UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): April
1, 2007
_______________
U.S.
CONCRETE, INC.
(Exact
name of registrant as specified in its charter)
Delaware
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000-26025
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76-0588680
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
incorporation)
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Identification
No.)
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2925
Briarpark, Suite 1050
Houston,
Texas 77042
(Address
of principal executive offices, including ZIP code)
(713)
499-6200
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
_______________
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation
of the registrant under any of the following
provisions:
o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b)) |
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c)) |
U.S.
CONCRETE, INC.
INDEX
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Item
9.01. Financial Statements and Exhibits
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3
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EXHIBITS
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20
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SIGNATURE
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21
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9.01 Financial
Statements and Exhibits
As
previously reported in U.S. Concrete, Inc.’s Current Reports on Form 8-K dated
March 26, 2007 and April 5, 2007, several subsidiaries of U.S. Concrete entered
into a contribution agreement with the Edw. C. Levy Co. relating to the
formation of a ready-mixed concrete joint venture operating in Michigan.
The
joint venture is being conducted through a recently formed limited liability
company, which has several operating subsidiaries. Under the contribution
agreement, U.S. Concrete subsidiaries became members of the limited liability
company by contributing their ready-mixed concrete and related concrete products
assets in Michigan (excluding working capital) to the joint venture in exchange
for an aggregate 60 percent ownership interest, and the Edw. C. Levy Co.
became
a member by contributing all of its ready-mixed concrete and related concrete
products assets (excluding working capital), which were conducted through
its
Clawson Concrete Company division, for a 40 percent ownership interest. In
connection with the Contribution Agreement, the relevant U.S. Concrete
subsidiaries and the Edw. C. Levy Co. sold their respective ready-mixed concrete
raw materials inventories to the joint venture. In addition, the relevant
U.S.
Concrete subsidiaries sold their building materials resale inventories and
certain other assets to the joint venture The joint venture, is operating
primarily under the trade name Superior Materials, currently owns and operates
28 ready-mixed concrete plants, a 24,000-ton cement terminal and approximately
300 ready-mixed concrete trucks.
The
effective dates for the contributions under the contribution agreement were
April 1, 2007 and April 2, 2007. For financial reporting purposes, U.S. Concrete
intends to include the joint venture in U.S. Concrete’s consolidated accounts.
This Current Report on Form 8-K is being filed to provide: (1) the historical
audited financial statements of the Clawson Concrete Company division, which
was
acquired by the joint venture in which U.S. Concrete now owns the majority
interest, and (2) pro forma financial statements of U.S. Concrete to reflect
both the acquisition and disposition components of the joint venture formation
transactions.
(a)
Financial Statements of Businesses Acquired
Independent
Auditor’s
Report
To
the
Board of Directors
Edw.
C.
Levy Co.
Clawson
Concrete Company Division
We
have
audited the accompanying divisional balance sheet of Clawson Concrete Company
(a
division of Edw. C. Levy Co.) as of December 31, 2006, 2005, and 2004 and the
related divisional statements of operations and cash flows for each year in
the
three-year period ended December 31, 2006. These divisional financial statements
are the responsibility of Clawson Concrete Company’s management. Our
responsibility is to express an opinion on these financial statements based
on
our audits.
We
conducted our audits in accordance with auditing standards generally accepted
in
the United States of America. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In
our
opinion, the divisional financial statements referred to above present fairly,
in all material respects, the divisional financial position of Clawson Concrete
Company at December 31, 2006, 2005, and 2004 and the results of its operations
and its cash flows for each year in the three-year period ended December 31,
2006, in conformity with accounting principles generally accepted in the United
States of America.
June
7,
2007
Clawson
Concrete Company
Divisional
Balance Sheet
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December
31,
2006
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December
31,
2005
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December
31,
2004
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Assets
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Current
Assets
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Cash
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$
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224,801
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$
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377,468
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$
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1,252,075
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Accounts
receivable
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4,403,646
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6,100,602
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6,715,073
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Inventories
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1,932,632
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2,197,183
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1,456,263
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Prepaid
expenses and other current assets
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86,179
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164,106
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241,648
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Total
current assets
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6,647,258
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8,839,359
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9,665,059
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Property,
Plant, and Equipment -
Net (Note 2)
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4,096,138
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5,393,380
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5,895,694
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Total
assets
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$
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10,743,396
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$
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14,232,739
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$
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15,560,753
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Liabilities
and Parent Company Investment
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Current
Liabilities
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Trade
accounts payable
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$
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1,302,428
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$
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1,128,274
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$
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1,124,344
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Current
portion of long-term debt (Note 3)
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46,483
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—
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Amounts
due to Edw. C. Levy Co. and Affiliates
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(Note
5)
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263,352
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1,361,918
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606,435
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Accrued
and other current liabilities
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254,449
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259,180
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273,465
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Total
current liabilities
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1,866,712
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2,749,372
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2,004,244
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Long-term
Debt -
Net of current portion (Note 3)
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76,721
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Parent
Company Investment
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8,799,963
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11,483,367
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13,556,509
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Total
liabilities and parent
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company
investment
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$
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10,743,396
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$
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14,232,739
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$
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15,560,753
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See
Notes
to Divisional Financial Statements
Clawson
Concrete Company
Divisional
Statement of Operations
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Year
Ended
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December
31,
2006
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December
31,
2005
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Net
Sales
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$
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32,041,677
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$
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36,774,659
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$
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35,553,529
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Cost
of Sales
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34,476,079
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37,360,810
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34,956,340
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Gross
Profit (Loss)
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(2,434,402
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(586,151
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)
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597,189
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Operating
Expenses
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6,054,468
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6,366,301
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5,379,243
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Gain
on Sale of Property, Plant, and
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Equipment
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3,590
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1,170,939
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119,654
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Operating
Loss
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(8,485,280
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)
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(5,781,513
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(4,662,400
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)
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Nonoperating
Income
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111,435
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190,398
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15,000
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Divisional
Loss
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$
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(8,373,845
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)
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$
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(5,591,115
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)
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$
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(4,647,400
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)
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See
Notes
to Divisional Financial Statements
Clawson
Concrete Company
Divisional
Statement of Cash Flows
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Year
Ended December 31
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2006
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2005
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2004
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Cash
Flows from Operating Activities
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Divisional
loss
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$
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(8,373,845
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)
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$
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(5,591,115
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$
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(4,647,400
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Adjustments
to reconcile divisional loss to net
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cash
from operating activities:
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Depreciation
and amortization
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1,510,322
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2,072,636
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2,551,329
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(Gain)
loss on sale of property and
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equipment
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(3,590
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) |
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(1,170,939
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)
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119,654
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Bad
debt expense
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153,232
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45,520
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267,837
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Net
change in:
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Accounts
receivable
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1,543,724
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568,951
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(2,033,797
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)
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Inventories
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264,551
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(740,920
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)
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56,249
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Prepaid
expenses and other
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77,927
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77,542
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(53,768
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)
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Accounts
payable
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174,154
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3,930
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(44,368
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)
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Accrued
liabilities and other
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(4,731
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)
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(14,285
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)
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141,881
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Net
cash used in
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operating
activities
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(4,658,256
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)
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(4,748,680
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)
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(3,642,383
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)
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Cash
Flows from Investing Activities
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Purchase
of property and equipment
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(65,173
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)
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(1,660,037
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)
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(1,339,247
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)
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Proceeds
from disposition of property and
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equipment
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25,833
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1,260,654
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133,648
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Net
cash used in investing
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|
activities
|
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(39,340
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)
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(399,383
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)
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(1,205,599
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)
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Cash
Flows from Financing Activities
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Payments
on debt
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(46,946
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)
|
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|
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Change
in parent company investment
|
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|
5,690,441
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3,517,973
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7,318,271
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Change
in amounts due to Edw. C. Levy Co.
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and
affiliates
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(1,098,566
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)
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755,483
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(1,791,508
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)
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Net
cash provided by
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financing
activities
|
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4,544,929
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4,273,456
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5,526,763
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Net
Increase (Decrease) in Cash
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(152,667
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)
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(874,607
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)
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678,781
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Cash
-
Beginning of year
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377,468
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1,252,075
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573,294
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Cash
-
End of year
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$
|
224,801
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$
|
377,468
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|
$
|
1,252,075
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|
See
Notes
to Divisional Financial Statements
Clawson
Concrete Company
Notes
to Divisional Financial Statements
December
31, 2006, 2005, and 2004
Note
1 - Nature of Business and Significant Accounting Policies
The
divisional financial statements include all of the operating accounts of Clawson
Concrete Company (Clawson), a division of Edw. C. Levy Co. (Levy), for the
years
ended December 31, 2006, 2005, and 2004. Levy is a closely held company based
in
Detroit, Michigan that is in the asphalt paving, sand and gravel extracting,
concrete production, and steel mill services industries. Clawson manufactures
and sells concrete products in Southeast Michigan. On April 2, 2007, Levy
contributed certain assets of Clawson to a subsidiary of US Concrete, Inc.,
a
public company, in exchange for minority ownership in the subsidiary as
described in Note 8.
Basis
of Presentation
- The
accompanying financial statements are presented on a carve-out basis and as
such
present management’s best estimate of Clawson’s financial position and results
of operations. Although management believes the allocations are reasonable,
the
financial statements may not represent the financial position of Clawson had
Clawson been a separate, stand-alone entity during the periods presented.
Clawson’s future operating results on an unaffiliated, stand-alone basis may be
different from past results.
Allocation
Methodology
- To the
extent assets, liabilities, revenue, expenses, gains, and losses are
identifiable and directly attributable to Clawson they are included in the
accompanying divisional financial statements. Certain executive, administrative,
financial, legal, and general services are performed on a centralized basis
by
Levy. The costs of services provided by Levy are allocated to the division
using
a pro rata share, based on sales, of the total cost pool related to these
activities, which management considers to be a reasonable reflection of the
utilization of services provided. In addition, Clawson is allocated a portion
of
Levy’s employee benefit costs. The employee benefit costs are allocated based on
actual number of employees, which management considers to be a reasonable
allocation of expenses incurred. Clawson was allocated expenses totaling
approximately $4,151,000, $4,710,000, and $3,526,000, in 2006, 2005, and 2004,
respectively.
Trade
Accounts Receivable
-
Accounts receivable are stated at net invoice amounts. An allowance for doubtful
accounts is established based on a specific assessment of all invoices that
remain unpaid following normal customer payment periods. In addition, a general
valuation allowance is established for other accounts receivable based on
historical loss experience. All amounts deemed to be uncollectible are charged
against the allowance for doubtful accounts in the period that determination
is
made. An allowance for doubtful accounts of $175,000 has been recorded at
December 31, 2006, 2005, and 2004.
Inventory
-
Inventories consist of raw materials and are stated at the lower of cost or
market, with cost determined on the first-in, first-out (FIFO) method for all
inventory.
Clawson
Concrete Company
Notes
to Divisional Financial Statements
December
31, 2006, 2005, and 2004
Note
1 - Nature of Business and Significant Accounting Policies (Continued)
Property,
Plant, and Equipment
-
Property, plant, and equipment are stated at cost. Depreciation is computed
using the straight-line method for buildings and accelerated methods for other
assets over the estimated useful lives of the assets.
Parent
Company Investment
- Parent
company investment is the accumulated earnings and losses of Clawson since
inception plus Levy’s funding of operations.
Income
Taxes
-
Pursuant to provisions of the Internal Revenue Code, Levy has elected to be
taxed as an S Corporation. Generally, the income of an S Corporation is not
subject to federal income tax at the corporate level, but rather the
stockholders are required to include a pro rata share of the corporation’s
taxable income or loss in their personal income tax returns, irrespective of
whether dividends have been paid. Accordingly, no provision for federal income
taxes has been made in the accompanying divisional financial statements.
Revenue
Recognition
-
Revenue from sales of concrete is recognized when the product is shipped to
the
customer.
Union
Contracts - Approximately
62 percent of Clawson’s employees are covered under union contracts at December
31, 2006. Approximately 48 percent of Clawson’s employees are covered under
contracts that expire in 2007.
Warranty
- Clawson
typically provides a one-year warranty on all sales. Warranty expense was
approximately $168,000, $136,000, and $67,000 for 2006, 2005, and 2004,
respectively.
Use
of Estimates
- The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Notes
to Divisional Financial Statements
December
31, 2006, 2005, and 2004
Note
2 - Property, Plant, and Equipment
Property,
plant, and equipment are summarized as follows:
|
|
2006
|
|
2005
|
|
2004
|
|
|
|
Land
|
|
$
|
933,620
|
|
$
|
933,620
|
|
$
|
933,620
|
|
|
|
|
Land
improvements
|
|
|
626,944
|
|
|
628,428
|
|
|
731,887
|
|
|
10-15
|
|
Buildings
and plants
|
|
|
|
|
|
|
|
|
10,952,404
|
|
|
7-40
|
|
Machinery
and equipment
|
|
|
1,477,589
|
|
|
1,622,359
|
|
|
1,388,761 |
|
|
5-10 |
|
Transportation
equipment
|
|
|
17,831,384
|
|
|
18,937,797
|
|
|
19,433,014 |
|
|
5 |
|
Furniture
and fixtures
|
|
|
44,546
|
|
|
44,546
|
|
|
44,546
|
|
|
3-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
cost
|
|
|
|
|
|
|
|
|
33,484,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,588,538
|
|
|
|
|
Net
property and equipment
|
|
$ |
4,096,138
|
|
$
|
5,393,380
|
|
$ |
5,895,694 |
|
|
|
|
For
the
years ended December 31, 2006, 2005, 2004, depreciation and amortization expense
was $1,510,322, $2,072,636, and $2,551,329, respectively.
Note
3 - Long-term Debt
Long-term
debt at December 31, 2006 consists of a note payable to a financing company
due
in monthly installments of $4,525, including interest at 7.65 percent. The
note
is collateralized by the specific equipment and is due in June 2009. The
outstanding balance at December 31, 2006 is $123,204.
The
balance of the above debt matures as follows:
2007
|
|
$
|
46,483
|
|
2008
|
|
|
50,166
|
|
2009
|
|
|
26,555
|
|
|
|
|
|
|
Total
|
|
$
|
123,204
|
|
Interest
expense for the year ended December 31, 2006 was $5,205.
Clawson
Concrete Company
Notes
to Divisional Financial Statements
December
31, 2006, 2005, and 2004
Note
4 - Pension and Other Postretirement Benefits
Clawson
makes contributions to multiemployer pension plans for certain union employees
whose benefits are collectively bargained. Contributions under these pension
plans are based on specified rates as provided by union agreements. Pension
expense for such plans amounted to $1,417,095, $1,446,078, and $915,573 for
the
years ended December 31, 2006, 2005, and 2004, respectively. While contributions
are based on fixed hourly rates, federal laws impose certain contingent
liabilities on contributors to multiemployer plans such as these. In the event
of withdrawal from the plan and under certain other conditions, a contributor
to
a multiemployer plan may be liable to the plan in accordance with formulas
established by law.
All
eligible salaried and certain hourly employees are covered by noncontributory
defined benefit pension plans through Levy. In addition, Clawson provides
certain defined health care and life insurance benefits for retired employees
through Levy. The expense allocated to Clawson related to these plans, which
was
based on actual employees covered under the plans, was $395,856, $388,355,
and
$321,424 for years ended December 31, 2006, 2005, and 2004, respectively.
Note
5 - Related Party Transactions
For
each
year in the three-year period ended December 31, 2006, materials and services
provided by other divisions of Levy and companies under common control
(collectively "affiliates") consisted of the following:
|
|
2006
|
|
2005
|
|
2004
|
|
Aggregates
purchased
|
|
$
|
1,017,140
|
|
$
|
2,845,034
|
|
$
|
3,570,725
|
|
Trucking
and other services purchased
|
|
|
1,017,530
|
|
|
942,767
|
|
|
1,101,827
|
|
Rent
expense
|
|
|
278,286
|
|
|
200,000
|
|
|
200,000
|
|
It
is
management’s policy that materials and services purchased from other divisions
and affiliates are transacted at the price the divisions or affiliates would
sell to third parties (effectively market). These materials and services
purchased in the normal course of business are classified as amounts due to
Edw.
C. Levy Co. and affiliates on the divisional balance sheet. The average balance
was approximately $813,000, $984,000, and $1,502,000 for 2006, 2005, and 2004,
respectively.
The
assets of Clawson are subject to creditors of Levy as a whole. In the event
of
default by Levy, the assets of Clawson could be used to satisfy the obligations.
Clawson
Concrete Company
Notes
to Divisional Financial Statements
December
31, 2006, 2005, and 2004
Note
6 - Self-insurance
Clawson,
Levy, and affiliates are partially self-insured for workers’ compensation and
have obtained specific excess reinsurance coverage for claims in excess of
$1,000,000 per accident. Amounts charged to operations by Clawson related to
workers’ compensation totaled approximately $4,000, $159,000, and $21,000 for
the years ended December 31, 2006, 2005, and 2004, respectively. Clawson is
also
self-insured for employee health care coverage. Amounts charged to operations
under this plan for Clawson totaled approximately $901,000, $990,000, and
$743,000 for the years ended December 31, 2006, 2005, and 2004, respectively.
Note
7 - Cash Flows
Clawson
purchased equipment under an installment note totaling $170,150 in 2006. There
were no significant noncash investing and financing transactions during 2005
and
2004.
Cash
paid
for interest totaled $5,205 in 2006. There was no cash paid for interest in
2005
and 2004. There was no cash paid for income taxes in 2006, 2005, or 2004.
Note
8 - Subsequent Events
On
April
2, 2007, Levy contributed $1,000,000 of cash and certain property, plant, and
equipment of Clawson in exchange for a 40 percent membership interest in
Superior Materials Holdings, LLC, a subsidiary of US Concrete, Inc. Superior
Materials Holdings, LLC includes all of US Concrete, Inc.’s property, plant, and
equipment representing its Michigan operations.
The
Clawson assets had a net book value of approximately $3,500,000 when
contributed. In exchange for the assets, Levy was credited with a capital
contribution of approximately $16,500,000.
Levy
has
contracted with Superior Materials Holdings, LLC to continue to provide
aggregates at market value following the effective date of this transaction.
(b)
Pro
Forma Financial Information.
The
following unaudited pro forma financial information reflects our historical
results as adjusted on a pro forma basis to give effect to the disposition
of
40% of substantially all of our Michigan operations (excluding quarry assets
and
working captial) through a contribution of those operations to a newly formed
joint venture company, Superior Materials Holdings, LLC, in return for a 60%
interest in that company, which includes the Michigan ready-mixed concrete
operations contributed by the Edw. C. Levy Co. The unaudited pro forma balance
sheet information gives effect to the disposition of the 40% interest in those
Michigan operations and our acquisition of the 60% interest in the joint venture
company (which we refer to together as the “joint venture formation
transactions”) as if they had occurred on March 31, 2007. The unaudited pro
forma statement of operations information for the year ended December 31, 2006
and the three months ended March 31, 2007 gives effect to the joint venture
formation transactions as if they had occurred on January 1, 2006. The pro
forma
adjustments are based on available information and assumptions that our
management believes are reasonable and are described in the related
notes.
The
historical statement of operations information for the year ended December
31,
2006 is derived from our audited historical consolidated financial statements,
the unaudited historical financial statements of our Michigan operations and
the
audited divisional financial statements of Clawson Concrete Company (a division
of Edw. C. Levy Co.) included in Item 9.01(a) of this report. The historical
balance sheet and statement of operations information as of and for the three
months ended March 31, 2007 are derived from our unaudited consolidated
financial statements, the unaudited historical financial statements of our
Michigan operations and the unaudited divisional financial statements of Clawson
Concrete Company (a division of the Edw. C. Levy Co.).
The
unaudited pro forma financial statement information is presented for
informational purposes only and is not necessarily indicative of the financial
position or results of operations which would have been realized had the joint
venture formation transactions been effective as of or for the periods presented
or the financial position or the results of operations of U.S. Concrete and
its
subsidiaries (including our consolidation of Superior Materials Holdings, LLC)
in the future. The unaudited pro forma financial information as of and for
the
periods presented may have been different had the transactions actually been
completed as of or during the period presented due to, among other factors,
effects of goodwill impairments and various “Risk Factors” discussed under Item
1A. of our annual report on Form 10-K for the year ended December 31, 2006.
The
pro
forma adjustments reflecting the joint venture formation transactions are based
on various preliminary estimates and assumptions. The actual adjustments to
our
consolidated financial statements will be affected by a number of factors,
including Superior Materials Holdings, LLC becoming consolidated into our
consolidated financial statements, with the outside interest in Superior
Materials Holdings, LLC being reflected as a minority interest in our
consolidated balance sheet and statement of operations, final settlement of
contractual post-closing adjustments, and additional information available
at
such time. Accordingly, it is likely that the actual adjustments will differ
from the pro forma adjustments, and it is possible that the differences could
be
material.
You
should read the unaudited pro forma financial information in conjunction with
the historical consolidated financial statements and related notes thereto
of
U.S. Concrete included in our annual report on Form 10-K for the year ended
December 31, 2006 and the audited divisional financial statements of Clawson
Concrete Company (a division of Edw. C. Levy Co.) included in Item 9.01(a)
of
this report.
U.S.
CONCRETE, INC.
UNAUDITED
PRO FORMA BALANCE SHEET
March
31, 2007
(in
thousands)
|
|
|
|
|
|
Pro
Forma
|
|
|
|
U.S.
Concrete, Inc.
|
|
Clawson
Concrete Company
|
|
Adjustments
|
|
|
|
Combined
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
9,501
|
|
$
|
25
|
|
$
|
975
|
|
2
|
(a)
|
$
|
10,501
|
|
Trade
accounts receivable, net
|
|
|
99,867
|
|
|
2,421
|
|
|
(2,421
|
)
|
2
|
(b)
|
|
99,867
|
|
Inventories
|
|
|
33,046
|
|
|
2,990
|
|
|
725
|
|
2
|
(c)
|
|
36,761
|
|
Prepaid
expenses
|
|
|
6,163
|
|
|
117
|
|
|
(117
|
)
|
2
|
(b)
|
|
6,163
|
|
Other
current assets
|
|
|
20,241
|
|
|
—
|
|
|
—
|
|
|
|
|
20,241
|
|
Total
current assets
|
|
|
168,818
|
|
|
5,553
|
|
|
(838
|
)
|
|
|
|
173,533
|
|
Properties,
plant and equipment, net
|
|
|
268,817
|
|
|
3,820
|
|
|
13,340
|
|
2
|
(d)
|
|
285,977
|
|
Goodwill
|
|
|
259,653
|
|
|
—
|
|
|
891
|
|
2
|
(e)
|
|
260,544
|
|
Other
assets
|
|
|
12,848
|
|
|
—
|
|
|
—
|
|
|
|
|
12,848
|
|
Total
assets
|
|
$
|
710,136
|
|
$
|
9,373
|
|
$
|
13,393
|
|
|
|
$
|
732,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
maturities of long-term debt
|
|
$
|
3,596
|
|
$
|
46
|
|
$
|
—
|
|
|
|
$
|
3,642
|
|
Accounts
payable
|
|
|
35,736
|
|
|
1,434
|
|
|
2,281
|
|
2
|
(f)
|
|
39,451
|
|
Accrued
liabilities
|
|
|
55,928
|
|
|
1,197
|
|
|
(1,197
|
)
|
2
|
(g)
|
|
55,928
|
|
Total
current liabilities
|
|
|
95,260
|
|
|
2,677
|
|
|
1,084
|
|
|
|
|
99,021
|
|
Long-term
debt, net of current maturities
|
|
|
308,927
|
|
|
—
|
|
|
—
|
|
|
|
|
308,927
|
|
Other
long-term obligations and deferred credits
|
|
|
10,950
|
|
|
62
|
|
|
—
|
|
|
|
|
11,012
|
|
Deferred
income taxes
|
|
|
29,973
|
|
|
—
|
|
|
3,072
|
|
2
|
(h)
|
|
33,045
|
|
Total
liabilities
|
|
|
445,110
|
|
|
2,739
|
|
|
4,156
|
|
|
|
|
452,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interest
|
|
|
—
|
|
|
|
|
|
15,871
|
|
2
|
(i)
|
|
15,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
company investment
|
|
|
—
|
|
|
6,634
|
|
|
(6,634
|
)
|
2
|
(j)
|
|
—
|
|
Common
stock
|
|
|
39
|
|
|
|
|
|
—
|
|
|
|
|
39
|
|
Additional
paid-in capital
|
|
|
263,917
|
|
|
|
|
|
—
|
|
|
|
|
263,917
|
|
Treasury
stock
|
|
|
(2,084
|
)
|
|
|
|
|
—
|
|
|
|
|
(2,084
|
)
|
Retained
earnings
|
|
|
3,154
|
|
|
|
|
|
—
|
|
|
|
|
3,154
|
|
Total
stockholders’ equity
|
|
|
265,026
|
|
|
6,634
|
|
|
(6,634
|
)
|
|
|
|
265,026
|
|
Total
liabilities and stockholders’ equity
|
|
$
|
710,136
|
|
$
|
9,373
|
|
$
|
13,393
|
|
|
|
$
|
732,902
|
|
See
Notes
to Unaudited Pro Forma Financial Information
U.S.
CONCRETE, INC.
UNAUDITED
PRO FORMA STATEMENT OF OPERATIONS
FOR
THE THREE MONTHS ENDED MARCH 31, 2007
(in
thousands)
|
|
|
|
|
|
Pro
Forma
|
|
|
|
U.S.
Concrete, Inc.
|
|
Clawson
Concrete Company
|
|
Adjustments
|
|
|
|
Combined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
169,389
|
|
$
|
3,232
|
|
$
|
—
|
|
|
|
$
|
172,621
|
|
Cost
of goods sold before depreciation,
depletion
and amortization
|
|
|
147,620
|
|
|
4,409
|
|
|
(50
|
)
|
2
|
(k)
|
|
151,979
|
|
Selling,
general and administrative expenses
|
|
|
17,740
|
|
|
855
|
|
|
(541
|
)
|
2
|
(l)
|
|
18,054
|
|
Depreciation,
depletion and amortization
|
|
|
7,218
|
|
|
264
|
|
|
(164
|
)
|
2
|
(m)
|
|
7,318
|
|
Loss
from operations
|
|
|
(3,189
|
)
|
|
(2,296
|
)
|
|
755
|
|
|
|
|
(4,730
|
)
|
Interest
income
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
|
|
24
|
|
Interest
expense
|
|
|
6,891
|
|
|
—
|
|
|
—
|
|
|
|
|
6,891
|
|
Other
income, net
|
|
|
483
|
|
|
46
|
|
|
(46
|
)
|
2
|
(n)
|
|
483
|
|
Minority
interest
|
|
|
—
|
|
|
—
|
|
|
2,047
|
|
2
|
(i)
|
|
2,047
|
|
Loss
before income tax
benefit
|
|
|
(9,573
|
)
|
|
(2,250
|
)
|
|
2,756
|
|
|
|
|
(9,067
|
)
|
Income
tax benefit
|
|
|
(3,844
|
)
|
|
—
|
|
|
177 |
|
2
|
(o)
|
|
(3,667
|
)
|
Net
loss
|
|
$
|
(5,729
|
)
|
$
|
(2,250
|
)
|
$
|
2,579
|
|
|
|
$
|
(5,400
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
(0.14
|
)
|
Diluted
|
|
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of shares used in calculating loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
38,030
|
|
|
|
|
|
|
|
|
|
|
38,030
|
|
Diluted
|
|
|
38,030
|
|
|
|
|
|
|
|
|
|
|
38,030
|
|
See
Notes
to Unaudited Pro Forma Financial Information
U.S.
CONCRETE, INC.
UNAUDITED
PRO FORMA STATEMENT OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2006
(in
thousands)
|
|
|
|
|
|
Pro
Forma
|
|
|
|
U.S.
Concrete, Inc.
|
|
Clawson
Concrete Company
|
|
Adjustments
|
|
|
|
Combined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
789,522
|
|
$
|
32,042
|
|
$
|
—
|
|
|
|
$
|
821,564
|
|
Cost
of goods sold before depreciation,
depletion
and amortization
|
|
|
649,351
|
|
|
33,921
|
|
|
(200
|
)
|
2
|
(k)
|
|
683,072
|
|
Goodwill
and other asset impairments
|
|
|
38,964
|
|
|
—
|
|
|
—
|
|
|
|
|
38,964
|
|
Selling,
general and administrative expenses
|
|
|
66,430
|
|
|
5,161
|
|
|
(3,927
|
)
|
2
|
(l)
|
|
67,664
|
|
Depreciation,
depletion and amortization
|
|
|
22,322
|
|
|
1,444
|
|
|
(245
|
)
|
2
|
(m)
|
|
23,521
|
|
Income
(loss) from operations
|
|
|
12,455
|
|
|
(8,484
|
)
|
|
4,372
|
|
|
|
|
8,343
|
|
Interest
income
|
|
|
1,604
|
|
|
—
|
|
|
—
|
|
|
|
|
1,604
|
|
Interest
expense
|
|
|
23,189
|
|
|
—
|
|
|
—
|
|
|
|
|
23,189
|
|
Other
income, net
|
|
|
1,850
|
|
|
111
|
|
|
729
|
|
2
|
(n)
|
|
2,690
|
|
Minority
interest
|
|
|
—
|
|
|
—
|
|
|
1,839
|
|
2
|
(i)
|
|
1,839
|
|
Loss
before income tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,280
|
)
|
|
(8,373
|
)
|
|
6,940
|
|
|
|
|
(8,713
|
)
|
Income
tax provision (benefit)
|
|
|
810
|
|
|
—
|
|
|
(501 |
)
|
2
|
(o)
|
|
309
|
|
Net
loss
|
|
$
|
(8,090
|
)
|
$
|
(8,373
|
)
|
$
|
7,442
|
|
|
|
$
|
(9,021
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
(0.22
|
)
|
|
|
|
|
|
|
|
|
|
(0.24
|
)
|
Diluted
|
|
|
(0.22
|
)
|
|
|
|
|
|
|
|
|
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of shares used in calculating earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
36,847
|
|
|
|
|
|
|
|
|
|
|
36,847
|
|
Diluted
|
|
|
36,847
|
|
|
|
|
|
|
|
|
|
|
36,847
|
|
See
Notes
to Unaudited Pro Forma Financial Information
NOTES
TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
1.
Basis of Presentation
The
unaudited pro forma balance sheet information as of March 31, 2007 has been
adjusted to give effect to the disposition of 40% of substantially all of our
Michigan operations through a contribution of those operations to a newly formed
joint venture company, Superior Materials Holdings, LLC, in return for a 60%
interest in that company, which includes the Michigan ready-mixed concrete
operations contributed by the Edw. C. Levy Co. We refer to the disposition
of
the 40% interest in those Michigan operations and our acquisition of the 60%
interest in the joint venture company together as the “joint venture formation
transactions.” The unaudited pro forma statement of operations information for
the year ended December 31, 2006 and the three months ended March 31, 2007
gives
effect to the joint venture formation transactions as if they had occurred
on
January 1, 2006.
The
unaudited pro forma balance sheet information as of March 31, 2007 and the
unaudited pro forma statements of operations information for the three months
ended March 31, 2007 and for the year ended December 31, 2006 have been prepared
based on the following information:
(a) |
audited
consolidated financial statements of U.S. Concrete and its subsidiaries
as
of and for the year ended December 31,
2006;
|
(b) |
unaudited
consolidated financial statements of U.S. Concrete and its subsidiaries
as
of and for the three months ended March 31,
2007;
|
(c) |
unaudited
historical balance sheet and statement of operations of our Michigan
operations as of and for the year ended December 31, 2006 and for
the
three months ended March 31, 2007;
|
(d) |
audited
divisional financial statements of Clawson Concrete Company (a division
of
Edw. C. Levy Co.) as of and for the year ended December 31, 2006;
and
|
(e) |
other
supplementary information we considered necessary for the purpose
of
reflecting the disposition transaction reflected in the pro forma
financial information.
|
The
pro
forma adjustments reflecting the joint venture formation transactions are based
on various preliminary estimates and assumptions. The actual adjustments to
our
consolidated financial statements will depend upon a number of factors,
including Superior Materials Holdings, LLC becoming a part our consolidated
financial statements, with the outside interest being reflected as minority
interest in our consolidated balance sheet and statement of operations, giving
effect to the Edw. C. Levy Co.’s contribution of its ready-mixed concrete
operations in the balance sheet and statement of operations of Superior
Materials Holdings, LLC, final appraisals, final settlement of contractual
post-closing adjustments, and additional information available at such time.
Accordingly, it is likely that the actual adjustments will differ from the
pro
forma adjustments, and it is possible that the differences could be material.
We
believe that such assumptions provide a reasonable basis for presenting all
the
significant effects of the disposition transaction and that the pro forma
adjustments give appropriate effect to those assumptions and are properly
applied in the pro forma financial information.
NOTES
TO UNAUDITED PRO FORMA FINANCIAL
INFORMATION
A
summary
of the preliminary pro forma purchase price allocation which reflects 40%
of the
net assets of our Michigan operations as the purchase price allocated among
the
components of the net assets of Clawson Concrete Company acquired through
the
joint venture formation transactions and reduced to the 60% interest we acquired
in them is as follows (in thousands):
Estimated
Purchase Price
Net
assets of our Michigan operations reduced to 40%
|
|
$
|
8,650
|
|
|
|
|
|
|
Preliminary
Purchase Price Allocation
|
|
|
|
|
Cash
|
|
$
|
1,000
|
|
Property,
plant and equipment
|
|
|
17,160
|
|
Goodwill
|
|
|
891
|
|
Total
assets acquired
|
|
|
19,051
|
|
Capital
lease liability
|
|
|
108
|
|
Other
long-term liabilities
|
|
|
3,072
|
|
Total
liabilities assumed
|
|
|
3,180
|
|
Minority
interest
|
|
|
7,221 |
|
Net
assets acquired
|
|
$
|
8,650
|
|
For
the
purposes of these pro forma financial statements, we have allocated to goodwill
the excess of the estimated purchase price over the estimated fair value
of the
net assets acquired. We have not allocated any amounts to pre-acquisition
contingencies, as these types of liabilities were not assumed by the joint
venture. The pro forma combined financial statements do not include anticipated
financial benefits from items such as cost and revenue synergies arising
from
the joint venture formation transactions, nor do the pro forma combined
financial statements include any anticipated costs of integration we will
incur.
Also,
for
purposes of these pro forma combined financial statements, the presentation
of
certain historical items of Clawson Concrete Company (a division of Edw.
C. Levy
Co.) has been modified to conform to this pro forma presentation.
2.
Joint Venture Formation Transactions
The
pro
forma adjustments assume the following with respect to the joint venture
formation transactions:
NOTES
TO UNAUDITED PRO FORMA FINANCIAL
INFORMATION
|
(a)
|
Reflects
the increase in cash associated with the $1.0 million contribution
of cash
to the joint venture by Edw. C. Levy
Co.
|
|
(b)
|
Reflects
the elimination of certain Clawson Concrete Company assets which
were not
contributed to the joint venture.
|
|
(c)
|
Reflects
the adjustment to record the purchase of Clawson Concrete Company’s raw
materials inventory at fair market value at the time of formation
of the
joint venture.
|
|
(d)
|
Reflects
the adjustment required to state properties, plant and equipment
of
Clawson Concrete Company at its estimated fair market value of
$17.2
million.
|
|
(e)
|
Reflects
the excess of the 40% interest in our Michigan operations contributed
to
the joint venture over the 60% interest in the cash and net assets
of
Clawson Concrete Company contributed by the Edw. C. Levy Co. recorded
as
goodwill.
|
|
(f)
|
Reflects
the increase in accounts payable related to the purchase of Clawson
Concrete Company’s raw materials inventory, partially offset by the
elimination of Clawson Concrete Company’s accounts payable, which was not
assumed by the joint venture in the joint venture formation
transactions.
|
|
(g)
|
Represents
the elimination of accrued liabilities of Clawson Concrete Company
which
were not assumed in the joint venture formation
transactions.
|
|
(h)
|
Deferred
income taxes have been increased to reflect the estimated impact
of income
tax on our 60% share of the fair value adjustments to Clawson Concrete
Company’s balance sheet assets and liabilities as described above. An
effective income tax rate of 21% was used to calculate this adjustment,
inclusive of state income tax
effects.
|
|
(i)
|
Represents
the adjustment to reflect the Edw. C. Levy Co. interest in the
net assets
and income (loss) before income tax provision (benefit) of the
joint
venture as a minority interest.
|
|
(j)
|
Clawson
Concrete Company’s parent company investment has been eliminated to
reflect the effect of the joint venture formation
transactions.
|
|
(k)
|
Represents
the reduction in certain lease expenses assumed by the Edw. C.
Levy Co. as
a component of the joint venture formation
transactions.
|
NOTES
TO UNAUDITED PRO FORMA FINANCIAL
INFORMATION
|
(l)
|
Represents
the elimination of certain general and administrative costs which
were
allocated to Clawson Concrete Company from the Edw. C. Levy Co.
and will
not be expenses of the joint
venture.
|
|
(m)
|
Represents
the adjustment required to record depreciation, depletion and amortization
resulting from the fair value adjustments to the properties, plant
and
equipment of Clawson Concrete Company as well as conforming depreciation
policies to that of U.S. Concrete and its
subsidiaries.
|
|
(n)
|
Represents
a payment to U.S. Concrete by the Edw. C. Levy Co. required by
certain
contractual provisions of the operating agreement among U.S. Concrete
and
the Edw. C. Levy Co. should the joint venture fail to have net
income in
its first year of operation, offset by the elimination of the other
income
of the Clawson Concrete Company which would not have been earned
subsequent to the joint venture formation transactions. Payments
to U.S. Concrete, if any, required under the operating agreement
are only
a requirement in the first year of operation. Accordingly, no similar
other income adjustment is recorded in the three-month period ended
March
31, 2007.
|
|
(o)
|
Represents
the adjustment to reflect the aggregate pro forma income tax effect
of the
adjustments more fully described in notes 2(i), 2(k), 2(l), 2(m),
and
2(n), and the pro forma income tax effect of U.S. Concrete's share
of the
loss before tax of Clawson Concrete Company at an income tax rate
of
35%.
|
|
|
|
Exhibit
|
|
|
|
|
|
23.1
|
|
Consent
of Independent Auditors.
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf of the undersigned hereunto
duly authorized.
|
|
|
|
U.S.
CONCRETE, INC. |
|
|
|
Date: June
15, 2007 |
By: |
/s/ Robert
D.
Hardy |
|
Robert D. Hardy
Senior
Vice President and Chief
Financial Officer
|
|
|