SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
U.S. AGGREGATES, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined): N/A
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(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid: N/A
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(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
U.S. AGGREGATES, INC.
400 South El Camino Real, Suite 500
San Mateo, California 94402
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 16, 2000
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of U.S.
Aggregates, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, May 16, 2000, at 1:00 p.m. local time, in the Ridgley Room at the
Tutwiler Hotel at 2021 Park Place North, Birmingham, Alabama 35203 for the
following purposes:
1. To elect three (3) Class I directors to hold office for a term ending
in 2003 and until their successors are elected and qualified.
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 21, 2000
are entitled to notice of and to vote at the meeting and at any continuation
or adjournment thereof.
By Order of the Board of Directors,
/S/ Michael J. Stone
Michael J. Stone
Secretary
San Mateo, California
March 30, 2000
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO
VOTE, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE>
U.S. AGGREGATES, INC.
400 SOUTH EL CAMINO REAL, SUITE 500
SAN MATEO, CALIFORNIA 94402
PROXY STATEMENT
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of U.S.
Aggregates, Inc., a Delaware corporation (the "Company"), for use at the annual
meeting of shareholders (the "Annual Meeting") to be held on Tuesday, May 16,
2000 at 1:00 p.m. local time, at which shareholders of record on March 21, 2000
will be entitled to vote. On March 21, 2000, the Company had issued and
outstanding 14,900,593 shares of Common Stock, par value $.01 per share. The
annual meeting will be held in the Ridgley Room at the Tutwiler Hotel at 2021
Park Place North, Birmingham, Alabama 35203.
VOTING AND REVOCABILITY OF PROXIES
All properly executed proxies that are not revoked will be voted at the
meeting in accordance with the instructions contained therein. Proxies
containing no instructions regarding the proposals specified in the form of
proxy will be voted FOR approval of all proposals in accordance with the
recommendation of the Company's Board of Directors. Any person giving a proxy
in the form accompanying this statement has the power to revoke such proxy at
any time before its exercise. The proxy may be revoked by filing with the
Secretary of the Company at the Company's principal executive office an
instrument of revocation or a duly executed proxy bearing a later date, or by
filing written notice of revocation with the secretary of the meeting prior to
the voting of the proxy, or by voting the shares subject to the proxy by written
ballot.
Broker non-votes and shares held by stockholders present in person or by
proxy at the meeting but abstaining on a vote, will be counted in determining
whether a quorum is present at the Annual Meeting. The vote required for the
election of directors is described below. For all other proposals, abstentions
by stockholders present in person or by proxy at the meeting are counted as
votes against a proposal for purposes of determining whether or not the proposal
has been approved, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
Each holder of Common Stock is entitled to one vote for each share of
Common Stock held.
SOLICITATION
The Company will bear the entire cost of solicitation, including
preparation, assembly, printing, and mailing of this proxy statement, the proxy,
and any additional material furnished to shareholders. Original solicitation of
proxies by mail may be supplemented by telephone, telegram, or personal
solicitation by directors, officers, or employees of the Company; no additional
compensation will be paid for any such services. Except as described above, the
Company does not intend to solicit proxies other than by mail. Arrangements
will also be made with brokerage firms and other custodians, nominees and
fiduciaries to forward proxy material to certain beneficial owners of the
Company's Common Stock, and the Company will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection therewith.
The Company intends to mail this proxy statement on or about March 31,
2000.
<PAGE>
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of shareholders that are intended to be presented at the
Company's 2001 annual meeting of shareholders must be received by the Company no
later than December 31, 2000 in order to be included in the proxy statement and
proxy relating to that meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for three classes of
directors: Class I, Class II and Class III. In accordance with the
Certificate of Incorporation, Class I directors are to be elected at the 2000
annual meeting, Class II directors are to be elected at the 2001 annual meeting
and Class III directors are to be elected at the annual meeting in the year
2002. At each annual meeting of shareholders, one class of directors is elected
for a term of three years to succeed those directors whose terms expire on the
annual meeting dates.
MANAGEMENT RECOMMENDS A VOTE FOR EACH OF
THE NOMINEES FOR DIRECTOR NAMED BELOW
NOMINEES
Three Class I directors are to be elected to the Board at the Annual
Meeting, each to serve until the annual meeting of shareholders to be held in
2003 and until his successor has been elected and qualified, or until his
earlier death, resignation or removal. The current Class I directors are Edward
A. Dougherty, Michael J. Stone and Raymond R. Wingard. Mr. Wingard was
appointed to the Board as a Class I director on December 9, 1999. Messrs.
Dougherty and Stone were previously elected to the board by the shareholders.
The following table sets forth certain information regarding the Company's
directors and nominees.
<TABLE>
<CAPTION>
Name Age Position Director Since
- ------------------------------------------ --- --------------------------------------- --------------
<S> <C> <C> <C>
Class I Nominees to be Elected at the Annual Meeting
- -------------------------------------------------------------
Edward A. Dougherty. . . . . . . . . . . . 42 Director 1997
Michael J. Stone . . . . . . . . . . . . . 56 Executive Vice President - Development, 1994
Chief Financial Officer, Treasurer and
Secretary
Raymond R. Wingard . . . . . . . . . . . . 69 Director 1999 (1)
Class II Director Whose Terms Expire At The 2001 Annual Meeting Of Shareholders
- -------------------------------------------------------------------------------------------
Morris L. Bishop, Jr.. . . . . . . . . . . 55 President and Chief Operating Officer 1999 (2)
Charles R. Pullin. . . . . . . . . . . . . 76 Director 1994
Bruce V. Rauner. . . . . . . . . . . . . . 44 Director 1994
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<PAGE>
Class III Directors Whose Terms Expire at the 2002 Annual Meeting of Shareholders
- ---------------------------------------------------------------------------------------------
Franz L. Cristiani . . . . . . . . . . . . 58 Director 2000 (3)
David A. Donnini . . . . . . . . . . . . . 34 Director 1994
James A. Harris. . . . . . . . . . . . . . 66 Chief Executive Officer and Chairman of 1994
the Board
</TABLE>
(1) Appointed by the Board of Directors as a Class I director on December 9,
1999.
(2) Appointed by the Board of Directors as a Class II director on May 1,
1999.
(3) Appointed by the Board of Directors as a Class III director on February
4, 2000.
Each of the nominees and current directors has been engaged in the
principal occupations set forth below during the past five years:
Edward A. Dougherty. Mr. Dougherty has provided consulting services to the
Company since its founding in January 1994. Mr. Dougherty is an independent
financial advisor.
Michael J. Stone. Mr. Stone has been Executive Vice
President--Development, Chief Financial Officer, Treasurer, Secretary and
Director of the Company since January 1994.
Raymond R. Wingard. Mr. Wingard is President of Wingard Enterprises, Inc.
(consulting services and funding to early stage business ventures). Mr. Wingard
is also Chairman of the Board of Cardiac Telecom Corp. (telemedicine
technology). Mr. Wingard is a retired vice president of Koppers Company, Inc.
Morris L. Bishop, Jr. Mr. Bishop has been President and Chief Operating
Officer of the Company since May 1997. From 1994 to 1997 he was Vice President
of the Company. Prior thereto he was Vice President of Hoover, Inc.
Charles R. Pullin. Mr. Pullin is the retired Chairman and Chief Executive
Officer of Koppers Company, Inc.
Bruce V. Rauner. Mr. Rauner is the Managing Principal of GTCR Golder
Rauner, LLC, a private equity investment company in Chicago, Illinois formed in
May 1998 as a successor to Golder, Thoma, Cressey, Rauner, Inc., where he has
been a Principal since 1981. Mr. Rauner is also a director of Coinmach
Corporation, Lason, Inc., Province Healthcare Company, AnswerThink Consulting
Group, Inc., AppNet, Inc. and Polymer Group, Inc.
Franz L. Cristiani. Mr. Cristiani is a retired partner of Arthur Andersen
LLP. Mr. Cristiani retired in August 1999.
David A. Donnini. Mr. Donnini is a Principal of GTCR Golder Rauner, LLC, a
private equity investment company in Chicago, Illinois formed in May 1998 as a
successor to Golder, Thoma, Cressey, Rauner, Inc., where he has been a Principal
since 1993. Mr. Donnini is also a director of Coinmach Corporation and Polymer
Group, Inc.
James A. Harris. Mr. Harris has been Chief Executive Officer and Chairman
of the Board since January 1994. Prior thereto he was Vice President of
Koppers Company, Inc.
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<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The 1999 Recapitalization.
In connection with the Company's August 1999 initial public offering, the
following transactions took place between the Company and certain of its
affiliates: (i) Each outstanding share of common stock of Western Aggregates
Holding Corp., a subsidiary of the Company in which certain members of its
management (not including any of the Company's executive officers or directors)
held a minority interest, not held by the Company was converted into
approximately 18.702 shares (after taking into account a 30.0347 to 1 stock
split) of the Company's common stock; (ii) each outstanding share of common
stock of SRM Holdings Corp., a subsidiary of the Company in which certain
members of its management (not including any of the Company's executive officers
or directors) held a minority interest, not held by the Company was converted
into approximately 242.401 shares (after taking into account a 30.0347 to 1
stock split) of the Company's common stock; (iii) 300,842 shares of the
Company's preferred stock owned by Golder, Thoma, Cressey, Rauner Fund IV, L.P.,
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, after the inclusion of accrued but unpaid dividends of $16,292,908,
into an aggregate of 3,091,809 shares of the Company's common stock. The
preferred stock and accrued dividends were converted into common stock based
upon the offering price of the Company's initial public offering.
Certain Loans to Executives.
As of February 29, 2000, the Company has outstanding principal loans of
approximately $146,000 to James A. Harris, Chief Executive Officer and Chairman
of the Board, $100,000 to Michael J. Stone, Executive Vice President -
Development, Chief Financial Officer, Treasurer and Secretary and a Director,
$247,000 to Morris L. Bishop, Jr., President and Chief Operating Officer and a
Director, pursuant to promissory notes to finance their purchase of the
Company's securities. Each of the notes is secured by a pledge of the
securities purchased with the note pursuant to a pledge agreement between the
Company and each of Messrs. Harris, Stone and Bishop. The notes bear interest
at a rate per annum equal to 8%. The principal amount of the notes and all
interest accrued thereon mature in part on various dates beginning in October
2001, with the remainder maturing in October 2005. The notes may be prepaid in
full or in part at any time.
Professional Services Agreement.
The Company had a professional services agreement with Golder, Thoma,
Cressey, Rauner, Inc. pursuant to which it provided financial and management
consulting services to the Company. The agreement was terminated in July 1999
immediately prior to the Company's initial public offering. Under the
professional services agreement, Golder, Thoma, Cressey, Rauner, Inc. received
an annual management fee equal to 0.25% of the aggregate purchase price paid by
Golder, Thoma, Cressey, Rauner Fund IV, L.P. to the Company for common and
preferred stock up to a maximum of $150,000 per year plus reimbursement of
out-of-pocket expenses and an investment fee payable at the time of any purchase
of our common or preferred stock by Golder, Thoma, Cressey, Rauner Fund IV, L.P.
equal to 1.0% of the amount of the purchase price paid to the Company by Golder,
Thoma, Cressey, Rauner Fund IV, L.P. for the common or preferred stock. For the
year ended December 31, 1999 the Company paid or accrued $150,000 in fees under
the professional services agreement.
Registration Agreement.
The Company, Golder, Thoma, Cressey, Rauner Fund IV, L.P., James A. Harris
Grantor Retained Annuity Trust, The James A. Harris Charitable Remainder
Unitrust, a trust for the benefit of Mr. Stone
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<PAGE>
and his wife for which they also serve as trustees, Mrs. Jeanne T. Richey and
Messrs. Harris, Bishop, Dougherty and Pullin are parties to a registration
agreement. Pursuant to the registration agreement, the holders of a majority of
the Company's common stock issued pursuant to an equity purchase agreement, or
issued or issuable in respect of the securities may request, after the offering
of common stock, up to three registrations of all or any part of their common
stock on Form S-1 or any similar long-form registration statement, if available,
an unlimited number of registrations on Form S-2 or S-3 or any similar
short-form registration statement, each at the Company's expense. In the event
the holders of a majority of common stock make such a request, all other parties
to the registration agreement will be entitled to participate in the
registration. The registration agreement also grants the parties piggyback
registration rights with respect to registrations by the Company of its
securities. The Company pays all expenses related to these piggyback
registrations.
Financial Advisory Arrangements.
Pursuant to financial advisory agreements between the Company and Edward A.
Dougherty, a Director, Mr. Dougherty has served as an advisor to the Company
with respect to strategic financial planning from time to time in connection
with its acquisition program and securing and completing specific financing
arrangements. The Company paid Mr. Dougherty a total of $416,206 in 1999 for
financial advisory services rendered to it including $140,000 paid upon the
consummation of the Company's initial public offering.
Certain Family Relationships.
David Harris, the son of James A. Harris, is a full-time employee of
Southern Ready Mix, Inc., a subsidiary. David Harris receives a salary of
approximately $90,000 for performing services as an employee. Christopher M.
Bishop, the son of Morris L. Bishop, Jr., and Timothy K. Bishop, the brother of
Morris L. Bishop, Jr., are full-time employees of Southern Ready Mix, Inc., a
subsidiary. Each receives a salary of approximately $60,000 for services
performed as an employee. Ashia H. Stone, the wife of Michael J. Stone acts as
one of the Company's financial advisors. The Company paid Ms. Stone a total of
$144,240 in 1999 for financial advisory services provided to it.
Other Relationships.
Morris L. Bishop, Jr. has a minority interest in Dekalb Stone, Inc., a
corporation in which the Company is the majority shareholder.
BOARD COMMITTEES AND MEETINGS
During 1999 the Board of Directors held four meetings. The Board of
Directors has a standing Audit Committee whose function is to recommend the
engagement of the Company's independent accountants, approve services performed
by such accountants, and review and evaluate the Company's accounting system and
system of internal controls. The Audit Committee, which consists of Messrs.
Pullin and Wingard (from December 9, 1999), held one meeting during the year.
Mr. Cristiani was appointed to the Audit Committee in February 2000.
The Board of Directors has a standing Compensation Committee which makes
recommendations to the Board of Directors concerning salaries and incentive
compensation paid to officers, administers the Company's 1999 Long Term
Incentive Plan, and performs such other functions regarding compensation as the
Board may delegate. The Compensation Committee, which consists of Messrs.
Donnini, Pullin and Rauner, held one meeting during the year.
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<PAGE>
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives an annual
retainer fee, which is currently $12,000, plus $3,000 for each meeting day of
the Board. Directors' fees paid or accrued by the Company during 1999 totaled
$21,000. Additionally, during 1999 the Company's non-employee directors
received a nonqualified option grant to purchase 3,000 shares of Common Stock
under the Company's 1999 Long Term Incentive Plan. Employee directors receive
no additional compensation for serving as a director.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables, based in part upon information supplied by officers,
directors and principal shareholders, set forth certain information regarding
the ownership of the Company's Common Stock as of March 21, 2000 by (i) all
those known by the Company to be beneficial owners of more than five percent of
any class of the Company's voting securities; (ii) each director and nominee;
(iii) each named executive officer; and (iv) all executive officers and
directors of the Company as a group. Unless otherwise indicated, each of the
shareholders has sole voting and investment power with respect to the shares
beneficially owned, subject to community property laws where applicable.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS(a)
<TABLE>
<CAPTION>
AMOUNT OF DIRECT PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS (b)
- --------------------------------------------- -------------------- ------------
<S> <C> <C>
Golder, Thoma, Cressey, Rauner Fund IV, L.P.. 7,824,997 52.5%
6100 Sears Tower
Chicago, Illinois 60606
Goldman Sachs Asset Management. . . . . . . . 803,600 5.4%
1 New York Plaza
New York, New York 10004
T. Rowe Price Associates, Inc. (c). . . . . . 1,040,900 7.0%
100 E. Pratt Street
Baltimore, Maryland 21202
</TABLE>
(a) Security ownership information for beneficial owners is taken from
statements filed with the Securities and Exchange Commission pursuant
to Sections 13(d),13(g) and 16(a) and information made known to the company.
(b) Calculation based on 14,900,593 shares of Common Stock outstanding as of
March 21, 2000.
(c) These securities are owned by various individuals and institutional
investors which T. Rowe Price Associates, Inc. serves as investment adviser
with power to direct investments and/or sole power to vote the securities.
For purposes of the reporting requirements of the Securities Exchange Act of
1934, T. Rowe Price Associates, Inc. is deemed to be a beneficial owner
of such securities; however, T. Rowe Price Associates, expressly disclaims
that it is, in fact, the beneficial owners of such securities.
-6-
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (a) (b) OF CLASS(c)
- ------------------------- ------------------ -------------
<S> <C> <C>
Morris L. Bishop, Jr. . 123,893 *
Franz L. Cristiani. . . 3,000 *
David A. Donnini. . . . 7,827,997(d) 52.5% *
Edward A. Dougherty . . 33,657(e) *
James A. Harris . . . . 443,346(f) 3.0%
Charles R. Pullin . . . 17,837 *
Bruce V. Rauner . . . . 7,827,997(d) 52.5%
Michael J. Stone. . . . 302,384(g) 2.0%
Raymond R. Wingard. . . 3,500 *
All Directors and . . . 8,755,614 58.8%
Executive Officers as a
Group
</TABLE>
* Does not exceed 1% of the referenced class of securities.
(a) Ownership is direct unless indicated otherwise.
(b) Includes shares beneficially owned and shares which may be acquired
within 60 days from March 21, 2000.
(c) Calculation based on 14,900,593 shares of Common Stock outstanding as of
March 21, 2000.
(d) Includes 3,000 shares issuable upon the exercise of stock options and
7,824,997 shares held by Golder, Thoma, Cressey, Rauner Fund IV, L.P. to
which Messrs. Donnini and Rauner disclaim any beneficial interest.
(e) Includes 30,657 shares owned by The Edward A. Dougherty and Linda F.
Dougherty 1998 Family Trust.
(f) Includes 199,010 shares owned by the James A. Harris Grantor Retained
Annuity Trust and 49,737 shares owned by the James A. Harris Charitable
Remainder Unitrust.
(g) Owned by The Michael J. Stone and Ashia H. Stone Revocable Inter Vivos
Trust.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION OF NAMED EXECUTIVES
The Summary Compensation Table shows certain compensation information for
each person who served as Chief Executive Officer during the year and the other
most highly compensated executive officers whose aggregate compensation exceeded
$100,000 for services rendered in all capacities during fiscal year 1999
(collectively referred to as the "Named Executive Officers"). Compensation data
is shown for the fiscal years ended December 31, 1999, 1998 and 1997. This
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted, and certain other compensation, if any, whether paid
or deferred.
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------
Name and All Other
Principal Position Year Salary Bonus(a) Stock Options (#)(b) Compensation (c)
- ---------------------- ---- -------- -------- -------------------- ----------------
<S> <C> <C> <C> <C> <C>
James A. Harris. . . . 1999 $300,000 $200,000 20,000 $ -
Chief Executive 1998 258,333 - - 2,500
Officer and 1997 200,000 75,000 - 4,750
Chairman of the
Board
Morris L. Bishop, Jr.. 1999 250,000 125,000 35,000 -
President and Chief 1998 220,833 - - 2,500
Operating Officer 1997 167,500 75,000 - 2,375
and Director
Michael J. Stone . . . 1999 250,000 200,000 20,000 -
Executive Vice 1998 208,333 - - 2,500
President- 1997 150,000 75,000 - 4,750
Development, Chief
Financial Officer,
Treasurer, Secretary
and Director
</TABLE>
(a) In May 1999, in recognition of the successful completion of the Company's
southeast expansion program, Mr. Harris was awarded a bonus of $200,000,
Mr. Bishop was awarded a bonus of $125,000 and Mr. Stone was awarded a bonus
Of $200,000.
(b) Options granted are for the Company's common stock.
(c) Amounts reported under "All Other Compensation" consist of matching
contributions made on behalf of the employee to the Company's 401(k)
Retirement Plan for 1998 and 1997.
MANAGEMENT EMPLOYMENT AGREEMENTS.
On August 18, 1999, the Company entered into employment agreements with
James A. Harris, its Chief Executive Officer and Chairman of the Board, Morris
L. Bishop, Jr., its President and Chief Operating Officer, and Michael J. Stone,
its Executive Vice President - Development, Chief Financial Officer, Treasurer
and Secretary. Pursuant to the agreements, Messrs. Harris, Bishop and Stone are
currently entitled to receive base salaries of $300,000, $250,000 and $250,000,
respectively, and bonuses, as determined from time to time by the Board of
Directors. The agreements are each for a term ending December 31, 2002. If the
executive's employment is terminated without cause, he is entitled to a
severance payment equal to his 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.
401(K) PLAN.
The Company maintains a savings plan qualified under Section 401(a) and
401(k) of the Internal Revenue Code. Generally, all full-time employees other
than certain union employees are eligible to participate in the plan. Employees
electing to participate in the plan are fully vested in their contributions. In
addition, the Company may make discretionary contributions under the plan each
year. Participating employees increase their vested interest in the
discretionary contributions based upon years of employment in which a minimum of
1,000 hours are worked, and they become fully vested after five
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<PAGE>
years. The maximum contribution for any participant for any year is the maximum
amount permitted under the Internal Revenue Code.
1999 LONG TERM INCENTIVE PLAN.
The Company's 1999 Long Term Incentive Plan (the "Plan"), which was
approved by the Shareholders in August 1999, provides for the granting of
incentive and nonqualified stock options, stock appreciation rights, either
alone or in tandem with options, restricted stock, performance awards, or any
combination of the foregoing. The purposes of the Plan are to promote the long
term growth and profitability of the Company by providing certain directors,
officers and key employees of, and certain other key individuals who perform
services for, the Company and its subsidiaries with incentives to maximize
stockholder value and otherwise contribute to the Company's success, as well as
to attract people of experience and ability to the Company. The Plan is
intended to comply with Rule 16b-3 of the Securities Exchange Act of 1934. The
Plan covers an aggregate of 700,840 shares of Common Stock of which 305,836 had
been granted as of February 29, 2000.
The Plan provides for the granting of two types of stock options: incentive
stock options (ISOs) and Nonqualified Stock Options (NSOs) The ISOs (but not
the NSOs) are intended to qualify as "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended.
Options may be granted under the Plan to directors (including non-employee
directors), officers and key employees of, and other key individuals performing
services for, the Company and its subsidiaries selected by the Compensation
Committee of the Board of Directors; provided, however, that ISOs may be granted
only to eligible employees of the Company and its subsidiaries. As of February
29, 2000, approximately 65 employees, directors and consultants participated in
the Plan.
The Compensation Committee of the Board of Directors administers the
Plan. The Committee has the power, subject to the provisions of the Plan,
to determine the persons to whom and the dates on which grants will be made,
the number of shares to be subject to each grant, the time or times during
the term of each grant within which all or a portion of such grant may be
exercised, and the other terms of the grants.
The maximum term of each option is ten years. ISOs granted under the
Plan generally vest in thirds over a three-year period following the date of
grant for employees of the Company. NSOs granted under the Plan generally
vest annually over a three-year period following the date of grant and
immediately upon grant date for outside directors. Upon termination for
cause or at will, the unvested portion of the options will be forfeited.
The exercise price of all ISOs granted under the Option Plan must be at
least equal to the fair market value of the underlying stock on the date of
grant. The exercise price of NSOs granted under the Option Plan is not subject
to any limitation based on the then current market value of the Company's Common
Stock.
The Plan also provides for awards of restricted stock. A restricted stock
award is an award of shares of common stock which are subject to restrictions on
transfer for a period specified by the Compensation Committee. The holder must
pay at least par value ($0.01 per shares) for all restricted stock granted. In
the event the holder of restricted stock issued under the Plan ceases to be
employed by (or to act as a director or consultant to) the Company prior the end
of the restricted period, all shares still subject to restriction may be
purchased by the Company for the price paid by the holder. No awards of
restricted stock were made under the Plan in 1999.
-9-
<PAGE>
The Plan also provides for awards of stock appreciation rights either alone
or in tandem with options. A SAR entitles the holder, upon exercise, to receive
a distribution in an amount equal to the difference between the fair market
value of a share of common stock of the Company on the date of exercise and the
exercise price of the SAR, or in the case of SARs granted in tandem with
options, the exercise price of any option to which the SAR is related,
multiplied by the number of shares as to which the SAR is exercised. The
Compensation Committee is authorized to decide whether such distribution shall
be in cash or in the Company's securities. All SARs will be exercised
automatically on the last day prior to the expiration date as long as the fair
market value of a share of the Company's common stock exceeds the exercise price
of the SAR. No awards of SARs were made under the Plan in 1999.
The Plan also provides for awards of performance shares. Performance
shares are shares of the Company's common stock based on the achievement by the
grantees of certain performance goals established by the Compensation Committee.
A participant must be a director, officer or employee of, or otherwise perform
services for the Company or its subsidiaries at the end of the performance cycle
in order to be entitled to a payment of a performance award. No performance
awards were made under the Plan in 1999.
No consideration is received by the Company for granting any option,
restricted stock or SAR under the Plan. An optionee may pay the exercise price
of an option in cash, by check, by surrender of shares of the Company's common
stock, by payment in accordance with a permitted cashless exercise program or by
any other forms of consideration approved by the Compensation Committee.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the options granted during the last fiscal
year to each of the named executive officers of the Company:
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year(a)
- ------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation For Option Term(b)
------------------------------------------------ -----------------------------------
Number Of % Of Total
Securities Granted To Exercise
Underlying Employees Or Base
Options In Fiscal Price Expiration
Name Granted (#) Year (c) ($)/Share Date 5% 10%
- --------------------- ----------- ----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
James A. Harris . . . 20,000 6.54% $ 15.00 8/10/09 $188,668 $478,123
Morris L. Bishop, Jr. 35,000 11.44% $ 15.00 8/10/09 330,170 836,715
Michael J. Stone. . . 20,000 6.54% $ 15.00 8/10/09 188,668 478,123
</TABLE>
(a) Awards under the Company's 1999 Long Term Incentive Plan are granted at
the discretion of the Compensation Committee of the Board of Directors
and may be awarded based on past performance and to promote long term
growth. The option exercise price of all options granted equals the
fair market value of the shares of Common Stock of the Company on the
date of the grant. The options are subject to vesting in one-third
increments over a three-year period for employees of the Company and
immediately upon grant date for outside directors unless accelerated
upon the optionee's death, disability or retirement or upon a change in
control of the Company.
(b) Pursuant to the rules of the Securities and Exchange Commission, the
dollar amounts set forth in these columns are the result of calculations
based on the set rates of 5% and 10%, and therefore are not intended to
forecast possible future appreciation, if any, of the price of the
Common Stock.
(c) Based on 305,836 options granted to all employees as February 29, 2000.
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<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth the options exercised during the last fiscal
year by Named Executive Officers of the Company:
<TABLE>
<CAPTION>
Aggregated Options Exercised and Option Values in Fiscal Year 1999
------------------------------------------------------------------
Number Of Securities Value Of Unexercised In-
Underlying Unexercised The-Money Options At
Options At Year-End (#) Year-End ($)
----------------------- ------------
Shares
Acquired On Value
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
James A. Harris . . . - - 0/20,000 -
Morris L. Bishop, Jr. - - 0/35,000 -
Michael J. Stone. . . - - 0/20,000 -
</TABLE>
COMPENSATION COMMITTEE REPORT
This report is provided by the Compensation Committee of the Board of
Directors (the "Committee") to assist stockholders in understanding the
Committee's objectives and procedures in establishing the compensation of the
Company's Chief Executive Officer and other executive officers. The Committee,
made up of non-employee Directors, is responsible for establishing and
administering the Company's executive compensation program. None of the members
of the Committee are eligible to receive awards under the Company's incentive
compensation programs other than the 1999 Long Term Incentive Plan.
The Company's executive compensation program is designed to motivate,
reward, and retain the management talent needed to achieve its business
objectives and maintain its competitiveness in the construction materials
industry. It does this by utilizing competitive base salaries that
recognize a philosophy of career continuity and by rewarding exceptional
performance and accomplishments that contribute to the Company's success.
COMPENSATION PHILOSOPHY AND OBJECTIVE
The philosophical basis of the compensation program is to pay for
performance and the level of responsibility of an individual's position. The
Committee finds greatest value in executives who possess the ability to
implement the Company's business plans as well as to react to unanticipated
external factors that can have a significant impact on corporate performance.
Compensation decisions for all executives, including the named executive
officers and the Chief Executive Officer, are based on the same criteria. These
include quantitative factors that directly improve the Company's short-term
financial performance, as well as qualitative factors that strengthen the
Company over the long term, such as demonstrated leadership skills and the
ability to deal quickly and effectively with difficulties which sometimes arise.
The Committee believes that compensation of the Company's key executives
should:
- Link rewards to business results and stockholder returns;
- Encourage creation of stockholder value and achievement of strategic
objectives;
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<PAGE>
- Maintain an appropriate balance between base salary and short-and long-
term incentive opportunity;
- Attract and retain, on a long-term basis, highly qualified executive
personnel; and
- Provide total compensation opportunity that is competitive with that
provided by competitors in the construction materials industry, taking
into account relative company size and performance as well as individual
responsibilities and performance.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of three elements:
Base Salary, Short-Term Incentives and Long-Term Incentives. Payout of
short-term incentives depends on corporate performance measured against annual
objectives and overall performance. Payout of the long-term incentives depends
on performance of the Company's stock, both in absolute and relative terms.
BASE SALARY
A competitive base salary is crucial to support the philosophy of
management development and career orientation of executives. Salaries are
targeted to pay levels of the Company's competitors and companies having similar
capitalization and revenues, among other attributes. Executive salaries are
reviewed annually.
SHORT-TERM INCENTIVE
Short-term awards to executives are made in cash and in stock to recognize
contributions to the Company's business during the past year. The bonus an
executive receives is dependent on individual performance and level of
responsibility. Assessment of an individual's relative performance is made
annually based on a number of factors which include initiative, business
judgment, technical expertise, and management skills.
LONG-TERM INCENTIVE
Long term incentives to executives are made in grants of stock options and
grants of restricted stock and stock appreciation rights. These grants are made
under the Company's 1999 Long Term Incentive Plan.
1999 CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Harris' salary was increased in 1998, effective June 1, 1998, from
$200,000 to $300,000 per year. Mr. Harris received no salary increase in 1999.
He received a bonus of $200,000 in May 1999, in recognition of the successful
completion of the Company's Southeast expansion program, and 20,000 options to
purchase common stock which vest over a three year period. The Committee
believes that Mr. Harris' base salary and incentive compensation is within the
range of compensation for chief executive officers of other companies engaged in
the basic construction materials industry and is consistent with the foregoing
philosophy and objectives and reflect the scope and level of his
responsibilities.
Members of the Compensation Committee
David A. Donnini, Chairman
Charles R. Pullin
Bruce V. Rauner
-12-
<PAGE>
SHARE INVESTMENT PERFORMANCE
The following graph compares the total return performance of the Company
for the periods indicated with the performance of the Russell 2000 Index
(presented on a dividends reinvested basis) and the performance of a Peer Group
Index. The Company's shares are traded on the New York Stock Exchange under the
symbol "AGA". The Russell 2000 Index is comprised of the publicly traded stocks
of the 2,000 smallest companies included in the Russell 3000 Index, which
includes the publicly traded stocks of the 3,000 largest companies. The average
market capitalization of the companies included in the Russell 2000 Index is
approximately $526 million. The Peer Group Index includes the publicly traded
securities of Vulcan Materials Company, Florida Rock Industries, Inc., LaFarge
Corporations, U.S. Aggregates, Inc. and Martin Marietta Materials, Inc. The
total return indices reflect reinvested dividends and are weighted on a market
capitalization basis at the time of each reported data point.
PERFORMANCE GRAPH
COMPARISON OF 4 MONTH CUMULATIVE TOTAL RETURN
AMONG U.S. AGGREGATES, INC., THE RESSELL 2000 INDEX
AND A PEER GROUP
[GRAPH]
Period Ending 8/12/99 8/99 9/99 10/99 11/99 12/99
- ------------- ------- ---- ---- ----- ----- -----
U.S. Aggregates, Inc. 100 99.58 92.92 79.58 77.50 80.20
Peer Group Index 100 97.24 90.19 92.46 88.80 91.15
Russell Index 100 96.35 94.42 92.53 93.01 95.87
-13-
<PAGE>
FILINGS BY DIRECTORS, EXECUTIVE OFFICERS AND TEN PERCENT HOLDERS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Executive officers, directors, and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that all filings were
made on a timely basis.
PROPOSAL 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent auditor for the
year ended December 31, 1999. Representatives of Arthur Andersen LLP are
expected to be present at the annual meeting, will have the opportunity to make
a statement at the meeting if they desire to do so, and will be available to
respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares of
Common Stock Voting in person or by proxy on this proposal is required to
ratify the appointment of the independent auditors.
MANAGEMENT RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR
ENDING DECEMBER 31, 2000
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the annual meeting. If other matters are properly brought
before the meeting, however, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
By Order of the Board of Directors,
/S/ Michael J. Stone
Michael J. Stone
Secretary
March 30, 2000
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<PAGE>
U.S. AGGREGATES, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 16, 2000
James A. Harris and Michael J. Stone, or either of them, each with the
power of substitution and revocation, are hereby authorized to represent the
undersigned with all powers which the undersigned would possess if personally
present, to vote the securities of the undersigned at the annual meeting of
shareholders of U.S. AGGREGATES, INC. to be held in the Ridgley Room at the
Tutwiler Hotel at 2021 Park Place North, Birmingham, Alabama 35203, at 1:00 p.m.
local time on Tuesday, May 16, 2000, and at any postponements or adjournments of
that meeting, and in their discretion upon any other business that may properly
come before the meeting. THE BOARD OF DIRECTORS RECOMMENDS AN AFFIRMATIVE VOTE
FOR PROPOSALS ONE AND TWO:
1. To elect Class I directors to hold office until the 2003 annual meeting
of shareholders or until their successors are elected and qualified.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked below) to vote for all nominees listed
below
Edward A. Dougherty Michael J. Stone Raymond R. Wingard
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE THAT NOMINEE'S NAME
FROM THE LIST ABOVE:
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby acknowledges receipt of (a) Notice of Annual Meeting
of Shareholders to be held May 16, 2000, (b) the accompanying Proxy Statement,
and (c) the annual report of the Company for the year ended December 31, 1999.
If no specification is made, this proxy will be voted FOR proposals one and two.
Date:_____________________, 2000
Please sign exactly as your name appears at left. Executors, administrators,
traders, guardians, attorneys-in-fact, etc. should give their full titles. If
signer is a corporation, please give full corporate name and have a duly
authorized officer sign, stating title. If a partnership, please sign in
partnership name by authorized person. If stock is registered in two names,
both should sign.
_______________________________
_______________________________
