DEFERRED REVENUE

3 Months Ended

Mar. 31, 2013

NOTE 4: DEFERRED REVENUE

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 net cash proceeds of $73,583,000. The proceeds were recorded as deferred revenue and are being amortized on a unit-of-sales basis to revenue over the term of the VPP. During the three months ended March 31, 2013, we received additional cash proceeds of $62,000 and recognized $253,000 of the deferred revenue related to this transaction. Based on projected sales, we anticipate recognizing a range of $1,000,000 to $1,400,000 of the deferred revenue for the 12-month period ending March 31, 2014.

The key terms of the VPP are:

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

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 volume projection, 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 volume, 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 a separate marketing agreement

¡ the purchaser’s percentage of future production is 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

- Definition

The entire disclosure for deferred revenues at the end of the reporting period, and description and amounts of significant changes that occurred during the reporting period. Deferred revenue is a liability as of the balance sheet date related to a revenue producing activity for which revenue has not yet been recognized. Generally, an entity records deferred revenue when it receives consideration from a customer before achieving certain criteria that must be met for revenue to be recognized in conformity with GAAP.

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