UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 001-15217
---------------------
U.S. AGGREGATES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 57-0990958
----------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 South El Camino Real, Suite 500,
San Mateo, California 94402
----------------------------------------------------------
(Address, of principal executive offices) (Zip Code)
(650) 685-4880
----------------------------------------------------
(Registrant's telephone number, including area code)
None
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Shares outstanding as of October 29, 1999
- ---------------------------- -----------------------------------------------
Common stock, $.01 par value 14,900,593
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
CONTENTS
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
EXHIBIT INDEX 18
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
ASSETS
SEPTEMBER 30, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 3,774 $ 2,849
Trade accounts receivable, net. . . . . . . . . . . . . . . . . . . . . . 65,139 37,703
Inventories, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,683 25,480
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . 6,141 12,070
--------------- ---------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . 103,737 78,102
--------------- ---------------
PROPERTY, PLANT AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . 304,484 253,910
Less: Accumulated Depreciation & Depletion. . . . . . . . . . . . . . . . . (29,589) (21,591)
--------------- ---------------
Net property, plant and equipment . . . . . . . . . . . . . . . . . . 274,895 232,319
--------------- ---------------
INTANGIBLE ASSETS, net. . . . . . . . . . . . . . . . . . . . . . . . . . . 28,114 26,023
OTHER ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,204 1,167
--------------- ---------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 409,950 $ 337,611
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,958 $ 48,748
LONG-TERM DEBT, net of current portion. . . . . . . . . . . . . . . . . . . 165,279 185,790
DEFERRED INCOME TAXES, net. . . . . . . . . . . . . . . . . . . . . . . . . 52,614 44,611
OTHER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 192
--------------- ---------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 269,963 279,341
--------------- ---------------
MINORITY INTEREST, net. . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3,160
--------------- ---------------
MANDATORY REDEEMABLE PREFERRED STOCK, $.01 par value,
10,000,000 shares authorized. . . . . . . . . . . . . . . . . . . . . . . - 43,563
--------------- ---------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized,. . . . . . . 149 61
14,908,222 shares outstanding, including 7,629 shares of treasury stock
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . 123,648 2,887
Notes receivable from sale of stock . . . . . . . . . . . . . . . . . . . (1,177) (640)
Treasury stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . (2) (2)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,358 9,241
--------------- ---------------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . 139,976 11,547
--------------- ---------------
Total liabilities, mandatory redeemable preferred stock and
shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . $ 409,950 $ 337,611
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
<TABLE>
<CAPTION>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 93,986 $ 82,512 $ 220,925 $ 165,554
COST OF PRODUCTS SOLD. . . . . . . . . . . . . . . . . . . . . 65,000 58,530 156,966 119,338
------------ ------------ ------------ ------------
Gross profit . . . . . . . . . . . . . . . . . . . . . . 28,986 23,982 63,959 46,216
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES . . . . . . . . . 7,806 8,024 22,704 18,944
DEPRECIATION, DEPLETION AND AMORTIZATION . . . . . . . . . . . 3,517 3,470 9,211 8,019
------------ ------------ ------------ ------------
Income from operations . . . . . . . . . . . . . . . . . 17,663 12,488 32,044 19,253
OTHER INCOME (EXPENSES):
Interest, net. . . . . . . . . . . . . . . . . . . . . . . . (4,018) (4,469) (12,859) (10,023)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 97 (386) (382) (1,104)
------------ ------------ ------------ ------------
Income from continuing operations before provision for
income taxes, minority interest and extraordinary item 13,742 7,633 18,803 8,126
PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . . . (5,138) (3,191) (7,036) (3,397)
------------ ------------ ------------ ------------
Income from continuing operations before minority
interest and extraordinary item. . . . . . . . . . . . 8,604 4,442 11,767 4,729
MINORITY INTEREST. . . . . . . . . . . . . . . . . . . . . . . (533) (584) (572) (484)
------------ ------------ ------------ ------------
Income from continuing operations. . . . . . . . . . . . 8,071 3,858 11,195 4,245
EXTRAORDINARY ITEM: Loss on extinguishment of debt,
less applicable income tax benefit of $161 and $212. . . . . (264) - (264) (338)
------------ ------------ ------------ ------------
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 7,807 $ 3,858 $ 10,931 $ 3,907
============ ============ ============ ============
Income per common share - basic
Income from continuing operations available for
common shareholders. . . . . . . . . . . . . . . . . . . . $ 0.69 $ 0.46 $ 1.09 $ 0.20
Extraordinary item, net of tax . . . . . . . . . . . . . . . (0.02) - (0.03) (0.06)
------------ ------------ ------------ ------------
Net income available for common shareholders . . . . . . . . $ 0.67 $ 0.46 $ 1.06 $ 0.14
============ ============ ============ ============
Weighted average common shares outstanding . . . . . . . . . 10,804,389 6,136,630 7,709,642 6,136,630
Income per common share - diluted
Income from continuing operations available for
common shareholders. . . . . . . . . . . . . . . . . . . . $ 0.67 $ 0.44 $ 1.05 $ 0.19
Extraordinary item, net of tax . . . . . . . . . . . . . . . (0.02) - (0.03) (0.05)
------------ ------------ ------------ ------------
Net income available for common shareholders . . . . . . . . $ 0.65 $ 0.44 $ 1.02 $ 0.14
============ ============ ============ ============
Weighted average common shares outstanding . . . . . . . . . 11,078,626 6,423,011 7,991,930 6,368,306
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
<TABLE>
<CAPTION>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share amounts)
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES. . . . . . . . . . . . . . . . $ 4,103 $ 587
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment . . . . . . . . . . . . . . (43,251) (21,453)
Acquisition of subsidiaries, net of cash acquired. . . . . . . . . . . (325) (82,724)
Proceeds from sale of fixed assets . . . . . . . . . . . . . . . . . . 2,874 5,712
----------- -----------
Net cash used in investing activities. . . . . . . . . . . . . (40,702) (98,465)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt . . . . . . . . . . . . . . . . . (92,342) (121,475)
New borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,115 221,823
Proceeds from sale of stock, net . . . . . . . . . . . . . . . . . . . 65,706 300
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 (456)
----------- -----------
Net cash provided by financing activities. . . . . . . . . . . 37,524 100,192
----------- -----------
NET INCREASE IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . . 925 2,314
CASH, beginning of period. . . . . . . . . . . . . . . . . . . . . . . . 2,849 479
----------- -----------
CASH, end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,774 $ 2,793
=========== ===========
DISCLOSURE OF SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,260 $ 9,596
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755 110
NONCASH TRANSACTIONS:
Accretion of preferred stock dividend. . . . . . . . . . . . . . . . . 2,814 3,035
Conversion of minority interest to equity. . . . . . . . . . . . . . . 8,273 -
Conversion of preferred shares and accreted dividends to common shares 46,377 -
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Founded in 1994, U.S. Aggregates, Inc. ("USAI" or the "Company") is a
leading producer of aggregates. Aggregates consist of crushed stone, sand and
gravel. The Company's products are used primarily for construction and
maintenance of highways, other infrastructure projects, and for commercial and
residential construction. USAI serves local markets in nine states in two
regions of the United States, the Mountain states and the Southeast.
The accompanying unaudited condensed consolidated financial statements of
U.S. Aggregates, Inc. and subsidiaries have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to the Quarterly Report on Form 10-Q and to Article 10 of
Regulation S-X. In the opinion of management, the interim financial information
provided herein reflects all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of the results of operations for the
interim periods. 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.
The Statements should be read in conjunction with the summary of accounting
policies and notes to financial statements included in the Company's
registration statement on Form S-1 No. 333-79209, which was declared effective
on August 12, 1999.
2. Risk Factors
The Company's business is seasonal with peak revenue and profits occurring
primarily in the months of April through November. Bad weather conditions
during this period could adversely affect operating income and cash flow and
could therefore have a disproportionate impact on the Company's results for the
full year. Quarterly results have varied significantly in the past and are
likely to vary significantly from quarter to quarter in the future.
A majority of the Company's revenues are from customers who are in
industries and businesses that are cyclical in nature and subject to changes in
general economic conditions. In addition, since operations occur in a variety
of geographic markets, the Company's business is subject to the economic
conditions in each such geographic market. General economic downturns or
localized downturns in the regions where the Company has operations, including
any downturns in the construction industry, could have a material adverse effect
on the Company's business, financial condition and results of operations.
The Company'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 level and health, safety and environmental matters. In
many instances, various permits are required. Although management believes that
the Company is in compliance with regulatory requirements, there can be no
assurance that the Company will not incur material costs or liabilities in
connection with regulatory requirements.
Certain of the Company's 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. Risk of environmental liability is
inherent in the operation of the Company's business. As a result, it is
possible that environmental liabilities will have a material adverse effect on
the Company in the future.
6
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. Long-Term Debt
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
--------------- ---------------
(dollars in thousands)
<S> <C> <C>
Prudential Insurance subordinated notes, net of discount
of $686 and $753, respectively. . . . . . . . . . . . . $ 44,314 $ 44,247
Bank of America term loan A . . . . . . . . . . . . . . . 39,782 53,500
Bank of America term loan B . . . . . . . . . . . . . . . 46,404 58,500
Bank of America revolving loan. . . . . . . . . . . . . . 31,000 24,200
Notes payable to former stockholders. . . . . . . . . . . 4,963 4,997
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 6,013 7,127
--------------- ---------------
Total long-term debt. . . . . . . . . . . . . . . . . 172,476 192,571
Less: Current portion . . . . . . . . . . . . . . . . . . (7,197) (6,781)
--------------- ---------------
Long-term debt, net of current portion. . . . . . . . $ 165,279 $ 185,790
=============== ===============
</TABLE>
In April 1999, the Company's revolving loan facility was increased from $40
million to $60 million. The revolving loan is to be paid in full by the
revolving facility termination date in June 2004.
In addition to the above described long-term debt, the Company also had a
demand note in the amount of $8.0 million at December 31, 1998, which was later
increased to $16.1 million and was retired with the proceeds of the
initial public offering.
7
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. Equity Structure
On August 18, 1999 the minority owned shares of SRM Holdings Corp. (SRMHC)
and Western Aggregates Holding Corp. (WAHC) were converted to 649,363 of U.S.
Aggregates, Inc.'s common shares. These shares were valued at $8.8 million.
The Company's initial public offering was consummated on August 18, 1999
offering 5,000,000 shares of common stock at $15.00 per share resulting in net
proceeds of approximately $65.7 million. Concurrent with the consummation of
the offering, 300,842 shares of preferred stock owned by Golder, Thoma, Cressey,
Rauner Fund IV, LP, Messrs. Harris and Dougherty, a trust for the benefit of Mr.
Stone and his wife for which they also serve as trustees and Mrs. Jeanne T.
Richey, were converted into an aggregate of 3,091,808 shares of common stock.
The preferred stock was converted into common stock at the initial public
offering price of $15.00.
The following schedule of change in stockholder's equity statement
summarizes the Company's equity transactions between December 31, 1998 and
September 30, 1999:
<TABLE>
<CAPTION>
NOTES TREASURY STOCK
-----------------
ADDITIONAL RECEIVABLE SHARES TOTAL
COMMON STOCK PAID-IN FROM SALE HELD IN RETAINED SHAREHOLDERS'
-------------------
SHARES AMOUNT CAPITAL OF STOCK TREASURY AMOUNT EARNINGS EQUITY
---------- ------- --------- ---------- -------- -------- ---------- ---------
(in thousands, except share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31, 1998 . . . . . . . . . 6,144,251 $ 61 $ 2,887 $ (640) 7,629 $ (2) $ 9,241 $ 11,547
Notes receivable, net of
payments. . . . . . . . . . . . . - - - (44) - - - (44)
Conversion of minority. . . . . . . 649,363 6 8,760 (493) - - - 8,273
interest to equity
Issuance of common stock. . . . . . 5,000,000 50 65,656 - - - - 65,706
Exercise of warrants. . . . . . . . 22,800 1 (1) - - - - -
Accretion of mandatory
redeemable preferred
stock dividend. . . . . . . . . . - - - - - - (2,814) (2,814)
Conversion of preferred shares
and accreted dividends to
common shares . . . . . . . . . . 3,091,808 31 46,346 - - - - 46,377
Net income. . . . . . . . . . . . . - - - - - - 10,931 10,931
---------- ------- --------- ---------- -------- -------- ---------- ---------
BALANCE AT
SEPTEMBER 30, 1999. . . . . . . . . 14,908,222 $ 149 $123,648 $ (1,177) 7,629 $ (2) $ 17,358 $139,976
========== ======= ========= ========== ======== ======== ========== =========
</TABLE>
8
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. Inventories
Inventories consist of the following as of:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
--------------- ---------------
(dollars in thousands)
<S> <C> <C>
Finished products . . . $ 25,076 $ 19,014
Raw materials . . . . . 2,568 5,730
Supplies and parts. . . 590 888
Fuel. . . . . . . . . . 465 348
Less: Allowances. . . . (16) (500)
--------------- ---------------
$ 28,683 $ 25,480
=============== ===============
</TABLE>
Inventories are pledged as security under various debt agreements.
6. Earnings per Common Share
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------
1999 1998
------------------------------ -------------------------------
(in thousands, except share amounts)
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------- ---------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations . . . . . . . . . . . $ 8,071 $ 3,858
Less: Accretion of preferred stock dividend . . . . . 609 1,037
------- -------
Basic income from continuing operations available to
common shareholders . . . . . . . . . . . . . . . . . 7,462 10,804,389 $ 0.69 2,821 6,136,630 $ 0.46
Effect of warrants 274,237 286,381
---------- ---------
Dilutive income from continuing operations available to
common shareholders . . . . . . . . . . . . . . . . . $ 7,462 11,078,626 $ 0.67 $ 2,821 6,423,011 $ 0.44
======= ========== ========== ======= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------
1999 1998
------------------------------ ------------------------------
(in thousands, except share amounts)
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------- --------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations . . . . . . . . . . . $11,195 $ 4,245
Less: Accretion of preferred stock dividend . . . . . 2,814 3,035
------- -------
Basic income from continuing operations available to
common shareholders . . . . . . . . . . . . . . . . . 8,381 7,709,642 $ 1.09 1,210 6,136,630 $ 0.20
Effect of warrants 282,288 231,676
--------- ---------
Dilutive income from continuing operations available to
common shareholders . . . . . . . . . . . . . . . . . $ 8,381 7,991,930 $ 1.05 $ 1,210 6,368,306 $ 0.19
======= ========= ========== ======= ========= ==========
</TABLE>
9
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. Related Party Transactions
The Company paid an advisory fee of approximately $146,986 and $415,691 for
the quarter and nine months ended September 30, 1999, respectively, to a
director and shareholder of U.S. Aggregates, Inc. These fees were paid in
connection with various financing transactions undertaken by the Company,
including $165,219 in connection with the initial public offering.
8. Stock Option Plan
The Board of Directors of the Company has adopted the U.S. Aggregates, Inc.
Long Term Incentive Plan, whereby the Company is authorized to issue up to
700,840 shares of the Company's common stock. On August 16, 1999, the
Compensation Committee of the Board of Directors granted options to purchase an
aggregate of 280,336 shares of the Company's common stock at a price of $15.00
per share under the plan to 60 employees of the Company. Options granted under
this plan will be accounted for in accordance with APB No. 25 wherein no
compensation expense would be recognized for options issued to employees.
10
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
On August 18, 1999 U.S. Aggregates, Inc., completed its initial public
offering (IPO), in which it issued and sold 5.0 million shares of its common
stock at $15.00 per share. The net proceeds from the IPO (after underwriting
discounts, commission and offering expenses of $9.3 million) were approximately
$65.7 million.
We conduct our operations through the quarrying and distribution of
aggregate products in nine states in two regions of the United States, the
Mountain states and the Southeast. Our operations have the same general
economic characteristics including the nature of the products, production
processes, type and class of customers, methods of distribution and governmental
regulations.
Over the last three years, our net sales and profitability have increased
as a result of internal growth, the maturation of recently developed aggregate
production sites and the completion of several business and asset acquisitions.
In February 1998, we completed the acquisition of Falcon Ridge Quarry, Inc. and
the acquisition of Geodyne Transport, Inc. In June 1998, we completed the
acquisition of Monroc, Inc. Collectively, these acquisitions are referred to as
the 1998 acquired businesses. The 1998 acquired businesses and the start-up of
several other operations significantly expanded our business in the Mountain
states and increased our presence in a number of local markets.
Since 1996, we have started nine major greenfield aggregate production
sites serving large metropolitan markets. The development of greenfield
aggregate production sites includes securing all necessary permits and zoning to
ensure that commercially economic quantities of aggregates can be produced.
These new sites include both sites which have never been permitted or mined, as
well as sites which may have been properly zoned, but were not operating at
sufficient volumes to be economically viable. Based on our experience, a new
aggregate production site's net sales, cash flow and profitability tend to
increase over the first five years of operation as production increases and the
site matures.
Our business is seasonal, with peak sales and profits occurring primarily
in the months of April through November. Accordingly, our results of operations
for any individual quarter are not necessarily indicative of our results for the
full year.
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis needs to be read in
conjunction with the MD&A included in our registration statement on Form S-1 No.
333-79209, which was declared effective on August 12, 1999.
Three Months Ended September 30, 1999 Compared to Three Months Ended September
30, 1998
Net sales for the third quarter in 1999 increased by 13.9% to $94.0 million
compared to $82.5 million for the third quarter in 1998. This was due to strong
demand for our aggregates and related products resulting in increased aggregate
shipments. Total shipments of processed aggregates increased to 4.9 million
tons for the three months ended September 30, 1999 from 4.3 million tons for the
same period in 1998, a 13.3% increase. The average selling price of processed
aggregates increased 7.0% over 1998. The associated products sales volumes and
prices generally increased at a lower rate partially due to delays in several
larger projects in Utah. Gross profit for the three months ended September 30,
1999 increased 20.9% to $29.0 million from $24.0 million for the three months
ended September 30, 1998. The gross margin percent grew to 30.8% in
1999 from 29.1% in 1998.
11
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
Selling, general and administrative expenses were $7.8 million for the third
quarter in 1999 versus $8.0 million in 1998 due to administrative efficiencies
resulting from the ongoing consolidation of the accounting functions in our
Mountain states operations. As a percentage of net sales, selling, general and
administrative expenses decreased to 8.3% in 1999 from 9.7% in 1998, due to the
leveraging of these costs over a larger sales base. Income from operations
for the third quarter in 1999 increased to $17.7 million compared to $12.5
million for 1998, an increase in operating margin to 18.8% from 15.1% because
of the factors discussed above. Net interest expense decreased to $4.0 million
for the three months ended September 30, 1999 from $4.5 million for the
same period ended September 30, 1998 primarily as a result of debt reduction
from the use of proceeds from the initial public offering on August 18, 1999.
The effective tax rate for the quarter was 37.4%, down from last year's
third quarter of 41.8%. In 1998, we anticipated that our future taxable income
would exceed $10.0 million and provided for a required 1% increase in the
statutory tax rate on cumulative deferred tax items.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998
Year-to-date net sales in 1999 increased by 33.4% to $220.9 million from
$165.6 million in 1998. This increase consists of $31.0 million of additional
net sales from the 1998 acquired businesses and an increase in net sales by our
existing business of $24.3 million, a 17.4% increase. Year-to-date shipments of
processed aggregates increased to 12.3 million tons for 1999 from 9.3 million
tons for 1998, a 32.2% increase. Approximately half of the increases in
processed aggregate volumes were contributed by our 1998 acquired businesses,
while our existing businesses continue to experience strong growth in demand.
We also experienced increases in selling prices ranging from 2.1% to 7.2% for
our aggregates and related products. Gross profit for 1999 increased 38.4% to
$64.0 million from $46.2 million for the same period in 1998. The increase
consists of $5.4 million additional gross profit from our 1998 acquired
businesses and a $12.4 million increase in gross profit from our existing
business, a 32.8% increase. The increased profitability was primarily due to
increases in prices as well as cost reductions resulting from improved
efficiencies and higher volumes. The gross margin percent grew to 29.0% in 1999
from 27.9% in 1998.
Selling, general and administrative expenses increased to $22.7 million in
the first nine months of 1999 from $18.9 million compared to the same period in
1998 primarily due to the 1998 acquired businesses. As a percentage of net
sales, selling, general and administrative expenses decreased to 10.3% this year
compared to 11.4% in the prior year, due to the leveraging of these costs over a
larger sales base. Year-to-date income from operations increased to $32.0
million compared to $19.3 million in the same period last year, a margin
improvement to 14.5% from 11.6% because of the factors discussed above. Net
interest expense increased to $12.9 million for the nine months ended September
30, 1999 from $10.0 million for the nine months ended September 30, 1998 as a
result of increased borrowings used to fund the purchase of the 1998 acquired
businesses and other expansion and capital needs, offset by the reduction in
our debt after we applied our IPO proceeds.
The effective tax rate for the first nine months of 1999 was 37.4%, down
from 41.8% for the same period last year. In 1998, we anticipated that our
future taxable income would exceed $10.0 million and provided for a required 1%
increase in the statutory tax rate on cumulative deferred tax items.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, working capital, exclusive of current maturities of
debt and cash items, totaled $55.2 million compared to $41.3 million at December
31, 1998, up 33.6% and compared to $48.6 million at June 30, 1999, up 13.5%.
These increases were attributable to the seasonal nature of our business.
12
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
Net cash provided by operating activities for the nine months ended
September 30, 1999 was $4.1 million, up from the $0.6 million generated during
the same period last year. The $3.5 million increase in net cash provided
reflects higher earnings offset by heightened working capital needs. Net cash
used in investing activities for the nine months ended September 30, 1999 was
$40.7 million compared to $98.5 million used in the same period in 1998. This
$57.8 million decrease in cash used reflects the significant acquisition
activities in 1998 offset by a $21.8 million increase in capital expenditures as
we continue to expand our operations. On August 18, 1999, we completed our IPO
resulting in net proceeds, to the Company of $65.7 million which was used to
reduce our short and long term debt.
Based on prior performance and current expectations, we expect cash flows
from internally generated funds and our access to capital markets will continue
to be sufficient to provide the capital resources necessary to fund the
operating needs of our existing businesses, cover debt service requirements, and
allow for the payment of dividends.
YEAR 2000 ISSUE
The Company recognizes the importance of Year 2000 issues and has made the
resolution of these issues a priority by creating Year 2000 task forces whose
project scopes include the assessment and ongoing monitoring of all information
technology, computer hardware and software and non-information technology
equipment affected by the Year 2000 issue. The task forces are granted the
authority and resources to address the Year 2000 issue and receive supervisory
support, as needed, from our Chief Financial Officer.
Our plan to resolve the Year 2000 issue involves the following four phases:
systems and hardware assessment, resolution, testing and implementation. To
date, the task forces have completed their assessment of all our systems that
could be significantly affected by the Year 2000 issue. We have installed or
are in the process of installing new hardware and system solutions. We estimate
that we have completed 90% of this process.
We have contacted all major third party vendors to obtain representations
and assurances that their hardware, embedded technology systems and software
which we will use or will impact us are, or will be modified on a timely basis
to be, Year 2000 compliant. These third parties include banks, cement and
aggregates suppliers, gas, electricity and water suppliers and telephone
companies. All of the third parties that have responded have stated that they
are or expect to be Year 2000 compliant by the end of 1999. To date, our costs
associated with assessing and monitoring the progress of third parties in
resolving their Year 2000 issues have not been significant, and we do not expect
to incur any material costs in the future relating to this aspect of our Year
2000 program.
In 1998 and 1999 we spent $499,400 and $421,843, respectively, on system
improvements . We believe these improvements, along with the program described
above, should resolve our Year 2000 issues. The results of ongoing system
resolution and testing, however, could result in additional costs to us.
Management believes it has an effective program in place to resolve the
impact of the Year 2000 issue in a timely manner and does not expect the Year
2000 issue to have a material adverse effect on our business, financial
condition and results of operations, but we cannot assure you that this will be
the case. We have not yet completed the conversion of all information
technologies identified in our Year 2000 program. We do not anticipate any
material adverse effect from Year 2000 failures, but you have no guarantee that
we will be able to achieve total compliance. Factors that give rise to this
uncertainty include our possible failure to identify all susceptible systems,
noncompliance by third parties whose systems and operations impact us and a
possible loss of technical resources to perform the necessary work.
13
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
Our most likely worst case Year 2000 noncompliance scenarios are:
- loss of gas, electricity, water or phone services;
- failures or delays in the daily delivery of raw materials;
- equipment failures;
- an interruption in our ability to collect amounts due from customers;and
- loss of accurate accounting records.
Depending on the length of any noncompliance or system failure, any of
these situations could have a material adverse impact on our ability to serve
our customers in a timely manner and result in lost business and revenues or
increased costs.
We currently have no formal contingency plans in place if we do not
complete all phases of our Year 2000 program. However, the progress of the Year
2000 program continues to be closely monitored, and additional measures will be
taken as risks are identified. We will continue to evaluate the status of
completion throughout the fourth quarter of 1999 and determine whether such a
plan is necessary in any part of our business.
This disclosure is subject to protection under the Year 2000 Information
and Readiness Disclosure Act of 1998, 15 U.S.C. I (1999), as a "Year 2000
Statement" and "Year 2000 Readiness Disclosure" as that Act defines these terms.
EFFECT OF INFLATION
Management believes that inflation has not had a material effect on our
results.
FORWARD LOOKING STATEMENTS
Certain matters discussed in this report contain forward-looking statements
and information based on management's belief as well as assumptions made by and
information currently available to management. Such statements are subject to
risks, uncertainties and assumptions including, among other matters, future
growth in the construction industry; the ability of U.S. Aggregates, Inc. to
complete acquisitions and effective integration of acquired companies
operations; and general risks related to the markets in which U.S. Aggregates,
Inc. operates. Should one or more of these risks materialize, or should
underlying assumptions prove incorrect, actual results may differ materially
from those projected. Additional information regarding these risk factors and
other uncertainties may be found in the Company's filings with the Securities
and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to certain market risks arising from transactions
that are entered into in the normal course of business.
All of the Company's borrowings under our floating rate credit facilities
are subject to interest rate risk. Borrowings under our syndicated revolving
credit facility bear interest, at our option, at either the Eurodollar rate or
the ABR rate, plus margin. Each 1.0% increase in the interest rates on the
total of our floating rate debt would impact pretax earnings by approximately
$1.2 million. The Company does not use interest rate swap contracts to hedge
the impact of interest rate fluctuations on certain variable rate debt.
14
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
U.S. Aggregates, Inc. is subject to legal proceedings and claims that arise
in the ordinary course of business. Management does not believe that the
outcome of any of those matters will have a material adverse effect on U.S.
Aggregates, Inc.'s consolidated financial position, operating results or cash
flows.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Changes in Securities
During the three months ended September 30, 1999, the Company granted
options to purchase an aggregate of 280,336 shares of common stock at an
exercise price of $15.00 per share to 60 employees pursuant to the U.S.
Aggregates, Inc. 1999 Long Term Incentive Plan. The issuances described were
not registered under the Securities Act of 1933 pursuant to the exemption under
Section 4 (2).
(b) Use of Proceeds
The shares of common stock issued and sold in the IPO were registered under
the Securities Act pursuant to a registration statement on Form S-1 (Reg. No.
333-79209), which the SEC declared effective on August 12, 1999. That
registration statement registered 5,000,000 shares of common stock having a
maximum aggregate offering price of $75,000,000. Also, four of the Company's
Stockholders granted the underwriters the right to purchase up to 750,000
additional shares to cover any over-allotments . The IPO was completed through
a syndicate of underwriters for which Deutsche Banc Alex. Brown, Schroder & Co.
Inc. and The Robinson-Humphrey Company acted as representatives.
In the IPO, the Company issued and sold 5,000,000 shares of common stock
on August 18, 1999 at an initial public offering price of $15.00 per share,
resulting in gross proceeds of $75,000,000. On September 15, 1999, four of the
Company's stockholders sold an additional 475,000 shares of common stock on the
partial exercise of the underwriters' over-allotment option granted in
connection with the IPO. Following the closing of the sale of those shares, the
IPO was terminated.
Through September 30, 1999, we incurred the following expenses in
connection with the issuance and distribution of the shares of common stock
registered pursuant to our IPO registration statement, none of which constituted
direct or indirect payments to any of our officers, directors or any of their
associates, or any person owning 10% or more of USAI or any of its affiliates,
except for a $165,219 payment to Edward Dougherty, a director of the Company for
consulting services (other expenses represent a reasonable estimate of actual
costs incurred):
Underwriting discounts and commissions $ 5,250,000
Finders' fees -
Expenses paid to or for Underwriters -
Other expenses 4,050,000
---------------
Total expenses $ 9,300,000
===============
15
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
The net proceeds we received from the IPO, after deducting the expenses
detailed above, were $65,700,000.
From August 18, 1999 through September 30, 1999, we have applied the
following amounts of our net proceeds from the IPO.
<TABLE>
<CAPTION>
Payment to Officers,
Payment to Directors and
Use of Proceeds Others 10% Stockholders
- --------------- ----------- ---------------------
<S> <C> <C>
Construction of plant, building and facilities $ - $ -
Purchase and installation of machinery
and equipment . . . . . . . . . . . . . . - -
Purchase of real estate. . . . . . . . . . . . - -
Acquisition of other businesses. . . . . . . . - -
Repayment of indebtedness. . . . . . . . . . . 65,700,000 -
Working Capital. . . . . . . . . . . . . . . . - -
Temporary investments. . . . . . . . . . . . . - -
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
- ------------ -----------
3.1* Form of Restated Certificate of Incorporation of the
Company (Form S-1 (Reg. No. 333-79209), Exhibit 3.1(vi))
3.2* Form of Restated By-laws of the Company (Form S-1
(Reg. No. 333-79209), Exhibit 3.2(ii))
10.1* U.S. Aggregates, Inc. 1999 Long Term Incentive Plan
(Form S-1 (Reg. No. 333-79209), Exhibit 10.49)
10.2 Amended and Restated Employment Agreement dated
August 18, 1999 with James A. Harris
10.3 Amended and Restated Employment Agreement dated
August 18, 1999 with Michael J. Stone
10.4 Amended and Restated Employment Agreement dated
August 18, 1999 with Morris L. Bishop, Jr.
10.5* Form of Underwriting Agreement among the Company, the Selling
Stockholders, BT Alex Brown Incorporated, The Robinson-
Humphrey Company, LLC and J. Henry Schroder & Co. Limited
(Form S-1 (Reg. No. 333-79209), Exhibit 1.1)
21.1* Subsidiaries of the Company (Form S-1 (Reg. No. 333-79209),
Exhibit 21.1)
27.1 Financial Data Schedule (EDGAR Filing Only)
* Incorporated by reference to the filing indicated.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three months
ended September 30, 1999.
All other items specified by Part II of this report are inapplicable and
accordingly have been omitted.
16
<PAGE>
U.S. AGGREGATES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. AGGREGATES, INC.
Dated: November 8, 1999 /s/ Michael J. Stone
-------------------------------------
Michael J. Stone
Executive Vice President,
Chief Financial Officer, Treasurer
and Secretary
17
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ------------ -----------
3.1* Form of Restated Certificate of Incorporation of the
Company (Form S-1 (Reg. No. 333-79209), Exhibit 3.1(vi))
3.2* Form of Restated By-laws of the Company (Form S-1
(Reg. No. 333-79209), Exhibit 3.2(ii))
10.1* U.S. Aggregates, Inc. 1999 Long Term Incentive Plan
(Form S-1 (Reg. No. 333-79209), Exhibit 10.49)
10.2 Amended and Restated Employment Agreement dated
August 18, 1999 with James A. Harris
10.3 Amended and Restated Employment Agreement dated
August 18, 1999 with Michael J. Stone
10.4 Amended and Restated Employment Agreement dated
August 18, 1999 with Morris L. Bishop, Jr.
10.5* Form of Underwriting Agreement among the Company, the Selling
Stockholders, BT Alex Brown Incorporated, The Robinson-
Humphrey Company, LLC and J. Henry Schroder & Co. Limited
(Form S-1 (Reg. No. 333-79209), Exhibit 1.1)
21.1* Subsidiaries of the Company (Form S-1 (Reg. No. 333-79209),
Exhibit 21.1)
27.1 Financial Data Schedule (EDGAR Filing Only)
* Incorporated by reference to the filing indicated.
18
<PAGE>
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of August 18, 1999, between U.S. Aggregates,
Inc., a Delaware corporation (the "Company"), and James A. Harris ("Executive").
The parties hereto desire to enter into an agreement pursuant to which
Executive shall be employed by the Company as the Company's Chief Executive
Officer. Certain defined terms used herein are set forth in Section 9 below.
The parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon termination pursuant to Section 3(a) hereof (the "Employment
Period"). During the Employment Period, Executive shall serve as the Chief
Executive Officer of the Company, subject to customary oversight by the
Company's board of directors (the "Board").
2. Compensation. During the Employment Period, the Company will pay
Executive a base salary (the "Annual Base Salary") as the Board may designate
from time to time, at a rate initially equal to $300,000 per annum, which amount
shall be reviewed annually and shall be subject to adjustment as determined by
the Board in its discretion, based upon, among other things, the Company's
achievement of certain performance objectives; provided Annual Base Salary shall
not be less than $300,000 per annum. Following the end of each fiscal year, the
Board may, in its sole discretion, award a bonus (a "Bonus") to Executive in an
amount as determined by the Board in its discretion, based upon, among other
things, the Company's achievement of budgetary and other objectives. The Board
will consult with Executive at the beginning of each budgetary period to set
reasonable budgetary and other objectives against which the Company's
performance will be measured. Executive's Annual Base Salary for any partial
year will be prorated based upon the number of days elapsed in such year.
3. Termination.
(a) Employment Period. Unless renewed upon mutual agreement of the
Company and Executive, the Employment Period will continue until December 31,
2002, Executive's resignation, Disability or death or until the Board determines
in its good faith judgment that termination of Executive's employment is in the
best interests of the Company. Upon mutual agreement of the Company and
Executive, the Employment Period may be extended for successive one-year terms.
(b) Severance Payments.
(i) In the event Executive's employment is terminated by the Company
without Cause (excluding any expiration of the initial or any renewal of the
<PAGE>
Employment Period) or as a result of Executive's death or Disability, the
Company shall pay to Executive severance pay ("Severance Pay") equal to
Executive's Annual Base Salary, plus the amount of any Bonus received for the
year prior to such termination, per year for a period of two years following the
date of such termination, payable within 15 days following such termination.
(ii) In the event the Employment Period is terminated for any reason
other than Cause prior to December 31, 2002, Executive shall be entitled to
health insurance of such coverage as provided to Executive prior to such
termination until December 31, 2004. In the event the Employment Period is
terminated for Cause prior to December 31, 2002 or for any reason (including
expiration and non-renewal) on or after December 31, 2002, Executive shall be
entitled to health insurance of such coverage as provided to Executive prior to
such termination until two years after the end of the Employment Period.
4. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company and its affiliates (the "Confidential Information") are the property of
the Company. Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for his own account any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public, other than as a result of Executive's acts or omissions
to act. Executive agrees to deliver to the Company at the termination of his
employment, or at any other time the Company may request in writing, all
memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the Confidential Information (including, without
limitation, all acquisition prospects, lists and contact information) which he
may then possess or have under his control.
5. Noncompetition and Nonsolicitation.
(a) Noncompetition. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that during the Noncompete Period (as defined in
Section 9 below) he shall not directly or indirectly own, manage, control,
participate in, consult with, render services for or in any manner engage in any
business competing with the businesses of the Company or its Subsidiaries as
such businesses exist on the date of the termination of Executive's employment,
within 100 miles any site of operations in which the Company or its Subsidiaries
engage in such businesses or are then in negotiations to acquire such
businesses.
(b) Nonsolicitation. During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the Company
or such Subsidiary, or in any way knowingly interfere with the relationship
between the Company or any Subsidiary and any employee thereof, (ii) hire any
person who was an employee of the Company or any Subsidiary at any time during
the last
- 2 -
<PAGE>
12 months of the Employment Period or (iii) induce or attempt to induce any
customer, supplier, licensee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, or in
any way knowingly interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company or any Subsidiary.
(c) Enforcement. If, at the time of enforcement of Section 4 or 5 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
6. Executive Representations. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement,
confidentiality agreement or other similar agreement with any other person or
entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms.
7. Survival. Paragraphs 4 and 5 shall survive and continue in full
force in accordance with their terms notwithstanding any termination of the
Employment Period.
8. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
If to the Company:
U.S. Aggregates, Inc.
400 South El Camino Real, Suite 500
San Mateo, California 94402
Attention: Michael J. Stone
- 3 -
<PAGE>
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Kevin R. Evanich
John A. Schoenfeld
If to Executive:
James A. Harris
U.S. Aggregates, Inc.
400-4 College Avenue
Clemson, South Carolina 29631
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
9. Definitions.
"Cause" means (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other act involving dishonesty, disloyalty or
fraud with respect to the Company or any of its Subsidiaries, (ii) conduct
tending to bring the Company or any of its Subsidiaries into public disgrace or
disrepute, (iii) failure to perform duties as reasonably directed by the Board,
(iv) gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any other material breach of this Agreement or any
other agreement to which Executive and the Company are parties which is not
cured within 10 days after written notice thereof to Executive.
"Disability" means Executive's inability, because of injury, illness or
other incapacity to perform the services to the Company contemplated hereby for
a continuous period of 90 days or for 120 days out of a continuous period of 360
days. Such Disability shall be deemed to have occurred on the 90th consecutive
day or the 120th day within the specified period, as applicable.
"Noncompete Period" means the Employment Period plus the two year period
immediately subsequent the Employment Period.
"Subsidiary" means any corporation of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors directly or through one or more subsidiaries.
- 4 -
<PAGE>
10. General Provisions.
(a) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior under-standings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors and assigns; provided
that the rights and obligations of Executive and the Company under this
Agreement shall not be assignable without the prior written consent of the other
party.
(e) Choice of Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in accordance
with the internal laws of the State of Illinois, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Illinois.
(f) Remedies. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages and
costs (including attorneys' fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and/or
other injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
- 5 -
<PAGE>
(g) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.
* * * * *
- 6 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
U.S. Aggregates, Inc.
By: /S/ Michael J. Stone
--------------------------
Its: Executive Vice President
/S/ James A. Harris
----------------------------------
James A. Harris
- 7 -
<PAGE>
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of August 18, 1999, between U.S. Aggregates,
Inc., a Delaware corporation (the "Company"), and Michael J. Stone
("Executive").
The parties hereto desire to enter into an agreement pursuant to which
Executive shall be employed by the Company as the Company's Executive Vice
President - Development, Chief Financial Officer, Treasurer and Secretary.
Certain defined terms used herein are set forth in Section 9 below.
The parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon termination pursuant to Section 3(a) hereof (the "Employment
Period"). During the Employment Period, Executive shall serve as the Executive
Vice President - Development, Chief Financial Officer, Treasurer and Secretary
of the Company, subject to customary oversight by the Company's board of
directors (the "Board").
2. Compensation. During the Employment Period, the Company will pay
Executive a base salary (the "Annual Base Salary") as the Board may designate
from time to time, at a rate initially equal to $250,000 per annum, which amount
shall be reviewed annually and shall be subject to adjustment as determined by
the Board in its discretion, based upon, among other things, the Company's
achievement of certain performance objectives; provided Annual Base Salary shall
not be less than $250,000 per annum. Following the end of each fiscal year, the
Board may, in its sole discretion, award a bonus (a "Bonus") to Executive in an
amount as determined by the Board in its discretion, based upon, among other
things, the Company's achievement of budgetary and other objectives. The Board
will consult with Executive at the beginning of each budgetary period to set
reasonable budgetary and other objectives against which the Company's
performance will be measured. Executive's Annual Base Salary for any partial
year will be prorated based upon the number of days elapsed in such year.
3. Termination.
(a) Employment Period. Unless renewed upon mutual agreement of the
Company and Executive, the Employment Period will continue until December 31,
2002, Executive's resignation, Disability or death or until the Board determines
in its good faith judgment that termination of Executive's employment is in the
best interests of the Company. Upon mutual agreement of the Company and
Executive, the Employment Period may be extended for successive one-year terms.
<PAGE>
(b) Severance Payments.
(i) In the event Executive's employment is terminated by the Company
without Cause (excluding any expiration of the initial or any renewal of the
Employment Period) or as a result of Executive's death or Disability, the
Company shall pay to Executive severance pay ("Severance Pay") equal to
Executive's Annual Base Salary, plus the amount of any Bonus received for the
year prior to such termination, per year for a period of two years following the
date of such termination, payable within 15 days following such termination.
(ii) In the event the Employment Period is terminated for any reason
other than Cause prior to December 31, 2002, Executive shall be entitled to
health insurance of such coverage as provided to Executive prior to such
termination until December 31, 2004. In the event the Employment Period is
terminated for Cause prior to December 31, 2002 or for any reason (including
expiration and non-renewal) on or after December 31, 2002, Executive shall be
entitled to health insurance of such coverage as provided to Executive prior to
such termination until two years after the end of the Employment Period.
4. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company and its affiliates (the "Confidential Information") are the property of
the Company. Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for his own account any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public, other than as a result of Executive's acts or omissions
to act. Executive agrees to deliver to the Company at the termination of his
employment, or at any other time the Company may request in writing, all
memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the Confidential Information (including, without
limitation, all acquisition prospects, lists and contact information) which he
may then possess or have under his control.
5. Noncompetition and Nonsolicitation.
(a) Noncompetition. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that during the Noncompete Period (as defined in
Section 9 below) he shall not directly or indirectly own, manage, control,
participate in, consult with, render services for or in any manner engage in any
business competing with the businesses of the Company or its Subsidiaries as
such businesses exist on the date of the termination of Executive's employment,
within 100 miles any site of operations in which the Company or its Subsidiaries
engage in such businesses or are then in negotiations to acquire such
businesses.
- 2 -
<PAGE>
(b) Nonsolicitation. During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the Company
or such Subsidiary, or in any way knowingly interfere with the relationship
between the Company or any Subsidiary and any employee thereof, (ii) hire any
person who was an employee of the Company or any Subsidiary at any time during
the last 12 months of the Employment Period or (iii) induce or attempt to induce
any customer, supplier, licensee or other business relation of the Company or
any Subsidiary to cease doing business with the Company or such Subsidiary, or
in any way knowingly interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company or any Subsidiary.
(c) Enforcement. If, at the time of enforcement of Section 4 or 5 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
6. Executive Representations. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement,
confidentiality agreement or other similar agreement with any other person or
entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms.
7. Survival. Paragraphs 4 and 5 shall survive and continue in full
force in accordance with their terms notwithstanding any termination of the
Employment Period.
8. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
- 3 -
<PAGE>
If to the Company:
U.S. Aggregates, Inc.
400-4 College Avenue
Clemson, South Carolina 29631
Attention: James A. Harris
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Kevin R. Evanich
John A. Schoenfeld
If to Executive:
Michael J. Stone
U.S. Aggregates, Inc.
400 South El Camino Real, Suite 500
San Mateo, California 94402
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
9. Definitions.
"Cause" means (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other act involving dishonesty, disloyalty or
fraud with respect to the Company or any of its Subsidiaries, (ii) conduct
tending to bring the Company or any of its Subsidiaries into public disgrace or
disrepute, (iii) failure to perform duties as reasonably directed by the Board,
(iv) gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any other material breach of this Agreement or any
other agreement to which Executive and the Company are parties which is not
cured within 10 days after written notice thereof to Executive.
"Disability" means Executive's inability, because of injury, illness or
other incapacity to perform the services to the Company contemplated hereby for
a continuous period of 90 days or for 120 days out of a continuous period of 360
days. Such Disability shall be deemed to have occurred on the 90th consecutive
day or the 120th day within the specified period, as applicable.
"Noncompete Period" means the Employment Period plus the two year period
immediately subsequent the Employment Period.
- 4 -
<PAGE>
"Subsidiary" means any corporation of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors directly or through one or more subsidiaries.
10. General Provisions.
(a) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors and assigns; provided
that the rights and obligations of Executive and the Company under this
Agreement shall not be assignable without the prior written consent of the other
party.
(e) Choice of Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in accordance
with the internal laws of the State of Illinois, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Illinois.
(f) Remedies. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages and
costs (including attorneys' fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond
- 5 -
<PAGE>
or other security) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(g) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.
* * * * *
- 6 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
U.S. Aggregates, Inc.
By: /S/ James A. Harris
--------------------------
Its: Chief Executive Officer
/S/ Michael J. Stone
----------------------------------
Michael J. Stone
- 7 -
<PAGE>
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of August 18, 1999, between U.S. Aggregates,
Inc., a Delaware corporation (the "Company"), and Morris L. Bishop, Jr.
("Executive").
The parties hereto desire to enter into an agreement pursuant to which
Executive shall be employed by the Company as the Company's President and Chief
Operating Officer. Certain defined terms used herein are set forth in Section 9
below.
The parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon termination pursuant to Section 3(a) hereof (the "Employment
Period"). During the Employment Period, Executive shall serve as the President
and Chief Operating Officer of the Company, subject to customary oversight by
the Company's board of directors (the "Board").
2. Compensation. During the Employment Period, the Company will pay
Executive a base salary (the "Annual Base Salary") as the Board may designate
from time to time, at a rate initially equal to $250,000 per annum, which amount
shall be reviewed annually and shall be subject to adjustment as determined by
the Board in its discretion, based upon, among other things, the Company's
achievement of certain performance objectives; provided Annual Base Salary shall
not be less than $250,000 per annum. Following the end of each fiscal year, the
Board may, in its sole discretion, award a bonus (a "Bonus") to Executive in an
amount as determined by the Board in its discretion, based upon, among other
things, the Company's achievement of budgetary and other objectives. The Board
will consult with Executive at the beginning of each budgetary period to set
reasonable budgetary and other objectives against which the Company's
performance will be measured. Executive's Annual Base Salary for any partial
year will be prorated based upon the number of days elapsed in such year.
3. Termination.
(a) Employment Period. Unless renewed upon mutual agreement of the
Company and Executive, the Employment Period will continue until December 31,
2002, Executive's resignation, Disability or death or until the Board determines
in its good faith judgment that termination of Executive's employment is in the
best interests of the Company. Upon mutual agreement of the Company and
Executive, the Employment Period may be extended for successive one-year terms.
(b) Severance Payments.
(i) In the event Executive's employment is terminated by the Company
without Cause (excluding any expiration of the initial or any renewal of the
<PAGE>
Employment Period) or as a result of Executive's death or Disability, the
Company shall pay to Executive severance pay ("Severance Pay") equal to
Executive's Annual Base Salary, plus the amount of any Bonus received for the
year prior to such termination, per year for a period of two years following the
date of such termination, payable within 15 days following such termination.
(ii) In the event the Employment Period is terminated for any reason
other than Cause prior to December 31, 2002, Executive shall be entitled to
health insurance of such coverage as provided to Executive prior to such
termination until December 31, 2004. In the event the Employment Period is
terminated for Cause prior to December 31, 2002 or for any reason (including
expiration and non-renewal) on or after December 31, 2002, Executive shall be
entitled to health insurance of such coverage as provided to Executive prior to
such termination until two years after the end of the Employment Period.
4. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company and its affiliates (the "Confidential Information") are the property of
the Company. Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for his own account any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public, other than as a result of Executive's acts or omissions
to act. Executive agrees to deliver to the Company at the termination of his
employment, or at any other time the Company may request in writing, all
memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the Confidential Information (including, without
limitation, all acquisition prospects, lists and contact information) which he
may then possess or have under his control.
5. Noncompetition and Nonsolicitation.
(a) Noncompetition. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that during the Noncompete Period (as defined in
Section 9 below) he shall not directly or indirectly own, manage, control,
participate in, consult with, render services for or in any manner engage in any
business competing with the businesses of the Company or its Subsidiaries as
such businesses exist on the date of the termination of Executive's employment,
within 100 miles any site of operations in which the Company or its Subsidiaries
engage in such businesses or are then in negotiations to acquire such
businesses.
(b) Nonsolicitation. During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the Company
or such Subsidiary, or in any way knowingly
- 2 -
<PAGE>
interfere with the relationship between the Company or any Subsidiary and any
employee thereof, (ii) hire any person who was an employee of the Company or any
Subsidiary at any time during the last 12 months of the Employment Period or
(iii) induce or attempt to induce any customer, supplier, licensee or other
business relation of the Company or any Subsidiary to cease doing business with
the Company or such Subsidiary, or in any way knowingly interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary.
(c) Enforcement. If, at the time of enforcement of Section 4 or 5 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
6. Executive Representations. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement,
confidentiality agreement or other similar agreement with any other person or
entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms.
7. Survival. Paragraphs 4 and 5 shall survive and continue in full
force in accordance with their terms notwithstanding any termination of the
Employment Period.
8. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
If to the Company:
U.S. Aggregates, Inc.
400 South El Camino Real, Suite 500
San Mateo, California 94402
Attention: Michael J. Stone
- 3 -
<PAGE>
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Kevin R. Evanich
John A. Schoenfeld
If to Executive:
Morris L. Bishop, Jr.
U.S. Aggregates, Inc.
3800 Colonnade Parkway, Suite 525
Birmingham, Alabama 35243
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
9. Definitions.
"Cause" means (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other act involving dishonesty, disloyalty or
fraud with respect to the Company or any of its Subsidiaries, (ii) conduct
tending to bring the Company or any of its Subsidiaries into public disgrace or
disrepute, (iii) failure to perform duties as reasonably directed by the Board,
(iv) gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any other material breach of this Agreement or any
other agreement to which Executive and the Company are parties which is not
cured within 10 days after written notice thereof to Executive.
"Disability" means Executive's inability, because of injury, illness or
other incapacity to perform the services to the Company contemplated hereby for
a continuous period of 90 days or for 120 days out of a continuous period of 360
days. Such Disability shall be deemed to have occurred on the 90th consecutive
day or the 120th day within the specified period, as applicable.
"Noncompete Period" means the Employment Period plus the two year period
immediately subsequent the Employment Period.
"Subsidiary" means any corporation of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors directly or through one or more subsidiaries.
- 4 -
<PAGE>
10. General Provisions.
(a) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors and assigns; provided
that the rights and obligations of Executive and the Company under this
Agreement shall not be assignable without the prior written consent of the other
party.
(e) Choice of Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in accordance
with the internal laws of the State of Illinois, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Illinois.
(f) Remedies. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages and
costs (including attorneys' fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and/or
other injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
- 5 -
<PAGE>
(g) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.
* * * * *
- 6 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
U.S. Aggregates, Inc.
By: /S/ Michael J. Stone
---------------------------
Its: Executive Vice President
/S/ Morris L. Bishop, Jr.
-----------------------------------
Morris L. Bishop, Jr.
- 7 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1999 AND THE RELATED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 3774
<SECURITIES> 0
<RECEIVABLES> 66493
<ALLOWANCES> 1354
<INVENTORY> 28683
<CURRENT-ASSETS> 103737
<PP&E> 304484
<DEPRECIATION> 29589
<TOTAL-ASSETS> 409950
<CURRENT-LIABILITIES> 51958
<BONDS> 165279
0
0
<COMMON> 149
<OTHER-SE> 139827
<TOTAL-LIABILITY-AND-EQUITY> 409950
<SALES> 220925
<TOTAL-REVENUES> 220925
<CGS> 156966
<TOTAL-COSTS> 188881
<OTHER-EXPENSES> 382
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12859
<INCOME-PRETAX> 18803
<INCOME-TAX> 7036
<INCOME-CONTINUING> 11195
<DISCONTINUED> 0
<EXTRAORDINARY> (264)
<CHANGES> 0
<NET-INCOME> 10931
<EPS-BASIC> 1.09
<EPS-DILUTED> 1.05
</TABLE>