NOTE 1: BASIS OF PRESENTATION

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

Our accompanying unaudited condensed consolidated financial statements were prepared in compliance with the instructions to Form 10-Q and Article 10 of Regulation S-X and thus do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. Operating results for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ended December 31, 2011. For further information, refer to the consolidated financial statements and footnotes included in our most recent Annual Report on Form 10-K.

Due to the 2005 sale of our Chemicals business as presented in Note 2, the operating results of the Chemicals business are presented as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income.

RECLASSIFICATIONS

Certain items previously reported in specific financial statement captions have been reclassified to conform with the 2011 presentation.

CORRECTION OF PRIOR PERIOD FINANCIAL STATEMENTS

During 2010 we completed a comprehensive analysis of our deferred income tax balances and concluded that our deferred income tax liabilities were understated. The errors arose during 2008 and during periods prior to January 1, 2007, and are not material to previously issued financial statements. As a result, we did not amend previously filed financial statements but restated the December 31, 2009 balance sheet in our Annual Report on Form 10-K for the year ended December 31, 2010 and have restated the September 30, 2010 balance sheet presented in this Form 10-Q.

The errors that arose during 2008 related to the calculations of deferred income taxes referable to the Florida Rock acquisition and additional 2008 federal return adjustments. The correction of these errors resulted in a decrease to deferred income tax liabilities of $6,129,000, an increase to goodwill referable to our Aggregates segment of $2,321,000 and an increase in current taxes payable of $8,450,000 for the year ended December 31, 2008.

The errors that arose during periods prior to January 1, 2007 resulted in an understatement of deferred income tax liabilities of $14,785,000. Based on the work performed to confirm the current and deferred income tax provisions recorded during 2007, 2008 and 2009, and to determine the correct deferred income tax account balances as of January 1, 2007, we were able to substantiate that the $14,785,000 understatement related to periods prior to January 1, 2007. The correction of these errors resulted in an increase to deferred income tax liabilities and a corresponding decrease to retained earnings of $14,785,000 as of January 1, 2007.

A summary of the effects of the correction of the errors on our Condensed Consolidated Balance Sheet as of September 30, 2010, is presented in the table below:

		As of September 30, 2010
		As								As
in thousands		Reported				Correction				Restated
Assets
Current deferred income taxes			$66,718				($1,950	)			$64,768
Prepaid expenses			42,729				(8,450	)			34,279
Total current assets			932,144				(10,400	)			921,744
Goodwill			3,093,979				2,321				3,096,300
Total assets			$8,529,597				($8,079	)			$8,521,518
Liabilities
Noncurrent deferred income taxes			$849,925				$6,706				$856,631
Total liabilities			4,490,743				6,706				4,497,449
Equity
Retained earnings			1,606,754				(14,785	)			1,591,969
Total equity			4,038,854				(14,785	)			4,024,069
Total liabilities and equity			$8,529,597				($8,079	)			$8,521,518

NOTE 2: DISCONTINUED OPERATIONS

In 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation. In addition to the initial cash proceeds, Basic Chemicals was required to make payments under two earn-out agreements subject to certain conditions. During 2007, we received the final payment under the ECU (electrochemical unit) earn-out, bringing cumulative cash receipts to its $150,000,000 cap.

Proceeds under the second earn-out agreement are based on the performance of the hydrochlorocarbon product HCC-240fa (commonly referred to as 5CP) from the closing of the transaction through December 31, 2012 (5CP earn-out). The primary determinant of the value for this earn-out is the level of growth in 5CP sales volume. At the June 7, 2005 closing date, the value assigned to the 5CP earn-out was limited to an amount that resulted in no gain on the sale of the business, as the gain was contingent in nature. A gain on disposal of the Chemicals business is recognized to the extent cumulative cash receipts under the 5CP earn-out exceed the initial value recorded.

In March 2011, we received a payment of $12,284,000 under the 5CP earn-out related to performance during the year ended December 31, 2010. During the first quarter of 2010, we received $8,794,000 under the 5CP earn-out related to the year ended December 31, 2009. These receipts were recorded as gains on disposal of discontinued operations. Through September 30, 2011, we have received a total of $54,991,000 under the 5CP earn-out, a total of $21,890,000 in excess of the receivable recorded on the date of disposition.

We are liable for a cash transaction bonus payable to certain former key Chemicals employees. This transaction bonus is payable if cash receipts realized from the two earn-out agreements described above exceed an established minimum threshold. The bonus is payable annually based on the prior year’s results. Payments for this transaction bonus were $1,228,000 during the first nine months of 2011 and $882,000 during the first nine months of 2010.

The financial results of the Chemicals business are classified as discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income for all periods presented. There were no net sales or revenues from discontinued operations during the nine month periods ended September 30, 2011 and 2010. Results from discontinued operations are as follows:

		Three Months Ended								Nine Months Ended
		September 30								September 30
in thousands		2011				2010				2011				2010
Discontinued Operations
Pretax earnings (loss) from results			($4,068	)			$4,425				($481	)			$3,565
Gain on disposal, net of transaction bonus			0				0				11,056				7,912
Income tax (provision) benefit			1,615				(1,770	)			(4,176	)			(4,572	)
Earnings (loss) on discontinued operations, net of tax			($2,453	)			$2,655				$6,399				$6,905

The pretax loss from results of discontinued operations of ($4,068,000) for the third quarter of 2011 was due primarily to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. The pretax loss from results of discontinued operations of ($481,000) for the nine months ended September 30, 2011 includes a $7,500,000 pretax gain recognized in the first quarter on recovery from an insurer in lawsuits involving perchloroethylene offset by general and product liability costs, including legal defense costs, and environmental remediation costs. The 2010 pretax earnings from results of discontinued operations of $4,425,000 for the third quarter and $3,565,000 for the nine months ended September 30, 2010 are due primarily to $7,600,000 of pretax gains recognized from insurance recoveries in percholoroethylene lawsuits. These gains were offset in part by general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business.

NOTE 3: EARNINGS PER SHARE (EPS)

We report two earnings per share numbers: basic and diluted. These 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:

		Three Months Ended								Nine Months Ended
		September 30								September 30
in thousands		2011				2010				2011				2010
Weighted-average common shares
outstanding			129,493				128,602				129,341				127,840
Dilutive effect of
Stock options/SOSARs			35				58				0				0
Other stock compensation plans			240				250				0				0
Weighted-average common shares
outstanding, assuming dilution			129,768				128,910				129,341				127,840

All dilutive common stock equivalents are reflected in our earnings per share calculations. Antidilutive common stock equivalents are not included 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 are excluded. These excluded shares are as follows: nine months ended September 30, 2011 — 304,000 shares and nine months ended September 30, 2010 — 406,000 shares.

The number of antidilutive common stock equivalents for which the exercise price exceeds the weighted-average market price, are as follows:

		Three Months Ended								Nine Months Ended
		September 30								September 30
in thousands		2011				2010				2011				2010
Antidilutive common stock equivalents			5,871				6,225				5,871				4,905

NOTE 4: INCOME TAXES

Our income tax provision and the corresponding annual effective tax rate are based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. For interim financial reporting, except in circumstances as described in the following paragraph, we estimate the annual effective tax rate based on projected taxable income for the full year and record a quarterly tax provision in accordance with the expected annual effective tax rate. As the year progresses, we refine the estimates of the year’s taxable income as new information becomes available, including year-to-date financial results. This continual estimation process often results in a change to our expected annual effective tax rate for the year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date income tax provision reflects the expected annual effective tax rate. Significant judgment is required in determining our annual effective tax rate and in evaluating our tax positions.

When application of the expected annual effective tax rate is not reliable and distorts the income tax provision for an interim period, we calculate the income tax provision or benefit using the year-to-date effective tax rate in accordance with Accounting Standards Codification (ASC) 740-270-30-18. This cut-off method results in an income tax provision or benefit based solely on the year-to-date pretax income or loss as adjusted for permanent differences on a pro rata basis.

We recognize an income tax benefit associated with an uncertain tax position when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we initially and subsequently measure the income tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. Our liability associated with 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. Such adjustments are recognized entirely in the period in which they are identified. We consider resolution for an issue to occur at the earlier of settlement of an examination, the expiration of the statute of limitations, or when the issue is effectively settled. Our income tax provision includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as we consider appropriate.

We record deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, tax planning actions and strategies, projected future taxable income and recent financial operating results. If our determination regarding the realizability of our deferred tax assets changes, we would then adjust the valuation allowance.

We recorded income tax benefits from continuing operations of $47,938,000 for the nine months ended September 30, 2011 compared to $61,491,000 for the nine months ended September 30, 2010. The 2011 decrease in our income tax benefit, after the effect of the pretax loss at the statutory rate, resulted largely from a decrease in permanent income tax benefits from charitable contributions and an increase in discrete income tax adjustments. We recorded an income tax provision from continuing operations of $29,833,000 in the third quarter of 2011 compared to an income tax benefit of $6,048,000 in the third quarter of 2010. The current quarter’s income tax provision is the amount required so that the year-to-date benefit reflects the expected annual effective tax rate.

NOTE 5: MEDIUM-TERM INVESTMENTS

We held investments in money market and other money funds at The Reserve, an investment management company specializing in such funds, as follows: September 30, 2011 — $0, December 31, 2010 — $5,531,000 and September 30, 2010 — $5,531,000. The substantial majority of our investment was held in the Reserve International Liquidity Fund, Ltd. On September 15, 2008, Lehman Brothers Holdings Inc. filed for bankruptcy protection. In the following days, The Reserve announced that it was closing all of its money funds, some of which owned Lehman Brothers securities, and was suspending redemptions from and purchases of its funds, including the Reserve International Liquidity Fund.

As a result of the temporary suspension of redemptions and the uncertainty as to the timing of such redemptions, during 2008 we changed the classification of our investments in The Reserve funds from cash and cash equivalents to medium-term investments. We reduced the carrying value of our investment to its estimated fair value of $3,630,000 and $3,910,000 as of December 31, 2010 and September 30, 2010, respectively. See Note 7 for further discussion of the fair value determination.

During January 2011, we received $3,630,000 from the Reserve representing the final redemption of the investment. As a result of this redemption, we reclassified our investments in The Reserve funds from medium-term investments to cash and cash equivalents as of December 31, 2010.

NOTE 6: DERIVATIVE INSTRUMENTS

During the normal course of operations, we are exposed to market risks including fluctuations in interest rates, foreign currency exchange rates and commodity pricing. From time to time, and consistent with our risk management policies, we use derivative instruments to hedge against these market risks. We do not utilize 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. The interest rate swap agreements described below were designated as either fair value hedges or cash flow hedges. The changes in fair value of our interest rate swap fair value hedges are recorded as interest expense consistent with the change in the fair value of the hedged items attributable to the risk being hedged. The changes in fair value of our 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.

Derivative instruments are recognized at fair value in the accompanying Condensed Consolidated Balance Sheets. Fair values of derivative instruments designated as hedging instruments are as follows:

						Fair Value 1
						September 30				December 31				September 30
in thousands			Balance Sheet Location			2011				2010				2010
Liabilities
Interest rate swaps			Other current liabilities				$0				$0				$3,044
Total hedging instrument liabilities							$0				$0				$3,044

We use interest rate swap agreements designated as cash flow hedges to minimize the variability in cash flows of liabilities or forecasted transactions caused by fluctuations in interest rates. In December 2007, we issued $325,000,000 of floating-rate notes due in 2010 that bore interest at 3-month London Interbank Offered Rate (LIBOR) plus 1.25% per annum. Concurrently, we entered into a 3-year interest rate swap agreement in the stated amount of $325,000,000. Under this agreement, we paid a fixed interest rate of 5.25% and received 3-month LIBOR plus 1.25% per annum. Concurrent with each quarterly interest payment, the portion of this swap related to that interest payment was settled and the associated realized gain or loss was recognized. This swap agreement terminated December 15, 2010, coinciding with the maturity of the notes due in 2010.

Additionally, during 2007, we entered into fifteen forward starting interest rate swap agreements for a total stated amount of $1,500,000,000. Upon the 2007 and 2008 issuances of the related fixed-rate debt, we terminated and settled these forward starting swaps for cash payments of $89,777,000. Amounts accumulated in other comprehensive income (OCI) are being amortized to interest expense over the term of the related debt. For the 12-month period ending September 30, 2012, we estimate that $6,362,000 of the pretax loss accumulated in OCI will be reclassified to earnings.

The effects of changes in the fair values of derivatives designated as cash flow hedges on the accompanying Condensed Consolidated Statements of Comprehensive Income are as follows:

						Three Months Ended								Nine Months Ended
		Location on				September 30								September 30
in thousands		Statement				2011				2010				2011				2010
Cash Flow Hedges
Loss recognized in OCI (effective portion)		OCI					$0				($307	)			$0				($881	)
Loss reclassified from AOCI		Interest
(effective portion)		expense					(1,519	)			(4,799	)			(10,191	)			(14,695	)

We use interest rate swap agreements designated as fair value hedges to minimize exposure to changes in the fair value of fixed-rate debt that results from fluctuations in the benchmark interest rates for such debt. In June 2011, we issued $500,000,000 of 6.50% fixed-rate notes due in 2016. Concurrently, we entered into interest rate swap agreements in the stated amount of $500,000,000. Under these agreements, we paid 6-month LIBOR plus a spread of 4.05% and received a fixed interest rate of 6.50%. Additionally, in June 2011, we entered into interest rate swap agreements on our $150,000,000 of 10.125% fixed-rate notes due in 2015. Under these agreements, we paid 6-month LIBOR plus a spread of 8.03% and received a fixed interest rate of 10.125%. In August 2011, we terminated and settled these interest rate swap agreements for $25,382,000 of cash proceeds. The $23,387,000 forward component of the settlement (cash proceeds less $1,995,000 of accrued interest) was added to the carrying value of the related debt and is being amortized as a reduction to interest expense over the remaining lives of the related debt using the effective interest method. During the three and nine months ended September 30, 2011, $320,000 was amortized to earnings as a reduction to interest expense.

NOTE 7: 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 and liabilities that are subject to fair value measurements on a recurring basis are summarized below:

		Level 1
		September 30				December 31				September 30
in thousands		2011				2010				2010
Fair Value Recurring
Rabbi Trust
Mutual funds			$12,816				$13,960				$13,146
Equities			5,746				9,336				7,456
Total assets			$18,562				$23,296				$20,602

		Level 2
		September 30				December 31				September 30
in thousands		2011				2010				2010
Fair Value Recurring
Medium-term investments			$0				$0				$3,910
Interest rate swaps			0				0				(3,044	)
Rabbi Trust
Common/collective trust funds			1,965				2,431				2,361
Net asset			$1,965				$2,431				$3,227

The Rabbi Trust investments relate to funding for the executive nonqualified deferred compensation and excess benefit plans. The fair values of these investments are estimated using a market approach. The Level 1 investments include mutual funds and equity securities for which quoted prices in active markets are available. Investments in common/collective trust funds are stated at estimated fair value based on the underlying investments in those funds. The underlying investments are comprised of short-term, highly liquid assets in commercial paper, short-term bonds and treasury bills.

The medium-term investments were comprised of money market and other money funds, as more fully described in Note 5. Using a market approach, we estimated the fair value of these funds by applying our historical distribution ratio to the liquidated value of investments in The Reserve funds. Additionally, we estimated a discount against our investment balances to allow for the risk that legal and accounting costs and pending or threatened claims and litigation against The Reserve and its management would reduce the principal available for distribution.

Interest rate swaps are measured at fair value using quoted market prices or pricing models that use prevailing market interest rates as of the measurement date. These interest rate swaps are more fully described in Note 6.

The carrying values of our cash equivalents, restricted cash, accounts and notes receivable, current maturities of long-term debt, short-term borrowings, trade payables and other accrued expenses 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 6 and 11, respectively.

There were no assets or liabilities subject to fair value measurement on a nonrecurring basis in 2011. Assets that were subject to fair value measurement on a nonrecurring basis are summarized below:

		As of December 31, 2010
						Impairment
in thousands		Level 3				Charges
Fair Value Nonrecurring
Property, plant & equipment			$1,536				$2,500
Assets held for sale			9,625				1,436
Totals			$11,161				$3,936

We recorded a $3,936,000 loss on impairment of long-lived assets in 2010. We utilized an income approach to measure the fair value of the long-lived assets and determined that the carrying value of the assets exceeded the fair value. The loss on impairment represents the difference between the carrying value and the fair value (less costs to sell for assets held for sale) of the impacted long-lived assets.

NOTE 8: OTHER COMPREHENSIVE INCOME (OCI)

Comprehensive income includes charges and credits to equity from nonowner sources and comprises two subsets: net earnings and other comprehensive income. The components of other comprehensive income are presented in the accompanying Condensed Consolidated Statements of Comprehensive Income, net of applicable taxes.

Amounts accumulated in other comprehensive income (loss), net of tax, are as follows:

		September 30				December 31				September 30
in thousands		2011				2010				2010
Accumulated Other Comprehensive Loss
Cash flow hedges			($32,785	)			($39,137	)			($41,521	)
Pension and postretirement plans			(132,158	)			(138,202	)			(142,308	)
Total			($164,943	)			($177,339	)			($183,829	)

Amounts reclassified from accumulated other comprehensive income (loss) to earnings, are as follows:

		Three Months Ended								Nine Months Ended
		September 30								September 30
in thousands		2011				2010				2011				2010
Reclassification Adjustment for Cash Flow Hedges
Interest expense			$1,499				$4,779				$10,131				$14,634
Benefit from income taxes			(599	)			(1,930	)			(3,778	)			(6,287	)
Total			$900				$2,849				$6,353				$8,347
Amortization of Pension and Postretirement Plan Actuarial Loss and Prior Service Cost
Cost of goods sold			$2,407				$1,193				$7,104				$3,569
Selling, administrative and general expenses			715				399				2,260				1,209
Benefit from income taxes			(1,237	)			(629	)			(3,321	)			(2,093	)
Total			$1,885				$963				$6,043				$2,685
Total reclassifications from AOCI to earnings			$2,785				$3,812				$12,396				$11,032

NOTE 9: SHAREHOLDERS’ EQUITY

In March 2010, we issued 1,190,000 shares of common stock to our qualified pension plan (par value of $1 per share) as described in Note 10. This transaction increased shareholders’ equity by $53,864,000 (common stock $1,190,000 and capital in excess of par $52,674,000).

In February 2011, we issued 372,992 shares (368,527 shares net of acquired cash) of common stock in connection with a business acquisition as described in Note 14.

We periodically issue shares of common stock to the trustee of our 401(k) savings and retirement plan to satisfy the plan participants’ elections to invest in our common stock. The resulting cash proceeds provide a means of improving cash flow, increasing shareholders’ equity and reducing leverage. Under this arrangement, the stock issuances and resulting cash proceeds were as follows:

■		nine months ended September 30, 2011 — issued 110,881 shares for cash proceeds of $4,745,000; and
■		nine months ended September 30, 2010 — issued 882,131 shares for cash proceeds of $41,734,000.

No shares were held in treasury as of September 30, 2011, December 31, 2010 and September 30, 2010. As of September 30, 2011, 3,411,416 shares may be repurchased under the current authorization of our Board of Directors.

NOTE 10: BENEFIT PLANS

The following tables set forth the components of net periodic benefit cost:

PENSION BENEFITS		Three Months Ended								Nine Months Ended
		September 30								September 30
in thousands		2011				2010				2011				2010
Components of Net Periodic Benefit Cost
Service cost			$5,190				$4,805				$15,571				$14,413
Interest cost			10,595				10,405				31,787				31,216
Expected return on plan assets			(12,370	)			(12,530	)			(37,110	)			(37,591	)
Amortization of prior service cost			85				115				255				345
Amortization of actuarial loss			2,918				1,438				8,753				4,314
Net periodic pension benefit cost			$6,418				$4,233				$19,256				$12,697
Pretax reclassification from OCI included in net periodic pension benefit cost			$3,003				$1,553				$9,008				$4,659

OTHER POSTRETIREMENT BENEFITS		Three Months Ended								Nine Months Ended
		September 30								September 30
in thousands		2011				2010				2011				2010
Components of Net Periodic Benefit Cost
Service cost			$1,197				$1,066				$3,592				$3,199
Interest cost			1,613				1,663				4,838				4,988
Amortization of prior service credit			(169	)			(183	)			(506	)			(547	)
Amortization of actuarial loss			288				222				862				666
Net periodic postretirement benefit cost			$2,929				$2,768				$8,786				$8,306
Pretax reclassification from OCI included in net periodic postretirement benefit cost			$119				$39				$356				$119

The reclassifications from OCI noted in the tables above are related to amortization of prior service costs or credits and actuarial losses as shown in Note 8.

We contributed $72,500,000 in March 2010 ($18,636,000 in cash and $53,864,000 in stock — 1,190,000 shares valued at $45.26 per share) and an additional $1,300,000 in July 2010 to our qualified pension plans for the 2009 plan year. These contributions, along with the existing funding credits, should be sufficient to cover expected required contributions to the qualified plans through 2012.

As of December 31, 2008, our Master Pension Trust had assets invested at Westridge Capital Management, Inc. (WCM) with a reported fair value of $59,245,000. In February 2009, the New York District Court appointed a receiver over WCM due to allegations of fraud and other violations of federal commodities and securities laws by principals of a WCM affiliate. In light of these allegations, we reassessed the fair value of our investments at WCM and recorded a $48,018,000 write-down in the estimated fair value of these assets for the year ended December 31, 2008.

During 2010, the Master Pension Trust received $6,555,000 from the receiver over WCM as a partial distribution of assets, and received a $15,000,000 insurance settlement related to our WCM loss. In April 2011, the court-appointed receiver released an additional $22,041,000 to our Master Pension Trust.

NOTE 11: CREDIT FACILITIES, SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term borrowings are summarized as follows:

		September 30				December 31				September 30
dollars in thousands		2011				2010				2010
Short-term Borrowings
Bank borrowings			$0				$285,500				$0
Total			$0				$285,500				$0
Bank Borrowings
Maturity			n/a			3 - 74 days					n/a
Weighted-average interest rate			n/a				0.59	%			n/a

We utilize our $1,500,000 bank line of credit to fund our working capital and for general corporate purposes. The line of credit expires November 16, 2012. As of September 30, 2011, there were no borrowings under the line of credit. Interest rates referable to borrowings under the line of credit are determined at the time of borrowing based on current market conditions.

In the normal course of business, we maintain bank balances for which we are credited with earnings allowances toward our cash management related service fees. To the extent the earnings allowances are not sufficient to fully cover the related fees for these non-credit services, we pay the difference.

In June 2011, we issued $1,100,000,000 of long-term notes in two series, as follows: $500,000,000 of 6.50% notes due in 2016 and $600,000,000 of 7.50% notes due in 2021. These notes were issued principally to:

■		repay and terminate our $450,000,000 floating-rate term loan due in 2015,
■		fund the purchase through a tender offer of $165,443,000 of our outstanding 5.60% notes due in 2012 and $109,556,000 of our outstanding 6.30% notes due in 2013,
■		repay $275,000,000 outstanding under our revolving credit facility,
■		and for general corporate purposes.

The terminated $450,000,000 floating-rate term loan due in 2015 was established in July 2010 in order to repay the $100,000,000 outstanding balance of our floating-rate term loan due in 2011 and all outstanding commercial paper. Unamortized deferred financing costs of $2,423,000 were recognized in June 2011 as a component of interest expense upon the termination of this floating-rate term loan.

The June 2011 purchases of the 5.60% and 6.30% notes cost $294,533,000, representing a $19,534,000 premium above the $274,999,000 face value of the notes. This premium primarily reflects the trading price of the notes at the time of purchase relative to par value. Additionally, $4,711,000 of expense associated with a proportional amount of unamortized discounts, deferred financing costs and amounts accumulated in OCI was recognized in June 2011 upon the partial termination of the notes. The combined expense of $24,245,000 is presented in the accompanying Condensed Consolidated Statements of Comprehensive Income as a component of interest expense for the nine month period ended September 30, 2011.

As of September 30, 2011, $35,000 of our long-term debt, including current maturities, was secured. This secured debt was assumed with the November 2007 acquisition of Florida Rock. All other debt obligations, both short-term and long-term, are unsecured.

Long-term debt is summarized as follows:

		September 30				December 31				September 30
in thousands		2011				2010				2010
Long-term Debt
Floating-rate notes due 2010			$0				$0				$325,000
5.60% notes due 2012 1			134,496				299,773				299,746
6.30% notes due 2013 2			140,337				249,729				249,704
Floating-rate term loan due 2015			0				450,000				450,000
10.125% notes due 2015 3			153,640				149,597				149,582
6.50% notes due 2016 4			519,072				0				0
6.40% notes due 2017 5			349,865				349,852				349,848
7.00% notes due 2018 6			399,684				399,658				399,649
10.375% notes due 2018 7			248,491				248,391				248,360
7.50% notes due 2021 8			600,000				0				0
7.15% notes due 2037 9			239,544				249,324				249,322
Medium-term notes			21,000				21,000				21,000
Industrial revenue bonds			14,000				14,000				14,000
Other notes			1,309				1,438				1,559
Total			$2,821,438				$2,432,762				$2,757,770
Less current maturities of long-term debt			5,215				5,246				325,249
Total long-term debt			$2,816,223				$2,427,516				$2,432,521
Estimated fair value of total long-term debt			$2,649,207				$2,559,059				$2,689,770

	1	Includes decreases for unamortized discounts, as follows: September 30, 2011 - $61 thousand, December 31, 2010 - $227 thousand and September 30, 2010 - $254 thousand. The effective interest rate for these notes is 6.57%.
	2	Includes decreases for unamortized discounts, as follows: September 30, 2011 - $107 thousand, December 31, 2010 - $271 thousand and September 30, 2010 - $296 thousand. The effective interest rate for these notes is 7.48%.
	3	Includes an increase for the unamortized portion of the deferred gain realized upon the August 2011 settlement of interest rate swaps, as follows: September 30, 2011 - $3,995 thousand. Additionally, includes decreases for unamortized discounts, as follows: September 30, 2011 - $355 thousand, December 31, 2010 - $403 thousand and September 30, 2010 - $418 thousand. The effective interest rate for these notes is 9.59%.
	4	Includes an increase for the unamortized portion of the deferred gain realized upon the August 2011 settlement of interest rate swaps, as follows: September 30, 2011 - $19,072 thousand. The effective interest rate for these notes is 6.01%.
	5	Includes decreases for unamortized discounts, as follows: September 30, 2011 - $135 thousand, December 31, 2010 - $148 thousand and September 30, 2010 - $152 thousand. The effective interest rate for these notes is 7.41%.
	6	Includes decreases for unamortized discounts, as follows: September 30, 2011 - $316 thousand, December 31, 2010 - $342 thousand and September 30, 2010 - $351 thousand. The effective interest rate for these notes is 7.87%.
	7	Includes decreases for unamortized discounts, as follows: September 30, 2011 - $1,509 thousand, December 31, 2010 - $1,609 thousand and September 30, 2010 - $1,640 thousand. The effective interest rate for these notes is 10.58%.
	8	The effective interest rate for these notes is 7.74%.
	9	Includes decreases for unamortized discounts, as follows: September 30, 2011 - $644 thousand, December 31, 2010 - $676 thousand and September 30, 2010 - $678 thousand. The effective interest rate for these notes is 8.06%.

The estimated fair value of total long-term debt presented in the table above was determined by discounting expected future cash flows based on credit-adjusted interest rates on U.S. Treasury bills, notes or bonds, as appropriate. The fair value estimates were based on information available to us as of the respective balance sheet dates. Although we are not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since those dates.

Our current bank credit facility and the indentures governing our notes contain a covenant limiting our total debt as a percentage of total capital to 65%. Our total debt as a percentage of total capital was 42.1% as of September 30, 2011; 40.7% as of December 31, 2010; and 40.7% as of September 30, 2010.

We plan to replace our $1,500,000,000 bank credit facility expiring November 16, 2012 with a $500,000,000 five-year credit facility. The new revolving credit facility is being structured as an asset based lending facility and is projected to close in November 2011.

NOTE 12: 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 nine month periods ended September 30, we recognized ARO operating costs related to accretion of the liabilities and depreciation of the assets as follows:

		Three Months Ended								Nine Months Ended
		September 30								September 30
in thousands		2011				2010				2011				2010
ARO Operating Costs
Accretion			$1,894				$2,081				$6,189				$6,525
Depreciation			1,947				3,050				5,342				9,390
Total			$3,841				$5,131				$11,531				$15,915

ARO operating costs for our continuing operations 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								Nine Months Ended
		September 30								September 30
in thousands		2011				2010				2011				2010
Asset Retirement Obligations
Balance at beginning of period			$160,733				$162,168				$162,730				$167,757
Liabilities incurred			1,456				1,016				1,734				2,457
Liabilities settled			(6,238	)			(4,762	)			(12,202	)			(8,879	)
Accretion expense			1,894				2,081				6,189				6,525
Revisions up (down)			139				(288	)			(467	)			(7,645	)
Balance at end of period			$157,984				$160,215				$157,984				$160,215

Revisions to our AROs during 2010 related primarily to extensions in the estimated settlement dates at numerous sites.

NOTE 13: STANDBY LETTERS OF CREDIT

We provide certain third parties with irrevocable standby letters of credit in the normal course of business. We use commercial banks to issue such letters of credit to back our obligations to pay or perform when required to do so according to the requirements of an underlying agreement. The standby letters of credit listed below are cancelable only at the option of the beneficiaries who are authorized to draw drafts on the issuing bank up to the face amount of the standby letter of credit in accordance with its terms.

Our standby letters of credit as of September 30, 2011 are summarized in the table below:

		September 30
in thousands		2011
Standby Letters of Credit
Risk management requirement for insurance claims			$41,083
Payment surety required by utilities			133
Contractual reclamation/restoration requirements			8,482
Financial requirement for industrial revenue bond			14,230
Total			$63,928

Since banks consider standby letters of credit as contingent extensions of credit, we are required to pay a fee until they expire or are canceled. Substantially all of our standby letters of credit have a one-year term and are automatically renewed unless cancelled with the approval of the beneficiary. Of the total $63,928,000 outstanding standby letters of credit as of September 30, 2011, $60,896,000 is backed by our $1,500,000,000 bank credit facility which expires November 16, 2012.

NOTE 14: ACQUISITIONS AND DIVESTITURES

During the first quarter of 2011, we acquired ten ready-mixed concrete facilities for 432,407 shares of common stock valued at the closing date price of $42.85 per share (total consideration of $18,529,000 net of acquired cash). We issued 368,527 shares to the seller at closing and retained 63,880 shares to fulfill certain working capital adjustments and indemnification obligations.

As a result of this acquisition, we recognized $6,419,000 of amortizable intangible assets, none of which is expected to be deductible for income tax purposes. The amortizable intangible assets consist of contractual rights in place and will be amortized over an estimated weighted-average period of 20 years.

The purchase price allocation for this 2011 acquisition is preliminary and subject to adjustment.

On September 30, 2011, we completed the sale of four aggregates facilities. The sale resulted in net cash proceeds at closing of $61,774,000 and a pretax gain on sale of $39,659,000. The book value of the divested operations includes $10,300,000 of goodwill. Goodwill was allocated based on the relative fair value of the divested operations as compared to the relative fair value of the retained portion of the reporting unit.

On October 3, 2011, we consummated a transaction resulting in an exchange of assets. We acquired three aggregates facilities and a rail distribution yard. In return, we divested two aggregates facilities, one asphalt mix facility, one ready-mixed concrete facility and undeveloped real property, and paid $10,000,000 in cash (in escrow pending the exchange partner’s satisfaction of certain obligations). As this exchange was an exchange of businesses, we will account for the acquisitions and divestitures separately at fair value. Accordingly, as of September 30, 2011 the exchanged assets met the criteria for classification as held for sale.

Additionally, as of the second quarter of 2011, we determined that the sale of an aggregates facility and a ready-mixed concrete facility located outside the United States would not close within the next twelve months. Thus, these assets no longer meet the criteria for classification as held for sale. The property, plant & equipment of these foreign facilities was measured at the lower of fair value or carrying amount adjusted to recapture suspended depreciation.

The accompanying Condensed Consolidated Balance Sheets reflect our assets held for sale and liabilities of assets held for sale as of September 30, 2011 (exchange of assets), and as of December 31, 2010 and September 30, 2010 (facilities located outside the United States) as follows:

		September 30				December 31				September 30
in thousands		2011				2010				2010
Held for Sale
Current assets			$2,644				$3,460				$3,729
Property, plant & equipment, net			20,934				9,625				10,709
Other assets			3,305				122				144
Total assets held for sale			$26,883				$13,207				$14,582
Current liabilities			$0				$116				$460
Other liabilities			1,474				0				0
Total liabilities of assets held for sale			$1,474				$116				$460

During the third quarter of 2010, we acquired twelve ready-mixed concrete facilities for approximately $35,404,000 (total cash consideration). Our final purchase price allocation for this acquisition resulted in an immaterial revision to our September 30, 2010 balances for property, plant & equipment and other intangible assets as reflected in the accompanying Condensed Consolidated Balance Sheet.

During the first quarter of 2010, we sold three aggregates facilities for approximately $42,750,000 (total cash consideration) and recognized a pretax gain of $39,479,000.

NOTE 15: GOODWILL

Changes in the carrying amount of goodwill by reportable segment from December 31, 2010 to September 30, 2011 are summarized below:

GOODWILL
in thousands		Aggregates				Concrete				Asphalt Mix				Cement				Total
Gross Carrying Amount
Total as of December 31, 2010			$3,005,383				$0				$91,633				$252,664				$3,349,680
Goodwill of divested businesses			(10,300	)			0				0				0				(10,300	)
Total as of September 30, 2011			$2,995,083				$0				$91,633				$252,664				$3,339,380
Accumulated Impairment Losses
Total as of December 31, 2010			$0				$0				$0				($252,664	)			($252,664	)
Goodwill impairment loss			0				0				0				0				0
Total as of September 30, 2011			$0				$0				$0				($252,664	)			($252,664	)
Goodwill, net of Accumulated Impairment Losses
Total as of December 31, 2010			$3,005,383				$0				$91,633				$0				$3,097,016
Total as of September 30, 2011			$2,995,083				$0				$91,633				$0				$3,086,716