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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
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(MARK ONE)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
for the quarterly period ended June 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.
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(exact name of Registrant as specified in its charter)
Delaware 76-0586680
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 Post Oak Blvd., Suite 1220, Houston, Texas 77056
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(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 [_] No [X]
The number of shares of Common Stock of the Registrant, par value $.001 per
share, outstanding at November 12, 1999 was 18,495,181.
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This Amendment No. 1 on Form 10-Q/A amends Item I of the Quarterly Report on
Form 10-Q of U.S. Concrete, Inc. for the quarter ended June 30, 1999, to revise
our previously reported provision for income taxes and net income for the three
months ended June 30, 1999. This revision reflects (1) approximately $924,000 in
income tax charges relating to Central Concrete Supply Co.'s conversion from
subchapter S corporation status to C corporation status for federal income tax
purposes as a result of U.S. Concrete's acquisition of Central and (2)
approximately $815,000 in additional income tax charges relating to the non-
deductibility of a $2.9 million non-cash stock compensation charge that we
recorded in connection with our initial public offering.
The $924,000 adjustment is reflected in Central's historical financial
statements as having been incurred just prior to the completion of our initial
public offering on May 28, 1999. For financial reporting purposes, we have
presented Central as the accounting acquiror of our initial operating
businesses. Accordingly, these income tax charges impact our historical results
for the quarter ended June 30, 1999. Because these charges are eliminated in our
pro forma financial statements, they have no impact on our previously reported
pro forma results.
The $815,000 adjustment is reflected in our historical financial statements as
having been incurred in June 1999 and impacts both our historical and pro forma
results for the quarter ended June 30, 1999. This adjustment does not affect the
Company's pro forma results exclusive of the $2.9 million stock compensation
charge and related income tax effect. The pro forma net income and earnings per
share exclusive of such charge and related income tax effect for the six months
ended June 30, 1999 would have been $4.5 million and $0.28.
In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, this
Amendment No. 1 sets forth the complete text to Item 1 of Part I of our Form
10-Q for the quarter ended June 30, 1999, as amended.
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 (the "Acquired Businesses"). 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 acquisitions is May 31, 1999. As used herein, 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
six months ended June 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 six Acquired 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 form adjustments for:
. certain contractual reductions in salaries, bonuses and benefits to
former owners of the Acquired Businesses;
. elimination of legal, accounting and other professional fees incurred in
connection with the acquisitions of the Acquired Businesses;
. amortization of goodwill resulting from the acquisitions of the Acquired
Businesses;
. reduction in interest expense, net of interest expense on borrowings to
fund S corporation distributions by certain of the Acquired Businesses;
and
. adjustments to the federal and state income tax provision based on pro
forma operating results.
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 the 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.
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U.S. CONCRETE, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts; unaudited)
SIX MONTHS ENDED
JUNE 30,
-------------------
1999 1998
------- -------
Sales $88,505 $82,709
Cost of goods sold 71,801 68,317
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Gross profit 16,704 14,392
Selling, general and administrative expenses 7,085 4,400
Stock compensation charge 2,880 --
Depreciation and amortization 2,256 2,256
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Income from operations 4,483 7,736
Interest expense, net (361) (361)
Other income, net 877 233
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Income before provision for income taxes 4,999 7,608
Provision for income taxes 3,236 3,133
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Net income $ 1,763 $ 4,475
======= =======
Net income per share:
Basic $0.11 $0.28
======= =======
Diluted $0.11 $0.28
======= =======
Number of shares used in calculating net income per share:
Basic 16,209 16,209
======= =======
Diluted 16,273 16,209
======= =======
The accompanying notes are an integral part of these pro forma combined
financial statements.
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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>
SIX MONTHS ENDED
June 30,
----------------
1999 1998
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<S> <C> <C>
Shares issued to the owners of the Acquired Businesses 8,985 8,985
Shares issued to the initial stockholders and certain
management personnel of U.S. Concrete 2,854 2,854
Shares issued in the IPO 4,370 4,370
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Number of shares used in calculating basic net income per share 16,209 16,209
Effect of shares issuable under stock options and warrants based on the
treasury stock method 64 --
------- -------
Number of shares used in calculating diluted net income per share 16,273 16,209
======= =======
</TABLE>
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U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
1999 1998
-------- -------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 9,122 $ 4,213
Trade accounts receivable, net 27,576 7,641
Receivables from related parties 4,367 2,712
Inventories 1,786 792
Prepaid expenses 1,549 833
Deferred tax asset 276 --
Other current assets 294 156
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Total current assets 44,970 16,347
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Property, plant and equipment, net 44,493 9,138
Goodwill, net 56,277 --
Cash surrender value of life insurance -- 1,155
Other assets 884 --
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Total assets $146,624 $26,640
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LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 137 $ 1,006
Accounts payable and accrued liabilities 34,096 7,910
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Total current liabilities 34,233 8,916
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Long-term debt, net of current maturities 18,912 2,524
Deferred income taxes 3,915 46
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Total liabilities 57,060 11,486
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Stockholders' equity
Common stock 16 70
Additional paid-in capital 92,314 554
Retained earnings (deficit) (2,766) 14,530
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Total stockholders' equity 89,564 15,154
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Total liabilities and stockholders' equity $146,624 $26,640
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The accompanying notes are an integral part of these condensed consolidated
financial statements.
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U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts; unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------- -------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales $27,648 $15,775 $40,604 $25,693
Cost of goods sold 22,150 12,793 32,775 21,330
------- ------- ------- -------
Gross profit 5,498 2,982 7,829 4,363
Selling, general and administrative expenses 2,134 1,056 3,457 1,656
Stock compensation charge 2,880 -- 2,880 --
Depreciation and amortization 666 272 959 460
------- ------- ------- -------
Income (loss) from operations (182) 1,654 533 2,247
Interest income (expense), net (317) (20) (279) 23
Other income (expense), net 145 (25) 334 28
------- ------- ------- -------
Income (loss) before income tax provision (354) 1,609 588 2,298
Income tax provision 1,642 25 1,642 31
------- ------- ------- -------
Net income (loss) $(1,996) $ 1,584 $(1,054) $ 2,267
======= ======= ======= =======
Net income (loss) per share:
Basic $ (0.23) $ 0.51 $ (0.17) $ 0.73
======= ======= ======= =======
Diluted $ (0.23) $ 0.51 $ (0.17) $ 0.73
======= ======= ======= =======
Number of shares used in calculating net income
(loss) per share:
Basic 8,576 3,120 6,037 3,120
======= ======= ======= =======
Diluted 8,576 3,120 6,037 3,120
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
------------------
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,054) $ 2,267
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 959 460
Net gain on sale of property, plant and equipment (215) --
Deferred income tax provision 924 --
Change in allowance for doubtful accounts 217 2
Stock compensation charge 2,880 --
Changes in assets and liabilities, excluding effects of acquisitions:
Trade accounts receivable (4,361) (270)
Prepaid expenses and other current assets (60) 302
Accounts payable and accrued liabilities 3,482 326
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Net cash provided operating activities 2,772 3,087
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,240) (1,112)
Payments for acquisitions accounted for as purchases, net of cash
received of $9,154 (37,051) --
Proceeds from disposals of property, plant and equipment 959 --
Increase in cash surrender value of life insurance -- (91)
Other 691 --
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Net cash used in investing activities (37,641) (1,203)
======= =======
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 18,700 1,487
Repayments of borrowings (3,480) (423)
Proceeds from issuances of common stock 32,512 --
Cash paid related to common stock issuance costs (3,002) --
Distributions to stockholders (4,952) (1,495)
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Net cash provided by (used in) financing activities 39,778 (431)
======= =======
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,909 1,453
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,213 1,945
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,122 $ 3,398
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 262 $ 131
Cash paid during the period for income taxes $ 137 $ --
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.
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
U.S. Concrete was founded 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. U.S. Concrete conducted no operations of its own prior to
the closing on May 28, 1999 of (1) its initial public offering of its common
stock and (2) its acquisition for shares of its common stock and cash of six
operating businesses (the "Acquired Businesses").
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 acquisitions is May 31, 1999. As used herein, 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 the notes thereto
of U.S. Concrete and the Acquired Businesses 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. 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:
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------- -------------
1999 1998 1999 1998
----- ----- ----- -----
Shares issued to Central's owners 3,120 3,120 3,120 3,120
Shares issued to owners of Acquired Businesses
other than Central 2,127 -- 1,069 --
Shares issued to the initial stockholders and
certain management personnel of U.S. Concrete 1,832 -- 1,095 --
Shares issued in the IPO 1,497 -- 753 --
----- ----- ----- -----
Number of shares used in calculating basic
and diluted net income (loss) per share 8,576 3,120 6,037 3,120
===== ===== ===== =====
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4. LONG-TERM DEBT
A summary of long-term debt is as follows (dollars in thousands):
JUNE 30, DECEMBER 31,
1999 1998
------- -------
Secured revolving credit facility $ 18,700 $ --
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 349 --
------- -------
19,049 3,530
Less: current maturities (137) (1,006)
------- -------
Long-term debt, net of current maturities $18,912 $ 2,524
======= =======
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.
5. INCOME TAXES
Prior to May 28, 1999, Central and two 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.
6. 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.
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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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