Exhibit 99.1

INDEX TO FINANCIAL STATEMENTS

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

New Enterprise Stone & Lime Co., Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, cash flows and changes in deficit and comprehensive income (loss) present fairly, in all material respects, the financial position of New Enterprise Stone & Lime Co., Inc. and its subsidiaries at February 28, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended February 28, 2011 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed under the heading “Liquidity and Management’s Plans” in Note 2 to the consolidated financial statements, the Company’s First Lien Revolving Credit Facility matures in January 2013. In addition, after considering current estimated operating results for the year ended February 29, 2012, the quarterly periods during fiscal 2013, and resulting potential impacts on the Company’s ability to satisfy its obligations under the First Lien Revolving Credit Facility and First Lien Term Loans A & B, the Company is considering, among other actions, entering into two new debt agreements, a Senior Secured Note and an asset based loan to refinance the existing First Lien Revolving Credit Facility and First Lien Term Loans A & B.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

May 31, 2011, except for Note 20 and the effects of the Registration paragraph described in Note 1 to the consolidated financial statements, as to which the date is August 29, 2011, and except for Note 2 as it relates to disclosures under the heading “Liquidity and Management’s Plans”, as to which the date is February 29, 2012

F-2

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Consolidated Balance Sheets

The accompanying notes are an integral part of these financial statements.

F-3

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Consolidated Statements of Operations

The accompanying notes are an integral part of these financial statements.

F-4

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Consolidated Statements of Cash Flows

The accompanying notes are an integral part of these financial statements.

F-5

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Consolidated Statements of Changes in Deficit and Comprehensive Income (Loss)

The accompanying notes are an integral part of these financial statements.

F-6

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Company Activities

The Company is a leading privately held, vertically integrated construction materials supplier and heavy/highway construction contractor in Pennsylvania and western New York and a national traffic safety services and equipment provider. The Company operates in three segments based upon the nature of its products and services: construction materials, heavy/highway construction and traffic safety services and equipment. The Company’s construction materials operations are comprised of: aggregate production, including crushed stone and construction sand and gravel; hot mix asphalt production; ready mixed concrete production; and the production of concrete products, including precast/prestressed structural concrete components and masonry blocks. Another of the Company’s core businesses, heavy/highway construction, includes heavy construction, blacktop paving and other site preparation services. The Company’s heavy/highway construction operations are primarily supplied with construction materials from its construction materials operation. The Company’s third core business, traffic safety services and equipment, consists primarily of sales and leasing of general and specialty traffic control and work zone safety equipment and devices to industrial construction end-users.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary companies, and their wholly owned subsidiary companies, and entities where the Company has a controlling equity interest. During fiscal 2011, the Company consolidated various legal entities in order to simplify the legal structure. This did not change the assets, liabilities, or results of operations at the time the legal mergers took place. The Companies in the consolidated group as of February 28, 2011 include New Enterprise Stone & Lime Co., Inc.; Gateway Trade Center Inc.; EII Transport Inc.; Protection Services Inc.; Work Area Protection  Corp.; SCI Products Inc.; ASTI Transportation Systems, Inc.; Precision Solar Controls Inc.; Rock Solid Insurance Company; Kettle Creek Partners GP, LLC; and Kettle Creek Partners L.P.

The consolidated financial statements also include the accounts of South Woodbury, L.P., which is 99% owned by certain life insurance trusts, which insure the lives of the principal stockholders of the Company. The remainder, which the Company owns, has a 1% general partnership interest through a wholly-owned entity, NESL II, LLC.

South Woodbury, L.P. owns an office building in Roaring Spring, PA and an office building that is being used as the Company’s corporate headquarters in New Enterprise, PA. The Company signed two lease agreements on February 28, 2003. The original lease terms for both leases end on May 31, 2023 and have one five-year option to extend the lease. The annual base rents for the Roaring Spring, PA and New Enterprise, PA office buildings are $0.4 million and $2.0 million respectively, which may be reset to a fair market rate, as defined in the agreements.

Significant intercompany balances and transactions have been eliminated in consolidation.

Investments in entities in which the Company has an ownership interest of 50% or less are accounted for by the equity method. Investments in affiliated companies consist of a 12.6% membership interest in Means To Go, LLC as of February 28, 2011.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the

F-7

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

1. Summary of Significant Accounting Policies (Continued)

financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. The Company establishes provisions for income taxes when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold, as defined by the applicable accounting guidance, which is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority. In the normal course of business, the Company and its subsidiaries are examined by various federal, state and foreign tax authorities. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of the provision for income taxes. Interest accrued related to unrecognized tax benefits and income tax related penalties are both included in as a component of the provision for taxes and adjust the income tax provision, the current tax liability and deferred taxes in the period of which the facts that give rise to a revision become known.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Certain U.S. cash balances exceed Federal Deposit Insurance Corporation limits. Cash balances were restricted in certain consolidated subsidiaries for bond sinking fund and insurance requirements as well as collateral on outstanding letters of credit or rentals.

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and past due accounts are subject to services charges. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable, including service charges. The Company determines the allowance based on historical write-off experience, specific identification based on a review of individual past due balances, and the composition and nature of the customer. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Concentrations of Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and temporary investments with high-quality financial institutions. At times, such balances and investments may be in excess of federally insured limits, however the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. The Company conducts business with various governmental entities within the Commonwealth of Pennsylvania. These entities include the Pennsylvania Department of Transportation, the Pennsylvania Turnpike Authority, and various townships, municipalities, school districts and universities within Pennsylvania. The Company had $11.9 million and $13.3 million of accounts receivable from these

F-8

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

1. Summary of Significant Accounting Policies (Continued)

governmental entities as of February 28, 2011 and 2010, respectively. The Company has not experienced any material losses with these governmental agencies and does not believe it is exposed to any significant credit risk on the outstanding accounts receivable.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using either first-in, first-out (“FIFO”) or weighted average method based on the applicable category of inventories. The Company also maintains an allowance for obsolete inventories, which is based on recent sales activity and usage of related items.

Rental Equipment

Rental equipment, primarily related to the Company’s safety products business, is recorded at cost and depreciated over the estimated useful lives of the equipment using the straight-line method. The range of estimated useful lives for rental equipment is two to three years.

Property, Plant, and Equipment

Property, plant, and equipment are carried at cost. Assets under capital leases are stated at the lesser of the present value of minimum lease payments or the fair value of the leased item. Provision for depreciation is generally computed over estimated service lives by the straight-line method.

The average depreciable life by fixed asset category is as follows:

Depletable limestone deposits are reduced by cost depletion estimated on the basis of recoverable quantities of each quarry.

Repairs and maintenance are charged to operations as incurred. Renewals or betterments, which materially add to the useful lives of property and equipment, are capitalized.

The Company capitalizes interest cost during the period assets are being constructed. Interest capitalized on construction in progress amounted to $0.1 million, $0.2 million and $0.4 million during the years ended February 28, 2011, 2010, and 2009, respectively.

Goodwill and Goodwill Impairment

Goodwill is tested for impairment on an annual basis or more frequently whenever events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment test for goodwill is a two-step process. Under the first step, the fair value of the reporting unit is compared with its carrying value. If the fair value of the reporting unit is less than its carrying value, an indication of impairment exists and the reporting unit must perform step two of the impairment test. Under step two, an impairment loss is recognized for any

F-9

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

1. Summary of Significant Accounting Policies (Continued)

excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

The carrying value of each reporting unit is determined by assigning assets and liabilities, including goodwill, to those reporting units as of the measurement date. We use significant judgment in determining the most appropriate method to estimate the fair values of each of our reporting units. We estimate the fair values of the reporting units by considering the indicated fair values derived from both an income approach, which involves discounting estimated future cash flows, and a market approach, which involves the application of revenue and earnings multiples of comparable companies.

We complete a discounted future cash flow model for each reporting unit based upon projected earnings before interest and taxes (“EBIT”). Under this approach, we calculate the fair value of each reporting unit based on the present value of its estimated future cash flow. In applying the discounted cash flow methodology, we rely on a number of factors, including future business plans, actual and forecasted operating results, and market data. The significant assumptions in our discounted cash flow models include our estimate of future profitability, revenue growth rates, capital requirements, and the discount rate. The profitability estimates used were derived from internal operating budgets and forecasts for long-term demand and pricing in our industry and markets. Any changes in key assumptions or management judgment with respect to a reporting unit or its prospects, which may result from a change in market conditions, market trends, interest rates or other factors outside of our control, or significant underperformance relative to historical or projected future operating results, could result in a significantly different estimate of the fair value of our reporting units, which could result in an impairment charge in the future. The discount rates utilized reflect market-based estimates of capital costs and discount rates adjusted for management’s assessment of a market participant’s view with respect to other risks associated with the projected cash flows and overall size of the individual reporting units. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable.

We then supplement this analysis by also calculating a fair value of the reporting unit utilizing EBIT market multiples applicable to our industry and peer group, the data for which we develop internally and through third-party sources. If there is sufficient depth and availability of market comparables we will take a weighted average approach of the two methods in calculating the fair value of a reporting unit. The weighting of these methods is subjective and based upon our judgment and our historical approach to calculating the fair value of a reporting unit.

Our annual goodwill impairment analysis takes place as of fiscal year-end and for 2011 did not result in any impairment loss. In order to evaluate the sensitivity of the fair value calculations of our goodwill impairment test, we applied a hypothetical 5% decrease to the fair values of each reporting unit. The hypothetical decrease would cause one reporting unit with approximately $5.8 million of goodwill to potentially be impaired. Accordingly, small changes in future earnings, interest rates, market trends and cash flows would likely lead to a goodwill impairment charge as the fair value of this reporting unit exceeds its carrying value by approximately 1%. The fair value of the remaining reporting units exceeded their carrying value by a substantial margin.

F-10

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

1. Summary of Significant Accounting Policies (Continued)

Other Intangible Assets

Other intangible assets consist of technology, customer relationships, and trademarks. The technology is being amortized over a straight-line basis of 15 years. The customer relationships are being amortized on a straight-line basis over 20 years. The trademarks are considered to have an indefinite life and are not amortized, but are tested for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable.

Reclamation Costs

The Company accounts for land reclamations costs in accordance with applicable accounting rules which require the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the assets. The associated asset retirement costs are capitalized as part of the underlying asset and depreciated over the estimated useful life of the asset. The liability is accreted through charges to operating expenses. If the asset retirement obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on the settlement.

The Company is legally required to maintain a reclamation bond with the Commonwealth of Pennsylvania. The land reclamation obligation calculated by the Company is based upon the legal requirements for bond posting amounts and is adjusted for inflation and discounted using present value techniques at a credit-adjusted risk-free rate commensurate with the estimated years to settlement.

Other Assets

Other assets consist of mine permitting costs which benefit future periods, costs incurred to relocate crushers and blacktop plants and costs incurred in securing financing agreements. Amortization of mine permitting and relocation costs is charged to operations over the future periods which receive the benefit. Financing costs are amortized to interest expense over the terms of the associated credit agreements.

Revenue Recognition

The Company records revenue on long-term highway construction contracts on the basis of the percentage-of-completion of individual contracts under the units-of-work performed method determined using engineering estimates. Provisions for estimated losses on contracts are recorded when identified. As contracts extend over one or more years, revisions in cost and profit estimates during the course of the work are reflected in the accounting period in which revisions become known. The typical contract life cycle for these projects can be up to two to four years in duration. Costs and estimated earnings in excess of billings on uncompleted contracts represent the excess of contract revenue recognized to date on the percentage-of-completion method over billings to date. Billings in excess of costs and estimated earnings on uncompleted contracts represent the excess of billings to date over the amount of revenue recognized to date on the percentage-of-completion method. Such amount as of February 28, 2011 and February 28, 2010 are included in accounts receivable and accrued liabilities, respectively, in the consolidated balance sheet at those dates.

The Company accounts for custom built concrete products under the units-of-production method. Under this method, the revenue is recognized as the units are produced under firm contracts.

F-11

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

1. Summary of Significant Accounting Policies (Continued)

The Company generally recognizes revenue on the sale of construction materials and concrete products, other than custom built concrete products, when they are shipped and the customer takes title and assumes risk of loss.

The Company’s rental contract periods are daily, weekly or monthly and are recognized on a straight-line basis. Revenues from the sale of rental equipment and new equipment are recognized at the time of delivery to, or pick-up by, the customer. Sales of contractor supplies are also recognized at the time of delivery to, or pick-up by, the customer.

Other revenue consists of sales of miscellaneous materials, scrap, and other products that do not fall into our other primary lines of business. The Company generally recognizes revenue when the risk of ownership passes to the customer, the price is fixed or determinable, and collection is reasonably assured.

Self-Insurance

The Company is self-insured for workers’ compensation and health coverage, subject to specific retention levels. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and an estimated liability for claims incurred but not reported.

Fair Value

The Company determines fair value in accordance with applicable accounting rules which define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value determined is based on assumptions that market participants would use, including consideration of nonperformance risk. The carrying amounts of cash, restricted cash and cash equivalents, trade receivables, accounts payable, accrued expenses, and short-term debt approximate fair value because of the short-term maturity of these financial instruments.

Impairment of Long-Lived Assets

Long-lived assets, such as property, plant and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the asset group. During 2011, 2010, and 2009, the Company determined no impairment charge was necessary.

Use of Estimates

The preparation of the consolidated financial statements requires management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include the carrying amount of property, plant and equipment; valuation of receivables, inventories, and goodwill; recognition of revenue and loss contract reserves under the

F-12

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

1. Summary of Significant Accounting Policies (Continued)

percentage-of-completion method; assets and obligations related to employee benefit plans; asset retirement obligations; and self-insurance reserves. Actual results could differ from those estimates.

Recently Issued Accounting Standards

In January 2010, the FASB issued ASU 2010-06 “Fair Value Measurements and Disclosures—Improving Disclosures about Fair Value Measurements” (ASU 2010-06). This guidance requires new disclosures surrounding transfers in and out of level 1 or 2 in the fair value hierarchy and also requires that in the reconciliation of level 3 inputs, the entity should report separately information on purchases, sales, issuances or settlements. The increased disclosures should be reported for each class of assets or liabilities. ASU 2010-06 also clarifies existing disclosures for the level of disaggregating, disclosures about valuation techniques and inputs used to determine level 2 or 3 fair value measurements and include conforming amendments to the guidance on employers’ disclosures about postretirement benefit plan assets. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances or settlements in the roll forward activity for level 3 fair value measurements which are effective for interim and annual periods beginning after December 15, 2010. The adoption of ASU 2010-06 did not have a material effect on the Company’s condensed consolidated financial statements.

Reclassifications

Certain reclassifications have been made to conform prior year balances to current year presentation.

Registration

These financial statements are prepared in conformity with the requirements applicable to a “Non-Accelerated Filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. The Company’s previously issued financial statements were not prepared in compliance with public company reporting requirements. Significant differences from the previously issued statements include the reclassification of common stock as mezzanine or temporary equity, as reflected in Note 13, and the timing of adoption of the accounting standard related to uncertain tax positions to fiscal year ended February 28, 2009, reflected in Note 8.

2. Risks and Uncertainties

Our business is heavily impacted by several factors which are outside the control of management, including the overall health of the economy, the level of commercial and residential construction, the level of federal, state and local publicly funded construction projects and seasonal variations generally attributable to weather conditions. These factors impact the amount and timing of our revenues.

Our second amended and restated credit agreement (the “Credit Agreement”) contains certain financial covenants that include limitations on annual capital expenditures, available credit, maximum leverage ratios and a minimum fixed charge coverage ratio, among others, as defined in the associated agreement (the “Financial Covenants”). If an event of default should occur, the lenders may, among other things, accelerate the maturity of the outstanding amounts as well as discontinue lending under the revolving line of credit.

F-13

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

2. Risks and Uncertainties (Continued)

While we have confidence in our ability to meet our operating plan in the future, in the past we have failed to meet certain operating performance measures as well as the Financial Covenant requirements set forth in our Credit Agreement, which resulted in the need to obtain several amendments to the Credit Agreement. In each of February 28, 2009 and 2010, we did not comply with certain Financial Covenant and obtained an associated waiver. In May 2010, we did not comply with certain Financial Covenants and obtained a waiver and an increase in the total available borrowings under the Credit Agreement. At February 28, 2011, we were in compliance with all of our Financial Covenants; however, on May 18, 2011, we entered into the ninth amendment to the Credit Agreement, to adjust certain covenant levels (see Note 7) in future periods to provide greater cushion under our financial covenants. This amendment also imposes a $25.0 million annual limit on capital expenditures.

As a result of the May 2011 amendment to the credit agreement, we expect to be in compliance with the Financial Covenants during the next fiscal year. Operating losses incurred during our most recent fiscal year as well as reductions in our cash flow generated by operations have resulted in an increase in interest expense due to higher debt levels along with an increase in overall interest rates, which were also impacted by the issuance of Senior Notes in August 2010. A shortfall in the actual trailing twelve month earnings before interest, taxes and depreciation and certain lease expenses (“EBITDAR”), as adjusted and defined in the Credit Agreement, of between approximately 5% and 8% during a particular quarter over the next fiscal year could cause us to fail to meet our Financial Covenants during the period. Similarly, we are projecting to be above the required fixed charge coverage ratios at amounts that vary between approximately 7% and 15% of the required levels set in the Credit Agreement.

Our earnings and debt levels, and associated covenant compliance, may be impacted by, among other things, the volume and amount of federal, state and local publicly funded construction projects, the weather, which can materially affect our business and makes us subject to seasonality on a quarter to quarter basis, changes in product mix, commodity price changes and other factors inherent in the operation of our business. We are exploring a number of options which could enhance earnings or reduce total debt while not negatively impacting our ability to continue operating in our key markets. If we do not meet our projections and the actions described above are not sufficient to maintain our compliance with the Financial Covenants, we would seek a waiver of the covenants or alternative financing. There can be no assurance that the new covenant requirements will be met or that we would be able to amend the Credit Agreement or obtain alternative financing to replace the Credit Agreement, which could result in a material adverse effect on our financial position, results of operations and cash flows.

Liquidity and Management’s Plans

As discussed in Note 7, the Company’s First Lien Revolving Credit Facility matures in January 2013. In addition, after considering current estimated operating results for the year ended February 29, 2012, the quarterly periods during fiscal 2013, and resulting potential impacts on the Company’s ability to satisfy its obligations under the First Lien Revolving Credit Facility and First Lien Term Loans A & B, the Company is considering, among other actions, entering into two new debt agreements, a Senior Secured Note and an asset based loan to refinance the existing First Lien Revolving Credit Facility and First Lien Term Loans A & B.

The Company is considering a refinancing that would, in effect, amend or replace a significant portion of the Company’s existing indebtedness. The Company is planning to enter into a $170 million

F-14

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

2. Risks and Uncertainties (Continued)

asset based loan, which will be secured by the Company’s accounts receivable, inventory and certain other assets. In addition, the Company is seeking to obtain $250 million through the issuance of Senior Secured Notes which will pay cash interest, estimated at 4.0%, and additional paid in kind (“PIK”) interest estimated at 9.0% which will be deferred and accumulate over the term of the debt.

The Company anticipates consummating the proposed refinancing during the first quarter of fiscal year 2013. The Company believes the consummation of the refinancing described above will allow the Company to maintain the necessary levels of operating liquidity on a long-term basis and will provide terms and conditions with which the Company believes it will comply for the foreseeable future. However, no assurances can be given that the refinancing will be consummated. If the foregoing refinancing does not occur, the Company would need to obtain waivers or amendments during fiscal 2013 under the existing credit facility and no assurances can be given that the Company will be able to obtain these waivers or amendments. If the Company is unable to obtain these waivers or amendments if and when necessary, the Company may be in default under its existing facilities which would (1) preclude the Company from accessing any available borrowings under its revolving facility, (2) entitle the lenders thereunder to exercise their remedies, which includes the right to accelerate the debt outstanding and (3) trigger the cross-acceleration provisions under the Senior Notes due 2018. These factors could have a material adverse effect on the Company. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

3. Accounts Receivable

Accounts receivable at February 28 consisted of:

Costs and estimated earnings in excess of billings related to uncompleted contracts and amounts not processed by governmental agencies. State and local agencies often require several approvals to process billings or payments and this may cause a lag in payment times.

F-15

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

4. Inventories

Inventories at February 28 consisted of:

5. Property, Plant & Equipment

Property, plant & equipment at February 28 are as follows:

Depreciation expense was $43.2 million, $41.1, and $39.2 million for years ended February 28, 2011, 2010, and 2009. Included in the contracting equipment, vehicles, and other asset category above are capital leases with a cost basis of $22.5 million and $17.5 million as of February 28, 2011 and 2010, respectively.

F-16

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

6. Accrued Liabilities

Accrued liabilities at February 28 consisted of:

7. Long-Term Debt

Land, Equipment and Other Obligations

The Company has various notes, mortgages and other financing arrangements resulting from the purchase of principally land and equipment. All loans provide for at least annual payments, which include interest ranging up to 10.0% per annum. Principally all loans are secured by the land and equipment acquired. During the year ended February 28, 2011, the Company had $6.0 million outstanding of new obligations incurred under various financing arrangements related to the purchase of $3.9 million of equipment and $2.1 million of software. As of February 28, 2010, the Company incurred additional debt of $9.1 million related to the purchase of land and equipment.

From 1998 through 2005 the Company issued four revenue bonds to different industrial development authorities with counties in Pennsylvania in order to fund the acquisition and installation of plant and equipment. The original issuance of bonds totaled $25.3 million with dates of maturity through May, 2022. The Company maintains irrevocable, transferable letters of credit equal to the approximate carrying value of each bond, in total for $11.6 million and $13.4 million as of February 28, 2011 and 2010, respectively. The effective interest rate on these bonds ranged from 0.41% to 0.48%

F-17

New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

and 0.35% and 0.43% as of February 28, 2011 and 2010, respectively. The Company is subject to annual principal maturities each year which is funded on either a quarterly or monthly basis, depending upon the terms of the original agreement. The Company’s plant and equipment provide collateral under these borrowings and for the letters of credit.

The Company entered into a three year term loan agreement in August 2009 with Citizens Bank in the amount of $8.5 million. The purpose of the borrowing was to fund the acquisition of equipment, which serves as collateral under the agreement. Required principal maturities of $0.2 million are due monthly. The interest rate options are LIBOR plus 3.50% or the Prime Rate plus 3.50%. Additionally, the Company is subject to a 1.00% floor on the LIBOR rate for LIBOR based borrowings under this arrangement. The effective rate of interest was 3.79% and 3.73%as of February 28, 2011 and 2010 respectively. The outstanding balance of the loan was $4.5 million and $7.3 million as of February 28, 2011 and 2010, respectively. The Company is subject the existing covenants as defined in the second amended and restated credit agreement discussed below.

First Lien Term Loan A & B

On January 11, 2008, the Company entered into a second amended and restated credit agreement that provided two term loans and a second lien facility. The term loans were used to acquire equity and assets of Stabler Companies Inc. and refinance certain existing indebtedness. The term loans A and B are secured by a first priority lien on appraised real estate, mineral rights, and fixed assets. The second lien facility was prepaid during 2011. The Company is required to meet certain financial covenants, including maintaining certain leverage and coverage ratios, minimum net worth requirements and capital expenditure and lease payment limitations under our second amended and restated credit agreement. The term loan A and term loan B mature on January 10, 2014.

Pricing on the term loan A is tied to a performance grid based on the ratio of total debt to earnings before interest, taxes, depreciation and depletion, amortization and rent expense (“EBITDAR”), as defined in the second amended and restated credit agreement. LIBOR margins for the term loan A ranged from 2.00% to 3.50% and from 1.75% to 3.00% for fiscal years ended February 28, 2011 and 2010, respectively. Prime Rate margins ranged from 0% to 1.50% and 0% to 1.00% for fiscal years ended February 28, 2011 and 2010, respectively. Additionally, the Company was subject to a 1.00% floor on the LIBOR rate for LIBOR based borrowings under this arrangement for the fiscal year ended February 28, 2011. The term loan A had $85.1 million outstanding and the LIBOR margin was 3.50% and the Prime Rate margin was 1.50% and $158.9 million outstanding and the LIBOR margin was 3.00% and Prime Rate margin was 1.00% as of February 28, 2011 and 2010, respectively. The net effective interest rate on the term loan A was approximately 3.79% and 3.00% at February 28, 2011 and 2010, respectively.

Pricing on the term loan B is tied to a performance grid based on the ratio of total debt to EBITDAR. LIBOR margins for the term loan B range from 3.50% to 4.00% and from 3.00% to 3.50% as of fiscal year ended February 28, 2011 and 2010, respectively. Prime Rate margins range from 1.50% to 2.00% and 1.00% to 1.50% for the fiscal year ended February 28, 2011 and 2010, respectively. Additionally, the Company was subject to a 1.00% floor on the LIBOR rate for LIBOR based borrowings under this arrangement for the fiscal year ended February 28, 2011. The term loan B had $68.0 million outstanding and the LIBOR margin was 4.00% and the Prime Rate margin was 2.00% and $121.2 million outstanding and the LIBOR margin was 3.50% and the Prime Rate margin was

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New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

1.50% as of February 28, 2011 and 2010, respectively. The net effective interest rate on the term loan B was approximately 4.31% and 3.50% at February 28, 2011 and 2010, respectively.

First Lien Revolving Credit Facility

On January 11, 2008, the Company entered into a second amended and restated credit agreement with a $110.0 million, secured revolving credit facility. On May 27, 2010 the Company amended its second amended and rested credit agreement to adjust certain leverage ratios, limitations on operating lease expense and also increased the total amount available under the revolving credit facility to $135.0 million. Availability under the revolver is restricted to a borrowing base equal to the sum of 85% of accounts receivable less accounts over 120 days and 60% of inventory. Pricing on the revolver is tied to a performance grid based on the ratio of total Leverage to EBITDAR, as defined in the agreement. LIBOR margins for the revolver range from 2.00% to 3.50%. Prime Rate margins for the revolver range from 0% to 1.50%. Additionally, the Company was subject to a 1.00% floor on the LIBOR rate for LIBOR based borrowings under this arrangement for the fiscal year ended February 28, 2011. The LIBOR margin was 3.50% and 3.00% as of February 28, 2011 and 2010, respectively. The Prime Rate was 1.50% and 1.00% as of February 28, 2011 and 2010, respectively. The effective interest rate was 3.99% and 3.00% at February 28, 2011 and 2010, respectively. The Company is required to meet certain financial covenants, including maintaining certain leverage and coverage ratios, minimum net worth requirements and capital expenditure and lease payment limitations under the second amended and restated credit agreement. The first lien revolving credit facility expires on January 11, 2013.

At February 28, 2011 and February 28, 2010, an additional $81.8 million and $35.9 million were available under the revolving credit facility, respectively. The agreement also permits an additional seasonal availability of $10.0 million during the months of March, April, May, and June. The credit facility requires that, for 30 consecutive days during the fourth fiscal quarter of each year that the balance outstanding on the revolving loans are repaid to a specified level not to exceed $75.0 million.

Senior Notes Due 2018

In August 2010, the Company sold $250.0 million aggregate principal amount of 11.0% senior notes (“Notes”) due in 2018 at par value. Interest on the Notes is payable semi-annually in cash in arrears on March 1 and September 1 of each year. The Company used the net proceeds from the issuance to repay a portion of existing debt. In connection with the issuance of the Notes, the Company incurred costs of approximately $8.3 million which were deferred and are being amortized on the effective interest method over the term of the Notes.

At February 28, 2011 the Company had $250.0 million aggregate principal amount of Notes outstanding. At any time prior to September 1, 2014, the Company may redeem all or part of the Notes at a redemption price equal to 100.0% of the principal amount plus accrued and unpaid interest and an applicable “make-whole” premium which is set forth in the indenture governing the Notes. On and after September 1, 2014, the Company may redeem all or a part of the Notes at the redemption

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New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest if redeemed during the twelve-month period beginning on September 1 of the years indicated below:

In addition, prior to September 1, 2013, the Company may redeem up to 35.0% of the aggregate principal Notes outstanding with the net cash proceeds from certain equity offerings at a redemption price equal to 111.0% of the principal amount thereof, together with accrued and unpaid interest. If the Company experiences a change of control, as outlined in the indenture, the Company may be required to offer to purchase the Notes at a purchase price equal to 101.0% of the principal amount, plus accrued interest.

The Notes are guaranteed, on a joint and several basis, by all of the Company’s existing and future domestic subsidiaries, with the exception of certain subsidiaries. The indenture governing the Notes contains affirmative and negative covenants that, among other things, limit the Company and its subsidiaries’ ability to incur additional debt, make restricted payments, dividends or other payments from subsidiaries to the Company, create liens, engage in the sale or transfer of assets, and engage in transactions with affiliates. The Company is not required to maintain any affirmative financial ratios or covenants.

The Company must file a registration statement with the Securities and Exchange Commission (“SEC”) within 360 days of issuance with respect to a registered offer to exchange the Notes for new Notes having terms substantially identical in all material respects to the Notes. If the Company fails to file a registration statement within the time provided in the indenture the interest rate on the Notes will pay up to an additional 1% per annum until such registration is completed or the Notes are redeemed.

Refinancing

From the proceeds of the Notes, the Company prepaid its second lien loan which had a principal balance outstanding of $85.0 million and paid down a portion of its term loan A, term loan B, and the revolving credit facility in the amounts of $64.9 million, $50.1 million and $43.5 million respectively. For the year ended February 28, 2011 the Company recognized a loss on debt retirement of approximately $2.9 million relating to the write off of unamortized debt issuance costs associated with the components of outstanding debt that were effectively extinguished. The write off of the debt issuance costs have been recorded as a component of interest expense.

Obligations Under Capital Lease

The Company has various arrangements for the lease of machinery and equipment which qualify as capital leases. These arrangements typically provide for monthly payments, some of which include residual value guarantees if the Company were to terminate the arrangement during certain specified periods of time for each underlying asset under lease.

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New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

Covenants

The Company is subject to certain financial covenants related to its term loan A, term loan B, and revolving credit facility, including maintaining certain leverage and coverage ratios, minimum net worth requirements, and capital expenditure and lease payment limitations. The credit agreements also contain subjective acceleration clauses which allow the Bank to declare amounts outstanding under the financing arrangements due and payable if a Material Adverse Change occurs. The Company believes that it will continue to comply with its financial covenants, as amended, under the financing arrangement. If the Company’s performance does not result in compliance with any of its financial covenants, or if the Bank seeks to exercise its rights under the subjective acceleration clause referred to above, the Company would seek to modify its financing arrangement. However, there can be no assurance that the Bank would not exercise their rights and remedies under the financing arrangement including accelerating payment of all outstanding debt due and payable.

The Company has obtained multiple waivers and amendments related to covenant defaults (refer to Note 2) during fiscal years 2009, 2010 and 2011, respectively. The more significant amendments related to defaults of the net worth covenant, leverage ratios, limitations on operating lease expense and timely completion of the financial statements. In addition, the Company obtained amendments to the first lien credit facility, including the term loans and revolving credit facility which adjusted covenants for future periods and allowed for the issuance of the Notes in August 2010. Where appropriate, the Company records fees paid to obtain the waivers and amendments as deferred financing fees and amortizes the amounts over the remaining life of the associated financing arrangements. As of February 28, 2011, the Company was in compliance with all of its covenant requirements as amended through that date. On May 18, 2011, the Company obtained an additional amendment to the second amended and restated credit agreement that adjusted covenant levels in future periods during fiscal year 2012 and beyond.

Other

Long-term debt for each fiscal period matures as follows:

Using a combination of discounted cash flow techniques that incorporate a market interest yield curve with adjustments for duration, optionality, risk profile and other available information as

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New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

well as publicly available information on the Notes, the Company has determined the fair value of long term debt as of February 28 is as follows:

8. Income Taxes

The components of the U.S. federal and state income tax expense as of February 28 consist of the following:

The detail of the (benefit from) provision for income taxes and a reconciliation of the statutory to effective tax expense (benefit) for periods ending February 28 are as follows:

Deferred income taxes arise due to certain items being includable in the determination of taxable income in periods different than for financial reporting purposes. The tax effect of significant

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New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

8. Income Taxes (Continued)

types of temporary differences and carryforwards that gave rise to the Company’s deferred tax assets and liabilities as of February 28 are as follows:

During the year ended February 28, 2011, the Company recorded a noncash charge to establish a valuation allowance of $5.5 million against certain deferred tax assets primarily related to state net operating losses. In assessing whether the deferred tax assets may be realized, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized based upon an assessment of both positive and negative evidence as prescribed by applicable accounting guidance, for example recent operating results and permanent differences for tax purposes. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The Company has a U.S. federal net operating loss that begins to expire in 2028 of approximately $14.0 million and $20.7 million as of February 28, 2011 and 2010 respectively. The Company has state net operating losses that will begin to expire in 2022 of approximately $91.0 million and $70.1 million as of February 28, 2011 and 2010 respectively, of which $73.7 million and $63.8 million relates to Pennsylvania as of February 28, 2011 and 2010 respectively.

In June 2006, new guidance was issued which clarified the accounting for uncertainty in income taxes recognized in an entity’s financial statements. The Company adopted this guidance on March 1,

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New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

8. Income Taxes (Continued)

2008. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for the years ended February 28 is as follows:

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate were $1.6 million and $1.0 million as of February 28, 2011 and 2010, respectively. In January of 2011, the IRS’s Tax Exempt and Government Entities Division initiated an exam of the Company’s federal income tax returns specifically related to revenue bonds issued by the Company. It is reasonably possible that this examination may be resolved within the next twelve months and therefore reasonable possible that the Company’s gross unrecognized tax benefits may change within the next twelve months by a range of $0 to $0.8 million.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of tax expense. During the years ended February 28, 2011, 2010 and 2009 interest and penalties accrued were not material.

Each year the Company files tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the taxing authorities. Positions challenged by the taxing authorities may be settled or appealed by the Company. The Company’s number of open tax years varies by jurisdiction. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non U.S. income tax examinations by tax authorities for years before 2006.

9. Retirement and Benefit Programs

Substantially all employees are covered by either a defined contribution plan, a defined benefit plan, a collectively bargained multi-employer plan, or a noncontributory profit sharing plan.

The Company participates in several multi-employer pension plans, which provide defined benefits to certain employees covered by labor union contracts. Contributions to these plans amounted to approximately $1.9 million, $1.9 million and $1.6 million as of February 28, 2011, 2010, and 2009 respectively. These amounts were determined by the union contracts and the Company does not administer or control the funds. However, in the event of plan terminations or Company withdrawal from the plans, the Company may be liable for a portion of the plans’ unfunded vested benefits, the amount of which, if any, has not been determined. The Company presently has no plans to withdraw from these plans.

The Company also maintains, for certain salaried and hourly employees, an investment plan under which eligible employees can invest various percentages of their earnings, matched by an employer contribution of up to 6%. Additionally, the Company may make special voluntary

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New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

9. Retirement and Benefit Programs (Continued)

contributions to all employees eligible to participate in the plan, regardless of whether they contributed during the year. The Company contributions were approximately $6.8 million, $7.5 million and $6.9million for the years ended February 28, 2011, 2010, and 2009, respectively.

Additionally, the Company has unfunded supplemental retirement agreements with individuals previously associated with the Company which had actuarial present values of future payments of $0.3 million, $0.4 million and $0.5 million at February 28, 2011, 2010, and 2009, respectively, which are included in other liabilities on the balance sheet.

The Company has two defined benefit pension plans covering certain union employees. The benefits are based on years of service. The funded status reported on the balance sheet as of February 28, 2011 was measured as the difference between the fair value of plan assets and the benefit obligation on a plan-by-plan basis. Actuarial gains and losses are generally amortized subject to the corridor, over the average remaining service life of the Company’s active employees. Net periodic pension expense of $0.3 million, $0.4 million and $0.2 million were recognized at February 28, 2011, 2010, and 2009, respectively.

The components of net pension expense for the years ended February 28 are as follows:

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New Enterprise Stone & Lime Co., Inc. and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

9. Retirement and Benefit Programs (Continued)

The following table sets forth the Plans’ benefit obligation, fair value of plan assets, and funded status as of February 28:

The accumulated benefit obligation for the plans was $8.2 million and $7.8 million as of February 28, 2011 and 2010, respectively.

The amounts in accumulated other comprehensive income that have not yet been recognized as a component of net period benefit cost as of February 28 are as follows:

The estimated amount that will be amortized from accumulated other comprehensive income into net periodic benefit cost related to unrecognized net actuarial loss and prior service cost next year is approximately $0.1 million.

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