Vulcan Materials CO | 2013 | FY | 3


NOTE 18: GOODWILL AND INTANGIBLE ASSETS

We classify purchased intangible assets into three categories: (1) goodwill, (2) intangible assets with finite lives subject to amortization and (3) intangible assets with indefinite lives. Goodwill and intangible assets with indefinite lives are not amortized; rather, they are reviewed for impairment at least annually. For additional information regarding our policies on impairment reviews, see Note 1 under the captions Goodwill and Goodwill Impairment, and Impairment of Long-lived Assets excluding Goodwill.

GOODWILL

Goodwill is recognized when the consideration paid for a business combination (acquisition) exceeds the fair value of the tangible and other intangible assets acquired. Goodwill is allocated to reporting units for purposes of testing goodwill for impairment. There were no charges for goodwill impairment in the years ended December 31, 2013,  2012 and 2011.

We have four reportable segments organized around our principal product lines: aggregates, concrete, asphalt mix and cement. Changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2013,  2012 and 2011 are summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in thousands

Aggregates

 

 

Concrete

 

 

Asphalt Mix

 

 

Cement

 

 

Total

 

Goodwill, Gross Carrying Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total as of December 31, 2011

$   2,995,083 

 

 

$           0 

 

 

$     91,633 

 

 

$   252,664 

 

 

$  3,339,380 

 

Total as of December 31, 2012

$   2,995,083 

 

 

$           0 

 

 

$     91,633 

 

 

$   252,664 

 

 

$  3,339,380 

 

Goodwill of divested businesses 1

(5,195)

 

 

 

 

 

 

 

 

(5,195)

 

Total as of December 31, 2013

$   2,989,888 

 

 

$           0 

 

 

$     91,633 

 

 

$   252,664 

 

 

$  3,334,185 

 

Goodwill, Accumulated Impairment Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

Total as of December 31, 2011

$                 0 

 

 

$           0 

 

 

$              0 

 

 

$ (252,664)

 

 

$   (252,664)

 

Total as of December 31, 2012

$                 0 

 

 

$           0 

 

 

$              0 

 

 

$ (252,664)

 

 

$   (252,664)

 

Total as of December 31, 2013

$                 0 

 

 

$           0 

 

 

$              0 

 

 

$ (252,664)

 

 

$   (252,664)

 

Goodwill, net of Accumulated Impairment Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

Total as of December 31, 2011

$   2,995,083 

 

 

$           0 

 

 

$     91,633 

 

 

$              0 

 

 

$  3,086,716 

 

Total as of December 31, 2012

$   2,995,083 

 

 

$           0 

 

 

$     91,633 

 

 

$              0 

 

 

$  3,086,716 

 

Total as of December 31, 2013

$   2,989,888 

 

 

$           0 

 

 

$     91,633 

 

 

$              0 

 

 

$  3,081,521 

 

 

 

 

 

1

The goodwill of divested businesses relates to the 2013 divestitures discussed in Note 19.

 

We test goodwill for impairment on an annual basis or more frequently if events or circumstances change in a manner that would more likely than not reduce the fair value of a reporting unit below its carrying value. A decrease in the estimated fair value of one or more of our reporting units could result in the recognition of a material, noncash write-down of goodwill.

 

INTANGIBLE ASSETS

Intangible assets acquired in business combinations are stated at their fair value determined as of the date of acquisition. Costs incurred to renew or extend the life of existing intangible assets are capitalized. These capitalized renewal/extension costs were immaterial for the years presented. Intangible assets consist of contractual rights in place (primarily permitting and zoning rights), noncompetition agreements, favorable lease agreements, customer relationships and trade names and trademarks. Intangible assets acquired individually or otherwise obtained outside a business combination consist primarily of permitting, permitting compliance and zoning rights and are stated at their historical cost, less accumulated amortization, if applicable.

See Note 19 for the details of the intangible assets acquired in business acquisitions during 2013 and 2012.  Amortization of finite-lived intangible assets is computed based on the estimated life of the intangible assets. Contractual rights in place associated with aggregates reserves are amortized using the unit-of-production method based on estimated recoverable units. Other intangible assets are amortized principally by the straight-line method. Intangible assets are reviewed for impairment when events or circumstances indicate that the carrying amount may not be recoverable. There were no charges for impairment of intangible assets in the years ended December 31, 2013,  2012 and 2011.

The gross carrying amount and accumulated amortization by major intangible asset class for the years ended December 31 are summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in thousands

2013 

 

 

2012 

 

Gross Carrying Amount

 

 

 

 

 

Contractual rights in place

$      649,506 

 

 

$     640,450 

 

Noncompetition agreements

1,200 

 

 

1,450 

 

Favorable lease agreements

16,677 

 

 

16,677 

 

Permitting, permitting compliance and zoning rights

88,113 

 

 

82,596 

 

Customer relationships

14,393 

 

 

14,493 

 

Trade names and trademarks

5,006 

 

 

5,006 

 

Other

2,014 

 

 

3,711 

 

Total gross carrying amount

$      776,909 

 

 

$     764,383 

 

Accumulated Amortization

 

 

 

 

 

Contractual rights in place

$       (49,000)

 

 

$     (42,470)

 

Noncompetition agreements

(925)

 

 

(985)

 

Favorable lease agreements

(3,053)

 

 

(2,584)

 

Permitting, permitting compliance and zoning rights

(16,461)

 

 

(14,625)

 

Customer relationships

(7,275)

 

 

(5,927)

 

Trade names and trademarks

(2,587)

 

 

(2,044)

 

Other

(30)

 

 

(3,216)

 

Total accumulated amortization

$       (79,331)

 

 

$     (71,851)

 

Total Intangible Assets Subject to Amortization, net

$      697,578 

 

 

$     692,532 

 

Intangible Assets with Indefinite Lives

 

 

 

Total Intangible Assets, net

$      697,578 

 

 

$     692,532 

 

Amortization Expense for the Year

$        11,732 

 

 

$       11,869 

 

 

Estimated amortization expense for the five years subsequent to December 31, 2013  is as follows:

 

 

 

 

 

 

 

in thousands

 

 

Estimated Amortization Expense for Five Subsequent Years

 

2014

$        12,994 

 

2015

12,870 

 

2016

13,173 

 

2017

13,785 

 

2018

14,347 

 

 

 


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