UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the Quarterly Period Ended September 30, 2008
Commission
File Number 000-26025
U.S.
CONCRETE, INC.
A
Delaware Corporation
IRS
Employer Identification No. 76-0586680
2925
Briarpark, Suite 1050
Houston,
Texas 77042
(713)
499-6200
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 þ
No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company (as
defined in Rule 12b-2 of the Exchange Act).
Large
accelerated filer ¨
Accelerated filer þ
Non-accelerated filer ¨
Smaller
reporting company ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨
No
þ
As
of the
close of business on November 5, 2008, U.S. Concrete, Inc. had 36,715,183 shares
of its common stock, $0.001 par value, outstanding (excluding treasury shares
of
443,025).
U.S.
CONCRETE, INC.
INDEX
|
|
Page
No.
|
Part
I – Financial Information
|
|
|
Item
1. Financial Statements
|
|
|
Condensed
Consolidated Balance Sheets
|
|
2
|
Condensed
Consolidated Statements of Operations
|
|
3
|
Condensed
Consolidated Statement of Changes in Stockholders’ Equity
|
|
4
|
Condensed
Consolidated Statements of Cash Flows
|
|
5
|
Notes
to Condensed Consolidated Financial Statements
|
|
6
|
Item
2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
|
|
21
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
|
31
|
Item
4. Controls and Procedures
|
|
31
|
|
|
|
Part
II – Other Information
|
|
|
Item
1. Legal Proceedings
|
|
32
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
|
32
|
Item
6. Exhibits
|
|
33
|
|
|
|
SIGNATURE
|
|
34
|
INDEX
TO EXHIBITS
|
|
35
|
PART
I - FINANCIAL INFORMATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in
thousands)
|
|
September 30,
|
|
December 31,
|
|
|
|
2008
|
|
2007
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
3,907
|
|
$ |
14,850
|
|
Trade
accounts receivable, net
|
|
|
125,682
|
|
|
102,612
|
|
Inventories,
net
|
|
|
36,430
|
|
|
32,557
|
|
Deferred
income taxes
|
|
|
16,289
|
|
|
10,937
|
|
Prepaid
expenses
|
|
|
5,619
|
|
|
5,256
|
|
Other
current assets
|
|
|
9,379
|
|
|
11,387
|
|
Assets
held for sale
|
|
|
—
|
|
|
7,273
|
|
Total
current assets
|
|
|
197,306
|
|
|
184,872
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
|
275,793
|
|
|
267,010
|
|
Goodwill
|
|
|
191,365
|
|
|
184,999
|
|
Other
assets, net
|
|
|
9,202
|
|
|
10,375
|
|
Total
assets
|
|
$ |
673,666
|
|
$ |
647,256
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Current
maturities of long-term debt
|
|
$ |
3,868
|
|
$ |
3,172
|
|
Accounts
payable
|
|
|
55,239
|
|
|
48,160
|
|
Accrued
liabilities
|
|
|
60,466
|
|
|
45,411
|
|
Total
current liabilities
|
|
|
119,573
|
|
|
96,743
|
|
|
|
|
|
|
|
|
|
Long-term
debt, net of current maturities
|
|
|
295,990
|
|
|
295,328
|
|
Other
long-term liabilities and deferred credits
|
|
|
8,477
|
|
|
9,125
|
|
Deferred
income taxes
|
|
|
31,713
|
|
|
26,763
|
|
Total
liabilities
|
|
|
455,753
|
|
|
427,959
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interest in consolidated subsidiary (Note 4)
|
|
|
11,547
|
|
|
14,192
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
|
Common
stock
|
|
|
40
|
|
|
39
|
|
Additional
paid-in capital
|
|
|
269,720
|
|
|
267,817
|
|
Retained
deficit
|
|
|
(60,371
|
)
|
|
(60,118
|
)
|
Treasury
stock, at cost
|
|
|
(3,023
|
)
|
|
(2,633
|
)
|
Total
stockholders’ equity
|
|
|
206,366
|
|
|
205,105
|
|
Total
liabilities and stockholders’ equity
|
|
$ |
673,666
|
|
$ |
647,256
|
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in
thousands, except per share amounts)
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Sales
|
|
$ |
212,819
|
|
$ |
238,085
|
|
$ |
580,973
|
|
$ |
605,087
|
|
Cost
of goods sold before depreciation, depletion and
amortization
|
|
|
176,324
|
|
|
192,500
|
|
|
488,025
|
|
|
497,515
|
|
Selling,
general and administrative expenses
|
|
|
19,322
|
|
|
17,164
|
|
|
55,095
|
|
|
49,783
|
|
Depreciation,
depletion and amortization
|
|
|
7,850
|
|
|
7,547
|
|
|
21,763
|
|
|
21,489
|
|
Income
from operations
|
|
|
9,323
|
|
|
20,874
|
|
|
16,090
|
|
|
36,300
|
|
Interest
expense, net
|
|
|
6,747
|
|
|
7,036
|
|
|
20,121
|
|
|
21,091
|
|
Other
income, net
|
|
|
578
|
|
|
566
|
|
|
1,628
|
|
|
2,950
|
|
Income
(loss) before income taxes and minority interest
|
|
|
3,154
|
|
|
14,404
|
|
|
(2,403
|
)
|
|
18,159
|
|
Income
tax provision
|
|
|
1,248
|
|
|
4,563
|
|
|
346
|
|
|
6,139
|
|
Minority
interest in consolidated subsidiary
|
|
|
184
|
|
|
(287
|
)
|
|
(2,645
|
)
|
|
72
|
|
Income
(loss) from continuing operations
|
|
|
1,722
|
|
|
10,128
|
|
|
(104
|
)
|
|
11,948
|
|
Loss
from discontinued operations (net of tax benefit of $0 and $81 in
2008,
and $54 and $537 in 2007)
|
|
|
—
|
|
|
(84
|
)
|
|
(149
|
)
|
|
(809
|
)
|
Net
income (loss)
|
|
$ |
1,722
|
|
$ |
10,044
|
|
$ |
(253
|
)
|
$ |
11,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share – Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$ |
0.04
|
|
$ |
0.26
|
|
$ |
—
|
|
$ |
0.31
|
|
Loss
from discontinued operations, net of income tax benefit
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
Net
income
|
|
$ |
0.04
|
|
$ |
0.26
|
|
$ |
—
|
|
$ |
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share – Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
$ |
0.04
|
|
$ |
0.26
|
|
$ |
—
|
|
$ |
0.31
|
|
Loss
from discontinued operations, net of income tax benefit
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
Net
income
|
|
$ |
0.04
|
|
$ |
0.26
|
|
$ |
—
|
|
$ |
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of shares used in calculating earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
38,808
|
|
|
38,341
|
|
|
38,702
|
|
|
38,186
|
|
Diluted
|
|
|
39,389
|
|
|
39,004
|
|
|
38,702
|
|
|
38,894
|
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
U.S.
CONCRETE, INC.
CONDENSED
CONSOLIDATED STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(in
thousands)
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Common Stock
|
|
Paid-In
|
|
Retained
|
|
Treasury
|
|
Stockholders’
|
|
|
|
Shares
|
|
Par Value
|
|
Capital
|
|
Deficit
|
|
Stock
|
|
Equity
|
|
BALANCE,
December 31, 2007
|
|
|
39,361
|
|
$
|
39
|
|
$
|
267,817
|
|
$
|
(60,118
|
)
|
$
|
(2,633
|
)
|
$
|
205,105
|
|
Employee
purchase of ESPP shares
|
|
|
93
|
|
|
—
|
|
|
376
|
|
|
—
|
|
|
—
|
|
|
376
|
|
Stock-based
compensation
|
|
|
560
|
|
|
1
|
|
|
2,230
|
|
|
—
|
|
|
—
|
|
|
2,231
|
|
Purchase
of treasury shares
|
|
|
(106
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(390
|
)
|
|
(390
|
)
|
Cancellation
of shares
|
|
|
(207
|
)
|
|
—
|
|
|
(703
|
)
|
|
—
|
|
|
—
|
|
|
(703
|
)
|
Net
loss
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(253
|
)
|
|
—
|
|
|
(253
|
)
|
BALANCE,
September 30, 2008
|
|
|
39,701
|
|
$
|
40
|
|
$
|
269,720
|
|
$
|
(60,371
|
)
|
$
|
(3,023
|
)
|
$
|
206,366
|
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
U.S.
CONCRETE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in
thousands)
|
|
Nine
Months
Ended
September 30,
|
|
|
|
2008
|
|
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(253
|
)
|
$
|
11,139
|
|
Adjustments
to reconcile net income (loss) to net cash provided by
operations:
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
21,763
|
|
|
23,186
|
|
Debt
issuance cost amortization
|
|
|
1,250
|
|
|
1,151
|
|
Net
(gain) loss on sale of property, plant and equipment
|
|
|
(892
|
)
|
|
49
|
|
Deferred
income taxes
|
|
|
(402
|
)
|
|
3,669
|
|
Provision
for doubtful accounts
|
|
|
996
|
|
|
1,716
|
|
Stock-based
compensation
|
|
|
2,231
|
|
|
2,116
|
|
Excess
tax benefits from stock-based compensation
|
|
|
—
|
|
|
(22
|
)
|
Minority
interest in consolidated subsidiary
|
|
|
(2,645
|
)
|
|
72
|
|
Changes
in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
Trade
accounts receivable, net
|
|
|
(22,138
|
)
|
|
(34,157
|
)
|
Inventories,
net
|
|
|
(3,431
|
)
|
|
1,835
|
|
Prepaid
expenses and other current assets
|
|
|
1,540
|
|
|
(3,196
|
)
|
Other
assets, net
|
|
|
126
|
|
|
(70
|
)
|
Accounts
payable and accrued liabilities
|
|
|
21,369
|
|
|
9,991
|
|
Net
cash provided by operations
|
|
|
19,514
|
|
|
17,479
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Property,
plant and equipment, net of disposals of $3,350 and $2,174
|
|
|
(16,846
|
)
|
|
(17,113
|
)
|
Disposal
of business unit
|
|
|
7,583
|
|
|
—
|
|
Payments
for acquisitions, net of cash received of $1,000 in 2007
|
|
|
(21,778
|
)
|
|
(8,265
|
)
|
Other
investing activities
|
|
|
103
|
|
|
(227
|
)
|
Net
cash used in investing activities
|
|
|
(30,938
|
)
|
|
(25,605
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds
from borrowings
|
|
|
6,282
|
|
|
13,122
|
|
Repayments
of capital leases and notes payable
|
|
|
(4,924
|
)
|
|
(7,829
|
)
|
Proceeds
from issuances of common stock under compensation plans
|
|
|
376
|
|
|
1,471
|
|
Excess
tax benefits from stock-based compensation
|
|
|
—
|
|
|
22
|
|
Shares
purchased under common stock buyback program
|
|
|
(703
|
)
|
|
—
|
|
Purchase
of treasury shares
|
|
|
(390
|
)
|
|
(715
|
)
|
Other
financing activities
|
|
|
(160
|
)
|
|
(217
|
)
|
Net
cash provided by financing activities
|
|
|
481
|
|
|
5,854
|
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(10,943
|
)
|
|
(2,272
|
)
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
14,850
|
|
|
8,804
|
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
3,907
|
|
$
|
6,532
|
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.
BASIS OF PRESENTATION
The
accompanying condensed consolidated financial statements include the accounts
of
U.S. Concrete, Inc. and its subsidiaries and have been prepared by us, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the “SEC”). We include in our condensed consolidated financial
statements, the results of operations, balance sheets and cash flows of our
60%-owned Michigan subsidiary. We reflect the minority owner’s 40% interest in
results of operations, net assets and cash flows of our Michigan subsidiary
as
minority interest in consolidated subsidiary in our condensed consolidated
financial statements. Some information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the SEC’s rules
and regulations, although our management believes that the disclosures made
are
adequate to make the information presented not misleading. These unaudited
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes in our annual report
on
Form 10-K for the year ended December 31, 2007 (the “2007 Form 10-K”). In the
opinion of our management, all adjustments necessary to state fairly the
information in our unaudited condensed consolidated financial statements have
been included. Operating results for the three- and nine-month periods ended
September 30, 2008 are not necessarily indicative of our results expected for
the year ending December 31, 2008.
The
preparation of financial statements and accompanying notes in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions in determining the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
as
of the date of the financial statements and the reported amounts of revenues
and
expenses during the reporting period. Actual results could differ from those
estimates.
2.
SIGNIFICANT ACCOUNTING POLICIES
For
a
description of our accounting policies, see Note 1 of the consolidated financial
statements in the 2007 Form 10-K, as well as Note 13 below.
3. DISCONTINUED
OPERATIONS
In
the
fourth quarter of 2007, we entered into definitive agreements to dispose of
three of our ready-mixed concrete business units. In November 2007, we sold
our
Knoxville, Tennessee and Wyoming, Delaware business units. The sale of the
third
unit, headquartered in Memphis, Tennessee, occurred on January 31, 2008. All
three units were part of our ready-mixed concrete and concrete-related products
segment. We classified all three business units sold as discontinued operations
beginning in the fourth quarter of 2007 and presented the results of operations,
net of tax, as discontinued operations in the accompanying condensed
consolidated statements of operations for all periods presented. The results
of
discontinued operations included in the accompanying condensed consolidated
statements of operations were as follows for the three and nine months ended
September 30 (in thousands):
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Sales
|
|
$
|
—
|
|
$
|
12,205
|
|
$
|
671
|
|
$
|
37,825
|
|
Operating
expenses
|
|
|
—
|
|
|
12,343
|
|
|
1,395
|
|
|
39,171
|
|
Gain
on disposal of assets
|
|
|
—
|
|
|
—
|
|
|
494
|
|
|
—
|
|
Loss
from discontinued operations, before income tax benefit
|
|
|
—
|
|
|
(138
|
)
|
|
(230
|
)
|
|
(1,346
|
)
|
Income
tax benefits from discontinued operations
|
|
|
—
|
|
|
(54
|
)
|
|
(81
|
)
|
|
(537
|
)
|
Loss
from discontinued operations, net of tax
|
|
$
|
—
|
|
$
|
(84
|
)
|
$
|
(149
|
)
|
$
|
(809
|
)
|
The
following table summarizes the carrying amount as of December 31, 2007 of the
major classes of assets of the Memphis, Tennessee business unit we classified
as
held for sale (in thousands):
|
|
December 31, 2007
|
|
Assets
held for sale:
|
|
|
|
Inventories,
net
|
|
$
|
401
|
|
Property,
plant and equipment, net
|
|
|
6,872
|
|
Total
assets held for sale
|
|
$
|
7,273
|
|
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. BUSINESS
COMBINATIONS
In
August
2008, we acquired a ready-mixed concrete operation in Mount Vernon, New York
and
a precast concrete operation in San Diego, California. We used cash on hand
to
fund the purchase prices of $1.9 million and $2.5 million,
respectively.
In
June
2008, we acquired nine ready-mixed concrete plants, together with related real
property, rolling stock and working capital, in our west Texas market from
another ready-mixed concrete producer for approximately $13.5 million. We used
cash on hand and borrowings under our existing credit facility to fund the
purchase price.
In
May
2008, we paid $1.4 million of contingent purchase consideration related to
real
estate acquired pursuant to the acquisition of Builders’ Redi-Mix, Inc. in
January 2003.
In
January 2008, we acquired a ready-mixed concrete operation in Staten Island,
New
York. We used cash on hand to fund the purchase price of approximately $1.8
million.
In
October 2007, we completed the acquisition of the operating assets, including
working capital and real property of Architectural Precast, LLC (“API”), a
leading designer and manufacturer of premium quality architectural and
structural precast concrete products serving the Atlantic region. We used
borrowings under our revolving credit facility to fund the cash purchase price
of approximately $14.5 million. The purchase agreement provides for up to $1.5
million in additional purchase consideration, which is contingent on API
attaining established earnings targets in each of 2008 and 2009. For the quarter
ended September 30, 2008, API attained 50% of its established earnings target,
and we expect to pay out $750,000 in the first quarter of 2009.
In
April
2007, several of our subsidiaries entered into agreements with the Edw. C.
Levy
Co. (“Levy”) relating to the formation of a ready-mixed concrete company that
operates in Michigan. We contributed our Michigan ready-mixed concrete and
concrete-related products assets, excluding our quarry assets and working
capital, in exchange for an aggregate 60% ownership interest, and Levy
contributed all of its ready-mixed concrete and concrete-related products
assets, a cement terminal and cash of $1.0 million for a 40% ownership interest
in the new company. Under the contribution agreement, the subsidiary also
purchased at closing the then carrying amount of Levy’s inventory and prepaid
assets, totaling approximately $3.0 million, which is classified as cash used
in
investing activities. For financial reporting purposes, we include Superior
Materials Holdings, LLC in our consolidated accounts.
Superior
Materials Holdings, LLC has a separate credit agreement which provides for
a
revolving credit facility, under which borrowings of up to $17.5 million may
become available depending on its borrowing base, as defined in the credit
agreement (see Note 7).
In
other
business acquisitions during the periods presented, we acquired two ready-mixed
concrete plants, including real property and raw material inventories, in our
west Texas market for approximately $3.6 million in June 2007.
5.
INVENTORIES
Inventories
consist of the following (in thousands):
|
|
September 30,
|
|
December 31,
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
Raw
materials
|
|
$
|
19,707
|
|
$
|
17,374
|
|
Precast
products
|
|
|
8,767
|
|
|
7,495
|
|
Building
materials for resale
|
|
|
3,264
|
|
|
3,520
|
|
Repair
parts
|
|
|
4,692
|
|
|
4,168
|
|
|
|
$
|
36,430
|
|
$
|
32,557
|
|
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6.
GOODWILL
The
change in the carrying amount of goodwill from December 31, 2007 to September
30, 2008 was as follows (in thousands):
|
|
Ready-Mixed
Concrete and
Concrete-Related
Products
|
|
Precast Concrete
Products
|
|
Total
|
|
Balance
at December 31, 2007
|
|
$
|
148,116
|
|
$
|
36,883
|
|
$
|
184,999
|
|
Acquisitions
|
|
|
7,451
|
|
|
—
|
|
|
7,451
|
|
Additional
purchase consideration
|
|
|
—
|
|
|
750
|
|
|
750
|
|
Adjustments
|
|
|
(223
|
)
|
|
(1,612
|
)
|
|
(1,835
|
)
|
Balance
at September 30, 2008
|
|
$
|
155,344
|
|
$
|
36,021
|
|
$
|
191,365
|
|
The
adjustments made in the nine months ended September 30, 2008 relate to the
purchase price allocation in connection with our recent business acquisitions
and certain reclassifications to other tangible property as of the acquisition
date (see Note 4).
7.
DEBT
A
summary
of debt is as follows (in thousands):
|
|
September 30,
|
|
December 31,
|
|
|
|
2008
|
|
2007
|
|
Senior
secured credit facility due 2011
|
|
$
|
3,500
|
|
$
|
—
|
|
8⅜%
senior subordinated notes due 2014
|
|
|
283,951
|
|
|
283,807
|
|
Notes
payable
|
|
|
5,813
|
|
|
6,114
|
|
Superior
Materials Holdings, LLC secured credit facility due 2010
|
|
|
6,081
|
|
|
7,816
|
|
Capital
leases
|
|
|
513
|
|
|
763
|
|
|
|
|
299,858
|
|
|
298,500
|
|
Less:
current maturities
|
|
|
3,868
|
|
|
3,172
|
|
|
|
$
|
295,990
|
|
$
|
295,328
|
|
Senior
Secured Credit Facility
On
June
30, 2006, we entered into a credit agreement (the “Credit Agreement”),
which amended and restated our senior secured credit agreement dated as of
March
12, 2004. The Credit Agreement, as amended to date, provides for a $150 million
revolving credit facility, with borrowings limited based on a portion of the
net
amounts of eligible accounts receivable, inventory and mixer trucks. The
facility is scheduled to mature in March 2011. At September 30, 2008,
outstanding borrowings were $3.5 million under this facility. Borrowings under
the facility have an annual interest rate at our option of either the
Eurodollar-based rate (“LIBOR”) plus 1.75% or the domestic rate which was 5.00%
plus 0.25%. Commitment fees at an annual rate of 0.25% are payable on the unused
portion of the facility. The Credit Agreement provides that the administrative
agent may, on the bases specified, reduce the amount of the available credit
from time to time. At September 30, 2008, the amount of the available credit
was
approximately $96.7 million, net of outstanding letters of credit of
approximately $13.0 million.
Our
subsidiaries, excluding our 60%-owned Michigan subsidiary and minor subsidiaries
without operations or material assets, have guaranteed the repayment of all
amounts owing under the Credit Agreement. In addition, we collateralized our
obligations under the Credit Agreement with the capital stock of our
subsidiaries, excluding our 60%-owned Michigan subsidiary and minor subsidiaries
without operations or material assets, and substantially all the assets of
those
subsidiaries, excluding most of the assets of the aggregates quarry in northern
New Jersey, other real estate owned by us or our subsidiaries, and the assets
of
our 60%-owned Michigan subsidiary. The Credit Agreement contains covenants
restricting, among other things, prepayment or redemption of subordinated notes,
distributions, dividends and repurchases of capital stock and other equity
interests, acquisitions and investments, mergers, asset sales other than in
the
ordinary course of business, indebtedness, liens, changes in business, changes
to charter documents and affiliate transactions. It also limits capital
expenditures (excluding permitted acquisitions) to the greater of $45 million
or
5% of consolidated revenues in the prior 12 months and will require us to
maintain a minimum fixed-charge coverage ratio of 1.0 to 1.0 on a rolling
12-month basis if the available credit under the facility falls below $25
million. The Credit Agreement provides that specified change-of-control events
would constitute events of default. As of September 30, 2008, we were in
compliance with our financial covenants under the credit
agreement.
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Senior
Subordinated Notes
On
March
31, 2004, we issued $200 million principal amount of 8⅜% senior subordinated
notes due April 1, 2014. Interest on these notes is payable semi-annually on
April 1 and October 1 of each year. We used the net proceeds of this financing
to redeem our prior 12% senior subordinated notes and prepay the outstanding
debt under our credit facility. In July 2006, we issued $85 million principal
amount of additional 8⅜% senior subordinated notes.
All
of
our subsidiaries, excluding our 60%-owned Michigan
subsidiary and minor subsidiaries, have jointly and severally and fully and
unconditionally guaranteed the repayment of the 8⅜% senior subordinated
notes.
The
indenture governing the notes limits our ability and the ability of our
subsidiaries to pay dividends or repurchase common stock, make certain
investments, incur additional debt or sell preferred stock, create liens, merge
or transfer assets. After March 31, 2009, we may redeem all or a part of the
notes at a redemption price of 104.188% in 2009, 102.792% in 2010, 101.396%
in
2011 and 100% in 2012 and thereafter. The indenture requires us to offer to
repurchase (1) an aggregate principal amount of the subordinated notes equal
to
the proceeds of certain asset sales that are not reinvested in the business
or
used to pay senior debt, and (2) all the notes following the occurrence of
a
change of control. The Credit Agreement limits these repurchases.
As
a
result of restrictions contained in the indenture relating to the 8⅜% senior
subordinated notes, our ability to incur additional debt is primarily limited
to
the greater of (1) borrowings available under the Credit Agreement, plus the
greater of $15 million or 7.5% of our tangible assets, or (2) additional debt
if, after giving effect to the incurrence of such additional debt, our earnings
before interest, taxes, depreciation, amortization and certain noncash items
equal or exceed two times our total interest expense.
Superior
Materials Holdings, LLC Credit Facility
Superior
Materials Holdings, LLC has a separate credit agreement that provides for a
revolving credit facility. The credit agreement was amended in August 2008
and
currently allows for borrowings of up to $17.5 million. Borrowings under
this credit facility are collateralized by substantially all the assets of
Superior Materials Holdings, LLC and are scheduled to mature on April 1,
2010. Availability of borrowings is subject to a borrowing base that is
determined based on the values of net receivables, certain inventories, certain
rolling stock and letters of credit. The
credit agreement provides that the lender may, on the bases specified, reduce
the amount of the available credit from time to time. As of September 30,
2008, there was $6.1 million in outstanding borrowings under the revolving
credit facility, and the remaining amount of the available credit was
approximately $9.6 million. Letters of credit outstanding at September 30,
2008
were $1.8 million.
Currently,
borrowings have an annual interest rate at Superior Materials Holdings, LLC's
option of either, LIBOR plus 4.25% or prime rate plus 2.00%. Commitment fees
at
an annual rate of 25 basis points are payable on the unused portion of the
facility.
The
credit agreement contains covenants restricting, among other things, Superior
Materials Holdings, LLC’s distributions, dividends and repurchases of capital
stock and other equity interests, acquisitions and investments, mergers, asset
sales other than in the ordinary course of business, indebtedness, liens,
changes in business, changes to charter documents and affiliate
transactions. It also generally limits Superior Materials Holdings, LLC’s
capital expenditures and requires the subsidiary to maintain compliance with
specified financial covenants, including an affirmative covenant which requires
earnings before income taxes, interest and depreciation (“EBITDA”) to meet
certain minimum thresholds quarterly. As of September 30, 2008, Superior
Materials Holdings, LLC was in compliance with its financial covenants under
the
credit agreement.
U.S.
Concrete and its 100%-owned subsidiaries are not obligors under the terms of
the
Superior Materials Holdings, LLC credit agreement. However, in connection with
the recent amendment of the revolving credit facility, Superior Materials
Holdings, LLC’s credit agreement provides that an event of default beyond a
30-day grace period under either U.S. Concrete’s or Edw. C. Levy’s credit
agreement would constitute an event of default. Furthermore, U.S. Concrete
agreed to provide or obtain additional equity or subordinated debt capital
not
to exceed $6.75 million through the term of the revolving credit facility to
fund any future cash flow deficits, as defined, of Superior Materials Holdings,
LLC. No additional capital contribution was required under that agreement for
the period ended September 30, 2008.
8.
INCOME TAXES
For
the
nine months ended September 30, our income tax payments were approximately
$0.5
million in 2008 and $2.7 million in 2007.
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In
accordance with applicable generally accepted accounting principles, we estimate
the effective tax rate expected to be applicable for the full year. We use
this
estimate in providing for income taxes on a year-to-date basis, and it may
change in subsequent interim periods. Our effective tax rate for the nine months
ended September 30, 2008 was approximately (14.4%), compared to 33.8% for the
nine months ended September 30, 2007. Income tax expense for the 2008 period was
due primarily to $0.3 million for interest and penalties related to previously
recorded tax liabilities for uncertain tax positions. The impact on the
effective tax rate related to minority interest is a result of the consolidation
of our Michigan ready-mixed concrete joint ventures which are not subject to
federal income taxes on a stand-alone basis. In the 2007 period, the effective
income tax rate was higher than the federal statutory rate, due primarily to
state
income taxes
and an
additional $0.2 million for interest and penalties related to previously
recorded tax liabilities for uncertain tax positions. We do not anticipate
any
significant increase or decrease to the unrecognized tax benefits within the
next twelve months.
9.
STOCKHOLDERS’ EQUITY
Common
Stock and Preferred Stock
The
following table presents information regarding U.S. Concrete’s common stock (in
thousands):
|
|
September 30, 2008
|
|
December 31, 2007
|
|
Shares
authorized
|
|
|
60,000
|
|
|
60,000
|
|
Shares
outstanding at end of period
|
|
|
39,701
|
|
|
39,361
|
|
Shares
held in treasury
|
|
|
421
|
|
|
315
|
|
Under
our
restated certificate of incorporation, we are authorized to issue 10,000,000
shares of preferred stock, $0.001 par value, none of which were issued or
outstanding as of September 30, 2008 and December 31, 2007.
Restricted
Stock
During
the nine months ended September 30, 2008, approximately 36,000 shares of
restricted stock were cancelled.
Treasury
Stock
Employees
may elect to satisfy their tax obligations on the vesting of their restricted
stock by having us make the required tax payments and withhold a number of
vested shares having an aggregate value on the date of vesting equal to the
tax
obligation. As a result of such employee elections, we withheld approximately
106,000 shares during the nine months ended September 30, 2008, at a total
value
of $0.4 million, and we accounted for those shares as treasury
stock.
Share
Repurchase Plan
On
January 7, 2008, our Board of Directors approved a plan to repurchase up to
an
aggregate of three million shares of our common stock. The plan permitted the
stock repurchases to be made on the open market or in privately negotiated
transactions in compliance with applicable securities and other laws. As of
September 30, 2008, we had repurchased and subsequently cancelled 171,463 shares
with an aggregate value of $0.7 million under the repurchase plan. In October
2008, we modified our repurchase program and purchased 2,976,942 shares at
a
cost of $5.9 million and completed the repurchase program.
10.
SHARES USED IN COMPUTING NET INCOME PER SHARE
The
following table summarizes the number of shares (in thousands) of common stock
U.S. Concrete has used, on a weighted-average basis, in calculating basic and
diluted net income per share:
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Basic
weighted average common shares outstanding
|
|
|
38,808
|
|
|
38,341
|
|
|
38,702
|
|
|
38,186
|
|
Effect
of dilutive stock options and awards
|
|
|
581
|
|
|
663
|
|
|
—
|
|
|
708
|
|
Diluted
weighted average common shares outstanding
|
|
|
39,389
|
|
|
39,004
|
|
|
38,702
|
|
|
38,894
|
|
For
the
three month period ended September 30, stock options and awards covering 2.0
million shares in 2008 and 2.7 million shares in 2007 were excluded from the
computation of the net income (loss) per share because their effect would have
been antidilutive. For the nine month period ended September 30, stock options
and awards covering 1.8 million shares in 2007 were exchanged from the
computation of the net income (loss) per share because their effect would have
been antidilutive.
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.
COMMITMENTS AND CONTINGENCIES
From
time
to time, and currently, we are subject to various claims and litigation brought
by employees, customers and other third parties for, among other matters,
personal injuries, property damages, product defects and delay damages that
have, or allegedly have, resulted from the conduct of our operations. As a
result of these types of claims and litigation, we must periodically evaluate
the probability of damages being assessed against us and the range of possible
outcomes. In the period, if we determine that the likelihood of damages being
assessed against us is probable, and, if we believe we can estimate a range
of
possible outcomes, then we record a liability reflecting either the low end
of
our range or a specific estimate, if we believe a specific estimate to be likely
based on current information. During the year ended December 31, 2007, we
recorded a $2.3 million liability associated with certain ongoing litigation.
Based on information available to us as of September 30, 2008, we believe our
existing accruals for these matters are reasonable.
Currently,
there are no material product defects claims pending against us. Accordingly,
our existing accruals for claims against us do not reflect any material amounts
relating to products defects claims. While our management is not aware of any
facts that would reasonably be expected to lead to material product defects
claims against us that would have a material adverse effect on our business,
financial condition or results of operations, it is possible that claims could
be asserted against us in the future. We do not maintain insurance that would
cover all damages resulting from product defects claims. In particular, we
generally do not maintain insurance coverage for the cost of removing and
rebuilding structures, or so-called “rip and tear” coverage. In addition, our
indemnification arrangements with contractors or others, when obtained,
generally provide only limited protection against product defects claims. Due
to
inherent uncertainties associated with estimating unasserted claims in our
business, we cannot estimate the amount of any future loss that may be
attributable to unasserted product defects claims related to ready-mixed
concrete we have delivered prior to December 31, 2007.
We
received a letter from a multi-employer pension plan to which one of our
subsidiaries is a contributing employer, providing notice that the Internal
Revenue Service had denied applications by the plan for waivers of the minimum
funding deficiency from prior years, and requesting payment of approximately
$1.3 million in May 2008 as our allocable share of the minimum funding
deficiencies. We are currently evaluating several options to minimize our
exposure, including transferring our assets and liabilities into another plan.
We may receive future funding deficiency demands from this particular
multi-employer pension plan, or other multi-employer plans to which we
contribute. We are unable to estimate the amount of any potential future funding
deficiency demands because the actions of each of the other contributing
employers in the plans has an effect on each of the other contributing
employers, the development of a rehabilitation plan by the trustees, and
subsequent submittal to and approval by the Internal Revenue Service is not
predictable, and the allocation of fund assets and return assumptions by
trustees are variable, as are actual investment returns relative to the plan
assumptions.
We
believe that the resolution of all litigation currently pending or threatened
against us or any of our subsidiaries will not
materially exceed our existing accruals for those matters. However,
because
of the inherent uncertainty of litigation, there
is
a risk that we may have to increase our accruals
for one or more claims or proceedings
to which
we or any of our subsidiaries is a party as
more
information becomes available or proceedings progress, and any such increase
in
accruals could have a material adverse effect on our consolidated financial
condition or results of
operations.
We
expect in the future that we and our operating subsidiaries will from time
to
time be a party to litigation or administrative proceedings that arise in the
normal course of our business.
We
are
subject to federal, state and local environmental laws and regulations
concerning, among other matters, air emissions and wastewater discharge. Our
management believes we are in substantial compliance with applicable
environmental laws and regulations. From time to time, we receive claims from
federal and state environmental regulatory agencies and entities asserting
that
we may be in violation of environmental laws and regulations. Based on
experience and the information currently available, our management believes
that
the possibility that these claims could materially exceed our accrual is remote.
Despite compliance and experience, it is possible that we could be held liable
for future charges, which might be material, but are not currently known to
us
or cannot be estimated by us. In addition, changes in federal or state laws,
regulations or requirements, or discovery of currently unknown conditions,
could
require additional expenditures.
As
permitted under Delaware law, we have agreements that provide indemnification
of
officers and directors for certain events or occurrences while the officer
or
director is or was serving at our request in such capacity. The maximum
potential amount of future payments that we could be required to make under
these indemnification agreements is not limited; however, we have a director
and
officer insurance policy that potentially limits our exposure and enables us
to
recover a portion of future amounts that may be paid. As a result of the
insurance policy coverage, we believe the estimated fair value of these
indemnification agreements is minimal. Accordingly, we have not recorded any
liabilities for these agreements as of September 30, 2008.
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We
and
our subsidiaries are parties to agreements that require us to provide
indemnification in certain instances when we acquire or divest businesses and
real estate and in the ordinary course of business with our customers,
suppliers, lessors and service providers.
Insurance
Programs
We
maintain third-party insurance coverage in amounts and against the risks we
believe are reasonable. Under certain components of our insurance program,
we
share the risk of loss with our insurance underwriters by maintaining high
deductibles subject to aggregate annual loss limitations. Generally, we believe
our deductible retentions per occurrence for auto, general liability and
workers’ compensation insurance programs are consistent with industry practices.
Generally, our deductible retentions per occurrence for auto, workers’
compensation and general liability insurance programs are $1.0 million, although
certain of our operations are self-insured for workers’ compensation. We fund
these deductibles and record an expense for expected losses under the programs.
The expected losses are determined using a combination of our historical loss
experience and subjective assessments of our future loss exposure. The estimated
losses are subject to uncertainty from various sources, including changes in
claims reporting patterns, claims settlement patterns, judicial decisions,
legislation and economic conditions. Although we believe that the estimated
losses we have recorded are reasonable, significant differences related to
the
items noted above could materially affect our insurance obligations and future
expense.
In
March
2007, we settled a lawsuit with a third-party claims administrator responsible
for handling workers’ compensation claims related to 2002 and 2003. The
settlement relieves us of any future responsibility relating to certain workers’
compensation claims and required the payment of $225,000 in cash to us by the
third-party administrator. As a result, we recorded additional income of
approximately $1.4 million resulting from the reversal of accrued liabilities
relating to workers’ compensation claims associated with 2002 and 2003 and the
cash settlement amount. The additional income is reported in our financial
statements primarily as an offset to cost of sales in 2007.
Performance
Bonds
In
the
normal course of business, we and our subsidiaries are contingently liable
for
performance under $37.4 million in performance bonds that various contractors,
states and municipalities have required. The bonds principally relate to
construction contracts, reclamation obligations and mining permits. We and
our
subsidiaries have indemnified the underwriting insurance company against any
exposure under the performance bonds. No material claims have been made against
these bonds.
12.
SEGMENT INFORMATION
Our
ready-mixed concrete and concrete-related products segment produces and sells
ready-mixed concrete, aggregates (crushed stone, sand and gravel), concrete
masonry and building materials. This segment serves the following
principal markets: north and west Texas, northern California, New Jersey, New
York, Washington, D.C., and Michigan. Our precast concrete products
segment produces and sells precast concrete products in select markets in the
western United States and the mid-Atlantic region.
We
account for inter-segment sales at market prices. Segment operating profit
consists of net sales less operating expense, including certain operating
overhead directly related to the operation of the specific segment.
Corporate includes administrative, financial, legal, human resources and risk
management activities which are not allocated to operations and are excluded
from segment operating profit.
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The
following table sets forth certain financial information relating to our
continuing operations by reportable segment (in thousands):
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
Ready-mixed
concrete and concrete-related products
|
|
$
|
198,434
|
|
$
|
223,523
|
|
$
|
540,224
|
|
$
|
561,627
|
|
Precast
concrete products
|
|
|
19,231
|
|
|
18,548
|
|
|
53,145
|
|
|
54,492
|
|
Inter-segment
sales
|
|
|
(4,846
|
)
|
|
(3,986
|
)
|
|
(12,396
|
)
|
|
(11,032
|
)
|
Total
sales
|
|
$
|
212,819
|
|
$
|
238,085
|
|
$
|
580,973
|
|
$
|
605,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Operating Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ready-mixed
concrete and concrete-related products
|
|
$
|
13,053
|
|
$
|
21,302
|
|
$
|
24,824
|
|
$
|
36,415
|
|
Precast
concrete products
|
|
|
1,762
|
|
|
2,108
|
|
|
5,277
|
|
|
6,259
|
|
Unallocated
overhead and other income
|
|
|
1,347
|
|
|
1,241
|
|
|
4,042
|
|
|
7,348
|
|
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
|
6,261
|
|
|
3,211
|
|
|
16,425
|
|
|
10,772
|
|
Interest
expense, net
|
|
|
6,747
|
|
|
7,036
|
|
|
20,121
|
|
|
21,091
|
|
Income
(loss) before income taxes and minority interest
|
|
$
|
3,154
|
|
$
|
14,404
|
|
$
|
(2,403
|
)
|
$
|
18,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation,
Depletion and Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ready-mixed
concrete and concrete-related products
|
|
$
|
6,907
|
|
$
|
6,928
|
|
$
|
19,518
|
|
$
|
19,797
|
|
Precast
concrete products
|
|
|
827
|
|
|
519
|
|
|
1,8851,885
|
|
|
1,396
|
|
Corporate
|
|
|
116
|
|
|
100
|
|
|
360
|
|
|
296
|
|
Total
depreciation, depletion and amortization
|
|
$
|
7,850
|
|
$
|
7,547
|
|
$
|
21,763
|
|
$
|
21,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
by Product:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ready-mixed
concrete
|
|
$
|
174,643
|
|
$
|
198,881
|
|
$
|
476,584
|
|
$
|
497,832
|
|
Precast
concrete products
|
|
|
19,231
|
|
|
18,547
|
|
|
53,145
|
|
|
54,492
|
|
Aggregates
|
|
|
8,050
|
|
|
8,445
|
|
|
19,455
|
|
|
19,961
|
|
Building
materials
|
|
|
4,828
|
|
|
5,575
|
|
|
13,359
|
|
|
15,168
|
|
Other
|
|
|
6,067
|
|
|
6,638
|
|
|
18,430
|
|
|
17,634
|
|
Total
sales
|
|
$
|
212,819
|
|
$
|
238,086
|
|
$
|
580,973
|
|
$
|
605,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ready-mixed
concrete and concrete-related products
|
|
$
|
7,360
|
|
$
|
2,702
|
|
$
|
18,278
|
|
$
|
14,336
|
|
Precast
concrete products
|
|
|
474
|
|
|
3,262
|
|
|
1,918
|
|
|
4,951
|
|
Total
capital expenditures
|
|
$
|
7,834
|
|
$
|
5,964
|
|
$
|
20,196
|
|
$
|
19,287
|
|
|
|
As of
September 30,
2008
|
|
As of
December 31,
2007
|
|
Identifiable
Assets:
|
|
|
|
|
|
Ready-mixed
concrete and concrete-related products
|
|
$
|
522,940
|
|
$
|
506,999
|
|
Precast
concrete products
|
|
|
90,076
|
|
|
79,557
|
|
Corporate
|
|
|
60,650
|
|
|
60,700
|
|
Total
assets
|
|
$
|
673,666
|
|
$
|
647,256
|
|
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13.
RECENT ACCOUNTING PRONOUNCEMENTS
In
May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles used in
the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles.
SFAS No. 162 directs the GAAP hierarchy to the entity, not the independent
auditors, as the entity is responsible for selecting accounting principles
for
financial statements that are presented in conformity with GAAP. SFAS No.
162 is effective 60 days following the Securities and Exchange Commission
approval of the Public Company Accounting Oversight Board amendments to remove
the GAAP hierarchy from the auditing standards. The Company does not
expect the implementation of SFAS No. 162 to have a material effect on its
consolidated financial condition, results of operations or cash
flows.
In
March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.” The new standard is intended to improve financial
reporting about derivative instruments and hedging activities by requiring
enhanced disclosures to enable investors to better understand their effects
on
an entity’s financial position, financial performance, and cash flows. It is
effective for our first quarter 2009 financial statements, with early
application encouraged. We do not believe the adoption of SFAS No. 161 will
have
a material impact on our consolidated financial position, results of operations
or cash flows.
On
January 1, 2008, we adopted SFAS No. 157, “Fair Value Measurements.” SFAS
No. 157 clarifies the principle that fair value should be based on the
assumptions market participants would use when pricing an asset or liability
and
establishes a fair-value hierarchy that prioritizes the information used to
develop those assumptions. Under SFAS No. 157, fair-value measurements would
be
separately disclosed by level within the fair-value hierarchy. The adoption
did
not have a material effect on our financial statements.
In
February 2008, the FASB issued Staff Position No. 157-2, "Partial Deferral
of the Effective Date of SFAS No. 157," which deferred the effective date
of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities to
fiscal years beginning after November 15, 2008. We have not yet completed
our evaluation of the potential impact of this standard on our nonfinancial
assets and liabilities.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations,” which
replaces SFAS No. 141. SFAS No. 141(R) establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill acquired. SFAS
No. 141(R) also establishes disclosure requirements which will enable users
to
evaluate the nature and financial effects of the business combination. SFAS
No.
141(R) is effective for fiscal years beginning after December 15, 2008. We
have not yet completed our evaluation of the potential impact of this standard
on our financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of Accounting Research Bulletin
No. 51,” which establishes accounting and reporting standards for ownership
interests in subsidiaries held by parties other than the parent, the amount
of
consolidated net income attributable to the parent and to the noncontrolling
interest, changes in a parent’s ownership interest and the valuation of retained
noncontrolling equity investments when a subsidiary is deconsolidated.
SFAS No. 160 also establishes reporting requirements that provide
sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the noncontrolling owners.
SFAS No. 160 is effective for fiscal years beginning after December 15,
2008. We have not completed our evaluation of the potential impact of this
standard.
14.
FINANCIAL STATEMENTS OF SUBSIDIARY GUARANTORS
All
of
our subsidiaries, excluding our Michigan 60%-owned subsidiary, Superior
Materials Holdings, LLC (see Note 4), and minor subsidiaries, have jointly
and
severally and fully and unconditionally guaranteed the repayment of our
long-term debt. We directly or indirectly own 100% of each subsidiary guarantor.
The following supplemental financial information sets forth, on a condensed
consolidating basis, the financial statements for U.S. Concrete, the parent
company, and its subsidiary guarantors (including minor subsidiaries), our
60%-owned Michigan non-guarantor subsidiary and our total company, as of and
for
the three and nine months ended September 30, 2008 and 2007.
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Condensed
Consolidating Balance Sheet
As of September 30, 2008:
|
|
U.S. Concrete
Parent
|
|
Subsidiary
Guarantors
|
|
Superior
Materials
Holdings,
LLC
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in
thousands)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
—
|
|
$
|
3,751
|
|
$
|
156
|
|
$
|
—
|
|
$
|
3,907
|
|
Trade
accounts receivable, net.
|
|
|
—
|
|
|
108,013
|
|
|
17,669
|
|
|
—
|
|
|
125,682
|
|
Inventories,
net
|
|
|
—
|
|
|
31,374
|
|
|
5,056
|
|
|
—
|
|
|
36,430
|
|
Deferred
income taxes
|
|
|
—
|
|
|
16,289
|
|
|
—
|
|
|
—
|
|
|
16,289
|
|
Prepaid
expenses
|
|
|
—
|
|
|
4,723
|
|
|
896
|
|
|
—
|
|
|
5,619
|
|
Other
current assets
|
|
|
11
|
|
|
9,253
|
|
|
115
|
|
|
—
|
|
|
9,379
|
|
Total
current assets
|
|
|
11
|
|
|
173,403
|
|
|
23,892
|
|
|
—
|
|
|
197,306
|
|
Property,
plant and equipment, net
|
|
|
—
|
|
|
243,702
|
|
|
32,091
|
|
|
—
|
|
|
275,793
|
|
Goodwill
|
|
|
—
|
|
|
191,365
|
|
|
—
|
|
|
—
|
|
|
191,365
|
|
Investment
in subsidiaries
|
|
|
509,078
|
|
|
28,871
|
|
|
—
|
|
|
(537,949
|
)
|
|
—
|
|
Other
assets, net
|
|
|
7,214
|
|
|
1,884
|
|
|
104
|
|
|
—
|
|
|
9,202
|
|
Total
assets
|
|
$
|
516,303
|
|
$
|
639,225
|
|
$
|
56,087
|
|
$
|
(537,949
|
)
|
$
|
673,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
maturities of long-term debt
|
|
$
|
809
|
|
$
|
2,703
|
|
$
|
356
|
|
$
|
—
|
|
$
|
3,868
|
|
Accounts
payable
|
|
|
—
|
|
|
39,635
|
|
|
15,604
|
|
|
—
|
|
|
55,239
|
|
Accrued
liabilities
|
|
|
12,696
|
|
|
42,751
|
|
|
5,019
|
|
|
—
|
|
|
60,466
|
|
Total
current liabilities
|
|
|
13,505
|
|
|
85,089
|
|
|
20,979
|
|
|
—
|
|
|
119,573
|
|
Long-term
debt, net of current maturities
|
|
|
288,592
|
|
|
1,161
|
|
|
6,237
|
|
|
—
|
|
|
295,990
|
|
Other
long-term obligations and deferred credits
|
|
|
7,840
|
|
|
637
|
|
|
—
|
|
|
—
|
|
|
8,477
|
|
Deferred
income taxes
|
|
|
—
|
|
|
31,713
|
|
|
—
|
|
|
—
|
|
|
31,713
|
|
Total
liabilities
|
|
$
|
309,937
|
|
|
118,600
|
|
|
27,216
|
|
|
—
|
|
|
455,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interest in consolidated subsidiary
|
|
|
—
|
|
|
11,547
|
|
|
—
|
|
|
—
|
|
|
11,547
|
|
Total
stockholders' equity
|
|
|
206,366
|
|
|
509,078
|
|
|
28,871
|
|
|
(537,949
|
)
|
|
206,366
|
|
Total
liabilities and stockholders' equity
|
|
$
|
516,303
|
|
$
|
639,225
|
|
$
|
56,087
|
|
$
|
(537,949
|
)
|
$
|
673,666
|
|
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Condensed
Consolidating Statements of Operations
Three months ended September 30, 2008:
|
|
U.S. Concrete
Parent
|
|
Subsidiary
Guarantors
|
|
Superior
Materials
Holdings,
LLC
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in
thousands)
|
|
Sales
|
|
$
|
—
|
|
$
|
186,330
|
|
$
|
26,489
|
|
$
|
—
|
|
$
|
212,819
|
|
Cost
of goods sold before depreciation, depletion and
amortization
|
|
|
—
|
|
|
152,997
|
|
|
23,327
|
|
|
—
|
|
|
176,324
|
|
Selling,
general and administrative expenses
|
|
|
—
|
|
|
17,761
|
|
|
1,561
|
|
|
|
|
|
19,322
|
|
Depreciation,
depletion and amortization
|
|
|
—
|
|
|
6,909
|
|
|
941
|
|
|
—
|
|
|
7,850
|
|
Income
from operations
|
|
|
—
|
|
|
8,663
|
|
|
660
|
|
|
—
|
|
|
9,323
|
|
Interest
expense, net
|
|
|
6,572
|
|
|
35
|
|
|
140
|
|
|
—
|
|
|
6,747
|
|
Other
income, net
|
|
|
—
|
|
|
563
|
|
|
15
|
|
|
—
|
|
|
578
|
|
Income
before income tax provision and minority interest
|
|
|
(6,572
|
)
|
|
9,191
|
|
|
535
|
|
|
|
|
|
3,154
|
|
Income
tax provision
|
|
|
(2,300
|
)
|
|
3,473
|
|
|
75
|
|
|
—
|
|
|
1,248
|
|
Equity
earnings subsidiaries
|
|
|
5,994
|
|
|
460
|
|
|
—
|
|
|
(6,454
|
)
|
|
—
|
|
Minority
interest in consolidated subsidiary
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
—
|
|
|
184
|
|
Income
from continuing operations
|
|
|
1,722
|
|
|
5,994
|
|
|
460
|
|
|
(6,454
|
)
|
|
1,722
|
|
Loss
from discontinued operations, net of tax
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net
income
|
|
$
|
1,722
|
|
$
|
5,994
|
|
$
|
460
|
|
$
|
(6,454
|
)
|
$
|
1,722
|
|
Condensed
Consolidating Statements of Operations
Nine months ended September 30, 2008:
|
|
U.S. Concrete
Parent
|
|
Subsidiary
Guarantors
|
|
Superior
Materials
Holdings,
LLC
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in
thousands)
|
|
Sales
|
|
$
|
—
|
|
$
|
527,945
|
|
$
|
53,028
|
|
$
|
—
|
|
$
|
580,973
|
|
Cost
of goods sold before depreciation, depletion and
amortization
|
|
|
—
|
|
|
436,625
|
|
|
51,400
|
|
|
—
|
|
|
488,025
|
|
Selling,
general and administrative expenses
|
|
|
—
|
|
|
50,522
|
|
|
4,573
|
|
|
|
|
|
55,095
|
|
Depreciation,
depletion and amortization
|
|
|
—
|
|
|
18,645
|
|
|
3,118
|
|
|
—
|
|
|
21,763
|
|
Income
(loss) from operations
|
|
|
—
|
|
|
22,153
|
|
|
(6,063
|
)
|
|
|
|
|
16,090
|
|
Interest
expense, net
|
|
|
19,475
|
|
|
210
|
|
|
436
|
|
|
—
|
|
|
20,121
|
|
Other
income, net
|
|
|
—
|
|
|
1,512
|
|
|
116
|
|
|
—
|
|
|
1,628
|
|
Income
(loss) before income tax provision and minority interest
|
|
|
(19,475
|
)
|
|
23,455
|
|
|
(6,383
|
)
|
|
|
|
|
(2,403
|
)
|
Income
tax provision
|
|
|
(6,816
|
)
|
|
6,932
|
|
|
230
|
|
|
—
|
|
|
346
|
|
Equity
earnings in subsidiaries
|
|
|
12,406
|
|
|
(6,613
|
)
|
|
—
|
|
|
|
)
|
|
—
|
|
Minority
interest in consolidated subsidiary
|
|
|
—
|
|
|
(2,645
|
)
|
|
—
|
|
|
—
|
|
|
(2,645
|
)
|
Income
(loss) from continuing operations
|
|
|
(253
|
)
|
|
12,555
|
|
|
(6,613
|
)
|
|
(5,793
|
)
|
|
(104
|
)
|
Loss
from discontinued operations, net of tax
|
|
|
—
|
|
|
(149
|
)
|
|
—
|
|
|
—
|
|
|
(149
|
)
|
Net
income (loss)
|
|
$
|
(253
|
)
|
$
|
12,406
|
|
$
|
(6,613
|
)
|
$
|
(5,793
|
)
|
$
|
(253
|
)
|
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Condensed
Consolidating Statements of Cash Flows
Nine Months ended September 30, 2008:
|
|
U.S. Concrete
Parent
|
|
Subsidiary
Guarantors
|
|
Superior
Materials
Holdings,
LLC
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in thousands)
|
|
Net
cash provided by (used in) operating activities
|
|
$
|
(456
|
) |
$
|
21,290
|
|
$
|
(1,320
|
)
|
$
|
—
|
|
$
|
19,514
|
|
Net
cash (used in) investing activities
|
|
|
(6,652
|
) |
|
(24,043
|
)
|
|
(243
|
)
|
|
—
|
|
|
(30,938
|
)
|
Net
cash provided by (used in) financing activities
|
|
|
7,108
|
|
|
(6,864
|
) |
|
237
|
|
|
—
|
|
|
481
|
|
Net
decrease in cash and cash equivalents
|
|
|
—
|
|
|
(9,617
|
)
|
|
(1,326
|
)
|
|
—
|
|
|
(10,943
|
)
|
Cash
and cash equivalents at the beginning of the period
|
|
|
—
|
|
|
13,368
|
|
|
1,482
|
|
|
—
|
|
|
14,850
|
|
Cash
and cash equivalents at the end of the period
|
|
$
|
—
|
|
$
|
3,751
|
|
$
|
156
|
|
$
|
—
|
|
$
|
3,907
|
|
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Condensed
Consolidating Statements of Operations
Three months ended September 30, 2007:
|
|
U.S. Concrete
Parent
|
|
Subsidiary
Guarantors
|
|
Superior
Materials
Holdings,
LLC
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in
thousands)
|
|
Sales
|
|
$
|
—
|
|
$
|
206,712
|
|
$
|
31,373
|
|
$
|
—
|
|
$
|
238,085
|
|
Cost
of goods sold before depreciation, depletion and
amortization
|
|
|
—
|
|
|
163,903
|
|
|
28,597
|
|
|
—
|
|
|
192,500
|
|
Selling,
general and administrative expenses
|
|
|
—
|
|
|
15,491
|
|
|
1,673
|
|
|
—
|
|
|
17,164
|
|
Depreciation,
depletion and amortization
|
|
|
—
|
|
|
6,119
|
|
|
1,428
|
|
|
—
|
|
|
7,547
|
|
Income
(loss) from operations
|
|
|
—
|
|
|
21,199
|
|
|
(325
|
)
|
|
—
|
|
|
20,874
|
|
Interest
expense, net
|
|
|
6,725
|
|
|
96
|
|
|
215
|
|
|
—
|
|
|
7,036
|
|
Other
income, net
|
|
|
—
|
|
|
539
|
|
|
27
|
|
|
—
|
|
|
566
|
|
Income
(loss) before income tax provision and minority interest
|
|
|
(6,725
|
)
|
|
21,642
|
|
|
(513
|
)
|
|
—
|
|
|
14,404
|
|
Income
tax provision
|
|
|
(2,354
|
)
|
|
6,777
|
|
|
140
|
|
|
—
|
|
|
4,563
|
|
Equity
in earnings of subsidiaries
|
|
|
14,415
|
|
|
(653
|
)
|
|
—
|
|
|
(13,762
|
)
|
|
—
|
|
Minority
interest in consolidated subsidiary
|
|
|
—
|
|
|
(287
|
)
|
|
—
|
|
|
—
|
|
|
(287
|
)
|
Income
(loss) from continuing operations
|
|
|
10,044
|
|
|
14,499
|
|
|
(653
|
)
|
|
(13,762
|
)
|
|
10,128
|
|
Loss
from discontinued operations, net of tax
|
|
|
—
|
|
|
(84
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
Net
income (loss)
|
|
$
|
10,044
|
|
$
|
14,415
|
|
$
|
(653
|
)
|
$
|
(13,762
|
)
|
$
|
10,044
|
|
Condensed
Consolidating Statements of Operations
Nine months ended September 30, 2007:
|
|
U.S. Concrete
Parent
|
|
Subsidiary
Guarantors
|
|
Superior
Materials
Holdings,
LLC
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in thousands)
|
|
Sales
|
|
$
|
—
|
|
$
|
543,129
|
|
$
|
61,958
|
|
$
|
—
|
|
$
|
605,087
|
|
Cost
of goods sold before depreciation, depletion and
amortization
|
|
|
—
|
|
|
441,974
|
|
|
55,542
|
|
|
—
|
|
|
497,515
|
|
Selling,
general and administrative expenses
|
|
|
—
|
|
|
46,507
|
|
|
3,275
|
|
|
—
|
|
|
49,783
|
|
Depreciation,
depletion and amortization
|
|
|
—
|
|
|
18,901
|
|
|
2,588
|
|
|
—
|
|
|
21,489
|
|
Income
from operations
|
|
|
—
|
|
|
35,747
|
|
|
553
|
|
|
—
|
|
|
36,300
|
|
Interest
expense, net
|
|
|
20,462
|
|
|
362
|
|
|
267
|
|
|
—
|
|
|
21,091
|
|
Other
income, net
|
|
|
—
|
|
|
2,915
|
|
|
35
|
|
|
—
|
|
|
2,950
|
|
Income
before income tax provision and minority interest
|
|
|
(20,462
|
)
|
|
38,300
|
|
|
321
|
|
|
—
|
|
|
18,159
|
|
Income
tax provision
|
|
|
(7,162
|
)
|
|
13,161
|
|
|
140
|
|
|
—
|
|
|
6,139
|
|
Equity
in earnings of subsidiaries
|
|
|
24,349
|
|
|
181
|
|
|
—
|
|
|
(24,620
|
)
|
|
—
|
|
Minority
interest in consolidated subsidiary
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
72
|
|
Income
from continuing operations
|
|
|
11,139
|
|
|
25,248
|
|
|
181
|
|
|
(24,620
|
)
|
|
11,948
|
|
Loss
from discontinued operations, net of tax
|
|
|
—
|
|
|
(809
|
)
|
|
—
|
|
|
—
|
|
|
(809
|
)
|
Net
income
|
|
$
|
11,139
|
|
$
|
24,439
|
|
$
|
181
|
|
$
|
(24,620
|
)
|
$
|
11,139
|
|
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Condensed
Consolidating Balance Sheet
As of December 31, 2007:
|
|
U.S. Concrete
Parent
|
|
Subsidiary
Guarantors
|
|
Superior
Materials
Holdings,
LLC
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in thousands)
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
—
|
|
$
|
13,368
|
|
$
|
1,482
|
|
$
|
—
|
|
$
|
14,850
|
|
Trade
accounts receivable, net.
|
|
|
—
|
|
|
90,763
|
|
|
11,849
|
|
|
—
|
|
|
102,612
|
|
Inventories,
net
|
|
|
—
|
|
|
28,182
|
|
|
4,375
|
|
|
—
|
|
|
32,557
|
|
Deferred
income taxes
|
|
|
—
|
|
|
10,937
|
|
|
—
|
|
|
—
|
|
|
10,937
|
|
Prepaid
expenses
|
|
|
—
|
|
|
4,625
|
|
|
631
|
|
|
—
|
|
|
5,256
|
|
Other
current assets
|
|
|
31
|
|
|
10,584
|
|
|
772
|
|
|
—
|
|
|
11,387
|
|
Assets
held for sale
|
|
|
—
|
|
|
7,273
|
|
|
—
|
|
|
—
|
|
|
7,273
|
|
Total
current assets
|
|
|
31
|
|
|
165,732
|
|
|
19,109
|
|
|
—
|
|
|
184,872
|
|
Properties,
plant and equipment, net
|
|
|
—
|
|
|
232,004
|
|
|
35,006
|
|
|
—
|
|
|
267,010
|
|
Goodwill
|
|
|
—
|
|
|
184,999
|
|
|
—
|
|
|
—
|
|
|
184,999
|
|
Investment
in subsidiaries
|
|
|
502,426
|
|
|
35,484
|
|
|
—
|
|
|
(537,910
|
)
|
|
—
|
|
Other
assets, net
|
|
|
8,251
|
|
|
1,998
|
|
|
126
|
|
|
—
|
|
|
10,375
|
|
Total
assets
|
|
$
|
510,708
|
|
$
|
620,217
|
|
$
|
54,241
|
|
$
|
(537,910
|
)
|
$
|
647,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
maturities of long-term debt
|
|
$
|
—
|
|
$
|
2,816
|
|
$
|
356
|
|
$
|
—
|
|
$
|
3,172
|
|
Accounts
payable
|
|
|
—
|
|
|
40,801
|
|
|
7,359
|
|
|
—
|
|
|
48,160
|
|
Accrued
liabilities
|
|
|
13,932
|
|
|
28,659
|
|
|
2,820
|
|
|
—
|
|
|
45,411
|
|
Total
current liabilities
|
|
|
13,932
|
|
|
72,276
|
|
|
10,535
|
|
|
—
|
|
|
96,743
|
|
Long-term
debt, net of current maturities
|
|
|
283,807
|
|
|
3,299
|
|
|
8,222
|
|
|
—
|
|
|
295,328
|
|
Other
long-term obligations and deferred credits
|
|
|
7,864
|
|
|
1,261
|
|
|
—
|
|
|
—
|
|
|
9,125
|
|
Deferred
income taxes
|
|
|
—
|
|
|
26,763
|
|
|
—
|
|
|
|
|
|
26,763
|
|
Total
liabilities
|
|
$
|
305,603
|
|
|
103,599
|
|
|
18,757
|
|
|
|
|
|
427,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interest in consolidated subsidiary
|
|
|
—
|
|
|
14,192
|
|
|
—
|
|
|
—
|
|
|
14,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
205,105
|
|
|
502,426
|
|
|
35,484
|
|
|
(537,910
|
)
|
|
205,105
|
|
Total
liabilities and stockholders' equity
|
|
$
|
510,708
|
|
$
|
620,217
|
|
$
|
54,241
|
|
$
|
(537,910
|
)
|
$
|
647,256
|
|
U.S.
CONCRETE, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed
Consolidating Statements of Cash Flows
Nine months ended September 30, 2007:
|
|
U.S. Concrete
Parent
|
|
Subsidiary
Guarantors
|
|
Superior
Materials
Holdings,
LLC
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in
thousands)
|
|
Net
cash provided by (used in) operating activities
|
|
$
|
(16,181
|
) |
$
|
13,329
|
|
$
|
(12,031
|
)
|
$
|
—
|
|
$
|
17,479
|
|
Net
cash provided by (used in) investing activities
|
|
|
(7,807
|
) |
|
(17,995
|
)
|
|
197
|
|
|
—
|
|
|
(25,605
|
)
|
Net
cash provided by (used in) financing activities
|
|
|
8,374
|
|
|
1,874
|
|
|
12,354
|
|
|
—
|
|
|
5,854
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
—
|
|
|
(2,792
|
|
|
520
|
|
|
—
|
|
|
(2,272
|
)
|
Cash
and cash equivalents at the beginning of the period
|
|
|
—
|
|
|
7,804
|
|
|
1,000
|
|
|
—
|
|
|
8,804
|
|
Cash
and cash equivalents at the end of the period
|
|
$
|
—
|
|
$
|
5,012
|
|
$
|
1,520
|
|
$
|
—
|
|
$
|
6,532
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Statements
we make in the following discussion which express a belief, expectation or
intention, as well as those that are not historical fact, are forward-looking
statements that are subject to various risks, uncertainties and assumptions.
Our
actual results, performance or achievements, or industry results, could differ
materially from the forward-looking statements in the following discussion
as a result of a variety of factors, including the risks and uncertainties
we
have referred to under the headings “Risk Factors” in Item 1A of Part I in the
2007 Form 10-K, and “—Risks and Uncertainties” below. For a discussion of our
commitments, not discussed below, related-party transactions, and our critical
accounting policies, see “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in Item 7 in the 2007 Form 10-K. We assume
no obligation to update our forward-looking statements, except as required
by
applicable law.
Our
Business
We
operate our business in two business segments: ready-mixed concrete and
concrete-related products; and precast concrete products.
Ready-Mixed
Concrete and Concrete-Related Products. Our
ready-mixed concrete and concrete-related products segment is engaged primarily
in the production, sale and delivery of ready-mixed concrete to our customers’
job sites. To a lesser extent, this segment is engaged in the mining and sale
of
aggregates and the resale of building materials, primarily to our ready-mixed
concrete customers. We provide these products and services from our operations
in north and west Texas, northern California, New Jersey, New York, Washington,
D.C., Michigan and Oklahoma.
Precast
Concrete Products. Our
precast concrete products segment engages principally in the production,
distribution and sale of precast concrete products from its nine plants located
in California, Arizona and Pennsylvania. From these facilities, we produce
precast concrete structures such as utility vaults, manholes and other
wastewater management products, specialty engineered structures, pre-stressed
bridge girders, concrete piles, curb-inlets, catch basins, retaining and other
wall systems, custom designed architectural products and other precast concrete
products.
Our
Markets; Pricing and Demand Trends
The
markets for our products are generally local, and our operating results are
subject to fluctuations in the level and mix of construction activity that
occur
in our markets. The level of activity affects the demand for our products,
while
the product mix of activity among the various segments of the construction
industry affects both our relative competitive strengths and our operating
margins. Commercial and industrial projects generally provide more opportunities
to sell value-added products that are designed to meet the high-performance
requirements of these types of projects.
Our
customers are generally involved in the construction industry, which is a
cyclical business and is subject to general and more localized economic
conditions. In addition, our business is impacted by seasonal variations in
weather conditions which vary by regional market. Accordingly, demand for our
products and services during the winter months is typically lower than in other
months of the year because of inclement weather. Also, sustained periods of
inclement weather and other weather conditions could postpone or delay projects
in our markets during other times of the year.
For
the
first nine months of 2008, our overall average sales prices were higher than
in
the corresponding period of last year. However, pricing trends varied by region
in our ready-mixed concrete markets. We experienced pricing improvements in
our
northern California and our north and west Texas markets, and pricing declines
in our New Jersey, Michigan and Washington, D.C. markets, as compared to the
first nine months of 2007. Sustaining or improving our operating margins in
the
future will depend on market conditions, including the impact of continued
softening in the residential and commercial construction sectors. During the
third quarter of 2008, we experienced marked declines in the demand for our
products, primarily in residential and commercial end-use markets. We have
announced price increases in several of our markets, generally effective October
1, 2008 and early 2009. The extent to which we realize benefits from these
announced price increases will depend on market conditions and whether such
increases exceed our raw material and other cost increases.
Ready-mixed
concrete sales volumes generally declined beginning in 2006 and has continued
to
decline in the first nine months of 2008, as compared to the first nine months
of 2007. This decline reflects a sustained downward trend in residential
construction activity and commercial projects in many of our markets. We expect
the overall construction downturn, in both residential and commercial end-use
markets, to continue in the remainder of 2008, resulting in ready-mixed concrete
sales volumes being down on a same-plant-sales basis in 2008 in most of our
markets as compared to 2007. We expect ready-mixed concrete sales volumes
related to public works construction to be higher in 2008, as compared to 2007.
We expect ready-mixed concrete sales volumes in 2009 to be lower than sales
volumes achieved in 2008, because of continued sluggishness in the residential
and commercial en-use construction markets.
Demand
for our products in our precast concrete products segment decreased in the
first
nine months of 2008, as compared to the first nine months of 2007. This decline
is reflective of the decline in residential construction starts in our northern
California and Phoenix, Arizona markets, where our precast business has been
heavily weighted toward products used in new residential construction projects.
We are in the process of refocusing our product lines and streamlining our
operations in these markets to better serve existing demand and penetrate
additional end-use markets. Such streamlining may result in the closure of
certain facilities.
Cement
and Other Raw Materials
We
obtain
most of the raw materials necessary to manufacture ready-mixed concrete and
precast concrete products on a daily basis. These materials include cement,
other cementitious materials (generally, fly ash and blast furnace slag) and
aggregates (stone, gravel and sand), in addition to certain chemical admixtures.
With the exception of chemical admixtures, each plant typically maintains an
inventory level of these materials sufficient to satisfy its operating needs
for
a few days. Typically, cement, other cementitious materials and aggregates
represents the highest cost materials used in manufacturing a cubic yard of
ready-mixed concrete. In each of our markets, we purchase each of these
materials from several suppliers. Admixtures are generally purchased from
suppliers under national purchasing agreements.
We
negotiate cement and aggregates pricing with suppliers both on a company-wide
basis and at the local market level in an effort to obtain the most competitive
pricing available for cement and aggregates. We anticipate that the residential
construction downturn that began in the second half of 2006 will continue
through the remainder of 2008 and 2009 and, therefore, commercial construction
and other building segments will comprise a larger percentage of overall product
demand. Due to the slowdown in residential housing starts and other construction
activity combined with increased U.S. cement capacity, we have not experienced
and do not expect to experience cement shortages during 2008 or 2009. We expect
that demand for cement consumption nationally will be down in 2009 as compared
to 2008. Announced cement price increases for January 1, 2008 have been delayed
or withdrawn, in many of our markets and price increases in certain markets
realized by our cement suppliers have been significantly lower than in 2007.
Several cement suppliers have announced price increases effective January 1,
2009 in several of our markets. The extent such price increases will be realized
is uncertain.
Aggregates
pricing in 2008 has increased moderately over 2007 levels. Today, in most of
our
markets, we believe there is an adequate supply of aggregates. Should demand
for
aggregates increase significantly, we could experience escalating prices or
shortages of aggregates. We have been experiencing higher diesel fuel surcharges
from our cement and aggregates suppliers, including third-party freighters,
due
to increases in costs of diesel fuel experienced in the first nine months of
2008. The price of diesel fuel has declined moderately in the third quarter
of
2008 as compared to the first half of 2008. The majority of our aggregates
suppliers have announced modest price increases effective January 1, 2009.
We
expect certain announced price increases in certain markets to be
realized.
Acquisitions
Since
our
inception in 1999, our growth strategy has contemplated acquisitions. The rate
and extent to which appropriate further acquisition opportunities are available,
and the extent to which acquired businesses are integrated and anticipated
synergies and cost savings are achieved, can affect our operations and results.
Our recent acquisitions are discussed briefly below.
Ready-Mixed
Concrete and Concrete-Related Products Segment
New
York Acquisitions. In
January 2008, we acquired a single plant ready-mixed concrete operation in
Staten Island, New York. The purchase price was approximately $1.8 million
in
cash. In August 2008, we paid $1.9 million to acquire a ready-mixed concrete
operation in Mount Vernon, New York. We used borrowings under our existing
credit facility to fund the purchase price.
West
Texas Acquisition. In
June
2008, we acquired nine ready-mixed concrete plants, together with related real
property, rolling stock and working capital, in our west Texas market for
approximately $13.5 million.
West
Texas Acquisition.
In June
2007, we acquired two ready-mixed concrete plants, including real property
and
certain raw material inventories, in our west Texas market for approximately
$3.6 million.
Superior
Materials Joint Venture.
In
April
2007, we formed a joint venture (Superior Materials Holdings, LLC) with the
Edw.
C. Levy Co., which operates in Michigan. Under the contribution agreement,
we
contributed substantially all of our ready-mixed concrete and concrete-related
products assets, except our quarry assets and working capital, in Michigan,
in
exchange for a 60% ownership interest, while the Edw. C. Levy Co. contributed
its Michigan ready-mixed concrete and related concrete products assets, its
24,000-ton cement terminal and $1.0 million for a 40% ownership interest.
Precast
Concrete Products Segment
Pomeroy
Precast.
In
August
2008, we paid $2.5 million to acquire a precast operation to augment our
existing precast operations in San Diego, California. We used borrowings under
our existing credit facility to fund the purchase price.
Architectural
Precast, LLC (“API”).
In
October 2007, we acquired the operating assets, including working capital and
real property, of API, a leading designer and manufacturer of premium quality
architectural and structural precast concrete products serving the Mid-Atlantic
region, for approximately $14.5 million plus a $1.5 million contingency payment
based on the future earnings of API. For the quarter ended September 30, 2008,
API attained 50% of its established earnings target, and we expect to pay out
$750,000 in the first quarter of 2009.
Divestitures
In
the
fourth quarter of 2007, we began to implement our strategy of exiting markets
that do not meet our performance and return criteria or fit our long-term
strategic objectives. We sold our Knoxville, Tennessee and Wyoming, Delaware
operations in November 2007 for $16.5 million, plus certain adjustments for
working capital. In addition, we sold our Memphis, Tennessee operations for
$7.2
million, plus the payment for certain inventory-on-hand at closing, on January
31, 2008 (See Note 3 to our condensed consolidated financial statements included
in this report). These operations have been aggregated and presented in our
accompanying condensed consolidated financial statements as “discontinued
operations.”
Risks
and Uncertainties
Numerous
factors could affect our future operating results, including those discussed
under the heading “Risk Factors” in Item 1A of Part I of the 2007 Form 10-K and
the following factors:
Internal
Computer Network and Applications. We
rely
on our network infrastructure, enterprise applications and internal technology
systems for our operational, support and sales activities. The hardware and
software systems related to such activities are subject to damage from
earthquakes, floods, fires, power loss, telecommunication failures and other
similar events. They are also subject to computer viruses, physical or
electronic vandalism or other similar disruptions that could cause system
interruptions, delays and loss of critical data and could prevent us from
fulfilling our customers’ orders. We have developed disaster recovery plans and
backup systems to reduce the potentially adverse effects of such events. Any
event that causes failures or interruption in our hardware or software systems
could result in disruption in our business operations, loss of revenues or
damage to our reputation.
During
the second half of 2007, we began a process to select a new enterprise resource
planning solution to provide for enhanced control, business efficiency and
effectiveness, more timely and consistent reporting of both operational and
financial data, and provide a platform to more adequately support our long-term
growth plans. In the fourth quarter of 2007, a plan of implementation was
approved which anticipates a phased implementation across our regions during
the
course of 2008 and into early 2009. The plan of implementation is on schedule.
Delays or system problems or failures related to the implementation could
adversely affect our financial reporting.
Accounting
Rules and Regulations. We
prepare our consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America (“GAAP”). A change
in these policies can have a significant effect on our reported results and
may
even retroactively affect previously reported transactions. Our accounting
policies that recently have been or may be affected by changes in the accounting
rules are as follows:
|
• |
accounting
for income taxes; and
|
|
• |
accounting
for business combinations and related goodwill.
|
Tax
Liabilities.
We are
subject to federal, state and local income taxes, applicable to corporations
generally, as well as nonincome-based taxes. Significant judgment is required
in
determining our provision for income taxes and other tax liabilities. In the
ordinary course of business, we make calculations in which the ultimate tax
determination is uncertain. We are also, from time to time, under audit by
state
and local tax authorities. Although we can provide no assurance that the final
determination of our tax liabilities will not differ from what our historical
income tax provisions and accruals reflect, we believe our tax estimates are
reasonable.
Critical
Accounting Policies
We
have
outlined our critical accounting policies in Item 7 of Part II of the 2007
Form
10-K. Our critical accounting policies involve the use of estimates in the
recording of allowance for doubtful accounts, realization of goodwill, accruals
for self-insurance, accruals for income taxes and the valuation and useful
lives
of property, plant and equipment. During the nine months ended September 30,
2008, we made no changes in the application of our critical accounting policies
presented in the 2007 Form 10-K. See Note 1 to our consolidated financial
statements included in Item 8 of Part II of the 2007 Form 10-K for a discussion
of these accounting policies. See Note 13 to the condensed consolidated
financial statements in Part I of this report for a discussion of recent
accounting pronouncements and accounting changes.
Goodwill.
We
test
goodwill for impairment on an annual basis, or more often if events or
circumstances indicate that there may be impairment. We generally test for
goodwill impairment in the fourth quarter of each year, because this period
gives us the best visibility of the reporting units’ operating performances for
the current year (seasonally, April through October are highest revenue and
production months) and outlook for the upcoming year, since much of our customer
base is finalizing operating and capital budgets. The October 2008 cement
consumption forecast for 2009 through 2013 has indicated likely further
deterioration in cement consumption. In light of this, coupled with the slowdown
in construction activity, persistently challenging interest rates and credit
environments and our depressed stock price in October 2008, there is an
increased likelihood that we will record an impairment charge in the fourth
quarter of 2008. We will record such a charge to the extent that the book equity
value of each of our reporting units (including goodwill) exceeds the estimated
fair value of that reporting unit. The estimated fair values of our reporting
units were based on discounted cash flow models derived from internal earnings
forecasts and other market-based valuation techniques. See Note 2 to our
consolidated financial statements, included in Item 8 of Part II of the 2007
Form 10-K. We will continue to monitor and evaluate the carrying value of our
goodwill, particularly with respect to the northern and southern California
and
Phoenix, Arizona precast operations and our South Central region ready-mixed
concrete operations, in which the book equity value, including goodwill,
approximated the estimated fair value of these reporting units.
Results
of Operations
The
following table sets forth selected historical statement of operations
information (in thousands, except for selling prices) and that information
as a
percentage of sales for each of the periods indicated.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ready-mixed
concrete and concrete-related products
|
|
$
|
198,434
|
|
|
93.2
|
%
|
$
|
223,523
|
|
|
93.9
|
%
|
$
|
540,224
|
|
|
93.0
|
%
|
$
|
561,627
|
|
|
92.8
|
%
|
Precast
concrete products
|
|
|
19,231
|
|
|
9.0
|
|
|
18,548
|
|
|
7.8
|
|
|
53,145
|
|
|
9.1
|
|
|
54,492
|
|
|
9.0
|
|
Inter-segment
sales
|
|
|
(4,846
|
)
|
|
(2.2
|
)
|
|
(3,986
|
)
|
|
(1.7
|
)
|
|
(12,396
|
)
|
|
(2.1
|
)
|
|
(11,032
|
)
|
|
(1.8
|
)
|
Total
sales
|
|
$
|
212,819
|
|
|
100.0
|
|
$
|
238,085
|
|
|
100.0
|
|
$
|
580,973
|
|
|
100.0
|
|
$
|
605,087
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods sold before depreciation, depletion and
amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ready-mixed
concrete and concrete-related products
|
|
$
|
161,925
|
|
|
76.1
|
|
$
|
178,508
|
|
|
75.0
|
|
$
|
448,286
|
|
|
77.2
|
|
$
|
456,486
|
|
|
75.4
|
|
Precast
concrete products
|
|
|
14,399
|
|
|
6.8
|
|
|
13,992
|
|
|
5.9
|
|
|
39,739
|
|
|
6.8
|
|
|
41,029
|
|
|
6.8
|
|
Selling,
general and administrative expenses
|
|
|
19,322
|
|
|
9.1
|
|
|
17,164
|
|
|
7.2
|
|
|
55,095
|
|
|
9.5
|
|
|
49,783
|
|
|
8.2
|
|
Depreciation,
depletion and amortization
|
|
|
7,850
|
|
|
3.7
|
|
|
7,547
|
|
|
3.1
|
|
|
21,763
|
|
|
3.7
|
|
|
21,489
|
|
|
3.6
|
|
Income
from operations
|
|
|
9,323
|
|
|
4.4
|
|
|
20,874
|
|
|
8.8
|
|
|
16,090
|
|
|
2.8
|
|
|
36,300
|
|
|
6.0
|
|
Interest
expense, net
|
|
|
6,747
|
|
|
3.2
|
|
|
7,036
|
|
|
3.0
|
|
|
20,121
|
|
|
3.5
|
|
|
21,091
|
|
|
3.5
|
|
Other
income, net
|
|
|
578
|
|
|
0.3
|
|
|
566
|
|
|
0.2
|
|
|
1,628
|
|
|
0.3
|
|
|
2,950
|
|
|
0.5
|
|
Income
(loss) before income taxes and minority interest
|
|
|
3,154
|
|
|
1.5
|
|
|
14,404
|
|
|
6.1
|
|
|
(2,403
|
)
|
|
(0.4
|
)
|
|
18,159
|
|
|
3.0
|
|
Income
tax provision
|
|
|
1,248
|
|
|
0.6
|
|
|
4,563
|
|
|
1.9
|
|
|
346
|
|
|
0.1
|
|
|
6,139
|
|
|
1.0
|
|
Minority
interest in consolidated subsidiary
|
|
|
184
|
|
|
0.0
|
|
|
(287
|
)
|
|
(0.1
|
)
|
|
(2,645
|
)
|
|
(0.5
|
)
|
|
72
|
|
|
0.0
|
|
Income
(loss) from continuing operations
|
|
|
1,722
|
|
|
0.8
|
|
|
10,128
|
|
|
4.2
|
|
|
(104
|
)
|
|
(0.0
|
)
|
|
11,948
|
|
|
2.0
|
|
Loss
from discontinued operations, net of tax
|
|
|
—
|
|
|
0.0
|
|
|
(84
|
)
|
|
0.0
|
|
|
(149
|
)
|
|
(0.0
|
)
|
|
(809
|
)
|
|
(0.1
|
)
|
Net
income (loss)
|
|
$
|
1,722
|
|
|
0.8
|
%
|
$
|
10,044
|
|
|
4.2
|
%
|
$
|
(253
|
)
|
|
(0.0
|
)%
|
$
|
11,139
|
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ready-mixed
Concrete Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
selling price per cubic yard
|
|
$
|
93.74
|
|
|
|
|
$
|
91.70
|
|
|
|
|
$
|
94.28
|
|
|
|
|
$
|
91.27
|
|
|
|
|
Sales
volume in cubic yards
|
|
|
1,845
|
|
|
|
|
|
2,159
|
|
|
|
|
|
5,002
|
|
|
|
|
|
5,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precast
Concrete Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
selling price per cubic yard of concrete used in
production1
|
|
$
|
904.19
|
|
|
|
|
$
|
652.11
|
|
|
|
|
$
|
771.91
|
|
|
|
|
$
|
600.52
|
|
|
|
|
Ready-mixed
concrete used in production in cubic yards
|
|
|
20
|
|
|
|
|
|
29
|
|
|
|
|
|
69
|
|
|
|
|
|
91
|
|
|
|
|
|
1 |
Compared
to the three and nine months ended September 30, 2007, average selling
price per cubic yard of concrete
used in production was $845.56 and $713.05, respectively, on a
same-plant-sales basis.
|
Sales
Ready-mixed
concrete and concrete-related products. Sales
of
our ready-mixed concrete and concrete-related products from continuing
operations were $198.4 million for the three months ended September 30, 2008,
down $25.1 million, or 11.2%, compared to the corresponding period in 2007.
Our
ready-mixed sales volumes for the third quarter of 2008 totaled approximately
1.8 million cubic yards, down 14.5% from the 2.2 million cubic yards of
ready-mixed concrete we sold in the third quarter of 2007. The decline reflects
the continued downturn in construction activity in many of our markets. On
a
same-plant-sales basis, ready-mixed concrete sales volumes were down 17.7%
in
the third quarter of 2008, as compared to the third quarter of 2007. Offsetting
the effects of lower sales volumes was the approximate 2.2% rise in the average
sales price per cubic yard of ready-mixed concrete during the third quarter
of
2008, as compared to the third quarter of 2007.
For
the
nine months ending September 30, 2008, sales were $540.2 million, a decrease
of
$21.4 million, or 3.8%, over the same period in 2007. The decrease in the nine
months ending September 30, 2008 was primarily related to a 7.7% decrease in
ready-mixed concrete sales volumes, partially offset by a 3.3% increase in
the
average selling price of ready-mixed concrete in the nine months ended September
30, 2008, as compared to the same period in 2007.
Precast
concrete products. Sales
in
our precast concrete products segment
were $19.2 million for the three months ended September 30, 2008, an increase
of
$0.7 million, or 3.7%, from the corresponding period in 2007. Excluding sales
associated with acquired operations, on a same-plant-sales basis, our third
quarter 2008 precast concrete products sales were down approximately 19.4%
from
the third quarter of 2007, a result of the continued downturn in residential
construction in our northern California and Phoenix, Arizona markets. Sales
for
the nine months ended September 30, 2008 were down by $1.3 million, or 2.5%,
to
$53.1 million, as compared to the same period of last year. Excluding sales
associated with acquired operations, on a same-plant-sales basis, precast
concrete products sales in the first nine months of 2008 were down approximately
25.4% from the corresponding period last year. The decline was attributable
primarily to the downturn in residential construction in our Phoenix, Arizona
and northern California markets.
Cost
of goods sold before depreciation, depletion and
amortization.
Ready-mixed
concrete and concrete-related products. The
decrease in cost of goods sold, before depreciation, depletion and amortization,
of $16.6 million, or 9.3%, to $161.9 million for the three months ended
September 30, 2008 was primarily associated with lower ready-mixed concrete
sales volumes, partially offset by higher aggregates costs and increased diesel
fuel costs, as compared to the three months ended September 30, 2007. As a
percentage of ready-mixed concrete and concrete-related products sales, cost
of
goods sold before depreciation, depletion and amortization increased from 79.9%
for the three months ended September 30, 2007, to 81.6% for the three months
ended September 30, 2008. The increase in cost of goods sold as a percentage
of
ready-mixed concrete and concrete-related products sales was primarily
attributable to higher aggregates and increased diesel fuel costs, partially
offset by higher average selling prices, as compared to the third quarter of
2007. Cost of goods sold before depreciation, depletion and amortization in
the
nine months ended September 30, 2008 decreased $8.2 million, or 1.8%, to $448.3
million on lower sales volumes, partially offset by higher aggregates costs
and
increased diesel fuel costs. Cost of goods sold before depreciation, depletion
and amortization was favorably impacted in the first quarter of 2007 by the
$1.4
million workers’ compensation settlement gain. Cost of goods sold before
depreciation, depletion and amortization in the nine months ended September
30
of 2008 was negatively impacted by a $1.3 million expense related to a
multi-employer plan funding deficiency accrual at one of our locations. As
a
percentage of ready-mixed concrete and concrete-related products sales, these
costs increased from 81.3% to 83.0% for the nine months ended September 30,
2008, as compared to the same period in 2007. The increase in cost of goods
sold
as a percentage of revenue was primarily attributable to increased aggregates
costs and diesel fuel costs rising faster than price increases for our
ready-mixed concrete and concrete-related products.
Precast
concrete products. The
cost
of goods sold before depreciation, depletion and amortization in our precast
concrete products segment increased $0.4 million, or 2.9%, for the three months
ended September 30, 2008, as compared to the corresponding period in 2007.
This
increase reflected increased cost of goods sold associated with our
Architectural Precast business in 2008, which we did not own in the third
quarter of 2007, partially offset by the reduced costs of goods sold primarily
related to volume reductions in our northern California and Phoenix, Arizona
precast markets. As a percentage of precast concrete products sales, cost of
goods sold before depreciation, depletion and amortization decreased in the
three months ended September 30, 2008, as compared to the corresponding period
in 2007, from 75.4% to 74.9%. The decrease in cost of goods sold as a percentage
of precast concrete product sales for the three months ended September 30,
2008
reflected lower average selling prices associated with product mix changes,
lower sales volumes and the comparative impact of certain fixed costs in both
periods. Cost of goods sold before depreciation, depletion and amortization
for
the nine months ended September 30, 2008 declined $1.3 million, or 3.1%, on
lower sales volumes in our northern California and Phoenix, Arizona markets,
partially offset by API volumes not reflected in the nine-month period ended
September 30, 2007. As a percentage of precast product sales, cost of goods
sold
declined slightly from 75.3% to 74.8%.
Selling,
general and administrative expenses.
Selling,
general and administrative expenses for the three months ended September 30,
2008 were $19.3 million, or 12.6% higher than in the corresponding 2007 period.
For the nine months ended September 30, 2008, selling, general and
administrative expenses rose by $6.4 million, or 12.8%, when compared to the
corresponding period in 2007. These expenses increased comparatively in both
periods, due primarily to an increase in incentive compensation accruals,
medical expenses and professional fees. Selling, general and administrative
expenses as a percentage of sales increased to 9.1% and 9.7% in the three-
and
nine-month periods ended September 30, 2008, as compared to 7.2% and 8.2% in
the
three- and nine-month periods ended September 30, 2007.
Depreciation,
depletion and amortization.
Depreciation, depletion and amortization expense increased $0.3 million, or
4.0%, for the three months ended September 30, 2008, as compared to the
corresponding period in 2007. For the nine months ended September 30, 2008,
depreciation, depletion and amortization expense was $21.8 million, which was
slightly higher than the nine months ended September 30, 2007. These increases
were primarily attributable to the four acquisitions completed in the first
nine
months of 2008.
Interest
expense, net.
Interest
expense, net, decreased $0.3 million, or 4.1%, to $6.7 million for the three
months ended September 30, 2008, as compared to the corresponding period of
2007. Net interest expense decreased $1.0 million to $20.1 million in the nine
months ended September 30, 2008, as compared to the nine months ended September
30, 2007, primarily due to lower borrowings under our credit
facility.
Other
income, net. Other
income,
net,
was
slightly higher for the three months ended September 30, 2008, and decreased
$1.3 million for the nine months ended September 30, 2008, as compared to the
corresponding periods in the prior year. The nine-month comparative variance
was
primarily attributable to a contractual settlement reached in 2007 with a former
owner of an acquired business.
Income
tax provision.
We
recorded an income tax provision from continuing operations of $1.2 million
for
the three months ended September 30, 2008, as compared to $4.6 million for
the
corresponding period in 2007. The decrease in the income tax expense for the
period ended September 30, 2008 resulted primarily from lower pre-tax income.
We
recorded an income tax provision of $0.3 million for the nine months ended
September 30, 2008, as compared to an income tax provision of $6.1 million
for
the corresponding period in 2007. That decrease was also a result of lower
pre-tax income. At the end of each interim reporting period, we estimate the
effective income tax rate expected to be applicable for the full year. We use
this estimate in providing for income taxes on a year-to-date basis, and it
may
change in subsequent interim periods. The effective income tax rates for the
2008 and 2007 periods vary from the federal statutory rate, due primarily to
state income taxes and additional tax provisions for uncertain tax benefits
as
required by FIN 48 and the impact on the effective tax rate related to minority
interest resulted from the consolidation of our Michigan ready-mixed concrete
joint venture which is not subject to federal income taxes on a stand-alone
basis.
Minority
interest in consolidated subsidiary. Minority
interest of $0.2 million and $(2.6) million recorded in the three months and
nine months ended September 30, 2008, respectively, related to the allocable
share of net income (loss) from our Michigan joint venture to our minority
partner. The Michigan joint venture was formed on April 1, 2007.
Liquidity
and Capital Resources
Our
primary short-term liquidity needs consist of financing seasonal increases
in
working capital requirements, purchasing property and equipment and paying
cash
interest expense under our 8⅜% senior subordinated notes due in April 2014 and
cash interest expense on borrowings under our senior secured revolving credit
facility that is scheduled to expire in March 2011. In addition to cash and
cash
equivalents of $3.9 million at September 30, 2008 and cash from operations,
our
senior secured revolving credit facility provides us with a significant source
of liquidity. That facility provides us a borrowing capacity of up to $150
million with borrowings limited based on a portion of the net amounts of
eligible accounts receivable, inventory and mixer trucks. The credit agreement
relating to the facility provides that the administrative agent may, on the
bases specified, reduce the amount of available credit from time to time. At
September 30, 2008, we had $96.7 million of available credit, net of outstanding
letters of credit of $13.0 million. Our working capital needs are typically
at
their lowest level in the first quarter and increase in the second and third
quarters to fund the increases in accounts receivable and inventories during
those periods and the cash interest payment on our senior subordinated notes
on
April 1 and October 1 of each year. Generally, in the fourth quarter of each
year, our working capital borrowings decline and are at their lowest annual
levels in the first quarter of the following year. Current market conditions
have limited the availability of new sources of financing and capital which
will
clearly have an impact on our ability and the ability of our partners to obtain
financing for our acquisition program and developmental capital.
The
principal factors that could adversely affect the amount and availability of
our
internally generated funds include:
|
·
|
any
deterioration of sales;
|
|
· |
any
decline in gross margins due to shifts in our project mix or increases
in
the cost of our raw materials;
|
|
· |
any
deterioration in our ability to collect our accounts receivable from
customers as a result of further weakening in residential and other
construction demand or as a result of payment difficulties experienced
by
our customers relating to the global financial crisis;
and
|
|
· |
the
extent to which we are unable to generate internal growth through
integration of additional businesses or capital expansions of our
existing
business.
|
The
principal factors that could adversely affect our ability to obtain cash from
external sources include:
|
·
|
covenants
contained in the credit agreement governing our senior revolving
credit
facility and the indenture governing our 8⅜% senior subordinated
notes;
|
|
·
|
volatility
in the markets for corporate debt and any additional market instability,
unavailability of credit or inability to access the capital markets
which
may result from the effect of the global financial crisis;
and
|
|
· |
fluctuations
in the market price of our common stock or 8 ⅜%
senior subordinated notes.
|
The
following key financial measurements reflect our financial position and capital
resources as of September 30, 2008 and December 31, 2007 (dollars in
thousands):
|
|
September 30, 2008
|
|
December 31, 2007
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
3,907
|
|
$
|
14,850
|
|
Working
capital
|
|
$
|
77,733
|
|
$
|
88,129
|
|
Total
debt
|
|
$
|
299,858
|
|
$
|
298,500
|
|
Debt
to debt and equity
|
|
|
59.2
|
%
|
|
59.3
|
%
|
Our
cash
and cash equivalents consist of highly liquid investments in deposits we hold
at
major financial institutions.
Senior
Secured Credit Facility
On
June
30, 2006, we entered into a credit agreement (the “Credit Agreement”),
which amended and restated our senior secured credit agreement dated as of
March
12, 2004. The Credit Agreement, as amended to date, provides for a $150 million
revolving credit facility, with borrowings limited based on a portion of the
net
amounts of eligible accounts receivable, inventory and mixer trucks. The
facility is scheduled to mature in March 2011. At September 30, 2008,
outstanding borrowings were $3.5 million under this facility. Borrowings under
the facility have an annual interest at our option of either the
Eurodollar-based rate (“LIBOR”) plus 1.75% or the domestic rate which was 5.00%
plus 0.25%. Commitment fees at an annual rate of 0.25% are payable on the unused
portion of the facility. The Credit Agreement provides that the administrative
agent may, on the bases specified, reduce the amount of the available credit
from time to time. At September 30, 2008, the amount of the available credit
was
approximately $96.7 million, net of outstanding letters of credit of
approximately $13.0 million.
Our
subsidiaries, excluding our 60%-owned Michigan subsidiary and minor subsidiaries
without operations or material assets, have guaranteed the repayment of all
amounts owing under the Credit Agreement. In addition, we collateralized our
obligations under the Credit Agreement with the capital stock of our
subsidiaries, excluding our 60%-owned Michigan subsidiary and minor subsidiaries
without operations or material assets; and substantially all the assets of
those
subsidiaries, excluding most of the assets of the aggregates quarry in northern
New Jersey, other real estate owned by us or our subsidiaries, and the assets
of
our 60%-owned Michigan subsidiary. The Credit Agreement contains covenants
restricting, among other things, prepayment or redemption of subordinated notes,
distributions, dividends and repurchases of capital stock and other equity
interests, acquisitions and investments, mergers, asset sales other than in
the
ordinary course of business, indebtedness, liens, changes in business, changes
to charter documents and affiliate transactions. It also limits capital
expenditures (excluding permitted acquisitions) to the greater of $45 million
or
5% of consolidated revenues in the prior 12 months and will require us to
maintain a minimum fixed-charge coverage ratio of 1.0 to 1.0 on a rolling
12-month basis if the available credit under the facility falls below $25
million. The Credit Agreement provides that specified change-of-control events
would constitute events of default. As of September 30, 2008, we were in
compliance with our financial covenants under the credit agreement.
Senior
Subordinated Notes
On
March
31, 2004, we issued $200 million principal amount of 8⅜% senior subordinated
notes due April 1, 2014. Interest on these notes is payable semi-annually on
April 1 and October 1 of each year. We used the net proceeds of this financing
to redeem our prior 12% senior subordinated notes and prepay the outstanding
debt under our credit facility. In July 2006, we issued $85 million principal
amount of additional 8⅜% senior subordinated notes.
All
of
our subsidiaries, excluding our 60%-owned Michigan
subsidiary and minor subsidiaries, have jointly and severally and fully and
unconditionally guaranteed the repayment of the 8⅜% senior subordinated
notes.
The
indenture governing the notes limits our ability and the ability of our
subsidiaries to pay dividends or repurchase common stock, make certain
investments, incur additional debt or sell preferred stock, create liens, merge
or transfer assets. After March 31, 2009, we may redeem all or a part of the
notes at a redemption price of 104.188% in 2009, 102.792% in 2010, 101.396%
in
2011 and 100% in 2012 and thereafter. The indenture requires us to offer to
repurchase (1) an aggregate principal amount of the subordinated notes equal
to
the proceeds of certain asset sales that are not reinvested in the business
or
used to pay senior debt, and (2) all the notes following the occurrence of
a
change of control. The Credit Agreement limits these repurchases.
As
a
result of restrictions contained in the indenture relating to the 8⅜% senior
subordinated notes, our ability to incur additional debt is primarily limited
to
the greater of (1) borrowings available under the Credit Agreement, plus the
greater of $15 million or 7.5% of our tangible assets, or (2) additional debt
if, after giving effect to the incurrence of such additional debt, our earnings
before interest, taxes, depreciation, amortization and certain noncash items
equal or exceed two times our total interest expense.
Superior
Materials Holdings, LLC Credit Facility
Superior
Materials Holdings, LLC has a separate credit agreement that provides for a
revolving credit facility. The credit agreement was amended in August 2008
and
currently allows for borrowings of up to $17.5 million. Borrowings under
this credit facility are collateralized by substantially all the assets of
Superior Materials Holdings, LLC and are scheduled to mature on April 1,
2010. Availability of borrowings is subject to a borrowing base that is
determined based on the values of net receivables, certain inventories, certain
rolling stock and letters of credit. The
credit agreement provides that the lender may, on the bases specified, reduce
the amount of the available credit from time to time. As of September 30,
2008, there was $6.1 million in outstanding borrowings under the revolving
credit facility, and the remaining amount of the available credit was
approximately $9.6 million. Letters of credit outstanding at September 30,
2008
were $1.8 million.
Currently,
borrowings have an annual interest rate at Superior Materials Holdings,
LLC's option of either, LIBOR plus 4.25% or prime rate plus 2.00%.
Commitment fees at an annual rate of 25 basis points are payable on the unused
portion of the facility.
The
credit agreement contains covenants restricting, among other things, Superior
Materials Holdings, LLC’s distributions, dividends and repurchases of capital
stock and other equity interests, acquisitions and investments, mergers, asset
sales other than in the ordinary course of business, indebtedness, liens,
changes in business, changes to charter documents and affiliate
transactions. It also generally limits Superior Materials Holdings, LLC’s
capital expenditures and requires the subsidiary to maintain compliance with
specified financial covenants, including an affirmative covenant which requires
earnings before income taxes, interest and depreciation (“EBITDA”) to meet
certain minimum thresholds quarterly. As of September 30, 2008, Superior
Materials Holdings, LLC was in compliance with its financial covenants under
the
credit agreement.
U.S.
Concrete and its 100%-owned subsidiaries are not obligors under the terms of
the
Superior Materials Holdings, LLC credit agreement. However, in connection with
the recent amendment of the revolving credit facility, Superior Materials
Holdings, LLC’s credit agreement provides that an event of default beyond a
30-day grace period under either U.S. Concrete’s or Edw. C. Levy’s credit
agreement would constitute an event of default. Furthermore, U.S. Concrete
agreed to provide or obtain additional equity or subordinated debt capital
not
to exceed $6.75 million through the term of the revolving credit facility to
fund any future cash flow deficits, as defined in the credit agreement, of
Superior Materials Holdings, LLC. No additional capital contribution was
required under that agreement for the period ended September 30,
2008.
Cash
Flow
Our
net
cash provided by operating activities generally reflects the cash effects of
transactions and other events used in the determination of net income or loss.
Net cash provided by operating activities was $19.5 million in the nine months
ended September 30, 2008, compared to $17.5 million of net cash provided by
operating activities in the nine months ended September 30, 2007. This
improvement was principally a result of lower working capital requirements
and
lower income tax payments in the nine months ended September 30, 2008, as
compared to the nine months ended September 30, 2007.
Our
net
cash used in investing activities was $30.9 million for the nine months ended
September 30, 2008, as compared to $25.6 million used in investing activities
in
the nine months ended September 30, 2007. This increase was primarily due to
an
increase in funds used for acquisitions partially offset by net proceeds
received from our divestiture activities. During the first nine months of 2008,
we received $7.6 million in proceeds from the sale of our Memphis operations
and
spent approximately $3.7 million for two ready-mixed concrete operations in
New
York, $13.5 million for certain ready-mixed concrete operations in west Texas
and $2.5 for a precast operation in San Diego, California.
Our
net
cash provided by financing activities of $0.5 million for the nine months ended
September 30, 2008 decreased $5.4 million from the $5.9 million net cash
provided by financing activities in the nine months ended September 30, 2007.
This decrease was attributable to lower borrowings under our credit
facility.
We
define
free cash flow as net cash provided by operating activities less purchases
of
property, plant and equipment (net of disposals). Free cash flow is a liquidity
measure not prepared in accordance with GAAP. Our management uses free cash
flow
in managing our business because we consider it to be an important indicator
of
our ability to service our debt and generate cash for acquisitions and other
strategic investments. We believe free cash flow may provide users of our
financial information additional meaningful comparisons between current results
and results in prior operating periods. As a non-GAAP financial measure, free
cash flow should be viewed in addition to, and not as an alternative for, our
reported operating results or cash flow from operations or any other measure
of
performance prepared in accordance with GAAP.
A
reconciliation of our net cash provided by operations (the nearest GAAP
measure) and free cash flow is as follows (in thousands):
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
Net
cash provided by operations
|
|
$
|
19,514
|
|
$
|
17,479
|
|
Less:
purchases of property and equipment (net of disposals)
|
|
|
(16,846
|
)
|
|
(17,113
|
)
|
Free
cash flow (as defined)
|
|
$
|
2,668
|
|
$
|
366
|
|
Future
Capital Requirements
For
the
last three months of 2008, we expect our capital requirements for planned
capital expenditures will be in the range of $5 million to $8 million, most
of
which we expect to be related to equipment purchases, plant replacements and
our
ongoing enterprise resource planning systems implementation. In addition, in
the
normal course of business, we lease certain equipment used in our operations
under operating leases.
We
believe, on the basis of current expectations, that our cash on hand, internally
generated cash flow and available borrowings under our revolving credit facility
will be sufficient to provide the liquidity necessary to fund our operations,
meet our capital and debt service requirements.
Off-Balance
Sheet Arrangements
We
do not
currently have any off-balance sheet debt arrangements except for operating
leases. From time to time, we may enter into additional operating leases that
would not be reflected on our balance sheet. We
do not
have any transactions, arrangements or relationships with “special purpose”
entities. Also, we have no outstanding debt guarantees. At September 30, 2008,
we had $13.0 million of letters of credit outstanding. We are also contingently
liable for performance under $37.4 million in performance bonds relating
primarily to our ready-mixed concrete operations.
Share
Repurchase Plan
On
January 7, 2008, our Board of Directors approved a plan to repurchase up to
an
aggregate of three million shares of our common stock. The plan permitted the
stock repurchases to be made on the open market or in privately negotiated
transactions in compliance with applicable securities and other laws. As of
September 30, 2008, we had repurchased and subsequently cancelled 171,463 shares
with an aggregate value of $0.7 million under the repurchase plan. In October
2008, our Board of Directors modified our repurchase program and purchased
2,976,942 shares at a cost of $5.9 million and completed the repurchase
program.
Other
We
periodically evaluate our liquidity requirements, alternative uses of capital,
capital needs and availability of resources in view of, among other things,
our
dividend policy, our debt service and capital expenditure requirements and
estimated future operating cash flows. As a result of this process, in the
past
we have sought, and in the future we may seek, to: reduce, refinance, repurchase
or restructure indebtedness; raise additional capital; issue additional
securities; repurchase shares of our common stock; modify our dividend policy;
restructure ownership interests; sell interests in subsidiaries or other assets;
or take a combination of such steps or other steps to manage our liquidity
and
capital resources. In the normal course of our business, we may review
opportunities for the acquisition, divestiture, joint venture or other business
combinations in the ready-mixed concrete or related businesses. In the event
of
any acquisition or other business combination transaction, we may consider
using
available cash, issuing equity securities or increasing our indebtedness to
the
extent permitted by the agreements governing our existing debt.
Inflation
We
experienced modest increases in operating costs during the first nine months
of
2008 related to inflation. However, over the past few years, cement prices
and
certain other raw material prices, including aggregates and diesel fuel prices,
have generally risen faster than regional inflationary rates. We generally
compensate for the escalating cost of diesel fuel with fuel surcharges to our
customers, which are recorded in our revenues. Our success in realizing fuel
surcharges varies by each market.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
We
do not
enter into derivatives or other financial instruments for trading or speculative
purposes, but we may utilize them to manage our fixed-to-variable-rate debt
ratio. All derivatives, whether designated as hedging relationships or not,
are
required to be recorded on the balance sheet at their fair values. Because
of
the short duration of our investments, changes in market interest rates would
not have a significant impact on their fair values. As of September 30, 2008
and
2007, we were not a party to any derivative financial instruments.
The
indebtedness evidenced by our 8⅜% senior subordinated notes is fixed-rate debt,
so we are not exposed to cash-flow risk from market interest rate changes on
these notes. The fair value of that debt will vary as interest rates change.
Borrowings
under our revolving credit facility expose us to certain market risks. Interest
on amounts drawn under the credit facility varies based on prime rate or one-,
two-, three- or six-month LIBOR rates. Based on the trend of our credit facility
outstanding balance through September 30, 2008, a one-percent change in the
applicable rate would not materially change the amount of our interest expense
for 2008.
We
purchase commodities, such as cement, aggregates and diesel fuel, at market
prices and do not currently use financial instruments to hedge commodity
prices.
Our
operations are subject to factors affecting the level of general construction
activity, including the level of interest rates and availability of funds for
construction. A significant decrease in the level of general construction
activity in any of our market areas may have a material adverse effect on our
sales and earnings.
In
August
2005, the compensation committee of our board of directors awarded approximately
163,000 share price performance units which vest in four equal annual
installments beginning in May 2006. Each share price performance unit is equal
in value to one share of our common stock. Upon vesting, a holder of share
price
performance units will receive a cash payment from us equal to the number of
vested share price performance units multiplied by the closing price of a share
of our common stock on the vesting date. A change of one dollar in the price
of
our common stock would cause a pretax change in selling, general and
administrative expense of approximately one dollar for each share price
performance unit outstanding. At September 30, 2008, there were approximately
28,000 share price performance units outstanding.
Item
4. Controls and Procedures
In
accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), we carried out an evaluation, under the
supervision and with the participation of management, including our chief
executive officer and chief financial officer, of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) as of September 30, 2008. Based on that evaluation,
our
chief executive officer and chief financial officer concluded that our
disclosure controls and procedures were effective as of September 30, 2008
to
provide reasonable assurance that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed
by
an issuer in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuer’s management, including its principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure. During the three months ended September 30, 2008, there were no
changes in our internal control over financial reporting or in other factors
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings
For
information about litigation involving us, see Note 11 to the condensed
consolidated financial statements in Part I of this report, which we incorporate
by reference into this Item 1.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
On
January 7, 2008, our Board of Directors approved a plan to repurchase up to
an
aggregate of three million shares of our common stock. The timing and amount
of
share repurchases has been determined by our management based on an evaluation
of market and economic conditions and other relevant factors. We intend to
retire all repurchased shares as soon as practicable following repurchase.
The
following table provides information with respect to repurchases of our common
stock during the three months ended September 30, 2008 pursuant to our stock
repurchase program:
Period
|
|
Total Number of
Shares Purchased
|
|
Average Price Paid
per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Programs
|
|
Maximum Number of
Shares that may yet be
Purchased under
the Programs
|
|
July
2008
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
August
2008
|
|
|
20,000
|
|
|
4.35
|
|
|
79,014
|
|
|
2,920,986
|
|
September
2008
|
|
|
92,449
|
|
|
4.12
|
|
|
171,463
|
|
|
2,828,537
|
|
Item
6. Exhibits
Exhibit
Number
|
|
Description
|
3.1*
|
|
—Restated
Certificate of Incorporation of U.S. Concrete, Inc. (Form 8-K filed
on May
9, 2006 (File No. 000- 26025), Exhibit 3.1).
|
3.2*
|
|
—Amended
and Restated Bylaws of U.S. Concrete, Inc., as amended (Post Effective
Amendment No. 1 to Form S-3 (Reg. No. 333-42860), Exhibit
4.2).
|
3.3*
|
|
—Restated
Certificate of Designation of Junior Participating Preferred Stock
(Form
10-Q for the quarter ended June 30, 2000 (File No. 000-26025),
Exhibit 3.3).
|
4.1*
|
|
—Amendment
No. 3 to Amended and Restated Credit Agreement, dated as of July
11, 2008,
among U.S. Concrete, Inc., Citicorp North America Inc., Bank of
America, N.A., JP Morgan Chase Bank and the Lenders and Issuers
named therein (Form 8-K dated July 11, 2008 (File No. 000-26025),
Exhibit
4.1).
|
10.6*
|
|
—Amendment
No. 6 to 1999 Incentive Plan of U.S. Concrete, Inc. dated as of April
11,
2008 (Form 8-K dated April 11, 2008 (File No. 000-26025), Exhibit
10.1).
|
31.1
|
|
—Rule
13a-14(a)/15d-14(a) Certification of Michael W. Harlan.
|
31.2
|
|
—Rule
13a-14(a)/15d-14(a) Certification of Robert D. Hardy.
|
32.1
|
|
—Section
1350 Certification of Michael W. Harlan.
|
32.2
|
|
—Section
1350 Certification of Robert D.
Hardy.
|
* Incorporated
by reference to the filing indicated.
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 by the undersigned thereunto
duly authorized.
|
|
U.S.
CONCRETE, INC.
|
|
|
|
Date:
November 10, 2008
|
By:
|
/s/
Robert D. Hardy
|
|
|
Robert
D. Hardy
|
|
|
Executive
Vice President and Chief Financial Officer
|
|
|
(Principal
Financial and Accounting Officer)
|
INDEX
TO EXHIBITS
Exhibit
Number
|
|
Description
|
3.1*
|
|
—Restated
Certificate of Incorporation of U.S. Concrete, Inc. (Form 8-K filed
on May
9, 2006 (File No. 000- 26025), Exhibit 3.1).
|
3.2*
|
|
—Amended
and Restated Bylaws of U.S. Concrete, Inc., as amended (Post Effective
Amendment No. 1 to Form S-3 (Reg. No. 333-42860), Exhibit
4.2).
|
3.3*
|
|
—Restated
Certificate of Designation of Junior Participating Preferred Stock
(Form
10-Q for the quarter ended June 30, 2000 (File No. 000-26025),
Exhibit 3.3).
|
4.1*
|
|
—Amendment
No. 3 to Amended and Restated Credit Agreement, dated as of July
11, 2008,
among U.S. Concrete, Inc., Citicorp North America Inc., Bank of
America, N.A., JP Morgan Chase Bank and the Lenders and Issuers
named therein (Form 8-K dated July 11, 2008 (File No. 000-26025),
Exhibit
4.1).
|
10.6*
|
|
—Amendment
No. 6 to 1999 Incentive Plan of U.S. Concrete, Inc. dated as of April
11,
2008 (Form 8-K dated on April 11, 2008 (File No. 000-26025), Exhibit
10.1).
|
31.1
|
|
—Rule
13a-14(a)/15d-14(a) Certification of Michael W. Harlan.
|
31.2
|
|
—Rule
13a-14(a)/15d-14(a) Certification of Robert D. Hardy.
|
32.1
|
|
—Section
1350 Certification of Michael W. Harlan.
|
32.2
|
|
—Section
1350 Certification of Robert D.
Hardy.
|
*Incorporated
by reference to the filing indicated.