UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

		(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to

Commission File Number 001-33841

VULCAN MATERIALS COMPANY

(Exact name of registrant as specified in its charter)

New Jersey		20-8579133
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

1200 Urban Center Drive, Birmingham, Alabama		35242
(Address of principal executive offices)		(zip code)

(205) 298-3000      (Registrant’s telephone number including area code)

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x          Accelerated filer o          Non-accelerated filer o           Smaller reporting company o

(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

				Shares outstanding
Class				at June 30, 2010
Common Stock, $1 Par Value				128,269,559

VULCAN MATERIALS COMPANY

FORM 10-Q
QUARTER ENDED June 30, 2010

Contents

						Page
PART I		FINANCIAL INFORMATION
		Item 1.		Financial Statements		3
				Condensed Consolidated Balance Sheets		4
				Condensed Consolidated Statements of Earnings		5
				Condensed Consolidated Statements of Cash Flows		6
				Notes to Condensed Consolidated Financial Statements
		Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
		Item 3.		Quantitative and Qualitative Disclosures About Market Risk		35
		Item 4.		Controls and Procedures		36
PART II		OTHER INFORMATION
		Item 1.		Legal Proceedings		37
		Item 1A.		Risk Factors		37
		Item 6.		Exhibits		37
SIGNATURES						38
EX-31.A
EX-31.B
EX-32.A
EX-32.B
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I FINANCIAL INFORMATION

		June 30				December 31				June 30
Unaudited, except for December 31		2010				2009				2009
Amounts in thousands, except per share data										As restated
										see Note 1
Assets
Cash and cash equivalents			$42,173				$22,265				$43,711
Restricted cash			3,746				0				0
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				0
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
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
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				0
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
Other commitments and contingencies (Notes 13 & 19)
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

See accompanying Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Earnings

		Three Months Ended								Six Months Ended
		June 30								June 30
Unaudited		2010				2009				2010				2009
Amounts and shares in thousands, except per share data
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				0				40,000				0
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	)			2,895				144				1,820
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 (Note 2)			(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%

See accompanying Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Cash Flows

		Six Months Ended
		June 30
Unaudited		2010				2009
Amounts in thousands
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
Payment for businesses acquired, net of acquired cash			0				(36,980	)
Increase in restricted cash			(3,746	)			0
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			0				397,660
Debt issuance costs			0				(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

See accompanying Notes to Condensed Consolidated Financial Statements

Notes to Condensed Consolidated Financial Statements

Note 1   Basis of Presentation

Our accompanying unaudited condensed consolidated financial statements were prepared in compliance with the instructions to Form 10-Q and Article 10 of Regulation S-X 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 our management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. Operating results for the three and six month periods ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ended December 31, 2010. For further information, refer to the consolidated financial statements and footnotes included in our most recent Annual Report on Form 10-K.

We disaggregated our asphalt mix and concrete operating segments for reporting purposes as of January 1, 2010 (see Note 17).

Due to the 2005 sale of our Chemicals business as presented in Note 2, the operating results of the Chemicals business are presented as discontinued operations in the accompanying Condensed Consolidated Statements of Earnings.

Restricted Cash — We identified a portion of the proceeds from the disposition of three aggregates facilities during the first quarter of 2010 (see Note 14) for potential use in IRS Section 1031 like-kind exchange transactions. This cash is restricted from withdrawal or usage as of June 30, 2010. The restriction expires in the third quarter of 2010.

Correction of Prior Period Financial Statements — During the third quarter of 2009, we completed a comprehensive analysis of our deferred income tax balances and concluded that our deferred income tax liabilities were overstated. The errors arose during the fourth quarter of 2008 and during periods prior to January 1, 2006, and were not material to previously issued financial statements. However, correcting the errors in 2009 would have materially impacted that year’s deferred tax provision. As a result, we restated all affected prior period financial statements in our Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009.

A summary of the effects of the correction of the errors on our Condensed Consolidated Balance Sheet as of June 30, 2009 is presented in the table below (in thousands of dollars):

		June 30, 2009
		As								As
		Reported				Corrections				Restated
Goodwill			$3,091,524				$2,455				$3,093,979
Total assets			$8,847,872				$2,455				$8,850,327
Deferred income taxes			$957,248				($28,561	)			$928,687
Total liabilities			$4,844,653				($28,561	)			$4,816,092
Retained earnings			$1,743,097				$31,016				$1,774,113
Shareholders’ equity			$4,003,219				$31,016				$4,034,235
Total liabilities and shareholders’ equity			$8,847,872				$2,455				$8,850,327

Note 2    Discontinued Operations

In June 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation. In addition to the initial cash proceeds, Basic Chemicals was required to make payments under two earn-out agreements subject to certain conditions. During 2007, we received the final payment under the ECU (electrochemical unit) earn-out, bringing cumulative cash receipts to its $150,000,000 cap.

Proceeds under the second earn-out agreement are determined based on the performance of the hydrochlorocarbon product HCC-240fa (commonly referred to as 5CP) from the closing of the transaction through December 31, 2012 (5CP earn-out). Under this earn-out agreement, cash plant margin for 5CP, as defined in the Asset Purchase Agreement, in excess of an annual threshold amount is shared equally between Vulcan and Basic Chemicals. The primary determinant of the value for this earn-out is the level of growth in 5CP sales volume. At the June 7, 2005 closing date, the value assigned to the 5CP earn-out was limited to an amount that resulted in no gain on the sale of the business, as the gain was contingent in nature. A gain on disposal of the Chemicals business is recognized to the extent cumulative cash receipts under the 5CP earn-out exceed the initial value recorded.

In March 2010, we received a payment of $8,794,000 (recorded as gain on disposal of discontinued operations) under the 5CP earn-out related to performance during the year ended December 31, 2009. Any future payments received pursuant to the 5CP earn-out will be recorded as additional gain on disposal of discontinued operations. During 2009, we received $11,625,000 under the 5CP earn-out related to the year ended December 31, 2008. These 2009 receipts resulted in a gain on disposal of discontinued operations of $812,000 for 2009. Through June 30, 2010, we have received a total of $42,707,000 under the 5CP earn-out, a total of $9,606,000 in excess of the receivable recorded on the date of disposition.

We are liable for a cash transaction bonus payable to certain former key Chemicals employees. This transaction bonus is payable if cash receipts realized from the two earn-out agreements described above exceed an established minimum threshold. The bonus is payable annually based on the prior year’s results. We expect the 2010 payout will be approximately $882,000 and have accrued this amount as of June 30, 2010. In comparison, we had accrued approximately $728,000 as of June 30, 2009.

There were no net sales or revenues from discontinued operations during the six month periods ended June 30, 2010 or 2009. Results from discontinued operations are as follows (in thousands of dollars):

		Three Months Ended								Six Months Ended
		June 30								June 30
		2010				2009				2010				2009
Discontinued operations
Earnings (loss) from results			($1,821	)			$11,121				($860	)			$9,721
Gain on disposal, net of transaction bonus			(2	)			(28	)			7,912				495
Income tax (provision) benefit			346				(4,442	)			(2,802	)			(4,091	)
Earnings (loss) on discontinued operations, net of tax			($1,477	)			$6,651				$4,250				$6,125

The 2010 pretax losses from results of discontinued operations of ($1,821,000) for the second quarter and ($860,000) for the six months ended June 30, 2010 are due primarily to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. The pretax earnings from results of discontinued operations in 2009 of $11,121,000 for the second quarter and $9,721,000 for the six months ended June 30, 2009 relate primarily to a settlement during the second quarter with one of our insurers in the Modesto case (lawsuit settled in October 2007 involving the perchloroethylene product) resulting in a $12,238,000 pretax gain, after deducting legal fees and other expenses. The insurance proceeds and associated gain represent a partial recovery of legal and settlement costs recognized in prior periods.

Note 3    Earnings Per Share (EPS)

We report two earnings per share numbers: basic and diluted. These are computed by dividing net earnings (loss) by the weighted-average common shares outstanding (basic EPS) or weighted-average common shares outstanding assuming dilution (diluted EPS) as set forth below (in thousands of shares):

		Three Months Ended								Six Months Ended
		June 30								June 30
		2010				2009				2010				2009
Weighted-average common shares outstanding			128,168				113,477				127,452				112,045
Dilutive effect of
Stock options/SOSARs			0				144				0				0
Other stock compensation plans			0				208				0				0
Weighted-average common shares outstanding, assuming dilution			128,168				113,829				127,452				112,045

All dilutive common stock equivalents are reflected in our earnings per share calculations. Antidilutive common stock equivalents are not included in our earnings per share calculations. Because we operated at a loss for the three and six month periods ended June 30, 2010 and the six month period ended June 30, 2009, 513,000 shares, 533,000 shares and 464,000 shares, respectively, that otherwise would have been included in our diluted weighted-average common shares outstanding computation, were excluded.

The number of antidilutive common stock equivalents for which the exercise price exceeds the weighted-average market price, are as follows (in thousands of shares):

		Three Months Ended								Six Months Ended
		June 30								June 30
		2010				2009				2010				2009
Antidilutive common stock equivalents			4,067				5,104				4,254				3,823

Note 4    Income Taxes

Our effective tax rate is based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. For interim financial reporting, except in circumstances as described in the following paragraph, we estimate the annual tax rate based on projected taxable income for the full year and record a quarterly tax provision in accordance with the anticipated annual rate. As the year progresses, we refine the estimates of the year’s taxable income as new information becomes available, including year-to-date financial results. This continual estimation process often results in a change to our expected effective tax rate for the year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual tax rate. Significant judgment is required in determining our effective tax rate and in evaluating our tax positions.

When application of the estimated annual effective tax rate distorts the financial results of an interim period, we calculate the income tax provision or benefit using an alternative methodology as prescribed by accounting standards. This alternative methodology results in an income tax provision or benefit based solely on the year-to-date pretax loss as adjusted for permanent differences on a pro rata basis.

We recognize a tax benefit associated with an uncertain tax position when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we initially and subsequently measure the tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. Our liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case

law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. Our effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as we consider appropriate.

We applied the alternative methodology discussed above in the determination of the income tax benefit from continuing operations for the three and six month periods ending June 30, 2010. We recognized a tax benefit from continuing operations of $21,231,000 for the second quarter and $55,444,000 for the six months ended June 30, 2010. In 2009, we recognized tax expense from continuing operations of $9,632,000 for the second quarter and a tax benefit from continuing operations of $3,638,000 for the six months ended June 30, 2009. The increase in our income tax benefit, after recording the effect of the pretax loss at the statutory rate, resulted largely from applying the alternative methodology in 2010.

Note 5    Medium-term Investments

We held investments in money market and other money funds at The Reserve, an investment management company specializing in such funds, as follows: June 30, 2010 — $5,532,000, December 31, 2009 — $5,554,000 and June 30, 2009 — $8,247,000. The substantial majority of our investment was held in the Reserve International Liquidity Fund, Ltd. On September 15, 2008, Lehman Brothers Holdings Inc. filed for bankruptcy protection. In the following days, The Reserve announced that it was closing all of its money funds, some of which owned Lehman Brothers securities, and was suspending redemptions from and purchases of its funds, including the Reserve International Liquidity Fund. As a result of the temporary suspension of redemptions and the uncertainty as to the timing of such redemptions, we changed the classification of our investments in The Reserve funds from cash and cash equivalents to medium-term investments and reduced the carrying value of our investment to its estimated fair value, as follows: June 30, 2010 — $3,910,000, December 31, 2009 — $4,111,000 and June 30, 2009 — $6,755,000. See Note 7 for further discussion of the fair value determination.

The Reserve redeemed $22,000 of our investment during the six months ended June 30, 2010 and $30,590,000 during the six months ended June 30, 2009. Based on public statements issued by The Reserve and the maturity dates of the underlying investments, we believe that proceeds from the liquidation of the money funds in which we have investments will be received within twelve months of June 30, 2010, and therefore, such investments are classified as current.

Note 6    Derivative Instruments

During the normal course of operations, we are exposed to market risks including fluctuations in interest rates, fluctuations in foreign currency exchange rates and changes in commodity pricing. From time to time, and consistent with our risk management policies, we use derivative instruments to hedge against these market risks. We do not utilize derivative instruments for trading or other speculative purposes. The interest rate swap agreements described below were designated as cash flow hedges of future interest payments.

In December 2007, we issued $325,000,000 of 3-year floating (variable) rate notes that bear interest at 3-month London Interbank Offered Rate (LIBOR) plus 1.25% per annum. Concurrently, we entered into a 3-year interest rate swap agreement in the stated (notional) amount of $325,000,000. Under this agreement, we pay a fixed interest rate of 5.25% and receive 3-month LIBOR plus 1.25% per annum. Concurrent with each quarterly interest payment, the portion of this swap related to that interest payment is settled and the associated realized gain or loss is recognized. The pretax loss of $5,614,000 accumulated in Other Comprehensive Income (OCI) related to this interest rate swap will be reclassified to earnings by the end of the current year in conjunction with the retirement of the related debt.

Additionally, during 2007, we entered into fifteen forward starting interest rate swap agreements for a total notional amount of $1,500,000,000. On December 11, 2007, upon the issuance of the related fixed-rate debt, we terminated and settled for a cash payment of $57,303,000 a portion of these forward starting swaps with an aggregate notional amount of $900,000,000 ($300,000,000 5-year, $350,000,000

10-year and $250,000,000 30-year). In December 2007, the remaining forward starting swaps on an aggregate notional amount of $600,000,000 were extended to August 29, 2008. On June 20, 2008, upon the issuance of $650,000,000 of related fixed-rate debt, we terminated and settled for a cash payment of $32,474,000 the remaining forward starting swaps. Amounts accumulated in other comprehensive loss are being amortized to interest expense over the term of the related debt. For the 12-month period ending June 30, 2011, we estimate that $7,908,000 of the pretax loss accumulated in OCI will be reclassified to earnings.

Derivative instruments are recognized at fair value in the accompanying Condensed Consolidated Balance Sheets. Fair values of derivative instruments designated as hedging instruments are as follows (in thousands of dollars):

						Fair Value1
						June 30				December 31				June 30
		Balance Sheet Location				2010				2009				2009
Liability derivatives
Interest rate derivatives		Other current liabilities					$5,614				$11,193				$0
Interest rate derivatives		Other noncurrent liabilities					0				0				14,069
Total derivatives liability							$5,614				$11,193				$14,069

The effects of the cash flow hedge derivative instruments on the accompanying Condensed Consolidated Statements of Earnings for the three and six months ended June 30 are as follows (in thousands of dollars):

						Three Months Ended								Six Months Ended
		Location on				June 30								June 30
		Statement				2010				2009				2010				2009
Interest rate derivatives
Gain (loss) recognized in OCI (effective portion)		Note 8					$234				($871	)			($574	)			($1,670	)
Loss reclassified from Accumulated OCI (effective portion)		Interest expense					(4,997	)			(3,957	)			(9,895	)			(7,327	)

Note 7    Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as described below:

Level 1:		Quoted prices in active markets for identical assets or liabilities;
Level 2:		Inputs that are derived principally from or corroborated by observable market data;
Level 3:		Inputs that are unobservable and significant to the overall fair value measurement.

Our assets and liabilities that are subject to fair value measurements on a recurring basis are summarized below (in thousands of dollars):

		Level 1
		June 30				December 31				June 30
		2010				2009				2009
Fair value recurring
Rabbi Trust
Mutual funds			$10,787				$10,490				$9,245
Equities			7,236				8,472				6,562
Net asset			$18,023				$18,962				$15,807

		Level 2
		June 30				December 31				June 30
		2010				2009				2009
Fair value recurring
Medium-term investments			$3,910				$4,111				$6,755
Interest rate derivative			(5,614	)			(11,193	)			(14,069	)
Rabbi Trust
Common/collective trust funds			3,185				4,084				3,816
Net asset (liability)			$1,481				($2,998	)			($3,498	)

The fair values of the Rabbi Trust investments are estimated using a market approach. The Level 1 investments include mutual funds and equity securities for which quoted prices in active markets are available. Investments in common/collective trust funds are stated at estimated fair value based on the underlying investments in those funds. The underlying investments are comprised of short-term, highly liquid assets in commercial paper, short-term bonds and treasury bills.

The medium-term investments are comprised of money market and other money funds, as more fully described in Note 5. Using a market approach, we estimated the fair value of these funds by applying our historical distribution ratio to the liquidated value of investments in The Reserve funds. Additionally, we estimated a discount against our investment balances to allow for the risk that legal and accounting costs and pending or threatened claims and litigation against The Reserve and its management may reduce the principal available for distribution.

The interest rate derivative consists of an interest rate swap agreement applied to our $325,000,000 3-year notes issued December 2007 and is more fully described in Note 6. This interest rate swap is measured at fair value using a market approach based on the prevailing market interest rate as of the measurement date.

The carrying values of our cash equivalents, restricted cash, accounts and notes receivable, current maturities of long-term debt, trade payables, accrued expenses and short-term borrowings approximate their fair values because of the short-term nature of these instruments. Additional disclosures for derivative instruments and interest-bearing debt are presented in Notes 6 and 11, respectively.

Note 8   Comprehensive Income

Comprehensive income (loss) includes charges and credits to equity from nonowner sources and comprises two subsets: net earnings (loss) and other comprehensive income (loss). Total comprehensive income (loss) comprises the following (in thousands of dollars):

		Three Months Ended								Six Months Ended
		June 30								June 30
		2010				2009				2010				2009
Net earnings (loss)			($23,992	)			$22,212				($62,739	)			($10,569	)
Other comprehensive income (loss)
Fair value adjustments to cash flow hedges, net of tax			124				(519	)			(320	)			(995	)
Reclassification adjustment for cash flow hedges included in net income (loss), net of tax			2,645				2,352				5,498				4,334
Amortization of pension and postretirement plan actuarial loss and prior service cost, net of tax			823				294				1,722				569
Total comprehensive income (loss)			($20,400	)			$24,339				($55,839	)			($6,661	)

Amounts accumulated in other comprehensive loss, net of tax, are as follows (in thousands of dollars):

		June 30				December 31				June 30
		2010				2009				2009
Cash flow hedges			($44,187	)			($49,365	)			($53,180	)
Pension and postretirement plans			(143,271	)			(144,993	)			(128,194	)
Accumulated other comprehensive loss			($187,458	)			($194,358	)			($181,374	)

Note 9   Shareholders’ Equity

In March 2010, we issued 1,190,000 shares of common stock to our qualified pension plan (par value of $1 per share) as described in Note 10. The transaction increased shareholders’ equity by $53,864,000 (common stock $1,190,000 and capital in excess of par $52,674,000).

In June 2009, we completed a public offering of common stock (par value of $1 per share) resulting in the issuance of 13,225,000 common shares at a price of $41.00 per share. The total number of shares issued through the offering included 1,725,000 shares issued upon full exercise of the underwriters’ option to purchase additional shares. We received net proceeds of $519,993,000 (net of commissions and transaction costs of $22,232,000) from the sale of the shares. The net proceeds from the offering were used for debt reduction and general corporate purposes. The transaction increased shareholders’ equity by $519,993,000 (common stock $13,225,000 and capital in excess of par $506,768,000).

We periodically issue shares of common stock to the trustee of our 401(k) savings and retirement plan to satisfy the plan participants’ elections to invest in our common stock. The resulting cash proceeds provide a means of improving cash flow, increasing shareholders’ equity and reducing leverage. Under this arrangement, the stock issuances and resulting cash proceeds were as follows: six months ended June 30, 2010 — issued 768,735 shares for cash proceeds of $35,314,000 and a receivable of $1,453,000; six months ended June 30, 2009 — issued 561,529 shares for cash proceeds of $24,295,000.

On November 16, 2007, pursuant to the terms of the agreement to acquire Florida Rock, all treasury stock held immediately prior to the close of the transaction was canceled. Our Board of Directors resolved to carry forward the existing authorization to purchase common stock. As of June 30, 2010, 3,411,416 shares remained under the current authorization.

There were no shares purchased during the six month periods ended June 30, 2010 and 2009, and there were no shares held in treasury as of June 30, 2010, December 31, 2009 and June 30, 2009.

Note 10   Benefit Plans

The following tables set forth the components of net periodic benefit cost (in thousands of dollars):

		Three Months Ended								Six Months Ended
PENSION BENEFITS		June 30								June 30
		2010				2009				2010				2009
Components of net periodic benefit cost
Service cost			$4,800				$4,658				$9,608				$9,319
Interest cost			10,406				10,485				20,811				20,970
Expected return on plan assets			(12,526	)			(11,582	)			(25,061	)			(23,252	)
Amortization of prior service cost			115				115				230				230
Amortization of actuarial loss			1,540				426				2,876				826
Net periodic pension benefit cost			$4,335				$4,102				$8,464				$8,093
Pretax reclassification from OCI included in net periodic pension benefit cost			$1,655				$541				$3,106				$1,056

		Three Months Ended								Six Months Ended
OTHER POSTRETIREMENT BENEFITS		June 30								June 30
		2010				2009				2010				2009
Components of net periodic benefit cost
Service cost			$1,067				$978				$2,133				$1,956
Interest cost			1,662				1,761				3,325				3,522
Amortization of prior service credit			(182	)			(206	)			(364	)			(412	)
Amortization of actuarial loss			222				150				444				299
Net periodic postretirement benefit cost			$2,769				$2,683				$5,538				$5,365
Pretax reclassification from OCI included in net periodic postretirement benefit cost			$40				($56	)			$80				($113	)

The reclassifications from other comprehensive income (OCI) noted in the tables above are related to amortization of prior service costs or credits and actuarial losses.

In March 2010, we contributed $72,500,000 ($18,636,000 in cash and $53,864,000 in stock — 1,190,000 shares valued at $45.26 per share) to our qualified pension plans for the 2009 plan year. This contribution, along with the existing funding credits, should be sufficient to cover expected required contributions to the qualified plans through 2012.

During the six months ended June 30, 2010 and 2009, contributions of $74,938,000 and $2,242,000, respectively, were made to our pension plans (qualified and nonqualified).

Note 11   Credit Facilities, Short-term Borrowings and Long-term Debt

Short-term borrowings are summarized as follows (in thousands of dollars):

		June 30				December 31				June 30
		2010				2009				2009
Short-term borrowings
Bank borrowings			$0				$0				$46,000
Commercial paper			320,000				236,512				366,300
Total short-term borrowings			$320,000				$236,512				$412,300
Bank borrowings
Maturity			n/a				n/a			1 day
Weighted-average interest rate			n/a				n/a				0.62%
Commercial paper
Maturity		1 to 2 days				42 days					1 to 43 days
Weighted-average interest rate			0.70%				0.39%				0.72%

We utilize our bank lines of credit as liquidity back-up for outstanding commercial paper or draw on the bank lines to access LIBOR-based short-term loans to fund our borrowing requirements. Periodically, we issue commercial paper for general corporate purposes, including working capital requirements.

Our policy is to maintain committed credit facilities at least equal to our outstanding commercial paper. Unsecured bank lines of credit totaling $1,500,000,000 were maintained at June 30, 2010, all of which expire November 16, 2012. As of June 30, 2010, there were no borrowings under the lines of credit. Interest rates referable to borrowings under these lines of credit are determined at the time of borrowing based on current market conditions. Pricing of bank loans, if any lines were drawn, would be 30 basis points (0.3%) over LIBOR based on our long-term debt ratings at June 30, 2010.

All lines of credit extended to us in 2010 and 2009 were based solely on a commitment fee; no compensating balances were required. In the normal course of business, we maintain balances for which

we are credited with earnings allowances. To the extent the earnings allowances are not sufficient to fully compensate banks for the services they provide, we pay the fee equivalent for the differences.

As of June 30, 2010, $3,636,000 of our long-term debt, including current maturities, was secured. This secured debt was assumed with the November 2007 acquisition of Florida Rock. All other debt obligations, both short-term borrowings and long-term debt, are unsecured.

In February 2009, we issued $400,000,000 of long-term notes in two related series (tranches), as follows: $150,000,000 of 10.125% coupon notes due December 2015 and $250,000,000 of 10.375% coupon notes due December 2018. The proceeds were used primarily to repay outstanding borrowings. The notes are presented in the table below net of unamortized discounts from par. Discounts and debt issuance costs are being amortized using the effective interest method over the respective lives of the notes.

Long-term debt is summarized as follows (in thousands of dollars):

		June 30				December 31				June 30
		2010				2009				2009
Long-term debt
10.125% 2015 notes issued 20091			$149,567				$149,538				$149,511
10.375% 2018 notes issued 20092			248,329				248,270				248,213
3-year floating loan issued 2008			100,000				175,000				255,000
6.30% 5-year notes issued 20083			249,680				249,632				249,587
7.00% 10-year notes issued 20084			399,641				399,625				399,610
3-year floating notes issued 2007			325,000				325,000				325,000
5.60% 5-year notes issued 20075			299,719				299,666				299,615
6.40% 10-year notes issued 20076			349,844				349,837				349,829
7.15% 30-year notes issued 20077			249,321				249,317				249,314
Private placement notes			15,181				15,243				15,309
Medium-term notes			21,000				21,000				21,000
Industrial revenue bonds			17,550				17,550				17,550
Other notes			1,648				1,823				2,069
Total debt excluding short-term borrowings			$2,426,480				$2,501,501				$2,581,607
Less current maturities of long-term debt			425,300				385,381				60,417
Total long-term debt			$2,001,180				$2,116,120				$2,521,190
Estimated fair value of total long-term debt			$2,240,447				$2,300,522				$2,499,454

	1	Includes decreases for unamortized discounts, as follows: June 30, 2010 - $433 thousand, December 31, 2009 - $462 thousand and June 30, 2009 - $489 thousand. The effective interest rate for these 2015 notes is 10.305%.
	2	Includes decreases for unamortized discounts, as follows: June 30, 2010 - $1,671 thousand, December 31, 2009 - $1,730 thousand and June 30, 2009 - $1,787 thousand. The effective interest rate for these 2018 notes is 10.584%.
	3	Includes decreases for unamortized discounts, as follows: June 30, 2010 - $320 thousand, December 31, 2009 - $368 thousand and June 30, 2009 - $413 thousand. The effective interest rate for these 5-year notes is 7.47%.
	4	Includes decreases for unamortized discounts, as follows: June 30, 2010 - $359 thousand, December 31, 2009 - $375 thousand and June 30, 2009 - $390 thousand. The effective interest rate for these 10-year notes is 7.86%.
	5	Includes decreases for unamortized discounts, as follows: June 30, 2010 - $281 thousand, December 31, 2009 - $334 thousand and June 30, 2009 - $385 thousand. The effective interest rate for these 5-year notes is 6.58%.
	6	Includes decreases for unamortized discounts, as follows: June 30, 2010 - $156 thousand, December 31, 2009 - $163 thousand and June 30, 2009 - $171 thousand. The effective interest rate for these 10-year notes is 7.39%.
	7	Includes decreases for unamortized discounts, as follows: June 30, 2010 - $679 thousand, December 31, 2009 - $683 thousand and June 30, 2009 - $686 thousand. The effective interest rate for these 30-year notes is 8.04%.

The estimated fair values of long-term debt presented in the table above were determined by discounting expected future cash flows based on credit-adjusted interest rates on U.S. Treasury bills, notes or bonds, as appropriate. The fair value estimates were based on information available to us as of the respective balance sheet dates. Although we are not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since those dates.

Our debt agreements do not subject us to contractual restrictions with regard to working capital or the amount we may expend for cash dividends and purchases of our stock. The percentage of consolidated debt to total capitalization (total debt as a percentage of total capital), as defined in our bank credit facility agreements, must be less than 65%. Our total debt as a percentage of total capital was 40.4% as of June 30, 2010; 40.3% as of December 31, 2009; and 42.6% as of June 30, 2009.

Note 12   Asset Retirement Obligations

Asset retirement obligations are legal obligations associated with the retirement of long-lived assets resulting from the acquisition, construction, development and/or normal use of the underlying assets.

Recognition of a liability for an asset retirement obligation is required in the period in which it is incurred at its estimated fair value. The associated asset retirement costs are capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset. The liability is accreted through charges to operating expenses. If the asset retirement obligation is settled for other than the carrying amount of the liability, we recognize a gain or loss on settlement.

We record all asset retirement obligations for which we have legal obligations for land reclamation at estimated fair value. Essentially all these asset retirement obligations relate to our underlying land parcels, including both owned properties and mineral leases. For the three and six month periods ended June 30, we recognized asset retirement obligation (ARO) operating costs related to accretion of the liabilities and depreciation of the assets as follows (in thousands of dollars):

		Three Months Ended								Six Months Ended
		June 30								June 30
		2010				2009				2010				2009
ARO operating costs
Accretion			$2,255				$2,333				$4,444				$4,605
Depreciation			3,157				3,288				6,340				6,891
Total			$5,412				$5,621				$10,784				$11,496

ARO operating costs for our continuing operations are reported in cost of goods sold. Asset retirement obligations are reported within other noncurrent liabilities in our accompanying Condensed Consolidated Balance Sheets.

Reconciliations of the carrying amounts of our asset retirement obligations are as follows (in thousands of dollars):

		Three Months Ended								Six Months Ended
		June 30								June 30
		2010				2009				2010				2009
Asset retirement obligations
Balance at beginning of period			$163,931				$173,774				$167,757				$173,435
Liabilities incurred			1,441				0				1,441				334
Liabilities settled			(1,740	)			(3,326	)			(4,117	)			(5,925	)
Accretion expense			2,255				2,333				4,444				4,605
Revisions down			(3,719	)			(4,306	)			(7,357	)			(3,974	)
Balance at end of period			$162,168				$168,475				$162,168				$168,475

Downward revisions to our asset retirement obligations during 2010 relate primarily to changes in the estimated settlement dates at select sites.

Note 13   Standby Letters of Credit

We provide certain third parties with irrevocable standby letters of credit in the normal course of business. We use commercial banks to issue standby letters of credit to back our obligations to pay or perform when required to do so pursuant to the requirements of an underlying agreement. The standby letters of credit listed below are cancelable only at the option of the beneficiaries who are authorized to draw drafts on the issuing bank up to the face amount of the standby letter of credit in accordance with its terms. Since banks consider letters of credit as contingent extensions of credit, we are required to pay a fee until they expire or are canceled. Substantially all of our standby letters of credit have a one-year term and are renewable annually at the option of the beneficiary.

Our standby letters of credit as of June 30, 2010 are summarized in the table below (in thousands of dollars):

		June 30
		2010
Standby letters of credit
Risk management requirement for insurance claims			$40,411
Payment surety required by utilities			133
Contractual reclamation/restoration requirements			11,803
Financial requirement for industrial revenue bond			14,230
Total			$66,577

Of the total $66,577,000 outstanding letters of credit, $63,386,000 is backed by our $1,500,000,000 bank credit facility which expires November 16, 2012.

Note 14   Acquisitions and Divestitures

During the first quarter of 2010, we sold three aggregates facilities located in rural Virginia for cash proceeds of approximately $42,750,000.

Assets held for sale and liabilities of assets held for sale as presented in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009, relate to an aggregates production facility and ready-mixed concrete operation located outside the United States. We expect the transaction to close within the 12-month period ending June 30, 2011. There were no pending divestitures as of June 30, 2009. The major classes of assets and liabilities of assets classified as held for sale are as follows (in thousands of dollars):

		June 30				December 31
		2010				2009
Current assets			$3,695				$3,799
Property, plant & equipment, net			11,016				11,117
Intangible assets			93				96
Other assets			60				60
Total assets held for sale			$14,864				$15,072
Current liabilities			$409				$369
Total liabilities of assets held for sale			$409				$369

During the six months ended June 30, 2009, we acquired the following assets for approximately $38,955,000 (total note and cash consideration), net of acquired cash:

•

leasehold interest in a rail yard

•

two aggregates production facilities

Note 15   Goodwill

Changes in the carrying amount of goodwill by reportable segment from December 31, 2009 to June 30, 2010 are summarized below (in thousands of dollars):

Goodwill
		Aggregates				Concrete				Asphalt mix				Cement				Total
Gross carrying amount
Total as of December 31, 2009			$3,002,346				$0				$91,633				$252,664				$3,346,643
Purchase price allocation adjustment			0				0				0				0				0
Total as of June 30, 2010			$3,002,346				$0				$91,633				$252,664				$3,346,643
Accumulated impairment losses
Total as of December 31, 2009			$0				$0				$0				($252,664	)			($252,664	)
Goodwill impairment loss			0				0				0				0				0
Total as of June 30, 2010			$0				$0				$0				($252,664	)			($252,664	)
Goodwill, net of accumulated impairment losses
Total as of December 31, 2009			$3,002,346				$0				$91,633				$0				$3,093,979
Total as of June 30, 2010			$3,002,346				$0				$91,633				$0				$3,093,979

Note 16   New Accounting Standards

Recently Adopted

Enhanced disclosures for fair value measurements — As of and for the interim period ended March 31, 2010, we adopted Accounting Standards Update (ASU) No. 2010-6, “Improving Disclosures about Fair Value Measurements” (ASU 2010-6) as it relates to disclosures about transfers into and out of Level 1 and 2. Our adoption of this standard had no impact on our financial position, results of operations or liquidity. We will adopt ASU 2010-6 as it relates to separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements as of and for the interim period ended March 31, 2011.

Note 17   Segment Reporting - Continuing Operations

We have four operating segments organized around our principal product lines: aggregates, asphalt mix, concrete and cement. For reporting purposes, we historically combined our Asphalt mix and Concrete operating segments into one reporting segment as the products are similar in nature and the businesses exhibited similar economic characteristics, production processes, types and classes of customer, methods of distribution and regulatory environments. We routinely received inquiries from our investors specific to these individual operating segments. In an effort to provide more meaningful information to the public, these two segments are now reported separately. We have recast our 2009 data to reflect this change in reportable segments to conform to the current period’s presentation.

The majority of our activities are domestic. We sell a relatively small amount of aggregates outside the United States. Transactions between our reportable segments are recorded at prices approximating market levels. Management reviews earnings from the product line reporting units principally at the gross profit level.

Segment Financial Disclosure		Three Months Ended								Six Months Ended
		June 30								June 30
		2010				2009				2010				2009
Amounts in millions
TOTAL REVENUES
Aggregates
Segment revenues			$513.9				$497.6				$855.2				$899.4
Intersegment sales			(42.4	)			(42.9	)			(74.5	)			(80.0	)
Net sales			471.5				454.7				780.7				819.4
Concrete
Segment revenues			105.0				114.6				188.0				229.4
Intersegment sales			0.0				0.0				0.0				(0.1	)
Net sales			105.0				114.6				188.0				229.3
Asphalt mix
Segment revenues			103.5				103.7				166.5				182.1
Intersegment sales			0.0				0.0				0.0				0.0
Net sales			103.5				103.7				166.5				182.1
Cement
Segment revenues			22.9				16.9				40.8				36.6
Intersegment sales			(10.1	)			(8.5	)			(18.7	)			(18.1	)
Net sales			12.8				8.4				22.1				18.5
Total
Net sales			692.8				681.4				1,157.3				1,249.3
Delivery revenues			43.4				40.5				72.1				72.9
Total revenues			$736.2				$721.9				$1,229.4				$1,322.2
GROSS PROFIT
Aggregates			$122.0				$126.8				$137.4				$190.4
Concrete			(5.6	)			(2.2	)			(21.7	)			(3.1	)
Asphalt mix			7.3				21.7				8.3				37.9
Cement			(1.4	)			(0.5	)			(0.8	)			(1.8	)
Total gross profit			$122.3				$145.8				$123.2				$223.4
Depreciation, Depletion, Accretion and Amortization
Aggregates			$74.9				$78.3				$148.1				$157.1
Concrete			13.4				13.3				26.4				26.2
Asphalt mix			2.3				2.2				4.5				4.2
Cement			5.2				4.8				9.6				9.4
Corporate and other unallocated			1.5				1.0				2.9				2.0
Total depreciation, depletion, accretion and amortization			$97.3				$99.6				$191.5				$198.9

Note 18   Supplemental Cash Flow Information

Supplemental information referable to our Condensed Consolidated Statements of Cash Flows is summarized below (in thousands of dollars):

		Six Months Ended
		June 30
		2010				2009
Cash payments (refunds)
Interest (exclusive of amount capitalized)			$90,942				$98,871
Income taxes			1,130				(9,468	)
Noncash investing and financing activities
Accrued liabilities for purchases of property, plant & equipment			5,165				14,684
Debt issued for purchases of property, plant & equipment			0				1,982
Stock issued for pension contribution (Note 9)			53,864				0
Proceeds receivable from issuance of common stock			1,453				0

Note 19   Other Commitments and Contingencies

We are a defendant in various lawsuits in the ordinary course of business. It is not possible to determine with precision the outcome, or the amount of liability, if any, under these lawsuits, especially where the cases involve possible jury trials with as yet undetermined jury panels.

In addition to these lawsuits in which we are involved in the ordinary course of business, certain other legal proceedings are more specifically described below.

Florida Antitrust Litigation — Our subsidiary, Florida Rock Industries, Inc., has been named as a defendant in a number of class action lawsuits filed in the United States District Court for the Southern District of Florida. The lawsuits were filed by several ready-mixed concrete producers and construction companies against a number of concrete and cement producers and importers in Florida. There are now two consolidated amended complaints: (1) on behalf of direct independent ready-mixed concrete producers, and (2) on behalf of indirect users of ready-mixed concrete. The other defendants include Cemex Corp., Lehigh Cement Company, Oldcastle Materials, Suwannee American Cement LLC, Titan America LLC, and Votorantim Cimentos North America, Inc. The complaints allege various violations under the federal antitrust laws, including price fixing and market allocations. We have no reason to believe that Florida Rock is liable for any of the matters alleged in the complaint, and we intend to defend the case vigorously.

IDOT/Joliet Road — In September 2001, we were named a defendant in a suit brought by the Illinois Department of Transportation (IDOT), in the Circuit Court of Cook County, Chancery Division, Illinois, alleging damage to a 0.9-mile section of Joliet Road that bisects our McCook quarry in McCook, Illinois, a Chicago suburb. On May 18, 2010, we settled this lawsuit for $40 million and recognized the full settlement as a charge to operations in the second quarter of 2010. Under the terms of the settlement we paid IDOT $20 million in May 2010 and will pay the final $20 million no later than 9 months from the date of settlement. During that time we will take appropriate actions, including one or more arbitrations, to recover the settlement amount, in excess of the self-insured retention of $2 million, as well as a portion of our defense costs from our insurers. While we believe this settlement is covered by insurance policies, the ultimate amount and timing of such recoveries, which will be recorded as income when realized, cannot be predicted with certainty.

Lower Passaic River Clean-Up — We have been sued as a third-party defendant in New Jersey Department of Environmental Protection, et al. v. Occidental Chemical Corporation, et al., a case brought by the New Jersey Department of Environmental Protection in the New Jersey Superior Court. The third-party complaint was filed on February 4, 2009. This suit by the New Jersey Department of Environmental Protection seeks recovery of past and future clean-up costs as well as unspecified economic damages,

punitive damages, penalties and a variety of other forms of relief arising from alleged discharges into the Passaic River of dioxin and other unspecified hazardous substances. Our former Chemicals Division operated a plant adjacent to the Passaic River and has been sued as a third-party defendant, along with approximately 300 other parties. Additionally, Vulcan and approximately 70 other companies are parties to a May 2007 Administrative Order of Consent with the U.S. Environmental Protection Agency to perform a Remedial Investigation/Feasibility Study of the contamination in the lower 17 miles of the Passaic River. This study is ongoing. At this time, we cannot determine the likelihood or reasonably estimate a range of loss pertaining to this matter.

Perchloroethylene cases

We are a defendant in several cases involving perchloroethylene (perc), which was a product manufactured by our former Chemicals business. Perc is a cleaning solvent used in dry cleaning and other industrial applications. These cases involve various allegations of groundwater contamination, or exposure to perc allegedly resulting in personal injury. Vulcan is vigorously defending all of these cases. At this time, we cannot determine the likelihood or reasonably estimate a range of loss pertaining to any of these matters, which are listed below:

•

California Water Service Company — On June 6, 2008, we were served in an action styled California Water Service Company v. Dow, et al, now pending in the San Mateo County Superior Court, California. According to the complaint, California Water Service Company “owns and/or operates public drinking water systems, and supplies drinking water to hundreds of thousands of residents and businesses throughout California.” The complaint alleges that water systems in a number of communities have been contaminated with perc. The plaintiff is seeking compensatory damages and punitive damages. Discovery is ongoing.

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City of Sunnyvale California — On January 6, 2009, we were served in an action styled City of Sunnyvale v. Legacy Vulcan Corporation, f/k/a Vulcan Materials Company, filed in the San Mateo County Superior Court, California. The plaintiffs are seeking cost recovery and other damages for alleged environmental contamination from perc and its breakdown products at the Sunnyvale Town Center Redevelopment Project. Discovery is ongoing.

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Suffolk County Water Authority — On May 4, 2010, we were served in an action styled Suffolk County Water Authority v. The Dow Chemical Company, et al., in the United States District Court for the Eastern District of New York. The complaint alleges that the plaintiff “owns and/or operates drinking water systems and supplies drinking water to thousands of residents and businesses, in Suffolk County, New York.” The complaint alleges that perc and its degradation products “have been and are contaminating and damaging Plaintiff’s drinking water supply wells.” The plaintiff is seeking compensatory and punitive damages. This case has recently been dismissed but we anticipate it will be refiled in state court.

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Team Enterprises — On June 5, 2008, we were named as a defendant in the matter of Team Enterprises, Inc. v. Century Centers, Ltd., et al., filed in Modesto, Stanislaus County, California but removed to the United States District Court for the Eastern District of California (Fresno Division). This is an action filed by Team Enterprises as the former operator of a dry cleaner located in Modesto, California. The plaintiff is seeking damages from the defendants associated with the remediation of perc from the site of the dry cleaner. Discovery is ongoing.

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United States Virgin Islands — There are currently two cases pending here.

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Government of the United States; Department of Planning and Natural Resources; and Commissioner Robert Mathes, in his capacity as Trustee for the Natural Resources of the Territory of The United States Virgin Islands v. Vulcan Materials Company, et al. Plaintiff brought this action based on parens patriae doctrine for injury to quasi-sovereign interest on the island of St. Thomas (injuries to groundwater resources held in public trust). It is alleged that the island’s sole source of drinking water (the Tutu aquifer) is contaminated with perc. The primary source of perc contamination allegedly emanated from the former Laga facility (a textile manufacturing site). The perc defendants are alleged to have failed to adequately

warn perc users of the dangers posed by the use and disposal of perc. It is also alleged that perc from O’Henry Dry Cleaners has contributed to the perc contamination in the Tutu aquifer. This case was dismissed, but we anticipate it will be refiled in territorial court.

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L’Henry, Inc., d/b/a O’Henry Cleaners and Cyril V. Francois, LLC v. Vulcan and Dow. Plaintiffs are the owners of a dry cleaning business on St. Thomas. It is alleged that perc from the dry cleaner contributed to the contamination of the Tutu Wells aquifer, and that Vulcan as a perc manufacturer failed to properly warn the dry cleaner of the proper disposal method for perc, resulting in unspecified damages to the dry cleaner. A trial date of December 1, 2010, has been set for this matter.

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Addair — This is a purported class action case for medical monitoring and personal injury damages styled Addair et al. v. Processing Company, LLC, et al., pending in the Circuit Court of Wyoming County, West Virginia. The plaintiffs allege various personal injuries from exposure to perc used in coal sink labs. Discovery is now complete. The class certification hearing scheduled for August 2010 has been stayed.

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Santarsiero — This is a case styled Robert Santarsiero v. R.V. Davies, et al., pending in Supreme Court, New York County, New York. The plaintiff alleges personal injury (kidney cancer) from exposure to perc. We were brought in as a third-party defendant by original defendant R.V. Davies. Discovery is ongoing.

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R.R. Street Indemnity — Street, a former distributor of perc manufactured by us, alleges that we owe Street, and its insurer (National Union), a defense and indemnity in several of these litigation matters, as well as some prior litigation which we have now settled. National Union alleges that we are obligated to contribute to National Union’s share of defense fees, costs and any indemnity payments made on Street’s behalf. We are having ongoing discussions with Street about the nature and extent of indemnity obligations, if any, and to date there has been no resolution of these issues.

It is not possible to predict with certainty the ultimate outcome of these and other legal proceedings in which we are involved and a number of factors, including developments in ongoing discovery or adverse rulings, could cause actual losses to differ materially from accrued costs. We believe the amounts accrued in our financial statements as of June 30, 2010 are sufficient to address claims and litigation for which a loss was determined to be probable and reasonably estimable. No liability was recorded for claims and litigation for which a loss was determined to be only reasonably possible or for which a loss could not be reasonably estimated. In addition, losses on certain claims and litigation described above may be subject to limitations on a per occurrence basis by excess insurance, as described in our most recent Annual Report on Form 10-K.

Note 20   Subsequent Event

On July 7, 2010, we closed on a $450,000,000 5-year syndicated term loan which bears interest at a floating rate. The interest rate reflects 1, 2, 3 or 6-month LIBOR plus a credit spread governed by our Standard & Poor’s and Moody’s long-term credit ratings. Our current ratings are BBB and Baa2, respectively, and the applicable credit spread is 2.0%. The loan requires quarterly principal payments of $10,000,000 starting in June 2013 and a final principal payment of $360,000,000 in July 2015. The term loan agreement provides up to $150,000,000 in additional loans at our request, subject to each lender’s acceptance to increase its commitment.

Item 2		Management’s Discussion and Analysis of Financial Condition And Results of Operations

GENERAL COMMENTS

Overview

Vulcan provides the basic materials for the infrastructure needed to drive the U.S. economy. We are the nation’s largest producer of construction aggregates, primarily crushed stone, sand and gravel. We are also a major producer of asphalt mix and ready-mixed concrete and a leading producer of cement in Florida.

Demand for our products is dependent on construction activity. The primary end uses include public construction, such as highways, bridges, airports, schools and prisons, as well as private nonresidential (e.g., manufacturing, retail, offices, industrial and institutional) and private residential construction (e.g., single-family houses, duplexes, apartment buildings and condominiums). Customers for our products include heavy construction and paving contractors; commercial building contractors; concrete products manufacturers; residential building contractors; state, county and municipal governments; railroads and electric utilities.

We operate primarily in the United States and our principal product — aggregates — is used in all types of public and private construction projects and in the production of asphalt mix and ready-mixed concrete. Aggregates have a high weight-to-value ratio and, in most cases, must be produced near where they are used or transportation can cost more than the materials. Exceptions to this typical market structure include areas along the U.S. Gulf Coast and the eastern seaboard where there are limited supplies of locally available aggregates. We serve these markets from inland quarries — shipping by barge and rail — and from our quarry on Mexico’s Yucatan Peninsula. We transport aggregates from Mexico to the U.S. principally on our Panamax-class, self-unloading ships.

There are practically no substitutes for quality aggregates. Because of barriers to entry created by zoning and permitting regulation and because of high transportation costs, the location of reserves is a critical factor to long-term success.

While aggregates is our primary business, we believe vertical integration between aggregates and downstream products, such as asphalt mix and concrete, can be managed effectively in certain markets to generate acceptable financial returns. We produce and sell asphalt mix and ready-mixed concrete primarily in our mid-Atlantic, Florida, southwestern and western markets. Aggregates comprise approximately 95% of asphalt mix by weight and 78% of ready-mixed concrete by weight.

Seasonality and cyclical nature of our business

Almost all our products are produced and consumed outdoors. Our financial results for any quarter do not necessarily indicate the results expected for the year because seasonal changes and other weather-related conditions can affect the production and sales volumes of our products. Normally, the highest sales and earnings are in the third quarter and the lowest are in the first quarter. Our sales and earnings are sensitive to national, regional and local economic conditions and particularly to cyclical swings in construction spending, particularly in the private sector. The levels of construction spending are affected by changing interest rates, and demographic and population fluctuations.

EXECUTIVE SUMMARY

Financial highlights for Second Quarter 2010

	•		Unit shipments in each major product line increased from the prior year
	•		Aggregates shipments increased 6% with broad geographic improvement, increasing pretax earnings $14.9 million, or $0.08 per diluted share
	•		Average price for aggregates decreased 2% with wide variations across markets, reducing pretax earnings $10.3 million, or $0.05 per diluted share
	•		Unit cost for diesel fuel increased 38%, reducing pretax earnings $8.1 million, or $0.04 per diluted share
	•		Unit cost for liquid asphalt increased 26%, reducing pretax earnings $9.0 million, or $0.04 per diluted share
	•		Previously announced settlement and legal fees associated with a lawsuit in Illinois reduced operating earnings $41.5 million, or $0.21 per diluted share
	•		Charges associated with severe flooding in the Nashville, Tennessee area reduced aggregates segment earnings $2.8 million, or $0.02 per diluted share
	•		Earnings from continuing operations were a loss of $22.5 million, or $0.18 per diluted share
	•		EBITDA was $97.3 million