<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER
JUNE 30, 2000 000-29619
</TABLE>
KIEWIT MATERIALS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 47-0819021
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
KIEWIT PLAZA, OMAHA, NEBRASKA 68131
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(402) 536-3661
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ ] No [X]
The number of shares outstanding of each of the registrant's classes of
common stock as of September 19, 2000:
<TABLE>
<S> <C>
Title of Class Shares Outstanding
Common Stock, $0.01 par value 36,343,869
</TABLE>
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<PAGE> 2
KIEWIT MATERIALS COMPANY
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Condensed Statements of Earnings for the
three and six months ended June 30, 2000 and 1999...... 1
Consolidated Condensed Balance Sheets as of June 30, 2000
and December 25, 1999.................................. 2
Consolidated Condensed Statements of Cash Flows for the
six months ended June 30, 2000 and 1999................ 3
Notes to Consolidated Condensed Financial Statements...... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of
Operations................................................ 7
Item 3. Quantitative and Qualitative Disclosure About
Market Risk............................................... 10
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders................................................... 10
Item 6. Exhibits and Reports on Form 8-K................... 10
Signatures.................................................. 11
Index to Exhibits........................................... 12
</TABLE>
<PAGE> 3
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ------------------------------
2000 1999 2000 1999
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Revenue........................ $ 127,930,873 $109,258,819 $ 227,470,710 $ 208,746,819
Cost of revenue................ (106,572,791) (93,209,800) (190,729,935) (177,015,210)
Depreciation, depletion and
amortization................. (4,962,514) (4,440,660) (9,637,042) (7,607,247)
------------- ------------ ------------- -------------
16,395,568 11,608,359 27,103,733 24,124,362
General and administrative
expenses..................... (5,391,202) (5,890,179) (11,842,104) (12,495,527)
------------- ------------ ------------- -------------
Operating earnings............. 11,004,366 5,718,180 15,261,629 11,628,835
Other income (expense):
Investment income............ 1,257,863 948,699 2,705,546 1,959,653
Equity earnings.............. -- (1,940) -- 269,554
Interest expense............. (551,007) (622,286) (1,282,330) (864,520)
Gain on sale of property,
plant and equipment,
net....................... 340,336 310,954 436,372 456,268
Other, net................... 54,877 230,346 111,790 285,120
------------- ------------ ------------- -------------
1,102,069 865,773 1,971,378 2,106,075
------------- ------------ ------------- -------------
Earnings before income taxes
and minority interest........ 12,106,435 6,583,953 17,233,007 13,734,910
Minority interest.............. 74,375 391,598 17,234 (44,830)
Income tax expense............. (4,830,798) (2,655,004) (6,867,976) (5,493,964)
------------- ------------ ------------- -------------
Net earnings................... $ 7,350,012 $ 4,320,547 $ 10,382,265 $ 8,196,116
============= ============ ============= =============
Net earnings per share:
Basic and diluted............ $ 73,500 $ 43,205 $ 103,823 $ 81,961
============= ============ ============= =============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE> 4
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 25,
2000 1999
(UNAUDITED)
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 47,355,863 $ 72,330,127
Marketable securities..................................... -- 2,533,975
Receivables, less allowance of $1,036,724 and $993,998.... 59,939,866 51,367,160
Inventories............................................... 14,807,025 11,140,897
Deferred income taxes..................................... 5,227,000 4,662,000
Other..................................................... 2,452,738 1,884,960
------------ ------------
Total current assets........................................ 129,782,492 143,919,119
Property, plant and equipment, less accumulated depreciation
of $104,250,171 and $96,277,685........................... 130,394,513 100,000,530
Other assets................................................ 46,569,770 32,970,988
------------ ------------
$306,746,775 $276,890,637
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable.......................................... $ 35,229,121 $ 23,803,632
Current portion of long-term debt......................... 570,514 561,538
Accrued payroll and payroll taxes......................... 5,545,099 6,772,340
Accrued insurance costs................................... 8,720,669 6,776,798
Income taxes payable -- parent company.................... 16,747,691 11,815,841
Other..................................................... 1,643,733 1,719,859
------------ ------------
Total current liabilities................................... 68,456,827 51,450,008
Long-term debt, less current portion........................ 5,231,061 3,753,298
Deferred income taxes....................................... 10,092,000 8,976,000
Other liabilities........................................... 2,641,206 2,622,906
Minority interest........................................... 338,537 355,770
------------ ------------
Total liabilities...................................... 86,759,631 67,157,982
Stockholder's equity:
Common stock, par $.01; and 100 shares authorized, issued
and outstanding........................................ 1 1
Additional paid-in capital................................ 126,501,127 126,627,470
Accumulated other comprehensive income.................... -- 1,434
Retained earnings......................................... 93,486,016 83,103,750
------------ ------------
Total stockholder's equity.................................. 219,987,144 209,732,655
------------ ------------
$306,746,775 $276,890,637
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
2
<PAGE> 5
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operations:
Net cash provided by (used in) operations................... $ 25,605,182 $ (6,848,717)
Cash flows from investing activities:
Sales of marketable securities............................ 2,500,000 --
Proceeds from sales of property, plant and equipment...... 693,222 1,156,967
Investments and acquisitions.............................. (33,515,432) (32,426,029)
Capital expenditures...................................... (20,856,218) (13,206,957)
Additions to notes receivable............................. (85,552) (394,972)
Payments on notes receivable.............................. 758,087 525,575
------------ ------------
Net cash used in investing activities....................... (50,505,893) (44,345,416)
Cash flows from financing activities:
Payments on long-term debt................................ (275,162) (15,516,935)
Contributions from parent................................. 201,609 45,372,722
------------ ------------
Net cash (used in) provided by financing activities......... (73,553) 29,855,787
------------ ------------
Net decrease in cash and cash equivalents................... (24,974,264) (21,338,346)
Cash and cash equivalents at beginning of period............ 72,330,127 65,601,870
------------ ------------
Cash and cash equivalents at end of period.................. $ 47,355,863 $ 44,263,524
============ ============
</TABLE>
3
<PAGE> 6
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The consolidated condensed financial statements include the accounts of
Kiewit Materials Company ("KMC" or "Materials") and its subsidiaries
(collectively, the "Company"). The Company was formed on February 2, 1999.
Several affiliated operating corporations under common ownership (the
"Predecessors"), each one of which is engaged in an aspect of the materials
business, were combined (the "Combination") on March 1, 1999 through a series of
non monetary contributions from KMC's parent, Peter Kiewit Sons', Inc.
("Kiewit").
The Combination has been accounted for at historical cost in a manner
similar to a pooling of interests. All significant intercompany transactions
have been eliminated in consolidation.
The consolidated condensed balance sheet of the Company at December 25,
1999 has been condensed from the Company's audited balance sheet as of that
date. All other financial statements contained herein are unaudited and, in the
opinion of management, contain all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of financial position and
results of operations for the periods presented. The Company's accounting
policies and certain other disclosures are set forth in the notes to the
consolidated financial statements contained in the Company's Registration
Statement on Form 10 filed with the Securities and Exchange Commission on
September 15, 2000.
The results of operations for the six months ended June 30, 2000 are not
necessarily indicative of the results to be expected for the full year.
2. EARNINGS PER SHARE:
Basic earnings per share have been computed using the weighted average
number of shares outstanding during each period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -------------------------
2000 1999 2000 1999
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net earnings available to common
stockholders..................... $7,350,012 $4,320,547 $10,382,265 $8,196,116
========== ========== =========== ==========
Total number of weighted average
shares outstanding used to
compute basic earnings per
share............................ 100 100 100 100
========== ========== =========== ==========
Net earnings
Basic earnings per share......... $ 73,500 $ 43,205 $ 103,823 $ 81,961
========== ========== =========== ==========
</TABLE>
3. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 25,
2000 1999
----------- ------------
<S> <C> <C>
Raw Materials....................................... $11,534,558 $ 9,523,973
Other............................................... 3,272,467 1,616,924
----------- -----------
$14,807,025 $11,140,897
=========== ===========
</TABLE>
4
<PAGE> 7
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
4. COMPREHENSIVE INCOME:
Comprehensive income includes net earnings and unrealized gains (losses) on
securities and minimum pension liability adjustments.
Comprehensive income for the three months and six months ended June 30,
2000 and 1999 was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -------------------------
2000 1999 2000 1999
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net earnings..................... $7,350,012 $4,320,547 $10,382,265 $8,196,116
Other comprehensive income,
before tax:
Unrealized losses arising
during period............... (995) (14,233) (2,323) (23,945)
Minimum pension liability
adjustment.................. -- 5,986 -- 11,971
Income tax benefit related to
items of other comprehensive
income...................... 381 3,349 889 4,969
---------- ---------- ----------- ----------
Comprehensive income............. $7,349,398 $4,315,649 $10,380,831 $8,189,111
========== ========== =========== ==========
</TABLE>
5. SEGMENT REPORTING:
The Company currently operates under one segment.
The Company's external revenues by product for the three months and six
months ended June 30, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Aggregates (sand, gravel,
crushed stone and
railroad ballast)....... $ 30,340,654 $ 27,675,917 $ 52,127,847 $ 54,496,210
Asphalt................... 19,973,318 20,177,292 32,900,342 34,370,520
Ready mix concrete........ 75,226,878 60,822,391 137,302,435 114,289,898
Construction.............. 2,390,023 583,219 5,140,086 5,590,191
------------ ------------ ------------ ------------
$127,930,873 $109,258,819 $227,470,710 $208,746,819
============ ============ ============ ============
</TABLE>
6. ACQUISITIONS:
On February 28, 1999, the Company purchased the remaining 60% of Pacific
Rock Products, L.L.C., and Pacific Rock Products Trucking, L.L.C. (formerly
River City Machinery L.L.C.) ("Pac Rock") a materials operation operating in the
Portland, Oregon area, for $40,000,000. The acquisition was accounted for by the
purchase method of accounting. The excess of aggregate purchase price over fair
value of identifiable assets and liabilities acquired of $17,305,204 was
recognized as goodwill and is being amortized over 20 years. The operating
results of Pac Rock are included in the consolidated results of operations from
the date of acquisition. Prior to the acquisition, the Company used the equity
method to account for Pac Rock.
5
<PAGE> 8
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
6. ACQUISITIONS, CONTINUED:
On January 3, 2000, the Company acquired 100% of the outstanding common
stock and related assets of Solano Concrete Co., Inc., a materials operation
operating in the Northern California area, for $30,880,432. Identifiable
intangible assets related to this purchase of $15,447,711 will be amortized over
their useful life of 27.5 years. There was no goodwill related to this
transaction.
The following pro forma financial information assumes the acquisitions
occurred at the beginning of 1999. These results have been prepared for
comparative purposes only and do not purport to be indicative of what would have
occurred had the acquisition been made at the beginning of 1999, or the results
which may occur in the future:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue................... $127,930,873 $112,332,160 $227,470,710 $223,610,162
Net earnings.............. $ 7,350,012 $ 4,383,781 $ 10,382,265 $ 9,282,231
Net earnings per share:
Basic and diluted....... $ 73,500 $ 43,838 $ 103,823 $ 92,822
</TABLE>
During the first six months of 2000, the Company acquired the assets of
various materials operations, all of which were accounted for by the purchase
method and, accordingly, results of operations for the acquired businesses have
been included in the consolidated statements of income from their respective
dates of acquisition. Pro forma financial information is not presented for the
acquisitions because the impact is not material to the results of operations.
The aggregate purchase price was $4,396,901 during 2000. Notes payable of
$1,761,900 were issued in connection with the purchase. Goodwill related to one
of the acquisitions was $961,901 and is being amortized over a period of 27.25
years.
7. OTHER MATTERS:
The Company is involved in various lawsuits and claims incidental to its
business. Management believes that any resulting liability, beyond that
provided, should not materially affect the Company's future financial position,
results of operations or cash flows.
8. SUBSEQUENT EVENT:
On August 4, 2000, the Company acquired 100% of the outstanding common
stock and related assets of Fort Calhoun Stone Company, a limestone quarry
business located in Washington County, Nebraska, for approximately $41,000,000.
The acquisition will be accounted for as a purchase. The purchase price
allocation will be determined when additional information becomes available.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion is based upon and should be read in conjunction
with our Consolidated Condensed Financial Statements, including the notes
thereto, included elsewhere in this quarterly report on Form 10-Q.
Peter Kiewit Sons', Inc. ("Kiewit") management has decided to separate
Kiewit's construction business and materials business into two separate,
independent companies by distributing shares of common stock of Kiewit Materials
Company ("Materials") to Kiewit stockholders in a spin-off that is intended to
be tax-free for U.S. federal income tax purposes. Prior to the completion of the
share exchange and the debenture exchange offer described below, Materials was a
wholly owned subsidiary of Kiewit.
On August 15, 2000, Kiewit commenced a share exchange in which it offered
Kiewit stockholders who are Materials employees the opportunity to exchange
their shares of Kiewit common stock for shares of Materials common stock with an
equal aggregate formula price. The share exchange expired at 11:59 p.m., Omaha
time, on Thursday, September 14, 2000. In the share exchange, Materials
employees collectively exchanged 1,081,226 shares of Kiewit common stock,
representing 100% of the shares of Kiewit common stock collectively owned by
them and 3.24% of the total issued and outstanding Kiewit common stock on
September 14, 2000. For each share of Kiewit common stock tendered, Materials
employees received 2.85 shares of Materials common stock. Materials employees
who participated in the share exchange collectively received 3,081,646 shares of
Materials common stock, representing 8.48% of the issued and outstanding
Materials common stock on September 15, 2000.
On August 15, 2000, Kiewit also commenced a debenture exchange offer in
which it offered the holders of its outstanding convertible debentures the
opportunity to exchange their debentures for (1) Materials debentures
convertible into shares of Materials common stock, or (2) both shares of
Materials common stock and new reduced principal amount Kiewit debentures
convertible into shares of Kiewit common stock. The debenture exchange offer
expired at 11:59 p.m., Omaha time, on Thursday, September 14, 2000. In the
debenture exchange offer, Kiewit debentureholders collectively exchanged
$13,095,000 principal amount original Kiewit debentures for (1) $670,000
aggregate principal amount Materials debentures, and (2) both 973,383 shares of
Materials common stock and $5,475,045 principal amount new Kiewit debentures.
On September 30, 2000, Kiewit will distribute the shares of Materials
common stock it then holds as a dividend on a pro rata basis to holders of
Kiewit common stock in the spin-off. The record date for the spin-off dividend
has been set as of the close of business on September 15, 2000. On September 18,
2000, Kiewit mailed to its stockholders as of the record date an information
statement describing the spin-off and the Materials common stock to be
distributed in the spin-off. In the spin-off, Kiewit stockholders will receive
one share of Materials common stock for each share of Kiewit common stock they
hold on the record date.
Consequently, upon completion of the spin-off, Kiewit will no longer have
any interest in its materials operations. The materials operations will be owned
and operated solely by Materials. The spin-off is not expected to adversely
impact Materials' equity, revenue or net income. Current cash flows are expected
to be sufficient to fund current operations. Materials' ability to execute its
future growth strategy will, however, be dependent upon the ability to obtain
borrowings on terms deemed appropriate.
RESULTS OF OPERATIONS -- SECOND QUARTER 2000 VS. SECOND QUARTER 1999
Revenue. Revenues increased $18,672,054 or 17% in the second quarter of
2000 to $127,930,873 compared to $109,258,819 for the same period in 1999. The
increase is comprised of a 3% increase in average selling prices, a 4% increase
in unit volumes and the inclusion of $6,517,352 of additional revenues from
acquired companies. Unit volumes were greater for both ready mix concrete and
aggregates which were mitigated by a decline in asphalt sales. Asphalt sales
declined as we became more selective in supplying the market in an effort to
improve product margins.
Gross Profit. Gross profit margins increased to 12.8% in the second
quarter of 2000 from 10.6% for the same period of 1999. The increased unit
volumes and average selling prices were responsible for the improved margins.
7
<PAGE> 10
General and Administrative Expenses. General and administrative expenses
were relatively constant for the second quarter of 2000 when compared to the
same period in 1999. As a percentage of sales, this expense decreased to 4.2% in
2000 from 5.4% in 1999. This was due to the increase in revenues without a
proportionate increase in expenses.
Other Income and Expense. Other income increased $236,296 to $1,102,069 in
the second quarter of 2000 from $865,773 in the same period in 1999. An increase
in interest income, due to higher interest rates, was responsible for the
increase.
Income Tax Expense. The effective income tax rates during the second
quarter of 2000 and 1999 were 40%. These rates differ from the federal statutory
rates of 35% primarily due to state income taxes.
RESULTS OF OPERATIONS -- SIX MONTHS 2000 VS. SIX MONTHS 1999
Revenue. Revenues increased $18,723,891 or 9% in the first six months of
2000 to $227,470,710, as compared to $208,746,819 for the same period of 1999.
The increase is primarily due to a 3% increase in average selling prices and the
inclusion of additional revenues of $16,725,884 from acquired companies.
Offsetting the increases were declines in unit volumes of asphalt sales. Asphalt
sales declined as the company became more selective in supplying the market in
an effort to improve product margins.
Gross Profit. Gross profit margins remained consistent between the first
six months of 2000 and the same period of 1999. Higher margin sales from
acquired companies, a higher average selling price and a more selective approach
to supplying asphalt demand were offset by increases in asphalt oil costs and
higher fuel prices.
General and Administrative Expenses. General and administrative expenses
for the first six months of 2000 remained relatively constant when compared to
the same period in 1999. As a percentage of sales, general and administrative
expenses decreased to 5.2% in 2000 from 6.0% in 1999. This was due to the
increase in revenues without a proportionate increase in expenses.
Other Income and Expense. Other income decreased $134,697 to $1,971,378
for the first six months of 2000 from $2,106,076 for the same period in 1999.
Increases in interest income, due to higher interest rates, were offset by a
reduction in equity earnings due to the consolidation of Pacific Rock Products,
L.L.C. in the first quarter of 1999.
Income Tax Expense. The effective income tax rates for the first six
months of 2000 and 1999 were 40%. These rates differ from the federal statutory
rates of 35% primarily due to state income taxes.
FINANCIAL CONDITION -- JUNE 30, 2000
Cash and cash equivalents decreased $24,974,264 to $47,355,863 at June 30,
2000 from $72,330,127 at December 25, 1999. The decrease reflects net cash
provided by operations of $25,605,182 offset by net cash used in investing
activities of $50,505,893 and $73,553 used in financing activities.
Net cash provided by operating activities for the first six months of 2000
of $25,605,182 represented an increase of $32,453,899 from the same period in
1999. Net income increased $2,186,149 for the first six months of 2000 compared
to the same period in 1999. The principal source of the increase in net cash
from operating activities was a reduction in receivables.
Net cash used in investing activities for the first six months of 2000
increased by $6,160,477 to $50,505,893 as compared to the same period in 1999.
This increase was due to additional acquisitions of $1,089,403, decreases in
proceeds from the sale of property, plant and equipment in the ordinary course
of business of $463,745 and additional capital expenditures of $7,649,261. These
changes were partially offset by a decrease in additions to notes receivable of
$309,420, an increase in payments received on notes receivable of $232,512 and
$2,500,000 of additional proceeds from the sale of marketable securities.
Net cash used in financing activities for the first six months of 2000
increased by $29,929,340 to $73,553 as compared to a net source of cash of
$29,855,787 for the same period in 1999. This change was due to a
8
<PAGE> 11
reduction in contributions from Kiewit of $45,171,113. This change was partially
offset by a decrease in payments on long-term debt of $15,241,773.
We continue to explore opportunities to acquire additional businesses.
Other long-term liquidity uses include the payment of income taxes. The current
portion of long-term debt is $570,514. We believe that our current financial
condition, together with anticipated cash flows from operations, should be
sufficient for the operational needs of our business for the next twelve months.
We intend to pursue a growth strategy that will require substantial
capital. These capital requirements will be in addition to amounts necessary to
replace existing equipment and make long-term debt payments which amounts are
not anticipated to exceed $24 million for the next twelve months. We are unable
to estimate capital requirements for our growth strategy for fiscal year 2000.
We are actively pursuing our growth strategy, but capital requirements largely
depend on the number of acquisition candidates in the market and the level of
success we have in completing acquisitions.
For the six-month period ended June 30, 2000, we expended approximately
$33.5 million in connection with our growth strategy, which amount does not
include approximately $2 million in acquisition indebtedness payable in equal
installments over the next three years. In the third quarter of 2000, we
expended approximately an additional $43.6 million on two aggregates businesses.
Funding for these acquisitions came from a combination of cash generated from
our operations and capital contributions from Kiewit.
Following the spin-off, capital requirements for acquisitions that are in
excess of internally generated funds are expected to come from the issuance of
debt securities, which may be senior or junior to, or pari passu with, the
Materials convertible debentures being issued in the debenture exchange offer,
or borrowings under credit facilities. Should we obtain any debt financing, this
financing may contain restrictive covenants with respect to future capital
raising activities and other financial and operational matters.
Although we have historically received contributions from Kiewit to fund
our acquisitions, we do not believe that our spin-off from Kiewit, if effected,
will have an adverse effect on our liquidity or material commitments. We believe
that our working capital at the time of the spin-off, together with our ability
to borrow funds, will provide flexibility in pursuing our growth strategy and
will allow us to make significant capital investments in connection with
acquisitions. In addition, Materials has no current intention to pay cash
dividends, but will instead use its capital to fund its growth strategy.
Should we be unable to issue sufficient debt securities or obtain funds on
terms deemed appropriate to fund our growth strategy, we would then be limited
in our ability to fully execute our growth strategy. While we believe our growth
strategy to be important in enhancing shareholder value, we do not believe that
the inability to fully execute it would have a material adverse impact on
current operations, financial condition or liquidity.
We receive our revenue by selling ready mix, asphalt and aggregate
products. We also generate a small amount of revenue from construction
contracts. We do not generate a revenue backlog of any significant size given
the nature of our business.
We typically have a small number of notes receivable that are due from
customers. These notes are usually short in duration and insignificant in
amount. We do not have any note receivable commitments with customers on an
on-going basis. We do not have any established credit facilities. At June 30,
2000, we had $5.8 million of notes payable.
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
established accounting and reporting standards for derivative instruments and
for hedging activities. This statement, as amended, is effective for all fiscal
years beginning after June 15, 2000. Management does not expect adoption of this
statement to materially affect our financial statements as we have no
significant derivative instruments or hedging activities.
9
<PAGE> 12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We do not believe that our business is subject to significant market risks
arising from interest rates, foreign exchange rates or equity prices.
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On April 1, 2000, Kiewit, the sole stockholder of Materials during the
quarter ended June 30, 2000, acted by written consent to set the number of
directors which shall constitute the whole Board of Directors at eight. Kiewit
also elected James Goodwin to serve as a director until the next annual meeting.
On April 3, 2000, Kiewit acted by written consent to amend and restate
Materials' certificate of incorporation and by-laws. The Restated Certificate of
Incorporation and Amended and Restated By-laws were filed as exhibits to
Amendment No. 5 to Materials' Registration Statement on Form 10, filed with the
Securities and Exchange Commission on September 15, 2000.
On June 19, 2000, Kiewit acted by written consent in lieu of an annual
meeting of stockholders to elect the following persons as directors of Materials
to serve until the next annual meeting: Richard W. Colf, Richard Geary, James
Goodwin, Bruce E. Grewcock, William L. Grewcock, Christopher J. Murphy, Walter
Scott, Jr. and Kenneth E. Stinson. Mr. Stinson was designated as the Chairman of
the Board of Directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation of Kiewit Materials
Company.(1)
3.2 Amended and Restated By-laws of Kiewit Materials Company.(2)
4.1 Indenture, dated as of September 14, 2000, by and between
Kiewit Materials Company and UMB Bank, N.A., as trustee.
4.2 Form of Series 2000A Convertible Debentures due October 31,
2010 of Kiewit Materials Company.
4.3 Form of Series 2000B Convertible Debentures due October 31,
2010 of Kiewit Materials Company.
4.4 Form of Series 2000C Convertible Debentures due October 31,
2010 of Kiewit Materials Company.
27.1 Financial Data Schedule.
</TABLE>
---------------
(1) Filed as Exhibit 3.1 to Amendment No. 5 to Kiewit Materials Company's
Registration Statement on Form 10, filed with the Securities and Exchange
Commission on September 15, 2000, and incorporated herein by reference.
(2) Filed as Exhibit 3.2 to Amendment No. 5 to Kiewit Materials Company's
Registration Statement on Form 10, filed with the Securities and Exchange
Commission on September 15, 2000, and incorporated herein by reference.
10
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KIEWIT MATERIALS COMPANY
/s/ DONALD E. BOWMAN
--------------------------------------
Donald E. Bowman
Vice President, Chief Financial
Officer
Date: September 22, 2000
11
<PAGE> 14
KIEWIT MATERIALS COMPANY
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation of Kiewit Materials
Company.(1)
3.2 Amended and Restated By-laws of Kiewit Materials Company.(2)
4.1 Indenture, dated as of September 14, 2000, by and between
Kiewit Materials Company and UMB Bank, N.A., as trustee.
4.2 Form of Series 2000A Convertible Debentures due October 31,
2010 of Kiewit Materials Company.
4.3 Form of Series 2000B Convertible Debentures due October 31,
2010 of Kiewit Materials Company.
4.4 Form of Series 2000C Convertible Debentures due October 31,
2010 of Kiewit Materials Company.
27.1 Financial Data Schedule.
</TABLE>
---------------
(1) Filed as Exhibit 3.1 to Amendment No. 5 to Kiewit Materials Company's
Registration Statement on Form 10, filed with the Securities and Exchange
Commission on September 15, 2000, and incorporated herein by reference.
(2) Filed as Exhibit 3.2 to Amendment No. 5 to Kiewit Materials Company's
Registration Statement on Form 10, filed with the Securities and Exchange
Commission on September 15, 2000, and incorporated herein by reference.
12
