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Vulcan Materials announces fourth quarter results

Feb, 09 2010

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(Birmingham, Alabama) -- Vulcan Materials Company, the nation?s largest producer of construction aggregates, announced results today for the fourth quarter and full year ended December 31, 2009.

Fourth Quarter Summary and Comparisons with the Prior Year

- Net earnings from continuing operations were a loss of $13 million, or $0.10 per diluted share.
- Cash earnings from continuing operations were $67 million.
- Aggregates shipments declined 23 percent, reducing earnings $0.57 per diluted share.
- Aggregates pricing increased 5 percent.
- Aggregates cash fixed costs decreased 8 percent.
- Selling, administrative and general expenses decreased 7 percent.
- Total contract awards for highways increased 13 percent in Vulcan-served states.

Commenting for the Company, Don James, Vulcans Chairman and Chief Executive Officer, stated, Our employees continue to run the business in a cost-efficient manner, maximizing our cash generation during the economic downturn. Their efforts in the fourth quarter contributed to further reductions in cash fixed costs in our operations as well as reductions in overhead expenses. Continued weakness in private construction activity, uncertainty surrounding the timing and amount of either a formal extension or reauthorization of the multi-year federal highway program, and extremely wet weather suppressed momentum gained from stimulus-related construction. Nonetheless, we finished the year with strong cash generation. For the full year 2009, free cash flow was $343 million, an increase of $261 million from the prior year, and cash earnings per ton of aggregates remained in-line with the prior year.

We continue to believe that 2010 will be the biggest year for stimulus-related highway construction. Economic stimulus funds of $27.5 billion designated for highway projects under the American Recovery and Reinvestment Act of 2009 buoyed contract awards for highways in the second half of 2009. Despite the failure of Congress to pass a fully-funded extension of SAFETEA-LU, the previous highway authorization that expired on September 30, 2009, contract awards for highways in the fourth quarter increased 9 percent from the prior year. Vulcan-served states, which were apportioned 55 percent more funds than other states, generally have lagged the rest of the country in awarding contracts and starting stimulus-related construction. In the fourth quarter, however, contract awards for highway projects in our states increased 13 percent from the prior year versus a 2 percent increase in other states. We are encouraged by the increased award activity and are optimistic that stimulus-related highway projects in Vulcan-served states, after a slow start, are now moving forward and will benefit demand for our products in 2010.

Fourth Quarter Operating Results Commentary

Fourth quarter earnings for aggregates were lower versus the prior year as the impact of reduced shipments more than offset the earnings benefit from improved prices and cost control measures. Aggregates shipments declined 23 percent from the prior year due to weak demand and extremely wet weather in most key markets. Lower aggregates volumes reduced fourth quarter EBITDA by approximately $69 million versus the prior year. Most markets realized price improvement from the prior year. The overall price increase benefited somewhat from a product mix shift to more aggregates for highway construction.

Key Vulcan-served markets in the Mid-Atlantic, Southeast, Midwest, and Southwest regions were hampered by an unusually large amount of rainfall throughout the quarter. Additionally, aggregates volumes were negatively affected by the varied timing of spending of stimulus-related funding, the uncertainty regarding timing and duration of an extension of the federal highway bill as well as the lack of visibility regarding timing for ultimate passage of a new multi-year highway bill. Construction activity on stimulus-related highway projects has varied widely in Vulcan-served states and in certain key states lagged the rest of the country. Florida, Virginia, California, and Georgia spent less than 10 percent of their highway-related stimulus funds by the end of 2009. Conversely, Illinois, Tennessee, and North Carolina spent 41, 36 and 23 percent, respectively, of stimulus funds by year end.

Segment earnings in asphalt and concrete were a slight loss due to the earnings effects of lower volumes and lower materials margins. Asphalt materials margins in the fourth quarter were lower than the prior year as lower selling prices for asphalt mix more than offset lower costs, including a 29 percent decline in the costs for liquid asphalt.

Selling, administrative and general (SAG) expenses in the fourth quarter declined $6 million from the prior year. This year-over-year decline in overhead costs is due mostly to reductions in employee-related expenses, which more than offset a year-over-year increase in project costs of $2.6 million related to the replacement of legacy IT systems. Additionally, the current year?s fourth quarter included expenses of $8.5 million for the fair market value of donated real estate as compared to $5.1 million in the prior year. Excluding the effects of donated real estate from both years, SAG expenses declined 11 percent versus the prior year?s fourth quarter.

Full Year Summary and Comparisons with the Prior Year

  • Net earnings were $30 million, including $19 million from continuing operations.
  • Cash earnings were $369 million from continuing operations and $12 million from discontinued operations.
  • Aggregates shipments declined 26 percent, reducing pretax earnings $334 million.
  • Aggregates pricing increased 3 percent.
  • Cash provided by operating activities was $453 million compared with $435 million in the prior year.
  • Full year capital spending was $110 million compared with $353 million in the prior year.
  • Free cash flow was $343 million compared with $82 million in the prior year.
  • Total debt was reduced by $810 million in 2009.

Commenting on the full year, Mr. James stated, Throughout the period of protracted decline in demand for construction materials, Vulcan employees have managed costs aggressively. In 2009, their efforts further rationalized production and reduced operating hours, thereby offsetting some of the cost impact related to lower volumes. Their efforts also contributed to an increase in free cash flow, demonstrating the cash generation ability of our business even in the midst of an economic recession.

All results are unaudited.

Outlook Highlights and Commentary

Commenting on the Companys outlook, Mr. James stated, Overall, the construction environment remains challenging, reflecting continued weak private nonresidential construction activity and uncertainty regarding the timing and amount of a new multi-year federal highway program.

Since May of last year, highway construction awards have been buoyed by stimulus-related funding. Through December 2009, the Federal Highway Administration reported approximately $15 billion of stimulus-related highway projects under construction with $5.6 billion of these stimulus funds having been paid to contractors for work performed. During this same period, Vulcan-served states lagged the rest of the country in awarding and starting stimulus-related highway construction projects. These differences in awarding projects and spending patterns are due in part to the types of projects planned and to the proportion sub-allocated to Metropolitan Planning Organizations less accustomed to implementing a large number of projects. The above-average increase in our states in fourth quarter contract awards for highways provides some encouragement that construction activity in our states should improve in 2010.

Overall, our outlook for aggregates demand in 2010 reflects an increase in highway and other infrastructure-related construction activity due primarily to stimulus-related funding. While we have assumed that regular federal funding for highways will remain at an annualized level consistent with fiscal year 2009 under SAFETEA-LU, Congress will need to act quickly to restore fiscal year 2010 funding levels and contract authority prior to the start of the construction season. Additionally, residential construction activity should increase year-over-year in 2010, albeit from low levels. Further weakness is expected in private nonresidential construction. As a result, aggregates volumes are expected to be flat to up 5 percent from 2009 levels. For the full year 2010, we expect aggregates pricing to improve 2 to 3 percent.

In our asphalt business, we expect sales volumes to increase approximately 5 percent from 2009 levels. Pricing for asphalt mix is expected to increase from 2009 levels but not enough to offset projected higher prices for liquid asphalt and aggregates. As a result, we expect lower material margins in asphalt when compared with the prior year. In concrete, we expect sales volumes to remain flat with the prior year and pricing to decline modestly, reflecting continued weakness in private nonresidential construction.

Debt reduction and achieving target debt ratios remain a priority use of cash flows. For the full year, we expect capital spending of approximately $125 million, up from $110 million spent in 2009 and down sharply from the $353 million spent in 2008.

Our available production capacity and ongoing efforts to improve cash margins position Vulcan to participate efficiently and effectively in the $50 to $60 billion of stimulus-related construction, including significant remaining portions of the $27 billion for highways and bridges. We expect 2010 to be the largest year of stimulus-related highway demand for our products followed by another solid year in 2011. By that time, we expect demand from private construction activity to be improving, accelerating the earnings leverage from our improved cost structure and disciplined approach to pricing.

Conference Call

Vulcan will host a conference call at 10:00 a.m. CST on February 9, 2010. Investors and other interested parties in the U.S. may access the teleconference live by calling 888.713.4218 approximately 10 minutes before the scheduled start. International participants can dial 617.213.4870. The access code is 41673485. 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 February 16, 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.

Vulcan Materials Company

    and Subsidiary Companies

                                     (Amounts and shares in thousands,

                                           except per share data)

   

                                 Three Months Ended      Twelve Months Ended

    Consolidated Statements         December 31             December 31

     of Earnings                 ------------------      -------------------

     (Condensed and unaudited)     2009       2008         2009        2008

    ------------------------------------------------------------------------

    Net sales                  $555,767   $756,523   $2,543,707  $3,453,081

    Delivery revenues            34,377     42,676      146,783     198,357

                               --------   --------   ----------  ----------

    Total revenues              590,144    799,199    2,690,490   3,651,438

   

    Cost of goods sold          487,726    607,333    2,097,745   2,703,369

    Delivery costs               34,377     42,676      146,783     198,357

                               --------   --------   ----------  ----------

    Cost of revenues            522,103    650,009    2,244,528   2,901,726

                               --------   --------   ----------  ----------

   

    Gross profit                 68,041     149,190     445,962     749,712

    Selling, administrative

     and general expenses        82,979      88,863     321,608     342,584

    Goodwill impairment               -     252,664           -     252,664

    Gain on sale of property,

     plant & equipment and

     businesses, net             16,451       7,537      27,104      94,227

    Other operating income

     (expense), net               (122)         371     (3,006)         411

                                 ------   ---------     -------     -------

    Operating earnings (loss)     1,391   (184,429)     148,452     249,102

   

    Other income (expense),

     net                            730     (1,322)       5,307     (4,357)

    Interest income                 367         502       2,282       3,126

    Interest expense             43,318      46,583     175,262     172,813

                               --------   ---------    --------     -------

    Earnings (loss) from

     continuing operations

     before income taxes       (40,830)   (231,832)    (19,221)      75,058

    Provision (benefit) for

     income taxes              (28,248)    (19,673)    (37,869)      71,691

                               --------    --------    --------      ------

    Earnings (loss) from

     continuing operations     (12,582)   (212,159)      18,648       3,367

    Earnings (loss) on

     discontinued operations,

     net of tax                   (767)       (661)      11,666     (2,449)

                              ---------  ----------     -------     -------

    Net earnings (loss)       $(13,349)  $(212,820)     $30,314        $918

    =======================================================================

   

    Basic earnings (loss) per

     share:

        Continuing operations   $(0.10)     $(1.92)       $0.16       $0.03

        Discontinued operations  (0.01)      (0.01)        0.09      (0.02)

                                -------     -------       -----      ------

        Net earnings (loss) per

         share                  $(0.11)     $(1.93)       $0.25       $0.01

   

    Diluted earnings (loss)

     per share:

        Continuing operations   $(0.10)     $(1.92)       $0.16       $0.03

        Discontinued operations  (0.01)      (0.01)        0.09      (0.02)

                                -------     -------       -----      ------

        Net earnings (loss) per

         share                  $(0.11)     $(1.93)       $0.25       $0.01

    =======================================================================

   

    Weighted-average common

     shares outstanding:

        Basic                   125,889     110,394     118,891     109,774

        Assuming dilution       125,889     110,394     119,430     110,954

    Cash dividends declared

     per share of common stock    $0.25       $0.49       $1.48       $1.96

    Depreciation, depletion,

     accretion and amortization

     from continuing operations $96,454     $97,570    $394,612    $389,060

    Effective tax rate from

     continuing operations        69.2%        8.5%      197.0%       95.5%

    =======================================================================

   

   

                                                                 Table B

    Vulcan Materials Company

    and Subsidiary Companies

   

                                              (Amounts in thousands)

                                 

    Consolidated Balance Sheets            December 31       December 31

    (Condensed and unaudited)                 2009                2008

    --------------------------------------------------------------------

    Assets

    ------

    Cash and cash equivalents                  $22,265           $10,194

    Medium-term investments                      4,111            36,734

    Accounts and notes receivable:

      Accounts and notes receivable, gross     276,746           365,688

      Less: Allowance for doubtful accounts    (8,722)           (8,711)

                                               -------           -------

        Accounts and notes receivable, net     268,024           356,977

    Inventories:

      Finished products                        261,752           295,525

      Raw materials                             21,807            28,568

      Products in process                        3,907             4,475

      Operating supplies and other              37,567            35,743

                                               -------           -------

        Inventories                            325,033           364,311

    Deferred income taxes                       57,967            71,205

    Prepaid expenses                            51,821            54,469

    Assets held for sale                        15,072                 -

                                               -------           -------

        Total current assets                   744,293           893,890

    Investments and long-term receivables       33,283            27,998

    Property, plant & equipment:

      Property, plant & equipment, cost      6,653,261         6,635,873

      Less: Reserve for depr.,

       depl. & amort.                      (2,778,590)       (2,480,061)

                                           -----------       -----------

        Property, plant & equipment, net    3,874,671          4,155,812

    Goodwill                                 3,093,979         3,085,468

    Other intangible assets                    682,643           673,792

    Other assets                               105,086            79,664

                                            ----------        ----------

        Total assets                        $8,533,955        $8,916,624

                                            ==========        ==========

   

   

    Liabilities and Shareholders' Equity

    ------------------------------------

    Current maturities of long-term debt      $385,381          $311,685

    Short-term borrowings                      236,512         1,082,500

    Trade payables and accruals                121,324           147,104

    Other current liabilities                  113,109           121,777

    Liabilities of assets held for sale            369                 -

                                               -------         ---------

        Total current liabilities              856,695         1,663,066

    Long-term debt                           2,116,120         2,153,588

    Deferred income taxes                      888,272           920,475

    Other noncurrent liabilities               620,846           625,743

                                             ---------         ---------

        Total liabilities                    4,481,933         5,362,872

                                             ---------         ---------

    Shareholders' equity:

      Common stock, $1 par value               125,912           110,270

      Capital in excess of par value         2,368,228         1,734,835

      Retained earnings                      1,752,240         1,893,929

      Accumulated other comprehensive loss   (194,358)         (185,282)

                                             ---------         ---------

        Shareholders' equity                 4,052,022         3,553,752

                                             ---------         ---------

        Total liabilities and

         shareholders' equity               $8,533,955        $8,916,624

    ====================================================================

   

   

                                                                     Table C

    Vulcan Materials Company

    and Subsidiary Companies

   

                                                    (Amounts in thousands)

   

                                                      Twelve Months Ended

    Consolidated Statements of Cash Flows                 December 31

                                                      -------------------

    (Condensed and unaudited)                      2009                 2008

    ------------------------------------------------------------------------

    Operating Activities

    --------------------

    Net earnings                                $30,314                 $918

    Adjustments to reconcile net earnings to

     net cash provided by operating activities:

       Depreciation, depletion, accretion and

        amortization                            394,612              389,060

       Goodwill impairment                            -              252,664

       Net gain on sale of property, plant &

        equipment and businesses               (27,916)             (94,227)

       Contributions to pension plans          (27,616)              (3,127)

       Share-based compensation                  23,120               19,096

       Excess tax benefits from share-based

        compensation                            (2,072)             (11,209)

       Deferred tax provision                  (43,773)             (19,756)

       Changes in assets and liabilities

        before initial effects of business

        acquisitions and dispositions            90,275             (85,171)

       Other, net                                16,091             (13,063)

                                                -------             --------

         Net cash provided by operating

          activities                            453,035              435,185

                                                -------              -------

   

    Investing Activities

    --------------------

    Purchases of property, plant &

     equipment                                (109,729)            (353,196)

    Proceeds from sale of property,

     plant & equipment                           17,750               25,542

    Proceeds from sale of businesses             16,075              225,783

    Payment for businesses acquired,

     net of acquired cash                      (36,980)             (84,057)

    Reclassification from cash

     equivalents to medium-term investments           -             (36,734)

    Redemption of medium-term investments        33,282                    -

    Proceeds from loan on life

     insurance policies                               -               28,646

    Other, net                                    (400)               4,976

                                               --------            ---------

         Net cash used for investing

          activities                           (80,002)            (189,040)

                                               --------            ---------

   

    Financing Activities

    --------------------

    Net short-term payments                   (847,963)          (1,009,000)

    Payment of current maturities of

     long-term debt                           (311,724)             (48,794)

    Payment of long-term debt                  (50,000)                   -

    Proceeds from issuance of long-

     term debt, net of discounts                397,660              949,078

    Debt issuance costs                         (3,033)              (5,633)

    Settlements of forward starting swaps             -             (32,474)

    Proceeds from issuance of common stock      606,546               55,072

    Dividends paid                            (171,468)            (214,783)

    Proceeds from exercise of stock options      17,327               24,602

    Excess tax benefits from share-based

     compensation                                 2,072               11,209

    Other, net                                    (379)                (116)

                                              ---------            ---------

         Net cash used for financing

          activities                          (360,962)            (270,839)

                                              ---------            ---------

    

    Net increase (decrease) in cash

     and cash equivalents                        12,071             (24,694)

    Cash and cash equivalents at

     beginning of year                           10,194               34,888

                                                -------              -------

    Cash and cash equivalents at end

     of year                                    $22,265              $10,194

    ========================================================================

   

   

                                                                      Table D

    Segment Financial Data and Unit Shipments

   

                                (Amounts in thousands, except per unit data)

   

                                Three Months Ended       Twelve Months Ended

                                     December 31             December 31

                                     -----------             -----------

                                   2009       2008        2009         2008

                                   ----       ----        ----         ----

    Total Revenues

      Aggregates (a)

          Segment revenues      $406,246   $529,531   $1,838,599   $2,406,800

          Intersegment sales     (37,162)   (47,254)    (165,210)    (206,187)

                                 -------    -------     --------     --------

              Net sales          369,084    482,277    1,673,389    2,200,613

                                 -------    -------    ---------    ---------

      Asphalt mix and

       Concrete (b)

           Segment revenues      178,416    268,511      833,129    1,201,191

           Intersegment sales         (6)       (80)        (123)        (560)

                                     ---        ---         ----         ----

              Net sales          178,410    268,431      833,006    1,200,631

                                 -------    -------      -------    ---------

      Cement (c)

           Segment revenues       16,108     20,614       72,531      106,468

           Intersegment sales     (7,835)   (14,799)     (35,219)     (54,631)

                                  ------    -------      -------      -------

              Net sales            8,273      5,815       37,312       51,837

                                   -----      -----       ------       ------

      Total

              Net sales          555,767    756,523    2,543,707    3,453,081

              Delivery revenues   34,377     42,676      146,783      198,357

                                  ------     ------      -------      -------

              Total revenues    $590,144   $799,199   $2,690,490   $3,651,438

                                ========   ========   ==========   ==========

   

    Gross Profit

      Aggregates                 $69,613   $127,619     $393,288     $657,566

      Asphalt mix

       and Concrete               (1,042)    18,425       54,516       74,463

      Cement                        (530)     3,146       (1,842)      17,683

                                    ----      -----       ------       ------

         Total gross profit      $68,041   $149,190     $445,962     $749,712

                                 =======   ========     ========     ========

   

    Unit Shipments

      Aggregates

        Customer tons             30,873     40,209      139,297      188,344

        Internal tons (d)          2,671      3,302       11,566       15,908

                                   -----      -----       ------       ------

         Aggregates - tons        33,544     43,511      150,863      204,252

                                  ======     ======      =======      =======

   

      Asphalt mix - tons           1,779      2,026        7,415        9,538

   

      Ready-mixed concrete -

       cubic yards                   930      1,352        4,337        6,354

   

      Cement

        Customer tons                 58        117          262          595

        Internal tons (d)             81         87          369          444

                                     ---        ---          ---          ---

         Cement - tons               139        204          631        1,039

                                     ===        ===          ===        =====

   

    Average Unit Sales Price

     (including internal sales)

      Aggregates

       (freight-adjusted) (e)     $10.39      $9.91       $10.30        $9.98

      Asphalt mix                 $49.93     $61.29       $52.66       $55.16

      Ready-mixed

       concrete                   $93.34     $97.76       $96.53       $97.75

      Cement                      $94.03     $95.11       $95.70       $96.75

   

    (a) Includes crushed stone, sand and gravel, sand, other aggregates, as

        well as transportation and service revenues associated with the

        aggregates business.

    (b) Includes asphalt mix, ready-mixed concrete, concrete block, precast

        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 twelve months ended December 31 is

    summarized below (amounts in thousands):

   

   

                                                     2009           2008

    ------------------------------------------------------------------------

   

   

    Supplemental Disclosure of Cash Flow

    Information

    ------------------------------------

    Cash paid (refunded) during the period

     for:

       Interest                                      $181,352       $179,880

       Income taxes                                   (25,097)        91,544

   

    Supplemental Schedule of Noncash

    Investing and Financing Activities

    -------------------------------------

    Liabilities assumed in business acquisitions            -          2,024

    Accrued liabilities for purchases of

     property & equipment                              13,459         22,974

    Note received from sale of businesses               1,450              -

    Carrying value of noncash assets and liabilities

     exchanged                                              -         42,974

    Debt issued for purchases of property,

     plant & equipment                                  1,987            389

    Proceeds receivable from exercise of stock

     options                                                -            325

    Fair value of stock issued in business

     acquisitions                                           -         25,023

   

   

    2. Reconciliation of Non-GAAP Measures

         Free Cash Flow Reconciliations                2009            2008

                                                    -------------------------

   

    Net cash provided by operating

     activities                                      $453,035       $435,185

       less: Purchases of property,    

        plant and equipment                          (109,729)      (353,196)

                                                     --------       --------

    Free Cash Flow                                   $343,306        $81,989

                                                     ========        =======

   

    Free Cash Flow deducts Purchases of Property, Plant and 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 the Company's

    shareholders an understanding of metrics management uses to assess

    performance and to monitor our cash and liquidity positions.  Vulcan's

    management internally uses Free Cash Flow and other such measures to

    assess the operating performance of its' various business units and the

    consolidated company. Vulcan's management does 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            Twelve Months Ended

                               December 31                    December 31

                               -----------                    -----------

                           2009            2008           2009          2008

    -------------------------------------------           ------------------

   

    Reconciliation of Net Cash Provided by Operating

     Activities to EBITDA and Cash Earnings

   

    Net cash provided

     by operating

     activities           $98,214         $156,942     $453,035      $435,185

    Changes in operating

     assets and liabilities

     before initial effects

     of business

     acquisitions and

     dispositions         (38,429)         (59,525)     (90,275)       85,171

    Goodwill Impairment         -         (252,664)           -      (252,664)

    Other net operating

     items (providing)

     using cash            23,320           39,997       62,166       122,286

    (Earnings) loss on

     discontinued operations,

     net of tax               767              661      (11,666)        2,449

    Provision (benefit)

     for income taxes     (28,248)         (19,673)     (37,869)       71,691

    Interest expense,

     net                   42,951           46,081      172,980       169,687

    Less:

     Depreciation, depletion,

     accretion and

     amortization         (96,454)         (97,570)    (394,612)     (389,060)

                          -------          -------     --------      --------

    EBIT                    2,121         (185,751)     153,759       244,745

    Plus: Goodwill

     Impairment                 -          252,664            -       252,664

    Plus: Depreciation,

     depletion, accretion

     and amortization      96,454           97,570      394,612       389,060

                           ------           ------      -------       -------

    EBITDA                $98,575         $164,483     $548,371      $886,469

    Less: Interest expense,

     net                  (42,951)         (46,081)    (172,980)     (169,687)

          Current taxes    10,893            1,578       (6,106)      (92,346)

                           ------            -----      -------       -------

    Cash earnings         $66,517         $119,980     $369,285      $624,436

                          =======         ========     ========      ========

   

    Reconciliation of Operating Earnings to EBITDA

     and Cash Earnings

   

    Operating earnings

     (loss)                $1,391        $(184,429)    $148,452      $249,102

    Other income

     (expense), net           730           (1,322)       5,307        (4,357)

                              ---           ------        -----        ------

    EBIT                    2,121         (185,751)     153,759       244,745

    Plus: Goodwill

     Impairment                 -          252,664            -       252,664

    Plus: Depreciation,

     depletion, accretion

     and amortization      96,454           97,570      394,612       389,060

                           ------           ------      -------       -------

    EBITDA                $98,575         $164,483     $548,371      $886,469

    Less: Interest

     expense, net         (42,951)         (46,081)    (172,980)     (169,687)

           Current taxes   10,893            1,578       (6,106)      (92,346)

                            -----            -----      -------       -------

    Cash earnings         $66,517         $119,980     $369,285      $624,436

                          =======         ========     ========      ========

   

    -------------------------------------------------------------------------

    EBITDA and Earnings Per Share (EPS) Bridge     

        

    (Amounts in millions,         Three Months Ended   Twelve Months Ended

      except per share data)          December 31          December 31

                                     --------------       -------------

                                     EBITDA     EPS       EBITDA    EPS

                                     ------     ---       ------    ---

    Continuing Operations -

     2008 Actual                     $164     $(1.92)      $886    $0.03

   

    Increase / (Decrease) due to:

    Aggregates:   Volumes             (69)     (0.57)      (334)   (2.12)

                  Selling prices       16       0.13         48     0.30

                  Costs                (6)     (0.05)        25     0.16

    Asphalt mix and Concrete          (19)     (0.16)       (19)   (0.12)

    Cement                             (4)     (0.03)       (20)   (0.13)

    Selling, administrative and

     general expenses                   6       0.03         21     0.11

    Gain on sale of property,

     plant & equipment and

     businesses                       n/a        n/a        (67)   (0.43)

    Depreciation, depletion,

     accretion and amortization       n/a       0.01        n/a    (0.04)

    Interest expense, net             n/a       0.02        n/a    (0.02)

    Tax rate differential and

     discrete items                   n/a       0.23        n/a     0.29

    Goodwill Impairment               n/a       2.09        n/a     2.06

    Additional shares outstanding

     and other                        11       0.12          8     0.07

                                      ---       ----        ---     ----

    Continuing Operations -

     2009 Actual                      $99     $(0.10)      $548    $0.16

                                      ===     ======       ====    =====

    -------------------------------------------------------------------------

   

   

    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

    the Company's shareholders an understanding of metrics management uses

    to assess performance and to monitor our cash and liquidity positions.

    Vulcan's management internally uses EBITDA, cash earnings and other

    such measures to assess the operating performance of its' various

    business units and the consolidated company. Vulcan?s management does

    not use these metrics as a measure to allocate resources internally.

 
Source: http://www.earthtimes.org/articles/show/vulcan-announces-fourth-quarter-results,1155805.shtml

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