Vulcan Materials 8-K Vulcan Announces Second Quarter Results

Exhibit 99.1

Vulcan Announces Second Quarter Results

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Vulcan Materials Company (NYSE:VMC) today announced second quarter net sales of $966 million, as compared to $808 million in the second quarter of 2007. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) were $339 million in the second quarter of 2008, as compared to $281 million in the prior year. Operating earnings were $238 million in the second quarter of 2008 versus $217 million in the prior year. Net earnings per diluted share were $1.27 in the second quarter of 2008 compared to $1.45 per diluted share for the second quarter of 2007. The current year’s second quarter results include net earnings per diluted share of $0.34 referable to the sale of quarry sites divested as a condition for approval by the Department of Justice of the Florida Rock acquisition.

Don James, Vulcan’s Chairman and Chief Executive Officer, stated, “We are focused on improving operating efficiency and controlling costs during this period of weaker demand for our products. Our efforts to control selling, administrative and general expenses and operating costs lessened the earnings impact of lower volumes and the effects of sharp increases in energy-related costs. On a comparable basis, our selling, administrative and general expenses in the second quarter were approximately 16 percent lower than the second quarter of 2007. This focus on cost control will make us a stronger company and improve our earnings leverage when volumes begin to recover. Additionally, we reduced inventory levels of aggregates in the second quarter by reducing operating hours. This planned action reduced second quarter earnings but increased cash generation and positions us for improved performance efficiencies going forward.

“Pricing for our products remained strong and helped to mitigate the earnings effects of lower volumes and higher energy-related costs. The average freight-adjusted unit price for aggregates in the second quarter increased 8 percent from the prior year’s second quarter. The unit price for diesel fuel increased 70 percent from the prior year’s second quarter reducing net earnings approximately $0.09 per diluted share. The unit price for liquid asphalt increased 60 percent from the prior year’s second quarter, which reduced net earnings approximately $0.12 per diluted share.

“During the first half of 2008, we acquired four quarries in California, two in Virginia and one in Illinois as well as reserves adjacent to existing quarries in Texas and North Carolina. Each of these acquisitions helped us defer income taxes arising from the sale of quarry sites required by the Justice Department as part of the Florida Rock acquisition. Taken together, these transactions added approximately 210 million tons of aggregates reserves net of the Justice Department’s required divestitures. Following these transactions, we control approximately 13 billion tons of proven and probable reserves in markets where reserves are limited and where demand is expected to grow at above-average rates for many years to come.”

The following table summarizes the major changes in EBITDA and earnings per share from last year’s second quarter:

		EBITDA			EPS
		(millions)			(diluted)
Second Quarter Continuing Operations - 2007 Actual		$	281		$	1.46
Increase / (Decrease) due to:
Aggregates:	Volumes		(33	)		(0.23	)
	Selling prices		41			0.29
	Costs		(24	)		(0.17	)
Asphalt and Concrete			0			0.00
Cement			8			0.05
Selling, administrative and general expenses and other (excl. donated real estate)			(8	)		(0.05	)
Depreciation, depletion, accretion & amortization		-n/a-				(0.20	)
Interest expense, net		-n/a-				(0.18	)
Additional shares outstanding and other		-n/a-				(0.04	)
Total before effect of required divestitures		$	265		$	0.93
Effect of required divestitures, net			74			0.34
Second Quarter Continuing Operations - 2008 Actual		$	339		$	1.27
Memo: Energy-related costs accounted for $0.25 of the total decrease in earnings per share.

Operating Results

Aggregates revenues increased from last year’s level as improved pricing and the inclusion of results from former Florida Rock operations offset the effects of lower volumes in most markets. Total aggregates unit shipments declined 6 percent compared to the second quarter of 2007. The average freight-adjusted sales price for aggregates increased 8 percent. Improvements in aggregates pricing and the inclusion of earnings from former Florida Rock operations partially offset the earnings effects from the decline in legacy shipments and sharply higher costs for diesel fuel. Most of our geographic markets reported double-digit declines in aggregates volumes except for markets in Texas and along the Central Gulf Coast where sales volumes increased versus the prior year’s second quarter.

Cost control initiatives in the second quarter improved operating results. Excluding energy-related costs, unit variable production costs in legacy Vulcan aggregates operations were relatively flat while cash fixed costs were approximately 14 percent lower than in the prior year’s second quarter. However, average total unit cost of sales for aggregates increased from the prior year’s second quarter due mostly to higher energy-related costs, the effects of lower production levels, and the inclusion of former Florida Rock operations, which still have relatively higher production costs.

Shipments of asphalt mix increased 4 percent while concrete shipments increased significantly due to the addition of Florida Rock operations. Asphalt mix prices increased approximately 8 percent from the prior year’s second quarter. Asphalt earnings decreased due principally to higher costs for liquid asphalt. Concrete earnings increased as the addition of Florida Rock concrete operations more than offset the effects of lower volumes from legacy operations.

Cement earnings reflect the inclusion of Florida Rock cement operations for the current year’s second quarter. On a sequential basis, second quarter cement earnings were lower than the first quarter’s level due principally to a planned maintenance outage in the quarter.

Selling, administrative and general expenses increased from the prior year’s second quarter due to the addition of the Florida Rock businesses and a $6 million expense for the fair market value of donated real estate. On a comparable basis, selling, administrative and general expenses decreased $11 million, or approximately 16 percent, in the second quarter as compared to the prior year.

Interest expense increased $30 million from the prior year’s second quarter due primarily to debt incurred for the acquisition of Florida Rock. In late June, we completed the planned issuance of long-term debt financing related to the Florida Rock transaction. As a result, we added $950 million of new long-term debt and reduced short-term debt by a commensurate amount. Debt reduction and achieving target debt ratios remain a priority use of cash flows.

All results are unaudited.

Outlook

Commenting on the outlook for 2008, Mr. James stated, “Our earnings outlook reflects a prolonged downturn in residential construction, weakness in non-residential and highway construction activity and energy-related costs remaining at the current high levels. Leading indicators such as contract awards weakened in most construction categories in the second quarter. We now estimate full year aggregates shipments, including Florida Rock operations for the full year, to be down 2 to 5 percent versus the prior year.

“During this time of weaker demand, our focus is on those aspects of the business we can control. During the first half of this year, we have reduced operating hours, maintained relatively flat unit variable production costs excluding energy-related costs and decreased cash fixed costs. We will continue aggressively managing costs in all areas. We expect higher selling prices for our products to help offset the earnings effects of lower volumes and higher energy-related costs. For aggregates, we continue to expect full year price improvement of approximately 8 percent.

“We now expect consolidated EBITDA for 2008 to be in the range of $1.0 to $1.1 billion. Consolidated earnings from continuing operations should be in the range of $2.85 to $3.25 per diluted share. Our 2008 earnings outlook includes $74 million of EBITDA and $0.34 of earnings per diluted share resulting from the sale of quarry sites related to the acquisition of Florida Rock.”

Conference Call

Vulcan will host a conference call at 10:00 a.m. CDT on August 6, 2008. Investors and other interested parties in the U.S. may access the teleconference live by calling 888.680.0879 approximately 10 minutes before the scheduled start. International participants can dial 617.213.4856. The access code is 56899483. A live webcast will be available via the Internet through Vulcan's home page at www.vulcanmaterials.com. The conference call will be recorded and available for replay approximately two hours after the call through August 13, 2008.

Vulcan Materials Company, a member of the S&P 500 index, is the nation's largest producer of construction aggregates, a major producer of asphalt mix and concrete and a leading producer of cement in Florida.

Certain matters discussed in this release, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to, those associated with general economic and business conditions; changes in interest rates; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for residential and private nonresidential construction; the highly competitive nature of the construction materials industry; the impact of future regulatory or legislative actions; the outcome of pending legal proceedings; pricing; weather and other natural phenomena; energy costs; costs of hydrocarbon-based raw materials; increasing healthcare costs; the timing and amount of any future payments to be received under the 5CP earn-out contained in the agreement for the divestiture of the Company's Chemicals business; the Company’s ability to secure and permit aggregates reserves in strategically located areas; the Company’s ability to manage and successfully integrate acquisitions; risks and uncertainties related to the Company’s acquisition of Florida Rock Industries, Inc., including the ability to successfully integrate its operations and to achieve the anticipated cost savings and operational synergies; the possibility that business may suffer because management’s attention is diverted to integration concerns; and other assumptions, risks and uncertainties detailed from time to time in the Company’s SEC reports, including the report on Form 10-K for the year. Forward-looking statements speak only as of the date hereof, and Vulcan assumes no obligation to publicly update such statements.

Table A
Vulcan Materials Company
and Subsidiary Companies
	(Amounts and shares in thousands,
	except per share data)
Consolidated Statements of Earnings		Three Months Ended June 30						Six Months Ended June 30
(Condensed and unaudited)		2008			2007			2008			2007
Net sales		$	965,957		$	807,818		$	1,737,718		$	1,438,005
Delivery revenues			55,594			71,026			101,172			128,026
Total revenues			1,021,551			878,844			1,838,890			1,566,031
Cost of goods sold			720,731			522,585			1,338,042			985,577
Delivery costs			55,594			71,026			101,172			128,026
Cost of revenues			776,325			593,611			1,439,214			1,113,603
Gross profit			245,226			285,233			399,676			452,428
Selling, administrative and general expenses			84,781			71,308			177,357			145,710
Gain on sale of property, plant and equipment, net			80,498			4,852			84,443			51,239
Other operating expense, net			2,613			1,544			1,817			3,578
Minority interest in losses of a consolidated subsidiary			139			-			283			-
Operating earnings			238,469			217,233			305,228			354,379
Other income (expense), net			3,444			(113	)		792			1,089
Interest income			997			1,117			1,669			2,440
Interest expense			38,193			8,091			81,652			14,726
Earnings from continuing operations before income taxes			204,717			210,146			226,037			343,182
Provision for income taxes			63,492			66,465			70,327			110,162
Earnings from continuing operations			141,225			143,681			155,710			233,020
Loss on discontinued operations, net of tax			(470	)		(1,670	)		(1,022	)		(2,135	)
Net earnings		$	140,755		$	142,011		$	154,688		$	230,885
Basic earnings (loss) per share:
Earnings from continuing operations		$	1.28		$	1.50		$	1.42		$	2.44
Discontinued operations			-			(0.01	)		-			(0.02	)
Net earnings per share		$	1.28		$	1.49		$	1.42		$	2.42
Diluted earnings (loss) per share:
Earnings from continuing operations		$	1.27		$	1.46		$	1.41		$	2.38
Discontinued operations			-			(0.01	)		(0.01	)		(0.02	)
Net earnings per share		$	1.27		$	1.45		$	1.40		$	2.36
Weighted-average common shares outstanding:
Basic			109,922			95,578			109,286			95,376
Assuming dilution			111,117			98,157			110,515			98,023
Cash dividends declared per share of common stock		$	0.49		$	0.46		$	0.98		$	0.92
Depreciation, depletion, accretion and amortization from continuing operations		$	96,919		$	63,903		$	192,775		$	124,705
Effective tax rate from continuing operations			31.0	%		31.6	%		31.1	%		32.1	%

Table B
Vulcan Materials Company
and Subsidiary Companies
			(Amounts in thousands)
Consolidated Balance Sheets			June 30			December 31			June 30
(Condensed and unaudited)			2008			2007			2007
Assets
Cash and cash equivalents			$	151,210		$	34,888		$	34,593
Accounts and notes receivable:
	Accounts and notes receivable, gross			530,759			427,876			464,165
	Less: Allowance for doubtful accounts			(7,456	)		(6,015	)		(3,246	)
		Accounts and notes receivable, net		523,303			421,861			460,919
Inventories:
	Finished products			309,868			286,591			251,486
	Raw materials			29,009			28,330			11,803
	Products in process			3,113			4,115			2,494
	Operating supplies and other			41,510			37,282			20,329
		Inventories		383,500			356,318			286,112
Deferred income taxes				62,074			44,210			18,531
Prepaid expenses				19,392			40,177			14,711
Assets held for sale				-			259,775			-
		Total current assets		1,139,479			1,157,229			814,866
Investments and long-term receivables				24,265			25,445			5,004
Property, plant and equipment:
	Property, plant and equipment, cost			6,047,065			5,805,789			4,119,748
	Less: Reserve for depr., depl., & amort			(2,325,181	)		(2,185,695	)		(2,114,125	)
		Property, plant and equipment, net		3,721,884			3,620,094			2,005,623
Goodwill				3,895,267			3,789,091			650,205
Other assets				353,587			344,511			213,951
		Total assets	$	9,134,482		$	8,936,370		$	3,689,649
Liabilities and Shareholders' Equity
Current maturities of long-term debt			$	330,081		$	35,181		$	727
Short-term borrowings				1,209,500			2,091,500			224,000
Trade payables and accruals				215,835			219,548			161,032
Other current liabilities				178,775			175,649			126,350
Liabilities of assets held for sale				-			6,309			-
		Total current liabilities		1,934,191			2,528,187			512,109
Long-term debt				2,183,584			1,529,828			321,365
Deferred income taxes				685,432			671,518			293,199
Other noncurrent liabilities				415,096			446,827			340,386
Minority interest				410			410			-
		Total liabilities		5,218,713			5,176,770			1,467,059
Shareholders' equity:
	Common stock, $1 par value			109,834			108,234			139,705
	Capital in excess of par value			1,702,946			1,607,865			248,153
	Retained earnings			2,129,554			2,083,718			3,124,385
	Accumulated other comprehensive income (loss)			(26,565	)		(40,217	)		2,924
	Treasury stock at cost			-			-			(1,292,577	)
		Shareholders' equity		3,915,769			3,759,600			2,222,590
		Total liabilities and shareholders' equity	$	9,134,482		$	8,936,370		$	3,689,649

Table C
Vulcan Materials Company
and Subsidiary Companies
	(Amounts in thousands)
	Six Months Ended
Consolidated Statements of Cash Flows	June 30
(Condensed and unaudited)	2008			2007
Operating Activities
Net earnings	$	154,688		$	230,885
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, depletion, accretion and amortization		192,775			124,705
Net gain on sale of property, plant & equipment and businesses		(84,443	)		(51,239	)
Contributions to pension plans		(1,593	)		(584	)
Share-based compensation		9,169			8,282
Increase in assets before initial effects of business acquisitions and dispositions		(81,985	)		(113,828	)
Increase (decrease) in liabilities before initial effects of business acquisitions and dispositions		(623	)		19,570
Other, net		(6,566	)		148
Net cash provided by operating activities		181,422			217,939
Investing Activities
Purchases of property, plant and equipment		(246,027	)		(234,800	)
Proceeds from sale of property, plant & equipment		13,576			55,492
Proceeds from sale of businesses		225,783			8,418
Payment for businesses acquired, net of acquired cash		(79,822	)		(58,861	)
Decrease in investments and long-term receivables		578			1,660
Proceeds from loan on life insurance policies		28,646			-
Withdrawal from nonconsolidated companies, net		469			-
Other, net		4,430			718
Net cash used for investing activities		(52,367	)		(227,373	)
Financing Activities
Net short-term borrowings (payments)		(882,000	)		25,100
Payment of short-term debt and current maturities		(483	)		(367	)
Proceeds from issuance of long-term debt, net of discounts		949,078			-
Debt issuance costs		(5,633	)		-
Settlements of forward starting swaps		(32,474	)		-
Purchases of common stock		-			(4,800	)
Proceeds from issuance of common stock		55,072			-
Dividends paid		(106,976	)		(87,610	)
Proceeds from exercise of stock options		6,850			32,963
Excess tax benefits from share-based compensation		3,605			23,511
Other, net		228			-
Net cash used for financing activities		(12,733	)		(11,203	)
Net increase (decrease) in cash and cash equivalents		116,322			(20,637	)
Cash and cash equivalents at beginning of year		34,888			55,230
Cash and cash equivalents at end of period	$	151,210		$	34,593

Table D
Segment Financial Data and Unit Shipments
		(Amounts in thousands, except per unit data)
		Three Months Ended						Six Months Ended
		June 30						June 30
		2008			2007			2008			2007
Total Revenues
	Aggregates(a)	$	679,271		$	652,936		$	1,215,309		$	1,163,534
	Asphalt mix and Concrete(b)		325,374			183,794			592,002			329,706
	Cement(c)		29,162			-			60,249			-
	Intersegment sales		(67,850	)		(28,912	)		(129,842	)		(55,235	)
	Total net sales		965,957			807,818			1,737,718			1,438,005
	Delivery revenues		55,594			71,026			101,172			128,026
	Total revenues	$	1,021,551		$	878,844		$	1,838,890		$	1,566,031
Gross Profit
	Aggregates	$	217,866		$	250,919		$	344,773		$	398,275
	Asphalt mix and Concrete		23,266			34,314			43,340			54,153
	Cement		4,094			-			11,563			-
	Total gross profit	$	245,226		$	285,233		$	399,676		$	452,428
Unit Shipments
	Aggregates
	Customer tons		54,331			60,323			96,401			106,028
	Internal tons(d)		4,916			2,780			8,887			5,118
	Aggregates - tons		59,247			63,103			105,288			111,146
	Asphalt mix - tons		2,725			2,609			4,629			4,645
	Ready-mixed concrete - cubic yards		1,727			586			3,320			1,090
	Cement - tons		298			-			588			-
Average Unit Sales Price (including internal sales)
	Aggregates (freight adjusted)(e)	$	10.02		$	9.24		$	10.06		$	9.29
	Asphalt mix	$	51.93		$	48.29		$	50.70		$	47.96
	Ready-mixed concrete	$	97.39		$	95.13		$	98.41		$	95.26
	Cement	$	96.50		$	-		$	97.32		$	-
(a) Includes crushed stone, sand and gravel, sand, other aggregates, as well as transportation and service revenues associated with the aggregates business.
(b) Includes asphalt mix, ready-mixed concrete, concrete block, precast and prestressed concrete, as well as building materials purchased for resale.
(c) Includes cement and calcium products.
(d) Represents tons shipped primarily to our downstream operations (e.g., asphalt mix and ready-mixed concrete). Sales from internal shipments are eliminated in net sales presented above and in the accompanying Condensed Consolidated Statements of Earnings.
(e) 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).

Table E
Supplemental Cash Flow Information
Supplemental information referable to the Condensed Consolidated Statements of Cash Flows for the six months ended June 30 is summarized below (amounts in thousands):
	2008		2007
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest, net of amount capitalized	$	89,532	$	14,904
Income taxes		37,055		61,994
Supplemental Schedule of Noncash Investing and Financing Activities
Accrued liabilities for purchases of property, plant and equipment		24,834		26,518
Carrying value of noncash assets and liabilities exchanged		42,974		-
Debt issued for purchases of property, plant and equipment		8		10
Proceeds receivable from exercise of stock options		-		216
Fair value of stock issued in business acquisitions		25,023		-
Other noncash transactions		16		-

Table F
Reconciliation of Non-GAAP Performance Measures
		(Amounts in thousands, except per share data)
		Three Months Ended						Six Months Ended
		June 30						June 30
		2008			2007			2008			2007
GAAP Earnings from continuing operations before income taxes		$	204,717		$	210,146		$	226,037		$	343,182
	Gain on sale of California real estate, net(1)		-			-			-			(41,332	)
	Gain on sale of required divestitures, net(2)		(73,847	)		-			(73,847	)		-
	Gain from adjustment in the carrying value of the ECU earn-out(3)		-			(1,229	)		-			(1,929	)
	SAG expense attributable to donations of real estate(4)		5,769			-			5,769			-
	Gain from donations of real estate(5)		(5,690	)		-			(5,690	)		-
Earnings from continuing operations before income taxes, as adjusted(6)		$	130,949		$	208,917		$	152,269		$	299,921
GAAP Diluted earnings per share from continuing operations		$	1.27		$	1.46		$	1.41		$	2.38
	After-tax gain per diluted share resulting from sale of California real estate, net(1)		-			-			-			(0.25	)
	After-tax gain per diluted share resulting from sale of required divestitures, net(2)		(0.40	)		-			(0.40	)		-
	After-tax gain per diluted share resulting from the adjustment in the carrying value of the ECU earn-out(3)		-			(0.01	)		-			(0.01	)
	Income tax expense on divested Florida Rock assets(5)		0.06			-			0.06			-
Earnings per share from continuing operations, net of tax, as adjusted(6)		$	0.93		$	1.45		$	1.07		$	2.12
(1) In January 2007, the Company sold approximately 125 acres of vacant land located in San Bernardino County, California resulting in a pretax gain of $43.8 million. The amounts shown above are net of the related incentives ratably applied in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
(2) During the second quarter of 2008, the Company recognized a $74 million pretax gain from the sale of an aggregates production facility and a greenfield (undeveloped) aggregates site owned by Vulcan prior to the acquisition of Florida Rock. The Company was required to divest these assets as a condition for approval by the Antitrust Division of the U.S. Department of Justice of our acquisition of Florida Rock.
(3) In June 2005, the Company sold substantially all the assets of its Chemicals business, known as Vulcan Chemicals, to a subsidiary of Occidental Chemical Corporation, Basic Chemicals. Subject to certain conditions as defined in a separate earn-out agreement, Basic Chemicals was required to make payments based on ECU and natural gas prices during the five-year period beginning July 1, 2005. In September 2007, the Company received the final payment under the ECU earn-out of $22.1 million, bringing cumulative cash receipts to the $150 million cap. The ECU earn-out was accounted for as a derivative instrument; accordingly, it was reported at fair value. The amount presented in the table above for 2007 reflects the change to the fair value of the ECU derivative, which was recorded within continuing operations pursuant to SAB Topic 5:Z:5.
(4) During the second quarter of 2008, the Company donated certain real estate properties with an aggregate fair value of $5.8 million. Statement of Financial Accounting Standards No. 116, "Accounting for Contributions Received and Contributions Made," requires that the fair value of donated property be recognized as an expense in the period the donation is made. We classify expense referable to donated real estate property in selling, administrative and general (SAG) expense. The difference between the fair value of the real estate property donated and its carrying value is recorded as a gain or loss on the sale or disposition of property, plant and equipment, net. Accordingly, during the second quarter of 2008, we recognized a $5.8 million charge to SAG expense equal to the fair value of the donated property and a $5.7 million gain related to the donation for the difference between the property fair values and carrying values.
(5) On November 16, 2007, the Company acquired 100% of the outstanding common stock of Florida Rock Industries, Inc. In connection with the acquisition, the Company was required by the Antitrust Division of the U.S. Department of Justice to divest of certain Florida Rock and Vulcan assets. For book purposes, the Florida Rock assets were recorded at their estimated fair values through purchase accounting, including approximately $18 million in nondeductible goodwill. As a result, there was no pretax gain or loss recognized on the sale of these assets. However, Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” prohibits recognizing a deferred tax liability related to goodwill for which amortization is not deductible for tax purposes. Therefore, the income tax related to the gain associated with the goodwill at these sites could not be recognized as a deferred tax liability through purchase accounting, but rather was recognized as a current charge to income tax expense.
(6) The Company prepares and reports its financial statements in accordance with GAAP. Internally, management monitors the operating performance of its Construction Materials business using non-GAAP metrics similar to those above. These non-GAAP measures exclude the effects of the items described more fully above.
In Management's opinion, these non-GAAP measures are important indicators of the ongoing operations of our Construction Materials business. These measures provide better comparability between reporting periods because they exclude items that may not be indicative of or are unrelated to our core business and provide a better baseline for analyzing trends in our core operations. The Company does not, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company believes the disclosure of the effects of these items increases the reader's understanding of the underlying performance of the business and that such non-GAAP financial measures provide investors with an additional tool to evaluate our financial results and assess our prospects for future performance.

Table G
Reconciliation of Non-GAAP Measures
EBITDA Reconciliations
	(Amounts in thousands)
	Three Months Ended					Six Months Ended
	June 30					June 30
	2008		2007			2008		2007
Reconciliation of Net Cash Provided by Operating Activities to EBITDA
Net cash provided by operating activities	$	149,126	$	119,793		$	181,422	$	217,939
Changes in operating assets and liabilities before initial effect of business acquisitions and dispositions		9,753		84,317			82,608		94,258
Other items, net		78,795		1,804			83,433		43,393
Discontinued operations, net of tax		470		1,670			1,022		2,135
Income tax expense		63,492		66,465			70,327		110,162
Interest expense, net		37,196		6,974			79,983		12,286
EBITDA	$	338,832	$	281,023		$	498,795	$	480,173
Reconciliation of Operating Earnings to EBITDA
Operating earnings	$	238,469	$	217,233		$	305,228	$	354,379
Other income, net		3,444		(113	)		792		1,089
EBIT		241,913		217,120			306,020		355,468
Depreciation, depletion, accretion and amortization from continuing operations		96,919		63,903			192,775		124,705
EBITDA	$	338,832	$	281,023		$	498,795	$	480,173
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. This financial metric is often used by the investment community as one indicator of a company’s ability to incur and service debt. EBITDA is not defined by generally accepted accounting principles (GAAP); thus, it should not be considered as an alternative to net cash provided by operating activities, operating earnings, or any other liquidity or performance measure defined by GAAP.
EBITDA is presented for the convenience of investment professionals that use this metric in their analysis and to provide the Company's shareholders an understanding of one metric management uses to assess performance. Due to the significant write-up of the assets acquired in the November 2007 acquisition of Florida Rock resulting from the application of SFAS 141, Business Combinations, Vulcan's management internally uses EBITDA to assess the operating performance of the acquired Florida Rock assets and consolidated company. Vulcan’s management does not use this metric as a measure to allocate resources internally.

CONTACT:
Vulcan Materials Company
Investor Contact:
Mark Warren, 205-298-3220
or
Media Contact:
David Donaldson, 205-298-3220