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UNITED STATES 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 AND
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission file number 0-25428
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MEADOW VALLEY CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada 88-0328443
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
4411 South 40th Street, Suite D-11, Phoenix, AZ 85040
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(Address of principal executive offices) (Zip Code)
(602) 437-5400
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class: Name of exchange on which registered:
Common stock, $.001 par value Nasdaq National Market
Common stock purchase warrants Nasdaq National Market
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 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 requirements for the past 90 days. Yes x No ___
---
Indicated 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.
On February 16, 1999, the aggregate market value of the registrant's voting
stock held by non-affiliates was $16,409,738.
On February 16, 1999, there were 3,601,250 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant incorporates by reference into Part III of this Report,
information contained in its definitive proxy statement disseminated in
connection with its Annual Meeting of Shareholders for the year ended December
31, 1998.
1
PART I
ITEM 1. BUSINESS
GENERAL
The following is a summary of certain information contained in this Report
and is qualified in its entirety by the detailed information and financial
statements that appear elsewhere herein. Except for the historical information
contained herein, the matters set forth in this Report include forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties are detailed throughout this Report
and will be further discussed from time to time in the Company's periodic
reports filed with the Commission. The forward-looking statements included in
this Report speak only as of the date hereof.
Meadow Valley Corporation (the "Company") was incorporated in Nevada on
September 15, 1994. On October 1, 1994, the Company purchased all of the
outstanding Common Stock of Meadow Valley Contractors, Inc. ("MVC") for $11.5
million comprised of a $10 million promissory note and $1.5 million paid by the
issuance of 500,000 restricted shares of the Company's Common Stock valued at
$3.00 per share. On January 4, 1999, the $10 million promissory note was paid in
full. MVC was founded in 1980 as a heavy construction contractor and has been
engaged in that activity since inception. References to the Company's history
include the history of MVC.
On October 16, 1995, the Company sold 1,675,000 Units of its securities to
the public at $6.00 per Unit (the "Public Offering"). Each Unit consisted of one
share of $.001 par value common stock and one common stock purchase warrant. In
November 1995, the Company sold an additional 251,250 Units pursuant to its
underwriters' overallotment option.
Operating through MVC, the Company is a heavy construction contractor
specializing in structural concrete construction of highway bridges and
overpasses and the paving of highways and airport runways. The Company generally
serves as the prime contractor for public sector customers (such as federal,
state and local governmental authorities) in the states of Nevada, Arizona, Utah
and New Mexico. The Company believes that specializing in structural concrete
construction has contributed significantly to its revenue growth and provides it
with an advantage in the competitive bidding process. However, such
specialization limits the types and sizes of projects upon which the Company
bids and may be a competitive disadvantage for projects in which the amount of
work proposed to be completed by the prime contractor (as compared to the amount
of work which will be subcontracted by the prime contractor) is a consideration
in the bidding process. The Company primarily seeks public sector customers
because public sector projects are less cyclical than private sector projects,
payment is more reliable, work required by the project is generally standardized
and little marketing expense is incurred in obtaining projects.
The Company had a project backlog of approximately $220 million at December
31, 1998, which included the remainder of a $92.1 million portion of the
reconstruction of the core of the interchange at I-15 and US 95 in Las Vegas,
NV, the remainder of a $38.7 million portion of the Squaw Peak Pkwy Freeway
Continuation in Phoenix, AZ, the remainder of a $56.6 million portion of the
Pima Freeway Continuation, in Phoenix, AZ and the remainder of $84.6 million of
projects which are portions of the Beltway Continuation projects in Las Vegas,
Nevada. The Company's backlog includes approximately $186 million of work that
is scheduled for completion during 1999. The Company has acted as the prime
contractor on projects funded by a number of governmental authorities, including
the Federal Highway Administration, the Arizona Department of Transportation,
the Nevada Department of Transportation, the Utah Department of Transportation,
the Clark County (Nevada) Department of Public Works, the Salt Lake City (Utah)
Airport Authority, the New Mexico Department of Transportation and the City of
Phoenix.
In 1996, the Company acquired certain assets, including the tradename, of
AKR Contracting ("AKR"), an unaffiliated Company in Phoenix, Arizona. AKR
previously specialized in earthwork, grading and paving of residential
subdivisions and commercial centers, but has since become increasingly involved
in small publicly funded projects in Arizona and New Mexico. Through AKR, the
Company entered into operating leases for a portable hot mix asphalt plant and
related paving equipment and a rubberized asphalt plant. The asphalt paving
capabilities provide the Company the opportunity to expand its
2
existing geographic market and enhance its construction operations in its
existing market. To date, AKR has assisted the Company in its expansion into New
Mexico and a broadening of the work it performs in Arizona. Moreover, the
Company believes the AKR equipment improves its competitiveness and may generate
increased revenues on projects that call for large quantities of asphaltic
concrete, recycled asphalt or rubberized asphalt.
In 1996, the Company expanded its Nevada construction industry activities
with the formation of Ready Mix, Inc. ("RMI") as a wholly-owned subsidiary. RMI
manufactures and distributes ready mix concrete in Las Vegas, NV, and targets
prospective customers such as concrete subcontractors, prime contractors, home
builders, commercial and industrial property developers, pool builders and
homeowners. RMI began operations from its first location in March 1997. Financed
with internal funds, a $2 million line of credit, notes payable and operating
leases, RMI intends to operate from two or more sites using at least 40 mixer
trucks.
In 1996, the Company formed Prestressed Products Incorporated ("PPI") as a
wholly-owned subsidiary to design, manufacture and erect precast prestressed
concrete building components for use on commercial, institutional and public
construction projects throughout the Southwest. Product lines included
architectural and structural building components and prestressed bridge girders
for highway construction. During 1997, PPI began operations with a precast yard
and concrete batch plant located on leased property adjacent to the Company's
office in Moapa, Nevada. As a result of continuing operating losses, in June
1998, the Company adopted a formal plan (the "plan") to discontinue the
operations of PPI. The plan included the completion of approximately $2.8
million of uncompleted contracts and the disposition of approximately $1.2
million of equipment. The Company recorded an estimated loss of $1,950,000 (net
of income tax benefit of $1,300,000), related to the disposal of assets of PPI,
which included a provision of $1,350,000 for estimated losses during the
phase-out period of July 1, 1998 through June 30, 1999. Management anticipates
that the remaining contracts will be completed before the end of April 1999 and
the collection of outstanding receivables and the disposition of assets will be
completed before the end of the second quarter 1999.
In 1997, financed through internal funds and operating leases, the Company
obtained equipment and experienced personnel to expand its construction
capabilities to include the performance of concrete or "white" paving. By
performing white paving work, the Company may be able to increase its project
revenue and earnings, reduce reliance on white paving subcontractors, maintain
greater control over project schedules and improve the likelihood of being
awarded projects in which the amount of work proposed to be completed on a
project by the prime contractor is a consideration in the competitive bidding
process.
BUSINESS STRATEGY
The Company seeks to generate revenue growth and profitability by pursuing
the following business strategy:
(i) Expand construction-related niche markets. The Company will continue
to explore niche markets which may increase the Company's competitiveness,
diversify its revenue base, increase project revenue and improve profitability.
This may include acquiring equipment and personnel to increase the amount of
work performed by the Company itself as opposed to subcontracted to others.
(ii) Increase the Company's ownership and/or control of strategic
aggregate resources. The Company has successfully obtained mineral leases on a
number of aggregate resources strategically located near geographic locations in
which the Company is currently competing. Control of aggregate resources may
enhance the Company's competitiveness on work it performs while adding a new
source of revenue and potential profit for materials sold to third parties.
(iii) Solidify market position. The Company intends to continue to expand
its construction and materials operations in Nevada, Arizona, Utah and New
Mexico and will consider expansion into other western states. The Company
intends to further develop its position as a commercial supplier and producer of
aggregates and related materials such as ready mix concrete and asphalt.
(iv) Seek to acquire other businesses. The Company may seek to acquire
other businesses that provide subcontracting services used by the Company in its
projects, complement the Company's existing construction expertise or offer
construction
3
services similar to the Company in geographic locations not currently served by
the Company. For certain projects, the Company may join with one or more
companies to combine expertise, financial strength, and/or bonding capacity.
Through a joint venture, the Company may elect to pursue projects which might
otherwise exceed its staffing or bonding resources, including design-build type
projects within the Company's existing market.
(iv) Increase bonding capacity. The Company will continue to seek to
increase its bonding capacity in order to allow it to increase its volume of
bids and work. See "Insurance and Bonding."
MARKET OVERVIEW
The Company believes that infrastructure construction (primarily highways,
bridges, overpasses, tunnels and other transportation projects) in the western
United States is substantial and will generate continued federal, state and
local government expenditures. On June 9, 1998, the Transportation Equity Act
for the 21st Century ("TEA 21") was signed into law. This bill establishes a
total budget authority of $215 billion over the six year period 1998-2003. TEA
21 ensures that tax revenue deposited into the Highway Trust Fund will be spent
on transportation improvements by guaranteeing $165 billion for highways and $35
billion for transit and by further stipulating that appropriators can spend
trust fund dollars only on transportation.
Growth in the Company's market continues to outperform many areas of the
country. The states of Arizona, Nevada and Utah are among the leaders in key
growth statistics such as population growth and employment. On a percentage
basis, Nevada led the nation for 1998 in population growth, with Arizona in
second place. Nevada, Arizona, Utah, Idaho and Georgia have been the fastest
growing states in the United States in the 1990's. This growth has led to record
levels of residential and commercial construction and to increased
transportation infrastructure work. Consensus among forecasters is that this
growth will slow from 1998 to 1999, with the exception of the transportation
infrastructure segment. Over the six year term of TEA 21, the annual average
funding for transportation infrastructure will increase by 61.8% in Nevada,
59.5% in Arizona, 57.8% in Utah and 45.3% in New Mexico. The state departments
of transportation, along with metropolitan planning organizations will be the
primary parties responsible for administering the TEA 21 funds. In addition to
TEA 21 funds, existing local funding mechanisms will continue to provide for
construction of key transportation facilities through 2015 to fund construction
of multi-billion dollar freeway transportation facilities. Airports in Phoenix,
Las Vegas and Salt Lake City also have substantial capital improvement programs
in excess of $500 million each.
RMI, the Company's ready mix concrete subsidiary, is affected most by the
amount of new residential and commercial construction in the Las Vegas, NV area.
Forecasts for 1999 predict that residential and commercial construction in the
Las Vegas, NV area will be less than 1998 levels. RMI's primary customers have
been residential builders and residential construction is expected to decline.
As a result, the Company may be faced with increased competition from other
local suppliers of ready mix concrete. RMI plans to increase its activity in the
infrastructure portion of the market and may more frequently provide concrete to
its sister company, MVC.
The Company believes the overall economic health in its existing market
will present opportunities for improved performance.
OPERATIONS
In addition to the construction of highways, bridges, overpasses and
airport runways, the Company constructs other heavy civil projects. From its
Phoenix, Arizona corporate office and area offices in Phoenix, Arizona, Moapa,
Nevada, Salt Lake City, Utah and Ruidoso, New Mexico, the Company markets
(primarily by responding to solicitations for competitive bids) and manages all
of its projects. Project management is also located on-site to provide direct
supervision to the operations.
In addition to profitability, the Company considers a number of factors
when determining whether to bid on a project, including the location of the
project, likely competitors and the Company's current and projected workloads.
The Company uses a computer-based project estimating system which reflects its
bidding and construction experience and which the Company believes best
identifies a project's risks and opportunities. The Company develops
comprehensive estimates with each project
4
divided into phases and line items for which separate labor, equipment,
material, subcontractor and overhead cost estimates are compiled. Once a project
begins, the estimate provides the Company with a budget against which ongoing
project costs are measured. There can be no assurance that every project will
attain its budgeted costs. A number of factors can affect a project's
profitability including weather, availability of a quality workforce and actual
productivity rates. Each month the project manager updates the project's
projected performance at completion by using actual costs-to-date and re-
forecasted costs-to-complete for the balance of the work remaining. Regular
review of the estimated costs to complete permit project, area and corporate
management to be as responsive as possible to cost overruns or other problems
that may affect profitability.
The Company owns some of the equipment used in its business lines,
including cranes, backhoes, scrapers, graders, loaders, trucks, trailers,
pavers, rollers, batch plants and related equipment. The net book value of the
Company's equipment at December 31, 1998 was approximately $11.0 million. During
1998, the Company's acquired $3.9 million of property and equipment, primarily
the acquisition of a second asphalt plant and additional equipment needed for
the added construction workload. The Company leases a significant portion of its
equipment and attempts to keep the equipment as fully utilized as possible. It
may rent equipment on a short-term basis to subcontractors.
The Company's corporate management oversees operational and strategic
issues and, through the corporate accounting staff, provides administrative
support services to subsidiary managers, area managers and individual project
management at the project site. The latter are responsible for planning,
scheduling and budgeting operations, equipment maintenance and utilization and
customer satisfaction. Subsidiary managers, area managers and project managers
monitor project costs on a daily and weekly basis while corporate management
monitors such costs monthly.
Raw materials (primarily concrete, aggregate and steel) used in the
Company's operations are available from a number of sources. There are a
sufficient number of materials suppliers within the Company's market area to
assure the Company of adequate competitive bids for supplying such raw
materials. Generally, the Company will obtain several bids from competing
concrete, asphalt or aggregate suppliers whose reserves of such materials will
normally extend beyond the expected completion date of the project. Costs for
raw materials vary depending upon project duration, construction season, or
other factors; but, generally, prices quoted to the Company for raw materials
are fixed for the project's duration. Increased construction activity in the
western United States has created temporary scarcity of key construction
materials, primarily cement powder. It is foreseeable that shortages of cement
supply might reoccur which could result in unexpected and uncontrollable
reductions in sales of ready mix concrete from RMI, the Company's ready mix
concrete subsidiary. The Company strives to obtain supply commitments from a
number of suppliers, but their supply capacity is occasionally exceeded by spot
demands. The Company has not yet been impacted by any cement shortages on its
construction projects, as it normally obtains guaranteed commitments for supply
of cement powder for the duration of the contracts and any damages incurred by
lack of supply could be assessed back to the supplier.
PROJECTS AND CUSTOMERS
The Company specializes in public sector construction projects and its
principal customers are the state departments of transportation in Nevada,
Arizona, Utah and New Mexico and bureaus and departments of municipal and county
governments in those states. For the year ended December 31, 1998, revenue
generated from six projects in Nevada, Arizona and Utah represented 60% of the
Company's revenue. The discontinuance of any projects, a general economic
downturn or a reduction in the number of projects let out for bid in any of the
states in which the Company operates, could have an adverse effect on the
Company's results of operations. In each of the three years ended December 31,
1996, 1997 and 1998 Clark County General Services and the Arizona Department of
Transportation each accounted for over 10% of the Company's consolidated
revenue. Additionally, the Nevada Department of Transportation accounted for
over 10% of the Company's consolidated revenue during the year ended December
31, 1998.
The following table describes all projects substantially completed by the
Company in each of the three years ended December 31, 1996, 1997 and 1998.
Contract amounts include agreed upon change orders, if any, and represent the
total dollar value of the contract to the Company.
5
CONTRACT COMPLETION
CUSTOMER PROJECT DESIGNATION LOCATION AMOUNT DATE
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Arizona Department
of Transportation Highway at Heber Heber, AZ $ 5,535,662 April 1996
Arizona Department
of Transportation I-17 Widening Phoenix, AZ 8,832,295 October 1996
DG Fenn Baptist Retirement Phoenix, AZ 78,468 October 1996
Salt Lake City Airport
Authority South Cargo Salt Lake City, UT 1,517,428 October 1996
Intermountain
Roadbuilders Davis Monthan - Streets Tucson, AZ 344,418 April 1996
Town of Youngtown Youngtown Streets Youngtown, AZ 77,423 February 1996
Arizona Department
of Transportation Pima Freeway Phoenix, AZ 7,546,838 May 1996
Salt Lake City Salt Lake
Airport Authority Salt Lake City Airport City, UT 27,364,636 January 1996
Clark County Nevada
General Services South Beltway Las Vegas, NV 16,175,964 January 1996
Arizona Department
of Transportation Dunlap Phoenix, AZ 8,198,181 January 1996
VFL Technology
Corporation Chevron Cell Construction Salt Lake City, UT 1,362,974 June 1996
Arizona Department
of Transportation Chandler Boulevard Phoenix, AZ 2,209,435 May 1996
Utah Department of
Transportation Snow Canyon Southern, UT 4,138,290 January 1996
Arizona Department
of Transportation Navajo Papermill Road Phoenix, AZ 641,061 January 1996
Intermountain
Roadbuilders Intermountain Roadbuilders Phoenix, AZ 264,845 January 1996
Arizona Department
of Transportation Goodyear Urban Goodyear, AZ 463,665 August 1996
Crescent Run LLP Crescent Run Mesa, AZ 262,261 April 1996
Wespac Lost Canyon II Scottsdale, AZ 152,778 October 1996
City of Winslow City of Winslow Winslow, AZ 1,402,868 September 1996
6
CONTRACT COMPLETION
CUSTOMER PROJECT DESIGNATION LOCATION AMOUNT DATE
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Clark County Dept.
of Aviation Searchlight Searchlight, NV $ 707,977 January 1996
Arizona Department
of Transportation Nogales Connection Nogales, AZ 11,327,515 October 1996
Clark County Dept.
of Aviation Jean Airport Jean, NV 3,897,065 March 1997
Clark County Dept.
of Aviation McCarran Garage Infrastructure Las Vegas, NV 6,203,284 November 1997
Intermountain
Roadbuilders Davis Monthan - Taxiway Tucson, AZ 162,677 March 1997
City of Henderson Equestrian Detention Henderson, NV 5,436,067 March 1997
Homes by Dave
Brown Country Estates Gilbert, AZ 215,770 July 1997
Chanen Midwestern University II Glendale, AZ 230,579 January 1997
Moapa Water District Moapa Water District Moapa, NV 903,919 January 1997
City of Phoenix Collector Street Overlay Phoenix, AZ 1,820,288 January 1997
Triton Builders AT&T Expansion Mesa, AZ 246,080 January 1997
City of Phoenix Skunk Creek Landfill Phoenix, AZ 2,845,955 January 1997
City of Las Vegas Detention Facility Las Vegas, NV 430,700 February 1997
Robert Ewing Lone Butte 3 & 4 Maricopa County 201,979 February 1997
Frehner Construction Precast Las Vegas, NV 89,924 January 1997
City of Gilbert Municipal Parking Expansion Gilbert, AZ 154,492 January 1997
Kay Rogers/ADA
Construction Legacy II Phoenix, AZ 194,023 August 1997
United States Dept.
of Agriculture Tonto Forest Arizona 99,515 July 1997
Mayo Clinic/Ryan
Cos. Mayo Arrowhead Glendale, AZ 155,165 October 1997
Robert Ewing Lone Butte Industrial Maricopa County 225,000 February 1997
Nevada Department
of Transportation Eastern State Highway System Las Vegas, NV 2,260,492 October 1997
7
CONTRACT COMPLETION
CUSTOMER PROJECT DESIGNATION LOCATION AMOUNT DATE
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City of Bisbee Bisbee Municipal Airport Bisbee, AZ $ 295,712 January 1997
Clark County General
Services CCPW Bridge Repair Las Vegas, NV 42,214 December 1997
Clark County, Nevada McCarran Airport Parking
General Services Garage Las Vegas, NV 60,299,916 March 1998
Clark County Department
of Aviation Runway Extension Las Vegas, NV 11,062,630 March 1998
Clark County Department
of Aviation Union Pacific R.R.Relocation Las Vegas, NV 2,019,620 March 1998
Dept. of United States
Army White Sands Missile Range New Mexico 2,106,670 June 1998
Dept. of Transportation
Hwy. Administration Wiggins Crossing Arizona 794,611 March 1998
Clark County Department
of Aviation McCarran Air Cargo Expansion Las Vegas, NV 2,543,872 March 1998
New Mexico Department
of Transportation I-25/Socorro New Mexico 3,315,876 June 1998
Jackson Properties Country Meadows Maricopa County 812,706 February 1998
United States Marine
Corp. Yuma Taxiway Repair Yuma, AZ 708,220 March 1998
Arizona Department of
Transportation Douglas Rodeo Highway Douglas, AZ 1,435,326 March 1998
City of Mesa City of Mesa Sealcoat Mesa, AZ 83,913 March 1998
Clark County General
Services Sloan Channel Las Vegas, NV 1,296,493 March 1998
Nevada Department of
Transportation NDOT Bike Path Las Vegas, NV 1,620,687 March 1998
Clark County General
Services Channel Repair Las Vegas, NV 198,882 May 1998
Clark County General
Services Russell Road Las Vegas, NV 4,892,226 March 1998
Arizona Department of
Transportation White River Arizona 673,362 March 1998
City of Phoenix City of Phoenix Overlay II Phoenix, AZ 2,182,882 February 1998
8
CONTRACT COMPLETION
CUSTOMER PROJECT DESIGNATION LOCATION AMOUNT DATE
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Coconino County,
Fann Construction Clint's Well AZ $ 676,092 March 1998
Dept. of United States
Army White Sands MissileRange New Mexico 855,108 June 1998
Clark County Department
of Public Works LV Beltway Las Vegas, NV 29,169,402 March 1998
The following table describes all projects of the Company in progress as of
December 31, 1998. Current contract amounts include agreed upon change orders,
if any, and represent the dollar value of the contract to the Company.
CURRENT AWARD DATE/
CONTRACT ESTIMATED
CUSTOMER PROJECT DESIGNATION LOCATION AMOUNT COMPLETION DATE
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Arizona Department of Phoenix - Casa Grande November 1995/
Transportation (Joint Venture) Phoenix, AZ $ 20,991,224 April 1999
Clark County Department June 1996/
of Aviation Ticketing Facility Las Vegas, NV 9,097,786 March 1999
Clark County Department August 1996/
of Aviation Terminal D Sitework Las Vegas, NV 39,516,609 April 1999
Arizona Department of Squaw Peak Shea-TBird October 1996/
Transportation Continuation Phoenix, AZ 38,747,627 November 1999
United States Forest Roosevelt Lake, October 1996/
Service School House Campground AZ 4,833,884 January 1999
Utah Department of October 1996/
Transportation I-15/Woods Crossing Salt Lake, UT 19,066,321 March 1999
Arizona Department of February 1997/
Transportation Payson Show-Low Payson, AZ 4,002,855 February 1999
Arizona Department of Coconino County, June 1997/
Transportation Blueridge-Forest AZ 2,401,933 February 1999
Clark County General September 1997/
Services McCarran Mobil Home Park Las Vegas, NV 8,958,184 June 1999
Arizona Department of June 1997/
Transportation Pima Freeway Phoenix, AZ 56,588,647 September 2000
Utah Department of Salt Lake City, August 1997/
Transportation Bangerter Highway UT 21,045,091 March 1999
9
CURRENT AWARD DATE/
CONTRACT ESTIMATED
CUSTOMER PROJECT DESIGNATION LOCATION AMOUNT COMPLETION DATE
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Salt Lake City Airport Salt Lake City, August 1997/
Authority Utah Taxiway UT $ 9,537,445 March 1999
Arizona Department of August 1997/
Transportation Ashfork Devildog Williams, AZ 3,646,313 February 1999
Maricopa County Dept. Maricopa County, September 1997/
of Parks & Recreation Lake Pleasant AZ 1,584,813 January 1999
September 1997/
Victory Valley Land Lake Mead Henderson, NV 3,273,464 December 1999
September 1997/
City of Showlow City of Showlow Showlow, AZ 2,469,918 March 1999
New Mexico Department Donna Ana County, December 1997/
of Transportation I-15/Hatch NM 3,732,191 March 1999
New Mexico Department December 1997/
of Transportation NM Ruidoso Ruidoso, NM 9,367,476 November 1999
Arizona Department of Coconino County, December 1997/
Transportation SR87-Blueridge AZ 2,417,485 February 1999
Nevada Department of December 1997/
Transportation Spaghetti Bowl Las Vegas, NV 92,096,200 November 2000
Clark County General April 1998/
Services Yamashita Street Overton, NV 2,061,295 July 1999
Clark County General May 1998/
Services LV Beltway Sec 4 Las Vegas, NV 29,284,659 December 1999
Arizona Department of April 1998/
Transportation Pima-Red Mountain Phoenix, AZ 11,199,664 January 2000
Arizona Department of October 1998/
Transportation Pineveta/Ashfork Payson, AZ 3,324,644 October 1999
New Mexico Department May 1998/
of Transportation Ski Basin Road Ruidoso, NM 879,905 March 1999
Salt Lake City, May 1998/
Ralph Wadsworth Wadsworth/Bangerter UT 4,701,767 May 1999
New Mexico Department June 1998/
of Transportation Alamagordo Alamogordo, NM 7,084,058 December 1999
New Mexico Department July 1998/
of Transportation Ruidoso II Ruidoso, NM 7,564,710 November 2000
10
CURRENT AWARD DATE/
CONTRACT ESTIMATED
CUSTOMER PROJECT DESIGNATION LOCATION AMOUNT COMPLETION DATE
- ----------------------------------------------------------------------------------------------------------------------------
New Mexico Department Ruidoso Downs, August 1998/
of Transportation US 70 NM $ 7,659,877 May 2000
Arizona Department of September 1998/
Transportation Sunflower Sunflower, AZ 30,564,147 September 2001
New Mexico Department November 1998/
of Transportation Alamagordo II Alamagordo, NM 2,243,292 December 1999
Utah Department of October 1998/
Transportation Grassy Mountain Delle, UT 3,475,328 August 1999
Clark County General September 1998/
Services LV Beltway Section 7, 8 & 9 Las Vegas, NV 55,397,771 June 2000
October 1998/
Victory Valley Land Black Mountain Industrial Las Vegas, NV 1,557,992 December 2000
Maricopa County Department December 1998/
of Transportation Eagle Eye Road Elloy, AZ 2,447,357 May 1999
BACKLOG
The Company's backlog (anticipated revenue from the uncompleted portions of
awarded projects) was approximately $220 million at December 31, 1998, compared
to approximately $214 million at December 31, 1997. At December 31, 1998, the
Company's backlog included approximately $186 million of work that is scheduled
for completion during 1999. The Company includes a construction project in its
backlog at such time as a contract is awarded or a firm letter of commitment is
obtained. The Company believes that its backlog figures are firm, subject to
provisions contained in its contracts which allow customers to modify or cancel
the contracts at any time upon payment of a relatively small cancellation fee.
The Company has not been materially adversely affected by contract cancellations
or modifications in the past. Revenue is impacted in any one period by the
backlog at the beginning of the period. The Company's backlog depends upon the
Company's success in the competitive bid process. Bidding strategies and
priorities may be influenced and changed from time to time by the level of the
Company's backlog and other internal and external factors. A portion of the
Company's anticipated revenue in any year is not reflected in its backlog at the
start of the year because some projects are initiated and completed in the same
year.
COMPETITION
The Company believes that the primary competitive factors as a prime
contractor in the construction industry are price, reputation for quality work,
financial strength, knowledge of local market conditions and estimating
abilities. The Company believes that it competes favorably with respect to each
of the foregoing factors. Most of the Company's projects involve public sector
work for which contractors are first pre-qualified to bid and then are chosen by
a competitive bidding process, primarily on the basis of price. Because the
Company's bids are often determined by the cost to it of subcontractor services
and materials, the Company believes it is often able to lower its overall
construction bids due to its prompt payments to, consistent workloads for, and
good relationships with its subcontractors and suppliers. The Company competes
with a large number of small owner/operator contractors that tend to dominate
smaller (under $4 million) projects. When bidding on larger infrastructure
projects, the Company also competes with larger, well capitalized regional and
national contractors (including Granite Construction Incorporated, Peter Kiewit
Sons', Inc., Sundt Corp. and Morrison Knudsen), many of whom have larger net
worths, higher bonding capacities and more construction personnel than the
Company. Due to currently favorable market conditions in Nevada, Arizona, Utah
and New Mexico, which have resulted in an increase in heavy construction
projects in these states,
11
additional competition may be expected. Such additional competition could reduce
the Company's profit margins on certain projects.
The Company has received single project bond approval up to $110 million
and has an aggregate program bond capacity of over $300 million. The Company
believes its bonding capacity is sufficient to sustain anticipated growth.
Larger competitors typically have unlimited bonding capacity and, therefore, may
be able to bid on more work than the Company. Except for bonding capacity, the
Company does not believe it is at a competitive disadvantage in relation to its
larger competitors. With respect to its smaller competitors, the Company
believes that its larger bonding capacity, long relationships with
subcontractors and suppliers and the perceived stability of having been in
business since 1980 may be competitive advantages.
The Company does not believe that the competitive environment is materially
different in other western states in which the Company may expand. Initially,
the Company will be at a competitive disadvantage in new geographic locations
until it obtains information on those locations and develops relationships with
local subcontractors.
THE CONTRACT PROCESS
The Company's projects are obtained primarily through competitive bidding
and negotiations in response to advertisements by federal, state and local
government agencies and solicitations by private parties. The Company submits
bids after a detailed review of the project specifications, an internal review
of the Company's capabilities and equipment availability and an assessment of
whether the project is likely to attain targeted profit margins. The Company
owns, leases, or is readily able to rent, any equipment necessary to complete
the projects upon which it bids. After computing estimated costs of the project
to be bid, the Company adds its desired profit margin before submitting its bid.
The Company believes that success in the competitive bidding process involves
(i) being selective on projects bid upon in order to conserve resources, (ii)
identifying projects which require the Company's specific expertise, (iii)
becoming familiar with all aspects of the project to avoid costly bidding errors
and (iv) analyzing the local market to determine the availability and cost of
labor and the degree of competition. Since 1987, the Company has been awarded
contracts for approximately 21% of the projects upon which it has bid. A
substantial portion of the Company's revenue is derived from projects that
involve "fixed unit price" contracts under which the Company is committed to
provide materials or services at fixed unit prices (such as dollars per cubic
yard of earth or concrete, or linear feet of pipe). The unit price is determined
by a number of factors including haul distance between the construction site and
the warehouses or supply facilities of local material suppliers and to or from
disposal sites, site characteristics and the type of equipment to be used. While
the fixed unit price contract generally shifts the risk of estimating the
quantity of units for a particular project to the customer, any increase in the
Company's unit cost over its unit bid price, whether due to inefficiency, faulty
estimates, weather, inflation or other factors, must be borne by the Company.
Most public sector contracts provide for termination of the contract at the
election of the customer. In such event the Company is generally entitled to
receive a small cancellation fee in addition to reimbursement for all costs it
incurred on the project. Many of the Company's contracts are subject to
completion requirements with liquidated damages assessed against the Company if
schedules are not met. The Company has not been materially adversely affected by
these provisions in the past.
Contracts often involve work periods in excess of one year. Revenue on
uncompleted fixed price contracts is recorded under the percentage of completion
method of accounting. The Company begins to recognize revenue on its contracts
when it first accrues direct costs. Pursuant to construction industry practice,
a portion of billings, generally not exceeding 10%, may be retained by the
customer until the project is completed and all obligations of the contractor
are paid. The Company has not been subject to a loss in connection with any such
retention.
The Company acts as prime contractor on most of its construction projects
and subcontracts certain jobs such as electrical, mechanical, guardrail and
fencing, signing and signals, foundation drilling, steel erection and other
specialty work to others. As prime contractor, the Company bills the customer
for work performed and pays the subcontractors from funds received from the
customer. Occasionally the Company provides its services as a subcontractor to
another prime contractor. As a subcontractor, the Company will generally receive
the same or similar profit margin as it would as a prime contractor, although
revenue to the Company will be smaller because the Company only contracts a part
of the project. As prime contractor, the Company is responsible for the
performance of the entire contract, including work assigned to subcontractors.
Accordingly,
12
the Company is subject to liability associated with the failure of
subcontractors to perform as required under the contract. The Company
occasionally requires its subcontractors to furnish bonds guaranteeing their
performance, although affirmative action regulations require the Company to use
its best efforts to hire minority subcontractors for a portion of the project
and some of these subcontractors may not be able to obtain surety bonds. On
average, the Company has required performance bonds for less than 10% of the
dollar amount of its subcontracted work. However, the Company is generally aware
of the skill levels and financial condition of its subcontractors through its
direct inquiry of the subcontractors and contract partners of the
subcontractors, as well as its review of financial information provided by the
subcontractors and third party reporting services including credit reporting
agencies and bonding companies. The Company has not been materially adversely
affected by subcontractor related losses over the past five years. As the
Company expands into new geographic areas, it expects to obtain references and
examine the financial condition of prospective subcontractors before entering
into contracts with them, requiring bonding as deemed appropriate.
In connection with public sector contracts, the Company is required to
provide various types of surety bonds guaranteeing its own performance. The
Company's ability to obtain surety bonds depends upon its net worth, working
capital, past performance, management expertise and other factors. Surety
companies consider such factors in light of the amount of the Company's surety
bonds then outstanding and the surety companies' current underwriting standards,
which may change from time to time. See "Insurance and Bonding".
INSURANCE AND BONDING
The Company maintains general liability and excess liability insurance
covering its owned and leased construction equipment and workers' compensation
insurance in amounts it believes are consistent with its risks of loss and in
compliance with specific insurance coverages required by its customers as a part
of the bidding process. The Company carries liability insurance of $16 million
per occurrence, which management believes is adequate for its current operations
and consistent with the requirements of projects currently under construction by
the Company.
The Company is required to provide a surety bond on most of its projects.
The Company's ability to obtain bonding, and the amount of bonding required, is
primarily determined by the Company's management experience, net worth, liquid
working capital (consisting of cash and accounts receivable in excess of
accounts payable and accrued liabilities), the Company's performance history,
the number and size of projects under construction and other factors. Surety
companies consider such factors in light of the amount of the Company's surety
bonds then outstanding and the surety companies' current underwriting standards,
which may change from time to time. The larger the project and/or the more
projects in which the Company is engaged, the greater the Company's bonding, net
worth and liquid working capital requirements. Bonding requirements vary
depending upon the nature of the project to be performed. The Company generally
pays a fee to bonding companies of 1/2% to 1% of the amount of the contract to
be performed. Because these fees are generally payable at the beginning of a
project, the Company must maintain sufficient working capital to satisfy the fee
prior to receiving revenue from the project. The Company has received single
project bonding approval up to $110 million and has an aggregate program bond
capacity of over $300 million.
MARKETING
The Company obtains its projects primarily through the process of
competitive bidding. Accordingly, the Company's marketing efforts are limited to
subscribing to bid reporting services and monitoring trade journals and other
industry sources for bid solicitations by various government authorities. In
response to a bid request, the Company submits a proposal detailing its
qualifications, the services to be provided and the cost of the services to the
soliciting entity which then, based on its evaluation of the proposals
submitted, awards the contract to the successful bidder. Generally, the contract
for a project is awarded to the lowest bidder, although other factors may be
taken into consideration such as the bidder's track record for compliance with
bid specifications and procedures and its construction experience.
For its ready mix operations which the Company pursues through its RMI
subsidiary, a more focused marketing effort is required. Certification of plant
and facilities must be obtained and maintained in order to comply with certain
project requirements. Membership and participation in selected industry
associations help increase the Company's exposure to potential
13
clients and are two means by which the Company stays informed on industry
developments and future prospects within the marketplace. Customer care and
service are important tools for RMI which focuses more on private owners than
public works. Building and maintaining customer relations and reputation for
quality work are essential elements to the marketing efforts of RMI.
GOVERNMENT REGULATION
The Company's operations are subject to compliance with regulatory
requirements of federal, state and municipal authorities, including regulations
covering labor relations, safety standards, affirmative action and the
protection of the environment including requirements in connection with water
discharge, air emissions and hazardous and toxic substance discharge. Under the
Federal Clean Air Act and Clean Water Act, the Company must apply water or
chemicals to reduce dust on road construction projects and to contain water
contaminants in run-off water at construction sites. The Company may also be
required to hire subcontractors to dispose of hazardous wastes encountered on a
project. The Company believes that it is in substantial compliance with all
applicable laws and regulations. However, amendments to current laws or
regulations imposing more stringent requirements could have a material adverse
effect on the Company.
EMPLOYEES
On December 31, 1998, the Company employed approximately 81 salaried
employees (including its management personnel and executive officers) and
approximately 469 hourly employees. The number of hourly employees varies
depending upon the amount of construction in progress. For the year ended
December 31, 1998, the number of hourly employees ranged from approximately 450
to approximately 550 and averaged approximately 525. At December 31, 1998, the
Company is party to four project agreements in Arizona with the Arizona State
District Council of Carpenters, AFL-CIO which covers approximately 15% of the
Company's hourly workforce. At December 31, 1998, the Company believes its
relations with its employees are satisfactory.
ITEM 2. PROPERTIES
The following properties were leased by the Company at December 31, 1998:
(1) 8,300 square feet of executive office space at 4411 South 40th
Street, Suites D-10 and D-11, Phoenix, Arizona, 85040, pursuant to a
lease which expires in December 2000, at a monthly rental rate of
$6,998 per month.
(2) 1,800 square feet of office space at 1598 North 400 West, Suite C,
Layton, Utah 84041, on a month-to-month basis, at a rental rate of
$1,600 per month.
(3) 2,000 square feet of office space for the Company's ready mix
operations, at 3430 E. Flamingo , Suite 100, Las Vegas, Nevada, on a
month-to-month basis, at a rental rate of $2,575.
(4) 2,000 square feet of office space at 1501 Highway 168, Moapa, Nevada
89025, on a month-to-month basis, at a rental rate of $840 per
month, from a Company controlled by Kim A. Marshall, a principal
stockholder. The Company believes that its rental rates are fair,
reasonable and consistent with rates charged by unaffiliated third
parties in the same market area.
(5) 17,500 square feet of property at 1501 Highway 168, Moapa, Nevada
89025, on a month-to-month basis, at a rental rate of $2,500 per
month, from a Company controlled by Kim A. Marshall, a principal
stockholder. The Company used the property for its manufacturing of
prestressed concrete products, a discontinued operation. The lease
terminates January 31, 1999 under the plan to discontinue operations
of PPI. The Company believes that its rental rates are fair,
reasonable and consistent with rates charged by unaffiliated third
parties in the same market area.
The Company owns approximately five acres of land at 109 W. Delhi, North
Las Vegas, NV 89030, which is used for the manufacturing of ready mix concrete.
14
The Company owns approximately 24.5 acres of property in Moapa, Nevada,
which is currently being readied for use as a storage yard.
The Company has determined that the above properties are suitable and
adequate for their intended use.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to legal proceedings in the ordinary course of its
business. The Company believes that the nature of these proceedings (which
generally relate to disputes between the Company and its subcontractors,
material suppliers or customers regarding payment for work performed or
materials supplied) are typical for a construction firm of its size and scope,
and that none of these proceedings are material to its financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 1998.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock has been listed on the Nasdaq National Market
since October 1995 and is traded under the symbol "MVCO". The following table
represents the high and low closing prices for the Company's Common Stock on the
Nasdaq National Market.
1997 1998
------------------------------------------
HIGH LOW HIGH LOW
------------------------------------------
First Quarter........ 5 5/8 3 9/16 6 5/8 5 1/8
Second Quarter....... 5 7/8 3 1/2 7 5 1/2
Third Quarter........ 6 1/4 5 5/16 7 1/4 5
Fourth Quarter....... 6 9/16 5 1/2 6 1/4 4 5/8
HOLDERS OF RECORD
As of February 16, 1999 there were 775 record and beneficial owners of the
Company's Common Stock.
15
ITEM 6. SELECTED FINANCIAL DATA
YEARS ENDED DECEMBER 31, PROFORMA
- ----------------------------------------------------
COMBINED (1)
INCOME STATEMENT DATA: 1994 1995 1996 1997 1998
------------ ----------- ------------ ------------ ------------
Revenue............................................. $80,220,521 $90,048,523 $133,723,645 $146,273,286 $187,036,077
Gross Profit........................................ 5,472,878 4,354,455 2,810,585 7,861,972 9,444,231
Income (loss) from Operations....................... 4,704,425 2,364,676 (255,072) 3,172,430 3,084,983
Interest Expense.................................... 500,000 1,116,464 611,828 624,048 435,358
Income (loss) from continuing operations
before income taxes (2).......................... 4,565,398 1,608,997 (30,410) 3,235,458 3,592,019
Net income (loss) from continuing operations........ 2,824,776 1,059,347 (37,531) 2,072,567 2,169,579
Discontinued Operations:
Loss from discontinued operations (4)............ - - (47,697) (860,952) (635,246)
Estimated loss on disposal of net assets......... - - - - (1,950,000)
of discontinued operations (5)
Net income (loss)................................... 2,824,776 1,059,347 (85,228) 1,211,615 (415,667)
Basic net income (loss) per common share:
Income (loss) from continuing operations......... $ 0.84 $ 0.65 $ (.01) $ 0.58 $ 0.60
Loss from discontinued operations................ - - (.01) (.24) (.18)
Estimated loss on disposal of net assets
of discontinued operations..................... - - - - (.54)
Basic net income (loss) per common share ........... $ 0.84 $ 0.65 $ (.02) $ .34 $ (.12)
Diluted net income (loss) per common share:
Income (loss) from continuing operations......... $ 0.84 $ 0.65 $ (.01) $ 0.57 $ 0.60
Loss from discontinued operations................ - - (.01) (.24) (.17)
Estimated loss on disposal of net assets
of discontinued operations..................... - - - - (54)
Diluted net income (loss) per common share ......... $ 0.84 $ 0.65 $ (.02) $ .33 $ (.11)
Basic weighted average common shares
outstanding (3).................................. 3,350,000 1,641,663 3,601,250 3,601,250 3,601,250
Diluted weighted average common shares
outstanding...................................... 3,350,000 1,641,663 3,601,250 3,651,360 3,644,651
FINANCIAL POSITION DATA:
Working capital (deficiency)........................ $(3,348,451) $11,319,107 $ 8,689,123 $ 5,152,550 $ 5,760,414
Total assets........................................ 22,375,168 28,909,786 42,171,030 47,737,762 49,297,063
Long-term debt...................................... - 3,689,055 4,631,377 5,847,659 5,977,643
Stockholders' equity (deficit)...................... (232,770) 11,761,997 11,676,769 12,888,384 12,472,717
(1) Effective October 1, 1994, the Company acquired all the outstanding shares
of Meadow Valley Contractors, Inc. ("MVC") in a transaction accounted for
by the purchase method of accounting whereby the basis of certain assets
was revalued for accounting purposes. To arrive at this proforma
presentation, the MVC financial statements for the 1994 period prior to
October 1, 1994 have been combined with the Company's financial statements
for the period ending December 31, 1994.
16
(2) Includes the effect of proforma income tax adjustments reflecting
additional income taxes that would have been reported had MVC been subject
to federal and state income taxes for the periods presented through
September 30, 1994. Prior to October 1, 1994, MVC was a S Corporation and,
therefore, did not pay income taxes.
(3) The average shares outstanding and net income (loss) per share for 1994 are
computed upon the number of shares of the Company's Common Stock
outstanding as of December 31, 1994, including the assumed issuance of
500,000 shares of restricted Common Stock in the MVC acquisition, which
were issued during October 1995.
(4) Includes the net income tax benefit of $28,756, $443,520 and $423,497 for
the years ended December 31, 1996, 1997 and 1998 for the discontinued
operations of Prestressed Products Incorporated.
(5) Estimated loss on disposal of net assets of Prestressed Products
Incorporated (net of income tax benefit of $1,300,000), including
$1,350,000 for operating losses during the phase-out period.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The following is a summary of certain information contained in this Report
and is qualified in its entirety by the detailed information and financial
statements that appear elsewhere herein. Except for the historical information
contained herein, the matters set forth in this Report include forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties are detailed throughout the Report and
will be further discussed from time to time in the Company's periodic reports
filed with the Commission. The forward-looking statements included in the Report
speak only as of the date hereof.
The Company was incorporated in Nevada on September 15, 1994. On October 1,
1994, the Company purchased all of the outstanding Common Stock of Meadow Valley
Contractors, Inc. ("MVC"), for $11.5 million comprised of a $10 million
promissory note and $1.5 million paid by the issuance of 500,000 restricted
shares of the Company's Common Stock valued at $3.00 per share. On January 4,
1999, the $10 million promissory note was paid in full. MVC was founded in 1980
as a heavy construction contractor and has been engaged in that activity since
inception. References to the Company's history include the history of MVC.
Operating through MVC, the Company is a heavy construction contractor
specializing in structural concrete construction of highway bridges and
overpasses and the paving of highways and airport runways. The Company generally
serves as the prime contractor for public sector customers (such as federal,
state and local governmental authorities) in the states of Nevada, Arizona, Utah
and New Mexico. The Company believes that specializing in structural concrete
construction has contributed significantly to its revenue growth and provides it
with an advantage in the competitive bidding process. However, such
specialization limits the types and sizes of projects upon which the Company
bids and may be a competitive disadvantage for projects in which the amount of
work proposed to be completed by the prime contractor (as compared to the amount
of work which will be subcontracted by the prime contractor) is a consideration
in the bidding process. The Company primarily seeks public sector customers
because public sector projects are less cyclical than private sector projects,
payment is more reliable, work required by the project is generally standardized
and little marketing expense is incurred in obtaining projects.
In 1996, the Company acquired certain assets, including the tradename, of
AKR Contracting ("AKR"), an unaffiliated Company in Phoenix, Arizona. AKR
previously specialized in earthwork, grading and paving of residential
subdivisions and commercial centers, but has since become increasingly involved
in small publicly funded projects in Arizona and New Mexico. Through AKR, the
Company entered into operating leases for a portable hot mix asphalt plant and
related paving equipment and a rubberized asphalt plant. The asphalt paving
capabilities provide the Company the opportunity to expand its existing
geographic market and enhance its construction operations in its existing
market. To date, AKR has assisted the Company in its expansion into New Mexico
and a broadening of the work it performs in Arizona. Moreover, the Company
believes the AKR equipment improves its competitiveness and may generate
increased revenues on projects that call for large quantities of asphaltic
concrete, recycled asphalt or rubberized asphalt.
17
In 1996, the Company expanded its Nevada construction industry activities
with the formation of Ready Mix, Inc. ("RMI") as a wholly-owned subsidiary. RMI
manufactures and distributes ready mix concrete in Las Vegas, NV, and targets
prospective customers such as concrete subcontractors, prime contractors, home
builders, commercial and industrial property developers, pool builders and
homeowners. RMI began operations from its first location in March 1997. Financed
with internal funds, a $2 million line of credit, notes payable and operating
leases, RMI intends to operate from two or more sites using at least 40 mixer
trucks.
In 1996, the Company formed Prestressed Products Incorporated ("PPI") as a
wholly-owned subsidiary to design, manufacture and erect precast prestressed
concrete building components for use on commercial, institutional and public
construction projects throughout the Southwest. Product lines included
architectural and structural building components and prestressed bridge girders
for highway construction. During 1997, PPI began operations with a precast yard
and concrete batch plant located on leased property adjacent to the Company's
office in Moapa, Nevada. As a result of continuing operating losses in June
1998, the Company adopted a formal plan (the "plan") to discontinue the
operations of PPI. The plan included the completion of approximately $2.8
million of uncompleted contracts and the disposition of approximately $1.2
million of equipment. The Company recorded an estimated loss of $1,950,000 (net
of income tax benefit of $1,300,000), related to the disposal of assets of PPI,
which included a provision of $1,350,000 for estimated losses during the phase-
out period of July 1, 1998 through June 30, 1999. Management anticipates that
the remaining contracts will be completed before the end of April 1999 and the
collection of outstanding receivables and the disposition of assets will be
completed before the end of the second quarter 1999.
In 1997, financed through internal funds and operating leases, the Company
obtained equipment and experienced personnel to expand its construction
capabilities to include the performance of concrete or "white" paving. By
performing white paving work, the Company may be able to increase its project
revenue and earnings, reduce reliance on white paving subcontractors, maintain
greater control over project schedules and improve the likelihood of being
awarded projects in which the amount of work proposed to be completed on a
project by the prime contractor is a consideration in the competitive bidding
process.
The Company has historically relied upon a small number of projects to
generate a significant portion of its revenue. For instance, revenue generated
from six projects represented 60% of the Company's revenue for the year ended
December 31, 1998. Results for any one calender quarter may fluctuate widely
depending upon the stage of completion of the Company's active projects.
RESULTS OF OPERATIONS
The following table sets forth statement of operations data expressed as a
percentage of revenues for the periods indicated:
Years Ended December 31,
------------------------------------------
1996 1997 1998
------------ ------------ ------------
Revenue........................................... 100.00% 100.00% 100.00%
Cost of revenue................................... 97.90 94.63 94.95
Gross profit...................................... 2.10 5.37 5.05
General and administrative expenses............... 2.29 3.21 3.40
Income (loss) from operations..................... (.19) 2.16 1.65
Interest income................................... .55 .46 .46
Interest expense.................................. (.46) (.43) (.23)
Other income...................................... .07 .01 .05
Net income (loss) from continuing operations...... (.03) 1.42 1.16
Loss from discontinued operations................. (.03) (.59) (.34)
Estimated loss on disposal of net assets of
discontinued operations......................... - - (1.04)
Net income (loss)................................. (.06) .83 (.22)
18
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Revenue and Backlog. Revenue increased 27.9% to $187.0 million for the year
ended December 31, 1998 from $146.3 million for the year ended December 31,
1997. The increase was the result of an increase in contract revenue of $36.6
million and a $4.1 million increase in revenue generated from construction
materials production and manufacturing sold to non-affiliates. Backlog increased
to $220 million at December 31, 1998 compared to $214 million at December 31,
1997. Revenue is impacted in any one period by the backlog at the beginning of
the period.
Gross Profit. As a percentage of revenue, consolidated gross profit
decreased from 5.37% in 1997 to 5.05% in 1998. The decrease in MVC's gross
profit margin was the result of (i) cost overruns on certain projects (ii)
subcontractor difficulties and (iii) costs related to plan or specification
errors. Gross profit margins are affected by a variety of factors including
construction delays and difficulties due to weather conditions, availability of
materials, the timing of work performed by other subcontractors and the physical
and geological condition of the construction site.
General and Administrative Expenses. General and administrative expenses
increased to $6,359,248 for 1998 from $4,689,542 for 1997. The increase
resulted, in part, from costs associated with expansion into the white paving
market amounting to approximately $323,000, $267,000 in corporate labor,
$871,000 in costs related to various employee incentive plans, $120,000 in legal
costs, $35,000 in costs related to the Company's safety plan, $32,000 in costs
related to the administration of various employee incentive and benefit plans
and a variety of other costs related to the administration of the corporate and
area offices.
Interest Income and Expense. Interest income for 1998 increased to $856,191
from $666,397 in 1997 due to an increase in cash reserves resulting primarily
from billings in excess of costs and estimated earnings on uncompleted projects.
Interest expense decreased in 1998 to $435,358 from $624,048, due to a
$1,000,000 reduction in related party debt during the fourth quarter 1997 and a
$1,500,000 reduction in 1998. At December 31, 1998 the remaining balance on the
related party promissory note was $1,000,000. During January 1999, the Company
made the final principal payment of $1,000,000.
Net Income from Continuing Operations After Income Taxes. Net income from
continuing operations after income taxes was $2,169,579 in 1998 as compared to
$2,072,567 for 1997. The slight increase resulted from higher revenues offset by
increased general and administrative expenses and decreased gross profit
margins, as well as higher interest income and lower interest expense.
Discontinued Operations. In June 1998, due to continuing operating losses,
the Company decided to dispose of its wholly-owned subsidiary Prestressed
Products Incorporated. Accordingly, the Company has reclassified the operations
of Prestressed Products Incorporated as discontinued operations in the
accompanying financial statements. In June 1998, the Company accrued a
$1,950,000 charge (net of income tax benefit of $1,300,000), related to the
disposal of assets for the Prestressed Products business, which included a
provision of $1,350,000 for estimated operating losses during the phase-out
period. During the year ended December 31, 1998, $1,134,112 of the expected
losses were incurred (net of income tax benefit of $756,073). The cessation of
the Prestressed Products business is expected to be completed during the second
quarter 1999.
Net Loss. Net loss, after discontinued operations, for 1998 was $415,667
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Revenue and Backlog. Revenue increased 9.4% to $146.3 million for the year
ended December 31, 1997, from $133.7 million for the year ended December 31,
1996. The increase results primarily from a $12.0 million increase in revenue
generated from construction materials production and manufacturing sold to
non-affiliates.
Gross Profit. As a percentage of revenue, gross profit increased from 2.10%
in 1996 to 5.37% in 1997. The increase in the gross profit margin was the result
of decreased gross profit margins experienced during 1996 related to (i)
omission of costs from bid estimates (ii) difficulties assembling an adequate
skilled labor force due to physical location of a construction site (iii)
19
erroneous assumptions at bid time regarding the Company's construction
productivity and (iv) inadequate field and corporate supervision.
General and Administrative Expenses. General and administrative expenses
increased from $3,065,657 for 1996 to $4,689,542 for 1997. The increase results,
in part, from the costs associated with the Company's wholly-owned ready-mix
concrete subsidiary, the Company's continued expansion in Utah and expansion
into white paving. The additional costs associated with the Company's wholly-
owned ready-mix concrete subsidiary and the continued expansion in Utah and
expansion into white paving amounted to approximately $887,000. The remainder of
the increase was $365,948 in corporate labor and a variety of costs including
costs in excess of $79,000 related to enhancements in the safety plan, $75,000
related to non-recurring consulting studies and $53,000 related to corporate
travel.
Interest Income and Expense. Interest income decreased in 1997 to $666,397
from $741,270 in 1996, due to a decrease in cash reserves resulting primarily
from the expansion into the production and manufacturing of construction
materials and the purchase of equipment. Interest expense increased slightly in
1997 to $624,048 from $611,828 in 1996, due primarily to financing certain of
the property and equipment additions.
Net Income from Continuing Operations After Income Taxes. Net income from
continuing operations after taxes for 1997 was $2,072,567 compared to a net loss
from continuing operations after income taxes for 1996 of $(37,531). The
increase primarily resulted from the increase in revenue and gross profit margin
offset, in part, by higher general and administrative expenses as discussed
above.
Discontinued Operations. In June 1998, the Company decided to dispose of
its wholly-owned subsidiary Prestressed Products Incorporated. Accordingly, the
Company has reclassified the operations of Prestressed Products Incorporated as
discontinued operations in the accompanying financial statements. The statements
of operations for the years ended December 31, 1996 and 1997 have been restated
and operating results of PPI are shown separately. During the years ended
December 31, 1996 and 1997, PPI incurred losses in the amounts of $47,697 and
$860,952, net of income tax benefits of $28,756 and $443,520. The cessation of
the Prestressed Products business is expected to be completed during the second
quarter 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary need for capital has been to finance growth in its
core business as a heavy construction contractor and its expansion into the
other construction and construction related businesses heretofore discussed.
Annual revenue has grown from approximately $134.0 million in 1996 to $187.0
million in 1998. Growth has resulted in the need for additional capital to
finance increased receivables, retentions and capital expenditures, and to
address fluctuations in the work-in-process billing cycle.
The following table sets forth, for the periods presented, certain items
from the Statements of Cash Flows of the Company.
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------
1996 1997 1998
Cash Provided By (Used in) Operating Activities....... $ (3,090,919) $ 7,545,827 $ 10,889,235
Cash Provided By (Used in) Investing Activities....... (579,183) (4,432,322) 331,646
Cash Used in Financing Activities..................... (247,283) (1,738,860) (3,043,020)
Although the Company may experience increased profitability as operations
increase, cash may be reduced to finance receivables and for customer cash
retention required under contracts subject to completion. Management continually
monitors the Company's cash requirements to maintain adequate cash reserves, and
the Company believes that its cash balances were and, together with the
operating lines of credit described below, are sufficient.
20
Cash used in operating activities during 1996 amounted to $3.1 million,
primarily the result of an increase in accounts receivable and prepaid expenses
of $14.1 million, offset by an increase in accounts payable of $8.6 million
along with an increase in net billings in excess of costs of $1.6 million and
depreciation and amortization of $.8 million.
Cash provided by operating activities during 1997 amounted to $7.5 million,
primarily the result of net income of $1.2 million, depreciation and
amortization of $1.3 million, a decrease in accounts receivable of $2.8 million,
an increase in net billings in excess of costs of $3.1 million, $.4 million
increase in deferred income tax payable, offset by a decrease in accounts
payable of $1.3 million.
Cash provided by operating activities during 1998 amounted to $10.9
million, primarily the result of a decrease in accounts receivable of $8.7
million, depreciation and amortization of $1.8 million, an increase in net
billings in excess of costs of $4.8 million, an increase in accrued liabilities
of $1.3 million, offset by a decrease in accounts payable of $4.6 million and an
increase in prepaid expenses and other of $.8 million and a net loss of $.4
million.
Cash used in investing activities during 1996 amounted to $.6 million,
primarily the result of the purchase of property and equipment of $1.7 million
and the investment in and advances to Prestressed Products Incorporated of $.2
million, offset by a decrease in restricted cash of $1.2 million and proceeds
from the sale of property and equipment of $.1 million. The decrease in
restricted cash during 1996 is a result of the partial release of funds held in
escrow accounts pending the completion of three large volume projects.
Cash used in investing activities during 1997 amounted to $4.4 million
related primarily to an increase in net assets of discontinued operations of
$2.6 million and the purchase of property and equipment of $1.8 million.
Cash provided by investing activities during 1998 amounted to $.3 million
related primarily to the decrease in related party note receivable of $.3
million, a decrease in net assets of discontinued operations of $2.5 million and
proceeds from the sale of property and equipment in the amount of $.2 million,
offset by the increase in restricted cash of $2.0 million and the purchase of
property and equipment of $.6 million. The aforementioned note receivable
related party was due from Paul R. Lewis, an officer and director of the
Company.
Cash used in financing activities during 1996 included lease payments of
$.1 million and equipment loan payments of $.1 million, a total of approximately
$.2 million. Cash used in financing activities during 1997 amounted to $1.7
million including $.5 million repayment of a loan from a related party plus $.5
million prepayment of a loan from a related party and repayments of notes
payable and capital lease obligations in the amount of $.7 million. Cash used in
financing activities during 1998 amounted to $3.0 million including a total of
$1.5 million of prepayments of a loan from a related party and repayments of
notes payable and capital lease obligations in the amount of $1.5 million. The
aforementioned note payable related party was due to a principal shareholder of
the Company, the Richard C. Lewis Family Revocable Trust I.
The Company currently has available from a commercial bank a $2,000,000
operating line of credit at an interest rate of the commercial bank's prime plus
.50%, and a $2,000,000 operating line of credit at an interest rate of the
commercial bank's prime plus .25% ("lines of credit"). At December 31, 1998, and
as of the filing date of this report, nothing had been drawn on either of the
lines of credit. Under the lines of credit, the Company is required to maintain
certain levels of working capital, to promptly pay all its obligations and is
precluded from conveying, selling or leasing all or substantially all of its
assets. At December 31, 1998, the Company was in full compliance with all such
covenants and there are no material covenants or restrictions in the lines of
credit which the Company believes would impair its operations. The lines of
credit expire September 15, 1999.
The Company anticipates that a substantial portion of the costs associated
with a planned second ready-mix plant and related equipment will be financed
through bank financing and operating leases. In addition, the Company is
currently leasing approximately 40 ready-mix trucks with estimated annual lease
payments of $800,000.
21
Management believes that the Company's cash reserves, together with its
lines of credit and its capacity to enter into other financing arrangements are
sufficient to fund its cash requirements for the next 12 months and that the
Company's working capital will be adequate to fund its short term and long term
requirements.
NEW ACCOUNTING PRONOUNCEMENTS
Disclosures about Segments of an Enterprise and Related Information:
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," (SFAS 131) issued by the
FASB is effective for financial statements with fiscal years beginning after
December 15, 1997. Earlier application is permitted. SFAS 131 requires that
public companies report certain information about operating segments, products,
services and geographical areas in which they operate and their major customers.
The Company adopted this accounting standard on January 1, 1998.
IMPACT OF INFLATION
The Company believes that inflation has not had a material impact on its
operations. However, substantial increases in labor costs, worker compensation
rates and employee benefits, equipment costs, material or subcontractor costs
could adversely affect the operations of the Company for future periods.
YEAR 2000
The Company's has completed a comprehensive assessment of the internal
information systems and applications that will be impacted by the year 2000. The
Company expects to make the necessary revisions or upgrades to its systems to
render it year 2000 compliant. The Company's accounting software currently
utilizes a four digit year field. Attention is also being focused on compliance
efforts of key suppliers and customers. The Company could potentially experience
disruptions to some aspects of its various activities and operations as a result
of non-compliant systems utilized by the Company or unrelated third parties.
Contingency plans are therefore under development to mitigate the extent of any
such potential disruption to business operations. Based on preliminary
information, the costs to the Company of addressing potential year 2000 issues
are not expected to have a material adverse impact on the Company's consolidated
results of operations or financial position. There can be no assurance that the
efforts or the contingency plans related to the Company's systems, or those of
the other entities relied upon will be successful or that any failure to
convert, upgrade or appropriately plan for contingencies would not have a
material adverse effect on the Company.
KNOWN AND ANTICIPATED FUTURE TRENDS AND CONTINGENCIES
The Company has increasingly drawn the interest and attention of an
AFL-CIO-funded organization known as the Building Trades Organizing Project
("BTOP"). The stated purpose of the BTOP is to organize the workforce of
non-union companies. Notwithstanding its stated purpose and the fact that it
currently owns 263 shares of the Company's Common Stock, the actions taken by
the BTOP relative to the Company have generally been contrary to the interests
of the Company's other shareholders. These actions include hindering the
Company's productivity by organizing pickets on certain Nevada job sites, filing
unfounded unfair labor charges (to date the Company has successfully prevailed
on all charges brought against the Company) and interfering with the work of
subcontractors and suppliers. In addition, the BTOP has issued press releases
wherein the facts were incomplete, mistaken, misleading, blatantly false or
stated erroneous conclusions. Unfortunately, all too frequently the wire
services have mistakenly attributed to the Company statements made in the BTOP
press releases. On one occasion, this caused a dramatic decline in the value of
the Company's Common Stock. The BTOP is now seeking to inhibit the Company's
ongoing operations by requesting that all transactions with related parties be
subject to shareholder approval. The BTOP has also had direct contact with two
of the Company's customers, the Nevada Department of Transportation and the New
Mexico State Highway and Transportation Department, with the apparent intent of
restricting the Company's contractual rights and its ability to continue to
obtain future contracts. The Company has successfully minimized the impact of
the BTOP's actions on the construction projects, but has, as yet, been unable to
prevent BTOP from issuing damaging press releases. It can be
22
anticipated that, barring successful legal action, if any, by the Company the
BTOP will continue to use the same tactics in dealing with the Company in the
future.
Subject to the Company's profitability and increases in retained earnings,
it is anticipated that the bonding limits will increase proportionately, thereby
allowing the Company to bid on and perform more and larger projects.
The Company believes that government at all levels will continue to be the
primary source of funding for infrastructure work. One June 9, 1998, the
Transportation Equity Act for the 21st Century ("TEA 21") was signed into law.
This bill establishes a total budget authority of $215 billion over the six year
period 1998-2003. TEA 21 ensures that tax revenue deposited into the Highway
Trust Fund will be spent on transportation improvements by guaranteeing $165
billion for highways and $35 billion for transit and by further stipulating that
appropriators can spend trust fund dollars only on transportation. See "Market
Overview".
The competitive bidding process will continue to be the dominant method for
determining contract award. However, other innovative bidding methods will be
tried and may gain favor, namely "A Plus B" contracts, where the bidders'
proposals are selected on both price and scheduling criteria. Design-build
projects are becoming more common and are likely to increase in frequency.
Design-build projects also tend to be of more worth to the owner when the
contract size is substantial, usually $50 million or more.
In light of the rising needs for infrastructure work throughout the nation
and the tendency of the current needs to out-pace the supply of funds, it is
anticipated that alternative funding sources will continue to be sought. Funding
for infrastructure development in the United States is coming from a growing
variety of innovative sources. An increase of funding measures is being
undertaken by various levels of government to help solve traffic congestion and
related air quality problems. Sales taxes, fuel taxes, user fees in a variety of
forms, vehicle license taxes, private toll roads and quasi-public toll roads are
examples of how transportation funding is evolving. Transportation norms are
being challenged by federally mandated air quality standards. Improving traffic
movement, eliminating congestion, increasing public transit, adding or
designating high occupancy vehicle (HOV) lanes to encourage car pooling and
other solutions are being considered in order to help meet EPA-imposed air
quality standards.
SEASONALITY
The construction industry is seasonal, generally due to inclement weather
occurring in the winter months. Accordingly, the Company may experience a
seasonal pattern in its operating results with lower revenue in the first and
fourth quarters of each calendar year than other quarters. Quarterly results may
also be affected by the timing of bid solicitations by governmental authorities,
the stage of completion of major projects and revenue recognition policies.
Results for any one quarter, therefore, may not be indicative of results for
other quarters or for the year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements are indexed on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
23
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on directors and executive officers of the Company will be
included under the caption "Directors and Executive Officers" of the Company's
definitive Proxy Statement relating to the Annual Meeting of Shareholders for
the year ended December 31, 1998, which is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information on executive compensation will be included under the caption
"Compensation of Executive Officers" of the Company's definitive Proxy Statement
relating to the Annual Meeting of Shareholders for the year ended December 31,
1998, which is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information on beneficial ownership of the Company's voting securities by
each director and all officers and directors as a group, and by any person known
to beneficially own more than 5% of any class of voting security of the Company
will be included under the caption "Beneficial Ownership of the Company's
Securities" of the Company's definitive Proxy Statement relating to the Annual
Meeting of the Shareholders for the year ended December 31, 1998, which is
hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information on certain relationships and related transactions including
information with respect to management indebtedness will be included under the
caption "Information Regarding Indebtedness of Management to the Company" of the
Company's definitive Proxy Statement relating to the Annual Meeting of
Shareholders for the year ended December 31, 1998, which is hereby incorporated
by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
See Item 8 of Part II hereof.
(a)(2) Financial Statement Schedules
The schedules specified under Regulation S-X are either not
applicable or immaterial to the Company's consolidated financial
statements for the years ended December 31, 1996, 1997 and 1998.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the fourth
quarter ended December 31, 1998.
(c) Exhibits
EXHIBIT
NO. TITLE
------- -----------------------------------------------------
1.01 Form of Underwriting Agreement with Spelman & Co.,
Inc. (1)
24
EXHIBIT
NO. TITLE
------- ------------------------------------------------------------
1.02 Form of Selected Dealer Agreement (1)
1.03 Form of Representatives' Warrant (1)
1.04 Consulting Agreement with the Representative (1)
1.05 Form of Amended Underwriting Agreement (Spelman & Co., Inc.)
(1)
1.06 Form of Amended Representatives' Warrant (Spelman & Co.,
Inc.)(1)
1.07 Form of Underwriting Agreement (H D Brous & Co., Inc.)(1)
1.08 Form of Selected Dealer Agreement (H D Brous & Co., Inc.)(1)
1.09 Form of Representatives' Unit Warrant (H D Brous & Co.,
Inc.)(1)
1.10 Warrant Agreement (1)
1.11 Agreement Among Underwriters (1)
1.12 Form of Underwriting Agreement (H D Brous & Co., Inc. and
Neidiger/Tucker/Bruner, Inc.)(1)
1.13 Form of Agreement Among Underwriters (H D Brous & Co., Inc.
and Neidiger/Tucker/Bruner, Inc.)(1)
1.14 Form of Selected Dealer Agreement (H D Brous & Co., Inc. and
Neidiger/Tucker/Bruner, Inc.)(1)
1.15 Form of Representatives' Warrant Agreement, including Form
of Representatives' Warrant (H D Brous & Co., Inc. and
Neidiger/Tucker/Bruner, Inc.)(1)
3.01 Articles of Incorporation and Amendments thereto of the
Registrant (1)
3.02 Bylaws of the Registrant (1)
3.03 Bylaws of the Registrant Effective October 20, 1995 (1)
5.01 Opinion of Gary A. Agron, regarding legality of the Common
Stock (includes Consent)(1)
5.02 Opinion of Gary A. Agron, regarding legality of the Units,
Common Stock and Warrants (1)
10.01 Incentive Stock Option Plan (1)
10.02 Office lease of the Registrant (1)
10.03 Office lease of the Registrant (1)
10.04 Contract between the State of Arizona and the Registrant
dated October 22, 1993 (1)
10.05 Surety Bond between the Registrant and St. Paul Fire &
Marine Insurance Company (1)
10.06 Surety Bond between the Registrant and United States
Fidelity and Guaranty Company (1)
10.07 Contract between Clark County, Nevada and the Registrant
dated October 6, 1992 (1)
10.08 Surety Bond between the Registrant and St. Paul Fire and
Marine Insurance Company (1)
10.09 Agreement between Salt Lake City Corporation and the
Registrant dated May 5, 1993 (1)
10.10 Contract between Clark County, Nevada and the Registrant
dated July 21, 1993 (1)
10.11 Contract between Clark County, Nevada and the Registrant
dated August 17, 1993 (1)
10.12 Promissory Note executed by Robert C. Lewis and Richard C.
Lewis (1)
10.13 Promissory Note executed by Moapa Developers, Inc. (1)
25
EXHIBIT
NO. TITLE
------- ------------------------------------------------------------
10.14 Promissory Note executed by Paul R. Lewis (1)
10.15 Contract between Clark County, Nevada and the Registrant
dated September 7, 1993 (1)
10.16 Agreement between Salt Lake City Corporation and the
Registrant dated February 11, 1994 (1)
10.17 Contract between Northwest/Cheyenne Joint Venture and the
Registrant dated March 16, 1994 (1)
10.18 Contract between Clark County, Nevada and the Registrant
dated April 5, 1994 (1)
10.19 Statutory Payment Bond dated September 8, 1994 (1)
10.20 Employment Agreement with Mr. Lewis (1)
10.21 Employment Agreement with Mr. Black (1)
10.22 Employment Agreement with Mr. Terril (1)
10.23 Employment Agreement with Mr. Nelson (1)
10.24 Employment Agreement with Ms. Danley (1)
10.25 Employment Agreement with Mr. Jessop (1)
10.26 Employment Agreement with Mr. Larson (1)
10.27 Stock Purchase Agreement (1)
10.28 Form of Lockup Letter (1)
10.29 Revolving Credit Loan Agreement (1)
10.30 Contract Award Notification - Arizona Department of
Transportation (1)
10.31 Contract Award Notification - McCarran International Airport
(1)
10.32 Contract Award Notification - City of Henderson (1)
10.33 Contract between Registrant and Arizona Department of
Transportation (1)
10.34 Contract between Registrant and Arizona Department of
Transportation (1)
10.35 Office Lease of the Registrant (1)
10.36 Contract between Registrant and Arizona Department of
Transportation (2)
10.37 Contract Award Notification - Clark County (2)
10.38 Joint Venture Agreement (2)
10.39 Employment Agreement with Mr. Grasmick (2)
10.40 Contract between Registrant and Clark County, Nevada (2)
10.41 Contract between Registrant and Clark County, Nevada (2)
10.42 Contract between Registrant and Utah Department of
Transportation (2)
10.43 Contract between Registrant and Arizona Department of
Transportation (2)
10.44 Promissory Note executed by Nevada State Bank (2)
10.45 Escrow Settlement Documents and related Promissory Note (2)
10.46 Conveyor Sales Contract and Security Agreement (2)
10.47 CAT Financial Installment Sale Contract (2)
10.48 Second and Third Amendments to Office Lease of the
Registrant (2)
10.49 Lease Agreement with US Bancorp (2)
26
EXHIBIT
NO. TITLE
------- ------------------------------------------------------------
10.50 Lease Agreement with CIT Group (2)
10.51 CAT Financial Installment Sale Contract (3)
10.52 CAT Financial Installment Sale Contract (3)
10.53 CAT Financial Installment Sale Contract (3)
10.54 CAT Financial Installment Sale Contract (3)
10.55 CAT Financial Installment Sale Contract (3)
10.56 Escrow Settlement Documents (3)
10.57 Promissory Note executed by General Electric Capital
Corporation (3)
10.58 Promissory Note executed by General Electric Capital
Corporation (3)
10.59 Promissory Note executed by General Electric Capital
Corporation (3)
10.60 Promissory Note executed by General Electric Capital
Corporation (3)
10.61 Promissory Note executed by Nevada State Bank (3)
10.62 KDC Sales Contract (3)
10.63 Lease Agreement with CIT (3)
10.64 Lease Agreement with CIT (3)
10.65 Contract between Registrant and Utah Department of
Transportation (3)
10.66 Contract between Registrant and Clark County, Nevada (3)
10.67 Contract between Registrant and New Mexico State Highway and
Transportation Department (3)
10.68 Contract between Registrant and Salt Lake City Corporation
(3)
10.69 Contract between Registrant and Utah Department of
Transportation (3)
10.70 Contract between Registrant and Arizona Department of
Transportation (3)
10.71 Contract between Registrant and Nevada Department of
Transportation (3)
10.72 Employment and Indemnification Agreements with Mr. Nelson
(3)
10.73 Employment and Indemnification Agreements with Mr. Terril
(3)
10.74 Employment and Indemnification Agreements with Mr. Lewis (3)
10.75 Employment and Indemnification Agreements with Mr. Larson
(3)
10.76 Employment and Indemnification Agreements with Mr. Burnell
(3)
10.77 Lease Agreement with Banc One Leasing Corp.
10.78 Lease Agreement with Banc One Leasing Corp.
10.79 Lease Agreement with Banc One Leasing Corp.
10.80 Lease Agreement with US Bancorp.
10.81 Security Agreement with Associates Commercial Corporation
10.82 Lease Agreement with Caterpillar Financial Services
10.83 Contract between Registrant and Clark County, Nevada
10.84 Contract between Registrant and Arizona Department of
Transportation
10.85 Contract between Registrant and New Mexico State Highway and
Transportation Department
27
EXHIBIT
NO. TITLE
------- ------------------------------------------------------------
10.86 Contract between Registrant and New Mexico State Highway and
Transportation Department
10.87 Contract between Registrant and New Mexico State Highway and
Transportation Department
10.88 Joint Venture Agreement between Registrant and R.E. Monks
Construction Co.
10.89 Contract between Meadow Valley Contractors, Inc./R.E. Monks
Construction Co. (JV) and Arizona Department of
Transportation
10.90 Contract between the Registrant and Utah Department of
Transportation
10.91 Contract between the Registrant and Clark County, Nevada
10.92 General Agreement of Indemnity between the Registrant and
Liberty Mutual Insurance Company
10.93 Employment Agreement with Mr. Larson
10.94 Lease Agreement between the Registrant and Ken Nosker
16.01 Letter re: Change in Certifying Accountant (1)
21.01 Subsidiaries of the Registrant (1)
23.01 Consent of Semple & Cooper (Meadow Valley Contractors,
Inc.)(1)
23.02 Consent of Semple & Cooper (Meadow Valley Corporation)(1)
23.03 Consent of Gary A. Agron, Esq. (See 5.01, above.)(1)
23.04 Consent of Semple & Cooper (Meadow Valley Contractors,
Inc.)(1)
23.05 Consent of BDO Seidman, LLP (Meadow Valley Corporation)(1)
23.06 Consent of Semple & Cooper (Meadow Valley Contractors,
Inc.)(1)
23.07 Consent of BDO Seidman, LLP (Meadow Valley Corporation) (1)
23.08 Consent of Semple & Cooper (Meadow Valley Contractors,
Inc.)(1)
23.09 Consent of BDO Seidman, LLP (Meadow Valley Corporation and
Meadow Valley Contractors, Inc.)(1)
23.10 Consent of Semple & Cooper (Meadow Valley Contractors,
Inc.)(1)
23.11 Consent of BDO Seidman, LLP (Meadow Valley Corporation and
Meadow Valley Contractors, Inc.)(1)
23.12 Consent of Semple & Cooper (Meadow Valley Contractors, Inc.)
(1)
23.13 Consent of BDO Seidman, LLP (Meadow Valley Corporation and
Meadow Valley Contractors, Inc.)(1)
23.14 Consent of Semple & Cooper (Meadow Valley Contractors,
Inc.)(1)
23.15 Consent of BDO Seidman, LLP (Meadow Valley Corporation and
Meadow Valley Contractors