Note 16: Acquisitions and Divestitures

In the third quarter of 2014, we completed six acquisitions for total consideration of $318,001,000 (as detailed in the Fair Value of Purchase Consideration table below). Assets acquired include:

five aggregates facilities and associated downstream assets in Arizona and New Mexico

two aggregates facilities in Delaware, serving northern Virginia and Washington, D.C.

four aggregates facilities in the San Francisco Bay Area

an aggregates operation and distribution yards that serve the greater Dallas/Fort Worth market

The 2014 acquisitions listed above are reported in our condensed consolidated financial statements as of their respective acquisition dates. The amounts of total revenues, net earnings and acquisition related costs for these acquisitions (collectively) are included in our Condensed Consolidated Statements of Comprehensive Income as follows:



	Three Months Ended		Nine Months Ended
	September 30		September 30
in thousands		2014		2014
Actual Results
Total revenues		$ 13,090		$ 13,090
Net earnings		91		91
Acquisition Related Costs
Selling, administrative and general expenses		$ 734		$ 1,156

None of the 2014 acquisitions listed above are material to our results of operations or financial position either individually or collectively. The fair value of consideration transferred for these acquisitions and the preliminary amounts of assets acquired and liabilities assumed (based on estimated fair values at their acquisition dates), are summarized below:



in thousands, except for share data
Fair Value of Purchase Consideration
Cash										$ 268,396
Real property										2,414
Payable to seller										2,500
Vulcan Materials Company, common stock (698,108 shares)										44,691
Total fair value of purchase consideration										$ 318,001
Identifiable Assets Acquired and Liabilities Assumed
Accounts and notes receivable, net										$ 9,676
Inventories										13,767
Other current assets										25
Property, plant & equipment, net										178,784
Other intangible assets
Contractual rights in place										125,478
Deferred income taxes, net										(13,796)
Liabilities assumed										(10,329)
Remaining minority interest in a consolidated entity										600
Net identifiable assets acquired										$ 304,205
Goodwill										$ 13,796

Estimated fair values of assets acquired and liabilities assumed are preliminary pending appraisals of contractual rights in place and property, plant & equipment.

The contractual rights in place noted above will be amortized against earnings using the unit-of-production method over an estimated weighted-average period in excess of 20 years and all but $41,576,000 will be deductible for income tax purposes over 15 years. The goodwill noted above (none of which will be deductible for income tax purposes) represents the balance of deferred tax liabilities generated from carrying over the seller’s tax basis in the assets acquired.

In 2014, we sold:

March 2014 — our cement and concrete businesses in the Florida area for total consideration of $721,359,000 (as of September 30, 2014, $719,089,000 has been received in cash) resulting in a pretax gain of $227,910,000. We retained all of our Florida aggregates operations, our Cement segment’s calcium operation in Brooksville, Florida and real estate associated with certain former ready-mixed concrete facilities. Under a separate supply agreement, we will continue to provide aggregates to the divested concrete facilities, at market prices, for a period of 20 years. As a result of the continuing cash flows (generated via the supply agreement and the retained operation and assets), the disposition is not reported as discontinued operations

March 2014 — a previously mined and subsequently reclaimed tract of land in Maryland (Aggregates segment) for net pretax cash proceeds of $10,727,000 resulting in a pretax gain of $168,000

January 2014 — unimproved land in Tennessee previously containing a sales yard (Aggregates segment) for net pretax cash proceeds of $5,820,000 resulting in a pretax gain of $5,790,000

The structure of these 2014 transactions — along with the fourth quarter 2013 acquisition noted below — enabled us to defer income taxes on approximately $145,000,000 in capital gains.

In 2013, we acquired:

Fourth quarter — land containing 136 million tons of aggregates reserves at an existing quarry in southern California for $117,000,000. We previously mined these reserves under a lease which was scheduled to expire in 2017

Second quarter — an aggregates production facility and four ready-mixed concrete facilities in Texas for $29,983,000. As a result, we recognized $5,425,000 of contractual rights in place. The contractual rights in place will be amortized against earnings using the unit-of-production method over an estimated weighted-average period in excess of 50 years and will be deductive for income tax purposes over 15 years

First quarter — two aggregates production facilities in Georgia for $59,968,000. After finalizing the purchase price allocation, we recognized $3,620,000 of amortizable intangible assets (contractual rights in place). The contractual rights in place will be amortized against earnings using the unit-of-production method over an estimated weighted-average period in excess of 20 years and will be deductible for income tax purposes over 15 years

In 2013, we sold:

Third quarter — reclaimed land associated with a former site of a ready-mixed concrete facility in Virginia for net pretax cash proceeds of $11,261,000 resulting in a pretax gain of $9,027,000

Third quarter — a percentage of the future production from aggregates reserves at certain owned quarries. The sale was structured as a volumetric production payment (VPP) for which we received gross cash proceeds of $154,000,000 and incurred transaction costs of $905,000. The net proceeds were recorded as deferred revenue and are amortized on a unit-of-sales basis to revenues over the term of the VPP. See Note 4 for the key terms of the VPP

Second quarter — four aggregates production facilities in Wisconsin for net pretax cash proceeds of $34,743,000 resulting in a pretax gain of $21,183,000. We allocated $4,521,000 of goodwill to these dispositions based on the relative fair values of the businesses disposed of and the portion of the reporting unit retained

First quarter — an aggregates production facility in Wisconsin and its related replacement reserve land for net pretax cash proceeds of $5,133,000 resulting in a pretax gain of $2,802,000. We allocated $674,000 of goodwill to this disposition based on the relative fair values of the business disposed of and the portion of the reporting unit retained

Effective land management is both a business strategy and a social responsibility. We strive to achieve value through our mining activities as well as incremental value through effective post-mining land management. Our land management strategy includes routinely reclaiming and selling our previously mined land. Additionally, this strategy includes developing conservation banks by preserving land as a suitable habitat for endangered or sensitive species. These conservation banks have received approval from the United States Fish and Wildlife Service to offer mitigation credits for sale to third parties who may be required to compensate for the loss of habitats of endangered or sensitive species.

No assets meet the criteria for held for sale at September 30, 2014. As of December 31, 2013 and September 30, 2013, a previously mined and subsequently reclaimed tract of land within our Aggregates segment is presented in the accompanying Condensed Consolidated Balance Sheets as assets held for sale. This land tract sold in the first quarter of 2014. Assets classified as held for sale are as follows:



	December 31		September 30
in thousands		2013		2013
Held for Sale
Property, plant & equipment, net		$ 10,559		$ 10,559
Total assets held for sale		$ 10,559		$ 10,559