<PAGE>
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 1-12977
U.S. CONCRETE, INC.
(exact name of registrant as specified in its charter)
Delaware 76-0586680
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 Post Oak Blvd., Suite 1220, Houston, Texas 77056
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 499-6200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days.
Yes X No
------- -------
U.S. Concrete, Inc. had 18,495,181 shares of its Common Stock, par value $.001
per share, outstanding at November 12, 1999.
<PAGE>
PART I
Item 1. Financial Statements
PRO FORMA COMBINED FINANCIAL INFORMATION
ORGANIZATION AND BASIS OF PRESENTATION
U.S. Concrete, Inc., a Delaware corporation, was founded in July 1997 to create
a leading provider of ready-mixed concrete and related products and services to
the construction industry in major markets in the United States. It did not
conduct any operations prior to May 1999. On May 28, 1999, it completed an
initial public offering of its common stock and concurrently acquired six
operating businesses. From the date of its IPO through September 30, 1999, U.S.
Concrete acquired four additional operating businesses for approximately $13.2
million in cash and 1.7 million shares of common stock. U.S. Concrete intends
to acquire additional companies to expand its operations.
For financial statement presentation purposes, (1) Central Concrete Supply Co.,
Inc., one of the acquired businesses, is presented as the acquirer of the other
acquired businesses and U.S. Concrete, (2) these acquisitions are accounted for
in accordance with the purchase method of accounting and (3) the effective date
of the initial acquisitions is May 31, 1999. As used in this report, the term
"Company" means (1) Central prior to June 1, 1999 and (2) U.S. Concrete and its
consolidated subsidiaries on that date and thereafter.
The accompanying unaudited pro forma combined statements of operations for the
three and nine months ended September 30, 1999 and 1998, respectively, assume
that U.S. Concrete completed the following transactions on January 1 in each
period presented:
. its issuance and sale in the IPO of 4.4 million shares of its common
stock (including shares it sold on the exercise of its underwriters'
over-allotment option) at $8.00 per share;
. its application of its net proceeds from the IPO;
. its acquisition of the 10 operating businesses and its payment of the
purchase prices for those businesses; and
. its refinancing with borrowings under its credit facility of the
indebtedness it assumed as a result of the acquisitions.
These statements also reflect pro forma adjustments for:
. certain contractual reductions in salaries, bonuses and benefits to
former owners of the operating businesses;
. elimination of legal, accounting and other professional fees incurred
in connection with the acquisitions of businesses;
. amortization of goodwill resulting from the acquisitions of
businesses;
. reduction in interest expense, net of interest expense on borrowings
to fund S corporation distributions by certain businesses; and
. adjustments to the federal and state income tax provision based on
pro forma operating results.
These statements do not reflect the operations of the two businesses acquired by
the Company subsequent to September 30, 1999.
You should read the accompanying unaudited pro forma combined statements of
operations together with the Company's historical unaudited financial statements
and notes thereto this report includes. The pro forma adjustments are based on
estimates, available information and certain assumptions which may be revised as
additional information becomes available. The pro forma financial information
does not purport to represent what the Company's combined financial position or
results of operations would actually have been if such transactions had in fact
occurred when assumed and are not necessarily representative of the Company's
financial position or results of operations for any future period. Since U.S.
Concrete and its acquired businesses were not under common control or management
for all or a portion of the periods presented, historical combined results may
not be comparable to, or indicative of, future performance.
2
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts; unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $ 69,531 $ 71,085 $ 175,897 $ 170,639
Cost of goods sold 55,016 56,489 139,442 137,149
-------- -------- --------- ---------
Gross profit 14,515 14,596 36,455 33,490
Selling, general and administrative expenses 3,444 4,972 13,536 13,571
Stock compensation charge -- -- 2,880 --
Depreciation and amortization 1,483 1,461 4,384 4,384
-------- -------- --------- ---------
Income from operations 9,588 8,163 15,655 15,535
Interest expense, net (670) (1,088) (2,271) (3,263)
Other income, net 339 199 1,256 455
-------- -------- --------- ---------
Income before income tax provision 9,257 7,274 14,640 12,727
Income tax provision 3,675 2,888 6,910 5,053
-------- -------- --------- ---------
Net income $ 5,582 $ 4,386 $ 7,730 $ 7,674
======== ======== ========= =========
Net income per share:
Basic $ 0.31 $ 0.24 $ 0.43 $ 0.43
======== ======== ========= =========
Diluted $ 0.31 $ 0.24 $ 0.43 $ 0.43
======== ======== ========= =========
Number of shares used in calculating net income per share:
Basic 17,945 17,945 17,945 17,945
======== ======== ========= =========
Diluted 18,036 17,945 18,018 17,945
======== ======== ========= =========
The accompanying notes are an integral part of these pro forma combined financial statements.
</TABLE>
3
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
1. SHARES USED IN COMPUTING PRO FORMA NET INCOME PER SHARE
The following table summarizes the number of shares (in thousands) of common
stock used in calculating pro forma net income per share:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
1999 1998 1999 1998
---------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Shares issued to Central's owners 3,120 3,120 3,120 3,120
Shares issued to owners of acquired businesses other than Central 7,602 7,602 7,602 7,602
Shares issued to the initial stockholders and certain management
personnel of U.S. Concrete 2,853 2,853 2,853 2,853
Shares issued in the IPO 4,370 4,370 4,370 4,370
------ ------ ------ ------
Number of shares used in calculating basic
net income per share 17,945 17,945 17,945 17,945
Effect of shares issuable under stock options
and warrants based on the treasury stock method 91 -- 73 --
------ ------ ------ ------
Number of shares used in calculating
diluted net income per share 18,036 17,945 18,018 17,945
====== ====== ====== ======
</TABLE>
4
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
September 30, December 31,
1999 1998
------------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 5,994 $ 4,213
Trade accounts receivable, net 40,192 7,641
Receivables from related parties 1,658 2,712
Inventories 3,408 792
Prepaid expenses 2,333 833
Deferred tax asset 157 --
Other current assets 833 156
-------- -------
Total current assets 54,575 16,347
-------- -------
Property, plant and equipment, net 49,079 9,138
Goodwill, net 75,723 --
Cash surrender value of life insurance -- 1,155
Other assets 1,007 --
-------- -------
Total assets $180,384 $26,640
======== =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 136 $ 1,006
Accounts payable and accrued liabilities 33,669 7,910
-------- -------
Total current liabilities 33,805 8,916
-------- -------
Long-term debt, net of current maturities 32,222 2,524
Deferred income taxes 6,704 46
-------- -------
Total liabilities 72,731 11,486
-------- -------
Stockholders' equity
Common stock 18 70
Additional paid-in capital 101,082 554
Retained earnings 6,553 14,530
-------- -------
Total stockholders' equity 107,653 15,154
-------- -------
Total liabilities and stockholders' equity $180,384 $26,640
======== =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts; unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- ----------------------
1999 1998 1999 1998
--------- -------- --------- ----------
<S> <C> <C> <C> <C>
Sales $59,803 $21,482 $100,407 $47,175
Cost of goods sold 48,078 17,161 80,853 38,491
------- ------- -------- -------
Gross profit 11,725 4,321 19,554 8,684
Selling, general and administrative expenses 2,281 1,712 5,738 3,368
Stock compensation charge -- -- 2,880 --
Depreciation and amortization 1,148 219 2,106 679
------- ------- -------- -------
Income from operations 8,296 2,390 8,830 4,637
Interest expense, net (463) (35) (742) (12)
Other income, net 292 22 626 50
------- ------- -------- -------
Income before income tax provision 8,125 2,377 8,714 4,675
Income tax provision 3,212 37 4,854 68
------- ------- -------- -------
Net income $ 4,913 $ 2,340 $ 3,860 $ 4,607
======= ======= ======== =======
Net income per share:
Basic $ 0.30 $ 0.75 $ 0.40 $ 1.48
======= ======= ======== =======
Diluted $ 0.30 $ 0.75 $ 0.40 $ 1.48
======= ======= ======== =======
Number of shares used in calculating net income per share:
Basic 16,498 3,120 9,562 3,120
======== ======== ========= ========
Diluted 16,589 3,120 9,636 3,120
======== ======== ========= ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
---------------------
1999 1998
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,860 $ 4,607
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,106 679
Net gain on sale of property, plant and equipment (217) 13
Deferred income tax provision 924 --
Change in allowance for doubtful accounts 242 16
Stock compensation charge 2,880 --
Changes in assets and liabilities, excluding effects of acquisitions:
Trade accounts receivable (9,322) (1,853)
Prepaid expenses and other current assets (1,608) 154
Accounts payable and accrued liabilities 5,536 2,961
-------- -------
Net cash provided by operating activities 4,401 6,577
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,847) (2,860)
Payments for acquisitions accounted for as purchases, net of cash received of $10,078 (52,089) --
Proceeds from disposals of property, plant and equipment 2,330 14
Increase in cash surrender value of life insurance -- (106)
-------- -------
Net cash used in investing activities (52,606) (2,952)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 32,148 1,857
Repayments of borrowings (3,501) (706)
Proceeds from issuances of common stock 32,512 --
Cash paid related to common stock issuance costs (3,459) --
Distributions to stockholders (7,714) (1,801)
-------- -------
Net cash provided by (used in) financing activities 49,986 (650)
-------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,781 2,975
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,213 1,945
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,994 $ 4,920
-------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 705 $ 262
Cash paid during the period for income taxes $ 370 $ --
NONCASH FINANCING ACTIVITY:
Distribution of cash surrender value of life insurance to stockholder $ 1,155 $ --
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
7
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
U.S. Concrete, Inc., a Delaware corporation, was founded in July 1997 to create
a leading provider of ready-mixed concrete and related products and services to
the construction industry in major markets in the United States. It did not
conduct any operations prior to May 1999. On May 28, 1999, it completed an
initial public offering of its common stock and concurrently acquired six
operating businesses. From the date of its IPO through September 30, 1999, U.S.
Concrete acquired four additional operating businesses for approximately $13.2
million in cash and 1.7 million shares of common stock. U.S. Concrete intends
to acquire additional companies to expand its operations.
For financial statement presentation purposes, (1) Central Concrete Supply Co.,
Inc., one of the acquired businesses, is presented as the acquirer of the other
acquired businesses and U.S. Concrete, (2) these acquisitions are accounted for
in accordance with the purchase method of accounting and (3) the effective date
of the initial acquisitions is May 31, 1999. As used in this report, the term
"Company" means (1) Central prior to June 1, 1999 and (2) U.S. Concrete and its
consolidated subsidiaries on that date and thereafter.
Under applicable regulations of the SEC, the historical financial statements in
this report are unaudited and omit information and footnote disclosures that
financial statements prepared in accordance with generally accepted accounting
principles normally would include. In the opinion of management, (1) the
disclosures herein are adequate to make the information presented not misleading
and (2) the financial statements reflect all elimination entries and normal
adjustments that are necessary for a fair presentation of the results for the
interim periods presented.
Operating results for interim periods are not necessarily indicative of the
results for full years. You should read these condensed consolidated financial
statements together with the audited financial statements and related notes,
which U.S. Concrete's registration statement for its IPO includes.
2. SIGNIFICANT ACCOUNTING POLICIES
The Company has not added to or changed its accounting policies significantly
since December 31, 1998. For a description of these policies, see Note 2 of
Notes to Financial Statements of Central in U.S. Concrete's IPO registration
statement.
3. SUBSEQUENT BUSINESS COMBINATIONS
From October 1, 1999 through November 12, 1999, U.S. Concrete has acquired two
additional operating businesses for approximately $15.3 million in cash and
550,000 shares of common stock.
8
<PAGE>
4. SHARES USED IN COMPUTING NET INCOME (LOSS) PER SHARE
The following table summarizes the number of shares (in thousands) of common
stock we have used on a weighted average basis in calculating net income or loss
per share:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- ---------------------
1999 1998 1999 1998
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Shares issued to Central's owners 3,120 3,120 3,120 3,120
Shares issued to owners of acquired businesses other than Central 6,155 -- 2,782 --
Shares issued to the initial stockholders and certain management
personnel of U.S. Concrete 2,853 -- 1,688 --
Shares issued in the IPO 4,370 -- 1,972 --
------ ----- ----- -----
Number of shares used in calculating basic
net income per share 16,498 3,120 9,562 3,120
Effect of shares issuable under stock options and
warrants based on the treasury stock method 91 -- 74 --
------ ----- ----- -----
Number of shares used in calculating
diluted net income per share 16,589 3,120 9,636 3,120
====== ===== ===== =====
</TABLE>
5. LONG-TERM DEBT
A summary of long-term debt is as follows (dollars in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- --------------
<S> <C> <C>
Secured revolving credit facility $ 32,050 $ --
Notes payable to various financial institutions, secured by mixer trucks,
maturing in varying amounts through May 2003,
with interest ranging from 7.0% to 9.7% -- 2,860
Notes payable to various financial institutions, secured by various equipment
and guaranteed by stockholders, maturing in varying amounts
through September 2003, with interest ranging from 4.7% to 8.8% -- 670
Other 308 --
-------- -------
32,358 3,530
Less: current maturities (136) (1,006)
-------- -------
Long-term debt, net of current maturities $ 32,222 $ 2,524
======== =======
</TABLE>
On May 28, 1999, U.S. Concrete entered into a three-year $75 million revolving
credit facility with a group of banks. The Company may use this facility for
working capital, to finance acquisitions and for other general corporate
purposes. Availability under the facility is tied to the Company's cash flow
and liquidity. Advances bear interest, at the Company's option, at a prime rate
or LIBOR, in each case plus a margin keyed to the ratio of the Company's
indebtedness to cash flow. Commitment fees are due on any unused borrowing
capacity. The facility requires the Company to maintain financial covenants
regarding net worth, coverage ratios and additional indebtedness and prohibits
dividends by U.S. Concrete. Subsidiary guarantees and pledges of substantially
all the Company's fixed assets secure the payment of all obligations owing under
the facility.
6. INCOME TAXES
Prior to their respective acquisitions, Central and certain other acquired
businesses were S corporations and were not subject to federal income taxes.
Effective with their acquisition they became C corporations subject to those
taxes, and we have recorded an estimated deferred tax liability to provide for
the Company's estimated future income tax liability as a result of the
difference between the book and tax bases of the net assets of these
corporations. For purposes of these consolidated financial statements, federal
and previously inapplicable state income taxes have been provided for the post-
acquisition periods.
9
<PAGE>
7. SEGMENT REPORTING
SFAS No. 131 "Disclosures about Segments of an Enterprise and Related
Information" requires that companies report separately information about each
significant operating segment reviewed by the chief operating decision maker.
All segments that meet a threshold of 10% of revenues, reported profit or loss,
or combined assets are defined as significant segments. The Company currently
operates under one segment and all operations and long-lived assets are in the
United States.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
You should read the following discussion together with (1) the pro forma and
historical financial statements and related notes this report contains and (2)
the pro forma and historical financial statements and related notes and
managements' discussion and analysis U.S. Concrete's IPO registration statement
contains. This discussion contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on our current
plans and expectations and involve risks and uncertainties that could cause
actual future activities and results of operations to be materially different
from those set forth in the forward-looking statements. Important factors that
could cause actual results to differ include, among others, (1) the extent to
which we are able to grow through acquisitions, reduce costs and achieve revenue
enhancements in our operations, (2) the rate at which we will write off the
significant goodwill on our balance sheet, (3) changes in government
regulations, (4) competition, (5) Year 2000 issues and (6) other risk factors
discussed in U.S. Concrete's IPO registration statement.
We expect to derive substantially all our revenues from the sale of ready-mixed
concrete, other concrete products and related construction materials to the
construction industry in the United States. We will serve all segments of the
construction industry, and our customers will include contractors for
commercial, industrial, residential and public works and infrastructure
construction. We typically will sell ready-mixed concrete pursuant to daily
purchase orders that require us to formulate, prepare and deliver ready-mixed
concrete to the job sites of our customers. We generally will recognize our
sales from these orders when we deliver the ordered products.
Our cost of goods sold consist principally of the costs we incur in obtaining
the cement, aggregates and admixtures we combine to produce ready-mixed concrete
and other concrete products in various formulations. We obtain all these
materials from third parties and generally have only one day's supply at each of
our concrete plants. Our cost of goods sold also includes labor costs and the
operating, maintenance and rental expenses we incur in operating our concrete
plants and mixer trucks and other vehicles.
Our selling expenses include the salary and incentive compensation we pay our
sales force, the salaries and incentive compensation of our sales managers and
travel, entertainment and other promotional expenses. Our general and
administrative expenses include the salaries and benefits we pay to our
executive officers, the senior managers of our local and regional operations,
plant managers and administrative staff, as well as office rent and utilities,
communications expenses and professional fees.
Our pro forma combined statements of operations include pro forma adjustments to
our selling, general and administrative expenses to reflect the reductions in
salaries, bonuses and benefits to which owners of the businesses we have
acquired agreed would take effect when we acquired them and the elimination of
nonrecurring legal, accounting and other professional fees attributable to the
acquisitions. Our pro forma combined statements of operations also reflect the
substantial increase in income tax expense that will result from the conversion
of certain businesses from S corporations into C corporations.
We expect that our integration of the businesses we have acquired will present
opportunities to realize cost savings through the elimination of duplicative
functions and the development of economies of scale. We believe that we should
be able to:
. obtain greater discounts from suppliers;
. borrow at lower interest rates;
. consolidate insurance programs; and
. generate savings in other general and administrative areas.
We cannot currently quantify these savings and expect that various incremental
costs will partially offset them. These incremental costs include those
associated with:
. our corporate management;
. our being a public company; and
. our systems integration, upgrading and replacement.
Our pro forma combined statements of operations reflect neither the cost savings
nor the incremental costs we expect, but cannot quantify.
11
<PAGE>
The pro forma combined financial information this report contains covers periods
during which the businesses we have acquired had different tax structures and
operated independently of each other as private, owner-operated companies. This
information reflects the purchase method of accounting to account for these
acquisitions and presents Central as the "accounting acquirer."
RESULTS OF OPERATIONS - PRO FORMA COMBINED
The following table sets forth for us on a pro forma combined basis selected
statement of operations information and that information as a percentage of
sales for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
---------------------------------- ---------------------------------
1999 1998 1999 1998
---------------- ----------------- ----------------- --------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $69,531 100.0% $71,085 100.0% $175,897 100.0% $170,639 100.0%
Cost of goods sold 55,016 79.1 56,489 79.5 139,442 79.3 137,149 80.4
------- ----- ------- ----- -------- ------ ------- -----
Gross profit 14,515 20.9 14,596 20.5 36,455 20.7 33,490 19.6
Selling, general and administrative
expenses 3,444 5.0 4,972 7.0 13,536 7.7 13,571 8.0
Stock compensation charge -- -- -- -- 2,880 1.6 -- --
Depreciation and amortization 1,483 2.1 1,461 2.0 4,384 2.5 4,384 2.5
------- ----- ------- ----- -------- ----- -------- -----
Income from operations $ 9,588 13.8% $ 8,163 11.5% $ 15,655 8.9% $ 15,535 9.1%
======= ===== ======= ===== ======== ===== ======== =====
</TABLE>
Sales
Sales decreased $1.6 million, or 2.2%, and increased $5.3 million, or 3.1%, for
the three- and nine-month periods ended September 30, 1999, as compared with the
same periods in 1998. The decrease in the three-month period was due to lower
sales volumes, partially offset by higher average sales prices for ready-mixed
concrete in the San Francisco Bay area. The increase in the nine-month period
was due to higher average sales prices and increased sales of pre-cast products
and building materials, partially offset by lower sales volumes in the San
Francisco Bay area.
Gross Profit
Gross profit decreased $81,000, or 0.6%, and increased $3.0 million, or 8.9%,
for the three- and nine-month periods ended September 30, 1999, as compared with
the same periods in 1998. Gross margins increased from 20.5% in the three
months ended September 30, 1998 to 20.9% in the three months ended September 30,
1999 and increased from 19.6% in the nine months ended September 30, 1998 to
20.7% in the nine months ended September 30, 1999, in each case primarily
because of higher average sales prices and the strong marginal contribution from
those increased prices attributable to the portion of our business that is of a
fixed-cost nature.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $1.5 million, or 30.7%,
and $35,000, or 0.3%, for the three- and nine-month periods ended September 30,
1999, as compared with the same periods in 1998, primarily due to expenses
incurred during the 1998 periods by acquired businesses that have been
discontinued subsequent to their acquisition by U.S. Concrete.
Stock Compensation Charge
The 1999 stock compensation charge represents a noncash charge related to
400,000 shares of common stock U.S. Concrete issued in December 1998 and March
1999 to management and nonemployee directors at a nominal cost. The amount of
this charge reflected a fair value of $7.20 per share, which represented a 10%
discount from the initial offering price to the public of $8.00 per share in the
IPO.
12
<PAGE>
RESULTS OF OPERATIONS - HISTORICAL
The following table sets forth for us selected historical statement of
operations information and that information as a percentage of sales for the
periods indicated. For periods prior to June 1, 1999, the information relates
to Central on a stand-alone basis. For the period beginning June 1, 1999, the
information relates to U.S. Concrete and its subsidiaries on a consolidated
basis and presents Central as the accounting acquirer. Except as we note below,
the consolidation of operating results beginning on June 1, 1999 principally
accounts for the changes in the 1999 periods from the 1998 periods.
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
----------------------------------- ---------------------------------
1999 1998 1999 1998
---------------- ---------------- ---------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $59,803 100.0% $21,482 100.0% $100,407 100.0% $47,175 100.0%
Cost of goods sold 48,078 80.4 17,161 79.9 80,853 80.5 38,491 81.6
------- ----- ------- ----- -------- ----- ------- -----
Gross profit 11,725 19.6 4,321 20.1 19,554 19.5 8,684 18.4
Selling, general and administrative expenses 2,281 3.8 1,712 8.0 5,738 5.7 3,368 7.1
Stock compensation charge -- -- -- -- 2,880 2.9 -- --
Depreciation and amortization 1,148 1.9 219 1.0 2,106 2.1 679 1.5
------- ----- ------- ----- -------- ----- ------- -----
Income from operations $ 8,296 13.9% $ 2,390 11.1% $ 8,830 8.8% $ 4,637 9.8%
======= ===== ======= ===== ======== ===== ======= =====
</TABLE>
Sales
Sales increased $38.3 million, or 178.4%, and $53.2 million, or 112.8%, for the
three- and nine-month periods ended September 30, 1999, as compared with the
same periods in 1998.
Gross Profit
Gross profit increased $7.4 million, or 171.4%, and $10.9 million, or 125.2%,
for the three- and nine-month periods ended September 30, 1999, as compared with
the same periods in 1998. Gross margins decreased from 20.1% in the three
months ended September 30, 1998 to 19.6% in the three months ended September 30,
1999 and increased from 18.4% in the nine months ended September 30, 1998 to
19.5% in the nine months ended September 30, 1999.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $569,000, or 33.3%, and
$2.4 million, or 70.4%, for the three- and nine-month periods ended September
30, 1999, as compared with the same periods in 1998.
Stock Compensation Charge
The 1999 stock compensation charge represents a noncash charge related to
400,000 shares of common stock U.S. Concrete issued in December 1998 and March
1999 to management and nonemployee directors at a nominal cost. The amount of
this charge reflected a fair value of $7.20 per share, which represented a 10%
discount from the initial offering price to the public of $8.00 per share in the
IPO.
LIQUIDITY AND CAPITAL RESOURCES
On May 28, 1999, U.S. Concrete completed its initial public offering, in which
it issued and sold 3.8 million shares of its common stock. Its net proceeds
from the IPO (after underwriting discounts, commissions and offering expenses)
were approximately $24.0 million. Concurrently, U.S. Concrete acquired six
operating businesses in separate transactions for consideration of $22.3 million
in cash and 9.0 million shares of common stock. On June 11, 1999, its
underwriters exercised their over-allotment option to acquire an additional
570,000 shares of common stock at the offering price of $8.00 per share,
providing U.S. Concrete with $4.3 million (net of underwriting discounts and
commissions) of additional proceeds from the IPO.
On May 28, 1999, U.S. Concrete entered into a $75 million secured revolving
credit facility with a group of banks and borrowed approximately $22.7 million,
principally to refinance outstanding indebtedness of its acquired businesses.
At September 30, 1999, $32.1 million was outstanding under the facility.
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The credit facility is a three-year revolving credit facility of up to $75.0
million, with a $5.0 million sublimit for letters of credit issued on our
behalf, we may use for the following purposes:
. finance acquisitions;
. working capital; and
. for general corporate purposes.
Our subsidiaries have guaranteed the repayment of all amounts due under the
facility, and we secured the facility with the capital stock and assets of our
subsidiaries. The facility will:
. require the consent of the lenders for acquisitions;
. prohibit the payment of cash dividends by U.S. Concrete;
. restrict our ability to incur additional indebtedness; and
. require us to comply with stringent financial covenants.
The failure to comply with these covenants and restrictions would constitute an
event of default under the facility. Our borrowing capacity under the facility
will vary from time to time depending on our satisfaction of several financial
tests.
We anticipate that our consolidated cash flow from our operations will exceed
our normal working capital needs, debt service requirements and the amount of
our planned capital expenditures, excluding acquisitions, for at least the next
12 months.
Our growth strategy will require substantial capital. We currently intend to
finance future acquisitions through issuances of our common stock or debt
securities, including convertible debt securities, and borrowings under our
credit facility. Using debt to complete acquisitions could substantially limit
our operational and financial flexibility. The extent to which we will be able
or willing to use our common stock to make acquisitions will depend on its
market value from time to time and the willingness of potential sellers to
accept it as full or partial payment. Using our common stock for this purpose
may result in significant dilution to our then existing stockholders. To the
extent we are unable to use our common stock to make future acquisitions, our
ability to grow will be limited by the extent to which we are able to raise
capital for this purpose, as well as to expand existing operations, through debt
or additional equity financings. If we are unable to obtain additional capital
on acceptable terms, we may be required to reduce the scope of our presently
anticipated expansion, which could materially adversely affect our business and
the value of our common stock.
We cannot accurately predict the timing, size and success of our acquisition
efforts or our associated potential capital commitments.
Changes in working capital accounts and property, plant and equipment between
December 31, 1998 and September 30, 1999 are driven primarily by the
acquisitions of operating businesses.
YEAR 2000 COMPLIANCE
Many software applications, computer hardware and related equipment and systems
that use embedded technology, such as microprocessors, rely on two digits rather
than four to represent years in performing computations and decision-making
functions. These programs, hardware items and systems may fail on January 1,
2000 or earlier because they misinterpret ``00'' as the year 1900 rather than
2000. These failures could have an adverse effect on us because of our direct
dependence on our own applications, equipment and systems and our indirect
dependence on those of third parties.
Our year 2000 program consists of the following phases:
. identifying all items that may be affected by the year 2000;
. investigating those items for year 2000 compliance;
. assessing the potential impact of year 2000 noncompliance;
. designing solutions for noncompliant items;
. repairing and replacing any noncompliant items and testing those
improvements; and
. contingency planning.
Each business we have acquired has assigned one or more individuals in its
organization year 2000 responsibility. We
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have also assigned an individual overall year 2000 responsibility to track and
coordinate the efforts of the individual companies. Although we are following
the general steps we outlined above, we do not consider preparation and
maintenance of formal inventories and risk rankings, detailed test plans and
documentation of results necessary because of the small number of information
technology systems each business uses.
Each business we have acquired has completed identification of its mission-
critical information technology hardware and software, including business
applications, operations software, service providers and product suppliers that
may be affected by the year 2000. We have completed the process of identifying
the potential impact of embedded technologies on the businesses.
We have contacted various third parties to obtain representations and assurances
that their hardware, embedded technology systems and software which we use or
will impact us are, or will be modified on a timely basis to be, year 2000
compliant. We identified approximately 50 third parties to be contacted, based
on our identification of those persons as being either significant service
providers or materials suppliers to our business. These third parties include
banks, cement and aggregates suppliers, gas, electricity and water suppliers and
telephone companies. All the third parties that have responded have stated that
they are or expect to be year 2000 compliant by the end of 1999. We have
completed this part of our program. 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.
Most of the businesses we have acquired have completed the solution design phase
of their efforts to determine whether noncompliant information hardware and
software systems can be repaired or replaced.
As part of our consolidation of our businesses, we are replacing some of their
financial and other systems in order to obtain internal consistency. Some
systems we are replacing happen not to be year 2000 compliant, but we would
replace them in all events this year and are not including the cost of their
replacements as a part of our year 2000 program.
We have decided not to develop formal budgets or perform detailed analysis of
the costs associated with this effort. We based this decision on the low number
of systems that comprise our technical environment and the fact that our year
2000 efforts are being addressed during the normal course of business. We
estimate our external costs of our year 2000 program total approximately $50,000
to date and expect that any additional costs of this program will be nominal. We
expect to pay these costs with the cash flow from our consolidated operations.
We have incurred substantially all these costs in investigating systems for year
2000 compliance and have not incurred any material costs to replace or repair
noncompliant systems. We have not deferred other information technology projects
because of our year 2000 efforts.
We have not yet begun a formal analysis of various failure scenarios or their
potential impact or possible contingency plans. If we identify significant risks
related to year 2000 compliance or our progress deviates from our anticipated
program, we will develop contingency plans as necessary. We expect that we will
develop any necessary contingency plans in the fourth quarter of 1999 and that
these will primarily consist of replacing noncompliant third-party suppliers or
making arrangements with compliant third-party suppliers to back up any delivery
failures and developing backup procedures to handle the failure of any of our
internal systems.
We do not anticipate any material adverse effect from year 2000 failures, but
you have no guarantee that we will 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 work.
While we do not expect our worst-case year 2000 noncompliance scenarios to
occur, possible effects of such scenarios include:
. loss of gas, electricity, water or phone service;
. 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.
This disclosure is subject to protection under the Year 2000 Information and
Readiness Disclosure Act of 1998 as a
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"Year 2000 Statement" and "Year 2000 Readiness Disclosure" as that Act
defines those terms.
SEASONALITY; FLUCTUATIONS OF QUARTERLY RESULTS
Reflecting the levels of construction activity, the demand for ready-mixed
concrete is highly seasonal. We believe that this demand may be as much as
three times greater in a prime summer month than in a slow winter month and that
the six-month period of May through October is the peak demand period.
Consequently, we expect that our sales generally will be lower in the first and
fourth calendar quarters. Because we incur fixed costs, such as wages, rent and
other expenses throughout the year, we expect our gross profit margins will be
disproportionately lower than our sales in these quarters. Even during
traditional peak periods, sustained periods of inclement weather and other
extreme weather conditions can slow or delay construction and thus slow or delay
our sales. Quarterly results may also be materially affected by the timing of
acquisitions, variations in sales prices, the timing and magnitude of
acquisition assimilation costs and regional economic conditions. Additionally,
the industry can be highly cyclical, and the general condition of the economy
and a variety of other factors beyond our control can affect its level of
activity. Our volume of business may be adversely affected by declines in
construction activity.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We have not purchased any futures contracts nor have we purchased or held any
derivative financial instruments for trading purposes during the nine months
ended September 30, 1999.
Our borrowings under our credit facility are subject to the risk that interest
rates may increase. For example, a 10 percent increase in LIBOR (a benchmark on
to which interest rates applicable to borrowings under the credit facility may
be set) would have increased our pro forma consolidated interest by $67,000 for
the quarter ended September 30, 1999 and $227,100 for the nine months ended
September 30, 1999. We have not entered into any interest rate swaps or other
hedging arrangements with respect to the interest obligations under the credit
facility.
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PART II
ITEM 1. LEGAL PROCEEDINGS
We have been from time to time, and currently are, subject to claims and
litigation brought by employees, customers and third parties for personal
injuries, property damages, product defects and delay damages, that have, or
allegedly have, resulted from the conduct of our operations. Currently, we do
not have pending any litigation that, separately or in the aggregate, if
adversely determined, we believe would have a material adverse effect on our
business, financial condition or results of operations. We expect that in the
future we will from time to time be a party to litigation or administrative
proceedings which arise in the normal course of our business.
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS
(c) Unregistered Sales of Securities.
During the quarter ended September 30, 1999, we issued 1,726,782 shares of our
common stock as part of the consideration we paid to the former owners of four
businesses we acquired in September 1999. We issued these shares without
registration under the Securities Act in reliance on the exemption provided by
Section 4(2) of the Securities Act as transactions not involving any public
offering. Each acquisition involved a limited number of owners."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
Number Description
2.1* -- Agreement and Plan of Reorganization dated as of March 22, 1999 by and
among U.S. Concrete, OCC Acquisition Inc., Opportunity Concrete
Corporation and the stockholders named therein (Form S-1 (Reg. No. 333-
74855), Exhibit 2.1).
2.2* -- Agreement and Plan of Reorganization dated as of March 22, 1999 by and
among U.S. Concrete, Walker's Acquisition Inc., Walker's Concrete, Inc.
and the stockholders named therein (Form S-1 (Reg. No. 333-74855),
Exhibit 2.2).
2.3* -- Agreement and Plan of Reorganization dated as of March 22, 1999 by and
among U.S. Concrete, Central Concrete Acquisition Inc., Central Concrete
Supply Co., Inc. and the stockholders named therein (Form S-1 (Reg. No.
333-74855), Exhibit 2.3).
2.4* -- Agreement and Plan of Reorganization dated as of March 22, 1999 by and
among U.S. Concrete, Bay Cities Acquisition Inc., Bay Cities Building
Materials Co., Inc. and the stockholders named therein (Form S-1 (Reg.
No. 333-74855), Exhibit 2.4).
2.5* -- Agreement and Plan of Reorganization dated as of March 22, 1999 by and
among U.S. Concrete, Baer Acquisition Inc., Baer Concrete, Incorporated
and the stockholders named therein (Form S-1 (Reg. No. 333-74855),
Exhibit 2.5).
2.6* -- Agreement and Plan of Reorganization dated as of March 22, 1999 by and
among U.S. Concrete, Santa Rosa Acquisition, Inc., R.G. Evans/Associates
(d/b/a Santa Rosa Cast Products Co.) and the stockholders named therein
(Form S-1 (Reg. No. 333-74855), Exhibit 2.6).
2.7* -- Uniform Provisions for the Acquisitions (incorporated into the
agreements filed as Exhibits 2.1 through 2.6 hereto) (Form S-1 (Reg. No.
333-74855), Exhibit 2.7).
3.1* -- Restated Certificate of Incorporation of U.S. Concrete (Form S-1 (Reg.
No. 333-74855), Exhibit 3.1).
3.2* -- Bylaws of U.S. Concrete (Form S-1 (Reg. No. 333-74855), Exhibit 3.2).
4.1* -- Form of Certificate representing common stock (Form S-1 (Reg. No. 333-
74855), Exhibit 4.1).
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4.2* -- Form of Registration Rights Agreement by and among U.S. Concrete and the
stockholders listed on the signature pages thereto (Form S-1 (Reg. No.
333-74855), Exhibit 4.2).
4.3* -- Funding Agreement dated as of September 10, 1999 by and between U.S.
Concrete and Main Street Merchant Partners II, L.P. (Form S-1 (Reg. No.
333-74855), Exhibit 4.3).
4.4* -- Rights Agreement by and between U.S. Concrete and American Stock
Transfer & Trust Company, including form of Rights Certificate attached
as Exhibit B thereto (Form S-1 (Reg. No. 333-74855), Exhibit 4.4).
4.5* -- Form of Warrant Agreement among U.S. Concrete, Scott & Stringfellow,
Inc. and Sanders Morris Mundy, Inc. (Form S-1 (Reg. No. 333-74855),
Exhibit 1.2).
4.6* -- Credit Agreement, dated as of May 28, 1999, among U.S. Concrete, Inc.,
as Borrower, the Guarantors named therein and Chase Bank of Texas,
National Association, NationsBank, N.A. (D/B/A Bank of America, N.A.),
Bank One, Texas, NA, Credit Lyonaiss New York Branch and the other
Lenders named therein (Form 10-Q for the quarter ended June 30, 1999,
Exhibit 4.6).
4.7* -- First Amendment to Credit Agreement, dated as of June 30, 1999, among
U.S. Concrete, Inc., as Borrower, the Guarantors named therein and Chase
Bank of Texas, National Association, NationsBank, N.A. (D/B/A Bank of
America, N.A.), Bank One, Texas, NA, Credit Lyonaiss New York Branch and
the other Lenders named therein (Form 10-Q for the quarter ended June
30, 1999, Exhibit 4.7).
4.8 -- Second Amendment to Credit Agreement, dated as of July 31, 1999, among
U.S. Concrete, Inc., as Borrower, the Guarantors named therein and Chase
Bank of Texas, National Association, NationsBank, N.A. (D/B/A Bank of
America, N.A.), Bank One, Texas, NA, Credit Lyonaiss New York Branch and
the other Lenders named therein.
4.9 -- Third Amendment to Credit Agreement, dated as of August 31, 1999, among
U.S. Concrete, Inc., as Borrower, the Guarantors named therein and Chase
Bank of Texas, National Association, NationsBank, N.A. (D/B/A Bank of
America, N.A.), Bank One, Texas, NA, Credit Lyonaiss New York Branch and
the other Lenders named therein.
U.S. Concrete and some of its subsidiaries are parties to debt
instruments under which the total amount of securities authorized does
not exceed 10% of the total assets of U.S. Concrete and its subsidiaries
on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b)
of Regulation S-K, U.S. Concrete agrees to furnish a copy of those
instruments to the SEC on request.
27.1 -- Financial Data Schedule.
- -------------------
* Incorporated by reference to the filing indicated.
(b) Reports on Form 8-K.
None.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. CONCRETE, INC.
Dated: November 12, 1999 /s/ MICHAEL W. HARLAN
--------------------------------
By: Michael W. Harlan
Senior Vice President --
Chief Financial Officer
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SECOND AMENDMENT TO
CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment" or
this "Amendment"), effective as of this 31st day of July, 1999, is entered into
by and among U.S. CONCRETE, INC., a Delaware corporation, (the "Company"), the
Guarantors party hereto, the Lenders signatory hereto under the caption
"Lenders" (together with each other Person who becomes a Lender, collectively,
the "Lenders") and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking
association, individually as a Lender, and as administrative agent for the other
Lenders (in such capacity, together with any other Person who becomes the
administrative agent, the "Administrative Agent"), BANK OF AMERICA, N.A. f/k/a
NationsBank, N.A., as Syndication Agent, and BANK ONE, TEXAS, NA and CREDIT
LYONNAIS NEW YORK BRANCH, as Co-Agents for the Lenders.
PRELIMINARY STATEMENT
WHEREAS, the Company, the Guarantors, the Lenders, the Administrative
Agent, the syndication agent and the co-agents have entered into that certain
Credit Agreement dated as of May 28, 1999, as amended by that certain First
Amendment to Credit Agreement dated June 30, 1999 among such parties (said
Credit Agreement, as amended and as it may be further amended, extended,
supplemented or amended and restated from time to time, the "Credit Agreement");
and
WHEREAS, the Company has requested the Lenders and the Administrative
Agent to make a swingline facility available to the Company and to amend and
modify certain other terms of the Credit Agreement; and
WHEREAS, the Lenders and the Administrative Agent have agreed to do so
to the extent reflected in this Amendment, provided that each of the Company and
the Guarantors ratifies and confirms all of its respective obligations under the
Credit Agreement and the Loan Documents and agrees to make certain other
amendments as set forth here.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration and the mutual benefits, covenants and agreements
herein expresses, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. Defined Terms and Overall Changes. All capitalized terms used in
this Amendment and not otherwise defined herein shall have the meanings ascribed
to such terms in the Credit Agreement.
2. Amendment to Section 1.01. The hereinafter listed definitions are
hereby deleted from the Credit Agreement and restated or are added to the Credit
Agreement in the appropriate alphabetical order to read as follows:
<PAGE>
"'Autoborrow Agreement' means the Autoborrow Service Agreement dated
as of _____________, 1999, between the Borrower and the Swingline Lender."
"'Borrowing' means (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect, and (b) a Swingline Loan."
"'Class', when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Swingline Loans."
"'Commitment' means (a) with respect to each Lender, the commitment of
such Lender to make Revolving Loans and to acquire participations in Letters of
Credit and Swingline Loans hereunder, expressed as an amount representing the
maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder,
as such commitment may be (i) reduced from time to time pursuant to Section 2.07
and (ii) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04 and (b) with respect to the Swingline
Lender, its commitment to make Swingline Loans. The initial amount of each
Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Commitment, as
applicable. The initial aggregate amount of the Lenders' Commitments is
$75,000,000.00."
"'Interest Payment Date' means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid pursuant to Section 2.08(a), Section 2.19(c), Section 7.02, or
otherwise."
"'Lenders' means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the
term "Lenders" includes the Swingline Lender."
"'Revolving Credit Exposure' means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its LC Exposure and Swingline Exposure at such time."
"'Swingline Exposure' means, at any time, the aggregate principal
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Percentage of the total
Swingline Exposure at such time."
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"'Swingline Lender' means Bank of America, N.A., in its capacity as
lender of Swingline Loans hereunder."
"'Swingline Loan' means a Loan made pursuant to Section 2.19."
3. Amendment to Section 2.02. Sections 2.02(b) and (c) of the
Credit Agreement are hereby restated in their entirety to read as follows:
"(b) Subject to Section 2.12, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower
may request in accordance herewith; provided each Swingline Loan shall
be an ABR Loan. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender
to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance
with the terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Revolving Borrowing, such Borrowing shall be in an
aggregate amount that is an integral multiple of $500,000 and not less
than $1,000,000, unless such Borrowing represents a Borrowing of all
of the unused Commitment. At the time that each ABR Revolving
Borrowing is made (other than Borrowings under the Swingline Loans),
such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $1,000,000; provided that an
ABR Revolving Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Commitments or that is required
to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.04(e). At any time when the Autoborrow Agreement is in
effect, the provisions thereof shall govern the advancing of a
Swingline Loan. At any time when the Autoborrow Agreement is not in
effect, each Swingline Loan shall be in an amount not less than
$50,000 and integral multiples of $10,000 in excess thereof.
Borrowings of more than one Type and Class may be outstanding at the
same time; provided that there shall not at any time be more than a
total of seven (7) Eurodollar Revolving Borrowings outstanding."
4. Amendment to Section 2.03. Section 2.03 is hereby amended by
adding a subparagraph (vi) thereto to read as follows:
"(vi) any amounts then outstanding as Swingline Loans."
5. Amendment to Section 2.05. Section 2.05(a) of the Credit
Agreement is hereby restated in its entirety to read as follows:
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"(a) Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately
available funds by 1:30 p.m., Houston, Texas time, to the account of
the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders; provided that Swingline Loans shall
be made as provided in Section 2.19. The Administrative Agent will
make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in Houston, Texas or other
location as designated by the Borrower in the applicable Borrowing
Request."
6. Amendment to Section 2.08. Section 2.08(a) of the Credit
Agreement is hereby restated in its entirety to read as follows:
"(a) The Borrower hereby unconditionally promises to pay (i) to
the Administrative Agent for the account of each Lender the then
unpaid principal amount of each Revolving Loan on the Maturity Date
and (ii) to the Swingline Lender the then unpaid principal amount of
each Swingline Loan on the Maturity Date."
7. Amendment to Section 2.09. Section 2.09(b) of the Credit
Agreement is hereby restated in its entirety to read as follows:
"(b) The Borrower shall notify the Administrative Agent (and,
in the case of prepayment of a Swingline Loan at any time when the
Autoborrow Agreement is not in effect, the Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in
the case of prepayment of a Eurodollar Revolving Borrowing, not later
than 11:00 a.m., Houston, Texas time, three Business Days before the
date of prepayment, (ii) in the case of prepayment of an ABR Revolving
Borrowing, not later than 11:00 a.m., Houston, Texas time, one
Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan at any time when the Autoborrow
Agreement is not in effect, not later than 12:00 noon, Houston, Texas
time, on the date of prepayment. At any time when the Autoborrow
Agreement is in effect, the provisions thereof shall govern the
prepayment of a Swingline Loan. Each such notice shall be irrevocable
and shall specify the prepayment date and the principal amount of each
Borrowing or portion thereof to be prepaid; provided that, if a notice
of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.07, then
such notice of prepayment may be revoked if such notice of termination
is revoked in accordance with Section 2.07. Promptly following receipt
of any such notice relating to a Revolving Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof.
Each partial prepayment of any Revolving Borrowing shall be in an
amount that would be permitted in the case of an advance of a
Revolving Borrowing of the same Type as provided in Section 2.02.
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Each prepayment of a Revolving Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section
2.11."
8. Amendment to Section 2.10. Section 2.10(a) of the Credit
Agreement is hereby restated in its entirety to read as follows:
"(a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee, which shall accrue as
shown in the column for Commitment Fee Rate in the definitions of
Applicable Margin on the daily average Commitment of each Lender less the
Revolving Credit Exposure for such Lender during the period from and
including the date of this Agreement to but excluding the date on which
such Commitment terminates, provided, for purposes of this Section 2.10(a)
only, but for no other purpose, Revolving Credit Exposure shall not include
any Lender's Swingline Exposure. Accrued and unpaid commitment fees shall
be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Commitments terminate,
commencing on the first such date to occur after the date hereof; provided
that any unpaid commitment fees accruing after the date on which the
Commitments terminate shall be payable on demand. All facility fees shall
be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the
last day).
9. Amendment to Section 2.11. Sections 2.11(a) of the Credit
Agreement is hereby restated in its entirety to read as follows:
"(a) (i) The Loans comprising each ABR Borrowing (excluding
each Swingline Loan) shall bear interest at a rate per annum equal to
the lesser of: (y) the Alternate Base Rate plus the Applicable Margin
and (z) the Highest Lawful Rate.
(ii) Each Swingline Loan shall bear interest at a rate per
annum equal to the lesser of (y) the Alternate Base Rate plus the
Applicable Margin for ABR Loans less the applicable Commitment Fee
Rate and (z) the Highest Lawful Rate."
10. Amendment to Section 2.16. Sections 2.16(a) and (c) of the
Credit Agreement are hereby restated in their entirety to read as follows (the
remainder of Section 2.16 is unchanged):
"(a) The Borrower shall make each payment required to be made
by it hereunder (whether of principal, interest, fees or reimbursement
of LC Disbursements, or of amounts payable under Section 2.13, 2.14 or
2.15, or otherwise) prior to 12:00 noon, Houston, Texas time, on the
date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in
the discretion of the recipient, be deemed to have been
-5-
<PAGE>
received on the next succeeding Business Day for purposes of
calculating interest thereon. All other such payments shall be made to
the Administrative Agent at its offices at 712 Main St., Houston,
Texas 77002, except payment to be made directly to the Issuing Bank or
Swingline Lenders as expressly provided herein or in any other Loan
Document, and except that payments pursuant to Sections 2.13, 2.14,
2.15 and 9.03 shall be made directly to the Persons entitled thereto.
The Administrative Agent shall distribute any such payments received
by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in
dollars.
"(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Revolving Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its
Revolving Loans and participations in LC Disbursements and Swingline
Loans and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Revolving
Loans and participations in LC Disbursements and Swingline Loans of
other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their
respective Revolving Loans and participations in LC Disbursements and
Swingline Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply
to any payment made by the Borrower pursuant to and in accordance with
the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the
Borrower or any Subsidiary or Affiliate thereof (as to which the
provisions of this paragraph shall apply). The Borrower consents to
the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to
the foregoing arrangements may exercise, after the occurrence and
during the continuance of an Event of Default, against the Borrower
rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in
the amount of such participation."
11. Amendment to Section 2.17. Sections 2.17(b)(i) and (ii) of the
Credit Agreement are hereby restated in their entirety to read as follows:
-6-
<PAGE>
"(i) the Borrower shall have received the prior written consent
of the Administrative Agent (and, if a Commitment is being assigned,
the Issuing Bank and Swingline Lender), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts)"
12. Addition of Section 2.19. A new Section 2.19 is hereby added to
the Credit Agreement and will read as follows:
"SECTION 2.19. Swingline Loans. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make
Swingline Loans to the Borrower from time to time during the
Availability Period, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount
of outstanding Swingline Loans exceeding $5,000,000.00 or (ii) the sum
of the total Revolving Credit Exposures exceeding the total
Commitments. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and
reborrow Swingline Loans.
(b) At any time when the Autoborrow Agreement is in effect, the
provisions thereof shall govern the advancing of a Swingline Loan. At
any time when the Autoborrow Agreement is not in effect, the
provisions of this Section 2.19(b) shall govern the advancing of a
Swingline Loan. To request a Swingline Loan, the Borrower shall notify
the Swingline Lender of such request not later than 12:00 noon,
Houston, Texas time, on the day of a proposed Swingline Loan. Each
such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline
Loan. The Swingline Lender shall make each Swingline Loan available to
the Borrower by means of a credit to the general deposit account of
the Borrower with the Swingline Lender (or, in the case of a Swingline
Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.04(e), by remittance to the Issuing Bank) by
3:00 p.m., Houston, Texas time, on the requested date of such
Swingline Loan.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., Houston, Texas time,
on any Business Day following an Event of Default including the
failure of Borrower to pay any principal, interest, fees or other
amounts with respect to a Swingline Loan at the time required by this
Agreement, require the Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding.
Such notice shall specify the aggregate amount of Swingline Loans in
which Lenders will
-7-
<PAGE>
participate. Promptly upon receipt of such notice, the Administrative
Agent will give notice thereof to each Lender, specifying in such
notice such Lender's Applicable Percentage of such Swingline Loan or
Loans. Each Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to promptly pay to the
Administrative Agent, for the account of the Swingline Lender, such
Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is
absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a
Default or reduction or termination of the Commitments, and that each
such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Lender shall comply with its obligation
under this paragraph by wire transfer of immediately available funds,
in the same manner as provided in Section 2.05 with respect to Loans
made by such Lender (and Section 2.05 shall apply, mutatis mutandis,
to the payment obligations of the Lenders), and the Administrative
Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Lenders. The Administrative Agent shall notify
the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such
Swingline Loan shall be made to the Administrative Agent and not to
the Swingline Lender. Any amounts received by the Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in
respect of a Swingline Loan after receipt by the Swingline Lender of
the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative
Agent to the Lenders that shall have made their payments pursuant to
this paragraph and to the Swingline Lender, as their interests may
appear. The purchase of participations in a Swingline Loan pursuant to
this paragraph shall not relieve the Borrower of any default in the
payment thereof."
13. Amendment to Section 6.02. Section 6.02(d) of the Credit
Agreement is hereby restated in its entirety to read as follows:
"(d) Liens securing potential prepayment obligations of Walker's
Concrete, Inc. to Union Bank of California encumbering assets of
Walker's Concrete, Inc.; provided (i) no further Indebtedness is owing
by the Borrower or any Subsidiary to said bank and (ii) said Liens are
fully extinguished and released prior to August 31, 1999; and"
14. Amendment to Section 7.02. Section 7.02(i) of the Credit
Agreement is hereby restated in its entirety to read as follows:
"On the occurrence of any event described in Section 7.01 (other
than an event with respect to the Borrower described in clause (h) or
(i) thereof), and at any
-8-
<PAGE>
time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders
shall, by notice to the Borrower, take either or both of the following
actions, at the same time or different times: (i) terminate the
Commitments (including the Commitment of the Swingline Lender with
respect to its obligation to advance Swingline Loans), and thereupon
the Commitments shall terminate immediately; provided that in the case
of the Commitment of the Swingline Lender with respect to its
obligation to advance Swingline Loans, the Swingline Lender may, by
notice to the Borrower (with a copy to the Administrative Agent) and
regardless of whether the Required Lenders elect to terminate the
Commitments hereunder, terminate such Commitment, and thereupon such
Commitment shall terminate immediately,"
15. Amendment to Section 9.01. Section 9.01(d) of the Credit
Agreement is hereby redesignated as Section 9.01(e) and a new (d) is added to
read as follows:
"(d) if to the Swingline Lender, to it at Bank of America, N.A.,
700 Louisiana, 7th Floor, Houston, Texas 77002, telecopy: 713-247-7748
and telephone: 713-247-7756.
(e) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire."
16. Amendment to Section 9.02. Section 9.02(b)(vii) of the Credit
Agreement is hereby restated in its entirety to read as follows:
"(vii) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive,
amend or modify any rights hereunder or make any determination or
grant any consent hereunder, without the written consent of each
Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent, the
Issuing Bank or the Swingline Lender hereunder without the prior
written consent of the Administrative Agent, the Issuing Bank or the
Swingline Lender, as the case may be."
17. Amendment to Section 9.03. Section 9.03 of the Credit Agreement
is hereby amended as follows to contain a reference to the Swingline Lender with
the result that the Swingline Lender shall be entitled to the reimbursement
provisions of paragraph (a) (ii), the indemnity provisions of paragraph (b) and
the reimbursement provisions of paragraph (c).
18. Amendment to Section 9.04. Sections 9.04(b)(i) and (e) of the
Credit Agreement are hereby restated in their entirety to read as follows:
-9-
<PAGE>
"(i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, each of the Borrower and the Administrative
Agent (and, in the case of an assignment of all or a portion of a
Commitment or any Lender's obligations in respect of its LC Exposure
or Swingline Exposure, the Issuing Bank and the Swingline Lender) must
give their prior written consent to such assignment (which consent
shall not be unreasonably withheld),"
"(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank, or the Swingline Lender sell
participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of
this Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same
extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.16(c) as though it were
a Lender."
19. Ratification. Each of the Company and each Guarantor hereby
ratifies all of its obligations under the Credit Agreement and each of the Loan
Documents to which it is a party, and agrees and acknowledges that the Credit
Agreement and each of the Loan Documents to which it is a party shall continue
in full force and effect as amended and modified by this Amendment. Nothing in
this Amendment extinguishes, novates or releases any right, claim, lien,
security interest or entitlement of any of the Lenders or the Administrative
Agent created by or contained in any of such documents nor is the Company or any
Guarantor released from any covenant, warranty or obligation created by or
contained herein.
20. Representations and Warranties. Each of the Company and each
Guarantor hereby represents and warrants to the Administrative Agent and the
Lenders that (a) this Amendment has been duly executed and delivered on behalf
of the Company and such Guarantor, as the case may be, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
laws
-10-
<PAGE>
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law,
(b) this Amendment constitutes a valid and legally binding agreement enforceable
against the Company or such Guarantor, as the case may be, in accordance with
its terms, (c) the representations and warranties contained in the Credit
Agreement and the Loan Documents are true and correct on and as of the date
hereof in all material respects as though made as of the date hereof, except as
heretofore otherwise disclosed in writing to the Administrative Agent unless
such representations and warranties relate to an earlier date, or are untrue as
a result of transactions permitted by the Loan Documents, (d) no Default exists
under the Credit Agreement or under any of Loan Document and (e) the execution,
delivery and performance of this Amendment has been duly authorized by the
Company and each Guarantor.
21. Conditions to Effectiveness. This Amendment shall be effective
upon the execution and delivery hereof by all parties to the Administrative
Agent and receipt by the Administrative Agent of (a) this Amendment and (b) a
certificate of an officer of the Company certifying that all conditions in
Section 4.02 of the Credit Agreement shall be satisfied.
22. Counterparts. This Amendment may be signed in any number of
counterparts, which may be delivered in original or facsimile form each of which
shall be construed as an original, but all of which together shall constitute
one and the same instrument.
23. Governing Law. THIS AMENDMENT, ALL NOTES, THE OTHER LOAN
DOCUMENTS AND ALL OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE
DEEMED TO BE CONTRACTS AND AGREEMENTS UNDER THE LAWS OF THE STATE OF TEXAS AND
OF THE UNITED STATES OF AMERICA AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF TEXAS AND OF THE UNITED STATES.
24. Final Agreement of the Parties. THIS AMENDMENT AND THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
COMPANY:
U.S. CONCRETE, INC.
By: /s/ Michael W. Harlan
----------------------------------
Michael W. Harlan
Senior Vice President
GUARANTORS:
Baer Concrete, Incorporated, a New Jersey corporation
Bay Cities Building Materials Co., Inc., a California
corporation
B.C.B.M. Transport, Inc., a California corporation
Central Concrete Supply Co., Inc. a California
corporation
Opportunity Concrete Corporation, a District of
Columbia corporation
R.G. Evans/Associates, d/b/a/ Santa Rosa Cast Products
Co., a California corporation
Walker's Concrete, Inc., a California corporation
By: /s/ Michael W. Harlan
----------------------------------
Michael W. Harlan
Vice President
<PAGE>
ADMINISTRATIVE AGENT/LENDER:
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ Michael Ondruch
----------------------------------
Michael Ondruch
Vice President
<PAGE>
SYNDICATION AGENT/LENDER/SWINGLINE LENDER:
BANK OF AMERICA, N.A.,
f/k/a NationsBank, N.A.
By: /s/ William B. Borus
------------------------------
Name: William B. Borus
Title: Vice President
<PAGE>
LENDER:
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
<PAGE>
CO-AGENT/LENDER:
BANK ONE, TEXAS, N.A.
By: /s/ David A. Batson
-------------------------------
Name: David A. Batson
Title: Assistant Vice President
<PAGE>
LENDER:
BRANCH BANKING & TRUST COMPANY
By: /s/ Cory Boyte
------------------------------
Name: Cory Boyte
Title: Vice President
<PAGE>
LENDER:
COMERICA BANK
By: /s/ Mark B. Grover
-----------------------------
Name: Mark B. Grover
Title: Vice President
<PAGE>
CO-AGENT/LENDER:
CREDIT LYONNAIS
NEW YORK BRANCH
By: /s/ Robert Ivosevich
------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
<PAGE>
THIRD AMENDMENT TO
CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), effective
as of August 31, 1999, is entered into by and among U.S. CONCRETE, INC., a
Delaware corporation, (the "Company"), the Guarantors party thereto, the Lenders
signatory hereto under the caption "Lenders" (together with each other Person
who becomes a Lender, collectively, the "Lenders") and CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, a national banking association, individually as a Lender,
and as administrative agent for the other Lenders (in such capacity, together
with any other Person who becomes the administrative agent, the "Administrative
Agent"), Bank of America, N.A., f/k/a NationsBank, N.A., as Syndication Agent,
and Bank One, Texas, NA and Credit Lyonnais New York Branch, as Co-Agents for
the Lenders.
PRELIMINARY STATEMENT
WHEREAS, the Company, the Guarantors, the Lenders, the Administrative
Agent, the syndication agent and the co-agents have entered into that certain
Credit Agreement dated as of May 28, 1999, as amended by that certain First
Amendment to Credit Agreement dated June 30, 1999 among such parties and that
certain Second Amendment to Credit Agreement dated July 31, 1999 (said Credit
Agreement, as amended and as may be further amended, extended, supplemented or
amended and restated from time to time, the "Credit Agreement"); and
WHEREAS, the Company has requested the Lenders and the Administrative
Agent to amend and modify certain additional terms of the Credit Agreement; and
WHEREAS, the Lenders and the Administrative Agent have agreed to do
so to the extent reflected in this Amendment, provided that each of the Company
and the Guarantors ratifies and confirms all of its respective obligations under
the Credit Agreement and the Loan Documents and agrees to make certain other
amendments as set forth here.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration and the mutual benefits, covenants and agreements
herein expresses, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. Defined Terms and Overall Changes. All capitalized terms
used in this Amendment and not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement.
2. Amendment to Section 6.01. Section 6.01 of the Credit
Agreement is amended to add a new subsection (g) to read as follows (the
remainder of Section 6.01 is unchanged):
"(g) Indebtedness not to exceed $50,000.00 incurred as an
advance by Walkers' Concrete, Inc. under its facility with Union Bank
of
<PAGE>
California, N.A.; provided such advance (i) shall be a one-time
advance and (ii) shall be fully repaid on or before the earlier of
December 31, 1999 or the release by such bank of the liens securing
such facility."
3. Amendment to Section 6.02. Section 6.02(d) of the Credit
Agreement is restated in its entirety to read as follows:
"(d) Liens securing potential prepayment obligations of
Walker's Concrete, Inc. to Union Bank of California, N.A. encumbering
assets of Walker's Concrete, Inc.; provided (i) no further
Indebtedness is owing by the Borrower or any Subsidiary to said bank
in excess of that provided in Section 6.01(g) and (ii) said Liens are
fully extinguished and released prior to December 31, 1999; and"
4. Ratification. Each of the Company and each Guarantor
hereby ratifies all of its obligations under the Credit Agreement and each of
the Loan Documents to which it is a party, and agrees and acknowledges that the
Credit Agreement and each of the Loan Documents to which it is a party shall
continue in full force and effect as amended and modified by this Amendment.
Nothing in this Amendment extinguishes, novates or releases any right, claim,
lien, security interest or entitlement of any of the Lenders or the
Administrative Agent created by or contained in any of such documents nor is the
Company or any Guarantor released from any covenant, warranty or obligation
created by or contained herein.
5. Representations and Warranties. Each of the Company and
each Guarantor hereby represents and warrants to the Administrative Agent and
the Lenders that (a) this Amendment has been duly executed and delivered on
behalf of the Company and such Guarantor, as the case may be, subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law, (b) this Amendment constitutes a valid and legally binding
agreement enforceable against the Company or such Guarantor, as the case may be,
in accordance with its terms, (c) the representations and warranties contained
in the Credit Agreement and the Loan Documents are true and correct on and as of
the date hereof in all material respects as though made as of the date hereof,
except as heretofore otherwise disclosed in writing to the Administrative Agent,
(d) no Default exists under the Credit Agreement or under any of Loan Document
and (e) the execution, delivery and performance of this Amendment has been duly
authorized by the Company and each Guarantor.
6. Conditions to Effectiveness. This Amendment shall be
effective upon the execution and delivery hereof by all parties to the
Administrative Agent and receipt by the Administrative Agent of (a) this
Amendment and (b) a certificate of an officer of the Company certifying that all
conditions in Section 4.02 of the Credit Agreement shall be satisfied.
7. Counterparts. This Amendment may be signed in any number of
counterparts, which may be delivered in original or facsimile form each of which
shall be construed as an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
8. Governing Law. THIS AGREEMENT, ALL NOTES, THE OTHER LOAN
DOCUMENTS AND ALL OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE
DEEMED TO BE CONTRACTS AND AGREEMENTS UNDER THE LAWS OF THE STATE OF TEXAS AND
OF THE UNITED STATES OF AMERICA AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF TEXAS AND OF THE UNITED STATES.
9. Final Agreement of the Parties. THIS AMENDMENT AND THE
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of Page Intentionally Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
COMPANY:
U.S. CONCRETE
By: /s/ Michael W. Harlan
--------------------------
Michael W. Harlan
Senior Vice President
GUARANTORS:
Baer Concrete, Incorporated, a New Jersey
corporation
Bay Cities Building Materials Co., Inc., a
California corporation
B.C.B.M. Transport, Inc., a California corporation
Central Concrete Supply Co., Inc. a California
corporation
Opportunity Concrete Corporation, a District of
Columbia corporation
R.G. Evans/Associates, d/b/a/ Santa Rosa Cast
Products Co., a California corporation
Walker's Concrete, Inc., a California corporation
By: /s Michael W. Harlan
--------------------------
Michael W. Harlan
Vice President
<PAGE>
ADMINISTRATIVE AGENT/LENDER:
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ Michael E. Ondruch
-----------------------------
Michael E. Ondruch
Vice President
<PAGE>
SYNDICATION AGENT/LENDER:
BANK OF AMERICA, N.A.,
f/k/a Nationsbank, N.A.
By: /s/ William B. Borus
---------------------------
Name: William B. Borus
Title: Vice President
<PAGE>
LENDER:
THE BANK OF NOVA SCOTIA
By: F.C.H. Ashby
----------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
<PAGE>
CO-AGENT/LENDER:
BANK ONE, TEXAS, N.A.
By: /s/ William S. Rogers
----------------------------
Name: William S. Rogers
Title: Vice President
<PAGE>
LENDER:
BRANCH BANKING & TRUST COMPANY
By: /s/ Cory Boyte
---------------------------
Name: Cory Boyte
Title: Vice President
<PAGE>
LENDER:
COMERICA BANK
By: /s/ Mark B. Grover
----------------------------
Name: Mark B. Grover
Title: Vice President
<PAGE>
CO-AGENT/LENDER:
CREDIT LYONNAIS
NEW YORK BRANCH
By: Robert Ivosevich
---------------------------
Name: Robert Ivosevich
Title: Senior Vice President
<TABLE> <S> <C>
<PAGE>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,994
<SECURITIES> 0
<RECEIVABLES> 40,192
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<PP&E> 49,079
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<TOTAL-LIABILITY-AND-EQUITY> 180,384
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