<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM __________ TO ______________
COMMISSION FILE NUMBER 0-1162
CALMAT CO.
(Exact name of Registrant as specified in its charter)
Delaware 95-0645790
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
3200 SAN FERNANDO ROAD 90065
LOS ANGELES, CALIFORNIA (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (213) 258-2777
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE REGISTERED
(Title of Class)
Indicate by check mark whether Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-
affiliates of Registrant. The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within 60 days prior to the date of
the filing.
$335,963,793 COMPUTED ON THE BASIS OF $18.50 PER SHARE, WHICH WAS THE LAST SALE
PRICE ON THE NEW YORK STOCK EXCHANGE ON FEBRUARY 24, 1995.
Indicate the number of shares outstanding of each of Registrant's classes of
common stock, as of the latest practicable date.
23,138,769 SHARES OF COMMON STOCK, $1 PAR VALUE, AS OF FEBRUARY 24, 1995.
LIST OF DOCUMENTS INCORPORATED BY REFERENCE
CALMAT CO.'S DEFINITIVE PROXY STATEMENT, DATED MARCH 16, 1995 IS INCORPORATED
BY REFERENCE IN PART III OF THIS FORM 10-K.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
------ ----
<C> <S> <C>
PART I
Item 1. Business ...................................................................... 1
Item 2. Properties .................................................................... 5
Item 3. Legal Proceedings ............................................................. 5
Item 4. Submission of Matters to a Vote of Security Holders ........................... 7
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters ......... 9
Item 6. Selected Financial Data ....................................................... 10
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations ................................................................... 11
Item 8. Financial Statements and Supplementary Data ................................... 15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................... 34
PART III
Item 10. Directors and Executive Officers of Registrant ................................ 34
Item 11. Executive Compensation ........................................................ 34
Item 12. Security Ownership of Certain Beneficial Owners and Management ................ 34
Item 13. Certain Relationships and Related Transactions ................................ 34
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K ............... 34
Signatures ................................................................................ 41
</TABLE>
i
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
CalMat Co. (the "Company" or "Registrant") has its corporate headquarters
in Los Angeles, California and has operations throughout the state of
California, in Phoenix and Tucson, Arizona, and in Albuquerque, New Mexico. The
Company was formed in 1984 by the business combination of California Portland
Cement Company ("CPC") and Conrock Co. ("Conrock"). Following its formation,
the Company operated CPC as its Cement Division. The Company subsequently
disposed of the Cement Division in an exchange transaction with Onoda
California, Inc. in 1990. Two of its business segments involve the manufacture,
production, distribution and sale of construction materials: hot mix asphalt,
and aggregates (crushed rock, sand and gravel) and ready mixed concrete. The
business segments which supply materials to the construction industry experience
fluctuations with general levels of activity in the industry and with weather-
related construction delays, which normally occur during the first and fourth
quarters each year. A third business segment is engaged in the ownership,
leasing and management of industrial and office buildings, the ownership and
leasing of undeveloped real property and sales of real property.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information about the Company's business segments for the years ended
December 31, 1994, 1993 and 1992 is incorporated in Note 13 of the "Notes to
Consolidated Financial Statements," located on pages 30 and 31 of this Annual
Report on Form 10-K.
NARRATIVE DESCRIPTION OF BUSINESS
ASPHALT DIVISION
The Company'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 Division produces and supplies asphalt and
related specialty products. Unlike most of its competitors, the Division does
not undertake paving work, and thus does not compete with its customers, which
are principally contractors engaged in the paving business.
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 refined petroleum product). The Division currently operates asphalt
plants in 34 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 34 locations, 18 are sites which also have aggregates processing plants
operated by the Concrete and Aggregates Division. This proximity provides the
Division 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 ten 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 Division's ability to secure public projects, and provide a high
return on investment. Five additional recycling systems are planned for 1995.
1
<PAGE>
The Division manufactures related specialty products including GUARDTOP(R),
a seal coating material used for sealing asphalt pavement to prevent water
damage and surface erosion, and, under a license agreement, the Division is the
exclusive distributor in metropolitan Los Angeles of PETROMAT(R), 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 also has soil remediation operations which are conducted by Western
Thermal Soils Company, a wholly owned subsidiary. 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.
The Division has negotiated three-year contracts, which expire in 1997,
with the Operating Engineers union in its Fresno and Sacramento locations.
In 1987 the Company entered into a ten-year consent decree with the Justice
Department limiting its ability to acquire additional asphalt operations in Los
Angeles, San Diego and other specified areas of Southern California.
CONCRETE AND AGGREGATES DIVISION
The Concrete and Aggregates Division produces and sells construction
aggregates (crushed rock, sand and gravel) 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. Examples of projects to which the Company will
supply aggregates and/or ready mixed concrete in 1995 include Pier 300 at the
Los Angeles Harbor in Los Angeles, California, reconstruction of the Cypress
freeway in Oakland, California destroyed by the 1989 Loma Prieta earthquake, the
County of San Diego's Inmate Reception Center in San Diego, California, and the
Arizona Museum of Science and Technology's new facility in Phoenix, Arizona.
The Division operates aggregates processing plants at 31 locations
primarily in Los Angeles, San Francisco, San Diego, Orange, Kern, and Fresno
Counties in 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 has 18
locations in Southern California, and the Company believes it is the largest
supplier of construction aggregates to the greater Los Angeles area. During
1994 the Company sold 24.6 million tons of aggregates, representing less than
half of the Company's annual maximum production capacity.
As of December 31, 1994, the Company had estimated aggregates reserves of
approximately 1.8 billion tons, located near the major urban centers of the
markets it serves. A schedule of the Company's estimated aggregates reserves is
found on page 39 of this Annual Report on Form 10-K. 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
65% 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, the Company 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 1995. In addition, the Company obtained permits for
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.
2
<PAGE>
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 materials. 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.
The Division has labor agreements with various unions at most of the
locations at which it operates. During 1994 the Division negotiated three-year
contracts with five local Teamsters unions in California which reduced its labor
cost without a work stoppage for its locations in Los Angeles, San Bernardino,
and Riverside Counties, and a one-year contract was signed with the Teamsters in
Albuquerque, New Mexico.
The Division is currently negotiating new contracts with several other
local unions (Operating Engineers, Teamsters, Machinists and Electricians) to
succeed those which expired in 1994 for its California locations in the counties
of Los Angeles, Ventura, San Bernardino, Riverside, Madera, Ventura, and Santa
Barbara and its Arizona locations in the Phoenix area. Only negotiations with
the Teamsters union in Ventura and Santa Barbara Counties have resulted in a
work stoppage. This ten-week work stoppage ended on October 4, 1994, on which
date the 40 employees returned to work under the terms of the Division's
implemented contract offer, which provides for reduced labor costs.
PROPERTIES DIVISION
The Properties Division manages the Company's extensive holdings of over
33,000 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. The
Company 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 1994 approximately 130 leases
covering more than 1,400 acres were in effect. These leaseholds were used for
farming, storage locations and other uses.
The Company'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 future use. The Company has
generally been able to recycle previously mined properties due in part to the
efforts of its land management professionals. The Company 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.
3
<PAGE>
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 buffer the Company's mining and production
operations. The Company currently owns approximately 0.9 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 Division currently operates six
landfills and expects to develop two additional landfill sites in 1995. All of
the Division's existing and planned landfills are designed and have permits to
accept only non-hazardous construction rubble.
The labor agreement negotiated in 1993, which covers approximately five
employees at the Division's landfill facilities, expires in 1996.
REGULATIONS AND EMPLOYEES
A substantial amount of time and resources is expended by the Company to
comply with local, state and federal regulations for land use, health and
safety, air pollution and other environmental matters. This is essential,
because changes in the enforcement of existing regulations or the addition of
new laws and regulations may require the Company to modify, supplement or
replace equipment or facilities.
During the normal course of its operations, the Company uses and disposes
of materials, such as solvents and lubricants used in equipment maintenance,
which are classified as hazardous by some government agencies. The Company
attempts to minimize the generation of such waste material and recycles most of
it. A small amount of remaining wastes are disposed of in fully permitted off-
site landfills.
Because of the nature of the Company's business, both the Occupational
Safety and Health Administration (OSHA) and the Mine Safety and Health
Administration (MSHA) have jurisdiction over its safety standards and controls.
Considerable effort is expended to train, inspect, report and enforce according
to OSHA and MSHA requirements.
The Company continued to be successful in obtaining zoning approvals and
other required permits from local governing bodies allowing the mining of
aggregates and the conducting of the Company's other businesses. The state,
county and city governing bodies within California, Arizona and New Mexico
continue to adopt new laws and regulations relating to land use. Some of these
laws and regulations, including but not limited to the California Endangered
Species Act, may lead to attempts by special interest groups to reduce or
restrict the Company's use of its properties.
The Company had 1,655 full-time employees as of December 31, 1994. Of
these, 495 were salaried and 1,160 were hourly.
The Company is party to 29 collective bargaining agreements covering an
aggregate of 961 employees. Eight of these agreements, covering an aggregate of
333 employees, are currently being negotiated. The Company is in labor
negotiations with its Los Angeles plant operators represented by the Operating
Engineers Union, whose contract expired on September 15, 1994. If the Company
is unable to reach a negotiated settlement, it is likely that a strike would
occur. A strike, should one occur, will depress volumes and cause plant
efficiencies to suffer.
OTHER
In 1990 Onoda California, Inc., ("Onoda") and the Company consummated a
transaction whereby the Company distributed to Onoda all of its shares of stock
in California Portland Cement Company ("CPC") in exchange for certain shares of
stock of the Company that were then held by Onoda. In addition, prior to 1990,
certain other related transactions were accomplished, including the Company's
contribution of certain assets to CPC and CPC's distribution of all of its
shares of stock in one of its subsidiaries to the Company (along with the
Company's
4
<PAGE>
distribution of the CPC stock to Onoda, the "Onoda Transactions"). The Onoda
Transactions were reported as tax-free transactions for federal income tax
purposes. Based on an analysis of the tax law in effect at the time of the
Onoda Transactions, the Company believes that this treatment of the Onoda
Transactions is correct, and has not established financial statement reserves
for this matter. The Internal Revenue Service (the "IRS"), however, has yet to
examine the Onoda Transactions. As a result, there can be no assurance that the
IRS will not challenge the Company's position regarding the proper tax treatment
of the Onoda Transactions. If the IRS does challenge the Company's position and
is ultimately successful in denying the Company's treatment of the Onoda
Transactions, the resulting tax liability would have a material adverse effect
on the Company's financial position.
As is the case with other companies in the same industries, the Company's
products contain varying amounts of crystalline silica, a common mineral that is
a component of most sands. Excessive, prolonged inhalation of very small
particles (principally those less than ten microns in size) of crystalline
silica has been associated with non-malignant lung disease. In 1987, the
carcinogenic potential of crystalline silica was evaluated by the International
Agency for Research on Cancer and later by the National Toxicology Program. The
International Agency found limited evidence of carcinogenicity in humans but
sufficient evidence of carcinogenicity in animals. The National Toxicology
Program concluded in 1991 that crystalline silica is "reasonably anticipated to
be a carcinogen." At present, the State of California does not require warning
notices concerning the carcinogenicity, if any, of crystalline silica pursuant
to California Proposition 65, but this policy is subject to change in the
future. In addition, future research results could tend to implicate
crystalline silica as a carcinogen or could fail to show any association between
crystalline silica and cancer. The Company is not a party to any litigation
regarding crystalline silica.
ITEM 2. PROPERTIES
PLANT FACILITIES
See "Item 1. Business" on page 1 of this Annual Report on Form 10-K for
additional information relating to these properties.
The Company makes a practice of leasing idle land which has been obtained
for its aggregates reserves during periods when the land is not used for
operations. During 1994 approximately 130 leases covering more than 1,400 acres
were in effect. These leaseholds were used for farming, storage locations and
other uses. Additionally, the Company owns approximately 0.9 million square
feet of commercial and industrial buildings, approximately 550,000 square feet
of which are located in close proximity to aggregates operations and buffer the
adjacent mining and processing operations. A total of 33,292 acres are owned or
leased by the Company.
See "CalMat Co., Property Owned and Leased" on page 38 of this Annual
Report on Form 10-K for additional information relating to these properties.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various lawsuits and
claims which the Company considers ordinary and routine in view of its size and
the nature of its business. The Company does not believe that any ultimate
liability resulting from any such lawsuits will have a material adverse effect
on the operations or financial position of the Company.
During 1990 the lawsuits which had been pending against the Company and its
directors in connection with actions taken by the Company which involved
Brierley Investments Limited and Onoda U.S.A., Inc. ("Onoda USA") were settled
and dismissed, with the court permitting stockholders not wishing to participate
in the settlement to "opt out." In November 1990 a lawsuit was filed against
the Company and its directors in Delaware Chancery Court by a stockholder who
had opted out of the settlement, purporting to represent a class of similarly
situated stockholders and alleging misrepresentations and breach of fiduciary
duty in connection with the matters which were the subject
5
<PAGE>
of the original lawsuits. During 1994 this lawsuit was settled and dismissed in
consideration of a payment by the Company of $200,000.
During the third quarter of 1992, the Company received a letter from CPC,
Onoda and Onoda U.S.A., purporting to assert a claim for indemnification with
respect to certain environmental matters, pursuant to certain provisions of the
agreement, dated July 19, 1988, under which Onoda acquired the stock of CPC.
The Company has notified these companies that it believes that it has no
liability with respect to the matters identified in the letter. No dollar
amount of damages was specified, but the July 19, 1988, agreement limits any
potential liability with respect to such matters to a maximum of $16,000,000.
Operating Industries, Inc. Landfill Site
The U.S. Environmental Protection Agency ("EPA"), the State of California
and the California Hazardous Substance Account have named the Company and over
200 other parties defendants in a civil action alleging joint and several
liability pursuant to certain California statutes and the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") in connection
with the cleanup of the former Operating Industries, Inc. landfill site in
Monterey Park, California. The EPA alleges that the Company disposed of
hazardous substances representing 0.078 percent of the total volume of waste at
the site. The Company believes, however, that the substances attributed to it
at the site were not hazardous.
To date, the Company has contributed approximately $300,000 to fund certain
interim remedial actions at the site, as part of two partial settlements of this
matter (which in part remain subject to court approval). The EPA issued a
Remedial Investigation Report in October 1994. A Feasibility Study, upon which
the final remedy will be based, is expected to be issued in late 1995.
Because, among other things, the EPA has yet to select a final remedy for
the site and the Company's share of any liability is undetermined, the ultimate
outcome of this action cannot be predicted with certainty. The Company
believes, however, that this matter will be resolved without a material adverse
effect on its financial position. The Company's belief is based on its position
that the wastes attributed to it at the site were not hazardous, its extremely
small share of the waste at the site and the large number of other defendants,
and its belief that it has recourse to insurance coverage for at least a
substantial portion of any resulting liability.
In a related development, the Company was among 150 defendants named in a
civil action filed in September 1994 in Los Angeles Superior Court by
approximately 100 individuals, alleging personal injuries and property damage
arising from the existence and operation of the Operating Industries landfill
site. The complaint seeks "general, special and punitive" damages "according to
proof" at time of trial. The Company contends that it has no liability in this
matter. However, because the case is in the very preliminary stages of
development, there are a large number of parties alleged to be involved, the
damages, if any, will likely be apportioned between any defendants found to be
responsible, and there exists the potential for insurance coverage, the ultimate
outcome of this action for the Company cannot be predicted.
San Gabriel Valley Superfund Area
The EPA has named the Company and more than 300 other entities as
"potentially responsible parties" ("PRPs") under CERCLA in connection with
alleged groundwater contamination at four sites designated as San Gabriel Valley
Areas 1 to 4 in Los Angeles County, California (the "Sites"). The EPA has
advised the Company and the other PRPs that they may be jointly and severally
liable for releases of hazardous substances, not only from properties they owned
or operated, but also for area-wide groundwater contamination. The Company's
corporate predecessor previously leased property the Company no longer owns to
Aerojet Electrosystem's corporate predecessor, which burned solid propellant
waste on the property.
6
<PAGE>
In January 1995 the Company received a letter from the EPA advising it that
the EPA does not plan to ask the Company to participate in the clean up of the
regional groundwater contamination. Because no legal proceedings have been
initiated by the EPA and the investigation of the Sites is ongoing, the amount
that may ultimately be required for investigation and/or remediation with
respect to any contamination at the Sites or in the affected areas is presently
unknown and is unlikely to be determined for some time. In addition, as a
result of uncertainty regarding the source and scope of contamination, the large
number of PRPs and the likelihood of varying degrees of responsibility among
various classes of PRPs, the Company's potential share of liability, if any,
cannot be determined at this time.
San Fernando Valley Superfund Area
The EPA has named the Company a PRP under CERCLA in connection with ongoing
containment and remediation being conducted pursuant to an EPA Record of
Decision issued in 1987 for the San Fernando Valley Area 1 Superfund Site, North
Hollywood Operable Unit. The EPA advised the Company that, as an alleged past
owner of a property formerly operated by another party as a landfill and alleged
to be connected with the contamination, the Company may be jointly and severally
liable, with at least fifteen (15) other PRPs, including Allied-Signal, Inc.,
Lockheed Martin Corporation and Waste Management Disposal Services of
California, Inc., for $17,213,355 in evaluation and containment costs incurred
by the EPA. Because of, among other things, uncertainty regarding the scope and
source of the contamination and the likelihood of varying degrees of
responsibility among the various PRPs, the Company has not determined what
portion, if any, of these costs it may be liable for, should these costs be
allocated among the various PRPs. The property in question was sold to a third
party in 1988. That party has also been named as a PRP.
No legal proceedings have been initiated by the EPA against the Company at
this time. The Company has, at this time, no detailed information concerning
actual contributions to the contamination, if any, from the site in question and
has not yet had an opportunity to make a determination as to possible defenses
or insurance coverage which may be available to it or the possibility of
recovery from other PRPs or third parties not named by the EPA as PRPs.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
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.
The following is a list of executive officers of the Company:
NAME OFFICE
---- ------
A. FREDERICK GERSTELL Chairman of the Board, President, Chief Executive
Officer and Chief Operating Officer
Mr. Gerstell, 57, 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.
7
<PAGE>
DELBERT H. TANNER Executive Vice President - Construction Materials
Mr. Tanner, 43, 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 its 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.
SCOTT J WILCOTT Executive Vice President, Law and Property
Mr. Wilcott, 57, was elected to his current position in August 1990. He also
serves as President of CalMat Properties Co., a subsidiary of the Company. In
1989 he served as Executive Vice President, General Counsel and Secretary of the
Company. From 1984 to 1989, he served as Senior Vice President, Legal Counsel
and Secretary. From 1968 until the formation of the Company in 1984, Mr.
Wilcott was employed by Conrock.
H. JAMES GALLAGHER Executive Vice President - Finance and Chief Financial
Officer
Mr. Gallagher, 48, 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.
PAUL STANFORD Executive Vice President - Administration, General
Counsel and Secretary
Mr. Stanford, 52, was elected to his current position in February 1995. From
June 1993 until February 1995, he served as Senior Vice President -
Administration, General Counsel and Secretary. 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.
EDWARD J. KELLY Senior Vice President, Treasurer and Chief Accounting
Officer
Mr. Kelly, 39, 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.
R. BRUCE RIESER Senior Vice President, Construction Materials
Mr. Rieser, 44, was elected to his current position in January 1995. Before
joining the Company, he was employed by Southwest Construction Materials &
Services, a division of Beazer USA/Hanson, where he served as President from
1992. Prior to that, he served as Vice President/General Manager of Beazer USA,
San Diego Division from March 1990.
WALTER Q. LUKKARILA Vice President, Operations
Mr. Lukkarila, 59, was elected to his current position in June 1993. Prior to
that, from February 1991, he served as Vice President - Development,
Construction Materials. He served as Vice President, Operations, Conrock
Division from 1984 to 1991, and from 1980 was employed by Conrock.
CARLOS S. HERNANDEZ Vice President and General Manager, Asphalt Division
Mr. Hernandez, 58, was elected to his current position in February 1990. He
served as an Area Manager of Industrial Asphalt (now the Asphalt Division) 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, prior to the
Company's formation, since 1968.
8
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York, Pacific and Chicago
Stock Exchanges under the trading symbol "CZM." The following table sets forth
the high and low sales prices of the Common Stock of the Company as reported on
the New York Stock Exchange Composite Tape for the periods indicated and the
cash dividends declared on the Company's Common Stock during each quarter
presented.
<TABLE>
<CAPTION>
Dividends
Period High Low Declared
---------------------------------------------------------
<S> <C> <C> <C>
1994
First Quarter 25 5/8 19 3/8 $.10
Second Quarter 22 1/8 17 3/4 .10
Third Quarter 21 3/8 19 1/2 .10
Fourth Quarter 21 16 7/8 .10
1993
First Quarter 22 5/8 18 1/2 $.10
Second Quarter 21 3/8 17 1/2 .10
Third Quarter 19 16 1/2 .10
Fourth Quarter 22 16 3/8 .10
</TABLE>
At February 24, 1995, there were 1,311 holders of record of the Company's Common
Stock $1 par value.
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------------------------------------
(Amounts in thousands, except per share data) 1994 1993 1992 1991 1990 1989
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net sales and operating revenue $365,243 $348,413 $347,282 $364,943 $428,916 $462,466
Gains on sale of real estate 7,678 2,081 453 9,555 1,109 12,825
Total revenues 376,797 353,506 350,260 378,329 433,339 479,977
Gains from disposal of assets held for sale -- -- 1,786 2,929 20,774 39,217
Income (loss) from continuing operations
before income taxes and cumulative effect
of change in accounting principle/(a)/ 29,609 14,897 (17,506) 31,422 50,564 109,955
Federal and state income taxes 10,881 6,600 (7,002) 12,568 20,118 41,807
Income (loss) from continuing operations
before cumulative effect of change in
accounting principle 18,728 8,297 (10,504) 18,854 30,446 68,148
Income from discontinued operations
(net of income taxes) -- -- -- -- 3,089 9,953
Gain on disposition of CPC to a related party/(b)/ -- -- -- -- 47,310 --
Cumulative effect of change in accounting
principle -- 919 (6,000) -- -- --
Net income (loss) 18,728 9,216 (16,504) 18,854 80,845 78,101
Per Share Data
Income (loss) from continuing operations
before cumulative effect of change in
accounting principle .81 .36 (.45) .81 1.08 2.20
Income from discontinued operations
(net of income taxes) -- -- -- -- .11 .32
Gain on disposition of CPC to a related party -- -- -- -- 1.68 --
Cumulative effect of change in accounting
principle -- .04 (.26) -- -- --
Net income (loss) .81 .40 (.71) .81 2.87 2.52
Weighted average number of shares outstanding
during year 23,224 23,117 23,242 23,319 28,128 30,978
Cash dividends declared 9,256 9,244 14,800 14,866 20,892 17,227
Regular dividends per share .40 .40 .64 .64 .64 .56
Special dividend per share -- -- -- -- .10 --
Balance Sheet Data
Total assets $572,837 $604,895 $597,240 $597,600 $605,660 $867,121
Working capital 34,882 38,916 34,003 43,430 36,100 92,346
Long-term debt 68,694 109,635 131,129 92,515 93,320 126,671
Stockholders' equity 361,104 351,046 350,687 383,596 387,189 526,764
Stockholders' equity per share at year end 15.55 15.19 15.19 16.58 16.52 17.43
</TABLE>
/(a)/ 1992 includes $26.1 million of special charges related to the
consolidation of certain construction materials operations ($11.1
million) and the write down of the book value of certain developed real
estate ($15.0 million). Excluding these charges, income (loss) from
continuing operations before income taxes and cumulative effect of change
in accounting principle would have been $8.6 million.
/(b)/ In 1990, Onoda California, Inc. (Onoda), an indirect, wholly-owned
subsidiary of Onoda Cement Co., Ltd. of Japan, acquired from CalMat all
of the outstanding stock of California Portland Cement Company (CPC), a
wholly-owned subsidiary, in exchange for 5,834,000 shares of CalMat's
common stock held by Onoda.
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion should be read in conjunction with the consolidated
financial statements.
RESULTS OF OPERATIONS
The Company's Arizona and New Mexico markets showed continued strength
in 1994. California, after five years of severe recession, appears to be
recovering. However, infrastructure spending on highway projects in California
slowed during 1994 as projects were deferred as a result of state budget
problems, spending on seismic retrofit projects and lack of funding. Asphalt
Division earnings increased in 1994 as higher sales prices, combined with
increased income from soil remediation operations, offset lower sales volume.
Earnings in the Concrete and Aggregates Division improved in 1994 as increases
in ready mixed concrete more than offset decreases in rock and sand. The
Properties Division earnings for 1994 were sharply higher than in 1993, largely
due to increased gains on real estate sales and higher income from landfill
operations. Net income was $18.7 million, or $0.81 per share, for the year
ended December 31, 1994, compared with net income of $9.2 million, or $0.40 per
share, for the year ended December 31, 1993.
Net income in 1993 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
increase in the federal tax rate. Excluding these items, earnings for 1993
would have been $9.0 million, or $0.39 per share. The Company's Arizona and New
Mexico markets 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
Asphalt Division 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 sales
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 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.
CONSOLIDATED REVENUES AND EARNINGS
Total revenues amounted to $376.8 million, $353.5 million and $350.3
million in 1994, 1993 and 1992, respectively. Included in total revenues are
gains from real estate sales of $7.7 million, $2.1 million and $0.5 million in
1994, 1993 and 1992, respectively. Net sales and operating revenues, which
excludes gains on sale of real estate and other income, of $365.2 million in
1994 were up $16.8 million, or 4.8%, compared with $348.4 million in 1993. Net
sales and operating revenues were up $1.1 million in 1993 compared with 1992.
Cost of goods sold as a percentage of net sales and operating revenues declined
to 83.4% in 1994 compared with 85.0% in 1993, mainly due to higher average unit
prices in the Concrete and Aggregates Division and the Asphalt Division. This
percentage was 86.3% in 1992.
Interest expense decreased $2.0 million, or 30.3%, in 1994 compared
with 1993 despite rising interest rates due to a $46.7 million, or 40.4%,
reduction in notes and bonds payable.
Income (loss) before incomes taxes and cumulative effect of change in
accounting principle was $29.6 million in 1994, up from income of $14.9 million
in 1993, which in turn was up from a loss of $17.5 million in 1992. The increase
in 1994 over 1993 consists primarily of improved earnings of the Asphalt
Division and Properties Division of $4.3 million and $8.8 million, respectively.
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
11
<PAGE>
($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 in 1993 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.
Selling, general and administrative expenses increased $0.9 million,
or 2.6%, in 1994 compared with 1993, which in turn was reduced $2.5 million, or
6.9%, from the 1992 level.
The effective tax rate in 1994 was 36.7% compared to 44.3% in 1993 and
40.0% in 1992. Excluding an adjustment to deferred taxes to account for the
increase in the federal tax rate, the effective tax rate in 1993 was 36.7%. The
decrease compared with 1992 is due primarily to the benefit of percentage
depletion.
OPERATING DIVISIONS
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 1994,
aggregates and liquid asphalt represented approximately 40% and 36% of the total
production costs, respectively. The division has plants at 34 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 34 locations, 18 are sites which also have aggregates processing
plants and/or ready mixed concrete plants operated by the Concrete and
Aggregates Division.
Division revenues of $157.1 million were up $3.2 million or 2.1%, from
1993's revenues of $153.9 million, which in turn were up $7.4 million, or 5.1%,
from 1992's revenues of $146.5 million. The increase in 1994 was due to
increased revenues of $4.2 million from soil remediation operations as the
impact of a 3.4% increase in average sales price was more than offset by a
decline in sales volume. The increase in 1993 resulted from higher prices and
higher volume.
Unit sales volume of hot-mix asphalt was 7,539,000 tons in 1994, down
3.7% from 7,830,000 tons in 1993, which in turn was up 4.8% from 7,474,000 tons
sold in 1992. During 1994 volume increases in the Company's Arizona and New
Mexico markets were more than offset by decreases in California due to the
slowdown in infrastructure work.
Gross profit increased by $3.8 million in 1994 as a result of a 3.4%
increase in average sales price and $2.2 million increase in income from soil
remediation operations offset partially by slightly higher unit production costs
and a 3.7% volume decline. In 1993, a slight increase in average sales price and
a 4.8% increase in unit sales volume was more than offset by the higher cost of
purchased liquid asphalt, resulting in a 9.1% decline in gross profit per ton
compared with 1992. Between 7.6% and 14.6% of the division's total gross profit
was from the miscellaneous products and services category, which includes soil
remediation operations, during 1994, 1993 and 1992.
Selling, general and administrative expenses decreased 3.4% in 1994
versus 1993 which in turn had increased 1.3% over 1992. Income from operations
increased to $13.1 million in 1994 from $8.8 million in 1993, which in turn
dropped from $11.0 million in 1992.
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 31 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, 13 are sites which also have
aggregates processing plants.
12
<PAGE>
As shown in the following table, 1994 aggregate sales volumes declined
from 1993 as the slowdown in infrastructure work in California more than offset
increases from the January 17, 1994 Los Angeles earthquake. Volumes in 1993
increased slightly from 1992 due primarily to volumes of the San Francisco Bay
Area operations which were acquired in December, 1992.
CONSTRUCTION AGGREGATES - TONS SOLD
----------------------------------------------------------
(Amounts in thousands) 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales to outside customers 16,878 17,740 17,126
Used in ready mixed concrete 2,635 2,531 3,180
Sales to Asphalt Division 5,077 5,137 4,960
------------------------
Total 24,590 25,408 25,266
========================
</TABLE>
Ready mixed concrete sales volume increased 7.0% to 1,946,000 cubic
yards in 1994 from 1,818,000 cubic yards in 1993, which in turn had decreased
from 2,146,000 cubic yards in 1992.
Overall division revenue of $212.6 million was up 5.7% from 1993's
revenue of $201.1 million, while 1993's revenue was down 2.2% from 1992's
revenue of $205.7 million. The increase in 1994's revenue was due to higher
average sales prices for both aggregates and ready mixed concrete and higher
volumes for ready mixed concrete offset by lower volume for aggregates. 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.
In 1994, the average sales price of aggregates increased 5.7% compared
with 1993. Gross profit for aggregates during 1994 decreased $1.3 million as
higher unit production costs and a 3.2% volume decline more than offset the
increase in average sales price. Gross profit for ready mixed concrete increased
by $3.8 million in 1994 as a 7.4% increase in average sales price and a 7.0%
increase in unit sales volume more than offset a 3.4% increase in unit
production costs.
In 1993, the average sales price of aggregates increased 4.3% compared
with 1992 resulting in a $4.0 million increase in gross profit. The average
sales price of ready mixed concrete increased 4.8% during 1993 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 over 1992.
Selling, general and administrative expenses increased 3.8% in 1994
from the 1993 level, which in turn had decreased 10.4% from 1992. Income from
operations increased slightly to $11.1 million in 1994 from $10.5 million in
1993 which had recovered from 1992's level of $1.3 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 $17.6 million in 1994 compared with $8.8
million in 1993. Included in 1994 are gains from real estate sales of $7.7
million versus $2.1 million in 1993. Included in 1993 is a charge of $1.3
million related to settlements of certain property disputes. Excluding the gains
from real estate sales and the $1.3 million charge, Properties Division income
was $9.9 million in 1994 compared with $8.0 million in 1993. The improved
results primarily reflect increased earnings from landfill operations.
Income from operations was $8.8 million in 1993 compared with $9.0
million in 1992. Included in 1993 are gains from real estate sales of $2.1
million versus $0.5 million in 1992. Also included in 1993 is a charge of $1.3
million related to settlements of certain property disputes. Excluding the
gains from real estate sales and the $1.3 million charge, Properties
13
<PAGE>
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.
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 or fuel spillage
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 1994, the Company charged to income $2.1 million before tax for
environmental remediation costs and made related payments of $2.9 million. At
December 31, 1994, the reserve for environmental remediation costs totaled $2.7
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 five years.
OTHER
The Company has experienced unusually wet weather in California in
January and February, 1995. Also, the Company is in labor negotiations with its
Los Angeles plant operators represented by the Operating Engineers Union, whose
contract expired on September 15, 1994. If the Company is unable to reach a
negotiated settlement, it is likely that a strike would occur. The adverse
weather conditions and a strike, should one occur, will depress volumes and
cause plant efficiencies to suffer.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Cash and cash equivalents decreased $8.5 million in 1994 to a balance
at year end of $2.1 million compared with a balance of $10.6 million at the end
of 1993, which in turn was an increase of $10.6 million from 1992.
Operating activities are the principal source of CalMat's cash flows.
Over the past three years, operating activities have provided $116.0 million in
cash. Net cash of $44.0 million generated from operating activities in 1994 was
essentially unchanged from 1993's $43.9 million, which was $15.8 million more
than in 1992.
Cash used for investing activities totaled $1.7 million in 1994, a
$2.6 million decrease from the 1993 level. The primary reasons for this change
were increased proceeds from sales of real estate of $17.8 million offset by
increased spending on property, plant and equipment of $13.8 million. 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.
Net cash used for financing activities amounted to $50.8 million in
1994, a $21.8 million change from the $29.0 million used for financing
activities during 1993. The primary reason for this change was $25.8 million
more in net payments on notes and bonds payable in 1994 compared with 1993. 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
14
<PAGE>
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.
Although capital expenditures increased in 1994 to $25.8 million from
$12.1 million in 1993, several planned projects were delayed to 1995. Capital
expenditures in 1995 are expected to be in excess of $60.0 million due to cost
savings projects, equipment replacements and expansion projects including the
construction of mining facilities located at Irvine Lake in Orange County,
California which is scheduled to begin production during 1995 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 1995.
During 1994 and 1993, the Company expended $9.3 million and $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 $34.9 million at December 31, 1994, a decrease
of $4.0 million from the 1993 level of $38.9 million. This decrease was due to
the $8.5 million decrease in cash and cash equivalents.
Working capital totaled $38.9 million at December 31, 1993, an
increase of $4.9 million from the 1992 level of $34.0 million. This increase was
due to the $10.6 million increase in cash and cash equivalents.
OTHER
Total consolidated long-term and short-term borrowings at December 31,
1994 of $68.8 million decreased $46.7 million from the balance at December 31,
1993 of $115.5 million which in turn had decreased $16.7 million from the
balance at December 31, 1992. The decreases in debt in both 1994 and 1993 were
paid from cash flows from operations. Debt as a percent of total capitalization
was 16.0% and 24.8%, at December 31, 1994 and 1993, respectively.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The location in this Form 10-K of the Company's Consolidated Financial
Statements, Financial Statement Schedule and Selected Quarterly Financial Data
are set forth in the "Index" on page 16 hereof.
15
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
Report of Independent Accountants.............................. 17
Consolidated Balance Sheets as of December 31, 1994 and 1993... 18
Consolidated Statements of Operations for the
three years ended December 31, 1994, 1993 and 1992............. 19
Consolidated Statements of Cash Flow for the
three years ended December 31, 1994, 1993 and 1992............. 20
Consolidated Statements of Stockholders' Equity
for the three years ended December 31, 1994, 1993 and 1992..... 21
Notes to Consolidated Financial Statements..................... 22
Financial Statement Schedule:
II - Valuation and Qualifying Accounts and Reserves......... 32
Selected Quarterly Financial Data (Unaudited).................. 33
</TABLE>
Schedules other than those listed above are omitted since they are not
applicable, not required, or the information required to be set forth therein is
included in the financial statements, or in notes thereto.
16
<PAGE>
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, 1994 and 1993, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1994, and the related financial
statement schedule as listed in the index on page 16 of this Annual Report on
Form 10-K. These consolidated financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
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 L.L.P.
Los Angeles, California
February 20, 1995
17
<PAGE>
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------
(Amounts in thousands, except share data) 1994 1993
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 2,139 $ 10,596
Trade accounts receivable, less allowance for discounts and
doubtful accounts ($4,254 in 1994 and $4,174 in 1993) 61,353 63,835
Income taxes receivable 714 1,564
Inventories 6,439 5,581
Prepaid expenses 3,322 3,205
Deferred income taxes 9,089 7,499
Installment notes receivable 1,329 2,902
--------- ---------
Total current assets 84,385 95,182
Installment notes receivable and other assets 21,937 21,492
Investment in and advances to affiliates 14,527 14,945
Costs in excess of net assets of subsidiaries 53,793 55,484
Property, plant and equipment:
Land and deposits 168,523 182,484
Buildings, machinery and equipment 476,023 469,185
Construction in progress 19,515 11,208
--------- ---------
664,061 662,877
Less: accumulated depreciation and depletion (265,866) (245,085)
--------- ---------
Property, plant and equipment, net 398,195 417,792
--------- ---------
Total assets $ 572,837 $ 604,895
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 17,909 $ 18,810
Accrued liabilities 29,185 29,293
Notes and bonds payable - current portion 95 5,852
Dividends payable 2,314 2,311
--------- ---------
Total current liabilities 49,503 56,266
Notes and bonds payable - long term portion 68,694 109,635
Other liabilities and deferred credits 21,333 17,724
Deferred income taxes 72,203 70,224
--------- ---------
Total liabilities 211,733 253,849
--------- ---------
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
23,138,769 in 1994 and 23,109,292 in 1993 23,139 23,109
Additional paid-in capital 39,930 39,202
Retained earnings 298,035 288,735
--------- ---------
Total stockholders' equity 361,104 351,046
--------- ---------
Total liabilities and stockholders' equity $ 572,837 $ 604,895
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended
December 31,
-----------------------------
(Amounts in thousands, except per share data) 1994 1993 1992
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Net sales and operating revenues $365,243 $348,413 $347,282
Gains on sale of real estate 7,678 2,081 453
Other income 3,876 3,012 2,525
-------- -------- --------
376,797 353,506 350,260
-------- -------- --------
Costs and expenses:
Cost of products sold and operating expenses 304,721 296,169 299,829
Selling, general and administrative expenses 34,525 33,636 36,141
Interest expense 4,506 6,465 7,073
Other expenses 3,436 2,339 409
Special charges -- -- 26,100
-------- -------- --------
347,188 338,609 369,552
-------- -------- --------
Gains from disposal of assets held for sale -- -- 1,786
-------- -------- --------
Income (loss) before income taxes and cumulative
effect of change in accounting principle 29,609 14,897 (17,506)
Federal and state income taxes 10,881 6,600 (7,002)
-------- -------- --------
Income (loss) before cumulative effect
of change in accounting principle 18,728 8,297 (10,504)
Cumulative effect of change in accounting principle -- 919 (6,000)
-------- -------- --------
Net income (loss) $ 18,728 $ 9,216 $(16,504)
======== ======== ========
Per Share Data
Income (loss) before cumulative effect of
change in accounting principle $ .81 $ .36 $ (.45)
Cumulative effect of change in accounting principle - .04 (.26)
-------- -------- --------
Net income (loss) $ .81 $ .40 $ (.71)
======== ======== ========
Cash dividends per share $ .40 $ .40 $ .64
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
19
<PAGE>
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------
(Amounts in thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income (loss) $ 18,728 $ 9,216 $(16,504)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation, cost depletion and amortization 29,929 31,953 30,210
Cumulative effect of change in accounting principle -- (919) 6,000
Special charges -- -- 26,100
Gains from disposal of assets held for sale -- -- (1,786)
Gains from sale of real estate (7,678) (2,081) (453)
Gain on disposal of property, plant and equipment (291) (379) (3)
Deferred tax expense 2,075 2,184 (7,144)
Changes in operating assets and liabilities
Trade accounts, net 3,690 (9,552) 3,340
Inventories, prepaid expenses and deferred taxes (5,103) 2,094 (1,154)
Accounts payable and accrued liabilities 1,984 7,906 (3,368)
Federal and state income taxes 850 3,349 (6,658)
Other (174) 111 (499)
-------- -------- --------
Cash provided by operating activities 44,010 43,882 28,081
-------- -------- --------
Investing Activities:
Purchase of property, plant and equipment (25,836) (12,063) (32,732)
Proceeds from sale of property, plant and equipment 773 1,922 640
Proceeds from sale of real estate 20,957 3,188 351
Proceeds from sale of properties included in assets held for sale -- -- 2,141
Receipts on installment notes receivable 2,397 1,638 1,777
Investment in and advances to affiliates 52 (214) (189)
Business acquired -- -- (34,111)
Other investing activities -- 1,275 (472)
-------- -------- ------
Cash used for investing activities (1,657) (4,254) (62,595)
-------- -------- --------
Financing Activities:
Stock options exercised 551 335 546
Notes payable to banks (21,759) (50,667) 39,000
Proceeds from senior notes -- 35,000 --
Principal payments on notes and bonds payable (20,721) (994) (46)
Payment of cash dividends (9,253) (10,624) (14,833)
Common stock repurchases -- -- (2,214)
Hedge costs and other loan fees, net 372 (2,082) --
-------- -------- ------
Cash provided by (used for) financing activities (50,810) (29,032) 22,453
-------- -------- --------
Increase (decrease) in cash and cash equivalents (8,457) 10,596 (12,061)
Balance, beginning of period 10,596 -- 12,061
-------- -------- ------
Balance, end of period $ 2,139 $ 10,596 $ --
========= ======== =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 6,827 $ 7,103 $ 7,186
Income taxes 10,602 3,844 9,910
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
For the years ended
December 31, 1994, 1993 and 1992
---------------------------------------------
Additional Total
Common Paid-In Retained Stockholders'
(Amounts in thousands) Stock Capital Earnings Equity
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
Net income for 1994 -- -- 18,728 18,728
Common stock repurchased (8) (12) (172) (192)
Stock options exercised 38 740 -- 778
Cash dividends declared -- -- (9,256) (9,256)
------- ------- -------- --------
Balance, December 31, 1994 $23,139 $39,930 $298,035 $361,104
======= ======= ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
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 $9.4 million and $7.7 million at December 31, 1994 and 1993,
respectively. The Company periodically assesses whether there has been a
permanent impairment in the value of goodwill and other intangible assets by
considering factors such as expected future operating income, current operating
results, trends and prospects, as well as the effects of demand, competition,
and other economic factors. Management believes no impairment has occurred.
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 $2.7 million and $3.5
million at December 31, 1994 and December 31, 1993, respectively.
SELF-INSURANCE: The Company is self-insured up to certain levels for workers'
compensation, automobile liability and general liability. The Company is also
self-insured for health care claims for eligible active and retired employees.
The Company accrues its estimated costs monthly in connection with its portion
of insurance losses/claims. Claims paid by the Company are charged against the
reserve. Additionally, the Company maintains a reserve for claims incurred but
not reported based on actuarially estimated costs.
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).
RECLASSIFICATION: Beginning in 1994, certain expenses which were previously
classified as selling, general and administrative expenses have been
reclassified to cost of products sold and operating expenses to conform with
current industry practices. Such expenses amounted to $8.0, $7.9 and $8.1 in
1994, 1993, and 1992, respectively. All financial information has been restated
to conform with this year's presentation.
Certain other prior year amounts have been reclassified to conform
with the current year's presentation.
22
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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>
(Amounts in thousands) 1994 1993
-----------------------------------------------------------
<S> <C> <C>
Payroll, vacation and other benefits $ 7,418 $ 7,687
Workers' compensation 2,946 3,229
Profit sharing 3,891 3,825
Other 14,930 14,552
------- -------
$29,185 $29,293
======= =======
</TABLE>
NOTE 4: FEDERAL AND STATE TAXES
Income (loss) before income taxes and the related income tax expense (benefit)
are as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1994 1993 1992
------------------------------------------------------------------------
<S> <C> <C> <C>
Income (Loss) Before Income Taxes and
Cumulative Effect of Change in
Accounting Principle $29,609 $14,897 $(17,506)
======= ======= ========
Income Tax Expense (Benefit) $10,881 $ 6,600 $ (7,002)
======= ======= ========
Income tax expense (benefit) consists of the following:
Federal Income Tax:
Currently payable (receivable) $ 6,794 $ 3,252 $ (363)
Deferred 1,792 2,052 (5,219)
------- ------- -------
8,586 5,304 (5,582)
------- ------- -------
State Income Tax:
Currently payable 2,012 1,164 505
Deferred 283 132 (1,925)
------- ------- -------
2,295 1,296 (1,420)
------- ------- -------
$10,881 $ 6,600 $(7,002)
======= ======= =======
</TABLE>
23
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax liabilities (assets) are comprised of the following at December 31:
<TABLE>
<CAPTION>
1994 1993
--------------------
<S> <C> <C>
Depreciation $ 30,718 $ 31,399
Real estate exchanges 27,191 25,161
Purchase accounting basis differences 14,474 14,958
Depletion and other land basis adjustments 6,798 6,995
Other 5,627 5,117
-------- --------
Gross deferred tax liabilities 84,808 83,630
-------- --------
Postretirement benefits (4,462) (4,448)
Real estate impairment (6,230) (7,194)
Other (11,718) (10,524)
-------- --------
Gross deferred tax assets (22,410) (22,166)
Valuation allowance 716 1,261
-------- --------
$63,114 $ 62,725
======== ========
</TABLE>
A reconciliation of the provision for income taxes to the federal statutory
income tax rate is as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax expense (benefit) at statutory rates $ 10,363 $ 5,065 $(5,952)
Less effect of:
Federal tax benefit (expense) of state income tax 785 392 (577)
Percentage depletion in excess of cost depletion 1,266 1,232 1,071
Goodwill and other amortization (461) (449) (616)
Enacted rate change -- (1,127) --
Tax credits -- 267 314
Other accruals 388 31 333
Miscellaneous (201) (585) (895)
-------- -------- --------
Reported federal income tax expense (benefit) 8,586 5,304 (5,582)
State income tax expense (benefit) 2,295 1,296 (1,420)
-------- -------- --------
$10,881 $ 6,600 $ (7,002)
======== ======== ========
</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 net property, plant and equipment and
deferred taxes by $13.5 million. 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%.
24
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 1994, the Company had alternative minimum tax credit
carryforwards of approximately $0.5 million available to offset regular tax in
future years.
The Company's federal consolidated income tax returns have been
examined and settlements have been reached for all years through 1989, except
for certain assessments made for the years 1986 and 1987 which are presently
being negotiated at the appellate level. The Company believes that adequate
provision has been made for possible assessments of additional taxes.
NOTE 5: NOTES AND BONDS PAYABLE
Notes and bonds payable consist of the following at December 31:
<TABLE>
<CAPTION>
(Amounts in thousands) 1994 1993
-------------------------------------------------------------------
<S> <C> <C>
Notes payable to banks $32,250 $ 62,333
Senior notes 35,000 35,000
Municipal improvement bonds 1,539 2,647
Mortgages and other notes payable -- 15,507
------- --------
Total 68,789 115,487
Less current portion 95 5,852
------- --------
Long-term portion $68,694 $109,635
======= ========
</TABLE>
At December 31, 1994, the Company had a formal committed revolving
credit facility with a group of banks totaling $125.0 million which will expire
in 1997 and on which the Company pays facility fees of 0.165%.
Short-term bank borrowings made under this credit facility and
included in notes payable to banks were $32.3 million and $54.0 million at
December 31, 1994 and 1993, respectively, and bore rates equal to or less than
the prime bank lending rate which was 8.5% and 6.0% at December 31, 1994 and
1993, respectively. Committed credit available under the revolving credit
facility 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 senior notes bear interest at 6.7% and require principal payments
beginning in 1997 through 2000.
The credit agreements contain restrictions with respect to the
incurring of additional debt, creation of liens and guarantees, and maintenance
of minimum net worth and financial ratios.
Maturities of notes and bonds payable during the next five years are
as follows: 1995, $0.1 million; 1996, $0.1 million; 1997, $41.1 million; 1998,
$8.8 million; and 1999, $8.8 million.
25
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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>
1994 1993 1992
-----------------------------------
<S> <C> <C> <C>
Shares
Outstanding at beginning of year 1,679,596 1,771,766 1,565,616
Granted 328,000 412,675 307,600
Exercised (37,610) (24,912) (81,450)
Forfeited (70,600) (479,933) (20,000)
--------- --------- ---------
Outstanding at end of year 1,899,386 1,679,596 1,771,766
========= ========= =========
Available for future options 762,214 1,019,834 52,576
========= ========= =========
Exercisable at end of year 1,081,946 882,160 986,650
========= ========= =========
</TABLE>
Prices per share of common stock under option range from $12.75 to
$30.50 at December 31, 1994. Options expire from 1995 to 2004. Prices per share
of options exercised range from $12.75 to $22.50 in 1994, $7.095 to $19.375 in
1993 and $7.095 to $22.50 in 1992. 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 the grant date. In 1994, 220 options expired. No options
expired in 1993 or 1992.
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 $.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 1994, 1993 and 1992 totaled
23,224,000, 23,117,000 and 23,242,000, respectively.
NOTE 8: FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company enters into
interest rate swap agreements to manage its interest rate risk. Interest rate
swaps allow the Company 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 counterparty fails to meet the terms of an agreement, the Company's
exposure is limited to the interest rate differential.
26
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company had an outstanding interest rate swap agreement that
effectively converted $25.0 million of variable rate debt to fixed rate
borrowings at December 31, 1994 and 1993. This agreement expires in 1995.
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of periodic temporary
investments of excess cash and trade receivables. The Company places its
temporary excess cash investments in high quality short term money market
instruments through several 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 carrying values of 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 are as follows:
<TABLE>
<CAPTION>
1994 1995
---- ----
(Amounts in thousands) Carrying Amount Fair Value Carrying Amount Fair Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes receivable $ 5,352 $ 4,768 $ 6,459 $ 6,285
Notes and bonds payable 68,789 66,400 115,487 111,619
Interest rate swaps-unrealized gain (loss) -- 119 -- (518)
</TABLE>
The methods and assumptions used to estimate the fair value of each class of
financial instruments are as follows:
Notes receivable: The fair value has been estimated using the expected future
cash flows discounted at market interest rates.
Notes and bonds payable: The fair value 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 values are based on market value 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 plans. 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 employees. Contributions to all retirement plans
charged to income totaled $8.2 million in 1994, $8.0 million in 1993 and $7.6
million in 1992.
27
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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:
<TABLE>
<CAPTION>
(Amounts in thousands) 1994 1993 1992
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accumulated Postretirement Benefit Obligation
Retirees $ 5,152 $ 4,904 $ 5,255
Fully eligible active plan participants 748 894 1,202
Other active plan participants 1,006 1,022 1,160
------- ------- -------
6,906 6,820 7,617
Plan assets at fair value -- -- --
------- ------- -------
Accumulated Postretirement Benefit Obligation in excess of plan assets 6,906 6,820 7,617
------- ------- -------
Unrecognized prior service cost 1,708 1,888 2,068
Unrecognized net gain 2,041 2,038 913
------- ------- -------
Accrued postretirement benefit cost at December 31 $10,655 $10,746 $10,598
======= ======= =======
</TABLE>
The net periodic postretirement benefit cost for 1994, 1993 and 1992 included
the following components:
<TABLE>
<CAPTION>
(Amounts in thousands) 1994 1993 1992
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits attributed to service during the period $ 230 $ 289 $ 462
Interest cost on the Accumulated Postretirement Benefit Obligation 452 511 597
Net amortization (293) (192) --
Full recognition of transition obligation -- -- 10,000
----- ----- -------
Net periodic postretirement benefit cost $ 389 $ 608 $11,059
===== ===== =======
</TABLE>
For measurement purposes, an 11.7% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1995; 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 was 8.0% in 1994 and 7.0% in 1993
and 1992.
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, 1994 by $0.7 million and
the aggregate of 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.
28
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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 outstanding totaling approximately
$32.0 million at December 31, 1994, which guarantee various insurance and
financing activities.
The Company has retained certain self-insurance risks with respect to
losses for workers' compensation, automobile and general liability and certain
health care claims.
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 in labor negotiations with its Los Angeles plant
operators represented by the Operating Engineers Union, whose contract expired
on September 15, 1994. If the Company is unable to reach a negotiated
settlement, it is likely that a strike would occur which would depress volumes
and cause plant efficiencies to suffer.
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 have a material adverse effect on the Company's results of operations,
cash flow or financial position.
29
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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(R), an asphalt surface sealer, and is a distributor of
paving reinforcement fabric. The division operates asphalt plants at 34
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 34 locations, 18 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 31
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, 13 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.
30
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Business segment information for the years ended December 31, is as
follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1994 1993 1992
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Asphalt $157,057 $153,862 $146,457
Concrete and Aggregates 212,599 201,117 205,650
Properties - Operations 24,403 21,560 21,585
Properties - Real estate sales 7,678 2,081 453
Corporate and other 3,876 3,012 2,525
Intersegment sales (28,816) (28,126) (26,410)
-------- -------- --------
Total $376,797 $353,506 $350,260
======== ======== ========
Income before taxes:
Asphalt $ 13,079 $ 8,790 $ 10,974
Concrete and Aggregates 11,133 10,524 1,267
Properties - Operations 9,900 6,734 8,543
Properties - Real estate sales 7,678 2,081 453
Corporate and unallocated expenses, net (14,621) (14,434) (15,626)
Other income 2,440 1,202 1,197
Special charges -- -- (26,100)
Gains from disposal of assets held for sale -- -- 1,786
-------- -------- --------
Total $ 29,609 $ 14,897 $(17,506)
======== ======== ========
Identifiable assets (as of December 31):
Asphalt $143,103 $149,524 $141,763
Concrete and Aggregates 276,734 287,943 302,226
Properties 125,442 131,802 132,477
Corporate and other 27,558 35,626 20,774
-------- -------- --------
Total $572,837 $604,895 $597,240
======== ======== ========
Depreciation, cost depletion and amortization:
Asphalt $ 7,450 $ 7,435 $ 6,413
Concrete and Aggregates 17,950 19,562 18,890
Properties 3,683 3,993 4,124
Corporate and other 846 963 783
------- -------- --------
Total $ 29,929 $ 31,953 $ 30,210
======== ======== ========
Capital expenditures and business expansion:
Asphalt $ 3,205 $ 3,190 $ 6,991
Concrete and Aggregates 13,976 4,051 51,780
Properties 8,025 4,352 6,763
Corporate and other 630 1,161 1,672
-------- -------- --------
Total $ 25,836 $ 12,754 $ 67,206
======== ======== ========
</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.
31
<PAGE>
CALMAT CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E
------------------------------------------------------------------------------------------------------------------------------
Balance at Additions Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
----------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1994:
Reserves deducted from assets to which they apply:
Allowance for doubtful trade receivables............... $3,854 $3,325 $ -- $3,273/(a)/ $3,906
Allowance for cash discounts............................ 320 3,476 -- 3,448/(b)/ 348
Allowance for doubtful notes receivable................. 897 384 -- 343/(a)/ 938
Reserves included in liabilities:
Environmental remediation............................... 3,500 2,069 -- 2,855/(c)/ 2,714
------ ------ -------- ------ ------
Total................................................. $8,571 $9,254 $ -- $9,919 $7,906
====== ====== ======== ====== ======
DECEMBER 31, 1993:
Reserves deducted from assets to which they apply:
Allowance for doubtful trade receivables................ $2,656 $2,966 $ -- $1,768/(a)/ $3,854
Allowance for cash discounts............................ 607 2,802 -- 3,089/(b)/ 320
Allowance for doubtful notes receivable................. 1,300 161 -- 564/(a)/ 897
Reserves included in liabilities:
Environmental remediation............................... 2,739 1,029 -- 268/(c)/ 3,500
------ ------ -------- ------ ------
Total................................................. $7,302 $6,958 $ -- $5,689 $8,571
====== ====== ======== ====== ======
DECEMBER 31, 1992:
Reserves deducted from assets to which they apply:
Allowance for doubtful trade receivables................ $2,673 $1,814 $ -- $1,831/(a)/ $2,656
Allowance for cash discounts............................ 567 3,265 -- 3,225/(b)/ 607
Allowance for doubtful notes receivable................. -- 1,300 -- -- 1,300
Reserves included in liabilities:
Environmental remediation............................... 2,364 1,276 -- 901/(c)/ 2,739
------ ------ -------- ------ ------
Total $5,604 $7,655 $ -- $5,957 $7,302
====== ====== ======== ====== ======
</TABLE>
-----------------------
Notes:
/(a)/ Write offs of uncollectible accounts, less recoveries.
/(b)/ Cash discounts allowed.
/(c)/ Payments made.
32
<PAGE>
CALMAT CO AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1994 Quarter Ended
--------------------------------------------------------------------------------------------------------------------------------
(Unaudited; Amounts in thousands, except per share data) March 31 June 30 Sept. 30 Dec. 31 Year
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $79,515 $93,651 $101,867 $101,764 $376,797
Gross profit 11,596 18,395 21,250 20,835 72,076
Net income 1,453 5,194 6,297 5,784 18,728
Net income per share/(d)/ .06 .22 .27 .25 .81
<CAPTION>
1993 Quarter Ended
--------------------------------------------------------------------------------------------------------------------------------
(Unaudited; Amounts in thousands, except per share data) March 31 June 30 Sept. 30 Dec. 31 Year
--------------------------------------------------------------------------------------------------------------------------------
Total revenues $62,042 $96,444 $100,432 $94,588 $353,506
Gross profit/(c)/ 4,636 20,002 19,134 13,565 57,337
Net income (loss) (2,503)/(a)/ 5,620 4,521 1,578/(b)/ 9,216
Net income (loss) per share/(d)/ (.11)/(a)/ .24 .20 .07/(b)/ .40
</TABLE>
/(a)/ Reflects the cumulative effect to January 1, 1993 to adopt the new
accounting standard for income taxes of $0.9 million, or $0.04 per share.
/(b)/ Includes charge of $0.8 million, or $0.03 per share, related to
anticipated settlements of certain property disputes.
/(c)/ Reflects the restatement of certain selling, general and administrative
expenses to cost of products sold and operating expenses. See Note 1 to
the Consolidated Financial Statements.
/(d)/ The sum of the quarterly net income per share amounts may not equal the
year because quarterly and annual figures are required to be
independently calculated.
33
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Except for information as to identification and business experience of
executive officers which is set forth in Part I of this report, the information
called for by Item 10 is incorporated herein by reference to the information
included under the caption "Election of Directors" on pages 3 through 5 of the
Company's Proxy Statement dated March 16, 1995, for the April 26, 1995, Annual
Meeting of Stockholders ("Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information called for by Item 11 is incorporated herein by
reference to the information included under the caption "Executive Compensation"
on pages 8 through 15 in the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this Item 12 is incorporated herein by
reference to the information included under the captions "Stock Ownership of
Certain Beneficial Owners" and "Election of Directors" on pages 2 through 5 of
the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item 13 is incorporated herein by
reference to the information included under the caption "Election of Directors"
on pages 3 through 5 of the Company's Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report:
(1) Financial Statements:
See Index to Consolidated Financial Statements and Financial
Statement Schedule on page 16 of this Annual Report on Form
10-K.
(2) Financial Statement Schedule:
See Index to Consolidated Financial Statements and Financial
Statement Schedule on page 16 of this Annual Report on Form
10-K.
(3) Exhibits:
The following exhibits are included as part of the Company's
1994 Annual Report on Form 10-K as required by Item 601 of
Regulation S-K. The exhibits identified by asterisks are the
management contracts and compensatory plans or arrangements
required to be filed as exhibits to this Annual Report on
Form 10-K. Stockholders may obtain copies of the exhibits not
presented herein upon written request to: Secretary, CalMat
Co., 3200 San Fernando Road, Los Angeles, CA 90065.
34
<PAGE>
Exhibit 3.1: CalMat Co. Certificate of Incorporation, as amended,
filed as Exhibit 3.1 to the Company's 1987 Annual
Report on Form 10-K, is incorporated herein by
reference.
Exhibit 3.2: Certificate of Amendment of Certificate of
Incorporation, filed May 20, 1992, with Delaware
Secretary of State, filed as Exhibit 3.2 to the
Company's 1992 Annual Report on Form 10-K, is
incorporated herein by reference.
Exhibit 3.3: CalMat Co. By-Laws, filed as Exhibit 3.3 to the
Company's 1993 Annual Report on Form 10-K, is
incorporated herein by reference.
Exhibit 4.1: Rights Agreement, dated as of September 22, 1987,
between CalMat Co. and Security Pacific National Bank,
filed as Exhibit 1 to the Company's Form 8-K dated
October 5, 1987, is incorporated herein by reference.
Exhibit 4.2: First Amendment to Rights Agreement, dated as of
October 26, 1992, between CalMat Co. and Bank of
America, N.T.&S.A., formerly known as Security Pacific
National Bank, filed as Exhibit 4.2 to the Company's
1992 Annual Report on Form 10-K, is incorporated herein
by reference.
Exhibit 10.1: First Amended and Restated Credit Agreement dated as of
June 30, 1994, among CalMat Co., Bank of America
National Trust and Savings Association, as Agent, and
The Other Financial Institution Parties Hereto,
Arranged by BA Securities, Inc., filed as Exhibit 10.1
to Registrant's Report on Form 10-Q for the Quarterly
Period Ended June 30, 1994, is incorporated herein by
reference.
Exhibit 10.2: Note Purchase Agreement dated as of July 23, 1993
between CalMat Co. and Metropolitan Life Insurance
Company et al., filed as Exhibit 10.11 to the Company's
1993 Annual Report on Form 10-K, is incorporated herein
by reference.
Exhibit 10.3: Interest Rate Swap Agreement dated as of December 10,
1988, by and between Security Pacific National Bank and
CalMat Co.
*Exhibit 10.4: Amended Employment Agreement between the Company and A.
Frederick Gerstell, filed as Exhibit 10.2 to the
Company's 1990 Annual Report on Form 10-K, is
incorporated herein by reference.
*Exhibit 10.5: Supplemental Executive Retirement Agreement between the
Company and A. Frederick Gerstell, filed as Exhibit
10.3 to the Company's 1990 Annual Report on Form 10-K,
is incorporated herein by reference.
*Exhibit 10.6: Amended and Restated Trust Agreement dated April 13,
1993, by and between CalMat Co. and Wachovia Bank and
Trust Company.
*Exhibit 10.7: Amended Employment Agreement between the Company and
Scott J Wilcott, filed as Exhibit 10.6 to the Company's
1990 Annual Report on Form 10-K, is incorporated herein
by reference.
35
<PAGE>
*Exhibit 10.8: Amended Employment Agreement between the Company and Paul
Stanford, filed as Exhibit 10.9 to the Company's 1992
Annual Report on Form 10-K, is incorporated herein by
reference.
*Exhibit 10.9: Letter Agreement Regarding Employment between the Company
and Delbert H. Tanner, executed May 27, 1993, filed as
Exhibit 10.16 to the Company's 1993 Annual Report on Form
10-K, is incorporated herein by reference.
*Exhibit 10.10: Letter Agreement Regarding Employment between the Company
and H. James Gallagher, executed August 12, 1993, filed as
Exhibit 10.17 to the Company's 1993 Annual Report on Form
10-K, is incorporated herein by reference.
*Exhibit 10.11: Thrift and Profit Sharing Retirement Plan and Money
Purchase Pension Plan for Employees of CalMat Co., dated
January 1, 1989, filed as Exhibit 10.8 to the Company's
1989 Annual Report on Form 10-K, is incorporated herein by
reference.
*Exhibit 10.12: Trust Agreement pursuant to the Thrift and Profit Sharing
Retirement Plan and the Money Purchase Pension Plan for
Employees of CalMat Co., dated October 24, 1989, filed as
Exhibit 10.9 to the Company's 1989 Annual Report on
Form 10-K, is incorporated herein by reference.
*Exhibit 10.13: Stock Option Plan for Executive and Key Employees of CalMat
Co., filed as Exhibit 4 to the Company's Form S-8
Registration Statement (#33-8770) effective October 6,
1986, is incorporated herein by reference.
*Exhibit 10.14: 1987 Stock Option Plan for Executive and Key Employees of
CalMat Co., as amended, filed as Exhibit 4 to the Company's
Form S-8 Registration Statement (#33-18760) effective
December 19, 1987, is incorporated herein by reference.
*Exhibit 10.15: Non-qualified Deferred Compensation Plan for Selected
Executives of CalMat Co, filed as Exhibit 10.12 to the
Company's 1990 Annual Report on Form 10-K, is incorporated
herein by reference.
*Exhibit 10.16: 1990 Stock Option Plan for Executive and Key Employees of
CalMat Co., filed as Exhibit 4.1 to the Company's Form S-8
Registration Statement (#33-43558) effective October 28,
1991, is incorporated herein by reference.
*Exhibit 10.17: Amended and Restated 1993 Stock Option Plan for Officers,
Directors and Key Employees of CalMat Co., filed as Exhibit
"A" to the Company's Definitive Proxy Statement filed with
the Commission on March 16, 1994, and mailed to the
Company's stockholders on March 17, 1994, is incorporated
herein by reference.
Exhibit 21.1: Subsidiaries of the Company.
Exhibit 22.1: The Company's definitive Proxy Statement, filed with the
Commission on March 16, 1995, and mailed to the Company's
stockholders on March 16, 1995, is incorporated herein by
reference.
36
<PAGE>
Exhibit 23.1: Consent of Coopers & Lybrand L.L.P., certified public
accountants, to incorporation by reference in the
Registration Statements on Form S-8 (#33-8770, #33-18760,
#33-43558 and #33-56301) and the related prospectuses
pertaining to the Stock Option Plan for Executive and Key
Employees of CalMat Co., the 1987 Stock Option Plan for
Executive and Key Employees of CalMat Co., the 1990 Stock
Option Plan for Executive and Key Employees of CalMat Co.,
and the Amended and Restated 1993 Stock Option Plan for
Officers, Directors and Key Employees of CalMat Co.,
respectively, is on page 40 of this Annual Report on
Form 10-K.
Exhibit 27: Financial Data Schedule.
(b) Reports on Form 8-K:
There were no Form 8-K reports filed by the Company during the
fourth quarter of 1994.
37
<PAGE>
CALMAT CO.
PROPERTY OWNED AND LEASED
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
ACREAGE/(a)/
------------------------------------
JOINT
OWNED LEASED VENTURES TOTAL
------- ------ -------- ------
<S> <C> <C> <C> <C>
CONCRETE AND AGGREGATES: /(b)/
Production and sales property................................ 6,973 5,498 12,471
Reserve property held for future production/not zoned........ 3,565 1,115 4,680
Fully depleted property...................................... 416 416
Reserve property held for future production/zoned............ 339 339
Joint ventures, partnerships, partially owned subsidiaries... 757 757
------ ----- --- ------
Total Concrete and Aggregates Division.............. 11,293 6,613 757 18,663
ASPHALT:
Production and sales property................................ 559 431 990
Property leased to others/miscellaneous property............. 5 3 8
------ ----- --- ------
Total Asphalt Division.............................. 564 434 998
PROPERTIES:
Developable.................................................. 1,025 13 1,038
Improved property/finished lots.............................. 54 3 57
Improved property/fully developed............................ 80 2 82
Landfill/permitted........................................... 176 176
Public storage............................................... 48 48
Property leased to others.................................... 103 8 111
Miscellaneous properties/(c)/................................ 12,119 12,119
------ ----- --- ------
Total Properties Division........................... 13,605 13 13 13,631
Total All Divisions................................. 25,462 7,060 770 33,292
====== ===== === ======
</TABLE>
--------------------------
/(a)/ The Company's continuing program of evaluating the best use of property
may result in reclassification of properties between categories from time
to time.
/(b)/ Certain land in the Concrete and Aggregates Division is leased on a
short-term basis as undeveloped property and the revenues generated are
reported in the Properties Division.
/(c)/ Consists of numerous parcels which have limited access and of which
approximately 59% are located in the Mojave Desert, Kern County,
California.
38
<PAGE>
CALMAT CO.
SCHEDULE OF ESTIMATED AGGREGATES RESERVES
AS OF DECEMBER 31, 1994
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
TONS OWNED TONS LEASED TOTAL TONS
---------- ----------- ----------
<S> <C> <C> <C>
Aggregates Reserves 1,053.6 736.1 1,789.7
</TABLE>
39
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
CalMat Co. and subsidiaries on Form S-8 (File Numbers 33-8770, 33-18760, 33-
43558 and 33-56301) of our report dated February 20, 1995, on our audits of the
consolidated financial statements and the financial statement schedule of CalMat
Co. and subsidiaries as of December 31, 1994 and 1993, and for the years ended
December 31, 1994, 1993 and 1992, which report is included in this Annual Report
on Form 10-K.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 24, 1995
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CalMat Co.
By: /s/ A. FREDERICK GERSTELL
---------------------------------
A. Frederick Gerstell
Chairman of the Board, President,
Chief Executive Officer and
Chief Operating Officer
March 24, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
---------------------------------------- ------------------------- --------------
<S> <C> <C>
/s/ A. FREDERICK GERSTELL Chairman of the Board, March 24, 1995
---------------------------------------- President, Chief
A. Frederick Gerstell Executive Officer, Chief
Operating Officer and
Director
/s/ H. JAMES GALLAGHER Chief Financial Officer March 24, 1995
----------------------------------------
H. James Gallagher
/s/ EDWARD J. KELLY Chief Accounting Officer March 24, 1995
----------------------------------------
Edward J. Kelly
/s/ JOHN C. ARGUE Director March 24, 1995
----------------------------------------
John C. Argue
/s/ ARTHUR BROWN Director March 24, 1995
----------------------------------------
Arthur Brown
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
---------------------------------------- ------------------------- --------------
<S> <C> <C>
/s/ HARRY M. CONGER Director March 24, 1995
----------------------------------------
Harry M. Conger
/s/ RAYBURN S. DEZEMBER Director March 24, 1995
----------------------------------------
Rayburn S. Dezember
/s/ RICHARD A. GRANT, JR. Director March 24, 1995
----------------------------------------
Richard A. Grant, Jr.
/s/ GROVER R. HEYLER Director March 24, 1995
----------------------------------------
Grover R. Heyler
/s/ WILLIAM T. HUSTON Director March 24, 1995
----------------------------------------
William T. Huston
/s/ WILLIAM JENKINS Director March 24, 1995
----------------------------------------
William Jenkins
/s/ EDWARD A. LANDRY Director March 24, 1995
----------------------------------------
Edward A. Landry
/s/ THOMAS L. LEE Director March 24, 1995
----------------------------------------
Thomas L. Lee
/s/ THOMAS M. LINDEN Director March 24, 1995
----------------------------------------
Thomas M. Linden
/s/ STUART T. PEELER Director March 24, 1995
----------------------------------------
Stuart T. Peeler
</TABLE>
42
<PAGE>
ISDA
International Swap Dealers Association, Inc.
INTEREST RATE
SWAP AGREEMENT
Dated as of December 10, 1988
SECURITY PACIFIC NATIONAL BANK and CALMAT CO.
have entered and/or anticipate entering into one or more transactions (each a
"Rate Swap Transaction"). The parties agree that each Rate Swap Transaction
will be governed by the terms and conditions set forth in this document (which
includes the schedule (the "Schedule") and in the documents (each a
"Confirmation") exchanged between the parties confirming such Rate Swap
Transactions. Each Confirmation constitutes a supplement to and forms part of
this document and will be read and construed as one with this document, so that
this document and all the Confirmations constitute a single agreement between
the parties (collectively referred to as this "Agreement"). The parties
acknowledge that all Rate Swap Transactions are entered into in reliance on the
fact that this document and all Confirmations will form a single agreement
between the paries, it being understood that the parties would not otherwise
enter into any Rate Swap Transactions.
Accordingly, the parties agree as follows:
1. Interpretations; Code of SWAPS
(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Agreement.
(b) Code of SWAPS. This Agreement and each Rate Swap Transaction are subject
to the Code of Standard Wording, Assumptions and Provisions for Swaps, 1986
Edition (as published by the International Swap Dealers Association, Inc.) (the
"Code"), and will be governed in all relevant respects by the provisions set
forth in the Code, without regard to any amendments to the Code subsequent to
the date hereof. The provisions of the Code are incorporated by reference in,
and shall be deemed to be a part of, this document and each Confirmation, as if
set forth in full in
1
<PAGE>
this document or in that Confirmation. This Agreement constitutes a Rate Swap
Agreement as that term used in the Code.
(c) Inconsistency. In the event of any inconsistency between the provisions of
this document and the Code, this document will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this document, such
Confirmation will prevail for the purpose of the relevant Rate Swap Transaction.
2. Payments
(a) Obligations and Conditions. Subject to the payment basis specified below
and the other terms and conditions set forth or incorporated by reference in
this Agreement (including without limitation Article 10 of the Code) or in a
Confirmation, with respect to each Rate Swap Transaction, each party will make
each payment specified in that Confirmation as being payable by it by transfer
of the relevant amount in freely transferable funds to the account of the other
party specified for that Rate Swap Transaction. Unless otherwise provided in a
Confirmation, the Fixed Amount or Floating Amount applicable to a Payment Date
will be the Fixed Amount or Floating Amount calculated with reference to the
Calculation Period ending on, but excluding, the Period End Date (or in the case
of the Final Calculation Period, the Termination Date) that coincides with, or
corresponds to, that Payment Date.
(b) Change of Account. Either party may change its account to another account
in the country originally specified, by giving notice to the other party at
least five days prior to a Payment Date for which such change applies.
(c) Netting. The obligations of the parties under this Section 2 will be
calculated and payable on the basis of Net Payments. The parties may, if so
specified in the Schedule or otherwise, apply Net Payments -- Corresponding
Payment Dates to their respective obligations under this Section 2 with effect
from the date so specified; provided that, in such case, Net Payments --
Corresponding Payment Dates will apply separately to each Office through which a
party makes and receives payments as set forth in Section 10.
3. Representations
2
<PAGE>
The representations of the parties (other than those relating to tax matters, if
any) are specified below and will be deemed to be repeated at the times set
forth in Section 15.1 of the Code:
(a) Basic Representations;
(b) Absence of Certain Events, which in the case of an event or condition that
has occurred, is continuing;
(c) Absence of Litigation; and
(d) Accuracy of Specified Information.
4. Agreements
The agreements of the parties (other than Tax Covenants, if any) are specified
below:
(a) Each party agrees to deliver to the other party any documents specified in
the Schedule or a Confirmation as soon as practicable or by the date specified
in the Schedule or such Confirmation;
(b) Each party agrees to Maintain Authorizations and Comply with Laws, but in
the case of Section 16.1(f)(i) of the Code only to the extent that each party
agrees to use all reasonable efforts; and
(c) Each party agrees to pay any stamp, registration, documentation or similar
tax ("Stamp Tax") levied or imposed upon it or in respect of its execution or
performance of this Agreement by a jurisdiction in which it is incorporated,
organized, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction) and will indemnify the other party against any
Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. Events of Default and Termination Events
The events of Default and Termination Events with respect to each party are
specified below. The occurrence of any Event of Default or Termination Event
with respect to a Specified Entity of a party
3
<PAGE>
will constitute as Event of Default or Termination Event with respect to such
party.
(a) Events of Default.
(i) Failure to Pay following a Cure Period of three Business Days After Notice;
(ii) Breach of Covenant following a Cure Period of thirty days After Notice;
(iii) Credit Support Default which in the case of Section 11.7(b)(i) of the
Code is continuing after any applicable grace period has elapsed;
(iv) Misrepresentation;
(v) Default Under Specified Swaps;
(vi) If Cross-Default is specified in the Schedule as applying to the party,
such term will mean: (1) the occurrence or existence of an event or condition in
respect of such party or any applicable Specified Entity under one or more
agreements or instruments relating to Specified Indebtedness of such party or
any such Specified Entity in an aggregate amount of not less than the Threshold
Amount (as specified in the Schedule) which has resulted in such Specified
Indebtedness becoming, or becoming capable at such time of being declared, due
and payable under such agreements or instruments before it would otherwise have
been due and payable; or (2) the failure by such party or any such Specified
Entity to make one or more payments at maturity in an aggregate amount of not
less than the Threshold Amount under such agreements or instruments (after
giving effect to any applicable grace period);
(vii) Bankruptcy, which will mean the occurrence of any of the following events
with respect to a party or any applicable Specified Entity:
such party or any such Specified Entity (1) is dissolved; (2) becomes insolvent
or fails or is unable or admits in writing its inability generally to pay its
debts as they become due; (3) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (4) institutes or has
instituted against it a proceeding seeking a judgement of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors' rights, or a petition is presented
4
<PAGE>
for the winding-up or liquidation of the party or any such Specified Entity,
and, in the case of any such proceeding or petition instituted or presented
against it, such proceeding or petition (A) results in a judgement of insolvency
or bankruptcy or the entry of an order for relief or the making of an order for
the winding-up or liquidation of the party or such Specified Entity or (B) is
not dismissed, discharged, stayed or restrained in each case within 30 days of
the institution or presentation thereof; (5) has a resolution passed for its
winding-up or liquidation; (6) seeks or becomes subject to the appointment of an
administrator, receiver, trustee, custodian or other similar official for it or
for all or substantially all its assets (regardless of how brief such
appointment may be, or whether any obligations are promptly assumed by another
entity or whether any other event described in this clause (6) has occurred and
is continuing); (7) any event occurs with respect to the party or any such
Specified Entity which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (1) to (6)
(inclusive); or (8) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing acts; other
than in the case of clause (1) or (5) or, to the extent it relates to those
clauses, clause (8), for the purpose of a consolidation, amalgamation or merger
which would not constitute a Merger Without Assumption; or
(viii) Merger Without Assumption, which will mean that a party consolidates or
amalgamates with, or merges into, or transfers all or substantially all its
assets to, another entity and, at the time of such consolidation, amalgamation,
merger or transfer:
(1) the resulting, surviving or transferee entity fails to assume all the
obligations of such party under this Agreement by operation of law or pursuant
to an agreement reasonably satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document relating to this Agreement fail
to extend (without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under this
Agreement.
(b) Termination Events.
(i) Illegality;
(i) Tax Event, which will mean either:
(1) the party (which will be the Affected Party) will be required on the next
succeeding Payment Date to pay to the other party an additional amount in
respect of an Indemnifiable Tax under Section
5
<PAGE>
19.1(b) of the Code (except in respect of default interest) as a result of a
Change in Tax Law; or
(2) there is a substantial likelihood that the party (which will be the Affected
Party) will be required on the next succeeding Payment Date to pay to the other
party an additional amount in respect of an Indemnifiable Tax under Section
19.1(b) of the Code (except in respect of default interest) and such substantial
likelihood results from an action taken by a taxing authority, or brought in a
court of competent jurisdiction, on or after the Trade Date of such Rate Swap
Transaction (regardless of whether such action was taken or brought with respect
to a party to this Agreement):
(iii) Tax Event Upon Merger, which will mean the party (the "Burdened Party")
on the next succeeding Payment Date will either (1) be required to pay to the
other party an additional amount in respect of an Indemnifiable Tax under
Section 19.1(b) of the Code (except in respect of default interest) or (2)
receive a payment from which an amount has been deducted or withheld for or on
account of any Indemnifiable Tax in respect of which the other party is not
required to pay an additional amount, in either case as a result of a party
consolidating or amalgamating with, or merging into, transferring all or
substantially all its assets to, another entity (which will be the Affected
Party) where such action does not constitute a Merger Without Assumption; or
(iv) If Credit Event Upon Merger is specified in the Schedule as applying to
the party, such term will mean that such party ("X") consolidates or amalgamates
with, or merges into, or transfers all or substantially all its assets to,
another entity and such action does not constitute a Merger Without Assumption
but the credit worthiness of the resulting, surviving or transferee entity
(which will be the Affected Party) is materially weaker than that of X
immediately prior to such action.
(c) Other provisions with respect to Events of Default and Termination Events
are as follows:
(i) Limited Early Termination will apply to all Termination Events other than
Credit Event Upon Merger.
(ii) If an event or circumstance which would otherwise constitute or give rise
to an Event of Default also constitutes an Illegality, it will be treated as an
Illegality and will not constitute an Event of Default.
6
<PAGE>
6. Early Termination
(a) Right to Terminate Following Event of Default. A party entitled to
designate an Early Termination Date in respect of an Event of Default may do so
by giving notice to the other party of the Early Termination Date not more than
20 days prior to the date so designated (which date may not be earlier than the
date such notice is effective); provided, however, that Immediate Early
Termination will apply with respect to an Event of Default under Section 5
(a)(vii) and, in the case of an Event of Default under clause (4) thereof, the
Early Termination Date shall be deemed to have occurred as of the time
immediately preceding the institution of the relevant proceeding or the
presentation of the relevant petition.
(b) Right to Terminate Following Termination Event.
(i) Notice. Upon the occurrence of a Termination Event, an Affected Party
will, promptly upon becoming aware of the same, notify the other party thereof,
specifying the nature of such Termination Event and the Affected Transactions
relating thereto. The Affected Party will also give such other information to
the other party with regard to such Termination Event as the other party may
reasonably require.
(ii) Transfer to Avoid Termination Event. Notwithstanding Section 18.3 of the
Code, if either an Illegality under Section 11.8(a)(i) of the Code or a Tax
Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger
occurs and the Affected Party is the Burdened Party, the Affected Party will as
a condition to its right to designate an Early Termination Date use all
reasonable efforts (which will not require such party to incur a loss, excluding
immaterial, incidental expenses) to transfer within 20 days after the Affected
Party gives notice under Section 6(b)(i) all its rights and obligations under
this Agreement in respect of the Affected Transactions to another of its
offices, branches or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give notice to
the other party to that effect within such 20 day period, whereupon the other
party may effect such a transfer within 30 days after the notice is given under
Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(i) will be subject to and
conditional upon the prior written consent of the
7
<PAGE>
other party, which consent will not be withheld if such other party's policies
in effect at such time would permit it to enter into swap transactions with the
transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section 11.8(a)(i) of the
Code or a Tax Event occurs and there are two Affected Parties, each party will
use all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action that would cause such
Termination Event to cease to exist.
(iv) Right to Terminate. Notwithstanding Section 11.6 of the Code, if:
(1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii),
as the case may be, has not been effected with respect to all Affected
Transactions within 30 days after an Affected Party gives notice under Section
6(b)(i); or
(2) An Illegality under Section 11.8(a)(ii) of the Code or a Credit Event Upon
Merger occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not
the Affected Party, either party in the case of an Illegality, the burdened
Party in the case of a Tax Event Upon Merger, any Affected Party in the case of
a Tax Event, or the party which is not the Affected Party in the case of a
Credit Event Upon Merger, will be the party entitled to designate an Early
Termination Date. Such party may designate an Early Termination Date in respect
of all Affected Transactions by giving notice not more than 20 days prior to the
date so designated (which date may not be earlier than the date such notice is
effective).
(c) Effect of Designation. Upon the effectiveness of notice designating an
Early Termination Date (or the deemed occurrence of an Early Termination Date),
the obligations of the parties to make any further payments under Section 2 in
respect of the Terminated Transactions will terminate, but without prejudice to
the other provisions of this Agreement.
(d) Calculations. The amount calculated as being payable under Section 6(e)
will be due on the day that notice of the amount payable is effective (in the
case of an Early Termination Date which is designated or deemed to occur as a
result of an Event of Default) and not later than the day which is two Business
Days after the day on which notice of the amount payable is effective (in the
case of an Early Termination Date which is designated as a
8
<PAGE>
result of a Termination Event). Such notice shall specify the account for
payment. Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon from (and including) the relevant Early
Termination Date to (but excluding) the relevant due date, calculated as
follows:
(i) if notice is given designating an Early Termination Date or if an Early
Termination Date is deemed to occur, in either case as a result of an Event of
Default, at the Default Rate; or
(ii) if notice is given designating an Early Termination Date as a result of a
Termination Event, at the Default Rate minus the Default Spread.
Such interest will be computed on the basis of Compounding using daily
Compounding Dates, as if the rate specified were a Floating Rate, such period
were a Calculation Period and the amount due were a Notional Amount.
(e) Payments on Early Termination.
(i) Amount Payable. The amount payable in respect of an Early Termination Date
will be calculated as follows:
(1) If there is a Defaulting Party, the Defaulting Party will pay to the other
party the excess, if a positive number, of (A) the sum of (i) the amount
determined in accordance with Agreement Value --Limited Two Way Payments,
calculated on the basis of Aggregation (or, if the Aggregate Market Quotation
calculated in determining such amount is less than zero, the amount by which
such Aggregate Market Quotation is less than zero, expressed as a negative
number) and (ii) the Unpaid Amounts due to the other party over (B) the Unpaid
Amounts due to the Defaulting Party; and
(2) if an Early Termination Date occurs as a result of a Termination Event, the
payment to be made will be the amount equal to (A) the sum of (i) the amount
determined in accordance with Agreement Value -- Limited Two Way Payments,
calculated on the basis of Aggregation and (ii) the Unpaid Amounts due to the
party ("X") entitled to receive a payment under clause (i) minus (B) the Unpaid
Amounts due to the other party ("Y"). If the resulting amount is a positive
number, Y will pay such amount to X. If the resulting amount is negative, X
will pay the absolute value of such amount to Y; and
(3) for purposes of the foregoing clauses (1) and (2), if Market Quotation is
not, or cannot be, determined with respect to a Rate Swap Transaction, the
alternative measure of damages with respect
9
<PAGE>
to such Rate Swap Transaction will be Indemnification -- Limited Two Way
Payments; provided that, (A) in the case of clause (1)(A)(a) above, the amount,
if any, by which Loss is less than zero will be given effect and (B) in the case
of a Termination Event where there is only one Affected Party, Indemnification
-- Limited Two Way Payments will be computed without regard to the Loss of the
Affected Party.
(ii) Adjustment for Bankruptcy. In circumstances where an Early Termination
Date is deemed to occur as a result of Immediate Early Termination, the amount
determined under Section 6(e)(i) will be subject to such adjustments as are
appropriate and permitted by law to reflect any payments made by one party to
the other under this Agreement (and retained by such other party) during the
period from the relevant Early Termination Date to the date for payment
determined under Section 6(d).
(iii) Pre-Estimate of Loss. The parties agree that the amounts recoverable
under this Section 6(e) are a reasonable pre-estimate of loss and not a penalty.
Such amounts are payable for the loss of bargain and the loss of protection
against future risks and except as otherwise provided in this Agreement neither
party will be entitled to recover any additional damages as a consequence of
such losses.
7. Transfer
Subject to Section 6(b) and to any exception provided in the Schedule, neither
this Agreement nor any interest or obligation in
or under this Agreement may be transferred by either party without the prior
written consent of the other party (other than pursuant to a consolidation or
amalgamation with, or merger into, or transfer of all or substantially all its
assets to, another entity) and any purported transfer without such consent will
be void.
8. Contractual Currency
All payments under this Agreement will be made in Dollars. In connection with a
demand for payment of any additional amount under Section 18.1 of the Code, it
will be sufficient for a party to demonstrate that it would have suffered a loss
had an actual exchange or purchase been made.
9. Miscellaneous
10
<PAGE>
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communications and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing and executed by each of the
parties or confirmed by an exchange of telexes.
(c) Survival of Obligations. Except as provided in Section 6(c), the
obligations of the parties under this Agreement will survive the termination of
any Rate Swap Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Confirmations. A Confirmation may be executed in counterparts or created
by an exchange of telexes, substantially in the form of the letter or telex
attached hereto as Exhibit I (or in such other form as the parties may agree),
which in either case will be sufficient for all purposes to evidence a binding
supplement to this Agreement. Any such counterpart or telex will specify that
it constitutes a Confirmation.
10. Multibranch Parties
If a party is specified as a Multibranch Party in the Schedule, such Multibranch
Party may make and receive payments under any Rate Swap Transaction through any
of its branches or offices listed in the Schedule (each an "Office"). The
Office through which it so makes and receives payments for the purpose of any
Rate Swap Transaction will be specified in the relevant Confirmation and any
change of Office for such purpose requires the prior written consent of the
other party. Each Multibranch Party represents to the other party that,
notwithstanding the place of payment, the obligations of each Office are for all
purposes under this Agreement the obligations of such Multibranch Party. This
representation will be deemed to be repeated by such Multibranch Party on each
Trade Date.
11. Credit Support Document
11
<PAGE>
If a Credit Support Document is specified with respect to a party in the
Schedule, the obligations of such party under this Agreement and in respect of
each Rate Swap Transaction will be secured or guaranteed in accordance with the
provisions of that Credit Support Document.
12. Tax Matters
(a) Representations and Covenants. The parties make the following Tax
covenant: Give Notice of Breach of Payee Tax Representation or Tax Covenant.
In addition, the parties make the Payee Tax Representations, the Withholding Tax
Representation and the Tax Covenants specified in the Schedule. In addition, at
all times during the Term of any Rate Swap Transaction, each party makes to the
other party, and to any Specified Entity of the other party, the representations
specified in the Schedule as "Payor Tax Representations". Unless otherwise
specified (i) all Payee Tax Representations, Payor Tax Representations, the
Withholding Tax Representation and all Tax Covenants made by a party will apply
to each Office of the party and (ii) all Payee Tax Representations will be
subject to the occurrence of a Change in Tax Law.
(b) Exempt from Withholding. If used for purposes of specifying the
Withholding Tax Representation of a party in the Schedule, "Exempt from
Withholding" will have the meaning set forth in the Code; provided that, such
representation will apply to the jurisdiction from or through which a payment is
made, as well as the jurisdictions specified in Section 19.3 of the Code.
(c) Recognized Bank. If used for purposes of specifying Payee Tax
Representations or Payor Tax Representations of a party in the Schedule,
"Recognized Bank" means the party represents that it is a bank recognized by the
United Kingdom Inland Revenue as carrying on a bona fide banking business in the
United Kingdom, is entering into this Agreement in the ordinary course of such
business and will bring into account payments made and received under this
Agreement in computing its income for United Kingdom tax purposes.
(d) Provide U.S. Tax Forms if Required. If used for purposes of specifying Tax
Covenants of a party in the Schedule, "Provide U.S. Tax Forms if Required" means
that the party agrees to complete, accurately and in a manner reasonably
satisfactory to the other party, and to execute and deliver to the other party,
a United Sates Internal Revenue Service Form 4224, or any successor form, in
respect of any payments received or to be received by that party in
12
<PAGE>
connection with this Agreement that are effectively connected or otherwise
attributable to its conduct of a trade or business in the United States (i)
before the first payment date on which any such payment is or may be so
connected or attributable, (ii) promptly upon reasonable demand by the other
party, and (iii) promptly upon learning that any such form previously provided
has become obsolete or incorrect.
13. Service of Process
Each party irrevocably appoints the party specified in the Schedule, if any, as
its agent for service of process. If for any reason a party's agent for service
of process is unable to act as such, such party will promptly notify the other
party and within 30 days appoint a substitute agent for service of process
acceptable to the other party. The parties irrevocably consent to service of
process given in accordance with Section 10 of the Schedule. Nothing in this
Section will affect the right of either party to serve process in any other
manner permitted by law.
15. Definitions
As used in this Agreement:
"Affected Transactions" means (a) with respect to any Termination Event to which
Limited Early Termination applies under Section 5(c)(i) of this Agreement, all
Rate Swap Transactions affected by the occurrence of such Termination Event and
(b) with respect to any other Termination Event, all Rate Swap Transactions.
"Default Rate" means a rate per annum determined in accordance with the Federal
Funds Floating Rate Option plus the Default Spread, using daily Reset Dates.
For purposes of Section 10.3 of the Code, the Default Rate will be applied on
the basis of Compounding as if the overdue amount were a Notional Amount and
using daily Compounding Dates, and interest will accrue and be payable before as
well as after judgement.
"Default Spread" will have the meaning specified in the Schedule.
"Illegality" will have the meaning set forth in Section 11.8 of the Code;
provided that, if an event that would otherwise constitute an Illegality results
from a breach by the party of its obligations under Section 16.1(f)(i) of the
Code, such event will not be deemed to be an Illegality.
13
<PAGE>
"Indemnifiable Tax" will have the meaning set forth in the Code, provided that,
(a) references to the recipient of a payment shall be considered also to refer
to a person related to the recipient and (b) the last clause of the definition
of "Indemnifiable Tax" in Section 19.5(d) of the Code shall be considered to
refer to a Credit Support Document as well as a Rate Swap Agreement.
"law" means, with respect to tax matters, any treaty, law, rule or regulation,
as modified by the practice of any relevant governmental revenue authority.
"Specified Entity" will have the meaning set forth in the Schedule.
"Specified Indebtedness" means any obligation (whether present or future,
contingent or otherwise, as principal or surety or otherwise) in respect of
borrowed money.
"Specified Swap" means any rate swap or currency exchange transaction now
existing or hereafter entered into between one party to this Agreement (or any
applicable Specified Entity) and the other party to this Agreement (or any
applicable Specified Entity).
"Terminated Transactions" means (a) with respect to any Early Termination Date
occurring as a result of a Termination Event, all Affected Transactions and (b)
with respect to any Early Termination Date occurring as a result of an Event of
Default, all Rate Swap Transactions, which in either case are in effect as of
the time immediately preceding the effectiveness of the notice designating such
Early Termination Date (or, in the case of Immediate Early Termination, in
effect as of the time immediately preceding such Early Termination Date).
"Unpaid Amounts" owing to any party means, with respect to any Early Termination
Date, the aggregate of the amounts that became due and payable (or that would
have become due and payable but for Section 10.2 of the Code or the designation
or occurrence of such Early Termination Date) to such party under Section 2 in
respect of all Terminated Transactions by reference to all Calculation Periods
ended on or prior to such Early Termination Date and which remain unpaid as at
such Early Termination Date, together with (to the extent permitted under
applicable law in lieu of any interest calculated under Section 10.3 of the
Code) interest thereon from (and including) the date such amount became due and
payable or
14
<PAGE>
would have become due and payable to (but excluding) such Early Termination
Date, calculated as follows:
(a) in the case of amounts that became so due and payable by a Defaulting
Party, at the Default Rate; and
(b) in the case of all other such amounts, at the Default Rate minus the
Default Spread.
Such interest will be computed on the basis of Compounding using daily
Compounding Dates, as if the rate specified were a Floating Rate, such period
were a Calculation Period and the amount due were a Notional Amount.
IN WITNESS WHEREOF the parties have executed this document as of the date
specified on the first page of this document.
SECURITY PACIFIC NATIONAL BANK
By: /s/ Gail Rosen
Title: AVP
By: /s/ Reed RT. Evenlaue
Title: VP
CALMAT CO.
By: /s/ Ronald C. Hadfield
Title: Senior Vice President
By: Scott J Wilcott
Title: Senior Vice President
Exhibit I
Heading for Letter
[Letterhead of party]
[Date]
Rate Swap Transaction
[Name and Address of Party]
Heading for Telex
Telex
15
<PAGE>
Date:
To: [Name and Address of Party]
From: [Name of Party]
Subject: Rate Swap Transaction
Dear
The purpose of this [letter agreement/telex] is to set forth the terms and
conditions of the Rate Swap Transaction entered into between us on the Trade
Date referred to below. This [letter/telex] constitutes a "Confirmation" as
referred to in the Rate Swap Agreement specified below.
1. This Confirmation supplements, forms a part of, and is subject to, the
Interest Rate Swap Agreement dated as of [Date] (the "Rate Swap Agreement")
between you and us. All provisions contained or incorporated by reference in
the Rate Swap Agreement shall govern this Confirmation except as expressly
modified below.
2. The terms of the particular Rate Swap Transaction to which this Confirmation
relates are as follows:
Notional Amount: $
Trade Date:
Effective Date:
Termination Date:
Fixed Amounts:
Fixed Rate Payor:
Fixed Rate Payor, Payment Dates
[or period End Dates, if Delayed
Payment or Early Payment applies]:
Fixed Amount [or Fixed Rate and Fixed Rate Day Count Fraction]:
Floating Amounts:
Floating Rate Payor:
Floating Rate Payor Payment Dates
[or Period End Dates, if Delayed
Following/Preceding] Banking Day
Payment or Early Payment applies]:
Floating Rate for initial Calculation Period:
Floating Rate Option:
Designated Maturity:
Spread:[plus/minus] %
16
<PAGE>
Floating Rate Day Count Faction:
Reset Dates:
[Rate Cut-off Dates:]
[Calculation Date:]
Other provisions:
[name of party]
[_______], subject to adjustment in accordance with the [Following/Modified
Following/Preceding] Banking Day convention
[name of party]
[_______], subject to adjustment in accordance with [Following/Modified
Following/Preceding] Banking Day convention
[plus/minus] %
[Unweighted Average Rate/Weighted Average Rate]
Applicable/Inapplicable
[3._______ agrees to provide the following Credit Support Document [or agrees
to provide the following in accordance with [specify Credit Support Document]:]
Closing for letter
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Very truly yours,
By:__________
Name:
Title:
Accepted and confirmed as
of the date first written:
By:__________
Name:
Title:
17
<PAGE>
Closing for Telex
Please confirm that the foregoing correctly sets forth the terms of our
agreement by a return telex to [name of party] substantially to the following
effect:
"We acknowledge receipt of your telex dated _______ with respect to a Rate Swap
Transaction between [name of party] and [name of party] with a Notional Amount
of _______ and a Termination Date of _______ and confirm that such telex
correctly sets forth the terms of our agreement relating to the Rate Swap
Transaction described therein.
Very truly yours, [name of party], by (specify name and title of authorized
officer)."
Very truly yours,
By:__________
Name:
Title:
18
<PAGE>
Schedule
to the
Interest Rate Swap Agreement
dated as of December 10, 1988
between SECURITY PACIFIC NATIONAL BANK ("Security Pacific") and CALMAT CO. (the
"Counterparty")
1. Definitions. In addition to the definitions set forth in Section 14, the
following terms will have the following specified meanings:
(a) "Default Spread" means 2% per annum.
(b) "Specified Entity" means in relation to Security Pacific for the purpose
of:
Section 5(a)(iii) and (iv) and 5(b)(i), Not applicable
Section 5(a)(v), Any Affiliate of Security Pacific
Section 5(a)(vi), Not applicable
Section 5(a)(vii), Not applicable
and, in relation to Counterparty for the purpose of:
Section 5(a)(iii) and (iv) and 5(b)(i), Not applicable
Section 5(a)(v), Any Affiliate of the Counterparty
Section 5(a)(vi), Not applicable
Section 5(a)(vii), Not applicable
Item 12 (a)(ii) and (b) of this Schedule: Not applicable
(c) "Specified Swap" will have the meaning specified in Section 14.
2. Payments. The following additional provisions apply with respect to Section
2:
(a) The Calculation Agent is Security Pacific.
(b) Net Payments -- Corresponding Payment Dates applies with effect from the
date of this Agreement.
(c) Any amount that would have become due and payable but for Section 10.2 of
the Code, if not paid sooner, shall be paid on the latest Termination Date set
forth in any Confirmation, together
19
<PAGE>
with interest on each such amount, to the extent permitted by applicable law,
from its original due date until the date such amount is paid at a per annum
rate equal to the Default Rate minus the Default Spread, unless an Early
Termination Date is designated, in which case the provisions of Section 6(e)
shall apply.
3. Representations. (a) As a further inducement to enter into this Agreement,
the Counterparty makes the following additional
representation, which representation will be deemed to be repeated at the times
set forth in Section 15.1 of the Code:
its financial statements most recently furnished to the other party hereto, if
any, fairly represent its financial position as of their date and the results of
operations for the period then ended, which statements were prepared in
accordance with generally accepted accounting principles (except that with
respect to interim financial statements no footnotes shall be provided and such
interim financial statements shall be subject to normal year-end adjustments),
and there has been no material adverse change in its financial condition since
that date that would affect its ability to pay any amount that it is required or
will be required to pay under this Agreement.
(b) "Accuracy of Specified Information" will apply to the information, if any,
listed in Annex II to this Schedule.
(c) The representation set forth in Section 3(c) will not apply to Security
Pacific.
4. Agreements. (a) For the purpose of Section 4(a), the documents to be
delivered to Security Pacific (other than tax forms), in form and substance
satisfactory to Security Pacific, are;
(i) certified copies of the resolutions of the board of directors of the
Counterparty authorizing the execution and delivery of this Agreement;
(i) a certificate as to the incumbency and specimen signatures of the officers
of the Counterparty executing this Agreement on behalf of the Counterparty; and
(iii) an opinion of counsel substantially in the form Annex I to this Schedule.
(b) Except to the extent that it is inconsistent with a consolidation,
amalgamation or merger involving such party, each party further agrees that so
long as it shall have any obligation
20
<PAGE>
hereunder it will do all things necessary to remain duly organized and validly
existing.
(c) Counterparty further agrees with Security Pacific as follows:
(i) Furnish Annual Financial Statements; and
(ii) Furnish Quarterly Financial Statements.
5. Events of Default. (a) The "Cross-Default" provisions of Section 5(a)(vi)
will apply only to the Counterparty, and for purposes thereof (i) there shall be
added to the aggregate amount referred to in Section 5(a)(vi)(1)and (2) all
amounts due and payable by the Counterparty and remaining unpaid under any
interest rate or currency exchange agreement (however entitled); (ii) amounts
which have become or have become capable of being declared due and payable as a
result of an event similar to Illegality or any change in tax law or the
application thereof shall not be included in the aggregate amount referred to in
Section 5(a)(vi)(1); and (iii) amounts which are not paid at maturity solely as
a result of an event similar to Illegality shall not be included in the
aggregate amount referred to in Section 5(a)(vi)(2).
"Specified Indebtedness" will have the meaning specified in Item 12(b) of this
Schedule.
"Threshold Amount" means any amount.
(b) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not
apply to either party.
6. Transfer. Exceptions to the Transfer provisions of Section 7, if any, are:
None.
7. Addresses for Notices.
(a) Address for notices or communications to Security Pacific:
Security Pacific National Bank, Security Pacific Merchant Bank, 333 South Hope
Street, Los Angeles, CA 90071, Attention: Swaps Administration and Control Unit
(H12-66) (Telex No. 674-343, Answerback: SEC BANK LSA; Telefax No. (213) 613-
1673), with a copy to Security Pacific Hoare Govett Limited, Security Pacific
House,
21
<PAGE>
4 Broadgate, London EC2M 7LE, England, Attention: Swaps Agency Department,
(Telex No. 887887; Answerback: SECPAC G).
(b) Address for notices to the Counterparty:
Address: CalMat Co., 3200 San Fernando Road, Los Angeles, CA 90065; (Telefax:
(213) 259-8159), Attention: Treasurer.
8. Multibranch Parties. Security Pacific is not a Multibranch Party. The
Counterparty is not a Multibranch Party.
Notwithstanding anything in Section 10 to the contrary, if any event of the type
described in Section 11.8(a) of the Code shall occur with respect to an Office
of a party and a related Rate Swap Transaction, the parties shall have such
rights with respect to termination of that Rate Swap Transaction as are provided
for Illegality in this Agreement.
9. Tax Matters.
(a) Security Pacific
(i) Payee Tax Representations are: Not applicable
(ii) Payor Tax Representations are: Not applicable
(iii) Withholding Tax Representation: Exempt from Withholding
(iv) Additional Tax Covenants: Provide Tax Forms
(b) Counterparty
(i) Payee Tax Representations are: Not applicable
(ii) Payor Tax Representations are: Not applicable
(iii) Withholding Tax Representation: Exempt from Withholding
(iv) Additional Tax Covenants: Provide Tax Forms
10. Agent for Service of Process. The Counterparty irrevocably consents to the
service of process given in accordance with the notice provisions of Article 14
of the Code and Section 7 of this Schedule. Security Pacific irrevocably
consents to the service of process by hand delivery to its Office of the General
Counsel located at 333 South Hope Street, 23rd Floor, Los Angeles, CA 90071 or
at 40 East 52nd Street, 7th Floor, New York, New York 10022, or at such other
address as Security Pacific may notify to the Counterparty in writing.
11. Credit Support Document. The Credit Support Document with regard to the
Counterparty's performance of this Agreement is:
Not applicable.
22
<PAGE>
12. Other Provisions.
(a) Additional Termination Events.
(i) Additional Tax Event. In addition to those specified in Section 5(b)(ii),
a Tax Event shall for all purposes of this Agreement be deemed to occur if, due
to a Change in Tax Law, ether party will be required by any applicable law, rule
or regulation to make any deduction or withholding for or on account of any Tax
from any payment it is required to make pursuant to Section 2(a) and will not be
required to pay to the other party any additional amount in respect of such Tax.
In connection with such a Tax Event, the other party shall be the Affected Party
for purposes of Section 6(b) (ii) and shall be the party entitled to designate
an Early Termination Date.
(ii) Merger and Maintenance of Authorization Events. The following additional
events shall constitute Termination Events for purposes of Section 6(b)(i), 6(d)
and 6(e):
(A) The Counterparty or its Specified Entity sells or otherwise transfers all
or a substantial part of its assets to or consolidates, amalgamates or merges
with another entity without the written consent of Security Pacific and such
action does not constitute a Merger Without Assumption but the policies of
Security Pacific in effect at that time would lead it to decline to extend
credit to or enter into a rate swap transaction with the resulting, surviving or
transferee entity; and
(B) The Counterparty or its Specified Entity fails to comply with its
obligation to Maintain Authorizations and Comply with Laws, and such failure
does not constitute an Event of Default.
If a Termination Event of the kind described in (A) of this item occurs with
respect to Counterparty, the resulting, surviving or transferee entity shall be
the Affected Party, and if such event occurs with respect to Counterparty's
Specified Entity, Counterparty shall be the Affected Party. If a Termination
Event of a kind described in (B) of this item occurs with respect to the
Counterparty or its Specified Entity, (i) that party shall be the Affected Party
and (ii) Limited Early Termination will apply. If either of such Termination
Events shall occur, Security Pacific shall be entitled to designate an Early
Termination Date in respect of all Affected Transactions by giving notice not
more than 20 days prior to the date so designated (which date may not be earlier
than the date such notice is effective).
23
<PAGE>
(b) Additional Definitions. For purposes of this Agreement, "Specified
Indebtedness" shall not have the meaning set forth in Section 14 but shall mean
any agreement or instrument creating, guaranteeing or securing any indebtedness
for borrowed money of a party or its Specified Entity or an Affiliate of such
party or its Specified Entity excepting any indebtedness with respect to
deposits received.
(c) Affected Parties. For purposes of Section 6(e), each party shall be deemed
to be an Affected Party in connection with Illegality and any Tax Event.
(d) Accounts for Payments.
Security Pacific
Account Number: Department 910, for the account of Swaps Operations
Counterparty
Account Number:
Depositary:
Reference:
Depositary: Security Pacific National Bank, 333 South Hope Street, Los Angeles,
California 90071, Attention T. Cummins
(e) Agreed Change. The following manually effected change to pages 1-10 of
this Agreement are acknowledged and agreed to by each party:
the deletion of the words "the notice provisions of Articles 14 of the Code and
this Agreement" from Section 13, and the insertion, in their place, of the words
"Section 10 of the Schedule".
Annex I to Schedule
[Letterhead of Counsel to the Counterparty]
Security Pacific National Bank
333 South Hope Street
Los Angeles, California 90071
24
<PAGE>
Re: Interest Rate Swap Agreement, dated as of December 10, 1988 (the
"Agreement"), between Security Pacific National Bank and CalMat Co., (the
"Counterparty").
Ladies and Gentlemen:
I am an attorney admitted to practice in _______ and am counsel to the
Counterparty, and as such am generally familiar with its affairs. This opinion
is limited to the laws of [the State(s) of _______[organization and principal
office] _______ and the federal laws of the United States] [_______]. I have
examined the Agreement and such other records and instruments as I deemed
advisable.
Based upon the foregoing, and having regard for legal considerations which I
deem relevant, I am of the opinion that:
1. The Counterparty is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization or incorporation.
2. The Counterparty has the power to execute and deliver the Agreement and any
other documentation relating to the Agreement that it is required by the
Agreement to deliver contemporaneously therewith and to perform its obligations
under the Agreement and any obligations it has under any Credit Support Document
(as such term is defined in the Agreement) and has taken all necessary action
to authorize such execution and delivery and performance of such obligations.
3. The Counterparty's execution and delivery of the Agreement and any other
documentation relating to the Agreement that it is required by the Agreement to
deliver contemporaneously therewith and its performance of its obligations under
the Agreement and any obligations it has under any Credit Support Document do
not violate or conflict with (i) any provision of its charter or by-laws (or
comparable constituent documents) or (ii) any law, rule or regulation applicable
to it, or any order or judgement of any court or other agency of government
applicable to it or any of its assets or any contractual restriction binding on
or affecting it or any of its assets, the violation of or conflict with which
(in the case of the items listed in this clause (ii)) would have a material
adverse effect on the Counterparty or its ability to perform its obligations
under this Agreement or any Credit Support Document to which it is a party.
25
<PAGE>
4. All authorizations of and exemptions, actions or approvals by, and all
notices to or filings with, any governmental or other authority that are
required to have been obtained or made by the Counterparty with respect to the
Agreement or any Credit Support Document to which it is a party have been
obtained or made and are in full force and effect and all conditions of any such
authorizations, exemptions, actions or approvals have been complied with.
5. Each of the Agreement and any Credit Support Document to which the
Counterparty is a party has been duly executed and delivered by the Counterparty
and constitutes the Counterparty's legal, valid and binding obligation,
enforceable against the Counterparty in accordance with its terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether enforcement
is sought in a proceeding in equity or at law)).
Very truly yours,
ANNEX II
List of Counterparty Information to which "Accuracy of Specified Information"
applies.
None.
26
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT dated this 13 day of April, 1993, by and
between CALMAT CO., a Delaware corporation ("Company"), and WACHOVIA BANK AND
TRUST COMPANY ("Trustee").
WHEREAS, Company has previously entered into a Supplemental Executive Retirement
Agreement (the "Agreement") with A. Frederick Gerstell and has adopted the Non-
Qualified Deferred Compensation Plan For Selected Executives of CalMat Co. (the
"Plan"), the Agreement and the Plan attached hereto as Exhibits A and B
respectively;
WHEREAS, Company desired to provide a vehicle to hold certain assets of Company
as a reserve for the discharge of Company's obligations to Mr. Gerstell and
certain electing participants in the Plan (the "Participants") and their
beneficiaries or representatives entitled to receive payments pursuant to the
Agreement and the Plan (the "Beneficiaries");
WHEREAS, Company established a trust (the "Trust") and has contributed and will
contribute to the Trust assets that shall be held therein, subject to the claims
of Company's creditors in the event of Company's Insolvency, as herein
defined, until paid to Participants and Beneficiaries in such manner and at such
times as specified in the Agreement and the Plan;
WHEREAS, it is the intention of the parties that this Trust shall constitute an
unfunded arrangement and shall not affect the status of the Agreement and the
Plan as unfunded arrangements maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of Company to make contributions to the Trust to
provide itself with a source of funds to assist it in the meeting of its
liabilities under the Agreement and the Plan; and
WHEREAS, Company and Trustee, with the consent of Participants, wish to amend
the Trust Agreement in certain respects;
NOW, THEREFORE, the parties do hereby continue the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
1
<PAGE>
SECTION 1. Establishment of Trust. (a) Company has previously deposited with
Trustee certain amounts which, together with any future contributions, shall be
the principal of the Trust to be held, administered and disposed of by Trustee
as provided in this Trust Agreement.
(b) The Trust shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), and
shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Participants and general creditors as herein set forth.
Participants and Beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust. Any rights created
under the Agreement and this Trust Agreement shall be mere unsecured contractual
rights of Participants and Beneficiaries against Company. Any assets held by
the Trust will be subject to the claims of Company's general creditors under
Federal and state law in the event of Insolvency, as defined in Section 3(a)
herein.
(e) Company, in its sole discretion, may at any time, or from time to time,
make additional deposits of cash or other property in trust with Trustee to
augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor Participants or any
Beneficiary shall have any right to compel such additional deposits.
SECTION 2. Payments to Participants and Beneficiaries. (a) Company shall
deliver to Trustee a schedule (the "Payment Schedule") that indicates the
amounts payable in respect of Participants (and Beneficiaries) or provide a
formula or other instructions acceptable to Trustee for determining the amounts
so payable, the form in which such amounts are to be paid (as provided for or
available under the Agreement and the Plan), and the time of commencement of
payment of such amounts. Except as otherwise provided herein, Trustee shall
make payments to Participants and Beneficiaries in accordance with the Payment
Schedule. The Trustee shall make provision for the reporting and withholding of
any Federal, state or local taxes that may be required to be withheld with
respect to the payment of amounts pursuant to the terms of the
2
<PAGE>
Agreement, the Plan and this Trust Agreement and pay such taxes to the
appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by Company.
(b) Company may make payments of benefits directly to Participants or
Beneficiaries as they become due under the terms of the Agreement and the Plan.
Company shall notify Trustee of its decision to make payments directly prior to
the time amounts are payable to Participants or Beneficiaries. In addition, if
the principal of the Trust, and any earnings thereon, are not sufficient to make
payments in accordance with the terms of the Agreement and the Plan, Company
shall make the balance of each such payment as it falls due. Trustee shall
notify Company when principal and earnings are not sufficient to make payments.
SECTION 3. Trustee Responsibility Regarding Payments to Trust Beneficiary When
Company Is Insolvent. (a) Trustee shall cease payments to Participants and
Beneficiaries if Company is Insolvent. Company shall be considered "Insolvent"
for purposes of this Trust Agreement if (i) Company is unable to pay its debts
as they become due, or (ii) Company is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in Section
1(d) hereof, the principal and income of the Trust shall be subject to claims of
general creditors of Company under Federal and state law as set forth below:
(1) The Board of Directors and the Chief Executive Officer of Company shall
have the duty to inform Trustee in writing of Company's Insolvency. If a person
claiming to be a creditor of Company alleges in writing to Trustee that Company
has become Insolvent, Trustee shall determine whether Company is Insolvent and,
pending such determination, Trustee shall discontinue payments to Participants
and Beneficiaries.
(2) Unless Trustee has actual knowledge of Company's Insolvency, or has
received notice from Company or a person claiming to be a creditor alleging that
Company is Insolvent, Trustee shall have no duty to inquire whether Company is
Insolvent. Trustee may in all events rely on such evidence concerning Company's
solvency as may be furnished to Trustee and provide Trustee with a reasonable
basis for making a determination concerning Company's solvency.
3
<PAGE>
(3) If at any time Trustee has determined that Company is Insolvent, Trustee
shall discontinue payments to Participants and Beneficiaries and shall hold the
assets of the Trust for the benefit of Company's general creditors. Nothing in
this Trust Agreement shall in any way diminish any rights of the Participants or
Beneficiaries to pursue their rights as general creditors of Company with
respect to amounts due under the Agreement or otherwise.
(4) Trustee shall resume the payment of benefits to Participants and
Beneficiaries in accordance with Section 2 of this Trust Agreement only after
Trustee has determined that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues payments
from the Trust pursuant to Section 3(b) hereof and subsequently resumes such
payments, the first payment following such discontinuance shall include the
aggregate amount of all payments due to Participants and Beneficiaries under the
terms of the Agreement and the Plan for the period of such discontinuance, less
the aggregate amount of any payments made to Participants and Beneficiaries by
Company in lieu of the payments provided for hereunder during any such period of
discontinuance.
SECTION 4. Payments to Company. Except as provided in Section 3 hereof,
Company shall have no right or power to direct Trustee to return to Company or
to divert to others any of the Trust assets
before all payments of benefits have been made to Participants and Beneficiaries
pursuant to the terms of the Agreement and the Plan.
SECTION 5. Investment Authority. (a) Subject to the other provisions of this
Trust Agreement, the assets of the Trust shall be prudently invested and managed
with the purpose of preserving the principal of the Trust and earning interest
and other income thereon in a manner consistent with the objectives of trusts of
like character and aims. For this purpose, the Trust shall be invested entirely
in instruments (with maturities averaging less than one year) that are United
States Government treasury notes, bank deposits fully insured by the Federal
Deposit Insurance Corporation or other short-term fixed income securities which
are fully guaranteed by the United States Government.
(b) Company shall make sufficient contributions to the Trust, and sufficient
liquidity shall be maintained, to meet the reasonably anticipated requirements
of the Trust for payment of expenses (if
4
<PAGE>
any) of administration, investment and management and for payments to
Participants and Beneficiaries.
(c) The policy established in this Section may be modified at any time by the
written agreement of Trustee and Company, but only with the express written
consent of Participants.
(d) In no event may Trustee invest in securities (including stock or rights to
acquire stock) or obligations issued by Company, other than a de minimis amount
held in common investment vehicles in which Trustee invests. All rights
associated with assets of the Trust shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable by or rest with
Participants.
SECTION 6. Disposition of Income. During the term of this Trust, all income
received by the Trust, net of expenses and taxes, shall be accumulated and
reinvested.
SECTION 7. Accounting by Trustee. Trustee shall keep accurate and detailed
records of all investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be agreed upon in
writing between Company and Trustee. Within 30 days following the close of each
calendar year and within 30 days after the removal or resignation of Trustee,
Trustee shall deliver to Company a written account of its administration of the
Trust during such year or during the period from the close of the last preceding
year to the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and other property
held in the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be.
SECTION 8. Responsibility of Trustee. (a) Trustee shall act with the care,
prudence and diligence that a prudent person would use in the conduct of its
duties hereunder; provided, however, that Trustee shall incur no liability to
any person for any action taken pursuant to a direction, request or approval
given by Company that is contemplated by, and in conformity with, the terms of
the Agreement, the Plan or this Trust Agreement and is given in writing by
Company. In the event of a dispute between Company and a party,
5
<PAGE>
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in connection with
this Trust, Company agrees to indemnify Trustee against Trustee's costs,
expenses and liabilities (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such payments. If
Company does not pay such costs, expenses and liabilities in a reasonably timely
manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for Company
generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment advisors,
financial consultants or other professionals to assist it in performing any of
its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on trustees by
applicable law, unless expressly provided otherwise herein, provided, however,
that if any insurance policy is held as an asset of the Trust, Trustee shall
have no power to name a beneficiary of the policy other than the Trust, to
assign the policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to lend to any person the proceeds
of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this Trust
Agreement or to applicable law, Trustee shall not have any power that could give
this Trust the objective of carrying on a business and dividing the gains
therefrom within the meaning of Treas. Reg. (S)301.7701-2 promulgated pursuant
to the Code.
SECTION 9. Compensation and Expenses of Trustee.
Company shall pay all administrative and Trustee's fees and expenses. If not so
paid, the fees and expenses shall be paid from the Trust.
SECTION 10. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to Company, which shall be
effective 30 days after receipt of such notice unless Company and Trustee agree
otherwise.
(b) Trustee may be removed by Company on 3 days' notice or upon shorter notice
accepted by Trustee.
6
<PAGE>
(c) Upon a change of control, as defined herein, Trustee may not be removed by
Company for 3 years.
(d) If Trustee resigns within two years after a change of control, Company
shall apply to a court of competent jurisdiction for the appointment of a
successor Trustee or for instructions.
(e) If Trustee resigns or is removed within two years of a change of control,
Trustee shall select a successor Trustee in accordance with the provisions of
Section 11(b) hereof prior to the effective date of Trustee's resignation or
removal.
(f) Upon resignation or removal of Trustee and appointment of a successor
Trustee, all assets shall be transferred to the successor Trustee. The transfer
shall be completed within 30 days after receipt of notice of resignation,
removal or transfer, unless Company extends the time limit.
(g) If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this Section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
SECTION 11. Appointment of Successor. (a) If Trustee resigns or is removed in
accordance with Section 10(a) or (b) hereof, Company may appoint any third
party, such as a bank trust department or other party that may be granted
corporate trust powers under state law, as a successor to replace Trustee. The
appointment shall be effective when accepted in writing by the new trustee,
which shall have all of the rights and powers of the Trustee, including
ownership rights in the Trust assets. The Trustee shall execute any instrument
necessary or reasonably requested by Company or the successor trustee to
evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the provisions of Section
10(e) hereof and selects a successor Trustee, Trustee may appoint any third
party such as a bank trust department or other party that may be granted
corporate trust powers under state law. The appointment of a successor trustee
shall be effective when accepted in writing by the new trustee. The new trustee
shall have all the rights and powers of Trustee, including legal title
7
<PAGE>
to Trust assets. The Trustee shall execute any instrument necessary or
reasonably requested by the successor trustee to evidence the transfer.
(c) The successor trustee need not examine the records and acts of any prior
Trustee and may retain or dispose of existing Trust assets, subject to Sections
7 and 8 hereof. The successor trustee shall not be responsible for, and Company
shall indemnify and defend the successor trustee from, any claim or liability
resulting
from any action or inaction of any prior trustee or from any other past event,
or any condition existing at the time it becomes successor trustee.
SECTION 12. Amendment or Termination. (a) This Trust Agreement may be amended
by a written instrument executed by Trustee and Company. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the Agreement or
the Plan or shall make the Trust revocable.
(b) The Trust shall not terminate until the date on which Participants and
Beneficiaries are no longer entitled to payments pursuant to the terms of the
Agreement or the Plan. Upon termination of the Trust any assets remaining in
the Trust shall be returned to Company.
(c) Upon Written approval of Participants or Beneficiaries entitled to payments
pursuant to the terms of the Agreement or the Plan, Company may terminate this
Trust prior to the time all payments under the Agreement and the Plan have been
made. All assets in the Trust at termination shall be returned to Company.
(d) Sections 1, 2, 3, 12, and 13 of this Trust Agreement may not be amended by
Company for 3 years following a change of control, as defined herein.
SECTION 13. Miscellaneous. (a) Any provision of this Trust Agreement
prohibited by law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Amounts payable to Participants and Beneficiaries under this Trust
Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
8
<PAGE>
(c) This Trust Agreement shall be governed by and construed in accordance with
the laws of California.
(d) For purposes of this Trust, "change of control" shall mean:
the purchase or other acquisition by any person, entity or group of persons,
within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934 ("the Act"), or any comparable successor provisions, of beneficial
ownership within the meaning of Rule 13d-3 promulgated under the Act) of 30
percent or more of either the outstanding shares of common stock or the combined
voting power of Company's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of Company of a reorganization,
merger or consolidation, in each case with respect to which persons who were
stockholders of Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated Company's then outstanding
securities, or a liquidation or dissolution of Company or of the sale of all or
substantially all of Company's assets.
SECTION 14. Effective Date. The effective date of this Amended and Restated
Trust Agreement shall be the date first above stated.
CALMAT CO.,
by /s/ Scott J Wilcott
Name: Scott J Wilcott
Title: Senior Vice President
WACHOVIA BANK AND TRUST
COMPANY,
by
Name:
Title:
9
<PAGE>
EXHIBIT 21.1
CALMAT CO.
SUBSIDIARIES OF REGISTRANT
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PERCENTAGE OF
STOCK OR
ORGANIZED UNDER INTEREST OWNED
NAME OF COMPANY THE LAWS OF BY REGISTRANT
-------------------------------------------------------------------
<S> <C> <C>
CalMat Co. of Arizona Arizona 100%
CalMat Co. of New Mexico New Mexico 100%
CalMat of Central California California 100%
CalMat Land Co. California 100%
CalMat Properties Co. California 100%
Coast Asphalt, Inc. Delaware 100%
Huntmix, Inc. California 100%
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,139
<SECURITIES> 0
<RECEIVABLES> 66,936
<ALLOWANCES> (4,254)
<INVENTORY> 6,439
<CURRENT-ASSETS> 84,385
<PP&E> 664,061
<DEPRECIATION> (265,866)
<TOTAL-ASSETS> 572,837
<CURRENT-LIABILITIES> 49,503
<BONDS> 68,694
<COMMON> 23,139
0
0
<OTHER-SE> 337,965
<TOTAL-LIABILITY-AND-EQUITY> 572,837
<SALES> 365,243
<TOTAL-REVENUES> 376,797
<CGS> 304,721
<TOTAL-COSTS> 304,721
<OTHER-EXPENSES> 3,436
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,506
<INCOME-PRETAX> 29,609
<INCOME-TAX> 10,881
<INCOME-CONTINUING> 18,728
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,728
<EPS-PRIMARY> .81
<EPS-DILUTED> 0
</TABLE>
