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. In December 2013, we amended our defined benefit plans so that future service accruals for salaried pension participants would cease effective December 31, 2013. This amendment included a special transition provision which will allow covered compensation through December 31, 2015 to be considered in the participants’ benefit calculations. The amendment resulted in a curtailment and remeasurement of the salaried and nonqualified pension plans as of May 31, 2013 that reduced our 2013 pension expense by approximately $7,600,000 (net of the one-time curtailment loss noted below) of which $800,000 relates to discontinued operations.

In addition to these qualified plans, we sponsor three unfunded, nonqualified pension plans. The projected benefit obligation presented in the table below includes $93,600,000 and $92,322,000, respectively, related to these plans for 2013 and 2012.

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	2013	2012
Change in Benefit Obligation
Projected benefit obligation at beginning of year	$ 991,338	$ 867,374
Service cost	21,904	22,349
Interest cost	40,995	43,194
Plan amendments 1, 2	(39,443)	1,286
Actuarial (gain) loss	(61,548)	96,222
Benefits paid	(41,546)	(39,087)
Projected benefit obligation at end of year	$ 911,700	$ 991,338
Change in Fair Value of Plan Assets
Fair value of assets at beginning of year	$ 683,091	$ 636,648
Actual return on plan assets	110,224	81,021
Employer contribution	4,855	4,509
Benefits paid	(41,546)	(39,087)
Fair value of assets at end of year	$ 756,624	$ 683,091
Funded status	(155,076)	(308,247)
Net amount recognized	$ (155,076)	$ (308,247)
Amounts Recognized in the Consolidated
Balance Sheets
Noncurrent assets	$ 3,056	$ 0
Current liabilities	(11,398)	(5,211)
Noncurrent liabilities	(146,734)	(303,036)
Net amount recognized	$ (155,076)	$ (308,247)
Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial loss	$ 142,173	$ 325,807
Prior service cost (credit)	(168)	1,609
Total amount recognized	$ 142,005	$ 327,416


1	The 2013 amendment eliminated future accruals for salaried pension participants effective December 31, 2013.
2	The 2012 amendment to the salaried plan was necessary to maintain compliance with IRS nondiscrimination requirements.

The accumulated benefit obligation (ABO) and the projected benefit obligation (PBO) exceeded plan assets for all of our defined benefit plans except the Chemicals Hourly Plan at December 31, 2013 and for all defined benefit plans at December 31, 2012. Assets in the Chemicals Hourly Plan of $91,803,000 exceeded its ABO by $3,919,000 and its PBO by $3,056,000 at December 31, 2013. The ABO for all of our defined benefit pension plans totaled $891,394,000 (unfunded, nonqualified plans of $89,289,000) at December 31, 2013 and $928,059,000 (unfunded, nonqualified plans of $88,643,000) at December 31, 2012.

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	2013	2012	2011
Components of Net Periodic Pension
Benefit Cost
Service cost	$ 21,904	$ 22,349	$ 20,762
Interest cost	40,995	43,194	42,383
Expected return on plan assets	(47,425)	(48,780)	(49,480)
Curtailment loss	855	0	0
Amortization of prior service cost	339	274	340
Amortization of actuarial loss	20,429	19,526	11,670
Net periodic pension benefit cost	$ 37,097	$ 36,563	$ 25,675
Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income
Net actuarial loss (gain)	$ (163,205)	$ 63,981	$ 90,886
Prior service cost (credit)	(583)	1,286	0
Reclassification of actuarial loss to net
periodic pension benefit cost	(20,429)	(19,526)	(11,670)
Reclassification of prior service cost to net
periodic pension benefit cost	(1,194)	(274)	(340)
Amount recognized in other comprehensive
income	$ (185,411)	$ 45,467	$ 78,876
Amount recognized in net periodic pension
benefit cost and other comprehensive
income	$ (148,314)	$ 82,030	$ 104,551
Assumptions
Weighted-average assumptions used to
determine net periodic benefit cost for
years ended December 31
Discount rate	4.33%	4.96%	5.49%
Expected return on plan assets	7.50%	8.00%	8.00%
Rate of compensation increase
(for salary-related plans)	3.50%	3.50%	3.50%
Weighted-average assumptions used to
determine benefit obligation at
December 31
Discount rate	4.91%	4.19%	4.96%
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 2014 are $9,983,000 and $187,000 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 2013 pension benefit cost was 7.50%.

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 primarily 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, 2013 and 2012 by asset category are as follows:

Fair Value Measurements at December 31, 2013



in thousands	Level 1 1	Level 2 1	Level 3 1	Total
Asset Category
Debt securities	$ 0	$ 137,034	$ 0	$ 137,034
Investment funds
Commodity funds	0	23,773	0	23,773
Equity funds	602	490,355	0	490,957
Short-term funds	0	16,378	0	16,378
Venture capital and partnerships	0	0	88,482	88,482
Total pension plan assets	$ 602	$ 667,540	$ 88,482	$ 756,624


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

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.

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 tables above and the valuation techniques we used to determine the fair values as of December 31, 2013 and 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)



			Venture
			Capital and
in thousands			Partnerships
Balance at December 31, 2011			$ 106,801
Total gains (losses) for the period			(6,858)
Purchases, sales and settlements, net			15,356
Transfers in (out) of Level 3			(17,288)
Balance at December 31, 2012			$ 98,011
Total gains (losses) for the period			10,581
Purchases, sales and settlements, net			(20,110)
Transfers in (out) of Level 3			0
Balance at December 31, 2013			$ 88,482

Total employer contributions for the pension plans are presented below:



in thousands			Pension
Employer Contributions
2011			$ 4,906
2012			4,509
2013			4,855
2014 (estimated)			15,539

During 2013, 2012 and 2011, we made no contributions to our qualified pension plans. We do not anticipate contributions will be required to fund the qualified plans during 2014. However, we anticipate making a $4,100,000 discretionary contribution in 2014. For our nonqualified pension plans, we made benefit payments of $4,855,000, $4,509,000 and $4,906,000 during 2013, 2012 and 2011, respectively, and expect to make payments of $11,400,000 during 2014.

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



in thousands			Pension
Estimated Future Benefit Payments
2014			$ 50,147
2015			48,500
2016			50,158
2017			51,407
2018			54,405
2019-2023			286,320

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:

FIP/RP

Pension Protection

Status

Expiration

Pension

EIN/Pension

Act Zone Status 1

Pending/

Vulcan Contributions in thousands

Surcharge

Date/Range of

Fund

Plan Number

2013

2012

Implemented

2013

2012

2011

Imposed

CBAs

36-6042061-001

Red

$ 137

$ 147

$ 162

Yes

5/31/2013

5/31/2015 -

36-6052390-001

Green

227

418

408

1/31/2016

5/31/2013 -

36-6044243-001

Red

183

302

276

Yes

1/31/2016

51-6031295-002

Green

3/31/2014

94-6277608-001

Yellow

Implemented

252

232

177

7/15/2016

7/31/2014 -

52-6074345-001

Red

Implemented

1,018

887

840

1/31/2016

51-6067400-001

Green

201

211

166

4/30/2014

36-6140097-001

Yellow

Green

1,381

1,392

1,543

4/30/2014

7/15/2016 -

94-6090764-001

Red

Orange

Implemented

2,489

2,082

1,737

9/17/2016

95-6032478-001

Red

Implemented

427

391

313

9/30/2015

36-6155778-001

Red

217

216

198

4/30/2013

L 2

51-6051034-001

Green

Yellow

3/27/2014 -

91-6145047-001

Green

968

885

882

4/8/2017

Total contributions

$ 7,580

$ 7,227

$ 6,778


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.
3	This plan is currently operating under a contract extension.

Our contributions to individual multiemployer pension funds did not exceed 5% of the fund’s total contributions in the three years ended December 31, 2013, 2012 and 2011. Additionally, our contributions to multiemployer postretirement benefit plans were immaterial for all periods presented in the accompanying consolidated financial statements.

As of December 31, 2013, a total of 18% of our domestic hourly labor force was covered by collective bargaining agreements. Of such employees covered by collective bargaining agreements, 12% were covered by agreements that expire in 2014. We also employed 243 union employees in Mexico who are covered by a collective bargaining agreement that will expire in 2014. 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, 2013 and 2012. The accrued costs for the supplemental retirement plan were $1,328,000 at December 31, 2013 and $1,243,000 at December 31, 2012.

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	2013	2012
Change in Benefit Obligation
Projected benefit obligation at beginning of year	$ 113,500	$ 134,926
Service cost	2,830	4,409
Interest cost	3,260	5,851
Plan amendments	0	(38,414)
Actuarial (gain) loss	(20,444)	13,562
Benefits paid	(6,258)	(6,834)
Projected benefit obligation at end of year	$ 92,888	$ 113,500
Change in Fair Value of 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	$ (92,888)	$ (113,500)
Net amount recognized	$ (92,888)	$ (113,500)
Amounts Recognized in the Consolidated
Balance Sheets
Current liabilities	$ (9,431)	$ (10,366)
Noncurrent liabilities	(83,457)	(103,134)
Net amount recognized	$ (92,888)	$ (113,500)
Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial loss	$ 16,405	$ 38,221
Prior service credit	(36,319)	(41,182)
Total amount recognized	$ (19,914)	$ (2,961)

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	2013	2012	2011
Components of Net Periodic Postretirement
Benefit Cost
Service cost	$ 2,830	$ 4,409	$ 4,789
Interest cost	3,260	5,851	6,450
Amortization of prior service credit	(4,863)	(1,372)	(674)
Amortization of actuarial loss	1,372	1,346	1,149
Net periodic postretirement benefit cost	$ 2,599	$ 10,234	$ 11,714
Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income
Net actuarial (gain) loss	$ (20,444)	$ 13,562	$ (2,853)
Prior service credit	0	(38,414)	0
Reclassification of actuarial loss to net
periodic postretirement benefit cost	(1,372)	(1,346)	(1,149)
Reclassification of prior service credit to net
periodic postretirement benefit cost	4,863	1,372	674
Amount recognized in other comprehensive
income	$ (16,953)	$ (24,826)	$ (3,328)
Amount recognized in net periodic
postretirement benefit cost and other
comprehensive income	$ (14,354)	$ (14,592)	$ 8,386
Assumptions
Assumed Healthcare Cost Trend Rates
at December 31
Healthcare cost trend rate assumed
for next year	7.50%	8.00%	7.50%
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	2019	2017
Weighted-average assumptions used to
determine net periodic benefit cost for
years ended December 31
Discount rate	3.30%	4.60%	4.95%
Weighted-average assumptions used to
determine benefit obligation at
December 31
Discount rate	4.10%	3.30%	4.60%

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 2014 are $634,000 and $(4,853,000), respectively.

Total employer contributions for the postretirement plans are presented below:



in thousands			Postretirement
Employer Contributions
2011			$ 7,176
2012			6,834
2013			6,258
2014 (estimated)			9,431

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
2014			$ 9,431
2015			9,662
2016			9,605
2017			9,464
2018			9,417
2019–2023			40,429

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



in thousands			Postretirement
Participants Contributions
2011			$ 1,933
2012			1,901
2013			2,022

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, 2013, the discount rates for our various plans ranged from 3.80% to 5.15% (December 31, 2012 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, 2013, the expected return on plan assets remained at 7.50%.

In projecting the rate of compensation increase, we consider past experience and future expectations. At December 31, 2013, our projected weighted-average rate of compensation increase remains at 3.50%.

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, 2013, our assumed rate of increase in the per capita cost of covered healthcare benefits remained at 7.50% for 2014, decreasing each year until reaching 5.00% 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:



	One-percentage-point		One-percentage-point
in thousands	Increase		Decrease
Effect on total of service and interest cost		$ 1,977		$ (1,905)
Effect on postretirement benefit obligation		175		(170)

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. Expense recognized in connection with these plans totaled $21,416,000 in 2013, $18,460,000 in 2012 and $16,057,000 in 2011.