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SECURITIES AND EXCHANGE COMMISSION
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New Jersey (State or other jurisdiction of incorporation or organization) | 20-8579133 (I.R.S. Employer Identification No.) |
(Address, including zip code, of registrant’s principal executive offices)
(Registrant’s telephone number, including area code)
Title of each class | Name of each exchange on which registered | |
Common Stock, $1 par value | New York Stock Exchange |
Large accelerated filerþ | Accelerated filero | Non-accelerated filero | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
Aggregate market value of voting stock held by non-affiliates as of June 30, 2009: | $ | 5,362,319,558 | ||
Number of shares of common stock, $1.00 par value, outstanding as of February 19, 2010: | 126,334,086 |
(1) | Portions of the registrant’s annual proxy statement for the annual meeting of its shareholders to be held on May 14, 2010, are incorporated by reference into Part III of this Annual Report on Form 10-K. |
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III | 102 | |||||||
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IV | 103 | |||||||
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EX-18 | ||||||||
EX-21 | ||||||||
EX-23 | ||||||||
EX-24 | ||||||||
EX-31.A | ||||||||
EX-31.B | ||||||||
EX-32.A | ||||||||
EX-32.B | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
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• | general economic and business conditions; | ||
• | changes in interest rates; | ||
• | the timing and amount of federal, state and local funding for infrastructure, including the federal stimulus funds; | ||
• | changes in the level of spending for residential and private nonresidential construction; | ||
• | the highly competitive nature of the construction materials industry; | ||
• | the impact of future regulatory or legislative action; | ||
• | the outcome of pending legal proceedings; | ||
• | pricing of our products; | ||
• | weather and other natural phenomena; | ||
• | energy costs; | ||
• | costs of hydrocarbon-based raw materials; | ||
• | healthcare costs; | ||
• | the amount of long-term debt and interest expense incurred by us; | ||
• | volatility in pension plan asset values which may require cash contributions to our pension plans; | ||
• | the timing and amount of any future payments to be received under the 5CP earn-out contained in the agreement for the divestiture of our Chemicals business; | ||
• | the impact of environmental clean-up costs and other liabilities relating to previously divested businesses; | ||
• | our ability to secure and permit aggregates reserves in strategically located areas; | ||
• | our ability to manage and successfully integrate acquisitions; | ||
• | the impact of the global economic recession on our business and financial condition and access to capital markets; | ||
• | the potential impact of future legislation or regulations relating to climate change or greenhouse gas emissions; | ||
• | the risks set forth in Item 1A “Risk Factors,” Item 3 “Legal Proceedings,” Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 12 “Other Commitments and Contingencies” to the consolidated financial statements in Item 8 “Financial Statements and Supplementary Data,” all as set forth in this report; and | ||
• | other assumptions, risks and uncertainties detailed from time to time in our filings made with the Securities and Exchange Commission. |
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* | Represents sales to external customers of our aggregates and our downstream products that use our aggregates |
• | Attractive industry fundamentals — Aggregates are used in virtually all types of public and private construction projects and there are practically no substitutes for quality aggregates. Because of barriers to entry created by zoning and permitting regulations and because of high transportation costs, the location of reserves is critical to long-term success. Our reserves are strategically located in high growth areas throughout the United States that will require large amounts of aggregates to meet construction demand. Aggregates operations have flexible production capabilities and require no raw material inputs other than owned or leased aggregates reserves. | ||
• | Scale from being largest producer — Each aggregates operation is unique because of its location within a local market and its geological characteristics. However, every operation utilizes a similar group of assets to produce saleable aggregates and provide customer service. As the largest aggregates company in the U.S., whether measured by production or revenues, our 317 aggregates facilities provide opportunities to standardize and procure equipment (fixed and mobile), parts, supplies and services either regionally or nationally in the most efficient and cost-effective manner possible. Additionally, we are able to share best practices across the organization and leverage our size in the areas of administrative support, customer service, accounts receivables and accounts payable, technical support and engineering. | ||
• | Ability to generate strong cash flows, even in a recession — A knowledgeable and experienced workforce and flexible production capabilities have allowed us to aggressively manage costs during the current recession. As a result, operating cash flow was $453.0 million in 2009 and $435.2 million in 2008. | ||
• | Our downstream businesses (asphalt-mix and ready-mixed concrete) use Vulcan-produced aggregates — Virtually all of the aggregates used at our asphalt-mix and ready-mixed concrete plants are produced internally. |
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• | Strategic acquisitions — Since its inception as a public company in 1956, Vulcan has principally grown by merger and acquisition. For example, in 1999 we acquired CalMat, Inc., expanding our aggregates operations into California, Arizona and New Mexico and making us one of the nation’s leading producers of hot-mix asphalt and ready-mixed concrete. In 2007, we acquired Florida Rock Industries, Inc. (Florida Rock), the largest acquisition in our history. The Florida Rock acquisition expanded our aggregates business in Florida and other southeastern and mid-Atlantic states, and added to our operations an extensive ready-mixed concrete business in Florida, Maryland, Virginia and Washington, D.C. and cement manufacturing and distribution facilities in Florida. In addition to these large acquisitions, we have completed many smaller acquisitions that over time have contributed significantly to our growth. | ||
• | Tightly manage costs — In a business where our aggregates sell, on average, for $10.30 per ton, we are accustomed to rigorous cost management throughout economic cycles. Small savings per ton of production add up to significant cost reductions. We are able to rationalize production and adjust employment levels to meet changing market demands without jeopardizing our ability to capitalize on future increased demand. | ||
• | Reinvestment opportunities with high returns — It is estimated that 74% of the U.S. population growth over the next decade will occur in Vulcan-served states. The close proximity of our production facilities and our aggregates reserves to this projected population growth creates many opportunities to invest capital in high-return projects — projects that will add reserves, increase production capacity and improve costs. |
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Reserves | Number of Aggregates Operating Facilities1 | |||||||||||||||
(billions of tons) | Stone | Sand and Gravel | Sales Yards | |||||||||||||
By Division: | ||||||||||||||||
Florida Rock | 0.5 | 5 | 11 | 6 | ||||||||||||
Mideast | 3.7 | 39 | 2 | 25 | ||||||||||||
Midsouth | 2.1 | 40 | 1 | 0 | ||||||||||||
Midwest | 1.9 | 17 | 5 | 4 | ||||||||||||
Southeast | 2.2 | 34 | 0 | 3 | ||||||||||||
Southern and Gulf Coast | 2.0 | 23 | 1 | 27 | ||||||||||||
Southwest | 0.9 | 13 | 1 | 13 | ||||||||||||
Western | 0.9 | 2 | 27 | 1 | ||||||||||||
Total | 14.2 | 173 | 48 | 79 | ||||||||||||
1 | In addition to the facilities included in the table above, we operate 17 recrushed concrete plants which are not dependent on reserves. |
Location | Reserves | |||
(nearest major metropolitan area) | (millions of tons) | |||
Playa del Carmen (Cancun), Mexico | 665.2 | |||
Hanover (Harrisburg), Pennsylvania | 563.7 | |||
McCook (Chicago), Illinois | 445.9 | |||
Dekalb (Chicago), Illinois | 366.5 | |||
Gold Hill (Charlotte), North Carolina | 294.9 | |||
Rockingham (Charlotte), North Carolina | 259.3 | |||
1604 Stone (San Antonio), Texas | 214.1 | |||
Grand Rivers (Paducah), Kentucky | 179.6 | |||
Macon, Georgia | 179.5 | |||
Gray Court (Greenville), South Carolina | 170.2 | |||
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Asphalt mix | Concrete | Cement | ||||||||||
Division | Facilities | Facilities1 | Facilities2 | |||||||||
Florida Rock | 0 | 75 | 4 | |||||||||
Northern Concrete | 0 | 32 | 0 | |||||||||
Southwest | 11 | 4 | 0 | |||||||||
Western | 27 | 15 | 0 | |||||||||
1 | Includes ready-mixed concrete, concrete block and other concrete products facilities. | |
2 | Includes one cement manufacturing facility, two cement import terminals and a calcium plant. |
Reserves | ||||
Location | (millions of tons) | |||
Newberry | 193.9 | |||
Brooksville | 6.6 | |||
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Name | Position | Age | ||
Donald M. James | Chairman and Chief Executive Officer | 61 | ||
Robert A. Wason IV | Senior Vice President, General Counsel | 58 | ||
Ronald G. McAbee | Senior Vice President, Construction Materials-West | 62 | ||
Daniel F. Sansone | Senior Vice President, Chief Financial Officer | 57 | ||
Danny R. Shepherd | Senior Vice President, Construction Materials-East | 58 | ||
Ejaz A. Khan | Vice President, Controller and Chief Information Officer | 52 | ||
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Common Stock | ||||||||||||
Prices | Dividends | |||||||||||
High | Low | Declared | ||||||||||
2009 | ||||||||||||
First quarter | $ | 71.26 | $ | 34.30 | $ | 0.49 | ||||||
Second quarter | 53.94 | 39.65 | 0.49 | |||||||||
Third quarter | 62.00 | 39.14 | 0.25 | |||||||||
Fourth quarter | 54.37 | 44.70 | 0.25 | |||||||||
2008 | ||||||||||||
First quarter | $ | 79.75 | $ | 60.20 | $ | 0.49 | ||||||
Second quarter | 84.73 | 59.26 | 0.49 | |||||||||
Third quarter | 100.25 | 49.39 | 0.49 | |||||||||
Fourth quarter | 77.95 | 39.52 | 0.49 | |||||||||
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ITEM 6. | SELECTED FINANCIAL DATA |
Amounts in millions, | ||||||||||||||||||||
except per share data | ||||||||||||||||||||
For the years ended December 31 | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
(As Restated1) | ||||||||||||||||||||
Net sales | $ | 2,543.7 | $ | 3,453.1 | $ | 3,090.1 | $ | 3,041.1 | $ | 2,615.0 | ||||||||||
Total revenues | $ | 2,690.5 | $ | 3,651.4 | $ | 3,327.8 | $ | 3,342.5 | $ | 2,895.3 | ||||||||||
Gross profit | $ | 446.0 | $ | 749.7 | $ | 950.9 | $ | 931.9 | $ | 708.8 | ||||||||||
Earnings from continuing operations2 | $ | 18.6 | $ | 3.4 | $ | 463.1 | $ | 480.2 | $ | 344.1 | ||||||||||
Earnings (loss) on discontinued operations, net of tax3 | $ | 11.7 | $ | (2.4 | ) | $ | ( 12.2 | ) | $ | ( 10.0 | ) | $ | 44.9 | |||||||
Net earnings | $ | 30.3 | $ | 0.9 | $ | 450.9 | $ | 470.2 | $ | 389.1 | ||||||||||
Basic earnings (loss) per share | ||||||||||||||||||||
Earnings from continuing operations | $ | 0.16 | $ | 0.03 | $ | 4.77 | $ | 4.92 | $ | 3.37 | ||||||||||
Discontinued operations | 0.09 | (0.02 | ) | (0.12 | ) | (0.10 | ) | 0.44 | ||||||||||||
Net earnings | $ | 0.25 | $ | 0.01 | $ | 4.65 | $ | 4.82 | $ | 3.81 | ||||||||||
Diluted earnings (loss) per share | ||||||||||||||||||||
Earnings from continuing operations | $ | 0.16 | $ | 0.03 | $ | 4.66 | $ | 4.81 | $ | 3.31 | ||||||||||
Discontinued operations | 0.09 | (0.02 | ) | (0.12 | ) | (0.10 | ) | 0.43 | ||||||||||||
Net earnings | $ | 0.25 | $ | 0.01 | $ | 4.54 | $ | 4.71 | $ | 3.74 | ||||||||||
Total assets | $ | 8,533.0 | $ | 8,916.6 | $ | 8,936.4 | $ | 3,427.8 | $ | 3,590.4 | ||||||||||
Long-term debt | $ | 2,116.1 | $ | 2,153.6 | $ | 1,529.8 | $ | 322.1 | $ | 323.4 | ||||||||||
Shareholders’ equity | $ | 4,052.0 | $ | 3,553.8 | $ | 3,785.6 | $ | 2,036.9 | $ | 2,133.6 | ||||||||||
Cash dividends declared per share | $ | 1.48 | $ | 1.96 | $ | 1.84 | $ | 1.48 | $ | 1.16 | ||||||||||
1 | See Note 20 “Correction of Prior Period Financial Statements” in Item 8 “Financial Statements and Supplementary Data.” | |
2 | Earnings from continuing operations during 2008 includes an after tax goodwill impairment charge of $227.6 million, or $2.05 per diluted share, for our Cement segment in Florida. | |
3 | Discontinued operations include the results from operations attributable to our former Chloralkali and Performance Chemicals businesses, divested in 2005 and 2003, respectively. |
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• | Net earnings from continuing operations were $18.6 million compared to $3.4 million in the prior year | ||
• | EBITDA was $548.4 million compared to adjusted EBITDA of $886.5 million in the prior year | ||
• | Aggregates shipments declined 26%, reducing earnings by $333.7 million | ||
• | Aggregates pricing increased 3%, increasing earnings by $48.3 million | ||
• | Cost management and productivity improvements reduced the effects of lower volumes on our earnings and cash flow | ||
• | Aggregates cash fixed costs decreased $48.7 million, or 14% | ||
• | Selling, administrative and general expense decreased 6% | ||
• | Cash provided by operating activities increased 4% to $453.0 million in 2009 compared to $435.2 million in 2008 | ||
• | Full year capital spending was reduced 69% to $109.7 million compared to $353.2 million in the prior year | ||
• | Free cash flow increased to $343.3 million in 2009 compared to $82.0 million in 2008 | ||
• | Private placement debt offering in the first quarter raised $394.6 million in net proceeds | ||
• | Public offering of equity in the second quarter raised $520.0 million in net proceeds | ||
• | Total debt was reduced by $809.8 million |
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in millions | 2009 | 2008 | 2007 | |||||||||||
Net cash provided by operating activities | $453.0 | $ | 435.2 | $ | 708.1 | |||||||||
Less | ||||||||||||||
Purchases of property, plant & equipment | (109.7 | ) | (353.2 | ) | (483.3 | ) | ||||||||
Free cash flow | $343.3 | $ | 82.0 | $ | 224.8 | |||||||||
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in millions | 2009 | 2008 | 2007 | |||||||||
Net cash provided by operating activities | $ | 453.0 | $ | 435.2 | $ | 708.1 | ||||||
Decrease in assets before initial effects of business acquisitions and dispositions | (95.7 | ) | (16.7 | ) | (25.2 | ) | ||||||
(Increase) decrease in liabilities before initial effects of business acquisitions and dispositions | 5.4 | 101.9 | (4.4 | ) | ||||||||
Other net operating items (providing) using cash | 62.2 | (130.4 | ) | 43.9 | ||||||||
(Earnings) loss on discontinued operations, net of tax | (11.7 | ) | 2.4 | 12.2 | ||||||||
Provision for income taxes | (37.8 | ) | 71.7 | 204.4 | ||||||||
Interest expense, net | 173.0 | 169.7 | 41.6 | |||||||||
EBITDA | $ | 548.4 | $ | 633.8 | $ | 980.6 | ||||||
Plus | ||||||||||||
Goodwill impairment | 252.7 | |||||||||||
Adjusted EBITDA | n/a | $ | 886.5 | n/a | ||||||||
in millions | 2009 | 2008 | 2007 | |||||||||
Operating earnings | $ | 148.5 | $ | 249.1 | $ | 714.4 | ||||||
Other income (expense), net | 5.3 | (4.4 | ) | (5.3 | ) | |||||||
Plus | ||||||||||||
Depreciation, depletion, accretion and amortization | 394.6 | 389.1 | 271.5 | |||||||||
EBITDA | $ | 548.4 | $ | 633.8 | $ | 980.6 | ||||||
Plus | ||||||||||||
Goodwill impairment | 252.7 | |||||||||||
Adjusted EBITDA | n/a | $ | 886.5 | n/a | ||||||||
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Amounts and shares in millions, | |||||||||||||||||||||||
except per share data | |||||||||||||||||||||||
For the years ended December 31 | 2009 | 2008 | 2007 | ||||||||||||||||||||
Net sales | $ | 2,543.7 | $ | 3,453.1 | $ | 3,090.1 | |||||||||||||||||
Cost of goods sold | 2,097.7 | 2,703.4 | 2,139.2 | ||||||||||||||||||||
Gross profit | $ | 446.0 | $ | 749.7 | $ | 950.9 | |||||||||||||||||
Operating earnings | $ | 148.5 | $ | 249.1 | $ | 714.4 | |||||||||||||||||
Earnings (loss) from continuing operations before income taxes | $ | (19.2 | ) | $ | 75.1 | $ | 667.5 | ||||||||||||||||
Earnings from continuing operations | $ | 18.6 | $ | 3.4 | $ | 463.1 | |||||||||||||||||
Earnings (loss) on discontinued operations, net of income taxes | 11.7 | (2.5 | ) | (12.2 | ) | ||||||||||||||||||
Net earnings | $ | 30.3 | $ | 0.9 | $ | 450.9 | |||||||||||||||||
Basic earnings (loss) per share | |||||||||||||||||||||||
Continuing operations | $ | 0.16 | $ | 0.03 | $ | 4.77 | |||||||||||||||||
Discontinued operations | 0.09 | (0.02 | ) | (0.12 | ) | ||||||||||||||||||
Net earnings | $ | 0.25 | $ | 0.01 | $ | 4.65 | |||||||||||||||||
Diluted earnings (loss) per share | |||||||||||||||||||||||
Continuing operations | $ | 0.16 | $ | 0.03 | $ | 4.66 | |||||||||||||||||
Discontinued operations | 0.09 | (0.02 | ) | (0.12 | ) | ||||||||||||||||||
Net earnings | $ | 0.25 | $ | 0.01 | $ | 4.54 | |||||||||||||||||
EBITDA (adjusted EBITDA in 2008) | $ | 548.4 | $ | 886.5 | $ | 980.6 | |||||||||||||||||
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2007 | $ | 668 | ||
Lower aggregates earnings due to | ||||
Lower volumes | (210 | ) | ||
Higher selling prices | 115 | |||
Higher costs | (76 | ) | ||
Lower asphalt mix and concrete earnings | (48 | ) | ||
Higher cement earnings | 18 | |||
Higher selling, administrative and general expenses | (53 | ) | ||
Goodwill impairment — cement | (253 | ) | ||
Gain on divestitures | 74 | |||
Gain on 2007 sale of California real estate | (44 | ) | ||
Higher interest expense, net | (128 | ) | ||
All other | 12 | |||
2008 | $ | 75 | ||
Lower aggregates earnings due to | ||||
Lower volumes | (334 | ) | ||
Higher selling prices | 48 | |||
Lower costs | 21 | |||
Lower asphalt mix and concrete earnings | (20 | ) | ||
Lower cement earnings | (20 | ) | ||
Lower selling, administrative and general expenses | 21 | |||
2008 goodwill impairment — cement | 253 | |||
Lower gain on sale of PP&E and divestitures | (67 | ) | ||
All other | 4 | |||
2009 | $ | ( 19 | ) | |
in millions
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Unit Shipments | Selling Price | |
Customer and internal1tons, in millions | Freight-adjusted average sales price per ton2 | |
1 Represents tons shipped primarily to our downstream operations (e.g., asphalt mix and ready-mixed concrete) | 2 Freight-adjusted sales price is calculated as total sales dollars (internal and external) less freight to remote distribution sites divided by total sales units (internal and external) |
in millions
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in millions
in millions
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in millions
in millions
in millions | 2009 | 2008 | 2007 | |||||||||
Earnings (loss) from continuing operations before income taxes | $ | (19.2 | ) | $ | 75.1 | $ | 667.5 | |||||
(Benefit) provision for income taxes | (37.9 | ) | 71.7 | 204.4 | ||||||||
Effective tax rate | 197.0 | % | 95.5 | % | 30.6 | % | ||||||
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2010 | ||||
in millions | Maturities | |||
First quarter | $ | 15.0 | ||
Second quarter | 15.0 | |||
Third quarter | 15.0 | |||
Fourth quarter | 340.0 | |||
2009 | 2008 | |||||||
Bank borrowings | $ | 0.0 | $ | 1,082.5 | ||||
Commercial paper | 236.5 | 0.0 | ||||||
Total short-term borrowings | $ | 236.5 | $ | 1,082.5 | ||||
Bank borrowings | ||||||||
Maturity | n/a | 2 days | ||||||
Weighted-average interest rate | n/a | 1.63 | % | |||||
Commercial paper | ||||||||
Maturity | 42 days | n/a | ||||||
Weighted-average interest rate | 0.39 | % | n/a | |||||
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• | Standard and Poor’s — A-2/stable (last rating attained in August 2009) | ||
• | Moody’s — P-2/negative (last rating attained in September 2009) |
• | $113.4 million in 2009 | ||
• | $769.2 million in 2008 |
in millions | 2009 | 2008 | 2007 | |||||||||
Net earnings | $ | 30.3 | $ | 0.9 | $ | 450.9 | ||||||
Depreciation, depletion, accretion and amortization | 394.6 | 389.1 | 271.5 | |||||||||
Goodwill impairment | 0.0 | 252.7 | 0.0 | |||||||||
Other operating cash flows, net | 28.1 | (207.5 | ) | (14.3 | ) | |||||||
Net cash provided by operating activities | $ | 453.0 | $ | 435.2 | $ | 708.1 | ||||||
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• | Maintain our investment grade ratings | ||
• | Maintain debt ratios within what we believe to be prudent and generally acceptable limits of 35% to 40% of total capital | ||
• | Pay out a reasonable share of net cash provided by operating activities as dividends |
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2009 | 2008 | |||||||
Debt | ||||||||
Current maturities of long-term debt | $ | 385.4 | $ | 311.7 | ||||
Short-term borrowings | 236.5 | 1,082.5 | ||||||
Long-term debt | 2,116.1 | 2,153.6 | ||||||
Total debt | $ | 2,738.0 | $ | 3,547.8 | ||||
Capital | ||||||||
Total debt | $ | 2,738.0 | $ | 3,547.8 | ||||
Shareholders’ equity1 | 4,052.0 | 3,553.8 | ||||||
Total capital | $ | 6,790.0 | $ | 7,101.6 | ||||
Total debt as a percentage of total capital | 40.3 | % | 50.0 | % | ||||
Long-term debt — weighted-average stated interest rate | 7.69 | % | 6.72 | % | ||||
1 | As restated for 2008, see Note 20 to the consolidated financial statements. |
• | Standard and Poor’s — BBB/stable (last rating attained in August 2009) | ||
• | Moody’s — Baa2/negative (last rating attained in September 2009) |
2009 | 2008 | 2007 | ||||||||||
Common stock shares at January 1, issued and outstanding | 110,270 | 108,234 | 139,705 | |||||||||
Common stock issuances | ||||||||||||
Public offering | 13,225 | 0 | 0 | |||||||||
Acquisitions | 789 | 1,152 | 12,604 | |||||||||
401(k) savings and retirement plan | 1,135 | 0 | 0 | |||||||||
Share-based compensation plans | 493 | 884 | 26 | |||||||||
Cancellation of treasury stock | 0 | 0 | (44,101 | ) | ||||||||
Common stock shares at December 31, issued and outstanding | 125,912 | 110,270 | 108,234 | |||||||||
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Payments Due by Year | ||||||||||||||||||||||||
Note Reference | 2010 | 2011-2012 | 2013-2014 | Thereafter | Total | |||||||||||||||||||
Cash Contractual Obligations | ||||||||||||||||||||||||
Short-term borrowings | ||||||||||||||||||||||||
Lines of credit / commercial paper1 | Note 6 | $ | 236.5 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 236.5 | |||||||||||||
Interest payments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||
Principal payments | Note 6 | 385.4 | 437.7 | 260.3 | 1,422.0 | 2,505.4 | ||||||||||||||||||
Interest payments | Note 6 | 165.0 | 289.5 | 228.0 | 699.0 | 1,381.5 | ||||||||||||||||||
Operating leases | Note 7 | 27.1 | 41.1 | 20.4 | 29.5 | 118.1 | ||||||||||||||||||
Mineral royalties | Note 12 | 15.6 | 24.8 | 18.6 | 134.2 | 193.2 | ||||||||||||||||||
Unconditional purchase obligations | ||||||||||||||||||||||||
Capital | Note 12 | 8.0 | 0.9 | 0.0 | 0.0 | 8.9 | ||||||||||||||||||
Noncapital2 | Note 12 | 20.9 | 28.2 | 14.7 | 13.8 | 77.6 | ||||||||||||||||||
Benefit plans3 | Note 10 | 42.6 | 94.6 | 107.9 | 313.7 | 558.8 | ||||||||||||||||||
Total cash contractual obligations4,5 | $ | 901.1 | $ | 916.8 | $ | 649.9 | $ | 2,612.2 | $ | 5,080.0 | ||||||||||||||
1 | Lines of credit represent borrowings under, or commerical paper backed by, our five-year credit facility which expires November 16, 2012. | |
2 | Noncapital unconditional purchase obligations relate primarily to transportation and electrical contracts. | |
3 | Payments in “Thereafter” column for benefit plans are for the years 2015-2019. | |
4 | The above table excludes discounted asset retirement obligations in the amount of $167.8 million at December 31, 2009, the majority of which have an estimated settlement date beyond 2014 (see Note 17 “Asset Retirement Obligations” in Item 8 “Financial Statements and Supplementary Data”). | |
5 | The above table excludes unrecognized tax benefits in the amount of $21.0 million at December 31, 2009, as we cannot make a reasonably reliable estimate of the amount and period of related future payment of these uncertain tax positions (for more details, see Note 9 “Income Taxes” in Item 8 “Financial Statements and Supplementary Data.”) |
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Standby Letters of Credit | ||||
Risk management requirement for insurance claims | $ | 36.2 | ||
Payment surety required by utilities | 0.1 | |||
Contractual reclamation/restoration requirements | 11.9 | |||
Financing requirement for industrial revenue bond | 14.2 | |||
Total standby letters of credit | $ | 62.4 | ||
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• | Discount Rate — The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future. | ||
• | Expected Return on Plan Assets— We project the future return on plan assets based principally on prior performance and our expectations for future returns for the types of investments held by the plan as well as the expected long-term asset allocation of the plan. These projected returns reduce the recorded net benefit costs. | ||
• | Rate of Compensation Increase— For salary-related plans only, we project employees’ annual pay increases, which are used to project employees’ pension benefits at retirement. | ||
• | Rate of Increase in the Per Capita Cost of Covered Healthcare Benefits — We project the expected increases in the cost of covered healthcare benefits. |
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(Favorable) Unfavorable | ||||||||||||||||
0.5 Percentage Point Increase | 0.5 Percentage Point Decrease | |||||||||||||||
Increase (Decrease) | Increase (Decrease) | Increase (Decrease) | Increase (Decrease) | |||||||||||||
in Benefit Obligation | in Benefit Cost | in Benefit Obligation | in Benefit Cost | |||||||||||||
Actuarial Assumptions | ||||||||||||||||
Discount rate: | ||||||||||||||||
Pension | $ | (41.5 | ) | $ | (1.5 | ) | $ | 46.0 | $ | 2.2 | ||||||
Other postretirement benefits | (4.4 | ) | (0.2 | ) | 4.8 | 0.2 | ||||||||||
Expected return on plan assets | not applicable | (2.8 | ) | not applicable | 2.8 | |||||||||||
Rate of compensation increase (for salary-related plans) | 8.4 | 1.2 | (7.7 | ) | (1.1 | ) | ||||||||||
Rate of increase in the per capita cost of covered healthcare benefits | 5.3 | 0.7 | (4.7 | ) | (0.6 | ) | ||||||||||
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Birmingham, Alabama
February 26, 2010
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For the years ended December 31 | 2009 | 2008 | 2007 | |||||||||
Amounts and shares in thousands, except per share data | (As Restated, | |||||||||||
See Note 20) | ||||||||||||
Net sales | $ | 2,543,707 | $ | 3,453,081 | $ | 3,090,133 | ||||||
Delivery revenues | 146,783 | 198,357 | 237,654 | |||||||||
Total revenues | 2,690,490 | 3,651,438 | 3,327,787 | |||||||||
Cost of goods sold | 2,097,745 | 2,703,369 | 2,139,230 | |||||||||
Delivery costs | 146,783 | 198,357 | 237,654 | |||||||||
Cost of revenues | 2,244,528 | 2,901,726 | 2,376,884 | |||||||||
Gross profit | 445,962 | 749,712 | 950,903 | |||||||||
Selling, administrative and general expenses | 321,608 | 342,584 | 289,604 | |||||||||
Goodwill impairment | 0 | 252,664 | 0 | |||||||||
Gain on sale of property, plant & equipment and businesses, net | 27,104 | 94,227 | 58,659 | |||||||||
Other operating income (expense), net | (3,006 | ) | 411 | (5,541 | ) | |||||||
Operating earnings | 148,452 | 249,102 | 714,417 | |||||||||
Other income (expense), net | 5,307 | (4,357 | ) | (5,322 | ) | |||||||
Interest income | 2,282 | 3,126 | 6,625 | |||||||||
Interest expense | 175,262 | 172,813 | 48,218 | |||||||||
Earnings (loss) from continuing operations before income taxes | (19,221 | ) | 75,058 | 667,502 | ||||||||
Provision for income taxes | ||||||||||||
Current | 6,106 | 92,346 | 199,931 | |||||||||
Deferred | (43,975 | ) | (20,655 | ) | 4,485 | |||||||
Total provision for income taxes | (37,869 | ) | 71,691 | 204,416 | ||||||||
Earnings from continuing operations | 18,648 | 3,367 | 463,086 | |||||||||
Earnings (loss) on discontinued operations, net of income taxes (Note 2) | 11,666 | (2,449 | ) | (12,176 | ) | |||||||
Net earnings | $ | 30,314 | $ | 918 | $ | 450,910 | ||||||
Basic earnings (loss) per share | ||||||||||||
Continuing operations | $ | 0.16 | $ | 0.03 | $ | 4.77 | ||||||
Discontinued operations | $ | 0.09 | $ | ( 0.02 | ) | $ | ( 0.12 | ) | ||||
Net earnings per share | $ | 0.25 | $ | 0.01 | $ | 4.65 | ||||||
Diluted earnings (loss) per share | ||||||||||||
Continuing operations | $ | 0.16 | $ | 0.03 | $ | 4.66 | ||||||
Discontinued operations | $ | 0.09 | $ | ( 0.02 | ) | $ | ( 0.12 | ) | ||||
Net earnings per share | $ | 0.25 | $ | 0.01 | $ | 4.54 | ||||||
Dividends declared per share | $ | 1.48 | $ | 1.96 | $ | 1.84 | ||||||
Weighted-average common shares outstanding | 118,891 | 109,774 | 97,036 | |||||||||
Weighted-average common shares outstanding, assuming dilution | 119,430 | 110,954 | 99,403 | |||||||||
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As of December 31 | 2009 | 2008 | ||||||
Amounts and shares in thousands, except per share data | (As Restated, | |||||||
See Note 20) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 22,265 | $ | 10,194 | ||||
Medium-term investments | 4,111 | 36,734 | ||||||
Accounts and notes receivable | ||||||||
Customers, less allowance for doubtful accounts 2009 — $8,722; 2008 — $8,711 | 254,753 | 326,204 | ||||||
Other | 13,271 | 30,773 | ||||||
Inventories | 325,033 | 364,311 | ||||||
Deferred income taxes | 57,967 | 71,205 | ||||||
Prepaid expenses | 50,817 | 54,469 | ||||||
Assets held for sale | 15,072 | 0 | ||||||
Total current assets | 743,289 | 893,890 | ||||||
Investments and long-term receivables | 33,283 | 27,998 | ||||||
Property, plant & equipment, net | 3,874,671 | 4,155,812 | ||||||
Goodwill | 3,093,979 | 3,085,468 | ||||||
Other intangible assets, net | 682,643 | 673,792 | ||||||
Other assets | 105,085 | 79,664 | ||||||
Total assets | $ | 8,532,950 | $ | 8,916,624 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities | ||||||||
Current maturities of long-term debt | $ | 385,381 | $ | 311,685 | ||||
Short-term borrowings | 236,512 | 1,082,500 | ||||||
Trade payables and accruals | 121,324 | 147,104 | ||||||
Accrued salaries, wages and management incentives | 38,148 | 44,858 | ||||||
Accrued interest | 9,458 | 14,384 | ||||||
Other accrued liabilities | 65,503 | 62,535 | ||||||
Liabilities of assets held for sale | 369 | 0 | ||||||
Total current liabilities | 856,695 | 1,663,066 | ||||||
Long-term debt | 2,116,120 | 2,153,588 | ||||||
Deferred income taxes | 887,268 | 920,475 | ||||||
Deferred management incentive and other compensation | 33,327 | 34,770 | ||||||
Pension benefits | 212,033 | 198,415 | ||||||
Other postretirement benefits | 109,990 | 105,560 | ||||||
Asset retirement obligations | 167,757 | 173,435 | ||||||
Other noncurrent liabilities | 97,738 | 113,563 | ||||||
Total liabilities | 4,480,928 | 5,362,872 | ||||||
Other commitments and contingencies (Note 12) | ||||||||
Shareholders’ equity | ||||||||
Common stock, $1 par value - 125,912 shares issued as of 2009 and 110,270 shares issued as of 2008 | 125,912 | 110,270 | ||||||
Capital in excess of par value | 2,368,228 | 1,734,835 | ||||||
Retained earnings | 1,752,240 | 1,893,929 | ||||||
Accumulated other comprehensive loss | (194,358 | ) | (185,282 | ) | ||||
Total shareholders’ equity | 4,052,022 | 3,553,752 | ||||||
Total liabilities and shareholders’ equity | $ | 8,532,950 | $ | 8,916,624 | ||||
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For the years ended December 31 | 2009 | 2008 | 2007 | |||||||||
Amounts in thousands | (As Restated, | |||||||||||
See Note 20) | ||||||||||||
Operating Activities | ||||||||||||
Net earnings | $ | 30,314 | $ | 918 | $ | 450,910 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities | ||||||||||||
Depreciation, depletion, accretion and amortization | 394,612 | 389,060 | 271,475 | |||||||||
Goodwill impairment | 0 | 252,664 | 0 | |||||||||
Net gain on sale of property, plant & equipment and businesses | (27,916 | ) | (94,227 | ) | (58,659 | ) | ||||||
Contributions to pension plans | (27,616 | ) | (3,127 | ) | (1,808 | ) | ||||||
Share-based compensation | 23,120 | 19,096 | 16,942 | |||||||||
Excess tax benefits from share-based compensation | (2,072 | ) | (11,209 | ) | (29,220 | ) | ||||||
Deferred tax provision | (43,773 | ) | (19,756 | ) | 7,427 | |||||||
(Increase) decrease in assets before initial effects of business acquisitions and dispositions | ||||||||||||
Accounts and notes receivable | 79,930 | 61,352 | 44,779 | |||||||||
Inventories | 39,289 | (7,630 | ) | (29,508 | ) | |||||||
Prepaid expenses | 4,127 | (23,425 | ) | 27,191 | ||||||||
Other assets | (27,670 | ) | (13,568 | ) | (17,252 | ) | ||||||
Increase (decrease) in liabilities before initial effects of business acquisitions and dispositions | ||||||||||||
Accrued interest and income taxes | (2,854 | ) | 8,139 | 47,947 | ||||||||
Trade payables and other accruals | (30,810 | ) | (125,167 | ) | (22,541 | ) | ||||||
Other noncurrent liabilities | 28,263 | 15,128 | (20,967 | ) | ||||||||
Other, net | 16,091 | (13,063 | ) | 21,428 | ||||||||
Net cash provided by operating activities | 453,035 | 435,185 | 708,144 | |||||||||
Investing Activities | ||||||||||||
Purchases of property, plant & equipment | (109,729 | ) | (353,196 | ) | (483,322 | ) | ||||||
Proceeds from sale of property, plant & equipment | 17,750 | 25,542 | 88,939 | |||||||||
Proceeds from sale of businesses | 16,075 | 225,783 | 30,560 | |||||||||
Payment for businesses acquired, net of acquired cash | (36,980 | ) | (84,057 | ) | (3,297,898 | ) | ||||||
Reclassification from cash equivalents to medium-term investments | 0 | (36,734 | ) | 0 | ||||||||
Redemption of medium-term investments | 33,282 | 0 | 0 | |||||||||
Proceeds from loan on life insurance policies | 0 | 28,646 | 0 | |||||||||
Other, net | (400 | ) | 4,976 | 7,422 | ||||||||
Net cash used for investing activities | (80,002 | ) | (189,040 | ) | (3,654,299 | ) | ||||||
Financing Activities | ||||||||||||
Net short-term borrowings (payments) | (847,963 | ) | (1,009,000 | ) | 1,892,600 | |||||||
Payment of current maturities and long-term debt | (361,724 | ) | (48,794 | ) | (2,075 | ) | ||||||
Proceeds from issuance of long-term debt, net of discounts | 397,660 | 949,078 | 1,223,579 | |||||||||
Debt issuance costs | (3,033 | ) | (5,633 | ) | (9,173 | ) | ||||||
Settlements of forward starting interest rate swap agreements | 0 | (32,474 | ) | (57,303 | ) | |||||||
Purchases of common stock | 0 | 0 | (4,800 | ) | ||||||||
Proceeds from issuance of common stock | 606,546 | 55,072 | 0 | |||||||||
Dividends paid | (171,468 | ) | (214,783 | ) | (181,315 | ) | ||||||
Proceeds from exercise of stock options | 17,327 | 24,602 | 35,074 | |||||||||
Excess tax benefits from share-based compensation | 2,072 | 11,209 | 29,220 | |||||||||
Other, net | (379 | ) | (116 | ) | 6 | |||||||
Net cash provided by (used for) financing activities | (360,962 | ) | (270,839 | ) | 2,925,813 | |||||||
Net increase (decrease) in cash and cash equivalents | 12,071 | (24,694 | ) | (20,342 | ) | |||||||
Cash and cash equivalents at beginning of year | 10,194 | 34,888 | 55,230 | |||||||||
Cash and cash equivalents at end of year | $ | 22,265 | $ | 10,194 | $ | 34,888 | ||||||
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Vulcan Materials Company and Subsidiary Companies
Accumulated | ||||||||||||||||||||||||||||||||
Capital in | Other | |||||||||||||||||||||||||||||||
Common Stock1 | Excess of | Retained | Comprehensive | Treasury Stock | ||||||||||||||||||||||||||||
Amounts and shares in thousands, except per share data | Shares | Amount | Par Value | Earnings | Income (Loss) | Shares | Amount | Total | ||||||||||||||||||||||||
Balances at January 1, 2007 (As Restated, See Note 20) | 139,705 | $ | 139,705 | $ | 191,695 | $ | 3,008,509 | $ | (4,953 | ) | (45,099 | ) | $ | (1,298,074 | ) | $ | 2,036,882 | |||||||||||||||
Net earnings | 0 | 0 | 0 | 450,910 | 0 | 0 | 0 | 450,910 | ||||||||||||||||||||||||
Common stock issued | ||||||||||||||||||||||||||||||||
Acquisitions | 12,604 | 12,604 | 1,423,883 | 0 | 0 | 0 | 0 | 1,436,487 | ||||||||||||||||||||||||
Share-based compensation plans | 26 | 26 | 26,566 | 0 | 0 | 1,042 | 10,858 | 37,450 | ||||||||||||||||||||||||
Share-based compensation expense | 0 | 0 | 16,942 | 0 | 0 | 0 | 0 | 16,942 | ||||||||||||||||||||||||
Excess tax benefits from share-based compensation | 0 | 0 | 29,220 | 0 | 0 | 0 | 0 | 29,220 | ||||||||||||||||||||||||
Accrued dividends on share-based compensation awards | 0 | 0 | 497 | (497 | ) | 0 | 0 | 0 | 0 | |||||||||||||||||||||||
Purchases of common stock | 0 | 0 | 0 | 0 | 0 | (44 | ) | (4,800 | ) | (4,800 | ) | |||||||||||||||||||||
Cash dividends on common stock | 0 | 0 | 0 | (181,315 | ) | 0 | 0 | 0 | (181,315 | ) | ||||||||||||||||||||||
Fair value adjustment to cash flow hedges, net of reclassification adjustment | 0 | 0 | 0 | 0 | (55,922 | ) | 0 | 0 | (55,922 | ) | ||||||||||||||||||||||
Adjustment for funded status of pension and postretirement benefit plans, net of reclassification adjustment | 0 | 0 | 0 | 0 | 20,658 | 0 | 0 | 20,658 | ||||||||||||||||||||||||
Cumulative effect of accounting change (Note 1, New Accounting Standards, 2007 — Uncertainty in Income Taxes) | 0 | 0 | 0 | (940 | ) | 0 | 0 | 0 | (940 | ) | ||||||||||||||||||||||
Other | 0 | 0 | 0 | 11 | 0 | 0 | 0 | 11 | ||||||||||||||||||||||||
Cancellation of treasury stock | (44,101 | ) | (44,101 | ) | (80,938 | ) | (1,166,977 | ) | 0 | 44,101 | 1,292,016 | 0 | ||||||||||||||||||||
Balances at December 31, 2007 (As Restated, See Note 20) | 108,234 | $ | 108,234 | $ | 1,607,865 | $ | 2,109,701 | $ | (40,217 | ) | 0 | $ | 0 | $ | 3,785,583 | |||||||||||||||||
Accounting Change (Note 1, New Accounting Standards, 2008 — Retirement Benefits Measurement Date) | 0 | 0 | 0 | (1,312 | ) | 8,981 | 0 | 0 | 7,669 | |||||||||||||||||||||||
Balances at January 1, 2008 adjusted for accounting change | 108,234 | $ | 108,234 | $ | 1,607,865 | $ | 2,108,389 | $ | (31,236 | ) | 0 | $ | 0 | $ | 3,793,252 | |||||||||||||||||
Net earnings (As Restated, See Note 20) | 0 | 0 | 0 | 918 | 0 | 0 | 0 | 918 | ||||||||||||||||||||||||
Common stock issued | ||||||||||||||||||||||||||||||||
Acquisitions | 1,152 | 1,152 | 78,948 | 0 | 0 | 0 | 0 | 80,100 | ||||||||||||||||||||||||
Share-based compensation plans | 884 | 884 | 17,130 | 0 | 0 | 0 | 0 | 18,014 | ||||||||||||||||||||||||
Share-based compensation expense | 0 | 0 | 19,096 | 0 | 0 | 0 | 0 | 19,096 | ||||||||||||||||||||||||
Excess tax benefits from share-based compensation | 0 | 0 | 11,209 | 0 | 0 | 0 | 0 | 11,209 | ||||||||||||||||||||||||
Accrued dividends on share-based compensation awards | 0 | 0 | 593 | (593 | ) | 0 | 0 | 0 | 0 | |||||||||||||||||||||||
Cash dividends on common stock | 0 | 0 | 0 | (214,783 | ) | 0 | 0 | 0 | (214,783 | ) | ||||||||||||||||||||||
Fair value adjustment to cash flow hedges, net of reclassification adjustment | 0 | 0 | 0 | 0 | (672 | ) | 0 | 0 | (672 | ) | ||||||||||||||||||||||
Adjustment for funded status of pension and postretirement benefit plans, net of reclassification adjustment | 0 | 0 | 0 | 0 | (153,375 | ) | 0 | 0 | (153,375 | ) | ||||||||||||||||||||||
Other | 0 | 0 | (6 | ) | (2 | ) | 1 | 0 | 0 | (7 | ) | |||||||||||||||||||||
Balances at December 31, 2008 (As Restated, See Note 20) | 110,270 | $ | 110,270 | $ | 1,734,835 | $ | 1,893,929 | $ | (185,282 | ) | 0 | $ | 0 | $ | 3,553,752 | |||||||||||||||||
Net earnings | 0 | 0 | 0 | 30,314 | 0 | 0 | 0 | 30,314 | ||||||||||||||||||||||||
Common stock issued | ||||||||||||||||||||||||||||||||
Public offering | 13,225 | 13,225 | 506,768 | 0 | 0 | 0 | 0 | 519,993 | ||||||||||||||||||||||||
Acquisitions | 789 | 789 | 33,073 | 0 | 0 | 0 | 0 | 33,862 | ||||||||||||||||||||||||
401(k) Trustee (Note 13) | 1,135 | 1,135 | 51,556 | 0 | 0 | 0 | 0 | 52,691 | ||||||||||||||||||||||||
Share-based compensation plans | 493 | 493 | 16,279 | 0 | 0 | 0 | 0 | 16,772 | ||||||||||||||||||||||||
Share-based compensation expense | 0 | 0 | 23,120 | 0 | 0 | 0 | 0 | 23,120 | ||||||||||||||||||||||||
Excess tax benefits from share-based compensation | 0 | 0 | 2,072 | 0 | 0 | 0 | 0 | 2,072 | ||||||||||||||||||||||||
Accrued dividends on share-based compensation awards | 0 | 0 | 521 | (521 | ) | 0 | 0 | 0 | 0 | |||||||||||||||||||||||
Cash dividends on common stock | 0 | 0 | 0 | (171,468 | ) | 0 | 0 | 0 | (171,468 | ) | ||||||||||||||||||||||
Fair value adjustment to cash flow hedges, net of reclassification adjustment | 0 | 0 | 0 | 0 | 7,154 | 0 | 0 | 7,154 | ||||||||||||||||||||||||
Adjustment for funded status of pension and postretirement benefit plans, net of reclassification adjustment | 0 | 0 | 0 | 0 | (16,229 | ) | 0 | 0 | (16,229 | ) | ||||||||||||||||||||||
Other | 0 | 0 | 4 | (14 | ) | (1 | ) | 0 | 0 | (11 | ) | |||||||||||||||||||||
Balances at December 31, 2009 | 125,912 | $ | 125,912 | $ | 2,368,228 | $ | 1,752,240 | $ | (194,358 | ) | 0 | $ | 0 | $ | 4,052,022 | |||||||||||||||||
1 Common stock, $1 par value, 480 million shares authorized in 2009, 2008 and 2007 | ||||||||||||||||||||||||||||||||
For the years ended December 31 | 2009 | 2008 | 2007 | |||||||||||||||||||||||||||||
Comprehensive income (loss) | ||||||||||||||||||||||||||||||||
Net earnings, As Restated for 2008, See Note 20 | $ | 30,314 | $ | 918 | $ | 450,910 | ||||||||||||||||||||||||||
Other comprehensive income (loss) | (9,075 | ) | (154,047 | ) | (35,264 | ) | ||||||||||||||||||||||||||
Total comprehensive income (loss) (As Restated for 2008, See Note 20) | $ | 21,239 | $ | (153,129 | ) | $ | 415,646 | |||||||||||||||||||||||||
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2009 | 2008 | 2007 | ||||||||||
Depreciation | $ | 361,530 | $ | 365,177 | $ | 253,764 | ||||||
Depletion | 10,143 | 7,896 | 6,042 | |||||||||
Accretion | 8,802 | 7,082 | 5,866 | |||||||||
Amortization of leaseholds and capitalized leases | 180 | 178 | 185 | |||||||||
Amortization of intangibles | 13,957 | 8,727 | 5,618 | |||||||||
Total depreciation, depletion, accretion and amortization | $ | 394,612 | $ | 389,060 | $ | 271,475 | ||||||
Level 1: | Quoted prices in active markets for identical assets or liabilities; | |||
Level 2: | Inputs that are derived principally from or corroborated by observable market data; | |||
Level 3: | Inputs that are unobservable and significant to the overall fair value measurement. |
Level 2 | ||||||||
2009 | 2008 | |||||||
Fair Value Recurring | ||||||||
Medium-term investments | $ | 4,111 | $ | 36,734 | ||||
Interest rate derivative | (11,192 | ) | (16,247 | ) | ||||
Foreign currency derivative | 0 | (19 | ) | |||||
Net liability | $ | (7,081 | ) | $ | 20,468 | |||
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2009 | 2008 | |||||||
Cash surrender value | $ | 32,720 | $ | 30,235 | ||||
Loans outstanding | 32,710 | 30,225 | ||||||
Net value included in noncurrent assets | $ | 10 | $ | 10 | ||||
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Unrecognized | Expected | |||||||
Compensation | Weighted-average | |||||||
Expense | Recognition (Years) | |||||||
Stock options/SOSARs | $ | 11,904 | 0.9 | |||||
Performance shares | 6,616 | 1.8 | ||||||
Deferred stock units | 2,123 | 1.5 | ||||||
Total/weighted-average | $ | 20,643 | 1.3 | |||||
2009 | 2008 | 2007 | ||||||||||
Pretax compensation expense | $ | 21,861 | $ | 17,800 | $ | 18,261 | ||||||
Income tax benefits | 8,915 | 7,038 | 7,319 | |||||||||
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• | Discount Rate— The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future. | ||
• | Expected Return on Plan Assets— We project the future return on plan assets based principally on prior performance and our expectations for future returns for the types of investments held by the plan as well as the expected long-term asset allocation of the plan. These projected returns reduce the recorded net benefit costs. | ||
• | Rate of Compensation Increase— For salary-related plans only, we project employees’ annual pay increases, which are used to project employees’ pension benefits at retirement. | ||
• | Rate of Increase in the Per Capita Cost of Covered Healthcare Benefits — We project the expected increases in the cost of covered healthcare benefits. |
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2009 | 2008 | |||||||
Liabilities (undiscounted) | $ | 60,072 | $ | 61,206 | ||||
Accrued liabilities (discounted) | 56,998 | 57,752 | ||||||
Discount rate | 1.77 | % | 1.96 | % | ||||
Estimated payments for five subsequent years | ||||
2010 | $ | 18,914 | ||
2011 | 11,817 | |||
2012 | 7,920 | |||
2013 | 5,649 | |||
2014 | 3,652 | |||
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2009 | 2008 | 2007 | ||||||||||
Weighted-average common shares outstanding | 118,891 | 109,774 | 97,036 | |||||||||
Dilutive effect of | ||||||||||||
Stock options/SOSARs | 269 | 905 | 1,903 | |||||||||
Other stock compensation plans | 270 | 275 | 464 | |||||||||
Weighted-average common shares outstanding, assuming dilution | 119,430 | 110,954 | 99,403 | |||||||||
2009 | 2008 | 2007 | ||||||||||
Antidilutive common stock equivalents | 3,661 | 2,130 | 407 | |||||||||
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2009 | 2008 | |||||||
5CP earn-out | ||||||||
Accounts and notes receivable — other | $ | 0 | $ | 9,737 | ||||
Other noncurrent liabilities | 0 | 1,077 | ||||||
Total | $ | 0 | $ | 10,814 | ||||
2009 | 2008 | 2007 | ||||||||||
Discontinued Operations | ||||||||||||
Earnings (loss) from results of discontinued operations | $ | 18,644 | $ | (4,059 | ) | $ | (19,327 | ) | ||||
Gain on disposal of discontinued operations | 812 | 0 | 0 | |||||||||
Income tax (provision) benefit | (7,790 | ) | 1,610 | 7,151 | ||||||||
Earnings (loss) on discontinued operations, net of tax | $ | 11,666 | $ | ( 2,449 | ) | $ | (12,176 | ) | ||||
2009 | 2008 | |||||||
Finished products | $ | 261,752 | $ | 295,525 | ||||
Raw materials | 21,807 | 28,568 | ||||||
Products in process | 3,907 | 4,475 | ||||||
Operating supplies and other | 37,567 | 35,743 | ||||||
Total inventories | $ | 325,033 | $ | 364,311 | ||||
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2009 | 2008 | |||||||
Land and land improvements | $ | 2,080,457 | $ | 2,043,702 | ||||
Buildings | 152,615 | 150,922 | ||||||
Machinery and equipment | 4,091,209 | 4,001,194 | ||||||
Leaseholds | 7,231 | 7,508 | ||||||
Deferred asset retirement costs | 147,992 | 153,360 | ||||||
Construction in progress | 173,757 | 279,187 | ||||||
Total | $ | 6,653,261 | $ | 6,635,873 | ||||
Less allowances for depreciation, depletion and amortization | 2,778,590 | 2,480,061 | ||||||
Property, plant & equipment, net | $ | 3,874,671 | $ | 4,155,812 | ||||
2009 | 2008 | 2007 | ||||||||||
Capitalized interest cost | $ | 10,721 | $ | 14,243 | $ | 5,130 | ||||||
Total interest cost incurred before recognition of the capitalized amount | 185,983 | 187,056 | 53,348 | |||||||||
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Fair Value1 | ||||||||||
Balance Sheet Location | 2009 | 2008 | ||||||||
Liability Derivatives | ||||||||||
Interest rate derivatives | Other accrued liabilites | $ | 11,193 | $ | 0 | |||||
Interest rate derivatives | Other noncurrent liabilities | 0 | 16,247 | |||||||
Total derivatives | $ | 11,193 | $ | 16,247 | ||||||
1 | See Note 1 (caption Fair Value Measurements) for further discussion of the fair value determination. |
Location on Statement | 2009 | 2008 | 2007 | |||||||||||
Interest rate derivatives | ||||||||||||||
Gain (loss) recognized in OCI (effective portion) | Note 14 | $ | (4,633 | ) | $ | (12,439 | ) | $ | (93,138 | ) | ||||
Loss reclassified from Accumulated OCI (effective portion) | Interest expense | (16,776 | ) | (9,142 | ) | (198 | ) | |||||||
Gain (loss) recognized in earnings (ineffective portion and amounts excluded from effectiveness test) | Other income (expense), net | 0 | 2,169 | (6,576 | ) | |||||||||
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2009 | 2008 | |||||||
Bank borrowings | $ | 0 | $ | 1,082,500 | ||||
Commercial paper | 236,512 | 0 | ||||||
Total short-term borrowings | $ | 236,512 | $ | 1,082,500 | ||||
Bank borrowings | ||||||||
Maturity | n/a | 2 days | ||||||
Weighted-average interest rate | n/a | 1.63 | % | |||||
Commercial paper | ||||||||
Maturity | 42 days | n/a | ||||||
Weighted-average interest rate | 0.39 | % | n/a | |||||
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2009 | 2008 | |||||||
10.125% 2015 notes issued 20091 | $ | 149,538 | $ | 0 | ||||
10.375% 2018 notes issued 20092 | 248,270 | 0 | ||||||
3-year floating loan issued 2008 | 175,000 | 285,000 | ||||||
6.30% 5-year notes issued 20083 | 249,632 | 249,543 | ||||||
7.00% 10-year notes issued 20084 | 399,625 | 399,595 | ||||||
3-year floating notes issued 2007 | 325,000 | 325,000 | ||||||
5.60% 5-year notes issued 20075 | 299,666 | 299,565 | ||||||
6.40% 10-year notes issued 20076 | 349,837 | 349,822 | ||||||
7.15% 30-year notes issued 20077 | 249,317 | 249,311 | ||||||
6.00% 10-year notes issued 1999 | 0 | 250,000 | ||||||
Private placement notes | 15,243 | 15,375 | ||||||
Medium-term notes | 21,000 | 21,000 | ||||||
Industrial revenue bonds | 17,550 | 17,550 | ||||||
Other notes | 1,823 | 3,512 | ||||||
Total debt excluding short-term borrowings | $ | 2,501,501 | $ | 2,465,273 | ||||
Less current maturities of long-term debt | 385,381 | 311,685 | ||||||
Total long-term debt | $ | 2,116,120 | $ | 2,153,588 | ||||
Estimated fair value of long-term debt | $ | 2,300,522 | $ | 1,843,479 | ||||
1 | Includes a decrease for unamortized discounts of $462 thousand as of December 31, 2009. The effective interest rate for these 2015 notes is 10.305%. | |
2 | Includes a decrease for unamortized discounts of $1,730 thousand as of December 31, 2009. The effective interest rate for these 2018 notes is 10.584%. | |
3 | Includes decreases for unamortized discounts, as follows: December 31, 2009 — $368 thousand and December 31, 2008 — $457 thousand. The effective interest rate for these 5-year notes is 7.47%. | |
4 | Includes decreases for unamortized discounts, as follows: December 31, 2009 — $375 thousand and December 31, 2008 — $405 thousand. The effective interest rate for these 10-year notes is 7.86%. | |
5 | Includes decreases for unamortized discounts, as follows: December 31, 2009 — $334 thousand and December 31, 2008 — $435 thousand. The effective interest rate for these 5-year notes is 6.58%. | |
6 | Includes decreases for unamortized discounts, as follows: December 31, 2009 — $163 thousand and December 31, 2008 — $178 thousand. The effective interest rate for these 10-year notes is 7.39%. | |
7 | Includes decreases for unamortized discounts, as follows: December 31, 2009 — $683 thousand and December 31, 2008 — $689 thousand. The effective interest rate for these 30-year notes is 8.04%. |
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Total | Principal | Interest | ||||||||||
Payments of Long-term Debt | ||||||||||||
2010 | $ | 550,371 | $ | 385,385 | $ | 164,986 | ||||||
2011 | 281,302 | 135,249 | 146,053 | |||||||||
2012 | 445,876 | 302,452 | 143,424 | |||||||||
2013 | 378,178 | 260,166 | 118,012 | |||||||||
2014 | 110,158 | 177 | 109,981 | |||||||||
2009 | 2008 | 2007 | ||||||||||
| | | | ||||||||||||
Minimum rentals | $ | 36,976 | $ | 34,263 | $ | 28,674 | ||||||
Contingent rentals (based principally on usage) | 25,846 | 39,169 | 33,904 | |||||||||
Total | $ | 62,822 | $ | 73,432 | $ | 62,578 | ||||||
Future Minimum Operating Lease Payments | ||||
2010 | $ | 27,102 | ||
2011 | 21,662 | |||
2012 | 19,405 | |||
2013 | 14,038 | |||
2014 | 6,360 | |||
Thereafter | 29,579 | |||
Total | $ | 118,146 | ||
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2009 | 2008 | |||||||
Continuing operations | $ | 7,830 | $ | 8,366 | ||||
Retained from former Chemicals businesses | 5,001 | 5,342 | ||||||
Total | $ | 12,831 | $ | 13,708 | ||||
2009 | 2008 | 2007 | ||||||||||
Domestic | $ | (43,180 | ) | $ | 45,445 | $ | 643,350 | |||||
Foreign | 23,959 | 29,613 | 24,152 | |||||||||
Total | $ | (19,221 | ) | $ | 75,058 | $ | 667,502 | |||||
2009 | 2008 | 2007 | ||||||||||
(As Restated, | ||||||||||||
See Note 20) | ||||||||||||
Current | ||||||||||||
Federal | $ | (3,965 | ) | $ | 64,428 | $ | 172,149 | |||||
State and local | 7,034 | 20,883 | 21,894 | |||||||||
Foreign | 3,037 | 7,035 | 5,888 | |||||||||
Total | 6,106 | 92,346 | 199,931 | |||||||||
Deferred | ||||||||||||
Federal | (37,790 | ) | (18,978 | ) | 6,601 | |||||||
State and local | (5,794 | ) | (1,724 | ) | (488 | ) | ||||||
Foreign | (391 | ) | 47 | (1,628 | ) | |||||||
Total | (43,975 | ) | (20,655 | ) | 4,485 | |||||||
Total provision (benefit) | $ | (37,869 | ) | $ | 71,691 | $ | 204,416 | |||||
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2009 | 2008 | 2007 | ||||||||||||||||||||||
(As Restated, | ||||||||||||||||||||||||
See Note 20) | ||||||||||||||||||||||||
Income tax provision (benefit) at the federal statutory tax rate of 35% | $ | (6,727 | ) | 35.0 | % | $ | 26,272 | 35.0 | % | $ | 233,630 | 35.0 | % | |||||||||||
Increase (decrease) in income tax provision (benefit) resulting from Statutory depletion | (19,464 | ) | 101.3 | % | (28,063 | ) | -37.4 | % | (32,005 | ) | -4.8 | % | ||||||||||||
State and local income taxes, net of federal income tax benefit | 1,457 | -7.6 | % | 11,127 | 14.8 | % | 18,235 | 2.7 | % | |||||||||||||||
Nondeductible expense | 1,694 | -8.8 | % | 1,619 | 2.2 | % | 1,706 | 0.3 | % | |||||||||||||||
Goodwill impairment | 0 | 0.0 | % | 65,031 | 86.6 | % | 0 | 0.0 | % | |||||||||||||||
ESOP dividend deduction | (2,408 | ) | 12.5 | % | (3,017 | ) | -4.0 | % | (2,450 | ) | -0.4 | % | ||||||||||||
U.S. Production Activities Deduction | 0 | 0.0 | % | (2,203 | ) | -2.9 | % | (6,951 | ) | -1.0 | % | |||||||||||||
Fair market value over tax basis of contributions | (2,931 | ) | 15.3 | % | (3,814 | ) | -5.1 | % | (4,994 | ) | -0.7 | % | ||||||||||||
Foreign tax rate differential | (4,461 | ) | 23.2 | % | (4,955 | ) | -6.6 | % | (2,999 | ) | -0.4 | % | ||||||||||||
Tax loss on sale of stock — divestiture | (4,143 | ) | 21.6 | % | 0 | 0.0 | % | 0 | 0.0 | % | ||||||||||||||
Reversal cash surrender value — COLI plans | (412 | ) | 2.1 | % | (486 | ) | -0.6 | % | 0 | 0.0 | % | |||||||||||||
Prior year true up adjustments | 375 | -2.0 | % | 1,932 | 2.5 | % | 1,636 | 0.2 | % | |||||||||||||||
Provision for uncertain tax positions | (451 | ) | 2.3 | % | 1,516 | 2.0 | % | (1,363 | ) | -0.3 | % | |||||||||||||
Gain on sale of goodwill on divested assets | 0 | 0.0 | % | 6,937 | 9.3 | % | 0 | 0.0 | % | |||||||||||||||
Other | (398 | ) | 2.1 | % | (205 | ) | -0.3 | % | (29 | ) | 0.0 | % | ||||||||||||
Total income tax provision (benefit) | $ | (37,869 | ) | 197.0 | % | $ | 71,691 | 95.5 | % | $ | 204,416 | 30.6 | % | |||||||||||
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2009 | 2008 | |||||||
(As Restated, | ||||||||
See Note 20) | ||||||||
Deferred tax assets related to | ||||||||
Pensions | $ | 63,881 | $ | 57,323 | ||||
Other postretirement benefits | 46,718 | 43,741 | ||||||
Accruals for asset retirement obligations and environmental accruals | 23,569 | 46,686 | ||||||
Accounts receivable, principally allowance for doubtful accounts | 3,083 | 3,381 | ||||||
Deferred compensation, vacation pay and incentives | 61,197 | 55,522 | ||||||
Interest rate swaps | 34,468 | 38,734 | ||||||
Self-insurance reserves | 24,551 | 22,343 | ||||||
Valuation allowance on net operating loss carryforwards | (10,768 | ) | (6,057 | ) | ||||
Other | 37,343 | 24,453 | ||||||
Total deferred tax assets | 284,042 | 286,126 | ||||||
Deferred tax liabilities related to | ||||||||
Inventory | 3,091 | 221 | ||||||
Fixed assets | 848,923 | 873,999 | ||||||
Intangible assets | 248,978 | 237,528 | ||||||
Other | 12,351 | 23,648 | ||||||
Total deferred tax liabilities | 1,113,343 | 1,135,396 | ||||||
Net deferred tax liability | $ | 829,301 | $ | 849,270 | ||||
2009 | 2008 | |||||||
(As Restated, | ||||||||
See Note 20) | ||||||||
Deferred income taxes | ||||||||
Current assets | $ | (57,967 | ) | $ | (71,205 | ) | ||
Deferred liabilities | 887,268 | 920,475 | ||||||
Net deferred tax liability | $ | 829,301 | $ | 849,270 | ||||
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2009 | 2008 | 2007 | ||||||||||
Unrecognized income tax benefits as of January 1 | $ | 18,131 | $ | 7,480 | $ | 9,700 | ||||||
Increases for tax positions related to | ||||||||||||
Prior years | 1,108 | 482 | 2,148 | |||||||||
Current year | 5,667 | 6,189 | 2,323 | |||||||||
Acquisitions | 0 | 5,250 | 0 | |||||||||
Decreases for tax positions related to | ||||||||||||
Prior years | (9 | ) | (1,009 | ) | (1,900 | ) | ||||||
Current year | 0 | 0 | 0 | |||||||||
Settlements with taxing authorities | (482 | ) | (261 | ) | (281 | ) | ||||||
Expiration of applicable statute of limitations | (3,441 | ) | 0 | (4,510 | ) | |||||||
Unrecognized income tax benefits as of December 31 | $ | 20,974 | $ | 18,131 | $ | 7,480 | ||||||
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2009 | 2008 | |||||||
Change in Benefit Obligation | ||||||||
Benefit obligation at beginning of year | $ | 620,845 | $ | 636,270 | ||||
Remeasurement adjustment1 | 0 | (21,020 | ) | |||||
Service cost | 18,638 | 19,166 | ||||||
Interest cost | 41,941 | 39,903 | ||||||
Actuarial (gain) loss | 61,019 | (21,819 | ) | |||||
Benefits paid | (32,660 | ) | (31,655 | ) | ||||
Benefit obligation at end of year | $ | 709,783 | $ | 620,845 | ||||
Change in Plan Assets | ||||||||
Fair value of assets at beginning of year | $ | 418,977 | $ | 679,747 | ||||
Remeasurement adjustment1 | 0 | (2,809 | ) | |||||
Actual return on plan assets2 | 79,713 | (229,164 | ) | |||||
Employer contribution | 27,616 | 2,858 | ||||||
Benefits paid | (32,660 | ) | (31,655 | ) | ||||
Fair value of assets at end of year | $ | 493,646 | $ | 418,977 | ||||
Funded status | $ | (216,137 | ) | $ | (201,868 | ) | ||
Net amount recognized | $ | (216,137 | ) | $ | (201,868 | ) | ||
Amounts Recognized in the Consolidated Balance Sheets | ||||||||
Noncurrent assets | $ | 0 | $ | 0 | ||||
Current liabilities | (4,104 | ) | (3,453 | ) | ||||
Noncurrent liabilities | (212,033 | ) | (198,415 | ) | ||||
Net amount recognized | $ | (216,137 | ) | $ | (201,868 | ) | ||
Amounts Recognized in Accumulated Other Comprehensive Income | ||||||||
Net actuarial loss | $ | 225,301 | $ | 199,141 | ||||
Prior service cost | 1,398 | 1,858 | ||||||
Total amount recognized | $ | 226,699 | $ | 200,999 | ||||
1 | See Note 1, caption New Accounting Standards, Accounting Standards Recently Adopted, 2008—Retirement Benefits Measurement Date for an explanation of the remeasurement adjustment. | |
2 | Actual return on plan assets during 2008 includes a $48,018 thousand write-down in the estimated fair value of certain assets invested in Westridge Capital Management, Inc. The write-down, net of income taxes, was recorded in other comprehensive loss for 2008. |
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2009 | 2008 | 2007 | ||||||||||
Components of Net Periodic Pension Benefit Cost | ||||||||||||
Service cost | $ | 18,638 | $ | 19,166 | $ | 20,705 | ||||||
Interest cost | 41,941 | 39,903 | 34,683 | |||||||||
Expected return on plan assets | (46,505 | ) | (51,916 | ) | (46,517 | ) | ||||||
Amortization of prior service cost | 460 | 460 | 755 | |||||||||
Amortization of actuarial loss | 1,651 | 560 | 1,822 | |||||||||
Net periodic pension benefit cost | $ | 16,185 | $ | 8,173 | $ | 11,448 | ||||||
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income | ||||||||||||
Net actuarial loss (gain) | $ | 27,811 | $ | 259,308 | $ | (29,287 | ) | |||||
Prior service credit | 0 | 0 | (829 | ) | ||||||||
Reclassification of actuarial loss to net periodic pension benefit cost | (1,651 | ) | (560 | ) | (1,822 | ) | ||||||
Reclassification of prior service cost to net periodic pension benefit cost | (460 | ) | (460 | ) | (755 | ) | ||||||
Amount recognized in other comprehensive income | $ | 25,700 | $ | 258,288 | $ | (32,693 | ) | |||||
Amount recognized in net periodic pension benefit cost and other comprehensive income | $ | 41,885 | $ | 266,461 | $ | (21,245 | ) | |||||
Assumptions | ||||||||||||
Weighted-average assumptions used to determine benefit obligation at December 31 | ||||||||||||
Discount rate | 5.92 | % | 6.60 | % | ||||||||
Rate of compensation increase (for salary-related plans): | ||||||||||||
Inflation | 2.25 | % | 2.25 | % | ||||||||
Merit/productivity | 1.15 | % | 2.50 | % | ||||||||
Total rate of compensation increase | 3.40 | % | 4.75 | % | ||||||||
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31 | ||||||||||||
Discount rate | 6.60 | % | 6.45 | % | 5.70 | % | ||||||
Expected return on plan assets | 8.25 | % | 8.25 | % | 8.25 | % | ||||||
Rate of compensation increase (for salary-related plans): | ||||||||||||
Inflation | 2.25 | % | 2.25 | % | 2.25 | % | ||||||
Merit/productivity | 2.50 | % | 2.50 | % | 2.50 | % | ||||||
Total rate of compensation increase | 4.75 | % | 4.75 | % | 4.75 | % | ||||||
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Total | Level 11 | Level 21 | Level 31 | |||||||||||||
Asset Category | ||||||||||||||||
Debt securities | $ | 163,967 | $ | 0 | $ | 163,647 | $ | 320 | ||||||||
Investment funds | ||||||||||||||||
Bond funds | 4,650 | 4,647 | 3 | 0 | ||||||||||||
Commodity funds | 23,093 | 0 | 23,093 | 0 | ||||||||||||
Equity funds | 166,005 | 0 | 166,005 | 0 | ||||||||||||
Short-term funds | 37,308 | 0 | 37,308 | 0 | ||||||||||||
Venture capital and partnerships | 93,262 | 0 | 0 | 93,262 | ||||||||||||
Other | 5,361 | 1,995 | 3,366 | 0 | ||||||||||||
Total pension plan assets | $ | 493,646 | $ | 6,642 | $ | 393,422 | $ | 93,582 | ||||||||
1 | See Note 1 under the caption fair value measurements for a description of the fair value heirarchy. |
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Venture | ||||||||||||
Debt | Capital and | |||||||||||
Securities | Partnerships | Total | ||||||||||
Beginning balance at December 31, 2008 | $ | 342 | $ | 94,744 | $ | 95,086 | ||||||
Actual return on plan assets | ||||||||||||
Relating to assets still held at December 31, 2009 | 2 | (7,793 | ) | (7,791 | ) | |||||||
Relating to assets sold during the year ended December 31, 2009 | 0 | 0 | 0 | |||||||||
Purchases, sales and settlements | (24 | ) | 6,311 | 6,287 | ||||||||
Transfers in (out) of Level 3 | 0 | 0 | 0 | |||||||||
Ending balance at December 31, 2009 | $ | 320 | $ | 93,262 | $ | 93,582 | ||||||
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Pension | ||||
Employer Contributions | ||||
2007 | $ | 1,808 | ||
2008 | 3,127 | |||
2009 | 27,616 | |||
2010 (estimated) | 72,500 | |||
Pension | ||||
Estimated Future Benefit Payments | ||||
2010 | $ | 34,313 | ||
2011 | 36,598 | |||
2012 | 39,369 | |||
2013 | 41,483 | |||
2014 | 45,696 | |||
2015-2019 | 254,548 | |||
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2009 | 2008 | |||||||
Change in Benefit Obligation | ||||||||
Benefit obligation at beginning of year | $ | 112,837 | $ | 106,154 | ||||
Remeasurement adjustment1 | 0 | 4,459 | ||||||
Service cost | 3,912 | 5,224 | ||||||
Interest cost | 7,045 | 6,910 | ||||||
Amendments | 0 | 100 | ||||||
Actuarial loss (gain) | 974 | (3,621 | ) | |||||
Benefits paid | (6,455 | ) | (6,389 | ) | ||||
Benefit obligation at end of year | $ | 118,313 | $ | 112,837 | ||||
Change in Plan Assets | ||||||||
Fair value of assets at beginning of year | $ | 0 | $ | 0 | ||||
Actual return on plan assets | 0 | 0 | ||||||
Fair value of assets at end of year | $ | 0 | $ | 0 | ||||
Funded status | $ | (118,313 | ) | $ | (112,837 | ) | ||
Net amount recognized | $ | (118,313 | ) | $ | (112,837 | ) | ||
Amounts Recognized in the Consolidated Balance Sheets | ||||||||
Current liabilities | $ | (8,323 | ) | $ | (7,277 | ) | ||
Noncurrent liabilities | (109,990 | ) | (105,560 | ) | ||||
Net amount recognized | $ | (118,313 | ) | $ | (112,837 | ) | ||
Amounts Recognized in Accumulated Other Comprehensive Income | ||||||||
Net actuarial loss | $ | 19,165 | $ | 18,789 | ||||
Prior service credit | (5,543 | ) | (6,366 | ) | ||||
Total amount recognized | $ | 13,622 | $ | 12,423 | ||||
1 | See Note 1, caption New Accounting Standards, Accounting Standards Recently Adopted, 2008—Retirement Benefits Measurement Date for an explanation of the remeasurement adjustment. |
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2009 | 2008 | 2007 | ||||||||||
Components of Net Periodic Postretirement Benefit Cost | ||||||||||||
Service cost | $ | 3,912 | $ | 5,224 | $ | 4,096 | ||||||
Interest cost | 7,045 | 6,910 | 5,483 | |||||||||
Expected return on plan assets | 0 | 0 | 0 | |||||||||
Amortization of prior service credit | (823 | ) | (839 | ) | (475 | ) | ||||||
Amortization of actuarial loss | 598 | 1,020 | 910 | |||||||||
Net periodic postretirement benefit cost | $ | 10,732 | $ | 12,315 | $ | 10,014 | ||||||
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income | ||||||||||||
Net actuarial loss (gain) | $ | 974 | $ | ( 3,792 | ) | $ | 6,123 | |||||
Prior service cost (credit) | 0 | 100 | (7,170 | ) | ||||||||
Reclassification of actuarial loss to net periodic postretirement benefit cost | (598 | ) | (1,020 | ) | (910 | ) | ||||||
Reclassification of prior service credit to net periodic postretirement benefit cost | 823 | 839 | 475 | |||||||||
Amount recognized in other comprehensive income | $ | 1,199 | $ | ( 3,873 | ) | $ | ( 1,482 | ) | ||||
Amount recognized in net periodic postretirement benefit cost and other comprehensive income | $ | 11,931 | $ | 8,442 | $ | 8,532 | ||||||
Assumptions | ||||||||||||
Weighted-average assumptions used to determine benefit obligation at December 31 | ||||||||||||
Discount rate | 5.45 | % | 6.65 | % | ||||||||
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31 | ||||||||||||
Discount rate | 6.65 | % | 6.10 | % | 5.50 | % | ||||||
Assumed Healthcare Cost Trend Rates at December 31 | ||||||||||||
Healthcare cost trend rate assumed for next year | 8.50 | % | 9.00 | % | 9.00 | % | ||||||
Rate to which the cost trend rate gradually declines | 5.00 | % | 5.00 | % | 5.25 | % | ||||||
Year that the rate reaches the rate it is assumed to maintain | 2017 | 2017 | 2012 | |||||||||
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One-percentage-point | One-percentage-point | |||||||
Increase | Decrease | |||||||
Effect on total of service and interest cost | $ | 1,107 | $ | (970 | ) | |||
Effect on postretirement benefit obligation | 10,529 | (9,344 | ) | |||||
Postretirement | ||||
Employer Contributions | ||||
2007 | $ | 6,933 | ||
2008 | 6,389 | |||
2009 | 6,455 | |||
2010 (estimated) | 8,323 | |||
Postretirement | ||||
Estimated Future Benefit Payments | ||||
2010 | $ | 8,323 | ||
2011 | 9,069 | |||
2012 | 9,531 | |||
2013 | 10,114 | |||
2014 | 10,641 | |||
2015-2019 | 59,070 | |||
Postretirement | ||||||||
Participants Contributions | ||||||||
2007 | $ | 1,147 | ||||||
2008 | 1,460 | |||||||
2009 | 1,673 | |||||||
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Our 2006 Omnibus Long-term Incentive Plan (Plan) authorizes the granting of stock options, Stock-Only Stock Appreciation Rights (SOSARs) and other types of share-based awards to key salaried employees and non-employee directors. The maximum number of shares that may be issued under the Plan is 5,400,000. There are an additional 381,000 shares available for issuance under a Florida Rock shareholder approved plan that we assumed in connection with our merger. Shares under the Florida Rock plan are available for grants until September 30, 2010.
Weighted-average | ||||||||
Number | Grant Date | |||||||
of Shares | Fair Value | |||||||
Nonvested at January 1, 2009 | 238,100 | $ | 42.35 | |||||
Granted | 0 | $ | 0.00 | |||||
Dividend equivalents accrued | 10,729 | $ | 43.32 | |||||
Vested | (74,718 | ) | $ | 40.31 | ||||
Canceled/forfeited | (609 | ) | $ | 42.80 | ||||
Nonvested at December 31, 2009 | 173,502 | $ | 43.19 | |||||
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Target | Weighted-average | |||||||
Number | Grant Date | |||||||
of Shares | Fair Value | |||||||
Nonvested at January 1, 2009 | 232,196 | $ | 82.50 | |||||
Granted | 235,500 | $ | 45.72 | |||||
Vested | (85,574 | ) | $ | 105.93 | ||||
Canceled/forfeited | (8,564 | ) | $ | 66.55 | ||||
Nonvested at December 31, 2009 | 373,558 | $ | 54.34 | |||||
2009 | 2008 | 2007 | ||||||||||
Fair value | $ | 14.74 | $ | 19.76 | $ | 34.18 | ||||||
Risk-free interest rate | 2.14 | % | 3.21 | % | 4.73 | % | ||||||
Dividend yield | 2.22 | % | 2.07 | % | 2.04 | % | ||||||
Volatility | 35.04 | % | 28.15 | % | 27.46 | % | ||||||
Expected term | 7.50 years | 7.25 years | 7.75 years | |||||||||
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Weighted-average | ||||||||||||||||
Remaining | Aggregate | |||||||||||||||
Number | Weighted-average | Contractual | Intrinsic Value | |||||||||||||
of Shares | Exercise Price | Life (Years) | (in thousands) | |||||||||||||
Outstanding at January 1, 2009 | 5,943,027 | $ | 56.54 | |||||||||||||
Granted | 1,086,620 | $ | 47.47 | |||||||||||||
Exercised | (533,363 | ) | $ | 42.60 | ||||||||||||
Forfeited or expired | (63,708 | ) | $ | 55.61 | ||||||||||||
Outstanding at December 31, 2009 | 6,432,576 | $ | 56.17 | 5.11 | $ | 33,114 | ||||||||||
Vested and expected to vest | 6,415,846 | $ | 56.18 | 5.10 | $ | 33,042 | ||||||||||
Exercisable at December 31, 2009 | 4,964,067 | $ | 55.87 | 4.02 | $ | 26,952 | ||||||||||
2009 | 2008 | 2007 | ||||||||||
Aggregate intrinsic value of options | ||||||||||||
exercised | $ | 4,903 | $ | 23,714 | $ | 62,971 | ||||||
2009 | 2008 | 2007 | ||||||||||
Stock option exercises | ||||||||||||
Cash and stock consideration received | $ | 22,719 | $ | 29,278 | $ | 35,195 | ||||||
Tax benefit | 1,965 | 9,502 | 25,232 | |||||||||
Stock option compensation cost | 15,195 | 10,367 | 9,207 | |||||||||
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Unconditional | ||||
Purchase | ||||
Obligations | ||||
Property, Plant & Equipment | ||||
2010 | $ | 7,985 | ||
2011-2012 | 907 | |||
Total | $ | 8,892 | ||
Noncapital | ||||
2010 | $ | 20,877 | ||
2011-2012 | 28,250 | |||
2013-2014 | 14,682 | |||
Thereafter | 13,831 | |||
Total | $ | 77,640 | ||
Mineral | ||||
Leases | ||||
Mineral Royalties | ||||
2010 | $ | 15,642 | ||
2011-2012 | 24,812 | |||
2013-2014 | 18,606 | |||
Thereafter | 134,112 | |||
Total | $ | 193,172 | ||
Standby Letters of Credit | ||||
Risk management requirement for insurance claims | $ | 36,144 | ||
Payment surety required by utilities | 133 | |||
Contractual reclamation/restoration requirements | 11,931 | |||
Financing requirement for industrial revenue bond | 14,230 | |||
Total standby letters of credit | $ | 62,438 | ||
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• | Addair—This is a purported class action case for medical monitoring damages styledAddair et al. v. Processing Company, LLC, et al., pending in the Circuit Court of Wyoming County, West Virginia. The plaintiffs allege various personal injuries from exposure to perc used in coal sink labs. Discovery is ongoing. No class determination has been made by the court. |
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• | California Water Service Company—On June 6, 2008, we were served in the action styledCalifornia Water Service Company v. Dow, et al, now pending in the San Mateo County Superior Court, California. According to the complaint, California Water Service Company “owns and/or operates public drinking water systems, and supplies drinking water to hundreds of thousands of residents and businesses throughout California.” The complaint alleges that water systems in a number of communities have been contaminated with perc. The plaintiff is seeking compensatory damages and punitive damages. Discovery is ongoing. | ||
• | City of Sunnyvale California—On January 6, 2009, we were served in an action styledCity of Sunnyvale v. Legacy Vulcan Corporation, f/k/a Vulcan Materials Company, filed in the San Mateo County Superior Court, California. The plaintiffs are seeking cost recovery and other damages for alleged environmental contamination from perc and its breakdown products at the Sunnyvale Town Center Redevelopment Project. Discovery is ongoing. | ||
• | R.R. Street Indemnity—Street, a former distributor of perc manufactured by Vulcan, alleges that Vulcan owes Street, and its insurer (National Union), a defense and indemnity in several of these litigation matters, as well as some prior litigation which Vulcan has now settled. National Union alleges that Vulcan is obligated to contribute to National Union’s share of defense fees, costs and any indemnity payments made on Street’s behalf. Street and Vulcan are having ongoing discussions about the nature and extent of indemnity obligations, if any, and to date there has been no resolution of these issues. | ||
• | Santarsiero—This is a case styledRobert Santarsiero v. R.V. Davies, et al., pending in Supreme Court, New York County, New York. The plaintiff alleges personal injury (kidney cancer) from exposure to perc. Vulcan was brought in as a third-party defendant by original defendant R.V. Davies. Discovery is ongoing. | ||
• | Team Enterprises—On June 5, 2008, we were named as a defendant in the matter ofTeam Enterprises, Inc. v. Century Centers, Ltd., et al., filed in Modesto, Stanislaus County, California but removed to the United States District Court for the Eastern District of California (Fresno Division). This is an action filed by Team Enterprises as the former operator of a dry cleaners located in Modesto, California. The plaintiff is seeking damages from the defendants associated with the remediation of perc from the site of the dry cleaners. | ||
• | United States Virgin Islands—There are currently two cases pending here. |
• | Government of the United States; Department of Planning and Natural Resources; and Commissioner Robert Mathes, in his capacity as Trustee for the Natural Resources of the Territory of The United States Virgin Islands v. Vulcan Materials Company, et al. Plaintiff brought this action based on parens patriae doctrine for injury to quasi-sovereign interest on the island of St. Thomas (injuries to groundwater resources held in public trust). It is alleged that the island’s sole source of drinking water (the Tutu aquifer) is contaminated with perc. The primary source of perc contamination allegedly emanated from the former Laga facility (a textile manufacturing site). The perc defendants are alleged to have failed to adequately warn perc users of the dangers posed by the use and disposal of perc. It is also alleged that perc from O’Henry Dry Cleaners has contributed to the perc contamination in the Tutu aquifer. There has been no activity in the case since it was filed. | ||
• | L’Henry, Inc., d/b/a O’Henry Cleaners and Cyril V. Francois, LLC v. Vulcan and Dow. Plaintiffs are the owners of a dry cleaning business on St. Thomas. The dry cleaner began operation in 1981. It is alleged that perc from the dry cleaner contributed to the contamination of the Tutu Wells aquifer, and that Vulcan as a perc manufacturer failed to properly warn the dry cleaner of the proper disposal method for perc, resulting in unspecified damages to the dry cleaners. A motion to dismiss has been pending for two years. |
• | Florida Antitrust Litigation— Our subsidiary, Florida Rock Industries, Inc., has been named as a defendant in a number of class action lawsuits filed in the United States District Court for the Southern District of Florida. The lawsuits were filed by several ready-mixed concrete producers and construction companies against a number of concrete and cement producers and importers in Florida. There are now two |
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consolidated complaints: (1) on behalf of direct independent ready-mixed concrete producers, and (2) on behalf of indirect users of ready-mixed concrete. The defendants include Cemex Corp., Holcim (US) Inc., Lafarge North America, Inc., Lehigh Cement Company, Oldcastle Materials, Suwannee American Cement LLC, Titan America LLC, and Votorantim Cimentos North America, Inc. The complaints allege various violations under the federal antitrust laws, including price fixing and market allocations. We have no reason to believe that Florida Rock is liable for any of the matters alleged in the complaint, and we intend to defend the case vigorously. |
• | Florida Lake Belt Litigation— On March 22, 2006, the United States District Court for the Southern District of Florida (in a case captionedSierra Club, National Resources Defense Council and National Parks Conservation Association v. Lt. General Carl A. Stock, et al.) ruled that a mining permit issued for our Miami quarry, which was acquired in the Florida Rock transaction in November 2007, as well as certain permits issued to competitors in the same region, had been improperly issued. The Court remanded the permitting process to the U. S. Army Corps of Engineers (Corps of Engineers) for further review and consideration. In July 2007, the Court ordered us and several other mining operations in the area to cease mining excavation under the vacated permits pending the issuance by the Corps of Engineers of a Supplemental Environmental Impact Statement (SEIS). The District Court decision was appealed to the U.S. Court of Appeals for the Eleventh Circuit, and the Eleventh Circuit reversed and remanded the case to the District Court. With issuance of the Eleventh Circuit’s Mandate on July 1, 2008, we resumed mining at the Miami quarry. On January 30, 2009, the District Court again issued an order invalidating certain of the Lake Belt mining permits, which immediately stopped all mining excavation in the majority of the Lake Belt region. We appealed this order to the Eleventh Circuit but are not currently mining in the areas covered by the District Court order. On January 21, 2010, the Eleventh Circuit upheld the ruling of the District Court. On May 1, 2009, the Corps of Engineers issued a Final SEIS and accepted public comments until June 8, 2009, pending issuance of the Record of Decision with respect to issuance of permits. The Record of Decision was issued on January 29, 2010, and the Corps of Engineers has begun issuing new permits. We anticipate receiving a proposed permit shortly. We believe that when the permit is issued, this litigation over the old permits will be moot. | ||
• | IDOT/Joliet Road— In September 2001, we were named a defendant in a suit brought by the Illinois Department of Transportation (IDOT), in the Circuit Court of Cook County, Chancery Division, Illinois, alleging damage to a 0.9-mile section of Joliet Road that bisects our McCook quarry in McCook, Illinois, a Chicago suburb. IDOT seeks damages to “repair, restore, and maintain” the road or, in the alternative, judgment for the cost to “improve and maintain other roadways to accommodate” vehicles that previously used the road. The complaint also requests that the court enjoin any McCook quarry operations that will further damage the road. The court granted summary judgment in favor of Vulcan on certain claims. The court also granted the plaintiff’s motion to amend their complaint to add a punitive damages claim, although the court made it clear that it was not ruling on the merits of this claim. The matter has been set for trial on April 26, 2010. We believe that the claims and damages alleged by the State are covered by liability insurance policies purchased by Vulcan. We have received a letter from our primary insurer stating that there is coverage of this lawsuit under its policy; however, the letter indicates that the insurer is currently taking the position that various damages sought by the State are not covered. At this time, we believe a loss related to this litigation is reasonably possible; however, we cannot reasonably estimate the loss or range of loss that may result from a settlement or an adverse judgment at trial. | ||
• | Lower Passaic River Clean-Up— We have been sued as a third-party defendant inNew Jersey Department of Environmental Protection, et al. v. Occidental Chemical Corporation, et al.,a case brought by the New Jersey Department of Environmental Protection in the New Jersey Superior Court. The third-party complaint was filed on February 4, 2009. This suit by the New Jersey Department of Environmental Protection seeks recovery of past and future clean-up costs as well as unspecified economic damages, punitive damages, penalties and a variety of other forms of relief arising from alleged discharges into the Passaic River of dioxin and other unspecified hazardous substances. Our former Chemicals Division operated a plant adjacent to the Passaic River and has been sued as a third-party defendant in this New Jersey action, along with approximately 300 other parties. Additionally, Vulcan and approximately 70 other companies are parties to a May 2007 Administrative Order of Consent with the U.S. Environmental |
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Protection Agency to perform a Remedial Investigation/Feasibility Study of the contamination in the lower 17 miles of the Passaic River. This study is ongoing. No remedial remedy for this Superfund site has yet been determined. At this time, we cannot determine the likelihood or reasonably estimate a range of loss pertaining to this matter. |
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2009 | 2008 | 2007 | ||||||||||
Shares purchased | ||||||||||||
Number | 0 | 0 | 44,123 | |||||||||
Total cost (thousands) | $ | 0 | $ | 0 | $ | 4,800 | ||||||
Average cost | $ | 0.00 | $ | 0.00 | $ | 108.78 | ||||||
Before-tax | Tax (Expense) | Net-of-tax | ||||||||||
Amount | Benefit | Amount | ||||||||||
December 31, 2009 | ||||||||||||
Fair value adjustment to cash flow hedges | $ | (4,643 | ) | $ | 1,895 | $ | (2,748 | ) | ||||
Reclassification adjustment for cash flow hedge amounts included in net earnings | 16,728 | (6,826 | ) | 9,902 | ||||||||
Adjustment for funded status of pension and postretirement benefit plans | (28,784 | ) | 11,417 | (17,367 | ) | |||||||
Amortization of pension and postretirement plan actuarial loss and prior service cost | 1,886 | (748 | ) | 1,138 | ||||||||
Total other comprehensive income (loss) | $ | (14,813 | ) | $ | 5,738 | $ | (9,075 | ) | ||||
December 31, 2008 | ||||||||||||
Fair value adjustment to cash flow hedges | $ | (12,190 | ) | $ | 9,550 | $ | (2,640 | ) | ||||
Reclassification adjustment for cash flow hedge amounts included in net earnings | 9,088 | (7,120 | ) | 1,968 | ||||||||
Adjustment for funded status of pension and postretirement benefit plans | (255,616 | ) | 101,517 | (154,099 | ) | |||||||
Amortization of pension and postretirement plan actuarial loss and prior service cost | 1,201 | (477 | ) | 724 | ||||||||
Total other comprehensive loss | $ | (257,517 | ) | 103,470 | $ | (154,047 | ) | |||||
December 31, 2007 | ||||||||||||
Fair value adjustment to cash flow hedges | $ | (92,718 | ) | $ | 36,676 | $ | (56,042 | ) | ||||
Reclassification adjustment for cash flow hedge amounts included in net earnings | 198 | (78 | ) | 120 | ||||||||
Adjustment for funded status of pension and postretirement benefit plans | 31,163 | (12,326 | ) | 18,837 | ||||||||
Amortization of pension and postretirement plan actuarial loss and prior service cost | 3,012 | (1,191 | ) | 1,821 | ||||||||
Total other comprehensive loss | $ | (58,345 | ) | $ | 23,081 | $ | (35,264 | ) | ||||
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2009 | 2008 | 2007 | ||||||||||
Cash flow hedges | $ | (49,365 | ) | $ | (56,519 | ) | $ | (55,847 | ) | |||
Pension and postretirement plans | (144,993 | ) | (128,763 | ) | 15,630 | |||||||
Accumulated other comprehensive income (loss) | $ | (194,358 | ) | $ | (185,282 | ) | $ | (40,217 | ) | |||
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Segment Financial Disclosure | ||||||||||||
Amounts in millions | 2009 | 2008 | 2007 | |||||||||
Total Revenues | ||||||||||||
Aggregates | ||||||||||||
Segment revenues | $ | 1,838.6 | $ | 2,406.8 | $ | 2,448.2 | ||||||
Intersegment sales | (165.2 | ) | (206.2 | ) | (131.5 | ) | ||||||
Net sales | $ | 1,673.4 | $ | 2,200.6 | $ | 2,316.7 | ||||||
Asphalt mix and Concrete | ||||||||||||
Segment revenues | $ | 833.1 | $ | 1,201.2 | $ | 765.9 | ||||||
Intersegment sales | (0.1 | ) | (0.6 | ) | (0.2 | ) | ||||||
Net sales | $ | 833.0 | $ | 1,200.6 | 765.7 | |||||||
Cement | ||||||||||||
Segment revenues | $ | 72.5 | $ | 106.5 | $ | 14.1 | ||||||
Intersegment sales | (35.2 | ) | (54.6 | ) | (6.4 | ) | ||||||
Net sales | $ | 37.3 | $ | 51.9 | $ | 7.7 | ||||||
Total | ||||||||||||
Net sales | $ | 2,543.7 | $ | 3,453.1 | $ | 3,090.1 | ||||||
Delivery revenues | 146.8 | 198.3 | 237.7 | |||||||||
Total revenues | $ | 2,690.5 | $ | 3,651.4 | $ | 3,327.8 | ||||||
Gross Profit | ||||||||||||
Aggregates | $ | 393.3 | $ | 657.6 | $ | 828.7 | ||||||
Asphalt mix and Concrete | 54.5 | 74.4 | 122.2 | |||||||||
Cement | (1.8 | ) | 17.7 | 0.0 | ||||||||
Total gross profit | $ | 446.0 | $ | 749.7 | $ | 950.9 | ||||||
Identifiable Assets | ||||||||||||
Aggregates | $ | 7,208.4 | $ | 7,530.6 | ||||||||
Asphalt mix and Concrete | 669.5 | 767.6 | ||||||||||
Cement | 446.9 | 435.2 | ||||||||||
Identifiable assets | 8,324.8 | 8,733.4 | ||||||||||
General corporate assets | 185.9 | 173.0 | ||||||||||
Cash items | 22.3 | 10.2 | ||||||||||
Total | $ | 8,533.0 | $ | 8,916.6 | ||||||||
Depreciation, Depletion, | ||||||||||||
Accretion and Amortization | ||||||||||||
Aggregates | $ | 312.2 | $ | 310.8 | $ | 246.9 | ||||||
Asphalt mix and Concrete | 61.2 | 61.0 | 20.3 | |||||||||
Cement | 16.3 | 14.6 | 1.9 | |||||||||
Corporate and other unallocated | 4.9 | 2.7 | 2.4 | |||||||||
Total | $ | 394.6 | $ | 389.1 | $ | 271.5 | ||||||
Capital Expenditures from | ||||||||||||
Continuing Operations | ||||||||||||
Aggregates | $ | 74.6 | $ | 267.7 | $ | 445.0 | ||||||
Asphalt mix and Concrete | 5.3 | 13.6 | 24.2 | |||||||||
Cement | 22.4 | 60.2 | 10.3 | |||||||||
Corporate | 4.2 | 12.7 | 1.0 | |||||||||
Total | $ | 106.5 | $ | 354.2 | $ | 480.5 | ||||||
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2009 | 2008 | 2007 | ||||||||||
Cash payments (refunds) | ||||||||||||
Interest | $ | 181,352 | $ | 179,880 | $ | 41,933 | ||||||
Income taxes | (25,184 | ) | 91,544 | 132,697 | ||||||||
Noncash investing and financing activities | ||||||||||||
Accrued liabilities for purchases of property, plant & equipment | $ | 13,459 | $ | 22,974 | $ | 32,065 | ||||||
Note received from sale of business | 1,450 | 0 | 0 | |||||||||
Carrying value of noncash assets and liabilities exchanged | 0 | 42,974 | 0 | |||||||||
Debt issued for purchases of property, plant & equipment | 1,987 | 389 | 19 | |||||||||
Proceeds receivable from exercise of stock options | 0 | 325 | 152 | |||||||||
Amounts referable to business acquisitions | ||||||||||||
Liabilities assumed | 0 | 2,024 | 588,184 | |||||||||
Fair value of stock issued | 0 | 25,023 | 1,436,487 | |||||||||
2009 | 2008 | 2007 | ||||||||||
ARO Operating Costs | ||||||||||||
Accretion | $ | 8,802 | $ | 7,082 | $ | 5,866 | ||||||
Depreciation | 13,732 | 15,504 | 13,172 | |||||||||
Total | $ | 22,534 | $ | 22,586 | $ | 19,038 | ||||||
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2009 | 2008 | |||||||
Asset retirement obligations at beginning of year | $ | 173,435 | $ | 131,383 | ||||
Liabilities incurred | 539 | 39,926 | ||||||
Liabilities settled | (10,610 | ) | (17,633 | ) | ||||
Accretion expense | 8,802 | 7,082 | ||||||
Revisions up (down), net | (4,409 | ) | 12,677 | |||||
Asset retirement obligations at end of year | $ | 167,757 | $ | 173,435 | ||||
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Asphalt mix | ||||||||||||||||
Aggregates | and Concrete | Cement | Total | |||||||||||||
Gross carrying amount | ||||||||||||||||
Total as of December 31, 2007 | $ | 3,399,796 | $ | 91,633 | $ | 297,662 | $ | 3,789,091 | ||||||||
Goodwill of acquired businesses | 30,565 | 0 | 0 | 30,565 | ||||||||||||
Purchase price allocation adjustments | (436,526 | ) | 0 | (44,998 | ) | (481,524 | ) | |||||||||
Total as of December 31, 2008 | $ | 2,993,835 | $ | 91,633 | $ | 252,664 | $ | 3,338,132 | ||||||||
Goodwill of acquired businesses1 | 9,558 | 0 | 0 | 9,558 | ||||||||||||
Purchase price allocation adjustments | (1,047 | ) | 0 | 0 | (1,047 | ) | ||||||||||
Total as of December 31, 2009 | $ | 3,002,346 | $ | 91,633 | $ | 252,664 | $ | 3,346,643 | ||||||||
Accumulated impairment losses | ||||||||||||||||
Total as of December 31, 2007 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Goodwill impairment loss | 0 | 0 | (252,664 | ) | (252,664 | ) | ||||||||||
Total as of December 31, 2008 | $ | 0 | $ | 0 | $ | (252,664 | ) | $ | (252,664 | ) | ||||||
Goodwill impairment loss | 0 | 0 | 0 | 0 | ||||||||||||
Total as of December 31, 2009 | $ | 0 | $ | 0 | $ | (252,664 | ) | $ | (252,664 | ) | ||||||
Goodwill, net of accumulated impairment losses | ||||||||||||||||
Total as of December 31, 2007 | $ | 3,399,796 | $ | 91,633 | $ | 297,662 | $ | 3,789,091 | ||||||||
Total as of December 31, 2008 | $ | 2,993,835 | $ | 91,633 | $ | 0 | $ | 3,085,468 | ||||||||
Total as of December 31, 2009 | $ | 3,002,346 | $ | 91,633 | $ | 0 | $ | 3,093,979 | ||||||||
1 | The goodwill of acquired businesses for 2009 relates to the 2009 acquisitions listed in Note 19. We are currently evaluating the final purchase price allocation for most of these acquisitions; therefore, the goodwill amount is subject to change. All of the goodwill from the 2009 acquisitions is expected to be fully deductible for income tax purposes. |
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2009 | 2008 | |||||||
Gross carrying amount | ||||||||
Contractual rights in place | $ | 617,278 | $ | 604,236 | ||||
Noncompetition agreements | 2,490 | 1,980 | ||||||
Favorable lease agreements | 16,773 | 12,835 | ||||||
Permitting, permitting compliance and zoning rights | 58,547 | 52,769 | ||||||
Customer relationships | 14,393 | 13,657 | ||||||
Tradenames and trademarks | 5,006 | 5,742 | ||||||
Other | 3,911 | 10,148 | ||||||
Total gross carrying amount | $ | 718,398 | $ | 701,367 | ||||
Accumulated amortization | ||||||||
Contractual rights in place | $ | (20,522 | ) | $ | (10,981 | ) | ||
Noncompetition agreements | (1,618 | ) | (1,295 | ) | ||||
Favorable lease agreements | (1,132 | ) | (734 | ) | ||||
Permitting, permitting compliance and zoning rights | (9,592 | ) | (8,675 | ) | ||||
Customer relationships | (1,500 | ) | (50 | ) | ||||
Tradenames and trademarks | (567 | ) | (45 | ) | ||||
Other | (824 | ) | (5,795 | ) | ||||
Total accumulated amortization | $ | (35,755 | ) | $ | (27,575 | ) | ||
Total intangible assets subject to amortization, net | $ | 682,643 | $ | 673,792 | ||||
Intangible assets with indefinite lives | 0 | 0 | ||||||
Total intangible assets, net | $ | 682,643 | $ | 673,792 | ||||
Aggregate amortization expense for the period | $ | 13,777 | $ | 9,482 | ||||
Estimated amortization expense for five subsequent years | ||||
2010 | $ | 13,612 | ||
2011 | 15,197 | |||
2012 | 14,424 | |||
2013 | 14,530 | |||
2014 | 14,597 | |||
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December 31, | ||||
2009 | ||||
Current assets | $ | 3,799 | ||
Property, plant & equipment, net | 11,117 | |||
Intangible assets | 96 | |||
Other assets | 60 | |||
Total assets held for sale | $ | 15,072 | ||
Current liabilities | $ | 369 | ||
Total liabilities of assets held for sale | $ | 369 | ||
• | leasehold interest in a rail-served aggregates distribution yard | ||
• | two aggregates production facilities |
• | dock and transloading facility | ||
• | interest in an aggregates production facility |
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• | five aggregates production facilities | ||
• | one asphalt mix plant | ||
• | an aggregates recycling facility | ||
• | our former joint venture partner’s interest in an aggregates production facility |
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For the year ended December 31, 2008 | ||||||||||||
As | As | |||||||||||
Reported | Correction | Restated | ||||||||||
Statement of Earnings | ||||||||||||
Earnings from continuing operations before income taxes | $ | 75,058 | $ | 0 | $ | 75,058 | ||||||
Provision for income taxes | ||||||||||||
Current | 92,346 | 0 | 92,346 | |||||||||
Deferred | (15,622 | ) | (5,033 | ) | (20,655 | ) | ||||||
Total provision for income taxes | 76,724 | (5,033 | ) | 71,691 | ||||||||
Earnings (loss) from continuing operations | (1,666 | ) | 5,033 | 3,367 | ||||||||
Loss on discontinued operations, net of income taxes | (2,449 | ) | 0 | (2,449 | ) | |||||||
Net earnings (loss) | $ | ( 4,115 | ) | $ | 5,033 | $ | 918 | |||||
Basic and diluted earnings (loss) per share | ||||||||||||
Continuing operations | $ | (0.02 | ) | $ | 0.05 | $ | 0.03 | |||||
Discontinued operations | $ | (0.02 | ) | $ | 0.00 | $ | ( 0.02 | ) | ||||
Net earnings (loss) per share | $ | ( 0.04 | ) | $ | 0.05 | $ | 0.01 | |||||
Weighted-average common shares outstanding, assuming dilution | 109,774 | 110,954 | ||||||||||
As of December 31, 2008 | ||||||||||||
As | As | |||||||||||
Reported | Correction | Restated | ||||||||||
Balance Sheet | ||||||||||||
Assets | ||||||||||||
Goodwill | $ | 3,083,013 | $ | 2,455 | $ | 3,085,468 | ||||||
Total assets | $ | 8,914,169 | $ | 2,455 | $ | 8,916,624 | ||||||
Liabilities and Shareholders’ Equity | ||||||||||||
Deferred income taxes | $ | 949,036 | $ | (28,561 | ) | $ | 920,475 | |||||
Total liabilities | 5,391,433 | (28,561 | ) | 5,362,872 | ||||||||
Retained earnings | $ | 1,862,913 | $ | 31,016 | $ | 1,893,929 | ||||||
Total shareholders’ equity | 3,522,736 | 31,016 | 3,553,752 | |||||||||
Total liabilities and shareholders’ equity | $ | 8,914,169 | $ | 2,455 | $ | 8,916,624 | ||||||
For the year ended December 31, 2008 | ||||||||||||
As | As | |||||||||||
Reported | Correction | Restated | ||||||||||
Statement of Cash Flows | ||||||||||||
Operating Activities | ||||||||||||
Net earnings | $ | (4,115 | ) | $ | 5,033 | $ | 918 | |||||
Deferred tax provision | (14,723 | ) | (5,033 | ) | (19,756 | ) | ||||||
Net cash provided by operating activities | $ | 435,185 | $ | 0 | $ | 435,185 | ||||||
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2009 | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31 | June 30 | Sept 30 | Dec 31 | |||||||||||||
| | | | | ||||||||||||||||
Net sales | $ | 567,895 | $ | 681,380 | $ | 738,664 | $ | 555,768 | ||||||||
Total revenues | 600,294 | 721,859 | 778,192 | 590,145 | ||||||||||||
Gross profit | 77,607 | 145,834 | 154,480 | 68,041 | ||||||||||||
Operating earnings (loss) | (1,326 | ) | 65,684 | 82,704 | 1,390 | |||||||||||
Earnings (loss) from continuing operations | (32,255 | ) | 15,561 | 47,924 | (12,582 | ) | ||||||||||
Net earnings (loss) | (32,780 | ) | 22,212 | 54,232 | (13,350 | ) | ||||||||||
Basic earnings (loss) per share from continuing operations | $ | (0.29 | ) | $ | 0.14 | $ | 0.38 | $ | (0.10 | ) | ||||||
Diluted earnings (loss) per share from continuing operations | $ | (0.29 | ) | $ | 0.14 | $ | 0.38 | $ | (0.10 | ) | ||||||
Basic net earnings (loss) per share | $ | (0.30 | ) | $ | 0.20 | $ | 0.43 | $ | (0.11 | ) | ||||||
Diluted net earnings (loss) per share | $ | (0.30 | ) | $ | 0.20 | $ | 0.43 | $ | (0.11 | ) | ||||||
2008 | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31 | June 30 | Sept 30 | Dec 31 | |||||||||||||
(As Restated, | ||||||||||||||||
See Below) | ||||||||||||||||
Net sales | $ | 771,762 | $ | 965,957 | $ | 958,839 | $ | 756,523 | ||||||||
Total revenues | 817,339 | 1,021,551 | 1,013,349 | 799,199 | ||||||||||||
Gross profit | 154,450 | 245,226 | 200,846 | 149,190 | ||||||||||||
Operating earnings (loss) | 66,758 | 238,469 | 128,303 | (184,428 | ) | |||||||||||
Earnings (loss) from continuing operations | 14,485 | 141,225 | 59,816 | (212,159 | ) | |||||||||||
Net earnings (loss) | 13,933 | 140,755 | 59,050 | (212,820 | ) | |||||||||||
Basic earnings (loss) per share from continuing operations | $ | 0.13 | $ | 1.28 | $ | 0.54 | $ | (1.92 | ) | |||||||
Diluted earnings (loss) per share from continuing operations | $ | 0.13 | $ | 1.27 | $ | 0.54 | $ | (1.92 | ) | |||||||
Basic net earnings (loss) per share | $ | 0.13 | $ | 1.28 | $ | 0.54 | $ | (1.93 | ) | |||||||
Diluted net earnings (loss) per share | $ | 0.13 | $ | 1.27 | $ | 0.53 | $ | (1.93 | ) | |||||||
For the three months ended December 31, 2008 | ||||||||||||
As | As | |||||||||||
Reported | Correction | Restated | ||||||||||
Earnings (loss) from continuing operations | $ | (217,192 | ) | $ | 5,033 | $ | (212,159 | ) | ||||
Net earnings (loss) | (217,853 | ) | 5,033 | (212,820 | ) | |||||||
Basic earnings (loss) per share | ||||||||||||
Continuing operations | $ | (1.97 | ) | $ | 0.05 | $ | (1.92 | ) | ||||
Net earnings (loss) per share | $ | (1.97 | ) | $ | 0.04 | $ | (1.93 | ) | ||||
Diluted earnings (loss) per share | ||||||||||||
Continuing operations | $ | (1.97 | ) | $ | 0.05 | $ | (1.92 | ) | ||||
Net earnings (loss) per share | $ | (1.97 | ) | $ | 0.04 | $ | (1.93 | ) | ||||
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Schedule II Valuation and Qualifying Accounts and Reserves | 105 |
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Vulcan Materials Company | ||||||
By | ||||||
Chairman and Chief Executive Officer |
Signature | Title | Date | ||
Chairman, Chief Executive Officer and Director (Principal Executive Officer) | February 26, 2010 | |||
Senior Vice President and Chief Financial Officer (Principal Financial Officer) | February 26, 2010 | |||
Vice President, Controller and Chief Information Officer (Principal Accounting Officer) | February 26, 2010 |
The following directors: | ||||
Philip J. Carroll, Jr. | Director | |||
Phillip W. Farmer | Director | |||
H. Allen Franklin | Director | |||
Ann McLaughlin Korologos | Director | |||
Douglas J. McGregor | Director | |||
James V. Napier | Director | |||
Richard T. O’Brien | Director | |||
James T. Prokopanko | Director | |||
Donald B. Rice | Director | |||
Vincent J. Trosino | Director | |||
Kathleen Wilson-Thompson | Director |
By | February 26, 2010 |
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VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Years Ended December 31, 2009, 2008 and 2007
Amounts in Thousands
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||
Balance at | Additions Charged To | Balance at | ||||||||||||||||||
Beginning | Costs and | Other | End | |||||||||||||||||
Description | Of Period | Expenses | Accounts | Deductions | Of Period | |||||||||||||||
2009 | ||||||||||||||||||||
Accrued Environmental Costs | $ | 13,708 | $ | 1,093 | $ | 0 | $ | 1,970 | 1 | $ | 12,831 | |||||||||
Asset Retirement Obligations | 173,435 | 8,802 | (3,870 | )2 | 10,610 | 3 | 167,757 | |||||||||||||
Doubtful Receivables | 8,711 | 4,173 | 0 | 4,162 | 4 | 8,722 | ||||||||||||||
Self-Insurance Reserves | 56,912 | 15,503 | 0 | 17,149 | 5 | 55,266 | ||||||||||||||
All Other6 | 901 | 3,517 | 0 | 3,641 | 777 | |||||||||||||||
2008 | ||||||||||||||||||||
Accrued Environmental Costs | $ | 9,756 | $ | 451 | $ | 4,698 | 7 | $ | 1,197 | 1 | $ | 13,708 | ||||||||
Asset Retirement Obligations | 131,383 | 7,082 | 52,603 | 2 | 17,633 | 3 | 173,435 | |||||||||||||
Doubtful Receivables | 6,015 | 5,393 | 0 | 2,697 | 4 | 8,711 | ||||||||||||||
Self-Insurance Reserves | 61,298 | 23,191 | 0 | 27,577 | 5 | 56,912 | ||||||||||||||
All Other6 | 1,244 | 5,120 | 0 | 5,463 | 901 | |||||||||||||||
2007 | ||||||||||||||||||||
Accrued Environmental Costs | $ | 13,394 | $ | 966 | $ | 175 | 7 | $ | 4,779 | 1 | $ | 9,756 | ||||||||
Asset Retirement Obligations | 114,829 | 5,866 | 24,487 | 2 | 13,799 | 3 | 131,383 | |||||||||||||
Doubtful Receivables | 3,355 | 1,144 | 2,283 | 7 | 767 | 4 | 6,015 | |||||||||||||
Self-Insurance Reserves | 45,197 | 17,182 | 11,209 | 7 | 12,290 | 5 | 61,298 | |||||||||||||
All Other6 | 589 | 1,518 | 302 | 7 | 1,165 | 1,244 | ||||||||||||||
1 | Expenditures on environmental remediation projects. | |
2 | Net up/down revisions to asset retirement obligations. | |
3 | Expenditures related to settlements of asset retirement obligations. | |
4 | Write-offs of uncollected accounts and worthless notes, less recoveries. | |
5 | Expenditures on self-insurance reserves. | |
6 | Valuation and qualifying accounts and reserves for which additions, deductions and balances are individually insignificant. | |
7 | The 2008 and 2007 amounts include additions related to the acquisition of Florida Rock. |
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Exhibit (3)(a) | Certificate of Incorporation (Restated 2007) of Vulcan Materials Company (formerly known as Virginia Holdco, Inc.), filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on November 16, 2007.1 | |
Exhibit (3)(b) | Amended and Restated By-Laws of Vulcan Materials Company effective as of December 11, 2009 filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on December 11, 2009.1 | |
Exhibit (4)(a) | Supplemental Indenture No. 1 dated as of November 16, 2007, among Vulcan Materials Company, Legacy Vulcan Corp. and The Bank of New York, as Trustee filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on November 21, 2007.1 | |
Exhibit (4)(b) | Senior Debt Indenture, dated as of December 11, 2007, between Vulcan Materials Company and Wilmington Trust Company, as Trustee, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on December 11, 2007.1 | |
Exhibit (4)(c) | First Supplemental Indenture, dated as of December 11, 2007, between Vulcan Materials Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture, dated as of December 11, 2007, between Vulcan Materials Company and Wilmington Trust Company, as Trustee, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K on December 11, 2007.1 | |
Exhibit (4)(d) | Second Supplemental Indenture dated June 20, 2008 between the Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture dated as of December 11, 2007, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed June 20, 2008.1 | |
Exhibit (4)(e) | Indenture dated as of May 1, 1991, by and between Legacy Vulcan Corp. (formerly Vulcan Materials 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).1 | |
Exhibit (10)(a) | Underwriting Agreement, dated June 11, 2009, among the Company and Goldman Sachs & Co., Merrill Lynch, Pierce Fenner & Smith Incorporated, J. P. Morgan Securities, Inc. and Wachovia Capital Markets, LLC, as representatives of the several underwriters named therein filed as Exhibit 1.1 to the Company’s Report on Form 8-K filed June 17, 2009.1 | |
Exhibit (10)(b) | Underwriting Agreement, dated June 17, 2008, among the Company and Banc of America Securities, LLC, Goldman, Sachs & Co., JP Morgan Securities, Inc. and Wachovia Capital Markets, LLC as Representatives of several underwriters named therein filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed June 20, 2008.1 | |
Exhibit (10)(c) | Five-Year Credit Agreement dated as of November 16, 2007, among the Company, certain lenders party thereto and Bank of America, N.A., as administrative agent filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed November 21, 2007.1 | |
Exhibit (10)(d) | Term Loan Credit Agreement dated as of June 23, 2008, among the Company, Wachovia Bank, National Association, as administrative agent and certain other Lender Parties thereto filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed June 27, 2008.1 | |
Exhibit (10)(e) | Purchase Agreement dated January 23, 2009, between the Company and Goldman, Sachs & Co. filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K on January 29, 2009.1 |
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Exhibit (10)(f) | Third Supplemental Indenture dated February 3, 2009, between the Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture dated as of December 11, 2007 filed as Exhibit 10(f) to the Company’s Annual Report on Form 10-K filed on March 2, 2009.1 | |
Exhibit (10)(g) | Exchange and Registration Rights Agreement dated February 3, 2009, between the Company and Goldman, Sachs & Co. filed as Exhibit 10(g) to the Company’s Annual Report on Form 10-K filed March 2, 2009.1 | |
Exhibit (10)(h) | The Unfunded Supplemental Benefit Plan for Salaried Employees, as amended, filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on December 17, 2008.1,2 | |
Exhibit (10)(i) | Amendment to the Unfunded Supplemental Benefit Plan for Salaried Employees filed as Exhibit 10(c) to Legacy Vulcan Corp.’s Annual Report on Form 10-K for the year ended December 31, 2001 filed on March 27, 2002.1,2 | |
Exhibit (10)(j) | The Deferred Compensation Plan for Directors Who Are Not Employees of the Company, as amended, filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on December 17, 2008.1,2 | |
Exhibit (10)(k) | The 2006 Omnibus Long-Term Incentive Plan of the Company filed as Appendix C to Legacy Vulcan Corp.’s 2006 Proxy Statement on Schedule 14A filed on April 13, 2006.1,2 | |
Exhibit (10)(l) | The Deferred Stock Plan for Nonemployee Directors of the Company filed as Exhibit 10(f) to Legacy Vulcan Corp.’s Annual Report on Form 10-K for the year ended December 31, 2001 filed on March 27, 2002.1,2 | |
Exhibit (10)(m) | The Restricted Stock Plan for Nonemployee Directors of the Company, as amended, filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed December 17, 2008.1,2 | |
Exhibit (10)(n) | Executive Deferred Compensation Plan, as amended, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 17, 2008.1,2 | |
Exhibit (10)(o) | Change of Control Employment Agreement Form (Double Trigger) filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 2, 2008.1,2 | |
Exhibit (10)(p) | Change of Control Employment Agreement Form (Modified Double Trigger) filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 2, 2008.1,2 | |
Exhibit (10)(q) | Executive Incentive Plan of the Company, as amended, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 17, 2008.1,2 | |
Exhibit (10)(r) | Supplemental Executive Retirement Agreement filed as Exhibit 10 to Legacy Vulcan Corp.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 filed on November 2, 2001.1,2 | |
Exhibit (10)(s) | Form Stock Option Award Agreement filed as Exhibit 10(o) to Legacy Vulcan Corp.’s Report on Form 8-K filed December 20, 2005.1,2 | |
Exhibit (10)(t) | Form Director Deferred Stock Unit Award Agreement filed as Exhibit 10.9 to the Company’s Current Report on Form 8-K filed December 17, 2008.1,2 | |
Exhibit (10)(u) | Form Performance Share Unit Award Agreement filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K filed December 17, 2008.1,2 |
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Exhibit (10)(v) | Form Stock Only Stock Appreciation Rights Agreement filed as Exhibit 10(p) to Legacy Vulcan Corp.’s Report on Form 10-K filed February 26, 2007. 1,2 | |
Exhibit (10)(w) | Form Employee Deferred Stock Unit Award Amended Agreement filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed December 17, 2008. 1,2 | |
Exhibit (10)(x) | 2010 Compensation Arrangements filed in the Company’s Current Report on Form 8-K filed on February 18, 2010. 1,2 | |
Exhibit (18) | Letter dated February 26, 2009 of Deloitte & Touche LLP, Independent Registered Public Accounting Firm for Vulcan Materials Company and its subsidiary companies regarding a change in accounting principles. | |
Exhibit (21) | List of the Company’s subsidiaries as of December 31, 2009. | |
Exhibit (23) | Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. | |
Exhibit (24) | Powers of Attorney. | |
Exhibit (31)(a) | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. | |
Exhibit (31)(b) | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act. | |
Exhibit (32)(a) | Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act. | |
Exhibit (32)(b) | Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act. |
1 | Incorporated by reference. | |
2 | Management contract or compensatory plan. |
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