PETER KIEWIT SONS INC /DE/, S-4, 2000-02-18

PETER KIEWIT SONS INC /DE/
S-4, 2000-02-18
HEAVY CONSTRUCTION OTHER THAN BLDG CONST - CONTRACTORS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 18, 2000

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
<TABLE>
<S> <C> <C> <C> <C> <C>

KIEWIT MATERIALS PETER KIEWIT
COMPANY SONS', INC.
(BEING RENAMED "UNITED METRO MATERIALS INC.") (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CHARTER)
DELAWARE 1400 47-0819021 DELAWARE 1600 91-1842817
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.) JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION) CLASSIFICATION CODE INCORPORATION) CLASSIFICATION CODE
NUMBER) NUMBER)
------------------------ ------------------------

KIEWIT PLAZA, OMAHA, NEBRASKA 68131, (402) 536-3661 KIEWIT PLAZA, OMAHA, NEBRASKA 68131, (402) 342-2052
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)

MARK E. BELMONT, ESQ. TOBIN A. SCHROPP, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
KIEWIT PLAZA KIEWIT PLAZA
OMAHA, NEBRASKA 68131 OMAHA, NEBRASKA 68131
(402) 536-3661 (402) 342-2052
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING (NAME, ADDRESS, INCLUDING ZIP CODE, AND
AREA CODE, OF AGENT FOR SERVICE) TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
</TABLE>

------------------------

WITH A COPY TO:
JOHN S. D'ALIMONTE, ESQ.
WILLKIE FARR & GALLAGHER
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
(212) 728-8000

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.

If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PER SECURITY OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series 1997A Convertible Debentures of
Peter Kiewit Sons', Inc., due October 31,
2010...................................... $3,355,000(1) -- $3,355,000(2) $ 886(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Series 1998A Convertible Debentures of
Peter Kiewit Sons', Inc., due October 31,
2010...................................... $4,365,000(1) -- $4,365,000(2) $1,153(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Series 1999A Convertible Debentures of
Peter Kiewit Sons', Inc., due October 31,
2010...................................... $5,440,000(1) -- $5,440,000(2) $1,437(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 per share,
of Peter Kiewit Sons', Inc.(4)............ 1,029,877 shares(5) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Series 2000A Convertible Debentures of
Kiewit Materials Company, due October 31,
2010...................................... $3,355,000 -- $3,355,000(6) $ 886
- ---------------------------------------------------------------------------------------------------------------------------------
Series 2000B Convertible Debentures of
Kiewit Materials Company, due October 31,
2010...................................... $4,365,000 -- $4,365,000(6) $1,153
- ---------------------------------------------------------------------------------------------------------------------------------
Series 2000C Convertible Debentures of
Kiewit Materials Company, due October 31,
2010...................................... $5,440,000 -- $5,440,000(6) $1,437
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 per share,
of Kiewit Materials Company............... 1,029,877 shares(7) -- -- -- (8)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) As described in the offering circular-prospectus included in this
registration statement, such amounts are to be reduced by the initial
aggregate formula price of the shares of common stock of Kiewit Materials
Company (calculated pursuant to its Restated Certificate of Incorporation)
to be issued together with such debentures in exchange for outstanding
convertible debentures of Peter Kiewit Sons', Inc.
<PAGE> 2

(2) Estimated pursuant to Rule 457 based on the maximum aggregate principal
amount of Peter Kiewit Sons', Inc. outstanding convertible debentures to be
received by Peter Kiewit Sons', Inc. in exchange for such debentures and
shares of common stock of Kiewit Materials Company.
(3) Such registration fee includes the fee payable in respect of the shares of
common stock of Kiewit Materials Company to be issued together with such
debentures.
(4) Issuable upon conversion of Series 1997A, 1998A and 1999A convertible
debentures of Peter Kiewit Sons', Inc.
(5) Together with such presently indeterminate number of shares of such stock as
may be issued as a result of anti-dilution adjustments in accordance with
the terms of the Series 1997A, 1998A and 1999A convertible debentures of
Peter Kiewit Sons', Inc.
(6) Estimated pursuant to Rule 457 based on the maximum aggregate principal
amount of Peter Kiewit Sons', Inc. outstanding convertible debentures to be
received by Peter Kiewit Sons', Inc. in exchange for such convertible
debentures of Kiewit Materials Company.
(7) Shares issuable in combination with Series 1997A, 1998A and 1999A
convertible debentures of Peter Kiewit Sons', Inc. in exchange for
outstanding convertible debentures of Peter Kiewit Sons', Inc., together
with such presently indeterminate number of shares (a) issuable upon
conversion of Series 2000A, 2000B and 2000C convertible debentures of Kiewit
Materials Company, and (b) as may be issued as a result of anti-dilution
adjustments in accordance with the terms thereof.
(8) The registration fee payable with respect to such shares to be issued
together with the Series 1997A, 1998A and 1999A convertible debentures of
Peter Kiewit Sons', Inc. is included with the registration fees for such
debentures.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3

EXPLANATORY NOTE

Prior to the effectiveness of this Registration Statement, Kiewit Materials
Company, one of the registrants, will change its name to United Metro Materials
Inc. Accordingly, Kiewit Materials Company is referred to as United Metro
Materials Inc. in the prospectus contained in this Registration Statement.
<PAGE> 4

THE INFORMATION IN THIS OFFERING CIRCULAR-PROSPECTUS IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS OFFERING
CIRCULAR-PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED FEBRUARY 18, 2000

JOINT PROSPECTUS

[PETER KIEWIT SONS', INC. LOGO]

PETER KIEWIT SONS', INC.
OFFER TO EXCHANGE
------------------------

-- 8.028% SERIES 2000A CONVERTIBLE DEBENTURES OF UNITED METRO MATERIALS
INC., DUE OCTOBER 31, 2010, OR

-- (1) 8.028% SERIES 1997A CONVERTIBLE DEBENTURES OF PETER KIEWIT SONS',
INC., DUE OCTOBER 31, 2010, AND (2) SHARES OF UNITED METRO MATERIALS
INC. COMMON STOCK

for

OUTSTANDING 8.028% SERIES 1997 CONVERTIBLE DEBENTURES OF PETER KIEWIT
SONS', INC., DUE OCTOBER 31, 2007
------------------------------

-- 7.35% SERIES 2000B CONVERTIBLE DEBENTURES OF UNITED METRO MATERIALS
INC., DUE OCTOBER 31, 2010, OR

-- (1) 7.35% SERIES 1998A CONVERTIBLE DEBENTURES OF PETER KIEWIT SONS',
INC., DUE OCTOBER 31, 2010, AND (2) SHARES OF UNITED METRO MATERIALS
INC. COMMON STOCK

for

OUTSTANDING 7.35% SERIES 1998 CONVERTIBLE DEBENTURES OF PETER KIEWIT
SONS', INC., DUE OCTOBER 31, 2008
------------------------------

-- 8.25% SERIES 2000C CONVERTIBLE DEBENTURES OF UNITED METRO MATERIALS
INC., DUE OCTOBER 31, 2010, OR

-- (1) 8.25% SERIES 1999A CONVERTIBLE DEBENTURES OF PETER KIEWIT SONS',
INC., DUE OCTOBER 31, 2010, AND (2) SHARES OF UNITED METRO MATERIALS
INC. COMMON STOCK

for

OUTSTANDING 8.25% SERIES 1999 CONVERTIBLE DEBENTURES OF PETER KIEWIT
SONS', INC., DUE OCTOBER 31, 2009
------------------------------

The debenture exchange offer expires at 11:59 p.m., Omaha time, on
, 2000, unless extended.

Kiewit intends to spin-off United Metro after the debenture exchange offer.

Your right to withdraw tendered securities is limited, as described in this
document.

The new securities will not be listed on any securities exchange or market
and will be subject to substantial transfer restrictions.

SEE "RISK FACTORS," BEGINNING ON PAGE 16, FOR A DESCRIPTION OF FACTORS THAT
YOU SHOULD CONSIDER IN EVALUATING THE DEBENTURE EXCHANGE OFFER.
------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

, 2000
<PAGE> 5

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE DEBENTURE EXCHANGE OFFER.... 1
SUMMARY..................................................... 11
The Companies............................................. 11
The Debenture Exchange Offer.............................. 11
RISK FACTORS................................................ 16
Risk Factors Relating to the Debenture Exchange Offer, the
Share Exchange and the Spin-off........................ 16
Risk Factors Regarding United Metro....................... 16
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE............. 21
THE DEBENTURE EXCHANGE OFFER, THE SHARE EXCHANGE
AND THE SPIN-OFF.......................................... 22
Background and Purpose.................................... 22
The Share Exchange........................................ 23
The Spin-off.............................................. 23
Effects................................................... 23
Consequences of a Decision Not to Exchange................ 23
Consequences of a Decision to Exchange.................... 24
No Appraisal Rights....................................... 24
Regulatory Approvals...................................... 24
Accounting Treatment...................................... 24
THE DEBENTURE EXCHANGE OFFER................................ 26
Terms of the Debenture Exchange Offer..................... 26
Exchange Alternatives..................................... 28
Formula Price............................................. 30
Transfer Restrictions..................................... 30
Determining to Participate in the Debenture Exchange
Offer.................................................. 31
Exchange of Kiewit Convertible Debentures................. 32
Procedures for Tendering Kiewit Convertible Debentures.... 32
Lost or Destroyed Kiewit Convertible Debentures........... 32
Kiewit's Interpretations Are Binding...................... 33
Withdrawal Rights......................................... 33
Extension of Tender Period; Termination; Amendment........ 33
Conditions to the Debenture Exchange Offer................ 34
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA OF
KIEWIT.................................................... 35
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA OF UNITED
METRO..................................................... 36
</TABLE>

i
<PAGE> 6

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF KIEWIT....................... 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF UNITED METRO................. 42
BUSINESS OF UNITED METRO.................................... 45
Industry Background/Market Overview....................... 45
Business Strategy......................................... 48
Operations................................................ 48
Reserves.................................................. 49
Products.................................................. 49
Customers................................................. 49
Competition............................................... 50
Employees................................................. 50
Governmental and Environmental Regulation................. 50
Legal Proceedings......................................... 51
BUSINESS OF KIEWIT.......................................... 52
The Construction Business................................. 52
Competition............................................... 52
Demand.................................................... 52
Backlog................................................... 53
Joint Ventures............................................ 53
The Materials Business.................................... 53
Locations................................................. 53
Properties................................................ 53
Environmental Protection.................................. 54
Employees................................................. 54
</TABLE>

ii
<PAGE> 7

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MANAGEMENT OF UNITED METRO.................................. 55
Senior Management and Directors of United Metro........... 55
Other Key Personnel....................................... 55
Committees................................................ 57
SECURITY OWNERSHIP OF UNITED METRO COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF
UNITED METRO.............................................. 58
EXECUTIVE COMPENSATION OF UNITED METRO...................... 59
MANAGEMENT OF KIEWIT........................................ 60
Senior Management and Directors of Kiewit................. 60
Committees................................................ 62
SECURITY OWNERSHIP OF KIEWIT COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF
KIEWIT.................................................... 63
EXECUTIVE COMPENSATION OF KIEWIT............................ 64
CERTAIN TRANSACTIONS........................................ 65
COMPARISON OF OUTSTANDING KIEWIT CONVERTIBLE DEBENTURES AND
NEW REDUCED PRINCIPAL AMOUNT KIEWIT CONVERTIBLE
DEBENTURES................................................ 67
Basic Features............................................ 67
Conversion Rights......................................... 70
Ownership and Transfer Restrictions....................... 71
Redemption................................................ 71
Modification of the Indenture............................. 71
Events of Default and Withholding of Notice to
Debentureholders....................................... 71
The Trustee............................................... 72
Authentication and Delivery............................... 72
Satisfaction and Discharge of Indenture................... 72
COMPARISON OF OUTSTANDING KIEWIT CONVERTIBLE DEBENTURES AND
UNITED METRO CONVERTIBLE DEBENTURES....................... 73
Basic Features............................................ 73
Conversion Rights......................................... 76
Ownership and Transfer Restrictions....................... 78
Redemption................................................ 78
Modification of the Indenture............................. 78
Events of Default and Withholding of Notice to
Debentureholders....................................... 78
The Trustee............................................... 79
Authentication and Delivery............................... 79
Satisfaction and Discharge of Indenture................... 79
</TABLE>

iii
<PAGE> 8

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COMPARISON OF RIGHTS OF HOLDERS OF KIEWIT COMMON STOCK AND
UNITED METRO COMMON STOCK................................. 80
General................................................... 80
Dividend Policy........................................... 80
Voting Rights............................................. 80
Repurchase Rights......................................... 81
Liquidation Rights........................................ 81
Formula Price............................................. 82
Ownership and Transfer Restrictions....................... 82
Listing................................................... 83
Limitation on Directors' Liability........................ 83
Preferred Stock........................................... 83
Action by Stockholder Consent; Stockholders' Meetings..... 84
RELATIONSHIP BETWEEN KIEWIT AND UNITED METRO................ 85
Separation Agreement...................................... 85
Tax Sharing Agreement..................................... 85
Other..................................................... 86
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES............... 86
Non-U.S. Persons.......................................... 87
Reporting Requirements.................................... 87
MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES........... 88
Exchange of Outstanding Kiewit Debentures for United Metro
Common Stock and New Reduced Principal Amount Kiewit
Debentures............................................. 88
Exchange of Outstanding Kiewit Debentures for United Metro
Convertible Debentures................................. 89
NEBRASKA TAX LETTER REQUEST................................. 90
LEGAL MATTERS............................................... 90
EXPERTS..................................................... 90
WHERE YOU CAN FIND MORE INFORMATION......................... 91
INDEX TO KIEWIT FINANCIAL STATEMENTS........................ F-1
INDEX TO KIEWIT MATERIALS COMPANY FINANCIAL STATEMENTS...... F-33
INDEX TO PACIFIC ROCK PRODUCTS AND RIVER CITY MACHINERY
FINANCIAL STATEMENTS...................................... F-60
INDEX TO PRO FORMA INFORMATION.............................. F-82
</TABLE>

iv
<PAGE> 9

QUESTIONS AND ANSWERS ABOUT THE DEBENTURE EXCHANGE OFFER

Q: WHAT IS THE DEBENTURE EXCHANGE OFFER?

A: In the debenture exchange offer, Peter Kiewit Sons', Inc. is offering the
holders of its outstanding convertible debentures the opportunity to
exchange their Kiewit debentures for:

- United Metro debentures convertible into shares of United Metro common
stock; or

- both shares of United Metro common stock and new reduced principal amount
Kiewit debentures convertible into shares of Kiewit common stock.

United Metro is the new name for Kiewit Materials Company, a wholly owned
subsidiary of Kiewit.

The debenture exchange offer is being made in connection with a proposal by
Kiewit to separate its construction business and its materials business into
two separate, independent companies by distributing shares of United Metro
common stock to Kiewit stockholders in a spin-off that is intended to be
tax-free for U.S. federal income tax purposes.

Q: WHAT IS THE SPIN-OFF?

A: After the completion of the debenture exchange offer and the share exchange
described below, Kiewit will distribute the shares of United Metro common
stock it then holds as a dividend on a pro rata basis to holders of Kiewit
common stock in the spin-off. Kiewit stockholders will receive in the
spin-off one share of United Metro common stock for each share of Kiewit
common stock held.

Q: WHAT WILL I RECEIVE IF I PARTICIPATE IN THE DEBENTURE EXCHANGE OFFER?

A: What you will receive if you participate in the debenture exchange offer
depends on:

- the series of the Kiewit convertible debentures you currently hold; and

- the securities you elect to receive in exchange for your Kiewit
convertible debentures.

The table below shows what you will receive based on what you hold and which
option you choose.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
SERIES OF KIEWIT CHOICE 1
CONVERTIBLE DEBENTURES EXCHANGE FOR UNITED METRO CHOICE 2
YOU HOLD CONVERTIBLE DEBENTURES IN EXCHANGE FOR NEW REDUCED
THE SAME PRINCIPAL AMOUNT PRINCIPAL AMOUNT KIEWIT
AS THE KIEWIT DEBENTURES CONVERTIBLE DEBENTURES AND
BEING EXCHANGED UNITED METRO COMMON STOCK
-------------------------------------------------------------------------------------------
<S> <C> <C>
7.35% Series 1998 Convertible 7.35% Series 2000B - 7.35% Series 1998A
Debentures of Peter Kiewit Convertible Debentures of Convertible Debentures of
Sons', Inc., due October 31, United Metro Materials Inc., Peter Kiewit Sons', Inc.,
2008 and convertible into due October 31, 2010. The due October 31, 2010 and
shares of Kiewit common stock Series 2000B Convertible convertible in October 2003
in October 2003. Debentures you receive will into the same number of
be convertible in October shares of Kiewit common
2003 into shares of United stock as the Series 1998
Metro common stock with an Convertible Debentures you
initial aggregate formula exchange were convertible;
price equal to the aggregate and
formula price of the shares
of Kiewit common stock into - Shares of United Metro
which the Series 1998 common stock.
Convertible Debentures you
exchange were convertible.
-------------------------------------------------------------------------------------------
8.25% Series 1999 Convertible 8.25% Series 2000C - 8.25% Series 1999A
Debentures of Peter Kiewit Convertible Debentures of Convertible Debentures of
Sons', Inc., due October 31, United Metro Materials Inc., Peter Kiewit Sons', Inc.,
2009 and convertible into due October 31, 2010. The due October 31, 2010 and
shares of Kiewit common stock Series 2000C Convertible convertible in October 2004
in October 2004. Debentures you receive will into the same number of
be convertible in October shares of Kiewit common
2004 into shares of United stock as the Series 1999
Metro common stock with an Convertible Debentures you
initial aggregate formula exchange were convertible;
price equal to the aggregate and
formula price of the shares
of Kiewit common stock into - Shares of United Metro
which the Series 1999 common stock.
Convertible Debentures you
exchange were convertible.
-------------------------------------------------------------------------------------------
</TABLE>

In the event you elect Choice 2:

- the principal amount of the new Kiewit convertible debentures you receive
will be equal to the principal amount of the outstanding Kiewit
convertible debentures less the initial formula price of the United Metro
common stock received in the debenture exchange offer; and

- the number of shares of United Metro common stock you receive will be
equal to the number of shares of United Metro common stock you would have
received had you converted your original Kiewit debentures prior to the
spin-off, and received the dividend of United Metro common stock in the
spin-off. Kiewit stockholders will receive in the spin-off one share of
United Metro common stock for each share of Kiewit common stock they
hold.

2
<PAGE> 11

Q. WHAT SHOULD I EXPECT TO RECEIVE IF I EXCHANGE A $1,000 PRINCIPAL AMOUNT
KIEWIT CONVERTIBLE DEBENTURE FOR A UNITED METRO CONVERTIBLE DEBENTURE?

A: We have prepared the following table to illustrate what you would receive if
you elected to exchange a $1,000 principal amount Kiewit convertible
debenture in the debenture exchange offer for a United Metro convertible
debenture. The table assumes a formula price for Kiewit common stock
immediately prior to the spin-off of $20.28 per share, the estimated formula
price as of February 17, 2000. The Kiewit formula price will be reduced in
the event Kiewit pays a cash dividend prior to completion of the debenture
exchange offer. The table also assumes an initial formula price for United
Metro common stock of $6.58 per share. The following is an example for
illustrative purposes only and may not be indicative of what you will
actually receive if you participate in the debenture exchange offer.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CHOICE 1
OUTSTANDING KIEWIT CONVERTIBLE DEBENTURE UNITED METRO CONVERTIBLE DEBENTURE
- ------------------------------------------------------------------------------------------------------------------
SERIES PRINCIPAL NUMBER OF SHARES AGGREGATE SERIES PRINCIPAL NUMBER OF SHARES INITIAL AGGREGATE
AMOUNT OF KIEWIT FORMULA PRICE AMOUNT OF UNITED METRO FORMULA PRICE
COMMON STOCK OF SHARES OF COMMON STOCK OF SHARES OF
ISSUABLE ON KIEWIT ISSUABLE ON UNITED METRO
CONVERSION(1) COMMON STOCK CONVERSION(1) COMMON STOCK
ISSUABLE ON ISSUABLE ON
CONVERSION CONVERSION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $1,000 100 $2,028.00 2000A $1,000 308.21 $2,028.00
1998 $1,000 79.36 $1,609.42 2000B $1,000 244.59 $1,609.42
1999 $1,000 63.9 $1,295.89 2000C $1,000 196.94 $1,295.89
</TABLE>

- ---------------
(1) The terms of the debentures require that, on conversion, the holder pay the
then current formula price for the fraction of the share necessary to round
the number of shares issuable on conversion up to the nearest whole number
of shares. Therefore, on conversion, the holders of the Series 1998 and 1999
Kiewit convertible debentures would receive 80 and 64 shares of Kiewit
common stock, respectively. Similarly, on conversion, the holders of the
Series 2000A, 2000B and 2000C United Metro convertible debentures would
receive 309, 245 and 197 shares of United Metro common stock, respectively.

Q. WHAT SHOULD I EXPECT TO RECEIVE IF I EXCHANGE A $1,000 PRINCIPAL AMOUNT
KIEWIT CONVERTIBLE DEBENTURE FOR BOTH A NEW REDUCED PRINCIPAL AMOUNT KIEWIT
CONVERTIBLE DEBENTURE AND SHARES OF UNITED METRO COMMON STOCK?

A: We have prepared the following table to illustrate what you would receive if
you elected to exchange a $1,000 principal amount Kiewit convertible
debenture in the debenture exchange offer for both a new reduced principal
amount Kiewit convertible debenture and shares of United Metro common stock.
The table assumes a formula price for Kiewit common stock immediately prior
to the spin-off of $20.28 per share, the estimated formula price as of
February 17, 2000. The Kiewit formula price will be reduced in the event
Kiewit pays a cash dividend prior to completion of the debenture exchange
offer. The table also assumes an initial formula price for United Metro
common stock of $6.58 per share. The following is an

3
<PAGE> 12

example for illustrative purposes only and may not be indicative of what you
will actually receive if you participate in the debenture exchange offer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
CHOICE 2
NEW REDUCED PRINCIPAL AMOUNT UNITED METRO
OUTSTANDING KIEWIT AND
CONVERTIBLE DEBENTURE KIEWIT CONVERTIBLE DEBENTURE COMMON STOCK
- ------------------------------------------------------------------------------------------------------------------------------
SERIES PRINCIPAL AGGREGATE SERIES PRINCIPAL INITIAL AGGREGATE NUMBER OF
AMOUNT NUMBER OF FORMULA PRICE AMOUNT NUMBER OF FORMULA PRICE SHARES OF
SHARES OF OF SHARES OF SHARES OF OF SHARES OF UNITED METRO
KIEWIT KIEWIT KIEWIT KIEWIT COMMON
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK STOCK(2)
ISSUABLE ON ISSUABLE ON ISSUABLE ON ISSUABLE ON
CONVERSION(1) CONVERSION CONVERSION(1) CONVERSION
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $1,000 100 $2,028.00 1997A $342.00 100 $1,370.00 100
1998 $1,000 79.36 $1,609.42 1998B $473.60 79.36 $1,087.23 80
1999 $1,000 63.9 $1,295.89 1999C $578.88 63.9 $ 875.43 64

<CAPTION>
- --------------------------
CHOICE 2
UNITED METRO

COMMON STOCK
- --------------------------
SERIES INITIAL AGGREGATE
FORMULA PRICE
OF SHARES OF
UNITED METRO
COMMON STOCK
- --------------------------
<S> <C>
1997 $658.00
1998 $526.40
1999 $421.12
</TABLE>

(2) Assumes that the holder of the outstanding Kiewit convertible debenture has
paid the then current formula price for the fraction of the share necessary
to round the number of shares issuable on conversion up to the nearest whole
number of shares.

Q: WHY IS KIEWIT CONDUCTING THE DEBENTURE EXCHANGE OFFER?

A: Each holder of Kiewit convertible debentures is a party to a repurchase
agreement that requires that the debentures be sold to Kiewit on termination
of the holder's employment with Kiewit or a subsidiary of Kiewit. Following
the completion of the spin-off, United Metro employees will no longer be
employed by Kiewit or a subsidiary of Kiewit and will no longer meet the
requirements for owning Kiewit debentures. Therefore, they will be required
to sell any Kiewit debentures they own back to Kiewit. The debenture
exchange offer allows debentureholders who are United Metro employees the
opportunity to acquire securities of their company and avoid having to sell
any Kiewit debentures they then own back to Kiewit immediately following the
spin-off.

Kiewit debentures do not contain provisions which would enable
debentureholders who are Kiewit employees to participate in the distribution
of shares of United Metro common stock in the spin-off or which would adjust
the conversion ratio of the outstanding Kiewit debentures to take into
account the effect of the spin-off. Following the spin-off, the shares of
Kiewit common stock issuable on conversion of the Kiewit debentures will
have a lower aggregate formula price since the formula price for Kiewit
common stock immediately after the spin-off will be reduced by the book
value of United Metro distributed as a dividend in the spin-off. The
debenture exchange offer allows debentureholders who are Kiewit employees
the opportunity to participate in the spin-off by receiving United Metro
common stock and new reduced principal amount Kiewit debentures.

Q: WHAT IS THE SHARE EXCHANGE?

A: Kiewit is also offering Kiewit stockholders who are United Metro employees
the opportunity to exchange their shares of Kiewit common stock for shares
of United Metro common stock with an equal aggregate formula price. Kiewit's
restated certificate of incorporation generally restricts ownership of
Kiewit common stock to directors and employees of Kiewit and its
subsidiaries. Following the completion of the spin-off, United Metro
employees will no longer be employed by Kiewit or a subsidiary of Kiewit and
will

4
<PAGE> 13
no longer meet the requirements for owning Kiewit common stock. Therefore,
they will be required to sell any Kiewit common stock they then own back to
Kiewit. To provide United Metro employees with a larger, more direct stake
in the materials business and an alternative to selling their Kiewit common
stock back to Kiewit for cash immediately following the spin-off, Kiewit is
offering Kiewit stockholders who are United Metro employees the opportunity
to exchange their shares of Kiewit common stock for shares of United Metro
common stock with an equal aggregate formula price.

Q: WHY HAS KIEWIT DECIDED TO SEPARATE UNITED METRO FROM KIEWIT?

A: The board of directors and management of Kiewit have concluded that
separation of its materials business and its construction business by means
of a spin-off is in the best interests of Kiewit and Kiewit's stockholders.
In reaching this conclusion, Kiewit's board of directors and management
considered that, as a result of the spin-off, the debenture exchange offer
and the share exchange:

- the senior management of United Metro will acquire a larger, direct
interest in the materials business that reflects solely the performance of
United Metro;

- United Metro employees will acquire a larger, direct interest in the
materials business, which the Kiewit board of directors believes is
essential to United Metro's ability to better retain, attract, and
motivate its employees; and

- United Metro should improve its ability to make sales to, and secure
contracts from, unrelated construction businesses that have concerns about
doing business with United Metro while it is owned and controlled by a
direct competitor.

Q: HOW DO I DECIDE WHETHER TO PARTICIPATE IN THE DEBENTURE EXCHANGE OFFER?

A: Whether you should participate in the debenture exchange offer and which
option you should choose if you decide to participate in the offer depends
on a number of factors, including whether you are a United Metro employee or
a Kiewit employee. The table below shows what you will receive and the
consequences of each choice you may make in the debenture exchange offer.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
EMPLOYEE CHOICE 1 CHOICE 2 CHOICE 3
EXCHANGE FOR UNITED METRO EXCHANGE FOR NEW REDUCED DO NOTHING
CONVERTIBLE DEBENTURES PRINCIPAL AMOUNT KIEWIT
CONVERTIBLE DEBENTURES AND
UNITED METRO COMMON STOCK
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Metro You will receive United Metro You will receive new reduced You will keep your
convertible debentures in the principal amount Kiewit outstanding Kiewit
same principal amount as the convertible debentures and debentures. However,
Kiewit debentures surrendered shares of United Metro following the spin-off, you
in a transaction that is common stock. However, will no longer be employed
intended to be tax-free to following the spin-off, you by Kiewit or a subsidiary of
debentureholders for U.S. will no longer be employed Kiewit and you will be
federal income tax purposes. by Kiewit or a subsidiary of required to sell your Kiewit
Kiewit and you will be debentures you then own back
required to sell the new to Kiewit.
reduced principal amount
Kiewit debentures you then
own back to Kiewit.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

5
<PAGE> 14

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
EMPLOYEE CHOICE 1 CHOICE 2 CHOICE 3
EXCHANGE FOR UNITED METRO EXCHANGE FOR NEW REDUCED DO NOTHING
CONVERTIBLE DEBENTURES PRINCIPAL AMOUNT KIEWIT
CONVERTIBLE DEBENTURES AND
UNITED METRO COMMON STOCK
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kiewit You will receive United Metro You will receive new reduced You will keep your
convertible debentures in the principal amount Kiewit outstanding Kiewit
same principal amount as the convertible debentures and debentures. However,
Kiewit debentures surrendered. shares of United Metro following the spin-off, the
However, following the common stock in a shares of Kiewit common
spin-off, you will not be a transaction that is intended stock issuable on conversion
United Metro employee and you to be tax-free to of the Kiewit debentures
will be required to sell any debentureholders for U.S. will have a lower aggregate
United Metro debentures you federal income tax purposes. formula price, since that
then own back to United Metro. formula price will be
reduced by the book value of
United Metro distributed as
a dividend in the spin-off.
- ----------------
</TABLE>

You should consider all of the factors described under "Risk Factors"
starting at page 16. Neither Kiewit, United Metro nor any of their
respective directors make any recommendation as to whether you should tender
your Kiewit debentures. You must make your own decision as to whether to
tender your Kiewit debentures after reading this document and consulting
with your advisors based on your own financial position and requirements.

Q: TO WHOM WILL I BE ABLE TO TRANSFER NEW REDUCED PRINCIPAL AMOUNT KIEWIT
CONVERTIBLE DEBENTURES?

A: The new reduced principal amount Kiewit debentures will be subject to
substantial transfer restrictions and will remain subject to the repurchase
agreement executed by the debentureholders at the time of initial purchase
of the outstanding Kiewit debentures. Specifically, the terms of the
repurchase agreement prohibit Kiewit debentureholders from transferring the
Kiewit debentures in any manner except in a sale to Kiewit. The repurchase
agreement also requires the holder to sell the Kiewit debentures back to
Kiewit upon the termination of the holder's employment with Kiewit.

Q: TO WHOM WILL I BE ABLE TO TRANSFER UNITED METRO CONVERTIBLE DEBENTURES?

A: The United Metro debentures will be subject to substantial transfer
restrictions. Each holder of Kiewit debentures who elects to receive United
Metro debentures will be required to execute a repurchase agreement with
United Metro. Specifically, the terms of the repurchase agreement will
prohibit United Metro debentureholders from transferring the United Metro
debentures in any manner except in a sale to United Metro. The repurchase
agreement will also require the holder to sell the United Metro debentures
back to United Metro if the holder voluntarily terminates his or her
employment with United Metro or United Metro terminates his or her
employment for cause.

Q: WHAT WILL I RECEIVE IF I CONVERT THE NEW REDUCED PRINCIPAL AMOUNT KIEWIT
DEBENTURES?

A: The new reduced principal amount Kiewit debentures will be convertible
during the applicable conversion period into the same number of shares of
Kiewit common stock as the outstanding Kiewit debentures.

6
<PAGE> 15

Q: WHAT WILL I RECEIVE IF I CONVERT THE UNITED METRO DEBENTURES?

A: The United Metro debentures will be convertible during the applicable
conversion period into shares of United Metro common stock with an initial
aggregate formula price equal to the aggregate formula price of the Kiewit
common stock into which the holder's Kiewit debenture was convertible.

The United Metro debentures will also be convertible during the one-month
period after the occurrence of any of the following:

- the holder's death;

- a change of control of United Metro; or

- a call for redemption of the holder's debentures.

Q: WHAT IS "FORMULA PRICE"?

A: The formula price of Kiewit common stock is the per share price at which
Kiewit buys and sells shares of its common stock and is based on the
adjusted book value of Kiewit at the end of the previous year less the
amount of declared dividends during the current year. The estimated formula
price of Kiewit common stock on February 17, 2000 was $20.28 per share. The
Kiewit formula price will be reduced in the event Kiewit pays a cash
dividend prior to the completion of the debenture exchange offer.

The formula price of United Metro common stock is the per share price at
which United Metro will buy shares of its common stock and is based on the
adjusted book value of United Metro at the end of the previous year less the
amount of declared dividends during the current year. In addition to any
adjustments for declared dividends during the current year, the initial
formula price for United Metro common stock is also adjusted for the amount
of any capital contributions made by Kiewit to United Metro during fiscal
year 2000 prior to the spin-off.

Q: CAN I PARTICIPATE WITH ONLY A PORTION OF MY KIEWIT CONVERTIBLE DEBENTURES IN
THE DEBENTURE EXCHANGE OFFER?

A: Yes. You can tender some or all of your Kiewit debentures so long as the
tendered debentures are in denominations of $1,000 or an integral multiple
of $1,000. However, following the spin-off, if you are a United Metro
employee, you will be required to sell any Kiewit debentures you then hold
back to Kiewit. If you are a Kiewit employee, the shares of Kiewit common
stock issuable on conversion of the Kiewit debentures will have a lower
aggregate formula price since the formula price for Kiewit common stock
immediately after the spin-off will be reduced by the book value of United
Metro distributed as a dividend in the spin-off.

Q: DO I HAVE TO DO ANYTHING IF I WANT TO RETAIN MY KIEWIT DEBENTURES?

A: No, you do not have to do anything if you want to retain your Kiewit
debentures. However, following the spin-off, if you are a United Metro
employee, you will be required to sell any Kiewit debentures you then hold
back to Kiewit. If you are a Kiewit employee, the shares of Kiewit common
stock issuable on conversion of the Kiewit debentures will have a lower
aggregate formula price since the formula price for Kiewit common stock
immediately after the spin-off will be reduced by the book value of United
Metro distributed as a dividend in the spin-off.

Q: HOW DO I PARTICIPATE IN THE DEBENTURE EXCHANGE OFFER?

A: Complete and sign the letter of transmittal designating the principal amount
of Kiewit debentures you wish to tender. Send it, together with your
convertible debentures and any other documents required by the letter of
transmittal, by registered mail, return receipt requested, so that it is
received by Kiewit at the address on the back cover of this offering
circular-prospectus before the expiration of the debenture exchange offer.
If you are exchanging your outstanding Kiewit debentures for United Metro
debentures, you must also send an executed United Metro repurchase agreement
to Kiewit.

7
<PAGE> 16

If your Kiewit debenture has been pledged to a lender, you must make
arrangements with the lender for the valid tender of the pledged Kiewit
debentures. If, however, the lender is Enterprise Bank, N.A. or U.S. Bank,
N.A., Kiewit will arrange directly with the bank for delivery of the pledged
debentures to Kiewit.

Q: CAN I CHANGE MY MIND AFTER I TENDER MY KIEWIT DEBENTURES?

A: Yes. You may withdraw tenders of your debentures any time before the
expiration of the debenture exchange offer. If you change your mind again,
you can retender your Kiewit debentures by following the tender procedures
again prior to the expiration of the debenture exchange offer. However,
following the spin-off, if you are a United Metro employee, you will be
required to sell any Kiewit debentures you then hold back to Kiewit. If you
are a Kiewit employee, the shares of Kiewit common stock issuable on
conversion of the Kiewit debentures will have a lower aggregate formula
price since the formula price for Kiewit common stock immediately after the
spin-off will be reduced by the book value of United Metro distributed as a
dividend in the spin-off.

Q: ARE THERE ANY CONDITIONS TO KIEWIT'S OBLIGATION TO COMPLETE THE DEBENTURE
EXCHANGE OFFER?

A: Yes. Kiewit has received a ruling from the IRS confirming that the debenture
exchange offer, the share exchange and the spin-off generally will be
tax-free transactions for U.S. federal income tax purposes. The debenture
exchange offer will not be completed unless that ruling remains in effect.

Kiewit reserves the right to abandon the spin-off at any time prior to the
completion of the debenture exchange offer and the share exchange. If Kiewit
abandons the spin-off, it will not complete the debenture exchange offer or
the share exchange. Kiewit also reserves the right to abandon the debenture
exchange offer or the share exchange at any time prior to its completion. If
Kiewit abandons either the debenture exchange offer or the share exchange,
it will not complete the spin-off or the other exchange.

There is no requirement that any minimum principal amount of debentures are
tendered for the debenture exchange offer to be completed.

Q: WHEN DOES THE DEBENTURE EXCHANGE OFFER EXPIRE?

A: The debenture exchange offer and withdrawal rights will expire at 11:59
p.m., Omaha time, on , 2000, unless extended. You must tender
your Kiewit debentures prior to the expiration date if you wish to
participate in the debenture exchange offer.

Q: WILL UNITED METRO COMMON STOCK BE LISTED ON AN EXCHANGE?

A: The United Metro common stock will not be listed on any national securities
exchange or quoted on the Nasdaq National Market.

Q: ARE SHARES OF UNITED METRO COMMON STOCK TRANSFERABLE?

A: The United Metro common stock will be subject to substantial transfer
restrictions. Specifically, holders of United Metro common stock will be
prohibited from transferring the United Metro common stock in any manner
except in a sale to United Metro or in a transfer for estate planning
purposes that meets specified requirements. Upon the death of a United Metro
stockholder, the shares of United Metro common stock owned by the deceased
stockholder will be permitted to be transferred to his or her estate,
provided that the shares transferred to the transferee will be subject to
the same transfer restrictions. However, unlike Kiewit common stock, United
Metro stockholders will not be required to sell their United Metro common
stock back to United Metro upon their retirement or other termination of
their employment with United Metro or Kiewit, as the case may be. All
transfer restrictions may be terminated by the United Metro board at any
time.

Holders of United Metro common stock are permitted to pledge their common
stock for loans in connection with the ownership of their common stock.

8
<PAGE> 17

Q: HOW CAN I SELL SHARES OF UNITED METRO COMMON STOCK TO UNITED METRO?

A: At any time on or prior to the 15th day of any calendar month, United Metro
stockholders may offer to sell all or part of their United Metro common
stock to United Metro at the current formula price. United Metro will
generally be required to accept the offer within 10 days of receipt of the
offer.

United Metro's repurchase obligations may be terminated by United Metro's
board of directors at any time. However, the board shall not have that
authority unless it has also determined that the United Metro common stock
is publicly traded.

Q: WILL I BE TAXED ON THE DEBENTURES AND/OR THE SHARES OF UNITED METRO COMMON
STOCK THAT I RECEIVE IN THE DEBENTURE EXCHANGE OFFER?

A: You will generally not recognize gain or loss for U.S. federal income tax
purposes upon the receipt of debentures and/or shares of United Metro common
stock in the debenture exchange offer, except to the extent that you are
required to sell any debentures so received back to Kiewit or United Metro
immediately following the spin-off.

Q: IN THE EVENT I CHOOSE TO RECEIVE NEW REDUCED PRINCIPAL AMOUNT KIEWIT
DEBENTURES AND SHARES OF UNITED METRO COMMON STOCK IN THE DEBENTURE EXCHANGE
OFFER, WHAT WILL BE THE TAX BASIS AND HOLDING PERIOD OF THE DEBENTURES AND
THE SHARES FOR U.S. FEDERAL INCOME TAX PURPOSES?

A: For U.S. federal income tax purposes, you will generally have a tax basis in
the new Kiewit convertible debentures and shares of United Metro common
stock received in the debenture exchange offer that is equal to your tax
basis in the Kiewit convertible debentures you tendered in the exchange.
That tax basis will be allocated in proportion to the fair market values of
the new reduced principal amount Kiewit debentures and shares of United
Metro common stock. Your holding period will include the period during which
you held the Kiewit debentures you tendered in the exchange, provided that
you held the Kiewit debentures as capital assets at the time of the
exchange.

Q: WILL UNITED METRO PAY DIVIDENDS ON SHARES OF UNITED METRO COMMON STOCK?

A: United Metro does not currently intend to pay dividends on the United Metro
common stock.

Q: WHOM SHOULD I CALL WITH QUESTIONS ABOUT THE DEBENTURE EXCHANGE OFFER?

A: Prior to the spin-off, stockholders with inquiries relating to the debenture
exchange offer should contact:

Douglas A. Obermier
Stock Registrar
Peter Kiewit Sons', Inc.
Kiewit Plaza
Omaha, Nebraska 68131
(402) 342-2052

After the spin-off, holders of United Metro debentures and/or shares of
United Metro common stock with inquiries relating to their investment in
United Metro should contact:

Mark E. Belmont
Vice President, General Counsel
and Secretary
United Metro Materials Inc.
Kiewit Plaza
Omaha, Nebraska 68131
(402) 536-3661

9
<PAGE> 18

After the spin-off, holders of new Kiewit convertible debentures with
inquiries relating to their investment in Kiewit should contact:

Douglas A. Obermier
Stock Registrar
Peter Kiewit Sons', Inc.
Kiewit Plaza
Omaha, Nebraska 68131
(402) 342-2052

10
<PAGE> 19

SUMMARY

This summary highlights selected information from this offering
circular-prospectus and may not contain all of the information that is important
to you. To understand the debenture exchange offer fully, you should read
carefully this entire offering circular-prospectus and the documents to which we
have referred you. See "Where You Can Find More Information" on page 91.

THE COMPANIES

Peter Kiewit Sons', Inc.
Kiewit Plaza
Omaha, Nebraska 61831
(402) 342-2052

Peter Kiewit Sons', Inc., together with its subsidiaries, is one of the
largest construction contractors in North America. Kiewit primarily performs its
services as a general contractor, responsible for the overall direction and
management of construction projects. Kiewit was incorporated in Delaware in 1997
to continue a construction business founded in Omaha, Nebraska in 1884. For more
detail on the business of Kiewit, see page 52.

United Metro Materials Inc.
Kiewit Plaza
Omaha, Nebraska 61831
(402) 536-3661

United Metro Materials Inc., a wholly owned subsidiary of Kiewit, together
with its subsidiaries, operates ready mix, asphalt and aggregates operations in
Arizona, Washington, Oregon, California, Wyoming, Utah and New Mexico. United
Metro is the new name for Kiewit Materials Company. For more detail on the
business of United Metro, see page 45.

THE DEBENTURE EXCHANGE OFFER

TERMS OF THE DEBENTURE
EXCHANGE OFFER................ Kiewit is offering to exchange its outstanding
convertible debentures for:

- United Metro debentures convertible into
United Metro common stock; or

- both shares of United Metro common stock and
new reduced principal amount Kiewit
debentures convertible into shares of Kiewit
common stock.

The exchange offer is being made in connection
with a proposal by Kiewit to separate its
construction and materials businesses into two
separate, independent companies by distributing
shares of United Metro common stock to Kiewit
stockholders in a spin-off that is intended to
be tax-free for U.S. federal income tax
purposes.

Holders of Kiewit convertible debentures who
exchange their Kiewit debentures for United
Metro debentures will receive United Metro
debentures in the same principal amount,
bearing interest at the same rate as the Kiewit
convertible debentures for which they were
exchanged and due on October 31, 2010. The
United Metro debentures will be convertible
into shares of United Metro common stock with
an initial aggregate formula price equal to the
aggregate formula price of the Kiewit common
stock into which the holder's Kiewit debentures
were convertible at the expiration of the
debenture exchange offer. The United Metro
debentures will be convertible into shares of
United Metro common stock during

11
<PAGE> 20

the same period that the Kiewit debentures were
convertible into shares of Kiewit common stock.
The United Metro debentures will also be
convertible in other limited circumstances.

Holders of Kiewit convertible debentures who
exchange their debentures for United Metro
common stock and new reduced principal amount
Kiewit convertible debentures will receive:

- new reduced principal amount Kiewit
debentures, bearing interest at the same rate
as the Kiewit convertible debentures for
which they were exchanged and due on October
31, 2010; and

- shares of United Metro common stock.

The new Kiewit debentures will be convertible
into the same number of shares of Kiewit common
stock as the original Kiewit debenture during
the same period that the original Kiewit
debenture was convertible. The principal amount
of the new Kiewit debenture will be the
principal amount of the holder's original
Kiewit debenture less the initial formula price
of the United Metro common stock received by
the holder in the debenture exchange offer. The
number of shares of United Metro common stock
the holder of a new reduced principal amount
Kiewit debenture will receive will be equal to
the number of shares that holder would have
received had he or she converted his or her
original Kiewit debenture prior to the spin-off
and received the dividend of United Metro
common stock in the spin-off.

All Kiewit convertible debentures properly
tendered and not withdrawn will be exchanged on
the terms and conditions of the debenture
exchange offer. Kiewit will promptly return to
debentureholders any Kiewit debentures not
accepted for exchange following the expiration
of the debenture exchange offer.

TRANSFER RESTRICTIONS......... The new reduced principal amount Kiewit
debentures will be subject to substantial
transfer restrictions and will remain subject
to the repurchase agreement executed by the
debentureholders at the time of the initial
purchase of the Kiewit debentures.
Specifically, the terms of the repurchase
agreement prohibit Kiewit debentureholders from
transferring the Kiewit debentures in any
manner except in a sale to Kiewit. The
repurchase agreement also requires the holder
to sell the Kiewit debentures back to Kiewit
upon the termination of the holder's employment
with Kiewit.

The United Metro debentures also will be
subject to substantial transfer restrictions.
Each holder of Kiewit debentures who elects to
receive United Metro debentures will be
required to execute a repurchase agreement with
United Metro. Specifically, the terms of the
repurchase agreement will prohibit United Metro
debentureholders from transferring the United
Metro debentures in any manner except in a sale
to United Metro. The repurchase agreement will
also require the holder to sell the United
Metro debentures back to United Metro if the
holder voluntarily terminates his or her
employment with United Metro or United Metro
terminates his or her employment for cause.

12
<PAGE> 21

MINIMUM CONDITION............. The debenture exchange offer is not conditioned
upon any minimum aggregate principal amount of
Kiewit convertible debentures being tendered
for exchange.

EXPIRATION DATE; EXTENSION;
TERMINATION................. The debenture exchange offer will expire at
11:59 p.m., Omaha time, on , 2000,
unless extended by Kiewit. You must tender your
Kiewit convertible debentures prior to this
date if you wish to participate. Kiewit may
also terminate the debenture exchange offer in
the circumstances described on page 33.

WITHDRAWAL RIGHTS............. You may withdraw tenders of your debentures at
any time before the expiration of the debenture
exchange offer. If you change your mind again,
you can retender your Kiewit debentures by
following the tender procedures again prior to
the expiration of the debenture exchange offer.

CONDITIONS TO THE DEBENTURE
EXCHANGE OFFER................ The debenture exchange offer is subject to
various conditions. Kiewit has received a
ruling from the IRS confirming that the
debenture exchange offer, the share exchange
and the spin-off generally will be tax-free
transactions for U.S. federal income tax
purposes. The debenture exchange offer will not
be completed unless that ruling remains in
effect.

Kiewit reserves the right to abandon the
spin-off at any time prior to the completion of
the debenture exchange offer and the share
exchange. If Kiewit abandons the spin-off, it
will not complete the debenture exchange offer
or the share exchange. Kiewit also reserves the
right to abandon the debenture exchange offer
or the share exchange at any time prior to its
completion. If Kiewit abandons either the
debenture exchange offer or the share exchange,
it will not complete the spin-off or the other
exchange.

PROCEDURES FOR TENDERING...... You must complete and sign the letter of
transmittal designating the principal amount of
Kiewit debentures you wish to tender and
whether you wish to exchange your Kiewit
debentures for: (1) United Metro debentures
convertible into United Metro common stock; or
(2) both shares of United Metro common stock
and new reduced principal amount Kiewit
debentures convertible into shares of Kiewit
common stock. Send the letter of transmittal,
together with your convertible debentures and
any other documents required by the letter of
transmittal, by registered mail, return receipt
requested, so that it is received by Kiewit at
the address on the back cover of this offering
circular-prospectus before the expiration of
the debenture exchange offer. If you are
exchanging your outstanding Kiewit debentures
for United Metro debentures, you must also send
an executed United Metro repurchase agreement
to Kiewit.

If your Kiewit convertible debentures have been
pledged to a lender, you must make arrangements
with the lender for the valid tender of the
pledged Kiewit debentures. If, however, the
lender is Enterprise Bank, N.A. or U.S. Bank,
N.A., Kiewit will arrange directly with the
bank for delivery of the pledged Kiewit
debentures to Kiewit.

13
<PAGE> 22

DELIVERY OF UNITED METRO
CONVERTIBLE DEBENTURES, SHARES
OF UNITED METRO COMMON STOCK
AND NEW REDUCED PRINCIPAL
KIEWIT CONVERTIBLE
DEBENTURES.................. Kiewit will deliver United Metro convertible
debentures, new reduced principal amount Kiewit
convertible debentures and certificates
representing shares of United Metro common
stock as soon as practicable after acceptance
of Kiewit convertible debentures for exchange.

MATERIAL U.S. FEDERAL INCOME
TAX CONSEQUENCES.............. Debentureholders will generally not recognize
gain or loss for U.S. federal income tax
purposes as a result of the debenture exchange
offer, except to the extent that the debentures
received are immediately repurchased following
the spin-off. A debentureholder will generally
have a tax basis in the common stock and/or
debentures received equal to the tax basis in
the Kiewit debentures exchanged, allocated, in
the case of the receipt of United Metro common
stock and new reduced principal amount Kiewit
debentures, in proportion to the fair market
values of each at the time of the exchange. A
debentureholder's holding period for the
debentures and/or common stock received will
include the holding period for the Kiewit
debentures exchanged, provided such debentures
were held as capital assets at the time of the
exchange. See "Material U.S. Federal Income Tax
Consequences" on page 86.

MATERIAL CANADIAN FEDERAL
INCOME TAX CONSEQUENCES....... As a result of the debenture exchange offer,
Canadian resident debentureholders will realize
a gain or loss for Canadian tax purposes
relating to the U.S. dollar principal amount of
the outstanding Kiewit debentures. In addition,
debentureholders may receive a taxable stock
option benefit from Canadian employment,
depending on whether a value test is satisfied.

USE OF PROCEEDS............... Neither Kiewit nor United Metro will receive
any proceeds from the issuance of debentures or
United Metro common stock in the debenture
exchange offer.

RISK FACTORS.................. You should consider carefully the matters
described under the caption "Risk Factors," as
well as the other information set forth in this
offering circular-prospectus.

DETERMINING WHETHER TO
PARTICIPATE IN THE DEBENTURE
EXCHANGE OFFER.............. You should consider all of the factors
described under "Risk Factors" starting at page
16. Neither Kiewit, United Metro nor any of
their respective directors make any
recommendation as to whether you should tender
your Kiewit debentures. You must make your own
decision as to whether to tender your Kiewit
debentures after reading this document and
consulting with your advisors based on your own
financial position and requirements.

EFFECTS OF THE DEBENTURE
EXCHANGE OFFER.............. Kiewit debentureholders will be affected by the
spin-off regardless of whether they choose to
participate in the debenture exchange offer.

14
<PAGE> 23

CONSEQUENCES OF A DECISION NOT
TO EXCHANGE................... United Metro Employees

Kiewit debentureholders who are United Metro
employees will cease to be employees of Kiewit
or a subsidiary of Kiewit after the spin-off.
Consequently, they will no longer meet the
requirements for owning Kiewit debentures and
will be required to sell any Kiewit debentures
they then own back to Kiewit.

Kiewit Employees

For those Kiewit debentureholders who are
Kiewit employees, the shares of Kiewit common
stock issuable on conversion of the Kiewit
debentures will have a lower aggregate formula
price following the spin-off, since that
formula price will be reduced by the book value
of United Metro distributed as a dividend in
the spin-off.

CONSEQUENCES OF A DECISION TO
EXCHANGE.................... United Metro Employees

Kiewit debentureholders who are United Metro
employees and who exchange some or all of their
Kiewit convertible debentures in the debenture
exchange offer will receive at their option:

- United Metro debentures convertible into
shares of United Metro common stock in a
transaction that is intended to be tax-free
to debentureholders for U.S. federal income
tax purposes; or

- both new reduced principal amount Kiewit
debentures convertible into shares of Kiewit
common stock, and shares of United Metro
common stock.

A United Metro employee who elects to receive
new reduced principal amount Kiewit debentures
and United Metro common stock will be required
to sell the new Kiewit debentures back to
Kiewit following the spin-off.

Kiewit Employees

Kiewit debentureholders who are Kiewit
employees and who exchange some or all of their
Kiewit convertible debentures in the debenture
exchange offer will receive at their option:

- United Metro debentures convertible into
shares of United Metro common stock; or

- both new reduced principal amount Kiewit
debentures convertible into shares of Kiewit
common stock, and shares of United Metro
common stock in a transaction that is
intended to be tax-free to debentureholders
for U.S. federal income tax purposes.

A Kiewit employee who elects to receive United
Metro debentures will be required to sell those
debentures back to United Metro following the
spin-off.

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RISK FACTORS

In considering whether to participate in the debenture exchange offer, you
should consider carefully all of the information set forth or incorporated in
this offering circular-prospectus and, in particular, the following risk
factors. In addition, for a discussion of additional uncertainties associated
with forward-looking statements in this offering circular-prospectus, please see
"Forward-Looking Statements May Prove Inaccurate" on page 21.

RISK FACTORS RELATING TO THE DEBENTURE EXCHANGE OFFER, THE SHARE EXCHANGE AND
THE SPIN-OFF

CONSEQUENCES OF A DECISION NOT TO EXCHANGE

If the spin-off occurs, those Kiewit debentureholders who are United Metro
employees will cease to be employees of Kiewit or a subsidiary of Kiewit after
the spin-off. Consequently, they will no longer meet the requirements for owning
Kiewit debentures and will be required to sell any Kiewit debentures they then
own back to Kiewit. For those Kiewit debentureholders who are Kiewit employees,
the shares of Kiewit common stock issuable on conversion of the Kiewit
debentures will have a lower aggregate formula price following the spin-off,
since that formula price will be reduced by the book value of United Metro
distributed as a dividend in the spin-off.

POSSIBLE EFFECTS OF THE DEBENTURE EXCHANGE OFFER ON LOANS SECURED BY KIEWIT
DEBENTURES

In the debenture exchange offer, Kiewit debentureholders may elect to
exchange their Kiewit debentures for either United Metro debentures or both new
reduced principal amount Kiewit debentures and shares of United Metro common
stock. Those debentureholders who choose to receive both new reduced principal
Kiewit debentures and United Metro common stock will receive Kiewit debentures
with a principal amount which is less than the principal amount of the Kiewit
debenture tendered. Consequently, the interest payable with respect to the new
reduced principal amount Kiewit debenture will be less than that payable with
respect to the Kiewit debenture tendered in the debenture exchange offer. To the
extent that a Kiewit debentureholder has obtained financing to purchase his or
her Kiewit debenture, the debentureholder will have less interest income with
which to make payments on that financing.

If the Kiewit debentures being tendered in the debenture exchange offer are
pledged to a lender, the securities received in exchange will also be subject to
the pledge under the terms of the loan documentation between the debentureholder
and the lender. As a result, the debentureholder may be required to deliver
those securities to his or her lender.

Debentureholders who have pledged their Kiewit debentures to a lender and
who are considering participation in the debenture exchange offer should consult
with their lender as to the effect of the debenture exchange offer on their
individual loan arrangements.

THE DEBENTURE EXCHANGE OFFER, THE SHARE EXCHANGE AND THE SPIN-OFF WILL RESULT IN
A LOWER FORMULA PRICE FOR KIEWIT COMMON STOCK

After the completion of the debenture exchange offer, the share exchange
and the spin-off, Kiewit will no longer own any of the outstanding common stock
of United Metro. The formula price for Kiewit common stock is determined by
reducing the prior year's adjusted book value by the amount of the dividends
declared during the current year. The spin-off will be effected by a dividend of
shares of United Metro common stock. Consequently, the formula price for Kiewit
common stock immediately after the spin-off will be reduced by the book value of
United Metro distributed as a dividend in the spin-off, in respect of each
Kiewit share.

RISK FACTORS REGARDING UNITED METRO

A DECREASE IN GOVERNMENT FUNDING OF HIGHWAY CONSTRUCTION AND MAINTENANCE AND
OTHER INFRASTRUCTURE PROJECTS MAY REDUCE UNITED METRO'S SALES AND PROFITS

A decrease or delay in government funding of highway construction and
maintenance and other infrastructure projects could reduce United Metro's sales
and profits. This is because many of the customers
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United Metro serves and intends to serve in the future depend substantially on
government funding of highway construction and maintenance and other
infrastructure projects. Unlike some of its competitors, United Metro operates
in a limited number of states. As a result, United Metro may be more vulnerable
than its more geographically diverse competitors to decreases in state
government highway spending in the states in which it operates.

BAD WEATHER IN UNITED METRO'S PEAK SEASON MAY RESULT IN LOWER SALES

Poor weather during the months of April through November could result in
lower sales of materials, which could reduce United Metro's net sales and
profits. This is because sales of materials are highest during this period and
poor weather conditions may reduce or delay highway construction and maintenance
and other infrastructure projects. In the past, significant changes in weather
conditions during this period have caused variations in demand for materials. In
addition, because United Metro is not as geographically diverse as some of its
competitors, it may be more vulnerable than these competitors to poor weather
conditions in the regions in which it operates.

GENERAL AND LOCAL ECONOMIC DOWNTURNS MAY RESULT IN DECREASED SALES AND PROFITS

General economic downturns or localized downturns in regions where United
Metro has operations, including any downturns in the construction industry,
could result in a decrease in sales and profits. A majority of United Metro's
sales are to customers in industries and businesses that are cyclical in nature
and subject to changes in general economic conditions, such as the construction
industry. United Metro's business is principally located in the Pacific
Northwest and the Southwest and is dependent upon the economies of those
regions. Because its business is more geographically concentrated than some of
its competitors, it may be more vulnerable to local economic conditions.

AN INCREASE IN THE PRICE OR DECREASE IN THE AVAILABILITY OF OIL MAY INCREASE THE
PRICE OF ASPHALT, RESULTING IN LESS ASPHALT USE BY UNITED METRO'S CUSTOMERS

A material rise in the price or a material decrease in the availability of
oil could adversely affect United Metro's operating results. Federal, state and
municipal government spending on roads is subject to appropriations by the
particular government entity. Asphalt prices are positively correlated to the
price of oil. Therefore, if there is a material rise in the price or a material
decrease in the availability of oil, there will be a resulting increase in the
cost of producing asphalt, which United Metro would likely attempt to pass along
to its customers. As a result of any price increase, United Metro's customers
may use less asphalt, which would decrease its asphalt sales volumes. A material
increase in the price or decrease in the availability of oil could also lead to
higher gasoline costs which would also increase United Metro's operating costs.
An increase in United Metro's operating costs could adversely affect its
operating results if it cannot pass these increased costs through to its
customers.

UNITED METRO'S SUCCESS DEPENDS SIGNIFICANTLY ON A LIMITED NUMBER OF KEY
PERSONNEL

United Metro will be managed by a small number of executive officers,
including Christopher J. Murphy, its Chief Executive Officer and President. The
loss of any of its key personnel could have a material adverse effect on United
Metro. United Metro believes that its future success will depend in large part
on its ability to retain and attract highly skilled, knowledgeable,
sophisticated and qualified personnel.

UNITED METRO MAY INCUR SIGNIFICANT DEBT IN THE FUTURE WHICH COULD LIMIT ITS
GROWTH AND ITS ABILITY TO RESPOND TO CHANGING CONDITIONS

United Metro may incur debt to fund acquisitions it may make as part of its
growth strategy. The extent to which United Metro incurs debt, and the resulting
restrictive and financial covenants that United Metro

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<PAGE> 26

may be subject to, will have important consequences to the United Metro
stockholders. These include the following:

- United Metro's ability to use operating cash flows in other areas of its
business might be limited because it would have to dedicate a substantial
portion of these funds to pay interest;

- United Metro might be unable to obtain additional financing to fund its
growth strategy, working capital, capital expenditures, debt service
requirements or other purposes;

- United Metro's ability to adjust to changing market conditions and its
ability to withstand competition might be hampered by the amount of debt
it owes; and

- United Metro might be more vulnerable in a market downturn or a recession
than its competitors with less debt.

Future credit agreements that United Metro may enter into may impose
limitations on its ability to repurchase its shares of common stock.

ACQUISITIONS, WHICH ARE A PART OF UNITED METRO'S GROWTH STRATEGY, INVOLVE RISKS
THAT COULD CAUSE ITS ACTUAL GROWTH OR OPERATING RESULTS TO DIFFER FROM ITS
EXPECTATIONS

United Metro currently intends to grow in part through the acquisition of
additional materials businesses in exchange for cash or debt securities. If it
is not successful in integrating acquired businesses, United Metro may have
difficulty operating its business. United Metro may have greater difficulty
integrating acquired businesses and assets than its competitors because of its
size and its rapid growth. United Metro has completed nine business and asset
acquisitions since 1992. Its future success may be limited because of unforeseen
expenses, difficulties, complications, delays and other risks inherent in the
integration of acquired businesses, including the following:

- United Metro may not be able to compete successfully for available
acquisition candidates, complete future acquisitions, or accurately
estimate the financial effect of any businesses it acquires;

- Future acquisitions may require United Metro to spend significant amounts
of cash;

- United Metro may have trouble integrating acquired businesses and
retaining personnel;

- United Metro may ultimately fail to consummate an acquisition, even if it
announces that it plans to acquire a company;

- United Metro may choose to acquire a company that is less profitable than
it is or has lower profit margins than it does;

- United Metro may not be able to obtain the necessary financing, on
favorable terms or at all, to finance one or more of its potential
acquisitions;

- Acquisitions may disrupt United Metro's business and distract its
management from other responsibilities;

- To the extent that any of the companies which United Metro acquires
fails, the growth of its business could be harmed; and

- Future acquired companies may have unknown liabilities that could require
United Metro to spend significant amounts of additional capital.

UNITED METRO MAY BE UNABLE TO COMPETE SUCCESSFULLY IN THE HIGHLY COMPETITIVE
MATERIALS INDUSTRY

The following factors specific to the construction materials industry may
affect United Metro's business:

- Transporting materials over even relatively short distances is costly in
relation to the value of the delivered materials. Therefore, if United
Metro cannot maintain production sites close to its customers, its
operating results may be adversely affected;

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<PAGE> 27

- The cost and time involved in locating suitable mineral sources,
obtaining proper permits and establishing operations can be significant
and if United Metro does not continue to be successful in these matters,
it may lose growth opportunities and its operating results may be
adversely affected;

- United Metro has significant investments in fixed locations in specific
geographic areas. In the event one or more of its materials production
sites loses business in its market, it could have a material adverse
effect on its business, financial condition and results of operations;

- It is possible that United Metro could encounter increased competition
from existing competitors or new market entrants that may be
significantly larger and have greater financial and marketing resources;
and

- To the extent United Metro's existing or future competitors seek to gain
or retain market share by reducing prices, United Metro may be required
to lower its prices and rates, which would adversely affect its operating
results.

UNITED METRO MAY BE ADVERSELY AFFECTED BY GOVERNMENT REGULATIONS

United Metro's operations are subject to and affected by federal, state and
local laws and regulations including such matters as land usage, street and
highway usage, noise levels and health, safety and environmental matters. In
many instances, United Metro must have various permits. United Metro cannot
assure you that it will not incur material costs or liabilities in connection
with regulatory requirements. Its operations may from time to time involve the
use of substances that are classified as toxic or hazardous substances within
the meaning of these laws and regulations. Despite its compliance efforts, risk
of environmental liability is inherent in the operation of United Metro's
business. As a result, environmental liabilities could have a material adverse
effect on United Metro in the future. In addition, future events, such as
changes in existing laws or regulations or enforcement policies, or further
investigation or evaluation of the potential health hazards of United Metro's
products or business activities, may give rise to additional compliance and
other costs that could have a material adverse effect on its business, financial
condition and results of operations. See "Business -- Governmental and
Environmental Regulation" for a further discussion of the effects of regulation
on United Metro's business.

UNITED METRO'S OPERATIONS ARE SUBJECT TO RISKS THAT MAY RESULT IN CLAIMS OF
PERSONAL INJURY, PROPERTY DAMAGE OR OTHER LIABILITIES

The drivers of United Metro's heavy delivery trucks are subject to traffic
and other hazards associated with providing services on construction sites.
United Metro's plant personnel are subject to the hazards associated with moving
and storing large quantities of heavy raw materials. These operating hazards can
cause personal injury and death, damage to or destruction of property and
environmental damage. United Metro's insurance coverage may not be adequate to
cover all losses or liabilities it may incur in its operations, and United Metro
may not be able to maintain insurance of the types or at levels it deems
necessary or adequate or at rates it considers reasonable. United Metro's
failure to maintain adequate insurance could have a material adverse effect on
its business, financial position, results of operations and cash flows.

UNITED METRO HAS NO OPERATING HISTORY AS AN INDEPENDENT COMPANY

United Metro does not have an operating history as an independent company
and has historically relied on Kiewit for various financial, administrative and
managerial expertise relevant to operating as an independent company. After the
spin-off, United Metro will be responsible for obtaining or providing its own
administrative functions. While United Metro has been profitable as part of
Kiewit, it cannot be certain that, as a stand-alone company, its future profits
will be comparable to reported historical consolidated results before the
spin-off. In addition, United Metro's credit rating may be lower than that of
Kiewit.

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THERE ARE LIMITATIONS ON CHANGES IN CONTROL OF UNITED METRO

United Metro's restated certificate of incorporation and by-laws contain
provisions that could make it more difficult or even prevent a third party from
acquiring United Metro without the approval of its incumbent board of directors.
These provisions, among other things:

- divide the board of directors into three classes, with members of each
class to be elected in staggered three-year terms;

- prohibit stockholder action by written consent in place of a meeting;

- limit the right of stockholders to call special meetings of stockholders;

- impose significant transfer restrictions on United Metro common stock;

- limit the right of stockholders to present proposals or nominate
directors for election at annual meetings of stockholders; and

- authorize the board of directors to issue preferred stock in one or more
series without any action on the part of stockholders.

These provisions could significantly impede the ability of the holders of
United Metro common stock to change management.

UNITED METRO HAS NO CURRENT INTENTION TO PAY DIVIDENDS

United Metro's dividend policy following the spin-off will be determined by
its board of directors. Under Delaware law and United Metro's restated
certificate of incorporation, United Metro's board of directors will not be
required to declare dividends on any class of United Metro capital stock and
will be free to adopt the dividend policy it deems appropriate and to change its
dividend policy and practices from time to time. It is anticipated that United
Metro will not pay cash dividends to its stockholders.

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FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE

United Metro and Kiewit have made forward-looking statements in this
offering circular-prospectus that are subject to risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations of United Metro and/or Kiewit. Also, when
we use words such as "believes," "expects," "anticipates" or similar
expressions, we are making forward-looking statements. You should note that many
factors, some of which are discussed elsewhere in this offering
circular-prospectus, could affect the future financial results of United Metro
and/or Kiewit and could cause those results to differ materially from those
expressed in the forward-looking statements contained in this offering circular-
prospectus.

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THE DEBENTURE EXCHANGE OFFER,
THE SHARE EXCHANGE AND THE SPIN-OFF

BACKGROUND AND PURPOSE

The debenture exchange offer is being made in connection with a proposal by
Kiewit to separate its materials business and construction business in a
spin-off that is intended to be tax-free to stockholders for U.S. federal income
tax purposes. The board of directors and management of Kiewit have determined
that separation of the materials business and the construction business is in
the best interests of Kiewit and Kiewit's stockholders. In reaching this
conclusion, Kiewit's board of directors and management considered the factors
discussed below.

Key United Metro Employees

Kiewit's restated certificate of incorporation generally restricts
ownership of Kiewit common stock to directors and employees of Kiewit and its
subsidiaries. Kiewit's policy of employee ownership originated many years ago as
a way of attracting and motivating top-quality employees. Historically, Kiewit
has maintained a relatively low salary structure and few retirement benefits for
its key employees in relation to its competitors, instead choosing to motivate
and reward employees by linking their personal economic well-being to the
performance and growth of Kiewit common stock.

In recent years, as a result of United Metro's acquisition strategy, the
materials business has become an increasingly larger portion of Kiewit's overall
business. However, since the price of Kiewit common stock reflects the
performance of all of Kiewit's operations, it does not directly and distinctly
reflect the results of operations of the materials business. Kiewit believes
that materials employees would be better motivated if there were a clearer
connection between the results of their work and their economic rewards. This
lack of connection between effort and reward is particularly pronounced for key
employees of United Metro, whose annual compensation, in keeping with Kiewit's
core philosophy, is particularly low in relation to the value of their Kiewit
common stock.

Kiewit would like to provide United Metro's key employees with a larger,
direct ownership interest in the materials business alone, undistorted by the
economic returns of the construction business. Kiewit believes that the future
of the materials business depends to a large degree on the continued efforts of
these individuals and that they will be much more and better motivated to
promote its financial success if they hold an increased interest solely in the
enterprise in which they are employed.

By acquiring an increased equity interest in United Metro, which will
operate only the materials business, these employees' economic rewards will be
tied much more closely and directly to their performance. Each of United Metro's
key employees is expected to exchange all of his Kiewit common stock for United
Metro common stock in the share exchange. If they do, these employees' equity
ownership will change from an approximately 2% aggregate interest in Kiewit as
of February 17, 2000, to an approximately 6% aggregate interest in United Metro.

Increased Ownership for All United Metro Employees

The share exchange provides all United Metro employees who own Kiewit
common stock, approximately 60 individuals (including key employees), with the
opportunity to obtain a substantially larger, direct ownership interest in the
materials business that is unaffected by the results of the construction
business. Kiewit believes this increased correlation between these employees'
work performance and their stock-based financial rewards is essential to United
Metro's ability to better retain, attract and motivate its employees broadly as
a group. If all of the United Metro employees who own Kiewit common stock
exchange their Kiewit common stock for United Metro common stock in the share
exchange, these employees' equity ownership in United Metro (including the key
employees) will change from an approximately 3.4% aggregate interest in Kiewit
as of February 17, 2000 to an approximately 9.5% aggregate interest in United
Metro. This more closely aligns the economic interests of these United Metro
employees with United Metro's interests and is expected to motivate these
employees to work and compete more efficiently.
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Competition

The management of United Metro believes that there are potential customers
who are reluctant to do business with United Metro because of its existing
relationship with Kiewit. These potential customers view the companies operating
the construction business within Kiewit's affiliated group as their direct
competitors. The perception that the materials business is owned and controlled
by Kiewit has limited United Metro's ability to obtain business from these
potential customers. The managers of United Metro believe that their ability to
make sales to and secure contracts from unrelated construction businesses would
be meaningfully improved if the materials business were separated from the
construction business, so that no entity owning or operating the construction
business would have control over or benefit economically from the materials
business.

THE SHARE EXCHANGE

Kiewit is also offering Kiewit stockholders who are United Metro employees
the opportunity to exchange their shares of Kiewit common stock for shares of
United Metro common stock with an equal aggregate formula price. Kiewit's
restated certificate of incorporation generally restricts ownership of Kiewit
common stock to directors and employees of Kiewit and its subsidiaries.
Following the completion of the spin-off, United Metro employees will no longer
be employed by Kiewit or a subsidiary of Kiewit and will no longer meet the
requirements for owning Kiewit common stock. Therefore, they will be required to
sell any Kiewit common stock they then own back to Kiewit. To provide United
Metro employees with a larger, more direct stake in the materials business and
an alternative to selling their Kiewit common stock back to Kiewit for cash
immediately following the spin-off, Kiewit is offering Kiewit stockholders who
are United Metro employees the opportunity to exchange their shares of Kiewit
common stock for shares of United Metro common stock with an equal aggregate
formula price.

THE SPIN-OFF

After the completion of the debenture exchange offer and the share
exchange, Kiewit will distribute the shares of United Metro common stock it then
holds as a dividend on a pro rata basis to holders of Kiewit common stock in the
spin-off. Kiewit stockholders will receive in the spin-off one share of United
Metro common stock for each share of Kiewit common stock held.

EFFECTS

As a result of the spin-off, the debenture exchange offer and the share
exchange, United Metro will become a fully independent, separate company. Kiewit
debentureholders will be affected by the spin-off regardless of whether they
choose to participate in the debenture exchange offer.

CONSEQUENCES OF A DECISION NOT TO EXCHANGE

United Metro Employees

Kiewit debentureholders who are United Metro employees will cease to be
employees of Kiewit or a subsidiary of Kiewit after the spin-off. Consequently,
they will no longer meet the requirements for owning Kiewit debentures and will
be required to sell any Kiewit debentures they then own back to Kiewit.

Kiewit Employees

For those debentureholders who are Kiewit employees, the shares of Kiewit
common stock issuable on conversion of the Kiewit debentures will have a lower
aggregate formula price following the spin-off since that formula price will be
reduced by the book value of United Metro distributed as a dividend in the
spin-off.

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CONSEQUENCES OF A DECISION TO EXCHANGE

United Metro Employees

Kiewit debentureholders who are United Metro employees and who exchange
some or all of their Kiewit convertible debentures in the debenture exchange
offer will receive at their option:

- United Metro debentures convertible into shares of United Metro common
stock in a transaction that is intended to be tax-free to
debentureholders for U.S. federal income tax purposes; or

- both new reduced principal amount Kiewit debentures convertible into
shares of Kiewit common stock and shares of United Metro common stock.

A United Metro employee who elects to receive new reduced principal amount
Kiewit debentures and United Metro common stock will be required to sell the new
Kiewit debentures back to Kiewit following the spin-off.

Kiewit Employees

Kiewit debentureholders who are Kiewit employees and who exchange some or
all of their Kiewit convertible debentures in the debenture exchange offer will
receive at their option:

- United Metro debentures convertible into shares of United Metro common
stock; or

- both new reduced principal amount Kiewit debentures convertible into
shares of Kiewit common stock and shares of United Metro common stock in
a transaction that is intended to be tax-free to debentureholders for
U.S. federal income tax purposes.

A Kiewit employee who elects to receive United Metro debentures will be
required to sell the United Metro debentures back to United Metro following the
spin-off.

NO APPRAISAL RIGHTS

Because none of the debenture exchange offer, share exchange or the
spin-off is a merger or consolidation giving rise to appraisal rights under
Section 262 of the Delaware General Corporation Law, no appraisal rights are
available to Kiewit stockholders or debentureholders in connection with these
transactions.

REGULATORY APPROVALS

Kiewit and United Metro do not believe that any material federal or state
regulatory approvals will be necessary to consummate the debenture exchange
offer, the share exchange and the spin-off.

ACCOUNTING TREATMENT

Debenture Exchange Offer

The United Metro convertible debentures will be recorded at the same
carrying value as the Kiewit convertible debentures as reflected on Kiewit's
accounting records on the date of exchange. Accordingly, no gain or loss for
accounting purposes will be recognized by Kiewit as a result of the consummation
of the debenture exchange offer.

The combined United Metro common stock and new reduced principal amount
Kiewit convertible debentures will be recorded at the same carrying value as the
Kiewit convertible debentures as reflected on Kiewit's accounting records on the
date of exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by Kiewit as a result of the consummation of the debenture exchange
offer.

Share Exchange

The exchange of United Metro common stock for Kiewit common stock in the
share exchange will be computed on the basis of their respective formula prices
on the date of exchange. Accordingly, no gain

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or loss for accounting purposes will be recognized by Kiewit as a result of the
consummation of the share exchange.

Spin-off

Shares of United Metro common stock that are distributed in the spin-off
will be accounted for as a dividend through a direct charge to retained
earnings. The amount of the dividend will be equal to Kiewit's carrying value of
the shares of United Metro common stock distributed.

After the spin-off, the historical consolidated financial statements of
Kiewit will be retroactively restated, where appropriate, to disaggregate the
historical basis financial information of United Metro to present the business
of United Metro as discontinued operations. After the spin-off, United Metro
will be operated independently from Kiewit and will be reflected in the separate
financial statements of United Metro on an historical cost basis.

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THE DEBENTURE EXCHANGE OFFER

TERMS OF THE DEBENTURE EXCHANGE OFFER

Kiewit is offering holders of Kiewit convertible debentures the opportunity
to exchange their Kiewit convertible debentures for:

- United Metro debentures convertible into United Metro common stock; or

- both shares of United Metro common stock and new reduced principal amount
Kiewit debentures convertible into shares of Kiewit common stock.

The debenture exchange offer is being made in connection with a proposal by
Kiewit to separate its construction and materials businesses into two separate,
independent companies by distributing shares of United Metro common stock to
Kiewit stockholders in a spin-off that is intended to be tax-free for U.S.
federal income tax purposes.

Holders of Kiewit convertible debentures who exchange their Kiewit
debentures for United Metro debentures will receive United Metro debentures in
the same principal amounts, bearing interest at the same rate as the Kiewit
debentures for which they were exchanged and due on October 31, 2010. The United
Metro debentures will be convertible into shares of United Metro common stock
with an initial aggregate formula price equal to the aggregate formula price of
the Kiewit common stock into which the holder's Kiewit debenture was
convertible.

Holders of Kiewit convertible debentures who exchange their debentures for
United Metro common stock and new reduced principal amount Kiewit convertible
debentures will receive:

- new reduced principal amount Kiewit debentures, bearing interest at the
same rate as the Kiewit debentures for which they were exchanged and due
on October 31, 2010; and

- shares of United Metro common stock.

The number of shares of United Metro common stock the holder of a new
reduced principal amount Kiewit debenture will receive will be equal to the
number of shares that holder would have received had he or she converted his or
her original Kiewit debenture prior to the spin-off and received the dividend of
United Metro common stock in the spin-off.

In addition, Kiewit debentureholders who participate in the debenture
exchange offer will receive accrued interest on the Kiewit debentures they
tender up to and including the date of the consummation of the debenture
exchange offer. If the tendered debentures are pledged to Enterprise Bank, N.A.
or U.S. Bank, N.A., Kiewit will pay that interest to those banks up to the
amount of any interest accrued on the underlying loan. Any remaining accrued
interest on the debentures will be paid by Kiewit directly to the
debentureholder.

All Kiewit convertible debentures properly tendered and not withdrawn will
be exchanged on the terms and conditions of the debenture exchange offer. Kiewit
will promptly return to debentureholders any Kiewit debentures not accepted for
exchange following the expiration of the debenture exchange offer.

Kiewit is sending this document and related documents to debentureholders
who held Kiewit convertible debentures on or about , 2000. On that
date, there were $ in aggregate principal amount Kiewit convertible
debentures outstanding, which were held by approximately
debentureholders.

What Kiewit debentureholders will receive if they participate in the
debenture exchange offer depends on:

- the series of the Kiewit convertible debentures they currently hold; and

- the securities they elect to receive in exchange for their convertible
debentures.

26
<PAGE> 35

The table below shows what will be received based on what series debenture
is held and which option is chosen.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SERIES OF KIEWIT CHOICE 1
CONVERTIBLE DEBENTURES EXCHANGE FOR UNITED METRO CHOICE 2
YOU HOLD CONVERTIBLE DEBENTURES IN EXCHANGE FOR NEW REDUCED
THE SAME PRINCIPAL AMOUNT PRINCIPAL AMOUNT KIEWIT
AS THE KIEWIT DEBENTURES CONVERTIBLE DEBENTURES AND
BEING EXCHANGED UNITED METRO COMMON STOCK
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
8.028% Series 1997 Convertible 8.028% Series 2000A - 8.028% Series 1997A
Debentures of Peter Kiewit Convertible Debentures of Convertible Debentures of
Sons', Inc., due October 31, United Metro Materials Inc., Peter Kiewit Sons', Inc.,
2007 and convertible into due October 31, 2010. The due October 31, 2010 and
shares of Kiewit common stock Series 2000A Convertible convertible in October 2002
in October 2002. Debentures you receive will be into the same number of
convertible in October 2002 shares of Kiewit common
into shares of United Metro stock as the Series 1997
common stock with an aggregate Convertible Debentures you
formula price equal to the exchange were convertible;
aggregate formula price of the and
shares of Kiewit common stock
into which the Series 1997 - Shares of United Metro
Convertible Debentures you common stock.
exchange were convertible.
- ----------------------------------------------------------------------------------------------
7.35% Series 1998 Convertible 7.35% Series 2000B Convertible - 7.35% Series 1998A
Debentures of Peter Kiewit Debentures of United Metro Convertible Debentures of
Sons', Inc., due October 31, Materials Inc., due October Peter Kiewit Sons', Inc.,
2008 and convertible into 31, 2010. The Series 2000B due October 31, 2010 and
shares of Kiewit common stock Convertible Debentures you convertible in October 2003
in October 2003. receive will be convertible in into the same number of
October 2003 into shares of shares of Kiewit common
United Metro common stock with stock as the Series 1998
an aggregate formula price Convertible Debentures you
equal to the aggregate formula exchange were convertible;
price of the shares of Kiewit and
common stock into which the
Series 1998 Convertible - Shares of United Metro
Debentures you exchange were common stock.
convertible.
- ----------------------------------------------------------------------------------------------
8.25% Series 1999 Convertible 8.25% Series 2000C Convertible - 8.25% Series 1999A
Debentures of Peter Kiewit Debentures of United Metro Convertible Debentures of
Sons', Inc., due October 31, Materials Inc., due October Peter Kiewit Sons', Inc.,
2009 and convertible into 31, 2010. The Series 2000C due October 31, 2010 and
shares of Kiewit common stock Convertible Debentures you convertible in October 2004
in October 2004. receive will be convertible in into the same number of
October 2004 into shares of shares of Kiewit common
United Metro common stock with stock as the Series 1999
an aggregate formula price Convertible Debentures you
equal to the aggregate formula exchange were convertible;
price of the shares of Kiewit and
common stock into which the
Series 1999 Convertible - Shares of United Metro
Debentures you exchange were common stock.
convertible.
- ----------------------------------------------------------------------------------------------
</TABLE>

27
<PAGE> 36

If you elect Choice 2:

- the number of shares of United Metro common stock you receive will be
equal to the number of shares of United Metro common stock you would have
received had you converted your original Kiewit debentures prior to the
spin-off and received the dividend of United Metro common stock in the
spin-off. In the spin-off, Kiewit stockholders will receive one share of
United Metro common stock for each share of Kiewit common stock they
hold.

EXCHANGE ALTERNATIVES

The following tables illustrate what you would receive depending on the
choice you elect in the debenture exchange offer.

The results in the tables below were prepared on the basis of the
following:

- Based on 32,235,928 shares of Kiewit common stock outstanding on January
3, 2000, of which 1,099,706 shares were held by United Metro employees,
and $13,160,000 in principal of Kiewit convertible debentures outstanding
on February 17, 2000, of which $670,000 were held by United Metro
employees;

- Assumes that Kiewit will contribute $30 million to United Metro prior to
the debenture exchange offer and the share exchange and, as a result, the
adjusted book value that will be used in calculating the United Metro
formula price would be $233,819,000;

- Assumes that, in the debenture exchange offer, holders of Kiewit
convertible debentures who are employees of United Metro exchanged
$670,000 principal amount Kiewit debentures for United Metro convertible
debentures and other holders of Kiewit debentures exchanged $12,490,000
principal amount Kiewit debentures for new reduced principal amount
Kiewit convertible debentures and shares of United Metro common stock;

- Assumes that all United Metro employees who hold shares of Kiewit common
stock exchanged their shares for shares of United Metro common stock in
the share exchange;

- Assumes a formula price for Kiewit common stock immediately prior to the
spin-off of $20.28 per share, the estimated formula price as of February
17, 2000; and

- Assumes a formula price for United Metro common stock of $6.58 per share.

Election to Receive United Metro Convertible Debentures

28
<PAGE> 37

convertible debenture. The following is an example for illustrative purposes
only and may not be indicative of what you will actually receive if you
participate in the debenture exchange offer.

Election to Receive New Reduced Principal Amount Kiewit Convertible Debentures
and United Metro Common Stock

We have prepared the following table to illustrate what you would receive
if you elect to exchange a $1,000 principal amount Kiewit convertible debenture
in the debenture exchange offer for both a new reduced principal amount Kiewit
convertible debenture and shares of United Metro common stock. The following is
an example for illustrative purposes only and may not be indicative of what you
will actually receive if you participate in the debenture exchange offer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
CHOICE 2
NEW REDUCED PRINCIPAL AMOUNT UNITED METRO
OUTSTANDING KIEWIT AND
CONVERTIBLE DEBENTURE KIEWIT CONVERTIBLE DEBENTURE COMMON STOCK
- ------------------------------------------------------------------------------------------------------------------------------
SERIES PRINCIPAL AGGREGATE SERIES PRINCIPAL INITIAL AGGREGATE NUMBER OF
AMOUNT NUMBER OF FORMULA PRICE AMOUNT NUMBER OF FORMULA PRICE SHARES OF
SHARES OF OF SHARES OF SHARES OF OF SHARES OF UNITED METRO
KIEWIT KIEWIT KIEWIT KIEWIT COMMON
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK STOCK(2)
ISSUABLE ON ISSUABLE ON ISSUABLE ON ISSUABLE ON
CONVERSION(1) CONVERSION CONVERSION(1) CONVERSION
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $1,000 100 $2,028.00 1997A $342.00 100 $1,370.00 100
1998 $1,000 79.36 $1,609.42 1998B $473.60 79.36 $1,087.23 80
1999 $1,000 63.9 $1,295.89 1999C $578.88 63.9 $ 875.43 64

<CAPTION>
- ----------------------------
CHOICE 2
UNITED METRO
- ----------------------------
COMMON STOCK
SERIES INITIAL AGGREGATE
FORMULA PRICE
OF SHARES OF
UNITED METRO
COMMON STOCK
----------------------------
<S> <C>
1997 $658.00
1998 $526.40
1999 $421.12
</TABLE>

29
<PAGE> 38

FORMULA PRICE

The formula price of Kiewit common stock is the per share price at which
Kiewit buys and sells shares of its common stock and is based on the adjusted
book value of Kiewit at the end of the previous year less the amount of declared
dividends during the current year. The estimated formula price per share of
Kiewit common stock on February 17, 2000 was $20.28 per share. This formula
price will be reduced in the event Kiewit pays a cash dividend prior to
completion of the debenture exchange offer.

The formula price of United Metro common stock is the per share price at
which United Metro will buy shares of its common stock and is based on the
adjusted book value of United Metro at the end of the previous year, less the
amount of declared dividends during the current year. In addition to any
adjustments for declared dividends during the current year, the initial formula
price for United Metro common stock is also adjusted for the amount of any
capital contributions made by Kiewit to United Metro during fiscal year 2000
prior to the spin-off.

TRANSFER RESTRICTIONS

The new reduced principal amount Kiewit debentures will be subject to
substantial transfer restrictions and will remain subject to the repurchase
agreement executed by the debentureholders at the time of initial purchase of
the Kiewit debentures. Specifically, the terms of the repurchase agreement
prohibit Kiewit debentureholders from transferring the Kiewit debentures in any
manner except in a sale to Kiewit. The repurchase agreement also requires the
holder to sell the Kiewit debentures back to Kiewit upon the holder's
termination of employment with Kiewit.

The United Metro debentures will also be subject to substantial transfer
restrictions. Each holder of Kiewit debentures who elects to receive United
Metro debentures will be required to execute a repurchase agreement with United
Metro. Specifically, the terms of the repurchase agreement will prohibit United
Metro debentureholders from transferring the United Metro debentures in any
manner except in a sale to United Metro. The repurchase agreement will also
require the holder to sell the United Metro debentures back to United Metro if
the holder voluntarily terminates his or her employment with United Metro or
United Metro terminates his or her employment for cause.

30
<PAGE> 39

DETERMINING TO PARTICIPATE IN THE DEBENTURE EXCHANGE OFFER

Whether you should participate in the debenture exchange offer and which
option you should choose if you decide to participate in the offer depends on a
number of factors, including whether you are a United Metro employee or a Kiewit
employee. The United Metro debentures may be owned: (1) prior to the spin-off
only by employees of Kiewit or a subsidiary of Kiewit; and (2) following the
spin-off only by employees of United Metro or a subsidiary of United Metro. The
Kiewit debentures may only be owned by employees of Kiewit or a subsidiary of
Kiewit.

The table below shows what you will receive and the consequences of each
choice you may make in the debenture exchange offer.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
EMPLOYEE CHOICE 1 CHOICE 2 CHOICE 3
EXCHANGE FOR UNITED EXCHANGE FOR NEW REDUCED DO NOTHING
METRO CONVERTIBLE PRINCIPAL AMOUNT KIEWIT
DEBENTURES CONVERTIBLE DEBENTURES
AND UNITED METRO
COMMON STOCK
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Metro You will receive United You will receive new You will keep your
Metro convertible reduced principal amount outstanding Kiewit
debentures in the same Kiewit convertible debentures. However,
principal amount as the debentures and shares of following the spin-off,
Kiewit debentures United Metro common you will no longer be
surrendered in a stock. However, employed by Kiewit or a
transaction that is following the spin-off, subsidiary of Kiewit and
intended to be tax-free you will no longer be you will be required to
to debentureholders for employed by Kiewit or a sell your Kiewit
U.S. federal income tax subsidiary of Kiewit and debentures you then own
purposes. you will be required to back to Kiewit.
sell the new reduced
principal amount Kiewit
debentures you then own
back to Kiewit.
- -------------------------------------------------------------------------------------------------
Kiewit You will receive United You will receive new You will keep your
Metro convertible reduced principal amount outstanding Kiewit
debentures in the same Kiewit convertible debentures. However,
principal amount as the debentures and shares of following the spin-off,
Kiewit debentures United Metro common the shares of Kiewit
surrendered. However, stock in a transaction common stock issuable on
following the spin-off, that is intended to be conversion of the Kiewit
you will not be a United tax-free to debentures will have a
Metro employee and you debentureholders for lower aggregate formula
will be required to sell U.S. federal income tax price, since that
any United Metro purposes. formula price will be
debentures you then own reduced by the book
back to United Metro. value of United Metro
distributed as a
dividend in the
spin-off.
- -------------------------------------------------------------------------------------------------
</TABLE>

You should consider all of the factors described under "Risk Factors"
starting at page 16. Neither Kiewit, United Metro nor any of their respective
directors make any recommendation as to whether you should tender your Kiewit
debentures. You must make your own decision as to whether to tender your Kiewit
debentures after reading this document and consulting with your advisors based
on your own financial position and requirements.

31
<PAGE> 40

EXCHANGE OF KIEWIT CONVERTIBLE DEBENTURES

If all of the conditions to the debenture exchange offer are met, Kiewit
will accept for exchange Kiewit convertible debentures that have been validly
tendered and not properly withdrawn or deemed withdrawn prior to the expiration
date except as described in "-- Extension of Tender Period; Termination;
Amendment" on page 33. Kiewit may, subject to the rules under the Securities
Act, delay accepting or exchanging any Kiewit debentures in order to comply in
whole or in part with any applicable law. For a description of Kiewit's right to
delay, terminate or amend the debenture exchange offer, see "-- Extension of
Tender Period; Termination; Amendment" on page 33.

PROCEDURES FOR TENDERING KIEWIT CONVERTIBLE DEBENTURES

To tender your Kiewit convertible debentures, you must send to Kiewit, by
registered mail, return receipt requested, the following documents to be
received by Kiewit before the expiration date for the debenture exchange offer:

- a completed and executed letter of transmittal indicating: (1) the
principal amount of Kiewit debentures tendered, and (2) whether you are
exchanging the Kiewit debentures for: (a) United Metro debentures
convertible into shares of United Metro common stock, or (b) shares of
United Metro common stock and new reduced principal amount Kiewit
debentures, and any other documents required by the letter of
transmittal;

- an executed United Metro repurchase agreement if you are exchanging the
Kiewit debentures for United Metro debentures; and

- the Kiewit convertible debentures.

Kiewit's address is listed on the back cover of this document.

If Kiewit debentures have been pledged to a lender, the registered holder
of the pledged Kiewit debentures must make appropriate arrangements with the
lender for the valid tender of the Kiewit debentures. If, however, the lender is
Enterprise Bank, N.A. or U.S. Bank, N.A., Kiewit will arrange directly with
those banks for the delivery of the pledged Kiewit debentures to Kiewit. Kiewit
will deliver the United Metro debentures or the United Metro common stock and
new reduced principal Kiewit debentures issued in exchange for Kiewit debentures
directly to any lending institution to which the Kiewit debentures were pledged
if so directed by the registered holder of the Kiewit debentures in the holder's
letter of transmittal. If the United Metro debentures or United Metro common
stock and new reduced principal Kiewit debentures received in exchange for the
tendered Kiewit debentures are to be delivered to a lender other than Enterprise
Bank, N.A. or U.S. Bank, N.A., the letter of transmittal must state with
specificity the necessary information, including the name, address and contact
person of the lender, to effect the delivery. If a holder of pledged Kiewit
debentures does not designate the lending institution to which the United Metro
debentures or United Metro common stock and new reduced principal Kiewit
debentures received in exchange for tendered Kiewit debentures is to be
delivered, Kiewit may deliver the United Metro debentures or United Metro common
stock and new reduced principal Kiewit debentures to the exchanging
debentureholder, but reserves the right to deliver such securities directly to a
lending institution if Kiewit believes in good faith that the lending
institution is entitled to receive them under a borrowing arrangement with the
exchanging debentureholder.

Persons who have pledged Kiewit debentures to a lender and who are
considering participation in the debenture exchange offer should consult with
the lender as to the effect of the debenture exchange offer on their loan
arrangements.

LOST OR DESTROYED KIEWIT CONVERTIBLE DEBENTURES

If any Kiewit convertible debentures have been mutilated, destroyed, lost
or stolen, the debentureholder must:

- furnish to Kiewit evidence, satisfactory to it in its discretion, of the
ownership of and the destruction, loss or theft of the convertible
debenture;
32
<PAGE> 41

- furnish to Kiewit indemnity, satisfactory to it in its discretion; and

- comply with any other reasonable regulations Kiewit may prescribe.

KIEWIT'S INTERPRETATIONS ARE BINDING

Kiewit will determine in its own discretion all questions as to the form of
documents, including notices of withdrawal, and the validity, form, eligibility,
including time of receipt, and acceptance for exchange of any tender of Kiewit
convertible debentures. This determination will be final and binding on all
tendering debentureholders. Kiewit reserves the right to:

- reject any and all tenders of any Kiewit convertible debentures not
properly tendered;

- waive any defects or irregularities in the tender of Kiewit convertible
debentures or any conditions of the debenture exchange offer either
before or after the expiration date; and

- request any additional information from any Kiewit debentureholder that
Kiewit deems necessary.

Neither Kiewit nor United Metro will be under any duty to notify tendering
debentureholders of any defect or irregularity in tenders or notices of
withdrawal.

WITHDRAWAL RIGHTS

You may withdraw tenders of Kiewit convertible debentures at any time prior
to the expiration date and, unless Kiewit has accepted your tender as provided
in this document, after the expiration of 40 business days from the commencement
of the debenture exchange offer. If Kiewit:

- delays its acceptance of Kiewit convertible debentures tendered for
exchange;

- extends the debenture exchange offer; or

- is unable to accept Kiewit convertible debentures tendered for exchange
under the debenture exchange offer for any reason,

then, without prejudice to Kiewit's rights under the debenture exchange offer,
Kiewit may retain Kiewit convertible debentures tendered, and those debentures
may not be withdrawn except as otherwise provided in this document, subject to
provisions under the Securities Exchange Act that provide that an issuer making
an exchange offer shall either pay the consideration offered or return tendered
securities promptly after the termination or withdrawal of the exchange offer.

For a withdrawal to be effective, a written notice of withdrawal must be
received by Kiewit at its address set forth on the back cover of this document.
The notice of withdrawal must:

- specify the name of the person having tendered the Kiewit convertible
debentures to be withdrawn; and

- identify the principal amount of Kiewit convertible debentures to be
withdrawn.

If Kiewit convertible debentures have been delivered or otherwise
identified to Kiewit, then, before the release of the convertible debentures,
the withdrawing holder must also submit the serial numbers of the particular
convertible debentures to be withdrawn, and a signed notice of withdrawal with
signatures guaranteed by an eligible institution, unless the holder is an
eligible institution.

Any Kiewit convertible debentures withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the debenture exchange offer.
Properly withdrawn debentures may be retendered by following one of the
procedures described under "-- Procedures for Tendering Kiewit Convertible
Debentures" at any time on or before the expiration date.

Except as otherwise provided above, any tender of Kiewit convertible
debentures made under the debenture exchange offer is irrevocable.

EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT

Kiewit expressly reserves the right, in its discretion, for any reason,
including the non-satisfaction of the conditions for completion set forth below,
to extend the period of time during which the debenture exchange offer is open
or to amend the debenture exchange offer in any respect.

33
<PAGE> 42

If Kiewit materially changes the terms of or information concerning the
debenture exchange offer, Kiewit will extend the exchange offer. The SEC has
stated that, as a general rule, it believes that an offer should remain open for
a minimum of five business days from the date that notice of the material change
is first given. The actual length of time will depend on the particular facts
and circumstances. Subject to the preceding paragraph, the debenture exchange
offer will be extended so that it remains open for a minimum of ten business
days following the announcement if:

- Kiewit changes the principal amount of Kiewit convertible debentures
eligible for exchange or imposes a minimum condition; or

- the debenture exchange offer is scheduled to expire within ten business
days of announcing a material change.

If the conditions indicated in the next section have not been met, Kiewit
reserves the right, in its sole discretion, so long as Kiewit convertible
debentures have not been accepted for exchange, to delay acceptance for exchange
of or exchange for any Kiewit convertible debentures or to terminate the
debenture exchange offer and not accept for exchange any Kiewit convertible
debentures.

If Kiewit extends the debenture exchange offer, is delayed in accepting any
Kiewit convertible debentures or is unable to accept for exchange any Kiewit
convertible debentures under the debenture exchange offer for any reason, then,
without affecting Kiewit's rights under the debenture exchange offer, it may
retain all Kiewit convertible debentures tendered. These Kiewit convertible
debentures may not be withdrawn except as provided in "-- Withdrawal Rights"
above. Kiewit's reservation of the right to delay acceptance of any Kiewit
convertible debentures is subject to applicable law, which requires that Kiewit
pay the consideration offered or return the Kiewit convertible debentures
deposited promptly after the termination or withdrawal of the debenture exchange
offer.

Kiewit will issue a press release or other public announcement no later
than 9:00 a.m., Omaha time, on the next business day following any extension,
amendment, non-acceptance or termination of the previously scheduled expiration
date.

CONDITIONS TO THE DEBENTURE EXCHANGE OFFER

Kiewit has received a ruling from the IRS confirming that, based on certain
factual representation by Kiewit and United Metro, the debenture exchange offer,
the share exchange and the spin-off generally will be tax-free transactions for
U.S. federal income tax purposes. The debenture exchange offer will not be
completed unless that ruling remains in effect, as determined by Kiewit in its
sole discretion.

Kiewit expressly reserves the right to abandon the debenture exchange offer
and not accept for exchange any Kiewit convertible debentures if the Kiewit
board of directors reasonably determines that any material change in the
business, financial condition, results of operations or prospects of Kiewit or
United Metro has occurred, or in any other circumstance, and that, as a result,
completion of the debenture exchange offer would no longer be in the best
interest of Kiewit and its stockholders. Kiewit also expressly reserves the
right to abandon the share exchange. If Kiewit abandons either the debenture
exchange offer or the share exchange, it will not complete the spin-off or the
other exchange.

Kiewit also reserves the right to abandon the spin-off at any time prior to
the completion of the debenture exchange offer and the share exchange. If Kiewit
abandons the spin-off, it will not complete the debenture exchange offer or the
share exchange.

Kiewit also expressly reserves the right, at any time or from time to time,
whether or not the conditions to the debenture exchange offer have been
satisfied, (1) to extend the expiration date or (2) if the Kiewit board of
directors determines for any reason that such action would be in the best
interest of Kiewit and its stockholders, to modify the debenture exchange offer
in any respect, by giving written notice of such extension or modification to
Kiewit debentureholders.

The debenture exchange offer is not conditioned on any minimum principal
amount of Kiewit convertible debentures stock being tendered for exchange.

34
<PAGE> 43

SELECTED HISTORICAL AND PRO FORMA
FINANCIAL DATA OF KIEWIT

The following table presents selected historical and pro forma financial
data of Kiewit. The historical information as of and for each of the fiscal
years ended 1994 through 1998 is derived from Kiewit's historical consolidated
financial statements and the notes to those financial statements included
elsewhere in this offering circular-prospectus. The historical information for
the nine months ended September 30, 1998 and September 30, 1999 is derived from
the unaudited consolidated condensed financial statements included elsewhere in
this offering circular-prospectus which, in the opinion of management, reflect
all adjustments, which are of a recurring nature, necessary to present fairly
the financial position and results of operations and cash flows for the interim
periods. Results for the nine months ended September 30, 1999 and 1998 are not
necessarily indicative of the results of operations to be expected for the full
fiscal year.

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA(1)(2)
-------------------------------------------------------------- -------------------
FISCAL
YEAR 9 MONTHS
FISCAL YEAR ENDED 9 MONTHS ENDED ENDED ENDED
------------------------------------------ ----------------- -------- --------
1994 1995 1996 1997 1998 9/30/98 9/30/99 12/26/98 9/30/99
------ ------ ------ ------ ------ ------- ------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Results of Operations:
Revenue.................... $2,175 $2,330 $2,303 $2,742 $3,379 $2,513 $2,842 $3,052 $2,520
Net Earnings............... 77 104 108 155 136 79 82 121 67

Per Common Share:
Net Earnings
Basic.................... 1.23 1.95 2.53 4.00 4.07 2.41 2.40 3.75 2.03
Diluted.................. 1.22 1.91 2.44 3.84 4.02 2.38 2.35 3.71 1.99
Dividends(3)............... 0.23 0.26 0.33 0.38 0.43 0.20 0.25
Stock Price(4)............. 6.39 8.10 10.18 12.80 15.90 15.65 12.65
Book Value................. 7.85 10.73 12.76 16.10 19.35 21.98 16.04

Financial Position:
Total Assets............... 969 978 1,039 1,342 1,379 1,608 1,314
Current Portion of
Long-term Debt........... 3 2 -- 5 8 3 3
Long-term Debt, net of
Current Portion.......... 9 9 12 22 13 14 6

Redeemable common
stock(5)................. 505 467 562 652 691 767 543
</TABLE>

- ---------------
(1) Completion of the share exchange, the debenture exchange offer and the
spin-off has been assumed to be as of September 30, 1999 in the pro forma
financial position data and as of December 28, 1997 in the pro forma results
of operations data for the year ended December 26, 1998 and nine months
ended September 30, 1999.

(2) The pro forma results of operations, per common share and financial position
data assume the earnings statement and balance sheet accounts of United
Metro have been removed, the share exchange, the debenture exchange offer
and the spin-off have been completed, and Kiewit has made a $30 million
capital contribution to United Metro.

(3) The 1994, 1995, 1996, 1997 and 1998, Kiewit dividends include $.1125, $.15,
$.175, $.20 and $.225 for dividends declared in those years, respectively,
but paid in January of the subsequent year.

(4) Pursuant to Kiewit's restated certificate of incorporation, the formula
price calculation is calculated annually at the end of the fiscal year,
except that adjustments to reflect dividends are made when declared.

(5) Ownership of Kiewit common stock is restricted to employees conditioned upon
the execution of repurchase agreements which restrict employees from
transferring the stock. Kiewit is generally required to purchase all of its
common stock at the formula price. The aggregate redemption value of Kiewit
common stock at September 30, 1999 was $546 million.

35
<PAGE> 44

SELECTED HISTORICAL AND PRO FORMA
FINANCIAL DATA OF UNITED METRO

The following table presents selected historical and pro forma financial
data of United Metro. The historical information as of and for each of the
fiscal years ended 1994 through 1998 is derived from United Metro's historical
consolidated financial statements and the notes to those financial statements
included elsewhere in this offering circular-prospectus. The historical
information for the nine months ended September 30, 1998 and September 30, 1999
is derived from the unaudited consolidated condensed financial statements
included elsewhere in this offering circular-prospectus which, in the opinion of
management, reflect all adjustments, which are of a recurring nature, necessary
to present fairly the financial position and results of operations and cash
flows for the interim periods. Results for the nine months ended September 30,
1999 and 1998 are not necessarily indicative of the results of operations to be
expected for the full fiscal year.

For all historical periods presented, United Metro operated as a part of
Kiewit. Because United Metro did not operate as an independent company during
these periods, the data may not reflect the results of operations or the
financial condition which would have resulted if United Metro had operated as a
separate, independent company. In addition, the data may not necessarily be
indicative of United Metro's future results of operations or financial position.

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA(1)(2)
---------------------------------------------------------------------------------- -------------------
FISCAL
YEAR 9 MONTHS
FISCAL YEAR ENDED 9 MONTHS ENDED ENDED ENDED
-------------------------------------------------------- ----------------------- -------- --------
1994 1995 1996 1997 1998 9/30/98 9/30/99 12/26/98 9/30/99
-------- -------- -------- ---------- ---------- ---------- ---------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Results of Operations:
Revenue............. $198,139 $233,068 $246,083 $ 277,309 $ 333,060 $ 245,103 $ 328,454 $333,060 $328,454
Net Earnings........ 8,283 13,161 14,204 16,542 15,378 11,729 15,339 15,357 15,324

Per Common Share:
Net Earnings
Basic............. 82,825 131,609 142,043 165,423 153,783 117,293 153,394 0.39 0.41
Diluted........... 82,825 131,609 142,043 165,423 153,783 117,293 153,394 0.39 0.41
Dividends(3)........ 109,049 80,975 143,553 39,700 -- -- -- -- --
Book Value.......... 825,458 915,115 986,516 1,216,306 1,392,870 1,987,600 6.15

Financial Position:
Total Assets........ 119,369 133,882 152,771 181,699 207,054 263,437 293,977
Current Portion of
Long-term Debt.... -- -- -- 387 740 439 439
Long-term Debt, net
of Current
Portion........... -- -- -- 1,492 761 2,544 2,934
Stockholders'
equity............ 82,546 91,512 98,652 121,631 139,287 198,760 228,910
</TABLE>

(2) The pro forma results of operations, per common share and financial position
data assume the share exchange, debenture exchange offer and the spin-off
have been completed, and that Kiewit has made a $30 million capital
contribution to United Metro.

(3) The 1996 dividends include $100,000 for dividends declared in 1996, but paid
in January of the subsequent year. The 1994, 1995 and 1996 dividends per
share include $109,049, $40,975 and $3,553 of non-cash dividends,
respectively.

36
<PAGE> 45

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF KIEWIT

The following discussion is based upon and should be read in conjunction
with Kiewit's Consolidated Financial Statements, including the notes thereto,
included elsewhere in this offering circular-prospectus.

RESULTS OF OPERATIONS -- THIRD QUARTER 1999 VS. THIRD QUARTER 1998

Revenue from each of the Company's segments was (in millions):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
------------------
1999 1998
------- -----
<S> <C> <C>
Construction...................................... $ 957 $871
Materials......................................... 110 83
------ ----
$1,067 $954
====== ====
</TABLE>

Construction. Revenues for the construction business increased $86 million
or 10% for the three months ended September 30, 1999 as compared to the same
time period in 1998. The increase is due to favorable market conditions in the
business sectors that Kiewit operates.

Contract backlog at September 30, 1999 was $4.4 billion of which 6% is
attributable to foreign operations located in Canada. Domestic projects are
spread geographically throughout the U.S.

Margins as a percentage of revenue on construction projects for the three
months ended September 30, 1999 were consistent with margins in the same time
period in 1998, increasing from 8.4% to 8.5%.

Materials. Revenues increased 33% to $110 million during the third quarter
1999 when compared to the same period in 1998. A continued strong market for
materials products in the Southwest that resulted in additional unit sales of
asphalt, ready mix and aggregates accounted for much of the increase. Additional
ballast sales at a quarry located in Wyoming plus the consolidation of Pacific
Rock Products, L.L.C. due to the increase in ownership from 40% to 100%, which
contributed $19 million, account for the balance of the increase.

Margins increased 40% from $10 million to $14 million during 1999 compared
to the third quarter of 1998. Increased volumes and the consolidation of Pacific
Rock accounts for the increase in margins.

General and Administrative Expenses. General and administrative expenses
remained consistent with prior year levels as a proportionate increase in
administration costs was not necessary to support Kiewit's revenue growth.

Investment (Loss) Income and Equity Earnings. During the current period,
Kiewit determined that the decline in market value of an investment security was
other-than-temporary. This investment was written down to the current market
value and a loss of $18 million was recognized in the Statement of Earnings.
This investment had previously been carried at market value and the write-down
had been recorded as an unrealized loss as a separate component of other
comprehensive income. As a result, this write-down had no effect on total
comprehensive income or total redeemable common stock. Subsequent changes in the
market value of the security will be included as a separate component of
comprehensive income.

Other, net. Other income is primarily comprised of mine management fee
income from Level 3 Communications, Inc. and gains and losses on the disposition
of property, plant and equipment and other assets. The $10 million decrease
resulted primarily from a decrease in gains on equipment sales.

Kiewit manages certain coal mines for Level 3. Fees for these services were
$9 million during the third quarter of 1999 and $10 million for the same time
period in 1998. Kiewit's fee is a percentage of adjusted operating earnings of
the coal mines. The mines managed by Kiewit for Level 3 earn the majority of
their revenues under long-term contracts. The remainder of the mines' sales are
made on the spot market where prices are substantially lower than those of the
long-term contracts. After a significant long-term contract

37
<PAGE> 46

expires next year, adjusted operating earnings at the mines will decrease
substantially, thereby similarly decreasing the management fee earned by Kiewit.

Additionally, the Minerals Management Service and Montana Department of
Revenue have issued assessments to the Level 3 mines for the underpayment of
royalties and production taxes. Level 3 is vigorously contesting the
assessments. If Level 3 pays these assessments, the payments could materially
decrease future mine management fees, but will not affect fees previously
received.

Provision for Income Taxes. The effective income tax rates in 1999 and
1998 differ from the federal statutory rate of 35% due primarily to state income
taxes.

RESULTS OF OPERATIONS -- NINE MONTHS 1999 VS. NINE MONTHS 1998

Revenue from each of Kiewit's segments was (in millions):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1999 1998
------- -------
<S> <C> <C>
Construction....................................... $2,526 $2,277
Materials.......................................... 316 236
------ ------
$2,842 $2,513
====== ======
</TABLE>

Construction. Revenues for the construction business increased $249
million or 11% from the same time period in 1998. The increase is due to
favorable market conditions in the business sectors that Kiewit operates.

Margins on construction projects as a percentage of revenue for the nine
months ended September 30, 1999 were consistent with margins in the same period
in 1998, decreasing from 7.2% to 7.1%.

Materials. Revenues for the materials business increased 34% to $316
million from the same time period in 1998. A continued strong market for
materials products in the Southwest that resulted in additional unit sales of
asphalt, ready mix and aggregates accounted for much of the increase. Additional
ballast sales at quarries located in Wyoming and Utah plus consolidation of
Pacific Rock, due to the increase in ownership from 40% to 100%, which
contributed $38 million, account for the balance of the increase.

Materials margins increased 72% from $18 million to $31 million when
compared to the same time period in 1998. Increased volumes and the
consolidation of Pacific Rock combined with the elimination of losses taken in
1998 for the Oak Mountain coal operations contributed to the increase.

General and Administrative Expenses. General and administrative expenses
decreased 3% for the nine months ended September 30, 1999. The decrease was
attributable to cost containment and reassignment of overhead personnel.

Other, net. Other income is primarily comprised of mine management fee
income from Level 3 and gains and losses on the disposition of property, plant
and equipment and other assets. The $7 million decrease resulted primarily from
a decrease in the mine management fee.

Kiewit manages certain coal mines for Level 3. Fees for these services were
$23 million for the nine months ended September 30, 1999 and $27 million for the
same time period in 1998. Kiewit's fee is a percentage of adjusted operating
earnings of the coal mines. The mines managed by Kiewit for Level 3 earn

38
<PAGE> 47

the majority of their revenues under long-term contracts. The remainder of the
mines' sales are made on the spot market where prices are substantially lower
than those of the long-term contracts. After a significant long-term contract
expires next year, adjusted operating earnings at the mines will decrease
substantially, thereby similarly decreasing the management fee earned by Kiewit.

Provision for Income Taxes. The effective income tax rates in 1999 and
1998 differ from the federal statutory rate of 35% due primarily to state income
taxes.

RESULTS OF OPERATIONS 1998 VS. 1997

Revenue from Kiewit's segments for the twelve months ended December 26,
1998 and December 27, 1997 was (in millions):

<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Construction....................................... $3,057 $2,474
Materials.......................................... 322 268
------ ------
$3,379 $2,742
====== ======
</TABLE>

Construction. Revenues for the construction business increased $583
million or 23.6% from the same time period in 1997. $210 million of the increase
in revenues resulted from several new domestic cogeneration facilities. Joint
ventures performing electrical work on railway systems contributed another $82
million. Another major factor was the "I-15" project, a $1.4 billion design
build joint venture, of which Kiewit's share is $780 million, to reconstruct 16
miles of interstate through the Salt Lake City, Utah area which contributed $135
million to the increase. Several new projects account for the remainder of the
increase.

Contract backlog at December 26, 1998 was nearly $5 billion, of which 3.5%
is attributable to foreign operations located primarily in Canada. Domestic
projects are spread geographically throughout the U.S.

Margins on construction projects as a percentage of revenue for the twelve
months ended December 26, 1998 decreased to 8.6% from 13% for the same time
period in 1997. Favorable resolutions of project uncertainties, change order
settlements and bonuses for cost savings and early completion increased margins
for the twelve months ended December 27, 1997. Margins in 1996 and 1995 were
9.6% and 7.7%, respectively.

In September of 1997, a Presidential Decree was issued in Indonesia
affecting the construction and start-up dates for a number of private power
projects. As a result of the Decree and the continued fluctuations in the value
of the Indonesian currency, several projects in Indonesia for a U.S. client have
been suspended. The suspension had no material impact on Kiewit, as
substantially all payments have been received for work performed and the costs
of demobilizing the project were not significant. All amounts that have been
billed and received in excess of costs incurred on the suspended projects have
been deferred pending final resolution of these projects with the U.S. client
and its lenders.

Materials. Revenues for the materials business were up 20%, from $268
million to $322 million, for the twelve months ended December 26, 1998 as
compared to the same time period in 1997. Greater sales volume and higher
average selling prices for aggregates, ready mix concrete and asphalt products
resulted in a 27% increase which was offset by the decrease in revenues from the
Oak Mountain Coal operations. The investment in Oak Mountain was sold on June 9,
1998. The Oak Mountain investment was previously written off as an impaired
asset in December 1997. In 1998, Kiewit realized operating losses of $3 million.

Margins from materials sales as a percentage of revenue for the twelve
months ended December 26, 1998 increased from 4% in 1997 to 6.5% in 1998. The
increase in margins was attributable to higher average selling

39
<PAGE> 48

prices and improvements in the performance of recent acquisitions. Also
contributing to the increase was the elimination of losses from the Oak Mountain
Coal operations.

General and Administrative Expenses. General and administrative expenses
decreased in 1998. G & A expense, as a percent of revenue, decreased from 5.4%
in 1997 to 4.2% in 1998, as a proportionate increase in administration costs
were not necessary to support Kiewit's revenue growth.

Investment Income, Net. Net investment income decreased by $5 million. The
decrease was partially due to the increased interest expense on long-term debt
and gains on sales of marketable securities in 1997 which were not recurring
items.

Other, Net. Other income is primarily comprised of mine management fee
income from Level 3 and gains and losses on the disposition of property, plant
and equipment and other assets. The mine management fee increased by $2 million
while a decrease in the amount of equipment sold during 1998 resulted in a $3
million decrease in gains from sales.

Kiewit manages certain coal mines for Level 3. Fees for these services were
$34 million in 1998 and $32 million in 1997. Kiewit's fee is a percentage of
adjusted operating earnings of the coal mines, as defined. The mines managed by
Kiewit for Level 3 earn the majority of their revenues under long-term
contracts. The remainder of the mines' sales are made on the spot market where
prices are substantially lower than those of the long-term contracts. As the
long-term contracts expire over the next two to five years, adjusted operating
earnings at the mines will decrease substantially, thereby similarly decreasing
the management fee earned by Kiewit.

Provision for Income Taxes. The effective income tax rates in 1998 and
1997 differ from the expected rate of 35% primarily due to state income taxes
and prior year tax adjustments.

RESULTS OF OPERATIONS 1997 VS. 1996

Revenue from each of Kiewit's segments for the twelve months ended December
27, 1997 and December 28, 1996 was (in millions).

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Construction....................................... $2,474 $2,060
Materials.......................................... 268 243
------ ------
$2,742 $2,303
====== ======
</TABLE>

Construction. Construction revenues increased $414 million during 1997
compared to 1996. The consolidation of ME Holding Inc. (due to the increase in
ownership from 49% to 80%) contributed $261 million, almost two-thirds of the
increase. In addition to ME Holding, several large projects and joint ventures
became fully mobilized during the latter part of the year and were well into the
"peak" construction phase.

Construction margins increased to 13% of revenue in 1997 as compared to 10%
in 1996. The favorable resolution of project uncertainties, several change order
settlements, and cost savings or early completion bonuses received during the
year contributed to this increase.

Materials. Material revenues increased 10% to $268 million in 1997 from
$243 million in 1996. The acquisition of additional plant sites accounts for 43%
of the increase in sales. The remaining increase was a result of the strong
market for material products in Arizona. This raised sales volume from existing
plant sites and allowed for slightly higher selling prices. The inclusion of $10
million of revenues from the Oak Mountain facility in Alabama also contributed
to the increase.

40
<PAGE> 49

Material margins decreased from 10% of revenue in 1996 to 4% in 1997.
Losses at the Oak Mountain facility in Alabama were the source of the decrease.
The materials margins from sources other than Oak Mountain remained stable as
higher unit sales and selling prices were offset by increases in raw materials
costs.

General and Administrative Expenses. General and administrative expenses
increased 11% in 1997 after deducting $17 million of expenses attributable to ME
Holding. Compensation and profit sharing expenses increased $9 million and $2
million, respectively, from 1996. The increase in these costs is a direct result
of higher earnings.

Investment Income and Equity Earnings. Investment income increased by $1
million in 1997 to $20 million.

Interest Expense. The decline in interest expense is due to the absence of
short-term borrowings which were repaid in 1996.

Other, Net. Other income is primarily comprised of gains and losses on the
disposition of construction equipment and mine management fees paid by Level 3.
A $6 million increase in gains on the sale of equipment and additional
miscellaneous income was partially offset by a decline in mine management fee
income.

Provision for Income Taxes. The effective income tax rates in 1997 and
1996 differ from the expected statutory rate of 35% primarily due to state
income taxes and prior year tax adjustments.

FINANCIAL CONDITION -- SEPTEMBER 30, 1999 VS. DECEMBER 26, 1998

Kiewit's working capital increased $36 million or 7% during the first nine
months of 1999. Sources of cash primarily included $193 million of cash provided
by operations, $22 million in proceeds from the sale of property, plant and
equipment and $25 million from the issuance of Kiewit common stock. Uses of cash
primarily included stock repurchases of $39 million, dividends of $16 million,
purchases of marketable securities of $4 million, repayment of debt of $22
million, $36 million for the acquisition of materials operations and $45 million
for the purchase of property, plant and equipment. Kiewit anticipates investing
between $50 and $100 million annually in its construction and materials
businesses. In addition to normal spending, Kiewit expects to make significant
investments in construction joint ventures in 1999. Kiewit continues to explore
opportunities to acquire additional businesses. Other long-term liquidity uses
include the payment of income taxes and the payment of dividends. Kiewit's
current financial condition and borrowing capacity, together with anticipated
cash flows from operations, should be sufficient for immediate cash requirements
and future investing activities.

NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
established accounting and reporting standards for derivative instruments and
for hedging activities. This statement is effective for all fiscal years
beginning after June 15, 2000. Management does not expect adoption of this
statement to materially affect Kiewit's financial statements as Kiewit has no
material derivative instruments or hedging activities.

YEAR 2000 UPDATE

Kiewit's Year 2000 effort, which was comprised of internal updating and
replacement of computer systems and external coordination with its customers was
completed on schedule. Kiewit has not experienced any material Year 2000 related
difficulties.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Kiewit does not believe that its business is subject to significant market
risks arising from interest rates, foreign exchange rates or equity prices.

41
<PAGE> 50

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF UNITED METRO

The following discussion is based upon and should be read in conjunction
with United Metro's Consolidated Financial Statements, including the notes
thereto, included elsewhere in this offering circular-prospectus.

RESULTS OF OPERATIONS -- THIRD QUARTER 1999 VS. THIRD QUARTER 1998

Revenue. Revenue increased $27,769,633 to $116,882,523 during the third
quarter of 1999 when compared to the same period in 1998. A continued strong
market for materials products in the Southwest resulting in additional unit
sales, coupled with the consolidation of Pacific Rock Products, L.L.C., due to
the increase in ownership from 40% to 100%, which contributed $19,477,933,
account for most of the increase. Additional ballast sales at a quarry located
in Wyoming also contributed to the increase.

Gross Profit. Gross profit increased $6,154,502 from $11,421,226 in the
third quarter of 1998 to $17,575,728 in the same period of 1999. The inclusion
of the acquired materials business and greater sales volume account for the
increase in gross profits. Gross profits, as a percentage of revenue increased
from 13% to 15% between the two time periods primarily due to the consolidation
of Pacific Rock.

General and Administrative Expenses. General and administrative expenses
increased $858,895 to $6,152,012 in the third quarter of 1999 when compared to
the same time period in 1998. Increases in unit volumes and the inclusion of
Pacific Rock account for the additional expense. General and administrative
expenses as a percentage of revenue declined slightly between the quarters in
1999 and 1998.

Other Income and Expense. Other income declined $1,530,717 for the two
quarters in 1999 and 1998. The consolidation of Pacific Rock, due to the
increase in ownership from 40% to 100%, accounts for the reduction in equity
earnings.

Income Tax Expense. Income taxes differ from the federal statutory rate
primarily because of state income tax and percentage depletion.

RESULTS OF OPERATIONS -- NINE MONTHS 1999 VS. NINE MONTHS 1998

Revenue. Revenue increased $83,351,589, from $245,102,685 in 1998 to
$328,454,274 in 1999. Strong markets in the Southwest, the consolidation of
Pacific Rock, due to the increase in ownership from 40% to 100%, which
contributed $38,306,126, and additional ballast sales at quarries in Wyoming and
Utah account for most of the increase.

Gross Profit. Gross profit increased from $28,073,193 to $41,798,432 for
the nine months ended September 1999 when compared to the same time period in
1998. The inclusion of the acquired business and greater sales volume are the
primary reasons for the increase gross profits. Improved operating performance
at a newly developed quarry also contributed to the gross profit increase. Gross
profit as a percentage of revenue increased slightly between the two periods.
The consolidation of Pacific Rock is responsible for most of the percentage
increase.

General and Administrative Expenses. General and administrative expenses
increased $3,449,109 in 1999 when compared to the same nine-month period in
1998. Increases in unit volume and the inclusion of Pacific Rock accounts for
most of the additional expense. As a percentage of revenue, general and
administrative expenses declined from 6.2% to 5.7%.

Other Income and Expense. Other income declined $2,764,391 for the nine
months ended 1999 as compared to the same time period in 1998. The consolidation
of Pacific Rock accounts for the reduction in equity earnings.

Income Tax Expense. Income taxes differ from the federal statutory rate
primarily because of state income tax and percentage depletion.

42
<PAGE> 51

RESULTS OF OPERATIONS 1998 VS. 1997

Revenue. Revenue increased 20% from $277,308,896 to $333,060,002 for the
twelve months ended December 26, 1998 as compared to the same period in 1997.
This increase in sales resulted from higher selling prices and increases in
sales volumes of aggregates, ready mix concrete and asphalt products.

Gross Profit. Gross profits decreased $119,420 for the twelve months ended
December 26, 1998 when compared to the same time period in 1997. Gross profit as
a percentage of revenue declined from 13% in 1997 to 10% in 1998. Increases in
cement and other costs, coupled with start up expenses incurred at a greenfield
quarry site offset higher selling prices and unit volume increases.

General and Administrative Expenses. General and administrative expenses
increased in 1998 when compared to the same time in 1997 from $16,277,521 in
1997 to $19,062,488 in 1998. As a percentage of revenue, this expense declined
slightly from 5.9% in 1997 to 5.7% in 1998. The overall increase in expense was
necessary to support sales volume increases and the expansion of product lines.

Other Income and Expense. Other income increased $836,819 during the
twelve months ended 1998 when compared to the same period in 1997. Increases in
investment income, primarily from better operating results at Pacific Rock were
responsible for the change. Higher interest expense and smaller gain from the
sale of equipment mitigated the investment income increase.

Income Tax Expense. Income tax expense differs from the federal statutory
rate primarily because of state income taxes and percentage depletion.

RESULTS OF OPERATIONS 1997 VS. 1996

Revenue. Revenue increased 13% to $277,308,896 in 1997 from $246,083,386
in 1996. The acquisition of additional plant sites coupled with a strong demand
for products in the Southwest is responsible for the increase. Sales price
increases also contributed to the overall rise in revenue.

Gross Profit. Gross profits increased from $31,724,548 to $35,019,575 for
the twelve months ended December 1997 when compared to the same time period in
1996. The gross profit increase is derived from additional plant sites and
increased sales in the Southwest. Gross profit as a percentage of revenue
remained constant for the two years, as higher selling prices were offset by
increases in cement prices and other direct costs.

General and Administrative Expenses. General and administrative expenses
increased $1,307,198 in 1997 when compared to 1996. As a percentage of revenue,
the overall rate declined from 6.1% to 5.9% between the two years. The increase
in expense was a result of plant expansion and growth in sales volumes.

Other Income and Expense. Other income increased $2,098,697 from 1996 to
1997. A slightly lower gain from the sale of equipment in 1997 was offset by an
increase in equity earnings from Pacific Rock and lower interest expense.

Income Tax Expense. Income tax expense differs from the federal statutory
rate primarily because of state income tax and percentage depletion.

FINANCIAL CONDITION -- SEPTEMBER 30, 1999

Working capital increased $15,432,709 or 24% during the nine months ended
September 30, 1999. Sources of cash flow included cash provided by operations of
$10,143,108, proceeds from the sale of equipment of $1,216,238 and contributions
from Kiewit equaling $45,286,690. Uses of cash included $16,814,147 of capital
expenditures, $15,973,285 for payment of long term debt and $34,896,029 used in
acquisitions.

United Metro intends to pursue a growth strategy that will require
substantial capital. These capital requirements will be in addition to amounts
necessary to replace existing equipment and make long term debt payments.
Capital requirements for acquisitions that are in excess of internally generated
funds are expected to

43
<PAGE> 52

come from the issuance of debt securities or borrowings under credit facilities.
United Metro cannot accurately predict the timing, size or success of the growth
strategy and associated capital commitments.

ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
established accounting and reporting standards for derivative instruments and
for hedging activities. This statement is effective for all fiscal years
beginning after June 15, 2000. Management does not expect adoption of this
statement to materially affect United Metro's financial statements as United
Metro has no material derivative instruments or hedging activities.

YEAR 2000 UPDATE

United Metro's Year 2000 effort, which was comprised of internal updating
and replacement of computer systems and external coordination with its customer
was completed on schedule. United Metro has not experienced any material Year
2000 related difficulties.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

United Metro does not believe that its business is subject to significant
market risks arising from interest rates, foreign exchange rates or equity
prices.

44
<PAGE> 53

BUSINESS OF UNITED METRO

United Metro operates aggregate, ready mix, asphalt and materials
operations in Arizona, Washington, Oregon, California, Wyoming, Utah and New
Mexico, with primary operations in Arizona, centered in the Phoenix and Tucson
metropolitan areas and in the Pacific Northwest, centered in the Vancouver,
Washington and Portland, Oregon metropolitan areas. Aggregate products are used
as highway construction materials, railroad ballast, decorative landscape rock,
roofing aggregate and building stone. United Metro also provides construction
services in and around Yuma, Arizona, focusing mainly on paving and related
projects. In 1999, United Metro produced in excess of 28 million tons of
construction materials and generated approximately $433 million of revenue.

United Metro's Arizona and Pacific Northwest markets have been some of the
highest growth markets in the United States. Factors contributing to this growth
include large population increases and increases in public sector spending on
highway projects. United Metro believes that it should continue to experience
strong demand for its products, due in large part to federally funded highway
construction projects under the Transportation Equity Act for the 21st Century.
This act provides $218 billion for highway, transit and safety spending for
years 1998 through 2003, which represents a 40% increase in average annual
federal highway spending when compared to federal funding programs for the
preceding six years.

United Metro has a favorable market position with the combination of its
strong market presence, extensive, high quality aggregate reserves, efficient
operations and experienced management team. United Metro has set high standards
for being a low cost producer, facilitating employee involvement, promoting
favorable community relations and being a safety conscious employer. It intends
to leverage these attributes with a growth strategy to expand its presence in
existing markets and to enter new markets with high-growth potential. United
Metro believes that there exists a significant opportunity for growth through
acquisitions given the large number of independent materials companies that
operate in the United States. These acquisition opportunities coupled with its
current expertise and the expected strong demand for its products provide for a
positive environment in which to pursue its growth oriented business plan.

INDUSTRY BACKGROUND/MARKET OVERVIEW

United Metro is a vertically integrated manufacturer of aggregates,
ready-mix concrete and hot-mix asphalt for use primarily in construction.

Aggregates

Aggregates are a basic construction material, comprising sand, gravel and
crushed stone, used extensively for highway and infrastructure construction and
maintenance as well as for commercial and residential construction. In addition,
United Metro also produces aggregates for use as railroad track ballast. For
these purposes, aggregates have few, if any, substitutes. The United States
market for all aggregates was approximately 2.8 billion tons in 1998 with a
value of $13.5 billion. This represents an increase of 6.2% in volume and 9.6%
in dollar value above 1997 levels.

Historically, demand for aggregates has been only moderately cyclical,
especially relative to other building materials such as cement and gypsum
wallboard. In addition to moderate cycles, the national per ton average price
for aggregates has not experienced an annual decline between 1985 and 1998.

Spending on highway and infrastructure construction and maintenance
significantly drives demand for aggregates. Spending levels are influenced by
public sector expenditures for construction and regional economic conditions.
Residential and commercial construction spending is influenced by general
economic conditions and prevailing interest rates and consequently is generally
more cyclical than public construction spending. Demand is also seasonal because
of the impact of weather conditions on construction activity.

The aggregates industry is currently undergoing significant consolidation,
although generally the industry remains fragmented nationally as well as in many
regional areas. The estimated market share of the top five producers was 25% in
1998. From 1980 to 1998, the number of independent producers of crushed stone in
the United States declined by 22% from approximately 1,865 to approximately
1,450, although crushed stone
45
<PAGE> 54

consumption increased by 68%. From 1980 to 1998, the number of independent sand
and gravel producers declined by 19% from 4,512 to 3,642, although sand and
gravel consumption increased by 47%.

Due to the high cost of transportation relative to the value of the
product, competition within the aggregates industry tends to be localized.
Generally, individual aggregate production sites compete for customers within a
limited geographic area, which may be as small as 20 to 30 miles depending on
local availability of suitable aggregates and the geographic density of demand.
As a result, the proximity of aggregate production sites to customers is an
important factor in competition for customers.

There are four primary factors which limit the availability of economically
viable aggregates reserves in a particular market:

- the geological existence of suitable aggregates within a particular
market;

- the physical characteristics of available aggregates and the difficulty
in satisfying increasingly rigorous specifications required by customers;

- the difficulty in and increasingly higher cost of obtaining the necessary
permits for potential reserves; and

- the feasibility of cost-effectively extracting, processing and delivering
available reserves.

In addition to factors that limit the availability of suitable aggregates,
increasing levels of operational, technical and financial sophistication in the
aggregates industry have rewarded efficient producers with a competitive
advantage in terms of their ability to meet the increasing demand for quality
aggregates and to satisfy increasingly demanding and technically sophisticated
customers.

The difficulty and related expense of complying with environmental and
other regulations may make it difficult for small producers to open new
aggregate production sites, enter new markets and compete effectively. In
ongoing aggregate mining and processing, aggregates producers must adhere to
various mining regulations, including rules and regulations regarding:

- dust and water emissions;

- sediment and erosion control;

- noise limitations;

- wetlands protection;

- reclamation of depleted quarry sites; and

- the safety of blasting and other mining techniques.

Often new aggregate production sites require, among other things, zoning
changes and local, state and federal permits and plans regarding mining,
reclamation and air and water emissions. Once appropriate zoning is secured and
approved, it is permanent. Generally, permits must be renewed every five years.
Their renewal can only be denied, however, if the controlling agency is able to
prove that the permit holder has repeatedly violated the set guidelines and has
not taken remedial action when notified of violations. New site approval
procedures may require the preparation of archaeological surveys, endangered
species studies and other studies to assess the environmental impact. Compliance
with these regulatory requirements necessitates a significant up-front
investment and adds to the length of time to develop a new site.

Aggregates producers often face opposition from the communities in which
new aggregate production sites are to be located. Public concerns center on
noise levels and blasting safety, the visual impact of an aggregate production
site on neighboring properties and high volume of truck traffic. To respond to
these issues, producers must operate in a more sophisticated manner such as
developing blasting techniques to minimize surface vibrations and noise and
developing an effective community communications program. Producers are often
required to acquire larger tracts of property to allow for extended buffer zones
between aggregate production sites and surrounding properties and to invest
significant capital to improve road and highway access.
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<PAGE> 55

Ready-mix Concrete

Ready-mix concrete is a versatile, low-cost manufactured material the
construction industry uses in substantially all of 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-mix concrete can be manufactured in thousands of variations, which in each
instance may reflect a specific design use. Manufacturers of ready-mix 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.

Annual usage of ready-mix concrete in the United States is currently at a
record level and is projected to continue growing. According to the National
Ready-mix Concrete Association, total sales from production and delivery of
ready-mix concrete in the United States grew from $17.6 billion in 1996 to $19.3
billion in 1997, an increase of 9.7%, and to $21.3 billion in 1998, an increase
of 10.4%, and are expected to grow to $22.1 billion in 1999. Also according to
this industry association, the following segments of the construction industry
accounted for the following approximate percentages of total sales of ready-mix
concrete in the United States in 1998:

<TABLE>
<CAPTION>
SEGMENT PERCENTAGE
- ------- ----------
<S> <C>
Commercial and industrial construction.................... 18%
Residential construction.................................. 22%
Street and highway construction and paving................ 32%
Other public works and infrastructure construction........ 28%
---
Total..................................................... 100%
</TABLE>

Ready-mix 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-mix
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 that 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 from the National Ready-mix Concrete
Association, in addition to vertically integrated manufacturers of cement and
ready-mix 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. The typical ready-mix
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 constraints, many ready-mix concrete companies are finding it
difficult to both grow their businesses and compete effectively against larger,
more cost-efficient and technically capable competitors. These characteristics
present consolidation and growth opportunities.

Hot Mix Asphalt

Hot mix asphalt is a combination of approximately 95% aggregates bound
together by asphalt cement, also known as asphalt oil, a crude oil product. It
is used almost exclusively for paving and related applications.

To make hot mix asphalt, the asphalt cement is heated, combined and mixed
with the aggregates at a hot mix asphalt facility. It is then loaded into trucks
for transport to the paving site. The trucks dump the hot mix asphalt into
hoppers located at the front of paving machines. The asphalt is placed, and then
is compacted using a heavy roller which is driven over the asphalt. Because the
temperature of the hot mix asphalt drops rapidly after spreading and because
compaction of the hot mix asphalt to achieve a specified density must take place
at temperatures above 175 degrees, compaction usually takes place within a
matter of minutes after the

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<PAGE> 56

paver spreads the hot mix asphalt. This generally also limits the market a hot
mix asphalt facility can serve to within a radius of approximately 20 miles
around the facility.

Hot mix asphalt is recyclable. One hundred percent of an asphalt pavement
can be picked up, remixed with a portion of fresh materials, and used again.

According to the National Asphalt Pavement Association, of the 2.27 million
miles of paved road in the U.S., 94% is surfaced with asphalt, including 65% of
the interstate system. United Metro believes the hot mix asphalt industry has
similar characteristics to the ready mix concrete industry in that there are
many local, independent operators as well as some large consolidators. In many
instances, hot mix asphalt will be provided in conjunction with paving services
by integrated paving contractors.

BUSINESS STRATEGY

United Metro intends to continue to grow its business through a four-part
business strategy. First, United Metro plans to continue to build value in
markets currently served. In accomplishing this objective, United Metro will
strive for significant amounts of negotiated work that command higher margins by
continuing its focus on customer satisfaction and loyalty and continuing its
efforts to retain and improve upon its market share leadership. United Metro
also will continue to invest in technology to develop more efficient and
service-oriented truck dispatching, improve production methods to lower costs
and maintain superior equipment maintenance standards.

Second, United Metro plans to expand its presence in existing markets
through acquisitions in exchange for cash or debt securities. United Metro
should have the opportunity to purchase smaller materials companies that operate
in or near current operations, as these markets remain fragmented and include a
large number of family-owned businesses facing inter-generational transition
issues. Successful acquisition of additional operations will allow United Metro
to eliminate duplicate overhead functions, improve efficiencies through the use
of newer technologies and benefit from cost savings derived from economies of
scale in operations and the purchasing of parts and supplies.

Third, United Metro plans to enter, via acquisition in exchange for cash or
debt securities, new high-growth potential markets. Metropolitan communities
with high rates of expected population growth, coupled with greater than average
increases in spending on retirement and leisure activities, are some of the
variables that are considered in selecting an area for expansion. United Metro
has begun to implement this strategy with its recent acquisition of a materials
operation located in Northern California. This business is an integrated
supplier of high quality aggregates, ready mix concrete and asphalt. It serves
the rapidly expanding market between San Francisco and Sacramento.

Finally, United Metro will seek to acquire and develop additional strategic
aggregate reserves in selected markets. The successful implementation of this
strategy element will not only replace reserves consumed by operations, but will
enhance United Metro's competitive cost position by the ownership of reserves in
attractive locations.

Since 1992, United Metro has acquired nine companies and developed one
greenfield site in the implementation of its four-part strategy. Revenues have
increased from $40 million in 1992, to approximately $433 million for 1999 and
production tonnage has grown from 5.5 million tons in 1992, to in excess of 28
million tons in 1999. United Metro intends to continue its disciplined
investment approach to achieve profitable growth through acquisitions.

OPERATIONS

United Metro is organized into four operating divisions: Arizona
Operations, Pacific Northwest Operations, Northern California Operations and
Quarries Operations. United Metro believes that a decentralized management
structure allows for a quicker reaction to localized events and a more
profitable operation. Each division is responsible for maintenance and operation
of significant investments in fixed plant assets and a substantial mobile
equipment fleet. Each operation also is charged with customer relations,
dispatching of

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<PAGE> 57

delivery vehicles, quality control, scheduling of production and the development
and maintenance of certain computer systems.

United Metro is a vertically integrated provider of aggregates, ready-mix
concrete and asphalt products. Its operations employ approximately 2,300 people.
United Metro operates 60 ready-mix batch plants or asphalt plants at 21
locations in Arizona, California, Oregon and Washington. Its aggregates
operations are located in Arizona, California, New Mexico, Utah, Washington and
Wyoming. United Metro manages a truck fleet of about 1,000 vehicles, 900 of
which are owned and 100 of which are either leased on a long-term basis or
managed on a day-to-day rental basis. In 1999, United Metro's combined
operations produced and sold in excess of 28 million tons of aggregates
consisting of construction materials, ballast, highway aggregates, roofing
aggregates, concrete block aggregates and landscape rock products. Its Arizona
operation also manages a construction service business in the Yuma, Arizona
area.

United Metro's executive management provides its four operating divisions
with strategic planning, corporate development and acquisitions and operations
oversight. United Metro also has a centralized administrative staff that
provides labor relations, various accounting functions, legal, tax planning and
compliance, equipment purchasing and equipment maintenance support.

RESERVES

United Metro estimates that its total recoverable aggregates reserves are
in excess of 550 million tons. The yield from the mining of these reserves is
based on an estimate of volume that can be economically extracted to meet
current market and product applications. United Metro's mining plans are
developed by experienced mining engineers and operating personnel using drilling
and geological studies in conjunction with mine planning software. In certain
instances, reserve extraction is limited to phases or yearly amounts. Various
properties also have reserves under lease that have not been included in a
mining permit. These reserves have been excluded from United Metro's recoverable
reserve estimate.

United Metro owns about 170 million tons of aggregates reserves and leases
another 380 million tons of aggregates reserves. United Metro's leases usually
require royalty payments based on either revenue derived from the location or an
amount for each ton of materials removed and sold from a site and have terms
ranging from one year to 27 years. Most of its long-term leases also provide an
option for the lease to be renewed.

PRODUCTS

Aggregates. United Metro primarily sells to third parties and utilizes
internally various types of aggregate products. The production of these products
typically involves extracting the material, crushing and sizing the material and
shipping it to the customer using either trucks or rail. Approximately 37% of
the aggregates produced in 1999 were used internally in the production of
value-added concrete and asphalt products.

Ready-mix Concrete. United Metro produces ready-mix concrete by combining
aggregates, cement, water and additives. The additives allow United Metro to
customize the product to customer specifications for overall strength, drying
speed and other properties. Product ingredients are combined at a batch plant
site and loaded into a mixer truck for delivery to the customer's location.

Asphalt. United Metro also produces and sells asphalt products. Asphalt is
a mixture of aggregates and asphalt oil. The asphalt oil is heated and combined
at a plant site and then loaded into dump trucks for transit to the customer's
location. Customer specifications can require the use of certain types or sizes
of aggregates and/or varying proportions of aggregates and asphalt oil.

CUSTOMERS

United Metro markets to a wide variety of customers including street and
highway contractors, industrial and residential contractors, public works
contractors, wholesalers and retailers of decorative rock products, interstate
railroads and manufacturers of concrete block products. A substantial amount of
produced material is used in publicly funded projects, but no single customer
accounts for more than 3% of sales.
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<PAGE> 58

COMPETITION

Due to the high cost of transportation, the construction materials business
is highly dependent on the availability of high quality aggregates proximate to
customers and production facilities. While price is an important factor in the
customer's purchase decision, qualitative factors such as response time,
reliability and product quality influence the purchase decision as well. With
much of the industry consisting of small to medium sized independent firms,
economies of scale, good site locations and technical knowledge will often
provide a competitive advantage. While United Metro believes it possesses these
attributes in the markets it serves, in certain segments of those markets it
competes directly with integrated materials companies that have greater
financial resources. It is also possible that competitors with a lower cost
structure or a willingness to accept lower margins than United Metro may have an
advantage on price sensitive projects.

EMPLOYEES

United Metro employs approximately 2,300 people. Of these, about 400 are
officers, operations management, sales personnel, technical staff,
administrative personnel and clerical staff. Approximately 1,600 employees are
represented by labor unions under collective bargaining agreements and
approximately 300 are non-union craft employees. The collective bargaining
agreements have multi-year terms and expiration dates spread out over a period
of time. These agreements call for specified wage rates, payments to pension
plans or benefit trusts and require United Metro to comply with various
workplace rules. United Metro considers relations with its employees to be good.

GOVERNMENTAL AND ENVIRONMENTAL REGULATION

United Metro's facilities are subject to various evolving federal, state
and local laws and regulations relating to the environment, including those
relating to discharges to air, water and land, the handling and disposal of
solid and hazardous waste and the cleanup of properties affected by hazardous
substances. Certain environmental laws impose substantial penalties for
non-compliance and others, such as the federal Comprehensive Environmental
Response, Compensation and Liability Act, as amended, impose strict,
retroactive, joint and several liability upon persons responsible for releases
of hazardous substances.

United Metro continually evaluates whether it must take additional steps at
its locations to ensure compliance with certain environmental laws. United Metro
believes that its operations are in substantial compliance with applicable laws
and regulations and that any noncompliance is not likely to have a material
adverse effect on its business, financial position, results of operations or
cash flows. However, future events, such as changes in, or modified
interpretations of, existing laws and regulations or enforcement policies, or
further investigation or evaluation of the potential health hazards of certain
products or business activities, may give rise to additional compliance and
other costs that could have a material adverse effect on United Metro's
business.

United Metro, as well as other companies in the aggregates industry,
produces certain products containing varying amounts of crystalline silica.
Excessive and prolonged inhalation of very small particles of crystalline silica
has been associated with non-malignant lung disease. The carcinogenic potential
of excessive exposure to crystalline silica has been evaluated for over a decade
by a number of research groups including the International Agency for Research
on Cancer, the National Institute for Occupational Safety and Health and the
National Toxicology Program, a part of the Department of Health and Human
Services. Results of various studies have ranged from classifying crystalline
silica as a probable to a known carcinogen. Other studies concluded higher
incidences of lung cancer in some operations were due to cigarette smoking, not
silica. Governmental agencies, including the Occupational Safety and Health
Administration and Mine Safety Health Administration, coordinate to establish
standards for controlling permissible limits on crystalline silica. United Metro
believes it currently meets government guidelines for crystalline silica
exposure and will continue to employ advanced technologies as they become
available to ensure worker safety and to comply with all applicable regulations.

United Metro believes that its compliance with environmental laws has not
had a material adverse effect on its business, financial position, results of
operations or cash flows.
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<PAGE> 59

LEGAL PROCEEDINGS

From time to time, United Metro has been involved in various legal
proceedings relating to its operations and properties, all of which it believes
are routine in nature and incidental to the conduct of its business. Although
the ultimate legal and financial liability associated with such proceedings
cannot be estimated with certainty, United Metro believes, based on its
examination of such matters, that none of these proceedings, if determined
adversely, would have a material adverse effect on its business, financial
position, results of operations or cash flows.

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<PAGE> 60

BUSINESS OF KIEWIT

Kiewit, together with its subsidiaries, is one of the largest construction
contractors in North America and also owns materials businesses. Kiewit was
incorporated in Delaware in 1997 to continue a construction business founded in
Omaha, Nebraska in 1884.

THE CONSTRUCTION BUSINESS

The construction business is conducted by operating subsidiaries of Kiewit.
Kiewit and its joint ventures perform construction services for a broad range of
public and private customers primarily in the United States and Canada. New
contract awards during 1999 were distributed among the following construction
markets (approximately, by number): power, heat, cooling -- 34%, transportation
(including highways, bridges, airports, railroads, and mass transit) -- 33%,
commercial buildings -- 27%, water supply/dams -- 3%, oil and gas -- 2% and
other markets -- 1%.

Kiewit primarily performs its services as a general contractor. As a
general contractor, Kiewit is responsible for the overall direction and
management of construction projects and for completion of each contract in
accordance with its terms, plans, and specifications. Kiewit plans and schedules
the projects, procures materials, hires workers as needed, and awards
subcontracts. Kiewit generally requires performance and payment bonds or other
assurances of operational capability and financial capacity from its
subcontractors.

Contract Types

Kiewit performs its construction work under various types of contracts,
including fixed unit or lump-sum price, guaranteed maximum price, and
cost-reimbursable contracts. Contracts are either competitively bid and awarded
or negotiated. Kiewit's public contracts generally provide for the payment of a
fixed price for the work performed. Profit on a fixed-price contract is realized
on the difference between the contract price and the actual cost of
construction, and the contractor bears the risk that it may not be able to
perform all the work for the specified amount. Construction contracts generally
provide for progress payments as work is completed, with a retainage to be paid
when performance is substantially complete. Construction contracts frequently
contain penalties or liquidated damages for late completion and infrequently
provide bonuses for early completion.

Government Contracts

Public contracts accounted for approximately 76% of the combined prices of
contracts awarded to Kiewit during 1999. Most of these contracts were awarded by
government and quasi-government units under fixed price contracts after
competitive bidding. Most public contracts are subject to termination at the
election of the government. In the event of termination, the contractor is
entitled to receive the contract price on completed work and payment of
termination related costs.

COMPETITION

A contractor's competitive position is based primarily on its prices for
construction services and its reputation for quality, timeliness, experience,
and financial strength. The construction industry is highly competitive and
lacks firms with dominant market power. In 1999, Engineering News Record, a
construction trade publication, ranked Kiewit as the eighth largest United
States contractor in terms of 1998 revenue and 14th largest in terms of 1998 new
contract awards. It ranked Kiewit first in the transportation market in terms of
1998 revenue.

DEMAND

The volume and profitability of Kiewit's construction work depends to a
significant extent upon the general state of the economies of the United States
and Canada, and the volume of work available to contractors. Fluctuating demand
cycles are typical of the industry, and such cycles determine to a large extent
the degree of competition for available projects. Kiewit's construction
operations could be adversely affected

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<PAGE> 61

by labor stoppages or shortages, adverse weather conditions, shortages of
supplies, or governmental action. The volume of available government work is
affected by budgetary and political considerations. A significant decrease in
the amount of new government contracts, for whatever reason, would have a
material adverse effect on Kiewit.

BACKLOG

At the end of 1999, Kiewit had backlog (anticipated revenue from
uncompleted contracts) of approximately $4 billion, a decrease from
approximately $4.9 billion at the end of 1998. Of current backlog, approximately
$1 billion is not expected to be completed during 2000. In 1999, Kiewit was low
bidder on 165 jobs with total contract prices of approximately $1.5 billion, an
average price of approximately $9.3 million per job. There were 19 new projects
with contract prices over $20 million, accounting for approximately 63% of the
successful bid volume.

JOINT VENTURES

Kiewit frequently enters into joint ventures to efficiently allocate
expertise and resources among the venturers and to spread risks associated with
particular projects. In most joint ventures, if one venturer is financially
unable to bear its share of expenses, the other venturers may be required to pay
those costs. Kiewit prefers to act as the sponsor of its joint ventures. The
sponsor generally provides the project manager, the majority of
venturer-provided personnel, and accounting and other administrative support
services. The joint venture generally reimburses the sponsor for such personnel
and services on a negotiated basis. The sponsor is generally allocated a
majority of the venture's profits and losses and usually has a controlling vote
in joint venture decision making. In 1999, Kiewit derived approximately 61% of
its joint venture revenue from sponsored joint ventures and approximately 39%
from non-sponsored joint ventures. Kiewit's share of joint venture revenue
accounted for approximately 25% of its 1999 total revenue.

THE MATERIALS BUSINESS

Several of Kiewit's subsidiaries, located in Arizona, Washington, Oregon,
California, Wyoming, Utah and New Mexico, produce construction materials,
including ready-mix concrete, asphalt, sand and gravel, landscaping materials
and railroad ballast. As a result of the spin-off, substantially all of these
materials operations will no longer be a part of Kiewit. They will be owned and
operated by United Metro.

LOCATIONS

Kiewit structures its construction operations around 20 principal operating
offices located throughout North America, including its headquarters located in
Omaha, Nebraska. Through its decentralized system of management, Kiewit has been
able to quickly respond to changes in the local markets. At the end of 1999,
Kiewit had current projects in 47 states, Puerto Rico, Washington, D.C. and 8
Canadian provinces.

PROPERTIES

Kiewit's headquarters facilities are located in Omaha, Nebraska and are
owned by Kiewit. Kiewit also has 19 principal district offices in its
construction operations, 15 of which are located in owned facilities and 4 which
operate from leased facilities. Kiewit also has 14 area offices in its
construction operation, 2 of which are owned facilities and 12 of which are
leased facilities. Kiewit owns or leases numerous shops, equipment yards,
storage facilities, warehouses and construction material quarries. Since
construction projects are inherently temporary and location-specific, Kiewit
owns approximately 1,100 portable offices, shops and transport trailers. Kiewit
has a large equipment fleet, including approximately 5,100 trucks, pickups and
automobiles and 3,800 heavy construction vehicles, such as graders, scrapers,
backhoes and cranes. Joint ventures in which Kiewit is a participant also own an
approximate additional 1,800 portable offices, shops and transport trailers, 600
trucks, pickups and automobiles and 1,000 heavy construction vehicles.

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ENVIRONMENTAL PROTECTION

Compliance with federal, state, and local provisions regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not and is not expected to have a material
effect upon the capital expenditures, earnings, or competitive position of
Kiewit and its subsidiaries.

EMPLOYEES

At the end of 1999, Kiewit and its majority-owned subsidiaries employed
approximately 20,300 people. Of these, approximately 2,300 were employees of
United Metro and its subsidiaries.

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<PAGE> 63

MANAGEMENT OF UNITED METRO

SENIOR MANAGEMENT AND DIRECTORS OF UNITED METRO

The following table provides material information concerning United Metro's
board of directors and executive officers who will be serving or in office as of
the date of the spin-off.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Christopher J. Murphy................ 45 President, Chief Executive Officer and Director
Mark E. Belmont...................... 46 Vice President, General Counsel and Secretary
Sanford M. Goodman................... 45 Vice President, Corporate Development
Daniel W. Speck...................... 44 Vice President
John J. Shaffer...................... 49 Vice President
Richard W. Colf...................... 56 Director
Bruce E. Grewcock.................... 45 Director
William L. Grewcock.................. 74 Director
Richard Geary........................ 64 Director
Walter Scott, Jr. ................... 67 Director
Kenneth E. Stinson................... 56 Chairman of the Board of Directors
</TABLE>

OTHER KEY PERSONNEL

The following table provides material information concerning other key
personnel of United Metro.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
John L. Fowler....................... 57 Vice President, United Metro Materials of Arizona
Inc., Vice President, Solano Concrete Co., Inc.
R. David Jennings.................... 53 Vice President, Twin Mountain Rock Company
William G. Heeter.................... 62 Vice President -- Sales and Marketing, United Metro
Materials of Arizona Inc.
Rick W. Thomas....................... 42 Director of Business Development, United Metro
Materials Inc.
</TABLE>

Christopher J. Murphy. Mr. Murphy has been a director and the Chief
Executive Officer of United Metro since January 1, 2000. Mr. Murphy has been the
President of United Metro since February 2, 1999. Mr. Murphy has been the
President of Kiewit Mining Group Inc. since July 1996. Mr. Murphy is the
Chairman of the Executive Committee of United Metro.

Mark E. Belmont. Mr. Belmont has been General Counsel and Secretary of
United Metro since January 1, 2000 and a Vice President of United Metro since
February 2, 1999. Mr. Belmont has been Senior Corporate Counsel of Kiewit since
July 1991.

Sanford M. Goodman. Mr. Goodman has been Vice President, Corporate
Development of United Metro since January 1, 2000. Mr. Goodman was Director,
Financial Services for Kiewit from September 1999 to December 31, 1999. He was a
Vice President of infoUSA, Inc. from June 1998 to February 1999. Prior to that,
Mr. Goodman held senior corporate development and financial management positions
for Kiewit and its subsidiaries continuously since 1991.

Daniel W. Speck. Mr. Speck has been a Vice President of United Metro since
January 1, 2000. Mr. Speck has been Vice President of United Metro Materials of
Arizona Inc. since April 1997. Mr. Speck was the manager of Walnut Creek Mining
Company from March 1993 to March 1997.

John J. Shaffer. Mr. Shaffer has been a Vice President of United Metro
since January 1, 2000. Mr. Shaffer has been Vice President of Pacific Rock
Products, L.L.C. since February 1, 1996. Mr. Shaffer was Vice President of
Pacific Rock Products, Inc. for more than five years prior to February 1, 1996.

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<PAGE> 64

Richard W Colf. Mr. Colf has been a director of United Metro since January
1, 2000. Mr. Colf has been an Executive Vice President of Kiewit since July
1998. Mr. Colf has been an Executive Vice President of Kiewit Pacific Co., since
September 1998, was a Senior Vice President of Kiewit Pacific from October 1995
to September 1998 and was a Vice President of Kiewit Pacific for more than five
years prior to October 1995. Mr. Colf is currently also a director of Kiewit.
Mr. Colf is a member of the Audit Committee of United Metro.

Richard Geary. Mr. Geary has been a director of United Metro since January
1, 2000. Mr. Geary was an Executive Vice President of Kiewit from August 1997 to
July 1998. Mr. Geary was an Executive Vice President of Kiewit Construction
Group Inc. and President of Kiewit Pacific Co. for more than five years prior to
August 1997. Mr. Geary is currently also a director of Kiewit and serves on the
board of directors of Standard Insurance Company, David Evans & Associates,
Today's Bank, and is a trustee of the Oregon Health Sciences University
Foundation. Mr. Geary is the Chairman of the Audit Committee of United Metro.

Bruce E. Grewcock. Mr. Grewcock has been a director of United Metro since
February 2, 1999. Mr. Grewcock has been an Executive Vice President of Kiewit
since August 1997. Mr. Grewcock has been the President of Kiewit Western Co.
since July 1997. Mr. Grewcock was an Executive Vice President of Kiewit
Construction Group Inc. from July 1996 to June 1998 and President of Kiewit
Mining Group, Inc., from January 1992 to July 1996. Mr. Grewcock is currently
also a director of Kiewit and Kinross Gold Corporation. Mr. Grewcock is a member
of the Executive Committee and the Compensation Committee of United Metro.

William L. Grewcock. Mr. Grewcock has been a director of United Metro
since January 1, 2000. Mr. Grewcock was Vice Chairman of Level 3 Communications,
Inc. for more than five years prior to April 1998. Mr. Grewcock is also a
director of Kiewit and Level 3. Mr. Grewcock is a member of the Audit Committee
of United Metro.

Walter Scott, Jr. Mr. Scott has been a director of United Metro since
January 1, 2000. Mr. Scott has been the Chairman Emeritus of Kiewit since August
1997 and has been the Chairman of the Board of Level 3 Communications, Inc. for
more than the last five years. Mr. Scott was the Chief Executive Officer of
Level 3 for more than five years prior to August 1997. Mr. Scott is also
currently a director of Berkshire Hathaway Inc., Burlington Resources Inc.,
MidAmerican Energy Holding Co., ConAgra, Inc., Commonwealth Telephone
Enterprises, Inc., RCN Corporation, Kiewit, Valmont Industries, Inc. and Level
3. Mr. Scott is a member of the Compensation Committee of United Metro.

Kenneth E. Stinson. Mr. Stinson has been a director and Chairman of United
Metro since January 1, 2000. Mr. Stinson has been President of Kiewit since
August 1997 and Chairman and Chief Executive Officer of Kiewit since March 1998.
Mr. Stinson has been the Chairman and Chief Executive Officer of Kiewit
Construction Group Inc. for more than the last five years. Mr. Stinson was
Executive Vice President of Level 3 Communications, Inc. from June 1991 to
August 1997. Mr. Stinson is also currently a director of ConAgra, Inc., Valmont
Industries, Inc., Kiewit and Level 3. Mr. Stinson is a member of the Executive
Committee and is the Chairman of the Compensation Committee of United Metro.

John L. Fowler. Mr. Fowler has been Vice President of United Metro
Materials of Arizona Inc. since March 1, 1994 and was President of the United
Metro Division of The Tanner Companies from 1985 to 1994. Mr. Fowler has been
Vice President of Solano Concrete Co., Inc. since January 3, 2000.

R. David Jennings. Mr. Jennings has been Vice President of Twin Mountain
Rock Company since 1986.

William G. Heeter. Mr. Heeter has been Vice President -- Sales and
Marketing of United Metro Materials of Arizona Inc. and its predecessors since
1971.

Rick W. Thomas. Mr. Thomas has been Director of Business Development of
United Metro since January 1999. From 1997 to 1998, Mr. Thomas held a senior
operations position with Kiewit Mining Group Inc. From 1996 to 1997, Mr. Thomas
was Vice President -- Engineering of Anker Energy Corporation.

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<PAGE> 65

Mr. Thomas was Vice President -- Operations of Great Western Coal Company for
more than five years prior to 1996.

The United Metro board of directors is divided into three classes,
designated Class I, Class II and Class III, each class consisting, as nearly as
possible, of one-third of the total number of directors constituting the United
Metro board. The initial Class I directors are: Messrs. Bruce Grewcock, William
Grewcock and Scott. The initial Class II directors are: Messrs. Colf and Geary.
The initial Class III directors are: Messrs. Murphy and Stinson. The term of the
initial Class I directors will terminate on the date of the 2001 annual meeting
of stockholders. The term of the initial Class II directors will terminate on
the date of the 2002 annual meeting of stockholders. The term of the initial
Class III directors will terminate on the date of the 2003 annual meeting of the
stockholders. At each annual meeting of stockholders beginning in 2001,
successors to the class of directors whose term expires at that annual meeting
will be elected for three-year terms.

COMMITTEES

The board of directors has an Audit Committee, a Compensation Committee and
an Executive Committee.

The Audit Committee recommends the selection of and reviews the services
provided by United Metro's independent auditors, consults with the independent
auditors and reviews the need for internal auditing procedures and the adequacy
of internal controls and reports and makes recommendations to the full board.
The initial Audit Committee members are Messrs. Geary (Chairman), Colf and
William Grewcock.

The Compensation Committee determines the compensation of the Chief
Executive Officer and reviews the compensation, securities ownership and
benefits of United Metro's executive officers. The initial Compensation
Committee members are Messrs. Stinson (Chairman), Bruce Grewcock and Scott.

The Executive Committee exercises, to the maximum extent permitted by law,
all powers of the board between board meetings, except those functions assigned
to specific committees. The initial Executive Committee members are Messrs.
Murphy (Chairman), Bruce Grewcock and Stinson.

57
<PAGE> 66

SECURITY OWNERSHIP OF UNITED METRO COMMON STOCK BY CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS OF UNITED METRO

The table below shows information about the expected ownership of United
Metro common stock as of the date of the spin-off by each of United Metro's
directors and the four most highly compensated executive officers in 1999 and
each person who is expected to beneficially own more than 5 percent of United
Metro common stock. The table also shows the expected ownership of United Metro
common stock by all of the directors and executive officers as a group as of
that date. The ownership information presented below with respect to all
persons:

- is based on the ownership of United Metro common stock after the
completion of the debenture exchange offer, the share exchange and the
spin-off;

- assumes that, in the share exchange, the persons listed below who are
employees of United Metro exchanged any shares of Kiewit common stock
they held for shares of United Metro common stock;

- assumes that, in the debenture exchange offer, the persons listed below
who are employees of United Metro exchanged any Kiewit convertible
debentures they held for United Metro convertible debentures;

- assumes that, in the debenture exchange offer, the persons listed below
who are employees of Kiewit exchanged any Kiewit convertible debentures
they held for both new reduced principal amount Kiewit convertible
debentures and shares of United Metro common stock;

- assumes a formula price for Kiewit common stock immediately prior to the
spin-off of $20.28 per share, the estimated formula price as of February
17, 2000;

- assumes a formula price for United Metro common stock of $6.58 per share;

- reflects the beneficial ownership of Kiewit common stock at January 3,
2000 and the distribution ratio of one share of United Metro common stock
for each share of Kiewit common stock in the spin-off, and the United
Metro common stock split necessary to achieve that ratio; and

- assumes no change in beneficial ownership of Kiewit common stock between
January 3, 2000 and the date of the spin-off.

"Beneficial ownership" means the sole or shared power to vote, or to direct the
voting of, a security, or the sole or shared power to dispose of, or to direct
the disposition of, a security. A person is deemed, as of any date, to have
"beneficial ownership" of any security that such person has the right to acquire
within 60 days after such date.

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME BENEFICIALLY OWNED PERCENT OF SHARES
- ---- ------------------ -----------------
<S> <C> <C>
Kenneth E. Stinson(1)(2).................................... 2,880,492 8.1%
Richard W. Colf............................................. 1,725,960 4.9%
Bruce E. Grewcock........................................... 958,804 2.7%
Christopher J. Murphy....................................... 918,037 2.6%
Richard Geary............................................... 717,780 2%
Walter Scott, Jr............................................ 400,000 1.1%
Daniel W. Speck............................................. 229,170 *
Mark E. Belmont............................................. 44,160 *
John J. Shaffer............................................. 10,787 *
William L. Grewcock......................................... 8,192 *
--------- ----
Directors and Executive Officers as a Group (11
Individuals).............................................. 7,893,382 22.2%
</TABLE>

- ---------------
* Less than 1%

(1) Includes the 766,773 shares of United Metro common stock expected to be held
in trusts, for which Mr. Stinson is the trustee with sole voting and
investment powers.

(2) Mr. Stinson's address is c/o Kiewit Plaza, Omaha, Nebraska 68131.

58
<PAGE> 67

EXECUTIVE COMPENSATION OF UNITED METRO

The following table presents information regarding the compensation paid by
Kiewit to United Metro's Chief Executive Officer and each of United Metro's
three other most highly compensated executive officers for the fiscal year ended
December 25, 1999. Kiewit does not maintain plans under which options, stock
appreciation rights, restricted stock awards, long-term incentive compensation,
profit sharing, or pension benefits were granted to United Metro's executive
officers.

<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)
- --------------------------- ---- --------- --------
<S> <C> <C> <C>
Christopher J. Murphy....................................... 1999 185,700 150,000
President and Chief Executive Officer
John J. Shaffer............................................. 1999 138,312 111,754
Vice President
Mark E. Belmont............................................. 1999 134,875 13,000
Vice President, General Counsel and Secretary
Daniel W. Speck............................................. 1999 117,650 30,000
Vice President
</TABLE>

Other annual compensation is not included because, in 1999, no executive
officer received any other annual compensation in excess of the reporting
threshold.

DIRECTOR COMPENSATION

Directors of United Metro will not receive directors' fees.

OTHER COMPENSATION AND EQUITY PROGRAMS

United Metro intends to implement a discretionary bonus program for its
stockholder employees. United Metro anticipates that any bonuses under this
bonus program will be paid in January of each year during which the plan is in
effect. The amount of any bonuses and the determination of the individuals to
whom bonuses may be paid will be determined by the United Metro board of
directors and management in their sole discretion.

Kiewit has historically offered certain of its employees the opportunity to
purchase securities in annual common stock and debenture offerings. The Kiewit
board of directors and management, in their sole discretion, select the
employees to whom Kiewit's securities will be offered and determine the amount
of securities to be offered. United Metro intends to follow Kiewit's prior
practice by regularly selling United Metro common stock and convertible
debentures to United Metro employees in annual offerings. However, although
United Metro intends to follow Kiewit's prior practice, United Metro is not
required to offer its securities in any particular year, nor is United Metro
obligated to offer securities to any particular employee, whether or not that
employee is already a security holder of United Metro, in any particular year.

59
<PAGE> 68

MANAGEMENT OF KIEWIT

SENIOR MANAGEMENT AND DIRECTORS OF KIEWIT

The following table provides material information concerning Kiewit's board
of directors and executive officers who will be serving or in office as of the
date of the spin-off.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Mogens C. Bay............................. 51 Director
John B. Chapman........................... 54 Vice President -- Human Resources and
Administration
Roy L. Cline.............................. 62 Executive Vice President and Director
Richard W. Colf........................... 56 Executive Vice President and Director
James Q. Crowe............................ 49 Director
Richard Geary............................. 64 Director
Bruce E. Grewcock......................... 45 Executive Vice President and Director
William L. Grewcock....................... 74 Director
Kenneth M. Jantz.......................... 57 Vice President and Treasurer
Peter Kiewit, Jr. ........................ 72 Director
Allan K. Kirkwood......................... 56 Executive Vice President and Director
Ben E. Muraskin........................... 35 Vice President
Gerald S. Pfeffer......................... 54 Vice President
Rodney K. Rosenthal....................... 46 Controller
Tobin A. Schropp.......................... 37 Vice President, General Counsel and
Secretary
Walter Scott, Jr. ........................ 68 Director
Stephen A. Sharpe......................... 47 Vice President
Kenneth E. Stinson........................ 56 Chief Executive Officer, President and
Chairman of the Board of Directors
George B. Toll, Jr. ...................... 63 Director
</TABLE>

Mogens C. Bay. Mr. Bay has been a director of Kiewit since March 1999. Mr.
Bay has been Chairman of Valmont Industries, Inc. since January 1997 and
President and Chief Executive Officer of Valmont since August 1993. Mr. Bay is
also currently a director of Valmont, ConAgra, Inc. and InaCom Corp. Mr. Bay is
a member of the Compensation Committee and the Executive Compensation
Subcommittee of the Compensation Committee of Kiewit.

John B. Chapman. Mr. Chapman has been Vice President of Human Resources
and Administration of Kiewit since August 1997. Mr. Chapman was Vice President
of Human Resources for Kiewit Construction Group Inc. for more than five years
prior to August 1997.

Roy L. Cline. Mr. Cline has been a director and Executive Vice President
of Kiewit since June 1999. Mr. Cline was the President of Kiewit Industrial Co.
from March 1992 until June 1999. Mr. Cline is a member of the Executive
Committee of Kiewit.

Richard W. Colf. Biographical information regarding Mr. Colf is included
in "Management of United Metro." Mr. Colf is also a member of the Executive
Committee of Kiewit.

James Q. Crowe. Mr. Crowe has been a director of Kiewit since August 1997.
Mr. Crowe has been the President and Chief Executive Officer of Level 3
Communications, Inc. since August 1997. Mr. Crowe was Chairman of the Board of
MFS Communications Company, Inc. for more than five years prior to December
1997, Chief Executive Officer from November 1991 until December 1997 and was
President from January 1988 to June 1989 and from April 1990 until January 1992.
Mr. Crowe was Chairman of the Board of MCI WorldCom, Inc. from January 1997
until July 1997. Mr. Crowe is currently also a director of Commonwealth
Telephone Enterprises, Inc., RCN Corporation, InaCom Corp. and Level 3. Mr.
Crowe is a member of the Compensation Committee of Kiewit.

60
<PAGE> 69

Richard Geary. Biographical information regarding Mr. Geary is included in
"Management of United Metro."

Bruce E. Grewcock. Biographical information regarding Mr. Grewcock is
included in "Management of United Metro." Mr. Grewcock is also a member of the
Executive Committee of Kiewit.

William L. Grewcock. Biographical information regarding Mr. Grewcock is
included in "Management of United Metro." Mr. Grewcock is also a member of the
Compensation Committee of Kiewit.

Kenneth M. Jantz. Mr. Jantz has been a Vice President and Treasurer of
Kiewit since August 1997. Mr. Jantz was a Vice President of Kiewit Construction
Group Inc. from May 1994 to June 1998. Mr. Jantz was Executive Vice President
and Chief Financial Officer of C-TEC Corporation from October 1993 to April
1994.

Peter Kiewit, Jr. Mr. Kiewit has been a director of Kiewit since August
1997. Mr. Kiewit has been Of Counsel to the law firm of Gallagher & Kennedy,
Phoenix, Arizona, for more than the last five years. Mr. Kiewit is a member of
the Audit Committee, the Compensation Committee and is the Chairman of the
Executive Compensation Subcommittee of the Compensation Committee of Kiewit.

Allan K. Kirkwood. Mr. Kirkwood has been a director of Kiewit since August
1997. Mr. Kirkwood has been an Executive Vice President of Kiewit since July
1998. Mr. Kirkwood has been an Executive Vice President of Kiewit Pacific Co.
since September 1998, was a Senior Vice President of Kiewit Pacific from October
1995 to September 1998 and was a Vice President of Kiewit Pacific for more than
five years prior to October 1995. Mr. Kirkwood is a member of the Executive
Committee and is the Chairman of the Audit Committee of Kiewit.

Ben E. Muraskin. Mr. Muraskin has been a Vice President of Kiewit since
January 2000. Mr. Muraskin was a partner at Alston & Bird LLP from January 1999
to December 1999, and an associate at that firm from May 1992 to January 1999.

Gerald S. Pfeffer. Mr. Pfeffer has been a Vice President of Kiewit since
April 1998. Mr. Pfeffer was a Vice President of Kiewit Construction Group Inc.
from December 1997 to June 1998. Mr. Pfeffer was Vice President of Kiewit SR91
Corp. from January 1993 to December 1997.

Rodney K. Rosenthal. Mr. Rosenthal has been the Controller of Kiewit since
March 1998. Mr. Rosenthal was Controller of Kiewit Construction Group Inc. from
October 1995 to June 1998. Mr. Rosenthal was Corporate Accounting Manager of
Kiewit Construction Group from April 1991 to October 1995.

Tobin A. Schropp. Mr. Schropp has been a Vice President, General Counsel
and Secretary of Kiewit since September 1998. Mr. Schropp was Director of Taxes
of Kiewit from March 1998 to September 1998. Mr. Schropp was Director of Taxes
of Level 3 Communications, Inc. from August 1996 to March 1998, and Director of
Research, Planning and Audit of Level 3 from September 1993 to August 1996.

Walter Scott, Jr. Biographical information regarding Mr. Scott is included
in "Management of United Metro." Mr. Scott is also the Chairman of the
Compensation Committee of Kiewit.

Stephen A. Sharpe. Mr. Sharpe has been a Vice President of Kiewit since
August 1997. Mr. Sharpe was a Vice President of Kiewit Construction Group Inc.
from October 1996 to June 1998. Mr. Sharpe was a Vice President of U.S.
Generating Company for more than five years prior to October 1996.

Kenneth E. Stinson. Biographical information regarding Mr. Stinson is
included in "Management of United Metro." Mr. Stinson is also the Chairman of
the Executive Committee of Kiewit.

George B. Toll, Jr. Mr. Toll has been a director of Kiewit since August
1997. Mr. Toll was an Executive Vice President of Kiewit from August 1994 to
June 1999. Mr. Toll was an Executive Vice President of Kiewit Construction Group
Inc. from April 1994 to June 1998, and a Vice President of Kiewit Pacific from
June 1992 to August 1994.

61
<PAGE> 70

COMMITTEES

The Kiewit board of directors has an Audit Committee, a Compensation
Committee and an Executive Committee.

The Audit Committee recommends the selection of and reviews the services
provided by Kiewit's independent auditors, consults with the independent
auditors and reviews the need for internal auditing procedures and the adequacy
of internal controls and reports and makes recommendations to the full board.
The current Audit Committee members are Messrs. Kirkwood (Chairman), Bay and
Kiewit.

The Compensation Committee determines the compensation of the Chief
Executive Officer and reviews the compensation, securities ownership and
benefits of Kiewit's executive officers. The current Compensation Committee
members are Messrs. Scott (Chairman), Bay, Crowe, Kiewit and William Grewcock.

The Compensation Committee has an Executive Compensation Subcommittee. The
Executive Compensation Subcommittee reviews and approves or disapproves all
compensation of whatever nature to be paid to the Chief Executive Officer of
Kiewit and Kiewit's next four highest paid executive officers; establishes and
administers performance goals pursuant to Kiewit's executive bonus plans, if
any, adopted pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended; and approves or disapproves, on behalf of the board, the creation of
any new bonus plans for the executive officers of Kiewit pursuant to Section
162(m) of the Code. The current Executive Compensation Subcommittee members are
Messrs. Kiewit (Chairman) and Bay.

The Executive Committee exercises, to the maximum extent permitted by law,
all powers of the board of directors between board meetings, except those
functions assigned to specific committees. The current Executive Committee
members are Messrs. Stinson (Chairman), Cline, Colf, Bruce Grewcock and
Kirkwood.

62
<PAGE> 71

SECURITY OWNERSHIP OF KIEWIT COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF KIEWIT

The table below shows information about the expected ownership of Kiewit
common stock as of the date of the spin-off, by each of Kiewit's directors and
five most highly compensated executive officers in 1999 and each person who is
expected to beneficially own more than 5 percent of Kiewit common stock. The
table also shows the expected ownership of Kiewit common stock by all of the
directors and executive officers as a group as of that date. The ownership
information presented below with respect to all persons reflects the beneficial
ownership of Kiewit common stock at January 3, 2000 and assumes no change in
beneficial ownership of Kiewit common stock between that date and the date of
the spin-off.

"Beneficial ownership" means the sole or shared power to vote, or to direct
the voting of, a security, or the sole or shared power to dispose of, or to
direct the disposition of, a security. A person is deemed, as of any date, to
have "beneficial ownership" of any security that such person has the right to
acquire within 60 days after such date.

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME BENEFICIALLY OWNED PERCENT OF SHARES
- ---- ------------------ -----------------
<S> <C> <C>
Kenneth E. Stinson(1)(2).................................... 2,770,968 8.9%
Richard W. Colf(3).......................................... 1,715,960 5.5%
Allan K. Kirkwood........................................... 1,207,664 3.9%
George B. Toll, Jr. ........................................ 1,140,824 3.7%
Bruce E. Grewcock........................................... 911,336 2.9%
Richard Geary............................................... 717,780 2.3%
Roy L. Cline................................................ 553,416 1.8%
Walter Scott, Jr. .......................................... 400,000 1.3%
William L. Grewcock......................................... 8,192 *
Mogens C. Bay............................................... 2,000 *
James Q. Crowe.............................................. 2,000 *
Peter Kiewit, Jr. .......................................... 2,000 *
---------- ----
Directors and Executive Officers as a Group (19
Individuals).............................................. 10,031,336 32.2%
</TABLE>

- ---------------
* Less than 1%.

(1) Includes the 766,773 shares of Kiewit common stock held in trusts, for which
Mr. Stinson is the trustee with sole voting and investment powers.

(2) Mr. Stinson's address is c/o Kiewit Plaza, Omaha, Nebraska 68131

(3) Mr. Colf's address is c/o 215 V Street, Vancouver, Washington 98661

63
<PAGE> 72

EXECUTIVE COMPENSATION OF KIEWIT

SUMMARY COMPENSATION TABLE

The table below shows the annual compensation paid by Kiewit to its Chief
Executive Officer and each of Kiewit's four other most highly compensated
executive officers. In addition, annual compensation information is also
provided for George B. Toll, Jr. who resigned as Executive Vice President of
Kiewit in June 1999. Kiewit does not currently have plans under which options,
stock appreciation rights, restricted stock awards, long-term incentive
compensation, profit sharing or pension benefits are held by its executive
officers.

<TABLE>
<CAPTION>
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2)
- --------------------------- ---- --------- ----------- ------------------
<S> <C> <C> <C> <C>
Kenneth E. Stinson......................... 1999 656,207 1,500,000 109,780(3)
Chief Executive Officer 1998 570,835 1,500,000 111,422(4)
1997 476,670 900,000
George B. Toll, Jr. ....................... 1999 229,585 700,000
1998 290,921 650,000
1997 257,706 500,000
Allan K. Kirkwood.......................... 1999 300,768 400,000
Executive Vice President 1998 254,885 360,000
1997 221,250 310,000
Roy L. Cline............................... 1999 295,890 365,000
Executive Vice President 1998 271,046 407,260
1997 257,670 223,667
Richard W. Colf............................ 1999 302,229 250,000
Executive Vice President 1998 261,530 360,000
1997 234,750 310,000
Bruce E. Grewcock.......................... 1999 286,145 270,000
Executive Vice President 1998 226,415 175,000
1997 199,831 175,000
</TABLE>

- ---------------
(1) Bonuses reflect payments made in the specified year with respect to
performance in the prior year.

(2) Other Annual Compensation means perquisites and other personal benefits
received, if, in the aggregate, in excess of the lesser of $50,000 or 10% of
their combined salary and bonus. No executive officer other than Mr. Stinson
received any Other Annual Compensation in excess of the reporting threshold.

(3) In 1999, taxable income in the amount of $51,535 was imputed to Mr. Stinson
with respect to the non-business use of corporate aircraft and taxable
income in the amount of $57,430 was imputed with respect to his interest
free loan described below.

(4) In 1998, taxable income in the amount of $40,778 was imputed to Mr. Stinson
with respect to the non-business use of corporate aircraft and taxable
income in the amount of $70,644 was imputed with respect to his interest
free loan described below.

DIRECTORS' COMPENSATION

During 1999, each of the directors of Kiewit who were not employed by
Kiewit during 1999 received directors' fees consisting of an annual retainer of
$30,000 and fees of $1,500 for attending each board meeting and $1,200 for
attending each committee meeting. Non-employee directors also receive $1,500 for
attending Kiewit's annual operations meeting.

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<PAGE> 73

CERTAIN TRANSACTIONS

On January 25, 1999, Kiewit Engineering Company, a subsidiary of Kiewit,
sold its 60% interest in an aircraft to Elk Mountain Ventures, Inc., a
corporation controlled by Mr. Scott, for $10,800,000, the fair market value of
the aircraft interest. Kiewit Engineering acquired the aircraft interest in a
capital contribution from Level 3. Elk Mountain Ventures, Inc. and a subsidiary
of Kiewit are parties to various aircraft operating agreements pursuant to which
Kiewit's subsidiary provides Elk Mountain with aircraft maintenance, operations
and related services. During 1999, Elk Mountain reimbursed a subsidiary of
Kiewit approximately $1.4 million in expenses incurred in connection with the
operation of Elk Mountain's aircraft. Elk Mountain also paid the subsidiary of
Kiewit a management fee of approximately $44,000. A subsidiary of Kiewit
provided various construction related services to Walter Scott, Jr. during 1999.
Mr. Scott paid that subsidiary approximately $4 million in connection with those
services.

A subsidiary of Level 3 and a subsidiary of Kiewit are parties to various
aircraft operating agreements pursuant to which Kiewit's subsidiary provides
Level 3's subsidiary with aircraft maintenance, operations and related services.
During 1999, Level 3's subsidiary reimbursed a subsidiary of Kiewit
approximately $2.1 million in expenses incurred in connection with the operation
of Level 3's aircraft. Level 3 also paid the subsidiary of Kiewit a management
fee of approximately $80,000.

Level 3 and a subsidiary of Kiewit are parties to an amended mine
management agreement pursuant to which Kiewit's subsidiary provides mine
management and related services for Level 3's coal mining properties. During
1999, Level 3 paid a subsidiary of the Kiewit approximately $33 million in
connection with services provided pursuant to such agreement.

Level 3 and a subsidiary of Kiewit are parties to a contract for the
construction of Level 3's North American Intercity Network. Construction, which
is expected to be completed by the end of 2000, will cost an estimated $3
billion. In 1999, Level 3 paid a subsidiary of Kiewit approximately $699 million
under this contract. In addition, Level 3 has retained a subsidiary of Kiewit as
the general contractor for the construction of Level 3's campus headquarters
facility being built in Broomfield, Colorado. In 1999, Level 3 paid a subsidiary
of Kiewit approximately $100 million in connection with such activities.

In connection with the 1998 spin-off of Kiewit from Level 3, Kiewit and
Level 3 entered into various agreements intended to implement that spin-off,
including a separation agreement and a tax sharing agreement, pursuant to which
the parties allocated certain liabilities associated with their respective
businesses and the costs and other liabilities related to the spin-off.

Kiewit loaned George B. Toll, Jr. $800,000 during 1994 in connection with
the purchase of a residence and relocation expenses. The full principal amount
of his demand note payable to Kiewit is currently outstanding.

Kiewit provided the holders of its convertible debentures with
interest-free loans in connection with the spin-off of Kiewit from Level 3 in
1998. The following is a list of directors and executive officers who had
outstanding interest-free loans from Kiewit in excess of $60,000 during 1999,
the largest aggregate amount outstanding during 1999 and the amount, if any,
currently outstanding: (a) Kenneth E. Stinson -- $1,080,000 ($700,000
currently); (b) Roy L. Cline -- $250,000 ($200,000 currently); (c) Bruce E.
Grewcock -- $250,000 ($200,000 currently); (d) Allan K. Kirkwood -- $240,000
($200,000 currently); (e) Richard W. Colf -- $150,000 ($100,000 currently); (f)
Kenneth M. Jantz -- $150,000 ($100,000 currently); (g) Richard Geary -- $100,000
($0 currently); (h) Stephen A. Sharpe -- $100,000 ($100,000 currently); and (i)
John Brad Chapman -- $80,000 ($55,000 currently).

Valmont Industries, Inc. has retained a subsidiary of the Kiewit as the
general contractor for the construction of Valmont's headquarters facility in
Omaha, Nebraska. In 1999, Valmont paid a subsidiary of Kiewit approximately $7
million in connection with such activities.

In 1999, Richard W. Colf acquired a used piece of construction equipment
from a subsidiary of Kiewit for $80,000.
65
<PAGE> 74

The law firm of Gallagher & Kennedy provided various legal services to
Kiewit and its subsidiaries during 1999. Fees paid to Gallagher & Kennedy by
Kiewit and its subsidiaries did not exceed 5% of Gallagher & Kennedy's revenues
for 1999.

Bruce E. Grewcock is the son of William L. Grewcock.

66
<PAGE> 75

COMPARISON OF OUTSTANDING KIEWIT CONVERTIBLE DEBENTURES AND
NEW REDUCED PRINCIPAL AMOUNT KIEWIT CONVERTIBLE DEBENTURES

Each series of outstanding Kiewit debentures is issued in fully registered
form under an indenture, dated July 1, 1986, as amended by a First Supplemental
Indenture, dated March 31, 1998, between Kiewit and U.S. Bank, N.A. The
indenture is qualified pursuant to the Trust Indenture Act of 1939. The
indenture does not limit the aggregate principal amount of debentures which may
be issued and provides that debentures may be issued from time to time in one or
more series. The terms of the outstanding Kiewit debentures include those stated
in the indenture and those made a part of the indenture by reference to the
Trust Indenture Act of 1939 as in effect on the date of the indenture.

The new reduced principal Kiewit convertible debentures will be issued
under the same indenture as the outstanding Kiewit convertible debentures.

The following is a comparison of the material terms of the outstanding
Kiewit convertible debentures and the new reduced principal amount Kiewit
debentures and the terms of the repurchase agreement required to be executed by
a holder of a Kiewit debenture.

BASIC FEATURES

As of February 17, 2000, there were three series of Kiewit convertible
debentures outstanding in an aggregate principal amount of $13,160,000: Series
1997, Series 1998 and Series 1999. There are three series of new reduced
principal Kiewit convertible debentures being offered in the debenture exchange
offer: Series 1997A, Series 1998A and Series 1999A. The outstanding Kiewit
convertible debentures and the new reduced principal amount Kiewit convertible
debentures are unsecured obligations of Kiewit, and the debentureholders rank
equally with other unsecured creditors of Kiewit in bankruptcy. In addition,
both the outstanding Kiewit debentures and the new reduced principal amount
Kiewit convertible debentures are issued only in registered form, without
coupons. The outstanding Kiewit convertible debentures are issued only in
denominations of $1,000 or any integral multiple of $1,000. The new reduced
principal Kiewit convertible debentures may be issued in any denomination.

Following is a comparison of the basic features and terms of each series of
outstanding Kiewit convertible debentures and the series of the new reduced
principal Kiewit convertible debentures being offered in exchange for each
outstanding series.

67
<PAGE> 76

Series 1997 and 1997A Convertible Debentures

As of February 17, 2000, there were $3,355,000 aggregate principal amount
8.028% Series 1997 Convertible Debentures outstanding. Kiewit is offering to
exchange both new reduced principal amount Series 1997A Convertible Debentures
and shares of United Metro common stock for its outstanding 8.028% Series 1997
Convertible Debentures. The principal amount of the Series 1997A Convertible
Debentures will be equal to the principal amount of the Series 1997 Debentures
for which they are exchanged less the initial formula price of the United Metro
common stock received in the debenture exchange offer. The following table
provides a comparison of the basic features of the two Series.

<TABLE>
<CAPTION>
8.028% SERIES 1997 8.028% SERIES 1997A
FEATURE CONVERTIBLE DEBENTURE CONVERTIBLE DEBENTURE
<S> <C> <C>
ISSUER Peter Kiewit Sons', Inc. Peter Kiewit Sons', Inc.
INTEREST RATE 8.028% 8.028%
INTEREST PAYMENT Interest is payable annually on Interest is payable annually on
DATE November 1. November 1.
If the debentures are converted into If the debentures are converted into
Kiewit common stock, interest ceases Kiewit common stock, interest ceases
to accrue on June 30, 2002. to accrue on June 30, 2002.
MATURITY DATE October 31, 2007 October 31, 2010
CONVERSION PERIOD October 1, 2002 to October 31, 2002 October 1, 2002 to October 31, 2002
CONVERSION RATE The entire principal amount of a The entire principal amount of a
debenture is convertible into whole debenture is convertible into the
shares of Kiewit common stock at a same whole number of shares of
conversion rate of 100 shares of Kiewit common stock as the Series
Kiewit common stock per $1,000 1997 Convertible Debenture for which
principal amount. No partial it was exchanged. No partial
conversions are permitted and a cash conversions are permitted and a cash
payment by the debentureholder is payment by the debentureholder is
required upon conversion where required upon conversion where
necessary to avoid the issuance of necessary to avoid the issuance of
fractional shares. fractional shares.
At February 17, 2000, the 100 shares For an estimate of the initial
of Kiewit common stock into which a aggregate formula price of the
$1,000 principal amount debenture shares of Kiewit common stock
was convertible had an estimated issuable on conversion, see the
aggregate formula price of table on page 29.
$2,028.00.
</TABLE>

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<PAGE> 77

Series 1998 and 1998A Convertible Debentures

As of February 17, 2000, there were $4,365,000 aggregate principal amount
7.35% Series 1998 Convertible Debentures outstanding. Kiewit is offering to
exchange both new reduced principal amount Series 1998A Convertible Debentures
and shares of United Metro common stock for its outstanding 7.35% Series 1998
Convertible Debentures. The principal amount of the Series 1998A Convertible
Debentures will be equal to the principal amount of the Series 1998 Debentures
for which they are exchanged less the initial formula price of the United Metro
common stock received in the debenture exchange offer. The following table
provides a comparison of the basic features of the two Series.

<TABLE>
<CAPTION>
7.35% SERIES 1998 7.35% SERIES 1998A
FEATURE CONVERTIBLE DEBENTURE CONVERTIBLE DEBENTURE
<S> <C> <C>
ISSUER Peter Kiewit Sons', Inc. Peter Kiewit Sons', Inc.
INTEREST RATE 7.35% 7.35%
INTEREST PAYMENT Interest is payable annually on Interest is payable annually on
DATE November 1. November 1.
If the debentures are converted into If the debentures are converted into
Kiewit common stock, interest ceases Kiewit common stock, interest ceases
to accrue on June 30, 2003. to accrue on June 30, 2003.
MATURITY DATE October 31, 2008 October 31, 2010
CONVERSION PERIOD October 1, 2003 to October 31, 2003 October 1, 2003 to October 31, 2003
CONVERSION RATE The entire principal amount of a The entire principal amount of a
debenture is convertible into whole debenture is convertible into the
shares of Kiewit common stock at a same whole number of shares of
conversion rate of 79.36 shares of Kiewit common stock as the Series
Kiewit common stock per $1,000 1998 Convertible Debenture for which
principal amount. No partial it was exchanged. No partial
conversions are permitted and a cash conversions are permitted and a cash
payment by the debentureholder is payment by the debentureholder is
required upon conversion where required upon conversion where
necessary to avoid the issuance of necessary to avoid the issuance of
fractional shares. fractional shares.
At February 17, 2000, the 79.36 For an estimate of the initial
shares of Kiewit common stock into aggregate formula price of the
which a $1,000 principal amount shares of Kiewit common stock
debenture was convertible had an issuable on conversion, see the
estimated aggregate formula price of table on page 29.
$1,609.42.
</TABLE>

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<PAGE> 78

Series 1999 and Series 1999A Convertible Debentures

As of February 17, 2000, there were $5,440,000 aggregate principal amount
8.25% Series 1999 Convertible Debentures outstanding. Kiewit is offering to
exchange both new reduced principal amount Series 1999A Convertible Debentures
and shares of United Metro common stock for its outstanding 8.028% Series 1999
Convertible Debentures. The principal amount of the Series 1999A Convertible
Debentures will be equal to the principal amount of the Series 1999 Debentures
for which they are exchanged less the initial formula price of the United Metro
common stock received in the debenture exchange offer. The following table
provides a comparison of the basic features of the two Series.

<TABLE>
<CAPTION>
8.25% SERIES 1999 8.25% SERIES 1999A
FEATURE CONVERTIBLE DEBENTURE CONVERTIBLE DEBENTURE
<S> <C> <C>
ISSUER Peter Kiewit Sons', Inc. Peter Kiewit Sons', Inc.
INTEREST RATE 8.25% 8.25%
INTEREST PAYMENT Interest is payable annually on Interest is payable annually on
DATE November 1. November 1.
If the debentures are converted into If the debentures are converted into
Kiewit common stock, interest ceases Kiewit common stock, interest ceases
to accrue on June 30, 2004. to accrue on June 30, 2004.
MATURITY DATE October 31, 2009 October 31, 2010
CONVERSION PERIOD October 1, 2004 to October 31, 2004 October 1, 2004 to October 31, 2004
CONVERSION RATE The entire principal amount of a The entire principal amount of a
debenture is convertible into whole debenture is convertible into the
shares of Kiewit common stock at a same whole number of shares of
conversion rate of 63.9 shares of Kiewit common stock as the Series
Kiewit common stock per $1,000 1999 Convertible Debenture for which
principal amount. No partial it was exchanged. No partial
conversions are permitted and a cash conversions are permitted and a cash
payment by the debentureholder is payment by the debentureholder is
required upon conversion where required upon conversion where
necessary to avoid the issuance of necessary to avoid the issuance of
fractional shares. fractional shares.
At February 17, 2000, the 63.9 For an estimate of the initial
shares of Kiewit common stock into aggregate formula price of the
which a $1,000 principal amount shares of Kiewit common stock
debenture was convertible had an issuable on conversion, see the
estimated aggregate formula price of table on page 29.
$1,295.89.
</TABLE>

CONVERSION RIGHTS

If the outstanding Kiewit convertible debentures are not converted into
shares of Kiewit common stock during the one month applicable conversion period
described above, the conversion right is lost. Prior to exercising the
conversion right, a debentureholder must have executed a repurchase agreement
pertaining to all Kiewit common stock acquired by the holder. The conversion
rights of the outstanding Kiewit convertible debentures will be adjusted to
reflect stock splits, stock dividends, stock reclassifications or certain
corporate reorganizations between the date of purchase of the debentures and the
date of conversion.

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<PAGE> 79

The new reduced principal amount Kiewit convertible debentures will have
identical conversion rights. Similarly, debentureholders must have executed a
repurchase agreement pertaining to Kiewit common stock prior to conversion.

OWNERSHIP AND TRANSFER RESTRICTIONS

Holders of outstanding Kiewit convertible debentures are parties to
repurchase agreements under which they agree not to transfer the debentures
except in a sale to Kiewit. Kiewit must purchase any debentures offered to it by
debentureholders. The repurchase agreement also provides that the debentures
must be sold back to Kiewit upon the death or retirement of the purchaser of the
debenture or the termination of the debentureholder's employment with Kiewit or
its subsidiaries. In any of the above-described circumstances, Kiewit will buy
back the debentures at a price equal to the principal amount of the debentures,
together with accrued interest from the last interest payment date to the date
of such purchase at the stated rate. No payment is made by Kiewit with respect
to the original bond premium. In the event Kiewit is offered some, but not all,
of a debentureholder's debentures, Kiewit may purchase all of such holder's
debentures.

New reduced principal amount Kiewit debentures received in the debenture
exchange offer will remain subject to the repurchase agreement executed by the
debentureholder at the time of the initial purchase of the Kiewit debentures.

REDEMPTION

Upon not less than ten days' written notice, Kiewit may, at its option,
redeem all, but not less than all, of the outstanding Kiewit convertible
debentures of any given series at the principal amount thereof, together with
accrued interest from the last interest payment date to the date fixed for
redemption at the stated rate. No payment is made by Kiewit with respect to the
original bond premium. Kiewit may not redeem outstanding Kiewit debentures of
any series during the one-month conversion period applicable to that series.

Kiewit has identical redemption rights with respect to the new reduced
principal amount Kiewit convertible debentures.

MODIFICATION OF THE INDENTURE

The indenture permits modification or amendment with the consent of the
holders of not less than two-thirds in principal amount of each series of
debentures, but no modification of the terms of payment, conversion rights, or
the percentage required for modification will be effective against any
debentureholder without such holder's consent.

Both the outstanding Kiewit convertible debentures and the new reduced
principal amount Kiewit convertible debentures are issued under the indenture.

EVENTS OF DEFAULT AND WITHHOLDING OF NOTICE TO DEBENTUREHOLDERS

The indenture provides for the following events of default with respect to
each series of the outstanding and new reduced principal amount Kiewit
convertible debentures: (1) failure to pay interest upon any of the debentures
of such series when due, continued for a period of 60 days, and (2) failure to
pay principal of the debentures of such series when due, continued for a period
of 60 days.

The trustee under the indenture, within 90 days after the occurrence of a
default with respect to a particular series of debentures, is to give the
holders of debentures of such series notice of all defaults known to the
trustee, unless cured prior to the giving of such notice, provided that, except
in the case of default in the payment of principal or interest on any of the
debentures of such series, the trustee may withhold such notice if and so long
as it in good faith determines that the withholding of such notice is in the
interest of the holders of debentures of such series.

71
<PAGE> 80

thereon due and payable, but if the default is cured, the holders of a majority
of such debentures may waive all defaults and rescind such declaration. Subject
to the provisions of the indenture relating to the duties of the trustee in case
any such default shall have occurred and be continuing, the trustee will be
under no obligation to exercise any of its rights or powers at the request,
order or direction of any of the debentureholders unless they shall have offered
to the trustee reasonable security or indemnity. A majority of the holders of
outstanding Kiewit debentures of such series will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy
available to the trustee with respect to the debentures of such series.

THE TRUSTEE

Kiewit maintains a demand deposit account and conducts routine banking
business with the trustee. The indenture contains limitations on the right of
the trustee, as a creditor of Kiewit under other instruments, to obtain payment
of claims in specified cases, or to realize on certain property received in
respect of any such claim as security or otherwise.

AUTHENTICATION AND DELIVERY

The outstanding Kiewit convertible debentures may be authenticated and
delivered upon the written order of Kiewit without any further corporate action.

Kiewit will have identical powers with respect to the new reduced principal
amount Kiewit convertible debentures.

SATISFACTION AND DISCHARGE OF INDENTURE

The indenture may be discharged upon payment or redemption of all of the
debentures or upon deposit with the trustee of funds sufficient therefor.

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<PAGE> 81

COMPARISON OF OUTSTANDING KIEWIT CONVERTIBLE DEBENTURES AND
UNITED METRO CONVERTIBLE DEBENTURES

Each series of United Metro convertible debentures will be issued in fully
registered form under an indenture between United Metro and . The
indenture will be qualified pursuant to the Trust Indenture Act of 1939. The
indenture will not limit the aggregate principal amount of debentures which may
be issued and will provide that debentures may be issued from time to time in
one or more series. The terms of the United Metro convertible debentures will
include those stated in the indenture and those made a part of the indenture by
reference to the Trust Indenture Act of 1939 as in effect on the date of the
indenture.

The following is a comparison of the material terms of the outstanding
Kiewit convertible debentures and the United Metro convertible debentures and
the terms of the repurchase agreements required to be executed by a holder of a
Kiewit debenture and the purchaser of a United Metro debenture.

BASIC FEATURES

The outstanding Kiewit convertible debentures are unsecured obligations of
Kiewit, and the debentureholders rank equally with other unsecured creditors of
Kiewit in bankruptcy. In addition, the outstanding Kiewit debentures are issued
only in registered form, without coupons, in denominations of $1,000 or any
integral multiple of $1,000.

Similarly, the United Metro convertible debentures are unsecured
obligations of United Metro, and the debentureholders rank equally with other
unsecured creditors of United Metro in bankruptcy. In addition, the United Metro
convertible debentures are issued only in registered form, without coupons, in
denominations of $1,000 or any integral multiple of $1,000.

Following is a comparison of the basic features and terms of each series of
outstanding Kiewit convertible debentures and the series of the United Metro
convertible debentures being offered in exchange for each outstanding series.

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<PAGE> 82

Series 1997 Kiewit Convertible Debentures and Series 2000A United Metro
Convertible Debentures

As of February 17, 2000, there were $3,355,000 aggregate principal amount
8.028% Series 1997 Convertible Debentures outstanding. Kiewit is offering to
exchange United Metro Series 2000A Convertible Debentures for its outstanding
8.028% Series 1997 Convertible Debentures. The principal amount of the Series
2000A Convertible Debentures will be equal to the principal amount of the Series
1997 Convertible Debentures for which they are exchanged. The following table
provides a comparison of the basic features of the two Series.

<TABLE>
<CAPTION>
8.028% SERIES 1997 8.028% SERIES 2000A
FEATURE CONVERTIBLE DEBENTURE CONVERTIBLE DEBENTURE
<S> <C> <C>
ISSUER Peter Kiewit Sons', Inc. United Metro Materials Inc.
INTEREST RATE 8.028% 8.028%
INTEREST PAYMENT Interest is payable annually on Interest is payable annually on
DATE November 1. November 1.
If the debentures are converted into If the debentures are converted into
Kiewit common stock, interest ceases United Metro common stock in October
to accrue on June 30, 2002. 2002, interest ceases to accrue on
June 30, 2002.
MATURITY DATE October 31, 2007 October 31, 2010
CONVERSION PERIOD October 1, 2002 to October 31, 2002 October 1, 2002 to October 31, 2002
United Metro debentures will also be
convertible during the one-month
period after the occurrence of any
of the following:
- the holder's death;
- a change of control of United
Metro; or
- a call for redemption of the
holder's debentures.
CONVERSION RATE The entire principal amount of a The entire principal amount of a
debenture is convertible into whole debenture is convertible into whole
shares of Kiewit common stock at a shares of United Metro common stock
conversion rate of 100 shares of at a conversion rate that will
Kiewit common stock per $1,000 result in an initial aggregate
principal amount. No partial formula price equal to the aggregate
conversions are permitted and a cash formula price of the shares of
payment by the debentureholder is Kiewit common stock into which the
required upon conversion where Series 1997 Convertible Debentures
necessary to avoid the issuance of were convertible. No partial
fractional shares. conversions are permitted and a cash
payment by the debentureholder is
At February 17, 2000, the 100 shares required upon conversion where
of Kiewit common stock into which a necessary to avoid the issuance of
$1,000 principal amount debenture fractional shares.
was convertible had an estimated
aggregate formula price of
$2,028.00.
</TABLE>

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<PAGE> 83

Series 1998 Kiewit Convertible Debentures and Series 2000B United Metro
Convertible Debentures

As of February 17, 2000, there were $4,365,000 aggregate principal amount
7.35% Series 1998 Convertible Debentures outstanding. Kiewit is offering to
exchange United Metro Series 2000B Convertible Debentures for its outstanding
7.35% Series 1998 Convertible Debentures. The following table provides a
comparison of the basic features of the two Series.

<TABLE>
<CAPTION>
7.35% SERIES 1998 7.35% SERIES 2000B
FEATURE CONVERTIBLE DEBENTURE CONVERTIBLE DEBENTURE
<S> <C> <C>
ISSUER Peter Kiewit Sons', Inc. United Metro Materials Inc.
INTEREST RATE 7.35% 7.35%
INTEREST PAYMENT Interest is payable annually on Interest is payable annually on
DATE November 1. November 1.
If the debentures are converted into If the debentures are converted into
Kiewit common stock, interest ceases United Metro common stock in October
to accrue on June 30, 2003. 2003, interest ceases to accrue on
June 30, 2003.
MATURITY DATE October 31, 2008 October 31, 2010
CONVERSION PERIOD October 1, 2003 to October 31, 2003 October 1, 2003 to October 31, 2003
United Metro debentures will also be
convertible during the one-month
period after the occurrence of any
of the following:
- the holder's death;
- a change of control of United
Metro; or
- a call for redemption of the
holder's debentures.
CONVERSION RATE The entire principal amount of a The entire principal amount of a
debenture is convertible into whole debenture is convertible into whole
shares of Kiewit common stock at a shares of United Metro common stock
conversion rate of 79.36 shares of at a conversion rate that will
Kiewit common stock per $1,000 result in an initial aggregate
principal amount. No partial formula price equal to the aggregate
conversions are permitted and a cash formula price of the shares of
payment by the debentureholder is Kiewit common stock into which the
required upon conversion where Series 1998 Convertible Debentures
necessary to avoid the issuance of were convertible. No partial
fractional shares. conversions are permitted and a cash
payment by the debentureholder is
At February 17, 2000, the 79.36 required upon conversion where
shares of Kiewit common stock into necessary to avoid the issuance of
which a $1,000 principal amount fractional shares.
debenture was convertible had an
estimated aggregate formula price of
$1,609.42.
</TABLE>

75
<PAGE> 84

Series 1999 Kiewit Convertible Debentures and Series 2000C United Metro
Convertible Debentures

As of February 17, 2000, there were $5,440,000 aggregate principal amount
8.25% Series 1999 Convertible Debentures outstanding. Kiewit is offering to
exchange United Metro Series 1999A Convertible Debentures for its outstanding
8.25% Series 1999 Convertible Debentures. The following table provides a
comparison of the basic features of the two Series.

<TABLE>
<CAPTION>
8.25% SERIES 1999 8.25% SERIES 2000C
FEATURE CONVERTIBLE DEBENTURE CONVERTIBLE DEBENTURE
<S> <C> <C>
ISSUER Peter Kiewit Sons', Inc. United Metro Materials Inc.
INTEREST RATE 8.25% 8.25%
INTEREST PAYMENT Interest is payable annually on Interest is payable annually on
DATE November 1. November 1.
If the debentures are converted into If the debentures are converted into
Kiewit common stock, interest ceases United Metro common stock in October
to accrue on June 30, 2004. 2004, interest ceases to accrue on
June 30, 2004.
MATURITY DATE October 31, 2009 October 31, 2010
CONVERSION PERIOD October 1, 2004 to October 31, 2004 October 1, 2004 to October 31, 2004
United Metro debentures will also be
convertible during the one-month
period after the occurrence of any
of the following:
- the holder's death;
- a change of control of United
Metro; or
- a call for redemption of the
holder's debentures.
CONVERSION RATE The entire principal amount of a The entire principal amount of a
debenture is convertible into whole debenture is convertible into whole
shares of Kiewit common stock at a shares of United Metro common stock
conversion rate of 63.9 shares of at a conversion rate that will
Kiewit common stock per $1,000 result in an initial aggregate
principal amount. No partial formula price equal to the aggregate
conversions are permitted and a cash formula price of the shares of
payment by the debentureholder is Kiewit common stock into which the
required upon conversion where Series 1999 Convertible Debentures
necessary to avoid the issuance of were convertible. No partial
fractional shares. conversions are permitted and a cash
payment by the debentureholder is
At February 17, 2000, the 63.9 required upon conversion where
shares of Kiewit common stock into necessary to avoid the issuance of
which a $1,000 principal amount fractional shares.
debenture was convertible had an
estimated aggregate formula price of
$1,295.89.
</TABLE>

CONVERSION RIGHTS

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<PAGE> 85

convertible debentures will be adjusted to reflect stock splits, stock
dividends, stock reclassifications or certain corporate reorganizations between
the date of purchase of the debentures and the date of conversion.

If the United Metro convertible debentures are not converted into shares of
Kiewit common stock during the one month applicable conversion period described
above, the conversion right is lost. In addition to the conversion period
specified above, the United Metro debentures are convertible for one month prior
to the expiration of that period after the occurrence of any of the following:

- the holder's death;

- a change of control of United Metro; or

- a call for redemption of the holder's debentures.

The conversion rights of the United Metro convertible debentures will be
adjusted to reflect the following:

(a) dividends and other distributions payable in common stock on
shares of stock of United Metro;

(b) subdivisions, combinations and reclassifications of United Metro
common stock;

(c) distributions to all holders of United Metro common stock of
evidences of indebtedness of United Metro, shares of capital stock, cash or
assets, including securities, but excluding those dividends, rights,
options, warrants and distributions referred to in clauses (a) and (d),
dividends and distributions paid exclusively in cash and distributions upon
mergers or consolidations to which the next succeeding paragraph applies;

(d) the issuance to all holders of United Metro common stock of
rights, options or warrants entitling them to subscribe for or purchase
United Metro common stock or securities convertible into United Metro
common stock at less than the then average current market price, determined
as provided in the indenture and equal to the formula price for so long as
the United Metro common stock is not publicly traded, of the United Metro
common stock as of the record date for holders entitled to receive those
rights, options or warrants;

(e) distributions consisting exclusively of cash, excluding any cash
portion of distributions referred to in (c) above, or cash distributed upon
a merger or consolidation to which the next succeeding paragraph applies,
to all holders of United Metro common stock in an aggregate amount that,
combined together with (1) other such all-cash distributions made within
the preceding 12 months in respect of which no adjustment has been made and
(2) any cash and the fair market value of other consideration payable in
respect of any tender offer by United Metro or any of its subsidiaries for
United Metro common stock concluded within the preceding 12 months in
respect of which no adjustment has been made, exceeds 10% of United Metro's
market capitalization, being the product of the average current market
price of the United Metro common stock on the record date for the
distribution and the number of shares of United Metro common stock then
outstanding; and

(f) the successful completion of a tender offer made by United Metro
or any of its subsidiaries for common stock which involves an aggregate
consideration that, together with (1) any cash and other consideration
payable in a tender offer by United Metro or any of its subsidiaries for
common stock expiring within the 12 months preceding the expiration of such
tender offer in respect of which no adjustment has been made and (2) the
aggregate amount of any such all-cash distributions referred to in (e)
above to all holders of common stock within the 12 months preceding the
expiration of such tender offer in respect of which no adjustments have
been made, exceeds 10% of United Metro's market capitalization on the
expiration of such tender offer.

United Metro reserves the right to make such increases in the conversion
rate in addition to those required in the foregoing provisions as it considers
to be advisable in order that any event treated for United States federal income
tax purposes as a dividend of stock or stock rights will not be taxable to the
recipients. No adjustment of the conversion rate will be required to be made
until the cumulative adjustments amount to 1.0% or more of the conversion rate.
United Metro shall compute any adjustments to the conversion rate pursuant to
this paragraph and will give notice to the holders of any such adjustments.
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<PAGE> 86

In case of any consolidation or merger involving United Metro, other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of United Metro common stock, or in the case of any sale or
transfer of all or substantially all of the assets of United Metro, each
outstanding debenture will, without the consent of the holder, become
convertible into the kind and amount of securities, cash and other property
receivable by a holder of common stock in that transaction.

OWNERSHIP AND TRANSFER RESTRICTIONS

The United Metro debentures will be subject to substantial transfer
restrictions. Each holder of Kiewit debentures who elects to receive United
Metro debentures will be required to execute a repurchase agreement with United
Metro. Specifically, the terms of the repurchase agreement will prohibit United
Metro debentureholders from transferring the United Metro debentures in any
manner except in a sale to United Metro. The repurchase agreement will also
require the holder to sell the United Metro debentures back to United Metro if
the holder voluntarily terminates his or her employment with United Metro or
United Metro terminates his or her employment for cause. In any of the
above-described circumstances, United Metro will buy back the debentures at a
price equal to the principal amount of the debentures, together with accrued
interest from the last interest payment date to the date of such purchase at the
stated rate. No payment is made by United Metro with respect to the original
bond premium. In the event United Metro is offered some, but not all, of a
debentureholder's debentures, United Metro may purchase all of that holder's
debentures.

REDEMPTION

United Metro has substantially equivalent redemption rights with respect to
the United Metro convertible debentures. However, United Metro must give at
least thirty days' written notice prior to redemption and the United Metro
debentures are convertible during that thirty-day period.

MODIFICATION OF THE INDENTURE

The indenture under which the outstanding Kiewit convertible debentures are
issued permits modification or amendment with the consent of the holders of not
less than two-thirds in principal amount of each series of debentures, but no
modification of the terms of payment, conversion rights, or the percentage
required for modification will be effective against any debentureholder without
such holder's consent.

The indenture under which the United Metro convertible debentures are
issued will have substantially equivalent modification provisions.

EVENTS OF DEFAULT AND WITHHOLDING OF NOTICE TO DEBENTUREHOLDERS

The indenture under which the outstanding Kiewit convertible debentures are
issued provides for the following events of default with respect to each series
of the debentures: (i) failure to pay interest upon any of

78
<PAGE> 87

the debentures of such series when due, continued for a period of 60 days and
(ii) failure to pay principal of the debentures of such series when due,
continued for a period of 60 days.

Upon the happening and during the continuance of a default with respect to
a particular series of debentures, the trustee may declare the principal of all
the debentures of such series and the interest accrued thereon due and payable,
but if the default is cured, the holders of a majority of such debentures may
waive all defaults and rescind such declaration. Subject to the provisions of
the indenture relating to the duties of the trustee in case any such default
shall have occurred and be continuing, the trustee will be under no obligation
to exercise any of its rights or powers at the request, order or direction of
any of the debentureholders unless they shall have offered to the trustee
reasonable security or indemnity. A majority of the holders of outstanding
Kiewit debentures of such series will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the trustee with respect to the debentures of such series.

The indenture under which the United Metro convertible debentures are
issued will have substantially equivalent provisions.

THE TRUSTEE

Kiewit maintains a demand deposit account and conducts routine banking
business with the trustee. The indenture under which the outstanding Kiewit
convertible debentures are issued contains limitations on the right of the
trustee, as a creditor of Kiewit under other instruments, to obtain payment of
claims in specified cases, or to realize on certain property received in respect
of any such claim as security or otherwise.

The indenture under which the United Metro convertible debentures are
issued will also contain limitations on the right of the trustee, if it is a
creditor of United Metro under other instruments, to obtain payment of claims in
specified cases, or to realize on certain property received in respect of any
such claim as security or otherwise.

AUTHENTICATION AND DELIVERY

The outstanding Kiewit convertible debentures may be authenticated and
delivered upon the written order of Kiewit without any further corporate action.

United Metro has substantially equivalent powers with respect to the United
Metro convertible debentures.

SATISFACTION AND DISCHARGE OF INDENTURE

The indenture under which the outstanding Kiewit convertible debentures are
issued may be discharged upon payment or redemption of all of the outstanding
Kiewit debentures or upon deposit with the trustee of funds sufficient therefor.

The indenture under which the United Metro convertible debentures are
issued will contain a substantially equivalent provision.

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<PAGE> 88

COMPARISON OF RIGHTS OF HOLDERS OF KIEWIT COMMON STOCK AND
UNITED METRO COMMON STOCK

GENERAL

The following is a summary of material differences between the rights of
holders of Kiewit common stock and the rights of holders of United Metro common
stock. Because each of Kiewit and United Metro are organized under the laws of
Delaware, these differences arise principally from provisions of the restated
certificate of incorporation and bylaws of each of Kiewit and United Metro.

The authorized capital stock of United Metro consists of 100,000,000 shares
of common stock, par value $0.01 per share and 10,000,000 shares of preferred
stock, par value $0.01 per share.

The authorized capital stock of Kiewit consists of 125,000,000 shares of
common stock, par value $0.01 per share and 250,000 shares of preferred stock,
par value $0.01 per share.

The following summary does not purport to be a complete statement of the
rights of stockholders of Kiewit under the restated certificate of incorporation
and bylaws of Kiewit as compared with the rights of United Metro stockholders
under the restated certificate of incorporation and the bylaws of United Metro
or a complete description of the specific provisions referred to in this
summary. The identification of specific differences is not meant to indicate
that other equal or more significant differences do not exist. The summary is
qualified in its entirety by reference to the governing corporate instruments of
Kiewit and United Metro, to which stockholders are referred. Copies of the
governing corporate instruments of Kiewit and United Metro have been filed with
the SEC. See "Where You Can Find More Information" on page 91.

DIVIDEND POLICY

United Metro currently does not intend to pay dividends on the United Metro
common stock.

Kiewit pays a regular cash dividend on its common stock based upon a
percentage of its prior year's earnings, with any special cash dividends based
on extraordinary earnings.

VOTING RIGHTS

The holders of United Metro common stock are entitled to one vote per share
on all matters to be voted on by stockholders and are entitled to receive such
dividends, if any, as may be declared from time to time by the board of
directors from legally available funds. Holders of United Metro common stock are
not entitled to cumulative voting rights. The holders of United Metro common
stock have no preemptive or other subscription rights and there are no
conversion rights or redemption or sinking fund provisions with respect to the
United Metro common stock. All outstanding shares of United Metro common stock,
including the shares being offered in the share exchange, the debenture exchange
offer and the spin-off, are, or will be upon completion of the share exchange,
the debenture exchange offer and the spin-off, fully paid and non-assessable.

The United Metro restated certificate of incorporation provides that any
amendment to the provisions in the restated certificate of incorporation
regarding the classification of the board of directors requires the approval of
at least 80% of the United Metro common stock. Any amendment to the 80%
threshold requires the approval of at least 80% of the United Metro common
stock. Amendments to the provisions in the restated certificate of incorporation
regarding stockholders' repurchase rights, the definition of the formula price,
stock ownership and transfer restrictions, the prohibition of stockholder action
by written consent in place of a meeting, the limitation on the right of
stockholders to call special meetings of stockholders, the limitation on the
right of stockholders to present proposals or nominate directors for election at
annual meetings of stockholders and amendments to the restated certificate of
incorporation require the approval of at least 66 2/3% of the United Metro
common stock.

Holders of Kiewit common stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders of Kiewit. Holders of Kiewit
common stock are entitled to elect the entire Kiewit board of

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directors by cumulative voting. The Kiewit restated certificate of incorporation
provides that certain fundamental corporate changes, such as changes in the
capital structure of Kiewit, are effective only upon the approval of at least
80% of Kiewit common stock, while certain other actions require the approval of
66 2/3% of Kiewit common stock.

REPURCHASE RIGHTS

Holders of United Metro common stock are generally permitted, at any time
on or prior to the 15th day of any calendar month, to offer to sell all or part
of their common stock to United Metro at the current formula price. United Metro
is generally required to accept the offer within 10 days of receipt of the
offer, provided, however, that after giving effect to the purchase, there remain
at least 1,000 shares of capital stock of United Metro issued and outstanding
and having full voting power.

The United Metro board of directors may suspend United Metro's duties to
repurchase United Metro common stock offered by a stockholder upon the United
Metro board's determination that the United Metro adjusted book value to be
determined at the end of the current fiscal year is likely to be less than the
United Metro adjusted book value determined at the end of the prior fiscal year,
less dividends declared on United Metro common stock since the prior fiscal year
end. This suspension may not exceed one year.

The United Metro board has the right to decide to conserve United Metro's
cash by temporarily halting United Metro's duty to repurchase United Metro
common stock for cash. In such event, payment will be in the form of
interest-bearing promissory notes instead of cash. Such promissory notes will
have such term to maturity, up to five years, as the United Metro board may
determine. Holders may withdraw tenders of shares of United Metro common stock
that would be paid for with notes. The United Metro board has the right to
invoke this cash repurchase limitation only after more than 5% of the
outstanding shares of United Metro common stock have been tendered in any fiscal
year.

Under Section 160 of the Delaware General Corporation Law, United Metro may
not repurchase shares of its common stock if its capital is impaired or if the
repurchase would impair its capital.

United Metro's repurchase obligations may be terminated by United Metro's
board of directors at any time. However, the board shall not have that authority
unless it has also determined that the United Metro common stock is publicly
traded.

Holders of Kiewit common stock are generally permitted, at any time on or
prior to the 15th day of any calendar month, to offer to sell all or a part of
their common stock to Kiewit at the current formula price. Kiewit is generally
required to accept the offer within 10 days of receipt of the offer, provided,
however, that after giving effect to the purchase, there remain at least 1,000
shares of capital stock of Kiewit issued and outstanding having full voting
power.

The Kiewit board of directors may suspend Kiewit's duties to repurchase
Kiewit common stock offered by a stockholder upon the Kiewit board's
determination that the Kiewit adjusted book value to be determined at the end of
the current fiscal year is likely to be less than the Kiewit adjusted book value
determined at the end of the prior year, less dividends declared on Kiewit
common stock since the prior fiscal year end. This suspension may not exceed one
year.

Under Section 160 of the Delaware General Corporation Law, Kiewit may not
repurchase shares of its common stock if its capital is impaired or if the
repurchase would impair its capital.

LIQUIDATION RIGHTS

Upon the liquidation, dissolution or winding up of United Metro, after the
creditors of United Metro and the holders of United Metro preferred stock (if
any) receive the full preferential amounts to which they are entitled, holders
of United Metro common stock will be entitled to receive any assets available
for distribution to stockholders of United Metro.

The holders of Kiewit common stock have comparable rights upon liquidation
of Kiewit.

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FORMULA PRICE

The formula price of United Metro common stock is the price at which United
Metro purchases shares of its common stock and is based upon the adjusted book
value of United Metro at the end of the previous year.

The per share United Metro formula price is determined by decreasing the
prior year's book value by the stockholders' equity attributable to any
preferred stock, and increasing such result by the portion of the face amount of
any outstanding United Metro debentures convertible into United Metro common
stock at the end of such year, and then dividing this result by the sum of (1)
the number of outstanding shares of United Metro common stock and (2) the number
of shares reserved for conversion of such debentures into United Metro common
stock, each at the end of such year. This quotient is rounded down to the
nearest $.01 and the result represents the adjusted book value per share of the
United Metro common stock. The per share formula price is determined by reducing
this amount by any dividends per share declared on the United Metro common stock
since the prior year end. In addition to any adjustments for declared dividends
during the current year, the initial formula price for United Metro common stock
is also adjusted for the amount of any capital contributions made by Kiewit to
United Metro during fiscal year 2000 prior to the spin-off.

The formula price of Kiewit common stock is the price at which Kiewit
purchases and sells shares of its common stock and is based upon the adjusted
book value of Kiewit at the end of the previous year.

The per share Kiewit formula price is determined by decreasing the prior
year's book value by the sum of the book value of construction related property,
plant and equipment and the stockholders' equity attributable to any preferred
stock, and increasing such result by the portion of the face amount of any
outstanding Kiewit debentures convertible into Kiewit common stock at the end of
such year, and then dividing this result by the sum of (1) the number of
outstanding shares of Kiewit common stock and (2) the number of shares reserved
for conversion of such debentures into Kiewit common stock, each at the end of
such year. This quotient is rounded to the nearest $.05 and the result
represents the adjusted book value per share of the Kiewit common stock. The per
share formula price is determined by reducing this amount by any dividends per
share declared on the Kiewit common stock since the prior year end.

OWNERSHIP AND TRANSFER RESTRICTIONS

Holders of United Metro common stock are prohibited from transferring the
common stock in any manner except in a sale to United Metro and, with prior
approval by the United Metro board of directors, to certain authorized
transferees of the holders. Those authorized transferees consist of fiduciaries
for the benefit of the holders and members of the immediate families of the
holders, corporations wholly owned by holders or holders and their spouses
and/or children, fiduciaries for the benefit of such corporations and charities
and fiduciaries for charities designated by any such persons. Upon the death of
a United Metro stockholder, the shares of United Metro common stock owned by the
deceased stockholder would be permitted to be transferred to his or her estate,
provided that the shares transferred to the transferee would be subject to the
same transfer restrictions.

Holders of United Metro common stock are permitted to pledge the United
Metro common stock for loans in connection with the ownership of the United
Metro common stock.

All transfer restrictions may be terminated by the United Metro board at
any time. In the event that the board of directors decides to conduct an initial
public offering of the United Metro common stock, officers and directors of
United Metro and stockholders owning one percent or more of the United Metro
common stock outstanding at the time of the offering will not be permitted to
sell or otherwise transfer any shares held by them for a period of up to one
hundred eighty days following the offering.

Kiewit common stock may generally be owned only by directors of Kiewit,
employees of Kiewit and its subsidiaries and, with prior Kiewit board of
directors approval, by certain authorized transferees of such employees (i.e.,
fiduciaries for the benefit of members of the immediate families of employees,
corporations wholly owned by employees or employees and their spouses and/or
children, fiduciaries for the benefit of such corporations, charities, and
fiduciaries for charities designated by any such persons). No more than 10% of
the total Kiewit common stock may be owned by any one employee and certain
transferees at any time.
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Holders of Kiewit common stock are permitted to pledge the Kiewit common
stock for loans in connection with the ownership of the Kiewit common stock.

Each holder of Kiewit common stock is required to execute a repurchase
agreement which provides that a stockholder may offer to sell all or part of the
Kiewit common stock owned by such stockholder to Kiewit at any time at the
current formula price and that Kiewit must accept any such offer. Upon the
tender of a part of such holder's shares of Kiewit common stock, Kiewit is
entitled, at its option, to require the holder to sell any or all remaining
Kiewit common stock held by such holder back to Kiewit. Under the repurchase
agreement, the employee will not be entitled to transfer the shares of Kiewit
common stock held by such employee except in a sale to Kiewit or a transfer to
an authorized transferee (i.e., a charity, etc.). Upon the death, termination or
retirement of such employee, all Kiewit common stock held by the employee and by
such employee's authorized transferees is required to be sold back to Kiewit.

LISTING

Neither United Metro common stock nor Kiewit common stock is listed on any
national securities exchange or quoted on the Nasdaq National Market.

LIMITATION ON DIRECTORS' LIABILITY

The United Metro restated certificate of incorporation provides that a
director of United Metro will not be personally liable to United Metro or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for:

- any breach of the director's duty of loyalty to United Metro or its
stockholders;

- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; or

- any transaction from which the director derived an improper personal
benefit.

The restated certificate of incorporation of Kiewit contains a comparable
limitation on directors' liability.

PREFERRED STOCK

The United Metro board of directors is empowered, without approval of the
stockholders, to issue shares of United Metro preferred stock in one or more
series, with the numbers of shares of each series and the powers, preferences,
rights and limitations of each series to be determined by the United Metro
board. Among the specific matters that may be determined by the board of
directors are:

- the rate of dividends;

- the rights and terms of conversion or exchange;

- voting rights;

- the terms of redemption;

- the amount payable in the event of any voluntary liquidation, dissolution
or winding up of the affairs of United Metro; and

- the terms of a sinking or purchase fund.

The board of directors of Kiewit has similar power to issue shares of one
or more series of preferred stock without stockholder approval and to determine
the powers, preferences, rights and limitations of each series. However, no
series of preferred stock may have any voting rights or be convertible into
shares of stock having any voting rights.

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ACTION BY STOCKHOLDER CONSENT; STOCKHOLDERS' MEETINGS

Under the Delaware General Corporation Law, unless otherwise provided in a
corporation's certificate of incorporation, any action which is required or
permitted to be taken at an annual or special meeting of stockholders may
instead be taken without a meeting, without prior notice and without a vote, if
the requirements for an action by written consent are met. The United Metro
restated certificate of incorporation provides that stockholders of United Metro
may only take action at an annual or special meeting and may not act by written
consent.

Under the Delaware General Corporation Law, special meetings of
stockholders of a corporation may be called by the corporation's board of
directors or by persons authorized by the corporation's certificate of
incorporation or by-laws. The United Metro restated certificate of incorporation
provides that special meetings of the stockholders may be called only by the
United Metro board of directors, the Chairman of the Board or the Chief
Executive Officer and may not be called by any other person or persons.
Accordingly, stockholders of United Metro may not call a special meeting of
stockholders.

Kiewit has no comparable consent and meeting provisions in its restated
certificate of incorporation.

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RELATIONSHIP BETWEEN KIEWIT AND UNITED METRO

This section describes the primary agreements between United Metro and
Kiewit that will define the ongoing relationship between them and their
subsidiaries and affiliates after the spin-off and will provide for an orderly
separation of the two companies. The following description of agreements
summarizes the material terms of the agreements. All stockholders should read
the agreements which are filed as exhibits to the registration statement of
which this information statement is a part.

SEPARATION AGREEMENT

The separation agreement provides for the principal corporate transactions
necessary to effect the spin-off, the relationship between Kiewit and United
Metro after the spin-off, the allocation of certain risks and responsibilities
between Kiewit and United Metro after the spin-off and certain other matters.

The separation agreement provides for the distribution of United Metro
common stock to holders of Kiewit common stock in the spin-off, the debenture
exchange offer and the share exchange, and for the capital contributions
necessary to effect the spin-off, the debenture exchange offer and the share
exchange. The separation agreement provides that each of United Metro and Kiewit
will indemnify the other with respect to breaches of the separation agreement
and with respect to the activities of its subsidiary business groups, except as
specifically provided under the tax allocation agreement described below. The
cross-indemnities are intended to allocate financial responsibility for
liabilities arising out of the historical and future business of the
construction business to Kiewit, and financial responsibility for liabilities
arising out of the historical and future business of the materials business to
United Metro.

The separation agreement provides that each of United Metro and Kiewit will
be granted access to certain records and information in the possession of the
other company, and requires that each of United Metro and Kiewit retain all such
information in its possession for a period of ten years following the spin-off.
Under the separation agreement, each company is required to give the other
company prior notice of any intention to dispose of any such information.

The separation agreement provides that, except as otherwise set forth
therein or in any related agreement, all costs and expenses in connection with
the spin-off will be paid by Kiewit.

The separation agreement also contains, among other things, short-term
arrangements relating to:

- the lease of office space by Kiewit to United Metro; and

- the provision of administrative services by Kiewit to United Metro.

TAX SHARING AGREEMENT

The tax sharing agreement defines each company's rights and obligations
with respect to deficiencies and refunds of federal, state and other taxes
relating to the business operations for tax years (or portions thereof) ending
prior to the spin-off and with respect to certain tax attributes of United Metro
and Kiewit after the spin-off. The tax sharing agreement also specifies the
parties' respective obligations in connection with any audit or investigation
concerning any federal, state or other taxes or in the event that the spin-off
was subsequently determined not to qualify as a tax-free transaction for U.S.
federal income tax purposes. Under the tax allocation agreement, in general,
with respect to periods (or portions thereof) ending on or before the completion
of the spin-off, Kiewit will be responsible for preparing both consolidated
federal tax returns for Kiewit and United Metro, and state tax returns for
Kiewit and United Metro. In general, under the tax allocation agreement, United
Metro and Kiewit will be responsible for paying the taxes relating to such
returns (including any subsequent adjustments resulting from the redetermination
of such tax liabilities by the applicable taxing authorities) that are allocable
to the materials business and the construction business, respectively. United
Metro and Kiewit will cooperate with each other and share information in
preparing such tax returns and in dealing with other tax matters.

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OTHER

After the spin-off, Kiewit will not own any of United Metro's common stock.
Six of United Metro's seven initial directors will also be Kiewit directors.

In addition, Kiewit may, in the ordinary course of business, purchase
construction materials from United Metro, although it is under no contractual
obligation to do so. Sales to Kiewit represented approximately 3% of United
Metro's total sales in 1999.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of the material United States federal income
tax consequences of the debenture exchange offer. The discussion which follows
is based on the Internal Revenue Code of 1986, as amended, Treasury regulations
promulgated thereunder and judicial and administrative interpretations thereof,
all as in effect on the date hereof, and is subject to any changes in these or
other laws occurring after such date, possibly with retroactive effect. The
discussion below is for general information only and does not address the
effects of any state, local or foreign tax laws on the spin-off. The tax
treatment of a holder of Kiewit debentures may vary depending on his or her
particular situation, and certain holders may be subject to special rules not
discussed below. The discussion assumes that a holder of Kiewit Debentures holds
those debentures as capital assets and that such debentures were not received,
and will not be treated, as compensation. Except as set forth below, the
following discussion does not address the tax consequences to a holder of Kiewit
debentures that is a non-U.S. person. A non-U.S. person is (1) an alien
individual who is not a resident of the United States, (2) a corporation or
partnership that is not created or organized under the laws of the United States
or of any state, (3) an estate that is not subject to United States federal
income tax on a net income basis or (4) a trust the administration of which is
not subject to primary supervision of a United States court or with respect to
which no United States person has authority to control all substantial
decisions.

EACH HOLDER OF KIEWIT DEBENTURES IS URGED TO CONSULT THAT HOLDER'S OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DEBENTURE EXCHANGE OFFER TO
THAT HOLDER, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR
FOREIGN LAWS AND OF CHANGES IN APPLICABLE TAX LAWS.

Kiewit has received a private letter ruling from the Internal Revenue
Service to the effect that (i) the exchange of Kiewit debentures for United
Metro debentures will qualify as a transaction described in Sections 355(a) and
368(a)(1)(D) of the Code and (ii) the exchange of Kiewit debentures for United
Metro common stock and new reduced principal amount Kiewit debentures will
qualify as a transaction described in Sections 355(a) and 368(a) of the Code.
The ruling is based on current law and on representations as to factual matters
made by, among others, Kiewit and United Metro. Such representations, if
incorrect in material respects, could jeopardize the conclusions reached in the
ruling. Neither Kiewit nor United Metro is aware of any facts or circumstances
that would cause any such representations to be untrue or incorrect in any
material respect.

Based on the Internal Revenue Service ruling, the material United States
federal income tax consequences expected to result from the exchange of Kiewit
debentures for (1) United Metro debentures or (2) United Metro common stock and
new reduced principal amount Kiewit debentures are as follows. No gain or loss
will be recognized by Kiewit or United Metro upon the exchange. A holder who
receives United Metro debentures in exchange for Kiewit debentures (and is not
required to sell the United Metro debentures so received back to United Metro
immediately following the spin-off) (i) will not recognize gain or loss as a
result of the exchange, (ii) will have, immediately after the exchange, a tax
basis for the United Metro debentures that equals such holder's tax basis in his
or her Kiewit debentures exchanged, and (iii) will include in his or her holding
period for the United Metro debentures the period during which the holder held
the Kiewit debentures exchanged. A holder who receives United Metro common stock
and new reduced principal amount Kiewit debentures in exchange for Kiewit
debentures (and is not required to sell the new reduced principal amount Kiewit
debentures so received back to Kiewit immediately following the spin-off) (i)
will not recognize gain or loss as a result of the exchange, (ii) will have,
immediately after the exchange, a tax basis for the United Metro common stock
and new reduced principal amount Kiewit debentures that equals

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such holder's tax basis in his or her Kiewit debentures exchanged, allocated in
proportion to the relative fair market values of the United Metro common stock
and the new reduced principal amount Kiewit debentures at the time of the
exchange, and (iii) will include in his or her holding period for the United
Metro common stock and the new reduced principal amount Kiewit debentures the
period during which the holder held the Kiewit debentures exchanged.

If the spin-off does not qualify as a tax-free transaction under Section
355 of the Code, then, among other consequences, (i) the exchange of Kiewit
debentures for new reduced principal amount Kiewit debentures should still be
treated as tax-free to Kiewit and holders receiving new reduced principal amount
Kiewit debentures in the exchange (except to the extent that the holder is
required to sell the new reduced principal amount Kiewit debentures received
back to Kiewit immediately following the spin-off), (ii) Kiewit would recognize
gain equal to the amount by which the fair market value of the United Metro
debentures and United Metro common stock distributed exceeded Kiewit's adjusted
tax basis therein, and (iii) each holder who received United Metro debentures or
United Metro common stock in exchange for Kiewit debentures would, depending on
such holder's particular circumstances, recognize either (A) a dividend in an
amount equal to the fair market value of the United Metro debentures or United
Metro common stock so received or (B) capital gain or loss equal to the
difference between the fair market value of the United Metro debentures or
United Metro common stock on the date of the exchange and the holder's tax basis
in the Kiewit debentures exchanged therefor. Such capital gain or loss would be
long-term capital gain or loss if the Kiewit debentures exchanged were held for
more than one year at the time of the exchange.

NON-U.S. PERSONS

If the exchange qualifies as a transaction described in Sections 355 and
368 of the Code, the receipt of United Metro debentures or United Metro common
stock and new reduced principal amount Kiewit debentures by a non-U.S. person
who exchanges Kiewit debentures will not be subject to withholding of United
States federal income tax. Even if the exchange does not qualify under Sections
355 and 368, a non-U.S. person generally would not be subject to withholding of
United States federal income tax, provided that (i) any gain recognized on the
exchange of Kiewit debentures is not effectively connected with the conduct by
such non-U.S. person of a trade or business in the United States, (ii) the
non-U.S. person (if an individual) is not present in the United States for 183
days or more during his or her taxable year and (iii) certain certification
requirements are met.

REPORTING REQUIREMENTS

Applicable Treasury regulations require that each holder of Kiewit
debentures attach to his or her federal income tax return for the taxable year
in which the holder receives the United Metro debentures or United Metro common
stock and new reduced principal amount Kiewit debentures in exchange for Kiewit
debentures a statement indicating that Sections 355 and 368 of the Code apply to
the exchange. Kiewit will provide each holder with the information necessary to
comply with this requirement.

BECAUSE OF THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, EACH HOLDER OF KIEWIT
DEBENTURES IS URGED TO CONSULT HIS OR HER TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO THAT HOLDER OF THE DEBENTURE EXCHANGE OFFER, INCLUDING THE
EFFECT OF UNITED STATES FEDERAL, STATE AND LOCAL, AND FOREIGN AND OTHER TAX
LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN SUCH LAWS.

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MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material Canadian federal income tax
consequences generally applicable under the Income Tax Act (Canada) to a holder
of Kiewit convertible debentures who participates in the debenture exchange
offer. More particularly, it is applicable to a holder who, for purposes of the
Act: (1) is a resident of Canada, (2) holds Kiewit debentures and will hold the
shares of United Metro common stock and new reduced principal amount Kiewit
debentures as capital property, (3) deals at arm's length with Kiewit, (4)
acquired the Kiewit debentures by virtue of employment in Canada with Kiewit or
a subsidiary of Kiewit, and (5) will, immediately following completion of the
debenture exchange offer, continue to be employed by Kiewit or a subsidiary of
Kiewit. It is assumed that the debentureholder is not and will not be an
employee of United Metro or a subsidiary of United Metro. It is also assumed
that all of the outstanding Kiewit convertible debentures were issued at a
premium above par.

This summary is based on the current provisions of the Act and the
regulations under the Act, specific proposals to amend the Act or the
regulations publicly announced by the Minister of Finance prior to the date of
this offering circular-prospectus and an understanding of the current published
administrative and assessing practices of the Canada Customs and Revenue Agency,
commonly referred to as Revenue Canada. Except for those tax proposals, this
summary does not take into account or anticipate any proposed changes to the law
or to Revenue Canada's administrative and assessing practices, whether by
legislative, governmental or judicial action.

THE FOLLOWING DISCUSSION IS INTENDED TO BE A GENERAL DESCRIPTION OF THE
MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES GENERALLY APPLICABLE TO A
CANADIAN DEBENTUREHOLDER BY REASON OF THE DEBENTURE EXCHANGE OFFER. IT IS NOT
INTENDED TO BE, NOR SHOULD IT BE CONSTRUED AS BEING, LEGAL OR TAX ADVICE TO ANY
PARTICULAR DEBENTURE-HOLDER. EACH CANADIAN HOLDER IS URGED TO CONSULT THE
HOLDER'S OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DEBENTURE
EXCHANGE OFFER TO THAT HOLDER, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
PROVINCIAL, LOCAL OR FOREIGN LAWS AND OF CHANGES IN APPLICABLE TAX LAWS.

EXCHANGE OF OUTSTANDING KIEWIT DEBENTURES FOR UNITED METRO COMMON STOCK AND NEW
REDUCED PRINCIPAL AMOUNT KIEWIT DEBENTURES

A debentureholder will generally realize a capital gain (or loss) to the
extent that the Canadian dollar equivalent of the U.S. dollar principal amount
of the outstanding Kiewit debentures the holder exchanges on the date of the
exchange offer is greater (or less) than the holder's adjusted cost base of
those debentures in Canadian dollars on the date(s) the debentures were
acquired. The holder's adjusted cost base of his or her outstanding Kiewit
debentures will not include the amount of the cost of the debentures, if any, in
Canadian dollars attributable to the conversion right under those debentures.
This gain or loss must be adjusted to reflect any increase or decrease in the
fair market value of the debentures since the date of issue which is not
attributable to foreign exchange fluctuations or to the conversion right.

The tax treatment of the exchange of the conversion right in the debenture
exchange offer is based on a value test that requires that no economic advantage
be derived by the holder in the exchange. The value test may be satisfied if:
(1) the principal amount of the new Kiewit debentures is reduced by an amount
equal to the value of the United Metro common stock received in the debenture
exchange offer, and (2) immediately following the exchange, the difference
between the value of the Kiewit common stock issuable on conversion of the new
Kiewit debentures and the principal amount of those debentures does not exceed
the difference, immediately prior to the exchange, between the value of the
Kiewit common stock issuable on conversion of the outstanding Kiewit debentures
and the principal amount of those debentures.

If the value test is satisfied:

If the value test is satisfied, a debentureholder should not, other than in
the event he or she realizes a capital gain or loss described above, recognize
any income, gain or loss for Canadian federal income tax purposes in the
debenture exchange offer. In particular, a debentureholder should not recognize
a taxable employee stock option benefit.

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<PAGE> 97

For purposes of the employee stock option rules, the conversion right under
the new Kiewit debentures will be treated as a continuation of an embedded stock
option originally granted with the outstanding Kiewit convertible debentures.
Any stock option benefit will generally be recognized for Canadian tax purposes
when the conversion right is exercised or disposed of or when the employee dies.
The cost of the United Metro common stock will be equal to the amount of the
reduction in the principal amount of the outstanding Kiewit debentures in
Canadian dollars at the time of the exchange. The cost of the new Kiewit
convertible debentures will be equal to their principal amount in Canadian
dollars at the time of the exchange.

If the value test is not satisfied:

If the value test is not satisfied, the debentureholder will recognize a
taxable employee stock option benefit. That benefit will be equal to the amount
by which (1) the total value of (x) the United Metro common stock and (y) the
value of the new reduced principal amount Kiewit debentures in excess of their
principal amount, arising by reason of the conversion right, exceeds (2) the
amount of the reduction of the principal amount of the new Kiewit debentures.
The benefit will be reduced by the amount of the premium paid for the
debentures, if any, attributable to the conversion right under those debentures,
referred to as the conversion premium. This benefit will be included in income
from the holder's employment in Canada. An offsetting deduction equal to
one-quarter of the benefit will be available if, at the time the outstanding
Kiewit debentures were acquired, the value of the Kiewit stock into which the
debentures were convertible was less than the amount payable by the holder to
acquire the stock (including the principal amount of the debentures) and the
conversion premium.

The cost of the United Metro common stock will be equal to the amount of
the reduction in the principal amount of the outstanding Kiewit debentures in
Canadian dollars at the time of the exchange, plus any amount added as described
below. The cost of the new Kiewit convertible debentures will be equal to their
principal amount in Canadian dollars at the time of the exchange, plus any
amount added as described below. The full amount of the taxable stock option
benefit (prior to the one-quarter deduction, if any) and the conversion premium
will be added to the cost of the United Metro common stock and the new Kiewit
convertible debentures, allocated in a reasonable manner in accordance with
their values at the time of the exchange. This amount will be taken into account
in computing any future gains and losses from disposition of the United Metro
common stock or new Kiewit convertible debentures and any future taxable
employment benefits related to the conversion right under the new Kiewit
debentures.

EXCHANGE OF OUTSTANDING KIEWIT DEBENTURES FOR UNITED METRO CONVERTIBLE
DEBENTURES

If a debentureholder who is a Kiewit employee exchanges outstanding Kiewit
debentures for United Metro convertible debentures, he or she will realize a
capital gain (or loss) to the extent that the Canadian dollar equivalent of the
U.S. dollar principal amount of the outstanding Kiewit debentures on the date of
the exchange offer is greater (or less) than the holder's adjusted cost base of
those debentures in Canadian dollars on the date(s) the debentures were
acquired.

Kiewit employees will be required to sell United Metro debentures back to
United Metro following the spin-off for an amount equal to their principal
amount plus accrued interest. Any amount received by a debentureholder upon
disposition of United Metro debentures in respect of the principal amount of the
debentures will be treated as proceeds of disposition of the debentures.
Consequently, the debentureholder will realize a capital gain (or loss) to the
extent that the proceeds of disposition in Canadian dollars at the time of the
disposition is greater (or less than) the holder's adjusted cost base of those
debentures. Any amount received in respect of accrued interest will be included
in income.

89
<PAGE> 98

NEBRASKA TAX LETTER REQUEST

Kiewit has applied to the State of Nebraska Department of Revenue for a
letter to the effect that even though Kiewit and United Metro will become
independent companies if the spin-off is consummated, Kiewit and United Metro
generally would continue to be considered the same corporation for purposes of
the Nebraska capital gain exclusion provisions. Assuming that the letter is
obtained, provided certain requirements are met and an appropriate election is
made, the Nebraska capital gain exclusion generally would be available for the
sale of United Metro common stock by residents of Nebraska. The failure to
receive such a letter could result in substantial additional tax cost of the
spin-off to a substantial number of Kiewit stockholders upon their ultimate
disposition of United Metro common stock. Accordingly, if Kiewit does not
receive the requested letter from the Nebraska Department of Revenue, or an
opinion of tax counsel generally to the same effect as the requested letter, the
Kiewit board of directors may review the benefits of the spin-off in light of
the failure to receive the letter or opinion, and could determine to abandon,
defer or modify the terms of the spin-off if it is determined that such action
would be in the best interests of all Kiewit stockholders.

The above discussion is not intended to be, nor should it be construed as
being, legal or tax advice to any particular securityholder. Each securityholder
is urged to consult his or her own tax advisor as to any applicable state and
local or other tax laws.

LEGAL MATTERS

The validity of the securities being issued in the debenture exchange offer
will be passed upon by Willkie Farr & Gallagher, 787 Seventh Avenue, New York,
New York 10019.

EXPERTS

The audited financial statements and the financial statement schedules
included in this offering circular-prospectus on Form S-4 have been audited by
various independent accountants. The companies and periods covered by those
audits are indicated in the individual accountants' reports. Such financial
statements have been so included in reliance on the reports of the various
independent accountants given on the authority of such firms as experts in
auditing and accounting.

90
<PAGE> 99

WHERE YOU CAN FIND MORE INFORMATION

Kiewit files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information filed by Kiewit at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Kiewit's SEC filings are also available to the public
from commercial document retrieval services and at the web site maintained by
the SEC at "http://www.sec.gov."

Following the spin-off, United Metro will be required to file annual,
quarterly and current reports, proxy statements and other information with the
SEC.

United Metro and Kiewit filed a registration statement on Form S-4 to
register with the SEC the United Metro convertible debentures and common stock
and the new reduced principal amount Kiewit convertible debentures to be issued
to Kiewit stockholders who tender their Kiewit debentures in the debenture
exchange offer and whose Kiewit debentures are accepted for exchange. Kiewit
will also file a tender offer statement on Schedule TO with respect to the
debenture exchange offer. This offering circular-prospectus is a part of that
registration statement and constitutes an offering circular of Kiewit in
addition to being a prospectus of United Metro. As allowed by SEC rules, this
offering circular-prospectus does not contain all the information you can find
in the registration statement, the exhibits to the registration statement or the
tender offer statement.

You should rely only on the information contained in this offering
circular-prospectus or in the letter of transmittal in connection with the
debenture exchange offer. Neither Kiewit nor United Metro has authorized anyone
to provide you with information that is different from what is contained in this
offering circular-prospectus. This offering circular-prospectus is dated
, 2000. You should not assume that the information contained in this
offering circular-prospectus is accurate as of any date other than such date,
and neither the mailing of this offering circular-prospectus to debentureholders
nor the issuance of United Metro common stock, United Metro debentures or Kiewit
debentures shall create any implication to the contrary.

This offering circular-prospectus does not constitute an offer to sell or a
solicitation of any offer to buy any of the United Metro convertible debentures,
Kiewit convertible debentures or United Metro common stock in any jurisdiction
to any person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Kiewit is not aware of any jurisdiction where the making of the
exchange offer or the acceptance thereof would not be in compliance with
applicable law. If Kiewit becomes aware of any jurisdiction where the making of
the exchange offer or acceptance thereof would not be in compliance with any
valid applicable law, Kiewit will make a good faith effort to comply with such
law. If, after such good faith effort, Kiewit cannot comply with such law, the
exchange offer will not be made to, nor will tenders be accepted from or on
behalf of, Kiewit debentureholders in any such jurisdiction.

91
<PAGE> 100

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Financial Statements as of December 26, 1998
and December 27, 1997 and for the three years in the
period ended December 26, 1998:
Consolidated Statements of Earnings......................... F-3
Consolidated Balance Sheets................................. F-4
Consolidated Statements of Cash Flows....................... F-6
Consolidated Statements of Changes in Redeemable Common
Stock and Comprehensive Income............................ F-8
Notes to Consolidated Financial Statements.................. F-10
Report of Independent Accountants on Consolidated Financial
Statement Schedule........................................ F-24
Consolidated Financial Statement Schedule for the three
years in the period ended December 26, 1998............... F-25
Consolidated Condensed Financial Statements as of September
30, 1999 and for the three and nine months ended September
30, 1999 and 1998:
Consolidated Condensed Statements of Earnings............... F-26
Consolidated Condensed Balance Sheet........................ F-27
Consolidated Condensed Statements of Cash Flows............. F-28
Notes to Consolidated Condensed Financial Statements........ F-29
</TABLE>

F-1
<PAGE> 101

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholders
Peter Kiewit Sons', Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of earnings, changes in redeemable common stock
and comprehensive income, and of cash flows present fairly, in all material
respects, the consolidated financial position of Peter Kiewit Sons', Inc. and
Subsidiaries at December 26, 1998, and December 27, 1997, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 26, 1998, in conformity with accounting principles
generally accepted in the United States. These 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 of these financial statements in accordance with auditing standards
generally accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP

Omaha, Nebraska
March 18, 1999, except as to Note 2,
Reclassifications, as to which the
date is February 11, 2000.

F-2
<PAGE> 102

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE YEARS ENDED DECEMBER 26, 1998

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
Revenue..................................................... $ 3,379 $ 2,742 $ 2,303
Cost of Revenue............................................. (3,095) (2,408) (2,078)
------- ------- -------
284 334 225
General and Administrative Expenses......................... (142) (148) (118)
------- ------- -------
Operating Earnings.......................................... 142 186 107
Other Income (Expense):
Investment Income and Equity Earnings..................... 17 20 19
Interest Expense.......................................... (5) (3) (4)
Other, net................................................ 61 61 58
------- ------- -------
73 78 73
------- ------- -------
Earnings Before Income Taxes and Minority Interest.......... 215 264 180
Minority Interest in Net Income of Subsidiaries............. (1) (2) --
Provision for Income Taxes.................................. (78) (107) (72)
------- ------- -------
Net Earnings................................................ $ 136 $ 155 $ 108
======= ======= =======
Net Earnings per Share:
Basic..................................................... $ 4.07 $ 4.00 $ 2.53
======= ======= =======
Diluted................................................... $ 4.02 $ 3.84 $ 2.44
======= ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.
F-3
<PAGE> 103

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 26, 1998 AND DECEMBER 27, 1997

<TABLE>
<CAPTION>
1998 1997
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 227 $ 232
Marketable securities..................................... 9 26
Receivables, less allowance of $5 and $9.................. 457 431
Unbilled contract revenue................................. 88 88
Contract costs in excess of related revenue............... 26 31
Investment in construction joint ventures................. 190 176
Deferred income taxes..................................... 64 61
Other..................................................... 15 14
------ ------
Total Current Assets........................................ 1,076 1,059
Property, Plant and Equipment, at cost:
Land...................................................... 19 20
Buildings................................................. 42 40
Equipment................................................. 640 594
------ ------
701 654
Less accumulated depreciation and amortization............ (489) (453)
------ ------
Net Property, Plant and Equipment........................... 212 201
Other Assets................................................ 91 82
------ ------
$1,379 $1,342
====== ======
</TABLE>

See accompanying notes to consolidated financial statements.
F-4
<PAGE> 104

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 26, 1998 AND DECEMBER 27, 1997

<TABLE>
<CAPTION>
1998 1997
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
LIABILITIES AND REDEEMABLE COMMON STOCK
Current Liabilities:
Accounts payable, including retainage of $47 and $37...... $ 183 $ 208
Current portion of long-term debt......................... 8 5
Accrued costs on construction contracts................... 125 96
Billings in excess of related costs and earnings.......... 132 121
Accrued insurance costs................................... 81 76
Other..................................................... 63 73
------ ------
Total Current Liabilities................................... 592 579
Long-term Debt, less current portion........................ 13 22
Deferred Taxes.............................................. 1 --
Other Liabilities........................................... 70 78
Minority Interest........................................... 12 11

Preferred Stock, no par value, 250,000 shares authorized, no
shares outstanding in 1998 and 1997....................... -- --
Redeemable Common Stock ($576 million aggregate redemption
value):
Common Stock, 125 million shares authorized par $0.01 and
$.0625, 35,692,820 and 40,529,372 outstanding.......... -- 1
Additional paid-in capital................................ 161 117
Accumulated other comprehensive income.................... (22) (18)
Retained earnings......................................... 552 552
------ ------
Total Redeemable Common Stock............................... 691 652
------ ------
$1,379 $1,342
====== ======
</TABLE>

See accompanying notes to consolidated financial statements.
F-5
<PAGE> 105

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 26, 1998

<TABLE>
<CAPTION>
1998 1997 1996
---- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash flows from operations:
Net earnings.............................................. $136 $ 155 $ 108
Adjustments to reconcile net earnings to net cash provided
by operations:
Depreciation and amortization.......................... 71 67 62
Gain on sale of property, plant and equipment and other
investments........................................... (20) (24) (17)
Equity (earnings) loss, net of distributions........... -- 11 (3)
Change in other noncurrent liabilities................. (7) 18 18
Deferred income taxes.................................. 6 -- (6)
Change in working capital items:
Receivables.......................................... (6) (114) 37
Costs and earnings in excess of billings on
uncompleted construction contracts.................. 5 (39) (1)
Investment in construction joint ventures............ (13) (82) (18)
Other current assets................................. -- 7 2
Accounts payable..................................... (27) 27 (18)
Accrued construction costs and billings in excess of
revenue on uncompleted contracts.................... 28 102 1
Other liabilities.................................... 5 23 8
Other................................................ (3) 8 (7)
---- ----- -----
Net cash provided by operations............................. 175 159 166
Cash flows from investing activities:
Proceeds from sales and maturities of marketable
securities............................................. 24 73 160
Purchases of marketable securities........................ (7) (39) (157)
Proceeds from sale of property, plant and equipment....... 25 36 25
Capital expenditures...................................... (87) (107) (72)
Investments and acquisitions, net of cash acquired........ (13) (21) (6)
Additions to notes receivable............................. (20) -- --
Payments received on notes receivable..................... 5 -- --
Sale of note receivable and other......................... -- -- 14
---- ----- -----
Net cash used in investing activities....................... (73) (58) (36)
</TABLE>

See accompanying notes to consolidated financial statements.
F-6
<PAGE> 106

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 26, 1998

<TABLE>
<CAPTION>
1998 1997 1996
----- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash flows from financing activities:
Long-term debt borrowings................................. $ 4 $ 12 $ 6
Short-term debt borrowings, net........................... (5) -- (45)
Payments on long-term debt................................ -- -- (2)
Issuances of common stock................................. 67 34 27
Repurchases of common stock............................... (35) (2) (5)
Dividends paid............................................ (13) (12) (12)
Exchange of Class C Stock for Level 3's Class D Stock,
net.................................................... (122) (72) (20)
----- ---- ----
Net cash used in financing activities....................... (104) (40) (51)
Effect of exchange rates on cash............................ (3) (2) --
----- ---- ----
Net change in cash and cash equivalents..................... (5) 59 79
Cash and cash equivalents at beginning of year.............. 232 173 94
----- ---- ----
Cash and cash equivalents at end of year.................... $ 227 $232 $173
===== ==== ====
Supplemental disclosures of cash flow information:
Taxes paid................................................ $ 91 $ 94 $ 78
Interest paid............................................. 5 2 2
Non-cash financing activities:
Conversion of convertible debentures to common stock...... $ (10) $ -- $ --
</TABLE>

See accompanying notes to consolidated financial statements.
F-7
<PAGE> 107

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE COMMON STOCK AND
COMPREHENSIVE INCOME
FOR THE THREE YEARS ENDED DECEMBER 26, 1998

<TABLE>
<CAPTION>
ACCUMULATED TOTAL
REDEEMABLE ADDITIONAL OTHER REDEEMABLE
COMMON PAID-IN COMPREHENSIVE RETAINED COMMON
STOCK CAPITAL INCOME EARNINGS STOCK
---------- ---------- ------------- -------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 30, 1995.......... $1 $ 78 $ (4) $392 $467
Dividends(a).......................... -- -- -- (13) (13)
Issuance of stock..................... -- 27 -- -- 27
Repurchase of stock................... -- (1) -- (4) (5)
Exchange of Class C Stock for Class D
Stock, net.......................... -- (4) -- (16) (20)
Comprehensive income:
Net earnings.......................... -- -- -- 108 108
Other comprehensive income:
Change in unrealized holding loss,
net of tax....................... -- -- (2) -- (2)
----
Total other comprehensive income.... (2)
----
Total comprehensive income............ -- -- -- -- 106
-- ---- ---- ---- ----
BALANCE AT DECEMBER 28, 1996.......... 1 100 (6) 467 562
-- ---- ---- ---- ----
Dividends(a).......................... (13) (13)
Issuance of stock..................... -- 34 -- -- 34
Repurchase of stock................... -- -- -- (2) (2)
Exchange of Class C stock for Class D
Stock, net.......................... -- (17) -- (55) (72)
Comprehensive income:
Net earnings.......................... -- -- -- 155 155
Other comprehensive income:
Foreign currency adjustment......... -- -- (2) -- (2)
Change in unrealized holding loss,
net of tax....................... -- -- (10) -- (10)
----
Total other comprehensive income.... (12)
----
Total comprehensive income............ -- -- -- -- 143
-- ---- ---- ---- ----
BALANCE AT DECEMBER 27, 1997.......... 1 117 (18) 552 652
-- ---- ---- ---- ----
</TABLE>

See accompanying notes to consolidated financial statements.
F-8
<PAGE> 108

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE COMMON STOCK AND
COMPREHENSIVE INCOME
FOR THE THREE YEARS ENDED DECEMBER 26, 1998

- ---------------
(a) Dividends include $.225, $.20 and $.175 for dividends declared in 1998, 1997
and 1996 but paid in January of the following year.

See accompanying notes to consolidated financial statements.
F-9
<PAGE> 109

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION:

Peter Kiewit Sons', Inc. (the "Company") was formed by its former parent,
Level 3 Communications, Inc. (formerly Peter Kiewit Sons', Inc.) ("Level 3"), in
connection with a transaction (the "Transaction") intended to separate the
Construction and Materials Businesses and the diversified business of Level 3
into two independent companies. On March 31, 1998, pursuant to the terms of a
Separation Agreement between the Company, Level 3 and certain other parties (the
"Separation Agreement"), Level 3 consummated the Transaction by: (i)
transferring 100 shares of the $100 par value common stock ("KCG Stock") of
Kiewit Construction Group Inc. ("KCG"), representing all of the issued and
outstanding shares of KCG Stock, as well as certain other assets and liabilities
related to the construction and materials businesses which together comprised
the Construction and Mining Group (the "Construction & Mining Group"), to the
Company in exchange for 30,711,680 shares of the $.01 par value common stock of
the Company ("Common Stock") (125 million shares authorized) and (ii)
distributing 100% of its shares of the Common Stock to the holders of Level 3's
$0.0625 par value Class C Construction & Mining Group Restricted Redeemable
Convertible Exchangeable Common Stock ("Class C Stock") as of March 31, 1998, in
exchange for such shares of Class C Stock. Prior to the Transaction, the Company
was a wholly-owned subsidiary of Level 3. As a result of the Transaction, the
Company became owned by the former holders of Level 3's Class C Stock. Prior to
consummation of the Transaction, Level 3's Class C Common stock was convertible
to Level 3's Class D Common Stock ("Class D Stock"). As the Construction &
Mining Group comprised all of the net assets and operations of the Company at
the time of the Transaction, the Construction & Mining Group is the Company's
predecessor. Thus, the term "the Company", as used herein, refers to Peter
Kiewit Sons', Inc., its predecessor, and its consolidated subsidiaries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation:

The consolidated financial statements include the accounts of the Company
and subsidiaries in which it has control, which are engaged in enterprises
primarily related to construction and materials. Investments in construction
joint ventures and partnerships in which the Company exercises significant
influence over operating and financial policies are accounted for by the equity
method. The Company accounts for its share of the operations of the construction
joint ventures and partnerships on a pro rata basis in the consolidated
statements of earnings. Investments in materials limited liability companies in
which the Company exercises significant influence over operations and financial
policies are accounted for by the equity method. The Company accounts for its
share of a materials joint venture on a pro rata basis. All significant
intercompany accounts and transactions have been eliminated.

Construction Contracts:

The Company operates as a general contractor throughout North America and
engages in various types of construction projects for both public and private
owners. Credit risk is minimal with public (government) owners since the Company
ascertains that funds have been appropriated by the governmental project owner
prior to commencing work on public projects. Most public contracts are subject
to termination at the election of the government. However, in the event of
termination, the Company is entitled to receive the contract price on completed
work and reimbursement of termination-related costs. Credit risk with private
owners is minimized because of statutory mechanics liens, which give the Company
high priority in the event of lien foreclosures following financial difficulties
of private owners.

The construction industry is highly competitive and lacks firms with
dominant market power. A substantial portion of the Company's business involves
construction contracts obtained through competitive bidding. The volume and
profitability of the Company's construction work depends to a significant extent
upon the general state of the economies of North America and the volume of work
available to contractors. The

F-10
<PAGE> 110
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Company's construction operations could be adversely affected by labor stoppages
or shortages, adverse weather conditions, shortages of supplies or other
governmental action.

The Company uses the percentage of completion method of accounting on
long-term construction contracts and joint ventures. Under the percentage of
completion method, an estimated percentage for each contract, as determined by
the Company's engineering estimate based on the amount of work performed, is
applied to total estimated profit. Provision is made for the entire amount of
future estimated losses on contracts and joint ventures in progress; claims for
additional contract compensation, however, are not reflected in the accounts
until the year in which such claims are allowed. Revisions in cost and profit
estimates during the course of the work are reflected in the accounting period
in which the facts which require the revision become known. It is at least
reasonably possible that cost and profit estimates will be revised in the
near-term.

In accordance with industry practice, amounts realizable and payable under
contracts which may extend beyond one year are included in current assets and
liabilities.

Depreciation:

Property, plant and equipment are recorded at cost. Depreciation for the
majority of the Company's property, plant and equipment is calculated using
accelerated methods.

Intangible Assets:

Intangible assets primarily consist of amounts allocated upon purchase of
existing operations. Those assets are amortized on a straight-line basis over
the expected period of benefit, which does not exceed 20 years.

Long-Lived Assets:

The Company reviews the carrying amount of long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Measurement of any impairment would include a comparison
of the present value of the estimated future operating cash flows anticipated to
be generated during the remaining life of the assets to the net carrying value
of the assets.

Foreign Currencies:

The local currencies of foreign subsidiaries are the functional currencies
for financial reporting purposes. Assets and liabilities are translated into
U.S. dollars at year end exchange rates. Revenue and expenses are translated
using average exchange rates prevailing during the year. Gains or losses
resulting from currency translation are recorded as adjustments to accumulated
other comprehensive income.

Earnings Per Share:

Basic earnings per share have been computed using the weighted average
number of shares outstanding during each period. Diluted earnings per share give
effect to convertible debentures considered to be dilutive common stock
equivalents. The potentially dilutive convertible debentures are calculated in
accordance with the "if converted" method. This method assumes that the
after-tax interest expense associated with the debentures is an addition to
income and the debentures are converted into equity with the resulting common
shares being aggregated with the weighted average shares outstanding.

F-11
<PAGE> 111
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Net earnings available to common stockholders (in
millions).............................................. $ 136 $ 155 $ 108
Add: Interest expense, net of tax effect, associated with
convertible debentures................................. * 1 *
------ ------ ------
Net earnings for diluted shares.......................... $ 136 $ 156 $ 108
====== ====== ======
Total number of weighted average shares outstanding used
to compute basic earnings per share (in thousands)..... 33,396 38,912 42,624
Additional dilutive shares assuming conversion of
convertible debentures................................. 432 1,764 1,748
------ ------ ------
Total number of shares used to compute diluted earnings
per share.............................................. 33,828 40,676 44,372
====== ====== ======
Net earnings
Basic earnings per share............................... $ 4.07 $ 4.00 $ 2.53
====== ====== ======
Diluted earnings per share............................. $ 4.02 $ 3.84 $ 2.44
====== ====== ======
</TABLE>

- ---------------
* Interest expense attributable to convertible debentures was less than $.5
million.

Income Taxes:

Deferred income taxes are provided for the temporary differences between
the financial reporting basis and the tax basis of the Company's assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

Use of Estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Recent Pronouncements:

During 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", and
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information". These standards expand and modify disclosures, but have no effect
upon measurement of amounts included in the consolidated financial statements.
Disclosures of prior years have been restated to conform to the requirements of
these standards.

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments and
for hedging activities. This statement is effective for all fiscal years
beginning after June 15, 2000. Management does not expect adoption of this
statement to materially affect the Company's financial statements as the Company
has no derivative instruments or hedging activities.

F-12
<PAGE> 112
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Stock Split:

On January 11, 1999, the Company declared a four-for-one stock split in the
form of a stock dividend of three shares of Common Stock for each share issued
and outstanding, payable on January 15, 1999. All share and per share amounts
for all periods presented have been retroactively restated to reflect the stock
split.

Fiscal Year:

The Company has a 52-53 week fiscal year which ends on the last Saturday in
December. 1998, 1997 and 1996 were all 52 week years.

Reclassifications:

When appropriate, items within the consolidated financial statements have
been reclassified in the previous periods to conform to current year
presentation. Additionally, these financial statements differ from those
originally issued in 1999 because of certain reclassifications related to the
presentation of operating results of materials limited liability companies. Such
reclassifications had no impact on redeemable common stock or net earnings.

3. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:

The following methods and assumptions were used to determine classification
and fair values of financial instruments:

Cash and Cash Equivalents:

Cash equivalents generally consist of funds invested in Wilmington
Trust-Money Market Portfolio and highly liquid instruments purchased with an
original maturity of three months or less. The securities are stated at cost,
which approximates fair value.

Marketable Securities and Non-current Investments:

The Company has classified all marketable securities and marketable
non-current investments not accounted for under the equity method as
available-for-sale. The amortized cost of the securities used in computing
unrealized and realized gains and losses is determined by specific
identification. Fair values are estimated based on quoted market prices for the
securities on hand or for similar investments. Net unrealized holding gains and
losses are reported as a separate component of accumulated other comprehensive
income, net of tax.

F-13
<PAGE> 113
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED:
The following summarizes the amortized cost, unrealized holding gains and
losses, and estimated fair values of marketable securities and marketable
non-current investments at December 26, 1998 and December 27, 1997:

<TABLE>
<CAPTION>
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
1998
Marketable securities:
U.S. debt securities.............................. $ 9 $ -- $ -- $ 9
--- ---- ---- ---
$ 9 $ -- $ -- $ 9
=== ==== ==== ===
Non-current investments:
Equity securities................................. $30 $ -- $(21) $ 9
=== ==== ==== ===
1997
Marketable securities:
Mutual Funds:
Short-term government.......................... $10 $ -- $ -- $10
Intermediate term bond......................... 1 -- -- 1
Tax exempt..................................... 1 -- -- 1
U.S. debt securities.............................. 14 -- -- 14
--- ---- ---- ---
$26 $ -- $ -- $26
=== ==== ==== ===
Non-current investments:
Equity securities................................. $30 $ -- $(18) $12
=== ==== ==== ===
</TABLE>

For debt securities, amortized costs do not vary significantly from
principal amounts. Realized gains and losses on sales of marketable securities
were each less than $1 million in 1998, 1997 and 1996.

The contractual maturities of the debt securities are from one to five
years.

Retainage on Construction Contracts:

Receivables at December 26, 1998 and December 27, 1997 include
approximately $86 million and $88 million of retainage on uncompleted projects,
the majority of which is expected to be collected within one year. Included in
the retainage amounts are $26 million and $18 million of securities which are
being held by the owners of various construction projects in lieu of retainage.
Also included in accounts receivable are $15 million and $26 million of
securities held by the owners which are now due as the contracts are completed.
These securities are carried at fair value which is determined based on quoted
market prices for the securities on hand or for similar investments. Net
unrealized holding gains and losses, if any, are reported as a separate
component of accumulated other comprehensive income, net of tax.

Long-term Debt:

The fair value of debt was estimated using the incremental borrowing rates
of the Company for debt of the same remaining maturities and approximates the
carrying amount.

F-14
<PAGE> 114
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. INVESTMENT IN CONSTRUCTION JOINT VENTURES AND PARTNERSHIP:

The Company has entered into a number of construction joint venture
arrangements and owns a 49% interest in a partnership, Aker-Gulf Marine. The
partnership engages in the engineering, construction, fabrication and
installation of steel and concrete structures. Under these arrangements, if one
venturer is financially unable to bear its share of the costs, the other
venturers will be required to pay those costs.

Summary joint venture and partnership financial information follows:

<TABLE>
<CAPTION>
FINANCIAL POSITION 1998 1997
- ------------------ --------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C>
TOTAL JOINT VENTURES
Current assets.............................................. $ 917 $ 700
Other assets (principally construction equipment)........... 145 148
------ -----
1,062 848
Current liabilities......................................... (703) (539)
Other liabilities........................................... -- (6)
------ -----
Net assets................................................ $ 359 $ 303
====== =====
COMPANY'S SHARE
Equity in net assets........................................ $ 199 $ 174
Receivable from joint ventures and partnership.............. 15 20
------ -----
214 194
Construction partnership (Note 5)........................... (24) (18)
------ -----
Investment in construction joint ventures................. $ 190 $ 176
====== =====
</TABLE>

<TABLE>
<CAPTION>
OPERATIONS 1998 1997 1996
- ---------- ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
TOTAL JOINT VENTURES
Revenue.................................................. $2,237 $1,635 $1,493
Costs.................................................... 2,082 1,461 1,320
------ ------ ------
Operating income....................................... $ 155 $ 174 $ 173
====== ====== ======
COMPANY'S SHARE
Revenue.................................................. $1,116 $ 857 $ 749
Costs.................................................... 1,024 753 679
------ ------ ------
Operating income....................................... $ 92 $ 104 $ 70
====== ====== ======
</TABLE>

Depreciation is computed by the joint ventures and partnership using
straight-line and declining balance methods over the estimated useful life of
the assets which range from 2 to 20 years.

F-15
<PAGE> 115
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. OTHER ASSETS:

Other assets consist of the following at December 26, 1998 and December 27,
1997:

<TABLE>
<CAPTION>
1998 1997
------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Marketable securities (note 3)............................. $ 9 $12
Equity method investments.................................. 14 13
Construction partnership (note 4).......................... 24 18
Goodwill, net of accumulated amortization of $12 and $10... 26 23
Deferred income taxes...................................... -- 12
Notes receivable........................................... 18 4
--- ---
$91 $82
=== ===
</TABLE>

The marketable securities are an investment in a publicly traded company.

The notes receivable are primarily non-interest bearing employee notes.

The equity method investments consist of a 33% interest in a concrete
products business that is not publicly traded and does not have a readily
determinable market value and a 40% interest in Pacific Rock Products, L.L.C.
and a 40% interest in Pacific Rock Products Trucking, L.L.C. (formerly River
City Machinery, L.L.C.) (collectively "Pacific Rock"). Pacific Rock is engaged
in the mining of rock products.

Financial data relating to the equity method investments are summarized
below:

<TABLE>
<CAPTION>
1998 1997
------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Current assets............................................. $ 28 $ 31
Property, plant and equipment, net......................... 38 36
Other noncurrent assets.................................... 1 1
---- ----
67 68
---- ----
Current liabilities........................................ (11) (10)
Noncurrent liabilities..................................... (13) (19)
---- ----
Net assets............................................... $ 43 $ 39
==== ====
Equity in net assets....................................... $ 14 $ 13
==== ====
</TABLE>

<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Revenue................................................ $ 80 $ 81 $ 61
==== ==== ====
Gross margin........................................... $ 21 $ 19 $ 12
==== ==== ====
Net earnings........................................... $ 16 $ 13 $ 8
==== ==== ====
Equity in net earnings................................. $ 6 $ 5 $ 3
==== ==== ====
</TABLE>

F-16
<PAGE> 116
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT:

At December 26, 1998 and December 27, 1997, long-term debt consisted of the
following:

<TABLE>
<CAPTION>
1998 1997
------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C>
7.35% - 8.03% Convertible debentures, 2007 - 2008........... $ 8 $13
BICC Cables Corp. note...................................... 6 6
Minority stockholder note................................... -- 5
Stockholder notes and other................................. 7 3
--- ---
21 27
Less current portion........................................ 8 5
--- ---
$13 $22
=== ===
</TABLE>

The convertible debentures are convertible during October of the fifth year
preceding their maturity date. Each annual series may be redeemed in its
entirety prior to the due date except during the conversion period. Debentures
were converted into 1,542,076 and 205,256 shares of stock in 1998 and 1997,
respectively. At December 26, 1998, 707,836 shares of stock were reserved for
future conversions.

In 1997, the Company borrowed $6 million from BICC Cables Corp. ("BICC").
BICC is affiliated with a joint venture partner of the Company. The note is
payable in full in 1999 and requires quarterly interest payments at a rate equal
to one month LIBOR. The proceeds from the note were used for working capital
requirements.

In 1997, the Company issued a note payable in the amount of $5 million,
payable upon demand to the minority stockholder of an 80% owned subsidiary. The
note and accrued interest were paid in 1998.

Scheduled maturities of long-term debt are as follows (in millions):
1999 -- $8; 2000 -- $3; 2001 -- $1; 2002 -- $1; 2003 -- $- and 2004 and
thereafter -- $8.

7. INCOME TAXES:

An analysis of the (provision) benefit for income taxes relating to
earnings before minority interest and income taxes for the three years ended
December 26, 1998 follows:

<TABLE>
<CAPTION>
1998 1997 1996
---- ----- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Current:
U.S. federal.............................................. $(55) $ (88) $(62)
Foreign................................................... (5) (9) (5)
State..................................................... (12) (10) (11)
---- ----- ----
(72) (107) (78)
Deferred:
U.S. federal.............................................. (8) 1 7
Foreign................................................... 2 (1) (3)
State..................................................... -- -- 2
---- ----- ----
(6) -- 6
---- ----- ----
$(78) $(107) $(72)
==== ===== ====
</TABLE>

F-17
<PAGE> 117
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES, CONTINUED:
The United States and foreign components of earnings, for tax reporting
purposes, before minority interest and income taxes follows:

<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
United States............................................... $213 $228 $155
Foreign..................................................... 2 36 25
---- ---- ----
$215 $264 $180
==== ==== ====
</TABLE>

A reconciliation of the actual (provision) benefit for income taxes and the
tax computed by applying the U.S. federal rate (35%) to the earnings before
minority interest and income taxes for the three years ended December 26, 1998
follows:

<TABLE>
<CAPTION>
1998 1997 1996
---- ----- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Computed tax at statutory rate.............................. $(75) $ (92) $(63)
State income taxes.......................................... (7) (8) (6)
Prior year tax adjustments.................................. -- (5) (4)
Other....................................................... 4 (2) 1
---- ----- ----
$(78) $(107) $(72)
==== ===== ====
</TABLE>

Possible taxes, beyond those provided, on remittances of undistributed
earnings of foreign subsidiaries, are not expected to be material.

The components of the net deferred tax assets for the years ended December
26, 1998 and December 27, 1997 were as follows:

<TABLE>
<CAPTION>
1998 1997
------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Deferred tax assets:
Construction accounting................................... $27 $27
Investments in construction joint ventures................ 27 25
Insurance claims.......................................... 33 31
Compensation -- retirement benefits....................... 8 8
Other..................................................... 2 6
--- ---
Total deferred tax assets................................... 97 97
Deferred tax liabilities:
Asset bases/accumulated depreciation...................... 14 2
Other..................................................... 20 22
--- ---
Total deferred tax liabilities.............................. 34 24
--- ---
Net deferred tax assets..................................... $63 $73
=== ===
</TABLE>

F-18
<PAGE> 118
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. EMPLOYEE BENEFIT PLANS:

The Company makes contributions, based on collective bargaining agreements
related to its construction operations, to several multi-employer union pension
plans. These contributions are included in the cost of revenue. Under federal
law, the Company may be liable for a portion of future plan deficiencies;
however, there are no known deficiencies.

Approximately 15% of the employees of the Company are covered under the
Company's profit sharing plan. The expense related to the profit sharing plan
was $3 million in 1998, $5 million in 1997 and $3 million in 1996.

9. REDEEMABLE COMMON STOCK:

Ownership of Redeemable Common Stock is restricted to certain employees
conditioned upon the execution of repurchase agreements which restrict the
employees from transferring the Redeemable Common Stock. The Company is
generally committed to purchase all Redeemable Common Stock at the amount
computed pursuant to its Restated Certificate of Incorporation. Issuances and
repurchases of Redeemable Common Stock, including conversions, for the three
years ended December 26, 1998, were as follows:

<TABLE>
<S> <C>
Balance at December 30, 1995................................ 43,521,476
Shares issued in 1996....................................... 3,586,560
Shares repurchased in 1996.................................. (3,081,472)
-----------
Balance at December 28, 1996................................ 44,026,564
Shares issued in 1997....................................... 3,575,696
Shares repurchased in 1997.................................. (7,072,888)
-----------
Balance at December 27, 1997................................ 40,529,372
Shares issued in 1998....................................... 6,852,196
Shares repurchased in 1998.................................. (11,688,748)
-----------
Balance at December 26, 1998................................ 35,692,820
</TABLE>

10. SEGMENT AND GEOGRAPHIC DATA:

The Company is managed and operated in two segments, Construction and
Materials. The Construction segment performs services for a broad range of
public and private customers primarily in North America. Construction services
are performed in the following construction markets: transportation (including
highways, bridges, airports, railroads and mass transit), commercial buildings,
water supply, sewage and waste disposal, dams, mining, power, heat and cooling,
and oil and gas. The Materials segment primarily operates in Arizona and Oregon.
This segment produces construction materials including ready-mix concrete,
asphalt and sand and gravel, landscaping materials and railroad ballast.

Intersegment sales are recorded at cost. Operating earnings are comprised
of net sales less all identifiable operating expenses, allocated general and
administrative expenses, depreciation and amortization. Interest income,
interest expense and income taxes have been excluded from segment operations.
The management fee earned by the Company as described in Note 11 is excluded
from the segment information that follows as it is included in other income on
the Statement of Earnings and not included in operating earnings. This fee is

F-19
<PAGE> 119
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. SEGMENT AND GEOGRAPHIC DATA, CONTINUED:
earned, however, by the Materials segment. Segment asset information has not
been presented as it is not reported to or reviewed by the chief operating
decision maker.

<TABLE>
<CAPTION>
1998 1997 1996
------------------------ ------------------------ ------------------------
SEGMENT DATA CONSTRUCTION MATERIALS CONSTRUCTION MATERIALS CONSTRUCTION MATERIALS
- ------------ ------------ --------- ------------ --------- ------------ ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenue
External customers............. $3,057 $346 $2,474 $290 $2,060 $260
Intersegment................... -- 6 -- 8 -- 8
------ ---- ------ ---- ------ ----
Total Revenues.............. 3,057 352 2,474 298 2,060 268
Equity earnings adjustment(1).... -- (24) -- (22) -- (17)
Elimination of intersegment
revenues....................... -- (6) -- (8) -- (8)
------ ---- ------ ---- ------ ----
Total consolidated
revenues.................. $3,057 $322 $2,474 $268 $2,060 $243
====== ==== ====== ==== ====== ====
Depreciation and amortization.... $ 64 6 $ 60 $ 6 $ 55 $ 6
====== ==== ====== ==== ====== ====
Operating Earnings............... $ 124 $ 18 $ 178 $ 8 $ 82 $ 25
====== ==== ====== ==== ====== ====
</TABLE>

- ---------------
(1) Adjust revenue of limited liability companies accounted for by the equity
method.

<TABLE>
<CAPTION>
GEOGRAPHIC DATA 1998 1997 1996
- --------------- ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Revenue, by location of services provided:
United States............................................. $3,282 $2,572 $2,017
Canada.................................................... 77 90 175
Other..................................................... 20 80 111
------ ------ ------
$3,379 $2,742 $2,303
====== ====== ======
Long-lived assets:
United States............................................. $ 208 $ 195 $ 157
Canada.................................................... 4 6 13
------ ------ ------
$ 212 $ 201 $ 170
====== ====== ======
</TABLE>

11. MANAGEMENT FEES:

The Company manages certain coal mines for Level 3. Fees for these services
which are included in other income in the statement of earnings were $34 million
in 1998, $32 million in 1997 and $37 million in 1996. The Company's fee is a
percentage of adjusted operating earnings of the coal mines, as defined. The
mines managed by the Company for Level 3 earn the majority of their revenues
under long-term contracts. The remainder of the mines' sales are made on the
spot market where prices are substantially lower than those of the long-term
contracts. As the long-term contracts expire over the next two to five years,
adjusted operating earnings at the mines will decrease substantially, thereby
similarly decreasing the management fee earned by the Company.

F-20
<PAGE> 120
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. MANAGEMENT FEES, CONTINUED:
contesting the assessments. If Level 3 pays these assessments, the payments
could materially decrease future mine management fees, but will not affect fees
previously received.

12. OTHER COMPREHENSIVE INCOME:

Other comprehensive income consisted of the following:

<TABLE>
<CAPTION>
TAX
BEFORE TAX BENEFIT AFTER TAX
---------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 28, 1996
Foreign currency translation adjustments............ $ -- $ -- $ --
---- ---- ----
Unrealized holding loss:
Unrealized holding losses arising during the
period......................................... (2) 1 (1)
Plus reclassification adjustment for gains
realized in net income......................... (2) 1 (1)
---- ---- ----
Net unrealized losses............................. (4) 2 (2)
---- ---- ----
Other comprehensive income December 28, 1996........ $ (4) $ 2 $ (2)
==== ==== ====
FOR THE YEAR ENDED DECEMBER 27, 1997
Foreign currency translation adjustments............ $ (3) $ 1 $ (2)
---- ---- ----
Unrealized holding loss:
Unrealized holding losses arising during the
period......................................... (14) 5 (9)
Plus reclassification adjustment for gains
realized in net income......................... (1) -- (1)
---- ---- ----
Net unrealized losses............................. (15) 5 (10)
---- ---- ----
Other comprehensive income December 27, 1997........ $(18) $ 6 $(12)
==== ==== ====
FOR THE YEAR ENDED DECEMBER 26, 1998
Foreign currency translation adjustments............ $ (2) $ 1 $ (1)
---- ---- ----
Unrealized holding loss:
Unrealized holding losses arising during the
period......................................... (4) 1 (3)
Plus reclassification adjustment for gains
realized in net income......................... -- -- --
---- ---- ----
Net unrealized losses............................. (4) 1 (3)
---- ---- ----
Other comprehensive income December 26, 1998........ $ (6) $ 2 $ (4)
==== ==== ====
</TABLE>

F-21
<PAGE> 121
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. OTHER COMPREHENSIVE INCOME, CONTINUED:
Accumulated other comprehensive income consisted of the following:

<TABLE>
<CAPTION>
FOREIGN UNREALIZED ACCUMULATED
CURRENCY HOLDING OTHER
TRANSLATION GAIN/(LOSS) COMPREHENSIVE
ADJUSTMENTS ON SECURITIES INCOME
----------- ------------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
BALANCE AT DECEMBER 30, 1995.................. $(5) $ 1 $ (4)
Change during the year........................ -- (2) (2)
--- ---- ----
BALANCE AT DECEMBER 28, 1996.................. (5) (1) (6)
Change during the year........................ (2) (10) (12)
--- ---- ----
BALANCE AT DECEMBER 27, 1997.................. (7) (11) (18)
Change during the year........................ (1) (3) (4)
--- ---- ----
BALANCE AT DECEMBER 26, 1998.................. $(8) $(14) $(22)
=== ==== ====
</TABLE>

13. OTHER MATTERS:

In connection with the Transaction, the Company and Level 3 entered into
various agreements including a Separation Agreement, a Tax-Sharing Agreement and
an amended Mine Management Agreement.

The Separation Agreement provides for the allocation of certain risks and
responsibilities between Level 3 and the Company and for cross-indemnifications
that are intended to allocate financial responsibility to the Company for
liabilities arising out of the construction business and to allocate to Level 3
financial responsibility for liabilities arising out of the non-construction
businesses. The Separation Agreement also provides for the payment, by the
Company, of a majority of the third party costs and expenses associated with the
Transaction.

Under the Tax Sharing Agreement, with respect to periods, or portions
thereof, ending on or before the closing date of the Transaction, Level 3 and
the Company generally will be responsible for paying the taxes relating to such
periods, including any subsequent adjustments resulting from the redetermination
of such tax liabilities by the applicable taxing authorities, that are allocable
to the non-construction businesses and construction businesses, respectively.
The Tax Sharing Agreement also provides that Level 3 and the Company will
indemnify the other from certain taxes and expenses that would be assessed if
the Transaction was determined to be taxable, but solely to the extent that such
determination arose out of the breach by Level 3 or the Company, respectively,
of certain representations made to the Internal Revenue Service in connection
with the ruling issued with respect to the Transaction or made in the
Tax-Sharing Agreement. If the Transaction were determined to be taxable for any
other reason, those taxes ("Transaction Taxes") would be allocated 50% to Level
3 and 50% to the Company. Finally, under certain circumstances, Level 3 would
make certain liquidated damage payments to the Company if the Transaction was
determined to be taxable in order to take into account the fact that the
Transaction is taxable to the holders of the Company's Common Stock.

Additionally, the Mine Management Agreement, pursuant to which the Company
provides mine management and related services to Level 3's coal mining
operations, was amended to provide the Company with a right of offer in the
event that Level 3 would determine to sell any or all of its coal mining
properties. Under the right of offer, Level 3 would be required to offer to sell
those properties to the Company at the price that Level 3 would seek to sell the
properties to a third party. If the Company declined to purchase the properties
at that price, Level 3 would be free to sell them to a third party for an amount
greater than or equal to that price. If Level 3 sold the properties to a third
party, thus terminating the Mine Management

F-22
<PAGE> 122
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. OTHER MATTERS, CONTINUED:
Agreement, it would be required to pay the Company an amount equal to the
discounted present value of the Mine Management Agreement, determined, if
necessary, by an appraisal process.

In 1997, the Company and a partner each invested $15 million to acquire a
96% interest in Oak Mountain Energy LLC ("Oak Mountain"). Oak Mountain then
acquired the existing assets of an underground coal mine located in Alabama for
approximately $18 million and assumed approximately $14 million of related
liabilities. Oak Mountain used cash and $18 million of nonrecourse bank
borrowings to retire the existing debt and develop and modernize the mine.

Oak Mountain's results are consolidated with those of the Company on a
pro-rata basis since the date of acquisition. Due to higher than anticipated
costs in modernizing and operating the mine, Oak Mountain incurred operating
losses since acquisition. Production at the mine was significantly below
anticipated levels, and as a result of this and other factors, Oak Mountain fell
out of compliance with certain covenants of the bank borrowings. Those events
caused the Company to assess whether its investment was impaired. In 1997, the
Company determined its investment in Oak Mountain was impaired and reduced the
Company's investment to zero. In June 1998, the Company disposed of its
investment in Oak Mountain. In 1998, the Company realized operating losses of $3
million.

The Company and certain other defendants are party to certain litigation
involving repairs to runways at Denver International Airport. In December 1998,
a jury determined that the defendants were liable for compensatory and punitive
damages. The Company intends to appeal the verdict. Management believes that any
resulting liability, beyond that provided, should not materially affect the
Company's financial position, future results of operations or future cash flows.

The Company is involved in various other lawsuits and claims incidental to
its business. Management believes that any resulting liability, beyond that
provided, should not materially affect the Company's financial position, future
results of operations or future cash flows.

The Company leases various buildings and equipment under both operating and
capital leases. Minimum rental payments on buildings and equipment subject to
noncancellable operating leases during the next 21 years aggregate $31 million.

It is customary in the Company's industry to use various financial
instruments in the normal course of business. These instruments include items
such as letters of credit. Letters of credit are conditional commitments issued
on behalf of the Company in accordance with specified terms and conditions. The
Company has informal arrangements with a number of banks to provide such
commitments. As of December 26, 1998, the Company had outstanding letters of
credit of approximately $191 million.

In September of 1997, a Presidential Decree was issued in Indonesia
affecting the construction and start-up dates for a number of private power
projects. As a result of the Decree and the continued fluctuations in the value
of the Indonesian currency, several projects in Indonesia for a U.S. client have
been suspended. The suspension had no material impact on the Company, as
substantially all payments have been received for work performed and the costs
of demobilizing the project were not significant. All amounts that have been
billed and received in excess of costs incurred on the suspended projects have
been deferred pending final resolution of these projects with the U.S. client
and its lenders.

14. SUBSEQUENT EVENTS:

On February 28, 1999, the Company purchased the remaining 60% of Pacific
Rock.

F-23
<PAGE> 123

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholders
Peter Kiewit Sons', Inc.

Our audit of the consolidated financial statements referred to in our
report dated March 18, 1999, except as to Note 2, Reclassifications, as to which
the date is February 11, 2000, appearing on page F-2 also included an audit of
the financial statement schedule appearing on page F-25. In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.

PricewaterhouseCoopers LLP

Omaha, Nebraska
March 18, 1999

F-24
<PAGE> 124

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
ADDITIONS AMOUNTS
BALANCE CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO END OF
OF PERIOD EXPENSES RESERVES OTHER PERIOD
--------- ---------- -------- ----- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 26, 1998
Allowance for doubtful trade accounts....... $ 9 $-- $ (4) $-- $ 5
Reserves:
Insurance claims.......................... 76 15 (10) -- 81
YEAR ENDED DECEMBER 27, 1997
Allowance for doubtful trade accounts....... $17 $ 3 $(11) $-- $ 9
Reserves:
Insurance claims.......................... 81 7 (12) -- 76
YEAR ENDED DECEMBER 28, 1996
Allowance for doubtful trade accounts....... $10 $12 $ (5) $-- $17
Reserves:
Insurance claims.......................... 79 22 (20) -- 81
</TABLE>

F-25
<PAGE> 125

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- --------------------
1999 1998 1999 1998
------- ------ ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenue......................................... $1,067 $ 954 $ 2,842 $ 2,513
Cost of Revenue................................. (971) (871) (2,630) (2,331)
------ ----- ------- -------
96 83 212 182
General and Administrative Expenses............. (34) (33) (109) (111)
------ ----- ------- -------
Operating Earnings.............................. 62 50 103 71
Other Income (Expense):
Investment (Loss) Income and Equity
Earnings................................... (14) 5 (7) 13
Interest Expense.............................. (1) (1) (2) (2)
Other, net.................................... 11 21 42 49
------ ----- ------- -------
(4) 25 33 60
------ ----- ------- -------
Earnings Before Income Taxes.................... 58 75 136 131
Provision for Income Taxes...................... (23) (30) (54) (52)
------ ----- ------- -------
Net Earnings.................................... $ 35 $ 45 $ 82 $ 79
====== ===== ======= =======
Net Earnings per Share:
Basic......................................... $ 1.00 $1.28 $ 2.40 $ 2.41
====== ===== ======= =======
Diluted....................................... $ .98 $1.27 $ 2.35 $ 2.38
====== ===== ======= =======
</TABLE>

See accompanying notes to consolidated condensed financial statements.
F-26
<PAGE> 126

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
-------------
(DOLLARS IN
MILLIONS)
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 306
Marketable securities..................................... 12
Receivables, less allowance of $4......................... 513
Unbilled contract revenue................................. 134
Contract costs in excess of related revenue............... 30
Investment in construction joint ventures................. 175
Deferred income taxes..................................... 75
Other..................................................... 21
------
Total Current Assets........................................ 1,266
Property, Plant and Equipment, less accumulated depreciation
and amortization of $504.................................. 236
Other Assets................................................ 106
------
$1,608
======
LIABILITIES AND REDEEMABLE COMMON STOCK
Current Liabilities:
Accounts payable, including retainage of $54.............. $ 207
Current portion of long-term debt......................... 3
Accrued costs on construction contracts................... 216
Billings in excess of related costs and earnings.......... 173
Accrued insurance costs................................... 89
Other..................................................... 58
------
Total Current Liabilities................................... 746
Long-term Debt, less current portion........................ 14
Other Liabilities........................................... 69
Minority Interest........................................... 12
------
Total Liabilities........................................... 841

Redeemable Common Stock ($546 million aggregate redemption
value):
Common stock, par $0.01; and 34,892,418 shares
outstanding............................................ --
Additional paid in capital................................ 175
Accumulated other comprehensive income.................... (6)
Retained earnings......................................... 598
------
Total Redeemable Common Stock............................... 767
------
$1,608
======
</TABLE>

See accompanying notes to consolidated condensed financial statements.
F-27
<PAGE> 127

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
-------------
1999 1998
---- -----
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Cash flows from operations:
Net cash provided by operations........................... $193 $ 162
Cash flows from investing activities:
Proceeds from sales and maturities of marketable
securities............................................. 1 19
Purchases of marketable securities........................ (4) (7)
Proceeds from sales of property, plant and equipment...... 22 21
Acquisitions, net of cash acquired........................ (36) (3)
Capital expenditures...................................... (45) (75)
---- -----
Net cash used in investing activities.................. (62) (45)
Cash flows from financing activities:
Net payments on short-term debt........................... -- (5)
Payments on long-term debt................................ (22) --
Issuance of common stock.................................. 25 67
Repurchases of common stock............................... (39) (29)
Dividends paid............................................ (16) (13)
Exchange of Class C Stock for Class D Stock, net.......... -- (122)
---- -----
Net cash used in financing activities.................. (52) (102)
---- -----
Net increase in cash and cash equivalents................... 79 15
Cash and cash equivalents at beginning of period............ 227 232
---- -----
Cash and cash equivalents at end of period.................. $306 $ 247
==== =====
</TABLE>

See accompanying notes to consolidated condensed financial statements.
F-28
<PAGE> 128

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION:

Peter Kiewit Sons', Inc. (the "Company") was formed by its former parent,
Level 3 Communications, Inc. (formerly Peter Kiewit Sons', Inc.) ("Level 3"), in
connection with a transaction (the "Transaction") intended to separate the
construction and materials businesses and the diversified business of Level 3
into two independent companies. On March 31, 1998, pursuant to the terms of a
Separation Agreement between the Company, Level 3 and certain other parties (the
"Separation Agreement"), Level 3 consummated the Transaction by: (i)
transferring 100 shares of the $100 par value common stock ("KCG Stock") of
Kiewit Construction Group Inc. ("KCG"), representing all of the issued and
outstanding shares of KCG Stock, as well as certain other assets and liabilities
related to the construction and materials businesses which together comprised
the Construction and Mining Group (the "Construction & Mining Group"), to the
Company in exchange for 30,711,680 shares of the $.01 par value common stock of
the Company ("Common Stock") (125 million shares authorized) and (ii)
distributing 100% of its shares of the Common Stock to the holders of Level 3's
$0.0625 par value Class C Construction & Mining Group Restricted Redeemable
Convertible Exchangeable Common Stock ("Class C Stock") as of March 31, 1998, in
exchange for such shares of Class C Stock. Prior to the Transaction, the Company
was a wholly-owned subsidiary of Level 3. As a result of the Transaction, the
Company is now primarily owned by the former holders of Level 3's Class C Stock.
Prior to consummation of the Transaction, Level 3's Class C Common Stock was
convertible into Level 3's $0.0625 par value Class D Diversified Group Common
Stock ("Class D Stock"). As the Construction & Mining Group comprised all of the
net assets and operations of the Company, at the time of the Transaction, the
Construction & Mining Group is the Company's predecessor. Thus, the term "the
Company", as used herein, refers to Peter Kiewit Sons', Inc., its predecessor,
and its consolidated subsidiaries.

All other financial statements contained herein are unaudited and, in the
opinion of management, contain all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of financial position and
results of operations for the periods presented. The Company's accounting
policies and certain other disclosures are set forth in the notes to the
consolidated financial statements contained in the Company's Annual Report on
Form 10-K.

Receivables at September 30, 1999 and December 26, 1998 include
approximately $97 million and $86 million of retainage on uncompleted projects,
the majority of which is expected to be collected within one year. Included in
the retainage amounts are $26 million and $26 million of securities which are
being held by the owners of various construction projects in lieu of retainage.
Also included in accounts receivable are $15 million and $15 million of
securities held by the owners which are now due as the contracts are completed.
These securities are carried at fair value which is determined based on quoted
market prices for the securities on hand or for similar investments. Net
unrealized holding gains and losses, if any, are reported as a separate
component of accumulated other comprehensive income, net of tax.

The results of operations for the nine months ended September 30, 1999 are
not necessarily indicative of the results to be expected for the full year.

When appropriate, items within the consolidated condensed financial
statements have been reclassified in the previous periods to conform to current
year presentation.

2. EARNINGS PER SHARE:

Basic earnings per share have been computed using the weighted average
number of shares outstanding during each period. Diluted earnings give effect to
convertible debentures considered to be dilutive common stock equivalents.
Dilutive potential common shares are calculated in accordance with the "if
converted" method. This method assumes that the after-tax interest expense
associated with the debentures is an addition to income and the debentures are
converted into equity with the resulting common shares being aggregated with the
weighted average shares outstanding.

F-29
<PAGE> 129
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

2. EARNINGS PER SHARE, CONTINUED:

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net earnings available to common
stockholders (in millions)................ $ 35 $ 45 $ 82 $ 79
Add: Interest expense, net of tax effect,
associated with convertible debentures.... * * * *
------- ------- ------- -------
Net earnings for diluted shares............. $ 35 $ 45 $ 82 $ 79
======= ======= ======= =======
Total number of weighted average shares
outstanding used to compute basic earnings
per share (in thousands).................. 34,932 35,104 34,119 32,668
Additional dilutive shares assuming
conversion of convertible debentures...... 700 360 705 360
------- ------- ------- -------
Total number of shares used to compute
diluted earnings per share................ 35,632 35,464 34,824 33,028
======= ======= ======= =======
Net earnings
Basic earnings per share.................. $ 1.00 $ 1.28 $ 2.40 $ 2.41
Diluted earnings per share................ $ .98 $ 1.27 $ 2.35 $ 2.38
</TABLE>

- ---------------
* Interest expense attributable to convertible debentures was less than $.5
million.

On January 11, 1999, the Company declared a four-for-one stock split in the
form of a stock dividend of three shares of Common Stock for each share of
Common Stock issued and outstanding, payable on January 15, 1999. All share and
per share amounts for all periods presented have been retroactively restated to
reflect the stock split.

3. COMPREHENSIVE INCOME:

Comprehensive income includes net earnings, unrealized gains (losses) on
securities and foreign currency translation adjustments which are charged or
credited to the cumulative translation account within Redeemable Common Stock.
Comprehensive income for the three months and nine months ended September 30,
1999 and 1998 was as follows:

<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------- --------------
1999 1998 1999 1998
----- ----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net Earnings........................................... $35 $45 $82 $79
Other comprehensive income, before tax:
Foreign currency translation adjustments............. (1) (3) 3 (3)
Unrealized gains arising during period............... 5 -- 3 --
Reclassification adjustments for losses included in
net earnings...................................... 18 -- 18 --
Income tax (expense) benefit related to items of
other comprehensive income........................ (7) 1 (8) 1
--- --- --- ---
Comprehensive Income................................... $50 $43 $98 $77
=== === === ===
</TABLE>

F-30
<PAGE> 130
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

4. SEGMENT DATA:

The Company is managed and operated in two segments, Construction and
Materials. The Construction segment performs services for a broad range of
public and private customers primarily in North America. Construction services
are performed in the following construction markets: transportation (including
highways, bridges, airports, railroads and mass transit), commercial buildings,
water supply, sewage and waste disposal, dams, mining, power, telecommunication
infrastructure, heating and cooling, and oil and gas. The Materials segment
primarily operates in the Southwest and Northwest portions of the United States.
This segment produces construction materials including ready-mix concrete,
asphalt, sand and gravel, landscaping materials and railroad ballast.

Intersegment sales are recorded at cost. Operating earnings is comprised of
net sales less all identifiable operating expenses, allocated general and
administrative expenses, depreciation and amortization. Investment income,
interest expense, other income and income taxes have been excluded from segment
operations.

<TABLE>
<CAPTION>
ELIMINATION EQUITY
OF EARNINGS TOTAL
EXTERNAL INTERSEGMENT TOTAL INTERSEGMENT ADJUSTMENT CONSOLIDATED OPERATING
REVENUES REVENUES REVENUES REVENUES (1) REVENUES EARNINGS
-------- ------------ -------- ------------ ---------- ------------ ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
NINE MONTHS ENDED
9/30/99
Construction............ $2,526 $-- $2,526 $-- $ -- $2,526 $78
Materials............... $ 316 $6 $ 322 $(6) $ -- $ 316 $25
THREE MONTHS ENDED
9/30/99
Construction............ $ 957 $-- $ 957 $-- $ -- $ 957 $50
Materials............... $ 110 $6 $ 116 $(6) $ -- $ 110 $12
NINE MONTHS ENDED
9/30/98
Construction............ $2,277 $-- $2,277 $-- $ -- $2,277 $60
Materials............... $ 256 $7 $ 263 $(7) $(20) $ 236 $11
THREE MONTHS ENDED
9/30/98
Construction............ $ 871 $-- $ 871 $-- $ -- $ 871 $44
Materials............... $ 92 $3 $ 95 $(3) $ (9) $ 83 $ 6
</TABLE>

- ---------------
(1) Adjusts revenue of limited liability companies accounted for by the equity
method.

5. OTHER MATTERS:

In connection with the Transaction, the Company and Level 3 entered into
various agreements including a Separation Agreement, a Tax Sharing Agreement and
an Amended Mine Management Agreement.

F-31
<PAGE> 131
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

5. OTHER MATTERS, CONTINUED:
liabilities by the applicable taxing authorities, that are allocable to the
non-construction businesses and construction business, respectively. The Tax
Sharing Agreement also provides that Level 3 and the Company will indemnify each
other from certain taxes and expenses that would be assessed if the Transaction
was determined to be taxable, but solely to the extent that such determination
arose out of the breach by Level 3 or the Company, respectively, of certain
representations made to the Internal Revenue Service in connection with the
ruling issued with respect to the Transaction or made in the Tax Sharing
Agreement. If the Transaction was determined to be taxable for any other reason,
those taxes would be allocated 50% to Level 3 and 50% to the Company. Finally,
under certain circumstances, Level 3 would make certain liquidated damages
payments to the Company if the Transaction was determined to be taxable in order
to take into account the fact that the Transaction is taxable to the holders of
Common Stock.

Additionally, the Mine Management Agreement, pursuant to which the Company
provides mine management and related services to Level 3's coal mining
operations, was amended to provide the Company with a right of offer in the
event that Level 3 was to determine to sell any or all of its coal mining
properties. Under the right of offer, Level 3 would be required to offer to sell
those properties to the Company at the price that Level 3 would seek to sell the
properties to a third party. If the Company were to decline to purchase the
properties at that price, Level 3 would be free to sell them to a third party
for an amount greater than or equal to that price. If Level 3 were to sell the
properties to a third party, thus terminating the Mine Management Agreement, it
would be required to pay the Company an amount equal to the discounted present
value of the Mine Management Agreement, determined, if necessary, by an
appraisal process.

On February 28, 1999, the Company purchased the remaining 60% of a
materials operation in the Portland, Oregon/Vancouver, Washington area. Goodwill
recognized on the purchase is being amortized over 20 years. Had the results of
operations of this acquisition been consolidated for the periods presented,
there would have been no material impact to the Company's results.

F-32
<PAGE> 132

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Reports of Independent Accountants.......................... F-34
Consolidated Financial Statements as of December 26, 1998
and December 27, 1997 and for the three years in the
period ended December 26, 1998:
Consolidated Statements of Earnings......................... F-37
Consolidated Balance Sheets................................. F-38
Consolidated Statements of Cash Flows....................... F-39
Consolidated Statements of Stockholder's Equity and
Comprehensive Income...................................... F-40
Notes to Consolidated Financial Statements.................. F-41
Report of Independent Accountants on Consolidated Financial
Schedule.................................................. F-53
Consolidated Financial Statement Schedule for the three
years in the period ended December 26, 1998............... F-54
Consolidated Condensed Financial Statements as of September
30, 1999 and for the three and nine months ended September
30, 1999 and 1998:
Consolidated Condensed Statements of Earnings............... F-55
Consolidated Condensed Balance Sheet........................ F-56
Consolidated Condensed Statements of Cash Flows............. F-57
Notes to Consolidated Condensed Financial Statements........ F-58
</TABLE>

F-33
<PAGE> 133

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholder
Kiewit Materials Company

In our opinion, based on our audits and the reports of other auditors, the
accompanying consolidated balance sheets and the related consolidated statements
of earnings, changes in stockholder's equity and comprehensive income, and cash
flows present fairly, in all material respects, the financial position of Kiewit
Materials Company and its subsidiaries (the "Company") at December 26, 1998 and
December 27, 1997, and the results of their operations and their cash flows for
each of the three years in the period ended December 26, 1998 in conformity with
accounting principles generally accepted in the United States. These 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 did not audit the financial statements of Granite Canyon Joint
Venture, Pacific Rock Products, L.L.C. and Pacific Rock Products Trucking,
L.L.C. (formerly River City Machinery, L.L.C.) the investments in which comprise
$15,615,740 and $15,181,461 of the Company's total assets as of December 26,
1998 and December 27, 1997, respectively and $8,190,779, $6,243,716 and
$4,906,330 of the Company's earnings before income taxes for each of the three
years in the period ended December 26, 1998. Those statements were audited by
other auditors whose reports thereon have been furnished to us, and our opinion
expressed herein, insofar as it relates to the amounts included for Granite
Canyon Joint Venture, Pacific Rock Products, L.L.C. and Pacific Rock Products
Trucking, L.L.C. (formerly River City Machinery, L.L.C.), is based solely on the
reports of the other auditors. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits and the reports of
other auditors provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Omaha, Nebraska
February 11, 2000

F-34
<PAGE> 134

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Management Committee of
Granite Canyon Quarry

We have audited the balance sheets of GRANITE CANYON QUARRY (the "Venture") as
of December 31, 1998 and 1997, and the related statements of income, changes in
venturers' capital and cash flows for the years then ended (not presented
herein). These financial statements are the responsibility of the Venture's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Granite Canyon Quarry as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Denver, Colorado,
March 29, 1999.

F-35
<PAGE> 135

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Management Committee of
Granite Canyon Quarry

We have audited the balance sheets of GRANITE CANYON QUARRY (the "Venture") as
of December 31, 1997 and 1996, and the related statements of income, changes in
venturers' capital and cash flows for the years then ended (not presented
herein). These financial statements are the responsibility of the Venture's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Granite Canyon Quarry as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Denver, Colorado,
March 4, 1998.

F-36
<PAGE> 136

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE YEARS ENDED DECEMBER 26, 1998

<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Revenue....................................... $ 333,060,002 $ 277,308,896 $ 246,083,386
Cost of revenue............................... (286,046,917) (231,304,212) (204,510,622)
Depreciation, depletion and amortization...... (12,112,930) (10,985,109) (9,848,216)
------------- ------------- -------------
34,900,155 35,019,575 31,724,548
General and administrative expenses........... (19,062,488) (16,227,521) (14,920,323)
------------- ------------- -------------
Operating earnings............................ 15,837,667 18,792,054 16,804,225
Other income (expense):
Investment income........................... 3,551,074 3,526,354 3,422,960
Equity earnings............................. 5,599,268 4,272,210 2,391,724
Interest expense............................ (934,888) (547,704) (930,018)
Gain on sale of property, plant and
equipment, net........................... 853,436 1,005,530 1,364,381
Other....................................... 323,322 299,003 207,649
------------- ------------- -------------
9,392,212 8,555,393 6,456,696
------------- ------------- -------------
Earnings before income taxes and minority
interests................................... 25,229,879 27,347,447 23,260,921
Minority interests in (earnings) losses of
subsidiaries................................ (58,101) 52,277 --
Income tax expense............................ (9,793,440) (10,857,416) (9,056,640)
------------- ------------- -------------
Net earnings.................................. $ 15,378,338 $ 16,542,308 $ 14,204,281
============= ============= =============
Net earnings per share:
Basic and diluted........................... $ 153,783 $ 165,423 $ 142,043
============= ============= =============
</TABLE>

See accompanying notes to consolidated financial statements.
F-37
<PAGE> 137

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 26, 1998 AND DECEMBER 27, 1997

<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 65,601,870 $ 48,021,924
Marketable securities..................................... 2,584,050 3,324,482
Accounts receivable:
Trade, net of allowance for doubtful accounts of
$780,445 and $784,904................................ 40,529,060 36,435,225
Affiliates............................................. 292,108 752,904
------------ ------------
Total accounts receivable................................. 40,821,168 37,188,129
Inventories............................................... 7,766,988 7,148,503
Deferred income taxes..................................... 2,855,000 3,191,000
Other..................................................... 2,200,369 1,441,228
------------ ------------
Total current assets................................... 121,829,445 100,315,266
Property, plant and equipment at cost....................... 145,892,746 132,078,621
Less accumulated depreciation............................. 86,454,443 75,702,488
------------ ------------
Net property, plant and equipment........................... 59,438,303 56,376,133
Investments and other assets................................ 25,785,949 25,007,790
------------ ------------
$207,053,697 $181,699,189
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable:
Trade.................................................. $ 22,913,995 $ 18,913,479
Affiliates............................................. 14,675,013 13,237,610
------------ ------------
Total accounts payable.................................... 37,589,008 32,151,089
Current portion of long-term debt......................... 739,965 386,873
Accrued payroll and payroll taxes......................... 5,787,804 3,652,358
Accrued insurance costs................................... 5,626,346 4,833,829
Income taxes payable -- parent company.................... 5,559,111 5,926,548
Other..................................................... 2,040,055 2,230,553
------------ ------------
Total current liabilities.............................. 57,342,289 49,181,250
Long-term debt, less current portion........................ 760,834 1,492,345
Deferred income taxes....................................... 6,606,000 6,149,000
Other liabilities........................................... 2,762,503 3,009,073
Minority interest........................................... 295,044 236,943
Stockholder's equity:
Common stock of $.01 par value. 100 shares authorized,
issued and outstanding................................. 1 1
Additional paid-in capital................................ 82,466,491 80,121,548
Accumulated other comprehensive income.................... (456,172) (389,340)
Retained earnings......................................... 57,276,707 41,898,369
------------ ------------
Total stockholder's equity.................................. 139,287,027 121,630,578
------------ ------------
$207,053,697 $181,699,189
============ ============
</TABLE>

See accompanying notes to consolidated financial statements.
F-38
<PAGE> 138

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 26, 1998

<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings................................... $ 15,378,338 $ 16,542,308 $ 14,204,281
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation, depletion and amortization.... 12,112,930 10,985,109 9,848,216
Gain on sale of property, plant and
equipment, net............................ (853,436) (1,005,530) (1,364,381)
Gain on sale of securities.................. (25,714) -- --
Deferred income taxes....................... 707,000 1,038,000 243,000
Undistributed equity earnings............... (1,078,437) (4,246,212) (1,360,199)
Minority interest in earnings (losses)...... 58,101 (52,277) --
Change in operating assets and liabilities:
Accounts receivable....................... (3,548,729) (6,263,241) (2,262,418)
Inventories............................... (163,240) (278,122) (679,440)
Other assets.............................. (749,466) (469,808) 1,139,721
Accounts payable.......................... 5,437,919 13,316,821 4,016,072
Accrued payroll and other................. 2,135,446 (111,141) (456,281)
Accrued insurance cost.................... 792,517 327,575 251,989
Income taxes payable...................... (367,437) (87,334) (733,981)
Other liabilities......................... (206,800) (1,220,587) (867,319)
------------ ------------ ------------
Net cash provided by operating activities........ 29,628,992 28,475,561 21,979,260
Cash flows from investing activities:
Proceeds from sale of property, plant and
equipment................................... 1,448,503 1,304,334 2,140,466
Capital expenditures........................... (13,351,000) (20,213,136) (12,711,802)
Purchases of marketable securities............. (16,874) (43,947) (40,598)
Sales of marketable securities................. 760,621 -- --
Additions to notes receivable.................. (1,837,933) (760,642) (129,125)
Payments received on notes receivable.......... 1,316,489 363,750 219,472
Investments and acquisitions................... (2,136,356) (8,132,363) (6,419,887)
------------ ------------ ------------
Net cash used in investing activities............ (13,816,550) (27,482,004) (16,941,474)
Cash flows from financing activities:
Payments of long-term debt..................... (378,419) (86,221) --
Contributions by minority owner................ -- 209,445 --
Contributions from parent...................... 2,145,923 10,713,084 7,325,251
Dividends...................................... -- (13,970,000) (4,000,000)
------------ ------------ ------------
Net cash provided by (used in) financing
activities..................................... 1,767,504 (3,133,692) 3,325,251
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents.................................... 17,579,946 (2,140,135) 8,363,037
Cash and cash equivalents at beginning of year... 48,021,924 50,162,059 41,799,022
------------ ------------ ------------
Cash and cash equivalents at end of year......... $ 65,601,870 $ 48,021,924 $ 50,162,059
============ ============ ============
Supplemental disclosures of cash flow
information:
Interest paid.................................. $ 944,672 $ 528,031 $ 930,018
Income taxes paid.............................. 7,701,132 7,441,421 8,063,559
</TABLE>

See accompanying notes to consolidated financial statements.
F-39
<PAGE> 139

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
AND COMPREHENSIVE INCOME
FOR THE THREE YEARS ENDED DECEMBER 26, 1998

<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON PAID-IN COMPREHENSIVE RETAINED STOCKHOLDER'S
STOCK CAPITAL INCOME EARNINGS EQUITY
------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 30, 1995..... $ 1 $62,083,213 $ (48,757) $ 29,477,079 $ 91,511,536
Dividends ($143,553 per share)... -- -- -- (14,355,299) (14,355,299)
Contribution from parent......... -- 7,325,251 -- -- 7,325,251
Comprehensive income:
Net earnings................... -- -- -- 14,204,281 14,204,281
Other comprehensive income:
Change in unrealized holding
gain, net of tax.......... -- -- (47,666) -- (47,666)
Minimum pension liability
adjustment................ -- -- 13,472 -- 13,472
------------
Total other comprehensive
income.................... (34,194)
------------
Total comprehensive income....... 14,170,087
--- ----------- --------- ------------ ------------
BALANCE AT DECEMBER 28, 1996..... 1 69,408,464 (82,951) 29,326,061 98,651,575
Dividends ($39,700 per share).... -- -- -- (3,970,000) (3,970,000)
Contribution from parent......... -- 10,713,084 -- -- 10,713,084
Comprehensive income:
Net earnings................... -- -- -- 16,542,308 16,542,308
Other comprehensive income:
Change in unrealized holding
gain, net of tax.......... -- -- 8,537 -- 8,537
Minimum pension liability
adjustment................ -- -- (314,926) -- (314,926)
------------
Total other comprehensive
income.................... (306,389)
------------
Total comprehensive income....... 16,235,919
--- ----------- --------- ------------ ------------
BALANCE AT DECEMBER 27, 1997..... 1 80,121,548 (389,340) 41,898,369 121,630,578
Contribution from parent......... -- 2,344,943 -- -- 2,344,943
Comprehensive income:
Net earnings................... -- -- -- 15,378,338 15,378,338
Other comprehensive income:
Change in unrealized holding
gain, net of tax.......... -- -- (7,857) -- (7,857)
Minimum pension liability
adjustment................ -- -- (58,975) -- (58,975)
------------
Total other comprehensive
income.................... (66,832)
------------
Total comprehensive income....... 15,311,506
--- ----------- --------- ------------ ------------
BALANCE AT DECEMBER 26, 1998..... $ 1 $82,466,491 $(456,172) $ 57,276,707 $139,287,027
=== =========== ========= ============ ============
</TABLE>

See accompanying notes to consolidated financial statements.
F-40
<PAGE> 140

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

General:

The consolidated financial statements include the accounts of Kiewit
Materials Company ("KMC") and its subsidiaries (collectively, the "Company") and
the Company's pro rata portion of the accounts of Granite Canyon Joint Venture.
The Company was formed on February 2, 1999. Several affiliated operating
corporations under common ownership (the "Predecessors"), each one of which is
engaged in an aspect of the materials business, were combined (the
"Combination") on March 1, 1999 through a series of nonmonetary contributions
from KMC's parent, Peter Kiewit Sons', Inc. ("Kiewit").

The Combination has been accounted for at historical cost in a manner
similar to a pooling of interests. All material intercompany transactions have
been eliminated in consolidation.

The Company has a 52-53 week fiscal year which ends on the last Saturday in
December. 1998, 1997 and 1996 were all 52 week years.

The Company principally operates in the Southwest and Northwest portions of
the United States. The Company produces and distributes construction materials
including ready-mix concrete, asphalt, sand, gravel, crushed stone and railroad
ballast ("materials products").

Demand for the Company's products is subject to factors affecting the level
of general construction activity including the level of interest rates,
availability of funds for construction, appropriations by federal and state
governments for construction, past overbuilding, labor relations in the
construction industry, energy shortages, material shortages, weather, climate
and other factors affecting the construction industry in general. Labor disputes
in the construction industry may result in work stoppages which may interrupt
sales in the affected area. Precipitation or freezing temperatures may cause a
reduction in construction activity and related demand for the Company's
products. During the winter months, sales and income of the Company's quarries
and Northwest operations are adversely affected by the impact of inclement
weather. A decrease in the level of general construction activity in any of the
Company's market areas caused by any of the above factors may have a material
adverse effect on the Company's sales and income derived therefrom.

Use of Estimates:

Revenue Recognition:

Materials revenue, net of discounts, is recognized at the time the products
are shipped and all significant contractual obligations have been satisfied.

Construction revenue is recognized using the percentage of completion
method of accounting. Under the percentage of completion method, an estimated
percentage for each contract, as determined by the Company's engineering
estimate based on the amount of work performed, is applied to total estimated
profit. Provision is made for the entire amount of future estimated losses on
contracts in progress; claims for additional contract compensation, however, are
not reflected in the accounts until the year in which such claims are allowed.
Revisions in cost and profit estimates during the course of the work are
reflected in the accounting period in which the facts which require the revision
become known. It is at least reasonably possible that cost and profit estimates
will be revised in the near-term.

F-41
<PAGE> 141
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Limited Liability Companies and Joint Ventures:

Investments in limited liability companies in which the Company exercises
significant influence over operations and financial policies are accounted for
by the equity method. The Company accounts for its 49% share of Granite Canyon
Joint Venture on a pro rata basis.

Inventories:

Inventories consist primarily of raw materials, repair parts, fuel and
building materials that the Company holds for use or sale in the ordinary course
of business. Inventories are stated at the lower of average cost or market.

Depreciation:

Property, plant and equipment are recorded at cost. Depreciation is
provided on a straight line method based on the following useful lives:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements.................................. 39
Equipment and other......................................... 5-10
</TABLE>

Depletion:

Depletion of mineral properties is provided on a unit-of-extraction basis
determined in relation to estimated recoverable reserves at each mineral site.

Intangible Assets:

Intangible assets consist principally of goodwill. These assets are
amortized on a straight-line basis over the expected period of benefit, which
does not exceed 20 years.

Long Lived Assets:

The Company reviews the carrying amount of long lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Measurement of any impairment would include a comparison
of the present value of the estimated future operating cash flows anticipated to
be generated during the remaining life of the assets to the net carrying value
of the assets.

Income Taxes:

The Company is included in a consolidated income tax return. The provision
for Federal income tax is computed on the separate results of operations of the
Company as if a separate return was filed.

Accrued Insurance Costs:

The Company is self-insured for certain general, auto, and worker's
compensation claims and accrues for the estimated ultimate liability for
incurred losses. It is at least reasonably possible that the estimate of
ultimate liability will be revised in the near-term.

F-42
<PAGE> 142
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
General and Administrative Costs:

General and administrative costs historically recorded by Kiewit or other
affiliates of the Company, but that were incurred for the benefit of the
Company, have been recorded in the accompanying financial statements. These
costs have been allocated to the Company based upon historical assessments of
the level of effort incurred for the benefit of the Company that were used for
internal reporting purposes, and have been, in management's opinion, reasonably
allocated to the Company.

Earnings Per Share:

The basic and diluted earnings per share were calculated using the 100
shares the Company issued to its parent in March 1999 in connection with the
Combination.

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net earnings available to common
stockholders.............................. $15,378,338 $16,542,308 $14,204,281
=========== =========== ===========
Total number of weighted average shares
outstanding............................... 100 100 100
=========== =========== ===========
Basic and diluted earnings per share........ $ 153,783 $ 165,423 $ 142,043
=========== =========== ===========
</TABLE>

Recent Pronouncements:

2. FINANCIAL INSTRUMENTS:

The following methods and assumptions were used to determine classification
and fair values of financial instruments:

Cash and Cash Equivalents:

Cash and cash equivalents are stated at cost, which approximates fair
value. Cash equivalents generally consist of highly liquid instruments purchased
with a maturity of three months or less and cash deposited with Kiewit
Construction Company ("KCC"), an indirect subsidiary of Kiewit. The Company's
deposits with KCC are commingled with the funds of other affiliated companies
for investment purposes and are available for withdrawal upon demand. These
deposits earn interest at a rate based on LIBOR. The Company's net deposits
totaled $54,520,320 and $42,145,567 in 1998 and 1997.

Marketable Securities:

The Company has classified all marketable securities as available-for-sale.
The amortized cost of the securities used in computing unrealized and realized
gains and losses are determined by specific identification. Fair values are
estimated based on quoted market prices for the securities on hand or similar
investments. Net unrealized holding gains and losses, if any, are reported as a
separate component of accumulated other comprehensive income, net of tax.

F-43
<PAGE> 143
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. FINANCIAL INSTRUMENTS, CONTINUED:
At December 26, 1998 and December 27, 1997, the cost, estimated fair values
and unrealized holding gains of the Company's marketable securities are as
follows:

<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED HOLDING FAIR
COST GAIN VALUE
---------- ---------- ----------
<S> <C> <C> <C>
1998:
U.S. debt securities............................ $2,541,925 $42,125 $2,584,050
========== ======= ==========
1997:
U.S. debt securities............................ $2,551,599 $30,201 $2,581,800
Intermediate-term bond mutual funds............. 718,033 24,649 742,682
---------- ------- ----------
$3,269,632 $54,850 $3,324,482
========== ======= ==========
</TABLE>

Realized gain on sale of marketable securities was $25,714 in 1998 and $0
in 1997 and 1996.

All debt securities mature within one to five years.

Long-term debt:

The fair value of debt was estimated using the incremental borrowing rates
of the Company for debt of the same remaining maturities and approximates the
carrying amount.

3. INVENTORIES:

Inventories consist of the following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Raw materials....................................... $6,573,036 $5,538,887
Other............................................... 1,193,952 1,609,616
---------- ----------
$7,766,988 $7,148,503
========== ==========
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Land and mineral properties....................... $ 6,178,777 $ 6,656,421
Buildings and improvements........................ 944,342 676,208
Equipment and other............................... 52,315,184 49,043,504
----------- -----------
$59,438,303 $56,376,133
=========== ===========
</TABLE>

F-44
<PAGE> 144
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. INVESTMENT AND OTHER ASSETS:

Investments and other assets consists of the following:

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Investment in limited liability companies......... $10,724,511 $ 9,525,242
Intangible assets, principally goodwill, net of
accumulated amortization of $4,169,800 and
$3,018,561...................................... 13,974,896 14,857,921
Notes receivable.................................. 521,218 61,394
Other............................................. 565,324 563,233
----------- -----------
$25,785,949 $25,007,790
=========== ===========
</TABLE>

The Company's investment in limited liability companies is comprised of a
40% interest in Pacific Rock Products, L.L.C. and a 40% interest in Pacific Rock
Products Trucking, L.L.C. (formerly River City Machinery, L.L.C.). Pacific Rock
Products, L.L.C. is engaged in the production and distribution of materials
products. Pacific Rock Products Trucking, L.L.C. rents equipment to affiliated
companies.

6. EMPLOYEE BENEFIT PLANS:

The Company makes contributions based on collective bargaining agreements
to several multi-employer union pension plans. These contributions are included
in cost of revenue. Under federal law, the Company may be liable for a portion
of future plan deficiencies; however, there are no known deficiencies.

Approximately 10% of the employees of the Company are covered under the
Kiewit profit sharing plan. The expense related to the profit sharing plan was
$447,795, $617,784 and $456,075 in 1998, 1997 and 1996, respectively.

The Company sponsors a defined benefit pension plan covering certain union
employees. Benefits are based on negotiated rates multiplied by years of
service. It is the Company's policy to make contributions to these plans
sufficient to meet minimum funding requirements of the applicable laws and
regulations, plus such additional amounts, if any, as the Company's actuarial
consultants advise to be appropriate. Plan assets consist principally of fixed
income instruments, equity securities and cash equivalents.

F-45
<PAGE> 145
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. EMPLOYEE BENEFIT PLANS, CONTINUED:

<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year.................. $ 3,174,787 $2,038,747
Service cost............................................. 974,369 762,450
Interest cost............................................ 226,788 156,768
Actuarial loss........................................... 577,594 324,339
Benefits paid............................................ (154,300) (107,517)
----------- ----------
Benefit obligation at end of year.......................... 4,799,238 3,174,787
Change in plan assets:
Fair value of plan assets at beginning of year........... 2,821,262 1,267,198
Actual return on plan assets............................. 673,916 (24,212)
Employer contribution.................................... -- 1,685,793
Benefits paid............................................ (154,300) (107,517)
----------- ----------
Fair value of plan assets at end of year................... 3,340,878 2,821,262
----------- ----------
Funded status.............................................. (1,458,360) (353,525)
Unrecognized net actuarial loss............................ 741,822 651,091
Unrecognized prior service cost............................ 183,216 205,489
----------- ----------
(Accrued) prepaid benefit cost............................. $ (533,322) $ 503,055
=========== ==========
Amounts recognized in the statement of financial position
consist of:
Prepaid benefit cost..................................... $ -- $ 503,055
Accrued benefit liability................................ (1,458,360) (856,580)
Intangible asset......................................... 183,216 205,489
Accumulated other comprehensive income................... 741,822 651,091
----------- ----------
Net amount recognized...................................... $ (533,322) $ 503,055
=========== ==========
</TABLE>

<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- --------
<S> <C> <C> <C>
Weighted-average assumptions as of year end:
Discount rate................................. 6.5% 7.0% 7.5%
Expected return on plan assets................ 8.0% 8.0% 8.0%
Components of net periodic benefit cost:
Service cost.................................. $ 974,369 $ 762,450 $747,297
Interest cost................................. 226,788 156,768 110,866
Expected return on plan assets................ (224,321) (145,444) (68,194)
Amortization of prior service cost............ 22,273 22,273 21,494
Recognized net actuarial loss................. 37,268 968 15,320
---------- --------- --------
Net periodic benefit cost....................... $1,036,377 $ 797,015 $826,783
========== ========= ========
</TABLE>

The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plan with accumulated benefit obligations
in excess of plan assets were $4,799,238, $4,799,238 and $3,340,878,
respectively, as of December 26, 1998 and $3,174,787, $3,174,787 and $2,821,262,
respectively, as of December 27, 1997.

F-46
<PAGE> 146
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. LONG-TERM DEBT:

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
7% note payable quarterly to 2003........................... $ 430,429 $ 500,000
9.25% notes payable quarterly to 2003....................... 304,830 343,335
9.5% note payable monthly to 2002........................... 205,228 257,577
Other....................................................... 560,312 778,306
---------- ----------
1,500,799 1,879,218
Less current portion........................................ 739,965 386,873
---------- ----------
$ 760,834 $1,492,345
========== ==========
</TABLE>

Long-term debt repayments are due as follows:

<TABLE>
<S> <C>
1999............................................. $ 739,965
2000............................................. 249,180
2001............................................. 209,563
2002............................................. 136,374
2003............................................. 117,440
2004 and thereafter.............................. 48,277
----------
$1,500,799
==========
</TABLE>

The 7% note payable is not collateralized and was issued as additional
consideration as part of a 1997 acquisition.

The 9.25% notes payable were collateralized by deeds of trust and were
retired in February 1999.

All remaining items of debt are collateralized by equipment and were
assumed as part of the Company's 1997 acquisition of various materials
operations.

F-47
<PAGE> 147
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES:

An analysis of the provision for income taxes relating to earnings before
minority interest and income taxes for the three years ended December 26, 1998
follows:

<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
---------- ---------- -----------
<S> <C> <C> <C>
1998:
Current....................................... $6,961,899 $2,124,541 $ 9,086,440
Deferred...................................... 593,000 114,000 707,000
---------- ---------- -----------
$7,554,899 $2,238,541 $ 9,793,440
========== ========== ===========
1997:
Current....................................... $7,643,867 $2,175,549 $ 9,819,416
Deferred...................................... 833,000 205,000 1,038,000
---------- ---------- -----------
$8,476,867 $2,380,549 $10,857,416
========== ========== ===========
1996:
Current....................................... $6,133,095 $2,680,545 $ 8,813,640
Deferred...................................... 113,000 130,000 243,000
---------- ---------- -----------
$6,246,095 $2,810,545 $ 9,056,640
========== ========== ===========
</TABLE>

The actual income tax expense differs from the "expected" tax expense
computed by applying the U.S. Federal corporate tax rate of 35% to earnings
before minority interest and income taxes as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ----------- ----------
<S> <C> <C> <C>
Federal income tax expense at statutory
rate........................................ $8,830,458 $ 9,571,606 $8,175,505
State income tax, net of Federal tax
benefit..................................... 1,394,993 1,584,486 1,623,264
Percentage depletion.......................... (1,310,610) (942,905) (952,135)
Prior year adjustment......................... 521,371 496,187 (66,505)
Other......................................... 357,228 148,042 276,511
---------- ----------- ----------
$9,793,440 $10,857,416 $9,056,640
========== =========== ==========
</TABLE>

F-48
<PAGE> 148
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES, CONTINUED:
The components of the net deferred tax liabilities for the years ended
December 26, 1998 and December 27, 1997 were as follows:

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Deferred tax assets:
Construction accounting................................. $ (806,000) $ (929,000)
Insurance claims........................................ (2,229,000) (1,897,000)
Compensation and retirement benefits.................... (1,291,000) (823,000)
Other................................................... (1,033,000) (967,000)
----------- -----------
Total deferred tax assets................................. (5,359,000) (4,616,000)
Deferred tax liabilities:
Asset bases/accumulated depreciation.................... 7,332,000 5,993,000
Investments in limited liability companies/joint
ventures............................................. 1,678,000 1,477,000
Other................................................... 100,000 104,000
----------- -----------
Total deferred tax liabilities............................ 9,110,000 7,574,000
----------- -----------
Net deferred tax liabilities.............................. $ 3,751,000 $ 2,958,000
=========== ===========
</TABLE>

9. SEGMENT REPORTING:

The Company currently operates under one segment and all operations and
long-lived assets are in the United States.

The Company's external revenues by product for the three years ended
December 26, 1998 are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Aggregates (sand, gravel, crushed stone
and railroad ballast).................. $ 54,722,819 $ 44,388,081 $ 42,366,028
Asphalt.................................. 57,862,340 75,732,891 51,472,747
Ready mix concrete....................... 209,842,986 144,908,912 139,576,346
Construction............................. 10,631,857 12,279,012 12,668,265
------------ ------------ ------------
$333,060,002 $277,308,896 $246,083,386
============ ============ ============
</TABLE>

F-49
<PAGE> 149
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. OTHER COMPREHENSIVE INCOME:

Other comprehensive income consisted of the following:

<TABLE>
<CAPTION>
TAX
(EXPENSE)
BEFORE TAX OR BENEFIT AFTER TAX
---------- ---------- ---------
<S> <C> <C> <C>
1998:
Unrealized holding losses:
Unrealized holding gains arising during the
period...................................... $ 11,924 $ (4,561) $ 7,363
Plus reclassification adjustment for gains
realized in net income...................... (24,648) 9,428 (15,220)
--------- -------- ---------
Net unrealized losses............................ $ (12,724) $ 4,867 $ (7,857)
Minimum pension liability adjustment............. (90,731) 31,756 (58,975)
--------- -------- ---------
Other comprehensive income....................... $(103,455) $ 36,623 $ (66,832)
========= ======== =========
1997:
Unrealized holding gain:
Unrealized holding gains arising during the
period...................................... $ 13,825 $ (5,288) $ 8,537
Minimum pension liability adjustment............. (484,502) 169,576 (314,926)
--------- -------- ---------
Other comprehensive income....................... $(470,677) $164,288 $(306,389)
========= ======== =========
1996:
Unrealized holding losses:
Unrealized holding losses arising during the
period...................................... $ (71,280) $ 23,614 $ (47,666)
Minimum pension liability adjustment............. 20,727 (7,255) 13,472
--------- -------- ---------
Other comprehensive income....................... $ (50,553) $ 16,359 $ (34,194)
========= ======== =========
</TABLE>

Accumulated other comprehensive income consisted of the following:

<TABLE>
<CAPTION>
CURRENT
BEGINNING YEAR ENDING
BALANCE CHANGE BALANCE
--------- --------- ---------
<S> <C> <C> <C>
1998:
Unrealized holding gain on securities........... $ 33,869 $ (7,857) $ 26,012
Minimum pension liability adjustment............ (423,209) (58,975) (482,184)
--------- --------- ---------
Accumulated other comprehensive income.......... $(389,340) $ (66,832) $(456,172)
========= ========= =========
1997:
Unrealized holding gain on securities........... $ 25,332 $ 8,537 $ 33,869
Minimum pension liability adjustment............ (108,283) (314,926) (423,209)
--------- --------- ---------
Accumulated other comprehensive income.......... $ (82,951) $(306,389) $(389,340)
========= ========= =========
1996:
Unrealized holding gain on securities........... $ 72,998 $ (47,666) $ 25,332
Minimum pension liability adjustment............ (121,755) 13,472 (108,283)
--------- --------- ---------
Accumulated other comprehensive income.......... $ (48,757) $ (34,194) $ (82,951)
========= ========= =========
</TABLE>

F-50
<PAGE> 150
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. OPERATING LEASES:

The Company leases mineral properties, buildings and certain equipment
under noncanceleable operating lease agreements. Total rent expense was
$11,625,294, $10,176,629 and 8,909,486 in 1998, 1997 and 1996, respectively.
Future minimum lease commitments are as follows:

<TABLE>
<S> <C>
1999............................................ $12,291,760
2000............................................ 9,093,959
2001............................................ 8,096,764
2002............................................ 7,504,509
2003............................................ 6,682,634
Thereafter...................................... 32,419,705
-----------
$76,089,331
===========
</TABLE>

12. RELATED PARTY TRANSACTIONS:

During 1998, 1997 and 1996 the Company was involved in transactions with
affiliated companies as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Equipment rental income........................ $ 203,334 $ 186,911 $ 197,249
Equipment rental expense....................... 19,288 -- 145,089
Insurance premium expense...................... 32,839 49,387 9,829
Interest income................................ 2,847,501 2,753,194 2,810,221
Interest expense............................... 583,673 478,885 918,541
Administrative service fee income.............. 199,031 182,001 78,522
Administrative service fee expense............. 1,402,834 1,181,156 1,167,308
Asset acquisitions............................. 135,500 107,558 376,600
Asset disposals, proceeds...................... 223,500 270,907 155,755
Gain on asset disposals........................ 11,134 101,607 138,733
Engineering & estimating expense............... 79,249 52,505 80,135
Sales.......................................... 7,326,151 8,838,367 8,902,154
</TABLE>

During 1996, the Company made noncash dividends to its parent for the
assumption of certain operating liabilities of $355,299, declared a $10,000,000
dividend paid in 1997 and paid cash dividends of $4,000,000.

During 1997, the Company declared and paid an additional cash dividend of
$3,970,000.

During 1998, the Company received a noncash contribution from its parent
for the assumption of certain operating liabilities of $199,020.

F-51
<PAGE> 151
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. ACQUISITIONS:

During 1998, 1997 and 1996, the Company acquired the assets of various
materials operations, all of which were accounted for by the purchase method
and, accordingly, results of operations for the acquired businesses have been
included in the consolidated statement of income from their respective dates of
acquisition. Pro forma financial information is not presented for the
acquisitions because the impact is not material to the results of operations.
The aggregate purchase prices were $2,136,356, $9,477,437 and $3,092,884 during
1998, 1997 and 1996, respectively. Included in the 1997 purchase price was the
assumption of long-term debt totaling $1,339,381 and the issuance of a $500,000
long-term note payable. Goodwill related to these acquisitions was $357,111,
$2,120,022 and $1,202,950 during 1998, 1997 and 1996, respectively and is
amortized over periods of 15 to 20 years.

14. OTHER MATTERS:

The Company is involved in various lawsuits and claims incidental to its
business. Management believes that any resulting liability should not materially
affect the Company's financial position, future results of operations or cash
flows.

15. SUBSEQUENT EVENTS:

On February 28, 1999, the Company purchased the remaining 60% of Pacific
Rock Products, L.L.C. and Pacific Rock Products Trucking, L.L.C. (formerly River
City Machinery, L.L.C.), a materials operation operating in the Portland, Oregon
area, for $40,000,000. Any goodwill related to this purchase will be amortized
over a period of 20 years.

On January 3, 2000, the Company acquired 100% of the outstanding common
stock and related assets of a materials operation operating in the Northern
California area, for approximately $30,000,000. Identifiable intangible assets
related to this purchase will be amortized over their useful life of 27.5 years.
There was no goodwill related to this transaction.

F-52
<PAGE> 152

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholder
Kiewit Materials Company

Our audit of the consolidated financial statements referred to in our report
dated February 11, 2000 appearing on page F-34 also included an audit of the
financial statement schedule appearing on page F-54. In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.

PricewaterhouseCoopers LLP

Omaha, Nebraska
February 11, 2000

F-53
<PAGE> 153

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO AMOUNTS BALANCE
BEGINNING COSTS AND CHARGED TO END OF
OF PERIOD EXPENSES RESERVES OTHER PERIOD
--------- ------------------ ---------- ----- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 26, 1998
Allowance for doubtful trade
accounts.......................... $ 785 $ 42 $ (47) $-- $ 780
Reserves:
Insurance claims.................. 4,834 2,030 (1,238) -- 5,626
YEAR ENDED DECEMBER 27, 1997
Allowance for doubtful trade
accounts.......................... $ 863 $ 153 $ (231) $-- $ 785
Reserves:
Insurance claims.................. 4,506 1,427 (1,099) -- 4,834
YEAR ENDED DECEMBER 28, 1996
Allowance for doubtful trade
accounts.......................... $ 797 $ 140 $ (74) $-- $ 863
Reserves:
Insurance claims.................. 4,463 1,461 (1,418) -- 4,506
</TABLE>

F-54
<PAGE> 154

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ----------------------------
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenue............................ $116,882,523 $89,112,890 $328,454,274 $245,102,685
Cost of revenue.................... (94,924,199) (74,871,996) (274,767,602) (208,829,003)
Depreciation, depletion and
amortization..................... (4,382,596) (2,819,668) (11,888,240) (8,200,489)
------------ ----------- ------------ ------------
17,575,728 11,421,226 41,798,432 28,073,193
General and administrative
expenses......................... (6,152,012) (5,293,117) (18,776,674) (15,327,565)
------------ ----------- ------------ ------------
Operating earnings................. 11,423,716 6,128,109 23,021,758 12,745,628
Other income (expense):
Investment income................ 1,329,022 789,078 3,056,436 2,585,868
Equity earnings.................. -- 1,377,805 215,514 2,636,222
Interest expense................. (487,071) (165,079) (1,351,591) (766,624)
Other, net....................... 18,309 389,173 743,698 972,982
------------ ----------- ------------ ------------
860,260 2,390,977 2,664,057 5,428,448
------------ ----------- ------------ ------------
Earnings before income taxes and
minority interest................ 12,283,976 8,519,086 25,685,815 18,174,076
Minority interest.................. (27,252) (56,280) (72,082) (109,120)
Income tax expense................. (4,913,591) (2,912,366) (10,274,326) (6,335,678)
------------ ----------- ------------ ------------
Net earnings....................... $ 7,343,133 $ 5,550,440 $ 15,339,407 $ 11,729,278
============ =========== ============ ============
Net earnings per share:
Basic and diluted................ $ 73,431 $ 55,504 $ 153,394 $ 117,293
============ =========== ============ ============
</TABLE>

See accompanying notes to consolidated condensed financial statements.
F-55
<PAGE> 155

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
-------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 54,564,445
Marketable securities..................................... 2,588,475
Receivables, less allowance of $1,080,284................. 57,381,716
Inventories............................................... 10,092,030
Deferred income taxes..................................... 3,792,000
Other..................................................... 3,187,830
------------
Total current assets........................................ 131,606,496
Property, plant and equipment, less accumulated depreciation
of $94,934,094............................................ 99,467,305
Other assets................................................ 32,363,412
------------
$263,437,213
============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 23,080,701
Current portion of long-term debt......................... 438,665
Accrued payroll and payroll taxes......................... 4,992,921
Accrued insurance costs................................... 7,322,225
Income taxes payable -- parent company.................... 13,600,800
Other..................................................... 2,251,319
------------
Total current liabilities................................... 51,686,631
Long-term debt, less current portion........................ 2,543,957
Deferred income taxes....................................... 7,598,000
Other liabilities........................................... 2,481,534
Minority interest........................................... 367,125
------------
Total liabilities...................................... 64,677,247
Stockholder's equity:
Common stock, par $.01; and 100 shares authorized, issued
and outstanding........................................ 1
Additional paid-in capital................................ 126,609,627
Accumulated other comprehensive income.................... (464,843)
Retained earnings......................................... 72,615,181
------------
Total stockholder's equity.................................. 198,759,966
------------
$263,437,213
============
</TABLE>

See accompanying notes to consolidated condensed financial statements.
F-56
<PAGE> 156

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operations:
Net cash provided by operations........................... $ 10,143,108 $ 2,843,773
Cash flows from investing activities:
Sales of marketable securities............................ -- 760,621
Purchases of marketable securities........................ -- (16,874)
Proceeds from sales of property, plant and equipment...... 1,216,238 878,316
Investments and acquisitions.............................. (34,896,029) --
Capital expenditures...................................... (16,814,147) (10,014,214)
------------ -----------
Net cash used in investing activities.................. (50,493,938) (8,392,151)
Cash flows from financing activities:
Payments on long-term debt................................ (15,973,285) (280,688)
Contributions from parent................................. 45,286,690 3,379,024
------------ -----------
Net cash provided by financing activities.............. 29,313,405 3,098,336
------------ -----------
Net decrease in cash and cash equivalents................... (11,037,425) (2,450,042)
Cash and cash equivalents at beginning of period............ 65,601,870 48,021,924
------------ -----------
Cash and cash equivalents at end of period.................. $ 54,564,445 $45,571,882
============ ===========
</TABLE>

See accompanying notes to consolidated condensed financial statements.
F-57
<PAGE> 157

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION:

The consolidated condensed financial statements include the accounts of
Kiewit Materials Company ("KMC") and its subsidiaries (collectively, the
"Company"). The Company was formed on February 2, 1999. Several affiliated
operating corporations under common ownership (the "Predecessors"), each one of
which is engaged in an aspect of the materials business, were combined on March
1, 1999 through a series of non monetary contributions from KMC's parent, Peter
Kiewit Sons', Inc. ("Kiewit").

All financial statements contained herein are unaudited and, in the opinion
of management, contain all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of financial position and results of
operations for the periods presented. The Company's accounting policies and
certain other disclosures are set forth in the notes to the consolidated
financial statements.

The results of operations for the nine months ended September 30, 1999 are
not necessarily indicative of the results to be expected for the full year.

2. EARNINGS PER SHARE:

Basic earnings per share have been computed using the weighted average
number of shares outstanding during each period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ --------------------------
1999 1998 1999 1998
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net earnings available to common
stockholders.................. $7,343,133 $5,550,440 $15,339,407 $11,729,278
========== ========== =========== ===========
Total number of weighted average
shares outstanding used to
compute basic earnings per
share......................... 100 100 100 100
========== ========== =========== ===========
Net earnings
Basic earnings per share...... $ 73,431 $ 55,504 $ 153,394 $ 117,293
========== ========== =========== ===========
</TABLE>

3. INVENTORIES:

Inventories consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
-------------
<S> <C>
Raw materials........................................... $ 7,644,357
Other................................................... 2,447,673
-----------
$10,092,030
===========
</TABLE>

4. COMPREHENSIVE INCOME:

Comprehensive income includes net earnings and unrealized gains (losses) on
securities and minimum pension liability adjustments.

F-58
<PAGE> 158
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

4. COMPREHENSIVE INCOME, CONTINUED:
Comprehensive income for the three months and nine months ended September
30, 1999 and 1998 was as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ --------------------------
1999 1998 1999 1998
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net earnings.................... $7,343,133 $5,550,440 $15,339,407 $11,729,278
Other comprehensive income,
before tax:
Unrealized gains (loss)
arising during period...... (8,996) 30,302 (32,941) 32,177
Reclassification adjustments
for losses included in net
earnings................... -- -- -- (24,648)
Minimum pension liability
adjustment................. 5,983 9,317 17,954 27,951
Income tax benefit (expense)
related to items of other
comprehensive income....... 1,347 (14,852) 6,316 (12,663)
---------- ---------- ----------- -----------
Comprehensive income............ $7,341,467 $5,575,207 $15,330,736 $11,752,095
========== ========== =========== ===========
</TABLE>

5. ACQUISITION:

On February 28, 1999, the Company purchased the remaining 60% of Pacific
Rock Products, L.L.C., and Pacific Rock Products Trucking L.L.C. (formerly River
City Machinery L.L.C.) a materials operation operating in the Portland, Oregon
area, for $40,000,000. The acquisition was accounted for by the purchase method
of accounting. The excess of aggregate purchase price over fair value of
identifiable assets and liabilities acquired of approximately $17,305,204 was
recognized as goodwill and is being amortized over 20 years. The operating
results of the remaining 60% are included in the consolidated results of
operations from the date of acquisition. The following pro forma financial
information assumes the acquisition occurred at the beginning of 1998. These
results have been prepared for comparative purposes only and do not purport to
be indicative of what would have occurred had the acquisition been made at the
beginning of 1998, or the results which may occur in the future.

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue................... $116,882,523 $111,194,180 $332,584,508 $292,034,577
Net earnings.............. 7,343,133 7,617,147 15,549,533 15,683,611
Net earnings per share:
Basic and diluted....... $ 73,431 $ 76,171 $ 155,495 $ 156,836
</TABLE>

6. OTHER MATTERS:

The Company is involved in various lawsuits and claims incidental to its
business. Management believes that any resulting liability, beyond that
provided, should not materially affect the Company's financial position, future
results of operations or future cash flows.

7. SUBSEQUENT EVENT:

F-59
<PAGE> 159

PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Combined Financial Statements as of December 31, 1997 and
December 31, 1996 and for the year ended December 31, 1997
and the period from inception (February 1, 1996) to
December 31, 1996:
Independent Auditors' Report................................ F-61
Combined Balance Sheets..................................... F-62
Combined Statements of Income and Members' Equity........... F-63
Combined Statements of Cash Flows........................... F-64
Notes to Combined Financial Statements...................... F-65
Combined Financial Statement Schedule for the two years in
the period ended December 31, 1997........................ F-71

Combined Financial Statements as of December 31, 1998 and
December 31, 1997 and for the years ended December 31,
1998 and 1997:
Independent Auditors' Report................................ F-72
Combined Balance Sheets..................................... F-73
Combined Statements of Income and Members' Equity........... F-74
Combined Statements of Cash Flows........................... F-75
Notes to Combined Financial Statements...................... F-76

Financial Statement Schedule for the two years in the period
ended December 31, 1998................................... F-81
</TABLE>

F-60
<PAGE> 160

INDEPENDENT AUDITORS' REPORT

To the Members
Pacific Rock Products, L.L.C. and
River City Machinery, L.L.C.

We have audited the accompanying combined balance sheets of Pacific Rock
Products, L.L.C. and River City Machinery, L.L.C. as of December 31, 1997 and
1996, and the related combined statements of income and members' equity, and
cash flows for the year ended December 31, 1997 and the period from inception
(February 1, 1996) to December 31, 1996. We have also audited the related
Schedule II Combined Valuation and Qualifying Accounts. These combined financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and schedule. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion the combined financial statements referred to above present
fairly, in all material respects, the financial position of Pacific Rock
Products, L.L.C. and River City Machinery, L.L.C. as of December 31, 1997 and
1996, and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.

Also in our opinion, the schedule referred to above presents fairly, in all
material respects, the information set forth therein.

Perkins & Company, P.C.
Portland, Oregon
February 20, 1998

F-61
<PAGE> 161

PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 1)........................ $ 7,865,893 $ 584,036
Accounts receivable -- trade, less allowance for doubtful
accounts of $271,700 and $250,000 in 1997 and 1996,
respectively (Note 3).................................. 9,831,538 7,954,217
Accounts receivable -- related parties (Notes 3 and 6).... 562,323 1,468,218
Inventories (Notes 2 and 3)............................... 1,876,357 708,103
Other current assets...................................... 410,219 366,704
----------- -----------
Total current assets................................... 20,546,330 11,081,278
PROPERTY, PLANT AND EQUIPMENT (Notes 1, 3 and 5):
Buildings................................................. 978,994 691,090
Equipment................................................. 31,696,135 23,635,189
----------- -----------
32,675,129 24,326,279
Less accumulated depreciation............................. 9,138,028 6,633,914
----------- -----------
23,537,101 17,692,365
Land and gravel deposits, net............................. 10,546,235 10,603,936
----------- -----------
34,083,336 28,296,301
GOODWILL (Note 1)........................................... 1,154,935 --
DEPOSITS.................................................... 116,666 193,993
----------- -----------
$55,901,267 $39,571,572
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Long-term debt due in one year (Note 3)................... $ 4,219,989 $ 3,823,326
Accounts payable -- trade................................. 1,453,479 1,583,241
Accounts payable -- related parties (Note 6).............. 236,464 475,186
Accrued interest.......................................... 198,862 177,152
Accrued payroll and taxes................................. 1,084,572 622,004
Other accrued liabilities................................. 268,277 94,380
----------- -----------
Total current liabilities.............................. 7,461,643 6,775,289
LONG-TERM DEBT -- NET OF PORTION DUE IN ONE YEAR (Note 3)... 18,801,817 13,966,500
MEMBERS' EQUITY............................................. 29,637,807 18,829,783
----------- -----------
$55,901,267 $39,571,572
=========== ===========
</TABLE>

See accompanying notes to combined financial statements.
F-62
<PAGE> 162

PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

COMBINED STATEMENTS OF INCOME AND MEMBERS' EQUITY
YEAR ENDED DECEMBER 31, 1997 AND PERIOD FROM FEBRUARY 1, 1996
(DATE OF INCEPTION) TO DECEMBER 31, 1996

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
REVENUES:
Sales..................................................... $55,373,472 $41,712,729
Gain on sales of equipment................................ 235,543 94,120
Other..................................................... 623,617 439,325
----------- -----------
56,232,632 42,246,174
COSTS AND EXPENSES:
Cost of sales............................................. 38,415,384 31,704,115
General and administrative................................ 2,398,693 1,573,092
Depreciation, depletion and amortization.................. 2,901,084 1,869,842
Interest.................................................. 1,709,447 1,063,074
----------- -----------
45,424,608 36,210,123
----------- -----------
NET INCOME.................................................. 10,808,024 6,036,051
MEMBERS' EQUITY, BEGINNING OF YEAR.......................... 18,829,783 --
MEMBERS' CONTRIBUTIONS (Note 1)............................. -- 15,193,732
DISTRIBUTIONS............................................... -- (2,400,000)
----------- -----------
MEMBERS' EQUITY, END OF YEAR................................ $29,637,807 $18,829,783
=========== ===========
</TABLE>

See accompanying notes to combined financial statements.
F-63
<PAGE> 163

PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

COMBINED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997 AND PERIOD FROM FEBRUARY 1, 1996
(DATE OF INCEPTION) TO DECEMBER 31, 1996

<TABLE>
<CAPTION>
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $10,808,024 $ 6,036,051
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, depletion and amortization............... 2,901,084 1,869,842
Provision for losses on accounts receivable............ 65,118 163,055
Gain on sales of equipment............................. (235,543) (94,120)
(Increase) decrease in assets:
Accounts receivable.................................. (1,036,545) (6,260,125)
Inventories.......................................... (1,168,254) (126,578)
Other current assets and deposits.................... 33,812 (266,839)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses................ 289,691 389,205
----------- ------------
Net cash provided by operating activities......... 11,657,387 1,710,491
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of equipment.......................... 326,044 160,758
Purchase of property, plant and equipment................. (7,990,661) (11,261,140)
Purchase of goodwill...................................... (931,176) --
----------- ------------
Net cash used in investing activities............. (8,595,793) (11,100,382)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from new long-term borrowings.................... 8,000,000 10,319,200
Principal payments on long-term debt...................... (3,779,737) (1,345,646)
Members' contributions.................................... -- 3,400,373
Distributions paid........................................ -- (2,400,000)
----------- ------------
Net cash provided by financing activities......... 4,220,263 9,973,927
----------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 7,281,857 584,036
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 584,036 --
----------- ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 7,865,893 $ 584,036
=========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 1,687,737 $ 946,194
Noncash investing and financing transactions:
Assets and liabilities (net) contributed by members
(Note 1)............................................. $ -- $ 15,193,732
Long-term debt incurred to purchase real property and
equipment............................................ $ 716,413 $ 1,477,242
Long-term debt incurred to purchase goodwill........... $ 295,304 --
</TABLE>

See accompanying notes to combined financial statements.
F-64
<PAGE> 164

PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

Organization -- Effective February 1, 1996, Pacific Rock Products, Inc.
(PRP) and Rock Products Leasing, Inc. (RPL), entered into an agreement with
Gilbert Southern Corp. (Gilbert), an affiliate of Peter Kiewit Sons' Inc., to
form two new entities, Pacific Rock Products, L.L.C. and River City Machinery
L.L.C., which are hereinafter referred to as the "Company," in a business
combination accounted for as a purchase. PRP and RPL contributed essentially all
of their assets and liabilities, except certain intercompany receivables and
payables, with a fair value of $15,000,000, in exchange for a 60% interest in
the Company. Pacific Rock Products, Inc. simultaneously changed its name to
Aggregate Services, Inc. (ASI). Gilbert contributed real property, real property
leases, and cash with a fair value of $10,000,000 in exchange for a 40% interest
in the Company.

For accounting purposes, the assets and liabilities contributed by PRP and
RPL have been recorded at their predecessor's basis. The assets contributed by
Gilbert have been recorded at fair value. The amount recorded to equipment will
be depreciated over the estimated remaining useful lives of the assets. The
amount recorded as gravel deposits will be depleted based on the ratio of
quantities extracted to total estimated quantities available.

A summary of the assets and liabilities contributed by the members on
February 1, 1996 is as follows:

<TABLE>
<S> <C>
Assets:
Cash and cash equivalents................................. $ 3,400,373
Accounts receivable....................................... 3,325,365
Inventories............................................... 581,525
Other current assets...................................... 226,286
Property, plant and equipment............................. 17,494,399
Deposits.................................................. 67,572
-----------
25,095,520
Liabilities:
Long-term debt due in one year............................ 1,823,782
Accounts payable and accrued liabilities.................. 2,562,758
Long-term debt -- net of portion due in one year.......... 5,515,248
-----------
9,901,788
-----------
Members' contributions...................................... $15,193,732
===========
</TABLE>

In March 2002, Gilbert has an option to offer to purchase the 60%
membership interest of ASI and RPL. If Gilbert does not exercise its option, ASI
and RPL have an option to offer to purchase Gilbert's 40% membership interest.
Each member has the right to purchase the other member's interest by increasing
the offer price by a predetermined formula. In the event Gilbert does not
acquire the membership interest of ASI and RPL, it has an option to purchase
certain specified real property of the Company at its then current market value.

Nature of Operations -- Pacific Rock Products, L.L.C. produces sand and
gravel, crushed rock products, asphalt and concrete mix. It operates from six
sources of supply which are owned and leased, none of which produced greater
than 32% of revenues in 1997. The products are used in commercial and
residential construction and in construction and maintenance of roads and
utilities.

River City Machinery, L.L.C.'s principal activity is leasing equipment to
Pacific Rock Products, L.L.C.

F-65
<PAGE> 165
PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Basis of Accounting -- The financial statements of Pacific Rock Products,
L.L.C. and River City Machinery, L.L.C. have been combined due to common
business activities, intercompany transactions and common ownership. All
material intercompany transactions have been eliminated in the combination.

Cash and Cash Equivalents -- For purposes of the statement of cash flows,
the Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

Concentrations of Credit Risk -- The Company grants credit to material
suppliers and contractors located in southwestern Washington and northwestern
Oregon. Concentration of credit risk with respect to accounts receivable is
limited as the receivables are predominately secured by lien and bond rights.
The Company's practice is to perfect these rights after 60 days.

The Company places its cash and cash equivalents with two financial
institutions located in Washington and Oregon. Cash balances are insured by the
Federal Deposit Insurance Corporation up to $100,000. At December 31, 1997 and
1996, the Company's cash balances exceeded the insured amounts. Cash equivalents
are invested in short term prime quality commercial paper and U.S. Government
instruments and are not insured by the Federal Deposit Corporation. Cash
equivalents were approximately $7,436,000 and $237,000 at December 31, 1997 and
1996, respectively.

Inventories -- Inventories are stated at the lower of cost or market. Cost
is determined by the average cost method for gravel and rock and the first-in,
first-out method for fuel.

Property, Plant and Equipment -- Property, plant and equipment is recorded
at cost. Depletion of gravel deposits is provided based on the ratio of
quantities extracted during the year to total estimated quantities available.
Land and gravel deposits are reported net of accumulated depletion of $2,578,597
and $2,520,896 at December 31, 1997 and 1996, respectively. Depreciation for
plant and equipment is computed using the straight-line and declining balance
methods over estimated useful lives of 3 to 10 years for equipment and 10 to 20
years for buildings.

Maintenance and repair costs are charged to current earnings. Upon disposal
of assets the cost of assets and the related accumulated depreciation are
removed from the accounts. Gains or losses are reflected in current earnings.

Income Taxes -- Income and losses of the Company are included in the
federal and state income tax returns of its members. Accordingly, no provision
is made in these financial statements for income taxes.

Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-66
<PAGE> 166
PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2 -- INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
1997 1996
---------- --------
<S> <C> <C>
Gravel and rock...................................... $1,803,930 $650,699
Fuel................................................. 72,427 57,404
---------- --------
$1,876,357 $708,103
========== ========
</TABLE>

NOTE 3 -- LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Notes payable to U.S. Bank through December 2001, due in
monthly installments of $223,727 plus interest at LIBOR
plus 2.0% (7.875% at December 31, 1997), collateralized
by accounts receivable, inventories and equipment....... $10,327,990 $13,636,737
Note payable to U.S. Bank through March 2003, due in
monthly installments of $161,661, beginning April 1998,
plus interest at 7.77%, collateralized by accounts
receivable, inventories and equipment................... 8,000,000 --
Notes payable to Lewis Rock and Redi-Mix through May 2007,
due in monthly installments of $12,275 including
interest at 8.0%, collateralized by equipment........... 972,222 --
Note payable to Hulit through November 2016, due in
monthly installments of $6,835 including interest at
7.629%, collateralized by a deed of trust on real
property................................................ 820,066 838,747
Note payable to Wilmes through November 2016, due in
monthly installments of $5,731 including interest at 9%,
collateralized by a second trust deed on real
property................................................ 624,030 636,049
Note payable to Frost in monthly installments of $10,164
including interest at 10% through July 2002 when the
unpaid balance is due. Collateralized by a deed of trust
on real property........................................ 984,060 1,027,971
Lease payable for rock mining in monthly installments of
$20,500 through December 1998 including interest at 9%,
collateralized by mineral rights........................ 233,642 448,020
Capital lease obligation (Note 5)......................... 1,059,796 1,202,302
----------- -----------
23,021,806 17,789,826
Less current portion...................................... 4,219,989 3,823,326
----------- -----------
$18,801,817 $13,966,500
=========== ===========
</TABLE>

As of December 31, 1997, annual maturities of long-term debt, exclusive of
the capital lease obligation, for the next five years are as follows:

<TABLE>
<S> <C>
1998............................................. $4,066,316
1999............................................. 4,271,396
2000............................................. 4,400,096
2001............................................. 4,128,347
2002............................................. 2,004,991
Thereafter....................................... 3,090,864
</TABLE>

F-67
<PAGE> 167
PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 -- LONG-TERM DEBT, CONTINUED
The Company has financing agreements with U.S. Bank which specify certain
minimum financial ratios and tangible net worth requirements for the Company.

The Company has available through U.S. Bank an operating line of credit at
the lesser of $2,500,000 or the sum of 80% of eligible accounts receivable plus
50% of eligible inventory, with interest at the prime rate or LIBOR borrowing
rate plus 2.5%, due on demand. There were no amounts outstanding on the line of
credit at December 31, 1997 and 1996.

NOTE 4 -- PENSION AND PROFIT SHARING PLANS

Qualified defined contribution pension and profit sharing plans are
maintained by the Company for all employees meeting length of service
requirements except those employees that receive benefits of a retirement nature
under state and federal prevailing wage laws. The pension plan provides for
contributions of 5% of salaries. Contributions to the profit sharing plan are at
the discretion of the managers, not to exceed the amount deductible under the
Internal Revenue Code or 15% of salaries. The Company expenses pension and
profit sharing costs as incurred, which amounted to $636,158 and $430,850 for
1997 and 1996, respectively.

NOTE 5 -- LEASES AND COMMITMENTS

The Company extracts rock and sand from five leased properties. The
properties are leased for terms expiring through 2015 and generally require the
payment of royalties which are based on quantities extracted. The royalty
agreements generally specify a minimum annual royalty and provide for increases
in the royalty amount based on a variety of inflationary indexes. The Company is
obligated under the terms of various noncancelable equipment leases expiring
through 2001 and a noncancelable real property lease expiring in 2000. The
Company is also obligated under noncancelable real property leases with Freeway
Land Company and Production Land Company, Inc. which call for annual payments of
$60,000 plus an amount based on quantities sold through January 2004 and annual
payments of $322,800 through December 2002, respectively. Certain leases contain
renewal options. Other equipment and real property are leased on a
month-to-month basis.

The Company leases an asphalt plant under a long-term lease agreement
classified as a capital lease. The cost of the plant as of December 31, 1997 and
1996 was $1,608,745. Accumulated amortization amounted to $538,102 and $388,740
at December 31, 1997 and 1996, respectively. The amortization of this lease,
amounting to $149,722 and $136,915 for 1997 and 1996, respectively, has been
included in the Company's depreciation, depletion and amortization expense.

F-68
<PAGE> 168
PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- LEASES AND COMMITMENTS, CONTINUED
Future minimum lease and royalty payments are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASE LEASES ROYALTIES
---------- ---------- ----------
<S> <C> <C> <C>
Years ending December 31,
1998........................................... $ 228,620 $1,054,784 $1,905,000
1999........................................... 228,620 789,046 1,905,000
2000........................................... 228,620 755,316 405,000
2001........................................... 592,659 442,602 350,000
2002........................................... -- 387,800 244,929
Thereafter..................................... -- 65,000 925,833
---------- ---------- ----------
Total minimum lease payments required.......... 1,278,519 $3,494,548 $5,735,762
========== ==========
Less amount representing interest.............. 218,723
----------
Present value of minimum lease payments........ 1,059,796
Less current portion........................... 153,673
----------
Long-term portion of capital lease
obligation................................... $ 906,123
==========
</TABLE>

Total rent and royalty expense consists of the following:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Equipment rent.............................................. $2,672,033 $2,366,597
Real property rent.......................................... 750,335 570,402
Rock and sand lease and royalties:
Minimum................................................... 2,030,734 1,519,999
Contingent................................................ 688,608 571,407
---------- ----------
$6,141,710 $5,028,405
========== ==========
</TABLE>

The Company subleases portions of its leased property under agreements
expiring through 2000. Lease rentals received totaled $120,000 and $100,000 for
the years ended December 31, 1997 and 1996, respectively. Future lease rentals
are as follows:

NOTE 6 -- RELATED PARTY TRANSACTIONS

Accounts receivable and accounts payable -- related parties consist of
amounts due from or to members and their affiliates and owners.

Equipment and real property rents amounting to approximately $2,357,000 and
$1,794,000 for the years ended December 31, 1997 and 1996, respectively, were
paid to members and their affiliates and owners.

F-69
<PAGE> 169

NOTE 7 -- ACQUISITION

On May 20, 1997, the Company acquired the assets of Lewis Rock and Redi-Mix
in a business combination accounted for as a purchase. Lewis Rock and Redi-Mix
was primarily engaged in the production of concrete mix. The results of
operations of Lewis Rock and Redi-Mix is included in the accompanying financial
statements since the date of acquisition. The total cost of the acquisition was
approximately $2,236,700, which exceeded the fair value of the net assets of
Lewis Rock and Redi-Mix by $1,226,480. The excess is being amortized over ten
years.

NOTE 8 -- SUBSEQUENT EVENTS

On January 29, 1998, the members authorized and distributed $4,000,000 in
cash to its members in proportion to their ownership interests.

F-70
<PAGE> 170

PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

SCHEDULE II
COMBINED VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO AMOUNTS
BEGINNING COSTS AND CHARGED TO BALANCE END
OF PERIOD EXPENSES RESERVES OTHER OF PERIOD
--------- ---------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Allowance for doubtful accounts..... $250,000 $ 65,118 $ (43,418) $ -- $271,700

YEAR ENDED DECEMBER 31, 1996
Allowance for doubtful accounts..... $250,000 $163,055 $(163,055) $ -- $250,000
</TABLE>

F-71
<PAGE> 171

INDEPENDENT AUDITORS' REPORT

To the Members
Pacific Rock Products, L.L.C. and
River City Machinery, L.L.C.

We have audited the accompanying combined balance sheets of Pacific Rock
Products, L.L.C. and River City Machinery, L.L.C. as of December 31, 1998 and
1997, and the related combined statements of income and members' equity, and
cash flows for the years then ended. We have also audited the related Schedule
II Combined Valuation and Qualifying Accounts. These combined financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and schedule. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion the combined financial statements referred to above present
fairly, in all material respects, the financial position of Pacific Rock
Products, L.L.C. and River City Machinery, L.L.C. as of December 31, 1998 and
1997, and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.

Also, in our opinion, the schedule referred to above presents fairly, in
all material respects, the information set forth therein.

Perkins & Company, P.C.
Portland, Oregon
February 24, 1999

F-72
<PAGE> 172

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

COMBINED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 1)........................ $ 7,085,802 $ 7,865,893
Accounts receivable -- trade, less allowance for doubtful
accounts of $296,136 in 1998 and $271,700 in 1997 (Note
3)..................................................... 8,117,955 9,831,538
Accounts receivable -- related parties (Notes 3 and 6).... 70,783 562,323
Inventories (Notes 2 and 3)............................... 1,175,963 1,876,357
Other current assets...................................... 595,656 410,219
----------- -----------
Total current assets................................... 17,046,159 20,546,330
PROPERTY, PLANT AND EQUIPMENT (Notes 1, 3 and 5):
Buildings................................................. 1,414,399 978,994
Equipment................................................. 36,310,382 31,696,135
----------- -----------
37,724,781 32,675,129
Less accumulated depreciation............................. 12,447,063 9,138,028
----------- -----------
25,277,718 23,537,101
Land and gravel deposits, net............................. 10,093,814 10,546,235
----------- -----------
35,371,532 34,083,336
GOODWILL (Note 1)........................................... 1,032,287 1,154,935
DEPOSITS.................................................... 103,160 116,666
----------- -----------
$53,553,138 $55,901,267
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Long-term debt due in one year (Note 3)................... $ 4,411,641 $ 4,219,989
Accounts payable -- trade................................. 1,294,481 1,453,479
Accounts payable -- related parties (Note 6).............. 98,947 236,464
Accrued interest.......................................... 120,377 198,862
Accrued payroll and taxes................................. 749,770 1,084,572
Other accrued liabilities................................. 679,662 268,277
----------- -----------
Total current liabilities.............................. 7,354,878 7,461,643
LONG-TERM DEBT -- NET OF PORTION DUE IN ONE YEAR (Note 3)... 13,434,094 18,801,817
COMMITMENTS AND CONTINGENCIES (Notes 5 and 7)
MEMBERS' EQUITY............................................. 32,764,166 29,637,807
----------- -----------
$53,553,138 $55,901,267
=========== ===========
</TABLE>

See accompanying notes to combined financial statements.
F-73
<PAGE> 173

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

COMBINED STATEMENTS OF INCOME AND MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
REVENUES:
Sales..................................................... $62,760,002 $55,373,472
Gain on sales of property and equipment................... 1,446,429 235,543
Other..................................................... 1,022,453 623,617
----------- -----------
65,228,884 56,232,632
COSTS AND EXPENSES:
Cost of sales............................................. 42,485,630 38,415,384
General and administrative................................ 3,274,376 2,398,693
Depreciation, depletion and amortization.................. 3,704,762 2,901,084
Interest.................................................. 1,637,757 1,709,447
----------- -----------
51,102,525 45,424,608
----------- -----------
NET INCOME.................................................. 14,126,359 10,808,024
MEMBERS' EQUITY, BEGINNING OF YEAR.......................... 29,637,807 18,829,783
LESS DISTRIBUTIONS.......................................... 11,000,000 --
----------- -----------
MEMBERS' EQUITY, END OF YEAR................................ $32,764,166 $29,637,807
=========== ===========
</TABLE>

See accompanying notes to combined financial statements.
F-74
<PAGE> 174

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 14,126,359 $10,808,024
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, depletion and amortization............... 3,704,762 2,901,084
Provision for bad debts................................ 383,519 65,118
Gain on sales of property and equipment................ (1,446,429) (235,543)
(Increase) decrease in assets:
Accounts receivable.................................. 1,821,604 (1,036,545)
Inventories.......................................... 700,394 (1,168,254)
Other current assets and deposits.................... (165,931) 33,812
(Decrease) increase in liabilities:
Accounts payable and accrued expenses................ (298,417) 289,691
------------ -----------
Net cash provided by operating activities......... 18,825,861 11,657,387
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property and equipment............. 1,046,585 326,044
Purchases of property, plant and equipment................ (5,458,085) (7,990,661)
Purchase of goodwill...................................... -- (931,176)
------------ -----------
Net cash used in investing activities............. (4,411,500) (8,595,793)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from new long-term borrowings.................... -- 8,000,000
Principal payments on long-term debt...................... (4,194,452) (3,779,737)
Distributions paid........................................ (11,000,000) --
------------ -----------
Net cash provided (used) by financing
activities...................................... (15,194,452) 4,220,263
------------ -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........ (780,091) 7,281,857
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 7,865,893 584,036
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 7,085,802 $ 7,865,893
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 1,716,243 $ 1,687,737
Noncash investing and financing activities:
Long-term debt incurred to purchase property and
equipment............................................ $ -- $ 716,413
Long-term debt incurred to purchase goodwill........... $ -- $ 295,304
Long-term debt repaid from proceeds from sale of
property............................................. $ 981,619 $ --
</TABLE>

See accompanying notes to combined financial statements.
F-75
<PAGE> 175

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

Organization -- In February 1996, Aggregate Services, Inc. (ASI) and Rock
Products Leasing, Inc. (RPL), entered into an agreement with Gilbert Southern
Corp. (Gilbert), an affiliate of Peter Kiewit Sons' Inc., to form two new
entities, Pacific Rock Products, L.L.C. and River City Machinery, L.L.C., which
are hereinafter referred to as the "Company." As part of that agreement, Gilbert
has an option, in March, 2002, to offer to purchase the 60% membership interests
of ASI and RPL. If Gilbert does not exercise its option, ASI and RPL have an
option to offer to purchase Gilbert's 40% membership interest. Each member has
the right to purchase the other member's interest by increasing the offer price
by a predetermined formula. In the event Gilbert does not acquire the membership
interest of ASI and RPL, it has an option to purchase certain specified real
property of the Company at its then current market value.

The members of the Company expect to enter into an agreement in February
1999 whereby an affiliate of Peter Kiewit Sons' Inc. will purchase the entire
60% membership interests of ASI and RPL.

Nature of Operations -- Pacific Rock Products, L.L.C. produces sand and
gravel, crushed rock products, asphalt and concrete mix. It operates from seven
sources of supply which are owned and leased, none of which produced greater
than 27% of revenues in 1998. The products are used in commercial and
residential construction and in construction and maintenance of roads and
utilities.

River City Machinery, L.L.C.'s principal activity is leasing equipment to
Pacific Rock Products, L.L.C.

Basis of Accounting -- The financial statements of Pacific Rock Products,
L.L.C. and River City Machinery, L.L.C. have been combined due to common
business activities, intercompany transactions and common ownership. All
material intercompany transactions have been eliminated in the combination.

The Company places its cash and cash equivalents with two financial
institutions located in Washington and Oregon. Cash balances are insured by the
Federal Deposit Insurance Corporation up to $100,000. At December 31, 1998 and
1997, the Company's cash balances exceeded the insured amounts. Cash equivalents
are invested in short term prime quality repurchase agreements and are not
insured by the Federal Deposit Corporation. Cash equivalents were approximately
$7,303,000 and $7,436,000 at December 31, 1998 and 1997, respectively.

Inventories -- Inventories are stated at the lower of cost or market. Cost
is determined by the average cost method for gravel and rock and the first-in,
first-out method for fuel.

Property, Plant and Equipment -- Property, plant and equipment is recorded
at cost. Depletion of gravel deposits is provided based on the ratio of
quantities extracted during the year to total estimated quantities available.
Land and gravel deposits are reported net of accumulated depletion of $2,642,246
and $2,578,597 at December 31, 1998 and 1997, respectively. Depreciation for
plant and equipment is computed using the straight-line and declining balance
methods over estimated useful lives of 3 to 10 years for equipment and 10 to 20
years for buildings.

F-76
<PAGE> 176
PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Maintenance and repair costs are charged to current earnings. Upon disposal
of assets the cost of assets and the related accumulated depreciation are
removed from the accounts. Gains or losses are reflected in current earnings.

Goodwill -- Goodwill represents the excess of the cost of acquiring an
unrelated concrete business in 1997, over the fair value of net assets at the
date of acquisition. Amortization for goodwill is computed using the
straight-line method over 10 years. Accumulated amortization amounted to
$194,193 and $71,545 at December 31, 1998 and 1997, respectively. Amortization
expense charged to operations in 1998 and 1997 was $122,648 and $71,545,
respectively.

NOTE 2 -- INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Gravel and rock..................................... $1,123,967 $1,803,930
Fuel and oil........................................ 51,996 72,427
---------- ----------
$1,175,963 $1,876,357
========== ==========
</TABLE>

NOTE 3 -- LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Notes payable to U.S. Bank through December 2001, due in
monthly installments of $223,727 plus interest at LIBOR
plus 2.0% (7.85% at December 31, 1998), collateralized
by accounts receivable, inventories and equipment....... $ 7,643,267 $10,327,990
Note payable to U.S. Bank through March 2003, due in
monthly installments of $161,661, including interest at
7.77%, collateralized by accounts receivable,
inventories and equipment............................... 6,985,457 8,000,000
Notes payable to Lewis Rock and Redi-Mix through May 2007,
due in monthly installments of $12,275 including
interest at 8.0%, collateralized by equipment........... 900,094 972,222
Note payable to Hulit through November 2016, due in
monthly installments of $6,835 including interest at
7.629%, collateralized by a deed of trust on real
property................................................ 799,910 820,066
</TABLE>

F-77
<PAGE> 177
PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 -- LONG-TERM DEBT, CONTINUED

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Note payable to Wilmes through November 2016, due in
monthly installments of $5,731 including interest at 9%,
collateralized by a second trust deed on real
property................................................ 610,884 624,030
Note and lease payable.................................... -- 1,217,702
Capital lease obligation (Note 5)......................... 906,123 1,059,796
----------- -----------
17,845,735 23,021,806
Less current portion...................................... 4,411,641 4,219,989
----------- -----------
$13,434,094 $18,801,817
=========== ===========
</TABLE>

As of December 31, 1998, future annual maturities of long-term debt are as
follows:

<TABLE>
<S> <C>
1999............................................. $4,411,641
2000............................................. 4,549,711
2001............................................. 4,659,597
2002............................................. 1,971,818
2003............................................. 617,302
Thereafter....................................... 1,635,666
</TABLE>

The Company has financing agreements with U.S. Bank which specify certain
minimum financial ratios and tangible net worth requirements for the Company.
The Company was in compliance with the financial covenants of the agreements at
December 31, 1998.

The Company has available through U.S. Bank an operating line of credit at
the lesser of $2,500,000 or the sum of 80% of eligible accounts receivable plus
50% of eligible inventory, with interest at the prime rate or LIBOR borrowing
rate plus 2.0%, due on demand. There were no amounts outstanding on the line of
credit at December 31, 1998 and 1997.

NOTE 4 -- PENSION AND PROFIT SHARING PLANS

Qualified defined contribution pension and profit sharing plans are
maintained by the Company for all employees meeting length of service
requirements except those employees that receive benefits of a retirement nature
under state and federal prevailing wage laws. The pension plan provides for
contributions of 5% of salaries. Contributions to the profit sharing plan are at
the discretion of the managers, not to exceed the amount deductible under the
Internal Revenue Code or 15% of salaries. The Company expenses pension and
profit sharing costs as incurred, which amounted to $926,763 and $634,084 for
1998 and 1997, respectively.

NOTE 5 -- LEASES AND COMMITMENTS

The Company extracts rock and sand from six leased properties. The
properties are leased for terms expiring through 2015 and generally require the
payment of royalties which are based on quantities extracted. The royalty
agreements generally specify a minimum annual royalty and provide for increases
in the royalty amount based on a variety of inflationary indexes. One lease
contains a provision providing for an incentive payment of approximately
$372,000 to the Company, if the property is completely mined by December 2003.
The Company also leases real property for two retail outlets under noncancelable
real property leases expiring through 2001. The Company is obligated under the
terms of various noncancelable equipment leases expiring through 2003. The
Company is also obligated under noncancelable real property leases with Freeway
Land Company and Production Land Company, Inc. which call for annual payments of
$103,500 plus an amount

F-78
<PAGE> 178
PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- LEASES AND COMMITMENTS, CONTINUED
based on quantities sold through January 2004 and annual payments of $322,800
through December 2002, respectively. Certain leases contain renewal options.
Other equipment and real property are leased on a month-to-month basis.

The Company leases an asphalt plant under a long-term lease agreement
classified as a capital lease. The cost of the plant as of December 31, 1998 and
1997 was $1,608,745. Accumulated amortization amounted to $686,863 and $538,102
at December 31, 1998 and 1997, respectively. The amortization of this lease,
amounting to $149,033 and $149,722 for 1998 and 1997, respectively, has been
included in the Company's depreciation, depletion and amortization expense.

Future minimum lease and royalty payments are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASE LEASES ROYALTIES
---------- ---------- ----------
<S> <C> <C> <C>
Years ending December 31,
1999........................................... $ 228,620 $1,126,839 $1,862,501
2000........................................... 228,620 1,070,473 362,500
2001........................................... 592,659 984,955 307,500
2002........................................... -- 845,412 307,500
2003........................................... -- 251,689 307,500
Thereafter..................................... -- -- 1,025,950
---------- ---------- ----------
Total minimum lease payments required.......... 1,049,899 $4,279,368 $4,173,451
========== ==========
Less amount representing interest.............. 143,776
----------
Present value of minimum lease payments........ 906,123
Less current portion........................... 165,714
----------
Long-term portion of capital lease
obligation................................... $ 740,409
==========
</TABLE>

Total rent and royalty expense consists of the following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Equipment rent.............................................. $2,906,280 $2,672,033
Real property rent.......................................... 646,144 750,335
Rock and sand lease and royalties:
Minimum................................................... 2,083,688 2,030,734
Contingent................................................ 702,906 688,608
---------- ----------
$6,339,018 $6,141,710
========== ==========
</TABLE>

The Company subleases portions of its leased property under agreements
expiring through 2000. Lease rentals received totaled $192,000 annually for the
years ended December 31, 1998 and 1997. Future lease rentals are as follows:

F-79
<PAGE> 179
PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 -- RELATED PARTY TRANSACTIONS

Accounts receivable and accounts payable -- related parties consist of
amounts due from or to members and their affiliates and owners.

Equipment and real property rents amounting to approximately $2,067,000 and
$2,357,000 for the years ended December 31, 1998 and 1997, respectively, were
paid to members and their affiliates and owners.

NOTE 7 -- CONTINGENCIES

The Company is involved with two claims filed with the National Labor
Relations Board and a claim filed with the Equal Employment Opportunity
Commission. The Company's management does not believe that the ultimate
resolution of these claims will have a material effect on its financial
position, results of operations or cash flows.

In addition, the Company, in its regular course of business, is involved in
various claims and legal proceedings incidental to its normal business
activities. The Company's management does not believe that the ultimate
resolution of these investigations, claims and legal proceedings will have a
material effect on its financial position, results of operations or cash flows.

NOTE 8 -- YEAR 2000 ISSUE (UNAUDITED)

Like other businesses, the Company could be adversely affected if the
computer systems used by its personnel, suppliers or customers do not properly
process and calculate date related information and data from the period
surrounding and including January 1, 2000. This is commonly known as the "Year
2000" issue. Additionally, this issue could impact non-computer systems and
devices such as production equipment, scales, etc. At this time, because of the
complexities involved in the issue, management cannot provide assurances that
the Year 2000 issue will not have an impact on the Company's operations.

F-80
<PAGE> 180

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.
SCHEDULE II
COMBINED VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO AMOUNTS
BEGINNING COSTS AND CHARGED TO BALANCE END
OF PERIOD EXPENSES RESERVES OTHER OF PERIOD
--------- ---------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
Allowance for doubtful accounts......... $271,700 $383,519 $(359,083) $ -- $296,136

YEAR ENDED DECEMBER 31, 1997
Allowance for doubtful accounts......... $250,000 $ 65,118 $ (43,418) $ -- $271,700
</TABLE>

F-81
<PAGE> 181

INDEX TO PRO FORMA INFORMATION

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Peter Kiewit Sons', Inc. and Subsidiaries Pro Forma
Consolidated Condensed Statements of Earnings............. F-84
Peter Kiewit Sons', Inc. and Subsidiaries Pro Forma
Consolidated Condensed Balance Sheet...................... F-88
Notes to Peter Kiewit Sons', Inc. and Subsidiaries Pro Forma
Consolidated Condensed Financial Statements............... F-90
Kiewit Materials Company and Subsidiaries Pro Forma
Consolidated Condensed Statements of Earnings............. F-92
Kiewit Materials Company and Subsidiaries Pro Forma
Consolidated Condensed Balance Sheet...................... F-94
Notes to Kiewit Materials Company and Subsidiaries Pro Forma
Consolidated Condensed Financial Statements............... F-95
</TABLE>

F-82
<PAGE> 182

PRO FORMA FINANCIAL INFORMATION

The pro forma financial information of Kiewit and Kiewit Materials Company
has been prepared to give effect, as further described below, to the share
exchange, the debenture exchange offer and the spin-off.

The pro forma consolidated condensed statements of earnings assume that
these transactions are consummated at the beginning of the indicated period. The
pro forma consolidated condensed balance sheets assume that these transactions
are consummated as of September 30, 1999.

The pro forma financial information is not intended to reflect results of
operations or the financial position of Kiewit and Kiewit Materials Company
which actually would have resulted had these transactions been effected on the
dates indicated. Moreover, the pro forma information is not intended to be
indicative of future results of operations or financial position of Kiewit and
Kiewit Materials Company.

The pro forma financial information should be read in conjunction with
Kiewit's and Kiewit Materials Company's historical financial statements, and the
notes thereto which are contained elsewhere herein.

F-83
<PAGE> 183

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 26, 1998
---------------------------------------------------
SEPARATE OTHER
HISTORICAL KMC ADJUSTMENTS PRO FORMA
---------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue....................................... $ 3,379 $ (333) $ 7(b) $ 3,053
Cost of Revenue............................... (3,095) 298 (7)(b) (2,804)
------- -------- ----------- -------
284 (35) -- 249
General and Administrative Expenses........... (142) 19 -- (123)
------- -------- ----------- -------
Operating Earnings............................ 142 (16) -- 126
Other Income (Expense)
Investment Income and Equity Earnings....... 17 (9) -- 8
Interest Expense............................ (5) 1 (4)
Other, net.................................. 61 (1) -- 60
------- -------- ----------- -------
73 (9) 64
------- -------- ----------- -------
Earnings from Continuing Operations before
Income Taxes................................ 215 (25) -- 190
Provision for Income Taxes.................... (79) 10 -- (69)
------- -------- ----------- -------
Earnings from Continuing Operations........... $ 136 $ (15) $ -- $ 121
======= ======== =========== =======
Earnings from Continuing Operations per Share:
Basic....................................... $ 4.07 $ 3.75
======= =======
Diluted..................................... $ 4.02 $ 3.71
======= =======
Weighted Average Shares Outstanding (in thousands):
Basic....................................... 33,396 (1,214) 32,182
======= =========== =======
Diluted..................................... 33,828 (1,249) 32,579
======= =========== =======
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-84
<PAGE> 184

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 27, 1997
--------------------------------------------------
SEPARATE OTHER
HISTORICAL KMC ADJUSTMENTS PRO FORMA
---------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue........................................ $ 2,742 $ (277) $ 9(b) $ 2,474
Cost of Revenue................................ (2,408) 242 (9)(b) (2,175)
------- -------- ------ -------
334 (35) -- 299
General and Administrative Expenses............ (148) 16 -- (132)
------- -------- ------ -------
Operating Earnings............................. 186 (19) -- 167
Other Income (Expense)
Investment Income and Equity Earnings........ 20 (8) -- 12
Interest Expense............................. (3) 1 (2)
Other, net................................... 61 (1) -- 60
------- -------- ------ -------
78 (8) 70
------- -------- ------ -------
Earnings from Continuing Operations before
Income Taxes................................. 264 (27) 237
Provision for Income Taxes..................... (109) 10 --(c) (99)
------- -------- ------ -------
Earnings from Continuing Operations............ $ 155 $ (17) $ 138
======= ======== ====== =======
Earnings from Continuing Operations per Share:
Basic........................................ $ 4.00
=======
Diluted...................................... $ 3.84
=======
Weighted Average Shares Outstanding (in
thousands):
Basic........................................ 38,912
=======
Diluted...................................... 40,676
=======
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-85
<PAGE> 185

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 26, 1996
--------------------------------------------------
SEPARATE OTHER
HISTORICAL KMC ADJUSTMENTS PRO FORMA
---------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue........................................ $ 2,303 $ (246) $ 9(b) $2,066
Cost of Revenue................................ (2,078) 214 (9)(b) (1,873)
------- -------- ----------- ------
225 (32) -- 193
General and Administrative Expenses............ (118) 15 -- (103)
------- -------- ----------- ------
Operating Earnings............................. 107 (17) -- 90
Other Income (Expense)
Investment Income and Equity Earnings........ 19 (6) -- 13
Interest Expense............................. (4) 1 -- (3)
Other, net................................... 58 (1) -- 57
------- -------- ----------- ------
73 (6) -- 67
------- -------- ----------- ------
Earnings from Continuing Operations before
Income Taxes................................. 180 (23) -- 157
Provision for Income Taxes..................... (72) 9 -- (63)
------- -------- ----------- ------
Earnings from Continuing Operations............ $ 108 $ (14) $ -- $ 94
======= ======== =========== ======
Earnings from Continuing Operations per Share:
Basic........................................ $ 2.53
=======
Diluted...................................... $ 2.44
=======
Weighted Average Shares Outstanding (in
thousands):
Basic........................................ 42,624
=======
Diluted...................................... 44,372
=======
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-86
<PAGE> 186

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
--------------------------------------------------
SEPARATE OTHER
HISTORICAL KMC ADJUSTMENTS PRO FORMA
---------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue........................................ $ 2,842 $ (328) $ 6(b) $ 2,520
Cost of Revenue................................ (2,630) 287 (6)(b) (2,349)
------- -------- --------- -------
212 (41) -- 171
General and Administrative Expenses............ (109) 19 -- (90)
------- -------- --------- -------
Operating Earnings............................. 103 (22) -- 81
Other Income (Expense)
Investment Income (Loss) and Equity
Earnings.................................. (7) (3) -- (10)
Interest Expense............................. (2) 1 -- (1)
Other, net................................... 42 (1) -- 41
------- -------- --------- -------
33 (3) -- 30
------- -------- --------- -------
Earnings from Continuing Operations before
Income Taxes................................. 136 (25) -- 111
Provision for Income Taxes..................... (54) 10 -- (44)
------- -------- --------- -------
Earnings from Continuing Operations............ $ 82 $ (15) $ -- $ 67
======= ======== ========= =======
Earnings from Continuing Operations per Share:
Basic........................................ $ 2.40 $ 2.03
======= =======
Diluted...................................... $ 2.35 $ 1.99
======= =======
Weighted Average Shares Outstanding (in
thousands):
Basic........................................ 34,119 (1,100) 33,019
======= ========= =======
Diluted...................................... 34,824 (1,134) 33,690
======= ========= =======
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-87
<PAGE> 187

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
REPURCHASE/
EXCHANGE
CASH STOCK/ SEPARATE
HISTORICAL CONTRIBUTION DEBENTURES KMC PRO FORMA
---------- ------------ ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................. $ 306 $(30)(a) $(1)(b) $ (55) $ 220
Marketable securities...................... 12 -- -- (3) 9
Receivables, net........................... 513 -- -- (57) 456
Unbilled contract revenue.................. 134 -- -- -- 134
Contract costs in excess of related
revenue................................. 30 -- -- -- 30
Investment in construction joint
ventures................................ 175 -- -- -- 175
Deferred income taxes...................... 75 -- -- (4) 71
Other...................................... 21 -- -- (13) 8
------ ---- --- ----- ------
Total Current Assets......................... 1,266 (30) (1) (132) 1,103
Property, Plant and Equipment, net........... 236 -- -- (99) 137
Other Assets................................. 106 -- -- (32) 74
------ ---- --- ----- ------
$1,608 $(30) $(1) $(263) $1,314
====== ==== === ===== ======
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.

F-88
<PAGE> 188

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
REPURCHASE/
EXCHANGE
CASH STOCK/ SEPARATE
HISTORICAL CONTRIBUTION DEBENTURES KMC PRO FORMA
---------- ------------ ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND REDEEMABLE
COMMON STOCK
Current Liabilities:
Accounts payable.............. $ 207 $ -- $ -- $ (23) $ 184
Current portion of long-term
debt....................... 3 -- -- -- 3
Accrued costs on construction
contracts.................. 216 -- -- -- 216
Billings in excess of related
costs and earnings......... 173 -- -- -- 173
Accrued insurance costs....... 89 -- -- (7) 82
Other......................... 58 -- -- (22) 36
------ ---- ---- ----- ------
Total Current Liabilities....... 746 -- -- (52) 694
Long-term debt, less current
portion....................... 14 -- (5)(b)(d) (3) 6
Other liabilities............... 69 -- -- (10) 59
Minority interest............... 12 -- 21(c)(d) (21) 12
------ ---- ---- ----- ------
Total Liabilities.......... 841 -- 16 (86) 771
Redeemable Common Stock.........
Common Stock.................. -- -- -- -- --
Additional paid-in capital.... 175 -- (6)(c) -- 169
Accumulated other
comprehensive income....... (6) -- -- -- (6)
Retained earnings............. 598 (30)(a) (11)(c) (177) 380
------ ---- ---- ----- ------
Total Redeemable Common Stock... 767 (30) (17) (177) 543
------ ---- ---- ----- ------
$1,608 $(30) $ (1) $(263) $1,314
====== ==== ==== ===== ======
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-89
<PAGE> 189

PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF REPORTING

The accompanying pro forma consolidated condensed financial statements of
Peter Kiewit Sons', Inc. (the "Company") are presented based upon the historical
consolidated financial statements and the notes thereto of the Company, as
adjusted to remove the earnings statement and balance sheet accounts of Kiewit
Materials Company ("KMC") and to give effect to certain other elements of the
share exchange, the debenture exchange offer and the spin-off. The pro forma
information assumes that all of the current KMC employees will exchange
approximately 1.1 million shares of the Company's common stock for KMC's common
stock with an equal aggregate formula price. It also assumes that the Company's
debenture holders that are KMC employees will exchange their debentures for KMC
debentures and that the remaining debentures will be exchanged for both shares
of KMC common stock and reduced principal amount convertible debentures of the
Company. The remaining shares of KMC common stock will be distributed as a
dividend on a pro rata basis to the Kiewit stockholders on a one to one ratio.

Such pro forma financial statements should be read in conjunction with the
separate historical consolidated financial statements and the notes thereto of
the Company, included elsewhere herein. Such pro forma financial statements are
not necessarily indicative of the future results of operations or financial
position.

Completion of the foregoing transactions has been assumed to be as of
September 30, 1999 in the pro forma consolidated condensed balance sheet. In the
pro forma consolidated condensed statements of earnings, completion of these
transactions has been assumed to be at the beginning of the indicated period. If
less than $1 million, no adjustment has been made.

The significant accounting policies followed by the Company, described in
the notes to its historical consolidated financial statements included elsewhere
herein, have been used in preparing the accompanying pro forma consolidated
condensed financial statements.

2. STATEMENTS OF EARNINGS PRO FORMA ADJUSTMENTS

As described in Note 1, the historical consolidated condensed statements of
earnings for the Company have been adjusted to remove the earnings statement
accounts of KMC. Other adjustments made in preparation of the Company's Pro
Forma Consolidated Condensed Statements of Earnings are described below:

(a) Adjustment made to reflect a decrease in interest expense due to the
exchange of the Company's convertible debentures into either KMC debentures or
both shares of KMC common stock and new reduced principal amount convertible
debentures of the Company. The interest rate used to calculate the decrease in
interest expense approximates the average rate paid on debentures.

(b) Adjustment made to reverse any elimination of intercompany materials
sales between the Company and KMC.

3. BALANCE SHEET PRO FORMA ADJUSTMENTS

As described in Note 1, the historical consolidated condensed balance sheet
of the Company has been adjusted to remove the balance sheet accounts of KMC.
Other adjustments made in preparation of the Company's Pro Forma Consolidated
Condensed Balance Sheet are described below:

(a) Adjustments made to reflect the decrease in cash as a result of an
estimated $30 million capital contribution to KMC.

(b) Adjustments made to reflect the payment of cash to KMC for the
Company's debentures held by KMC employees exchanged for KMC debentures.
F-90
<PAGE> 190
PETER KIEWIT SONS', INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS -- (CONTINUED)

3. BALANCE SHEET PRO FORMA ADJUSTMENTS, CONTINUED
(c) Adjustments made to reflect the repurchase and retirement of the
Company's common stock held by KMC employees exchanged for shares of KMC common
stock with an equal aggregate formula value.

(d) Adjustments made to reflect the conversion of the Company's convertible
debentures into either KMC convertible debentures or both shares of KMC common
stock and new reduced principal amount convertible debentures of the Company.

4. EARNINGS PER SHARE

Basic and diluted earnings per share of the Company's common stock have
been computed using the weighted average number of shares outstanding during
each period after giving effect to common stock equivalents.

F-91
<PAGE> 191

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 26, 1998
----------------------------------------
EXCHANGE OF
HISTORICAL DEBENTURES PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Revenue.............................................. $ 333,060 -- $ 333,060
Cost of Revenue...................................... (298,160) -- (298,160)
--------- ----------- -----------
34,900 -- 34,900
General and Administrative Expenses.................. (19,062) -- (19,062)
--------- ----------- -----------
Operating Earnings................................... 15,838 -- 15,838
Other Income (Expense)
Investment Income and Equity Earnings.............. 9,150 -- 9,150
Interest Expense................................... (935) 32(a) (967)
Other, net......................................... 1,176 -- 1,176
--------- ----------- -----------
9,391 (32) 9,359
--------- ----------- -----------
Earnings before Income Taxes......................... 25,229 (32) 25,197
Provision for Income Taxes........................... (9,851) 11(b) (9,840)
--------- ----------- -----------
Net Earnings......................................... $ 15,378 $ (21) $ 15,357
========= =========== ===========
Earnings per Share:
Basic.............................................. $ 153,783 $ 0.39
========= ===========
Diluted............................................ $ 153,783 $ 0.39
========= ===========
Weighted Average Shares Outstanding:
Basic.............................................. 100 39,758,734 39,758,834
========= =========== ===========
Diluted............................................ 100 39,854,263 39,854,363
========= =========== ===========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-92
<PAGE> 192

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
-----------------------------------------
EXCHANGE OF
HISTORICAL DEBENTURES PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Revenue............................................. $ 328,454 $ -- $ 328,454
Cost of Revenue..................................... (286,656) -- (286,656)
--------- ----------- -----------
41,798 -- 41,798
General and Administrative
Expenses.......................................... (18,776) -- (18,776)
--------- ----------- -----------
Operating Earnings.................................. 23,022 -- 23,022
Other Income (Expense)
Investment Income and Equity Earnings............. 3,272 -- 3,272
Interest Expense.................................. (1,352) (23)(a) (1,375)
Other, net........................................ 743 -- 743
--------- ----------- -----------
2,663 (23) 2,640
--------- ----------- -----------
Earnings before Income Taxes........................ 25,685 (23) 25,662
Provision for Income Taxes.......................... (10,346) 8(b) (10,338)
--------- ----------- -----------
Net Earnings........................................ $ 15,339 $ (15) $ 15,324
========= =========== ===========
Earnings per Share:
Basic............................................. $ 153,394 $ 0.41
========= ===========
Diluted........................................... $ 153,394 $ 0.41
========= ===========
Weighted Average Shares Outstanding:
Basic............................................. 100 37,247,996 37,248,096
========= =========== ===========
Diluted........................................... 100 37,311,554 37,311,654
========= =========== ===========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-93
<PAGE> 193

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
CASH ISSUE
HISTORICAL CONTRIBUTION DEBENTURES PRO FORMA
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................... $ 54,564 $30,000(a) $540(b) $ 85,104
Marketable securities....................... 2,588 -- -- 2,588
Receivables, net............................ 57,382 -- -- 57,382
Deferred income taxes....................... 3,792 -- -- 3,792
Other....................................... 13,280 -- -- 13,280
-------- ------- ---- --------
Total Current Assets.......................... 131,606 30,000 540 162,146
Property, Plant and Equipment, net............ 99,467 -- -- 99,467
Other Assets.................................. 32,364 -- -- 32,364
-------- ------- ---- --------
$263,437 $30,000 $540 $293,977
======== ======= ==== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable............................ $ 23,081 $ -- $ -- $ 23,081
Current portion of long-term debt........... 439 -- -- 439
Accrued insurance costs..................... 7,322 -- -- 7,322
Other....................................... 20,845 -- -- 20,845
-------- ------- ---- --------
Total Current Liabilities..................... 51,687 -- -- 51,687
Long-term debt, less current portion.......... 2,544 -- 390(b) 2,934
Other liabilities............................. 10,079 -- -- 10,079
Minority interest............................. 367 -- -- 367
-------- ------- ---- --------
Total Liabilities........................ 64,677 -- 390 65,067
Stockholder's Equity:
Common stock................................ -- -- -- --
Additional paid-in capital.................. 127,319 30,000(a) 150(b) 157,469
Accumulated other comprehensive income...... (465) -- -- (465)
Retained earnings........................... 71,906 -- -- 71,906
-------- ------- ---- --------
Total Stockholder's Equity.................... 198,760 30,000 150 228,910
-------- ------- ---- --------
$263,437 $30,000 $540 $293,977
======== ======= ==== ========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-94
<PAGE> 194

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF REPORTING

The accompanying pro forma consolidated condensed financial statements of
Kiewit Materials Company (the "Company") are presented based upon the historical
consolidated financial statements and the notes thereto adjusted to give effect
to certain elements of the share exchange, the debenture exchange offer and the
spin-off. The pro forma information assumes that all of the current employees
will exchange approximately 1.1 million shares of Kiewit common stock for shares
of the Company's common stock with an equal aggregate formula value. It also
assumes that Kiewit debentureholders that are employees of the Company will
exchange their Kiewit debentures for debentures of the Company and that the
remaining Kiewit debentures will be exchanged for both shares of the Company's
common stock and reduced principal amount convertible debentures of Kiewit. The
remaining shares of the Company's common stock will be distributed as a dividend
at a pro rata basis to the Kiewit stockholders on a one to one ratio.

2. STATEMENTS OF EARNINGS PRO FORMA ADJUSTMENTS

As described in Note 1, the historical consolidated condensed statements of
earnings for the Company have been adjusted to give effect to certain elements
of the transactions. The adjustments made in preparation of the Company's Pro
Forma Consolidated Condensed Statements of Earnings are described below:

(a) Adjustments made to reflect an increase in interest expense due to the
exchange of the Kiewit debentures held by the Company's employees into
the Company's convertible debentures. The interest rate used to
calculate the increase in interest expense approximates the average
rate paid on debentures.

(b) Adjustments made to reflect the tax effect of the above adjustments.

3. BALANCE SHEET PRO FORMA ADJUSTMENTS

As described in Note 1, the historical consolidated condensed balance sheet
of the Company has been adjusted to reflect certain elements of the
transactions. The adjustments made in preparation of the Company's Pro Forma
Consolidated Condensed Balance Sheet are described below:

(a) Adjustments made to reflect the increase in cash as a result of an
estimated $30 million capital contribution from Kiewit.

(b) Adjustments made to reflect the receipt of cash for the issuance of the
Company's convertible debentures exchanged for Kiewit debentures held
by the Company's employees.

4. EARNINGS PER SHARE

Basic and diluted earnings per share of common stock have been computed
using the weighted average number of shares outstanding during each period after
giving effect to common stock equivalents. Pro forma earnings per share reflect
the additional shares issued in the share exchange, the debenture exchange offer
and the spin-off.
F-95
<PAGE> 195

DELIVERY OF LETTERS OF TRANSMITTAL AND REPURCHASE AGREEMENTS

Manually signed facsimile copies of the Letters of Transmittal and
Repurchase Agreements will be accepted. The Letters of Transmittal, Repurchase
Agreements and Kiewit Convertible Debentures and any other required documents
should be sent or delivered by each tendering debentureholder to Kiewit at the
address set forth below:

BY REGISTERED OR CERTIFIED MAIL:
Peter Kiewit Sons', Inc.
Kiewit Plaza
Omaha, Nebraska 68131
Attention: Stock Registrar

By Facsimile Transmission:
(402) 271-2829

TO CONFIRM BY TELEPHONE OR FOR INFORMATION CALL:
(402) 342-2052

Questions and requests for assistance or for additional copies of this
offering circular-prospectus may be directed to:

PETER KIEWIT SONS', INC.
KIEWIT PLAZA
OMAHA, NEBRASKA 68131
TELEPHONE: (402) 342-2052
ATTENTION: STOCK REGISTRAR

[PETER KIEWIT SONS', INC. LOGO]
<PAGE> 196

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

United Metro and Kiewit have authority under Section 145 of the Delaware
General Corporation Law to indemnify their directors and officers to the extent
provided for in the statute. Both United Metro's Certificate of Incorporation
and Kiewit's Restated Certificate of Incorporation provide for indemnification
of their officers and directors to the extent permitted under the Delaware
General Corporation Law.

Both United Metro's Certificate of Incorporation and Kiewit's Restated
Certificate of Incorporation limit the liability of directors to the maximum
extent permitted by Delaware General Corporation Law. Delaware law provides that
the directors of a corporation will not be personally liable to the corporation
or its stockholders for monetary damages for breach of their fiduciary duties as
directors, except for liability (i) for any breach of their duty of loyalty to
the corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law;
or (iv) for any transaction from which the director derives an improper personal
benefit. United Metro's Certificate of Incorporation provides that United Metro
shall indemnify its directors and officers to the fullest extent permitted by
Delaware law, except against actions by United Metro approved by its board of
directors, and requires United Metro to advance expenses to such directors and
officers to defend any action for which rights of indemnification are provided
in the Certificate of Incorporation, and also permits the board of directors to
grant such rights to its employees and agents. Kiewit's Restated Certificate of
Incorporation provides that Kiewit shall indemnify its directors and officers to
the fullest extent permitted by Delaware law, except against actions by Kiewit
approved by its board of directors, and requires Kiewit to advance expenses to
such directors and officers to defend any action for which rights of
indemnification are provided in the Restated Certificate of Incorporation, and
also permits the board of directors to grant such rights to its employees and
agents.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, United Metro and
Kiewit have been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in that
Act and is, therefore, unenforceable. In the event that a claim of
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of United Metro or Kiewit in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, United Metro and/or Kiewit
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are included as a part of this Registration
Statement:

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
2.1+ Form of Separation Agreement, by and between Peter Kiewit
Sons', Inc. and United Metro Materials Inc.
3.1+ Form of Restated Certificate of Incorporation of United
Metro Materials Inc.
3.2 Restated Certificate of Incorporation, effective June 19,
1999, of Peter Kiewit Sons', Inc.(1)
3.3+ Form of Amended and Restated By-laws of United Metro
Materials Inc.
3.4 Amended and Restated By-laws, effective June 19, 1999, of
Peter Kiewit Sons', Inc.(2)
</TABLE>

II-1
<PAGE> 197

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
4.1+ Specimen certificate representing shares of common stock,
par value $0.01 per share, of United Metro Materials Inc.
4.2+ Indenture, by and between United Metro Materials Inc. and
, as trustee.
4.3+ Form of Series 2000A Convertible Debentures due October 31,
2010 of United Metro Materials Inc.
4.4+ Form of Series 2000B Convertible Debentures due October 31,
2010 of United Metro Materials Inc.
4.5+ Form of Series 2000C Convertible Debentures due October 31,
2010 of United Metro Materials Inc.
4.6 Indenture, dated as of July 1, 1986, as amended pursuant to
a First Supplemental Indenture, dated as of March 31, 1998,
by and between Peter Kiewit Sons', Inc. and U.S. Bank, N.A.,
as trustee.(3)
4.7+ Form of 8.028% Series 1997 Convertible Debentures due
October 31, 2007 of Peter Kiewit Sons', Inc.
4.8 Form of 7.35% Series 1998 Convertible Debentures due October
31, 2008, of Peter Kiewit Sons', Inc.(4)
4.9 Form of 8.25% Series 1999 Convertible Debentures due October
31, 2009, of Peter Kiewit Sons', Inc.(5)
4.10+ Form of Series 1997A Convertible Debentures due October 31,
2010 of Peter Kiewit Sons', Inc.
4.11+ Form of Series 1998A Convertible Debentures due October 31,
2010 of Peter Kiewit Sons', Inc.
4.12+ Form of Series 1999A Convertible Debentures due October 31,
2010 of Peter Kiewit Sons', Inc.
4.13 Form of Stock Repurchase Agreement for Peter Kiewit Sons',
Inc. Employees.(6)
4.14 Form of Repurchase Agreement for Holders of Peter Kiewit
Sons', Inc. Convertible Debentures.(7)
4.15+ Form of Repurchase Agreement for holders of United Metro
Materials Inc. Convertible Debentures.
5.1+ Opinion of Willkie Farr & Gallagher.
8.1+ Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, with
respect to certain tax matters.
8.2+ Opinion of Blake, Cassels & Graydon LLP, with respect to
certain Canadian tax matters.
10.1+ Form of Tax Sharing Agreement by and between Peter Kiewit
Sons', Inc. and United Metro Materials Inc.
21.1+ List of Subsidiaries of United Metro Materials Inc.
21.2+ List of Subsidiaries of Peter Kiewit Sons', Inc.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Perkins & Company, P.C.
23.4+ Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 5.1).
23.5+ Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in their opinion filed as Exhibit 8.1).
23.6+ Consent of Blake, Cassels & Graydon LLP (included in their
opinion as Exhibit 8.2).
25.1+ Statement on Form T-1 of Eligibility of Trustee for the
United Metro Materials Inc. Convertible Debentures.
</TABLE>

II-2
<PAGE> 198

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
25.2 Statement on Form T-1 of Eligibility of Trustee for the
Peter Kiewit Sons', Inc. Convertible Debentures.(8)
99.1+ Form of Letter of Transmittal.
99.2+ Form of Letter to Debentureholders.
</TABLE>

- ---------------
+ To be filed by amendment.

(1) Filed as Exhibit 3.1 to Peter Kiewit Sons', Inc.'s Quarterly Report on Form
10-Q, for the quarter ended June 30, 1999 filed with the Securities and
Exchange Commission, and incorporated herein by reference.

(2) Filed as Exhibit 3.2 to Peter Kiewit Sons', Inc.'s Quarterly Report on Form
10-Q, for the quarter ended June 30, 1999 filed with the Securities and
Exchange Commission, and incorporated herein by reference.

(3) Filed as Exhibit 4.3 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
5, 1998, and incorporated herein by reference.

(4) Filed as Exhibit 4.4 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
5, 1998, and incorporated herein by reference.

(5) Filed as Exhibit 4.4 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
4, 1999, and incorporated herein by reference.

(6) Filed as Exhibit 1 to Peter Kiewit Sons', Inc.'s Registration Statement on
Form 8-A, filed with the Securities and Exchange Commission on March 24,
1998, and incorporated herein by reference.

(7) Filed as Exhibit 4.5 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
5, 1998, and incorporated herein by reference.

(8) Filed as Exhibit 99.1 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
4, 1999, and incorporated herein by reference.

ITEM 22. UNDERTAKINGS.

The undersigned registrants hereby undertake:

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
of the registrants pursuant to the foregoing provisions, or otherwise, each of
the registrants has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
each of the registrants of expenses incurred or paid by a director, officer or
controlling person of such registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, each registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request. Each of the undersigned
registrants hereby further undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of or included in the
registration statement when it became effective.

II-3
<PAGE> 199

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Omaha,
State of Nebraska, on the 18th day of February, 2000.

KIEWIT MATERIALS COMPANY

By: /s/ CHRISTOPHER J. MURPHY
------------------------------------
Christopher J. Murphy
President and Chief Executive
Officer

POWER OF ATTORNEY

The undersigned officers and directors of Kiewit Materials Company hereby
severally constitute and appoint Mark E. Belmont attorney-in-fact for the
undersigned, in any and all capacities, with the power of substitution, to sign
any amendments to this Registration Statement (including post-effective
amendments) and any subsequent registration statement for the same offering
which may be filed under Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all interests and purposes as he might or
could do in person, hereby ratifying and confirming all that each said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons, in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<C> <S> <C>
/s/ CHRISTOPHER J. MURPHY President, Chief Executive February 18, 2000
- --------------------------------------------------- Officer and Director
Christopher J. Murphy

/s/ RICHARD W. COLF Director February 18, 2000
- ---------------------------------------------------
Richard W. Colf

/s/ BRUCE E. GREWCOCK Director February 18, 2000
- ---------------------------------------------------
Bruce E. Grewcock

/s/ WILLIAM L. GREWCOCK Director February 18, 2000
- ---------------------------------------------------
William L. Grewcock

/s/ RICHARD GEARY Director February 18, 2000
- ---------------------------------------------------
Richard Geary

/s/ WALTER SCOTT, JR. Director February 18, 2000
- ---------------------------------------------------
Walter Scott, Jr.

/s/ KENNETH E. STINSON Chairman of the Board of February 18, 2000
- --------------------------------------------------- Directors
Kenneth E. Stinson
</TABLE>

II-4
<PAGE> 200

SIGNATURES

PETER KIEWIT SONS', INC.

By: /s/ KENNETH E. STINSON
------------------------------------
Kenneth E. Stinson
President, Chief Executive Officer
and Chairman of the Board of
Directors

POWER OF ATTORNEY

The undersigned officers and directors of Peter Kiewit Sons', Inc., hereby
severally constitute and appoint Tobin A. Schropp attorney-in-fact for the
undersigned, in any and all capacities, with the power of substitution, to sign
any amendments to this Registration Statement (including post-effective
amendments) and any subsequent registration statement for the same offering
which may be filed under Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all interests and purposes as he might or
could do in person, hereby ratifying and confirming all that each said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons, in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<C> <S> <C>
/s/ MOGENS C. BAY Director February 18, 2000
- ---------------------------------------------------
Mogens C. Bay

/s/ ROY L. CLINE Executive Vice President and February 18, 2000
- --------------------------------------------------- Director
Roy L. Cline

/s/ RICHARD W. COLF Executive Vice President and February 18, 2000
- --------------------------------------------------- Director
Richard W. Colf

/s/ JAMES Q. CROWE Director February 18, 2000
- ---------------------------------------------------
James Q. Crowe

/s/ RICHARD GEARY Director February 18, 2000
- ---------------------------------------------------
Richard Geary

/s/ BRUCE E. GREWCOCK Executive Vice President and February 18, 2000
- --------------------------------------------------- Director
Bruce E. Grewcock
</TABLE>

II-5
<PAGE> 201

<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<C> <S> <C>
/s/ WILLIAM L. GREWCOCK Director February 18, 2000
- ---------------------------------------------------
William L. Grewcock

/s/ PETER KIEWIT, JR. Director February 18, 2000
- ---------------------------------------------------
Peter Kiewit, Jr.

/s/ ALLAN K. KIRKWOOD Executive Vice President and February 18, 2000
- --------------------------------------------------- Director
Allan K. Kirkwood

/s/ WALTER SCOTT, JR. Director February 18, 2000
- ---------------------------------------------------
Walter Scott, Jr.

/s/ KENNETH E. STINSON Chief Executive Officer, February 18, 2000
- --------------------------------------------------- President and Chairman of the
Kenneth E. Stinson Board of Directors

/s/ GEORGE B. TOLL, JR. Director February 18, 2000
- ---------------------------------------------------
George B. Toll, Jr.
</TABLE>

II-6
<PAGE> 202

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
2.1+ Form of Separation Agreement by and between Peter Kiewit
Sons', Inc. and United Metro Materials Inc.
3.1+ Form of Restated Certificate of Incorporation of United
Metro Materials Inc.
3.2 Restated Certificate of Incorporation, effective June 19,
1999, of Peter Kiewit Sons', Inc.(1)
3.3+ Form of Amended and Restated By-laws of United Metro
Materials Inc.
3.4 Amended and Restated By-laws, effective June 19, 1999, of
Peter Kiewit Sons', Inc.(2)
4.1+ Specimen certificate representing shares of common stock,
par value $0.01 per share, of United Metro Materials Inc.
4.2+ Indenture, by and between United Metro Materials Inc. and
, as trustee.
4.3+ Form of Series 2000A Convertible Debentures due October 31,
2010 of United Metro Materials Inc.
4.4+ Form of Series 2000B Convertible Debentures due October 31,
2010 of United Metro Materials Inc.
4.5+ Form of Series 2000C Convertible Debentures due October 31,
2010 of United Metro Materials Inc.
4.6 Indenture, dated as of July 1, 1986, as amended pursuant to
a First Supplemental Indenture, dated as of March 31, 1998,
by and between Peter Kiewit Sons', Inc. and U.S. Bank, N.A.,
as trustee.(3)
4.7+ Form of 8.028% Series 1997 Convertible Debentures due
October 31, 2007 of Peter Kiewit Sons', Inc.
4.8 Form of 7.35% Series 1998 Convertible Debentures due October
31, 2008, of Peter Kiewit Sons', Inc.(4)
4.9 Form of 8.25% Series 1999 Convertible Debentures due October
31, 2009, of Peter Kiewit Sons', Inc.(5)
4.10+ Form of Series 1997A Convertible Debentures due October 31,
2010 of Peter Kiewit Sons', Inc.
4.11+ Form of Series 1998A Convertible Debentures due October 31,
2010 of Peter Kiewit Sons', Inc.
4.12+ Form of Series 1999A Convertible Debentures due October 31,
2010 of Peter Kiewit Sons', Inc.
4.13 Form of Stock Repurchase Agreement for Peter Kiewit Sons',
Inc. Employees.(6)
4.14 Form of Repurchase Agreement for Holders of Peter Kiewit
Sons', Inc. Convertible Debentures.(7)
4.15+ Form of Repurchase Agreement for holders of United Metro
Materials Inc. Convertible Debentures.
5.1+ Opinion of Willkie Farr & Gallagher.
8.1+ Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, with
respect to certain tax matters.
8.2+ Opinion of Blake, Cassels & Graydon LLP, with respect to
certain Canadian tax matters.
10.1+ Form of Tax Sharing Agreement, by and between Peter Kiewit
Sons', Inc. and United Metro Materials Inc.
21.1+ List of Subsidiaries of United Metro Materials Inc.
21.2+ List of Subsidiaries of Peter Kiewit Sons', Inc.
23.1 Consent of PricewaterhouseCoopers LLP.
</TABLE>
<PAGE> 203

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Perkins & Company, P.C.
23.4+ Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 5.1).
23.5+ Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in their opinion filed as Exhibit 8.1).
23.6+ Consent of Blake, Cassels & Graydon LLP (included in their
opinion as Exhibit 8.2).
25.1+ Statement on Form T-1 of Eligibility of Trustee for the
United Metro Materials Inc. Convertible Debentures.
25.2 Statement on Form T-1 of Eligibility of Trustee for the
Peter Kiewit Sons', Inc. Convertible Debentures.(8)
99.1+ Form of Letter of Transmittal.
99.2+ Form of Letter to Debentureholders.
</TABLE>

- ---------------
+ To be filed by amendment.

(3) Filed as Exhibit 4.3 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
5, 1998, and incorporated herein by reference.

(4) Filed as Exhibit 4.4 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
5, 1998, and incorporated herein by reference.

(5) Filed as Exhibit 4.4 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
4, 1999, and incorporated herein by reference.

(6) Filed as Exhibit 1 to Peter Kiewit Sons', Inc.'s Registration Statement on
Form 8-A, filed with the Securities and Exchange Commission on March 24,
1998, and incorporated herein by reference.

(7) Filed as Exhibit 4.5 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
5, 1998, and incorporated herein by reference.

(8) Filed as Exhibit 99.1 to Peter Kiewit Sons', Inc.'s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on October
4, 1999, and incorporated herein by reference.

<PAGE> 1
Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the inclusion in this Registration Statement on Form S-4 of
Peter Kiewit Sons', Inc. and United Metro Materials, Inc. of our reports dated
March 18, 1999, except as to Note 2, Reclassifications, as to which the date is
February 11, 2000, relating to the consolidated financial statements and
financial statement schedule of Peter Kiewit Sons', Inc. as of December 26, 1998
and December 27, 1997 and for the three year period ended December 26, 1998 and
our reports dated February 11, 2000 relating to the consolidated financial
statements and financial statement schedule of Kiewit Materials Company which
appear in such Registration Statement. We also consent to reference to us under
the heading "Experts" in such Registration Statement.

PricewaterhouseCoopers LLP

Omaha, Nebraska
February 18, 2000

<PAGE> 1
Exhibit 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use in this
registration statement on Form S-4 of our reports dated March 29, 1999 and March
4, 1998, on the financial statements of Granite Canyon Quarry, which financial
statements are consolidated into Kiewit Materials Company and subsidiaries'
consolidated financial statements for the year three years ended December 26,
1998. We also consent to the reference to our firm under the caption "Experts"
in this registration statement.

Arthur Andersen LLP

Denver, Colorado
February 17, 1999

<PAGE> 1
Exhibit 23.3

CONSENT OF INDEPENDENT AUDITORS

Peter Kiewit Sons', Inc.
Omaha, Nebraska

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 (Debentures) of United Metro Materials, Inc. of our
reports dated February 20, 1998 and February 24, 1999 relating to the combined
financial statements and schedule of Pacific Rock Products, L.L.C. and River
City Machinery L.L.C. (currently known as Pacific Rock Products Trucking
L.L.C.).

Perkins & Company, P.C.
Portland, Oregon
February 17, 2000