NOTE 10: BENEFIT PLANS

PENSION PLANS

We sponsor three funded, noncontributory defined benefit pension plans. These plans cover substantially all employees hired prior to July 15, 2007, other than those covered by union-administered plans. Normal retirement age is 65, but the plans contain provisions for earlier retirement. Benefits for the Salaried Plan are generally based on salaries or wages and years of service; the Construction Materials Hourly Plan and the Chemicals Hourly Plan provide benefits equal to a flat dollar amount for each year of service. Effective July 15, 2007, we amended our defined benefit pension plans and our then existing defined contribution 401(k) plans to no longer accept new participants. Existing participants continue to accrue benefits under these plans. Salaried and non-union hourly employees hired on or after July 15, 2007 are eligible for a new single defined contribution 401(k)/Profit-Sharing plan established on that date.

In addition to these qualified plans, we sponsor three unfunded, nonqualified pension plans. The projected benefit obligation presented in the table below includes $92,322,000 and $83,025,000, respectively, related to these plans for 2012 and 2011.

The following table sets forth the combined funded status of the plans and their reconciliation with the related amounts recognized in our consolidated financial statements at December 31:


in thousands	*2012*			2011

Change in Benefit Obligation
Projected benefit obligation at beginning of year		$867,374			$761,384
Service cost		22,349			20,762
Interest cost		43,194			42,383
Plan amendment ¹		1,286			0
Actuarial loss		96,222			81,699
Benefits paid		(39,087	)		(38,854	)
Projected benefit obligation at end of year		$991,338			$867,374

Change in Plan Assets
Fair value of assets at beginning of year		$636,648			$630,303
Actual return on plan assets		81,021			40,293
Employer contribution		4,509			4,906
Benefits paid		(39,087	)		(38,854	)
Fair value of assets at end of year		$683,091			$636,648
Funded status		($308,247	)		($230,726	)
Net amount recognized		($308,247	)		($230,726	)

Amounts Recognized in the Consolidated
Balance Sheets
Current liabilities		($5,211	)		($4,880	)
Noncurrent liabilities		(303,036	)		(225,846	)
Net amount recognized		($308,247	)		($230,726	)

Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial loss		$325,807			$281,352
Prior service cost		1,609			597
Total amount recognized		$327,416			$281,949

An amendment to the salaried plan was necessary to maintain compliance with required discrimination testing.

The accumulated benefit obligation and the projected benefit obligation exceeded plan assets for all of our defined benefit plans at December 31, 2012 and 2011.

The accumulated benefit obligation for all of our defined benefit pension plans totaled $928,059,000 (unfunded, nonqualified plans of $88,643,000) at December 31, 2012 and $812,346,000 (unfunded, nonqualified plans of $76,795,000) at December 31, 2011.

The following table sets forth the components of net periodic benefit cost, amounts recognized in other comprehensive income and weighted-average assumptions of the plans at December 31:


dollars in thousands	*2012*			2011			2010

Components of Net Periodic Pension Benefit Cost
Service cost		$22,349			$20,762			$19,217
Interest cost		43,194			42,383			41,621
Expected return on plan assets		(48,780	)		(49,480	)		(50,122	)
Amortization of prior service cost		274			340			460
Amortization of actuarial loss		19,526			11,670			5,752
Net periodic pension benefit cost		$36,563			$25,675			$16,928

Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Net actuarial loss (gain)		$63,981			$90,886			($17,413	)
Prior service cost		1,286			0			0
Reclassification of actuarial loss to net periodic pension benefit cost		(19,526	)		(11,670	)		(5,752	)
Reclassification of prior service cost to net periodic pension benefit cost		(274	)		(340	)		(460	)
Amount recognized in other comprehensive income		$45,467			$78,876			($23,625	)
Amount recognized in net periodic pension benefit cost and other comprehensive income		$82,030			$104,551			($6,697	)

Assumptions
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31
Discount rate		4.96	%		5.49	%		5.92	%
Expected return on plan assets		8.00	%		8.00	%		8.25	%
Rate of compensation increase
(for salary-related plans)		3.50	%		3.50	%		3.40	%

Weighted-average assumptions used to determine benefit obligation at December 31
Discount rate		4.19	%		4.96	%		5.49	%
Rate of compensation increase (for salary-related plans)		3.50	%		3.50	%		3.50	%

The estimated net actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income into net periodic pension benefit cost during 2013 are $26,216,000 and $380,000, respectively.

Assumptions regarding our expected return on plan assets are based primarily on judgments made by us and the Finance Committee of our Board. These judgments take into account the expectations of our pension plan consultants and actuaries and our investment advisors, and the opinions of market professionals. We base our expected return on long-term investment expectations. The expected return on plan assets used to determine 2012 pension benefit cost was 8.0%.

We establish our pension investment policy by evaluating asset/liability studies periodically performed by our consultants. These studies estimate trade-offs between expected returns on our investments and the variability in anticipated cash contributions to fund our pension liabilities. Our policy balances the variability in potential pension fund contributions to expected returns on our investments.

Our current strategy for implementing this policy is to invest in publicly traded equities and in publicly traded debt and private, nonliquid opportunities, such as venture capital, commodities, buyout funds and mezzanine debt. The target allocation ranges for plan assets are as follows: equity securities — 50% to 77%; debt securities — 15% to 27%; specialty investments — 10% to 20%; and cash reserves — 0% to 5%. Equity securities include domestic investments and foreign equities in the Europe, Australia and Far East (EAFE) and International Finance Corporation (IFC) Emerging Market Indices. Debt securities include domestic debt instruments, while specialty investments include investments in venture capital, buyout funds, mezzanine debt, private partnerships and an interest in a commodity index fund.

The fair values of our pension plan assets at December 31, 2012 and 2011 by asset category are as follows:

FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2012


in thousands	Level 1 ¹		Level 2 ¹		Level 3 ¹		Total

Asset Category
Debt securities		$0		$155,874		$0		$155,874
Investment funds
Commodity funds		0		27,906		0		27,906
Equity funds		4,503		388,499		0		393,002
Short-term funds		8,298		0		0		8,298
Venture capital and partnerships		0		0		98,011		98,011
Total pension plan assets		$12,801		$572,279		$98,011		$683,091

¹ See Note 1 under the caption Fair Value Measurements for a description of the fair value hierarchy.

FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2011


in thousands	Level 1 ¹		Level 2 ¹		Level 3 ¹		Total

Asset Category
Debt securities		$0		$152,240		$0		$152,240
Investment funds
Commodity funds		0		26,498		0		26,498
Equity funds		884		346,632		0		347,516
Short-term funds		3,593		0		0		3,593
Venture capital and partnerships		0		0		106,801		106,801
Total pension plan assets		$4,477		$525,370		$106,801		$636,648

¹ See Note 1 under the caption Fair Value Measurements for a description of the fair value hierarchy.

As of December 31, 2008, our Master Pension Trust had assets invested at Westridge Capital Management, Inc. (WCM) with a reported fair value of $59,245,000. In February 2009, the New York District Court appointed a receiver over WCM due to allegations of fraud and other violations of federal commodities and securities laws by principals of a WCM affiliate. In light of these allegations, we reassessed the fair value of our investments at WCM and recorded a $48,018,000 write-down in the estimated fair value of these assets for the year ended December 31, 2008.

During 2010, the court-appointed receiver released $6,555,000 as a partial distribution and the Master Pension Trust received a $15,000,000 insurance settlement related to our WCM loss. In April 2011, the court-appointed receiver released an additional $22,041,000 to our Master Pension Trust. This recovery resulted in the recognition of a $10,814,000 return on plan assets (net of the $11,227,000 remaining WCM investment). Future recoveries, if any, are expected to be limited.

At each measurement date, we estimate the fair value of our pension assets using various valuation techniques. We utilize, to the extent available, quoted market prices in active markets or observable market inputs in estimating the fair value of our pension assets. When quoted market prices or observable market inputs are not available, we utilize valuation techniques that rely on unobservable inputs to estimate the fair value of our pension assets. The following describes the types of investments included in each asset category listed in the table above and the valuation techniques we used to determine the fair values as of December 31, 2012.

The debt securities category consists of bonds issued by U.S. federal, state and local governments, corporate debt securities, fixed income obligations issued by foreign governments, and asset-backed securities. The fair values of U.S. government and corporate debt securities are based on current market rates and credit spreads for debt securities with similar maturities. The fair values of debt securities issued by foreign governments are based on prices obtained from broker/dealers and international indices. The fair values of asset-backed securities are priced using prepayment speed and spread inputs that are sourced from the new issue market.

Investment funds consist of exchange traded and non-exchange traded funds. The commodity funds asset category consists of a single open-end commodity mutual fund. The equity funds asset category consists of index funds for domestic equities and an actively managed fund for international equities. The short-term funds asset category consists of a collective investment trust invested in highly liquid, short-term debt securities. For investment funds publicly traded on a national securities exchange, the fair value is based on quoted market prices. For investment funds not traded on an exchange, the total fair value of the underlying securities is used to determine the net asset value for each unit of the fund held by the pension fund. The estimated fair values of the underlying securities are generally valued based on quoted market prices. For securities without quoted market prices, other observable market inputs are utilized to determine the fair value.

The venture capital and partnerships asset category consists of various limited partnership funds, mezzanine debt funds and leveraged buyout funds. The fair value of these investments has been estimated based on methods employed by the general partners, including consideration of, among other things, reference to third-party transactions, valuations of comparable companies operating within the same or similar industry, the current economic and competitive environment, creditworthiness of the corporate issuer, as well as market prices for instruments with similar maturity, term, conditions and quality ratings. The use of different assumptions, applying different judgment to inherently subjective matters and changes in future market conditions could result in significantly different estimates of fair value of these securities.

A reconciliation of the fair value measurements of our pension plan assets using significant unobservable inputs (Level 3) for the years ended December 31 is presented below:

FAIR VALUE MEASUREMENTS

USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)


in thousands	Debt Securities			Venture Capital and Partnerships			Total
Balance at December 31, 2010		$308			$96,244			$96,552
Actual return on plan assets
Relating to assets still held at December 31, 2011		0			13,696			13,696
Relating to assets sold during the year ended December 31, 2011		0			0			0
Purchases, sales and settlements, net		0			(3,139	)		(3,139	)
Transfers in (out) of Level 3		(308	)		0			(308	)
Balance at December 31, 2011		$0			$106,801			$106,801
Actual return on plan assets
Relating to assets still held at December 31, 2012		0			(6,858	)		(6,858	)
Relating to assets sold during the year ended December 31, 2012		0			0			0
Purchases, sales and settlements, net		0			15,356			15,356
Transfers in (out) of Level 3		0			(17,288	)		(17,288	)
Balance at December 31, 2012		$0			$98,011			$98,011

Total employer contributions for the pension plans are presented below:


in thousands	Pension

Employer Contributions
2010		$78,359
2011		4,906
2012		4,509
2013 (estimated)		5,200

We contributed $72,500,000 in March 2010 ($18,636,000 in cash and $53,864,000 in stock — 1,190,000 shares valued at $45.26 per share) and an additional $1,300,000 in July 2010 to our qualified pension plans for the 2009 plan year. We do not anticipate contributions will be required to fund the qualified plans during 2013. In addition to the contributions to our qualified pension plans, we made $4,509,000, $4,906,000 and $4,559,000 of benefit payments for our nonqualified plans during 2012, 2011 and 2010, respectively, and expect to make payments of $5,200,000 during 2013 for our nonqualified plans.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


in thousands	Pension
Estimated Future Benefit Payments
2013		$42,335
2014		51,155
2015		49,066
2016		50,515
2017		51,709
2018-2022		284,836

We contribute to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements for union-represented employees. A multiemployer plan is subject to collective bargaining for employees of two or more unrelated companies. Multiemployer plans are managed by boards of trustees on which management and labor have equal representation. However, in most cases, management is not directly represented. The risks of participating in multiemployer plans differ from single employer plans as follows:

¡	assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers

¡	if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers

¡	if we cease to have an obligation to contribute to one or more of the multiemployer plans to which we contribute, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability

A summary of each multiemployer pension plan for which we participate is presented below:

Pension

Fund

EIN/Pension

Plan Number

Pension

Protection
Act Zone Status ¹

FIP/RP
Status
Pending/

Vulcan Contributions in thousands

Surcharge

Expiration
Date/Range of
CBAs

2012

2011

Implemented

2012

2011

2010

Imposed

36-6042061-001

red

orange

$147

$162

$176

5/31/2013

5/31/2015 -

36-6052390-001

green

418

408

494

1/31/2016

5/31/2013 -

36-6044243-001

red

302

276

267

1/31/2016

51-6031295-002

green

3/31/2014

94-6277608-001

yellow

yes

232

177

176

7/15/2013

7/31/2014 -

52-6074345-001

red

yes

887

840

825

1/31/2016

51-6067400-001

green

211

166

181

4/30/2014

36-6140097-001

green

1,392

1,543

1,566

4/30/2014

7/15/2013 -

94-6090764-001

orange

yes

2,082

1,737

1,576

9/17/2013

95-6032478-001

red

yes

391

313

243

9/30/2015

36-6155778-001

red

216

198

195

4/30/2013

L ²

51-6051034-001

yellow

green

7/15/2013 -

91-6145047-001

green

885

882

764

4/8/2017

Total contributions

$7,227

$6,778

$6,566



A Automobile Mechanics Local No. 701 Pension Fund		H Midwest Operating Engineers Pension Trust Fund
B Central Pension Fund of the IUOE and Participating Employers		I Operating Engineers Trust Funds - Local 3
C Central States Southeast and Southwest Areas Pension Plan		J Operating Engineers Pension Trust Funds - Local 12
D IAM National Pension Fund		K Suburban Teamsters of Northern Illinois Pension Plan
E Laborers Trust Funds for Northern California		L Teamsters Union No 142 Pension Trust Fund
F LIUNA National Industrial Pension Fund		M Western Conference of Teamsters Pension Trust Fund
G Local 786 Building Material Pension Trust
EIN Employer Identification Number
FIP Funding Improvement Plan
RP Rehabilitation Plan
CBA Collective Bargaining Agreement

¹	The Pension Protection Act of 2006 defines the zone status as follows: green - healthy, yellow - endangered, orange - seriously endangered and red - critical.

²	All employees covered under this plan were located at operations divested on 9/30/2011.

Our contributions to individual multiemployer pension funds did not exceed 5% of the fund’s total contributions in the three years ended December 31, 2012, 2011 and 2010. Additionally, our contributions to multiemployer postretirement benefit plans were immaterial for all periods presented in the accompanying consolidated financial statements.

As of December 31, 2012, a total of 20% of our domestic hourly labor force was covered by collective bargaining agreements. Of such employees covered by collective bargaining agreements, 19% were covered by agreements that expire in 2013. We also employed 235 union employees in Mexico who are covered by a collective bargaining agreement that will expire in 2013. None of our union employees in Mexico participate in multiemployer pension plans.

In addition to the pension plans noted above, we had one unfunded supplemental retirement plan as of December 31, 2012 and 2011. The accrued costs for the supplemental retirement plan were $1,243,000 at December 31, 2012 and $1,293,000 at December 31, 2011.

POSTRETIREMENT PLANS

In addition to pension benefits, we provide certain healthcare and life insurance benefits for some retired employees. In the fourth quarter of 2012, we amended our postretirement healthcare plan to cap our portion of the medical coverage cost at the 2015 level. Effective July 15, 2007, we amended our salaried postretirement healthcare coverage to increase the eligibility age for early retirement coverage to age 62, unless certain grandfathering provisions were met. Substantially all our salaried employees and where applicable, hourly employees may become eligible for these benefits if they reach a qualifying age and meet certain service requirements. Generally, Company-provided healthcare benefits terminate when covered individuals become eligible for Medicare benefits, become eligible for other group insurance coverage or reach age 65, whichever occurs first.

The following table sets forth the combined funded status of the plans and their reconciliation with the related amounts recognized in our consolidated financial statements at December 31:


in thousands	*2012*			2011

Change in Benefit Obligation
Projected benefit obligation at beginning of year		$134,926			$133,717
Service cost		4,409			4,789
Interest cost		5,851			6,450
Plan amendments		(38,414	)		0
Actuarial (gain) loss		13,562			(2,854	)
Benefits paid		(6,834	)		(7,176	)
Projected benefit obligation at end of year		$113,500			$134,926

Change in Plan Assets
Fair value of assets at beginning of year		$0			$0
Actual return on plan assets		0			0
Fair value of assets at end of year		$0			$0
Funded status		($113,500	)		($134,926	)
Net amount recognized		($113,500	)		($134,926	)

Amounts Recognized in the Consolidated Balance Sheets
Current liabilities		($10,366	)		($9,966	)
Noncurrent liabilities		(103,134	)		(124,960	)
Net amount recognized		($113,500	)		($134,926	)

Amounts Recognized in Accumulated Other Comprehensive Income
Net actuarial loss		$38,221			$26,006
Prior service credit		(41,182	)		(4,141	)
Total amount recognized		($2,961	)		$21,865

The following table sets forth the components of net periodic benefit cost, amounts recognized in other comprehensive income, weighted-average assumptions and assumed trend rates of the plans at December 31:


dollars in thousands	*2012*		2011		2010

Components of Net Periodic Postretirement Benefit Cost
Service cost	$4,409		$4,789		$4,265
Interest cost	5,851		6,450		6,651
Amortization of prior service credit	(1,372	)	(674	)	(728	)
Amortization of actuarial loss	1,346		1,149		887
Net periodic postretirement benefit cost	$10,234		$11,714		$11,075

Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Net actuarial (gain) loss	$13,562		($2,853	)	$11,730
Prior service credit	(38,414	)	0		0
Reclassification of actuarial loss to net periodic postretirement benefit cost	(1,346	)	(1,149	)	(887	)
Reclassification of prior service credit to net periodic postretirement benefit cost	1,372		674		728
Amount recognized in other comprehensive income	($24,826	)	($3,328	)	$11,571
Amount recognized in net periodic postretirement benefit cost and other comprehensive income	($14,592	)	$8,386		$22,646

Assumptions Assumed Healthcare Cost Trend Rates at December 31
Healthcare cost trend rate assumed for next year	8.00%		7.50%		8.00%
Rate to which the cost trend rate gradually declines	5.00%		5.00%		5.00%
Year that the rate reaches the rate it is assumed to maintain	2019		2017		2017

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31
Discount rate	4.60%		4.95%		5.45%

Weighted-average assumptions used to determine benefit obligation at December 31
Discount rate	3.30%		4.60%		4.95%

The estimated net actuarial loss and prior service credit that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit cost during 2013 are $2,331,000 and ($4,863,000), respectively.

Total employer contributions for the postretirement plans are presented below:


in thousands	Postretirement

Employer Contributions
2010		$7,242
2011		7,176
2012		6,834
2013 (estimated)		10,366

The employer contributions shown above are equal to the cost of benefits during the year. The plans are not funded and are not subject to any regulatory funding requirements.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


in thousands	Postretirement

Estimated Future Benefit Payments
2013		$10,366
2014		10,807
2015		11,101
2016		11,050
2017		10,719
2018–2022		47,491

Contributions by participants to the postretirement benefit plans for the years ended December 31 are as follows:


in thousands	Postretirement

Participants Contributions
2010		$1,829
2011		1,933
2012		1,901

PENSION AND OTHER POSTRETIREMENT BENEFITS ASSUMPTIONS

Each year we review our assumptions about the discount rate, the expected return on plan assets, the rate of compensation increase (for salary-related plans) and the rate of increase in the per capita cost of covered healthcare benefits.

In selecting the discount rate, we consider fixed-income security yields, specifically high-quality bonds. We also analyze the duration of plan liabilities and the yields for corresponding high-quality bonds. At December 31, 2012, the discount rates for our various plans ranged from 3.05% to 4.35%.

In estimating the expected return on plan assets, we consider past performance and long-term future expectations for the types of investments held by the plan as well as the expected long-term allocation of plan assets to these investments. At December 31, 2012, the expected return on plan assets was reduced to 7.5% from the 8.0% used to determine the 2012 expense.

In projecting the rate of compensation increase, we consider past experience and future expectations. At December 31, 2012, our projected weighted-average rate of compensation remained at 3.5%.

In selecting the rate of increase in the per capita cost of covered healthcare benefits, we consider past performance and forecasts of future healthcare cost trends. At December 31, 2012, our assumed rate of increase in the per capita cost of covered healthcare benefits was increased to 8.0% for 2013, decreasing each year until reaching 5.0% in 2019 and remaining level thereafter.

Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one-percentage-point change in the assumed healthcare cost trend rate would have the following effects:


in thousands	One-percentage-point Increase		One-percentage-point Decrease

Effect on total of service and interest cost		$192		($186	)
Effect on postretirement benefit obligation		3,274		(3,149	)

DEFINED CONTRIBUTION PLANS

We sponsor three defined contribution plans. Substantially all salaried and nonunion hourly employees are eligible to be covered by one of these plans. As stated above, effective July 15, 2007, we amended our defined benefit pension plans and our defined contribution 401(k) plans to no longer accept new participants. Existing participants continue to accrue benefits under these plans. Salaried and nonunion hourly employees hired on or after July 15, 2007 are eligible for a single defined contribution 401(k)/Profit-Sharing plan. Expense recognized in connection with these plans totaled $18,460,000 in 2012, $16,057,000 in 2011 and $15,273,000 in 2010.