<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, 1995
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, LOS ANGELES, CALIFORNIA 90065
(Address of Principal Executive Offices) (Zip Code)
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.
$338,960,814 COMPUTED ON THE BASIS OF $18.375 PER SHARE, WHICH WAS THE
LAST SALE PRICE ON THE NEW YORK STOCK EXCHANGE ON FEBRUARY 20, 1996.
Indicate the number of shares outstanding of each of Registrant's classes of
common stock, as of the latest practicable date.
23,182,312 SHARES OF COMMON STOCK, $1 PAR VALUE, AS OF FEBRUARY 20, 1996.
LIST OF DOCUMENTS INCORPORATED BY REFERENCE
CALMAT CO.'S DEFINITIVE PROXY STATEMENT, DATED MARCH 15, 1996 IS INCORPORATED BY
REFERENCE IN PART III OF THIS FORM 10-K.
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
- ------ ----
<S> <C> <C>
PART I
Item 1. Business..................................................... 1
Item 2. Properties................................................... 5
Item 3. Legal Proceedings............................................ 6
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.................. 14
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..................................... 32
PART III
Item 10. Directors and Executive Officers of Registrant............... 32
Item 11. Executive Compensation....................................... 32
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 32
Item 13. Certain Relationships and Related Transactions............... 32
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports
on Form 8-K.................................................. 32
Signatures ............................................................... 39
</TABLE>
<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. The Company's operations are primarily
concentrated in two business segments. One of its business segments involves
the manufacture, production, distribution and sale of construction materials:
aggregates (crushed rock, sand and gravel), hot-mix asphalt and ready mixed
concrete. This business segment experiences fluctuations with general levels
of activity in the construction industry and with weather-related construction
delays, which normally occur during the first and fourth quarters each year. A
second 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, 1995, 1994 and 1993 is incorporated in Note 11 of the "Notes to
Consolidated Financial Statements," located on pages 28 and 29 of this Annual
Report on Form 10-K.
NARRATIVE DESCRIPTION OF BUSINESS
CONSTRUCTION MATERIALS DIVISION
The Construction Materials Division produces and sells construction
aggregates, hot-mix asphalt, and 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 30 locations in the major markets of Southern and Central
California, the San Francisco Bay Area; Phoenix and Tucson, Arizona; and
Albuquerque, New Mexico. The division also operates asphalt plants at 33
locations in the same markets as the aggregates processing plants, but in
addition, also operates in the Sacramento area. Of the 33 hot-mix locations,
19 are sites which also have aggregates processing plants and/or ready mixed
concrete plants. Ready mixed concrete batch plants are operated at 26 locations
in the same markets as the aggregates plants, except for the Los Angeles and San
Francisco Bay areas. Of the 26 ready mixed concrete locations, 12 are sites
which also have aggregates processing plants. Examples of projects to which the
Company will supply aggregates and/or ready mixed concrete in 1996 include:
Piers 302-305 at the Los Angeles Harbor in Los Angeles, California, the post-
earthquake rebuild of the Cypress freeway in Oakland, California destroyed by
the 1989 Loma Prieta earthquake, the Pleasanton/Dublin Bay Area Rapid Transit
extension in the San Francisco area, a waste water treatment plant in Fresno,
California, the widening of the 118 freeway lanes in Southern California's San
Fernando Valley, Phase III of the Red Line Tunnel in West Los Angeles, the
Arizona Museum of Science and Technology in Phoenix, Arizona, the Tucson,
Arizona International Airport, the Cottonwood Mall in Albuquerque, New Mexico,
and the light rail transit line between downtown San Diego, California and Jack
Murphy Stadium.
The Construction Materials Division was formed in 1995 as a
consolidation of the Company's former Concrete and Aggregates Division and its
Asphalt Division. The former divisions were consolidated in order to streamline
the Company's operations, to eliminate redundancies, and to give customers a
single point of contact for the Company's
1
<PAGE>
products. Included within this new Division is Western Environmental
Contracting, Inc. (formerly known as Western Thermal Soils Company), a wholly
owned subsidiary that provides soil remediation, crushing and contracting
services.
Aggregates
Of the Company's 30 aggregates processing plants, 17 are located in
Southern California. The Company believes it is the largest supplier of
construction aggregates in the greater Los Angeles area. During 1995, the
Company sold 23.2 million tons of aggregates, representing less than half of the
Company's annual maximum production capacity. As of December 31, 1995, the
Company had estimated aggregates reserves of approximately 1.9 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 37 of this Annual
Report on Form 10-K. The Company owns (or has long-term leases or options for)
all of the properties on which its reserves are located, and in all cases where
required by law the Company obtains permits from various governmental
authorities prior to the commencement of its mining activities. Approximately
57% 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 early
1996, the Company acquired a 611-acre site in south San Diego County, which is
expected to yield 30 million tons of aggregates reserves. During 1995, the
Company purchased its joint venture partner's 50% share of the partnership which
owns Azusa Rock, Inc., to become the sole owner of this 120-million ton reserve,
located ten miles from Los Angeles. In March 1994 the Company was awarded a
contract to remove 18 million tons of rock, sand and silts from Irvine Lake in
Orange County, California where commercial aggregates production has recently
commenced. 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.
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.
Hot-Mix Asphalt
The Company's asphalt operations, under the trade name Industrial
Asphalt, represent the third largest supplier of hot-mix asphalt to the
construction industry nationwide, and the Company believes it is the largest
such supplier in California. The Company produces and supplies asphalt and
related specialty products. Unlike most of its competitors, the Company does
not undertake paving work, and thus does not compete with its customers, which
are principally contractors engaged in the paving business.
The primary source of revenue from asphalt operations is from the sale
of hot-mix asphalt. Hot-mix asphalt consists by volume of approximately 95%
aggregates and 5% liquid asphalt (a refined petroleum product). Of the 33
Company locations with asphalt facilities, 19 are sites that also have
aggregates processing plants and/or ready mixed concrete plants. This proximity
provides the Company with a competitive advantage in those markets due to the
availability of aggregates and transportation cost savings. At all other
asphalt plants, more than one source of aggregates is available, and at all
asphalt plants, more than one source of liquid asphalt is available.
In addition, the Company operates 13 asphalt recycling systems at its
major plants that recover aggregates and oil from asphalt that has been salvaged
from roads and other surfaces. Used in the production of new asphalt paving,
the recovered aggregates and oil offer substantial cost savings, strengthen the
Company's ability to secure public projects, and provide a high return on
investment. Two additional recycling systems are planned for 1996.
2
<PAGE>
During 1995, the Company acquired an asphalt plant located on the
Company's Carroll Canyon aggregates site, near San Diego, to enhance the
Company's responsiveness to local customers. Also in late 1995, the Company
entered into a site lease agreement to erect an asphalt plant at Romoland in
Riverside County, California.
The Company also 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
Company is the exclusive distributor in metropolitan Los Angeles of PETROMAT(R),
a polypropylene reinforcing fabric used in the resurfacing of pavement. The
Company also maintains a fleet of paving machines and specialty paving equipment
which it rents, along with qualified operators, to contractors.
Ready Mixed Concrete
Ready mixed concrete, which consists by volume of approximately 80%
aggregates and 20% cement, water and other materials, is either delivered by the
Company's fleet of approximately 375 mixer trucks or by independent haulers. 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.
PROPERTIES DIVISION
The Properties Division manages the Company's extensive holdings of
over 32,000 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 1995, approximately 130 leases
covering approximately 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.
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 33 such buildings (totaling approximately 1.7
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 over 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 nine
landfills and expects to develop one additional landfill site in 1996. All of
the Company's existing and planned landfills are designed and have permits to
accept only non-hazardous construction rubble.
COMPETITIVE CONDITIONS
The aggregates operations and the ready mixed concrete operations have
numerous competitors in each of their markets, but generally have 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 Company'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 Company consumes a portion of its
aggregates production in the manufacturing of ready mixed concrete, and supplies
a portion
3
<PAGE>
of its production to its asphalt operations 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 Company's asphalt operations have more than one competitor in each
of its markets and have several competitors in most of its markets. These
operators compete for business through price, quality and service to customers.
In 1987, the Company entered into a ten-year consent decree with the
Justice Department limiting its ability to acquire additional asphalt operations
in the greater Los Angeles area, western San Diego County and other specified
areas of Southern California. The 1995 acquisition of the Carroll Canyon
asphalt plant was completed with the consent of the Justice Department.
REGULATIONS AND EMPLOYEES
Regulations
Substantial time and resources are 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 is 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.
Employees and Other Labor Information
The Company had 1,671 full-time employees as of December 31, 1995.
Of these, 498 were salaried and 1,173 were hourly.
The Company is party to 28 collective bargaining agreements covering
an aggregate of 959 employees. Eight of these agreements, covering an aggregate
of 156 employees, are currently being negotiated, including one with its
Teamster employees in Albuquerque, New Mexico and three others with its Teamster
and Operating Engineer employees in Bakersfield, California. If the Company is
unable to reach negotiated settlements for any of these contracts, it is likely
that a strike would occur. A strike, should one occur, will depress volumes and
cause plant efficiencies to suffer.
In July 1995, a labor strike by Southern California's I.U.O.E. Local
12 members, affecting 87 asphalt employees and 134 aggregates employees, caused
the Company to experience temporary volume losses and higher costs. The strike
is still in effect but work is being performed by a combination of new employees
and returning workers.
The Company is currently negotiating new contracts with several other
local unions (Teamsters, Laborers and Electricians) to succeed those which
expired in 1994 for its California locations in the counties of Los Angeles and
4
<PAGE>
Orange, and in the cities of Fresno and Sanger, California. In addition, the
Company has four other contracts relating to its asphalt employees that expire
in 1997; three with the Operating Engineers in its Fresno and Sacramento
locations, and one with the Operating Engineers in Phoenix.
A labor agreement negotiated in 1993, which covers less than five
employees at the Company's Properties Division's landfill facilities, expires in
1996.
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 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 currently being
evaluated and 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 1995, 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 32,678 acres are owned or
leased by the Company.
See "CalMat Co., Property Owned and Leased" on page 36 of this Annual
Report on Form 10-K for additional information relating to these properties.
5
<PAGE>
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.
ENVIRONMENTAL - GENERAL
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.
ENVIRONMENTAL - ADMINISTRATIVE AND JUDICIAL PROCEEDINGS
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 currently expected to be issued in late
1996.
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, the ultimate outcome of this action for the Company cannot be
predicted because the case is still in the 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.
6
<PAGE>
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.
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 as 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 has advised the Company that, as an alleged
past owner of two properties and owner of a third property, all formerly
operated by other parties as landfills 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. The
current owners of the two properties which are no longer owned by the Company
have also been named as PRPs.
Subsequently, the Company was named as a defendant in joint cost
recovery actions filed by the EPA and the California Department of Toxic
Substance Control in the United States District Court, Central District of
California. However, the Company has not been served with process, and, with
other PRPs, has entered into a Partial Consent Decree which, if approved by the
Court, would result in dismissal of the Company from the actions, at a cost
which would be less than the sum already reserved for this matter. In the event
the Partial Consent Decree is not approved, the ultimate outcome of the action
cannot be predicted, because of, among other things, uncertainty regarding the
actual contributions to the contamination, if any, from the properties in
question, insurance coverage which may be available, the portion, if any, of
costs for which recovery is sought that could be allocated to the Company, and
the possibility of recovery from other PRPs or defendants or third parties not
named as PRPs or defendants.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
7
<PAGE>
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, 58, 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.
SCOTT J WILCOTT Executive Vice President, Law and Property
Mr. Wilcott, 58, 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.
R. BRUCE RIESER Executive Vice President, Construction Materials
Mr. Rieser, 45, was elected to his current position in December 1995. From
March of 1995 to December of 1995, he served as Senior Vice President,
Construction Materials. 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.
PAUL STANFORD Executive Vice President - Administration, General
Counsel and Secretary
Mr. Stanford, 53, 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.
H. JAMES GALLAGHER Executive Vice President - Finance and Chief Financial
Officer
Mr. Gallagher, 49, 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.
EDWARD J. KELLY Senior Vice President, Treasurer and Chief Accounting
Officer
Mr. Kelly, 40, 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.
CARLOS S. HERNANDEZ Vice President, Asphalt Operations
Mr. Hernandez, 59, was elected to his current position in March 1995. Prior to
that he served as Vice President and General Manager, Asphalt Division since
February 1990. He served as an Area Manager of Industrial Asphalt from 1984 to
1989, then as Managing Director of the Asphalt Division from 1989 to 1990. He
has been employed by the Company and Industrial Asphalt, 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>
1995
First Quarter 19 1/8 17 $.10
Second Quarter 21 3/8 18 1/4 .10
Third Quarter 20 5/8 17 1/4 .10
Fourth Quarter 18 7/8 16 3/8 .10
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
</TABLE>
At February 20, 1996, there were 1,056 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) 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Summary of Operations
Net sales and operating revenues $370,313 $365,243 $348,413 $347,282 $364,943
Net gains on sale of real estate 4,133 7,678 2,081 453 9,555
Total revenues 378,182 376,797 353,506 350,260 378,329
Gains from disposal of assets held for sale -- -- -- 1,786 2,929
Income (loss) from continuing operations
before income taxes and cumulative effect
of change in accounting principle/(a)/ (36,858) 29,609 14,897 (17,506) 31,422
Federal and state income taxes (15,487) 10,881 6,600 (7,002) 12,568
Income (loss) from continuing operations
before cumulative effect of change in
accounting principle (21,371) 18,728 8,297 (10,504) 18,854
Cumulative effect of change in accounting
principle -- -- 919 (6,000) --
Net income (loss) (21,371) 18,728 9,216 (16,504) 18,854
Per Share Data
Income (loss) from continuing operations
before cumulative effect of change in
accounting principle (.92) .81 .36 (.45) .81
Cumulative effect of change in accounting principle -- -- .04 (.26) --
Net income (loss) (.92) .81 .40 (.71) .81
Weighted average number of shares outstanding
during year 23,176 23,224 23,117 23,242 23,319
Cash dividends declared 9,264 9,256 9,244 14,800 14,866
Regular dividends per share .40 .40 .40 .64 .64
Balance Sheet Data
Total assets $559,530 $572,837 $604,895 $597,240 $597,600
Working capital 33,551 34,882 38,916 34,003 43,430
Long-term debt 84,321 68,694 109,635 131,129 92,515
Stockholders' equity 331,149 361,104 351,046 350,687 383,596
Stockholders' equity per share at year end 14.29 15.55 15.19 15.19 16.58
</TABLE>
(a) 1995 includes $47.0 million of special charges related to adoption of SFAS
121, the new accounting standard for impairment of long-lived assets ($45.0
million) and costs related to a management consolidation within
construction materials operations ($2.0 million). 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 from continuing operations before income taxes and
cumulative effect of change in accounting principle would have been $10.1
million and $8.6 million for 1995 and 1992, respectively.
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion should be read in connection with the consolidated
financial statements.
RESULTS OF OPERATIONS
Record rainfall and related flooding in the Company's California
markets early in the year and a labor strike which affected most of the Los
Angeles area construction materials operations had a pronounced negative impact
on 1995 results. Construction Materials Division earnings were lower than in
1994, due to decreases in aggregates and asphalt, partially offset by increases
in ready mixed concrete. Properties Division earnings were also lower than in
1994, due to lower gains on sale of real estate, a decline in income from
developed properties caused by recent sales of such properties and a decrease in
income from landfill operations.
The Company reported a net loss of $21.4 million, or $0.92 per share,
for 1995, which includes a non-cash charge of $26.5 million, or $1.14 per share,
to adopt Statement of Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and For Long-Lived Assets to be Disposed Of"
("SFAS 121"), and a charge of $1.2 million, or $0.05 per share, related to a
management consolidation within the Company's construction materials operations.
Excluding these special charges, net income would have been $6.3 million, or
$0.27 per share, compared with net income of $18.7 million, or $0.81 per share,
for 1994.
Net income in 1994 was $18.7 million, or $0.81 per share, compared
with net income of $9.2 million, or $0.40 per share, for the year ended December
31, 1993. Construction Materials Division earnings increased in 1994, due to
increases in asphalt, ready mixed concrete and soil remediation operations,
partially offset by decreases in aggregates. The Properties Division earnings
for 1994 were sharply higher than 1993, largely due to increased gains on real
estate sales and higher income from landfill operations.
Net income in 1993 of $9.2 million, or $0.40 per share, 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.
CONSOLIDATED REVENUES AND EARNINGS
Total revenues amounted to $378.2 million, $376.8 million and $353.5
million in 1995, 1994 and 1993, respectively. Included in total revenues are
gains from real estate sales of $4.1 million, $7.7 million and $2.1 million in
1995, 1994 and 1993, respectively. Net sales and operating revenues, which
excludes gains on sale of real estate and other income, of $370.3 million in
1995 were up $5.1 million, or 1.4%, compared with $365.2 million in 1994. Net
sales and operating revenues were up $16.8 million, or 4.8%, in 1994 compared
with 1993. Cost of goods sold as a percentage of net sales and operating
revenues was 88.2% in 1995 compared with 83.4% in 1994, mainly due to higher
average unit plant costs in the Construction Materials Division. This
percentage was 85.0% in 1993.
Interest expense decreased $1.8 million, or 40.6%, in 1995 compared
with 1994, due primarily to a decrease in the average borrrowings. Interest
expense decreased 30.3% in 1994, compared with 1993, primarily because of lower
borrowings, partially offset by higher interest rates.
Income (loss) before incomes taxes and cumulative effect of change in
accounting principle was ($36.9) million in 1995, versus $29.6 million in 1994.
The 1995 amount includes special charges of $47.0 million related to SFAS 121
($45.0 million) and costs related to a management consolidation within
construction materials operations ($2.0 million). Excluding these special
charges, income was $10.1 million. The decrease, excluding special charges,
consists of declines in earnings of the Construction Materials Division of $13.9
million, of which $3.3 million represents incremental out-of-pocket labor strike
costs incurred in 1995, and the Properties Division of $6.3 million, of which
$3.5 million was due to a decrease in gains on sales of real estate. Income
(loss) before income taxes and cumulative effect of change in accounting
principle was $29.6 million in 1994, up from income of $14.9 million in 1993.
The increase in 1994 over 1993 consists primarily of improved earnings of the
Construction Materials Division and Properties Division of $4.9 million and $8.8
million, respectively.
11
<PAGE>
Selling, general and administrative expenses increased $1.3 million,
or 3.8%, in 1995 compared with 1994, which in turn increased $0.9 million, or
2.6%, from the 1993 level.
The effective tax rate in 1995 was 42.0% compared with 36.7% in 1994
and 44.3% in 1993. The 42.0% in 1995 is due primarily to the fact that the SFAS
121 charge was tax effected at 41.1%, the combined federal and state statutory
rate. Excluding the SFAS 121 charge, the effective tax rate in 1995 was 37.0%.
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%.
OPERATING DIVISIONS
CONSTRUCTION MATERIALS DIVISION
The Construction Materials Division produces and sells construction
aggregates, hot-mix asphalt, and 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 30 locations in the major markets of Southern and Central
California, the San Francisco Bay Area; Phoenix and Tucson, Arizona; and
Albuquerque, New Mexico. The division also operates asphalt plants at 33
locations in the same markets as the aggregates processing plants, but in
addition, also operates in the Sacramento area. Of the 33 hot-mix locations,
19 are sites which also have aggregates processing plants and/or ready mixed
concrete plants. Ready mixed concrete batch plants are operated at 26 locations
in the same markets as the aggregates plants, except for the Los Angeles and San
Francisco Bay areas. Of the 26 ready mixed concrete locations, 12 are sites
which also have aggregates processing plants.
As shown in the following table, 1995 aggregates and asphalt sales
volumes declined from 1994, mainly because of the record rainfall in California
in early 1995, as well as the labor strike in the Los Angeles area. Volumes in
1994 decreased from 1993 as the slowdown in infrastructure work in California
more than offset increases from the January 1994 Los Angeles earthquake.
CONSTRUCTION MATERIALS - SALES VOLUMES
<TABLE>
<CAPTION>
(Amounts in thousands) 1995 1994 1993
- ----------------------------------------------------------------
<S> <C> <C> <C>
Aggregates:
Ton sold to outside customers 15,417 16,878 17,740
Tons used in ready mixed concrete 2,958 2,635 2,531
Tons used in asphalt 4,830 5,077 5,137
------ ------ ------
23,205 24,590 25,408
====== ====== ======
Tons of hot-mix asphalt sold 7,386 7,539 7,830
====== ====== ======
Yards of ready mixed concrete sold 2,241 1,946 1,818
====== ====== ======
</TABLE>
Overall division revenue of $350.5 million was up 2.8% from 1994's
revenue of $340.8 million, which was up 4.3% from 1993's revenue of $326.9
million. The increase in 1995's revenue was due to higher average sales prices
for ready mixed concrete and asphalt and higher volumes for ready mixed
concrete, which more than offset lower volumes for aggregates and asphalt. The
increase in 1994's revenues resulted from higher average sales prices for
aggregates, ready mixed concrete and asphalt and higher volumes for ready mixed
concrete, partially offset by lower volumes for aggregates and asphalt. Also
contributing to the higher revenue was increased revenue from soil remediation
operations.
In 1995, the average sales price of aggregates was virtually unchanged
from 1994. Gross profit for aggregates, excluding incremental out-of-pocket
strike costs, decreased $4.4 million due to the combination of a 6% volume
decline and 5% higher unit production costs. Asphalt gross profit, excluding
incremental out-of-pocket strike costs, declined by $4.9 million due to the
combination of a 2% volume decline and 8% higher unit production costs,
partially offset by a 3% increase in average sales price. More than one-half of
the cost increase was due to the increased costs of liquid asphalt and
aggregates. Gross profit from ready mixed concrete sales increased $1.8 million
due to a 15% increase in unit sales volumes and a 2% increase in average sales
price, partially offset by 2% higher unit production costs. Ready mixed
concrete operations were not as negatively impacted by the heavy rainfall in
California early in the year, because a much larger percentage of the Company's
ready mixed concrete business is in Arizona and New Mexico, where weather
conditions were less adverse. Income from soil remediation operations declined
$2.0 million from 1994 levels due to a substantial reduction in volumes
processed.
12
<PAGE>
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 asphalt increased by $3.8
million in 1994 as a result of a 3.4% increase in average sales price and a $2.2
million increase in income from soil remediation operations offset partially by
slightly higher unit production costs and a 3.7% volume decline. 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.
Selling, general and administrative expenses increased 1.7% in 1995
from the 1994 level, which in turn had increased 0.7% from 1993. Income from
operations decreased to $10.3 million in 1995 from $24.2 million in 1994 which
had increased from 1993's level of $19.3 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 $11.2 million in 1995 compared with $17.6
million in 1994. Included in 1995 are gains from real estate sales of $4.1
million versus gains of $7.7 million in 1994. Excluding real estate gains,
Properties Division income from operations decreased $2.8 million. The decrease
was due to a $1.2 million decline in income from developed properties due to
recent sales of such properties, and a $0.9 million decrease in income from
landfill operations due, in part, to the adverse weather in California in early
1995 and an unusually large contract in Arizona in 1994.
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 1995, the Company charged to income $2.3 million before tax for
environmental remediation costs and made related payments of $0.2 million. At
December 31, 1995, the reserve for environmental remediation costs totaled $5.4
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
Previous mention has been made of the negative impact the labor
strike, which affected most of the Los Angeles area construction materials
operations, had on 1995 results. Although the labor strike is still in effect,
the Company has replaced all necessary positions, and plant operations and
business levels are returning to their pre-strike norms.
During 1995, the Company revised its inventory valuation process for
income tax purposes. In order to conform its book inventory valuation process
more closely to this change, the Company recorded a cumulative increase in
inventories of $5.4 million at December 31, 1995.
In connection with the operating property valuation process undertaken
in the adoption of SFAS 121, the Company also reassessed its reclamation
provision policies and concluded it appropriate to increase its reclamation
reserve. During 1995, the Company charged to income $7.8 million before tax for
reclamation costs and made related payments of $1.2 million. The
13
<PAGE>
Company expects future annual charges for reclamation obligations to approximate
the average charge for the years 1993, 1994 and 1995 (exclusive of the charge
related to the reassessment), which was $2.7 million. At December 31, 1995, the
reserve for reclamation obligations totaled $11.6 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Cash and cash equivalents decreased $2.1 million in 1995, which in
turn decreased $8.5 million from 1993.
Operating activities are the principal source of CalMat's cash flows.
Over the past three years, operating activities have provided $131.7 million in
cash. Net cash of $43.8 million generated from operating activities in 1995 was
essentially unchanged from 1994 and 1993, which were $44.0 million and $43.9
million, respectively.
Cash used for investing activities totaled $53.6 million in 1995, a
$51.9 million increase from the 1994 level. The primary reasons for this change
were increased spending on property, plant and equipment of $31.1 million, the
acquisition of the remainder of a business previously partially owned for $11.7
million, and increases in installment notes receivable of $6.9 million. 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.
Net cash provided by financing activities amounted to $7.6 million in
1995, a $58.4 million change from the $50.8 million used for financing
activities during 1994. The primary reason for this change was $15.8 million in
net increase in notes payable to banks in 1995 compared with $42.5 million in
net payments on notes payable to banks and notes and bonds payable in 1994. 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.
Capital expenditures increased in 1995 to $57.0 million from $25.8
million in 1994, which was largely due to expansion projects, including the
construction of mining and processing facilities located at Irvine Lake in
Orange County, California, two new asphalt plants in Southern California and a
portable aggregates crushing plant. Management believes that cash provided by
operations and existing borrowing arrangements will provide adequate funds for
current commitments and expected working capital requirements during 1996.
During both 1995 and 1994, the Company expended $9.3 million in cash
dividends.
WORKING CAPITAL
Working capital totaled $33.6 million at December 31, 1995, a $1.3
million decrease from the 1994 total of $34.9 million, which was $4.0 million
less than the 1993 level of $38.9 million. This decrease was due to the $8.5
million decrease in cash and cash equivalents.
OTHER
Total consolidated long-term and short-term borrowings at December 31,
1995 of $84.4 million increased $15.6 million from the balance at December 31,
1994 of $68.8 million, which had decreased $46.7 million from the balance at
December 31, 1993 of $115.5 million. The decrease in debt in 1994 was paid from
cash flows from operations. Debt as a percent of total capitalization was 20.3%
and 16.0%, at December 31, 1995 and 1994, 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 15 hereof.
14
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
Report of Independent Accountants.............................. 16
Consolidated Balance Sheets as of December 31, 1995 and 1994... 17
Consolidated Statements of Operations for the
three years ended December 31, 1995, 1994, and 1993............ 18
Consolidated Statements of Cash Flow for the
three years ended December 31, 1995, 1994, and 1993............ 19
Consolidated Statements of Stockholders' Equity
for the three years ended December 31, 1995, 1994, and 1993.... 20
Notes to Consolidated Financial Statements..................... 21
Financial Statement Schedule:
II - Valuation and Qualifying Accounts and Reserves........ 31
</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.
15
<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, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1995, and the related financial
statement schedule as listed in the index on page 15 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, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, 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 Note 3 to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for income taxes.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
February 27, 1996
16
<PAGE>
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------
(Amounts in thousands, except share data) 1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ -- $ 2,139
Trade accounts receivable, less allowance for discounts and
doubtful accounts ($4,570 in 1995 and $4,254 in 1994) 62,274 61,353
Income taxes receivable -- 714
Inventories 11,705 6,439
Prepaid expenses 3,265 3,322
Deferred income taxes 9,361 9,089
Installment notes receivable 7,217 1,329
--------- ---------
Total current assets 93,822 84,385
Installment notes receivable and other assets 20,670 21,937
Investment in and advances to affiliates 1,236 14,527
Costs in excess of net assets of businesses acquired, net 52,102 53,793
Property, plant and equipment:
Land and deposits 166,995 168,523
Buildings, machinery and equipment 465,631 476,023
Construction in progress 40,082 19,515
--------- ---------
672,708 664,061
Less: accumulated depreciation and depletion (281,008) (265,866)
--------- ---------
Property, plant and equipment, net 391,700 398,195
--------- ---------
Total assets $559,530 $ 572,837
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 23,753 $ 17,909
Accrued liabilities 32,687 29,185
Notes and bonds payable - current portion 110 95
Income taxes payable 1,403 --
Dividends payable 2,318 2,314
--------- ---------
Total current liabilities 60,271 49,503
Notes and bonds payable - long term portion 84,321 68,694
Other liabilities and deferred credits 30,670 21,333
Deferred income taxes 53,119 72,203
--------- ---------
Total liabilities 228,381 211,733
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $1; authorized 5,000,000 shares;
none issued or outstanding
Common stock, par value $1; authorized 100,000,000 shares;
issued and outstanding 23,182,312 in 1995 and 23,138,769 in 1994 23,182 23,139
Additional paid-in capital 40,588 39,930
Retained earnings 267,379 298,035
--------- ---------
Total stockholders' equity 331,149 361,104
--------- ---------
Total liabilities and stockholders' equity $559,530 $ 572,837
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended December 31,
----------------------------------
(Amounts in thousands, except per share data) 1995 1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Net sales and operating revenues $370,313 $365,243 $348,413
Net gains on sale of real estate 4,133 7,678 2,081
Other income 3,736 3,876 3,012
-------------------------------
378,182 376,797 353,506
-------------------------------
Costs and expenses:
Cost of products sold and operating expenses 326,513 304,721 296,169
Selling, general and administrative expenses 35,847 34,525 33,636
Interest expense 2,675 4,506 6,465
Other expenses 3,005 3,436 2,339
Special charges 47,000 -- --
-------------------------------
415,040 347,188 338,609
-------------------------------
Income (loss) before income taxes and cumulative
effect of change in accounting principle (36,858) 29,609 14,897
Federal and state income taxes (15,487) 10,881 6,600
-------------------------------
Income (loss) before cumulative effect
of change in accounting principle (21,371) 18,728 8,297
Cumulative effect of change in accounting principle -- -- 919
-------------------------------
Net income (loss) $(21,371) $ 18,728 $ 9,216
===============================
Per Share Data
Income (loss) before cumulative effect of
change in accounting principle $ (.92) $ .81 $ .36
Cumulative effect of change in accounting principle -- -- .04
-------------------------------
Net income (loss) $ (.92) $ .81 $ .40
===============================
Cash dividends per share $ .40 $ .40 $ .40
===============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
For the years ended December 31,
----------------------------------
(Amounts in thousands) 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income (loss) $(21,371) $ 18,728 $ 9,216
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation, cost depletion and amortization 31,181 29,929 31,953
Cumulative effect of change in accounting principle -- -- (919)
Special charges 47,000 -- --
Net gains from sale of real estate (4,133) (7,678) (2,081)
Net gains on disposal of property, plant and equipment (422) (291) (379)
Deferred taxes (19,356) 389 2,991
Changes in operating assets and liabilities
Trade accounts, net 457 3,690 (9,552)
Inventories and prepaid expenses 113 (3,417) 1,287
Accounts payable, accrued liabilities and other liabilities 8,850 1,984 7,906
Federal and state income taxes 2,117 850 3,349
Other (592) (174) 111
----------------------------------
Cash provided by operating activities 43,844 44,010 43,882
----------------------------------
Investing Activities:
Purchase of property, plant and equipment (56,962) (25,836) (12,063)
Proceeds from sale of property, plant and equipment 1,554 773 1,922
Proceeds from sale of real estate 18,438 20,957 3,188
Installment notes receivable (4,455) 2,397 1,638
Investment in and advances to affiliates (706) 52 (214)
Business acquired (11,682) -- --
Other 250 -- 1,275
----------------------------------
Cash used for investing activities (53,563) (1,657) (4,254)
----------------------------------
Financing Activities:
Stock options exercised 680 551 335
Notes payable to banks 15,750 (21,759) (50,667)
Proceeds from senior notes -- -- 35,000
Principal payments on notes and bonds payable (88) (20,721) (994)
Payment of cash dividends (9,260) (9,253) (10,624)
Hedge costs and other loan fees, net 498 372 (2,082)
----------------------------------
Cash provided by (used for) financing activities 7,580 (50,810) (29,032)
----------------------------------
Increase (decrease) in cash and cash equivalents (2,139) (8,457) 10,596
Balance, beginning of period 2,139 10,596 --
----------------------------------
Balance, end of period $ -- $ 2,139 $ 10,596
==================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $ 2,353 $ 4,462 $ 5,319
Income taxes 2,129 10,602 3,844
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
CALMAT CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
For the years ended
December 31, 1995, 1994 and 1993
-------------------------------------------
Additional Total
Common Paid-In Retained Stockholders'
(Amounts in thousands) Stock Capital Earnings Equity
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
Net loss for 1995 -- -- (21,371) (21,371)
Common stock repurchased (1) (2) (21) (24)
Stock options exercised 44 660 -- 704
Cash dividends declared -- -- (9,264) (9,264)
- ----------------------------------------------------------------------------
Balance, December 31, 1995 $23,182 $40,588 $267,379 $331,149
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<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.
INVENTORIES: Inventories are recorded when purchased or produced and are stated
at the lower of cost or market. The Company revised its inventory valuation
process for income tax purposes and has adopted similar methodology for book
purposes. The annual impact for book and tax purposes is not expected to be
material.
COSTS IN EXCESS OF NET ASSETS OF BUSINESSES ACQUIRED: Costs in excess of the
fair value of net assets of businesses acquired are amortized on a straight-line
basis over periods not exceeding 40 years. Accumulated amortization of such
costs was $11.1 million and $9.4 million at December 31, 1995 and 1994,
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.
RECLAMATION COSTS: The estimated costs of reclamation associated with mining
activities are accrued during production and classified as long-term
liabilities. Such costs are taken into account in determining the cost of
production. The reserve for reclamation costs was $11.6 million and $5.0
million at December 31, 1995 and December 31, 1994, respectively.
ENVIRONMENTAL: Environmental remediation 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 $5.4 million and $3.2
million at December 31, 1995 and December 31, 1994, 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.
21
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
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: Certain prior year amounts have been reclassified to conform
with the current year's presentation.
NOTE 2: ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31:
<TABLE>
<CAPTION>
(Amounts in thousands) 1995 1994
- -----------------------------------------------------------
<S> <C> <C>
Payroll, vacation and other benefits $ 7,585 $ 7,418
Workers' compensation 2,550 2,946
Profit sharing 4,022 3,891
Other 18,530 14,930
-----------------
$32,687 $29,185
=================
</TABLE>
NOTE 3: FEDERAL AND STATE TAXES
Income (loss) before income taxes and the related income tax expense (benefit)
are as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income (Loss) Before Income Taxes and Cumulative
Effect of Change in Accounting Principle $(36,858) $29,609 $14,897
===============================
Income Tax Expense (Benefit) $(15,487) $10,881 $ 6,600
===============================
</TABLE>
Income tax expense (benefit) consists of the following:
Federal Income Tax:
<TABLE>
<S> <C> <C> <C>
Currently payable $ 1,376 $6,794 $3,252
Deferred (13,475) 1,792 2,052
-------- ------- ------
(12,099) 8,586 5,304
-------- ------- ------
State Income Tax:
Currently payable 532 2,012 1,164
Deferred (3,920) 283 132
-------- ------- ------
(3,388) 2,295 1,296
-------- ------- ------
$(15,487) $10,881 $6,600
======== ======= ======
</TABLE>
22
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax liabilities (assets) are comprised of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C>
Depreciation $ 32,769 $ 30,718
Real estate exchanges 27,418 27,191
Purchase accounting basis differences 13,862 14,474
Depletion and other land basis adjustments 5,970 6,798
Change in inventory method for tax purposes 3,545 --
Other 3,010 5,627
-------- --------
Gross deferred tax liabilities 86,574 84,808
-------- --------
Postretirement benefits (4,518) (4,462)
Impairment of long-lived assets (19,533) (6,230)
Net operating loss carryforwards (3,565) (716)
Reclamation and environmental accruals (7,030) (3,318)
Inventory valuation reserves (4,985) (139)
Other (6,750) (7,545)
-------- --------
Gross deferred tax assets (46,381) (22,410)
Valuation allowance 3,565 716
-------- --------
$ 43,758 $ 63,114
======== ========
</TABLE>
A reconciliation of the provision (benefit) for income taxes to the federal
statutory income tax rate is as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1995 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax expense (benefit) at statutory rates $(12,900) $ 10,363 $ 5,065
Less effect of:
Federal tax benefit (expense) of state income tax (1,180) 785 392
Percentage depletion 916 1,266 1,232
Goodwill and other amortization (462) (461) (449)
Enacted rate change -- -- (1,127)
Tax credits -- -- 267
Other accruals (155) 388 31
Miscellaneous 80 (201) (585)
-------- -------- -------
Reported federal income tax expense (benefit) (12,099) 8,586 5,304
State income tax expense (benefit) (3,388) 2,295 1,296
-------- -------- -------
$(15,487) $ 10,881 $ 6,600
======== ======== =======
</TABLE>
In January 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." The adjustments to the
January 1, 1993 balance sheet to adopt SFAS 109 netted to a credit of $0.9
million. This amount was reflected in 1993 net income as the cumulative effect
of a change in accounting principle.
At December 31, 1995, the Company had alternative minimum tax credit
carryforwards of approximately $2.2 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.
23
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: NOTES AND BONDS PAYABLE
Notes and bonds payable consist of the following at December 31:
<TABLE>
<CAPTION>
(Amounts in thousands) 1995 1994
- --------------------------------------------------
<S> <C> <C>
Notes payable to banks $48,000 $32,250
Senior notes 35,000 35,000
Municipal improvement bonds 1,431 1,539
------- -------
Total 84,431 68,789
Less current portion 110 95
------- -------
Long-term portion $84,321 $68,694
======= =======
</TABLE>
At December 31, 1995, the Company had a formal committed revolving
credit facility with a group of banks totaling $125.0 million which will expire
in 1998. The Company pays a facility fee on the committed facility.
Short-term bank borrowings made under this credit facility and
included in notes payable to banks were $48.0 million and $32.3 million at
December 31, 1995 and 1994, respectively, and bore rates equal to or less than
the prime bank lending rate which was 8.5% at December 31, 1995 and 1994.
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: 1996, $0.1 million; 1997, $8.8 million; 1998, $56.8 million; 1999,
$8.8 million; and 2000, $8.9 million.
NOTE 5: STOCK OPTIONS AND RIGHTS
The Company has stock option plans that provide for granting incentive
and non-qualified options on common stock to officers, directors 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>
1995 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Shares
Outstanding at beginning of year 1,899,386 1,679,596 1,771,766
Granted 69,000 328,000 412,675
Exercised (44,818) (37,610) (24,912)
Forfeited (126,707) (70,600) (479,933)
--------- --------- ---------
Outstanding at end of year 1,796,861 1,899,386 1,679,596
========= ========= =========
Available for future options 811,671 762,214 1,019,834
========= ========= =========
Exercisable at end of year 1,287,502 1,081,946 882,160
========= ========= =========
</TABLE>
Prices per share of common stock under option range from $14.63 to
$30.50 at December 31, 1995. Options expire from 1996 to 2004. Prices per share
of options exercised range from $12.75 to $19.38 in 1995, $12.75 to $22.50 in
1994 and $7.095 to $19.375 in 1993. Stock options may be issued to executives
and certain key employees as determined by the Stock Option Sub-Committee of 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
24
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
grant. Options generally become exercisable in four annual installments
beginning one year after the date of grant and expire ten years after the grant
date. No options expired in 1995 and 1993. In 1994, 220 options expired. In
January 1996, options to purchase a total of 237,000 shares of common stock were
granted to officers and key employees.
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 6: EARNINGS PER SHARE
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 1995, 1994 and 1993 totaled
23,176,000, 23,224,000 and 23,117,000, respectively.
NOTE 7: 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.
The Company had outstanding interest rate swap agreements that
effectively converted $15.0 million in 1995 and $25.0 million in 1994 of
variable rate debt to fixed rate borrowings at December 31, 1995 and 1994,
respectively. These agreements expire in 1996.
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 among willing parties in a current market transaction.
25
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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>
1995 1994
----------------------------- ----------------------------
(Amounts in thousands) Carrying Amount Fair Value Carrying Amount Fair Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes receivable $ 9,830 $ 9,495 $ 5,352 $ 4,768
Notes and bonds payable 84,431 85,300 68,789 66,400
Interest rate swaps-unrealized gain (loss) -- (58) -- 119
</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 8: RETIREMENT PLANS
The Company has a trusteed thrift and profit-sharing retirement plan
and a money purchase pension plan to provide funds from which retirement
benefits are paid to substantially all salaried employees of the Company and its
wholly owned subsidiaries, including officers and directors who are also
employees. Annual contributions to these plans made by the Company approximate
15.0% of the aggregate compensation paid or accrued each year to participants in
the plan. The Company also contributes to various union pension plans, as
specified by certain union agreements, and non-union pension plans which cover
substantially all hourly employees. Contributions to all retirement plans
charged to income totaled $7.9 million in 1995, $8.2 million in 1994 and $8.0
million in 1993.
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.
The following table sets fort 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) 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accumulated Postretirement Benefit Obligation
Retirees $ 6,224 $ 5,152 $ 4,904
Fully eligible active plan participants 675 748 894
Other active plan participants 1,488 1,006 1,022
------- ------- -------
8,387 6,906 6,820
Plan assets at fair value -- -- --
------- ------- -------
Accumulated Postretirement Benefit Obligation in excess of plan assets 8,387 6,906 6,820
------- ------- -------
Unrecognized prior service cost 1,528 1,708 1,888
Unrecognized net gain 628 2,041 2,038
------- ------- -------
Accrued postretirement benefit cost at December 31 $10,543 $10,655 $10,746
======= ======= =======
</TABLE>
26
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The net periodic postretirement benefit cost for 1995, 1994 and 1993
included the following components:
<TABLE>
<CAPTION>
(Amounts in thousands) 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits attributed to service during the period $ 290 $ 230 $ 289
Interest cost on the Accumulated Postretirement Benefit Obligation 554 452 511
Net amortization (180) (293) (192)
Full recognition of transition obligation -- -- --
----- ----- -----
Net periodic postretirement benefit cost $ 664 $ 389 $ 608
===== ===== =====
</TABLE>
For measurement purposes, an 11.3% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1996; the rate was
assumed to decrease gradually to 6.0% by 2011 and remain at that level
thereafter. The weighted-average discount rate used in determining the
Accumulated Postretirement Benefit Obligation was 7.0% in 1995, 8.0% in 1994 and
7.0% in 1993.
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, 1995 by $1.0 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 9: SPECIAL CHARGES
The Company recorded a special charge of $2.0 million in the second
quarter of 1995 relating to the consolidation of the Company's construction
materials operations. The net after-tax effect of this charge was $1.2 million,
or $0.05 per share.
The Company adopted Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and For Long-Lived
Assets to be Disposed Of " ("SFAS 121") during the fourth quarter of 1995. This
required accounting change resulted in a pre-tax charge of $45.0 million ($26.5
million after-tax, or $1.14 per share).
SFAS 121 changes the method of determining and measuring impairment
for long-lived assets. For operating properties, the new standard requires that
impairment be measured at the plant or specific property level; under previous
accounting rules it was acceptable to measure impairment at the regional or
divisional level. Further, if an impairment, as now defined, is identified, the
new standard requires measurement of the impairment using fair value, which in
most cases requires the use of discounted cash flows, which is the principal
reason for the write-down of real estate development projects. Given the nature
of the Company's assets, the new requirements resulted in substantially greater
write-downs than under previous accounting rules.
The $45.0 million pre-tax charge can be broken out as follows:
<TABLE>
<S> <C>
Operating properties $24,648
Real estate development projects 14,821
Assets to be Disposed Of 5,531
-------
$45,000
=======
</TABLE>
Impairment charges for operating properties relate to sites where, due
to intense competition and/or difficult production environments, marginally
profitable or loss operations persist. Impairment charges for real estate,
including Assets to be Disposed Of, stem from severe declines in California and
Arizona real estate values for properties acquired or development projects
committed to at the peak of those markets. The Company anticipates the sale of
Assets to be Disposed Of during 1996. The carrying value of Assets to be
Disposed Of aggregated $11.9 million at December 31, 1995.
27
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10: COMMITMENTS AND CONTINGENCIES
The Company had letters of credit outstanding totaling approximately
$36.0 million at December 31, 1995, 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 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.
NOTE 11: BUSINESS SEGMENT INFORMATION
The Company operates principally in two business segments:
Construction Materials and Properties. Operations in the Construction Materials
Division include the mining and sale of aggregates (rock, sand and gravel), the
manufacture and sale of ready mixed concrete, and the manufacture and sale of
hot-mix asphalt. The 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. Also included in
this division is Western Environmental Contracting, Inc. (formerly known as
Western Thermal Soils), a wholly owned subsidiary that provides soil
remediation, crushing and contracting services. These products and services are
used primarily 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 30 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 26
locations in these markets except for the Los Angeles and San Francisco Bay
areas. Of the 26 ready mixed concrete locations, 12 are sites which also have
aggregates processing plants. Asphalt plants are operated at 33 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 33 asphalt plant locations, 19 are sites which also have
aggregates processing plants and/or ready mixed concrete 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.
28
<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) 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Construction Materials $350,536 $340,840 $326,853
Properties - Operations 19,777 24,403 21,560
Properties - Real estate gains 4,133 7,678 2,081
Corporate and other 3,736 3,876 3,012
-------- -------- --------
Total $378,182 $376,797 $353,506
======== ======== ========
Income (loss) before taxes:
Construction Materials $ 10,316 $ 24,212 $ 19,314
Properties - Operations 7,103 9,900 6,734
Properties - Real estate gains 4,133 7,678 2,081
Corporate and unallocated expenses, net (13,767) (14,621) (14,434)
Other income 2,357 2,440 1,202
Special charges (47,000) -- --
-------- -------- --------
Total $(36,858) $ 29,609 $ 14,897
======== ======== ========
Identifiable assets (as of December 31):
Construction Materials $428,437 $414,456 $432,086
Properties 102,233 130,823 137,183
Corporate and other 28,860 27,558 35,626
-------- -------- --------
Total $559,530 $572,837 $604,895
======== ======== ========
Depreciation, cost depletion and
amortization:
Construction Materials $27,552 $ 25,400 $ 26,997
Properties 2,729 3,683 3,993
Corporate and other 900 846 963
-------- -------- --------
Total $31,181 $ 29,929 $ 31,953
======== ======== ========
Capital expenditures and business
expansion:
Construction Materials $61,108 $ 17,181 $ 7,241
Properties 8,365 8,025 4,352
Corporate and other 295 630 1,161
------- -------- --------
Total $69,768 $ 25,836 $ 12,754
======= ======== ========
</TABLE>
Income (loss) 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 cash and cash equivalents, notes
receivable, general office facilities and other assets.
A substantial portion of the Company's revenues and income before
taxes result from construction materials operations located in Southern
California.
29
<PAGE>
CALMAT CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: QUARTERLY OPERATING RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
1995 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 $69,954 $103,047 $100,862 $104,319 $378,182
Gross profit 6,958 18,846 14,701 11,164 51,669
Net income (loss) (1,982) 4,105/(a)/ 3,215 (26,709)/(b)/ (21,371)
Net income (loss) per share/ (c)/ (.09) .18 .14 (1.15) (.92)
<CAPTION>
1994 Quarter Ended
- ---------------------------------------------------------------------------------------------------------------------------------
(Unaudited; Amounts in thousands, except per share data) March 31 June 30 Sept. 30 Dec. 31 Year
- ---------------------------------------------------------------------------------------------------------------------------------
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/(c)/ .06 .22 .27 .25 .81
</TABLE>
(a) Includes a charge of $1.2 million, or $0.05 per share, related to a
management consolidation of the Company's construction materials
operations.
(b) Includes a non-cash charge of $26.5 million, or $1.14 per share, to adopt
the new accounting standard for impairment of long-lived assets (SFAS 121).
(c) 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.
30
<PAGE>
CALMAT CO. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(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, 1995:
Reserves deducted from assets to
which they apply:
Allowance for doubtful trade receivables... $ 3,906 $ 3,368 $ -- $ 3,098(a) $ 4,176
Allowance for cash discounts............... 348 2,790 -- 2,744(b) 394
Allowance for doubtful notes receivable.... 938 404 -- 123(a) 1,219
Reserves included in liabilities:
Environmental remediation.................. 3,214 2,343 -- 169(c) 5,388
Reclamation 5,019 7,767 -- 1,182(c) 11,604
------- ------- ------- ------- -------
Total.................................... $13,425 $16,672 $ -- $ 7,316 $22,781
======= ======= ======= ======= =======
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.................. 4,000 2,069 -- 2,855(c) 3,214
Reclamation 1,200 4,276 -- 457(c) 5,019
------- ------- ------- ------- -------
Total.................................... $10,271 $13,530 $ -- $10,376 $13,425
======= ======= ======= ======= =======
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 1,529 -- 268(c) 4,000
Reclamation 384 1,530 -- 714(c) 1,200
------- ------- ------- ------- -------
Total.................................... $ 7,686 $ 8,988 $ -- $ 6,403 $10,271
======= ======= ======= ======= =======
</TABLE>
______________________
Notes:
(a) Write offs of uncollectible accounts, less recoveries.
(b) Cash discounts allowed.
(c) Payments made.
31
<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 8 of the
Company's Proxy Statement dated March 15, 1996, for the April 24, 1996, 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 16 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 4 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 6 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 15 of this Annual Report on Form 10-K.
(2) Financial Statement Schedule:
See Index to Consolidated Financial Statements and Financial Statement
Schedule on page 15 of this Annual Report on Form 10-K.
(3) Exhibits:
The following exhibits are included as part of the Company's 1995
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
32
<PAGE>
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.
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: Standby Letter of Credit Facility dated September 26,
1995, between CalMat Co. and ABN-AMRO Bank N.V., filed
as Exhibit 10.1 to the Company's Report on Form 10-Q
for the Quarterly Period Ended September 30, 1995, is
incorporated herein by reference.
Exhibit 10.2: 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 the Company's Report on Form 10-Q for the Quarterly
Period Ended June 30, 1994, is incorporated herein by
reference.
Exhibit 10.3: Second Amendment, dated February 26, 1996, effective
December 31, 1995, to 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.
Exhibit 10.4: 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 10.5: Amendment dated February 6, 1996, effective December
31, 1995, to Note Purchase Agreement dated as of July
23, 1993, between CalMat Co. and Metropolitan Life
Insurance Company et al.
33
<PAGE>
Exhibit 10.6: Interest Rate Swap Agreement dated as of December 10,
1988, by and between Security Pacific National Bank
and CalMat Co., filed as Exhibit 10.3 to the Company's
1994 Annual Report on Form 10-K, is incorporated
herein by reference.
*Exhibit 10.7: Restatement of Amended and Restated Employment
Agreement originally effective as of July 1, 1984,
between the Company and A. Frederick Gerstell executed
on April 13, 1993.
*Exhibit 10.8: 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 10.9: Amended and Restated Trust Agreement dated April 13,
1993, by and between CalMat Co. and Wachovia Bank and
Trust Company, filed as Exhibit 10.6 to the Company's
1994 Annual Report on Form 10-K, is incorporated
herein by reference.
*Exhibit 10.10: 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.
*Exhibit 10.11: Second Amendment to Employment Agreement between the
Company and Scott J Wilcott, dated April 8, 1991.
*Exhibit 10.12: 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 10.13: Second Amendment to Employment Agreement between the
Company and Paul Stanford, dated October 4, 1995.
*Exhibit 10.14: 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 10.15: 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 10.16: Letter Agreement Regarding Employment between the
Company and R. Bruce Rieser, executed February 2,
1995.
*Exhibit 10.17: 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 10.18: 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.
34
<PAGE>
*Exhibit 10.19: 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 10.20: 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 10.21: 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 10.22: 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 10.23: 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 15, 1996, and mailed to the
Company's stockholders on March 15, 1996, is
incorporated herein by reference.
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 38 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 1995.
35
<PAGE>
CALMAT CO.
PROPERTY OWNED AND LEASED
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
ACREAGE /(A)/
---------------------------------
JOINT
OWNED LEASED VENTURES TOTAL
---------------------------------
<S> <C> <C> <C> <C>
CONSTRUCTION MATERIALS /(B)/
Production and sales property........................... 7,605 6,227 13,832
Reserve property held for future production/not zoned... 3,443 1,115 4,558
Fully depleted property................................. 98 98
Reserve property held for future production/zoned....... 1,937 1,937
Joint ventures, partnerships, partially owned subsidiaries 610 610
------ ----- ----- ------
Total Construction Materials Division.......... 13,083 7,342 610 21,035
PROPERTIES:
Developable............................................. 1,269 13 1,282
Improved property/finished lots......................... 53 3 56
Improved property/fully developed....................... 76 2 78
Landfill/permitted...................................... 244 244
Public storage.......................................... 48 48
Property leased to others............................... 99 8 107
Miscellaneous properties /(c)/.......................... 9,828 9,828
------ ----- ----- ------
Total Properties Division...................... 11,617 13 13 11,643
Total All Divisions............................ 24,700 7,355 623 32,678
====== ===== ===== ======
</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 Construction Materials 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.
36
<PAGE>
CALMAT CO.
SCHEDULE OF ESTIMATED AGGREGATES RESERVES
AS OF DECEMBER 31, 1995
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
TONS OWNED TONS LEASED TOTAL TONS
---------- ----------- ----------
<S> <C> <C> <C>
Aggregates Reserves..... 1,193.3 727.8 1,921.1
</TABLE>
37
<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 27, 1996, on our audits of the
consolidated financial statements and the financial statement schedule of CalMat
Co. and subsidiaries as of December 31, 1995 and 1994, and for the years ended
December 31, 1995, 1994 and 1993, which report is included in this Annual Report
on Form 10-K.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 26, 1996
38
<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 25, 1996
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 25, 1996
- ---------------------------------------- President, Chief
A. Frederick Gerstell Executive Officer, Chief
Operating Officer and
Director
/s/ H. JAMES GALLAGHER Chief Financial Officer March 25, 1996
- ----------------------------------------
H. James Gallagher
/s/ EDWARD J. KELLY Chief Accounting Officer March 25, 1996
- ----------------------------------------
Edward J. Kelly
/s/ JOHN C. ARGUE Director March 25, 1996
- ----------------------------------------
John C. Argue
/s/ ARTHUR BROWN Director March 25, 1996
- ----------------------------------------
Arthur Brown
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ HARRY M. CONGER Director March 25, 1996
- ----------------------------------------
Harry M. Conger
/s/ RAYBURN S. DEZEMBER Director March 25, 1996
- ----------------------------------------
Rayburn S. Dezember
/s/ RICHARD A. GRANT, JR. Director March 25, 1996
- ----------------------------------------
Richard A. Grant, Jr.
/s/ GROVER R. HEYLER Director March 25, 1996
- ----------------------------------------
Grover R. Heyler
/s/ WILLIAM T. HUSTON Director March 25, 1996
- ----------------------------------------
William T. Huston
/s/ WILLIAM JENKINS Director March 25, 1996
- ----------------------------------------
William Jenkins
/s/ EDWARD A. LANDRY Director March 25, 1996
- ----------------------------------------
Edward A. Landry
/s/ THOMAS L. LEE Director March 25, 1996
- ----------------------------------------
Thomas L. Lee
/s/ THOMAS M. LINDEN Director March 25, 1996
- ----------------------------------------
Thomas M. Linden
/s/ STUART T. PEELER Director March 25, 1996
- ----------------------------------------
Stuart T. Peeler
</TABLE>
40
<PAGE>
EXHIBIT 10.3
[LOGO OF BANK OF AMERICA]
February 28, 1996
Agency Management Services 5596
FEDERAL EXPRESS
- ---------------
TO: PERSONS ON THE ATTACHED DISTRIBUTION LIST
Ref: CALMAT CO. USD 125MM First Amended and Restated Credit
Agreement dated June 30, 1994, as Amended
The Bank of America, as Agent, is pleased to announce that the Agent has
received approval from all parties to replace the changed pages 1 and 2 to the
Second Amendment To First Amended And Restated Credit Agreement (the "Second
Amendment"), which had been previously executed by all parties.
Therefore, attached please find an original executed Second Amendment,
together with a copy of the letter agreement to substitute pages 1 and 2 and
copies of each party's acknowledged signature page.
Please feel free to call the undersigned if you have any questions or need
additional information. Thanks to each of you for your prompt responses during
this transaction.
Sincerely,
Bank of America NT&SA, as Agent
/s/ Charles Graber
Charles Graber
Vice President
(415) 436-3495
encl.
<PAGE>
DISTRIBUTION LIST
CALMAT CO.
Edward Kelly
Senior Vice President, Treasurer and
Chief Accounting Officer
CALMAT CO
3200 San Fernando Road
Los Angeles, CA 90065
FAX (213) 254-6102
Gina West
Vice President
BANK OF AMERICA NT & SA
Credit Products - LA #5618
555 South Flower Street
Los Angeles, CA 90071-2202
FAX (213) 228-2756
cc: Peter Fuad, Senior Legal Counsel
Legal South - #4362, 8th Floor
555 South Flower Street
Los Angeles, CA 90071-2202
FAX (213) 228-3086
Mary Cameron
CHEMICAL BANK
270 Park Avenue
New York, NY 10017
FAX (212) 270-4711
James P. Moore
Senior Corporate Banker
FIRST NATIONAL BANK OF CHICAGO
Fourth Floor
777 South Figueroa Street
Los Angeles, CA 90017-5800
FAX (213) 683-4999
Andrea Defterios
Vice President
NATIONSBANK OF TEXAS, NA
444 S. Flower Street, Suite #1500
Los Angeles, CA 90017-2901
FAX (213) 624-5815
<PAGE>
Calmat Co.
Page 2
Dan Silmore
Assistant Vice President
WELLS FARGO BANK, N.A.
333 S. Grand Avenue, 3rd Floor
Los Angeles, CA 90071
FAX (213) 617-7622
<PAGE>
[LOGO OF BANK OF AMERICA]
AGENCY MANAGEMENT SERVICES 5596
February 21, 1996
FAX
- ---
TO: PERSONS ON THE ATTACHED DISTRIBUTION LIST
Ref: CALMAT CO. USD 125MM First Amended and Restated Credit
Agreement dated June 30, 1994, as Amended
Attached herewith are changed pages 1 and 2 to the Second Amendment To
First Amended And Restated Credit Agreement (the "Second Amendment") which has
been previously executed by all parties. Also attached herewith is a copy of a
revised SFAS #121 Impairment Schedule which has been prepared by the Borrower.
As you will see, the Borrower has revised their projection of the SFAS #121
impact from $35,000,000 previously shown in the Second Amendment to $45,000,000.
Therefore, we have provided the changed pages to reflect this upward adjustment
(these are the only changes).
Please review the two changed pages to the Second Amendment, and if they
are acceptable to you, please sign this letter below acknowledging your approval
and return a copy of your signature on this letter via facsimile to the
______________________________________________________________________
undersigned as soon as possible, but no later than 5:00 p.m. on Monday, February
________________________________________________________________________________
26, 1996 (please follow with an original via overnight mail). If anyone
________
foresees any problem with the above time table, please call the undersigned as
soon as possible.
If you have any questions or need additional information, please call Gina
West at
Bank of America National Trust and Savings Association
1455 Market Street, San Francisco, CA 94103
Telex 3726050 BAGASFO Fax 415/436-2700
<PAGE>
CALMAT CO.
2/21/96
Page 2
(213) 228-6400 or the undersigned. Thank you in advance for your prompt
attention to this matter.
Sincerely,
Bank of America NT&SA, as Agent
/s/ Charles Graber
Charles Graber
Vice President
(415) 436-3495
APPROVED: YES X NO
--- ---
BY: CalMat Co. DATE: February 26, 1996
------------------------------ ------------
BANK OR COMPANY NAME
BY: /s/ Edward J. Kelly
--------------------------
NAME: Edward J. Kelly
TITLE: Senior Vice President,
Treasurer and Chief
Accounting Officer
BY: /s/ Richard S. Yamashita
----------------------------
NAME: Richard S. Yamashita
TITLE: Assistant Treasurer
<PAGE>
CALMAT CO.
2/21/96
Page 2
(213) 228-6400 or the undersigned. Thank you in advance for your prompt
attention to this matter.
Sincerely,
Bank of America NT&SA, as Agent
/s/ Charles Graber
Charles Graber
Vice President
(413) 436-3495
APPROVED: YES X NO
--- ----
BY: Bank of America DATE: February 22, 1996
--------------------------------- -----------
BANK OR COMPANY NAME
BY: /s/ Gina M. West
-----------------------------
NAME: Gina M. West
TITLE: Vice President
<PAGE>
CALMAT CO.
2/21/96
Page 2
(213) 228-6400 or the undersigned. Thank you in advance for your prompt
attention to this matter.
Sincerely,
Bank of America NT&SA, as Agent
/s/ Charles Graber
Charles Graber
Vice President
(415) 436-3495
APPROVED: YES X NO
--- ---
BY: Chemical Bank DATE: February 26, 1996
--------------------------------- ------------
Bank or Company Name
BY: /s/ Mary E. Cameron
-----------------------------
NAME: Mary E. Cameron
TITLE: Vice President
<PAGE>
CALMAT CO.
2/21/96
Page 2
(213) 228-6400 or the undersigned. Thank you in advance for your prompt
attention to this matter.
Sincerely,
Bank of America NT&SA, as Agent
/s/ Charles Graber
Charles Graber
Vice President
(415) 436-3495
APPROVED: YES X NO
--- ---
BY: The First National Bank of Chicago DATE: February 27, 1996
---------------------------------- -----------
BANK OR COMPANY NAME
BY: /s/ Michael A. Basak
------------------------
NAME: Michael A. Basak
TITLE: Vice President
<PAGE>
CALMAT CO.
2/21/96
Page 2
(213) 228-6400 or the undersigned. Thank you in advance for your prompt
attention to this matter.
Sincerely,
Bank of America NT&SA, as Agent
/s/ Charles Graber
Charles Graber
Vice President
(415) 436-3495
APPROVED: YES X NO
--- ---
BY: NationsBank of Texas, N.A. DATE: February 26, 1996
-------------------------------------- -----------
BANK OR COMPANY NAME
BY: /s/ Andrea Deftenos
---------------------------------
NAME: Andrea Deftenos
TITLE: Vice President
<PAGE>
CALMAT CO.
2/21/96
Page 2
(213) 228-6400 or the undersigned. Thank you in advance for your prompt
attention to this matter.
Sincerely,
Bank of America NT&SA, as Agent
/s/ Charles Graber
Charles Graber
Vice President
(415) 436-3495
APPROVED: YES X NO
--- ---
BY: Wells Fargo Bank DATE: February 23, 1996
---------------------------------- -----------
BANK OR COMPANY NAME
BY: /s/ Daniel S. Silmore
-----------------------------
NAME: Daniel S. Silmore
TITLE: Assistant Vice President
<PAGE>
SECOND AMENDMENT TO FIRST AMENDED
AND RESTATED CREDIT AGREEMENT
This SECOND AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
("Second Amendment") is entered into as of February 1, 1996, to be effective
December 31, 1995, by and among CALMAT CO., a Delaware corporation (the
"Borrower"), the Banks party thereto and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as agent for the Banks (the "Agent"), and amends the First
Amended and Restated Credit Agreement dated as of June 30, 1994, among the
Borrower, the Banks and the Agent, as amended by a First Amendment to First
Amended and Restated Credit Agreement dated as of November 17, 1995 (as so
amended, the "Agreement").
RECITAL
-------
The Borrower is adopting statement of Financial Accounting Standards
No. 121 and has requested that a one-time noncash charge not exceeding
$45,000,000 on a pre-tax basis resulting from such adoption be excluded from the
calculation of the financial covenants, and the Banks and the Agent are willing
to do so on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties to the Agreement agree as follows:
1. TERMS. All terms used herein shall have the same meaning as in
-----
the Agreement unless, otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. AMENDMENTS TO AGREEMENT. The parties hereto agree that the
-----------------------
Agreement is amended as follows:
2.1 The definition of "Consolidated Net Income" in Section 1.1 of the
Agreement is amended by deleting "and" at the end of clause (ii) and inserting
the following at the end of clause (iii) before the period:
; and (iv) a one-time noncash charge not exceeding $45,000,000 on a
pre-tax basis resulting from the Borrower's adoption of Statement of
Financial Accounting Standards No. 121 when computing Consolidated Net
Income for the fiscal quarter and year ending December 31, 1995 and
thereafter."
-1-
<PAGE>
2.2 The definition of "Consolidated Net Worth" in Section 1.1 of the
Agreement is amended by inserting the following at the end:
"provided, however, that a one-time noncash charge not exceeding
-------- -------
$45,000,000 on a pre-tax basis resulting from the Borrower's adoption
of Statement of Financial Accounting Standards No. 121 shall be
excluded when computing Consolidated Net Worth for the fiscal quarter
and year ending December 31, 1995 and thereafter."
2.3 Attachment 1 to Exhibit IV to the Agreement (Compliance
Certificate) is amended by inserting the following at the end of the first
paragraph:
"For purposes of computing the following financial covenants, one-time
noncash charge not exceeding $45,000,000 on a pre-tax basis resulting
from the Borrower's adoption of Statement of Financial Accounting
Standards No.121 shall be excluded."
3. Representations and Warranties. The Borrower hereby represents
------------------------------
and warrants to the Agent and the Banks that:
3.1 Authority. The Borrower has all necessary power and has taken
---------
all corporate action necessary to make this Second Amendment, the Agreement, and
all other Loan Documents, the valid and enforceable obligations they purport to
be.
3.2 No Legal Obstacle to Agreement. Neither the execution of this
------------------------------
Second Amendment, the making by the Borrower of any borrowings under the
Agreement, nor the performance of the Agreement has constituted or resulted in
or will constitute or result in a breach of the provisions of any contract to
which the Borrower or any of its Subsidiaries are a party, or the violation of
any law, judgment, decree or governmental order, rule or regulation applicable
to the Borrower or any of its Subsidiaries, or result in the creation under any
agreement or instrument of any security interest, lien, charge, or encumbrance
upon any of the assets of the Borrower or any of its Subsidiaries.
3.3 INCORPORATION OF CERTAIN REPRESENTATIONS. The representations
----------------------------------------
and warranties set forth in Section 4 of the Agreement are true and correct in
all material respects on and as of the date hereof as though made on and as of
the date hereof.
3.4 DEFAULT. No Potential Event of Default or Event of Default under
--------
the Agreement has occurred and is continuing.
-2-
<PAGE>
4. Miscellaneous.
-------------
4.1 Effectiveness Of The Agreement. Except as hereby expressly
------------------------------
amended, the Agreement shall remain in full force and effect, and is hereby
ratified and confirmed in all respects.
4.2 Limited Waiver. This Second Amendment is specific in time and in
--------------
intent and does not constitute, nor should it be construed as, a waiver of any
right, power or privilege under the Loan Documents, or under any agreement,
contract, indenture, document or instrument mentioned in the Loan Documents; nor
does it preclude any exercise thereof or the exercise of any other right, power
or privilege, no shall any future waiver of any right, power, privilege or
default hereunder, or under any agreement, contract, indenture, document of
instrument mentioned in the Loan Documents, constitute a waiver of any other
default of the same or of any other term or provision.
4.3 Counterparts. This Second Amendment may be executed in any
------------
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This Second Amendment shall
not become effective until signed by the Borrower, the Agent and the Requisite
Banks, whether the same or counterparts, and the same shall have been delivered
to the Agent.
4.4 Jurisdiction. This Second Amendment, and any instrument or
------------
agreement required hereunder, shall be governed by and construed under the laws
of the State of California.
IN WITNESS WHEREOF, the parties have caused this Second Amendment to
------------------
be executed and delivered as of the date first set forth above.
BORROWER: CALMAT CO.
By: /s/ Edward J. Kelly
----------------------------------
Edward J. Kelly
Senior Vice President,
Treasurer and
Chief Accounting Officer
By: /s/ Richard S. Yamashita
----------------------------------
Richard S. Yamashita
Assistant Treasurer
(Signatures continue)
-3-
<PAGE>
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION. AS AGENT
By: /s/ Charles Graber
--------------------------------
Charles Graber
Vice President
BANKS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AS A BANK
By: /s/ Gina West
--------------------------------
Gina West
Vice President
CHEMICAL BANK
By: /s/ Mary E. Cameron
--------------------------------
Name: Mary E. Cameron
-----------------------------
Title: Vice President
----------------------------
FIRST NATIONAL BANK OF CHICAGO
By: /s/ L. Gene Beube
--------------------------------
Name: L. Gene Beube
-----------------------------
Title: Senior Vice President
----------------------------
NATIONSBANK OF TEXAS, N.A.
By: /s/ Andrea Defterios
-------------------------------
Name: Andrea Defterios
-----------------------------
Title: Vice President
-----------------------------
WELLS FARGO BANK, N.A.
By: /s/ Daniel S. Silmore
--------------------------------
Name: Daniel S. Silmore
------------------------------
Title: Assistant Vice President
-----------------------------
-4-
<PAGE>
EXHIBIT 10.5
Metropolitan Life Insurance Company
One Madison Avenue, New York, NY 10010-3690
February 6, 1996
CalMat Co.
3200 San Fernando Road
Los Angeles, CA 90065
Attention: Mr. Edward Kelly
Treasurer
Dear Sir:
The undersigned are the holders of $35,000,000 aggregate principal amount of the
6.70% Senior Unsecured Notes due July 23, 2000 (the "Notes") issued pursuant to
the Note Purchase Agreement dated July 23, 1993, as amended (the "Agreement"),
between CalMat Co. (the "Company") and the undersigned.
As holders of the Notes and parties to the Agreement and subject to the
conditions specified in the next to last paragraph of this letter, the
undersigned hereby consent and agree that:
1. Section 7.4 (ii) of the Agreement shall be amended by deleting the
number "$40,000,000" appearing therein and substituting in its place the number
"$70,000,000";
2. The definition of "Consolidated Net Income" in Section 9.1 of the
Agreement shall be amended by deleting the word "and" at the end of clause (ii)
thereof, by deleting the period at the end of clause (iii) thereof, and by
adding the following language:
"; (iv) the effects of any revaluing of the assets of the Company as a result of
SFAS #121: "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of"; and (v) the special charges taken by the
Company in an amount not exceeding $2,700,000 (pre-tax) during the quarter ended
December 31, 1995."; and
3. The definition of "Restricted Investments" in Section 9.1 of the
Agreement shall be amended by deleting the word "and" at the end of clause (vii)
thereof and substituting in its place a semicolon and the word "and" after
clause (viii) and by adding the following clause immediately after clause
(viii): "(ix) until
<PAGE>
November 30, 1996, the Investment by the Company in the amount of $6,000,000 in
New Owl Rock Products."
The undersigned's consents to the foregoing amendments are conditioned upon the
Company's representation to the undersigned, as confirmed by its
countersignature below, that neither the Company nor any Subsidiary is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any bond, debenture, note or other evidence
of Indebtedness of the Company or such Subsidiary or contained in any instrument
under or pursuant to which any thereof has been issued or made and delivered.
If you are in agreement with the foregoing amendments and make the above
referenced representation please sign below and return this letter to
Metropolitan Life Insurance Company whereupon such amendments shall be effective
as of December 31, 1995.
Very truly yours,
METROPOLITAN LIFE INSURANCE METROPOLITAN INSURANCE AND
COMPANY ANNUITY COMPANY
By: /s/ William F. Covington By: /s/ Anthony J. Williamson
By: /s/ John C.
For Separate Accounts METROPOLITAN PROPERTY AND
#50 and #137 CASUALTY INSURANCE COMPANY
TEXAS LIFE INSURANCE COMPANY By: /s/ Susan A. Buffum
By: /s/ Jacqueline D. Jenkins
The representation by the Company
contained in the next to last paragraph
of the foregoing letter is hereby
confirmed and the foregoing amendments
to the Agreement are accepted and agreed to.
CALMAT CO.
By: /s/ Edward J. Kelly
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
This is a restatement of an amended and restated Employment Agreement
("Agreement") originally effective as of July 1, 1984, and most recently
amended August 7, 1991, between CalMat Co., a Delaware Corporation
(hereinafter called "Company"), and A. Frederick Gerstell (hereinafter
called "Executive").
RECITALS
--------
A. The Executive presently serves as Chairman of the Board, President,
Chief Executive Officer and Chief Operating Officer of the Company.
B. The Company desires to provide for the Executive's compensation
commensurate with the position of Chairman of the Board, President, Chief
Executive Officer and Chief Operating Officer of the Company and to be
assured of the continued association and services of the Executive and is,
therefore, consistent with the established practice of the Company with
respect to its top executives, willing and anxious to engage the
Executive's services upon the terms herein contained.
C. The Executive desires to continue his employment with the Company upon
said terms and in consideration of the benefits of this Agreement.
AGREEMENT
---------
NOW THEREFORE, in consideration of the foregoing recitals and the promises
and conditions herein contained, it is agreed as follows:
ARTICLE I
EMPLOYMENT
----------
Section 1.1: Position, Duties and Responsibilities of Executive
--------------------------------------------------
The Company shall employ the Executive as its Chairman of the
Board, President, Chief Executive Officer and Chief Operating Officer. In
such position, the Executive shall have at least such responsibilities and
<PAGE>
2
powers as set forth in Article IV, Sections 6 and 7 of the By-laws of the
Company in effect on the date hereof. During his employment hereunder, the
Executive shall devote his full energies, interest, abilities and
productive time during normal business hours to the performance of this
Agreement and shall, without the Company's prior written consent in each
instance, refrain from rendering services of any kind to others for
compensation or which would materially interfere with the performance of
his duties under this Agreement. Notwithstanding the foregoing, the
Executive may serve as a director of other companies with the consent of
the Company's Board of Directors.
Section 1.2: TERM OF EMPLOYMENT
------------------
(a) The Executive shall be employed for a term commencing July 1,
1984 and ending upon such termination date as is set forth in a written
notice given by either party terminating this Agreement provided that such
termination date will occur not less than four years subsequent to the date
upon which such notice is given. For example, this Agreement could be
terminated on or after January 31, 1994 by written notice given by either
party on January 30, 1990.
(b) During such term of this Agreement, the Executive's
employment shall not be subject to termination at the instance of the
Company for cause or for any other reason and the Executive's compensation
and other benefits as provided herein shall continue unabated during the
full term of this Agreement and otherwise as provided herein; provided,
however, that the Board of Directors of the Company shall have the right,
acting in accordance with the By-laws of the Company, to remove the
Executive from office as Chairman of the Board, President, Chief Executive
Officer and Chief Operating Officer of the Company in the event the
Executive acts in any way which has a direct, substantial and adverse
effect upon the reputation or condition of the Company, in which event the
Executive may terminate his employment pursuant to Section 1.5.
Section 1.3: TERMINATION OF AGREEMENT UPON DISABILITY OF
--------------------------------------------
EXECUTIVE
---------
If at the end of any calendar month, the Executive is and has,
for six (6) full months, continuously been unable, due to mental or
physical illness or injury, to perform his duties under this Agreement in
his normal and
<PAGE>
3
regular manner, this Agreement shall be terminated subject to the
provisions of Section 3.1.
Section 1.4: TERMINATION OF AGREEMENT UPON DEATH OF
--------------------------------------
EXECUTIVE
---------
If the Executive dies, this Agreement shall be terminated on the
last day of the calendar month of his death.
Section 1.5: TERMINATION OF EMPLOYMENT BY THE EXECUTIVE
------------------------------------------
If, without the Executive's express written consent, the Company
(i) significantly reduces the importance of the functions, duties,
responsibilities or authority of the Executive, (ii) reduces the
Executive's compensation or benefits, or (iii) relocates the principal
executive office of the Company to a location outside of Los Angeles County
or reassigns the Executive to a location other than the principal executive
office of the Company (except for required travel on the Company's business
to an extent substantially consistent with the Executive's travel
obligations existing on the date of this Agreement), then the Executive may
inform the Company that such action by the Company constitutes constructive
notification under Section 1.2 that this Agreement will be terminated four
years thereafter. Executive shall continue to receive compensation during
the notice period. Notwithstanding the notice provision contained in
Section 1.2(a), after any such constructive notice or actual notice to the
Executive of the termination of this Agreement by the Company pursuant to
Section 1.2, the Executive may at any time terminate his employment with
the Company. In the event of such a termination of employment by the
Executive, the Company shall within 72 hours make a payment to the
Executive of the lump-sum value (without any present-value discount or
adjustment for inflation) of the salary and benefits that would have been
provided to the Executive for the period from the date of such resignation
until the date which is four years from the date of such constructive or
actual notice, and the Executive shall be free to seek and obtain other
employment or arrangements for the rendition of personal services with or
to others, notwithstanding the provisions of Section 1.1, and without a
reduction of his compensation and benefits hereunder.
<PAGE>
4
ARTICLE II
COMPENSATION
------------
Section 2.1: SALARY
------
The Company shall pay a salary to the Executive for the term
hereof at the minimum rate of Three Hundred Twenty Thousand dollars
($320,000) per year, payable in bi-weekly or semi-monthly installments.
During the term hereof, the Executive's salary may be improved by the
Company's Board of Directors (with the Executive not voting) in which event
this Agreement shall be deemed amended to reflect such increases.
Section 2.2: TRAVEL AND ENTERTAINMENT EXPENSE
--------------------------------
The Company shall reimburse the Executive for reasonable travel
and entertainment expenses incurred in behalf of the Company in the
performance of his duties hereunder. During the term of the Executive's
employment, he shall be entitled to the business and personal use of an
automobile that is owned or leased by the Company and that is comparable to
the automobile provided to the Executive on the date of this Agreement.
ARTICLE III
OTHER BENEFITS
--------------
Section 3.1: PAYMENTS ON ACCOUNT OF DISABILITY OF
------------------------------------
EXECUTIVE
---------
If this Agreement is terminated under Section 1.3, the Company
shall continue to pay to the Executive on account of his disability, the
bi-weekly or semi-monthly salary installments under Section 2.1 at the
salary rate in effect on the date of said termination (subject to
adjustment pursuant to Section 3.3) and to provide him with benefits as
described in Section 3.2, until four years after the Executive is given
notice of such termination; provided, however, that in the event of the
Executive's death such monthly installments as shall be payable hereunder
shall terminate.
<PAGE>
5
Section 3.2: PARTICIPATION IN OTHER COMPANY BENEFITS
---------------------------------------
In addition to the benefits provided in this Agreement, the
Executive shall, throughout the term hereof (prior to death), be entitled
to and shall receive all other benefits generally available to other
executives of the Company, including (without limitation) benefits under
the Company's medical, health, disability, death benefit, profit sharing
and bonus and other incentive compensation plans (other than stock option
plans). The Executive shall be entitled to receive benefits which are at
least as great in scope and amount as those received by any other employee
of the Company. The Executive shall also be entitled to benefits under the
Company's Supplemental Executive Retirement Plan ("SERP"), whether or not
the SERP is available to other executives. If the Executive's employment is
terminated pursuant to Section 1.2(b), Section 1.3 or Section 1.5: (i) the
amount the Executive otherwise would have received as bonus payments for
the period after the termination shall be determined assuming that he would
be entitled to an annual bonus or bonuses at an annual rate at least equal
to the average of his annual bonuses for the preceding two years and that
he would be entitled to receive a pro-rata portion of such amount for any
period shorter than a full calendar year; (ii) the amount of the profit
sharing plan contributions otherwise made on behalf of the Executive shall
be determined assuming that the level of Company contributions to the plan
would equal the average of such levels for the preceding two years; (iii)
the payment for the value of welfare benefits shall be based on the current
cost of such coverage to the Company and shall take into account the
Executive's entitlement to participate in the Company's welfare benefit
plans for retirees (if he would have qualified for such participation
assuming he had an additional four years of service); (iv) the Executive
shall continue to have use of an automobile as provided in Section 2.2
(until the end of the appropriate four-year period under Section 1.2(b),
Section 1.3 or 1.5, as the case may be) unless and until he elects during
such period to purchase the car from the Company at a price equal to the
greater of its book value to the Company or its wholesale selling price;
and (v) the amount to which the Executive would otherwise be entitled under
the SERP shall be determined (A) based on his age at the date he would
otherwise have terminated employment, (B) taking into account the salary he
would have earned through such date based on his salary rate in effect at
his actual termination date increased using the 6.5% salary
<PAGE>
6
scale assumption adopted by the SERP actuary in funding the SERP and (C)
deeming the amount of the Executive's Qualified Plan benefit (as defined in
the SERP) to include the amount in (ii) above.
Section 3.3: COST OF LIVING ADJUSTMENT
-------------------------
The bi-weekly or semi-monthly payments to be paid to or on
account of the Executive in any year under Section 3.1 shall be increased
on January 1 of each year after January 1, 1984 (the "adjustment date"), in the
same proportion as the proportional difference between the "Consumer Price Index
for Urban Wage Earners, Clerical Workers, all items (Los Angeles - Long Beach -
Anaheim areas)," published by the United States Department of Labor, Bureau of
Labor Statistics (the "CPI") in effect on the adjustment date and the CPI in
effect on January 1, 1984. Should the Bureau of Labor Statistics discontinue the
publication of the CPI, or publish the same less frequently, or alter the same
in any manner, then the Company may adopt a substitute index or substitute
procedure which reasonably reflects and monitors consumer prices. A decline in
the CPI shall not serve as a basis for a reduction in the bi-weekly or semi-
monthly payments to be paid to or on account of the Executive.
Section 3.4: STOCK OPTIONS
-------------
The Company shall amend all outstanding Stock Option Agreements
with the Executive to provide, and shall provide in all future options
under the Company Stock Option Plan or future stock option plans, that the
Executive may accelerate the exercisability of all options to acquire
shares covered by such Stock Option Agreements, and by future agreements
(i) on the termination of the Executive's employment by the Company for any
reason, or (ii) the occurrence of a "potential change in control of the
Company." For the purpose of this provision, a "potential change in the
control of the Company" shall be deemed to have occurred if (i) the Company
enters into an agreement or letter of intent the consummation of which
would result in the occurrence of a "change in control of the Company," as
hereinafter defined, (ii) any person (including the Company) publicly
announces an intention to take or to consider to take actions which if
consummated would constitute a "change in control of the Company" or (iii)
the Board of Directors of the Company adopts a resolution to the effect
that, for the purpose of this provision, a "potential change in
<PAGE>
7
control of the Company" has occurred. For the purposes of this provision,
a "change in control of the Company" shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), other
than a trustee or other fiduciary holding securities under an employee
benefit of the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities regardless of whether or not the
Board of Directors shall have approved such change in control, (ii) the
shareholders of the Company approve (a) a merger of consolidation of the
Company with any other corporation regardless of which entity is the
surviving company, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least
80% of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation or (b) a plan of complete liquidation of the Company or
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, (iii) during any period of two
consecutive years, individuals who at the beginning of any such period
constitute the Directors of the Company cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for
election by the Company stockholders, of each new Director of the Company
was approved by a vote of at least a majority of such Directors of the
Company then still in office who were Directors of the Company at the
beginning of any such period, or (iv) any other event shall occur that
would be required to be reported in response to Item 6(c) (or any successor
provision) of Schedule 14A of Regulation 14A promulgated under the Exchange
Act.
Section 3.5: POTENTIAL EXCISE TAXES
----------------------
Should any payments hereunder or contemplated hereby be subject
to excise tax pursuant to Section 4999 of the Internal Revenue Code of
1986, or any successor or similar provision thereto, or comparable state or
local tax laws, the Company shall pay to the Executive such additional
compensation as is necessary (after taking into account all Federal, state
and local income taxes payable by the
<PAGE>
8
Executive as a result of the receipt of such compensation) to place the
Executive in the same after-tax position he would have been in had no such
excise tax (or any interest or penalties thereon) been paid or incurred.
The Company shall pay additional compensation upon the earlier of (i) the
time at which the Company withholds such excise tax from any payments to
the Executive or (ii) 30 days after the Executive notifies the Company that
the Executive has filed a tax return which takes the position that such
excise tax is due and payable in reliance on a written opinion of the
Executive's tax counsel that it is more likely than not that such payment
with respect to any such excise tax is due and payable. If the Executive
makes any payment with respect to any such excise tax as a result of an
adjustment to the Executive's tax liability by a Federal, state or local
authority, the Company will pay such additional compensation within 30 days
after the Executive notifies the Company of such payment. Without limiting
the obligation of the Company hereunder, the Executive agrees, in the event
the Executive makes any payment pursuant to the preceding sentence, to
negotiate with the Company in good faith with respect to procedures
reasonably requested by the Company which would afford the Company the
ability to contest the imposition of such excise tax; provided, however,
that the Executive will not be required to afford the Company any right to
contest the applicability of any such excise tax to the extent that the
Executive reasonably determines that such contest is inconsistent with the
overall tax interests of the Executive. The Company agrees to hold in
confidence and not to disclose, without the Executive's prior written
consent, any information with regard to the Executive's tax position which
the Company obtains pursuant to this Section 3.5.
ARTICLE IV
----------
GENERAL PROVISIONS
------------------
Section 4.1: ASSIGNABILITY OF AGREEMENT
--------------------------
The rights and duties of the parties hereunder shall not be
assignable by either party, except that this Agreement and all rights and
obligations hereunder shall be assigned by the Company and its assumption
required by any corporation or other business entity which succeeds to all
or substantially all of the business of the Company through merger,
consolidation, corporate reorganization, or by
<PAGE>
9
acquisition of all or substantially all of the assets of the Company.
Section 4.2: INTEGRATION
-----------
Except as provided in Sections 2.1 and 3.2, this Agreement
contains the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings,
commitments and practices, whether written or oral. No amendments to this
Agreement may be made except by a writing signed by both parties. This
Agreement shall be construed according to the laws of the State of
California.
Section 4.3: NOTICES
-------
Any notice to the Company required or permitted hereunder shall
be given in writing to the Secretary of the Company either by personal
service or by registered mail, postage prepaid, addressed to the Company at
its then principal place of business. Any such notice to the Executive
shall be given in a like manner and if mailed shall be addressed to the
Executive at his home address then shown in the files of the Company. For
the purpose of determining compliance with any time element herein, a
notice shall be deemed given on the postmarked date.
Section 4.4: WAIVER OF SEVERANCE BENEFITS
----------------------------
In consideration of the execution of this Agreement the Executive
waives any and all rights which he has or might otherwise have under that
certain letter agreement between him and California Portland Cement Company
dated March 23, 1983 with regard to the "Severance Benefits" and consents
to the cancellation thereof by California Portland Cement Company and/or
Company. Accordingly, upon the execution of this Agreement said letter
agreement shall thereupon become and thereafter be void and of no force or
effect.
Section 4.5: INDEMNIFICATION PROVISIONS
--------------------------
The indemnification provisions set forth in Article VII of the
By-laws of the Company in effect on the date hereof are hereby incorporated
by reference as a material term of this Agreement, constitute material
consideration for the Executive's agreement hereunder and
<PAGE>
10
may not be amended without the Executive's express written consent.
Section 4.6: RIGHT TO ARBITRATE
------------------
The Executive shall have the right, in addition to all other
rights and remedies provided by law, at his election to seek arbitration in
Los Angeles County, California, under the rules of the American Arbitration
Association, in the event of any dispute concerning this Agreement.
Section 4.7: ATTORNEY'S AND ACCOUNTANT'S FEES
--------------------------------
The Company shall pay to the Executive all legal and accounting
expenses and fees incurred by Executive in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection with any tax
audit or proceeding to the extent attributable to the application of
Section 4999 of the Code to any payment or benefit under this Agreement,
without regard to whether the Executive prevails in obtaining or enforcing
such right or benefit. The Company shall pay to the Executive any expenses
and fees incurred in any such proceeding promptly after receipt by the
Company of a written notice by the Executive that he has incurred such fees
or expenses.
EXECUTED by the parties this 13th day of April,
---- -----
1993.
----
CALMAT CO.
By /s/ Scott J Wilcott
------------------------------------
By /s/ A Frederick Gerstell By /s/ Paul Stanford
------------------------------ -----------------------------------
A. Frederick Gerstell Secretary
"Executive" "Company"
<PAGE>
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
----------------------------------------
This is the Second Amendment to the Employment Agreement made effective as
of October 30, 1987, as amended by the First Amendment to Employment Agreement
dated January 15, 1990 ("Agreement"), between CalMat Co., a Delaware corporation
(hereinafter called "Company"), and Scott J Wilcott (hereinafter called
"Executive").
In view of the change in title of the Executive to currently Executive Vice
President, Law and Property, effective August 28, 1990, the Agreement shall be
amended as follows:
Recital A of the Agreement shall be amended to read in full as follows:
"A. The Executive presently serves as Executive Vice President, Law
and Property, of the Company."
Section 1.1: Position, Duties and Responsibilities of Executive,
--------------------------------------------------
shall be amended to read in full as follows:
"Section 1.1: Position, Duties and
---------------------
Responsibilities of Executive
-----------------------------
The Company shall employ the
Executive as its Executive Vice President,
Law and Property. In such position, the
Executive shall have at least such
responsibilities and powers as set forth in
Article IV, Section 9 of the By-laws of the
Company in effect on the date hereof. During
his employment hereunder, the Executive shall
devote his full energies, interest, abilities
and productive time during normal business
hours to the performance of this Agreement
and shall, without the Company's prior
written consent in each instance, refrain
from rendering services of any kind to others
for compensation or which would materially
interfere with the performance of his duties
under this Agreement. Notwithstanding the
foregoing, the Executive may serve as a
director of other companies with the consent
of the Company's Board of Directors."
<PAGE>
Subsection 1.2(b): Term of Employment, shall be amended to read in
------------------
full as follows:
"Section 1.2: Term of Employment
------------------
(b) During the term of employment, this Agreement of the
Executive's employment shall not be subject to termination at the
instance of the Company, for cause or for any reason, and the
Executive's compensation and other benefits as provided herein shall
continue unabated during the full term of this agreement and
otherwise as provided herein; provided, however, that the Board of
Directors of the Company shall have the right, acting in accordance
with the By-laws of the Company, to remove the Executive from office
as Executive Vice President, Law and Property of the Company in the
event the Executive acts in any way which has a direct, substantial
and adverse effect upon the reputation or condition of the Company, in
which event the Executive may terminate his employment pursuant to
Section 1.5."
All other terms and conditions of the Agreement are ratified and
confirmed.
EXECUTED by the parties this 8th day of April 1991.
--- ----- ----
CALMAT CO.
By: /s/ A. Frederick Gerstell
------------------------------------
President
/s/ Scott J Wilcott By: /s/ Paul Stanford
- ------------------------------- ------------------------------------
Scott J Wilcott Secretary
"Executive" "Company"
<PAGE>
EXHIBIT 10.13
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
----------------------------------------
This is the Second Amendment to the Employment Agreement made effective as
of May 31, 1991 ("Agreement") between CALMAT CO., a Delaware corporation
(hereinafter called "Company"), and PAUL STANFORD (hereinafter called
"Executive").
In consideration of the action of the Board of Directors in changing the
title and duties of the Executive to Senior Vice President -- Administration,
General Counsel and Secretary, effective June 22, 1993, and to Executive Vice
President --Administration, General Counsel and Secretary, effective February
28, 1995, the Agreement shall be amended, effective immediately, as follows:
Recital A of the Agreement shall be amended to read in full as follows:
"A. The Executive presently serves as Executive Vice President--
Administration, General Counsel and Secretary of the Company."
Recital B of the Agreement shall be amended to read in full as follows:
"B. The Company desires to provide for the Executive's compensation
commensurate with the position of Executive Vice President --
Administration, General Counsel and Secretary of the Company and to be
assured of the continued association and services of the Executive and is,
therefore, consistent with the established practice of the Company with
respect to its top executives, willing and anxious to engage the
Executive's services upon the terms herein contained."
Section 1.1: Position, Duties and Responsibilities of Executive,
--------------------------------------------------
shall be amended to read in full as follows:
"Section 1.1: Position, Duties and Responsibilities of Executive
--------------------------------------------------
"The Company shall employ the Executive as its Executive Vice
President - Administration, General Counsel and Secretary. In such
position, the Executive shall have at least such responsibilities and
powers as set forth in Article IV, Section 9, of the Bylaws of the Company
in effect on the date hereof. During his employment hereunder, the
Executive shall devote his full energies, interest, abilities and
productive time during normal business hours to the performance of this
Agreement and shall, without the Company's prior written consent in each
instance, refrain from rendering services of any kind to others for
<PAGE>
compensation or which would materially interfere with the performance of
his duties under this Agreement. Notwithstanding the foregoing, the
Executive may serve as a director of other companies with the consent of
the Company's Board of Directors."
Section 1.2(b) Term of Employment, shall be amended to read in full as
------------------
follows:
"During the term of employment, this Agreement of the Executive's
employment shall not be subject to termination at the instance of the
Company, for cause or for any reason, and the Executive's compensation and
other benefits as provided herein shall continue unabated during the full
term of this Agreement and otherwise as provided herein; provided, however,
that the Board of Directors of the Company shall have the right, acting in
accordance with the Bylaws of the Company, to remove the Executive from
office as Executive Vice President --Administration, General Counsel and
Secretary of the Company in the event the Executive acts in any way which
has a direct, substantial and adverse effect upon the reputation or
condition of the Company, in which event the Executive may terminate his
employment pursuant to Section 1.5."
In consideration of the mutual promises of the parties, it is also agreed
that the term of the Agreement be extended from two (2) years to three (3)
years, as follows:
Section 1.2(a) Term of Employment, shall be amended to read in full as
------------------
follows:
"The Executive shall be employed for a term commencing May 31, 1991,
and ending upon such termination date as is set forth in a written notice
given by either party terminating this Agreement, provided that such
termination date will occur not less than three years subsequent to the
date upon which such notice is given. For example, this Agreement could be
terminated on or after November 30, 1998, by written notice given by either
party on November 30, 1995."
Section 1.5: Termination of Employment by the Executive, shall be
------------------------------------------
amended to read in full as follows:
"If, without the Executive's express written consent, the Company (i)
significantly reduces the importance of the functions,
2
<PAGE>
duties, responsibilities or authority of the Executive, (ii) reduces the
Executive's compensation or benefits, or (iii) relocates the principal
executive office of the Company to a location outside of Los Angeles County
or reassigns the Executive to a location other than the principal executive
office of the Company (except for required travel on the Company's business
to an extent substantially consistent with the Executive's travel
obligations existing on the date of this Agreement), then the Executive may
inform the Company that such action by the Company constitutes constructive
notification under Section 1.2 that this Agreement will be terminated three
years thereafter. After any such constructive notice or actual notice to
the Executive of the termination of this Agreement pursuant to Section 1.2,
the Executive may at any time terminate his employment with the Company. In
the event of such a termination of employment by the Executive, the Company
shall, within 72 hours after such termination, make a payment to the
Executive of the lump-sum value (without any present-value discount or
adjustment for inflation) of the salary and benefits that would have been
provided to the Executive for the period from the date of such termination
until the date which is three years from the date of such constructive or
actual notice, and the Executive shall be free to seek and obtain other
employment or arrangements for the rendition of personal services with or
to others, notwithstanding the provisions of Section 1.1, and without a
reduction of his compensation and benefits hereunder."
Section 3.1: Payments on Account of Disability of Executive, shall be
----------------------------------------------
amended to read in full as follows:
"If this Agreement is terminated under Section 1.3, the Company shall
continue to pay to the Executive on account of his disability, the bi-
weekly or semi-monthly salary installments under Section 2.1 at the salary
rate in effect on the date of said termination (subject to adjustment
pursuant to Section 3.3) and to provide him with benefits as described in
Section 3.2, until three years after the Executive is given notice of such
termination; provided, however, that in the event of the Executive's death,
such monthly installments as shall be payable hereunder shall terminate."
Section 3.2: Participation in Other Benefits, shall be amended to
-------------------------------
read in full as follows:
3
<PAGE>
"In addition to the benefits provided in this Agreement, the Executive
shall throughout the term hereof (prior to death) be entitled to and shall
receive all other benefits generally available to other executives of the
Company, including (without limitation) benefits under the company's
medical, health, disability, death benefit, profit sharing and bonus and
other incentive compensation plans (other than stock option plans. The
Executive shall be entitled to receive benefits which are at least as great
in scope and amount as those received by any other employee of the Company
except the Chairman of the Board and Chief Executive Officer of the Company
and the President and Chief Operating Officer of the Company. If the
Executive's employment is terminated pursuant to Section 1.2(b), Section
1.3, or Section 1.5: (i) the amount the Executive otherwise would have
received as bonus payments for the period after the termination shall be
determined assuming that he would be entitled to an annual bonus or bonuses
at an annual rate at least equal to the average of his annual bonuses for
the preceding two years and that he would be entitled to receive a pro rata
portion of such amount for any period shorter than a full calendar year;
(ii) the amount of the profit sharing plan contributions otherwise made on
behalf of the Executive shall be determined assuming that the level of
Company contributions to the plan would equal the average of such levels
for the preceding two years; and (iii) the payment for the value of welfare
benefits shall be based on the current cost of such coverage to the Company
and shall take into account the Executive's benefit plans for retirees (if
he would have qualified for such participation assuming he had an
additional three years of service)."
All other terms and conditions of the Agreement are ratified and confirmed.
EXECUTED by the parties this 4th day of October, 1995.
--- -------
CALMAT CO.
By: /s/ A. Frederick Gerstell
--------------------------------------
Chairman of the Board, President
Chief Executive Officer and
Chief Operating Officer
/s/ Paul Stanford By: /s/ Christine McVeigh
- ---------------------------------- --------------------------------------
Paul Stanford Assistant Secretary
"Executive" "Company"
4
<PAGE>
EXHIBIT 10.16
[LETTERHEAD OF CALMAT CO]
January 20, 1995
Mr. R. Bruce Rieser
1527 Ridge Street
Redlands, CA 92373
Dear Bruce:
It is with great pleasure that I am extending to you an offer to join
CalMat Co. in the position of Senior Vice President, Construction Materials.
This letter will outline the terms of CalMat's offer. We ask that you signify
your acceptance of employment on these terms by signing the duplicate copy of
this letter that is enclosed and returning it to me as soon as possible.
I. Base Salary
-----------
Your base salary will be $17,917 a month (which annualizes to $215,000).
This salary is to be reviewed in accordance with CalMat's Executive Compensation
Program as of January 1, 1996.
II. Bonus
-----
You will be eligible for bonus consideration for fiscal year 1995 and
future years in accordance with the Company's program for Senior Executive
Bonuses.
III. Stock Options
-------------
You will receive 20,000 shares as an initial grant, pursuant to the terms
of the Company's existing stock option plans. Any future grants would be in
accordance with the CalMat Executive Compensation and Stock Option Program.
IV. Company Car
-----------
A company car will not be provided, but business mileage will be
reimbursed at the current IRS approved rate ($.29 per mile). Alternatively,
your business use of your personal automobile may qualify for inclusion in the
Company's "Runzheimer" Plan, in which event you will be reimbursed in accordance
with that Plan.
<PAGE>
Mr. R. Bruce Rieser
January 20, 1995
Page Two
V. Pension/401-K
-------------
You will be eligible to participate in the CalMat Salaried Employees
Thrift and Profit Sharing Retirement plan. Please note that this Plan has a
one-year waiting period which cannot be waived. You may elect to roll over any
401-K monies you currently have into the CalMat Plan.
VI. Nonqualified Deferred Compensation Plan
---------------------------------------
After the first year waiting period, you will be eligible to
participate in the Nonqualified Deferred Compensation Plan and have the option
of deferring 1% to 4% of base salary, in accordance with plan rules.
VII. Health and Welfare
------------------
You will participate in the CalMat Health and Welfare Plan for
salaried employees, following a 60-day waiting period. To the extent not paid
by your former employer, the Company will reimburse your current employee COBRA
cost through the duration of the waiting period. Once you are covered by the
CalMat Health and Welfare Plan, you will receive medical and dental benefits in
accordance with the plan. In addition, the Company will provide Company-paid
life insurance of two times annual base salary; accidental death and
dismemberment insurance at two times annual base salary; travel accident
insurance at $300,000; and long-term disability insurance providing for 60% of
base salary after a 90-day waiting period. You may purchase supplemental
accident insurance up to $500,000.
VIII. Vacations
---------
For purposes of vacation eligibility, you will be credited on your
starting date with years of service equal to your length of employment with your
current employer and its corporate predecessors.
IX. Continuing Education
--------------------
CalMat will pay the cost of tuition and directly related costs, such
as books, for your participation in the USC Executive MBA program or an
equivalent program.
X. Relocation Expense
------------------
In the event that you desire to relocate your home in order to be
closer to the Company's headquarters, the Company will pay your actual moving
expenses plus a grant for incidental expenses in accordance with Company policy
in effect at the time of your move.
<PAGE>
Mr. R. Bruce Rieser
January 20, 1995
Page Three
XI. At-Will Employment and Severance Arrangements
---------------------------------------------
By accepting employment on the terms set forth in this offer letter,
you agree that your employment and compensation are at-will and therefore can be
terminated, with or without cause, at any time, and without prior notice, at
your option or the Company's option. This at-will employment relationship will
remain in effect throughout your employment with the Company, unless it is
specifically modified by an express written employment agreement, authorized by
the Company's Board of Directors.
No CalMat employment policy, nor any written or oral statement or
promise, nor any course of conduct, practice, award, promotion, transfer, or
length of service creates an express or implied contract modifying this at-will
relationship. Your acceptance of at-will employment with CalMat is a material
part of this offer of employment and is an express condition of your employment.
In the event that CalMat at any time chooses to exercise its right to
terminate you without cause, you will be paid one year's base salary, less
legally required deductions and withholdings, as severance pay. In addition,
CalMat will waive payment of costs of continued health coverage under COBRA for
one year. These will be the only payments to which you will be entitled in the
event of termination without cause.
Enclosed for your information and consideration are materials
describing CalMat's benefit programs and personnel policies, and copies of the
Company's latest Annual Report and related documents, as listed on the
attachment to this letter (sent under separate cover).
Bruce, we are very excited about your joining CalMat, and we look
forward to having you on board.
Very truly yours,
/s/ A. Frederick Gerstell
A. Frederick Gerstell
Chairman of the Board
President and Chief Executive Officer
<PAGE>
Mr. R. Bruce Rieser
January 20, 1995
Page Four
Acceptance of offer of employment:
I hereby accept employment with CalMat on the terms and
conditions stated above.
Dated: February 2, 1995
----------
/s/ R. Bruce Rieser
- ------------------------
R. Bruce Rieser
AFG/cek
Attachments
<PAGE>
EXHIBIT 21.1
CALMAT CO.
SUBSIDIARIES OF REGISTRANT
DECEMBER 31, 1995
<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 Co. of Central California California 100%
CalMat Land Co. California 100%
CalMat Properties Co. California 100%
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 74,061
<ALLOWANCES> 4,570
<INVENTORY> 11,705
<CURRENT-ASSETS> 93,822
<PP&E> 672,708
<DEPRECIATION> (281,008)
<TOTAL-ASSETS> 559,530
<CURRENT-LIABILITIES> 60,271
<BONDS> 84,321
0
0
<COMMON> 23,182
<OTHER-SE> 307,967
<TOTAL-LIABILITY-AND-EQUITY> 559,530
<SALES> 370,313
<TOTAL-REVENUES> 378,182
<CGS> 326,513
<TOTAL-COSTS> 326,513
<OTHER-EXPENSES> 3,005
<LOSS-PROVISION> 3,266
<INTEREST-EXPENSE> 2,675
<INCOME-PRETAX> (36,858)
<INCOME-TAX> (15,487)
<INCOME-CONTINUING> (21,371)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,371)
<EPS-PRIMARY> (.92)
<EPS-DILUTED> 0
</TABLE>
