VULCAN MATERIALS CO, 10-K, 1997-03-26

VULCAN MATERIALS CO
10-K, 1997-03-26
MINING & QUARRYING OF NONMETALLIC MINERALS (NO FUELS)

Previous: V F CORP /PA/, 10-K, 1997-03-26

Next: WASHINGTON MUTUAL INVESTORS FUND INC, N-30B-2, 1997-03-26

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, 1996

[ ] 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. [ ]

The aggregate market value of the voting stock held by non-affiliates
of the registrant as of February 28, 1997:

Common Stock, $1 Par Value $2,199,958,756

The number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date:

Shares outstanding
at February 28, 1997
Common Stock, $1 Par Value 33,976,197

Documents Incorporated by Reference:
Portions of the registrant's Annual Report to Shareholders for the year
ended December 31, 1996, are incorporated by reference into Parts I, II and IV
of this Annual Report on Form 10-K.
Portions of the registrant's annual proxy statement for the annual
meeting of its shareholders to be held on May 16, 1997, are incorporated by
reference into Part III of this Annual Report on Form 10-K.

VULCAN MATERIALS COMPANY

CROSS REFERENCE SHEET FOR DOCUMENTS INCORPORATED BY REFERENCE

HEADING IN ANNUAL REPORT PAGE IN
FORM 10-K TO SHAREHOLDERS FOR ANNUAL
ITEM NO. YEAR ENDED DECEMBER 31, 1996 REPORT

1. Business (Financial Results Segment Financial Data 42-43
by Business Segments)
Note 12, Segment Data 65

Note 14 Acquisitions 66

3. Legal Proceedings Note 10, Other Commitments and
Contingent Liabilities 64

5. Market for the Registrant's Common Stock Market Prices
Common Equity and Related and Dividends 44
Stockholder Matters

6. Selected Financial Data Selected Financial Data 41

7. Management's Discussion and Management's Discussion 45-51
Analysis of Financial and Analysis
Condition and Results Financial Terminology 40
of Operations

8. Financial Statements and Consolidated Statements of Earnings 54
Supplementary Data
Consolidated Balance Sheets 55

Consolidated Statements of Cash Flows 56

Consolidated Statements of
Shareholders' Equity 57

Notes to Financial Statements 58-66

Management's Responsibility for
Financial Reporting and
Internal Control 67

Independent Auditors' Report 67

Supplementary Information-
Quarterly Financial Data (Unaudited) 53

14. Exhibits, Financial Statement Management's Discussion
Schedules and Reports on and Analysis 45-51
Form 8-K

HEADING IN PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 1997

10. Directors and Executive Election of Directors; Nominees for
Officers of the Registrant Election to the Board of Directors;
Directors Continuing in Office;
Compliance with the Securities
Exchange Act

11. Executive Compensation Compensation of Directors;
Executive Compensation; Option Grants
in 1996; Shareholder Return Performance
Presentation; Retirement Income Plan;
Employee Special Severance Plan

12. Security Ownership of Security Ownership of Certain Beneficial
Certain Beneficial Owners Owners; Security Holdings of Management
and Management

VULCAN MATERIALS COMPANY

ANNUAL REPORT ON FORM 10-K

FISCAL YEAR ENDED DECEMBER 31, 1996

CONTENTS

PART ITEM PAGE

I 1 Business 1
2 Properties 5
3 Legal Proceedings 8
4 Submission of Matters to a Vote of Security Holders 11
4 a. Executive Officers of the Registrant 11

II 5 Market for the Registrant's Common Equity and
Related Stockholder Matters 13
6 Selected Financial Data 13
7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
8 Financial Statements and Supplementary Data 13
9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 14

III 10 Directors and Executive Officers of the Registrant 14
11 Executive Compensation 14
12 Security Ownership of Certain Beneficial Owners
and Management 14
13 Certain Relationships and Related Transactions 14

IV 14 Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 15

-- Signatures 21

PART I

ITEM 1. BUSINESS

Vulcan Materials Company, a New Jersey corporation incorporated in
1956, and its subsidiaries (together called the "Company") are principally
engaged in the production, distribution and sale of construction materials
("Construction Materials") and industrial and specialty 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 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 the Construction
Materials segment and Chemicals segment.

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 conducts research and development activities for both of
its business segments. The Construction Materials research and development
laboratory is located near Birmingham, Alabama. The Chemicals research and
development laboratories are located in Wichita, Kansas and Columbus, Georgia.
In general, the Company's research and development effort is directed to
applied technological development for the use of its Construction Materials
and Chemicals products as well as for the manufacturing or processing of its
Chemicals products. The Company spent approximately $1,080,000 in 1994,
$1,142,000 in 1995 and $1,091,000 in 1996 on research and development
activities for its Construction Materials segment. The Company spent
approximately $7,215,000 in 1994, $9,159,000 in 1995 and $7,939,000 in 1996
on research and development activities for its Chemicals segment.

The Company estimates that capital expenditures for environmental
control facilities in the current fiscal year (1997) and the succeeding fiscal
year (1998) will be approximately $2,367,000 and $1,130,000, respectively, for
the Construction Materials segment, and $3,849,000 and $3,000,000,
respectively, for the Chemicals segment.

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 required for its operations.

In 1996, the Construction Materials segment employed an average of
approximately 5,074 people. The Chemicals segment employed an average of
approximately 1,704 people. The Company's corporate office employed an
average of approximately 148 people. The Company considers its relationship
with its employees to be good.

Financial results of the Company for any individual quarter are not
necessarily indicative of results to be expected for the year, due primarily
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.

CONSTRUCTION MATERIALS

The Company's construction materials 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 79% of the dollar volume of the Construction Materials segment's
1996 sales, as compared to 77% in 1995 and 75% in 1994. 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 generally is limited to the areas in relatively
close proximity to production facilities. Noteworthy exceptions are the areas
along the Mississippi and Tennessee-Tombigbee river systems and the Gulf Coast
which are served by the Company's Reed quarry, areas served by rail-connected
quarries, and the areas along the U.S. coast served by ocean-going vessels
that transport stone from the Company's joint venture operation in Mexico.
The Company's construction aggregates are sold in 17 states primarily in
the Southeast, Midwest and Southwest regions of the United States.

During 1996, the Company completed several acquisitions, including
stone quarries in Alabama, Arkansas and Texas, an aggregates distribution
facility in northern Illinois and an aggregates distribution business in
Louisiana.

Shipments to customers of all construction aggregates from the
Company's domestic operations in 1996 totaled approximately 147 million tons,
with crushed stone shipments to customers accounting for approximately 138
million tons.

In 1996, the Company, directly or through joint ventures, operated
127 permanent crushed stone plants in 14 states and Mexico for the production
of crushed limestone and granite with estimated reserves totaling
approximately 8.1 billion tons.

In 1996, the Company, directly or through joint ventures, operated 12
sand and gravel plants, 4 slag plants and various other types of plants which
produce rock asphalt and other aggregates. Estimates of sand and gravel
reserves, calculated in a manner comparable to the estimates of stone
reserves set forth above, total approximately 43 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 and several other businesses.

Environmental and zoning regulations have made it increasingly
difficult for the construction aggregates industry either to expand existing
quarries or to develop new quarries. Although it cannot be predicted what
policies will be adopted in the future by governmental bodies regarding
environmental controls which affect the Construction Materials industry,
the Company anticipates that future environmental control costs will not
have a materially adverse effect upon its business.

CHEMICALS

The Chemicals Group is organized into two business units: the
Chloralkali Business Unit which manages the Company's chloralkali and
related businesses, and the Performance Systems Business Unit which manages
the Company's specialty chemicals and services business.

The principal chemicals produced by the Chloralkali Business Unit
at the Company's three chloralkali plants described in Item 2 below, are
chlorine, caustic soda (sodium hydroxide), muriatic acid, caustic potash
(potassium hydroxide), potassium carbonate, chlorinated hydrocarbons and
calcium chloride. Chlorine and various hydrocarbons (primarily ethylene and
methanol) are used to produce the Unit's line of chlorinated hydrocarbons,
including methylene chloride, perchloroethylene, chloroform, methyl chloride,
ethylene dichloride, carbon tetrachloride, methyl chloroform and
pentachlorophenol.

Principal markets for the Chloralkali Business Unit's chemical
products include pulp and paper, energy, food, pharmaceutical, cleaning,
chemical processing, fluorocarbons, water management and textiles. In the
paper-making industry, chlorine is used in pulp and paper bleaching, while
caustic soda is used primarily in the kraft and sulfite pulping process. The
Company supplies hydrochloric acid 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.
Perchloroethylene, methylene chloride and methyl chloroform are used in
industrial cleaning applications. Perchloroethylene is also used in the
drycleaning industry.

The Chloralkali Business Unit'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, chlorine, caustic soda, caustic potash and potassium
carbonate. Potassium carbonate is used in the manufacture of screen glass,
rubber antioxidants and other chemicals. The Company sells chloroform,
methyl chloroform and perchloroethylene to the fluorocarbons market. Chlorine
is used in water and sewage management, and caustic soda and caustic potash
are used in the production of soaps and detergents. Chlorine 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. 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 principal chemicals produced for the Performance Systems Business
Unit by the Company's Callaway Chemical Company subsidiaries include process
aids for the pulp and paper and textile industries and various water
management chemicals. Through its Vulcan Chemical Technologies, Inc. (VCT)
subsidiary, the Performance Systems Business Unit assembles and markets
small-scale chlorine dioxide generators, and sells related chemicals
(primarily sodium chlorite manufactured by the Company) and services to the
water management, food and beverage processing and pulp and paper industries.
This subsidiary also assembles and markets equipment, and sells related
chemicals (primarily hydrogen peroxide purchased from others) and services,
to the municipal and industrial water management markets. Additionally, the
Performance Systems Business Unit markets sodium chlorite produced at the
Chloralkali Business Unit's Wichita plant. Sodium chlorite is used in the
water management, food and beverage processing, pulp and paper, textile and
electronics industries. The Performance Systems Business Unit also markets
sodium hydrosulfite which is used primarily in the pulp and paper industry
and produced at the Chloralkali Business Unit's Port Edwards plant.

In June 1996, the Company's Callaway Chemical Company subsidiary
acquired substantially all of the assets of Mayo Chemical Company, Inc.
Mayo produces and markets specialty chemicals for the water management,
textile, industrial and institutional cleaning, mining and pulp and paper
industries. Callaway also acquired the textile chemicals business of Laun-Dry
Supply Co., Inc., in December 1996. The Company's VCT subsidiary made three
small acquisitions in 1996. It acquired the stock of Miller-Aldridge
Chemicals, Inc., which supplies sanitation and other products to the food
processing industry in the midwest United States, in June 1996. In September
1996, VCT acquired the municipal drinking water management business of the
Drew Industrial Division of Ashland Chemical Company. Finally, in December
1996, VCT purchased the food processing business of Savolite, Inc., which
supplies sanitation and other products to customers primarily in the Pacific
Northwest region of the United States.

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 the United States, with sales to such customers
currently accounting for approximately 6% of the sales of the Company's
Chemicals segment.

The Company's underground reserves of salt, which is a basic raw
material in the production of chlorine and caustic soda, are located near
its Wichita, Kansas and Geismar, Louisiana plants. The Company purchases
salt for its Port Edwards, Wisconsin plant. Ethylene, methanol, and vinyl
chloride monomer, the other major raw materials used in the Chloralkali
Business Unit and various chemicals used by the Performance Systems Business
Unit are purchased from several different suppliers. Sources of salt,
ethylene, methanol, vinyl chloride monomer and other various chemicals are
believed to be adequate for the Company's operations and the Company does
not anticipate any material difficulty in obtaining the raw materials which
it uses.

The Company's chemical operations are subject to the Resource
Conservation and Recovery Act ("RCRA"). Under the corrective action
requirements of RCRA, the Environmental Protection Agency ("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 results of the RFI
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 and CMS costs over the next several
years at its Geismar, Port Edwards and Wichita manufacturing facilities. For
each of these three facilities, the RFI and CMS results will determine whether
the EPA subsequently requires a CMI to address releases at the facility, and
the scope and cost of any such CMI. With respect to those RFI and 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.

Various other environmental regulations also have a restrictive effect
upon the chemicals industry, both as to production and sales, particularly the
production and sale of certain chemicals which are subject to regulation as
ozone depleting chemicals. The production and marketing of carbon
tetrachloride ended effective January 1, 1996, for most end uses except for
exports to Article 5 countries as defined by the Montreal Protocol on Ozone
Depleting Chemicals. The production of methyl chloroform for emissive
applications also ended effective January 1, 1996. Existing inventory of
methyl chloroform may continue to be marketed for emissive uses. In addition,
methyl chloroform will continue to be produced and marketed for non-emissive
uses while carbon tetrachloride will continue to be produced and marketed for
export to Article 5 countries. However, sales volume of both products will be
lower than in prior years.

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, 1996, are reported on page 65 (Note 12 of the Notes to Financial
Statements) and on pages 42 and 43 (under the caption "Segment Financial
Data") in the Company's 1996 Annual Report to Shareholders, which pages are
incorporated herein by reference.

ITEM 2. PROPERTIES

CONSTRUCTION MATERIALS

The Company's current estimate of approximately 8.1 billion tons
of stone reserves is approximately 600 million tons more than the estimate
reported at the end of 1995. These reserves include stone reserves in Mexico
owned or controlled by the Company's Mexican joint venture. Increases in the
Company's reserves have resulted from 1996 acquisitions in Alabama, Arkansas
and Texas, and significant reserve acquisitions in Mexico by the Company's
Mexican joint venture. Management believes that the quantities of reserves
at the Company's stone quarries are sufficient to result in an average quarry
life of approximately 56 years at present operating levels.

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.

Of the 127 stone quarries which the Company operates directly or
through joint ventures, 34 are located on owned land, 22 are on land owned
in part and leased in part, and 71 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 1997 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 (if
applicable) shown in parentheses:

<TABLE>
<CAPTION>
ESTIMATED
YEARS OF LIFE LEASE
AT AVERAGE EXPIRATION
RATE OF NATURE OF DATE, IF
LOCATION PRODUCT PRODUCTION(1) INTEREST APPLICABLE(2)

McCook (Chicago), Illinois Limestone 91.5(3) Owned

Paducah, Kentucky Limestone 42.7 Leased (4)

Grayson (Atlanta), Georgia Granite Over 100 Owned

Playa Del Carmen, Mexico Limestone 87.4 Owned(5)

Gray Court (Greenville), South Carolina Granite Over 100 Owned

Warrenton, Virginia (Washington, D.C.) Diabase Over 100 Leased (4)

Kennesaw (Atlanta), Georgia Granite 46.7 75% Owned
25% Leased 2013

Manteno, Illinois Limestone Over 100 Leased 2005

Skippers, Virginia Granite Over 100 Leased 2016

Lawrenceville (Norfolk/Virginia
Beach), Virginia Granite 81.6 25% Owned
75% Leased 2024
<FN>

(1) Estimated years of life of stone reserves are based on the average annual
rate of production of the quarry for the most recent three-year period, except
that if reserves are acquired or if production has been reactivated during
that period, the estimated years of life are based on the annual rate of
production from the date of such acquisition or reactivation. 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.

(2) Renewable by the Company through date shown.

(3) For some time, the Metropolitan Water Reclamation District of Greater
Chicago (MWRD) has had under consideration the condemnation of a portion of
this quarry in order to use it as a reservoir. The Company believes that this
action, if it occurs, could significantly reduce the life of this quarry, but
will not have a material effect on the financial condition of the Company as
a whole. In 1996, the MWRD announced that it plans to have reservoirs
created on real property it owns near the McCook quarry and that its current
plan does not include using the McCook quarry as a reservoir.

(4) Lease does not expire until reserves are exhausted. Surface rights at
the Paducah, Kentucky, quarry are owned.

(5) Owned by the Company's joint venture in Mexico.

</TABLE>

The estimated average life of the Company's sand and gravel
operations, calculated in the same manner as described in the footnote to
the table set out above, is approximately 8 years. Approximately 39% of the
Company's estimated 43 million tons of sand and gravel reserves are located
on owned land, with the remaining 61% located on leased land.

CHEMICALS

Manufacturing facilities for the chemicals produced by the Chloralkali
Business Unit are owned and operated by the Company at Wichita, Kansas,
Geismar, Louisiana, and Port Edwards, Wisconsin. With a few exceptions, the
Geismar and Wichita facilities produce the full line of products manufactured
by the Company's Chloralkali Business Unit. The Port Edwards plant produces
chlorine, caustic soda, muriatic acid, caustic potash, potassium carbonate and
sodium hydrosulfite.

All of the facilities at Wichita are located on a 1,396-acre tract
of land owned by the Company. 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. In
addition, the Company owns 320 acres of salt reserves and 160 acres of water
reserves. The Company maintains an electric power cogeneration facility at
the Wichita plant site which is capable of generating approximately one-third
of the plant's electricity and two-thirds of its process steam requirements.
Effective July 1995, pursuant to a long-term agreement, the Company has placed
this facility in reserve and is purchasing all of its requirements for
electric power from a local utility at favorable rates.

The facilities at Geismar, Louisiana are located on a 1,266-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 lease expiring in 2007.

The plant facilities at Port Edwards, Wisconsin are located on a
34-acre tract of land, the surface rights to which are owned by the Company.
Currently, the Company purchases its salt and electrical power requirements
for the Port Edwards facility from regional sources of supply.

Manufacturing facilities for chemicals produced by the Performance
Systems Business Unit (other than sodium chlorite produced at Wichita and
sodium hydrosulfite produced at Port Edwards) are operated by subsidiaries
of the Company. Callaway Chemical Company owns a headquarters office
building and two production facilities in Columbus, Georgia and additional
facilities in Smyrna, Georgia, Dalton, Georgia and Shreveport, Louisiana.
Callaway Chemical Limited has an office and small production facility on
leased property in Vancouver, British Columbia. Vulcan Chemical Technologies,
Inc., leases its office and production facilities in West Sacramento,
California and owns a small production facility and warehouse space near
Kansas City, Missouri.

The Company's Chemicals manufacturing 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 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 staffs of the Construction Materials and
Chemicals segments, the Southern Division of the Construction Materials
segment, and Vulcan Gulf Coast Materials, Inc., also are located in this
complex. The space is occupied pursuant to several leases. The lease
pursuant to which the majority of the space is leased 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, 1996, of $1,470,000, which is
subject to limited escalation.

ITEM 3. LEGAL PROCEEDINGS

The Company is a defendant in various lawsuits in the ordinary course
of business. It is not possible to determine with precision the probable
outcome of 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 position 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 or to 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 effects on its business.

1. The Company has been designated by the United States
Environmental Protection Agency ("EPA") as a potentially responsible party
("PRP") under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") with respect to a Louisiana chemical waste disposal
site, referred to as the Cleve Reber site. Records indicate that the Company
generated a portion of the waste placed at the site.

In 1996, the Company, together with certain other participating PRPs,
completed all site remediation activities required under a CERCLA unilateral
administrative order issued by the EPA, except the ongoing operation and
maintenance ("O&M") of the completed remedy. Mid- year 1998, EPA anticipates
conducting its five-year review of site conditions. If, based on that review,
site conditions are satisfactory, the Cleve Reber site will thereafter be
removed from the national list of Superfund sites.

The Company is continuing to make payments from its accrued reserve to
fund, under an agreement among the participating PRPs, the Company's allocated
share of the O&M costs. An understanding in principle has also been reached
among the Company, the other participating PRPs and EPA regarding settlement
of EPA's as yet inchoate claim for recovery of certain past CERCLA response
costs EPA allegedly incurred in connection with the Cleve Reber site.
Assuming this understanding in principle is subsequently implemented, the
Company believes that total provisions now recorded are adequate to cover
its share of the anticipated remaining costs.

2. In 1991, the Company received a notification from the State of
New Jersey Department of Environmental Protection ("NJDEP") 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 notification 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 whether a remedial action plan with respect thereto
should be developed.

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 NJDEP concerning the site. The ACO contains
certain 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 Company has been informally advised by the NJDEP
that, if the Company continues to participate in the RI/FS, the NJDEP will
not seek to enforce a directive issued in 1991 requiring the Company to pay
$1 million to the NJDEP to be used for the conduct of the RI/FS.

Depending upon the results of the RI/FS, NJDEP will determine what
site remediation is required under the ACO, if any. If remediation is
required, the Respondents or the NJDEP may 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.

3. In 1994, the EPA notified the Company that it was a CERCLA PRP
with respect to the Jack's Creek/Sitkin Smelting Superfund Site, a
Pennsylvania smelting facility operated by the Sitkin Smelting Company from
1958 until declaring bankruptcy in 1977. EPA claims that there are releases
and threatened releases of various hazardous substances from this site. By
the summer of 1996, EPA had undertaken investigative and response actions
which reportedly cost approximately $6.4 million. Although a record of
decision ("ROD") for this site has not yet been issued by the EPA, the RI/FS
prepared by EPA's contractor favors a remedy involving chemical fixation and
capping, with an estimated cost of $56.2 million.

The Company is among some 880 PRPs that EPA claims shipped to the site
a total of approximately 286 million pounds of material alleged to contain
hazardous substances. EPA claims that the Company's shipments totaled
approximately 1.8 million pounds over the five year period from 1972-1977.
Although claiming the PRPs are jointly and severally liable under CERCLA for
site response costs, EPA has prepared a volumetric ranking of those PRPs who
allegedly sent material to the site during the 1972-77 period. Under that
ranking, the percentage attributed to the Company is 0.877%; however, the
percentage has not been agreed to by the Company or other PRPs as a basis for
allocating responsibility at this site.

The Company and over 30 other PRPs have formed a PRP group for this
site ("PRP Group") to respond to the claims relating to the site which may be
asserted by EPA and others. In April 1995, the PRP Group submitted to EPA a
study prepared by an independent consultant to identify cost effective
alternatives for remediating the site. The alternative proposed for
implementation by this study was estimated to cost approximately $12 million.
The PRP Group has subsequently commissioned and submitted to EPA additional
studies and other evaluations to support the selection of this proposed
alternative. At this point, EPA is reviewing those studies.

EPA's stated objective is to issue a ROD by the second quarter of
1997, and EPA has indicated interest in negotiating with the PRP Group a
possible settlement of alleged liabilities relating to this site. A
negotiating team has been appointed by the PRP Group, and settlement
negotiations with EPA are anticipated in the near future. In preparation for
such negotiations, the PRP Group has adopted a proposed method for allocating
among PRP Group members the costs of implementing the alternative remedy
advocated by the PRP Group (assuming that remedy is selected by EPA).
Under that allocation arrangement, the Company's share percentage would be
approximately 2.18%.

Under the circumstances, the Company is not able to predict the
probability of a favorable or unfavorable outcome, or the amount of potential
loss in the event of any unfavorable outcome.

4. Lawsuits naming the Company have been filed in the District
Courts of Jefferson and Ector counties, Texas, by individual plaintiffs
alleging silicosis arising from exposure to industrial sand used for abrasive
blasting which was marketed by the Company from 1988 to 1994. The Company is
one of from 20-40 defendants named in each case. Currently, 28 such cases are
pending against the Company. At this time, the Company does not expect that
settlements or adverse judgments, if any, will adversely affect the
consolidated financial position of the Company to a material extent.

5. In August 1995, a complaint was filed in the District Court of
Nueces County, Texas, 214th Judicial District, by 144 individual plaintiffs
against 93 defendants, including the Company. Plaintiffs allege personal
injuries and damages arising from exposure to petroleum products, asbestos,
chemicals, solvents, minerals, metals and other products in connection with
plaintiffs' employment at the Corpus Christi Army Depot in Corpus Christi,
Texas. Plaintiffs' ad damnum plea is for $100 million in compensatory damages
and "at least" $400 million in punitive damages from all defendants. The
Company has retained counsel and is currently defending the action. The
Company does not believe that its potential share, if any, of costs related to
this action will adversely affect the consolidated financial position of the
Company to a material extent.

6. In 1987, the Company sold its former Neville Island,
Pennsylvania, detinning facility to AMG Resources Corporation ("AMG"). Under
the terms of the sale and subsequent agreements, the Company retained
responsibility for the assessment of environmental contamination at the site,
the preparation of a remediation plan for submission to appropriate
environmental agencies, and the implementation of the approved remediation
plan.

In 1991, the Company prepared and submitted to the Pennsylvania
Department of Environmental Protection ("PADEP") the results of an extensive
site investigation. Subsequently, the Company's independent consultants
prepared a remediation proposal, and in November 1994, the Company presented
its remediation concept to PADEP. In October 1995, the Company filed with
PADEP a Notice of Intent to Remediate the site under certain applicable
provisions of the Pennsylvania Land Recycling and Environmental Remediation
Standards Act ("Act 2"). With PADEP's approval, the Company subsequently
implemented a pilot remediation project which addressed soil contamination
in an area of the site where AMG was constructing a new can recycling unit.
Based on results of the pilot remediation effort, the Company has proposed to
conduct additional remediation activities under Act 2 to address the remainder
of the AMG site, including lead conditions in soils and arsenic conditions in
groundwater. (A subsequent pilot test of injection techniques for pH
adjustment to reduce arsenic solubility did not prove successful, and other
options are being evaluated.)

Under present circumstances, the Company can neither predict the
probability of a favorable or unfavorable ultimate resolution of this matter
nor the amount, if any, of costs in excess of current reserves which might be
incurred in connection with resolving this matter.

Note 10, Other Commitments and Contingent Liabilities on page 64 of
the Company's 1996 Annual Report to Shareholders is hereby incorporated by
reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to the Company's security holders through the
solicitation of proxies or otherwise during the fourth quarter of 1996.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The names, positions and ages of the executive officers of the Company
are as follows:

NAME POSITION AGE

Herbert A. Sklenar Chairman of the Board of Directors 65

Donald M. James President, Chief Executive Officer and Director 48

Peter J. Clemens, III Executive Vice President and Chief
Administrative Officer 53

William F. Denson, III Vice President, Law and Secretary 53

Daniel F. Sansone Vice President, Finance 44

Richard K. Carnwath Vice President, Planning and Development 48

Ejaz A. Khan Controller 40

John A. Heilala President, Chloralkali Business Unit 56

Robert A. Wason IV President, Performance Systems Business Unit 45

Guy M. Badgett, III President, Southeast Division 48

Perry W. Donahoo President, Southern Division 42

William L. Glusac President, Midwest Division 46

Daniel J. Leemon President, Midsouth Division 58

Thomas R. Ransdell President, Southwest Division and President, 54
Vulcan Gulf Coast Materials, Inc.

James W. Smack President, Mideast Division 53

The principal occupations of the executive officers during the past
five years are set forth below:

Herbert A. Sklenar was Chairman and Chief Executive Officer from May
1992 until February 1997 when he relinquished the position of Chief Executive
Officer.

Donald M. James was elected President and Chief Executive Officer
in February 1997. He was elected President and Chief Operating Officer in
February 1996. Mr. James joined the Company in 1992 as Senior Vice President
and General Counsel. In January 1994, Mr. James was elected President of the
Southern Division and in August 1995, he was also elected Senior Vice
President, South, Construction Materials Group.

Peter J. Clemens, III, was elected Executive Vice President and Chief
Administrative Officer in May 1996. Prior to that time he served as Senior
Vice President, West, Construction Materials Group and Senior Vice President,
Finance.

William F. Denson, III, has served as Secretary since April 1981. He
served as Assistant General Counsel until May 1992, when he was elected Vice
President and Assistant General Counsel, and was elected Vice President, Law
effective January 1, 1994.

Daniel F. Sansone was elected Vice President, Finance effective
January 1994. Prior to that time he served as Vice President and Controller.

Richard K. Carnwath has served as Vice President, Planning and
Development since 1985.

Ejaz A. Khan served as Controller, Chemicals Division, until September
1995, when he was elected Controller of the Company.

John A. Heilala has served as President, Chloralkali Business Unit
since May 1996. From 1994 until 1996, he served as Executive Vice President,
Chloralkali, and prior to that time he served as Vice President,
Manufacturing, Chemicals Division.

Robert A. Wason IV has served as President, Performance Systems
Business Unit, since May 1996. From 1994 until 1996, he served as Executive
Vice President, Performance Systems, and prior to that time he served as
Executive Vice President, Administration and Business Development, Chemicals
Division.

Guy M. Badgett, III, has served as President, Southeast Division,
since 1992.

Perry W. Donahoo has served as President, Southern Division, since
October 1996. From August 1992 until June 1995, Mr. Donahoo served as
President of Reed Crushed Stone Company (formerly a subsidiary of the Company)
and as Executive Vice President, Southern Division, from June of 1995 until
October 1996.

William L. Glusac has served as President, Midwest Division, since
1994. Prior to that time he served as President, Southwest Division.

Daniel J. Leemon has served as President, Midsouth Division, since
1993. Prior to that time he served as Senior Vice President, West,
Construction Materials Group.

Thomas R. Ransdell has served as President, Vulcan Gulf Coast
Materials, Inc., since 1987 and also as President, Southwest Division
since 1994.

James W. Smack has served as President, Mideast Division, since 1991.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

"Common Stock Market Prices and Dividends" on page 44 of the Company's
1996 Annual Report to Shareholders is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

"Selected Financial Data" on page 41 of the Company's 1996 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 45 through 51 and
"Financial Terminology" on page 40 of the Company's 1996 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 1996 Annual Report to Shareholders on the pages shown below, which
are incorporated herein by reference:

PAGE
Financial Statements and Notes 54

Management's Responsibility for Financial Reporting
and Internal Control 67

Independent Auditors' Report 67

Supplementary Information-Quarterly Financial Data (Unaudited) 53

With the exception of the aforementioned information and the
information incorporated by reference in Items 1, 3, 5, 6, 7, 8 and 14, the
Company's 1996 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 herein pursuant to Item 304
of Regulation S-K.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

On or before April 7, 1997, the Company will file a definitive proxy
statement with the Securities and Exchange Commission pursuant to Regulation
14A (the Company's "1997 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 1997 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 made to the information provided in Part I, Item 4(a) of this
Annual Report on Form 10-K. Based solely on a review of Forms 3 and 4 and
amendments thereto furnished to the Company pursuant to Rule 240.16a-3(e)
during 1996, and of Form 5 and amendments thereto furnished to the Company
pursuant to Rule 240.16a-3(e) with respect to 1996, the Company has identified
certain persons subject to Section 16(a) of the Securities Exchange Act of
1934 who failed to file on a timely basis required forms. Information
concerning such failures under the heading "Compliance with the Securities
Exchange Act" included in the Company's 1997 Proxy Statement is incorporated
herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information under the headings "Compensation of Directors,"
"Executive Compensation," "Option Grants in 1996," "Shareholder Return
Performance Presentation," "Retirement Income Plan" and "Employee Special
Severance Plan" included in the Company's 1997 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 1997 Proxy Statement is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

No information is required to be included herein 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 1996
Annual Report to Shareholders on the pages shown below and are incorporated
herein by reference:
PAGE

Consolidated Statements of Earnings 54

Consolidated Balance Sheets 55

Consolidated Statements of Cash Flows 56

Consolidated Statements of Shareholders' Equity 57

Notes to Financial Statements 58

Management's Responsibility for Financial Reporting
and Internal Control 67

Independent Auditors' Report 67

Supplementary Information-Quarterly Financial Data
(Unaudited) 53

(a) (2) FINANCIAL STATEMENT SCHEDULES

The following financial statement schedule for the years ended
December 31, 1996, 1995 and 1994 is included in Part IV of this report on
the indicated pages:

Schedule II Valuation and Qualifying Accounts and Reserves 19

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 Exhibit (12) which is on page 20 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.

EXHIBIT (3)(i) Certificate of Incorporation (Restated 1988) of the
Company filed as Exhibit 3(a) to the Company's 1988
Form 10-K Annual Report (File No. 1-4033).*

EXHIBIT (3)(ii) By-laws of the Company, as restated February 2, 1990,
and as last amended February 14, 1997.

EXHIBIT (4)(a) Distribution Agreement dated as of May 14, 1991, by
and among the Company, Goldman, Sachs & Co., Lehman
Brothers and Salomon Brothers Inc., filed as Exhibit 1
to the Form S-3 filed on May 2, 1991 (Registration
No. 33-40284).*

EXHIBIT (4)(b) Indenture dated as of May 1, 1991, by and between the
Company and First Trust of New York (as successor
trustee to Morgan Guaranty Trust Company of New York)
filed as Exhibit 4 to the Form S-3 on May 2, 1991
(Registration No. 33-40284).*

EXHIBIT (10)(a) The Management Incentive Plan of the Company, as last
amended and restated filed as Exhibit 10(a) to the
Company's 1989 Form 10-K Annual Report (File
No. 1-4033).**

EXHIBIT (10)(b) The 1991 Long-Range Performance Share Plan of the
Company filed as Exhibit A to the Company's definitive
proxy statement for the annual meeting of its
shareholders held May 16, 1991 (File No. 1-4033).**

EXHIBIT (10)(c) The Employee Special Severance Plan of the Company
filed as Exhibit 10(g) to the Company's 1989 Form 10-K
Annual Report (File No. 1-4033).**

EXHIBIT (10)(d) The Unfunded Supplemental Benefit Plan for Salaried
Employees filed as Exhibit 10(d) to the Company's 1989
Form 10-K Annual Report (File No. 1-4033).**

EXHIBIT (10)(e) The 1983 Long-Term Incentive Plan, as last amended and
restated, filed as Exhibit 10(f) to the Company's 1989
Form 10-K Annual Report (File No. 1-4033).**

EXHIBIT (10)(f) The Deferred Compensation Plan for Directors Who
Are Not Employees of the Company, as last amended
and restated on February 17, 1996. Exhibit 10(g)
to the Company's 1995 Form 10-K Annual Report
(File No. 4033).**

EXHIBIT (10)(g) The 1996 Long-Term Incentive Plan of the Company filed
as Exhibit 10(h) to the Company's 1995 Form 10-K Annual
Report (File No. 4033).**

EXHIBIT (10)(h) The Directors Deferred Stock Plan of the Company filed
as Exhibit 10(i) to the Company's 1995 Form 10-K Annual
Report (File No. 4033).**

EXHIBIT (12) Computation of Ratio of Earnings to Fixed Charges for
the five years ended December 31, 1996 (set forth on
page 20 of this report).

EXHIBIT (13) The Company's 1996 Annual Report to Shareholders.

EXHIBIT (21) List of the Company's subsidiaries as of
December 31, 1996.

EXHIBIT (24) Powers of Attorney

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, 1996,
will be filed as one or more amendments to this Form 10-K on or before
June 28, 1997, as permitted by Rule 15d-21 under the Securities Exchange
Act of 1934.

*Incorporated by reference.
**Management Contract or Compensatory Plan.

(b) REPORTS ON FORM 8-K

None.

INDEPENDENT AUDITORS' REPORT

Vulcan Materials Company:

We have audited the consolidated financial statements of Vulcan Materials
Company and its subsidiary companies as of December 31, 1996, 1995 and 1994
and for the years then ended, and have issued our report thereon dated
February 7, 1997; such consolidated financial statements and report are
included in your 1996 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the consolidated financial
statement schedule of Vulcan Materials Company and its subsidiary companies,
listed in Item 14. This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements as a whole, presents fairly in all material respects
the information shown therein.

/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Birmingham, Alabama
February 7, 1997

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 on March 26, 1997.

VULCAN MATERIALS COMPANY

By /s/ D. M. James
D. M. James
President 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 of the Board of Directors March 26, 1997
H. A. Sklenar

/s/ D. M. James President, Chief Executive March 26, 1997
D. M. James Officer and Director
(Principal Executive Officer)

/s/ D. F. Sansone Vice President, Finance and Treasurer March 26, 1997
D. F. Sansone (Principal Financial Officer)

/s/ E. A. Khan Controller March 26, 1997
E. A. Khan (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 26, 1997
William F. Denson, III
Attorney-in-Fact

EXHIBITS

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

VULCAN MATERIALS COMPANY

FILED MARCH 26, 1997

COMMISSION FILE NUMBER 1-4033

EXHIBIT INDEX
FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 1996

EXHIBIT (3)(i) Certificate of Incorporation (Restated 1988) of the
Company filed as Exhibit 3(a) to the Company's 1988
Form 10-K Annual Report (File No. 1-4033).*

EXHIBIT (3)(ii) By-laws of the Company, as restated February 2, 1990,
and as last amended February 14, 1997.

EXHIBIT (4)(a) Distribution Agreement dated as of May 14, 1991, by and
among the Company, Goldman, Sachs & Co., Lehman
Brothers and Salomon Brothers Inc., filed as Exhibit 1
to the Form S-3 filed on May 2, 1991 (Registration No.
33-40284).*

EXHIBIT (10)(a) The Management Incentive Plan of the Company, as last
amended and restated filed as Exhibit 10(a) to the
Company's 1989 Form 10-K Annual Report (File No.
1-4033).**

EXHIBIT (10)(c) The Employee Special Severance Plan of the Company
filed as Exhibit 10(g) to the Company's 1989 Form 10-K
Annual Report (File No. 1-4033).**

EXHIBIT (10)(d) The Unfunded Supplemental Benefit Plan for Salaried
Employees filed as Exhibit 10(d) to the Company's 1989
Form 10-K Annual Report (File No. 1-4033).**

EXHIBIT (10)(e) The 1983 Long-Term Incentive Plan, as last amended and
restated, filed as Exhibit 10(f) to the Company's 1989
Form 10-K Annual Report (File No. 1-4033).**

EXHIBIT (10)(f) The Deferred Compensation Plan for Directors Who Are
Not Employees of the Company, as last amended and
restated on February 17, 1996. Exhibit 10(g) to the
Company's 1995 Form 10-K Annual Report (File
No. 4033).**

EXHIBIT (10)(g) The 1996 Long-Term Incentive Plan of the Company filed
as Exhibit 10(h) to the Company's 1995 Form 10-K Annual
Report (File No. 4033).**

EXHIBIT (10)(h) The Directors Deferred Stock Plan of the Company filed
as Exhibit 10(i) to the Company's 1995 Form 10-K Annual
Report (File No. 4033).**

EXHIBIT (12) Computation of Ratio of Earnings to Fixed Charges for
the five years ended December 31, 1996 (set forth on
page 20 of this report).

EXHIBIT (13) The Company's 1996 Annual Report to Shareholders.

EXHIBIT (21) List of the Company's subsidiaries as of
December 31, 1996.

EXHIBIT (24) Powers of Attorney

*Incorporated by reference.
**Management Contract or Compensatory Plan.

BY - LAWS

VULCAN MATERIALS COMPANY

(Incorporated under the laws of the State of New Jersey)

Restated: February 2, 1990
Amended: June 27, 1990
March 27, 1991
February 5, 1992
(eff. 5/11/92)
May 11, 1992
December 8, 1992
February 12, 1993
March 5, 1995
February 17, 1996
May 17, 1996
February 14, 1997

I N D E X
Page

ARTICLE I Shareholders' Meetings

Section 1.1 Annual Meetings................................1
Section 1.2 Special Meetings...............................1
Section 1.3 Notice and Purpose of Meetings.................1
Section 1.4 Quorum and Adjournments........................1
Section 1.5 Organization...................................2
Section 1.6 Voting.........................................2
Section 1.7 Selection of Inspectors........................3
Section 1.8 Duties of Inspectors...........................3

ARTICLE II Directors

Section 2.1 Number, Qualification, Tenure, Term,
Quorum, Vacancies, Removal
(a) Number, Qualification and Tenure..........4
(b) Term......................................4
(c) Quorum....................................5
Section 2.2 Meetings of the Board of Directors.............5
Section 2.3 Committees of the Board of Directors...........6
Section 2.4 Participation in Meetings by Means of
Conference Telephone or Similar Instrument.....7
Section 2.5 Action of Board of Directors and
Committees Without a Meeting...................7
Section 2.6 Dividends......................................7
Section 2.7 Conflict of Interest...........................8

ARTICLE III Officers

Section 3.1 (a) Corporate Officers........................8
(b) Group Officers............................8
(c) Division and Business Unit Officers.......9
Section 3.2 (a) Term and Removal of Officers of
the Corporation...........................9
(b) Term and Removal of Group and
Division Officers.........................9
Section 3.3 Chairman of the Board..........................9
Section 3.4 Chief Executive Officer.......................10
Section 3.5 Chief Operating Officer.......................10
Section 3.6 President.....................................10
Section 3.7 Chief Administrative Officer..................10
Section 3.8 Vice Presidents...............................11
Section 3.9 General Counsel...............................11
Section 3.10 Secretary.....................................11
Section 3.11 Treasurer.....................................11
Section 3.12 Controller....................................11
Section 3.13 Other Officers................................12
Section 3.14 Voting Corporation's Securities...............12

ARTICLE IV Indemnification of Directors, Officers
and Employees.................................................12

ARTICLE V Certificates of Stock

Section 5.1 Transfer of Shares............................14
Section 5.2 Transfer Agent and Registrar..................14
Section 5.3 Fixing Record Date............................14
Section 5.4 Lost, Stolen or Destroyed Certificates........15

ARTICLE VI Miscellaneous

Section 6.1 Fiscal Year...................................16
Section 6.2 Corporate Seal................................16
Section 6.3 Delegation of Authority.......................16
Section 6.4 Notices.......................................16

ARTICLE VII By-Laws and Their Amendments..................................16

ARTICLE VIII National Emergency............................................17

ARTICLE I
Shareholders' Meetings

SECTION 1.1. Annual Meetings

(a) The annual meeting of the shareholders of the corporation may
be held at such place within or without the State of New Jersey as may be
fixed by the Board of Directors, at 10 a.m., local time, or at such other
hour as may be fixed by the Board of Directors, on such day in April or
May of each year as may be fixed by the Board of Directors, for the
purpose of electing directors and for the transaction of such other
business as may properly be brought before the meeting.

(b) If the annual meeting for the election of directors is not held
in one of the months set forth in Section 1.1(a), the Board of Directors
shall cause the meeting to be held as soon thereafter as convenient.

SECTION 1.2. Special Meetings

(a) Special meetings of the shareholders may be called by the Board
of Directors, the chairman of the Board of Directors or the chief
executive officer.

(b) Special meetings shall be held at such time and date and at
such place as shall have been fixed by the Board of Directors, the
chairman of the Board of Directors or by the chief executive officer.

SECTION 1.3. Notice and Purpose of Meetings

Written notice of the time, place and purpose or purposes of every
meeting of shareholders shall be given, not less than ten nor more than 60
days before the meeting, either personally or by mail, to each shareholder
of record entitled to vote at the meeting.

SECTION 1.4. Quorum and Adjournments

(a) A quorum at all meetings of shareholders shall consist of the
holders of record of a majority of the shares of the issued and
outstanding capital stock of the corporation, entitled to vote thereat,
present in person or by proxy, except as otherwise provided by law or the
Certificate of Incorporation.

(b) A shareholders' meeting may be adjourned to another time or
place, and, if no new record date is fixed, it shall not be necessary to
give notice of the adjourned meeting if the time and place to which the
meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting only such business
is transacted as might have been transacted at the original meeting.
If after the adjournment a new record date is fixed by the Board of
Directors, notice of the adjourned meeting shall be given to shareholders
of record on the new record date entitled to vote. Less than a quorum
may adjourn the meeting as herein provided.

SECTION 1.5. Organization

Meetings of the shareholders shall be presided over by the chief
executive officer, or, if he is not present, by a chairman to be chosen by a
majority of the shareholders entitled to vote who are present in person or by
proxy at the meeting. The Secretary of the corporation, or, in his or her
absence, an Assistant Secretary, shall act as secretary of every meeting, but
if neither the Secretary nor an Assistant Secretary is present, the meeting
shall choose any person present to act as secretary of the meeting.

SECTION 1.6. Voting

(a) At all meetings of the shareholders the voting need not be by
ballot, except that all elections for directors shall be by ballot, and
except that the voting shall be by ballot on all other matters upon which
voting by ballot is expressly required by the Certificate of
Incorporation or by the laws of the State of New Jersey.

(b) The poll at all elections of directors shall be open in
accordance with the laws of the State of New Jersey.

(c) Subject to the foregoing provisions, the right of any
shareholder to vote at a meeting of shareholders shall be determined on
the basis of the number of shares registered in his or her name on the
date fixed as the record date for said meeting.

(d) Except as otherwise provided by statute or these By-laws, any
matter submitted to a vote of shareholders shall be viva voce unless the
person presiding at the meeting determines that the voting shall be by
ballot or unless the circumstances are such that the will of the holders
of a majority of shares entitled to vote cannot be determined with
certainty and the holder of a share entitled to vote or his or her proxy
shall demand a vote by ballot. In either of such events a vote by ballot
shall be taken.

SECTION 1.7. Selection of Inspectors

(a) The Board of Directors may in advance of any shareholders'
meeting or any proposed shareholder action without a meeting appoint one
or more inspectors to act at the meeting or any adjournment thereof or to
receive consents of shareholders. If inspectors are not so appointed for
a shareholders' meeting or shall fail to qualify, the person presiding at
the shareholders' meeting may, and upon the request of any shareholder
entitled to vote thereat shall, make such appointment.

(b) In case any person appointed as inspector fails to appear or
act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the meeting or at the meeting by the person
presiding.

(c) Each inspector, before entering upon the discharge of his or
her duties, shall take and sign an oath faithfully to execute the duties
of inspector at such meeting or in tabulating consents with strict
impartiality and according to the best of his or her ability.

(d) No person shall be elected a director in an election for which
he has served as an inspector.

SECTION 1.8. Duties of Inspectors

The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting or the shares
entitled to consent, the existence of a quorum, the validity and effect of
proxies, and shall receive votes or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count
and tabulate all votes or consents, determine the result, and do such acts as
are proper to conduct the election or vote or consents with fairness to all
shareholders. If there are three or more inspectors, the act of a majority
shall govern. On request of the person presiding at the meeting or any
shareholder entitled to vote thereat or of any officer, the inspectors shall
make a report in writing of any challenge, question or matter determined by
them. Any report made by them shall be prima facie evidence of the facts
therein stated, and such report shall be filed with the minutes of the
meeting.

ARTICLE II
Directors

SECTION 2.1. Number, Qualification, Tenure, Term, Quorum, Vacancies,
Removal

(a) Number, Qualification and Tenure. The business and affairs of
the corporation shall be managed by or under the direction of its Board
of Directors, consisting of 11 persons. However, effective at 9:30 a.m.,
Central Daylight Time on May 16, 1997, the Board of Directors shall
consist of 10 persons. The number may, from time to time, be increased
or decreased by resolution adopted by a majority of the entire Board of
Directors, but the number shall not be less than nine nor more than 21.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by the affirmative vote of two-thirds of the
directors in office at the time. Directors shall be at least 25 years of
age and need not be United States citizens or residents of New Jersey or
shareholders of the corporation.

Any outside director shall retire from the Board of Directors at the
annual meeting next following their 70th birthday, regardless of the term
for which they might have been elected; provided, however, that current
outside directors who continue to serve until the annual meeting next
following their 68th birthday shall have the option to retire then. Any
outside director who ceases to hold the position with the business or
professional organization with which such person was associated when most
recently elected a director shall automatically be deemed to have offered
his or her resignation as a director of the corporation, and the Director
and Management Succession Committee shall make a recommendation to the
Board of Directors with respect to such resignation; and, if the deemed
offer to resign is accepted by the Board of Directors, such resignation
shall be effective as of the next annual meeting of shareholders.

Any inside director shall retire from the Board of Directors at
the annual meeting next following his or her 65th birthday; provided,
however, that any inside director who has served as chief executive
officer of the corporation and who has been requested by the Board of
Directors to do so shall serve until the next annual meeting following
his or her 67th birthday, but not thereafter.

An inside director is one who is or has been in the full-time
employment of the corporation, and an outside director is any other
director.

(b) Term. Directors shall be divided into three classes, with
the term of office of one class expiring each year. Except as otherwise
provided in the Certificate of Incorporation or these By-laws, directors
shall be chosen at annual meetings of the shareholders, and each director
shall be chosen to serve until the third succeeding annual meeting of
shareholders following his or her election and until his or her successor
shall have been elected and qualified.

(c) Quorum. A majority of the members of the Board of Directors
then acting, but, in no event less than one-third of the entire Board of
Directors, acting at a meeting duly assembled, shall constitute a quorum
for the transaction of business. Directors having a personal or
conflicting interest in any matter to be acted upon may be counted in
determining the presence of a quorum. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those
present may adjourn the meeting, without further notice, from time to
time until a quorum shall have been obtained.

SECTION 2.2. Meetings of the Board of Directors

(a) Meetings of the Board of Directors shall be held at such place
within or without the State of New Jersey and at such time and date as
may from time to time be fixed by the Board of Directors, or, if not so
fixed, as may be specified in the notice of the meeting. A meeting of
the Board of Directors shall be held without notice immediately after
the annual meeting of the shareholders.

(b) Regular meetings of the Board of Directors shall be held on
such day of such months as may be fixed by the Board of Directors. At
any regular meeting of the Board of Directors any business that comes
before such meeting may be transacted except where special notice is
required by these By-laws.

(c) Special meetings of the Board of Directors may be held on
the call of the chairman of the Board of Directors, the chief executive
officer or any three directors.

(d) Notice of each regular meeting of the Board of Directors, other
than the meeting following the annual meeting of shareholders, shall be
given not less than seven days before the date on which such regular
meeting is to be held. Notice of each special meeting of the Board of
Directors shall be given to each member of the Board of Directors not
less than two days before the date upon which such meeting is held.
Notice of any such meeting may be given by mail, telegraph, telephone,
telex, facsimile transmission, personal service or by personally advising
the director orally. Notice of a meeting of the Board of Directors may
be waived in writing before or after the meeting. Meetings may be held
at any time without notice if all the directors are present. Notice of
special meetings of the Board of Directors shall specify the purpose or
purposes of the meeting. Neither the business to be transacted nor the
purpose or purposes of any meeting of the Board of Directors need be
specified in the notice of regular meetings or in the waiver of notice
of any regular or special meeting of the Board of Directors.

(e) Notice of an adjourned meeting of the Board of Directors need
not be given if the time and place are fixed at the meeting adjourning
and if the period of adjournment does not exceed ten days in any one
adjournment.

SECTION 2.3. Committees of the Board of Directors

(a) The Board of Directors, by resolution adopted by a majority of
the entire Board of Directors, may appoint from among its members an
Executive Committee and one or more other committees, each of which shall
have at least three members. To the extent provided in such resolution
each such committee shall have and may exercise all the authority of the
Board of Directors, except as expressly limited by the New Jersey
Business Corporation Act.

(b) The Board of Directors, by resolution adopted by a majority
of the entire Board of Directors, may: (1) fill any vacancy in any such
committee; (2) appoint one or more directors to serve as additional
members of any such committee; (3) appoint one or more directors to serve
as alternate members of any such committee, to act in the absence or
disability of members of any such committee with all the powers of such
absent or disabled members; (4) abolish any such committee at its
pleasure; and (5) remove any director from membership on such committee
at any time, with or without cause.

(c) The Executive Committee shall meet at such time or times, and
at such place within or outside the State of New Jersey, as it shall
designate or, in the absence of such designation, as shall be designated
by the person or persons calling the meeting; and it shall make its own
rules of procedure. Meetings may be held at any time without notice if
all members of the Executive Committee are present, or if at any time
before or after the meeting those not present waive notice of the meeting
in writing. A majority of the members of the Executive Committee shall
constitute a quorum thereof, but at any meeting of the Committee at which
all the members are not present no action shall be taken except by the
unanimous vote of those present.

(d) Meetings of any committee may be called by the chairman of
the Board of Directors, the chief executive officer, the chairman of
the committee, by any two members of the committee or as provided in
the resolution appointing the committee. Notice of such meeting shall
be given to each member of the committee by mail, telegraph, telephone,
telex, facsimile transmission, personal service or by personally advising
the member orally. Said notice shall state the time and place of any
meeting of any such committee and shall be fixed by the person or persons
calling the meeting.

(e) Actions taken at a meeting of any committee shall be reported
to the Board of Directors at its next meeting following such committee
meeting; except that, when the meeting of the Board of Directors is held
within two days after the committee meeting, such report shall, if not
made at the first meeting, be made to the Board of Directors at its
second meeting following such committee meeting.

SECTION 2.4. Participation in Meetings by Means of Conference Telephone
or Similar Instrument

Where appropriate communication facilities are available, any or all
directors may participate in all or any part of a meeting of the Board of
Directors or in a meeting of any committee of the Board of Directors by means
of a conference telephone or any means of communication by which the persons
participating in the meeting are able to hear each other as though he was or
they were present in person at such meeting. Such participation without
protesting prior to the conclusion of such participation the lack of notice
of such meeting shall constitute a waiver of notice by such participating
director or directors with respect to business transacted during such
participation.

SECTION 2.5. Action of Board of Directors and Committees Without
a Meeting

Any action required or permitted to be taken pursuant to authorization
voted at a meeting of the Board of Directors or any committee of the Board
of Directors may be taken without a meeting if, prior or subsequent to such
action, all members of the Board of Directors or of such committee, as the
case may be, consent thereto in writing and such written consents are filed
with the minutes of the proceedings of the Board of Directors or committee.

SECTION 2.6. Dividends

Subject to the provisions of the laws of the State of New Jersey and the
Certificate of Incorporation, the Board of Directors shall have full power to
determine whether any and, if any, what part of any funds of the corporation
shall be declared in dividends and paid to shareholders; the division of the
whole or any part of such funds of the corporation shall rest wholly within
the lawful discretion of the Board of Directors, and it shall not be required
at any time, against such discretion, to divide or pay any part of such funds
among or to the shareholders as dividends or otherwise, and the Board of
Directors may fix a sum which may be set aside or reserved over and above the
capital paid in of the corporation as working capital for the corporation or
as a reserve for any proper purpose, and from time to time may increase,
diminish and vary the same in its absolute judgment and discretion.

SECTION 2.7. Conflict of Interest

No contract or other transaction between the corporation and one or more
of its directors, or between the corporation and any domestic or foreign
corporation, firm or association of any type or kind in which one or more
of its directors are directors or are otherwise interested, shall be void or
voidable solely by reason of such common directorship or interest, or solely
because such director or directors are present at the meeting of the Board of
Directors or a committee thereof which authorizes or approves the contract or
transaction, or solely because his or their votes are counted for such
purpose, if any of the following is true: (1) the contract or other
transaction is fair and reasonable as to the corporation at the time it is
authorized, approved or ratified; or (2) the fact of the common directorship
or interest is disclosed or known to the Board of Directors or committee and
the Board of Directors or committee authorizes, approves, or ratifies the
contract by unanimous written consent, provided at least one director so
consenting is disinterested, or by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than
a quorum; or (3) the fact of the common directorship or interest is disclosed
or known to the shareholders, and they authorize, approve or ratify the
contract or transaction.

The Board of Directors, by the affirmative vote of a majority of
directors in office and irrespective of any personal interest of any of them,
shall have authority to establish reasonable compensation of directors for
services to the corporation as directors, officers or otherwise.

ARTICLE III
Officers

SECTION 3.1

(a) Corporate Officers. Each year promptly after the annual
meeting of the shareholders, the Board of Directors shall elect a
Chairman of the Board, a President, one or more Vice Presidents, with
such designations, if any, as it may determine, a General Counsel, a
Secretary, a Treasurer, and a Controller, and from time to time may elect
or appoint one or more Assistants to any of such officers, and such one
or more Assistant Secretaries, Assistant Treasurers, and Assistant
Controllers, and such other officers, agents, and employees, and with
such designations, as it may deem proper. Any two or more offices may be
concurrently held by the same person at the same time. The Chairman of
the Board and the President shall be chosen from among the directors.

(b) Group Officers. The chief executive officer of the corporation
may appoint such officers of any group of the corporation as he may deem
proper, except that group senior vice presidents may be appointed only by
the Board of Directors. A group officer shall not be an officer of the
corporation, and shall serve as an officer only of the group to which he
is appointed, but a person who holds a group office may also hold a
corporate office or a division office, or both.

(c) Division and Business Unit Officers. The chief executive
officer of the corporation may appoint such officers of any division
or business unit of the corporation as he may deem proper, except that
division and business unit chairmen and presidents may be appointed only
by the Board of Directors. A division or business unit officer shall not
be an officer of the corporation, and shall serve as an officer only of
the division or business unit to which appointed, but a person who holds
a division or business unit office may also hold a corporate office or a
group office, or both.

SECTION 3.2

(a) Term and Removal of Officers of the Corporation. The term
of office of all officers shall be one year and until their respective
successors are elected and qualify, but any officer may be removed from
office, either with or without cause, at any time, by the affirmative
vote of a majority of the members of the Board of Directors then in
office.

(b) Term and Removal of Group and Division Officers. Group senior
vice presidents and division chairmen and presidents shall serve at the
pleasure of the Board of Directors. Group senior vice presidents and
division chairmen and presidents may be removed from office, either with
or without cause, at any time, by the Board of Directors. Other group
and division officers shall serve at the pleasure of the chief executive
officer of the corporation. Any other group or division officer may be
removed from office as a group or division officer, either with or
without cause, at any time, by the chief executive officer of the
corporation.

SECTION 3.3.

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

SECTION 3.4. Chief Executive Officer

The Chief Executive Officer may execute bonds, mortgages, and bills of
sale, assignments, conveyances, and all other contracts, except those required
by law to be otherwise signed and executed, or except when the signing and
execution thereof when permitted by law shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation. The
Chief Executive Officer shall be responsible to the Board of Directors for
planning and directing the business of the corporation and for initiating and
directing those actions essential to its profitable growth and development and
shall perform such other duties as may be assigned to him by the Board of
Directors.

SECTION 3.5. Chief Operating Officer

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

SECTION 3.6. President

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

SECTION 3.7. Chief Administrative Officer

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

SECTION 3.8. Vice Presidents

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

SECTION 3.9. General Counsel

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

SECTION 3.10. Secretary

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

SECTION 3.11. Treasurer

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

SECTION 3.12. Controller

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

SECTION 3.13. Other Officers

The other officers of the corporation shall have such powers and duties
as generally pertain to their respective offices as well as such powers and
duties as from time to time may be designated by the Board of Directors or by
the chief executive officer of the corporation.

SECTION 3.14. Voting Corporation's Securities

Unless otherwise ordered by the Board of Directors, the chief executive
officer or his or her delegate, or, in the event of his or her inability to
act, such other officer as may be designated by the Board of Directors to act
in the absence of the chief executive officer shall have full power and
authority on behalf of the corporation to attend and to act and to vote, and
to execute a proxy or proxies empowering others to attend and to act and to
vote, at any meetings of security holders of the corporations in which the
corporation may hold securities, and at such meetings the chief executive
officer or such other officer of the corporation, or such proxy, shall possess
and may exercise any and all rights and powers incident to the ownership of
such securities, and which as the owner thereof the corporation might have
possessed and exercised, if present. The Secretary or any Assistant Secretary
may affix the corporate seal to any such proxy or proxies so executed by the
chief executive officer or such other officer and attest the same. The Board
of Directors by resolution from time to time may confer like powers upon any
other person or persons.

ARTICLE IV

Indemnification of Directors, Officers and Employees

(a) Subject to the provisions of this Article IV, the
corporation shall indemnify the following persons to the fullest
extent permitted and in the manner provided by and the
circumstances described in the laws of the State of New Jersey,
including Section 14A:3-5 of the New Jersey Business Corporation
Act and any amendments thereof or supplements thereto: (i) any
person who is or was a director, officer, employee or agent of
the corporation; (ii) any person who is or was a director,
officer, employee or agent of any constituent corporation
absorbed by the corporation in a consolidation or merger, but
only to the extent that (a) the constituent corporation was
obligated to indemnify such person at the effective date of the
merger or consolidation or (b) the claim or potential claim of
such person for indemnification was disclosed to the corporation
and the operative merger or consolidation documents contain an
express agreement by the corporation to pay the same; (iii) any
person who is or was serving at the request of the corporation as
a director, officer, trustee, fiduciary, employee or agent of any
other domestic or foreign corporation, or any partnership, joint
venture, sole proprietorship, trust, employee benefit plan or
other enterprise, whether or not for profit; and (iv) the legal
representative of any of the foregoing persons (collectively, a
"Corporate Agent").

(b) Anything herein to the contrary notwithstanding, the
corporation shall not be obligated under this Article IV to
provide indemnification (i) to any bank, trust company, insurance
company, partnership or other entity, or any director, officer,
employee or agent thereof or (ii) to any other person who is not
a director, officer or employee of the corporation, in respect of
any service by such person or entity, whether at the request of
the corporation or by agreement therewith, as investment advisor,
actuary, custodian, trustee, fiduciary or consultant to any
employee benefit plan.

(c) To the extent that any right of indemnification granted
hereunder requires any determination that a Corporate Agent shall
have been successful on the merits or otherwise in any Proceeding
(as hereinafter defined) or in defense of any claim, issue or
matter therein, the Corporate Agent shall be deemed to have been
"successful" if, without any settlement having been made by the
Corporate Agent, (i) such Proceeding shall have been dismissed or
otherwise terminated or abandoned without any judgment or order
having been entered against the Corporate Agent, (ii) such claim,
issue or other matter therein shall have been dismissed or
otherwise eliminated or abandoned as against the Corporate Agent,
or (iii) with respect to any threatened Proceeding, the
Proceeding shall have been abandoned or there shall have been a
failure for any reason to institute the Proceeding within a
reasonable time after the same shall have been threatened or
after any inquiry or investigation that could have led to any
such Proceeding shall have been commenced. The Board of
Directors or any authorized committee thereof shall have the
right to determine what constitutes a "reasonable time" or an
"abandonment" for purposes of this paragraph (c), and any such
determination shall be conclusive and final.

(d) To the extent that any right of indemnification granted
hereunder shall require any determination that the Corporate
Agent has been involved in a Proceeding by reason of his or her
being or having been a Corporate Agent, the Corporate Agent shall
be deemed to have been so involved if the Proceeding involves
action allegedly taken by the Corporate Agent for the benefit of
the corporation or in the performance of his or her duties or the
course of his or her employment for the corporation.

(e) If a Corporate Agent shall be a party defendant in a
Proceeding, other than a Proceeding by or in the right of the
corporation, and the Board of Directors or a duly authorized
committee of disinterested directors shall determine that it is
in the best interests of the corporation for the corporation to
assume the defense of any such Proceeding, the Board of Directors
or such committee may authorize and direct that the corporation
assume the defense of the Proceeding and pay all expenses in
connection therewith without requiring such Corporate Agent to
undertake to pay or repay any part thereof. Such assumption shall
not affect the right of any such Corporate Agent to employ his or
her own counsel or to recover indemnification under this By-law
to the extent that he may be entitled thereto.

(f) As used herein, the term "Proceeding" shall mean and
include any pending, threatened or completed civil, criminal,
administrative or arbitrative action, suit or proceeding, and any
appeal therein and any inquiry or investigation which could lead
to such action, suit or proceeding.

(g) The right to indemnification granted under this Article
IV shall not be exclusive of any other rights to which any
Corporate Agent seeking indemnification hereunder may be
entitled.

ARTICLE V
Certificates of Stock

SECTION 5.1. Transfer of Shares

Stock of the corporation shall be transferable in accordance with the
provisions of Chapter 8 of the Uniform Commercial Code as adopted in New
Jersey (N.J.S. 12A:8-101, et seq.) as amended from time to time, except as
otherwise provided in the New Jersey Business Corporation Act.

SECTION 5.2. Transfer Agent and Registrar

The Board of Directors may appoint one or more transfer agents and one
or more registrars of transfers and may require all stock certificates to
bear the signatures of such transfer agent and registrar, one of which
signatures may be a facsimile.

SECTION 5.3. Fixing Record Date

For the purpose of determining the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or
to express consent to or dissent from any proposal without a meeting, or for
the purpose of determining shareholders entitled to receive payment of any
dividend or allotment of any right, or for the purpose of any other action,
the Board of Directors may fix, in advance, a date as the record date for any
such determination of shareholders. Such date shall not be more than 60 nor
less than ten days before the date of such meeting, nor more than 60 days
prior to any other action.

SECTION 5.4. Lost, Stolen or Destroyed Certificates

(a) Where a certificate for shares has been lost, apparently
destroyed, or wrongfully taken and the owner thereof fails to so notify
the corporation or the transfer agent of that fact within a reasonable
time after he has notice of it and the transfer agent or the corporation
registers a transfer of the shares before receiving such a notification,
the owner shall be precluded from asserting against the corporation any
claim for registering the transfer of such shares or any claim to a new
certificate.

(b) Subject to the foregoing, where the owner of shares claims that
the certificate representing shares has been lost, destroyed or
wrongfully taken, the corporation shall issue a new certificate in place
of the original certificate if the owner thereof requests the issue of
a new certificate before the corporation has notice that the certificate
has been acquired by a bona fide purchaser, makes proof in affidavit
form, satisfactory to the Secretary or Assistant Secretary of the
corporation and to its transfer agent, of his or her ownership of the
shares represented by the certificate and that the certificate has been
lost, destroyed or wrongfully taken; files an indemnity bond for an open
or unspecified amount or if authorized in a specific case by the
corporation, for such fixed amount as the chief executive officer, or a
Vice President, or the Secretary of the corporation may specify, in such
form and with such surety as may be approved by the transfer agent and
the Secretary or Assistant Secretary of the corporation, indemnifying the
corporation and the transfer agent and registrar of the corporation
against all loss, cost and damage which may arise from issuance of a new
certificate in place of the original certificate; and satisfies any
other reason- able requirements imposed by the corporation or transfer
agent. In case of the surrender of the original certificate, in lieu of
which a new certificate has been issued, or the surrender of such new
certificate, for cancellation, the bond of indemnity given as a condition
of the issuance of such new certificate may be surrendered.

ARTICLE VI
Miscellaneous

SECTION 6.l. Fiscal Year

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

SECTION 6.2. Corporate Seal

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

SECTION 6.3. Delegation of Authority

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

SECTION 6.4 Notices

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

ARTICLE VII
By-Laws and Their Amendments

Subject to the rights, if any, of the holders of any series of Preference
Stock then outstanding, the By-laws of the corporation shall be subject to
alteration, amendment or repeal, and new By-laws not inconsistent with any
provisions of the Certificate of Incorporation and not inconsistent with the
laws of the State of New Jersey may be made, either by the affirmative vote of
a majority of the votes cast at any annual or special meeting of shareholders
by the holders of shares entitled to vote thereon, or, except with respect to
By-laws adopted by the shareholders of the corporation which by their terms
may not be altered, amended or repealed by the Board of Directors, by the
affirmative vote of a majority of the whole Board of Directors at any regular
or special meeting of the Board of Directors.

ARTICLE VIII
National Emergency

For the purpose of this Article VIII a national emergency is hereby
defined as any period following an enemy attack on the continental United
States of America or any nuclear or atomic disaster as a result of which and
during the period that communication or the means of travel among states in
which the corporation's plants or offices are disrupted or made uncertain or
unsafe. Persons not directors of the corporation may conclusively rely upon
a determination by the Board of Directors of the corporation, at a meeting held
or purporting to be held pursuant to this Article VIII that a national
emergency as hereinabove defined exists regardless of the correctness of
such determination. During the existence of a national emergency under the
foregoing provisions of this Article VIII the following provisions shall
become operative but no other provisions of these By-laws shall become
inoperative in such event unless directly in conflict with this Article VIII
or action taken pursuant hereto:

(a) When it is determined in good faith by any director that a
national emergency exists, special meetings of the Board of Directors may
be called by such director and at any such special meeting two directors
shall constitute a quorum for the transaction of business including
without limiting the generality hereof the filling of vacancies among
directors and officers of the corporation and the election of additional
officers. The act of a majority of the directors present thereat shall
be the act of the Board of Directors. If at any such special meeting of
the Board of Directors there shall be only one director present such
director present may adjourn the meeting from time to time until a quorum
is obtained, and no further notice thereof need be given of any such
adjournment. The director calling any such special meeting shall make a
reasonable effort to notify all other directors of the time and place of
such special meeting, and such effort shall be deemed to constitute the
giving of reasonable notice of such special meeting and every director
shall be deemed to have waived any requirement, of law or otherwise, that
any other notice of such special meeting be given. The directors present
at any such special meeting shall make reasonable effort to notify all
absent directors of any action taken thereat, but failure to give such
notice shall not affect the validity of the action taken at any such
meeting. Any action taken at any such special meeting may be
conclusively relied upon by all directors, officers, employees, and
agents of, and all persons dealing with, the corporation.

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

EXHIBIT 12
<TABLE>
<CAPTION>
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

For the Years Ended December 31
Amounts in Thousands

1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense before capitalization credits... $ 9,263 $ 11,396 $ 10,699 $ 10,187 $ 10,441
Amortization of financing costs.................. 164 109 114 115 116
One-third of rental expense...................... 9,663 9,532 10,393 7,375 7,190
Total fixed charges........................... $ 19,090 $ 21,037 $ 21,206 $ 17,677 $ 17,747

Net earnings....................................... 188,595 166,240 97,976 88,229 90,980
Provisions for income taxes........................ 96,985 92,181 47,930 36,993 39,746
Fixed charges...................................... 19,090 21,037 21,206 17,677 17,747
Capitalized interest credits....................... (627) (297) (878) (1,016) (673)
Amortization of capitalized interest............... 674 1,031 997 882 792
Earnings before income taxes as adjusted......... $304,717 $280,192 $167,231 $142,765 $148,592

Ratio of earnings to fixed charges................. 16.0 13.3 7.9 8.1 8.4

</TABLE>

VULCAN MATERIALS COMPANY
1996 ANNUAL REPORT

<TABLE>
<CAPTION>
FINANCIAL REVIEW-SELECTED FINANCIAL DATA
Amounts and shares in millions, except per share data

1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Operations
Net sales............................................ $1,568.9 $1,461.0 $1,253.4 $1,133.5 $1,078.0
Gross profit on sales................................ $ 453.5 $ 416.3 $ 268.2 $ 246.7 $ 249.1
As a percent of net sales.......................... 28.9% 28.5% 21.4% 21.8% 23.1%
Interest expense..................................... $ 8.6 $ 11.1 $ 9.8 $ 9.2 $ 9.8
Net earnings before cumulative effect of
accounting change.................................. $ 188.6 $ 166.2 $ 98.0 $ 88.2 $ 91.0
As a percent of average shareholders' equity..... 22.4% 21.9% 13.6% 12.8% 13.3%
Cumulative effect ofaccounting change................ $ - $ - $ - $ - $ 3.0
Net earnings......................................... $ 188.6 $ 166.2 $ 98.0 $ 88.2 $ 94.0
Primary and fully diluted earnings per common share:
Net earnings before cumulative effect of
accounting change................................ $ 5.36 $ 4.63 $ 2.67 $ 2.39 $ 2.41
Cumulative effect of accounting change............. $ - $ - $ - $ - $ .08
Net earnings....................................... $ 5.36 $ 4.63 $ 2.67 $ 2.39 $ 2.49
Effective tax rate................................... 34.0% 35.7% 32.8% 29.5% 30.4%
Operating income after taxes......................... $ 194.4 $ 173.4 $ 104.5 $ 93.3 $ 98.7
As a percent of average capital employed........... 17.8% 16.6% 10.5% 9.7% 10.3%

LIQUIDITY AND CAPITAL RESOURCES
Working capital...................................... $ 199.4 $ 184.7 $ 125.5 $ 161.8 $ 169.8
Current ratio........................................ 2.0 2.0 1.6 2.1 2.3
Net cash provided by continuing operations........... $ 346.4 $ 267.4 $ 209.2 $ 194.1 $ 199.1
As a percent of long-term obligations (year-end)... 405.1% 296.1% 214.8% 190.2% 185.6%
Ratio of earnings to fixed charges................... 16.0 13.3 7.9 8.1 8.4
Total assets (year-end).............................. $1,320.6 $1,215.8 $1,181.1 $1,078.6 $1,083.9
Average capital employed:
Short-term debt.................................... $ 14.1 $ 45.6 $ 39.4 $ 25.2 $ 24.1
Long-term obligations.............................. 86.9 93.3 99.1 105.6 108.2
Other noncurrent liabilities....................... 152.9 144.7 135.0 140.4 138.4
Shareholders' equity............................... 840.2 758.6 719.6 691.7 686.5
Total............................................ $1,094.1 $1,042.2 $ 993.1 $ 962.9 $ 957.2

Long-term obligations (year-end)..................... $ 85.5 $ 90.3 $ 97.4 $ 102.0 $ 107.3
As a percent of long-term capital................. 7.6% 8.7% 10.0% 10.9% 11.3%
Dividends declared and paid per common share......... $ 1.68 $ 1.46 $ 1.32 $ 1.26 $ 1.20
Total common stock dividends......................... $ 58.4 $ 51.8 $ 48.1 $ 46.3 $ 45.1
Common shares outstanding (year-end)................. 34.2 35.0 35.9 36.3 37.2
</TABLE>

<TABLE>
<CAPTION>
SEGMENT FINANCIAL DATA
Amount Percent of Company Total
Amounts in millions 1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES
Construction Materials............ $ 961.9 $ 884.7 $ 842.9 $ 756.7 $ 686.4 61% 61% 67% 67% 64%
Chemicals......................... 607.0 576.3 410.5 376.8 391.6 39 39 33 33 36
Total.......................... $1,568.9 $1,461.0 $1,253.4 $1,133.5 $1,078.0 100% 100% 100% 100% 100%

EARNINGS (LOSS) BEFORE INTEREST
EXPENSE AND INCOME TAXES
Construction Materials............ $ 197.3 $ 181.5 $ 162.5 $ 116.7 $ 88.3 67% 67% 104% 87% 63%
Chemicals......................... 94.7 87.8 (7.3) 17.4 51.3 32 33 (5) 13 36
Segment earnings.................. 292.0 269.3 155.2 134.1 139.6 99 100 99 100 99
Interest income, etc.............. 2.2 .2 .5 .3 .9 1 - 1 - 1
Total........................... $ 294.2 $ 269.5 $ 155.7 $ 134.4 $ 140.5 100% 100% 100% 100% 100%

OPERATING INCOME (LOSS)
AFTER TAXES
Construction Materials............ $ 134.9 $ 120.6 $ 108.8 $ 81.6 $ 65.3 69% 70% 104% 87% 66%
Chemicals......................... 58.0 52.7 (4.7) 11.5 32.7 30 30 (4) 12 33
Interest income, etc.............. 1.5 .1 .4 .2 .7 1 - - 1 1
Total........................... $ 194.4 $ 173.4 $ 104.5 $ 93.3 $ 98.7 100% 100% 100% 100% 100%

NET CASH PROVIDED BY
CONTINUING OPERATIONS
Construction Materials............ $ 219.8 $ 182.9 $ 182.5 $ 156.6 $ 141.9 64% 68% 87% 81% 71%
Chemicals......................... 128.8 90.8 31.5 41.1 63.8 37 34 15 21 32
Interest expense, interest
income, etc., net............... (2.2) (6.3) (4.8) (3.6) (6.6) (1) (2) (2) (2) (3)
Total......................... $ 346.4 $ 267.4 $ 209.2 $ 194.1 $ 199.1 100% 100% 100% 100% 100%

PROPERTY ADDITIONS
Construction Materials............ $ 124.1 $ 94.4 $ 69.3 $ 59.3 $ 56.5 66% 75% 43% 59% 57%
Chemicals......................... 63.1 31.2 90.5 41.3 42.0 34 25 57 41 43
Total........................... $ 187.2 $ 125.6 $ 159.8 $ 100.6 $ 98.5 100% 100% 100% 100% 100%

DEPRECIATION, DEPLETION AND
AMORTIZATION
Construction Materials............ $ 75.2 $ 72.0 $ 72.8 $ 74.3 $ 75.5 67% 65% 68% 72% 73%
Chemicals......................... 37.4 38.7 33.9 28.5 27.8 33 35 32 28 27
Total........................... $ 112.6 $ 110.7 $ 106.7 $ 102.8 $ 103.3 100% 100% 100% 100% 100%

AVERAGE CAPITAL EMPLOYED
Construction Materials............ $ 710.6 $ 681.5 $ 688.1 $ 707.4 $ 708.4 65% 65% 69% 73% 74%
Chemicals......................... 356.0 353.9 294.0 248.5 226.4 33 34 30 26 24
Cash items........................ 27.5 6.8 11.0 7.0 22.4 2 1 1 1 2
Total........................... $1,094.1 $1,042.2 $ 993.1 $ 962.9 $ 957.2 100% 100% 100% 100% 100%

OPERATING INCOME (LOSS)
AFTER TAXES AS A PERCENT
OF AVERAGE CAPITAL EMPLOYED
Construction Materials............ 19.0% 17.7% 15.8% 11.5% 9.2%
Chemicals......................... 16.3 14.9 (1.6) 4.6 14.5
Interest income, etc.............. 5.3 1.9 3.4 3.0 3.0
Total........................... 17.8% 16.6% 10.5% 9.7% 10.3%
<FN>
Definitions of certain financial terms used in this report are provided on page 40.
</TABLE>

<TABLE>
<CAPTION>
COMMON STOCK MARKET PRICES AND DIVIDENDS

Range of Common Stock Market Prices Dividend Paid Per Share
1996 1995

Quarter Ended High Low High Low 1996 1995
<S> <C> <C> <C> <C> <C> <C>
March 31............. $58 1/4 $53 1/8 $57 5/8 $48 1/8 $ .42 $ .365
June 30.............. 59 3/8 55 3/8 58 3/4 54 .42 .365
September 30......... 66 1/2 54 1/2 60 3/8 51 3/4 .42 .365
December 31.......... 65 59 1/2 58 7/8 52 1/2 .42 .365
$1.68 $1.46
</TABLE>

The Company's common stock is traded on the New York Stock Exchange (ticker
symbol VMC). As of January 31, 1997, the number of shareholders of record
approximated 4,000.

Dividends paid in 1996 totaled $58,399,000 as compared with $51,848,000
paid in 1995. On February 14, 1997, the Board of Directors authorized a
quarterly dividend of 47 cents per common share payable March 10, 1997. The
new quarterly dividend represents a 12% increase over quarterly dividends paid
in 1996.

During the last five years, the Company's dividend payout rate has averaged
28% of prior year free funds flow. The Company's policy is to pay out a
reasonable share of free funds flow as dividends, consistent on average with
the payout record of past years, and consistent with the goal of maintaining
debt ratios within prudent and generally acceptable limits. Additionally,
management believes that purchases of the Company's stock frequently may
represent an attractive long-term investment. Management intends to continue
buying shares when appropriate based on prevailing market conditions and based
on the Company's cash position and long-term capital requirements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION

Vulcan is the largest producer of construction aggregates in the United States
and is one of the nation's leading producers of chemicals. The following is a
discussion and analysis of the results of operations and the financial
condition of the Company. The discussion and analysis should be read in
connection with the historical financial information included in the
Consolidated Financial Statements and their notes.

RESULTS OF OPERATIONS
Vulcan's 1996 sales, net earnings and earnings per share were at record
levels. Net earnings were $188.6 million, or $5.36 per share, as compared
with 1995 net earnings and earnings per share of $166.2 million and $4.63,
respectively. Sales in 1996 were $1.569 billion, up from the 1995 total of
$1.461 billion. Pretax earnings totaled $285.6 million, up 11% from last
year's amount of $258.4 million.

CONSTRUCTION MATERIALS
1996 vs. 1995
For the fourth consecutive year, Construction Materials sales surpassed
previous records. Net sales for 1996 totaled $961.9 million, up 9% from the
1995 result of $884.7 million. The 1996 result reflects a 7% increase in
shipments and a 3% rise in the average unit selling price of crushed stone,
the segment's principal product. Of the total increase in sales of $77.2
million, $54.4 million was related to increased volume and $22.8 million was
due to higher prices.

Segment earnings of $197.3 million, which are before interest expense and
income taxes, also were at a record level and were up 9% from 1995's record
level of $181.5 million. Results for 1996 include pretax gains totaling
approximately $5.2 million from the sale of assets, primarily surplus land,
as compared to the 1995 total of $16.5 million. When gains referable to asset
sales are excluded from both years' results, 1996 earnings were 16% better
than 1995 due principally to higher crushed stone shipments and improved
prices. The favorable effects of higher volume and prices were partially
offset by higher operating costs due mainly to the full-year impact of new
operations.

1995 vs. 1994
Construction Materials sales in 1995 were at a record level of $884.7 million,
up 5% from the 1994 result of $842.9 million. The improvement reflected a 3%
increase in shipments and a 5% rise in the average unit selling price of
crushed stone. Of the total increase in sales of $41.8 million, $13.0 million
was related to increased volume and $28.8 million was due to higher prices.

Segment earnings of $181.5 million also were at a record level and were up
12% from 1994's record level of $162.5 million. The improvement reflected
better operating results as well as significant gains from asset sales,
primarily surplus land. The favorable effects of higher volume and prices were
partially offset by higher operating costs. The cost increases were due mainly
to the development of several new quarry sites and a significant project to
redesign the segment's procurement process. For the year, gains from the sale
of assets, primarily surplus land, were $16.5 million as compared with 1994
gains of $7.6 million. The 1994 amount included a gain from the sale of the
Company's industrial sand operation in Brady, Texas which had been operated
jointly by the Construction Materials and Chemicals segments. Accordingly, the
gain resulting from the sale of the business was shared equally by the two
segments. The Construction Materials segment's $2.1 million share of the
pretax gain was offset by provisions associated with the shutdown of an
operating facility.

CHEMICALS
1996 vs. 1995
Record 1996 sales of $607.0 million were up 5% from the 1995 level of $576.3
million. Excluding the effects of 1995 and 1996 acquisitions from both years'
results, 1996 sales were effectively even with the prior year. Sales for
Performance Systems increased due to the impact of recent acquisitions as well
as internal growth. Sales for the Chloralkali Business Unit were virtually
unchanged from 1995 as the effect of lower caustic soda prices was offset by
higher revenues from chlorinated organic products and other inorganic
products.

Segment earnings reached a record of $94.7 million in 1996 as compared to
$87.8 million in 1995. The increase reflects improved earnings in the
Performance Systems Business Unit. Earnings for the Chloralkali Business Unit
were even with results reported for 1995. Chloralkali results in 1995 included
a $7.1 million pretax charge referable to the Company's suspended joint
venture soda ash project, as well as a $3.5 million charge for environmental
remediation at the Cleve Reber Superfund site. Chloralkali operating earnings
declined in 1996 due to the decline in caustic soda prices, as well as higher
costs referable to energy and plant maintenance. These effects were partially
offset by higher earnings from chlorinated organic products.

In 1996, the Company's Chemicals segment completed several acquisitions
through its Performance Systems Business Unit, all with a focus on niche
markets in the water management, textile, industrial cleaning, food
processing, mining, and pulp and paper industries. The most significant of
these was the acquisition of Mayo Chemical Company during the second quarter.
These acquisitions contributed $22.0 million in sales during 1996.

1995 vs. 1994
In 1995, Chemicals sales of $576.3 million increased 40% from the 1994 level
of $410.5 million. The increase was due to the recovery in caustic soda
prices, higher prices for chlorinated organic products and the effects of
acquisitions. The $165.8 million increase in sales reflected $53.1 million
due to the effect of higher volume and $112.7 million due to higher prices.
Excluding the effects of the Callaway Chemical acquisition on August 1, 1994
and the Rio Linda acquisition on June 1, 1995, sales increased 27%.

Segment earnings were $87.8 million in 1995 as compared to a loss of $7.3
million in 1994. The increase reflected the effects of higher selling prices
for caustic soda and chlorinated organic products. This was partially offset
by higher raw material and maintenance costs. The 1995 results included a $7.1
million pretax charge referable to the Company's suspended joint venture soda
ash project at Owens Lake, California and a $3.5 million environmental
remediation provision. The loss in 1994 included that year's $7.0 million
charge for environmental remediation and the Chemicals $2.1 million share of
the gain on the sale of the industrial sand business.

ENVIRONMENTAL ISSUES
In 1991 the Environmental Protection Agency ("EPA") issued a unilateral
administrative order which directed the named respondents, including the
Company and other potentially responsible parties ("PRPs"), to clean up a
now-closed third party waste disposal site to which the Chemicals segment last
shipped waste materials in 1970. During the years 1986 through 1989, the
Company recorded provisions totaling $28.8 million for environmental
remediation at this site. In 1995 and 1994, the Company recorded additional
provisions of $3.5 million and $7.0 million, respectively, for remedial
actions at this site, for total provisions of $39.3 million. During 1996, the
Company and the other participating PRPs completed all activities relating to
site remediation, with the exception of ongoing operation and maintenance of
the remedy. The EPA anticipates conducting its five-year review of site
conditions mid-year 1998. If site conditions are satisfactory based on that
review, the site will be removed from the National Priority List of Superfund
sites. The Company believes that total provision

In 1987 the Company discontinued its Metals segment and recorded a loss on
disposal that reflected provisions for phaseout costs, including the estimated
cost of contractual liabilities associated with remediation of environmental
conditions at several Metals plants. An additional provision for estimated
remediation costs was recorded in 1989. The Company has made significant
progress in addressing these contractual liabilities by completing several
environmental remediation projects at certain of these Metals plants.
Expenditures for these projects were within recorded provisions. While the
Company believes its recorded provisions are adequate to address the remainder
of these contractual liabilities and other liabilities associated with these
operations, factors that might impact the adequacy of provisions include the
results of further environmental testing, engineering analyses and planning,
and negotiations among interested parties.

SELLING, ADMINISTRATIVE AND GENERAL
Selling, administrative and general expenses of $175.1 million in 1996
increased 10% from the 1995 level of $159.8 million. This reflects principally
the impact of Chemicals acquisitions and expenses referable to a significant
project to redesign Construction Materials procurement process. In 1995
selling, administrative and general expenses were up 28% from the 1994 level.
This increase principally reflects the effects of acquisitions by the
Chemicals segment, and, to a lesser extent, higher provisions for incentive
plans and professional fees.

INCOME TAXES
The Company's 1996 effective tax rate was 34.0%, down from the 1995 rate of
35.7%. The decrease reflects principally adjustments to close out provisions
referable to completed tax audits for prior years, as well as the effect of
statutory depletion due to relatively higher Construction Materials earnings.

The effective tax rate increased in 1995 from the 1994 rate of 32.8%. The
increase reflects principally the relatively greater impact of higher
Chemicals earnings which diluted the effect on the tax rate of statutory
depletion referable to construction aggregates production.

1997 OUTLOOK
With regard to 1997, the Company's starting point is the assumption that
moderate growth in GDP and stable interest rates will continue to provide a
healthy economic environment for construction activity in the U.S. The market
for construction aggregates should remain strong, overall. Demand in all major
construction end-use markets should equal or exceed their 1996 levels, with
the exception of residential construction, which is expected to decline
modestly. Based on this outlook, 1997 earnings in the Construction Materials
segment should equal or exceed 1996's record result.

As for the Chemicals business, 1996 was another outstanding year, despite
the significant decrease in caustic soda prices during the second half of the
year. Progress continued in developing the Performance Systems Business Unit.
During 1996, the Performance Systems Business Unit contributed to the
improvement in earnings from 1995 and this trend is expected to continue in
1997, reflecting demand growth and further progress in integrating the Unit's
recent acquisitions. Current market conditions in the Chloralkali Business
Unit are mixed. The outlook for caustic soda prices remains uncertain and
comparisons to 1996 are likely to be significantly unfavorable, particularly
in the first half of 1997. Also, energy and maintenance costs are expected to
be higher. On the other hand, continuing strong demand for chlorinated organic
products should mitigate the adverse impact of these factors. Overall, for the
Chemicals segment as a whole, earnings are expected to be down from 1996's
record performance.

The Company's 1996 effective tax rate benefited from adjustments to close
out provisions referable to completed tax audits for prior years. Additional
tax audits are expected to be closed out in 1997 and the effective tax rate
currently is projected to be slightly lower than 1996's rate.

Taking all of the current expectations into account, there is a good chance
that the Company's 1997 net earnings and earnings per share will equal 1996's
record results. If the upper range of the Company's outlook prevails, 1997
earnings should be at a record level.

LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Net cash provided by continuing operations amounted to $346.4 million in 1996,
up 30% from 1995's total of $267.4 million. Net cash provided by the
Construction Materials segment increased 20% to $219.8 million, while net cash
provided by the Chemicals segment rose $38.0 million, or 42%, to $128.8
million. The Company's long-standing ability to generate significant cash
flows enabled it to fund capital requirements internally, reduce long-term
debt, and return $103.6 million to shareholders through dividends and share
purchases.

Net cash provided by operations for each segment in each of the last three
years, including the effect of working capital changes, is summarized below
(amounts in millions):

1996 1995 1994
Construction Materials............. $219.8 $182.9 $182.5
Chemicals.......................... 128.8 90.8 31.5
Interest expense, interest
income, etc., net................ (2.2) (6.3) (4.8)
Total.......................... $346.4 $267.4 $209.2

Net cash used for investing activities totaled $205.8 million in 1996, up
$99.4 million from the 1995 level. Cash expenditures for property, plant and
equipment, including acquisitions, were $216.5 million in 1996, up $80.2
million. Cash spending for acquisitions totaled $64.8 million compared with
$27.2 million in 1995.

Net cash used for financing activities amounted to $110.8 million in 1996,
down $35.1 million from the prior year's $145.9 million. Interest-bearing debt
was reduced $7.2 million in 1996 compared with a net decrease of $43.9 million
in 1995. No long-term debt was issued during 1996 or 1995. Purchases of the
Company's common stock totaled $45.2 million in 1996, down $4.9 million from
the 1995 level of $50.1 million.

The Company's policy is to pay out a reasonable share of free funds flow as
dividends consistent, on average, with the payout record of past years, and
consistent with the goal of maintaining debt ratios within prudent and
generally acceptable limits. Additionally, management believes that purchases
of the Company's stock frequently may represent an attractive long-term
investment. Management intends to continue buying shares when appropriate
based on prevailing market conditions and based on the Company's cash position
and long-term capital requirements.

WORKING CAPITAL
Working capital, exclusive of debt and cash items (cash, cash equivalents and
short-term investments), totaled $158.1 million at December 31, 1996, down
$16.7 million from the 1995 level. This decrease compares with increases of
$8.2 million and $15.7 million in 1995 and 1994, respectively.

The Company's overall position is summarized below (dollar amounts in
millions as of year-end):

1996 1995 1994
Working capital, exclusive of
debt and cash items.............. $158.1 $174.8 $166.6
Cash and cash equivalents.......... 50.8 21.9 7.7
Short-term debt (including
current maturities).............. (8.3) (10.6) (47.5)
Accrued interest................... (1.2) (1.4) (1.3)
Total working capital
(including debt and
cash items).................. $199.4 $184.7 $125.5

Current ratio...................... 2.0 2.0 1.6
Acid test ratio.................... 1.2 1.1 .9

The current ratio remained unchanged in 1996. The increase in the current
ratio from 1994 to 1995 is attributable to a reduced need for short-term
borrowing, $3.6 million at year end 1995 as compared with $42.8 million at
December 31, 1994.

PROPERTY ADDITIONS
Property additions, including acquisitions, totaled $187.2 million in 1996,
up 49% from the 1995 level of $125.6 million. As explained on page 40, the
Company classifies its property additions into three categories based upon the
predominant purpose of the project.

The table below summarizes property additions by each category (amounts
in millions):

Project Purpose 1996 1995 1994
Replacement....................... $ 84.5 $ 69.0 $ 53.0
Environmental control............. 9.9 8.4 3.9
Subtotal....................... 94.4 77.4 56.9
Profit adding:
Acquisitions................... 33.9 12.3 58.1
Other.......................... 58.9 35.9 44.8
Subtotal....................... 92.8 48.2 102.9
Total....................... $187.2 $125.6 $159.8

Total property additions were significantly higher in 1996 due primarily
to increased spending on profit-adding projects. This includes several
acquisitions by Chemicals Performance Systems Business Unit, the most
significant of which was the acquisition of Mayo Chemical Company during the
second quarter. The Construction Materials segment also completed several
acquisitions during the year. These included stone quarries in Alabama,
Arkansas and Texas, an aggregates distribution facility in northern Illinois,
and an aggregates distribution business in Louisana. Also, significant
spending occurred on a greenfield site in Alabama, a new lime production
facility in Illinois, a second stone distribution facility in northern
Illinois and plant rebuilds in Tennessee and North Carolina. The decrease
in property additions in 1995 reflects principally lower spending for
acquisitions.

Commitments for capital expenditures were $23.2 million at December 31,
1996. This included $9.8 million referable to various Chemicals projects.
Cash flow for the next year is expected to be adequate to cover commitments.

SHORT-TERM BORROWINGS AND INVESTMENTS
During most of the years 1994 through 1996, the Company was in a net
short-term borrowing position. Short-term borrowings in 1996 reached a maximum
of $48.2 million, averaged $9.7 million and were $3.3 million at year end.
Comparable 1995 amounts were $93.9 million, $41.8 million and $3.6 million,
respectively.

Details pertaining to short-term borrowings during the last three years
(amounts in millions) are as follows:

1996 1995 1994
Year-end.......................... $ 3.3 $ 3.6 $42.8
Maximum outstanding............... $48.2 $93.9 $91.7
Average outstanding............... $ 9.7 $41.8 $36.0
Weighted average interest rate.... 5.4% 6.1% 4.8%

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 $130.0 million were maintained
at the end of 1996. 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.

The investment of excess cash during the last three years (amounts in
millions) is shown below:

1996 1995 1994
Year-end.......................... $43.6 $16.0 $ -
Maximum invested.................. $ 4.8 $45.0 $45.1
Average invested.................. $26.7 $ 3.5 $ 7.7
Taxable-equivalent yield.......... 5.8% 6.2% 4.0%

LONG-TERM OBLIGATIONS
During 1996 the Company reduced its total long-term obligations by $4.8
million to $85.5 million as compared with a net decrease of $7.1 million in
1995. During the three-year period ended December 31, 1996, long-term
obligations decreased cumulatively by $16.5 million from the $102.0 million
outstanding at December 31, 1993.

During the same three year period, shareholders' equity, net of common stock
purchases of $123.9 million and dividends of $158.4 million, increased by
$180.7 million to $883.7 million. The Company's overall long-term capital
position is shown in the following table (dollar amounts in millions as of
year-end):

1996 1995 1994
Long-term debt.................... $ 85.5 $ 90.3 $ 97.4
Other noncurrent liabilities...... 156.8 151.5 140.8
Shareholders' equity.............. 883.7 796.6 731.6
Total long-term capital......... $1,126.0 $1,038.4 $969.8

Long-term debt
as a percent of:
Total long-term capital....... 7.6% 8.7% 10.0%
Shareholders' equity.......... 9.7% 11.3% 13.3%
Net cash provided by
continuing operations as a
percent of long-term debt....... 405% 296% 215%
Ratio of earnings to
fixed charges................... 16.0 13.3 7.9

In the future, the ratio of long-term debt to total long-term capital will
depend upon specific investment and financing decisions. Nonetheless,
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 1996 was 7.6%. The Company
has made acquisitions from time to time and will continue actively to pursue
attractive investment opportunities. If financing is required for this
purpose, it may be accomplished either 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. The Company's medium-term notes
issued in 1991 are rated AA- by Standard & Poor's and A1 by Moody's.

COMMON STOCK
During 1996 the Company purchased 765,400 shares of its common stock at a cost
of $45.2 million, equal to an average price of $59.03 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.

The number and cost of shares purchased during each of the last three years
is shown below:

1996 1995 1994
Shares purchased:
Number.......................... 765,400 947,908 603,700
Total cost (millions)........... $ 45.2 $ 50.1 $ 28.6
Average cost.................... $59.03 $52.90 $47.39
Shares in treasury at year-end:
Number........................ 12,332,047 11,602,590 10,666,952
Average cost.................. $38.73 $37.34 $35.93

The number of shares remaining under the current purchase authorization was
834,392 shares as of December 31, 1996. On February 14, 1997, the Company's
Board of Directors increased the authorization to 4,000,000 shares, which
represents 11.7% of shares outstanding as of year-end 1996.

CAPITAL EMPLOYED
During 1996 total average capital employed in continuing operations was
$1,094.1 million, up $51.9 million from the 1995 average of $1,042.2 million.
The latter figure reflects an increase of $49.1 million, or 5%, from the
$993.1 million employed on average in 1994. Average capital employed in the
Company's business segments is shown in the table below (amounts in
millions):

1996 1995 1994
Construction Materials............ $ 710.6 $ 681.5 $688.1
Chemicals......................... 356.0 353.9 294.0
Cash items........................ 27.5 6.8 11.0
Total........................... $1,094.1 $1,042.2 $993.1

The sources and deployment of the year-to-year increases in total average
capital employed are shown below (amounts in millions; parenthesis indicate
a decrease):

1995-96 1994-95
Sources:
Short-term debt................. $(31.5) $ 6.2
Long-term obligations........... (6.4) (5.8)
Other noncurrent liabilities.... 8.2 9.7
Shareholders' equity............ 81.6 39.0
Total......................... $ 51.9 $49.1
Deployment:
Construction Materials.......... $ 29.1 $(6.6)
Chemicals....................... 2.1 59.9
Cash items...................... 20.7 (4.2)
Total......................... $ 51.9 $49.1

During the period 1992 through 1996, total average capital employed in
continuing operations grew at an average annual compound rate of 2.5%, or by
the cumulative amount of $116.5 million. During this period, interest-bearing
debt decreased by $38.2 million and, as a percent of average capital employed,
decreased from 14.2% to 9.2%.

The following summary indicates the sources and deployment of the increase
in average capital employed from 1992 to 1996 (amounts in millions):

Amount
of Increase % of
(Decrease) Total
Sources:
Short-term debt................. $(58.6) (50)%
Long-term obligations........... 20.4 17
Other noncurrent liabilities.... (2.8) (2)
Shareholders' equity............ 157.5 135
Total......................... $116.5 100 %
Deployment:
Construction Materials.......... $(37.8) (32)%
Chemicals....................... 129.9 111
Cash items...................... 24.4 21
Total......................... $116.5 100 %

<TABLE>
<CAPTION>
SUPPLEMENTARY INFORMATION-QUARTERLY FINANCIAL DATA

First Second Third Fourth Full
Amounts in millions, except per share data Quarter Quarter Quarter Quarter Year
1996
<S> <C> <C> <C> <C> <C>
Net sales............................................. $308.5 $419.2 $443.6 $397.6 $1,568.9
Gross profit on sales................................. 70.1 129.3 139.6 114.5 453.5
Net earnings.......................................... 20.1 58.6 62.1 47.8 188.6
Primary and fully diluted earnings per share.......... .57 1.65 1.77 1.37 5.36

1995
Net sales............................................. $294.4 $382.8 $422.0 $361.8 $1,461.0
Gross profit on sales................................. 58.8 113.2 133.8 110.5 416.3
Net earnings.......................................... 6.0 47.7 59.1 43.4 166.2
Primary and fully diluted earnings per share.......... .44 1.32 1.64 1.23 4.63

1994
Net sales............................................. $216.9 $326.7 $360.4 $349.4 $1,253.4
Gross profit on sales................................. 21.0 77.4 90.4 79.4 268.2
Net earnings (loss)................................... (5.2) 33.7 37.6 31.9 98.0
Primary and fully diluted earnings (loss) per share... (.14) .92 1.02 .87 .67

</TABLE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS Vulcan Materials Company and Subsidiary Companies

For the Years Ended December 31, 1996, 1995 and 1994
Amounts and shares in thousands, except per share data 1996 1995 1994

<S> <C> <C> <C>
Net sales................................................ $1,568,945 $1,460,974 $1,253,360
Cost of goods sold....................................... 1,115,442 1,044,710 985,198
Gross profit on sales.................................... 453,503 416,264 268,162
Selling, administrative and general expenses............. 175,128 159,829 125,036
Other operating costs.................................... 3,887 6,347 5,526
Other income, net
Interest income........................................ 3,179 1,099 1,224
Other, net............................................. 16,549 18,333 16,903
Total other income, net.............................. 19,728 19,432 18,127

Earnings before interest expense and income taxes........ 294,216 269,520 155,727
Interest expense (Note 4)................................ 8,636 11,099 9,821
Earnings before income taxes............................. 285,580 258,421 145,906
Provision for income taxes (Note 7)
Current................................................ 95,443 86,437 41,339
Deferred............................................... 1,542 5,744 6,591
Total provision for income taxes..................... 96,985 92,181 47,930
Net earnings............................................. $ 188,595 $ 166,240 $ 97,976

Primary and fully diluted net earnings per share......... $5.36 $4.63 $2.67
Dividends per share...................................... $1.68 $1.46 $1.32
Average common and common equivalent
shares outstanding..................................... 35,173 35,933 36,683

<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS Vulcan Materials Company and Subsidiary Companies

As of December 31, 1996, 1995 and 1994
Amounts in thousands, except per share data 1996 1995 1994

<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents (Note 2)..................... $ 50,816 $ 21,869 $ 7,717
Accounts and notes receivable:
Customers, less allowance for doubtful accounts:
1996, $8,106; 1995, $8,176; 1994, $8,244........... 176,864 170,757 170,954
Other................................................ 8,671 10,303 11,174
Inventories (Note 3)................................... 128,578 126,801 112,481
Deferred income taxes (Note 7)......................... 23,474 26,555 29,074
Prepaid expenses....................................... 5,642 5,836 5,398
Total current assets.............................. 394,045 362,121 336,798
Investments and long-term receivables.................... 61,274 56,272 58,138
Property, plant and equipment, net (Note 4).............. 764,490 698,033 701,757
Deferred charges and other assets (Note 8, 14)........... 100,836 99,368 84,451

Total............................................. $1,320,645 $1,215,794 $1,181,144

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt................... $ 5,021 $ 7,070 $ 4,687
Notes payable (Note 2)................................. 3,289 3,569 42,779
Trade payables and accruals............................ 98,528 98,253 102,394
Accrued income taxes................................... 29,606 22,262 19,423
Accrued salaries and wages............................. 38,253 28,658 23,068
Accrued interest....................................... 1,221 1,300 1,415
Other accrued liabilities (Note 9)..................... 18,736 16,297 17,582
Total current liabilities......................... 194,654 177,409 211,348
Long-term debt (Note 5).................................. 85,535 90,278 97,380
Deferred income taxes (Note 7)........................... 86,968 85,935 82,507
Deferred management incentive and
other compensation (Note 9)............................ 26,251 26,618 21,575
Other postretirement benefits (Note 8)................... 36,222 32,717 29,835
Other noncurrent liabilities (Note 10)................... 7,351 6,199 6,870
Other commitments and contingent liabilities (Note 10)...
Shareholders' equity.....................................
Common stock, $1 par value............................. 46,573 46,573 46,573
Capital in excess of par value......................... 10,344 9,089 8,585
Retained earnings...................................... 1,304,367 1,174,171 1,059,779
Total............................................. 1,361,284 1,229,833 1,114,937
Less cost of stock in treasury......................... 477,620 433,195 383,308
Total shareholders' equity........................ 883,664 796,638 731,629
Total............................................. $1,320,645 $1,215,794 $1,181,144

<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>

CONSOLIDATED STATEMENTS OF CASH FLOWS Vulcan Materials Company and Subsidiary Companies

For the Years Ended December 31, 1996, 1995 and 1994
Amounts in thousands 1996 1995 1994
<S> <C> <C> <C>
OPERATIONS
Net earnings............................................. $188,595 $166,240 $ 97,976
Adjustments to reconcile net earnings to
net cash provided by continuing operations:
Depreciation, depletion and amortization............. 112,600 110,677 106,695
(Increase) decrease in assets before
effects of business acquisitions:
Accounts and notes receivable..................... 1,381 3,634 (21,188)
Inventories....................................... 3,915 (11,899) 965
Deferred income taxes............................. 3,081 2,519 (2,176)
Prepaid expenses.................................. 194 (362) 1,056
Increase (decrease) in liabilities before
effects of business acquisitions:
Accrued interest and income taxes................. (105) (355) (84)
Trade payables, accruals, etc..................... 14,118 (1,352) 16,457
Deferred income taxes............................. 1,032 3,428 8,314
Other noncurrent liabilities...................... 4,290 7,255 (266)
Issuance of common stock in connection with
Performance Share Plan............................ 2,010 699 998
Other, net........................................... 15,333 (13,126) 470
Net cash provided by continuing operations........ 346,444 267,358 209,217
Net cash used for discontinued operations
(Note 10)....................................... (912) (902) (958)

Net cash provided by operations................... 345,532 266,456 208,259

INVESTING ACTIVITIES
Purchases of property, plant and equipment............... (151,767) (109,174) (100,090)
Payment for business acquisitions........................ (64,765) (27,172) (87,540)
Proceeds from sale of property, plant and equipment...... 11,952 31,881 15,358
Net investment in nonconsolidated companies.............. (1,233) (1,913) (2,112)
Net cash used for investing activities............ (205,813) (106,378) (174,384)

FINANCING ACTIVITIES
Net borrowings (payments) - commercial paper
and bank lines of credit............................... (280) (39,211) 42,779
Payment of short-term debt............................... (6,849) (4,687) (1,809)
Payment of long-term debt................................ (62) (32) (4,403)
Purchases of common stock (Note 11)...................... (45,182) (50,148) (28,612)
Dividends paid........................................... (58,399) (51,848) (48,109)
Net cash used for financing activities............ (110,772) (145,926) (40,154)
Net increase (decrease) in cash and cash equivalents..... 28,947 14,152 (6,279)
Cash and cash equivalents at beginning of year........... 21,869 7,717 13,996

Cash and cash equivalents at end of year................. $ 50,816 $ 21,869 $ 7,717

<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Vulcan Materials Company and Subsidiary Companies

For the Years Ended December 31, 1996, 1995 and 1994
Amounts and shares in thousands, 1996 1995 1994
except per share data 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 1996,
1995 and 1994)................................ 46,573 $ 46,573 46,573 $ 46,573 46,573 $ 46,573

Capital in excess of par value
Balance at beginning of year.................... 9,089 8,585 4,587
Shares issued in connection with
the acquisition of business................... - - 3,490
Distributions under Performance
Share Plan.................................... 1,253 414 514
Distributions under Stock Plan
for Nonemployee Directors..................... - 24 23
Other........................................... 2 66 (29)

Balance at end of year.......................... 10,344 9,089 8,585

Retained earnings
Balance at beginning of year.................... 1,174,171 1,059,779 1,009,912
Net earnings.................................... 188,595 166,240 97,976
Cash dividends on common stock.................. (58,399) (51,848) (48,109)

Balance at end of year.......................... 1,304,367 1,174,171 1,059,779

Common stock held in treasury
Balance at beginning of year (11,602) (433,195) (10,666) (383,308) (10,224) (358,109)
Shares issued in connection with
the acquisition of business................... - - - - 140 2,952
Purchase of common shares....................... (765) (45,182) (948) (50,148) (604) (28,612)
Distributions under Performance
Share Plan.................................... 35 757 11 247 21 442
Distributions under Stock Plan
for Nonemployee Directors..................... - - 1 14 1 19

Balance at end of year.......................... (12,332) (477,620) (11,602) (433,195) (10,666) (383,308)

Total...................................... $ 883,664 $ 796,638 $ 731,629

<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Vulcan Materials Company and Subsidiary Companies

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
The Company classifies as cash equivalents all highly liquid securities with
a maturity of three months or less at the time of purchase.

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.

GOODWILL
Goodwill represents the excess of the cost of net assets acquired in business
combinations over their fair value. Goodwill is amortized on a straight-line
basis over periods ranging from fifteen to twenty years.

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 expenditures that pertain to current operations or relate to
future revenues are expensed or capitalized consistent with the Company's
capitalization policy. Expenditures that relate to an existing condition
caused by past operations and do not contribute to future revenue are
expensed. Environmental compliance costs include maintenance and operating
costs with respect to pollution control facilities, the cost of ongoing
monitoring programs and similar costs. Costs are expensed and accrued as
liabilities when environmental assessments and/or remedial efforts are
probable, and the cost can be reasonably estimated. These amounts are accrued
no later than the feasibility study and/or when the Company commits to a
formal plan of action.

INCOME TAXES
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
relate to stock options and shares contingently issuable under long-term
performance share plans.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

RECLASSIFICATIONS
Certain items previously reported in specific financial statement captions
have been reclassified to conform with the 1996 presentation.

2. CASH

Bank lines of credit amounted to $130,000,000 at year-end 1996, 1995 and 1994.
At year-end 1996 and 1995 the Company did not have any commercial paper
outstanding, but did have $3,100,000 and $3,400,000, respectively, in bank
borrowings referable to a Canadian subsidiary. At the end of 1994, $35,000,000
was used to back up commercial paper outstanding and $7,800,000 was drawn down
as bank borrowings.
All of the lines of credit extended to the Company in 1996, 1995 and 1994
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):

1996 1995 1994
Finished products................... $ 87,459 $ 90,009 $ 77,721
Raw materials....................... 10,115 10,062 9,248
Products in process................. 873 979 622
Operating supplies and other........ 30,131 25,751 24,890
Total inventories............... $128,578 $126,801 $112,481

The above amounts include inventories valued under the LIFO method totaling
$96,045,000, $97,959,000 and $79,909,000 at December 31, 1996, 1995 and 1994,
respectively. Estimated current cost exceeded LIFO cost at December 31, 1996,
1995 and 1994 by $35,747,000, $36,899,000 and $29,049,000, 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 a decrease of $702,000
($.02 per share effect) in 1996, an increase of $4,784,000 ($.13 per share
effect) in 1995, and a decrease of $2,476,000 ($.07 per share effect)
in 1994.

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):

1996 1995 1994
Land and land improvements.......... $ 222,546 $ 203,920 $ 206,457
Buildings........................... 82,049 77,732 76,629
Machinery and equipment............. 1,630,089 1,536,742 1,486,577
Leaseholds.......................... 7,118 6,483 6,471
Construction in progress............ 60,362 34,559 32,754
Total.......................... 2,002,164 1,859,436 1,808,888
Less allowances for depreciation,
depletion and amortization........ 1,237,674 1,161,403 1,107,131

Property, plant and equipment, net.. $ 764,490 $ 698,033 $ 701,757

The Company capitalized interest costs of $627,000 in 1996, $297,000
in 1995 and $878,000 in 1994 with respect to qualifying construction projects.
Total interest costs incurred before recognition of the capitalized amount
was $9,263,000 in 1996, $11,396,000 in 1995 and $10,699,000 in 1994.

5. DEBT

Long-term debt, exclusive of current maturities, at December 31 is summarized
as follows (in thousands of dollars):

1996 1995 1994
Medium-term notes................... $66,000 $ 71,000 $76,000
Variable rate pollution
control revenue bonds............. 8,200 1,200 3,000
6 5/8% pollution control
revenue bonds..................... - 6,800 6,800
6 3/8% pollution control
revenue bonds..................... 5,800 5,800 5,800
Other notes......................... 5,535 5,478 5,780
Total.......................... $85,535 $ 90,278 $97,380

Estimated fair value................ $93,507 $101,782 $98,597

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 the medium-term notes in
1991 totaled $81,000,000. The dollar-weighted average maturity of the notes,
as calculated from the dates of issuance, approximated 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. At that time, the weighted average interest
rate on the notes was 8.53% with a range of 7.59% to 8.85%. The $66,000,000 in
notes outstanding as of December 31, 1996 have a weighted average maturity of
9.5 years with a weighted average interest rate of 8.70%.
The 6 5/8% pollution control revenue bonds and the variable rate pollution
control revenue bonds were called and refunded in 1996. In connection with the
refunding, $8,200,000 of tax exempt bonds were issued and currently bear
interest at a variable rate which is reset weekly by the remarketing agent.
The interest rate on these bonds may be changed to another variable rate
option, or to a fixed rate, in accordance with the provisions of the trust
indenture. The 6 3/8% pollution control revenue bonds issued in 1992 mature
in 2012.
Other notes include $3,000,000 representing a fixed rate tax exempt
industrial development bond issue which matures in 2011 and notes issued for
businesses acquired.
The aggregate principal payments for the five years subsequent to
December 31, 1996 are: 1997-$5,021,000; 1998-$5,185,000; 1999-$5,184,000;
2000-$5,182,000 and 2001-$5,165,000.
The Company is not 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.
The estimated fair value amounts of long-term debt 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, 1996, 1995 and 1994. 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. OPERATING 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):

1996 1995 1994
Minimum rentals..................... $17,188 $14,260 $16,138
Contingent rentals (based
principally on usage)............. 10,677 11,205 11,212
Total............................ $27,865 $25,465 $27,350

Future minimum operating lease payments under all leases with initial or
remaining noncancellable lease terms in excess of one year, exclusive of
mineral leases, at December 31, 1996 range from $4,100,000 to $11,948,000
annually through 2001 and aggregate $13,502,000 thereafter. 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.

7. INCOME TAXES

The components of earnings before income taxes are as follows (in thousands
of dollars):
1996 1995 1994
Domestic............................ $279,801 $253,991 $143,502
Foreign............................. 5,779 4,430 2,404
Total............................ $285,580 $258,421 $145,906

Provisions for income taxes consist of the following (in thousands
of dollars):
1996 1995 1994
Current:
Federal........................... $80,704 $72,332 $34,194
State and local................... 14,595 14,087 7,135
Foreign........................... 144 18 10
Total.......................... 95,443 86,437 41,339

Deferred:
Federal........................... 1,446 4,861 5,953
State and local................... 96 883 578
Foreign........................... - - 60
Total.......................... 1,542 5,744 6,591

Total provision..................... $96,985 $92,181 $47,930

The effective tax rate varied from the federal statutory income tax rate
due to the following:
1996 1995 1994
Federal statutory tax rate.......... 35.0% 35.0% 35.0%
Increase (decrease) in tax
rate resulting from:
Depletion....................... (4.8) (4.5) (7.2)
State and local income
taxes, net of federal
income tax benefit............ 3.3 3.8 3.4
Miscellaneous items............. .5 1.4 1.6

Effective tax rate.................. 34.0% 35.7% 32.8%

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):

1996 1995 1994
Deferred tax assets related to:
Accrual for post-retirement
benefits......................... $ 14,149 $ 13,318 $12,123
Accrual for environmental
reclamation...................... 396 1,604 5,902
Accounts receivable,
principally allowance
for doubtful accounts............ 3,493 3,592 3,780
Inventory adjustments............. 6,101 7,278 7,079
Pensions, incentives and
deferred compensation............ 10,463 10,066 7,142
Other items....................... 10,339 9,518 7,765

Total deferred tax assets...... 44,941 45,376 43,791

Deferred tax liabilities
related to:
Fixed assets, principally
depreciation................... 101,316 98,821 92,120
Other items...................... 7,119 5,935 5,259

Total deferred tax
liabilities................. 108,435 104,756 97,379

Net deferred tax liability......... $ 63,494 $ 59,380 $53,588

8. PENSION AND POSTRETIREMENT BENEFIT PLANS

PENSION PLANS
The Company sponsors three noncontributory, defined benefit pension plans.
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
$5,185,000 in 1996, $1,187,000 in 1995 and $3,088,000 in 1994. Components of
the net periodic pension charges are as follows (in thousands of dollars):

1996 1995 1994
Service cost - benefits earned
during the period................. $11,631 $ 8,665 $ 9,551
Interest cost....................... 19,069 18,019 17,167
Actual return on plan assets........ (43,867) (51,744) (3,923)
Net amortization and deferral....... 18,352 26,247 (19,707)

Net periodic pension charge....... $ 5,185 $ 1,187 $ 3,088

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 and corporate and
government debt securities. 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):
1996 1995 1994
Actuarial present value
of benefit obligations:
Based on employment
service to date and
current salary levels:
Vested........................ $(173,166) $(174,436) $(134,409)
Nonvested..................... (8,693) (7,143) (4,792)
Accumulated benefit
obligation.................. (181,859) (181,579) (139,201)
Effect of projected
future salary increases........ (85,430) (83,011) (68,107)
Projected benefit obligation..... (267,289) (264,590) (207,308)
Plan assets at fair market value.... 337,326 305,398 264,174

Plan assets in excess of
projected benefit obligation...... 70,037 40,808 56,866
Unamortized portion of
unrecognized net asset at
implementation of SFAS No. 87..... (10,212) (13,225) (16,696)
Unrecognized net gain............... (68,163) (26,057) (38,748)
Unrecognized prior service cost..... 12,632 8,148 9,151

Net prepaid pension cost....... $ 4,294 $ 9,674 $ 10,573

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:

1996 1995 1994
Discount rates used to determine
the pension obligations........... 7.50% 7.00% 8.50%
Discount rates used to determine
the net periodic cost and
other recognized gains
- First 18 years................ 7.00 8.50 7.25
- Thereafter.................... 7.00 8.50 7.25
Rates of increase in
compensation levels
(for salary-related plans)........ 4.25 4.25 5.00
Expected long-term rates
of return on plan assets.......... 8.25 8.25 8.25

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 $2,090,000 in 1996, $1,859,000 in 1995 and $1,617,000 in 1994.
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. Seventeen percent of the labor force
is covered by collective bargaining agreements and 23% are covered by labor
agreements that expire within one year.

POSTRETIREMENT PLANS
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.
The components of net periodic postretirement benefit charges and credits
are as follows (in thousands of dollars):

1996 1995 1994
Service cost - benefits attributed
to service during the period...... $2,045 $1,965 $1,742
Interest cost....................... 3,013 3,558 2,919
Actual return on assets............. (196) (158) (150)
Net amortization and deferral....... 88 209 329
Net periodic postretirement
benefit cost................... $4,950 $5,574 $4,840

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
sheets at December 31 (in thousands of dollars):

1996 1995 1994
Accumulated postretirement
benefit obligation:...............
Retirees.......................... $ (9,991) $(11,355) $(10,570)
Fully eligible active
plan participants............... (13,227) (13,658) (11,934)
Other active plan participants.... (20,415) (19,478) (18,439)
Total accumulated postretirement
benefit obligation.............. (43,633) (44,491) (40,943)
Plan assets at fair market value.... 3,119 2,842 2,628
Accumulated postretirement benefit
obligation in excess
of plan assets.................... (40,514) (41,649) (38,315)
Unrecognized prior service cost..... 5 6 6
Unrecognized net loss............... 4,287 7,726 7,274
Accrued postretirement
benefit cost.................... $(36,222) $(33,917) $(31,035)

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:

1996 1995 1994
Discount rates...................... 7.50% 7.00% 8.50%
Expected long-term rate
of return on plan assets.......... 7.00 7.00 7.00
Rate of increase in per
capita claims cost
- First year................... 9.00 10.00 12.00
- Ultimate rate................ 5.00 5.00 6.00

If the health care cost trend rates were increased 1.0% each year, the
accumulated postretirement benefit obligation as of December 31, 1996 would
have increased by $4,537,000 (or 10.9%) and the aggregate of the service and
interest cost for 1996 would have increased by $613,000 (or 12.1%).

9. INCENTIVE PLANS

STOCK-BASED COMPENSATION PLANS
In 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). This new standard
defines a fair value method of accounting for stock-based compensation. Under
the fair value method, compensation cost is measured at the grant date based
on the fair value of the award and is recognized over the service period,
which is usually the vesting period. Pursuant to the new standard, companies
are encouraged, but are not required, to adopt the fair value method of
accounting for employee stock-based transactions. Companies also are permitted
to continue to account for such transactions under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), but are
required to disclose in a note to the financial statements pro forma
information as if the company had applied the new method of accounting. The
Company has elected to continue to follow APB 25, and the required pro forma
disclosures are presented below.
The Company's 1996 Long-Term Incentive Plan authorizes the granting of
stock-based awards to key salaried employees of the Company and its
affiliates. The Plan permits the granting of: stock options (including
incentive stock options), stock appreciation rights, restricted stock and
restricted stock units, performance share awards, dividend equivalents, and
other awards valued in whole or in part by reference to or otherwise based on
common stock of the Company. The number of shares available for awards is .95%
of the issued common shares of the Company (including treasury shares) as of
the first day of each calendar year plus the unused shares that are carried
over from prior years.
Stock options issued during 1996 were granted at the fair market value of
the stock on the date of the grant. They vest ratably over five years and
expire ten years subsequent to the grant.
Performance share awards were granted through 1995. These awards are based
on the achievement of established performance goals and the majority of the
awards vest over five years. Expense provisions referable to these plans
amounted to $4,373,000 in 1996, $6,742,000 in 1995 and $3,894,000 in 1994.
Expense provisions were also affected by changes in the market value of the
Company's common stock.
Pro forma information regarding net income and earnings per share is
required by SFAS 123, and has been determined as if the Company had accounted
for its employee stock options and performance share awards under the fair
value method of that Statement. The fair value for options was estimated at
the date of the grant using a Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rate of 6.4%;
dividend yields of 2.9%; volatility factors of the expected market price of
the Company's common stock of 14.5% and a weighted-average expected life of
the option of five years. The fair value for performance share awards was
based on a discounted fair market value of the Company's stock at grant date.
For purposes of pro forma disclosures, the estimated fair value of the
options and performance share awards is amortized to expense over the options'
vesting period. The effects of applying SFAS 123 on a pro forma basis would
be immaterial to 1996 and 1995 net earnings and earnings per share. A summary
of the Company's stock option activity, related information as of December 31,
1996 and changes during the year is presented below:
Weighted Average
Shares Exercise Price
Outstanding at beginning of year.... - $ -
Granted........................... 429,800 $56.61
Forfeited......................... 850 $56.56
Outstanding at end of year.......... 428,950 $56.61

Options exercisable at year-end..... -
Weighted-average grant date
fair value of each option
granted during the year........... $10.35

Exercise prices for options outstanding at December 31, 1996 ranged from
$55.75 to $59.19. The weighted-average remaining contractual life of the
options is 9.38 years.
The number and weighted-average grant date fair value of performance share
awards is presented below:

1996 1995
Number of awards.................... - 126,760
Weighted-average grant date
fair value of each award
granted during the year........... - $39.35

CASH BASED COMPENSATION PLANS
The Company has a management incentive plan under which cash awards may be
made annually to officers and key employees. Expense provisions referable to
the plans amounted to $8,500,000 in 1996, $5,550,000 in 1995 and $3,600,000
in 1994.

10. 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
shareholder agreements for these three companies provide that each sponsor
will contribute its share of the equity required to fund the joint venture.
The Company's share of $71,903,000 had been contributed as of December 31,
1996; Indica contributed a substantially equal pro rata amount. The jointly
owned companies have entered into credit agreements which have loan balances
totaling $41,596,000. 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, 1996
as its share of loans to the joint venture. The carrying amount of net assets
of the entities located outside the United States was $49,723,000 as of
December 31, 1996.
Other commitments of the Company include the purchase of property,
plant and equipment approximating $23,221,000 at December 31, 1996.
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 1991 the Environmental Protection Agency ("EPA") issued a unilateral
administrative order which directed the named respondents, including the
Company and other potentially responsible parties ("PRPs"), to clean up a
now-closed third party waste disposal site to which the Chemicals segment last
shipped waste materials in 1970. During the years 1986 through 1995, the
Company recorded provisions totaling $39,300,000 for environmental remediation
at this site. During 1996 the Company and the other participating PRPs
completed all activities relating to site remediation, with the exception of
ongoing operation and maintenance of the remedy. The EPA anticipates
conducting its five-year review of site conditions mid-year 1998. If site
conditions are satisfactory based on that review, the site will thereafter be
removed from the National Priority List of Superfund sites. The Company
believes that total provisions now recorded are adequate to cover its share of
the anticipated remaining costs. Provisions for other environmental expenses
for the last three years have not been material.
The Company's consolidated balance sheets as of December 31 include
accrued environmental cleanup costs for the Chemicals segment of
$3,732,000 in 1996, $2,765,000 for 1995 and $12,867,000 for 1994.
In 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 remediation of
environmental conditions at several Metals plants. An additional provision for
estimated phaseout costs was recorded in 1989. The Company has made
significant progress in addressing these contractual liabilities by completing
several environmental remediation projects at certain of these Metals plants.
Expenditures for these projects were within recorded provisions. While the
Company believes its recorded provisions are adequate to address the remainder
of these contractual liabilities and other liabilities associated with these
operations, factors that might impact the adequacy of provisions include the
results of further environmental testing, engineering analyses and planning,
and negotiations among interested parties.
Current liabilities reported on the Company's consolidated balance sheets
include accrued provisions for discontinued operations in the following
amounts as of December 31: $905,000 in 1996; $1,805,000 in 1995 and $2,649,000
in 1994. In addition, other noncurrent liabilities include $240,000 in 1996
and $493,000 each in 1995 and 1994 referable to discontinued operations.

11. COMMON STOCK

A total of 12,816,971 shares has been purchased at a cost of $487,852,000
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 the current purchase authorization was
834,392 shares as of December 31, 1996. On February 14, 1997, the Company's
Board of Directors increased the authorization to 4,000,000 shares.

12. SEGMENT DATA

Operations in the Company's Construction Materials segment principally
involve the production and sale of aggregates and related products and
services. Sales are in 17 states located in the southeast, midwest and
southwest regions of the United States. Customers primarily use
aggregates in the construction and maintenance of highways, roads and
streets and in the construction of housing and nonresidential,
commercial and industrial facilities.
The Chemicals segment, through its Chloralkali Business Unit, produces
and sells basic industrial and specialty chemicals, including chlorine,
caustic soda and chlorinated organic chemicals. Principal markets for
these chemicals include pulp and paper, energy, food and
pharmaceuticals, textiles, water management, and chemical processing.
The Performance Systems Business Unit offers a unique blend of products,
services, technologies and manufacturing capabilities for a variety of
customer needs in the pulp and paper, textile, water management, and
food processing industries. Products are principally marketed throughout
the United States, but are also exported to Mexico, the Far East and
Western Europe.
Segment data referable to net sales to unaffiliated customers, property
additions, and depreciation, depletion and amortization are provided in
Segment Financial Data on pages 74 and 75.
The Company's determination of segment earnings recognizes equity in the
income or losses of nonconsolidated affiliates 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 $16,231,000 in 1996, $22,533,000 in 1995
and $14,110,000 in 1994.
Segment earnings are reconciled with earnings before income taxes as
follows (in thousands of dollars):
1996 1995 1994
Segment Earnings:
Construction Materials............ $197,315 $181,528 $162,505
Chemicals......................... 94,707 87,792 (7,349)

292,022 269,320 155,156
Interest income, etc................ 2,194 200 571
Interest expense.................... (8,636) (11,099) (9,821)
Earnings before income taxes........ $285,580 $258,421 $145,906

Identifiable assets by segment at December 31 are as follows (in thousands
of dollars):
1996 1995 1994
Construction Materials.............. $ 719,618 $ 690,044 $ 678,793
Chemicals........................... 441,088 395,487 389,491
Total identifiable assets........... 1,160,706 1,085,531 1,068,284
Investment in nonconsolidated
affiliates........................ 56,043 50,780 53,902
General corporate assets............ 53,080 57,614 51,241
Cash items.......................... 50,816 21,869 7,717
Total assets........................ $1,320,645 $1,215,794 $1,181,144

13. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental information referable to the Consolidated Statements of Cash
Flows is summarized below (in thousands of dollars):

1996 1995 1994
Cash payments:
Interest (exclusive of
amount capitalized)............. $ 8,715 $11,214 $ 9,762
Income taxes...................... 85,492 85,324 36,846
Noncash investing and
financing activities:
Amounts referable to
business acquisitions:
Liabilities assumed........... 5,051 1,382 12,198
Fair value of stock issued.... - - 6,443

14. ACQUISITIONS

At various dates during 1996 the Company acquired the net assets and
businesses of several companies. The combined purchase price was approximately
$64,000,000. Funds for the purchases were primarily provided by internally
generated cash flows. The amount by which the total cost of these acquisitions
exceeded the fair value of the assets acquired was recognized as goodwill and
will be amortized under the Company's normal amortization policy.
All of the 1996 acquisitions described above were accounted for as
purchases and accordingly, the results of operations of the acquired
businesses are included in the accompanying financial statements from their
respective dates of acquisition. On a pro forma basis, as if the assets and
business had been acquired at the beginning of fiscal 1995, revenue, net
income and earnings per share would not differ materially from the amounts
reflected in the accompanying consolidated financial statements for 1996
and 1995.
On August 1, 1994, the Company acquired the net assets and business
of Callaway Chemical Company from Exxon Chemical Company. In a related
transaction, the Company also acquired the net assets and business of Comcor
Chemicals Limited from Exxon Corporation's affiliated Canadian company,
Imperial Oil Limited. The Company paid cash for the assets acquired. The
purchase price paid for all assets, including net working capital, was
approximately $82,000,000. Funds for the purchase price were primarily
obtained by the Company through issuance and sale of short-term notes.
Goodwill recorded on the Company's balance sheet as of December 31, 1996
amounted to $69,523,000.

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 LLP, 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
D. F. Sansone
Vice President, Finance

/s/ E. A. Khan
E. A. Khan
Controller

February 7, 1997

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, 1996, 1995,
and 1994, 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, 1996, 1995 and 1994, 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 LLP
Deloitte & Touche LLP
Birmingham, Alabama
February 7, 1997

FINANCIAL TERMINOLOGY

Capital employed
For the Company: the sum of interest-bearing debt, 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' equity
The sum of common stock (less the cost of common 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, other noncurrent liabilities and shareholders'
equity

Operating income from continuing operations after taxes
For the Company: net earnings from continuing operations plus the
after-tax cost of interest expense; for a segment: segment earnings
less 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 to fixed charges
The sum of earnings from continuing operations 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 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.

VULCAN MATERIALS COMPANY
SUBSIDIARIES
AS OF DECEMBER 31, 1996

STATE OR OTHER % OWNED
JURISDICTION OF DIRECTLY OR
INCORPORATION INDIRECTLY
ENTITY OR ORGANIZATION BY VULCAN

Subsidiaries
<S> <C> <C>
Atlantic Granite Company * South Carolina 33 1/3
Birmingham Slag Company * Alabama 100
BRT Transfer Terminal, Inc. Kentucky 100
Calizas Industriales del Carmen, S.A. de C. V. Mexico 49
Callaway Chemical Company New Jersey 100
Callaway Chemical Limited British Columbia 100
Dixie Sand and Gravel Company * Tennessee 100
Knoxville Mack Distributors, Inc. * Tennessee 100
Lambert Bros., Inc. * Tennessee 100
Midsouth Machine and Service Company Tennessee 100
RECO Transportation, Inc. Kentucky 100
Statewide Transport, Inc. Texas 100
Vulcan Chemical Technologies, Inc. Delaware 100
Vulcan/ICA Distribution Company (Partnership) Texas 51
Vulcan Gulf Coast Aggregates, Inc. New Jersey 100
Vulcan Gulf Coast Materials, Inc. New Jersey 100
Vulcan International, Ltd. U. S. Virgin Island 100
Vulcan Lands, Inc. New Jersey 100
Vulcan Soda Ash Company California 100
VULICA Shipping Company, Limited Bahamas 50
Wanatah Trucking Co., Inc. Indiana 100
Wesco Contracting Company * Tennessee 100
White's Mines, Inc. * Texas 100

<FN>
* Inactive

</TABLE>

POWER OF ATTORNEY

The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints William 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 Annual
Report on Form 10-K for the year ended December 31, 1996 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.