NOTE 19: ACQUISITIONS AND

DIVESTITURES

2012 DIVESTITURES AND PENDING DIVESTITURES

In the fourth quarter of 2012, we completed the sale of:

§	two tracts of land totaling approximately 148 acres resulting in net pretax cash proceeds of $57,690,000 and pretax gains of $41,155,000

§	an aggregates production facility including approximately 197 acres of land resulting in net pretax cash proceeds of $10,476,000 and a pretax gain of $5,646,000

Also in the fourth quarter of 2012, we completed the sale of a percentage of the future production from aggregates reserves at certain owned and leased quarries. The sale was structured as a volumetric production payment (VPP) for which we received gross cash proceeds of $75,200,000 and incurred transactions costs of $1,617,000. Concurrently, we entered into a marketing agreement (the marketing agreement) with the purchaser through which we are designated the exclusive sales agent for the purchaser’s percentage of future production.

The key terms of the VPP are:

§	The VPP provides the purchaser with a nonoperating interest in reserves thus entitling them to a specified percentage (the percentage) of future production

§	The VPP terminates at the earlier to occur of December 31, 2052 or the sale of 143.2 million tons of aggregates from the specified quarries subject to the VPP (as such, the future production in which the purchaser owns the percentage could be less than 143.2 million tons)

§	Based on historical and projected volumes from the specified quarries, it is expected that 143.2 million tons will be sold prior to 2052, resulting in the purchaser owning a percentage of the maximum 143.2 million tons of future production

The purchaser’s percentage of the maximum 143.2 million tons of future production is estimated, based on current sales volumes projections, to be 10.5% (approximately 15 million tons; the actual percentage received by the purchaser through the term of the transaction may vary based on when the maximum 143.2 million tons is sold)

§	We have no obligation for any minimum annual or cumulative production or sales volumes, nor is there any minimum sales price required

§	The purchaser has the right to take its percentage of future production in physical product, or receive the cash proceeds from the sale of its percentage under the terms of the marketing agreement

§	The purchaser’s percentage of future production is to be conveyed free and clear of future costs of production and sales

§	We retain full operational and marketing control of the specified quarries

§	We retain fee simple interest in the land as well as any residual values that may be realized upon the conclusion of mining

The VPP and marketing agreements represent separate units of accounting, however, as the timing of revenue recognition under both are identical, allocation of revenues between the two deliverables is irrelevant. The net proceeds were recorded as deferred revenue and are being amortized on a unit-of-sales basis to revenues over the term of the VPP. Based on projected sales, we anticipate recognizing approximately $1,200,000 of deferred revenue in our 2013 Consolidated Statement of Comprehensive Income related to this transaction.

Additionally:

§	In the second quarter of 2012, we sold mitigation credits resulting in net pretax cash proceeds of $13,469,000 and a pretax gain of $12,342,000

§	In the first quarter of 2012, we sold real estate resulting in net pretax cash proceeds of $9,691,000 and a pretax gain of $5,979,000

Pending divestitures (Aggregates segment — a previously mined and subsequently reclaimed tract of land, an aggregates production facility and its related replacement reserve land, and Ready-mix segment — a former site of a ready-mix facility) are presented in the accompanying Consolidated Balance Sheet as of December 31, 2012 as assets held for sale and liabilities of assets held for sale. As the book value of the Aggregates segment land exceeded the expected selling price less cost to sell, a $1,738,000 loss on impairment was recognized in our Consolidated Statement of Comprehensive Income as other operating expenses for the year ended December 31, 2012. Conversely, the aggregates production facility and former ready-mix facility site are expected to generate significant gains on disposition. We expect the sales to occur during 2013. Depreciation and amortization expenses were suspended on the assets classified as held for sale. The major classes of assets and liabilities of assets classified as held for sale as of December 31 are as follows:


in thousands	*2012*		2011
Held for Sale
Current assets		$809		$0
Property, plant & equipment, net		14,274		0
Total assets held for sale		$15,083		$0
Noncurrent liabilities		$801		$0
Total liabilities of assets held for sale		$801		$0

2011 ACQUISITIONS AND DIVESTITURES

During the fourth quarter of 2011, we consummated a transaction resulting in an exchange of assets.

We acquired

§	three aggregates facilities

§	one rail distribution yard

In return, we divested:

§	two aggregates facilities

§	one asphalt mix facility

§	two ready-mixed concrete facilities

§	one recycling operation

§	undeveloped real property

Total consideration for the acquired assets of $35,406,000 includes the fair value of the divested assets plus $10,000,000 cash paid. We recognized a gain of $587,000, net of transaction related costs of $531,000, based on the fair value of the divested assets.

During the third quarter of 2011, we completed the sale of four aggregates facilities. The sale resulted in net cash proceeds at closing of $61,774,000, a receivable of $2,400,000 and a pretax gain on sale of $39,659,000. The book value of the divested operations included $10,300,000 of goodwill. Goodwill was allocated based on the relative fair value of the divested operations as compared to the relative fair value of the retained portion of the reporting unit.

In a separate 2011 transaction, we acquired ten ready-mixed concrete facilities for 432,407 shares of common stock valued at the closing date price of $42.85 per share (total consideration of $18,529,000 net of acquired cash). We issued 372,992 shares to the seller at closing and retained the remaining shares to fulfill certain working capital adjustments and indemnification obligations. During the third quarter of 2012, we issued 60,855 shares (including shares accrued for dividends) of common stock to the seller as the final payment. As a result of this acquisition, we recognized $6,419,000 of amortizable intangible assets, none of which is expected to be deductible for income tax purposes. The amortizable intangible assets consist of contractual rights in place and will be amortized over an estimated weighted-average period of 20 years.