Page 20 - 2019 Annual Report

NOTES TO FINANCIAL STATEMENTS (continued)

The carrying values of goodwill and other indefinite‐lived intangible assets are reviewed annually, as of October 1, for
impairment. An interim review is performed between annual tests if facts and circumstances indicate potential impairment.
The carrying value of other amortizable intangibles is reviewed if facts and circumstances indicate potential impairment. If a
review indicates the carrying value is impaired, a charge is recorded.

Retirement Plans and Postretirement Benefits. The Company sponsors defined benefit retirement plans and also provides
other postretirement benefits. The Company recognizes the funded status, defined as the difference between the fair value of
plan assets and the benefit obligation, of its pension plans and other postretirement benefits as an asset or liability on the
consolidated balance sheets. Actuarial gains or losses that arise during the year are recognized as a component of accumulated
other comprehensive earnings or loss. Those amounts are amortized over the participants’ average remaining service period
and recognized as a component of net periodic benefit cost. The amount amortized is determined using a corridor approach
and represents the excess over 10% of the greater of the projected benefit obligation or pension plan assets.

Insurance Reserves. The Company has insurance coverage with large deductibles for workers’ compensation, automobile
liability, marine liability and general liability claims, and is also self‐insured for health claims. The Company records insurance
reserves based on an actuarial‐determined analysis, which calculates development factors that are applied to total case
reserves within the insurance programs. While the Company believes the assumptions used to calculate these liabilities are
appropriate, significant differences in actual experience and/or significant changes in these assumptions may materially affect
insurance costs.

Stock‐Based Compensation. The Company has stock‐based compensation plans for employees and its Board of Directors. The
Company recognizes all forms of stock‐based awards that vest as compensation expense. The compensation expense is the fair
value of the awards at the measurement date and is recognized over the requisite service period. Forfeitures are recognized
as they occur.

The fair value of restricted stock awards, incentive compensation stock awards and Board of Directors’ fees paid in the form of
common stock are based on the closing price of the Company’s common stock on the awards’ respective grant dates. The fair
value of performance stock awards as of the grant dates is determined by a Monte Carlo simulation methodology.
In 2019, 2018 and 2017, the Company did not issue any stock options. For stock options issued prior to 2016, the Company
used the accelerated expense recognition method. The accelerated recognition method requires stock options that vest ratably
to be divided into tranches. The expense for each tranche is allocated to its particular vesting period.

Environmental Matters. The Company records a liability for an asset retirement obligation at fair value in the period in which
it is incurred. The asset retirement obligation is recorded at the acquisition date of a long‐lived tangible asset if the fair value
can be reasonably estimated. A corresponding amount is capitalized as part of the asset’s carrying amount. The fair value is
affected by management’s assumptions regarding the scope of the work required, inflation rates and quarry closure dates.
Further, the Company records an accrual for other environmental remediation liabilities in the period in which it is probable
that a liability has been incurred and the appropriate amounts can be estimated reasonably. Such accruals are adjusted as
further information develops or circumstances change. Generally, these costs are not discounted to their present value or
offset for potential insurance or other claims or potential gains from future alternative uses for a site.

Income Taxes. Deferred income taxes, net, on the consolidated balance sheets reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes, net of valuation allowances. The effect on deferred income tax assets and liabilities attributable to
changes in enacted tax rates are charged or credited to income tax expense or benefit in the period of enactment.

Uncertain Tax Positions. The Company recognizes a tax benefit when it is more‐likely‐than‐not, based on the technical merits,
that a tax position would be sustained upon examination by a taxing authority. The amount to be recognized is measured as
the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing
authority that has full knowledge of all relevant information. The Company’s unrecognized tax benefits are recorded in other
liabilities on the consolidated balance sheets or as an offset to the deferred tax asset for tax carryforwards where available.
The Company records interest accrued in relation to unrecognized tax benefits as income tax expense. Penalties, if incurred,
are recorded as operating expenses in the consolidated statements of earnings.

Page 18 ♦ Annual Report Celebrating 25 Years as a Public Company