VULCAN MATERIALS CO, 10-K filed on 2/26/2020
Annual Report
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Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2019
Feb. 13, 2020
Jun. 28, 2019
Document and Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2019    
Document Annual Report true    
Document Transition Report false    
Document Fiscal Year Focus 2019    
Entity File Number 001-33841    
Document Fiscal Period Focus FY    
Entity Registrant Name VULCAN MATERIALS COMPANY    
Entity Central Index Key 0001396009    
Current Fiscal Year End Date --12-31    
Entity Public Float     $ 18,124,821,274
Entity Incorporation, State or Country Code NJ    
Entity Tax Identification Number 20-8579133    
Entity Address, Address Line One 1200 Urban Center Drive    
Entity Address, City or Town Birmingham    
Entity Address, State or Province AL    
Entity Address, Postal Zip Code 35242    
City Area Code 205    
Local Phone Number 298-3000    
Title of 12(b) Security Common Stock, $1 par value    
Trading Symbol VMC    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Common Stock, Shares Outstanding   132,394,732  
Documents Incorporated By Reference

Aggregate market value of voting and non-voting common stock held by non-affiliates as of June 28, 2019:


$18,124,821,274

Number of shares of common stock, $1.00 par value, outstanding as of February 13, 2020:

 132,394,732 

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s annual proxy statement for the annual meeting of its shareholders to be held on May 8, 2020, are incorporated by reference into Part III of this Annual Report on Form 10-K.

   
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]      
Total revenues [1] $ 4,929,103 $ 4,382,869 $ 3,890,296
Cost of revenues 3,673,202 3,281,924 2,896,783
Gross profit 1,255,901 1,100,945 993,513
Selling, administrative and general expenses 370,548 333,371 324,972
Gain on sale of property, plant & equipment and businesses 23,752 14,944 17,827
Other operating expense, net (31,647) (34,805) (47,324)
Operating earnings 877,458 747,713 639,044
Other nonoperating income, net 9,243 13,000 13,357
Interest income 1,155 554 4,437
Interest expense 130,155 137,977 295,522
Earnings from continuing operations before income taxes 757,701 623,290 361,316
Income tax expense (benefit)      
Current 58,941 40,516 354
Deferred 76,257 64,933 (232,429)
Total income tax expense (benefit) 135,198 105,449 (232,075)
Earnings from continuing operations 622,503 517,841 593,391
Earnings (loss) on discontinued operations, net of income taxes (4,841) (2,036) 7,794
Net earnings 617,662 515,805 601,185
Other comprehensive income (loss), net of tax      
Deferred gain on interest rate derivative 0 2,496 0
Amortization of prior interest rate derivative loss 227 226 1,862
Adjustment for funded status of benefit plans (26,892) (207) (14,106)
Amortization of actuarial loss and prior service cost for benefit plans 1,142 4,365 2,154
Other comprehensive income (loss) (25,523) 6,880 (10,090)
Comprehensive income $ 592,139 $ 522,685 $ 591,095
Basic earnings (loss) per share      
Continuing operations $ 4.71 $ 3.91 $ 4.48
Discontinued operations (0.04) (0.01) 0.06
Net earnings 4.67 3.90 4.54
Diluted earnings (loss) per share      
Continuing operations 4.67 3.87 4.40
Discontinued operations (0.04) (0.02) 0.06
Net earnings $ 4.63 $ 3.85 $ 4.46
Weighted-average common shares outstanding      
Basic 132,300 132,393 132,513
Assuming dilution 133,385 133,926 134,878
[1]

1

The geographic markets are defined by states/countries as follows:

East market — Arkansas, Delaware, Illinois, Kentucky, Maryland, North Carolina, Pennsylvania, Tennessee, Virginia, and Washington D.C.

Gulf Coast market — Alabama, Florida, Georgia, Louisiana, Mexico, Mississippi, Oklahoma, South Carolina, Texas and the Bahamas

West market — Arizona, California and New Mexico

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CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Assets    
Cash and cash equivalents $ 271,589 $ 40,037
Restricted cash 2,917 4,367
Accounts and notes receivable    
Customers, less allowance for doubtful accounts 2019 — $3,125; 2018 — $2,090 532,012 512,279
Other 38,104 28,499
Inventories 458,308 429,330
Other current assets 76,396 64,633
Total current assets 1,379,326 1,079,145
Investments and long-term receivables 60,709 44,615
Property, plant & equipment, net 4,316,038 4,237,307
Operating lease right-of-use assets, net 408,189 0
Goodwill 3,167,061 3,165,396
Other intangible assets, net 1,091,475 1,095,378
Other noncurrent assets 225,995 210,289
Total assets 10,648,793 9,832,130
Liabilities    
Current maturities of long-term debt 25 23
Short-term debt 0 133,000
Trade payables and accruals 265,159 216,473
Accrued salaries, wages and management incentives 97,228 91,960
Accrued interest 19,167 19,631
Other current liabilities 153,984 141,463
Total current liabilities 535,563 602,550
Long-term debt 2,784,315 2,779,357
Deferred income taxes, net 633,039 567,283
Deferred management incentive and other compensation 22,856 16,604
Pension benefits 142,363 119,587
Other postretirement benefits 35,848 35,274
Asset retirement obligations 210,323 225,726
Deferred revenue 179,880 186,397
Operating lease liabilities 388,042 0
Other noncurrent liabilities 94,707 96,449
Total liabilities 5,026,936 4,629,227
Other commitments and contingencies (Note 12)
Equity    
Common stock, $1 par value, Authorized 480,000 shares, Outstanding 132,371 and 131,762 shares, respectively 132,371 131,762
Capital in excess of par value 2,791,353 2,798,486
Retained earnings 2,895,871 2,444,870
Accumulated other comprehensive loss (197,738) (172,215)
Total equity 5,621,857 5,202,903
Total liabilities and equity $ 10,648,793 $ 9,832,130
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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
CONSOLIDATED BALANCE SHEETS [Abstract]    
Allowance for doubtful accounts $ 3,125 $ 2,090
Common stock, par value $ 1 $ 1
Common stock, shares authorized 480,000,000 480,000,000
Common stock, shares outstanding 132,371,000 131,762,000
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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Operating Activities      
Net earnings $ 617,662 $ 515,805 $ 601,185
Adjustments to reconcile net earnings to net cash provided by operating activities      
Depreciation, depletion, accretion and amortization 374,596 346,246 305,965
Noncash operating lease expense 35,344 0 0
Net gain on sale of property, plant & equipment and businesses (23,752) (14,944) (17,827)
Contributions to pension plans (8,882) (109,631) (20,023)
Share-based compensation expense 31,843 25,215 26,635
Deferred tax expense (benefit) 76,011 64,639 (235,697)
Cost of debt purchase 0 6,922 140,772
(Increase) decrease in assets excluding the initial effects of business acquisitions and dispositions      
Accounts and notes receivable (29,734) 63,230 (81,561)
Inventories (28,273) (34,976) (14,121)
Prepaid expenses 5,990 (2,167) (28,445)
Other assets (61,195) (58,489) (23,759)
Increase (decrease) in liabilities excluding the initial effects of business acquisitions and dispositions      
Accrued interest and income taxes (4,644) 12,148 1,303
Trade payables and other accruals 21,788 40,181 9,823
Other noncurrent liabilities (51,150) (26,901) (32,592)
Other, net 28,518 5,499 13,020
Net cash provided by operating activities 984,122 832,777 644,678
Investing Activities      
Purchases of property, plant & equipment (384,094) (469,088) (459,566)
Proceeds from sale of property, plant & equipment 22,661 22,210 15,756
Proceeds from sale of businesses 1,744 11,256 287,292
Payment for businesses acquired, net of acquired cash (44,151) (221,419) (1,109,725)
Other, net (11,997) (12,850) (3,248)
Net cash used for investing activities (415,837) (669,891) (1,269,491)
Financing Activities      
Proceeds from short-term debt 366,900 739,900 5,000
Payment of short-term debt (499,900) (606,900) (5,000)
Payment of current maturities and long-term debt (23) (892,055) (1,463,308)
Proceeds from issuance of long-term debt 0 850,000 2,200,000
Debt issuance and exchange costs 0 (45,513) (15,291)
Settlements of interest rate derivatives 0 3,378 0
Purchases of common stock (2,602) (133,983) (60,303)
Dividends paid (163,973) (148,109) (132,335)
Share-based compensation, shares withheld for taxes (38,585) (31,846) (25,323)
Net cash provided by (used for) financing activities (338,183) (265,128) 503,440
Net increase (decrease) in cash and cash equivalents and restricted cash 230,102 (102,242) (121,373)
Cash and cash equivalents and restricted cash at beginning of year 44,404 146,646 268,019
Cash and cash equivalents and restricted cash at end of year $ 274,506 $ 44,404 $ 146,646
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CONSOLIDATED STATEMENTS OF EQUITY - USD ($)
shares in Thousands, $ in Thousands
Common Stock [Member]
Capital In Excess Of Par Value [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Total
Beginning balance, shares at Dec. 31, 2016 132,339        
Balance at beginning of period at Dec. 31, 2016 $ 132,339 $ 2,807,995 $ 1,771,518 $ (139,376) $ 4,572,476
Net earnings $ 0 0 601,185 0 601,185
Share-based compensation plans, net of shares withheld for taxes, shares 495        
Share-based compensation plans, net of shares withheld for taxes $ 495 (29,168) 0 0 (28,673)
Purchase and retirement of common stock, shares (510)        
Purchase and retirement of common stock $ (510) 0 (59,793) 0 (60,303)
Share-based compensation expense 0 26,635 0 0 26,635
Cash dividends on common stock 0 0 (132,335) 0 (132,335)
Other comprehensive income (loss) 0 0 0 (10,090) (10,090)
Other $ 0 125 (127) 0 (2)
Ending balance, shares at Dec. 31, 2017 132,324        
Balance at end of period at Dec. 31, 2017 $ 132,324 2,805,587 2,180,448 (149,466) 4,968,893
Released stranded tax effects ASU 2018-02 (Note 9) 0 0 29,629 (29,629) 0
Balances at January 1, 2018, due to reclassification 132,324 2,805,587 2,210,077 (179,095) 4,968,893
Net earnings $ 0 0 515,805 0 515,805
Share-based compensation plans, net of shares withheld for taxes, shares 630        
Share-based compensation plans, net of shares withheld for taxes $ 630 (32,428) 0 0 (31,798)
Purchase and retirement of common stock, shares (1,192)        
Purchase and retirement of common stock $ (1,192) 0 (132,791) 0 (133,983)
Share-based compensation expense 0 25,215 0 0 25,215
Cash dividends on common stock 0 0 (148,109) 0 (148,109)
Other comprehensive income (loss) 0 0 0 6,880 6,880
Other $ 0 112 (112) 0 0
Ending balance, shares at Dec. 31, 2018 131,762        
Balance at end of period at Dec. 31, 2018 $ 131,762 2,798,486 2,444,870 (172,215) 5,202,903
Net earnings $ 0 0 617,662 0 617,662
Share-based compensation plans, net of shares withheld for taxes, shares 628        
Share-based compensation plans, net of shares withheld for taxes $ 628 (39,080) 0 0 (38,452)
Purchase and retirement of common stock, shares (19)        
Purchase and retirement of common stock $ (19) 0 (2,583) 0 (2,602)
Share-based compensation expense 0 31,843 0 0 31,843
Cash dividends on common stock 0 0 (163,973) 0 (163,973)
Other comprehensive income (loss) 0 0 0 (25,523) (25,523)
Other $ 0 104 (105) 0 (1)
Ending balance, shares at Dec. 31, 2019 132,371        
Balance at end of period at Dec. 31, 2019 $ 132,371 $ 2,791,353 $ 2,895,871 $ (197,738) $ 5,621,857
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Vulcan Materials Company (the “Company,” “Vulcan,” “we,” “our”), a New Jersey corporation, is the nation's largest supplier of construction aggregates (primarily crushed stone, sand and gravel) and a major producer of asphalt mix and ready-mixed concrete.

We operate primarily in the United States and our principal product — aggregates — is used in virtually all types of public and private construction projects and in the production of asphalt mix and ready-mixed concrete. We serve markets in twenty states, Washington D.C., and the local markets surrounding our operations in Mexico and the Bahamas. Our primary focus is serving metropolitan markets in the United States that are expected to experience the most significant growth in population, households and employment. These three demographic factors are significant drivers of demand for aggregates. While aggregates is our focus and primary business, we produce and sell asphalt mix and/or ready-mixed concrete in our Alabama, Arizona, California, Maryland, New Mexico, Tennessee, Texas, Virginia and Washington D.C. markets.

Due to the 2005 sale of our Chemicals business as described below, the results of the Chemicals business are presented as discontinued operations in the accompanying Consolidated Statements of Comprehensive Income.

DISCONTINUED OPERATIONS

In 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation. The financial results of the Chemicals business are classified as discontinued operations in the accompanying Consolidated Statements of Comprehensive Income for all periods presented. Results from discontinued operations are as follows:

in thousands

2019

2018

2017

Discontinued Operations

Pretax earnings (loss)

$        (6,541)

$       (2,748)

$      12,959 

Income tax (expense) benefit

1,700 

712 

(5,165)

Earnings (loss) on discontinued operations,

net of tax

$        (4,841)

$       (2,036)

$        7,794 

Our discontinued operations include charges related to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. The 2017 results also reflect insurance recoveries for past legal expenses associated with the Texas Brine matter (see Note 12). There were no revenues from discontinued operations for the years presented.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Vulcan Materials Company and all our majority or
wholly-owned subsidiary companies. Partially-owned affiliates are either consolidated or accounted for at cost or as equity investments depending on the level of ownership interest or our ability to exercise control over the affiliates’ operations. All intercompany transactions and accounts have been eliminated in consolidation.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of these financial statements in conformity with accounting principles generally accepted (GAAP) in the United States of America requires us to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and contingent liabilities at the date of the financial statements. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The results of these estimates form the basis for our judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ materially from these estimates. The most significant estimates included in the preparation of these financial statements are related to goodwill and long-lived asset impairments, business combinations and purchase price allocation, pension and other postretirement benefits, environmental compliance, claims and litigation including self-insurance, and income taxes.

BUSINESS COMBINATIONS

We account for business combinations under the acquisition method of accounting. The purchase price of an acquisition is allocated to the underlying identifiable assets acquired and liabilities assumed based on their respective fair values. The purchase price is determined based on the fair value of consideration transferred to and liabilities assumed from the seller as of the date of acquisition. We allocate the purchase price to the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed as of the date of acquisition. Goodwill is recorded for the excess of the purchase price over the net of the fair value of the identifiable assets acquired and liabilities assumed.

Determining the fair values of assets acquired and liabilities assumed requires judgment and often involves the use of significant estimates and assumptions. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction, and therefore represents an exit price. A fair value measurement assumes the highest and best use of the asset by market participants.

We may adjust the amounts recognized in an acquisition during a measurement period after the acquisition date. Any such adjustments are the result of subsequently obtaining additional information that existed at the acquisition date regarding the assets acquired or the liabilities assumed. Measurement period adjustments are generally recorded as increases or decreases to goodwill, if any, recognized in the transaction. The cumulative impact of measurement period adjustments on depreciation, amortization and other income statement items are recognized in the period the adjustment is determined.

FOREIGN CURRENCY TRANSACTIONS

The U.S. dollar is the functional currency for all of our operations. For our non-U.S. subsidiaries, local currency inventories and long-term assets such as property, plant & equipment and intangibles are remeasured into U.S. dollars at approximate rates prevailing when acquired; all other assets and liabilities are remeasured at year-end exchange rates. Inventories charged to cost of sales and depreciation are remeasured at historical rates; all other income and expense items are remeasured at average exchange rates prevailing during the year. Gains and losses which result from remeasurement are included in earnings and are not material for the years presented.

CASH EQUIVALENTS

We classify as cash equivalents all highly liquid securities with a maturity of three months or less at the time of purchase. The carrying amount of these securities approximates fair value due to their short-term maturities.

RESTRICTED CASH

Restricted cash consists of cash proceeds from the sale of property held in escrow for the acquisition of replacement property under like-kind exchange agreements and cash reserved by other contractual agreements (such as asset purchase agreements) for a specified purpose and therefore not available for use in our operations. The escrow accounts are administered by an intermediary. Cash restricted pursuant to like-kind exchange agreements remains restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property. Restricted cash is included with cash and cash equivalents in the accompanying Consolidated Statements of Cash Flows.

ACCOUNTS AND NOTES RECEIVABLE

Accounts and notes receivable from customers result from our extending credit to trade customers for the purchase of our products. The terms generally provide for payment within 15 days of the month following invoice. On occasion, when necessary to conform to regional industry practices, we sell product under extended payment terms, which may result in either secured or unsecured short-term notes; or, on occasion, notes with durations of less than one year are taken in settlement of existing accounts receivable. Other accounts and notes receivable result from short-term transactions (less than one year) other than the sale of our products, such as interest receivable; insurance claims; freight claims; bid deposits or rents receivable.

Receivables are aged, and appropriate allowances for doubtful accounts and bad debt expense are recorded. Bad debt expense (net of recoveries) for the years ended December 31 was as follows: 2019 — $1,426,000, 2018 — $251,000 and 2017 — $812,000. Write-offs of accounts receivables for the years ended December 31 were as follows: 2019 — $809,000, 2018 — $1,291,000 and 2017 — $1,384,000.

INVENTORIES

Inventories and supplies are stated at the lower of cost or net realizable value. We use the last-in, first-out (LIFO) method of valuation for most of our inventories because it results in a better matching of costs with revenues. Such costs include fuel, parts and supplies, raw materials, direct labor and production overhead. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation. Substantially all operating supplies inventory is carried at average cost. For additional information about our inventories see Note 3.

PROPERTY, PLANT & EQUIPMENT

Property, plant & equipment (including finance leases) are carried at cost less accumulated depreciation, depletion and amortization.

Capitalized software costs of $2,976,000 and $4,155,000 are reflected in net property, plant & equipment as of December 31, 2019 and 2018, respectively. We capitalized software costs for the years ended December 31 as follows: 2019 — $1,506,000, 2018 — $2,213,000 and 2017 — $1,988,000.

For additional information about our property, plant & equipment see Note 4.

REPAIR AND MAINTENANCE

Repair and maintenance costs generally are charged to operating expense as incurred. Renewals and betterments that add materially to the utility or useful lives of property, plant & equipment are capitalized and subsequently depreciated. Actual costs for planned major maintenance activities, related primarily to periodic overhauls on our oceangoing vessels, are capitalized and amortized to the next overhaul.

LEASES

Beginning in 2019 (see ASU 2016-02, “Leases,” as presented within this Note under the caption Accounting Standards Recently Adopted), our nonmineral leases are recognized on the balance sheet as right-of-use (ROU) assets and lease liabilities. Mineral leases continue to be exempt from balance sheet recognition.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU assets are adjusted for any prepaid lease payments and lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We elected the following practical expedients: (1) the practical expedient package which permits us to not reassess our prior conclusions about lease identification, lease classification, and initial direct costs; (2) to not separate the lease components from the non-lease components for all leases; (3) to apply a portfolio approach to our railcar and barge leases; (4) to not recognize ROU assets and lease liabilities for all pre-existing land easements not previously accounted for as leases; and (5) to not recognize ROU assets or lease liabilities for our short-term leases, including existing short-term leases of those assets in transition.

For additional information about leases see Note 7.

DEPRECIATION, DEPLETION, ACCRETION AND AMORTIZATION

Depreciation is generally computed by the straight-line method at rates based on the estimated service lives of the various classes of assets, which include machinery and equipment (3 to 35 years), buildings (7 to 20 years) and land improvements (8 to 20 years). Finance leases are amortized over varying periods not in excess of applicable lease terms or estimated useful lives. Capitalized software costs are included in machinery and equipment and are depreciated on a straight-line basis beginning when the software project is substantially complete.

Cost depletion on depletable land is computed by the unit-of-sales method based on estimated recoverable units.

Accretion reflects the period-to-period increase in the carrying amount of the liability for asset retirement obligations. It is computed using the same credit-adjusted, risk-free rate used to initially measure the liability at fair value.

Leaseholds are amortized over varying periods not in excess of applicable lease terms or estimated useful lives.

Amortization of intangible assets subject to amortization is computed based on the estimated life of the intangible assets.
A significant portion of our intangible assets is contractual rights in place associated with zoning, permitting and other rights to access and extract aggregates reserves. Contractual rights in place associated with aggregates reserves are amortized using the unit-of-sales method based on estimated recoverable units. Other intangible assets are amortized principally by the straight-line method.

Depreciation, depletion, accretion and amortization expense for the years ended December 31 is outlined below:

in thousands

2019

2018

2017

Depreciation, Depletion, Accretion and Amortization

Depreciation

$      300,613 

$     276,814 

$     250,835 

Depletion

22,421 

23,260 

19,342 

Accretion

10,992 

10,776 

11,415 

Amortization of leaseholds

29 

472 

608 

Amortization of intangibles

40,541 

34,924 

23,765 

Total

$      374,596 

$     346,246 

$     305,965 

DERIVATIVE INSTRUMENTS

During the normal course of operations, we are exposed to market risks including interest rates, foreign currency exchange rates and commodity prices. From time to time, and consistent with our risk management policies, we use derivative instruments to balance the cost and risk of such expenses. We do not use derivative instruments for trading or other speculative purposes.

The accounting for gains and losses that result from changes in the fair value of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the type of hedging relationship. Changes in the fair value of interest rate swap cash flow hedges are recorded in accumulated other comprehensive income (AOCI) and are reclassified into interest expense in the same period the hedged items affect earnings. Additional disclosures about our derivative instruments are presented in Note 5.

FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as described below:

Level 1: Quoted prices in active markets for identical assets or liabilities
Level 2: Inputs that are derived principally from or corroborated by observable market data
Level 3: Inputs that are unobservable and significant to the overall fair value measurement

Our assets at December 31 subject to fair value measurement on a recurring basis are summarized below:

Level 1 Fair Value

in thousands

2019

2018

Fair Value Recurring

Rabbi Trust

Mutual funds

$       22,883 

$     19,164 

Total

$       22,883 

$     19,164 

Level 2 Fair Value

in thousands

2019

2018

Fair Value Recurring

Rabbi Trust

Money market mutual fund

$        1,340 

$       1,015 

Total

$        1,340 

$       1,015 

We have two Rabbi Trusts for the purpose of providing a level of security for the employee nonqualified retirement and deferred compensation plans and for the directors' nonqualified deferred compensation plans. The fair values of these investments are estimated using a market approach. The Level 1 investments include mutual funds for which quoted prices in active markets are available. Level 2 investments are stated at estimated fair value based on the underlying investments in the fund (short-term, highly liquid assets in commercial paper, short-term bonds and certificates of deposit).

Net gains (losses) of the Rabbi Trusts’ investments were $3,993,000, $(2,741,000) and $2,441,000 for the years ended December 31, 2019, 2018 and 2017, respectively. The portions of the net gains (losses) related to investments still held by the Rabbi Trusts at December 31, 2019, 2018 and 2017 were $3,729,000, $(4,386,000) and, $(3,618,000), respectively.

The carrying values of our cash equivalents, restricted cash, accounts and notes receivable, short-term debt, trade payables and accruals, and all other current liabilities approximate their fair values because of the short-term nature of these instruments. Additional disclosures for derivative instruments and interest-bearing debt are presented in Notes 5 and 6, respectively.

GOODWILL IMPAIRMENT

Goodwill represents the excess of the cost of net assets acquired in business combinations over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Goodwill impairment exists when the fair value of a reporting unit is less than its carrying amount. As of December 31, 2019, goodwill totaled $3,167,061,000, as compared to $3,165,396,000 at December 31, 2018. Goodwill represents 30% of total assets at December 31, 2019 compared to 32% at December 31, 2018.

Goodwill is tested for impairment annually, as of November 1, or more frequently whenever events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill is tested for impairment at the reporting unit level, one level below our operating segments. We have four operating segments organized around our principal product lines: Aggregates, Asphalt, Concrete and Calcium. Within these four operating segments, we have identified 17 reporting units (of which 9 carry goodwill) based primarily on geographic location. We have the option of either assessing qualitative factors to determine whether it is more likely than not that the carrying value of our reporting units exceeds their respective fair value or proceeding directly to a quantitative test. We elected to perform the quantitative impairment test for all years presented.

The quantitative impairment test compares the fair value of a reporting unit to its carrying value, including goodwill. If the fair value exceeds its carrying value, the goodwill of the reporting unit is not considered impaired. However, if the carrying value of a reporting unit exceeds its fair value, we recognize an impairment loss equal to that excess.

The results of the annual impairment tests performed as of November 1, 2019, 2018 and 2017 indicated that the fair values of all reporting units with goodwill substantially exceeded their carrying values. Accordingly, there were no charges for goodwill impairment in the years ended December 31, 2019, 2018 or 2017.

We estimate the fair values of the reporting units using both an income approach (which involves discounting estimated future cash flows) and a market approach (which involves the application of revenue and EBITDA multiples of comparable companies). Determining the fair value of our reporting units involves the use of significant estimates and assumptions and considerable management judgment. We base our fair value estimates on assumptions we believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty and actual results may differ. Changes in key assumptions or management judgment with respect to a reporting unit or its prospects, which may result from a change in market conditions, market trends, interest rates or other factors outside of our control, or underperformance relative to historical or projected operating results, could result in a significantly different estimate of the fair value of our reporting units, which could result in an impairment charge in the future.

For additional information about goodwill see Note 18.

IMPAIRMENT OF LONG-LIVED ASSETS EXCLUDING GOODWILL

We evaluate the carrying value of long-lived assets, including intangible assets subject to amortization, when events and circumstances indicate that the carrying value may not be recoverable. The carrying value of long-lived assets is considered impaired when the estimated undiscounted cash flows from such assets are less than their carrying value. In that event, we recognize a loss equal to the amount by which the carrying value exceeds the fair value. Fair value is determined primarily by using a discounted cash flow methodology that requires considerable judgment and assumptions. Our estimate of net future cash flows is based on historical experience and assumptions of future trends, which may be different from actual results. We periodically review the appropriateness of the estimated useful lives of our long-lived assets.

We test long-lived assets for impairment at the a significantly lower level than the level at which we test goodwill for impairment. In markets where we do not produce downstream products (e.g., asphalt mix and ready-mixed concrete), the lowest level of largely independent identifiable cash flows is at the individual aggregates operation or a group of aggregates operations collectively serving a local market. Conversely, in vertically integrated markets, the cash flows of our downstream and upstream businesses are not largely independently identifiable as the selling price of the upstream products (aggregates) determines the profitability of the downstream business.

As of December 31, 2019, net property, plant & equipment represents 41% of total assets, while net other intangible assets represents 10% of total assets. During 2019, 2018 and 2017, we recorded no losses on impairment of long-lived assets.

For additional information about long-lived assets and intangible assets see Notes 4 and 18.

REVENUES AND REVENUE RECOGNITION

Total revenues include sales of product and services to customers, net of any discounts and taxes, and freight and delivery revenues billed to customers. Freight and delivery generally represent pass-through transportation we incur (including our administrative costs) and pay to third-party carriers to deliver our products to customers. The cost related to freight and delivery is included in cost of revenues.

Revenues for product sales are recognized when control passes to the customer (typically occurs when finished products are shipped/delivered). Construction paving revenues are recognized using the percentage-of-completion method.

For additional information regarding revenues and revenue recognition see Note 2.

STRIPPING COSTS

In the mining industry, the costs of removing overburden and waste materials to access mineral deposits are referred to as stripping costs.

Stripping costs incurred during the production phase are considered costs of extracted minerals under our inventory costing system, inventoried, and recognized in cost of sales in the same period as the revenue from the sale of the inventory. The production stage is deemed to begin when the activities, including removal of overburden and waste material that may contain incidental saleable material, required to access the saleable product are complete. Stripping costs considered as production costs and included in the costs of inventory produced were $86,090,000 in 2019, $78,911,000 in 2018 and $65,944,000 in 2017.

Conversely, stripping costs incurred during the development stage of a mine (pre-production stripping) are excluded from our inventory cost. Pre-production stripping costs are capitalized and reported within other noncurrent assets in our accompanying Consolidated Balance Sheets. Capitalized pre-production stripping costs are expensed over the productive life of the mine using the unit-of-sales method. Pre-production stripping costs included in other noncurrent assets were $92,759,000 as of December 31, 2019 and $95,800,000 as of December 31, 2018.

RECLAMATION COSTS

Reclamation costs resulting from normal use of long-lived assets are recognized over the period the asset is in use when there is a legal obligation to incur these costs upon retirement of the assets. Additionally, reclamation costs resulting from normal use under a mineral lease are recognized over the lease term when there is a legal obligation to incur these costs upon expiration of the lease. The obligation, which cannot be reduced by estimated offsetting cash flows, is recorded at fair value as a liability at the obligating event date and is accreted through charges to operating expenses. This fair value is also capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset. If the obligation is settled for other than the carrying amount of the liability, a gain or loss is recognized on settlement.

To determine the fair value of the obligation, we estimate the cost (including a reasonable profit margin) for a third party to perform the legally required reclamation tasks. This cost is then increased for both future estimated inflation and an estimated market risk premium related to the estimated years to settlement. Once calculated, this cost is discounted to fair value using present value techniques with a credit-adjusted, risk-free rate commensurate with the estimated years to settlement.

In estimating the settlement date, we evaluate the current facts and conditions to determine the most likely settlement date. If this evaluation identifies alternative estimated settlement dates, we use a weighted-average settlement date considering the probabilities of each alternative.

We review reclamation obligations at least annually for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. Examples of events that would trigger a change in the cost include a new reclamation law or amendment of an existing mineral lease. Examples of events that would trigger a change in the estimated settlement date include the acquisition of additional reserves or the closure of a facility.

The carrying value of these obligations was $210,323,000 as of December 31, 2019 and $225,726,000 as of December 31, 2018. For additional information about reclamation obligations (referred to in our financial statements as asset retirement obligations) see Note 17.

ENVIRONMENTAL COMPLIANCE

Our environmental compliance costs are undiscounted and include the cost of ongoing monitoring programs, the cost of remediation efforts and other similar costs. We accrue costs for environmental assessment and remediation efforts when we determine that a liability is probable and we can reasonably estimate the cost. At the early stages of a remediation effort, environmental remediation liabilities are not easily quantified due to the uncertainties of various factors. The range of an estimated remediation liability is defined and redefined as events in the remediation effort occur, but generally liabilities are recognized no later than the completion of the remedial feasibility study.

When we can estimate a range of probable loss, we accrue the most likely amount. If no amount in the range of probable loss is considered most likely, the minimum loss in the range is accrued. As of December 31, 2019, the spread between the amount accrued and the maximum loss in the range for all sites for which a range can be reasonably estimated was $3,105,000 this amount does not represent our maximum exposure to loss for all environmental remediation obligations as it excludes those sites for which a range of loss cannot be reasonably estimated at this time. Accrual amounts may be based on technical cost estimations or the professional judgment of experienced environmental managers. Our Safety, Health and Environmental Affairs Management Committee routinely reviews cost estimates and key assumptions in response to new information, such as the kinds and quantities of hazardous substances, available technologies and changes to the parties participating in the remediation efforts. However, a number of factors, including adverse agency rulings and encountering unanticipated conditions as remediation efforts progress, may cause actual results to differ materially from accrued costs.

For additional information about environmental compliance costs see Note 8.

CLAIMS AND LITIGATION INCLUDING SELF-INSURANCE

We are involved with claims and litigation, including items covered under our self-insurance program. We are self-insured for losses related to workers' compensation up to $2,000,000 per occurrence and automotive and general/product liability up to $3,000,000 per occurrence. We have excess coverage on a per occurrence basis beyond these retention levels.

Under our self-insurance program, we aggregate certain claims and litigation costs that are reasonably predictable based on our historical loss experience and accrue losses, including future legal defense costs, based on actuarial studies. Certain claims and litigation costs, due to their unique nature, are not included in our actuarial studies. We use both internal and outside legal counsel to assess the probability of loss, and establish an accrual when the claims and litigation represent a probable loss and the cost can be reasonably estimated. For matters not included in our actuarial studies, legal defense costs are accrued when incurred. The following table outlines our self-insurance program at December 31:

dollars in thousands

2019

2018

Self-insurance Program

Self-insured liabilities (undiscounted)

$        69,069 

$       68,912 

Insured liabilities (undiscounted)

6,431 

4,377 

Discount rate

1.63%

2.93%

Amounts Recognized in Consolidated

Balance Sheets

Other accounts and notes receivable

$                 0 

$            631 

Investments and long-term receivables

5,931 

3,932 

Other current liabilities

(19,830)

(18,466)

Other noncurrent liabilities

(51,360)

(48,049)

Net liabilities (discounted)

$       (65,259)

$     (61,952)

Estimated payments (undiscounted and excluding the impact of related receivables) under our self-insurance program for the five years subsequent to December 31, 2019 are as follows:

in thousands

Estimated Payments under Self-insurance Program

2020

$        22,348 

2021

15,306 

2022

10,742 

2023

6,256 

2024

3,604 

Significant judgment is used in determining the timing and amount of the accruals for probable losses, and the actual liability could differ materially from the accrued amounts.

SHARE-BASED COMPENSATION

All of our share-based compensation awards are classified as equity awards. We measure share-based compensation awards using fair-value-based measurement methods. This results in the recognition of compensation expense for all share-based compensation awards based on their fair value as of the grant date. Compensation cost is recognized over the requisite service period. Forfeitures are recognized as they occur.

A summary of the estimated future compensation cost (unrecognized compensation expense) as of December 31, 2019 related to share-based awards granted to employees under our long-term incentive plans is presented below:

Unrecognized

Expected

Compensation

Weighted-average

dollars in thousands

Expense

Recognition (Years)

Share-based Compensation

SOSARs 1

$          2,168 

1.2 

Performance shares

11,580 

1.7 

Restricted shares

8,003 

1.8 

Total/weighted-average

$        21,751 

1.7 

1

Stock-Only Stock Appreciation Rights (SOSARs)

Pretax compensation expense related to our employee share-based compensation awards and related income tax benefits for the years ended December 31 are summarized below:

in thousands

2019

2018

2017

Employee Share-based Compensation Awards

Pretax compensation expense

$        30,067 

$       23,250 

$       24,367 

Income tax benefits

7,682 

5,940 

6,226 

We receive an income tax deduction for share-based compensation equal to the excess of the market value of our common stock on the date of exercise or issuance over the exercise price. Tax benefits resulting from tax deductions in excess of the compensation cost recognized (excess tax benefits) are reflected as discrete income tax benefits in the period of exercise or issuance. Net excess tax benefits were recorded as reductions to our income tax expense and reflected as operating cash flows, as follows (combined federal and state): 2019 $21,020,000; 2018$20,137,000 and 2017 $22,962,000.

For additional information about share-based compensation, see Note 11 under the caption Share-based Compensation Plans.

PENSION AND OTHER POSTRETIREMENT BENEFITS

Accounting for pension and other postretirement benefits requires that we use assumptions for the valuation of projected benefit obligations (PBO) and the performance of plan assets. Each year, we review our assumptions for discount rates (used for PBO, service cost, and interest cost calculations) and the expected return on plan assets. Due to plan changes made in 2012 and 2013, annual pay increases and the per capita cost of healthcare benefits do not materially impact plan obligations.

DISCOUNT RATES — We use a high-quality bond full yield curve approach (specific spot rates for each annual expected cash flow) to establish the discount rates at each measurement date. See Note 10 for the discount rates used for PBO, service cost, and interest cost calculations.

EXPECTED RETURN ON PLAN ASSETS — Our expected return on plan assets is: (1) a long-term view based on our current asset allocation, and (2) a judgment informed by consultation with our retirement plans’ consultant and our pension plans’ actuary. For the year ended December 31, 2019, the expected return on plan assets was 5.75% (7.0% for 2018).

Accounting standards provide for the delayed recognition of differences between actual results and expected or estimated results. This delayed recognition of actual results allows for a smoothed recognition in earnings of changes in benefit obligations and asset performance. The differences between actual results and expected or estimated results are recognized in full in other comprehensive income. Amounts recognized in other comprehensive income are reclassified to earnings in a systematic manner over the average remaining service period of participants for our active plans or the average remaining lifetime of participants for our inactive plans.

We present the service cost component of net periodic benefit cost in cost of revenues and selling, administrative and general expense consistent with employee compensation costs. The other components of net periodic benefit cost are reported within other nonoperating income in our accompanying Condensed Consolidated Statements of Comprehensive Income.

For additional information about pension and other postretirement benefits see Note 10.

INCOME TAXES

We file federal, state and foreign income tax returns and account for the current and deferred tax effects of such returns using the asset and liability method. We recognize deferred tax assets and liabilities (which reflect our best assessment of the future taxes we will pay) based on the differences between the book basis and tax basis of assets and liabilities. Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns while deferred tax liabilities represent items that will result in additional tax in future tax returns.

Significant judgments and estimates are required in determining our deferred tax assets and liabilities. These estimates are updated throughout the year to consider income tax return filings, our geographic mix of earnings, legislative changes and other relevant items. We are required to account for the effects of changes in income tax rates on deferred tax balances in the period in which the legislation is enacted.

Each quarter we analyze the likelihood that our deferred tax assets will be realized. Realization of the deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character in either the carryback or carryforward period. A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not (a likelihood of more than 50%) that some portion, or all, of a deferred tax asset will not be realized. A summary of our deferred tax assets is included in Note 9.

We recognize a tax benefit associated with a tax position when, in our judgment, it is more likely than not that the position will be sustained based upon the technical merits of the position. For a tax position that meets the more likely than not recognition threshold, we measure the income tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized. A liability is established for the unrecognized portion of any tax position. Our liability for unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation.

Generally, we are not subject to significant changes in income taxes by any taxing jurisdiction for the years before 2016. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe our liability for unrecognized tax benefits is appropriate.

We consider a tax position to be resolved at the earlier of the issue being “effectively settled,” settlement of an examination, or the expiration of the statute of limitations. Upon resolution of a tax position, any liability for unrecognized tax benefits will be released.

Our liability for unrecognized tax benefits is generally presented as noncurrent. However, if we anticipate paying cash within one year to settle an uncertain tax position, the liability is presented as current. We classify interest and penalties associated with our liability for unrecognized tax benefits as income tax expense.

Our largest permanent item in computing both our taxable income and effective tax rate is the deduction allowed for statutory depletion. The impact of statutory depletion on the effective tax rate is presented in Note 9. The deduction for statutory depletion does not necessarily change proportionately to changes in pretax earnings.

COMPREHENSIVE INCOME

We report comprehensive income in our Consolidated Statements of Comprehensive Income and Consolidated Statements of Equity. Comprehensive income comprises two subsets: net earnings and other comprehensive income (OCI). OCI includes adjustments to cash flow hedges, as well as actuarial gains or losses and prior service costs related to pension and postretirement benefit plans.

For additional information about comprehensive income see Note 14.

EARNINGS PER SHARE (EPS)

Earnings per share are computed by dividing net earnings by the weighted-average common shares outstanding (basic EPS) or weighted-average common shares outstanding assuming dilution (diluted EPS), as set forth below:

in thousands

2019

2018

2017

Weighted-average common shares outstanding

132,300 

132,393 

132,513 

Dilutive effect of

SOSARs

611 

963 

1,295 

Other stock compensation plans

474 

570 

1,070 

Weighted-average common shares outstanding,

assuming dilution

133,385 

133,926 

134,878 

All dilutive common stock equivalents are reflected in our earnings per share calculations. In periods of loss, shares that otherwise would have been included in our diluted weighted-average common shares outstanding computation would be excluded.

Antidilutive common stock equivalents are not included in our earnings per share calculations. The number of antidilutive common stock equivalents for which the exercise price exceeds the weighted-average market price for the years ended December 31 is as follows:

in thousands

2019

2018

2017

Antidilutive common stock equivalents

105

162

79

RECLASSIFICATIONS

As noted below in Accounting Standards Recently Adopted (Lease Accounting), we elected not to restate pre-2019 financials for the adoption of the new lease standard (ASU 2016-02).

NEW ACCOUNTING STANDARDS

ACCOUNTING STANDARDS RECENTLY ADOPTED

LEASE ACCOUNTING During the first quarter of 2019, we adopted Accounting Standards Update (ASU) 2016-02, “Leases,” utilizing the comparatives transition option (we elected not to restate comparative periods) under ASC 840. This ASU amends prior accounting standards for lease accounting and adds additional disclosures about leasing arrangements. Under the new guidance, lessees are required to recognize lease right-of-use assets and lease liabilities on the balance sheet for all leases (excluding mineral leases) with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement and presentation of cash flow in the statement of cash flows. Upon adoption, we recognized operating lease liabilities of $442,697,000, with corresponding right-of-use assets based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. See the caption Leases under this Note 1 for the practical expedients elected and other information. Additionally, see Notes 7 and 16 for the required lease disclosures.

ACCOUNTING STANDARDS PENDING ADOPTION

INCOME TAXES In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which adds new guidance to simplify the accounting for income taxes and changes the accounting for certain income tax transactions. The new standard is effective as of January 1, 2021, and early adoption is permitted. We do not expect this standard to have a material impact on our consolidated financial statements.

DEFINED BENEFIT PLANS In August 2018, the FASB issued ASU 2018-14, “Changes to the Disclosure Requirements for Defined Benefit Plans,” which adds, removes and clarifies the disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 and is to be applied retrospectively. While we are still evaluating the impact of ASU 2018-14, it will not impact our consolidated financial statements as it only affects disclosure. Thus, the adoption of this standard will have a minor impact on the notes to our consolidated financial statements, specifically, our benefit plans note.

CREDIT LOSSES In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which amends guidance on the impairment of financial instruments. The new guidance estimates credit losses based on expected losses, modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, and interim reporting periods within those annual reporting periods. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

 

 
v3.19.3.a.u2
REVENUES
12 Months Ended
Dec. 31, 2019
REVENUES [Abstract]  
REVENUES NOTE 2: REVENUES

Revenues are measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes we collect are excluded from revenues. Costs to obtain and fulfill contracts (primarily asphalt construction paving contracts) are immaterial and are expensed as incurred when the expected amortization period is one year or less.

Total revenues are primarily derived from our product sales of aggregates (crushed stone, sand and gravel, sand and other aggregates), asphalt mix and ready-mixed concrete, and include freight & delivery costs that we pass along to our customers to deliver these products. We also generate service revenues from our asphalt construction paving business and service revenues related to our aggregates business, such as landfill tipping fees. Our total service revenues were as follows: 2019 — $234,099,000, 2018 — $198,897,000 and 2017 — $113,422,000. The increased service revenues resulted from acquisitions that included asphalt construction paving businesses (2018 – Alabama and Texas, See Note 19).

Our products typically are sold to private industry and not directly to governmental entities. Although approximately 45% to 55% of our aggregates shipments have historically been used in publicly-funded construction, such as highways, airports and government buildings, relatively insignificant sales are made directly to federal, state, county or municipal governments/agencies. Therefore, although reductions in state and federal funding can curtail publicly-funded construction, our aggregates business is not directly subject to renegotiation of profits or termination of contracts with state or federal governments.

Our segment total revenues by geographic market for the years ended December 31, 2019, 2018 and 2017 are disaggregated as follows:

For the Year Ended December 31, 2019

in thousands

Aggregates

Asphalt

Concrete

Calcium

Total

Total Revenues by Geographic Market 1

East

$  1,254,748 

$     166,552 

$     261,249 

$                0 

$    1,682,549 

Gulf Coast

2,117,526 

194,367 

66,628 

8,191 

2,386,712 

West

618,001 

494,902 

67,750 

0 

1,180,653 

Segment sales

$  3,990,275 

$     855,821 

$     395,627 

$         8,191 

$    5,249,914 

Intersegment sales

(320,811)

0 

0 

0 

(320,811)

Total revenues

$  3,669,464