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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-4033
VULCAN MATERIALS COMPANY
(Exact name of registrant as specified in its charter)
NEW JERSEY 63-0366371
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1200 URBAN CENTER DRIVE, BIRMINGHAM, ALABAMA 35242
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (205) 298-3000
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
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Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by referenced in Part III of this Form 10-K or any
amendment to this Form 10-K.
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of filing.
AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES AS OF
FEBRUARY 29, 2000: $3,982,494,047
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
COMMON STOCK, $1.00 PAR VALUE, AS OF FEBRUARY 29, 2000: 100,734,902 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's Annual Report to Shareholders for the year
ended December 31, 1999, are incorporated by reference into Parts I, II
and IV of this Annual Report on Form 10-K.
(2) Portions of the registrant's annual proxy statement for the annual meeting
of its shareholders to be held on May 12, 2000, are incorporated by
reference into Part III of this Annual Report on Form 10-K.
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VULCAN MATERIALS COMPANY
CROSS REFERENCE SHEET FOR DOCUMENTS INCORPORATED BY REFERENCE
HEADING IN ANNUAL REPORT PAGE IN
FORM 10-K TO SHAREHOLDERS FOR ANNUAL
ITEM NO. YEAR ENDED DECEMBER 31, 1999 REPORT
1. Business (Financial Results by Segment Financial Data for the 3 Years Ended
Business Segments) December 31, 1999-Note 11, Segment Data 52-53
3. Legal Proceedings Note 9, Other Commitments and Contingent Liabilities 52
7. Management's Discussion and Management's Discussion and Analysis of Results of
Analysis of Financial Condition Operations and Financial Condition 40-44
and Results of Operations
Financial Terminology 64
7A. Quantitative and Qualitative Management's Discussion and Analysis of Results of
Disclosures About Market Risk Operations and Financial Condition 44
8. Financial Statements and Consolidated Statements of Earnings 36
Supplementary Data Consolidated Balance Sheets 37
Consolidated Statements of Cash Flows 38
Consolidated Statements of Shareholders' Equity 39
Notes to Consolidated Financial Statements 45-54
Management's Responsibility for Financial Reporting
and Internal Control 35
Independent Auditors' Report 35
Net Sales, Net Earnings and Earnings Per Share
Quarterly Financial Data for Each of the 2 Years
Ended December 31, 1999 and 1998 (Unaudited) 62
14. Exhibits, Financial Statement Consolidated Statements of Earnings
Schedules and Report on Consolidated Balance Sheets 36
Form 8-K Consolidated Statements of Cash Flows 37
Consolidated Statements of Shareholders' Equity 38
Notes to Consolidated Financial Statements 39
Management's Responsibility for Financial Reporting 45-54
and Internal Control
Independent Auditors' Report 35
Net Sales, Net Earnings and Earnings Per Share 35
Quarterly Financial Data for Each of the 2 Years
Ended December 31, 1999 and 1998 (Unaudited) 62
HEADING IN PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 2000
10. Directors and Executive Officers Election of Directors; Nominees for Election to the Board of
of the Registrant Directors; Directors Continuing in Office; Section 16(a)
Beneficial Ownership Reporting Compliance
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11. Executive Compensation Compensation of Directors; Executive Compensation; Option
Grants in 1999; Report of the Compensation Committee;
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year End Option Values; Shareholder Return Performance
Presentation; Retirement Income Plan: Change in Control
Employment Agreements.
12. Security Ownership of Certain Stock Ownership of Certain Beneficial Owners;
Beneficial Owners and Stock Ownership of Management
Management
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VULCAN MATERIALS COMPANY
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 1999
CONTENTS
PART ITEM PAGE
I 1 Business 1
2 Properties 4
3 Legal Proceedings 6
4 Submission of Matters to a Vote of Security Holders 8
4a. Executive Officers of the Registrant 9
II 5 Market for the Registrant's Common Equity and Related
Stockholder Matters 10
6 Selected Financial Data 11
7 Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
7A. Quantitative and Qualitative Disclosure About Market Risk 11
8 Financial Statements and Supplementary Data 12
9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 12
III 10 Directors and Executive Officers of the Registrant 12
11 Executive Compensation 12
12 Security Ownership of Certain Beneficial Owners and
Management 12
13 Certain Relationships and Related Transactions 13
IV 14 Exhibits, Financial Statement Schedules, and Reports on 13
Form 8-K
-- Signatures 19
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PART 1
ITEM 1. BUSINESS
Vulcan Materials Company, a New Jersey corporation incorporated in
1956, and its subsidiaries (together called the "Company") are principally
engaged in the production, distribution and sale of construction materials
("Construction Materials") and industrial and specialty chemicals
("Chemicals"). Construction Materials and Chemicals are both reported as
segments. The Company is the nation's foremost producer of construction
aggregates, a major producer of other construction materials and a leading
chemicals manufacturer, supplying chloralkali and other industrial and
specialty chemicals.
All of the Company's products are marketed under highly competitive
conditions, including competition in price, service and product performance.
There are a substantial number of competitors in both the Construction
Materials segment and the Chemicals segment.
No material part of the business of either segment of the Company is
dependent upon a single customer or upon a few customers, the loss of any one
of which would have a materially adverse effect on the segment. The Company's
products are sold principally to private industry. Although large amounts of
construction materials are used in public works, relatively insignificant sales
are made directly to federal, state, county or municipal governments, or
agencies thereof.
The Company conducts research and development activities for both of
its business segments. The Construction Materials research and development
facility is located in Birmingham, Alabama. The Chemicals research and
development laboratories are located in Wichita, Kansas and Columbus, Georgia.
In general, the Company's research and development effort is directed to
applied technological development relating to the use of its Construction
Materials and Chemicals products as well as for the manufacturing or processing
of its Chemicals products. The Company spent approximately $1,281,000 in 1997,
$984,000 in 1998 and $1,231,000 in 1999 on research and development activities
for its Construction Materials segment. The Company spent approximately
$9,474,000 in 1997, $8,641,000 in 1998 and $8,803,000 in 1999 on research and
development activities for its Chemicals segment.
The Company estimates that capital expenditures for environmental
control facilities in the current fiscal year (2000) and the succeeding fiscal
year (2001) will be approximately $11,500,000 and $4,200,000, respectively, for
the Construction Materials segment, and $7,000,000 and $1,500,000,
respectively, for the Chemicals segment.
The Company's principal sources of energy are electricity, natural gas
and diesel fuel. The Company does not anticipate any material difficulty in
obtaining the required sources of energy required for its operations.
In 1999, the Construction Materials segment employed an average of
approximately 7,520 people. The Chemicals segment employed an average of
approximately 1,540 people. The Company's corporate office employed an average
of approximately 185 people. The Company considers its relationship with its
employees to be good.
Financial results of the Company for any individual quarter are not
necessarily indicative of results to be expected for the year, due primarily to
the effect that weather can have on the sales and production volume of the
Construction Materials segment. Normally, the highest sales and earnings of the
Construction Materials segment are attained in the third quarter and the lowest
are realized in the first quarter.
CONSTRUCTION MATERIALS
The Company's construction materials business consists of the
production and sale of construction aggregates and other construction materials
and related services. Construction aggregates include crushed stone, sand and
gravel, rock asphalt, recrushed concrete and crushed slag (a by-product of
steel production) and are
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employed in virtually all types of construction, including highway construction
and maintenance, and in the production of asphaltic and portland cement
concrete mixes. Aggregates also are widely used as railroad track ballast.
Construction aggregates constituted approximately 66% of the dollar volume of
the Construction Materials segment's 1999 sales, as compared to 84% in both
1998 and 1997.
Each type of aggregate is sold in competition with other types of
aggregates and in competition with other producers of the same type of
aggregates. Because of the relatively high transportation costs inherent in the
business, competition generally is limited to the areas in relatively close
proximity to production facilities. Noteworthy exceptions are the areas along
the Mississippi and Tennessee-Tombigbee river systems and the Gulf Coast which
are served by the Company's river quarries, areas served by rail-connected
quarries, and the areas along the U.S. coast served by ocean-going vessels that
transport stone from the Company's joint venture operation in Mexico. The
Company's construction aggregates are sold in 21 states and the District of
Columbia.
In January 1999, the Company acquired the stock of CalMat Co., the
leading producer of construction aggregates and asphalt mix in California.
Additionally, during 1999, the Company acquired 20 construction aggregates
facilities and opened four greenfield sites.
Shipments to customers of all construction aggregates from the
Company's domestic operations in 1999 totaled approximately 220 million tons.
As of year-end 1999, the Company, either directly or indirectly or
through joint ventures, operated 193 permanent reserve-supplied aggregates
production facilities in 17 states and Mexico for the production of crushed
stone (limestone and granite), sand and gravel, and rock asphalt with estimated
reserves totaling approximately 9.5 billion tons.
As of year-end 1999, the Company, either directly or indirectly or
through joint ventures, operated 19 recrushed concrete plants, 4 slag plants,
and various other types of plants which produce fine grind, dolomitic lime and
other aggregates.
Other Construction Materials products and services include asphalt
mix and related products, ready-mixed concrete, trucking services, barge
transportation, paving construction, and several other businesses.
As of year-end 1999, the Company operated 58 asphalt plants in 8
states and 32 ready-mixed concrete plants in 5 states.
Environmental and zoning regulations have made it increasingly
difficult for the construction aggregates industry either to expand existing
quarries or to develop new quarries. Although it cannot be predicted what
policies will be adopted in the future by governmental bodies regarding
environmental controls which affect the construction materials industry, the
Company anticipates that future environmental control costs will not have a
materially adverse effect upon its business.
CHEMICALS
The Chemicals segment is organized into two business units: the
Chloralkali Business Unit which manages the Company's line of chloralkali
products and related businesses, and the Performance Chemicals Business Unit
which manages the Company's specialty chemicals and services business.
The principal inorganic chemicals produced by the Chloralkali Business
Unit's three manufacturing facilities described in Item 2 below are chlorine,
caustic soda (sodium hydroxide), caustic potash (potassium hydroxide),
hydrochloric acid (muriatic acid) and potassium carbonate. In addition, the
Chloralkali Business Unit uses chlorine or hydrogen chloride and various
hydrocarbons (primarily, ethylene, methanol and vinyl chloride monomer) to
produce an associated and varied line of chlorinated hydrocarbon products,
including methyl chloride, methylene chloride, chloroform, ethylene dichloride,
perchloroethylene, methyl chloroform and
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pentachlorophenol. Principal markets for the Chloralkali Business Unit's
chemical products include pulp and paper, energy, food, pharmaceuticals,
cleaning, chemical processing, fluorocarbons, water management and textiles.
In the paper industry caustic soda is used primarily in the kraft and
sulfite pulping processes. Chlorine is used in potable water disinfection and
sewage management, to remove impurities from recycled aluminum and as an
ingredient to make other chlorinated products. Caustic soda and caustic potash
are used in the production of soaps and detergents. Caustic soda also is used
to demineralize water for steam production at electrical energy facilities and
to remove sulfur from gas and coal. The Company supplies hydrochloric acid to
the energy industry for stimulation of oil and gas wells. Hydrochloric acid,
caustic soda, caustic potash and methylene chloride are used by the food and
pharmaceutical industries. Perchloroethylene, methylene chloride and methyl
chloroform are used in industrial cleaning applications. Perchloroethylene is
also used in the dry cleaning industry and in the manufacture of refrigerants.
Ethylene dichloride (EDC) is used in the manufacture of PVC and
pentachlorophenol is used in wood or utility pole treatment. The Chloralkali
Business Unit's sales to the chemical processing industry serve companies that
produce organic and inorganic chemical intermediates and finished products.
Products sold to this market segment include hydrochloric acid, chlorine,
caustic soda, caustic potash, potassium carbonate and various chlorinated
hydrocarbons. Potassium carbonate is used in the manufacture of screen glass,
rubber antioxidants, cleansers, chocolate and other chemicals. The Company
sells chloroform, methyl chloroform, perchloroethylene and other chlorinated
hydrocarbons to the fluorocarbons market as feedstock for manufacturing
refrigerants.
In 1998, the Company announced the formation of a joint venture with
Mitsui & Co., Ltd., to construct a new chloralkali plant and expand EDC
production capacity at the Company's current manufacturing site in Geismar,
Louisiana. This joint venture was structured to take advantage of the Company's
manufacturing and domestic marketing capabilities and Mitsui's access to global
EDC markets. It is anticipated that the new chloralkali plant will begin
production in June 2000, and the expanded EDC plant will begin production in
October 2000.
In February 2000, the Company combined its specialty chemicals
businesses into one business unit called Vulcan Performance Chemicals. The new
business unit includes Callaway Chemical Company, Callaway's Mayo Division,
Callaway Chemical Limited, Vulcan Chemical Technologies and Vulcan's sodium
chlorite business. These businesses formerly operated as the Company's
Performance Systems Business Unit. Vulcan Performance Chemicals offers a blend
of products, services, technologies and manufacturing capabilities for
customers in a variety of industries, with emphasis on pulp and paper, textiles
and water management. Additionally, Vulcan Performance Chemicals intends to
expand into the petrochemical, mining and utilities markets.
The Company competes throughout the United States with numerous
companies, including some of the largest chemical companies, in the production
and sale of its lines of chemicals. The Company also competes for sales to
customers located outside the United States, with sales to such export
customers currently accounting for approximately 11% of the sales of the
Company's Chemicals segment.
Underground reserves of salt, a basic raw material used by the
Chloralkali Business Unit in the production of chlorine and caustic soda, are
located near the Company's Wichita, Kansas and Geismar, Louisiana plants. The
Company purchases salt for its Port Edwards, Wisconsin plant. Ethylene,
methanol and vinyl chloride monomer, the other major raw materials used in the
Chloralkali Business Unit, and various chemicals used as raw materials by
Vulcan Performance Chemicals are purchased from several different suppliers.
Sources of salt, ethylene, methanol, vinyl chloride monomer and various other
raw material chemicals are believed to be adequate for the Company's
operations, and the Company does not anticipate any material difficulty in
obtaining the raw materials which it uses.
Certain of the Company's chemical operations are subject to the
Resource Conservation and Recovery Act ("RCRA"). Under the corrective action
requirements of RCRA, the Environmental Protection Agency ("EPA") must identify
facilities subject to RCRA's hazardous waste permitting provisions where past
practices have caused releases of hazardous waste or constituents thereof. The
owner of any such facility is then required to conduct a Remedial Facility
Investigation ("RFI") defining the nature and extent of any such releases. If
the results of the
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RFI determine that constituent concentrations from any such release exceed
action levels specified by the EPA, the facility owner is further required to
perform a Corrective Measures Study ("CMS") identifying feasible technological
alternatives for addressing these releases. Depending upon the results reported
to the EPA in the RFI and CMS, the EPA subsequently may require Corrective
Measures Implementation ("CMI") by the facility owner - essentially,
implementation of a cleanup plan developed by the EPA based on the RFI and CMS.
The Company expects to incur RFI and CMS costs over the next several
years at its Geismar and Wichita manufacturing facilities. For each of these
three facilities, the RFI and CMS results will determine whether the EPA
subsequently requires a CMI to address releases at the facility, and the scope
and cost of any such CMI. With respect to those RFI and CMS costs that
currently can be reasonably estimated, the Company has determined that its
accrued reserves are adequate to cover such costs. However, the total costs
which ultimately may be incurred by the Company in connection with discharging
its obligations under RCRA's corrective action requirements cannot reasonably
be estimated at this time.
Various other environmental regulations also have a restrictive effect
upon the chemicals industry, both as to production and sales, particularly the
production and sale of certain chemicals which are subject to regulation as
ozone depleting chemicals. The production and marketing of carbon tetrachloride
ended effective January 1, 1996, for most end uses except for exports to
Article 5 countries as defined by the Montreal Protocol on Ozone Depleting
Chemicals. The production of methyl chloroform for emissive applications also
ended effective January 1, 1996. Existing inventories of methyl chloroform may
continue to be marketed for emissive uses. In addition, methyl chloroform will
continue to be produced and marketed for non-emissive uses, while carbon
tetrachloride will continue to be produced and marketed for export to Article 5
countries. However, sales volume of both products will be lower than in prior
years.
FINANCIAL RESULTS BY BUSINESS SEGMENTS
Net sales, earnings, identifiable assets and related financial data
for each of the Company's business segments for the three years ended December
31, 1999, are reported on pages 52 and 53 (Note 11 of the Notes to Financial
Statements) in the Company's 1999 Annual Report to Shareholders, which
referenced pages of said report are incorporated herein by reference.
ITEM 2. PROPERTIES
CONSTRUCTION MATERIALS
The Company's current estimate of approximately 9.5 billion tons of
zoned and permitted aggregates reserves is approximately 1.2 billion tons more
than the estimate reported at the end of 1998. These reserves include
aggregates reserves in Mexico owned or controlled by the Company's Mexican
joint venture. Increases in the Company's reserves have resulted from 1999
acquisitions. Management believes that the quantities of zoned and permitted
reserves at the Company's aggregates facilities are sufficient to result in an
average life of approximately 45 years at present operating levels. See Note 1
to the table of the Company's 10 largest active aggregates facilities on page 5
for a description of the method used by the Company for estimating the years of
life of reserves.
The foregoing estimates of reserves are of recoverable stone, sand and
gravel of suitable quality for economic extraction, based on drilling and
studies by the Company's geologists and engineers, recognizing reasonable
economic and operating restraints as to maximum depth of overburden and stone
excavation.
Of the 193 permanent reserve-supplied aggregates production facilities
which the Company operates directly or through joint ventures, 67 are located
on owned land, 30 are on land owned in part and leased in part, and 96 are on
leased land. While some of the Company's leases run until reserves at the
leased sites are exhausted, generally the Company's leases have definite
expiration dates which range from 2000 to 2105. Most of the Company's leases
have options to extend them well beyond their current terms.
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Due to transportation costs, the marketing areas for most aggregates
facilities in the construction aggregates industry are limited, often
consisting of a single metropolitan area or one or more counties or portions
thereof. The following table itemizes the Company's 10 largest active
aggregates facilities in terms of the quantity of aggregates reserves, with
nearby major metropolitan areas (if applicable) shown in parentheses:
ESTIMATED
YEARS OF LIFE LEASE
AT AVERAGE EXPIRATION
RATE OF NATURE OF DATE, IF
LOCATION PRODUCT PRODUCTION (1) INTEREST APPLICABLE (2)
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McCook (Chicago), Illinois Limestone 77.3 Owned
Paducah, Kentucky Limestone 41.0 Leased (4)
Grayson (Atlanta), Georgia Granite Over 100 Owned
Playa Del Carmen, Mexico (3) Limestone 98.8 Owned
Gray Court (Greenville), South Carolina Granite Over 100 Owned
Warrenton, Virginia (Washington, D.C.) Diabase Over 100 Leased (4)
Kennesaw (Atlanta), Georgia Granite 37.5 Owned
Manteno, Illinois Limestone Over 100 Leased (4)
Skippers, Virginia Granite 91.6 Leased 2016
Lawrenceville (Norfolk/Virginia Granite 57.5 31% Owned
Beach), Virginia 69% Leased (5)
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(1) Estimated years of life of aggregates reserves are based on the
average annual rate of production of the facility for the most
recent three-year period, except that if reserves are acquired or
if production has been reactivated during that period, the
estimated years of life are based on the annual rate of production
from the date of such acquisition or reactivation. Revisions may be
necessitated by such occurrences as changes in zoning laws
governing facility properties, changes in aggregates specifications
required by major customers and passage of government regulations
applicable to aggregates operations. Estimates also are revised
when and if additional geological
evidence indicates that a revision is necessary.
(2) Renewable by the Company through date shown.
(3) The Playa Del Carmen, Mexico location is owned by the Company's joint
venture in Mexico. Its ranking in this table is based on counting 49%
of its reserves, which represents the Company's ownership interest in
the entity which owns the reserves. This facility's estimated years of
life at average rate of production is based on 100% of the reserves.
(4) Lease does not expire until reserves are exhausted. Surface rights at
the Paducah, Kentucky facility are owned.
(5) Leases expire as follows: 8% in 2020, 9% in 2024, 47% in 2044 and 5%
in 2045.
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CHEMICALS
Manufacturing facilities for the chemicals produced by the Chloralkali
Business Unit are owned and operated by the Company at Wichita, Kansas,
Geismar, Louisiana, and Port Edwards, Wisconsin. With a few exceptions, the
Geismar and Wichita facilities produce the full line of products manufactured
by the Company's Chloralkali Business Unit. The Wichita facility also
manufactures sodium chlorite for the Performance Chemicals Business Unit. The
Port Edwards plant produces chlorine, caustic soda, muriatic acid, caustic
potash and potassium carbonate, and manufactures sodium hydrosulfite for the
Performance Chemicals Business Unit.
All of the facilities at Wichita are located on a 1,518-acre tract of
land owned by the Company. Mineral rights for salt are held by the Company under
two leases that are automatically renewable from year to year unless terminated
by the Company and under several other leases which may be kept in effect so
long as production from the underlying properties is continued. In addition, the
Company owns 120 acres of salt reserves and 108 acres of water reserves. The
Company maintains an electric power cogeneration facility at the Wichita plant
site which is capable of generating approximately one-third of the plant's
electricity and two-thirds of its process steam requirements. The Company has
placed this cogeneration facility in reserve and is purchasing most of its
requirements for electric power from a local utility at favorable rates pursuant
to a long-term agreement. Through a separate agreement with this utility, the
Company does operate its cogeneration unit upon the request of the utility at
various times during the summer peak electricity demand period, selling the
cogenerated electricity to the utility under profitable rates.
The facilities at Geismar are located on a 2,185-acre tract of land
owned by the Company. Included in the facilities at the Geismar plant is an
electric power cogeneration facility owned by the Company which supplies
substantially all of the electricity and process steam required by the plant.
Mineral rights for salt are held under a lease which may be extended, at the
Company's option, through 2037.
The plant facilities at Port Edwards are located on a 34-acre tract of
land, the surface rights to which are owned by the Company. Currently, the
Company purchases its salt and electrical power requirements for the Port
Edwards facility from regional sources of supply.
Manufacturing facilities for chemicals produced by Vulcan Performance
Chemicals (other than sodium chlorite and sodium hydrosulfite which are
respectively produced at Wichita and Port Edwards) are operated by subsidiaries
of the Company. The Performance Chemicals Business Unit owns two production
facilities in Columbus, Georgia and additional production facilities in Smyrna,
Georgia, Dalton, Georgia and Shreveport, Louisiana. The Performance Chemicals
Business Unit also has an office and small production facility on leased
property in Vancouver, British Columbia.
The Company's Chemicals manufacturing facilities are designed to
permit a high degree of flexibility as to raw material feedstocks, product mix
and product ratios; therefore, actual plant production capacities vary
according to these factors. Management does not believe, however, that there is
material excess production capacity at the Company's Chemicals facilities.
OTHER PROPERTIES
The Company relocated its corporate offices to a newly constructed
office complex in Birmingham, Alabama late in 1998. Headquarters staffs for the
Construction Materials and Chemicals segments, the Southern Division of the
Construction Materials segment, and Vulcan Gulf Coast Materials, Inc., also are
located in this complex. The space is leased through December 31, 2013 and
consists of approximately 189,000 square feet. The annual rental for each year
in the initial 5 year period, the second 5 year period and the final 5 year
period of the lease will be approximately $3.0 million, $3.2 million and $3.4
million, respectively.
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ITEM 3. LEGAL PROCEEDINGS
In the course of its Construction Materials and Chemicals operations,
the Company is subject to occasional governmental proceedings and orders
pertaining to occupational safety and health or to protection of the
environment, such as proceedings or orders relating to noise abatement, air
emissions or water discharges. As part of its continuing program of stewardship
in safety, health and environmental matters, the Company has been able to
resolve such proceedings and to comply with such orders without any materially
adverse affects on its business.
The Company also is a defendant in various lawsuits in the ordinary
course of business. It is not possible to determine with precision the probable
outcome of, or the amount of liability, if any, under these lawsuits; however,
in the opinion of the Company and its counsel, the disposition of these
lawsuits will not adversely affect the consolidated financial position of the
Company to a material extent. In addition to those lawsuits in which the
Company is involved in the ordinary course of business, certain other legal
proceedings involving the Company are more specifically described below.
The Company received an August 1991 letter from the State of New
Jersey Department of Environmental Protection ("NJDEP") concerning a site
located in Newark, New Jersey, which the Company previously owned and upon
which the Company operated a chemicals production facility from the early 1960s
until 1974. The NJDEP's letter asserts that hazardous substances and pollutants
contaminate the site and that a Remedial Investigation/ Feasibility Study
("RI/FS") is required in order to determine the nature and extent of such
contamination and whether a site remedial action plan should be developed. In
November 1991, the Company received from the NJDEP a "Directive and Notice to
Insurers" (the "Directive") purporting to direct the Company to pay within
thirty (30) days to the NJDEP $1,000,000 to be used by it in conducting an
RI/FS at the site. The NJDEP also asserted that it may have the right to cause
a lien to be placed against the real and personal property of the Company to
secure the payment of any such amounts. Although the NJDEP has not withdrawn
its Directive, the NJDEP has informally agreed that it would not seek to
enforce its Directive if the Company participated in the RI/FS for this site.
In August 1993, two other allegedly responsible parties, Safety-Kleen
Environsystems Company and Bristol-Meyers Squibb Company (collectively, the
"Respondents"), entered into an Administrative Consent Order ("ACO") issued by
the NJDEP in regard to the site. The ACO contains certain findings of fact by
the NJDEP, together with provisions governing the conduct by the Respondents of
an RI/FS for the site and remedial actions, if any, resulting therefrom. Under
a separate agreement with Respondents and certain successors, the Company
shared in the cost of the RI/FS. The results of the now completed RI/FS have
been presented to the NJDEP, and the Department is in the process of
determining what site remediation is required under the ACO, if any. If site
remediation is required, the Respondents or the NJDEP might assert that the
Company should bear some responsibility in connection with such remediation.
In a March 1994 letter, the EPA notified the Company that it was a
potentially responsible party ("PRP") under the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") with respect to the Jack's
Creek/Sitkin Smelting Superfund Site (the "Site") in Pennsylvania, a secondary
smelting facility that operated from 1958 until declaring bankruptcy in 1977.
The Pennsylvania Department of Environmental Protection ("PADEP") also has
asserted a claim for investigation and response costs allegedly incurred at the
Site, and state and federal trustees have asserted claims for alleged natural
resources damages. In September 1997, the EPA issued a Record of Decision
("ROD") for the Site, which included selection of a remedy. The EPA estimated
the total costs of implementing and thereafter operating and maintaining the
selected remedy to be a total net present value of $12,500,000; however, there
remain several uncertainties and contingencies regarding this estimate. The
Company and over 30 other PRPs formed the Jack's Creek PRP Group (the "PRP
Group") to respond to the claims asserted by the EPA, the PADEP and others. In
December 1998, the PRP Group entered into a settlement with the EPA, the U.S.
Department of Justice and the PADEP. That settlement is embodied in a Consent
Decree now lodged with the U.S. District Court. Under the Consent Decree, the
PRP Group commits to design and implement the remedy selected in the ROD. In
consideration of that commitment, the EPA will forgive the unreimbursed past
response costs it allegedly incurred and certain future oversight costs it
expects to incur. The Consent Decree also incorporates both the PRP Group's
settlement of the PADEP's claims for past response costs and future oversight
costs and a settlement between the PRP Group and some 100 de minimis parties.
These de minimis settlers will pay approximately $3.2 million into a "special
fund" held by the EPA,
7
12
95% of which amount will be available to reimburse the PRP Group for costs
incurred in design and implementation of the remedy. The Consent Decree does
not include any settlement of natural resource damage claims. In January 1999,
the PRP Group executed an Amended and Restated Contribution Agreement
allocating the costs of implementing the remedy pursuant to the Consent Decree
among the PRP Group members; the Company's allocated share is 1.96%.
Concurrently, the PRP Group executed a settlement agreement with the current
owner and operator of the Site, providing for the owner/operator's contribution
of certain in-kind services and materials toward performance of the remedy.
In July 1996, the Company received a copy of a Complaint filed by
Amoco Chemical Company ("Amoco") in the U.S. District Court (Southern District
of Texas); the Company is included among the more than 100 named defendants.
The Complaint alleges that certain of the defendants are present or former
owners or operators of a Texas smelting facility most recently operated by the
now bankrupt Tex Tin Corporation (the "Tex Tin Site") and that the remainder of
the defendants, including the Company, generated CERCLA hazardous substances
which were sent to the Tex Tin Site. The Complaint further alleges that
plaintiff, Amoco, together with defendant Tex Tin Corporation, entered into a
March 1990 ACO with the EPA, and that under the ACO, Amoco conducted certain
remedial investigations until May 1993, during which time the Tex Tin Site was
included on the National Priorities List ("NPL") as a Superfund site. The Tex
Tin Site was removed then from the NPL by order of the U.S. Court of Appeals
(D.C. Circuit). The action brought by Amoco asserts that Amoco spent over $8
million in conducting these past remedial investigations, that Amoco will incur
costs in the future relating to the Tex Tin Site, and that all such costs,
together with pre- and post-judgment interest, are CERCLA response costs for
which defendants are liable to Amoco, either jointly and severally or in
contribution. The Company had previously received a September 1989 CERCLA
ss.104(e) Notice Letter from EPA-Region 6 asserting that the Company is a PRP
liable for remediation of the Tex Tin Site and reimbursement of EPA oversight
costs. In September 1998, the Tex Tin Site was again placed on the NPL, and in
May 1999, a ROD was issued by the EPA proposing a remedy for the Tex Tin Site
with an estimated total cost of approximately $28 million. At the direction of
the Court, the parties to this litigation, including the Company, are
participating in on-going mediated negotiations, both as to settlement of the
pending litigation and a related CERCLA settlement under which the remediation
of the Tex Tin Superfund Site would be effectuated. The Company is
participating in the mediation with 15 other companies on a joint defense
basis.
At present, the Company cannot predict the likelihood of either a
favorable or unfavorable outcome as to any of the matters specifically
described above, or the amount of any potential loss or losses in the event of
any unfavorable outcome or outcomes as to any and all of the above-described
matters; however, the Company does not believe that any such loss or losses
would affect the consolidated financial position of the Company to a material
extent.
The Company's subsidiary, CalMat Co., which was acquired in January
1999, received a federal grand jury subpoena in 1998 requesting information
concerning its Fresno, California asphalt operations. The subpoena was issued
as part of an investigation by the U.S. Department of Justice, Antitrust
Division ("DOJ") into possible violations of antitrust laws by CalMat Co.
regarding these operations for certain years prior to 1998. Shortly after the
Company received the subpoena, the DOJ advised the Company that CalMat Co. was
a target of this investigation. On February 29, 2000 after CalMat Co. responded
to the subpoena and several CalMat Co. employees testified before the Grand
Jury, the DOJ advised the Company that its investigation of this matter has
been closed.
Note 9, Other Commitments and Contingent Liabilities on page 52 of the
Company's 1999 Annual Report to Shareholders is hereby incorporated by
reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to the Company's security holders through the
solicitation of proxies or otherwise during the fourth quarter of 1999.
8
13
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The names, positions and ages of the executive officers of the Company
are as follows:
NAME POSITION AGE
Donald M. James Chairman and Chief Executive Officer 51
Peter J. Clemens, III Executive Vice President, Finance & Administration and Treasurer 56
Guy M. Badgett, III Senior Vice President-Construction Materials, East, and 51
President, Southeast Division
William F. Denson, III Senior Vice President, General Counsel and Secretary 56
Robert A. Wason IV Senior Vice President, Corporate Development 48
Richard K. Carnwath Vice President, Planning and Development 51
J. Wayne Houston Vice President, Human Resources 50
Ejaz A. Khan Vice President, Controller and Chief Information Officer 43
John A. Heilala President, Chloralkali Business Unit 59
John L. Holland President, Performance Chemicals Business Unit 57
William L. Glusac President, Midwest Division 49
Daniel J. Leemon President, Midsouth Division 61
Ronald G. McAbee President, Mideast Division 53
Thomas R. Ransdell President, Southwest Division 57
Daniel F. Sansone President, Vulcan Gulf Coast Materials Division 47
President, Southern Division
James W. Smack President, CalMat Division 56
The principal occupations of the executive officers during the past
five years are set forth below:
Donald M. James, was elected Chairman of the Board of Directors in May
1997. He became President and Chief Executive Officer in February 1997. Prior
to that he served as President and Chief Operating Officer.
Peter J. Clemens, III, was elected Executive Vice President, Finance
and Administration and Treasurer in May 1997. He served as Executive Vice
President and Chief Administrative Officer from May 1996 to May 1997. Prior to
that time he served as Senior Vice President, West, Construction Materials
Group and Senior Vice President, Finance.
Guy M. Badgett, III, was elected Senior Vice President, Construction
Materials, East in February 1999. He was elected Chairman, Southern Division in
May 1997. He has served as President, Southeast Division, since 1992.
9
14
William F. Denson, III, was elected Senior Vice President and General
Counsel in May 1999. Prior to that date he served as Senior Vice President-Law.
He has also served as Secretary since April 1981.
Robert A. Wason IV was elected Senior Vice President, Corporate
Development in December 1998. From 1996 until 1998 he served as President,
Performance Systems Business Unit. Prior to that time he had served as
Executive Vice President, Performance Systems.
Richard K. Carnwath has served as Vice President, Planning and
Development since 1985.
J. Wayne Houston was elected Vice President, Human Resources in
October 1997. Prior to that time he served as Director of Compensation and
Benefits.
Ejaz A. Khan was elected Vice President and Controller in February
1999. He was appointed as Chief Information Officer as well in February 2000.
Prior to that he served as Controller.
John A. Heilala has served as President, Chloralkali Business Unit
since May 1996. From 1994 until 1996, he served as Executive Vice President,
Chloralkali.
John L. Holland joined the Company in December 1998 as President of
the newly-renamed Performance Chemicals Business Unit. Prior to that he served
as President of BetzDearborn Water Management Group and Group Vice President,
BetzDearborn, Inc.
William L. Glusac has served as President, Midwest Division, since
1994.
Daniel J. Leemon has served as President, Midsouth Division, since
1993.
Ronald G. McAbee was appointed President of Mideast Division in
January 1999. Prior to that time he served as Vice President, East Region of
the Midsouth Division.
Thomas R. Ransdell has served as President, Southwest Division since
1994. He also served as President, Vulcan Gulf Coast Materials, Inc., from 1987
to May 1997.
Daniel F. Sansone was appointed President, Southern Division in July
1999 and President, Vulcan Gulf Coast Materials Division in May 1997. Prior to
that time he served as Vice President, Finance.
James W. Smack was appointed President of CalMat Division effective
January 1999. Prior to that time he served as President, Mideast Division.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock is traded on the New York Stock Exchange
(ticker symbol VMC). As of February 29, 2000, the number of shareholders of
record approximated 3,618. The closing price of the Common Stock on the New
York Stock Exchange on February 29, 2000, was $40.00. The prices in the
following table represent the high and low sales prices for the Company's
Common Stock as reported on the New York Stock Exchange.
QUARTER ENDED 1999 1998
------------- ---- ----
HIGH LOW HIGH LOW
---- --- ---- ---
March 31 $ 48.13 $ 40.75 $ 37.83 $ 31.50
June 30 50.75 39.63 39.90 34.83
September 30 51.25 34.31 40.75 33.63
December 31 44.13 34.81 44.67 31.33
10
15
Dividends paid in 1999 totaled $78,730,000, as compared with
$70,015,000 paid in 1998. On February 11, 2000, the Board of Directors
authorized a quarterly dividend of $.21 per share of Common Stock payable March
10, 2000 to holders of record on February 25, 2000. This quarterly dividend
represents a 7.7% increase over quarterly dividends paid in 1999.
The Company's policy is to pay out a reasonable share of net cash
provided by operating activities as dividends, consistent on average with the
payout record of past years, and consistent with the goal of maintaining debt
ratios within prudent and generally acceptable limits. The future payment of
dividends, however, will be within the discretion of the Board of Directors of
the Company and depends on the Company's profitability, capital requirements,
financial condition, growth, business opportunities and other factors which the
Board of Directors may deem relevant.
ITEM 6. SELECTED FINANCIAL DATA
The selected statement of operations, per share data and balance sheet
data for each of the 5 years ended December 31, 1999 set forth below have been
derived from the audited consolidated financial statements of the Company. The
following data should be read in conjunction with the consolidated financial
statements of the Company and notes to consolidated financial statements on
pages 35 through 39 and 45 through 54 of the Company's 1999 Annual Report to
Shareholders, which are incorporated herein by reference.
Year Ended December 31
- ------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
(Amounts in millions, except per share data)
Net sales $2,355.8 $1,776.4 $1,678.6 $1,568.9 $1,461.0
Net earnings $ 239.7 $ 255.9 $ 209.1 $ 188.6 $ 166.2
Net earnings per:
Basic shares outstanding $ 2.38 $ 2.54 $ 2.06 $ 1.81 $ 1.56
Diluted shares outstanding $ 2.35 $ 2.50 $ 2.03 $ 1.79 $ 1.54
Total assets $2,839.5 $1,658.6 $1,449.2 $1,320.6 $1,215.8
Long-term obligations $ 698.9 $ 76.5 $ 81.9 $ 85.5 $ 90.3
Cash dividends declared per share $ 0.78 $ 0.69 $ 0.63 $ 0.56 $ 0.49
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" on pages 40 through 44 and "Financial Terminology" on page
64 of the Company's 1999 Annual Report to Shareholders are incorporated herein
by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" on page 44 of the Company's 1999 Annual Report to
Shareholders is incorporated herein by reference.
11
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information relative to this item is included in the
Company's 1999 Annual Report to Shareholders on the pages shown below, which
are incorporated herein by reference:
PAGE
Consolidated Financial Statements 36-39
Notes to Consolidated Financial Statements 45-54
Management's Responsibility for Financial Reporting and Internal Control 35
Independent Auditors' Report 35
Net Sales, Net Earnings and Earnings Per Share Quarterly Financial Data for Each of
the 2 Years Ended December 31, 1999 and 1998 (Unaudited) 62
With the exception of the aforementioned information and the
information incorporated by reference in Items 1, 3, 7, 7A, 8 and 14, the
Company's 1999 Annual Report to Shareholders is not deemed filed as part of
this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No information is required to be included herein pursuant to Item 304
of Regulation S-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
On or before March 30, 2000, the Company will file a definitive proxy
statement with the Securities and Exchange Commission pursuant to Regulation
14A (the Company's "2000 Proxy Statement"). The information under the headings
"Election of Directors," "Nominees for Election to the Board of Directors" and
"Directors Continuing in Office" included in the 2000 Proxy Statement are
incorporated herein by reference. For the information required by Item 401 of
Regulation S-K concerning executive officers of the registrant, reference is
made to the information provided in Part I, Item 4(a) of this Annual Report on
Form 10-K. Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 240.16a-3(e) during 1998, and of Form
5 and amendments thereto furnished to the Company pursuant to Rule 240.16a-3(e)
with respect to 1998, the Company has not identified any persons subject to
Section 16(a) of the Securities Exchange Act of 1934 who failed to file on a
timely basis required forms, except that Guy M. Badgett, III, Senior Vice
President-Construction Materials, East, Robert A. Wason IV, Senior Vice
President, Corporate Development, and Daniel J. Leemon, President, Midsouth
Division, all filed a Form 5 late with respect to shares gifted to family
members. The information set forth under the heading "Section 16(a) Beneficial
Ownership Reporting Compliance" included in the Company's 2000 Proxy Statement
is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the headings "Compensation of Directors,"
"Executive Compensation," "Option Grants in 1999," "Report of the Compensation
Committee," "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year
End Option Values," "Shareholder Return Performance Presentation," "Retirement
Income Plan" and "Change in Control Employment Agreements" included in the
Company's 2000 Proxy Statement is incorporated herein by reference.
12
17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the headings "Stock Ownership of Certain
Beneficial Owners" and "Stock Ownership of Management" included in the
Company's 2000 Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
An executive officer of the Company, Daniel F. Sansone, serves as the
chief executive officer of three companies in which the Company has a 51%, 50%
and 49% interest, respectively. Each of the companies reimburses the Company for
a portion of Mr. Sansone's salary and bonus. In 1999, the total amount of this
reimbursement was $154,000.
On January 6, 1999, the Company entered into a Consulting Agreement
with A. Frederick Gerstell, the former chairman and chief executive officer of
CalMat Co., which the Company acquired in 1999. Pursuant to the Consulting
Agreement, Mr. Gerstell receives a monthly retainer of $10,600 in exchange for
his consulting services. This Consulting Agreement will terminate in June 2000.
Mr. Gerstell also received a grant of 3,126 restricted shares pursuant to the
Consulting Agreement on January 6, 2000.
Other than the foregoing, no information is required to be included
herein pursuant to Item 404 of Regulation S-K, which requires disclosure of
certain information with respect to certain relationships or related
transactions of the directors and management.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) (1) FINANCIAL STATEMENTS
The following financial statements are included in the Company's 1999
Annual Report to Shareholders on the pages shown below and are incorporated
herein by reference:
PAGE
Consolidated Statements of Earnings 36
Consolidated Balance Sheets 37
Consolidated Statements of Cash Flows 38
Consolidated Statements of Shareholders' Equity 39
Notes to Consolidated Financial Statements 45-54
Management's Responsibility for Financial Reporting and Internal Control 35
Independent Auditors' Report 35
Net Sales, Net Earnings and Earnings Per Share Quarterly Financial Data for 62
each of the 2 Years Ended December 31, 1999 and 1998 (Unaudited)
13
18
(A) (2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule for the years ended
December 31, 1999, 1998 and 1997 is included in Part IV of this report on the
indicated page:
Schedule II Valuation and Qualifying Accounts and Reserves 17
Other schedules are omitted because of the absence of conditions under
which they are required or because the required information is provided in the
financial statements or notes thereto.
Financial statements (and summarized financial information) of 50% or
less owned entities accounted for by the equity method have been omitted
because they do not, considered individually or in the aggregate, constitute a
significant subsidiary.
(A) (3) EXHIBITS
The exhibits required by Item 601 of Regulation S-K and indicated
below, other than Exhibit (12) which is on page 18 of this report, are either
incorporated by reference herein or accompany the copies of this report filed
with the Securities and Exchange Commission and the New York Stock Exchange.
Copies of such exhibits will be furnished to any requesting shareholder of the
Company upon payment of the costs of copying and transmitting the same.
EXHIBIT (3)(I) Certificate of Incorporation (Restated 1988) of the Company
filed as Exhibit 3(i) to the Company's 1998 Form 10-K Annual
Report (File No. 1-4033).(1)
EXHIBIT(3)(II) By-laws of the Company, as restated February 2, 1990, and as
last amended February 12, 1999, filed as Exhibit 3(ii) to the
Company's 1998 Form 10-K Annual Report (File No. 1-4033).(1)
EXHIBIT (4)(A) Distribution Agreement dated as of May 14, 1991, by and among
the Company, Goldman, Sachs & Co., Lehman Brothers and Salomon
Brothers Inc., filed as Exhibit 1 to the Form S-3 filed on May
2, 1991 (Registration No. 33-40284).(1)
EXHIBIT (4)(B) Indenture dated as of May 1, 1991, by and between the Company
and First Trust of New York (as successor trustee to Morgan
Guaranty Trust Company of New York) filed as Exhibit 4 to the
Form S-3 on May 2, 1991 (Registration No. 33-40284).(1)
EXHIBIT (10)(A) The Management Incentive Plan of the Company, as last amended
and restated filed as Exhibit 10(a) to the Company's 1989 Form
10-K Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(B) The 1991 Long-Range Performance Share Plan of the Company
filed as Exhibit A to the Company's definitive proxy statement
for the annual meeting of its shareholders held May 16, 1991
(File No. 1-4033).(1)(2)
EXHIBIT (10)(C) The Employee Special Severance Plan of the Company filed as
Exhibit 10(g) to the Company's 1989 Form 10-K Annual Report
(File No. 1-4033).(1)(2)
EXHIBIT (10)(D) The Unfunded Supplemental Benefit Plan for Salaried Employees
filed as Exhibit 10(d) to the Company's 1989 Form 10-K Annual
Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(E) The 1983 Long-Term Incentive Plan, as last amended and
restated, filed as Exhibit 10(f) to the Company's 1989 Form
10-K Annual Report (File No. 1-4033).(1)(2)
14
19
EXHIBIT (10)(F) The Deferred Compensation Plan for Directors Who Are Not
Employees of the Company, as last amended and restated on
February 17, 1996 filed as Exhibit 10(g) to the Company's 1995
Form 10-K Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(G) The 1996 Long-Term Incentive Plan of the Company filed as
Exhibit 10(h) to the Company's 1995 Form 10-K Annual Report
(File No. 1-4033).(1)(2)
EXHIBIT (10)(H) The Directors Deferred Stock Plan of the Company filed as
Exhibit 10(i) to the Company's 1995 Form 10-K Annual Report
(File No. 1-4033).(1)(2)
EXHIBIT (10)(I) The Restricted Stock Plan for Nonemployee Directors of the
Company filed as Exhibit 10(i) to the Company's 1997 Form 10-K
Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(J) Executive Deferred Compensation Plan filed as Exhibit 10(j) to
the Company's 1998 Form 10-K Annual Report (File No.
1-4033).(1)(2)
EXHIBIT (10)(K) Unfunded Supplemental Benefit Plan for Salaried Employees filed
as Exhibit 10(k) to the Company's 1998 Form 10-K Annual Report
(File No. 1-4033).(1)(2)
EXHIBIT (10)(L) Consulting Agreement with A. Frederick Gerstell dated January
6, 1999 filed as Exhibit 10(l) to the Company's 1998 Form 10-K
Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(M) Change in Control Employment Agreement Form. [single trigger](2)
EXHIBIT (10)(N) Change in Control Employment Agreement Form.[double trigger](2)
EXHIBIT (12) Computation of Ratio of Earnings to Fixed Charges for the five
years ended December 31, 1999 (set forth on page 18 of this
report).
EXHIBIT (13) The Company's 1999 Annual Report to Shareholders.
EXHIBIT (21) List of the Company's subsidiaries as of December 31, 1999.
EXHIBIT (23) Consent of Deloitte & Touche LLP
EXHIBIT (24) Powers of Attorney
EXHIBIT (27) Financial Data Schedule (Electronic Submission Only).
Information, financial statements and exhibits required by Form 11-K
with respect to the Company's Thrift Plan for Salaried Employees, Construction
Materials Divisions Hourly Employees Savings Plan and Chemicals Division Hourly
Employees Savings Plan, for the fiscal year ended December 31, 1999, will be
filed as one or more amendments to this Form 10-K on or before June 28, 2000,
as permitted by Rule 15d-21 under the Securities Exchange Act of 1934.
(1) Incorporated by reference.
(2) Management Contract or Compensatory Plan.
15
20
INDEPENDENT AUDITORS' REPORT
Vulcan Materials Company:
We have audited the consolidated financial statements of Vulcan Materials
Company and its subsidiary companies as of December 31, 1999, 1998 and 1997 and
for the years then ended, and have issued our report thereon dated February 4,
2000; such consolidated financial statements and report are included in your
1999 Annual Report to Shareholders and are incorporated herein by reference.
Our audits also included the consolidated financial statement schedule of
Vulcan Materials Company and its subsidiary companies, listed in Item 14. This
consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements as a
whole, presents fairly in all material respects the information shown therein.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Birmingham, Alabama
February 4, 2000
16
21
SCHEDULE II
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Years Ended December 31, 1999, 1998 and 1997
Amounts in Thousands
Column A Column B Column C Column D Column E Column F
- --------------------------------------- -------------- --------------- -------------- --------------- ---------------
Additions Additions
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts Deductions Of Period
- --------------------------------------- -------------- --------------- -------------- --------------- ---------------
1999
Accrued Environmental Costs $ 3,973 $ 145 $ 4,844 $ 162 (1) $ 8,800
Accrued Reclamation Costs 0 3,144 23,460 3,045 23,559
Doubtful Receivables 7,391 (40) 5,381 3,010 (2) 9,722
All Other(3) 1,958 6,772 7,512 7,257 8,985
1998
Accrued Environmental Costs $ 4,285 $ 6,848 $ 7,160 (1) $ 3,973
Doubtful Receivables 7,548 1,312 1,469 (2) 7,391
All Other(3) 1,374 2,282 1,698 1,958
1997
Accrued Environmental Costs $ 3,732 $ 1,069 $ 516 (1) $ 4,285
Doubtful Receivables 8,106 885 1,443 (2) 7,548
All Other(3) 1,687 2,010 $ 208 2,531 1,374
(1) Expenditures on environmental remediation projects.
(2) Write-offs of uncollected accounts and worthless notes, less recoveries.
(3) Valuation and qualifying accounts and reserves for which
additions, deductions and balances are individually insignificant.
17
22
EXHIBIT 12
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Years Ended December 31
Amounts in Thousands
1999 1998 1997 1996 1995
- ------------------------------------------------ ------------- ------------- ------------- -------------- -------------
Fixed charges:
Interest expenses before capitalization
Credits $ 53,022 $ 7,224 $ 8,074 $ 9,263 $ 11,396
Amortization of financing costs 267 93 104 164 109
One-third of rental expense 20,798 13,668 9,735 9,663 9,532
----------- ----------- ----------- ---------- ---------
Total fixed charges $ 74,087 $ 20,985 $ 17,913 $ 19,090 $ 21,037
========== ========== ========== ========== ==========
Net earnings 239,693 255,908 209,145 188,595 166,240
Provisions for income taxes 111,868 118,936 91,356 96,985 92,181
Fixed charges 74,087 20,985 17,913 19,090 21,037
Capitalized interest credits (4,445) (442) (1,160) (627) (297)
Amortization of capitalized interest 693 715 708 674 1,031
---------- ---------- ---------- ---------- -----------
Earnings before income taxes as adjusted $ 421,896 $ 396,102 $ 317,962 $ 304,717 $ 280,192
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges 5.7 18.9 17.8 16.0 13.3
18
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on March 28, 2000.
VULCAN MATERIALS COMPANY
By /s/ D. M. JAMES
---------------------------------
D. M. James
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ D. M. James Chairman and Chief Executive Officer March 28, 2000
- ------------------------------------- (Principal Executive Officer)
D. M. James
/s/ P. J. Clemens, III Executive Vice President, Finance March 28, 2000
- ------------------------------------- and Administration and Treasurer
P. J. Clemens, III (Principal Financial Officer)
/s/ E. A. Khan Vice President, Controller March 28, 2000
- ------------------------------------ and Chief Information Officer
E.A. Khan (Principal Accounting Officer)
The following directors:
Marion H. Antonini Director
Philip J. Carroll, Jr. Director
Livio D. DeSimone Director
Phillip W. Farmer Director
John K. Greene Director
Douglas J. McGregor Director
Ann D. McLaughlin Director
James V. Napier Director
Donald B. Rice Director
Herbert A. Sklenar Director
Orin R. Smith Director
By /s/ William F. Denson, III
--------------------------------
William F. Denson, III March 28, 2000
Attorney-in-Fact
19
24
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OF
VULCAN MATERIALS COMPANY
FILED MARCH 28, 2000
COMMISSION FILE NUMBER 1-4033
25
EXHIBIT INDEX
FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 1999
EXHIBIT (3)(I) Certificate of Incorporation (Restated 1988) of the Company
filed as Exhibit 3(i) to the Company's 1998 Form 10-K Annual
Report (File No. 1-4033).(1)
EXHIBIT(3)(II) By-laws of the Company, as restated February 2, 1990, and as
last amended February 12, 1999, filed as Exhibit 3(ii) to the
Company's 1998 Form 10-K Annual Report (File No. 1-4033).(1)
EXHIBIT (4)(A) Distribution Agreement dated as of May 14, 1991, by and among
the Company, Goldman, Sachs & Co., Lehman Brothers and Salomon
Brothers Inc., filed as Exhibit 1 to the Form S-3 filed on May
2, 1991 (Registration No. 33-40284).(1)
EXHIBIT (4)(B) Indenture dated as of May 1, 1991, by and between the Company
and First Trust of New York (as successor trustee to Morgan
Guaranty Trust Company of New York) filed as Exhibit 4 to the
Form S-3 on May 2, 1991 (Registration No. 33-40284).(1)
EXHIBIT (10)(A) The Management Incentive Plan of the Company, as last amended
and restated filed as Exhibit 10(a) to the Company's 1989 Form
10-K Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(B) The 1991 Long-Range Performance Share Plan of the Company
filed as Exhibit A to the Company's definitive proxy statement
for the annual meeting of its shareholders held May 16, 1991
(File No. 1-4033).(1)(2)
EXHIBIT (10)(C) The Employee Special Severance Plan of the Company filed as
Exhibit 10(g) to the Company's 1989 Form 10-K Annual Report
(File No. 1-4033).(1)(2)
EXHIBIT (10)(D) The Unfunded Supplemental Benefit Plan for Salaried Employees
filed as Exhibit 10(d) to the Company's 1989 Form 10-K Annual
Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(E) The 1983 Long-Term Incentive Plan, as last amended and
restated, filed as Exhibit 10(f) to the Company's 1989 Form
10-K Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(F) The Deferred Compensation Plan for Directors Who Are Not
Employees of the Company, as last amended and restated on
February 17, 1996 filed as Exhibit 10(g) to the Company's 1995
Form 10-K Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(G) The 1996 Long-Term Incentive Plan of the Company filed as
Exhibit 10(h) to the Company's 1995 Form 10-K Annual Report
(File No. 1-4033).(1)(2)
EXHIBIT (10)(H) The Directors Deferred Stock Plan of the Company filed as
Exhibit 10(i) to the Company's 1995 Form 10-K Annual Report
(File No. 1-4033).(1)(2)
EXHIBIT (10)(I) The Restricted Stock Plan for Nonemployee Directors of the
Company filed as Exhibit 10(i) to the Company's 1997 Form 10-K
Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(J) Executive Deferred Compensation Plan filed as Exhibit 10(j) to
the Company's 1998 Form 10-K Annual Report (File No.
1-4033).(1)(2)
EXHIBIT (10)(K) Unfunded Supplemental Benefit Plan for Salaried Employees filed
as Exhibit 10(k) to the Company's 1998 Form 10-K Annual Report
(File No. 1-4033).(1)(2)
26
EXHIBIT (10)(L) Consulting Agreement with A. Frederick Gerstell dated January
6, 1999 filed as Exhibit 10(l) to the Company's 1998 Form 10-K
Annual Report (File No. 1-4033).(1)(2)
EXHIBIT (10)(M) Change in Control Employment Agreement Form. [single trigger](2)
EXHIBIT (10)(N) Change in Control Employment Agreement Form.[double trigger](2)
EXHIBIT (12) Computation of Ratio of Earnings to Fixed Charges for the five
years ended December 31, 1999 (set forth on page 18 of this
report).
EXHIBIT (13) The Company's 1999 Annual Report to Shareholders.
EXHIBIT (21) List of the Company's subsidiaries as of December 31, 1999.
EXHIBIT (23) Consent of Deloitte & Touche LLP
EXHIBIT (24) Powers of Attorney
EXHIBIT (27) Financial Data Schedule (Electronic Submission Only).
Information, financial statements and exhibits required by Form 11-K
with respect to the Company's Thrift Plan for Salaried Employees, Construction
Materials Divisions Hourly Employees Savings Plan and Chemicals Division Hourly
Employees Savings Plan, for the fiscal year ended December 31, 1999, will be
filed as one or more amendments to this Form 10-K on or before June 28, 2000,
as permitted by Rule 15d-21 under the Securities Exchange Act of 1934.
(1) Incorporated by reference.
(2) Management Contract or Compensatory Plan.