<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CALMAT CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 95-0645790
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
3200 SAN FERNANDO ROAD
LOS ANGELES, CALIFORNIA 90065
(213) 258-2777
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PAUL STANFORD, ESQ.
3200 SAN FERNANDO ROAD
LOS ANGELES, CALIFORNIA 90065
(213) 258-2777
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
BRIAN G. CARTWRIGHT, ESQ. D. COLLIER KIRKHAM, ESQ.
LATHAM & WATKINS CRAVATH, SWAINE & MOORE
633 WEST FIFTH STREET, SUITE 4000 WORLDWIDE PLAZA
LOS ANGELES, CALIFORNIA 90071-2007 825 EIGHTH AVENUE
(213) 485-1234 NEW YORK, NEW YORK 10019-7475
(212) 474-1000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) PRICE(1) FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1 Par Value............. 3,162,500(2) $23.3125 $73,725,781.25 $25,422.68
- ----------------------------------------------------------------------------------------------------------
Common Stock Purchase Rights(3)........ 3,162,500 N/A N/A N/A
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</TABLE>
(1) Estimated solely for purposes of calculation of the registration fee in
accordance with Rule 457 under the Securities Act of 1933 on the basis of
the high and low prices ($23.3125 per share) of the Registrant's Common
Stock on the New York Stock Exchange Composite Tape on March 22, 1994.
(2) Includes 412,500 shares which the Underwriters have options to purchase to
cover over-allotments, if any.
(3) Rights are evidenced by certificates for shares of Common Stock and
automatically trade with such Common Stock. The value attributable to such
Rights, if any, is reflected in the market price of the Common Stock.
----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MARCH 24, 1994
PROSPECTUS
2,750,000 SHARES
CALMAT CO.
COMMON STOCK
------------------------
All of the shares of Common Stock of CalMat Co. (the "Company" or "CalMat")
offered hereby are being sold by the Company.
The Common Stock is traded under the symbol "CZM" on the New York Stock
Exchange, the Pacific Stock Exchange and the Chicago Stock Exchange. On March
22, 1994, the last sales price of the Common Stock as reported on the New York
Stock Exchange was $23 1/4. See "Price Range of Common Stock and Dividends."
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share....................... $ $ $
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Total(3)........................ $ $ $
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</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the several Underwriters an option to purchase up to
an additional 412,500 shares to cover over-allotments, if any. If all such
shares are purchased, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $ , $ , and $ ,
respectively. See "Underwriting."
------------------------
The shares are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters. The Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in whole or
in part. It is expected that delivery of the shares of Common Stock will be made
in New York, New York on or about , 1994.
------------------------
MERRILL LYNCH & CO. LAZARD FRERES & CO.
------------------------
The date of this Prospectus is , 1994
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices in New York
(Seven World Trade Center (Thirteenth Floor), New York, New York 10048) and in
Chicago (Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661). Copies of such materials can be obtained at prescribed
rates by writing to the Securities and Exchange Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549. The Common Stock of the
Company is traded on the New York, Pacific and Chicago Stock Exchanges. Reports
and other information concerning the Company can be inspected at the offices of
The New York Stock Exchange ("NYSE") (20 Broad Street, New York, New York
10005), the Pacific Stock Exchange ("PSE") (301 Pine Street, San Francisco,
California 94104), and the Chicago Stock Exchange ("CSE") (440 South LaSalle
Street, Chicago, Illinois 60605).
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto. The Registration
Statement, including the exhibits thereto, may be inspected without charge at
the principal office of the Commission, 450 Fifth Street, N.W., Washington D.C.
20549, and copies of all or any part thereof may be obtained from such office
upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-1162) are incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1993;
(2) the Company's Proxy Statement issued in connection with its Annual
Meeting of Stockholders to be held on April 27, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this Prospectus
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this Prospectus shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
on the written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference herein or in any
incorporated document. Requests should be directed to Secretary, CalMat Co.,
3200 San Fernando Road, Los Angeles, California 90065 (Telephone Number: (213)
258-2777).
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK, PACIFIC OR CHICAGO STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere in this Prospectus. Unless
otherwise noted, all information in this Prospectus assumes that the
Underwriters' over-allotment option will not be exercised. See "Underwriting."
THE COMPANY
CalMat is the sixth largest producer of construction aggregates in the
United States and believes it is the largest producer of aggregates and owner of
the most extensive aggregates reserves in California. The Company employs a
vertically integrated operating strategy which has contributed to it becoming
the United States' third largest supplier of hot mix asphalt (the largest such
supplier in California) and a supplier of ready mixed concrete. The Company
derives significant income from its real estate holdings, consisting primarily
of properties originally associated with its aggregates mining operations. The
Company's operations are generally located near populous urban centers in the
western United States consisting of Los Angeles, San Francisco, San Diego and
Orange County, California, Phoenix and Tucson, Arizona and Albuquerque, New
Mexico. The Company operates through three business segments: (i) the Concrete
and Aggregates Division, which mines, produces and sells construction aggregates
and manufactures and distributes ready mixed concrete; (ii) the Asphalt
Division, which manufactures and sells hot mix asphalt; and (iii) the Properties
Division, which manages CalMat's extensive land holdings and developed
properties. The Concrete and Aggregates Division and the Asphalt Division
contributed revenues of $173.0 million (48.9%) and $153.9 million (43.5%),
respectively, net of intersegment sales, of the Company's total revenues of
$353.5 million in 1993.
The Company believes it has a unique position within the industry as the
largest producer of aggregates in California, the most populous state in the
country, which consumes more aggregates than any other state in the nation.
Since 1985, the Company has expanded its aggregates reserves from 0.6 billion
tons and now controls 1.8 billion tons situated in key construction markets in
the western United States. The Company believes that its substantial and
strategically located reserves have provided it with a long-term competitive
advantage as the high cost of land and the lengthy and complicated regulatory
process have created significant barriers to entry.
CalMat was formed in June 1984 through the business combination of Conrock
Co. ("Conrock") and California Portland Cement Company ("CPC"). Beginning in
1985, the Company's management began a multi-year program of acquisitions and
dispositions to focus the Company on its primary business of producing and
selling construction aggregates and discontinued its business of developing
industrial and office buildings. By the early 1990s the Company's restructuring
program, which included the dispositions of the Company's coal, oil and cement
businesses and a major portion of its developed and developable real estate, had
been largely completed. During the severe California recession over the past
four years, the Company has responded by reducing selling, general and
administrative expenses by 14% since 1990. The Company believes it is well
positioned to capitalize on an economic turnaround in California and the
currently improving economies in New Mexico and Arizona.
The Company's business strategy is composed of four key elements:
Focus on Core Businesses. The Company intends to focus on its core business
of aggregates (sand and gravel and crushed rock) with a strong complementary
position in asphalt and ready mixed concrete. In conjunction with its aggregates
business, the Company maintains extensive land holdings in California, New
Mexico and Arizona which provide income from rentals, landfills and self storage
facilities.
Maintain Substantial Strategically Located Reserves. The Company intends to
maintain substantial permitted reserves in the key geographic markets in which
it competes. The high cost of transporting aggregates heavily influences the
price to the end user, thus making production and distribution of aggregates a
localized business.
Maintain a Competitive Cost Structure. During the severe California
recession over the past four years, the Company has steadily implemented
rigorous operating cost and expense reduction measures. The
3
<PAGE> 5
Company's cost structure should provide significant operating leverage as the
Company's business environment improves.
Expand through Strategic Acquisitions. While the Company focuses on its
core businesses within its existing markets, it plans to continue to selectively
expand these businesses into complementary geographic markets with attractive
growth prospects. The Company will seek to take advantage of strategic
acquisitions, on an opportunistic basis, that may arise as the industry
continues to consolidate.
By focusing on this strategy, the Company intends to continue to improve
its substantial position in the markets in which it competes and to continue to
expand into complementary geographic markets. The construction aggregates
industry has and continues to experience significant consolidation, resulting in
fewer, larger competitors. Certain factors contributing to this trend include an
increasingly stringent regulatory environment, including costly reclamation
requirements, and the fact that aggregates production operations have become
more capital intensive. In addition, larger producers are able to spread many
fixed costs, such as those relating to mining and regulatory expertise, over a
larger revenue base which gives them a relative cost advantage. Management
believes that industry consolidation will continue in the future.
OPERATING OUTLOOK
In recent years, the Company's results of operations have been negatively
impacted by the severe recession in California. Housing starts in California in
1993 were nearly 65% lower than in 1989, while total construction spending
statewide declined approximately 50% over the same period. Consequently, the
Company sold 25.4 million tons of construction aggregates in 1993, down from
32.0 million tons in 1989. While the Company's aggregates production volume
increased slightly in 1993 as compared to 1992, both private (residential and
commercial) and public infrastructure construction must increase before the
Company would expect results from operations for 1994 to materially exceed 1993
results, excluding any significant real estate sales.
On January 17, 1994, a strong earthquake in Los Angeles caused extensive
damage to the area's infrastructure and buildings. In the period immediately
following the earthquake, the Company experienced a significant increase in
business at its Sun Valley landfill operation and some additional sales of
construction materials for emergency road repairs and related work. While the
impact of the earthquake should be beneficial to the Company's business in the
long-term as both private sector and federal relief money under the Federal
Emergency Management Agency ("FEMA") is put to work, it is uncertain whether
such activity will materially affect the Company's results of operations during
1994. The magnitude and timing of any effects from the earthquake on the
Company's future operating results is impossible to predict.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered...................... 2,750,000 shares
Common Stock outstanding:(1)
Before the Offering..................... 23,137,640 shares
After the Offering...................... 25,887,640 shares
Use of Proceeds........................... All of the net proceeds from the sale of the
Common Stock will be used to repay outstanding
indebtedness and for general corporate purposes.
See "Use of Proceeds."
NYSE, PSE and CSE Symbol.................. CZM
</TABLE>
- ---------------
(1) Does not include 1,654,110 shares issuable upon the exercise of outstanding
stock options as of March 22, 1994. See "Capitalization."
4
<PAGE> 6
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................. $353,506 $350,260 $378,329 $433,339 $479,977
Costs and expenses excluding special
charges................................. 338,609 343,452 349,836 403,549 409,239
-------- -------- -------- -------- --------
14,897 6,808 28,493 29,790 70,738
Special charges........................... -- 26,100(b) -- -- --
Gains from disposal of assets held for
sale(a)................................. -- 1,786 2,929 20,774 39,217
-------- -------- -------- -------- --------
Income (loss) from continuing operations
before income taxes and cumulative
effect of change in accounting
principle............................... 14,897 (17,506) 31,422 50,564 109,955
Federal and state income taxes............ 6,600 (7,002) 12,568 20,118 41,807
-------- -------- -------- -------- --------
Income (loss) from continuing operations
before cumulative effect of change in
accounting principle.................... 8,297 (10,504) 18,854 30,446 68,148
Income from discontinued operations....... -- -- -- 3,089(c) 9,953(c)
Gain on disposition of CPC to a related
party................................... -- -- -- 47,310(c) --
Cumulative effect of change in accounting
principle............................... 919(d) (6,000)(d) -- -- --
-------- -------- -------- -------- --------
Net income (loss)......................... $ 9,216 $(16,504) $ 18,854 $ 80,845 $ 78,101
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average number of common and
common equivalent shares................ 23,117 23,242 23,319 28,128 30,978
PER SHARE DATA:
Income (loss) from continuing operations
before cumulative effect of change in
accounting principle.................... $ 0.36 $ (0.45)(b) $ 0.81 $ 1.08 $ 2.20
Income from discontinued operations....... -- -- -- 0.11(c) 0.32(c)
Gain on disposition of CPC to a related
party................................... -- -- -- 1.68(c) --
Cumulative effect of change in accounting
principle............................... 0.04(d) (0.26)(d) -- -- --
-------- -------- -------- -------- --------
Net income (loss)......................... $ 0.40 $ (0.71) $ 0.81 $ 2.87 $ 2.52
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Dividends................................. $ 0.40 $ 0.64 $ 0.64 $ 0.64(e) $ 0.56
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
OTHER OPERATING DATA:
Depreciation, depletion and
amortization............................ $ 31,953 $ 30,210 $ 28,802 $ 41,502 $ 45,499
Capital expenditures...................... 12,063(f) 32,732 34,461 89,757 63,667
Tons of aggregates shipped................ 25,408 25,266 24,941 30,193 32,017
BALANCE SHEET DATA (AT YEAR END):
Total assets.............................. $604,895 $597,240 $597,600 $605,660 $867,121(g)
Working capital........................... 39,863 34,003 43,430 36,100 92,346(g)
Long-term debt............................ 109,635 131,129 92,515 93,320 126,671(g)
Stockholders' equity...................... 351,046 350,687 383,596 387,189 526,764(g)
</TABLE>
(footnotes appear on following page)
5
<PAGE> 7
(a) Relates to the sale of certain developed or developable real estate
properties which were classified as assets held for sale in 1988 due to the
Company's decision to discontinue its business of developing industrial and
office buildings. No properties are currently classified as assets held for
sale. Gains from sales of all other real estate are recorded as revenues.
(b) During 1992, the Company recorded non-cash, pre-tax special charges totaling
$26.1 million ($0.68 per share on an after-tax basis) related to the write
down of the book value of certain developed real estate ($15.0 million),
write downs of excess plant and equipment and severance payments related to
the consolidation of certain construction materials operations ($5.4
million) and the write off of certain accumulated costs incurred in
connection with seeking permits for additional aggregates sources and for
other valuation allowances ($5.7 million).
(c) On September 30, 1990, Onoda California, Inc. ("Onoda"), an indirect, wholly
owned subsidiary of Onoda Cement Co. Ltd. of Japan, acquired from the
Company all of the outstanding stock of CPC, a wholly owned subsidiary of
the Company, in exchange for 5,834,000 shares of the Company's common stock
held by Onoda. A non-taxable gain of $49.8 million on this transaction was
offset by charges of $2.5 million (net of tax benefits of $1.8 million)
related to the decision to dispose of CPC, resulting in a net gain of $47.3
million. Net income attributable to CPC is reflected as income from
discontinued operations.
(d) Reflects the cumulative effect to January 1, 1993, to adopt SFAS No. 109,
"Accounting for Income Taxes," of $0.9 million, or $0.04 per share, and the
cumulative effect to January 1, 1992, to adopt SFAS No. 106, "Employer's
Accounting for Post Retirement Benefits Other than Pensions" of $6.0
million, or $0.26 per share.
(e) Excludes a one-time special dividend of $0.10 per share.
(f) During 1993, due to the continued recession in southern California, the
Company restricted capital expenditures in order to conserve cash. See
"Management's Discussion and Analysis of Results of Operations -- Liquidity
and Capital Resources -- Cash Flows."
(g) Includes amounts related to CPC which was disposed of on September 30, 1990.
6
<PAGE> 8
INVESTMENT CONSIDERATIONS
In addition to the other information in this Prospectus, the following
factors should be carefully considered by prospective purchasers of the
Company's Common Stock.
GEOGRAPHIC CONCENTRATION
The Company's facilities and sales are concentrated in southern California,
primarily in or near the Los Angeles and San Diego metropolitan areas. For
example, in 1993 more than half of the revenues, and approximately two-thirds of
the operating profit, of the Concrete and Aggregates and Asphalt Divisions were
attributable to sales in southern California. The Company's ability to return to
the profitability it enjoyed in 1989 and 1990 will to a significant degree
depend on the level of economic growth and construction activity in southern
California. Although there are some preliminary indications that southern
California is beginning to recover from the severe recession it has experienced
since 1990, there cannot be any assurance as to the extent, if any, or timing of
any such improvement in economic conditions.
CYCLICALITY
The Company's Concrete and Aggregates and Asphalt Divisions primarily
supply the construction industry. Demand is driven by general construction
levels, which in turn reflect economic conditions (including interest rates) and
public sector construction spending in the markets in which the Company
operates. Accordingly, aggregates, concrete and asphalt sales tend to be
cyclical and, due to high transportation costs, are sensitive to changes in
economic conditions in the localities near production facilities. Since fixed
costs are relatively high, profitability is substantially affected by increases
and decreases in sales associated with local and regional business cycles.
SEASONALITY
Due to the effect of weather on the level of construction in the Company's
market, the Company's business is somewhat seasonal, with the second and third
quarters generally being the strongest. Unusually good or bad weather,
particularly during the first and fourth quarters, can make period to period
comparisons of operating results more difficult, as longer term trends may be
temporarily offset by weather related factors.
PROPERTIES
The Company is no longer in the business of developing industrial and
office buildings, and, if market conditions improve, will consider selling a
substantial portion of its remaining developed properties. The timing of or
proceeds from any such sales are uncertain. If such sales do occur, income from
the Properties Division would be reduced in future years due to the loss of
rental income from the properties involved.
PERMITTING, ENVIRONMENTAL AND OTHER REGULATORY MATTERS
Obtaining the requisite governmental approvals to develop aggregates
reserves and operate existing aggregates, asphalt and ready mixed concrete
production facilities requires compliance with a broad range of federal, state
and local laws and regulations relating to the environment, health, safety,
zoning and other related concerns. In recent years, the regulatory requirements
(dealing with such matters as environmental impact reports, land reclamation
requirements and endangered species) have become more complex and stringent, and
groups and individuals opposed to allowing aggregates production in their
localities have been increasingly willing to invoke all aspects of those laws to
prevent, delay or obtain economic concessions in connection with proposed or
ongoing production activities. In some cases, particularly those involving
coastlines, rivers or wetlands, environmental restrictions make it impracticable
to attempt to develop sand and gravel deposits (the Company's traditional source
of aggregates), thus accelerating a trend towards hard rock quarrying and
crushed stone production.
In addition to the foregoing, some of the Company's operations involve the
use of materials that are or in the future may be classified as toxic or
hazardous within the meaning of applicable federal and states laws,
7
<PAGE> 9
thus requiring compliance with a variety of reporting, monitoring and disposal
requirements. Due to the extremely stringent air quality requirements applicable
to certain regions of California in which the Company operates, the Clean Air
Act of 1990 will require modifications to the production facilities of a number
of the Company's asphalt plants in order to reduce the level of nitrous oxide
emissions. Other regulations, such as those dealing with noise, dust and truck
traffic, impact the Company's aggregates production operations.
The Company believes that all its operations are in substantial compliance
with all applicable environmental and other laws and regulations. Despite the
Company's compliance efforts, risk of environmental liability is inherent in the
operation of the Company's businesses, as it is with other companies engaged in
similar businesses, and there can be no assurance that environmental liabilities
will not have a material adverse effect on the Company in the future.
USE OF PROCEEDS
The net proceeds from the sale of the shares of Common Stock offered hereby
are estimated to be approximately $ million. Approximately $ million of the
net proceeds will be used to pay down indebtedness outstanding under the
Company's revolving credit facilities and repay a bank term loan. As of March
22, 1994 the weighted average interest rate of the borrowings outstanding under
the revolving credit facilities was approximately 4.46%. The bank term loan has
a floating interest rate which currently is 3.88%. Availability to borrow under
the revolving credit facilities expires in 1996 and 1997, and the bank term loan
matures in 1996. The balance of the net proceeds will be used for general
corporate purposes.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is traded under the symbol "CZM" on the New York, Pacific
and Chicago Stock Exchanges. The following table sets forth the high and low
sales prices of the Common Stock for the quarters indicated as reported on the
New York Stock Exchange and the cash dividends declared on the Common Stock
during each quarter presented.
<TABLE>
<CAPTION>
PRICE RANGE CASH
------------- DIVIDENDS
HIGH LOW DECLARED
---- ---- ---------
<S> <C> <C> <C>
1992
First Quarter................................... $28 5/8 $22 3/4 $0.16
Second Quarter.................................. 28 24 0.16
Third Quarter................................... 24 1/2 19 3/4 0.16
Fourth Quarter.................................. 25 19 1/2 0.16
1993
First Quarter................................... $22 5/8 $18 1/2 $0.10
Second Quarter.................................. 21 3/8 17 1/2 0.10
Third Quarter................................... 19 16 1/2 0.10
Fourth Quarter.................................. 22 16 3/8 0.10
1994
First Quarter (through March 22, 1994).......... $25 5/8 $19 3/8 $0.10
</TABLE>
The last reported sales price of the Common Stock on the New York Stock
Exchange on March 22, 1994 was $23 1/4. There were 1,368 holders of record of
the Common Stock as of March 22, 1994.
The Company's Board of Directors voted in February 1993 to reduce quarterly
cash dividends on the Common Stock to $0.10 per share. The action was taken to
maintain operating flexibility and conserve cash until there are clear signs of
an economic recovery. Future declarations of dividends on the Common Stock and
the amounts thereof will depend on the Company's financial condition, results of
operations, capital requirements, debt agreement restrictions and such other
factors that the Board of Directors in its business judgment deems relevant.
8
<PAGE> 10
CAPITALIZATION
The following table sets forth the capitalization of the Company at
December 31, 1993, and as adjusted to give effect to the sale of the Common
Stock offered hereby and the application of the net proceeds therefrom. See "Use
of Proceeds" and "Description of Capital Stock."
<TABLE>
<CAPTION>
DECEMBER 31, 1993
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt (includes current portion of long-term debt)......... $ 5,852 $
Long-term debt:
Bank debt.......................................................... 59,000
Municipal improvement bonds........................................ 2,465
Mortgages and other notes.......................................... 13,170
Senior notes....................................................... 35,000
-------- -----------
Total debt(1).............................................. 115,487
-------- -----------
Stockholders' equity:
Preferred stock, $1 par value; 5,000,000 shares authorized;
no shares issued or outstanding................................. -- --
Common stock, $1 par value; 100,000,000 shares authorized;
23,109,292 shares issued and outstanding(2)..................... 23,109
Additional paid-in capital......................................... 39,202
Retained earnings.................................................. 288,735 288,735
-------- -----------
Total stockholders' equity................................. 351,046
-------- -----------
Total capitalization................................................. $466,533 $
-------- -----------
-------- -----------
</TABLE>
- ---------------
(1) See Note 5 to the Consolidated Financial Statements included herein.
(2) Does not include 1,679,596 shares issuable upon the exercise of stock
options outstanding at December 31, 1993, or 1,019,834 additional shares
reserved for issuance upon exercise of options that may be granted in the
future under the Company's stock option plans. See "Description of Capital
Stock" and Note 6 to the Consolidated Financial Statements included herein.
SELECTED QUARTERLY OPERATING DATA
The following table sets forth unaudited selected quarterly operating data
for the periods indicated.
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------- YEAR ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
--------- -------- ------------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1993
Total revenues.............. $62,042 $96,444 $ 100,432 $ 94,588 $353,506
Gross profit(a)............. 6,600 21,966 21,098 15,529 65,193
1992
Total revenues.............. $67,344 $97,272 $ 102,849 $ 82,795 $350,260
Gross profit(a)............. 8,516 18,563 20,120 11,381 58,580
</TABLE>
- ---------------
(a) Gross profit reflects total revenues net of cost of products sold and
operating expenses.
9
<PAGE> 11
THE COMPANY
CalMat is the sixth largest producer of construction aggregates in the
United States and believes it is the largest producer of aggregates and owner of
the most extensive aggregates reserves in California. The Company employs a
vertically integrated operating strategy which has contributed to it becoming
the United States' third largest supplier of hot mix asphalt (the largest such
supplier in California) and a supplier of ready mixed concrete. The Company
derives significant income from its real estate holdings, consisting primarily
of properties originally associated with its aggregates mining operations.
The Company's operations are generally located near populous urban centers
in the western United States consisting of Los Angeles, San Francisco, San Diego
and Orange County, California, Phoenix and Tucson, Arizona and Albuquerque, New
Mexico. The Company operates through three business segments: (i) the Concrete
and Aggregates Division, which mines, produces and sells construction aggregates
and manufactures and distributes ready mixed concrete; (ii) the Asphalt
Division, which manufactures and sells hot mix asphalt; and (iii) the Properties
Division, which manages CalMat's extensive land holdings and developed
properties. The Concrete and Aggregates Division and the Asphalt Division
contributed revenues of $173.0 million (48.9%) and $153.9 million (43.5%),
respectively, net of intersegment sales, of the Company's total revenues of
$353.5 million in 1993.
The Company believes it has a unique position within the industry as the
largest producer of aggregates in California, the most populous state in the
country, which consumes more aggregates than any other state in the nation.
According to 1990 U.S. Census Bureau estimates, over 29 million people live in
California, CalMat's primary market, and, by the year 2000, the population in
this region is expected to grow to over 33 million. Since 1985 the Company has
expanded its aggregates reserves from 0.6 billion tons and now controls 1.8
billion tons situated in key construction markets in the western United States.
The Company believes that its substantial and strategically located reserves
have provided it with a long-term competitive advantage as the high cost of land
and the lengthy and complicated regulatory process have created significant
barriers to entry. The Company's service to its customers is enhanced by its
plentiful reserves, convenient locations and production capacity, which help
ensure timely delivery and an uninterrupted supply of product.
CalMat was formed in June 1984 through the business combination of Conrock
and CPC. Beginning in 1985, the Company's management began a multi-year program
of acquisitions and dispositions to focus the Company on its primary businesses
of producing and selling construction aggregates. As part of this program, the
Company sold its oil and coal businesses in 1985 and disposed of its cement
operations in 1990. During this same period, the Company increased its ownership
to 100% in what is now its Asphalt Division and made a number of acquisitions
that strategically fit within its core businesses of aggregates, ready mixed
concrete and asphalt. In addition, in 1988 the Company redirected the emphasis
of its real estate operations from the capital-intensive construction of
buildings to activities more narrowly focused on the management and master
planning of its properties from the mining cycle through the leasing or selling
of property after reclamation. By the early 1990s the Company's restructuring
program, which included the dispositions of the Company's coal, oil and cement
businesses and a major portion of its developed and developable real estate, had
been largely completed. During the severe California recession over the past
four years, the Company has responded by reducing selling, general and
administrative expenses by 14% since 1990. The Company believes it is well
positioned to capitalize on an economic turnaround in California and the
currently improving economies in New Mexico and Arizona.
STRATEGY
The Company's business strategy is composed of four key elements:
Focus on Core Businesses. The Company intends to focus on its core business
of aggregates (sand and gravel and crushed rock) with a strong complementary
position in asphalt and ready mixed concrete. Aggregates are basic materials for
which no economic substitutes exist and which are required by virtually all
types of construction. The Company not only supplies aggregates to a wide
variety of customers but also employs a vertically integrated operating strategy
utilizing its aggregates in the production of hot mix asphalt (consisting of 95%
aggregates) and ready mixed concrete (consisting of 80% aggregates). In
conjunction with
10
<PAGE> 12
its aggregates business, the Company maintains extensive land holdings in
California, New Mexico and Arizona which provide income from rentals, landfills
and self storage facilities.
Maintain Substantial Strategically Located Reserves. The Company intends to
maintain substantial permitted reserves in the key geographic markets in which
it competes. The high cost of transporting aggregates heavily influences the
price to the end user, thus making production and distribution of aggregates a
localized business. The proximity of CalMat's mining operations to major urban
centers along with the Company's extensive, permitted reserves at these
locations should enable it to respond quickly and efficiently to growing demand
for construction aggregates once the currently depressed California economy
improves. In March 1994, the Company added to its strategic aggregates base by
acquiring the mining rights to approximately 17 million tons of permitted rock
and sand located at Irvine Lake in Orange County, California, where commercial
aggregates production is expected to commence in 1994. In addition, the Company
permitted more than 50 million tons of sand and gravel near San Bernardino,
California in 1993 which should allow the Company to meet its needs in that
region for several decades.
Maintain a Competitive Cost Structure. During the severe California
recession over the past four years, the Company has steadily implemented
rigorous operating cost and expense reduction measures. These have included
cutting selling, general and administrative expenses by 14%, reducing the work
force by 11% and closing and consolidating several production facilities since
the end of 1990. The Company's cost structure should provide significant
operating leverage as the Company's business environment improves.
Expand through Strategic Acquisitions. While the Company focuses on its
core businesses within its existing markets, it plans to continue to selectively
expand these businesses into complementary geographic markets with attractive
growth prospects. The Company will seek to take advantage of strategic
acquisitions, on an opportunistic basis, that may arise as the industry
continues to consolidate. For example, in December 1992, the Company acquired
The Jamieson Company, a privately held, leading aggregates producer in the San
Francisco Bay area. The acquisition not only allowed CalMat to expand its
aggregates business into the growing San Francisco Bay area but also
complemented the Company's existing asphalt operations in that market. Although
the Company has an on-going program to develop and evaluate acquisition
opportunities and continually considers possible acquisition targets, the
Company has no acquisitions presently pending.
By focusing on these strategies, the Company intends to continue to improve
its substantial position in the markets in which it competes and to continue to
expand into complementary geographic markets. The construction aggregates
industry has and continues to experience significant consolidation, resulting in
fewer, larger competitors. Certain factors contributing to this trend include an
increasingly stringent regulatory environment, including costly reclamation
requirements, and the fact that aggregates production operations have become
more capital intensive. In addition, larger producers are able to spread many
fixed costs, such as those relating to mining and regulatory expertise, over a
larger revenue base which gives them a relative cost advantage. Management
believes that industry consolidation will continue in the future.
The Company, a Delaware corporation, maintains its principal executive
offices at 3200 San Fernando Road, Los Angeles, California. Its telephone number
is (213) 258-2777. Unless the context otherwise requires, all references to the
"Company" or "CalMat" include the Company and its subsidiaries.
CONCRETE AND AGGREGATES DIVISION
The Concrete and Aggregates Division produces and sells construction
aggregates (sand and gravel and crushed rock) and supplies ready mixed concrete
for use in most types of construction including homes, schools, shopping
centers, office buildings and industrial parks as well as roads, freeways,
bridges, dams and rail-based transit systems. Projects to which the Company is
currently supplying aggregates include a remote aircraft parking facility at the
Los Angeles International Airport, airport runway reconstruction at the John
Wayne International Airport in Orange County, California, State Farm Insurance's
Regional Office in Bakersfield, California, a major Intel Corporation complex in
Albuquerque, New Mexico and several projects related to the expansion of the Sky
Harbor International Airport in Phoenix, Arizona.
11
<PAGE> 13
The Division operates aggregates processing plants at 34 locations
primarily in Los Angeles, San Francisco, San Diego and Orange County,
California, in Phoenix and Tucson, Arizona, and in Albuquerque, New Mexico.
Plants at three of these locations have been temporarily idled but are expected
to return to operation when demand increases. The Division operates 19 plants in
southern California, and the Company believes it is the largest supplier of
construction aggregates to the greater Los Angeles area. During 1993 the Company
sold 25.4 million tons of aggregates, representing less than half of the
Company's annual maximum production capacity.
As of December 31, 1993, the Company had approximately 1.8 billion tons of
estimated aggregates reserves, located near the major urban centers of the
markets it serves. The Company owns (or has long-term leases for) all of the
properties on which its reserves are located, and in all cases the Company
obtains permits from various governmental authorities prior to the commencement
of its mining activities. Approximately 70% of the Company's total reserves are
either fully permitted or in the process of being permitted. As is typical of
major aggregates producers with a number of production facilities, the currently
permitted reserves at the Company's quarries, expressed in terms of years of
production at historical rates, varies widely, in the Company's case from
approximately two to three years at several older facilities to in excess of 20
years at many others. The Company has permitting or alternative production plans
to deal with all of its sites where reserves could be depleted in less than 10
years, and believes that its current reserves position provides it with a
significant long-term competitive advantage.
To further assure sufficient reserves and adequate facilities to meet
future demand, CalMat continues to add new aggregates reserves. In March 1994
the Company added to its strategic aggregates base by acquiring the mining
rights to approximately 17 million tons of permitted rock and sand located at
Irvine Lake in Orange County, California where commercial aggregates production
is expected to commence in 1994. In addition, the Company permitted more than 50
million tons of sand and gravel near San Bernardino, California in 1993 which
should allow the Company to meet its needs in that region for several decades.
In December 1992, the Company acquired substantially all of the assets of
The Jamieson Company, a privately-held aggregates producer located in
Pleasanton, California. This acquisition, which includes approximately 100
million tons of permitted reserves, enabled the Company to expand its aggregates
business into the growing San Francisco Bay area and complemented the Company's
existing asphalt operations in that market.
The Division also operates 28 ready mixed concrete batch plants, generally
at locations adjacent to the Division's aggregates processing plants (with the
exception of the Los Angeles and San Francisco areas, where the Company does not
produce ready mixed concrete). Ready mixed concrete consists by volume of
approximately 80% aggregates and 20% cement, water and other. The Company's
fleet of approximately 375 mixer trucks delivers ready mixed concrete to the
customer's job site. The Company has vertically integrated into the ready mixed
concrete business primarily in those geographic areas where it has been
necessary from a competitive standpoint to provide an outlet for the Company's
aggregates production.
The Division has numerous competitors in each of its markets, but generally
has fewer competitors in the aggregates market than in the ready mixed concrete
market. A majority of the ready mixed concrete business is obtained by
competitive bid. In addition to competitive pricing, the Division's other
methods of meeting competition include providing higher levels of service and
higher quality products to its customers. Most of the Company's aggregates are
delivered to customers by third-party truckers. The Division consumes a portion
of its aggregates production in the manufacturing of ready mixed concrete, and
supplies a portion of its production to the Asphalt Division for use in the
production of hot mix asphalt. Other sources of raw materials, such as cement
used in ready mixed concrete, are readily available.
ASPHALT DIVISION
CalMat's Asphalt Division is the third largest supplier of hot mix asphalt
to the construction industry nationwide and believes it is the largest such
supplier in California. The Company produces and supplies asphalt and related
specialty products. Unlike some asphalt producers, the Company does not
undertake paving work, and thus does not compete with its customers, which are
principally contractors engaged in the paving business.
12
<PAGE> 14
The Division's primary source of revenue is from sales of hot mix asphalt.
Hot mix asphalt consists by volume of approximately 95% aggregates and 5% liquid
asphalt (a petroleum refining by-product). The Division currently operates
asphalt plants in 36 locations primarily in metropolitan Los Angeles, San Diego
and Orange County and the San Francisco Bay and San Joaquin Valley areas of
California, as well as Phoenix and Tucson, Arizona, and Albuquerque, New Mexico.
Of the 36 locations, 21 are sites which also have aggregates-processing plants
operated by the Concrete and Aggregates Division. This proximity provides the
Company with a competitive advantage in those markets due to the availability of
aggregates and transportation cost savings. At all other asphalt plants, more
than one source of aggregates is available, and at all asphalt plants, more than
one source of liquid asphalt is available.
In addition, the Division operates nine asphalt recycling systems at its
major plants which recover aggregates and oil from asphalt that has been
salvaged from roads and other surfaces. Used in the production of new asphalt
paving, the recovered aggregates and oil offer substantial cost savings,
strengthen the Company's ability to secure public projects, and provide a high
return on investment. Three additional recycling systems are planned for 1994.
The Division manufactures related specialty products including GUARDTOP(R),
a coating material used for sealing asphalt paving to prevent water damage and
surface erosion, and under a license agreement the Division is the exclusive
distributor in metropolitan Los Angeles of a polypropylene reinforcing fabric
used in the resurfacing of pavement. The Division also maintains a fleet of
paving machines and specialty paving equipment which it rents, along with
qualified operators, to contractors. The Division has more than one competitor
in each of its markets and has several competitors in most of its markets. The
Division competes for business through price, quality and service to customers.
PROPERTIES DIVISION
The Properties Division manages the Company's extensive holdings of over
34,000 owned and leased acres and is responsible for land acquisitions,
permitting, reclamation, sales and leasing activities. Due to economies of scale
and the Company's experience and expertise in the permitting process, the
Company believes it has a significant advantage over most of its smaller
competitors in obtaining permits for its mining and other operations. CalMat
maintains substantial property holdings near the major urban centers of the
markets it serves and leases land containing aggregates reserves prior to
commencement of mining activities. During 1993, approximately 120 leases
covering more than 1,200 acres were in effect. These leaseholds were used for
farming, storage locations and other uses.
CalMat's land management cycle includes acquiring property, developing a
master plan, obtaining land use entitlements, extracting aggregates, and then
reclaiming the mined property and preparing it for development. The Company has
generally been able to recycle previously mined properties due in part to the
efforts of its land management professionals. CalMat reclaims land for a wide
variety of uses such as agriculture, native habitat restoration, water
conservation and commercial, residential and industrial development. Reclaimed
property may be subdivided into lots and sold to developers after obtaining the
necessary zoning and permits.
As part of the Company's restructuring in 1988, the Company decided to
discontinue its business of developing industrial and office buildings. Since
that time, the Company has sold 30 industrial buildings (totalling approximately
1.5 million square feet). As market conditions permit, the Company intends to
dispose of its remaining commercial and industrial developments except for
certain industrial buildings which serve to buffer the Company's mining and
production operations. The Company currently owns approximately 1.1 million
square feet of commercial and industrial buildings, approximately 550,000 square
feet of which are located in close proximity to aggregates mining sites and
buffer the adjacent mining and processing operations. The Company currently
operates 4 landfills and expects to develop 3 additional landfill sites in 1994
and 1995. All of the Company's existing and planned landfills are designed and
have permits to accept only non-hazardous construction rubble.
13
<PAGE> 15
SELECTED BUSINESS SEGMENT OPERATING DATA
The table below sets forth selected operating data of the Company's
principal business segments. Total revenues by segment include both sales to
unaffiliated customers, as reported in the Company's consolidated statements of
operations, and intersegment sales. Income before income taxes by segment
represents total revenues, less direct operating expenses, segment selling,
general and administrative expenses, and certain allocated corporate, general
and administrative expenses. Corporate and unallocated expenses include
corporate administrative expenses and support expenses not allocated to business
segments. The results of CPC, which was sold in 1990, are excluded from the
information set forth below.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
REVENUES:
Asphalt............................. $153,862 $146,457 $168,477 $184,722 $185,832
Concrete and Aggregates............. 201,117 205,650 203,646 256,188 284,910
Properties.......................... 23,641 22,038 29,327 19,152 31,370
Corporate and other................. 3,012 2,525 3,831 3,314 4,686
Intersegment sales.................. (28,126) (26,410) (26,952) (30,037) (26,821)
-------- -------- -------- -------- --------
Total..................... $353,506 $350,260 $378,329 $433,339 $479,977
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES:
Asphalt............................. $ 8,790 $ 10,974 $ 21,081 $ 21,059 $ 33,333
Concrete and Aggregates............. 10,524 1,267 8,091 20,574 35,889
Properties.......................... 8,815 8,996 15,527 3,947 16,783
Corporate and unallocated expenses,
net............................... (14,434) (15,626) (18,683) (19,235) (18,130)
Other income........................ 1,202 1,197 2,477 3,445 2,863
Special charges..................... -- (26,100) -- -- --
Gains from disposal of assets held
for sale.......................... -- 1,786 2,929 20,774 39,217
-------- -------- -------- -------- --------
Total..................... $ 14,897 $(17,506) $ 31,422 $ 50,564 $109,955
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
14
<PAGE> 16
INDUSTRY
BACKGROUND AND DEMAND FOR AGGREGATES
Aggregates, which include sand, gravel and crushed rock, are fundamental
materials used in virtually all types of construction. Sand and gravel are mined
from alluvial deposits which are typically found in dry river and lake beds and
are the result of millions of years of erosion. These types of deposits are
relatively easy to mine but have come under increasing pressure from
environmentalists and governmental regulators due to the proximity of these
deposits to water sources. Recognizing this trend, the Company is developing
hard rock mining operations in order to supplement existing alluvial sources.
Aggregates are present in abundant quantities throughout the western United
States; however, the high cost of transporting aggregates heavily influences the
overall price to the end user, thus tending to make production and distribution
a very localized business. For example, the cost of delivering aggregates ten
miles is typically one-third of the f.o.b. selling price. As a result, the
industry has historically been highly fragmented and includes many small local
operators. The Company concentrates its operations close to major urban centers
including Los Angeles, San Francisco, San Diego and Orange County, California,
Phoenix and Tucson, Arizona and Albuquerque, New Mexico which have limited sites
available for aggregates production. The Company believes this proximity,
coupled with the Company's experience and expertise in obtaining mining permits,
has provided it with a long-term competitive position with substantial barriers
to potential entrants.
Because the principal consumers of aggregates are in the construction
industry, demand for aggregates is driven by general construction activity
levels, which in turn are influenced to a large extent by regional economic
conditions and public sector construction spending. Beyond this cyclicality,
demand for aggregates is also somewhat seasonal because of the impact of weather
conditions on construction activity. Sales are generally strongest in the second
and third calendar quarters, when construction is at its peak, and tend to be
weaker in the fourth quarter and weakest in the first quarter due to
construction delays caused by the rainy winter season.
The majority of the Company's aggregates business is conducted within
California, where demand for aggregates is divided between public and private
consumption. Historically, private sector construction spending within
California has far exceeded public construction spending; however, the Company
believes that public construction projects often utilize a higher percentage of
aggregates per construction dollar spent than private projects. In recent years,
California total aggregates production has declined to a lesser degree than
total construction activity statewide.
The table below sets forth total aggregates production for California over
the past twelve years.
CALIFORNIA AGGREGATES PRODUCTION
(IN MILLIONS OF TONS)
<TABLE>
<S> <C>
1982 109.6
1983 126.6
1984 141.0
1985 154.0
1986 166.9
1987 185.9
1988 191.0
1989 193.2
1990 174.7
1991 147.7
1992 153.7
1993 150.6
</TABLE>
Source: U.S. Bureau of Mines.
Aggregates production in Arizona and New Mexico following the recession
rebounded sharply to 61 million tons in 1993 after bottoming in 1991 at 42
million tons.
15
<PAGE> 17
Private sector construction spending, which includes both residential and
commercial construction, is closely tied to the economic cycle, availability of
credit and shifts in demand, which have historically resulted in greater
cyclical swings than public spending. Consequently, during the recession which
began in 1990, California residential and commercial construction spending
declined more significantly than public construction spending. Total residential
and commercial construction spending in California was approximately $21 billion
in 1993, down approximately 55% from the peak level of $46 billion reached in
1989 (in constant 1993 dollars).
The table below sets forth the total private (residential and commercial)
construction spending in California over the past twelve years.
CALIFORNIA PRIVATE CONSTRUCTION
(IN CONSTANT 1993 DOLLARS IN BILLIONS)
<TABLE>
<S> <C>
1982 20.60
1983 28.62
1984 33.90
1985 37.73
1986 42.79
1987 40.48
1988 45.59
1989 45.82
1990 35.20
1991 25.66
1992 23.43
1993 20.46
</TABLE>
Source: Construction Industry Research Board.
Spending on public infrastructure is closely related to the availability of
government funding and has been much less cyclical than private construction
spending. The Federal Intermodal Surface Transportation Efficiency Act of 1991
("ISTEA"), which authorized an approximately $150 billion, six-year
infrastructure spending program, could provide a catalyst for growth in public
spending over the coming years. Under the guidelines of the ISTEA, states are
required to provide matching funds ranging from 10% to 50% of the project costs,
depending on the type of construction project and the year the project is
implemented.
The table below sets forth the total public sector construction spending in
California over the past twelve years.
CALIFORNIA PUBLIC CONSTRUCTION
(IN CONSTANT 1993 DOLLARS IN BILLIONS)
<TABLE>
<S> <C>
1982 3.10
1983 3.46
1984 3.11
1985 4.85
1986 4.90
1987 4.62
1988 5.80
1989 5.35
1990 5.12
1991 6.51
1992 5.85
1993 6.12
</TABLE>
Source: Construction Industry Research Board.
16
<PAGE> 18
TRENDS
Over the past decade, complying with the regulatory environment under which
the Company operates has become considerably more burdensome and expensive. With
regard to activities at existing mines, operators must adhere to various
regulations, including those requiring reclamation of depleted mines, noise
limitations, wetlands protection, safety regulations and restrictions on dust
emissions. With respect to the permitting and approval process, approval of new
sites may require, among other things, general plan amendments, zoning changes
and conditional use permits, as well as mining, reclamation and air and water
emission plans and permits. Obtaining such permits from the responsible
governmental agencies may require the development of environmental impact
reports or statements, endangered species surveys and other plans and studies.
In addition, proposed new facilities often face community opposition based on
concerns over noise, visual aesthetics, dust emissions and increased volumes of
truck traffic. Citizen groups frequently engage in extended litigation regarding
these issues, and obtaining needed approvals from local governments requires
sophisticated and effective community relations programs. In addition, those
seeking new permits may be required to acquire or donate large tracts of
property to serve as buffers between a new quarry site and neighboring
communities.
The difficult regulatory situation tends to discourage new, smaller
entrants who do not possess the legal expertise or financial resources to cope
with the lengthy and uncertain permitting process. The Company believes that,
while these environmental and regulatory guidelines increase the cost of doing
business, at the same time these challenges must be confronted by all of its
competitors, many of which may not have the same financial and technical
resources as the Company. While a large number of producers remain, there has
been a trend in recent years toward consolidation within the industry, owing in
large part to the burden and expense of complying with environmental and other
regulations. Larger producers, such as the Company, are able to spread many
fixed costs, such as those relating to mining and regulatory expertise, over a
larger production volume. As a result, the Company believes that it has certain
competitive advantages over most smaller producers.
17
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The information set forth below, except for tons of aggregates shipped, is
derived from the audited consolidated financial statements of the Company and
notes thereto which have been audited by Coopers & Lybrand, independent
auditors. The audited consolidated balance sheets at December 31, 1993 and 1992,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1993 are
included elsewhere in this Prospectus. The selected consolidated financial
information presented below should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
audited financial statements and related notes thereto appearing elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Net sales and operating revenues................... $348,413 $347,282 $364,943 $428,916 $462,466
Gains on sale of real estate(a).................... 2,081 453 9,555 1,109 12,825
Other income....................................... 3,012 2,525 3,831 3,314 4,686
-------- -------- -------- -------- --------
Total revenues............................. 353,506 350,260 378,329 433,339 479,977
-------- -------- -------- -------- --------
Costs and expenses:
Cost of products sold and operating expenses....... 288,313 291,680 292,475 343,653 350,277
Selling, general and administrative expenses....... 41,492 44,290 47,716 48,244 48,073
Interest expense................................... 6,465 7,073 8,587 11,306 9,741
Other expenses..................................... 2,339 409 1,058 346 1,148
Special charges.................................... -- 26,100(b) -- -- --
-------- -------- -------- -------- --------
Total costs and expenses................... 338,609 369,552 349,836 403,549 409,239
-------- -------- -------- -------- --------
Gains from disposal of assets held for sale(a)..... -- 1,786 2,929 20,774 39,217
-------- -------- -------- -------- --------
Income (loss) from continuing operations before
income taxes and cumulative effect of change in
accounting principle............................. 14,897 (17,506) 31,422 50,564 109,955
Federal and state income taxes..................... 6,600 (7,002) 12,568 20,118 41,807
-------- -------- -------- -------- --------
Income (loss) from continuing operations before
cumulative effect of change in accounting
principle........................................ 8,297 (10,504) 18,854 30,446 68,148
Income from discontinued operations................ -- -- -- 3,089(c) 9,953(c)
Gain on disposition of CPC to a related party...... -- -- -- 47,310(c) --
Cumulative effect of change in accounting
principle........................................ 919(d) (6,000)(d) -- -- --
-------- -------- -------- -------- --------
Net income (loss).................................. $ 9,216 $(16,504) $ 18,854 $ 80,845 $ 78,101
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average number of common and common
equivalent shares................................ 23,117 23,242 23,319 28,128 30,978
PER SHARE DATA:
Income (loss) from continuing operations before
cumulative effect of change in accounting
principle........................................ $ 0.36 $ (0.45)(b) $ 0.81 $ 1.08 $ 2.20
Income from discontinued operations................ -- -- -- 0.11(c) 0.32(c)
Gain on disposition of CPC to a related party...... -- -- -- 1.68(c) --
Cumulative effect of change in accounting
principle........................................ 0.04(d) (0.26)(d) -- -- --
-------- -------- -------- -------- --------
Net income (loss).................................. $ 0.40 $ (0.71) $ 0.81 $ 2.87 $ 2.52
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Dividends.......................................... $ 0.40 $ 0.64 $ 0.64 $ 0.64(e) $ 0.56
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
OTHER OPERATING DATA:
Depreciation, depletion and amortization........... $ 31,953 $ 30,210 $ 28,802 $ 41,502 $ 45,499
Capital expenditures............................... 12,063(f) 32,732 34,461 89,757 63,667
Tons of aggregates shipped......................... 25,408 25,266 24,941 30,193 32,017
BALANCE SHEET DATA (AT YEAR END):
Total assets....................................... $604,895 $597,240 $597,600 $605,660 $867,121(g)
Working capital.................................... 39,863 34,003 43,430 36,100 92,346(g)
Long-term debt..................................... 109,635 131,129 92,515 93,320 126,671(g)
Stockholders' equity............................... 351,046 350,687 383,596 387,189 526,764(g)
</TABLE>
(footnotes appear on following page)
18
<PAGE> 20
- ---------------
(a) Relates to the sale of certain developed or developable real estate
properties which were classified as assets held for sale in 1988 due to the
Company's decision to discontinue its business of developing industrial and
office buildings. No properties are currently classified as assets held for
sale. Gains from sales of all other real estate are recorded as revenues
under the caption "Gains on sale of real estate."
(b) During 1992, the Company recorded non-cash, pre-tax special charges totaling
$26.1 million ($0.68 per share on an after-tax basis) related to the write
down of the book value of certain developed real estate ($15.0 million),
write downs of excess plant and equipment and severance payments related to
the consolidation of certain construction materials operations ($5.4
million) and the write off of certain accumulated costs incurred in
connection with seeking permits for additional aggregates sources and for
other valuation allowances ($5.7 million).
(c) On September 30, 1990, Onoda, an indirect, wholly owned subsidiary of Onoda
Cement Co. Ltd. of Japan, acquired from the Company all of the outstanding
stock of CPC, a wholly owned subsidiary of the Company, in exchange for
5,834,000 shares of Company's common stock held by Onoda. A non-taxable gain
of $49.8 million on this transaction was offset by charges of $2.5 million
(net of tax benefits of $1.8 million) related to the decision to dispose of
CPC, resulting in a net gain of $47.3 million. Net income attributable to
CPC is reflected as income from discontinued operations.
(d) Reflects the cumulative effect to January 1, 1993, to adopt SFAS No. 109,
"Accounting for Income Taxes," of $0.9 million, or $0.04 per share, and the
cumulative effect to January 1, 1992, to adopt SFAS No. 106, "Employer's
Accounting for Post Retirement Benefits Other than Pensions" of $6.0
million, or $0.26 per share.
(e) Excludes a one-time special dividend of $0.10 per share.
(f) During 1993, due to the continued recession in southern California, the
Company restricted capital expenditures in order to conserve cash. See
"Management's Discussion and Analysis of Results of Operations -- Liquidity
and Capital Resources -- Cash Flows."
(g) Includes amounts related to CPC which was disposed of on September 30, 1990.
19
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Arizona and New Mexico markets where the Company operated showed
definite signs of recovery in 1993. California, however, experienced its fourth
straight year of significant decline in residential and non-residential
construction activity. Unit sales volumes for the Company's hot-mix asphalt
increased in 1993, however, the higher cost of purchased liquid asphalt more
than offset the improved sales volumes resulting in lower earnings for the year.
The Concrete and Aggregates Division experienced higher prices and lower costs
resulting in a significant increase in earnings in 1993. The Properties Division
earnings for 1993 were slightly lower than in 1992, largely due to lower income
from landfill operations. The Company reported net income of $9.2 million, or
$0.40 per share, for the year ended December 31, 1993, which includes an
after-tax credit of $0.9 million, or $0.04 per share, resulting from the
adoption of the new accounting standard for accounting for income taxes and a
provision to income tax expense of $0.7 million, or $0.03 per share, to adjust
deferred taxes due primarily to the recent increase in the federal tax rate.
Excluding these items, earnings for 1993 would have been $9.0 million, or $0.39
per share. The net loss reported of $16.5 million, or $0.71 per share, for the
year ended December 31, 1992, includes after-tax charges totaling $21.8 million,
or $0.94 per share. These after-tax charges consisted of $6.0 million, or $0.26
per share, arising from the adoption of the new accounting standard for
postretirement benefits other than pensions, $9.0 million, or $0.39 per share,
to write down the book value of certain developed real estate and $6.7 million,
or $0.29 per share, related to consolidation of certain construction material
operations. Excluding these charges, earnings for the year would have been $5.3
million, or $0.23 per share.
REVENUES AND EARNINGS
Consolidated
Total revenues amounted to $353.5 million, $350.3 million and $378.3
million in 1993, 1992 and 1991, respectively. Net sales and operating revenues,
which excludes gains on sale of real estate and other income, of $348.4 million
in 1993 were up slightly from $347.3 million in 1992. Net sales and operating
revenues were down $17.7 million, or 4.8%, in 1992 compared with 1991, the
decrease occurring in the Asphalt Division, which was down 13.1%. Total revenues
includes gains from ongoing land sales of $2.1 million, $0.5 million and $9.6
million in 1993, 1992 and 1991, respectively. Cost of goods sold on a
consolidated basis as a percentage of net sales and operating revenues declined
to 82.8% in 1993 compared with 84.0% in 1992, mainly due to higher average unit
prices and a change in product mix in the Concrete and Aggregates Division
offset by higher average costs in the Asphalt Division. This percentage was
80.1% in 1991.
Income (loss) before incomes taxes and cumulative effect of change in
accounting principle was $14.9 million in 1993, up from a loss of $17.5 million
in 1992, which in turn was down from income of $31.4 million in 1991. The 1992
amount includes special charges of $26.1 million related to the consolidation of
certain construction materials operations ($11.1 million) and to write down the
book value of certain developed real estate ($15.0 million). Excluding these
special charges, income (loss) before income taxes and cumulative effect of
change in accounting principle increased 73.3% to $14.9 million compared with
$8.6 million for 1992. This increase consists primarily of improved earnings of
the Concrete and Aggregates Division of $9.3 million offset by a $2.2 million
decrease in earnings of the Asphalt Division. Excluding special charges, income
(loss) before income taxes and cumulative effect of change in accounting
principle would have been $8.6 million in 1992 compared with $31.4 million in
1991. This drop consists primarily of declines in earnings of the Asphalt
Division and the Concrete and Aggregates Division of $10.1 million and $6.8
million, respectively, and $9.1 million less in gains from land sales.
Selling, general and administrative expenses decreased $2.8 million, or
6.3%, in 1993 compared with 1992, which in turn was reduced 7.2% from the 1991
level. This reflects management's continuing efforts to reduce these expenses.
During the past three years, the Company has reduced selling, general and
administrative expenses by $6.8 million, or 14.0%.
20
<PAGE> 22
The effective tax rate in 1993 increased to 44.3% as compared with 40.0% in
1992 and 1991. Excluding the adjustment to deferred taxes in 1993 to account for
the increase in the federal tax rate, the effective tax rate was 36.7%. The
decrease compared with 1992 and 1991 is due primarily to the benefit of
percentage depletion.
Asphalt Division
The Asphalt Division's principal business involves the production and sale
of hot-mix asphalt. Hot-mix asphalt is comprised physically of approximately 95%
aggregates (sand and gravel) and 5% liquid asphalt. In 1993, aggregates and
liquid asphalt represented approximately 39% and 36% of the total production
costs, respectively. The division has plants at 36 locations in metropolitan Los
Angeles and San Diego, the San Francisco Bay and San Joaquin Valley areas of
California; Phoenix and Tucson, Arizona; and Albuquerque, New Mexico. Of the 36
locations, 21 are sites which also have aggregates processing plants and/or
ready mixed concrete plants operated by the Concrete and Aggregates Division.
Division revenues of $153.9 million were up $7.4 million, or 5.1%, from
1992's revenues of $146.5 million, which in turn were down $22.0 million, or
13.1%, from 1991's revenues of $168.5 million. The increase in 1993 resulted
from higher prices and higher volume, while the reduction in 1992 was due to
lower prices and lower volume. Income from operations dropped to $8.8 million in
1993 from $11.0 million in 1992, which in turn dropped from $21.1 million in
1991.
Unit sales volume of hot-mix asphalt was 7,830,000 tons in 1993, up 4.8%
from 7,474,000 tons sold in 1992, which in turn was down 9.3% from 1991's volume
of 8,241,000 tons. Substantially all of the volume improvement in 1993 occurred
during the fourth quarter and was, in part, a result of less rainfall during the
current year's fourth quarter.
A slight increase in average sales prices and a 4.8% increase in unit sales
volume was more than offset by the higher cost of purchased liquid asphalt
during 1993, resulting in a 9.1% decline in gross profit per ton. Selling,
general and administrative expenses increased 3.6% in 1993 due primarily to
management's decision to further strengthen bad debt reserves. Competitive
pricing in the division's primary markets during 1992 resulted in a drop in
prices in excess of a slight reduction in costs versus 1991. The resulting gross
profit per ton dropped 23.2%. Selling, general and administrative expenses
increased 4.3% in 1992 compared with 1991 due primarily to wage increases and
increased corporate support costs. Between 6.0% and 9.0% of the division's total
gross profit was from the miscellaneous products and services category during
1993, 1992 and 1991.
Concrete and Aggregates Division
The Concrete and Aggregates Division produces and sells construction
aggregates and supplies ready mixed concrete for use in commercial and
residential construction, public construction projects and projects to build,
expand and repair roads and highways. The division operates aggregates
processing plants at 34 locations in the major markets of southern and central
California, the San Francisco Bay area; Phoenix and Tucson, Arizona; and
Albuquerque, New Mexico. Ready mixed concrete batch plants are operated at 28
locations in these markets except for the Los Angeles and San Francisco Bay
areas. Of the 28 ready mixed concrete locations, 15 are sites which also have
aggregates processing plants.
The overall decline in construction activity in southern California in
residential and non-residential building in recent years continues to have a
negative impact on the Concrete and Aggregates Division's volumes compared to
historical levels. However, as shown in the following table, 1993 aggregates
volumes increased slightly from 1992 due primarily to volumes of the San
Francisco Bay Area operations which were
21
<PAGE> 23
acquired in December, 1992. Volumes in 1992 increased slightly from 1991, due
primarily to volume increases at the New Mexico operation as the local economy
strengthened.
CONSTRUCTION AGGREGATES -- TONS SOLD
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales to outside customers....................................... 17,740 17,126 16,756
Used in ready mixed concrete..................................... 2,531 3,180 3,019
Sales to Asphalt Division........................................ 5,137 4,960 5,166
------ ------ ------
Total.................................................. 25,408 25,266 24,941
------ ------ ------
------ ------ ------
</TABLE>
Ready mixed concrete sales volume decreased 15% to 1,818,000 cubic yards in
1993 from 2,146,000 cubic yards in 1992, which in turn had increased from
1,860,000 cubic yards in 1991.
Overall division revenue of $201.1 million was down 2.2% from 1992's
revenue of $205.7 million, while 1992's revenue was up slightly from 1991's
revenue of $203.6 million. The decrease in 1993's revenue was due to a decline
in ready mixed concrete sales volume offset by higher average sales prices for
both aggregates and ready mixed concrete. Although total division revenue in
1992 was comparable to 1991, aggregates revenue was lower due to lower prices on
similar volume, offset by ready mixed concrete revenue which was higher, due to
higher volume, but at lower prices. The result was similar total revenue but
lower income from operations due to the lower average prices.
In 1993, the average sales price of aggregates increased 4.3% compared with
1992. Including aggregates used in ready mixed concrete, overall aggregates
gross profit increased $4.0 million in 1993. The average price of ready mixed
concrete increased 4.8% while costs per cubic yard were essentially unchanged.
The higher average sales prices for both aggregates and ready mixed concrete
more than offset the impact of flat aggregates volume and lower ready mixed
volume, resulting in a $7.1 million increase in gross profit from 1992's gross
profit.
The overall average sales price of aggregates fell 7.2% in 1992 compared
with 1991, while costs increased 3.2% on a per ton basis. Including aggregates
used in ready mixed concrete, overall aggregates gross profit fell $7.2 million
in 1992. The overall average price of ready mixed concrete also declined 7.2%
while costs per cubic yard were lower by 5.4%. Despite increased volume, lower
prices resulted in a loss at the gross margin level for ready mixed concrete and
a $1.7 million decline from 1991's gross profit.
Selling, general and administrative expenses were reduced 9.9% in 1993 from
the 1992 level, which in turn had decreased 11.7% from 1991. Income from
operations recovered to $10.5 million in 1993 from $1.3 million in 1992 after
dropping from 1991's level of $8.1 million.
Properties Division
The Properties Division manages the Company's real estate and is
responsible for acquisitions, permitting, reclamation, sales and leasing
activities.
Income from operations was $8.8 million compared with $9.0 million in 1992.
Included in 1993 are gains from ongoing property sales of $2.1 million versus
gains of $0.5 million in 1992. Also included in 1993 is a charge of $1.3 million
related to anticipated settlements of certain property disputes. Excluding the
gains from ongoing property sales and the $1.3 million charge, the Properties
Division income was $8.0 million in 1993 compared with $8.5 million in 1992. The
decline is largely due to lower income from landfill operations.
Income from operations was $9.0 million in 1992 compared with $15.5 million
in 1991. The large decline in income in 1992 is a result of fewer real estate
transactions being completed. Gains from ongoing property sales were $0.5
million in 1992 compared with gains of $9.6 million in 1991.
22
<PAGE> 24
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local environmental laws and
regulations which require the Company to remove or mitigate the effect on the
environment of the disposal or release of certain chemical, mineral and
petroleum substances at various sites. Generally, the Company's exposure has
been limited to soil contamination from underground fuel tanks rather than
exposure resulting from generation of hazardous waste, although it is a "named
party" or "potentially responsible party" at three federal Superfund sites.
The Company conducts annual environmental assessments of each of its
operating sites. Liabilities are recorded when environmental assessments and/or
remedial efforts are probable, and the costs can be reasonably estimated.
Generally, the timing of these accruals coincides with completion of a
feasibility study or the Company's commitment to a formal plan of action. As
investigation or remediation proceeds, and as the scope of the Company's
obligations become more clearly defined, there may be changes to estimated
costs, which might result in future charges to earnings.
During 1993, the Company charged to income $1.1 million before tax for
environmental remediation costs and made related payments of $0.3 million. At
December 31, 1993, the reserve for environmental remediation costs totaled $3.5
million. The amount reserved represents the estimated undiscounted costs which
the Company will incur to remediate sites with known contamination. No potential
insurance recoveries have been offset against the reserve. Substantially all
amounts accrued in the reserve are expected to be paid out over the next 5
years.
OTHER
There were no gains or losses on disposition of assets held for sale in
1993 compared with gains of $1.8 million and $2.9 million in 1992 and 1991,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash and cash equivalents increased $10.6 million during 1993 to a balance
at year end of $10.6 million compared with a balance of zero at the end of 1992,
which in turn was a decrease of $12.1 million from 1991.
Operating activities are the principal source of CalMat's cash flows. Over
the past three years, operating activities have provided $115.2 million in cash.
Net cash of $43.9 million generated from operating activities in 1993 was $15.8
million more than 1992's $28.1 million, which was $15.2 million less than in
1991.
Cash used for investing activities totaled $4.3 million in 1993, a $58.3
million decrease from the 1992 level. The primary reasons for this change were
$20.7 million less in spending on property, plant and equipment in 1993 and the
use of $34.1 million for a business acquisition in 1992. Cash used for investing
activities totaled $62.6 million in 1992, a $52.8 million increase from the 1991
level. The primary reason for this change was the $34.1 million spent for a
business acquisition in 1992. In addition, there was $10.3 million less in
proceeds from sales of real estate in 1992 and $9.4 million less in receipts on
installment notes receivable.
Net cash used for financing activities amounted to $29.0 million in 1993, a
$51.5 million change from the $22.5 million provided by financing activities
during 1992. The primary reasons for this change were $50.7 million in net
payments on notes payable to banks in 1993, compared with $39.0 million in net
proceeds in 1992; offset by $35.0 million in proceeds from issuance of senior
notes in 1993, $4.2 million less in payments of cash dividends and $2.2 million
less in common stock repurchases. Also included in 1993 is $2.1 million in
payments for hedge costs and other loan fees. Net cash provided by financing
activities amounted to $22.5 million in 1992, a $47.2 million change from the
$24.8 million used for financing activities in 1991. The primary reasons for
this change were $38.7 million less in principal payments on notes and bonds
payable, $2.5 million more in net proceeds from notes payable to banks and $5.7
million less in common stock repurchases.
23
<PAGE> 25
During 1993, the Company restricted capital expenditures in order to
conserve cash. Capital expenditures in 1994 are expected to be in excess of $40
million, due in part to equipment replacements and the commencement of expansion
projects including the construction of mining facilities located at Irvine Lake
in Orange County, California which is scheduled to begin production by the end
of 1994 and Azusa Rock, located near Los Angeles, California. Management
believes that cash provided by operations and existing borrowing arrangements
will provide adequate funds for current commitments and expected working capital
requirements during 1994.
During 1993, the Company expended $10.6 million in cash dividends. In order
to conserve cash, the Company reduced its quarterly dividend from $0.16 per
share to $0.10 per share in February 1993.
Working Capital
Working capital totaled $39.9 million at December 31, 1993, an increase of
$5.9 million from the 1992 level of $34.0 million. This increase was primarily
due to the $10.6 million increase in cash and cash equivalents.
Working capital totaled $34.0 million at December 31, 1992, a decrease of
$9.4 million from the 1991 level of $43.4 million. This decrease was primarily
due to the $12.1 million decrease in cash and cash equivalents. Current ratios
were 1.7 at December 31, 1993 and 1992.
Other
Total consolidated long-term and short-term borrowings at December 31, 1993
and 1992 were $115.5 million and $132.1 million, respectively. This $16.7
million decrease in debt was paid from cash flows from operations. Total
consolidated long-term and short-term borrowings at December 31, 1992 of $132.1
million had increased $39.0 million over 1991 primarily due to $34.1 million
used to finance The Jamieson Company acquisition in 1992. Debt as a percent of
total capitalization was 24.8% and 27.4%, at December 31, 1993 and 1992,
respectively.
During 1989, the Company announced its intention to repurchase a
significant amount of its common stock using the net proceeds, after taxes and
related debt, from the sale of real estate assets held for sale as the source of
funding. Under this program, the Company repurchased on the open market
approximately 309,000 shares at a cost of $7.5 million during 1991. The
Company's commitment to repurchase shares pursuant to the settlement of
stockholder litigation has been fulfilled. During November 1991, the Company
announced its intention to expend up to $5.0 million over a twelve-month period
to repurchase shares of its common stock. During 1992 and 1991, 91,000 shares
and 17,000 shares, respectively, were acquired at a total cost of $2.4 million
under the program.
24
<PAGE> 26
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
A. Frederick Gerstell 56 Chairman of the Board, President, Chief
Executive Officer, Chief Operating Officer and
Director.
Delbert H. Tanner 42 Executive Vice President -- Construction
Materials
Scott J Wilcott 56 Executive Vice President -- Law and Property
H. James Gallagher 46 Executive Vice President -- Finance, Chief
Financial Officer
Paul Stanford 51 Senior Vice President -- Administration, General
Counsel and Secretary
Edward J. Kelly 38 Senior Vice President, Treasurer and Chief
Accounting Officer
Walter Q. Lukkarila 58 Vice President, Operations
Carlos S. Hernandez 57 Vice President and General Manager, Asphalt
Division
John C. Argue 62 Director
Harry M. Conger 63 Director
Rayburn S. Dezember 63 Director
Bert A. Getz 56 Director
Richard A. Grant, Jr. 54 Director
Grover R. Heyler 67 Director
William T. Huston 66 Director
William Jenkins 74 Director
Thomas L. Lee 51 Director
Thomas M. Linden 50 Director
Stuart T. Peeler 64 Director
</TABLE>
Mr. Gerstell became Chairman of the Board in January 1991. He served as
President and Chief Executive Officer from 1988 through 1990. From 1984 to 1988,
he served as President and Chief Operating Officer. Prior to the formation of
the Company by the merger of Conrock and CPC in 1984, he was President and Chief
Operating Officer of CPC and employed by CPC from 1975.
Mr. Tanner was elected to his current position in June 1993. From July 1987
to June 1993, he served as Regional Vice President of Apac, Inc., a division of
Ashland Oil, and President of their Florida and Georgia divisions. Prior to his
service at Apac, he was employed for 14 years by the Tanner Companies, Phoenix,
Arizona, a large construction materials producer and contractor, where he served
as President and Chief Executive Officer.
Mr. Wilcott was elected to his current position in August 1990. He was
elected Executive Vice President in 1989. He served as Senior Vice President,
Legal Counsel and Secretary from 1984 to 1989. He has been employed by the
Company since 1968.
Mr. Gallagher was elected to his current position in August 1993. Prior to
that he served concurrently as Executive Vice President, Chief Financial Officer
and Director of Pacific Enterprises Oil Co., and Senior Vice President, Chief
Financial Officer and Director of Pacific Interstate Company. He previously
served as Vice President, Controller and Chief Financial Officer of Pacific
Interstate Company from 1979 and Manager of Internal Audits of Pacific
Enterprises, Inc. from 1975.
Mr. Stanford was elected to his current position in June 1993. From August
1990 until June 1993, he served as Vice President, General Counsel and
Secretary. Before joining the Company, from 1981, he was engaged in the practice
of business law with the firm of Paul, Hastings, Janofsky & Walker.
25
<PAGE> 27
Mr. Kelly was elected to his current position in January 1994. Since June
1993 he served as Senior Vice President, Controller and Chief Accounting
Officer. From December 1990 until June 1993, he served as Vice President,
Controller. He was employed by Superior Industries International, Inc., a
manufacturer of automotive products, as Vice President, Corporate Controller and
Secretary from 1985 to 1990.
Mr. Lukkarila was elected to his current position in June 1993. From
February 1991 to June 1993, he served as Vice President - Development,
Construction Materials. He served as Vice President, Operations, Conrock
Division from 1984 to 1991, and has been employed by the Company since 1980.
Mr. Hernandez was elected to his current position in February 1990. He
served as an Area Manager of Industrial Asphalt from 1984 to 1989, then as
Managing Director of the Asphalt Division from 1989 to 1990. He has been
employed by the Company and Industrial Asphalt, a partnership wholly owned by
the Company, since 1968.
Mr. Argue is a senior partner of the Los Angeles law firm of Argue,
Pearson, Harbison & Myers where he has practiced law since 1972. He is a
Director of Avery Dennison, Inc. and a Trustee of TCW Funds, Inc., the TCW/DW
Family of Funds and Term Trusts 2000, 2002, 2003.
Mr. Conger has been Chairman of the Board and Chief Executive Officer of
Homestake Mining Company since 1986 and was also its President from 1982 to
1986. Mr. Conger is also a Director of ASA, Ltd., Baker Hughes, Inc., and
Pacific Gas and Electric Company.
Mr. Dezember serves on the boards of Wells Fargo and the Company, Wells
Fargo Bank and Tejon Ranch Company. Mr. Dezember served as Chairman of the Board
and Chief Executive Officer of Central Pacific Corporation from 1980 to 1990.
Prior to Mr. Dezember's election to the Company's Board of Directors, the
Company formed a subsidiary, Golden Empire Concrete Co. ("Golden Empire"), with
Mr. Dezember's son, Brent M. Dezember, as the owner of a 49% interest with the
other 51% owned by the Company. In the first quarter of 1993, Golden Empire
purchased the Company's 51% interest for a purchase price of $520,000 in cash,
which approximated the book value of the transferred stock, making Mr. Brent
Dezember the sole shareholder of Golden Empire. All debt of Golden Empire to the
Company has been repaid, and the Company has terminated and been released from
its guarantee of certain bank loans made to Golden Empire.
Mr. Getz is Chairman of the Board, President and a Director of Globe
Corporation, a diversified investment company. He has been its President and a
Director for more than the past five years. Mr. Getz is also a Director of
Continental Bank Corporation and Deans Foods Company.
Mr. Grant is a private investor and a co-trustee of M. B. Scott Trusts. Mr.
Grant is Secretary, Treasurer and a Trustee of the Dan Murphy Foundation, a
nonprofit foundation which owns 4,157,247 shares of the Company's Common Stock.
Mr. Heyler retired as a partner of the law firm of Latham & Watkins at the
end of 1992, where he had practiced law since 1952. Since his retirement, he has
been "of counsel" to the firm. The Company retained the services of Latham &
Watkins during 1993 and has retained such services in 1994.
Since January 1, 1994, Mr. Huston has been Chairman of the Board of Watson
Land Company, formerly known as Watson Industrial Properties, a real estate
development company. From 1963 to 1985, he was its President and Chief Executive
Officer, and from 1986 through 1993, he was its Chairman and Chief Executive
Officer.
Mr. Jenkins retired as Chairman of the Board of the Company at the end of
1990. Prior to 1988, Mr. Jenkins was Chairman of the Board and Chief Executive
Officer and, prior to 1984, President, Chief Executive Officer and a Director of
Conrock.
Mr. Lee has served as Chief Executive Officer, as a Director, and since
July 1989 as Chairman of The Newhall Land & Farming Company, a publicly traded
California limited partnership. He served as its President and Chief Executive
Officer from 1987 to 1989, and as President and Chief Operating Officer from
1985 to 1987. He also is a Director of First Interstate Bancorp and of First
Interstate Bank of California.
26
<PAGE> 28
Mr. Linden is a private investor. He was Executive Vice President and
General Manager - Properties Division of the Company from May 1985 through May
1989. Before that time, he was a partner with Smith, Linden and Basso, certified
public accountants.
Mr. Peeler has been a petroleum industry consultant and independent oil and
gas producer since the beginning of 1989. He was Chairman of the Board and Chief
Executive Officer of Statex Petroleum, Inc., from 1982 through 1989 and was its
President from 1983 to 1986. Mr. Peeler is also a Director of Chieftain
International, Inc., Chieftain International Funding Corp., Homestake Mining
Company and Homestake Gold of Australia, Ltd.
Executive officers are elected by the Board of Directors annually, and
serve at the pleasure of the Board or until their successors are qualified and
elected.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $1 par value per share, of which 23,137,640 shares were issued
and outstanding as of March 22, 1994, and 5,000,000 shares of Preferred Stock,
$1 par value per share, of which no shares are issued and outstanding. The
following summary description of the Common Stock and the Preferred Stock is
qualified in its entirety by reference to the Company's Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and By-Laws and
the applicable provisions of the Delaware General Corporation Law (the "DGCL").
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and have cumulative voting rights.
Accordingly, a holder of Common Stock entitled to vote at any election for
directors has the right to cumulate his or her votes and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which his or her shares are entitled, or to distribute his or
her votes on the same principle among as many candidates as he or she wishes.
Holders of Common Stock are entitled to receive ratably such dividends if, as
and when declared by the Board of Directors out of assets legally available
therefor, subject to any preferential dividend rights of outstanding Preferred
Stock and restrictions set forth in the Company's existing loan agreements and
restrictions, if any, imposed by other indebtedness outstanding from time to
time, including any new loan agreement that may be entered into after this
offering. See "Price Range of Common Stock and Dividends" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." Upon
the liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to receive ratably the net assets of the Company remaining
available after the satisfaction of all debts and other liabilities and the
payment of the liquidation preference of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights, nor are they entitled to the benefits of any sinking fund
provisions. The outstanding shares of Common Stock are, and the shares offered
by the Company in the offering of the Common Stock will be, when issued and paid
for, fully paid and nonassessable. The rights, preferences and privileges of
holders of Common Stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of Preferred Stock which the
Company may designate and issue in the future.
The outstanding shares of Common Stock are listed on the New York and
Pacific Stock Exchanges and traded on these stock exchanges and the Chicago
Stock Exchange. The transfer agent and registrar for the Company's Common Stock
is the First Chicago Trust Company of New York, 14 Wall Street, New York, New
York 10005.
PREFERRED STOCK
Pursuant to the Certificate of Incorporation, the Company's Board of
Directors is authorized, subject to any limitations prescribed by law, to
provide for the issuance of the shares of Preferred Stock in series and to
establish from time to time the number of shares to be included in each such
series and to fix the designation,
27
<PAGE> 29
powers, preferences and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. Because the Board of
Directors has the power to establish the preferences and rights of each series,
it may afford the holders of any Preferred Stock preferences, powers and rights
(including voting rights) senior to the rights of the holders of Common Stock.
No shares of Preferred Stock are currently outstanding. Although the Company has
no present intention to issue such shares, the issuance of shares of Preferred
Stock, or the issuance of rights to purchase such shares, could be used to
discourage an unsolicited acquisition proposal.
COMMON STOCK PURCHASE RIGHTS
In September 1987, the Company declared a dividend distribution of one
common share purchase right (each, a "Right" and collectively, the "Rights") on
each outstanding share of Common Stock. When exercisable, each Right will
entitle its holder to buy one share of the Company's Common Stock at a price of
$90 per share, subject to certain antidilution adjustments, until the earlier of
September 1997 or the occurrence of certain redemptions, mergers or
acquisitions. The Rights will become exercisable if a person acquires 25.0% or
more of the Company's Common Stock or makes an offer, the consummation of which
will result in the person's owning 30.0% or more of the Company's Common Stock.
In the event the Company is acquired in a merger, each Right entitles the holder
to purchase common stock of the surviving company having a market value twice
the exercise price of the Right. The Rights may be redeemed by the Company at a
price of $0.05 per Right at any time within 30 days after a person acquires
25.0% of the Company's Common Stock.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the DGCL. In
general, this statute prohibits a publicly held Delaware corporation such as the
Company from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person becomes an interested stockholder, unless the business
combination is approved in a prescribed manner. An "interested stockholder" is a
person who, together with affiliates and associates, owns (or within the prior
three years did own) 15% or more of the corporation's voting stock. Such
provisions could render the Company more difficult to be acquired pursuant to an
unfriendly acquisition by a third party by making it more difficult for such
person to obtain control of the Company without the approval of the Board of
Directors.
The Company's Rights have certain antitakeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors prior to the time that a person
or group has acquired beneficial ownership of 25% or more of the Common Stock
since the Rights may be redeemed by the Company at $.05 per Right prior to such
time. See "--Common Stock Purchase Rights."
In May 1992, the Company amended the Certificate of Incorporation to
prevent the Company from engaging in any transaction constituting greenmail, as
such term is defined in the Certificate of Incorporation.
The Company has included in the Certificate of Incorporation and the
Company's By-Laws provisions to eliminate the personal liability of its
directors for monetary damages resulting from breaches of their fiduciary duty
to the extent permitted by the DGCL subject to certain limited exceptions and to
indemnify its directors and officers to the fullest extent permitted by the
DGCL.
28
<PAGE> 30
UNDERWRITING
Subject to the terms and conditions of a purchase agreement (the "Purchase
Agreement") between the Company and each of the Underwriters named below (the
"Underwriters"), the Company has agreed to sell to each of the Underwriters, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated and Lazard Freres & Co.
are acting as representatives (the "Representatives"), and each of the
Underwriters has severally agreed to purchase from the Company, the number of
shares of Common Stock set forth opposite their respective names. The
Underwriters are committed to purchase all of such shares if any are purchased.
In the event of default by an Underwriter, the Purchase Agreement provides that,
in certain circumstances, purchase commitments of the non-defaulting
Underwriters may be increased or the Purchase Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith.............................
Incorporated
Lazard Freres & Co................................................
---------
Total................................................ 2,750,000
---------
---------
</TABLE>
The Representatives have advised the Company that the Underwriters propose
initially to offer the shares of Common Stock in part directly to the public at
the public offering price set forth on the cover page of this Prospectus, and to
certain securities dealers at such price less a concession of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain brokers and dealers. After the shares of Common Stock
are released for sale to the public, the public offering price, concession and
discount may be changed by the Representatives.
The Company has granted to the Underwriters an option, exercisable by the
Representatives, to purchase up to an additional 412,500 shares of Common Stock
at the public offering price, less the underwriting discount. Such option, which
expires 30 days after the date of this Prospectus, may be exercised solely to
cover over-allotments in the sale of the shares of Common Stock that the
Underwriters have agreed to purchase. To the extent that the Representatives
exercise such option, each Underwriter will be obligated, subject to certain
conditions, to purchase approximately the same percentage of the option shares
as the number of shares of Common Stock to be purchased initially by that
Underwriter bears to the total number of shares of Common Stock initially
purchased by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act or to contribute to
payments the Underwriters may be required to make in respect thereto.
The Company has agreed that it will not, without the prior written consent
of Merrill Lynch & Co., directly or indirectly, offer, sell or otherwise dispose
of, any shares of Common Stock, or any securities convertible into Common Stock,
except those offered in the offering of the Common Stock or pursuant to certain
reservations, agreements or employee benefit plans, for a period of 90 days from
the date of this Prospectus.
Certain of the Underwriters and their associates have performed and may in
the future perform services for the Company in the ordinary course of business
and have been paid customary fees in connection therewith.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Paul Stanford, the Company's General Counsel, and for
the Underwriters by Cravath, Swaine & Moore, New York, New York.
EXPERTS
The consolidated balance sheets as of December 31, 1993 and 1992 and the
consolidated statements of operations, cash flows, and stockholders' equity for
each of the three years in the period ended December 31, 1993 included in this
Prospectus, have been included herein in reliance on the report of Coopers &
Lybrand, independent accountants, given on the authority of that firm as experts
in accounting and auditing.
29
<PAGE> 31
CALMAT CO. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Year-End Financial Information:
Report of Independent Accountants................................................... F-2
Consolidated Balance Sheets as of December 31, 1993 and 1992........................ F-3
Consolidated Statements of Operations for the three years ended
December 31, 1993, 1992 and 1991................................................. F-4
Consolidated Statements of Cash Flow for the three years ended
December 31, 1993, 1992 and 1991................................................. F-5
Consolidated Statements of Stockholders' Equity for the three years ended
December 31, 1993, 1992 and 1991................................................. F-6
Notes to Consolidated Financial Statements.......................................... F-7
</TABLE>
F-1
<PAGE> 32
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
CalMat Co.
Los Angeles, California
We have audited the accompanying consolidated balance sheets of CalMat Co.
and subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1993, as listed in the index on
page F-1 of this Registration Statement. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
CalMat Co. and subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in Notes 4 and 9 to the consolidated financial statements,
effective January 1, 1993, the Company changed its method of accounting for
income taxes, and effective January 1, 1992, the Company changed its method of
accounting for postretirement benefits other than pensions.
COOPERS & LYBRAND
Los Angeles, California
February 21, 1994
F-2
<PAGE> 33
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
--------- ---------
(AMOUNTS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................................... $ 10,596 $ --
Trade accounts receivable, less allowance for discounts and
doubtful accounts ($4,174 in 1993 and $3,263 in 1992)........... 63,835 56,639
Income taxes receivable............................................ 1,564 4,769
Inventories........................................................ 5,581 5,567
Prepaid expenses and other......................................... 4,152 5,307
Deferred income taxes.............................................. 7,499 6,653
Installment notes receivable....................................... 2,902 1,991
--------- ---------
Total current assets....................................... 96,129 80,926
Installment notes receivable and other assets........................ 17,260 16,138
Investment in and advances to unconsolidated subsidiaries............ 14,945 14,421
Costs in excess of net assets of subsidiaries........................ 55,484 57,508
Property, plant and equipment:
Land and deposits.................................................. 183,754 177,123
Buildings, machinery and equipment................................. 469,185 450,170
Construction in progress........................................... 14,493 17,373
--------- ---------
667,432 644,666
--------- ---------
--------- ---------
Less: accumulated depreciation and depletion......................... (246,355) (216,419)
--------- ---------
Property, plant and equipment, net......................... 421,077 428,247
--------- ---------
Total assets............................................... $ 604,895 $ 597,240
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 18,810 $ 15,552
Accrued liabilities................................................ 29,293 26,658
Notes and bonds payable -- current portion......................... 5,852 1,019
Dividends payable.................................................. 2,311 3,694
--------- ---------
Total current liabilities.................................. 56,266 46,923
Notes and bonds payable -- long term portion......................... 109,635 131,129
Other liabilities and deferred credits............................... 17,724 15,661
Deferred income taxes................................................ 70,224 52,840
--------- ---------
Total liabilities.......................................... 253,849 246,553
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value; authorized 5,000,000 shares; none
issued or outstanding
Common stock, $1 par value; authorized 100,000,000 shares; issued
and outstanding 23,109,292 in 1993 and 23,084,382 in 1992....... 23,109 23,084
Additional paid-in capital......................................... 39,202 38,840
Retained earnings.................................................. 288,735 288,763
--------- ---------
Total stockholders' equity................................. 351,046 350,687
--------- ---------
Total liabilities and stockholders' equity................. $ 604,895 $ 597,240
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 34
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Net sales and operating revenues......................... $348,413 $347,282 $364,943
Gains on sale of real estate............................. 2,081 453 9,555
Other income............................................. 3,012 2,525 3,831
-------- -------- --------
353,506 350,260 378,329
-------- -------- --------
Costs and expenses:
Cost of products sold and operating expenses............. 288,313 291,680 292,475
Selling, general and administrative expenses............. 41,492 44,290 47,716
Interest expense......................................... 6,465 7,073 8,587
Other expenses........................................... 2,339 409 1,058
Special charges.......................................... -- 26,100 --
-------- -------- --------
338,609 369,552 349,836
-------- -------- --------
Gains from disposal of assets held for sale................ -- 1,786 2,929
-------- -------- --------
Income (loss) before income taxes and cumulative effect of
change in accounting principle........................... 14,897 (17,506) 31,422
Federal and state income taxes............................. 6,600 (7,002) 12,568
-------- -------- --------
Income (loss) before cumulative effect of change in
accounting principle..................................... 8,297 (10,504) 18,854
Cumulative effect of change in accounting principle........ 919 (6,000) --
-------- -------- --------
Net income (loss).......................................... $ 9,216 $(16,504) $ 18,854
-------- -------- --------
-------- -------- --------
PER SHARE DATA
Income (loss) before cumulative effect of change in
accounting principle..................................... $ .36 $ (.45) $ .81
Cumulative effect of change in accounting principle........ .04 (.26) --
-------- -------- --------
Net income (loss).......................................... $ .40 $ (.71) $ .81
-------- -------- --------
-------- -------- --------
Cash dividends per share................................... $ .40 $ .64 $ .64
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 35
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).......................................... $ 9,216 $(16,504) $ 18,854
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation, cost depletion and amortization............ 31,953 30,210 28,802
Cumulative effect of change in accounting principle...... (919) 6,000 --
Special charges.......................................... -- 26,100 --
Gains from disposal of assets held for sale.............. -- (1,786) (2,929)
Gains from sale of real estate........................... (2,081) (453) (9,555)
(Gain) loss on disposal of property, plant and
equipment............................................. (379) (3) 475
Deferred tax expense..................................... 2,184 (7,144) 2,232
Changes in operating assets and liabilities
Trade accounts, net................................... (9,552) 3,340 10,398
Inventories, prepaid expenses and deferred taxes...... 2,094 (1,154) 3,703
Accounts payable and accrued liabilities.............. 7,906 (3,368) (8,102)
Federal and state income taxes........................ 3,349 (6,658) (1,762)
Other................................................. 111 (499) 1,154
-------- -------- --------
Cash provided by operating activities.................... 43,882 28,081 43,270
-------- -------- --------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment.................. (12,063) (32,732) (34,461)
Proceeds from sale of property, plant and equipment........ 1,922 640 1,192
Proceeds from sale of real estate.......................... 3,188 351 10,607
Proceeds from sale of properties included in assets held
for sale................................................. -- 2,141 3,480
Receipts on installment notes receivable................... 1,638 1,777 11,206
Investment in and advances to unconsolidated
subsidiaries............................................. (214) (189) (1,801)
Business acquired.......................................... -- (34,111) --
Other investing activities................................. 1,275 (472) --
-------- -------- --------
Cash used for investing activities....................... (4,254) (62,595) (9,777)
-------- -------- --------
FINANCING ACTIVITIES:
Stock options exercised.................................... 335 546 334
Notes payable to banks..................................... (50,667) 39,000 36,500
Proceeds from senior notes................................. 35,000 -- --
Principal payments on notes and bonds payable.............. (994) (46) (38,770)
Payment of cash dividends.................................. (10,624) (14,833) (14,907)
Common stock repurchases................................... -- (2,214) (7,915)
Hedge costs and other loan fees, net....................... (2,082) -- --
-------- -------- --------
Cash provided by (used for) financing activities......... (29,032) 22,453 (24,758)
-------- -------- --------
Increase (decrease) in cash and cash equivalents........... 10,596 (12,061) 8,735
Balance, beginning of period............................... -- 12,061 3,326
-------- -------- --------
Balance, end of period..................................... $ 10,596 $ -- $ 12,061
-------- -------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest................................................. $ 7,103 $ 7,186 $ 8,359
Income taxes............................................. $ 3,844 $ 9,910 $ 8,860
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 36
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
-----------------------------------------------------
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------- ---------- -------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1990..................... $23,430 $ 37,091 $326,668 $ 387,189
Net income for 1991............................ -- -- 18,854 18,854
Common stock repurchased....................... (366) (579) (7,779) (8,724)
Stock options exercised........................ 73 1,070 -- 1,143
Cash dividends declared........................ -- -- (14,866) (14,866)
------- ---------- -------- ---------
BALANCE, DECEMBER 31, 1991..................... 23,137 37,582 322,877 383,596
Net loss for 1992.............................. -- -- (16,504) (16,504)
Common stock repurchased....................... (134) (155) (2,810) (3,099)
Stock options exercised........................ 81 1,413 -- 1,494
Cash dividends declared........................ -- -- (14,800) (14,800)
------- ---------- -------- ---------
BALANCE, DECEMBER 31, 1992..................... 23,084 38,840 288,763 350,687
Net income for 1993............................ -- -- 9,216 9,216
Stock options exercised........................ 25 362 -- 387
Cash dividends declared........................ -- -- (9,244) (9,244)
------- ---------- -------- ---------
BALANCE, DECEMBER 31, 1993..................... $23,109 $ 39,202 $288,735 $ 351,046
------- ---------- -------- ---------
------- ---------- -------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 37
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of CalMat Co.
(the Company) and all of its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The Company uses the equity method of accounting for companies where ownership
is between 20 and 50 percent.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances and highly liquid
investments with a maturity of three months or less when purchased.
Costs in Excess of Net Assets of Subsidiaries
Costs in excess of the fair value of net assets of purchased subsidiaries
are amortized on a straight-line basis over periods not exceeding 40 years.
Accumulated amortization of such costs was $7.7 million and $6.0 million at
December 31, 1993 and 1992, respectively.
Property, Plant and Equipment
Property, plant and equipment is carried at cost. Depreciation is computed
using primarily straight-line rates over estimated useful lives (5 to 35 years
for plant structures and components and 4 to 25 years for machinery and
equipment).
Depletion of rock and sand deposits is computed by the unit-of-production
method based upon estimated recoverable quantities of rock and sand.
Significant expenditures which add materially to the utility or useful
lives of property, plant and equipment are capitalized. All other maintenance
and repair costs are charged to current operations.
The cost and related accumulated depreciation of assets replaced, retired
or otherwise disposed of are eliminated from the property accounts, and any gain
or loss is reflected in income.
Environmental
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Estimated liabilities are not discounted to present value.
Generally, the timing of these accruals coincides with completion of a
feasibility study or the Company's commitment to a formal plan of action. The
reserve for environmental remediation costs was $3.5 million and $2.7 million at
December 31, 1993 and December 31, 1992, respectively.
Revenue Recognition
Sales and operating revenues are recorded upon shipment of product, net of
discounts, if any, and include revenue earned pursuant to the terms of property
leasing contracts. Gains and losses on real estate are recorded upon
consummation of the transaction. Other income relates primarily to interest and
dividend income, miscellaneous rental income and gains on sale of fixed assets
which are recognized in accordance with the terms of various contractual
arrangements or upon receipt (as applicable).
F-7
<PAGE> 38
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Reclassification
Certain prior year amounts have been reclassified to conform with the
present presentation.
NOTE 2: ASSETS HELD FOR SALE
During 1988, the Company announced its intention to dispose of a
substantial portion of its developed and developable properties, and these
properties were classified as assets held for sale. Due to the continued
depressed condition of the commercial real estate market in southern California,
combined with the lack of conventional financing available to buyers, the
Company in 1992 conducted a review of the properties included in assets held for
sale. As a result of this review, substantially all the properties were
reclassified to operating assets. During 1993, the remaining properties were
reclassified to operating assets. Prior period information has been restated to
reflect the reclassifications.
NOTE 3: ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31:
<TABLE>
<CAPTION>
1993 1992
------- -------
(AMOUNTS IN
THOUSANDS)
<S> <C> <C>
Payroll, vacation and other benefits............................. $ 7,687 $ 6,550
Workers compensation............................................. 3,229 3,156
Profit sharing................................................... 3,825 3,597
Other............................................................ 14,552 13,355
------- -------
$29,293 $26,658
------- -------
------- -------
</TABLE>
F-8
<PAGE> 39
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4: FEDERAL AND STATE TAXES
Income (loss) before income taxes and the related income tax expense
(benefit) are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- -------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE............................. $14,897 $(17,506) $31,422
------- -------- -------
------- -------- -------
INCOME TAX EXPENSE (BENEFIT)................................. $ 6,600 $ (7,002) $12,568
------- -------- -------
------- -------- -------
Income tax expense (benefit) consists of the following:
FEDERAL INCOME TAX:
Currently payable (receivable)............................... $ 3,252 $ (363) $ 7,659
Deferred..................................................... 2,052 (5,219) 1,934
------- -------- -------
5,304 (5,582) 9,593
------- -------- -------
STATE INCOME TAX:
Currently payable............................................ 1,164 505 2,677
Deferred..................................................... 132 (1,925) 298
------- -------- -------
1,296 (1,420) 2,975
------- -------- -------
$ 6,600 $ (7,002) $12,568
------- -------- -------
------- -------- -------
The sources of deferred taxes are as follows:
Accelerated tax depreciation................................. $ 1,656 $ 2,230 $ 2,108
State income tax............................................. (279) 1,285 230
Real estate exchanges........................................ 152 391 1,440
Tax operating loss and tax credits........................... (759) (1,946) --
Special charges.............................................. 489 (3,165) --
Real estate impairment....................................... 691 (6,106) --
Bad debts.................................................... (599) (277) 5
Employee benefits............................................ (551) (1,173) (256)
Enacted rate change.......................................... 1,127 -- --
Hedge costs.................................................. 708 -- --
Other accruals............................................... (451) 1,617 (1,295)
------- -------- -------
$ 2,184 $ (7,144) $ 2,232
------- -------- -------
------- -------- -------
</TABLE>
F-9
<PAGE> 40
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred tax liabilities (assets) are comprised of the following at
December 31, 1993 and January 1, 1993:
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1993 1993
------------ ----------
<S> <C> <C>
Depreciation........................................ $ 31,399 $ 29,080
Real estate exchanges............................... 25,161 24,954
Purchase accounting bases differences............... 14,958 15,047
Depletion and other land bases adjustments.......... 6,995 6,838
Other............................................... 5,117 4,122
-------- --------
Gross deferred tax liabilities.................... 83,630 80,041
-------- --------
Postretirement benefits............................. (4,448) (4,257)
Real estate impairment.............................. (7,194) (8,178)
Other............................................... (10,524) (8,767)
-------- --------
Gross deferred tax assets......................... (22,166) (21,202)
Valuation allowance................................. 1,261 895
-------- --------
$ 62,725 $ 59,734
-------- --------
-------- --------
</TABLE>
A reconciliation of the provision for income taxes to the federal statutory
income tax rate is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Income tax expense (benefit) at statutory
rates....................................... $ 5,065 $(5,952) $10,683
Less effect of:
Federal tax benefit (expense) of state
income tax............................... 392 (577) 1,011
Percentage depletion in excess of cost
depletion................................ 1,232 1,071 1,224
Goodwill and other amortization............. (449) (616) (756)
Enacted rate change......................... (1,127) -- --
Tax credits................................. 267 314 281
Other accruals.............................. 31 333 (274)
Miscellaneous............................... (585) (895) (396)
------- ------- -------
Reported federal income tax expense
(benefit)......................... 5,304 (5,582) 9,593
State income tax expense (benefit)............ 1,296 (1,420) 2,975
------- ------- -------
$ 6,600 $(7,002) $12,568
------- ------- -------
------- ------- -------
</TABLE>
In January 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." The adoption of SFAS
109 changes the Company's method of accounting for income taxes from the
deferred method (APB 11) to an asset and liability approach. Previously, the
Company deferred the tax effects of timing differences between financial
reporting and taxable income. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
bases of assets and liabilities.
Under SFAS 109, assets and liabilities acquired in purchase business
combinations are assigned their fair values and deferred taxes are established
for lower or higher tax bases. Under APB 11, values assigned were net of tax. In
adopting SFAS 109, the Company adjusted the carrying amounts of assets purchased
in business acquisitions which increased primarily net property, plant and
equipment and deferred taxes by $13.5 million.
F-10
<PAGE> 41
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Pre-tax income from operations for the year ended December 31, 1993 was reduced
by $0.6 million, representing primarily the increase in depreciation expense
resulting from these higher carrying amounts.
The adjustments to the January 1, 1993 balance sheet to adopt SFAS 109
netted to a credit of $0.9 million. This amount, recorded in the first quarter,
was reflected in 1993 net income as the cumulative effect of a change in
accounting principle. It primarily represents the impact of adjusting deferred
taxes to reflect the enacted tax rate in effect as of January 1, 1993 of 34.0%
as opposed to the higher tax rates that were in effect when the deferred taxes
originated.
The Company increased its deferred tax liability in 1993 as a result of
legislation enacted during 1993 increasing the corporate rate from 34.0% to
35.0%.
At December 31, 1993, the Company had alternative minimum tax credit
carryforwards of approximately $2.0 million available to offset regular tax in
future years.
The Company's federal consolidated income tax returns have been examined
and settled by the Internal Revenue Service through 1985.
NOTE 5: NOTES AND BONDS PAYABLE
Notes and bonds payable consist of the following at December 31:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(AMOUNTS IN
THOUSANDS)
<S> <C> <C>
Notes payable to banks......................................... $ 62,333 $113,000
Senior notes................................................... 35,000 --
Municipal improvement bonds.................................... 2,647 2,911
Mortgages and other notes payable.............................. 15,507 16,237
-------- --------
Total..................................................... 115,487 132,148
Less current portion........................................... 5,852 1,019
-------- --------
Long-term portion......................................... $109,635 $131,129
-------- --------
-------- --------
</TABLE>
During 1993, the Company replaced $35.0 million of borrowings under its
revolving credit facilities with senior notes. The senior notes bear interest at
6.7% and require principal payments beginning in 1997 through 2000.
At December 31, 1993, the Company had formal committed revolving credit
facilities with a number of banks totaling $135.0 million which will expire in
1994 and beyond. At December 31, 1993, the Company had various unused lines of
credit totaling approximately $81.0 million on which the Company pays commitment
fees of .375%.
Short-term bank borrowings made under these various credit facilities and
included in notes payable to banks were $54.0 million and $113.0 million at
December 31, 1993 and 1992, respectively, and bore rates equal to or less than
the prime bank lending rate which was 6.0% at December 31, 1993 and 1992.
Committed credit available under the revolving credit facilities provides
management with the ability to refinance the short-term bank borrowings on a
long-term basis and, as it is management's intention to do so, these borrowings
have been classified as long-term debt.
The credit agreements contain restrictions with respect to the incurring of
additional debt, creation of liens and guarantees, and maintenance of minimum
working capital, stockholders' equity and financial ratios. The Company has
complied with all of these restrictions.
Maturities of notes payable during the next five years are as follows:
1994, $5.9 million; 1995, $3.7 million; 1996, $2.0 million; 1997, $63.1 million;
and 1998, $9.1 million.
F-11
<PAGE> 42
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6: STOCK OPTIONS AND RIGHTS
The Company has stock option plans that provide for granting incentive and
non-qualified options on common stock to officers and key employees. During
1993, the Board of Directors adopted, subject to stockholder approval at the
1994 Annual Meeting of Stockholders, the 1993 Stock Option Plan for Executive
and Key Employees of CalMat Co. which authorized the issuance of options
covering 900,000 shares of common stock. Certain information relative to stock
options follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
SHARES
Outstanding at beginning year..................... 1,771,766 1,565,616 1,388,770
Granted........................................... 412,675 307,600 389,875
Exercised......................................... (24,912) (81,450) (72,633)
Forfeited......................................... (479,933) (20,000) (140,396)
--------- --------- ---------
Outstanding at end of year........................ 1,679,596 1,771,766 1,565,616
--------- --------- ---------
--------- --------- ---------
Available for future options...................... 1,019,834 52,576 340,176
--------- --------- ---------
--------- --------- ---------
Exercisable at end of year........................ 882,160 986,650 798,165
--------- --------- ---------
--------- --------- ---------
</TABLE>
Prices per share of common stock under option range from $12.75 to $30.50
at December 31, 1993. Options expire from 1995 to 2003. Prices per share of
options exercised range from $7.095 to $19.375 in 1993, $7.095 to $22.50 in 1992
and $7.095 to $19.125 in 1991. Stock options may be issued to executives and
certain key employees as determined by the Management Development and
Compensation Committee of the Board of Directors. The price of the shares
subject to each option is set by the Committee but may not be less than the fair
market value of the shares at the date of grant. Options generally become
exercisable in installments beginning one year after the date of grant and
expire 10 years after grant date. No options expired in 1993, 1992 or 1991.
In September 1987, the Company declared a dividend distribution of one
common share purchase right on each outstanding share of common stock. When
exercisable, each right will entitle its holder to buy one share of the
Company's stock at a price of $90 per share until September 1997. The rights
will become exercisable if a person acquires 25.0% or more of the Company's
stock or makes an offer, the consummation of which will result in the person's
owning 30.0% or more of the Company's stock. In the event the Company is
acquired in a merger, each right entitles the holder to purchase common stock of
the surviving company having a market value twice the exercise price of the
right. The rights may be redeemed by the Company at a price of $0.05 per right
at any time prior to a person acquiring 25.0% of the Company's common stock.
NOTE 7: STOCKHOLDERS' EQUITY
Earnings per common equivalent share (common shares adjusted for dilutive
effect of common stock options) have been computed by dividing net income for
each period by the weighted-average shares of common stock outstanding.
Weighted-average shares used for 1993, 1992 and 1991 totaled 23,117,000,
23,242,000 and 23,319,000, respectively.
NOTE 8: FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
The Company enters into interest rate swap agreements to effectively
convert a portion of its floating-rate borrowings into fixed-rate obligations.
The interest rate differential to be received or paid is recognized over the
lives of the agreements as an adjustment to interest expense. Counterparties to
these agreements are high credit quality financial institutions, and
nonperformance is considered remote. In the unlikely event that a
F-12
<PAGE> 43
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
counterparty fails to meet the terms of an agreement, the Company's exposure is
limited to the interest rate differential.
The Company had outstanding interest rate swap agreements that effectively
converted $25.0 million and $35.0 million of variable rate debt to fixed rate
borrowings at December 31, 1993 and 1992, respectively.
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and trade receivables. The Company places its temporary cash investments with
high credit quality financial institutions. At times, such investments may be in
excess of the FDIC insurance limit. A significant portion of the Company's sales
are to customers in the construction industry, and, as such, the Company is
directly affected by the well-being of that industry. However, the credit risk
associated with trade receivables is minimal due to the Company's large customer
base and ongoing control procedures which monitor the credit worthiness of
customers. The Company generally obtains lien rights on all major projects.
Historically, the Company has not experienced significant losses on trade
receivables.
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of Statement of
Accounting Financial Standards (SFAS) No. 107, "Disclosures About Fair Value of
Financial Instruments." The estimated fair value amounts have been determined by
the Company using available market information and valuation methodologies
described below. However, considerable judgements are required in interpreting
market data to develop the estimates of fair value. Accordingly, the estimates
presented herein may not be indicative of the amounts that the Company could
realize in a current market exchange. The use of different market assumptions or
valuation methodologies may have a material effect on the estimated fair value
amounts.
The carrying values of cash and cash equivalents, trade receivables and
accounts payable approximate fair values due to the short-term maturities of
these instruments. The carrying amounts and estimated fair values of the
Company's other financial instruments at December 31, 1993 are as follows:
<TABLE>
<CAPTION>
CARRYING AMOUNT FAIR VALUE
--------------- ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Notes receivable.................................. $ 6,459 $ 6,285
Notes and bonds payable........................... 115,487 111,619
Interest rate swaps -- unrealized loss............ -- (518)
</TABLE>
The fair value of notes receivable has been estimated using the expected
future cash flows discounted at market interest rates.
The fair value of notes and bonds payable was estimated by discounting the
future cash flows using rates currently available for debt of similar terms and
maturity. The carrying values of short-term bank loans were assumed to
approximate fair values due to their short-term maturities.
Interest rate swaps fair value is the amount at which they could be
settled, based on estimates from dealers.
NOTE 9: RETIREMENT PLANS
The Company has a trusteed thrift and profit-sharing retirement plan and a
money purchase pension plan to provide funds from which retirement benefits are
paid to substantially all salaried employees of the Company and its wholly-owned
subsidiaries, including officers and directors who are also employees. Annual
contributions to these plans made by the Company approximate 15.0% of the
aggregate compensation paid or accrued each year to participants in the plan.
The Company also contributes to various union pension plans, as specified by
certain union agreements, and non-union pension plans which cover substantially
all hourly
F-13
<PAGE> 44
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
employees. Contributions to all retirement plans charged to income totaled $8.6
million in 1993, $7.6 million in 1992 and $8.7 million in 1991.
The Company provides certain health care and life insurance benefits to
eligible retired employees. Salaried and non-union hourly participants generally
become eligible after reaching age 62 with 20 years of service or after reaching
age 65 with 15 years of service. The health care plan is contributory and the
life insurance plan is noncontributory. The plans are unfunded.
In the third quarter of 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." These benefits are now accrued over the period
the employee provides services to the Company. Prior to the change, costs were
charged to expense as incurred. The Company elected to immediately recognize the
Accumulated Postretirement Benefit Obligation valued as of January 1, 1992, as
of the beginning of the year and recorded an after-tax charge of $6.0 million,
or $0.26 per share ($10.0 million net of deferred taxes of $4.0 million), as a
change in accounting principle. The following table sets forth the plans' funded
status reconciled with the amount included in the caption other liabilities and
deferred credits in the Company's balance sheets at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accumulated Postretirement Benefit Obligation
Retirees................................................... $ 4,904 $ 5,255
Fully eligible active plan participants.................... 894 1,202
Other active plan participants............................. 1,022 1,160
------- -------
6,820 7,617
Plan assets at fair value.................................... -- --
------- -------
Accumulated Postretirement Benefit Obligation in excess of
plan assets................................................ 6,820 7,617
------- -------
Unrecognized prior service cost.............................. 1,888 2,068
Unrecognized net gain........................................ 2,038 913
------- -------
Accrued postretirement benefit cost at December 31........... $10,746 $10,598
------- -------
------- -------
</TABLE>
The net periodic postretirement benefit cost for 1993 and 1992 included the
following components:
<TABLE>
<CAPTION>
1993 1992
----- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Service cost -- benefits attributed to service during the
period...................................................... $ 289 $ 462
Interest cost on the Accumulated Postretirement Benefit
Obligation.................................................. 511 597
Net amortization.............................................. (192) --
Full recognition of transition obligation..................... -- 10,000
----- -------
Net periodic postretirement benefit cost...................... $ 608 $11,059
----- -------
----- -------
</TABLE>
For measurement purposes, a 12.0% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1994; the rate was assumed
to decrease gradually to 6.0% by 2012 and remain at that level thereafter. The
weighted-average discount rate used in determining the Accumulated
Postretirement Benefit Obligation in 1993 and 1992 was 7.0%.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the Accumulated
Postretirement Benefit Obligation as of December 31, 1993 by $0.8 million and
the aggregate of
F-14
<PAGE> 45
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the service and interest cost components of net periodic postretirement benefit
cost for the year then ended by $0.1 million.
NOTE 10: ACQUISITION
On December 8, 1992, the Company purchased substantially all of the assets
of the Jamieson Company, a major San Francisco Bay area producer of aggregates.
The Company paid $34.1 million for an aggregates production facility, mining
equipment, related real estate and the exclusive right to mine significant
aggregates reserves. The purchase was financed using the Company's existing
lines of credit.
The acquisition has been accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to assets based on
their estimated fair values as of the date of the acquisition. The cost in
excess of net assets acquired was approximately $10.4 million and is being
amortized on a straight-line basis over 28 years, which approximates the
estimated life of the aggregates reserves. The Jamieson Company's results of
operations have been included in the Company's consolidated financial statements
beginning December 8, 1992. The Jamieson Company's operations are not material
in relation to the consolidated financial statements, and proforma financial
information has, therefore, not been presented.
NOTE 11: SPECIAL CHARGES
Based upon an evaluation of certain developed real estate and due primarily
to market conditions, the Company recorded a non-cash special charge of $15.0
million in the third quarter of 1992 representing the excess of net book value
over the estimated fair market value. The net after-tax effect of this charge
was $9.0 million, or $0.39 per share.
Fourth quarter results for 1992 include a non-cash special charge of $11.1
million, of which $5.4 million is related to write downs of excess plant and
equipment and severance payments related to the consolidation of certain
construction materials operations, and $5.7 million is to write off accumulated
costs incurred in connection with seeking permits for additional aggregates
sources and for other valuation allowances. These costs relate to projects where
completion is uncertain in the near term because of economic conditions and
increased regulation. The Company believes it has adequate aggregates reserves
and productive capacity to serve indicated demand in the Company's markets. The
net after-tax effect of this charge was $6.7 million, or $0.29 per share.
NOTE 12: COMMITMENTS AND CONTINGENCIES
The Company had letters of credit and performance bonds outstanding
totaling approximately $22.0 million at December 31, 1993 which guarantee
various insurance and financing activities.
The Company has been named by the U.S. Environmental Protection Agency
("EPA") as a defendant in a civil action involving one "Superfund" cleanup site
and as a "potentially responsible party ("PRP") with respect to two other such
sites. In each instance the Company is one of many entities so named. Because,
in the case of the site involved in ongoing litigation, no final remedy has been
selected, and with respect to the other two sites, investigation is ongoing, the
Company's share of total liability, if any, is unable to be quantified at this
time. In the case of the site involved in ongoing litigation, the Company
believes that the wastes attributed to it were not hazardous. In addition, the
waste attributed to the Company represents an extremely small (less than
one-tenth of one percent) percentage of the total volume of waste at this site.
The Company is subject to various legal proceedings, claims and
liabilities, which arise in the ordinary course of its business. In the opinion
of management, the amount of ultimate liability with respect to these actions
will not materially affect the financial position of the Company.
F-15
<PAGE> 46
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13: BUSINESS SEGMENT INFORMATION
The Company operates principally in three business segments: Asphalt,
Concrete and Aggregates, and Properties. Operations in the Asphalt Division
principally involve the manufacture and sale of hot-mix asphalt. In addition to
supplying asphalt to customers at its various plants, the Asphalt Division
maintains a fleet of specialty paving equipment which it rents to customers. It
also markets Guardtop, an asphalt surface sealer, and is a distributor of paving
reinforcement fabric. The division operates asphalt plants at 36 locations in
metropolitan Los Angeles and San Diego, the San Francisco Bay and San Joaquin
Valley areas of California; Phoenix and Tucson, Arizona; and Albuquerque, New
Mexico. Of the 36 locations, 21 are sites which also have aggregates processing
plants and/or ready mixed concrete plants operated by the Concrete and
Aggregates Division.
Operations in the Concrete and Aggregates Division include the mining and
sale of aggregates (rock, sand and gravel) and the manufacture and sale of ready
mixed concrete. The division operates aggregates production plants at 34
locations serving the Los Angeles, San Diego, Bakersfield, Fresno, Ventura,
Santa Barbara and San Francisco Bay areas of California; Phoenix and Tucson,
Arizona; and Albuquerque, New Mexico. Ready mixed concrete batch plants are
operated at 28 locations in these markets except for the Los Angeles and San
Francisco Bay areas. Of the 28 ready mixed concrete locations, 15 are sites
which also have aggregates processing plants.
The Properties Division manages the Company's real estate and is
responsible for acquisition, permitting, reclamation, sales and leasing
activities. These activities take place principally in Los Angeles and San
Diego, California and Phoenix, Arizona.
F-16
<PAGE> 47
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Business segment information for the years ended December 31, is as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
REVENUES:
Asphalt.................................................... $153,862 $146,457 $168,477
Concrete and Aggregates.................................... 201,117 205,650 203,646
Properties................................................. 23,641 22,038 29,327
Corporate and other........................................ 3,012 2,525 3,831
Intersegment sales......................................... (28,126) (26,410) (26,952)
-------- -------- --------
Total............................................ $353,506 $350,260 $378,329
-------- -------- --------
-------- -------- --------
INCOME BEFORE TAXES:
Asphalt.................................................... $ 8,790 $ 10,974 $ 21,081
Concrete and Aggregates.................................... 10,524 1,267 8,091
Properties................................................. 8,815 8,996 15,527
Corporate and unallocated expenses, net.................... (14,434) (15,626) (18,683)
Other income............................................... 1,202 1,197 2,477
Special charges............................................ -- (26,100) --
Gains from disposal of assets held for sale................ -- 1,786 2,929
-------- -------- --------
Total............................................ $ 14,897 $(17,506) $ 31,422
-------- -------- --------
-------- -------- --------
IDENTIFIABLE ASSETS (AS OF DECEMBER 31):
Asphalt.................................................... $148,889 $141,180 $143,532
Concrete and Aggregates.................................... 275,107 290,375 276,424
Properties................................................. 131,802 132,477 144,419
Corporate and other........................................ 49,097 33,208 33,225
-------- -------- --------
Total............................................ $604,895 $597,240 $597,600
-------- -------- --------
-------- -------- --------
DEPRECIATION, COST DEPLETION AND AMORTIZATION:
Asphalt.................................................... $ 7,435 $ 6,413 $ 6,097
Concrete and Aggregates.................................... 19,562 18,890 17,973
Properties................................................. 3,993 4,124 4,181
Corporate and other........................................ 963 783 551
-------- -------- --------
Total............................................ $ 31,953 $ 30,210 $ 28,802
-------- -------- --------
-------- -------- --------
CAPITAL EXPENDITURES AND BUSINESS EXPANSION:
Asphalt.................................................... $ 3,190 $ 6,991 $ 10,183
Concrete and Aggregates.................................... 4,051 51,780 19,125
Properties................................................. 4,352 6,763 5,872
Corporate and other........................................ 1,161 1,672 1,260
-------- -------- --------
Total............................................ $ 12,754 $ 67,206 $ 36,440
-------- -------- --------
-------- -------- --------
</TABLE>
Total revenues by segment include both sales to unaffiliated customers, as
reported in the Company's consolidated statements of operations, and
intersegment sales. Income from operations by segment represents total revenues
less direct operating expenses, segment selling, general and administrative
expenses and certain allocated corporate general and administrative expenses.
Corporate and unallocated expenses include corporate administrative expenses and
support expenses not allocated to business segments. Assets classified as
corporate and other consist primarily of general office facilities, cash and
cash equivalents and other assets.
F-17
<PAGE> 48
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
Prospectus Summary...................... 3
Investment Considerations............... 7
Use of Proceeds......................... 8
Price Range of Common Stock and
Dividends............................. 8
Capitalization.......................... 9
Selected Quarterly Operating Data....... 9
The Company............................. 10
Industry................................ 15
Selected Consolidated Financial
Information........................... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 20
Management.............................. 25
Description of Capital Stock............ 27
Underwriting............................ 29
Legal Matters........................... 29
Experts................................. 29
Index to Financial Statements........... F-1
- ---------------------------------------------
- ---------------------------------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
2,750,000 SHARES
CALMAT CO.
COMMON STOCK
------------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
LAZARD FRERES & CO.
, 1994
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 49
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............... $ 25,423
NASD filing fee................................................... 7,873
Listing fees...................................................... 10,000
Blue sky fees and expenses........................................ 5,000
Legal services.................................................... 100,000
Accounting fees and expenses...................................... 35,000
Transfer Agent and Registrar fees................................. 10,000
Printing Expenses................................................. 50,000
Miscellaneous..................................................... 6,704
--------
Total...................................................... $250,000
--------
--------
</TABLE>
All of the above items except the Securities and Exchange Commission
registration fee, the NASD filing fee and the listing fees are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware gives
Delaware corporations broad powers to indemnify their present and former
directors and officers against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with threatened, pending or completed actions, suits or proceedings
to which they are parties or are threatened to be made parties by reason of
being or having been such directors or officers, subject to specified conditions
and exclusions; gives a director or officer who successfully defends an action
the right to be so indemnified; and permits a corporation to buy directors' and
officers' liability insurance. Such indemnification is not exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or otherwise.
Article VII of the Company's By-Laws requires the Company to indemnify its
directors and officers to the maximum extent permitted by the General
Corporation Law of the State of Delaware. Article Tenth of the Company's
Certificate of Incorporation, as amended, requires the Company to indemnify its
directors and officers to the fullest extent allowed by law, subject to the
Company's By-Laws.
The Company does not indemnify directors and officers through any
individual contractual arrangements.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
The Company maintains insurance policies insuring its directors and
officers against certain losses incurred by them as a result of claims based
upon their actions or statements (including omissions to act or to make
statements, as directors and officers. The aggregate amount payable for all
directors and officers for all claims under such policies first presented in any
policy year is limited to $50 million. After certain deductibles, the Company is
entitled to reimbursement of up to $50 million under such policies in connection
with its indemnification of directors and officers.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
permits a Delaware corporation to include in its certificate of incorporation a
provision eliminating or limiting the potential monetary liability of a director
to the corporation or its stockholders for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the
II-1
<PAGE> 50
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for improper payment of dividends, stock
purchase or redemption or (iv) for any transaction from which the director
receives an improper personal benefit.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER
- ---------------
<S> <C>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation, as amended (incorporated by reference from
Exhibit 3.1 to CalMat's Annual Report on Form 10-K for the year ended
December 31, 1988).
3.2 Certificate of Amendment to Certificate of Incorporation (incorporated by
reference from Exhibit 3.2 to CalMat's Annual Report on Form 10-K for the
year ended December 31, 1992).
3.3 By-laws (incorporated by reference from Exhibit 3.3 to CalMat's Annual
Report on Form 10-K for the year ended December 31, 1993).
4.1 The Rights Agreement dated as of September 22, 1987, between the Company and
Security Pacific National Bank (incorporated by reference from Exhibit 1 to
CalMat's Form 8-K dated October 5, 1987).
4.2 First Amendment to Rights Agreement, dated as of October 26, 1992, between
the Company and Bank of America N.T.&S.A., formerly known as Security
Pacific National Bank (incorporated by reference from Exhibit 4.2 to the
Company's 1992 Annual Report on Form 10-K).
*5.1 Opinion of Paul Stanford, General Counsel to the Company.
*23.1 Consent of Paul Stanford, General Counsel to the Company (included in
Exhibit 5.1).
23.2 Consent of Coopers & Lybrand.
24.1 Power of Attorney (included in the signature page on page II-4 in this
Registration Statement).
</TABLE>
- ---------------
* To be filed by amendment.
II-2
<PAGE> 51
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described
under Item 15 above, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(4) For purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE> 52
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, and State of California, on this 23rd
day of March, 1994.
CALMAT CO.
By A. FREDERICK GERSTELL
---------------------------------
A. Frederick Gerstell
Chairman of the Board, President,
Chief Executive Officer
and Chief Operating Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on
the signature page to this Registration Statement constitutes and appoints Paul
Stanford and Scott J Wilcott, and each of them, his true and lawful
attorneys-in-fact and agents, and each of them, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection, therewith, with the Securities and Exchange
Commission, and grants unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or each of them, or his
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <C> <C>
A. FREDERICK GERSTELL Chairman of the Board, March 23, 1994
- ------------------------------------------- President, and Chief Executive
A. Frederick Gerstell Officer, Chief Operating
Officer, and Director
(principal executive officer)
H. JAMES GALLAGHER Executive Vice March 23, 1994
- ------------------------------------------- President-Finance and Chief
H. James Gallagher Financial Officer (principal
financial officer)
EDWARD J. KELLY Senior Vice President, March 23, 1994
- ------------------------------------------- Treasurer and Chief Accounting
Edward J. Kelly Officer (principal accounting
officer)
JOHN C. ARGUE Director March 23, 1994
- -------------------------------------------
John C. Argue
HARRY M. CONGER Director March 23, 1994
- -------------------------------------------
Harry M. Conger
</TABLE>
II-4
<PAGE> 53
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
RAYBURN S. DEZEMBER Director March 23, 1994
- ---------------------------------------------
Rayburn S. Dezember
BERT A. GETZ Director March 23, 1994
- ---------------------------------------------
Bert A. Getz
RICHARD A. GRANT, JR. Director March 23, 1994
- ---------------------------------------------
Richard A. Grant, Jr.
GROVER R. HEYLER Director March 23, 1994
- ---------------------------------------------
Grover R. Heyler
WILLIAM T. HUSTON Director March 23, 1994
- ---------------------------------------------
William T. Huston
WILLIAM JENKINS Director March 23, 1994
- ---------------------------------------------
William Jenkins
THOMAS L. LEE Director March 23, 1994
- ---------------------------------------------
Thomas L. Lee
THOMAS M. LINDEN Director March 23, 1994
- ---------------------------------------------
Thomas M. Linden
STUART T. PEELER Director March 23, 1994
- ---------------------------------------------
Stuart T. Peeler
</TABLE>
II-5
<PAGE> 54
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------ ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement..........................................
3.1 Certificate of Incorporation, as amended (incorporated by reference from
Exhibit 3.1 to CalMat's Annual Report on Form 10-K for the year ended
December 31, 1988)......................................................
3.2 Certificate of Amendment to Certificate of Incorporation (incorporated
by reference from Exhibit 3.2 to CalMat's Annual Report on Form 10-K for
the year ended December 31, 1992).......................................
3.3 By-laws (incorporated by reference from Exhibit 3.3 to CalMat's Annual
Report on Form 10-K for the year ended December 31, 1993)...............
4.1 The Rights Agreement dated as of September 22, 1987, between the Company
and Security Pacific National Bank (incorporated by reference from
Exhibit 1 to CalMat's Form 8-K dated October 5, 1987)...................
4.2 First Amendment to Rights Agreement, dated as of October 26, 1992,
between the Company and Bank of America N.T.&S.A., formerly known as
Security Pacific National Bank (incorporated by reference from Exhibit
4.2 to the Company's 1992 Annual Report on Form 10-K)...................
*5.1 Opinion of Paul Stanford, General Counsel to the Company................
*23.1 Consent of Paul Stanford, General Counsel to the Company (included in
Exhibit 5.1)............................................................
23.2 Consent of Coopers & Lybrand............................................
24.1 Power of Attorney (included in the signature page on page II-4 in this
Registration Statement).................................................
</TABLE>
- ---------------
* To be filed by amendment.
II-6
<PAGE> 1
Exhibit 1.1
2,750,000 Shares
CALMAT CO.
A Delaware corporation
Common Stock
(Par Value $1 Per Share)
PURCHASE AGREEMENT
, 1994
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Lazard Freres & Co.
as Representatives of the several Underwriters
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
CalMat Co., a Delaware corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Lazard Freres & Co. ("Lazard") and each of the
other Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch and Lazard
are acting as representatives (in such capacity, Merrill Lynch and Lazard shall
hereinafter be referred to as the "Representatives"), with respect to the sale
by the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of shares of Common Stock, par value $1 per
share, of the Company ("Common Stock") set forth in said Schedule A, and with
respect to the grant by the Company to the Underwriters, acting severally and
not jointly, of the option described in Section 2(b) hereof to purchase all or
any part of 412,500 additional shares of Common Stock to cover
over-allotments,
<PAGE> 2
2
in each case except as may otherwise be provided in the Pricing Agreement, as
hereinafter defined. The aforesaid 2,750,000 shares of Common Stock (the
"Initial Securities") to be purchased by the Underwriters and all or any part
of the 412,500 shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option Securities") are collectively hereinafter
called the "Securities".
Prior to the purchase and public offering of the Securities by the
several Underwriters, the Company and the Representatives, acting on behalf of
the several Underwriters, shall enter into an agreement substantially in the
form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the
Securities will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33- _______) and a
related preliminary prospectus for the registration of the Securities under the
Securities Act of 1933 (the "1933 Act"), has filed such amendments thereto, if
any, and such amended preliminary prospectuses as may have been required to the
date hereof, and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. Such registration statement (as
amended, if applicable) and the prospectus constituting a part thereof
(including in each case all documents incorporated or deemed to be incorporated
by reference therein and the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations")), as from time to time amended or
supplemented pursuant to the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or otherwise, are hereinafter referred to as the
"Registration Statement" and the "Prospectus", respectively, except that if any
revised prospectus shall be provided to the Underwriters by the Company for use
in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration
<PAGE> 3
3
Statement becomes effective (whether or not such revised prospectus is required
to be filed by the Company pursuant to Rule 424(b) of the 1933 Act
Regulations), the term "Prospectus" shall refer to such revised prospectus from
and after the time it is first provided to the Underwriters for such use. All
references in this Agreement to financial statements and schedules and other
information which is "contained," "included" or "stated" in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and
other information which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement or the Prospectus, shall be deemed to mean and include the filing of
any document under the 1934 Act which is or is deemed to be incorporated by
Reference in the Registration Statement or the Prospectus, as the case may be.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
the Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as of the
date hereof and as of the date of the Pricing Agreement (such latter date being
hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective
and at the Representation Date, the Registration Statement will comply
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
The Prospectus, at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of
the Securities which differs from the Prospectus on file at the
Commission at the time the Registration Statement becomes effective,
in which case at the time it is
<PAGE> 4
4
first provided to the Underwriters for such use) and at Closing Time
referred to in Section 2 hereof, will not include an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that
the representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through Merrill
Lynch and Lazard expressly for use in the Registration Statement or
Prospectus.
(ii) The accountants who certified the financial statements
and supporting schedules included in the Registration Statement are
independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(iii) The financial statements included in the Registration
Statement and the Prospectus present fairly the financial position of
the Company and its consolidated subsidiaries as at the dates
indicated and the results of their operations for the periods
specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated
therein.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) except for regular quarterly dividends on Common
Stock in amounts per share that are consistent with
<PAGE> 5
5
past practice, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement and the Pricing Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise.
(vi) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not
have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise; all of
the issued and outstanding capital stock of each such subsidiary has
been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
<PAGE> 6
6
(vii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under "Capitalization"
(except for subsequent issuances, if any, pursuant to this Agreement
or pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus); the shares of issued and outstanding
Common Stock have been duly authorized and validly issued and are
fully paid and non-assessable; the Securities have been duly
authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to
this Agreement against payment of the consideration set forth in the
Pricing Agreement, will be validly issued and fully paid and
non-assessable; the Common Stock conforms to all statements relating
thereto contained in the Prospectus; and the issuance of the
Securities is not subject to preemptive or other similar rights.
(viii) Neither the Company nor any of its subsidiaries is in
violation of its charter or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any
of its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject; and the execution, delivery and
performance of this Agreement and the Pricing Agreement and the
consummation of the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action
and will not conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any
of its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company
or any applicable law, administrative regulation or administrative or
court decree.
<PAGE> 7
7
(ix) No labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is
imminent; and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors which might be expected to result in any
material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise.
(x) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any of its subsidiaries, which is required to
be disclosed in the Registration Statement (other than as disclosed
therein), or which might result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, or which might materially and adversely
affect the properties or assets thereof or which might materially and
adversely affect the consummation of this Agreement; all pending legal
or governmental proceedings to which the Company or any subsidiary is
a party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, are,
considered by the Company in the aggregate, not material; and there
are no contracts or documents of the Company or any of its
subsidiaries which are required to be filed as exhibits to the
Registration Statement by the 1933 Act or by the 1933 Act Regulations
which have not been so filed.
(xi) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names (collectively, "patent and proprietary rights") presently
employed by them in connection with the business now operated by them,
and neither the Company
<PAGE> 8
8
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of
others with respect to any patent or proprietary rights, or of any
facts which would render any patent and proprietary rights invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in any
material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise.
(xii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
offering, issuance or sale of the Securities hereunder, except such as
may be required under the 1933 Act or the 1933 Act Regulations or
state securities laws.
(xiii) The Company and its subsidiaries possess such
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies (including, without
limitation, environmental authorities) necessary to conduct the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
(xiv) This Agreement has been, and, at the Representation
Date, the Pricing Agreement will have been, duly executed and
delivered by the Company.
(xv) There are no persons with registration or other similar
rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
<PAGE> 9
9
(xvi) The documents incorporated or deemed to be incorporated
by reference in the Prospectus, as the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, at the time the Registration Statement and any
amendments thereto become effective and at the Closing Time, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in the Pricing Agreement, the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter
(except as otherwise provided in the Pricing Agreement), plus any additional
number of Initial Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(1) If the Company has elected not to rely upon Rule 430A
under the 1933 Act Regulations, the initial public offering price and
the purchase price per share to be paid by the several Underwriters
for the Securities have each been determined and set forth in the
Pricing Agreement, dated the date hereof, and an amendment to the
Registration Statement and the Prospectus will be filed before the
Registration Statement becomes effective.
<PAGE> 10
10
(2) If the Company has elected to rely upon Rule 430A under
the 1933 Act Regulations, the purchase price per share to be paid by
the several Underwriters for the Securities shall be an amount equal
to the initial public offering price, less an amount per share to be
determined by agreement between the Representatives and the Company.
The initial public offering price per share of the Securities shall be
a fixed price to be determined by agreement between the
Representatives and the Company. The initial public offering price
and the purchase price, when so determined, shall be set forth in the
Pricing Agreement. In the event that such prices have not been agreed
upon and the Pricing Agreement has not been executed and delivered by
all parties thereto by the close of business on the fourth business
day following the date of this Agreement, this Agreement shall
terminate forthwith, without liability of any party to any other
party, unless otherwise agreed to by the Company and the
Representatives.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters, severally and not jointly,
to purchase up to an additional 412,500 shares of Common Stock at the price
per share set forth in the Pricing Agreement, less an amount per share equal to
any dividends declared by the Company and payable on the Initial Securities but
not payable on the Option Securities. The option hereby granted will expire 30
days after (i) the date the Registration Statement becomes effective, if the
Company has elected not to rely on Rule 430A under the 1933 Act Regulations, or
(ii) the Representation Date, if the Company has elected to rely on Rule 430A
under the 1933 Act regulations, and may be exercised in whole or in part from
time to time only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Initial Securities upon
notice by the Representatives to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by
the Representatives, but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined, unless otherwise agreed by the
<PAGE> 11
11
Representatives and the Company. If the option is exercised as to all or any
portion of the Option Securities, each of the Underwriters, acting severally
and not jointly, will purchase that proportion of the total number of Option
Securities then being purchased which the number of Initial Securities set
forth in Schedule A opposite the name of such Underwriter bears to the total
number of Initial Securities (except as otherwise provided in the Pricing
Agreement), subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of
Merrill Lynch & Co, New York, New York, or at such other place as
shall be agreed upon by the Representatives and the Company, at 7:00 A.M.
(California time) on the fifth business day (unless postponed in accordance
with the provisions of Section 10) following the date the Registration
Statement becomes effective (or, if the Company has elected to rely upon Rule
430A of the 1933 Act Regulations, the fifth business day after execution of the
Pricing Agreement), or such other time not later than ten business days after
such date as shall be agreed upon by the Representatives and the Company (such
time and date of payment and delivery being herein called "Closing Time"). In
addition, in the event that any or all of the Option Securities are purchased
by the Underwriters, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company. Payment shall be made to the Company by
certified or official bank check or checks drawn in New York Clearing House
funds or similar next day funds payable to the order of the Company, against
delivery to the Representatives for the respective accounts of the Underwriters
of certificates for the Securities to be purchased by them. Certificates for
the Initial Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the Representatives may request
in writing at least two business days before the Closing Time or the relevant
Date of Delivery, as the case may be. It is understood that each Underwriter
has authorized the Representatives, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the Initial Securities
<PAGE> 12
12
and the Option Securities, if any, which it has agreed to purchase. Merrill
Lynch and Lazard, individually and not as representatives of the Underwriters,
may (but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any
Underwriter whose check has not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder. The certificates for
the Initial Securities and the Option Securities, if any, will be made
available for examination and packaging by the Representative not later than
10:00 A.M. (California time) on the last business day prior to the Closing Time
or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) The Company will notify the Representatives immediately,
and confirm the notice in writing, (i) of the effectiveness of the
Registration Statement and any amendment thereto (including any
post-effective amendment), (ii) of the receipt of any comments from
the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company will give the Representatives notice of its
intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any amendment or
supplement to the Prospectus (including any revised prospectus which
the Company proposes for use by the Underwriters in connection with
the offering of the Securities which differs from the prospectus on
file at the Commission at the time the Registration Statement becomes
effective, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) of the 1933 Act Regulations), whether
<PAGE> 13
13
pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the
Representatives with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment or supplement or use
any such prospectus to which the Representatives or counsel for the
Underwriters shall object.
(c) The Company will deliver to the Representatives as many
signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed
to be incorporated by reference therein) as the Representatives may
reasonably request and will also deliver to the Representatives a
conformed copy of the Registration Statement as originally filed and
of each amendment thereto (without exhibits) for each of the
Underwriters.
(d) The Company will furnish to each Underwriter, from time
to time during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of
the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request for the purposes contemplated by the 1933 Act or
the 1934 Act or the respective applicable rules and regulations of the
Commission thereunder.
(e) If any event shall occur as a result of which it is
necessary, in the opinion of counsel for the Underwriters, to amend or
supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, the Company will forthwith amend or
supplement the Prospectus (in form and substance satisfactory to
counsel for the Underwriters) so that, as so amended or supplemented,
the Prospectus will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading, and the Company
will furnish to the Underwriters a reasonable number of copies of such
amendment or supplement.
<PAGE> 14
14
(f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under
the applicable securities laws of such states and other jurisdictions
of the United States as the Representatives may designate; provided,
however, that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so
qualified. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from
the effective date of the Registration Statement.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 50 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve month period beginning not later than the first day
of the Company's fiscal quarter next following the "effective date"
(as defined in said Rule 158) of the Registration Statement.
(h) The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds".
(i) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in
reliance upon Rule 430A of the 1933 Act Regulations, then immediately
following the execution of the Pricing Agreement, the Company will
prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or, if required by such
Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so
omitted.
(j) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, will file
all documents required to be filed with the Commission pursuant to
Section 13,
<PAGE> 15
15
14 or 15 of the 1934 Act within the time periods required by the 1934
Act and the 1934 Act Regulations.
(k) The Company will use its best efforts to effect the
listing of the Common Stock on the New York, Pacific and Chicago Stock
Exchanges.
(l) During a period of 180 days from the date of the Pricing
Agreement, the Company will not, without the Representatives' prior
written consent, directly or indirectly, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, any Common Stock
or any security convertible into or exchangeable into or exercisable
for Common Stock (except for Common Stock issued pursuant to this
Agreement or pursuant to reservations, agreements or employee benefit
plans referred to in Section 1(a)(vii) hereof). [Lock ups for Dan
Murphy Foundation and certain officers and directors to be discussed]
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the printing and filing of the Registration Statement as originally filed
and of each amendment thereto, (ii) the printing of this Agreement and the
Pricing Agreement, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel and accountants, (v) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey, (vi) the printing and delivery to the
Underwriters of copies of the Registration Statement as originally filed and of
each amendment thereto, of each preliminary prospectus, and of the Prospectus
and any amendments or supplements thereto, (vii) the printing and delivery to
the Underwriters of copies of the Blue Sky Survey, and (viii) the fee of the
National Association of Securities Dealers, Inc., and (ix) the fees and
expenses incurred in connection with the listing of the Securities on the New
York, Pacific and Chicago Stock Exchanges.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses,
<PAGE> 16
16
including the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
(a) The Registration Statement shall have become effective
not later than 5:30 P.M. on the date hereof, or with the consent of
the Representatives, at a later time and date, not later, however,
than 5:30 P.M. on the first business day following the date hereof, or
at such later time and date as may be approved by a majority in
interest of the Underwriters; and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission. If the Company has elected to rely upon
Rule 430A of the 1933 Act Regulations, the price of the Securities and
any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of
the 1933 Act Regulations within the prescribed time period and prior
to Closing Time the Company shall have provided evidence satisfactory
to the Representatives of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed
and declared effective in accordance with the requirements of Rule
430A of the 1933 Act Regulations.
(b) At Closing Time the Representatives shall have received:
(1) The favorable opinion, dated as of Closing Time,
of Latham & Watkins [to be discussed; certain items may be
more appropriate for Mr. Stanford], counsel for the Company,
in
<PAGE> 17
17
form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of Delaware.
(ii) The Company has corporate power and
authority to own, lease and operate its properties
and to conduct its business as described in the
Registration Statement and to enter into and perform
its obligations under this Agreement and the Pricing
Agreement.
(iii) To the best of their knowledge and
information, the Company is duly qualified as a
foreign corporation to transact business and is in
good standing in each jurisdiction in which such
qualification is required.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the
Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans
referred to in the Prospectus), and the shares of
issued and outstanding Common Stock have been duly
authorized and validly issued and are fully paid and
non-assessable.
(v) The Securities have been duly authorized
for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of
the consideration set forth in the Pricing Agreement,
will be validly issued and fully paid and
non-assessable.
(vi) The issuance of the Securities is not
subject to preemptive or other similar rights arising
by operation of law, under the charter or by-laws of
the Company or, to the best of their knowledge and
information, otherwise.
<PAGE> 18
18
(vii) Each subsidiary of the Company has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its
properties and to conduct its business as described
in the Registration Statement and, to the best of
their knowledge and information, is duly qualified as
a foreign corporation to transact business and is in
good standing in each jurisdiction in which such
qualification is required; all of the issued and
outstanding capital stock of each such subsidiary has
been duly authorized and validly issued, is fully
paid and non-assessable and, to the best of their
knowledge and information, is owned by the Company
[any subsidiaries not wholly owned?], directly or
through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(viii) This Agreement and the Pricing
Agreement have each been duly authorized, executed
and delivered by the Company.
(ix) The Registration Statement is effective
under the 1933 Act and, to the best of their
knowledge and information, no stop order suspending
the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(x) At the time the Registration Statement
became effective and at the Representation Date, the
Registration Statement (other than the financial
statements and supporting schedules included therein,
as to which no opinion need be rendered) complied as
to form in all material respects with the
requirements of the 1933 Act and the 1933 Act
Regulations.
(xi) The Common Stock conforms to the
description thereof contained in the Prospectus, and
the form of certificate used to
<PAGE> 19
19
evidence the Common Stock is in due and proper form
and complies with all applicable statutory
requirements.
(xii) To the best of their knowledge and
information, there are no legal or governmental
proceedings pending or threatened which are required
to be disclosed in the Registration Statement, other
than those disclosed therein, and all pending legal
or governmental proceedings to which the Company or
any subsidiary is a party or to which any of their
property is subject which are not described in the
Registration Statement, including ordinary routine
litigation incidental to the business, are,
considered in the aggregate, not material.
(xiii) The information in the Prospectus, to
the extent that it constitutes matters of law,
summaries of legal matters, documents or proceedings,
or legal conclusions, has been reviewed by them and
is correct in all material respects.
(xiv) To the best of their knowledge and
information, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to
in the Registration Statement or to be filed as
exhibits thereto other than those described or
referred to therein or filed as exhibits thereto, the
descriptions thereof or references thereto are
correct, and no default exists in the due performance
or observance of any material obligation, agreement,
covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or
other instrument so described, referred to, or filed.
(xv) No authorization, approval, consent or
order of any court or governmental authority or
agency is required in connection with the offering,
issuance or sale of the Securities to the
Underwriters, except such as may be required under
the 1933 Act or the
<PAGE> 20
20
1933 Act Regulations or state securities law; and, to
the best of their knowledge and information, the
execution, delivery and performance of this Agreement
and the Pricing Agreement and the consummation of the
transactions contemplated herein and therein and
compliance by the Company with its obligations
hereunder and thereunder will not conflict with or
constitute a breach of, or default under, or result
in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company or any
of its subsidiaries is a party or by which it or any
of them may be bound, or to which any of the property
or assets of the Company or any of its subsidiaries
is subject, nor will such action result in any
violation of the provisions of the charter or by-
laws of the Company, or any applicable law,
administrative regulation or administrative or court
decree.
(xvi) To the best of their knowledge and
information, there are no persons with registration
or other similar rights to have any securities
registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933
Act.
(xvii) Each document filed pursuant to the
1934 Act (other than the financial statements and
supporting schedules included therein, as to which no
opinion need be rendered) and incorporated or deemed
to be incorporated by reference in the Prospectus
complied when so filed as to form in all material
respects with the 1934 Act and the 1934 Act
Regulations.
(2) Such opinion or opinions, dated as of Closing
Time, of Cravath, Swaine & Moore, counsel for the
Underwriters, with respect to the Registration Statement, the
Prospectus and other related matters as you may require, and
the Company shall have furnished to such counsel such
<PAGE> 21
21
documents and information as they request for the purpose of
enabling them to pass upon such matters.
(3) In giving their opinions required by subsections
(b)(1) and (b)(2), respectively, of this Section, Latham &
Watkins and Cravath, Swaine & Moore shall each additionally
state that nothing has come to their attention that would lead
them to believe that the Registration Statement (except for
financial statements and schedules and other financial or
statistical data included or incorporated by reference
therein, as to which counsel need make no statement), at the
time it became effective or at the Representation Date,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements and
schedules and other financial or statistical data included or
incorporated by reference therein, as to which counsel need
make no statement), at the Representation Date (unless the
term "Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Company for use in
connection with the offering of the Securities which differs
from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the
time it is first provided to the Underwriters for such use) or
at Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(c) At Closing Time there shall not have been, since the
date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, and the Representatives shall have received a certificate of
the President or a Vice President of the Company and of
<PAGE> 22
22
the chief financial or chief accounting officer of the Company, dated
as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect
as though expressly made at and as of Closing Time, (iii) the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the Commission. As used in this
Section 5(c), the term "Prospectus" means the Prospectus in the form
first used to confirm sales of the securities.
(d) At the time of the execution of this Agreement, the
Representatives shall have received from Coopers & Lybrand a letter
dated such date, in form and substance satisfactory to the
Representatives, to the effect that (i) they are independent public
accountants with respect to the Company and its subsidiaries within
the meaning of the 1933 Act and the 1933 Act Regulations; (ii) it is
their opinion that the financial statements and supporting schedules
included in the Registration Statement and covered by their opinions
therein comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations;
(iii) based upon limited procedures set forth in detail in such
letter, nothing has come to their attention which causes them to
believe that (A) the unaudited financial statements and supporting
schedules of the Company and its subsidiaries included in the
Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations or are not presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement, (B) the unaudited amounts of
revenues, net income and net income per share set forth under
"Selected Consolidated Financial Information" in the Prospectus were
not determined on a basis substantially consistent with that used in
determining the corresponding amounts in the audited financial
statements included in the Registration
<PAGE> 23
23
Statement, or (C) at a specified date not more than five days prior to
the date of this Agreement, there has been any change in the capital
stock of the Company or any increase in the consolidated long term
debt of the Company and its subsidiaries or any decrease in
consolidated net current assets or net assets as compared with the
amounts shown in the December 31, 1993 balance sheet included in the
Registration Statement or, during the period from December 31, 1993 to
a specified date not more than five days prior to the date of this
Agreement, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated revenues,
net income or net income per share of the Company and its
subsidiaries, except in all instances for changes, increases or
decreases which the Registration Statement and the Prospectus disclose
have occurred or may occur; and (iv) in addition to the examination
referred to in their opinions and the limited procedures referred to
in clause (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in
the Registration Statement and Prospectus and which are specified by
the Representative, and have found such amounts, percentages and
financial information to be in agreement with the relevant accounting,
financial and other records of the Company and its subsidiaries
identified in such letter.
(e) At Closing Time the Representatives shall have received
from Coopers & Lybrand a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than five days prior to
Closing Time and, if the Company has elected to rely on Rule 430A of
the 1933 Act Regulations, to the further effect that they have carried
out procedures as specified in clause (iv) of subsection (d) of this
Section with respect to certain amounts, percentages and financial
information specified by the Representatives and deemed to be a part
of the Registration Statement pursuant to
<PAGE> 24
24
Rule 430(A)(b) and have found such amounts, percentages and financial
information to be in agreement with the records specified in such
clause (iv).
(f) At the Closing Time the Securities shall have been
approved for listing on the New York, Pacific and Chicago Stock
Exchanges upon notice of issuance.
(g) At Closing Time and at each Date of Delivery, if any,
counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling
them to provide the opinions as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be satisfactory in
form and substance to the Representative and counsel for the
Underwriters.
(h) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
Option Securities, the representations and warranties of the Company
contained herein and the statements in any certificates furnished by
the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives
shall have received:
(1) A certificate, dated such Date of Delivery, of
the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the
Company confirming that the certificate delivered at the
Closing Time pursuant to Section 5(c) hereof remains true
and correct as of such Date of Delivery.
(2) The favorable opinion of [Latham & Watkins;
see comment on page 16], counsel for the Company, in form
and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of
Delivery and otherwise to the same
<PAGE> 25
25
effect as the opinion required by Sections 5(b)(1) and
5(b)(3) hereof.
(3) The favorable opinion of Cravath, Swaine
& Moore, counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Sections 5(b)(2)
and 5(b)(3) hereof.
(4) A letter from Coopers & Lybrand, in form and
substance satisfactory to the Representatives and dated
such Date of Delivery, substantially the same in form and
substance as the letter furnished to the Representatives
pursuant to Section 5(e) hereof, except that the
"specified date" in the letter furnished pursuant to
this Section 5(h)(4) shall be a date not more than five
days prior to such Date of Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 4 hereof.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
information deemed to be part of the Registration Statement pursuant
to Rule 430A(b) of the 1933 Act Regulations, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or
<PAGE> 26
26
alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by Merrill Lynch and Lazard), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch or Lazard expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or
<PAGE> 27
27
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through Merrill Lynch or Lazard expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and one or more of the Underwriters, as incurred, in
such proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the initial public offering price
appearing thereon and the Company is responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Underwriter, and each
<PAGE> 28
28
director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers
of the Company submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to
the Company, at any time at or prior to Closing Time (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which is such as to make it,
in the judgment of the Representatives, impracticable to market the Securities
or to enforce contracts for the sale of the Securities, or (iii) if trading in
the Common Stock has been suspended by the Commission, or if trading generally
on the New York Stock Exchange has been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by said Exchange or by order of the Commission
or any other governmental authority, or if a banking moratorium has been
declared by either Federal, New York or California authorities. As used in
this Section 9(a), the term "Prospectus" means the Prospectus in the form
first used to confirm sales of the Securities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any
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party to any other party except as provided in Section 4 hereof.
Notwithstanding any such termination, the provisions of Sections 6 and 7 shall
remain in effect.
SECTION 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at Closing Time to purchase the Initial
Securities which it or they are obligated to purchase under this Agreement and
the Pricing Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the number of Initial Securities, each of the non- defaulting
Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of
the number of Initial Securities, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone Closing Time for a period not exceeding seven days
in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
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Underwriters shall be directed to the Representatives at Merrill Lynch & Co.,
10900 Wilshire Boulevard, 9th Floor, Los Angeles, California 90024, attention
of Matthew Pendo, Director; notices to the Company shall be directed to it at
3200 San Fernando Road, Los Angeles, CA 90065, attention of Paul Sanford,
Senior Vice President.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters and the
Company and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm
or corporation. No purchaser of Securities from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Except as otherwise set forth herein, specified times of day refer to
New York City time.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement
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31
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
CALMAT CO.
By ________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Lazard Freres & Co.
By Merrill Lynch, Pierce, Fenner &
Smith, Incorporated
______________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
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EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-3 (File No. ) of our report dated February 21, 1994, on our
audits of the financial statements and financial statement schedules of CalMat
Co. and subsidiaries. We also consent to the reference to our firm under the
caption "Experts."
COOPERS & LYBRAND
Los Angeles, California
March 23, 1994
