NOTE 19: ACQUISITIONS AND DIVESTITURES

2014 ACQUISITIONS, DIVESTITURES AND PENDING DIVESTITURES

During 2014, we completed several acquisitions for total consideration of $331,836,000. Assets acquired include:

two portable asphalt plants and an aggregates facility in southern California

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

a rail-connected aggregates operation and two distribution yards that serve the greater Dallas/Fort Worth market

a permitted aggregates quarry in Alabama

The 2014 acquisitions listed above are reported in our 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 Consolidated Statements of Comprehensive Income for year ended December 31, 2014 as follows:



in thousands	2014
Actual Results
Total revenues	$ 44,918
Net earnings	591
Acquisition Related Costs
Selling, administrative and general expenses	$ 1,491

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 their estimated fair values at their acquisition dates), are summarized below:



in thousands, except per share data	2014
Fair Value of Purchase Consideration
Cash	$ 284,237
Exchanges of real property and businesses	2,414
Vulcan Materials Company, common stock (715,004 shares)	45,185
Total fair value of purchase consideration	$ 331,836
Identifiable Assets Acquired and Liabilities Assumed
Accounts and notes receivable, net	$ 9,406
Inventories	13,229
Other current assets	203
Property, plant & equipment, net	194,031
Other intangible assets
Contractual rights in place	126,036
Noncompetition agreement	2,250
Deferred income taxes, net	(14,058)
Liabilities assumed	(12,564)
Net identifiable assets acquired	$ 318,533
Goodwill	$ 13,303

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 40 years and all but $36,921,000 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 net pretax cash proceeds of $721,359,000 resulting in a pretax gain of $227,910,000. We retained all of our Florida aggregates operations, our former 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 2013 reserve acquisition in southern California (noted below) — enabled us to defer income taxes on approximately $144,200,000 in ordinary and capital gains.

The pending divestiture of 12 ready-mixed concrete facilities in California is presented in the accompanying Consolidated Balance Sheet as of December 31, 2014 as assets held for sale and liabilities of assets held for sale. This transaction closed in January 2015 resulting in an immaterial gain. These ready-mixed concrete facilities (representing all of our California concrete operations) were swapped for 13 asphalt mix operations, primarily in Arizona. Likewise, the previously mined and subsequently reclaimed tract of land sold in the first quarter of 2014 (as noted above) is presented in the accompanying Consolidated Balance Sheet as of December 31, 2013 as assets 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	2014	2013
Held for Sale
Current assets	$ 1,773	$ 0
Property, plant & equipment, net	12,764	10,559
Other intangible assets, net	647	0
Total assets held for sale	$ 15,184	$ 10,559
Asset retirement obligations	$ 520	$ 0
Total liabilities of assets held for sale	$ 520	$ 0

2013 ACQUISITIONS AND DIVESTITURES

In 2013, we acquired:

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

one aggregates production facility and four ready-mixed concrete facilities in Texas for $29,983,000. As a result, we recognized $5,425,000 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 50 years and will be deductible for income tax purposes over 15 years

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:

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

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 1, caption Deferred Revenue, for the key terms of the VPP

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. Additionally, the dispositions of these facilities will likely result in a partial withdrawal from one of our multiemployer pension plans; therefore, we recognized a $4,000,000 liability related to this plan

one 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 value of the business disposed of and the portion of the reporting unit retained

2012 DIVESTITURES

In 2012, we sold:

two tracts of land totaling approximately 148 acres for net pretax cash proceeds of $57,690,000 resulting in a pretax gain of $41,155,000

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

a percentage of the future production from aggregates reserves at certain owned and leased quarries. The sale was structured as a VPP for which we received gross cash proceeds of $75,200,000 and incurred transactions costs of $1,617,000. 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 1, caption Deferred Revenue, for the key terms of the VPP

mitigation credits for net pretax cash proceeds of $13,469,000 resulting in a pretax gain of $12,342,000

real estate for net pretax cash proceeds of $9,691,000 resulting in a pretax gain of $5,979,000

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.