MEADOW VALLEY CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002
Commission File No 0-25428

MEADOW VALLEY CORPORATION
(Exact name of registrant as specified in its charter)


Nevada (State or other Jurisdiction of incorporation or organization)		88-0328443 (I.R.S. Employer Identification Number)

4411 South 40th Street, Suite D-11
Phoenix, Arizona 85040
(602) 437-5400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings requirements for the past 90 days. Yes [X] No [ ]

Number of shares outstanding of each of the registrant’s classes of common stock as of October 31, 2002:

Common Stock, $.001 par value
3,559,938 shares

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosure About Market Risk
	Item 4. Controls and Procedures
PART II – OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
EX-10.193
EX-10.194
EX-10.195
EX-10.196
EX-10.197
EX-10.198
EX-10.199
EX-10.200
EX-10.201
EX-10.202
EX-10.203
EX-10.204
EX-10.205
EX-10.206
EX-10.207
EX-99.7
EX-99.8
EX-99.9
EX-99.10
EX-99.11

MEADOW VALLEY CORPORATION
INDEX
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002


PART I. FINANCIAL INFORMATION









Item 1. Financial Statements









	Condensed Consolidated Statements of Operations (Unaudited) — Nine Months Ended September 30, 2002 and 2001	3




	Condensed Consolidated Statements of Operations (Unaudited) — Three Months Ended September 30, 2002 and 2001	4




	Condensed Consolidated Balance Sheets — As of September 30, 2002 (Unaudited) and December 31, 2001	5




	Condensed Consolidated Statements of Cash Flows (Unaudited) — Nine Months Ended September 30, 2002 and 2001	6




	Notes to Condensed Consolidated Financial Statements	8




Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20




Item 3. Quantitative and Qualitative Disclosure About Market Risk		25




Item 4. Controls and Procedures		25









PART II. OTHER INFORMATION




Item 1. Legal Proceedings		26




Item 6. Exhibits and Reports on Form 8-K		29

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


		Nine Months Ended
		September 30,

		2002			2001

Revenue		$	114,504,444		$	133,449,734




Cost of revenue			109,264,991			128,902,986

Gross profit			5,239,453			4,546,748




General and administrative expenses			4,359,550			4,973,476

Income (loss) from operations			879,903			(426,728	)

Other income (expense):




	Interest income		100,204			175,455




	Interest expense		(329,942	)		(353,676	)




	Other income		76,023			358,223

			(153,715	)		180,002

Income (loss) before income taxes			726,188			(246,726	)




Income tax benefit (expense)			(272,320	)		92,522

Net income (loss)		$	453,868		$	(154,204	)

Basic net income (loss) per common share		$	0.13		$	(0.04	)

Diluted net income (loss) per common share		$	0.13		$	(0.04	)

Basic weighted average common shares outstanding			3,559,938			3,559,938

Diluted weighted average common shares outstanding			3,559,938			3,559,938

MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


		Three Months Ended
		September 30,

		2002			2001

Revenue		$	37,523,094		$	52,619,530




Cost of revenue			36,045,632			50,413,756

Gross profit			1,477,462			2,205,774




General and administrative expenses			1,435,485			1,501,449

Income from operations			41,977			704,325

Other income (expense):




	Interest income		46,387			48,912




	Interest expense		(121,882	)		(128,969	)




	Other income (expense)		98,809			(103,543	)

			23,314			(183,600	)

Income before income taxes			65,291			520,725




Income tax expense			(24,484	)		(195,272	)

Net income		$	40,807		$	325,453

Basic net income per common share		$	0.01		$	0.09

Diluted net income per common share		$	0.01		$	0.09

Basic weighted average common shares outstanding			3,559,938			3,559,938

Diluted weighted average common shares outstanding			3,559,938			3,559,938

MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


			September 30,			December 31,
			2002			2001

			(Unaudited)
Assets:




Current Assets:




	Cash and cash equivalents		$	2,989,563		$	2,228,506




	Restricted cash			1,704,233			2,401,548




	Accounts receivable, net			22,386,581			21,377,904




	Claims receivable			1,205,112			—




	Prepaid expenses and other			1,945,662			404,780




	Inventory			2,691,146			3,365,750




	Land held for sale			711,531			—




	Costs and estimated earnings in excess of billings on uncompleted contracts			3,175,230			5,294,054

		Total Current Assets		36,809,058			35,072,542




Property and equipment, net				15,151,123			15,267,791




Assets held for sale				—			3,213,484




Deferred tax asset				1,685,603			1,957,923




Refundable deposits				50,604			55,110




Mineral rights and pit development, net				415,968			533,608




Claims receivable, less current portion				6,723,422			5,968,026




Other assets				31,810			80,558

		Total Assets	$	60,867,588		$	62,149,042

Liabilities and Stockholders’ Equity:




Current Liabilities:




	Accounts payable		$	22,171,450		$	27,025,984




	Accrued liabilities			3,266,426			1,811,998




	Notes payable			4,386,430			1,685,634




	Obligations under capital leases			961,010			1,118,055




	Income tax payable			—			—




	Billings in excess of costs and estimated earnings on uncompleted contracts			5,653,604			4,625,657

		Total Current Liabilities		36,438,920			36,267,328




Deferred tax liability				2,718,734			2,718,734




Notes payable, less current portion				8,453,971			9,484,479




Obligations under capital leases, less current portion				2,087,789			2,964,195

		Total Liabilities		49,699,414			51,434,736

Commitments and contingencies




Stockholders’ Equity:




	Preferred stock-$.001 par value; 1,000,000 shares authorized, none issued and outstanding			—			—




	Common stock-$.001 par value; 15,000,000 shares authorized, 3,559,938 issued and outstanding			3,601			3,601




	Additional paid-in capital			10,943,569			10,943,569




	Capital adjustments			(799,147	)		(799,147	)




	Retained earnings			1,020,151			566,283

		Total Stockholders’ Equity		11,168,174			10,714,306

		Total Liabilities and Stockholders’ Equity	$	60,867,588		$	62,149,042

MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


			Nine Months Ended
			September 30,

			2002			2001

Increase (Decrease) in Cash and Cash Equivalents:




Cash flows from operating activities:




	Cash received from customers		$	115,058,242		$	118,519,595




	Cash paid to suppliers and employees			(112,639,054	)		(120,732,546	)




	Interest received			100,204			175,455




	Interest paid			(329,942	)		(353,676	)




	Income taxes refunded			—			598,445

		Net cash provided by (used in) operating activities		2,189,450			(1,792,727	)

Cash flows from investing activities:




	Decrease (increase) in restricted cash			697,315			(570,993	)




	Proceeds from sale of property and equipment			1,184,946			84,887




	Purchase of property and equipment			(310,818	)		(420,989	)




	Increase in land held for sale			(711,531	)		—




	Decrease in pit development			557,587			37,567

		Net cash provided by (used in) investing activities		1,417,499			(869,528	)

Cash flows from financing activities:




	Proceeds received from note payable			—			4,182,533




	Repayment of notes payable			(1,812,441	)		(1,426,370	)




	Repayment of capital lease obligations			(1,033,451	)		(824,504	)

	Net cash provided by (used in) financing activities			(2,845,892	)		1,931,659

Net increase (decrease) in cash and cash equivalents				761,057			(730,596	)




Cash and cash equivalents at beginning of period				2,228,506			1,822,598

Cash and cash equivalents at end of period			$	2,989,563		$	1,092,002

MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)


			Nine Months Ended
			September 30,

			2002			2001

Increase (Decrease) in Cash and Cash Equivalents (Continued):




Reconciliation of Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities:




	Net Income (Loss)		$	453,868		$	(154,204	)




	Adjustments to reconcile net income (loss) to net cash




	provided by (used in) operating activities:




		Depreciation and amortization		2,173,494			1,968,472




		Gain on sale of property and equipment		(33,351	)		(1,081	)




		Deferred taxes, net		272,320			—




		Allowance for doubtful accounts		(333,540	)		161,939




Changes in Operating Assets and Liabilities:




	Accounts receivable			(675,137	)		(12,630,154	)




	Claims receivable, current portion			(1,205,112	)		—




	Prepaid expenses and other			(302,922	)		264,359




	Inventory			2,795,307			(652,853	)




	Income tax receivable			—			505,923




	Costs and estimated earnings in excess of billings on uncompleted contracts			2,118,824			(1,795,673	)




	Refundable deposits			4,506			41,731




	Claims receivable, less current portion			(755,396	)		—




	Other assets			48,748			—




	Accounts payable			(4,854,534	)		11,462,614




	Accrued liabilities			1,454,428			(102,346	)




	Billings in excess of costs and estimated earnings on uncompleted contracts			1,027,947			(861,454	)

Net cash provided by (used in) operating activities			$	2,189,450		$	(1,792,727	)

MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business:

Nature of Corporation:

Meadow Valley Corporation (the “Company”) was organized under the laws of the State of Nevada on September 15, 1994. The principal business purpose of the Company is to operate as the holding company of Meadow Valley Contractors, Inc. (“MVCI”) and Ready Mix, Inc. (“RMI”). MVCI is a general contractor, primarily engaged in the construction of structural concrete highway bridges and overpasses, and the paving of highways and airport runways in the states of Nevada, Arizona and Utah. RMI manufactures and distributes ready mix concrete in the Las Vegas, NV and Phoenix, AZ metropolitan areas. Formed by the Company, RMI commenced operations in 1997.

Reclassifications:

Certain balances for the period ending September 30, 2001 have been reclassified in the accompanying consolidated financial statements to conform with the current year presentation. These classifications had no effect on previously reported net income or stockholders’ equity.

Liquidity:

The Company incurred income (loss) from operations for the nine months ended September 30, 2002 and 2001 of $453,868 and ($154,204) and has provided (used) cash in operating activities of $2,189,450 and ($1,792,727) for the nine months ended September 30, 2002 and 2001. In order to improve working capital, the Company executed a definitive agreement on March 22, 2002 to sell certain pit assets classified as assets held for sale at December 31, 2001 to United Metro Materials Inc. (“United Metro”). The transaction closed on May 9, 2002. The net book value of assets sold and liabilities assumed was $51,668. Proceeds from the sale total $3,833,760 and include payments from United Metro and refunds of certain pit and equipment costs. In connection with the transaction, United Metro also assumed $1,693,267 in future lease obligations resulting in a decrease of $38,216 in monthly lease payments. If sales during the next twenty-four months, as measured in tons of materials sold, meet or exceed a stipulated minimum amount, United Metro will pay an additional $250,000 as specified in the purchase agreement. Cash proceeds from the sale of the Prescott pit assets were primarily used to reduce subcontract, trade payables and eliminate $211,525 in debt.

Working capital for the periods ending September 30, 2001, December 31, 2001, March 31, 200

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents