Vulcan 2005 Results at Record Levels; Fourth Quarter EPS from Continuing Operations Increase 44 Percent

Vulcan Materials Company (NYSE:VMC) today announcedrecord fourth quarter earnings from continuing operations of $0.89 perdiluted share as compared to $0.62 per diluted share in the prioryear. Included in earnings from continuing operations is $0.06 perdiluted share referable to an increase in the carrying value of theECU earn-out. Improved pricing and higher volumes for all majorproducts led to a 24 percent increase in net sales to $681 million.Fourth quarter net earnings of $0.88 per diluted share reflect a $0.01per diluted share loss from discontinued operations.

For the full year, earnings from continuing operations were $344million, or $3.30 per diluted share, as compared to $261 million, or$2.52 per diluted share in the prior year. Net earnings increased 35percent to $389 million, or $3.73 per diluted share, including $45million, or $0.43 per diluted share, from discontinued operations. Netsales increased 18 percent from the prior year to $2.6 billion.

Chairman and Chief Executive Officer Don James said, "Our fourthquarter results were excellent, underscoring the very good performancewe saw throughout the year. Gross profit as a percent of salesimproved in all major product lines despite energy-related costpressures. With the current strength in demand and pricing for ourproducts, 2006 should be another outstanding year.

"Our business continues to generate strong cash flows. Wegenerated $473 million of cash from operating activities in 2005. Weused this cash to invest in internal capital projects, to acquire 11aggregates operations and 5 asphalt plants in 4 states, to repurchaseover 3.5 million of our shares in the open market and to increase ourdividend 11 percent."

During the fourth quarter, the Company repurchased 1,580,300shares of its common stock for approximately $105 million,representing an average cost of $66.67 per share. Year to date, theCompany repurchased 3,588,738 shares for approximately $228 million,representing an average cost of $63.67 per share. The number of sharesremaining under the Company's repurchase authorization isapproximately 4.9 million shares.

Continuing Operations - Fourth Quarter

Net sales of $681 million for the fourth quarter increased 24percent from the prior year due to improved prices, record aggregatesshipments, and more favorable weather conditions in certain keymarkets. Earnings from continuing operations before income taxes were$127 million, as compared to $93 million in the prior year, anincrease of 36 percent.

For aggregates, gross profit as a percent of net sales increasedapproximately 200 basis points over the prior year's level. The marginexpansion reflects the effects of a 10 percent improvement in pricesand a 6 percent increase in volumes. Excluding acquisitions,aggregates shipments increased 5 percent. The earnings improvementfrom higher pricing more than offset the effects of a 45 percentincrease in unit diesel costs, higher costs for parts and maintenanceand plant improvement costs related to recent acquisitions. Higherunit costs for diesel fuel reduced pretax earnings by approximately $9million.

Selling prices for asphalt and concrete improved significantly andmore than offset the effects of cost increases for raw materials,which included a 40 percent increase in unit costs for liquid asphalt.Gross profit from both products also benefited from higher volumesresulting from improved market demand in California, Arizona andTexas, and to a lesser extent, better weather in California and Texas.

Selling, administrative and general expenses increasedapproximately $14 million due primarily to performance-based incentivecompensation.

Other income increased $9 million from the prior year's fourthquarter due to an $11 million increase in the carrying value of theECU earn-out agreement included as part of the consideration paid bythe buyer of the Company's Chemicals business. This earn-out isaccounted for as a derivative instrument, with future adjustments tothe carrying value recorded as other income or charges in continuingoperations.

Continuing Operations - Full Year

Full year 2005 net sales were $2.6 billion as compared to $2.2billion for the prior year, an increase of 18 percent. Earnings fromcontinuing operations before income taxes increased 28 percent to $480million.

All major product lines achieved higher sales. Aggregates pricingincreased 8 percent and volumes were up 7 percent from the prioryear's record levels. Acquisitions accounted for 1 percent of thisvolume growth. Sales of asphalt increased 36 percent over the 2004levels due to higher pricing and volume. Concrete sales increased 12percent from the prior year due to higher prices.

Aggregates pricing and volume improvements more than offset theeffects of increased costs for diesel fuel, parts and supplies andmaintenance. Higher unit costs for diesel fuel reduced pretax earningsby approximately $33 million. Pricing improvements in asphalt andconcrete more than offset cost increases for raw materials such asliquid asphalt and cement. Unit cost for liquid asphalt increased 28percent from the prior year.

Selling, administrative and general expenses increased $36 millionfrom the prior year due primarily to the Company's performance-basedincentive compensation plans. Compensation expense under the plans isinfluenced by the degree to which business performance targets areachieved. One of the plans, the performance share plan, is alsoaffected by stock price, which increased 24 percent in 2005.

Gain on sale of property, plant and equipment in 2005 wasapproximately $15 million lower than the prior year's amount dueprimarily to lower sales of real estate. Other income increased $16million from the prior year due to a $20 million increase in thecarrying value of the ECU earn-out agreement, which is included aspart of the consideration paid by the buyer of the Company's Chemicalsbusiness.

The effective tax rate on earnings from continuing operations was28.4 percent for 2005 as compared to 30.4 percent in the prior year.The current year's effective tax rate decreased due principally to areduction in estimated income tax liabilities for prior years and afavorable settlement of federal refund claims. In 2004, an increase inthe contingency for uncertain tax positions raised the effective taxrate.

All results are unaudited.

Discontinued Operations

On June 7, 2005, the Company closed the sale of its Chemicalsbusiness. The reported after-tax earnings of $45 million for the yearis net of related exit and disposal costs and represents a $19 millionincrease from the prior year. The higher earnings are mostly due tofavorable demand and pricing for caustic soda and chlorine.

Outlook

Mr. James stated, "We expect 2006 to be another outstanding year.Construction spending should remain strong due to continued economicgrowth. Highway construction should benefit from higher funding as aresult of the new multi-year federal highway bill passed in 2005 andimproving state and local tax receipts. The recovery in privatenonresidential construction should continue and residentialconstruction activity in our markets should remain at high levels.

"As a result, we expect Vulcan's aggregates shipments to increase2 to 4 percent above the record 260 million tons shipped in 2005. The8 percent increase in aggregates prices achieved in 2005 marked asignificant change from the 3 to 4 percent historical levels. Weexpect to build on this momentum and achieve additional priceimprovements of 6 to 8 percent in 2006, given the strong demand andbroad uses for aggregates, the increasing difficulty in securing newreserves in some markets, and sharply higher input costs. Unit costsin 2006 for diesel fuel and liquid asphalt are projected to be higher.Plant spending to improve acquisitions completed in 2005 shouldmoderate and these operations should contribute to improved earningsin 2006.

"In light of these assumptions, we expect earnings from continuingoperations to be in the range of $3.85 to $4.15 per diluted share forthe year. In the first quarter, we expect to earn $0.20 to $0.35 perdiluted share depending on weather conditions. Remaining costs relatedto the sale of our former Chemicals business are expected to result ina loss of $0.04 per diluted share for the year and $0.01 per dilutedshare in the first quarter of 2006.

"In recent years, we have generated significant value for ourshareholders through the development and sale of reclaimed and surplusreal estate and we are continuing this process. Our current estimatefor real estate gains ranges from $0 to $40 million of pretax earningsin 2006. However, the timing of real estate sales is difficult topredict and as such, we have not included any real estate gains in ourearnings guidance for 2006. Additionally, our earnings guidance for2006 does not reflect any future adjustment in the carrying value ofthe ECU earn-out referable to the sale of our Chemicals business."

Effective January 1, 2006, Vulcan will adopt FAS 123(R),"Accounting for Stock Based Compensation," which requires companies tobegin expensing stock options. Our 2006 earnings guidance includes upto $0.06 per diluted share in expense referable to stock options forthe full year and up to $0.03 for the first quarter. Our 2005 earningsfrom continuing operations do not include any expenses referable tostock options. Earnings from discontinued operations in 2005 includeda charge of $0.03 per diluted share related to modifications of stockoption awards in connection with the sale of our Chemicals business.

In keeping with past practice, the Company will give quarterly andannual earnings guidance. The Company will issue press releases torevise such guidance if it is reasonably certain that earnings pershare, on either a quarterly or an annual basis, will be outside itslatest published estimates.

Conference Call

Vulcan will host a broadcast of the quarterly earnings conferencecall scheduled for 9:00 a.m. CST on February 1, 2006. Investors andother interested parties may access the teleconference live by calling(800) 638-5439 or via the Internet through Vulcan's home page atvulcanmaterials.com. For international calls dial (617) 614-3945. Theparticipant access code is 27657415.

Vulcan Materials Company, a member of the S&P 500 index, is thenation's foremost producer of construction aggregates and a majorproducer of other construction materials.

Certain matters discussed in this release, including expectationsregarding future performance, contain forward-looking statements thatare subject to risks, assumptions and uncertainties that could causeactual results to differ materially from those projected. These risks,assumptions and uncertainties include, but are not limited to, thoseassociated with general business conditions; the timing and amount offederal, state and local funding for infrastructure; the highlycompetitive nature of the construction materials industry; pricing;weather and other natural phenomena; energy costs; costs ofhydrocarbon-based raw materials; increasing healthcare costs; thetiming and amount, if any, of the payments to be received by theCompany under two earn-outs contained in the agreement for thedivestiture of the Company's Chemicals business unit; and other risks,assumptions and uncertainties detailed from time to time in theCompany's SEC reports, including the report on Form 10-K for the year.Forward-looking statements speak only as of the date hereof, andVulcan assumes no obligation to update such statements.

Vulcan Materials Company
and Subsidiary Companies

(Amounts and shares in thousands, except
per share data)
Three Months Ended Twelve Months Ended
Consolidated Statements of December 31 December 31
Earnings
------------------- -----------------------
(Condensed and unaudited) 2005 2004 2005 2004
------------------------- ---------- --------- ----------- ----------

Net sales $680,849 $547,254 $2,614,965 $2,213,160
Delivery revenues 73,772 61,400 280,362 241,175
-------- -------- ---------- ----------
Total revenues 754,621 608,654 2,895,327 2,454,335

Cost of goods sold 502,237 409,072 1,906,489 1,630,487
Delivery costs 73,772 61,400 280,362 241,175
-------- -------- ---------- ----------
Cost of revenues 576,009 470,472 2,186,851 1,871,662
-------- -------- ---------- ----------

Gross profit 178,612 138,182 708,476 582,673
Selling, administrative
and general expenses 63,020 49,375 232,531 196,352
Gain on sale of property,
plant and equipment, net 5,195 12,691 8,295 23,801
Other operating expense,
net 588 3,282 7,862 8,189
Other income, net 11,470 2,297 24,378 8,314
-------- -------- ---------- ----------
Earnings from continuing
operations before
interest and income taxes 131,669 100,513 500,756 410,247
Interest income 4,509 1,945 16,627 5,599
Interest expense 9,123 9,164 37,146 40,280
-------- -------- ---------- ----------
Earnings from continuing
operations before income
taxes 127,055 93,294 480,237 375,566
Provision for income taxes 34,927 28,337 136,402 114,353
-------- -------- ---------- ----------
Earnings from continuing
operations 92,128 64,957 343,835 261,213
Earnings (loss) on
discontinued operations,
net of tax (1,485) 20,675 44,922 26,172
-------- -------- ---------- ----------
Net earnings $ 90,643 $ 85,632 $ 388,757 $ 287,385
=========================== ========= ========= =========== ==========
Basic earnings (loss) per
share:
Earnings from
continuing operations $ 0.91 $ 0.63 $ 3.37 $ 2.55
Discontinued operations (0.01) 0.20 0.43 0.26
-------- -------- ---------- ----------
Net earnings per share $ 0.90 $ 0.83 $ 3.80 $ 2.81

Diluted earnings (loss)
per share:
Earnings from
continuing operations $ 0.89 $ 0.62 $ 3.30 $ 2.52
Discontinued operations (0.01) 0.20 0.43 0.25
-------- -------- ---------- ----------
Net earnings per share $ 0.88 $ 0.82 $ 3.73 $ 2.77

======================================================================
Weighted-average common
shares outstanding:
Basic 101,217 102,700 102,179 102,447
Assuming dilution 103,188 104,094 104,085 103,664
Cash dividends per share
of common stock $ 0.290 $ 0.260 $ 1.160 $ 1.040
Depreciation, depletion,
accretion and
amortization from
continuing operations $ 57,544 $ 53,723 $ 220,488 $ 209,989
Effective tax rate 27.5% 30.4% 28.4% 30.4%
=========================== ========= ========= =========== ==========


Vulcan Materials Company
and Subsidiary Companies

(Amounts in thousands)

Consolidated Balance Sheets December 31 December 31
(Condensed and unaudited) 2005 2004
--------------------------- ------------ -----------

Assets
------
Cash and cash equivalents $ 275,138 $ 271,450
Medium-term investments 175,140 179,210
Accounts and notes receivable:
Accounts and notes receivable, gross 480,647 286,809
Less: Allowance for doubtful accounts (4,277) (5,196)
----------- -----------
Accounts and notes receivable, net 476,370 281,613
Inventories:
Finished products 170,539 158,350
Raw materials 9,602 6,512
Products in process 1,589 937
Operating supplies and other 16,022 11,385
----------- -----------
Inventories 197,752 177,184
Deferred income taxes 23,184 34,433
Prepaid expenses 17,138 15,846
Assets held for sale - 458,223
----------- -----------
Total current assets 1,164,722 1,417,959
Investments and long-term receivables 6,942 7,226
Property, plant and equipment:
Property, plant and equipment, cost 3,481,708 3,264,193
Less: Reserve for depr., depl., & amort (1,877,741) (1,727,700)
----------- -----------
Property, plant and equipment, net 1,603,967 1,536,493
Goodwill 617,083 600,181
Other assets 196,170 103,274
----------- -----------
Total $ 3,588,884 $ 3,665,133
=========== ===========

Liabilities and Shareholders' Equity
------------------------------------
Current maturities of long-term debt $ 272,067 $ 3,226
Trade payables and accruals 142,221 95,312
Other current liabilities 164,726 139,716
Liabilities of assets held for sale - 188,435
----------- -----------
Total current liabilities 579,014 426,689
Long-term debt 323,392 604,522
Deferred income taxes 275,065 348,613
Other noncurrent liabilities 284,872 271,334
Shareholders' equity 2,126,541 2,013,975
----------- -----------
Total $ 3,588,884 $ 3,665,133
========================================= ============ ===========


Vulcan Materials Company
and Subsidiary Companies

(Amounts in
thousands)
Twelve Months Ended
Consolidated Statements of Cash Flows December 31
-------------------
(Condensed and unaudited) 2005 2004
----------------------------------------------------------------------

Operating Activities
--------------------
Net earnings $388,757 $287,385
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, depletion, accretion and
amortization 220,956 245,050
Net gain on sale of property, plant, & equipment (9,414) (23,973)
Contributions to pension plans (29,100) (7,327)
Increase in assets before initial effects of
business acquisitions and dispositions (115,005) (16,239)
Increase in liabilities before initial effects
of business acquisitions and dispositions 5,983 86,933
Other, net 11,007 8,786
--------- ---------
Net cash provided by operating activities 473,184 580,615
--------- ---------

Investing Activities
--------------------
Purchases of property, plant and equipment (215,646) (203,800)
Proceeds from sale of property, plant and
equipment 10,629 48,377
Proceeds from sale of Chemicals business, net of
cash transaction fees 209,254 -
Payment for partner's interest in consolidated
joint venture (65,172) -
Payment for business acquisitions, net of acquired
cash (93,965) (34,555)
Purchases of medium-term investments (313,490) (378,463)
Proceeds from sales and maturities of medium-term
investments 317,560 473,147
Change in investments and long-term receivables 596 789
Other, net 1,062 -
--------- ---------
Net cash used for investing activities (149,172) (94,505)
--------- ---------

Financing Activities
--------------------
Net payments - commercial paper and bank lines of
credit - (29,000)
Payment of short-term debt and current maturities (3,350) (249,794)
Payment of long-term debt (8,253) (195)
Purchases of common stock (228,479) -
Dividends paid (118,229) (106,331)
Proceeds from exercise of stock options 37,940 21,508
Other, net 47 1,383
--------- ---------
Net cash used for financing activities (320,324) (362,429)
--------- ---------

Net increase in cash and cash equivalents 3,688 123,681
Cash and cash equivalents at beginning of period 271,450 147,769
--------- ---------
Cash and cash equivalents at end of year $275,138 $271,450
======================================================================


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):
2005 2004
--------------------------------------------------- -------- --------

Supplemental Disclosure of Cash Flow Information
------------------------------------------------
Cash paid during the period for:
Interest, net of amount capitalized $ 37,331 $ 44,191
Income taxes 211,985 90,129

Supplemental Schedule Of Noncash Investing and
Financing Activities
----------------------------------------------
Liabilities assumed in business acquisitions 4,684 -
Noncash proceeds from the sale of the Chemicals
business:
Earn-outs 127,979 -
Working capital adjustments 14,255 -