VULCAN MATERIALS CO, 10-Q filed on 11/3/2010
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2010
Jun. 30, 2009
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
Vulcan Materials CO 
 
Entity Central Index Key
0001396009 
 
Document Type
10-Q 
 
Document Period End Date
2010-09-30 
 
Amendment Flag
FALSE 
 
Document Fiscal Year Focus
2010 
 
Document Fiscal Period Focus
Q3 
 
Current Fiscal Year End Date
12/31 
 
Entity Well-known Seasoned Issuer
Yes 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Public Float
 
5,362,319,558 
Entity Common Stock, Shares Outstanding
128,390,617 
 
Condensed Consolidated Balance Sheets (Unaudited, except for December 31) (USD $)
In Thousands
9 Months Ended
Sep. 30,
2010
2009
Year Ended
Dec. 31, 2009
Assets
 
 
 
Cash and cash equivalents
$ 82,496 
$ 46,547 
$ 22,265 
Restricted cash
531 
Medium-term investments
3,910 
6,803 
4,111 
Accounts and notes receivable
 
 
 
Accounts and notes receivable, gross
414,316 
408,407 
276,746 
Less: Allowance for doubtful accounts
(9,382)
(9,394)
(8,722)
Accounts and notes receivable, net
404,934 
399,013 
268,024 
Inventories
 
 
 
Finished products
251,457 
265,422 
261,752 
Raw materials
22,924 
24,565 
21,807 
Products in process
5,905 
5,085 
3,907 
Operating supplies and other
35,958 
36,623 
37,567 
Inventories
316,244 
331,695 
325,033 
Deferred income taxes
66,718 
67,967 
57,967 
Prepaid expenses
42,729 
33,466 
50,817 
Assets held for sale
14,582 
15,072 
Total current assets
932,144 
885,491 
743,289 
Investments and long-term receivables
33,808 
31,424 
33,283 
Property, plant & equipment
 
 
 
Property, plant & equipment, cost
6,656,252 
6,678,317 
6,653,261 
Reserve for depr., depl. & amort.
(2,987,287)
(2,713,057)
(2,778,590)
Property, plant & equipment, net
3,668,965 
3,965,260 
3,874,671 
Goodwill
3,093,979 
3,093,979 
3,093,979 
Other intangible assets, net
693,779 
681,087 
682,643 
Other assets
106,922 
105,927 
105,085 
Total assets
8,529,597 
8,763,168 
8,532,950 
Liabilities
 
 
 
Current maturities of long-term debt
325,249 
60,421 
385,381 
Short-term borrowings
286,357 
236,512 
Trade payables and accruals
138,462 
141,884 
121,324 
Other current liabilities
207,085 
187,171 
113,109 
Liabilities of assets held for sale
460 
369 
Total current liabilities
671,256 
675,833 
856,695 
Long-term debt
2,432,521 
2,506,170 
2,116,120 
Deferred income taxes
849,925 
896,598 
887,268 
Other noncurrent liabilities
537,041 
599,039 
620,845 
Total liabilities
4,490,743 
4,677,640 
4,480,928 
Other commitments and contingencies (Notes 13 & 19)
 
 
 
Shareholders' equity
 
 
 
Common stock, $1 par value
128,391 
125,401 
125,912 
Capital in excess of par value
2,487,538 
2,342,765 
2,368,228 
Retained earnings
1,606,754 
1,797,036 
1,752,240 
Accumulated other comprehensive loss
(183,829)
(179,674)
(194,358)
Shareholders' equity
4,038,854 
4,085,528 
4,052,022 
Total liabilities and shareholders' equity
$ 8,529,597 
$ 8,763,168 
$ 8,532,950 
Condensed Consolidated Balance Sheets (Unaudited, except for December 31) (Parenthetical) (USD $)
Sep. 30, 2010
Mar. 31, 2010
Dec. 31, 2009
Sep. 30, 2009
Jun. 30, 2009
Shareholders' equity
 
 
 
 
 
Common stock, par value
$ 1 
$ 1 
$ 1 
$ 1 
$ 1 
Condensed Consolidated Statements of Earnings (Unaudited) (USD $)
In Thousands, except Per Share data
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Condensed Consolidated Statements of Earnings [Abstract]
 
 
 
 
Net sales
$ 699,792 
$ 738,664 
$ 1,857,085 
$ 1,987,939 
Delivery revenues
43,412 
39,528 
115,534 
112,407 
Total revenues
743,204 
778,192 
1,972,619 
2,100,346 
Cost of goods sold
573,045 
584,184 
1,607,109 
1,610,018 
Delivery costs
43,412 
39,528 
115,534 
112,407 
Cost of revenues
616,457 
623,712 
1,722,643 
1,722,425 
Gross profit
126,747 
154,480 
249,976 
377,921 
Selling, administrative and general expenses
77,560 
79,558 
247,431 
238,629 
Gain on sale of property, plant & equipment and businesses, net
476 
7,496 
50,210 
10,653 
Charge for legal settlement
40,000 
Other operating income (expense), net
769 
286 
2,117 
(2,885)
Operating earnings
50,432 
82,704 
14,872 
147,060 
Other income, net
1,637 
2,756 
1,780 
4,578 
Interest expense, net
47,526 
43,519 
134,541 
130,029 
Earnings (loss) from continuing operations before income taxes
4,543 
41,941 
(117,889)
21,609 
Benefit from income taxes
(6,048)
(5,983)
(61,491)
(9,621)
Earnings (loss) from continuing operations
10,591 
47,924 
(56,398)
31,230 
Earnings on discontinued operations, net of tax (Note 2)
2,655 
6,308 
6,905 
12,433 
Net earnings (loss)
13,246 
54,232 
(49,493)
43,663 
Basic earnings (loss) per share
 
 
 
 
Continuing operations
0.08 
0.38 
(0.44)
0.27 
Discontinued operations
0.02 
0.05 
0.05 
0.1 
Net earnings (loss) per share
0.1 
0.43 
(0.39)
0.37 
Diluted earnings (loss) per share
 
 
 
 
Continuing operations
0.08 
0.38 
(0.44)
0.27 
Discontinued operations
0.02 
0.05 
0.05 
0.1 
Net earnings (loss) per share
0.1 
0.43 
(0.39)
0.37 
Weighted-average common shares outstanding
 
 
 
 
Basic
128,602 
125,361 
127,840 
116,533 
Assuming dilution
128,910 
125,859 
127,840 
117,047 
Cash dividends declared per share of common stock
0.25 
0.25 
0.75 
1.23 
Depreciation, depletion, accretion and amortization
$ 97,697 
$ 99,243 
$ 289,174 
$ 298,158 
Effective tax rate from continuing operations
(1.331)
(0.143)
0.522 
(0.445)
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands
9 Months Ended
Sep. 30,
2010
2009
Operating Activities
 
 
Net earnings (loss)
$ (49,493)
$ 43,663 
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities
 
 
Depreciation, depletion, accretion and amortization
289,174 
298,158 
Net gain on sale of property, plant & equipment and businesses
(59,004)
(11,465)
Contributions to pension plans
(23,400)
(26,793)
Share-based compensation
15,198 
21,870 
Deferred tax provision
(51,060)
(26,477)
Changes in assets and liabilities before initial effects of business acquisitions and dispositions
(6,647)
51,845 
Other, net
13,059 
4,021 
Net cash provided by operating activities
127,827 
354,822 
Investing Activities
 
 
Purchases of property, plant & equipment
(62,104)
(94,165)
Proceeds from sale of property, plant & equipment
4,008 
6,399 
Proceeds from sale of businesses, net of transaction costs
50,954 
16,075 
Payment for businesses acquired, net of acquired cash
(35,404)
(36,980)
Redemption of medium-term investments
22 
30,590 
Other, net
341 
676 
Net cash used for investing activities
(42,183)
(77,405)
Financing Activities
 
 
Net short-term payments
(236,512)
(798,118)
Payment of current maturities and long-term debt
(193,994)
(296,555)
Proceeds from issuance of long-term debt, net of discounts
450,000 
397,660 
Debt issuance costs
(3,058)
(3,033)
Proceeds from issuance of common stock
41,734 
587,129 
Dividends paid
(95,696)
(140,048)
Proceeds from exercise of stock options
12,597 
10,958 
Other, net
(484)
943 
Net cash used for financing activities
(25,413)
(241,064)
Net increase in cash and cash equivalents
60,231 
36,353 
Cash and cash equivalents at beginning of year
22,265 
10,194 
Cash and cash equivalents at end of period
$ 82,496 
$ 46,547 
Basis of Presentation
Basis of Presentation
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, 2010 are not necessarily indicative of the results that may be expected for the year ended December 31, 2010. For further information, refer to the consolidated financial statements and footnotes included in our most recent Annual Report on Form 10-K.
We disaggregated our asphalt mix and concrete operating segments for reporting purposes as of January 1, 2010 (see Note 17).
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 Earnings.
Discontinued Operations
Discontinued Operations
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 determined 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). Under this earn-out agreement, cash plant margin for 5CP, as defined in the Asset Purchase Agreement, in excess of an annual threshold amount is shared equally between Vulcan and Basic Chemicals. 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 2010, we received a payment of $8,794,000 (recorded as gain on disposal of discontinued operations) under the 5CP earn-out related to performance during the year ended December 31, 2009. Any future payments received pursuant to the 5CP earn-out will be recorded as additional gain on disposal of discontinued operations. During 2009, we received $11,625,000 under the 5CP earn-out related to the year ended December 31, 2008. These 2009 receipts resulted in a gain on disposal of discontinued operations of $812,000 for 2009. Through September 30, 2010, we have received a total of $42,707,000 under the 5CP earn-out, a total of $9,606,000 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 $882,000 during the first nine months of 2010 and $521,000 during the first nine months of 2009.
There were no net sales or revenues from discontinued operations during the nine month periods ended September 30, 2010 or 2009. Results from discontinued operations are as follows (in thousands of dollars):
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2010     2009     2010     2009  
Discontinued operations
                               
Pretax earnings from results
  $ 4,425     $ 10,397     $ 3,565     $ 20,117  
Gain on disposal, net of transaction bonus
    0       88       7,912       584  
Income tax provision
    (1,770 )     (4,177 )     (4,572 )     (8,268 )
 
                       
Earnings on discontinued operations, net of tax
  $ 2,655     $ 6,308     $ 6,905     $ 12,433  
 
                       
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 a pretax gain recognized in the third quarter on a recovery from an insurer in a lawsuit involving perchloroethylene. This gain was offset in part by general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. The pretax earnings from results of discontinued operations in 2009 of $10,397,000 for the third quarter and $20,117,000 for the nine months ended September 30, 2009 relate primarily to settlements during the second and third quarters with two of our insurers in a lawsuit involving perchloroethylene. These settlements resulted in pretax gains of $10,500,000 for the third quarter of 2009 and $23,500,000 for the first nine months of 2009. The insurance proceeds and associated gain represent a partial recovery of legal and settlement costs recognized in prior periods.
Earnings Per Share (EPS)
Earnings Per Share (EPS)
Note 3 Earnings Per Share (EPS)
We report two earnings per share numbers: basic and diluted. These are computed by dividing net earnings (loss) 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 of shares):
                                 
    Three Months Ended   Nine Months Ended
    September 30   September 30
    2010   2009   2010   2009
Weighted-average common shares outstanding
    128,602       125,361       127,840       116,533  
Dilutive effect of
                               
Stock options/SOSARs
    58       288       0       234  
Other stock compensation plans
    250       210       0       280  
 
                               
Weighted-average common shares outstanding, assuming dilution
    128,910       125,859       127,840       117,047  
 
                               
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. Because we operated at a loss for the nine month period ended September 30, 2010, 406,000 shares that otherwise would have been included in our diluted weighted-average common shares outstanding computation, were excluded.
The number of antidilutive common stock equivalents for which the exercise price exceeds the weighted-average market price, are as follows (in thousands of shares):
                                 
    Three Months Ended   Nine Months Ended
    September 30   September 30
    2010   2009   2010   2009
Antidilutive common stock equivalents
    6,225       3,747       4,905       3,753  
Income Taxes
Income Taxes
Note 4 Income Taxes
Our tax provision and the corresponding 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 tax rate based on projected taxable income for the full year and record a quarterly tax provision in accordance with the anticipated annual 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 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 provision reflects the expected annual tax rate. Significant judgment is required in determining our effective interim tax rate and in evaluating our tax positions.
When application of the estimated annual effective tax rate distorts the financial results of an interim period, we calculate the income tax provision or benefit using an alternative methodology as prescribed by Accounting Standards Codification (ASC) 740-270-30-30 through 30-33. This alternative methodology results in an income tax provision or benefit based solely on the year-to-date pretax loss as adjusted for permanent differences on a pro rata basis.
We recognize a 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 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. Our effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as we consider appropriate.
In the first and second quarters of 2010, we applied the alternative methodology discussed above in the determination of the income tax provision from continuing operations. However, as of September 30, 2010, the conditions requiring the alternative method no longer existed. As a result, in the third quarter of 2010, we estimated the annual tax rate based on our projected taxable income for the full year and recorded a quarterly tax provision in accordance with the anticipated annual rate.
We recorded a tax benefit from continuing operations of $6,048,000 in the third quarter of 2010 compared to $5,983,000 in the third quarter of 2009. An adjustment to the current quarter’s income tax provision was required so that the year-to-date provision reflects the expected annual tax rate. During the first nine months of 2010, we recognized a tax benefit from continuing operations of $61,491,000 as compared to $9,621,000 during the same period of 2009. The increase in our income tax benefit, after recording the effect of the pretax loss at the statutory rate, resulted largely from an increase in the expected state income tax benefit.
Medium-term Investments
Medium-term Investments
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, 2010 — $5,531,000,

December 31, 2009 — $5,554,000 and September 30, 2009 — $8,247,000. 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, we changed the classification of our investments in The Reserve funds from cash and cash equivalents to medium-term investments and reduced the carrying value of our investment to its estimated fair value, as follows: September 30, 2010 — $3,910,000, December 31, 2009 — $4,111,000 and September 30, 2009 — $6,803,000. See Note 7 for further discussion of the fair value determination.
The Reserve redeemed $22,000 of our investment during the nine months ended September 30, 2010 and $30,590,000 during the nine months ended September 30, 2009. Based on public statements issued by The Reserve and the maturity dates of the underlying investments, we believe that proceeds from the liquidation of the money funds in which we have investments will be received within twelve months of September 30, 2010, and therefore, such investments are classified as current.
Derivative Instruments
Derivative Instruments
Note 6 Derivative Instruments
During the normal course of operations, we are exposed to market risks including fluctuations in interest rates, fluctuations in foreign currency exchange rates and changes in 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 interest rate swap agreements described below were designated as cash flow hedges of future interest payments.
In December 2007, we issued $325,000,000 of 3-year floating (variable) rate notes that bear 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 (notional) amount of $325,000,000. Under this agreement, we pay a fixed interest rate of 5.25% and receive 3-month LIBOR plus 1.25% per annum. Concurrent with each quarterly interest payment, the portion of this swap related to that interest payment is settled and the associated realized gain or loss is recognized. The pretax loss of $3,044,000 accumulated in Other Comprehensive Income (OCI) related to this interest rate swap will be reclassified to earnings by the end of the current year in conjunction with the retirement of the related debt.
Additionally, during 2007, we entered into fifteen forward starting interest rate swap agreements for a total notional amount of $1,500,000,000. Upon the issuance 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 loss are being amortized to interest expense over the term of the related debt. For the 12-month period ending September 30, 2011, we estimate that $8,053,000 of the pretax loss accumulated in OCI will be reclassified to 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 (in thousands of dollars):
                             
        Fair Value 1  
        September 30     December 31     September 30  
    Balance Sheet Location   2010     2009     2009  
Liability derivatives
                           
Interest rate derivatives
  Other current liabilities   $ 3,044     $ 11,193     $ 0  
Interest rate derivatives
  Other noncurrent liabilities     0       0       13,444  
   
 
                 
Total derivatives liability
      $ 3,044     $ 11,193     $ 13,444  
 
                     
 
1   See Note 7 for further discussion of the fair value determination.
The effects of the cash flow hedge derivative instruments on the accompanying Condensed Consolidated Statements of Earnings for the three and nine months ended September 30 are as follows (in thousands of dollars):
                                     
        Three Months Ended   Nine Months Ended
    Location on   September 30   September 30
    Statement   2010   2009   2010   2009
Interest rate derivatives
                                   
Loss recognized in OCI (effective portion)
  Note 8   $ (307 )   $ (2,174 )   $ (881 )   $ (3,844 )
 
                                   
Loss reclassified from Accumulated OCI (effective portion)
  Interest expense     (4,799 )     (4,588 )     (14,695 )     (11,915 )
Fair Value Measurements
Fair Value Measurements
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 (in thousands of dollars):
                         
    Level 1  
    September 30     December 31     September 30  
    2010     2009     2009  
Fair value recurring
                       
Rabbi Trust
                       
Mutual funds
  $ 13,146     $ 10,490     $ 10,084  
Equities
    7,456       8,472       8,830  
 
                 
Net asset
  $ 20,602     $ 18,962     $ 18,914  
 
                 
                         
    Level 2  
    September 30     December 31     September 30  
    2010     2009     2009  
Fair value recurring
                       
Medium-term investments
  $ 3,910     $ 4,111     $ 6,803  
Interest rate derivative
    (3,044 )     (11,193 )     (13,444 )
Rabbi Trust
                       
Common/collective trust funds
    2,361       4,084       3,783  
 
                 
Net asset (liability)
  $ 3,227     $ (2,998 )   $ (2,858 )
 
                 
The fair values of the Rabbi Trust 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 are 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 may reduce the principal available for distribution.
The interest rate derivative consists of an interest rate swap agreement applied to our $325,000,000 3-year notes issued December 2007 and is more fully described in Note 6. This interest rate swap is measured at fair value using a market approach based on the prevailing market interest rate as of the measurement date.
The carrying values of our cash equivalents, restricted cash, accounts and notes receivable, current maturities of long-term debt, trade payables, accrued expenses and short-term borrowings 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.
Comprehensive Income (Loss)
Comprehensive Income (Loss)
Note 8 Comprehensive Income (Loss)
Comprehensive income (loss) includes charges and credits to equity from nonowner sources and comprises two subsets: net earnings (loss) and other comprehensive income (loss). Total comprehensive income (loss) comprises the following (in thousands of dollars):
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2010     2009     2010     2009  
Net earnings (loss)
  $ 13,246     $ 54,232     $ (49,493 )   $ 43,663  
Other comprehensive income (loss)
                               
Fair value adjustments to cash flow hedges, net of tax
    (183 )     (1,286 )     (503 )     (2,281 )
Reclassification adjustment for cash flow hedges included in net earnings (loss), net of tax
    2,849       2,702       8,347       7,036  
Amortization of pension and postretirement plan actuarial loss and prior service cost, net of tax
    963       283       2,685       852  
 
                       
Total comprehensive income (loss)
  $ 16,875     $ 55,931     $ (38,964 )   $ 49,270  
 
                       
Amounts accumulated in other comprehensive loss, net of tax, are as follows (in thousands of dollars):
                         
    September 30     December 31     September 30  
    2010     2009     2009  
Cash flow hedges
  $ (41,521 )   $ (49,365 )   $ (51,764 )
Pension and postretirement plans
    (142,308 )     (144,993 )     (127,910 )
 
                 
Accumulated other comprehensive loss
  $ (183,829 )   $ (194,358 )   $ (179,674 )
 
                 
Shareholders' Equity
Shareholders' Equity
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. The transaction increased shareholders’ equity by $53,864,000 (common stock $1,190,000 and capital in excess of par $52,674,000).
In June 2009, we completed a public offering of common stock (par value of $1 per share) resulting in the issuance of 13,225,000 common shares at a price of $41.00 per share. The total number of shares issued through the offering included 1,725,000 shares issued upon full exercise of the underwriters’ option to purchase additional shares. We received net proceeds of $519,993,000 (net of commissions and transaction costs of $22,232,000) from the sale of the shares. The net proceeds from the offering were used for debt reduction and general corporate purposes. The transaction increased shareholders’ equity by $519,993,000 (common stock $13,225,000 and capital in excess of par $506,768,000).
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, 2010 — issued 882,131 shares for cash proceeds of $41,734,000; nine months ended September 30, 2009 — issued 778,162 shares for cash proceeds of $34,899,000.
During the second quarter of 2009, we issued 789,495 shares of common stock in connection with business acquisitions. We received net cash proceeds of $33,862,000 from the share issuance and acquired the business for a cash payment of $36,980,000, net of acquired cash.
No shares were held in treasury as of September 30, 2010, December 31, 2009 and September 30, 2009. As of September 30, 2010, 3,411,416 shares may be repurchased under the current authorization of our Board of Directors.
Benefit Plans
Benefit Plans
Note 10 Benefit Plans
The following tables set forth the components of net periodic benefit cost (in thousands of dollars):
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
PENSION BENEFITS   2010     2009     2010     2009  
Components of net periodic benefit cost
                               
Service cost
  $ 4,805     $ 4,660     $ 14,413     $ 13,979  
Interest cost
    10,405       10,485       31,216       31,455  
Expected return on plan assets
    (12,530 )     (11,626 )     (37,591 )     (34,878 )
Amortization of prior service cost
    115       115       345       345  
Amortization of actuarial loss
    1,438       412       4,314       1,238  
 
                       
Net periodic pension benefit cost
  $ 4,233     $ 4,046     $ 12,697     $ 12,139  
 
                       
Pretax reclassification from OCI included in net periodic pension benefit cost
  $ 1,553     $ 527     $ 4,659     $ 1,583  
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
OTHER POSTRETIREMENT BENEFITS   2010     2009     2010     2009  
Components of net periodic benefit cost
                               
Service cost
  $ 1,066     $ 978     $ 3,199     $ 2,934  
Interest cost
    1,663       1,762       4,988       5,284  
Amortization of prior service credit
    (183 )     (205 )     (547 )     (617 )
Amortization of actuarial loss
    222       149       666       448  
 
                       
Net periodic postretirement benefit cost
  $ 2,768     $ 2,684     $ 8,306     $ 8,049  
 
                       
Pretax reclassification from OCI included in net periodic postretirement benefit cost
  $ 39     $ (56 )   $ 119     $ (169 )
The reclassifications from other comprehensive income (OCI) noted in the tables above are related to amortization of prior service costs or credits and actuarial losses.
We contributed $72,500,000 ($18,636,000 in cash and $53,864,000 in stock — 1,190,000 shares valued at $45.26 per share) in March 2010 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.
During the nine months ended September 30, 2010 and 2009, contributions of $77,264,000 and $26,793,000, respectively, were made to our pension plans (qualified and nonqualified).
Credit Facilities, Short-term Borrowings and Long-term Debt
Credit Facilities, Short-term Borrowings and Long-term Debt
Note 11 Credit Facilities, Short-term Borrowings and Long-term Debt
Short-term borrowings are summarized as follows (in thousands of dollars):
                         
    September 30     December 31     September 30  
    2010     2009     2009  
Short-term borrowings
                       
Commercial paper
  $ 0     $ 236,512     $ 286,357  
 
                 
Total short-term borrowings
  $ 0     $ 236,512     $ 286,357  
 
                 
 
                       
Commercial paper
                       
Maturity
    n/a     42 days     1 to 63 days  
Weighted-average interest rate
    n/a       0.39 %     0.42 %
We utilize our bank lines of credit as liquidity back-up for outstanding commercial paper or draw on the bank lines to access LIBOR-based short-term loans to fund our borrowing requirements. Periodically, we issue commercial paper for general corporate purposes, including working capital requirements.
Our policy is to maintain committed credit facilities at least equal to our outstanding commercial paper. Unsecured bank lines of credit totaling $1,500,000,000 were maintained at September 30, 2010, all of which expire November 16, 2012. As of September 30, 2010, there were no borrowings under the lines of credit. Interest rates referable to borrowings under these lines of credit are determined at the time of borrowing based on current market conditions. Pricing of bank loans, if any lines were drawn, would be 30 basis points (0.30%) over LIBOR based on our long-term debt ratings at September 30, 2010.
All lines of credit extended to us in 2010 and 2009 were based solely on a commitment fee; no compensating balances were required. In the normal course of business, we maintain balances for which we are credited with earnings allowances. To the extent the earnings allowances are not sufficient to fully compensate banks for the services they provide, we pay the fee equivalent for the differences.
In July 2010, we established a $450,000,000 5-year syndicated term loan with a floating rate based on a spread over LIBOR (1, 2, 3 or
6-month LIBOR options). The proceeds were used to repay outstanding borrowings, including the $100,000,000 outstanding balance of our 3-year floating loan issued in 2008 and all outstanding commercial paper, and for general corporate purposes. As of September 30, 2010, the spread was 2.25 percentage points above the 1-month LIBOR of 0.26% for a total rate of 2.51% on the $450,000,000 outstanding balance. The spread is subject to increase if our long-term credit ratings are downgraded. The loan requires quarterly principal payments of $10,000,000 starting in June 2013 and a final principal payment of $360,000,000 in July 2015.
In February 2009, we issued $400,000,000 of long-term notes in two related series (tranches), as follows: $150,000,000 of 10.125% coupon notes due December 2015 and $250,000,000 of 10.375% coupon notes due December 2018. The proceeds were used primarily to repay outstanding borrowings. The notes are presented in the table below net of unamortized discounts from par. Discounts and debt issuance costs are being amortized using the effective interest method over the respective lives of the notes.
As of September 30, 2010, $75,000 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 borrowings and long-term debt, are unsecured.
Long-term debt is summarized as follows (in thousands of dollars):
                         
    September 30     December 31     September 30  
    2010     2009     2009  
Long-term debt
                       
5-year floating loan issued 2010
  $ 450,000     $ 0     $ 0  
10.125% 2015 notes issued 20091
    149,582       149,538       149,524  
10.375% 2018 notes issued 20092
    248,360       248,270       248,241  
3-year floating loan issued 2008
    0       175,000       240,000  
6.30% 5-year notes issued 20083
    249,704       249,632       249,609  
7.00% 10-year notes issued 20084
    399,649       399,625       399,617  
3-year floating notes issued 2007
    325,000       325,000       325,000  
5.60% 5-year notes issued 20075
    299,746       299,666       299,640  
6.40% 10-year notes issued 20076
    349,848       349,837       349,833  
7.15% 30-year notes issued 20077
    249,322       249,317       249,316  
Private placement notes
    0       15,243       15,276  
Medium-term notes
    21,000       21,000       21,000  
Industrial revenue bonds
    14,000       17,550       17,550  
Other notes
    1,559       1,823       1,985  
 
                 
Total debt excluding short-term borrowings
  $ 2,757,770     $ 2,501,501     $ 2,566,591  
Less current maturities of long-term debt
    325,249       385,381       60,421  
 
                 
Total long-term debt
  $ 2,432,521     $ 2,116,120     $ 2,506,170  
 
                 
 
                       
Estimated fair value of total long-term debt
  $ 2,689,770     $ 2,300,522     $ 2,676,278  
 
                 
 
1   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $418 thousand, December 31, 2009 — $462 thousand and September 30, 2009 — $476 thousand. The effective interest rate for these 2015 notes is 10.31%.
 
2   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $1,640 thousand, December 31, 2009 — $1,730 thousand and September 30, 2009 — $1,759 thousand. The effective interest rate for these 2018 notes is 10.58%.
 
3   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $296 thousand, December 31, 2009 — $368 thousand and September 30, 2009 — $391 thousand. The effective interest rate for these 5-year notes is 7.47%.
 
4   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $351 thousand, December 31, 2009 — $375 thousand and September 30, 2009 — $383 thousand. The effective interest rate for these 10-year notes is 7.86%.
 
5   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $254 thousand, December 31, 2009 — $334 thousand and September 30, 2009 — $360 thousand. The effective interest rate for these 5-year notes is 6.58%.
 
6   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $152 thousand, December 31, 2009 — $163 thousand and September 30, 2009 — $167 thousand. The effective interest rate for these 10-year notes is 7.39%.
 
7   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $678 thousand, December 31, 2009 — $683 thousand and September 30, 2009 — $684 thousand. The effective interest rate for these 30-year notes is 8.04%.
The estimated fair values of long-term debt presented in the table above were 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 debt agreements do not subject us to contractual restrictions with regard to working capital or the amount we may expend for cash dividends and purchases of our stock. Our bank credit facilities (term loan and unsecured bank lines of credit) contain a covenant that our percentage of consolidated debt to total capitalization (total debt as a percentage of total capital) may not exceed 65%. Our total debt as a percentage of total capital was 40.6% as of September 30, 2010; 40.3% as of December 31, 2009; and 41.1% as of September 30, 2009.
Asset Retirement Obligations
Asset Retirement Obligations
Note 12 Asset Retirement Obligations
Asset retirement obligations 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 asset retirement obligation 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 asset retirement obligation is settled for other than the carrying amount of the liability, we recognize a gain or loss on settlement.
We record all asset retirement obligations for which we have legal obligations for land reclamation at estimated fair value. Essentially all these asset retirement obligations 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 asset retirement obligation (ARO) operating costs related to accretion of the liabilities and depreciation of the assets as follows (in thousands of dollars):
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2010     2009     2010     2009  
ARO operating costs
                               
Accretion
  $ 2,081     $ 1,994     $ 6,525     $ 6,599  
Depreciation
    3,050       3,445       9,390       10,336  
 
                       
Total
  $ 5,131     $ 5,439     $ 15,915     $ 16,935  
 
                       
ARO operating costs for our continuing operations are reported in cost of goods sold. Asset retirement obligations are reported within other noncurrent liabilities in our accompanying Condensed Consolidated Balance Sheets.
Reconciliations of the carrying amounts of our asset retirement obligations are as follows (in thousands of dollars):
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2010     2009     2010     2009  
Asset retirement obligations
                               
Balance at beginning of period
  $ 162,168     $ 168,475     $ 167,757     $ 173,435  
Liabilities incurred
    1,016       107       2,457       441  
Liabilities settled
    (4,762 )     (2,838 )     (8,879 )     (8,763 )
Accretion expense
    2,081       1,994       6,525       6,599  
Revisions up (down)
    (288 )     268       (7,645 )     (3,706 )
 
                       
Balance at end of period
  $ 160,215     $ 168,006     $ 160,215     $ 168,006  
 
                       
Downward revisions to our asset retirement obligations during 2010 relate primarily to changes in the estimated settlement dates at numerous sites.
Standby Letters of Credit
Standby Letters of Credit
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 standby letters of credit to back our obligations to pay or perform when required to do so pursuant 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. Since banks consider 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 renewable annually at the option of the beneficiary.
Our standby letters of credit as of September 30, 2010 are summarized in the table below (in thousands of dollars):
         
    September 30  
    2010  
Standby letters of credit
       
Risk management requirement for insurance claims
  $ 40,411  
Payment surety required by utilities
    133  
Contractual reclamation/restoration requirements
    10,391  
Financial requirement for industrial revenue bond
    14,231  
 
     
Total
  $ 65,166  
 
     
Of the total $65,166,000 outstanding letters of credit, $62,134,000 is backed by our $1,500,000,000 bank credit facility which expires November 16, 2012.
Acquisitions and Divestitures
Acquisitions and Divestitures
Note 14 Acquisitions and Divestitures
During the third quarter of 2010, we acquired twelve ready-mixed concrete facilities located in Georgia for approximately $35,404,000 (total cash consideration).
During the first quarter of 2010, we sold three aggregates facilities located in rural Virginia for cash proceeds of approximately $42,750,000.
Assets held for sale and liabilities of assets held for sale as presented in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009, relate to an aggregates production facility and ready-mixed concrete operation located outside the United States. We expect the transaction to close within the 12-month period ending September 30, 2011. The major classes of assets and liabilities of assets classified as held for sale are as follows (in thousands of dollars):
                 
    September 30     December 31  
    2010     2009  
Current assets
  $ 3,729     $ 3,799  
Property, plant & equipment, net
    10,709       11,117  
Other assets
    144       156  
 
           
Total assets held for sale
  $ 14,582     $ 15,072  
 
           
Current liabilities
  $ 460     $ 369  
 
           
Total liabilities of assets held for sale
  $ 460     $ 369  
 
           
During the nine months ended September 30, 2009, we acquired the following assets for approximately $38,955,000 (total note and cash consideration), net of acquired cash:
    leasehold interest in a rail yard, and
 
    two aggregates production facilities.
Goodwill
Goodwill
Note 15 Goodwill
There were no changes in the carrying amount of goodwill by reportable segment from December 31, 2009 to September 30, 2010 as summarized below (in thousands of dollars):
Goodwill
                                         
    Aggregates     Concrete     Asphalt mix     Cement     Total  
Gross carrying amount
                                       
Total as of December 31, 2009
  $ 3,002,346     $ 0     $ 91,633     $ 252,664     $ 3,346,643  
 
                             
Goodwill of acquired businesses
    0       0       0       0       0  
 
                             
Total as of September 30, 2010
  $ 3,002,346     $ 0     $ 91,633     $ 252,664     $ 3,346,643  
 
                             
Accumulated impairment losses
                                       
Total as of December 31, 2009
  $ 0     $ 0     $ 0     $ (252,664 )   $ (252,664 )
 
                             
Goodwill impairment loss
    0       0       0       0       0  
 
                             
Total as of September 30, 2010
  $ 0     $ 0     $ 0     $ (252,664 )   $ (252,664 )
 
                             
Goodwill, net of accumulated impairment losses
                                       
Total as of December 31, 2009
  $ 3,002,346     $ 0     $ 91,633     $ 0     $ 3,093,979  
 
                             
Total as of September 30, 2010
  $ 3,002,346     $ 0     $ 91,633     $ 0     $ 3,093,979  
 
                             
New Accounting Standards
New Accounting Standards
Note 16 New Accounting Standards
Recently Adopted
Enhanced disclosures for fair value measurements — As of and for the interim period ended March 31, 2010, we adopted Accounting Standards Update (ASU) No. 2010-6, “Improving Disclosures about Fair Value Measurements” (ASU 2010-6) as it relates to disclosures about transfers into and out of Level 1 and 2. Our adoption of this standard had no impact on our financial position, results of operations or liquidity. We will adopt ASU 2010-6 as it relates to separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements as of and for the interim period ended March 31, 2011.
Segment Reporting - Continuing Operations
Segment Reporting- Continuing Operations
Note 17 Segment Reporting – Continuing Operations
We have four operating segments organized around our principal product lines: aggregates, concrete, asphalt mix and cement. Historically, we combined our Asphalt mix and Concrete operating segments into one reporting segment as the products are similar in nature and the businesses exhibited similar economic characteristics, production processes, types and classes of customer, methods of distribution and regulatory environments. We routinely received inquiries from our investors specific to these individual operating segments. In an effort to provide more meaningful information to the public, these two segments are now reported separately. We have recast our 2009 data to reflect this change in reportable segments to conform to the current period’s presentation.
The majority of our activities are domestic. We sell a relatively small amount of aggregates outside the United States. Transactions between our reportable segments are recorded at prices approximating market levels. Management reviews earnings from the product line reporting units principally at the gross profit level.
                                 
    Three Months Ended     Nine Months Ended  
Segment Financial Disclosure   September 30     September 30  
Amounts in millions   2010     2009     2010     2009  
TOTAL REVENUES
                               
Aggregates
                               
Segment revenues
  $ 514.3     $ 533.0     $ 1,369.5     $ 1,432.3  
Intersegment sales
    (44.8 )     (48.1 )     (119.2 )     (128.0 )
 
                       
Net sales
    469.5       484.9       1,250.3       1,304.3  
 
                       
Concrete
                               
Segment revenues
    105.1       119.3       293.0       348.7  
Intersegment sales
    0.0       0.0       0.0       (0.1 )
 
                       
Net sales
    105.1       119.3       293.0       348.6  
 
                       
Asphalt mix
                               
Segment revenues
    115.8       123.9       282.3       306.0  
Intersegment sales
    0.0       0.0       0.0       0.0  
 
                       
Net sales
    115.8       123.9       282.3       306.0  
 
                       
Cement
                               
Segment revenues
    20.3       19.8       61.2       56.4  
Intersegment sales
    (10.9 )     (9.2 )     (29.7 )     (27.4 )
 
                       
Net sales
    9.4       10.6       31.5       29.0  
 
                       
Total
                               
Net sales
    699.8       738.7       1,857.1       1,987.9  
Delivery revenues
    43.4       39.5       115.5       112.4  
 
                       
Total revenues
  $ 743.2     $ 778.2     $ 1,972.6     $ 2,100.3  
 
                       
GROSS PROFIT
                               
Aggregates
  $ 125.2     $ 133.3     $ 262.5     $ 323.7  
Concrete
    (10.1 )     (0.6 )     (31.7 )     (3.7 )
Asphalt mix
    13.4       21.3       21.8       59.2  
Cement
    (1.8 )     0.5       (2.6 )     (1.3 )
 
                       
Total gross profit
  $ 126.7     $ 154.5     $ 250.0     $ 377.9  
 
                       
Depreciation, Depletion, Accretion and Amortization
                               
Aggregates
  $ 74.5     $ 78.1     $ 222.6     $ 235.1  
Concrete
    13.6       12.8       40.1       39.0  
Asphalt mix
    2.2       2.2       6.7       6.4  
Cement
    5.8       4.9       15.3       14.3  
Corporate and other unallocated
    1.6       1.2       4.5       3.4  
 
                       
Total depreciation, depletion, accretion and amortization
  $ 97.7     $ 99.2     $ 289.2     $ 298.2  
 
                       
Supplemental Cash Flow Information
Supplemental Cash Flow Information
Note 18 Supplemental Cash Flow Information
Supplemental information referable to our Condensed Consolidated Statements of Cash Flows is summarized below (in thousands of dollars):
                 
    Nine Months Ended
    September 30
    2010   2009
Cash payments (refunds)
               
Interest (exclusive of amount capitalized)
  $ 101,917     $ 109,586  
Income taxes
    3,897       (9,706 )
 
Noncash investing and financing activities
               
Accrued liabilities for purchases of property, plant & equipment
    4,674       13,436  
Note received from sale of business
    0       1,450  
Debt issued for purchases of property, plant & equipment
    0       1,984  
Stock issued for pension contribution (Note 9)
    53,864       0  
Proceeds receivable from issuance of common stock
    0       1,712  
Liabilities assumed in business acquisitions
    150       0  
Other Commitments and Contingencies
Other Commitments and Contingencies
Note 19 Other Commitments and Contingencies
We are a defendant in various lawsuits in the ordinary course of business. It is not possible to determine with precision the outcome, or the amount of liability, if any, under these lawsuits, especially where the cases involve possible jury trials with as yet undetermined jury panels.
In addition to these lawsuits in which we are involved in the ordinary course of business, certain other legal proceedings are more specifically described below.
Florida Antitrust Litigation — Our subsidiary, Florida Rock Industries, Inc., has been named as a defendant in a number of class action lawsuits filed in the United States District Court for the Southern District of Florida. The lawsuits were filed by several ready-mixed concrete producers and construction companies against a number of concrete and cement producers and importers in Florida. There are now two consolidated amended complaints: (1) on behalf of direct independent ready-mixed concrete producers, and (2) on behalf of indirect users of ready-mixed concrete. The other defendants include Cemex Corp., Prestige and Tarmac. The complaints allege various violations under the federal antitrust laws, including price fixing and market allocations. We have no reason to believe that Florida Rock is liable for any of the matters alleged in the complaint, and we intend to defend the case vigorously.
IDOT/Joliet Road — In September 2001, we were named a defendant in a suit brought by the Illinois Department of Transportation (IDOT), in the Circuit Court of Cook County, Chancery Division, Illinois, alleging damage to a 0.9-mile section of Joliet Road that bisects our McCook quarry in McCook, Illinois, a Chicago suburb. On May 18, 2010, we settled this lawsuit for $40 million and recognized the full settlement as a charge to operations in the second quarter of 2010. Under the terms of the settlement, we paid IDOT $20 million in May 2010 and are obligated to pay the final $20 million no later than 9 months from the date of settlement. We are taking appropriate actions, including participating in several arbitrations, to recover the settlement amount in excess of the self-insured retention of $2 million, as well as a portion of our defense costs from our insurers. While we believe this settlement is covered by insurance policies, the ultimate amount and timing of such recoveries, which will be recorded as income when realized, cannot be predicted with certainty.
Lower Passaic River Clean-Up — We have been sued as a third-party defendant in New Jersey Department of Environmental Protection, et al. v. Occidental Chemical Corporation, et al., a case brought by the New Jersey Department of Environmental Protection in the New Jersey Superior Court. The third-party complaint was filed on February 4, 2009. This suit by the New Jersey Department of Environmental Protection seeks recovery of past and future clean-up costs as well as unspecified economic damages, punitive damages, penalties and a variety of other forms of relief arising from alleged discharges into the Passaic River of dioxin and other unspecified hazardous substances. Our former Chemicals Division operated a plant adjacent to the Passaic River and has been sued as a third-party defendant, along with approximately 300 other parties. Additionally, Vulcan and approximately 70 other companies are parties to a May 2007 Administrative Order of Consent with the U.S. Environmental Protection Agency to perform a Remedial Investigation/Feasibility Study of the contamination in the lower 17 miles of the Passaic River. This study is ongoing. At this time, we cannot determine the likelihood or reasonably estimate a range of loss pertaining to this matter.
Perchloroethylene cases
We are a defendant in cases involving perchloroethylene (perc), which was a product manufactured by our former Chemicals business. Perc is a cleaning solvent used in dry cleaning and other industrial applications. These cases involve various allegations of groundwater contamination or exposure to perc allegedly resulting in personal injury. Vulcan is vigorously defending all of these cases. At this time, we cannot determine the likelihood or reasonably estimate a range of loss pertaining to any of these matters, which are listed below:
    California Water Service Company — On June 6, 2008, we were served in an action styled California Water Service Company v. Dow, et al., now pending in the San Mateo County Superior Court, California. According to the complaint, California Water Service Company “owns and/or operates public drinking water systems, and supplies drinking water to hundreds of thousands of residents and businesses throughout California.” The complaint alleges that water systems in a number of communities have been contaminated with perc. The plaintiff is seeking compensatory damages and punitive damages. Discovery is ongoing.
 
    City of Sunnyvale California — On January 6, 2009, we were served in an action styled City of Sunnyvale v. Legacy Vulcan Corporation, f/k/a Vulcan Materials Company, filed in the San Mateo County Superior Court, California. The plaintiffs are seeking cost recovery and other damages for alleged environmental contamination from perc and its breakdown products at the Sunnyvale Town Center Redevelopment Project. Discovery is ongoing. A trial date of January 9, 2012 has been set.
 
    Suffolk County Water Authority — On May 4, 2010, we were served in an action styled Suffolk County Water Authority v. The Dow Chemical Company, et al., in the United States District Court for the Eastern District of New York. This case was subsequently dismissed and refiled in the Supreme Court for Suffolk County, State of New York. The complaint alleges that the plaintiff “owns and/or operates drinking water systems and supplies drinking water to thousands of residents and businesses, in Suffolk County, New York.” The complaint alleges that perc and its degradation products “have been and are contaminating and damaging Plaintiff’s drinking water supply wells.” The plaintiff is seeking compensatory and punitive damages.
 
    United States Virgin Islands — There are currently two cases:
    Government of the United States; Department of Planning and Natural Resources; and Commissioner Robert Mathes, in his capacity as Trustee for the Natural Resources of the Territory of The United States Virgin Islands v. Vulcan Materials Company, et al. Plaintiff brought this action based on parens patriae doctrine for injury to quasi-sovereign interest on the island of St. Thomas (injuries to groundwater resources held in public trust). It is alleged that the island’s sole source of drinking water (the Tutu aquifer) is contaminated with perc. The primary source of perc contamination allegedly emanated from the former Laga facility (a textile manufacturing site). The perc defendants are alleged to have failed to adequately warn perc users of the dangers posed by the use and disposal of perc. It is also alleged that perc from O’Henry Dry Cleaners has contributed to the perc contamination in the Tutu aquifer. This case has been dismissed, but we anticipate it will be refiled in territorial court.
    L’Henry, Inc., d/b/a O’Henry Cleaners and Cyril V. Francois, LLC v. Vulcan and Dow. Plaintiffs are the owners of a dry cleaning business on St. Thomas. It is alleged that perc from the dry cleaner contributed to the contamination of the Tutu Wells aquifer, and that Vulcan as a perc manufacturer failed to properly warn the dry cleaner of the proper disposal method for perc, resulting in unspecified damages to the dry cleaner. A trial date of April 4, 2011, has been set for this matter.
    Addair — This is a purported class action case for medical monitoring and personal injury damages styled Addair et al. v. Processing Company, LLC, et al., pending in the Circuit Court of Wyoming County, West Virginia. The plaintiffs allege various personal injuries from exposure to perc used in coal sink labs. Discovery in this case is complete. However, pending the ruling of the Court on the class certification in this matter, the plaintiffs recently filed over 100 individual actions in various state courts in West Virginia. Since the individual cases were only recently filed, there has been no discovery conducted.
 
    Santarsiero — This is a case styled Robert Santarsiero v. R.V. Davies, et al., pending in Supreme Court, New York County, New York. The plaintiff alleges personal injury (kidney cancer) from exposure to perc. We were brought in as a third-party defendant by original defendant R.V. Davies. Discovery is ongoing.
 
    R.R. Street Indemnity — Street, a former distributor of perc manufactured by us, alleges that we owe Street, and its insurer (National Union), a defense and indemnity in several of these litigation matters, as well as some prior litigation which we have now settled. National Union alleges that we are obligated to contribute to National Union’s share of defense fees, costs and any indemnity payments made on Street’s behalf. We are having ongoing discussions with Street about the nature and extent of indemnity obligations, if any, and to date there has been no resolution of these issues.
It is not possible to predict with certainty the ultimate outcome of these and other legal proceedings in which we are involved and a number of factors, including developments in ongoing discovery or adverse rulings, could cause actual losses to differ materially from accrued costs. We believe the amounts accrued in our financial statements as of September 30, 2010 are sufficient to address claims and litigation for which a loss was determined to be probable and reasonably estimable. No liability was recorded for claims and litigation for which a loss was determined to be only reasonably possible or for which a loss could not be reasonably estimated. In addition, losses on certain claims and litigation described above may be subject to limitations on a per occurrence basis by excess insurance, as described in our most recent Annual Report on Form 10-K.
New Accounting Standards (Policies)
Accounting Standards Update (ASU) No. 2010-6, "Improving Disclosures about Fair Value Measurements"
Enhanced disclosures for fair value measurements — As of and for the interim period ended March 31, 2010, we adopted Accounting Standards Update (ASU) No. 2010-6, “Improving Disclosures about Fair Value Measurements” (ASU 2010-6) as it relates to disclosures about transfers into and out of Level 1 and 2. Our adoption of this standard had no impact on our financial position, results of operations or liquidity. We will adopt ASU 2010-6 as it relates to separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements as of and for the interim period ended March 31, 2011.
Discontinued Operations (Tables)
Results from discontinued operations
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2010     2009     2010     2009  
Discontinued operations
                               
Pretax earnings from results
  $ 4,425     $ 10,397     $ 3,565     $ 20,117  
Gain on disposal, net of transaction bonus
    0       88       7,912       584  
Income tax provision
    (1,770 )     (4,177 )     (4,572 )     (8,268 )
 
                       
Earnings on discontinued operations, net of tax
  $ 2,655     $ 6,308     $ 6,905     $ 12,433  
 
                       
Earnings Per Share (EPS) (Tables)
                                 
    Three Months Ended   Nine Months Ended
    September 30   September 30
    2010   2009   2010   2009
Weighted-average common shares outstanding
    128,602       125,361       127,840       116,533  
Dilutive effect of
                               
Stock options/SOSARs
    58       288       0       234  
Other stock compensation plans
    250       210       0       280  
 
                               
Weighted-average common shares outstanding, assuming dilution
    128,910       125,859       127,840       117,047  
 
                               
                                 
    Three Months Ended   Nine Months Ended
    September 30   September 30
    2010   2009   2010   2009
Antidilutive common stock equivalents
    6,225       3,747       4,905       3,753  
Derivative Instruments (Tables)
                             
        Fair Value 1  
        September 30     December 31     September 30  
    Balance Sheet Location   2010     2009     2009  
Liability derivatives
                           
Interest rate derivatives
  Other current liabilities   $ 3,044     $ 11,193     $ 0  
Interest rate derivatives
  Other noncurrent liabilities     0       0       13,444  
   
 
                 
Total derivatives liability
      $ 3,044     $ 11,193     $ 13,444  
 
                     
 
1   See Note 7 for further discussion of the fair value determination.
                                     
        Three Months Ended   Nine Months Ended
    Location on   September 30   September 30
    Statement   2010   2009   2010   2009
Interest rate derivatives
                                   
Loss recognized in OCI (effective portion)
  Note 8   $ (307 )   $ (2,174 )   $ (881 )   $ (3,844 )
 
                                   
Loss reclassified from Accumulated OCI (effective portion)
  Interest expense     (4,799 )     (4,588 )     (14,695 )     (11,915 )
Fair Value Measurements (Tables)
Fair value measurement of assets and liabilities on recurring basis
                         
    Level 1  
    September 30     December 31     September 30  
    2010     2009     2009  
Fair value recurring
                       
Rabbi Trust
                       
Mutual funds
  $ 13,146     $ 10,490     $ 10,084  
Equities
    7,456       8,472       8,830  
 
                 
Net asset
  $ 20,602     $ 18,962     $ 18,914  
 
                 
                         
    Level 2  
    September 30     December 31     September 30  
    2010     2009     2009  
Fair value recurring
                       
Medium-term investments
  $ 3,910     $ 4,111     $ 6,803  
Interest rate derivative
    (3,044 )     (11,193 )     (13,444 )
Rabbi Trust
                       
Common/collective trust funds
    2,361       4,084       3,783  
 
                 
Net asset (liability)
  $ 3,227     $ (2,998 )   $ (2,858 )
 
                 
Comprehensive Income (Loss) (Tables)
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2010     2009     2010     2009  
Net earnings (loss)
  $ 13,246     $ 54,232     $ (49,493 )   $ 43,663  
Other comprehensive income (loss)
                               
Fair value adjustments to cash flow hedges, net of tax
    (183 )     (1,286 )     (503 )     (2,281 )
Reclassification adjustment for cash flow hedges included in net earnings (loss), net of tax
    2,849       2,702       8,347       7,036  
Amortization of pension and postretirement plan actuarial loss and prior service cost, net of tax
    963       283       2,685       852  
 
                       
Total comprehensive income (loss)
  $ 16,875     $ 55,931     $ (38,964 )   $ 49,270  
 
                       
                         
    September 30     December 31     September 30  
    2010     2009     2009  
Cash flow hedges
  $ (41,521 )   $ (49,365 )   $ (51,764 )
Pension and postretirement plans
    (142,308 )     (144,993 )     (127,910 )
 
                 
Accumulated other comprehensive loss
  $ (183,829 )   $ (194,358 )   $ (179,674 )
 
                 
Benefit Plans (Tables)
Components of net periodic benefit cost
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
PENSION BENEFITS   2010     2009     2010     2009  
Components of net periodic benefit cost
                               
Service cost
  $ 4,805     $ 4,660     $ 14,413     $ 13,979  
Interest cost
    10,405       10,485       31,216       31,455  
Expected return on plan assets
    (12,530 )     (11,626 )     (37,591 )     (34,878 )
Amortization of prior service cost
    115       115       345       345  
Amortization of actuarial loss
    1,438       412       4,314       1,238  
 
                       
Net periodic pension benefit cost
  $ 4,233     $ 4,046     $ 12,697     $ 12,139  
 
                       
Pretax reclassification from OCI included in net periodic pension benefit cost
  $ 1,553     $ 527     $ 4,659     $ 1,583  
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
OTHER POSTRETIREMENT BENEFITS   2010     2009     2010     2009  
Components of net periodic benefit cost
                               
Service cost
  $ 1,066     $ 978     $ 3,199     $ 2,934  
Interest cost
    1,663       1,762       4,988       5,284  
Amortization of prior service credit
    (183 )     (205 )     (547 )     (617 )
Amortization of actuarial loss
    222       149       666       448  
 
                       
Net periodic postretirement benefit cost
  $ 2,768     $ 2,684     $ 8,306     $ 8,049  
 
                       
Pretax reclassification from OCI included in net periodic postretirement benefit cost
  $ 39     $ (56 )   $ 119     $ (169 )
Credit Facilities, Short-term Borrowings and Long-term Debt (Tables)
                         
    September 30     December 31     September 30  
    2010     2009     2009  
Short-term borrowings
                       
Commercial paper
  $ 0     $ 236,512     $ 286,357  
 
                 
Total short-term borrowings
  $ 0     $ 236,512     $ 286,357  
 
                 
 
                       
Commercial paper
                       
Maturity
    n/a     42 days     1 to 63 days  
Weighted-average interest rate
    n/a       0.39 %     0.42 %
                         
    September 30     December 31     September 30  
    2010     2009     2009  
Long-term debt
                       
5-year floating loan issued 2010
  $ 450,000     $ 0     $ 0  
10.125% 2015 notes issued 20091
    149,582       149,538       149,524  
10.375% 2018 notes issued 20092
    248,360       248,270       248,241  
3-year floating loan issued 2008
    0       175,000       240,000  
6.30% 5-year notes issued 20083
    249,704       249,632       249,609  
7.00% 10-year notes issued 20084
    399,649       399,625       399,617  
3-year floating notes issued 2007
    325,000       325,000       325,000  
5.60% 5-year notes issued 20075
    299,746       299,666       299,640  
6.40% 10-year notes issued 20076
    349,848       349,837       349,833  
7.15% 30-year notes issued 20077
    249,322       249,317       249,316  
Private placement notes
    0       15,243       15,276  
Medium-term notes
    21,000       21,000       21,000  
Industrial revenue bonds
    14,000       17,550       17,550  
Other notes
    1,559       1,823       1,985  
 
                 
Total debt excluding short-term borrowings
  $ 2,757,770     $ 2,501,501     $ 2,566,591  
Less current maturities of long-term debt
    325,249       385,381       60,421  
 
                 
Total long-term debt
  $ 2,432,521     $ 2,116,120     $ 2,506,170  
 
                 
 
                       
Estimated fair value of total long-term debt
  $ 2,689,770     $ 2,300,522     $ 2,676,278  
 
                 
 
1   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $418 thousand, December 31, 2009 — $462 thousand and September 30, 2009 — $476 thousand. The effective interest rate for these 2015 notes is 10.31%.
 
2   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $1,640 thousand, December 31, 2009 — $1,730 thousand and September 30, 2009 — $1,759 thousand. The effective interest rate for these 2018 notes is 10.58%.
 
3   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $296 thousand, December 31, 2009 — $368 thousand and September 30, 2009 — $391 thousand. The effective interest rate for these 5-year notes is 7.47%.
 
4   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $351 thousand, December 31, 2009 — $375 thousand and September 30, 2009 — $383 thousand. The effective interest rate for these 10-year notes is 7.86%.
 
5   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $254 thousand, December 31, 2009 — $334 thousand and September 30, 2009 — $360 thousand. The effective interest rate for these 5-year notes is 6.58%.
 
6   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $152 thousand, December 31, 2009 — $163 thousand and September 30, 2009 — $167 thousand. The effective interest rate for these 10-year notes is 7.39%.
 
7   Includes decreases for unamortized discounts, as follows: September 30, 2010 — $678 thousand, December 31, 2009 — $683 thousand and September 30, 2009 — $684 thousand. The effective interest rate for these 30-year notes is 8.04%.
Asset Retirement Obligations (Tables)
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2010     2009     2010     2009  
ARO operating costs
                               
Accretion
  $ 2,081     $ 1,994     $ 6,525     $ 6,599  
Depreciation
    3,050       3,445       9,390       10,336  
 
                       
Total
  $ 5,131     $ 5,439     $ 15,915     $ 16,935  
 
                       
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2010     2009     2010     2009  
Asset retirement obligations
                               
Balance at beginning of period
  $ 162,168     $ 168,475     $ 167,757     $ 173,435  
Liabilities incurred
    1,016       107       2,457       441  
Liabilities settled
    (4,762 )     (2,838 )     (8,879 )     (8,763 )
Accretion expense
    2,081       1,994       6,525       6,599  
Revisions up (down)
    (288 )     268       (7,645 )     (3,706 )
 
                       
Balance at end of period
  $ 160,215     $ 168,006     $ 160,215     $ 168,006  
 
                       
Standby Letters of Credit (Tables)
Standby letters of credit
         
    September 30  
    2010  
Standby letters of credit
       
Risk management requirement for insurance claims
  $ 40,411  
Payment surety required by utilities
    133  
Contractual reclamation/restoration requirements
    10,391  
Financial requirement for industrial revenue bond
    14,231  
 
     
Total
  $ 65,166  
 
     
Acquisitions and Divestitures (Tables)
Classification of assets and liabilities held for sale
                 
    September 30     December 31  
    2010     2009  
Current assets
  $ 3,729     $ 3,799  
Property, plant & equipment, net
    10,709       11,117  
Other assets
    144       156  
 
           
Total assets held for sale
  $ 14,582     $ 15,072  
 
           
Current liabilities
  $ 460     $ 369  
 
           
Total liabilities of assets held for sale
  $ 460     $ 369  
 
           
Goodwill (Tables)
Changes in the carrying amount of goodwill by reportable segment
Goodwill
                                         
    Aggregates     Concrete     Asphalt mix     Cement     Total  
Gross carrying amount
                                       
Total as of December 31, 2009
  $ 3,002,346     $ 0     $ 91,633     $ 252,664     $ 3,346,643  
 
                             
Goodwill of acquired businesses
    0       0       0       0       0  
 
                             
Total as of September 30, 2010
  $ 3,002,346     $ 0     $ 91,633     $ 252,664     $ 3,346,643  
 
                             
Accumulated impairment losses
                                       
Total as of December 31, 2009
  $ 0     $ 0     $ 0     $ (252,664 )   $ (252,664 )
 
                             
Goodwill impairment loss
    0       0       0       0       0  
 
                             
Total as of September 30, 2010
  $ 0     $ 0     $ 0     $ (252,664 )   $ (252,664 )
 
                             
Goodwill, net of accumulated impairment losses
                                       
Total as of December 31, 2009
  $ 3,002,346     $ 0     $ 91,633     $ 0     $ 3,093,979  
 
                             
Total as of September 30, 2010
  $ 3,002,346     $ 0     $ 91,633     $ 0     $ 3,093,979  
 
                             
Segment Reporting - Continuing Operations (Tables)
Segment Financial Disclosure
                                 
    Three Months Ended     Nine Months Ended  
Segment Financial Disclosure   September 30     September 30  
Amounts in millions   2010     2009     2010     2009  
TOTAL REVENUES
                               
Aggregates
                               
Segment revenues
  $ 514.3     $ 533.0     $ 1,369.5     $ 1,432.3  
Intersegment sales
    (44.8 )     (48.1 )     (119.2 )     (128.0 )
 
                       
Net sales
    469.5       484.9       1,250.3       1,304.3  
 
                       
Concrete
                               
Segment revenues
    105.1       119.3       293.0       348.7  
Intersegment sales
    0.0       0.0       0.0       (0.1 )
 
                       
Net sales
    105.1       119.3       293.0       348.6  
 
                       
Asphalt mix
                               
Segment revenues
    115.8       123.9       282.3       306.0  
Intersegment sales
    0.0       0.0       0.0       0.0  
 
                       
Net sales
    115.8       123.9       282.3       306.0  
 
                       
Cement
                               
Segment revenues
    20.3       19.8       61.2       56.4  
Intersegment sales
    (10.9 )     (9.2 )     (29.7 )     (27.4 )
 
                       
Net sales
    9.4       10.6       31.5       29.0  
 
                       
Total
                               
Net sales
    699.8       738.7       1,857.1       1,987.9  
Delivery revenues
    43.4       39.5       115.5       112.4  
 
                       
Total revenues
  $ 743.2     $ 778.2     $ 1,972.6     $ 2,100.3  
 
                       
GROSS PROFIT
                               
Aggregates
  $ 125.2     $ 133.3     $ 262.5     $ 323.7  
Concrete
    (10.1 )     (0.6 )     (31.7 )     (3.7 )
Asphalt mix
    13.4       21.3       21.8       59.2  
Cement
    (1.8 )     0.5       (2.6 )     (1.3 )
 
                       
Total gross profit
  $ 126.7     $ 154.5     $ 250.0     $ 377.9  
 
                       
Depreciation, Depletion, Accretion and Amortization
                               
Aggregates
  $ 74.5     $ 78.1     $ 222.6     $ 235.1  
Concrete
    13.6       12.8       40.1       39.0  
Asphalt mix
    2.2       2.2       6.7       6.4  
Cement
    5.8       4.9       15.3       14.3  
Corporate and other unallocated
    1.6       1.2       4.5       3.4  
 
                       
Total depreciation, depletion, accretion and amortization
  $ 97.7     $ 99.2     $ 289.2     $ 298.2  
 
                       
Supplemental Cash Flow Information (Tables)
Supplemental Cash Flow Information
                 
    Nine Months Ended
    September 30
    2010   2009
Cash payments (refunds)
               
Interest (exclusive of amount capitalized)
  $ 101,917     $ 109,586  
Income taxes
    3,897       (9,706 )
 
Noncash investing and financing activities
               
Accrued liabilities for purchases of property, plant & equipment
    4,674       13,436  
Note received from sale of business
    0       1,450  
Debt issued for purchases of property, plant & equipment
    0       1,984  
Stock issued for pension contribution (Note 9)
    53,864       0  
Proceeds receivable from issuance of common stock
    0       1,712  
Liabilities assumed in business acquisitions
    150       0  
Discontinued Operations (Details)
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
Year Ended
Dec. 31,
Mar. 31, 2010
2010
2009
2010
2009
2009
2007
Discontinued operations
 
 
 
 
 
 
 
Earnings from results
 
4,425,000 
10,397,000 
3,565,000 
20,117,000 
 
 
Gain on disposal, net of transaction bonus
 
88,000 
7,912,000 
584,000 
812,000 
 
Income tax provision
 
(1,770,000)
(4,177,000)
(4,572,000)
(8,268,000)
 
 
Earnings on discontinued operations, net of tax (Note 2)
 
2,655,000 
6,308,000 
6,905,000 
12,433,000 
 
 
Discontinued Operations (Textuals) [Abstract]
 
 
 
 
 
 
 
Cumulative cash receipts received under ECU earn-out
 
 
 
 
 
 
150,000,000 
Payments received under 5CP earn-out
8,794,000 
 
 
 
 
11,625,000 
 
Gain on disposal of discontinued operations
 
88,000 
7,912,000 
584,000 
812,000 
 
Total payments received under the 5CP earn-out
 
 
 
42,707,000 
 
 
 
Excess cash received under 5CP earn-out
 
 
 
9,606,000 
 
 
 
Cash transaction bonus payable
 
 
 
882,000 
521,000 
 
 
Earnings from results
 
4,425,000 
10,397,000 
3,565,000 
20,117,000 
 
 
Pretax gains from discontinued operations related to insurance settlements
 
 
10,500,000 
 
23,500,000 
 
 
Earnings Per Share (EPS) (Details)
In Thousands
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Earnings Per Share (EPS)
 
 
 
 
Weighted-average common shares outstanding
128,602 
125,361 
127,840 
116,533 
Weighted-average common shares outstanding, assuming dilution
128,910 
125,859 
127,840 
117,047 
Antidilutive common stock equivalents
 
 
 
 
Antidilutive common stock equivalents
6,225 
3,747 
4,905 
3,753 
Earnings Per Share (EPS) (Textuals) [Abstract]
 
 
 
 
Shares excluded from diluted weighted-average common shares outstanding computation due to operating losses
 
 
406,000 
 
Other stock compensation plans [Member]
 
 
 
 
Incremental Common Shares Attributable To Share Based Payment Arrangements [Line Items]
 
 
 
 
Dilutive effect of stock options/SOSARs/other stock compensation plans
250 
210 
280 
Stock options/SOSARs [Member]
 
 
 
 
Incremental Common Shares Attributable To Share Based Payment Arrangements [Line Items]
 
 
 
 
Dilutive effect of stock options/SOSARs/other stock compensation plans
58 
288 
234 
Income Taxes (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Income Taxes (Textuals) [Abstract]
 
 
 
 
Accounting Standards Codification Topic 740 - Income Taxes recognition threshold for uncertain tax positions
0.5 
0.5 
0.5 
0.5 
Provision (benefit) for income taxes from continuing operations
$ 6,048 
$ 5,983 
$ 61,491 
$ 9,621 
Medium-term Investments (Details) (USD $)
9 Months Ended
Sep. 30,
2010
2009
Dec. 31, 2009
Medium-term Investments (Textuals) [Abstract]
 
 
 
Medium-term investments principal balance
$ 5,531,000 
$ 8,247,000 
$ 5,554,000 
Medium-term investments
3,910,000 
6,803,000 
4,111,000 
Redemption of medium-term investments
22,000 
30,590,000 
 
Derivative Instruments (Details)
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
Sep. 30, 2010
Sep. 30, 2011
Dec. 31, 2010
Dec. 31, 2009
Sep. 30, 2009
Dec. 31, 2007
Dec. 11, 2007
2010
2009
2010
2009
2010
2009
2010
2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Fair values of derivative instruments designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivatives liability
3,044,000 1
 
 
11,193,000 1
13,444,000 1
 
 
 
 
 
 
 
 
 
 
3,044,000 1
11,193,000 1
1
1
1
13,444,000 1
Effects of cash flow hedge derivative instruments on the accompanying Condensed Consolidated Statements of Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss recognized in OCI (effective portion)
 
 
 
 
 
 
 
(307,000)
(2,174,000)
(881,000)
(3,844,000)
 
 
 
 
 
 
 
 
 
 
Loss reclassified from Accumulated OCI (effective portion)
 
 
 
 
 
 
 
 
 
 
 
(4,799,000)
(4,588,000)
(14,695,000)
(11,915,000)
 
 
 
 
 
 
Derivative Instruments (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate notional amount of swaps
 
 
 
 
 
325,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread above 3-month London Interbank Offered Rate (LIBOR)
3-month LIBOR plus 1.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maturity period of notes (In years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount of 3-year interest rate swap agreement
 
 
 
 
 
325,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Length of interest rate swap agreement (In years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed interest rate paid under swap agreement
 
 
 
 
 
0.0525 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated amount of pretax loss accumulated in Other Comprehensive Income related to interest rate swap that would be reclassified to earnings
 
8,053,000 
3,044,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of forward starting interest rate swap agreements
 
 
 
 
 
15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount for forward starting interest rate swap agreements
 
 
 
 
 
1,500,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash payment for settlement of forward starting interest rate swap
 
 
 
 
 
 
89,777,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value Measurements (Details) (USD $)
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Fair value recurring
 
 
 
Medium-term investments
$ 3,910,000 
$ 4,111,000 
$ 6,803,000 
Level 1 [Member]
 
 
 
Rabbi Trust
 
 
 
Net asset
20,602,000 
18,962,000 
18,914,000 
Level 1 [Member] | Rabbi Trust Equities [Member]
 
 
 
Rabbi Trust
 
 
 
Fair value recurring
7,456,000 
8,472,000 
8,830,000 
Level 1 [Member] | Rabbi Trust Mutual Funds [Member]
 
 
 
Rabbi Trust
 
 
 
Fair value recurring
13,146,000 
10,490,000 
10,084,000 
Level 2 [Member] | Rabbi Trust Common Collective Trust Funds [Member]
 
 
 
Rabbi Trust
 
 
 
Fair value recurring
2,361,000 
4,084,000 
3,783,000 
Medium-term Investments [Member] | Level 2 [Member]
 
 
 
Fair value recurring
 
 
 
Medium-term investments
3,910,000 
4,111,000 
6,803,000 
Level 2 [Member]
 
 
 
Fair value recurring
 
 
 
Interest rate derivative
(3,044,000)
(11,193,000)
(13,444,000)
Net (asset) liability
$ 3,227,000 
$ (2,998,000)
$ (2,858,000)
Comprehensive Income (Loss) (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Dec. 31, 2009
Total comprehensive income (loss)
 
 
 
 
 
Net earnings (loss)
13,246 
54,232 
(49,493)
43,663 
 
Other comprehensive income (loss)
 
 
 
 
 
Fair value adjustments to cash flow hedges, net of tax
(183)
(1,286)
(503)
(2,281)
 
Reclassification adjustment for cash flow hedges included in net earnings (loss), net of tax
2,849 
2,702 
8,347 
7,036 
 
Amortization of pension and postretirement plan actuarial loss and prior service cost, net of tax
963 
283 
2,685 
852 
 
Total comprehensive income (loss)
16,875 
55,931 
(38,964)
49,270 
 
Accumulated other comprehensive loss
 
 
 
 
 
Cash flow hedges
(41,521)
(51,764)
(41,521)
(51,764)
(49,365)
Pension and postretirement plans
(142,308)
(127,910)
(142,308)
(127,910)
(144,993)
Accumulated other comprehensive loss
$ (183,829)
$ (179,674)
$ (183,829)
$ (179,674)
$ (194,358)
Shareholders' Equity (Details) (USD $)
9 Months Ended
Sep. 30,
Mar. 31, 2010
Jun. 30, 2009
3 Months Ended
Jun. 30, 2009
2010
2009
Dec. 31, 2009
Shareholders' Equity (Textuals) [Abstract]
 
 
 
 
 
 
Number of common shares issued to pension plan
1,190,000 
 
 
 
 
 
Common stock, par value
$ 1 
$ 1 
$ 1 
$ 1 
$ 1 
$ 1 
Increase in shareholders' equity from issuance of common shares to pension plan
53,864,000 
 
 
 
 
 
Value of common shares issued to pension plan
1,190,000 
 
 
 
 
 
Increase in capital in excess of par from issuance of common shares to pension plan
52,674,000 
 
 
 
 
 
Number of common shares issued in a public offering
 
13,225,000 
 
 
 
 
Price of common shares
 
41 
41 
 
 
 
Shares issued upon full exercise of the underwriters' option to purchase additional shares
 
1,725,000 
1,725,000 
 
 
 
Net proceeds from the sale of the shares in a public offering
 
519,993,000 
 
 
 
 
Commissions and transaction costs included in net proceeds
 
22,232,000 
 
 
 
 
Increase in shareholders' equity from issuance of common shares in a public offering
 
519,993,000 
 
 
 
 
Value of common shares issued in a public offering
 
13,225,000 
 
 
 
 
Increase in capital in excess of par from issuance of common shares in a public offering
 
506,768,000 
 
 
 
 
Shares of common stock issued to the trustee under 401(K) savings and retirement plan
 
 
 
882,131 
778,162 
 
Net proceeds from issuance of common stock to the trustee under 401(k) savings and retirement plan
 
 
 
41,734,000 
34,899,000 
 
Common stock issued in connection with business acquisitions
 
 
789,495 
 
 
 
Net proceeds from the issuance of common stock in connection with business acquisitions
 
 
33,862,000 
 
 
 
Payment for businesses acquired, net of acquired cash
 
 
36,980,000 
35,404,000 
36,980,000 
 
Shares remaining under the current authorization repurchase program
 
 
 
3,411,416 
 
 
Number of shares held in treasury
 
 
 
Benefit Plans (Details)
9 Months Ended
Sep. 30,
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
Jul. 31, 2010
Mar. 31, 2010
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
 
 
 
4,805,000 
4,660,000 
14,413,000 
13,979,000 
1,066,000 
978,000 
3,199,000 
2,934,000 
Interest cost
 
 
 
 
10,405,000 
10,485,000 
31,216,000 
31,455,000 
1,663,000 
1,762,000 
4,988,000 
5,284,000 
Expected return on plan assets
 
 
 
 
(12,530,000)
(11,626,000)
(37,591,000)
(34,878,000)
 
 
 
 
Amortization of prior service cost
 
 
 
 
115,000 
115,000 
345,000 
345,000 
(183,000)
(205,000)
(547,000)
(617,000)
Amortization of actuarial loss
 
 
 
 
1,438,000 
412,000 
4,314,000 
1,238,000 
222,000 
149,000 
666,000 
448,000 
Net periodic pension/postretirement benefit cost
 
 
 
 
4,233,000 
4,046,000 
12,697,000 
12,139,000 
2,768,000 
2,684,000 
8,306,000 
8,049,000 
Pretax reclassification from OCI included in net periodic pension (postretirement) benefit cost
 
 
 
 
1,553,000 
527,000 
4,659,000 
1,583,000 
39,000 
(56,000)
119,000 
(169,000)
Benefit Plans (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total contributions (cash and stock) to qualified pension plans
 
72,500,000 
 
 
 
 
 
 
 
 
 
 
Additional contribution to pension plan
1,300,000 
 
 
 
 
 
 
 
 
 
 
 
Contributions to pension plans in cash
 
18,636,000 
 
 
 
 
 
 
 
 
 
 
Contributions to pension plans in stock
 
53,864,000 
 
 
 
 
 
 
 
 
 
 
Number of shares contributed to pension plans
 
1,190,000 
 
 
 
 
 
 
 
 
 
 
Value per share of shares contributed to pension plans
 
45.26 
 
 
 
 
 
 
 
 
 
 
Contribution towards qualified and nonqualified pension plan
 
 
77,264,000 
26,793,000 
 
 
 
 
 
 
 
 
Credit Facilities, Short-term Borrowings and Long-term Debt (Details)
Jul. 31, 2010
9 Months Ended
Sep. 30, 2010
Jul. 07, 2010
Dec. 31, 2009
Sep. 30, 2009
Feb. 28, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Jul. 07, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Feb. 28, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Feb. 28, 2009
Sep. 30, 2010
Jul. 07, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Sep. 30, 2010
Dec. 31, 2009
Sep. 30, 2009
Dec. 31, 2009
Sep. 30, 2009
9 Months Ended
Sep. 30, 2009
Year Ended
Dec. 31, 2009
Short-term borrowings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial paper
 
 
236,512,000 
286,357,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total short-term borrowings
 
 
236,512,000 
286,357,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term Debt [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum days of maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42 
Maximum days of maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
63 
42 
Weighted-average interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.0042 
0.0039 
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total debt excluding short-term borrowings
 
2,757,770,000 
 
2,501,501,000 
2,566,591,000 
 
249,322,000 1
249,317,000 1
249,316,000 1
349,848,000 2
349,837,000 2
349,833,000 2
299,746,000 3
299,666,000 3
299,640,000 3
325,000,000 
325,000,000 
325,000,000 
399,649,000 4
399,625,000 4
399,617,000 4
249,704,000 5
249,632,000 5
249,609,000 5
 
175,000,000 
240,000,000 
248,360,000 6
248,270,000 6
248,241,000 6
 
149,582,000 7
149,538,000 7
149,524,000 7
 
450,000,000 
 
15,243,000 
15,276,000 
1,559,000 
1,823,000 
1,985,000 
14,000,000 
17,550,000 
17,550,000 
21,000,000 
21,000,000 
21,000,000 
 
 
 
 
Maturity period of notes (In years)
 
 
 
 
 
 
30 
30 
30 
10 
10 
10 
10 
10 
10 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term notes issued
 
 
450,000,000 
 
 
400,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
250,000,000 
 
 
 
150,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coupon rate of notes
 
 
 
 
 
 
0.0715 
0.0715 
0.0715 
0.064 
0.064 
0.064 
0.056 
0.056 
0.056 
 
 
 
0.07 
0.07 
0.07 
0.063 
0.063 
0.063 
 
 
 
 
0.10375 
0.10375 
0.10375 
0.10375 
0.10125 
0.10125 
0.10125 
0.10125 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Decrease in unamortized discounts
 
 
 
 
 
 
678,000 
683,000 
684,000 
152,000 
163,000 
167,000 
254,000 
334,000 
360,000 
 
 
 
351,000 
375,000 
383,000 
296,000 
368,000 
391,000 
 
 
 
 
1,640,000 
1,730,000 
1,759,000 
 
418,000 
462,000 
476,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective interest rate
 
 
 
 
 
 
0.0804 
0.0804 
0.0804 
0.0739 
0.0739 
0.0739 
0.0658 
0.0658 
0.0658 
 
 
 
0.0786 
0.0786 
0.0786 
0.0747 
0.0747 
0.0747 
 
 
 
 
0.1058 
0.1058 
0.1058 
 
0.1031 
0.1031 
0.1031 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less current maturities of long-term debt
 
325,249,000 
 
385,381,000 
60,421,000