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Vulcan Materials
2020 Annual Report

Vulcan Announces Second Quarter Results

08/02/10

BIRMINGHAM, Ala., Aug 02, 2010 /PRNewswire via COMTEX/ --

Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, announced results today for the second quarter ended June 30, 2010.

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Second Quarter Summary and Comparisons with the Prior Year

  • Unit shipments in each major product line increased from the prior year.
  • Aggregates shipments increased 6 percent with broad geographic improvement, increasing pretax earnings $15 million, or $0.08 per diluted share.
  • Average price for aggregates decreased 2 percent with wide variations across markets, reducing pretax earnings $10 million, or $0.05 per diluted share.
  • Unit cost for diesel fuel increased 38 percent, reducing pretax earnings $8 million, or $0.04 per diluted share.
  • Unit cost for liquid asphalt increased 26 percent, reducing pretax earnings $9 million, or $0.04 per diluted share.
  • The previously announced settlement of a lawsuit in Illinois reduced operating earnings by $41 million, or $0.21 per diluted share.
  • Charges associated with severe flooding in the Nashville, Tennessee area reduced aggregates segment earnings $3 million, or $0.02 per diluted share.
  • Earnings from continuing operations were a loss of $23 million, or $0.18 per diluted share.
  • EBITDA was $97 million.

Commenting for the Company, Don James, Vulcan's Chairman and Chief Executive Officer, stated, "Our second quarter volume growth is encouraging as we look ahead to the second half of 2010 and continuing recovery in demand. The upward trend in aggregates shipments that started in March and continued throughout the second quarter led to the first year-over-year quarterly increase in shipments in four years. The earnings effect of higher volumes was more than offset by charges for settlement of the lawsuit in Illinois, the flooding in Nashville, higher unit costs for liquid asphalt and diesel fuel and lower product pricing. Improvement in the overall economy as well as higher levels of contract awards for highway construction and single-family housing starts provided the catalyst for growth in demand for our products in the second quarter.

"The flow of contract awards for highway construction, a leading indicator of future construction activity, has been improving since March of 2009 when stimulus-related funds became available to each state. During the first six months of 2010, total contract awards for highway construction in Vulcan-served states, including awards for federal, state and local projects, increased 11 percent from the prior year. Through June 2010, the Federal Highway Administration reported that only 38 percent of the $26 billion of total stimulus funds obligated for highways had been spent - which bodes well for increased construction activity from federal stimulus spending for the remainder of 2010 and 2011."

Second Quarter Operating Results Commentary

Second quarter aggregates earnings were $122 million versus $127 million in the prior year. Aggregates shipments increased 6 percent from the prior year's second quarter. Many Vulcan-served markets realized solid increases in shipments and earnings versus the prior year's second quarter due primarily to stronger demand from public highway projects and improvement in single-family housing starts. The earnings effect from higher aggregates shipments was more than offset by the effects of a 2 percent decrease in aggregates prices, a 38 percent increase in the unit cost for diesel fuel and $3 million of charges associated with flooding in the Nashville, Tennessee area in May.

Aggregates pricing continues to reflect wide variations across Vulcan-served markets. Markets in Florida, and to a lesser extent the Far West, have remained challenging due to increased competitive pressures. Additionally, a number of long-haul markets served by rail, barge and ship reported lower freight-adjusted prices. Higher energy costs related to these modes of long-haul transportation were not recovered in second quarter selling prices to customers. The average second quarter selling price for aggregates in markets not mentioned above approximated prior year levels. Aggregates gross profit in these markets increased as expected based on the increased levels of shipments.

Segment earnings in asphalt were $14 million lower than the prior year due primarily to a 26 percent increase in the unit cost for liquid asphalt and lower selling prices. Selling prices for asphalt mix generally lag increasing liquid asphalt costs and were further held in check due to competitive pressures. Asphalt volumes increased 2 percent from the prior year's second quarter.

Concrete segment earnings declined $3 million from the prior year's second quarter as the earnings effects from slightly higher shipments of ready-mixed concrete and lower costs were more than offset by a decrease in the average selling price. Cement segment earnings in the second quarter were slightly lower than the prior year as lower average unit selling prices offset higher sales volumes.

In May, the Company reached final settlement in a lawsuit filed in 2001 against the Company by the Illinois Department of Transportation. As a result, a $41 million charge was recorded in the second quarter. The Company believes that the settlement is covered by insurance policies and is taking appropriate actions, including one or more arbitrations, to recover the amount paid in settlement above a self-insured retention of $2 million, as well as a portion of its defense costs, from its insurers. The ultimate amount and timing of such recoveries, which will be recorded as income when realized, cannot be predicted with certainty.

Selling, administrative and general expense in the second quarter was $83 million versus $79 million in the prior year's second quarter. Included in the current year's second quarter was $1.5 million of legal expenses related to the lawsuit in Illinois.

All results are unaudited.

Outlook Highlights and Commentary

Commenting on the Company's outlook, Mr. James stated, "Key drivers of the demand for our products are improving. First, from the perspective of the overall economy, most GDP forecasts for the U.S. indicate further growth in the overall economy in 2010. In past economic cycles, demand for aggregates has improved as GDP has grown during the initial years of economic recovery. Additionally, state and local tax revenues have historically rebounded after GDP recovers. Since the second quarter of 2009, the gross state product of all Vulcan-served states has shown positive growth - an indication economic recovery is underway.

"Initially, Vulcan-served states lagged the rest of the country in obligating and awarding stimulus-related highway projects. From March to the end of December 2009, contract awards for highways in Vulcan-served states were up 9 percent versus 17 percent for the remaining states. In the six months ended June 2010, contract awards for highways were up 11 percent in Vulcan-served states versus down 1 percent for other states. The above-average increase during the six months ended June 2010 provides encouragement that highway construction activity in our states should improve in 2010 and beyond.

"Our forecast for aggregates demand in the second half of 2010 continues to reflect an increase in residential construction, albeit from low levels, and continued weakness in private nonresidential building construction. Residential construction contract awards in the second quarter increased 6 percent from the prior year in Vulcan-served states. This year-over-year increase follows a 41 percent increase in Vulcan-served states in the first quarter. As a result, most key states for Vulcan now reflect positive growth in trailing twelve month single-family housing starts. In private nonresidential construction, the rate of decline in contract awards has slowed in recent months. The start of a recovery in this end market will be influenced by employment growth, business investment and lending activity. In the second half of 2010 we expect aggregates volumes to be flat to up 5 percent from the prior year's levels.

"Overall, pricing for aggregates remains solid despite the year-over-year decline reported in the second quarter. A number of Vulcan-served markets are still realizing year-over-year price growth while in certain other markets, pricing remains under competitive pressures or is being affected by recent increases in long-haul transportation costs. As a result, we expect aggregates pricing in the second half of 2010 to approximate the prior year's levels.

"In our asphalt business, we expect sales volumes and segment earnings in the second half of 2010 to approximate last year's levels, a significant improvement from the current year's first half. In concrete, we expect sales volumes in the second half of 2010 to increase from the prior year's second half but pricing to decline due to competitive pressures. In our cement business, we expect second half earnings to be a slight loss versus the breakeven results reported in the prior year.

"Our available production capacity positions Vulcan to participate efficiently and effectively in the $50 to $60 billion of stimulus-related construction. We expect approximately 75 percent of stimulus-related demand for our products to occur during 2010 and 2011. By the second half of 2011, we expect continued growth in the overall economy and an improving job market to begin driving an increase in private nonresidential construction activity, accelerating the earnings leverage of the Company."

Conference Call

Vulcan will host a conference call at 10:00 a.m. CDT on August 3, 2010. Investors and other interested parties in the U.S. may access the teleconference live by calling 866.510.0705 approximately 10 minutes before the scheduled start. International participants can dial 617.597.5363. The access code is 27279331. A live webcast will be available via the Internet through Vulcan's home page at www.vulcanmaterials.com. The conference call will be recorded and available for replay approximately two hours after the call through August 10, 2010.

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

Certain matters discussed in this release, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to, those associated with general economic and business conditions; changes in interest rates; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and nonresidential construction; the highly competitive nature of the construction materials industry; the impact of future regulatory or legislative actions; the outcome of pending legal proceedings; pricing for our products; weather and other natural phenomena; energy costs; costs of hydrocarbon-based raw materials; healthcare costs; the amount of long-term debt and interest expense incurred by the Company; volatility in pension plan asset values which may require cash contributions to the pension plans; the timing and amount of any future payments to be received under the 5CP earn-out contained in the agreement for the divestiture of the Company's Chemicals business; the impact of environmental clean-up costs and other liabilities relating to previously divested businesses; the Company's ability to secure and permit aggregates reserves in strategically located areas; the Company's ability to manage and successfully integrate acquisitions; the impact of the global economic recession on our business and financial condition and access to the capital markets; the potential impact of future legislation or regulations relating to climate change or greenhouse gas emissions; and other assumptions, risks and uncertainties detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year. Forward-looking statements speak only as of the date hereof, and Vulcan assumes no obligation to publicly update such statements.

 Table A Vulcan Materials Company and Subsidiary Companies (Amounts and shares in thousands, except per share data) 
 Three Months Ended Six Months Ended Consolidated Statements of Earnings June 30 June 30 ------- ------- (Condensed and unaudited) 2010 2009 2010 2009 -------------- ---- ---- ---- ---- Net sales $692,758 $681,380 $1,157,293 $1,249,275 Delivery revenues 43,394 40,479 72,122 72,878 ------ ------ ------ ------ Total revenues 736,152 721,859 1,229,415 1,322,153 Cost of goods sold 570,423 535,546 1,034,063 1,025,834 Delivery costs 43,394 40,479 72,122 72,878 ------ ------ ------ ------ Cost of revenues 613,817 576,025 1,106,185 1,098,712 ------- ------- --------- --------- Gross profit 122,335 145,834 123,230 223,441 Selling, administrative and general expenses 83,376 79,353 169,872 159,070 Gain on sale of property, plant & equipment and businesses, net 1,362 654 49,734 3,157 Charge for legal settlement 40,000 - 40,000 - Other operating income (expense), net 889 (1,451) 1,347 (3,170) Operating earnings (loss) 1,210 65,684 (35,561) 64,358 Other income (expense), net (1,233) 2,894 144 1,819 Interest income 481 687 971 1,482 Interest expense 44,204 44,073 87,987 87,992 ------ ------ ------ ------ Earnings (loss) from continuing operations before income taxes (43,746) 25,193 (122,433) (20,332) Provision (benefit) for income taxes (21,231) 9,632 (55,444) (3,638) ------- ----- ------- ------ Earnings (loss) from continuing operations (22,515) 15,561 (66,989) (16,694) Earnings (loss) on discontinued operations, net of tax (1,477) 6,651 4,250 6,125 ------ ----- ----- ----- Net earnings (loss) $(23,992) $22,212 $(62,739) $(10,569) ============ ======== ======= ======== ======== Basic earnings (loss) per share: Continuing operations $(0.18) $0.14 $(0.53) $(0.15) Discontinued operations (0.01) 0.06 0.04 0.06 ----- ---- ---- ---- Net earnings (loss) per share $(0.19) $0.20 $(0.49) $(0.09) Diluted earnings (loss) per share: Continuing operations $(0.18) $0.14 $(0.53) $(0.15) Discontinued operations (0.01) 0.06 0.04 0.06 ----- ---- ---- ---- Net earnings (loss) per share $(0.19) $0.20 $(0.49) $(0.09) Weighted- average common shares outstanding: Basic 128,168 113,477 127,452 112,045 Assuming dilution 128,168 113,829 127,452 112,045 Cash dividends declared per share of common stock $0.25 $0.49 $0.50 $0.98 Depreciation, depletion, accretion and amortization $97,280 $99,600 $191,476 $198,915 Effective tax rate from continuing operations 48.5% 38.2% 45.3% 17.9% ============= ==== ==== ==== ==== 
 Table B Vulcan Materials Company and Subsidiary Companies 
 (Amounts in thousands, except per share data) Consolidated December Balance Sheets June 30 31 June 30 (Condensed and unaudited) 2010 2009 2009 -------------- ---- ---- ---- Assets ------ Cash and cash equivalents $42,173 $22,265 $43,711 Restricted cash 3,746 - - Medium-term investments 3,910 4,111 6,755 Accounts and notes receivable: Accounts and notes receivable, gross 398,613 276,746 394,938 Less: Allowance for doubtful accounts (9,290) (8,722) (9,437) ------ ------ ------ Accounts and notes receivable, net 389,323 268,024 385,501 Inventories: Finished products 246,956 261,752 290,451 Raw materials 23,114 21,807 32,035 Products in process 3,784 3,907 5,133 Operating supplies and other 37,486 37,567 35,964 ------ ------ ------ Inventories 311,340 325,033 363,583 Deferred income taxes 59,525 57,967 69,080 Prepaid expenses 42,422 50,817 58,425 Assets held for sale 14,864 15,072 - ------ ------ --- Total current assets 867,303 743,289 927,055 Investments and long-term receivables 34,078 33,283 30,614 Property, plant & equipment: Property, plant & equipment, cost 6,632,580 6,653,261 6,672,394 Less: Reserve for depr., depl. & amort. (2,915,565) (2,778,590) (2,644,146) ---------- ---------- ---------- Property, plant & equipment, net 3,717,015 3,874,671 4,028,248 Goodwill 3,093,979 3,093,979 3,093,979 Other intangible assets, net 681,059 682,643 683,092 Other assets 101,610 105,085 87,339 ------- ------- ------ Total assets $8,495,044 $8,532,950 $8,850,327 ========== ========== ========== Liabilities and Shareholders' Equity --------------- Current maturities of long-term debt $425,300 $385,381 $60,417 Short-term borrowings 320,000 236,512 412,300 Trade payables and accruals 168,269 121,324 145,744 Other current liabilities 160,151 113,109 130,103 Liabilities of assets held for sale 409 369 - --- --- --- Total current liabilities 1,074,129 856,695 748,564 Long-term debt 2,001,180 2,116,120 2,521,190 Deferred income taxes 836,702 887,268 928,687 Other noncurrent liabilities 538,929 620,845 617,651 ------- ------- ------- Total liabilities 4,450,940 4,480,928 4,816,092 --------- --------- --------- Shareholders' equity: Common stock, $1 par value 128,270 125,912 124,989 Capital in excess of par value 2,477,672 2,368,228 2,316,507 Retained earnings 1,625,620 1,752,240 1,774,113 Accumulated other comprehensive loss (187,458) (194,358) (181,374) -------- -------- -------- Shareholders' equity 4,044,104 4,052,022 4,034,235 --------- --------- --------- Total liabilities and shareholders' equity $8,495,044 $8,532,950 $8,850,327 ================== ========== ========== ========== 
 Table C Vulcan Materials Company and Subsidiary Companies 
 (Amounts in thousands) Six Months Ended Consolidated Statements of Cash Flows June 30 ------- (Condensed and unaudited) 2010 2009 ------------------------- ---- ---- Operating Activities -------------------- Net loss $(62,739) $(10,569) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, depletion, accretion and amortization 191,476 198,915 Net gain on sale of property, plant & equipment and businesses (58,527) (3,880) Contributions to pension plans (21,075) (2,242) Share-based compensation 10,524 14,010 Deferred tax provision (54,755) 5,671 Changes in assets and liabilities before initial effects of business acquisitions and dispositions 2,585 (35,850) Other, net 11,167 3,347 ------ ----- Net cash provided by operating activities 18,656 169,402 ------ ------- Investing Activities -------------------- Purchases of property, plant & equipment (42,158) (60,101) Proceeds from sale of property, plant & equipment 3,224 4,051 Proceeds from sale of businesses, net of transaction costs 50,954 11,537 Payments for businesses acquired, net of acquired cash - (36,980) Increase in restricted cash (3,746) - Redemption of medium-term investments 22 30,590 Other, net (305) 714 ---- --- Net cash provided by (used for) investing activities 7,991 (50,189) ----- ------- Financing Activities -------------------- Net short-term borrowings (payments) 83,488 (672,176) Payment of current maturities and long- term debt (75,188) (281,461) Proceeds from issuance of long-term debt, net of discounts - 397,660 Debt issuance costs - (3,033) Proceeds from issuance of common stock 35,314 578,237 Dividends paid (63,600) (108,752) Proceeds from exercise of stock options 12,597 3,697 Other, net 650 132 --- --- Net cash used for financing activities (6,739) (85,696) ------ ------- Net increase in cash and cash equivalents 19,908 33,517 Cash and cash equivalents at beginning of year 22,265 10,194 Cash and cash equivalents at end of period $42,173 $43,711 ========================================== ======= ======= 
 Table D Segment Financial Data and Unit Shipments 
 (Amounts in thousands, except per unit data) Three Months Ended Six Months Ended June 30 June 30 2010 2009 2010 2009 ---- ---- ---- ---- Total Revenues Aggregates segment (a) $513,844 $497,605 $855,160 $899,417 Intersegment sales (42,389) (42,840) (74,447) (79,978) ------- ------- ------- ------- Net sales 471,455 454,765 780,713 819,439 ------- ------- ------- ------- Concrete segment (b) 105,023 114,663 187,979 229,446 Intersegment sales (1) (35) (7) (86) --- --- --- --- Net sales 105,022 114,628 187,972 229,360 ------- ------- ------- ------- Asphalt mix segment 103,549 103,645 166,521 182,061 Intersegment sales - - - - --- --- --- --- Net sales 103,549 103,645 166,521 182,061 ------- ------- ------- ------- Cement segment (c) 22,903 16,853 40,848 36,594 Intersegment sales (10,171) (8,511) (18,761) (18,179) ------- ------ ------- ------- Net sales 12,732 8,342 22,087 18,415 ------ ----- ------ ------ Total Net sales 692,758 681,380 1,157,293 1,249,275 Delivery revenues 43,394 40,479 72,122 72,878 Total revenues $736,152 $721,859 $1,229,415 $1,322,153 ======== ======== ========== ========== Gross Profit Aggregates $122,017 $126,830 $137,386 $190,446 Concrete (5,574) (2,222) (21,666) (3,067) Asphalt mix 7,250 21,733 8,316 37,895 Cement (1,358) (507) (806) (1,833) Total gross profit $122,335 $145,834 $123,230 $223,441 ======== ======== ======== ======== Depreciation, depletion, accretion and amortization Aggregates $74,877 $78,331 $148,048 $157,086 Concrete 13,418 13,340 26,442 26,208 Asphalt mix 2,327 2,151 4,477 4,180 Cement 5,193 4,763 9,573 9,408 Corporate and other unallocated 1,465 1,015 2,936 2,033 Total DD&A $97,280 $99,600 $191,476 $198,915 ======= ======= ======== ======== Unit Shipments Aggregates customer tons 39,925 37,793 65,065 67,334 Internal tons (d) 3,144 2,929 5,434 5,441 ----- ----- ----- ----- Aggregates - tons 43,069 40,722 70,499 72,775 ====== ====== ====== ====== Ready-mixed concrete - cubic yards 1,145 1,129 2,028 2,216 Asphalt mix -tons 1,934 1,902 3,204 3,300 Cement customer tons 100 57 174 124 Internal tons (d) 144 89 243 190 Cement - tons 244 146 417 314 === === === === Average Unit Sales Price (including internal sales) Aggregates (freight- adjusted) (e) $10.11 $10.35 $10.20 $10.31 Ready-mixed concrete $86.08 $96.74 $86.57 $98.08 Asphalt mix $51.13 $53.64 $50.49 $54.30 Cement $76.64 $98.70 $80.25 $97.79 
 (a) Includes crushed stone, sand and gravel, sand, other aggregates, as well as transportation and service revenues associated with the aggregates business. (b) Includes ready-mixed concrete, concrete block, precast concrete, as well as building materials purchased for resale. (c) Includes cement and calcium products. (d) Represents tons shipped primarily to our downstream operations (e.g., asphalt mix and ready-mixed concrete). Sales from internal shipments are eliminated in net sales presented above and in the accompanying Condensed Consolidated Statements of Earnings. (e) Freight-adjusted sales price is calculated as total sales dollars (internal and external) less freight to remote distribution sites divided by total sales units (internal and external). 
 Table E 
 1. Supplemental Cash Flow Information Supplemental information referable to the Condensed Consolidated Statements of Cash Flows for the six months ended June 30 is summarized below: (Amounts in thousands) 2010 2009 ---- ---- Supplemental Disclosure of Cash Flow Information ------------------------------------ Cash paid (refunded) during the period for: Interest $90,942 $98,871 Income taxes 1,130 (9,468) Supplemental Schedule of Noncash Investing and Financing Activities ---------------------------------------------- Accrued liabilities for purchases of property & equipment 5,165 14,684 Debt issued for purchases of property, plant & equipment - 1,982 Stock issued for pension contribution 53,864 - Proceeds receivable from issuance of common stock 1,453 - 2. Reconciliation of Non-GAAP Measures Net cash provided by operating activities $18,656 $169,402 Purchases of property, plant & equipment (42,158) (60,101) ------- ------- Free cash flow $(23,502) $109,301 ======== ======== 
 Free cash flow deducts purchases of property, plant & equipment from net cash provided by operating activities. This financial metric is used by the investment community as an indicator of the company's ability to incur and service debt. It is not defined by Generally Accepted Accounting Principles (GAAP); thus, it should not be considered as an alternative to net cash provided by operating activities or any other liquidity measure defined by GAAP. This metric is presented for the convenience of investment professionals that use such metrics in their analysis and to provide our shareholders with an understanding of the metrics we use to assess performance and to monitor our cash and liquidity positions. We internally use free cash flow and other such measures to assess the operating performance of our various business units and the consolidated company. We do not use this metric as a measure to allocate resources internally. 
 Table F Reconciliation of Non-GAAP Measures EBITDA and Cash Earnings Reconciliations (Amounts in thousands) 
 Three Months Ended June 30 ------- 2010 2009 ---- ---- Reconciliation of Net Cash Provided by Operating Activities to EBITDA and Cash Earnings Net cash provided by operating activities $12,216 $64,303 Changes in operating assets and liabilities before initial effects of business acquisitions and dispositions 43,960 72,161 Other net operating items (providing) using cash 17,112 (14,652) (Earnings) loss on discontinued operations, net of tax 1,477 (6,651) Provision (benefit) for income taxes (21,231) 9,632 Interest expense, net 43,723 43,386 Less: Depreciation, depletion, accretion and amortization (97,280) (99,600) ------- ------- EBIT (23) 68,579 Plus: Depreciation, depletion, accretion and amortization 97,280 99,600 ------ ------ EBITDA $97,257 $168,179 Less: Interest expense, net (43,723) (43,386) Current taxes (3,715) (6,379) ------ ------ Cash earnings $49,819 $118,414 ======= ======== Reconciliation of Net Earnings (Loss) to EBITDA and Cash Earnings Net earnings (loss) $(23,992) $22,212 Provision (benefit) for income taxes (21,231) 9,632 Interest expense, net 43,723 43,386 (Earnings) loss on discontinued operations, net of tax 1,477 (6,651) ----- ------ EBIT (23) 68,579 Plus: Depreciation, depletion, accretion and amortization 97,280 99,600 ------ ------ EBITDA $97,257 $168,179 Less: Interest expense, net (43,723) (43,386) Current taxes (3,715) (6,379) ------ ------ Cash earnings $49,819 $118,414 ======= ======== EBITDA and Earnings Per Share (EPS) Bridge Three Months Ended (Amounts in millions, except per share data) June 30 ------- EBITDA EPS ------ --- Continuing Operations -2009 Actual $168 $0.14 Increase / (Decrease) due to: Illinois DOT settlement and related expenses (41) (0.21) Charges associated with flooding in Nashville, TN (3) (0.02) Aggregates: Volumes 15 0.08 Selling prices (10) (0.05) Costs (excluding flooding in TN) (8) (0.04) Asphalt mix (14) (0.08) Concrete (3) (0.02) Gain on sale of property, plant & equipment and businesses (a) 1 0.01 Depreciation, depletion, accretion and amortization n/a 0.01 All other (additional shares, tax rate, misc. items) (8) - --- --- Continuing Operations -2010 Actual $97 $(0.18) === ====== 
 Six Months Ended June 30 ------- 2010 2009 ---- ---- Reconciliation of Net Cash Provided by Operating Activities to EBITDA and Cash Earnings Net cash provided by operating activities $18,656 $169,402 Changes in operating assets and liabilities before initial effects of business acquisitions and dispositions (2,585) 35,850 Other net operating items (providing) using cash 112,666 (16,906) (Earnings) loss on discontinued operations, net of tax (4,250) (6,125) Provision (benefit) for income taxes (55,444) (3,638) Interest expense, net 87,016 86,510 Less: Depreciation, depletion, accretion and amortization (191,476) (198,915) -------- -------- EBIT (35,417) 66,178 Plus: Depreciation, depletion, accretion and amortization 191,476 198,915 ------- ------- EBITDA $156,059 $265,093 Less: Interest expense, net (87,016) (86,510) Current taxes (2,909) 9,527 ------ ----- Cash earnings $66,134 $188,110 ======= ======== Reconciliation of Net Earnings (Loss) to EBITDA and Cash Earnings Net earnings (loss) $(62,739) $(10,569) Provision (benefit) for income taxes (55,444) (3,638) Interest expense, net 87,016 86,510 (Earnings) loss on discontinued operations, net of tax (4,250) (6,125) ------ ------ EBIT (35,417) 66,178 Plus: Depreciation, depletion, accretion and amortization 191,476 198,915 ------- ------- EBITDA $156,059 $265,093 Less: Interest expense, net (87,016) (86,510) Current taxes (2,909) 9,527 ------ ----- Cash earnings $66,134 $188,110 ======= ======== EBITDA and Earnings Per Share (EPS) Bridge Six Months Ended (Amounts in millions, except per share data) June 30 ------- EBITDA EPS ------ --- Continuing Operations -2009 Actual $265 $(0.15) Increase / (Decrease) due to: Illinois DOT settlement and related expenses (41) (0.21) Charges associated with flooding in Nashville, TN (3) (0.02) Aggregates: Volumes (15) (0.11) Selling prices (8) (0.06) Costs (excluding flooding in TN) (34) (0.25) Asphalt mix (31) (0.22) Concrete (19) (0.14) Gain on sale of property, plant & equipment and businesses (a) 37 0.27 Depreciation, depletion, accretion and amortization n/a 0.05 All other (additional shares, tax rate, misc. items) 5 0.31 --- ---- Continuing Operations -2010 Actual $156 $(0.53) ==== ====== 
 (a) Excludes the donation of land EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. Cash earnings adjusts EBITDA for net interest and current taxes. These financial metrics are often used by the investment community as indicators of a company's ability to incur and service debt. They are not defined by Generally Accepted Accounting Principles (GAAP); thus, they should not be considered as an alternative to net cash provided by operating activities, operating earnings, or any other liquidity or performance measure defined by GAAP. These metrics are presented for the convenience of investment professionals that use such metrics in their analysis and to provide our shareholders with an understanding of the metrics we use to assess performance and to monitor our cash and liquidity positions. We internally use EBITDA, cash earnings and other such measures to assess the operating performance of our various business units and the consolidated company. We do not use these metrics as a measure to allocate resources internally. 

SOURCE Vulcan Materials Company