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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-12977
U. S. CONCRETE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0586680
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1300 Post Oak Blvd., Suite 1220 77056
Houston, Texas (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (713) 499-6200
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None Not applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of class)
Rights to Purchase Series A Junior
Participating Preferred Stock
(Title of class)
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 [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
As of March 24, 2000, there were 21,252,430 shares of common stock, par
value $.001 per share, of the Registrant issued and outstanding, 12,004,771 of
which, having an aggregate market value of $76.5 million, based on the closing
price per share of the common stock of the Registrant reported on The Nasdaq
Stock Market(R) on that date, were held by non-affiliates of the Registrant.
For purposes of the above statement only, all directors and executive officers
of the Registrant are assumed to be affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement related to the Registrant's 2000 Annual
Stockholders Meeting are incorporated by reference into Part III of this
report.
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TABLE OF CONTENTS
Page
----
PART I
Items 1 and 2. Business and Properties................................. 1
Cautionary Statement Concerning Forward-looking
Statements.............................................. 11
Item 3. Legal Proceedings....................................... 12
Item 4. Submission of Matters to a Vote of Security Holders..... 12
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters..................................... 13
Item 6. Selected Financial Data................................. 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 14
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.................................................... 19
Item 8. Financial Statements and Supplementary Data............. 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 37
PART III
Item 10. Directors and Executive Officers of the Registrant...... 37
Item 11. Executive Compensation.................................. 37
Item 12. Security Ownership of Certain Beneficial Owners and
Management.............................................. 37
Item 13. Certain Relationships and Related Transactions.......... 37
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K................................................ 37
Statements we make in this Annual Report on Form 10-K which express a belief,
expectation or intention, as well as those that are not historical fact, are
forward-looking statements under the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are subject to various risks,
uncertainties and assumptions, including those to which we refer under the
heading "Cautionary Statement Concerning Forward-Looking Statements" following
Items 1 and 2 of Part I of this report.
PART I
Items 1 and 2. Business and Properties
General
U.S. Concrete provides ready-mixed concrete and related products and
services to the construction industry in several major markets in the United
States. As of March 24, 2000, we have 59 operating plants producing over 4.5
million cubic yards of concrete annually. Our operations consist principally
of formulating, preparing, delivering and placing ready-mixed concrete at the
job sites of our customers. We provide services intended to reduce our
customers' overall construction costs by lowering the installed, or "in-
place," cost of concrete. These services include the formulation of new
mixtures for specific design uses, on-site and lab-based product quality
control and delivery programs we configure to meet our customers' needs.
We completed our initial public offering in May 1999. At the same time, we
acquired six ready-mixed concrete and related businesses and began operating
26 concrete plants in three major markets in the United States. Since our IPO
and through March 24, 2000, we have acquired an additional 11 ready-mixed
concrete and related businesses, operating an additional 33 concrete plants,
in five additional major markets in the United States.
To increase our geographic diversification and expand the scope of our
operations, we seek to acquire businesses operating under quality management
teams in growing markets. Our acquisition strategy has two primary objectives.
In a new market, we target one or more companies that can serve as platform
businesses into which we can integrate other concrete operations. In markets
where we have existing operations and seek to increase our market penetration,
we pursue tuck-in acquisitions.
Industry Overview
Annual usage of ready-mixed concrete in the United States is currently at a
record level. According to the National Ready-Mixed Concrete Association,
total sales from production and delivery of ready-mixed concrete in the United
States grew over the past three years as follows:
Year Sales
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($ millions)
1997......................................................... $21,183
1998......................................................... 23,672
1999......................................................... 25,812
Also according to this industry association, the four major segments of the
construction industry accounted for the following approximate percentages of
total sales of ready-mixed concrete in the United States in 1999:
Commercial and industrial construction............................... 28%
Residential construction............................................. 23%
Street and highway construction and paving........................... 30%
Other public works and infrastructure construction................... 19%
---
Total............................................................ 100%
===
Ready-mixed concrete is a versatile, low-cost manufactured material the
construction industry uses in substantially all its projects. It is a stone-
like compound that results from combining fine and coarse aggregates, such as
sand, gravel and crushed stone, with water, various admixtures and cement.
Ready-mixed concrete can be manufactured in thousands of variations which in
each instance may reflect a specific design use. Manufacturers of ready-mixed
concrete generally maintain less than one day's requirements of raw materials
and must coordinate their daily material purchases with the time-sensitive
delivery requirements of their customers.
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Ready-mixed concrete begins to harden when mixed and generally becomes
difficult to place within 60 to 90 minutes after mixing. This characteristic
generally limits the market for a permanently installed plant to an area within
a 25-mile radius of its location. Concrete manufacturers produce ready-mixed
concrete in batches at their plants and use mixer and other trucks to
distribute and place it at the job sites of their customers. These
manufacturers generally do not provide paving or other finishing services
construction contractors or subcontractors typically perform.
Manufacturers generally obtain contracts through local sales and marketing
efforts they direct at general contractors, developers and home builders. As a
result, local relationships are very important.
On the basis of information the National Ready-Mixed Concrete Association has
provided to us, we estimate that, in addition to vertically integrated
manufacturers of cement and ready-mixed concrete, more than 3,500 independent
producers currently operate a total of approximately 5,300 plants in the United
States. Larger markets generally have numerous producers competing for business
on the basis of price, timing of delivery and reputation for quality and
service. We believe, on the basis of available market information, that the
typical ready-mixed concrete company is family-owned and has limited access to
capital, limited financial and technical expertise and limited exit strategies
for its owners. Given these operating constraints, we believe many ready-mixed
concrete companies are finding it difficult to both grow their businesses and
compete effectively against larger, more cost-efficient and technically capable
competitors. We believe these characteristics in our highly fragmented industry
present growth opportunities for a company with a focused acquisition program
and access to capital.
Barriers to the start-up of a new ready-mixed concrete manufacturing
operation historically have been low. In recent years, however, public concerns
about the dust, noise and heavy mixer and other truck traffic associated with
the operation of ready-mixed concrete plants and their general appearance have
made obtaining the permits and licenses required for new plants more difficult.
Delays in the regulatory process, coupled with the substantial capital
investment start-up operations entail, have raised the barriers to entry for
those operations.
Significant Factors Impacting the Market for Ready-Mixed Concrete
On the basis of available industry information, we believe that between 1996
and 1999 ready-mixed concrete sales as a percentage of total construction
expenditures in the United States increased 8.3%. In addition to favorable
trends in the overall economy of the United States, we believe three
significant factors have been expanding the market for ready-mixed concrete in
particular:
. the increased level of industry-wide promotional and marketing
activities;
. the development of new and innovative uses for ready-mixed concrete; and
. the enactment of the federal legislation commonly called TEA-21.
Industry-wide Promotional and Marketing Activities. We believe industry
participants have only in recent years focused on and benefited from
promotional activities to increase the industry's share of street and highway
and residential construction expenditures. Many of these promotional efforts
resulted from an industry-wide initiative called RMC 2000, a program
established in 1993 under the leadership of our chief executive officer, Eugene
P. Martineau. The National Ready-Mixed Concrete Association, the industry's
largest trade organization, has adopted this program. Its principal goals have
been to (1) promote ready-mixed concrete as a building and paving material and
(2) improve the overall image of the ready-mixed concrete industry. We believe
RMC 2000 has been a catalyst for increased investment in the promotion of
concrete.
Development of New and Innovative Ready-mixed Concrete Products. Ready-mixed
concrete has many attributes that make it a highly versatile construction
material. In recent years, industry participants have developed various product
innovations, including:
. concrete housing;
. pre-cast modular paving stones;
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. pre-stressed concrete railroad ties to replace wood ties;
. continuous-slab rail-support systems for rapid transit and heavy-traffic
intricate rail lines; and
. concrete bridges, tunnels and other structures for rapid transit systems.
Other examples of successful innovations that have opened new markets for
ready-mixed concrete include:
. highway median barriers;
. highway sound barriers;
. paved shoulders to replace less permanent and increasingly costly asphalt
shoulders;
. parking lots providing a long-lasting and aesthetically pleasing urban
environment; and
. colored pavements to mark entrance and exit ramps and lanes of
expressways.
Impact of TEA-21. The Federal Transportation Equity Act for the 21st
Century, commonly called TEA-21, is the largest public works funding bill in
the history of the United States. It became effective in June 1998 and
provides a $218 billion budget for federal highway, transit and safety
spending for the six-year period from 1998 through 2003. This represents a 43%
increase over the funding levels similar federal funding programs authorized
for the 1992-1997 period. Although road and highway construction and paving
accounted for only 17% of our pro forma 1999 sales, we believe we should
benefit from the impact we expect TEA-21 will have on the overall demand for
ready-mixed concrete in the United States.
Our Business Strategy
Our objective is to continue expanding the geographic scope of our
operations and become the leading value-added provider of ready-mixed concrete
and related products and services in each of our markets. We plan to achieve
this objective by (1) continuing to make acquisitions and (2) continuing to
implement our national operating strategy aimed at increasing revenue growth
and market share, achieving cost efficiencies and enhancing profitability.
Growth Through Acquisitions. The significant costs and regulatory
requirements involved in building new plants make acquisitions an important
element of our growth strategy. Our acquisition program targets opportunities
for (1) expansion in our existing markets and (2) entering new geographic
markets in the United States.
. Expanding in Existing Markets. We seek to continue acquiring other well-
established companies operating in our existing markets in order to
expand our market penetration. We have acquired operating companies in
Northern California, Michigan, North Texas, Memphis/Northern Mississippi
and the Washington, D.C. area following our initial entry into these
markets. By expanding in existing markets through acquisitions, we
expect to continue realizing various operating synergies, including:
. increased market coverage;
. improved utilization and range of mixer trucks because of access to
additional plants;
. customer cross-selling opportunities; and
. reduced operating and overhead costs.
. Entering New Geographic Markets. We seek to continue entering new
geographic markets that have a balanced mix of residential, commercial,
industrial and public sector concrete consumption and have demonstrated
adequate sustainable demand and prospects for growth. In each new market
we enter, we target for acquisition one or more leading local or
regional ready-mixed concrete companies that can serve as platform
businesses into which we can consolidate other ready-mixed concrete
operations. Important criteria for these acquisition candidates include
historically successful operating results, established customer
relationships and superior operational management personnel, whom we
generally will seek to retain. Since our formation in May 1999, we have
entered into new geographic markets in San Diego, North Texas/Southwest
Oklahoma, Memphis/Northern Mississippi, Knoxville and Michigan.
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Implementation of National Operating Strategy. We designed our national
operating strategy (1) to increase revenues and market share through improved
marketing and sales initiatives and enhanced operations and (2) to achieve
cost efficiencies.
. Improving Marketing and Sales Initiatives and Enhancing Operations. Our
basic operating strategy emphasizes the sale of value-added product to
customers who are more focused on reducing their installed, or in-place,
concrete costs than on the price per cubic yard of the ready-mixed
concrete they purchase. Key elements of our service-oriented strategy
include:
. providing corporate-level marketing and sales expertise;
. establishing company-wide quality control improvements;
. continuing to develop and implement training programs that emphasize
successful marketing, sales and training techniques and the sale of
high-margin concrete mix designs; and
. investing in computer and communications technology at each of our
locations to improve communications, purchasing, accounting, load
dispatch, delivery efficiency, reliability, truck tracking and
customer relations.
. Achieving Cost Efficiencies. We expect to reduce the total operating
expenses of the businesses we acquire by eliminating duplicative
administrative functions and consolidating other functions each business
performed separately prior to its acquisition. In addition, we believe
that, as we continue to increase in size, we should continue
experiencing reduced costs as a percentage of net sales compared to
those of the individual businesses we acquire in such areas as:
. materials procurement;
. purchases of mixer trucks and other equipment, spare parts and tools;
. vehicle and equipment maintenance;
. employee benefit plans; and
. insurance and other risk management programs.
Products and Services
Ready-Mixed Concrete. Our ready-mixed concrete products consist of
proportioned mixes we prepare and deliver in unhardened plastic states for
placement and shaping into their designed forms. Selecting the optimum mix for
a job entails determining not only the ingredients that will produce the
desired permeability, strength, appearance and other properties of the
concrete after it has hardened and cured, but also the ingredients necessary
to achieve a workable consistency under the weather and other conditions at
the job site. We believe we can achieve product differentiation for the mixes
we offer because of the variety of mixes we can produce, our volume production
capacity and our scheduling, delivery and placement reliability. We also
believe we distinguish ourselves with our value-added service approach that
emphasizes reducing our customers' overall construction costs by lowering the
installed, or in-place, cost of concrete.
From a contractor's perspective, the in-place cost of concrete includes both
the amount paid to the ready-mixed concrete manufacturer and the internal
costs associated with the labor and equipment the contractor provides. A
contractor's unit cost of concrete is often only a small component of the
total in-place cost that takes into account all the labor and equipment costs
required to place and finish the ready-mixed concrete, including the cost of
additional labor and time lost as a result of substandard products or delivery
delays. By carefully designing proper mixes and using advances in mixing
technology, we can assist our customers in reducing the amount of reinforcing
steel and labor they will require in various applications.
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We provide a variety of services in connection with our sale of ready-mixed
concrete which can help reduce our customers' in-place cost of concrete. These
services include:
. production of new formulations and alternative product recommendations
that reduce labor and materials costs;
. quality control, through automated production and laboratory testing,
that ensures consistent results and minimizes the need to correct
completed work;
. automated scheduling and tracking systems that ensure timely delivery
and reduce the downtime incurred by the customer's finishing crew; and
. innovative pricing discounts that are designed to minimize the time the
customer keeps our trucks on site, thereby resulting in a lower price to
the customer as well as a more efficient use of the customer's crews and
equipment.
We produce ready-mixed concrete by combining the desired type of cement,
sand, gravel and crushed stone with water and typically one or more
admixtures. These admixtures, such as chemicals, minerals and fibers,
determine the usefulness of the product for particular applications.
We use a variety of chemical admixtures to achieve one or more of five basic
purposes:
. relieve internal pressure and increase resistance to cracking in
subfreezing weather;
. retard the hardening process to make concrete more workable in hot
weather;
. strengthen concrete by reducing its water content;
. accelerate the hardening process and reduce the time required for
curing; and
. facilitate the placement of concrete having a low water content.
We frequently use various mineral admixtures as supplementary cementing
materials to alter the permeability, strength and other properties of
concrete. These materials include fly ash, ground granulated blast-furnace
slag and silica fume.
We also use fibers, such as steel, glass and synthetic and carbon filaments,
as an additive in various formulations of concrete. Fibers help to control
shrinkage cracking, thus reducing permeability and improving abrasion
resistance. In many applications, fibers replace welded steel wire and
reinforcing bars. Relative to the other components of ready-mixed concrete,
these additives generate comparatively high margins.
Our ready-mixed concrete operations comprised 90% of our pro forma 1999
revenues.
Pre-Cast Concrete. We produce pre-cast concrete products at our Pleasanton,
Santa Rosa and San Diego, California plants. Our pre-cast concrete products
consist of ready-mixed concrete we produce and then pour into molds at the
plant site. These operations produce a wide variety of specialized finished
products, including specialty engineered structures, custom signage and curb
inlets. After the concrete sets, we strip the molds from the products and ship
the finished product to our customers. Because these products are not
perishable, pre-cast concrete plants can serve a much larger market than
ready-mixed concrete plants.
Our pre-cast operations comprised 6.5% of our pro forma 1999 revenues.
Building Materials. Our building materials operations supply various
materials, products and tools contractors use in the concrete construction
industry. These materials include rebar, wire mesh, color additives, curing
compounds, grouts, wooden forms, hard hats, rubber boots, gloves, trowels,
lime slurry used to stabilize foundations and numerous other items. Our
building materials operations are generally located near our ready-mixed
concrete operations.
Our building materials operations comprised 3.5% of our pro forma 1999
revenues.
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Operations
The businesses we have acquired have made substantial capital investments in
equipment, systems and personnel at their respective plants to facilitate
continuous multi-customer deliveries of highly perishable products. In any
given market, we may maintain a number of plants whose production we centrally
coordinate to meet customer production requirements. We must be able to adapt
constantly to continually changing delivery schedules.
Our ready-mixed concrete plants consist of permanent and mobile facilities
that produce ready-mixed concrete in wet or dry batches. Our fixed-plant
operations use our 59 permanent plant facilities to produce ready-mixed
concrete that we transport to job sites by mixer trucks. Our on-site mobile
plant operations deploy our eight mobile-plant facilities to produce ready-
mixed concrete at the job site that we direct into place using a series of
conveyor belts or a mixer truck. Several factors govern the choice of plant
type, including:
. capital availability;
. production consistency requirements;
. daily production capacity requirements; and
. job-site location.
A wet batch plant generally costs more, but yields greater consistency in
the concrete produced and has greater daily production capacity, than a dry
batch plant. We believe that a wet batch plant having an hourly capacity of
250 cubic yards currently would cost approximately $1.5 million, while a dry
batch plant having the same capacity currently would cost approximately $0.7
million. At March 24, 2000, we operated 12 wet batch plants and 47 dry batch
plants.
The market primarily will drive our future plant decisions. The relevant
market factors include:
. the expected production demand for the plant;
. the expected types of projects the plant will service; and
. the desired location of the plant.
Generally, plants intended primarily to serve high-volume, commercial or
public works projects will be wet batch plants, while plants intended
primarily to serve low-volume, residential construction projects will be dry
batch plants. From time to time, we also may use portable plants, which
include both wet batch and dry batch facilities, to service large, long-term
jobs and jobs in remote locations.
The batch operator in a dry batch plant simultaneously loads the dry
components of stone, sand and cement with water and admixtures in a mixer
truck that begins the mixing process during loading and completes that process
while driving to the job site. In a wet batch plant, the batch operator blends
the dry components and water in a plant mixer from which he loads the already
mixed concrete into the mixer truck, which leaves for the job site promptly
after loading.
Mixer trucks slowly rotate their loads on route to job sites in order to
maintain product consistency. A mixer truck typically has a load capacity of
nine cubic yards, or approximately 18 tons, and a useful life of 12 years.
Depending upon the type of batch plant from which the mixer trucks generally
are loaded, some components of the mixer trucks will require refurbishment
after three to nine years. A new truck of this size currently costs
approximately $125,000. At March 24, 2000, we operated a fleet of
approximately 720 mixer trucks.
In our manufacture and delivery of ready-mixed concrete, we emphasize
quality control, pre-job planning, customer service and coordination of
supplies and delivery. We often obtain purchase orders for ready-mixed
concrete months in advance of actual delivery to a job site. A typical order
contains various specifications the contractor requires the concrete to meet.
After receiving the specifications for a particular job, we use computer
modeling, industry information and information from previous similar jobs to
formulate a variety of mixtures of cement, aggregates, water and admixtures
which meet or exceed the contractor's specifications. We perform testing to
determine which mix design is most appropriate to meet the required
specifications. The test results enable us to select the mixture that has the
lowest cost and meets or exceeds the job specifications. The testing center
creates and
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maintains a project file that details the mixture we will use when we produce
the concrete for the job. For quality control purposes, the testing center
also is responsible for maintaining batch samples of concrete we have
delivered to a job site.
We use computer modeling to prepare bids for particular jobs based on the
size of the job, location, desired margin, cost of raw materials and the
design mixture identified in our testing process. If the job is large enough,
we obtain quotes from our suppliers as to the cost of raw materials we use in
preparing the bid. Once we obtain a quotation from our suppliers, the price of
the raw materials for the specified job is informally established. Several
months may elapse from the time a contractor has accepted our bid until actual
delivery of the ready-mixed concrete begins. During this time, we maintain
regular communication with the contractor concerning the status of the job and
any changes in the job's specifications in order to coordinate the multi-
sourced purchases of cement and other materials we will need to fill the job
order and meet the contractor's delivery requirements. We confirm that our
customers are ready to take delivery of manufactured product throughout the
placement process. On any given day, a particular plant may have production
orders for dozens of customers at various locations throughout its area of
operation. To fill an order:
. the dispatch office coordinates the timing and delivery of the concrete
to the job site;
. a load operator supervises and coordinates the receipt of the necessary
raw materials and operates the hopper that dispenses those materials
into the appropriate storage bins;
. a batch operator prepares the specified mixture from the order and
oversees the loading of the mixer truck with either dry ingredients and
water in a dry batch plant or the already-mixed concrete in a wet batch
plant; and
. the driver of the mixer truck delivers the load to the job site,
discharges the load and, after washing the truck, departs at the
direction of the dispatch office.
The central dispatch system tracks the status of each mixer truck as to
whether a particular truck is:
. loading concrete;
. in route to a particular job site;
. on the job site;
. discharging concrete;
. being washed; or
. in route to a particular plant.
The system is updated continuously via signals received from the individual
truck operators as to their status. In this manner, the dispatcher can
determine the optimal routing and timing of subsequent deliveries by each
mixer truck and monitor the performance of each driver.
A plant manager oversees the operation of each plant. Our employees also
include:
. maintenance personnel who perform routine maintenance work throughout
our plants;
. a full-time staff of mechanics who perform substantially all the
maintenance and repair work on our vehicles;
. testing center staff who prepare mixtures for particular job
specifications and maintain quality control;
. various clerical personnel who perform administrative tasks; and
. sales personnel who are responsible for identifying potential customers
and maintaining existing customer relationships.
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We generally operate on a single shift with some overtime operation during the
construction season. On occasion, however, we may have projects that require
deliveries around the clock.
Cement and Raw Materials
We obtain most of the materials necessary to manufacture ready-mixed
concrete at each of our facilities on a daily basis. These raw materials
include cement, which is a manufactured product, stone, gravel and sand. Each
plant typically maintains an inventory level of these materials sufficient to
satisfy its operating needs for one day or less. Cement represents the highest
cost material used in manufacturing a cubic yard of ready-mixed concrete,
while the combined cost of the stone, gravel and sand used is slightly less
than the cement cost. In each of our markets, we purchase each of these
materials from any one of several suppliers.
Sales and Marketing
General contractors typically select their suppliers of ready-mixed
concrete. In large, complex projects, an engineering firm or division within a
state transportation or public works department may influence the purchasing
decision, particularly if the concrete has complicated design specifications.
In those projects and in government-funded projects generally, the general
contractor or project engineer usually awards supply orders on the basis of
either direct negotiation or competitive bidding. We believe the purchasing
decision in many cases ultimately is relationship-based. Our marketing efforts
target general contractors, design engineers and architects whose focus
extends beyond the price of ready-mixed concrete to product quality and
consistency and reducing their in-place cost of concrete.
Customers
Of our pro forma 1999 sales, we made approximately 43% to commercial and
industrial construction contractors, approximately 35% to residential
construction contractors, approximately 17% to street and highway construction
contractors and approximately 5% to other public works and infrastructure
contractors. In 1999, no single customer or project accounted for more than 8%
of our total sales.
We rely heavily on repeat customers. Our management and dedicated sales
personnel are responsible for developing and maintaining successful long-term
relationships with key customers. We believe that by expanding our operations
into more geographic markets, we will be in a better position to market to and
service large nationwide and regional contractors.
Training and Safety
Our future success will depend, in part, on the extent to which we can
attract, retain and motivate qualified employees. We believe that our ability
to do so will depend on the quality of our recruiting, training, compensation
and benefits, the opportunities we afford for advancement and our safety
record. Historically, we have supported and funded continuing education
programs for our employees. We intend to continue and expand these programs.
We require all field employees to attend periodic safety training meetings and
all drivers to participate in training seminars followed by certification
testing. The responsibilities of our national safety director include managing
and executing a unified, company-wide safety program.
Competition
The ready-mixed concrete industry is highly competitive. Our competitive
position in a market depends largely on the location and operating costs of
our ready-mixed concrete plants and prevailing prices in that market. Price is
the primary competitive factor among suppliers for small or simple jobs,
principally in residential construction, while timeliness of delivery and
consistency of quality and service as well as price are the principal
competitive factors among suppliers for large or complex jobs. Our competitors
range from small, owner-operated private companies to subsidiaries or
operating units of large, vertically integrated cement manufacturing and
concrete products companies. Competitors having lower operating costs than we
do or having the financial resources to enable them to accept lower margins
than we do have a competitive advantage over us for jobs that are particularly
price-sensitive. Competitors having greater financial resources to build
plants in new areas or pay for acquisitions also have competitive advantages
over us.
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Employees
At March 24, 2000, we had approximately 239 salaried employees, including
executive officers, management personnel, sales personnel, technical
personnel, administrative staff and clerical personnel, and approximately
1,137 hourly personnel generally employed on an as-needed basis, including 801
truck drivers. The number of employees fluctuates depending on the number and
size of projects ongoing at any particular time, which may be impacted by
variations in weather conditions throughout the year.
At March 24, 2000, approximately 635 of our employees were represented by
labor unions having collective bargaining agreements with us. Generally, these
agreements have multi-year terms and expire on a staggered basis. Under these
agreements, we pay specified wages to covered employees, observe designated
workplace rules and make payments to multi-employer pension plans and employee
benefit trusts rather than administering the funds on behalf of these
employees.
None of the businesses we have acquired has experienced any strikes or
significant work stoppages in the past five years. We believe our
relationships with our employees and union representatives are satisfactory.
Facilities and Equipment
At March 24, 2000, we operated a fleet of approximately 720 owned and leased
mixer trucks and 323 other vehicles. Our own mechanics service most of the
fleet. We believe these vehicles are generally well maintained and adequate
for our operations. The average age of the mixer trucks is approximately 7.3
years.
We operated 67 fixed-plant facilities and eight onsite mobile-plant
facilities at March 24, 2000. We believe that these facilities are sufficient
for our immediate needs. The table below summarizes operations at our fixed-
plant facilities at March 24, 2000. The ready-mixed volumes in the table
represent the pro forma 1999 volumes produced by each location.
Ready-Mixed
Volume
Building (in thousands
Location Ready-Mixed Pre-Cast Materials of cubic yards)
- ------------------------ ----------- -------- --------- ---------------
Northern California..... 20 2 3 2,102
North Texas/Southwest
Oklahoma............... 14 -- 2 773
Washington, D.C. area... 4 -- -- 476
Michigan................ 7 -- -- 392
Memphis/Northern
Mississippi............ 6 -- -- 357
Knoxville............... 3 -- -- 215
New Jersey.............. 5 -- -- 211
San Diego............... -- 1 -- --
--- --- --- -----
59 3 5 4,526
=== === === =====
The information above includes the following locations we purchased between
January 1, 2000 and March 24, 2000:
Ready-Mixed
Volume
Building (in thousands
Location Ready-Mixed Pre-Cast Materials of cubic yards)
- ------------------------ ----------- -------- --------- ---------------
North Texas/Southwest
Oklahoma............... 14 -- 2 773
Michigan................ 4 -- -- 147
--- --- --- -----
18 -- 2 920
=== === === =====
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9
Governmental Regulation and Environmental Matters
A wide range of federal, state and local laws apply to our operations,
including such matters as:
. land usage;
. street and highway usage;
. noise levels; and
. health, safety and environmental matters.
In many instances, we must have certificates, permits or licenses to conduct
our business. Failure to maintain required certificates, permits or licenses
or to comply with applicable laws could result in substantial fines or
possible revocation of our authority to conduct some of our operations. Delays
in obtaining approvals for the transfer or grant of certificates, permits or
licenses, or failures to obtain new certificates, permits or licenses, could
impede the implementation of our acquisition program.
Environmental laws that impact our operations include those relating to air
quality, solid waste management and water quality. Environmental laws are
complex and subject to frequent change. These laws impose strict liability in
some cases without regard to negligence or fault. Sanctions for noncompliance
may include revocation of permits, corrective action orders, administrative or
civil penalties and criminal prosecution. Some environmental laws provide for
joint and several strict liability for remediation of spills and releases of
hazardous substances. In addition, businesses may be subject to claims
alleging personal injury or property damage as a result of alleged exposure to
hazardous substances, as well as damage to natural resources. These laws also
may expose us to liability for the conduct of or conditions caused by others,
or for acts which complied with all applicable laws when performed. We have
conducted Phase I investigations to assess environmental conditions on
substantially all the real properties we own or lease and have engaged
independent environmental consulting firms in that connection. We have not
identified any environmental concerns we believe are likely to have a material
adverse effect on our business, financial condition or results of operations,
but you have no assurance material liabilities will not occur. You also have
no assurance our compliance with amended, new or more stringent laws, stricter
interpretations of existing laws or the future discovery of environmental
conditions will not require additional, material expenditures. OSHA
regulations establish requirements our training programs must meet.
We have all material permits and licenses we need to conduct our operations
and are in substantial compliance with applicable regulatory requirements
relating to our operations. Our capital expenditures relating to environmental
matters were not material on a pro forma combined basis in 1999. We currently
do not anticipate any material adverse effect on our business or financial
position as a result of our future compliance with existing environmental laws
controlling the discharge of materials into the environment.
Insurance
Our operations involve providing ready-mixed concrete formulations that must
meet building code or other regulatory requirements and contractual
specifications for durability, stress-level capacity, weight-bearing capacity
and other characteristics. If we fail or are unable to provide product meeting
these requirements and specifications, claims may arise against us or our
reputation could be damaged. Although we have not experienced any material
claims of this nature in recent periods, we may experience such claims in the
future. In addition, our employees perform a significant portion of their work
moving and storing large quantities of heavy raw materials, driving large
mixer trucks in heavy traffic conditions or placing concrete at construction
sites or in other areas that may be hazardous. These operating hazards can
cause personal injury and loss of life, damage to or destruction of property
and equipment and environmental damage. We maintain insurance coverage in
amounts and against the risks we believe accord with industry practice, but
this insurance may not be adequate to cover all losses or liabilities we may
incur in our operations, and we may be unable to maintain insurance of the
types or at levels we deem necessary or adequate or at rates we consider
reasonable.
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10
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We are including the following discussion to inform our existing and
potential security holders generally of some of the risks and uncertainties
that can affect our company and to take advantage of the "safe harbor"
protection for forward-looking statements that applicable federal securities
law affords.
From time to time, our management or persons acting on our behalf make
forward-looking statements to inform existing and potential security holders
about our company. These statements may include projections and estimates
concerning the timing of pending acquisitions and the success of our
acquisition program, revenues, income and capital spending. Forward-looking
statements generally use words such as "estimate," "project," "predict,"
"believe," "expect," "anticipate," "plan," "goal" or other words that convey
the uncertainty of future events or outcomes. In addition, sometimes we will
specifically describe a statement as being a forward-looking statement and
refer to this cautionary statement.
In addition, various statements this report contains, including those that
express a belief, expectation or intention, as well as those that are not
statements of historical fact, are forward-looking statements. Those forward-
looking statements appear in Items 1 and 2--"Business and Properties" and Item
3--"Legal Proceedings" in Part I of this report and in Item 7--"Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
in the notes to our consolidated financial statements in Item 8 of Part II of
this report and elsewhere in this report. These forward-looking statements
speak only as of the date of this report, we disclaim any obligation to update
these statements and we caution you not to rely unduly on them. We have based
these forward-looking statements on our current expectations and assumptions
about future events. While our management considers these expectations and
assumptions to be reasonable, they are inherently subject to significant
business, economic, competitive, regulatory and other risks, contingencies and
uncertainties, most of which are difficult to predict and many of which are
beyond our control. These risks, contingencies and uncertainties relate to,
among other matters, the following:
. our acquisition and national operating strategies;
. our ability to integrate the businesses we acquire;
. our ability to obtain the capital necessary to finance our growth
strategies;
. the availability of qualified personnel;
. the trends we anticipate in the ready-mixed concrete industry;
. the level of activity in the construction industry generally and in our
local markets for ready-mixed concrete;
. the highly competitive nature of our business;
. changes in, or our ability to comply with, governmental regulations,
including those relating to the environment;
. our labor relations and those of our suppliers of cement and aggregates;
. our ability to control costs and maintain quality; and
. continuing uncertainties relating to the recent change over to the year
2000.
We believe the items we have outlined above are important factors that could
cause our actual results to differ materially from those expressed in a
forward-looking statement made in this report or elsewhere by us or on our
behalf. We have discussed most of these factors in more detail elsewhere in
this report. These factors are not necessarily all the important factors that
could affect us. Unpredictable or unknown factors we have not discussed in
this report could also have material adverse effects on actual results of
matters that are the subject of our forward-looking statements. We do not
intend to update our description of important factors each time a potential
important factor arises. We advise our stockholders and prospective investors
that they should (1) be aware that important factors to which we do not refer
above could affect the accuracy of our forward-looking statements and (2) use
caution and common sense when considering our forward-looking statements.
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11
Item 3. Legal Proceedings
From time to time, and currently, we are subject to claims and litigation
brought by employees, customers and 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.
Currently, we do not have pending any litigation that, separately or in the
aggregate, if adversely determined, we believe would have a material adverse
effect on our business, financial condition or results of operations. We
expect that in the future we will from time to time be a party to litigation
or administrative proceedings which arise in the normal course of our
business.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the Company's security holders during
the fourth quarter of 1999.
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12
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Our common stock began trading on The Nasdaq Stock Market in May 1999 under
the symbol "RMIX." As of March 24, 2000, 21.3 million shares of our common
stock were outstanding, held by approximately 155 stockholders of record. The
number of record holders does not necessarily bear any relationship to the
number of beneficial owners of our common stock.
The following table sets forth the range of high and low bid prices for our
common stock on The Nasdaq Stock Market for the periods indicated:
Year Ended December 31, 1999 High Low
---------------------------- ---- ---
Second Quarter (May 26 to June 30)....................... $10 1/32 $7 7/8
Third Quarter............................................ 11 1/8 6 1/2
Fourth Quarter........................................... 8 5/32 5 7/8
The last reported bid price for our common stock on The Nasdaq Stock Market
on March 24, 2000 was $6.375 per share.
During the quarter ended December 31, 1999, we issued 688,000 shares of our
common stock as part of the consideration we paid to the former owners of four
businesses we acquired during the quarter. We issued these shares without
registration under the Securities Act in reliance on the exemption provided by
Section 4(2) of the Securities Act as transactions not involving any public
offering. Each acquisition involved a limited number of owners.
We have not paid or declared any dividends since our formation and currently
intend to retain earnings to fund our working capital. Any future dividends
will be at the discretion of our board of directors after taking into account
various factors it deems relevant, including our financial condition and
performance, cash needs, income tax consequences and the restrictions Delaware
and other applicable laws and our credit facilities then impose. Our credit
facility prohibits the payment of cash dividends on our common stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" in Item 7 of this Report and Note
6 of our Notes to Consolidated Financial Statements in Item 8 of this Report.
Item 6. Selected Financial Data
During 1999, we purchased 14 operating businesses for which we have
accounted in accordance with the purchase method of accounting. Our financial
statements present Central Concrete Supply Co., Inc., one of our initial six
acquisitions, as the acquirer of the other 13 businesses and U.S. Concrete.
The following historical financial information is of Central prior to June 1,
1999 and of U.S. Concrete and its consolidated subsidiaries after that date.
The historical financial information for Central as of December 31, 1998 and
1997, and for the years ended December 31, 1998, 1997 and 1996, derives from
the audited financial statements of Central. The remaining historical
financial information for Central derives from Central's unaudited financial
statements, which have been prepared on the same basis as the audited
financial statements and reflect all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of that information.
See the historical financial statements and related notes this document
contains.
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13
Year Ended December 31 Year Ended
----------------------------------- April 30,
1999 1998 1997 1996 1996
-------- ------- ------- ------- -----------
(in thousands) (unaudited)
Statement of Operations
Information:
Sales....................... $167,912 $66,499 $53,631 $39,204 $37,781
Cost of goods sold.......... 135,195 53,974 43,794 33,402 32,040
-------- ------- ------- ------- -------
Gross profit................ 32,717 12,525 9,837 5,802 5,741
Selling, general and
administrative expenses.... 9,491 4,712 4,265 3,644 2,955
Stock compensation charge... 2,880 -- -- -- --
Depreciation and
amortization............... 3,453 930 1,330 1,203 586
-------- ------- ------- ------- -------
Income from operations...... 16,893 6,883 4,242 955 2,200
Interest and other income
(expense) net.............. (1,045) (129) (200) (188) (73)
-------- ------- ------- ------- -------
Income before provision
(benefit) for income
taxes...................... 15,848 6,754 4,042 767 2,127
Provision (benefit) for
income taxes............... 7,658 100 (457) 303 937
-------- ------- ------- ------- -------
Net income.................. $ 8,190 $ 6,654 $ 4,499 $ 464 $ 1,190
======== ======= ======= ======= =======
December 31
----------------------------------- April 30,
1999 1998 1997 1996 1996
-------- ------- ------- ------- -----------
(in thousands) (unaudited)
Balance Sheet Information:
Working capital............. $ 14,578 $ 7,431 $ 4,899 $ 1,363 $ 1,074
Total assets................ 212,734 26,640 19,837 13,603 9,683
Long-term debt, including
current maturities......... 57,375 3,530 2,660 1,730 2,091
Total stockholders' equity.. 110,793 15,154 10,731 6,472 3,158
Item 7. 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 risks, uncertainties and
assumptions. Our actual results, performance or achievements, or industry
results, could differ materially from those we express in the following
discussion as a result of a variety of factors, including the risks and
uncertainties we have referred to under the heading "Cautionary Statement
Concerning Forward-looking Statements" following Items 1 and 2 of Part I of
this report and under the heading "Factors That May Affect Our Future
Operating Results" below.
Overview
We derive substantially all our revenues from the sale of ready-mixed
concrete, other concrete products and related construction materials to the
construction industry in the United States. We serve substantially all
segments of the construction industry, and our customers include contractors
for commercial, industrial, residential and public works and infrastructure
construction. We typically sell ready-mixed concrete under daily purchase
orders that require us to formulate, prepare and deliver ready-mixed concrete
to the job sites of our customers. We generally recognize our sales from these
orders when we deliver the ordered products.
Our cost of goods sold consists principally of the costs we incur in
obtaining the cement, aggregates and admixtures we combine to produce ready-
mixed concrete and other concrete products in various formulations. We obtain
all these materials from third parties and generally have only one day's
supply at each of our concrete plants. Our cost of goods sold also includes
labor costs and the operating, maintenance and rental expenses we incur in
operating our concrete plants and mixer trucks and other vehicles.
Our selling expenses include the salary and incentive compensation we pay
our sales force, the salaries and incentive compensation of our sales managers
and travel, entertainment and other promotional expenses. Our general and
administrative expenses include the salaries and benefits we pay to our
executive officers, the senior managers of
- -------------------------------------------------------------------------------
14
our local and regional operations, plant managers and administrative staff.
These expenses also include office rent and utilities, communications expenses
and professional fees.
During 1999, we purchased 14 operating businesses for which we have
accounted in accordance with the purchase method of accounting. Our financial
statements present Central Concrete Supply Co., Inc., one of our initial six
acquisitions, as the acquirer of the other 13 businesses and U.S. Concrete.
These financial statements are those of Central prior to June 1, 1999 and of
U.S. Concrete and its consolidated subsidiaries after that date.
Factors That May Affect Our Future Operating Results
Reflecting the levels of construction activity, the demand for ready-mixed
concrete is highly seasonal. We believe that this demand may be as much as
three times greater in a prime summer month than in a slow winter month and
that the six-month period of May through October is the peak demand period.
Consequently, we expect that our sales generally will be materially lower in
the first and fourth calendar quarters. Because we incur fixed costs, such as
wages, rent, depreciation and other selling, general and administrative
expenses, throughout the year, we expect our gross profit margins will be
disproportionately lower than our sales in these quarters. Even during
traditional peak periods, sustained periods of inclement weather and other
extreme weather conditions can slow or delay construction and thus slow or
delay our sales.
You should not rely on (1) quarterly comparisons of our revenues and
operating results as indicators of our future performance or (2) the results
of any quarterly period during a year as an indicator of results you may
expect for that entire year.
Demand for ready-mixed concrete and other concrete products depends on the
level of activity in the construction industry. That industry is cyclical in
nature, and the general condition of the economy and a variety of other
factors beyond our control affect its level of activity. These factors
include, among others:
. the availability of funds for public or infrastructure construction;
. commercial and residential vacancy levels;
. changes in interest rates;
. the availability of short- and long-term financing;
. inflation;
. consumer spending habits; and
. employment levels.
The construction industry can exhibit substantial variations in activity
across the country as a result of these factors impacting regional and local
economies differently.
Markets for ready-mixed concrete generally are local. Our results of
operations are susceptible to swings in the level of construction activity
which may occur in our markets.
Ready-mixed concrete is highly price-sensitive. Our prices are subject to
changes in response to relatively minor fluctuations in supply and demand,
general economic conditions and market conditions, all of which are beyond our
control. Because of the fixed-cost nature of our business, our overall
profitability is sensitive to minor variations in sales volumes and small
shifts in the balance between supply and demand.
Competitive conditions in our industry also may affect our future operating
results.
As we acquire additional businesses in the future for which we will account
in accordance with the purchase method of accounting, we will include the
operating results of those businesses in our consolidated operating results
from their respective acquisition dates and begin writing off any purchased
goodwill resulting from those acquisitions
- -------------------------------------------------------------------------------
15
on those same dates. Consequently, the magnitude and timing of our future
acquisitions will affect our operating results.
Results of Operations
The following table sets forth for us selected historical statement of
operations information and that information as a percentage of sales for the
years indicated. These financial statements are those of Central prior to June
1, 1999 and of U.S. Concrete and its consolidated subsidiaries after that
date. Except as we note below, the consolidation of operating results
beginning on June 1, 1999 and our subsequent acquisitions in 1999 principally
account for the changes in 1999 from 1998.
Year Ended December 31
-----------------------------------------------
1999 1998 1997
--------------- -------------- --------------
(dollars in thousands)
Sales......................... $167,912 100.0% $66,499 100.0% $53,631 100.0%
Cost of goods sold............ 135,195 80.5 53,974 81.2 43,794 81.7
-------- ----- ------- ----- ------- -----
Gross profit................ 32,717 19.5 12,525 18.8 9,837 18.3
Selling, general and
administrative expenses...... 9,491 5.7 4,712 7.1 4,265 7.9
Stock compensation charge..... 2,880 1.7 -- -- -- --
Depreciation and
amortization................. 3,453 2.1 930 1.4 1,330 2.5
-------- ----- ------- ----- ------- -----
Income from operations...... 16,893 10.0 6,883 10.3 4,242 7.9
Interest expense, net......... 1,708 1.0 165 0.2 226 0.4
Other income (expense), net... (663) (0.4) (36) (0.1) (26) --
-------- ----- ------- ----- ------- -----
Income before income tax
provision (benefit)........ 15,848 9.4 6,754 10.2 4,042 7.5
Income tax provision
(benefit).................... 7,658 4.5 100 0.2 (457) (0.9)
-------- ----- ------- ----- ------- -----
Net income.................. $ 8,190 4.9% $ 6,654 10.0% $ 4,499 8.4%
======== ===== ======= ===== ======= =====
1999 Compared to 1998
Sales. Sales increased $101.4 million, or 152.5%, from $66.5 million in 1998
to $167.9 million in 1999.
Gross profit. Gross profit increased $20.2 million, or 161.2%, from $12.5
million in 1998 to $32.7 million in 1999. Gross margins increased from 18.8%
in 1998 to 19.5% in 1999, primarily because increases in our product prices
more than offset increases in labor rates, additional technical personnel and
increases in our costs of raw materials.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $4.8 million, or 101.4%, from $4.7 million
in 1998 to $9.5 million in 1999. The 1999 expenses include the salaries of our
executive officers and expenses we incurred in building our corporate
infrastructure.
Stock compensation charge. The 1999 stock compensation charge represents a
noncash charge for the 400,000 shares of our common stock we issued in
December 1998 and March 1999 to management and nonemployee directors at a
nominal cost.
Depreciation and amortization. Depreciation and amortization expense increased
$2.6 million, or 271.3%, from $0.9 million in 1998 to $3.5 million in 1999.
This increase reflects our initial amortization of the goodwill attributable
to our 1999 acquisition activity. We are amortizing this goodwill over 40
years for each acquisition. At December 31, 1999, the annualized amount of
this noncash expense was $2.7 million.
Interest expense, net. Interest expense, net, increased $1.5 million from $0.2
million in 1998 to $1.7 million in 1999. This increase was attributable
principally to borrowings we made to finance our post-IPO acquisitions in 1999
and to refinance indebtedness of our acquired businesses. At December 31,
1999, we had borrowings totaling $57.1 million outstanding under our credit
facility at a weighted average interest cost of 7.9% per annum.
- -------------------------------------------------------------------------------
16
Income tax provision. We provided for income taxes of $7.7 million in 1999, an
increase of $7.6 million from our provision in 1998. This increase is
attributable to the fact that Central was an S corporation during 1998 and the
first five months of 1999 and thus made no provision for federal income taxes
during those periods.
1998 Compared to 1997
Sales. Sales increased $12.9 million, or 24.1%, from $53.6 million in 1997 to
$66.5 million in 1998, principally as a result of strong construction activity
in the Silicon Valley region in California. Both increases in the size of
Central's customer base and in repeat sales to its existing customers
contributed to this increase.
Gross profit. Gross profit increased $2.7 million, or 27.3%, from $9.8 million
in 1997 to $12.5 million in 1998. Gross margins increased from 18.3% in 1997
to 18.8% in 1998 because increases in Central's product prices more than
offset increases in labor rates and costs of raw materials.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $0.4 million, or 10.5%, from $4.3 million in
1997 to $4.7 million in 1998 as a result of the addition of administrative
infrastructure necessary to support Central's growth. As a percentage of
sales, these expenses decreased from 7.9% in 1997 to 7.1% in 1998.
Liquidity and Capital Resources
The consolidation of operating results on June 1, 1999 and our subsequent
acquisitions in 1999 principally account for the changes in our working
capital accounts and our property, plant and equipment account from December
31, 1998 to December 31, 1999.
On May 28, 1999, we completed our initial public offering. In the IPO, we
issued and sold 3.8 million shares of common stock at an initial offering
price of $8 per share. On June 11, 1999, we issued and sold an additional
570,000 shares on the exercise in full of the over-allotment option we had
granted to the underwriters for the IPO. Our net proceeds from these sales,
after deducting the underwriting discount and other IPO expenses, totaled
$27.7 million. We used $22.3 million of these proceeds to pay the cash
portions of the purchase prices of our six initial businesses and the
remaining $5.4 million to repay a portion of their indebtedness.
On May 28, 1999, we entered into a $75 million secured revolving credit
facility with a group of banks and borrowed approximately $22.7 million,
principally to refinance outstanding indebtedness of our acquired businesses.
In December 1999, we increased the size of the facility to $100 million. We
had $57.1 million of outstanding borrowings under the facility at December 31,
1999. In February 2000, we increased the size of the facility to $200 million.
We had $130.8 million of outstanding borrowings under the facility at March
24, 2000.
The facility has a three-year term and a $5.0 million sublimit for letters
of credit issued on our behalf. We may use the facility for the following
purposes:
. finance acquisitions;
. internally expand operations;
. working capital; and
. general corporate purposes.
Our subsidiaries have guaranteed the repayment of all amounts owing under
the facility, and we secured the facility with the capital stock and assets of
our subsidiaries. The facility:
. requires the consent of the lenders for certain acquisitions;
. prohibits the payment of cash dividends on our common stock;
. limits our ability to incur additional indebtedness; and
. requires us to comply with financial covenants.
- -------------------------------------------------------------------------------
17
The failure to comply with these covenants and restrictions would constitute
an event of default under the facility. Our borrowing capacity under the
facility will vary from time to time depending on our satisfaction of several
financial tests.
We anticipate that our consolidated cash flow from our operations will
exceed our normal working capital needs, debt service requirements and the
amount of our planned capital expenditures, excluding acquisitions, for at
least the next 12 months.
Our growth strategy will require substantial capital. We currently intend to
finance future acquisitions through issuances of our common stock or debt
securities, including convertible debt securities, and borrowings under our
credit facility. Using debt to complete acquisitions could substantially limit
our operational and financial flexibility. The extent to which we will be able
or willing to use our common stock to make acquisitions will depend on its
market value from time to time and the willingness of potential sellers to
accept it as full or partial payment. Using our common stock for this purpose
may result in dilution to our then existing stockholders. To the extent we are
unable to use our common stock to make future acquisitions, our ability to
grow will be limited by the extent to which we are able to raise capital for
this purpose, as well as to expand existing operations, through debt or
additional equity financings. If we are unable to obtain additional capital on
acceptable terms, we may be required to reduce the scope of our presently
anticipated expansion, which could materially adversely affect our business
and the value of our common stock.
We cannot accurately predict the timing, size and success of our acquisition
efforts or our associated potential capital commitments.
Year 2000 Compliance
The "year 2000" problem resulted from the fact that many software
applications, computer hardware and related equipment and systems that use
embedded technology, such as microprocessors, rely on two digits rather than
four to represent years in performing computations and decision-making
functions. Absent modification, many of these programs, hardware items and
systems would have failed on January 1, 2000 or earlier because they would
have misinterpreted "00" as the year 1900 rather than 2000.
By December 31, 1999, we completed all tasks that we scheduled for
completion before that date to resolve the year 2000 problems that might have
affected us, and the transition to the year 2000 did not have a material
impact on any of our critical systems or facilities. To date, the year 2000
problems of third parties, including our customers and suppliers, have not had
a significant impact on our operations.
The costs associated with modifications to our systems and other activities
related to achieving year 2000 readiness have not had a material impact on our
consolidated financial condition, cash flows or results of operations. The
total cost of our year 2000 project was under $0.1 million, which we funded
through our cash flows from operations.
Although it appears the transition to the year 2000 has not impacted us,
some risk will continue until we encounter other critical dates in the current
year and until we execute all our software and other systems through complete
business and operating cycles.
This disclosure is subject to protection under the Year 2000 Information and
Readiness Disclosure Act of 1998 as a "Year 2000 Statement" and "Year 2000
Readiness Disclosure," as that Act defines those terms.
Inflation
As a result of the relatively low levels of inflation during the past three
years, inflation did not significantly affect our results of operations in any
of those years.
- -------------------------------------------------------------------------------
18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Borrowings under our revolving credit facility expose us to certain market
risks. Outstanding borrowings under our credit facility were $57.1 million at
December 31, 1999. A change of one percent in the interest rate would cause a
change in interest expense of approximately $571,000, or $0.02 per share, on
an annual basis. We did not enter into our credit facility for trading
purposes and the facility carries interest at a pre-agreed percentage point
spread from either the prime interest rate or 30-day Eurodollar interest rate.
Item 8. Financial Statements and Supplementary Data
U.S. CONCRETE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
U.S. Concrete, Inc. and Subsidiaries
Report of Independent Public Accountants................................ 20
Consolidated Balance Sheets at December 31, 1999 and 1998............... 21
Consolidated Statements of Operations for the Years Ended December 31,
1999, 1998 and 1997.................................................... 22
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 1999, 1998 and 1997................................. 23
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997.................................................... 24
Notes to Consolidated Financial Statements.............................. 25
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19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To U.S. Concrete, Inc.:
We have audited the accompanying consolidated balance sheets of U.S. Concrete,
Inc., a Delaware corporation, and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of U.S.
Concrete, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
- -------------------------------
ARTHUR ANDERSEN LLP
Houston, Texas
March 10, 2000
- --------------------------------------------------------------------------------
20
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
December 31
----------------
ASSETS 1999 1998
------ -------- -------
Current assets:
Cash and cash equivalents........................................ $ 627 $ 4,213
Trade accounts receivable, net................................... 44,085 7,641
Receivables from related parties................................. 1,496 2,712
Inventories...................................................... 4,351 792
Prepaid expenses and other current assets........................ 1,758 989
-------- -------
Total current assets......................................... 52,317 16,347
-------- -------
Property, plant and equipment, net................................. 53,949 9,138
Goodwill, net...................................................... 105,492 --
Cash surrender value of life insurance............................. -- 1,155
Other assets....................................................... 976 --
-------- -------
Total assets................................................. $212,734 $26,640
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt............................. $ 140 $ 1,006
Accounts payable and accrued liabilities......................... 37,599 7,910
-------- -------
Total current liabilities.................................... 37,739 8,916
-------- -------
Long-term debt, net of current maturities.......................... 57,235 2,524
Deferred income taxes.............................................. 6,967 46
-------- -------
Total liabilities............................................ 101,941 11,486
-------- -------
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized,
none issued and outstanding..................................... -- --
Common stock, $0.001 par value; 60,000,000 shares authorized;
18,639,228 and 3,120,130 shares issued and outstanding in 1999
and 1998, respectively.......................................... 19 3
Additional paid-in capital..................................... 104,271 621
Retained earnings.............................................. 6,503 14,530
-------- -------
Total stockholders' equity................................... 110,793 15,154
-------- -------
Total liabilities and stockholders' equity................... $212,734 $26,640
======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------------------
21
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Year Ended December 31
--------------------------
1999 1998 1997
-------- ------- -------
Sales............................................. $167,912 $66,499 $53,631
Cost of goods sold................................ 135,195 53,974 43,794
-------- ------- -------
Gross profit.................................... 32,717 12,525 9,837
Selling, general and administrative expenses...... 9,491 4,712 4,265
Stock compensation charge......................... 2,880 -- --
Depreciation and amortization..................... 3,453 930 1,330
-------- ------- -------
Income from operations.......................... 16,893 6,883 4,242
Interest expense, net............................. 1,708 165 226
Other, net........................................ (663) (36) (26)
-------- ------- -------
Income before income tax provision (benefit).... 15,848 6,754 4,042
Income tax provision (benefit).................... 7,658 100 (457)
-------- ------- -------
Net income...................................... $ 8,190 $ 6,654 $ 4,499
======== ======= =======
Earnings per share:
Basic........................................... $ 0.70 $ 2.13 $ 1.44
======== ======= =======
Diluted......................................... $ 0.70 $ 2.13 $ 1.44
======== ======= =======
Number of shares used in calculating earnings per
share:
Basic........................................... 11,770 3,120 3,120
======== ======= =======
Diluted......................................... 11,783 3,120 3,120
======== ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------------------
22
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
Common Stock Additional
------------- Paid-In Retained Stockholders'
Shares Amount Capital Earnings Equity
------ ------ ---------- -------- -------------
BALANCE, December 31, 1996..... 3,120 $ 3 $ 621 $ 5,848 $ 6,472
Distributions to
stockholders................ -- -- -- (240) (240)
Net income................... -- -- -- 4,499 4,499
------ --- -------- ------- --------
BALANCE, December 31, 1997..... 3,120 3 621 10,107 10,731
Distributions to
stockholders................ -- -- -- (2,231) (2,231)
Net income..................... -- -- -- 6,654 6,654
------ --- -------- ------- --------
BALANCE, December 31, 1998..... 3,120 3 621 14,530 15,154
Initial public offering, net
of offering costs........... 4,370 4 27,668 -- 27,672
Acquisitions of founding
companies................... 8,719 10 60,784 (6,064) 54,730
Acquisitions of purchased
companies................... 2,430 2 15,198 -- 15,200
Distributions to
stockholders................ -- -- -- (10,153) (10,153)
Net income................... -- -- -- 8,190 8,190
------ --- -------- ------- --------
BALANCE, December 31, 1999..... 18,639 $19 $104,271 $ 6,503 $110,793
====== === ======== ======= ========
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------------------
23
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31
--------------------------
1999 1998 1997
-------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 8,190 $ 6,654 $ 4,499
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 3,453 930 1,330
Net gain on sale of property, plant and
equipment..................................... (218) (36) (27)
Deferred income tax provision (benefit)........ 762 11 (483)
Provision for doubtful accounts................ 118 17 --
Stock compensation charge...................... 2,880 -- --
Changes in assets and liabilities, excluding
effects of acquisitions:
Receivables.................................... (5,372) (1,697) (4,640)
Prepaid expenses and other current assets...... 69 (519) (378)
Accounts payable and accrued liabilities....... (959) 1,499 1,947
-------- ------- -------
Net cash provided by operating activities.... 8,923 6,859 2,248
-------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment....... (7,547) (3,300) (2,222)
Payments for acquisitions accounted for as
purchases, net of cash received of $10,070, $0
and $0.......................................... (78,793) -- --
Proceeds from disposals of property, plant and
equipment....................................... 1,031 52 91
Increase in cash surrender value of life
insurance....................................... -- (189) (177)
-------- ------- -------
Net cash used in investing activities........ (85,309) (3,437) (2,308)
-------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings......................... 57,266 2,006 1,570
Repayments of borrowings......................... (3,607) (1,136) (640)
Proceeds from issuances of common stock.......... 32,512 -- --
Cash paid related to common stock issuance
costs........................................... (4,373) -- --
Distributions to stockholders.................... (8,998) (2,024) (240)
-------- ------- -------
Net cash provided by (used in) financing
activities.................................. 72,800 (1,154) 690
-------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS....................................... (3,586) 2,268 630
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD... 4,213 1,945 1,315
-------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......... $ 627 $ 4,213 $ 1,945
======== ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest........................... $ 1,412 $ 344 $ 285
Cash paid for income taxes....................... $ 4,973 $ 78 $ 749
NONCASH FINANCING ACTIVITY:
Distribution of cash surrender value of life
insurance to stockholder........................ $ 1,155 $ -- $ --
Distribution of note receivable to stockholder... $ -- $ 207 $ --
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------------------
24
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
U.S. Concrete, Inc., a Delaware corporation, was founded in July 1997 to
create a leading provider of ready-mixed concrete and related products and
services to the construction industry in major markets in the United States.
It did not conduct any operations prior to May 1999. On May 28, 1999, it
completed an initial public offering of its common stock and concurrently
acquired six operating businesses. From the date of its IPO through
December 31, 1999, U.S. Concrete acquired eight additional operating
businesses. It intends to acquire additional companies to expand its
operations.
For financial statement presentation purposes, (1) Central Concrete Supply
Co., Inc., one of the acquired businesses, is presented as the acquirer of the
other acquired businesses and U.S. Concrete, (2) all the 1999 acquisitions are
accounted for in accordance with the purchase method of accounting and (3) the
effective date of the initial acquisitions is May 31, 1999. These consolidated
financial statements are those of (1) Central for periods prior to June 1,
1999 and (2) U.S. Concrete and its consolidated subsidiaries on that date and
thereafter.
U.S. Concrete's future success depends on a number of factors which include
integrating operations successfully, identifying and integrating satisfactory
acquisition candidates, obtaining acquisition financing, managing growth,
attracting and retaining qualified management and employees, complying with
government regulations and other regulatory requirements or contract
specifications, and addressing risks associated with competition, seasonality
and quarterly fluctuations.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements consist of the accounts of U.S.
Concrete and its wholly owned subsidiaries. They eliminate all intercompany
transactions and balances.
Cash and Cash Equivalents
U.S. Concrete records as cash equivalents all highly liquid investments
having maturities of three months or less at the date of purchase.
Inventories
Inventories consist primarily of raw materials, pre-cast products, building
materials and repair parts that U.S. Concrete holds for use or sale in the
ordinary course of business. It uses the first-in, first-out method to value
inventories at the lower of cost or market. For each of the three years ended
December 31, 1999, management believes U.S. Concrete incurred no material
impairments in the carrying value of its inventories.
Prepaid Expenses
Prepaid expenses primarily include amounts U.S. Concrete has paid for fuel,
property taxes, licenses and insurance. It expenses or amortizes all prepaid
amounts as used or over the period of benefit, as applicable.
Property, Plant and Equipment, Net
U.S. Concrete states property, plant and equipment at cost, unless impaired,
and uses the straight-line method to compute depreciation of these assets over
their estimated useful lives. It capitalizes leasehold improvements on
properties it holds under operating leases and amortizes them over the lesser
of their estimated useful lives or the lives of the applicable leases. It
states equipment it holds under capital leases at the net present value of the
future minimum lease payments at the inception of the applicable leases and
amortizes that equipment over the lesser of the life of the lease or the
estimated useful life of the asset.
U.S. Concrete expenses maintenance and repair costs when incurred and
capitalizes and depreciates expenditures for major renewals and betterments
that extend the useful lives of its existing assets. When U.S. Concrete
retires or disposes of property, plant or equipment, it removes the related
cost and accumulated depreciation from its accounts and reflects any resulting
gain or loss in its statements of operations.
- -------------------------------------------------------------------------------
25
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Goodwill
Goodwill represents the amount by which the total purchase price U.S.
Concrete has paid to acquire businesses accounted for as purchases exceeds its
estimated fair market value of the net tangible assets acquired. It amortizes
goodwill on a straight-line basis over 40 years. Management routinely
evaluates whether events or circumstances have occurred that indicate that the
remaining estimated useful life of goodwill may warrant revision or that the
remaining balances may not be recoverable. During an evaluation the estimated
future undiscounted cash flows associated with the asset are compared to the
asset's carrying amount to determine if such an impairment exists. As of
December 31, 1999 and 1998, accumulated amortization was $1.1 million and $0,
respectively.
Debt Issue Costs
Other long-term assets include debt issue costs related to U.S. Concrete's
credit facility. See Note 6. U.S. Concrete amortizes these costs as interest
expense over the scheduled maturity period of the debt. As of December 31,
1999 and 1998, accumulated amortization of debt issue costs was $154,780 and
$0, respectively.
Allowance for Doubtful Accounts
U.S. Concrete provides an allowance for accounts receivable it believes it
may not collect in full.
Sales and Expenses
U.S. Concrete derives its sales primarily from the production and delivery
of ready-mixed concrete. It recognizes sales when products are delivered. Cost
of goods sold consists primarily of product costs and operating expenses.
Operating expenses consist primarily of wages, benefits and other expenses
attributable to plant operations, repairs and maintenance and trucks. Selling
expenses consist primarily of sales commissions, salaries of sales managers,
travel and entertainment expenses and trade show expenses. General and
administrative expenses consist primarily of executive compensation and
related benefits, administrative salaries and benefits, office rent and
utilities, communication expenses and professional fees.
Income Taxes
U.S. Concrete uses the liability method of accounting for income taxes.
Under this method, it records deferred income taxes based on temporary
differences between the financial reporting and tax bases of assets and
liabilities and uses enacted tax rates and laws that will be in effect when it
recovers those assets or settles those liabilities, as the case may be, to
measure those taxes.
U.S. Concrete files a consolidated federal income tax return, which includes
the operations of all acquired businesses for periods subsequent to their
respective acquisition dates. The acquired businesses file "short period"
federal income tax returns for the period from their last fiscal year through
their respective acquisition dates.
Fair Value of Financial Instruments
The financial instruments of U.S. Concrete consist primarily of cash and
cash equivalents, trade receivables, trade payables and long-term debt.
Management considers the book values of these items to be representative of
their respective fair values.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
by management in determining the reported amounts of liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.
- -------------------------------------------------------------------------------
26
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Valuation of Long-Lived Assets
U.S. Concrete reviews its long-lived assets for impairment whenever events
or changes in circumstances indicate that their carrying amounts may not be
recoverable. If the expected future undiscounted cash flows of an asset it
intends to hold for use is less than the carrying amount of the asset, it will
recognize a loss equal to the difference between the fair value (calculated by
discounting the estimated future operating cash flows) and the carrying amount
of the asset. If it intends to dispose of an asset that is impaired, it will
recognize a loss equal to the difference between the estimated fair value of
the asset, less estimated costs to sell, and its carrying amount.
Reclassifications
Certain reclassifications have been made to amounts in prior period
financial statements to conform with current period presentation.
Earnings per Share
Since Central is presented as the acquirer of the other acquired businesses
and U.S. Concrete, U.S. Concrete uses the shares of its common stock
beneficially owned by the former owners of Central in the calculation of its
earnings per share for all periods prior to the IPO.
The following table reconciles the numerators and denominators of the basic
and diluted earnings per share for the periods shown (in thousands, except per
share amounts). Basic earnings represent earnings per weighted average
outstanding share, while diluted earnings represent those earnings as diluted
by potentially dilutive securities such as outstanding options.
Year Ended December
31
--------------------
1999 1998 1997
------ ------ ------
Numerator:
Net income............................................... $8,190 $6,654 $4,499
Denominator:
Weighted average common shares outstanding-basic......... 11,770 3,120 3,120
Effect of dilutive stock options......................... 13 -- --
------ ------ ------
Weighted average common shares outstanding-diluted....... 11,783 3,120 3,120
====== ====== ======
Earnings per share:
Basic.................................................... $ 0.70 $ 2.13 $ 1.44
Diluted.................................................. $ 0.70 $ 2.13 $ 1.44
For the year ended December 31, 1999, 1.3 million stock options were
excluded from the computation of diluted earnings per share because their
exercise prices were greater than the average market price of the common
stock.
Collective Bargaining Agreements
U.S. Concrete's subsidiaries are parties to various collective bargaining
agreements with labor unions. These agreements require them to pay specified
wages and provide certain benefits to their union employees. These agreements
will expire at various times through April 2002.
New Accounting Pronouncements
In the first quarter of 1999, U.S. Concrete adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," which
requires the display of comprehensive income and its
- -------------------------------------------------------------------------------
27
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
components in the financial statements. Comprehensive income represents all
changes in equity of an entity during the reporting period, except those
resulting from investments by and distributions to stockholders. For each of
the three years ended December 31, 1999, no material differences exist between
the historical net income and comprehensive income of U.S. Concrete.
U.S. Concrete has adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information," which establishes standards for the way
public enterprises are to report information about operating segments in
annual financial statements and requires the reporting of selected information
about operating segments in interim financial reports issued to stockholders.
Beginning January 1, 2001, U.S. Concrete will apply SFAS No. 133,
"Accounting for Derivative Securities and Hedging Activities." SFAS No. 133
will require it to recognize all derivative instruments (including some
derivative instruments embedded in other contracts) as assets or liabilities
on its balance sheet and measure them at fair value. The statement requires
that changes in the fair value of derivatives be recognized currently in
earnings unless specific hedge accounting criteria are met. U.S. Concrete is
evaluating SFAS No. 133 and its impact on existing accounting policies and
financial reporting disclosure. U.S. Concrete has not, to date, engaged in
activities or entered into arrangements associated with derivative
instruments.
3. BUSINESS COMBINATIONS
During 1999, U.S. Concrete acquired 14 businesses. The aggregate
consideration it paid in these transactions, all of which are accounted for as
purchases, consisted of $40.0 million in cash and 2.4 million shares of common
stock. The accompanying balance sheet as of December 31, 1999 includes
preliminary allocations of the purchase prices and is subject to final
adjustment. The following summarized unaudited pro forma financial information
adjusts the historical financial information by assuming U.S. Concrete
acquired all these businesses on January 1, 1998:
Year Ended
December 31
-----------------
1999 1998
-------- --------
(unaudited)
Revenues.................................................. $282,598 $270,611
Net income................................................ $ 12,308 $ 9,115
Basic earnings per share.................................. $ 0.66 $ 0.49
Diluted earnings per share................................ $ 0.66 $ 0.49
Pro forma adjustments these amounts include primarily relate to:
. contractual reductions in salaries, bonuses and benefits to former
owners of the businesses;
. elimination of legal, accounting and other professional fees incurred in
connection with the acquisitions;
. amortization of goodwill resulting from the acquisitions;
. reduction in interest expense, net of interest expense on borrowings to
fund acquisitions; and
. adjustments to the federal and state income tax provision based on pro
forma operating results.
The pro forma financial information does not purport to represent what the
combined financial results of operations of U.S. Concrete actually would have
been if these transactions and events had in fact occurred when assumed and
are not necessarily representative of its financial results of operations for
any future period.
- -------------------------------------------------------------------------------
28
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In connection with the acquisitions, U.S. Concrete has determined a
preliminary calculation of the resulting goodwill as follows (in thousands):
December 31,
1999
------------
Fair value of assets acquired, net of cash acquired............. $ 75,067
Less: liabilities assumed....................................... (37,808)
--------
Net assets acquired, net of cash................................ 37,259
--------
Cash paid, net of cash acquired................................. 69,026
Issuance of common stock........................................ 74,816
--------
Total consideration paid........................................ 143,842
--------
Goodwill........................................................ $106,583
========
These amounts are preliminary and are subject to final adjustment.
4. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment is as follows (dollars in
thousands):
Useful December 31
Lives in ----------------
Years 1999 1998
-------- ------- -------
Land.............................................. -- $12,381 $ 584
Buildings and improvements........................ 10-40 7,225 1,019
Machinery and equipment........................... 10-30 14,191 5,827
Mixers, trucks and other vehicles................. 6-12 29,211 11,313
Furniture and fixtures............................ 3-10 527 512
Construction in progress.......................... -- 2,322 --
------- -------
65,857 19,255
Less: accumulated depreciation.................... (11,908) (10,117)
------- -------
$53,949 $ 9,138
======= =======
5. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
Activity in U.S. Concrete's allowance for doubtful accounts receivable
consists of the following (in thousands):
December 31
---------------
1999 1998 1997
---- ---- ----
Balance, beginning of period................................ $ 97 $80 $80
Additions from acquisitions................................. 686 -- --
Provision for uncollectible accounts........................ 118 17 --
Uncollectible receivables written off, net of recoveries.... (171) -- --
---- --- ---
Balance, end of period...................................... $730 $97 $80
==== === ===
- -------------------------------------------------------------------------------
29
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Inventory consists of the following (in thousands):
December 31
-----------
1999 1998
------ ----
Raw materials................................................... $1,905 $259
Building materials for resale................................... 844 533
Precast products................................................ 993 --
Repair parts.................................................... 609 --
------ ----
$4,351 $792
====== ====
Accounts payable and accrued liabilities consist of the following (in
thousands):
December 31
--------------
1999 1998
------- ------
Accounts payable............................................. $27,473 $7,042
Accrued compensation and benefits............................ 2,764 868
Accrued interest............................................. 172 --
Accrued income taxes......................................... 3,827 --
Other........................................................ 3,363 --
------- ------
$37,599 $7,910
======= ======
6. LONG-TERM DEBT
A summary of long-term debt is as follows (in thousands):
December 31
----------------
1999 1998
------- -------
Secured revolving credit facility............................ $57,100 $ --
Notes payable to various financial institutions, secured by
mixer trucks, maturing in varying amounts through May 2003,
with interest ranging from 7.0% to 9.7%..................... -- 2,860
Notes payable to various financial institutions, secured by
various equipment and guaranteed by stockholders, maturing
in varying amounts through September 2003, with interest
ranging from 4.7% to 8.8%................................... -- 670
Other........................................................ 275 --
------- -------
57,375 3,530
Less: current maturities................................... (140) (1,006)
------- -------
Long-term debt, net of current maturities.................... $57,235 $ 2,524
======= =======
On May 28, 1999, U.S. Concrete entered into a three-year $75 million
revolving credit facility with a group of banks. It may use this facility for
working capital, to finance acquisitions and for other general corporate
purposes. Availability under the facility is tied to consolidated cash flow
and liquidity. Advances bear interest, at U.S. Concrete's option, at a prime
rate or LIBOR, in each case plus a margin keyed to the ratio of consolidated
indebtedness to cash flow. At December 31, 1999, U.S. Concrete had borrowings
totaling $57.1 million outstanding under its credit facility at a weighted
average interest cost of 7.9%. Commitment fees are due on any unused borrowing
capacity. The facility requires U.S. Concrete to maintain financial covenants
regarding net worth, coverage ratios and additional indebtedness and prohibits
dividends on its common stock. Subsidiary guarantees and pledges of
substantially all U.S. Concrete's fixed assets secure the payment of all
obligations owing under the facility. The size of the facility increased to
$100 million in December 1999 and $200 million in February 2000.
- -------------------------------------------------------------------------------
30
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Aggregate maturities are as follows (in thousands):
Year Ending December 31
-----------------------
2000................................................................ $ 140
2001................................................................ 114
2002................................................................ 57,121
-------
$57,375
=======
7. STOCKHOLDERS' EQUITY
Initial Public Offering
In May 1999, U.S. Concrete completed its IPO, issuing 3.8 million shares of
its common stock to the public at a price of $8.00 per share, resulting in net
proceeds to U.S. Concrete of $23.5 million, after deducting offering costs. In
June 1999, it sold an additional 570,000 shares of common stock on the
exercise of the underwriters' over-allotment option. It realized net proceeds
from this sale of $4.2 million.
Warrants
In connection with the IPO, U.S. Concrete issued warrants to the
underwriters to purchase 200,000 shares of common stock at an exercise price
of $8.00 per share. At December 31, 1999, all these warrants remained
outstanding. They expire in May 2002.
Stock Options
U.S. Concrete's 1999 incentive plan enables U.S. Concrete to grant non-
qualified options, restricted stock, deferred stock, incentive stock options,
stock appreciation rights and other long-term incentive awards. The number of
shares available for issuance under the plan is limited to the greater of 2.0
million shares of common stock or 15% of the number of shares of common stock
outstanding on the last day of the preceding calendar quarter, although the
board of directors of U.S. Concrete may, in its discretion, grant additional
awards or establish other compensation plans. The number of shares available
for issue under the plan was 1.3 million as of December 31, 1999.
The following table summarizes stock option activity during 1999 (in
thousands, except prices):
Weighted
Average
Exercise
Options Price
----------- --------
Options outstanding at January 1....................... -- --
Granted.............................................. 1,425 7.93
Exercised............................................ -- --
Forfeited............................................ (32) 8.13
----------- ----
Options outstanding at December 31..................... 1,393 7.93
=========== ====
Options exercisable at December 31..................... 28 6.60
=========== ====
Option exercise price range at December 31............. $6.25-$8.75
As allowed by SFAS No. 123, "Accounting for Stock-Based Compensation," U.S.
Concrete accounts for stock option awards in accordance with Accounting
Principles Board (APB) Opinion No. 25. The exercise prices of all options U.S.
Concrete awarded during 1999 equaled the fair market values of the common
stock on the dates of
- -------------------------------------------------------------------------------
31
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
grant. As a result, under APB No. 25, it did not recognize any compensation
expense attributable to these options. Had it determined compensation expense
under the SFAS No. 123 method, its net income and earnings per share during
1999 would have been the following pro forma amounts (in thousands, except per
share amounts):
Net income
As reported........................................................ $8,190
======
Pro forma.......................................................... $7,699
======
Diluted earnings per share
As reported........................................................ $ 0.70
======
Pro forma.......................................................... $ 0.65
======
The effects of applying SFAS No. 123 in the pro forma disclosure may not be
indicative of future amounts because U.S. Concrete expects to make additional
awards. For purposes of this disclosure, U.S. Concrete estimated the fair value
of each option grant on the date of grant using the Black-Scholes option
pricing model with the following assumptions:
Expected dividend yield............................................. 0.0%
Expected stock price volatility..................................... 54.7%
Risk-free interest rate............................................. 6.0%
Expected life of options............................................ 10 years
8. INCOME TAXES
U.S. Concrete's consolidated federal and state tax returns include the
results of operations of acquired businesses from their dates of acquisition.
The amounts of consolidated federal and state income tax provision (benefit)
are as follows (in thousands):
Year Ended
December 31
-----------------
1999 1998 1997
------ ---- -----
Current:
Federal.................................................... $6,398 $ -- $ (32)
State...................................................... 498 89 58
------ ---- -----
6,896 89 26
------ ---- -----
Deferred:
Federal.................................................... 700 -- (393)
State...................................................... 62 11 (90)
------ ---- -----
762 11 (483)
------ ---- -----
$7,658 $100 $(457)
====== ==== =====
- --------------------------------------------------------------------------------
32
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A reconciliation of U.S. Concrete's effective income tax rate to the amounts
calculated by applying the federal statutory corporate tax rate of 35% is as
follows (in thousands):
Year Ended
December 31
-------------------
1999 1998 1997
------ ---- -----
Tax at statutory rate..................................... $5,547 $ -- $ --
Add (deduct):
State income taxes...................................... 364 100 (32)
Nondeductible expenses.................................. 405 -- 4
Nondeductible compensation charge....................... 1,008 -- --
Income taxed to Central shareholders.................... (590) -- (429)
Deferred tax charge for S corporation taxes............. 924 -- --
------ ---- -----
Income tax provision (benefit)............................ $7,658 $100 $(457)
====== ==== =====
Effective income tax rate................................. 48.3% 1.5% (11.3%)
====== ==== =====
Deferred income tax provisions (benefits) result from temporary differences
in the recognition of expenses for financial reporting purposes and for tax
reporting purposes. U.S. Concrete presents the effects of those differences as
deferred income tax liabilities and assets, as follows (in thousands):
December 31
-----------
1999 1998
------ ----
Deferred income tax liabilities:
Property and equipment, net....................................... $7,838 $47
Other............................................................. 476 10
------ ---
Total deferred income tax liabilities........................... 8,314 57
------ ---
Deferred income tax assets:
Allowance for doubtful accounts................................... 197 1
Inventory......................................................... 42 --
Accrued expenses.................................................. 1,062 9
Other............................................................. 46 1
------ ---
Total deferred income tax assets................................ 1,347 11
------ ---
Net deferred income tax liabilities........................... $6,967 $46
====== ===
Prior to their respective acquisitions, Central and other acquired
businesses were S corporations and were not subject to federal income taxes.
Effective with their acquisition they became subject to those taxes, and U.S.
Concrete has recorded an estimated deferred tax liability to provide for its
estimated future income tax liability as a result of the difference between
the book and tax bases of the net assets of these corporations as of the dates
of their acquisitions. These consolidated financial statements reflect the
federal and state income taxes of these corporations since their dates of
acquisition.
- -------------------------------------------------------------------------------
33
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9. RELATED-PARTY TRANSACTIONS
U.S. Concrete has transactions in the normal course of business with related
parties. These transactions consist principally of operating leases under
which U.S. Concrete leases facilities from former owners of its acquired
businesses or their affiliates. These leases are for periods generally ranging
from three to five years and are on terms management believes are comparable
to non-related party leases. Lease payments under these leases were
approximately $597,000 in 1999, $144,000 in 1998 and $144,000 in 1997. The
schedule of minimum lease payments in Note 11 includes U.S. Concrete's future
commitments under these leases.
U.S. Concrete's venture capital partner advanced funds to U.S. Concrete from
August 1998 until May 1999 totaling $1.7 million to enable it to pay its
expenses in connection with the completion of its IPO and concurrent
acquisitions of six operating businesses. U.S. Concrete repaid these advances,
including interest accrued at the rate of 6% per year, from the gross proceeds
of its IPO. U.S. Concrete paid its venture capital partner an additional
$180,000 during the remainder of 1999 for services related to U.S. Concrete's
acquisition program.
10. RISK CONCENTRATION
U.S. Concrete grants credit, generally without collateral, to its customers,
which include general contractors, municipalities and commercial companies
located solely in the United States. Consequently, it is subject to potential
credit risk related to changes in business and economic factors throughout the
United States. U.S. Concrete generally has lien rights in the work it
performs, and concentrations of credit risk are limited because of the
diversity of its customer base. Further, management believes that its contract
acceptance, billing and collection policies are adequate to minimize any
potential credit risk.
U.S. Concrete maintains cash balances at financial institutions, which may
at times be in excess of federally insured levels. It has not incurred losses
related to these balances during the three-year period ended December 31,
1999.
11. COMMITMENTS AND CONTINGENCIES
Litigation
In the normal course of business, U.S. Concrete is subject to proceedings,
lawsuits and other claims. In the opinion of management, pending or threatened
litigation involving U.S. Concrete will not have a material adverse effect on
its financial condition or results of operations.
Lease Payments
U.S. Concrete leases tracts of land, facilities and equipment it uses in its
operations. Rental expense under operating leases was $2.0 million, $322,000
and $320,000 in 1999, 1998 and 1997, respectively. Minimum future annual lease
payments under these leases are as follows (in thousands):
Year Ending
December 31
-----------
2000............................................................. $ 3,503
2001............................................................. 2,926
2002............................................................. 2,349
2003............................................................. 1,861
2004............................................................. 1,621
Thereafter....................................................... 2,086
-------
$14,346
=======
- -------------------------------------------------------------------------------
34
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12. SIGNIFICANT CUSTOMERS
Significant customers represented sales (as a percentage of total sales) as
follows:
Year Ended
December 31
----------------
1999 1998 1997
---- ---- ----
Customer A................................................. 8% 16% 14%
Customer B (related party)................................. 8 22 20
13. SIGNIFICANT SUPPLIERS
Significant suppliers represented purchases (as a percentage of total
purchases) as follows:
Year Ended
December 31
----------------
1999 1998 1997
---- ---- ----
Supplier A................................................. 23% 41% 39%
Supplier B................................................. 17 18 22
Supplier C................................................. 4 9 10
14. SEGMENT REPORTING
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," requires that companies report separately information about each
significant operating segment reviewed by the chief operating decision maker.
All segments that meet a threshold of 10% of revenues, reported profit or
loss, or combined assets are defined as significant segments. U.S. Concrete
currently operates as one segment, and all operations and long-lived assets
are in the United States.
15. EMPLOYEE BENEFIT PLANS
U.S. Concrete maintains defined contribution profit-sharing and money
purchase pension plans for its non union employees. Contributions to these
plans were approximately $816,000 in 1999, $404,000 in 1998 and $404,000 in
1997.
In connection with its collective bargaining agreements with various unions,
U.S. Concrete participates with other companies in the unions' multi-employer
pension plans. These plans cover all of U.S. Concrete's employees who are
members of such unions. The Employee Retirement Income Security Act of 1974,
as amended by the Multi-Employer Pension Plan Amendments Act of 1980, imposes
certain liabilities upon employers who are contributors to a multi-employer
plan in the event of the employer's withdrawal from, or upon termination of
such plan. U.S. Concrete has no plans to withdraw from these plans. These
plans do not maintain information on net assets and actuarial present value of
the accumulated share of the plans' unfunded vested benefits allocable to U.S.
Concrete, and amounts, if any, for which U.S. Concrete may be contingently
liable are not ascertainable at this time. U.S. Concrete made contributions to
these plans of $4.2 million in 1999, $2.3 million in 1998 and $2.0 million in
1997.
- -------------------------------------------------------------------------------
35
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited; in thousands, except
per share data)
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
1999
Revenues.................................... $12,956 $27,648 $59,803 $67,505
Operating income (loss)..................... 716 (182) 8,296 8,063
Net income (loss)........................... 926 (1,979) 4,913 4,330
Basic earnings (loss) per share............. 0.30 (0.23) 0.30 0.24
Diluted earnings (loss) per share........... 0.30 (0.23) 0.30 0.24
1998
Revenues.................................... 9,918 15,775 21,482 19,324
Operating income............................ 593 1,654 2,390 2,246
Net income.................................. 683 1,584 2,340 2,047
Basic earnings per share.................... 0.22 0.51 0.75 0.66
Diluted earnings per share.................. 0.22 0.51 0.75 0.66
In the second quarter of 1999, in connection with the IPO, U.S. Concrete
recorded a noncash compensation charge for 400,000 shares of common stock
issued to management at a nominal cost. The compensation charge was calculated
using a fair value of $7.20 per share, which reflects a 10% discount from the
IPO price of $8.00 per share because of restrictions on the sale and
transferability of the shares issued.
Also in the second quarter, an additional tax provision of $924,000 was
recorded with the conversion of Central from C-corp status to S-corp status.
Central had made no provision for federal income taxes for the first five
months of 1999.
17. SUBSEQUENT EVENTS
Profit Sharing Plan
In February 2000, U.S. Concrete established a defined contribution 401(k)
profit sharing plan for employees meeting various employment requirements.
Eligible employees may contribute amounts up to the lesser of 15% of their
annual compensation or the maximum amount permitted under IRS regulations.
U.S. Concrete matches 100% of employee contributions up to a maximum of 5% of
their compensation.
Acquisitions
From January 1 through March 10, 2000, U.S. Concrete acquired three
businesses. The aggregate consideration it paid in these transactions, all of
which it accounted for as purchases, consisted of $67.4 million in cash and
2.6 million shares of common stock.
- -------------------------------------------------------------------------------
36
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Please see the definitive proxy statement for our 2000 Annual Meeting of
Stockholders for the information required by Items 10, 11, 12 and 13. We will
file the definitive proxy statement with the SEC by May 1, 2000. We are
incorporating our definitive proxy statement into this report by reference
except for the information appearing under the captions "Report from the
Compensation Committee Regarding Executive Compensation" and "Performance
Graph".
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements.
See Index to Consolidated Financial Statements on page 19.
(2) Financial Statement Schedules.
All financial statement schedules are omitted because they are not required
or the required information is shown in our consolidated financial statements
or the notes thereto.
(3) Exhibits.
Exhibit
Number Description
------- -----------
2.1* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, OCC Acquisition Inc., Opportunity Concrete
Corporation and the stockholders named therein (Form S-1 (Reg. No.
333-74855), Exhibit 2.1).
2.2* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Walker's Acquisition Inc., Walker's
Concrete, Inc. and the stockholders named therein (Form S-1 (Reg.
No. 333-74855), Exhibit 2.2).
2.3* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Central Concrete Acquisitions Inc., Central
Concrete Supply Co., Inc. and the stockholders named therein (Form
S-1 (Reg. No. 333-74855), Exhibit 2.3).
2.4* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Bay Cities Acquisition Inc., Bay Cities
Building Materials Co., Inc. and the stockholders named therein
(Form S-1 (Reg. No. 333-74855), Exhibit 2.4).
2.5* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Baer Acquisition Inc., Baer Concrete,
Incorporated and the stockholders named therein (Form S-1 (Reg. No.
333-74855), Exhibit 2.5).
- -------------------------------------------------------------------------------
37
Exhibit
Number Description
------- -----------
2.6* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Santa Rosa Acquisition, Inc., R.G.
Evans/Associates d/b/a Santa Rosa Cast Products Co.) and the
stockholders named therein (Form S-1 (Reg. No. 333-74855), Exhibit
2.6).
2.7* --Uniform Provisions for the Acquisitions (incorporated into the
agreements filed as Exhibits 2.1 through 2.6 hereto) (Form S-1 (Reg.
No. 333-74855), Exhibit 2.7).
2.8 --Acquisition Agreement and Plan of Reorganization dated as of
September 14, 1999 by and among U.S. Concrete, Inc., Concrete XI
Acquisition, Inc., Carrier Excavation and Foundation Company, John F.
Carrier, William Henry Carrier, Michael K. Carrier, Mary G. Carrier,
Trustee for Anne Carrier (TN UGMA), William Henry Carrier, Trustee
for William Henry Carrier, Jr. (TN UGMA), and Mary G. Carrier.
2.9 --Stock Purchase Agreement dated as of November 5, 1999 by and among
U. S. Concrete, Inc., B. Thomas Stover, as Trustee under Trust
Agreement dated February 20, 1986 for B. Thomas Stover, Sarah M.
Stover, as Trustee under Trust Agreement dated February 27, 1990 for
Sarah M. Stover, B. Andrew Stover, B. Thomas Stover, Custodian under
Michigan Uniform Gifts to Minors Act for the benefit of Carolyn A.
Stover, Jeffery D. Spahr, Jeffrey T. Stover, and Bradley C. Stover.
2.10* --Stock Purchase Agreement dated as of January 20, 2000 by and among
Robert S. Beall, Chase Bank of Texas, National Association, in its
capacity as Trustee for Allison Beall 1999 Trust, Logan Beall 1999
Trust, Allison Beall Descendants' Trust and Logan Beall Descendants'
Trust and U.S. Concrete, Inc. (Form 8-K dated February 23, 2000,
Exhibit 2.1).
2.11* --Amendment No. 1 to Stock Purchase Agreement dated January 28, 2000
by and among Robert S. Beall, Chase Bank of Texas, National
Association, in its capacity as Trustee for Allison Beall 1999 Trust,
Logan Beall 1999 Trust, Allison Beall Descendants' Trust and Logan
Beall Descendants' Trust and U.S. Concrete, Inc. (Form 8-K dated
February 23, 2000, Exhibit 2.2).
2.12* --Stock Purchase Agreement dated as of January 24, 2000 by and among
Fallis Arch Beall, Nola Sue Beall, Robert S. Beall, Leigh Ann
Gathright, Doris W. Stokes and Fallis Arch Beall, in his capacity as
Trustee for the R. E. Stokes Trust and U. S. Concrete, Inc. (Form 8-K
dated February 23, 2000, Exhibit 2.3).
2.13 --Acquisition Agreement and Plan of Reorganization dated as of
February 8, 2000 by and among U. S. Concrete, Inc., Concrete XIX
Acquisition, Inc., Cornillie Fuel & Supply, Inc., Richard A. Deneweth
and Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie.
2.14 --Stock Purchase Agreement dated as of February 8, 2000 by and among
U. S. Concrete, Inc., Cornillie Fuel & Supply, Inc., Dencor, Inc.
Richard A. Deneweth and Joseph C. Cornillie, Trustee URTA of Joseph
C. Cornillie.
2.15 --Acquisition Agreement and Plan of Reorganization dated as of
February 8, 2000 by and among U. S. Concrete, Inc., Concrete XVIII
Acquisition, Inc., Cornillie Leasing, Inc., Richard A. Deneweth, and
Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie.
2.16 --Acquisition Agreement and Plan of Reorganization dated as of March
2, 2000 by and among U. S. Concrete, Inc., Concrete XXIV Acquisition,
Inc., Stancon Inc. and Donald S. Butler and John Grace.
3.1* --Restated Certificate of Incorporation of U.S. Concrete (Form S-1
(Reg. No. 333-74855), Exhibit 3.1).
3.2* --Bylaws of U.S. Concrete (Form S-1 (Reg. No. 333-74855), Exhibit
3.2).
4.1* --Form of Certificate representing common stock (Form S-1 (Reg. No.
333-74855), Exhibit 4.1).
4.2* --Form of Registration Rights Agreement by and among U.S. Concrete and
the stockholders listed on the signature pages thereto (Form S-1
(Reg. No. 333-74855), Exhibit 4.2).
4.3* --Funding Agreement dated as of September 10, 1999 by and between U.S.
Concrete and Main Street Merchant Partners II, L.P. (Form S-1 (Reg.
No. 333-74855), Exhibit 4.3).
4.4* --Rights Agreement by and between U.S. Concrete and American Stock
Transfer & Trust Company, including form of Rights Certificate
attached as Exhibit B thereto (Form S-1 (Reg. No. 333-74855), Exhibit
4.4).
4.5* --Form of Warrant Agreement among U.S. Concrete, Scott & Stringfellow,
Inc. and Sanders Morris Mundy, Inc. (Form S-1 (Reg. No. 333-74855),
Exhibit 1.2).
- --------------------------------------------------------------------------------
38
Exhibit
Number Description
------- -----------
4.6 --Amended and Restated Credit Agreement dated as of February 9, 2000,
among U.S. Concrete, the Guarantors named therein, the Lenders named
therein, Bankers Trust Company, as syndication agent, First Union
National Bank, as documentation agent, Bank One, Texas, NA, Branch
Banking & Trust Company, Credit Lyonnais New York Branch and The Bank
of Nova Scotia, as co-managing agents and Chase Bank of Texas, N.A.,
as the Administrative Agent, and Chase Securities, Inc., as sole book
manager and lead arranger.
U.S. Concrete and some of its subsidiaries are parties to debt
instruments under which the total amount of securities authorized
does not exceed 10% of the total assets of U.S. Concrete and its
subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)
(A) of Item 601(b) of Regulation S-K, U.S. Concrete agrees to furnish
a copy of those instruments to the SEC on request.
10.1* --1999 Incentive Plan of U.S. Concrete (Form S-1 (Reg. No. 333-74855),
Exhibit 10.1).
10.2* --Employment Agreement between U.S. Concrete and William T. Albanese
(Form S-1 (Reg. No. 333-74855), Exhibit 10.2).
10.3* --Form of Employment Agreement between U.S. Concrete and Michael W.
Harlan (Form S-1 (Reg. No. 333-74855), Exhibit 10.3).
10.4* --Form of Employment Agreement between U.S. Concrete and Eugene P.
Martineau (Form S-1 (Reg. No. 333-74855), Exhibit 10.4).
10.5* --Employment Agreement between U.S. Concrete and Michael D. Mitschele
(Form S-1 (Reg. No. 333-74855), Exhibit 10.5).
10.6* --Employment Agreement between U.S. Concrete and Charles W. Sommer
(Form S-1 (Reg. No. 333-74855), Exhibit 10.6).
10.7* --Employment Agreement between U.S. Concrete and Neil J. Vannucci
(Form S-1 (Reg. No. 333-74855), Exhibit 10.7).
10.8* --Employment Agreement between U.S. Concrete and Robert S. Walker
(Form S-1 (Reg. No. 333-74855), Exhibit 10.8).
10.9* --Form of Indemnification Agreement between U.S. Concrete and each of
its directors and officers (Form S-1 (Reg. No. 333-74855), Exhibit
10.9).
10.10* --Form of Employment Agreement between U.S. Concrete and Terry Green
(Form S-1 (Reg. No. 333-74855), Exhibit 10.10).
10.11 --Employment Agreement between U.S. Concrete and Donald C. Wayne.
21 --Subsidiaries
23 --Consent of independent public accountants.
27 --Financial Data Schedule.
- --------
* Incorporated by reference to the filing indicated.
(b) Reports on Form 8-K.
None
- --------------------------------------------------------------------------------
39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
U.S. CONCRETE, INC.
Date: March 24, 2000 /s/ Eugene P. Martineau
By:__________________________________
Eugene P. Martineau
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 24, 2000.
Signature Title
--------- -----
/s/ Eugene P. Martineau President and Chief Executive
___________________________________________ Officer and Director (Principal
Eugene P. Martineau Executive Officer)
/s/ Michael W. Harlan Chief Financial Officer and Director
___________________________________________ (Principal Financial and Accounting
Michael W. Harlan Officer
/s/ Vincent D. Foster Director
___________________________________________
Vincent D. Foster
/s/ John R. Colson Director
___________________________________________
John R. Colson
/s/ Peter T. Dameris Director
___________________________________________
Peter T. Dameris
/s/ William T. Albanese Director
___________________________________________
William T. Albanese
/s/ Michael D. Mitschele Director
___________________________________________
Michael D. Mitschele
/s/ Murray S. Simpson Director
___________________________________________
Murray S. Simpson
/s/ Neil J. Vannucci Director
___________________________________________
Neil J. Vannucci
/s/ Robert S. Walker Director
___________________________________________
Robert S. Walker
- -------------------------------------------------------------------------------
40