Page 24 - 2019 Annual Report

NOTES TO FINANCIAL STATEMENTS (continued)

New Accounting Pronouncements
Leases
Effective January 1, 2019, the Company adopted ASC 842, which applies to virtually all leases, excluding mineral interest royalty
agreements. ASC 842 requires the modified retrospective transition approach, applying the new standard to all leases existing
at the date of initial application. It further states that an entity may use either 1) its effective date or 2) the beginning of the
earliest comparative period presented in the financial statements as its date of initial application. The Company used the
effective date as the date of initial application. As such, financial information and disclosures required under ASC 842 are not
provided for dates and periods prior to January 1, 2019.
The lease standard provides a number of practical expedients for transition accounting. The Company elected the “package of
practical expedients”, which permitted the Company to not reassess its prior conclusions about lease identification, lease
classification and initial direct costs. The Company elected the practical expedients pertaining to the use of hindsight and to
land easements. Applying the hindsight practical expedient resulted in longer lease terms for many leases.
The adoption of ASC 842 resulted in the recognition of ROU assets and lease liabilities of $502.5 million and $501.6 million,
respectively, for operating leases and $10.9 million and $12.1 million, respectively, for finance leases. The adoption did not
have a material impact on the Company’s consolidated statement of earnings or consolidated statement of cash flows.

Pending Accounting Pronouncements

Credit Losses
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016‐13, Financial
Instruments – Credit Losses (“ASU 2016‐13”), which is effective and will be adopted January 1, 2020. ASU 2016‐13 includes a
current expected credit loss (CECL) model that requires an entity to estimate credit losses expected over the life of an exposure
or pool of exposures based on historical information, current information and reasonable and supportable forecasts at the time
the asset is recognized and is remeasured at each reporting period. ASU 2016‐13 primarily relates to the Company’s receivables,
but the scope also includes retainage and contract assets related to its paving business. The Company has evaluated ASU 2016‐
13, and the adoption will not have a material impact on its financial position or consolidated statement of earnings and
comprehensive earnings.

Note B: Revenue Recognition
Performance Obligations. Performance obligations are contractual promises to transfer or provide a distinct good or service
for a stated price. The Company’s product sales agreements are single‐performance obligations that are satisfied at a point in
time. Performance obligations within paving service agreements are satisfied over time, primarily ranging from one day to two
years. For product revenues and freight revenues, customer payment terms are generally 30 days from invoice date. Customer
payments for the paving operations are based on a contractual billing schedule and are due 30 days from invoice date.
Future revenues from unsatisfied performance obligations at December 31, 2019, 2018 and 2017 were $136.1 million, $78.1
million and $67.0 million, respectively, where the remaining periods to complete these obligations ranged from three months
to 12 months, two months to 22 months and one month to 23 months, respectively.
Sales Taxes. The Company is deemed to be an agent when collecting sales taxes from customers. Sales taxes collected are
initially recorded as liabilities until remitted to taxing authorities and are not reflected in the consolidated statements of
earnings as revenues and expenses.

Page 22 ♦ Annual Report Celebrating 25 Years as a Public Company