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UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
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VULCAN MATERIALS COMPANY QUARTER ENDED SEPTEMBER 30, 2002 Contents |
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Page No. |
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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Item 2. |
Management's Discussion and Analysis of Results |
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Item 3. |
Quantitative and Qualitative Disclosures About |
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Item 4. |
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Item 1. |
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Item 6. |
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PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements |
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Vulcan Materials Company |
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(Condensed and unaudited) |
September 30 |
December 31 |
September 30 |
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Assets Accounts and notes receivable: Accounts and notes receivable, gross Less: Allowance for doubtful accounts Accounts and notes receivable, net Inventories: Finished products Raw materials Products in process Operating supplies and other Inventories Deferred income taxes Prepaid expenses Total current assets Investments and long-term receivables Property, plant and equipment: Property, plant and equipment, cost Less: Reserve for depr., depl., & amort. Property, plant and equipment, net Goodwill Deferred charges and other assets Total Liabilities and Shareholders' Equity Current maturities of long-term debt Notes payable Trade payables and accruals Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other noncurrent liabilities Minority interest in a consolidated subsidiary Shareholders' equity Total Current ratio |
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See accompanying Notes to Condensed Consolidated Financial Statements
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Vulcan Materials Company |
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(Amounts in thousands, except per share data) |
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Three Months Ended |
Nine Months Ended |
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(Condensed and unaudited) |
2002 |
2001 |
2002 |
2001 |
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Net earnings |
$ 76,819 |
$ 92,228 |
$ 133,275 |
$ 177,577 |
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Cash dividends per share of common stock |
$ 0.235 |
$ 0.225 |
$ 0.705 |
$ 0.675 |
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Depreciation, depletion and amortization |
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Effective tax rate |
24.3% |
30.3% |
27.0% |
31.6% |
See accompanying Notes to Condensed Consolidated Financial Statements
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Vulcan Materials Company |
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(Amounts in Thousands) |
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(Condensed and unaudited) |
2002 |
2001 |
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Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion and amortization Cumulative effect of accounting change Increase in assets before effects of business acquisitions Increase in liabilities before effects of business acquisitions Other, net Net cash provided by operating activities |
198,230 20,537 (56,641) 6,954 3,910 306,265 |
209,327 - -0- (93,897) 56,730 (5,560) 344,177 |
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Purchases of property, plant and equipment Payment for business acquisitions, net of acquired cash Proceeds from sale of property, plant and equipment Net cash used for investing activities |
(42,138) 18,014 (228,481) |
(129,262) 18,017 (344,984) |
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Payment of short-term debt Payment of long-term debt Net proceeds from issuance of long-term debt Dividends paid Other, net Net cash provided by (used for) financing activities |
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See accompanying Notes to Condensed Consolidated Financial Statements
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in compliance with Form 10-Q instructions and thus do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. The statements should be read in conjunction with the summary of accounting policies and notes to financial statements included in the Company's latest annual report on Form 10-K.
2. Earnings Per Share (EPS)
The Company reports two separate earnings per share numbers, basic and diluted. Both are computed by dividing net earnings by the weighted-average common shares outstanding (basic EPS) or weighted-average common shares outstanding assuming dilution (diluted EPS) as detailed below (in thousands of shares):
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Three Months Ended |
Nine Months Ended |
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2002 |
2001 |
2002 |
2001 |
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Weighted-average common shares |
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All dilutive common stock equivalents are reflected in the Company's earnings per share calculation; the Company had 2,880,603 and 198 antidilutive common stock equivalents as of September 30, 2002 and 2001, respectively.
3. Effective Tax Rate
In accordance with accounting principles generally accepted in the United States of America, it is the Company's practice for each interim reporting period to make an estimate of the effective tax rate expected for the full fiscal year. The rate so determined is used in providing income taxes on a current year-to-date basis.
4. Derivative Instruments
Natural gas used by the Company in its Chemicals segment is subject to price volatility caused by supply conditions, political and economic variables and other unpredictable factors. The Company uses over-the-counter commodity swap and option contracts to manage the volatility related to future natural gas purchases. These instruments have been designated as effective cash flow hedges in accordance with Statement of Financial Accounts Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities". Accordingly, the fair value of the open contracts, which extend through December 2004, has been reflected as a component of accumulated other comprehensive income as of loss of $29 thousand, less a income tax benefit of $11 thousand, in the Company's Consolidated Balance Sheet as of September 30, 2002. If market prices for natural gas remained at the September 30, 2002 level, net losses of $.5 million would be classified into pretax earnings within the next twelve months. Comparatively, th
e Company's Consolidated Balance Sheet as of September 30, 2001 reflected the fair value of the open contracts, as a component of accumulated other comprehensive loss of $18.6 million, less income tax benefit of $7.3 million.
During the quarter ended September 30, 2002 the Company elected to terminate early certain of its natural gas swaps. The fair value of such swaps, which totaled $.5 million favorable as of September 30, 2002 will continue to be reported within accumulated other comprehensive income and will be reclassified into earnings as the forecasted transaction impacts earnings. There was no impact to earnings due to hedge ineffectiveness during the quarters and nine months ended September 30, 2002 and 2001.
5. Comprehensive Income
Comprehensive income is composed of two subsets: net earnings and other comprehensive income (loss). Other comprehensive income (loss) for the Company is comprised of fair value adjustments to cash flow hedges pertaining to its commodity swap and option contracts to purchase natural gas. Total comprehensive income for the three months ended September 30, 2002 and 2001 was $76.6 million and $93.8 million, respectively. Total comprehensive income for the nine months ended September 30, 2002 and 2001 was $141.3 million and $166.1 million, respectively.
6. New Accounting Standards
In June 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations" (FAS 143) was issued. FAS 143 requires the liability associated with asset retirement obligations to be recorded at fair value when incurred and the associated asset retirement obligation costs to be capitalized as part of the carrying value of the long-lived assets. FAS 143 is required to be adopted for fiscal years beginning after June 15, 2002. The Company is currently evaluating FAS 143 and has not yet determined the impact on its consolidated financial statements.
In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets" (FAS 144) was issued. FAS 144 establishes a single accounting model for long-lived assets to be disposed of, whether previously held or newly acquired. This statement was adopted effective January 1, 2002. There was no material impact on the Company's consolidated financial statements resulting from the adoption of FAS 144.
In June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" (FAS 146) was issued. FAS 146 supersedes Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain costs Incurred in a Restructuring)". FAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability is recognized at the date an entity commits to an exit plan. FAS 146 also establishes that the liability should initially be measured and recorded at fair value. The provisions of FAS 146 will be effective for any exit and disposal activities initiated after December 31, 2002.
7. Segment Data
The Company's reportable segments are Construction Materials and Chemicals and are organized around their products and services. The accounting policies of the segments are the same as those described in the summary of significant accounting polices in the notes to the consolidated financial statements on Form 10-K. The Company's determination of segment earnings (a) reflects allocations of general corporate expenses to the segments; (b) does not reflect interest income or expense; and (c) is before income taxes. Allocations are based on average capital employed and net sales.
Because the majority of the Company's activities are domestic, sales and assets outside the United States are not material.
Following is the comparative segment financial disclosure (amounts in millions):
SEGMENT FINANCIAL DISCLOSURE
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Three Months Ended |
Nine Months Ended |
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2002 |
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NET SALES |
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Sept. 30 |
Dec. 31 |
Sept. 30 |
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IDENTIFIABLE ASSETS |
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8. Supplemental Cash Flow Information
Supplemental information referable to the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30 is summarized below (amounts in thousands):
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2002 |
2001 |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW |
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9. Transitional Disclosure for Adoption of FAS 142
On January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets" (FAS 142) and, accordingly, discontinued goodwill amortization. Pro forma results assuming the elimination of both goodwill amortization and the cumulative effect of adopting FAS 142 are summarized below (amounts in thousands, except per share data):
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Nine Months Ended |
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2001 |
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NET EARNINGS |
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In connection with the adoption of FAS 142, the Company was required to complete the first step of the two-step goodwill impairment test by June 30, 2002. In so doing, the Company identified three reporting units, as defined by the statement: Construction Materials, Chloralkali Chemicals and Performance Chemicals. The Company determined the carrying value of each reporting unit by assigning assets and liabilities, including goodwill and intangible assets, to those reporting units as of January 1, 2002. Further, the Company determined the fair value of the reporting units using present value techniques.
Impairment was indicated in the Performance Chemicals reporting unit since its carrying value exceeded its fair value. This impairment resulted from the secular deterioration in business conditions facing the specialty chemical industry. With this indication of impairment, the Company completed step two of the process by allocating the fair value of the reporting unit to its assets and liabilities. The Company engaged an independent third party to assist in determining the fair value of the reporting unit and in allocating such fair value to the individual assets and liabilities. As a result of completing step two of the impairment test, the Company determined that the goodwill in the Performance Chemicals reporting unit of $30,240,000 was fully impaired as of January 1, 2002. Accordingly, a net of tax transition adjustment totaling $20,537,000 was recorded as a cumulative effect of accounting change as of January 1, 2002.
The changes in the carrying amount of goodwill for each reportable segment for the nine months ended September 30, 2002 are as follows (amounts in thousands):
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GOODWILL |
Construction |
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Transitional impairment charge |
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(30,240) |
(30,240) |
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BALANCE AS OF SEPTEMBER 30, 2002 |
$ 564,161 |
$ 375 |
$ 564,536 |
10. Other Commitments and Contingent Liabilities
The Company is a defendant in various lawsuits incident to the ordinary course of business including those legal proceedings detailed in Item 1 of Part II of this quarterly report on Form 10-Q. It is not possible to determine with precision the probable outcome or the amount of liability, if any, with respect to these lawsuits; however, in the opinion of the Company and its counsel, the disposition of these lawsuits will not adversely affect the consolidated financial statements of the Company to a material extent.
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Item 2. Management's Discussion and Analysis of Results |
GENERAL COMMENTS
Seasonality of the Company's Business
Results of any individual quarter are not necessarily indicative of results to be expected for the year due principally to the effect that weather can have on the sales and production volume of the Construction Materials segment. Normally, the highest sales and earnings of the Construction Materials segment are attained in the third quarter and the lowest are realized in the first quarter when sales and earnings are substantially below the levels realized in all subsequent quarters of the year.
Segment Earnings
Segment earnings are earnings before net interest and income taxes and after allocation of corporate expenses and income. Allocations are based on average capital employed and net sales.
Forward-Looking Statements
Certain matters discussed in this report contain forward-looking statements that are subject to risks, assumptions and uncertainties that could cause actual results to differ materially from those projected. These risks, assumptions and uncertainties include, but are not limited to, those associated with general business conditions; the timing and amount of federal, state and local funding for infrastructure; the depressed demand for the Company's chemical products; the highly competitive nature of the industries in which the Company operates; pricing; weather and other natural phenomena; energy costs; cost of hydrocarbon-based raw materials; and other risks, assumptions and uncertainties detailed from time to time in the Company's periodic reports.
RESULTS OF OPERATIONS
The comparative analysis in this Management's Discussion and Analysis of Results of Operations and Financial Condition is based on net sales and cost of goods sold, which exclude delivery revenues and costs, and is consistent with the basis on which management reviews the Company's results of operations.
Third Quarter 2002 as Compared with Third Quarter 2001
The Company's third quarter net earnings were $76.8 million, or $0.75 per diluted share, as compared to $92.2 million, or $0.90 per share a year earlier. Results for the third quarter 2001 included an after-tax charge of $4.9 million, or $0.05 per share for goodwill amortization which was eliminated beginning January 1, 2002 as required by FAS 142. Net sales of $714.3 million were 7% lower than the $766.0 million reported in the third quarter of 2001.
For the quarter, Construction Materials' net sales were $566.7 million, a decrease of 6% from the $604.4 million reported a year earlier. Pricing for aggregates increased 3% over the third quarter of 2001. Aggregates volumes were lower by 9% due to a significant slowdown in private nonresidential construction as well as weaker highway construction in most of our regions. The Chemicals segment reported third quarter net sales of $147.6 million compared to $161.6 million in 2001. The decline in sales was primarily attributable to lower caustic soda pricing and lower sales of fluorochemical feedstocks. While published industry prices for caustic soda increased more than $30 per ton over the second quarter, prices in the current quarter were $135 per ton less than the third quarter last year. Demand for the segment's chlorinated organic products, particularly fluorochemical feedstocks, was soft reflecting continuing weakness in the industrial sector of the economy.
Earnings before interest and income taxes were $114.6 million as compared to $146.6 million in the third quarter of 2001. The Construction Materials segment earned $131.8 million compared to the $144.1 million reported in 2001. The effect of lower aggregates volume was partially offset by pricing improvements for aggregates and the elimination of goodwill amortization. In the third quarter of 2001, this segment's goodwill amortization amounted to $5.0 million. For the quarter, the Chemicals segment lost $17.2 million compared to earnings of $2.5 million in 2001. This decline in earnings was primarily attributable to the aforementioned lower caustic soda pricing and lower sales and production of fluorochemical feedstocks.
Selling, administrative and general expenses of $59.0 million decreased 2% from third quarter 2001. Other operating costs of $3.5 million declined by $4.0 million for the quarter, due to the elimination of goodwill amortization, which amounted to $5.9 million in third quarter 2001. Minority interest decreased $2.0 million from third quarter 2001 reflecting the minority partner's share of the improvement in the chloralkali joint venture's results. Other income, net of other charges, of $7.0 million was up $6.0 million from the third quarter of 2001, reflecting primarily higher gains on asset sales.
Interest expense of $14.0 million decreased $1.4 million from the third quarter of 2001 due to a reduction in outstanding interest-bearing debt during the period.
The Company's effective tax rate was 24.3% for the third quarter of 2002, down from the 2001 rate of 30.3% for the comparable period. The lower rate reflects principally an increased favorable effect of statutory depletion, a lower state tax rate and the impact of the elimination of goodwill amortization pursuant to FAS 142.
Year-to-Date Comparisons as of September 30, 2002 and September 30, 2001
Net earnings for the first nine months of 2002 of $133.3 million, or $1.30 per share (diluted) reflect a pretax goodwill impairment charge of $30.2 million, or $0.20 per share after tax, as prescribed by the new accounting standard, FAS 142. This non-cash write-down was recorded as a cumulative effect of an accounting change and represents the full impairment of Performance Chemicals' goodwill. No goodwill write-down was necessary with respect to either the Construction Materials segment or the Chloralkali Chemicals business unit. Excluding the effects of the goodwill impairment charge, earnings were $153.8 million or $1.50 per share, as compared to $177.6 million, or $1.73 per share for the same period in 2001. Results for the first nine months of 2001 included an after-tax charge of $16.3 million, or $0.16 per share for goodwill amortization which was eliminated beginning January 1, 2002 as required by FAS 142.
Net sales of $1.9 billion for the first nine months of 2002 decreased 8% from the comparable 2001 total of $2.1 billion. Construction Materials net sales of $1.5 billion were down 5% from the 2001 level of $1.6 billion. Aggregates volume decreased 7% due primarily to the decline in private nonresidential construction and highway spending, while pricing increased 3%. Chemicals' net sales of $417.0 million were down 17% from the $502.0 million reported in the first nine months of 2001. This decline resulted from both lower prices and weak demand primarily for caustic soda and fluorochemical feedstocks.
Earnings before interest and income taxes were $248.8 million as compared to $303.1 million in the first nine months of 2001. Year-to-date the Construction Materials segment earned $305.7 million, an increase of 2% year-over-year. Aggregates pricing increases of 3% and the elimination of goodwill amortization were largely offset by volume softness caused by slowing private nonresidential construction and highway spending. Year-to-date 2001, this segment's goodwill amortization amounted to $16.5 million. Earnings in the Chemicals segment declined from $3.9 million in the first nine months of 2001 to a loss of $56.9 million in 2002. The Chemicals segment was adversely impacted by significantly lower pricing for caustic soda, lower pricing and soft demand for fluorochemical feedstocks, and reductions in operating rates from planned rate reductions and outages.
Selling, administrative and general expenses were favorable by 1% year-over-year. Other operating costs of $6.2 million declined by $18.2 million. This decline was attributable to the elimination of goodwill amortization, which amounted to $19.7 million for the first nine months of 2001. Minority interest decreased $6.4 million from 2001 reflecting the minority partner's share of the improvement in the Chloralkali joint venture's results. Other income, net of other charges, of $9.7 million was up $5.0 million, reflecting primarily higher gains on asset sales.
Interest expense of $40.7 million decreased $6.3 million from the prior year due to a reduction in interest-bearing debt outstanding during the period.
The Company's third quarter 2002 projection of the effective tax rate for the year was 27.0%, down from 31.6% for the comparable period of 2001. This decrease reflects principally a lower state tax rate, an increased favorable effect of statutory depletion and the impact of the elimination of goodwill amortization pursuant to FAS 142.
On October 22, 2002 and October 23, 2002, Donald M. James, Chairman and Chief Executive Officer, commented on the Company's third quarter results, as follows:
"We continue our focus on disciplined capital spending, minimizing operating costs in our aggregates operations and improving efficiencies in what has been a more difficult economic environment than anticipated. Strong free cash flows of $101.9 million for the first nine months of 2002 allowed us to reduce debt and increase dividends."
Additionally, Mr. James made certain statements pertaining to the outlook for the remainder of the year, as follows:
"Our fourth quarter results will be influenced by both chloralkali pricing and the pace of construction activity. For Construction Materials, our full year outlook assumes price improvement of 2 to 3% and a decline in aggregates volume of approximately 6%, subject to the normal sensitivities to weather in the fourth quarter. This segment is expected to achieve full year earnings in the range of $385 to $400 million.
"For Chemicals, caustic soda prices continue to improve. However, caustic soda prices remain significantly below last year's levels and demand for chlorinated organics, particularly fluorochemical feedstocks, is weak. Fourth quarter earnings in the Chemicals segment will be impacted by higher plant maintenance and operational improvement expenses, as well as lower volumes. These lower volumes have resulted, in part, from hurricane-related plant shutdowns during the month of October at our Geismar, Louisiana plant. As a result, Chemicals is expected to report a loss of $70 to $75 million for the year.
"We are addressing our cost structure in Chemicals both with respect to plant processing efficiencies as well as our fixed cost and overhead structure. We are committed to reducing our cost and improving our plant efficiencies. We also continue to address our chlorinated organic product mix, which is impacted not only by current market conditions but also by the phase out of ozone depleting chemicals pursuant to the Montreal Protocol.
"Based on our current expectations and excluding the goodwill impairment resulting from adoption of SFAS 142, our earnings guidance for the year is now $1.80 to $2.00 per share."
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
Working capital, exclusive of debt and cash items, totaled $447.9 million at September 30, 2002, an increase of $87.1 million from the $360.8 million at December 31, 2001. This increase resulted primarily from the seasonal increase in receivables in the Construction Materials segment. Working capital at September 30, 2002 increased $40.0 million from September 30, 2001. This increase resulted primarily from a sizeable decrease in current liabilities and an increase in inventories partially offset by a decrease in receivables. Current liabilities were higher at September 30, 2001 due to the deferral of the third quarter federal income tax payment of $36.1 million, as permitted under the 2001 Tax Act.
The Company's current ratio, which is based on all components of working capital, including cash and debt items, was 2.5 as of September 30, 2002. This compares to the 2.1 ratio at year-end 2001 and the 1.7 ratio at September 30, 2001. The increase in the current ratio from September 30, 2001 resulted primarily from a $73.3 million reduction in notes payable, which was achieved by means of internally generated cash flow.
Cash Flows
Net cash provided by operating activities totaled $306.3 million in the first nine months of 2002, down from the $344.2 million generated in the same period last year. This $37.9 million decrease in cash provided by operating activities reflected both lower earnings and an increase in working capital requirements. Net cash used for investing activities of $228.5 million decreased $116.5 million from the first nine months of 2001's total of $345.0 million due primarily to decreased acquisitions and capital expenditures. Net cash used for financing activities totaled $95.8 million for the nine months ended September 2002, representing a $107.0 decrease in cash provided by financing activities compared to the same period last year. This decrease in cash provided by financing activities resulted primarily from the prior year-to-date's net borrowings of $72.3 million used to fund acquisitions. There were no similar borrowings in the current year.
Short-term Borrowings
Short-term borrowings of $37.4 million as of September 30, 2002 consisted solely of notes payable to banks. The September 30, 2001 amount, $110.6 million, consisted of notes payable to banks of $46.0 million and commercial paper of $64.6 million. The prior year-end amount, $43.9 million, consisted solely of notes payable to banks.
Long-term Obligations
As of September 30, 2002, long-term obligations were 28.4% of long-term capital and 53.1% of shareholders' equity. The corresponding third quarter 2001 percentages were 30.4% and 58.0%, and the year-end 2001 percentages were 29.7% and 56.5%, respectively.
The ratio of total debt to total capital equaled 35.8% as of September 30, 2002: 39.6% as of September 30, 2001 and 37.6% as of year-end 2001.
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Item 3. Quantitative and Qualitative Disclosure |
The Company is exposed to certain market risks arising from transactions entered into in the normal course of business. In order to manage or reduce this market risk, the Company utilizes derivative financial instruments. The Company has entered into commodity swap and option contracts to reduce its exposure to fluctuations in prices for natural gas. The fair value of these contracts were as follows: September 30, 2002 - $29 thousand unfavorable; December 31, 2001 - $13.3 million unfavorable; and September 30, 2001 - $18.6 million unfavorable. As a result of a 10% reduction in the price of natural gas, the Company would experience a potential decline in the fair value of the underlying commodity swap and option contracts based on the fair value at September 30, 2002 of approximately $.4 million.
The Company is exposed to interest rate risk due to its various long-term debt instruments. Because substantially all of this debt is at fixed rates, a decline in interest rates would result in an increase in the fair market value of the liability. At September 30, 2002, the estimated fair market value of these debt instruments was $980.2 million as compared to a book value of $899.0 million. The effect of a hypothetical decline in interest rates of 1% would increase the fair market value of the liability by approximately $35.0 million.
The Company maintains a system of controls and procedures to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. The Company evaluated the effectiveness of the design and operation of the disclosure controls and procedures under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, within 90 days prior to the filing date of this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic Securities and Exchange Commission filings. No significant changes were made to our internal controls or other factors that could significantly affect these controls subsequent to the date of their evaluation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, and Form 10-Q for the quarter ended June 30, 2002, the Company has been named in multiple lawsuits filed in state and federal court claiming damages for personal injuries allegedly resulting from releases of chemicals at the Company's Geismar, Louisiana chloralkali plant. To date, 87 lawsuits, involving over 2,500 named plaintiffs have now been filed. Based on the information currently available to it, the Company does not believe that the ultimate resolution of these suits will have a materially adverse impact on the Company.
As previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, the Company has been engaged in litigation with Phillip Barker regarding the termination of a distribution agreement for the sale of specialty chemicals. The Company and Mr. Barker have now settled all claims for a mutually agreeable amount and Mr. Barker has given the Company a full release relating to this matter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 99(a) - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99(b) - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on August 13, 2002, pursuant to which the Company attached sworn statements pursuant to SEC Order No. 4-460 from each of the Chairman and Chief Executive Officer, Donald M. James, and Senior Vice President and Chief Financial Officer, Mark E. Tomkins.
The Company filed a Current Report on Form 8-K on August 13, 2002, pursuant to which the Company attached certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from each of the Chairman and Chief Executive Officer, Donald M. James, and Senior Vice President and Chief Financial Officer, Mark E. Tomkins.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
VULCAN MATERIALS COMPANY
Date November 12, 2002
/s/ Ejaz A. Khan
Ejaz A. Khan
Vice President, Controller and Chief Information Officer
/s/ Mark E. Tomkins
Mark E. Tomkins
Senior Vice President, Chief Financial Officer and
Treasurer
I, Donald M. James, certify that:
/s/ Donald M. James
Donald M. James
Chairman and Chief Executive Officer
I, Mark E. Tomkins, certify that:
/s/ Mark E. Tomkins
Mark E. Tomkins
Senior Vice President, Chief Financial Officer and
Treasurer