Exhibit 99.1

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

 

		June 27, 2015 (unaudited)				December 27, 2014 (audited)
Assets
Current assets:
Cash		$	12,570			$	13,215
Accounts receivable, net			164,059				141,302
Costs and estimated earnings in excess of billings			24,721				10,174
Inventories			128,417				111,553
Other current assets			19,853				17,172
Total current assets			349,620				293,416
Property, plant and equipment, less accumulated depreciation, depletion and amortization (June 27, 2015 - $317,293 and December 27, 2014 - $279,375)			985,081				950,601
Goodwill			418,659				419,270
Intangible assets, less accumulated amortization (June 27, 2015 - $4,274 and December 27, 2014 - $3,073)			16,257				17,647
Other assets			45,875				48,843
Total assets		$	1,815,492			$	1,729,777
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest
Current liabilities:
Current portion of debt		$	71,275			$	5,275
Current portion of acquisition-related liabilities			19,895				18,402
Payable due to Summit Inc.			4,585				—
Accounts payable			90,822				78,854
Accrued expenses			90,778				101,496
Billings in excess of costs and estimated earnings			8,341				8,958
Total current liabilities			285,696				212,985
Long-term debt			755,972				1,059,642
Acquisition-related liabilities			34,502				42,736
Other noncurrent liabilities			114,153				93,691
Total liabilities			1,190,323				1,409,054
Commitments and contingencies (see note 9)
Redeemable noncontrolling interest			—				33,740
Member’s interest:
Member’s equity			971,943				518,647
Accumulated deficit			(327,212	)			(217,416	)
Accumulated other comprehensive loss			(20,781	)			(15,546	)
Member’s interest			623,950				285,685
Noncontrolling interest			1,219				1,298
Total member’s interest			625,169				286,983
Total liabilities, redeemable noncontrolling interest and member’s interest		$	1,815,492			$	1,729,777

See notes to unaudited consolidated financial statements.

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(In thousands)

 

		Three months ended								Six months ended
		June 27,				June 28,				June 27,				June 28,
		2015				2014				2015				2014
Revenue:
Product		$	261,270			$	221,323			$	410,190			$	321,491
Service			67,739				71,087				93,958				106,938
Net revenue			329,009				292,410				504,148				428,429
Delivery and subcontract revenue			35,934				31,885				54,782				46,957
Total revenue			364,943				324,295				558,930				475,386
Cost of revenue (excluding items shown separately below):
Product			163,632				150,137				283,423				234,614
Service			49,604				49,740				69,234				78,866
Net cost of revenue			213,236				199,877				352,657				313,480
Delivery and subcontract cost			35,934				31,885				54,782				46,957
Total cost of revenue			249,170				231,762				407,439				360,437
General and administrative expenses			39,711				34,867				106,945				70,355
Depreciation, depletion, amortization and accretion			27,386				21,339				53,512				40,695
Transaction costs			6,376				2,405				7,740				4,996
Operating income (loss)			42,300				33,922				(16,706	)			(1,097	)
Other expense (income), net			102				(697	)			493				(891	)
Loss on debt financings			30,873				—				31,672				—
Interest expense			17,104				21,651				41,213				40,470
(Loss) income from continuing operations before taxes			(5,779	)			12,968				(90,084	)			(40,676	)
Income tax benefit			(5,345	)			(864	)			(9,813	)			(1,460	)
(Loss) income from continuing operations			(434	)			13,832				(80,271	)			(39,216	)
Income from discontinued operations			(758	)			(369	)			(758	)			(349	)
Net income (loss)			324				14,201				(79,513	)			(38,867	)
Net income (loss) attributable to noncontrolling interest			13				1,946				(1,969	)			(569	)
Net income (loss) attributable to member of Summit Materials, LLC		$	311			$	12,255			$	(77,544	)		$	(38,298	)

See notes to unaudited consolidated financial statements.

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

 

		Three months ended								Six months ended
		June 27,				June 28,				June 27,				June 28,
		2015				2014				2015				2014
Net income (loss)		$	324			$	14,201			$	(79,513	)		$	(38,867	)
Other comprehensive (loss) income:
Postretirement curtailment adjustment			—				—				—				(1,346	)
Postretirement liability adjustment			—				—				—				2,164
Foreign currency translation adjustment			1,064				—				(5,235	)			—
Other comprehensive income (loss)			1,064				—				(5,235	)			818
Comprehensive income (loss)			1,388				14,201				(84,748	)			(38,049	)
Less comprehensive income (loss) attributable to the noncontrolling interest			13				1,946				(1,969	)			(324	)
Comprehensive income (loss) attributable to member of Summit Materials, LLC		$	1,375			$	12,255			$	(82,779	)		$	(37,725	)

See notes to unaudited consolidated financial statements.

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)

 

		Six months ended
		June 27,				June 28,
		2015				2014
Cash flow from operating activities:
Net loss		$	(79,513	)		$	(38,867	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion, amortization and accretion			56,840				43,766
Share-based compensation expense			17,020				1,138
Deferred income tax expense (benefit)			23				(525	)
Net gain on asset disposals			(3,487	)			(76	)
Net gain on debt financings			(6,926	)			—
Other			1,185				559
(Increase) decrease in operating assets, net of acquisitions:
Accounts receivable, net			(21,535	)			(28,917	)
Inventories			(16,555	)			(17,820	)
Costs and estimated earnings in excess of billings			(14,505	)			(10,246	)
Other current assets			(2,779	)			(2,128	)
Other assets			53				2,214
Increase (decrease) in operating liabilities, net of acquisitions:
Accounts payable			3,105				3,589
Accrued expenses			(11,021	)			8,511
Billings in excess of costs and estimated earnings			(875	)			(4,361	)
Other liabilities			(1,114	)			(2,717	)
Net cash used in operating activities			(80,084	)			(45,880	)
Cash flow from investing activities:
Acquisitions, net of cash acquired			(15,863	)			(234,870	)
Purchases of property, plant and equipment			(43,379	)			(49,260	)
Proceeds from the sale of property, plant and equipment			6,039				5,985
Other			610				757
Net cash used for investing activities			(52,593	)			(277,388	)
Cash flow from financing activities:
Capital contributions by member			397,975				24,350
Capital issuance costs			(9,373	)			—
Proceeds from debt issuances			242,000				424,750
Debt issuance costs			(5,130	)			(6,354	)
Payments on debt			(469,628	)			(109,246	)
Payments on acquisition-related liabilities			(11,970	)			(4,259	)
Distributions			(11,842	)			—
Other			—				(88	)
Net cash provided by financing activities			132,032				329,153
Net (decrease) increase in cash			(645	)			5,885
Cash – beginning of period			13,215				14,917
Cash – end of period		$	12,570			$	20,802

See notes to unaudited consolidated financial statements.

 

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SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Member’s Interest

(In thousands)

 

		Total Member’s Interest
		Member’s equity				Accumulated deficit				Accumulated other comprehensive loss				Noncontrolling interest				Total member’s interest				Redeemable noncontrolling interest
Balance — December 27, 2014		$	518,647			$	(217,416	)		$	(15,546	)		$	1,298			$	286,983			$	33,740
Contributed capital			452,703				—				—				—				452,703
Accretion/ redemption value adjustment			—				(32,252	)			—				—				(32,252	)			(31,850	)
Net loss			—				(77,544	)			—				(79	)			(77,623	)			(1,890	)
Other comprehensive loss			—				—				(5,235	)			—				(5,235	)			—
Distributions			(16,427	)			—				—				—				(16,427	)			—
Share-based compensation			17,020				—				—				—				17,020				—
Balance — June 27, 2015		$	971,943			$	(327,212	)		$	(20,781	)		$	1,219			$	625,169			$	—
Balance — December 28, 2013			486,896				(198,511	)			(6,045	)			1,211				283,551				24,767
Contributed capital			24,350				—				—				—				24,350				—
Accretion/ redemption value adjustment			—				(2,404	)			—				—				(2,404	)			2,404
Net loss			—				(38,298	)			—				22				(38,276	)			(591	)
Other comprehensive income			—				—				573				—				573				245
Share-based compensation			1,138				—				—				—				1,138				—
Repurchase of member’s interest			(87	)			—				—				—				(87	)			—
Balance —June 28, 2014		$	512,297			$	(239,213	)		$	(5,472	)		$	1,233			$	268,845			$	26,825

See notes to unaudited consolidated financial statements.

 

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SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Tables in thousands)

 

1.	SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Summit Materials, LLC (“Summit LLC”) is a vertically integrated, construction materials company. Through its subsidiaries, it is engaged in the production and sale of aggregates, cement, ready-mixed concrete, asphalt paving mix and concrete products. Summit LLC, through its subsidiaries (collectively, the “Company”), owns and operates quarries, sand and gravel pits, a cement plant, cement distribution terminals, ready-mixed concrete plants, asphalt plants and landfill sites. It is also engaged in paving and related services. The Company is organized by geographic region and has three operating segments, which are also its reporting segments: the West; Central; and East regions.

Substantially all of the Company’s products and services are produced, consumed and performed outdoors, primarily in the spring, summer and fall. Seasonal changes and other weather-related conditions can affect the production and sales volumes of its products and delivery of services. Therefore, the financial results for any interim period are typically not indicative of the results expected for the full year. Furthermore, the Company’s sales and earnings are sensitive to national, regional and local economic conditions and to cyclical changes in construction spending, among other factors.

Summit LLC is a wholly owned indirect subsidiary of Summit Materials Holdings L.P. (“Summit Holdings”), whose major indirect owners are certain investment funds affiliated with Blackstone Capital Partners V L.P. and Silverhawk Summit, L.P. and Summit Materials, Inc. (“Summit Inc.”). Summit Inc. was formed as a Delaware corporation on September 23, 2014 to be a holding company. Its sole asset is a controlling equity interest in Summit Holdings. Pursuant to a reorganization into a holding company structure (the “Reorganization”) in connection with Summit Inc.’s March 2015 initial public offering (“IPO”), Summit Inc. became a holding corporation operating and controlling all of the business and affairs of Summit Holdings and its subsidiaries, including Summit LLC.

Summit Inc. commenced operations on March 11, 2015 upon the pricing of the initial public offering of its Class A common stock (“IPO”). Summit Inc. raised $433.0 million, net of underwriting discounts, through the issuance of 25,555,555 shares of Class A common stock at a public offering price of $18.00 per share. Summit Inc. used the offering proceeds to purchase a number of newly-issued Class A Units (“LP Units”) from Summit Holdings equal to the number of shares of Class A common stock issued to the public. Summit Inc. caused Summit Holdings to use these proceeds: (i) to redeem $288.2 million in aggregate principal amount of outstanding 10  ¹⁄₂% Senior Notes due January 31, 2020 (“2020 Notes”) at a redemption price of 100% and an applicable premium thereon; (ii) to purchase 71,428,571 Class B Units of Continental Cement Company, L.L.C. (“Continental Cement”); (iii) to pay a one-time termination fee of $13.8 million primarily to affiliates of the Sponsors in connection with the termination of a transaction and management fee agreement; and (iv) for general corporate purposes. The $288.2 million redemption of 2020 Notes was completed in the second quarter of 2015 at a redemption price equal to par plus an applicable premium of $38.2 million plus $5.2 million of accrued and unpaid interest.

Basis of Presentation—These unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto as of and for the year ended December 27, 2014. The Company continues to follow the accounting policies set forth in those consolidated financial statements. Management believes that these consolidated interim financial statements include all adjustments, normal and recurring in nature, that are necessary to present fairly the financial position of the Company as of June 27, 2015, the results of operations for the three and six months ended June 27, 2015 and June 28, 2014 and cash flows for the six months ended June 27, 2015 and June 28, 2014.

The Company’s fiscal year is based on a 52-53 week year with each quarter composed of 13 weeks ending on a Saturday. The 53-week year occurs approximately once every seven years and will occur in 2015. The additional week in the 53-week year will be included in the fourth quarter.

The consolidated financial statements of the Company include the accounts of Summit LLC and its subsidiaries, including noncontrolling interests. All significant intercompany balances and transactions have been eliminated. Noncontrolling interests in consolidated subsidiaries represent a 20% ownership in Ohio Valley Asphalt, LLC and, prior to the IPO and concurrent purchase of the noncontrolling interests of Continental Cement Company, L.L.C. (“Continental Cement”), a 30% redeemable ownership in Continental Cement.

Use of Estimates—Preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and the underlying assumptions affect the amounts of assets and liabilities

 

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reported, disclosures about contingent assets and liabilities and reported amounts of revenue and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangibles and other long-lived assets, pension and other postretirement obligations and asset retirement obligations. Estimates also include revenue earned on contracts and costs to complete contracts. Most of the Company’s paving and related services are performed under fixed unit-price contracts with state and local governmental entities. Management regularly evaluates its estimates and assumptions based on historical experience and other factors, including the current economic environment. Management adjusts such estimates and assumptions when circumstances dictate. As future events and their effects cannot be determined with precision, actual results can differ significantly from estimates made. Changes in estimates, including those resulting from continuing changes in the economic environment, are reflected in the Company’s consolidated financial statements when the change in estimate occurs.

Business and Credit Concentrations—As of June 27, 2015, the Company’s operations are conducted primarily across 17 U.S. states and in British Columbia, Canada, with the most significant revenue generated in Texas, Kansas, Kentucky, Utah and Missouri. The Company’s accounts receivable consist primarily of amounts due from customers within these areas. Therefore, collection of these accounts is dependent on the economic conditions in the aforementioned states, as well as specific situations affecting individual customers. Credit granted within the Company’s trade areas has been granted to many customers, and management does not believe that any significant concentrations of credit exist with respect to individual customers or groups of customers. No single customer accounted for more than 10% of total revenue in the three and six months ended June 27, 2015 and June 28, 2014.

Fair Value Measurements—Certain acquisitions made by the Company require the payment of contingent amounts of purchase consideration. These payments are contingent on specified operating results being achieved in periods subsequent to the acquisition and will only be made if earn-out thresholds are achieved. Contingent consideration obligations are measured at fair value each reporting period. Any adjustments to fair value are recognized in earnings in the period identified. Contingent consideration as of June 27, 2015 and December 27, 2014 was:

 

		June 27,				December 27,
		2015				2014
Current portion of acquisition-related liabilities:
Current portion of contingent consideration		$	4,486			$	2,375
Acquisition- related liabilities:
Contingent consideration		$	4,193			$	5,379

The fair values are based on unobservable, or Level 3, inputs, including projected probability-weighted cash payments and an 11.0% discount rate, which reflects a market discount rate. Changes in fair value may occur as a result of a change in actual or projected cash payments, the probability weightings applied by the Company to projected payments or a change in the discount rate. Significant increases or decreases in any of these inputs in isolation could result in a lower, or higher, fair value measurement. There were no material valuation adjustments to contingent consideration obligations in the three or six months ended June 27, 2015 or June 28, 2014.

 

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Financial Instruments—The Company’s financial instruments include debt and certain acquisition-related liabilities (deferred consideration and noncompete obligations). The carrying value and fair value of these financial instruments as of June 27, 2015 and December 27, 2014 was:

 

		June 27, 2015								December 27, 2014
		Fair Value				Carrying Value				Fair Value				Carrying Value
Level 2
Long-term debt(1)		$	780,155			$	827,247			$	1,101,873			$	1,064,917
Level 3
Current portion of deferred consideration and noncompete obligations(2)			15,409				15,409				16,027				16,027
Long term portion of deferred consideration and noncompete obligations(3)			30,309				30,309				37,357				37,357

 

(1)

$5.3 million included in current portion of debt as of June 27, 2015 and December 27, 2014. Excludes $66.0 million outstanding on the revolving credit facility as of June 27, 2015.

(2)

Included in current portion of acquisition-related liabilities on the balance sheet.

(3)

Included in acquisition-related liabilities on the balance sheet.

The fair value of debt was determined based on observable, or Level 2 inputs, such as interest rates, bond yields and quoted prices in inactive markets. The fair values of the deferred consideration and noncompete obligations were determined based on unobservable, or Level 3, inputs, including the cash payment terms in the purchase agreements and a discount rate reflecting the Company’s credit risk.

Redeemable Noncontrolling Interest — On March 17, 2015, upon the consummation of the IPO and the transactions contemplated by a contribution and purchase agreement entered into with the holders of all of the outstanding Class B Units of Continental Cement, Continental Cement became a wholly-owned indirect subsidiary of Summit LLC. The noncontrolling interests of Continental Cement were acquired for aggregate consideration of $64.1 million, consisting of $35.0 million of cash, 1,029,183 of Summit Inc.’s Class A common shares and $15.0 million aggregate principal amount of non-interest bearing notes payable in six annual installments of $2.5 million, beginning on March 17, 2016. The notes payable is a liability of Summit Holdings and, is therefore not included in the liabilities of Summit LLC.

New Accounting Standards — In April 2015, the FASB issued a new accounting standard to simplify the presentation of debt issuance costs. Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs, changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity will present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The ASU is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The guidance will be applied retrospectively to all prior periods (i.e., the balance sheet for each period will be adjusted). Had the Company adopted this guidance as of the current period, both Other Assets (noncurrent) and Long-term Debt as of June 27, 2015 and December 27, 2014, would have decreased by $11.8 million and $16.8 million, respectively.

In April 2015, the FASB issued a new accounting standard, ASU 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets, which gives an employer whose fiscal year-end does not coincide with a calendar month-end (e.g., an entity that has a 52- or 53-week fiscal year) the ability, as a practical expedient, to measure defined benefit retirement obligations and related plan assets as of the month-end that is closest to its fiscal year-end. The ASU is effective for public business entities for financial statements issued for fiscal years beginning after December 31, 2015, and interim periods within those fiscal years. Early application is permitted, and the ASU should be applied prospectively. The Company does not expect the adoption of this ASU to have a material effect on its financial position or results of operations.

In May 2014, the FASB issued a new accounting standard to improve and converge the financial reporting requirements for revenue from contracts with customers. ASU No. 2014-09, Revenue from Contracts with Customers, prescribes a five-step model for revenue recognition that will replace most existing revenue recognition guidance in U.S. GAAP. The ASU will supersede nearly all existing revenue recognition guidance under U.S. GAAP and provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and

 

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changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB decided to delay the effective date of the new revenue standard by one year, or to the first quarter of 2018. Early adoption is permitted, but no earlier than 2017. Management is currently assessing the effect that the adoption of this standard will have on the consolidated financial statements.

Reclassifications — Certain amounts in the prior year have been reclassified to conform to the presentation in the consolidated financial statements as of and for the three and six months ended June 27, 2015.

 

2.	REORGANIZATION

Prior to the IPO and Reorganization, the capital structure of Summit Holdings consisted of six different classes of limited partnership interests (Class A-1, Class A-2, Class B-1, Class C, Class D-1 and Class D-2), each of which was subject to unique distribution rights. There were no outstanding Class A-2 interests. In connection with the IPO and the Reorganization, the limited partnership agreement of Summit Holdings was amended and restated to, among other things, modify its capital structure by creating a single new class of units (the “LP Units”), referred to as the “Reclassification.” Immediately following the Reclassification, 69,007,297 LP Units were outstanding. In addition, in substitution for part of the economic benefit of the Class C and Class D interests that was not reflected in the conversion of such interests to LP Units, warrants were issued to holders of Class C interests to purchase an aggregate of 160,333 shares of Class A common stock, and options were issued to holders of Class D interests to purchase an aggregate of 4,358,842 shares of Class A common stock (“leverage restoration options”). In each case, the exercise price of such warrants and leverage restoration options was the IPO price of $18.00 per share. In conjunction with the Reclassification of the equity-based awards, the Company recognized $14.5 million modification charge in general and administrative costs in the three months ended March 28, 2015.

 

3.	ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consisted of the following as of June 27, 2015 and December 27, 2014:

 

		June 27,				December 27,
		2015				2014
Trade accounts receivable		$	154,678			$	131,060
Retention receivables			11,119				12,053
Receivables from related parties			629				333
Accounts receivable			166,426				143,446
Less: Allowance for doubtful accounts			(2,367	)			(2,144	)
Accounts receivable, net		$	164,059			$	141,302

Retention receivables are amounts earned by the Company but held by customers until paving and related service contracts and projects are near completion or fully completed. Amounts are expected to be billed and collected within one year.

 

4.	INVENTORIES

Inventories consisted of the following as of June 27, 2015 and December 27, 2014:

 

		June 27,				December 27,
		2015				2014
Aggregate stockpiles		$	91,036			$	88,211
Finished goods			16,791				8,826
Work in process			1,882				1,801
Raw materials			18,708				12,715
Total		$	128,417			$	111,553

 

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5.	ACCRUED EXPENSES

Accrued expenses consisted of the following as of June 27, 2015 and December 27, 2014:

 

		June 27,				December 27,
		2015				2014
Interest		$	19,908			$	32,475
Payroll and benefits			17,733				20,326
Capital lease obligations			18,400				17,530
Insurance			11,780				11,402
Non-income taxes			6,464				5,520
Professional fees			5,142				3,299
Other (1)			11,351				10,944
Total		$	90,778			$	101,496

 

(1)

Consists primarily of subcontractor and working capital settlement accruals.

 

6.

DEBT

Debt consisted of the following as of June 27, 2015 and December 27, 2014:

 

		June 27,				December 27,
		2015				2014
Revolving credit facility		$	66,000			$	—
Long-term debt:
$336.8 million senior notes, including a $12.9 million net premium at June 27, 2015 and $625.0 million senior notes, including a $26.5 million net premium at December 27, 2014			349,701				651,548
$413.6 million term loan, net of $2.1 million discount at June 27, 2015 and $415.7 million term loan, net of $2.3 million discount at December 27, 2014			411,546				413,369
Total			761,247				1,064,917
Current portion of long-term debt			5,275				5,275
Long-term debt		$	755,972			$	1,059,642

The contractual payments of long-term debt, including current maturities, for the five years subsequent to June 27, 2015, are as follows:

 

2015 (six months)		$	3,165
2016			4,220
2017			4,220
2018			3,165
2019			398,790
2020			336,800
Total			750,360
Plus: Original issue net premium			10,887
Total debt		$	761,247

2020 Notes—The 2020 Notes were issued under an indenture dated January 30, 2012 (as amended and supplemented, the “Indenture”). The Indenture contains covenants limiting, among other things, Summit LLC and its restricted subsidiaries’ ability to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make

 

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certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The Indenture also contains customary events of default. As of June 27, 2015 and December 27, 2014, the Company was in compliance with all covenants. Interest on the 2020 Notes is payable semi-annually in arrears.

In April 2015, using proceeds from the IPO, $288.2 million aggregate principal amount of the outstanding 2020 Notes were redeemed at a price equal to par plus an applicable premium. As a result of the redemption, a net charge of $31.3 million was recognized, which was composed of $38.2 million for the applicable prepayment premium and $4.7 million for the write-off of deferred financing fees, which was partially offset by an $11.6 million net benefit from the write-off the original issuance premium and discount.

On September 8, 2014 and January 17, 2014, the Issuers issued an additional $115.0 million and $260.0 million, respectively, aggregate principal amount of 2020 Notes (the “Additional Notes”), receiving proceeds of $409.3 million, before payment of fees and expenses and including an aggregate $34.3 million premium. The proceeds from the sale of the Additional Notes were used for the purchases of acquisitions, to make payments on the revolving credit facility and for general corporate purposes. The Additional Notes are treated as a single series with the $250.0 million of 2020 Notes (the “Existing Notes”) and have substantially the same terms as those of the Existing Notes. The Additional Notes and the Existing Notes are treated as one class under the Indenture.

Senior Secured Credit Facilities— Summit LLC has credit facilities which provide for term loans in an aggregate amount of $422.0 million and revolving credit commitments in an aggregate amount of $235.0 million (the “Senior Secured Credit Facilities”). Under the Senior Secured Credit Facilities, required principal repayments of 0.25% of term debt are due on the last business day of each March, June, September and December. The unpaid principal balance was due in full on the maturity date, which was January 30, 2019. In July 2015, the outstanding balance of the terms loans was refinanced, extending the maturity date to 2022. See further discussion of this refinancing in note 14, Subsequent Events.

On March 11, 2015, the Company entered into Amendment No. 3 to the credit agreement governing the Senior Secured Credit Facilities, which became effective on March 17, 2015 upon the consummation of the IPO. The amendment: (i) increased the size of the revolving credit facility from $150.0 million to $235.0 million; (ii) extended the maturity date of the revolving credit facility to March 11, 2020; (iii) amended certain covenants; and (iv) permits periodic tax distributions as contemplated in a tax receivable agreement, dated as of March 11, 2015, with Summit Holdings. As a result of this amendment, $0.4 million of financing fees were charged to earnings in the six months ended June 27, 2015.

The revolving credit facility bears interest per annum equal to, at Summit LLC’s option, either (i) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A. and (c) LIBOR plus 1.00%, plus an applicable margin of 2.5% for base rate loans or (ii) a LIBOR rate determined by reference to Reuters prior to the interest period relevant to such borrowing adjusted for certain additional costs plus an applicable margin of 3.5% for LIBOR rate loans. The interest rate in effect at June 27, 2015 was 3.6%.

There were $66.0 of outstanding borrowings under the revolving credit facility as of June 27, 2015, leaving remaining borrowing capacity of $144.8 million, which is net of $24.2 million of outstanding letters of credit. The outstanding letters of credit are renewed annually and support required bonding on construction projects and the Company’s insurance liabilities.

Summit LLC must adhere to certain financial covenants related to its debt and interest leverage ratios, as defined in the Senior Secured Credit Facilities. The consolidated first lien net leverage ratio, reported each quarter, should be no greater than 4.5:1.0. The interest coverage ratio must be at least 1.70:1.0 from January 1, 2013 through December 31, 2014 and 1.85:1.0 thereafter. As of March 27, 2015 and December 27, 2014, the Company was in compliance with all covenants. Summit LLC’s wholly-owned domestic subsidiary companies are subject to certain exclusions and exceptions are named as subsidiary guarantors of the 2020 Notes and the Senior Secured Credit Facilities. In addition, Summit LLC has pledged substantially all of its assets as collateral, subject to certain exclusions and exceptions, for the Senior Secured Credit Facilities.

 

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Interest expense related to debt totaled $14.8 million and $36.8 million for the three and six months ended June 27, 2015, respectively, and $19.3 million and $36.5 million for the three and six months ended June 28, 2014, respectively. The following table presents the activity for the deferred financing fees for the six months ended June 27, 2015 and June 28, 2014:

 

		Deferred financing fees
Balance — December 27, 2014		$	17,215
Loan origination fees			5,130
Amortization			(1,701	)
Write off of deferred financing fees			(5,109	)
Balance — June 27, 2015		$	15,535
Balance — December 28, 2013		$	11,485
Loan origination fees			6,309
Amortization			(1,544	)
Balance —June 28, 2014		$	16,250

Other—On January 15, 2015, the Company’s wholly-owned subsidiary in British Columbia, Canada entered into an agreement with HSBC for a (i) $6.0 million Canadian dollar (“CAD”) revolving credit commitment to be used for operating activities that bears interest per annum equal to the bank’s prime rate plus 0.20%, (ii) $0.5 million CAD revolving credit commitment to be used for capital equipment that bears interest per annum at the bank’s prime rate plus 0.90% and (iii) $0.4 million CAD revolving credit commitment to provide guarantees on behalf of that subsidiary. There were no amounts outstanding under this agreement as of June 27, 2015.

 

7.	ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in each component of accumulated other comprehensive loss consisted of the following:

 

		Change in retirement plans				Foreign currency translation adjustments				Accumulated other comprehensive loss
Balance — December 27, 2014		$	(9,730	)		$	(5,816	)		$	(15,546	)
Foreign currency translation adjustment			—				(5,235	)			(5,235	)
Balance — June 27, 2015		$	(9,730	)		$	(11,051	)		$	(20,781	)
Balance — December 28, 2013		$	(6,045	)		$	—			$	(6,045	)
Postretirement curtailment adjustment			(942	)			—				(942	)
Postretirement liability adjustment			1,515				—				1,515
Balance —June 28, 2014		$	(5,472	)		$	—			$	(5,472	)

 

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8.	INCOME TAXES

Summit LLC is a limited liability company and passes its tax attributes for federal and state tax purposes to its parent company and is generally not subject to federal or state income tax. However, certain subsidiary entities file federal and state income tax returns due to their status as C corporations. The provision for income taxes is primarily composed of federal, state and local income taxes for the subsidiary entities that have C corporation status.

The effective income tax rate for these entities differs from the statutory federal rate primarily due to (1) tax depletion expense in excess of the expense recorded under U.S. GAAP, (2) state income taxes and the effect of graduated tax rates and (3) certain non-recurring items, such as differences in the treatment of transaction costs, which are often not deductible for tax purposes.

As of June 27, 2015 and December 27, 2014, the Company has not recognized any liabilities for uncertain tax positions. The Company records interest and penalties as a component of the income tax provision. No material interest or penalties were recognized in income tax expense for the three or six months ended June 27, 2015 and June 28, 2014.

Tax Distributions – The holders of Summit Holdings’ LP Units, including Summit Inc., incur U.S. federal, state and local income taxes on their share of any taxable income of Summit Holdings. The limited partnership agreement of Summit Holdings provides for pro rata cash distributions (“tax distributions”) to the holders of the LP Units in an amount generally calculated to provide each holder of LP Units with sufficient cash to cover its tax liability in respect of the LP Units. In general, these tax distributions are computed based on Summit Holdings’ estimated taxable income allocated to each holder of LP Units multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate applicable to an individual or corporate resident in New York, New York (or a corporate resident in certain circumstances). In the three and six months ended June 27, 2015, the Company declared distributions totaling $16.4 million, $11.8 million were paid in cash to Summit Holdings, who, in turn, distributed the fund to its partners, excluding Summit Inc., and $4.6 million was paid to Summit Holdings, who, in turn, paid Summit Inc. in July 2015.

 

9.	COMMITMENTS AND CONTINGENCIES

The Company is party to certain legal actions arising from the ordinary course of business activities. Accruals are recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be predicted with certainty, management expects that the ultimate resolution of all pending or threatened claims and litigation will not have a material effect on the Company’s consolidated results of operations, financial position or liquidity. The Company’s policy is to record legal fees as incurred.

Litigation and Claims—The Company is obligated under an indemnification agreement entered into with the sellers of Harper Contracting, Inc., Harper Sand and Gravel, Inc., Harper Excavating, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc. (collectively, “Harper”) for the sellers’ 40% ownership interests in a joint venture agreement. The Company has the rights to any benefits under the joint venture as well as the assumption of any obligations, but does not own equity interests in the joint venture. The joint venture incurred significant losses on a highway project in Utah, which resulted in requests for funding from the joint venture partners and, ultimately, from the Company. Through June 27, 2015, the Company has funded $8.8 million, of which $4.0 million was funded in 2012 and $4.8 million was funded in 2011. On April 2, 2015, the Utah Department of Transportation filed suit in the Fourth District Court of Utah County, Utah against the joint venture and the parties to the joint venture seeking damages of at least $29.4 million. As of June 27, 2015 and December 27, 2014, an accrual of $4.3 million was recorded in other noncurrent liabilities as management’s best estimate of loss related to this matter.

During the ordinary course of business, there may be revisions to project costs and conditions that can give rise to change orders on construction contracts. Revisions can also result in claims made against a customer or subcontractor to recover project variances that have not been satisfactorily addressed through change orders with a customer. As of June 27, 2015 and December 27, 2014, the Company had unapproved change orders and claims of $1.4 million ($1.2 million in accounts receivable and $0.2 million in costs and estimated earnings in excess of billings) and $3.9 million ($1.2 million in accounts receivable, $0.5 million in costs and estimated earnings in excess of billings and $2.2 million in other assets), respectively.

Environmental Remediation—The Company’s operations are subject to and affected by federal, state, provincial and local laws and regulations relating to the environment, health and safety and other regulatory matters. These operations require environmental operating permits, which are subject to modification, renewal and revocation. The Company regularly monitors and reviews its operations, procedures and policies for compliance with these laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of the Company’s business, as it is with other companies engaged in similar businesses, and there can be no assurance that environmental liabilities or noncompliance will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity in the future.

Other—In the ordinary course of business, the Company enters into various firm purchase commitments for certain raw materials and services. The terms of the purchase commitments are generally less than one year. Management does not expect any significant changes in the market value of these goods and services during the commitment period that would have a material adverse effect on the financial position, results of operations or liquidity of the Company.

 

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10.	SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

 

		Six months ended
		June 27,				June 28,
		2015				2014
Cash payments:
Interest		$	50,646			$	25,881
Income taxes			1,257				1,320
Non cash financing activities:
Purchase of noncontrolling interest in Continental Cement		$	(64,102	)		$	—

 

11.	SEGMENT INFORMATION

The Company has three operating segments, which are its reportable segments: the West; Central; and East regions. These segments are consistent with the Company’s management reporting structure. Each region’s operations consist of various activities related to the production, distribution and sale of construction materials, products and the provision of paving and related services. Assets employed by segment include assets directly identified with those operations. Corporate assets consist primarily of cash, property, plant and equipment for corporate operations and other assets not directly identifiable with a reportable business segment. The accounting policies applicable to each segment are consistent with those used in preparing the consolidated financial statements. The following tables display selected financial data for the Company’s reportable segments:

 

		Three months ended								Six months ended
		June 27,				June 28,				June 27,				June 28,
		2015				2014				2015				2014
Revenue:
West region		$	208,068			$	172,236			$	335,742			$	267,130
Central region			117,920				109,117				174,529				156,659
East region			38,955				42,942				48,659				51,597
Total revenue		$	364,943			$	324,295			$	558,930			$	475,386

 

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		Three months ended								Six months ended
		June 27,				June 28,				June 27,				June 28,
		2015				2014				2015				2014
Adjusted EBITDA
West region		$	39,497			$	30,750			$	51,366			$	32,541
Central region			35,518				28,823				36,228				28,400
East region			9,580				7,932				1,713				(1,406	)
Corporate and other			(15,011	)			(11,547	)			(24,698	)			(19,046	)
Total reportable segments and corporate			69,584				55,958				64,609				40,489
Interest expense			17,104				21,651				41,213				40,470
Depreciation, depletion, amortization and accretion			27,386				21,339				53,512				40,695
Initial public offering costs			—				—				28,296				—
Loss on debt financings			30,873				—				31,672				—
(Loss) income from continuing operations before taxes		$	(5,779	)		$	12,968			$	(90,084	)		$	(40,676	)

 

		Six months ended
		June 27,				June 28,
		2015				2014
Cash paid for capital expenditures:
West region		$	18,037			$	17,924
Central region			15,920				23,372
East region			7,518				5,533
Total reportable segments			41,475				46,829
Corporate and other			1,904				2,431
Total capital expenditures		$	43,379			$	49,260

 

		Three months ended								Six months ended
		June 27,				June 28,				June 27,				June 28,
		2015				2014				2015				2014
Depreciation, depletion, amortization and accretion:
West region		$	12,634			$	7,667			$	24,722			$	14,414
Central region			11,348				9,504				21,420				18,351
East region			2,835				3,831				6,312				7,288
Total reportable segments			26,817				21,002				52,454				40,053
Corporate and other			569				337				1,058				642
Total depreciation, depletion, amortization and accretion		$	27,386			$	21,339			$	53,512			$	40,695

 

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		June 27,				December 27,
		2015				2014
Total assets:
West region		$	824,892			$	777,981
Central region			726,976				704,134
East region			230,353				221,598
Total reportable segments			1,782,221				1,703,713
Corporate and other			33,271				26,064
Total		$	1,815,492			$	1,729,777

 

		Three months ended								Six months ended
		June 27,				June 28,				June 27,				June 28,
		2015				2014				2015				2014
Revenue by product:*
Aggregates		$	79,929			$	59,816			$	132,266			$	91,366
Cement			30,177				27,557				41,996				35,264
Ready-mixed concrete			89,309				71,389				159,397				113,769
Asphalt			85,329				74,686				106,243				99,082
Paving and related services			137,330				144,911				181,229				200,768
Other			(57,131	)			(54,064	)			(62,201	)			(64,863	)
Total revenue		$	364,943			$	324,295			$	558,930			$	475,386

 

*

Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.

 

12.	RELATED PARTY TRANSACTIONS

Under the terms of a transaction and management fee agreement between Summit Holdings and Blackstone Management Partners L.L.C. (“BMP”), whose affiliates include controlling stockholders of the Summit Inc., BMP provided monitoring, advisory and consulting services to the Company through March 17, 2015. Under the terms of the agreement, BMP was permitted to assign, and had assigned, a portion of the fees to which it is entitled to Silverhawk Summit, L.P. and to certain other equity investors.

The management fee was calculated based on the greater of $300,000 or 2.0% of the Company’s annual consolidated profit, as defined in the agreement, which are included in general and administrative expenses. The Company incurred management fees due to BMP totaling $1.0 million during the period between December 28, 2014 and March 17, 2015 and $1.3 million and $2.3 million in the three and six months ended June 28, 2014, respectively. During these periods, the Company paid immaterial amounts to Silverhawk Summit, L.P. and to other equity investors.

Also under the terms of the transaction and management fee agreement, BMP undertook financial and structural analysis, due diligence investigations, corporate strategy and other advisory services and negotiation assistance related to acquisitions for which the Company paid BMP transaction fees equal to 1.0% of the aggregate enterprise value of any acquired entity or, if such transaction was structured as an asset purchase or sale, 1.0% of the consideration paid for or received in respect of the assets acquired or disposed. The Company paid BMP $0.6 million and $2.3 million during the three and six months ended June 28, 2014, respectively. During these periods, the Company paid immaterial amounts to Silverhawk Summit, L.P. and to other equity investors. The acquisition-related fees paid pursuant to this agreement are included in transaction costs.

In connection with the IPO, the transaction and management fee agreement with BMP was terminated on March 17, 2015 for a final payment of approximately $13.8 million, $13.4 million was paid to affiliates of Blackstone and the remaining $0.4 million was paid to affiliates of Silverhawk Summit, L.P. and to certain other equity investors.

In addition to the transaction and management fees paid to BMP, the Company reimburses BMP for direct expenses incurred, which were not material in the three and six months ended June 27, 2015 and June 28, 2014.

 

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On April 16, 2015, the Company entered into an agreement with Lafarge North America Inc. (“Lafarge”) to purchase certain assets, including a cement plant, a quarry and seven cement distribution terminals (the “Davenport Assets”) for a purchase price of $450.0 million cash and a cement distribution terminal in Bettendorf, Iowa. At closing, $370.0 million of the purchase price was due and the remaining $80.0 million is due to the seller no later than December 31, 2015. Summit Holdings entered into a commitment letter dated April 16, 2015, with Blackstone Capital Partners V L.P. (“BCP”) for equity financing up to $90.0 million in the form of a preferred equity interest (the “Equity Commitment Financing”). The proceeds of the Equity Commitment Financing would be used to pay the $80.0 million deferred purchase price associated with the Davenport acquisition if a public offering of Summit Inc.’s Class A common stock cannot be effected by December 31, 2015. Summit Holdings paid a $1.8 million commitment fee to BCP in the six months ended June 27, 2015.

Blackstone Advisory Partners L.P., an affiliate of Blackstone, served as an initial purchaser of $5.75 million and $13.0 million principal amount of the 2020 Notes issued in September 2014 and January 2014, respectively, and received compensation in connection therewith.

Cement sales to companies owned by a former noncontrolling member of Continental Cement were approximately $1.4 million during the period between December 28, 2014 and March 11, 2015 and $4.5 million and $6.2 million during the three and six months ended June 28, 2014, respectively. Accounts receivables due from the former noncontrolling member were $0.2 million as of December 27, 2014.

In the first quarter of 2014, the Company made an interest payment of $0.7 million to a certain former noncontrolling member of Continental Cement for a related party note. The principal balance on the note was repaid in 2012.

In the six months ended June 28, 2014, the Company sold certain assets associated with the production of concrete blocks, including inventory and equipment, to a related party for $2.3 million.

 

13.	2020 NOTES’ GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

Summit LLC’s domestic wholly-owned subsidiary companies other than Finance Corp. (the “Guarantors”) are named as guarantors (collectively, the “Guarantors”) of the 2020 Notes. Certain other partially-owned subsidiaries and a non-U.S. entity do not guarantee the 2020 Notes (collectively, the “Non-Guarantors”). The Guarantors provide a joint and several, full and unconditional guarantee of the 2020 Notes.

There are no significant restrictions on Summit LLC’s ability to obtain funds from any of the Guarantor Subsidiaries in the form of dividends or loans. Additionally, there are no significant restrictions on a Guarantor Subsidiary’s ability to obtain funds from Summit LLC or its direct or indirect subsidiaries.

The following condensed consolidating balance sheets, statements of operations and cash flows are provided for the Issuers, the Wholly-owned Guarantors and the Non-Guarantors. On March 17, 2015, the noncontrolling interests of Continental Cement were purchased resulting in Continental Cement being a wholly-owned indirect subsidiary of Summit LLC. Continental Cement’s results of operations and cash flows are reflected with the Guarantors for the three and six months ended June 27, 2015. In 2014, Continental Cement’s results are shown separately as a Non Wholly-owned Guarantor.

Earnings from subsidiaries are included in other income in the condensed consolidated statements of operations below. The financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the guarantor or non-guarantor subsidiaries operated as independent entities.

 

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Condensed Consolidating Balance Sheets

June 27, 2015

 

		Issuers				Wholly- owned Guarantors				Non- Guarantors				Eliminations				Consolidated
Assets
Current assets:
Cash		$	10,225			$	808			$	9,656			$	(8,119	)		$	12,570
Accounts receivable, net			—				153,726				11,214				(881	)			164,059
Intercompany receivables			429,542				7,114				6,183				(442,839	)			—
Cost and estimated earnings in excess of billings			—				24,490				231				—				24,721
Inventories			—				121,882				6,535				—				128,417
Other current assets			1,206				17,051				1,596				—				19,853
Total current assets			440,973				325,071				35,415				(451,839	)			349,620
Property, plant and equipment, net			8,117				948,314				28,650				—				985,081
Goodwill			—				366,669				51,990				—				418,659
Intangible assets, net			—				14,292				1,965				—				16,257
Other assets			1,248,995				138,530				1,352				(1,343,002	)			45,875
Total assets		$	1,698,085			$	1,792,876			$	119,372			$	(1,794,841	)		$	1,815,492
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest
Current liabilities:
Current portion of debt		$	71,275			$	4,465			$	—			$	(4,465	)		$	71,275
Current portion of acquisition-related liabilities			—				19,895				—				—				19,895
Accounts payable			4,266				81,677				5,760				(881	)			90,822
Accrued expenses			29,416				67,035				2,446				(8,119	)			90,778
Intercompany payables			46,451				397,217				3,756				(442,839	)			4,585
Billings in excess of costs and estimated earnings			—				8,319				22				—				8,341
Total current liabilities			151,408				578,608				11,984				(456,304	)			285,696
Long-term debt			755,972				517,598				—				(517,598	)			755,972
Acquisition-related liabilities			—				34,502				—				—				34,502
Other noncurrent liabilities			706				110,974				57,580				(55,107	)			114,153
Total liabilities			908,086				1,241,682				69,564				(1,029,009	)			1,190,323
Redeemable noncontrolling interest			—				—				—				—				—
Redeemable members’ interest			—				—				—				—				—
Total stockholders’ equity/partners’ interest			789,999				551,194				49,808				(765,832	)			625,169
Total liabilities, redeemable noncontrolling interest and member’s interest		$	1,698,085			$	1,792,876			$	119,372			$	(1,794,841	)		$	1,815,492

 

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Condensed Consolidating Balance Sheets

December 27, 2014

 

		Issuers				Non- Wholly- owned Guarantor				Wholly- owned Guarantors				Non- Guarantors				Eliminations				Consolidated
Assets
Current assets:
Cash		$	10,837			$	2			$	695			$	8,793			$	(7,112	)		$	13,215
Accounts receivable, net			1				6,629				124,380				11,525				(1,233	)			141,302
Intercompany receivables			376,344				4,095				30,539				4,052				(415,030	)			—
Cost and estimated earnings in excess of billings			—				—				9,819				355				—				10,174
Inventories			—				8,696				98,188				4,669				—				111,553
Other current assets			7,148				464				9,638				1,775				(1,853	)			17,172
Total current assets			394,330				19,886				273,259				31,169				(425,228	)			293,416
Property, plant and equipment, net			7,035				302,524				610,717				30,325				—				950,601
Goodwill			—				23,124				340,969				55,177				—				419,270
Intangible assets, net			—				542				14,245				2,860				—				17,647
Other assets			1,153,204				25,233				125,462				1,362				(1,256,418	)			48,843
Total assets		$	1,554,569			$	371,309			$	1,364,652			$	120,893			$	(1,681,646	)		$	1,729,777
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest
Current liabilities:
Current portion of debt		$	5,275			$	1,273			$	3,990			$	—			$	(5,263	)		$	5,275
Current portion of acquisition-related liabilities			166				—				18,236				—				—				18,402
Accounts payable			3,655				6,845				65,018				4,569				(1,233	)			78,854
Accrued expenses			37,101				10,178				59,477				3,705				(8,965	)			101,496
Intercompany payables			162,728				4,052				245,416				2,834				(415,030	)			—
Billings in excess of costs and estimated earnings			—				—				8,931				27				—				8,958
Total current liabilities			208,925				22,348				401,068				11,135				(430,491	)			212,985
Long-term debt			1,059,642				153,318				480,599				—				(633,917	)			1,059,642
Acquisition-related liabilities			—				—				42,736				—				—				42,736
Other noncurrent liabilities			796				24,787				65,479				57,736				(55,107	)			93,691
Total liabilities			1,269,363				200,453				989,882				68,871				(1,119,515	)			1,409,054
Redeemable noncontrolling interest			—				—				—				—				33,740				33,740
Redeemable members’ interest			—				34,543				—				—				(34,543	)			—
Total stockholders’ equity/partners’ interest			285,206				136,313				374,770				52,022				(561,328	)			286,983
Total liabilities, redeemable noncontrolling interest and member’s interest		$	1,554,569			$	371,309			$	1,364,652			$	120,893			$	(1,681,646	)		$	1,729,777

 

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Condensed Consolidating Statements of Operations

For the three months ended June 27, 2015

 

		Issuers				Wholly- owned Guarantors				Non- Guarantors				Eliminations				Consolidated
Revenue		$	—			$	346,309			$	23,702			$	(5,068	)		$	364,943
Cost of revenue (excluding items shown separately below)			—				240,637				13,601				(5,068	)			249,170
General and administrative expenses			14,972				29,446				1,669				—				46,087
Depreciation, depletion, amortization and accretion			567				25,471				1,348				—				27,386
Operating (loss) income			(15,539	)			50,755				7,084				—				42,300
Other (income) expense, net			(22,202	)			2,761				10				50,406				30,975
Interest expense			6,352				13,990				909				(4,147	)			17,104
Income from continuing operations before taxes			311				34,004				6,165				(46,259	)			(5,779	)
Income tax benefit (expense)			—				(5,625	)			280				—				(5,345	)
Income from continuing operations			311				39,629				5,885				(46,259	)			(434	)
Income from discontinued operations			—				(758	)			—				—				(758	)
Net income			311				40,387				5,885				(46,259	)			324
Net income attributable to minority interest			—				—				—				13				13
Net income attributable to member of Summit Materials, LLC		$	311			$	40,387			$	5,885			$	(46,272	)		$	311
Comprehensive income attributable to member of Summit Materials, LLC		$	1,375			$	40,387			$	6,949			$	(47,336	)		$	1,375

 

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Condensed Consolidating Statements of Operations

For the three months ended June 28, 2014

 

		Issuers				Non- Wholly- owned Guarantor				Wholly- owned Guarantors				Non- Guarantors				Eliminations				Consolidated
Revenue		$	—			$	27,557			$	287,307			$	14,942			$	(5,511	)		$	324,295
Cost of revenue (excluding items shown separately below)			—				16,724				210,693				9,856				(5,511	)			231,762
General and administrative expenses			10,002				1,900				25,080				290				—				37,272
Depreciation, depletion, amortization and accretion			338				3,703				17,020				278				—				21,339
Operating (loss) income			(10,340	)			5,230				34,514				4,518				—				33,922
Other (income) expense, net			(29,100	)			(1,261	)			(1,360	)			(3	)			31,027				(697	)
Interest expense			7,932				3,011				12,643				31				(1,966	)			21,651
Income from continuing operations before taxes			10,828				3,480				23,231				4,490				(29,061	)			12,968
Income tax benefit (expense)			(1,427	)			—				563				—				—				(864	)
Income from continuing operations			12,255				3,480				22,668				4,490				(29,061	)			13,832
Income from discontinued operations			—				—				(369	)			—				—				(369	)
Net income			12,255				3,480				23,037				4,490				(29,061	)			14,201
Net income attributable to minority interest			—				—				—				—				1,946				1,946
Net income attributable to member of Summit Materials, LLC		$	12,255			$	3,480			$	23,037			$	4,490			$	(31,007	)		$	12,255
Comprehensive income attributable to member of Summit Materials, LLC		$	12,255			$	3,480			$	23,037			$	4,490			$	(31,007	)		$	12,255

 

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Condensed Consolidating Statements of Operations

For the six months ended June 27, 2015

 

		Issuers				Wholly- owned Guarantors				Non- Guarantors				Eliminations				Consolidated
Revenue		$	—			$	525,652			$	57,349			$	(24,071	)		$	558,930
Cost of revenue (excluding items shown separately below)			—				391,864				39,646				(24,071	)			407,439
General and administrative expenses			52,753				58,596				3,336				—				114,685
Depreciation, depletion, amortization and accretion			1,058				49,623				2,831				—				53,512
Operating (loss) income			(53,811	)			25,569				11,536				—				(16,706	)
Other (income) expense, net			3,583				3,500				159				24,923				32,165
Interest expense			20,150				30,045				1,790				(10,772	)			41,213
Income from continuing operations before taxes			(77,544	)			(7,976	)			9,587				(14,151	)			(90,084	)
Income tax benefit (expense)			—				(10,163	)			350				—				(9,813	)
Income from continuing operations			(77,544	)			2,187				9,237				(14,151	)			(80,271	)
Income from discontinued operations			—				(758	)			—				—				(758	)
Net income			(77,544	)			2,945				9,237				(14,151	)			(79,513	)
Net income attributable to minority interest			—				—				—				(1,969	)			(1,969	)
Net income attributable to member of Summit Materials, LLC		$	(77,544	)		$	2,945			$	9,237			$	(12,182	)		$	(77,544	)
Comprehensive income attributable to member of Summit Materials, LLC		$	(82,779	)		$	2,945			$	4,002			$	(6,947	)		$	(82,779	)

 

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Condensed Consolidating Statements of Operations

For the six months ended June 28, 2014

 

		Issuers				Non- Wholly- owned Guarantor				Wholly- owned Guarantors				Non- Guarantors				Eliminations				Consolidated
Revenue		$	—			$	35,264			$	427,717			$	21,274			$	(8,869	)		$	475,386
Cost of revenue (excluding items shown separately below)			—				27,626				328,318				13,362				(8,869	)			360,437
General and administrative expenses			17,690				3,574				53,521				566				—				75,351
Depreciation, depletion, amortization and accretion			642				6,777				32,731				545				—				40,695
Operating (loss) income			(18,332	)			(2,713	)			13,147				6,801				—				(1,097	)
Other expense (income), net			7,725				(1,358	)			(1,553	)			45				(5,750	)			(891	)
Interest expense			13,668				5,857				24,415				56				(3,526	)			40,470
(Loss) income from continuing operations before taxes			(39,725	)			(7,212	)			(9,715	)			6,700				9,276				(40,676	)
Income tax benefit			(1,427	)			—				(33	)			—				—				(1,460	)
(Loss) income from continuing operations			(38,298	)			(7,212	)			(9,682	)			6,700				9,276				(39,216	)
Income from discontinued operations			—				—				(349	)			—				—				(349	)
Net (loss) income			(38,298	)			(7,212	)			(9,333	)			6,700				9,276				(38,867	)
Net loss attributable to noncontrolling interest			—				—				—				—				(569	)			(569	)
Net (loss) income attributable to member of Summit Materials, LLC		$	(38,298	)		$	(7,212	)		$	(9,333	)		$	6,700			$	9,845			$	(38,298	)
Comprehensive (loss) income attributable to member of Summit Materials, LLC		$	(38,298	)		$	(6,394	)		$	(9,333	)		$	6,700			$	9,600			$	(37,725	)

 

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Condensed Consolidating Statements of Cash Flows

For the six months ended June 27, 2015

 

		Issuers				Wholly- owned Guarantors				Non- Guarantors				Eliminations				Consolidated
Net cash (used in) provided by operating activities		$	(93,127	)		$	6,775			$	6,435			$	(167	)		$	(80,084	)
Cash flow from investing activities:
Acquisitions, net of cash acquired			—				(15,863	)			—				—				(15,863	)
Purchase of property, plant and equipment			(1,904	)			(40,969	)			(506	)			—				(43,379	)
Proceeds from the sale of property, plant, and equipment			—				5,989				50				—				6,039
Other			—				610				—				—				610
Net cash used for investing activities			(1,904	)			(50,233	)			(456	)			—				(52,593	)
Cash flow from financing activities:
Proceeds from investment by member			397,975				—				—				—				397,975
Capital issuance costs			(9,373	)															(9,373	)
Net proceeds from debt issuance			242,000				—				—				—				242,000
Loans received from and payments made on loans from other Summit Companies			(169,065	)			176,243				(5,116	)			(2,062	)			—
Payments on long-term debt			(349,980	)			(120,703	)			—				1,055				(469,628	)
Payments on acquisition-related liabilities			(166	)			(11,804	)			—				—				(11,970	)
Financing costs			(5,130	)			—				—				—				(5,130	)
Distributions from partnership			(11,842	)			—				—				—				(11,842	)
Other			—				(167	)							167				—
Net cash provided by (used for) financing activities			94,419				43,569				(5,116	)			(840	)			132,032
Net increase (decrease) in cash			(612	)			111				863				(1,007	)			(645	)
Cash — Beginning of period			10,837				697				8,793				(7,112	)			13,215
Cash— End of period		$	10,225			$	808			$	9,656			$	(8,119	)		$	12,570

 

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Condensed Consolidating Statements of Cash Flows

For the six months ended June 28, 2014

 

		Issuers				Non- Wholly- owned Guarantor				Wholly- owned Guarantors				Non- Guarantors				Eliminations				Consolidated
Net cash used in operating activities		$	(18,665	)		$	(13,153	)		$	(13,412	)		$	168			$	(818	)		$	(45,880	)
Cash flow from investing activities:
Acquisitions, net of cash acquired			(181,754	)			—				(53,116	)			—				—				(234,870	)
Purchase of property, plant and equipment			(2,428	)			(11,829	)			(34,666	)			(337	)			—				(49,260	)
Proceeds from the sale of property, plant, and equipment			—				—				5,912				73				—				5,985
Other			—				—				(409	)			—				1,166				757
Net cash (used for) provided by investing activities			(184,182	)			(11,829	)			(82,279	)			(264	)			1,166				(277,388	)
Cash flow from financing activities:
Proceeds from investment by member			24,350								—				1,166				(1,166	)			24,350
Net proceeds from debt issuance			424,750				—				—				—				—				424,750
Loans received from and payments made on loans from other Summit Companies			(123,441	)			25,234				104,121				22				(5,936	)			—
Payments on long-term debt			(104,060	)			(254	)			(4,932	)			—				—				(109,246	)
Payments on acquisition-related liabilities			(1,000	)			—				(3,259	)			—				—				(4,259	)
Financing costs			(6,354	)			—				—				—				—				(6,354	)
Other			(88	)			—				(1,000	)			—				1,000				(88	)
Net cash provided by (used for) financing activities			214,157				24,980				94,930				1,188				(6,102	)			329,153
Net increase (decrease) in cash			11,310				(2	)			(761	)			1,092				(5,754	)			5,885
Cash — Beginning of period			10,375				9				3,442				3,631				(2,540	)			14,917
Cash— End of period		$	21,685			$	7			$	2,681			$	4,723			$	(8,294	)		$	20,802

 

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14.	SUBSEQUENT EVENTS

On August 5, 2015, Summit Inc. priced the offering of 19,500,000 shares of its Class A common stock at a price to the public of $25.75 per share. The underwriters have been granted a 30-day option to purchase up to an additional 2,925,000 shares of Class A common stock. The offering is expected to close on August 11, 2015, subject to customary closing conditions. Summit Inc. intends to use all of the net proceeds from the offering to purchase for cash 3,750,000 newly-issued LP Units from Summit Holdings and 15,750,000 outstanding LP Units from certain pre-IPO owners, including affiliates of the Sponsors and certain of the Company’s directors and officers. Summit Holdings intends to use the proceeds it receives to pay all or a portion of the $80.0 million deferred purchase price of the Davenport Assets and for general purposes.

On July 17, 2015, the Company acquired certain assets of Lafarge, including a cement plant, a quarry and seven cement distribution terminals for a purchase price of $450.0 million cash and a cement distribution terminal in Bettendorf, Iowa. Due to the recent nature of the acquisition, it is impracticable to include a schedule of the fair value of the assets acquired and liabilities assumed as of the acquisition date and the Davenport Assets’ interim results of operations for the three and six months ended June 30, 2015.

On July 8, 2015, the Issuers issued $350.0 million in aggregate principal amount of 6.125% senior notes due July 15, 2023 (the “2023 Notes”). The 2023 Notes were issued at 100% of their par value. Interest on the 2023 Notes is payable semi-annually on January 15 and July 15 of each year commencing on January 15, 2016. On July 17, 2015, the Company refinanced its term loan under the Senior Secured Credit Facilities (the “Refinancing”). The Refinancing, among other things: (i) reduced the applicable margins used to calculate interest rates for term loans under our Senior Secured Credit Facilities to 3.25% for LIBOR rate loans and 2.25% for base rate loans, subject to a LIBOR floor of 1.00% (and one 25 basis point step down upon Summit LLC achieving a certain first lien net leverage ratio); (ii) increased term loans borrowed under our term loan facility to an aggregate $650.0 million; and (iii) created additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated First Lien Net Leverage Ratio (as defined in the Credit Agreement).

The Company used the net proceeds from the 2023 Notes and the Refinancing to finance an initial $370.0 million cash purchase price for the Davenport Assets, to refinance its existing senior secured term loan facility, to redeem $183.0 million aggregate principal amount of its outstanding 2020 Notes and to pay related fees and expenses. The remaining $80.0 million of the purchase price for the Davenport Assets is due to Lafarge no later than December 31, 2015 and accrues interest at an annual rate of 7.5%, payable monthly.

* * *

 

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