VULCAN MATERIALS COFORM10-K(Annual Report)Filed 02/28/13 for the Period Ending 12/31/12AddressTelephoneCIKSymbolSIC CodeIndustrySectorFiscal Year1200 URBAN CENTER DRIVEBIRMINGHAM, AL 3524220529830000001396009VMC1400 - Mining & Quarrying of Nonmetallic Minerals (No Fuels)Construction - Raw MaterialsCapital Goods12/31 Copyright 2013, EDGAR Online, Inc. All Rights Reserved.Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of ContentsIndex to Financial StatementsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2012Commission file number: 001-33841VULCAN MATERIALS COMPANY(Exact Name of Registrant as Specified in Its Charter)New Jersey(State or other jurisdiction of incorporation or organization)20-8579133(I.R.S. Employer Identification No.)1200 Urban Center Drive, Birmingham, Alabama 35242(Address of Principal Executive Offices) (Zip Code)(205) 298-3000(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each classCommon Stock, 1 par valueName of each exchange on which registeredNew York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes XNoYesNoX.Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. Yes X NoIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (orfor such shorter period that the registrant was required to submit and post such files). Yes X NoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. XIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the ExchangeAct (Check one):Large accelerated filer XNon-accelerated filer(Do not check if a smaller reporting company)Accelerated filerSmaller reporting companyIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).YesAggregate market value of voting and non-voting common stock held by non-affiliates as of June 30, 2012:Number of shares of common stock, 1.00 par value, outstanding as of February 14, 2013:NoX 5,118,918,572129,872,017DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s annual proxy statement for the annual meeting of its shareholders to be held on May 10, 2013, areincorporated by reference into Part III of this Annual Report on Form 10-K.

Table of ContentsIndex to Financial StatementsVULCAN MATERIALS COMPANYANNUAL REPORT ON FORM 10-KFISCAL YEAR ENDED DECEMBER 31, 2012CONTENTSPARTITEMI11A1B234BusinessRisk FactorsUnresolved Staff CommentsPropertiesLegal ProceedingsMine Safety DisclosuresII5Market for the Registrant’s Common Equity, RelatedStockholder Matters and Issuer Purchases of Equity SecuritiesSelected Financial DataManagement’s Discussion and Analysis of Financial Conditionand Results of OperationsQuantitative and Qualitative Disclosures about Market RiskFinancial Statements and Supplementary DataChanges in and Disagreements with Accountants on Accounting andFinancial DisclosureControls and ProceduresOther 93055561091091111121121314Directors, Executive Officers and Corporate GovernanceExecutive CompensationSecurity Ownership of Certain Beneficial Owners andManagement and Related Stockholder MattersCertain Relationships and Related Transactions, and Director IndependencePrincipal Accountant Fees and Services15Exhibits and Financial Statement Schedules113—Signatures114112112112Unless otherwise stated or the context otherwise requires, references in this report to “Vulcan,” the “company,” “we,” “our,” or “us” refer toVulcan Materials Company and its consolidated subsidiaries.Table of Contentsi

Table of ContentsIndex to Financial StatementsPART I“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIESLITIGATION REFORM ACT OF 1995Certain of the matters and statements made herein or incorporated by reference into this report constitute forward-looking statements within themeaning of Section 21E of the Securities Exchange Act of 1934. All such statements are made pursuant to the safe harbor provisions of thePrivate Securities Litigation Reform Act of 1995. These statements reflect our intent, belief or current expectation. Often, forward-lookingstatements can be identified by the use of words such as “anticipate,” “may,” “believe,” “estimate,” “project,” “expect,” “intend” and words ofsimilar import. In addition to the statements included in this report, we may from time to time make other oral or written forward-lookingstatements in other filings under the Securities Exchange Act of 1934 or in other public disclosures. Forward-looking statements are notguarantees of future performance, and actual results could differ materially from those indicated by the forward-looking statements. Allforward-looking statements involve certain assumptions, risks and uncertainties that could cause actual results to differ materially from thoseincluded in or contemplated by the statements. These assumptions, risks and uncertainties include, but are not limited to: cost reductions, profit enhancements and asset sales, as well as streamlining and other strategic actions we adopted, will not be able to berealized to the desired degree or within the desired time period and that the results thereof will differ from those anticipated or desired uncertainties as to the timing and valuations that may be realized or attainable with respect to planned asset sales general economic and business conditions the timing and amount of federal, state and local funding for infrastructure changes in our effective tax rate that can adversely impact results the increasing reliance on information technology infrastructure for our ticketing, procurement, financial statements and other processescan adversely effect operations in the event that the infrastructure does not work as intended or experiences technical difficulties the impact of the state of the global economy on our business and financial condition and access to capital markets changes in the level of spending for residential and private nonresidential construction the highly competitive nature of the construction materials industry the impact of future regulatory or legislative actions the outcome of pending legal proceedings pricing of our products weather and other natural phenomena energy costs costs of hydrocarbon-based raw materials healthcare costs the amount of long-term debt and interest expense we incur changes in interest rates the impact of our below investment grade debt rating on our cost of capital volatility in pension plan asset values and liabilities which may require cash contributions to our pension plans the impact of environmental clean-up costs and other liabilities relating to previously divested businesses our ability to secure and permit aggregates reserves in strategically located areas our ability to manage and successfully integrate acquisitions the potential of goodwill or long-lived asset impairmentPart I1

Table of ContentsIndex to Financial Statements the potential impact of future legislation or regulations relating to climate change, greenhouse gas emissions or the definition of minerals the risks set forth in Item 1A “Risk Factors,” Item 3 “Legal Proceedings,” Item 7 “Management’s Discussion and Analysis of FinancialCondition and Results of Operations,” and Note 12 “Other Commitments and Contingencies” to the consolidated financial statements inItem 8 “Financial Statements and Supplementary Data,” all as set forth in this report other assumptions, risks and uncertainties detailed from time to time in our filings made with the Securities and Exchange CommissionAll forward-looking statements are made as of the date of filing or publication. We undertake no obligation to publicly update any forwardlooking statements, whether as a result of new information, future events or otherwise. Investors are cautioned not to rely unduly on suchforward-looking statements when evaluating the information presented in our filings, and are advised to consult any of our future disclosures infilings made with the Securities and Exchange Commission and our press releases with regard to our business and consolidated financialposition, results of operations and cash flows.Part I2

Table of ContentsIndex to Financial StatementsITEM 1BUSINESSVulcan Materials Company is a New Jersey corporation and the nation’s largest producer of construction aggregates: primarily crushed stone,sand, and gravel. We have 341 active aggregates facilities. We also are a major producer of asphalt mix and ready-mixed concrete as well as aleading producer of cement in Florida.VULCAN’S VALUE PROPOSITIONWe are the leading construction materials business in the country with superior aggregates operations. Our leading position is based upon: being the largest aggregates producer in the U.S. having a favorable geographic footprint that provides attractive long-term growth prospects having the largest proven and probable reserve base having operational expertise and pricing discipline which provides attractive unit profitabilitySTRATEGY FOR EXISTING AND NEW MARKETS Our aggregates reserves are strategically located throughout the United States in high-growth areas that are projected to grow faster thanthe national average and that require large amounts of aggregates to meet construction demand. Vulcan-served states are estimated togenerate 75% of the total growth in U.S. population and 70% of the total growth in U.S. household formations between 2010 and 2020.Our top ten revenue producing states in 2012 were Alabama, California, Florida, Georgia, Illinois, North Carolina, South Carolina,Tennessee, Texas and Virginia.U.S. DEMOGRAPHIC GROWTH 2010 TO 2020, TOP 10 BY STATEPOPULATIONRankStateHOUSEHOLDSShare of TotalU.S. GrowthStateTexasFloridaCaliforniaNorth egonEMPLOYMENTShare of TotalU.S. iaFloridaNew YorkGeorgiaNorth CarolinaArizonaOhioPennsylvaniaVirginiaShare of TotalU.S. Growth1Texas2California3Florida4North n10ColoradoTop10 3%3%3%58%Vulcan States in Top 10:62%55%49%Al l States Served by Vulcan:75%70%63%Notes: Vulcan-served states shown in bolded blue text. Due to rounding, subtotals may not equal the sum of individual states.Source: Moody’s Analytics as of November 12, 2012 We take a disciplined approach to strengthening our footprint by increasing our presence in metropolitan areas that are expected to growmost rapidly and divesting assets that are no longer considered part of our long-term growth strategy. Where practical, we have operations located close to our local markets because the cost of trucking materials long distances is prohibitive.Approximately 81% of our total aggregates shipments are delivered exclusively from the producing location to the customer by truck, andanother 12% are delivered by truck after reaching a sales yard by rail or water.Part I3

Table of ContentsIndex to Financial StatementsCOMPETITORSWe operate in an industry that generally is fragmented with a large number of small, privately-held companies. We estimate that the ten largestaggregates producers account for approximately 30% to 35% of the total U.S. aggregates production. Despite being the industry leader,Vulcan’s total U.S. market share is less than 10%. Other publicly traded companies among the ten largest U.S. aggregates producers include thefollowing: Cemex S.A.B. de C.V. CRH plc HeidelbergCement AG Holcim Ltd. Lafarge Martin Marietta Materials, Inc. MDU Resources Group, Inc.Because the U.S. aggregates industry is highly fragmented, with over 5,000 companies managing almost 10,000 operations, many opportunitiesfor consolidation exist. Therefore, companies in the industry tend to grow by acquiring existing facilities to enter new markets or by enhancingtheir existing market positions.Part I4

Table of ContentsIndex to Financial StatementsBUSINESS STRATEGYVulcan provides the basic materials for the infrastructure needed to expand the U.S. economy. Our strategy is based on our strength inaggregates. Aggregates are used in all types of construction and in the production of asphalt mix and ready-mixed concrete. Our materials areused to build the roads, tunnels, bridges, railroads and airports that connect us, and to build the hospitals, churches, shopping centers, andfactories that are essential to our lives and the economy. The following graphs illustrate the relationship of our four operatin