KIEWIT MATERIALS CO, 10-12G/A, 2000-07-28

KIEWIT MATERIALS CO
10-12G/A, 2000-07-28
MINING & QUARRYING OF NONMETALLIC MINERALS (NO FUELS)

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 2000

REGISTRATION NO. 000-29619
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--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 3

TO
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF
THE SECURITIES EXCHANGE ACT OF 1934

KIEWIT MATERIALS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 1400 47-0819021
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
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KIEWIT PLAZA, OMAHA, NEBRASKA 68131, (402) 536-3661
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

------------------------

MARK E. BELMONT, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
KIEWIT PLAZA
OMAHA, NEBRASKA 68131
(402) 536-3661
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

------------------------

WITH A COPY TO:
JOHN S. D'ALIMONTE, ESQ.
WILLKIE FARR & GALLAGHER
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
(212) 728-8000

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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

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NAME OF EACH EXCHANGE ON WHICH EACH CLASS
TITLE OF EACH CLASS TO BE SO REGISTERED IS TO BE REGISTERED
--------------------------------------- -----------------------------------------
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS)

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<PAGE> 2

KIEWIT MATERIALS COMPANY

INFORMATION INCLUDED IN INFORMATION STATEMENT AND
INCORPORATED IN REGISTRATION STATEMENT ON FORM 10 BY REFERENCE

CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

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ITEM NO. ITEM CAPTION LOCATION IN INFORMATION STATEMENT
-------- ------------ ---------------------------------
<C> <S> <C>
1. Business........................................ "Summary"; "Management's Discussion and
Analysis of Financial Condition and Results
of Operations"; and "Business."

2. Financial Information........................... "Selected Historical and Pro Forma
Financial Data"; "Management's Discussion
and Analysis of Financial Condition and
Results of Operations"; "Index to Materials
Financial Statements"; "Index to Pacific
Rock Products and River City Machinery
Financial Statements"; and "Index to Pro
Forma Information."

3. Properties...................................... "Business."

4. Security Ownership of Certain Beneficial Owners
and Management.................................. "Security Ownership of Materials Common
Stock By Certain Beneficial Owners,
Directors and Executive Officers of
Materials."

5. Directors and Executive Officers................ "Management."

6. Executive Compensation.......................... "Executive Compensation."

7. Certain Relationships and Related
Transactions.................................... "Summary;" "Relationship Between Materials
and Kiewit"; and "Certain Relationships and
Related Transactions."

8. Legal Proceedings............................... "Business."

9. Market Price of and Dividends on the
Registrant's Securities to be Registered........ "Selected Historical and Pro Forma
Financial Data" and "Description of Capital
Stock."

10. Recent Sales of Unregistered Securities......... Not Applicable

11. Description of Registrant's Securities to be
Registered...................................... "Description of Capital Stock."

12. Indemnification of Directors and Officers....... "Description of Capital Stock."

13. Financial Statements and Supplementary Data..... "Selected Historical and Pro Forma
Financial Data Financial Data";
"Management's Discussion and Analysis of
Financial Condition and Results of
Operations"; "Index to Materials Financial
Statements"; "Index to Pacific Rock
Products and River City Machinery Financial
Statements" and "Index to Pro Forma
Information."

</TABLE>
<PAGE> 3

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<CAPTION>
ITEM NO. ITEM CAPTION LOCATION IN INFORMATION STATEMENT
-------- ------------ ---------------------------------
<C> <S> <C>
14. Changes in and Disagreements with Accountant on
Accounting and Financial Disclosure............. Not Applicable

15. Financial Statements and Exhibits............... "Materials Financial Statements"; "Pacific
Rock Products and River City Machinery
Financial Statements"; "Pro Forma Financial
Information" and "Exhibit List."
</TABLE>
<PAGE> 4

[PETER KIEWIT SONS', INC. LOGO]

PETER KIEWIT SONS', INC.
KIEWIT PLAZA
OMAHA, NEBRASKA 68131
(402) 342-2052

, 2000

Dear Kiewit Stockholder:

After careful consideration, the board of directors of Peter Kiewit Sons',
Inc. has decided to separate its construction business and its materials
business into two separate, independent companies in a spin-off that is intended
to be tax-free for U. S. federal income tax purposes. To effect the spin-off,
Kiewit is distributing shares of common stock of its formerly wholly owned
subsidiary, Kiewit Materials Company, to Kiewit stockholders.

Prior to the spin-off, Kiewit gave Materials employees holding Kiewit
common stock the opportunity to exchange their shares of Kiewit common stock for
shares of Materials common stock at an exchange ratio of Materials shares for
each share of Kiewit common stock tendered in the share exchange. Kiewit also
offered the holders of its outstanding convertible debentures the opportunity to
exchange their Kiewit 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 remaining shares of Materials common stock held by
Kiewit after the share exchange and the debenture exchange offer are being
distributed as a dividend on a pro rata basis to holders of Kiewit common stock
in the spin-off.

Holders of Kiewit common stock as of , 2000 will receive one
share of Materials common stock for each share of Kiewit common stock held on
that date. The IRS has ruled that the spin-off will be tax-free to stockholders
for U.S. federal income tax purposes. However, you should refer to pages 14-17
for a detailed review of the tax consequences of the spin-off.

Following the completion of the spin-off, Materials will own and operate
Kiewit's materials business. Christopher J. Murphy will be the Chief Executive
Officer and President of Materials.

The enclosed information statement explains the proposed spin-off in
greater detail and provides financial and other important information regarding
Materials. We urge you to read it carefully. Kiewit stockholders are not
required to take any action to participate in the spin-off.

We are enthusiastic about the spin-off and look forward to the future
success of Kiewit and Materials as highly focused, independent companies.

Sincerely,

Kenneth E. Stinson
Chairman of the Board and President
<PAGE> 5

SUBJECT TO COMPLETION, DATED JULY 28, 2000

INFORMATION STATEMENT

KIEWIT MATERIALS COMPANY

This information statement relates to the pro rata distribution by Peter
Kiewit Sons', Inc. of shares of common stock of its subsidiary, Kiewit
Materials Company. These shares are all of the shares of Materials held by
Kiewit on the date of this information statement and represent % of the issued
and outstanding shares of Materials common stock. The distribution will effect
the spin-off of Materials. Kiewit will make the distribution to record holders
of Kiewit common stock as of , 2000, the record date. In the spin-off,
Kiewit stockholders will receive one share of Materials common stock for each
share of Kiewit common stock held on the record date. If you are a record holder
of Kiewit common stock on the record date, your shares of Materials common stock
will be distributed automatically. You do not need to take any further action.
Currently, we expect the spin-off to occur on or about , 2000.

------------------------

The Materials common stock to be issued in the spin-off will not be listed
on any national securities exchange or quoted on the Nasdaq National Market and
will be subject to substantial transfer restrictions.

We strongly urge you to read and consider carefully this information
statement in its entirety, including the matters referred to under "Risk
Factors" beginning at page 7.

Stockholder approval is not required for the spin-off or any of the other
transactions described in this information statement. We are not asking you for
a proxy and we request that you do not send us one.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED OR DISAPPROVED OF THE MATERIALS COMMON STOCK TO BE
DISTRIBUTED IN THE SPIN-OFF OR DETERMINED IF THIS INFORMATION STATEMENT IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This information statement is dated , 2000 and is first
being mailed to stockholders on or about , 2000.
<PAGE> 6

TABLE OF CONTENTS

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PAGE
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QUESTIONS AND ANSWERS....................................... 1
SUMMARY..................................................... 4
Kiewit Materials Company.................................. 4
The Spin-off.............................................. 4
RISK FACTORS................................................ 7
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE............. 11
THE SPIN-OFF................................................ 12
Background and Reasons for the Spin-off and Related
Transactions........................................... 12
Description of the Spin-off............................... 13
No Appraisal Rights....................................... 13
The Share Exchange........................................ 13
The Debenture Exchange Offer.............................. 14
Dividend Policies......................................... 14
Material U.S. Federal Income Tax Consequences............. 14
Material Canadian Federal Income Tax Consequences......... 16
Nebraska Tax Letter....................................... 17
Capital Contribution to Materials......................... 17
Accounting Treatment...................................... 17
Trading Market and Transfer Restrictions.................. 17
RELATIONSHIP BETWEEN MATERIALS AND KIEWIT................... 19
Separation Agreement...................................... 19
Tax Sharing Agreement..................................... 19
Arrangements for Canadian Holders of Kiewit Common
Stock.................................................. 20
Other..................................................... 20
Dividend Policy........................................... 20
Effect of the Spin-off on the Formula Price of Kiewit
Common Stock........................................... 20
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA............ 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 23
BUSINESS.................................................... 27
Industry Background/Market Overview....................... 28
Business Strategy......................................... 30
Operations and Properties................................. 31
Reserves.................................................. 32
Products.................................................. 34
Customers................................................. 34
Competition............................................... 34
Employees................................................. 34
Governmental and Environmental Regulation................. 34
Legal Proceedings......................................... 35
</TABLE>

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PAGE
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MANAGEMENT.................................................. 36
Senior Management and Directors........................... 36
Other Key Personnel....................................... 36
Committees................................................ 38
EXECUTIVE COMPENSATION...................................... 39
Summary Compensation Table................................ 39
Director Compensation..................................... 39
Other Compensation and Equity Programs.................... 39
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 40
SECURITY OWNERSHIP OF MATERIALS COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF
MATERIALS................................................. 41
DESCRIPTION OF CAPITAL STOCK................................ 42
Authorized and Outstanding Capital Stock.................. 42
Voting Rights............................................. 42
Repurchase Rights......................................... 42
Liquidation Rights........................................ 43
Formula Price............................................. 43
Ownership and Transfer Restrictions....................... 43
Listing................................................... 44
Limitation on Directors' Liability........................ 44
Preferred Stock........................................... 44
Stockholder Consent....................................... 44
Stockholders' Meetings.................................... 44
EXPERTS..................................................... 45
WHERE YOU CAN FIND MORE INFORMATION......................... 45
INDEX TO KIEWIT MATERIALS COMPANY AND SUBSIDIARIES FINANCIAL
STATEMENTS................................................ F-1
INDEX TO PACIFIC ROCK PRODUCTS AND RIVER CITY MACHINERY
FINANCIAL STATEMENTS...................................... F-28
INDEX TO PRO FORMA INFORMATION.............................. F-39
</TABLE>

<PAGE> 8

QUESTIONS AND ANSWERS

Q: WHAT IS THE SPIN-OFF?

A: The board of directors of Peter Kiewit Sons', Inc. has decided to separate
its construction business and its materials business into two separate,
independent companies in a spin-off that is intended to be tax free for U.S.
federal income tax purposes. To effect the spin-off, Kiewit is distributing
shares of common stock of its formerly wholly owned subsidiary, Kiewit
Materials Company, to Kiewit stockholders.

Kiewit currently owns shares of Materials common stock,
representing % of the issued and outstanding shares of Materials common
stock on the date of this information statement. In the spin-off, Kiewit
will distribute all of its Materials common stock to Kiewit stockholders of
record as of , 2000, the record date. On , 2000,
Kiewit will distribute the Materials common stock as a dividend to Kiewit's
stockholders on a pro-rata basis. Materials will then begin to operate as a
separate, independent company. Upon completion of the spin-off, you will own
shares in two separate, independent companies, Kiewit and Materials.

Q: WHY HAS KIEWIT DECIDED TO SEPARATE MATERIALS FROM KIEWIT?

A: The board of directors and management of Kiewit have concluded that
separation of its materials business and its construction business by means
of a spin-off is in the best interests of Kiewit and Kiewit's stockholders.
In reaching this conclusion, Kiewit's board of directors and management
considered that, as a result of the spin-off, the debenture exchange offer
and the share exchange:

- the senior management of Materials will acquire a larger, direct interest
in the materials business that reflects solely the performance of
Materials;

- Materials employees will acquire a larger, direct interest in the
materials business, which the Kiewit board of directors believes is
essential to Materials' ability to better retain, attract, and motivate
its employees; and

- Materials should improve its ability to make sales to, and secure
contracts from, unrelated construction businesses that have concerns about
doing business with Materials while it is owned and controlled by a direct
competitor.

Q: WHAT IS THE SHARE EXCHANGE?

A: In the share exchange, Kiewit gave Kiewit stockholders who are Materials
employees the opportunity, prior to the spin-off, to exchange their shares
of Kiewit common stock for shares of Materials common stock with an equal
aggregate formula price.

In the share exchange, Materials employees collectively exchanged shares
of their Kiewit common stock, representing % of the shares of Kiewit
common stock collectively owned by them and % of the total issued and
outstanding Kiewit common stock. For each Kiewit share tendered, Materials
employees received shares of Materials common stock. Materials employees
who participated in the share exchange collectively received shares of
Materials common stock, representing % of the issued and outstanding
Materials common stock on , 2000.

Q: WHAT IS THE DEBENTURE EXCHANGE OFFER?

A: In the debenture exchange offer, Kiewit gave the holders of its outstanding
convertible debentures the opportunity, prior to the spin-off, to exchange
their Kiewit debentures for:

- Materials debentures convertible into shares of Materials common stock; or

- both shares of Materials common stock and new reduced principal amount
Kiewit debentures convertible into shares of Kiewit common stock.
<PAGE> 9

In the debenture exchange offer, Kiewit debentureholders collectively
exchanged $ principal amount outstanding Kiewit debentures for:

- $ principal amount Materials convertible debentures; and

- both shares of Materials common stock and $ principal amount new
Kiewit debentures.

Q: WHAT WILL MATERIALS AND KIEWIT LOOK LIKE AFTER THE SPIN-OFF?

A: Materials will own 100% of the shares of the subsidiaries which comprise its
materials business. Kiewit will hold 100% of the shares of Kiewit
Construction Group Inc., which holds all of the stock of Kiewit's
subsidiaries which comprise the construction business.

Q: WHAT WILL I RECEIVE IN THE SPIN-OFF?

A: You will receive one share of Materials common stock for each share of
Kiewit common stock that you own on the record date. Materials will have
only one class of stock which is entitled to one vote per share. After the
spin-off, you will also continue to own your shares of Kiewit common stock.

Q: WHAT IS "FORMULA PRICE"?

A: The formula price of Materials common stock is the per share price at which
Materials will buy shares of its common stock and is based on the adjusted
book value of Materials at the end of the previous year less the amount of
declared dividends during the current year. In addition to any adjustments
for declared dividends during the current year, the initial formula price
for Materials common stock is also adjusted for the amount of any capital
contributions made by Kiewit to Materials during fiscal year 2000 prior to
the spin-off, other than amounts contributed in connection with the
debenture exchange offer.

Q: WHAT DO I HAVE TO DO TO PARTICIPATE IN THE SPIN-OFF?

A: Nothing. No proxy or vote is necessary for the spin-off or the other
transactions described in this information statement to occur. You do not
need to, and should not, mail in any certificates of Kiewit common stock to
receive shares of Materials common stock in the spin-off.

Q: HOW WILL KIEWIT DISTRIBUTE MATERIALS COMMON STOCK?

A: On or about , 2000, Kiewit will mail stock certificates
representing one share of Materials common stock for each share of Kiewit
common stock you own as of the record date.

Q: WILL MATERIALS COMMON STOCK BE LISTED ON AN EXCHANGE?

A: The Materials common stock to be distributed in the spin-off will not be
listed on any national securities exchange or quoted on the Nasdaq National
Market.

Q: TO WHOM WILL I BE ABLE TO TRANSFER MY SHARES OF MATERIALS COMMON STOCK?

A: The Materials common stock will be subject to substantial transfer
restrictions. Specifically, holders of Materials common stock will be
prohibited from transferring the Materials common stock in any manner except
in a sale to Materials or in a transfer for estate planning purposes that
meets specified requirements. Upon the death of a Materials stockholder, the
shares of Materials common stock owned by the deceased stockholder will be
permitted to be transferred to his or her estate, provided that the shares
transferred to the transferee will be subject to the same transfer
restrictions. However, unlike Kiewit common stock, Materials stockholders
will not be required to sell their Materials common stock back to Materials
upon their retirement or other termination of their employment with
Materials or Kiewit, as the case may be. All transfer restrictions may be
terminated by the Materials board at any time.

Holders of Materials common stock are permitted to pledge their common stock
for loans in connection with the ownership of their common stock. For a more
detailed description of the transfer restrictions on Materials common stock,
see page 43.

2
<PAGE> 10

Q: HOW CAN I SELL SHARES OF MATERIALS COMMON STOCK TO MATERIALS?

A: At any time on or prior to the 15th day of any calendar month, you may offer
to sell all or part of your Materials common stock to Materials at the
formula price in effect at that time. Materials will generally be required
to accept the offer within 10 days of receipt of the offer.

Materials' repurchase obligations may be terminated by Materials' board of
directors at any time. However, the board shall not have that authority
unless it has also determined that the Materials common stock is publicly
traded.

Q: WILL MATERIALS PAY DIVIDENDS ON SHARES OF MATERIALS COMMON STOCK?

A: Materials does not currently intend to pay cash dividends on the Materials
common stock. For a more detailed discussion of Materials' dividend policy,
see "We have no current intention to pay dividends" on page 7.

Q: WILL KIEWIT CONTINUE TO PAY DIVIDENDS ON SHARES OF KIEWIT COMMON STOCK?

A: Kiewit intends to continue its current dividend policy of paying a regular
cash dividend on its common stock based upon a percentage of the prior
year's earnings from operations, with any special cash dividends to be based
on earnings from unusual or non-recurring events.

Q: HOW WILL MATERIALS FINANCE ITS ACTIVITIES AFTER THE SPIN-OFF?

A: Materials intends to finance its current activities through existing
resources and internally generated funds. To the extent that such amounts
are not sufficient, Materials anticipates that it would seek external
financing to fund any shortfalls.

Q: WHOM SHOULD I CALL WITH QUESTIONS ABOUT THE SPIN-OFF?

A: Prior to the spin-off, stockholders of Kiewit with inquiries relating to the
spin-off should contact:

Douglas A. Obermier
Stock Registrar
Peter Kiewit Sons', Inc.
Kiewit Plaza
Omaha, Nebraska 68131
(402) 342-2052

After the spin-off, stockholders of Materials with inquiries relating to
their investment in Materials common stock should contact:

Mark E. Belmont
Vice President, General Counsel
and Secretary
Kiewit Materials Company
Kiewit Plaza
Omaha, Nebraska 68131
(402) 536-3661

3
<PAGE> 11

SUMMARY

This summary highlights selected information from this information
statement and may not contain all of the information that is important to you.
To understand the spin-off fully, you should read carefully this entire
information statement and the documents to which we have referred you. See
"Where You Can Find More Information" on page 45.

KIEWIT MATERIALS COMPANY

Kiewit Materials Company, a formerly wholly owned subsidiary of Kiewit,
together with its subsidiaries, operates ready mix, asphalt and aggregates
operations in Arizona, Washington, Oregon, California, Wyoming, Utah and New
Mexico. Materials was incorporated under the laws of Delaware on February 2,
1999. Our principal executive offices are located at Kiewit Plaza, Omaha,
Nebraska 68131, and our telephone number is (402) 536-3661.

Our objective is to continue growing our businesses utilizing a four-part
business strategy. First, we plan to continue to build value in markets
currently served. Second, we plan to expand our presence in existing markets
through cash or debt-financed acquisitions. Third, we intend to enter, via cash
or debt-financed acquisitions, new high-growth potential markets. Finally, we
will seek to acquire and develop additional strategic aggregate reserves in
selected markets.

THE SPIN-OFF

The board of directors of Kiewit has decided to separate its construction
business and its materials business into two separate, independent companies in
a spin-off that is intended to be tax free for U.S. federal income tax purposes.
To effect the spin-off, Kiewit is distributing shares of common stock of its
formerly wholly owned subsidiary, Materials, to Kiewit stockholders.

Kiewit currently owns shares of Materials common stock, representing
% of the issued and outstanding shares of Materials common stock on the
date of this information statement. In the spin-off, Kiewit will distribute all
of its Materials common stock to Kiewit's stockholders of record as of
, 2000, the record date. On , 2000, Kiewit will distribute
the Materials common stock as a dividend to Kiewit's stockholders on a pro rata
basis. Materials will then begin to operate as a separate, independent company.
Upon completion of the spin-off, you will own shares in two separate,
independent companies, Kiewit and Materials.

The Share Exchange

In the share exchange, Kiewit offered Kiewit stockholders who are Materials
employees the opportunity, prior to the spin-off, to exchange their shares of
Kiewit common stock for shares of Materials common stock with an equal aggregate
formula price.

In the share exchange, Materials employees collectively exchanged
shares of their Kiewit common stock, representing % of the shares of Kiewit
common stock collectively owned by them and % of the total issued and
outstanding Kiewit common stock. For each Kiewit share tendered, Materials
employees received shares of Materials common stock. Materials employees
who participated in the share exchange collectively received shares of
Materials common stock, representing % of the issued and outstanding
Materials common stock on , 2000.

The Debenture Exchange Offer

In the debenture exchange offer, Kiewit offered holders of its outstanding
convertible debentures the opportunity, prior to the spin-off, to exchange their
Kiewit debentures for:

- Materials debentures convertible into shares of Materials common stock;
or

- both shares of Materials common stock and new reduced principal amount
Kiewit debentures convertible into shares of Kiewit common stock.
4
<PAGE> 12

In the debenture exchange offer, Kiewit debentureholders collectively
exchanged $ principal amount outstanding Kiewit debentures for:

- $ principal amount Materials convertible debentures; and

- both shares of Materials common stock and $ principal
amount new Kiewit debentures.

Primary Purposes

The board of directors and management of Kiewit have concluded that
separation of its materials business and its construction business by means of a
spin-off is in the best interests of Kiewit and Kiewit's stockholders. In
reaching this conclusion, Kiewit's board of directors and management considered
that, as a result of the spin-off, the share exchange and the debenture exchange
offer:

- the senior management of Materials will acquire a larger, direct interest
in the materials business that reflects solely the performance of
Materials;

- Materials should improve its ability to make sales to, and secure
contracts from, unrelated construction businesses that have concerns
about doing business with Materials while it is owned and controlled by a
direct competitor.

Securities to be Distributed

The outstanding shares of common stock, par value $.01 per share,
of Materials that are held by Kiewit will be distributed to Kiewit stockholders
of record as of , 2000. After the spin-off, Materials will have
approximately stockholders of record.

Distribution Ratio

You will receive one share of Materials common stock for each share of
Kiewit common stock that you own as of the close of business on ,
2000.

Distribution Date

The distribution date is expected to be , 2000.

U.S. Federal Income Tax Consequences

Kiewit has received a ruling from the Internal Revenue Service to the
effect that, for United States federal income tax purposes, the distribution of
Materials common stock in the spin-off will be tax-free to Kiewit and its
stockholders. See "Material U.S. Federal Income Tax Consequences" on page 14.

Canadian Federal Income Tax Consequences

Risk Factors

For a discussion of factors which may affect Materials' financial condition
and results of operations and/or the value of its common stock, you should
carefully consider the matters discussed under the section of this information
statement entitled "Risk Factors."

5
<PAGE> 13

Relationship with Kiewit After the Spin-off

After the spin-off, Kiewit and Materials will be separate, independent
companies and Kiewit will not own any of Materials' common stock. Six of
Materials' eight initial directors will also be Kiewit directors.

Materials has entered into a separation agreement and a tax sharing
agreement with Kiewit. The separation agreement contains, among other things,
short-term arrangements relating to:

- the lease of office space by Kiewit to Materials; and

- the provision of administrative services by Kiewit to Materials.

The tax sharing agreement generally defines Kiewit's and Materials' rights
and obligations with respect to tax matters for periods ending prior to the
spin-off.

In addition, Kiewit may, in the ordinary course of business, purchase
construction materials from Materials, although it is under no contractual
obligation to do so.

6
<PAGE> 14

RISK FACTORS

You should read and carefully consider each of the following factors, as
well as the other information contained in or attached to this information
statement, which may affect Materials' financial condition or results of
operations and/or the value of its common stock. In addition, for a discussion
of additional uncertainties associated with forward-looking statements in this
information statement, please see "Forward-Looking Statements May Prove
Inaccurate" on page 11.

WE HAVE NO CURRENT INTENTION TO PAY DIVIDENDS

Our dividend policy following the spin-off will be determined by our board
of directors. Under Delaware law and our restated certificate of incorporation,
our board of directors will not be required to declare dividends on any class of
our capital stock and will be free to adopt the dividend policy it deems
appropriate and to change its dividend policy and practices from time to time.
We do not anticipate paying cash dividends on our common stock.

Kiewit intends to continue its current dividend policy of paying a regular
cash dividend on its common stock based on a percentage of the prior year's
earnings from operations, with any special cash dividends to be based on
earnings from unusual or non-recurring events.

A DECREASE IN GOVERNMENT FUNDING OF HIGHWAY CONSTRUCTION AND MAINTENANCE AND
OTHER INFRASTRUCTURE PROJECTS MAY REDUCE OUR SALES AND PROFITS

A decrease or delay in government funding of highway construction and
maintenance and other infrastructure projects could reduce our sales and
profits. This is because many of the customers we serve and intend to serve in
the future depend substantially on government funding of highway construction
and maintenance and other infrastructure projects. Unlike some of our
competitors, we operate in a limited number of states. As a result, we may be
more vulnerable than our more geographically diverse competitors to decreases in
state government highway spending in the states in which we operate.

BAD WEATHER IN OUR PEAK SEASON MAY RESULT IN LOWER SALES

Poor weather during the months of April through November could result in
lower sales of materials, which could reduce our net sales and profits. This is
because sales of materials are highest during this period and poor weather
conditions may reduce or delay highway construction and maintenance and other
infrastructure projects. In the past, significant changes in weather conditions
during this period have caused variations in demand for materials. In addition,
because we are not as geographically diverse as some of our competitors, we may
be more vulnerable than these competitors to poor weather conditions in the
regions in which we operate.

GENERAL AND LOCAL ECONOMIC DOWNTURNS MAY RESULT IN DECREASED SALES AND PROFITS

General economic downturns or localized downturns in regions where we have
operations, including any downturns in the construction industry, could result
in a decrease in sales and profits. A majority of our sales are to customers in
industries and businesses that are cyclical in nature and subject to changes in
general economic conditions, such as the construction industry. Our business is
principally located in the Pacific Northwest and the Southwest and is dependent
upon the economies of those regions. Because our business is more geographically
concentrated than some of our competitors, we may be more vulnerable to local
economic conditions.

AN INCREASE IN THE PRICE OR DECREASE IN THE AVAILABILITY OF OIL MAY INCREASE THE
PRICE OF ASPHALT, RESULTING IN LESS ASPHALT USE BY OUR CUSTOMERS

A material rise in the price or a material decrease in the availability of
oil could adversely affect our operating results. Federal, state and municipal
government spending on roads is subject to appropriations by the particular
government entity. Asphalt prices are positively correlated to the price of oil.
Therefore, if there

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is a material rise in the price or a material decrease in the availability of
oil, there will be a resulting increase in the cost of producing asphalt, which
we would likely attempt to pass along to our customers. As a result of any price
increase, our customers may use less asphalt, which would decrease our asphalt
sales volumes. A material increase in the price or decrease in the availability
of oil could also lead to higher gasoline costs which would also increase our
operating costs. An increase in our operating costs could adversely affect our
operating results if we cannot pass these increased costs through to our
customers.

OUR SUCCESS DEPENDS SIGNIFICANTLY ON A LIMITED NUMBER OF KEY PERSONNEL

We will be managed by a small number of executive officers, including
Christopher J. Murphy, our Chief Executive Officer and President. The loss of
any of our key personnel could have a material adverse effect on us. We believe
that our future success will depend in large part on our ability to retain and
attract highly skilled, knowledgeable, sophisticated and qualified personnel.

WE MAY INCUR SIGNIFICANT DEBT IN THE FUTURE WHICH COULD LIMIT OUR GROWTH AND OUR
ABILITY TO RESPOND TO CHANGING CONDITIONS

We may incur debt to fund acquisitions we may make as part of our growth
strategy. The extent to which we incur debt, and the resulting restrictive and
financial covenants that we may be subject to, will have important consequences
to our stockholders. These include the following:

- Our ability to use operating cash flows in other areas of our business
might be limited because we would have to dedicate a substantial portion
of these funds to pay interest;

- We might be unable to obtain additional financing to fund our growth
strategy, working capital, capital expenditures, debt service
requirements or other purposes;

- Our ability to adjust to changing market conditions and our ability to
withstand competition might be hampered by the amount of debt we owe; and

- We might be more vulnerable in a market downturn or a recession than our
competitors with less debt.

Future credit agreements that we may enter into may impose limitations on our
ability to repurchase our shares of common stock.

ACQUISITIONS, WHICH ARE A PART OF OUR GROWTH STRATEGY, INVOLVE RISKS THAT COULD
CAUSE OUR ACTUAL GROWTH OR OPERATING RESULTS TO DIFFER FROM OUR EXPECTATIONS

We currently intend to grow in part through the acquisition of additional
materials businesses in exchange for cash or debt securities. If we are not
successful in integrating acquired businesses, we may have difficulty operating
our business. We may have greater difficulty integrating acquired businesses and
assets than our competitors because of our size and our rapid growth. We have
completed eleven business and asset acquisitions since 1992. Our future success
may be limited because of unforeseen expenses, difficulties, complications,
delays and other risks inherent in the integration of acquired businesses,
including the following:

- We may not be able to compete successfully for available acquisition
candidates, complete future acquisitions, or accurately estimate the
financial effect on our company of any businesses we acquire;

- Future acquisitions may require us to spend significant amounts of cash;

- We may have trouble integrating acquired businesses and retaining
personnel;

- We may ultimately fail to consummate an acquisition, even if we announce
that we plan to acquire a company;

- We may choose to acquire a company that is less profitable than we are or
has lower profit margins than we do;

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<PAGE> 16

- We may not be able to obtain the necessary financing, on favorable terms
or at all, to finance one or more of our potential acquisitions;

- Acquisitions may disrupt our business and distract our management from
other responsibilities;

- To the extent that any of the companies which we acquire fail, the growth
of our business could be harmed; and

- Future acquired companies may have unknown liabilities that could require
us to spend significant amounts of additional capital.

WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN THE HIGHLY COMPETITIVE MATERIALS
INDUSTRY

The following factors specific to the materials industry may affect our
business:

- Transporting materials over even relatively short distances is costly in
relation to the value of the delivered materials. Therefore, if we cannot
maintain production sites close to our customers, our operating results
may be adversely affected;

- The cost and time involved in locating suitable mineral sources,
obtaining proper permits and establishing operations can be significant
and if we do not continue to be successful in these matters, we may lose
growth opportunities and our operating results may be adversely affected;

- We have significant investments in fixed locations in specific geographic
areas. In the event one or more of our materials production sites loses
business in its market, it could have a material adverse effect on our
business, financial condition and results of operations;

- It is possible that we will encounter increased competition from existing
competitors or new market entrants that may be significantly larger and
have greater financial and marketing resources; and

- To the extent existing or future competitors seek to gain or retain
market share by reducing prices, we may be required to lower our prices
and rates, which would adversely affect our operating results.

OUR OPERATIONS ARE SUBJECT TO RISKS THAT MAY RESULT IN CLAIMS OF PERSONAL
INJURY, PROPERTY DAMAGE OR OTHER LIABILITIES

The drivers of our heavy delivery trucks are subject to traffic and other
hazards associated with providing services on construction sites. Our plant
personnel are subject to the hazards associated with moving and storing large
quantities of heavy raw materials. Our operating hazards can cause personal
injury and death, damage to or destruction of property and environmental damage.
Our insurance coverage may not be adequate to cover all losses or liabilities we
may incur in our operations, and we may not be able to maintain insurance of the
types or at levels we deem necessary or adequate or at rates we consider
reasonable. Our failure to maintain adequate insurance could have a material
adverse effect on our business, financial position, results of operations and
cash flows.

WE HAVE NO OPERATING HISTORY AS AN INDEPENDENT COMPANY

We do not have an operating history as an independent company and have
historically relied on Kiewit for various financial, administrative and
managerial expertise relevant to operating as an independent company. After the
spin-off, we will be responsible for obtaining or providing our own
administrative functions. While we have been profitable as part of Kiewit, we
cannot be certain that, as a stand-alone company, our future profits will be
comparable to reported historical consolidated results before the spin-off. In
addition, our credit rating may be lower than that of Kiewit.

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ANTI-TAKEOVER PROVISIONS COULD DELAY A CHANGE IN OUR MANAGEMENT

Our restated certificate of incorporation and by-laws contain provisions
that could make it more difficult or even prevent a third party from acquiring
us without the approval of our incumbent board of directors. These provisions,
among other things:

- divide our board of directors into three classes, with members of each
class to be elected in staggered three-year terms;

- prohibit stockholder action by written consent in place of a meeting;

- limit the right of stockholders to call special meetings of stockholders;

- impose significant transfer restrictions on our common stock;

- limit the right of stockholders to present proposals or nominate
directors for election at annual meetings of stockholders; and

- authorize our board of directors to issue preferred stock in one or more
series without any action on the part of stockholders.

These provisions could significantly impede the ability of the holders of
our common stock to change management.

OUR BOARD OF DIRECTORS MAY SUSPEND OR TERMINATE OUR OBLIGATION TO REPURCHASE
SHARES OF OUR COMMON STOCK IN SPECIFIED CIRCUMSTANCES

Holders of Materials common stock are generally permitted, at any time on
or prior to the 15th day of any calendar month, to offer to sell all or part of
their Materials common stock to Materials at the current formula price. We are
generally required to accept the offer within 10 days of receipt of the offer.

Our board of directors may suspend our duties to repurchase our common
stock offered by a stockholder for up to one year upon the board's determination
that our adjusted book value to be determined at the end of the current fiscal
year is likely to be less than our adjusted book value determined at the end of
the prior fiscal year, less dividends declared on Materials common stock since
the prior fiscal year end.

If more than 5% of the outstanding shares of Materials common stock has
been tendered for repurchase in any fiscal year, our board has the right to
decide to conserve our cash by temporarily halting our duty to repurchase our
common stock for cash. In that event, payment will be in the form of
interest-bearing promissory notes instead of cash.

In addition, under Delaware law, we may not repurchase shares of our common
stock if our capital is impaired or if the repurchase would impair our capital.

Our repurchase obligations may be terminated by our board of directors at
any time. However, the board shall not have that authority unless it has also
determined that our common stock is publicly traded.

THE MATERIALS COMMON STOCK IS SUBJECT TO SUBSTANTIAL TRANSFER RESTRICTIONS

In the event that the Materials board of directors decides to conduct an
initial public offering of the Materials common stock, officers and directors of
Materials and stockholders owning one percent or more of the Materials common
stock outstanding at the time of the offering will not be permitted to sell or
otherwise transfer any shares held by them for a period of up to one hundred
eighty days following the offering.

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FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE

Materials and Kiewit have made forward-looking statements in this
information statement that are subject to risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations of Materials and/or Kiewit. Also, when we
use words such as "believes," "expects," "anticipates" or similar expressions,
we are making forward-looking statements. You should note that many factors,
some of which are discussed elsewhere in this information statement, could
affect the future financial results of Materials and/or Kiewit and could cause
those results to differ materially from those expressed in our forward-looking
statements contained in this information statement.

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THE SPIN-OFF

BACKGROUND AND REASONS FOR THE SPIN-OFF AND RELATED TRANSACTIONS

The board of directors and management of Kiewit have determined that
separation of the materials business and the construction business is in the
best interests of Kiewit and Kiewit's stockholders. In reaching this conclusion,
Kiewit's board of directors and management considered the factors discussed
below.

Key Materials Employees

Kiewit's restated certificate of incorporation generally restricts
ownership of Kiewit common stock to directors and employees of Kiewit and
employees of its subsidiaries. Kiewit's policy of employee ownership originated
many years ago as a way of attracting and motivating top-quality employees.
Historically, Kiewit has maintained a relatively low salary structure and few
retirement benefits for its key employees in relation to its competitors,
instead choosing to motivate and reward its employees by linking their personal
economic well-being to the performance and growth of Kiewit common stock.

In recent years, as a result of Materials' acquisition strategy, the
materials business has become an increasingly larger portion of Kiewit's overall
business. However, since the price of Kiewit common stock reflects the
performance of all of Kiewit's operations, it does not directly and distinctly
reflect the results of operations of the materials business. Kiewit believes
that Materials employees would be better motivated if there were a clearer
connection between the results of their work and their economic rewards. This
lack of connection between effort and reward is particularly pronounced for key
employees of Materials, whose annual compensation, in keeping with Kiewit's core
philosophy, is particularly low in relation to the value of their Kiewit common
stock.

Kiewit would like to provide Materials' key employees with a larger, more
direct ownership stake in the materials business alone, undistorted by the
economic returns of the construction services business. Kiewit believes that the
future of the materials business depends to a large degree on the continued
efforts of these individuals and that they will be much more and better
motivated to promote its financial success if they hold an increased interest
solely in the enterprise in which they are employed.

By acquiring an increased equity interest in Materials, which will operate
only the materials business, these employees' economic rewards will be tied much
more closely and directly to their performance. Each of Materials' key employees
exchanged all of his Kiewit common stock for Materials common stock in the share
exchange. Accordingly, these employees' equity ownership changed from an
approximately % aggregate interest in Kiewit as of , 2000, to
an approximately % aggregate interest in Materials.

Increased Ownership for All Materials Employees

The share exchange provided all Materials employees who owned Kiewit common
stock, approximately 60 individuals (including key employees), with the
opportunity to obtain a substantially larger, direct ownership interest in the
materials business that is unaffected by the results of the construction
business. Kiewit believes this increased correlation between these employees'
work performance and their stock-based financial rewards is essential to
Materials' ability to better retain, attract and motivate its employees broadly
as a group. Of the Materials employees who owned Kiewit common stock, %
exchanged their Kiewit common stock for Materials common stock in the share
exchange. Accordingly, these employees' equity ownership in Materials (including
the key employees) changed from an approximately % aggregate interest in
Kiewit as of , 2000, to an approximately % aggregate interest
in Materials. This more closely aligns the economic interests of these Materials
employees with Materials' interests and is expected to motivate these employees
to work and compete more efficiently.

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<PAGE> 20

Competition

The management of Materials believes that there are potential customers who
are reluctant to do business with Materials because of its existing relationship
with Kiewit. These potential customers view the companies operating the
construction business within Kiewit's affiliated group as their direct
competitors. The perception that the materials business is owned and controlled
by Kiewit has limited Materials' ability to obtain business from these potential
customers. The managers of Materials believe that their ability to make sales to
and secure contracts from unrelated construction businesses would be
meaningfully improved if the materials business were separated from the
construction business, so that no entity owning or operating the construction
business would have control over or benefit economically from the materials
business.

DESCRIPTION OF THE SPIN-OFF

Kiewit will effect the spin-off on or about , 2000 by
distributing all of the issued and outstanding shares of Materials common stock
held by Kiewit to the record holders of Kiewit common stock on the record date
for the spin-off, which is , 2000. In the spin-off, Kiewit will
distribute one share of Materials common stock to each record holder for each
share of Kiewit common stock owned as of the record date by that holder. Shares
of Materials common stock will be fully paid and nonassessable, and the holders
of those shares will not be entitled to preemptive rights. For a further
description of Materials common stock and the rights of its holders, see
"Description of Capital Stock."

Holders of Kiewit common stock are not required to pay cash or any other
consideration, or take any other action to receive shares of Materials common
stock in the spin-off.

NO APPRAISAL RIGHTS

There are no appraisal rights in connection with the spin-off.

THE SHARE EXCHANGE

In the share exchange, Kiewit gave Kiewit stockholders who are Materials
employees the opportunity, prior to the spin-off, to exchange their shares of
Kiewit common stock for shares of Materials common stock with an equal aggregate
formula price.

Kiewit's restated certificate of incorporation generally restricts
ownership of Kiewit common stock to directors and employees of Kiewit and its
subsidiaries. Following the completion of the spin-off, Materials employees will
no longer be employed by Kiewit or a subsidiary of Kiewit and will no longer
meet the requirements for owning Kiewit common stock. Therefore, they will be
required to sell any shares of Kiewit common stock they then own back to Kiewit
immediately following the spin-off.

To provide Materials employees with a larger, more direct equity stake in
the materials business and an alternative to having to sell their Kiewit common
stock back to Kiewit for cash immediately following the spin-off, Kiewit 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.

In the share exchange, Materials employees collectively exchanged shares
of their Kiewit common stock, representing % of the shares of Kiewit common
stock collectively owned by them and % of the total issued and outstanding
Kiewit common stock. For each Kiewit share tendered, Materials employees
received shares of Materials common stock. Materials employees who
participated in the share exchange collectively received shares of Materials
common stock, representing % of the issued and outstanding Materials common
stock on , 2000.

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THE DEBENTURE EXCHANGE OFFER

Kiewit also offered the holders of its outstanding convertible debentures
the opportunity to exchange their Kiewit debentures for:

- Materials debentures convertible into shares of Materials common stock;
or

- both shares of Materials common stock and new reduced principal amount
Kiewit debentures convertible into shares of Kiewit common stock.

Each holder of Kiewit convertible debentures is a party to a repurchase
agreement that requires that the debentures be sold to Kiewit on termination of
the holder's employment with Kiewit or a subsidiary of Kiewit. Following the
completion of the spin-off, Materials employees will no longer be employed by
Kiewit or a subsidiary of Kiewit and will no longer meet the requirements for
owning Kiewit debentures. Therefore, they will be required to sell any Kiewit
debentures they then own back to Kiewit. The debenture exchange offer allowed
debentureholders who are Materials employees the opportunity to acquire
securities of their company and avoid having to sell any Kiewit debentures they
own back to Kiewit immediately following the spin-off.

Kiewit debentures do not contain provisions which would enable
debentureholders who are Kiewit employees to participate in the distribution of
shares of Materials common stock in the spin-off or which would adjust the
conversion ratio of the outstanding Kiewit debentures to take into account the
effect of the spin-off. Following the spin-off, the shares of Kiewit common
stock issuable on conversion of the Kiewit debentures will have a lower
aggregate formula price since the formula price for Kiewit common stock
immediately after the spin-off will be reduced by the book value of Materials
distributed as a dividend in the spin-off. The debenture exchange offer allowed
debentureholders who are Kiewit employees the opportunity to participate in the
spin-off by receiving Materials common stock and new reduced principal amount
Kiewit debentures.

In the debenture exchange offer, Kiewit debentureholders collectively
exchanged $ principal amount outstanding Kiewit debentures for:

- $ principal amount Materials convertible debentures; and

- both shares of Materials common stock and $ principal amount new
Kiewit debentures.

DIVIDEND POLICIES

Materials does not currently intend to pay cash dividends on the Materials
common stock.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of the material United States federal income
tax consequences of the spin-off. The discussion which follows is based on the
Internal Revenue Code of 1986, as amended, Treasury regulations promulgated
thereunder and judicial and administrative interpretations of the Code and
Treasury regulations, all as in effect on the date of this information
statement, and is subject to any changes in these or other laws occurring after
such date, possibly with retroactive effect. The discussion below is for general
information only and does not address the effects of any state, local or foreign
tax laws on the spin-off. The tax treatment of a holder of Kiewit common stock
may vary depending on his or her particular situation, and some holders may be
subject to special rules not discussed below. The discussion assumes that a
holder of Kiewit common stock holds that stock as a capital asset and that the
stock was not received, and will not be treated, as compensation. Except as set
forth below, the following discussion does not address the tax consequences to a
holder of Kiewit common stock that is a non-U.S. person. A non-U.S. person is
(1) an alien individual who
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<PAGE> 22

is not a resident of the United States, (2) a corporation or partnership that is
not created or organized under the laws of the United States or of any state,
(3) an estate that is not subject to United States federal income tax on a net
income basis, or (4) a trust the administration of which is not subject to
primary supervision of a United States court or with respect to which no United
States person has authority to control all substantial decisions.

EACH HOLDER OF KIEWIT COMMON STOCK IS URGED TO CONSULT THE HOLDER'S OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE SPIN-OFF TO THE HOLDER,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN LAWS AND
OF CHANGES IN APPLICABLE TAX LAWS.

Kiewit has received a private letter ruling from the Internal Revenue
Service to the effect that the spin-off of Materials common stock will qualify
as a transaction described in Sections 355(a) and 368(a)(1)(D) of the Code. The
IRS ruling is based on current law and on representations as to factual matters
made by, among others, Kiewit and Materials. Those representations, if incorrect
in material respects, could jeopardize the conclusions reached in the IRS
ruling. Neither Kiewit nor Materials is aware of any facts or circumstances that
would cause any of those representations to be untrue or incorrect in any
material respect.

Based on the IRS ruling, the material United States federal income tax
consequences expected to result from the distribution are as follows. No gain or
loss will be recognized by Kiewit or Materials upon the distribution of
Materials common stock. A holder of Kiewit common stock who receives shares of
Materials common stock in the spin-off (1) will not recognize gain or loss as a
result of the spin-off, (2) will have, immediately after the spin-off, a tax
basis for the shares of Materials common stock received that equals a portion of
that holder's tax basis in his or her Kiewit common stock immediately before the
spin-off, allocated in proportion to the relative fair market values of the
Kiewit common stock and the Materials common stock, and (3) will include in his
or her holding period for the Materials common stock the period during which the
holder held the Kiewit common stock with respect to which such Materials common
stock was distributed.

If the spin-off does not qualify as a tax-free transaction under Section
355 of the Code, then, among other consequences, (i) Kiewit would recognize gain
equal to the amount by which the fair market value of the Materials common stock
distributed exceeded Kiewit's adjusted tax basis therein, and (ii) each holder
who received Materials common stock in the spin-off would be treated as having
received a dividend which, for United States federal income tax purposes, would
be taxable as ordinary income to the extent of Kiewit's available current and
accumulated earnings and profits.

Non-U.S. Persons

Provided that the spin-off qualifies as a transaction described in Section
355 of the Code, the receipt in the spin-off of Materials common stock by a
non-U.S. person will not be subject to withholding of United States federal
income tax. If the spin-off does not qualify under Section 355, a non-U.S.
person would be treated as having received a dividend which, except as described
below, generally would be subject to withholding of United States federal income
tax at a rate of 30% or (provided that certain certification requirements are
met) a lower rate specified by an applicable income tax treaty. The United
States federal income tax withholding rate on dividends paid to a non-U.S.
person is limited to 15% under Article X of the Convention between the United
States of America and Canada with respect to Taxes on Income and Capital,
provided that the non-U.S. person is a resident of Canada within the meaning of
the Canadian treaty and does not have a permanent establishment in the United
States or perform independent personal services from a fixed base in the United
States, in the meaning of the Canadian treaty, with respect to which permanent
establishment or fixed base dividends on the Kiewit common stock are effectively
connected. Under current Treasury regulations, Kiewit may presume that a holder
with an address in a foreign country is a resident of that country in
determining whether a particular tax treaty applies. If dividends on the Kiewit
common stock are effectively connected with a trade or business of a non-U.S.
person in the United States, the distribution of Materials common stock would be
subject to United States federal income tax on a net income basis and not
subject to the withholding described above. In addition, a 30% branch profits
tax could apply to a holder that is a foreign corporation.

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Reporting Requirements

Applicable Treasury regulations require that each holder of Kiewit common
stock attach to his or her federal income tax return for the taxable year in
which the holder receives the Materials common stock a statement indicating that
Section 355 of the Code applies to the spin-off. Kiewit will provide each holder
with the information necessary to comply with this requirement.

BECAUSE OF THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, EACH HOLDER OF KIEWIT
COMMON STOCK IS URGED TO CONSULT HIS OR HER TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO THE HOLDER OF THE SPIN-OFF, INCLUDING THE EFFECT OF UNITED
STATES FEDERAL, STATE AND LOCAL, AND FOREIGN AND OTHER TAX LAWS, AND THE EFFECT
OF POSSIBLE CHANGES IN SUCH LAWS.

MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material Canadian federal income tax
consequences of the spin-off generally applicable under the Income Tax Act
(Canada) to a holder of shares of Kiewit common stock who receives shares of
Materials common stock in the spin-off. More particularly, it is applicable to a
holder who, for purposes of the Act: (1) is a resident of Canada, (2) holds
shares of Kiewit common stock and will hold the shares of Materials common stock
as capital property, and (3) deals at arm's length with Kiewit.

This summary does not apply to a financial institution within the meaning
of section 142.2 of the Act or to a Canadian stockholder in respect of which
Kiewit is a foreign affiliate within the meaning of the Act.

This summary is based on the current provisions of the Act and the
regulations under the Act, specific proposals to amend the Act or the
regulations publicly announced by the Minister of Finance prior to the date of
this information statement (except as set forth below) and an understanding of
the current published administrative and assessing practices of the Canada
Customs and Revenue Agency, commonly referred to as the CCRA. Except for these
tax proposals, this summary does not take into account or anticipate any
proposed changes to the law or to the CCRA's administrative and assessing
practices, whether by legislative, governmental or judicial actions.

On June 22, 2000, the Canadian federal Minister of Finance released draft
amendments to the Act with respect to the taxation of participating interests in
a "foreign investment entity". This draft legislation, if enacted in its current
form, will result in a significant adverse change in the Canadian income tax
consequences of holding shares or rights to acquire shares of a non-resident
entity which is classified as a "foreign investment entity," effective for
taxation years that begin after December 31, 2000. It is not clear whether this
draft legislation will be enacted in its current form and, therefore, Kiewit has
not yet determined whether either Kiewit or Materials will be a foreign
investment entity under the draft legislation. Accordingly, the following
summary does not address the possible application of the draft legislation to
holders of shares of Kiewit common stock or shares of Materials common stock.

THE FOLLOWING DISCUSSION IS INTENDED TO BE A GENERAL DESCRIPTION OF THE
CANADIAN FEDERAL INCOME TAX CONSEQUENCES GENERALLY APPLICABLE TO A CANADIAN
STOCKHOLDER BY REASON OF THE SPIN-OFF. IT IS NOT INTENDED TO BE, NOR SHOULD IT
BE CONSTRUED AS BEING, LEGAL OR TAX ADVICE TO ANY PARTICULAR STOCKHOLDER. EACH
CANADIAN STOCKHOLDER IS URGED TO CONSULT THE STOCKHOLDER'S OWN TAX ADVISOR AS TO
THE PARTICULAR TAX CONSEQUENCES OF THE SPIN-OFF TO THAT HOLDER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY PROVINCIAL, LOCAL OR FOREIGN LAWS AND OF CHANGES
IN APPLICABLE LAWS, INCLUDING THE DRAFT LEGISLATION DESCRIBED ABOVE.

In computing his or her income, a Canadian stockholder will be required to
include an amount equal to the fair market value in Canadian dollars of the
shares of Materials common stock received as a dividend in the spin-off. The
dividend will not be eligible for the gross-up and dividend tax credit generally
applicable to dividends received in respect of shares of taxable Canadian
corporations. In addition, a Canadian stockholder that is a corporation will not
be entitled to a deduction in computing taxable income in respect of that
dividend. A Canadian stockholder will generally be entitled to a foreign tax
credit equal to any U.S. tax required to be deducted or withheld in respect of
that dividend. The cost to a Canadian stockholder of the

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shares of Materials common stock received in the spin-off will be the fair
market value of those in Canadian dollars at the distribution date. The adjusted
cost base of a Canadian stockholder's Kiewit common stock is not affected by the
spin-off.

NEBRASKA TAX LETTER

Kiewit has received a letter from the State of Nebraska Department of
Revenue to the effect that, even though Kiewit and Materials will become
independent companies if the spin-off is consummated, Kiewit and Materials
generally would continue to be considered the same corporation for purposes of
the Nebraska capital gain exclusion provisions. The letter provides that,
provided certain requirements are met and an appropriate election is made, the
Nebraska capital gain exclusion generally would be available for the sale of
Materials common stock by residents of Nebraska.

The above discussion is not intended to be, nor should it be construed as
being, legal or tax advice to any particular stockholder. Each stockholder is
urged to consult his or her own tax advisor as to any applicable state and local
or other tax laws.

CAPITAL CONTRIBUTION TO MATERIALS

Prior to the completion of the debenture exchange offer and the share
exchange, Kiewit made capital contributions of $ to Materials. A
portion of the aggregate capital contributions represented a payment to
Materials for the obligations assumed as a result of the issuance of the
Materials debentures in the debenture exchange offer.

ACCOUNTING TREATMENT

Shares of Materials common stock that are distributed in the spin-off will
be accounted for as a dividend through a direct charge to retained earnings. The
amount of the dividend will be equal to Kiewit's carrying value of the shares of
Materials common stock distributed.

After the spin-off, the historical consolidated financial statements of
Kiewit will be retroactively restated, where appropriate, to disaggregate the
historical basis financial information of Materials, and present the business of
Materials as discontinued operations. After the spin-off, Materials will be
operated independently from Kiewit and will be reflected in the separate
financial statements of Materials on an historical cost basis.

TRADING MARKET AND TRANSFER RESTRICTIONS

The Materials common stock will not be listed on any national securities
exchange or quoted on the Nasdaq National Market and will be subject to
substantial transfer restrictions. Specifically, holders of Materials common
stock are prohibited from transferring the Materials common stock in any manner
except in a sale to Materials and, with prior approval by the Materials board of
directors, to certain authorized transferees of the holders. Those authorized
transferees consist of fiduciaries for the benefit of the holders and members of
the immediate families of the holders, corporations wholly owned by holders or
holders and their spouses and/or children, fiduciaries for the benefit of such
corporations and charities and fiduciaries for charities designated by any such
persons. Upon the death of a Materials stockholder, the shares of Materials
common stock owned by the deceased stockholder will be permitted to be
transferred to his or her estate, provided that the shares transferred to the
transferee will be subject to the same transfer restrictions. However, unlike
Kiewit common stock, Materials stockholders who receive Materials common stock
in the spin-off will not be required to sell their Materials common stock upon
their retirement or other termination of their employment with Materials or
Kiewit, as the case may be. All transfer restrictions may be terminated by the
Materials board at any time. There is no restriction on the maximum amount of
Materials common stock that may be owned by any individual or entity.

17
<PAGE> 25

Holders of Materials common stock are permitted to pledge their common
stock for loans in connection with the ownership of their common stock.

In the event that the board of directors decides to conduct an initial
public offering of the Materials common stock, officers and directors of
Materials and stockholders owning one percent or more of the Materials common
stock outstanding at the time of the offering will not be permitted to sell or
otherwise transfer any shares held by them for a period of up to one hundred
eighty days following the offering. In addition to any officers and directors
who may be subject to the 180 day transfer restriction following an initial
public offering, Materials estimates that there may be up to seven additional
stockholders, all of whom are Kiewit employees, who may own 1% or more of
Materials common stock and thus be subject to this transfer restriction.

Kiewit common stock may generally be owned only by directors of Kiewit,
employees of Kiewit and its subsidiaries and, with prior Kiewit board of
directors approval, by certain authorized transferees of such employees (i.e.,
fiduciaries for the benefit of members of the immediate families of employees,
corporations wholly owned by employees or employees and their spouses and/or
children, fiduciaries for the benefit of such corporations, charities, and
fiduciaries for charities designated by any such persons). No more than 10% of
the total Kiewit common stock may be owned by any one employee and certain
transferees at any time.

Holders of Kiewit common stock are permitted to pledge the Kiewit common
stock for loans in connection with the ownership of the Kiewit common stock.

Each holder of Kiewit common stock is required to execute a repurchase
agreement which provides that a stockholder may offer to sell all or part of the
Kiewit common stock owned by such stockholder to Kiewit at any time at the
current formula price and that Kiewit must accept any such offer. Upon the
tender of a part of such holder's shares of Kiewit common stock, Kiewit is
entitled, at its option, to require the holder to sell any or all remaining
Kiewit common stock held by such holder back to Kiewit. Under the repurchase
agreement, the employee will not be entitled to transfer the shares of Kiewit
common stock held by such employee except in a sale to Kiewit or a transfer to
an authorized transferee (i.e., a charity, etc.). Upon the death, termination of
employment or retirement of such employee, all Kiewit common stock held by the
employee and by such employee's authorized transferees is required to be sold
back to Kiewit.

18
<PAGE> 26

RELATIONSHIP BETWEEN MATERIALS AND KIEWIT

This section describes the primary agreements between Materials and Kiewit
that will define the ongoing relationship between them and their subsidiaries
and affiliates after the spin-off and will provide for an orderly separation of
the two companies. The following description of agreements summarizes the
material terms of the agreements. All stockholders should read the agreements
which we filed as exhibits to the registration statement of which this
information statement is a part.

SEPARATION AGREEMENT

The separation agreement provides for the principal corporate transactions
necessary to effect the spin-off, the relationship between Kiewit and Materials
after the spin-off, the allocation of certain risks and responsibilities between
Kiewit and Materials after the spin-off and the ongoing relationship between
Kiewit and Materials after the spin-off.

The separation agreement provides for the distribution of Materials common
stock to holders of Kiewit common stock, the exchange offers and capital
contributions necessary to effect the spin-off and the exchange offers. The
separation agreement also provides that Kiewit and Materials will each use their
respective best efforts to effect the spin-off, the debenture exchange offer and
the share exchange. The separation agreement provides that each of Materials and
Kiewit will indemnify the other with respect to breaches of the separation
agreement and with respect to the activities of its subsidiary business groups,
except as specifically provided under the tax sharing agreement described below.
The cross-indemnities are intended to allocate financial responsibility for
liabilities arising out of the historical and future business of the
construction business to Kiewit, and financial responsibility for liabilities
arising out of the historical and future business of the materials business to
Materials.

The separation agreement provides that each of Materials and Kiewit will be
granted access to certain records and information in the possession of the other
company, and requires that each of Materials and Kiewit retain all such
information in its possession for a period of ten years following the spin-off.
Under the separation agreement, each company is required to give the other
company prior notice of any intention to dispose of any such information.

The separation agreement also provides that Kiewit and Materials will
cooperate to ensure that any assets and liabilities of the construction business
are retained by or transferred to Kiewit and any assets and liabilities of the
materials business are retained by or transferred to Materials.

The separation agreement provides that effective as of the date of the
spin-off, all intercompany receivables and loans will be settled. In addition,
any guaranties by Kiewit in favor of Materials or any of Materials' subsidiaries
will also be terminated as of the effective date of the spin-off.

The separation agreement provides Materials with a non-exclusive right to
use the name "Kiewit Materials Company" at the sole discretion of the board of
directors of Kiewit.

The separation agreement provides that, except as otherwise set forth
therein or in any related agreement, all costs and expenses in connection with
the spin-off will be paid by Kiewit.

The separation agreement also contains, among other things, short-term
arrangements relating to:

- the lease of office space by Kiewit to Materials; and

- the provision of administrative services by Kiewit to Materials.

TAX SHARING AGREEMENT

The tax sharing agreement defines each company's rights and obligations
with respect to deficiencies and refunds of federal, state and other taxes
relating to the business' operations for tax years (or portions thereof) ending
prior to the spin-off and with respect to certain tax attributes of Materials
and Kiewit after the spin-off. The tax sharing agreement also specifies the
parties' respective obligations in connection with any audit or investigation
concerning any federal, state or other taxes or in the event that the spin-off
was subsequently
19
<PAGE> 27

determined not to qualify as a tax-free transaction for U.S. federal income tax
purposes. Under the tax allocation agreement, in general, with respect to
periods (or portions thereof) ending on or before the completion of the
spin-off, Kiewit will be responsible for preparing both consolidated federal tax
returns for Kiewit and Materials, and state tax returns for Kiewit and
Materials. In general, under the tax allocation agreement, Materials and Kiewit
will be responsible for paying the taxes relating to such returns (including any
subsequent adjustments resulting from the redetermination of such tax
liabilities by the applicable taxing authorities) that are allocable to the
materials business and the construction business, respectively. Materials and
Kiewit will cooperate with each other and share information in preparing such
tax returns and in dealing with other tax matters.

ARRANGEMENTS FOR CANADIAN HOLDERS OF KIEWIT COMMON STOCK

A holder of Kiewit common stock who is a resident of Canada for Canadian
federal income tax purposes will be subject to tax on receipt of shares of
Materials common stock in the spin-off. Consequently, Kiewit anticipates that it
will implement a special offset payment program for Canadian resident
stockholders to partially off-set the effect of such tax consequences. The
amount of any payments payable pursuant to such special offset payment program
would be calculated based upon the highest combined marginal tax rate in Canada
(federal and provincial). To be eligible to participate in such program, a
Canadian resident stockholder must be employed on the date of the spin-off and,
with respect to each annual payment date, on the date the special offset payment
is paid. Kiewit currently anticipates making such payments commencing in April
2001 and continuing annually through April 2003. Each special offset payment
would be included in the holder's taxable income from employment. The costs of
this special offset payment program, which are not expected to exceed
$1,200,000, will be paid by Kiewit.

Each Canadian stockholder is urged to consult the stockholder's own tax
advisor as to the particular tax consequences of any payments to that holder,
including the applicability and effect of any federal, provincial, local or
foreign laws and changes in applicable laws.

OTHER

After the spin-off, Kiewit will not own any of Materials' common stock. Six
of Materials' eight initial directors will also be Kiewit directors. Of these
six directors, three are executive officers of Kiewit.

Conflicts of interest may arise between Kiewit and Materials in a number of
areas relating to their past and ongoing relationships including the nature,
quality and pricing of services rendered by the parties to each other. A
majority of Materials' current board of directors are designees of Kiewit and
several current members of Materials' board hold positions with Kiewit. The
directors holding positions in both companies may face conflicts of interest
with respect to such matters as acquisitions, finances and other corporate
opportunities that might be suitable for both Kiewit and Materials.

In addition, Kiewit may, in the ordinary course of business, purchase
construction materials from Materials, although it is under no contractual
obligation to do so. Sales to Kiewit represented approximately 3% of Materials'
total sales in 1999.

DIVIDEND POLICY

Materials does not currently intend to pay cash dividends on the Materials
common stock.

Kiewit intends to continue its current dividend policy of paying a regular
cash dividend on its common stock based upon a percentage of its prior year's
earnings from operations, with any special cash dividends to be based on
earnings from unusual or non-recurring events.

EFFECT OF THE SPIN-OFF ON THE FORMULA PRICE OF KIEWIT COMMON STOCK

After the completion of the exchange offers and the spin-off, Kiewit will
no longer own any of the outstanding common stock of Materials. The formula
price for Kiewit common stock is determined by reducing the prior year's
adjusted book value by the amount of dividends declared during the current year.
The
20
<PAGE> 28

spin-off will be effected by a dividend of shares of Materials common stock.
Consequently, the formula price for Kiewit common stock immediately after the
spin-off will be reduced by the book value of Materials distributed in the
spin-off, on a per share basis.

The book value of Materials distributed in the spin-off will include any
earnings of Materials earned from the end of fiscal year 1999 through the date
of the spin-off. Since these earnings will not be included in the formula price
of Kiewit's common stock until the end of fiscal year 2000, the combined formula
value of the shares of Materials common stock and Kiewit common stock
immediately after the spin-off will be less than the formula value of shares of
Kiewit common stock immediately prior to the spin-off by the amount of those
Materials earnings. This technical difference will be eliminated when both the
Kiewit and Materials formula prices are calculated at the end of fiscal year
2000.

21
<PAGE> 29

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

The following table presents selected historical and pro forma financial
data of Materials. The historical income statement information as of and for
each of the fiscal years ended 1997 through 1999, and historical balance sheet
information for each of the fiscal years ended 1998 and 1999, is derived from
Materials' historical consolidated financial statements and the notes to those
financial statements included elsewhere in this information statement. The
balance sheet information as of the fiscal years ended 1995, 1996 and 1997 and
the income statement information for the fiscal years ended 1995 and 1996 were
derived from audited consolidated financial statements not included in this
document. The historical information for the three months ended March 31, 1999
and March 31, 2000 is derived from the unaudited consolidated condensed
financial statements included elsewhere in this information statement which, in
the opinion of management, reflects all adjustments, which are of a recurring
nature necessary to present fairly the financial position and results of
operations and cash flows for the interim periods. Results for the three months
ended March 31, 1999 and March 31, 2000 are not necessarily indicative of the
results of operations to be expected for the full fiscal year.

For all historical periods presented, Materials operated as a part of
Kiewit. Because we did not operate as an independent company during these
periods, the data may not reflect the results of operations or the financial
condition which would have resulted if we had operated as a separate,
independent company. In addition, the data may not necessarily be indicative of
our future results of operations or financial position.
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------------------------------------

FISCAL YEAR ENDED THREE MONTHS ENDED
---------------------------------------------------------- -----------------------
1995 1996 1997 1998 1999 3/31/99 3/31/00
-------- -------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Results of Operations:
Revenue....................... $233,068 $246,083 $ 277,309 $ 333,060 $ 437,058 $ 99,448 $ 99,540
Net Earnings.................. 13,161 14,204 16,542 15,378 25,828 3,876 3,032
Per Common Share:
Net Earnings
Basic....................... 131,609 142,043 165,423 153,783 258,280 38,756 30,323
Diluted..................... 131,609 142,043 165,423 153,783 258,280 38,756 30,323
Dividends(4).................. 80,975 143,553 39,700 -- -- -- --
Book Value.................... 915,115 986,516 1,216,306 1,392,870 2,097,326 1,559,290 2,125,892
Financial Position:
Total Assets.................. 133,882 152,771 181,699 207,054 276,891 277,459 286,638
Current Portion of Long-term
Debt........................ -- -- 387 740 562 4,667 566
Long-term Debt, Net of Current
Portion..................... -- -- 1,492 761 3,753 13,029 3,615
Stockholders' Equity.......... 91,512 98,652 121,631 139,287 209,733 155,929 212,589

<CAPTION>
PRO FORMA(1)(2)(3)
-------------------------------------------------
FISCAL YEAR ENDED THREE MONTHS ENDED
12/25/99 3/31/00
----------------------- -----------------------
SCENARIO 1 SCENARIO 2 SCENARIO 1 SCENARIO 2
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Results of Operations:
Revenue....................... $ 437,058 $ 437,058 $ 99,540 $ 99,540
Net Earnings.................. 25,793 25,811 3,023 3,028
Per Common Share:
Net Earnings
Basic....................... 0.65 0.72 0.09 0.09
Diluted..................... 0.67 0.72 0.09 0.09
Dividends(4).................. -- -- -- --
Book Value.................... 2,401,350 2,399,410 2,429,770 2,427,830
Financial Position:
Total Assets.................. 307,963 307,434 316,696 316,167
Current Portion of Long-term
Debt........................ 562 562 566 566
Long-term Debt, Net of Current
Portion..................... 4,423 4,088 4,285 3,950
Stockholders' Equity.......... 240,135 239,941 242,977 242,783
</TABLE>

---------------
(1) Completion of the spin-off, the share exchange and the debenture exchange
offer has been assumed to be as of December 26, 1998 in the pro forma
results of operations data for the year ended December 25, 1999 and three
months ended March 31, 2000 and as of March 31, 2000 in the pro forma
financial position data.

(2) The pro forma results of operations, per common share and financial position
data assume the share exchange, debenture exchange offer and the spin-off
have been completed, and that Kiewit has made a $50 million capital
contribution to us.

(3) The pro forma results of operations are based upon ownership information of
Kiewit securities as of March 31, 2000 and assume that (i) in Scenario 1
(a), all Materials employees who hold shares of Kiewit common stock and
Kiewit convertible debentures exchanged their Kiewit shares in the share
exchange and their Kiewit debentures for Materials debentures in the
debenture exchange offer, and (b) all Kiewit employees who hold Kiewit
debentures exchanged them for new reduced principal amount Kiewit debentures
and shares of Materials common stock in the debenture exchange offer, and
(ii) in Scenario 2, (a) those Materials employees exchanged 50% of their
Kiewit shares in the share exchange with the other 50% of their Kiewit
shares being sold back to Kiewit for cash immediately after the spin-off and
exchanged 50% of the principal amount of their Kiewit debentures for
Materials debentures in the debenture exchange offer with the other 50% of
the principal amount of their Kiewit debentures being sold back to Kiewit
for cash immediately after the spin-off, and (b) all Kiewit employees who
hold Kiewit debentures exchanged them for new reduced principal amount
Kiewit debentures and shares of Materials common stock in the debenture
exchange offer.

(4) The 1996 dividends include $100,000 for dividends declared in 1996, but paid
in January of the subsequent year. The 1995 and 1996 dividends per share
include $40,975 and $3,553 of non-cash dividends, respectively.

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<PAGE> 30

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 Financial Statements, including the notes thereto,
included elsewhere in this offering circular-prospectus.

Kiewit management has determined to separate Kiewit's materials and
construction businesses by means of a spin-off. 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 -- FIRST QUARTER 2000 VS. FIRST QUARTER 1999

Revenue. Revenues of $99,539,837 in the first quarter of 2000 remained
constant with the first quarter 1999 revenue of $99,488,000. During the first
quarter of 2000, a 9% reduction in revenues attributable to a decline in unit
volumes for aggregate and asphalt sales was offset by a 4% increase in average
selling price and the inclusion of additional revenues of $9,283,796 from
acquired companies. Aggregate sales in the Northwest were unfavorably impacted
by customer scheduling at certain quarries and a softening of market demand. The
overall impact of this was minimal as only 10% of revenues were earned in the
Northwest. 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 decreased to 10.8% in the first quarter
of 2000 from 12.6% in the first quarter of 1999. Increases in asphalt oil costs
and fuel expenses unfavorably impacted operating margins during the first
quarter of 2000.

General and Administrative Expenses. General and administrative expenses
were relatively constant for the first quarter of 2000 when compared to the
first quarter of 1999. As a percentage of sales, this expense decreased to 6.5%
in 2000 from 6.6% in 1999.

Other Income and Expense. Other income decreased $370,993 from $1,240,302
in the first quarter of 1999 to $869,309 in the first quarter of 2000. The
primary reason for the decrease is the consolidation of Pacific Rock in 1999
which reduced equity earnings.

Income Tax Expense. The effective income tax rates during the first
quarter 2000 and 1999 were 40%. These rates differ from the federal statutory
rates of 35% primarily due to state income taxes.

RESULTS OF OPERATIONS -- 1999 VS. 1998

Revenue. In 1999 and 1998, 82% and 95% of revenues, respectively, were
earned in the Southwest region of the United States. The remainder was earned
through other locations in the United States. Revenue increased $103,997,646,
from $333,060,002 in 1998 to $437,057,648 in 1999. The consolidation of Pacific
Rock (see footnote 13 of the December 25, 1999 financial statements), due to the
increase in Materials' ownership from 40% to 100%, contributed $54,510,558, and
additional ballast sales at quarries in Wyoming and Utah accounted for
$4,351,486 of the increase. Approximately 80% of the balance of the increase in
revenues was derived from additional unit sales with the other 20% of the
balance from higher average selling prices for ready mix concrete and
aggregates.

Gross Profit. Gross profit margins increased from 10.5% in 1998 to 14.2%
in 1999. The consolidation of Pacific Rock which had a higher margin on its
sales was responsible for the percentage increase.

General and Administrative Expenses. General and administrative expenses
increased $5,620,915 in 1999 when compared to 1998. Increases in unit volume and
the inclusion of Pacific Rock account for $3,690,754 of the additional expense.

23
<PAGE> 31

Other Income and Expense. Other income is comprised of investment income,
equity earnings from Pacific Rock, interest expense and gains and losses on the
sale of property, plant and equipment. Other income declined $5,253,501 in 1999
from 1998 as a result of the decline in equity earnings due to the consolidation
of Pacific Rock.

Income Tax Expense. Income taxes differ from the federal statutory rate
primarily because of state income tax and percentage depletion. The effective
tax rates were 37.7% in 1999 and 38.8% in 1998.

RESULTS OF OPERATIONS -- 1998 VS. 1997

Revenue. In 1998 and 1997, 95% and 96%, respectively, of revenues were
earned in the Southwest region of the United States. The remainder was earned
throughout other locations in the United States. Revenue increased 20% from
$277,308,896 in 1998 to $333,060,002 in 1997. Approximately 79% of the increase
resulted from additional unit sales. The remaining 21% resulted from higher
average selling prices for ready-mix concrete, asphalt and aggregates.

Gross Profit. Gross profit margins declined from 13% in 1997 to 10.5% in
1998. A 5% increase in cement and other costs, coupled with $1 million of
start-up expenses incurred at a newly developed quarry site offset higher
selling prices and unit volume increases.

General and Administrative Expenses. General and administrative expenses
increased from $16,277,521 in 1997 to $19,062,488 in 1998. As a percentage of
revenue, this expense declined slightly from 5.9% in 1997 to 5.7% in 1998. The
overall increase in expense was necessary to support sales volume increases and
the expansion of product lines.

Other Income and Expense. Other income is comprised of investment income,
equity earnings from Pacific Rock and gains and losses on the sale of equipment
in the ordinary course of business. Other income increased $836,819 during the
twelve months ended 1998 when compared to the same period in 1997. Increases in
equity earnings, primarily from better operating results at Pacific Rock, were
responsible for the change. Higher interest expense and smaller gain from the
sale of equipment mitigated the investment income increase.

Income Tax Expense. Income tax expense differs from the federal statutory
rate primarily because of state income taxes and percentage depletion. The
effective income tax rates were 38.8% for 1998 and 39.7% for 1997.

FINANCIAL CONDITION - MARCH 31, 2000

Cash and cash equivalents decreased $21,655,456 to $50,674,671 at March
2000 from $72,330,127 at December 1999. The decrease reflects net cash provided
by operations of $15,417,630 offset by net cash used in investing activities of
$36,765,067 and $308,019 used in financing activities.

Net cash provided by operating activities of $15,417,630 represented an
increase of $16,149,484 from the same period in 1999. Although net income
decreased in the first quarter of 2000 compared to the first quarter of 1999,
the increase in cash resulted primarily from a reduction in receivables.

Net cash used in investing activities in the first quarter of 2000
increased by $29,397,122 to $36,765,067 as compared to the first quarter of
1999. This increase was due to acquisitions of $30,880,432 and decreases in
proceeds from the sale of property, plant and equipment in the ordinary course
of business of $1,090,410. These changes were partially offset by a decrease in
capital expenditures of $2,080,122, a decrease in addition to notes receivable
of $256,213 and an increase in payments on notes receivable of $237,385.

Net cash used in financing activities in the first quarter of 2000
increased by $12,845,215 to $308,019 as compared to a net source of cash of
$12,537,196 for the same time period in 1999. This charge was due to a reduction
in contributions from Kiewit of $13,640,308 and a reduction in long-term
borrowings of $332,307. These changes were partially offset by a decrease in
payments on long-term debt of $1,127,400.

24
<PAGE> 32

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 $566,127. 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
$32.4 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. We are currently in negotiations to
acquire two aggregates businesses. The aggregate cash purchase price which would
be payable for these acquisitions is approximately $43.6 million. We can make no
assurances that these two acquisitions will be completed. Funding for these
acquisitions will come from either cash generated from our operations or 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, which is anticipated to
include a $50 million capital contribution from Kiewit, 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. In addition, we have no
current intention to pay cash dividends, but will instead use our capital to
fund our growth strategy.

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 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 March 31,
2000, we had $4.2 million of notes payable.

FINANCIAL CONDITION -- DECEMBER 25, 1999

Cash and cash equivalents increased $6,728,257 to $72,330,127 at December
1999 from $65,601,870 at December 1998. The increase reflects net cash provided
by operations of $31,701,592 and net cash provided by financing activities of
$28,402,215 which were partially offset by net cash used in investing activities
of $53,375,550.

25
<PAGE> 33

Net cash provided by operating activities of $31,701,592 represented an
increase of $2,072,600 from 1998. Although net earnings increased by $10,449,640
compared to 1998, this increase was offset by an increase in the reduction of
accounts payable by $20,454,352 which was subsequently partially offset by an
increase in income taxes payable of $6,624,167.

Net cash used in investing activities increased by $39,559,000 to
$53,375,550 in 1999 from $13,816,550 in 1998. This increase was primarily due to
increased acquisitions activity of $34,015,297 related mainly to the Pacific
Rock Products and River City Machinery acquisitions and increased capital
expenditures in the normal course of business of $6,096,225.

Net cash provided by financing activities increased by $26,634,711 to
$28,402,215 in 1999 from $1,767,504 in 1998. Additional parent contributions of
$42,015,056 which were partially offset by increased long-term debt reductions
of $15,380,345 accounted for the increase.

FINANCIAL CONDITION -- DECEMBER 26, 1998

Cash and cash equivalents increased $17,579,946 to $65,601,870 at December
1998 from $48,021,924 at December 1997. The increase reflects net cash provided
by operations of $29,628,992 and net cash provided by financing activities of
$1,767,504 which were partially offset by net cash used in investing activities
of $13,816,550.

Net cash provided by operating activities of $29,628,992 represented an
increase of $1,153,431 from 1997. Although net earnings decreased by $1,163,970
compared to 1997, there were various offsetting factors. The undistributed
equity earnings were $3,167,775 less in 1998 compared to 1997 and there was less
reduction of accounts receivable by $2,714,512 compared to 1997. These factors
were offset by less of an increase in accounts payable in 1998 of $7,878,902
compared to 1997.

Net cash used in investing activities decreased by $13,665,454 to
$13,816,550 in 1998 from $27,482,004 in 1997. This decrease was primarily due to
a decrease in cash used in acquisitions of $5,996,007 and decreased capital
expenditures in the normal course of business of $6,862,136.

Net cash provided by financing activities increased by $4,901,196 to
$1,767,504 in 1998 as compared to a net use of cash of $3,133,692 in 1997. There
were no dividends paid in 1998 compared to $13,970,000 paid in 1997. This was
offset by a decrease in contributions received from Kiewit of $8,567,161.

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 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.

YEAR 2000 UPDATE

Our Year 2000 effort, which was comprised of internal updating and
replacement of computer systems and external coordination with its customer was
completed on schedule. We have not experienced any material Year 2000 related
difficulties.

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.

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<PAGE> 34

BUSINESS

In 1968, Kiewit began its construction materials business in Arizona with
its acquisition of Union Rock & Materials Corporation which principally operated
in Phoenix and Tucson. In 1994, Kiewit acquired United Metro Materials which had
operations throughout Arizona and merged its Arizona materials operations under
the United Metro name. Following the United Metro acquisition, Kiewit continued
to expand its Arizona materials operations through six additional acquisitions.

Kiewit began its materials operations in the Vancouver, Washington and
Portland, Oregon areas in 1981. In 1996, Kiewit merged those materials
operations with Pacific Rock Products, retaining a 40% interest in the combined
entity. In 1999, Kiewit acquired the remaining 60% of Pacific Rock Products. For
a more detailed description of the material terms of the acquisition of Pacific
Rock, see footnote 13 to our Consolidated Financial Statements on page F-20.

Kiewit entered the Northern California market with its acquisition of
Solano Concrete Co., Inc. in the first quarter of 2000. For a more detailed
description of the material terms of the acquisition of Solano Concrete, see
footnote 5 to our Consolidated Condensed Financial Statements on page F-27.
Kiewit also acquired the assets of Dixon Redi-Mix, Inc. in the second quarter of
2000 for approximately $1.2 million in cash and approximately $2 million in
notes, payable in equal installments over the next three years.

Kiewit first entered the quarry business in 1950 with a quarry in Guernsey,
Wyoming. In 1953, it began a quarry operation near Des Moines, New Mexico.
Kiewit also holds a 49% joint venture interest in the Granite Canyon quarry near
Cheyenne, Wyoming and a 51% joint venture interest in quarry operations near
Little Lake and Hector, California.

In 1997, Kiewit started a new quarry near Milford, Utah.

For the six-month period ended June 30, 2000, we expended approximately
$32.4 million and completed three acquisitions in connection with our growth
strategy. We are currently in negotiations to acquire two aggregates businesses.
The aggregate cash purchase price which would be payable for these acquisitions
is approximately $43.6 million. We can make no assurances that these two
acquisitions will be completed.

Materials was formed in February 1999 to consolidate the materials
businesses of Kiewit under one holding company.

We operate aggregate ready mix, and asphalt and aggregate operations in
Arizona, Washington, Oregon, California, Wyoming, Utah and New Mexico, with
primary operations in Arizona, centered in the Phoenix and Tucson metropolitan
areas and in the Pacific Northwest, centered in the Vancouver, Washington and
Portland, Oregon metropolitan areas. Aggregate products are used as highway
construction materials, railroad ballast, decorative landscape rock, roofing
aggregate and building stone. We also provide construction services in and
around Yuma, Arizona, focusing mainly on paving and related projects. In 1999,
we produced in excess of 28 million tons of construction materials and generated
approximately $437 million of revenue.

Our Arizona and Pacific Northwest markets have been some of the highest
growth markets in the United States. Factors contributing to this growth include
large population increases and increases in public sector spending on highway
projects. We believe that we should continue to experience strong demand for our
products, due in large part to federally funded highway construction projects
under the Transportation Equity Act for the 21st Century. This act provides $218
billion for highway, transit and safety spending for years 1998 through 2003,
which represents a 40% increase in average annual federal highway spending when
compared to federal funding programs for the preceding six years.

We have a favorable market position with the combination of our strong
market presence, extensive, high quality aggregate reserves, efficient
operations and experienced management team. We seek to be a low cost producer,
facilitate employee involvement, promote favorable community relations and be a
safety conscious employer. We intend to leverage these attributes with a growth
strategy to expand our presence in existing markets and to enter new markets
with high-growth potential. We believe that there exists a significant
opportunity for growth through acquisitions given the large number of
independent materials companies that operate in the United States. These
acquisition opportunities coupled with our current expertise and the
27
<PAGE> 35

expected strong demand for our products provide for a positive environment in
which to pursue our growth oriented business plan.

INDUSTRY BACKGROUND/MARKET OVERVIEW

We are a vertically integrated manufacturer of aggregates, ready-mix
concrete and hot-mix asphalt for use primarily in construction.

Aggregates

Aggregates are a basic construction material comprising sand, gravel and
crushed stone, used extensively for highway and infrastructure construction and
maintenance as well as for commercial and residential construction. In addition,
we also produce aggregates for use as railroad track ballast. For these
purposes, aggregates have few, if any, substitutes. The United States market for
all aggregates was approximately 2.9 billion tons in 1999 with a value of $13.7
billion. This represents an increase of 2.7% in volume and 5.1% in dollar value
above 1998 levels.

Historically, demand for aggregates has been only moderately cyclical,
especially relative to other building materials such as cement and gypsum
wallboard. In addition to moderate cycles and with the exception of 1998, the
national per ton average price for aggregates has not experienced an annual
decline between 1985 and 1999.

Spending on highway and infrastructure construction and maintenance
significantly drives demand for aggregates. Spending levels are influenced by
public sector expenditures for construction and regional economic conditions.
Residential and commercial construction spending is influenced by general
economic conditions and prevailing interest rates and consequently is generally
more cyclical than public construction spending. Demand is also seasonal because
of the impact of weather conditions on construction activity.

Materials' management believes that the aggregates industry is currently
undergoing significant consolidation, although generally the industry remains
fragmented nationally as well as in many regional areas.

Due to the high cost of transportation relative to the value of the
product, competition within the aggregates industry tends to be localized.
Generally, individual aggregate production sites compete for customers within a
limited geographic area, which may be as small as 20-30 miles depending on local
availability of suitable aggregates and the geographic density of demand. As a
result, the proximity of aggregate production sites to customers is an important
factor in competition for customers.

There are four primary factors which limit the availability of economically
viable aggregates reserves in a particular market:

- the geological existence of suitable aggregates within a particular
market;

- the physical characteristics of available aggregates and the difficulty
in satisfying increasingly rigorous specifications required by customers;

- the difficulty in and increasingly higher cost of obtaining the necessary
permits for potential reserves; and

- the feasibility of cost-effectively extracting, processing and delivering
available reserves.

In addition to factors that limit the availability of suitable aggregates,
increasing levels of operational, technical and financial sophistication in the
aggregates industry have rewarded efficient producers with a competitive
advantage in terms of their ability to meet the increasing demand for quality
aggregates and to satisfy increasingly demanding and technically sophisticated
customers.

The difficulty and related expense of complying with environmental and
other regulations may make it difficult for small producers to open new
aggregate production sites, enter new markets and compete

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<PAGE> 36

effectively. In ongoing aggregate mining and processing, aggregates producers
must adhere to various mining regulations, including rules and regulations
regarding:

- dust and water emissions;

- sediment and erosion control;

- noise limitations;

- wetlands protection;

- reclamation of depleted quarry sites; and

- the safety of blasting and other mining techniques.

Often new aggregate production sites require, among other things, zoning
changes and local, state and federal permits and plans regarding mining,
reclamation and air and water emissions. Once appropriate zoning is secured and
approved, it is permanent. Generally, permits must be renewed every five years.
Their renewal can only be denied, however, if the controlling agency is able to
prove that the permit holder has repeatedly violated the set guidelines and has
not taken remedial action when notified of violations. New site approval
procedures may require the preparation of archaeological surveys, endangered
species studies and other studies to assess the environmental impact. Compliance
with these regulatory requirements necessitates a significant up-front
investment and adds to the length of time to develop a new site.

Aggregates producers often face opposition from the communities in which
new aggregate production sites are to be located. Public concerns center on
noise levels and blasting safety, the visual impact of an aggregate production
site on neighboring properties and high volume of truck traffic. To respond to
these issues, producers must operate in a more sophisticated manner, such as
developing blasting techniques to minimize surface vibrations and noise and
developing an effective community communications program. Producers are often
required to acquire larger tracts of property to allow for extended buffer zones
between aggregate production sites and surrounding properties and to invest
significant capital to improve road and highway access.

Ready-mix Concrete

Ready-mix concrete is a versatile, low-cost manufactured material the
construction industry uses in substantially all of its projects. It is a
stone-like compound that results from combining fine and coarse aggregates, such
as sand, gravel and crushed stone, with water, various admixtures and cement.
Ready-mix concrete can be manufactured in thousands of variations, which in each
instance may reflect a specific design use. Manufacturers of ready-mix concrete
generally maintain less than one day's requirements of raw materials and must
coordinate their daily material purchases with the time-sensitive delivery
requirements of their customers.

Annual usage of ready-mix concrete in the United States is currently at a
record level and is projected to continue growing. According to the National
Ready-mix Concrete Association, total sales from production and delivery of
ready-mix concrete in the United States grew from $17.6 billion in 1996 to $19.3
billion in 1997, an increase of 9.7%, and to $21.3 billion in 1998, an increase
of 10.4%, and are expected to grow to $22.1 billion in 1999. Also according to
this industry association, the following segments of the construction industry
accounted for the following approximate percentages of total sales of ready-mix
concrete in the United States in 1998:

<TABLE>
<CAPTION>
SEGMENT PERCENTAGE
------- ----------
<S> <C>
Commercial and industrial construction...................... 18%
Residential construction.................................... 22%
Street and highway construction and paving.................. 32%
Other public works and infrastructure construction.......... 28%
---
Total....................................................... 100%
</TABLE>

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<PAGE> 37

Ready-mix concrete begins to harden when mixed and generally becomes
difficult to place within 60 to 90 minutes after mixing. This characteristic
generally limits the market for a permanently installed plant to an area within
a 25-mile radius of its location. Concrete manufacturers produce ready-mix
concrete in batches at their plants and use mixer and other trucks to distribute
and place it at the job sites of their customers. These manufacturers generally
do not provide paving or other finishing services that construction contractors
or subcontractors typically perform.

Manufacturers generally obtain contracts through local sales and marketing
efforts they direct at general contractors, developers and home builders. As a
result, local relationships are very important.

On the basis of information from the National Ready-mix Concrete
Association, in addition to vertically integrated manufacturers of cement and
ready-mix concrete, more than 3,500 independent producers currently operate a
total of approximately 5,300 plants in the United States. Larger markets
generally have numerous producers competing for business on the basis of price,
timing of delivery and reputation for quality and service. The typical ready-mix
concrete company is family-owned and has limited access to capital, limited
financial and technical expertise and limited exit strategies for its owners.
Given these constraints, many ready-mix concrete companies are finding it
difficult to both grow their businesses and compete effectively against larger,
more cost-efficient and technically capable competitors. These characteristics
present consolidation and growth opportunities.

Hot Mix Asphalt

Hot mix asphalt is a combination of approximately 95% aggregates bound
together by asphalt cement, also known as asphalt oil, a crude oil product. It
is used almost exclusively for paving and related applications.

To make hot mix asphalt, the asphalt cement is heated, combined and mixed
with the aggregates at a hot mix asphalt facility. It is then loaded into trucks
for transport to the paving site. The trucks dump the hot mix asphalt into
hoppers located at the front of paving machines. The asphalt is placed, and then
is compacted using a heavy roller which is driven over the asphalt. Because the
temperature of the hot mix asphalt drops rapidly after spreading and because
compaction of the hot mix asphalt to achieve a specified density must take place
at temperatures above 175 degrees, compaction usually takes place within a
matter of minutes after the paver spreads the hot mix asphalt. This generally
also limits the market a hot mix asphalt facility can serve to within a radius
of approximately 20 miles around the facility.

Hot mix asphalt is recyclable. One hundred percent of an asphalt pavement
can be picked up, remixed with a portion of fresh materials, and used again.

According to the National Asphalt Pavement Association, of the 2.27 million
miles of paved road in the U.S., 94% is surfaced with asphalt, including 65% of
the interstate system. We believe the hot mix asphalt industry has similar
characteristics to the ready mix concrete industry in that there are many local,
independent operators as well as some large consolidators. In many instances,
hot mix asphalt will be provided in conjunction with paving services by
integrated paving contractors.

BUSINESS STRATEGY

We intend to continue to grow our business over the next 3 to 5 years
utilizing a four-part business strategy. First, we plan to continue to build
value in markets currently served. In accomplishing this objective, we will
strive for significant amounts of negotiated work that command higher margins by
continuing our focus on customer satisfaction and loyalty and continuing our
efforts to retain and improve upon our market share leadership. We also will
continue to invest in technology to develop more efficient and service-oriented
truck dispatching, improve production methods to lower costs and maintain
superior equipment maintenance standards.

Second, we plan to expand our presence in existing markets through cash or
debt-financed acquisitions. We should have the opportunity to purchase smaller
materials companies that operate in or near current operations, as these markets
remain fragmented and include a large number of family-owned businesses facing
inter-generational transition issues. Successful acquisition of additional
operations will allow us to eliminate

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<PAGE> 38

duplicate overhead functions, improve efficiencies through the use of newer
technologies and benefit from cost savings derived from economies of scale in
operations and the purchasing of parts and supplies.

Third, we intend to enter, via cash or debt-financed acquisitions, new
high-growth potential markets. Metropolitan communities with high rates of
expected population growth, coupled with greater than average increases in
spending on retirement and leisure activities, are some of the variables that
are considered in selecting an area for expansion. We have begun to implement
this strategy with our recent acquisition of a materials operation located in
Northern California. This business is an integrated supplier of high quality
aggregates, ready mix concrete and asphalt. It serves the rapidly expanding
market between San Francisco and Sacramento.

Finally, we will seek to acquire and develop additional strategic aggregate
reserves in selected markets. The successful implementation of this strategy
element will not only replace reserves consumed by operations, but will enhance
our competitive cost position by the ownership of reserves in attractive
locations.

Since 1992, we have acquired eleven materials companies and started one new
site in the implementation of our four-part strategy. The purchase price payable
in these acquisitions ranged from approximately $2 million to $47 million. Two
of the nine acquisitions were in excess of $40 million, one was in excess of $30
million and the remainder were between $2 million and $7 million. These
acquisitions have allowed us to expand our presence in existing markets in
Arizona and the Vancouver, Washington and Portland, Oregon areas and enter to
new markets in Northern California. Revenues have increased from $40 million in
1992, to approximately $437 million for 1999 and production tonnage has grown
from 5.5 million tons in 1992, to in excess of 28 million tons in 1999. We
intend to continue our disciplined investment approach to achieve profitable
growth through acquisitions.

For the six-month period ended June 30, 2000, we expended approximately
$32.4 million and completed three acquisitions in connection with its growth
strategy. We are currently in negotiations to acquire two aggregates businesses.
The aggregate cash purchase price which would be payable for these acquisitions
is approximately $43.6 million. We can make no assurances that these two
acquisitions will be completed.

Although as a part of our growth strategy, we evaluate potential
acquisitions from time to time, we are not currently a party to any agreements
other than those relating to the two potential acquisitions which are being
negotiated, which, alone or in combination, would be material to our business,
or which would require separate disclosure.

OPERATIONS AND PROPERTIES

We are organized into four operating divisions: Arizona Operations, Pacific
Northwest Operations, Northern California Operations and Quarries Operations. We
believe that a decentralized management structure allows for a quicker reaction
to localized events and a more profitable operation. Each division is
responsible for maintenance and operation of significant investments in fixed
plant assets and a substantial mobile equipment fleet. Each operation also is
charged with customer relations, dispatching of delivery vehicles, quality
control, scheduling of production and the development and maintenance of certain
computer systems.

We are a vertically integrated provider of aggregates, ready-mix concrete
and asphalt products. Our operations employ approximately 2,300 people. We
operate 62 ready-mix batch plants or asphalt plants at 23 locations in Arizona,
California, Oregon and Washington. Our aggregates operations are located in
Arizona, California, New Mexico, Utah, Washington and Wyoming. We manage a truck
fleet of about 1,000 vehicles, 900 of which are owned and 100 of which are
either leased on a long-term basis or managed on a day-to-day rental basis. In
1999, our combined operations produced and sold in excess of 28 million tons of
aggregates consisting of construction materials, ballast, highway aggregates,
roofing aggregates, concrete block aggregates and landscape rock products. Our
Arizona operation also manages a construction service business in the Yuma,
Arizona area.

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<PAGE> 39

Our executive management provides our four operating divisions with
strategic planning, corporate development and acquisitions and operations
oversight. Materials also has a centralized administrative staff that provides
labor relations, various accounting functions, legal, tax planning and
compliance, equipment purchasing and equipment maintenance support.

RESERVES

We estimate that our total recoverable aggregates reserves are in excess of
550 million tons. The yield from the mining of these reserves is based on an
estimate of volume that can be economically extracted to meet current market and
product applications. Our mining plans are developed by experienced mining
engineers and operating personnel using drilling and geological studies in
conjunction with mine planning software. In certain instances, reserve
extraction is limited to phases or yearly amounts. Various properties also have
reserves under lease that have not been included in a mining permit. These
reserves have been excluded from our recoverable reserve estimate.

We own about 170 million tons of aggregates reserves and lease another 380
million tons of aggregates reserves. Our leases usually require royalty payments
based on either revenue derived from the location or an amount for each ton of
materials removed and sold from a site and have terms ranging from one year to
27 years. Materials royalty payments range from $0.40 to $1.00 per ton. Most of
our long-term leases also provide an option for the lease to be renewed.

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<PAGE> 40

The following table summarizes our principal aggregate production
facilities and estimated reserves at June 30, 2000:

<TABLE>
<CAPTION>
NATURE
ANNUAL PRODUCTION OF YEARS UNTIL RESERVE
PRODUCT TYPE OF FACILITY (IN THOUSANDS OF TONS) INTEREST DEPLETION
------------------- --------------------------- ---------------------- -------- ---------------------
<S> <C> <C> <C> <C> <C>
Portland Sand and Gravel(8) Production and Distribution 5,558 5 Leased Average of 12.6 years
Oregon/Vancouver Gray Basalt(2) 5 Owned
Washington Area (10
sites)
Yolo County, Sand and Gravel Production and Distribution 1,000 Owned 27.5 years
California
Milford, Utah Quartz Latite Production and Distribution 400 Leased 17.6 years
Little Lake, Scoria Production and Distribution 80 Leased 19.4 years
California
Granite Canyon, Granite Production and Distribution 4,000 Leased 28.5 years
Wyoming
Des Moines, New Scoria Production and Distribution 125 Leased 31.3 years
Mexico
Guernsey, Wyoming Dolomite, Limestone Production and Distribution 800 1 Leased Over 100 years
and Quartz 2 Owned
Phoenix, Arizona Area Sand and Gravel Production and Distribution 14,514 9 Leased Average of 6.9 years
(11 sites) 2 Owned
Tucson, Arizona Area Sand and Gravel Production and Distribution 2,600 1 Leased Average of 6.3 years
(4 sites) 3 Owned
Nogalas, Arizona Sand and Gravel Production and Distribution 160 Leased 23.6 years
Sierra Vista, Arizona Sand and Gravel Production and Distribution 400 Leased 17.1 years
Flagstaff, Arizona (3 Sand and Gravel Production and Distribution 485 Leased Average of 52.5 years
sites)
Coolidge, Arizona Sand and Gravel Production and Distribution 500 Leased 16.4 years
Casa Grande, Arizona Sand and Gravel Production and Distribution 750 Leased 16.02 years
Winkelman, Arizona Gypsum Production 112 Owned Over 100 years
Campe Verde, Arizona Sand and Gravel Production and Distribution 700 Owned 6.8 years
Globe, Arizona Sand and Gravel Production and Distribution 275 Owned 14.9 years
Yuma, Arizona Sand and Gravel Production and Distribution 600 Leased 52.0 years
Fort Mojave Indian Sand and Gravel Production and Distribution 500 Leased 49.7 years
Reservation,
Arizona
Bullhead City, Sand and Gravel Production and Distribution 275 Leased 18.2 years
Arizona
</TABLE>

Estimated reserves are the probable reserves that are at each quarry site.
The reserve figures include only saleable tonnage and thus exclude waste
material that is generated in the crushing and processing phases of the
operation. Overall reserve estimates are determined by using a combination of
drill holes, quarry mining plans and historical averages. Sites may have leases
that expire prior to the exhaustion of estimated reserves. The reserve life
anticipates that some leases will be renewed to allow sufficient time to fully
recover this material. The reserve estimate numbers for the property in Yolo
County, California assume that the property will be limited to the current
permit and that the permit will not be extended past its expiration date. The
figures used in the reserve data and remaining life may require revisions due to
changes in customer requirements and unknown geological occurrences. Estimated
useful lives are calculated as total saleable reserves at a location divided by
annual production. Actual useful lives will be subject to, among other things,
fluctuations in customer demand, customer specifications, geological conditions
and changes in mining plans. The life of any site in a city or area with
multiple sites may be exhausted prior to or extend beyond the average life for
the sites in that city or area.

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<PAGE> 41

PRODUCTS

AGGREGATES. We sell primarily to third parties and utilize internally
various types of aggregate products. The production of these products typically
involves extracting the material, crushing and sizing the material and shipping
it to the customer using either trucks or rail. Approximately 37% of the
aggregates produced in 1999 were used internally in the production of
value-added concrete and asphalt products.

READY-MIX CONCRETE. We produce ready-mix concrete by combining aggregates,
cement, water and additives. The additives allow us to customize the product to
customer specifications for overall strength, drying speed and other properties.
Product ingredients are combined at a batch plant site and loaded into a mixer
truck for delivery to the customer's location.

ASPHALT. We also produce and sell asphalt products. Asphalt is a mixture
of aggregates and asphalt oil. The asphalt oil is heated and combined at a plant
site and then loaded into dump trucks for transit to the customer's location.
Customer specifications can require the use of certain types or sizes of
aggregates and/or varying proportions of aggregates and asphalt oil.

CUSTOMERS

We market to a wide variety of customers including street and highway
contractors, industrial and residential contractors, public works contractors,
wholesalers and retailers of decorative rock products, interstate railroads and
manufacturers of concrete block products. Produced material is used in both
publicly and privately funded projects, although we do not directly contract
with any public entity. No single customer accounts for more than 3% of sales.

COMPETITION

Due to the high cost of transportation, the materials business is highly
dependent on the availability of high quality aggregates proximate to customers
and production facilities. While price is an important factor in the customer's
purchase decision, qualitative factors such as response time, reliability and
product quality influence the purchase decision as well. With much of the
industry consisting of small to medium sized independent firms, economies of
scale, good site locations and technical knowledge will often provide a
competitive advantage. While we believe we possess these attributes in the
markets we serve, in certain segments of those markets we compete directly with
integrated materials companies that have greater financial resources. It is also
possible that competitors with a lower cost structure or a willingness to accept
lower margins than us may have an advantage on price sensitive projects.

EMPLOYEES

We employ approximately 2,300 people. Of these, about 400 are officers,
operations management, sales personnel, technical staff, administrative
personnel and clerical staff. Approximately 1,600 employees are represented by
labor unions under collective bargaining agreements and approximately 300 are
non-union craft employees. The collective bargaining agreements have multi-year
terms and expiration dates spread out over a period of time. These agreements
call for specified wage rates, payments to pension plans or benefit trusts and
require us to comply with various workplace rules. We consider relations with
our employees to be good.

GOVERNMENTAL AND ENVIRONMENTAL REGULATION

Our facilities are subject to various evolving federal, state and local
laws and regulations relating to the environment, including those relating to
discharges to air, water and land, the handling and disposal of solid and
hazardous waste and the cleanup of properties affected by hazardous substances.
Certain environmental laws impose substantial penalties for non-compliance and
others, such as the federal Comprehensive Environmental Response, Compensation
and Liability Act, as amended, impose strict, retroactive, joint and several
liability upon persons responsible for releases of hazardous substances.

We continually evaluate whether we must take additional steps at our
locations to ensure compliance with certain environmental laws. We believe that
our operations are in substantial compliance with applicable

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<PAGE> 42

laws and regulations and that any noncompliance is not likely to have a material
adverse effect on our business, financial position, results of operations or
cash flows. However, future events, such as changes in, or modified
interpretations of, existing laws and regulations or enforcement policies, or
further investigation or evaluation of the potential health hazards of certain
products or business activities, may give rise to additional compliance and
other costs that could have a material adverse effect on our business.

We, as well as other companies in the aggregates industry, produce certain
products containing varying amounts of crystalline silica. Excessive and
prolonged inhalation of very small particles of crystalline silica has been
associated with non-malignant lung disease. The carcinogenic potential of
excessive exposure to crystalline silica has been evaluated for over a decade by
a number of research groups including the International Agency for Research on
Cancer, the National Institute for Occupational Safety and Health and the
National Toxicology Program, a part of the Department of Health and Human
Services. Results of various studies have ranged from classifying crystalline
silica as a probable to a known carcinogen. Other studies concluded higher
incidences of lung cancer in some operations were due to cigarette smoking, not
silica. Governmental agencies, including the Occupational Safety and Health
Administration and Mine Safety Health Administration, coordinate to establish
standards for controlling permissible limits on crystalline silica. We believe
we currently meet government guidelines for crystalline silica exposure and will
continue to employ advanced technologies as they become available to ensure
worker safety and to comply with all applicable regulations.

We believe that our compliance with environmental laws has not had a
material adverse effect on our business, financial position, results of
operations or cash flows.

LEGAL PROCEEDINGS

From time to time, we have been involved in various legal proceedings
relating to our operations and properties, all of which we believe are routine
in nature and incidental to the conduct of our business. Although the ultimate
legal and financial liability associated with such proceedings cannot be
estimated with certainty, we believe, based on our examination of such matters,
that none of these proceedings, if determined adversely, would have a material
adverse effect on our business, financial position, results of operations or
cash flows.

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<PAGE> 43

MANAGEMENT

SENIOR MANAGEMENT AND DIRECTORS

The following table provides material information concerning our board of
directors and our executive officers who will be serving or in office as of the
date of the spin-off.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Christopher J. Murphy................ 45 President, Chief Executive Officer and Director
Donald E. Bowman..................... 52 Vice President and Chief Financial Officer
Mark E. Belmont...................... 47 Vice President, General Counsel and Secretary
Todd A. Freyer....................... 39 Controller and Treasurer
Daniel W. Speck...................... 45 Vice President
John J. Shaffer...................... 50 Vice President
Richard W. Colf...................... 57 Director
Richard Geary........................ 65 Director
James Goodwin........................ 44 Director
Bruce E. Grewcock.................... 46 Director
William L. Grewcock.................. 74 Director
Walter Scott, Jr..................... 69 Director
Kenneth E. Stinson................... 57 Chairman of the Board of Directors
</TABLE>

OTHER KEY PERSONNEL

The following table provides material information concerning other key
personnel of Materials.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John L. Fowler....................... 57 Vice President, United Metro Materials, Inc. and Vice
President, Solano Concrete Co., Inc., each a Materials
subsidiary
R. David Jennings.................... 53 Vice President, Twin Mountain Rock Company, a Materials
subsidiary
William G. Heeter.................... 62 Vice President -- Sales and Marketing, United Metro
Materials, Inc.
Rick W. Thomas....................... 43 Director of Business Development, Materials
</TABLE>

Christopher J. Murphy. Mr. Murphy has been a director and the Chief
Executive Officer of Materials since January 1, 2000. Mr. Murphy has been the
President of Materials since February 2, 1999. Mr. Murphy has been the President
of Kiewit Mining Group Inc., a Kiewit subsidiary, since July 1996 and was Vice
President of Kiewit Mining Group Inc. from October 1995 to July 1996. Mr. Murphy
has been the President of United Metro Materials since July 1996, and was Senior
Vice President of United Metro Materials from August 1994 to July 1996. Mr.
Murphy is the Chairman of the Executive Committee of Materials. Following the
spin-off, Mr. Murphy will cease to be an officer of Kiewit Mining Group.

Donald E. Bowman. Mr. Bowman has been Vice President and Chief Financial
Officer of Materials since April 24, 2000. Mr. Bowman was President, Eastern
Region, Construction Materials of Lafarge Corporation from January 1998 to March
1999. Mr. Bowman was President and Chief Executive Officer of Redland Genstar,
Inc. for more than five years prior to January 1998.

Mark E. Belmont. Mr. Belmont has been General Counsel and Secretary of
Materials since January 1, 2000 and a Vice President of Materials since February
2, 1999. Mr. Belmont has been Senior Corporate Counsel of Kiewit since July
1991.

36
<PAGE> 44

Todd A. Freyer. Mr. Freyer has been Controller of Materials since April 1,
2000 and the Treasurer since February 2, 1999. Mr. Freyer has been Accounting
Manager of Kiewit Mining Group since April 1999 and was Accounting Supervisor of
Kiewit Mining Group for more than five years prior to April 1999. Following the
spin-off, Mr. Freyer will cease to be an employee of Kiewit Mining Group.

Daniel W. Speck. Mr. Speck has been a Vice President of Materials since
January 1, 2000. Mr. Speck has been Vice President of United Metro since April
1997. Mr. Speck was the manager of Walnut Creek Mining Company from March 1993
to March 1997.

John J. Shaffer. Mr. Shaffer has been a Vice President of Materials since
January 1, 2000. Mr. Shaffer has been Vice President of Pacific Rock Products,
L.L.C. since February 1, 1996. Mr. Shaffer was Vice President of Pacific Rock
Products, Inc. for more than five years prior to February 1, 1996.

Richard W. Colf. Mr. Colf has been a director of Materials since January
1, 2000. Mr. Colf has been an Executive Vice President of Kiewit since July
1998. Mr. Colf has been an Executive Vice President of Kiewit Pacific Co., a
Kiewit subsidiary, since September 1998, was a Senior Vice President of Kiewit
Pacific from October 1995 to September 1998 and was a Vice President of Kiewit
Pacific for more than five years prior to October 1995. Mr. Colf is currently
also a director of Kiewit. Mr. Colf is a member of the Audit Committee of
Materials.

Richard Geary. Mr. Geary has been a director of Materials since January 1,
2000. Mr. Geary was an Executive Vice President of Kiewit from August 1997 to
July 1998. Mr. Geary was an Executive Vice President of Kiewit Construction
Group Inc., a Kiewit subsidiary, and President of Kiewit Pacific Co. for more
than five years prior to August 1997. Mr. Geary is currently also a director of
Kiewit, and serves on the board of directors of Standard Insurance Company,
David Evans & Associates, Today's Bank, and is a trustee of the Oregon Health
Sciences University Foundation. Mr. Geary is the Chairman of the Audit Committee
of Materials.

James Goodwin. Mr. Goodwin has been a director of Materials since April 1,
2000. Mr. Goodwin has been a private investor since February 1998. Mr. Goodwin
was a Managing Director at Gleacher NatWest, Inc. for more than five years prior
to February 1998. Mr. Goodwin is also a director of Champps Entertainment, Inc.
Mr. Goodwin is a member of the Compensation Committee of Materials.

Bruce E. Grewcock. Mr. Grewcock has been a director of Materials since
February 2, 1999. Mr. Grewcock has been an Executive Vice President of Kiewit
since August 1997. Mr. Grewcock has been the President of Kiewit Western Co., a
Kiewit subsidiary, since July 1997. Mr. Grewcock was an Executive Vice President
of Kiewit Construction Group Inc. from July 1996 to June 1998 and President of
Kiewit Mining Group Inc., from January 1992 to July 1996. Mr. Grewcock is
currently also a director of Kiewit and Kinross Gold Corporation. Mr. Grewcock
is a member of the Executive Committee and the Compensation Committee of
Materials.

William L. Grewcock. Mr. Grewcock has been a director of Materials since
January 1, 2000. Mr. Grewcock was Vice Chairman of Level 3 Communications, Inc.
for more than five years prior to April 1998. Mr. Grewcock is currently also a
director of Kiewit and Level 3. Mr. Grewcock is a member of the Audit Committee
of Materials.

Walter Scott, Jr. Mr. Scott has been a director of Materials since January
1, 2000. Mr. Scott has been the Chairman Emeritus of Kiewit since August 1997
and has been the Chairman of the Board of Level 3 Communications, Inc. for more
than the last five years. Mr. Scott was the Chief Executive Officer of Level 3
for more than five years prior to August 1997. Mr. Scott is currently also a
director of Berkshire Hathaway Inc., Burlington Resources Inc., MidAmerican
Energy Holding Co., ConAgra, Inc., Commonwealth Telephone Enterprises, Inc., RCN
Corporation, Kiewit, Valmont Industries, Inc. and Level 3. Mr. Scott is a member
of the Compensation Committee of Materials.

Kenneth E. Stinson. Mr. Stinson has been a director and Chairman of
Materials since January 1, 2000. Mr. Stinson has been President of Kiewit since
August 1997 and Chairman and Chief Executive Officer of Kiewit since March 1998.
Mr. Stinson has been the Chairman and Chief Executive Officer of Kiewit

37
<PAGE> 45

Construction Group, Inc. for more than the last five years. Mr. Stinson was
Executive Vice President of Level 3 Communications, Inc. from June 1991 to
August 1997. Mr. Stinson is currently also a director of ConAgra, Inc., Valmont
Industries, Inc., Kiewit and Level 3. Mr. Stinson is a member of the Executive
Committee and is the Chairman of the Compensation Committee of Materials.

John L. Fowler. Mr. Fowler has been Vice President of United Metro
Materials since March 1, 1994 and was President of the United Metro division of
The Tanner Companies from 1985 to 1994. Mr. Fowler has been Vice President of
Solano Concrete Co., Inc. since January 3, 2000.

R. David Jennings. Mr. Jennings has been Vice President of Twin Mountain
Rock Company, a Materials subsidiary, since 1986.

William G. Heeter. Mr. Heeter has been Vice President -- Sales and
Marketing of United Metro Materials and its predecessors since 1971.

Rick W. Thomas. Mr. Thomas has been Director of Business Development of
Materials since January 1999. From 1997 to 1998, Mr. Thomas held a senior
operations position with Kiewit Mining Group Inc. From 1996 to 1997, Mr. Thomas
was Vice President -- Engineering of Anker Energy Corporation. Mr. Thomas was
Vice President -- Operations of Great Western Coal Company for more than five
years prior to 1996.

The Materials board of directors is divided into three classes, designated
Class I, Class II and Class III, each class consisting, as nearly as possible,
of one-third of the total number of directors constituting the Materials board.
The initial Class I directors are: Messrs. Bruce Grewcock, William Grewcock and
Scott. The initial Class II directors are: Messrs. Colf, Geary and Goodwin. The
initial Class III directors are: Messrs. Murphy and Stinson. The term of the
initial Class I directors will terminate on the date of the 2001 annual meeting
of stockholders. The term of the initial Class II directors will terminate on
the date of the 2002 annual meeting of stockholders. The term of the initial
Class III directors will terminate on the date of the 2003 annual meeting of the
stockholders. At each annual meeting of stockholders beginning in 2001,
successors to the class of directors whose term expires at that annual meeting
will be elected for three-year terms.

COMMITTEES

The board of directors has an Audit Committee, a Compensation Committee and
an Executive Committee.

The Audit Committee recommends the selection of and reviews the services
provided by Materials' independent auditors, consults with the independent
auditors and reviews the need for internal auditing procedures and the adequacy
of internal controls and reports and makes recommendations to the full board.
The initial Audit Committee members are Messrs. Geary (Chairman), Colf and
William Grewcock.

The Compensation Committee determines the compensation of the Chief
Executive Officer, recommends the compensation of Materials' key management and
personnel and recommends securities ownership and other benefits. The initial
Compensation Committee members are Messrs. Stinson (Chairman) Goodwin, Bruce
Grewcock and Scott.

The Executive Committee exercises, to the maximum extent permitted by law,
all powers of the board between board meetings, except those functions assigned
to specific committees. The initial Executive Committee members are Messrs.
Murphy (Chairman), Bruce Grewcock and Stinson.

38
<PAGE> 46

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table presents information regarding the compensation paid by
Kiewit to Materials' Chief Executive Officer and each of Materials' three other
most highly compensated executive officers for the fiscal year ended December
25, 1999. Kiewit does not maintain plans under which options, stock appreciation
rights, restricted stock awards, long-term incentive compensation, profit
sharing, or pension benefits were granted to Materials' named executive
officers.

<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)
--------------------------- ---- --------- --------
<S> <C> <C> <C>
Christopher J. Murphy,
President and Chief Executive Officer..................... 1999 185,700 150,000
John J. Shaffer,
Vice President............................................ 1999 138,312 111,754
Mark E. Belmont,
Vice President, General Counsel and Secretary............. 1999 134,875 13,000
Daniel W. Speck,
Vice President............................................ 1999 117,650 30,000
</TABLE>

Other annual compensation is not included because, in 1999, no executive
officer received any other annual compensation in excess of the reporting
threshold.

DIRECTOR COMPENSATION

Directors of Materials who are not employees or officers of Materials or
its subsidiaries or employees, officers or directors of Kiewit or its
subsidiaries will receive directors' fees consisting of an annual retainer of
$35,000, payable in shares of Materials common stock.

OTHER COMPENSATION AND EQUITY PROGRAMS

Materials intends to implement a retention bonus program for certain of its
key employees to ensure their continued employment during Materials' transition
to an independent company. Materials anticipates that any bonuses under this
bonus program will be paid to such key employees who remain employed on January
1, 2001 and January 1, 2002. The amount of any bonuses and the determination of
the individuals to whom bonuses may be paid will be determined by the Materials
board of directors and management in their sole discretion.

The compensation payable to certain of Materials' executive officers who
previously were employees of Kiewit is expected to increase following the
spin-off.

Kiewit has historically offered certain of its employees the opportunity to
purchase securities in annual common stock and debenture offerings. The Kiewit
board of directors and management, in their sole discretion, select the
employees to whom Kiewit's securities will be offered and determine the amount
of securities to be offered. Kiewit securities are offered only to salaried
employees who are satisfactorily performing on a continuing basis in either an
executive, managerial, administrative or professional capacity. The following
factors are among those considered in determining whether an employee will be
offered Kiewit securities and the amount of securities to be offered: the
employee's effort and relative contribution to Kiewit's economic performance;
the employee's level of responsibility; the potential displayed by the employee;
the employee's length of service; and the amount of securities presently owned
by the employee. In addition, Kiewit debentures are only offered to those
employees whom the Kiewit board and management determine have contributed
significantly to the growth and performance of Kiewit. Materials intends to
follow Kiewit's

39
<PAGE> 47

prior practice by regularly selling Materials common stock and debentures to
Materials employees in annual offerings. However, although Materials intends to
follow Kiewit's prior practice, Materials is not required to offer its
securities in any particular year, nor is Materials obligated to offer
securities to any particular employee, whether or not that employee is already a
security holder of Materials, in any particular year. In addition, Materials
does not anticipate selling capital stock that represents, in the aggregate,
more than 12% of the capital stock of Materials outstanding on a fully diluted
basis immediately after the spin-off to employees over the next four to six
years.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

After the spin-off, Kiewit and Materials will have continuing obligations
to one another under the separation agreement and certain other agreements
described in "Relationship Between Materials and Kiewit."

40
<PAGE> 48

SECURITY OWNERSHIP OF MATERIALS COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF MATERIALS

The table below shows information about the expected ownership of Materials
common stock as of the date of the spin-off, by each of Materials' directors,
and its four most highly compensated executive officers in 1999 and each person
who is expected to beneficially own more than 5 percent of Materials common
stock. The table also shows the expected ownership of Materials common stock by
all of the directors and executive officers as a group as of that date. The
ownership information presented below with respect to all persons:

- is based on the ownership of Materials common stock after the completion
of the share exchange and the debenture exchange offer;

- reflects the beneficial ownership of Kiewit common stock at June 30, 2000
and the distribution ratio of one share of Materials common stock for
each share of Kiewit common stock in the spin-off, and the Materials
common stock split necessary to achieve that ratio; and

- assumes no change in beneficial ownership of Kiewit's common stock
between June 30, 2000 and the date of the spin-off.

"Beneficial ownership" means the sole or shared power to vote, or to direct the
voting of, a security, or the sole or shared power to dispose of, or to direct
the disposition of, a security. A person is deemed, as of any date, to have
"beneficial ownership" of any security that such person has the right to acquire
within 60 days after such date.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME BENEFICIALLY OWNED OF SHARES
---- ------------------ ---------
<S> <C> <C>
Kenneth E. Stinson(1)(2).................................... 2,880,492 8.30%
Richard W. Colf............................................. 1,725,960 4.98%
Bruce E. Grewcock........................................... 958,804 2.76%
Christopher J. Murphy....................................... 811,450 2.34%
Richard Geary............................................... 717,780 2.07%
Walter Scott, Jr............................................ 400,000 1.15%
Daniel W. Speck............................................. 202,563 *
Mark E. Belmont............................................. 39,033 *
John J. Shaffer............................................. 9,535 *
William L. Grewcock......................................... 8,192 *
James Goodwin............................................... -- *
--------- ------
Directors and Executive Officers as a Group (13
Individuals).............................................. 7,799,031 22.48%
</TABLE>

---------------
* Less than 1%

(1) Includes 766,773 shares of Materials common stock expected to be held in
trusts, for which Mr. Stinson is the trustee with sole voting and investment
powers.

(2) Mr. Stinson's address is c/o Kiewit Plaza, Omaha, Nebraska 68131.

41
<PAGE> 49

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

Upon completion of the spin-off, the authorized capital stock of Materials
will consist of 100,000,000 shares of common stock, par value $0.01 per share,
and 10,000,000 shares of preferred stock, par value $0.01 per share of which
shares will be issued and outstanding.

VOTING RIGHTS

The holders of Materials common stock are entitled to one vote per share on
all matters to be voted on by stockholders and are entitled to receive such
dividends, if any, as may be declared from time to time by the board of
directors from legally available funds. Holders of common stock are not entitled
to cumulative voting rights. The holders of the common stock have no preemptive
or other subscription rights and there are no conversion rights or redemption or
sinking fund provisions with respect to the common stock. All outstanding shares
of common stock, including the shares being offered in the spin-off, are, or
will be upon completion of the spin-off, fully paid and non-assessable.

The Materials restated certificate of incorporation provides that any
amendment to the provisions in the restated certificate of incorporation
regarding the classification of the board of directors requires the approval of
at least 80% of the Materials common stock. Any amendment to the 80% threshold
requires the approval of at least 80% of the Materials common stock. Amendments
to the provisions in the restated certificate of incorporation regarding
stockholders' repurchase rights, the definition of the formula price, stock
ownership and transfer restrictions, the prohibition of stockholder action by
written consent in place of a meeting, the limitation on the right of
stockholders to call special meetings of stockholders, the limitation on the
right of stockholders to present proposals or nominate directors for election at
annual meetings of stockholders and amendments to the restated certificate of
incorporation require the approval of at least 66 2/3% of the Materials common
stock.

REPURCHASE RIGHTS

Holders of Materials common stock are generally permitted, at any time on
or prior to the 15th day of any calendar month, to offer to sell all or part of
their common stock to Materials at the current formula price. Materials is
generally required to accept the offer within 10 days of receipt of the offer,
provided, however, that after giving effect to the purchase, there remain at
least 1,000 shares of capital stock of Materials issued and outstanding and
having full voting power.

The Materials board of directors may suspend Materials' duties to
repurchase Materials common stock offered by a stockholder upon the Materials
board's determination that the Materials adjusted book value to be determined at
the end of the current fiscal year is likely to be less that the Materials
adjusted book value determined at the end of the prior fiscal year, less
dividends declared on Materials common stock since the prior fiscal year end.
This suspension may not exceed one year.

The Materials board has the right to decide to conserve Materials' cash by
temporarily halting Materials' duty to repurchase Materials common stock for
cash. In such event, payment will be in the form of interest-bearing promissory
notes instead of cash. Such promissory notes will have such term to maturity, up
to 5 years, as the Materials board may determine. Holders may withdraw tenders
of shares of Materials common stock that would be paid for with notes. The
Materials board has the right to invoke this cash repurchase limitation only
after more than 5% of the outstanding shares of Materials common stock have been
tendered in any fiscal year.

Under Section 160 of the Delaware General Corporation Law, Materials may
not repurchase shares of its common stock if its capital is impaired or if the
repurchase would impair its capital.

Materials' repurchase obligations may be terminated by Materials' board of
directors at any time. However, the board shall not have that authority unless
it has also determined that the Materials common stock is publicly traded.

42
<PAGE> 50

LIQUIDATION RIGHTS

Upon the liquidation, dissolution or winding up of Materials, after the
creditors of Materials and the holders of Materials preferred stock (if any),
receive the full preferential amounts to which they are entitled, holders of
Materials common stock will be entitled to receive any assets available for
distribution to stockholders of Materials.

FORMULA PRICE

The formula price of Materials common stock is the price at which Materials
purchases shares of its common stock and is based upon the adjusted book value
of Materials at the end of the previous year.

The per share formula price is determined by decreasing the prior year's
book value by the stockholders' equity attributable to any preferred stock, and
increasing such result by the portion of the face amount of any outstanding
Materials debentures convertible into Materials common stock at the end of such
year, and then dividing this result by the sum of (1) the number of outstanding
shares of Materials common stock and (2) the number of shares reserved for
conversion of such debentures into Materials common stock, each at the end of
such year. This quotient is rounded down to the nearest $.01 and the result
represents the adjusted book value per share of the Materials common stock. For
purposes of determining the formula price during the fiscal year 2000, shares of
Materials common stock issued to Kiewit prior to the spin-off shall be deemed to
be outstanding at the end of the fiscal year 1999. The per share formula price
is determined by reducing this amount by any dividends per share declared on the
Materials common stock since the prior year end. In addition to any adjustments
for declared dividends during the current year, the initial formula price for
Materials common stock is also adjusted for the amount of any capital
contributions made by Kiewit to Materials during fiscal year 2000 prior to the
spin-off, other than any capital contribution made in connection with the
issuance of Materials debentures in exchange for Kiewit debentures.

OWNERSHIP AND TRANSFER RESTRICTIONS

Holders of Materials common stock are prohibited from transferring the
common stock in any manner except in a sale to Materials and, with prior
approval by the Materials board of directors, to certain authorized transferees
of the holders. Those authorized transferees consist of fiduciaries for the
benefit of the holders and members of the immediate families of the holders,
corporations wholly owned by holders or holders and their spouses and/or
children, fiduciaries for the benefit of such corporations and charities and
fiduciaries for charities designated by any such persons. Upon the death of a
Materials stockholder, the shares of Materials common stock owned by the
deceased stockholder would be permitted to be transferred to his or her estate,
provided that the shares transferred to the transferee would be subject to the
same transfer restrictions. There is no restriction on the maximum amount of
Materials common stock that may be owned by any individual or entity.

Holders of Materials common stock are permitted to pledge the Materials
common stock for loans in connection with the ownership of the Materials common
stock.

All transfer restrictions on Materials common stock may be terminated by
the Materials board at any time.

43
<PAGE> 51

LISTING

Materials common stock is not listed on any national securities exchange or
quoted on the Nasdaq National Market.

LIMITATION ON DIRECTORS' LIABILITY

The Materials restated certificate of incorporation provides that a
director of Materials will not be personally liable to Materials or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for:

- any breach of the director's duty of loyalty to Materials or its
stockholders;

- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; or

- for any transaction from which the director derived an improper personal
benefit.

PREFERRED STOCK

The Materials board of directors is empowered, without approval of the
stockholders, to issue shares of Materials preferred stock in one or more
series, with the numbers of shares of each series and the powers, preferences,
rights and limitations of each series to be determined by the board. Among the
specific matters that may be determined by the board of directors are:

- the rate of dividends;

- the rights and terms of conversion or exchange;

- voting rights;

- the terms of redemption;

- the amount payable in the event of any voluntary liquidation, dissolution
or winding up of the affairs of Materials; and

- the terms of a sinking or purchase fund.

STOCKHOLDER CONSENT

Under the Delaware General Corporation Law, unless otherwise provided in a
corporation's certificate of incorporation, any action which is required or
permitted to be taken at an annual or special meeting of stockholders may
instead be taken without a meeting, without prior notice and without a vote, if
the requirements for an action by written consent are met. The Materials
restated certificate of incorporation provides that stockholders of Materials
may only take action at an annual or special meeting and may not act by written
consent.

STOCKHOLDERS' MEETINGS

Under the Delaware General Corporation Law, special meetings of
stockholders of a corporation may be called by the corporation's board of
directors or by persons authorized by the corporation's certificate of
incorporation or by-laws. The Materials restated certificate of incorporation
provides that special meetings of the stockholders may be called only by the
Materials board of directors, the Chairman of the Board or the Chief Executive
Officer and may not be called by any other person or persons. Accordingly,
stockholders of Materials may not call a special meeting of stockholders.

44
<PAGE> 52

EXPERTS

The audited financial statements of Kiewit Materials Company as of December
25, 1999 and December 26, 1998 and for the three years in the period ended
December 25, 1999 included in this information statement have been audited by
PricewaterhouseCoopers LLP, independent accountants, and, insofar as they relate
to Granite Canyon Joint Venture as of December 31, 1999 and 1998 and for each of
the three years in the period ended December 31, 1999 by Arthur Andersen LLP,
independent public accountants, and Pacific Rock Products L.L.C. and Pacific
Rock Products Trucking L.L.C. (formerly River City Machinery, L.L.C.) as of
December 31, 1998 and 1997 and for each of the two years in the period ended
December 31, 1998, and by Perkins & Company, P.C., independent accountants,
respectively, both of whose reports thereon appear herein. Such financial
statements have been so included in reliance on the reports of such independent
accountants given on the authority of such firms as experts in auditing and
accounting.

The audited financial statements of Granite Canyon Joint Venture as of
December 31, 1999 and 1998 and for the three years in the period ended December
31, 1999, not separately presented in this information statement, have been
audited by Arthur Andersen LLP, independent public accountants, whose report
thereon appears herein. Such financial statements, to the extent they have been
included in the financial statements of Kiewit Materials Company, have been so
included in reliance upon the reports of said firm as experts in auditing and
accounting.

The audited financial statements of Pacific Rock Products L.L.C. and
Pacific Rock Products Trucking L.L.C. (formerly River City Machinery, L.L.C) as
of December 31, 1998 and 1997 and for each of the two years in the period ended
December 31, 1998 included in this information statement have been so included
in reliance on the report of Perkins & Company, P.C., independent accountants,
given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

Materials has filed a registration statement on Form 10 to register with
the Securities and Exchange Commission the Materials common stock. As allowed by
SEC rules, this information statement does not contain all of the information
that stockholders can find in the registration statement or the exhibits and
schedules to the registration statement. You may inspect and copy the
registration statement and the exhibits to the registration statement that we
have filed with the SEC at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. In addition, the
registration statement will also be available to the public from commercial
document retrieval services and at the SEC's World Wide Web site at
"http://www.sec.gov."

Following the spin-off, Materials will be required to file annual,
quarterly and current reports, proxy statements and other information with the
SEC.

Materials has not authorized anyone to provide you with information that is
different from what is contained in this information statement. This information
statement is dated , 2000. You should not assume that the information
contained in the information statement is accurate as of any date other than
that date, and neither the mailing of this information statement to stockholders
nor the distribution of Materials common stock to Kiewit stockholders shall
create any implication to the contrary.

45
<PAGE> 53

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Reports of Independent Accountants.......................... F-2
Consolidated Financial Statements as of December 25, 1999
and December 26, 1998 and for the three years in the
period ended December 25, 1999:
Consolidated Statements of Earnings....................... F-5
Consolidated Balance Sheets............................... F-6
Consolidated Statements of Cash Flows..................... F-7
Consolidated Statements of Changes in Stockholder's Equity
and Comprehensive Income............................... F-8
Notes to Consolidated Financial Statements................ F-9
Report of Independent Accountants on Consolidated Financial
Schedule.................................................. F-21
Consolidated Financial Statement Schedule for the three
years in the period ended December 25, 1999............... F-22
Consolidated Condensed Financial Statements as of March 31,
2000 and for the three months ended March 31, 2000 and
1999:
Consolidated Condensed Statements of Earnings............. F-23
Consolidated Condensed Balance Sheet...................... F-24
Consolidated Condensed Statements of Cash Flows........... F-25
Notes to Consolidated Condensed Financial Statements...... F-26
</TABLE>

F-1
<PAGE> 54

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholder
Kiewit Materials Company

In our opinion, based on our audits and the reports of other auditors, the
accompanying consolidated balance sheets and the related consolidated statements
of earnings, changes in stockholder's equity and comprehensive income, and cash
flows present fairly, in all material respects, the financial position of Kiewit
Materials Company and its subsidiaries (the "Company") at December 25, 1999 and
December 26, 1998, and the results of their operations and their cash flows for
each of the three years in the period ended December 25, 1999 in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Granite Canyon Quarry
for 1999, 1998 and 1997 and, Pacific Rock Products, L.L.C. and Pacific Rock
Products Trucking, L.L.C. (formerly River City Machinery, L.L.C.) for 1998 and
1997 the investments in which comprise $5,121,686 and $15,615,740 of the
Company's total assets as of December 25, 1999 and December 26, 1998,
respectively, and $4,290,969, $8,190,779 and $6,243,716 of the Company's
earnings before income taxes for each of the three years in the period ended
December 25, 1999. Those statements were audited by other auditors whose reports
thereon have been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for Granite Canyon Quarry, Pacific Rock
Products, L.L.C. and Pacific Rock Products Trucking, L.L.C. (formerly River City
Machinery, L.L.C.), is based solely on the reports of the other auditors. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits and the reports of other auditors provide a reasonable
basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Omaha, Nebraska
March 17, 2000

F-2
<PAGE> 55

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Management Committee of
Granite Canyon Quarry:

We have audited the balance sheets of GRANITE CANYON QUARRY (the "Venture") as
of December 31, 1999 and 1998, and the related statements of income, changes in
venturers' capital and cash flows for the years then ended (not presented
herein). These financial statements are the responsibility of the Venture's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Granite Canyon Quarry as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States.

Arthur Andersen LLP

Denver, Colorado,
March 3, 2000

F-3
<PAGE> 56

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Management Committee of
Granite Canyon Quarry:

We have audited the balance sheets of GRANITE CANYON QUARRY (the "Venture") as
of December 31, 1998 and 1997, and the related statements of income, changes in
venturers' capital and cash flows for the years then ended (not presented
herein). These financial statements are the responsibility of the Venture's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Granite Canyon Quarry as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Denver, Colorado,
March 29, 1999

F-4
<PAGE> 57

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE YEARS ENDED DECEMBER 25, 1999

<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Revenue....................................... $ 437,057,648 $ 333,060,002 $ 277,308,896
Cost of revenue............................... (358,112,282) (286,046,917) (231,304,212)
Depreciation, depletion and amortization...... (16,819,147) (12,112,930) (10,985,109)
------------- ------------- -------------
62,126,219 34,900,155 35,019,575
General and administrative expenses........... (24,683,403) (19,062,488) (16,227,521)
------------- ------------- -------------
Operating earnings............................ 37,442,816 15,837,667 18,792,054
Other income (expense):
Investment income........................... 4,585,287 3,551,074 3,526,354
Equity earnings............................. 265,664 5,599,268 4,272,210
Interest expense............................ (1,853,497) (934,888) (547,704)
Gain on sale of property, plant and
equipment, net........................... 899,122 853,436 1,005,530
Other....................................... 242,135 323,322 299,003
------------- ------------- -------------
4,138,711 9,392,212 8,555,393
------------- ------------- -------------
Earnings before income taxes and minority
interests................................... 41,581,527 25,229,879 27,347,447
Minority interests in (earnings) losses of
subsidiaries................................ (60,727) (58,101) 52,277
Income tax expense............................ (15,692,822) (9,793,440) (10,857,416)
------------- ------------- -------------
Net earnings.................................. $ 25,827,978 $ 15,378,338 $ 16,542,308
============= ============= =============
Net earnings per share:
Basic and diluted........................... $ 258,280 $ 153,783 $ 165,423
============= ============= =============
</TABLE>

See accompanying notes to consolidated financial statements.
F-5
<PAGE> 58

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 25, 1999 AND DECEMBER 26, 1998

<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 72,330,127 $ 65,601,870
Marketable securities..................................... 2,533,975 2,584,050
Accounts receivable:
Trade, net of allowance for doubtful accounts of
$993,998 and $780,445................................ 51,042,146 40,529,060
Affiliates............................................. 325,014 292,108
------------ ------------
Total accounts receivable................................. 51,367,160 40,821,168
Inventories............................................... 11,140,897 7,766,988
Deferred income taxes..................................... 4,662,000 2,855,000
Other..................................................... 1,884,960 2,200,369
------------ ------------
Total current assets................................... 143,919,119 121,829,445
Property, plant and equipment at cost....................... 196,278,215 145,892,746
Less accumulated depreciation............................. 96,277,685 86,454,443
------------ ------------
Net property, plant and equipment........................... 100,000,530 59,438,303
Investments and other assets................................ 32,970,988 25,785,949
------------ ------------
$276,890,637 $207,053,697
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable:
Trade.................................................. $ 18,202,993 $ 22,913,995
Affiliates............................................. 5,600,639 14,675,013
------------ ------------
Total accounts payable.................................... 23,803,632 37,589,008
Current portion of long-term debt......................... 561,538 739,965
Accrued payroll and payroll taxes......................... 6,772,340 5,787,804
Accrued insurance costs................................... 6,776,798 5,626,346
Income taxes payable -- parent company.................... 11,815,841 5,559,111
Other..................................................... 1,719,859 2,040,055
------------ ------------
Total current liabilities.............................. 51,450,008 57,342,289
Long-term debt, less current portion........................ 3,753,298 760,834
Deferred income taxes....................................... 8,976,000 6,606,000
Other liabilities........................................... 2,622,906 2,762,503
Minority interest........................................... 355,770 295,044
Stockholder's equity:
Common stock of $.01 par value. 100 shares authorized,
issued and outstanding................................. 1 1
Additional paid-in capital................................ 126,627,470 82,466,491
Accumulated other comprehensive income.................... 1,434 (456,172)
Retained earnings......................................... 83,103,750 57,276,707
------------ ------------
Total stockholder's equity.................................. 209,732,655 139,287,027
------------ ------------
$276,890,637 $207,053,697
============ ============
</TABLE>

See accompanying notes to consolidated financial statements.
F-6
<PAGE> 59

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 25, 1999

<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings................................... $ 25,827,978 $ 15,378,338 $ 16,542,308
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation, depletion and amortization.... 16,819,147 12,112,930 10,985,109
Gain on sale of property, plant and
equipment, net............................ (899,122) (853,436) (1,005,530)
Gain on sale of securities.................. -- (25,714) --
Deferred income taxes....................... 748,000 707,000 1,038,000
Undistributed equity earnings............... 129,273 (1,078,437) (4,246,212)
Minority interest in earnings (losses)...... 60,727 58,101 (52,277)
Change in operating assets and liabilities:
Accounts receivable....................... (1,669,564) (3,548,729) (6,263,241)
Inventories............................... (2,002,757) (163,240) (278,122)
Other assets.............................. 933,929 (749,466) (469,808)
Accounts payable.......................... (15,016,433) 5,437,919 13,316,821
Accrued payroll and other................. 984,536 2,135,446 (111,141)
Accrued insurance cost.................... 1,150,453 792,517 327,575
Income taxes payable...................... 6,256,730 (367,437) (87,334)
Other liabilities......................... (1,621,305) (206,800) (1,220,587)
------------ ------------ ------------
Net cash provided by operating activities........ 31,701,592 29,628,992 28,475,561
Cash flows from investing activities:
Proceeds from sale of property, plant and
equipment................................... 2,676,119 1,448,503 1,304,334
Capital expenditures........................... (19,447,225) (13,351,000) (20,213,136)
Purchases of marketable securities............. -- (16,874) (43,947)
Sales of marketable securities................. -- 760,621 --
Additions to notes receivable.................. (1,994,973) (1,837,933) (760,642)
Payments received on notes receivable.......... 1,542,182 1,316,489 363,750
Investments and acquisitions................... (36,151,653) (2,136,356) (8,132,363)
------------ ------------ ------------
Net cash used in investing activities............ (53,375,550) (13,816,550) (27,482,004)
Cash flows from financing activities:
Payments of long-term debt..................... (15,758,764) (378,419) (86,221)
Contributions by minority owner................ -- -- 209,445
Contributions from parent...................... 44,160,979 2,145,923 10,713,084
Dividends...................................... -- -- (13,970,000)
------------ ------------ ------------
Net cash provided by (used in) financing
activities..................................... 28,402,215 1,767,504 (3,133,692)
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents.................................... 6,728,257 17,579,946 (2,140,135)
Cash and cash equivalents at beginning of year... 65,601,870 48,021,924 50,162,059
------------ ------------ ------------
Cash and cash equivalents at end of year......... $ 72,330,127 $ 65,601,870 $ 48,021,924
============ ============ ============
Supplemental disclosures of cash flow
information:
Interest paid.................................. $ 1,848,988 $ 944,672 $ 528,031
Income taxes paid.............................. 7,465,923 7,701,132 7,441,421
</TABLE>

See accompanying notes to consolidated financial statements.
F-7
<PAGE> 60

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
AND COMPREHENSIVE INCOME
FOR THE THREE YEARS ENDED DECEMBER 25, 1999

<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON PAID-IN COMPREHENSIVE RETAINED STOCKHOLDER'S
STOCK CAPITAL INCOME EARNINGS EQUITY
------ ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 28, 1996..... $ 1 $ 69,408,464 $ (82,951) $29,326,061 $ 98,651,575
Dividends ($39,700 per share).... -- -- -- (3,970,000) (3,970,000)
Contribution from parent......... -- 10,713,084 -- -- 10,713,084
Comprehensive income:
Net earnings................... -- -- -- 16,542,308 16,542,308
Other comprehensive income:
Change in unrealized holding
gain, net of tax.......... -- -- 8,537 -- 8,537
Minimum pension liability
adjustment................ -- -- (314,926) -- (314,926)
------------
Total other comprehensive
income.................... (306,389)
------------
Total comprehensive income....... 16,235,919
--- ------------ --------- ----------- ------------
BALANCE AT DECEMBER 27, 1997..... 1 80,121,548 (389,340) 41,898,369 121,630,578
Contribution from parent......... -- 2,344,943 -- -- 2,344,943
Comprehensive income:
Net earnings................... -- -- -- 15,378,338 15,378,338
Other comprehensive income:
Change in unrealized holding
loss, net of tax.......... -- -- (7,857) -- (7,857)
Minimum pension liability
adjustment................ -- -- (58,975) -- (58,975)
------------
Total other comprehensive
income.................... (66,832)
------------
Total comprehensive income....... 15,311,506
--- ------------ --------- ----------- ------------
BALANCE AT DECEMBER 26, 1998..... 1 82,466,491 (456,172) 57,276,707 139,287,027
--- ------------ --------- ----------- ------------
Dividends($9 per share).......... (935) (935)
Contribution from parent......... -- 44,160,979 -- -- 44,160,979
Comprehensive income:
Net earnings................... -- -- -- 25,827,978 25,827,978
Other comprehensive income:
Change in unrealized holding
loss, net of tax.......... -- -- (24,578) -- (24,578)
Minimum pension liability
adjustment................ -- -- 482,184 -- 482,184
------------
Total other comprehensive
income.................... 457,606
------------
Total comprehensive income....... 26,285,584
--- ------------ --------- ----------- ------------
BALANCE AT DECEMBER 25, 1999..... $ 1 $126,627,470 $ 1,434 $83,103,750 $209,732,655
=== ============ ========= =========== ============
</TABLE>

See accompanying notes to consolidated financial statements.
F-8
<PAGE> 61

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

General:

The consolidated financial statements include the accounts of Kiewit
Materials Company ("KMC") and its subsidiaries (collectively, the "Company") and
the Company's pro rata portion of the accounts of Granite Canyon Joint Venture.
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 nonmonetary 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 material intercompany transactions have
been eliminated in consolidation.

The Company has a 52-53 week fiscal year which ends on the last Saturday in
December. 1999, 1998 and 1997 were all 52 week years.

The Company principally operates in the Southwest and Northwest portions of
the United States. The Company produces and distributes construction materials
including ready-mix concrete, asphalt, sand, gravel, crushed stone and railroad
ballast ("materials products").

Demand for the Company's products is subject to factors affecting the level
of general construction activity including the level of interest rates,
availability of funds for construction, appropriations by federal and state
governments for construction, past overbuilding, labor relations in the
construction industry, energy shortages, material shortages, weather, climate
and other factors affecting the construction industry in general. Labor disputes
in the construction industry may result in work stoppages which may interrupt
sales in the affected area. Precipitation or freezing temperatures may cause a
reduction in construction activity and related demand for the Company's
products. During the winter months, sales and income of the Company's quarries
and Northwest operations are adversely affected by the impact of inclement
weather. A decrease in the level of general construction activity in any of the
Company's market areas caused by any of the above factors may have a material
adverse effect on the Company's sales and income derived therefrom.

Use of Estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue Recognition:

Materials revenue, net of discounts, is recognized at the time the products
are shipped and all significant contractual obligations have been satisfied.

Construction revenue is recognized using the percentage of completion
method of accounting. Under the percentage of completion method, an estimated
percentage for each contract, as determined by the Company's engineering
estimate based on the amount of work performed, is applied to total estimated
profit. Provision is made for the entire amount of future estimated losses on
contracts in progress; claims for additional contract compensation, however, are
not reflected in the accounts until the year in which such claims are allowed.
Revisions in cost and profit estimates during the course of the work are
reflected in the accounting period in which the facts which require the revision
become known. It is at least reasonably possible that cost and profit estimates
will be revised in the near-term.

F-9
<PAGE> 62
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Limited Liability Companies and Joint Ventures:

Investments in limited liability companies in which the Company exercises
significant influence over operations and financial policies are accounted for
by the equity method. The Company accounts for its 49% share of Granite Canyon
Joint Venture on a pro rata basis.

Inventories:

Inventories consist primarily of raw materials, repair parts, fuel and
building materials that the Company holds for use or sale in the ordinary course
of business. Inventories are stated at the lower of average cost or market.

Depreciation:

Property, plant and equipment are recorded at cost. Depreciation is
provided on a straight line method based on the following useful lives:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements.................................. 39
Equipment and other......................................... 5-10
</TABLE>

Depletion:

Depletion of mineral properties is provided on a unit-of-extraction basis
determined in relation to estimated recoverable reserves at each mineral site.

Intangible Assets:

Intangible assets consist principally of goodwill. These assets are
amortized on a straight-line basis over the expected period of benefit, which
does not exceed 20 years.

Long Lived Assets:

The Company reviews the carrying amount of long lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Measurement of any impairment would include a comparison
of the present value of the estimated future operating cash flows anticipated to
be generated during the remaining life of the assets to the net carrying value
of the assets.

Income Taxes:

The Company is included in a consolidated income tax return. The provision
for Federal income tax is computed on the separate results of operations of the
Company as if a separate return was filed.

Deferred income taxes are provided for the temporary differences between
the financial reporting basis and the tax basis of the Company's assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

Accrued Insurance Costs:

The Company is self-insured for certain general, auto, and worker's
compensation claims and accrues for the estimated ultimate liability for
incurred losses. It is at least reasonably possible that the estimate of
ultimate liability will be revised in the near-term.

F-10
<PAGE> 63
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
General and Administrative Costs:

General and administrative costs historically recorded by Kiewit or other
affiliates of the Company, but that were incurred for the benefit of the
Company, have been recorded in the accompanying financial statements. These
costs have been allocated to the Company based upon historical assessments of
the level of effort incurred for the benefit of the Company that were used for
internal reporting purposes, and have been, in management's opinion, reasonably
allocated to the Company.

Earnings Per Share:

The basic and diluted earnings per share were calculated using the 100
shares the Company issued to its parent in March 1999 in connection with the
Combination.

<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net earnings available to common
stockholders.............................. $25,827,978 $15,378,338 $16,542,308
=========== =========== ===========
Total number of weighted average shares
outstanding............................... 100 100 100
=========== =========== ===========
Basic and diluted earnings per share........ $ 258,280 $ 153,783 $ 165,423
=========== =========== ===========
</TABLE>

Recent Pronouncements:

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments and
for hedging activities. This statement is effective for all fiscal years
beginning after June 15, 2000. Management does not expect adoption of this
statement to materially affect the Company's financial statements as the Company
has no derivative instruments or hedging activities.

2. FINANCIAL INSTRUMENTS:

The following methods and assumptions were used to determine classification
and fair values of financial instruments:

Cash and Cash Equivalents:

Cash and cash equivalents are stated at cost, which approximates fair
value. Cash equivalents generally consist of highly liquid instruments purchased
with a maturity of three months or less and cash deposited with Kiewit
Construction Company ("KCC"), an indirect subsidiary of Kiewit. The Company's
deposits with KCC are commingled with the funds of other affiliated companies
for investment purposes and are available for withdrawal upon demand. These
deposits earn interest at a rate based on LIBOR. The Company's net deposits
totaled $57,791,265 and $54,520,320 in 1999 and 1998.

Marketable Securities:

The Company has classified all marketable securities as available-for-sale.
The amortized cost of the securities used in computing unrealized and realized
gains and losses are determined by specific identification. Fair values are
estimated based on quoted market prices for the securities on hand or similar
investments. Net unrealized holding gains and losses, if any, are reported as a
separate component of accumulated other comprehensive income, net of tax.

F-11
<PAGE> 64
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. FINANCIAL INSTRUMENTS, CONTINUED:
At December 25, 1999 and December 26, 1998, the cost, estimated fair values
and unrealized holding gains of the Company's marketable securities are as
follows:

<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED HOLDING FAIR
COST GAIN VALUE
---------- ---------- ----------
<S> <C> <C> <C>
1999:
U.S. debt securities............................ $2,531,652 $ 2,323 $2,533,975
========== ======= ==========
1998:
U.S. debt securities............................ $2,541,925 $42,125 $2,584,050
========== ======= ==========
</TABLE>

Realized gain on sale of marketable securities was $-- in 1999 and $25,714
in 1998.

All debt securities mature within one to five years.

Long-term debt:

The fair value of debt was estimated using the incremental borrowing rates
of the Company for debt of the same remaining maturities and approximates the
carrying amount.

3. INVENTORIES:

Inventories consist of the following:

<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Raw materials...................................... $ 9,523,973 $6,573,036
Other.............................................. 1,616,924 1,193,952
----------- ----------
$11,140,897 $7,766,988
=========== ==========
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Land and mineral properties..................... 25,039,783 $ 8,844,421
Buildings and improvements...................... 7,176,851 6,073,090
Equipment and other............................. 164,061,581 130,975,235
------------ ------------
$196,278,215 $145,892,746
============ ============
</TABLE>

F-12
<PAGE> 65
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. INVESTMENT AND OTHER ASSETS:

Investments and other assets consists of the following:

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Investment in limited liability companies......... $ -- $10,724,511
Intangible assets, principally goodwill, net of
accumulated amortization of $6,050,026 and
$4,169,800...................................... 29,738,772 14,063,793
Land option....................................... 2,000,000 --
Notes receivable.................................. 949,252 521,218
Other............................................. 282,964 476,427
----------- -----------
$32,970,988 $25,785,949
=========== ===========
</TABLE>

The Company's investment in limited liability companies is comprised of a
40% interest in Pacific Rock Products, L.L.C. and a 40% interest in Pacific Rock
Products Trucking, L.L.C. (formerly River City Machinery, L.L.C.). Pacific Rock
Products, L.L.C. is engaged in the production and distribution of materials
products. Pacific Rock Products Trucking, L.L.C. rents equipment to affiliated
companies. During 1999, the Company acquired the remaining 60% interest of both
limited liability companies.

6. EMPLOYEE BENEFIT PLANS:

The Company makes contributions based on collective bargaining agreements
to several multi-employer union pension plans. These contributions are included
in cost of revenue. Under federal law, the Company may be liable for a portion
of future plan deficiencies; however, there are no known deficiencies.

Approximately 10% of the employees of the Company are covered under the
Kiewit profit sharing plan. The expense related to the profit sharing plan was
$302,774, $447,795 and $617,784 in 1999, 1998 and 1997, respectively.

The Company sponsors a defined benefit pension plan covering certain union
employees. Benefits are based on negotiated rates multiplied by years of
service. It is the Company's policy to make contributions to these plans
sufficient to meet minimum funding requirements of the applicable laws and
regulations, plus such additional amounts, if any, as the Company's actuarial
consultants advise to be appropriate. Plan assets consist principally of fixed
income instruments, equity securities and cash equivalents.

F-13
<PAGE> 66
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. EMPLOYEE BENEFIT PLANS, CONTINUED:

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year................. $ 4,799,238 $ 3,174,787
Service cost............................................ 1,137,407 974,369
Interest cost........................................... 310,258 226,788
Actuarial (gain) loss................................... (1,190,656) 577,594
Benefits paid........................................... (201,781) (154,300)
----------- -----------
Benefit obligation at end of year......................... 4,854,466 4,799,238
Change in plan assets:
Fair value of plan assets at beginning of year.......... 3,340,878 2,821,262
Actual return on plan assets............................ 603,336 673,916
Employer contribution................................... 1,023,964 --
Benefits paid........................................... (201,781) (154,300)
----------- -----------
Fair value of plan assets at end of year.................. 4,766,397 3,340,878
----------- -----------
Funded status............................................. (88,069) (1,458,360)
Unrecognized net actuarial (gain) loss.................... (762,296) 741,822
Unrecognized prior service cost........................... 160,943 183,216
----------- -----------
(Accrued) prepaid benefit cost............................ $ (689,422) $ (533,322)
=========== ===========
Amounts recognized in the statement of financial position
consist of:
Prepaid benefit cost.................................... $ -- $ --
Accrued benefit liability............................... (689,422) (1,458,360)
Intangible asset........................................ -- 183,216
Accumulated other comprehensive income.................. -- 741,822
----------- -----------
Net amount recognized..................................... $ (689,422) $ (533,322)
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
Weighted-average assumptions as of year end:
Discount rate................................ 8.0% 6.5% 7.0%
Expected return on plan assets............... 8.0% 8.0% 8.0%
Components of net periodic benefit cost:
Service cost................................. $1,137,407 $ 974,369 $762,450
Interest cost................................ 310,258 226,788 156,768
Expected return on plan assets............... (313,813) (224,321) (145,444)
Amortization of prior service cost........... 22,273 22,273 22,273
Recognized net actuarial loss................ 23,939 37,268 968
---------- ---------- --------
Net periodic benefit cost...................... $1,180,064 $1,036,377 $797,015
========== ========== ========
</TABLE>

The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plan with accumulated benefit obligations
in excess of plan assets were $4,854,466, $4,854,466 and $4,766,397,
respectively, as of December 25, 1999 and $4,799,238, $4,799,238 and $3,340,878,
respectively, as of December 26, 1998.

F-14
<PAGE> 67
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. LONG-TERM DEBT:

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
8% note payable monthly to 2009............................. $1,442,074 $ --
7% note payable quarterly to 2003........................... 355,858 430,429
9.5% note payable monthly to 2002........................... 151,902 205,228
9.25% notes payable monthly to 2003......................... -- 304,830
9% note payable monthly to 2007............................. 649,104 81,044
7.629% note payable monthly to 2016......................... 776,272 --
Other....................................................... 939,626 479,268
---------- ----------
4,314,836 1,500,799
Less current portion........................................ 561,538 739,965
---------- ----------
$3,753,298 $ 760,834
========== ==========
</TABLE>

Long-term debt repayments are due as follows:

<TABLE>
<S> <C>
2000............................................. $ 561,538
2001............................................. 921,155
2002............................................. 304,985
2003............................................. 294,023
2004............................................. 205,646
2005 and thereafter.............................. 2,027,489
----------
$4,314,836
==========
</TABLE>

The 8% note payable was issued in 1999 to purchase land and is
collateralized by a deed of trust.

The 7% note payable is not collateralized and was issued as additional
consideration as part of a 1997 acquisition.

The 9.25% notes payable were collateralized by deeds of trust and were
retired in February 1999.

The 9% and 7.629% notes payable are collateralized by deeds of trust and
were assumed as part of the Company's 1999 acquisition of the remaining 60% of
Pacific Rock Products, L.L.C.

All remaining items of debt are collateralized by equipment.

F-15
<PAGE> 68
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES:

An analysis of the provision for income taxes relating to earnings before
minority interest and income taxes for the three years ended December 25, 1999
follows:

<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
----------- ---------- -----------
<S> <C> <C> <C>
1999:
Current...................................... $11,691,349 $3,253,473 $14,944,822
Deferred..................................... 559,000 189,000 748,000
----------- ---------- -----------
$12,250,349 $3,442,473 $15,692,822
=========== ========== ===========
1998:
Current...................................... $ 6,961,899 $2,124,541 $ 9,086,440
Deferred..................................... 593,000 114,000 707,000
----------- ---------- -----------
$ 7,554,899 $2,238,541 $ 9,793,440
=========== ========== ===========
1997:
Current...................................... $ 7,643,867 $2,175,549 $ 9,819,416
Deferred..................................... 833,000 205,000 1,038,000
----------- ---------- -----------
$ 8,476,867 $2,380,549 $10,857,416
=========== ========== ===========
</TABLE>

The actual income tax expense differs from the "expected" tax expense
computed by applying the U.S. Federal corporate tax rate of 35% to earnings
before minority interest and income taxes as follows:

<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Federal income tax expense at statutory
rate...................................... $14,553,534 $ 8,830,458 $ 9,571,606
State income tax, net of Federal tax
benefit................................... 2,307,998 1,394,993 1,584,486
Percentage depletion........................ (1,161,782) (1,310,610) (942,905)
Prior year adjustment....................... (367,132) 521,371 496,187
Other....................................... 360,204 357,228 148,042
----------- ----------- -----------
$15,692,822 $ 9,793,440 $10,857,416
=========== =========== ===========
</TABLE>

F-16
<PAGE> 69
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. INCOME TAXES, CONTINUED:
The components of the net deferred tax liabilities for the years ended
December 25, 1999 and December 26, 1998 were as follows:

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Deferred tax assets:
Construction accounting................................. $(2,905,384) $ (806,000)
Insurance claims........................................ (2,762,474) (2,229,000)
Compensation and retirement benefits.................... (1,340,608) (1,291,000)
Other................................................... (1,513,534) (1,033,000)
----------- -----------
Total deferred tax assets................................. (8,522,000) (5,359,000)
Deferred tax liabilities:
Asset bases/accumulated depreciation.................... 9,162,071 7,332,000
Investments in limited liability companies/joint
ventures............................................. 3,673,265 1,678,000
Other................................................... 664 100,000
----------- -----------
Total deferred tax liabilities............................ 12,836,000 9,110,000
----------- -----------
Net deferred tax liabilities.............................. $ 4,314,000 $ 3,751,000
=========== ===========
</TABLE>

9. SEGMENT REPORTING:

The Company currently operates under one segment and all operations and
long-lived assets are in the United States.

The Company's external revenues by product for the three years ended
December 25, 1999 are as follows:

<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Aggregates (sand, gravel, crushed stone
and railroad ballast).................. $ 98,976,438 $ 54,722,819 $ 44,388,081
Asphalt.................................. 78,442,724 57,862,340 75,732,891
Ready mix concrete....................... 250,874,384 209,842,986 144,908,912
Construction............................. 8,764,102 10,631,857 12,279,012
------------ ------------ ------------
$437,057,648 $333,060,002 $277,308,896
============ ============ ============
</TABLE>

F-17
<PAGE> 70
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. OTHER COMPREHENSIVE INCOME:

Other comprehensive income consisted of the following:

<TABLE>
<CAPTION>
TAX
(EXPENSE)
BEFORE TAX OR BENEFIT AFTER TAX
---------- ---------- ---------
<S> <C> <C> <C>
1999:
Unrealized holding losses:
Unrealized holding losses arising during the
period..................................... $ (39,802) $ 15,224 $ (24,578)
Minimum pension liability adjustment............ 741,822 (259,638) 482,184
--------- --------- ---------
Other comprehensive income...................... $ 702,020 $(244,414) $ 457,606
========= ========= =========
1998:
Unrealized holding losses:
Unrealized holding gains arising during the
period..................................... $ 11,924 $ (4,561) $ 7,363
Plus reclassification adjustment for gains
realized in net earnings................... (24,648) 9,428 (15,220)
--------- --------- ---------
Net unrealized losses........................... (12,724) 4,867 (7,857)
Minimum pension liability adjustment............ (90,731) 31,756 (58,975)
--------- --------- ---------
Other comprehensive income...................... $(103,455) $ 36,623 $ (66,832)
========= ========= =========
1997:
Unrealized holding gains:
Unrealized holding gains arising during the
period..................................... $ 13,825 $ (5,288) $ 8,537
Minimum pension liability adjustment............ (484,502) 169,576 (314,926)
--------- --------- ---------
Other comprehensive income...................... $(470,677) $ 164,288 $(306,389)
========= ========= =========
</TABLE>

Accumulated other comprehensive income consisted of the following:

<TABLE>
<CAPTION>
CURRENT
BEGINNING YEAR ENDING
BALANCE CHANGE BALANCE
--------- --------- ---------
<S> <C> <C> <C>
1999:
Unrealized holding gain on securities........... $ 26,012 $ (24,578) $ 1,434
Minimum pension liability adjustment............ (482,184) 482,184 --
--------- --------- ---------
Accumulated other comprehensive income.......... $(456,172) $ 457,606 $ 1,434
========= ========= =========
1998:
Unrealized holding gain on securities........... $ 33,869 $ (7,857) $ 26,012
Minimum pension liability adjustment............ (423,209) (58,975) (482,184)
--------- --------- ---------
Accumulated other comprehensive income.......... $(389,340) $ (66,832) $(456,172)
========= ========= =========
1997:
Unrealized holding gain on securities........... $ 25,332 $ 8,537 $ 33,869
Minimum pension liability adjustment............ (108,283) (314,926) (423,209)
--------- --------- ---------
Accumulated other comprehensive income.......... $ (82,951) $(306,389) $(389,340)
========= ========= =========
</TABLE>

F-18
<PAGE> 71
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. OPERATING LEASES:

The Company leases mineral properties, buildings and certain equipment
under noncancelable operating lease agreements. Total rent expense was
$12,291,760, $11,625,294 and $10,176,629 in 1999, 1998 and 1997, respectively.
Future minimum lease commitments are as follows:

<TABLE>
<S> <C>
2000............................................ $ 9,093,959
2001............................................ 8,096,764
2002............................................ 7,504,509
2003............................................ 6,682,634
2004............................................ 5,622,128
Thereafter...................................... 26,797,577
-----------
$63,797,571
===========
</TABLE>

12. RELATED PARTY TRANSACTIONS:

During 1999, 1998 and 1997 the Company was involved in transactions with
affiliated companies as follows:

<TABLE>
<CAPTION>
1999 1998 1997
----------- ---------- ----------
<S> <C> <C> <C>
Equipment rental income....................... $ 39,076 $ 203,334 $ 186,911
Equipment rental expense...................... 562,022 19,288 --
Insurance premium expense..................... 43,738 32,839 49,387
Interest income............................... 3,180,932 2,847,501 2,753,194
Interest expense.............................. 1,236,391 583,673 478,885
Administrative service fee income............. 106,282 199,031 182,001
Administrative service fee expense............ 3,973,892 1,402,834 1,181,156
Asset acquisitions............................ 2,031,475 135,500 107,558
Asset disposals, proceeds..................... 444,900 223,500 270,907
Gain on asset disposals....................... 183,129 11,134 101,607
Engineering & estimating expense.............. -- 79,249 52,505
Sales......................................... 10,411,786 7,326,151 8,838,367
</TABLE>

During 1997, the Company declared and paid a cash dividend of $3,970,000.

During 1998, the Company received a noncash contribution from its parent
for the assumption of certain operating liabilities of $199,020.

During 1999, the Company dividended net operating assets of $935 to a
subsidiary of Kiewit.

F-19
<PAGE> 72
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. ACQUISITIONS:

During 1999, 1998 and 1997, 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 statement 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 prices were $4,270,000, $2,136,356 and $9,477,347 during
1999, 1998 and 1997, respectively. A $1,450,000 long-term note payable was
issued in connection with the 1999 purchase. Included in the 1997 purchase price
was the assumption of long-term debt totaling $1,339,381 and the issuance of a
$500,000 long-term note payable. Goodwill related to these acquisitions was
$357,111 and $2,120,022 during 1998 and 1997, respectively, and is amortized
over periods of 15 to 20 years.

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.), 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 fair value of the identifiable assets acquired and
liabilities assumed was $35,791,460 and $13,096,664, respectively. The excess of
aggregate purchase price over fair value of identifiable assets and liabilities
acquired of approximately $17,305,204 was recognized as goodwill and is being
amortized over 20 years. The operating results of the remaining 60% are included
in the consolidated results of operations from the date of acquisition. The
following pro forma financial information assumes the acquisition occurred at
the beginning of 1998. 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 1998, or the results which may occur
in the future.

<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 26,
1999 1998
------------ ------------
<S> <C> <C>
Revenue................................................. $444,119,978 $395,820,004
Net earnings............................................ 26,038,104 20,837,624
Net earnings per share:
Basic and diluted..................................... $ 260,381 $ 208,376
</TABLE>

14. OTHER MATTERS:

The Company is involved in various lawsuits and claims incidental to its
business. Management believes that any resulting liability should not materially
affect the Company's financial position, future results of operations or cash
flows.

15. SUBSEQUENT EVENTS:

On January 3, 2000, the Company acquired 100% of the outstanding common
stock and related assets of a materials operation operating in the Northern
California area, for approximately $30,000,000. Identifiable intangible assets
related to this purchase will be amortized over their useful life of 27.5 years.
There was no goodwill related to this transaction.

The Company has filed various documents with the Securities and Exchange
Commission pursuant to which Kiewit is proposing to spin-off the Company to its
shareholders in a transaction that is intended to be tax-free for U.S. Federal
income tax purposes.

F-20
<PAGE> 73

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholder
Kiewit Materials Company

Our audit of the consolidated financial statements referred to in our report
dated March 17, 2000 appearing on page F-2 also included an audit of the
financial statement schedule appearing on page F-22. In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.

PricewaterhouseCoopers LLP

Omaha, Nebraska
March 17, 2000

F-21
<PAGE> 74

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO AMOUNTS BALANCE
BEGINNING COSTS AND CHARGED TO END OF
OF PERIOD EXPENSES RESERVES OTHER PERIOD
--------- ------------------ ---------- ----- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 25, 1999
Allowance for doubtful trade
accounts.......................... $ 780 $ 447 $ (233) $-- $ 994
Reserves:
Insurance claims.................. 5,626 2,370 (1,219) -- 6,777
YEAR ENDED DECEMBER 26, 1998
Allowance for doubtful trade
accounts.......................... $ 785 $ 42 $ (47) $-- $ 780
Reserves:
Insurance claims.................. 4,834 2,030 (1,238) -- 5,626
YEAR ENDED DECEMBER 27, 1997
Allowance for doubtful trade
accounts.......................... $ 863 $ 153 $ (231) $-- $ 785
Reserves:
Insurance claims.................. 4,506 1,427 (1,099) -- 4,834
</TABLE>

F-22
<PAGE> 75

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Revenue..................................................... $ 99,539,837 $ 99,488,000
Cost of revenue............................................. (84,157,144) (83,805,410)
Depreciation, depletion and amortization.................... (4,674,528) (3,166,587)
------------ ------------
10,708,165 12,516,003
General and administrative expenses......................... (6,450,902) (6,605,348)
------------ ------------
Operating earnings.......................................... 4,257,263 5,910,655
Other income (expense):
Investment income......................................... 1,447,683 1,010,954
Equity earnings........................................... -- 271,494
Interest expense.......................................... (731,323) (242,234)
Gain on sale of property, plant and equipment, net........ 96,036 145,314
Other, net................................................ 56,913 54,774
------------ ------------
869,309 1,240,302
------------ ------------
Earnings before income taxes and minority interest.......... 5,126,572 7,150,957
Minority interest........................................... (57,141) (436,428)
Income tax expense.......................................... (2,037,178) (2,838,960)
------------ ------------
Net earnings................................................ 3,032,253 3,875,569
============ ============
Net earnings per share:
Basic and diluted......................................... $ 30,323 $ 38,756
============ ============
</TABLE>

See accompanying notes to consolidated condensed financial statements.
F-23
<PAGE> 76

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
2000
------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 50,674,671
Marketable securities..................................... 2,575,663
Receivables, less allowance of $884,263................... 45,874,156
Inventories............................................... 14,469,774
Deferred income taxes..................................... 5,349,000
Other..................................................... 2,970,118
------------
Total current assets........................................ 121,913,382
Property, plant and equipment, less accumulated depreciation
of $99,922,577............................................ 116,254,275
Other assets................................................ 47,470,076
------------
$285,637,733
============

LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable.......................................... $ 26,205,580
Current portion of long-term debt......................... 566,217
Accrued payroll and payroll taxes......................... 6,456,753
Accrued insurance costs................................... 7,604,966
Income taxes payable -- parent company.................... 13,902,855
Other..................................................... 2,147,103
------------
Total current liabilities................................... 56,883,474
Long-term debt, less current portion........................ 3,615,461
Deferred income taxes....................................... 9,517,000
Other liabilities........................................... 2,619,659
Minority interest........................................... 412,911
------------
Total liabilities...................................... 73,048,505
Stockholder's equity:
Common stock, par $.01; and 100 shares authorized, issued
and outstanding........................................ 1
Additional paid-in capital................................ 126,452,609
Accumulated other comprehensive income.................... 614
Retained earnings......................................... 86,136,004
------------
Total stockholder's equity.................................. 212,589,228
------------
$285,637,733
============
</TABLE>

See accompanying notes to consolidated condensed financial statements.
F-24
<PAGE> 77

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
------------ -----------
<S> <C> <C>
Cash flows from operations:
Net cash provided by operations............................. $ 15,417,630 $ (731,854)
Cash flows from investing activities:
Proceeds from sales of property, plant and equipment...... 210,816 1,301,226
Investments and acquisitions.............................. (30,880,432) --
Capital expenditures...................................... (6,432,522) (8,512,644)
Additions to notes receivable............................. (85,552) (341,765)
Payments on notes receivable.............................. 422,623 185,238
------------ -----------
Net cash used in investing activities....................... (36,765,067) (7,367,945)
Cash flows from financing activities:
Payments on long-term debt................................ (133,158) (1,260,558)
Contributions from parent................................. (174,861) 13,465,447
Long-term debt borrowings................................. -- 332,307
------------ -----------
Net cash (used in) provided by financing activities......... (308,019) 12,537,196
------------ -----------
Net (decrease) increase in cash and cash equivalents........ (21,655,456) 4,437,397
Cash and cash equivalents at beginning of period............ 72,330,127 65,601,870
------------ -----------
Cash and cash equivalents at end of period.................. $ 50,674,671 $70,039,267
============ ===========

Noncash investing activities:
Issuance of debt for materials acquisition................ $ -- $42,000,000
</TABLE>

F-25
<PAGE> 78

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") 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 on March
1, 1999 through a series of non monetary contributions from KMC's parent, Peter
Kiewit Sons', Inc. ("Kiewit").

All 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.

The results of operations for the three months ended March 31, 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
MARCH 31,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
Net earnings available to common stockholders............... $3,032,253 $3,875,569
========== ==========
Total number of weighted average shares outstanding used to
compute basic earnings per share.......................... 100 100
========== ==========
Net earnings
Basic earnings per share.................................. $ 30,323 $ 38,756
========== ==========
</TABLE>

3. INVENTORIES:

Inventories consist of the following:

<TABLE>
<CAPTION>
MARCH 31,
2000
-----------
<S> <C>
Raw Materials............................................... $11,466,352
Other....................................................... 3,003,422
-----------
$14,469,774
===========
</TABLE>

4. COMPREHENSIVE INCOME:

Comprehensive income includes net earnings and unrealized gains (losses) on
securities and minimum pension liability adjustments.

F-26
<PAGE> 79
KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

4. COMPREHENSIVE INCOME, CONTINUED:
Comprehensive income for the three months ended March 31, 2000 and 1999 was
as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
Net earnings................................................ $3,032,253 $3,875,569
Other comprehensive income, before tax:
Unrealized losses arising during period................... (1,328) (9,712)
Minimum pension liability adjustment...................... -- 5,985
Income tax benefit related to items of other
comprehensive income................................... 508 1,620
---------- ----------
Comprehensive income........................................ $3,031,433 $3,873,462
========== ==========
</TABLE>

5. ACQUISITION:

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.) 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 approximately $17,305,204 was
recognized as goodwill and is being amortized over 20 years. The operating
results of the remaining 60% are included in the consolidated results of
operations from the date of acquisition. The following pro forma financial
information assumes the acquisition 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
MARCH 31,
---------------------------
2000 1999
----------- ------------
<S> <C> <C>
Revenue.................................................. $99,539,837 $106,550,329
Net earnings............................................. 3,032,253 4,225,780
Net earnings per share:
Basic and diluted...................................... $ 30,323 $ 42,258
</TABLE>

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. Pro forma financial information is not presented for this
acquisition because the impact is not material to the results of operations.

6. 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 financial position, future
results of operations or future cash flows.

F-27
<PAGE> 80

PACIFIC ROCK PRODUCTS, L.L.C. AND RIVER CITY MACHINERY, L.L.C.

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Combined Financial Statements as of December 31, 1998 and
December 31, 1997 and for the years ended December 31,
1998 and 1997:
Independent Auditors' Report................................ F-29
Combined Balance Sheets..................................... F-30
Combined Statements of Income and Members' Equity........... F-31
Combined Statements of Cash Flows........................... F-32
Notes to Combined Financial Statements...................... F-33

Financial Statement Schedule for the two years in the period
ended December 31, 1998................................... F-38
</TABLE>

F-28
<PAGE> 81

INDEPENDENT AUDITORS' REPORT

To the Members
Pacific Rock Products, L.L.C. and
River City Machinery, L.L.C.

We have audited the accompanying combined balance sheets of Pacific Rock
Products, L.L.C. and River City Machinery, L.L.C. as of December 31, 1998 and
1997, and the related combined statements of income and members' equity, and
cash flows for the years then ended. We have also audited the related Schedule
II Combined Valuation and Qualifying Accounts. These combined financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and schedule. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion the combined financial statements referred to above present
fairly, in all material respects, the financial position of Pacific Rock
Products, L.L.C. and River City Machinery, L.L.C. as of December 31, 1998 and
1997, and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.

Also, in our opinion, the schedule referred to above presents fairly, in
all material respects, the information set forth therein.

Perkins & Company, P.C.
Portland, Oregon
February 24, 1999

F-29
<PAGE> 82

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

COMBINED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 1)........................ $ 7,085,802 $ 7,865,893
Accounts receivable -- trade, less allowance for doubtful
accounts of $296,136 in 1998 and $271,700 in 1997 (Note
3)..................................................... 8,117,955 9,831,538
Accounts receivable -- related parties (Notes 3 and 6).... 70,783 562,323
Inventories (Notes 2 and 3)............................... 1,175,963 1,876,357
Other current assets...................................... 595,656 410,219
----------- -----------
Total current assets................................... 17,046,159 20,546,330
PROPERTY, PLANT AND EQUIPMENT (Notes 1, 3 and 5):
Buildings................................................. 1,414,399 978,994
Equipment................................................. 36,310,382 31,696,135
----------- -----------
37,724,781 32,675,129
Less accumulated depreciation............................. 12,447,063 9,138,028
----------- -----------
25,277,718 23,537,101
Land and gravel deposits, net............................. 10,093,814 10,546,235
----------- -----------
35,371,532 34,083,336
GOODWILL (Note 1)........................................... 1,032,287 1,154,935
DEPOSITS.................................................... 103,160 116,666
----------- -----------
$53,553,138 $55,901,267
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Long-term debt due in one year (Note 3)................... $ 4,411,641 $ 4,219,989
Accounts payable -- trade................................. 1,294,481 1,453,479
Accounts payable -- related parties (Note 6).............. 98,947 236,464
Accrued interest.......................................... 120,377 198,862
Accrued payroll and taxes................................. 749,770 1,084,572
Other accrued liabilities................................. 679,662 268,277
----------- -----------
Total current liabilities.............................. 7,354,878 7,461,643
LONG-TERM DEBT -- NET OF PORTION DUE IN ONE YEAR (Note 3)... 13,434,094 18,801,817
COMMITMENTS AND CONTINGENCIES (Notes 5 and 7)
MEMBERS' EQUITY............................................. 32,764,166 29,637,807
----------- -----------
$53,553,138 $55,901,267
=========== ===========
</TABLE>

See accompanying notes to combined financial statements.
F-30
<PAGE> 83

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

COMBINED STATEMENTS OF INCOME AND MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
REVENUES:
Sales..................................................... $62,760,002 $55,373,472
Gain on sales of property and equipment................... 1,446,429 235,543
Other..................................................... 1,022,453 623,617
----------- -----------
65,228,884 56,232,632
COSTS AND EXPENSES:
Cost of sales............................................. 42,485,630 38,415,384
General and administrative................................ 3,274,376 2,398,693
Depreciation, depletion and amortization.................. 3,704,762 2,901,084
Interest.................................................. 1,637,757 1,709,447
----------- -----------
51,102,525 45,424,608
----------- -----------
NET INCOME.................................................. 14,126,359 10,808,024
MEMBERS' EQUITY, BEGINNING OF YEAR.......................... 29,637,807 18,829,783
LESS DISTRIBUTIONS.......................................... 11,000,000 --
----------- -----------
MEMBERS' EQUITY, END OF YEAR................................ $32,764,166 $29,637,807
=========== ===========
</TABLE>

See accompanying notes to combined financial statements.
F-31
<PAGE> 84

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 14,126,359 $10,808,024
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, depletion and amortization............... 3,704,762 2,901,084
Provision for bad debts................................ 383,519 65,118
Gain on sales of property and equipment................ (1,446,429) (235,543)
(Increase) decrease in assets:
Accounts receivable.................................. 1,821,604 (1,036,545)
Inventories.......................................... 700,394 (1,168,254)
Other current assets and deposits.................... (165,931) 33,812
(Decrease) increase in liabilities:
Accounts payable and accrued expenses................ (298,417) 289,691
------------ -----------
Net cash provided by operating activities......... 18,825,861 11,657,387
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property and equipment............. 1,046,585 326,044
Purchases of property, plant and equipment................ (5,458,085) (7,990,661)
Purchase of goodwill...................................... -- (931,176)
------------ -----------
Net cash used in investing activities............. (4,411,500) (8,595,793)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from new long-term borrowings.................... -- 8,000,000
Principal payments on long-term debt...................... (4,194,452) (3,779,737)
Distributions paid........................................ (11,000,000) --
------------ -----------
Net cash provided (used) by financing
activities...................................... (15,194,452) 4,220,263
------------ -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........ (780,091) 7,281,857
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 7,865,893 584,036
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 7,085,802 $ 7,865,893
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 1,716,243 $ 1,687,737
Noncash investing and financing activities:
Long-term debt incurred to purchase property and
equipment............................................ $ -- $ 716,413
Long-term debt incurred to purchase goodwill........... $ -- $ 295,304
Long-term debt repaid from proceeds from sale of
property............................................. $ 981,619 $ --
</TABLE>

See accompanying notes to combined financial statements.
F-32
<PAGE> 85

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

Organization -- In February 1996, Aggregate Services, Inc. (ASI) and Rock
Products Leasing, Inc. (RPL), entered into an agreement with Gilbert Southern
Corp. (Gilbert), an affiliate of Peter Kiewit Sons' Inc., to form two new
entities, Pacific Rock Products, L.L.C. and River City Machinery, L.L.C., which
are hereinafter referred to as the "Company." As part of that agreement, Gilbert
has an option, in March, 2002, to offer to purchase the 60% membership interests
of ASI and RPL. If Gilbert does not exercise its option, ASI and RPL have an
option to offer to purchase Gilbert's 40% membership interest. Each member has
the right to purchase the other member's interest by increasing the offer price
by a predetermined formula. In the event Gilbert does not acquire the membership
interest of ASI and RPL, it has an option to purchase certain specified real
property of the Company at its then current market value.

The members of the Company expect to enter into an agreement in February
1999 whereby an affiliate of Peter Kiewit Sons' Inc. will purchase the entire
60% membership interests of ASI and RPL.

Nature of Operations -- Pacific Rock Products, L.L.C. produces sand and
gravel, crushed rock products, asphalt and concrete mix. It operates from seven
sources of supply which are owned and leased, none of which produced greater
than 27% of revenues in 1998. The products are used in commercial and
residential construction and in construction and maintenance of roads and
utilities.

River City Machinery, L.L.C.'s principal activity is leasing equipment to
Pacific Rock Products, L.L.C.

Basis of Accounting -- The financial statements of Pacific Rock Products,
L.L.C. and River City Machinery, L.L.C. have been combined due to common
business activities, intercompany transactions and common ownership. All
material intercompany transactions have been eliminated in the combination.

Cash and Cash Equivalents -- For purposes of the statement of cash flows,
the Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

Concentrations of Credit Risk -- The Company grants credit to material
suppliers and contractors located in southwestern Washington and northwestern
Oregon. Concentration of credit risk with respect to accounts receivable is
limited as the receivables are predominately secured by lien and bond rights.
The Company's practice is generally to perfect these rights after 60 days.

The Company places its cash and cash equivalents with two financial
institutions located in Washington and Oregon. Cash balances are insured by the
Federal Deposit Insurance Corporation up to $100,000. At December 31, 1998 and
1997, the Company's cash balances exceeded the insured amounts. Cash equivalents
are invested in short term prime quality repurchase agreements and are not
insured by the Federal Deposit Corporation. Cash equivalents were approximately
$7,303,000 and $7,436,000 at December 31, 1998 and 1997, respectively.

Inventories -- Inventories are stated at the lower of cost or market. Cost
is determined by the average cost method for gravel and rock and the first-in,
first-out method for fuel.

Property, Plant and Equipment -- Property, plant and equipment is recorded
at cost. Depletion of gravel deposits is provided based on the ratio of
quantities extracted during the year to total estimated quantities available.
Land and gravel deposits are reported net of accumulated depletion of $2,642,246
and $2,578,597 at December 31, 1998 and 1997, respectively. Depreciation for
plant and equipment is computed using the straight-line and declining balance
methods over estimated useful lives of 3 to 10 years for equipment and 10 to 20
years for buildings.

F-33
<PAGE> 86
PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Maintenance and repair costs are charged to current earnings. Upon disposal
of assets the cost of assets and the related accumulated depreciation are
removed from the accounts. Gains or losses are reflected in current earnings.

Goodwill -- Goodwill represents the excess of the cost of acquiring an
unrelated concrete business in 1997, over the fair value of net assets at the
date of acquisition. Amortization for goodwill is computed using the
straight-line method over 10 years. Accumulated amortization amounted to
$194,193 and $71,545 at December 31, 1998 and 1997, respectively. Amortization
expense charged to operations in 1998 and 1997 was $122,648 and $71,545,
respectively.

Income Taxes -- Income and losses of the Company are included in the
federal and state income tax returns of its members. Accordingly, no provision
is made in these financial statements for income taxes.

Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

NOTE 2 -- INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Gravel and rock..................................... $1,123,967 $1,803,930
Fuel and oil........................................ 51,996 72,427
---------- ----------
$1,175,963 $1,876,357
========== ==========
</TABLE>

NOTE 3 -- LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Notes payable to U.S. Bank through December 2001, due in
monthly installments of $223,727 plus interest at LIBOR
plus 2.0% (7.85% at December 31, 1998), collateralized
by accounts receivable, inventories and equipment....... $ 7,643,267 $10,327,990
Note payable to U.S. Bank through March 2003, due in
monthly installments of $161,661, including interest at
7.77%, collateralized by accounts receivable,
inventories and equipment............................... 6,985,457 8,000,000
Notes payable to Lewis Rock and Redi-Mix through May 2007,
due in monthly installments of $12,275 including
interest at 8.0%, collateralized by equipment........... 900,094 972,222
Note payable to Hulit through November 2016, due in
monthly installments of $6,835 including interest at
7.629%, collateralized by a deed of trust on real
property................................................ 799,910 820,066
</TABLE>

F-34
<PAGE> 87
PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 -- LONG-TERM DEBT, CONTINUED

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Note payable to Wilmes through November 2016, due in
monthly installments of $5,731 including interest at 9%,
collateralized by a second trust deed on real
property................................................ 610,884 624,030
Note and lease payable.................................... -- 1,217,702
Capital lease obligation (Note 5)......................... 906,123 1,059,796
----------- -----------
17,845,735 23,021,806
Less current portion...................................... 4,411,641 4,219,989
----------- -----------
$13,434,094 $18,801,817
=========== ===========
</TABLE>

As of December 31, 1998, future annual maturities of long-term debt are as
follows:

<TABLE>
<S> <C>
1999............................................. $4,411,641
2000............................................. 4,549,711
2001............................................. 4,659,597
2002............................................. 1,971,818
2003............................................. 617,302
Thereafter....................................... 1,635,666
</TABLE>

The Company has financing agreements with U.S. Bank which specify certain
minimum financial ratios and tangible net worth requirements for the Company.
The Company was in compliance with the financial covenants of the agreements at
December 31, 1998.

The Company has available through U.S. Bank an operating line of credit at
the lesser of $2,500,000 or the sum of 80% of eligible accounts receivable plus
50% of eligible inventory, with interest at the prime rate or LIBOR borrowing
rate plus 2.0%, due on demand. There were no amounts outstanding on the line of
credit at December 31, 1998 and 1997.

NOTE 4 -- PENSION AND PROFIT SHARING PLANS

Qualified defined contribution pension and profit sharing plans are
maintained by the Company for all employees meeting length of service
requirements except those employees that receive benefits of a retirement nature
under state and federal prevailing wage laws. The pension plan provides for
contributions of 5% of salaries. Contributions to the profit sharing plan are at
the discretion of the managers, not to exceed the amount deductible under the
Internal Revenue Code or 15% of salaries. The Company expenses pension and
profit sharing costs as incurred, which amounted to $926,763 and $634,084 for
1998 and 1997, respectively.

NOTE 5 -- LEASES AND COMMITMENTS

The Company extracts rock and sand from six leased properties. The
properties are leased for terms expiring through 2015 and generally require the
payment of royalties which are based on quantities extracted. The royalty
agreements generally specify a minimum annual royalty and provide for increases
in the royalty amount based on a variety of inflationary indexes. One lease
contains a provision providing for an incentive payment of approximately
$372,000 to the Company, if the property is completely mined by December 2003.
The Company also leases real property for two retail outlets under noncancelable
real property leases expiring through 2001. The Company is obligated under the
terms of various noncancelable equipment leases expiring through 2003. The
Company is also obligated under noncancelable real property leases with Freeway
Land Company and Production Land Company, Inc. which call for annual payments of
$103,500 plus an amount

F-35
<PAGE> 88
PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- LEASES AND COMMITMENTS, CONTINUED
based on quantities sold through January 2004 and annual payments of $322,800
through December 2002, respectively. Certain leases contain renewal options.
Other equipment and real property are leased on a month-to-month basis.

The Company leases an asphalt plant under a long-term lease agreement
classified as a capital lease. The cost of the plant as of December 31, 1998 and
1997 was $1,608,745. Accumulated amortization amounted to $686,863 and $538,102
at December 31, 1998 and 1997, respectively. The amortization of this lease,
amounting to $149,033 and $149,722 for 1998 and 1997, respectively, has been
included in the Company's depreciation, depletion and amortization expense.

Future minimum lease and royalty payments are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASE LEASES ROYALTIES
---------- ---------- ----------
<S> <C> <C> <C>
Years ending December 31,
1999........................................... $ 228,620 $1,126,839 $1,862,501
2000........................................... 228,620 1,070,473 362,500
2001........................................... 592,659 984,955 307,500
2002........................................... -- 845,412 307,500
2003........................................... -- 251,689 307,500
Thereafter..................................... -- -- 1,025,950
---------- ---------- ----------
Total minimum lease payments required.......... 1,049,899 $4,279,368 $4,173,451
========== ==========
Less amount representing interest.............. 143,776
----------
Present value of minimum lease payments........ 906,123
Less current portion........................... 165,714
----------
Long-term portion of capital lease
obligation................................... $ 740,409
==========
</TABLE>

Total rent and royalty expense consists of the following:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Equipment rent.............................................. $2,906,280 $2,672,033
Real property rent.......................................... 646,144 750,335
Rock and sand lease and royalties:
Minimum................................................... 2,083,688 2,030,734
Contingent................................................ 702,906 688,608
---------- ----------
$6,339,018 $6,141,710
========== ==========
</TABLE>

The Company subleases portions of its leased property under agreements
expiring through 2000. Lease rentals received totaled $192,000 annually for the
years ended December 31, 1998 and 1997. Future lease rentals are as follows:

F-36
<PAGE> 89
PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 -- RELATED PARTY TRANSACTIONS

Accounts receivable and accounts payable -- related parties consist of
amounts due from or to members and their affiliates and owners.

Equipment and real property rents amounting to approximately $2,067,000 and
$2,357,000 for the years ended December 31, 1998 and 1997, respectively, were
paid to members and their affiliates and owners.

NOTE 7 -- CONTINGENCIES

The Company is involved with two claims filed with the National Labor
Relations Board and a claim filed with the Equal Employment Opportunity
Commission. The Company's management does not believe that the ultimate
resolution of these claims will have a material effect on its financial
position, results of operations or cash flows.

In addition, the Company, in its regular course of business, is involved in
various claims and legal proceedings incidental to its normal business
activities. The Company's management does not believe that the ultimate
resolution of these investigations, claims and legal proceedings will have a
material effect on its financial position, results of operations or cash flows.

NOTE 8 -- YEAR 2000 ISSUE (UNAUDITED)

Like other businesses, the Company could be adversely affected if the
computer systems used by its personnel, suppliers or customers do not properly
process and calculate date related information and data from the period
surrounding and including January 1, 2000. This is commonly known as the "Year
2000" issue. Additionally, this issue could impact non-computer systems and
devices such as production equipment, scales, etc. At this time, because of the
complexities involved in the issue, management cannot provide assurances that
the Year 2000 issue will not have an impact on the Company's operations.

F-37
<PAGE> 90

PACIFIC ROCK PRODUCTS, L.L.C. AND
RIVER CITY MACHINERY, L.L.C.
SCHEDULE II
COMBINED VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO AMOUNTS
BEGINNING COSTS AND CHARGED TO BALANCE END
OF PERIOD EXPENSES RESERVES OTHER OF PERIOD
--------- ---------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
Allowance for doubtful accounts......... $271,700 $383,519 $(359,083) $ -- $296,136

YEAR ENDED DECEMBER 31, 1997
Allowance for doubtful accounts......... $250,000 $ 65,118 $ (43,418) $ -- $271,700
</TABLE>

F-38
<PAGE> 91

INDEX TO PRO FORMA INFORMATION

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Kiewit Materials Company and Subsidiaries Pro Forma
Consolidated Condensed Statements of Earnings............. F-40
Kiewit Materials Company and Subsidiaries Pro Forma
Consolidated Condensed Balance Sheet...................... F-44
Notes to Kiewit Materials Company and Subsidiaries Pro Forma
Consolidated Condensed Financial Statements............... F-46
</TABLE>

F-39
<PAGE> 92

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(SCENARIO 1)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
----------------------------------------
EXCHANGE OF
HISTORICAL DEBENTURES PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Revenue.............................................. $ 99,540 $ -- $ 99,540
Cost of Revenue...................................... (88,832) -- (88,832)
--------- ----------- -----------
10,708 -- 10,708
General and Administrative Expenses.................. (6,451) -- (6,451)
--------- ----------- -----------
Operating Earnings................................... 4,257 -- 4,257
Other Income (Expense)
Investment Income and Equity Earnings.............. 1,448 -- 1,448
Interest Expense................................... (731) (13)(a) (744)
Other, net......................................... 95 -- 95
--------- ----------- -----------
812 (13) 799
--------- ----------- -----------
Earnings before Income Taxes......................... 5,069 (13) 5,056
Provision for Income Taxes........................... (2,037) 4(b) (2,033)
--------- ----------- -----------
Net Earnings......................................... $ 3,032 $ (9) $ 3,023
========= =========== ===========
Earnings per Share:
Basic.............................................. $ 30,323 $ 0.09
========= ===========
Diluted............................................ $ 30,323 $ 0.09
========= ===========
Weighted Average Shares Outstanding:
Basic.............................................. 100 33,219,994(c) 33,220,094
========= =========== ===========
Diluted............................................ 100 34,836,557(c) 34,836,657
========= =========== ===========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-40
<PAGE> 93

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(SCENARIO 2)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
----------------------------------------
EXCHANGE OF
HISTORICAL DEBENTURES PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Revenue.............................................. $ 99,540 $ -- $ 99,540
Cost of Revenue...................................... (88,832) -- (88,832)
--------- ----------- -----------
10,708 -- 10,708
General and Administrative Expenses.................. (6,451) -- (6,451)
--------- ----------- -----------
Operating Earnings................................... 4,257 -- 4,257
Other Income (Expense)
Investment Income and Equity Earnings.............. 1,448 -- 1,448
Interest Expense................................... (731) (7)(a) (738)
Other, net......................................... 95 -- 95
--------- ----------- -----------
812 (7) 805
--------- ----------- -----------
Earnings before Income Taxes......................... 5,069 (7) 5,062
Provision for Income Taxes........................... (2,037) 3(b) (2,034)
--------- ----------- -----------
Net Earnings......................................... $ 3,032 $ (4) $ 3,028
========= =========== ===========
Earnings per Share:
Basic.............................................. $ 30,323 $ 0.09
========= ===========
Diluted............................................ $ 30,323 $ 0.09
========= ===========
Weighted Average Shares Outstanding:
Basic.............................................. 100 33,219,994(c) 33,220,094
========= =========== ===========
Diluted............................................ 100 33,286,986(c) 33,287,086
========= =========== ===========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-41
<PAGE> 94

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(SCENARIO 1)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 25, 1999
----------------------------------------
EXCHANGE OF
HISTORICAL DEBENTURES PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Revenue.............................................. $ 437,058 $ -- $ 437,058
Cost of Revenue...................................... (374,952) -- (374,952)
--------- ----------- -----------
62,106 -- 62,106
General and Administrative Expenses.................. (24,684) -- (24,684)
--------- ----------- -----------
Operating Earnings................................... 37,422 -- 37,422
Other Income (Expense)
Investment Income and Equity Earnings.............. 4,496 -- 4,496
Interest Expense................................... (1,852) (54)(a) (1,906)
Other, net......................................... 1,516 -- 1,516
--------- ----------- -----------
4,160 (54) 4,106
--------- ----------- -----------
Earnings before Income Taxes......................... 41,582 (54) 41,528
Provision for Income Taxes........................... (15,754) 19(b) (15,735)
--------- ----------- -----------
Net Earnings......................................... $ 25,828 $ (35) $ 25,793
========= =========== ===========
Earnings per Share:
Basic.............................................. $ 258,280 $ 0.68
========= ===========
Diluted............................................ $ 258,280 $ 0.68
========= ===========
Weighted Average Shares Outstanding:
Basic.............................................. 100 38,084,235 38,084,335
========= =========== ===========
Diluted............................................ 100 38,191,779 38,191,879
========= =========== ===========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-42
<PAGE> 95

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(SCENARIO 2)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 25, 1999
----------------------------------------
EXCHANGE OF
HISTORICAL DEBENTURES PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Revenue.............................................. $ 437,058 $ -- $ 437,058
Cost of Revenue...................................... (374,952) -- (374,952)
--------- ----------- -----------
62,106 -- 62,106
General and Administrative Expenses.................. (24,684) -- (24,684)
--------- ----------- -----------
Operating Earnings................................... 37,422 -- 37,422
Other Income (Expense)
Investment Income and Equity Earnings.............. 4,496 -- 4,496
Interest Expense................................... (1,852) (27)(a) (1,879)
Other, net......................................... 1,516 -- 1,516
--------- ----------- -----------
4,160 (27) 4,133
--------- ----------- -----------
Earnings before Income Taxes......................... 41,582 (27) 41,555
Provision for Income Taxes........................... (15,754) 10(b) (15,744)
--------- ----------- -----------
Net Earnings......................................... $ 25,828 $ (17) $ 25,811
========= =========== ===========
Earnings per Share:
Basic.............................................. $ 258,280 $ 0.71
========= ===========
Diluted............................................ $ 258,280 $ 0.71
========= ===========
Weighted Average Shares Outstanding:
Basic.............................................. 100 36,344,995 36,345,095
========= =========== ===========
Diluted............................................ 100 36,419,015 36,419,115
========= =========== ===========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-43
<PAGE> 96

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
MARCH 31, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(SCENARIO 1)

<TABLE>
<CAPTION>
CASH ISSUE
HISTORICAL CONTRIBUTION DEBENTURES PRO FORMA
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................... $ 50,675 $50,000(a) $1,058(b) $101,733
Marketable securities....................... 2,576 -- -- 2,576
Receivables, net............................ 45,874 -- -- 45,874
Deferred income taxes....................... 5,349 -- -- 5,349
Other....................................... 17,440 -- -- 17,440
-------- ------- ------ --------
Total Current Assets.......................... 121,914 50,000 1,058 172,972
Property, Plant and Equipment, net............ 116,254 -- -- 116,254
Other Assets.................................. 47,470 -- -- 47,470
-------- ------- ------ --------
$285,638 $50,000 $1,058 $336,696
======== ======= ====== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable............................ $ 26,206 $ -- $ -- $ 26,206
Current portion of long-term debt........... 566 -- -- 566
Accrued insurance costs..................... 7,605 -- -- 7,605
Other....................................... 22,507 -- -- 22,507
-------- ------- ------ --------
Total Current Liabilities..................... 56,884 -- -- 56,884
Long-term debt, less current portion.......... 3,615 -- 670(b) 4,285
Other liabilities............................. 12,137 -- -- 12,137
Minority interest............................. 413 -- -- 413
-------- ------- ------ --------
Total Liabilities........................ 73,049 -- 670 73,719
Stockholder's Equity:
Common stock................................ -- -- -- --
Additional paid-in capital.................. 126,452 50,000(a) 388(b) 176,840
Accumulated other comprehensive income...... 1 -- -- 1
Retained earnings........................... 86,136 -- -- 86,136
-------- ------- ------ --------
Total Stockholder's Equity.................... 212,589 50,000 388 262,977
-------- ------- ------ --------
$285,638 $50,000 $1,058 $336,696
======== ======= ====== ========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-44
<PAGE> 97

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
MARCH 31, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(SCENARIO 2)

<TABLE>
<CAPTION>
CASH ISSUE
HISTORICAL CONTRIBUTION DEBENTURES PRO FORMA
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................... $ 50,675 $50,000(a) $ 529(b) $101,204
Marketable securities....................... 2,576 -- -- 2,576
Receivables, net............................ 45,874 -- -- 45,874
Deferred income taxes....................... 5,349 -- -- 5,349
Other....................................... 17,440 -- -- 17,440
-------- ------- ------ --------
Total Current Assets.......................... 121,914 50,000 529 172,443
Property, Plant and Equipment, net............ 116,254 -- -- 116,254
Other Assets.................................. 47,470 -- -- 47,470
-------- ------- ------ --------
$285,638 $50,000 $ 529 $336,167
======== ======= ====== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable............................ $ 26,206 $ -- $ -- $ 26,206
Current portion of long-term debt........... 566 -- -- 566
Accrued insurance costs..................... 7,605 -- -- 7,605
Other....................................... 22,507 -- -- 22,507
-------- ------- ------ --------
Total Current Liabilities..................... 56,884 -- -- 56,884
Long-term debt, less current portion.......... 3,615 -- 335(b) 3,950
Other liabilities............................. 12,137 -- -- 12,137
Minority interest............................. 413 -- -- 413
-------- ------- ------ --------
Total Liabilities........................ 73,049 -- 335 73,384
Stockholder's Equity:
Common stock................................ -- -- -- --
Additional paid-in capital.................. 126,452 50,000(a) 194(b) 176,646
Accumulated other comprehensive income...... 1 -- -- 1
Retained earnings........................... 86,136 -- -- 86,136
-------- ------- ------ --------
Total Stockholder's Equity.................... 212,589 50,000 194 262,783
-------- ------- ------ --------
$285,638 $50,000 $ 529 $336,167
======== ======= ====== ========
</TABLE>

See accompanying notes to pro forma consolidated condensed financial statements.
F-45
<PAGE> 98

KIEWIT MATERIALS COMPANY AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF REPORTING

The accompanying pro forma consolidated condensed financial statements of
Kiewit Materials Company ("KMC") are presented based upon the historical
consolidated financial statements and the notes thereto of KMC adjusted to give
effect to certain elements of the share exchange, the debenture exchange offer
and the spin-off. The pro forma information assumes, in two separate scenarios,
that 100% (Scenario 1) and 50% (Scenario 2) of the current Kiewit shares held by
KMC employees will be exchanged for shares of KMC common stock with an equal
aggregate formula price. It also assumes that 100% (Scenario 1) and 50%
(Scenario 2) of Kiewit debenture holders that are KMC employees will exchange
their Kiewit debentures for debentures of KMC and that the remaining Kiewit
debentures held by Kiewit employees will be exchanged for both shares of KMC
common stock and reduced principal amount convertible debentures of Kiewit. The
remaining shares of KMC's common stock will be distributed as a dividend at a
pro rata basis to the Kiewit stockholders on a one-to-one ratio.

Such pro forma financial statements should be read in conjunction with the
separate historical consolidated financial statements and the notes thereto of
KMC, included elsewhere herein. Such pro forma financial statements are not
necessarily indicative of the future results of operations or financial
position.

Completion of the foregoing transactions has been assumed to be as of March
31, 2000 in the pro forma consolidated condensed balance sheet. In the pro forma
consolidated condensed statements of earnings, completion of these transactions
has been assumed to be at the beginning of the indicated period.

The significant accounting policies followed by KMC, described in the notes
to its historical consolidated financial statements included elsewhere herein,
have been used in preparing the accompanying pro forma consolidated condensed
financial statements.

2. STATEMENTS OF EARNINGS PRO FORMA ADJUSTMENTS

As described in Note 1, the historical consolidated condensed statements of
earnings for KMC have been adjusted to give effect to certain elements of the
transactions. The adjustments made in preparation of KMC's Pro Forma
Consolidated Condensed Statements of Earnings are described below:

(a) Adjustments made to reflect an increase in interest expense due to the
exchange of the Kiewit convertible debentures held by KMC's employees
into KMC's convertible debentures. The interest rate used to calculate
the increase in interest were the actual rates applicable to each issue
of debentures as follows: 1999 issuance -- 8.25%, 1998
issuance -- 7.35% and 1997 issuance -- 8.028%.

(b) Adjustments made to reflect the tax effect of the above adjustments.

(c) Adjustments made to reflect the change in the number of the Company's
shares and convertible debentures outstanding as a result of the
transactions described in Note 1.

3. BALANCE SHEET PRO FORMA ADJUSTMENTS

As described in Note 1, the historical consolidated condensed balance sheet
of the Company has been adjusted to reflect certain elements of the
transactions. The adjustments made in preparation of the Company's Pro Forma
Consolidated Condensed Balance Sheet are described below:

(a) Adjustments made to reflect the increase in cash as a result of an
estimated $50 million capital contribution from Kiewit.

(b) Adjustments made to reflect the receipt of cash for the issuance of
KMC's convertible debentures exchanged for Kiewit debentures held by
KMC employees.

F-46
<PAGE> 99
KIEWIT MATERIALS COMPANY

NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

4. EARNINGS PER SHARE

Basic and diluted earnings per share of KMC common stock have been computed
using the weighted average number of shares outstanding during each period after
giving effect to common stock equivalents. Pro forma earnings per share reflect
the additional shares issued in the share exchange, the debenture exchange offer
and the spin-off.

F-47
<PAGE> 100

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on June 8, 2000.

KIEWIT MATERIALS COMPANY

By: /s/ CHRISTOPHER J. MURPHY
------------------------------------
Christopher J. Murphy
President and Chief Executive
Officer
<PAGE> 101

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2.1 Form of Separation Agreement by and between Peter Kiewit
Sons', Inc., Kiewit Materials Company and Kiewit
Construction Group Inc.
3.1* Form of Restated Certificate of Incorporation of Kiewit
Materials Company.
3.2* Form of Amended and Restated By-laws of Kiewit Materials
Company.
4.1 Specimen certificate representing shares of common stock,
par value $0.01 per share, of Kiewit Materials Company.
10.1 Form of Tax Sharing Agreement by and between Peter Kiewit
Sons', Inc. and Kiewit Materials Company.
21.1 List of Subsidiaries of Kiewit Materials Company.
27.1* Financial Data Schedule.
</TABLE>

---------------

* Previously filed.