NOTE 19: ACQUISITIONS AND DIVESTITURES

BUSINESS ACQUISITIONS

2018 business acquisitions — During 2018, we purchased the following operations for total consideration of $219,863,000 ($215,363,000 cash and $4,500,000 payable):

Alabama — aggregates, asphalt mix and construction paving operations

California — aggregates and asphalt mix operations

Texas — aggregates rail yards, asphalt mix and construction paving operations

The 2018 acquisitions listed above are reported in our consolidated financial statements as of their respective acquisition dates. None of these acquisitions are material to our results of operations or financial position either individually or collectively. The fair value of consideration transferred for these business acquisitions and the preliminary amounts assigned (pending appraisals of contractual rights in place and property, plant & equipment) to assets acquired and liabilities assumed, are summarized below:



in thousands				2018
Fair Value of Purchase Consideration
Cash				$ 215,363
Payable to seller				4,500
Total fair value of purchase consideration				$ 219,863
Identifiable Assets Acquired and Liabilities Assumed
Accounts and notes receivable, net				$ 15,402
Inventories				11,874
Other current assets				661
Property, plant & equipment				150,274
Other intangible assets
Contractual rights in place				44,163
Deferred income taxes, net				(32,871)
Liabilities assumed				(11,965)
Net identifiable assets acquired				$ 177,538
Goodwill				$ 42,325

As a result of the 2018 acquisitions, we recognized $44,163,000 of amortizable intangible assets (contractual rights in place). The contractual rights in place will be amortized against earnings ($43,072,000 - straight-line over a weighted-average 19.9 years and $1,080,000 - units of sales in excess of 30.0 years) and $7,385,000 will be deductible for income tax purposes over 15 years. Of the $42,325,000 of goodwill recognized, $4,468,000 will be deductible for income tax purposes over 15 years, and $32,871,000 represents the balance of deferred tax liabilities generated from carrying over the seller’s tax basis in the assets acquired.

2017 business acquisitions — During 2017 (excluding the assets immediately divested in the December 2017 Aggregates USA acquisition for $287,292,000), we purchased the following operations related to material business acquisitions for total consideration of $793,523,000:

California — aggregates and ready-mixed concrete operations

Florida — aggregates operations

Georgia — aggregates operations

South Carolina — aggregates operations

Tennessee — asphalt mix and construction paving operations

The amounts of total revenues and net earnings for the material business acquisitions noted above are included in our Consolidated Statement of Comprehensive Income for the year ended December 31, 2017, as follows:



in thousands				2017
Actual Results
Total revenues				$ 162,462
Net earnings				11,830

The unaudited pro forma financial information in the table below summarizes the results of operations for Vulcan and these material business acquisitions as if they were combined as of January 1, 2016. The 2016 financial information does not reflect any cost savings, operating efficiencies or synergies as a result of these combinations. Transactions between Vulcan and these businesses during the periods presented in the pro forma financial information were immaterial and have been eliminated as if the companies were consolidated affiliates during the following periods:



in thousands	2017	2016
Supplemental Pro Forma Results
Total revenues	$ 4,015,891	$ 3,882,257
Net earnings	610,494	433,431

The unaudited pro forma results above may not be indicative of the results that would have been obtained had these acquisitions occurred at the beginning of 2016, nor does it intend to be a projection of future results.

The fair value of consideration transferred for these material business acquisitions and the preliminary amounts assigned as of December 31, 2017 (immaterial adjustments were recorded in 2018 including an increase to goodwill of $750,000) to assets acquired and liabilities assumed, are summarized below:



in thousands				2017
Fair Value of Purchase Consideration
Cash				$ 1,072,978
Payable to seller				7,837
Total fair value of purchase consideration				$ 1,080,815
Identifiable Assets Acquired and Liabilities Assumed
Accounts and notes receivable, net				$ 14,955
Inventories				21,679
Other current assets				608
Investments				3,590
Property, plant & equipment				433,606
Other intangible assets
Contractual rights in place				295,482
Liabilities assumed				(3,894)
Net identifiable assets acquired and retained				$ 766,026
Goodwill				$ 27,497
Net Assets Divested Immediately Upon Acquisition				$ 287,292

Additionally, during 2017 we acquired the following operations related to immaterial business acquisitions for $48,490,000 of consideration ($36,746,000 cash, $1,844,000 payable and $9,900,000 of fair value of assets swapped):

Arizona — asphalt mix operations

Illinois — aggregates operations

New Mexico — aggregates operations

Tennessee — aggregates operations

Virginia — aggregates and ready-mixed concrete operations

As a collective result of the 2017 acquisitions, we recognized $309,112,000 of amortizable intangible assets (primarily contractual rights in place).The contractual rights in place will be amortized against earnings ($73,879,000 - straight-line over a weighted-average 19.3 years and $235,133,000 - units of sales over an estimated 54.7 years) and deductible for income tax purposes over 15 years. Of the $28,247,000 of goodwill recognized, all will be deductible for income tax purposes over 15 years.

2016 business acquisitions — During 2016, the following operations were acquired for $33,287,000 of consideration ($32,537,000 cash and $750,000 payable):

Georgia — aggregates distribution and logistical operations

New Mexico — asphalt mix operations

Texas — aggregates operations

None of the 2016 acquisitions listed above are material to our results of operations or financial position either individually or collectively. As a result of these 2016 acquisitions, we recognized $16,670,000 of amortizable intangible assets ($15,213,000 contractual rights in place and $1,457,000 of noncompetition agreement).The contractual rights in place will be amortized against earnings ($6,798,000 - straight-line over 20 years and $8,415,000 - units of sales over an estimated 20 years) and deductible for income tax purposes over 15 years.

DIVESTITURES AND PENDING DIVESTITURES

In 2018, we sold:

First quarter — ready-mixed concrete operations in Georgia resulting in a pretax gain of $2,929,000 (we retained all real property which is leased to the buyer, and obtained a long-term aggregates supply agreement)

In 2017, we sold:

Fourth quarter — swapped ready-mixed concrete operations in Arizona (fair value of $9,900,000 and book value of $1,879,000) for asphalt mix operations in Arizona resulting in a pretax gain of $8,021,000

Fourth quarter — as required by the Department of Justice, we immediately divested certain assets obtained in the Aggregates USA acquisition resulting in no gain

In 2016, we sold:

Fourth quarter — surplus land in California and Virginia for net pretax cash proceeds of $19,185,000 resulting in pretax gains of $11,871,000

Fourth quarter — plant relocation reimbursement in Virginia for net pretax cash proceeds of $6,000,000 resulting in a pretax gain of $4,335,000 (this item is presented within other operating expense in the accompanying Consolidated Statement of Comprehensive Income)

No assets met the criteria for held for sale at December 31, 2018, 2017 or 2016.