Vulcan Materials (VMC) 10-K risk factor changes: FY2016 vs FY2015

[removed: If any of these] [added: The following] risks [removed: actually occurs,] [added: could materially and adversely affect] our business, [removed: results of operations or] financial condition [removed: could be materially] and [removed: adversely affected.][added: results of operations, and cause the trading price of our common stock to decline.]

Changes in legal requirements and governmental policies concerning zoning, land use, [removed: environmental] [added: environmental, international trade] and other areas of the law may result in additional liabilities, a reduction in operating hours and additional capital expenditures — Our operations are affected by numerous federal, state and local laws and regulations related to zoning, land [removed: use] [added: use, environmental,] and [removed: environmental] [added: international trade] matters.

Stricter laws and regulations, or more stringent interpretations of existing laws or regulations, may impose new [removed: liabilities] [added: liabilities, taxes or tariffs] on us, reduce operating hours, require additional investment by us in pollution control equipment, or impede our opening new or expanding existing plants or facilities.

The [added: expanded] use of recycled concrete and asphalt mix could cause a significant reduction in the demand for aggregates.

| Part I | [removed: 18] [added: 21] |

Therefore, our earnings are highly sensitive to changes in [removed: volume] [added: product shipments] — Due to the high levels of fixed capital required for extracting and producing construction aggregates, our profits [removed: and profit margins] are negatively affected by significant decreases in [removed: volume.][added: shipments.]

While we have not identified any events or changes in circumstances since our annual impairment test on November 1, [removed: 2015] [added: 2016] that indicate the fair value of any of our reporting units is below its carrying value, a significant downturn in the construction industry may have a material effect on the fair value of our reporting units.

| | § | | goodwill [removed: and goodwill] impairment |

[removed: We believe we have sufficient experience and reasonable procedures to enable us to make appropriate assumptions and formulate reasonable estimates; however, these] [added: These] assumptions and estimates could change significantly in the future and could adversely affect our financial position, results of operations, or cash flows.

[removed: Failure] [added: In addition, failure] to comply with the FCPA may result in legal claims against us.

[removed: In addition, we face other] [added: These] risks [removed: associated with international operations and relationships, which] may include restrictive trade policies, imposition of duties, taxes or government royalties [removed: impressed] [added: or overt acts] by foreign governments.

There is also a risk that we could experience a business interruption, theft of information, or reputational [removed: damage] [added: damage, which could adversely affect our results of operations,] as a result of a cyber-attack, such as an infiltration of a data center, or data leakage of confidential information either internally or at our third-party providers.

While we have invested in the protection of our data and informational technology to reduce these risks and periodically test the security of our information systems network, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could adversely affect [removed: or] [added: our] business.

We cannot predict the outcome of litigation and other contingencies with certainty — We are involved in several complex litigation proceedings, some arising from our previous ownership and operation of our Chemicals [removed: and Metals businesses.][added: business.]

These risk factors do not identify all risks that we face; our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.

Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

You should also refer to the other information set forth in this Annual Report on Form 10-K, including Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8 “Financial Statements and Supplementary Data.”

Although Congress passed and President Obama signed a five-year, fully\-funded bill into law to invest in roads, bridges and public transportation in 2015, and in 2016, three state legislatures in Vulcan\-served areas passed one-time revenue increases for transportation and ballot measures were also passed to increase investment transportation infrastructure in several Vulcan-served areas including northern and southern California, Georgia, North Carolina and South Carolina, given varying state and local budgetary situations and the associated pressure on infrastructure spending, we cannot be entirely assured of the existence, amount and timing of appropriations for future public infrastructure projects.

We face political and other risks associated with our international operations, including our largest production facility located in Playa del Carmen, Mexico.

A deterioration in our credit ratings and/or the state of the capital markets could negatively impact our business — We currently have $2 billion of debt with maturities between 2018 and 2037.

Given our current credit metrics and ratings, together with other factors, we expect to refinance our nearer term debt maturities rather than repay them when due.

Furthermore, we expect to finance acquisitions with a combination of cash flows from existing operations, additional debt and/or additional equity.

The mix of financing sources for acquisitions will be situational dependent.

A deterioration in our credit ratings, regardless of the cause, could limit our debt financing options and increase the cost of such debt financing (whether for refinancing existing debt or financing acquisitions).

While we do not anticipate a credit ratings downgrade, and plan to manage the capital structure consistent with investment\-grade credit metrics, we cannot assure our current credit ratings.

A deterioration in the state of the capital markets, regardless of our credit rating, could impact our access to, and cost of, new debt or equity capital.

An investment in our common stock involves risks.

You should carefully consider the following risks, together with the information included in or incorporated by reference in this report, before deciding whether an investment in our common stock is suitable for you.

In such an event, the trading prices of our common stock could decline and you might lose all or part of your investment.

The following is a list of our risk factors.

Congress recently passed a five-year, fully funded bill to invest in roads, bridges and public transportation.

The resulting certainty and the modestly increased investment are positive developments and mitigate risk in this area.

In addition, eleven Vulcan-served states successfully increased transportation funding between 2013 and the present; similar efforts are expected in at least three other states in our service area in 2016.

However, given varying state and local budgetary situations and the associated pressure on infrastructure spending, we cannot be entirely assured of the existence, amount and timing of appropriations for future public infrastructure projects.

We have substantial debt and our credit ratings are non-investment grade — Our ability to make scheduled interest and principal payments depends on our financial performance.

Financial performance is, in turn, subject to general economic and business conditions, many of which are outside of our control.

Our ability to refinance maturing debt depends on our financial performance and the state of the non-investment grade debt market, which is more volatile than the investment-grade debt market.

Our debt instruments contain customary covenants, including: affirmative (e.g., maintain insurance), negative (e.g., to limit our ability to incur secured debt), informational (e.g., provide financial statements) and financial (e.g., minimum EBITDA to interest ratio) covenants.

If we fail to comply with any of these covenants, the related debt could become due prior to its stated maturity, and our ability to obtain alternative or additional financing could be impaired.

| --- | --- | --- | --- |

| | § | | reclamation costs |

FINANCIAL SUMMARY FOR [removed: 2015] [added: 2016] (compared to [removed: 2014)][added: 2015)]

| | § | | Total revenues increased [removed: $428.0] [added: $170.5] million, or [removed: 14%,] [added: 5%,] to [removed: $3,422.2] [added: $3,592.7] million |

| | § | | Gross profit increased [removed: $270.0] [added: $143.3] million, or [removed: 46%,] [added: 17%,] to [removed: $857.5] [added: $1,000.8] million |

| | § | | Aggregates [added: segment] freight-adjusted revenues increased [removed: $318.4] [added: $181.8] million, or [removed: 18%,] [added: 9%,] to [removed: $2,112.5] [added: $2,294.2] million |

| | § | | Freight-adjusted sales price increased 7% [removed: in total and on a same-store basis] |

[removed: | | § | | Segment] [added: Aggregates segment] gross profit increased [removed: $211.6 million, or 39% to $755.7] [added: $117.5] million [removed: |][added: (16%).]

| | § | | Incremental gross profit as a percentage of freight-adjusted revenues was [removed: 66%; on a same-store basis was 77%] [added: 64.6%] |

| | § | | Asphalt Mix, Concrete and Calcium segment gross profit [removed: improved $58.4] [added: increased $25.8] million, collectively |

| | § | | SAG increased [removed: $14.6] [added: $28.1] million and [removed: declined (0.7] [added: 0.4] percentage points [removed: or 70] [added: (40] basis points) as a percentage of total revenues |

| | § | | Earnings from continuing operations were [removed: $232.9] [added: $422.4] million, or [removed: $1.72] [added: $3.11] per diluted share, compared to earnings of [removed: $207.1] [added: $232.9] million, or [removed: $1.56] [added: $1.72] per diluted [removed: share, in 2014] [added: share] |

| | § | | a $4.7 million tax benefit related to a [removed: state] [added: partial release of the Alabama] NOL carryforward [added: valuation allowance] |

| | § | | a [added: $5.0 million] pretax charge [removed: of $67.1 million] for [removed: debt purchase costs] [added: restructuring] |

| | § | | a pretax gain of $6.3 million [removed: on] [added: related to] the sale of real estate and businesses |

| | § | | a [removed: pretax charge of] $5.2 million [removed: for] [added: pretax] asset impairment [added: loss] |

| | § | | Discrete items in [removed: 2014] [added: 2016] include: |

| | § | | a pretax gain of $238.5 million [removed: on] [added: related to] the sale of real estate and businesses [added: including our cement and concrete businesses in the Florida area] |

| | § | | Adjusted EBITDA was [removed: $836.3] [added: $966.0] million, an increase of [removed: $231.6] [added: $131.1] million, or [removed: 38%] [added: 16%] |

][added: 27](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg010.jpg)]

| Part II | [removed: 28] [added: 57] |

[removed: EXECUTIVE LEADERSHIP TEAM AND] OUR FIVE CORE DISCIPLINES

][added: 4](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg011.jpg)]

Goal: [removed: Lead] [added: Run] the [removed: markets] [added: industry’s] safest and most efficient operations by successfully leveraging and driving cost efficiencies to achieve 60% flow through of incremental aggregates [removed: revenue.][added: freight-adjusted revenues.]

In [added: 2016 and] 2015, we exceeded our long-term flow through goal of 60% by achieving [removed: 77%] [added: 65% and 67%, respectively,] flow through of incremental aggregates [removed: revenue on a same-store basis.][added: freight-adjusted revenues.]

Goal: Continue to leverage SAG in order to achieve 6% of [added: total] revenues.

Execution: We are leveraging our recently [removed: reorganized central shared services and recently] implemented common ERP platform [added: and reorganized central shared services] to reduce administrative expenses and enable rapid integration of acquired operations.

As a result, SAG as a percentage of total revenues has decreased from 9.1% in 2014 to [removed: 8.4%] [added: 8.8%] in [removed: 2015.][added: 2016.]

[removed: Execution:] In 2015, we completed a swap of twelve ready-mixed concrete plants in California for thirteen asphalt plants primarily in Arizona.

| | § | | [removed: one] [added: an] aggregates facility in [removed: Tennessee] [added: Texas] |

The following [removed: assumptions, which represent the mid-point of our expectations,] [added: assumptions] support our outlook for strong year-over-year growth in Adjusted EBITDA in [removed: 2016.][added: 2017:]

| | § | | [removed: increase in average freight-adjusted] [added: Freight-adjusted] aggregates [removed: pricing] [added: price increase] of [added: 5% to] 7%, with unit margins continuing to grow faster than pricing |

| | § | | SAG expenses of approximately [removed: $295] [added: $320] million, [added: 2% higher than the prior year and] excluding business development-related expenses |

| | § | | [removed: core] [added: Core] capital spending of approximately [removed: $275] [added: $300] million to support the increased level of shipments and further improve production costs and operating efficiencies |

| | § | | [removed: depreciation,] [added: Depreciation,] depletion, accretion and amortization expense of approximately [removed: $285] [added: $300] million |

| | § | | [removed: effective] [added: Effective] tax rate of [removed: 31%] [added: 28%] |

Since the beginning of this [removed: recovery in the second half of 2013,] [added: recovery,] our [removed: teams’] efforts have resulted in [removed: trailing twelve month] Aggregates segment gross profit increasing [removed: nearly $400] [added: $515] million on a [removed: 38] [added: 41] million ton increase in [removed: annualized] shipments.

Likewise, we believe that this presentation is consistent with [added: our competitors and consistent with] the basis by which investors analyze our operating results considering that freight and delivery services represent pass-through activities.

| dollars in millions | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | |

| Gross profit | | | $ [removed: 857.5] [added: 1,000.8] | | | $ [removed: 587.6] [added: 857.5] | | | $ [removed: 426.9] [added: 587.6] | |

| Total revenues | | | $ [removed: 3,422.2] [added: 3,592.7] | | | $ [removed: 2,994.2] [added: 3,422.2] | | | $ [removed: 2,770.7] [added: 2,994.2] | |

| Gross profit margin | | | [removed: 25.1%] [added: 27.9%] | | | [removed: 19.6%] [added: 25.1%] | | | [removed: 15.4%] [added: 19.6%] | |

| | § | | Aggregates segment sales increased $184.1 million, or 7%, to $2,961.8 million |

| | § | | Shipments increased 2%, or 3.1 million tons, to 181.4 million tons |

| | § | | Segment gross profit increased $117.5 million, or 16%, to $873.1 million and segment gross profit margin was 29.5% |

| | § | | $36.1 million of tax benefits (including $24.8 million of excess tax benefits for share-based compensation), a pretax gain of $16.2 million on the sale of real estate, a pretax gain of $11.0 million for business interruption claims, pretax charges of $16.9 million for divested operations and pretax losses of $10.5 million from asset impairment |

| | § | | a $6.5 million tax charge for a foreign tax credit carryforward impairment, a $4.7 million tax benefit for a partial release of the Alabama NOL carryforward valuation allowance, a pretax charge of $67.1 million for debt purchase costs, a pretax gain of $6.3 million for the sale of real estate and businesses, a pretax charge of $7.1 million for divested operations, a pretax loss of $5.2 million for asset impairment and a pretax charge of $5.0 million for restructuring |

| | § | | Net earnings were $419.5 million, an increase of $198.3 million, or 90% |

| | § | | Increased return of capital to shareholders via higher dividends ($106.3 million versus $53.2 million) and share repurchases ($161.5 million versus $21.5 million) |

Execution: In 2016, we expanded our aggregates distribution capabilities in Georgia and completed two strategic bolt-on acquisitions in New Mexico and Texas.

OUR COMMITMENTS

We crush rocks for a living, but at its core, this is a relationship business.

We are deeply committed to our customers and our people, and deeply embedded in our communities.

Our commitment to customers — We have the capabilities to fulfill our customers’ needs on large, complex jobs with unmatched performance and service and we aim to be the supplier of choice for smaller contractors.

With all of our customers, we strive to maintain and improve our relationships, to provide outstanding value and service for a fair price by being a solution provider rather than simply an aggregates provider.

Our commitment to our employees — We work hard to ensure our employees’ safety and health, in a positive environment where each person can thrive.

We are completely focused on the things that we can control, and it is here that our people continue to make all the difference: increasing unit profitability, delivering incremental earnings and improving our world-class aggregates franchise every day.

Our commitment to our communities — Our people contribute to the cities, towns and neighborhoods where they live and work, in big ways and in small; from disaster relief to the support of education and a wide variety of other social causes and programs.

At Vulcan, this means a great deal more than just financial support.

Our people throughout the United States, and in Mexico, are generously volunteering their time, talent and energy to improve the world around them.

Our commitment to the environment — We take a long-term approach that bears in mind the demands of the present and the needs of the future.

As we continue to build on our legacy, we do so with a clear view of our responsibility to future generations.

Our commitment to our shareholders — We work hard every day to generate returns that exceed market averages.

We are good stewards, with responsible operating and capital project expenditures, to achieve a healthy return on our shareholders’ investment in us.

We will continue to strive to be the market leader, winning on margin performance, consistent strength of execution and pricing performance; earning a superior return on the very significant capital invested in our business.

We believe our ability to succeed stems directly from these commitments.

Over the years, nearly six decades, we have built a strong, resilient and vital business on this foundation of doing things the right way.

We expect this to continue for the decades to come.

2016 ACQUISITIONS

During 2016, we acquired the assets of the following businesses for total consideration of $33.3 million:

| | § | | an asphalt plant in New Mexico |

| | § | | a distribution business in Georgia to complement our aggregates logistics and distribution activities |

The strong fundamentals of our aggregates-focused business and the outstanding improvement in our core profitability have led to strong earnings growth during the last three years of recovery.

In 2017, we expect continued growth across the vast majority of our markets and across each of the end use segments we serve.

Our expectation for full year Adjusted EBITDA of $1.125 to $1.225 billion is driven by a continuing recovery in shipments, with higher levels of publicly funded construction activity just beginning to join the ongoing recovery in private demand, as well as a favorable pricing environment.

| | § | | Aggregates shipments growth of 5% to 8% from 2016, with growth weighted more toward the second half of the year |

| | § | | Asphalt Mix, Concrete and Calcium segment gross profit growth of approximately 15% |

We remain focused on continuous, compounding improvement in profitability and cash flows.

Our 2017 outlook reflects earnings growth and unit margin performance consistent with recent trends as well as our longer range goals.

The flow-through of freight-adjusted revenues to gross profit in our Aggregates segment should remain in line with the long-term goal of greater than 60%.

During this same period, unit gross profit in our core Aggregates segment has improved 89% on a trailing twelve month (TTM) basis.

*Excludes more recent acquisitions.

| | § | | Total shipments increased 10%, or 15.9 million tons to 178.3 million tons; same-store shipments increased 7% |

| | § | | a pretax charge of $9.5 million associated with acquisitions and divestitures |

| | § | | a pretax charge of $5.0 million for restructuring |

| | § | | a pretax charge of $72.9 million for debt purchase costs |

| | § | | a pretax charge of $21.1 million associated with acquisitions and divestitures |

| | § | | a pretax charge of $1.3 million for restructuring |

In 2014, we announced an executive leadership team led by Tom Hill, Chairman and Chief Executive Officer.

Joining Mr. Hill on the leadership team were John McPherson (Executive Vice President, Chief Financial and Strategy Officer), Stan Bass (Chief Growth Officer) and Michael Mills (Chief Administrative Officer).

Each member of the executive leadership team has significant senior-level general and industry specific business experience.

Under the leadership of our executive leadership team, we have instituted the following five core disciplines that we focus on daily:

These transactions together with acquisitions completed in 2014, position us as the #1 aggregates supplier in the New Mexico market and a leading aggregates supplier in Arizona.

2015 ACQUISITIONS/DIVESTITURES

We continually challenge ourselves as to whether we are the best owner of our individual assets and operations — this logic supports the transaction we closed in January 2015 to exchange our California ready-mixed concrete operations for 13 asphalt mix plants, primarily in Arizona.

We expect to earn a higher return on the exchanged assets due to our operational and strategic focus in the Arizona asphalt market.

In addition, we acquired the following in 2015:

| | § | | three aggregates facilities and seven ready-mixed concrete operations in Arizona and New Mexico |

We expect overall demand growth in Vulcan-served markets to be approximately 7% in 2016, driven by continued growth in both private and public construction.

Private construction activity should continue to grow in both residential and nonresidential, led by double-digit growth in the residential sector.

Public construction in our markets should continue to benefit from state-led highway spending in key states and record levels of state and local tax receipts.

Additionally, with the passage of the new, fully funded, long-term federal highway bill in December 2015, the states now have greater funding stability and certainty to undertake much needed transportation projects.

As a result, we believe that mid-single digit growth for this aggregates-intensive end\-market is possible in 2016.

At this point in the recovery, the timing and pace of shipments throughout the year can be marginally more uncertain due to weather-related challenges and the start dates and shipping pace for certain large projects.

For example, El Nino-related rainfall has negatively impacted early 2016 shipment rates in our California, Arizona and New Mexico operations.

These factors, coupled with public transportation agencies needing time to adjust their project procurement schedules to incorporate passage of the new federal highway bill, could result in full year aggregates shipments being weighted towards the second half of the year.

We expect full year Adjusted EBITDA of $1.0 to $1.1 billion driven by: (1) the continuing recovery in demand from the trough seen in 2012, (2) strong growth in aggregates gross profit per ton, (3) earnings improvement in our non-aggregates businesses and (4) continuing leverage of our SAG expenses.

| | § | | aggregates shipments of approximately 191 million tons, up 7% from 2015 |

| | § | | aggregates gross profit growth of 25% |

| | § | | total non-aggregates gross profit improvement of 20% |

Our 2015 results and 2016 outlook are consistent with our long\-range expectations.

We are encouraged by the ongoing recovery in demand continuing across our markets and by the positive pricing environment.

Our teams continue to convert incremental revenue into incremental gross profit at an impressive rate.

Our focus will remain on continuous, compounding improvement – both operational and financial.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Reconciliations of these metrics to their nearest GAAP measures are presented below:

Thus, free cash flow should not be considered as an alternative to net cash provided by operating activities or any other liquidity measure defined by GAAP.

The investment community often uses these metrics as indicators of a company's ability to incur and service debt and to assess the operating performance of a company’s businesses.

We use free cash flow, cash gross profit and EBITDA to assess the operating performance of our various business units and the consolidated company.

FREE CASH FLOW

Free cash flow is calculated by deducting purchases of property, plant & equipment from net cash provided by operating activities.

[removed: In order to] [added: To] manage these market risks, we may [removed: utilize] [added: use] derivative financial instruments.

As discussed in the Liquidity and Financial Resources section of Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations," we actively manage our capital structure and resources to balance the cost of capital and [added: risk of] financial [removed: risk.][added: stress.]

In addition to floating-rate borrowings under our line of credit, we at times [removed: utilize] [added: use] interest rate swaps to manage the mix of [removed: fixed-] [added: fixed-rate] and floating-rate debt.

Since 2002, our EBITDA and Operating income are [added: positively] correlated to floating interest rates (as measured by 3-month LIBOR).

As such, our business serves as a natural hedge to rising interest rates, and floating-rate debt serves as a natural hedge against weaker operating [removed: results.][added: results due to general economic weakness.]

At December 31, [removed: 2015,] [added: 2016,] the estimated fair value of our long-term debt including current maturities was [removed: $2,204.9] [added: $2,243.4] million compared to a book value of [removed: $1,980.5] [added: $1,982.9] million.

The effect of a decline in interest rates of one percentage point would increase the fair value of our debt by [removed: $111.4] [added: approximately $104.9] million.

| Part II | [removed: 57] [added: 60] |

MARKET RISK

Vulcan Materials Company, a New Jersey corporation, is the nation’s largest [removed: producer] [added: supplier] of construction aggregates (primarily crushed stone, sand and gravel) and a major producer of asphalt mix and ready-mixed concrete.

As of December 31, [removed: 2015,] [added: 2016,] we had [removed: 344] [added: 337] active aggregates facilities.

We are the largest [removed: producer] [added: supplier] of construction aggregates in the country with coast-to-coast aggregates operations.

][added: 35](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg001.jpg)]

These factors, together with our strong operating expertise and price discipline, [removed: allow] [added: allowed] us to deliver [removed: the highest margins] [added: a 14% increase ($4.81 compared to $4.24) in Aggregates segment unit gross profit] per ton [removed: shipped] in [removed: the industry.][added: 2016.]

[removed: | | § | |] Our aggregates reserves are strategically located throughout the United States in areas that are projected to grow faster than the national average and that require large amounts of aggregates to meet construction demand. [removed: Vulcan-served states are estimated to generate 77% of the total growth in U.S. population and 72% of the total growth in U.S. household formations between 2015 and 2025. |]

| | VULCAN’S TOP TEN REVENUE PRODUCING STATES IN [removed: 2015] [added: 2016] | | | | | | | | | | | |

| | 4. | Georgia | | | | 9. | | [removed: North] [added: South] Carolina | | | | |

| | 5. | Florida | | | | 10. | | [removed: Alabama] [added: Illinois] | | | | |

Our top ten revenue producing states accounted for [removed: 83%] [added: 84%] of our [removed: 2015] [added: 2016] revenues while our top five accounted for 59%.

[removed: | | § | |] We take a disciplined approach to strengthening our footprint by increasing our presence in U.S. metropolitan areas that are expected to grow more rapidly and by divesting assets that are no longer considered part of our long-term growth strategy. [removed: In 2015, we completed a swap of twelve ready-mixed concrete plants in California for thirteen asphalt plants primarily in Arizona. We also acquired three aggregates facilities and seven ready-mixed concrete plants in Arizona and New Mexico. These transactions, together with acquisitions completed in 2014, position us as the #1 aggregates supplier in the New Mexico market and a leading aggregates supplier in Arizona. |]

[removed: | | § | | Where practical, we have operations located close to our local markets because the cost of trucking materials long distances is prohibitive.] Approximately 80% of our total aggregates shipments are delivered exclusively from the producing location to the customer by truck, and another 16% are delivered by truck after reaching a sales yard by rail or water. [removed: The remaining 4% of aggregates shipments are delivered directly to the customer by rail or water. |]

We operate in [removed: an industry that] [added: a] generally [removed: is] fragmented [added: industry] with a large number of small, privately-held companies.

We estimate that the ten largest aggregates producers accounted for approximately 30% to 35% of total U.S. aggregates production in [removed: 2015.][added: 2016.]

Because the U.S. aggregates industry is highly fragmented, with over [removed: 5,900] [added: 6,000] companies managing [removed: almost] [added: more than] 11,000 operations during [removed: 2015,] [added: 2016,] many opportunities for consolidation exist.

Therefore, companies in the industry tend to grow by acquiring existing facilities to enter new markets or [removed: by extending] [added: extend] their existing market positions.

[removed: Vulcan provides] [added: We provide] the basic materials for the infrastructure needed to maintain and expand the U.S. economy.

Our strategy and competitive [removed: advantages] [added: advantage] are based on our strength in aggregates.

Our materials are used to build the roads, tunnels, bridges, railroads and airports that connect us, and to build the hospitals, [removed: churches,] schools, shopping centers, [removed: and] factories [added: and places of worship] that are essential to our lives and the economy.

Our business strategies include: [removed: 1)] [added: (1)] aggregates focus, [removed: 2)] [added: (2)] coast-to-coast footprint, [removed: 3)] [added: (3)] profitable growth, [removed: 4)] [added: (4)] managing volume, product mix and price to grow profitability, and [removed: 5)] [added: (5)] effective land management.

[removed: Our] [added: Given our] focus on [removed: aggregates allows us to:][added: aggregates, we:]

[removed: Our reserves] [added: They] are strategically located throughout the United States in high-growth areas that [removed: will] [added: are expected to] require large amounts of aggregates to meet future construction demand.

TAKE ADVANTAGE OF [removed: BEING THE LARGEST PRODUCER:] [added: SIZE AND SCALE:] Each aggregates operation is unique because of its location within a local market with particular geological characteristics.

[removed: Vulcan is the] [added: | | § | |] largest aggregates [removed: company] [added: supplier] in the [removed: U.S., measured by shipments.][added: U.S. |]

[added: We are the largest aggregates supplier in the U.S.] Our [removed: 344] [added: 337] active aggregates facilities as of December 31, [removed: 2015] [added: 2016,] provide opportunities to standardize operating practices and procure equipment (fixed and mobile), parts, supplies and services in an efficient and cost-effective manner, both regionally and nationally.

Our strategic locations serve [removed: nineteen] [added: 19] of the top 25 highest-growth U.S. metropolitan areas [removed: and as shown below, we serve twenty] [added: in 20] states plus the District of Columbia.

][added: 17](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg003.jpg)]

In 2014, we completed eight transactions that expanded our aggregates business in Arizona, California, New [added: Mexico, Texas, Virginia and Washington D.C. and our asphalt mix business in Arizona and New Mexico.]

In [removed: January] 2015, we completed an asset exchange transaction in which we exited our ready-mixed concrete business in California and [removed: added thirteen] [added: further expanded our] asphalt [removed: plant locations, primarily] [added: mix business] in Arizona.

For example, in [removed: 2015] [added: 2016] we completed strategic bolt-on acquisitions in [removed: Arizona,] New Mexico and [removed: Tennessee.][added: Texas.]

| | § | | Reinvestment opportunities with high returns: [added: Demand for our products is dependent on construction activity and correlates positively with changes in population growth, household formation and employment.] During the [removed: next decade,] [added: period 2015 - 2025,] Moody's Analytics projects that [removed: 77%] [added: 79%] of the U.S. population growth, [removed: 72%] [added: 71%] of household formation and [removed: 64%] [added: 63%] of new jobs will occur in Vulcan-served states. The close proximity of our production facilities and our aggregates reserves to this projected population growth [removed: create] [added: creates] many opportunities to invest capital in high-return projects — projects that will add reserves, increase production capacity and improve costs. |

][added: 18](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg004.jpg)]

Source: Moody’s Analytics as of [removed: November 16, 2015][added: December 12, 2016]

][added: 28](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg005.jpg)]

Source: Moody’s Analytics as of [removed: November 16, 2015.][added: December 12, 2016.]

][added: 33](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg007.jpg)]

[removed: While] Aggregates segment gross profit has grown at a significantly greater rate than volume over the past [removed: couple of years,] [added: few years and] we expect continuing improvement in unit profitability.

| | § | | On Price for Service — Our expanding margins [removed: have just begun] [added: will continue] to benefit from the [removed: mid-to-high single digit price] [added: compounding pricing] gains associated with cyclical recoveries. |

| | § | | On Operating Efficiency and Leverage — We are operating a capital-intensive business [removed: at 55\-60%] [added: well below full] capacity and are extremely well positioned to further leverage fixed costs to sales as we move forward. |

We continue to focus our actions on prudent decisions regarding the life cycle management of the [removed: 120,000 acres of] land we [removed: currently] own.

| | § | | strong local leadership and autonomy coupled with company-wide performance goals and improvement |

Vulcan-served states are estimated to generate 79% of the total growth in U.S. population and 71% of the total growth in U.S. household formations between 2015 and 2025.

| | 2. | California | | | | 7. | | North Carolina | | | | |

| | 3. | Virginia | | | | 8. | | Arizona | | | | |

In 2016, we expanded our aggregates distribution capabilities in Georgia and completed two strategic bolt-on acquisitions in New Mexico and Texas.

Where practical, we have operations located close to our local markets because the cost of trucking materials long distances is prohibitive.

The remaining 4% of aggregates shipments are delivered directly to the customer by rail or water.

We operate primarily in the U.S. and are the nation’s largest supplier of construction aggregates (primarily crushed stone, sand and gravel) and a major producer of asphalt mix and ready-mixed concrete.

BUILD AND HOLD SUBSTANTIAL RESERVES: Our reserves are critical to our long-term success.

Moreover, there are significant barriers to entry in many metropolitan markets due to stringent zoning and permitting regulations.

BETTER SALES AND SERVICE

| | § | | empowered local leadership teams with intimate knowledge of local markets, leveraged with the strength and knowledge of the largest aggregates supplier in the U.S. |

| | § | | effective post-mining land management to generate significant additional value |

| | 1. | | Aggregates – 76% of 2016’s total revenues |

| | 2. | | Asphalt Mix – 14% of 2016’s total revenues |

| | 3. | | Concrete – 9% of 2016’s total revenues |

| | 4. | | Calcium – less than 1% of 2016’s total revenues |

Source: Company estimates

In 2016, publicly funded construction accounted for approximately 47% of our total aggregates shipments, and approximately 26% of our aggregates sales by volume were used in highway construction projects.

| | § | | Public Sector Funding: Generally, public sector construction spending is more stable than private sector construction spending; public sector spending is less sensitive to interest rates and spending has historically been supported by multi-year laws, which provide certainty and funding amounts, program structures, and rules and regulations. Federal spending is governed by authorization, budget and appropriations laws. The level of state and local spending on infrastructure varies across the United States and depends on individual state needs and economies. Since 2013, seventeen states have increased taxes on motor fuel to support needed transportation investments. In 2016, five state legislatures approved one-time funding for transportation, and three state legislatures passed bills providing recurring funding resources. To cap off state and local action, 2016 was another banner election year for transportation-related measures at the ballot box: 74% of local and state measures passed — consistent with the trend of the last 10 years. |

The long-term nature of the FAST Act, which authorizes federal funding through FFY 2020, is important.

This multi-year authorization and the associated dedicated funding provides state departments of transportation with the ability to plan and execute long-range, complex highway projects.

In 2016, total annual housing starts in the U.S. increased to 1.18 million (an increase of 2.2% over 2015).

Housing growth was particularly robust in our markets, which grew at almost twice the rate of the nation as a whole.

vertical integration

While aggregates is our focus and primary business, we believe vertical integration between aggregates and downstream products, such as asphalt mix and ready-mixed concrete, can be managed effectively in certain markets to generate acceptable financial returns.

We produce and sell asphalt mix and/or ready-mixed concrete primarily in our mid-Atlantic, Georgia, Southwestern and Western markets.

Aggregates comprise approximately 95% of asphalt mix by weight and 80% of ready-mixed concrete by weight.

In both of these downstream businesses, aggregates are primarily supplied from our operations.

We have received notices from the United States Environmental Protection Agency (EPA) or similar state or local agencies that we are considered a potentially responsible party (PRP) at a limited number of sites under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) or similar state and local environmental laws.

Generally we share the cost of remediation at these sites with other PRPs or alleged PRPs in accordance with negotiated or prescribed allocations.

There is inherent uncertainty in determining the potential cost of remediating a given site and in determining any individual party's share in that cost.

As a result, estimates can change substantially as additional information becomes available about the nature or extent of site contamination, remediation methods, other PRPs and their probable level of involvement, and actions by or against governmental agencies or private parties.

For additional information about litigation and environmental matters, see Notes 1 and 12 to the consolidated financial statements in Item 8 "Financial Statements and Supplementary Data."

| Jason P. Teter | Vice President, Finance | 42 |

| S. Martin Thorpe | President – Mideast Division | 60 |

Prior to that, he served in a number of positions with Vulcan including President, Florida Rock Division (September 2010 – December 2011).

Prior to that, he served in a number of positions with Vulcan including President, Midsouth and Southwest Divisions (September 2010 – December 2011).

Teter began serving as Vice President, Finance on January 1, 2017.

Christina M.

| --- | --- | --- | --- |

| | § | | excellent multi-modal logistics capabilities, plus the inherent advantages of our Playa del Carmen, Mexico quarry and supporting port facilities |

| | 2. | California | | | | 7. | | Arizona | | | | |

| | 3. | Virginia | | | | 8. | | Illinois | | | | |

BUILD AND HOLD SUBSTANTIAL RESERVES: The locations of our reserves are critical to our long-term success because of barriers to entry created in many metropolitan markets by zoning and permitting regulations and high costs associated with transporting aggregates.

PROFITABLE GROWTH

Mexico, Texas, Virginia and Washington D.C., our asphalt mix business in Arizona and New Mexico, and our ready-mixed concrete business in New Mexico.

| | § | | largest aggregates company in the U.S. (measured by shipments) |

| | § | | effective land management |

| | § | | quality top-line growth that converts to higher-margin earnings and cash flow generation |

| | § | | more opportunities to manage our portfolio of locations to further enhance long-term earnings growth |

| | 1. | | Aggregates |

| | 2. | | Asphalt Mix |

| | 3. | | Concrete |

| | 4. | | Calcium |

| | § | | Public Sector Funding: Generally, public sector construction spending is more stable than private sector construction because public sector spending is less sensitive to interest rates and has historically been supported by multi-year legislation and programs. For example, the federal surface transportation bill is a principal source of funding for public infrastructure and transportation projects. For over four decades, a portion of transportation projects has been funded through a series of multi-year bills. Some 35% of transportation projects are federally-funded, with special emphasis given to the largest and most complex projects. The long-term nature of such legislation is important because it provides state departments of transportation with the ability to plan and execute long-range, complex highway projects. Federal highway spending is governed by multi-year authorization bills and annual budget appropriations using funds largely from the Federal Highway Trust Fund. This Trust Fund receives funding from taxes on gasoline and other levies. The level of state spending on infrastructure varies across the United States and depends on individual state needs and economies. In 2015, approximately 26% of our aggregates sales by volume were used in highway construction projects. |

The funding levels and five years of stability will help to rebuild America’s aging infrastructure and protect millions of jobs.

Unlike TIFIA, WIFIA as originally crafted did not allow for federal credit assistance to projects financed, in whole or in part, by tax exempt municipal bonds.

The FAST Act lifts that restriction and should make it easier for project sponsors to use the credit program and advance water projects that would otherwise go unaddressed due to the lack of resources.

In 2015, privately-funded construction accounted for approximately 51% of our total aggregates shipments.

In 2015, total annual housing starts increased to more than 1.1 million units.

The levels of construction spending are affected by a number of factors including changing interest rates and demographic and population fluctuations.

| David J. Grayson | President – Southeast Division | 57 |

David J.

Before assuming that role, he served as Vice President and General Manager, Georgia for the preceding five years.

| Vulcan Materials Company | | | | | | $ 100.00 | | | $ 90.60 | | | $ 119.95 | | | $ 136.99 | | | $ 152.06 | | | $ 220.63 | |

| S&P 500 | | | | | | $ 100.00 | | | $ 102.11 | | | $ 118.45 | | | $ 156.81 | | | $ 178.28 | | | $ 180.78 | |

| Wilshire 5000 M&S | | | | | | $ 100.00 | | | $ 96.60 | | | $ 114.18 | | | $ 155.51 | | | $ 168.42 | | | $ 176.51 | |

We were not subject to any penalties in [removed: 2015] [added: 2016] for failure to disclose transactions identified by the Internal Revenue Service as abusive under Internal Revenue Code Section 6707A.

| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, [removed: 2015] [added: 2016] Commission file number: 001-33841 VULCAN MATERIALS COMPANY (Exact Name of Registrant as Specified in Its Charter) | | |

| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ 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 ☐ No ☒ 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 Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: ☐] [added: ☒] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ | | |

| Aggregate market value of voting and non-voting common stock held by non-affiliates as of June 30, [removed: 2015:] [added: 2016:] | [removed: $9,464,531,960] [added: $15,976,104,960] |

| Number of shares of common stock, $1.00 par value, outstanding as of February [removed: 11, 2016:] [added: 14, 2017:] | [removed: 133,181,057] [added: 132,355,703] |

| Portions of the registrant’s annual proxy statement for the annual meeting of its shareholders to be held on May [removed: 13, 2016,] [added: 12, 2017,] are incorporated by reference into Part III of this Annual Report on Form 10-K. | |

| VULCAN MATERIALS COMPANY ANNUAL REPORT ON FORM 10-k fISCAL YEAR ENDED DECEMBER 31, [removed: 2015 CONTENTS] [added: 2016 CONTENTs] | | | |

| | 1A | [Risk Factors](#PartI_Item1A) | [removed: 18] [added: 19] |

| | 1B | [Unresolved Staff Comments](#PartI_Item1B) | [removed: 21] [added: 22] |

| | 2 | [Properties](#PartI_Item2) | [removed: 22] [added: 23] |

| | 3 | [Legal Proceedings](#PartI_Item3) | [removed: 25] [added: 26] |

| | 4 | [Mine Safety Disclosures](#PartI_Item4) | [removed: 25] [added: 26] |

| II | 5 | [Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#PartII_Item5) | [removed: 26] [added: 27] |

| | 6 | [Selected Financial Data](#PartII_Item6) | [removed: 27] [added: 28] |

| | 7 | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#PartII_Item7) | [removed: 28] [added: 29] |

| | 7A | [Quantitative and Qualitative Disclosures about Market Risk](#PartII_Item7A) | [removed: 57] [added: 60] |

| | 8 | [Financial Statements and Supplementary Data](#PartII_Item8) | [removed: 58] [added: 61] |

| | 9 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#PartII_Item9) | [removed: 109] [added: 113] |

| | 9A | [Controls and Procedures](#PartII_Item9A) | [removed: 109] [added: 113] |

| | 9B | [Other Information](#PartII_Item9B) | [removed: 111] [added: 115] |

| III | 10 | [Directors, Executive Officers and Corporate Governance](#PartIII_Item10) | [removed: 112] [added: 116] |

| | 11 | [Executive Compensation](#PartIII_Item11) | [removed: 112] [added: 116] |

| | 12 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#PartIII_Item12) | [removed: 112] [added: 116] |

| | 13 | [Certain Relationships and Related Transactions, and Director Independence](#PartIII_Item13) | [removed: 112] [added: 116] |

| | 14 | [Principal Accounting Fees and Services](#PartIII_Item14) | [removed: 112] [added: 116] |

| IV | 15 | [Exhibits and Financial Statement Schedules](#PartIV_Item15) | [removed: 113] [added: 117] |

| | § | | changes in our effective tax rate [removed: that can adversely impact results] |

| | § | | the impact of the state of the global economy on our [removed: business] [added: businesses] and financial condition and access to capital markets |

| | § | | volatility in pension plan asset values and [removed: liabilities] [added: liabilities,] which may require cash contributions to the pension plans |

| | § | | the impact of environmental cleanup costs and other liabilities relating to [removed: previously] [added: existing and/or] divested businesses |

| | § | | the [removed: potential] impact of future [removed: legislation] [added: regulatory] or [removed: regulations] [added: legislative actions, including those] relating to climate change, greenhouse gas emissions or the definition of minerals |

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or [removed: otherwise.][added: otherwise, except to the extent required by law.]

10-K 1 vmc-20161231x10k.htm 10-K

| | 16 | [Form 10-K Summary](#PartIV_Item16) | 117 |

| | — | [Signatures](#Signatures) | 118 |

10-K 1 vmc-20151231x10k.htm 10-K

Ff f

| --- | --- | --- | --- |

| | — | [Signatures](#Signatures) | 114 |

| | § | | the impact of future regulatory or legislative actions |

| | § | | the impact of our below investment-grade debt rating on our cost of capital |

| Part I | [removed: 21] [added: 22] |

As the largest U.S. [removed: producer] [added: supplier] of construction aggregates, we have operating facilities across the U.S. and in Mexico and the Bahamas.

[removed: ][added: ]

Our current estimate of [removed: 15.7] [added: 15.5] billion tons of proven and probable aggregates reserves reflects a decrease of [removed: 0.1] [added: 0.2] billion tons from the prior year’s estimate.

| Part I | [removed: 22] [added: 25] |

The [removed: 15.7] [added: 15.5] billion tons of estimated proven and probable aggregates reserves reported at the end of [removed: 2015] [added: 2016] include reserves at inactive and greenfield (undeveloped) sites.

The table below presents, by division, the tons of proven and probable aggregates reserves as of December 31, [removed: 2015] [added: 2016] and the types of facilities operated.

| | | | (millions of tons) | | | | | | | | | | | | Number of Aggregates Operating Facilities [removed: 1] [added: 2] | | | | | | | |

| | | | Aggregates Reserves | | | | | | | | | [removed: 2015] [added: 2016] | | | | | | Sand and | | | | |

| [added: Division 1] | | | Proven | | | Probable | | | Total | | | Production | | | Stone | | | Gravel | | | Sales Yards | |

| [removed: 1] [added: 2] | In addition to the facilities included in the table above, we operated [removed: 24 recrushed] [added: 29 recycled] concrete plants which are not dependent on reserves. | |

| [removed: 2] [added: 1] | The divisions are defined by states/countries as follows: Central Division — Arkansas, Illinois, Kentucky and Tennessee International Division — Mexico Mideast Division — Delaware, Maryland, North Carolina, Pennsylvania, Virginia and Washington D.C. Mountain West Division — Arizona and New Mexico Southeast Division — Florida (excluding panhandle), Georgia, South Carolina and the Bahamas Southern Gulf Coast Division — Alabama, Florida [removed: panhandle,] [added: Panhandle,] Louisiana and Mississippi Southwest Division — Oklahoma and Texas Western Division — California | |

| 3 | Includes a maximum of [removed: 377.2] [added: 364.0] million tons of reserves encumbered by volumetric production payments as defined in Note 1 "Summary of Significant Accounting Policies" in Item 8 "Financial Statements and Supplementary Data" under the caption Deferred Revenue. | |

Of the [removed: 15.7] [added: 15.5] billion tons of aggregates reserves at December 31, [removed: 2015,] [added: 2016,] 8.7 billion tons or 56% are located on owned land and [removed: 7.0] [added: 6.8] billion tons or 44% are located on leased land.

None of our aggregates facilities, other than Playa del Carmen, contributed more than 5% to our total revenues in [removed: 2015.][added: 2016.]

| Playa del Carmen (Cancun), Mexico | | | | | | | | | | [removed: 592.2] [added: 578.3] | | | 0.0 | | | [removed: 592.2] [added: 578.3] | | | [removed: 14.3] [added: 13.7] | |

| Hanover (Harrisburg), Pennsylvania | | | | | | | | | | [removed: 273.3] [added: 270.5] | | | 274.4 | | | [removed: 547.7] [added: 544.9] | | | [removed: 2.6] [added: 2.7] | |

| McCook (Chicago), Illinois | | | | | | | | | | [removed: 108.8] [added: 101.1] | | | 271.2 | | | [removed: 380.0] [added: 372.3] | | | [removed: 7.1] [added: 7.7] | |

| DeKalb (Chicago), Illinois | | | | | | | | | | [removed: 161.6] [added: 161.3] | | | 193.7 | | | [removed: 355.3] [added: 355.0] | | | [removed: 0.4] [added: 0.3] | |

| Gold Hill (Charlotte), North Carolina | | | | | | | | | | [removed: 161.3] [added: 150.6] | | | [removed: 128.9] [added: 121.2] | | | [removed: 290.2] [added: 271.8] | | | 1.0 | |

| Norcross (Atlanta), Georgia | | | | | | | | | | [removed: 195.3] [added: 192.8] | | | 27.7 | | | [removed: 223.0] [added: 220.5] | | | 2.5 | |

| 1604 Stone (San Antonio), Texas | | | | | | | | | | [removed: 218.7] [added: 216.0] | | | 0.0 | | | [removed: 218.7] [added: 216.0] | | | [removed: 3.1] [added: 2.9] | |

As of December 31, [removed: 2015,] [added: 2016,] we operated a number of facilities producing asphalt mix, ready-mixed concrete and calcium in several of our divisions as reflected in the table below:

| Mideast | | | | | | | | | | | | | | | 0 | | | [removed: 32] [added: 33] | | | 0 | |

| Southeast | | | | | | | | | | | | | | | 0 | | | [removed: 12] [added: 14] | | | 1 | |

The office space [added: consists of approximately 184,410 square feet and] is leased through December 31, 2023, with three five-year renewal periods [removed: thereafter, and consists of approximately 184,125 square feet.][added: thereafter.]

The annual rental cost for the current term of the lease is [added: approximately] $3.6 million.

| Central | | | 3,042.2 | | | 917.9 | | | 3,960.1 | | | 37.3 | | | 57 | | | 3 | | | 11 | |

| International | | | 578.3 | | | 0.0 | | | 578.3 | | | 13.7 | | | 1 | | | 0 | | | 0 | |

| Mideast | | | 2,416.5 | | | 1,057.3 | | | 3,473.8 | | | 33.4 | | | 35 | | | 3 | | | 23 | |

| Mountain West | | | 175.2 | | | 127.8 | | | 303.0 | | | 6.8 | | | 1 | | | 13 | | | 2 | |

| Southeast 3 | | | 2,697.0 | | | 827.3 | | | 3,524.3 | | | 38.8 | | | 40 | | | 14 | | | 8 | |

| Southern Gulf Coast | | | 1,182.4 | | | 30.5 | | | 1,212.9 | | | 13.0 | | | 22 | | | 0 | | | 21 | |

| Southwest | | | 1,122.6 | | | 10.1 | | | 1,132.7 | | | 20.2 | | | 17 | | | 1 | | | 17 | |

| Western | | | 818.5 | | | 509.5 | | | 1,328.0 | | | 20.3 | | | 5 | | | 13 | | | 1 | |

| Total | | | 12,032.7 | | | 3,480.4 | | | 15,513.1 | | | 183.5 | | | 178 | | | 47 | | | 83 | |

| | | | | | | | | | | Reserves at 12/31/2016 | | | | | | | | | 2016 | |

| Corona (Los Angeles), California | | | | | | | | | | 17.1 | | | 321.6 | | | 338.7 | | | 2.4 | |

| Macon, Georgia | | | | | | | | | | 122.7 | | | 128.0 | | | 250.7 | | | 1.4 | |

| San Emidio (Bakersfield), California | | | | | | | | | | 250.0 | | | 0.0 | | | 250.0 | | | 1.4 | |

| 2 | Comprised of ready-mixed concrete facilities and 1 block plant in the Southeast Division. |

| | | | | | | | | | | | | Reserves at 12/31/2016 | | | | | | | | | 2016 | |

| Brooksville | | | | | | | | | | | | 5.6 | | | 7.1 | | | 12.7 | | | 0.3 | |

| Central 2 | | | 3,052.7 | | | 958.9 | | | 4,011.6 | | | 36.3 | | | 59 | | | 5 | | | 9 | |

| International 2 | | | 592.2 | | | 0.0 | | | 592.2 | | | 14.3 | | | 1 | | | 0 | | | 0 | |

| Mideast 2 | | | 2,529.5 | | | 1,144.1 | | | 3,673.6 | | | 32.4 | | | 35 | | | 7 | | | 22 | |

| Mountain West 2 | | | 180.8 | | | 128.5 | | | 309.3 | | | 5.7 | | | 1 | | | 13 | | | 2 | |

| Southeast 2, 3 | | | 2,739.3 | | | 823.5 | | | 3,562.8 | | | 34.8 | | | 40 | | | 14 | | | 6 | |

| Southern Gulf Coast 2 | | | 1,172.2 | | | 30.7 | | | 1,202.9 | | | 11.7 | | | 22 | | | 0 | | | 26 | |

| Southwest 2 | | | 1,162.9 | | | 10.0 | | | 1,172.9 | | | 19.5 | | | 17 | | | 1 | | | 18 | |

| Western 2 | | | 675.8 | | | 508.0 | | | 1,183.8 | | | 25.8 | | | 7 | | | 14 | | | 1 | |

| Total | | | 12,105.4 | | | 3,603.7 | | | 15,709.1 | | | 180.5 | | | 182 | | | 54 | | | 84 | |

| | | | | | | | | | | Reserves at 12/31/2015 | | | | | | | | | 2015 | |

| Corona (Los Angeles), California | | | | | | | | | | 19.5 | | | 321.5 | | | 341.0 | | | 3.0 | |

| Macon, Georgia | | | | | | | | | | 124.1 | | | 128.0 | | | 252.1 | | | 1.2 | |

| Rockingham (Charlotte), North Carolina | | | | | | | | | | 71.8 | | | 174.6 | | | 246.4 | | | 2.5 | |

| 2 | Comprised of ready-mixed concrete facilities. |

In January 2015, we exchanged our California (Western Division) ready-mixed concrete operations for 13 asphalt mix plants, primarily in Arizona (Mountain West Division).

| | | | | | | | | | | | | Reserves at 12/31/2015 | | | | | | | | | 2015 | |

| Brooksville | | | | | | | | | | | | 4.8 | | | 1.1 | | | 5.9 | | | 0.3 | |

| Part I | [removed: 25] [added: 26] |

As of February [removed: 11, 2016,] [added: 14, 2017,] the number of shareholders of record was [removed: 3,016.][added: 2,843.]

The prices in the following table represent the high and low sales prices for our common stock as reported on the New York Stock Exchange and the quarterly dividends declared by our Board of Directors in [removed: 2015] [added: 2016] and [removed: 2014.][added: 2015.]

On February [removed: 12, 2016,] [added: 10, 2017,] our Board declared a dividend of [removed: twenty] [added: twenty-five] cents per share for the first quarter of [removed: 2016.][added: 2017.]

This represents a [removed: ten] [added: five] cent per share increase over the prior quarter.

Purchases of our equity securities during the quarter ended December 31, [removed: 2015] [added: 2016] are summarized below.

| Period | Purchased | | | Per Share | | | Programs [removed: 1] | | | or Programs [added: 1] | |

| 1 | On February 10, 2006, our Board of Directors authorized us to purchase up to 10,000,000 shares. As of December 31, [removed: 2015,] [added: 2016,] there were [removed: 3,183,416] [added: 1,756,757] shares remaining under [removed: the] [added: this] authorization. [added: On February 10, 2017, our Board of Directors authorized us to purchase an additional 8,243,243 shares to refresh the number of shares we are authorized to purchase to 10,000,000.] Depending upon market, business, legal and other conditions, we may [removed: make share purchases] [added: purchase shares] from time to time through [added: the] open market [removed: purchases, privately negotiated transactions and/or] [added: (including] plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of [removed: 1934.] [added: 1934) and/or through privately negotiated transactions.] The authorization has no time limit, does not obligate us to purchase any specific number of shares, and may be suspended or discontinued at any time. | |

We did not have any unregistered sales of equity securities during the fourth quarter of [removed: 2015.][added: 2016.]

| Part II | [removed: 26] [added: 27] |

| 2016 | | | | | | | | |

| First quarter | $ 106.78 | | | $ 78.83 | | | $ 0.20 | |

| Second quarter | $ 121.22 | | | $ 104.61 | | | $ 0.20 | |

| Third quarter | $ 127.20 | | | $ 106.42 | | | $ 0.20 | |

| Fourth quarter | $ 138.18 | | | $ 105.71 | | | $ 0.20 | |

| 2016 | | | | | | | | | | | |

| Oct 1 - Oct 31 | 0 | | | $ 0.00 | | | 0 | | | 1,756,757 | |

| Nov 1 - Nov 30 | 0 | | | $ 0.00 | | | 0 | | | 1,756,757 | |

| Dec 1 - Dec 31 | 0 | | | $ 0.00 | | | 0 | | | 1,756,757 | |

| Total | 0 | | | $ 0.00 | | | 0 | | | | |

| 2014 | | | | | | | | |

| First quarter | $ 69.50 | | | $ 57.55 | | | $ 0.05 | |

| Second quarter | $ 68.29 | | | $ 58.88 | | | $ 0.05 | |

| Third quarter | $ 66.55 | | | $ 60.20 | | | $ 0.06 | |

| Fourth quarter | $ 69.10 | | | $ 54.10 | | | $ 0.06 | |

| 2015 | | | | | | | | | | | |

| Oct 1 - Oct 31 | 0 | | | $ 0.00 | | | 0 | | | 3,411,416 | |

| Nov 1 - Nov 30 | 0 | | | $ 0.00 | | | 0 | | | 3,411,416 | |

| Dec 1 - Dec 31 | 228,000 | | | $ 94.19 | | | 228,000 | | | 3,183,416 | |

| Total | 228,000 | | | $ 94.19 | | | 228,000 | | | | |

| | | | | [added: 2016 | | |] 2015 | | | 2014 | | | 2013 | | | 2012 | | [removed: | 2011 | |]

| Total revenues | | | $ | [removed: 3,422.2] [added: 3,592.7] | | $ | [removed: 2,994.2] [added: 3,422.2] | | $ | [removed: 2,770.7] [added: 2,994.2] | | $ | [removed: 2,567.3] [added: 2,770.7] | | $ | [removed: 2,564.6] [added: 2,567.3] | |

| Gross profit | | | $ | [removed: 857.5] [added: 1,000.8] | | $ | [removed: 587.6] [added: 857.5] | | $ | [removed: 426.9] [added: 587.6] | | $ | [removed: 334.0] [added: 426.9] | | $ | [removed: 283.9] [added: 334.0] | |

| Gross profit margin | | | | [added: 27.9% | | |] 25.1% | | | 19.6% | | | 15.4% | | | 13.0% | | [removed: | 11.1% | |]

| Earnings (loss) from continuing operations 1 | | | $ | [removed: 232.9] [added: 422.4] | | $ | [removed: 207.1] [added: 232.9] | | $ | [removed: 20.8] [added: 207.1] | | $ | [removed: (53.9)] [added: 20.8] | | $ | [removed: (75.3)] [added: (53.9)] | |

| net of tax 2 | | | $ | [removed: (11.7)] [added: (2.9)] | | $ | [removed: (2.2)] [added: (11.7)] | | $ | [removed: 3.6] [added: (2.2)] | | $ | [removed: 1.3] [added: 3.6] | | $ | [removed: 4.5] [added: 1.3] | |

| Net earnings (loss) | | | $ | [removed: 221.2] [added: 419.5] | | $ | [removed: 204.9] [added: 221.2] | | $ | [removed: 24.4] [added: 204.9] | | $ | [removed: (52.6)] [added: 24.4] | | $ | [removed: (70.8)] [added: (52.6)] | |

| Continuing operations | | | $ | [removed: 1.75] [added: 3.17] | | $ | [removed: 1.58] [added: 1.75] | | $ | [removed: 0.16] [added: 1.58] | | $ | [removed: (0.42)] [added: 0.16] | | $ | [removed: (0.58)] [added: (0.42)] | |

| Discontinued operations | | | | [added: (0.02) | | |] (0.09) | | | (0.02) | | | 0.03 | | | 0.01 | | [removed: | 0.03 | |]

| Basic net earnings (loss) per share | | | $ | [removed: 1.66] [added: 3.15] | | $ | [removed: 1.56] [added: 1.66] | | $ | [removed: 0.19] [added: 1.56] | | $ | [removed: (0.41)] [added: 0.19] | | $ | [removed: (0.55)] [added: (0.41)] | |

| Continuing operations | | | $ | [removed: 1.72] [added: 3.11] | | $ | [removed: 1.56] [added: 1.72] | | $ | [removed: 0.16] [added: 1.56] | | $ | [removed: (0.42)] [added: 0.16] | | $ | [removed: (0.58)] [added: (0.42)] | |

| Discontinued operations | | | | [added: (0.02) | | |] (0.08) | | | (0.02) | | | 0.03 | | | 0.01 | | [removed: | 0.03 | |]

| Diluted net earnings (loss) per share | | | $ | [removed: 1.64] [added: 3.09] | | $ | [removed: 1.54] [added: 1.64] | | $ | [removed: 0.19] [added: 1.54] | | $ | [removed: (0.41)] [added: 0.19] | | $ | [removed: (0.55)] [added: (0.41)] | |

| Cash and cash equivalents | | | $ | [removed: 284.1] [added: 259.0] | | $ | [removed: 141.3] [added: 284.1] | | $ | [removed: 193.7] [added: 141.3] | | $ | [removed: 275.5] [added: 193.7] | | $ | [removed: 155.8] [added: 275.5] | |

| Total assets [removed: 3] | | | $ | [removed: 8,301.6] [added: 8,471.5] | | $ | [removed: 8,041.1] [added: 8,301.6] | | $ | [removed: 8,233.1] [added: 8,041.1] | | $ | [removed: 8,095.4] [added: 8,233.1] | | $ | [removed: 8,193.1] [added: 8,095.4] | |

| Working capital | | | $ | [removed: 731.1] [added: 764.9] | | $ | [removed: 468.6] [added: 731.1] | | $ | [removed: 652.4] [added: 468.6] | | $ | [removed: 548.6] [added: 652.4] | | $ | [removed: 456.8] [added: 548.6] | |

| Current maturities and short-term debt | | | $ | 0.1 | | $ | [removed: 150.1] [added: 0.1] | | $ | [removed: 0.2] [added: 150.1] | | $ | [removed: 150.6] [added: 0.2] | | $ | [removed: 134.8] [added: 150.6] | |

| Long-term debt [removed: 3] | | | $ | [removed: 1,980.3] [added: 1,982.8] | | $ | [removed: 1,834.6] [added: 1,980.3] | | $ | [removed: 2,496.2] [added: 1,834.6] | | $ | [removed: 2,495.2] [added: 2,496.2] | | $ | [removed: 2,644.5] [added: 2,495.2] | |

| Equity | | | $ | [removed: 4,454.2] [added: 4,572.5] | | $ | [removed: 4,176.7] [added: 4,454.2] | | $ | [removed: 3,938.1] [added: 4,176.7] | | $ | [removed: 3,761.1] [added: 3,938.1] | | $ | [removed: 3,791.6] [added: 3,761.1] | |

| Cash dividends declared per share | | | $ | [removed: 0.40] [added: 0.80] | | $ | [removed: 0.22] [added: 0.40] | | $ | [removed: 0.04] [added: 0.22] | | $ | 0.04 | | $ | [removed: 0.76] [added: 0.04] | |

| Part II | [removed: 27] [added: 28] |

| 3 | The long-term debt balances prior to December 31, 2015 were adjusted to reflect our adoption of ASU 2015-03 and related election as described in Note 1 “Summary of Significant Accounting Policies” in Item 8 “Financial Statements and Supplementary Data” under the caption New Accounting Standards. Debt issuance costs (December 31, 2014 — $20.8 million, December 31, 2013 — $26.0 million, December 31, 2012 — $31.2 million and December 31, 2011 — $36.2 million) previously reported as other noncurrent assets were reclassified as a deduction from long-term debt. |

[removed: The] [added: To the] Board of Directors and Shareholders of Vulcan Materials Company:

We have audited the accompanying consolidated balance sheets of Vulcan Materials Company and [removed: its subsidiary companies] [added: subsidiaries] (the "Company") as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] and the related consolidated statements of comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, [removed: 2015.][added: 2016.]

Our responsibility is to express an opinion on [removed: the] [added: these] financial statements based on our audits.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Vulcan Materials Company and its subsidiary companies as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2015] [added: 2016] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] based on [added: the] criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission,] [added: Commission] and our report dated February [removed: 25, 2016] [added: 24, 2017] expressed an unqualified opinion on the Company's internal control over financial reporting.

][added: 2](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg030.jpg)]

| Part II | [removed: 58] [added: 109] |

| | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | |

| Total revenues | $ [removed: 3,422,181] [added: 3,592,667] | | | $ [removed: 2,994,169] [added: 3,422,181] | | | $ [removed: 2,770,709] [added: 2,994,169] | |

| Cost of revenues | [removed: 2,564,648] [added: 2,591,850] | | | [removed: 2,406,587] [added: 2,564,648] | | | [removed: 2,343,829] [added: 2,406,587] | |

| Gross profit | [removed: 857,533] [added: 1,000,817] | | | [removed: 587,582] [added: 857,533] | | | [removed: 426,880] [added: 587,582] | |

| Selling, administrative and general expenses | [removed: 286,844] [added: 314,986] | | | [removed: 272,288] [added: 286,844] | | | [removed: 259,427] [added: 272,288] | |

| Gain on sale of property, plant & equipment and businesses | [removed: 9,927] [added: 15,431] | | | [removed: 244,222] [added: 9,927] | | | [removed: 39,250] [added: 244,222] | |

| Other operating expense, net | [removed: (25,850)] [added: (22,826)] | | | [removed: (20,070)] [added: (25,648)] | | | [removed: (14,790)] [added: (18,283)] | |

| Operating earnings | [removed: 549,778] [added: 679,582] | | | [removed: 538,138] [added: 549,778] | | | [removed: 190,404] [added: 538,138] | |

| Other nonoperating income (expense), net | [removed: (1,678)] [added: 944] | | | [removed: 3,107] [added: (1,678)] | | | [removed: 7,538] [added: 3,107] | |

| Interest income | [removed: 345] [added: 807] | | | [removed: 960] [added: 345] | | | [removed: 943] [added: 960] | |

| Interest expense | [removed: 220,588] [added: 134,076] | | | [removed: 243,367] [added: 220,588] | | | [removed: 202,588] [added: 243,367] | |

| Earnings [removed: (loss)] from continuing operations before income taxes | [removed: 327,857] [added: 547,257] | | | [removed: 298,838] [added: 327,857] | | | [removed: (3,703)] [added: 298,838] | |

| [removed: Provision for (benefit from)] [added: Benefit from] income taxes | [added: (52)] | | | [added: (7,539)] | | | [added: (1,365)] | |

| Current | [removed: 89,340] [added: 94,254] | | | [removed: 74,039] [added: 89,340] | | | [removed: 9,673] [added: 74,039] | |

| Deferred | [removed: 5,603] [added: 30,597] | | | [removed: 17,653] [added: 5,603] | | | [removed: (34,132)] [added: 17,653] | |

| Earnings from continuing operations | [removed: 232,914] [added: 422,406] | | | [removed: 207,146] [added: 232,914] | | | [removed: 20,756] [added: 207,146] | |

| [removed: Earnings (loss)] [added: Loss] on discontinued operations, net of [removed: income taxes] [added: tax] (Note 2) | [removed: (11,737)] [added: (2,915)] | | | [removed: (2,223)] [added: (11,737)] | | | [removed: 3,626] [added: (2,223)] | |

| Net earnings | $ [removed: 221,177] [added: 419,491] | | | $ [removed: 204,923] [added: 221,177] | | | $ [removed: 24,382] [added: 204,923] | |

| Reclassification adjustment for cash flow hedges | [removed: 5,828] [added: 1,194] | | | [removed: 4,856] [added: 5,828] | | | [removed: 2,992] [added: 4,856] | |

| Adjustment for funded status of benefit plans | [removed: 23,832] [added: (20,583)] | | | [removed: (69,051)] [added: 23,832] | | | [removed: 111,883] [added: (69,051)] | |

| Amortization of actuarial loss and prior service cost for benefit plans | [removed: 11,985] [added: 82] | | | [removed: 2,112] [added: 11,985] | | | [removed: 11,011] [added: 2,112] | |

| Other comprehensive income (loss) | [removed: 41,645] [added: (19,307)] | | | [removed: (62,083)] [added: 41,645] | | | [removed: 125,886] [added: (62,083)] | |

| Comprehensive income | $ [removed: 262,822] [added: 400,184] | | | $ [removed: 142,840] [added: 262,822] | | | $ [removed: 150,268] [added: 142,840] | |

| Continuing operations | $ [removed: 1.75] [added: 3.17] | | | $ [removed: 1.58] [added: 1.75] | | | $ [removed: 0.16] [added: 1.58] | |

| Discontinued operations | [removed: (0.09)] [added: (0.02)] | | | [removed: (0.02)] [added: (0.09)] | | | [removed: 0.03] [added: (0.02)] | |

| Net earnings | $ [removed: 1.66] [added: 3.15] | | | $ [removed: 1.56] [added: 1.66] | | | $ [removed: 0.19] [added: 1.56] | |

| Continuing operations | $ [removed: 1.72] [added: 3.11] | | | $ [removed: 1.56] [added: 1.72] | | | $ [removed: 0.16] [added: 1.56] | |

| Discontinued operations | [removed: (0.08)] [added: (0.02)] | | | [removed: (0.02)] [added: (0.08)] | | | [removed: 0.03] [added: (0.02)] | |

| Net earnings | $ [removed: 1.64] [added: 3.09] | | | $ [removed: 1.54] [added: 1.64] | | | $ [removed: 0.19] [added: 1.54] | |

| Basic | [removed: 133,210] [added: 133,205] | | | [removed: 131,461] [added: 133,210] | | | [removed: 130,272] [added: 131,461] | |

| Assuming dilution | [removed: 135,093] [added: 135,790] | | | [removed: 132,991] [added: 135,093] | | | [removed: 131,467] [added: 132,991] | |

| Part II | [removed: 59] [added: 110] |

| | [added: 2016 | | |] 2015 | | | 2014 | |

February 24, 2017

| Business interruption claims recovery | 11,652 | | | 0 | | | 0 | |

| Impairment of long-lived assets | (10,506) | | | (5,190) | | | (3,095) | |

| Income tax expense | | | | | | | | |

| Total income tax expense | 124,851 | | | 94,943 | | | 91,692 | |

| | 2016 | | | 2015 | |

| Cash and cash equivalents | $ 258,986 | | | $ 284,060 | |

| 2016 — $2,813; 2015 — $5,576 | 398,488 | | | 397,287 | |

| Other current liabilities | 125,858 | | | 76,428 | |

| Net earnings | $ 419,491 | | | $ 221,177 | | | $ 204,923 | |

| acquisitions and dispositions | | | | | | | | |

| Other, net | 3,691 | | | 616 | | | 7,870 | |

| Net cash provided by operating activities | $ 644,588 | | | $ 519,538 | | | $ 261,007 | |

| Share-based compensation, shares withheld for taxes | (34,797) | | | (16,160) | | | (671) | |

| shares withheld for taxes | 507 | | 507 | | | 20,982 | | 0 | | 0 | | 21,489 | |

| shares withheld for taxes | 1,493 | | 1,493 | | | 51,240 | | 0 | | 0 | | 52,733 | |

| shares withheld for taxes | 594 | | 594 | | | (35,363) | | 0 | | 0 | | (34,769) | |

| Purchase and retirement of | | | | | | | | | | | | | |

| common stock | (1,427) | | (1,427) | | | 0 | | (160,036) | | 0 | | (161,463) | |

| ($0.80 per share) | 0 | | 0 | | | 0 | | (106,333) | | 0 | | (106,333) | |

| Other | 0 | | 0 | | | 110 | | (111) | | 0 | | (1) | |

| Balances at December 31, 2016 | 132,339 | | $ 132,339 | | | $ 2,807,995 | | $ 1,771,518 | | $ (139,376) | | $ 4,572,476 | |

FOREIGN CURRENCY TRANSACTIONS

The U.S. dollar is the functional currency for all of our operations.

For our non-U.S. subsidiaries, local currency inventories and long-term assets such as property, plant & equipment and intangibles are remeasured into U.S. dollars at approximate rates prevailing when acquired; all other assets and liabilities are remeasured at year-end exchange rates.

Inventories charged to cost of sales and depreciation are remeasured at historical rates; all other income and expense items are remeasured at average exchange rates prevailing during the year.

Gains and losses which result from remeasurement are included in earnings and are not material for the years presented.

RESTRICTED CASH

Restricted cash consists of cash proceeds from the sale of property held in escrow for the acquisition of replacement property under like-kind exchange agreements.

The escrow accounts are administered by an intermediary.

Pursuant to the like-kind exchange agreements, the cash remains restricted for a maximum of 180 days from the date of the property sale pending the acquisition of replacement property.

Changes in restricted cash balances are reflected as an investment activity in the accompanying Consolidated Statements of Cash Flows.

The bad debt income in 2016 relates to the collection of previously reserved receivables primarily attributable to the 2014 sale of our Florida area concrete and cement businesses.

| | | | Level 1 Fair Value | | | | |

| | | | Level 2 Fair Value | | | | |

| in thousands | | | 2016 | | | 2015 | |

| Money market mutual fund | | | $ 1,705 | | | $ 2,124 | |

The 2016 decrease of $3,967,000 in total Rabbi Trust asset fair values is primarily due to several retired executives receiving distributions from the nonqualified retirement and deferred compensation plans.

During 2016, we recorded a $10,506,000 loss on impairment of long-lived assets resulting from the termination of a nonstrategic aggregates lease and the write off of nonrecoverable project costs related to two Aggregates segment capital projects that we no longer intend to complete.

| SOSARs 1 | | $ 4,899 | | | 1.8 | |

February 25, 2016

| Restructuring charges | (4,988) | | | (1,308) | | | (1,509) | |

| Total provision for (benefit from) income taxes | 94,943 | | | 91,692 | | | (24,459) | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| 2015 — $5,576; 2014 — $5,105 | 397,287 | | | 354,935 | |

| Current deferred income taxes | 0 | | | 39,726 | |

| Assets held for sale | 0 | | | 15,184 | |

| Other accrued liabilities | 76,428 | | | 63,139 | |

| Liabilities of assets held for sale | 0 | | | 520 | |

| Net cash provided by operating activities | $ 503,378 | | | $ 260,336 | | | $ 356,499 | |

| Proceeds from sale of businesses, net of transaction costs | 0 | | | 721,359 | | | 51,604 | |

| Balances at December 31, 2012 | 129,721 | | $ 129,721 | | | $ 2,580,209 | | $ 1,276,649 | | $ (225,517) | | $ 3,761,062 | |

| Common stock issued | | | | | | | | | | | | | |

| 401(k) Trustee (Note 13) | 71 | | 71 | | | 3,750 | | 0 | | 0 | | 3,821 | |

| Excess tax benefits from | | | | | | | | | | | | | |

| ($0.04 per share) | 0 | | 0 | | | 0 | | (5,191) | | 0 | | (5,191) | |

| Other | 0 | | 0 | | | 5 | | (6) | | 0 | | (1) | |

| Share-based compensation plans | 1,493 | | 1,493 | | | 51,240 | | 0 | | 0 | | 52,733 | |

| Other | 0 | | 0 | | | 53 | | (50) | | 0 | | 3 | |

We operate primarily in the United States and our principal product — aggregates — is used in virtually all types of public and private construction projects and in the production of asphalt mix and ready-mixed concrete.

RESTRUCTURING CHARGES

Costs associated with restructuring our operations include severance and related charges to eliminate a specified number of employee positions, costs to relocate employees, contract cancellation costs and charges to vacate facilities and consolidate operations.

Relocation, contract cancellation costs and charges to vacate facilities are recognized in the period the liability is incurred.

Severance charges for employees, who are required to render service beyond a minimum retention period, generally more than 60 days, are recognized ratably over the retention period; otherwise, the full severance charge is recognized on the date a detailed restructuring plan has been authorized by management and communicated to employees.

In 2014, we announced changes to our executive management team, and a new divisional organization structure that was effective January 1, 2015.

During 2015 and 2014, we incurred $4,988,000 and $1,308,000, respectively, of costs related to these initiatives.

We do not expect to incur any future material charges related to these initiatives.

During 2013, we incurred $1,509,000 of severance costs related to the implementation of a 2012 profit enhancement plan.

| | | | Level 1 | | | | |

| | | | Level 2 | | | | |

| Common/collective trust funds | | | $ 2,124 | | | $ 1,415 | |

Assets that were subject to fair value measurement on a nonrecurring basis in 2015 and 2014 are summarized below:

We recorded no asset impairments during 2013.

| --- | --- | --- | --- |

Tax benefits resulting from tax deductions in excess of the compensation cost recognized (excess tax benefits) are classified as financing cash flows.

The $18,376,000, $3,464,000, and $161,000 in excess tax benefits classified as financing cash inflows for the years ended December 31, 2015, 2014 and 2013, respectively, in the accompanying Consolidated Statements of Cash Flows relate to the exercise of stock options and issuance of shares under long-term incentive plans.

| SOSARs 1 | | $ 4,882 | | | 1.6 | |

| Performance and restricted shares | | 22,271 | | | 2.5 | |

| 2016 | $ 19,001 | |

These disclosure controls and procedures (as defined in the Securities [removed: and] Exchange Act of 1934 Rules 13a - 15(e) or 15d - 15(e)), include, without limitation, controls and procedures designed to ensure that [added: such] information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our Chief Executive Officer and Chief Financial Officer, with the participation of other management officials, evaluated the effectiveness of the design and operation of the disclosure controls and procedures as of December 31, [removed: 2015.][added: 2016.]

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures [removed: are effective.][added: were effective as of December 31, 2016.]

No material changes were made during the fourth quarter of [removed: 2015] [added: 2016] to our internal controls over financial reporting, nor have there been other factors that materially affect these controls.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2015.][added: 2016.]

Deloitte & Touche LLP, an independent registered public accounting firm, as auditors of our consolidated financial statements, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, [removed: 2015.][added: 2016.]

[removed: The] [added: To the] Board of Directors and Shareholders of Vulcan Materials Company:

We have audited the internal control over financial reporting of Vulcan Materials Company and [removed: its subsidiary companies] [added: subsidiaries] (the "Company") as of December 31, [removed: 2015] [added: 2016] based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Also, projections of any evaluation of [added: the] effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2015] [added: 2016] based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements [removed: of the Company] as of and for the year ended December 31, [removed: 2015] [added: 2016 of the Company] and our report dated February [removed: 25, 2016] [added: 24, 2017] expressed an unqualified opinion on those financial statements.

| ] [added: 2](https://www.sec.gov/Archives/edgar/data/1396009/000139600917000005/vmc-20161231x10kg030.jpg)] |

LIMITATIONS OF EFFECTIVENESS OF CONTROLS AND PROCEDURES

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

| Part II | 113 |

| February 24, 2017 |

| Part II | 114 |

A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

| Part II | 109 |

| February 25, 2016 |

| Part II | 110 |

| Part II | 115 |

| Part II | 111 |

On or about March [removed: 25, 2016,] [added: 29, 2017,] we expect to file a definitive proxy statement with the Securities and Exchange Commission pursuant to Regulation 14A (our [removed: "2016] [added: “2017] Proxy [removed: Statement").][added: Statement”).]

The information under the headings [removed: "Proposal] [added: “Proposal] 1 - Election of [removed: Directors," "Corporate] [added: Directors,” “Corporate] Governance of our Company and Practices of our Board of [removed: Directors,"] [added: Directors,”] and [removed: "General] [added: “General] Information - Section 16(a) Beneficial Ownership Reporting [removed: Compliance"] [added: Compliance”] included in the [removed: 2016] [added: 2017] Proxy Statement is incorporated herein by reference.

See also the information [added: about our executive officers and governance policies] set forth above in Part I, Item I [removed: "Business"] [added: “Business”] of this report.

The information under the headings [removed: "Compensation] [added: “Compensation] Discussion and [removed: Analysis," "Director Compensation," "Executive Compensation,"] [added: Analysis,” “Director Compensation,” “Executive Compensation,”] “Corporate Governance of our Company and Practices of our Board of Directors,” and “Compensation Committee Report” included in our [removed: 2016] [added: 2017] Proxy Statement is incorporated herein by reference.

The information under the headings [removed: "Security] [added: “Security] Ownership of Certain Beneficial Owners and [removed: Management," "Equity] [added: Management,” “Equity] Compensation [removed: Plans"] [added: Plans”] and [removed: "Executive] [added: “Executive] Compensation — Payments Upon Termination or Change in [removed: Control"] [added: Control”] included in our [removed: 2016] [added: 2017] Proxy Statement is incorporated herein by reference.

The information under the [removed: headings "Corporate] [added: heading “Corporate] Governance of our Company and Practices of our Board of [removed: Directors"] [added: Directors”] included in our [removed: 2016] [added: 2017] Proxy Statement is incorporated herein by reference.

The information under the heading entitled [removed: "Independent] [added: “Independent] Registered Public Accounting [removed: Firm"] [added: Firm”] included in our [removed: 2016] [added: 2017] Proxy Statement is incorporated herein by reference.

| Part III | [removed: 112] [added: 116] |

| | Report of Independent Registered Public Accounting Firm | [removed: 58] [added: 61] | |

| | Consolidated Statements of Comprehensive Income | [removed: 59] [added: 62] | |

| | Consolidated Balance Sheets | [removed: 60] [added: 63] | |

| | Consolidated Statements of Cash Flows | [removed: 61] [added: 64] | |

| | Consolidated Statements of Equity | [removed: 62] [added: 65] | |

| | Notes to Consolidated Financial Statements | [removed: 63-108] [added: 66-112] | |

| | |

| --- | --- |

| Part IV | 113 |

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 25, 2016.

| | VULCAN MATERIALS COMPANY |

| |  J. Thomas Hill Chairman and Chief Executive Officer |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

| | | |

| --- | --- | --- |

| Signature | Title | Date |

|  J. Thomas Hill | Chairman and Chief Executive Officer (Principal Executive Officer) | February 25, 2016 |

|  John R. McPherson | Executive Vice President and Chief Financial and Strategy Officer (Principal Financial Officer) | February 25, 2016 |

|  ______________________________________________ Ejaz A. Khan | Vice President, Controller and Chief Information Officer (Principal Accounting Officer) | February 25, 2016 |

| The following directors: Elaine L. Chao Thomas A. Fanning O. B. Grayson Hall, Jr. Cynthia L. Hostetler Douglas J. McGregor Richard T. O'Brien James T. Prokopanko Donald B. Rice Lee J. Styslinger, III Vincent J. Trosino Kathleen Wilson-Thompson | Director Director Director Director Director Director Director Director Director Director Director | |

|  Michael R. Mills Attorney-in-Fact | | February 25, 2016 |

| Signatures | 114 |

EXHIBIT INDEX

| Exhibit 3(a) | Certificate of Incorporation (Restated 2007) of the Company (formerly known as Virginia Holdco, Inc.), filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on November 16, 2007 1 |

| Exhibit 3(b) | Amended and Restated By-Laws of the Company (as amended through February 13, 2015) filed as Exhibit 3(b) to the Company’s Annual Report on Form 10\-K filed on February 27, 2015 1 |

| Exhibit 4(a) | Supplemental Indenture No. 1, dated as of November 16, 2007, among the Company, Legacy Vulcan Corp. and The Bank of New York Trust Company, N.A., as Trustee filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on November 21, 2007 1 |

| Exhibit 4(b) | Senior Debt Indenture, dated as of December 11, 2007, between the Company and Wilmington Trust Company, as Trustee, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on December 11, 2007 1 |

| Exhibit 4(c) | First Supplemental Indenture, dated as of December 11, 2007, between Vulcan Materials Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture, dated as of December 11, 2007, between the Company and Wilmington Trust Company, as Trustee, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K on December 11, 2007 1 |

| Exhibit 4(d) | Second Supplemental Indenture, dated June 20, 2008 between the Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture dated as of December 11, 2007, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 20, 2008 1 |

| Exhibit 4(e) | Third Supplemental Indenture, dated February 3, 2009, between the Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture dated as of December 11, 2007 filed as Exhibit 10(f) to the Company's Annual Report on Form 10-K filed on March 2, 2009 1 |

| Exhibit 4(f) | Fourth Supplemental Indenture, dated June 14, 2011, between the Company and Wilmington Trust Company, as Trustee, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 15, 2011 1 |

| Exhibit 4(g) | Fifth Supplemental Indenture, dated March 30, 2015, between the Company and Regions Bank, as Trustee, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on March 30, 2015 1 |

| Exhibit 4(h) | Indenture, dated as of May 1, 1991, by and between Legacy Vulcan Corp. (formerly Vulcan Materials Company) and First Trust of New York (as successor trustee to Morgan Guaranty Trust Company of New York) filed as Exhibit 4 to the Form S-3 on May 2, 1991 (Registration No. 33-40284) 1 |

| Exhibit 4(i) | Supplemental Indenture No. 1, dated as of November 16, 2007, among the Company, Legacy Vulcan Corp. and The Bank of New York, as Trustee, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 21, 2007 1 |

| Exhibit 4(j) | Supplemental Indenture No. 2, dated as of June 30, 2015, between Legacy Vulcan, LLC and The Bank of New York Mellon Trust Company, N.A., as Trustee, filed as Exhibit 4(a) to the Company’s Quarterly Report on Form 10-Q filed on August 5, 2015 1 |

| Exhibit 10(a) | Credit Agreement dated as of June 19, 2015 among the Company and SunTrust Bank as Administrative Agent and other parties named therein filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 25, 2015 1 |

| Exhibit 10(b) | Unfunded Supplemental Benefit Plan for Salaried Employees, as amended, filed as Exhibit 10.4 to the Company's Current Report on Form 8-K filed on December 17, 2008 1,2 |

| Exhibit 10(c) | Amendment No. 1 to the Unfunded Supplemental Benefit Plan for Salaried Employees filed as Exhibit 10.1 to its Current Report on Form 8-K on January 7, 2014 1,2 |

| Exhibit 10(d) | Deferred Compensation Plan for Directors Who Are Not Employees of the Company, as amended, filed as Exhibit 10.5 to the Company's Current Report on Form 8-K filed on December 17, 2008 1,2 |

| | E-1 |

| Exhibit 10(e) | | | The 2006 Omnibus Long-Term Incentive Plan of the Company filed as Appendix C to Legacy Vulcan Corp.’s 2006 Proxy Statement on Schedule 14A filed on April 13, 2006 1,2 | | |

| --- | --- | --- | --- | --- | --- |

| Exhibit 10(f) | | | Amendment to the 2006 Omnibus Long-Term Incentive Plan of the Company filed as Appendix A to the Company's 2011 Proxy Statement on Schedule 14A filed March 31, 2011 1,2 | | |

| Exhibit 10(g) | | | Amendment to the 2006 Omnibus Long-Term Incentive Plan of the Company dated February 9, 2012, filed as Exhibit 10(l) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed on February 9, 2012 1,2 | | |

| Exhibit 10(h) | | | Deferred Stock Plan for Nonemployee Directors of the Company filed as Exhibit 10(f) to Legacy Vulcan Corp.’s Annual Report on Form 10-K for the year ended December 31, 2001 filed on March 27, 2002 1,2 | | |

FORM 10-K SUMMARY

None.

| | |

| --- | --- |

| | |

| Part IV | 117 |

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 24, 2017.

| | |

| --- | --- |

| | VULCAN MATERIALS COMPANY |

| |  J. Thomas Hill Chairman, President and Chief Executive Officer |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

| | | |

| --- | --- | --- |

| Signature | Title | Date |

|  J. Thomas Hill | Chairman, President and Chief Executive Officer (Principal Executive Officer) | February 24, 2017 |

|  John R. McPherson | Executive Vice President and Chief Financial and Strategy Officer (Principal Financial Officer) | February 24, 2017 |

|  ______________________________________________ Ejaz A. Khan | Vice President, Controller and Chief Information Officer (Principal Accounting Officer) | February 24, 2017 |

| | | |

| The following directors: Thomas A. Fanning O. B. Grayson Hall, Jr. Cynthia L. Hostetler Douglas J. McGregor Richard T. O'Brien James T. Prokopanko David P. Steiner Lee J. Styslinger, III Vincent J. Trosino Kathleen Wilson-Thompson | Director Director Director Director Director Director Director Director Director Director | |

| | | |

|  Michael R. Mills Attorney-in-Fact | | February 24, 2017 |

| | |

| --- | --- |

| Signatures | 118 |

EXHIBIT INDEX

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Exhibit 3(a) | | | Certificate of Incorporation (Restated 2007) of the Company (formerly known as Virginia Holdco, Inc.), filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on November 16, 2007 1 | | |

| Exhibit 3(b) | | | Amended and Restated By-Laws of the Company (as amended through February 13, 2015) filed as Exhibit 3(b) to the Company’s Annual Report on Form 10\-K filed on February 27, 2015 1 | | |

| Exhibit 4(a) | | | Supplemental Indenture No. 1, dated as of November 16, 2007, among the Company, Legacy Vulcan Corp. and The Bank of New York Trust Company, N.A., as Trustee filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on November 21, 2007 1 | | |

| Exhibit 4(b) | | | Senior Debt Indenture, dated as of December 11, 2007, between the Company and Wilmington Trust Company, as Trustee, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on December 11, 2007 1 | | |

| Exhibit 4(c) | | | First Supplemental Indenture, dated as of December 11, 2007, between Vulcan Materials Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture, dated as of December 11, 2007, between the Company and Wilmington Trust Company, as Trustee, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K on December 11, 2007 1 | | |

| Exhibit 4(d) | | | Second Supplemental Indenture, dated June 20, 2008 between the Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture dated as of December 11, 2007, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 20, 2008 1 | | |

| Exhibit 4(e) | | | Third Supplemental Indenture, dated February 3, 2009, between the Company and Wilmington Trust Company, as Trustee, to that certain Senior Debt Indenture dated as of December 11, 2007 filed as Exhibit 10(f) to the Company's Annual Report on Form 10-K filed on March 2, 2009 1 | | |

| Exhibit 4(f) | | | Fourth Supplemental Indenture, dated June 14, 2011, between the Company and Wilmington Trust Company, as Trustee, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 15, 2011 1 | | |

| Exhibit 4(g) | | | Fifth Supplemental Indenture, dated March 30, 2015, between the Company and Regions Bank, as Trustee, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on March 30, 2015 1 | | |

| Exhibit 4(h) | | | Indenture, dated as of May 1, 1991, by and between Legacy Vulcan Corp. (formerly Vulcan Materials Company) and First Trust of New York (as successor trustee to Morgan Guaranty Trust Company of New York) filed as Exhibit 4 to the Form S-3 on May 2, 1991 (Registration No. 33-40284) 1 | | |

| Exhibit 4(i) | | | Supplemental Indenture No. 1, dated as of November 16, 2007, among the Company, Legacy Vulcan Corp. and The Bank of New York, as Trustee, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 21, 2007 1 | | |