ASSET RETIREMENT OBLIGATIONS

6 Months Ended

Jun. 30, 2014

ASSET RETIREMENT OBLIGATIONS [Abstract]

Note 9: Asset Retirement Obligations

Asset retirement obligations (AROs) 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 ARO 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 ARO is settled for other than the carrying amount of the liability, we recognize a gain or loss on settlement.

We record all AROs for which we have legal obligations for land reclamation at estimated fair value. Essentially all these AROs 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 ARO operating costs related to accretion of the liabilities and depreciation of the assets as follows:



	Three Months Ended		Six Months Ended
		June 30		June 30
in thousands	2014	2013	2014	2013
ARO Operating Costs
Accretion	$ 2,913	$ 2,817	$ 5,852	$ 4,823
Depreciation	983	830	1,980	1,609
Total	$ 3,896	$ 3,647	$ 7,832	$ 6,432

ARO operating costs are reported in cost of goods sold. AROs are reported within other noncurrent liabilities in our accompanying Condensed Consolidated Balance Sheets.

Reconciliations of the carrying amounts of our AROs are as follows:



	Three Months Ended		Six Months Ended
		June 30		June 30
in thousands	2014	2013	2014	2013
Asset Retirement Obligations
Balance at beginning of period	$ 225,831	$ 156,458	$ 228,234	$ 150,072
Liabilities incurred	0	65,587	0	65,587
Liabilities settled	(7,593)	(5,219)	(12,843)	(6,511)
Accretion expense	2,913	2,817	5,852	4,823
Revisions up (down), net	3,966	3,208	3,874	8,880
Balance at end of period	$ 225,117	$ 222,851	$ 225,117	$ 222,851

The liabilities incurred during the second quarter of 2013 relate primarily to reclamation activities required under a development agreement and a conditional use permit at an aggregates facility on owned property in Southern California.