UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the quarterly period ended June 30,
1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934. For the transition period from
to .
- -------------- ---------------
Commission File Number 0-23880
-------
Monroc, Inc.
- -------------------------------------------------------------------------
Delaware 87-0436697
- ------------------------ ----------------------
(State of incorporation) (I.R.S. Employer
Identification Number)
P.O. Box 537, 1730 Beck Street, Salt Lake City, Utah 84110
- -------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number 801-359-3701
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities and Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such
filing requirement for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding in each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
- ----------------------------- ----------------------------
Common Stock, $0.01 par value 4,467,000 shares
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONROC, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1996 1995
---------- ----------
CURRENT ASSETS (Unaudited)
Cash and cash equivalents $2,186,427 $6,506,751
Accounts receivable, net of allowance for
discounts and doubtful accounts of $277,760
at June 30, 1996 and $296,647 at December 31, 1995 11,497,040 6,639,878
Costs and estimated earnings in excess of
billings on uncompleted contracts 464,484 152,943
Inventories 3,374,167 2,815,780
Prepaid expenses 1,943,644 1,274,892
--------- ---------
Total current assets 19,465,762 17,390,244
PROPERTY, PLANT AND EQUIPMENT, AT COST 27,259,072 24,625,327
Less accumulated depreciation and amortization 12,342,333 11,525,532
--------- ---------
14,916,739 13,099,795
AGGREGATE DEPOSITS 2,454,654 2,454,654
Less accumulated depletion 265,998 230,385
--------- ---------
2,188,656 2,224,269
LAND 1,539,329 1,510,072
OTHER ASSETS, at cost, less accumulated amortization
of $324,942 at June 30, 1996 and $284,526 at
December 31, 1995 1,342,960 1,383,376
--------- ---------
TOTAL ASSETS $39,453,446 $35,607,756
========== ==========
(Continued)
The accompanying notes are an integral part of these statements
-1-
<PAGE>
MONROC, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1996 1995
---------- ----------
(Unaudited)
CURRENT LIABILITIES
Notes payable $1,859,980 $86,519
Current maturities of long-term obligations 868,136 802,765
Trade accounts payable 7,501,745 5,307,303
Accrued liabilities 2,507,985 1,522,788
Billings in excess of costs and estimated
earnings on uncompleted contracts 479,600 242,530
--------- ---------
Total current liabilities 13,217,446 7,961,905
LONG-TERM OBLIGATIONS, less current maturities 5,006,927 6,591,329
DEFERRED COMPENSATION 670,610 626,710
DEFERRED INCOME TAXES 1,189,550 1,189,550
COMMITMENTS AND CONTINGENCIES 0 0
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 1,000,000
shares authorized; none issued 0 0
Common stock, $0.01 par value; 20,000,000
shares authorized; issued and outstanding
4,467,000 shares at June 30, 1996, and
4,467,000 at December 31, 1995 44,670 44,670
Capital in excess of par value 24,481,864 24,481,864
Accumulated deficit (2,233,575) (1,964,226)
--------- ---------
22,292,959 22,562,308
Less unpaid principal of Employee Stock
Ownership Plan note receivable (2,924,046) (3,324,046)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 19,368,913 19,238,262
--------- ---------
TOTAL LIABILIES AND STOCKHOLDERS' EQUITY $39,453,446 $35,607,756
========== ==========
The accompanying notes are an integral part of these statements.
-2-
<PAGE>
MONROC, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales $19,416,157 $12,500,024 $28,620,417 $19,632,071
Costs and expenses
Cost of sales 16,855,930 9,896,194 25,337,483 16,059,528
General and administrative expense 1,472,199 1,133,977 2,911,337 2,244,206
Contribution to ESOP 200,000 200,000 400,000 400,000
--------- --------- --------- ---------
18,528,129 11,230,171 28,648,820 18,703,734
--------- --------- --------- ---------
Operating income (loss) 888,028 1,269,853 (28,403) 928,337
Other income (expense)
Gain (loss) on sale of property, plant, equipment
and land 45,410 (5,137) 45,578 5,208
Interest income 8,483 5,152 53,087 8,816
Interest expense (170,582) (358,547) (339,611) (696,545)
--------- --------- --------- ---------
(116,689) (358,532) (240,946) (682,521)
--------- --------- --------- ---------
Earnings (loss) before income taxes 771,339 911,321 (269,349) 245,816
Income taxes 0 0 0 0
--------- --------- --------- ---------
NET EARNINGS (LOSS) $771,339 $911,321 ($269,349) $245,816
========== ========== ========== ==========
Earnings (loss) per common share $0.17 $0.32 ($0.06) $0.09
========== ========== ========== ==========
Weighted average common shares outstanding 4,467,000 2,817,000 4,467,000 2,817,000
</TABLE>
The accompanying notes are an integral part of these statements
-3-
<PAGE>
MONROC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1996 1995
---------- ----------
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net earnings (loss) ($269,349) $245,816
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities
Depreciation and amortization of property,
plant & equipment 1,203,752 1,203,791
Provision for contribution to ESOP and
repayment of ESOP note receivable 400,000 400,000
Amortization of other assets 40,416 43,694
Provision for discounts and doubtful accounts 13,571 28,914
Depletion of aggregate deposits 35,613 27,622
Earnings on sale of property, plant, equipment
and land (45,578) (5,208)
Changes in assets and liabilities
Accounts receivable (4,870,733) (2,540,642)
Costs and estimated earnings in excess of
billings on uncompleted contracts (311,541) 17,651
Inventories (558,387) (810,359)
Prepaid expenses (668,752) 266,370
Other assets (29,257) (119,830)
Trade accounts payable 2,194,442 724,605
Accrued liabilities 985,197 790,576
Billings in excess of costs and estimated
earnings on uncompleted contracts 237,070 10,248
Deferred compensation 43,936 44,262
--------- ---------
Net cash provided by (used in)
operating activities (1,599,600) 327,510
Cash flows from investing activities
Additions to property, plant and equipment (3,057,773) (866,040)
Proceeds from sale of property, plant, equipment,
and land 82,655 130,708
--------- ---------
Net cash used in investing activities (2,975,118) (735,332)
(Continued)
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
MONROC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended
June 30,
1996 1995
---------- ----------
Cash flows from financing activities
Net increase in notes payable 1,773,461 1,462,018
Principal payments on long-term obligations (2,391,249) (957,433)
Issuance of long-term obligations 872,182 125,000
--------- ---------
Net cash provided by financing activities 254,394 629,585
--------- ---------
Net increase (decrease) in cash and cash
equivalents (4,320,324) 221,763
Cash and cash equivalents at beginning of period 6,506,751 483,081
--------- ---------
Cash and cash equivalents at end of period $2,186,427 $704,844
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest $440,104 $701,906
Income taxes 20,410 960
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
MONROC, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements of Monroc,
Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles. In the opinion of
management, all normally recurring adjustments necessary for a
fair presentation of the financial information have been
reflected therein. Because of the seasonality and cyclicality of
the Company's businesses, the operating results for the six
months ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31,
1996. The revenues and net earnings for any interim period are
not necessarily indicative of results that may be expected for
the entire year.
These statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December
31, 1995.
Note 2. Stock Options
As of July 31, 1996, the Company had granted stock options
under the Company's 1994 Stock Option Plan to various officers,
directors and employees of the Company covering the aggregate
amount of 174,300 shares of common stock. On May 22, 1996, the
shareholders approved the Company's 1996 Stock Option Plan which
includes 300,000 shares of Common Stock. As of July 31, 1996,
the Company had granted stock options under the 1996 Option Plan
covering 200,000 shares of Common Stock.
-6-
<PAGE>
Note 3. Environmental Matters
The Company is currently the owner of property located in
Murray, Utah, formerly known as the ASARCO Smelter site, which
contains mining slag previously deposited by ASARCO. The slag
contains certain heavy metals including lead and arsenic which
may have leached from the slag into the environment. This and
adjoining properties previously owned by ASARCO have been
proposed by the Environmental Protection Agency (EPA) for listing
on the National Priorities List for cleanup of the slag and
potential groundwater contamination. Although the Company did
not generate the slag material, under the Comprehensive
Environmental Response, Compensation and Liability Act
("CERCLA"), the current owner of a property may be liable for
cleanup costs. In such case, the Company would have a claim
against the former owner for its respective share of these costs.
Although to date the Company has not been designated a
Potentially Responsible Party by the EPA with respect to cleanup
of any waste at this site, it recently received a CERCLA 104(e)
information request. The outcome of this matter is uncertain and
it is not possible at this time to estimate the possible
financial impact on the Company, if any.
Prior to learning of the potential presence of lead in the
slag from this site, the Company sold some of the slag for use in
road base and railroad fill. The Company may be liable for
cleanup costs if it is determined that the lead from this slag
poses an environmental hazard. The Company has not received any
notice of government or private action on this matter. The
potential cost to the Company, if any, is not ascertainable at
the present time. The Company's management believes that there
are economically reasonable methods of containing the slag should
this become necessary.
Note 4. Sale of Stock
On December 28, 1995, the Company issued 1,650,000 shares of
common stock in a private placement to BCCP I, L.P., a California
limited partnership ("BCCP I"), at $5.50 a share for an aggregate
purchase price of $9,075,000. It also issued a warrant for an
additional 1,500,000 shares exercisable within a five year period
at $6.25 a share. The sole general partner of BCCP I is Building
and Construction Capital Partners, L.P., a California limited
partnership ("BCCP"). The general partner of BCCP is Richard C.
Blum & Associates, L.P.. As part of the transaction, the Company
agreed to pay an annual $200,000 consultants fee to BCCP and has
reimbursed BCCP I $150,000 of its costs related to completing the
transaction. As part of the transaction, BCCP appointed a
majority of the Company's Board of Directors.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the unaudited Consolidated Financial Statements and related Notes
included elsewhere in this report. Also, the discussion should
be read in conjunction with the audited Financial Statements and
related Notes contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
Change in Management
Ronald D. Davis was elected as President and Chief Executive
Officer effective July 1st, 1996. Mr. Davis has over 25 years of
management experience in the concrete and construction
industries. Prior to joining Monroc, Mr. Davis served as vice
president and general manager of CalMat Corporation's central
California division.
Results of Operations - Six Months Ended June 30
Sales increased 46% from $19,632,071 for the six month
period ended June 30, 1995 ("1995 period") to $28,620,417 for the
six months ended June 30, 1996 ("1996 period"). Sales for the
Prestress Division were 105% higher in the 1996 period compared
to the 1995 period because of the higher volume related to
production on the $20 million Snake River Correctional Facility
contract in Ontario, Oregon. Ready mix concrete sales were up
20% due to a 24% increase in volume offset by lower prices.
Also, improved operating rates at the Company's Kearns, Utah pit
resulted in a 91% increase in sales for the Sand and Gravel
division in the 1996 period.
For the six month period, operating income decreased from an
income of $928,337 in the 1995 period to a loss of $28,403 in the
1996 period. Adverse winter weather conditions in the earlier
part of the year affected costs. Start-up costs and lower
initial labor and material efficiencies on the Snake River
Correctional Facility have resulted in lower operating margins in
the Prestress Division. Ready mix sales prices were down
approximately 2% in the 1996 period versus the 1995 period.
Also, sand and gravel profits were flat on the increased sales
because of start-up costs at the new Point of the Mountain, Utah
pit and a higher proportion of sales of low margin products.
General and administrative costs were $2,911,337 in the 1996
period compared to $2,244,206 in the 1995 period. Part of this
increase was due to an increase in staff to meet the demands of
the Snake River Correctional Facility contract. Also included in
general and administrative costs in the 1996 period were the
consulting fees to Building and Construction Capital Partners,
L.P. ("BCCP") and other consulting fees related to improvements
underway within the Company.
-8-
<PAGE>
Interest expense decreased to $339,611 in the 1996 period
compared to $696,545 in the 1995 period due to the use of some of
the proceeds from the private sale of common stock in December,
1995 to BCCP to a pay down of debt owed the CIT Group. Also,
investment of some of the proceeds resulted in increased interest
income. (See "Liquidity and Capital Resources" below)
A net loss of $269,349 or 6 cents per share was incurred in
the 1996 period compared to a net earnings of $245,816 or 9 cents
a share in the comparable 1995 period due to higher costs as
discussed above. There were 1,650,000 more shares outstanding in
the 1996 period versus the 1995 period.
Results of Operations - Three Months Ended June 30
Sales increased 55% from $12,500,024 for the three month
period ended June 30, 1995 to $19,416,157 for the three months
ended June 30, 1996. Most of the increased sales resulted from a
160% increase in revenues in the Prestress Division due to
production on the Company's Snake River Correctional Facility
contract. Ready mix concrete volumes were up 22% in the 1996
period compared to the 1995 period offset by lower prices in most
markets because of a higher proportion of commercial business.
General and Administrative expenses increased from
$1,133,977 for the 1995 period to $1,472,199 for the 1996 period
due to the addition of support personnel in the Prestress
Division for the Snake River Correctional Facility contract. In
addition, general and administrative expenses were higher in 1996
due to the payment of the consulting fee to BCCP and other
outside professional services.
Operating income was $1,269,853 for the 1995 period compared
to $888,028 for the 1996 period. In addition to the increase in
General and Administrative costs discussed above, operating
margins were affected by start-up costs and lower labor and
material efficiencies on the Snake River Correctional Facility
contract and by higher operating costs resulting from more
adverse winter conditions during the 1996 period compared to the
1995 period.
Net interest expense was $162,099 in the 1996 period, or
$191,296 lower than the 1995 period, due to the application of a
portion of the net proceeds from the private placement of common
stock to a pay down of outstanding loans with the CIT Group and
short term investment of the remaining balances (See "Liquidity
and Capital Resources" below).
Net earnings for the 1996 period were $771,339 or 17 cents a
share versus $991,321 or 32 cents a share for the 1995 period due
to higher costs as discussed above. There were 1,650,000 more
shares outstanding in the 1996 period compared to the 1995
period.
-9-
<PAGE>
Liquidity and Capital Resources
The Company has met its need for liquidity principally
through the use of a credit facility provided by the CIT Group
that includes a line of credit for working capital and term
loans. The Company's liabilities to the CIT Group are secured by
liens on substantially all of the Company's real and personal
property. In February 1996, the Company signed a new six year
loan agreement with the CIT Group which increased the total
credit available from $11,000,000 to $15,000,000 and reduced the
interest rate from prime plus 2.5% to prime plus 0.75%.
On December 28, 1995, $3,350,576 from the proceeds of the
sale of Common Stock to BCCP I were used to pay down the CIT
Group term notes to $4,000,000. Additional proceeds were used to
reduce the notes to $2,000,000 in March, 1996. Total borrowings
under the line of credit totalled $3,859,980 on June 30, 1996.
Total availability under the line of credit was $11,140,020 as of
that date.
As of June 30, 1996, the Company had positive working
capital of $6,248,316 compared to a positive working capital
balance of $9,428,339 at December 31, 1995. $2,000,000 of cash
was used to reduce the CIT notes in March, 1996. Cash used in
operations was $1,599,600 for the 1996 period versus cash
generated of $327,510 in the 1995 period. In addition to the
decrease in profitability in the 1996 period, accounts receivable
increased with the increased revenues discussed above. Cash used
in investing activities increased to $2,975,118 in the 1996
period from $735,332 in the 1995 period primarily due to
increased capital spending for the installation of plants at the
Point of the Mountain and the purchase of equipment to service
the Snake River Correctional Facility contract discussed above.
Also, cash provided from financing activities was $254,394 for
the 1996 period compared to $629,585 in the 1995 period due to
the $2,000,000 pay down of the CIT term loans as discussed above
offset by higher levels of financing related to the higher
capital investment.
During the first six months of 1996, the Company acquired
forty six new Mack front discharge ready mix trucks through
operating leases totalling $6,471,824. These trucks
significantly upgraded the capability of the Company's delivery
fleet. In addition, the Company installed a sand and gravel
facility and central ready mix batch plant at its Point of the
Mountain , Utah site at a cost of over $2,000,000 to service
customers in the south end of the Salt Lake Valley. The Company
has also acquired several long haul tractors, flatbed trailers,
front end loaders, hydro cranes and other equipment to upgrade
its equipment efficiency and capability.
-10-
<PAGE>
Seasonality
The Company services the construction industry principally
in areas where construction activity is restricted during the
winter. As a result, the Company experiences reduced revenues
from December through March and realizes the substantial part of
its revenues during the other months of the year. The Company
generally incurs losses during the winter months and must have
sufficient working capital to fund operations at a reduced level.
Financial performance of the Company in any one quarter of
the year should not be considered a reliable indicator of the
anticipated current year results. The seasonality and
variability of weather conditions as well as the cyclicality of
demand in response to factors such as interest rate changes can
cause significant fluctuations in financial results from quarter
to quarter and from year to year.
-11-
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was
held on May 22, 1996. At the meeting:
1. The following persons were elected as Directors of
the Company to serve until the next Annual Meeting or
until their successors are selected and qualified.
Name Votes For Votes Against
------------ ---------- -------------
James Dahl 4,034,039 21,386
Alexander L. Dean 4,028,147 27,278
Michael A. Kane 4,034,664 20,761
William T. Lightcap 4,028,147 27,278
Robert L. Miller 4,032,781 22,644
Jules Ross 4,034,664 20,761
2. The selection and appointment of Grant Thornton
LLP by the Company's Board of Directors as auditors for
the Company for the fiscal year ending December 31, 1996
was ratified by the shareholders as follows:
Votes For 4,023,042
Votes Against 2,179
Votes Abstaining 30,204
3. The Company's 1996 Stock Option Plan, in the form
of Exhibit A to the Company's Proxy Statement dated
April 29, 1996, was adopted and approved as follows:
Votes For 3,648,956
Votes Against 110,934
Votes Abstained 196,053
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1 - Employment Agreement, dated June
2, 1996, between the Company and Ronald D. Davis.
Exhibit 11 - Calculation of Earnings Per Share
Exhibit 27 - Financial Data Schedule
(b) There were no reports on Form 8-K filed during the
quarter ended June 30, 1996.
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Monroc, Inc.
---------------------------
Registrant
Date: August 12, 1996 /s/ L. William Rands
--------------- ---------------------------
L. William Rands
Vice President and Chief
Financial and Accounting
Officer
<PAGE>
INDEX OF EXHIBITS
Exhibit 10.1 - Employment Agreement, dated June 2, 1996,
between the Company and Ronald D. Davis
Exhibit 11 - Calculation of Earnings Per Share
Exhibit 27 - Financial Data Schedule
Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") made as of
the 2nd day of June, 1996, by and between MONROC, INC., a
Delaware corporation (the "Company"), having its principal place
of business at 1730 Beck Street, Salt Lake City, Utah, and RONALD
DAVIS, residing at 27701 Clear Creek Road, Keene, California
93531, (the "Executive").
WHEREAS, the Executive wishes to be employed by the
Company as President and Chief Executive Officer of the Company,
and the Company wishes to employ the Executive in such capacity;
NOW, THEREFORE, the Company and the Executive agree as
follows:
1. Employment. The Company agrees to employ the
Executive and the Executive agrees to serve the Company upon the
terms and conditions hereinafter set forth. The Executive shall
commence full-time employment with the Company on or before July
1, 1996 ("Commencement Date").
2. Term. The employment of the Executive by the
Company pursuant to this Agreement will be for a period of three
years from the date hereof.
3. Duties. The Executive shall, subject to overall
direction consistent with the legal authority of the Board of
Directors of the Company (the "Board"), serve as, and have all
power and authority inherent in the office of Chief Executive
Officer of the Company during his employment and, as such, shall
supervise, control and be responsible for the general management
and operations of the Company and have such other executive
powers and duties as may from time to time be prescribed by the
Board. The Executive shall also serve as a member of the Board
and its Executive Committee and Compensation Committee, if any,
during his employment. While sitting on the Compensation
Committee, if any, he may make any presentation concerning his
own compensation but shall not otherwise participate in the
consideration of his own compensation. The Executive shall
devote his business time and efforts to the business of the
Company.
4. Compensation and Other Provisions.
(a) Base Salary. The Company shall pay to the
Executive a base salary at the rate of $150,000.00 per annum from
and after the Commencement Date, payable in substantially equal semi-
monthly installments (such amount, as it may be increased from
time to time, hereinafter referred to as the "Base Salary"). The
Base Salary and the Executive's other compensation will be
reviewed by the Board at least annually and may be increased or
maintained as the Board may determine.
(b) Signing Bonus. The Company shall pay to the
Executive a one-time signing bonus of $50,000, which shall be
payable in full within 30 days after the Commencement Date.
(c) Annual Incentive Bonus. Beginning with the
calendar year ending December 31, 1997, the Company shall pay the
Executive with respect to each calendar year during his
employment an annual incentive bonus in such amount as the Board
shall determine. The incentive bonus shall be paid no later than
March 31 following the end of each calendar year.
(d) Participation in Benefit Plans. The
Executive shall be eligible to participate in all employee benefit
plans and arrangements now in effect or which may hereafter be
established which are generally applicable to other senior executive
officers of the Company or any of its subsidiaries or divisions,
including without limitation, the Company's Employee Stock Ownership
Plan ("ESOP"), all life, group insurance and medical care plans and
all disability, retirement and other employee benefit plans of
the Company, so long as any such plan or arrangement remains
generally applicable to other senior executives of the Company or
any of its divisions or subsidiaries. The Company shall purchase
and, during the term of this Agreement, pay the premiums with
respect to a one-million dollar term life insurance policy on the
life of the Executive, which policy shall designate the
Executive's wife as the beneficiary of the policy.
(e) Vacation, Expenses, etc. The Executive shall
be entitled to the same vacation benefits as are generally available
to other senior executives of the Company. He shall be
reimbursed for all reasonable expenses incurred by him in the
discharge of his duties, including but not limited to expenses
for entertainment and travel. The Executive shall account to the
Company for all such expenses.
(f) Other Benefits. The Executive shall be
entitled to receive the following non-salary benefits including,
an automobile, a country club membership, and such other benefits
as the Board of Directors may from time to time determine. In the
event any expenses provided under this subparagraph shall not be
deductible to the Company under the Internal Revenue Code of
1986, as the same shall hereinafter be amended, then the Company
shall pay to the Executive additional compensation equal to the
expense thereof and the Executive shall pay such expenses
directly. All such additional compensation to the Executive
shall be subject to applicable withholding taxes.
(g) Stock Options. The Company shall grant to
the Executive stock options ("Options") to purchase an aggregate
of 200,000 shares of Common Stock of the Company pursuant to the
Company's 1996 Stock Option Plan (the "Plan"). The Options shall
be granted as of the Commencement Date and shall expire on July
1, 2001; provided, however, the Options shall terminate eighty-
nine (89) days after the Executive's employment has been
terminated. On each anniversary of this Agreement twenty percent
(20%) of the Options shall vest and become exercisable at the
prices indicated below, so that all of the Options will become
exercisable over a period of four years:
July 1, 1996 - 40,000 shares at a price of $5.00 per share
July 1, 1997 - 40,000 shares at a price of $5.75 per share
July 1, 1998 - 40,000 shares at a price of $6.60 per share
July 1, 1999 - 40,000 shares at a price of $7.60 per share
July 1, 2000 - 40,000 shares at a price of $8.75 per share
Provided, however, in the event of a "change in control" of the
Company, as defined in the Plan, all of the outstanding Options
shall vest and become immediately exercisable, and the exercise
price for the previously unvested Options shall be the exercise
price of the most recently vested Options (for example, if the
Company is sold during Year 2, the 120,000 unvested Options shall
become immediately exercisable at an exercise price of $5.75 per
share); further provided, however, if the Executive elects to
have the Options qualify as incentive stock options under Section
422 of the Internal Revenue Code, the Company will make such
changes in the terms and provisions of the Options, including the
exercise prices thereof, as may be necessary in order for the
Options to qualify as incentive stock options.
(h) Moving and Housing Allowance. The Company
shall pay the reasonable expenses incurred by Executive in moving
his residence from Keene, California to Salt Lake City, Utah. In
addition, for a period of up to ninety days (90) from and after
the date of this Agreement, the Company will pay or reimburse the
Executive for the payment of: (i) the weekly round-trip airfare
incurred by the Executive in traveling between Salt Lake City,
Utah and Bakersfield, California; and (ii) the sums expended by
the Executive for renting a residence in Salt Lake City, Utah.
5. Termination. The Executive's employment hereunder
shall terminate as a result of any of the following events:
(a) Optional Termination by Company. The Company
may terminate the Executive's Employment at any time after the third
anniversary of this Agreement by giving the Executive one-hundred
eighty (180) days' prior written notice.
(b) Death. The death of the Executive;
(c) Disability. The Board may terminate the
Executive's employment in the event the Executive shall have been
unable to substantially perform his duties hereunder by reason of
illness, accident or other physical or mental disability for a
continuous period of at least six months or an aggregate of nine
months during any continuous twelve month period;
(d) Cause. The Board may terminate the
Executive's employment for "cause" at any time upon written notice
to the Executive stating the facts constituting such "cause". For
purposes of this section, the term "cause" shall mean:
(1) Conviction for commission of a felony by
the Executive; or
(2) Gross negligence or intentional or
willful misconduct by the Executive in the performance of his duties
as determined in good faith by the Board.
(e) Termination by Executive. The Executive may
terminate his employment at any time after the third anniversary of
this Agreement by giving the Company one-hundred eighty (180) days'
prior written notice or such lesser notice as the Board shall
approve.
6. Representations and Warranties.
(a) The Executive represents and warrants to the
Company that the Executive is under no contractual or other restriction
or obligation which would prevent the performance of his duties
hereunder, or interfere with the rights of the Company hereunder.
(b) The Company represents and warrants to the
Executive that (i) it has all requisite power and authority to
execute, deliver and perform this Agreement; (ii) all necessary
corporate proceedings of the Company have been duly taken to
authorize the execution, delivery, and performance of this Agreement;
and (iii) this Agreement has been duly authorized, executed, and
delivered by the Company, is the legal, valid and binding obligation
of the Company, and is enforceable as to the Company in accordance with
its terms.
7. Survival. The covenants, agreements, representations
and warranties contained in or made pursuant to this Agreement shall
survive the Executive's termination of employment.
8. Amendment. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter
hereof, supersedes all existing agreements between them
concerning such subject matter, and may be amended only by a
written instrument duly executed by each party.
9. Notice. Any notice or other communication required
or permitted to be given hereunder shall be in writing and shall be
mailed by certified mail, return receipt requested, or delivered
against receipt to the party to whom it is to be given at the
address of such party as set forth in the preamble to this
Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this
Section). Notice to the estate of the Executive shall be
sufficient if addressed to the Executive as provided in this
Section. Any notice or other communication given by certified
mail shall be deemed given at the time of certification thereof,
except for notice changing a party's address, which shall be
deemed given at the time of receipt thereof.
10. Waiver. Any waiver by either party of a breach of
any provision of this Agreement shall not operate as or be construed
to be a waiver of any other breach of such provision or of any
breach of any other provision of this Agreement. The failure of
a party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be considered a
waiver or deprive that party the right thereafter to insist upon
strict adherence to that term or any other term of this
Agreement. Any waiver must be in writing.
11. Binding Effect. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Executive
and his heirs and personal representatives and shall be binding
upon and inure to the benefit of each of the Company, its successors
and assigns.
12. Headings. The headings in this Agreement are solely
for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
13. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Utah,
without giving effect to rules governing conflicts of law.
14. Invalidity. The invalidity or unenforceability of
any term of this Agreement shall not invalidity, make unenforceable
or otherwise effect any other term of this Agreement which shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first hereinabove written.
MONROC, INC., a
Delaware corporation
By /s/ Robert L. Miller
-----------------------------
Robert L. Miller, Chairman of
the Board of Directors
EXECUTIVE:
/s/ Ronald Davis
--------------------------------
Ronald Davis
Exhibit 11
Calculation of Earnings Per Share
(in thousands except per share data)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
------ ------ ------ ------
Weighted average common 4,467 2,817 4,467 2,817
and common equivalent
shares outstanding
Net Earnings (Loss) $ 771 $ 911 $(269) $ 246
Earnings Per common $0.17 $0.32 $(0.06) $0.09
share ----- ----- ------- -----
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,093,451
<SECURITIES> 92,976
<RECEIVABLES> 11,497,040
<ALLOWANCES> 277,760
<INVENTORY> 3,374,167
<CURRENT-ASSETS> 19,465,762
<PP&E> 27,259,072
<DEPRECIATION> 12,342,333
<TOTAL-ASSETS> 39,453,446
<CURRENT-LIABILITIES> 13,217,446
<BONDS> 5,006,927
44,670
0
<COMMON> 0
<OTHER-SE> 19,324,243
<TOTAL-LIABILITY-AND-EQUITY> 39,453,446
<SALES> 28,620,417
<TOTAL-REVENUES> 28,620,417
<CGS> 25,337,483
<TOTAL-COSTS> 28,647,820
<OTHER-EXPENSES> 45,578
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 286,524
<INCOME-PRETAX> (269,349)
<INCOME-TAX> 0
<INCOME-CONTINUING> (269,349)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (269,349)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
