As filed with the Securities and Exchange Commission on May 3, 2013September 26, 2014

Registration No. 333-187556333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 1

TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

SUMMIT MATERIALS, LLC

SUMMIT MATERIALS FINANCE CORP.

(Exact name of registrant issuers as specified in their respective charters)

SEE TABLE OF ADDITIONAL REGISTRANT GUARANTORS

 

 

 

Delaware 1400 24-413848626-4138486

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

 

2900 K1550 Wynkoop Street, NW, Suite 1003rd Floor

Harbourside North Tower BuildingDenver, Colorado 80202

Washington, D.C. 20007(303) 893-0012

(202) 339-9509

(Address, including zip code, and telephone number, including area code, of registrants’ principal executive offices)

Thomas HillAnne Lee Benedict, Esq.

Chief ExecutiveLegal Officer

Summit Materials, LLC

2900 K1550 Wynkoop Street, NW, Suite 1003rd Floor

Harbourside North Tower BuildingDenver, Colorado 80202

Washington, D.C. 20007(303) 893-0012

(202) 339-9509

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

With a copy to:

Edward P. Tolley III, Esq.

Edgar J. Lewandowski, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017-3954

(212) 455-2000

 

 

Approximate date of commencement of proposed exchange offer: As soon as practicable after this Registration Statement is declared effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨  Accelerated filer ¨
Non-accelerated filer x(Do  (Do not check if a smaller reporting company)  Smaller reporting company ¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross Border Third Party Tender Offer)  ¨

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be

Registered

 

Proposed

Maximum

Offering Price

Per Note

 

Proposed

Maximum

Aggregate

Offering Price(1)

 

Amount of

Registration Fee

10.5% Senior Notes due 2020

 $250,000,000 100% $250,000,000 $34,100(2)

Guarantees of the 10.5% Senior Notes due 2020(3)

 N/A(4) (4) (4) (4)

 

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be
Registered

 Proposed
Maximum
Offering Price
Per Note
 

Proposed
Maximum
Aggregate

Offering Price(1)

 

Amount of

Registration Fee

10 12% Senior Notes due 2020

 $115,000,000 100% $115,000,000 $14,812

Guarantees of the 10 12% Senior Notes due 2020(2)

 N/A(3) (3) (3) (3)

 

 

(1)Estimated solely for the purpose of calculating the registration fee under Rule 457(f) of the Securities Act of 1933, as amended (the “Securities Act”).
(2)Previously paid.
(3)See inside facing page for additionaltable of registrant guarantors.
(4)(3)Pursuant to Rule 457(n) under the Securities Act, no separate filing fee is required for the guarantees.

 

 

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


TABLE OF ADDITIONAL REGISTRANT GUARANTORS

 

Exact Name of Registrant Guarantor

as Specified in its Charter (or Other

Organizational Document)

 

State or Other
Jurisdiction of
Incorporation or
Organization

 I.R.S.
Employer
Identification
Number
 Primary
Standard
Industrial
Classification
Code Number
 

Address, Including Zip Code
and Telephone Number,
Including Area Code, of
Registrant Guarantor’s
Principal Executive Offices

Elam Construction, Inc.

Colorado84-04843801400556 Struthers Avenue, Grand Junction, CO 81501

Alcomat, LLC

Delaware74-213660732737555 FM 762 Road Richmond, TX 77469

Alleyton Resource Company, LLC

Delaware72-157132114007555 FM 762 Road Richmond, TX 77469

Alleyton Services Company, LLC

Delaware46-473411214007555 FM 762 Road Richmond, TX 77469

Austin Materials, LLC

 Delaware 45-2840524 1400 9020 N. Capital of Texas
Highway, Suite 250, Austin,
TX 78759

Continental Cement Company, L.L.C.

 Delaware 27-2594654 3241 14755 North Outer Forth Drive
#514, Chesterfield, MO 63017

Kilgore Companies, LLC

 Delaware 27-2910651 1400 7057 West 2100 South, West
Valley, UT 84128

Norris Quarries, LLC

Delaware45-450683814002604 N Stadium Blvd,
Columbia, MO 65202

RK Hall, LLC

 Delaware 27-3722217 1600 2810 NW Loop 286, Paris, TX
75460

Summit Materials Companies I, LLC

Delaware27-139558014002900 K Street NW, Suite 100,
Harbourside North Tower
Building, Washington, DC
20007

Summit Materials Corporations I, Inc.

 Delaware 27-5206889 1400 2900 K1550 Wynkoop Street, NW, Suite 100,
Harbourside North Tower
Building, Washington, DC
20007

Summit Materials Holdings I, LLC

Delaware27-277976614002900 K Street NW, Suite 100,
Harbourside North Tower
Building, Washington, DC
200073rd Floor, Denver, CO 80202

Summit Materials Holdings II, LLC

 Delaware 27-2606667 3241 2900 K1550 Wynkoop Street, NW, Suite 100,
Harbourside North Tower
Building, Washington, DC
200073rd Floor, Denver, CO 80202

Elam Construction, Inc.Summit Materials International, LLC

 ColoradoDelaware 84-048438038-3937065 1400 556 Struthers Avenue, Grand
Junction,1550 Wynkoop Street, 3rd Floor, Denver, CO 8150180202

Cornejo & Sons, L.L.C.

 Kansas 27-2336713 1600 2060 E. Tulsa, Wichita,
KS
67216

Hamm Asphalt, LLC

Kansas48-07651532951609 Perry Place, Perry, KS
66073

Hamm, Inc.

 Kansas 48-1243726 1400 609 Perry Place, Perry,
KS
66073

N.R. Hamm Contractor, LLC

 Kansas 48-0581200 1600 609 Perry Place, Perry,
KS
66073

N.R. Hamm Quarry, LLC

 Kansas 48-0581201 1400 609 Perry Place, Perry,
KS
66073

Bourbon Limestone Company

 Kentucky 61-0592947 1400 395 North Middletown Rd,
Paris, KY 40361

Glass Aggregates, LLC

Kentucky20-47105851400395 North Middletown Rd,
Paris, KY 40361

Hinkle Contracting Company, LLC

 Kentucky 61-0725598 1400 395 North Middletown Rd,
Paris, KY 40361

Kentucky Hauling, Inc.

Kentucky61-09305344700395 North Middletown Rd,
Paris, KY 40361


South Central Kentucky Limestone, LLC

Kentucky27-30046071400395 North Middletown Rd,
Paris, KY 40361

Con-Agg of MO, L.L.C.

 Missouri 43-1765061 3273 2604 N Stadium Blvd,
Columbia, MO 65202

Fischer Quarries, L.L.C.Buckhorn Materials, LLC

 MissouriSouth Carolina 43-176780720-5771962 1400 2604 N Stadium Blvd,
Columbia, MO 65202

Quarry Properties, L.L.C.

Missouri20-113615914002604 N Stadium Blvd,
Columbia, MO 65202

Elam Paving, Inc.

New Mexico85-04736511400556 Struthers Avenue, Grand
Junction, CO 81501

B&H Contracting, L.P.

Texas26-316001773892810 NW Loop 286, Paris,
TX 754603410 Hwy 601 South, Jefferson, SC 29718

Industrial Asphalt, LLC

 Texas 74-2766027 1600 16409 Bratton Lane, Austin,
TX 78728

R.K. Hall Construction, Ltd.SCS Materials, LLC

 Texas 20-234719820-1932670 1600 2810 NW Loop 286, Paris,
TX 75460

RKH Capital, L.L.C.Troy Vines, Incorporated

 Texas 20-463256675-1655979 3273 67992810 NW Loop 286, Paris,
2817 Rankin Hwy, Midland, TX 75460

SCS Materials, L.P.

Texas20-193267016002810 NW Loop 286, Paris,
TX 75460

Altaview Concrete, LLC

Utah87-043160116007057 West 2100 South, West
Valley, UT 8412879706

B&B Resources, Inc.

 Utah 87-0490366 1600 7057 West 2100 South, West
Valley, UT 84128

Kilgore Equipment, LLC

Utah81-055172616007057 West 2100 South, West
Valley, UT 84128

Kilgore Trucking, LLC

Utah85-048737316007057 West 2100 South, West
Valley, UT 84128

Peak Construction Materials, LLC

Utah20-597884616007057 West 2100 South, West
Valley, UT 84128

Peak Management, L.C.

Utah87-062323287417057 West 2100 South, West
Valley, UT 84128

Salt Lake Valley Sand & Gravel, Inc.

Utah87-056187016007057 West 2100 South, West
Valley, UT 84128

Valley Ready Mix, Inc.

Utah87-050614916007057 West 2100 South, West
Valley, UT 84128

Wasatch Concrete Pumping, LLC

Utah87-055183716007057 West 2100 South, West
Valley, UT 84128

Wind River Materials, LLC

Wyoming27-382326716007057 West 2100 South, West
Valley, UT 84128


The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED MAY 3, 2013SEPTEMBER 26, 2014

PRELIMINARY PROSPECTUS

 

LOGOLOGO

SUMMIT MATERIALS, LLC

SUMMIT MATERIALS FINANCE CORP.

Offer to Exchange (the “exchange offer”)

 

 

$250,000,000115,000,000 aggregate principal amount of 10.5%10 12% Senior Notes due 2020 (the “exchange notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for any and all outstanding unregistered 10.5%10 12% Senior Notes due 2020 issued on September 8, 2014 (the “outstanding notes” and, together with the exchange notes, the “notes”).

On January 30, 2012, we issued $250,000,000 aggregate principal amount of 10 12% Senior Notes due 2020 and on January 17, 2014, we issued an additional $260,000,000 aggregate principal amount of 10 12% Senior Notes due 2020 (together, the “existing notes”). The notes and the existing notes have identical terms and are treated as a single class for all purposes under the indenture governing the notes and the existing notes. The existing notes are freely tradable as a result of registered exchange offers that were consummated on July 12, 2013 and May 19, 2014. Any exchange notes or any notes that otherwise become freely tradable are expected to trade under the same CUSIP with the existing notes that were part of registered exchange offers consummated in July 2013 and May 2014.

The exchange notes will be joint and several obligations of Summit Materials, LLC and Summit Materials Finance Corp. and will be fully and unconditionally guaranteed on a joint and several senior unsecured basis by all of our existing and future wholly-owned domestic restricted subsidiaries that guarantee indebtedness under our existing senior secured credit facilities, the existing notes and the outstanding notes and by our non-wholly-owned subsidiary, Continental Cement Company, L.L.C. (“Continental Cement”).

 

 

We are conducting the exchange offer in order to provide you with an opportunity to exchange your unregistered outstanding notes for freely tradable exchange notes that have been registered under the Securities Act.

The Exchange Offer

 

We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradable.

 

You may withdraw tenders of outstanding notes at any time prior to the expiration date of the exchange offer.

 

The exchange offer expires at 5:00 p.m., New York City time, on                     , 2013,2014, which is the 21st business day after the date of this prospectus, unless extended. We do not currently intend to extend the expiration date.

 

The exchange of the outstanding notes for the exchange notes in the exchange offer will not beconstitute a taxable event for U.S. federal income tax purposes.

 

The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the exchange notes will be freely tradable.

Results of the Exchange Offer

 

The exchange notes may be sold in the over-the-counter market, in negotiated transactions or through a combination of such methods. We do not plan to list the exchange notes on a national market.

All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the outstanding notes under the Securities Act.

 

 

We are an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and will beare subject to reduced public company reporting requirements.

 

 

You should carefully consider the “Risk Factors” beginning on page 2220 of this prospectus before participating in the exchange offer.

Each broker dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market making activities or other trading activities.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the exchange notes to be distributed in the exchange offer or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2013.2014.


You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. This prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted.

TABLE OF CONTENTS

 

   Page 

FORWARD-LOOKING STATEMENTS

   ii  

MARKET, RANKING AND OTHER INDUSTRY DATA

   iiiii  

EMERGING GROWTH COMPANY STATUS

   iiiiv  

CERTAIN DEFINITIONS

   iiiv  

PROSPECTUS SUMMARY

   1  

RISK FACTORS

   2220  

USE OF PROCEEDS

   4238  

CAPITALIZATION

   4339  

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

44

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

   4640  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF SUMMIT MATERIALS, LLC

   4742  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CONTINENTAL CEMENT COMPANY, L.L.C.

   7573  

BUSINESS

   8785  

MANAGEMENT

   110108  

EXECUTIVE AND DIRECTOR COMPENSATION

   114112  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

   122121  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

   125123  

DESCRIPTION OF OTHER INDEBTEDNESS

   128126  

DESCRIPTION OF THE NOTES

   131129  

THE EXCHANGE OFFER

197

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

   209207  

CERTAIN ERISA CONSIDERATIONS

   210208  

PLAN OF DISTRIBUTION

   212210  

LEGAL MATTERS

   213211  

EXPERTS

   213212  

CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

   214213  

WHERE YOU CAN FIND MORE INFORMATION

   214  

INDEX TO FINANCIAL STATEMENTS

   F-1  

 

i


FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. All statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, it is very difficult to predict the impacteffect of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results.

Some of the important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk Factors” and elsewhere in this prospectus. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

ii


MARKET, RANKING AND OTHER INDUSTRY DATA

The data included in this prospectus regarding markets and the industry in which we operate, including the size of certain markets and our position and the position of our competitors within these markets, are based on reports of government agencies, published industry sources and estimates based on our management’s knowledge and experience in the markets in which we operate. Data regarding the industries in which we compete and our market position and market share within these industries are inherently imprecise and are subject to significant business, economic and competitive uncertainties beyond our control, but we believe that they generally indicate size, and position and market share within these industries. Our own estimates have been based on information obtained from our trade and business organizations and other contacts in the markets in which we operate. We believe these estimates to be accurate as of the date of this prospectus. However, this information may prove to be inaccurate because of the method by which we obtained some of the data for the estimates or because this information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. We have not independently verified any of the data from third party sources, nor have we ascertained the underlying economic assumptions relied upon therein. As a result, you should be aware that market, ranking and other similar industry data included in this prospectus, and estimates and beliefs based on that data, may not be reliable and are subject to change based on various factors, including those discussed under “Risk Factors” and “Forward-Looking Statements”.Statements.”

 

iiiii


EMERGING GROWTH COMPANY STATUS

We are an “emerging growth company” as defined under the JOBS Act and are eligible to take advantage of certain exemptions from various public company reporting requirements. See “Risk Factors—Risks Related to Our Business and Our Industry—Other Risks—As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.”

Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act to comply with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards apply to private companies. As an “emerging growth company,” we may elect to delay adoption of new or revised accounting standards applicable to public companies until such standards are made applicable to private companies. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.

We will remain an “emerging growth company” until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenuesrevenue of $1 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement; (iii) the date on which we have, during the previous three year period, issued more than $1 billion in non-convertible debt; or (iv) the date on which we are deemed a “large accelerated issuer” as defined under the federal securities laws.

iv


CERTAIN DEFINITIONS

As used in this prospectus, unless otherwise noted or the context otherwise requires,requires:

 

we,We,” “our,” “us,” and “the Company” refer to Summit Materials, LLC and its subsidiaries as a combined entity, including Summit Materials Finance Corp., the co-issuer of the notes;

 

“Parent” refers only to Summit Materials Holdings L.P., our indirect parent entity;

“Summit Materials” refers only to Summit Materials, LLC and not its subsidiaries;

 

“Finance Corp.” refers only to Summit Materials Finance Corp., aan indirect wholly-owned subsidiary of Summit Materials;

 

“the Issuers” refers to Summit Materials and Finance Corp. as co-issuers of the notes but not to any of their subsidiaries;

 

“Hamm” and “Predecessor” refer to Hamm, Inc., our inaugural acquisition and the predecessor entity of Summit Materials;

 

“Hinkle Contracting” refers to Hinkle Contracting Corporation and its subsidiaries;

“Cornejo” refers collectively to Cornejo & Sons, L.L.C., C&S Group, Inc., Concrete Materials Company of Kansas, LLC and Cornejo Materials, Inc.;

 

“Greer” refers to certain assets of Elmo Greer & Sons, LLC;

“Harshman” refers collectively to certain assets of Harshman Construction L.L.C. and Harshman Farms, Inc.;

“Scotty’s” refers to South Central Kentucky Limestone, LLC;

“Harper Contracting” refers collectively to substantially all the assets of Harper Contracting, Inc., Harper Sand and Gravel, Inc., Harper Excavating, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc.;

 

“Kilgore” refers collectively to Kilgore Pavement Maintenance, LLC and Kilgore Properties, LLC;

iii


“Con-Agg” refers to Con-Agg of MO, L.L.C.;

“Altaview Concrete” refers collectively to Altaview Concrete, LLC, Peak Construction Materials, LLC, Peak Management, L.C. and Wasatch Concrete Pumping, LLC;

 

“EnerCrest” refers to substantially all the assets of EnerCrest Products, Inc.;

“RK Hall” refers collectively to R.K. Hall Construction, Ltd., RHMB Capital, L.L.C., Hall Materials, Ltd., B&H Contracting, L.P. and RKH Capital, L.L.C.;

 

“SCS” refers to SCS Materials, L.P.;

“Triple C” refers to Triple C Concrete, Inc.;

“Elam Construction” refers to Elam Construction, Inc.;

“Bourbon” refers to Bourbon Limestone Company;

“Fischer” refers to Fischer Quarries, L.L.C.;

“B&B” refers collectively to B&B Resources, Inc., Valley Ready Mix, Inc. and Salt Lake Sand & Gravel, Inc.;

 

“Grand Junction Pipe” refers to Grand Junction Pipe, Inc.;

“Industrial Asphalt” refers collectively to Industrial Asphalt, LLC, Asphalt Paving Company of Austin, LLC, KBDJ, L.P. and all the assets of Apache Materials Transport, Inc.;

 

“Ramming Paving” refers collectively to J.D. Ramming Paving Co., LLC, RTI Hot Mix, LLC, RTI Equipment Co., LLC and Ramming Transportation Co., LLC;

 

“Parent” refers only to Summit Materials Holdings L.P., our indirect parent entity;

“Norris” refers to Norris Quarries, LLC;

 

“Kay & Kay” refers to certain assets of Kay & Kay Contracting, LLC;

 

“Sandco” refers to certain assets of Sandco Inc.;

 

“Lafarge” refers to Lafarge North America, Inc.;

“Westroc” refers to Westroc, LLC;

“Alleyton” refers collectively to Alleyton Resource Company, LLC, Alcomat, LLC and Alleyton Services Company, LLC, formerly known as Alleyton Resource Corporation, Colorado Gulf, LP and certain assets of Barten Shepard Investments, LP;

“Troy Vines” refers to Troy Vines, Incorporated;

“Buckhorn Materials” refers to Buckhorn Materials, LLC, which is the surviving entity from the acquisition of Buckhorn Materials LLC and Construction Materials Group LLC;

“Canyon Redi-Mix” refers collectively to Canyon Redi-Mix, Inc. and CRM Mixers LP;

“Mainland” refers to Mainland Sand & Gravel ULC, which is the surviving entity from the acquisition of Rock Head Holdings Ltd., B.I.M Holdings Ltd., Carlson Ventures Ltd., Mainland Sand and Gravel Ltd. and Jamieson Quarries Ltd.;

v


“Southwest Ready Mix” refers to Southwest Ready Mix, LLC;

“Blackstone” refers to certain investment funds affiliated with Blackstone Capital Partners V L.P.;

 

“Silverhawk” refers to certain investment funds affiliated with Silverhawk Summit, L.P.;

 

“Sponsors” refers to Blackstone and Silverhawk;

and

 

Lafarge”September 2014 Transactions” refers collectively to Lafarge North America, Inc.;the private offering of the outstanding notes, our acquisition of Mainland on September 4, 2014, the paydown of outstanding amounts under our revolving credit facility with a portion of the proceeds of the private offering of our outstanding notes and

“Westroc” refers to Westroc, LLC.

the payment of related fees and expenses.

 

ivvi


PROSPECTUS SUMMARY

This summary highlights selected information appearing elsewhere in this prospectus and may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the information set forth under the heading “Risk Factors” and our consolidated financial statements before participating in the exchange offer. You should read the discussions under “Certain Definitions” above for the definition of certain terms used herein.

Our Company

We are a leading, vertically-integrated, geographically-diverse heavy-side buildingone of the fastest growing construction materials company;companies in the United States. Our materials include aggregates, which we supply aggregates,across the country, primarily in Texas, Kansas, Kentucky, Missouri and Utah, and cement, which we supply in Missouri, Iowa and Illinois. Within our markets, we offer customers a single-source provider for construction materials and related downstream products such as ready mixedthrough our vertical integration. In addition to supplying aggregates to customers, we use the materials internally to produce ready-mixed concrete and asphalt paving mix, concrete products andwhich may be sold externally or used in our paving and related construction services businesses. Our vertical integration creates opportunities to increase aggregates volumes and optimize margin at each stage of production, as well as creating a variety of end-usescompetitive advantage for us through the efficiency gains, convenience and reliability provided to customers.

In the five years since our first acquisition, we have become a major participant in the U.S. construction industry, including public infrastructure projects, as well as private residential and non-residential construction.materials industry. We believe that, by volume, we are a top 1510 aggregates supplier, of aggregates, a top 20 supplier of25 cement a top 10 producer of asphalt paving mix and a major producer of ready mixedready-mixed concrete and asphalt paving mix. Our revenue grew 126% from $405.3 million in 2010 to $916.2 million in 2013 and 31% in the United States by volume. As of Decembersix months ended June 28, 2014 from the six months ended June 29, 2012, we had 1.2 billion tons and 0.4 billion tons of2013. Our proven and probable aggregates reserves serving our aggregateswere 1.9 billion tons as of June 28, 2014. In the six months ended June 28, 2014 and cement businesses, respectively, and operated over 120 sites and plants. In the year ended December 29, 2012,28, 2013, we sold 16.410.2 million and 17.5 million tons of aggregates, 0.4 million and 1.0 million tons of cement, 4.61.2 million and 1.2 million cubic yards of ready-mixed concrete and 1.6 million and 3.9 million tons of asphalt paving mix, respectively, across our more than 200 sites and 1.1 million cubic yards of ready mixed concrete. plants.

For the six months ended June 28, 2014 and the year ended December 29, 2012, we generated revenue of $962.9 million.

We were formed in September 2008. Since July 2009, the Sponsors28, 2013, approximately 54% and certain42%, respectively, of our officers, directors and employees have made $794.5 million of funding commitmentsrevenue related to our indirect parent entity, Summit Materials Holdings L.P. We have grown rapidly as a result of our disciplined acquisition strategy, utilizing approximately $457.3 million of the $463.9 million of equity commitments funded to our parent by the Sponsors and certain other investors. Today, our nine operating companies make up our three distinct geographic regions that span 20 states and 23 metropolitan statistical areas. We believe each of our operating companies has a top three market share position in its local market area and an extensive operating history, averaging over 35 years. Our highly experienced management team, led by 30-year industry veteran CEO Tom Hill, has successfully enhanced the operations of acquired companies by focusing on scale advantages, cost efficiencies and pricing discipline to improve profitability and cash flow.

Our strategy is focused on developing a heavy-side, vertically integrated company with a strong aggregates base. We strive to be a leading supplier of all four major resource-based products—aggregates, cement, asphalt paving mix and ready mixed concrete—in the U.S. heavy-side building materials industry. We believe vertical integration across these major products strengthens our market positions and helps us achieve significant cost advantages. We believe a diversified mix of products also provides us with greater stability and insulates against local market fluctuations, competitive pricing dynamics and other individual market variances.

Our revenue is derived from multiple end-use markets, including public infrastructure construction as well as residential and non-residential construction. For the year ended December 29, 2012,nonresidential construction and approximately 62% of our revenues46% and 58%, respectively, related to public infrastructure construction and the remaining 38% related to residential and non-residential construction.projects. In general, our aggregates, and asphalt paving mix and paving and related services businesses are weighted towards public construction.infrastructure projects. Our cement and ready mixedready-mixed concrete businesses serve both the public and private construction and public infrastructure markets.

Private construction includes both residential and nonresidential new construction and the repair and remodel markets. From a macroeconomic view, we see positive indicators for the construction sector, including upward trends in housing starts and construction employment. All of these factors should result in increased construction activity in the private sector. However, we do not expect this recovery to be consistent across the United States. Certain markets, such as Texas, are showing greater, more rapid signs of recovery than other markets.

Public constructioninfrastructure includes spending by federal, state and local governments for roads, highways, bridges, airports and other public infrastructure construction projects. A significant portion of our construction revenues are from public constructionPublic infrastructure projects have historically been a historically morerelatively stable portion of state and federal budgets. Our acquisitions to dateoperations are primarily focused in states with constitutionally-protected transportation funding sources, which we believe serves to limitlimits our exposure to state and local budgetary uncertainties. Private construction includes both new residentialThe existing federal transportation funding program, Moving Ahead for Progress in the 21st Century (“MAP-21”), expires September 30, 2014. There is uncertainty as to what will succeed MAP-21, and non-residential construction and repair and remodel markets,funding increases are not expected in the short term. We also continue to monitor the status of the Highway Trust Fund. On August 1, 2014, a Highway

 

Trust Fund extension bill was enacted. The bill provides approximately $10.8 billion of funding, which have been significantly impacted by recentis expected to last until May 2015. With the nation’s infrastructure aging, we expect U.S. infrastructure investment to grow over the long term and current economic conditions. We believe exposure to various geographic markets affords us greater stability through economic cycles and positions usthat we are well positioned to capitalize on upside opportunities when recoveriesany such increase in residential and non-residential construction occur.investment.

Our Regional Platforms

We currently operate across 2017 U.S. states and in Vancouver, Canada through our three regional platforms: Central, WestWest; Central; and East. Each of our operating businesses has its own management team that, in turn, reports to a regional president who is responsible for overseeing business developmentthe operating businesses, developing growth opportunities, and implementing best practices within the regional platform. Our first and largest platform is our Central region. Our most recent platform, the West region, was established in August 2010 with our acquisition of the Harper Contracting and Kilgore businesses in Utah. Company acquisitionsintegrating acquired businesses. Acquisitions are an important element of our strategy, as we seek to enhance value through increased scale and cost savings from vertical integration within local marketsmarkets.

West Region. Our West region includes operations in Texas, the Mountain states of Utah, Colorado, Idaho and Wyoming and in Vancouver, Canada where we supply aggregates, ready-mixed concrete, asphalt paving mix and paving and related services. As of June 28, 2014, the West region controlled approximately 0.5 billion tons of proven and probable aggregates reserves and $328.6 million of net property, plant and equipment and inventories (“hard assets”).

Revenue in the West region grew approximately sixfold from 2010 to 2013 and 49% in the six months ended June 28, 2014 from the six months ended June 29, 2013. Of the West region’s $426.2 million 2013 revenue, approximately 43% was derived from residential and nonresidential construction, and the remaining approximately 57% was derived from public infrastructure spending. During the six months ended June 28, 2014 and the year ended December 28, 2013, approximately 56% and 47% of our revenue and approximately 55% and 25% of our Adjusted EBITDA, excluding corporate charges, were generated in the West region.

In 2014, we continued to expand the West region, with significant growth in Texas through key acquisitions in Houston and the regional management.Permian Basin region of West Texas as well as establishment of a new platform in Vancouver, Canada with the September acquisition of Mainland. These acquisitions were aggregates and ready-mixed concrete businesses, which has led to improved margins in the region. These acquisitions shifted our customer mix; approximately 62% of revenue in the six months ended June 28, 2014 was derived from residential and nonresidential construction, and the remaining approximately 38% was derived from public infrastructure spending.

Central Region. The Our Central region platform encompasses our integrated aggregates, cement, asphalt paving mix, ready mixed concrete and other operationsextends across the Midwestern United States, most notably in Kansas, Missouri, Nebraska, Iowa and Illinois. WithinIllinois, where we supply aggregates, cement, ready-mixed concrete, asphalt paving mix and paving and related services. As of June 28, 2014, the Central region we controlcontrolled approximately 0.5 billion tons of proven and probable aggregates reserves serving ourits aggregates business and cement businesses of approximately 0.5 billion tons and 0.4 billion tons respectively,serving its cement business and total$541.8 million of hard assets, which we defineassets.

Revenue in the Central region grew 56% from 2010 to 2013 and 22% in the six months ended June 28, 2014 from the six months ended June 29, 2013. Of the Central region’s $329.6 million 2013 revenue, approximately 57% was derived from residential and nonresidential construction, and the remaining approximately 43% was derived from public infrastructure spending. The Central region has historically been our most profitable region as it has had a higher proportion of its revenue from materials and products sales than the sum of our property, plantother regions. During the six months ended June 28, 2014 and equipment, net and inventories, with a balance sheet book value of $488.0 million as of December 29, 2012. During the year ended December 29, 2012,28, 2013, approximately 33% and 36%, respectively, of our revenue and approximately 48% and 62%, respectively, of our Adjusted EBITDA, excluding corporate charges, was generated in the Central region platform generated approximately 32% of our revenue. Approximately 52% of the Central region’s revenues were derived from public infrastructure spending, and the remaining 48% of its revenues were generated by residential and non-residential construction for the year ended December 29, 2012.region.

Our cement business serves markets in Missouri, Continental Cement, operatesIowa and Illinois. Our cement plant, commissioned in 2008, is a highly efficient, technologically advanced, integrated manufacturing and distribution system

strategically located near Hannibal, Missouri, 100 miles north of St. Louis along the Mississippi River. Continental Cement utilizesWe utilize an on-site solid, hazardous and liquid waste fuel processing facility, which can reduce ourthe plant’s fuel costs at that facility by up to 50%. The Continental CementOur cement plant is covered by the Environmental Protection AgencyAgency’s (“EPA”) National Emissions Standards for Hazardous Air Pollutants (“NESHAP”) for hazardous waste combustors (also known as the Hazardous Waste Combuster MACTMaximum Achievable Control Technology Standards regulations (“HWC-MACT”)), rather than the EPA’s NESHAP for Portland Cement NESHAP regulations (“PC-MACT”)cement plants (also known as PC-MACT), due to its waste fuel processing capabilities. We believe the facility is well positioned to comply with any potential regulatory changes during the foreseeable future.

WestEast Region. The West Our East region platform encompasses our integratedserves markets in Kentucky, South Carolina, North Carolina, Tennessee and Virginia, where we supply aggregates, asphalt paving mix ready mixed concrete, construction and other operations in Texas, Utah, Colorado, Idahopaving and Wyoming. Withinrelated services. As of June 28, 2014, the East region we controlcontrolled approximately 0.5 billion tons of proven and probable aggregates reserves and $163.5 million of hard assets.

Revenue in the East region remained consistent from 2010 to 2013 and in the six months ended June 28, 2014 as compared to the six months ended June 29, 2013. Of the East region’s $160.4 million 2013 revenue, approximately 0.3 billion tons8% was derived from residential and total hard assets with a balance sheet book value of $254.9 million as of December 29, 2012.nonresidential construction, and the remaining approximately 92% was derived from public infrastructure spending. During the year ended December 29, 2012, the West region platform generated approximately 50% of our revenue. Approximately 64% of its revenues were derived from public infrastructure spending, and the remaining 36% of its revenues were generated by residential and non-residential construction for the year ended December 29, 2012.

In August 2010, we acquired Kilgore and simultaneously acquired and merged assets from Harper Contracting (collectively referred to as, the “Kilgore Companies”) in Salt Lake City, Utah to establish the cornerstone of our West region platform. We expanded Kilgore Companies with the acquisitions of Altaview Concrete in Salt Lake City, B&B in Bluffdale, Utah, EnerCrest in southwest Wyoming, and Triple C in southern Idaho. Subsequently, in December 2010, we extended the West platform to the Texas market with the acquisition of RK Hall, an aggregates and asphalt paving business primarily operating in northeast Texas as well as southern Arkansas and southern Oklahoma. We also expanded to Grand Junction, Colorado with our acquisitions of Grand Junction Pipe and Elam Construction. Capitalizing on the regional presence of RK Hall, we acquired Industrial

Asphalt and Ramming Paving in August and October 2011, respectively, which expanded our presence into the attractive Austin, Texas market. These businesses complement each other with well-positioned reserves and integrated asphalt / paving operations.

East Region. The East region platform encompasses our integrated aggregates, asphalt paving mix, construction and other operations in Kentucky, Ohio, Indiana, Tennessee and Virginia. Within the region, we control proven and probable aggregates reserves of approximately 0.4 billion tons as of December 29, 2012 and total hard assets with a balance sheet book value of $162.6 million as of December 29, 2012. During the year ended December 29, 2012, the East region platform generated28, 2013, approximately 18% of our revenue. Approximately 73%revenue and approximately 13% of our Adjusted EBITDA, excluding corporate charges, was generated in the East region’s revenues were derived from public infrastructure spending, and the remaining 27% of its revenues were generated by residential and non-residential construction for the year ended December 29, 2012.region.

The East region platform is anchored by the Hinkle Contracting business, one of our largest acquisitions to date, which we acquired in February 2010 and strengthened with bolt-ons of select aggregates and asphalt assets from Greer, an asset swap with Scotty’s Contracting & Stone LLC where we exchanged asphalt paving mix and construction assets for a total of eight owned and leased quarry sites in southern Kentucky, the buyout of our non-controlling partner in the Bourbon Limestone aggregates business and select aggregates and asphalt assets from Kay & Kay Contracting, LLC.

Our Competitive Strengths

Leading market positions. We believe each of our operating companies has a top three market share position in its local market area.achieved through their respective extensive operating history, averaging over 35 years. We believe we are among the top 15 suppliers of aggregates, top 20 suppliers of cement, a top 10 supplier of asphalt paving mix,aggregates, a top 25 producer of cement and a major ready mixedproducer of ready-mixed concrete supplierand asphalt paving mix in the United States by volume. We focus on acquiring companies that have leading local market positions in aggregates, which we seek to enhance by building scale with other local aggregates and downstream businesses.products and services. The heavy-side building productsconstruction materials industry is primarily local in nature due to transportation costs from the high weight-to-value ratio of the products. Given this dynamic, we believe achieving local market scale provides a competitive advantage that drives growth and stability for our business. We believe that our ability to prudently acquire and rapidly integrate multiple businesses enableshas enabled, and will continue to enable, us to become market leaders in attractive regions.leaders.

Vertically-integrated business model. We generate revenue across a spectrum of related products and services. We internally supply the majority of the aggregates used in the ready-mixed concrete and asphalt paving mixes and ready mixed concrete that we produce and we internally supply the majority of the asphalt paving mix that our paving crews lay. Approximately 27% of our aggregates production is further processed and sold as a downstream product, such as ready-mixed concrete or asphalt paving mix, or used in our paving and related services business. Approximately 83% of the construction services thatasphalt paving mix we perform forproduce is installed by our customers.own paving crews. Our vertically-integrated business model enables us to operate as a single source provider of materials and construction capabilities,paving and related services, creating cost, convenience and reliability advantages for our customers, while at the same time creating significant cross-marketing opportunities among our interrelated businesses. We believe this significantly enhancescreates opportunities to increase aggregates volumes and optimize margin at each stage of production, as well as creating a competitive advantage for us through the value of our companyefficiency gains, convenience and improves the quality and consistency of services for ourreliability provided to customers.

Significant product and geographic scale. Our nineten operating companies operate across 2017 U.S. states and Vancouver, Canada in the central, western and eastern United States.27 metropolitan statistical areas. Between 2010 and 2012,2013, we have growngrew our revenue by 124%126%, primarily through acquisitions. This growth was the result of 17% revenue growth from 2011 to 2012, compounding 91% revenue growth from 2010 to 2011. The significant revenue growth has brought substantial additional scale to our operations in terms of purchasing and leveraging largely fixed overhead expenses.purchasing. A combination of increased scale and vertical integration present opportunities

to improve profitability through cost savings. We have achieved this scale without any significant customer or geographic concentration and continue to demonstrate operating earnings stability as a function of our diversification across products and regions.concentration.

Attractive industry dynamics and structure. We operate in anbelieve the construction materials industry that we believe has attractive fundamentals, characterized by high barriers to entry and a stable competitive environment in the majority of markets. Barriers to entry are created by scarcity of raw material resources, limited efficient distribution range, asset intensity of equipment, land required for quarry operations and a time-consuming and complex regulatory and permitting process. In addition, profits are relatively stable throughout various economic cycles, as compared to other businesses in the cycle as a result ofconstruction industry, aided by favorable pricing dynamics with historically stable public infrastructure spending and a largely variable cost structure.spending. According to the November 2012April 2014 U.S. Geological Survey, (“USGS”), U.S. aggregates pricing hashad increased in 5965 of the lastprevious 70 years, with growth accelerating since 2002 as continuing resource scarcity in the industry has led companies to focus increasingly on improved pricing strategies. Pricing growth remained strong in 2012,2013 despite volume declines in certain key end markets.

High quality assets and coverage. As a function of our disciplined acquisition strategy and high quality asset base, hard asset values constitute a significant portion of our enterprise value and currently exceed net debt (which we define as total indebtedness less cash) as of December 29, 2012.value. As of December 29, 2012,June 28, 2014, the balance sheet book value of our hard assets was $905.5$1,033.9 million (excluding $1.1$5.8 million at corporate). The majority of our hard asset value iswas derived from our property, plant and equipment together with the value of our approximately 1.2 billion tons and 0.41.9 billion tons of proven and probable aggregates reserves serving our aggregates and cement businesses, respectively, asbusinesses. We believe our sizeable quantity of December 29, 2012.reserves, paired with vertically-integrated, downstream products and services, enables us to better meet the needs of our end-use customers. Assuming production rates in future years are equal to those for the year ended December 29, 2012,in 2013, we estimate that the useful life of the proven and probable reserves for our construction aggregates business and our cement business isbusinesses are over 17055 years and over 200300 years, respectively.

We estimate proven and probable reserves based on the results of drilling. In determining the amount of reserves, our policy is to deduct reserves not available due to property boundaries, set-backs and plant configurations, as deemed appropriate when estimating reserves. Proven reserves are computed from dimensions revealed in outcrops, trenches, workings or drill holes; grades and/or quality are computed from the results of detailed sampling at the sites for inspection, sampling and measurement, which are spaced so closely and the geologic character of which is so well-defined that size, shape, depth and mineral content of reserves can be clearly established. Probable reserves are those for which the quantity and grade and/or quality are computed from information similar to that used for proven reserves except that the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. TheAs a result, the degree of assurance, although lower than that for provenprovided by measurements of our probable reserves is high enoughmore limited. However, because the difference in the degree of assurance between our proven and probable reserves cannot be readily defined, we present them on a combined basis in this prospectus. From time to assume continuity between points of observation.time, in connection with certain acquisitions, we engage a third party engineering firm to perform a reserve audit, but we do not perform annual reserve audits.

Our asset base includes the Continental Cement plant, a new dry process cement plant that was commissioned in 2008. We believe this plant contributes significantly to our asset value given its high replacement cost, large capacity, technologically advanced manufacturing capabilities strategic position on the Mississippi River and favorable environmental performance versus older facilities within the industry that will require upgrades to comply with stringent EPA standards coming into effect in the near-term. We believenear term. In addition, our sizeable quantityplant is strategically located on the Mississippi River. The U.S. cement industry is regional in nature with customers typically purchasing material from local sources due to transportation costs. According to the PCA 2013 North American Cement Industry Annual Yearbook, nearly 97% of reserves, paired with vertically-integrated, downstream products and services, enables uscement sold in the United States was shipped to better meet the needscustomers by truck in 2011. However, as a result of our end-use customers.plant’s strategic location on the Mississippi River, approximately 15% of our cement sold in 2013 was shipped by barge, which is more cost-effective than truck transport.

Strong operating market performance in challenging economic environment. We have demonstrated resilient financial performance despite challenging conditions in the broader economy over the last fewseveral years. This performanceBeginning in 2008, the U.S. construction industry experienced a significant decline in demand resulting in excess capacity at construction materials and related products facilities. Aggregate volumes decreased from 2.6 billion tons in 2008 to 2.1 billion tons in 2012, a 19% decline. However, during this same time period the average price per ton of aggregates in the United States increased from $8.57 in 2008 to $8.91 in 2012, a 4% increase. Consistent with these market trends, our aggregate and cement pricing increased 2% and 5%, respectively, from 2010 to June 28, 2014.

One significant factor that allows for pricing growth in periods of volume declines is largely due to our highly variable cost structure and exposure to more stable geographic markets and publicly-funded end-use segments. Many of our products, particularlythat aggregates and asphalt paving mix, have significant exposure to public road construction, which has demonstrated continued growth over the past 30 years, even during times of broader economic softness. In fact, through the prior three U.S. recessions (July 1990 through March 1991, March 2001 through November 2001 and December 2007 through June 2009), highway spending in real dollars grew 1.8% annually on average in years with a recession as compared to 0.9% annually on average in years without a recession, as reported in the Portland Cement Association (“PCA”) 2012 Annual Yearbook. The majority of public road construction spending is funded at the state level through the

states’ respective departments of transportation. The five key states in which we operate (Texas, Kansas, Kentucky, Missouri and Utah) have funds whosewith constitutionally-protected revenue sources are constitutionally protected and may only be useddedicated for transportation purposes.projects. These dedicated, earmarked funding sources limit the impactnegative effect current state deficits may have on public spending. As a result, our business exhibits significantly less volatilitymore stability in profitability than witnessed in most other building product subsectors. We believe these business characteristics have helped mitigate the impact of the depressedchallenging economic environment on our profitability.

Experienced and proven leadership implementing acquisition strategy. Our senior management team has a proven track record of creating value. This team is led by Tom Hill, our President and Chief Executive Officer, a 30-year industry veteran and former CEO of Oldcastle, Inc., CRH plc’s U.S. operations.veteran. In addition to Mr. Hill, our management team, consists of a number of other former Oldcastle managers, including corporate and regional operations managers, corporate development, and finance executives and other heavy side industry operators.operators, has extensive experience in the industry. Our management team has a track record of executing and successfully integrating acquisitions in the sector. Mr. Hill demonstratedand his ability to execute onteam successfully executed a similar consolidation strategy while at Oldcastle Materials,another company in the industry, where heMr. Hill led the integration of numerous acquisitions, taking the business from less than $0.3 billion to $7.4 billion in sales from 1992 to 2008. In executing Oldcastle’s consolidation strategy, Mr. Hill and his team completed2008 through 173 acquisitions worth approximately $6.3 billion in the aggregate and $36.0 million on average. From an operational standpoint, Mr. Hill was successful at managing Oldcastle’s rapid growth

Since July 2009, we have acquired 33 companies, successfully integrating the businesses into three regions through the implementation of operational improvements, creation of a world-class safety program and development of a strong leadership team. These acquisitions have helped us achieve significant revenue growth, from $29.3 million in 2009 to $916.2 million in 2013.

Strong sponsor equity commitment. Since July 2009, the Sponsors, together with certainour formation in September 2008, our parent company has received equity commitments of our officers, directors and employees, have made $794.5$798.1 million, of funding commitmentswhich $467.5 million has been deployed to execute our indirect parent company to strategically pursue consolidation withindisciplined acquisition strategy. Through the heavy-side building materials industry in the United States. Since then,deployed equity and debt financings, we have made 24completed 33 acquisitions including bolt-ons, and our Sponsors, together with certain other investors in our parent, have invested approximately $463.9 million of equity capital, excluding rollover equity invested by sellers in certain of our acquisitions, with approximately $337.2$330.6 million of commitments to our parent remaining outstanding.

Our Business Strategy

Drive profitable growth through strategic acquisitions. We were established Our goal is to acquire and grow heavy-side building materials companies with the goal of becomingbecome a top-five U.S. construction materials company through the successful execution of our acquisition strategy and implementation of best practices to drive organic growth. Based on aggregates sales, in volumes, we believe that we are currently a top-ten player, which has been achieved within five years. Since inception, we have demonstrated significant progress toward achieving this goal.years of our first acquisition. We continue to believe that the relative fragmentation of theour industry subsectors in which we operate, coupled with recent economic softness, createcreates an environment in which we can continue to acquire companies at attractive valuations and increase scale and diversity over time through both platform and bolt-on acquisitions.

We estimate that approximately 65% of the U.S. aggregates market is privately owned. From this group, our senior management team maintains contact with over 300 private companies. These long-standing relationships, cultivated over decades, have been the primary source for our acquisitions thus far and, we believe, that attractive purchase prices and high quality of assets with selective exposurewill be a key driver to well-funded public spending provide additional downside protection. Acquisitions can also provide synergies that provide additional revenue opportunities by filling in market gaps and expanding to adjacent geographies. We believe that achieving further vertical integration and increased scale will lead to improved cost positions, benefitting our profitability and cash flow generation. Our acquisition strategy is substantially similar to the one successfully employed by CEO Tom Hill and his team, including 25 current Summit employees, at Oldcastle Materials, CRH plc’s U.S. operations. Over a 16-year period, Mr. Hill helped execute over 173 acquisitions and approximately $6.3 billion of invested capital to make Oldcastle the largest U.S. integrated heavy-side business. Over that period, Oldcastle Materials reported that it grew sales from less than $0.3 billion in 1992 to $7.4 billion in 2008, representing a compound annual growth rate of over 25%.future growth.

Enhance margins and free cash flow generation through implementation of operational improvements.Our management team’s demonstrated ability at Oldcastle Materialsteam includes individuals with decades of experience in improving operating marginsour industry and proven success in integrating acquired businesses and organically growing operations. This experience represents a largesignificant source of value.value to us. Based on our management team’s prior acquisition experience in the heavy-side business,our industry, we believe margin improvement is achievable within 1218 to 1824 months of acquisition. These gainsmargin improvements are accomplished through proven profit optimization plans, including implementing a systematic pricing strategy and

thorough operations review, leveraging information technology and financial systems to control costs, managing working capital, and achieving scale-driven purchasing synergies along withand fixed overhead control and reduction. Our regional presidents, supported by our central operations, risk management and finance and information technology teams, drive the implementation of detailed and thorough profit optimization plans atfor each acquisition post close.close, which typically includes, among other things, implementation of a systematic pricing strategy and an equipment utilization analyses that assess repair and maintenance spending, the health of each piece of equipment and an utilization review to ensure we are maximizing productivity and selling any pieces of equipment that are not needed in the business.

Leverage vertically-integrated and strategically located operations for growth. As a vertically-integrated supplier We believe that our vertical integration of heavy-side buildingconstruction materials, in attractive markets, we believe we haveproducts and services is a significant competitive advantage asthat we seekwill leverage to grow our share in our existing markets and enter into new markets. The majorityA significant portion of raw materials used to produce our products and provide services to our servicescustomers are internally supplied. We believe our vertically-integrated business modelsupplied, which enables us to operate as a single source provider of materials, products and construction capabilities,paving and related services, creating cost, convenience and reliability advantages for our customers, while at the same time creating significant cross-marketing opportunities among our interrelated businesses.

Leverage our position as a preferred buyer of privately held companies in our industry. Our business model fosters entrepreneurship in local markets while reaping the benefits of best practices and economies of scale brought by the larger group. Business owners have found our modelWe believe the value proposition we offer to be attractive and we believe potential sellers preferhas allowed us as an acquirer. We seek to largely avoid competitive auctions and have instead individually negotiated each of our acquisitions to date. The ownersnegotiate terms directly with sellers at attractive valuations. A typical acquisition generally involves keeping the local management team of the majority ofacquired business, maintaining key operational decisions at the companies we have acquired have chosenlocal level, providing insightful leadership directed by our President and Chief Executive Officer, a 30-year industry veteran, and instilling an uncompromising commitment to stay on with Summit Materials following the sale and have in many cases chosen to roll equity investments into our parent company as well.employee safety.

Capitalize on expected recovery in U.S. economy and construction markets. In July 2012, Moving Ahead for Progress The residential and nonresidential markets are starting to show positive growth signs in varying degrees across our markets indicating at least modest growth in the 21st Century Act (“MAP-21”) was enactednear to medium term. Of our markets, Texas is currently experiencing the most active growth. According to the PCA’s September 2014 Regional Construction InVue, total construction spending in Texas has increased 22.9% from June 2013 to June 2014 and took effectresidential and nonresidential spending increased 1.2% and 25.3%, respectively. We are capitalizing on the growth in October 2012. MAP-21 is a 27-month, approximately $105 billion transportation funding program that provides for $40.4 billionthe Texas market by significantly increasing our investment there through acquisitions in Houston and $41.0 billion for highway infrastructure investmentsthe Permian Basin region of west Texas in fiscal years 2013 and 2014, respectively. The spending levels are consistent with the preceding federal transportation funding program. However, given the nation’s aging infrastructure and considering longstanding historical spending trends, we expect U.S. infrastructure investment growth to resume.2014. We believe we are well-positioned to capitalize on any such increase in investment. In addition,that we have sufficient exposure to the residential and non-residentialnonresidential end-markets to participate inbenefit from a potential recovery in theseall of our markets. Given the challenging current environment, we expect to leverage this exposure to realize significant upside in the medium term.

Our Industry

The U.S. heavy-side buildingconstruction materials industry is comprisedcomposed of four primary sectors: (i) aggregates, (ii) cement, (iii)aggregates; cement; ready-mixed concrete; and asphalt paving mix and (iv) ready mixed concrete, eachmix. Each of whichthese materials is widely used in most forms of construction activity. Competition is constrained in part by the distance materials can be transported efficiently, resulting in predominantly local or regional operations. Participants in these sectors typically range from small, privately-held companies focused on a single material, product or market to multinational corporations that offer a wide array of construction materials, products and paving and related services. Competition is constrainedWe estimate that approximately 65% of the aggregates in partthe United States are held by the distance materials may be efficiently transported, resulting in largely local or regional operations.private companies.

Transportation infrastructure projects, driven by both statefederal and federalstate funding programs, represent a significant share of the U.S. heavy-side buildingconstruction materials market. The current federal funding program, MAP-21, was enacted in July 2012 and took effect in October 2012. MAP-21 is a 27-month, approximately $105 billion transportation funding program that provides for $40.4 billion and $41.0 billion for highway infrastructure investments in fiscal years 2013 and 2014, respectively. In addition to federal funding, highway construction and maintenance funding is also available through state, county and local agencies. Our five largest states by revenue (Texas, Kansas, Kentucky, Missouri and Utah, which represented approximately 27%25%, 16%20%, 14%17%, 11%12% and 11%, respectively, of our total revenue for the year ended December 29, 2012) eachin 2013) have funds whosewith constitutionally-protected revenue sources are constitutionally protected and may only be spent ondedicated for transportation projects.

Aggregates. Aggregates are key material components used in the production of cement, ready-mixed concrete and asphalt paving mixes and concrete for the residential, nonresidential and public infrastructure highway, commercial and residential construction markets and are also widely used for various applications and products, such as road and building foundations, railroad ballast, erosion control, filtration, roofing granules and in solutions for snow and ice control. Generally extracted from the earth using surface or underground mining methods, aggregates are produced from natural deposits of various materials such as limestone, sand and gravel, granite and trap rock.

Aggregates represent an attractive market with high EBITDAprofit margins, high barriers to entry and increasing resource scarcity, andwhich, as compared to construction services, leads to relatively stable profitability through the economic cycle.cycles. Production is moderately capital intensive and access to well-placed reserves is important given high transport costs and environmental permitting restrictions. Markets are typically local due to high transport costs and are generally fragmented, with numerous participants operating in localized markets and themarkets. The top six players controllingcontrol approximately 30% of the national market in 2011.2013. According to the February 2013March 2014 U.S. Geological Survey, the U.S. market for these products was estimated at approximately 2.2 billion tons in 2012,2013, at a total market value of $17.75$18.6 billion. Relative to other heavy-side construction materials, such as cement, and ready mixed concrete, aggregates consumption is more heavily weighted towards public infrastructure construction and maintenance and repair. TheHowever, the mix of end-uses variesend uses can vary widely by geography, however,geographic location, based on the nature of construction activity in each market. Typically, three to six competitors comprise the majority market share of each local market because of the constraints around the availability of natural resources and transportation. Vertically-integrated players with integrated asphalt paving mix, ready mixed concrete, and construction businesses operating off a strong aggregates platform, can have an advantage versus smaller, non-integrated producers by leveraging their aggregates for downstream operations.operations, such as ready-mixed concrete, asphalt paving mix and paving and related services.

Cement. Portland cement, an industry term for the common cement in general use around the world, is the basic ingredient of concrete and is made from a combination of limestone, shale, clay, silica and iron ore. Together with water, cement creates the paste that binds the aggregates together when making concrete. Cement is an input for ready mixedready-mixed concrete and concrete products and commands significantly higher prices relative to aggregates, reflecting the more intensive capital investment required. Cement production in the United States is distributed among 98 production facilities located across 34 states and is a capital-intensive business with variable costs dominated by raw materials and energy required to fuel the kiln. Building new plants is challenging given the extensive permitting that is requiredrequirements and significant costs.capital investment requirements. We believeestimate new plant construction costs in the United States are estimated atto be approximately $250-300 per ton.ton, not including costs for property or securing raw materials and the required distribution network. Assuming construction costs of $275 per ton, a 1.25 million ton facility, such as the one Continental Cement operates,comparable to our cement plant’s potential annual capacity, would cost approximately $343.8 million to construct.

The domestic

Ready-mixed concrete. Ready-mixed concrete is one of the most versatile and widely used materials in construction today. It is created through the combination of coarse and fine aggregates, which make up approximately 60 to 75% of the mix by volume, with water, various chemical admixtures and cement industrymaking up the remainder. Given the high weight-to-value ratio, delivery of ready-mixed concrete is regionaltypically limited to a one-hour haul from a production plant and is further limited by a 90 minute window in naturewhich newly-mixed concrete must be poured to maintain quality and performance. As a result of the transportation constraints, the ready-mixed concrete market is highly localized, with customers purchasing material from local sources. According to the PCA 2012 North American Cement Industry Annual Yearbook, nearly 97% of cement soldan estimated 5,500 ready-mixed concrete plants in the United States, was shippedaccording to customers by truckthe National Ready Mixed Concrete Association (the “NRMCA”). We participate selectively in 2010.ready-mixed concrete markets where we provide our own aggregates for production, which we believe provides us a competitive advantage.

Asphalt paving mix. Asphalt paving mix is the most common roadway material used today, covering 90%93% of the more than 2.52.6 million miles of paved roadways in the U.S.,United States, according to the National Geographic News.Asphalt Pavement Association (“NAPA”). Major inputs include aggregateaggregates and liquid asphalt (the refined residue from the distillation process of crude oils by refineries). Given the significant aggregates component in asphalt paving mix (up to 95% by weight), local aggregates producers often participate in the asphalt paving mix business to secure captive demand for aggregates. Asphalt and paving is also highly fragmented domestically,in the United States, with end markets skewed towards public new road construction and maintenance and repair.repair of roads. Barriers to entry include permit hurdles,requirements, access to aggregates (asphalt(where possible, asphalt plants are typically co-locatedlocated at quarries wherever possible)quarries) and access to liquid asphalt.

Ready mixed concrete. Ready mixed concrete is one of the most versatile and widely used materials in construction today. Ready mixed concrete is created through the combination of coarse and fine aggregates, which make up approximately 60 to 75% of the mix by volume, with water, various chemical admixtures and

 

cement making up the remainder. Given the high weight-to-value ratio, delivery of ready mixed concrete is typically limited to a one-hour haul from a production plant location and is further limited by a 90 minute window in which newly mixed concrete must be poured to maintain quality and performance. As a result of the transportation constraints, the ready mixed concrete market is highly localized, with an estimated 5,500 ready mixed concrete plants in the United States, according to the National Ready Mixed Concrete Association (the “NRMCA”). While the barriers to entry for ready mixed concrete are lower, we participate selectively in ready mixed concrete markets in which we can control underlying raw materials.

Acquisition History

The following table lists acquisitions we have completed since August 2009:

Company

Date of Acquisition

Region

Hamm (predecessor)

August 25, 2009Central

Hinkle Contracting

February 1, 2010East

Cornejo

April 16, 2010Central

Greer

April 20, 2010East

Continental Cement

May 27, 2010Central

Harshman

June 15, 2010Central

Scotty’s

July 23, 2010East

Harper Contracting

August 2, 2010West

Kilgore

August 2, 2010West

Con-Agg

September 15, 2010Central

Altaview Concrete

September 15, 2010West

EnerCrest

September 28, 2010West

RK Hall

November 30, 2010West

SCS

November 30, 2010West

Triple C

January 14, 2011West

Elam Construction

March 31, 2011West

Bourbon

May 27, 2011East

Fischer

May 27, 2011Central

B&B

June 8, 2011West

Grand Junction Pipe

June 10, 2011West

Industrial Asphalt

August 2, 2011West

Ramming Paving

October 28, 2011West

Norris

February 29, 2012Central

Kay & Kay

October 5, 2012East

Sandco

November 30, 2012West

Lafarge

April 1, 2013Central

Westroc

April 1, 2013West

Corporate Structure

The following chart summarizes our organizational structure, equity ownership and our principal indebtedness as of the date of this prospectus. This chart is provided for illustrative purposes only and does not show all of our legal entities or all obligations of such entities.

 

LOGOLOGO

 

(1)Represents equity contributed by investment funds affiliated with the Sponsors and the contribution of equity by certain members of management and other investors (excluding rollover of equity investments made by sellers of acquired companies).
(2)Guarantor under the senior secured credit facilities, but not the seniorexisting notes or the notes.
(3)See “Description of Other Indebtedness—Senior Secured Credit Facilities.”

(4)Summit Materials, LLC and Summit Materials Finance Corp. are the issuers of the existing notes and the notes and Summit Materials, LLC is the borrower under our senior secured credit facilities. Summit Materials Finance Corp. was formed in December 2011 solely to act as co-issuer of the existing notes and other indebtedness, has only nominalno assets and does not conduct any operations.
(4)See “Description of Other Indebtedness—Senior Secured Credit Facilities.”
(5)Guarantor under the existing notes and the notes and guarantor under the senior secured credit facilities.
(6)

Pursuant to the terms of the Amended and Restated Limited Liability Company Agreement of Continental

Cement, in the absence of a dissolution or liquidation of Continental Cement, Summit Materials Holdings II, LLC (“Summit II”), which holds Class A Units of Continental Cement, and the holders of the Class B Units of Continental Cement are each entitled to receive a percentage of the distributions on apari passu basis. The percentage received by the holders of the Class B Units relative to Summit II adjusts based on the time period that the Class A Units have been outstanding and whether Summit II has received a certain return on the capital contributions it made to purchase the Class A Units it holds. Summit II’s sharing percentage is generally between 70% toand 80%. The holders of the Class B Units collectively share in the remaining distributions not allocated to Summit II. In connection with a dissolution or liquidation of Continental Cement, distributions are made either in the manner set forth above or, if it provides a greater return to Summit II with respect to the Class A Units, Summit II will receive a priority distribution ahead of the Class B Units up to an amount equal to the capital contributions made by Summit II in respect of the Class A Units, plus interest on such capital contributions of 11%, accruing daily and compounding annually from the date of issuance of the Class A Units. Any excess amount to be distributed after the priority payment to Summit II is then made to the holders of the Class B Units. Subject to certain exceptions, Summit II has the right to require Continental Cement to purchase all, but not less than all, of the Class B Units at any time after May 27, 2016 either in anticipation of an initial public offering of Parent, an indirect parent entity of Continental Cement, or if an initial public offering of Parent has already occurred. In addition, subject to certain conditions, holders of the Class B Units have the right to require Continental Cement to purchase all, but not less than all, of the Class B Units at a strike price that approximates fair value, including in the event of a change of control of Parent occurring after the earlier of the repayment of certain second lien credit agreement obligations and Augustprior to May 27, 20132016, or at any time following May 27, 2016.thereafter. Holders of Class B Units also have certain rights that allow them to rollover their interests in connection with an initial public offering.
(7)The notes are not and will not be guaranteed by any of our existing or future non-wholly owned subsidiaries other than Continental Cement or by any future foreign subsidiaries.
(8)Mainland Sand & Gravel ULC is a British Columbia unlimited liability company that is the surviving amalgamated entity of the Mainland acquisition. Mainland Sand & Gravel ULC is not a guarantor under the senior secured credit facilities, the existing notes or the exchange notes.

Recent Developments

Southwest Ready Mix Acquisition

On September 19, 2014, we acquired all of the issued and outstanding membership interests in and certain real property used in the operations of Southwest Ready Mix, LLC. Southwest Ready Mix has two ready-mixed concrete plants and serves the downtown and southwest Houston, Texas markets. Southwest Ready Mix, combined with the operations of Alleyton Resource Company, which was acquired in January 2014, is a leading integrated aggregates and ready-mixed concrete producer in the Houston market. The acquisition was funded with borrowings under the Company’s revolving credit facility.

Mainland Acquisition

On September 4, 2014, we acquired all of the issued and outstanding shares and certain shareholder notes of Rock Head Holdings Ltd. and B.I.M. Holdings Ltd., which collectively indirectly own all the shares of Mainland Sand and Gravel Ltd. (the “Mainland Acquisition”). Mainland Sand and Gravel Ltd., based in Surrey, British Columbia, is a supplier of construction aggregates to the Vancouver metropolitan area. Effective September 12, 2014, the acquired Canadian entities were amalgamated with 1010326 B.C. ULC and the amalgamated entity is Mainland Sand & Gravel ULC as a direct subsidiary of Summit Materials International, LLC.

 

Canyon Redi-Mix Assets Acquisition

On July 29, 2014, we acquired all of the assets of Canyon Redi-Mix, Inc., and CRM Mixers LP. The acquired assets include two ready-mixed plants, which serve the Permian Basin region of West Texas. The acquisition was funded with borrowings under the Company’s revolving credit facility. Canyon Redi-Mix, combined with the operations of Troy Vines, which was acquired in April 2014, is the top integrated ready-mixed concrete producer in the Midland-Odessa market.

Corporate Information

Summit Materials, LLC was formed under the laws of the State of Delaware in September 2008. Summit Materials Finance Corp., the co-issuer of the outstanding notes, was incorporated under the laws of the State of Delaware in December 2011. Our principal executive office is located at 2900 K1550 Wynkoop Street, NW, Suite 100, Harbourside North Tower Building, Washington, D.C. 20007.3rd Floor, Denver, Colorado 80202. Our telephone number is (202) 339-9509.(303) 893-0012.

Our Sponsors

Blackstone. Blackstone is one of the world’s leading investment and advisory firms. Blackstone’s alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Through its different investment businesses, as of December 31, 2012,June 30, 2014, Blackstone had total assets under management of approximately $210.0$278.9 billion.

Silverhawk. Silverhawk Capital Partners, LLC is a private equity firm with offices in Greenwich, Connecticut and Charlotte, North Carolina. The founding partners have invested as a team and operated businesses since 1989. Founded in 2005, Silverhawk’s investments are focused in the energy, manufacturing and business service sectors. Currently,As of June 30, 2014, Silverhawk hashad approximately $200.0 million under management.

Recent Developments

Amendment No. 1 to Credit Agreement

On February 5, 2013, we entered into Amendment No. 1 (“Amendment No. 1”) to our existing Credit Agreement, dated as of January 30, 2012 (the “Credit Agreement”), among Summit Materials, the guarantors party thereto, the several banks and other financial institutions or entities from time to time parties thereto and Bank of America, N.A., as administrative agent, collateral agent and swing line lender. On February 11, 2013, we entered into the Tranche A Revolving Credit Commitment Conversion Agreement (the “Conversion Agreement,” and together with Amendment No. 1, the “Amendments), among Summit Materials, the guarantors party thereto, the several banks and other financial institutions or entities party thereto and Bank of America, N.A., as administrative agent, collateral agent and swing line lender. We refer to the Credit Agreement, as amended by the Amendments, as our “senior secured credit facilities.”

Among other things, the Amendments: (i) reduced the applicable margins used to calculate interest rates for term loans under our senior secured credit facilities by 1.0%; (ii) reduced the applicable margins used to calculate interest rates for $131.0 million of tranche A revolving credit loans available under the senior secured credit facilities by 1.0% (with no reductions to the applicable margins for the remaining $19.0 million of available revolving credit loans); (iii) increased term loans borrowed under our term loan facility by $25.0 million with the same terms as the existing term loans (bringing total term loan borrowings to approximately $422.0 million); (iv) included a requirement that we pay a fee equal to 1.0% of the principal amount of term loans repaid in connection with certain repricing or refinancing transactions within six months after February 5, 2013; and (v) created additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated First Lien Net Leverage Ratio and reducing the applicable minimum Interest Coverage Ratio (each as defined in the Credit Agreement governing our senior secured credit facilities).

Lafarge Wichita Acquisition

On April 1, 2013, the Company completed its acquisition of Lafarge’s aggregates, concrete and asphalt/paving assets located in Wichita, Kansas (the “Wichita Assets”) for aggregate purchase consideration at closing

 

of approximately $35 million. The Wichita Assets include two aggregates operations, three ready mix concrete plants and one asphalt plant located in metro Wichita and the broader southeast Kansas area. The Wichita Assets acquisition was financed using borrowings under the Company’s existing senior secured credit facilities.

Westroc Acquisition

On April 1, 2013, the Company completed its acquisition of Westroc, an aggregates and ready mix concrete company located in Utah for aggregate purchase consideration at closing of approximately $25 million, plus $10 million in deferred consideration payable over five years. Westroc, based in Pleasant Grove, Utah, operates two aggregates sites and seven ready mix concrete plants along Utah’s Wasatch Front. The Westroc acquisition was financed using borrowings under the Company’s existing senior secured credit facilities.

The Exchange Offer

The following summary is provided solely for your convenience and is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus for a more detailed description of the notes.

 

General

On January 23, 2012,September 8, 2014, the Issuers issued an aggregate of $250.0$115.0 million principal amount of 10.5%10 12% Senior Notes due 2020 in a private offering. In connection with the private offering of the outstanding notes, the Issuers and the guarantors entered into a registration rights agreement with the initial purchasers in which they agreed, among other things, to deliver this prospectus to you and to complete the exchange offer within 540270 days after the date of issuance and sale of the outstanding notes. You are entitled to exchange in the exchange offer your outstanding notes for the exchange notes which are identical in all material respects to the outstanding notes except:

 

the exchange notes have been registered under the Securities Act;

 

the exchange notes are not entitled to any registration rights which are applicable to the outstanding notes under the registration rights agreement; and

 

the liquidated damagesadditional interest provisions of the registration rights agreement are no longer applicable.

 

The Exchange Offer

The Issuers are offering to exchange $250.0up to $115.0 million aggregate principal amount of 10.5%10 12% Senior Notes due 2020, which have been registered under the Securities Act, for any and alla like amount of their outstanding 10.5% Senior Notes due 2020.notes.

 

 You may only exchange outstanding notes in denominations of $2,000 and integral multiples of $1,000, in excess thereof.

 

Resale

Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties, the Issuers believe that the exchange notes issued pursuant to the exchange offer in exchange for outstanding notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that:

 

you are acquiring the exchange notes in the ordinary course of your business; and

 

you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes.

 

 

If you are a broker dealerbroker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a

result of market making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the exchange notes. See “Plan of Distribution.”

 

 Any holder of outstanding notes who:

 

is our affiliate;

 

does not acquire exchange notes in the ordinary course of its business; or

 

  

tenders its outstanding notes in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange notes cannot rely on the position of the staff of the SEC enunciated inMorgan Stanley & Co. IncorporatedInc. (available June 5, 1991) andExxonCapital Holdings CorporationCorp. (available May 13, 1988), as interpreted in the SEC’s letter toShearman & Sterling, dated available (available July 2, 1993,1993), or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes.

 

Expiration Date

The exchange offer will expire at 5:00 p.m., New York City time, on                     , 2013,2014, which is the 21st business day after the date of this prospectus, unless extended by the Issuers. The Issuers do not currently intend to extend the expiration date.

 

Withdrawal

You may withdraw the tender of your outstanding notes at any time prior to the expiration of the exchange offer. The Issuers will return to you any of your outstanding notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the exchange offer.

 

Interest on the Exchange Notes and the Outstanding Notes

The exchange notes will bear interest at the rate per annum set forth on the cover page of this prospectus from the most recent date to which interest has been paid on the outstanding notes. The interest will be payable semi-annually on January 31 and July 31. No interest will be paid on outstanding notes following their acceptance for exchange.

 

Conditions to the Exchange Offer

The exchange offer is subject to customary conditions, which the Issuers may waive. See “The Exchange Offer—Conditions to the Exchange Offer.”

 

Procedures for Tendering Outstanding Notes

If you wish to participate in the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of such letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must then mail or otherwise deliver the letter of transmittal, or a facsimile of such letter

of transmittal, together with the outstanding notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal.

 

 If you hold outstanding notes through The Depository Trust Company (“DTC”) and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things:

 

you are not our “affiliate” within the meaning of Rule 405 under the Securities Act;

 

you do not have an arrangement or understanding with any person or entity to participate in the distribution of the exchange notes;

 

you are acquiring the exchange notes in the ordinary course of your business; and

 

if you are a broker dealerbroker-dealer that will receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market making activities, that you will deliver a prospectus, as required by law, in connection with any resale of such exchange notes.

 

Special Procedures for Beneficial Owners

If you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those outstanding notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender those outstanding notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date.

 

Guaranteed Delivery Procedures

If you wish to tender your outstanding notes and your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents, or you cannot comply with the procedures under DTC’s Automated Tender Offer Program for transfer of book-entry interests, prior to the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer—Guaranteed Delivery Procedures.”

 

Effect on Holders of Outstanding Notes

As a result of the making of, and upon acceptance for exchange of, all validly tendered outstanding notes pursuant to the terms of the exchange offer, the Issuers and the guarantors will have fulfilled a covenant under the registration rights agreement. Accordingly, there will be no increase in the interest rate on the outstanding notes under

the circumstances described in the registration rights agreement. If you do not tender your outstanding notes in the exchange offer, you will continue to be entitled to all the rights and limitations applicable to the outstanding notes as set forth in the indenture; however, as a result of the making of, and upon acceptance for exchange of, all validly tendered outstanding notes pursuant to the terms of the exchange offer, the Issuers will not have any further obligation to you to provide for the exchange and registration of the outstanding notes under the registration rights agreement. To the extent that the outstanding notes are tendered and accepted in the exchange offer, the trading market for the remaining outstanding notes that are not so tendered and exchanged could be adversely affected.

 

Consequences of Failure to Exchange

All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, the Issuers do not currently anticipate that they will register the outstanding notes under the Securities Act.

 

Certain U.S. Federal Income Tax Considerations

The exchange of outstanding notes for exchange notes in the exchange offer will not beconstitute a taxable event to holders for United StatesU.S. federal income tax purposes. See “Certain U.S. Federal Income Tax Considerations.”

Fungibility

The exchange notes will be treated as fungible with the existing notes for United States federal income tax purposes. Any exchange notes or any notes that otherwise become freely tradable are expected to trade under the same CUSIP with the existing notes that were part of a registered exchange offer consummated in July 2013.

 

Use of Proceeds

The Issuers will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer. See “Use of Proceeds.”

 

Exchange Agent

Wilmington Trust, National Association is the exchange agent for the exchange offer. The addresses and telephone numbers of the exchange agent are set forth in the section captioned “The Exchange Offer—Exchange Agent” of this prospectus.

 

Summary Historical Consolidated Financial and Other Data

The following tables settable sets forth, for the periods and as of the dates indicated, our summary historical consolidated financial and other data. The summary historical consolidated financial information as of and for the six months ended June 28, 2014 and June 29, 2013 was derived from the unaudited consolidated financial statements included elsewhere in this prospectus. The summary historical consolidated financial information as of December 28, 2013 and December 29, 2012 and for the three years ended December 28, 2013, December 29, 2012 and December 31, 2011 and for our three fiscal years ended December 29, 2012, December 31, 2011 and December 31, 2010 havehas been derived from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the summary historical consolidated balance sheet data atas of December 31, 20102011 from our audited consolidated balance sheet as of December 31, 20102011, which is not presented in this prospectus. In 2011, Summit Materials adopted a “4-4-5” fiscal calendarWe have prepared our unaudited consolidated financial statements on the same basis as our audited consolidated financial statements and, in the placeour opinion, have included all adjustments, which include normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of the calendar year it previously used. Under the 4-4-5 fiscaloperations. The results for any interim period each year is divided into four quarters and each quarter consists of two four week “months” and one five week “month.” Historical results are not necessarily indicative of the results tothat may be expected infor the future. full year. Additionally, our historical results are not necessarily indicative of the results expected for any future period.

You should read the following information together with the more detailed information contained in “Selected Historical Consolidated Financial Data,” “Unaudited Pro Forma Condensed Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Summit Materials, LLC” and the consolidated financial statements and the accompanying notes appearing elsewhere in this prospectus.

 

(in thousands)  Year Ended
December 29,
2012
  Year Ended
December 31,
2011(1)
  Year Ended
December 31,
2010(1)
 

Statements of Operations Data:

    

Revenue

  $962,902   $822,548   $430,358  

Cost of revenue (exclusive of items shown separately below)

   749,363    630,944    308,297  

General and administrative expenses

   128,032    96,886    49,479  

Depreciation, depletion, amortization and accretion

   68,876    61,964    34,415  

Transaction costs

   1,988    9,120    22,268  
  

 

 

  

 

 

  

 

 

 

Operating income

   14,643    23,634    15,899  

Other expense (income)

   8,287    (21,244  11,558  

Interest expense

   58,079    47,784    25,430  
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations before income tax (benefit) expense

   (51,723  (2,906  (21,089

Income tax (benefit) expense

   (3,920  3,408    2,363  
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations

  $(47,803 $(6,314 $(23,452
  

 

 

  

 

 

  

 

 

 

Cash Flow Data:

    

Net cash provided by (used for):

    

Operating activities

  $62,279   $23,253   $(20,529

Investing activities

   (85,340  (192,331  (499,381

Financing activities

   7,702    146,775    575,389  

Balance Sheet Data (as of period end):

    

Cash and cash equivalents

  $27,431   $42,790   $65,093  

Total assets

   1,281,213    1,284,265    1,101,581  

Total debt including current portion of long-term debt

   639,843    608,981    559,980  

Capital leases

   3,092    3,158    3,217  

Total member’s interest

   382,428    436,372    345,993  

Redeemable noncontrolling interests

   22,850    21,300    21,300  

Other Financial Data (as of period end):

    

Total hard assets(2)

  $906,584   $906,166   $775,457  

Ratio of earnings to fixed charges(3)

   0.1    1.0    0.2  

(in thousands)  Year Ended
December 29,
2012
   Year Ended
December 31,
2011
   Year Ended
December 31,
2010
 

Units Shipped and Consumed(4):

      

Stone, sand and gravel (tons)

   17,043     19,032     18,064  

Hot mix asphalt (tons)

   4,555     5,040     4,532  

Ready mixed concrete (cubic yards)

   1,093     1,099     1,231  

Cement (tons)

   1,003     850     854  
   Six Months Ended  Year Ended
December 28,
2013
  Year Ended
December 29,
2012
  Year Ended
December 31,
2011
 
(in thousands)  June 28,
2014
  June 29,
2013
    

Statement of Operations Data:

      

Total revenue

  $475,386   $361,671   $916,201   $926,254   $789,076  

Total cost of revenue (excluding items shown separately below)

   360,437    277,916    677,052    713,346    597,654  

General and administrative expenses

   70,355    73,395    142,000    127,215    95,826  

Goodwill impairment

   —      —      68,202    —      —    

Depreciation, depletion, amortization and accretion

   40,695    36,026    72,934    68,290    61,377  

Transaction costs

   4,996    2,464    3,990    1,988    9,120  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating (loss) income

   (1,097  (28,130  (47,977  15,415    25,099  

Other (income) expense, net

   (891  163    (1,737  (1,182  (21,244

Loss on debt financings

   —      3,115    3,115    9,469    —    

Interest expense

   40,470    27,849    56,443    58,079    47,784  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Loss from continuing operations before tax

   (40,676  (59,257  (105,798  (50,951  (1,441

Income tax (benefit) expense

   (1,460  (3,347  (2,647  (3,920  3,408  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Loss from continuing operations

  $(39,216 $(55,910 $(103,151 $(47,031 $(4,849
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash Flow Data:

      

Net cash (used for) provided by:

      

Operating activities

  $(45,880 $(47,760 $66,412   $62,279   $23,253  

Investing activities

   (277,388  (94,221  (111,515  (85,340  (192,331

Financing activities

   329,153    122,205    32,589    7,702    146,775  

Balance Sheet Data (as of period end):

      

Cash

  $20,802    $14,917   $27,431   $42,790  

Total assets

   1,617,640     1,247,794    1,281,213    1,284,265  

Total debt (including current portion of long-term debt)

   1,007,510     688,987    639,843    608,981  

Capital leases

   23,368     8,026    3,092    3,158  

Total member’s interest

   268,845     283,551    382,428    436,372  

Redeemable noncontrolling interests

   26,825     24,767    22,850    21,300  

Other Financial Data (as of period end):

      

Total hard assets(1)

  $1,039,684   $968,672   $928,210   $906,584   $906,166  

Ratio of earnings to fixed charges(2)

   0.0x    N/A    N/A    0.1x    1.0x  

 

(1)Amounts are shown net of the results of operations associated with certain non-core businesses sold in 2012 and classified as discontinued operations.
(2)Defined as the consolidated balance sheet book value of the sum of (a) net property, plant and equipment net and (b) inventories.
(3)(2)The ratio of earnings to fixed charges is determined by dividing earnings, as adjusted, by fixed charges. Fixed charges consist of interest on all indebtedness plus that portion of operating lease rentals representative of the interest factor (deemed to be 33% of operating lease rentals).
(4)Units include amounts shipped Earnings were insufficient to cover fixed charges for the six months ended June 29, 2013 and consumedthe year ended December 28, 2013 by our subsidiaries assuming that all of our subsidiaries were acquired on or before January 1, 2010.$58.6 million and $5.6 million, respectively.

 

The Exchange Notes

The terms of the exchange notes are identical in all material respects to the terms of the outstanding notes, except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest upon a failure to fulfill certain of our obligations under the registration rights agreement. The exchange notes will evidence the same debt as the outstanding notes. The exchange notes will be governed by the same indenture under which the outstanding notes were issued. The following summary is not intended to be a complete description of the terms of the exchange notes. For a more detailed description of the exchange notes, see “Description of the Notes” in this prospectus.

 

Issuers

Summit Materials, LLC and Summit Materials Finance Corp.

 

Securities Offered

$250.0Up to $115.0 million aggregate principal amount of 10.5%10 12% Senior Notes due 2020.

 

Maturity Date

The exchange notes will mature on January 31, 2020, unless earlier redeemed or repurchased.

 

Interest

The exchange notes will accrue interest at a rate of 10.5%10 12% per annum, payable on January 31 and July 31 of each year. Interest on each exchange note will accrue from the last interest payment date on which interest was paid on the note surrendered in exchange for such outstanding note.

 

Guarantees

The exchange notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by all of our existing and future wholly-owned domestic restricted subsidiaries that guarantee indebtedness under our senior secured credit facilities and our existing notes and by our non-wholly-owned subsidiary, Continental Cement. These guarantees are subject to release under specified circumstances. See “Description of the Notes—Guarantees.” The guarantee of each guarantor will be an unsecured senior obligation of that guarantor and will rank:

 

equal in right of payment with all existing and future senior indebtedness of that guarantor;

 

senior in right of payment with all existing and future subordinated indebtedness of that guarantor;

 

effectively subordinated to all existing and future secured obligations of that guarantor, including any such guarantor’s guarantee of indebtedness under our senior secured credit facilities, to the extent of the value of the assets securing such indebtedness; and

 

structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, of our non-guarantor subsidiaries, including any foreign subsidiaries.

 

 See “Description of the Notes—Guarantees.”

 

Ranking

The exchange notes are our senior unsecured obligations and will:

 

rank equally in right of payment with all of our existing and future senior obligations;

obligations (including the existing notes);

 

rank senior in right of payment to all of our existing and future subordinated obligations;

 

be effectively subordinated to all of our existing and future secured obligations, including borrowings under our senior secured credit facilities, to the extent of the value of the assets securing such obligations; and

 

be structurally subordinated to all of our existing and future indebtedness and other liabilities of our non-guarantor subsidiaries, including any foreign subsidiaries.

 

 As of December 29, 2012,June 28, 2014, on a pro forma basis after giving effect to the September 2014 Transactions, we had:

 

$398.0455.3 million of indebtedness under our senior secured credit facilities, less original issue discount of $3.5$2.6 million;

 

$250.0625 million aggregate principal amount of outstanding seniorexisting notes, less net original issue discountpremium of $4.7$28.8 million; and

 

$3.723.8 million in capital leases and other obligations.

Interest began to accrue from the issue date of the exchange notes.

 

Optional Redemption

We may redeem some or all of the exchange notes at any time prior to January 31, 2016 at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date and the “applicable premium” described under the caption “Description of the Notes—Optional Redemption.” We may redeem some or all of the exchange notes at any time on or after January 31, 2016 at the redemption prices and as described under the caption “Description of the Notes—Optional Redemption.”

 

Change of Control and Asset Sale Offers

Upon the occurrence of a change of control or upon the sale of certain of our assets in which we do not apply the proceeds as required, the holders of the exchange notes will have the right to require us to make an offer to repurchase each holder’s notes at a price equal to 101% (in the case of a change control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. See “Description of the Notes—Repurchase at the Option of Holders—Change of Control,” and “Description of the Notes—Repurchase at the Option of Holders—Asset Sales.

 

Certain Covenants

The exchange notes will be governed by the same indenture under which the existing notes and the outstanding notes were issued. The indenture governing the exchange notes contains covenants that, among other things, limit the ability of the Issuers and their restricted subsidiaries to:

 

incur additional indebtedness or issue certain preferred shares;

 

pay dividends, redeem our stock or make other distributions;

make certain investments;

 

make certain investments;

create restrictions on the ability of our restricted subsidiaries to pay dividends to us or make other intercompany transfers;

create liens;

 

create liens;

sell or transfer certain assets;

 

consolidated, merge, sell or otherwise dispose of all or substantially all of our assets;

 

enter into certain transactions with our affiliates; and

 

designate subsidiaries as unrestricted subsidiaries.

 

 These covenants are subject to a number of important limitations, exceptions and qualifications. See “Description of the Notes—Certain Covenants.”

 

Use of Proceeds

We will not receive any proceeds from the exchange offer. See “Use of Proceeds.”

 

No Prior Market

The exchange notes will generally be freely transferable but will be new securities for which there will not initially be a market. Accordingly, there can be no assurance as to the development or liquidity of any market for the exchange notes. The initial purchasers in the private offering of the outstanding notes have advised us that they currently intend to makewe cannot assure you whether a market for the exchange notes will develop or as permitted by applicable laws and regulations. However, they are not obligated to do so and may discontinuethe liquidity of any such market making activities at any time without notice. We do not intend to apply for a listing of the exchange notes on any securities exchange or an automated dealer quotation system. See “Risk Factors—Risks Related to the Exchange Notes—Your ability to transfer the exchange notesthat may be limited by the absence of an active trading market, and an active trading market may not develop for the exchange notes.”develop.

 

Governing Law

The exchange notes will be governed by the laws of the State of New York.

Risk Factors

You should carefully consider all the information in the prospectus prior to exchanging your outstanding notes. In particular, we urge you to carefully consider the factors set forth under the caption “Risk Factors” beginning on page 2120 of this prospectus before participating in the exchange offer.

 

RISK FACTORS

You should carefully consider the following risk factors and all other information contained in this prospectus before participating in the exchange offer. The risks and uncertainties described below are not the only risks facing us and your investment in the exchange notes. Additional risks and uncertainties that we are unaware of, or those we currently deem less significant, also may become important factors that affect us. The following risks could materially and adversely affect our business, financial condition, cash flows or results of operations.operations or liquidity. The value of the exchange notes could decline due to any of these risks, and you may lose all or part of your investment.

Risks Related to the Exchange Offer

If you choose not to exchange your outstanding notes in the exchange offer, the transfer restrictions currently applicable to your outstanding notes will remain in force and the market price of your outstanding notes could decline.

If you do not exchange your outstanding notes for exchange notes in the exchange offer, then you will continue to be subject to the transfer restrictions on the outstanding notes as set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes. In general, the outstanding notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act. You should refer to “Prospectus Summary—The Exchange Offer” and “The Exchange Offer” for information about how to tender your outstanding notes.

The tender of outstanding notes under the exchange offer will reduce the remaining principal amount of the outstanding notes, which may have an adverse effect upon, and increase the volatility of, the market price of the outstanding notes not exchanged in the exchange offer due to a reduction in liquidity.

Your ability to transfer the exchange notes may be limited by the absence of an active trading market, and an active trading market may not develop for the exchange notes.

The exchange notes are a new issue of securities for which there is no established trading market. We do not intend to have the exchange notes listed on a national securities exchange or to arrange for quotation on any automated quotation system. The initial purchasers have advised us that they intend to make a market in the exchange notes, as permitted by applicable laws and regulations; however, the initial purchasers are not obligated to make a market in the exchange notes, and they may discontinue their market-making activities at any time without notice. Therefore, we cannot assure you as to the development or liquidity of any trading market for the exchange notes. The liquidity of any market for the exchange notes will depend on a number of factors, including:

 

the number of holders of exchange notes;

 

our operating performance and financial condition;

 

the market for similar securities;

 

the interest of securities dealers in making a market in the exchange notes; and

 

prevailing interest rates.

Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market, if any, for the exchange notes may face similar disruptions that may adversely affect the prices at which you may sell your exchange notes. Therefore, you may not be able to sell your exchange notes at a particular time and the price that you receive when you sell may not be favorable.

Certain persons who participate in the exchange offer must deliver a prospectus in connection with resales of the exchange notes.

Based on interpretations of the staff of the SEC contained inExxon Capital Holdings Corp., SEC no-action letter (April(available May 13, 1988),Morgan Stanley & Co. Inc., SEC no-action letter (June(available June 5, 1991) andShearman & Sterling, SEC no-action letter (July(available July 2, 1983)1993), we believe that you may offer for resale, resell or otherwise transfer the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act. However, in some instances described in this prospectus under “Plan of Distribution,” certain holders of exchange notes will remain obligated to comply with the registration and prospectus delivery requirements of the Securities Act to transfer the exchange notes. If such a holder transfers any exchange notes without delivering a prospectus meeting the requirements of the Securities Act or without an applicable exemption from registration under the Securities Act, such a holder may incur liability under the Securities Act. We do not and will not assume, or indemnify such a holder against, this liability.

Risks Related to Our Indebtedness and the Exchange Notes

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under the exchange notes.

We are highly leveraged. As of December 29, 2012,June 28, 2014, on a pro forma basis after giving effect to the September 2014 Transactions, (i) our total debt was approximately $648.0$1,104.1 million, (without giving effect to original issue discount on our term loan facility), (ii) the outstanding notes and related guarantees would have ranked equally with $510.0 million of existing notes, (iii) the notes and related guarantees would have ranked effectively subordinated to approximately $398.0$455.3 million of senior secured indebtedness under our senior secured term loan facilitycredit facilities to the extent of the value of the collateral securing such facilityfacilities and (iii)(iv) we had an additional $150.0$112.5 million of unutilized capacity under our senior secured revolving credit facility (less $14.5(without giving effect to approximately $22.8 million of letters of credit outstanding).

Our high degree of leverage could have important consequences for you, including:

 

making it more difficult for us to make payments on the exchange notes;

 

increasing our vulnerability to general economic and industry conditions;

 

requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

 

exposing us to the risk of increased interest rates as certain of our borrowings under our senior secured credit facilities will beare at variable rates of interest;

 

restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

 

limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and

 

limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.

Borrowings under our senior secured credit facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. Our interest expense for the year ended December 29, 2012 was $58.1 million, a portion of which was based on a floating rate index. A 0.125% increase in the floating rates on the funded amounts under our senior secured credit facility would have increased annual interest expense by approximately $0.5 million. Assuming all revolving loans are drawn under our senior secured revolving credit facility, a 0.125% change in the floating rate would result in an additional $0.2 million increase in our annual interest expense. In the future, we may enter into interest rate swaps that involve the exchange of

floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.

In addition, the indenture that governs the exchange notes and the credit agreement governing our senior secured credit facilities contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all our debt.

Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This could reduce our ability to satisfy our obligations under the exchange notes and further exacerbate the risks to our financial condition.

We and our subsidiaries may be able to incur significant additional indebtedness in the future. Although the indenture governing the exchangeexisting notes and the notes and the credit agreement governing our senior secured credit facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. If we incur any additional indebtedness that ranks equally with the exchange notes, subject to collateral arrangements, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our company. Such additional indebtedness may have the effect of reducing the amount of proceeds paid to you. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness.In February 2013, we entered into Amendments to our senior secured credit facilities. The senior secured credit facilities currently provide senior secured financing in an amount of $572.0 million, consisting of a $150.0 million five-year revolving credit facility and a $422.0 million seven-year term loan facility.indebtedness. Our senior secured credit facilities include an uncommitted incremental facility that will allow us the option to increase the amount available under the term loan facility and/or the senior secured revolving credit facility by (i) $135.0 million andplus (ii) an additional amount so long as we are in pro forma compliance with a consolidated first lien net leverage ratio. Availability of such incremental facilities will be subject to, among other conditions, the absence of an event of default and pro forma compliance with the financial covenants under our credit agreement and the receipt of commitments by existing or additional financial institutions. All of those borrowings would be secured indebtedness and, therefore, effectively senior to the exchange notes and the guarantees of the exchange notes by the guarantors to the extent of the value of the assets securing such debt. See “Description of Other Indebtedness” and “Description of the Notes.”

We may not be able to generate sufficient cash to service all of our indebtedness, including the exchange notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations and to fund planned capital expenditures and other corporate expenses depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors and any legal and regulatory restrictions on the payment of distributions and dividends to which we may be subject. Many of these factors are beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the exchange notes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Summit Materials, LLC—Liquidity and Capital Resources.” If our cash flows and capital resources are insufficient to fund our debt service obligations or our other needs, we may be forced to reduce or delay investments and capital expenditures, seek additional capital, restructure or refinance our indebtedness, including the exchange notes, or sell assets. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Ourobligations or fund planned capital expenditures. Significant delays in our planned capital expenditures may materially and adversely affect our future revenue prospects. In addition, our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The senior secured credit facilities and the indenture governing the exchangeexisting notes and the notes restrict our ability to use the proceeds from asset sales. We may not be able to consummate those asset sales to raise capital or sell assets

at prices that we believe are fair and proceeds that we do receive may not be adequate to meet any debt service obligations then due. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis

would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. See “Description of Other Indebtedness” and “Description of the Notes.”

The exchange notes will not be secured by any of our assets and are effectively subordinated to our secured debt. The senior secured credit facilities are secured and, therefore, the related lenders will have a prior claim on substantially all of our assets and those of our guarantors.

The exchange notes will not be secured by any of our or our guarantors’ assets. The senior secured credit facilities, however, are secured by (i) a perfected security interest in certain stock, other equity interests and promissory notes owned by us and the guarantors and (ii) a perfected security interest in all other tangible and intangible assets (including, without limitation, equipment, aggregate reserves, contract rights, securities, patents, trademarks, other intellectual property, cash and real estate) owned by us or any of the guarantors, subject to certain limited exceptions. The lenders under the senior secured credit facilities are entitled to accelerate all obligations thereunder if we become insolvent or are liquidated, or if we otherwise default on any of our obligations and agreements under the senior secured credit facilities. In addition, the indenture governing the existing notes and the notes permits us and our subsidiaries to incur secured debt under specified circumstances. If we incur any additional secured debt, our assets and the assets of our subsidiaries will be subject to prior claims by such secured creditors as well. If payment under any of the instruments governing our secured debt is accelerated, the lenders under these instruments will be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to instruments governing such debt. Accordingly, the lenders under the senior secured credit facilities and any future secured debt will have a prior claim on our assets (and those of the guarantors under the senior secured credit facilities).facilities and any future secured debt) in the event of our bankruptcy, liquidation, reorganization, dissolution or other winding up. In that event, because the exchange notes will not be secured by any of our or the guarantors’ assets, it is possible that our and the guarantors’ remaining assets might be insufficient to satisfy your claims in full. Any such exercise of the lenders’ remedies under the senior secured credit facilities and any future secured debt could impede or preclude our ability to continue to operate as a going concern. Holders of the exchange notes will participate in our remaining assets ratably with all of our unsecured and unsubordinated creditors, including our trade creditors.

AsIf we incur any additional obligations that rank equally with the exchange notes, including trade payables, the holders of December 29, 2012,those obligations will be entitled to share ratably with the holders of the exchange notes in any proceeds distributed upon our bankruptcy, liquidation, reorganization, dissolution or other winding up. This may have the effect of reducing the amount of proceeds paid to you. If there are not sufficient assets remaining to pay all these creditors, all or a portion of the exchange notes then outstanding would remain unpaid.

On a pro forma basis after giving effect to the September 2014 Transactions, as of June 28, 2014, we would have had $648.0$1,104.1 million of total consolidated indebtedness, (without giving effect to original issue discount on our term loan facility), of which $398.0$455.3 million waswould have been secured. Under our senior secured credit facilities, we would have also havehad available to us an uncommitted incremental loan facility in an amount not to exceed (i) $135.0 million plus (ii) an additional amount so long as we are in pro forma compliance with a consolidated first lien net leverage ratio. All of those borrowings could be secured, and as a result, would be effectively senior to the exchange notes and the guarantees of the exchange notes. We may incur additional secured indebtedness as permitted under our senior secured credit agreement and other existing instruments governing our indebtedness.

We require a significant amount of cash to service our indebtedness. The ability to generate cash or refinance our indebtedness as it becomes due depends on many factors, some of which are beyond our control.

Our ability to make scheduled payments on, or to refinance our respective obligations under, our indebtedness, including the exchange notes, and to fund planned capital expenditures and other corporate expenses will depend on our future operating performance and on economic, financial, competitive, legislative, regulatory and other factors and any legal and regulatory restrictions on the payment of distributions and dividends to which we may be subject. Many of these factors are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized or that future borrowings will be available to us in an amount sufficient to enable us to satisfy our respective obligations under our indebtedness or to fund our other needs. In order for us to satisfy our obligations under our indebtedness and fund planned capital expenditures, we must continue to execute our business strategy. If we are unable to do so, we may need to reduce or delay our planned capital expenditures or refinance all or a portion of our indebtedness on or before maturity. Significant delays in our planned capital expenditures may materially and adversely affect our future revenue prospects. In addition, we cannot assure you that we will be able to refinance any of our indebtedness, including the exchange notes and our senior secured credit facilities, on commercially reasonable terms or at all.

The indenture governing the exchangeexisting notes and the notes and the credit agreement governing our senior secured credit facilities restrict our ability and the ability of most of our subsidiaries to engage in some business and financial transactions.

Indenture governing the existing notes and the exchange notes.notes. The indenture governing the exchangeexisting notes containand the notes contains restrictive covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to:

 

incur additional indebtedness or issue certain preferred shares;

 

pay dividends, redeem our stock or make other distributions;

make investments;

 

make investments;

create restrictions on the ability of our restricted subsidiaries to pay dividends to us or make other intercompany transfers;

 

create liens;

 

transfer or sell assets;

 

merge or consolidate;

 

enter into certain transactions with our affiliates; and

 

designate subsidiaries as unrestricted subsidiaries.

Senior secured credit facilitiesfacilities.. The credit agreement governing our senior secured credit facilities contains a number of covenants that limit our ability and the ability of our restricted subsidiaries to:

 

incur additional indebtedness or guarantees;

 

create liens on assets;

 

change our fiscal year;

 

enter into sale and leaseback transactions;

 

engage in mergers or consolidations;

 

sell assets;

 

incur additional liens;

 

sell assets;

 

pay dividends and make other restricted payments;

 

make investments, loans or advances;

 

repay subordinated indebtedness;

 

make certain acquisitions;

 

engage in certain transactions with affiliates; and

 

change our lines of business.

In addition, the senior secured credit facilities require us to maintain a quarterly maximum consolidated first lien net leverage ratio and a quarterly minimum interest coverage ratio.

The credit agreement governing our senior secured credit facilities also contains certain customary representations and warranties, affirmative covenants and events of default (including, among others, an event of default upon a change of control). If an event of default occurs, the lenders under our senior secured credit facilities will be entitled to take various actions, including the acceleration of amounts due under our senior secured credit facilities and all actions permitted to be taken by a secured creditor.

Our failure to comply with obligations under the indenture governing the exchangeexisting notes and the notes and the credit agreement governing our senior secured credit facilities may result in an event of default under the indenture or the credit agreement. A default, if not cured or waived, may permit acceleration of our indebtedness. We cannot be certain that we will have funds available to remedy these defaults. If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all.

We may not have access to the cash flow and other assets of our subsidiaries that may be needed to make payment on the exchange notes.

Our ability to make payments on the exchange notes is dependent on the earnings and the distribution of funds from our subsidiaries. All of our business is conducted through our subsidiaries. The ability of our subsidiaries to make distributions, dividends or advances to us will depend on their future operating performance and on economic, financial, competitive, legislative, regulatory and other factors and any legal and regulatory restrictions on the payment of distributions and dividends to which they may be subject. Under the terms of the indenture governing the exchangeexisting notes and the notes and the credit agreement governing our senior secured credit facilities our subsidiaries will be permitted to incur additional indebtedness that may restrict or prohibit distributions, dividends or loans from those subsidiaries to us. We cannot assure you that the agreements governing the current and future indebtedness of our subsidiaries will permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund payments on the exchange notes when due.

The exchange notes will be structurally subordinated to the liabilities of our non-guarantor subsidiaries.

Payments on the exchange notes are only required to be made by us and the guarantors. The exchange notes will only be guaranteed by our domestic subsidiaries that guarantee our obligations under the senior secured credit facilities. Accordingly, holders of the exchange notes will be structurally subordinated to the claims of creditors of non-guarantor subsidiaries, including trade creditors. All obligations of our non-guarantor subsidiaries, including trade payables, will have to be satisfied before any of the assets of such subsidiaries would be available for distribution, upon liquidation or otherwise, to us or a guarantor of the exchange notes. The non-guarantor subsidiaries will be permitted to incur additional debt in the future under the indenture governing the exchangeexisting notes and the notes.

Additional debt could reduce our ability to satisfy our obligations under the exchange notes.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indenture governing the exchange notes do not fully prohibit us or our subsidiaries from doing so, and the credit agreement governing our senior secured credit facilities permit additional borrowing.

Such debt may be secured; if that is the case, then your rights to receive payments on the exchange notes would effectively be junior to the holders of such new debt. Also, if we incur any additional indebtedness that ranks equally with the exchange notes, the holders of that debt will be entitled to share ratably with the holders of the exchange notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of the Company. This may have the effect of reducing the amount of proceeds ultimately paid to you. If new debt is added to our current debt levels, the related risks that we and our subsidiaries now face, as described further herein, could intensify and we may not be able to meet all our debt obligations, including the repayment of the exchange notes.

If weA default on our obligations to pay our other indebtedness could result in the acceleration of such other indebtedness, we could be forced into bankruptcy or liquidation and we may not be able to make payments on the exchange notes.

Any default under the agreements governing our indebtedness, including a default under the credit agreement governing our senior secured credit facilities that is not waived by the required lenders, and the

remedies sought by the lenders could prevent us from paying principal, premium, if any, and interest on the exchange notes and substantially decrease the market value of the exchange notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, including covenants in the credit agreement governing our senior secured credit facilities, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness may be able to cause all of our available cash flow to be used to pay such indebtedness and, in any event could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest; the lenders under our senior secured credit facilities could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets and we could be forced into bankruptcy or liquidation. Upon any such bankruptcy filing, we would be stayed from making any ongoing payments on the exchange notes, and the holders of the exchange notes would not be entitled to receive post-petition interest or applicable fees, costs or charges, or any “adequate protection” under Title 11 of the United States Code (the “Bankruptcy Code”). Furthermore, if a bankruptcy case were to be commenced under the Bankruptcy Code, we could be subject to claims, with respect to any payments made within 90 days prior to commencement of such a case, that we were insolvent at the time any such payments were made and that all or a portion of such payments, which could include repayments of amounts due under the exchange notes, might be deemed to constitute a preference, under the Bankruptcy Code, and that such payments should be voided by the bankruptcy court and recovered from the recipients for the benefit of the entire bankruptcy estate. Also, in the event that we were to become a debtor in, a bankruptcy case seeking reorganization or other relief under the Bankruptcy Code, a delay and/or substantial reduction in payments under the exchange notes may otherwise

occur. If our operating performance declines, we may in the future need to obtain waivers from the required lenders under our senior secured credit facilities to avoid being in default. If we breach our covenants under our senior secured credit facilities and seek a waiver, we may not be able to obtain a waiver from the required lenders and holders. If this occurs, we would be in default under the credit agreement governing our senior secured credit facilities, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation. See “Description of Other Indebtedness” and “Description of the Notes.”

We may not be able to repurchase the exchange notes upon a change of control.

Upon the occurrence of specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes at 101% of their principal amount plus accrued and unpaid interest, unless such notes have been previously called for redemption. The source of funds for any such purchase of the exchange notes will be our available cash or cash generated from our subsidiaries’ operations or other sources, including borrowings, sales of assets or sales of equity. We may not be able to repurchase the exchange notes upon a change of control because we may not have sufficient financial resources to purchase all of the exchange notes that are tendered upon a change of control. Further, we will be contractually restricted under the terms of the credit agreement governing our senior secured credit facilities from repurchasing all of the exchange notes tendered by holders upon a change of control. Accordingly, we may not be able to satisfy our obligations to purchase the exchange notes unless we are able to refinance or obtain waivers under the credit agreement governing our senior secured credit facilities. Our failure to repurchase the exchange notes upon a change of control would cause a default under the indenture governing the exchange notes and a cross-default under the indenture governing the existing notes and the notes and a cross default under the credit agreement governing our senior secured credit facilities. See “Description of the Notes—Repurchase at the Option of Holders—Change of Control.” The credit agreement governing our senior secured credit facilities also provides that a change of control will be a default that permits lenders to accelerate the maturity of borrowings thereunder. Any of our future debt agreements may contain similar provisions.

Courts interpreting change of control provisions under New York law (which is the governing law of the indenture governing the existing notes and the exchange notes) have not provided clear and consistent meanings of such change of control provisions which leads to subjective judicial interpretation. In addition, a court case in Delaware has questioned whether a change of control provision contained in an indenture could be unenforceable on public

policy grounds. No assurances can be given that another court would enforce the change of control provisions in the indenture governing the exchange notes as written for the benefit of the holders, or as to how these change of control provisions would be impactedaffected were we to become a debtor in a bankruptcy case.

Federal and state fraudulent transfer laws may permit a court to void the exchange notes and the guarantees, subordinate claims in respect of the exchange notes and the guarantees and require noteholders to return payments received and, if that occurs, you may not receive any payments on the exchange notes.

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the exchange notes and the incurrence of any guarantees of the exchange notes, including the guarantee by the guarantors entered into upon issuance of the exchange notes and subsidiary guarantees (if any) that may be entered into thereafter under the terms of the indenture governing the exchange notes. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, the exchange notes or guarantees could be voided as a fraudulent transfer or conveyance if (i) the Issuers or any of the guarantors, as applicable, issued the exchange notes or incurred the guarantees with the intent of hindering, delaying or defrauding creditors or (ii) the Issuers or any of the guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for either issuing the exchange notes or incurring the guarantees and, in the case of (ii) only, one of the following is also true at the time thereof:

 

the Issuers or any of the guarantors, as applicable, were insolvent or rendered insolvent by reason of the issuance of the exchange notes or the incurrence of the guarantees;

 

the issuance of the exchange notes or the incurrence of the guarantees left the Issuers or any of the guarantors, as applicable, with an unreasonably small amount of capital to carry on the business;

the Issuers or any of the guarantors intended to, or believed that the Issuers or such guarantor would, incur debts beyond the Issuers’ or such guarantor’s ability to pay such debts as they mature; or

 

the Issuers or any of the guarantors were a defendant in an action for money damages, or had a judgment for money damages docketed against it or such guarantor if, in either case, after final judgment, the judgment is unsatisfied.

A court would likely find that we or a guarantor did not receive reasonably equivalent value or fair consideration for the exchange notes or such guarantee if we or such guarantor did not substantially benefit directly or indirectly from the issuance of the exchange notes or the applicable guarantee. As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied. A debtor will generally not be considered to have received value in connection with a debt offering if the debtor uses the proceeds of that offering to make a dividend payment or otherwise retire or redeem equity securities issued by the debtor.

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were solvent at the relevant time or, regardless of the standard that a court uses, that the issuance of the guarantees would not be further subordinated to our or any of our guarantors’ other debt. Generally, however, an entity would be considered insolvent if, at the time it incurred indebtedness:

 

the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all its assets;

 

the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

 

it could not pay its debts as they become due.

If a court were to find that the issuance of the exchange notes or the incurrence of the guarantee was a fraudulent transfer or conveyance, the court could void the payment obligations under the exchange notes or such guarantee or further subordinate the exchange notes or such guarantee to our or the related guarantors’ presently

existing and future indebtedness, or require the holders of the exchange notes to repay any amounts received with respect to such guarantee. In the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the exchange notes or such guarantee, as applicable. Sufficient funds to repay the exchange notes may not be available from other sources, including any remaining guarantor, if any. In addition, the court might direct you to repay any amounts that you already received from us or the guarantor. Further, the voidance of the exchange notes could result in an event of default with respect to the Issuers’ and their subsidiaries’ other debt that could result in acceleration of such debt.

If the guarantees were legally challenged, any guarantee could also be subject to the claim that, since the guarantee was incurred for the Issuers’ benefit, and only indirectly for the benefit of the applicable guarantor, the obligations of the applicable guarantor were incurred for less than fair consideration. A court could thus void the obligations under the guarantees, subordinate them to the applicable guarantor’s other debt or take other action detrimental to the holders of the exchange notes.

Although each guarantee entered into by a subsidiary will contain a provision intended to limit that guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer, this provision may not be effective to protect those guarantees from being voided under fraudulent transfer law, or may reduce that guarantor’s obligation to an amount that effectively makes its guarantee worthless. In a recent Florida bankruptcy case, this kind of provision was found to be ineffective to prohibit the guarantees.

In addition, any payment by us pursuant to the exchange notes made at a time we were found to be insolvent could be voided and required to be returned to us or to a fund for the benefit of our creditors if such payment is

made to an insider within a one-year period prior to a bankruptcy filing or within 90 days for any outside party and such payment would give such insider or outsider party more than such creditors would have received in a distribution under the Bankruptcy Code.

Finally, as a court of equity, the bankruptcy court may otherwise subordinate the claims in respect of the exchange notes to other claims against us under the principle of equitable subordination, if the court determines that: (i) the holder of the exchange notes engaged in some type of inequitable conduct; (ii) such inequitable conduct resulted in injury to our other creditors or conferred an unfair advantage upon the holder of the exchange notes; and (iii) equitable subordination is not inconsistent with the provisions of the Bankruptcy Code.

Many of the covenants in the indenture that will govern the exchange notes will not apply during any period in which the exchange notes are rated investment grade by both Moody’s and Standard & Poor’s.

Many of the covenants in the indenture that will govern the exchange notes will not apply to us during any period in which the exchange notes are rated investment grade by both Moody’s Investors Service, Inc., or “Moody’s,” and Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or “S&P,” provided at such time no default or event of default has occurred and is continuing. These covenants restrict among other things, our ability to pay distributions, incur debt and to enter into certain other transactions. There can be no assurance that the exchange notes will ever be rated investment grade, or that if they are rated investment grade, that the exchange notes will maintain these ratings. However, suspension of these covenants would allow us to incur debt, pay dividends and make other distributions and engage in certain other transactions that would not be permitted while these covenants were in force. To the extent the covenants are subsequently reinstated, any such actions taken while the covenants were suspended would not result in an event of default under the indenture that governswill govern the exchange notes. See “Description of the Notes—Certain Covenants.”

A downgrade, suspension or withdrawal of the rating assigned by a rating agency to our company or the exchange notes, if any, could cause the liquidity or market value of the exchange notes to decline.

The exchange notes have been rated by nationally recognized rating agencies and may in the future be rated by additional rating agencies. We cannot assure you that any rating assigned will remain for any given period of

time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant. Any downgrade, suspension or withdrawal of a rating by a rating agency (or any anticipated downgrade, suspension or withdrawal) could reduce the liquidity or market value of the exchange notes. Any future lowering of our ratings may make it more difficult or more expensive for us to obtain additional debt financing. If any credit rating initially assigned to the exchange notes is subsequently lowered or withdrawn for any reason, you may lose some or all of the value of your investment.

The exchange notes are subject to prior claims of any secured creditors and the creditors of our subsidiaries, and if a default occurs we may not have sufficient funds to fulfill our obligations under the exchange notes.

The exchange notes are our unsecured general obligations, ranking equally with our other senior unsecured indebtedness but below any secured indebtedness and effectively below the debt and other liabilities of our subsidiaries. The indenture governing the exchange notes permits us and our subsidiaries to incur secured debt under specified circumstances. If we incur any secured debt, our assets and the assets of our subsidiaries will be subject to prior claims by our secured creditors. In the event of our bankruptcy, liquidation, reorganization, dissolution or other winding up, assets that secure debt will be available to pay obligations on the exchange notes only after all debt secured by those assets has been repaid in full. Holders of the exchange notes will participate in our remaining assets ratably with all of our unsecured and unsubordinated creditors, including our trade creditors.

If we incur any additional obligations that rank equally with the exchange notes, including trade payables, the holders of those obligations will be entitled to share ratably with the holders of the exchange notes in any proceeds distributed upon our bankruptcy, liquidation, reorganization, dissolution or other winding up. This may have the effect of reducing the amount of proceeds paid to you. If there are not sufficient assets remaining to pay all these creditors, all or a portion of the exchange notes then outstanding would remain unpaid.

Risks Related to Our BusinessIndustry and Our IndustryBusiness

Industry Risks

Our business depends on activity within the construction industry and the strength of the local economies in which we operate.

We sell most of our construction materials and products and provide all of our highway constructionpaving and related services to the construction industry, so our results depend onare significantly affected by the strength of the construction industry. Demand for our products, particularly in the non-residentialresidential and residentialnonresidential construction markets, could remain weak and decline if companies and consumers cannot obtain credit for construction projects or if the slow pace of economic activity results in delays or cancellations of capital projects. In addition, statefederal and federalstate budget issues may continue to hurt the funding available for infrastructure spending, particularly highway construction, which constitutes a significant portion of our business.

Our earnings depend on the strength of the local economies in which we operate because of the high cost to transport our products relative to their price. ManyIn recent years, many states have reduced their construction spending due to budget shortfalls resulting from lower tax revenuesrevenue as well as uncertainty relating to long-term federal highway funding. As a result, there has been a reduction in many states’ investment in infrastructure spending. If economic and construction activity diminishdiminishes in one or more areas, particularly in our top revenue-generating markets of Texas, Kansas, Kentucky, Missouri and Utah, our business and results of operations and liquidity may be materially adversely affected, and there is no assurance that reduced levels of construction activity will not continue to affect our business in the future.

The success of our business depends, in part, on our ability to execute on our acquisition strategy, the successful integration of acquisitions and the retention of key employees of our acquired businesses.

A significant portion of our historical growth has occurred through acquisitions and we will likely enter into acquisitions in the future. We have evaluated and expect to continue to evaluate possible acquisition transactions

on an ongoing basis. At any time we may be engaged in discussions or negotiations with respect to several possible acquisitions. From time to time we enter into letters of intent to allow us to conduct due diligence on a confidential basis. Currently, we are in preliminary discussions with several potential acquisition targets. There can be no assurance that we will enter into definitive agreements with respect to such transactions or that they will be completed. Our growth has placed, and will continue to place, significant demands on our management and operational and financial resources. Acquisitions involve risks that the businesses acquired will not perform in accordance with expectations and that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove incorrect.

Our interest expense will increase in connection with acquisitions as a result of the assumption or incurrence of debt and contingent liabilities and to the extent we finance such acquisitions with drawdowns from our revolving credit facility. We may become liable for certain liabilities of any acquired business, whether or not known to us. These risks could include, among others, tax liabilities, product liabilities, environmental liabilities and liabilities for employment practices, and they could be significant.

Acquisitions may require integration of the acquired companies’ sales and marketing, distribution, engineering, purchasing, finance and administrative organizations. We may not be able to integrate successfully any business we acquire or acquired into our existing business and any acquired businesses may not be profitable or as profitable as we had expected. The successful integration of our acquisitions may also require substantial attention from our senior management and the management of the acquired business, which could decrease the time that they have to service and attract customers and develop new products and services. In addition, we may not effectively utilize new equipment that we acquire through acquisitions or otherwise at utilization and rental rates consistent with that of our existing equipment. Furthermore, the complete integration of companies we acquire depends, to a certain extent, on the full implementation of our financial systems and policies. Moreover, because we may actively pursue a number of opportunities simultaneously, we may encounter unforeseen expenses, complications and delays, including difficulties in employing sufficient staff and maintaining operational and management oversight. Our inability to complete the integration of new businesses in a timely and orderly manner could increase costs and lower profits.

We cannot assure you that we will achieve the cost savings and synergies identified in this prospectus or that we will achieve synergies and cost savings in connection with future acquisitions. In addition, many of the businesses that we have acquired and will acquire have unaudited financial statements that have been prepared by the management of such companies and have not been independently reviewed or audited. We cannot assure you that the financial statements of companies we have acquired or will acquire would not be materially different if such statements were audited. Finally, we cannot assure you that we will continue to acquire businesses at valuations consistent with our prior acquisitions or that we will complete future acquisitions at all.

Our business is cyclical and requires significant working capital to fund operations.

Our business is cyclical and requires that we maintain significant working capital to fund our operations. Our ability to generate sufficient cash flow depends on future performance, which will be subject to general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control. If we are unable to generate sufficient cash to operate our business and service our outstanding debt and other obligations, we may be required, among other things, to further reduce or delay planned capital or operating expenditures, sell assets or take other measures, including the restructuring of all or a portion of our debt, which may only be available, if at all, on unsatisfactory terms.

A decline in public sector construction and reductions in governmental funding could adversely affect our operations and results.

A significant portion of our revenues are generated from publicly funded construction projects. As a result, if publicly funded construction continues to remain low due to reduced federal or state funding or otherwise, our earnings and cash flows will be negatively affected.

The current federal funding program, MAP-21, was enacted in July 2012 and took effect in October 2012. MAP-21 is a 27-month, approximately $105 billion transportation funding program that provides for $40.4 billion and $41.0 billion for highway infrastructure investments in fiscal years 2013 and 2014, respectively. Additionally, in January 2011, the House passed a new rules package that repealed transportation law dating back to 1998, which protected annual funding levels from amendments that could reduce such funding. This rule change subjects funding for highways to yearly appropriation reviews. The change in the funding mechanism increases the uncertainty of many state departments of transportation regarding funds for highway projects. This uncertainty could result in states being reluctant to undertake large multi-year highway projects which could, in turn, negatively affect our sales.

As a result of the foregoing and other factors, we cannot be assured of the existence, amount and timing of appropriations for spending on federal, state or local projects. The federal support for the cost of highway maintenance and construction is dependent on congressional action. In addition, each state funds its infrastructure spending from specially allocated amounts collected from various taxes, typically gasoline taxes and vehicle fees, along with voter-approved bond programs. Shortages in state tax revenues can reduce the amounts spent on state infrastructure projects, even below amounts awarded under legislative bills. Nearly all states are now experiencing state-level funding pressures caused by lower tax revenues and an inability to finance approved projects. Delays or cancellations of state infrastructure spending have in the past, and we anticipate in the immediate future will continue to hurt our business because a significant portion of our business is dependent on state infrastructure spending.

Our business relies on private investment in infrastructure and a slower than normal recovery will adversely affect our results.

A portion of our sales are for projects with non-public owners. Construction spending is affected by developers’ ability to finance projects. The current credit environment has negatively affected the U.S. economy and demand for our products. Non-residential and residential construction could continue to decline if companies and consumers are unable to finance construction projects or if the economic slowdown continues to cause delays or cancellations of capital projects. If housing starts and non-residential projects do not begin to rise steadily with the slow economic recovery as they normally do when recessions end, our construction materials and contracting services sales may fall further and our business and results of operations may be materially adversely affected.

A decline in the funding of transportation authorities and other state agencies could adversely affect our operations and results.

A significant portion of our revenues, both through direct and indirect sales, are generated from public sources such as departments of transportation and other state agencies. The spending of these agencies is governed by an annual budget which is approved by the relevant state. To the extent that any of these entities significantly decreases its annual budget, our revenues could be adversely affected.

Difficult and volatile conditions in the credit markets could affect our financial position, results of operations and cash flows.

Demand for our products is primarily dependent on the overall health of the economy, and federal, state and local public funding levels. The stagnant, and at times declining, economy continues to put pressure on the demand for our construction materials and increases competition and aggressive pricing for private and public sector projects as companies migrate from bidding on scarce private sector work to projects in the public sector. In addition, a stagnant or declining economy tends to produce less tax revenue for public agencies, thereby decreasing a source of funds available for spending on public infrastructure improvements, which constitute a substantial part of our business.

With the slow pace of economic recovery, there is also a likelihood that we will not be able to collect on certain of our accounts receivable from our customers, many of which are still struggling. Although we are

protected in part by payment bonds posted by some of our customers, we have in the past experienced payment delays from some of our customers during this economic downturn. Although such delays have not had a material impact on our business, there can be no assurance that this will be the case in the future.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior secured credit facilities or from other sources in an amount sufficient to pay our debt or to fund our other liquidity needs. If we are unable to generate sufficient cash flow to meet our debt service requirements, we may have to renegotiate the terms of our senior secured credit facilities or obtain additional financing. We cannot assure you that we will be able to refinance any of our debt or obtain additional financing on commercially reasonable terms or at all. If we were unable to meet our debt service requirements or obtain new financing under these circumstances, we would have to consider other options, such as the sales of certain assets, sales of equity, and negotiations with our lenders to restructure our debt. The terms of our then existing indebtedness may restrict, or market or business conditions may limit, our ability to do any or all of these things.

If we are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate a contract that is ultimately awarded to us, we may achieve a lower than anticipated profit or incur a loss on the contract.

Even though the majority of our governmental contracts contain certain raw material escalators to protect us from certain price increases, a portion of the contracts are on a fixed cost basis. The fixed cost basis portion of these contracts require us to perform the contract for a fixed unit price based on approved quantities irrespective of our actual costs and lump sum contracts require that the total amount of work be performed for a single price irrespective of our actual costs. We realize a profit on our contracts only if: (i) we successfully estimate our costs and then successfully control actual costs and avoid cost overruns and (ii) our revenues exceed actual costs. If our cost estimates for a contract are inaccurate, or if we do not execute the contract within our cost estimates, then cost overruns may cause us to incur losses or cause the contract not to be as profitable as we expected. The final results under these types of contracts could negatively affect our cash flow, earnings and financial position. The costs incurred and gross profit realized, if any, on our contracts can vary, sometimes substantially, from our original projections due to a variety of factors, including, but not limited to:

failure to include materials or work in a bid, or the failure to estimate properly the quantities or costs needed to complete a lump sum contract;

delays caused by weather conditions;

contract or project modifications creating unanticipated costs not covered by change orders;

changes in availability, proximity and costs of materials, including liquid asphalt, cement, aggregates and other construction materials (such as stone, gravel, sand and oil for asphalt paving), as well as fuel and lubricants for our equipment;

to the extent not covered by contractual cost escalators, variability and inability to predict the costs of purchasing diesel, liquid asphalt and cement;

availability and skill level of workers;

failure by our suppliers, subcontractors, designers, engineers or customers to perform their obligations;

fraud, theft or other improper activities by our suppliers, subcontractors, designers, engineers, customers or our own personnel;

mechanical problems with our machinery or equipment;

citations issued by any governmental authority, including the Occupational Safety and Health Administration and Mine Safety and Health Administration;

difficulties in obtaining required governmental permits or approvals;

changes in applicable laws and regulations; and

uninsured claims or demands from third parties for alleged damages arising from the design, construction or use and operation of a project of which our work is part.

Public sector customers may seek to impose contractual risk-shifting provisions more aggressively, and we could face increased risks, which may adversely affect our cash flow, earnings and financial position.

Weather can materially affect our business and we are subject to seasonality.

Nearly all of the products used by us,we sell and by our customers, in the public or private construction industryservices we provide are used outdoors. In addition, our highway operations and production and distribution facilities are locatedor performed outdoors. Therefore, seasonal changes and other weather-related conditions can adversely affect our business and operations through a decline in both the use and production of our products and demand for our services.

Adverse weather conditions such as extended rainy and cold weather in the spring and fall can reduce demand for our products by contractors and reduce sales or render our contracting operations less efficient. Occasionally, majorMajor weather events such as hurricanes, tornadoes, tropical storms and heavy snows with quick rainy melts adversely could affect sales in the shortnear term.

The constructionConstruction materials business production and shipment levels follow activity in the construction industry, which typically occurs in the spring, summer and fall. Warmer and drier weather during the second and third quarters of our fiscal year typically result in higher activity and revenue levels during those quarters. The first quarter of our fiscal year has typically lower levels of activity due to the weather conditions. Our second quarter varies greatly with the spring rains and wide temperature variations. A cool wet spring increases drying time on projects, possibly delayingwhich can delay sales untilin the second quarter, while a warm dry spring may enable earlier project startup.

Our industry is capital intensive and we have significant fixed and semi-fixed costs. Therefore, our earnings are sensitive to changes in volume.

The property and machinery needed to produce our products can be very expensive. Therefore, we need to spend a substantial amount of capital to purchase and maintain the equipment necessary to operate our business. Although we believe that our current cash balance, along with our projected internal cash flows and our available financing resources, will provide sufficient cash to support our currently anticipated operating and capital needs, if we are unable to generate sufficient cash to purchase and maintain the property and machinery necessary to operate our business, we may be required to reduce or delay planned capital expenditures or incur additional debt. In addition, given the level of fixed and semi-fixed costs within our business, particularly at our cement production facility, decreases in volumes can negatively affect our financial position, results of operations and liquidity.

Within our local markets, we operate in a highly competitive industry.

The U.S. construction aggregates industry is highly fragmented with a large number of independent local producers in a number of our markets. Additionally, in most markets, we also compete against large private and public infrastructure companies, some of which are as vertically-integrated as we are.also vertically-integrated. Therefore, there is intense

competition in a number of the markets in which we operate. This significant competition could lead to lower prices, lower sales volumes and higher costs in some markets, negatively affecting our financial position, results of operations and liquidity.

Growth Risks

The success of our business depends, in part, on our ability to execute on our acquisition strategy, to successfully integrate acquisitions and to retain key employees of our acquired businesses.

A significant portion of our historical growth has occurred through acquisitions and we will likely enter into acquisitions in the future. We have evaluated and expect to continue to evaluate possible acquisition transactions on an ongoing basis. At any time we may be engaged in discussions or negotiations with respect to several possible acquisitions. From time to time we enter into letters of intent to allow us to conduct due diligence on a confidential basis. At any given time, we may be in preliminary discussions with several potential acquisition targets. There can be no assurance that we will enter into definitive agreements with respect to any contemplated transactions or that they will be completed. Our growth has placed, and will continue to place, significant demands on our management and operational and financial resources. Acquisitions involve risks that the businesses acquired will not perform as expected and that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove incorrect.

Acquisitions may require integration of the acquired companies’ sales and marketing, distribution, engineering, purchasing, finance and administrative organizations. We may not be able to integrate successfully any business we may acquire or have acquired into our existing business and any acquired businesses may not be profitable or as profitable as we had expected. Our inability to complete the integration of new businesses in a timely and orderly manner could increase costs and lower profits. Factors affecting the successful integration of acquired businesses include, but are not limited to, the following:

We may become liable for certain liabilities of any acquired business, whether or not known to us. These risks could include, among others, tax liabilities, product liabilities, environmental liabilities and liabilities for employment practices, and they could be significant.

Substantial attention from our senior management and the management of the acquired business may be required, which could decrease the time that they have to service and attract customers.

We may not effectively utilize new equipment that we acquire through acquisitions or otherwise at utilization and rental rates consistent with that of our existing equipment.

The complete integration of acquired companies depends, to a certain extent, on the full implementation of our financial systems and policies.

We may actively pursue a number of opportunities simultaneously and we may encounter unforeseen expenses, complications and delays, including difficulties in employing sufficient staff and maintaining operational and management oversight.

Although we believe margin improvement is achievable within 18 to 24 months of a given acquisition, we cannot assure you that we will achieve synergies and cost savings in connection with acquisitions. In addition, many of the businesses that we have acquired and will acquire have unaudited financial statements that have been prepared by the management of such companies and have not been independently reviewed or audited. We cannot assure you that the financial statements of companies we have acquired or will acquire would not be materially different if such statements were audited. Finally, we cannot assure you that we will continue to acquire businesses at valuations consistent with our prior acquisitions or that we will complete future acquisitions at all. We cannot assure you that there will be attractive acquisition opportunities at reasonable prices, that financing will be available or that we can successfully integrate such acquired businesses into our existing operations. In addition, our results of operations from these acquisitions could, in the future, result in impairment charges for any of our intangible assets, including goodwill, or other long-lived assets, particularly if economic conditions worsen unexpectedly. These changes could materially negatively affect our results of operations, financial condition or liquidity.

Our long-term success is dependent upon securing and permitting aggregate reserves in strategically located areas. If we are unableThe inability to secure and permit such reserves it could negatively affect our earnings in the future.

Construction aggregatesAggregates are bulky and heavy and therefore difficult to transport efficiently. Because of the nature of the products, the freight costs can quickly surpass the production costs. Therefore, except for geographic regions that do not possess commercially viable deposits of aggregates and are served by rail, barge or ship, the markets for our products tend to be very localized around our quarry sites and are served by truck. New quarry sites often take a number of years to develop, therefore ourdevelop. Our strategic planning and new site development must stay ahead of actual growth. Additionally, in a number of urban and suburban areas in which we operate, it is increasingly difficult to permit new sites or expand existing sites due to community resistance. Therefore, our future success is dependent, in part, on our ability to accurately forecast future areas of high growth in order to locate optimal facility sites and on our ability to either acquire existing quarries or secure operating and environmental permits to open new quarries. If we are unable to accurately forecast areas of future growth, acquire existing quarries or secure the necessary permits to open new quarries, our financial condition, results of operations and liquidity may be materially adversely affected.

Economic Risks

Our future growthbusiness relies on private investment in infrastructure, and a slower than expected recovery may dependadversely affect our results.

A significant portion of our sales are for projects with non-public owners. Construction spending is affected by developers’ ability to finance projects. The credit environment has negatively affected the U.S. economy and demand for our products in part on acquiring other businessesthe recent past. Residential and nonresidential construction could decline if companies and consumers are unable to finance construction projects or if an economic recovery is stalled, which could result in delays or cancellations of capital projects. If housing starts and nonresidential projects do not rise steadily with the economic recovery as they historically have when recessions end, sale of our industryconstruction materials, downstream products and successfully integrating them withpaving and related services may decline and our existing operations.financial position, results of operations and liquidity may be materially adversely affected.

In the past, we have made acquisitions to strengthen our existing locations, expandA decline in public infrastructure construction and reductions in governmental funding could adversely affect our operations grow our reserves and grow our market share. We expect to continue to make selective acquisitions in contiguous locations and geographic markets or other business arrangements we believe will help our company. However, the successresults.

A significant portion of our acquisition program will depend on our abilityrevenue is generated from publicly-funded construction projects. As a result, if publicly-funded construction decreases due to find and buy other attractive businesses at a reasonable price, the availability of financing and our ability to successfully integrate acquired businesses into our existing operations. We cannot assure you that there will be attractive acquisition opportunities at reasonable prices, that financing will be availablereduced federal or that we can successfully integrate such acquired businesses into our existing operations. In addition,state funding or otherwise, our results of operations and liquidity could be negatively affected.

In January 2011, the U.S. House of Representatives passed a new rules package that repealed a transportation law dating back to 1998, which protected annual funding levels from these acquisitionsamendments that could reduce such funding. This rule change subjects funding for highways to yearly appropriation reviews. The change in the funding mechanism increases the uncertainty of many state departments of transportation regarding funds for highway projects. This uncertainty could result in states being reluctant to undertake large multi-year highway projects which could, in turn, negatively affect our sales. MAP-21, the future result in impairment charges for any of our intangible assets, goodwill or other long-lived assets.

Ifexisting federal transportation funding program, expires September 30, 2014, and we failare uncertain as to develop or maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results.

We have completed numerous acquisitions in the past few yearssize and plan to continue to pursue growth through strategic acquisitions. Among the risks associated with acquisitions are the risks of control deficiencies that result from the integrationterm of the acquired businesses.transportation funding program that will follow.

In conjunction withAs a result of the preparationforegoing and other factors, we cannot be assured of our consolidated financial statementsthe existence, amount and timing of appropriations for the year ended December 31, 2011, we identified significant deficiencies in our internal controls over financial reporting related to the preparation and review of guarantor financial statements and purchase accounting processes.

Although we believe we have remediated these control deficiencies and strengthened our internal controls over financial reporting, specifically by increasing our accounting personnel, supplementing our financial expertise with outside resources and conducting training regarding U.S. generally accepted accounting principles (“GAAP”) accounting and reporting matters during fiscal 2011 and 2012, there may still be material weaknessesspending on federal, state or significant deficiencies in our internal controls in the future andlocal projects. Federal support for the cost of remediating any such weaknesseshighway maintenance and construction is dependent on congressional action. In addition, each state funds its infrastructure spending from specially allocated amounts collected from various taxes, typically gasoline taxes and vehicle fees, along with voter-approved bond programs. Shortages in state tax revenues can reduce the amounts spent on state infrastructure projects, even below amounts awarded under legislative bills. In recent years, nearly all states have experienced state-level funding pressures caused by lower tax revenues and an inability to finance approved

projects. Delays or deficienciescancellations of state infrastructure spending could be significant.

If our remediation efforts are insufficient to address control deficiencies, they may adverselynegatively affect our ability to record, process, summarize and report financial information timely and accurately and, as a result, our consolidated financial statements may contain material misstatements or omissions and we could be required to restate our financial results.

Our industry is capital intensive and portions of our business have significant fixed and semi-fixed costs. Therefore, our earnings are sensitive to changes in volume.

The property and machinery needed to produce our products can be very expensive. Therefore, we need to spend a substantial amount of money to purchase and maintain the equipment necessary to operate our business. Although we believe that our current cash balance, along with our projected internal cash flows and our available financing resources, will be enough to give us the cash we need to support our currently anticipated operating and capital needs, if we are unable to generate sufficient cash to purchase and maintain the property and machinery necessary to operate our business, we may be required to reduce or delay planned capital expenditures or incur additional debt. In addition, given the level of fixed and semi-fixed costs within our business, particularly at our cement production facility, both our dollar profits and our profits as a percentage of net sales (margin) can be negatively affected by decreases in volume.

Our failure to meet schedule or performance requirements of our contracts could adversely affect us.

In most cases, our contracts require completion by a scheduled acceptance date. Failure to meet any such schedule could result in additional costs, penalties or liquidated damages being assessed against us, and these

could exceed projected profit margins on the contract. Performance problems on existing and future contracts could cause actual results of operations to differ materially from those anticipated by us and could cause us to suffer damage to our reputation within the industry and among our customers, which may have a material adverse effect on our financial condition,position, results of operations and liquidity.liquidity because a significant portion of our business is dependent on state infrastructure spending.

Environmental, health and safety laws and regulations and any changes to, or liabilities arising under, such laws may have a material adverse effect on our business, financial condition, and results of operations.operations and liquidity.

We are subject to a variety of environmental, health and safety laws, and the cost of complying and other liabilities associated with such laws may have a material adverse effect on our business, financial condition and results of operations.

We are subject to a variety of federal, state and local environmental laws and regulations relating to:to, among other things: (i) the release or discharge of materials into the environment; (ii) the management, use, generation, treatment, processing, handling, storage, transport or disposal of hazardous materials, including the management of hazardous waste used as a fuel substitute at our cement kiln in Hannibal, Missouri; and (iii) the protection of public and employee health and safety and the environment. These laws and regulations impose strict liability in some cases without regard to negligence or fault and expose us to liability for the environmental condition of our currentcurrently or formerly owned or operated facilities, and may expose us to liability for the conduct of others or for our actions, thateven if such actions complied with all applicable laws at the time these actions were taken. In particular, we may incur remediation costs and other related expenses because our facilities were constructed and operated before the adoption of current environmental laws and the institution of compliance practices andor because certain of our processes are regulated. These laws and regulations may also expose us to liability for claims of personal injury or property or natural resource damage related to alleged exposure to, or releases of, regulated or hazardous materials. The existence of contamination at properties we own, lease or operate could also result in increased operational costs or restrictions on our ability to use those properties as intended, including for purposes of mining.

Despite our compliance efforts, there is thean inherent risk of liability in the operation of our business, especially from an environmental standpoint.standpoint, or from time to time, we may be in noncompliance with environmental, health and safety laws and regulations. These potential liabilities or noncompliances could have an adverse impacteffect on our operations and profitability. In many instances, we must have government approvals, and certificates, permits or licenses in order to conduct our business, which often require us to make significant capital, operating and maintenance expenditures to comply with zoningenvironmental, health and environmentalsafety laws and regulations. Our failure to obtain and maintain required approvals, certificates, permits or licenses or to comply with applicable governmental requirements could result in sanctions, including substantial fines or possible revocation of our authority to conduct some or all of our operations. Governmental requirements that impactaffect our operations also include those relating to air and water quality, waste management, water quality, mineasset reclamation, the operation and closure of municipal waste and construction and demolition debris landfills, remediation of contaminated sites and worker health and safety. These requirements are complex and subject to frequent change. They impose strict liability in some cases without regard to negligence or fault and expose us to liability for the conduct of, or conditions caused by, others, or for our acts that may otherwise have complied with all applicable requirements when we performed them. Stricter laws and regulations, more stringent interpretations of existing laws or regulations or the future discovery of environmental conditions may impose new liabilities on us, reduce operating hours, require additional investment by us in pollution control equipment or impede our opening new or expanding existing plants or facilities. We have incurred, and may in the future incur, significant capital and operating expenditures to comply with such laws and regulations. The cost of complying with such laws may have a material adverse effect on our business, financial condition, results of operations and liquidity. In addition, we have recorded liabilities in connection with our reclamation and landfill closure obligations, but there can be no assurances that the costs of our obligations will not exceed our accruals.

Financial Risks

ChangesDifficult and volatile conditions in legal requirementsthe credit markets could affect our financial position, results of operations and governmental policies concerning zoning, land use, environmental and other areasliquidity.

Demand for our products is primarily dependent on the overall health of the law impact our business.

Our operations are affected by numerouseconomy, and federal, state and local laws and regulations relatedpublic infrastructure funding levels. A stagnant or declining economy tends to zoning, land use and environmental matters. Despite our compliance efforts, we have an inherent riskproduce less tax revenue for public infrastructure agencies, thereby decreasing a source of liability in the operationfunds available for spending on public infrastructure improvements, which constitute a significant part of our business, especially from an environmental standpoint. These potential liabilities could have an adverse impact on our operations and profitability. In addition, our operations require numerous governmental approvals and permits, which often require us to make significant capital and maintenance expenditures to comply with zoning and environmental laws and regulations. Stricter laws and regulations, or more stringentbusiness.

interpretationsWith the slow pace of existing laws or regulations, may impose new liabilities on us, reduce operating hours, require additional investment by us in pollution control equipment, or impede our opening new or expanding existing plants or facilities.

Climate change and climate change legislation or regulations may adversely impact our business.

A number of governmental bodies have introduced or are contemplating legislative and regulatory change in response to the potential impacts of climate change. Such legislation or regulation, if enacted, potentially could include provisions for a “cap and trade” system of allowances and credits, among other provisions. The EPA promulgated a mandatory reporting rule covering greenhouse gas emissions from sources considered to be large emitters. The EPA has also promulgated a greenhouse gas emissions permitting rule, referred to as the “Tailoring Rule” which requires permitting of newly constructed or significantly modified large emitters of greenhouse gases under the Federal Clean Air Act. Our Continental Cement plant and Hamm landfill each hold EPA Title V Permits and could be impacted by the Tailoring Rule. The effects on our operations and potential costs are uncertain at this time. Under the Tailoring Rule, existing permits may require changes which could require significant additional costs ifeconomic recovery, there are future substantial modifications to either of these facilities that cause greenhouse gas emissions to be increased by the equivalent of 75,000 tons or more of carbon dioxide in a single year.

Other potential impacts of climate change include physical impacts such as disruption in production and product distribution due to impacts from major storm events and shifts in regional weather patterns and intensities. There is also a potential for climate change legislationlikelihood that we will not be able to collect on certain of our accounts receivable from our customers. Although we are protected in part by payment bonds posted by some of our customers, we have experienced payment delays and regulation to adversely impactdefaults from some of our customers during the cost of purchased energyrecent economic downturn and electricity.

The impacts of climate changesubsequent slow recovery. Such delays and defaults could have a material effect on our financial position, results of operations or liquidity.

If we are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us, we may achieve lower than anticipated profits or incur contract losses.

Even though the majority of our governmental contracts contain certain raw material escalators to protect us from certain price increases, a portion or all of the contracts are often on a fixed cost basis. Pricing on a contract with a fixed unit price is based on approved quantities irrespective of our actual costs and contracts with a fixed total price require that the total amount of work be performed for a single price irrespective of our actual costs. We realize a profit on our contracts only if our revenue exceeds actual costs, which requires that we successfully estimate our costs and then successfully control actual costs and avoid cost overruns. If our cost estimates for a contract are inadequate, or if we do not execute the contract within our cost estimates, then cost overruns may cause us to incur a loss or cause the contract not to be as profitable as we expected. The costs incurred and gross profit realized, if any, on our contracts can vary, sometimes substantially, from our original projections due to a variety of factors, including, but not limited to:

failure to include materials or work in a bid, or the failure to estimate properly the quantities or costs needed to complete a lump sum contract;

delays caused by weather conditions or otherwise failing to meet scheduled acceptance dates;

contract or project modifications creating unanticipated costs not covered by change orders;

changes in availability, proximity and costs of materials, including liquid asphalt, cement, aggregates and other construction materials (such as stone, gravel, sand and oil for asphalt paving), as well as fuel and lubricants for our equipment;

to the extent not covered by contractual cost escalators, variability and inability to predict the costs of purchasing diesel, liquid asphalt and cement;

availability and skill level of workers;

failure by our suppliers, subcontractors, designers, engineers or customers to perform their obligations;

fraud, theft or other improper activities by our suppliers, subcontractors, designers, engineers, customers or our own personnel;

mechanical problems with our machinery or equipment;

citations issued by any governmental authority, including the Occupational Safety and Health Administration (“OSHA”) and Mine Safety and Health Administration (“MSHA”);

difficulties in obtaining required governmental permits or approvals;

changes in applicable laws and regulations;

uninsured claims or demands from third parties for alleged damages arising from the design, construction or use and operation of a project of which our work is part; and

public infrastructure customers may seek to impose contractual risk-shifting provisions more aggressively, that result in us facing increased risks.

These factors, as well as others, may cause us to incur losses, which could negatively affect our financial position, results of operations and liquidity.

We may incur material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications.

We provide our customers with products designed to meet building code or other regulatory requirements and contractual specifications for measurements such as durability, compressive strength, weight-bearing capacity and other characteristics. If we fail or are unable to provide products meeting these requirements and specifications, material claims may arise against us and our reputation could be damaged. Additionally, if a significant uninsured, non-indemnified or product-related claim is resolved against us in the company overall are highly uncertainfuture, that resolution may have a material adverse effect on our financial condition, results of operations and difficultliquidity.

The cancellation of a significant number of contracts or our disqualification from bidding for new contracts could have a material adverse effect on our financial position, results of operations and liquidity.

Contracts that we enter into with governmental entities can usually be canceled at any time by them with payment only for the work already completed. In addition, we could be prohibited from bidding on certain governmental contracts if we fail to estimate. However, becausemaintain qualifications required by those entities. A cancellation of an unfinished contract or our disqualification from the bidding process could result in lost revenue and cause our equipment to be idled for a chemical reaction inherent to the manufacturesignificant period of Portland cement releases carbon dioxide, a greenhouse gas, cement kiln operations may be disproportionately impacted by future regulation of greenhouse gas emissions. Climate change and legislation and regulation concerning greenhouse gasestime until other comparable work becomes available, which could have a material adverse effect on our financial condition, results of operations and liquidity.

We depend on our senior management and we may be materially harmed if we lose any member of our senior management.

We are dependent upon the services of our senior management, especially CEO Tom Hill. The loss of key management personnel or our inability to attract and retain qualified management personnel could have a material adverse effect on us. A decision by any of these individuals to leave us, to compete against us or to reduce his involvement could have a material adverse effect on our financial condition, results of operations and liquidity.

We may not be able to grow our business effectively or successfully implement our growth plans if we are unable to recruit additional management and other personnel.

Our ability to continue to grow our business effectively and successfully implement our growth strategy is partially dependent upon our ability to attract and retain qualified management employees and other key employees. We believe there is a limited number of qualified people in our business and the industry in which we compete. As such, there can be no assurance that we will be able to identify and retain the key personnel that may be necessary to grow our business effectively or successfully implement our growth strategy. Our inability to attract and retain talented personnel could limit our ability to grow our business.

Labor disputes could disrupt operations of our businesses.

As of December 29, 2012, labor unions represent approximately 5% of our total hourly employees and 0.1% of our full time salaried employees. Our collective bargaining agreements for employees generally expire

between 2013 and 2015. Although we have good relations with our employees and unions, disputes with our trade unions, or the inability to renew our labor agreements, could lead to strikes or other actions that could disrupt our business, raise costs, and reduce revenues and earnings from the affected locations.

Our operations are subject to special hazards that may cause personal injury or property damage, subjecting us to liabilities and possible losses which may not be covered by insurance.

Operating hazards inherent in our business, some of which may be outside our control, can cause personal injury and loss of life, damage to or destruction of property, plant and equipment and environmental damage. We maintain insurance coverage in amounts and against the risks we believe are consistent with industry practice, but this insurance may not be adequate or available to cover all losses or liabilities we may incur in our operations. Our insurance policies are subject to varying levels of deductibles. Losses up to our deductible amounts are accrued based upon our estimates of the ultimate liability for claims incurred and an estimate of claims incurred but not reported. However, liabilities subject to insurance are difficult to assess and estimate due to unknown factors, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents not reported and the effectiveness of our safety programs. If we were to experience insurance claims or costs above our estimates, we might also be required to use working capital to satisfy these claims rather than using working capital to maintain or expand our operations.

Unexpected factors affecting self-insurance claims and reserve estimates could adversely affect our business.

We use a combination of third-party insurance and self-insurance to provide for potential liabilities for workers’ compensation, general liability, vehicle accident, property and medical benefit claims. Although we believe we have minimized our exposure on individual claims, for the benefit of costs savings we have accepted the risk of a large amount of independent multiple material claims arising, which could have a significant impacteffect on our earnings. We are liable for up to $500,000 per year per member for health claims. Our workers’ compensation and auto liability insurance has a $150,000 per occurrence deductible and our general liability per occurrence deductible is $100,000. Our property and excess property coverage carries a $200.0 million blanket annual limit, subject to a $50,000 deductible. Our general liability policy has a $1.0 million limit per occurrence and our auto liability policy has a $3.0 million combined single limit. We have umbrella insurance in the amount of $25.0 million to cover excess claims.

We estimate the projected losses and liabilities associated with the risks retained by us, in part, by considering historical claims experience, demographic and severity factors and other actuarial assumptions which, by their nature, are subject to a high degree of variability. Any projection of losses concerning workers’ compensation and general liability is subject to a high degree of variability. Among the causes of this variability are unpredictable external factors affecting future inflation rates, discount rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns.

We may incur material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications.

We provide to our customers specified product designs that meet building code or other regulatory requirements and contractual specifications for measurements Any such as durability, compressive strength, weight-bearing capacity and other characteristics. If we fail or are unable to provide products meeting these requirements and specifications, material claims may arise against us and our reputation could be damaged. Additionally, if a significant uninsured, non-indemnified or product-related claim is resolved against us in the future, that resolution may have a material adverse effect on our financial condition, results of operations and liquidity.

The cancellation of significant contracts or our disqualification from bidding for new contracts could reduce revenues and have a material adverse effect on our results of operations.

Contracts that we enter into with governmental entities can usually be canceled at any time by them with payment only for the work already completed. In addition, we could be prohibited from bidding on certain governmental contracts if we fail to maintain qualifications required by those entities. A cancellation of an unfinished contract or our disqualification from the bidding process could cause our equipment to be idled for a significant period of time until other comparable work became available, whichmatters could have a material adverse effect on our financial condition, results of operations and liquidity.

Other Risks

Our success is dependent on our Chief Executive Officer and other key personnel.

Our success depends on the continuing services of our Chief Executive Officer, Mr. Tom Hill, and other key personnel. We believe that Mr. Hill possesses valuable knowledge and skills that are crucial to our success and

would be very difficult to replicate. Our senior management team was assembled under the leadership of Mr. Hill. The team was assembled with a view towards substantial growth, and the size and aggregate compensation of the team increased substantially. The associated significant increase in overhead expense could decrease our margins if we fail to grow substantially. Not all of our senior management team resides near or works at our headquarters. The geographic distance of the members of our senior management team may impede the team’s ability to work together effectively. Our success will depend, in part, on the efforts and abilities of our senior management and their ability to work together. We cannot assure you that they will be able to do so.

Over time, our success will depend on attracting and retaining qualified personnel. Competition for senior management is intense, and we may not be able to retain our management team or attract additional qualified personnel. The loss of a member of senior management would require our remaining senior officers to divert immediate attention, which could be substantial or require costly external resources in the short-term, to fulfilling. The inability to adequately fill vacancies in our senior executive positions on a timely basis could negatively affect our ability to implement our business strategy, which could adversely affect our results of operations and prospects.

We use large amounts of electricity, diesel fuel, liquid asphalt and other petroleum-based resources that are subject to potential reliability issues, supply constraints and significant price fluctuation, which could affect our financial position, operating results and profitability.liquidity.

In our production and distribution processes, we consume significant amounts of electricity, diesel fuel, liquid asphalt and other petroleum-based resources. The availability and pricing of these resources are subject to market forces that are beyond our control. Furthermore, we are vulnerable to any reliability issues experienced by our suppliers, which also are beyond our control. Our suppliers contract separately for the purchase of such resources and our sources of supply could be interrupted should our suppliers not be able to obtain these materials due to higher demand or other factors that interrupt their availability. Variability in the supply and prices of these resources could materially affect our financial position, results of operations and liquidity from period to periodperiod.

Climate change and rising costsclimate change legislation or regulations may adversely affect our business.

A number of governmental bodies have introduced or are contemplating legislative and regulatory changes in response to the potential effects of climate change. Such legislation or regulation has and potentially could erodeinclude provisions for a “cap and trade” system of allowances and credits, among other provisions. The EPA promulgated a mandatory reporting rule covering greenhouse gas emissions from sources considered to be large emitters. The EPA has also promulgated a greenhouse gas emissions permitting rule, referred to as the “Tailoring Rule” which sets forth criteria for determining which facilities are required to obtain permits for greenhouse gas (“GHG”) emissions pursuant to the Clean Air Acts’s Prevention of Significant Deterioration (“PSD”) and Title V operating permit programs. The U.S. Supreme Court ruled in June 2014 that the EPA exceeded its statutory authority in issuing the Tailoring Rule but upheld the Best Available Control Technology (“BACT”) requirements for GHGs emitted by sources already subject to PSD requirements for other pollutants. Our cement plant and one of our profitability.landfills hold Title V Permits. If future modifications to our facilities require PSD review for other pollutants, GHG BACT requirements may also be triggered, which could require significant additional costs.

Other potential effects of climate change include physical effects such as disruption in production and product distribution as a result of major storm events and shifts in regional weather patterns and intensities. There is also a potential for climate change legislation and regulation to adversely affect the cost of purchased energy and electricity.

The effects of climate change on our operations are highly uncertain and difficult to estimate. However, because a chemical reaction inherent to the manufacture of Portland cement releases carbon dioxide, a GHG,

cement kiln operations may be disproportionately affected by future regulation of GHGs. Climate change and legislation and regulation concerning GHGs could have a material adverse effect on our financial condition, results of operations and liquidity.

Affiliates of the Sponsors indirectly own the substantial majority of theour equity interests in us and may have conflicts of interest with us or the holders of the exchange notes in the future.

The Sponsors indirectly own a substantial majority of our equity interests. As a result, affiliates of the Sponsors will have control over our decisions to enter into any corporate transaction and will have the ability to prevent any transaction that requires the approval of equity holders regardless of whether holders of the exchange notes believe that any such transactions are in their own best interests. For example, affiliates of the Sponsors could collectively cause us to make acquisitions that increase the amount of our indebtedness or to sell assets, or could cause us to issue additional capital stock or declare dividends.dividends, as permitted under the terms of the indenture governing the existing notes and the exchange notes and the credit agreement governing our senior secured credit facilities. So long as the Sponsors continue to indirectly own a significant amount of our outstanding equity interests, affiliates of the Sponsors will continue to be able to strongly influence or effectively control our decisions.

The indenture governing the existing notes and the exchange notes and the credit agreement governing our senior secured credit facilities permit us to pay advisory and other fees, dividends and make other restricted payments to the Sponsors under certain circumstances and the Sponsors or their respective affiliates may have an interest in our doing so. In addition, the Sponsors have no obligation to provide us with any additional debt or equity financing.

Additionally, the Sponsors are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or that supply us with goods and services. The Sponsors may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. The holders of the exchange notes should consider that the interests of the Sponsors may differ from their interests in material respects. See “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”and” and “Certain Relationships and Related Party Transactions.”

As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.

As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. We will remain an “emerging growth company” until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion or

more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement; (iii) the date on which we have, during the previous three year period, issued more than $1 billion in non-convertible debt; or (iv) the date on which we are deemed a “large accelerated issuer” as defined under the federal securities laws.

For so long as we remain an “emerging growth company,” we will not be required to, among other things:

 

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s reporting providing additional information about the audit and the financial statements (auditor discussion and analysis);

 

submit certain executive compensation matters to shareholders advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and “say on golden parachute” provisions (requiring a non- bindingnon-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and

include detailed compensation discussion and analysis in our filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and instead may provide a reduced level of disclosure concerning executive compensation.

We have not taken advantage of all of these reduced reporting burdens in this Registration Statement,prospectus, although we may do so in future filings. Although we intend to rely on certain exemptions provided infilings with the JOBS Act, the exactSEC. The specific implications for us of the JOBS Act for us are still subject to interpretations and guidance by the SEC and other regulatory agencies. In addition, as our business grows, we may no longercease to satisfy the conditions of an “emerging growth company.” We are currently evaluating and monitoring developments with respect to these new rules and we cannot assure you that we will be able to take advantage of all of the benefits from the JOBS Act.

In addition, as an “emerging growth company,” we may elect to delay adoption of new or revised accounting standards applicable to public companies until such standards are made applicable to private companies. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.

We are dependent on information technology and ourtechnology. Our systems and infrastructure face certain risks, including cyber security risks and data leakage risks.

We are dependent on information technology systems and infrastructure. Any significant breakdown, invasion, destruction or interruption of these systems by employees, others with authorized access to our systems, or unauthorized persons could negatively impactaffect operations. There is also a risk that we could experience a business interruption, theft of information or reputational damage as a result of a cyber attack, such as an infiltration of a data center, or data leakage of confidential information either internally or at our third-party providers. While we have invested in the protection of our data and information technology to reduce these risks and periodically test the security of our information systems network, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could adversely affect our financial condition, results of operations and liquidity.

Labor disputes could disrupt operations of our businesses.

As of June 28, 2014, labor unions represented approximately 4.4% of our total employees, substantially all at Continental Cement. Our collective bargaining agreements for employees generally expire between 2015 and 2018. Although we believe we have good relations with our employees and unions, disputes with our trade unions, or the inability to renew our labor agreements, could lead to strikes or other actions that could disrupt our operations, raise costs, and reduce revenue and earnings in the affected locations.

USE OF PROCEEDS

We will not receive any proceeds from the issuance of the exchange notes in the exchange offer. The exchange offer is intended to satisfy our obligations under the registration rights agreement that we entered into in connection with the private offering of the outstanding notes. As consideration for issuing the exchange notes as contemplated in this prospectus, we will receive in exchange a like principal amount of outstanding notes, the terms of which are identical in all material respects to the exchange notes, except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest upon a failure to fulfill certain of our obligations under the registration rights agreement. The outstanding notes that are surrendered in exchange for the exchange notes will be retired and cancelled and cannot be reissued. As a result, the issuance of the exchange notes will not result in any change in our capitalization.

CAPITALIZATION

The following table sets forth our consolidated cash and capitalization as of December 29, 2012.

June 28, 2014 on an actual basis and on an as adjusted basis to give effect to the September 2014 Transactions as if they had occurred on that date. You should read this table in conjunction with “Prospectus Summary—Summary Historical Consolidated Financial and Other Data,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Summit Materials, LLC” and our historical consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

The outstanding notes that are surrendered in exchange for the exchange notes will be retired and cancelled and cannot be reissued. As a result, the issuance of the exchange notes will not result in any change in our capitalization.

 

  As of
June 28, 2014
 
  As of
December 29, 2012
   Actual   As Adjusted 
  (in millions)   (in millions) 

Cash

  $27.4    $20.8    $20.8  
  

 

   

 

   

 

 

Debt:

      

Senior secured credit facilities(1)

  $398.0    $482.8    $455.3  

10.5% senior notes due 2020(2)

   250.0  

Capital leases and other

   23.8     23.8  

10 12% senior notes due 2020:

    

Existing notes(2)

   510.0     510.0  

Outstanding notes(3)

   —      115.0  
  

 

   

 

   

 

 

Total debt

   648.0     1,016.6     1,104.1  

Total member’s interest

   382.4     268.8     268.8  
  

 

   

 

   

 

 

Total capitalization

  $1,030.4    $1,285.4    $1,372.9  
  

 

   

 

   

 

 

 

(1)In February 2013, we entered into amendments to our senior secured credit facilities. The senior secured credit facilities currently provide senior secured financing in an amount of $572.0 million, consisting of a $150.0 million five-year revolving credit facility and a $422.0 million seven-year term loan facility. See “Description of Other Indebtedness—Senior Secured Credit Facilities.” Represents the principal amount of loans without giving effect to original issuanceissue discount.
(2)Represents the aggregate principal amount of the existing notes, without giving effect to original issuance discounts or premium to par or commissions to the initial purchasers.
(3)As adjusted amounts reflects the aggregate principal amount of the outstanding notes, without giving effect to any premium to par or commissions to the initial purchasers.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information has been prepared to give effect to our acquisitions of Norris, Kay & Kay and Sandco, which were completed on February 29, 2012, October 5, 2012 and November 30, 2012, respectively, as if they occurred on January 1, 2012. The acquisitions of Norris, Kay & Kay and Sandco are considered business combinations in accordance with Financial Accounting Standards Board Accounting Standards Codification 805, “Business Combinations.”

The following unaudited pro forma condensed consolidated financial information has been derived from our audited consolidated financial statements for the year ended December 29, 2012 included elsewhere in this prospectus along with the pre-acquisition financial information for Norris, Kay & Kay and Sandco. The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed consolidated statements of operations to give effect to pro forma events that are (i) directly attributable to the transaction, (ii) factually supportable, and (iii) expected to have a continuing impact on us. The unaudited pro forma condensed consolidated statements of operations exclude $1.7 million in non-recurring charges directly attributable to the Norris, Kay & Kay and Sandco acquisitions, including transaction-related costs such as financial advisory, accounting and legal fees.

The unaudited pro forma condensed consolidated financial information is presented for illustrative and informative purposes only and is not intended to represent or be indicative of what our results of operations would have been had the acquisitions of Norris, Kay & Kay and Sandco actually occurred on January 1, 2012. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the information contained in “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Summit Materials, LLC” and the audited consolidated financial statements for each of Summit Materials and for Norris included elsewhere in this prospectus. The unaudited pro forma condensed consolidated financial information should not be considered representative of our future results of operations or financial position.

Unaudited Pro Forma Condensed Consolidated Statements of Operations

for the year ended December 29, 2012

   Summit Materials, LLC 
(in thousands)  Summit
Materials,
LLC
  Pre-
acquisition
results of
Norris,
Kay & Kay
and
Sandco
1/1/2012 –
11/30/2012
   Pro Forma
adjustments
for the
acquisition of
Norris,
Kay & Kay
and Sandco
      Pro Forma
Combined
 

Revenue

  $962,902   $13,895    $—       $976,797  

Cost of revenue (exclusive of items shown separately below)

   749,363    11,502     —        760,865  

General and administrative expenses

   128,032    1,000     —        129,032  

Depreciation, depletion, amortization and accretion

   68,876    1,008     81    (a)     69,965  

Transaction costs

   1,988    —       (1,742  (b)     246  
  

 

 

  

 

 

   

 

 

    

 

 

 

Operating income (loss)

   14,643    385     1,661      16,689  
  

 

 

  

 

 

   

 

 

    

 

 

 

Other (income) expense, net.

   (1,182  15     —        (1,167

Loss on debt refinancing.

   9,469    —       —        9,469  

Interest expense

   58,079    2     200    (c)     58,281  
  

 

 

  

 

 

   

 

 

    

 

 

 

(Loss) income from continuing operations before income tax (benefit) expense

  $(51,723 $368     1,461      (49,894
  

 

 

  

 

 

   

 

 

    

 

 

 

See accompanying notes to unaudited pro forma condensed consolidated financial information, which are an integral part of this information.

Notes to Unaudited Pro Forma Condensed Consolidated Financial information

(a)The depreciation expense adjustment relates to the step up in fair value of fixed assets acquired in the Norris, Kay & Kay and Sandco acquisitions. A summary of the effects of the adjustment to depreciation expense for the year ended December 29, 2012 is as follows (dollars in thousands):

Estimated depreciation expense

  $330  

Elimination of historical depreciation expense

   (249
  

 

 

 

Depreciation expense adjustment

  $81  
  

 

 

 

(b)This adjustment is to eliminate historical transaction costs incurred in connection with the Norris acquisition, principally legal and financial advisory fees due to the non-recurring nature of these expenses. There was no income tax benefit recorded on the transaction costs in the historical consolidated results of operations, accordingly, no pro forma tax adjustment has been recorded for this adjustment. The transaction costs removed for the year ended December 29, 2012 is $1.7 million.

(c)A summary of the effects of the adjustment to interest expense for the year ended December 29, 2012 is as follows (dollars in thousands):

Estimated interest expense on debt from Norris acquisition(i)

  $196  

Elimination of historical interest expense(ii)

   (2

Estimated interest associated with acquisition liabilities(iii)

   6  
  

 

 

 

Interest expense adjustment

  $200  
  

 

 

 

(i)This adjustment is to reflect the estimated incremental interest expense based on the average interest rate between January 1, 2012 and February 29, 2012, the acquisition date, of approximately 4.75% on the debt incurred for the Norris acquisition as if incurred on January 1, 2012.

(ii)This adjustment is to eliminate the interest expense in the historical statements of operations.

(iii)We recorded certain acquisition-related liabilities at present value; accordingly, we began to record interest expense on the accretion of those liabilities. This adjustment is to record additional interest expense for the pre-acquisition period, assuming we had acquired Norris and recorded the acquisition-related liabilities at present value on January 1, 2012.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables settable sets forth, for the periods and as of the dates indicated, our selected predecessor and successor consolidated financial data. For financial statement presentation purposes, Hamm, Inc., which had a fiscal year end of March 31 prior to its acquisition by Summit Materials on August 26, 2009, has been identified as the predecessor. The selected predecessor statementsstatement of operations data for the period from April 1, 2009 to August 25, 2009 and for the year ended March 31, 2009 are derived from the audited consolidated financial statements not included in this prospectus. Summit Materials is the successor company. The selected successor statements of operations data for the three years ended December 28, 2013, December 29, 2012 and December 31, 2011 and December 31, 2010 and the selected balance sheet data as of December 29, 201228, 2013 and December 31, 201129, 2012 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected successor statements of operations data for the period from August 26, 2009 to December 31, 2009 and the selected balance sheet data as of December 31, 2011, December 31, 2010 and December 31, 2009 are derived from our audited consolidated financial statements not included in this prospectus.

The predecessor selected balance sheethistorical consolidated financial data as of March 31, 2009 isand for the six months ended June 28, 2014 and June 29, 2013 were derived from Hamm’s auditedthe unaudited consolidated financial statements not included elsewhere in this prospectus. We have prepared our unaudited consolidated financial statements on the same basis as our audited consolidated financial statements and, in our opinion, have included all adjustments, which include normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year. Additionally, our historical results are not necessarily indicative of the results expected for any future period.

In 2011, Summit Materials adopted a “4-4-5” fiscal calendar in place of the calendar year it previously used. Under the 4-4-5 fiscal period, each year is divided into four quarters and each quarter consists of two four week “months” and one five week “month.” Historical results are not indicative of the results to be expected in the future.

You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Summit Materials, LLC” and the consolidated financial statements and the accompanying notes appearing elsewhere in this prospectus.

 

 Summit Materials, LLC (Successor)      Hamm, Inc. (Predecessor)    Summit Materials, LLC (Successor)    Hamm, Inc.
(Predecessor)
 
(in thousands) Year Ended
December
29, 2012
 Year Ended
December 31,
2011(1)
 Year Ended
December 31,
2010(1)
 Period from
August 26,
2009 to
December 31,
2009
    Period From
April 1, 2009
to August 25,
2009
 Year Ended
March 31,
2009
  Six
Months
Ended
June 28,
2014
 Six
Months
Ended
June 29,
2013
 Year Ended
December 28,
2013
 Year Ended
December 29,
2012
 Year Ended
December 31,
2011
 Year Ended
December 31,
2010
 Period from
August 26,
2009 to
December 31,
2009
    Period From
April 1, 2009
to August 25,
2009
 

Statements of Operations Data:

        

Revenue

 $962,902   $822,548   $430,358   $29,348     $36,195   $104,407  

Cost of revenue (exclusive of items shown separately below)

  749,363    630,944    308,297    21,582      24,940    83,152  

Statement of Operations Data:

          

Total revenue

 $475,386   $361,671   $916,201   $926,254   $789,076   $405,297   $29,348     $36,195  

Total cost of revenue (excluding items shown separately below)

 360,437   277,916   677,052   713,346   597,654   284,336   21,582     24,940  

General and administrative expenses

  128,032    96,886    49,479    4,210      1,639    2,993   70,355   73,395   142,000   127,215   95,826   48,557   4,210     1,639  

Goodwill impairment

  —      —     68,202    —      —      —      —        —    

Depreciation, depletion, amortization and accretion

  68,876    61,964    34,415    3,148      3,187    8,101   40,695   36,026   72,934   68,290   61,377   33,870   3,148     3,187  

Transaction costs

  1,988    9,120    22,268    4,682       4,996   2,464   3,990   1,988   9,120   22,268   4,682      —    
 

 

  

 

  

 

  

 

  

 

 

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

    

 

 

Operating income (loss)

  14,643    23,634    15,899    (4,274    6,429    10,161  
        

Operating (loss) income

 (1,097 (28,130 (47,977 15,415   25,099   16,266   (4,274   6,429  

Other (income) expense, net

  (1,182  (21,244  1,583    192      484    (1,220 (891 163   (1,737 (1,182 (21,244 1,583   192     484  

Loss on debt refinancing

  9,469    —      9,975    —        —      —    

Loss on debt financings

  —     3,115   3,115   9,469    —     9,975    —        —    

Interest expense

  58,079    47,784    25,430    574      —      —     40,470   27,849   56,443   58,079   47,784   25,430   574      —    
 

 

  

 

  

 

  

 

  

 

 

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

    

 

 

(Loss) income from continuing operations before income tax (benefit) expense

  (51,723  (2,906  (21,089  (5,040    5,945    11,381  

(Loss) income from continuing operations before tax

 (40,676 (59,257 (105,798 (50,951 (1,441 (20,722 (5,040   5,945  

Income tax (benefit) expense

  (3,920  3,408    2,363    216      2,303    4,152   (1,460 (3,347 (2,647 (3,920 3,408   2,363   216     2,303  
 

 

  

 

  

 

  

 

    

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

    

 

 

(Loss) income from continuing operations

 $(47,803 $(6,314 $(23,452 $(5,256   $3,642   $7,229   $(39,216 $(55,910 $(103,151 $(47,031 $(4,849 $(23,085 $(5,256   $3,642  
 

 

  

 

  

 

  

 

    

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

    

 

 

Cash Flow Data:

                  

Net cash provided by (used for):

        

Net cash (used for) provided by:

          

Operating activities

 $62,279   $23,253   $(20,529 $3,897     $6,320   $17,430   $(45,880 $(47,760 $66,412   $62,279   $23,253   $(20,529 $3,897     $6,320  

Investing activities

  (85,340  (192,331  (499,381  (46,669    31,255    (18,492 (277,388 (94,221 (111,515 (85,340 (192,331 (499,381 (46,669   31,255  

Financing activities

  7,702    146,775    575,389    52,379      (44,649  (2,045 329,153   122,205   32,589   7,702   146,775   575,389   52,379     (44,649

Balance Sheet Data (as of period end):

                  

Cash and cash equivalents

 $27,431   $42,790   $65,093   $9,614      $10,419  

Cash

 $20,802    $14,917   $27,431   $42,790   $65,093   $9,614     

Total assets

  1,281,213    1,284,265    1,101,581    111,775       100,719   1,617,640    1,247,794   1,281,213   1,284,265   1,101,581   111,775     

Total debt (including current portion of long-term debt)

  639,843    608,981    559,980    28,750       —     1,007,510    688,987   639,843   608,981   559,980   28,750     

Capital leases

  3,092    3,158    3,217    —         —     23,368    8,026   3,092   3,158   3,217    —       

Total member’s interest

  382,428    436,372    345,993    —         —     268,845    283,551   382,428   436,372   345,993    —       

Redeemable Noncontrolling interests

  22,850    21,300    21,300    —         —    

Redeemable noncontrolling interests

 26,825    24,767   22,850   21,300   21,300    —       

Other Financial Data (as of period end):

                  

Total hard assets(2)(1)

 $906,584   $906,166   $775,457   $92,309      $32,571   $1,039,684   $968,672   $928,210   $906,584   $906,166   $775,457   $92,309     

Ratio of earnings to fixed charges(3)(2)

  0.1    1.0    0.2    N/A      364.0    341.4   0.0x   N/A   N/A   0.1x   1.0x   0.2x   N/A     365.0x  

 

(1)Amounts are shown net of results of operations associated with certain non-core businesses sold in 2012 and classified as discontinued operations.
(2)Defined as the balance sheet book value of the sum of (a) property, plant and equipment, net and (b) inventories.
(3)(2)The ratio of earnings to fixed charges is determined by dividing earnings, as adjusted, by fixed charges. Fixed charges consist of interest on all indebtedness plus that portion of operating lease rentals representative of the interest factor (deemed to be 33% of operating lease rentals). Earnings were insufficient to cover fixed charges for the six months ended June 29, 2013, the year ended December 28, 2013 and for the period from August 26, 2009 to December 31, 2009 by $5.8 million.$58.6 million, $5.6 million and $5.6 million, respectively.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS OF SUMMIT MATERIALS, LLC

You should read the following discussion of our results of operations and financial condition with the “Unaudited Pro Forma Condensed Consolidated Financial Statements” and the “Selected Historical Consolidated Financial Data” sections of this prospectus and our audited consolidated financial statements and the related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this prospectus. Our actual results may differ materially from those contained in any forward-looking statements.

Overview

We are one of the fastest growing construction materials companies in the United States. Our materials include aggregates, which we supply across the country, primarily in Texas, Kansas, Kentucky, Missouri and Utah, and cement, which we supply in Missouri, Iowa and Illinois. Within our markets, we offer our customers a leading, vertically-integrated, geographically-diverse heavy-side buildingsingle-source provider for construction materials company. We supply aggregates, cement and related downstream products such asthrough our vertical integration. In addition to supplying aggregates to customers, we use the materials internally to produce ready-mixed concrete and asphalt paving mix, ready mixed concrete, concrete products andwhich may be sold externally or used in our paving and related construction servicesservices. Our vertical integration creates opportunities to a varietyincrease aggregates volumes and optimize margin at each stage of end-uses in the U.S. construction industry, including public infrastructure projects,production, as well as private residentialcreating a competitive advantage for us through the efficiency gains, convenience and non-residential construction. Wereliability provided to customers.

Since our formation in September 2008, our parent company has received equity commitments of $798.1 million, of which $467.5 million has been deployed. Through the deployed equity and debt financings, we have organized the business by geographic region and have three operating segments,completed 33 acquisitions, which are alsoorganized into ten operating companies that make up our reporting segments:three distinct operating segments—West, Central West and East regions. Across the three regions, weregions—spanning 17 U.S. states and Vancouver, Canada and 27 metropolitan statistical areas. We believe we areeach of our operating companies has a top 15 supplierthree market share position in its local market achieved through their respective, extensive operating history, averaging over 35 years. Our highly experienced management team, led by our President and Chief Executive Officer, Tom Hill, a 30-year industry veteran, has successfully enhanced the operations of aggregates, a top 20 supplier of cement, a top 10 producer of asphalt paving mixacquired companies by focusing on scale advantages, cost efficiencies and a major producer of ready mixed concrete in the United States by volume. As of December 29, 2012, we had 1.2 billion tonspricing discipline to improve profitability and 0.4 billion tons ofcash flow.

Our proven and probable aggregates reserves serving our aggregateswere 1.9 billion tons and cement businesses, respectively,1.6 billion tons as of June 28, 2014 and operated over 120 sites and plants. We believe that we have adequate road, barge and/or railroad access to all of our sites and plants. We do not perform annual reserve audits.December 28, 2013, respectively. From time to time, in connection with certain acquisitions, we engage a third party engineering firm to perform a reserve audit.

Our production volumes and average selling prices foraudit, but we do not perform annual reserve audits. By segment, our primary products in 2012, 2011 and 2010 are as follows:

  2012   2011   2010 
  Volume(1)   Average
Selling  Price(2)
   Volume(1)   Average
Selling  Price(2)
   Volume(1)   Average
Selling  Price(2)
 

Aggregate

  16,728    $8.49     13,844    $8.17     7,972    $8.82  

Asphalt

  4,553     53.31     4,074     48.17     1,590     50.29  

Ready mix

  1,210     88.29     1,053     89.48     352     77.63  

Cement

  1,003     81.17     850     83.00     595     85.30  

(1)Volumes are shown in tons for aggregates, asphalt and cement and in cubic yards for ready mix.
(2)Average selling prices are shown on a per ton basis for aggregates, asphalt and cement and on a per cubic yard basis for ready mix.

The growth in our volumes is primarily a result of our acquisitions, which have also impacted our average selling prices, as we enter into new markets with different pricing structures. Our cement volume has increased and pricing has decreased as a result of increased volume to large customers, which have lower average selling prices.

Our estimate of proven and probable reserves for which we have permits for extraction and that we consider to be recoverable aggregates of suitable quality for economic extraction by segment are shown in the table below along with average annual production over the past three years.production. The number of producing quarries as of June 28, 2014 shown onin the table below includes the underground mine supportingthat was substantially completed in 2014 to support our cement plant, which is currently in development.plant.

 

  Number of
producing
quarries
  Tonnage of reserves for
each general type of
aggregate
  Annual
production
(tons)
  Average years
till depletion
at current
production
  Percent of
reserves owned and

percent leased
  Hard Rock  Sand &
Gravel
  

Segment

  OwnedAnnual
production
(tons)
Leased*Average years
till depletion
at current
production
Leased*  Number of
producing
quarries
   Tonnage of reserves for
each general type of
aggregate
   Annual
production(1)
   Average
years until
depletion
at current
production
   Percent of reserves
owned and percent
leased
 

Segment

  Hard
rock(1)
   Sand and
gravel(1)
   Owned Leased(2) 
   45     163,616     327,779     16,017     31     47 53

Central

   59     875,156     34,314     5,294     172     70 30

East

   24     461,695     7,271     4,615     102     39 61
  (in thousands)  

 

   

 

   

 

   

 

      

Central

    53     865,142     18,672     9,902     89     17%  83%

West

    38     148,905     170,756     4,586     70     37%  63%

East

    21     419,519     5,614     4,194     101     33%  67%

Total

    112     1,433,566     195,042     18,682           128     1,500,467     369,364     25,926       
  

 

   

 

   

 

   

 

      

 

*(1)Hard rock, sand and gravel and annual production tons are shown in thousands.
(2)Lease terms range from monthly to on-going with an average lease expiry inof 2020.

We were formed in September 2008. Since July 2009, the Sponsors and certain of our officers, directors and employees have made $794.5 million of funding commitments to our indirect parent entity, Summit Materials Holdings L.P. We have grown rapidly as a result of our disciplined acquisition strategy, utilizing approximately $457.3 million of the $463.9 million of equity commitments funded to Parent by the Sponsors and certain other investors. Today, our nine operating companies make up our three distinct geographic segments that span 20 states and 23 metropolitan areas. We believe each of our operating companies has a top three market share position in its local market area and an extensive operating history, averaging over 35 years. Our highly experienced management team, led by 30-year industry veteran, CEO Tom Hill has successfully enhanced the operations of acquired companies by focusing on scale advantages, cost efficiencies and pricing discipline to improve profitability and cash flow.

Of the 2017 states in which we operate, we currently have assets in 1315 states across our three geographic regions. The map below illustrates the geographic footprint of our geographic footprint:physical assets:

 

LOGOLOGO

Our revenue is derived from multiple end-use markets, including public infrastructure construction as well as private residentialFor the six months ended June 28, 2014 and non-residential construction. For the year ended December 29, 2012,28, 2013, approximately 62%54% and 42%, respectively, of our revenue related to residential and nonresidential construction and approximately 46% and 58%, respectively, related to public infrastructure construction and the remaining 38% related to residential and non-residential construction. Ourprojects. In general, our aggregates, and asphalt paving mix and paving businesses are weighted towards public infrastructure projects. Our cement and ready-mixed concrete businesses serve both the public and private construction and public infrastructure markets.

Private construction includes both residential and nonresidential new construction and the repair and remodel markets. From a macroeconomic view, we see positive indicators for the construction sector, including upward trends in housing starts and construction employment and highway obligations. All of these factors should result in increased construction activity in the private sector. However, we do not expect this recovery to be consistent across the United States. Certain markets, such as Texas, are showing greater, more rapid signs of recovery than other markets.

Public constructioninfrastructure includes spending by federal, state and local governments for roads, highways, bridges, airports and other public infrastructure construction projects. A significant portion of our construction revenues are from public constructionPublic infrastructure projects have historically been a historically morerelatively stable portion of state and federal budgets. Our acquisitions to date arehave been primarily focused in states with constitutionally-protected transportation funding sources, which we believe serves to limitlimits our exposure to state and local budgetary uncertainties. Private construction includes both new residentialThe existing federal transportation funding program, MAP-21, expires September 30, 2014. There is uncertainty as to what will succeed MAP-21, and non-residential construction and repair and remodel markets, which have been significantly impacted by the downturnfunding increases are not expected in the overall economyshort term. We also continue to monitor the status of the Highway Trust Fund. On August 1, 2014, a Highway Trust Fund extension bill was enacted. The bill provides approximately $10.8 billion of funding, which is expected to last until May 2015. With the nation’s infrastructure aging, we expect U.S. infrastructure investment to grow over the long term and the construction industry, in particular. We believe exposure to various markets affords us greater stability through economic cycles and positions usthat we are well positioned to capitalize on upside opportunities when recoveriesany such increase in residential and non-residential construction occur.investment.

Business Trends and Conditions

The U.S. heavy-side buildingconstruction materials industry is comprisedcomposed of four primary sectors: (i) aggregates, (ii) cement, (iii)aggregates; cement; ready-mixed concrete; and asphalt paving mix and (iv) ready mixed concrete, eachmix. Each of whichthese materials is widely used in most forms of construction activity. Competition is limited in part by the distance materials can be transported efficiently,

resulting in predominantly local or regional operations. Participants in these sectors typically range from small, privately-held companies

focused on a single material, product or market to multinational corporations that offer a wide array of construction materials, products and construction services. MarketsWe estimate that approximately 65% of the aggregates in the United States are defined in partheld by the distance materials may be efficiently transported, resulting in largely local or regional operations.private companies.

Transportation infrastructure projects, driven by both statefederal and federalstate funding programs, represent a significant share of the U.S. heavy-side buildingconstruction materials market. In July 2012, Moving Ahead for Progress in the 21st Century (MAP-21) was enacted and took effect in October 2012. MAP-21 is a 27-month, approximately $105 billion transportation funding program that provides for $40.4 billion and $41.0 billion in highway infrastructure investments in fiscal years 2013 and 2014, respectively. The spending levels are consistent with the preceding federal transportation funding program. In addition to federal funding, highway construction and maintenance funding is also available through state, county and local agencies. Our five largest states by revenue (Texas, Kansas, Kentucky, Missouri and Utah, which represented approximately 27%25%, 16%20%, 14%17%, 11%12% and 11%, respectively, of our total revenue for the year ended December 29, 2012)in 2013) each have funds whose revenue sources are constitutionally protected and may only be spent on transportation projects:projects.

 

Texas’ 2012 - 2013Texas Department of TransportationTransportation’s budget from 2014 to 2016 is $19.8 billion, a $3.9 billion increase from the previous 2010-2011 biennium budget

$25.3 billion.

 

Kansas has a 10-year $8.2 billion highway bill that was passed in May 2010

2010.

 

KentuckyKentucky’s biennial highway construction plan has a two-year $4.5funding of $3.6 billion highway bill that was passed in April 2012

from July 2014 to June 2016.

 

Missouri has an estimated $700.0 million$0.7 billion in annual construction funding committed to essential road and bridge programs

through 2017.

 

Utah’s fiscal year 2012 transportation investment fund increased to $1.1has $3.5 billion

committed through 2018.

Despite the economic challenges of recent years, we believe that the enacted federal transportation funding program extending through fiscal 2014 is a positive development, reducing the uncertainty that existed with the previous funding program that had been subject to 10 short-term extensions. Within many of our markets, the federal, state and local governments have taken actions to maintain or grow highway funding during a time in which many areas of spending are facing significant cuts. However, we could still be impacted by any economic improvement or slowdown, which could vary by local region and market. Our sales and earnings are sensitiveuncertainty with respect to national, regional and local economic conditions and particularly to cyclical swings in construction spending, especiallyfederal funding. For example:

The Texas legislature recently passed the largest two-year budget in the history of the Texas Department of Transportation (with growth in both new construction and maintenance). In addition, increased energy sector activity in parts of Texas has driven an increase in private sector.construction demand, which we expect to continue. In particular, Austin and Houston, Texas have seen rapid residential demand expansion, which we expect to provide a stimulus for nonresidential and public infrastructure demand, as job growth has drawn new residents.

Increases in heavy truck registration fees, dedicated sales tax revenue and bond issuances have enabled Kansas to maintain stability in public infrastructure spending.

We believe that public infrastructure spending in Kentucky, which comprises the majority of our revenue in the state, will remain consistent in the upcoming years.

We expect primarily maintenance-related public demand in Missouri and Utah, both of which have recently completed large spending programs.

In addition to being subject to cyclical swingschanges in the economy, our business is seasonal in nature. AlmostSubstantially all of our products and services are produced, consumed and consumedperformed outdoors. Severe weather, seasonal changes and other weather-related conditions can significantly affect the production and sales volumes of our products. Normally,Typically, the highest sales and earnings are in the second and third quarters, and the lowest are in the first and fourth quarters. Winter weather months are generally periods of lower sales as we, normallyand our customers, generally cannot cost-effectively mobilize and demobilize equipment and manpower during this period under adverse weather conditions. Periods of heavy rainfall also adversely affect our work patterns and therefore demand for our products. Our working capital may vary greatly during these peak periods, but generally returnreturns to comparableaverage levels as our operating cycle is completed each fiscal year.

We are subject to commodity price risk with respect to price changes in liquid asphalt and energy, including fossil fuels and electricity for aggregates, cement, ready-mixed concrete and asphalt paving mix production, natural gas for hot mix asphalt production and diesel fuel for distribution vehicles and production related mobile

equipment. Liquid asphalt escalator provisions in most of our private and commercial contracts limit our exposure to price fluctuations in this commodity. We often obtain similar escalators on public infrastructure contracts. In addition, we enter into various firm purchase commitments, with terms generally less than one year, for certain raw materials. As a result of the contract escalation clauses and effective use of the firm purchase commitments, commodity prices did not have a material effect on our results of operations in the six months ended June 28, 2014 as compared to the six months ended June 29, 2013 or in 2013, as compared to 2012.

2012 ResultsFinancial Highlights—Six Months Ended June 28, 2014

The principal factors in evaluating our financial condition and operating results for fiscal year 2012the six months ended June 28, 2014, as compared to 2011the six months ended June 29, 2013 are:

 

Total revenue of $962.9Revenue increased $113.7 million in 2012, increased 17% or $140.4 million, from 2011, primarilythe six months ended June 28, 2014 as a result of acquisitions. Approximately 61% of our revenue is from product sales, which is the result of salespricing and volume and pricingincreases across our product lines. As illustratedlines, which includes volume contributions from acquisitions.

Our operating earnings improved $27.0 million in the table below, our volumes increased from 2011 to 2012, primarily from acquisitions, across all of our products. The 18.0% increasesix months ended June 28, 2014. This improvement in earnings was largely driven by price increases in aggregates, cement volumes was organic, as we had no acquisitionsand asphalt and volume increases in 2012 or 2011 impacting our cement capacity.

aggregates, ready-mixed concrete and asphalt.

 

 Volume in 2012
Compared to 2011

Aggregates

20.8In January 2014, we increased our long-term debt by $260.0 million with the issuance of additional 10 12%

Asphalt

11.8

Readymix

14.9

Cement

18.0senior notes due 2020.

InFinancial Highlights—Year Ended December 28, 2013

The principal factors in evaluating our financial condition and operating results for the year ended December 28, 2013, as compared to the year ended December 29, 2012, we experienced modest growth to flatare:

Product revenue increased $4.8 million in 2013 as a result of pricing changesincreases across our product lines. We experienced increaseslines, somewhat offset by declines in aggregatescement and asphalt average selling prices across the Company andvolumes. In 2013, we increased our focus on higher-margin, low-volume paving projects, which resulted in increased operating margin, which we define as operating income as a percentage of revenue, but a decrease in ready mix due to a shift in product mix, despite increased prices across the ready mix concrete products on a like-for-like basis.asphalt volumes. The following table presents volume and average selling price for cement decreased $0.70 per ton from 2011 to 2012 duechanges by product:

   Volume in 2013
Compared to 2012
  Average Selling
Prices in 2013
Compared to 2012
 

Aggregate

   5  7

Cement

   (4%)   3

Ready-mixed concrete

   9  4

Asphalt

   (14%)   5

Service revenue declined $14.9 million in 2013 as a result of the increased focus on higher-margin, lower-volume projects.

Our operating earnings declined $63.4 million to a changeloss of $48.0 million in 2013 from income of $15.4 million in 2012. In 2013, we recognized goodwill impairment charges of $68.2 million as a result of uncertainties in the customer mix. In 2012, tons sold to peers and large volume customers increased, which are sold attiming of a lower price per ton than retail sales, impacting average selling price for the year.

Average Selling
Prices in 2012
compared to 2011

Aggregates

3.8 % 

Asphalt

10.7 % 

Readymix

(1.3)% 

Cement

(2.2)% 

Operating income of $14.6 million compared to $23.6 million in 2011. The decrease in operating income is primarily attributable to $8.0 million of charges recorded in 2012 on an indemnification agreementsustained recovery in the West region, compared to $1.9 million in 2011,Utah and low margin legacy contracts and cost overruns in ourKentucky construction business. These losses were offset by increased operating income from 2012 and 2011 acquisitions.

markets.

 

Our operating earnings improved $4.8 million in 2013 excluding the $68.2 million goodwill impairment recognized in 2013. This improvement in earnings was predominantly driven by the price increases discussed above and higher margins on our paving and related services businesses in 2013.

Cash provided by operations ofimproved to $66.4 million in 2013, compared to $62.3 million improved from $23.3 million in 2011 due primarily to improved cash management.

Cash paid for acquisitions of $48.8 million decreased from $161.1 million in 2011. We acquired three companies in 2012, compared to eight companiesas a result of the increase in 2011.operating earnings (excluding the goodwill impairment).

Acquisitions

On FebruarySeptember 19, 2014, we acquired all of the membership interests of Southwest Ready Mix, LLC, which included two ready-mixed concrete plants and serves the downtown and southwest Houston, Texas markets.

On September 5, 2014, we acquired all of the issued and outstanding shares and certain shareholder notes of Rock Head Holdings Ltd. and B.I.M. Holdings Ltd., which collectively indirectly own all the shares of Mainland Sand and Gravel Ltd., a supplier of construction aggregates to the Vancouver metropolitan area based in Surrey, British Columbia.

On July 29, 2012,2014, we acquired all of the assets of Canyon Redi-Mix, Inc., and CRM Mixers LP. The acquired assets include two ready-mixed concrete plants, which serve the Permian Basin region of West Texas.

On June 9, 2014, we acquired all of the membership interests of Buckhorn Materials, LLC, an aggregates quarry in South Carolina, and Construction Materials Group LLC, a sand pit in South Carolina.

On March 31, 2014, we acquired all of the stock of Troy Vines, Incorporated, an integrated aggregates and ready-mixed concrete business headquartered in Midland, Texas, which serves the Permian Basin region of West Texas.

On January 17, 2014, we acquired certain aggregates and ready-mixed concrete assets of Norris Quarries, LLCAlleyton in Missouri.Houston, Texas, which expands our presence in the Texas market.

On April 1, 2013, we acquired certain aggregates, ready-mixed concrete and asphalt assets of Lafarge in and around Wichita, Kansas, expanding our footprint in the Wichita market across our lines of business.

On April 1, 2013, we acquired the membership interests of Westroc in Utah. The NorrisWestroc acquisition expanded our market position in the Central region. It is a 100% aggregates company geographically situated between existing businesses in Missouri and Kansas.

On October 5, 2012, we acquired certain assets of Kay & Kay Contracting, LLC in Kentucky. The Kay & Kay acquisition expands our market presence in the southeastern region of Kentucky producing bothcoverage for aggregates and asphalts.ready-mixed concrete in Utah.

On November 30, 2012, we acquired the stock of Sandco Inc. in Colorado. The Sandco acquisition expands our market presence in the western region of Colorado producing both aggregates and ready mixed concrete.

Discontinued Operations

As part of our strategy to focus on our core business as a heavy-side building materials company, we sold, through separate transactions, our railroad construction and maintenance business (referred to herein as railroad business) and our environmental business, which is primarily associated with building retaining walls and removal and remediation of underground fuel storage tanks, in 2012 for $3.1 million in aggregate. Prior to recognition as discontinued operations, the railroad and environmental businesses were included as components of the East region’s operations. The railroad and environmental businesses’ revenue in fiscal 2012, 2011 and 2010 was $13.5 million, $16.1 million and $20.5 million, respectively, and loss before income tax expense was $2.8 million, $3.7 million and $0.4 million, respectively.

Aggregates

According to the February 2013 U.S. Geological Survey, approximately 1.28 billion tons of crushed stone with a value of approximately $11.5 billion was produced in the United States in 2012, in line with 1.28 billion tons in 2011. Sand and gravel production was approximately 907 million tons in 2012 valued at approximately $6.25 billion, up from 894 million tons in 2011. The U.S. aggregate industry is highly fragmented relative to other building product markets, with numerous participants operating in localized markets and the top six players controlling approximately 30% of the national market in 2011. The January 2013 U.S. Geological Survey reported that a total of 1,550 companies operating 4,000 quarries and 91 underground mines produced or sold crushed stone in 2012 in the United States.

We believe that the long-term growth of the market for aggregates is largely driven by growth in population, jobs and households, which impact transportation infrastructure spending and changes in population density. In the past few years, the recession in the United States has led to a decrease in overall private construction activity. Despite the increase in Federal stimulus spending, public construction activity has also declined over this period, albeit less than private construction markets. In fact, through the prior three U.S. recessions (July 1990 through March 1991, March 2001 through November 2001 and December 2007 through June 2009), highway spending in real dollars grew 1.8% annually on average in years with a recession as compared to 0.9% annually on average in years without a recession. While short-term demand for aggregates fluctuates with economic cycles, the declines have historically been followed by strong recovery, with each peak establishing a new historical high.

Cement

Cement production is a capital-intensive business with variable costs dominated by raw materials and energy required to fuel the kiln. Building new plants is challenging given the extensive permitting that is required and significant costs. We believe new plant construction costs in the United States are estimated at $250-300 per ton. Assuming construction costs of $275 per ton, a 1.25 million ton facility, such as the one Continental Cement operates, would cost approximately $343.8 million to construct.

As reported by the PCA in the 2012 North American Cement Industry Annual Yearbook, consumption is down significantly from the industry peak of 141 million tons in 2005 to 79 million tons in 2011 because of the decline in U.S. construction sector activity. Domestic cement consumption has at times outpaced domestic production capacity with the shortfall being supplied with imports, primarily from China, Canada, Columbia, Mexico and South Korea. The PCA reports that cement imports have declined since their peak of 39 million tons in 2006 to 7 million tons in 2011, in a manner indicative of the industry’s general response to the current demand downturn. Despite the reduction in imports, capacity utilization declined from 95% in 2006 to 59% in 2011 according to the PCA. Continental Cement operated at 75% capacity utilization in 2011 and 81% in 2012, which is above the 2011 industry mean of 68% capacity utilization as its markets did not suffer the pronounced demand declines seen in states like Florida, California and Arizona. Demand is seasonal in nature with nearly two-thirds of U.S. consumption occurring between May and October, coinciding with end-market construction activity.

In the cement industry, calcium oxide (“CaO”) content is the traditional measurement of limestone quality and purity. Limestone of 100% purity as measured by calcium carbonate (“CaCO3”) contains 56% CaO. Continental Cement’s mineable reserves have an average grade of 51.9% CaO, or 92.7% CaCO3. The mineable reserve calculation is based on a 70-foot mining height and a recovery ratio of 71.3% over the approximately 3,000 acre plant site.

Cement production in the United States is distributed among 101 production facilities located across 36 states. The EPA has new emission standards for Portland cement plants (“NESHAP”) that are due to come into effect in 2015. On December 20, 2012, the EPA signed the NESHAP final rule, which was less stringent than previous draft. The PCA had estimated based on the draft rule that 18 plants could be forced to close due to the inability to meet NESHAP standards or because the compliance investment required may not be justified on a financial basis. These potential closures represent approximately 20 million tons of clinker capacity, or 20% of current capacity in the United States.

Continental Cement’s plant utilizes alternative fuel (hazardous and non-hazardous) as well as coal and petroleum coke and, as a result, is subject to HWC-MACT standards, rather than NESHAP. We expect HWC-MACT standards to generally conform to NESHAP, for which we are mostly in compliance, ahead of the effective date of the NESHAP standards. Any additional costs to comply with the NESHAP standards are not expected to have a material adverse impact on our financial position, results of operations or liquidity.

Asphalt Paving Mix

Asphalt paving mix is produced by mixing aggregates and asphalt cement, a petroleum based product that serves as the binder, at elevated temperatures. These high production temperatures are needed to allow the asphalt binder to become viscous enough to completely coat the aggregates in the paving mix, have good workability during laying and compaction, and provide durability during traffic exposure. A high weight-to-value ratio and the need to maintain the asphalt paving mix at a sufficiently high temperature during the paving process typically limits the delivery time to a one-hour haul from production plant to the paving location. Consequently, the asphalt paving mix market is highly localized with a fragmented ownership base.

According to the National Asphalt Pavement Association, there are approximately 4,000 asphalt paving mix plants in the United States. As reported by the National Asphalt Pavement Association, an estimated 366 million tons of asphalt paving mix was produced in 2011 which was broadly in line with the estimated 360 million tons produced in 2010.

The use of Warm Mix Asphalt (“WMA”) or “green” asphalt is gaining popularity. The immediate benefit to producing WMA is the reduction in energy consumption required by burning fuels to heat traditional hot mix asphalt (“HMA”) to temperatures in excess of 300°F at the production plant. WMA can reduce the temperature by 50 to 70°F, resulting in lower emissions, fumes and odors generated at the plant and the paving site.

The asphalt paving mix sector is heavily exposed to public infrastructure spending as the vast majority of public roads and highways are paved with asphalt. Demand is seasonal in nature and focused on the April to November period in most states as asphalt paving requires a certain minimum ambient temperature to achieve the desired performance. Asphalt cement or liquid asphalt is a major input material. As a petroleum product, its price is driven by many factors and a fluctuation in the price of inputs, such as asphalt cement and burner fuel, which is typically either natural gas or recycled oil, may not be immediately recovered from the end customer.

Ready Mixed Concrete

As a result of the transportation constraints, the ready mixed concrete market is highly localized, with an estimated 5,500 ready mixed concrete plants in the United States, per the NRMCA. According to the NRMCA, 291 million cubic yards of ready mixed concrete was produced in 2012, which is a 9% increase from the 266 million cubic yards in 2011, but a 36% decrease from the industry peak of 458 million cubic yards in 2005.

Ready mixed concrete demand is driven in large part by private residential and non-residential building demand and the decline of demand since 2005 is strongly correlated with the decline in construction spending in these end-use markets during this period.

The major raw material inputs for ready mixed concrete are aggregates and cement, the price of which has generally tended to increase over time in a predictable manner. Ready mixed concrete is almost always delivered to the end-user by the supplier via purposely designed vehicles. Consequently, fuel prices are also an important cost component. Many suppliers reduce their exposure to changes in fuel costs by including sales price adjustment provisions for changes in fuel prices.

Components of Operating Results

Total Revenue

We derive our revenue predominantly by selling construction materials and products and providing constructionpaving and related services. Construction materials consist of aggregates and cement. Products consist of related downstream products, including ready-mixed concrete, asphalt ready mixed concrete, cementpaying mix and concrete products. ConstructionPaving and related services that we provide are primarily relate to asphalt paving and other highway constructionrelated services.

The following summarizes our revenue recognition policy with respect to construction materials and services:

Revenue derived from construction materialmaterials sales are recognized when risks associated with ownership have passed to unaffiliated customers. Typically this occurs when products are shipped. Product revenue generally includes sales of aggregates, cement and related downstream products cement and other materials to customers, net of discounts or allowances and taxes, if any.

Revenue derived from construction service contractspaving and related services are recognized on the percentage-of-completion method,basis, measured by the cost incurred to date compared to estimated total cost of each project. This method is used because management considers cost incurred to be the best available measure of progress on these contracts. Due to the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change over the life of the contract.

Operating costsCosts and expensesExpenses

The key components of our operating costs and expenses consist of the following:

Cost of revenue (exclusive ofRevenue (excluding items shown separately below)separately)

Cost of revenue consists of all production and delivery costs and primarily includes labor, repair and maintenance, utilities, raw materials, fuel, transportation, subcontractor costs and manufacturing overhead. Our cost of revenue is directly impactedaffected by fluctuations in commodity energy prices, primarily diesel fuel, liquid asphalt and other petroleum-based resources. As a result, our operating profit margins can be significantly impactedaffected by changes in the underlying cost of certain raw materials if they are not recovered through corresponding changes in revenue. We attempt to limit our exposure to changes in commodity energy prices by entering into forward purchase commitments when appropriate. In addition, we have sales price adjustment provisions that provide for adjustments based on fluctuations outside a limited range in certain energy-related production costs. These provisions are in place for most of our public infrastructure contracts and we aggressively seek to include similar price adjustment provisions in our private contracts.

Goodwill Impairment

Goodwill impairment charges consist of the amount by which the carrying value of a reporting unit exceeds its fair value, as determined in an annual two-step impairment test. See “—Critical Accounting Policies—Goodwill and Goodwill Impairment.”

General and administrative expensesAdministrative Expenses

General and administrative expenses consist primarily of salaries and personnel costs for our sales and marketing, administration, finance and accounting, legal, information systems and human resources employees. Additional expenses include audit, consulting and professional fees, travel, insurance and other corporate expenses.

Transaction costsCosts

Transaction costs consist primarily of third party accounting, legal, valuation and financial advisory fees incurred in connection with acquisitions.

Depreciation, depletion, amortizationDepletion, Amortization and accretionAccretion

Our business is relatively capital-intensive.capital intensive. We carry property, plant and equipment on our balance sheet at cost, net of applicable depreciation, depletion and amortization on our balance sheet.amortization. Depreciation on property, plant and equipment is computed on a straight-line basis or based on the economic usage over the estimated useful life of the asset. The general range of depreciable lives by fixed asset category, excluding mineral reserves, which are depleted based on the units of production method on a quarry-by-quarrysite-by-site basis, is as follows:

 

Buildings and improvements

   7 - 40 years  

Plant, machinery and equipment

   3 - 40 years  

Truck and auto fleet

   - 10-10 years  

Mobile equipment and barges

   3 - 20 years  

Landfill airspace and improvements

   5 - 60 years  

Other

   2 - 10 years  

Amortization expense is the periodic expense related to ourleasehold improvements and intangible assets, which were primarily acquired as part ofwith certain of our acquisitions. The intangible assets are generally amortized on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the life of the underlying asset or the remaining lease term.

Accretion expense is the periodic expense recorded using the effective interest method and is related tofor the accrued mining reclamation liabilities and landfill closure and post-closure liabilities.liabilities using the effective interest method.

Results of Operations

The following discussion of our results of operations is focused on the materialkey financial measures we use to evaluate the performance of our business from both a consolidated and operating segment perspective. We have three operating segments, which are also our reporting segments: Central, West and East regions. Operating income and margins are discussed in terms of changes in volume, pricing and mix of revenue source (e.g.(i.e., type of product sales or service revenue). The majority of our service revenue is generated by long-term contracts. As discussed further under “—Components of Operating Results” above, we generally account for revenue under these contracts using the percentage of completion method of accounting. Under this method, revenue is recognized as work progresses. Performance on service contracts refers to changes in contract earnings rates during the term of the contract based on revisions to estimates of profit at completion on individual contracts. These revisions result from increases or decreases to the estimated value of the contract and/or the estimated costs required to complete the contract. The following discussion of results of operations provides additional disclosure to the extent that a significant or unusual event causes a material change in the profitability of a contract.

The following table includes revenue and operating income by segment for the indicated fiscal years. Operating income by segment is computed as earnings before interest, taxes and other income / expense.

   2012  2011  2010 

(in thousands)

  Revenue   Operating
income (loss)
  Revenue   Operating
income (loss)
  Revenue   Operating
income (loss)
 

Central

  $302,113    $37,560   $264,008    $38,105   $211,238    $27,178  

West

   484,922     (6,625  362,577     (455  59,337     (4,691

East

   175,867     (1,017  195,963     1,222    159,783     3,920  

Corporate(1)

   —       (15,275  —       (15,238  —       (10,508
  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

   

 

 

 

Total

  $962,902    $14,643   $822,548    $23,634   $430,358    $15,899  
  

 

 

   

 

 

  

 

 

   

 

 

  

 

 

   

 

 

 

(1)Corporate results primarily consist of compensation expense for employees included in our headquarters.

Non-GAAP Performance Measures

Our chief operating decision maker evaluates the performance of our segments and allocates resources to them based on several factors, including a measure we call segment profit, or Adjusted EBITDA by segment. We define Adjusted EBITDA as earnings (loss) before loss from discontinued operations, income tax (benefit) expense, interest expense and depletion, amortization and accretion. Accretion is recognized on our asset retirement obligations and reflects the time value of money. Given that accretion is similar in nature to interest expense, it is treated consistently with interest expense in determining Adjusted EBITDA. Adjusted EBITDA is determined before considering the loss from discontinued operations as results from discontinued operations are not viewed by management as part of our core business. When management assesses the performance of our segments and the allocation of resources, it is not included in Adjusted EBITDA. Adjusted EBITDA reflects an additional way of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to GAAP financial measures included in the tables below, may provide a more complete understanding of factors and trends affecting our business. However, it should not be construed as being more important than other comparable GAAP measures and must be considered in conjunction with GAAP measures. In addition, non-GAAP financial measures are not standardized; therefore it may not be possible to compare such financial measures with other companies’ non-GAAP financial measures having the same or similar names. We strongly encourage investors to review our consolidated financial statements in their entirety and not rely on any single financial measure.

Reconciliation of Net Loss to Adjusted EBITDA

(in thousands)

 2012  2011  2010 

Net loss

 $(50,577 $(10,050 $(23,863

Income tax (benefit) expense

  (3,920  3,408    2,363  

Interest expense

  58,079    47,784    25,430  

Depreciation, depletion and amortization

  68,250    61,274    33,890  

Accretion

  626    690    525  

Loss from discontinued operations

  2,774    3,736    411  
 

 

 

  

 

 

  

 

 

 

Adjusted EBITDA

 $75,232   $106,842   $38,756  
 

 

 

  

 

 

  

 

 

 

Adjusted EBITDA by Segment

(in thousands)

  2012  2011  2010 

Central

  $65,767   $65,651   $40,790  

West

   14,429    36,442    (1,710

East

   10,596    14,626    5,474  

Corporate

   (15,560  (9,877  (5,798
  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA

  $75,232   $106,842   $38,756  
  

 

 

  

 

 

  

 

 

 

In 2011, we adopted a “4-4-5” fiscal calendar in the place of the calendar year we previously used.

Consolidated Results of Operations

The tables below set forth our historical consolidated results from continuing operations for the fiscal years indicated.

(in thousands)

  2012  2011  2010 

Revenue

  $962,902   $822,548   $430,358  

Cost of revenue (exclusive of items shown separately below)

   749,363    630,944    308,297  

General and administrative expenses

   128,032    96,886    49,479  

Depreciation, depletion, amortization and accretion

   68,876    61,964    34,415  

Transaction costs

   1,988    9,120    22,268  
  

 

 

  

 

 

  

 

 

 

Operating income

   14,643    23,634    15,899  

Other (income) expense, net

   (1,182  (21,244  1,583  

Loss on debt refinancing

   9,469    —      9,975  

Interest expense

   58,079    47,784    25,430  
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations before income tax (benefit) expense

   (51,723  (2,906  (21,089

Income tax (benefit) expense

   (3,920  3,408    2,363  
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations

   (47,803  (6,314  (23,452

Loss from discontinued operations

   (2,774  (3,736  (411
  

 

 

  

 

 

  

 

 

 

Net loss

   (50,577  (10,050  (23,863

Net loss attributable to noncontrolling interests

   1,919    695    86  
  

 

 

  

 

 

  

 

 

 

Net loss attributable to member of Summit Materials, LLC

  $(52,496 $(10,745 $(23,949
  

 

 

  

 

 

  

 

 

 

Fiscal year 2012 compared to 2011

(in thousands)

  2012  2011  

 

  Variance 

Revenue

  $962,902   $822,548      $140,354    17.1

Operating income

  $14,643   $23,634      $(8,991  (38.0%) 

Operating margin

   1.5  2.9     

Adjusted EBITDA

  $75,232   $106,842      $(31,610  (29.6%) 

LOGO

Revenue in 2012 increased to $962.9 million compared to $822.5 million in 2011. The $140.4 million increase was driven by acquisitions and $17.7 million from net pricing increases. Revenue from business acquired in 2012 totaled $24.7 million and the incremental revenue in 2012 from business acquired in 2011 was $149.7 million. Revenue growth from price increases and acquisitions was partially offset by $16.3 million of volume decreases across our product lines, excluding our cement business where we had a 18% increase from 2011 and from a decline in construction services revenue.

The West region experienced the most revenue growth in 2012 as compared to 2011. It was established in the second half of 2010 and grew significantly in 2011 through acquisitions. As a result, 2012 was the first year with a full twelve

months of results from these acquisitions. The West region comprised 50% of consolidated revenue in 2012 compared to 44% in 2011 and the East region revenue declined from 24% to 18% of consolidated revenue. Revenue, as a percentage of consolidated revenue, remained constant in the Central region in 2012 as compared to 2011.

Operating income decreased $9.0 million from $23.6 million in 2011 to $14.6 million in 2012. Operating income reflects our profit from continuing operations after taking into consideration cost of revenue, general and administrative expenses, depreciation, depletion, amortization and accretion and transaction costs. The components of cost of revenue generally increase ratably with revenue, as labor, transportation costs and subcontractor costs are recorded in cost of revenue. As

General and administrative costs as a percentage of revenue vary throughout the year due to the seasonality of our business. Considering the percentage of our historic growth that was derived from acquisitions and our focus on infrastructure development (finance, information technology, legal and human resources), annual general and administrative costs historically grew ratably with revenue. However, we expect the growth in general and administrative costs to stabilize in fiscal 2014 and beyond.

Also as a result of our revenue growth occurring primarily through acquisitions, our general and administrative costs and depreciation, depletion, amortization and accretion have generally have grown ratably with revenue.

Our transaction costs fluctuate with the number and size of acquisitions consummated each year.

The table below includes revenue and operating income (loss) by segment for the periods indicated. Operating income (loss) by segment is computed as earnings before interest, taxes and other income / expense.

  Six months ended  Year-ended 
  June 28, 2014  June 29, 2013  December 28, 2013  December 29, 2012  December 31, 2011 
(in thousands) Total
Revenue
  Operating
income
(loss)
  Total
Revenue
  Operating
income
(loss)
  Total
Revenue
  Operating
income
(loss)
  Total
Revenue
  Operating
income
(loss)
  Total
Revenue
  Operating
income
(loss)
 

West

 $267,130   $18,029   $179,719   $(10,736 $426,195   $(47,476 $484,922   $(6,625 $362,577   $(455

Central

  156,659    9,794    128,680    3,314    329,621    39,246    302,113    37,560    264,008    38,105  

East

  51,597    (8,843  53,272    (8,013  160,385    (14,207  139,219    (245  162,491    2,687  

Corporate(1)

  —      (20,077  —      (12,695  —      (25,540  —      (15,275  —      (15,238
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 $475,386   $(1,097 $361,671   $(28,130 $916,201   $(47,977 $926,254   $15,415   $789,076   $25,099  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(1)Corporate results primarily consist of compensation and office expenses for employees included in our headquarters. The increase in cost is primarily attributable to the Company strengthening its infrastructure with respect to finance, information technology, legal and human resources functions and relocation of the headquarters to Denver, Colorado in August 2013.

Non-GAAP Performance Measures

U.S. generally accepted accounting principles (“GAAP”) does not define Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”). Thus, Adjusted EBITDA should not be considered as an alternative to earnings measures defined by GAAP. We present these metrics for the convenience of investment professionals who use such metrics in their analyses. The investment community often uses these metrics as indicators of a company’s ability to incur and service debt, to assess the operating performance of a company’s business and to provide a more consistent comparison of performance from period to period. We use Adjusted EBITDA, among other metrics, to assess the operating performance of our individual segments and the consolidated company.

Adjusted EBITDA is used for certain items to provide a more consistent comparison of performance from period to period. We do not use these metrics as a measure to allocate resources. In addition, non-GAAP

financial measures are subjectnot standardized; therefore, it may not be possible to commodity price riskcompare such financial measures with respectother companies’ non-GAAP financial measures having the same or similar names. We strongly encourage investors to price changesreview our consolidated interim and audited financial statements in liquid asphalttheir entirety and energy, including fossil fuelsnot rely on any single financial measure.

The tables below reconcile our net loss to Adjusted EBITDA and electricitypresent Adjusted EBITDA by segment for the periods indicated.

   Six months ended  Year-ended 
   June 28,
2014
  June 29,
2013
  December 28,
2013
  December 29,
2012
  December 31,
2011
 

Reconciliation of Net Loss to Adjusted EBITDA

      

(in thousands)

      

Net loss

  $(38,867 $(56,007 $(103,679 $(50,577 $(10,050

Income tax (benefit) expense

   (1,460  (3,347  (2,647  (3,920  3,408  

Interest expense

   40,470    27,849    56,443    58,079    47,784  

Depreciation, depletion and amortization

   40,270    35,674    72,217    67,665    60,687  

Accretion

   425    352    717    625    690  

Goodwill impairment

   —      —      68,202    —      —    

(Income) loss from discontinued operations

   (349  97    528    3,546    5,201  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA

  $40,489   $4,618   $91,781   $75,418   $107,720  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA by Segment

      

West

  $32,541   $85   $28,607   $14,429   $36,442  

Central

   28,400    19,182    72,918    65,767    65,651  

East

   (1,406  (2,377  15,134    10,782    15,504  

Corporate

   (19,046  (12,272  (24,878  (15,560  (9,877
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA

  $40,489   $4,618   $91,781   $75,418   $107,720  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Consolidated Results of Operations

The table below sets forth our consolidated results of operations for the periods indicated:

   Six months ended  Year-ended 
   June 28,
2014
  June 29,
2013
  December 28,
2013
  December 29,
2012
  December 31,
2011
 
(in thousands)                

Total revenue

  $475,386   $361,671   $916,201   $926,254   $789,076  

Total cost of revenue

   360,437    277,916    677,052    713,346    597,654  

General and administrative expenses

   70,355    73,395    142,000    127,215    95,826  

Goodwill impairment

   —      —      68,202    —      —    

Depreciation, depletion, amortization and accretion

   40,695    36,026    72,934    68,290    61,377  

Transaction costs

   4,996    2,464    3,990    1,988    9,120  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating (loss) income

   (1,097  (28,130  (47,977  15,415    25,099  

Other (income) expense, net

   (891  163    (1,737  (1,182  (21,244

Loss on debt financings

   —      3,115    3,115    9,469    —    

Interest expense

   40,470    27,849    56,443    58,079    47,784  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Loss from continuing operations before taxes

   (40,676  (59,257  (105,798  (50,951  (1,441

Income tax (benefit) expense

   (1,460  (3,347  (2,647  (3,920  3,408  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Loss from continuing operations

   (39,216  (55,910  (103,151  (47,031  (4,849

(Income) loss from discontinued operations

   (349  97    528    3,546    5,201  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net loss

   (38,867  (56,007  (103,679  (50,577  (10,050

Net (loss) income attributable to noncontrolling interest

   (569  (1,518  3,112    1,919    695  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net loss attributable to member of Summit Materials, LLC

  $(38,298 $(54,489 $(106,791 $(52,496 $(10,745
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Six Months ended June 28, 2014 Compared to Six Months ended June 29, 2013

   Six months ended    
   June 28, 2014  June 29, 2013  Variance 
(in thousands)          

Revenue

  $475,386   $361,671    31.4

Operating loss

   (1,097  (28,130  96.1

Operating margin

   (0.2)%   (7.8)%  

Adjusted EBITDA

  $40,489   $4,618    776.8

Revenue increased $113.7 million in the six months ended June 28, 2014 due to improved volumes and pricing across our product lines, driven primarily by the 2014 and 2013 acquisitions, and operating efficiency improvements. Product revenue increased $92.6 million in the six months ended June 28, 2014 primarily as a result of improved pricing and volume increases in aggregates, cement,ready-mixed concrete and asphalt paving mix and ready mixedservice revenue increased $21.1 million. Detail of consolidated percent changes in sales volumes and pricing in the six months ended June 28, 2014 from the six months ended June 29, 2013 were as follows:

   Percentage Change in 
   Volume  Pricing 

Aggregates

   35.2  (1.1%) 

Cement

   (2.9%)   10.8

Ready-mixed concrete

   139.4  2.5

Asphalt

   20.6  (4.0%) 

Aggregates and ready-mixed concrete production, natural gasvolumes were positively affected by the 2014 and 2013 acquisitions, resulting in increased revenue of $88.7 million in the six months ended June 28, 2014. The increase in ready-mixed concrete pricing was affected by different pricing structures across our markets, particularly in the Texas markets, which have lower average selling prices than our ready-mixed concrete operations outside of Texas. We expanded our presence in Texas with the Alleyton and Troy Vines acquisitions in 2014. Our cement volumes decreased 2.9% due primarily to a shift in customer mix. Cement pricing improved from an overall market increase and from a customer mix shift. The increase in asphalt volume was primarily driven by organic growth in Texas and Utah with a 4.0% decrease in pricing due to product and geographic mix.

Our operating loss declined $27.0 million in the six months ended June 28, 2014. Operating margin, which we define as operating income (loss) as a percentage of revenue, improved 760 basis points in the six months ended June 28, 2014. These profit improvements were driven by the following:

Improved net pricing across our product lines.

A $1.3 million curtailment benefit recognized in the six months ended June 28, 2014 related to a retiree postretirement benefit plan maintained for hot mix asphalt productioncertain union employees at our cement plant, which was amended to eliminate all future retiree health and diesel fuellife coverage for distribution vehiclesthe remaining union employees, effective January 1, 2014.

A decline in general and productionadministrative costs, as a percentage of revenue, from 20.3% to 14.8% in the six months ended June 28, 2014. During 2013, we invested in our infrastructure (finance, information technology, legal and human resources) and expect the growth in general and administrative costs to stabilize in 2014 and beyond.

A $1.8 million charge was recognized in the six months ended June 29, 2013 to remove a sunken barge from the Mississippi River. No charges for barge removal were recognized in 2014.

Offsetting these profit improvements were $2.5 million of increased transaction costs primarily as a result of the acquisitions of Alleyton, Troy Vines and Buckhorn Materials in the six months ended June 28, 2014.

Adjusted EBITDA increased $35.9 million in the six months ended June 28, 2014 related mobile equipment. Liquid asphalt escalatorsto the following:

Operating income increased $27.0 million in mostthe six months ended June 28, 2014 as discussed above.

In 2014, we did not have a refinancing loss compared to a $3.1 million loss on the February 2013 debt repricing.

Other Financial Information

Loss on Debt Financings

In February 2013, we completed a repricing of our public contracts,senior secured credit facilities, which provide for term loans in an aggregate amount of $422.0 million and revolving credit commitments in an aggregate amount of $150.0 million, which reduced our stated term-loan interest rate by 1.0% and provided additional borrowing capacity of $25.0 million. As a result of the repricing, we recognized a loss of $3.1 million for related bank fees in 2013. Fees associated with the $260.0 million of 10 12% senior notes issued on January 17, 2014 were deferred in other than thosenon-current assets and are being amortized over the term of the debt as a charge to interest expense.

Interest Expense

Interest expense increased $12.6 million in the six months ended June 28, 2014 due to the additional $260.0 million of 10 12% senior notes issued on January 17, 2014.

Segment results of operations

West Region

   Six months ended    
   June 28,
2014
  June 29,
2013
  Variance 
(in thousands)          

Revenue

  $267,130   $179,719    48.6

Operating income (loss)

   18,029    (10,736  267.9

Operating margin

   6.7  (6.0)%  

Adjusted EBITDA

  $32,541   $85    38,183.5

Revenue in the West region increased $87.4 million, or 48.6%, in the six months ended June 28, 2014 due primarily to acquisitions and organic volume growth. Incremental revenue from acquisitions totaled $68.6 million in the six months ended June 28, 2014. In 2014, the West region’s aggregates, ready-mixed concrete and asphalt volumes increased and pricing of aggregates improved. Ready-mixed concrete pricing declined as a result of the Alleyton and Troy Vines acquisitions in Texas, limitas ready-mixed concrete prices in the Texas markets are lower than in our exposureother markets outside of Texas. Asphalt pricing declined primarily as a result of product mix. The West region’s percent changes in sales volumes and pricing in the six months ended June 28, 2014 from the six months ended June 29, 2013 were as follows:

   Percentage Change in 
   Volume  Pricing 

Aggregates

   97.8  2.2

Ready-mixed concrete

   253.2  (1.4)% 

Asphalt

   9.0  (3.1)% 

The West region’s operating income increased $28.8 million and operating margin more than doubled. The improvement was primarily driven by the acquisitions of Alleyton and Troy Vines, higher aggregates pricing and organic volume growth.

Adjusted EBITDA increased $32.5 million in the six months ended June 28, 2014 primarily due to increases in the pricing of our aggregates and increased volumes in aggregates, ready-mixed concrete and asphalt. The increased volumes were primarily driven by the acquisitions of Alleyton and Troy Vines and organic volume growth.

Central Region

   Six months ended    
   June 28,
2014
  June 29,
2013
  Variance 
(in thousands)          

Revenue

  $156,659   $128,680    21.7

Operating income

   9,794    3,314    195.5

Operating margin

   6.3  2.6 

Adjusted EBITDA

  $28,400   $19,182    48.1

Revenue in the Central region increased $28.0 million, or 21.7%, in the six months ended June 28, 2014. Incremental revenue from acquisitions totaled $4.9 million for the six months ended June 28, 2014. Improved spring weather in the region and the April 1, 2013 acquisition of the Lafarge-Wichita assets contributed to increases in aggregates, ready-mixed concrete and asphalt volumes. A change in customer mix drove a decrease in cement volumes of 2.9% but, along with overall price fluctuationsimprovements, helped lift pricing 10.8%. The Central region’s percent changes in this commodity. We often obtain similar escalatorssales volumes and pricing in the six months ended June 28, 2014 from the six months ended June 29, 2013 were as follows:

   Percentage Change in 
   Volume  Pricing 

Aggregates

   14.4  0.2

Cement

   (2.9)%   10.8

Ready-mixed concrete

   9.0  8.5

Asphalt

   93.4  (1.4)% 

The Central region’s operating income increased $6.5 million and operating margin improved 370 basis points in the six months ended June 28, 2014. Margin was positively affected by synergies realized from the April 1, 2013 acquisition of the Lafarge-Wichita assets, a $1.3 million curtailment benefit recognized in the six months ended June 28, 2014 related to a retiree postretirement benefit plan maintained for certain union employees and a $1.8 million charge recognized in the six months ended June 29, 2013 to remove a sunken barge from the Mississippi River.

Adjusted EBITDA improved $9.2 million in the six months ended June 28, 2014 as a result of increased volumes, improved pricing and the $1.3 million curtailment benefit. In addition, during the six months ended June 29, 2013, we realized a $0.6 million loss on privatedebt financing and commercial contracts.a $1.8 million charge to remove a sunken barge from the Mississippi River.

East Region

   Six months ended    
   June 28,
2014
  June 29,
2013
  Variance 
(in thousands)          

Revenue

  $51,597   $53,272    (3.1)% 

Operating loss

   (8,843  (8,013  (10.4)% 

Operating margin

   (17.1)%   (15.0)%  

Adjusted EBITDA

  $(1,406 $(2,377  40.8

Our East region’s revenue was relatively consistent with 2013, decreasing 3.1% in the six months ended June 28, 2014. Volumes and pricing were mixed in the East region due to a shift in product mix that drove a 9.6% decrease in aggregates volumes and a 7.9% decrease in asphalt pricing, offset by an increase in asphalt volumes due to improved weather that allowed paving to begin earlier in the year. The East region’s percent changes in sales volumes and pricing in the six months ended June 28, 2014 from the six months ended June 29, 2013 were as follows:

   Percentage Change in 
   Volume  Average Selling
Pricing
 

Aggregates

   (9.6)%   2.1

Asphalt

   30.4  (7.9)% 

The East region’s operating loss, margin and Adjusted EBITDA were generally consistent from 2013 to 2014. The operating income in the six months ended June 28, 2014 was somewhat affected by higher costs to clear land for additional mining (“stripping costs”) and lower production output in aggregates.

Fiscal Year 2013 Compared to 2012

(in thousands)  2013  2012  Variance 

Total revenue

  $916,201   $926,254   $(10,053  (1.1)% 

Operating (loss) income

   (47,977  15,415    (63,392  (411.2)% 

Operating margin

   (5.2)%   1.7  

Adjusted EBITDA

  $91,781   $75,418   $16,363    21.7

Despite a $4.8 million increase in revenue from sales of aggregates, cement and related downstream products such as ready-mixed concrete and asphalt paving mix, consolidated revenue in 2013 was down slightly from 2012. Revenue from services provided, primarily paving and related services, decreased $14.9 million from 2012, as a result of an increased focus on higher-margin, lower-volume paving projects and completion of low-margin projects, such as grading and structural work.

Product revenue increased $4.8 million in 2013 from 2012, as a result of improved pricing across our products and an increase in aggregate volumes. Offsetting these improvements were decreases in cement, ready-mixed concrete and asphalt volumes. Detail of consolidated percent changes in sales volumes and pricing from 2012 to 2013 were as follows:

   Percentage Change in 
   Volume  Average Selling
Price
 

Aggregate

   4.5  7.4

Cement

   (4.1%)   3.4

Ready-mixed concrete

   9.2  3.6

Asphalt

   (13.8%)   4.8

Aggregates and ready-mixed concrete volumes were positively affected from the April 1, 2013 acquisitions of the Lafarge-Wichita assets and Westroc near Salt Lake City, Utah. Our cement volumes decreased 4.1% due primarily to lower volumes in the fourth quarter of 2013, as compared to the fourth quarter of 2012. Adverse weather in 2013, compared to much dryer weather in 2012, and an increased focus on higher-margin, lower-volume paving projects largely offset the effect of the acquisitions and drove the decline in asphalt volumes. Price variances across our products increased revenue by $28.7 million in 2013, which was largely offset by the net volume changes, which negatively affected revenue by $21.2 million in 2013.

Also affecting revenue was a decrease in large-scale, low margin projects in the West region. In 2012, we completed certain construction projects which provided significant revenue, but at below-average margins, including a project in Austin, Texas that contributed $47.5 million of revenue in 2012.

Our operating (loss) income declined $63.4 million in 2013 from 2012. In 2013, we recognized $68.2 million of goodwill impairment charges in our West and East regions from a decline in the estimated fair value of certain reporting units caused by uncertainties in the timing of a sustained recovery in the Utah and Kentucky construction markets.

Excluding the goodwill impairment charges, operating earnings improved $4.8 million in 2013 from 2012 and operating margin improved 50 basis points. These profit improvements were driven by higher prices across our aggregates, ready-mixed concrete and asphalt products and improved performance on our paving and related projects, as low-margin legacy contracts were completed in prior periods. The pricing variances benefited revenue by $28.7 million in 2013. In 2012, we recognized $4.5 million of cost overruns on grading and structural projects in the West region and recognized an $8.0 million loss in general and administrative expenses (“G&A”) on an indemnification agreement.

These improvements to operating income were partially offset by volume decreases in our cement, ready-mixed concrete and asphalt products and increases in G&A and depreciation, depletion, amortization and accretion. Losses on asset dispositions, which are included in G&A, increased $9.9 million in 2013. In addition, transaction costs increased $2.0 million as a result of the April 1, 2013 Lafarge-Wichita and Westroc acquisitions and costs incurred in advance of the January 17, 2014 Alleyton acquisition.

Adjusted EBITDA increased $16.4 million in 2013 from 2012 as a result of the following:

The pricing and margin improvements discussed above.

In 2013, we recognized a $3.1 million loss on the February 2013 debt repricing compared to a $9.5 million loss on the financing transactions in January 2012.

Other Financial Information

Loss on Debt Financings

In February 2013, we completed a repricing of our credit facilities, which provide for term loans in an aggregate amount of $422.0 million and revolving credit commitments in an aggregate amount of $150.0 million (the “Senior Secured Credit Facilities”), which reduced our stated term-loan interest rate by 1.0% and provided additional borrowing capacity of $25.0 million. As a result of the repricing, we recognized a loss of $3.1 million for related bank fees. In January 2012, we refinanced our debt existing at that time, resulting in a net loss of $9.5 million. Both the repricing and the refinancing were accounted for as partial extinguishments.

Discontinued Operations

As part of our strategy to focus on our core business as a construction materials company, we have exited certain activities, including certain concrete paving operations, our railroad construction and maintenance operations (the “railroad business”), which involved building and repairing railroad sidings, and our environmental remediation operations (the “environmental remediation business”), which primarily involved the repair of retaining walls along highways in Kentucky and the removal and remediation of underground fuel storage tanks. The concrete paving operations were wound down in the second quarter of 2013, and all assets have been sold. The railroad and environmental remediation businesses were sold in 2012 in separate transactions for aggregate proceeds of $3.1 million.

The results of these operations have been removed from the results of continuing operations for all periods presented. Prior to recognition as discontinued operations, all of these businesses were included in the East region’s operations. Revenue from these discontinued operations was $3.9 million in 2013, and $50.2 million in 2012. The loss from discontinued operations was $0.5 million in 2013 and $3.5 million in 2012.

Segment Results of Operations

West Region

(in thousands)  2013  2012  Variance 

Total revenue

  $426,195   $484,922   $(58,727  (12.1)% 

Operating loss

   (47,476  (6,625  (40,851  616.6

Operating margin

   (11.1)%   (1.4)%   

Adjusted EBITDA

  $28,607   $14,429   $14,178    98.3

Revenue in the West region decreased 12.1% in 2013. The decrease was primarily attributable to an increased focus on higher-margin, lower-volume paving projects, which led to a 24.5% decrease in asphalt volumes, and the completion of high-revenue, low-margin projects in 2012, such as grading and structural work. In addition, we enter into various firm purchase commitments with terms generally less than one year for certain raw materials, including commodities,had a significant asphalt paving project in Austin, Texas that was completed in the ordinary coursefourth quarter of business.2012, which contributed $47.5 million to revenue in 2012.

These revenue declines were offset by improved pricing across our products lines and increased aggregate and ready-mixed concrete volumes from the April 1, 2013 Westroc acquisition. The West region’s percent changes in sales volumes and pricing from 2012 to 2013 were as follows:

   Percentage Change in 
   Volume  Average Selling
Price
 

Aggregate

   2.8  9.5

Ready-mixed concrete

   12.7  5.8

Asphalt

   (24.5%)   7.8

The West region’s operating loss in 2013 was $47.5 million compared to $6.6 million in 2012. In 2013, we recognized a $53.3 million goodwill impairment charge from a decline in the estimated fair value of our reporting unit based in Utah caused by uncertainties in the timing of a sustained recovery in the Utah construction market.

Excluding the goodwill impairment charge, operating earnings improved $12.4 million and operating margin improved 280 basis points in 2013 from 2012. The improvement was primarily driven by (1) higher average selling prices in aggregates, ready-mixed concrete and asphalt, (2) improved performance in Texas due to the completion of low margin grading and structural work in 2012 and increased focus on higher-margin, lower-volume paving projects and (3) an $8.0 million loss on an indemnification agreement in 2012. In 2013, these profit improvements were offset by the 24.5% decline in asphalt volumes, as a result of the increased focus on higher-margin, lower-volume paving projects and completion of high-revenue, low-margin projects, such as grading and structural work, completing a significant project in Austin, Texas in the fourth quarter of 2012, and a $4.4 million loss in 2013 on the disposition of certain assets in Colorado.

Adjusted EBITDA improved $14.2 million to $28.6 million in 2013 from $14.4 million in 2012 primarily due to (1) an $8.0 million loss on an indemnification agreement in 2012, (2) $4.5 million of cost overruns on certain structural projects in 2012, (3) $1.7 million less of debt financing costs in 2013, as compared to 2012, and (4) increased pricing of our aggregate, ready-mixed concrete and asphalt products. These earnings improvements were negatively affected by a decrease in asphalt volumes and a $4.4 million loss in 2013 on the disposition of certain assets in Colorado.

Central Region

(in thousands)  2013  2012  Variance 

Total revenue

  $329,621   $302,113   $27,508     9.1

Operating income

   39,246    37,560    1,686     4.5

Operating margin

   11.9  12.4   

Adjusted EBITDA

  $72,918   $65,767   $7,151     10.9

Revenue in the Central region increased $27.5 million, or 9.1%, in 2013 from 2012 as a result of positive movements in both volume and price across our products. The Central region’s percent changes in sales volumes and pricing from 2012 to 2013 were as follows:

   Percentage Change in 
   Volume  Average Selling
Price
 

Aggregate

   7.9  5.5

Cement

   (4.1%)   3.4

Ready-mixed concrete

   5.6  1.0

Asphalt

   25.9  (1.9%) 

The acquisition of the Lafarge assets in and around Wichita, Kansas contributed to the increases in aggregates, ready-mixed concrete and asphalt volumes. Asphalt prices decreased 1.9% from 2012 due to a concentration of higher grade asphalt mixes in 2012, which commanded a higher price due to higher material input cost. Cement volumes decreased 4.1% with a 3.4% price increase.

The Central region’s operating income increased $1.7 million and operating margin declined 50 basis points in 2013 from 2012. Operating income and margin in 2013 were positively affected by volume increases in aggregates, cement and ready–mixed concrete, realized synergies from the April 1, 2013 acquisition of the Lafarge-Wichita assets and a rebound in the Northeast Kansas market. However, these improvements were offset by higher stripping costs and a $0.8 million charge for costs to remove a sunken barge from the Mississippi River.

Adjusted EBITDA improved $7.2 million in 2013. This increase was a result of the increased volumes and improved pricing in 2013, partially offset by the decrease in cement volumes. In 2013, the Central region also realized a decrease of $1.5 million in debt financing costs allocated to the region, partially offset by the effect of higher stripping costs and a $0.8 million charge to remove a sunken barge from the Mississippi River.

East Region

(in thousands)  2013  2012  Variance 

Total revenue

  $160,385   $139,219   $21,166    15.2

Operating loss

   (14,207  (245  (13,962  5698.8

Operating margin

   (8.9)%   (0.2)%   

Adjusted EBITDA

  $15,134   $10,782   $4,352    40.4

Our East region’s revenue increased 15.2% in 2013, primarily as a result of improved aggregate pricing and increased aggregate and asphalt volumes, which was partially offset by decreased asphalt pricing. The East region’s percent changes in sales volumes and pricing from 2012 to 2013 were as follows:

   Percentage Change in 
   Volume  Average Selling
Price
 

Aggregate

   1.2  8.0

Asphalt

   9.3  (1.4%) 

In 2013, the East region’s operating loss was $14.2 million, which included a $14.9 million goodwill impairment charge from a decline in the estimated fair value of the reporting unit caused by uncertainties in the timing of a sustained recovery in the Kentucky construction market. Excluding the goodwill impairment charge, operating income improved $0.9 million and operating margin improved 60 basis points from 2012. This improvement was driven by increased aggregate pricing and various cost savings initiatives implemented in 2012 and 2013, including headcount reductions of approximately 60 salaried employees.

Adjusted EBITDA increased $4.4 million in 2013 to $15.1 million. The Adjusted EBITDA increase in 2013 was driven by increased aggregate pricing and the various cost savings initiatives mentioned above. In addition, the East region benefited in 2013 from a reduction of debt financing costs of $2.5 million, as compared to 2012.

Fiscal Year 2012 Compared to 2011

(in thousands)  2012  2011  Variance 

Total revenue

  $926,254   $789,076   $137,178    17.4

Operating income

   15,415    25,099    (9,684  (38.6)% 

Operating margin

   1.7  3.2  

Adjusted EBITDA

  $75,418   $107,720   $(32,302  (30.0)% 

Revenue in 2012 increased to $926.3 million compared to $789.1 million in 2011. The $137.2 million increase was driven by acquisitions and $17.7 million from net pricing increases. Revenue from businesses acquired in 2012 totaled $24.7 million and the incremental revenue in 2012 from business acquired in 2011 was $149.7 million. Revenue growth from price increases and acquisitions was partially offset by $16.3 million of volume decreases across our product lines, other than our cement business where we had an 18% increase from 2011, and from a decline in paving and related services revenue.

The West region experienced the most revenue growth in 2012 as compared to 2011. It was established in the second half of 2010 and grew significantly in 2011 through acquisitions. As a result, 2012 was the first year with a full year of results from these acquisitions. The West region composed 52% of consolidated revenue in 2012 compared to 46% in 2011. Revenue, as a percentage of consolidated revenue, remained constant in the Central region in 2012 and declined from 21% to 15% in the East region.

Operating income decreased $9.7 million from $25.1 million in 2011 to $15.4 million in 2012. As a result of our revenue growth in 2012 occurring primarily through acquisitions, our G&A and depreciation, depletion, amortization and accretion generally grew ratably with revenue. As a result of the contract escalation clauses and effective use of the firm purchase commitments discussed above, commodity prices did not have a material effect on our results of operations in 2012, as compared to 2011.

As a percentage of total revenue, the individual components of operating income remained relatively consistent from 2011 to 2012 with the exception of $8.0 million of costs recognized in connection with an indemnification agreement in the West region in 2012, compared to $1.9 million of costs recognized in 2011. The costs were primarily responsible for the decline in operating2012. Operating margin which we define as operating income as a percentage of revenue,declined from 2.9%3.2% in 2011 to 1.5%1.7% in 2012. Operating margin was also impactedaffected by low marginan $8.0 million loss on an indemnification agreement in 2012, compared to a $1.9 million loss in 2011 and low-margin contracts and higher costs on certain constructionpaving and related projects, primarily in the West region. During 2012, we performed work on certain grading and structural projects that were generally bid and awarded prior to our acquisition of the respective entities. These non-core structural projects were bid without cost escalators for raw materials, fuel, etc., which resulted in cost escalations in 2012 as work was performed on the projects. In addition, in the East region, we were affected by low margins on certain projects from a highly competitive environment.

We experienced a decline in Adjusted EBITDA from $106.8$107.7 million in 2011 to $75.2$75.4 million in 2012 related to the following:

 

In 2012, we recognized $8.0 million in losses on an indemnification agreement, compared to $1.9 million in 2011.

 

In 2012, we recognized a $9.5 million loss associated with a debt refinancing was recognized.

refinancing.

 

In 2011, we recognized $12.1 million of bargain purchase gains on certain acquisitions in the West region. The amount of the bargain purchase gain is equal to the amount by which the fair value of net assets acquired exceeded the consideration transferred. We believe that the resulting bargain purchase gain is reasonable as the sellers were highly motivated. For a further discussion of the bargain purchase gain, see note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

 

In 2011, we recognized a $10.3 million favorable fair value adjustment on contingent consideration, compared to $0.4 million in 2012. The $10.3 million adjustment in 2011 was due primarily to revised estimates of the probability of achieving the specified targets that would require contingent payments related to certain acquisitions.

 

Transaction fees decreased $7.1 million in 2012 compared to 2011 due to a decrease in acquisition activity. We closed eight acquisitions in 2011 with an average purchase price of $23.6 million compared to three in 2012 for an average purchase price of $19.8 million.

Other Financial Information

Other income, netIncome, Net

Other income decreased to $1.2 million in 2012 from $21.2 million in 2011. Included in other income in 2011 were $12.1 million of bargain purchase gains on certain acquisitions in the West region and a $10.3 million gain from fair value adjustments to contingent consideration, compared to a $0.4 million fair value adjustment in 2012.

Loss on debt refinancingDebt Refinancing

We refinanced our long-term debt and accrued interest in January 2012 resulting in a $9.5 million charge.charge, which was accounted for as a partial extinguishment. We did not refinance our long-term debt in 2011.

Interest expenseExpense

Interest expense increased $10.3 million, or 21.5%, to $58.1 million in 2012 compared to $47.8 million in 2011. The increase in our interest expense reflects an increase in our average debt. Our debt, without giving effect to original issuance discount, increased to $648.0 million at December 29, 2012 from $609.0 million at December 31, 2012.2011. In addition, although our outstanding borrowings on our revolver were zero at year-end 2012, we carried an average balance of $36.7 million during 2012. The additional borrowings were primarily used to fund acquisitions ($48.8 million) and seasonal working capital requirements.

Income tax expense

Summit is a limited liability company and passes its tax attributes for federal and state tax purposes to its parent entities and is generally not subject to Federal or state income tax. However, the consolidated financial statements of the Company include Federal and state income tax provisions for subsidiaries organized as taxable entities. In 2012, we recorded income tax benefit of $3.9 million compared to an expense of $3.4 million in 2011. The decrease in the income tax expense is due to taxable losses incurred by taxable entities in 2012.

Discontinued operationsOperations

In 2012, as partThe results of our strategy to focus on our core business as a heavy-side building materials company, we sold, through separate transactions, our railroad construction and maintenance business (referred to herein as railroad business) and our environmental business, which is primarily associated with building retaining walls and removal and remediation of underground fuel storage tanks, for $3.1 million. Prior to recognition as discontinued operations have been removed from the railroadresults of continuing operations for all periods presented. Revenue from these discontinued operations was $50.2 million and environmental businesses were included as components of the East region’s operations. The railroad and environmental businesses’ revenue$49.5 million in 2012 and 2011, was $13.5 million and $16.1 million, respectively, and the netrespectively. The loss from discontinued operations, inclusive of thean immaterial gain on the sale in 2012, was $2.8$3.5 million and $3.7$5.2 million in 2012 and 2011, respectively.

Fiscal year 2011 compared to 2010Segment Results of Operations

West Region

 

(in thousands)

  2011  2010      Variance 

Revenue

  $822,548   $430,358      $392,190     91.1

Operating income

  $23,634   $15,899      $7,735     48.7

Operating margin

   2.9  3.7      

Adjusted EBITDA

  $106,842   $38,756      $68,086     175.7

(in thousands)  2012  2011  Variance 

Total revenue

  $484,922   $362,577   $122,345    33.7

Operating loss

   (6,625  (455  (6,170  (1,356.0)% 

Operating margin

   (1.4)%   (0.1)%   

Adjusted EBITDA

  $14,429   $36,442   $(22,013  (60.4)% 

OurRevenue in the West region increased $122.3 million, or 33.7%. The majority of the increase is due to a full year of revenue increased significantlyfrom the six acquisitions that expanded our presence in 2011 to $822.5 million compared to $430.4 millionUtah, Texas and Colorado in 2010. The $392.2 million increase was almost entirely driven by acquisitions. Revenue2011. Incremental revenue from businessbusinesses acquired in 2011 totaled $117.0 million and the incremental revenue in 2011 from business acquired in 2010 was $248.1$147.4 million.

LOGO

The West region saw the most revenue growth in 2011 as compared to 2010. It was established in the second half of 2010 and grew significantly in 2011 through acquisitions. As a result of this growth, the West region comprised 44% of consolidated revenue in 2011 compared to 14% in 2010, thereby reducing the percentage of consolidated revenue contributed by the Central and East regions. Revenue, as a percentage of consolidated revenue, decreased 17% and 13% in the Central and East regions, respectively, in 2011 as compared to 2010.

Operating income increased $7.7 million from $15.9 million in 2010 to $23.6 million in 2011. Operating income reflects our profit after taking into consideration cost of revenue, general and administrative expenses, depreciation, depletion, amortization and accretion and transaction costs. The components of cost of revenue generally increase ratably with revenue as labor, transportation costs and subcontractor costs are recorded in cost of revenue. As a result of our revenue growth occurring primarily through acquisitions, our general and administrative costs and depreciation, depletion, amortization and accretion generally have grown ratably with revenue. Our transaction costs fluctuate with the number and size of acquisitions consummated each year.

We are subject to commodity price risk with respect to price changes in liquid asphalt and energy, including fossil fuels and electricity for aggregates, cement, asphalt paving mix and ready mixed concrete production, natural gas for hot mix asphalt production and diesel fuel for distribution vehicles and production related mobile equipment. Liquid asphalt escalators in most of our public contracts, other than those in Texas, limit our exposure to price fluctuations in this commodity. We often obtain similar escalators on private and commercial contracts. In addition, we enter into various firm purchase commitments with terms generally less than one year for certain raw materials, including commodities, These increases were partially offset by volume declines in the ordinary course of business. As a result of the contract escalation clauses and effective use of the firm purchase commitments, commodity prices did not have a material effect on our results of operations in 2011 as compared to 2010.Utah market.

As a percentage of revenue, the individual components of operating incomeOperating margin remained relatively consistent from 2010at (0.1)% in 2011 and (1.4)% in 2012. The negative margin in 2011 was affected by $6.0 million of transaction costs related to 2011 with the exception of the West region, the impact of which led to a decline in operating margin, from 3.7% in 2010 to 2.9% in 2011. The West region’s operating margin is the lowest of our three regions and with their operations representing a higher proportion of the consolidated company, operating margins contracted in 2011. The West region’s operating margins, asacquisitions, while 2012 was affected by an $8.0 million loss on an indemnification agreement, compared to the other regions, have been impacted by the timing of the acquisitions. We acquired two businesses in Austin, Texas in August and October 2011. Our business is seasonal with our peak earnings occurring between April and November of each year. With these acquisitions occurring late in the season, coupled with transaction fees associated with the acquisitions, an operating loss was recognized in 2011 in the West region. West region acquisitions were similarly timed in 2010 (August and November 2010) resulting in operating losses in 2010 as well. Underperformance on certain construction and paving contracts also impacted operating margins in the West region.

We experienced significant Adjusted EBITDA growth in 2011 from $38.8 million in 2010 to $106.8$1.9 million in 2011, and lower margins on legacy paving and related projects due to cost overruns.

Adjusted EBITDA declined $22.0 million from $36.4 million in 2011 to $14.4 million in 2012 primarily related todue the following:

 

Adjusted EBITDA from 2011 acquisitions was $21.2In 2012, we recognized an $8.0 million which includes a $12.1 million bargain purchase gain recognized with certain acquisitions in the West region

Incremental Adjusted EBITDA in 2011 from 2010 acquisitions was $26.7 million, which includes a $10.3 million favorable fair value adjustment recognizedloss on contingent consideration in the West and East regions

Transaction fees decreased $13.1an indemnification agreement, compared to $1.9 million in 2011.

In 2011, due to a decrease in acquisition activity. We closed eight acquisitions in 2011 with an average purchase price of $20.1 million compared to twelve acquisitions in 2010 with an average purchase price of $40.2 million

In 2010, a $10.0 million loss associated with two debt refinancings waswe recognized

Other Financial Information

Other (income) expense, net

Other income increased to $21.2 million in 2011 from expense of $1.6 million in 2010. Included in other income in 2011 were $12.1 million of bargain purchase gains on certainour acquisitions in the West region andColorado.

In 2011, we recognized a $10.3$4.8 million gain from a fair value adjustmentsadjustment to contingent consideration.

Loss on debt refinancing

We refinanced our term debt in February 2010 and again in December 2010 resulting in a $10.0 million charge for financing fees. We did not refinance our long-term debt in 2011.

Interest expense

Interest expense increased $22.4 million, or 87.9%,consideration, compared to $47.8$0.4 million in 2011 compared to $25.4 million in 2010. The increase in our interest expense reflects an increase in our term loan in December 2010 from $136.4 million to $400.0 million, and the increase in borrowings under our revolver facility associated with our 2011 acquisition activity. We amended one of our credit facilities in December 2010 to fund future acquisitions and take advantage of more favorable interest rates.

2012.

Income tax expenseCentral Region

Summit is a limited liability company and passes its tax attributes for Federal and state tax purposes to its parent entities and is generally not subject to Federal or state income tax. However, the consolidated financial statements of the Company include Federal and state income tax provisions for subsidiaries organized as taxable entities. In 2011, we recorded income tax expense of $3.4 million compared to $2.4 million in 2010. The increase in the income tax expense is due to an increase in taxable income from the taxable entities.

Discontinued operations

In 2012, as part of our strategy to focus on our core business as a heavy-side building materials company, we sold, through separate transactions, our railroad construction and maintenance business (referred to herein as railroad business) and our environmental business, which is primarily associated with building retaining walls and removal and remediation of underground fuel storage tanks for $3.1 million. Prior to recognition as discontinued operations, the railroad and environmental businesses were included as components of the East region’s operations. The railroad and environmental businesses’ revenue in 2011 and 2010 was $16.1 million and $20.5 million, respectively, and the net loss was $3.7 million and $0.4 million, respectively.

Segment results of operations

Central region fiscal year 2012 compared to 2011

 

(in thousands)

  2012 2011     Variance   2012 2011 Variance 

Revenue

  $302,113   $264,008      $38,105    14.4

Total revenue

  $302,113   $264,008   $38,105   14.4

Operating income

  $37,560   $38,105      $(545  (1.4)%    37,560   38,105   (545 (1.4)% 

Operating margin

   12.4  14.4        12.4 14.4  

Adjusted EBITDA

  $65,767   $65,651      $116    0.2  $65,767   $65,651   $116   0.2

Revenue in the Central region increased $38.1 million, or 14.4%, in 2012 to $302.1 million compared to $264.0 million in 2011 due to acquisitions and a $15.4 million increase in cement sales, driven by a 17% increase in cement volumes. Revenue from business acquired in 2012 totaled $23.3 million and the incremental revenue in 2012 from business acquired in 2011 was $1.5 million.

Operating margin declined in 2012 to 12.4% from 14.4% in 2011 primarily due to a $3.4 million gain on landfill closure obligations in 2011, aswhich was a result of revisions to landfill closure plans. After adjusting for this non-recurring gain, operating margin in 2012 was generally consistent with 2011.

Adjusted EBITDA remained relatively consistent from $65.7 million in 2011 to $65.8 million in 2012.

Central region fiscal year 2011 compared to 2010East Region

 

(in thousands)

  2011  2010      Variance 

Revenue

  $264,008   $211,238      $52,770     25.0

Operating income

  $38,105   $27,178      $10,927     40.2

Operating margin

   14.4  12.9      

Adjusted EBITDA

  $65,651   $40,790      $24,861     60.9

Revenue in the Central region increased $52.8 million, or 25.0%, in 2011 to $264.0 million compared to $211.2 million in 2010 due primarily to acquisitions. Revenue from business acquired in 2011 totaled $2.4 million and the incremental revenue in 2011 from business acquired in 2010 was $57.5 million. These revenue increases were partially offset by completion of a significant construction project with the Kansas Turnpike Authority in northeast Kansas which contributed approximately $10.9 million of additional revenue in 2010 than in 2011.

Operating margin improved in 2011 to 14.4% from 12.9% in 2010 primarily due to a $3.4 million gain on landfill closure obligations, as a result of revisions to landfill closure plans. After adjusting for this non-recurring gain, operating margin in 2011 was generally consistent with 2010.

The Adjusted EBITDA growth of $24.9 million from $40.8 million in 2010 to $65.7 million in 2011 was primarily due to the following:

Adjusted EBITDA from 2011 acquisitions was $0.9 million

Incremental Adjusted EBITDA in 2011 from 2010 acquisitions was $12.4 million

$3.4 million gain on landfill closure obligations as a result of revisions to landfill closure plans

$8.7 million decrease in transactions costs. In 2010, we acquired four entities for an average purchase price of $66.0 million compared to one acquisition in 2011 for $8.7 million.

West region fiscal year 2012 compared to 2011

(in thousands)

  2012  2011      Variance 

Revenue

  $484,922   $362,577      $122,345    33.7

Operating income

  $(6,625 $(455    $(6,170  (1,356.0)% 

Operating margin

   (1.4)%   (0.1)%      

Adjusted EBITDA

  $14,429   $36,442      $(22,013  (60.4)% 

Revenue in the West region increased $122.3 million, or 33.7%, in 2012 to $484.9 million compared to $362.6 million in 2011. The majority of the increase is due to a full year of revenue from the six acquisitions that expanded our presence in Utah, Texas and Colorado in 2011. Incremental revenue from businesses acquired in 2011 totaled $147.4 million. These increases were partially offset by volume declines in the Utah market.

Operating margin remained relatively consistent at (0.1)% in 2011 and (1.4)% in 2012. The negative margin in 2011 was impacted by $6.0 million of transaction costs related to the acquisitions, while 2012 was impacted by $8.0 million in losses on an indemnification agreement, compared to $1.9 million in 2011, and lower margins on legacy construction projects due to cost overruns.

Adjusted EBITDA declined $22.0 million from $36.4 million in 2011 to $14.4 million in 2012 primarily due the following:

In 2012, we recognized $8.0 million in losses on an indemnification agreement, compared to $1.9 million in 2011

In 2011, we recognized $12.1 million of bargain purchase gains on our acquisitions in Colorado

In 2011, we recognized a $4.8 million gain from a fair value adjustment to contingent consideration, compared to $0.4 million in 2012

West region fiscal year 2011 compared to 2010

(in thousands)

  2011  2010      Variance 

Revenue

  $362,577   $59,337      $303,240     511.0

Operating income

  $(455 $(4,691    $4,236     90.3

Operating margin

   (0.1)%   (7.9)%       
 

Adjusted EBITDA

  $36,442   $(1,710    $38,152     2,231.1

Our West region was established in 2010 with five acquisitions in Utah and in northeast Texas and expanded in 2011 with an additional six acquisitions expanding our presence in Utah, and into Austin, Texas and Colorado. The revenue growth in 2011 from 2010 was primarily due to these acquisitions. Revenue from businesses acquired in 2011 totaled $110.5 million and the incremental revenue in 2011 from businesses acquired in 2010 was $183.8 million.

Operating margin improved from (7.9)% in 2010 to (0.1)% in 2011. The negative margin in 2011 and 2010 was impacted by $4.1 million and $6.0 million, respectively, of transaction costs related to the acquisitions. The reduction in these transaction costs attributed to the improved operating margin in 2011.

The Adjusted EBITDA growth of $38.2 million from a loss of $1.7 million in 2010 to $36.4 million in 2011 is primarily due the following:

Adjusted EBITDA from 2011 acquisitions was $18.6 million, including $12.1 million bargain purchase gains related to the Colorado acquisitions

Incremental Adjusted EBITDA in 2011 from 2010 acquisitions was $16.9 million

In 2011, we recognized a $4.8 million gain from a fair value adjustment to contingent consideration

East region fiscal year 2012 compared to 2011

(in thousands)

  2012 2011     Variance   2012 2011 Variance 

Revenue

  $175,867   $195,963      $(20,096  (10.3)% 

Total revenue

  $139,219   $162,491   $(23,272 (14.3)% 

Operating (loss) income

  $(1,017 $1,222      $(2,239  (183.2)%    (245 2,687   (2,932 (109.1)% 

Operating margin

   (0.6)%   0.6        (0.2)%  1.7  
 

Adjusted EBITDA

  $10,596   $14,626      $(4,030  (27.6)%   $10,782   $15,504   $(4,722 (30.5)% 

Our East region’s revenue decreased $20.1$23.3 million from $196.0$162.5 million in 2011 to $175.9$139.2 million in 2012 due to a decline in constructionpaving and pavingrelated activities in Kentucky.

Operating margin in the East region decreased from 0.6%1.7% in 2011 to (0.6)(0.2)% in 2012 due primarily to cost overruns on certain constructionpaving and related projects.

Adjusted EBITDA declined $4.0$4.7 million from $14.6$15.5 million in 2011 to $10.6$10.8 million in 2012 due primarily to a $3.7 million charge associated with the January 2012 debt refinancing and cost overruns ofon certain legacy constructionpaving and related projects.

East region fiscal year 2011 compared to 2010

(in thousands)

  2011  2010      Variance 

Revenue

  $195,963   $159,783      $36,180    22.6

Operating income

  $1,222   $3,920      $(2,698  (68.8)% 

Operating margin

   0.6  2.5     
 

Adjusted EBITDA

  $14,626   $5,474      $9,152    167.2

Our East region’s revenue increased $36.2 million from 2010 as a result of revenue from business acquired in 2011 ($4.0 million), incremental revenue in 2011 from business acquired in 2010 ($6.8 million) and $8.4 million of additional revenue on two large concrete paving projects that began in 2009 and increased volume in the construction business.

Operating margin in the East region decreased from 2.5% in 2010 to 0.6% in 2011 due primarily to the two large concrete paving projects, which earned lower margins in 2011 due to cost overruns.

The Adjusted EBITDA growth of $9.2 million from $5.5 million in 2010 to $14.6 million in 2011 was primarily due to the following:

Adjusted EBITDA from 2011 acquisitions was $1.7 million

Incremental Adjusted EBITDA in 2011 from 2010 acquisitions was a loss of $2.7 million

Transaction costs from acquisitions decreased $4.9 million

In 2010, we recognized $5.5 million of finance charge associated with two debt refinancings

Liquidity and Capital Resources

Our primary sources of liquidity include cash on-hand, cash provided by our operations and amounts available for borrowing under our credit facilities ($135.5 million at December 29, 2012).facilities. As of December 29, 2012June 28, 2014, we had $27.4$20.8 million in cash and working capital of $114.4$128.7 million as compared to $42.8 million in cash and working capital of $146.7$14.9 million as ofand $85.4 million, respectively, at December 31, 2011.28, 2013. Working capital is calculated as current assets less current liabilities, excluding the current portion of long term debt.long-term debt and outstanding borrowings on our senior secured revolving credit facility (the “Revolver”). There were no restricted cash balances as of June 28, 2014 or December 28, 2013. Our remaining borrowing capacity on our Revolver as of June 28, 2014 was $62.2 million, which is net of $22.8 million of outstanding letters of credit.

Given the seasonality of our business, we typically experience significant fluctuations in working capital needs and balances throughout the year. Our working capital requirements generally increase during our peak summer season; these amounts are convertedthe first half of the year as we build up inventory and focus on repair and maintenance and other set-up costs for the upcoming season. Working capital levels then decrease as the construction season winds down and we enter the winter months, which is when we see significant inflows of cash from the collection of receivables. For example, net cash used for operating activities in the six months ended June 29, 2013 was $47.8 million, compared to full year 2013 net cash overprovided by operating activities of $66.4 million. Net cash used for operating activities in the course of our normal operating cycle. six months ended June 28, 2014 was $45.9 million.

We believe we have access to sufficient financial resources from our liquidity sources to fund our business and operations, including contractual obligations, capital expenditures and debt service obligations, for at least the next twelve months, including contractual obligations, capital expenditures, debt service obligations and potential future acquisitions.months. Our growth strategy contemplates future acquisitions for which we believe we have sufficient capital through committed fundsaccess to capital. As of June 28, 2014, we had approximately $330.6 million of funding commitments from our Sponsors and our borrowing capacity. There were no restricted cash balances as of December 29, 2012 or December 31, 2011.equity sponsors outstanding.

Our Credit FacilitiesLong-Term Debt

Refer to “Description of Other Indebtedness” andPlease refer to the notes to the consolidated financial statements includedfound elsewhere in this prospectus for detailed information onregarding our long-term debt and senior secured revolving credit facility, scheduled maturities of long-term debt and affirmative and negative covenants, including the maximum allowable consolidated first lien net leverage and interest coverage ratios.

At December 29, 2012 As of June 28, 2014 and December 31, 2011, $648.0 million, without giving effect to original issuance discount, and $609.0 million, respectively was outstanding under the respective debt agreements, including the revolving credit facility, and28, 2013, the Company was in compliance with all debt covenants.

At June 28, 2014 and December 29, 2012, we had no28, 2013, $927.8 million and $695.9 million, respectively, of total debt, without giving effect to original issuance discount or premium, were outstanding borrowings on the revolving credit facility, but did carry an average balanceunder our respective debt agreements.

As of $36.7 million during 2012. The revolver borrowings were primarily used to fund acquisitions ($48.8 million) and seasonal working capital requirements.

January 2012 Financing Transactions

On January 30, 2012June 28, 2014, Summit Materials and its indirect wholly-owned subsidiary, Summit Materials Finance Corp. (collectively, the “Issuers”), had issued $250.0$510.0 million aggregate principal amount of 10.5%10 12% Senior Notes due January 31, 2020 (“Senior(the “Senior Notes”) under an indenture dated as of January 30, 2012 (as amended and supplemented, the “Indenture”) among the Issuers, the guarantors party thereto and Wilmington Trust, National Association, as trustee. The Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by all. We initially issued $250.0 million of our existing and future wholly-owned domestic restricted subsidiaries that guarantee indebtedness under our senior secured credit facilities and by our non wholly-owned subsidiary Continental Cement. Concurrently with the issuance of the Senior Notes on January 30, 2012 and issued an additional $260.0 million of Senior Notes on January 17, 2014, receiving proceeds of $282.8 million, before payment of fees and expenses. The proceeds from the January 2014 issuance were used for the purchase of Alleyton, to make payments on the Revolver and for general corporate purposes.

On September 8, 2014, the Issuers issued an aggregate of $115.0 million principal amount of 10 12% Senior Notes due 2020 in a private offering. The proceeds from the private offering of the outstanding notes were used to fund our acquisition of Mainland on September 4, 2014, pay down outstanding amounts under our revolving credit facility and pay related fees and expenses.

In addition to the Senior Notes, Summit entered into aMaterials has senior secured credit facility which providedfacilities that provide for term loans in an initial aggregate amount of $400.0$422.0 million and revolving credit commitments under the Revolver in an initial aggregate amount of $150.0 million (the “Senior Secured Credit Facility”). The borrowings under the Senior Secured Credit Facilitymillion. Summit Materials’ wholly-owned subsidiary companies and net proceeds from the issuance of the Notes were used to refinance Summit’s pre-existing credit facility and theits non-wholly-owned subsidiary, Continental Cement, debt.

Proceeds from the Senior Secured Credit Facility and the Senior Notes were used primarily for (i) repayment of $451.0 million of borrowings under the existing credit facility, consisting of $396.0 million of term debt and $55.0 million of revolving credit facility debt, (ii) repayment of $142.7 million of secured debt of Continental Cement consisting of $39.0 million of first lien debt, $3.7 million of first lien revolving credit facility debt and $100.0 million of second lien debt, (iii) repayment of $13.0 million due under a promissory note by and between Continental Cement and a related party, (iv) payment of $4.5 million of accrued interest related to the pre-existing credit facility and the Continental Cement debt, (v) payment of $12.9 million of fees and (vi) $16.5 million of cash on hand. The refinancing of the existing credit facility was partially accounted forare named as an extinguishment. As a result of this transaction, $9.5 million was charged to earnings in January 2012 and $15.0 million in deferred financing fees will be amortized over the term of the debt using the effective interest method. The original issuance discounts of $9.5 million were recorded as a reduction to debt in January 2012 and will be accreted with a charge to earnings over the term of the debt.

The Indenture contains covenants limiting, among other things, Summit and its restricted subsidiaries’ ability to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make

other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of Summit’s assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The Indenture also contains customary events of default. We entered into a registration rights agreement with the initial purchasersguarantors of the Senior Notes pursuant to which we have filedand the registration statement on Form S-4senior secured credit facilities. Certain other partially-owned subsidiaries, including a subsidiary of which this prospectus forms a part. InContinental Cement, and the event that the exchange offer hasnon-U.S. subsidiary, Mainland, do not been consummated or a shelf registration statement covering resales of the notes has not been declared effective by the SEC, then the interest rate on the notes eligible for inclusion in such registration statement will be increased by certain specified rates pursuant to the registration rights agreement.

In February 2013, we entered into amendments to our Senior Secured Credit Facility that, among other things: (i) reduced the applicable margins used to calculate interest rates for term loans under our Senior Secured Credit Facility by 1.0%; (ii) reduced the applicable margins used to calculate interest rates for $131.0 million of tranche A revolving credit loans available underguarantee the Senior Secured Credit Facility by 1.0% (with no reductions toNotes. In addition, the applicable marginsCompany has pledged substantially all of its assets as collateral for the remaining $19.0 million of available revolvingsenior secured credit loans); (iii) increased term loans borrowed under our term loan facility by $25.0 million with the same terms as the existing term loans (bringing total term loan borrowings to approximately $422.0 million); (iv) included a requirement that we pay a fee equal to 1.0% of the principal amount of term loans repaid in connection with certain repricing or refinancing transactions within six months after February 5, 2013; and (v) created additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated First Lien Net Leverage Ratio and reducing the applicable minimum Interest Coverage Ratio (each as defined in the credit agreement governing our Senior Secured Credit Facility).facilities.

Cash Flows

The following table summarizes our net cash provided by or used for operating, activities, investing activities and financing activities and our capital expenditures for the periods indicated (in thousands):indicated:

 

  Year Ended   Six months ended Year ended 
  December 29,
2012
 December 31,
2011
 December 31,
2010
   June 28,
2014
 June 29,
2013
 December 28,
2013
 December 29,
2012
 December 31,
2011
 

Net cash provided by (used for):

    
(in thousands)            

Net cash (used for) provided by

      

Operating activities

  $62,279   $23,253   $(20,529  $(45,880 $(47,760 $66,412   $62,279   $23,253  

Investing activities

   (85,340  (192,331  (499,381   (277,388 (94,221 (111,515 (85,340 (192,331

Financing activities

   7,702    146,775    575,389     329,153   122,205   32,589   7,702   146,775  

Cash paid for capital expenditures

  $(45,488 $(38,656 $(21,145  $(49,260 $(40,528 $(65,999 $(45,488 $(38,656

Operating activitiesActivities

ForDuring the six months ended June 28, 2014, cash used in operating activities was $45.9 million primarily as a result of:

Net loss of $38.9 million, adjusted for $44.9 million of non-cash expenses, including $43.3 million of depreciation, depletion, amortization and accretion.

An increase in accounts receivable and costs and estimated earnings in excess of billings of $39.2 million. In conjunction with the seasonality of our business, the majority of our sales occur in the spring, summer and fall and we typically incur an increase in accounts receivable (net billed and unbilled) during the second and third quarters of each year. This amount is typically converted to cash in the fourth and first quarters.

Additional investment in inventory of $17.8 million consistent with the seasonality of our business for which our inventory levels typically decrease in the fourth quarter in preparation for the winter slowdown and are then increased at the end of the second quarter in preparation for the increased sales volumes in the summer and fall.

The timing of payments associated with accounts payable and accrued expenses utilized $12.1 million of cash in conjunction with the build-up of inventory levels and incurrence of repairs and maintenance to prepare the business for increased sales volumes in the summer and fall. In addition, we paid $25.9 million of interest payments in the six months ended June 28, 2014.

During the six months ended June 29, 2013, cash used in operating activities was $47.8 million primarily as a result of:

Net loss of $56.0 million, adjusted for $46.5 million of non-cash expenses, including $39.0 million of depreciation, depletion, amortization and accretion and $5.6 million of losses on asset dispositions.

An increase in accounts receivable and costs and estimated earnings in excess of billings of $25.3 million, in conjunction with the seasonality of our business.

Additional investment in inventory of $13.2 million, consistent with the seasonality of our business.

During the year ended December 28, 2013, cash provided by operating activities was $66.4 million primarily as a result of:

Net loss of $106.8 million, adjusted for non-cash expenses, including $75.9 million of depreciation, depletion, amortization and accretion, a $68.2 million goodwill impairment charge and $12.4 million from net losses on asset disposals.

Collection of accounts receivable providing $9.9 million of additional cash in 2013 due to an increased focus on processing billings and collecting on outstanding receivables.

During the year ended December 29, 2012, cash provided by operating activities was $62.3 million primarily as a result of:

 

Non-cashNet loss of $52.5 million, adjusted for non-cash expenses, including $72.2 million of depreciation, depletion, amortization and accretion, which increased in 2012 in connection with our 2011 and 2012 acquisitions, and a $9.5 million loss on our January 2012 debt refinancing;

refinancing.

 

AccountsCollection of accounts receivable and costs and estimated earnings in excess of billings providedproviding $12.1 million of additional cash from December 31, 2011 to December 29,in 2012 due to an increased focus on processing billings and collecting on outstanding receivables in a more timely manner during 2012 as compared to 2011; and

receivables.

 

AccountsReduced payments of accounts payable and accrued expenses providedproviding additional cash from operations, on a net basis, of $11.1 million from December 31, 2011 to December 29,in 2012 due primarily to a $16.0 million increase in accrued interest. The interest on our Senior Notes, issuedOur December 2012 payment was accrued at year-end 2012 and paid in January 2012, are payable in January and Julythe first quarter of each year and the interest on our Senor Secured Credit Facilities is payable on the last

2013.

business day of each calendar quarter, which resulted in our December 2012 payment being accrued at year-end 2012 and paid in the first quarter of 2013. The increase in accrued interest was partially offset by improvement in our cash management policy with respect to accounts payable.

ForDuring the year ended December 31, 2011, cash provided by operating activities was $23.3 million primarily as a result of:

 

Non-cashNet loss of $10.7 million, adjusted for non-cash expenses, including $65.0 million of depreciation, depletion, amortization and accretion, a $12.1 million bargain purchase gain and a $10.3 million gain on the revaluation of contingent consideration;

consideration.

 

AccountsCollection of accounts receivable and costs and estimated earnings in excess of billings providedproviding $13.3 million of additional cash from December 31, 2010 to December 31,in 2011 due to an increased focus on timely billings and cash collections as compared to the legacy processes of the businesses acquired in 2010;

2010.

 

Inventory utilizing $12.6 million of cash from December 31, 2010 to December 31,in 2011 as we increased our inventory balances to support the growth in business activities (revenue grew 91.1%increased 94.7% from 2010 to 2011); and

.

 

Billings in excess of costs and estimated earnings utilizing $8.2 million of cash from December 31, 2010 to December 31,in 2011 due to certain contracts that were completed in 2011.

ForInvesting Activities

During the six months ended June 28, 2014, cash used for investing activities was $277.4 million, $234.9 million of which related to the Alleyton, Troy Vines and Buckhorn Materials acquisitions. In addition, we invested $49.3 million in capital expenditures, offset by $6.0 million of proceeds from asset sales. Approximately $12.2 million of the capital expenditures were invested in our cement business in Hannibal, Missouri, for continued development of an underground mine ($4.1 million), as well as improvements made to our cement plant during the annual scheduled winter shutdown in February 2014.

During the six months ended June 29, 2013, cash used for investing activities was $94.2 million, $60.8 million of which related to the acquisitions of certain assets from Lafarge in and around Wichita, Kansas and all of the membership interests of Westroc near Salt Lake City, Utah. In addition, we invested $40.5 million in capital expenditures, offset by $7.1 million of proceeds from asset sales. Approximately $15.9 million of the capital expenditures were invested in our cement business in Hannibal, Missouri, which related to continued development of an underground mine ($7.8 million), a dome to store additional cement in St. Louis, Missouri ($2.6 million), as well as improvements made to our cement plant during the annual scheduled winter shutdown in February 2013. In 2013, we invested $3.5 million in a new hot mix asphalt plant in Austin, Texas.

During the year ended 2010,December 28, 2013, cash used for operatinginvesting activities was $20.5 million. The $23.9$111.5 million, net loss was adjusted for $35.5$61.6 million of depreciation, depletion, amortizationwhich was used for the April 1, 2013 acquisitions of certain Lafarge assets in and accretionaround Wichita, Kansas and all of the $10.0membership interests of Westroc near Salt Lake City, Utah. In addition, we invested $66.0 million loss on the 2010 debt refinancings. Operating cash flows in 2010 were reducedcapital expenditures, offset by $25.3$16.1 million of primarily interest charges incurred withproceeds from asset sales. Approximately $25.6 million of the paymentcapital expenditures were invested in our cement business in Hannibal,

Missouri, for continued development of legacy debt owed by Continental Cement. The interest was paid froman underground mine ($15.3 million), a cement terminal expansion to store additional cement in St. Louis, Missouri ($2.8 million), as well as improvements made to our cement plant during the cash used to acquire an approximately 70% interestscheduled shutdowns. We also invested $6.4 million in Continental Cement.a new hot mix asphalt plant in Austin, Texas.

Investing activities

ForDuring the year ended 2012, cash used for investing activities was $85.3 million. We paid $48.8 million for three acquisitions, and $45.5 million for capital expenditures. The 2012 acquisitionswhich expanded our presence in certain of our existing markets.markets and $45.5 million for capital expenditures. Approximately half of our 2012 capital expenditures were to replace or maintain equipment and the remaining portion reflects capital investments in the business, the most significant of which is the development of an underground mine at our cement plant. We spent $5.0 million on the underground mine development in 2012.

ForDuring the year ended 2011, cash used for investing activities was $192.3 million. The companyCompany paid $161.1 million for eight acquisitions and $38.7 million for capital expenditures. Six of the eight acquisitions were in the West region through which we entered the western Colorado and Austin, Texas markets as well as expanded our presence in Utah and Idaho.

ForFinancing Activities

During the six months ended June 28, 2014, cash provided by financing activities was $329.2 million, which was primarily composed of $315.5 million of net additional borrowings, $282.8 million of which were the net proceeds from the January 2014 issuance of $260.0 million Senior Notes issued at a premium of $22.8 million. Approximately $182.5 million of the funds from the borrowings were used to purchase Alleyton. The remaining funds have been used to fund working capital needs. In addition, we received contributions from our member of $24.4 million and made $4.3 million of payments on our acquisition related liabilities.

During the six months ended June 29, 2013, cash provided by financing activities was $122.2 million, which is primarily composed of $105.0 million net borrowings on the Revolver and proceeds from the February 2013 repricing transaction, through which our outstanding borrowings increased $25.0 million. Approximately $60.8 million of the funds from the borrowings were used on April 1, 2013 to purchase certain assets of Lafarge in and around Wichita, Kansas and all of the membership interests of Westroc near Salt Lake City, Utah. The remaining funds were used for seasonal working capital requirements.

During the year ended 2010,2013, cash provided by financing activities was $32.6 million, which was primarily composed of $42.4 million in net borrowings on the Revolver and proceeds from the February 2013 repricing transaction, through which our outstanding borrowings increased $25.0 million. Approximately $61.6 million of the funds from the borrowings were used on April 1, 2013 to purchase certain assets of Lafarge in and around Wichita, Kansas and all of the membership interests in Westroc. The remaining funds have been used for investing activities was $499.4 million. Investing activity was primarily driven by several large acquisitions totaling $482.3 million.seasonal working capital requirements. In 2010,addition, we established the West regionmade $9.8 million of payments on our acquisition-related liabilities in Utah and Texas and the East region in Kentucky, as well as expanded the Central region’s presence in Kansas and into Missouri.2013.

Financing activities

ForDuring the year ended 2012, cash provided by financing activities was $7.7 million, which is primarily comprisedcomposed of $16.5 million of proceeds from the January 2012 financing transactions, offset by the use of cash for $7.5 million of payments under deferred consideration, and noncompete and contingent consideration arrangements entered into with various acquisitions. In 2012, all acquisitions were funded with cash-on-hand and debt. Accordingly, we had no proceeds from investments fromon our member in 2012.

acquisition-related liabilities.

ForDuring the year ended 2011, cash provided by financing activities was $146.8 million. The $103.6 million capital contributions from our member were used to fund certain acquisitions. The remaining cash provided by financing activities primarily reflects the $47.7 million of net proceeds from new debt issuances, which were also used to fund acquisitions, andpartially offset by $4.6 million of payments under deferred consideration and noncompete arrangements entered into with various acquisitions.on our acquisition-related liabilities.

For the year ended 2010, cash provided by financing activities was $575.4 million, primarily driven by $338.6 million of capital contributions from our member, and $239.5 million of borrowings used to fund $499.4 million of acquisitions and working capital needs.

Cash paidPaid for capital expendituresCapital Expenditures

We expended approximately $45.5$49.3 million and $66.0 million in capital expenditures in 2012 compared to $38.7 million in 2011.the six months ended June 28, 2014 and the year ended December 28, 2013, respectively. A significant portion of the increase inour 2014 and 2013 capital expenditures in 2012 relatesinvestment related to the

development of an underground mine to extract limestone on our Hannibal, Missouri property where our cement plant is located. We spent an additional $4.8$4.1 million and $15.3 million on the underground mine development in the six months ended June 28, 2014 and the year ended December 28, 2013, respectively.

We expended approximately $45.5 million in capital expenditures in 2012 and $38.7 million in 2011. A significant portion of the increase in capital expenditures in 2012 relates to development of the underground mine for our cement plant. We spent $5.0 million on the underground mine development in 2012 as compared to 2011.

We estimate that we will incur between $54.0 million and $62.0$0.2 million in capital expenditures in 2013, which we expect to fund through cash on hand, cash from operations, outside financing and available borrowings under our credit facilities. A significant portion of our anticipated future capital expenditures relates to development of the underground mine referred to above. We expect to spend approximately $12.0 million in total during 2013 and 2014 on this project. We believe this project will eliminate the need to strip away overburden that covers the limestone and ultimately save about $1.50 to $2.00 per ton of limestone costs off our average historical mining cost.2011.

Contractual Obligations

The following table presents, as of December 29, 2012,28, 2013, our obligations and commitments to make future payments under contracts and contingent commitments:commitments (in thousands):

 

  Total   2013   2014-2015   2016-2017   Thereafter   Total   2014   2015-2016   2017-2018   Thereafter 

Contractual Obligations

          

Short term borrowings and long-term debt, including current portion

  $648,000    $4,000    $8,000    $9,000    $627,000  

Short term borrowings and long-term debt, including current portion(1)

  $695,890    $30,220    $9,495    $7,385    $648,790  

Capital lease obligations

   6,330     360     720     720     4,530     11,001     2,069     4,042     720     4,170  

Operating lease obligations

   13,391     3,614     5,193     3,095     1,489     18,260     4,034     6,988     4,359     2,879  

Interest payments(1)

   345,287     50,305     99,881     98,911     96,190  

Interest payments(2)

   281,096     47,398     99,360     88,099     46,239  

Acquisition-related liabilities

   46,430     9,525     13,998     9,654     13,253     47,337     10,790     14,254     12,330     9,963  

Royalty payments

   17,554     1,593     3,207     3,245     9,509     21,937     2,044     4,039     3,480     12,374  

Defined benefit plans(2)

   27,308     2,773     5,557     5,516     13,462  

Defined benefit plans(3)

   4,880     972     2,410     1,280     218  

Asset retirement obligation payments

   28,191     356     6,059     1,258     20,518     39,468     1,101     3,239     4,509     30,619  

Other

   708     164     330     214     —       9,465     3,088     3,220     3,157     —   
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

Total contractual obligations(3)

  $1,133,199    $72,690    $142,945    $131,613    $785,951  

Total contractual obligations(4)

  $1,129,334    $101,716    $147,047    $125,319    $755,252  
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

 

(1)We issued an additional $260.0 million and $115.0 million of Senior Notes due January 2020 on January 17, 2014 and September 8, 2014, respectively. Had these amounts been outstanding at December 28, 2013, total contractual payments on short term borrowings and long-term debt, including current portion, would increase to $1,071 million and payments due after 2018 would increase to $1,024 million.
(2)Future interest payments were calculated using the applicable fixed and floating rates charged by our lenders in effect as of December 29, 201228, 2013 and may differ from actual results.
(2)(3)Amounts represent estimated future payments to fund our defined benefit plans.
(3)(4)Any future payouts on the redeemable noncontrolling interest are excluded from total contractual obligations as the expected timing of settlement is not estimable.

Commitments and contingenciesContingencies

InWe are party to certain legal actions arising from the normalordinary course of business we have commitments, lawsuits,activities. Accruals are recorded when the outcome is probable and can be reasonably estimated in accordance with applicable accounting requirements. While the ultimate results of claims and contingent liabilities. In the opinion oflitigation cannot be predicted with certainty, management expects that the ultimate dispositionresolution of these mattersall current pending or threatened claims and litigation will not have a material adverse effect on ourthe Company’s consolidated results of operations, financial position or liquidity.

We are obligated under an indemnification agreement entered into with the sellers of Harper Contracting Inc., Harper Sand and Gravel, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc. (collectively, “Harper”) for the seller’ssellers’ ownership interests in a joint venture agreement. Summit hasWe have the rights to any benefits under the joint venture as well as the assumption of any obligations, but doesdo not own equity interests in the joint venture. The joint venture has incurred significant losses on a highway project in Utah, which have resulted in requests for funding requirements forfrom the joint venture partners and, ultimately, forfrom us. Through year-end 2012,June 28, 2014, we have funded $8.8 million, into the investment, $4.0 million was funded in 2012 and $4.8 million was funded in 2011. As of June 28, 2014 and December 28, 2013, an accrual of $4.3 million was recorded in other noncurrent liabilities for this matter.

In 2012 and2013, a dispute with the sellers of Harper Contracting related to the calculation of working capital from the August 2010 acquisition was settled. The working capital dispute was submitted to binding arbitration, the outcome of which resulted in the payment of $1.9 million to the sellers. In addition, various other acquisition-related disputes with the sellers were settled for approximately $0.8 million. The total payments of $2.7 million were made in 2013. There was no material effect to 2013 earnings as a result of these settlements.

In February 2011, we incurred a property loss related to a sunken barge with cement product aboard. In 2013, we recognized losses$0.8 million of charges for costs to remove the barge from the waterway. As of June 28, 2014 and December 28, 2013, the Company had $0.4 million and $0.9 million, respectively, included in accrued expenses as management’s best estimate of the remaining costs to remove the barge.

We are obligated under various firm purchase commitments for certain raw materials and services that are in the ordinary course of business. The terms of these agreements 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 indemnification agreementfinancial position, results of $8.0 million and $1.9 million, respectively, which are included in general and administrative expenses onoperations or liquidity of the consolidated statements of operations.Company.

Off-Balance sheet arrangementsSheet Arrangements

As of December 29, 2012June 28, 2014, we had no material off-balance sheet arrangements, sucharrangements.

New Accounting Standards

In May 2014, the FASB issued a new accounting standard to improve and converge the financial reporting requirements for revenue from contracts with customers. Accounting Standards Update (“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 GAAP. The ASU will supersede nearly all existing revenue recognition guidance under 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 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 and will become effective for the Company in the first quarter of 2017. Early adoption is prohibited. Management is currently assessing the effect that the adoption of this standard will have on the consolidated financial statements.

In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as financingdiscontinued operations and modifies related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or unconsolidated variable interest entities,group of components that either haveis disposed of or are reasonably likelyis classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” This ASU is effective for fiscal years beginning on or after December 15, 2014, and interim periods within that annual period, with early adoption permitted. We do not expect the adoption of this standard to have a current or future material effect on our results of operations,consolidated financial position, liquidity, capital expenditures or capital resources.statements.

Critical Accounting PoliciesEmerging Growth Company Status

We are an “emerging growth company” as defined under the JOBS Act and are eligible to take advantage of certain exemptions from various public company reporting requirements. See “Risk Factors—Other Risks—As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.”

Section 107 of the JOBS Act also provides that an “emerging growth company” maycan take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act to comply with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. As an “emerging growth company,” we may elect to delay adoption of new or revised accounting standards applicable to public companies until such standards are made applicable to private companies. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.

We may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act until we (i) are no longerwill remain an “emerging growth company” or (ii) affirmatively and irrevocably “opt-out”until the earliest of: (i) the last day of the extended transition period provided in Section 7(a)(2)(B)fiscal year during which we had total annual gross revenue of $1 billion or more; (ii) the last day of the Securities Act. Accordingly, untilfiscal year following the fifth anniversary of the date we are no longer an “emerging growth company,” or affirmatively and irrevocably “opt-out” of the exemption provided by Section 7(a)(2)(B)first sale of the Securities Act, upon the issuance of a new or revised accounting standard that appliesour common stock pursuant to our financial statements and that has a differentan effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies andregistration statement; (iii) the date on which we will adopthave, during the recentlyprevious three year period, issued accounting standard.

Additionally,more than $1 billion in non-convertible debt; or (iv) the date on which we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act,deemed a “large accelerated issuer” as an “emerging growth company,” we may choose to rely on certain exemptions. See “Risk Factors—Risks Related to Our Business and Our Industry—As an “emerging growth company”defined under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.”federal securities laws.

Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period.

On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, allowance for doubtfulthe valuation of accounts receivable, inventories, goodwill, intangibles and other long-lived assets, pension and other postretirement obligations, asset retirement obligations taxes and goodwill.the noncontrolling interest. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Acquisitions—Purchase price allocationPrice Allocation

We regularly review strategic long-term plans, including potential investments in value-added acquisitions of related or similar businesses, which would increase our market share and/or are related to our existing markets. When an acquisition is completed, our consolidated statement of operations includes the operating results of the acquired business starting from the date of acquisition, which is the date that control is obtained. The purchase price is determined based on the fair value of assets given to and liabilities assumed from the seller as of the date of acquisition. We allocate the purchase price to the fair values of the tangible and intangible assets acquired and liabilities assumed as valued at the date of acquisition. Goodwill is recorded for the excess of the purchase price over the net of the fair value of the identifiable assets acquired and liabilities assumed as of the acquisition date. The purchase price allocation is a critical accounting policy because the estimation of fair values of acquired assets and assumed liabilities is judgmental and requires various assumptions. Further,assumptions and the amounts and useful lives assigned to depreciable and amortizable assets versuscompared to amounts assigned to goodwill, which is not amortized, can significantly affect the results of operations in the period of and in periods subsequent to a business combination.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction, and therefore represents an exit price. A fair value measurement assumes the highest and best use of the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date. We assign the highest level of fair value available to assets acquired and liabilities assumed based on the following options:

 

Level 1—Quoted prices in active markets for identical assets and liabilitiesliabilities.

Level 2—Observable inputs, other than quoted prices, for similar assets or liabilities in active markets

markets.

 

Level 3—Unobservable inputs, which includes the use of valuation models

models.

Level 2 fair valuesinputs are typically used to estimate the fair value of acquired machinery, equipment and land and assumed liabilities for asset retirement obligations, environmental remediation and compliance obligations and contingencies.

Level 3 fair valuesinputs are used to estimate the fair value of acquired mineral reserves, mineral interests and separately-identifiable intangible assets.

There is a measurement period after the acquisition date during which we may adjust the amounts recognized for a business combination. Any such adjustments are based on us obtaining additional information that existed at the acquisition date regarding the assets acquired or the liabilities assumed. Measurement period adjustments are generally recorded as increases or decreases to the goodwill recognized in the transaction. Material adjustments are applied retroactively to the date of acquisition and reported retrospectively. The measurement period ends once we have obtained all necessary information that existed as of the acquisition date, but does not extend beyond one year from the date of acquisition. Any adjustments to assets acquired or liabilities assumed beyond the measurement period are recorded in earnings.

We have invested $48.8$234.9 million, $61.6 million and $161.1$48.8 million in business combinations and allocated this amount to assets acquired and liabilities assumed during the six months ended June 28, 2014 and the years ended December 28, 2013 and December 29, 2012, and December 31, 2011, respectively.

Goodwill and goodwill impairmentGoodwill Impairment

Goodwill is tested annually for impairment and in interim periods if certain events occur indicating that the carrying amounts may be impaired. The impairment evaluation is a critical accounting policy because the evaluation involves the use of significant estimates and assumptions and considerable management judgment. Our judgments regarding the existence of impairment indicators and future cash flows are based on operational performance of our businesses, market conditions and other factors. Although there are inherent uncertainties in this assessment process, the estimates and assumptions we use, including estimates of future cash flows, volumes, market penetration and discount rates, are consistent with our internal planning. The estimated future cash flows are derived from internal operating budgets and forecasts for long-term demand and pricing in our industry and markets. If these estimates or their related assumptions change in the future, we may be required to record an impairment charge on all or a portion of our goodwill. Furthermore, we cannot predict the occurrence of future impairment-triggering events nor the impactaffect such events might have on our reported values. Future events could cause us to conclude that impairment indicators exist and that goodwill associated with our acquired businesses are impaired. Any resulting impairment loss could have an adverse impacteffect on our financial position and results of operations.

Under the two-step quantitative impairment test, step one of the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. We use a discounted cash flow (“DCF”) model to estimate the current fair value of our reporting units when testing for impairment, as management believes forecasted cash flows are the best indicator of such fair value. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including macroeconomic trends in the public and private construction industry,and public infrastructure industries, the timing of work embedded in our backlog, our performance and profitability under our contracts, our success in securing future sales and the appropriate interest rate used to discount the projected cash flows. Most of these assumptions vary significantly among the reporting units. This discounted cash flow analysis is corroborated by “top-down” analyses, including a market assessment of our enterprise value. We believe the estimates and assumptions used in the valuations are reasonable.

We assessed the fair value of our reporting units in relation to their carrying values which resultedas of the first day of the fourth quarter of 2013. Step one of the impairment test concluded that the book values of two of our reporting

units, the Utah-based operations in the West region and our one reporting unit in the East region exceeded their estimated fair values. For our remaining reporting units, the estimated fair values of these reporting units beingwere substantially in excess of their carrying values by a rangeranging from 56% to 182%.

For the Utah-based and East region reporting units, we performed the second step of 26% to 133%. We have recorded nothe goodwill impairment test to measure the amount of the impairment loss, if any. The second step of the test requires the allocation of the reporting unit’s fair value to its assets and liabilities, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill is less than the carrying value, the difference is recorded as an impairment loss. Based on the results of the step two analyses, we recorded impairment charges inof $53.3 million and $14.9 million for the current year or in previous years.Utah-based and East region reporting units, respectively.

Impairment of long-lived assets, excluding goodwillLong-Lived Assets, Excluding Goodwill

We evaluate the carrying value of long-lived assets, including intangible assets subject to amortization, when events and circumstances indicate that the carrying value may not be recoverable. The impairment evaluation is a critical accounting policy because long-livedLong-lived assets are material to our total assets (as of December 29, 2012,28, 2013, net property, plant and equipment, net represents 63.5%represented 66.7% of total assets) and the evaluation involves the use of significant estimates and assumptions and considerable management judgment. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. A one year increase or decrease in the average useful lives of our property, plant and equipment would have affected 2013 depreciation expense by ($5.2)4.5) million or $6.1$5.2 million, respectively, in 2012.respectively. An impairment charge could be material to our financial condition and results of operations. The carrying value of long-lived assets is considered impaired when the estimated undiscounted cash flows from such assets are less than their carrying value. In that event, we recognize a loss equal to the amount by which the carrying value exceeds the fair value of the long-lived assets.

Fair value is determined by primarily using a discounted cash flow methodology that requires considerable management judgment and long-term assumptions. Our estimate of net future cash flows is based on historical experience and assumptions of future trends, which may be different from actual results. The goodwill impairment recognized at two reporting units was considered to be an indication that the carrying value of long-lived assets may not be recoverable at those reporting units requiring further evaluation. The evaluation indicated that the carrying value of the reporting units’ long-lived assets was less than or equal to the undiscounted future cash flows, resulting in no impairment of the evaluated long-lived assets.

We also consider the identification of an asset for disposal to be an event requiring evaluation of the asset’s fair value. Fair value is often determined to be the estimated sales price, less selling costs. If the carrying value exceeds the fair value, then an impairment charge is recognized equal to the expected loss on disposal. Throughout 2013, we recognized $12.4 million of net losses on asset dispositions, which include both the net loss on disposed assets and losses on assets identified for disposition in the succeeding twelve months. The losses commonly occur because the cash flows expected from selling the asset are less than the cash flows that could be generated from holding the asset for use.

There were no material

long-lived asset impairments during the years ended December 29, 2012 or December 31, 2011, nor were there any changes to the useful lives of assets having a material impacteffect on our financial position or results of operations in 2013 or financial position.2012.

Revenue recognitionRecognition

Revenue for product sales is recognized when evidence of an arrangement exists, the fee is fixed or determinable, title passes, which generally is when the product is shipped, and collection is reasonably assured.

Product revenue generally include sales of aggregates, cement and other materials to customers, net of discounts or allowances, if any, and generally include freight and delivery charges billed to customers. Freight and delivery charges associated with cement sales are recorded on a net basis together with freight costs within cost of sales.

Revenue from the receipt of waste fuels is recognized when the waste is accepted and a corresponding liability is recognized for the costs to process the waste into fuel for the manufacturing of cement or to ship the waste offsite for disposal in accordance with applicable regulations.

We account for revenue and earnings on our long-term constructionpaving and related services contracts as service revenue using the percentage-of-completion method of accounting. Under the percentage-of-completion method, we recognize contractpaving and related services revenue as services are rendered. We estimate profit as the difference between total estimated revenue and total estimated cost of a contract and recognize that profit over the remaining life of the contract based on input measures (e.g., costs incurred). We generally measure progress toward completion on long-term constructionpaving and related services contracts based on the proportion of costs incurred to date relative to total estimated costs at completion. We include revisions of estimated profits on contracts in earnings under the cumulative catch-up method, under which the impacteffect of revisions in estimates is recognized immediately. If a revised estimate of contract profitability reveals an anticipated loss on the contract, we recognize the loss in the period it is identified.

The percentage-of-completion method of accounting involves the use of various estimating techniques to project costs at completion, and in some cases includes estimates of recoveries asserted against the customer for changes in specifications or other disputes. Contract estimates involve various assumptions and projections relative to the outcome of future events over a period of multiple years,periods, including future labor productivity and availability, the nature and complexity of the work to be performed, the cost and availability of materials, the impacteffect of delayed performance, and the availability and timing of funding from the customer. These estimates are based on our best judgment. A significant change in one or more of these estimates could affect the profitability of one or more of our contracts. We review our contract estimates regularly to assess revisions in contract values and estimated costs at completion. No material contract adjustments were recognized in 20122013 or 2011.2012.

We recognize revenue arising from claims either as income or as an offset against a potential loss only when the amount of the claim can be estimated reliably and its realization is probable. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs and the objective evidence available to support the claim.

Revenue for product sales is recognized when evidence of an arrangement exists, the fee is fixed or determinable, title passes, which generally is when the product is shipped, and collection is reasonably assured. Revenue from the receipt of waste fuels are based on fees charged for waste transfer and disposal and are recognized upon acceptance of the waste. Product revenue generally include sales of aggregates, cement and other materials to customers, net of discounts or allowances, if any, and generally include freight and delivery charges billed to customers. Freight and delivery charges associated with cement sales are recorded on a net basis.

Mining reclamation obligationsReclamation Obligations

We incur reclamation obligations as part of our mining activities. Our quarry activities require the removal and relocation of significant levels of overburden to access stone of usable quantity and quality. The same overburden material is used to reclaim depleted mine areas, which must be sloped to a certain gradient and seeded to prevent erosion in the future. Reclamation methods and requirements can differ depending on the quarry and state rules and regulations in existence for certain locations. This differentiation impactsaffects the potential obligation required at each individual subsidiary. As of December 29, 2012,28, 2013, our undiscounted reclamation obligations totaled $17.7$19.7 million, of which 18.2%21.9% is expected to be settled within the next five years and the remaining 81.8%78.1% thereafter.

Reclamation costs resulting from the normal use of long-lived assets, either owned or leased, are recognized over the period the asset is in use only if there is a legal obligation to incur these costs upon retirement of the assets.use. The obligation, which cannot be reduced by estimated offsetting cash flows, is recorded at fair value as a liability at the obligating event date and is accreted through charges to operating expenses. The fair value is based on our estimate for a third party to perform the legally required reclamation tasks including a reasonable profit margin. This fair value is also capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset.

The mining reclamation reserve is based on management’s estimate of future cost requirements to reclaim property at both currently operating and closed quarry sites. Costs are estimated in current dollars and inflated

until the expected time of payment using a future estimated inflation rate and then discounted back to present value using a credit-adjusted, risk-free rate on obligations of similar maturity adjusted to reflect the Company’sour credit rating. We review reclamation obligations at least every three years for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. Examples of events that would trigger a change in the cost include a new reclamation law or amendment to an existing mineral lease. Examples of events that would cause a change in the estimated settlement date include the acquisition of additional reserves or theearly or delayed closure of a facility.site. Any impactaffect to earnings from cost revisions is included in cost of revenue.

New Accounting Standards

For a discussion of accounting standards recently adopted and the effect such accounting changes will have on our results of operations, financial position or liquidity, see note 1 to our audited consolidated financial statements included elsewhere in this prospectus.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to certain market risks arising from transactions that are entered into in the normal course of business. Our operations are highly dependent upon the interest rate-sensitive construction industry as well as the general economic environment. Consequently, these marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs.

Management has considered the current economic environment and its potential impacteffect to our business. Demand for aggregatesaggregates-based products, particularly in the nonresidentialresidential and residentialnonresidential construction markets, could decline if companies and consumers are unable to obtain financing for construction projects or if thean economic recession causes delays or cancellations to capital projects. Additionally, in preceding years, declining tax revenue, and state budget deficits and unpredictable or inconsistent federal funding have negatively affected states’ abilities to finance infrastructure construction projects.

Pension expenseand Other Postretirement Plans

Our subsidiary, Continental Cement, sponsorsAt our cement plant, we sponsor two non-contributory defined benefit pension plans for hourly and salaried employees as well asand healthcare and life insurance benefits for certain eligible retired employees. As of January 1, 2012,2014, the pension and postretirement plans have been frozen to new entrants.participants and the healthcare and life insurance benefit plan has been amended to eliminate all future retiree health and life coverage. Our results of operations are affected by our net periodic benefit cost from these plans, which totaled $1.2 million in 2012.2013. Assumptions that affect this expense include the discount rate and, for the pension plans only, the expected long-term rate of return on assets. Therefore, we have interest rate risk associated with these factors.

The healthcare and life insurance benefit plan are exposed to changes in the cost of healthcare services. A one percentage-point increase or decrease in assumed health care cost trend rates would have affected estimatedthe accumulated postretirement benefit obligation by $1.6approximately $1.3 million or ($1.3)$(1.1) million, respectively, in 2012.at December 28, 2013.

Commodity and energy price riskEnergy Price Risk

We are subject to commodity price risk with respect to price changes in liquid asphalt and energy, including fossil fuels and electricity for aggregates, cement, ready-mixed concrete and asphalt paving mix and ready mix concrete production, natural

gas for hot mix asphalt production and diesel fuel for distribution vehicles and production related mobile equipment. Liquid asphalt escalators in most of our public infrastructure contracts other than those in Texas, limit our exposure to price fluctuations in this commodity, and we seek to obtain escalators on private and commercial contracts.

Inflation riskRisk

Overall inflationInflation rates in recent years have not been a significant factor in our revenue or earnings due to relatively low inflation and our ability to recover increasing costs by obtaining higher prices for our products through sale price escalators in place for most public infrastructure sector contracts. Inflation risk varies with the level of activity in the construction industry, the number, size and strength of competitors and the availability of products to supply a local market.

Variable-Rate Borrowing Facilities

We have $150.0 million of revolving credit commitments and $422.0 million of term loans under the Senior Secured Credit Facility,Facilities, which bear interest at a variable rate. A hypothetical 100-basis-point increase in interest rates on borrowings of $36.7 million, which represents our average outstanding balance throughout 2012, would increase interest expense by $0.4 million on an annual basis.

In February 2013, we entered into amendments to our Senior Secured Credit Facilitysenior secured credit facilities that, among other things, reduced the applicable margins used to calculate interest rates for term loans under our Credit Facilitycredit facilities by 1.0% and reduced the applicable margins used to calculate interest rates for $131.0 million of $150.0 million Tranche A revolving credit loans available under the Senior Secured Credit FacilityFacilities by 1.0%. Had this reduction been in place throughout 2012, our interest expense would have been reduced by $4.4 million. A hypothetical 100-basis-point increase in interest rates on the December 28, 2013 outstanding Revolver borrowings of $26.0 million would increase interest expense by $0.3 million on an annual basis. The interest rate on the term loans has a floor of 1.25%. The rate in effect at December 28, 2013 was 0.25%. As a result, the 100-basis-point increase in the interest rate at December 28, 2013 would not result in a rate greater than the floor rate of 1.25%. Therefore, a hypothetical 100-basis-point increase in the term loans’ interest rate would have no effect on annual interest expense.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS OF CONTINENTAL CEMENT COMPANY, L.L.C.

You should read the following discussion of Continental Cement’s results of operations and financial condition with Continental Cement’s audited consolidated financial statements and related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this prospectus. Continental Cement’s actual results may differ materially from those contained in any forward-looking statements.

Overview

Continental Cement produces Portland cement (“cement”) at its highly efficient,highly-efficient, state-of-the-art, dry cement manufacturing plant located in Hannibal, Missouri and has distribution terminals in Hannibal and St. Louis, Missouri and Bettendorf, Iowa. Continental Cement’s primary cement operation customers are ready-mix operatorsready-mixed concrete and concrete products producers and contractors located in the Midwestern United States. In addition to producing cement, Continental Cement secures, processes and blends hazardous and nonhazardous waste materials primarily for use as supplemental fuels in the cement manufacturing process. Continental Cement’s primary customers for this service are commercial transportation disposal facilities and petroleum and chemical manufacturers located in the continental United States.

Continental Cement’s cement servesproducts serve a variety of end-usesend uses in its market, including residential and non-residential, agricultural and public infrastructure projects.projects and is used in most forms of construction activities. For the year ended December 31, 2012,28, 2013, approximately 35%74% of Continental Cement’s revenue related to public infrastructureresidential and nonresidential construction and agriculture and the remaining approximately 65%26% related to agricultural, residential and non-residentialpublic infrastructure construction. Continental Cement believes exposure to various end use markets and geographic markets in the Midwestern United States affords greater stability through economic cycles and positions it to capitalize on upside opportunities when recoveries in residential and non-residential construction occur. Continental Cement believes it is a top 2025 supplier of cement in the United States by volume and the primary supplier within its local market.

In the cement industry, CaO content is the traditional measurement of limestone quality and purity. Limestone of 100% purity as measured by CaCO3 contains 56% CaO. Continental Cement’s mineable reserves have an average grade of 51.9% CaO, or 92.7% CaCO3. The mineable reserve calculation is based on a 70-foot mining height and a recovery ratio of 71.3% over the approximately 3,000 acre plant site.

Business Trends and Conditions

Cement is usedContinental Cement’s sales and earnings are sensitive to national, regional and local economic conditions and particularly to cyclical changes in most forms of construction activity. Participantsspending, especially in the cementprivate sector. From a macroeconomic view, Continental Cement sees positive indicators for the construction sector, typicallyincluding upward trends in housing starts, construction employment and highway obligations. All of these factors are large multinational corporations that offer a wide array ofexpected to result in increased construction materials and services. Markets are definedactivity in part by the distance materials may be efficiently transported from a cement distribution facility.relatively near future as compared to the recently preceding years.

TransportationPublic infrastructure projects, driven by both statefederal and federalstate funding programs, represent a significant share of the U.S. heavy-side buildingconstruction materials market. In July 2012, MAP-21 was enacted and took effect in October 2012. MAP-21 is a 27-month, approximately $105 billionThe existing federal transportation funding program, MAP-21, expires September 30, 2014. Although there is uncertainty as to what will succeed MAP-21, funding increases are not expected in the short term. Management also continues to monitor the status of the Highway Trust Fund. On August 1, 2014, a Highway Trust Fund extension bill was enacted. The bill provides approximately $10.8 billion of funding, which is expected to last until May 2015. With the nation’s infrastructure aging, management expects U.S. infrastructure investment to grow over the long term and believes that provides for $40.4 billion and $41.0 billionContinental Cement is well positioned to capitalize on any such increase in highway infrastructure investments in fiscal years 2013 and 2014, respectively. The spending levels are consistent with the preceding federal transportation funding program. investment.

In addition to federal funding, highway construction and maintenance funding is also available through state, county and local agencies. Continental Cement generated 54% of its revenue in Missouri which represented 52%in the first half of Continental Cement’s total revenue for the year ended December 31, 2012, has2014. Missouri’s annual construction funding committed to essential road and bridge programs is approximately $700.0 million. In addition, Missouri’s transportation funds whose revenue sources are constitutionally protected and may only be spent on transportation projects. Missouri has approximately $700.0 million in annual construction funding committed to essential road and bridge programs.

Despite the economic challenges of recent years, Continental Cement believes that the enacted federal transportation funding program extending through fiscal 2014 is a positive development, reducing the uncertainty that existed with the previous funding program that had been subject to 10 short-term extensions. Within many of Continental Cement’s markets, the federal, state and local governments have taken actions to maintain or grow highway funding during a time in which many areas of spending are facing significant cuts. However, Continental Cement could still be impacted by any economic improvement or slowdown, which could vary by local region and market. Continental Cement’s sales and earnings are sensitive to national, regional and local economic conditions and particularly to cyclical swings in construction spending, especially in the private sector.

In addition to being subject to cyclical swings, Continental Cement’s business is also seasonal in nature. Almost all ofnature; its products are consumed outdoors. Severe weather, seasonal changes and other weather-related conditions can significantly affect the sales volumes of Continental Cement’s products. Normally,Winter weather months are generally periods of lower sales as Continental Cement’s customers have fewer active projects. Typically, the highest sales and earnings are in the second and third quarters and the lowest are in the first and fourth quarters. Winter weather months are generally periods of lower sales as Continental Cement’s customers have fewer active projects. Periods of heavy rainfall also adversely affect Continental Cement’s customers’ work patterns and therefore demand for itsContinental Cement’s products. Freezing or flooding of the Mississippi River can adversely affect Continental Cement’s barge distribution channel resulting in lower sales volumes during the affected period. Continental Cement’s working capital may vary greatly during these peak periods, but generally returnreturns to comparable levels as its operating cycle is completed each fiscal year.

Cement production is a capital-intensive business with variable costs dominated by raw materials and energy required to fuel the kiln. Building new plants is challenging given the extensive permitting that is required and significant costs. We believeManagement estimates new plant construction costs in the United States are estimated atto be between $250-300 per ton. Assuming construction costs of $275 per ton, a 1.25 million ton facility, such as the onecomparable to Continental Cement operates,Cement’s plant’s potential annual capacity, would cost approximately $343.8 million to construct.

As reported by the PCA in the 2013 North American Cement Industry Annual Yearbook, consumption is down significantly from the industry peak of 141 million tons in 2005 to 7986 million tons in 20112012 because of the decline in U.S. construction sector activity. Domestic cement consumption has at times outpaced domestic production capacity with the shortfall being supplied with imports, primarily from China, Canada, Colombia,Greece, Mexico and South Korea. The PCA reports that cement imports have declined since their peak of 39 million tons in 2006 to 78 million tons in 2011,2012, in a manner indicative of the industry’s general response to the current demand downturn. DespiteIn addition to the reduction in imports, U.S. capacity utilization declined from 95% in 2006 to 59%66% in 20112012 according to the PCA. Continental Cement operated at 75% capacity utilization in 2011 and 81% in 2012, which is above the industry mean of 68%at 78% capacity utilization in 20112013 as its markets did not suffer the pronounced demand declines seen in states like Florida, California and Arizona. Demand is seasonal in nature with nearly two-thirds of U.S. consumption occurring between May and October, coinciding with end-market construction activity.

Cement production in the United States is distributed among 101 production facilities located across 36 states. The EPA has new emission standards for Portland cement plants (“NESHAP”) that are due to come into effect in 2015. On December 20, 2012, the EPA signed the final NESHAP final rule, which was less stringent than previous drafts. The PCA had estimated based on the draft rule that 18 plants could be forced to close due to the inability to meet NESHAP standards or because the compliance investment required may not be justified on a financial basis. These potential closures represent approximately 20 million tons of clinker capacity, or 20% of current capacity in the United States.

Continental Cement’s plant utilizes alternative fuel (hazardous and non-hazardous) as well as coal and petroleum coke and, as a result, is subject to HWC-MACT standards, rather than NESHAP. Continental CementManagement expects HWC-MACT standards to generally conform to NESHAP, for which Continental Cement is substantially in compliance, in advanceahead of the effective date of the NESHAP standards. Any additional costs to comply with the NESHAPHWC-MACT standards are not expected to be material.

Components of Operating Results

Revenue

Continental Cement derives its revenue predominantly by selling cement and from the receipt of waste fuels, which are converted into fuel and used in the manufacturing of cement. Revenue derived from cement sales is recognized when risks associated with ownership have passed to customers. Typically this occurs when customers haul product from Continental Cement’s locations or when products are shipped. Product revenue includes sales of cement to customers, net of discounts, allowances and taxes, as applicable. Revenue from the receipt of waste fuels is classified as service revenue and is based on fees charged for the waste disposal, which are recognized when the waste is accepted.

Operating costsCosts and expensesExpenses

The key components of Continental Cement’s operating costs and expenses consist of the following:

Cost of revenue (exclusive of items shown separately below)

Cost of revenue consists of all production and delivery costs as well as costs to dispose of waste fuels. Such costs primarily include labor, repair and maintenance, utilities, raw materials, fuel, transportation and manufacturing overhead. Continental Cement’s cost of revenue is directly impactedaffected by fluctuations in commodity energy prices, primarily coal and natural gas. Continental Cement’s attemptCement attempts to limit its exposure to changes in commodity energy prices by entering into annual forward purchase commitments when appropriate.

General and administrative expenses

General and administrative expenses consist primarily of salaries and personnel costs for Continental Cement’s sales and marketing, administration, finance and accounting, legal, information systems and human resources employees. Additional expenses include audit, consulting and professional fees, travel, insurance and other corporate expenses.

Transaction costs

Transaction costs consist primarily of third party accounting, legal, valuation and financial advisory fees incurred in connection with the May 2010 transaction through which Summit Materials II, LLC became Continental Cement’s majority shareholder and certain indebtedness was prepaid or refinanced.

Depreciation, depletion, amortization and accretion

Continental Cement’s business is relatively capital-intensive.capital intensive. Continental Cement carries property, plant and equipment at cost, net of applicable depreciation depletion and amortizationdepletion, on its balance sheet. Depreciation on property, plant and equipment is computed on a straight-line basis or based on the economic usage over the estimated useful life of the asset or based on the economic usage of the asset.

Depletion of mineral reserves is calculated for proven and probable reserves by the units of production method on a site-by-site basis. The general range of depreciable lives by fixed asset category, excluding mineral reserves which are depleted based on the units of production method on a quarry-by-quarry basis, is as follows:

 

Buildings and improvements

  30 - 40 years

Plant, machinery and equipment

  3 - 40 years

Mobile equipment and barges

  3 - 20 years

Other

  3 - 7 years

Amortization expense is the periodic expense related to Continental Cement’s environmental permits and trade name, which was recognized as part of the May 2010 recapitalization.name. The environmental permits are generally amortized on a straight-line basis over three years. The trade name asset is amortized on a straight-line basis over its ten10 year estimated useful life.

Accretion expense is recorded using the effective interest method and is related to the accrued mining reclamation liabilities.

Results of Operations

The following discussion of Continental Cement’s results of operations is focused on the material financial measures Continental Cementmanagement uses to evaluate the performance of its business. Operating income and margins are discussed in terms of changes in volume, pricing and mix of revenue source (e.g., wholesale or retail sales).customer mix. Continental Cement’s product revenue reflects cement sales, and its service revenue reflects revenuesrevenue from the acceptance of waste fuels.

To supplementIn 2013, Continental Cement changed its fiscal year from a calendar year to a 52-53 week year with each quarter composed of 13 weeks ending on a Saturday, consistent with that of Summit Materials. The 53 week year occurs approximately once every seven years. The additional week in the discussion of53 week year will be included in the fourth quarter. Continental Cement’s historicalsix months ended June 28, 2014 included a full 26 weeks, or 182 days, of results compared to the six months ended June 29, 2013, which included 184 days. The effect of this change to Continental Cement’s financial position and results of operations Continental Cement has included a discussion of the aggregated information for the twelve months ended December 31, 2010, which represents only the mathematical sums of the information presented in the periods from (i) January 1, 2010 through May 26, 2010 (predecessor) and (ii) May 27, 2010 through December 31, 2010 (successor). The successor period represents the results of Continental Cement subsequent to Summit Materials’ acquisition of a controlling share of Continental Cement’s members’ interest. Continental Cement refers to the aggregated period as “aggregated twelve months ended December 31, 2010”. Although this presentation is not in accordance with GAAP, under which these periods would not be aggregated, Continental Cement believes the aggregated information for the year ended December 31, 2010 provides a meaningful comparison of its results for 2010 to its results for the year ended December 31, 2011.immaterial.

Non-GAAP Performance Measures

Continental Cement evaluates the performance of its business and allocates its resources based on several factors, including a measure it calls Adjusted EBITDA. Continental Cement defines Adjusted EBITDA as net income (loss) before interest expense and depreciation, depletion, amortization and accretion. Accretion is recognized on asset retirement obligations and reflects the time value of money. Since accretion is similar in nature to interest expense, it is treated consistently with interest expense in determiningand is excluded from Adjusted EBITDA.

Adjusted EBITDA reflects an additional way of viewing aspects of Continental Cement’s business that, when viewed with Continental Cement’s results determined in accordance with GAAP results and the accompanying reconciliations to GAAP financial measures included in the tables below, may provide a more complete understanding of factors and trends affecting Continental Cement’s business. However, it should not be construed as being more important than other comparable GAAP measures and must be considered in conjunction with GAAP measures. In addition, non-GAAP financial measures are not standardized; therefore it may not be possible to compare such financial measures with other companies’ non-GAAP financial measures having the same or similar names. Continental Cement strongly encourages investors to review its consolidated financial statements in their entirety and not rely on any single financial measure.

Reconciliation of Net (Loss) Income (Loss) to Adjusted EBITDA

The table below reconciles Continental Cement’s net (loss) income to Adjusted EBITDA for each of the periods indicated.

 

(in thousands)

  Year ended
December 31,
2012
   Year ended
December 31,
2011
   Aggregated
twelve months ended
December 31, 2010
  May 27, 2010 to
December 31,
2010
(Successor)
       January 1, 2010
to May 26, 2010
(Predecessor)
 

Net income (loss)

  $6,625    $2,462    $(36,330 $227       $(36,557

Interest expense

   12,622     14,621     26,686    8,150        18,536  

Depreciation, depletion and amortization

   10,449     9,956     9,680    5,363        4,317  

Accretion

   30     28     27    27        —    
  

 

 

   

 

 

   

 

 

  

 

 

      

 

 

 

Adjusted EBITDA

  $29,726    $27,067    $63   $13,767       $(13,704
  

 

 

   

 

 

   

 

 

  

 

 

      

 

 

 

   Six months ended  Year ended 
(in thousands)  June 28,
2014
  June 29,
2013
  December 28,
2013
   December 31,
2012
   December 31,
2011
 

Net (loss) income

  $(1,973 $(4,960 $9,865    $6,625    $2,462  

Interest expense

   5,894    5,635    11,053     12,622     14,621  

Depreciation, depletion and amortization

   6,991    5,710    11,732     10,449     9,956  

Accretion

   54    40    80     30     28  
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $10,966   $6,425   $32,730    $29,726    $27,067  
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

 

Consolidated Results of Operations

The tablestable below setsets forth Continental Cement’s historical consolidated results for each of the periods indicated.

 

  Six months ended Year ended 

(in thousands)

 Year ended
December 31,
2012
 Year ended
December 31,
2011
 Aggregated
twelve months ended
December 31, 2010
 May 27, 2010 to
December 31, 2010
(Successor)
    January 1, 2010
to May 26, 2010
(Predecessor)
   June 28,
2014
 June 29,
2013
 December 28,
2013
 December 31,
2012
   December 31,
2011
 

Revenue

 $94,882   $79,488   $79,780   $55,505     $24,275    $42,450   $39,585   $96,249   $94,882    $79,488  

Cost of revenue (exclusive of items shown separately below)

  58,319    47,721    60,129    33,661      26,468  

Cost of revenue (excluding items shown separately below)

   27,627   27,832   55,242   58,319     47,721  

General and administrative expenses

  6,706    4,761    6,096    2,547      3,549     3,868   5,400   8,367   6,706     4,761  

Depreciation, depletion, amortization and accretion

  10,479    9,984    9,707    5,390      4,317     7,045   5,750   11,812   10,479     9,984  

Transaction costs

  —      —      13,660    5,671      7,989  
 

 

  

 

  

 

  

 

    

 

   

 

  

 

  

 

  

 

   

 

 

Operating income (loss)

  19,378    17,022    (9,812  8,236      (18,048

Operating income

   3,910    603    20,828    19,378     17,022  

Other (income) expense, net

  131    (61  (168  (141    (27   (11  (72  (90  131     (61

Interest expense

  12,622    14,621    26,686    8,150      18,536     5,894    5,635    11,053    12,622     14,621  
 

 

  

 

  

 

  

 

    

 

   

 

  

 

  

 

  

 

   

 

 

Net income (loss)

 $6,625   $2,462   $(36,330 $227     $(36,557

Net (loss) income

  $(1,973 $(4,960 $9,865   $6,625    $2,462  
 

 

  

 

  

 

  

 

    

 

   

 

  

 

  

 

  

 

   

 

 

Year

Six Months ended December 31, 2012 comparedJune 28, 2014 Compared to the yearSix Months ended December 31, 2011June 29, 2013

 

  Six months ended   

(in thousands)

  Year ended
December 31,
2012
 Year ended
December 31,
2011
     Variance   June 28, 2014 June 29, 2013 Variance 

Revenue

  $94,882   $79,488      $15,394     19.4  $42,450   $39,585   7.2

Operating income

  $19,378   $17,022      $2,356     13.8   3,910   603   

Operating margin

   20.4  21.4         9.2 1.5 548.4

Adjusted EBITDA

  $29,726   $27,067      $2,659     9.8  $10,966   $6,425   70.7

Continental Cement’s revenue increased from $79.5 million7.2% in the twelvesix months ended December 31, 2011June 28, 2014. Pricing improved 10.8% due to $94.9 millionoverall price improvements in the year ended December 31, 2012. The increase in revenue is a result of selling approximately 1.0 million tons of cement in 2012 as compared to 0.9 million tons in 2011, an increase of 11.1%. However, a significant portion of the increased volume represented tons sold wholesale as an entrant into a new market and to othera change in cement producers, which resulted in a decrease in the average selling pricecustomer mix away from $83 per ton in 2011 to $81 per ton in 2012.high-volume sales.

Operating margin, which Continental Cement defines as operating income as a percentage of revenue, decreased 4.4% in the second quarter of 2014. Depreciation, depletion, amortization and accretion increased $0.9 million as a result of the continued investment in the business, including the development of an underground mine, for which Continental Cement began recognizing depreciation in 2014. Adjusted EBITDA improved $1.0 million, or 8.4%, in the second quarter of 2014 primarily due to the revenue growth discussed above.

Operating margin in the six months ended June 28, 2014 improved 7.7% in the second quarter of 2014 and Adjusted EBITDA improved $4.5 million, or 70.7%. This profit improvement was primarily a result of a $1.3 million curtailment benefit related to the postretirement healthcare plan recognized in the six months ended June 28, 2014 and a $1.8 million charge recorded in the six months ended June 29, 2013 for costs to remove a sunken barge from the waterway, offset by a decrease in operating margin in the second quarter of 2014 discussed above.

Fiscal Year 2013 Compared to 2012

(in thousands)  2013  2012  Variance 

Revenue

  $96,249   $94,882   $1,367     1.4

Operating income

   20,828    19,378    1,450     7.5

Operating margin

   21.6  20.4   

Adjusted EBITDA

  $32,730   $29,726   $3,004     10.1

Continental Cement’s revenue increased from $94.9 million in 2012 to $96.2 million in 2013. Approximately $2.1 million of this increase was from the waste fuels processing business, offset in part by a $0.8 million decrease in revenue from cement sales. The average selling price of cement increased 3.4% in 2013, offset by a decrease in tons sold of 4.1%.

Operating income increased $1.5 million and operating margin increased from 20.4% in 2012 to 21.6% in 2013. In addition, Adjusted EBITDA increased $3.0 million to $32.7 million in 2013 from $29.7 million in 2012. These profit improvements were primarily due to the increase in the average selling price of cement discussed above and due to an increase in the average tipping fee for the waste received.

Fiscal Year 2012 Compared to 2011

(in thousands)  2013  2012  Variance 

Revenue

  $94,882   $79,488   $15,394     19.4

Operating income

   19,378    17,022    2,356     13.8

Operating margin

   20.4  21.4   

Adjusted EBITDA

  $29,726   $27,067   $2,659     9.8

Continental Cement’s revenue increased from $79.5 million in 2011 to $94.9 million in 2012. Approximately $4.7 million of the increase in revenue is from the waste fuels processing business and selling 11.1% more cement tons. However, a significant portion of the increased volume represented tons sold wholesale, which resulted in a decrease in the average selling price partially offsetting the revenue growth.

Operating margin declined from 21.4% in 2011 to 20.4% in 2012 due to the decrease in average selling price discussed above.

Adjusted EBITDA improved $2.7 million, or 9.8%, in the twelve months ended December 31, 2012 to $29.7 million. The increase in Adjusted EBITDA was a result of the increased sales to higher volume customers at lower prices and, to a lesser extent, increased waste fuel volumes.

Other Financial Information

Interest expenseExpense

Interest expense decreased $1.6 million to $11.1 million in 2013 compared to $12.6 million in 2012. The decrease in Continental Cement’s interest expense was due to approximately $0.6 million of interest expense capitalized with the development of the underground mine, a decrease in the average debt balance and a decrease in the weighted average borrowing rate as a result of Summit Materials’ February 2013 repricing, in which the borrowing rate on Summit Materials’ senior secured credit facility was reduced by 1.0%. The favorable pricing adjustment for Summit Materials had a corresponding effect on Continental Cement’s borrowing rate with Summit Materials. Continental Cement’s average debt balance, calculated using the 2012 year-end balance and the balance at the end of each quarter in 2013 was $155.9 million, compared to $157.9 million in the comparable prior year periods.

Interest expense decreased $2.0 million to $12.6 million in the year ended December 31, 2012 compared to $14.6 million in the year ended December 31, 2011. The decrease in Continental Cement’s interest expense was primarily due to a decrease in the weighted-average interest rate from 9.0% in 2011 to 7.7% in 2012. The decreased interest rate was a result of Summit Material’sMaterials’ refinancing in January 2012; see additional discussion below.

Year ended December 31, 2011 compared to the aggregated twelve months ended December 31, 2010

(in thousands)

  Year ended
December 31,
2011
  Aggregated
twelve months ended
December 31, 2010
      Variance 

Revenue

  $79,488   $79,780      $(292  (0.4)% 

Operating income (loss)

  $17,022   $(9,812    $26,834    273.5

Operating margin

   21.4  (12.3)%      

Adjusted EBITDA

  $27,067   $63      $27,004    42,863.5

2012, which had a corresponding effect on Continental Cement’s revenue remained relatively flat from $79.8 million in the aggregated twelve months ended December 31, 2010 to $79.5 million in the year ended December 31, 2011. However, operating margin and Adjusted EBITDA improved significantly from (12.3)% and $0.1 million, respectively, in the aggregated twelve months ended December 31, 2010 to 21.4% and $27.1 million, respectively, in the year ended December 31, 2011. This improvement was a result of the following:borrowing rate with Summit Materials.

$13.7 million of transaction costs were incurred in the aggregated twelve months ended December 31, 2010 related to the transaction through which Summit Materials became the majority shareholder of Continental Cement

Cost of revenue decreased $12.4 million from $60.1 million in the aggregated twelve months ended December 31, 2010 to $47.7 million in the year ended December 31, 2011 due primarily to a $1.7 million charge for stripping in 2010, compared to no stripping charges in 2011 and a $7.2 million write-down of clinker inventory in 2010 to its market value, which was less than its cost basis.

Other Financial Information

Interest expense

Interest expense decreased $12.1 million, or 45.3%, to $14.6 million in the year ended December 31, 2011 compared to $26.7 million in the aggregated twelve months ended December 31, 2010. The decrease in Continental Cement’s interest expense was due to $3.5 million of interest expense in the period from January 1, 2010 to May 26, 2010 associated with the grant of redeemable members’ units and due to a $110.3 million payment on the long-term debt on May 27, 2010.

Liquidity and Capital Resources

Continental Cement’s primary sources of liquidity include cash, cash provided by its operations and amounts available for borrowing from Continental Cement’s parent company, Summit Materials. As of December 31, 2012, Continental Cement had $0.6 million in cash and working capital of $9.9 million as compared to $0.1 million in cash and working capital of $3.8 million as of December 31, 2011. Working capital is calculated as current assets less current liabilities, excluding the current portion of long term debt. In 2012, Continental Cement began participatingparticipates in Summit Material’s centralized banking system, through which excess funds are swept to Summit Materials at the end of each day and Continental Cement’s accounts are funded each day from the sweep account for amounts presented to Continental Cement’s accounts for payment. Continental Cement expectsAs a result, the cash balance held at Continental Cement to be nominal going forward.is nominal.

Given the seasonality of its business, Continental Cement typically experiences significant fluctuations in working capital needs and balances throughout the year with sales peakingyear. Sales peak in the summer and fall months. Despite the seasonality of its sales, Continental Cement producesmonths, but cement production occurs throughout the year with the exception of scheduled plant maintenance in the first and third quarters.

Working capital requirements generally increase during non-peak months. the first half of the year as management focuses on repair and maintenance and builds up inventory for the upcoming construction season. For example, cash used in operating activities in the six months ended June 29, 2013 was $7.7 million compared to full year 2013 net cash provided by operating activities of $18.6 million. Cash used in operating activities in the six months ended June 28, 2014 was $10.8 million.

Continental Cement believes it has sufficient financial resources from its liquidity sources to fund its business and operations, including contractual obligations, capital expenditures and debt service obligations for at least the next twelve months. There were no restricted cash balances as of December 28, 2013 or December 31, 2012 or 2011.2012.

Continental Cement’s Long-term Debt

ReferPlease refer to “Description of Other Indebtedness” andnote 6 to the notes to theContinental Cement’s consolidated audited financial statements included elsewhere in this prospectusreport for detailed information on Continental Cement’s indebtedness and scheduled maturities of long-term debt.debt due to Summit Materials. At December 31, 2012June 28, 2014 and December 31, 2011, there was $156.428, 2013, Continental Cement had $155.1 million and $154.0$155.6 million of debt outstanding, respectively,respectively. The interest rate in effect at June 28, 2014 was 3.7%.

The terms of Summit Materials’ debt limit certain transactions of its subsidiaries, including the revolving credit facility at year-end 2011.those of Continental Cement. Continental Cement’s ability to incur additional indebtedness or issue certain preferred shares, pay dividends to its noncontrolling members, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets or enter into certain transactions with affiliates is limited.

January 2012 Financing Transactions

On January 30, 2012, Continental Cement’s parent company, Summit Materials refinanced its consolidated outstanding indebtedness. The refinancing of the pre-existing long-term debt was partially accounted for as an extinguishment. As a result of the January 2012 financing transactions, Continental Cement’s existing debt was repaid by Summit Materials and was replaced by $156.8 million of long-term debt due to Summit Materials. In addition, Continental Cement recognized a charge to earnings of $0.3 million related to financing fees on the debt that was repaid.

The terms of Summit Materials’ debt limit certain transactions of its subsidiaries, including those of Continental Cement. Continental Cement’s ability to incur additional indebtedness or issue certain preferred shares, pay dividends to its noncontrolling members, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets, enter into certain transactions with affiliates are limited.

Cash Flows

The following tables summarize Continental Cement’s net cash used for or provided by or used for operating, activities, investing activities and financing activities and Continental Cement’s capital expenditures for each of the periods indicated (in thousands):

 

 Year ended
December 31,
2012
 Year ended
December 31,
2011
 Aggregated
twelve months ended
December 31, 2010
 May 27, 2010
to December 31,
2010

(Successor)
    January 1, 2010
to May 26, 2010

(Predecessor)
   Six months ended Year ended 

Net cash provided by (used for):

       
(in thousands)  June 28,
2014
 June 29,
2013
 December 28,
2013
 December 31,
2012
 December 31,
2011
 

Net cash (used for) provided by

      

Operating activities

 $22,379   $5,031   $(19,560 $(13,172   $(6,388  $(10,764 $(7,672 $18,589   $22,379   $5,031  

Investing activities

  (23,035  (6,942  (7,487  (6,251    (1,236   (12,166 (15,888 (18,473 (23,035 (6,942

Financing activities

  1,200    1,957    27,047    17,247      9,800     22,929   22,969   (706 1,200   1,957  

Cash paid for capital expenditures

  (12,805  (7,110  (11,067  (6,726    (4,341  $(12,166 $(15,888 $(25,594 $(12,805 $(7,110

Operating activities

For the six months ended June 28, 2014, cash used in operating activities was $10.8 million as a result of:

Net loss of $2.0 million, adjusted for non-cash expenses of $7.9 million, which were primarily attributable to depreciation, depletion, amortization and accretion expense.

Cash utilization for working capital needs approximating $16.7 million, which was primarily composed of $11.9 million in increased accounts receivable and the build-up of inventories and a $2.0 million reduction in accounts payable and accrued expenses. As Continental Cement’s products are used outdoors, sales in the spring and summer months exceed those in winter months. As a result, uncollected receivables are typically greater at the end of the second and third quarters and then those amounts are converted to cash as the operating cycle is completed each fiscal year. The cash expenditures related to inventory reflect the build-up of inventory levels to prepare the business for increased sales volumes in the summer and fall. Also affecting working capital was $5.9 million of interest payments in 2014.

For the six months ended June 29, 2013, cash used in operating activities was $7.7 million as a result of:

Net loss of $5.0 million, adjusted for non-cash expenses of $6.0 million, which were primarily attributable to depreciation, depletion, amortization and accretion expense.

Cash utilization for working capital needs approximating $8.7 million, which was primarily composed of $3.6 million in increased accounts receivable, $2.6 million for the build-up of inventory and $1.6 million reduction in accounts payable and accrued expenses, consistent with the seasonality of Continental Cement’s business. Also affecting working capital was $7.4 million of interest payments in 2013.

For the year ended 2013, cash provided by operating activities was $18.6 million, driven by income of $21.7 million, net of $11.8 million of depreciation, depletion, amortization and accretion expense, offset by a $3.3 million increase in inventory. Sales volume in 2013 was 4.1% less than 2012 resulting in elevated inventory levels at the end of 2013.

For the year ended 2012, cash provided by operating activities was $22.4 million, driven by net income of $17.1 million, net of $10.5 million of depreciation, depletion, amortization and accretion expense, as well as a $2.8 million reduction in inventory. The reduction in inventory was a result of an improvement in inventory management as compared to a $3.2 milliondriven by the 11.1% increase in inventory in 2011.cement tons sold.

For the year ended 2011, cash provided by operating activities was $5.0 million, driven by net income of $12.4 million, net of $10.0 million of depreciation, depletion, amortization and accretion expense, offset by a $3.2 million increase in inventory and a $4.1 million increase in accounts receivable and other assets.

Investing activities

For the aggregated twelvesix months ended December 31, 2010,June 28, 2014, cash used for operatinginvesting activities was $19.6 million. Operating cash flow$12.2 million, which was impacted by $13.7 millionused for capital investments. The capital expenditures included enhancement costs incurred during the cement plant’s annual scheduled winter shutdown, as well as continued development of transaction costs paid in association with Summit’s purchase of a 70% interest in Continental Cement and a concurrent refinancing of and paymentan underground aggregates mine on Continental Cement’s long-term debt.Hannibal, Missouri property where its cement plant is located ($4.1 million).

For the six months ended June 29, 2013, cash used for investing activities was $15.9 million, which related to capital investments. The proceeds fromcapital expenditures were primarily a result of enhancement costs incurred during the salecement plant’s annual scheduled winter shutdown, as well as continued development of the 70% interest to Summit were alsounderground aggregates mine ($7.8 million) and a storage dome in St. Louis, Missouri ($2.6 million), which is used to pay accrued interest, resultingstore cement product.

For the year ended 2013, cash used for investing activities was $18.5 million from capital expenditures. The capital expenditures were primarily a result of continued development of the underground aggregates mine ($15.3 million), a storage dome in total interest payments inSt. Louis, Missouri ($2.8 million), which is being used to store cement product, and enhancement costs incurred during the aggregated twelve months ended December 31, 2010 of $30.7 million.

Investing activitiescement plant’s annual scheduled shutdowns.

For the year ended 2012, cash used for investing activities was $23.0 million. Cash used for investing activities was impactedaffected by $10.2 million of net loans to Continental Cement’s sister companies. Due to strong cash flow provided by operations, Continental Cement was a net lender to Continental Cement’s sister companies in 2012. Continental Cement also invested $5.0 million in the development of an underground aggregates mine on Continental Cement’s Hannibal, Missouri property where its cement plant is located.mine.

For the year ended 2011, cash used for investing activities was $6.9 million, $7.1 million of which was on capital expenditures, primarily replacement and maintenance parts.

Financing activities

For the aggregated twelvesix months ended 2010,June 28, 2014 and June 29, 2013, cash provided by financing activities was $22.9 million and $23.0 million, respectively, primarily driven by $23.1 million and $23.3 million, respectively, of net borrowings from Summit Materials to fund working capital requirements and capital investments.

For the year ended 2013, cash used for investingfinancing activities was $7.5$0.7 million which primarily related to $11.1 millionreflective of capital expenditures. The largest capital investment in 2010 was for a dock relocation project in St. Louis, Missouri for $6.3 million. The capital expenditures were offset by the receipt of $3.1 million in funds restricted to use for investmentpayments on the dock relocation project.long-term debt.

Financing activities

For the year ended 2012, cash provided by financing activities was $1.2 million. Continental Cement’s financing cash flows in 2012 reflect Continental Cement’smillion, which was primarily net borrowings and repayments on long-term debt financed with Summit.from Summit Materials.

For the year ended 2011, cash provided by financing activities was $2.0 million, primarily driven by net borrowings and repayments on long-term debt.

For the aggregated twelve months ended 2010, cash provided by financing activities was $27.0 million. Included in financing activities in the aggregated twelve months ended December 31, 2010 was Summit’s $135.0 million purchase of Class A Units, $29.2 million of new borrowings, offset by $137.2 million of debt payments. Funds from the $135.0 million purchase of Class A Units were used to pay $110.3 million of outstanding indebtedness, as well as accrued interest and transaction fees.

Cash paid for capital expenditures

Continental Cement estimates that it will incur between $18.0 million and $21.0 million in capital expenditures in 2014, which it has funded or expects to fund through cash on hand, cash from operations and available borrowings under Summit Materials’ credit facilities. A significant portion of Continental Cement’s anticipated capital expenditures in 2014 relate to the continued development of the underground aggregates mine, which was substantially completed in the first quarter of 2014. Continental Cement expects to spend approximately $5.9 million during 2014 on this project, of which $4.1 million was spent during the first half of 2014. Production of the underground mine was sufficiently advanced that Continental Cement began recognizing depreciation on it in the first half of 2014. The underground mine is expected to provide Continental Cement with access to over 200 years of proven and probable limestone reserves.

Continental Cement expended approximately $25.6 million in capital expenditures in 2013 compared to $12.8 million in 2012. A significant portion of the increase in capital expenditures in 2013 related to developing an underground aggregates mine to extract limestone on Continental Cement’s Hannibal, Missouri property where its cement plant is located. The underground mine is expected to be completed in 2014. Continental Cement spent $15.3 million on the underground mine development in 2013, as compared to $5.0 million in 2012.

Continental Cement expended approximately $12.8 million in capital expenditures in 2012 compared to $7.1 million in 2011. A significant portion of the increase in capital expenditures in 2012 relates to developing an underground mine to extract limestone on Continental Cement’s Hannibal, MO property where its cement plant is located.aggregates mine. Continental Cement spent an additional $4.8$5.0 million on the underground aggregates mine development in 2012, as compared to $0.2 million in 2011.

In the year ended December 31, 2011, Continental Cement invested $7.1 million in capital expenditures compared to $11.1 million in the aggregated twelve months ended December 31, 2010. In 2010, $6.3 million was spent on a dock relocation project in St. Louis, Missouri.

Continental Cement estimates that it will incur between $16.0 million and $20.0 million in capital expenditures in 2013, which it has funded or expects to fund through cash on hand, cash from operations and available borrowings under Summit’s credit facilities. A significant portion of Continental Cement’s anticipated future capital expenditures relates to development of the underground mine. Continental Cement expects to spend approximately $12.5 million in aggregate during 2013 and 2014 on this project. Continental Cement believes this project will eliminate the need to strip away overburden that covers the limestone and ultimately save about $1.50 to $2.00 per ton of limestone off Continental Cement’s average historical mining cost.

Contractual Obligations

The following table presents, as of December 31, 2012,28, 2013, Continental Cement’s obligations and commitments to make future payments under contracts and contingent commitments:commitments (in thousands):

 

  Total   2013   2014 - 2015   2016 - 2017   Thereafter   Total   2014   2015-2016   2017-2018   Thereafter 

Contractual Obligations

          

Short term borrowings and long-term debt, including current portion

  $156,358    $965    $1,930    $1,930    $151,533  

Short-term borrowings and long-term debt, including current portion

  $155,608    $1,018    $2,291    $1,782    $150,517  

Operating lease obligations

   1,367     377     386     343     261     2,184     378     666     582     558  

Interest payments(1)

   83,316     12,138     24,101     23,867     23,210     67,826     11,437     23,975     21,257     11,157  

Pensions and other postretirement plans(2)

   27,308     2,773     5,557     5,516     13,462  

Pensions and other post-retirement plans(2)

   4,880     972     2,410     1,280     218  

Asset retirement obligation payments

   1,830     —       1,470     —       360     1,426     —       1,067     —       359  
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

Total contractual obligations(3)

  $270,179    $16,253    $33,444    $31,656    $188,826    $231,924    $13,805    $30,409    $24,901    $162,809  
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

 

(1)Future interest payments were calculated using the applicable fixed and floating ratesrate charged by Summit Materials in effect as of December 31, 201228, 2013 and may differ from actual results.
(2)Amounts represent estimated future payments to fund Continental Cement’s defined benefit retirement plans.
(3)Any future payouts on the redeemable members’ interest are excluded from total contractual obligations as the expected timing of settlement is not estimable.

Commitments and contingenciesContingencies

InContinental Cement is party to certain legal actions arising from the normalordinary course of business activities. Accruals are recorded when the outcome is probable and can be reasonably estimated in accordance with

applicable accounting requirements. While the ultimate results of claims and litigation cannot be predicted with certainty, management expects that the ultimate resolution of all current, pending or threatened claims and litigation will not have a material effect on Continental Cement’s consolidated results of operations, financial position or liquidity.

In February 2011, Continental Cement hasincurred a property loss related to a sunken barge with cement product aboard. During the six months ended June 29, 2013, Continental Cement recorded a $1.8 million charge for costs to remove the barge from the waterway. As of June 28, 2014 and December 28, 2013, Continental Cement had $0.4 million and $0.9 million, respectively, included in accrued expenses as management’s best estimate of the remaining costs to remove the barge.

Continental Cement is obligated under various firm purchase commitments lawsuits, claimsfor certain raw materials and contingent liabilities. Inservices that are in the opinionordinary course of Continental Cement’s management,business. The terms of the ultimate dispositionpurchase commitments are generally less than one year. Management does not expect any significant changes in the market value of these matters will notgoods and services during the commitment period that would have a material adverse effect on its consolidatedContinental Cement’s financial position, results of operations or liquidity.

Approximately 64% of Continental Cement’s employees are represented by labor organizations under collective bargaining agreements. The collective bargaining agreements expire between 2013 and 2015. Historically, the Company has been successful at negotiating successor agreements without any material disruption to operating activities. Management does not expect 2013 negotiations to have a material impact on results of operations, financial condition or liquidity.

Off-Balance sheet arrangementsSheet Arrangements

As of December 31, 2012,June 28, 2014, Continental Cement had no material off-balance sheet arrangements, such as financingarrangements.

New Accounting Standards

In May 2014, the FASB issued a new accounting standard to improve and converge the financial reporting requirements for revenue from contracts with customers. Accounting Standards Update (“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 GAAP. The ASU will supersede nearly all existing revenue recognition guidance under GAAP and provides that an entity recognize revenue when it transfers promised goods or unconsolidated variable interest entities,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 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 and will become effective for Continental Cement in the first quarter of 2017. Early adoption is prohibited. Management is currently assessing the effect that the adoption of this standard will have or are reasonably likely to have a current or future material effect on Continental Cement’s results of operations,the consolidated financial position, liquidity, capital expenditures or capital resources.statements.

Critical Accounting Policies

Continental Cement’s management’s discussion and analysis of its financial condition and results of operations is based on its consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires Continental Cement’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period.

On an ongoing basis, Continental Cement’s management evaluates its estimates, including those related to the allowance for doubtful accounts, inventories, goodwill, asset retirement obligations and the noncontrolling interest and goodwill.

redeemable members’ interest. Continental Cement bases its estimates and judgments on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue recognitionRecognition

Revenue for cement sales is recognized when evidence of an arrangement exists, the fee is fixed or determinable, title passes, which is generally when the product is shipped, and collection is reasonably assured. Cement sales are recorded net of discounts, allowances and sales taxes, as applicable. Continental Cement records freight revenue on a net basis together with freight costs within cost of sales.

Revenue from the receipt of waste fuels areis recognized when the waste is accepted and a corresponding liability is recognized for the costs to burnprocess the waste into fuel for the manufacturing of cement or to ship the waste offsite for disposal in accordance with applicable regulations. Cement sales are recorded net of discounts, allowances and sales taxes, as applicable.

Mining reclamation obligations

Continental Cement incurs reclamation obligations as part of its mining activities. Continental Cement mines aggregates and clay at its Hannibal and Owensville, Missouri locations, respectively, which are a key material used in the production of cement. Continental Cement’s quarry activities require the removal and relocation of significant levels of overburden to access stone of usable quantity and quality. The same overburden material is used to reclaim depleted mine areas, which must be sloped to a certain gradient and seeded to prevent erosion in the future. Reclamation methods and requirements can differ depending on the quarry and regulations in existence for certain locations. As of December 31, 2012, Continental Cement’s undiscounted reclamation obligations totaled $1.8 million, of which 80.3% is expected to be settled within the next five years and the remaining 19.7% thereafter. Continental Cement’s above-ground aggregate reserves are nearing depletion and, as a result, Continental Cement is developing an underground mine, which holds over 200 years of proven and probable aggregate reserves.

Reclamation costs resulting from the normal use of long-lived assets are recognized over the period the asset is in use only if there is a legal obligation to incur these costs upon retirement of the assets. The obligation, which cannot be reduced by estimated offsetting cash flows, is recorded at fair value as a liability at the obligating event date and is accreted through charges to operating expenses. The fair value is based on Continental Cement’s estimate for a third party to perform the legally required reclamation tasks including a reasonable profit margin. This fair value is also capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset.

The mining reclamation reserve is based on Continental Cement’s management’s estimate of future cost requirements to reclaim property at the above ground quarry site. Costs are estimated in current dollars and inflated until the expected time of payment using a future estimated inflation rate and then discounted back to present value using a risk-free rate on obligations of similar maturity adjusted to reflect Continental Cement’s credit rating. Continental Cement reviews reclamation obligations at least every three years for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. Examples of events that would trigger a change in the cost include a new reclamation law or amendment to an existing mineral lease. Examples of events that would cause a change in the estimated settlement date include the acquisition of additional reserves or the closure of a facility. Any impact to earnings from cost revisions is included in cost of revenue.

Goodwill and goodwill impairmentGoodwill Impairment

Goodwill is tested annually for impairment and in interim periods if certain events occur indicating that the carrying amounts may be impaired. The impairment evaluation is a critical accounting policy because the

evaluation involves the use of significant estimates and assumptions and considerable management judgment. Continental Cement’s judgments regarding the existence of impairment indicators and future cash flows related to goodwill are based on operational performance of its businesses,business, market conditions and other factors. Although there are inherent uncertainties in this assessment process, the estimates and assumptions Continental Cementmanagement uses, including estimates of future cash flows, volumes, market penetration and discount rates, are consistent with its internal planning. The estimated future cash flows are derived from internal operating budgets and forecasts for long-term demand and pricing in Continental Cement’s industry and market. If these estimates or their related assumptions change in the future, Continental Cement may be required to record an impairment charge on all or a portion of its goodwill. Furthermore, Continental CementManagement cannot predict the occurrence of future impairment-triggering events nor the impacteffect such events might have on its reported values. Future events could cause Continental Cementmanagement to conclude that impairment indicators exist and that goodwill associated with its acquired businesses areis impaired. Any resulting impairment loss could have an adverse impacteffect on Continental Cement’s financial position and results of operations.

Continental Cement performed its annual assessment of goodwill in the fourth quarter of 20122013 for its reporting unit for which Continental Cement’s senior management regularly reviews the operating results. Under the two-step quantitative impairment test, the evaluation of impairment involves comparing the current fair value of the reporting unit to its carrying value, including goodwill. Continental Cement uses a discounted cash flow (“DCF”)DCF model to estimate the current fair value of its reporting unit when testing for impairment, as Continental Cement’s management believes forecasted cash flows are the best indicator of such fair value. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including macroeconomic trends in the public and private construction industry, the timing of work embedded in Continental Cement’s backlog, its performance and profitability under its contracts,public infrastructure industries, its success in securing future sales and the appropriate interest rate used to discount the projected cash flows. This discounted cash flow analysis is corroborated by “top-down” analyses, including a market assessment of Continental Cement’s enterprise value.

As of the first day of the fourth quarter of 2013, Continental Cement’s fair value was assessed in relation to its carrying value. As a result of this analysis, Continental Cement determined that the estimated fair value is substantially in excess of its carrying values (greater than 40%55.9%). Continental Cement recorded no goodwill impairment charges in the current year or in previous years.

Impairment of long-livedLong-Lived Assets, Excluding Goodwill

Long-lived assets excluding goodwill

are material to Continental Cement’s total assets. As of December 28, 2013, net property, plant and equipment represented 84% of total assets. Continental Cement evaluates the carrying value of long-lived assets, including intangible assets subject to amortization, when events and circumstances indicate that the carrying value may not be recoverable. The impairment evaluation is a critical accounting policy because long-lived assets are material to Continental Cement’s total assets (as of December 31, 2012, property, plant and equipment, net represented 82% of total assets) and the evaluation involves the use of estimates and assumptions and considerable management judgment. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in thetheir markets, in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows or a trend of negative or declining cash flows

over multiple periods, among others. A one year increase or decrease in average useful lives of plant and equipment would have affected depreciation expense by ($0.4) million or $0.4 million, respectively, in 2012. An impairment charge could be material to Continental Cement’s financial condition and results of operations. The carrying value of long-lived assets is considered impaired when the estimated undiscounted cash flows from such assets are less than their carrying value. In that event, Continental Cement recognizeswould recognize a loss equal to the amount by which the carrying value exceeds the fair value of the long-lived assets.

Fair value is determined by primarily using a discounted cash flow methodology that requires the use of estimates and considerable management judgment and long-term assumptions. Continental Cement’s estimate of net future cash flows is based on historical experience and assumptions of future trends, which may be different from actual results.

There were no material long-lived asset impairments during the years ended December 31, 201228, 2013 or December 31, 20112012 nor were there any changes to the useful lives of assets having a material impacteffect on Continental Cement’s financial condition and results of operations. A one year increase or decrease in average useful lives of plant and equipment would have affected depreciation expense by ($0.4) million or $0.4 million, respectively, in 2013.

New Accounting Standards

For a discussion of accounting standards recently adopted and the effect such accounting changes will have on Continental Cement’s results of operations, financial position or liquidity, see note 1 to the audited Continental Cement consolidated financial statements included elsewhere in this prospectus.

Quantitative and Qualitative Disclosures About Market Risk

Continental Cement is exposed to certain market risks arising from transactions that are entered into in the normal course of business. Continental Cement’s operations are highly dependent upon the interest rate-sensitive construction industry as well as the general economic environment. Consequently, these marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs.

Continental Cement’s management has considered the current economic environment and its potential impacteffect to Continental Cement’s business. Demand for aggregatescement products, particularly in the nonresidentialresidential and residentialnonresidential construction markets, could decline if companies and consumers are unable to obtain financing for construction projects or if the economic recession causes delays or cancellations to capital projects. Additionally, declining tax revenue and state budget deficits have negatively affected states’ abilities to finance infrastructure construction projects.

Pension and other postretirement benefit plansOther Postretirement Benefit Plans

Continental Cement sponsors two non-contributory defined benefit pension plans for hourly and salaried employees, as well as healthcare and life insurance benefits for certain eligible retired employees. As of January 1, 2012,2014, the pension and postretirement plans have been frozen to new entrants.participants and the healthcare and life insurance benefit plan has been amended to eliminate all future retiree health and life coverage. Continental Cement’s results of operations are affected by its net periodic benefit cost from these plans, which totaled $1.2 million in 2012.2013. Assumptions that affect this expense include the discount rate and, for the pension plans only, the expected long-term rate of return on assets. Therefore, Continental Cement has interest rate risk associated with these factors.

The healthcare and life insurance benefit plan are exposed to changes in the cost of healthcare services. A one percentage-point increase or decrease in assumed health care cost trend rates would have affected the accumulated postretirement benefit obligations by $1.6approximately $1.3 million or ($1.3)1.1) million, respectively, in 2012.at December 28, 2013.

Commodity and energy price riskEnergy Price Risk

Continental Cement is subject to commodity price risk with respect to price changes in energy, including fossil fuels, such as natural gas and diesel for cement production activities.

Inflation risk

Overall inflation rates in recent years have not been a significant factor in Continental Cement’s revenue or earnings due to Continental Cement’s ability to recover increasing costs by obtaining higher prices for its products through sale price escalators in place for most public sector contracts. Inflation risk varies with the level of activity in the construction industry, the number, size and strength of competitors and the availability of products to supply a local market.

BUSINESS

Overview

We are a leading, vertically-integrated, geographically-diverse heavy-side buildingone of the fastest growing construction materials company;companies in the United States. Our materials include aggregates, which we supply aggregates,across the country, primarily in Texas, Kansas, Kentucky, Missouri and Utah, and cement, which we supply in Missouri, Iowa and Illinois. Within our markets, we offer customers a single-source provider for construction materials and related downstream products such as ready mixedthrough our vertical integration. In addition to supplying aggregates to customers, we use the materials internally to produce ready-mixed concrete and asphalt paving mix, concrete products andwhich may be sold externally or used in our paving and related construction services businesses. Our vertical integration creates opportunities to increase aggregates volumes and optimize margin at each stage of production, as well as creating a variety of end-usescompetitive advantage for us through the efficiency gains, convenience and reliability provided to customers.

In the five years since our first acquisition, we have become a major participant in the U.S. construction industry, including public infrastructure projects, as well as private residential and non-residential construction.materials industry. We believe that, by volume, we are a top 1510 aggregates supplier, of aggregates, a top 20 supplier of25 cement a top 10 producer of asphalt paving mix and a major producer of ready mixedready-mixed concrete and asphalt paving mix. Our revenue grew 126% from $405.3 million in 2010 to $916.2 million in 2013 and 31% in the United States by volume. As of Decembersix months ended June 28, 2014 from the six months ended June 29, 2012, we had 1.2 billion tons and 0.4 billion tons of2013. Our proven and probable aggregates reserves serving our aggregateswere 1.9 billion tons as of June 28, 2014. In the six months ended June 28, 2014 and cement businesses, respectively, and operated over 120 sites and plants. We believe that we have adequate road, barge and/or railroad access to all of our sites and plants. In the year ended December 29, 2012,28, 2013, we sold 16.410.2 million and 17.5 million tons of aggregates, 0.4 million and 1.0 million tons of cement, 4.61.2 million and 1.2 million cubic yards of ready-mixed concrete and 1.6 million and 3.9 million tons of asphalt paving mix, respectively, across our more than 200 sites and 1.1 million cubic yards of ready mixed concrete. plants.

For the six months ended June 28, 2014 and the year ended December 29, 2012, we generated revenue of $962.9 million.

We were formed in September 2008. Since July 2009, the Sponsors28, 2013, approximately 54% and certain42%, respectively, of our officers, directors and employees have made $794.5 million of funding commitmentsrevenue related to our indirect parent entity, Summit Materials Holdings L.P. We have grown rapidly as a result of our disciplined acquisition strategy, utilizing approximately $457.3 million of the $463.9 million of equity commitments funded to Parent by the Sponsors and certain other investors. Today, our nine operating companies make up our three distinct geographic regions that span 20 states and 23 metropolitan statistical areas. We believe each of our operating companies has a top three market share position in its local market area and an extensive operating history, averaging over 35 years. Our highly experienced management team, led by 30-year industry veteran CEO Tom Hill, has successfully enhanced the operations of acquired companies by focusing on scale advantages, cost efficiencies and pricing discipline to improve profitability and cash flow.

Our strategy is focused on developing a heavy-side, vertically integrated company with a strong aggregates base. We strive to be a leading supplier of all four major resource-based products—aggregates, cement, asphalt paving mix and ready mixed concrete—in the U.S. heavy-side building materials industry. We believe vertical integration across these major products strengthens our market positions and helps us achieve significant cost advantages. We believe a diversified mix of products also provides us with greater stability and insulates against local market fluctuations, competitive pricing dynamics and other individual market variances.

Our revenue is derived from multiple end-use markets, including public infrastructure construction as well as residential and non-residential construction. For the year ended December 29, 2012,nonresidential construction and approximately 62% of our revenues46% and 58%, respectively, related to public infrastructure construction and the remaining 38% related to residential and non-residential construction.projects. In general, our aggregates, and asphalt paving mix and paving and related services businesses are weighted towards public construction.infrastructure projects. Our cement and ready mixedready-mixed concrete businesses serve both the public and private construction and public infrastructure markets.

Private construction includes both residential and nonresidential new construction and the repair and remodel markets. From a macroeconomic view, we see positive indicators for the construction sector, including upward trends in housing starts and construction employment. All of these factors should result in increased construction activity in the private sector. However, we do not expect this recovery to be consistent across the United States. Certain markets, such as Texas, are showing greater, more rapid signs of recovery than other markets.

Public constructioninfrastructure includes spending by federal, state and local governments for roads, highways, bridges, airports and other public infrastructure construction projects. A significant portion of our construction revenues are from public constructionPublic infrastructure projects have historically been a historically morerelatively stable portion of state and federal budgets. Our acquisitions to dateoperations are primarily focused in states with constitutionally-protected transportation funding sources, which we believe serves to limitlimits our exposure to state and local budgetary uncertainties. Private construction includes both new residentialThe existing federal transportation funding program, MAP-21, expires September 30, 2014. There is uncertainty as to what will succeed MAP-21, and non-residential constructionfunding increases are not expected in the short term. We also continue to monitor the status of the Highway Trust Fund. On August 1, 2014, a Highway Trust Fund extension bill was enacted. The bill provides approximately $10.8 billion of funding, which is expected to last until May 2015. With the nation’s infrastructure aging, we expect U.S. infrastructure investment to grow over the long term and repair and remodel markets, which have been significantly impacted by the recent and current economic conditions. We believe exposure to various geographic markets affords us greater stability through economic cycles and positions usthat we are well positioned to capitalize on upside opportunities when recoveriesany such increase in residential and non-residential construction occur.investment.

Our products sold externally are generally delivered upon receipt of orders or requests from customers. Accordingly, the backlog associated with external product sales is converted into revenue within a relatively short period of time. Inventory for products is generally maintained in sufficient quantities to meet rapid delivery requirements of customers.

Our construction services backlog represents our estimate of the revenues that will be realized under the portion of the construction contracts remaining to be performed. We generally include a project in our contract backlog at the time a contract is awarded and funding is in place. Substantially all of the contracts in our contract backlog may be canceled or modified at the election of the customer. However, we have not been materially adversely affected by contract cancellations or modifications in the past. Many of our construction services are awarded and completed within one year and therefore may not be reflected in our beginning or year-end contract backlog.

As a vertically-integrated business, approximately 26% of our aggregates production is further processed and sold as a downstream product, such as asphalt paving mix or ready mixed concrete, or used in our construction services business. Approximately 75% of the asphalt paving mix we produce is installed by our own paving crews. A quarterly increase or decrease of backlog does not necessarily result in an improvement or a deterioration of our business. Our backlog includes only those products and projects for which we have obtained a purchase order or a signed contract with the customer. The following table sets forth, by product, our backlog as of the indicated dates:

(in thousands)

  March 30,
2013
  December 29,
2012
  December  31,
2011

Aggregate (in tons)

    5,794     3,908     2,905 

Asphalt (in tons)

    2,764     2,614     2,267 

Ready mixed concrete (in cubic yards)

    168     155     259 

Construction services

   $393,559    $288,673    $329,802 

Approximately 95%, 79%, 97% and 69% of our aggregate, asphalt, ready mixed concrete and construction backlog, respectively, are expected to be completed and converted into revenue in 2013.

Markets by Region

We currently operate across 2017 U.S states and in Vancouver, Canada through our three regional platforms: Central, WestWest; Central; and East. Each of our operating businesses has its own management team that, in turn, reports to a regional president who is responsible for overseeing business developmentthe operating businesses, developing growth opportunities, and

implementing best practices and integrating acquired businesses within the regional platform. Our first and largest platform is our Central region. Our most recent platform, the West region, was established in August 2010 with our acquisition of the Harper Contracting and Kilgore businesses in Utah. Company acquisitionsAcquisitions are an important element of our strategy, as we seek to enhance value through increased scale and cost savings from vertical integration within local marketsmarkets.

West Region. Our West region includes operations in Texas, the Mountain states of Utah, Colorado, Idaho and through the regional management.

Central Region. The Central region platform encompasses our integratedWyoming and in Vancouver, Canada where we supply aggregates, cement,ready-mixed concrete, asphalt paving mix ready mixedand paving and related services. As of June 28, 2014, the West region controlled approximately 0.5 billion tons of proven and probable aggregates reserves and $328.6 million of hard assets.

Revenue in the West region grew approximately sixfold from 2010 to 2013 and 49% in the six months ended June 28, 2014 from the six months ended June 29, 2013. Of the West region’s $426.2 million 2013 revenue, approximately 43% was derived from residential and nonresidential construction, and the remaining approximately 57% was derived from public infrastructure spending. During the six months ended June 28, 2014 and the year ended December 28, 2013, approximately 56% and 47% of our revenue and approximately 55% and 25% of our Adjusted EBITDA, excluding corporate charges, were generated in the West region.

In 2014, we continued to expand the West region, with significant growth in Texas through key acquisitions in Houston and the Permian Basin region of West Texas and the establishment of a new platform in Vancouver, Canada with the September acquisition of Mainland. These acquisitions were aggregates and ready-mixed concrete businesses, which led to improved margins in the region. These acquisitions shifted our customer mix; approximately 62% of revenue in the six months ended June 28, 2014 was derived from residential and other operationsnonresidential construction, and the remaining approximately 38% was derived from public infrastructure spending.

Central Region. Our Central region extends across the Midwestern United States, most notably in Kansas, Missouri, Nebraska, Iowa and Illinois. WithinIllinois, where we supply aggregates, cement, ready-mixed concrete, asphalt paving mix and paving and related services. As of June 28, 2014, the Central region we controlcontrolled approximately 0.5 billion tons of proven and probable aggregates reserves serving ourits aggregates business and cement businesses of approximately 0.5 billion tons and 0.4 billion tons respectively,serving its cement business and total$541.8 million of hard assets, which we defineassets.

Revenue in the Central region grew 56% from 2010 to 2013 and 22% in the six months ended June 28, 2014 from the six months ended June 29, 2013. Of the Central region’s $329.6 million 2013 revenue, approximately 57% was derived from residential and nonresidential construction, and the remaining approximately 43% was derived from public infrastructure spending. The Central region has historically been our most profitable region as it has had a higher proportion of its revenue from materials and products sales than the sum of our property, plantother regions. During the six months ended June 28, 2014 and equipment, net and inventories, with a balance sheet book value of $488.0 million as of December 29, 2012. During the year ended December 29, 2012,28, 2013, approximately 33% and 36%, respectively, of our revenue, respectively, and approximately 48% and 62%, respectively, of our Adjusted EBITDA, excluding corporate charges, was generated in the Central region platform generated approximately 32% of our revenue. Approximately 52% of the Central region’s revenues were derived from public infrastructure spending, and the remaining 48% of its revenues were generated by residential and non-residential construction for the year ended December 29, 2012.region.

Our cement business serves markets in Missouri, Continental Cement, operatesIowa and Illinois. Our cement plant, commissioned in 2008, is a highly efficient, technologically advanced, integrated manufacturing and distribution system strategically located near Hannibal, Missouri, 100 miles north of St. Louis along the Mississippi River. Continental Cement utilizesWe utilize an on-site solid, hazardous and liquid waste fuel processing facility, which can reduce ourthe plant’s fuel costs at that facility by up to 50%. The Continental CementOur cement plant is covered by HWC-MACT regulations, rather than PC-MACT,the EPA’s NESHAP for Portland cement plants, due to its waste fuel processing capabilities. We believe the facility is well positioned to comply with any potential regulatory changes during the foreseeable future.

West RegionEast Region.. The West Our East region platform encompasses our integratedserves markets in Kentucky, South Carolina, North Carolina, Tennessee and Virginia, where we supply aggregates, asphalt paving mix ready mixed concrete, construction, and other operations in Texas, Utah, Colorado, Idahopaving and Wyoming. Withinrelated services. As of June 28, 2014, the East region we controlcontrolled approximately 0.5 billion tons of proven and probable aggregates reserves and $163.5 million of hard assets.

Revenue in the East region remained consistent from 2010 to 2013 and in the six months ended June 28, 2014 as compared to the six months ended June 29, 2013. Of the East region’s $160.4 million 2013 revenue,

approximately 0.3 billion tons8% was derived from residential and total hard assets with a balance sheet book value of $254.9 million as of December 29, 2012.nonresidential construction, and the remaining approximately 92% was derived from public infrastructure spending. During the year ended December 29, 2012, the West region platform generated approximately 50% of our revenue. Approximately 64% of its revenues were derived from public infrastructure spending, and the remaining 36% of its revenues were generated by residential and non-residential construction for the year ended December 29, 2012.

In August 2010, we acquired Kilgore and simultaneously acquired and merged assets from Harper Contracting (collectively referred to as the “Kilgore Companies”) in Salt Lake City, Utah to establish the cornerstone of our West region platform. We expanded Kilgore Companies with the acquisitions of Altaview Concrete in Salt Lake City, B&B in Bluffdale, Utah, EnerCrest in southwest Wyoming, and Triple C in southern Idaho. Subsequently, in December 2010, we extended the West platform to the Texas market with the acquisition of RK Hall, an aggregates and asphalt paving business primarily operating in northeast Texas as well as southern Arkansas and southern Oklahoma. We also expanded to Grand Junction, Colorado with our acquisitions of Grand Junction Pipe and Elam Construction. Capitalizing on the regional presence of RK Hall, we acquired Industrial Asphalt and Ramming Paving in August and October 2011, respectively, which expanded our presence into the attractive Austin, Texas market. These businesses complement each other with well-positioned reserves and integrated asphalt / paving operations.

East Region. The East region platform encompasses our integrated aggregates, asphalt paving mix, construction and other operations in Kentucky, Indiana, Ohio, Tennessee and Virginia. Within the region, we control proven and probable aggregates reserves of approximately 0.4 billion tons as of December 29, 2012 and total hard assets with a balance sheet book value of $162.6 million as of December 29, 2012. During the year ended December 29, 2012, the East region platform generated28, 2013, approximately 18% of our revenue. Approximately 73%revenue and approximately 13% of our Adjusted EBITDA, excluding corporate charges, was generated in the East region’s revenues were derived from public infrastructure spending, and the remaining 27% of its revenues were generated by residential and non-residential construction for the year ended December 29, 2012.region.

The East region platform is anchored by the Hinkle Contracting business, one of our largest acquisitions to date, which we acquired in February 2010 and strengthened with bolt-ons of select aggregates and asphalt assets from Greer, an asset swap with Scotty’s Contracting & Stone LLC where we exchanged asphalt paving mix and construction assets for a total of eight owned and leased quarry sites in southern Kentucky, the buyout of our non-controlling partner in the Bourbon Limestone aggregates business and select aggregates and asphalt assets from Kay & Kay.

Acquisition History

The following table lists acquisitions we have completed since August 2009:

 

Company

  

Date of Acquisition

  Region

Hamm (predecessor)

  August 25, 2009  Central

Hinkle Contracting Company, LLC

  February 1, 2010  East

Cornejo

  April 16, 2010  Central

Elmo Greer & Sons, LLC

  April 20, 2010  East

Continental Cement

  May 27, 2010  Central

Harshman Construction L.L.C. and Harshman Farms, Inc.

  June 15, 2010  Central

Scotty’sSouth Central Kentucky Limestone, LLC

  July 23, 2010  East

Harper Contracting

  August 2, 2010  West

Kilgore Pavement Maintenance, LLC and Kilgore Properties, LLC

  August 2, 2010  West

Con-Agg of MO, L.L.C.

  September 15, 2010  Central

Altaview Concrete

  September 15, 2010  West

EnerCrest Products, Inc.

  September 28, 2010  West

RK Hall

  November 30, 2010  West

SCS Materials, L.P.

  November 30, 2010  West

Triple C Concrete, Inc.

  January 14, 2011  West

Elam Construction, Inc.

  March 31, 2011  West

Bourbon Limestone Company

  May 27, 2011  East

Fischer Quarries, L.L.C.

  May 27, 2011  Central

B&B

  June 8, 2011  West

Grand Junction Pipe, Inc.

  June 10, 2011  West

Industrial Asphalt

  August 2, 2011  West

Ramming Paving

  October 28, 2011  West

Norris

  February 29, 2012  Central

Kay & Kay

  October 5, 2012  East

Sandco

  November 30, 2012  West

Lafarge

  April 1, 2013  Central

Westroc

  April 1, 2013  West

Alleyton

January 17, 2014West

Troy Vines

March 31, 2014West

Buckhorn Materials

June 9, 2014East

Canyon Redi-Mix

July 29, 2014West

Mainland

September 4, 2014West

Southwest Ready Mix

September 19, 2014West

Our End Markets

Residential Construction. Residential construction includes single family houses and multi-family units such as apartments and condominiums. Demand for residential construction is influenced by employment prospects, new household formation and mortgage interest rates. In recent years, foreclosures have resulted in an oversupply of available houses, which had dampened the demand for new residential construction in many markets in the United States. However, employment prospects have improved, foreclosure rates have stabilized and demand has begun to grow, although the rate of growth is inconsistent across the United States.

Nonresidential Construction. Nonresidential construction encompasses all privately financed construction other than residential structures. Demand for nonresidential construction is driven by population and economic growth. Population growth spurs demand for stores, shopping centers and restaurants. Economic growth creates demand for projects such as hotels, office buildings, warehouses and factories. The supply of nonresidential construction projects is affected by interest rates and the availability of credit to finance these projects.

Public Sector ConstructionInfrastructure Construction.. Public sectorinfrastructure construction includes spending by federal, state and local governments for highways, bridges, airports, schools, public buildings and other public infrastructure construction projects. Generally, public sector constructionPublic infrastructure spending ishas historically been more stable than private sector construction. We believe that public sectorinfrastructure spending is less sensitive to interest ratesrate changes and economic cycles and often is supported by multi-year federal and state legislation and programs. A significant portion of our revenue is derived from public constructioninfrastructure projects. As a result, the supply of federal and state funding for public infrastructure highway construction significantly affects our public sector constructioninfrastructure end-use business.

Historically, public sectorinfrastructure funding has been underpinned by a series of six-year federal highway authorization bills. Federal funds are allocated to the states, which are required to match a portion of the federal funds they receive. Federal highway spending uses funds largelypredominantly from the Federal Highway Trust Fund, which derives its revenue from taxes on diesel fuel, gasoline and other user fees. The dependability of federal funding allows the state departments of transportation to plan for their long term highway construction and maintenance needs. On August 1, 2014, a Highway Trust Fund extension bill was enacted. The bill provides approximately $10.8 billion of funding, which is expected to last until May 2015.

In July 2012, MAP-21 was enacted and took effect in October 2012. MAP-21 is a 27-month, approximately $105 billionThe current transportation funding program, that provides for $40.4 billion and $41.0 billion forMAP-21, expires September 30, 2014. A new highway infrastructure investments in fiscal years 2013 andbill may be passed by the end of 2014, respectively. The spending levels are consistent with the preceding federal transportation funding program. However, given the nation’s aging infrastructure and considering longstanding historical spending trends, we expect U.S. infrastructure investment growth to resume.

Non-Residential Construction. Non-residential construction encompasses all privately financed construction other than residential structures. Demand for nonresidential construction is driven by population and job growth. Job growth creates demand for projects such as hotels, office buildings, warehouses and factories. Population growth spurs demand for stores, shopping centers, schools and restaurants. The supply of non-residential construction projects is affected by interest rateswhich would require continuing resolutions between October 1, 2014 and the availability of credit to finance these projects.date a new bill is passed.

Residential Construction. Residential construction includes single family houses and multi-family units such as apartments and condominiums. Demand for residential construction is influenced by new household formation, employment prospects and mortgage interest rates. In recent years, foreclosures have resulted in an oversupply of available houses which has dampened the demand for new residential construction in many markets in the United States.

Our Competitive Strengths

Leading market positions. We believe each of our operating companies has a top three market share position in its local market area.achieved through their respective extensive operating history, averaging over 35 years. We believe we are among the top 15 suppliers of aggregates, top 20 suppliers of cement, a top 10 supplier of asphalt paving mix,aggregates, a top 25 producer of cement and a major ready mixedproducer of ready-mixed concrete supplierand asphalt paving mix in the United States by volume. We focus on acquiring companies that have leading local market positions in aggregates, which we seek to enhance by building scale with other local aggregates and downstream businesses.products and services. The heavy-side building productsconstruction materials industry is primarily local in nature due to transportation costs from the high weight-to-value ratio of the products. Given this dynamic, we believe achieving local market scale provides a competitive advantage that drives growth and stability for our business. We believe that our ability to prudently acquire and rapidly integrate multiple businesses enableshas enabled, and will continue to enable, us to become market leaders in attractive regions.leaders.

Vertically-integrated business model. We generate revenue across a spectrum of related products and services. We internally supply the majority of the aggregates used in the ready-mixed concrete and asphalt paving mixes and ready mixed concrete that we produce and we internally supply the majority of the asphalt paving mix that our paving crews lay. Approximately 27% of our aggregates production is further processed and sold as a downstream product, such as ready-mixed concrete or asphalt paving mix, or used in our paving and related services business. Approximately 83% of the construction services thatasphalt paving mix we perform forproduce is installed by our customers.own paving crews. Our vertically-integrated business model enables us to operate as a single source provider of materials and construction capabilities,paving and related services, creating cost, convenience and reliability advantages for our customers, while at the same time creating significant cross-marketing opportunities among our interrelated businesses. We believe this significantly enhancescreates opportunities to increase aggregates volumes and optimize margin at each stage of production, as well as creating a competitive advantage for us through the value of our companyefficiency gains, convenience and improves the quality and consistency of services for ourreliability provided to customers.

Significant product and geographic scale. Our nineten operating companies operate across 2017 U.S. states and Vancouver, Canada in the central, western and eastern United States.27 metropolitan statistical areas. Between 2010 and 2012,2013, we have growngrew our revenue by 124%126%, primarily through acquisitions. This growth was the result of 17% revenue growth from 2011 to 2012, compounding 91% revenue growth from 2010 to 2011. The significant revenue growth has brought substantial additional scale to our operations in terms of purchasing and leveraging largely fixed overhead expenses.purchasing. A combination of increased scale and vertical integration present opportunities to improve profitability through cost savings. We have achieved this scale without any significant customer or geographic concentration and continue to demonstrate operating earnings stability as a function of our diversification across products and regions.concentration.

Attractive industry dynamics and structure. We operate in anbelieve the construction materials industry that we believe has attractive fundamentals, characterized by high barriers to entry and a stable competitive environment in the majority of markets. Barriers to entry are created by scarcity of raw material resources, limited efficient distribution range, asset intensity of equipment, land required for quarry operations and a time-consuming and complex regulatory and permitting process. In addition, profits are relatively stable throughout various economic cycles, as compared to other businesses in the cycle as a result ofconstruction industry, aided by favorable pricing dynamics with historically stable public infrastructure spending and a largely variable cost structure.spending. According to the April 2014 U.S. Geological Survey, U.S. aggregates pricing hashad increased in 5965 of the lastprevious 70 years, with growth accelerating since 2002 as continuing resource scarcity in the industry has led companies to focus increasingly on improved pricing strategies. Pricing growth remained strong in 2012,2013 despite volume declines in certain key end markets.

High quality assets and coverage. As a function of our disciplined acquisition strategy and high quality asset base, hard asset values constitute a significant portion of our enterprise value and currently exceed net debt (which we define as total indebtedness less cash) as of December 29, 2012.value. As of December 29, 2012,June 28, 2014, the balance sheet book value of our hard assets was $905.5$1,033.9 million (excluding $1.1$5.8 million at corporate). The majority of our hard asset value iswas derived from our property, plant and equipment together with the value of our approximately 1.2 billion tons and 0.41.9 billion tons of proven and probable aggregates reserves serving our aggregates and cement businesses, respectively, asbusinesses. We believe our sizeable quantity of December 29, 2012.reserves, paired with vertically-integrated, downstream products and services, enables us to better meet the needs of our end-use customers. Assuming production rates in future years are equal to those for the year ended December 29, 2012,in 2013, we estimate that the useful life of the proven and probable reserves for our construction aggregates business and our cement business isbusinesses are over 17055 years and over 200300 years, respectively.

We estimate proven and probable reserves based on the results of drilling. In determining the amount of reserves, our policy is to deduct reserves not available due to property boundaries, set-backs and plant configurations, as deemed appropriate when estimating reserves. Proven reserves are computed from dimensions revealed in outcrops, trenches, workings or drill holes; grades and/or quality are computed from the results of detailed sampling at the sites for inspection, sampling and measurement, which are spaced so closely and the geologic character of which is so well-defined that size, shape, depth and mineral content of reserves can be clearly established. Probable reserves are those for which the quantity and grade and/or quality are computed from information similar to that used for proven reserves except that the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. TheAs a result, the degree of assurance, although lower than that for provenprovided by measurements of our probable reserves is high enoughmore limited. However, because the difference in the degree of assurance between our proven and probable reserves cannot be readily defined, we present them on a combined basis in this prospectus. From time to assume continuity between points of observation.time, in connection with certain acquisitions, we engage a third party engineering firm to perform a reserve audit, but we do not perform annual reserve audits.

Our asset base includes the Continental Cement plant, a new dry process cement plant that was commissioned in 2008. We believe this plant contributes significantly to our asset value given its high replacement cost, large capacity, technologically advanced manufacturing capabilities strategic position on the Mississippi River and favorable environmental performance versus older facilities within the industry that facewill require upgrades to comply with stringent EPA standards coming into effect in the near-term. We believenear term. In addition, our sizeable quantityplant is strategically located on the Mississippi River. The U.S. cement industry is regional in nature with customers typically purchasing material from local sources due to transportation costs. According to the PCA 2013 North American Cement Industry Annual Yearbook, nearly 97% of reserves, paired with vertically-integrated, downstream products and services, enables uscement sold in the United States was shipped to better meet the needscustomers by truck in 2011. However, as a result of our end-use customers.plant’s strategic location on the Mississippi River, approximately 15% of our cement sold in 2013 was shipped by barge, which is more cost-effective than truck transport.

Strong operating market performance in challenging economic environment. We have demonstrated resilient financial performance despite challenging conditions in the broader economy over the last fewseveral years. This performanceBeginning in 2008, the U.S. construction industry experienced a significant decline in demand resulting in excess capacity at construction materials and related products facilities. Aggregate volumes decreased from 2.6 billion tons in 2008 to 2.1 billion tons in 2012, a 19% decline. However, during this same time period the average price per ton of aggregates in the United States increased from $8.57 in 2008 to $8.91 in 2012, a 4% increase. Consistent with these market trends, our aggregate and cement pricing increased 2% and 5%, respectively, from 2010 to June 28, 2014.

One significant factor that allows for pricing growth in periods of volume declines is largely due to our highly variable cost structure and exposure to more stable geographic markets and publicly-funded end-use segments. Many of our products, particularlythat aggregates and asphalt paving mix, have significant exposure to public road construction, which has demonstrated continued growth over the past 30 years, even during times of broader economic softness. In fact, through the prior three U.S. recessions (July 1990 through March 1991, March 2001 through November 2001 and December 2007 through June 2009), highway spending in real dollars grew 1.8% annually on average in years with a recession as compared to 0.9% annually on average in years without a recession. The majority of public road construction spending is funded at the state level through the states’ respective departments of transportation. The five key states in which we operate (Texas, Kansas, Kentucky, Missouri and Utah) have funds whosewith constitutionally-protected revenue sources are constitutionally protected and may only be useddedicated for transportation purposes.projects. These dedicated, earmarked funding sources limit the impactnegative effect current state deficits may have on public spending. As a result, our business exhibits significantly less volatilitymore stability in profitability than witnessed in most other building product subsectors. We believe these business characteristics have helped mitigate the impact of the depressedchallenging economic environment on our profitability.

Experienced and proven leadership implementing acquisition strategy. Our senior management team has a proven track record of creating value. This team is led by Tom Hill, our President and Chief Executive Officer, a 30-year industry veteran and former CEO of Oldcastle, Inc., CRH plc’s U.S. operations.veteran. In addition to Mr. Hill, our management team, consists of a number of other former Oldcastle managers, including corporate and regional operations managers, corporate development, and finance executives and other heavy side industry operators.operators, has extensive experience in the industry. Our management team has a track record of executing and successfully integrating acquisitions in the sector. Mr. Hill demonstratedand his ability to execute onteam successfully executed a similar consolidation strategy while at Oldcastle Materials,another company in the industry, where heMr. Hill led the integration of numerous acquisitions, taking the business from less than $0.3 billion to

$7.4 $7.4 billion in sales from 1992 to 2008. In executing Oldcastle’s consolidation strategy, Mr. Hill and his team completed2008 through 173 acquisitions worth approximately $6.3 billion in the aggregate and $36.0 million on average. From an operational standpoint, Mr. Hill was successful at managing Oldcastle’s rapid growth

Since July 2009, we have acquired 33 companies, successfully integrating the businesses into three regions through the implementation of operational improvements, creation of a world-class safety program and development of a strong leadership team. These acquisitions have helped us achieve significant revenue growth, from $29.3 million in 2009 to $916.2 million in 2013.

Strong sponsor equity commitment. Since July 2009, the Sponsors, together with certainour formation in September 2008, our parent company has received equity commitments of our officers, directors and employees have made $794.5$798.1 million, of funding commitmentswhich $467.5 million has been deployed to execute our indirect parent company to strategically pursue consolidation withindisciplined acquisition strategy. Through the heavy-side building materials industry in the United States. Since then,deployed equity and debt financings, we have made 24completed 33 acquisitions including bolt-ons, and our Sponsors, together with certain other investors in our parent, have invested approximately $463.9 million of equity capital, excluding rollover equity invested by sellers in certain of our acquisitions, with approximately $337.2$330.6 million of commitments from our parent remaining outstanding.

Our Business Strategy

Key elements of our business strategy include:

Drive profitable growth through strategic acquisitions. We were establishedOur goal is to acquire and grow heavy-side building materials companies with the goal of becomingbecome a top-five U.S. construction materials company through the successful execution of our acquisition strategy and implementation of best practices to drive organic growth. Based on aggregates sales, in volumes, we believe that we are currently a top-ten player, which has been achieved within five years. Since inception, we have demonstrated significant progress toward achieving this goal.years of our first acquisition. We continue to believe that the relative fragmentation of theour industry subsectors in which we operate, coupled with recent economic softness, createcreates an environment in which we can continue to acquire companies at attractive valuations and increase scale and diversity over time through both platform and bolt-on acquisitions.

We estimate that approximately 65% of the U.S. aggregates market is privately owned. From this group, our senior management team maintains contact with over 300 private companies. These long-standing relationships, cultivated over decades, have been the primary source for our acquisitions thus far and, we believe, that attractive purchase prices and high quality of assets with selective exposurewill be a key driver to well-funded public spending provide additional downside protection. Acquisitions can also provide synergies that provide additional revenue opportunities by filling in market gaps and expanding to adjacent geographies. We believe that achieving further vertical integration and increased scale will lead to improved cost positions, benefitting our profitability and cash flow generation. Our acquisition strategy is substantially similar to the one successfully employed by CEO Tom Hill and his team, including 25 current Summit employees, at Oldcastle Materials, CRH plc’s U.S. operations. Over a 16-year period, Mr. Hill helped execute over 173 acquisitions and approximately $6.3 billion of invested capital to make Oldcastle the largest U.S. integrated heavy-side business. Over that period, Oldcastle Materials reported that it grew sales from less than $0.3 billion in 1992 to $7.4 billion in 2008, representing a compound annual growth rate of over 25%.future growth.

Enhance margins and free cash flow generation through implementation of operational improvements. Our management team’s demonstrated ability at Oldcastle Materialsteam includes individuals with decades of experience in improving operating marginsour industry and proven success in integrating acquired businesses and organically growing operations. This experience represents a largesignificant source of value.value to us. Based on our management team’s prior acquisition experience in the heavy-side business,our industry, we believe margin improvement is achievable within 1218 to 1824 months of acquisition. These gainsmargin improvements are accomplished through proven profit optimization plans, including implementing a systematic pricing strategy and thorough operations review, leveraging information technology and financial systems to control costs, managing working capital, and achieving scale-driven purchasing synergies along withand fixed overhead control and reduction. Our regional presidents, supported by our central operations, risk management and finance and information technology teams, drive the implementation of detailed and thorough profit optimization plans atfor each acquisition post close.close, which typically includes, among other things, implementation of a systematic pricing strategy and an equipment utilization analyses that assess repair and maintenance spending, the health of each piece of equipment and an utilization review to ensure we are maximizing productivity and selling any pieces of equipment that are not needed in the business.

Leverage vertically-integrated and strategically located operations for growth. As a vertically-integrated supplierWe believe that our vertical integration of heavy-side buildingconstruction materials, in attractive markets, we believe we haveproducts and services is a significant competitive advantage asthat we seekwill leverage to grow our share in our existing markets and enter into new markets. The majorityA significant portion of raw materials used to produce our products and provide services to our servicescustomers are internally supplied. We believe our vertically-integrated business modelsupplied, which enables us to operate as a single source provider of materials, products and construction capabilities,paving and related services, creating cost, convenience and reliability advantages for our customers, while at the same time creating significant cross-marketing opportunities among our interrelated businesses.

Leverage our position as a preferred buyer of privately held companies in our industry. Our business model fosters entrepreneurship in local markets while reaping the benefits of best practices and economies of scale brought by the larger group. Business owners have found our modelWe believe the value proposition we offer to be attractive and we believe potential sellers preferhas allowed us as an acquirer. We seek to largely avoid competitive auctions and have instead individually negotiated each of our acquisitions to date. The ownersnegotiate terms directly with sellers at attractive valuations. A typical acquisition generally involves keeping the local management team of the majority ofacquired business, maintaining key operational decisions at the companies we have acquired have chosenlocal level, providing insightful leadership directed by our President and Chief Executive Officer, a 30-year industry veteran, and instilling an uncompromising commitment to stay on with Summit Materials following the sale and have in many cases chosen to roll equity investments into our parent company as well.employee safety.

Capitalize on expected recovery in U.S. economy and construction markets. In July 2012, MAP-21 was enactedThe residential and took effectnonresidential markets are starting to show positive growth signs in October 2012. MAP-21varying degrees across our markets indicating at least modest growth in the near to medium term. Of our markets, Texas is a 27-month, approximately $105 billion transportation funding program that provides for $40.4 billioncurrently experiencing the most active growth. According to the PCA’s August 2014 Regional Construction InVue, total construction spending in Texas has increased 14.9% from June 2013 to June 2014 and $41.0 billion for highway infrastructure investmentsresidential and nonresidential spending each increased 0.2% and 39.0%, respectively. We are capitalizing on the growth in fiscal years 2013the Texas market by significantly increasing our investment there through acquisitions in Houston and 2014, respectively. The spending levels are consistent with the preceding federal transportation funding program. However, given the nation’s aging infrastructure and considering longstanding historical spending trends, we expect U.S. infrastructure investment growth to resume.Permian Basin region of west Texas in 2014. We believe we are well-positioned to capitalize on any such increase in investment. In addition,that we have sufficient exposure to the residential and non-residentialnonresidential end-markets to participate inbenefit from a potential recovery in theseall of our markets. Given the challenging current environment, we expect to leverage this exposure to realize significant upside in the medium term.

Our Industry

The U.S. heavy-side buildingconstruction materials industry is comprisedcomposed of four primary sectors: (i) aggregates, (ii) cement, (iii)aggregates; cement; ready-mixed concrete; and asphalt paving mix and (iv) ready mixed concrete, eachmix. Each of whichthese materials is widely used in most forms of construction activity. Participants in these sectors typically range from small, privately-held companies focused on a single product or market to multinational corporations that offer a wide array of construction materials and construction services. Competition is constrained in part by the distance materials maycan be transported efficiently, transported, resulting in largelypredominantly local or regional operations. Due to the lack of product differentiation, competition for all of our products is predominantly based on price and, to a lesser extent, quality of products and service. As a result, the prices we charge our customers are not likely to be materially different from the prices charged by other producers in the same markets. Accordingly, our profitability is generally dependent on the level of demand for our products and our ability to control operating costs.

Transportation infrastructure projects, driven by both statefederal and federalstate funding programs, represent a significant share of the U.S. heavy-side buildingconstruction materials market. The current federal funding program, MAP-21, was enacted in July 2012 and took effect in October 2012. MAP-21 is a 27-month, approximately $105 billion transportation funding program that provides for $40.4 billion and $41.0 billion for highway infrastructure investments in fiscal years 2013 and 2014, respectively. In addition to federal funding, highway construction and maintenance funding is also available through state, county and local agencies. Our five largest states by revenue (Texas, Kansas, Kentucky, Missouri and Utah, which represented approximately 27%25%, 16%20%, 14%17%, 11%12% and 11%, respectively, of our total revenue for the year ended December 29, 2012) eachin 2013) have funds whosewith constitutionally-protected revenue sources are constitutionally protected and may only be spent ondedicated for transportation projects:

 

Texas’ 2012—2013Texas Department of TransportationTransportation’s budget from 2014 to 2016 is $19.8 billion, a $3.9 billion increase from the previous 2010-2011 biennium budget.

$25.3 billion.

 

Kansas has a 10 year $8.2 billion highway bill that was passed in May 2010.

 

KentuckyKentucky’s biennial highway construction plan has a two year $4.5funding of $3.6 billion highway bill that was passed in April 2012.

from July 2014 to June 2016.

 

Missouri has an estimated $700.0 million$0.7 billion in annual construction funding committed to essential road and bridge programs.

programs through 2017.

 

Utah’s fiscal year 2012 transportation investment fund increasedhad $3.0 billion committed through 2018.

Demand for our products is observed to have low elasticity in 2012relation to $1.1 billion.

Construction Materialsprices. We believe this is partially explained by the absence of competitive replacement products and relatively low contribution of our products to total construction costs. We do not believe that increases in our products’ prices are likely to affect the decision to undertake a construction project since these costs usually represent a small portion of total construction costs.

Aggregates

Aggregates are key material components used in the production of cement, ready-mixed concrete and asphalt paving mixes and concrete for the residential, nonresidential and public infrastructure highway, commercial and residential construction markets and are also widely used for various applications and products, such as road and building foundations, railroad ballast, erosion control,

filtration, roofing granules and in solutions for snow and ice control. Generally extracted from the earth using surface or underground mining methods, aggregates are produced from natural deposits of various materials such as limestone, sand and gravel, granite and trap rock. Once extracted, processed and graded, aggregates are supplied directly to their end use or incorporated for further processing into construction materials and products, such as cement, ready-mixed concrete and asphalt paving mix, and ready mixed concrete.mix.

According to the February 2013March 2014 U.S. Geological Survey, approximately 1.281.3 billion tons of crushed stone with a value of approximately $11.5$11.9 billion was produced in the United States in 2012,2013, in line with 1.28the 1.3 billion tons produced in 2011.2012. Sand and gravel production was approximately 907935 million tons in 20122013 valued at approximately $6.25$6.7 billion, up from 894899 million tons produced in 2011.2012. The U.S. aggregate industry is highly fragmented relative to other building product markets, with numerous participants operating in localized markets and the top sixten players controlling approximately 30% of the national market in 2011.2013. In January 2013,February 2014, the USGSU.S. Geological Survey reported that a total of 1,550 companies operating 4,000 quarries and 91 underground mines produced or sold crushed stone in 20122013 in the United States.

Transportation cost iscosts are a major variable in determining aggregate pricing and marketing radius. The cost of transporting aggregate products from the plant to the market often equates to or exceeds the sale price of the product at the plant. As a result of the high transportation costs and the large quantities of bulk material that have to be shipped, finished products are typically marketed locally. High transportation costs are responsible for the wide dispersion of production sites. Where possible, construction material producers maintain operations adjacent to highly populated areas to reduce transportation costs and enhance margins.

We believe that the long-term growth of the market for aggregates is largelypredominantly driven by growth in population, jobsemployment and households, which impactin turn affects demand for nonresidential construction, including stores, shopping centers and restaurants and increases transportation infrastructure spending and changes in population density.spending. In the past fewrecent years, the recession and subsequent slow recovery in the United States has led to a decrease in overall private and public infrastructure construction activity. Despite the increase in federal stimulus spending, public construction activity has also declined over this period, albeit less than private construction markets. In fact, through the prior three U.S. recessions (July 1990 through March 1991, March 2001 through November 2001 and December 2007 through June 2009), highway spending in real dollars grew 1.8% annually on average in years with a recession as compared to 0.9% annually on average in years without a recession. While short-term demand for aggregates fluctuates with economic cycles, the

declines have historically been followed by strong recovery, with each peak establishing a new historical high. In addition, according to the U.S. Geological Survey, during periods of economic decline in which aggregates volumes sold has decreased, prices have historically continued to grow, as illustrated in the following table:

LOGO

A significant portion of annual demand for aggregates is derived from large public infrastructure and highway construction projects. According to the Montana Contractors’ Association, approximately 38,000 tons of aggregate are required to construct a one mile stretch of a typical four-lane interstate highway. Highways located in markets with significant seasonal temperature variances are particularly vulnerable to freeze-thaw conditions that exert excessive stress on pavement and leadslead to more rapid surface degradation. Surface maintenance repairs, as well as general highway construction, occur in the warmer months, resulting in a majority of aggregates production and sales in the eight monthsperiod from April through November in these markets.most states.

Cement

Portland cement, an industry term for the common cement in general use around the world, is the basic ingredient of concrete and is made from a combination of limestone, shale, clay, silica and iron ore. TogetherIt is a fundamental building material consumed in several stages throughout the construction cycle of residential, nonresidential and public infrastructure projects. It is a binding agent that, when mixed with sand or aggregates and water, cement creates the paste that binds the aggregates together when making concrete.produces either ready-mixed concrete or mortar and is an important component of other essential construction materials. Cement is sold either in bulk or in bags as branded products, depending on its final user. Few construction projects can take place without utilizing Portland cement somewhere in the design, making it a key ingredient used in the nation’s construction industry. The majority of all cement shipments are sent to ready mixedready-mixed concrete operators. The remainderremaining shipments are directed to manufacturers of concrete related products such as block and precast, oil well service companies, contractorsprecast. Nearly two-thirds of U.S. consumption occurs between May and government entities.November, coinciding with end-market construction activity.

Portland cement is made from common materials such as limestone, shale, clay, silica, and iron ore. The principleprincipal raw materials in cement are a blend of 88%approximately 80% limestone 6%and approximately 5% shale, with the remaining raw materials being clay and iron ore. Generally, the limestone and shale are mined from quarries located on site with the production plant.

These core ingredients are blended and crushed into a fine grind and then preheated and ultimately introduced into a kiln heated to about 2,700°3,000°F. Under this extreme heat, a chemical transformation occurs uniting the elements to form a new substance with new physical and chemical characteristics. This new substance is called clinker and it is formed into pieces about the size of marbles. The clinker is then cooled and later ground into a fine powder that then is classified as Portland cement.

Cement production in the United States is distributed among 98 production facilities located across 34 states and is a capital-intensive business with variable costs dominated by raw materials and energy required to fuel the kiln. Building new plants is challenging given the extensive permitting that is requiredrequirements and significant costs.capital investment requirements. We believeestimate new plant construction costs in the United States are estimated atto be approximately $250-300 per ton.ton, not including costs for property or securing raw materials and the required distribution network. Assuming construction costs of $275 per ton, a 1.25 million ton facility, such as the one Continental Cement operates,comparable to our cement plant’s potential annual capacity, would cost approximately $343.8 million to construct.

As reported by the PCA in the 20122013 North American Cement Industry Annual Yearbook, consumption is down significantly from the industry peak of 141141.1 million tons in 2005 to 7986.5 million tons in 20112012 because of the decline in U.S. construction sector activity. DomesticU.S. cement consumption has at times outpaced domestic production capacity with the shortfall being supplied with imports, primarily from China, Canada, Columbia,Greece, Mexico and South Korea. The PCA reports that cement imports have declined since their peak of 3939.6 million tons in 2006 to 77.8 million tons in 2011,2012, in a manner indicative of the industry’s general response to the current demand downturn. DespiteIn addition to the reduction in imports, U.S. excess capacity utilization declinedincreased from 95%5% in 2006 to 59%34% in 20112012 according to the PCA. Continental CementOur cement plant operated above the industry mean at 68%78% capacity utilization in 20112013 as its markets did not suffer the pronounced demand declines seen in states like Florida, California and Arizona. Demand is seasonal in nature with nearly two-thirds of U.S. consumption occurring between May and October, coinciding with end-market construction activity.

Cement production in the United States is distributed among 101 production facilities located across 36 states. The EPA has new emission standards for Portland cement plants (“NESHAP”) that are due to come into effect in 2015. On December 20, 2012, the EPA signed the final NESHAP rule, which wasis due to come into effect in 2015 and is less stringent than previous drafts.drafts of the rule. The PCA had estimated based on thea previous draft rule that 18 plants could be forced to close due to the inability to meet NESHAP standards or because the compliance investment required may not be justified on a financial basis. These potential closures represent approximately 20 million tons of clinker capacity, or 20% of current capacity in the United States.

Continental Cement’sOur cement plant utilizes alternative fuel (hazardous and non-hazardous) as well as coal and petroleum coke and, as a result, is subject to HWC-MACT standards, rather than NESHAP. We expect HWC-MACT standards to generally conform to NESHAP, for which we believe we are mostlysubstantially in compliance, ahead of the new standards’ effective date of the NESHAP standards.date. Any additional costs to comply with the NESHAPHWC-MACT standards are not expected to be material.

Ready-Mixed Concrete

Ready-mixed concrete is one of the most versatile and widely used materials in construction today. Its flexible recipe characteristics allow for an end product that can assume almost any color, shape, texture and strength to meet the many requirements of end users that range from bridges, foundations, skyscrapers, pavements, dams, houses, parking garages, water treatment facilities, airports, tunnels, power plants, hospitals and schools. The versatility of ready-mixed concrete gives engineers significant flexibility when designing these projects.

Cement, coarse aggregate, fine aggregate, water and admixtures are the primary ingredients that constitute a basic ready-mixed concrete. The cement and water are combined and a chemical reaction is produced called hydration. This paste or binder represents between 15 to 20% of the volume of the mix that coats each particle of aggregate and serves as the agent that binds the aggregates together, according to the NRMCA. The aggregates represent 60 to 75% of the mix by volume, with a small portion of volume (5 to 8%) consisting of entrapped air that is generated by using air entraining admixtures. Once fully hydrated, the workable concrete will then harden and take on the shape of the form in which it was placed.

The quality of a concrete mix is generally determined by the weight ratio of water to cement. Higher quality concrete is produced by lowering the water-cement ratio as much as possible without sacrificing the workability of the fresh concrete. Specialty admixtures such as high range water reducers can aid in achieving this condition without sacrificing quality.

Other materials commonly used in the production of ready-mixed concrete include fly-ash, a waste by-product from coal burning power plants, silica fume, a waste by-product generated from the manufacture of silicon and ferro-silicon metals, and ground granulated blast furnace slag, a by-product of the iron and steel manufacturing process. All of these products have cemetitious properties that enhance the strength, durability and permeability of the concrete. These materials are available directly from the producer or via specialist distributors who intermediate between the ready-mixed concrete producers and the users.

Given the high weight-to-value ratio, delivery of ready-mixed concrete is typically limited to a one-hour haul from a production plant location and is further limited by a 90 minute window in which newly-mixed concrete must be poured to maintain quality and performance. As a result of the transportation constraints, the

ready-mixed concrete market is highly localized, with an estimated 5,500 ready-mixed concrete plants in the United States according to the NRMCA. According to the NRMCA, 300.9 million cubic yards of ready-mixed concrete was produced in 2013, which is a 4% increase from the 289.8 million cubic yards produced in 2012 but a 34% decrease from the industry peak of 458.3 million cubic yards in 2005.

Asphalt Paving Mix

Asphalt paving mix is the most common roadway material used today. It is a versatile and essential building material that has been used to surface 94%today, covering 93% of the more than 2.02.6 million miles of paved roadways in the U.S.,United States, according to the National Asphalt Pavement Association.NAPA.

Typically, asphalt paving mix is placed in three distinct layers to create a flexible pavement structure. These layers consist of a base course, an intermediate or binder course, and a surface or wearing course. These layers vary in thicknesses of three to six inches for base mix, two to four inches for intermediate mix and one to two inches for surface mix.

According to the National Asphalt Pavement Association, the components of asphalt paving mix by weight are approximately 95% aggregates and 5% asphalt cement, a petroleum based product that serves as the binder. The ingredients are then metered, mixed and heated to a temperature in excess of 300° F before being placed in a truck and delivered to the jobsite for final placement.

Asphalt pavement is generally 100% recyclable and reusable and is the most reused and recycled pavement material in the United States. Reclaimed asphalt pavement can be incorporated into new pavement at replacement rates in excess of 30% depending upon the mix and the application of the product. We actively engage in the recycling of previously used asphalt pavement and concrete. This material is crushed and repurposed in the construction cycle. Approximately 68.3 million tons of used asphalt is recycled annually by the industry according to a December 2013 National Asphalt Pavement Association survey.

The use of Warm Mix Asphaltwarm mix asphalt (“WMA”) or “green” asphalt is gaining popularity. The immediate benefit to producing WMA is the reduction in energy consumption required by burning fuels to heat traditional hot mix asphalt (“HMA”) to temperatures in excess of 300°F at the production plant. These high production temperatures are needed to allow the asphalt binder to become viscous enough to completely coat the aggregate in the HMA, have good workability during laying and compaction, and durability during traffic exposure. According to the Federal Highway Administration, WMA can reduce the temperature by 50 to 70°F, resulting in lower emissions, fumes and odors generated at the plant and the paving site.

According to the National Asphalt Pavement Association,NAPA, there are approximately 4,000 asphalt paving mix plants in the United States. As reported by the National Asphalt Pavement Association,States and an estimated 366360.3 million tons of asphalt paving mix was produced in 20112012 which was broadly in line with the estimated 360366.0 million tons produced in 2010.2011.

Ready Mixed Concrete

Ready mixed concrete is one of the most versatile and widely used materials in construction today. Its flexible recipe characteristics allow for an end product that can assume almost any color, shape, texture and strength to meet the many requirements of end users that range from bridges, foundations, skyscrapers, pavements, dams, houses, parking garages, water treatment facilities, airports, tunnels, power plants, hospitals and schools. The versatility of ready mixed concrete gives engineers significant flexibility when designing these projects.

There are five primary ingredients that constitute a basic ready mixed concrete:

cement;

coarse aggregate;

fine aggregate;

water; and

admixtures.

The water and cement are combined and a chemical reaction is produced called hydration. This paste or binder represents between 25 to 35% of the volume of the mix that coats each particle of aggregate and serves as the agent that binds the aggregates together, according to the NRMCA. The aggregates represent 60 to 75% of the mix by volume, with a small portion of volume (5 to 8%) consisting of entrapped air that was generated by using air entraining admixtures. Once fully hydrated, the workable concrete will then harden and take on the shape of the form in which it was placed.

The quality of a concrete mix is generally determined by ratio, by weight of water to cement. Higher quality concrete is produced by lowering the water-cement ratio as much as possible without sacrificing the workability of the fresh concrete. Specialty admixtures such as high range water reducers can aid in achieving this condition without sacrificing quality.

Other materials commonly used in the production of ready mixed concrete include fly-ash, a waste by-product from coal burning power plants, silica fume, a waste by-product generated from the manufacture of silicon and ferro-silicon metals, and ground granulated blast furnace slag, a by-product of the iron and steel manufacturing process. All of these products have cemetitious properties that enhance the strength, durability and permeability of the concrete. These materials are available directly from the producer or via specialist distributors who intermediate between the source producers and the ready mix concrete user.

Given the high weight-to-value ratio, delivery of ready mixed concrete is typically limited to a one-hour haul from a production plant location and is further limited by a 90 minute window in which newly mixed concrete must be poured to maintain quality and performance. As a result of the transportation constraints, the ready mixed concrete market is highly localized, with an estimated 5,500 ready mixed concrete plants in the United States according to the NRMCA. According to the NRMCA, 291 million cubic yards of ready mixed concrete was produced in 2012, which is a 9% increase from the 266 million cubic yards produced in 2011 but a 36% decrease from the industry peak of 458 million cubic yards in 2005.

Our Operations

We operate our construction materials and highway constructionproducts and paving and related services businesses through local operations and marketing teams, which work closely with our end customers to deliver the products and services that meet each customer’s specific needs for a project. We believe that this strong local presence gives us a competitive advantage by keeping our costs low and allowing us to obtain a unique understanding for the evolving needs of our customers.

We have construction materials operations in 1817 U.S. states across the Central, West and East regions. Eachin Vancouver, Canada. Our business in each region is vertically-integrated invertically-integrated. We supply aggregates internally for the aggregates,production of cement, ready-mixed concrete and asphalt paving mix, anda significant portion of which is used internally by our paving and related construction services businesses. Our Central region also manufactures cement, produces ready mixed concrete, and operates municipal landfill. Our East region has liquid asphalt terminal operations and provides concrete paving services.

As a result of our vertically-integrated operations, our end products are generally sold downstream to contractors and shipped directly toIn the job site. Approximately 74%year ended December 28, 2013, approximately 73% of our aggregates production is was

sold directly to outside customers with the remaining amount being further processed by us and sold as a downstream product. In addition, we operate a municipal waste landfill and a construction and demolition debris landfill in our Central region and we have liquid asphalt terminal operations in our East region.

Additionally, approximately 75%Approximately 83% of our asphalt paving mix products arewas installed by our paving and related construction services businesses.businesses in the year ended December 28, 2013. We charge a market price and competitive margin at each stage of the production process in order to optimize profitability across our operations.

Production Value Chain

Customer Our production value chain is illustrated as follows:

 

LOGO

LOGO

Construction Materials

We are a leading provider of construction materials in the markets we serve across the Central, West and East regions.serve. Our construction materials operations are comprisedcomposed of aggregateaggregates production, including:including crushed stone and construction sand and gravel; hotgravel, cement and ready-mixed concrete production and asphalt paving mix asphalt production; ready mixed concrete production; and the production of cement.production.

Our AggregateAggregates Operations

AggregateAggregates Products

We mine limestone, gravel, and other natural resources from 7682 crushed stone quarries and 3646 sand and gravel deposits throughout the United States. Aggregates are produced mainly from blasting hard rock from quarries and then crushing and screening it to various sizes to meet our customers’ needs. The production of aggregates also involves the extraction of sand and gravel, which requires less crushing, but still requires screening for different sizes. Aggregate production utilizes capital intensive heavy equipment which includes the use of loaders, large haul trucks, crushers, screens and other heavy equipment at quarries.

Once extracted, the minerals are processed and/or crushed on site into crushed stone, concrete and masonry sand, specialized sand, pulverized lime or agricultural lime. The minerals are processed to meet customer specifications or to meet industry standard sizes. Crushed stone is used primarily in ready mixedready-mixed concrete, asphalt paving mix, and the construction of road base for highways.

Transportation costs are a major variable in determining aggregate pricing and marketing radius. The cost of transporting aggregate products from the plant to the market often equates to or exceeds the sale price of the products at the plant. As a result of high transportation costs and the large quantities of bulk material that have to be shipped, finished products are typically marketed locally. High transportation costs are responsible for the wide dispersion of production sites. Where possible, construction materialmaterials producers maintain operations adjacent to highly populated areas to reduce transportation costs and enhance margins.

However, more recently, rising land values combined with local environmental concerns arehave been forcing production sites to move further away from the end-use locations. Our extensive network of quarries, plants and facilities, located throughout our three regions, ensures that weenables us to have a nearby operation to meet the needs of customers in each of our markets.

Aggregate Markets

The shipping distance from each quarry and the proximity to competitors are key factors that determine the geographic market area for each quarry. Each quarry location is unique with regards to demand for each product, proximity to competition and truck availability.

AggregateAggregates Reserves

Our currentJune 28, 2014 estimate of 1.21.9 billion tons of proven and probable reserves of recoverable stone, and sand and gravel of suitable quality for economic extraction is based on drilling and studies by geologists and engineers, recognizing reasonable economic and operating restraints as to maximum depth of extraction and permit or other restrictions.

Reported proven and probable reserves include only quantities that are owned in fee or under lease, and for which all required zoning and permitting have been obtained. Of the 1.21.9 billion tons of aggregateproven and probable aggregates reserves, 0.61.1 billion, or 50%56%, are located on owned land and 0.60.8 billion are located on leased land.

AggregateAggregates Sales and Marketing

The cost of transportation from each quarry and the proximity of competitors are key factors that determine the effective market area for each quarry. Each quarry location is unique with regards to demand for each product, proximity to competition and distribution network. Each of our aggregateaggregates operations is responsible for the sale and marketing of its aggregateaggregates products. Approximately 74%73% of our aggregates production is sold directly to outside customers and the remaining amount is further processed by Summitus and sold as a downstream product. Even though aggregate isaggregates are a commodity product, we work to optimize pricing depending on the site location, availability of particular product, customer type, project type and haul cost. We sell aggregateaggregates to internal downstream operations at market prices.

AggregateAggregates Competition

The U.S. aggregate industry is highly fragmented with numerous participants operating in localized markets. The January 2013 USGSFebruary 2014 U.S. Geological Survey reported that a total of 1,550 companies operating 4,000 quarries and 91 underground mines produced or sold crushed stone in 20122013 in the United States. This fragmentation is a result of the cost of transporting aggregates, which typically limits producers to a market area within approximately 40 miles of their production facilities.

The primary national players includeare large vertically-integrated companies, including Vulcan Materials Company, Martin Marietta Materials, Inc., CRH plc, Heidelberg, Lafarge and Heidelberg withCemex, S.A.B. de C.V., that have a combined estimated market share of approximately 30%.

Competitors by region include:

Central—Martin Marietta, CRH plc, Lafarge and various local suppliers.

West—CRH plc, Heidelberg Cement plc, Martin Marietta, CEMEX, S.A.B. de C.V., Lafarge and various local suppliers.

West—CRH plc, Heidelberg Cement plc, Martin Marietta and various local suppliers.

Central—Martin Marietta, CRH plc, Holcim and various local suppliers.

East—CRH plc, Heidelberg Cement plc, Vulcan and various local suppliers.

East—CRH plc, Heidelberg Cement plc, Vulcan and various local suppliers.

We believe we have a strong competitive advantage in aggregates through our well located reserves high quality in key markets, high quality reserves and our logistic networks. We further share and implement best practices relating to safety, strategy, sales and marketing, production, safety, and environmental and land management. As a result of our vertical integration and local market knowledge, we have a strong understanding of the needs of most of our aggregates customers. Finally,In addition, our companies have a reputation for responsible environmental stewardship and land restoration, which assists us in obtaining new permits and new reserves more easily.reserves.

Our Cement Operations

Cement Products

We operate a highly efficient, technologically advancedhighly-efficient, technologically-advanced integrated cement manufacturing and distribution system located near Hannibal, Missouri, 100 miles north of St. Louis along the Mississippi River. We also operate an on-site waste fuel processing facility, which can reduce fuel costs for the plant by up to 50%. Our cement plant is one of only 1112 with hazardous waste fuel facilities permitted and operating out of 11398 total cement plants in the United States. The recently completedOur cement plant upgrade, which effectively doubled cementplant’s potential capacity tois 1.25 million tons per annum positions us ahead ofand is in substantial compliance with the majority of U.S. plants in complying with 2013 NESHAP pollution limits for cement plants, as Continental Cement is covered byin advance of the EPA’s HWC-MACT regulations, rather than the PC-MACT regulations, due to its waste fuel processing capabilities.

Continental Cement’s plant utilizes alternative fuel (hazardous and non-hazardous) as well as coal and petroleum coke and, as a result, is subject to HWC-MACT standards, rather than NESHAP.effective date. We expect HWC-MACT standards, to which we are subject, to generally conform to NESHAP, for which we are mostly in compliance, ahead of the effective date of the NESHAP standards. Any additional costs to comply with the NESHAP standards are not expected to be material.

NESHAP.

Cement Markets

Cement is a product that is costly to transport over land.transport. Consequently, the radius within which a typical cement plant is competitive extends for no more thanonly up to 150 miles for the most common types of cement. Continental Cement’s served markets are eastern Missouri, southeastern Iowa, and central/northwestern Illinois.miles. Cement is distributed to local customers primarily by truck from our plant.plant and distribution terminals in St. Louis, Missouri and Bettendorf, Iowa. We also transport cement by inland barges on the Mississippi River to our storage and distribution terminals in St. Louis,terminals. In 2013, approximately 15% of our cement sales were delivered by barge. Our location on the Mississippi River extends our market beyond the typical 150 miles, as barge transport is more cost effective than trucking. Our markets include eastern Missouri, southeastern Iowa and Bettendorf, Iowa.central/northwestern Illinois.

Cement Sales and Marketing

Continental Cement’sOur cement customers are ready mixedready-mixed concrete and concrete productproducts producers in eastern Missouri, central Illinois, and eastern Iowa. Cement is distributed to local customers primarily by truck fromcontractors within our cement plant in Hannibal, Missouri. We also transport cement by inland barges to our storage and distribution terminals in St. Louis, Missouri and Bettendorf, Iowa.markets. Sales are made on the basis of competitive prices in each market and, as is customary in the industry, we do not typically enter into long-term sales contracts.

Cement Competition

Continental Cement’sConstruction of cement production facilities is highly capital intensive and requires long lead times to complete engineering design, obtain regulatory permits, acquire equipment and construct a plant. Most U.S. cement producers are owned by large foreign companies operating in multiple international markets. Our largest competitors areinclude Holcim (US) Inc., and Lafarge North America Inc., whose parent companies announced a merger plan in April 2014 that would create the world’s largest cement maker, in addition to Buzzi Unicem USA, Inc. and Eagle Materials.Materials Inc. Competitive factors include price, reliability of deliveries, location, quality of cement and support services. With a new low-cost cement plant, on-site raw material aggregate supply, a network of cement terminals, and longstanding customer relationships, we believe we are well positioned to serve our customers.

Our Ready-mixed Concrete Operations

Ready-mixed Concrete Products

We believe our West and Central regions are leaders in the supply of ready-mixed concrete in their respective markets. The West region has ready-mixed concrete operations in the Houston and Midland/Odessa, Texas, Salt Lake Valley, Utah, Twin Falls, Idaho and Grand Junction, Colorado markets. Our Central region supplies ready-mixed concrete to the Wichita, Kansas and Columbia, Missouri markets and surrounding areas. We produce ready-mixed concrete by blending aggregates, cement, chemical admixtures in various ratios and water at our concrete production plants and placing the resulting product in ready-mixed concrete trucks where it is then delivered to our customers.

Our aggregates business serves as the primary source of the raw materials for our concrete production, functioning essentially as a supplier to our ready-mixed concrete operations. Different types of concrete include lightweight concrete, high performance concrete, self compacting/consolidating concrete and architectural concrete and are used in a variety of activities ranging from building construction to highway paving.

We operated 37 ready-mixed concrete plants and 357 concrete delivery trucks in the West region and 17 ready-mixed concrete plants and 154 concrete delivery trucks in the Central region as of June 28, 2014.

Ready-mixed Concrete Competition

Ready-mixed concrete production requires relatively small amounts of capital to build a concrete batching plant and acquire delivery trucks. As a result, in each local market, we face competition from numerous small producers, as well as other large vertically-integrated companies with facilities in multiple markets. There are approximately 5,500 ready-mixed concrete plants in the United States, and in 2013 the United States ready-mixed concrete industry produced approximately 300.9 million cubic yards of ready-mixed concrete according to the NRMCA.

Our ready-mixed concrete operations compete with CEMEX, S.A.B. de C.V. in Texas and CRH plc in Utah and Colorado and various other privately owned competitors in other parts of the West and Central regions.

Competition among ready-mixed concrete suppliers is generally based on product characteristics, delivery times, customer service and price. Product characteristics such as tensile strength, resistance to pressure, durability, set times, ease of placing, aesthetics, workability under various weather and construction conditions as well as environmental effect are the main criteria that our customers vis-à-visconsider for selecting their product. Our quality assurance program produces results in excess of design strengths while optimizing material costs. Additionally, we believe our competitors.strategic network of locations and superior customer service gives us a competitive advantage relative to other producers.

Our Asphalt Paving Mix Operations

Asphalt Paving Mix Products

Our asphalt paving mix products are produced by first heating carefully measured amounts of aggregates at high temperatures to remove the moisture from the materials in an asphalt paving mix plant. As the aggregates are heated, liquid asphalt is then introduced to coat the aggregates. Depending on the specifications of a particular mix, recycled asphalt may be added to the mix, which lowers the production costs. The aggregates used for our production of these products are generally supplied from our quarries or sand and gravel plants. The ingredients are metered, mixed and brought up to a temperature in excess of 300°F before being placed in a truck and delivered to the jobsite for final placement.

We operate twoAs of June 28, 2014, we operated 21 asphalt paving mix plants in the CentralWest region, 23five plants in the WestCentral region and 1514 plants in the East region. 93%Approximately 95% of our plants can utilize recycled asphalt pavement.

Asphalt Paving Mix Markets

Asphalt paving mix is generally applied at high temperatures and prolonged exposure to air causes the mix to lose temperature and harden. Therefore delivery is typically within close proximity to the asphalt paving mix plant. Each asphalt paving mix plant is unique in that local market demand, proximity to competition, transportation costs and supply of aggregates and liquid asphalt vary widely from market to market. Most of our hot mix asphalt operations use a combination of company-owned and hired haulers to deliver materials to job sites.

Asphalt Paving Mix Sales and Marketing

Approximately 75%83% of the asphalt paving mix we produce is installed by our own paving crews. To optimize profitability, we sell asphalt paving mix internally at market prices. The rest is sold on a per ton basis to road contractors for the construction of roads, driveways and parking lots, as well as directly to state departments of transportation and local authorities.

Asphalt Paving Mix Competition

According to the National Asphalt Pavement Association,NAPA, there are approximately 4,000 asphalt paving mix plants in the United States. As reported by the National Asphalt Pavement Association,States and an estimated 366360.3 million tons of asphalt paving mix was produced in 2011.

2012. Our asphalt paving mix operations compete with CRH plc and other local suppliers in each of our three regions.

Based on availability of internal aggregate supply, quality, operating efficiencies, and location advantages, we believe we are well-positionedwell positioned vis-à-vis our competitors.

Our Ready Mixed Concrete Operations

Ready Mixed Concrete Products

We believe our CentralAsphalt paving mix is generally applied at high temperatures. Prolonged exposure to air causes the mix to lose temperature and West regions are leaders inharden. Therefore, delivery is typically within close proximity to the asphalt paving mix plant. Local market demand, proximity to competition, transportation costs and supply of ready mixed concrete. Our Central region supplies concreteaggregates and liquid asphalt vary widely from market to the Wichita, Kansasmarket. Most of our asphalt operations use a combination of company-owned and Columbia, Missouri markets and surrounding areas. The West region has ready mixed concrete operations in the Salt Lake Valley, Utah, Twin Falls, Idaho and Grand Junction, Colorado markets. We produce ready mixed concrete by blending aggregates, cement, chemical admixtures in various ratios and water at our concrete production plants and placing the resulting product in ready mixed concrete trucks where it is then deliveredhired haulers to our customers.deliver materials to job sites.

Our aggregates business serves as the primary source of the raw materials for our concrete production, functioning essentially as a supplier to our ready mixed concrete operations. Different types of concrete include Lightweight Concrete, High Performance Concrete, Self Compacting/Consolidating Concrete and Architectural Concrete and are used in a variety of activities ranging from building construction to highway paving.

We operate 11 ready mixed concrete plants in the Central region and approximately 113 concrete delivery trucks. We also operate 16 ready mixed concrete plants and 182 delivery trucks in the West region. We currently do not have any ready mixed concrete plants in the East region.

Ready Mixed Concrete Competition

There are approximately 5,500 ready mixed concrete plants in the United States, and in 2012 the United States ready mixed industry produced approximately 291 million cubic yards of ready mixed concrete according to the NRMCA.

Our ready mixed concrete operations compete with CRH plc in Utah and Colorado, Lafarge in Kansas and various other privately owned competitors in other parts of the Central and Western regions.

Competition among ready mixed concrete suppliers is generally based on product characteristics, delivery times, customer service and price. Product characteristics such as tensile strength, resistance to pressure, durability, set times, ease of placing, aesthetics, workability under various weather and construction conditions as well as environmental impact are the main criteria that our customers consider for selecting their product. Our quality assurance program continually produces results in excess of design strengths while economizing on material costs. Additionally, we believe our strategic network of locations and superior customer service gives us a competitive advantage relative to other producers.

Asphalt Paving and Related Construction Services

As part of our vertical integration strategy, we provide asphalt and concrete paving and related construction services to both the private and public and privateinfrastructure sectors as either a prime or sub-contractor. These services complement our heavy construction materials businessand products businesses by providing a reliable downstream outlet, through which to distribute these products, in addition to the normalour external distribution channels.

Our asphalt paving and constructionrelated services businesses bid on both public and private construction and public infrastructure projects in each of their respective local markets. We only provide constructionpaving and related services operations as a complement to our heavy construction materials operation, which we believe is a major competitive strength. Other factors impactingFactors affecting competitiveness in this business segment include price, estimating abilities, knowledge of local markets and conditions, project management, financial strength, reputation for quality and the availability of machinery and equipment.

Our contractsContracts with our customers are primarily “fixedfixed unit price”price or “fixedfixed price. Under fixed unit price contracts, we provide materials or services at fixed unit prices (for example, dollars per ton of asphalt placed). While the fixed unit price contract shifts the risk of estimating the quantity of units required for a particular project to the customer, any increase in our unit cost over the expected unit cost in the bid amount, whether due to inflation, inefficiency, errors in our estimates or other factors, is borne by us unless otherwise provided in the contract. Most of our contracts contain escalators for increases in liquid asphalt prices.

Customers

Our business is not dependent on any single customer or a few customers,customers. Therefore, the loss of whichany single or particular small number of customers would not have a material adverse effect on theany individual respective market in which we operate or on us as a whole. No individual customer accounted for more than 10% of our consolidated 20122013 revenue.

Seasonality

Use and consumption of our products fluctuate due to seasonality. Nearly all of the products used by us, and by our customers, in the public or private construction industryor public infrastructure industries are used outdoors. Our highway operations and production and distribution facilities are also located outdoors. Therefore, seasonseasonal changes and other weather-related conditions, in particular extended rainy and cold weather in the spring and fall and major weather events, such as hurricanes, tornadoes, tropical storms and heavy snows, can adversely affect our business and operations through a decline in both the use of our products and demand for our services. In addition, the construction materials business production and shipment levels follow activity in the construction industry, which typically occurs in the spring, summer and fall. Warmer and drier weather during the second and third quarters of our fiscal year typically result in higher activity and revenue levels during those quarters. The first quarter of our fiscal year has typically lower levels of activity due to weather conditions.

Backlog

Our products are generally delivered upon receipt of orders or requests from customers, or shortly thereafter. Accordingly, the backlog associated with product sales is converted into revenue within a relatively short period of time. Inventory for products is generally maintained in sufficient quantities to meet rapid delivery

requirements of customers. A period over period increase or decrease of backlog does not necessarily result in an improvement or a deterioration of our business. Our backlog includes only those products and projects for which we have obtained a purchase order or a signed contract with the customer and does not include products purchased and sold or services awarded and provided within the period.

Our paving and related services backlog represents our estimate of revenue that will be realized under paving and related services contracts. We generally include a project in at the time it is awarded and funding is in place. Many of our paving and related services are awarded and completed within one year and, therefore, may not be reflected in our beginning or ending contract backlog. Historically, we have not been materially adversely affected by contract cancellations or modifications. However, in accordance with applicable contract terms, substantially all contracts in our backlog may be cancelled or modified by our customers.

The following table sets forth, by product, our backlog as of the indicated dates:

(in thousands)  June 28,
2014
   June 29,
2013
   December 28,
2013
   December 29,
2012
 

Aggregate (in tons)

   6,067     5,740     5,153     3,881  

Ready-mixed concrete (in cubic yards)

   209     259     138     155  

Asphalt (in tons)

   2,815     3,263     2,387     2,314  

Paving and related services

  $441,088    $444,243    $359,263    $288,673  

Intellectual Property

We do not own or have a license or other rights under any patents that are material to anyour business.

Employees

As of our businesses.

Employment

WeJune 28, 2014 we had approximately 3,1003,800 employees, of whichwhom approximately 80% are75% were hourly workers and the remainder are full timewere salaried employees, as of December 29, 2012.employees. Because of the seasonal nature of our industry, many of our hourly and certain of our full time employees are subject to seasonal layoffs. The scope of layoffs varyvaries greatly from season to season as they are largelypredominantly a function of the type of projects in process and the weather induring the late fall through early spring.

Approximately 5%5.3% of our hourly employees are union members and approximately 0.1%0.4% of our full time salaried employees are union members. We believe we enjoy a satisfactory working relationship with our employees and their unions.

Properties

Our headquarters are located in a 7,00016,653 square foot office space, which we lease in Washington, D.C.,Denver, Colorado, under a lease expiring on August 31, 2017.

WeAs of June 28, 2014, we also operate 112operated 128 quarries and sand deposits, 40 asphalt paving mix plants 27and 54 fixed and portable ready mixedready-mixed concrete plants.plants and had 35 office locations.

The following chart sets forth specifics of our production and distribution facilities:facilities as of June 28, 2014:

 

PropertyRegion

 

Owned / Leased

Property
 AggregatesOwned/ Leased AggregatesAsphalt
Plant
 Ready
Mixed
Concrete
 Cement Landfill OtherOther*

Amity, ARWest

DeQueen, Arkansas Leased  X     —  

DeQueen, ARWest

 LeasedX

Kirby, AR

Arkansas
 Leased Sandstone     

West

Texarkana, AR

Arkansas
 Leased  X     —  

West

Clark, CO

Colorado
 Leased Sand and Gravel     

West

Craig, CO

Colorado
 Owned Sand and Gravel X     —  

West

Craig, CO

Colorado
 Leased Sand and Gravel     

West

Craig, CO

Colorado
 Leased Sand and Gravel     

West

Delta, CO

Colorado
 Owned/Leased Sand and Gravel     

West

Delta, CO

Colorado
 Leased Sand and Gravel     

West

Durango, CO

Colorado
 Leased Sand and Gravel X     —  

West

Durango, CO

Colorado
 Leased Sand and Gravel  X    —  

West

Eagle, CO

Colorado
 Leased  X(1)X    

West

Fruita, CO

Colorado
 Leased Sand and Gravel     

West

Grand Junction, CO

Colorado
 Owned Sand and Gravel     

West

Grand Junction, CO

Colorado
 Owned Sand and Gravel     

West

Grand Junction, CO

Colorado
 Owned  X     —  

West

Grand Junction, CO

Colorado
 Owned/Leased Sand and Gravel  X    —  

West

Grand Junction, CO

Colorado
 Leased Sand and Gravel     

West

Grand Junction, CO

Colorado
 Owned   X    —  

Silverton, COWest

 LeasedX

Parachute, CO

Colorado
 Leased Sand and Gravel     

Parachute, COWest

 

Leased

Sand and Gravel

Whitewater, CO

Parachute, Colorado
 Leased Sand and Gravel     

West

Silverton, ColoradoLeased—  —  X—  —  —  

West

Whitewater, COColoradoLeasedSand and Gravel—  —  —  —  —  

West

Whitewater, Colorado Owned/Leased Sand and Gravel     

West

Whitewater, CO

Colorado
 Leased Sand and Gravel     

West

Woody Creek, CO

Colorado
 Owned Sand and Gravel X     —  

Central

Bettendorf, IA

Iowa
 Owned    X   —  

West

Bliss, ID

Idaho
 Owned Sand and Gravel     

West

Burley, ID

Idaho
 Owned Sand and Gravel     

West

Jerome, ID

Idaho
 Owned   X   —   X

West

Rupert, ID

Idaho
 Owned   X    —  

West

Rupert, ID

Idaho
 Leased Sand and Gravel     

West

Rupert, ID

Idaho
 Owned Sand and Gravel     

West

Rupert, ID

Idaho
 Owned Sand and Gravel     

West

Twin Falls, ID

Idaho
 Owned   X   —   X

Central

Andover, KansasOwned—  —  X—  —  —  

Central

Chapman, KS

Kansas
 Leased Limestone     

Easton, KSCentral

Cummings, Kansas Leased Limestone     

Central

Derby, KansasOwned—  —  X—  —  —  

Central

Easton, KansasLeasedLimestone—  —  —  —  —  

Central

El Dorado, KS

Kansas
 Leased   X    —  

Central

El Dorado, KansasOwned—  —  —  —  —  —  

Central

Eudora, KS

Kansas
 Owned Limestone X     —  

Central

Eudora, KS

Kansas
 Leased Limestone     

Central

Eureka, KS

Kansas
 Owned   X    —  

Central

Grantville, KS

Kansas
 Leased Limestone     

Central

Herington, KS

Kansas
 Leased Limestone     

Central

Highland, KS

Kansas
 Leased Limestone     

Central

Holton, KS

Kansas
 Leased Limestone     

Central

Howard, KS

Kansas
 Owned   X    —  

Central

Lawrence, KS

Kansas
 Owned     X  

Central

Lawrence, KansasOwnedLimestone—  —  —  —  —  

Central

Lawrence, KansasOwnedLimestone—  —  —  —  —  

Central

Lawrence, KansasLeasedLimestone—  —  —  —  —  

Central

Leavenworth, KansasLeasedLimestone—  —  —  —  —  

Central

Linwood, KansasOwnedLimestone—  —  —  —  —  

Central

Moline, KansasLeasedLimestone—  —  —  —  —  

PropertyRegion

 

Owned / Leased

Property
 AggregatesOwned/ Leased AggregatesAsphalt
Plant
 Ready
Mixed
Concrete
 Cement Landfill OtherOther*

Lawrence, KSCentral

 OwnedLimestone

Lawrence, KS

OwnedLimestone

Lawrence, KS

Olsburg, Kansas
 Leased Limestone     

Leavenworth, KSCentral

Onaga, Kansas Leased Limestone     

Linwood, KSCentral

 OwnedLimestone

Moline, KS

Osage City, Kansas
 Leased Limestone     

Olsburg, KSCentral

Oxford, KansasLeasedSand and Gravel—  —  —  —  —  

Central

Perry, KansasOwned—  —  —  —  —  X

Central

Perry, Kansas Leased Limestone     

Onaga, KSCentral

Severy, Kansas Leased Limestone     

Osage City, KSCentral

St. Mary’s, Kansas Leased Limestone     

Perry, KSCentral

 OwnedX

Perry, KS

Tonganoxie, Kansas
 Leased Limestone     

St. Mary’s, KSCentral

Topeka, KansasLeased—  X—  —  —  —  

Central

Troy, Kansas Leased Limestone     

Tonganoxie, KSCentral

Washington, Kansas Leased Limestone     

Topeka, KSCentral

 LeasedX

Troy, KS

White City, Kansas
 Leased Limestone     

Washington, KSCentral

 LeasedLimestone

White City, KS

LeasedLimestone

Wichita, KS

Kansas
 Owned     X  

Central

Wichita, KS

Kansas
 Owned  —  —   X   

Central

 

Wichita, KS

Kansas
 Owned   X    —  

Central

Wichita, KSKansasOwned—  —  X—  —  —  

Central

Wichita, Kansas Leased   X    —  

Central

Wichita, KS

Kansas
 Owned      X

Central

Wichita, KSKansasOwned—  —  —  —  —  —  

Central

Wichita, KansasOwned—  —  X—  —  —  

Central

Wichita, KansasOwned—  —  X—  —  —  

Central

Wichita, KansasOwned—  —  X—  —  —  

Central

Wichita, KansasOwned—  —  X—  —  —  

Central

Wichita, KansasOwned—  X—  —  —  —  

Central

Wichita, KansasOwned—  X—  —  —  —  

Central

Wichita, KansasOwned—  X—  —  —  —  

Central

Wichita, Kansas Owned Sand and Gravel     

Central

Wichita, KS

Kansas
 Leased Sand and Gravel     

Wichita, KSCentral

 OwnedX

Wichita, KS

OwnedX

Winchester, KS

LeasedLimestone

Woodbine, KS

LeasedLimestone

Woodbine, KS

OwnedLimestone

Perry, KS

OwnedX

Avon, KY

LeasedX

Beattyville, KY

LeasedLimestoneX

Bethelridge, KY

OwnedLimestoneX

Burnside, KY

Owned/LeasedLimestoneX

Carrollton, KY

LeasedX

Carrollton, KY

LeasedX

Carrollton, KY

OwnedX

Cave City, KY

OwnedLimestone

Cave City, KY

OwnedLimestone

Crestwood, KY

LeasedX

Flat Lick, KY

OwnedX

Glasgow, KY

LeasedX

Glasgow, KY

LeasedLimestone

Glasgow, KY

LeasedLimestone

Horsecave, KY

Owned/LeasedLimestone

Jackson, KY

OwnedX

Lexington, KY

OwnedX

London, KY

LeasedX

Magnolia, KY

Kansas
 Owned Sand and Gravel     

Central

Wichita, KansasOwned—  —  —  —  —  X

Central

Wichita, KansasOwned—  —  —  —  —  —  

Central

Wichita, KansasOwned—  —  —  —  —  X

Central

Wichita, KansasOwned—  —  —  —  —  —  

Central

Wichita, KansasOwned—  —  —  —  —  —  

Central

Wichita, KansasOwnedSand and Gravel—  —  —  —  —  

Central

Winchester, KansasLeasedLimestone—  —  —  —  —  

Central

Woodbine, KansasLeasedLimestone—  —  —  —  —  

Central

Woodbine, KansasOwnedLimestone—  —  —  —  —  

East

Avon, KentuckyLeased—  —  —  —  —  X

East

Beattyville, KentuckyLeasedLimestoneX—  —  —  —  

East

Bethelridge, KentuckyOwnedLimestoneX—  —  —  —  

East

Burnside, KentuckyOwned/LeasedLimestoneX—  —  —  —  

East

Carrollton, KentuckyLeased—  X—  —  —  —  

East

Carrollton, KentuckyLeased—  —  —  —  —  X

East

Carrollton, KentuckyOwned—  —  —  —  —  X

East

Cave City, KentuckyOwnedLimestone—  —  —  —  —  

East

Cave City, KentuckyOwnedLimestone—  —  —  —  —  

East

Crestwood, KentuckyLeased—  X—  —  —  —  

East

Flat Lick, KentuckyOwned—  X—  —  —  —  

East

Glasgow, KentuckyLeased—  —  —  —  —  X

East

Glasgow, KentuckyLeasedLimestone—  —  —  —  —  

East

Glasgow, KentuckyLeasedLimestone—  —  —  —  —  

East

Horsecave, KentuckyOwned/LeasedLimestone—  —  —  —  —  

East

Jackson, KentuckyOwned—  X—  —  —  —  

East

Knob Lick, KentuckyOwnedLimestone—  —  —  —  X

East

Magnolia, KentuckyOwnedSand and Gravel—  —  —  —  —  

East

Middlesboro, KentuckyOwned—  X—  —  —  —  

East

Monticello, KentuckyOwnedLimestone—  —  —  —  —  

PropertyRegion

 

Owned / Leased

Property
 AggregatesOwned/ Leased AggregatesAsphalt
Plant
 Ready
Mixed
Concrete
 Cement Landfill OtherOther*

Middlesboro, KYEast

Morehead, KentuckyLeased—  X—  —  —  X

East

Paris, Kentucky Owned —  —  —  —   X  

Monticello, KYEast

 OwnedLimestone

Morehead, KY

LeasedXX

Paris, KY

Kentucky
 Leased/Owned Limestone X    —   X

East

Pineville, KY

Kentucky
 Leased Limestone     

East

Ravenna, KY

Kentucky
 Leased Limestone X     —  

East

Richmond, KY

Kentucky
 Owned      X

Salyersville, KYEast

 LeasedX

Scottsville, KY

Kentucky
 Leased Limestone     

East

Somerset, KY

Kentucky
 Leased Limestone     

East

Somerset, KY

Kentucky
 Owned/Leased Limestone X    —   X

East

Stanton, KY

Kentucky
 Owned/Leased Limestone X     —  

East

Tompkinsville, KYKentuckyLeasedLimestone—  —  —  —  —  

East

WestLiberty, Kentucky Owned Limestone X    

West Liberty, KYCentral

Amazonia, Missouri Owned Limestone —  —  —  —  —  

Central

Barnard, MissouriLeasedLimestone—  —  —  —  —  

Central

Bethany, MissouriLeasedLimestone—  —  —  —  —  

Central

Blythedale, MissouriLeasedLimestone—  —  —  —  —  

Central

Cameron, MissouriOwned—  —  —  —  —  X

Central

Chesterfield, MissouriLeased—  —  —  X    

Central

Columbia, MissouriLeasedLimestone —  —  —  —  

Amazonia, MOCentral

Columbia, Missouri Owned Limestone X   

Central

Columbia, MissouriOwned —  —  —  —  X

Barnard, MOCentral

Columbia, MissouriOwned—  —  —  —  —  —  

Central

Columbia, MissouriOwned—  —  X—  —  —  

Central

Columbia, MissouriOwned—  —  X—  —  —  

Central

Columbia, MissouriOwned—  —  X—  —  —  

Central

Columbia, Missouri Leased Limestone     

Bethany, MOCentral

Cowgil, Missouri Leased Limestone     

Blythedale, MOCentral

Dawn, Missouri Leased Limestone     

Cameron, MOCentral

 OwnedX

Cowgil, MO

Edinburg, Missouri
 Leased Limestone     

Dawn, MOCentral

Gallatin, Missouri Leased Limestone     

Edinburg, MOCentral

 LeasedHannibal, MissouriOwned Limestone  X    X

Gallatin, MOCentral

 LeasedLimestone

Huntsville, MO

Missouri
 Owned/Leased Limestone     

Central

Maitland, MO

Missouri
 Owned/Leased Limestone     

Central

Mercer, MO

Missouri
 Leased Limestone     

Central

Moberly, MissouriOwned—  —  X—  —  —  

Central

Oregon, MO

Missouri
 Leased Limestone     

Central

Owensville, MissouriOwnedClay—  —  X—  —  

Central

Owensville, MissouriOwned—  —  —  X—  —  

Central

Pattonsburg, MO

Missouri
 Leased Limestone     

Central

Pattonsburg, MO

Missouri
 Leased Limestone     

Central

Princeton, MO

Missouri
 Leased Limestone     

Central

Ravenwood, MO

Missouri
 Leased Limestone     

Central

Savannah, MO

Missouri
 Owned/Leased Limestone     

Stet, MOCentral

Savannah, MissouriLeased—  —  —  —  —  X

Central

Sedalia, Missouri Leased Limestone     

Trenton, MOCentral

St. Louis, MissouriOwned—  —  —  X—  —  

Central

Stet, Missouri Leased Limestone     

Chesterfield, MOCentral

 LeasedX

Columbia, MO

Trenton, Missouri
 Leased Limestone     

Columbia, MOCentral

Pawnee City, Nebraska Leased Limestone     

Columbia, MOWest

 OwnedLimestoneX

Columbia, MO

OwnedX

Columbia, MO

OwnedX

Columbia, MO

OwnedX

Columbia, MO

OwnedX

Hannibal, MO

OwnedLimestoneXX

Moberly, MO

OwnedX

Ownesville, MO

OwnedX

Sedalia, MO

LeasedLimestone

St. Louis, MO

OwnedX

Pawnee City, NE

LeasedLimestone

Sawyer, OK

Oklahoma
 Owned/Leased Sandstone     

East

Jefferson, South CarolinaLeasedGranite—  —  —  —  —  

East

Mt. Croghan, South CarolinaLeasedSand and Gravel—  —  —  —  —  

East

Jellico, TennesseeLeasedLimestone—  —  —  —  —  

West

Amarillo, TexasLeased—  X—  —  —  —  

West

Austin, TexasLeased—  —  —  —  —  X

West

Austin, TexasLeased—  —  —  —  —  —  

West

Big Springs, TexasOwned—  —  X—  —  —  

West

Brookshire, TexasOwned—  —  X—  —  —  

West

Buda, TexasOwned—  X—  —  —  —  

PropertyRegion

 

Owned / Leased

Property
 AggregatesOwned/ Leased AggregatesAsphalt
Plant
 Ready
Mixed
Concrete
 Cement Landfill OtherOther*

Stringtown, OKWest

 LeasedX

Florence, SC

LeasedX

Jellico, TN

Buda, Texas
 Leased Limestone      X

Amarillo, TXWest

Buda, Texas Leased  X     —  

Austin, TXWest

Columbus, TexasLeasedSand and Gravel—  —  —  —  —  

West

Columbus, TexasLeasedSand and Gravel—  —  —  —  —  

West

Columbus, TexasLeased—  —  —  —  —  X

West

Crane, Texas Owned —   X     

Florence, TXWest

 LeasedX

Buda, TX

Cypress, Texas
 Owned —   X     

Buda, TXWest

 LeasedLimestoneX

Buda, TX

LeasedX

Bullard, TX

LeasedX

Corsicana, TX

LeasedX

Denison, TX

Texas
 Owned  X     —  

West

Denison, TX

Texas
 Owned       X

Florence, TX

OwnedLimestoneX

Greenville, TX

Owned X  

West

 

Luling, TX

Eagle Lake, Texas
 Leased Sand and Gravel      X—  

Greenville, TXWest

 OwnedX

Holiday, TX

LeasedX

Mount Pleasant, TX

LeasedX

Paris, TX

OwnedX

Paris, TX

OwnedX

Paris, TX

LeasedX

Royce City, TX

LeasedX

Sulphur Springs, TX

OwnedX

Texarkana, TX

LeasedX

Bluffdale, UT

Eagle Lake, Texas
 Owned Sand and Gravel —  —  —  —  

West

Eagle Lake, TexasLeasedSand and Gravel—  —  —  —  —  

West

Florence, TexasOwnedLimestone—  —  —  —  —  

West

Florence, TexasLeased—   X    —  —  

Midvale, UTWest

Florence, Texas Owned   X    —  —  

Mona, UTWest

Garwood, TexasLeasedSand and Gravel—  —  —  —  —  

West

Greenville, TexasOwned—  X—  —  —  —  

West

Greenville, TexasOwned—  X—  —  —  —  

West

Greenwood, TexasLeasedLimestone—  —  —  —  X

West

Guthrie, TexasLeased—  X—  —  —  —  

West

Hartley, TexasLeased—  X—  —  —  —  

West

Holiday, TexasLeased—  —  —  —  —  X

West

Katy, TexasOwned—  —  X—  —  —  

West

Manvel, TexasOwned—  —  X—  —  —  

West

Midland, TexasOwned—  —  X—  —  —  

West

Monahans, TexasOwned—  —  X—  —  —  

West

Monahans, TexasOwned—  —  X—  —  —  

West

Mount Pleasant, TexasLeased—  X—  —  —  —  

West

Mustang Ridge, TexasOwned—  X—  —  —  —  

West

Odessa, TexasOwned—  —  X—  —  —  

West

Paris, TexasOwned—  —  —  —  —  X

West

Paris, TexasOwned—  X—  —  —  —  

West

Paris, TexasLeased—  —  —  —  —  X

West

Pecos, TexasLeased—  —  X—  —  —  

West

Pyote, Texas Owned Sand and Gravel      X

Parley’s Canyon, UTWest

 LeasedLimestone

Salt Lake City, UT

Richmond, Texas
 Owned   X    —  

Sandy, UTWest

Richmond, TexasLeased—  —  —  —  —  X

West

Rosenberg, Texas Owned     X—  —  —  

SaratogaWest

Sulphur Springs, UTTexasOwned—  —  —  —  —  X

West

Texarkana, TexasLeased—  —  —  —  —  X

West

Waller, TexasOwned—  —  X—  —  —  

West

American Fork, UtahOwned—  —  X—  —  —  

West

Aurora, UtahOwned—  —  X—  —  —  

West

Bluffdale, UtahOwnedSand and Gravel—  X—  —  —  

West

Highland, Utah Leased Sand and Gravel X   

West

Manti, UtahOwned —  X—  —  —  

Stockton, UTWest

Midvale, UtahOwned—  —  X—  —  —  

West

Mona, UtahLeasedSand and Gravel—  X—  —  —  

West

Mona, Utah Owned Sand and Gravel     

Tooele, UTWest

Mount Pleasant, UtahOwned—  —  X—  —  —  

West

Parley’s Canyon, UtahLeasedLimestone—  —  —  —  —  

West

Salt Lake City, UtahOwned—  —  X—  —  —  

West

Sandy, UtahOwned—  —  —  —  —  X

West

Springville, UtahOwned—  —  X—  —  —  

West

Stockton, Utah Owned Sand and Gravel     

West

Tooele, UT

Utah
 Leased Sand and Gravel     

West

Tooele, UT

Utah
 Owned Sand and Gravel     

West Haven, UT

WestHaven, Utah Owned   X    —  

West Jordan, UT

WestJordan, Utah Owned   X   —   X

Region

PropertyOwned/ LeasedAggregatesAsphalt
Plant
Ready
Mixed
Concrete
CementLandfillOther*

West Valley

WestValley City, UT

Utah
 Leased      X

West Valley

WestValley City, UT

Utah
 Owned Sand and Gravel X X    —  

East

Ewing, VA

Virginia
 Leased Limestone     

West

Big Piney, WY

Wyoming
 Leased   X    —  

West

Evanston, WY

Wyoming
 Owned   X    —  

West

Kemmerer, WY

Wyoming
 Leased   X    —  

 

(1)*Two asphalt plants are located at this location.Other primarily consists of office space.

Legal Proceedings

We are a party to certain legal actions arising from time to time to legal proceedings relating to our operations. Ourthe ordinary course of business activities. While the ultimate legalresults of claims and financial liability in respect to all legal proceeding in which we are involved at any given timelitigation cannot be estimatedpredicted with any certainty. However, based upon examination of such matters and consultation with counsel,certainty, management currently believesexpects that the ultimate outcomeresolution of these contingencies, net of liabilities already accrued on our consolidated balance sheet,all current pending or threatened claims and litigation will not have a material adverse effect on our consolidated financial position, although the resolution in any reporting period of one or more of these matters could have a significant impact on our results of operations, and/financial position or cash flows for that period.liquidity.

Environmental and Government Regulation

Our operationsWe are subject to federal, state and local laws and regulations relating to the environment and to health and safety, including noise, discharges to air and water, waste management including the management of hazardous waste used as a fuel substitute at our Hannibal, Missouri cement kiln, remediation of contaminated sites, mine reclamation, operation and closure of landfills and dust control and to zoning, land use and permitting. While we believeOur failure to comply with such laws and regulations can result in sanctions such as fines or the cessation of part or all of our operations are in substantial compliance with applicable requirements, thereoperations. There also can be no assurance that our compliance costs associated with such laws and regulations will not be significant.

In addition, our operations are subject to environmental, zoning and land use regulations and require numerous governmental approvals and permits. Environmental operating permits are subject to modification, renewal and revocation and can require us to make capital, maintenance and operationoperational expenditures to comply with the applicable requirements. Although not expected to be a significant impediment, stricterStricter laws and regulations, or more stringent interpretations of existing laws or regulations, may impose new liabilities on us, reduce operation hours, require additional investment by us in pollution control equipment or impede our opening new or expanding existing plants or facilities.

For We regularly monitor and review our operations, procedures and policies for compliance with existing environmental laws and regulations, changes in interpretations of existing laws and enforcement policies, new laws that are adopted, and new requirements that we anticipate will be adopted that could affect our operations.

Multiple permits are subjectrequired for our operations, including those required to zoning requirements and permit limitations.operate our cement plant. Applicable permits may include conditionsconditional use permits to allow us to operate in certain areas absent zoning approval and operational permits governing, among other matters, air and water emissions, dust, particulate matter and storm water management and control. In addition, we are often required to obtain bonding for future reclamation costs, most commonly specific to restorative grading and seeding of disturbed surface areas.

Multiple permits are required to operate our cement plant, including the following:

Pursuant to the Federal Water Pollution Control Act, under the authority granted to the State of Missouri and in compliance with the Missouri Clean Water Law, the Missouri Department of Natural Resources (“MDNR”) issued Continental Cement two state operating permits to discharge water.

We received a Title V Air Operating Permit that allows us to operate the cement plant and fuels operation as required by Title V of the Clean Air Act, as amended in 1990 and codified in 40 CFR Part 70. The permitting process, including air monitoring, typically takes three years to complete.

Continental Cement’s waste management program was developed and began operations in November 1986. At that time, Continental Cement applied for an interim status permit under the Resource Conservation & Recovery Act (“RCRA”) to operate a waste management facility where hazardous wastes were stored and prepared for use as fuel for the cement kiln. In 1989, Continental Cement filed a RCRA Part B Permit Application for treatment and storage. A compliance test and trial burn was conducted in accordance with the Boiler and Industrial Furnace (“BIF”) regulations, finalized in August 1992. The results of these tests were filed along with an amended and updated Part B Application in July 1992. The final Part B Permit was issued on October 14, 1999 for a ten year period. The Permit Renewal Application was submitted to the MDNR on October 13, 2009. We have been operating with a continued Missouri Hazardous Waste Management Facility Part I Permit since October 14, 2009. This continued status was the result of the MDNR not being able to reissue the permit before it expired.

Like others in the cement business,our industry, we expend substantial amounts to comply with theseapplicable environmental laws and regulations and permit limitations, which include amounts for pollution control equipment required to monitor and regulate air emissions.emissions into the environment. Since many of these requirements are likely to be affected by future legislation or rule making by government agencies, and are therefore not quantifiable, it is not possible to accurately predict the aggregate future costs of compliance and their effect on our future results of operations, financial condition or liquidity.

We regularly monitor and reviewAt most of our operations, procedures and policies for compliance with existing environmental laws and regulations, changes in interpretations of existing laws and enforcement policies, new laws that are adopted, and new requirements thatquarries, we anticipate will be adopted that could affect our operations. Our operations in Kansas include one municipal waste landfill and two construction and demolition debris landfills. Among other environmental, health and safety requirements, we are subject to obligations to appropriately close those landfills at the end of their useful lives and provide for appropriate post-closure care. Asset retirement obligations relating to these landfills are recorded in our consolidated financial statements.

We incur reclamation obligations as part of our mining activities. Reclamation methods and requirements can vary depending on the individual site and state regulations. Generally, we are

required to grade the mined properties to a certain slope and seed the property to prevent erosion. We record a mining reclamation liability in our consolidated financial statements to reflect the estimated fair value of the cost to reclaim each property including active and closed sites.

Our operations in Kansas include one municipal waste landfill and two construction and demolition debris landfills, one of which has been closed. Among other environmental, health and safety requirements, we are subject to obligations to appropriately close those landfills at the end of their useful lives and provide for appropriate post-closure care. Asset retirement obligations relating to these landfills are recorded in our consolidated financial statements.

Health and Safety

Our facilities and operations are subject to a variety of worker health and safety requirements, particularly those administered by the federal Mine SafetyOSHA and Health Administration and the Occupational Safety and Health Administration,MSHA, which are likely tomay become more strictstricter in the future. Throughout our organization, we strive for a zero-incident safety culture, and full compliance with safety regulations. However, failureFailure to comply with these requirements can result in sanctions such as fines and penalties and claims for personal injury and property damage. These requirements may also result in increased operating and capital costs in the future. We believe we are in substantial compliance with such requirements, but we cannot guarantee that violations of such requirements will not occur, whichand any violations could result in additional costs.

At Summit Materials and our operating companies, workerWorker safety and health matters are overseen by our corporate Risk Management and Safety department as well as operating company level safety managers. We provide leadership and support, comprehensive training, and the other tools designed to accomplish health and safety goals, reduce risk, eliminate hazards, and ultimately make our work places safer.

We believe that the continuous support and leadership of our management team, along with the commitment and desire of all our employees to eliminate injuries and other incidents, will aid our journey towards our goal of zero incidents.

Insurance

Our insurance program is structured using multiple “A” rated insurance carriers, and a variety of deductible amounts. In particular, our workers compensation, general liability and auto liability policies are subject to a $150,000$500,000 per occurrence deductible, and the general liability policy has a $100,000 deductible. Losses within these deductibles are accrued for using projections based on past loss history.

We also purchase $25.0maintain $50.0 million in combined umbrella insurance limits.insurance. Other policies have smaller deductibles and include property, contractors equipment, contractors pollution and professional, directors and officers, employment practices liability and fiduciary and crime. We also have a separate marine insurance policy for our Continental Cement business.cement business, which is located adjacent to the Mississippi River and ships cement on the river via barge.

MANAGEMENT

Composition

The following table sets forth, as of March 1, 2013,June 28, 2014, certain information regarding the directors and executive officers of Summit Materials and Parent and members of the board of directors (the “Board”) of the general partner of Parent (“Parent GP”) who are responsible for overseeing the management of our business, as well as certain information regarding the members of the board of directors of the general partner of Parent.business.

 

Name

  Age  

Position

Thomas W. Hill

  5758  President and Chief Executive Officer; Director

Brian J. Harris

58Chief Financial Officer

Douglas C. Rauh

54Chief Operating Officer

Anne Lee Benedict

41Chief Legal Officer and Secretary

Kevin A. Gill

53Chief Human Resources Officer

Michael J. Brady

47Executive Vice President

M. Shane Evans

44Regional President—West Region

Damian J. Murphy

45Regional President—Central Region

Howard L. Lance

58Director; Chairman of the Board of Directors

John R. Murphy

  6264  Interim Chief Financial Officer; Director

Douglas Rauh

52Chief Operating Officer

Damian Murphy

43Regional President—Central Region

Shane Evans

42Regional President—West Region

Michael Brady

45Executive Vice President

Howard Lance

57  Director; Non-ExecutiveAudit Committee Chairman of the Board of Directors

Neil P. Simpkins

  4648  Director

Ted A. Gardner

  5556  Director

Julia C. Kahr

  3436  Director

Thomas W. Hill is the founder of the Company and has been President and Chief Executive Officer since the Company’s inception in September 2008. He was appointed Chairmanhas been a member of the Board of Directors of Parent inGP since August 2009. From 2006 to 2008, he was the Chief Executive Officer of Oldcastle, Inc., the North American arm of CRH plc, one of the world’s leading buildingconstruction materials companies. Mr. Hill served on the CRH plc Board of Directors from 2002 to 2008 and, from 1992 to 2006, ran the Materials division of Oldcastle. Mr. Hill served as Chairman of the American Road and Transportation Builders Association (“ARTBA”) from 2002 to 2004, during congressional consideration of the multi-year transportation bill “SAFETEA-LU”.“SAFETEA-LU.” Mr. Hill has been Treasurer of both the National Asphalt Pavement Association and the National Stone Association, and he remains active with ARTBA’s Executive Committee. Mr. Hill received a B.A.Bachelor of Arts in Economics and History from Duke University and an M.B.A.a Masters of Business Administration from Trinity College in Dublin, Ireland.

Brian J. Harris joined the Company as Chief Financial Officer in October 2013. Prior to joining the Company, from 2009 to 2013, Mr. Harris served as Executive Vice President and Chief Financial Officer of Bausch & Lomb Holdings Incorporated, a leading global eye health company. From 1990 to 2009, Mr. Harris held positions of increasing responsibility with industrial, automotive, building products and engineering manufacturing conglomerate Tomkins plc, including President of the $2 billion worldwide power transmission business for Gates Corporation, and Senior Vice President for Strategic Business Development and Business Administration, Chief Financial Officer and Secretary of Gates Corporation. Mr. Harris earned his Bachelor of Accountancy from Glasgow University and is qualified as a Scottish Chartered Accountant.

Douglas C. Rauh joined the Company as the Regional President of the East Region in January 2012 with over 30 years of experience in the construction materials industry. Effective March 1, 2013, Mr. Rauh, became the Company’s Chief Operating Officer. Prior to joining the Company, from 2000 to 2012, Mr. Rauh held positions of increasing responsibility with Oldcastle, including President and Chief Executive Officer of The Shelly Co. (“Shelly”), Oldcastle’s operations in Ohio. During Mr. Rauh’s tenure with Shelly, he was an integral part of the team that completed over 30 acquisitions. Mr. Rauh started his career working for his family’s business, Northern Ohio Paving Company (“NOPCO”), where he held roles of increasing responsibility from 1983 to 2000, including Vice President. He attended The Ohio State University and graduated in 1983 with a Bachelor of Science degree in Business Administration.

Anne Lee Benedictjoined the Company in October 2013. Prior to joining the Company, Ms. Benedict was a corporate partner in the Washington, D.C. office of Gibson, Dunn & Crutcher, where she had practiced since 2000. Ms. Benedict’s practice involved a wide range of corporate law matters, including mergers and acquisitions, joint ventures and other strategic transactions, securities offerings, securities regulation and disclosure issues, and corporate governance matters. Ms. Benedict earned a Bachelor of Arts degree in English and Psychology from the University of Michigan and graduated from the University of Pennsylvania Law School.

Kevin A. Gill joined the Company in May 2013 after having been Human Resources Vice President for Guilford Performance Textiles, a Cerberus portfolio company, since November 2008. In this role, he provided Human Resources Leadership that fueled the monetization to Lear Corporation. Prior to Guilford, Mr. Gill held a variety of Human Resources leadership roles with companies such as Honeywell, Citibank and Monsanto Chemical. Mr. Gill holds a Bachelor of Science in Business Administration from Villanova University and a Master of Arts in Industrial Relations from Wayne State in Detroit, Michigan.

Michael J. Brady joined the Company in April 2009 as Executive Vice President. Before joining the Company, Mr. Brady was a Senior Vice President at Oldcastle with overall responsibility for acquisitions and business development, having joined the company in 2000. Prior to that, Mr. Brady worked in several operational and general management positions in the paper and packaging industry in Ireland, the United Kingdom and Asia Pacific with the Jefferson Smurfit Group, plc (now Smurfit Kappa Group plc). Mr. Brady has a Bachelor of Engineering (Electrical) and a Master of Engineering Science (Microelectronics) from University College, Cork in Ireland. He earned his Masters of Business Administration degree from INSEAD in Fontainebleau, France.

M. Shane Evans joined the Company as Regional President of the West Region in August 2010 with over 20 years of experience in the construction materials industry. Prior to joining the Company, Mr. Evans worked at Oldcastle for 12 years, most recently as a Division President. He started his career working in his family’s construction and materials business where he held various operational and executive positions. Mr. Evans has a Bachelor of Science degree from Montana State University.

Damian J. Murphy joined the Company as Regional President of the Central Region in August 2009 with over 20 years of experience in the construction materials and mining industries, working with both public and privately held companies. Prior to joining the Company, Mr. Murphy served roles as regional president and company president for Oldcastle starting in 2004. Prior to that Mr. Murphy served as vice president of Aggregate Industries’ Rocky Mountain region, responsible for aggregates and hot mix asphalt production and sales. Before joining AI, Mr. Murphy worked in the mid-Atlantic for a top 10 privately held aggregate supplier and began his career in the industry in Europe. Mr. Murphy holds a Bachelor of Engineering degree with a concentration in Minerals Engineering from the Camborne School of Mines/ Exeter University in the United Kingdom.

Howard L. Lance began to serve on the Board of Parent GP starting in October 2012 and was formally elected as a director of Parent GP and Chairman of the Board of Parent GP in February 2013. He was Chairman of the Board of Directors, President and Chief Executive Officer of Harris Corporation from 2003 to 2011. Before joining Harris Corporation, Mr. Lance was president of NCR Corporation and Chief Operating Officer of its Retail and Financial Group. Previously, he spent 17 years with Emerson Electric Co., where he held senior management positions including Executive Vice President of its Electronics and Telecommunications segment, Chief Executive Officer and director of its Astec electronics subsidiary in Hong Kong, Group Vice President of its Climate Technologies segment and President of its Copeland Refrigeration division.

John R. Murphy was elected as a director of Parent GP and Chairman of the Audit Committee in February 2012. Effective December 18, 2012, Mr. Murphy was appointedserved as the Company’s Interim Chief Financial Officer.Officer from January 2013 to May 2013 and from July 2013 to October 2013. He was Senior Vice President and Chief Financial Officer of Smurfit-Stone Container Corporation from 2009 to 2010 and served in various senior management roles from 1998 to 2008, including Chief Financial Officer and Chief Operating Officer and as President and Chief Executive Officer of Accuride Corporation. Accuride Corporation filed for Chapter 11 bankruptcy protection in October 2009 and emerged in 2010. Since 2003, Mr. Murphy has served on the Board of Directors, the Governance Committee and as Chairman of the Audit

Committee of O’Reilly Automotive, Inc. He has also served as a director and Audit Committee Chairman of DJ OrthopedicsDJO Global Inc. since January 2012. Mr. Murphy was elected as a director and Audit Committee member of Graham Packaging in February 2011. Graham Packaging was subsequently sold in September 2011.

Douglas Rauh joined the Company as the Regional President of the East Region in January 2012 with over 29 years of experience in the construction materials industry. Effective March 1, 2013, Mr. Rauh, became the Company’s Chief Operating Officer. Mr. Rauh started his career working for his family’s business, Northern Ohio Paving Company (“NOPCO”). He had roles of increasing responsibility from 1983 to 2000, concluding as Vice President. In April 2000, NOPCO was acquired by Oldcastle. Upon acquisition, NOPCO merged with The Shelly Co. (“Shelly”), which was also acquired by Oldcastle in early 2000. From 2000 through 2006, Mr. Rauh was the Vice President/General Manager of the Northeast Division of Shelly. During this period, several companies were acquired which tripled the division’s revenue. In 2007, Mr. Rauh was named Senior Vice President responsible for the Northeast and Northwest Divisions of Shelly. In 2008, Mr. Rauh was also given responsibility for Shelly’s ready mix concrete business in Northwest Ohio. Additionally, Mr. Rauh became responsible for all of Shelly’s hot mix asphalt plants. In 2009, Mr. Rauh was named the President and CEO of

Shelly. During Mr. Rauh’s tenure with Shelly, he was an integral part of the team that completed over thirty acquisitions. He attended The Ohio State University and graduated in 1983 withMurphy has a Bachelor of Science degree in Business Administration.

Damian Murphy joined the Company as Regional President of the Central Region in August 2009 with over 20 years of experience in the construction materials and mining industries, working with both public and privately held companies. Prior to joining the Company, Mr. Murphy served as Regional President of Oldcastle starting in 2007, Mr. Murphy also worked in the Rocky Mountain region as a Vice President, responsible for aggregates and hot mix asphalt production and sales. Before heading to Colorado, Mr. Murphy worked in the mid-Atlantic for a top 10 privately held aggregate supplier. He began his career in the mining industry in Europe. Mr. Murphy holds a Bachelor of Engineering (“B.E.”) degree with a concentration in Minerals EngineeringAccounting from the Camborne School of Mines/ ExeterPennsylvania State University in the United Kingdom.

Shane Evans joined the Company as Regional President of the West Region in August 2010 with 22 years of experience in the construction materials industry. He started his career working in his family’s construction and materials business where he held various operational and executive positions. Prior to joining the Company, Mr. Evans was part of Oldcastle Materials where he worked for 12 years, most recently as a Division President. Mr. Evans has a Bachelor of Science degree from Montana State University.

Michael Brady joined the Company in April 2009 as Executive Vice President. Before joining the Company, Mr. Brady was a Senior Vice President at Oldcastle Materials with overall responsibility for acquisitions and business development, having joined the company in 2000. Prior to that, Mr. Brady worked in several operational and general management positions in the paper and packaging industry in Ireland, the United Kingdom and Asia Pacific with the Jefferson Smurfit Group, plc (now Smurfit Kappa Group plc). Mr. Brady has a B.E. (Electrical) and a Master of Engineering and Science. (Microelectronics) from University College, Cork in Ireland. He earned his M.B.A.Business Administration degree from INSEAD in Fontainebleau, France.the University of Colorado and is a Certified Public Accountant.

Howard Lance began to serve on the Board of Parent starting in October 2012. However, he was formally elected as a director of Parent and Non-Executive Chairman of the Board of Directors in February 2013. He was Chairman of the Board of Directors, President and Chief Executive Officer of Harris Corporation through 2011. Mr. Lance was appointed president and Chief Executive Officer of Harris Corporation and elected to its Board of Directors in January 2003. He was elected chairman of the Board of Directors in June 2003. Before joining Harris Corporation, Mr. Lance was president of NCR Corporation and Chief Operating Officer of its Retail and Financial Group. Previously, he spent 17 years with Emerson Electric Co., where he held senior management positions including Executive Vice President of its Electronics and Telecommunications segment, Chief Executive Officer and director of its Astec electronics subsidiary in Hong Kong, Group Vice President of its Climate Technologies segment and President of its Copeland Refrigeration division.

Neil P. Simpkins was elected as a director of Parent GP in August 2009. He is a Senior Managing Director of Blackstone in theBlackstone’s Corporate Private Equity Group and is based in New York. He currently has global responsibility for portfolio management activities and investments in the healthcare services and industrial sectors.Group. Since joining Blackstone in 1998, Mr. Simpkins has led the acquisitions of TRW Automotive, Vanguard Health Systems, Team Health, LLC, Apria Healthcare Group, Summit Materials, and Emdeon, Inc. and Gates Corporation. Before joining Blackstone, Mr. Simpkins was a Principal at Bain Capital. While at Bain Capital, Mr. Simpkins was involved in the execution of investments in the consumer products, industrial, healthcare and information industries. Prior to joining Bain Capital, Mr. Simpkins was a consultant at Bain & Company in the Asia Pacific region and in London. He currently serves as Lead Director of TRW Automotive and as a Director of Apria Healthcare Group, Gates Corporation and Emdeon, Inc. Mr. Simpkins graduated with honors from Oxford University and received an M.B.A.a Masters of Business Administration from Harvard Business School. He currently serves as Lead Director of TRW Automotive and Vanguard Health Systems and as a Director of Team Health, LLC, Apria Healthcare Group and Emdeon, Inc.

Ted A. Gardner was elected as a director of Parent GP in August 2009. He is a Managing Partner of Silverhawk. Prior to co-founding Silverhawk in 2005, Mr. Gardner was a Managing Partner of Wachovia Capital Partners

(formerly, (formerly, First Union Capital Partners) from 1989 until 2002. He was a director and Chairman of the Compensation Committee of Kinder Morgan, Inc. from 1999 to 2007 and was a director and the Chairman of the Audit Committee of Encore Acquisition Company from 2001 to 2010. He is currently a director of Kinder Morgan Energy Partners, and Spartan Energy Partners.Partners and Athlon Energy Inc. Mr. Gardner received a B.A.Bachelor of Arts degree in Economics from Duke University and a J.D.Juris Doctor and M.B.A.Masters of Business Administration from the University of Virginia.

Julia C. Kahr was elected as a director of Parent GP in August 2009. She is a Managing Director in Blackstone’s Corporate Private Equity group. Since joining Blackstone in 2004, she has been involved in the execution of Blackstone’s investments in SunGard, Encore Medical, DJ Orthopedics, Summit Materials and Summit Materials.Gates Corporation. Before joining Blackstone, she was a Project Leader at the Boston Consulting Group, where she worked with companies in a variety of industries, including health care, financial services, media and entertainment and consumer goods. She is also the sole author of Working Knowledge, a book published by Simon & Schuster in 1998. She currently serves on the Board of Directors of DJ Orthopedics and Gates Corporation and is also a member of the Board of Directors of Episcopal Social Services. Ms. Kahr received a B.A.Bachelor of Arts in Classical Civilization from Yale University where she graduatedsumma cum laude.laude. She received an M.B.A.a Masters of Business Administration from Harvard Business School.

Corporate Governance Matters

Background and Experience of Directors

When considering whether directors and nominees have the experiences, qualifications, attributes or skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused on, among other things, each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above. We believe that our Parent’sParent GP’s directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. The members of the Board considered, among other things, the following important characteristics which make each director a valuable member of the Board:

 

Mr. Hill’s extensive knowledge of our industry and significant experience in leading companies.

Mr. Murphy’s extensive financial knowledge, including from his service as Chief Financial Officer of Smurfit-Stone Container Corporation and Accuride Corporation.

Mr. Lance’s significant management and operational experience from his service in various senior management roles, including as President and Chief Executive Officer of Harris Corporation and President of NCR Corporation.

 

Mr. Hill’s extensive knowledge of our industry and significant experience in leading companies.

Mr. Murphy’s extensive financial knowledge, including from his service as Chief Financial Officer of Smurfit-Stone Container Corporation and Accuride Corporation.

Mr. Simpkins’s significant financial expertise and business experience, including as a Senior Managing Director in the Private Equity Group at Blackstone and Principal at Bain Capital.

 

Mr. Gardner’s extensive business and leadership experience, including as a Managing Partner of Silverhawk and Managing Partner of Wachovia Capital Partners (formerly, First Union Capital Partners).

 

Ms. Kahr’s extensive knowledge of a variety of different industries and her significant financial and investment experience from her involvement in Blackstone, including as Managing Director.

Independence of Directors

We are not a listed issuer whose securities are listed on a national securities exchange or in an inter-dealer quotation system which has requirementsthat requires that a majority of the board of directorsBoard be independent. However, if we were a listed issuer whose securities were traded on the New York Stock Exchange (“NYSE”) and subject to such requirements, we would be entitled to rely on the controlled company exception contained in Section 303A of the NYSE Listed Company Manual for exception from the independence requirements related to the majority of our Board of Directors.the Board. Pursuant to Section 303A of the NYSE Listed Company Manual, a company of which more

than 50% of the voting power is held by an individual, a group ofor another company is exempt from the requirements that its board of directors consist of a majority of independent directors. At December 29, 2012,28, 2013, Blackstone beneficially ownsowned greater than 50% of the voting power of the Company, which would qualify the Company as a controlled company eligible for exemption under the rule.

Board Committees

The board of directors of the general partner of Parent (the “Board”)Board currently consists of six directors.directors with one standing committee, the audit committee. The Board has determined that Mr. Murphy, Board member and Audit Committee Chairman and our Interim Chief Financial Officer since December 18, 2012,audit committee chairman, qualifies as an “audit committee financial expert” as defined in the federal securities laws and regulations. In light of Mr. Murphy’s role as Interim Chief Financial Officer, heregulations and is not considered “independent.”

Audit Committee

The audit committee assists our board of directorsthe Board with its oversight of the quality and integrity of our accounting, auditing and reporting practices. Pursuant to its charter, the audit committee makes recommendations to our board of directorsthe Board for the appointment, compensation and retention of the independent auditor. The audit committee’s primary responsibilities include the following:

 

Reviewingreviewing and discussing our consolidated financial statements and management’s discussion and analysis of financial condition and results of operations disclosure with management and the independent registered public accountants;

 

Reviewingreviewing and discussing our earnings releases and any financial information or earnings guidance given, if any, to investors, creditors, financial analysts and credit rating agencies; and

 

Reviewingreviewing and discussing the Company’s risk assessment and risk management policies.

Code of Conduct

Summit Materials’ Code of Conduct applies to all employees, including its board of directors,our chief executive officer and chief financial officer.officer, and the Board of Parent GP. The Code of Conduct sets forth the Company’s conflict of interest policy, records retention policy, insider trading policy and policies for protection of Summit Material’s property, business opportunities and proprietary information. Summit Materials’ Code of Conduct is available free of charge on its website at summit-materials.comwww.summit-materials.com under the tab “Investor Relations.“Ethics Hotline.” Summit Materials intends to post on its website any amendments to, or waivers from, the Code of Conduct applicable to senior financial executives.

EXECUTIVE AND DIRECTOR COMPENSATION

Executive Compensation

Summary Compensation Table

The following table sets forth allthe compensation paid toof our named executive officers for the year ended December 28, 2013 and, as applicable, the year ended December 29, 2012, and their respective titles at December 29, 2012.28, 2013.

 

Name and Principal Position

  Salary
($)
   Bonus
($)(1)
   Stock
Awards
($)(2)
   All Other
Compensation
($)(3)
   Total
($)
 

Thomas Hill

   510,000     267,750     —       25,594     803,344  

Chief Executive Officer

          

Douglas Rauh

   450,000     550,000     838,853     468,548     2,307,401  

Regional President—East Region(4)

          

Shane Evans

   357,000     32,130     —       31,854     420,984  

Regional President—West Region

          

Glenn Culpepper(5)

   446,505     —       —       31,854     478,359  

Former Chief Financial Officer

          

Name and Principal Position

 Year  Salary  Bonus(1)  Stock
Awards(2)
  Non-Equity
Incentive Plan
Compensation
  All Other
Compensation(3)
  Total 

Thomas W. Hill

  2013   $525,000   $—    $—    $563,850   $18,665   $1,107,515  

President and Chief Executive Officer, Director

  2012    510,000    267,750    —     —     25,594    803,344  
       

Doug C. Rauh

  2013    475,000    29,212    103,553    382,073    68,496    1,058,334  

Chief Operating Officer

  2012    450,000    550,000    838,853    —     468,548    2,307,401  

Kevin A. Gill(4)

  2013    184,041    20,000    207,126    117,603    171,570    700,340  

Chief Human Resource Officer

       

 

(1)Reflects the cash bonuses paid to the named executive officers in 2014 and, as applicable, 2013 in respect of their services during 2012.2013 and 2012, respectively. The amounts of the bonus payments were determined by the Board of Directors in its discretion. For more information, see “—Bonus and Non-Equity Incentive Plan Compensation.” The amount foramounts paid in 2012 to Mr. Rauh includesinclude a starting bonus of $400,000 paid in a lump sum and a $150,000 discretionary bonus. For more details, see “—Employment Agreements—Douglas C. Rauh.” The amounts paid in 2013 to Mr. Gill include a starting bonus of $20,000 paid in a lump sum.
(2)The amount reported in the Stock Awards column reflects the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718.718”). The assumptions applied in determining the fair value of the stock awards are discussed in Note 19,Employee Long-Term Incentive Plan,to our December 29, 201228, 2013 audited consolidated financial statements included elsewhere in this prospectus. This amount reflects our calculation of the value of the awards at the grant date and do not necessarily correspond to the actual value that may ultimately be recognized by the named executive officer. A portion of the shares granted in 2013 and 2012 vest under certain performance conditions, which are not currently deemed probable of occurring, and, therefore, have not been included in the table above. The unrecognized value of these awards assuming the highest level of performance conditions would be achieved was $111,831 and $176,883 as of December 28, 2013 and December 29, 2012, respectively, for Mr. Rauh.Rauh and $223,676 as of December 28, 2013 for Mr. Gill.
(3)All Other Compensation includes the following items: (a) amounts contributed by Summit Materials under the Summit Materials, LLC Retirement Plan, (b) payments for term life insurance, (c) payments for health insurance, (d) car allowances, (d) relocation costs and related tax gross-ups, (e) relocation costs.gym membership costs, (f) country club dues and (g) fuel reimbursement for commuting. Amounts contributed to the Summit Materials, LLC Retirement Plan are matching contributions up to 4% of eligible compensation subject to IRS limits and totaled $10,200 for both Mr. Hill and Mr. Rauh and $6,000 for Mr. Gill in 2013 and $9,800 for each of Mr. Hill and Mr. Rauh Mr. Evans and Mr. Culpepper.in 2012. Matching contributions are immediately vested. For more information, see “—Summit Materials, LLC Retirement Plan”.Plan.” Payments for term life insurance were as follows: Mr. Hill—$6,719;2,451; Mr. Rauh—$979; Mr. Evans—$9791,173 and Mr. Culpepper—Gill—$979. Payments for health insurance were $9,075 for each named executive officer.215 in 2013 and Mr. Hill—$6,719 and Mr. Rauh—$979 in 2012. Payments made by Summit Materials for car allowances were as follows: Mr. Rauh—$20,844; Mr. Evans—$12,00020,851 and Mr. Culpepper—Gill—$12,000.7,355 in 2013 and $20,844 for Mr. Rauh in 2012. Payments made by Summit Materials associated with Mr. Rauh’s relocation were $427,850.$1,065 in 2013 and $233,393 of relocation and $194,457 for the related tax gross-up in 2012 and $88,358 associated with Mr. Gill’s relocation and $69,368 for the related tax gross-up in 2013. For more details about the payments made to Mr. Rauh and Mr. Gill, see “—Employment Agreements—Douglas Rauh.C. Rauh” and “—Employment Agreements—Kevin A. Gill.
(4)Effective March 1, 2013, Mr. Rauh has become our Chief Operating Officer.
(5)Mr. Culpepper resignedGill joined the Company effective December 19, 2012.May 21, 2013.

Employment Agreements

Thomas W. Hill

Parent entered into an employment agreement with ThomasMr. Hill, dated as of July 30, 2009, whereby Mr. Hill serves as the Chief Executive Officer of the Parent and the Chief Executive Officer of the general partner of Parent (“Parent GP”).GP. Mr. Hill also will continue to serve as a member of the Board so long as he serves in the foregoing capacities. Mr. Hill’s employment agreement had an initial term equal to three years commencing on July 30, 2009, which is automatically extended for additional one-year periods, unless Parent or Mr. Hill provides the other party 60 days prior written notice before the next extension date that the employment term will not be so extended. However, if Parent is dissolved pursuant to the terms of its exempted limited partnership agreement, (a “Dissolution”), then the employment term shall automatically and immediately be terminated. On July 30, 2012,2014, Mr. Hill’s employment agreement was automatically extended for an additional year.

Pursuant to the terms of his employment agreement, Mr. Hill’s initial annual base salary iswas $500,000, which amount is reviewed annually by the Board, and may be increased (but not decreased). His base salary in 2013 was $525,000. Mr. Hill is also eligible to earn an annual bonus of up to 100% of his base salary based upon the achievement of performance targets established by the Board within the first three months of each fiscal year during the employment term. The Board, in its sole discretion, may appropriately adjust such performance targets in any fiscal year to reflect any merger, acquisition or divestiture affected by the Parent during such fiscal year. Mr. Hill is also entitled to participate in the Parent’s employee benefit plans, as in effect from time to time, on the same basis as those benefits are generally made available to other senior executives of Parent.

If Mr. Hill’s employment is terminated (i) by Parent with Cause“cause” or (ii) by him other than as a result of a “Constructive Termination,“constructive termination,” he will be entitled to certain accrued amounts. If Mr. Hill’s employment is terminated as a result of his death or “Disability”“disability” (as defined in the employment agreement), he will be entitled to, in addition to certain accrued amounts, a pro rata portion of the annual bonus, if any, that Mr. Hill would have been entitled to receive, payable when such annual bonus would have otherwise been payable to him had his employment not been terminated. If Mr. Hill’s employment is terminated (i) by Parent without Cause or (ii) by him as a result of a “Constructive Termination”“constructive termination” (as defined in the employment agreement), subject to his continued compliance with certain restrictive covenants and his non-revocation of a general release of claims, he will be entitled to receive, in addition to certain accrued amounts, (i) continued payment of his base salary in accordance with the Parent’s normal payroll practices, as in effect on the date of termination of his employment, until 18 months after the date of such termination and (ii) an amount equal to one and one-half times his annual bonus in respect of the fiscal year immediately preceding the applicable year of his termination of employment; provided that the aggregate amounts shall be reduced by the present value of any other cash severance or termination benefits payable to him under any other plans, programs or arrangements of the Parent or its affiliates.

In the event (i) Mr. Hill elects not to extend the employment term or (ii) of a “Dissolution”“dissolution” with a “Negative Return”“negative return” (as such terms are defined in the employment agreement), unless Mr. Hill’s employment is earlier terminated, Mr. Hill’s termination of employment shall be deemed to occur on the close of business on the earlier of the effective date of “Dissolution”“dissolution” or the day immediately preceding the next scheduled extension date, and Mr. Hill shall be entitled to receive certain accrued amounts. In the event (i) that Parent elects not to extend the employment term or (ii) of a “Dissolution”“dissolution” with a “Positive Return”“positive return” (as such terms are defined in his employment agreement), Mr. Hill shall be treated as terminated without Causecause effective as of the close of business on the day immediately preceding the next scheduled extension date or the effective date of the “Dissolution,“dissolution,” and shall be entitled to receive the amounts and benefits described above.

Pursuant to the terms of his employment agreement, Mr. Hill is subject to the following covenants: (i) a covenant not to disclose confidential information while employed and at all times thereafter; (ii) a covenant not

to compete for a period of 18 months following his termination of employment for any reason; and (iii) a covenant not to solicit employees or customers for a period of 18 months following his termination of employment for any reason.

Douglas C. Rauh

Parent entered into an employment agreement with Douglas C. Rauh, dated as of December 29, 2011, wherebypursuant to which Mr. Rauh serves asbecame our Regional President, Eastern Division.East Region. Effective April 1, 2013, Mr. Rauh assumed the role of Chief Operating Officer of the Company. His employment agreement otherwise remained in effect. Mr. Rauh’s employment agreement has an initial term equal to three years commencing on January 1, 2012 which will be automatically extended for additional one-year periods, unless Parent or Mr. Rauh provides the other party 60 days prior written notice before the next extension date that the employment term will not be so extended. The employment term will automatically and immediately be terminated upon a “Dissolution”“dissolution” (as defined in the employment agreement).

Pursuant to the terms of his employment agreement, Mr. Rauh’s annual base salary is $450,000, which amount is reviewed annually by the Board, and may be increased (but not decreased). Mr. Rauh’s base salary for 2013 was $475,000. Mr. Rauh is also eligible to earn an annual bonus of up to 60% of his base salary based upon the achievement of performance targets established by the Board within the first three months of each fiscal year during the employment term, with a potential bonus of up to 90% of his base salary for extraordinary performance. The Board, in its sole discretion, may appropriately adjust such performance targets in any fiscal year to reflect any merger, acquisition or divestiture affected by the Parent during such fiscal year. Notwithstanding the foregoing, Mr. Rauh’s minimum annual bonus for 2012 (payable in 2013) was $150,000. In addition, after Mr. Rauh commenced his employment, Parent paid Mr. Rauh a starting bonus of $400,000 in a lump sum. Mr. Rauh is entitled to a car allowance in the amount of $1,000 per month for car expenses, in addition to reimbursement from the Parent for Mr. Rauh’s actual expenditures for gasoline, upon submission of appropriate documentation.

The employment agreement further provides that Parent reimburse Mr. Rauh for any loss suffered by Mr. Rauh in connection with the sale of his residence in Ohio, the actual out of pocket loss incurred by Mr. Rauh on the sale of his residence in Ohio, a gross-up of all income taxes imposed on Mr. Rauh in connection with the reimbursement payment, the cost of up to three visits by Mr. Rauh and his family to the Washington, D.C. area in connection with the search for a new residence, three months of the reasonable rental of a house in the Washington, D.C. area, and reasonable moving expenses incurred by Mr. Rauh in connection with his relocation. These obligations were satisfied by Parent in 2012 and are included in the amounts reported for Mr. Rauh in 2012 in the “All Other Compensation” column of the Summary Compensation Table. In addition, the agreement provides that Parent reimburse Mr. Rauh for his out of pocket costs for payment of COBRA continuation premiums in connection with health care insurance covering Mr. Rauh and his family, until such time as Mr. Rauh and his family obtain coverage under the Parent’s health care insurance plan. These obligations were satisfied by Parent in 2012 and are also included in the amounts reported for Mr. Rauh in 2012 in the “All Other Compensation” column of the Summary Compensation Table. Mr. Rauh is also entitled to participate in the Parent’s employee benefit plans as in effect from time to time, on the same basis as those benefits are generally made available to other senior executives of Parent.

If Mr. Rauh’s employment is terminated (i) by Parent with “Cause”“cause” (as defined in the employment agreement) or (ii) by him other than as a result of a “Constructive Termination”“constructive termination” (as defined in the employment agreement), he will be entitled to certain accrued amounts, and if Mr. Rauh’s employment is terminated as a result of his death or “Disability”“disability” (as defined in his employment agreement), he will be entitled to (a) certain accrued amounts, (b) a pro rata portion of the annual bonus, if any, that Mr. Rauh would have been entitled to receive, payable when such annual bonus would have otherwise been payable to him had his employment not terminated, and (c) the costs of COBRA health continuation coverage for 18 months (or, if shorter, until COBRA coverage ends under Parent’s group health plan). If Mr. Rauh’s employment is terminated (i) by Parent without Causecause or (ii) by him as a result of a “Constructive Termination”“constructive termination” (as defined in the employment agreement), subject to his continued compliance with certain restrictive covenants and his non-revocation of a general release of claims, he will be entitled to receive, in addition to certain accrued amounts, (i) continued payment of his base salary in accordance with the Parent’s normal payroll practices, as in effect on the date of termination of his

employment, until 2412 months after the date of such termination (or 12 months if the termination occurs on or after January 1, 2014) (the “Severance Period”), (ii) an amount equal to one and two times (or only one time if the termination occurs on or after January 1, 2014)

Mr. Rauh’s annual bonus in respect of the fiscal year immediately preceding the applicable year of Mr. Rauh’s termination of employment, payable in equal monthly installments for 18 months after the date of such termination, and (iii) the costs of COBRA health continuation coverage for the lesser of the Severance Period or 18 months (or, if shorter, until COBRA coverage ends under Parent’s group health plan); provided that the aggregate amounts shall be reduced by the present value of any other cash severance or termination benefits payable to Mr. Rauh under any other plans, programs or arrangements of the Parent or its affiliates.

In the event (i) Mr. Rauh elects not to extend the employment term or (ii) of a “Dissolution”“dissolution” (as such term is defined in his employment agreement) in connection with which the Sponsors do not receive a return on their investment, unless Mr. Rauh’s employment is earlier terminated, Mr. Rauh’s termination of employment shall be deemed to occur on the close of business on the earlier of the effective date of “Dissolution”“dissolution” or the day immediately preceding the next scheduled extension date, and Mr. Rauh shall be entitled to receive certain accrued amounts. In the event (i) that Parent elects not to extend the employment term or (ii) of a “Dissolution”“dissolution” (as such term is defined in his employment agreement) in connection with which the Sponsors receive a return on their investment, Mr. Rauh shall be treated as terminated without Causecause effective as of the close of business on the day immediately preceding the next scheduled extension date or the effective date of the “Dissolution,“dissolution,” and shall be entitled to receive the amounts and benefits described above.

Pursuant to the terms of his employment agreement, Mr. Rauh is subject to the following covenants: (i) a covenant not to disclose confidential information while employed and at all times thereafter; (ii) a covenant not to compete for a period of 12 months (24 months if the Severance Period is 24 months) following his termination of employment for any reason; and (iii) a covenant not to solicit employees or customers for a period of 12 months (24 months if the Severance Period is 24 months) following his termination of employment for any reason.

Shane EvansKevin A. Gill

Under theParent entered into an employment arrangement between Summit Materials and Shane Evans,agreement with Kevin A. Gill, dated as of November 11, 2013, whereby Mr. EvansGill serves as our Regional President Western Division.Chief Human Resource Officer. Mr. Evans’sGill’s employment agreement has an initial term equal to three years commencing on May 21, 2013 which will be automatically extended for additional one-year periods, unless Parent or Mr. Gill provides the other party 60 days prior written notice before the next extension date that the employment term will not be so extended. The employment term will automatically and immediately be terminated upon a “dissolution” (as defined in the employment agreement).

Pursuant to the terms of his employment agreement, Mr. Gill’s initial annual base salary is $350,000. In addition,$300,000, which amount is reviewed annually by the Board, and may be increased (but not decreased). Mr. EvansGill is also eligible to earn an annual bonus of up to 60% of his base salary based upon the achievement of performance targets established by the Board within the first three months of each fiscal year during the employment term, and thewith a potential bonus of up to 150% of his base salary for extraordinary performance. The Board, in its sole discretion, may appropriately adjust such performance targets in any fiscal year to reflect any merger, acquisition or divestiture affected by the Parent during such fiscal year. The annual bonus would be paid in a cash lump sum during the calendar year immediately following the fiscal year in which it is earned. In addition, after Mr. Evans receivedGill commenced his employment, Parent paid Mr. Gill a signingstarting bonus of $150,000 upon commencing employment.$20,000 in a lump sum. Mr. EvansGill is entitled to a car allowance in the amount of $1,000 per month. Mr. Evans is also entitled to participate in employee benefit plans as in effect from time to time.month for car expenses.

Glenn Culpepper

Glenn Culpepper, our former Chief Financial Officer, received a salary and benefits substantially consistent with a draftThe employment agreement deliveredfurther provides for reimbursement of three to himfour months of the reasonable rental of a house in June 2010 prior toColorado, the commencementclosing costs associated with the sale of his employment.home in North Carolina and any actual out of pocket loss incurred by Mr. Culpepper’s draft employment agreement contemplated an initial term equal to three years commencingGill on the sale of his residence in June 2010, which was to be automatically extended for additional one-year periods, unless Parent or Mr. Culpepper provided the other party 60 days prior written notice before the next extension date that the employment term will not be so extended.

The draft employment agreement contemplated an annual base salary of $425,000, such amount to be reviewed annually by the Board, andNorth Carolina. These reimbursements are subject to increase (but not decrease). It also contemplateda gross-up of all income taxes imposed on Mr. Gill in connection with the reimbursement payments. In addition, the agreement provides that Parent reimburse Mr. Culpepper would be eligible to earn an annual bonusGill for his out of up to 70%pocket costs for payment of COBRA continuation premiums in connection with health care insurance covering Mr. Gill and his base salary (the “Target”),family, until such time as Mr. Gill and his family obtain coverage under the Parent’s health care insurance plan. These obligations were satisfied by Parent in 2013 and are included in the “All Other

defined in the draft employment agreement, based upon the achievement of performance targets established by the Board within the first three months of each fiscal year during the employment term, with a potential bonus of up to 150%Compensation” column of the Target for extraordinary performance; provided, however, the Board, in its sole discretion, could appropriately adjust such performance targets in any fiscal year to reflect any merger, acquisition or divestiture affected by the Parent during such fiscal year. Notwithstanding the foregoing, the draft employment agreement provided thatSummary Compensation Table. Mr. Culpepper’s minimum annual bonus for 2010 was $212,500. Promptly after Mr. Culpepper commenced his employment, Parent paid Mr. Culpepper a starting bonus of $700,000 in a lump sum minus applicable deductions. The draft employment agreementGill is also contemplated that Mr. Culpepper would be entitled to a car allowance for rental or lease in the amount of $1,000 per month and that he would be entitled to participate in the Parent’s employee benefit plans as in effect from time to time, on the same basis as those benefits are generally made available to other senior executives of Parent.

If Mr. Gill’s employment is terminated (i) by Parent with “cause” (as defined in the employment agreement) or (ii) by him other than as a result of a “constructive termination” (as defined in the employment agreement), he will be entitled to certain accrued amounts, and if Mr. Gill’s employment is terminated as a result of his death or “disability” (as defined in his employment agreement), he will be entitled to (a) certain accrued amounts, (b) a pro rata portion of the annual bonus, if any, that Mr. Gill would have been entitled to receive, payable when such annual bonus would have otherwise been payable to him had his employment not terminated, and (c) the costs of COBRA health continuation coverage for 18 months (or, if shorter, until COBRA coverage ends under Parent’s group health plan). If Mr. Gill’s employment is terminated (i) by Parent without cause or (ii) by him as a result of a “constructive termination” (as defined in the employment agreement), subject to his continued compliance with certain restrictive covenants and his non-revocation of a general release of claims, he will be entitled to receive, in addition to certain accrued amounts, (i) continued payment of his base salary in accordance with the Parent’s normal payroll practices, as in effect on the date of termination of his employment, until 12 months after the date of such termination (the “Severance Period”), (ii) the costs of COBRA health continuation coverage for the lesser of the Severance Period or 18 months (or, if shorter, until COBRA coverage ends under Parent’s group health plan); provided that the aggregate amounts shall be reduced by the present value of any other cash severance or termination benefits payable to Mr. Gill under any other plans, programs or arrangements of the Parent or its affiliates.

In the event (i) Mr. Gill elects not to extend the employment term or (ii) of a “dissolution” (as such term is defined in his employment agreement) in connection with which the Sponsors do not receive a return on their investment, unless Mr. Gill’s employment is earlier terminated, Mr. Gill’s termination of employment shall be deemed to occur on the close of business on the earlier of the effective date of “dissolution” or the day immediately preceding the next scheduled extension date, and Mr. Gill shall be entitled to receive certain accrued amounts. In the event (i) that Parent elects not to extend the employment term or (ii) of a “dissolution” (as such term is defined in his employment agreement) in connection with which the Sponsors receive a return on their investment, Mr. Gill shall be treated as terminated without cause effective as of the close of business on the day immediately preceding the next scheduled extension date or the effective date of the “dissolution,” and shall be entitled to receive the amounts and benefits described above.

Pursuant to the terms of his employment agreement, Mr. Gill is subject to the following covenants: (i) a covenant not to compete for a period of 12 months following his termination of employment by Parent without cause, (ii) a covenant not to disclose confidential information while employed and at all times thereafter; and (iii) a covenant not to solicit employees or customers for a period of 12 months following his termination of employment by Parent without cause.

Bonus and Non-Equity Incentive Plan Compensation

Pursuant to their employment arrangements as discussed above, each named executive officer is eligible to earn an annual bonus of up to a specified percentage of such named executive officer’s base salary based upon the achievement of performance targets established by the Board within the first three months of each fiscal year during such named executive officer’s employment term. The performance targets may be based on Adjusted EBITDA and/or free cash flow targets; however, the Board, in its discretion, may adjust such performance targets in any fiscal year to reflect any merger, acquisition or divestiture affected by the Company during such fiscal year. In fiscal 2013 and 2012, the performance targets were primarily based on Adjusted EBITDA. EBITDA, cash flows and achieving certain safety metrics.

During fiscal 2013, the Adjusted EBITDA, cash flows and safety metrics as set by the Board in the first three months of 2013 were achieved. As a result, compensation was provided to the named executive officers in the amounts shown above in the Non-Equity Incentive Plan Compensation column in the “—Summary Compensation Table.”

During fiscal 2012, although the Company’s actual Adjusted EBITDA result did not meet the target Adjusted EBITDA and thus the named executive officers were not entitled to their cash payments under the non-equity compensation plan, awards, the Board, in its discretion, determined to make cash bonus payments to Mr. Hill Mr. Rauh and Mr. Evans,Rauh, as disclosed in the footnote to the bonus column of the Summary Compensation Table above.

In determining the discretionary cash bonus payment for each named executive officer, the Board considered all of the following measures: safety, customer satisfaction, product quality and the successful integration of acquired businesses into Summit Materials.the Company. In addition, the Board considered each named executive officer’s effectiveness and contribution to Summit Materials.the Company.

Employee Long-Term Incentive Plan

Certain of our employees, including our named executive officers, have received Class D unit interests in the Parent between the fiscal years of 2009 and 2012. On January 1, 2012, Mr. Rauh was granted 404.4 Class D units consistent with the terms described below. There were no other Class D units awarded to the named executive officers in 2012.Parent. The Class D units provide rights to cash distributions based on a predetermined distribution formula (as provided for in the SecondThird Amended and Restated Agreement of Exempted Limited Partnership Agreement dated January 29, 2010)December 23, 2013) upon the Parent’s general partner declaring a distribution. There are four categories of Class D units: Class D-1 U.S. Interests; Class D-1 Non-U.S. Interests; Class D-2 U.S. Interests and Class D-2 Non-U.S. Interests. Under the exempted limited partnership agreement, these units would be entitled to distributions as determined by the Board on a pro rata basis with the Class B and Class C Units after returns of capital to Class A (primarily, Blackstone and other Sponsors) and Class B Holders (Blackstone and other Sponsors) and a preferential distribution to Class C Holders.

Generally, 50% of each category of Class D-1 units vest with the passage of time (“time-vesting interests”) and the remaining 50% of the Class D-1 units and all Class D-2 units vest when certain investment returns are achieved by the Parent’s investors (“performance-vesting interests”). Of the time-vesting-interests, subject to the holder’s continued employment through the applicable vesting date, 20% vest on the first anniversary of the grant date and the remaining 80% vest monthly over the four-year period beginning onfour years following the first anniversary thereof.of the grant date. The time-vesting interests will become fully vested on an accelerated basis upon a change in control while the employee continues to provide services to the Company. Any of the time-vesting interests that are unvested onupon termination of the employee’s services will be forfeited by the employee.

The performance-vesting interests vest when certain investment returns are achieved by the Parent’s investors while the employee continues to provide services to the Company or its subsidiaries. There are two performance levels at which performance-vesting interests generally vest, with performance-vesting interests that are Class D-1 units vesting if the Parent’s investors receive a return on invested capital of 1.75 times their initial investment, and performance-vesting interests that are Class D-2 units vesting if the Parent’s investors receive a return on invested capital of 3.00 times their initial investment.

Unvested interests are generally forfeited upon any termination of employment by the holderholder. However, if the employee is terminated without “Cause”“cause” or resigns due to a “Constructive Termination”“constructive termination” (each as defined in such employee’s employment agreement with the Company) within 12 months preceding a “Change“change of Control”control” or a “Public Offering”“public offering” (each as defined in the Parent’s agreement of exempted limited partnership)partnership agreement) any performance-vesting interests that would have been eligible to vest in connection with such transaction shall be restored and shall be eligible to vest based on the proceeds of such transaction.

If a holder’s employment is terminated by us for “Cause”,“cause,” or the holder violates a restrictive covenant, any vested Class D units are automatically forfeited. If a holder’s employment is terminated by us without “Cause”,“cause,” we may, under specified circumstances, repurchase the holder’s vested Class D units at a price per unit equal to the fair market value of such Class D units, minus any amounts already distributed to the holder in respect of such Class D units.

If a holder’s employment terminates as a result of the voluntary resignation of the holder, we may elect to convert all of the employee’s Class D units into a right to a fixed cash payment capped at a specified amount

determined at the time of termination. The fixed cash payment calculated for this purpose is an amount equal to the fair market value of the holder’s vested Class D units minus any amounts already distributed to the holder in respect of such Class D units.

On January 1,In 2013 and 2012, Mr. Rauh was granted approximately 37.2 and 175.8 Class D-1 time-vesting units, respectively, 37.2 and 175.8 Class D-1 performance-vesting units, respectively, and 11.2 and 52.8 Class D-2 performance-vesting units, respectively, consistent with the terms described above. In 2013, Mr. Gill was granted approximately 74.3 Class D-1 time-vesting units, 74.3 Class D-1 performance-vesting units and 22.3 Class D-2 performance-vesting units consistent with the terms described above. There were no other Class D units awarded to the named executive officers in 2012.

Summit Materials, LLC Retirement Plan

We have a qualified contributory retirement plan established to qualify as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended. The plan covers all corporate employees, including our named executive officers, who are limited to their annual tax deferred contribution limit as allowed by the Internal Revenue Service and may contribute up to 75% of their gross wages. We provide for matching contributions to the plan, including 100% of pre-tax employee contributions and up to 4% of eligible compensation. Employer contributions vest immediately. Employees outside of the corporate office are covered by a variety of other plans, all of which qualify as deferred salary arrangements under Section 401(k) of the Internal Revenue Code of 1986, as amended.

Potential Payments upon Termination or Change of Control

In the event of a termination of employment or change of control, Class D units are subject to acceleration or extended periods during which the Class D units have an opportunity to vest, as described in “—Employee Long-Term Incentive Plan” above, and the named executive officers are entitled to the cash and non-cash severance benefits in accordance with the terms of their employment agreements, as described in “—Employment Agreements.”

Compensation Committee Interlocks and Insider Participation

Presently, the Board does not have a compensation committee. All decisions about our executive compensation in fiscal years 2013 and 2012 were made by the Board. Mr. Hill, who is the Chairman of the Board and our President and Chief Executive Officer, generally participates in discussions and deliberations of the Board

regarding executive compensation. Other than Mr. Hill and Mr. Murphy, who has served as our Interim Chief Financial Officer sincefrom December 18, 2012 to May 12, 2013 and from July 1, 2013 to October 14, 2013, no other member of the Board was at any time during fiscal years 2013 or 2012, or at any other time, one of our officers or employees. We are parties to certain transactions with our Sponsors described in “Certain Relationships and Related Party Transactions.” None of our executive officers has served as a director or member of a compensation committee (or other committee serving an equivalent function) of any entity, one of whose executive officers served as a director of Parent GP.

Outstanding Equity Awards at 20122013 Fiscal Year EndYear-end

A summary of the outstanding equity awards for each named executive officer as of December 29, 201228, 2013 is as follows:

 

   Stock Awards 

Name

  Grant Date  Number of
shares or units
of stock that
have not vested
(#)(1)
   Market value of
shares or units of
stock that have  not
vested ($)(2)
   Equity incentive
plan awards:
Number of
unearned shares,
units or other
rights that have
not vested (#)(3)
   Equity incentive
plan awards:
Market or
payout value of
unearned shares,
units or other
rights that have
not vested ($)(2)
 

Thomas Hill

  08/25/2009   50     189,175     195     596,277  
  02/17/2010   100     377,282     312     953,005  
  04/16/2010   20     75,561     58     178,320  
  05/27/2010   151     568,757     407     1,241,226  
  08/02/2010   86     324,024     218     665,832  
  09/15/2010   52     195,409     123     376,527  
  11/30/2010   9     32,000     20     61,608  
  05/27/2011   73     275,181     140     425,522  
  08/02/2011   59     223,101     107     327,145  
  10/28/2011   36     135,153     61     186,193  

Douglas Rauh

  01/01/2012   223     838,853     290     884,416  

Shane Evans

  09/15/2010   105     394,370     249     759,897  
  11/30/2010   2     5,647     4     10,872  
  05/27/2011   13     48,561     25     75,092  
  08/02/2011   10     39,371     19     57,732  
  10/28/2011   6     23,851     11     32,858  

Glenn Culpepper(4)

     —       —       —       —    
   Stock Awards 

Name

  Grant Date   Number of shares
or units
of stock that
have not vested (#)(1)
   Market value of
shares or
units of stock
that have not
vested ($)(2)
   Equity incentive
plan awards:
Number of
unearned shares,
units or other
rights that have
not vested (#)(3)
   Equity incentive
plan awards:
Market or
payout value of
unearned shares,
units or other
rights that have
not vested ($)(2)
 

Thomas W. Hill

   08/25/2009     20     56,929     195     452,414  
   02/17/2010     52     145,560     312     723,076  
   04/16/2010     11     30,652     58     135,297  
   05/27/2010     89     247,153     407     941,758  
   08/02/2010     52     145,838     218     505,188  
   09/15/2010     33     92,341     123     285,683  
   11/30/2010     5     14,944     20     46,744  
   05/27/2011     52     144,049     140     322,857  
   08/02/2011     43     118,725     107     248,216  
   10/28/2011     27     73,863     61     664,729  

Douglas C. Rauh

   01/01/2012     134     372,780     290     671,035  
   08/21/2013     37     103,553     48     111,831  

Kevin A. Gill

   05/21/2013     74     207,126     97     223,676  

 

(1)Reflects time-vesting Class D Units, 20% of which vest 20% on the first anniversary of the grant date and the remaining 80% vest monthly over the four-year period beginning onfour years following the first anniversary thereof.anniversary.
(2)Reflects the aggregated market values at December 29, 201228, 2013 based on the most recent valuation of the Class D Units.
(3)Reflects performance-vesting interests that vest when certain investment returns are achieved by the Parent’s investors while the employee continues to provide services to the Company or its subsidiaries.
(4)Mr. Culpepper forfeited his unvested Class D units upon his resignation on December 19, 2012.

Director Compensation

We do not currently pay our Directorsdirectors who are either employed by us, Blackstone or Silverhawk any compensation for their services as directors. Our other Directorsdirectors receive compensation for each quarter serving as a Director.director and equity incentive awards. We may also reimburse our other directors for any reasonable expenses incurred by them in connection with services provided in such capacity. Our other directors may also receive equity incentive awards under our incentive plans.

Howard L. Lance

Howard Lance began to serve on the Board of Parent starting in October 2012. However, he was formally elected as a director of Parent in February 2013. Mr.L. Lance is entitled to an annual cash retainer of $250,000 for his servicepursuant to an agreement under which Mr. Lance agreed to serve as a director. In connection with joining the Board,March 2013, Mr. Lance received an equity-based incentive arrangement that will provide himwas granted approximately 217.2 Class D-1 time-vesting units, 217.2 Class D-1 performance-vesting units and 65.2 Class D-2 performance-vesting units consistent with the economic equivalent of stock options over $2,500,000 of Parent’s equity securities. The structure of the equity incentive will be consistent with those applicable generally to Parent’s existing management team,terms describe above in “—Employee Long-Term Incentive Plan” above, except that Mr. Lance’s equity award will beis subject to vesting based solely on his continued service on the Board.

2012 John R. Murphy

John R. Murphy is entitled to an annual cash retainer of $100,000. In addition, Mr. Murphy is entitled to an annual equity grant of $50,000 for his service as director, for which, in 2013, he was granted approximately 4.3 Class D-1 time-vesting units, 4.3 Class D-1 performance-vesting units and 1.3 Class D-2 performance-vesting

units, consistent with the terms describe above in “—Employee Long-Term Incentive Plan.” Mr. Murphy was compensated $316,274 for his services as the Company’s Interim Chief Financial Officer from January 2013 to May 2013 and from July 2013 to October 2013.

Director Compensation

The table below summarizes the compensation paid to non-employee Directors for their Board services during the year ended December 29, 2012.28, 2013.

 

Name

  Fees Earned or
Paid in Cash ($)
 Stock
Awards ($)
 Total
Compensation ($)

John Murphy

    100,000(1)   9,606(2)   109,606 

Neil Simpkins

    —      —      —   

Ted Gardner

    —      —      —   

Julia Kahr

    —      —      —   

Howard Lance(3)

    62,500    —      62,500 

Name

  Fees Earned or
Paid in Cash
   Stock
Awards(1)
   Total
Compensation
 

Howard L. Lance

  $250,000    $605,047    $855,047  

John R. Murphy

   100,000     12,101     112,101  

Neil P. Simpkins

   —      —      —   

Ted A. Gardner

   —      —      —   

Julia C. Kahr

   —      —      —   

 

(1)Mr. Murphy received $25,000 for each fiscal quarter serving as a director.
(2)The amount reported in the Stock Awards column reflects the aggregate grant date fair value of our units computed in accordance with Financial Accounting Standards Board ASC Topic 718. The assumptions applied in determining the fair value of the stock awards are discussed in Note 19,Employee Long-Term Incentive Plan, to our December 29, 201228, 2013 audited consolidated financial statements included elsewhere in this prospectus. This amount reflects our calculation of the value of the awards at the grant date and does not necessarily correspond to the actual value that may ultimately be recognized by the director. Of the approximately 6.0 units granted to Mr. Murphy, 2.6 are Class D-1 time-vesting units, approximately 2.6 are Class D-1 performance-vesting units and approximately 0.8 is a Class D-2 performance-vesting unit. The performance conditions for the performance-vesting units are described above in “Executive“—Executive Compensation—Employee Long-Term Incentive Plan” in this prospectus. The performance-vesting units granted in 2012 vest under performance conditions which are not currently deemed probable of occurring, and, therefore, have not been included in the table above. The unrecognized value of these awards assuming the highest level of performance conditions would be achieved was $10,127$653,390 for Mr. Lance in 2013 and $13,068 in 2013 for Mr. Murphy. At fiscal year end,December 28, 2013, the aggregate number of stock awards outstanding was 499.5 Class D Units for each director was 6.0Mr. Lance and 15.9 Class D Units outstanding for Mr. Murphy.
(3)Mr. Lance began to serve on the Board starting in October 2012. However, he was formally elected as director in February 2013.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Parent owns 100% of the limited liability company interests of Summit Materials Holdings, LLC, which owns 100% of the limited liability company interests of Summit Materials Intermediate Holdings, LLC, which owns 100% of the limited liability company interests of Summit Materials, which indirectly owns 100% of the issued and outstanding common stock of Summit Materials Finance Corp. The limited partnership interests of Parent consist of Class A-1 Units, Class A-2 Units, Class B-1 Units, Class C Units and Class D-1 Units and Class D-2 Units. Class A-1 Units are equity interests in Parent and have economic characteristics that are similar to those of shares of preferred stock in a corporation. Class A-2 Units are equity interests in Parent that are issuable only upon the exchange of Class B-1 Units, Class C Units and Class D-1 Units or Class D-1 Units for Class A-2 Units following any transfer of any such units (other than transfers to certain permitted transferees) and have similar economic rights as Class A-1 Units. Class B Units are equity interests in Parent and have similar economic rights as Class A-1 Units. Class C Units are equity interests in Parent that have been issued to certain start-up partners of Parent and have economic characteristics similar to those of shares of junior preferred stock in a corporation. Class D-1 Units and Class D-2 Units are partnership profits interests having economic characteristics similar to stock appreciation rights and are subject to different vesting schedules and other conditions including certain transfer restrictions and put and call rights applicable only to employees or the other holders thereof. For additional information, see “Management—Executive and Director Compensation” and “Certain Relationships and Related Party Transactions.”

The following table below sets forth information with respect to the beneficial ownership of the Class A-1 Units and Class A-2 Units of Parent taken together as a single class, the Class B-1, the Class C Units of Parent, the ClassD-1 and Class D-2 Units taken together as a single class and the aggregate Class A-1 Units, Class A-2 Units, Class B-1 Units, Class C Units, Class D-1 Units and Class D-2 Units taken together as a single class, in each case, as of December 29, 201228, 2013 for (i) each individual or entity known by us to own beneficially more than 5% of the aggregate units, (ii) each of our named executive officers, (iii) each of our directors and (iv) all of our directors and our executive officers as a group.

The amounts and percentages of units beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.

Except as otherwise indicated in the footnotes below, each of the beneficial owners has, to our knowledge, sole voting and investment power with respect to the indicated Class A-1 Units, Class A-2 Units, Class B-1 Units, Class C Units, Class D-1 Units and Class D-2 Units. Unless otherwise noted, the address of each beneficial owner of is c/o Summit Materials, LLC, 2900 K1550 Wynkoop Street, NW, Suite 100, Harbourside North Tower Building, Washington, D.C. 20007.3rd floor, Denver, Colorado 80202. The table below presents the beneficial owners of the Company’s limited liability company interests as of June 28, 2014.

 

Name and
Address of Beneficial
Owner
 Class A Units  Class B-1 Units  Class C Units  Class D Units  Aggregate 
 Amount
and
Nature of
Beneficial
Ownership
  Percent  Amount
and
Nature of
Beneficial
Ownership
  Percent  Amount
and
Nature of
Beneficial
Ownership
  Percent  Amount
and
Nature of
Beneficial
Ownership
  Percent  Amount
and
Nature of
Beneficial
Ownership
  Percent 

Blackstone Funds(1)

  29,173    91.60  —      —      —      —      —      —      29,173(2)   69.86

Silverhawk Summit, L.P.(3)

  1,572    5.03  —      —      260    35.91  —      —      1,832    4.39

Thomas Hill

  108       —      —      133    18.37  —      —      241    *  

John Murphy

  —      —      —      —      —      —      —      —      —      —    

Douglas Rauh

  —      —      —      —      —      —      —      —      —      —    

Damian Murphy

  —      —      —      —      —      —      —      —      —      —    

Shane Evans

  —      —      —      —      —      —      —      —      —      —    

Michael Brady

  25       —      —      31    4.28  —      —      56    *  

Howard Lance

  —      —      —      —      —      —      —      —      —      —    

Neil Simpkins(4)

  —      —      —      —      —      —      —      —      —      —    

Ted Gardner(5)

  100       —      —      124    17.13  —      —      224    *  

Julia Kahr(6)

  —      —      —      —      —      —      —      —      —      —    

Glenn Culpepper

  —      —      —      —      —      —      —      —      —      —    

All Directors and Executive Officers as a Group (10 persons)

  233       —      —      288    39.78  —      —      521    1.25

Name and

Address of Beneficial

Owner

 Class A Units  Class B-1 Units  Class C Units  Class D Units  Aggregate 
 

Amount

and

Nature of

Beneficial

Ownership

  Percent  

Amount

and

Nature of

Beneficial

Ownership

  Percent  

Amount

and

Nature of

Beneficial

Ownership

  Percent  

Amount

and

Nature of

Beneficial

Ownership

  Percent  

Amount

and

Nature of

Beneficial

Ownership

  Percent 

Blackstone Funds(1)

  29,173    92.60  —     —     —     —     —     —     29,173(2)   78.80

Silverhawk Summit, L.P.(3)

  1,572    4.99  —     —     274    35.09  —     —     1,845    4.98

Thomas W. Hill

  108    *    —     —     140    17.97  —     —     258    *  

Douglas C. Rauh

  —     —     —     —     —     —     —     —     —     —   

Kevin A. Gill

  —     —     —     —     —     —     —     —     —     —   

Howard L. Lance

  34   *   —     —     —     —     —     —     34   * 

John R. Murphy

  —     —     —     —     —     —     —     —     —     —   

Neil P. Simpkins(4)

  —     —     —     —     —     —     —     —     —     —   

Ted A. Gardner(5)

  100    *    —     —     130    16.71  —     —     230    *  

Julia C. Kahr(6)

  —     —     —     —     —     —     —     —     —     —   

All Directors and Executive Officers as a Group (13 persons)

  474    *    —     —     303    38.85  —     —     777    *  

 

*Less than 1%.
(1)Units of Parent shown as beneficially owned by the Blackstone Funds (as hereinafter defined) are held by the following entities: (i) Blackstone Capital Partners (Cayman) V-NQ L.P. (“BCP Cayman V”) owns 23,602 Class A-1 Units representing 75.49%74.92% of the outstanding Class A Units of Parent; (ii) Blackstone Capital Partners (Cayman) NQ V-AC L.P. (“BCP Cayman NQ”) owns 4,975 Class A-1 Units representing 15.91%15.79% of the outstanding Class A Units of Parent; (iii) Summit BCP Intermediate Holdings L.P. (“Summit BCP”) owns 536 Class A-1 Units representing 1.71%1.70% of the outstanding Class A Units of Parent; (iv) Blackstone Participation Partnership (Cayman) V-NQ L.P. (“BPP”) owns 22 Class A-1 Units representing 0.07% of the outstanding Class A-1 Units of Parent; and (v) Blackstone Family Investment Partnership (Cayman) V-NQ L.P. (“BFIP”) owns 38 Class A-1 Units representing 0.12% of the outstanding Class A Units of Parent (BCP Cayman V, BCP Cayman NQ, Summit BCP, BPP and BFIP are collectively referred to as the “Blackstone Funds”). The general partner of BCP Cayman V and BCP Cayman NQ is Blackstone Management Associates (Cayman) V-NQ L.P. The general partner of Summit BCP is Summit BCP Intermediate Holdings GP, Ltd., and BFIP is the sole member and controlling entity of Summit BCP. The general partner and controlling entity of BFIP, BPP and Blackstone Management Associates (Cayman) V-NQ L.P. is BCP V-NQ GP L.L.C. Blackstone Holdings III L.P. is the managing member and majority interest owner of BCP V-NQ GP L.L.C. Blackstone Holdings III L.P. is indirectly controlled by The Blackstone Group L.P. and is owned, directly or indirectly, by Blackstone professionals and The Blackstone Group L.P. The Blackstone Group L.P. is controlled by its general partner, Blackstone Group Management L.L.C., which is in turn wholly ownedwholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman.Each of such Blackstone entities and Mr. Schwarzman may be deemed to beneficially own the securities beneficially owned by the Blackstone Funds directly or indirectly controlled by it or him, but each disclaims beneficial ownership of such securities except to the extent of its or his indirect pecuniary interest therein. The address of each of the Blackstone entities listed in this note is c/o The Blackstone Group L.P., 345 Park Avenue, New York, NY 10154.
(2)The limited partnership agreement of Parent Holdings (i) provides that, prior to an initial public offering, the Blackstone Funds have the right to require each unit owned by an employee to participate in any transaction constituting a change of control or the sale of all or substantially all of the assets of Parent to a third-party (in either case, with respect to U.S. investments only, non-U.S. investments only or both) and (ii) generally restricts the transfer of each unit owned by an employee until twelve months following an initial public offering. As a result, the Blackstone Funds may be deemed to beneficially own 95.60% of outstanding units of Parent. The units of Parent held by employees that may be so deemed beneficially owned by the Blackstone Funds are not reported in the table above. For additional information, see “Management—Executive and Director Compensation” and “Certain Relationships and Related Party Transactions.”
(3)Silverhawk Summit, L.P.is controlled by Silverhawk Capital Partners GP II, L.P. and is owned, directly or indirectly, by Silverhawk Capital Partners, LLC. The address of each of the Silverhawk entities listed in this note is c/o Silverhawk Capital Partners, LLC, 140 Greenwich Ave, 2nd Floor, Greenwich, CT 06830.
(4)Mr. Simpkins is a Senior Managing Director of The Blackstone Group. Mr. Simpkins disclaims beneficial ownership of any shares owned directly or indirectly by the Blackstone Funds, except to the extent of his indirect pecuniary interest therein. Mr. Simpkins’ address is c/o The Blackstone Group, L.P., 345 Park Avenue, New York, NY 10017.

(5)Mr. Gardner is a Managing Partner of Silverhawk Capital Partners, LLC. Mr. Gardner disclaims beneficial ownership of any shares owned directly or indirectly by Silverhawk, except to the extent of his indirect pecuniary interest therein. Mr. Gardner’s address is c/o Silverhawk Capital Partners, LLC, 140 Greenwich Ave, 2nd Floor, Greenwich, CT 06830.
(6)Ms. Kahr is a Managing Director of The Blackstone Group. Ms. Kahr disclaims beneficial ownership of any shares owned directly or indirectly by the Blackstone Funds, except to the extent of hisher indirect pecuniary interest therein. Ms. Kahr’s address is c/o The Blackstone Group L.P., 345 Park Avenue, New York, NY 10017.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Transaction and Management Fee Agreement

In connection with the formation of Parent, Parent entered into a transaction and management fee agreement with Blackstone Management Partners L.L.C. (“BMP”). Under this agreement, BMP (including through its affiliates) agreed to provide monitoring, advisory and consulting services relating to Parent and its subsidiaries. In consideration for the services, Parent will pay,pays, or causecauses to be paid, to BMP a management fee which, for the year ended December 31, 2010 and subsequent years, is equal to the greater of $300,000 or 2.0% of Parent’s consolidated profit, as defined in the transaction and management fee agreement, for the immediately preceding fiscal year. BMP shall have no obligationis not obligated to provide any other services to Parent absent express agreement. Under the management fee agreement, for the years ended December 28, 2013, December 29, 2012 and December 31, 2011, Summit Materials paid BMP management fees of $2.6 million, $2.1 million and $3.0 million, respectively, and incurred $2.3 million during the six months ended June 28, 2014.

In addition to the management fee, in consideration of BMP undertaking financial and structural analysis, due diligence investigations, corporate strategy and other advice and negotiation assistance necessary to enable Parent and its subsidiaries to undertake acquisitions, the Partnership will pay toParent pays BMP a transaction fee equal to (x) 1.0% of the aggregate enterprise value of any acquired entity or (y) if such transaction is structured as an asset purchase or sale, 1.0% of the consideration paid for or received in respect of the assets acquired or disposed of. In addition, Parent has agreed to indemnify BMP and its affiliates against liabilities relating to the services contemplated by the transaction and management fee agreement and will reimbursereimburses BMP and its affiliates for out-of-pocket expenses incurred in connection with providing such services.

Under the transaction fee agreement, BMP is permitted to, and has, assigned a portion of the fees to which it is entitled to receive from Parent to Silverhawk Summit, L.P. and to certain members of management. No transaction fees were paid in 2013 or 2012 and $0.8 million was paid in 2011. During the six months ended June 28, 2014, the Company paid BMP $2.3 million, under this agreement and paid immaterial amounts to Silverhawk Summit, L.P. and to other equity holders.

At any time in connection with or in anticipation of a change of control of Parent, a sale of all or substantially all of Parent’s assets or an initial public offering of common equity of Parent or its successor (including any other entity used as a vehicle for an initial public offering), BMP may elect to receive, subject to the achievement of certain thresholds, in consideration of BMP’s role in facilitating such transaction and in settlement of the termination of the services provided under the transaction and management fee agreement, a single lump sum cash payment equal to the then-present value of all then-current and future annual management fees payable under the transaction and management fee agreement, assuming a hypothetical organic consolidated EBITDA growth rate equal to the growth rate over the prior twelve months and a termination date of the agreement to be the tenth anniversary of the date of the agreement. The transaction and management fee agreement will continue until the earlier of (x) the tenth anniversary of the date of the agreement, (y) the date BMP ceases to perform services and provides written notice thereof to Parent, or (z) such earlier date as Parent and BMP may mutually agree in writing.

Under the transaction and management fee agreement, BMP is permitted to, and has, assigned a portion of the fees to which it is entitled to receive from Parent thereunder to Silverhawk Summit, L.P. and to certain members of management.

Under the transaction and management fee agreement, during the years ended December 29, 2012, December 31, 2011 and December 31, 2010, Summit Materials paid BMP transaction fees of $0.0, $0.8 million, $7.7 million, respectively, and management fees of $2.1 million, $4.3 million and $1.1 million, respectively.

Exempted Limited Partnership Agreement of Parent

The Sponsors and certain of our current and former officers, directors, employees and certain investors who rolled over equity in companies we acquired, indirectly beneficially own our equity interests through their respective ownership of partnership interests in Parent. Certain members of management indirectly beneficially own equity interests in Summit Materials through their respective ownership of certain classes of incentive partnership interests in Parent issued as part of an equity incentive program. Summit Materials is indirectly wholly-owned and controlled by Parent.

The exempted limited partnership agreement of Parent provides that, except as otherwise set forth in the agreement, Parent GP has the exclusive right to manage, conduct and control the business of Parent. The agreement also includes provisions with respect to restrictions on transfer of partnership interests, rights of first offer, tag-along rights, drag-along rights and the right of Blackstone to cause an initial public offering, as well as certain other provisions, including with respect to registration rights and certain approval rights.

Shareholders Agreement of Parent GP

Parent GP is party to a shareholders agreement with Blackstone, Silverhawk, our chief executive officer, Tom Hill, Ted Gardner, Michael Brady and certain other shareholders,equity holders, which governs certain matters relating to ownership of Parent GP, including with respect to restrictions on the issuance or transfer of shares, affiliate transactions and various corporate governance matters. Pursuant to the terms of the shareholders agreement, Parent GP is managed by a board of directors, currently consisting of foursix individuals, twothree of whom are nominees of Blackstone, one of whom is a nominee of Silverhawk, one of whom is a nominee of Tom Hill and Ted Gardner and one of whom is our chief executive officer. Under the shareholders agreement, owners of Class A interests of Parent are required to own shares of Parent GP. The majority of Parent GP is owned by Blackstone.

Management Equity Purchase Plan

Parent maintains equity incentive arrangements for executives and other senior management employees. Consistent with these arrangements, certain members of our management team have purchased and/or received, and may, from time to time, purchase and/or receive, equity interests or profit interests in Parent. Such purchases or awards of equity interests or profit interests may represent a substantial portion of the equity or profits of Parent.

Temporary Acquisition Financing from Blackstone

During the second half of 2010, we received an aggregate of $77.5 million in temporary acquisition financing, at an interest rate of 1.01% per annum, from Blackstone that we used as temporary financing for our acquisitions of RK Hall and Con-Agg. We repaid the temporary acquisition financing in full, including approximately $0.1 million in interest on December 17, 2010 with proceeds from Summit Materials Companies I, LLC’s amended and restated credit agreement.

Commercial Transactions with Sponsor Portfolio Companies

Our Sponsors and their respective affiliates have ownership interests in a broad range of companies. We have entered and may in the future enter into commercial transactions in the ordinary course of our business with some of these companies, including the sale of goods and services and the purchase of goods and services. None of these transactions or arrangements has been or is expected to be material to us.

Procedures with Respect to Review and Approval of Related Person Transactions

Parent GP has not adopted a formal written policy for the review and approval of transactions with related persons. However, the exempted limited partnership agreement of Parent provides that the members of the board of directors of Parent GP shall review and approve transactions with related persons in certain circumstances.

Interim Chief Financial OfficerOther Transactions

Mr. Murphy was appointed our Interim Chief Financial Officer effectiveBlackstone Advisory Partners L.P., an affiliate of The Blackstone Group L.P., served as an initial purchaser of December 18, 2012. $13.0 million principal amount of the senior notes issued in January 2014 and $5.75 million principal amount of the outstanding notes and in each case received compensation in connection therewith

In connectionthe six months ended June 28, 2014, we sold certain assets associated with his service as our Interim Chief Financial Officer, we pay Mr. Murphythe production of concrete blocks, including inventory and equipment, to a retainer equal to $446,500 per annum (or $37,208 per month). For the period from December 18, 2012 through December 29, 2012, Mr. Murphy did not receive any compensation.related party for $2.3 million.

Other

The CompanyWe purchased equipment from a noncontrolling member of Continental Cement for approximately $2.3 million, inclusive of $0.1 million of interest, in 2011, which was paid for in 2012.

The CompanyWe earned revenue of $0.6 million, $7.9 million $8.6 million and $8.5$8.6 million and incurred costs of $0.2 million, $0.7$0.2 million and $1.1$0.7 million in connection with several transactions with unconsolidated affiliates for

the years ended

December 29, 2012, December 31, 2011 and December 31, 2010, respectively. As of28, 2013, December 29, 2012 and December 31, 2011, respectively. As of December 28, 2013 and December 29, 2012, accounts receivable from affiliates was $1.9$0.4 million and $1.1 million, respectively, and accounts payable to$1.9 million. The Company had an immaterial amount of revenue from unconsolidated affiliates was $0.2 million and $2.2 million, respectively.during the six months ended June 28, 2014.

Cement sales to companies owned by certain noncontrolling members of Continental Cement were approximately $6.2 million, $12.7 million, $12.5 million and $9.5 million for the six month period ended June 28, 2014 and $9.0 million for the years ended December 28, 2013, December 29, 2012 December 2011 and December 31, 2010,2011, respectively, and accounts receivables due from these parties were approximately $1.0$1.2 million, $0.2 million and $1.3$1.0 million as of June 28, 2014, December 28, 2013 and December 29, 2012, and December 31, 2011, respectively.

The Company owes $2.1We paid $0.7 million of interest to a noncontrolling member of Continental Cement for accrued interestin the six months ended June 28, 2014 on a related party note, which is expected to be fully settled by 2014.note. The principal balance on the note was repaid as part of thein January 2012 financing transactions.

Lease payments of $1.0 million, $0.4 million and $0.2 million were made to related parties for the years ended December 29, 2012, December 31, 2011 and December 31, 2010, respectively.2012.

DESCRIPTION OF OTHER INDEBTEDNESS

Senior Secured Credit Facilities

Overview

On January 30, 2012, we entered into a senior secured credit facilityfacilities with Merrill Lynch, Pierce, Fenner & Smith IncorporatedBank of America, N.A. and Citigroup Global Markets Inc., as joint lead arrangers, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., UBS Securities LLC, Barclays Capital, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc., as joint bookrunners, Bank of America, N.A., as administrative agent, collateral agent, and swing line lender, Bank of America, N.A., as letter of credit issuer and swing line lender, Citigroup Global Markets Inc., as syndication agent.agent and Barclays Bank plc and Regions Bank, as co-documentation agents.

The senior secured credit facilities currently provide senior secured financingprovides for term debt in an aggregate amount of $572.0$422.0 million consistingand revolving credit commitments in an aggregate amount of a $150.0 million, five-year revolving credit facilitywhich matures January 30, 2017. The Company is required to make principal repayments of 0.25% of borrowings under the term debt on the last business day of each March, June, September and a $422.0 million seven-year term loan facility.December. The revolving credit facility includes capacity available for letters of credit and for borrowings on same-day notice referred to as the swingline loans.

Our senior secured credit facilities include an uncommitted incremental facility that allow usThe current outstanding principal amount of term debt and applicable interest rate reflect the option to increase the amount available under the term loan facility and/or the revolving credit facility by (i) $135.0 million and (ii) an additional amount so long asterms of a repricing we areconsummated in pro forma compliance with a consolidated first lien net leverage ratio. Availability of such incremental facilities will be subject to, among other conditions, the absence of an event of default and pro forma compliance with the financial covenants under our credit agreement and the receipt of commitments by existing or additional financial institutions.

InFebruary 2013. The February 2013 we entered into Amendments to our senior secured credit facilities that,repricing, among other things: (i) reduced the applicable margins used to calculate interest rates for term loans under our senior secured credit facilities by 1.0%; (ii) reduced the applicable margins used to calculate interest rates for $131.0 million of tranche A revolving credit loans available under the senior secured credit facilities by 1.0% (with no reductions to the applicable margins for the remaining $19.0 million of available revolving credit loans); (iii) increased term loans borrowed under our term loan facility by $25.0 million with the same terms as the existing term loans (bringing total term loan borrowings to approximately $422.0 million); (iv) included a requirement that we pay a fee equal to 1.0% of the principal amount of term loans repaid in connection with certain repricing or refinancing transactions within six months after February 5, 2013; and (v) created additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated First Lien Net Leverage Ratio and reducing the applicable minimum Interest Coverage Ratio (each as defined in the Credit Agreementcredit agreement governing our senior secured credit facilities)., which included additional borrowings of $25.0 million, an interest rate reduction of 1.0% and a deferral of the March 2013 principal payment. The unpaid principal balance of term debt is due in full on the maturity date, which is January 30, 2019.

On January 16, 2014, we entered into a second amendment to our senior secured credit facilities that, among other things: (i) permitted the incurrence of the outstanding notes; and (ii) increased the total leverage ratio and senior secured net leverage ratio in connection with the future incurrence of indebtedness.

Our senior secured credit facilities include an uncommitted incremental facility that allow us the option to increase the amount available under the term loan facility and/or the revolving credit facility by (i) $135.0 million and (ii) an additional amount so long as we are in pro forma compliance with a consolidated first lien net leverage ratio. Availability of such incremental facilities will be subject to, among other conditions, the absence of an event of default and pro forma compliance with the financial covenants under our credit agreement and the receipt of commitments by existing or additional financial institutions.

Interest Rate and Fees

Borrowings under our senior secured credit facilities will bear interest at a rate per annum equal to an applicable margin plus, at our 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) the British Bankers Association LIBOR Rate (subject to a LIBOR floor of 1.25% in the case of the term loan facility) plus 1.00% or (ii) a British Bankers Association LIBOR rate (subject to a LIBOR floor of 1.25% in the case of the term loan

facility) determined by reference to Reuters two business days prior to the interest period relevant to such borrowing adjusted for certain additional costs. The applicable margin for our term loan facility is 3.75% in the case of LIBOR loans and 2.75% in the case of base rate loans. The applicable margin on our revolving credit facility is 3.50% in the case of LIBOR loans and 2.50% in the case of base rate loans (or 4.50% and 3.50% in the case of the $19.0 million of available revolving credit loans discussed above, for which no reductions to margins were made) and will be subject to aone 25 basis point step-down upon our attaining certaina consolidated first lien net leverage ratios.ratio of 2.50:1.00.

In addition to paying interest on outstanding principal under our senior secured credit facility,facilities, we will beare required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder. We will also pay customary letter of credit and agency fees.

Mandatory Prepayments

The credit agreement governing our senior secured credit facilities will requirerequires us to prepay outstanding term loans, subject to certain exceptions, with:

 

commencing with the fiscal year ended December 29, 2012, 50% (which percentage will be reduced to 25% and 0% upon our attaining certain consolidated first lien net leverage ratios) of our annual excess cash flow less the principal amount of certain debt prepayments;

 

100% of the net proceeds from certain asset sales and casualty and condemnation proceeds, subject to certain threshold amounts of net proceeds and, if no default exists, to a 100% reinvestment right if reinvested or committed to be reinvested within 12 months of receipt so long as any committed reinvestment is actively reinvested within 18 months of receipt; and

 

100% of the net proceeds from issuances or incurrence of certain debt, other than proceeds from debt permitted to be incurred under the credit agreement governing the senior secured credit facilities.

We will apply the foregoing mandatory prepayments to the term loan in direct order of maturity.

Voluntary Prepayments

We may voluntarily repay outstanding loans under the senior secured credit facilities at any time without premium or penalty;provided that voluntary prepayments of eurocurrency rate loans made on a date other than the last day of an interest period applicable thereto shall be subject to customary breakage costs.

In addition, with respect to certain repricings or refinancings of the term loan facility within six months after February 5, 2013, we will be required to pay a fee equal to 1.0% of the principal amount of loans under the term loan facility that are repriced or refinanced.

Amortization and Final Maturity

We will beare required to make scheduled quarterly payments each equal to 0.25% of the original principal amount of the term loans made on the closing date, with the balance expected to be due on the seventh anniversary of the closing date. We will not be required to make any scheduled payments under our revolving credit facility. The principal amounts outstanding under the revolving credit facility will be due and payable on the fifth anniversary of the closing date.

Guarantee and Security

All obligations under the senior secured credit facilities will be unconditionally guaranteed by Summit Materials Intermediate Holdings, LLC, and each existing and future direct or indirect wholly-owned domestic restricted subsidiary of the CompanySummit Materials (other than certain immaterial subsidiaries, subsidiaries that are

precluded by law, regulation or contractual obligation from guaranteeing the obligations and certain subsidiaries excluded via customary exceptions) and by the Company’s non-wholly owned SubsidiarySummit Materials’ non-wholly-owned subsidiary Continental Cement (collectively, the “Credit Agreement Guarantors”).

All obligations under the senior secured credit facilities, and the guarantees of those obligations, will be secured by substantially all of the following assets of the CompanySummit Materials and each subsidiary that is a Credit Agreement Guarantor, subject to certain exceptions:

 

a pledge of 100% of the capital stock of Summit Materials and 100% of the capital stock of each domestic subsidiary that is directly owned by Summit Materials or one of the subsidiary Credit Agreement Guarantors, promissory notes and any other instruments evidencing indebtedness owned by the CompanySummit Materials or one of the subsidiary Credit Agreement Guarantors and 65% of the capital stock of each wholly ownedwholly-owned foreign subsidiary that is, in each case, directly owned by Summit Materials or one of the subsidiary Credit Agreement Guarantors; and

a security interest in, and mortgages on, substantially all tangible and intangible assets (above a materiality threshold in the case of mortgages) of Summit Materials and each subsidiary Credit Agreement Guarantor.

Certain Covenants and Events of Default

Our senior secured credit facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, our and our restricted subsidiaries’ ability to:

 

incur additional indebtedness or guarantees;

 

create liens on assets;

 

change our fiscal year;

 

enter into sale and leaseback transactions;

 

engage in mergers or consolidations;

 

sell assets;

 

pay dividends and make other restricted payments;

 

make investments, loans or advances;

 

repay subordinated indebtedness;

 

make certain acquisitions;

 

engage in certain transactions with affiliates; and

 

change our lines of business.

In addition, the senior secured credit facilities require us to maintain a quarterly maximum consolidated first lien net leverage ratio and a quarterly minimum interest coverage ratio.

The credit agreement governing our senior secured credit facilities also contains certain customary representations and warranties, affirmative covenants and events of default (including, among others, an event of default upon a change of control). If an event of default occurs, the lenders under our senior secured credit facilities will be entitled to take various actions, including the acceleration of amounts due under our senior secured credit facilities and all actions permitted to be taken by a secured creditor.

DESCRIPTION OF THE NOTES

General

Certain terms used in this description are defined below under the subheading “—Certain Definitions.” In this description, (1) the terms “we,” “our,” “us” and “Company” each refer to Summit Materials, LLC, and not to any of its Subsidiaries, (2) the term “Co-Issuer” refers to Summit Materials Finance Corp. and (3) the term “Issuers” refers to the Company and the Co-Issuer.

The Issuers are jointly and severally liable for all obligations under the Notes.Notes (as defined below). The Co-Issuer is a Wholly-Owned Subsidiary of the Company that has been incorporated in Delaware as a special purpose finance subsidiary to facilitate the offering of the Notes and other debt securities of the Company. The Company believes that some prospective purchasers of the Notes may be restricted in their ability to purchase debt securities of partnerships or limited liability companies, such as the Company, unless the securities are jointly issued by a corporation. The Co-Issuer willdoes not have any substantial operations or assets and willdoes not have any revenues. Accordingly, you should not expect the Co-Issuer to participate in servicing the principal and interest obligations on the Notes.

The Issuers issued $250.0$115.0 million aggregate principal amount of 10.5%10 12% senior notes due 2020 (the “Outstanding Notes”) under an existing indenture dated January 30, 2012 (the “Indenture”) among the Issuers, the Guarantors and Wilmington Trust, National Association, as trustee (the “Trustee”). The Issuers previously issued $250.0 million aggregate principal amount of 10 12% senior notes due 2020 under the Indenture on January 30, 2012 and an additional $260.0 million aggregate principal amount of 10 12% senior notes due 2020 under the Indenture on January 17, 2014 (together, the “Existing Notes”). The Outstanding Notes and the Existing Notes were issued in a private transactiontransactions that waswere not subject to the registration requirements of the Securities Act. The exchange notes offered hereby will be treated as a single series with the Outstanding Notes and Existing Notes and will have substantially the same terms. The terms of the exchange notes to be issued in the exchange offer for such notes are substantially identical to the Outstanding Notes and the Existing Notes, except that the transfer restrictions, registration rights and additional interest provision relating to the Outstanding Notes will not apply to the exchange notes. However, until the Outstanding Notes are registered and exchanged for exchange notes, or the Outstanding Notes are otherwise freely tradeable and the restrictive legend has been removed therefrom, the Existing Notes will have a different CUSIP number or numbers than that of the Outstanding Notes, which may adversely affect the liquidity of the Outstanding Notes and cause such notes to trade at different prices than the Existing Notes. In this section, we referunless the context requires otherwise, references to “Notes” are to the Outstanding Notes and the Existing Notes, together with the exchange notes offered hereby that are to be exchanged for the Outstanding Notes, as the “Notes”.Notes. Except as set forth herein, the terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act.

The following description is only a summary of the material provisions of the Indenture. It does not purport to be complete and is qualified in its entirety by reference to the provisions of the Indenture, including the definitions therein of certain terms used below. We urge you to read the Indenture because it, and not this description, defines your rights as Holders of the Notes. You may request copies of the Indenture at our address set forth under “Prospectus Summary—Corporate Information.”

Brief Description of the Notes

The Notes:

 

are general unsecured senior obligations of the Issuers;

 

rank equally in right of payment with all existing and future Senior Indebtedness of the Issuers (including borrowings under the Senior Secured Credit Facilities)Facilities and the Existing Notes);

are effectively subordinated to all Secured Indebtedness of the Issuers (including borrowings under the Senior Secured Credit Facilities), to the extent of the value of the collateral securing such Secured Indebtedness;

 

are structurally subordinated to all existing and future Indebtedness, claims of holders of Preferred Stock and other liabilities of the Company’s Subsidiaries that are not guaranteeing the Notes;

 

are senior in right of payment to all future Subordinated Indebtedness of the Issuers; and

 

are initially guaranteed on a senior unsecured basis by the Guarantors and will also will be guaranteed in the future by each U.S. Wholly-Owned Subsidiary that is a Restricted Subsidiary, if any, subject to certain exceptions, that guarantees Indebtedness of the Issuers under the Senior Secured Credit Facilities.

Guarantees

The Guarantors, as primary obligors and not merely as sureties, have jointly and severally guaranteed, irrevocably and unconditionally, on an unsecured senior basis, the performance and full and punctual payment when due, whether at maturity, by acceleration or otherwise, of all obligations of the Issuers under the Indenture and the Notes, whether for payment of principal of, any premium, interest in respect of Notes or expenses, indemnification or otherwise, on the terms set forth in the Indenture by executing the Indenture.

The Guarantors guarantee the Notes and, in the future, subject to exceptions set forth under the caption “—Certain Covenants—Limitation on Guarantees of Indebtedness by Restricted Subsidiaries,” each direct and indirect U.S. Wholly-Owned Subsidiary that is a Restricted Subsidiary of the Company that guarantees certain Indebtedness of the Issuers or any other Guarantor will, guarantee the Notes, subject to certain exceptions and to release as provided below or elsewhere in this “Description of the Notes.” Each of the Guarantees of the Notes are a general unsecured senior obligation of each Guarantor, rank equally in right of payment with all existing and future Senior Indebtedness of such Guarantor (including such Guarantor’s guarantee of the Senior Secured Credit Facilities)Facilities and the Existing Notes), are effectively subordinated to all Secured Indebtedness of such Guarantor (including such Guarantor’s guarantee of the Senior Secured Credit Facilities), to the extent of the value of the collateral of such Guarantor securing such Secured Indebtedness, and rank senior in right of payment to all future Subordinated Indebtedness of such Guarantor. Each of the Guarantees of the Notes are structurally subordinated to all existing and future Indebtedness, claims of holders of Preferred Stock and other liabilities of Subsidiaries of each Guarantor that do not Guarantee the Notes.

Not all of the Company’s Subsidiaries guarantee the Notes. In the event of a bankruptcy, liquidation, reorganization or similar proceeding of any of these non-guarantor Subsidiaries, the non-guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Issuers or a Guarantor. As a result, all of the existing and future liabilities of our non-guarantor Subsidiaries, including any claims of trade creditors, are effectively senior to the Notes. The Indenture does not limit the amount of liabilities that are not considered Indebtedness which may be incurred by the Company or its Restricted Subsidiaries, including the non-Guarantors.

The obligations of each Guarantor under its Guarantee are limited as necessary to prevent the Guarantee from constituting a fraudulent conveyance under applicable law. This provision may not, however, be effective to protect a Guarantee from being voided under fraudulent transfer law, or may reduce the applicable Guarantor’s obligation to an amount that effectively makes its Guarantee worthless. If a Guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the Guarantor, and, depending on the amount of such indebtedness, a Guarantor’s liability on its Guarantee could be reduced to zero. See “Risk Factors—Risks Related to Our Indebtedness and the Exchange Notes—Federal and state fraudulent transfer laws may permit a court to void the exchange notes and the guarantees, subordinate claims in respect of the exchange notes and the guarantees and require noteholders to return payments received and, if that occurs, you may not receive any payments on the exchange notes.”

Any Guarantor that makes a payment under its Guarantee is entitled upon payment in full of all guaranteed obligations under the Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’spro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

Each Guarantor may consolidate with, amalgamate or merge with or into or sell all or substantially all its assets to the Company, the Co-Issuer or another Guarantor without limitation or any other Person upon the terms and conditions set forth in the Indenture. See “—Certain Covenants—Merger, Consolidation or Sale of All or Substantially All Assets.”

Each Guarantee by a Guarantor provides by its terms that it will be automatically and unconditionally released and discharged upon:

(1) (a) any sale, exchange, disposition or transfer (by merger, amalgamation, consolidation or otherwise) of (i) the Capital Stock of such Guarantor, after which the applicable Guarantor is no longer a Restricted Subsidiary or (ii) all or substantially all the assets of such Guarantor, in each case if such sale, exchange, disposition or transfer is made in compliance with the applicable provisions of the Indenture;

(b) the release or discharge of the Guarantee by such Guarantor of Indebtedness under the Senior Secured Credit Facilities, or the release or discharge of such other guarantee that resulted in the creation of such Guarantee, except a discharge or release by or as a result of payment under such Guarantee (it being understood that a release subject to a contingent reinstatement is still a release, and that if any such Guarantee is so reinstated, such Guarantee shall also be reinstated to the extent that such Guarantor would then be required to provide a Guarantee pursuant to the covenant described under “—Certain Covenants—Limitation on Guarantees of Indebtedness by Restricted Subsidiaries”);

(c) the designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in compliance with the applicable provisions of the Indenture; or

(d) the exercise by the Issuers of their legal defeasance option or covenant defeasance option as described under “—Legal Defeasance and Covenant Defeasance” or the discharge of the Issuers’ obligations under the Indenture in accordance with the terms of the Indenture; and

(2) such Guarantor delivering to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transaction have been complied with.

Ranking

The payment of the principal of, premium, if any, and interest on the Notes and the payment of any Guarantee rank equally in right of payment to all existing and future Senior Indebtedness of the Issuers or the relevant Guarantor, as the case may be, including the obligations of the Issuers and such Guarantor under the Senior Secured Credit Facilities.Facilities and the Existing Notes.

The Notes and the Guarantees are effectively subordinated in right of payment to all of the Issuers’ and each Guarantor’s existing and future Secured Indebtedness to the extent of the value of the collateral securing such Secured Indebtedness. $401.1As of June 28, 2014, on a pro forma basis after giving effect to the September 2014 Transactions, we would have had $506.6 million of Secured Indebtedness outstanding, including $398.0$482.8 million in borrowings under the Senior Secured Credit Facilities (without giving effect to OID on our term loan facility) and $3.1$23.8 million of obligations related to capital leases.leases and other debt obligations. As of December 29, 2012,June 28, 2014, the Company would also have had (1) an additional approximately $135.5$27.5 million of borrowing capacity under the revolving credit facility under the Senior Secured Credit Facilities (after giving effect to $14.5approximately $22.8 million of issued but undrawn letters of credit), which, if borrowed, would be Secured Indebtedness and (2) the option to increase the amount available under the term loan facility and/or the revolving credit facility by (x) $135.0 million and (y) an additional amount so long as the Company is in pro forma compliance with a consolidated first lien net leverage ratio, which in each case, if borrowed, would be Secured Indebtedness.

Although the Indenture contains limitations on the amount of additional Indebtedness that the Issuers and the Restricted Subsidiaries (including the Guarantors) may incur, under certain circumstances the amount of such additional Indebtedness could be substantial and under certain circumstances such additional Indebtedness may be secured. The Indenture also does not limit the amount of additional Indebtedness that any direct or indirect parent company of the Company may incur. See “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.”

Paying Agent and Registrar for the Notes

The Issuers will maintain one or more paying agents for the Notes. The initial paying agent for the Notes is the Trustee.

The Issuers will also maintain one or more registrars and a transfer agent. The initial registrar and transfer agent with respect to the Notes is the Trustee. The registrar will maintain a register reflecting ownership of the Notes outstanding from time to time. The paying agent will make payments on, and the transfer agent will facilitate transfer of, the Notes on behalf of the Issuers.

The Issuers may change the paying agent, the registrar or the transfer agent without prior notice to the Holders. The Company or any of its Subsidiaries may act as a paying agent, registrar or transfer agent.

If any Notes are listed on an exchange and the rules of such exchange so require, the Issuers will satisfy any requirement of such exchange as to paying agents, registrars and transfer agents and will comply with any notice requirements required under such exchange in connection with any change of paying agent, registrar or transfer agent.

Transfer and Exchange

A Holder may transfer or exchange Notes in accordance with the Indenture. The registrar and the Trustee may require a Holder to furnish appropriate endorsements and transfer documents in connection with a transfer of Notes. Holders will be required to pay all taxes due on transfer. The Issuers are not required to transfer or exchange any Note selected for redemption or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Sale Offer. Also, the Issuers are not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered Holder of a Note will be treated as the owner of the Note for all purposes.

Principal, Maturity and Interest

The Issuers previously issued an$510.0 million aggregate principal amount of $250.0 million of OutstandingExisting Notes in a private transactiontransactions that waswere not subject to the registration requirements of the Securities Act. All $510.0 million aggregate principal amount of the privately placed Existing Notes were subsequently exchanged for substantially identical notes that were registered under the Securities Act and therefore are freely tradable. The Notes will mature on January 31, 2020. Subject to compliance with the covenant described below under the caption “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” the Issuers may issue additional Notes under the Indenture from time to time (“Additional Notes”). AllThe Outstanding Notes, includingthe Existing Notes and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including waivers, amendments, redemptions and offers to purchase, except for certain waivers and amendments as set forth herein. Unless the context requires otherwise, references to “Notes” for all purposes of the Indenture and this “Description of the Notes” include any Additional Notes that are actually issued. The Outstanding Notes constitute Additional Notes under the Indenture. The Notes will be issued in minimum denominations of $2,000 and any integral multiples of $1,000 in excess of $2,000.

Interest on the Notes accrues at the rate of 10.5%10 12% per annum. Interest on the Notes is payable semi-annually in arrears on each January 31 and July 31, commencing, Julywith respect to the Outstanding Notes, January 31, 20122015, to the Holders of Notes of record on the immediately preceding January 15 and July 15, respectively. Interest on the Notes accrues from, with respect to the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date.Outstanding Notes, July 31, 2014. Interest on the Notes is computed on the basis of a 360-day year comprised of twelve 30-day months.

Payment of Principal, Premium and Interest

Cash payments of principal of, premium, if any, and interest on the Notes are payable at the office or agency of the Issuers maintained for such purpose or, at the option of the Issuers, cash payment of interest may be made through the paying agent by check mailed to the Holders of the Notes at their respective addresses set forth in the

register of Holders;provided, that (a) all cash payments of principal, premium, if any, and interest with respect to the Notes represented by one or more global notes registered in the name of or held by The Depository Trust Company (“DTC”) or its nominee are made through the paying agent by wire transfer of immediately available funds to the accounts specified by the registered Holder or Holders thereof and (b) all cash payments of principal, premium, if any, and interest with respect to certificated Notes are made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the paying agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). Until otherwise designated by the Issuers, the Issuers’ office or agency will be the office of the Trustee maintained for such purpose.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

The Issuers are not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Issuers may be required to make an offer to purchase Notes as described under the caption “—Repurchase at the Option of Holders.” The Issuers, the Investors and their respective Affiliates may at any time and from time to time purchase Notes in the open market or otherwise.

Optional Redemption

Except as set forth below, the Issuers are not entitled to redeem the Notes at their option prior to January 31, 2016. At any time prior to January 31, 2016, the Issuers may on one or more occasions redeem all or a part of the Notes, upon notice as described under “—���—Selection and Notice,” at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, plus accrued and unpaid interest, if any, to the date of redemption (the “Redemption Date”), subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date.

On and after January 31, 2016, the Issuers may redeem the Notes, in whole or in part, upon notice as described under the heading “—Selection and Notice,” at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if any, to the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the twelve-month period beginning on January 31 of each of the years indicated below:

 

Year

  Senior
Notes
Percentage
 

2016

   105.250

2017

   102.625

2018 and thereafter

   100.000

In addition, until January 31, 2015, the Issuers may, at their option, and on one or more occasions, redeem up to 35.0% of the aggregate principal amount of Notes issued by them at a redemption price equal to the sum of

(a) 100% of the aggregate principal amount thereof, plus (b) a premium equal to the stated interest rate per annum on the Notes, plus (c) accrued and unpaid interest, if any, to the applicable Redemption Date, subject to the right of Holders of Notes of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds received by the Company from one or more Equity Offerings or a contribution to the Company’s common equity capital made with the net cash proceeds of a concurrent Equity Offering; provided, that (a) at least 50% of the aggregate principal amount of Notes originally issued under the Indenture on the Issue Date and any Additional Notes issued under the Indenture after the Issue Date remains outstanding immediately after the occurrence of each such redemption; and (b) each such redemption occurs within 180 days of the date of closing of each such Equity Offering.

Notice of any redemption, whether in connection with an Equity Offering or otherwise, may be given prior to the completion thereof, and any such redemption or notice may, at the Issuers’ discretion, be subject to one or more conditions precedent, including, but not limited to, the completion of the related Equity Offering or other corporate transaction. If such redemption is subject to the satisfaction of one or more conditions precedent, in the Issuers’ discretion the Redemption Date may be delayed or the redemption may be rescinded in the event that any such conditions shall not have been satisfied by the original Redemption Date. If any Notes are listed on an exchange, and the rules of such exchange so require, the Issuers will notify the exchange of any such notice of redemption. In addition, the Issuers will notify the exchange of the principal amount of any Notes outstanding following any partial redemption of such Notes.

Selection and Notice

If the Issuers are redeeming less than all of the Notes issued under the Indenture at any time, the Trustee will select the Notes to be redeemed (a) if the Notes are listed on an exchange, in compliance with the requirements of such exchange or (b) on apro rata basis to the extent practicable, or, if thepro rata basis is not practicable for any reason by lot or by such other method as the Trustee shall deem fair and appropriate. No Notes of $2,000 or less can be redeemed in part.

Notices of redemption shall be delivered electronically or mailed by first-class mail, postage prepaid, at least 30 but not more than 60 days before the redemption date to each Holder of Notes at such Holder’s registered address or otherwise in accordance with the procedures of DTC, except that redemption notices may be delivered more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture. If any Note is to be redeemed in part only, any notice of redemption that relates to such Note shall state the portion of the principal amount thereof that has been or is to be redeemed.

With respect to Notes represented by certificated notes, the Issuers will issue a new Note in a principal amount equal to the unredeemed portion of the original Note in the name of the Holder upon cancellation of the original Note;provided, that new Notes will only be issued in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. Notes called for redemption become due on the date fixed for redemption. On and after the Redemption Date, interest ceases to accrue on Notes or portions of them called for redemption.

Repurchase at the Option of Holders

Change of Control

The Indenture provides that if a Change of Control occurs after the Issue Date, unless the Issuers have previously or concurrently delivered a redemption notice with respect to all the outstanding Notes as described under “—Optional Redemption,” the Issuers will make an offer to purchase all of the Notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101.0% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, subject to the right of Holders of the Notes of record on the relevant record date to receive interest due

on the relevant interest payment date. Within 30 days following any Change of Control except to the extent that the Issuers have exercised the right to redeem the Notes as described under “—Optional Redemption” above, the Issuers will send notice of such Change of Control Offer electronically or by first-class mail, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the security register or otherwise in accordance with the procedures of DTC with the following information:

(1) that a Change of Control Offer is being made pursuant to the covenant entitled “Change of Control,” and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment by the Issuers;

(2) the purchase price and the purchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is delivered (the “Change of Control Payment Date”);

(3) that any Note not properly tendered will remain outstanding and continue to accrue interest;

(4) that unless the Issuers default in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

(5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the paying agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(6) that Holders will be entitled to withdraw their tendered Notes and their election to require the Issuers to purchase such Notes,provided that the paying agent receives, not later than the close of business on the second Business Day prior to the expiration date of the Change of Control Offer, a facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes, or a specified portion thereof, and its election to have such Notes purchased;

(7) that if the Issuers are redeeming less than all of the Notes, the Holders of the remaining Notes will be issued new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered. The unpurchased portion of the Notes must be equal to at least $2,000 or any integral multiple of $1,000 in excess of $2,000;

(8) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control; and

(9) the other instructions, as determined by the Issuers, consistent with the covenant described hereunder, that a Holder must follow.

The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations described in the Indenture by virtue thereof.

On the Change of Control Payment Date, the Issuers will, to the extent permitted by law:

(1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;

(2) deposit with the paying agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered; and

(3) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to, and purchased by, the Issuers.

The Senior Secured Credit Facilities provide, and future credit agreements or other agreements relating to Indebtedness to which the Issuers become a party may provide, that certain change of control events with respect to the Issuers would constitute a default thereunder (including a Change of Control under the Indenture). If we experience a change of control that triggers a default under the Senior Secured Credit Facilities or any such future Indebtedness, we could seek a waiver of such default or seek to refinance the Senior Secured Credit Facilities or such future Indebtedness. In the event we do not obtain such a waiver or do not refinance the Senior Secured Credit Facilities or such future Indebtedness, such default could result in amounts outstanding under the Senior Secured Credit Facilities or such future Indebtedness being declared due and payable.

Our ability to pay cash to the Holders of Notes following the occurrence of a Change of Control may be limited by our then-existing financial resources. Therefore, sufficient funds may not be available when necessary to make any required repurchases.

The Change of Control purchase feature of the Notes may in certain circumstances make more difficult or discourage a sale or takeover of us and, thus, the removal of incumbent management. After the Issue Date, weWe have no present intention to engage in a transaction involving a Change of Control, although it is possible that we could decide to do so in the future. Subject to the limitations discussed below, we could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of Indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings. Restrictions on our ability to incur additional Indebtedness are contained in the covenants described under “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “—Certain Covenants—Liens.” Such restrictions in the Indenture can be waived only with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Except for the limitations contained in such covenants, however, the Indenture does not contain any covenants or provisions that may afford Holders of the Notes protection in the event of a highly leveraged transaction.

The Issuers will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Issuers and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

The definition of “Change of Control” includes a disposition of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to certain Persons. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of “all or substantially all” of the assets of the Company and its Subsidiaries, taken as a whole. As a result, it may be unclear as to whether a Change of Control has occurred and whether a Holder of Notes may require the Issuers to make an offer to repurchase the Notes as described above.

The provisions under the Indenture relating to the Issuers’ obligation to make an offer to repurchase the Notes as a result of a Change of Control may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes then outstanding.

Asset Sales

The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale, unless:

(1) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of; and

(2) except in the case of a Permitted Asset Swap, at least 75.0% of the consideration therefor received by the Company or such Restricted Subsidiary, as the case may be, is in the form of Cash Equivalents; provided, that the amount of:

(a) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto) of the Company or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the Notes, that are assumed by the transferee of any such assets and for which the Company and all of its Restricted Subsidiaries have been validly released by all applicable creditors in writing;

(b) any securities, notes or other obligations or assets received by the Company or such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into Cash Equivalents (to the extent of the Cash Equivalents received) within 180 days following the closing of such Asset Sale; and

(c) any Designated Non-cash Consideration received by the Company or such Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of (i) $30.0 million and (ii) 2.25% of Total Assets at the time of the receipt of such Designated Non-cash Consideration, with the fair market value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value,

shall be deemed to be Cash Equivalents for purposes of this provision and for no other purpose.

Within 365 days after the receipt of any Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary, at its option, may apply the Net Proceeds from such Asset Sale,

(1) to permanently reduce:

(a) Obligations under the Senior Secured Credit Facilities, and to correspondingly reduce commitments with respect thereto;

(b) Obligations under Secured Indebtedness, which is secured by a Lien that is permitted by the Indenture, and to correspondingly reduce commitments with respect thereto;

(c) Obligations under other Senior Indebtedness (and to correspondingly reduce commitments with respect thereto),provided that the Issuers shall equally and ratably reduce Obligations under the Notes as provided under “—Optional Redemption” or through open-market purchases (to the extent such purchases are at or above 100.0% of the principal amount thereof) or by making an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase their Notes at 100.0% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, on the amount of Notes to be repurchased, to the date of repurchase; or

(d) Indebtedness of a Restricted Subsidiary that is not a Guarantor, other than Indebtedness owed to the Issuers or another Restricted Subsidiary; or

(2) to make (a) an Investment in any one or more businesses,provided that such Investment in any business is in the form of the acquisition of Capital Stock and results in the Company or any of its Restricted Subsidiaries, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) capital expenditures or (c) acquisitions of other assets, in each of (a), (b) and (c), used or useful in a Similar Business; or

(3) to make an Investment in (a) any one or more businesses,provided that such Investment in any business is in the form of the acquisition of Capital Stock and results in the Company or any of its Restricted Subsidiaries, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) properties or (c) acquisitions of other assets that, in each of (a), (b) and (c), replace the businesses, properties and/or assets that are the subject of such Asset Sale.

provided, that in the case of clauses (2) and (3) above, a binding commitment shall be treated as a permitted application of the Net Proceeds from the date of such commitment so long as the Company, or such Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Proceeds will be applied to satisfy such commitment within 180 days of such commitment (an “Acceptable Commitment”) and, in the event any Acceptable Commitment is later cancelled or terminated for any reason before the Net Proceeds are applied in connection therewith, the Company or such Restricted Subsidiary enters into another Acceptable Commitment (a “Second Commitment”) within 180 days of such cancellation or termination; provided further that if any Second Commitment is later cancelled or terminated for any reason before such Net Proceeds are applied, then such Net Proceeds shall constitute Excess Proceeds.

Any Net Proceeds from the Asset Sale that are not invested or applied as provided and within the time period set forth in the preceding paragraph will be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $25.0 million, the Issuers shall make an offer to all Holders of the Notes and, if required by the terms of any Indebtedness that is pari passu with the Notes (“Pari Passu Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum aggregate principal amount of the Notes and such Pari Passu Indebtedness that is in an amount equal to at least $2,000, or an integral multiple of $1,000 thereafter, that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100.0% of the principal amount thereof (or accreted value thereof, if less), plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. The Issuers will commence an Asset Sale Offer with respect to Excess Proceeds within ten10 Business Days after the date that Excess Proceeds exceed $25.0 million by delivering the notice required pursuant to the terms of the Indenture, with a copy to the Trustee. The Issuers may satisfy the foregoing obligations with respect to any Net Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Proceeds prior to the expiration of the relevant 365 days (or such longer period provided above) or with respect to Excess Proceeds of $25.0 million or less.

To the extent that the aggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes or the Pari Passu Indebtedness surrendered by such holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and the Company shall select such Pari Passu Indebtedness to be purchased on apro rata basis based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered with adjustments as necessary so that no Notes or Pari Passu Indebtedness will be repurchased in part in an unauthorized denomination. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds that resulted in the Asset Sale Offer shall be reset to zero (regardless of whether there are any remaining Excess Proceeds upon such completion).

Pending the final application of any Net Proceeds pursuant to this covenant, the holder of such Net Proceeds may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under a revolving credit facility, including under the Senior Secured Credit Facilities, or otherwise invest such Net Proceeds in any manner not prohibited by the Indenture.

The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities

laws or regulations conflict with the provisions of the Indenture, the Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations described in the Indenture by virtue thereof.

The provisions under the Indenture relating to the Issuers’ obligation to make an offer to repurchase the Notes as a result of an Asset Sale may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes then outstanding.

Future credit agreements or other similar agreements to which the Issuers become a party may contain restrictions on the Issuers’ ability to repurchase Notes. In the event an Asset Sale occurs at a time when the Issuers are prohibited from purchasing Notes, the Issuers could seek the consent of their lenders to the repurchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Issuers do not obtain such consent or repay such borrowings, the Issuers will remain prohibited from repurchasing Notes. In such a case, the Issuers’ failure to repurchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, likely constitute a default under such other agreements.

Certain Covenants

Set forth below are summaries of certain covenants that are contained in the Indenture.

During any period of time that (i) the Notes have Investment Grade Ratings from both Rating Agencies and (ii) no Default has occurred and is continuing under the Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event” and the date thereof being referred to as the “Suspension Date”) then, the covenants specifically listed under the following captions in this “Description of the Notes” section of this prospectus will not be applicable to the Notes (collectively, the “Suspended Covenants”):

(1) “—Repurchase at the Option of Holders—Asset Sales”;

(2) “—Limitation on Restricted Payments”;

(3) “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(4) clause (4) of the first paragraph of “—Merger, Consolidation or Sale of All or Substantially All Assets”;

(5) “—Transactions with Affiliates”;

(6) “—Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries”; and

(7) “—Limitation on Guarantees of Indebtedness by Restricted Subsidiaries”Subsidiaries.”

During any period that the foregoing covenants have been suspended, the Company may not designate any of its Subsidiaries as Unrestricted Subsidiaries pursuant to the second sentence of the definition of “Unrestricted Subsidiary.”

If and while the Company and its Restricted Subsidiaries are not subject to the Suspended Covenants, the Notes will be entitled to substantially less covenant protection. In the event that the Company and its Restricted Subsidiaries are not subject to the Suspended Covenants under the Indenture for any period of time as a result of the foregoing, and on any subsequent date (the “Reversion Date”) one or both of the Rating Agencies withdraw their Investment Grade Rating or downgrade the rating assigned to the Notes below an Investment Grade Rating, then the Company and its Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants under the Indenture with respect to future events. The period of time between the Suspension Date and the Reversion Date is referred to in this description as the “Suspension Period”. Additionally, upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Net Proceeds shall be reset to zero.

Notwithstanding the foregoing, in the event of any such reinstatement, no action taken or omitted to be taken by the Company or any of its Restricted Subsidiaries prior to such reinstatement will give rise to a Default or Event of Default under the Indenture with respect to the Notes; provided, that (1) with respect to Restricted Payments made after such reinstatement, the amount available to be made as Restricted Payments will be calculated as though the covenant described above under the caption “—Limitation on Restricted Payments” had been in effect prior to, but not during, the Suspension Period; and (2) all Indebtedness incurred, or Disqualified Stock issued, during the Suspension Period will be classified to have been incurred or issued pursuant to clause (3) of the second paragraph of “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock;” (3) any Affiliate Transaction entered into after such reinstatement pursuant to an agreement entered into during any Suspension Period shall be deemed to be permitted pursuant to clause (6) of the second paragraph of the covenant described under “—Affiliate Transactions;” (4) any encumbrance or restriction on the ability of any Restricted Subsidiary that is not a Guarantor to take any action described in clauses (1) through (3) of the first paragraph of the covenant described under “—Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries” that becomes effective during any Suspension Period shall be

deemed to be permitted pursuant to clause (a) of the second paragraph of the covenant described under “—Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries;” and (5) no Subsidiary of the Company shall be required to comply with the covenant described under “—Limitation on Guarantees of Indebtedness by Restricted Subsidiaries” after such reinstatement with respect to any guarantee entered into by such Subsidiary during any Suspension Period.

There can be no assurance that the Notes will ever achieve or maintain Investment Grade Ratings.

Limitation on Restricted Payments

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(I) declare or pay any dividend or make any payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (in each case, solely in such Person’s capacity as holder of such Equity Interests), including any dividend, payment or distribution payable in connection with any merger, amalgamation or consolidation, other than:

(a) dividends and distributions by the Company payable solely in Equity Interests (other than Disqualified Stock) of the Company; or

(b) dividends and distributions by a Restricted Subsidiary so long as, in the case of any dividend, payment or distribution payable on or in respect of any class or series of securities (including Equity Interests) issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend, payment or distribution in accordance with its Equity Interests in such class or series of securities (including Equity Interests);

(II) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent company of the Company, including in connection with any merger, amalgamation or consolidation;

(III) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness, other than:

(a) Indebtedness permitted under clauses (7), (8) and (9) of the second paragraph of the covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; or

(b) the purchase, repurchase or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition; or

(IV) make any Restricted Investment (all such payments and other actions set forth in clauses (I) through (IV) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

(1) no Default shall have occurred and be continuing or would occur as a consequence thereof;

(2) immediately after giving effect to such transaction on a pro forma basis, (x) the Company could incur $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” (the “Fixed Charge Coverage Test”) and (y) the Consolidated Leverage Ratio of the Company is less than 5.00 to 1.00; and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clauses (1), 6(c), (9) and (14) of the next succeeding paragraph, but excluding all other

Restricted Payments permitted by the next succeeding paragraph), is less than the sum of (without duplication):

(a) 50.0% of the Consolidated Net Income of the Company for the period (taken as one accounting period and including the predecessor) beginning on the first day of the fiscal quarter during which the Issue Date occurs to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, or, in the case such Consolidated Net Income for such period is a deficit, minus 100.0% of such deficit; plus

(b) 100.0% of the aggregate net cash proceeds and the fair market value of marketable securities or other property received by the Company since immediately after the Issue Date (other than net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of the second paragraph of “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”) from the issue or sale of:

(i) (A) Equity Interests of the Company, including Treasury Capital Stock (as defined below), but excluding cash proceeds and the fair market value of marketable securities or other property received from the sale of:

(x) Equity Interests to any future, present or former employees, directors, officers, managers or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Company, any direct or indirect parent company of the Company or any of the Company’s Subsidiaries after the Issue Date to the extent such amounts have been applied to Restricted Payments made in accordance with clause (4) of the next succeeding paragraph; and

(y) Designated Preferred Stock;

and (B) to the extent such net cash proceeds are actually contributed to the Company, Equity Interests of the Company’s direct or indirect parent companies (excluding contributions of the proceeds from the sale of Designated Preferred Stock of such companies or contributions to the extent such amounts have been applied to Restricted Payments made in accordance with clause (4) of the next succeeding paragraph); or

(ii) debt securities of the Company that have been converted into or exchanged for such Equity Interests of the Company;

provided, that this clause (b) shall not include the proceeds from (W) Refunding Capital Stock (as defined below) applied in accordance with clause (2) of the next succeeding paragraph, (X) Equity Interests or convertible debt securities of the Company sold to a Restricted Subsidiary, (Y) Disqualified Stock or debt securities that have been converted into Disqualified Stock or (Z) Excluded Contributions; plus

(c) 100.0% of the aggregate amount of cash and the fair market value of marketable securities or other property contributed to the capital of the Company following the Issue Date (other than net cash proceeds to the extent such net cash proceeds have been used to incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to clause (12)(a) of the second paragraph of “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”) (other than by a Restricted Subsidiary and other than any Excluded Contributions); plus

(d) 100.0% of the aggregate amount received in cash and the fair market value of marketable securities or other property received by means of:

(i) the sale or other disposition (other than to the Company or a Restricted Subsidiary) of, or other returns on Investments from, Restricted Investments made by the Company or its Restricted

Subsidiaries and repurchases and redemptions of such Restricted Investments from the Company or its Restricted Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Restricted Investments made by the Company or its Restricted Subsidiaries, in each case after the Issue Date; or

(ii) the sale (other than to the Company, the Co-Issuer or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a dividend or distribution from an Unrestricted Subsidiary (other than in each case to the extent the Investment in such Unrestricted Subsidiary was made by the Company or a Restricted Subsidiary pursuant to clause (7) of the next succeeding paragraph or to the extent such Investment constituted a Permitted Investment) or a dividend from an Unrestricted Subsidiary after the Issue Date; plus

(e) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary or the merger, amalgamation or consolidation of an Unrestricted Subsidiary into the Company or a Restricted Subsidiary or the transfer of all or substantially all of the assets of an Unrestricted Subsidiary to the Company or a Restricted Subsidiary after the Issue Date, the fair market value of the Investment in such Unrestricted Subsidiary (or the assets transferred) at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary or at the time of such merger, amalgamation, consolidation or transfer of assets, other than to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment;provided that, in the case of this clause (e), if the fair market value of such Investment shall exceed $40.0 million, such fair market value shall be determined by the board of directors of the Company, whose resolution with respect thereto will be delivered to the Trustee), at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary, other than to the extent the Investment in such Unrestricted Subsidiary was made by the Company, the Co-Issuer or a Restricted Subsidiary pursuant to clause (7) of the next succeeding paragraph or to the extent such Investment constituted a Permitted Investment.

The foregoing provisions will not prohibit:

(1) the payment of any dividend or other distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or other distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or other distribution or redemption payment would have complied with the provisions of the Indenture;

(2) (a) the redemption, repurchase, retirement or other acquisition of any Equity Interests, including any accrued and unpaid dividends thereon (“Treasury Capital Stock”) or Subordinated Indebtedness of the Company or any Restricted Subsidiary or any Equity Interests of any direct or indirect parent company of the Company, in exchange for, or out of the proceeds of the substantially concurrent sale or issuance (other than to a Restricted Subsidiary) of, Equity Interests of the Company or any direct or indirect parent company of the Company to the extent contributed to the Company (in each case, other than any Disqualified Stock) (“Refunding Capital Stock”), (b) the declaration and payment of dividends on Treasury Capital Stock out of the proceeds of the substantially concurrent sale or issuance (other than to a Subsidiary of the Company or to an employee stock ownership plan or any trust established by the Company or any of

its Subsidiaries) of Refunding Capital Stock, and (c) if, immediately prior to the retirement of Treasury Capital Stock, the declaration and payment of dividends thereon was permitted under clauses (6) (a) or (b) of this paragraph, the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of any direct or indirect parent company of the Company) in an aggregate amount per year no greater than the aggregate amount of dividends per annum that were declarable and payable on such Treasury Capital Stock immediately prior to such retirement;

(3) the defeasance, redemption, repurchase, exchange or other acquisition or retirement (a) of Subordinated Indebtedness of the Issuers or a Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of the Issuers or a Guarantor or Disqualified Stock of the

Company, the Co-Issuer or a Guarantor or (b) Disqualified Stock of the Issuers or a Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Disqualified Stock of the Issuers or a Guarantor, that, in each case, is incurred or issued, as applicable, in compliance with “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” so long as:

(a) the principal amount (or accreted value, if applicable) of such new Indebtedness or the liquidation preference of such new Disqualified Stock does not exceed the principal amount of (or accreted value, if applicable), plus any accrued and unpaid interest on, the Subordinated Indebtedness or the liquidation preference of, plus any accrued and unpaid dividends on, the Disqualified Stock being so defeased, redeemed, repurchased, exchanged, acquired or retired for value, plus the amount of any premium (including tender premium) required to be paid under the terms of the instrument governing the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, exchanged, acquired or retired, defeasance costs and any fees and expenses incurred in connection with the issuance of such new Indebtedness or Disqualified Stock;

(b) such new Indebtedness is subordinated to the Notes or the applicable Guarantee at least to the same extent as such Subordinated Indebtedness so defeased, redeemed, repurchased, exchanged, acquired or retired;

(c) such new Indebtedness or Disqualified Stock has a final scheduled maturity date equal to or later than the final scheduled maturity date of the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, exchanged, acquired or retired (or, if earlier, the date that is 91 days after the maturity date of the Notes); and

(d) such new Indebtedness or Disqualified Stock has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness or Disqualified Stock being so defeased, redeemed, repurchased, exchanged, acquired or retired (or requires no or nominal payments in cash prior to the date that is 91 days after the maturity date of the Notes);

(4) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of Equity Interests (other than Disqualified Stock) of the Company or any direct or indirect parent company of the Company held by any future, present or former employee, director, officer, member of management or consultant (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Company, any of its Subsidiaries or any of its direct or indirect parent companies pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, or any stock subscription or shareholder agreement (including, for the avoidance of doubt, any principal and interest payable on any notes issued by the Company or any direct or indirect parent company of the Company in connection with such repurchase, retirement or other acquisition), including any Equity Interest rolled over by management of the Company or any direct or indirect parent company of the Company in connection with the Transactions; provided, that the aggregate amount of Restricted Payments made under this clause (4) do not exceed in any calendar year $15.0 million (which shall increase to $25.0 million subsequent to the consummation of an underwritten public Equity Offering by the Company or any direct or indirect parent entity of the Company) (with unused amounts in any calendar year being

carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $30.0 million in any calendar year (which shall increase to $50.0 million subsequent to the consummation of an underwritten public Equity Offering by the Company or any direct or indirect parent corporation of the Company));provided,further, that such amount in any calendar year under this clause may be increased by an amount not to exceed:

(a) the cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of the Company and, to the extent contributed to the Company, the cash proceeds from the sale of Equity Interests of any of the Company’s direct or indirect parent companies, in each case to any future, present or former employees, directors, officers, members of management, or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Company, any of its

Subsidiaries or any of its direct or indirect parent companies that occurs after the Issue Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (3) of the preceding paragraph;plus

(b) the cash proceeds of key man life insurance policies received by the Company or its Restricted Subsidiaries (or any direct or indirect parent company to the extent contributed to the Company) after the Issue Date;less

(c) the amount of any Restricted Payments previously made with the cash proceeds described in clauses (a) and (b) of this clause (4);

andprovided,further, that cancellation of Indebtedness owing to the Company from any future, present or former employees, directors, officers, members of management or consultants of the Company (or their respective Controlled Investment Affiliates or Immediate Family Members), any of the Company’s direct or indirect parent companies or any of the Company’s Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company or any of its direct or indirect parent companies will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of the Indenture;

(5) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or any of its Restricted Subsidiaries or any class or series of Preferred Stock of any Restricted Subsidiary issued in accordance with the covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” to the extent such dividends are included in the definition of “Fixed Charges”;

(6) (a) the declaration and payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued by the Company or any of its Restricted Subsidiaries after the Issue Date;

(b) the declaration and payment of dividends to any direct or indirect parent company of the Company, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued by such parent company after the Issue Date,provided that the amount of dividends paid pursuant to this clause (b) shall not exceed the aggregate amount of cash actually contributed to the Company from the sale of such Designated Preferred Stock; or

(c) the declaration and payment of dividends on Refunding Capital Stock that is Preferred Stock in excess of the dividends declarable and payable thereon pursuant to clause (2) of this paragraph;

provided, in the case of each of (a), (b) and (c) of this clause (6), that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock or the declaration of such dividends on Refunding Capital Stock that is Preferred Stock, after giving effect to such issuance or declaration on a pro forma basis, the Company and its Restricted Subsidiaries on a consolidated basis would have had a Fixed Charge Coverage Ratio of at least 2.00 to 1.00;

(7) if the Consolidated Leverage Ratio of the Company is less than 5.00 to 1.00 on apro forma basis after giving effect to such transaction, Investments in Unrestricted Subsidiaries having an aggregate fair

market value taken together with all other Investments made pursuant to this clause (7) that are at the time outstanding, without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities (until such proceeds are converted to Cash Equivalents), not to exceed the greater of (a) $15.0 million and (b) 1.0% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

(8) payments made or expected to be made by the Company or any Restricted Subsidiary in respect of withholding or similar taxes payable upon exercise of Equity Interests by any future, present or former employee, director, officer, member of management or consultant (or their respective Controlled Investment

Affiliates or Immediate Family Members) of the Company or any Restricted Subsidiary or any direct or indirect parent company of the Company and any repurchases of Equity Interests deemed to occur upon exercise of stock options, warrants or similar rights if such Equity Interests represent a portion of the exercise price of such options, warrants or similar rights;

(9) the declaration and payment of dividends on the Company’s common stock (or the payment of dividends to any direct or indirect parent company of the Company to fund a payment of dividends on such company’s common stock), following the first public offering of the Company’s common stock or the common stock of any direct or indirect parent company of the Company after the Issue Date, of up to 6% per annum of the net cash proceeds received by or contributed to the Company in or from any such public offering, other than public offerings with respect to the Company’s common stock registered on Form S-4 or Form S-8 and other than any public sale constituting an Excluded Contribution;

(10) Restricted Payments in an amount that does not exceed the amount of Excluded Contributions received since the Issue Date;

(11) if the Consolidated Leverage Ratio of the Company is less than 5.00 to 1.00 on apro forma basis after giving effect to such transaction, Restricted Payments in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (11) (in the case of Restricted Investments, at the time outstanding (without giving effect to the sale of an Investment to the extent the proceeds of such sale do not consist of, or have not be subsequently sold or transferred for, Cash Equivalents)) not to exceed the greater of (a) $25.0 million and (b) 1.75% of Total Assets at such time;

(12) distributions or payments of Securitization Fees;

(13) any Restricted Payment made in connection with the Transactions and the fees and expenses related thereto or owed to Affiliates, in each case to the extent permitted by the covenant described under “—Transactions with Affiliates”;

(14) the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness pursuant to the provisions similar to those described under the captions “—Repurchase at the Option of Holders—Change of Control” and “—Repurchase at the Option of Holders—Asset Sales”;provided, that if the Issuers shall have been required to make a Change of Control Offer or Asset Sale Offer, as applicable, to purchase the Notes on the terms provided in the Indenture applicable to Change of Control Offers or Asset Sale Offers, respectively, all Notes validly tendered by Holders of such Notes in connection with a Change of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed, acquired or retired for value;

(15) the declaration and payment of dividends or distributions by the Company to, or the making of loans to, any direct or indirect parent company of the Company in amounts required for any direct or indirect parent company of the Company to pay, in each case without duplication,

(a) franchise and similar taxes, and other fees and expenses, required to maintain their corporate or other entity existence;

(b) foreign, federal, state or local income or similar taxes, to the extent such income or similar taxes are attributable to the income of the Company and its Restricted Subsidiaries or, to the extent of

any cash amounts actually received from its Unrestricted Subsidiaries for such purpose, to the income of such Unrestricted Subsidiaries;provided, that in each case the amount of such payments in respect of any fiscal year does not exceed the amount that the Company and/or its Restricted Subsidiaries (and, to the extent permitted above, its Unrestricted Subsidiaries), as applicable, would have been required to pay in respect of the relevant foreign, federal, state or local income or similar taxes for such fiscal year had the Company, its Restricted Subsidiaries and/or its Unrestricted Subsidiaries (to the extent described above), as applicable, paid such taxes separately from any such parent company;

(c) customary salary, bonus and other benefits payable to employees, directors, officers and managers of any direct or indirect parent company of the Company to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of the Company and its Restricted Subsidiaries;

(d) general corporate operating and overhead costs and expenses of any direct or indirect parent company of the Company to the extent such costs and expenses are attributable to the ownership or operation of the Company and its Restricted Subsidiaries;

(e) fees and expenses other than to Affiliates of the Company related to any unsuccessful equity or debt offering of such parent entity;

(f) amounts payable pursuant to the Management Fee Agreement, (including any amendment thereto or replacement thereof so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the board of directors of the Company to the Holders when taken as a whole, as compared to the Management Fee Agreement as in effect on the Issue Date (it being understood that any amendment thereto or replacement thereof to increase the fees payable pursuant to the Management Fee Agreement would be deemed to be materially disadvantageous to the Holders)), solely to the extent such amounts are not paid directly by the Company or its Subsidiaries;

(g) cash payments in lieu of issuing fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Company or any direct or indirect parent company of the Company;

(h) to finance Investments that would otherwise be permitted to be made pursuant to this covenant if made by the Company; provided, that (A) such Restricted Payment shall be made substantially concurrently with the closing of such Investment, (B) such direct or indirect parent company shall, immediately following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests) to be contributed to the capital of the Company or one of its Restricted Subsidiaries or (2) the merger or amalgamation of the Person formed or acquired into the Company or one of its Restricted Subsidiaries (to the extent not prohibited by the covenant “—Merger, Consolidation or Sale of All or Substantially All Assets” below) in order to consummate such Investment, (C) such direct or indirect parent company and its Affiliates (other than the Company or a Restricted Subsidiary) receives no consideration or other payment in connection with such transaction except to the extent the Company or a Restricted Subsidiary could have given such consideration or made such payment in compliance with the Indenture, (D) any property received by the Company shall not increase amounts available for Restricted Payments pursuant to clause (3) of the preceding paragraph and (E) such Investment shall be deemed to be made by the Company or such Restricted Subsidiary pursuant to another provision of this covenant (other than pursuant to clause (10) hereof) or pursuant to the definition of “Permitted Investments” (other than clause (9) thereof);

(i) amounts that would be permitted to be paid by the Company under clauses (3), (4), (7), (8), (12), (13), (16) and (20) of the covenant described under “—Transactions with Affiliates”;provided, that the amount of any Restricted Payment made under this clause (15)(i) as permitted to be paid by clause (13) of the covenant described under “—Transactions with Affiliates” shall not exceed the amount permitted under clause (4) hereof;provided, further, that the amount of any dividend or distribution under this clause (15)(i) to permit such payment shall reduce, without duplication, Consolidated Net Income of the Company to the extent, if any, that such payment would have reduced

Consolidated Net Income of the Company if such payment had been made directly by the Company and increase (or, without duplication of any reduction of Consolidated Net Income, decrease) EBITDA to the extent, if any, that Consolidated Net Income is reduced under this clause (15)(i) and such payment would have been added back to (or, to the extent excluded from Consolidated Net Income, would have been deducted from) EBITDA if such payment had been made directly by the Company, in each case, in the period such payment is made;

(16) the redemption, repurchase, retirement or other acquisition of any Equity Interests of any Restricted Subsidiary by the Company or any Restricted Subsidiary; and

(17) the distribution, by dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Company or a Restricted Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries, the primary assets of which are cash and/or Cash Equivalents);

provided, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (11) and (17), no Default shall have occurred and be continuing or would occur as a consequence thereof.

As of the IssueClosing Date, all of the Company’s Subsidiaries were Restricted Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the penultimate sentence of the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the penultimate sentence of the definition of “Investments.” Such designation will be permitted only if a Restricted Payment in such amount would be permitted at such time, pursuant to this covenant or pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in the Indenture. For the avoidance of doubt, this covenant shall not restrict the making of any “AHYDO catch up payment” with respect to, and required by the terms of, any Indebtedness of the Company or any of its Restricted Subsidiaries permitted to be incurred under the terms of the Indenture.

Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and the Company will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or Preferred Stock;provided, that the Company may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred Stock, if the Fixed Charge Coverage Ratio of the Company and its Restricted Subsidiaries’ for the most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period;provided that the then outstanding aggregate principal amount of Indebtedness (including Acquired Indebtedness), Disqualified Stock and Preferred Stock that may be incurred or issued, as applicable, pursuant to the foregoing, together with any amounts incurred under clauses (12) and (23) of the following paragraph, by Restricted Subsidiaries that are not Guarantors (other than the Co-Issuer) shall not exceed $75.0 million.

The foregoing limitations will not apply to:

(1) Indebtedness incurred pursuant to any Credit Facilities by the Company or any Restricted Subsidiary and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof);provided that immediately after giving effect to any such incurrence or issuance, the then outstanding aggregate principal amount of all Indebtedness incurred or issued under this clause (1) does not exceed $660.0 million;

(2) the incurrence by the Company and any Guarantor of Indebtedness represented by the Notes (including any guarantee thereof, but excluding any Additional Notes);

(3) Indebtedness of the Company and its Subsidiaries in existence on the Issue Date (other than Indebtedness described in clauses (1) and (2));

(4) Indebtedness (including Capitalized Lease Obligations), Disqualified Stock incurred or issued by the Company or any Restricted Subsidiary and Preferred Stock incurred or issued by the Company or any

Restricted Subsidiary, to finance the purchase, lease or improvement of property (real or personal), equipment or other assets used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets in an aggregate principal amount not to exceed the greater of (a) $40.0 million and (b) 3.0% of Total Assets (in each case, determined at the date of incurrence or issuance), so long as such Indebtedness, Disqualified Stock or Preferred Stock is incurred or issued at the date of such purchase, lease or improvement or within 270 days thereafter;

(5) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit, bank guarantees, banker’s acceptances, warehouse receipts, or similar instruments issued or created in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims, performance or surety bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance;provided, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 Business Days following such drawing or incurrence;

(6) Indebtedness arising from agreements of the Company or its Restricted Subsidiaries providing for indemnification, adjustment of purchase price, earnouts or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;provided, that such Indebtedness is not reflected on the balance sheet of the Company, or any of its Restricted Subsidiaries (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (6));

(7) Indebtedness of the Company to a Restricted Subsidiary;provided, that any such Indebtedness owing to a Restricted Subsidiary that is not the Co-Issuer or a Guarantor is expressly subordinated in right of payment to the Notes;provided,further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence of such Indebtedness (to the extent such Indebtedness is then outstanding) not permitted by this clause (7);

(8) Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary;provided, that if a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not the Co-Issuer or a Guarantor, such Indebtedness is expressly subordinated in right of payment to the Guarantee of the Notes of

such Guarantor;provided,further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence of such Indebtedness (to the extent such Indebtedness is then outstanding) not permitted by this clause (8);

(9) shares of Preferred Stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary;provided, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Company or another of its Restricted Subsidiaries or any pledge of such Capital Stock constituting a Permitted Lien) shall be deemed in each case to be an issuance of such shares of Preferred Stock (to the extent such Preferred Stock is then outstanding) not permitted by this clause (9);

(10) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes) for the purpose of limiting interest rate risk with respect to any Indebtedness permitted to be incurred under the Indenture, exchange rate risk or commodity pricing risk;

(11) obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Company or any of its Restricted Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business;

(12) (a) Indebtedness or Disqualified Stock of the Company and Indebtedness, Disqualified Stock or Preferred Stock of the Company or any Restricted Subsidiary in an aggregate principal amount or liquidation preference up to 100% of the net cash proceeds received by the Company since immediately after the Issue Date from the issue or sale of Equity Interests of the Company or cash contributed to the capital of the Company (in each case, other than proceeds of Disqualified Stock or sales of Equity Interests to the Company or any of its Subsidiaries) as determined in accordance with clauses (3)(b) and (3)(c) of the first paragraph of “—Limitation on Restricted Payments” to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments pursuant to the second paragraph of “—Limitation on Restricted Payments” or to make Permitted Investments (other than Permitted Investments specified in clauses (1), (2) or (3) of the definition thereof) and,

(b) Indebtedness or Disqualified Stock of the Company and Indebtedness, Disqualified Stock or Preferred Stock of the Company or any Restricted Subsidiary in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and incurred pursuant to this clause (12)(b), does not exceed the greater of (i) $75.0 million and (ii) 5.5% of Total Assets (in each case, determined on the date of such incurrence); it being understood that any Indebtedness, Disqualified Stock or Preferred Stock incurred pursuant to this clause (12)(b) shall cease to be deemed incurred or outstanding for purposes of this clause (12)(b) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which the Company or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or Preferred Stock under the first paragraph of this covenant without reliance on this clause (12)(b));provided, that the amount of Indebtedness, Disqualified Stock and Preferred Stock that may be incurred pursuant to this clause (12), together with amounts incurred under clause (23) and the immediately preceding paragraph, by Restricted Subsidiaries that are not Guarantors (other than the Co-Issuer) shall not exceed $75.0 million at any one time outstanding;

(13) the incurrence or issuance by the Company or any Restricted Subsidiary of Indebtedness, Disqualified Stock or Preferred Stock which serves to extend, replace, refund, refinance, renew or defease any Indebtedness, Disqualified Stock or Preferred Stock incurred or issued as permitted under the first paragraph of this covenant and clauses (2), (3), (4) and (12)(a) above, this clause (13) and clause (14) below

or any Indebtedness, Disqualified Stock or Preferred Stock incurred or issued to so extend, replace, refund, refinance, renew or defease such Indebtedness, Disqualified Stock or Preferred Stock including additional Indebtedness, Disqualified Stock or Preferred Stock incurred to pay premiums (including tender premiums), defeasance costs, and accrued interest, fees and expenses in connection therewith (the “Refinancing Indebtedness”) prior to its respective maturity;provided, that such Refinancing Indebtedness:

(a) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of, the Indebtedness, Disqualified Stock or Preferred Stock being extended, replaced, refunded, refinanced, renewed or defeased (or requires no or nominal payments in cash prior to the date that is 91 days after the maturity date of the Notes);

(b) to the extent such Refinancing Indebtedness extends, replaces, refunds, refinances, renews or defeases (i) Indebtedness subordinated in right of payment to the Notes or any Guarantee thereof, such Refinancing Indebtedness is subordinated in right of payment to the Notes or the Guarantee thereof at

least to the same extent as the Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock, respectively; and

(c) shall not include:

(i) Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of the Company that is not the Co-Issuer or a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of the Company, the Co-Issuer or a Guarantor;

(ii) Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary of the Company that is not a Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock of a Guarantor; or

(iii) Indebtedness or Disqualified Stock of the Company or Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary;

and,provided,further, that subclause (a) of this clause (13) will not apply to any extension, replacement, refunding, refinancing, renewal or defeasance of any Credit Facilities or Secured Indebtedness;

(14) (a) Indebtedness, Disqualified Stock or Preferred Stock of the Company or a Restricted Subsidiary, incurred or issued to finance an acquisition (or other purchase of assets) or (b) Indebtedness, Disqualified Stock or Preferred Stock of Persons that are acquired by the Company or any Restricted Subsidiary or merged into or consolidated with the Company or a Restricted Subsidiary in accordance with the terms of the Indenture;provided, that in the case of clauses (a) and (b), after giving effect to such acquisition, merger, amalgamation or consolidation, either (x) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Test set forth in the first paragraph of this covenant or (y) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries is equal to or greater than immediately prior to such acquisition, merger, amalgamation or consolidation;

(15) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business,provided that such Indebtedness is extinguished within five Business Days of its incurrence;

(16) Indebtedness of the Company or any of its Restricted Subsidiaries supported by a letter of credit issued pursuant to the Credit Facilities, in a principal amount not in excess of the stated amount of such letter of credit;

(17) (a) any guarantee by the Company or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of the Indenture,

(b) any guarantee by a Restricted Subsidiary of Indebtedness of the Company;provided, that such guarantee is incurred in accordance with the covenant described below under “—Limitation on Guarantees of Indebtedness by Restricted Subsidiaries”, or

(c) any incurrence by the Co-Issuer of Indebtedness as a co-issuer of Indebtedness of the Company that was permitted to be incurred by another provision of this covenant;

(18) Indebtedness consisting of Indebtedness issued by the Company or any of its Restricted Subsidiaries to future, present or former employees, directors, officers, managers and consultants thereof, their respective Controlled Investment Affiliates or Immediate Family Members, in each case to finance the purchase or redemption of Equity Interests of the Company or any direct or indirect parent company of the Company to the extent described in clause (4) of the second paragraph under the caption “—Limitation on Restricted Payments”;

(19) to the extent constituting Indebtedness, customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of business;

(20) (a) Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course of business of the Company and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to manage cash balances of the Company and its Restricted Subsidiaries and (b) Indebtedness in respect of Bank Products;

(21) Indebtedness incurred by a Restricted Subsidiary in connection with bankers’ acceptances, discounted bills of exchange or the discounting or factoring of receivables for credit management purposes, in each case incurred or undertaken in the ordinary course of business on arm’s length commercial terms;

(22) Indebtedness of the Company or any of its Restricted Subsidiaries consisting of (a) the financing of insurance premiums or (a) take-or-pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business;

(23) the incurrence of Indebtedness of Restricted Subsidiaries of the Company that are not Guarantors (including Foreign Subsidiaries) in an amount outstanding under this clause (23) not to exceed together with any other Indebtedness incurred under this clause (23) the greater of (a) $50.0 million and (b) 3.5% of Total Assets (in each case, determined on the date of such incurrence); it being understood that any Indebtedness deemed incurred pursuant to this clause (23) shall cease to be deemed incurred or outstanding for purposes of this clause (23) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which the Company or such Restricted Subsidiaries could have incurred such Indebtedness under the first paragraph of this covenant without reliance on this clause (23)); provided, that the amount of Indebtedness, Disqualified Stock and Preferred Stock that may be incurred pursuant to this clause (23), together with amounts incurred under clause (12) and the immediately preceding paragraph, by Restricted Subsidiaries that are not Guarantors (other than the Co-Issuer) shall not exceed $75.0 million at any one time outstanding; and

(24) Indebtedness of the Company or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business.

For purposes of determining compliance with this covenant:

(1) in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or Preferred Stock described in clauses (1) through (24) above or is entitled to be incurred pursuant to the

first paragraph of this covenant, the Company, in its sole discretion, may classify or reclassify such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock in one of the above clauses or under the first paragraph of this covenant;provided, that all Indebtedness outstanding under the Senior Secured Credit Facilities on the Issue Date will be treated as incurred on the Issue Date under clause (1) of the second paragraph above; and

(2) the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in the first and second paragraphs above.

Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount and the payment of interest or dividends in the form of additional Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, of the same class will not be deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred Stock for purposes of this covenant.

Notwithstanding any other provision of the Indenture to the contrary, for all purposes during the term of the Indenture, each lease in existence on the Issue Date shall have the same characterization as a Capitalized Lease

Obligation or an operating lease as the characterization of that lease in the most recent financial statements in existence on the Issue Date, notwithstanding any change in characterization of that lease subsequent to the Issue Date by the Company based on changes in GAAP or its interpretation of GAAP.

For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. Dollar Equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt;provided, that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed (a) the principal amount of such Indebtedness being refinanced plus (b) the aggregate amount of fees, underwriting discounts, premiums (including tender premiums) and other costs and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with such refinancing.

The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.

The Indenture provides that the Company does not, and does not permit any Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is contractually subordinated or junior in right of payment to any Indebtedness of the Company or such Guarantor, as the case may be, unless such Indebtedness is expressly subordinated in right of payment to the Notes or such Guarantor’s Guarantee to the extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the Company or such Guarantor, as the case may be.

The Indenture does not treat (1) unsecured Indebtedness as subordinated or junior to Secured Indebtedness merely because it is unsecured or (2) Indebtedness as subordinated or junior to any other Indebtedness merely because it has a junior priority with respect to the same collateral or because it is guaranteed by other obligors.

Liens

The Company will not, and will not permit the Co-Issuer or any Guarantor to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) that secures Obligations under any Indebtedness or any related Guarantee of Indebtedness, on any asset or property of the Company, the Co-Issuer or any Guarantor, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless:

(1) in the case of Liens securing Subordinated Indebtedness, the Notes and related Guarantees are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens; and

(2) in all other cases, the Notes or the Guarantees are equally and ratably secured,

except that the foregoing shall not apply to or restrict (a) Liens securing obligations in respect of the Notes and the related Guarantees, (b) Liens securing obligations in respect of (x) Indebtedness and other Obligations permitted to be incurred under Credit Facilities, including any letter of credit facility relating thereto, that was permitted by the terms of the Indenture to be incurred pursuant to clause (1) of the second paragraph under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and (y) obligations of the Issuers or any Subsidiary in respect of any Bank Products provided by any lender party to any Senior Secured Credit Facilities or any Affiliate of such lender (or any Person that was a lender or an Affiliate of a lender at the time the applicable agreements pursuant to which

such Bank Products are provided were entered into) and (c) Liens securing obligations in respect of Indebtedness permitted to be incurred under the covenant described above under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided, that, with respect to Liens securing Indebtedness permitted under this subclause (c), at the time of incurrence and after givingpro forma effect thereto and the application of the net proceeds thereof, the Consolidated Secured Debt Ratio would be no greater than 3.50 to 1.00.

Any Lien created for the benefit of the Holders of the Notes pursuant to this covenant shall be deemed automatically and unconditionally released and discharged upon the release and discharge of each of the Liens described in clauses (1) and (2) above.

Merger, Consolidation or Sale of All or Substantially All Assets

Company

The Company may not consolidate or merge with or into or wind up into (whether or not the Company is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:

(1) the Company is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made, is a Person organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Person, as the case may be, being herein called the “Successor Company”);provided, that in the case where the surviving Person is not a corporation, a co-obligor of the Notes is a corporation;

(2) the Successor Company, if other than the Company, expressly assumes all the obligations of the Company under the Notes pursuant to supplemental indentures or other documents or instruments;

(3) immediately after such transaction, no Default exists;

(4) immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the applicable four-quarter period,

(a) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Test, or

(b) the Fixed Charge Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be equal to or greater than the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction;

(5) each Guarantor, unless it is the other party to the transactions described above, in which case clause (1)(b) of the second succeeding paragraph shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations under the Indenture, the Notes and the Registration Rights Agreement; and

(6) the Co-Issuer, unless it is the party to the transactions described above, in which case clause (3) under the subheading “—Co-Issuer” below shall apply, shall have by supplemental indenture confirmed that it continues to be a co-obligor of the Notes; and

(7) the Company (or, if applicable, the Successor Company) shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation or transfer and such supplemental indentures, if any, comply with the Indenture. The Successor Company will succeed to, and be substituted for the Company under the Indenture, the Guarantees and the Notes, as applicable.

Notwithstanding the immediately preceding clauses (3) and (4),

(1) any Restricted Subsidiary may consolidate or amalgamate with or merge with or into or transfer all or part of its properties and assets to the Company, and

(2) the Company may merge with an Affiliate of the Company solely for the purpose of reorganizing the Company in the United States, any state thereof, the District of Columbia or any territory thereof so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby.

Guarantors

Subject to certain limitations described in the Indenture governing release of a Guarantee upon the sale, disposition or transfer of a Guarantor, no Guarantor will, and the Company will not permit any Guarantor to, consolidate, amalgamate or merge with or into or wind up into (whether or not such Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:

(1) (a) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a Person organized or existing under the laws of the jurisdiction of organization of such Guarantor, as applicable, or the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such surviving Guarantor or such Person, as the case may be, being herein called the “Successor Person”);

(b) the Successor Person, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under the Indenture and such Guarantor’s related Guarantee pursuant to supplemental indentures or other documents or instruments;

(c) immediately after such transaction, no Default exists; and

(d) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation or transfer and such supplemental indentures, if any, comply with the Indenture;

(2) the transaction is made in compliance with the first paragraph of the covenant described under “—Repurchase at the Option of Holders—Asset Sales”; or

(3) in the case of assets comprised of Equity Interests of Subsidiaries that are not Guarantors, such Equity Interests are sold, assigned, transferred, leased, conveyed or otherwise disposed of to one or more Restricted Subsidiaries.

Subject to certain limitations described in the Indenture, the Successor Person will succeed to, and be substituted for, such Guarantor under the Indenture and such Guarantor’s Guarantee. Notwithstanding the foregoing, any Guarantor may (1) merge or consolidate with or into, wind up into or transfer all or part of its properties and assets to another Guarantor or the Company, (2) merge with an Affiliate of the Company solely for the purpose of reincorporating the Guarantor in the United States, any state thereof, the District of Columbia or any territory thereof, (3) convert into a corporation, partnership, limited partnership, limited liability company or trust organized or existing under the laws of the jurisdiction of organization of such Guarantor or (4) liquidate or dissolve or change its legal form if the Company determines in good faith that such action is in the best interests of the Company.

Co-Issuer

The Co-Issuer may not, directly or indirectly, consolidate or merge with or into or wind up into (whether or not the Co-Issuer is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Co-Issuer’s properties or assets, in one or more related transactions, to any Person unless:

(1) (a) concurrently therewith, a corporate Wholly-Owned Restricted Subsidiary of the Company organized and validly existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof (which may be the continuing Person as a result of such transaction)

expressly assumes all the obligations of the Co-Issuer under the Notes, pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee, and the Registration Rights Agreement if the exchange offer contemplated therein has not been consummated or if the Issuers continue to have an obligation to file or maintain the effectiveness of a shelf registration statement as provided under such agreement; or

(b) after giving effect thereto, at least one obligor on the notes shall be a corporation organized and validly existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof;

(2) immediately after such transaction, no Default exists; and

(3) the Co-Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture, if any, comply with the Indenture.

Transactions with Affiliates

The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving aggregate payments or consideration in excess of $10.0 million, unless:

(1) such Affiliate Transaction is on terms that are not materially less favorable to the Company or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis; and

(2) the Company delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of $20.0 million, a resolution adopted by the majority of the board of directors of the Company approving such Affiliate Transaction and set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with clause (1) above.

The foregoing provisions will not apply to the following:

(1) transactions between or among the Company or any of its Restricted Subsidiaries;

(2) Restricted Payments permitted by the provisions of the Indenture described above under the covenant “—Limitation on Restricted Payments” and the definition of “Permitted Investments”;

(3) the payment of management, consulting, monitoring, transaction, advisory and other fees, indemnities and expenses pursuant to the Management Fee Agreement (plus any unpaid management, consulting, monitoring, transaction, advisory and other fees, indemnities and expenses accrued in any prior year) and the termination fees pursuant to the Management Fee Agreement, or any amendment thereto or replacement thereof so long as any such amendment or replacement is not materially disadvantageous in the good faith judgment of the board of directors of the Company to the Holders when taken as a whole, as compared to the Management Fee Agreement as in effect on the Issue Date (it being understood that any amendment thereto or replacement thereof to increase the fees payable pursuant to the Management Fee Agreement would be deemed to be materially disadvantageous to the Holders);

(4) the payment of reasonable and customary fees and compensation paid to, and indemnities and reimbursements and employment and severance arrangements provided on behalf of or for the benefit of, current or former employees, directors, officers, managers or consultants of the Company, any of its direct or indirect parent companies or any of its Restricted Subsidiaries;

(5) transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to

the Company or such Restricted Subsidiary from a financial point of view or stating that the terms are not materially less favorable to the Company or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis;

(6) any agreement as in effect as of the Issue Date, or any amendment thereto (so long as any such amendment is not disadvantageous in any material respect to the Holders when taken as a whole as compared to the applicable agreement as in effect on the Issue Date);

(7) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it (or any parent company of the Company which holds, directly or indirectly, 100% of the issued and outstanding Equity Interests of the Company) is a party as of the Issue Date and any similar agreements which it (or any parent company of the Company which holds, directly or indirectly, 100% of the issued and outstanding Equity Interests of the Company) may enter into thereafter; provided, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries (or such parent company) of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (7) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous in any material respect in the good faith judgment of the board of directors of the Company to the Holders when taken as a whole;

(8) the Transactions and the payment of all fees and expenses related to the Transactions, including Transaction Expenses;

(9) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture which are fair to the Company and its Restricted Subsidiaries, in the reasonable determination of the board of directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

(10) the issuance of Equity Interests (other than Disqualified Stock) of the Company to any direct or indirect parent company of the Company or to any Permitted Holder or to any employee, director, officer, manager or consultant (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Company, any of its direct or indirect parent companies or any of its Restricted Subsidiaries;

(11) sales of accounts receivable, or participations therein, or Securitization Assets or related assets in connection with any Qualified Securitization Facility;

(12) payments by the Company or any of its Restricted Subsidiaries to any of the Investors made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the board of directors of the Company in good faith;

(13) payments and Indebtedness and Disqualified Stock (and cancellation of any thereof) of the Company and its Restricted Subsidiaries and Preferred Stock (and cancellation of any thereof) of any Restricted Subsidiary to any future, current or former employee, director, officer, manager or consultant (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Company, any of its Subsidiaries or any of its direct or indirect parent companies pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement that are, in each case, approved by the Company in good faith; and any employment agreements, stock option plans and other compensatory arrangements (and any successor plans thereto) and any supplemental executive retirement benefit plans or arrangements with any such employees, directors, officers, managers or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members) that are, in each case, approved by the Company in good faith;

(14) (i) investments by Permitted Holders in securities of the Company or any of its Restricted Subsidiaries (and payment of reasonable out-of-pocket expenses incurred by such Permitted Holders in connection therewith) so long as (x) the investment is being offered by the Company or such Restricted Subsidiary generally to other investors on the same or more favorable terms and (y) the investment constitutes less than 5.0% of the proposed or outstanding issue amount of such class of securities (provided, that any investments in debt securities by any Debt Fund Affiliates shall not be subject to the limitation in this clause (y)), and (ii) payments to Permitted Holders in respect of securities of the Company or any of its Restricted Subsidiaries contemplated in the foregoing subclause (i) or that were acquired from Persons other than the Company and its Restricted Subsidiaries, in each case, in accordance with the terms of such securities;

(15) payments to or from, and transactions with, any joint venture in the ordinary course of business (including, without limitation, any cash management activities related thereto);

(16) payments by the Company (and any direct or indirect parent company thereof) and its Subsidiaries pursuant to tax sharing agreements among the Company (and any such parent company) and its Subsidiaries, to the extent such payments are permitted under clause (15)(b) of the second paragraph under the caption “—Limitation on Restricted Payments”;

(17) any lease entered into between the Company or any Restricted Subsidiary, as lessee and any Affiliate of the Company, as lessor, which is approved by a majority of the disinterested members of the board of directors of the Company in good faith;

(18) intellectual property licenses in the ordinary course of business;

(19) any payments by the Company and the Company’s Subsidiaries made pursuant to any Tax Receivable Agreement; and

(20) the payment of reasonable out-of-pocket costs and expenses relating to registration rights and indemnities provided to stockholders of the Company or any direct or indirect parent thereof pursuant to the stockholders agreement or the registration rights agreement entered into on the Issue Date in connection therewith.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

The Company will not, and will not permit any of its Restricted Subsidiaries that is not a Guarantor to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to:

(1) (a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries that is a Guarantor on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, or

(b) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries that is a Guarantor;

(2) make loans or advances to the Company or any of its Restricted Subsidiaries that is a Guarantor; or

(3) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries that is a Guarantor,

except (in each case) for such encumbrances or restrictions existing under or by reason of:

(a) contractual encumbrances or restrictions in effect on the Issue Date, including pursuant to the Senior Secured Credit Facilities and the related documentation and Hedging Obligations and the related documentation;

(b) the Indenture, the Notes and the guarantees thereof;

(c) purchase money obligations for property acquired in the ordinary course of business and capital lease obligations that impose restrictions of the nature described in clause (3) above on the property so acquired;

(d) applicable law or any applicable rule, regulation or order;

(e) any agreement or other instrument of a Person acquired by or merged or consolidated with or into the Company or any of its Restricted Subsidiaries in existence at the time of such acquisition or at the time it merges with or into the Company or any of its Restricted Subsidiaries or assumed in connection with the acquisition of assets from such Person (but, in any such case, not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person so acquired and its Subsidiaries, or the property or assets of the Person so acquired and its Subsidiaries or the property or assets so acquired;

(f) contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Company pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary;

(g) Secured Indebtedness otherwise permitted to be incurred pursuant to the covenants described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “—Liens” that limit the right of the debtor to dispose of the assets securing such Indebtedness;

(h) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business or arising in connection with any Permitted Liens;

(i) other Indebtedness, Disqualified Stock or Preferred Stock of Restricted Subsidiaries that are not Guarantors permitted to be incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(j) customary provisions in joint venture agreements and other similar agreements relating solely to such joint venture;

(k) customary provisions contained in leases, sub-leases, licenses, sub-licenses or similar agreements, including with respect to intellectual property and other agreements, in each case, entered into in the ordinary course of business;

(l) restrictions or conditions contained in any trading, netting, operating, construction, service, supply, purchase, sale or other agreement to which the Company or any of its Restricted Subsidiaries is a party entered into in the ordinary course of business;provided, that such agreement prohibits the encumbrance of solely the property or assets of the Company or such Restricted Subsidiary that are the subject to such agreement, the payment rights arising thereunder or the proceeds thereof and does not extend to any other asset or property of the Company or such Restricted Subsidiary or the assets or property of another Restricted Subsidiary;

(m) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of any Restricted Subsidiary;

(n) customary provisions restricting assignment of any agreement entered into in the ordinary course of business;

(o) restrictions arising in connection with cash or other deposits permitted under the covenant “—Liens”;

(p) any agreement or instrument (A) relating to any Indebtedness, Disqualified or preferred stock permitted to be incurred or issued subsequent to the Issue Date pursuant to the covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” if the encumbrances and restrictions are not materially more disadvantageous, taken as a whole, to the Holders than is customary in comparable financings for similarly situated issuers (as determined

in good faith by the Company) or is otherwise in effect on the Issue Date and (B) either (x) the Company determines that such encumbrance or restriction will not adversely affect the Company’s ability to make principal and interest payments on the Notes as and when they come due or (y) such encumbrances and restrictions apply only during the continuance of a default in respect of a payment or financial maintenance covenant relating to such Indebtedness;

(q) any encumbrances or restrictions of the type referred to in clauses (1), (2) and (3) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (p) above;provided, that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company, not materially more restrictive with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing; and

(r) restrictions created in connection with any Qualified Securitization Facility that, in the good faith determination of the Company are necessary or advisable to effect such Qualified Securitization Facility.

Limitation on Guarantees of Indebtedness by Restricted Subsidiaries

The Company will not permit any of its Wholly-Owned Subsidiaries that are Restricted Subsidiaries (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee other capital markets debt securities of the Company, the Co-Issuer or any Guarantor), other than a Guarantor, the Co-Issuer or a Foreign Subsidiary or a Securitization Subsidiary, to guarantee the payment of any Indebtedness of the Company, the Co-Issuer or any Guarantor unless:

(1) such Restricted Subsidiary within 30 days after the guarantee of such Indebtedness executes and delivers a supplemental indenture to the Indenture providing for a Guarantee by such Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Company, the Co-Issuer or any Guarantor:

(a) if such Indebtedness is by its express terms subordinated in right of payment to the Notes or such Guarantor’s Guarantee, any such guarantee by such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Guarantee substantially to the same extent as such Indebtedness is subordinated to the Notes; and

(b) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other applicable rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee;

provided, that this covenant shall not be applicable to any guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary. The Company may elect, in its sole discretion, to cause any Subsidiary that is not otherwise required to be a Guarantor to become a Guarantor, in which case such Subsidiary shall not be required to comply with the 30 day period described in clause (1) above.

Reports and Other Information

Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Indenture requires the Company to file with the SEC from and after the Issue Date:

(1) within 90 days after the end of each fiscal year (or 135 days for the fiscal year ending December 31, 2011), annual reports on Form 10-K, or any successor or comparable form, containing the information required to be contained therein, or required in such successor or comparable form;

(2) within 45 days after the end of each of the first three fiscal quarters of each fiscal year (or 90, 75 and 60 days, respectively, for the first three fiscal quarters ending after the Issue Date), reports on Form 10-Q containing all quarterly information that would be required to be contained in Form 10-Q, or any successor or comparable form;

(3) within five Business Days of the date on which an event would have been required to be reported on a Form 8-K or any successor or comparable form if the Company had been a reporting company under the Exchange Act, a current report relating to such event on Form 8-K or any successor or comparable form;

in each case, in a manner that complies in all material respects with the requirements specified in such form (except as described above or below and subject, in the case of required financial information, to exceptions consistent with the presentation of financial information in thisthe Offering Memorandum, to the extent filed within the times specified above);provided,however,that the Company shall not be so obligated to file such reports referred to in clauses (1), (2) and (3) above with the SEC (i) if the SEC does not permit such filing or (ii) prior to the consummation of an exchange offer or the effectiveness of a shelf registration statement as required by the Registration Rights Agreement, in which event the Company will make available such information to the Trustee, the Holders of the Notes and prospective purchasers of Notes, in each case within 15 days after the time the Company would be required to file such information with the SEC, if it were subject to Sections 13 or 15(d) of the Exchange Act;provided, further, that until such time as the consummation of an exchange offer or the effectiveness of a shelf registration statement as required by the Registration Rights Agreement, the Company shall not be required to (i) in the case of (x) clauses (1) and (2) provide any information beyond the financial information that would be required to be contained in an annual or quarterly report on Form 10-K or 10-Q, as applicable, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and (y) clause (3) make available any information regarding director and management compensation or the occurrence of any of the events set forth in Items 1.04, 2.01, 2.05, 2.06, 3 (other than Item 3.03), 5.01, 5.02(e)—(f), 5.03-5.08, 6, 7, 8 or 9 of Form 8-K, (ii) make available any information regarding the occurrence of any of the events set forth in Items 1.01 or 1.02 of Form 8-K if the Company determines in its good faith judgment that the event that would otherwise be required to be disclosed is not material to the holders of the notes or the business, assets, operations, financial positions or prospects of the Company and its Restricted Subsidiaries taken as a whole, (iii) comply with Regulation G under the Exchange Act or Item 10(e) of Regulation S-K with respect to any “non-GAAP” financial information contained therein (other than providing

reconciliations of such non-GAAP information to extent included in the Offering Memorandum), (iv) comply with Regulation S-X or (v) provide any information that is not otherwise similar to information currently included in the Offering Memorandum. In addition, notwithstanding the foregoing, the Company will not be required to (i) comply with Sections 302, 906 and 404 of the Sarbanes-Oxley Act of 2002 or (ii) otherwise furnish any information, certificates or reports required by Items 307 or 308 of Regulation S-K prior to the consummation of an exchange offer or the effectiveness of a shelf registration statement. In addition, to the extent not satisfied by the foregoing, the Company will agree that, for so long as any Notes are outstanding, it will furnish to Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

In the event that any direct or indirect parent company of the Company of which the Company is a Wholly-Owned Subsidiary becomes a Guarantor, the Indenture permits the Company to satisfy its obligations in this covenant with respect to financial information relating to the Company by furnishing financial information relating to such parent;provided, that, if and so long as such parent company shall have Independent Assets or Operations (as defined below), the same is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such parent, on the one hand, and the information relating to the Company and its Restricted Subsidiaries on a stand-alone basis, on the other hand. “Independent Assets or Operations” means, with respect to any such parent company, that such parent company’s total assets, revenues, income from continuing operations before income taxes and cash flows from operating activities (excluding in each case amounts related to its investment in the Company and the Restricted Subsidiaries), determined in accordance with GAAP and as shown on the most recent balance sheet of such parent company, is more than 3.0% of such parent company’s corresponding consolidated amount.

Notwithstanding the foregoing, such requirements shall be deemed satisfied prior to the commencement of the exchange offer or the effectiveness of the shelf registration statement (1) by the filing with the SEC of the exchange offer registration statement or shelf registration statement (or any other similar registration statement), and any amendments thereto, with such financial information that satisfies Regulation S-X of the Securities Act, subject to exceptions consistent with the presentation of financial information in thisthe Offering Memorandum, to the extent filed within the time periods specified above, or (2) by posting on the Company’s website and providing to the Trustee within 15 days of the time periods after the Company would have been required to file annual and interim reports with the SEC if it were a non-accelerated filer, the financial information (including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section) that would be required to be included in such reports, subject to exceptions consistent with the presentation of financial information in thisthe Offering Memorandum, to the extent filed within the times specified above.

Notwithstanding anything herein to the contrary, the Company will not be deemed to have failed to comply with any of its obligations hereunder for purposes of clause (3) under “—Events of Default and Remedies” until 90 days after the receipt of the written notice delivered thereunder.

To the extent any information is not provided within the time periods specified in this section “—Reports and Other Information” and such information is subsequently provided, the Company will be deemed to have satisfied its obligations with respect thereto at such time and any Default with respect thereto shall be deemed to have been cured.

Limitation on Business Activities of the Co-Issuer

The Co-Issuer may not hold any assets, become liable for any obligations or engage in any business activities; provided that it may be a co-obligor with respect to the Notes or any other Indebtedness issued by the Company and may engage in any activities directly related thereto or necessary in connection therewith. The Co-Issuer shall be a Wholly-Owned Subsidiary of the Company (or its permitted successors) at all times.

Events of Default and Remedies

The Indenture provides that each of the following is an “Event of Default”:

(1) default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes;

(2) default for 30 days or more in the payment when due of interest on or with respect to the Notes;

(3) failure by the Company, the Co-Issuer or any Guarantor for 60 days after receipt of written notice given by the Trustee or the Holders of not less than 25% in principal amount of the then outstanding Notes to comply with any of its obligations, covenants or agreements (other than a default referred to in clause (1) or (2) above) contained in the Indenture or the Notes;

(4) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Company, the Co-Issuer or any Restricted Subsidiary or the payment of which is guaranteed by the Company, the Co-Issuer or any Restricted Subsidiary, other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists or is created after the issuance of the Notes, if both:

(a) such default either results from the failure to pay any principal of such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity; and

(b) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity (after giving effect to

any applicable grace periods), or the maturity of which has been so accelerated, aggregate $30.0 million or more outstanding;

(5) failure by the Company, the Co-Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that together (as of the latest audited consolidated financial statements of the Issuer for a fiscal quarter end provided as required under “—Reports and Other Information”) would constitute a Significant Subsidiary) to pay final judgments aggregating in excess of $30.0 million (net of amounts covered by insurance policies issued by reputable insurance companies), which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;

(6) certain events of bankruptcy or insolvency with respect to the Company or any Significant Subsidiary (or any group of Restricted Subsidiaries that together (as of the latest audited consolidated financial statements of the Company for a fiscal quarter end provided as required under “—Reports and Other Information”) would constitute a Significant Subsidiary); or

(7) the Guarantee of any Significant Subsidiary (or any group of Restricted Subsidiaries that together (as of the latest audited consolidated financial statements of the Company for a fiscal quarter end provided as required under “—Reports and Other Information”) would constitute a Significant Subsidiary) shall for any reason cease to be in full force and effect or be declared null and void or any responsible officer of any Guarantor that is a Significant Subsidiary (or the responsible officers of any group of Restricted Subsidiaries that together (as of the latest audited consolidated financial statements of the Company for a fiscal quarter end) would constitute a Significant Subsidiary), as the case may be, denies in writing that it has any further liability under its Guarantee or gives written notice to such effect, other than by reason of the termination of the Indenture or the release of any such Guarantee in accordance with the Indenture.

If any Event of Default (other than of a type specified in clause (6) above) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 25% in principal amount of the then total outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.

Upon the effectiveness of such declaration, such principal of and premium, if any, and interest will be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising under clause (6) of the first paragraph of this section, all outstanding Notes will become due and payable without further action or notice. The Indenture provides that the Trustee may withhold from the Holders notice of any continuing Default, except a Default relating to the payment of principal, premium, if any, or interest, if it determines that withholding notice is in their interest.

The Indenture provides that the Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default and its consequences under the Indenture (except a continuing Default in the payment of interest on, premium, if any, or the principal of any Note held by a non-consenting Holder) and rescind any acceleration with respect to the Notes and its consequences (except if such rescission would conflict with any judgment of a court of competent jurisdiction). In the event of any Event of Default specified in clause (4) above, such Event of Default and all consequences thereof (excluding any resulting payment default, other than as a result of acceleration of the Notes) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 20 days after such Event of Default arose:

(1) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged;

(2) holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default; or

(3) the default that is the basis for such Event of Default has been cured.

In case an Event of Default occurs and is continuing, the Trustee is under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders of the Notes unless the Holders have offered to the Trustee indemnity or security reasonably satisfactory to the Trustee against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder of a Note may pursue any remedy with respect to the Indenture or the Notes unless:

(1) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(2) Holders of at least 25% in principal amount of the total outstanding Notes have requested in writing the Trustee to pursue the remedy;

(3) Holders of the Notes have offered the Trustee security or indemnity reasonably satisfactory to it against any loss, liability or expense;

(4) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and

(5) Holders of a majority in principal amount of the total outstanding Notes have not given the Trustee a direction inconsistent with such written request within such 60-day period.

Subject to certain restrictions, under the Indenture the Holders of a majority in principal amount of the total outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder of a Note or that would involve the Trustee in personal liability.

The Indenture provides that the Issuers are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required, within 10 Business Days, upon becoming aware of any Default, to deliver to the Trustee a statement specifying such Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No past, present or future director, officer, employee, incorporator, member, partner or stockholder of the Issuers or any Guarantor or any of their direct or indirect parent companies (other than the Company and the Guarantors) shall have any liability, for any obligations of the Issuers or the Guarantors under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

Legal Defeasance and Covenant Defeasance

The obligations of the Issuers and the Guarantors under the Indenture, the Notes and the Guarantees, as the case may be, will terminate (other than certain obligations) and will be released upon payment in full of all of the Notes. The Issuers may, at their option and at any time, elect to have all of their obligations discharged with respect to the Notes and have each Guarantor’s obligation discharged with respect to its Guarantee (“Legal Defeasance”) and cure all then existing Events of Default except for:

(1) the rights of Holders of Notes to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due solely out of the trust created pursuant to the Indenture;

(2) the Issuers’ obligations with respect to Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuers’ obligations in connection therewith; and

(4) the Legal Defeasance provisions of the Indenture.

In addition, the Issuers may, at their option and at any time, elect to have their obligations and those of each Guarantor released with respect to substantially all of the restrictive covenants that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations shall not constitute a Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including bankruptcy, receivership, rehabilitation and insolvency events pertaining to the Issuers) described under “—Events of Default and Remedies” will no longer constitute an Event of Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes:

(1) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest due on the Notes on the stated maturity date or on the redemption date, as the case may be, of such principal, premium, if any, or interest on such Notes and the Company must specify whether such Notes are being defeased to maturity or to a particular redemption date;provided, that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of the Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any deficit as of the date of redemption (any such amount, the “Applicable Premium Deficit”) only required to

be deposited with the Trustee on or prior to the date of redemption. Any Applicable Premium Deficit shall be set forth in an Officer’s Certificate delivered by the Issuers to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption;

(2) in the case of Legal Defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel confirming that, subject to customary assumptions and exclusions,

(a) the Issuers have received from, or there has been published by, the United States Internal Revenue Service a ruling, or

(b) since the issuance of the Notes, there has been a change in the applicable U.S. federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel confirming that, subject to customary assumptions and exclusions, the Holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith) shall have occurred and be continuing on the date of such deposit;

(5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Senior Secured Credit Facilities or any other material agreement or instrument

(other (other than the Indenture) to which, the Issuers or any Guarantor is a party or by which the Issuers or any Guarantor is bound (other than that resulting from any borrowing of funds to be applied to make the deposit required to effect such Legal Defeasance or Covenant Defeasance and any similar and simultaneous deposit relating to other Indebtedness, and, in each case, the granting of Liens in connection therewith);

(6) the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that, as of the date of such opinion and subject to customary assumptions and exclusions following the deposit, the trust funds will not be subject to the effect of Section 547 of Title 11 of the United States Code;

(7) the Issuers shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuers with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuers or any Guarantor or others; and

(8) the Issuers shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.

Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect as to all Notes, when either:

(1) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the Trustee for cancellation; or

(2) (a) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuers, and the Issuers or any Guarantor have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders of the Notes, cash in U.S. dollars, U.S. dollar-denominated Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;provided, that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of the Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, with any Applicable Premium Deficit only required to be deposited with the Trustee on or prior to the date of redemption. Any Applicable Premium Deficit shall be set forth in an Officer’s Certificate delivered by the Issuers to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption,

(b) no Default (other than that resulting from borrowing funds to be applied to make such deposit or any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith) with respect to the Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under the Senior Secured Credit Facilities or any other material agreement or instrument (other than the Indenture) to which the Issuers or any Guarantor is a party or by which the Issuers or any Guarantor is bound (other than resulting from any borrowing of funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith);

(c) the Issuers have paid or caused to be paid all sums payable by it under the Indenture; and

(d) the Issuers have delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be.

In addition, the Issuers must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the Indenture, any Guarantee and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding, including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes, and any existing Default or compliance with any provision of the Indenture or the Notes issued thereunder may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes, other than Notes beneficially owned by the Issuers or their Affiliates (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes).

The Indenture provides that, without the consent of each affected Holder of Notes, an amendment or waiver may not, with respect to any Notes held by a non-consenting Holder:

(1) reduce the principal amount of such Notes whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed final maturity of any such Note or alter or waive the provisions with respect to the redemption of such Notes (other than provisions relating to (a) notice periods (to

(to the extent consistent with applicable requirements of clearing and settlement systems) for redemption and conditions to redemption and (b) the covenants described above under the caption “—Repurchase at the Option of Holders”);

(3) reduce the rate of or change the time for payment of interest on any Note;

(4) waive a Default in the payment of principal of or premium, if any, or interest on the Notes, except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration, or in respect of a covenant or provision contained in the Indenture or any Guarantee which cannot be amended or modified without the consent of all affected Holders;

(5) make any Note payable in money other than that stated therein;

(6) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes;

(7) make any change in these amendment and waiver provisions;

(8) impair the right of any Holder to receive payment of principal of, or premium, if any, or interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

(9) make any change to or modify the ranking of the Notes that would adversely affect the Holders; or

(10) except as expressly permitted by the Indenture, modify the Guarantees of any Significant Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company), would constitute a Significant Subsidiary, in any manner materially adverse to the Holders of the Notes.

Notwithstanding the foregoing, the Issuers, any Guarantor (with respect to a Guarantee or the Indenture to which it is a party) and the Trustee may amend or supplement the Indenture and any Guarantee or Notes without the consent of any Holder:

(1) to cure any ambiguity, omission, mistake, defect or inconsistency;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to comply with the covenant relating to mergers, amalgamations, consolidations and sales of assets;

(4) to provide for the assumption of the Issuers’ or any Guarantor’s obligations to the Holders;

(5) to make any change that would provide any additional rights or benefits to the Holders or that does not materially adversely affect the legal rights under the Indenture of any such Holder;

(6) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuers or any Guarantor;

(7) to provide for the issuance of Additional Notes in accordance with the terms of the Indenture;

(8) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;

(9) to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee thereunder pursuant to the requirements thereof;

(10) to provide for the issuance of exchange notes or private exchange notes, which are identical to exchange notes except that they are not freely transferable;

(11) to add a Guarantor under the Indenture or to release a Guarantor in accordance with the terms of the Indenture;

(12) to conform the text of the Indenture, the Guarantees or the Notes to any provision of the “Description of the Notes” section of the Offering Memorandum to the extent that such provision in the “Description of the Notes” section of the Offering Memorandum was intended to be a verbatim recitation of a provision of the Indenture, the Guarantee or the Notes;

(13) to make any amendment to the provisions of the Indenture relating to the transfer and legending of Notes as permitted by the Indenture, including, without limitation to facilitate the issuance and administration of the Notes;provided, that (a) compliance with the Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (b) such amendment does not materially and adversely affect the rights of Holders to transfer Notes; or

(14) to make any other modifications to the Notes or the Indenture of a formal, minor or technical nature or necessary to correct a manifest error, so long as such modification does not adversely affect the rights of any Holders of the Notes in any material respect.

The consent of the Holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment.

Notices

Notices given by publication or electronic delivery will be deemed given on the first date on which publication is made and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing or transmitting.

Concerning the Trustee

The Indenture contains certain limitations on the rights of the Trustee thereunder, should it become a creditor of the Issuers, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee is permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as Trustee (if the Indenture has been qualified under the Trust Indenture Act) or resign.

The Indenture provides that the Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee is required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. Subject to such provisions, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of the Notes, unless such Holder shall have offered to the Trustee security and indemnity reasonably satisfactory to it against any loss, liability or expense.

Governing Law

The Indenture, the Notes and any Guarantee are governed by and construed in accordance with the laws of the State of New York.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. For purposes of the Indenture, unless otherwise specifically indicated, the term “consolidated” with respect to any Person refers to such Person consolidated with its Restricted Subsidiaries, and excludes from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person.

Acquired Indebtedness” means, with respect to any specified Person,

(1) Indebtedness of any other Person existing at the time such other Person is merged or consolidated with or into or became a Restricted Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging or consolidating with or into or becoming a Restricted Subsidiary of such specified Person, and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

Additional Interest” means all additional interest then owing pursuant to the Registration Rights Agreement.

AffiliateAffiliate”of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

Applicable Premium” means, with respect to any Note on any Redemption Date, the greater of:

(1) 1.0% of the principal amount of such Note, and

(2) the excess, if any, of (a) the present value at such Redemption Date of (i) the redemption price of such Notes at January 31, 2016 (such redemption price being set forth in the table appearing above under the caption “Optional Redemption”), plus (ii) all required remaining scheduled interest payments due on such Note through January 31, 2016 (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points over (b) the then outstanding principal amount of such Note.

Asset SaleSale” means:

(1) the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions (including by way of a Sale and Lease-Back Transaction) of property or assets of the Company or any of its Restricted Subsidiaries (each referred to in this definition as a “disposition”); or

(2) the issuance or sale of Equity Interests of any Restricted Subsidiary (other than Preferred Stock of Restricted Subsidiaries issued in compliance with the covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”), whether in a single transaction or a series of related transactions;

in each case, other than:

(a) any disposition of Cash Equivalents or Investment Grade Securities or obsolete or worn out property or equipment in the ordinary course of business or any disposition of inventory or goods (or other assets) held for sale or no longer used or useful in the ordinary course of business;

(b) the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to the provisions described above under “—Certain Covenants—Merger, Consolidation or Sale of All or Substantially All Assets” or any disposition that constitutes a Change of Control pursuant to the Indenture;

(c) the making of any Restricted Payment that is permitted to be made, and is made, under the covenant described above under “—Certain Covenants—Limitation on Restricted Payments” or any Permitted Investment;

(d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of related transactions with an aggregate fair market value of less than $15.0 million;

(e) any disposition of property or assets or issuance of securities by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary;

(f) to the extent allowable under Section 1031 of the Internal Revenue Code of 1986, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(g) the lease, assignment, sub-lease, license or sub-license of any real or personal property in the ordinary course of business;

(h) any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(i) foreclosures, condemnation, expropriation or any similar action with respect to assets or the granting of Liens not prohibited by the Indenture;

(j) sales of accounts receivable, or participations therein, or Securitization Assets (other than royalties or other revenues (except accounts receivable)) or related assets in connection with any Qualified Securitization Facility or the disposition of an account receivable in connection with the collection or compromise thereof in the ordinary course of business;

(k) any financing transaction with respect to property built or acquired by the Company or any Restricted Subsidiary after the Issue Date, including Sale and Lease-Back Transactions and asset securitizations permitted by the Indenture;

(l) the sale or discount of inventory, accounts receivable or notes receivable in the ordinary course of business or the conversion of accounts receivable to notes receivable;

(m) the licensing or sub-licensing of intellectual property or other general intangibles in the ordinary course of business, other than the licensing of intellectual property on a long-term basis;

(n) any surrender or waiver of contract rights or the settlement, release or surrender of contract rights or other litigation claims in the ordinary course of business;

(o) the unwinding of any Hedging Obligations;

(p) sales, transfers and other dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;

(q) the abandonment of intellectual property rights in the ordinary course of business, which in the reasonable good faith determination of the Company are not material to the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole;

(r) the issuance by a Restricted Subsidiary of Preferred Stock or Disqualified Stock that is permitted by the covenant described under “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(s) the granting of a Lien that is permitted under the covenant described above under “—Certain Covenants—Liens”; and

(t) the issuance of directors’ qualifying shares and shares issued to foreign nationals as required by applicable law.

Bank Products” means any facilities or services related to cash management, including treasury, depository, overdraft, credit or debit card, purchase card, electronic funds transfer and other cash management arrangements.

Business Day” means each day which is not a Legal Holiday.

Capital Stock” means:

(1) in the case of a corporation, corporate stock or shares in the capital of such corporation;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) prepared in accordance with GAAP;provided that any obligations of the Company or its Restricted Subsidiaries, or of a special purpose or other entity not consolidated with the Company and its Restricted Subsidiaries, either existing on the Issue Date or created prior to any recharacterization described below (or any refinancing thereof) (i) that were not included on the consolidated balance sheet of the Company as capital lease obligations and (ii) that are subsequently recharacterized as capital lease obligations or, in the case of such a special purpose or other entity becoming consolidated with the Company and its Restricted Subsidiaries, due to a change in accounting treatment or otherwise, shall for all purposes not be treated as a Capitalized Lease Obligations or Indebtedness.

Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by a Person and its Restricted Subsidiaries during such period in respect of licensed or purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of a Person and its Restricted Subsidiaries.

Cash Equivalents” means:

(1) United States dollars;

(2) (a) Canadian dollars, pounds sterling, yen, euros or any national currency of any participating member state of the EMU; or

(b) in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by it from time to time in the ordinary course of business;

(3) securities issued or directly and fully and unconditionally guaranteed or insured by the U.S. government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition;

(4) certificates of deposit, time deposits and eurodollar time deposits with maturities of 24 months or less from the date of acquisition, demand deposits, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $250.0 million;

(5) repurchase obligations for underlying securities of the types described in clauses (3), (4), (7) and (8) entered into with any financial institution or recognized securities dealer meeting the qualifications specified in clause (4) above;

(6) commercial paper and variable or fixed rate notes rated at least P-2 by Moody’s or at least A-2 by S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) and in each case maturing within 24 months after the date of creation thereof;

(7) marketable short-term money market and similar funds having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency);

(8) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) with maturities of 24 months or less from the date of acquisition;

(9) readily marketable direct obligations issued by any foreign government or any political subdivision or public instrumentality thereof, in each case having an Investment Grade Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) with maturities of 24 months or less from the date of acquisition;

(10) Investments with average maturities of 12 months or less from the date of acquisition in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency);

(11) securities with maturities of 12 months or less from the date of acquisition backed by standby letters of credit issued by any financial institution or recognized securities dealer meeting the qualifications specified in clause (4) above; and

(12) investment funds investing substantially all of their assets in securities of the types described in clauses (1) through (11) above.

In the case of Investments by any Foreign Subsidiary that is a Restricted Subsidiary or Investments made in a country outside the United States of America, Cash Equivalents shall also include (a) investments of the type and maturity described in clauses (1) through (8) and clauses (10), (11) and (12) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (b) other short-term investments utilized by Foreign Subsidiaries that are Restricted Subsidiaries in accordance with normal investment practices for cash management in investments analogous to the foregoing investments in clauses (1) through (12) and in this paragraph.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (1) and (2) above,provided that such amounts are converted into any currency listed in clauses (1) and (2) as promptly as practicable and in any event within ten10 Business Days following the receipt of such amounts.

Change of Control” means the occurrence of any of the following:

(1) the sale, lease, transfer, conveyance or other disposition in one or a series of related transactions (other than by merger, consolidation or amalgamation), of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person other than any Permitted Holder; or

(2) the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by (A) any Person (other than any Permitted Holder) or (B) Persons (other than any Permitted Holders) that are together a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any such group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50.0% or more of the total voting power of the Voting Stock of the Company directly or indirectly through any of its direct or indirect parent holding companies.

Closing Date” means September 8, 2014.

Consolidated Depletion, Depreciation and Amortization Expense” means with respect to any Person for any period, the total amount of depletion, depreciation and amortization expense of such Person, including the amortization of intangible assets, deferred financing fees, debt issuance costs, commissions, fees and expenses and Capitalized Software Expenditures of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.

Consolidated Interest Expense” means, with respect to any Person for any period, without duplication, the sum of:

(1) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including (a) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (b) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers acceptances, (c) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark to market valuation of Hedging Obligations or other derivative instruments pursuant to GAAP), (d) the interest component of Capitalized Lease Obligations, and (e) net payments, if any made (less net payments, if any, received), pursuant to interest rate Hedging Obligations with respect to Indebtedness, and excluding (q) annual agency fees paid to the administrative agents and collateral agents under any Credit Facilities, (r) costs associated with obtaining Hedging Obligations, (s) any expense resulting from the discounting of any Indebtedness in connection with the application of recapitalization accounting or, if applicable, purchase accounting in connection with the Transactions or any acquisition, (t) penalties and interest relating to taxes, (u) any Additional Interest and any “additional interest” or “liquidated damages” with respect to other securities for failure to timely comply with registration rights obligations, (v) amortization or expensing of deferred financing costs and any other amounts of non-cash interest, amendment and consent fees, debt issuance costs, commissions, fees and expenses and discounted liabilities, (w) any expensing of bridge, commitment and other financing fees and any other fees related to the Transactions or any acquisitions after the Issue Date, (x) commissions, discounts, yield and other fees and charges (including any interest expense) related to any Qualified Securitization Facility, (y) any accretion of accrued interest on discounted liabilities and any prepayment premium or penalty) and (z) interest expense resulting from push-down accounting; plus

(2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

(3) interest income of such Person and its Restricted Subsidiaries for such period.

For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

Consolidated Leverage Ratio” means, as at any date of determination, the ratio of (1) the Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur to (2) the Company’s EBITDA for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur, in each case with suchpro forma adjustments to Consolidated Total Indebtedness and EBITDA as are appropriate and consistent with thepro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio.

Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP;provided, that, without duplication,

(1) any after-tax effect of extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating thereto), charges or expenses (including relating to any multi-year strategic initiatives), Transaction Expenses, duplicative running costs, relocation costs, integration costs, facility consolidation and closing costs, severance costs and expenses, one-time compensation charges, costs relating to pre-opening and opening costs for plants/facilities, losses, costs or cost inefficiencies related to plant/facility disruptions or shutdowns, signing, retention and completion bonuses, costs incurred in connection with any strategic initiatives, transition costs, costs incurred in connection with acquisitions and non-recurring product and intellectual property development, other business optimization expenses (including costs and expenses relating to business optimization programs and new systems design, retention charges, system establishment costs and implementation costs) and operating expenses attributable to the implementation of cost-savings initiatives, and curtailments or modifications to pension and post-retirement employee benefit plans shall be excluded,

(2) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies during such period shall be excluded;

(3) any net after-tax effect of gains or losses on disposal, abandonment or discontinuance of disposed, abandoned or discontinued operations, as applicable, shall be excluded,

(4) any net after-tax effect of gains or losses (less all fees, expenses and charges relating thereto) attributable to asset dispositions or abandonments or the sale or other disposition of any Capital Stock of any Person other than in the ordinary course of business shall be excluded,

(5) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary or that is accounted for by the equity method of accounting, shall be excluded;provided, that Consolidated Net Income of such Person shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to such Person or a Restricted Subsidiary thereof in respect of such period,

(6) solely for the purpose of determining the amount available for Restricted Payments under clause (3)(a) of the first paragraph of “—Certain Covenants—Limitation on Restricted Payments,” the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders (other than restrictions in the Notes or the Indenture), unless such restriction with respect to the payment of dividends or similar distributions has been legally waived,provided that Consolidated Net Income of such Person will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to such Person or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein,

(7) effects of adjustments (including the effects of such adjustments pushed down to such Person and its Restricted Subsidiaries) in such Person’s consolidated financial statements pursuant to GAAP (including in the inventory, property and equipment, software, goodwill, intangible assets, in-process research and development, deferred revenue and debt line items thereof) resulting from the application of recapitalization accounting or purchase accounting, as the case may be, in relation to the Transactions or any consummated acquisition or joint venture investment or the amortization or write-off or write-down of any amounts thereof, net of taxes, shall be excluded,

(8) any after-tax effect of income (loss) from the early extinguishment or conversion of (i) Indebtedness, (ii) Hedging Obligations or (iii) other derivative instruments shall be excluded,

(9) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets, long-lived assets, investments in debt and equity securities and investments recorded using the equity method or as a result of a change in law or regulation, in each case, pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be excluded,

(10) any equity-based or non-cash compensation charge or expense including any such charge or expense arising from grants of stock appreciation or similar rights, stock options, restricted stock or other rights or equity incentive programs, and any cash charges associated with the rollover, acceleration, or payout of Equity Interests by management of the Company or any of its direct or indirect parent companies in connection with the Transactions, shall be excluded,

(11) any fees, expenses or charges incurred during such period, or any amortization thereof for such period, in connection with any acquisition, Investment, Asset Sale, disposition, incurrence or repayment of Indebtedness (including such fees, expenses or charges related to the offering and issuance of the Notes and other securities and the syndication and incurrence of any Credit Facilities), issuance of Equity Interests, refinancing transaction or amendment or modification of any debt instrument (including any amendment or other modification of the Notes and other securities and any Credit Facilities) and including, in each case, any such transaction consummated on or prior to the Issue Date and any such transaction undertaken but not completed, and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful or consummated (including, for the avoidance of doubt the effects of expensing all transaction related expenses in accordance with Financial Accounting Standards Board Accounting Standards Codification 805), shall be excluded,

(12) accruals and reserves that are established within 12 months after the Issue Date that are so required to be established as a result of the Transactions (or within 12 months after the closing of any acquisition that are so required to be established as a result of such acquisition) in accordance with GAAP shall be excluded,

(13) any expenses, charges or losses to the extent covered by insurance or indemnity and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer or indemnifying party and only to the extent that such amount is in fact reimbursed within 365 days of the date of the insurable or indemnifiable event (net of any amount so added back in any prior period to the extent not so reimbursed within the applicable 365-day period), shall be excluded;

(14) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of Accounting Standards Codification Topic No. 715,Compensation-Retirement Benefits, shall be excluded, and

(15) any noncash compensation expense resulting from the application of Accounting Standards Codification Topic No. 718,Compensation—Stock Compensation, shall be excluded, and

(16) the following items shall be excluded:

(a) any net unrealized gain or loss (after any offset) resulting in such period from Hedging Obligations and the application of Accounting Standards Codification Topic No. 815,Derivatives and Hedging,

(b) any net unrealized gain or loss (after any offset) resulting in such period from currency translation gains or losses including those related to currency remeasurements of Indebtedness (including any net loss or gain resulting from Hedging Obligations for currency exchange risk) and any other foreign currency translation gains and losses, to the extent such gain or losses are non-cash items,

(c) any adjustments resulting for the application of Accounting Standards Codification Topic No. 460,Guarantees, or any comparable regulation,

(d) effects of adjustments to accruals and reserves during a prior period relating to any change in the methodology of calculating reserves for returns, rebates and other chargebacks, and

(e) changes related to earn-outs and other deferred or contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments.

In addition, to the extent not already included in the Consolidated Net Income of such Person and its Restricted Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall include the amount of proceeds received from business interruption insurance and reimbursements of any expenses and charges that are covered by indemnification or other reimbursement provisions in connection with any acquisition, Investment or any sale, conveyance, transfer or other disposition of assets permitted under the Indenture.

Notwithstanding the foregoing, for the purpose of the covenant described under “—Certain Covenants — Limitation on Restricted Payments” only (other than clause (3)(d) of the first paragraph thereof), there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by the Company and its Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from the Company and its Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by the Company or any of its Restricted Subsidiaries, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under such covenant pursuant to clause (3)(d) thereof.

Consolidated Secured Debt Ratio” as of any date of determination means, the ratio of (1) Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries that is secured by Liens on the property of the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur to (2) EBITDA of the Company for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such event for which such calculation is being made shall occur, in each case with such pro forma adjustments to Consolidated Total Indebtedness and EBITDA as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio.

Consolidated Total Indebtedness” means, as at any date of determination, an amount equal to the sum of (1) the aggregate amount of all outstanding Indebtedness of the Company and its Restricted Subsidiaries on a consolidated basis consisting of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease Obligations and debt obligations evidenced by promissory notes and similar instruments, as determined in accordance with GAAP (excluding for the avoidance of doubt all undrawn amounts under revolving credit facilities and letters of credit, all obligations relating to Qualified Securitization Facilities and Tax Receivable

Agreements), and (2) the aggregate amount of all outstanding Disqualified Stock of the Company and all Preferred Stock of its Restricted Subsidiaries on a consolidated basis, with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and maximum fixed repurchase prices, in each case determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of repurchase or purchase accounting in connection with the Transactions or any acquisition);provided, that Consolidated Total Indebtedness shall not include Indebtedness in respect of (A) any letter of credit, except to the extent of unreimbursed amounts under standby letters of credit and (B) Hedging Obligations existing on the Issue Date or otherwise permitted by clause (10) of the second paragraph under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; it being understood, for the avoidance of doubt that earn-out payments and non-compete payments (to the extent such payments would not become a liability on the balance sheet of such Person in accordance with GAAP as GAAP existed on December 31, 2008) and obligations

to pay the deferred purchase price of property or services do not constitute Consolidated Total Indebtedness. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined reasonably and in good faith by the Company. The U.S. Dollar Equivalent principal amount of any Indebtedness denominated in a foreign currency will reflect the currency translation effects, determined in accordance with GAAP, of Hedging Obligations for currency exchange risks with respect to the applicable currency in effect on the date of determination of the U.S. Dollar Equivalent principal amount of such Indebtedness.

Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent,

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor;

(2) to advance or supply funds,

(a) for the purchase or payment of any such primary obligation; or

(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

Controlled Investment Affiliate” means, as to any Person, any other Person, other than any Investor, which directly or indirectly is in control of, is controlled by, or is under common control with such Person and is organized by such Person (or any Person controlling such Person) primarily for making direct or indirect equity or debt investments in the Company and/or other companies.

Credit Agreement” means that certain Credit Agreement, dated as of the Issue Date, by and among the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc., as joint lead arrangers, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., UBS Securities LLC, Barclays Capital, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc., as joint bookrunners, Bank of America, N.A., as administrative agent, collateral agent and swing line lender, Bank of America, N.A., as letter of credit issuer, Citigroup Global Markets Inc., as syndication agent and other parties party thereto.

Credit Facilities” means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities, including the Senior Secured Credit Facilities, or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit or other long-term indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof, in whole or in part, and any indentures or credit facilities or commercial paper facilities that replace, refund, supplement or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding, supplemental or refinancing facility, arrangement or indenture that increases the amount permitted to be borrowed or issued thereunder or alters the maturity thereof (provided that such increase in borrowings or issuances is permitted

under “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders or other holders.

Debt Fund Affiliate” means (i) any fund managed by, or under common management with, GSO Capital Partners LP, (ii) any fund managed by GSO Debt Funds Management LLC, Blackstone Debt Advisors L.P., Blackstone Distressed Securities Advisors L.P., Blackstone Mezzanine Advisors L.P. or Blackstone Mezzanine Advisors II L.P. and (iii) any other Affiliate of the Investors that is abona fide debt fund or an investment vehicle that is engaged in the making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course.

Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

Designated Non-cash Consideration” means the fair market value of non-cash consideration received by the Company or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate delivered by the Company, setting forth the basis of such valuation, executed by the principal financial officer of the Company, less the amount of Cash Equivalents received in connection with a subsequent sale, redemption or repurchase of or collection or payment on such Designated Non-cash Consideration.

Designated Preferred Stock” means Preferred Stock of the Company or any direct or indirect parent company thereof (in each case other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officer’s Certificate delivered by the Company executed by the principal financial officer of the Company or the applicable parent company thereof, as the case may be, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (3) of the first paragraph of “—Certain Covenants—Limitation on Restricted Payments.”

Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely as a result of a change of control or asset sale) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes are no longer outstanding;provided, that if such Capital Stock is issued to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations;provided, further, that any Capital Stock held by any future, current or former employee, director, officer, manager or consultant (or their respective Controlled Investment Affiliates or Immediate Family Members), of the Company, any of its Subsidiaries, any of its direct or indirect parent companies or any other entity in which the Company or a Restricted Subsidiary has an

Investment and is designated in good faith as an “affiliate” by the board of directors of the Company (or the compensation committee thereof), in each case pursuant to any stock subscription or shareholders’ agreement, management equity plan or stock option plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its Subsidiaries or in order to satisfy applicable statutory or regulatory obligations;provided, further,that the Class B Membership Interests of Continental Cement Company, L.L.C. shall not constitute Disqualified Stock.

EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period

(1) increased (without duplication) by the following, in each case (other than with respect to clauses (h) and (k)) to the extent deducted (and not added back) in determining Consolidated Net Income for such period:

(a) provision for taxes based on income or profits or capital, including, without limitation, federal, state, franchise and similar taxes and foreign withholding taxes (including any future taxes or other levies which replace or are intended to be in lieu of such taxes and any penalties and interest related to such taxes or arising from tax examinations) and the net tax expense associated with any adjustments made pursuant to clauses (1) through (16) of the definition of “Consolidated Net Income”; plus

(b) Fixed Charges of such Person for such period (including (x) net losses or Hedging Obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, (y) bank fees and other financing fees and (z) costs of surety bonds in connection with financing activities, plus amounts excluded from Consolidated Interest Expense as set forth in clauses (1)(q) through (z) in the definition thereof); plus

(c) Consolidated Depletion, Depreciation and Amortization Expense of such Person for such period; plus

(d) the amount of any severance, relocation costs and expenses, integration costs, transition costs, pre-opening, opening, consolidation and/or closing costs for facilities, costs incurred in connection with any non-recurring strategic initiatives, costs incurred in connection with acquisitions and Investments and non-recurring product and intellectual property development, other business optimization expenses (including costs and expenses relating to business optimization programs and new systems design and implementation costs), project start-up costs, restructuring charges, accruals or reserves (including restructuring costs related to acquisitions and to closure/consolidation of facilities, retention charges, systems establishment costs and excess pension charges); plus

(e) any other non-cash charges, including any write-offs or write-downs reducing Consolidated Net Income for such period (provided that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, (A) the Company may elect not to add back such non-cash charge in the current period and (B) to the extent the Company elects to add back such non-cash charge, the cash payment in respect thereof in such future period shall be subtracted from EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period); plus

(f) the amount of any non-controllingnoncontrolling interest or minority interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any non-Wholly-Owned Subsidiary; plus

(g) the amount of management, monitoring, consulting, advisory fees and other fees (including termination fees) and indemnities and expenses paid or accrued in such period under the Management Fee Agreement or otherwise to the Investors to the extent otherwise permitted under “—Certain Covenants—Transactions with Affiliates”; plus

(h) the amount of “run rate” cost savings, operating expense reductions and synergies projected by the Company in good faith to result from actions taken, committed to be taken or expected in good faith to be taken no later than 12 months after the end of such period (calculated on a pro forma basis as

though such cost savings, operating expense reductions and synergies had been realized on the first day of such period for which EBITDA is being determined and as if such cost savings, operating expense reductions and synergies were realized during the entirety of such period), net of the amount of actual benefits realized during such period from such actions;provided, that such cost savings and synergies are reasonably identifiable and factually supportable (it is understood and agreed that “run-rate” means the full recurring benefit for a period that is associated with any action taken, committed to be taken or expected to be taken, net of the amount of actual benefits realized during such period from such actions); plus

(i) the amount of loss on sale of receivables, Securitization Assets and related assets to any Securitization Subsidiary in connection with a Qualified Securitization Facility; plus

(j) any costs or expense incurred by the Company or a Restricted Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of the Company or net cash proceeds of an issuance of Equity Interest of the Company (other than Disqualified Stock) solely to the extent that such net cash proceeds are excluded from the calculation set forth in clause (3) of the first paragraph under “—Certain Covenants—Limitation on Restricted Payments”; plus

(k) cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing EBITDA or Consolidated Net Income in any period to the extent non-cash gains relating to such income were deducted in the calculation of EBITDA pursuant to clause (2) below for any previous period and not added back; plus

(l) any net loss from disposed, abandoned or discontinued operations; plus

(m) accretion of asset retirement obligations in accordance with Statement of Financial Accounting Standards No. 143,Accounting for Asset Retirement Obligations; plus

(n) interest income or investment earnings on retiree medical and intellectual property, royalty or license receivables;

(2) decreased (without duplication) by the following, in each case to the extent included in determining Consolidated Net Income for such period:

(a) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or reserve for a potential cash item that reduced EBITDA in any prior period and any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase EBITDA in such prior period; plus

(b) any net income from disposed, abandoned or discontinued operations.

EMU” means economic and monetary union as contemplated in the Treaty on European Union.

Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.

Equity Offering” means any public or private sale or issuance of common stock or Preferred Stock of the Company or any of its direct or indirect parent companies (excluding Disqualified Stock), other than:

(1) public offerings with respect to the Company’s or any direct or indirect parent company’s common stock registered on Form S-4 or Form S-8;

(2) issuances to any Subsidiary of the Company; and

(3) any such public or private sale or issuance that constitutes an Excluded Contribution.

euroeuro”means the single currency of participating member states of the EMU.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

Excluded Contribution” means net cash proceeds, marketable securities or Qualified Proceeds received by the Company from

(1) contributions to its common equity capital; and

(2) the sale (other than to a Subsidiary of the Company or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Company) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Company,

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate delivered by the Company executed by the principal financial officer of the Company on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be, which are excluded from the calculation set forth in clause (3) of the first paragraph under “—Certain Covenants—Limitation on Restricted Payments.”

fair market value” means, with respect to any asset or liability, the fair market value of such asset or liability as determined by the Company in good faith.

Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any Restricted Subsidiary incurs, assumes, guarantees, redeems, repays, retires or extinguishes any Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) or issues or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to or simultaneously with the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Fixed Charge Coverage Ratio Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, redemption, repayment, retirement or extinguishment of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period.

For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (as determined in accordance with GAAP) that have been made by the Company or any of its Restricted Subsidiaries during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Fixed Charge Coverage Ratio Calculation Date shall be calculated on apro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (and the change in any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Company or any of its Restricted Subsidiaries since the beginning of such period shall have made any Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation had occurred at the beginning of the applicable four-quarter period.

For purposes of this definition, wheneverpro forma effect is to be given to an Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation (including the Transactions), thepro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company (and may include, for the avoidance of doubt, cost savings, synergies and operating expense reductions resulting from such Investment, acquisition, merger, amalgamation or consolidation (including the Transactions) which is being givenpro forma effect that have been or are expected to be realized based on actions taken, committed to

be taken or expected in good faith to be taken within 18 months). If any Indebtedness bears a floating rate of interest and is being givenpro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Fixed Charge Coverage Ratio Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on apro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period except as set forth in the first paragraph of this definition. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate.

Fixed Charges” means, with respect to any Person for any period, the sum of, without duplication:

(1) Consolidated Interest Expense of such Person for such period;

(2) all cash dividends or other distributions paid (excluding items eliminated in consolidation) on any series of Preferred Stock during such period; and

(3) all cash dividends or other distributions paid (excluding items eliminated in consolidation) on any series of Disqualified Stock during such period.

Foreign Subsidiary” means, with respect to any Person, any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof and any Restricted Subsidiary of such Foreign Subsidiary.

GAAPGAAP”means (1) generally accepted accounting principles in the United States of America which are in effect from time to time (other than with respect to Capitalized Lease Obligations), it being understood that, for purposes of the Indenture, all references to codified accounting standards specifically named in the Indenture shall be deemed to include any successor, replacement, amended or updated accounting standard under GAAP or (2) if elected by the Company by written notice to the Trustee in connection with the delivery of financial statements and information, the accounting standards and interpretations (“IFRS”) adopted by the International Accounting Standard Board, as in effect on the first date of the period for which the Company is making such election;provided, that (a) any such election once made shall be irrevocable, (b) all financial statements and reports required to be provided, after such election pursuant to the Indenture shall be prepared on the basis of IFRS, (c) from and after such election, all ratios, computations and other determinations based on GAAP contained in the Indenture shall be computed in conformity with IFRS, (d) in connection with the delivery of financial statements (x) for any of its first three financial quarters of any financial year, it shall restate its consolidated interim financial statements for such interim financial period and the comparable period in the prior year to the extent previously prepared in accordance with GAAP as in effect on the Issue Date and (y) for delivery of audited annual financial information, it shall provide consolidated historical financial statements prepared in accordance with IFRS for the prior most recent fiscal year to the extent previously prepared in accordance with GAAP as in effect on the first date of the period in which the Company is making such election. For the avoidance of doubt, solely making an election (without any other action) referred to in this definition will not be treated as an incurrence of Indebtedness.

guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

GuaranteeGuarantee”means the guarantee by any Guarantor of the Issuers’ Obligations under the Indenture and the Notes.

GuarantorGuarantor”means each Subsidiary of the Company, if any, that Guarantees the Notes in accordance with the terms of the Indenture.

Hedging Obligations” means, with respect to any Person, the obligations of such Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange contract, currency swap agreement or similar agreement providing for the transfer or mitigation of interest rate, currency or commodity risks either generally or under specific contingencies.

Holder” means the Person in whose name a Note is registered on the registrar’s books.

Immediate Family Members” means with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, qualified domestic partner, sibling, mother- in-law, father-in-law, son-in-law and daughter-in-law (including adoptive

relationships) and any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any private foundation or fund that is controlled by any of the foregoing individuals or any donor-advised fund of which any such individual is the donor.

Indebtedness” means, with respect to any Person, without duplication:

(1) any indebtedness (including principal and premium) of such Person, whether or not contingent:

(a) in respect of borrowed money;

(b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof);

(c) representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except (i) any such balance that constitutes an obligation in respect of a commercial letter of credit, a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business and (ii) any earn-out or non-compete obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP as GAAP existed on the Issue Date and is not paid after becoming due and payable; or

(d) representing the net obligations under any Hedging Obligations,

if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;provided, that Indebtedness of any direct or indirect parent of the Company appearing upon the balance sheet of the Company solely by reason of push-down accounting under GAAP shall be excluded;

(2) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause (1) of a third Person (whether or not such items would appear upon the balance sheet of the such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business; and

(3) to the extent not otherwise included, the obligations of the type referred to in clause (1) of a third Person secured by a Lien on any asset owned by such first Person, whether or not such Indebtedness is assumed by such first Person;

provided, that notwithstanding the foregoing, Indebtedness shall be deemed not to include (a) Contingent Obligations incurred in the ordinary course of business or (b) obligations under or in respect of Qualified Securitization Facilities;provided, further, that Indebtedness shall be calculated without giving effect to the effects of Financial Accounting Standards Board Accounting Standards Codification 815 and related

interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under the Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.

Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged.

Initial Purchasers” means Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC,Citigroup Global Markets Inc., Barclays Capital Inc., UBS Securities LLC, Credit Suisse Securities (USA) LLC, and Deutsche Bank Securities Inc. and Blackstone Advisory Partners L.P.

Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or if the applicable securities are not then rated by Moody’s or S&P an equivalent rating by any other Rating Agency.

Investment Grade Securities” means:

(1) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents);

(2) debt securities or debt instruments with an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries;

(3) investments in any fund that invests exclusively in investments of the type described in clauses (1) and (2) which fund may also hold immaterial amounts of cash pending investment or distribution; and

(4) corresponding instruments in countries other than the United States customarily utilized for high quality investments.

Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit, advances to customers, commission, travel and similar advances to employees, directors, officers, managers and consultants, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of the Company in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of “Unrestricted Subsidiary” and the covenant described under “—Certain Covenants—Limitation on Restricted Payments”:

(1) “Investments” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary;provided, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

(a) the Company’s “Investment” in such Subsidiary at the time of such redesignation; less

(b) the portion (proportionate to the Company’s Equity Interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer.

The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by the Company or a Restricted Subsidiary in respect of such Investment.

Investors” means any of (i) Blackstone Capital Partners V L.P. and its Affiliates and any investment funds advised or managed by any of the foregoing (other than any portfolio operating companies of Blackstone Capital Partners V L.P.) and (ii) Silverhawk Summit, L.P. and its Affiliates and any investment funds advised or managed by any of the foregoing (other than any portfolio operating companies of Silverhawk Summit, L.P.).

Issue Date” means January 30, 2012.

Legal Holiday” means a Saturday, a Sunday or a day on which commercial banking institutions are not required to be open in the State of New York or at the place of payment. If a payment date is on a Legal Holiday, payment will be made on the next succeeding day that is not a Legal Holiday and no interest shall accrue for the intervening period.

Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention

agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction;provided, that in no event shall an operating lease be deemed to constitute a Lien.

Management Fee Agreement” means the transaction and management fee agreement or similar agreements between certain of the management companies associated with one or more of the Investors or their advisors, if applicable, and the Company (and/or its direct or indirect parent companies).

Management Stockholders” means the members of management (and their Controlled Investment Affiliates and Immediate Family Members) of the Company (or its indirect or direct parent companies) who were holders of Equity Interests of any direct or indirect parent companies of the Companies on the Issue Date.

Moody’sMoody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

Net IncomeIncome” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.

Net Proceeds” means the aggregate Cash Equivalents proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale, including any Cash Equivalents received upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale, net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration, including legal, accounting and investment banking fees, payments made in order to obtain a necessary consent or required by applicable law, and brokerage and sales commissions, any relocation expenses incurred as a result thereof, other fees and expenses, including title and recordation expenses, taxes paid or payable as a result thereof or any transactions occurring or deemed to occur to effectuate a payment under the Indenture (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of principal, premium, if any, and interest on Senior Indebtedness or amounts required to be applied to the repayment of Indebtedness secured by a Lien on such assets and required (other than required by clause (1) of the second paragraph of “—Repurchase at the Option of Holders—Asset Sales”) to be paid as a result of such transaction and any deduction of appropriate amounts to be provided by the Company or any of its Restricted Subsidiaries as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company or any of its Restricted Subsidiaries after such sale or other disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.

ObligationsObligations”means any principal, interest (including any interest accruing on or subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with

respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), premium, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness;provided, that any of the foregoing (other than principal and interest) shall no longer constitute “Obligations” after payment in full of such principal and interest except to the extent such obligations are fully liquidated and non-contingent on or prior to such payment in full.

Offering Memorandum” means the confidential offering memorandum, dated January 23, 2012, relating to the initial sale of the Notes.

OfficerOfficer” means the Chairman of the board of directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the applicable Issuer or Guarantor.

Officer’s Certificate” means a certificate signed on behalf of a Person by an Officer of such Person that meets the requirements set forth in the indenture. An Officer’s Certificate required to be delivered by the Issuers shall be signed by an Officer of each Issuer.

Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee that meets the requirements set forth in the Indenture.

Permitted Asset Swap” means the substantially concurrent purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and Cash Equivalents between the Company or any of its Restricted Subsidiaries and another Person;provided, that any Cash Equivalents received must be applied in accordance with the covenant described under “—Repurchase at the Option of Holders—Asset Sales.”

Permitted Holders” means each of the Investors and Management Stockholders and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members;provided, that in the case of such group and without giving effect to the existence of such group or any other group, such Investors and Management Stockholders, collectively, have beneficial ownership of more than 50.0% of the total voting power of the Voting Stock of the Company or any of its direct or indirect parent companies. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of the Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

Permitted Investments” means:

(1) any Investment in the Company or any of its Restricted Subsidiaries;

(2) any Investment in Cash Equivalents or Investment Grade Securities;

(3) any Investment by the Company or any of its Restricted Subsidiaries in a Person (including, to the extent constituting an Investment, in assets of a Person that represent substantially all of its assets or a division, business unit or product line, including research and development and related assets in respect of any product) that is engaged directly or through entities that will be Restricted Subsidiaries in a Similar Business if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary; or

(b) such Person, in one transaction or a series of related transactions, is amalgamated, merged or consolidated with or into, or transfers or conveys substantially all of its assets (or such division, business unit or product line) to, or is liquidated into, the Company or a Restricted Subsidiary,

and, in each case, any Investment held by such Person; provided, that such Investment was not acquired by such Person in contemplation of such acquisition, merger, amalgamation, consolidation or transfer;

(4) any Investment in securities or other assets not constituting Cash Equivalents or Investment Grade Securities and received in connection with an Asset Sale made pursuant to the first paragraph under “—Repurchase at the Option of Holders—Asset Sales” or any other disposition of assets not constituting an Asset Sale;

(5) any Investment existing on the Issue Date or made pursuant to binding commitments in effect on the Issue Date or an Investment consisting of any extension, modification or renewal of any such Investment or binding commitment existing on the Issue Date;provided, that the amount of any such Investment may be increased in such extension, modification or renewal only (a) as required by the terms of such Investment or binding commitment as in existence on the Issue Date (including as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities) or (b) as otherwise permitted under the Indenture;

(6) any Investment acquired by the Company or any of its Restricted Subsidiaries:

(a) consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business; or

(b) in exchange for any other Investment or accounts receivable, indorsements for collection or deposit held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable (including any trade creditor or customer); or

(c) in satisfaction of judgments against other Persons; or

(d) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(7) Hedging Obligations permitted under clause (10) of the covenant described in “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(8) any Investment in a Similar Business taken together with all other Investments made pursuant to this clause (8) that are at that time outstanding not to exceed the greater of (a) $35.0 million and (b) 2.50% of Total Assets (in each case, determined on the date such Investment is made, with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

(9) Investments the payment for which consists of Equity Interests (other than Disqualified Stock) of the Company, or any of its direct or indirect parent companies;provided, that such Equity Interests will not increase the amount available for Restricted Payments under clause (3) of the first paragraph under the covenant described in “—Certain Covenants—Limitations on Restricted Payments”;

(10) guarantees of Indebtedness permitted under the covenant described in “Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” performance guarantees and Contingent Obligations incurred in the ordinary course of business and the creation of liens on the assets of the Company or any Restricted Subsidiary in compliance with the covenant described under “—Certain Covenants—Liens”;

(11) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of the second paragraph of the covenant described under “—Certain Covenants—Transactions with Affiliates” (except transactions described in clauses (2), (5) and (9) of such paragraph);

(12) Investments consisting of purchases or other acquisitions of inventory, supplies, material or equipment or the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;

(13) Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (13) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed the greater of (a) $25.0 million and (b) 1.75% of Total Assets (in each case, determined on the date such Investment is made, with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

(14) Investments in or relating to a Securitization Subsidiary that, in the good faith determination of the Company are necessary or advisable to effect any Qualified Securitization Facility or any repurchase obligation in connection therewith;

(15) advances to, or guarantees of Indebtedness of, employees not in excess of $10.0 million outstanding in the aggregate;

(16) loans and advances to employees, directors, officers, managers and consultants (a) for business-related travel expenses, moving expenses and other similar expenses or payroll advances, in each case incurred in the ordinary course of business or consistent with past practices or (b) to fund such Person’s purchase of Equity Interests of the Company from the Company or any direct or indirect parent company thereof from such parent company;

(17) advances, loans or extensions of trade credit in the ordinary course of business by the Company or any of its Restricted Subsidiaries;

(18) any Investment in any Subsidiary or any joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business;

(19) Investments consisting of purchases and acquisitions of assets or services in the ordinary course of business;

(20) Investments made in the ordinary course of business in connection with obtaining, maintaining or renewing client contacts;

(21) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business;

(22) repurchases of Notes;

(23) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection of deposit and Article 4 customary trade arrangements with customers consistent with past practices; and

(24) Investments consisting of promissory notes issued by the Company or any Guarantor to future, present or former officers, directors and employees, members of management, or consultants of the Company or any of its Subsidiaries or their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Company or any direct or indirect parent thereof, to the extent the applicable Restricted Payment is a permitted by the covenant described under “—Certain Covenants—Limitation on Restricted Payment”.

Permitted Liens” means, with respect to any Person:

(1) pledges, deposits or security by such Person under workmen’s compensation laws, unemployment insurance, employers’ health tax, and other social security laws or similar legislation or other insurance related obligations (including, but not limited to, in respect of deductibles, self insured retention amounts and premiums and adjustments thereto) or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory

obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business;

(2) Liens imposed by law, such as landlords’, carriers’, warehousemen’s, materialmen’s, repairmen’s and mechanics’ Liens, in each case for sums not yet overdue for a period of more than 30 days or being contested in good faith by appropriate actions or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;

(3) Liens for taxes, assessments or other governmental charges not yet overdue for a period of more than 30 days or not yet payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate actions diligently conducted, if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;

(4) Liens in favor of issuers of performance, surety, bid, indemnity, warranty, release, appeal or similar bonds or with respect to other regulatory requirements or letters of credit or bankers acceptances issued, and completion guarantees provided for, in each case, issued pursuant to the request of and for the account of such Person in the ordinary course of its business or consistent with past practice prior to the Issue Date;

(5) minor survey exceptions, minor encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines, drains, telegraph, telephone and cable television lines and other similar purposes, or zoning, building codes or other restrictions (including minor defects and irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental, to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person and exceptions on title policies insuring liens granted on Mortgaged Properties (as defined in the Senior Secured Credit Facilities);

(6) Liens securing Obligations relating to any Indebtedness permitted to be incurred pursuant to clause (4), (12)(b) (in an amount not to exceed $60.0 million at any one time outstanding under such clause), (13) or (23) of the second paragraph under “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;provided, that (a) Liens securing Obligations relating to any Indebtedness, Disqualified Stock or Preferred Stock permitted to be incurred pursuant to clause (13) relate only to Obligations relating to Refinancing Indebtedness that (x) is secured by Liens on the same assets as the assets securing the Refinancing Indebtedness or (y) extends, replaces, refunds, refinances, renews or defeases Indebtedness incurred or Disqualified Stock or Preferred Stock issued under clauses (3), (4), (12) or (13) of the second paragraph under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” (b) Liens securing Obligations relating to Indebtedness permitted to be incurred pursuant to clause (23) extend only to the assets of Restricted Subsidiaries of the Company that are not Guarantors and (c) Liens securing Obligations relating to any Indebtedness, Disqualified Stock or Preferred Stock to be incurred pursuant to clause (4) of the second paragraph under “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” extend only to the assets so purchased, leased or improved;

(7) Liens existing on the Issue Date (including to secure any Refinancing Indebtedness of any Indebtedness secured by such Liens);

(8) Liens on property or shares of stock or other assets of a Person at the time such Person becomes a Subsidiary;provided, that such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary;provided,further, that such Liens may not extend to any other property or other assets owned by the Company or any of its Restricted Subsidiaries;

(9) Liens on property or other assets at the time the Company or a Restricted Subsidiary acquired the property or such other assets, including any acquisition by means of a merger, amalgamation or consolidation with or into the Company or any of its Restricted Subsidiaries;provided, that such Liens are not created or incurred in connection with, or in contemplation of, such acquisition, amalgamation, merger or consolidation;provided,further, that the Liens may not extend to any other property owned by the Company or any of its Restricted Subsidiaries;

(10) Liens securing Obligations relating to any Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary permitted to be incurred in accordance with the covenant described under “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(11) Liens securing (x) Hedging Obligations and (y) obligations in respect of Bank Products;

(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s accounts payable or similar trade obligations in respect of bankers’ acceptances or trade letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(13) leases, sub-leases, licenses or sub-licenses granted to others in the ordinary course of business which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries and do not secure any Indebtedness;

(14) Liens arising from Uniform Commercial Code (or equivalent statute) financing statement filings regarding operating leases or consignments entered into by the Company and its Restricted Subsidiaries in the ordinary course of business or purported Liens evidenced by the filing of precautionary Uniform Commercial Code financing statements or similar public filings;

(15) Liens in favor of the Company, the Co-Issuer or any Guarantor;

(16) Liens on equipment of the Company or any of its Restricted Subsidiaries granted in the ordinary course of business to the Company’s clients;

(17) Liens on accounts receivable, Securitization Assets and related assets incurred in connection with a Qualified Securitization Facility;

(18) Liens to secure any modification, refinancing, refunding, extension, renewal or replacement (or successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7), (8) and (9);provided, that (a) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property) and proceeds and products thereof, and (b) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6), (7), (8) and (9) at the time the original Lien became a Permitted Lien under the Indenture, and (ii) an amount necessary to pay any fees and expenses (including original issue discount, upfront fees or similar fees) and premiums (including tender premiums and accrued and unpaid interest) related to such modification, refinancing, refunding, extension, renewal or replacement;

(19) deposits made or other security provided in the ordinary course of business to secure liability to insurance carriers;

(20) Liens securing obligations in an aggregate principal amount outstanding which does not exceed the greater of (a) $50.0 million and (b) 3.75% of Total Assets (in each case, determined as of the date of such incurrence);

(21) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business;

(22) Liens securing judgments for the payment of money not constituting an Event of Default under clause (5) under the caption “—Events of Default and Remedies” so long as such Liens are adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(23) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;

(24) Liens (a) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (b) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business, and (c) in favor of banking institutions arising as a matter of law or under general terms and conditions encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;

(25) Liens deemed to exist in connection with Investments in repurchase agreements permitted under “Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided, that such Liens do not extend to any assets other than those that are the subject of such repurchase agreement;

(26) Liens encumbering reasonable customary deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;

(27) Liens that are contractual rights of set-off (a) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (b) relating to pooled deposit or sweep accounts of the Company or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Company and its Restricted Subsidiaries or (c) relating to purchase orders and other agreements entered into with customers of the Company or any of its Restricted Subsidiaries in the ordinary course of business;

(28) Liens securing obligations owed by the Company or any Restricted Subsidiary to any lender under the Senior Secured Credit Facilities or any Affiliate of such a lender in respect of any overdraft and related liabilities arising from treasury, depository and cash management services or any automated clearing house transfers of funds;

(29) any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(30) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale or purchase of goods entered into by the Company or any Restricted Subsidiary in the ordinary course of business;

(31) Liens solely on any cash earnest money deposits made by the Company or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement permitted by the Indenture;

(32) ground leases in respect of real property on which facilities owned or leased by the Company or any of its Subsidiaries are located;

(33) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

(34) Liens on Capital Stock of an Unrestricted Subsidiary that secure Indebtedness or other obligations of such Unrestricted Subsidiary;

(35) Liens on the assets of non-guarantor Restricted Subsidiaries securing Indebtedness of such Subsidiaries that were permitted by the terms of the Indenture to be incurred;

(36) Liens on cash advances in favor of the seller of any property to be acquired in an Investment permitted under the Indenture to be applied against the purchase price for such Investment;

(37) any interest or title of a lessor, sub-lessor, licensor or sub-licensor or secured by a lessor’s, sub-lessor’s, licensor’s or sub-licensor’s interest under leases or licenses entered into by the Company or any of the Restricted Subsidiaries in the ordinary course of business; and

(38) deposits of cash with the owner or lessor of premises leased and operated by the Company or any of its Subsidiaries in the ordinary course of business of the Company and such Subsidiary to secure the performance of the Company’s or such Subsidiary’s obligations under the terms of the lease for such premises.

For purposes of this definition, the term “Indebtedness” shall be deemed to include interest on such Indebtedness.

Person”means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

Preferred Stock” means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.

Qualified Proceeds” means the fair market value of assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business.

Qualified Securitization Facility” means any Securitization Facility (a) constituting a securitization financing facility that meets the following conditions: (i) the board of directors of the Company shall have determined in good faith that such Securitization Facility (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Company and the applicable Securitization Subsidiary, (ii) all sales and/or contributions of Securitization Assets and related assets to the applicable Securitization Subsidiary are made at fair market value (as determined in good faith by the Company) and (iii) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Company) or (b) constituting a receivables financing facility.

Rating Agencies” means Moody’s and S&P or if Moody’s or S&P or both shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Issuers which shall be substituted for Moody’s or S&P or both, as the case may be.

Registration Rights Agreement” means a registration rights agreement with respect to the Notes dated as of the IssueClosing Date, among the Issuers, the Guarantors and the representativesrepresentative of the Initial Purchasers.

Related Business Assets” means assets (other than Cash Equivalents) used or useful in a Similar Business,provided that any assets received by the Company or a Restricted Subsidiary in exchange for assets transferred by the Company or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.

Restricted Investment” means an Investment other than a Permitted Investment.

Restricted Subsidiary” means, with respect to any Person, at any time, any direct or indirect Subsidiary of such Person (including the Co-Issuer and any Foreign Subsidiary) that is not then an Unrestricted Subsidiary;provided,however, that upon an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of “Restricted Subsidiary.” Unless otherwise indicated in this “Description of the Notes,” all references to Restricted Subsidiaries shall mean Restricted Subsidiaries of the Company.

S&P&P”means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any successor to its rating agency business.

Sale and Lease-Back Transaction” means any arrangement providing for the leasing by the Company or any of its Restricted Subsidiaries of any real or tangible personal property, which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to a third Person in contemplation of such leasing.

SECSEC”means the U.S. Securities and Exchange Commission.

Secured Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries secured by a Lien.

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

Securitization Assets” means the accounts receivable, royalty or other revenue streams and other rights to payment and any other assets related thereto subject to a Qualified Securitization Facility and the proceeds thereof.

Securitization Facility” means any of one or more receivables or securitization financing facilities as amended, supplemented, modified, extended, renewed, restated or refunded from time to time, the Obligations of which are non-recourse (except for customary representations, warranties, covenants and indemnities made in connection with such facilities) to the Company or any of its Restricted Subsidiaries (other than a Securitization Subsidiary) pursuant to which the Company or any of its Restricted Subsidiaries sells or grants a security interest in its accounts receivable or Securitization Assets or assets related thereto to either (a) a Person that is not a Restricted Subsidiary or (b) a Securitization Subsidiary that in turn sells its accounts receivable to a Person that is not a Restricted Subsidiary.

Securitization Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Securitization Subsidiary in connection with, any Qualified Securitization Facility.

Securitization Subsidiary” means any Subsidiary formed for the purpose of, and that solely engages only in one or more Qualified Securitization Facilities and other activities reasonably related thereto.

Senior Indebtedness” means:

(1) all Indebtedness of the Company or any Guarantor outstanding under the Senior Secured Credit Facilities and the related guarantees and Notes and related Guarantees (including interest accruing on or after the filing of any petition in bankruptcy or similar proceeding or for reorganization of the Company or any Guarantor (at the rate provided for in the documentation with respect thereto, regardless of whether or not a claim for post-filing interest is allowed in such proceedings)), and any and all other fees, expense reimbursement obligations, indemnification amounts, penalties, and other amounts (whether existing on the Issue Date or thereafter created or incurred) and all obligations of the Company or any Guarantor to reimburse any bank or other Person in respect of amounts paid under letters of credit, acceptances or other similar instruments;

(2) all (x) Hedging Obligations (and guarantees thereof) and (y) obligations in respect of Bank Products (and guarantees thereof) owing to a lender under the Senior Secured Credit Facilities or any Affiliate of such lender (or any Person that was a lender or an Affiliate of such lender at the time the applicable agreement giving rise to such Hedging Obligation was entered into); provided, that such Hedging Obligations and obligations in respect of Bank Products, as the case may be, are permitted to be incurred under the terms of the Indenture;

(3) any other Indebtedness of the Company or any Guarantor permitted to be incurred under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is subordinated in right of payment to the Notes or any related Guarantee; and

(4) all Obligations with respect to the items listed in the preceding clauses (1), (2) and (3);provided, that Senior Indebtedness shall not include:

(a) any obligation of such Person to the Issuers or any of their Subsidiaries;

(b) any liability for federal, state, local or other taxes owed or owing by such Person;

(c) any accounts payable or other liability to trade creditors arising in the ordinary course of business;

(d) any Indebtedness or other Obligation of such Person which is subordinate or junior in any respect to any other Indebtedness or other Obligation of such Person; or

(e) that portion of any Indebtedness which at the time of incurrence is incurred in violation of the Indenture.

Senior Secured Credit Facilities” means the term loan facility, revolving credit facility and other credit facilities under the Credit Agreement, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions,

renewals, restatements, refundings, refinancings or replacements thereof and any one or more indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund, supplement or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under the caption “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” above) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders or holders.

Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X promulgated pursuant to the Securities Act, as such regulation is in effect on the Issue Date.

Similar Business” means (1) any business conducted by the Company or any of its Restricted Subsidiaries on the Issue Date, and any reasonable extension thereof, or (2) any business or other activities that are reasonably similar, ancillary, incidental, complementary or related to, or a reasonable extension, development or expansion of, the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.

Subordinated Indebtedness” means, with respect to the Notes,

(1) any Indebtedness of the Issuers which is by its terms subordinated in right of payment to the Notes, and

(2) any Indebtedness of any Guarantor which is by its terms subordinated in right of payment to the Guarantee of such entity of the Notes.

Subsidiary” means, with respect to any Person:

(1) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50.0% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; and

(2) any partnership, joint venture, limited liability company or similar entity of which

(a) more than 50.0% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and

(b) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

Total Assets” means the total assets of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, as shown on the most recent balance sheet of the Company or such other Person as may be expressly stated.

Transaction Expenses” means any fees or expenses incurred or paid by the Company or any Restricted Subsidiary in connection with the Transactions, including payments to officers, employees and directors as change of control payments, severance payments, special or retention bonuses and charges for repurchase or rollover of, or modifications to, stock options.

TransactionsTransactions”means the issuance of the Existing Notes and borrowings under the Senior Secured Credit Facilities on the Issue Date to repay certain debt as described in the Offering Memorandumoffering memorandum dated January 23, 2012, relating to the initial issuance of Existing Notes, under “Offering Memorandum Summary—The Transactions” and the payment of related premiums, fees and expenses.

Treasury Rate” means, as of any Redemption Date, the yield to maturity as of such Redemption Date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the Redemption Date to January 31, 2016;provided,that if the period from the Redemption Date to such date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

Trust Indenture Act” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-777bbbb).

Uniform Commercial Code” means the Uniform Commercial Code or any successor provision thereof as the same may from time to time be in effect in the State of New York.

Unrestricted Subsidiary” means:

(1) any Subsidiary of the Company which at the time of determination is an Unrestricted Subsidiary (as designated by the Company, as provided below); and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Company may designate any Subsidiary of the Company, other than the Co-Issuer (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Company or any Subsidiary of the Company (other than solely any Subsidiary of the Subsidiary to be so designated);provided, that:

(1) any Unrestricted Subsidiary must be an entity of which the Equity Interests entitled to cast at least a majority of the votes that may be cast by all Equity Interests having ordinary voting power for the election of directors or Persons performing a similar function are owned, directly or indirectly, by the Company;

(2) such designation complies with the covenants described under “—Certain Covenants—Limitation on Restricted Payments”; and

(3) each of (a) the Subsidiary to be so designated and (b) its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any Restricted Subsidiary.

The Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, that, immediately after giving effect to such designation, no Default shall have occurred and be continuing and either:

(1) the Company could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Test; or

(2) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be equal to or greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such designation, in each case on apro forma basis taking into account such designation.

Any such designation by the Company shall be notified by the Company to the Trustee by promptly filing with the Trustee a copy of the resolution of the board of directors of the Company or any committee thereof giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing provisions.

U.S. Dollar Equivalent” means with respect to any monetary amount in a currency other than U.S. dollars, at any time for determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency as published in The Wall Street Journal in the “Exchange Rates” column under the heading “Currency Trading” on the date two business days prior to such determination.

U.S. Government Securities” means securities that are:

(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged; or

(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,

which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Securities or a specific payment of principal of or interest on any such U.S. Government Securities held by such custodian for the account of the holder of such depository receipt;provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Securities or the specific payment of principal of or interest on the U.S. Government Securities evidenced by such depository receipt.

Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person.

Weighted Average Life to Maturity” means, when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing:

(1) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock or Preferred Stock multiplied by the amount of such payment; by

(2) the sum of all such payments.

provided, that for purposes of determining the Weighted Average Life to Maturity of any Indebtedness that is being extended, replaced, refunded, refinanced, renewed or defeased (the “Applicable Indebtedness”), the effects of any amortization or prepayments made on such Applicable Indebtedness prior to the date of the applicable extension, replacement, refunding, refinancing, renewal or defeasance shall be disregarded.

Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100.0% of the outstanding Equity Interests of which (other than directors’ qualifying shares and shares issued to foreign nationals as required by applicable law) shall at the time be owned by such Person and/or by one or more Wholly-Owned Subsidiaries of such Person.

THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

The Issuers and the guarantors of the outstanding notes and the initial purchasers have entered into a registration rights agreement on September 8, 2014, the original Issue Dateclosing date of the notes.issuance of the outstanding notes (the “Closing Date”). In the registration rights agreement, each of the Issuers and the guarantors of the outstanding notes have agreed that it will, at its expense, for the benefit of the holders of the outstanding notes, (i) file one or more registration statements on an appropriate registration form with respect to a registered offer to exchange the outstanding notes for new notes, guaranteed by the guarantors on a full and unconditional, joint and several senior unsecured basis, with terms substantially identical in all material respects to the outstanding notes and (ii) use its commercially reasonable efforts to cause the registration statement to be declared effective under the Securities Act. As of the date of this prospectus, $250.0$115.0 million aggregate principal amount of the 10.5%10 12% Senior Notes due 2020 is outstanding, and the outstanding notes were issued in January 30, 2012.on September 8, 2014.

Under the circumstances set forth below, the Issuers and the guarantors will use their commercially reasonable best efforts to cause the SEC to declare effective a shelf registration statement with respect to the resale of the outstanding notes within the time periods specified in the registration rights agreement and keep such registration statement effective for up to one year after the effective date of the shelf registration statement. These circumstances include:

 

if any change in law or in currently prevailing interpretations of the Staff of the SEC do not permit us to effect an exchange offer;

 

if an exchange offer is not consummated within the registration period contemplated by the registration rights agreement;

 

if, in certain circumstances, certain holders of unregistered exchange notes so request; or

 

if in the case of any holder that participates in an exchange offer, such holder does not receive exchange notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an affiliate of ours within the meaning of the Securities Act).

Under the registration rights agreement, if (A) we neither (i) exchanged exchange notes for all notes validly tendered in accordance with the terms of an exchange offer nor (ii) if applicable, had a shelf registration statement declared effective under the Securities Act, in either case on or prior to the 540th270th day after the IssueClosing Date, (B) notwithstanding clause (A), we are required to file a shelf registration statement and such shelf registration statement is not declared effective on or prior to the 90th day after the delivery of a shelf notice (as defined in the registration rights agreement) with respect thereto (the “Effectiveness Date”) or (C) if applicable, a shelf registration statement has been declared effective and such shelf registration statement ceases to be effective at any time during the effectiveness period (subject to certain exceptions) (each such event referred to in clauses (A), (B) and (C), a “Registration Default”), then additional interest (“Additional Interest”) shall accrue on the principal amount of the notes affected thereby at a rate of 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default (which rate will be increased by an additional 0.25% per annum for each subsequent 90-day period that such Additional Interest continues to accrue;provided that the rate at which such Additional Interest accrues may in no event exceed 1.00% per annum) (any such Additional Interest to be calculated by us) commencing on (x) the 540th271st day after the IssueClosing Date (in the case of clause (A) above), (y) the Effectiveness Date (in the case of clause (B) above) or (z) the day on which such shelf registration statement ceases to be effective (in the case of clause (C) above);provided,however, that upon the exchange of exchange notes for all notes tendered (in the case of clause (A)(i) above), upon the effectiveness of the applicable shelf registration statement (in the case of clause (A)(ii) and (B) above) or upon the effectiveness of a shelf registration statement that had ceased to remain effective (in the case of clause (C) above), Additional Interest on such notes as a result of such clause (or the relevant sub-clause thereof), as the case may be, shall cease to accrue.

If you wish to exchange your outstanding notes for exchange notes in the exchange offer, you will be required to make the following written representations:

 

you are not an affiliate of the Issuers or any guarantor within the meaning of Rule 405 of the Securities Act;

 

you have no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the exchange notes in violation of the Securities Act;

 

you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and

 

you are acquiring the exchange notes in the ordinary course of your business.

Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where the broker-dealer acquired the outstanding notes as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. Please see “Plan of Distribution.”

Resale of Exchange Notes

Based on interpretations by the SEC set forth in no-action letters issued to third parties, we believe that you may resell or otherwise transfer exchange notes issued in the exchange offer without complying with the registration and prospectus delivery provisions of the Securities Act, if:

 

you are not an affiliate of the Issuers or any guarantor within the meaning of Rule 405 under the Securities Act;

 

you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes;

 

you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and

 

you are acquiring the exchange notes in the ordinary course of your business.

If you are an affiliate of the Issuers or any guarantor, or are engaging in, or intend to engage in, or have any arrangement or understanding with any person to participate in, a distribution of the exchange notes, or are not acquiring the exchange notes in the ordinary course of your business:

 

you cannot rely on the position of the SEC set forth in Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling, dated July 2, 1993, or similar no-action letters; and

you cannot rely on the position of the SEC set forth inMorgan Stanley & Co. Inc. (available June 5, 1991) andExxon Capital Holdings Corp. (available May 13, 1988), as interpreted in the SEC’s letter toShearman & Sterling (available July 2, 1993), or similar no-action letters; and

 

in the absence of an exception from the position stated immediately above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes.

This prospectus may be used for an offer to resell, resale or other transfer of exchange notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the outstanding notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. Please read “Plan of Distribution” for more details regarding the transfer of exchange notes.

Terms of the Exchange Offer

On the terms and subject to the conditions set forth in this prospectus and in the accompanying lettersletter of transmittal, the Issuers will accept for exchange in the exchange offer any outstanding notes that are validly

tendered and not validly withdrawn prior to the expiration date. Outstanding notes may only be tendered in a

principal amount of $2,000 and in integral multiples of $1,000 in excess thereof. The Issuers will issue $1,000 principal amount of exchange notes in exchange for each $1,000 principal amount of outstanding notes surrendered in the exchange offer.

The form and terms of the exchange notes will be identical in all material respects to the form and terms of the outstanding notes except the exchange notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not provide for any additional interest upon failure by the Issuers and the guarantors to fulfill their obligations under the registration rights agreement to complete the exchange offer, or file, and cause to be effective, a shelf registration statement, if required thereby, within the specified time period. The exchange notes will evidence the same debt as the outstanding notes. The exchange notes will be issued under and entitled to the benefits of the same indenture that governs the terms of the outstanding notes. For a description of the indenture, see “Description of the Notes.”

The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding notes being tendered for exchange.

This prospectus and the lettersletter of transmittal are being sent to all registered holders of outstanding notes. There will be no fixed record date for determining registered holders of outstanding notes entitled to participate in the exchange offer. The Issuers and the guarantors intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC. Outstanding notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits such holders have under the indenture and the registration rights agreement except the Issuers and the guarantors will not have any further obligation to you to provide for the registration of the outstanding notes under the registration rights agreement.

The Issuers will be deemed to have accepted for exchange properly tendered outstanding notes when the Issuers have given written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange notes from the Issuers and delivering exchange notes to holders. Subject to the terms of the registration rights agreement, the Issuers expressly reserve the right to amend or terminate the exchange offer and to refuse to accept the occurrence of any of the conditions specified below under “—Conditions to the Exchange Offer.”

If you tender your outstanding notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding notes. We will pay all charges and expenses, other than certain applicable taxes described below in connection with the exchange offer. It is important that you read “—Fees and Expenses” below for more details regarding fees and expenses incurred in the exchange offer.

Expiration Date; Extensions, Amendments

As used in this prospectus, the term “expiration date” means 5:00 p.m., New York City time, on                     , 2013,2014, which is the 21st business day after the date of this prospectus. However, if the Issuers, in their sole discretion, extend the period of time for which the exchange offer is open, the term “expiration date” will mean the latest time and date to which the Issuers shall have extended the expiration of the exchange offer.

To extend the period of time during which the exchange offer is open, the Issuers will notify the exchange agent of any extension by written notice, followed by notification by press release or other public announcement to the registered holders of the outstanding notes no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. The Issuers are generally required to extend the offering period for any material change, including the waiver of a material condition, so that at least five business days remain in the exchange offer after the change.

The Issuers reserve the right, in their sole discretion:

 

to delay accepting for exchange any outstanding notes (if the Issuers amend or extend the exchange offer);

 

to extend the exchange offer or to terminate the exchange offer if any of the conditions set forth below under “—Conditions to the Exchange Offer” have not been satisfied, by giving written notice of such delay, extension or termination to the exchange agent; and

 

subject to the terms of the registration rights agreement, to amend the terms of the exchange offer in any manner.

Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by notice to the registered holders of the outstanding notes. If the Issuers amend the exchange offer in a manner that it determines to constitute a material change, the Issuers will promptly disclose the amendment in a manner reasonably calculated to inform the holders of applicable outstanding notes of that amendment.

Conditions to the Exchange Offer

Despite any other term of the exchange offer, the Issuers will not be required to accept for exchange, or to issue exchange notes in exchange for, any outstanding notes and the Issuers may terminate or amend the exchange offer as provided in this prospectus prior to the expiration date if in their reasonable judgment:

 

the exchange offer or the making of any exchange by a holder violates any applicable law or interpretation of the SEC; or

 

any action or proceeding has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer that, in their judgment, would reasonably be expected to impair their ability to proceed with the exchange offer.

In addition, the Issuers will not be obligated to accept for exchange the outstanding notes of any holder that has not made to the Issuers:

 

the representations described under “—Purpose and Effect of the Exchange Offer,” “—Procedures for Tendering Outstanding Notes” and “Plan of Distribution;” or

 

any other representations as may be reasonably necessary under applicable SEC rules, regulations, or interpretations to make available to the Issuers an appropriate form for registration of the exchange notes under the Securities Act.

The Issuers expressly reserve the right at any time or at various times to extend the period of time during which the exchange offer is open. Consequently, the Issuers may delay acceptance of any outstanding notes by giving written notice of such extension to their holders. The Issuers will return any outstanding notes that the Issuers do not accept for exchange for any reason without expense to their tendering holder promptly after the expiration or termination of the exchange offer.

The Issuers expressly reserve the right to amend or terminate the exchange offer and to reject for exchange any outstanding notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified above. In addition, the Issuers are generally required to extend the offering period for any material change, including the waiver of a material condition, so that at least five business days remain in the exchange offer after the change. The Issuers will give written notice of any extension, amendment, non-acceptance or termination to the holders of the outstanding notes as promptly as practicable. In the case of any extension, such notice will be issued no later than 9:00 a.m. New York City time, on the next business day after the previously scheduled expiration date.

These conditions are for sole benefit of the Issuers and the Issuers may assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times prior to the expiration date in their sole discretion. If the Issuers fail at any time to exercise any of the foregoing rights, this failure will not constitute a waiver of such right. Each such right will be deemed an ongoing right that the Issuers may assert at any time or at various times prior to the expiration date.

In addition, the Issuers will not accept for exchange any outstanding notes tendered, and will not issue exchange notes in exchange for any such outstanding notes, if at such time any stop order is threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939 (the “TIA”).

Procedures for Tendering Outstanding Notes

To tender your outstanding notes in the exchange offer, you must comply with either of the following:

 

complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, have the signature(s) on the letter of transmittal guaranteed if required by the letter of transmittal and mail or deliver such letter of transmittal or facsimile thereof to the exchange agent at the address set forth below under “—Exchange Agent” prior to the expiration date; or

 

comply with DTC’s Automated Tender Offer Program procedures described below.

In addition, either:

 

the exchange agent must receive certificates for outstanding notes along with the letter of transmittal prior to the expiration date;

 

the exchange agent must receive a timely confirmation of book-entry transfer of outstanding notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message prior to the expiration date; or

 

you must comply with the guaranteed delivery procedures described below.

Your tender, if not withdrawn prior to the expiration date, constitutes an agreement between the Issuers and you upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal.

The method of delivery of outstanding notes, letters of transmittal, and all other required documents to the exchange agent is at your election and risk. We recommend that instead of delivery by mail, you use an overnight or hand delivery service, properly insured. In all cases, you should allow sufficient time to assure timely delivery to the exchange agent before the expiration date. You should not send letters of transmittal or certificates representing outstanding notes to us. You may request that your broker, dealer, commercial bank, trust company or nominee effect the above transactions for you.

If you are a beneficial owner whose outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company, or other nominee and you wish to tender your notes, you should promptly contact the registered holder and instruct the registered holder to tender on your behalf. If you wish to tender the outstanding notes yourself, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either:

 

make appropriate arrangements to register ownership of the outstanding notes in your name; or

 

obtain a properly completed bond power from the registered holder of outstanding notes.

The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date.

Signatures on the letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the Financial Industry Regulatory Authority, Inc., a commercial bank or trust company having an office or correspondent in the United States or another “eligible guarantor institution” within the meaning of Rule 17A(d)-15 under the Exchange Act unless the outstanding notes surrendered for exchange are tendered:

 

by a registered holder of the outstanding notes who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” in the letter of transmittal; or

 

for the account of an eligible guarantor institution.

If the letter of transmittal is signed by a person other than the registered holder of any outstanding notes listed on the outstanding notes, such outstanding notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder’s name appears on the outstanding notes and an eligible guarantor institution must guarantee the signature on the bond power.

If the letter of transmittal or any certificates representing outstanding notes, or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, those persons should also indicate when signing and, unless waived by the Issuers, they should also submit evidence satisfactory to the Issuers of their authority to so act.

The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s Automated Tender Offer Program to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, electronically transmit their acceptance of the exchange by causing DTC to transfer the outstanding notes to the exchange agent in accordance with DTC’s Automated Tender Offer Program procedures for transfer. DTC will then send an agent’s message to the exchange agent. The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, which states that:

 

DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation;

 

the participant has received and agrees to be bound by the terms of the letter of transmittal, or in the case of an agent’s message relating to guaranteed delivery, that such participant has received and agrees to be bound by the notice of guaranteed delivery; and

 

the Issuers may enforce that agreement against such participant.

Acceptance of Exchange Notes

In all cases, the Issuers will promptly issue exchange notes for outstanding notes that they have accepted for exchange under the exchange offer only after the exchange agent timely receives:

 

outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent’s account at the book-entry transfer facility; and

 

a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message.

By tendering outstanding notes pursuant to the exchange offer, you will represent to the Issuers that, among other things:

 

you are not an affiliate of the Issuers or the guarantors within the meaning of Rule 405 under the Securities Act;

 

you do not have an arrangement or understanding with any person or entity to participate in a distribution of the exchange notes; and

 

you are acquiring the exchange notes in the ordinary course of your business.

In addition, each broker-dealer that is to receive exchange notes for its own account in exchange for outstanding notes must represent that such outstanding notes were acquired by that broker-dealer as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus that meets the requirements of the Securities Act in connection with any resale of the exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. See “Plan of Distribution.”

The Issuers will interpret the terms and conditions of the exchange offer, including the letters of transmittal and the instructions to the letters of transmittal, and will resolve all questions as to the validity, form, eligibility, including time of receipt, and acceptance of outstanding notes tendered for exchange. Determinations of the Issuers in this regard will be final and binding on all parties. The Issuers reserve the absolute right to reject any and all tenders of any particular outstanding notes not properly tendered or to not accept any particular outstanding notes if the acceptance might, in their or their counsel’s judgment, be unlawful. The Issuers also reserve the absolute right to waive any defects or irregularities as to any particular outstanding notes prior to the expiration date.

Unless waived, any defects or irregularities in connection with tenders of outstanding notes for exchange must be cured within such reasonable period of time as the Issuers determine. Neither the Issuers, the exchange agent, nor any other person will be under any duty to give notification of any defect or irregularity with respect to any tender of outstanding notes for exchange, nor will any of them incur any liability for any failure to give notification. Any outstanding notes received by the exchange agent that are not properly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the tendering holder, unless otherwise provided in the letter of transmittal, promptly after the expiration date.

Book-Entry Delivery Procedures

Promptly after the date of this prospectus, the exchange agent will establish an account with respect to the outstanding notes at DTC, as book-entry transfer facilities, for purposes of the exchange offer. Any financial institution that is a participant in the book-entry transfer facility’s system may make book-entry delivery of the outstanding notes by causing the book-entry transfer facility to transfer those outstanding notes into the exchange agent’s account at the facility in accordance with the facility’s procedures for such transfer. To be timely, book-entry delivery of outstanding notes requires receipt of a confirmation of a book-entry transfer, a “book-entry confirmation,” prior to the expiration date. In addition, although delivery of outstanding notes may be effected through book-entry transfer into the exchange agent’s account at the book-entry transfer facility, the letter of transmittal or a manually signed facsimile thereof, together with any required signature guarantees and any other required documents, or an “agent’s message,” as defined below, in connection with a book-entry transfer, must, in any case, be delivered or transmitted to and received by the exchange agent at its address set forth on the cover page of the letter of transmittal prior to the expiration date to receive exchange notes for tendered outstanding notes, or the guaranteed delivery procedure described below must be complied with. Tender will not be deemed made until such documents are received by the exchange agent. Delivery of documents to the book-entry transfer facility does not constitute delivery to the exchange agent.

Holders of outstanding notes who are unable to deliver confirmation of the book-entry tender of their outstanding notes into the exchange agent’s account at the book-entry transfer facility or all other documents required by the letter of transmittal to the exchange agent on or prior to the expiration date must tender their outstanding notes according to the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

If you wish to tender your outstanding notes but your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC’s Automatic Tender Offer Program, prior to the expiration date, you may still tender if:

 

the tender is made through an eligible guarantor institution;

prior to the expiration date, the exchange agent receives from such eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail, or hand delivery or a properly transmitted agent’s message and

notice of guaranteed delivery, that (1) sets forth your name and address, the certificate number(s) of such outstanding notes and the principal amount of outstanding notes tendered; (2) states that the tender is being made thereby; and (3) guarantees that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or facsimile thereof, together with the outstanding notes or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent; and

 

the exchange agent receives the properly completed and executed letter of transmittal or facsimile thereof, as well as certificate(s) representing all tendered outstanding notes in proper form for transfer or a book-entry confirmation of transfer of the outstanding notes into the exchange agent’s account at DTC, and all other documents required by the letter of transmittal within three New York Stock Exchange trading days after the expiration date.

Upon request, the exchange agent will send to you a notice of guaranteed delivery if you wish to tender your outstanding notes according to the guaranteed delivery procedures.

Withdrawal Rights

Except as otherwise provided in this prospectus, you may withdraw your tender of outstanding notes at any time prior to 5:00 p.m., New York City time, on the expiration date.

For a withdrawal to be effective:

 

the exchange agent must receive a written notice, which may be by telegram, telex, facsimile or letter, of withdrawal at its address set forth below under “—Exchange Agent;” or

 

you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system.

Any notice of withdrawal must:

 

specify the name of the person who tendered the outstanding notes to be withdrawn;

 

identify the outstanding notes to be withdrawn, including the certificate numbers and principal amount of the outstanding notes; and

 

where certificates for outstanding notes have been transmitted, specify the name in which such outstanding notes were registered, if different from that of the withdrawing holder.

If certificates for outstanding notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, you must also submit:

 

the serial numbers of the particular certificates to be withdrawn; and

 

a signed notice of withdrawal with signatures guaranteed by an eligible institution unless you are an eligible guarantor institution.

If outstanding notes have been tendered pursuant to the procedures for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn outstanding notes and otherwise comply with the procedures of the facility. The Issuers will determine all questions as to the validity, form, and eligibility, including time of receipt of notices of withdrawal and their determination will be final and binding on all parties. Any outstanding notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any

outstanding notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder, without cost to the holder, or, in the case of book-entry transfer, the outstanding notes will be credited to an account at the book-entry transfer facility, promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be retendered by following the procedures described under “—Procedures for Tendering Outstanding Notes” above at any time on or prior to the expiration date.

Exchange Agent

Wilmington Trust, National Association has been appointed as the exchange agent for the exchange offer. Wilmington Trust, National Association also acts as trustee under the indenture governing the notes. You should direct all executed letters of transmittal and all questions and requests for assistance, requests for additional copies of this prospectus or of the lettersletter of transmittal, and requests for notices of guaranteed delivery to the exchange agent addressed as follows:

 

By Mail or Overnight Courier:

By Facsimile:By Hand Delivery:

Wilmington Trust, National Association

(302) 636-4139Wilmington Trust, National Association

c/o Wilmington Trust Company

Corporate Capital Markets

Rodney Square North

1100 North Market Street
Wilmington, Delaware 19890-1626

Attn: Workflow Management – 5th Floor

 

By Facsimile:

(302) 636-4139

Attn: Sam HamedWorkflow Management

 

By Hand Delivery:

Wilmington Trust, National Association

c/o Wilmington Trust Company

Corporate Capital Markets

Corporate Capital Markets

Rodney Square North

Rodney Square North

1100 North Market Street

1100 North Market Street

Wilmington, Delaware 19890-1626
Wilmington, Delaware 19890-1626

Attn: Sam Hamed

Attn: Sam HamedWorkflow Management – 5th Floor

 

To Confirm by Telephone:Email:

(302) 636-6181

DTC2@wilmingtontrust.com

Attn: Sam HamedWorkflow Management

 

If you deliver the letter of transmittal to an address other than the one set forth above or transmit instructions via facsimile other than the one set forth above, that delivery or those instructions will not be effective.

Fees and Expenses

The registration rights agreement provideprovides that we will bear all expenses in connection with the performance of our obligations relating to the registration of the exchange notes and the conduct of the exchange offer. These expenses include registration and filing fees, accounting and legal fees and printing costs, among others. We will pay the exchange agent reasonable and customary fees for its services and reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for customary mailing and handling expenses incurred by them in forwarding this prospectus and related documents to their clients that are holders of outstanding notes and for handling or tendering for such clients.

We have not retained any dealer-manager in connection with the exchange offer and will not pay any fee or commission to any broker, dealer, nominee or other person, other than the exchange agent, for soliciting tenders of outstanding unregistered notes pursuant to the exchange offer.

Accounting Treatment

We will record the exchange notes in our accounting records at the same carrying value as the outstanding notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchanges, as the terms of the exchange notes are substantially identical to the terms of the outstanding notes. Accordingly, we will not recognize any gain or loss for accounting purposes upon the consummation of this exchange offer. We will capitalize the expenses relating to the exchange offer.

Transfer Taxes

The Issuers and the guarantors will pay all transfer taxes, if any, applicable to the exchanges of outstanding notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

 

certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered;

 

tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or

 

a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange

offer.

If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.

Holders who tender their outstanding notes for exchange will not be required to pay any transfer taxes. However, holders who instruct the Issuers to register exchange notes in the name of, or request that outstanding notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax.

Consequences of Failure to Exchange

If you do not exchange your outstanding notes for exchange notes under the exchange offer, your outstanding notes will remain subject to the restrictions on transfer of such outstanding notes:

 

as set forth in the legend printed on the outstanding notes as a consequence of the issuancesissuance of the outstanding notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and

 

as otherwise set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes.

In general, you may not offer or sell your outstanding notes unless they are registered under the Securities Act or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act.

Other

Participating in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

We may in the future seek to acquire untendered outstanding notes in open market or privately negotiated transactions, through subsequent exchange offeroffers or otherwise. We have no present plans to acquire any outstanding notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered outstanding notes.

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The exchange of outstanding notes for exchange notes in the exchange offer will not constitute a taxable event to holders for U.S. federal income tax purposes. Consequently, you will not recognize gain or loss upon receipt of an exchange note, the holding period of the exchange note will include the holding period of the outstanding note exchanged therefor and the basis of the exchange note will be the same as the basis of the outstanding note immediately before the exchange.

In any event, persons considering the exchange of outstanding notes for exchange notes should consult their own tax advisors concerning the U.S. federal income tax consequences in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.

CERTAIN ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the acquisition and holding of the notes by employee benefit plans that are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) or provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws”), and entities whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”).

General Fiduciary Matters

ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an “ERISA Plan”) and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.

In considering an investment in the notes of a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.

Prohibited Transaction Issues

Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engaged in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or holding of notes (including an exchange of outstanding notes for exchange notes) by an ERISA Plan with respect to which an issuerIssuer or a guarantor is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions, or “PTCEs,” that may apply to the acquisition and holding of the notes. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers. In addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provide relief from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions, provided that neither the issuer of the securities nor any of its affiliates (directly or indirectly) have or exercise any discretionary authority or control or render any investment advice with respect to the assets of any ERISA Plan involved in the transaction and provided further that the ERISA Plan pays no more than adequate consideration in connection with the transaction. There can be no assurance that all of the conditions of any such exemptions will be satisfied.

Because of the foregoing, the notes should not be acquired or held by any person investing “plan assets” of any Plan, unless such acquisition and holding (and the exchange of outstanding notes for exchange notes) will not constitute a non-exempt prohibited transaction under ERISA and the Code or a similar violation of any applicable Similar Laws.

Representation

Accordingly, by acceptance of a note (including an exchange of outstanding notes for exchange notes), each purchaser and subsequent transferee of a note will be deemed to have represented and warranted that either (i) no portion of the assets used by such purchaser or transferee to purchase or hold the notes or any interest therein constitutes assets of any Plan or (ii) the purchase and holding of the notes or any interest therein by such purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or similar violation under any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be all inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering acquiring or holding the notes on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the acquisition and holding of the notes.

PLAN OF DISTRIBUTION

Each broker dealerbroker-dealer that receives exchange notes for its own account pursuant to an exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker dealerbroker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market making activities or other trading activities. We have agreed that, for a period ending on the earlier of (i) 90 days from the date on which the registration statement for the exchange offer is declared effective, (ii) the date on which a broker dealerbroker-dealer is no longer required to deliver a prospectus in connection with market making or other trading activities and (iii) the date on which all the notes covered by such registration statement have been sold pursuant to the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker dealerbroker-dealer for use in connection with any such resale, and will promptly send additional copies of this prospectus and any amendments or supplements to this prospectus to any broker dealerbroker-dealer that requests such documents in the letter of transmittal. In addition, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of exchange notes by broker dealers.broker-dealers. Exchange notes received by broker dealersbroker-dealers for their own account pursuant to an exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker dealerbroker-dealer and/or the purchasers of any such exchange notes. Any broker dealerbroker-dealer that resells exchange notes that were received by it for its own account pursuant to an exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit of any such resale of exchange notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker dealerbroker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the outstanding notes) other than commissions or concessions of any broker dealersbroker-dealers and will indemnify you (including any broker dealers)broker-dealers) against certain liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

The validity and enforceability of the exchange notes will be passed upon for us by Simpson Thacher & Bartlett LLP, New York, New York. In rendering its opinion, Simpson Thacher & Bartlett LLP will rely upon the opinion of Holland & Hart LLP as to all matters governed by the laws of the states of Colorado New Mexico,and Utah, and Wyoming, the opinionopinions of Kutak Rock LLP as to all matters governed by the laws of the states of Kansas and Missouri, the opinion of Stites & Harbison PLLC as to all matters governed by the laws of the state of Kentucky, the opinion of Kirk Palmer & Thigpen, P.A. as to all matters governed by the laws of the state of South Carolina, and the opinion of Bell Nunnally & Martin LLPWinstead PC as to all matters governed by the laws of the state of Texas. An investment vehicle comprised of several partners of Simpson Thacher & Bartlett LLP, members of their families, related persons and others own interest representing less than 1% of the capital commitments of funds affiliated with Blackstone.

EXPERTS

The consolidated financial statements of Summit Materials, LLC as of December 28, 2013 and December 29, 2012, and for the year thenyears ended December 28, 2013 and December 29, 2012 have been included herein in reliance on the report of KPMG LLP, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of operations, comprehensive income (loss), changes in redeemable noncontrolling interest and member’s interest, and cash flows of Summit Materials, LLC and subsidiaries as of December 31, 2011 and for the yearsyear ended December 31, 2011 and 2010, and the retrospective adjustments to such financial statements included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion on the those consolidated financial statements and includes an explanatory paragraph referring toregarding retrospective adjustments for discontinued operations). Such consolidated financial statements have been so included in reliance upon the authorityreport of saidsuch firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Continental Cement Company, L.L.C. as of December 28, 2013 and December 31, 2012, and for the year thenyears ended December 28, 2013 and December 31, 2012 have been included herein in reliance on the report of KPMG LLP, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of operations, comprehensive income (loss), changes in redeemable member’s interest and equity, and cash flows of Continental Cement Company, L.L.C. as of December 31, 2011 and subsidiary for the year ended December 31, 2011 and for the periods from May 27, 2010 to December 31, 2010 (Successor) and from January 1, 2010 to May 26, 2010 (Predecessor) included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such consolidated financial statements have been so included in reliance upon the authorityreport of saidsuch firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Cornejo & Sons, Inc. and subsidiaries as of October 31, 2009 and 2008 and for each of the years in the three year period ended October 31, 2009 included in this prospectus have been included in reliance on the report of Allen, Gibbs & Houlik, L.C., independent auditors, upon the authority of said firm as experts in accounting and auditing in giving said report.

The audited financial statements of Kilgore Pavement Maintenance, LLC for the period ended August 1, 2010, as of August 1, 2010 and December 31, 2009 and for the year ended December 31, 2009 included in this prospectus have been included in reliance on the report of Wisan, Smith, Racker & Prescott, LLP, independent auditors, upon the authority of said firm as experts in accounting and auditing in giving said report.

The audited financial statements of Norris Aggregate Products Co. for the two month period ended February 28, 2012, as of February 28, 2012 and December 31, 2011 and for the year ended December 31, 2011 included in this prospectus have been included in reliance on the report of CliftonLarsonAllen LLP, independent auditors, upon the authority of said firm as experts in accounting and auditing in giving said report.

The combined financial statements of R.K. Hall Construction, Ltd. and Affiliates as of December 31, 2009 and December 31, 2008 and for the three year period ended December 31, 2009 included in this prospectus have been included in reliance on the report of Perryman Chaney Russell, LLP, independent auditors, upon the authority of said firm as experts in accounting and auditing in giving said report.

CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

On June 15, 2012, the Board dismissed Deloitte & Touche LLP (“Deloitte”) as the independent registered public accounting firm of Summit Materials, LLC and Subsidiaries and Continental Cement Company, L.L.C. and Subsidiary and on August 7, 2012, engaged KPMG LLP (“KPMG”). Deloitte’s reports on the financial statements of Summit Materials, LLC and Subsidiaries and Continental Cement Company, L.L.C. and Subsidiary, for the periods specified in such reports did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. There were (i) no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference to the subject matter of the disagreements in connection with its reports and (ii) no reportable events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K issued by the SEC, in connection with the audits of the financial statements of Summit Materials, LLC and Subsidiaries and Continental Cement Company, L.L.C. and Subsidiary for each of the 2011 and 2010 periods audited by Deloitte through the replacement of Deloitte with KPMG.

Neither we nor anyone acting on our behalf consulted with KPMG at any time prior to their retention by us with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Summit Materials, LLC and Subsidiaries and Continental Cement Company, L.L.C. and Subsidiary financial statements, and neither a written report was provided to us nor oral advice was provided that KPMG concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue or (ii) any matter that was the subject of a disagreement or reportable events set forth in Item 304(a)(1)(iv) and (v), respectively, of Regulation S-K.

WHERE YOU CAN FIND MORE INFORMATION

We and our guarantorsguarantor subsidiaries have filed with the SEC a registration statement on Form S-4 under the Securities Act with respect to the exchange notes. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. For further information with respect to us, our guarantorsguarantor subsidiaries and the exchange notes, reference is made to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the registration statement, each such statement is qualified by the provisions in such exhibit, to which reference is hereby made. We have historically filed annual, quarterly and current reports and other information with the SEC. The registration statement, such reports and other information can be inspected and copied at the Public Reference Room of the SEC located at Room 1580, 100 F Street, N.E., Washington D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. Such materials may also be accessed electronically by means of the SEC’s home page on the Internet (http://www.sec.gov). However, any such information filed with the SEC does not constitute a part of this prospectus.

So long as we are subject to the periodic reporting requirements of the Exchange Act, we are required to furnish the information required to be filed with the SEC to the trustee and the holders of the outstanding unregistered notes. We have agreed that, even if we are not required under the Exchange Act to furnish such information to the SEC, we will nonetheless continue to furnish information that would be required to be furnished by us by Section 13 or 15(d) of the Exchange Act.

INDEX TO FINANCIAL STATEMENTS

 

   

Page

 

Audited Consolidated Financial Statements of Summit Materials, LLC and Subsidiaries

  

Report of KPMG LLP, Independent Registered Public Accounting Firm

   F-3F-2  

Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

F-3

Consolidated Balance Sheets as of December 28, 2013 and December 29, 2012

   F-4  

Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011

F-5

Consolidated Statements of Operations for the years ended December 28, 2013, December  29, 2012 and December 31, 2011 and December 31, 2010

  

F-6

F-5

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 28, 2013,  December 29, 2012 and December 31, 2011 and December 31, 2010

  

F-7

F-6

Consolidated Statements of Cash Flows for the years ended December 28, 2013, December  29, 2012 and December 31, 2011 and December 31, 2010

  

F-8

F-7

Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Member’s Interest for the years ended December 28, 2013, December 29, 2012 and December 31, 2011 and December 31, 2010

  

F-9

F-8

Notes to Consolidated Financial Statements

   F-10F-9  

Unaudited Consolidated Financial Statements of Summit Materials, LLC and Subsidiaries

Consolidated Balance Sheets as of June 28, 2014 (Unaudited) and December 28, 2013

F-42

Unaudited Consolidated Statements of Operations for the six months ended June 28, 2014 and June  29, 2013

F-43

Unaudited Consolidated Statements of Comprehensive Income (Loss) for the six months ended June  28, 2014 and June 29, 2013

F-44

Unaudited Consolidated Statements of Cash Flows for the six months ended June 28, 2014 and June  29, 2013

F-45

Unaudited Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Member’s Interest for the six months ended June 28, 2014 and June 29, 2013

F-46

Notes to Unaudited Consolidated Financial Statements

F-47

Audited Consolidated Financial Statements of Continental Cement Company, L.L.C. and Subsidiary

  

Report of KPMG LLP, Independent Registered Public Accounting Firm

   F-50F-64  

Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

   F-51F-65  

Consolidated Balance Sheets as of December 28, 2013 and December 31, 2012 and 2011

   F-52F-66  

Consolidated Statements of Operations for the years ended December 28, 2013, December  31, 2012 and 2011 and for the periods from May 27, 2010 to December 31, 2010 (Successor) and January 1, 2010 to May 26, 2010 (Predecessor)2011

  

F-53

F-67

Consolidated Statements of Comprehensive Income (Loss) Income for the years ended December 28, 2013,  December 31, 2012 and 2011 and for the periods from May 27, 2010 to December 31, 2010 (Successor) and January 1, 2010 to May 26, 2010 (Predecessor)2011

  

F-54

F-68

Consolidated Statements of Cash Flows for the years ended December 28, 2013, December  31, 2012 and 2011 and for the periods from May 27, 2010 to December 31, 2010 (Successor) and January 1, 2010 to May 26, 2010 (Predecessor)2011

  

F-55

F-69

Consolidated Statements of Changes in Redeemable Members’ Interest and Member’s Interest for the years ended December 28, 2013, December 31, 2012 and 2011 and for the periods from May 27, 2010 to December 31, 2010 (Successor) and January 1, 2010 to May 26, 2010 (Predecessor)2011

  

F-56

F-70

Notes to Consolidated Financial Statements

   F-57F-71  

AuditedUnaudited Consolidated Financial Statements of Cornejo & Sons, Inc.Continental Cement Company, L.L.C. and SubsidiariesSubsidiary

  

Report of Allen, Gibbs & Houlik, L.C., Independent Auditors

F-76

Consolidated Balance Sheets as of October 31, 2009June 28, 2014 (Unaudited) and 2008December 28, 2013

   F-77F-84  

Consolidated Statements of Operations for the years ended October 31, 2009, 2008 and 2007

F-78

Consolidated Statements of Stockholders’ Equity for the years ended October  31, 2009, 2008 and 2007

F-79

Consolidated Statements of Cash Flows for the years ended October 31, 2009, 2008 and 2007

F-80

Notes to Consolidated Financial Statements

F-81

Unaudited Consolidated Statements of Operations for the threesix months ended January  31, 2009June 28, 2014 and January 31, 2010June  29, 2013

   F-90F-85  

Unaudited Consolidated Statements of Comprehensive Income (Loss) for the six months ended June  28, 2014 and June 29, 2013

F-86

Unaudited Consolidated Statements of Cash Flows for the threesix months ended January  31, 2009June 28, 2014 and January 31, 2010June  29, 2013

   F-91F-87  

Notes to the Unaudited Consolidated Financial Statements of Changes in Redeemable Members’ Interest and Member’s Interest for the six months ended June 28, 2014 and June 29, 2013

   F-92

Page

F-88
  

AuditedNotes to Unaudited Consolidated Financial Statements ofKilgore Pavement Maintenance, LLC

Report of Wisan, Smith, Racker & Prescott, LLP, Independent Auditors

   F-96

Balance Sheets as of August 1, 2010 and December 31, 2009

F-97

Statements of Operations and Members’ Equity for the period ended August  1, 2010 and for the year ended December 31, 2009

F-98

Statements of Cash Flows for the period ended August 1, 2010 and for the year ended December  31, 2009

F-99

Notes to Financial Statements

F-100

Audited Financial Statements of Norris Aggregate Products Co.

Report of CliftonLarsonAllen LLP, Independent Auditors

F-106

Balance Sheets as of February 28, 2012 and December 31, 2011

F-107

Statements of Operations for the two month period ended February 28, 2012 and for the year ended December 31, 2011

F-108

Statements of Stockholders’ Equity for the two month period ended February 28, 2012 and for the year ended December 31, 2011

F-109

Statement of Cash Flows for the two month period ended February 28, 2012 and for the year ended December 31, 2011

F-110

Notes to Financial Statements

F-111

Audited Combined Financial Statements ofR.K. Hall Construction, Ltd.

Report of Perryman Chaney Russell, LLP, Independent Auditors

F-116

Combined Balance Sheets as of December 31, 2009 and 2008

F-117

Combined Statements of Operations and Equity for the years ended December 31, 2009, December  31, 2008 and December 31, 2007

F-118

Combined Statements of Cash Flows for the years ended December 31, 2009, December 31, 2008 and December 31, 2007

F-119

Notes to Combined Financial Statements

F-120

Unaudited Combined Balance Sheets as of December 31, 2009 and September 30, 2010

F-126

Unaudited Combined Statements of Operations and Equity for the nine months ended September  30, 2009 and September 30, 2010

F-127

Unaudited Combined Statements of Cash Flows for the nine months ended September  30, 2009 and September 30, 2010

F-128

Notes to Unaudited Combined Financial statements

F-129F-89  

Report of Independent Registered Public Accounting Firm

The Board of Directors and Member

of Summit Materials, LLC:

We have audited the accompanying consolidated balance sheetsheets of Summit Materials, LLC and subsidiaries as of December 28, 2013 and December 29, 2012, and the related consolidated statements of operations, comprehensive (loss) income, cash flows, and changes in redeemable noncontrolling interest and member’s interest for the year then ended. Theyears ended December 28, 2013 and December 29, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thethese consolidated financial statements based on our audit.

audits.

We conducted our auditaudits 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit providesaudits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Summit Materials, LLC and subsidiaries as of December 28, 2013 and December 29, 2012, and the results of their operations and their cash flows for each of the year thenyears in thetwo-year period ended December 28, 2013, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

McLean, Virginia

March 27, 20137, 2014

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To theThe Board of Directors of Summit Materials Holdings GP, Ltd.

and Membermember of

Summit Materials, LLC and Subsidiaries

Washington, D.C.

We have audited the accompanying consolidated balance sheet of Summit Materials, LLC and Subsidiaries (the “Company”) as of December 31, 2011, and the related consolidated statements of operations, comprehensive (loss) income, changes in redeemable noncontrolling interest and member’s interest, and cash flows of Summit Materials, LLC and Subsidiaries (the “Company”) for each of the yearsyear ended December 31, 2011 and 2010.2011. 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.

audit.

We conducted our auditsaudit 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. We believe that our audits provideaudit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial positionresults of Summit Materials, LLC and Subsidiaries as of December 31, 2011, and the results of theirsubsidiaries’ operations and their cash flows for each of the yearsyear ended December 31, 2011 and 2010, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 34 to the consolidated financial statements, the accompanying 2011 and 2010 consolidated financial statements have been retrospectively adjusted for discontinued operations.

/s/ DELOITTE & TOUCHE LLP

McLean, Virginia

May 1, 2012 (March 26,(December 6, 2013 as to Note 3)4)

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

December 28, 2013 and December 29, 2012

(In thousands)

   2013  2012 
Assets   

Current assets:

   

Cash

  $14,917  $27,431 

Accounts receivable, net

   99,337   100,298 

Costs and estimated earnings in excess of billings

   10,767   11,575 

Inventories

   96,432   92,977 

Other current assets

   13,181   10,068 
  

 

 

  

 

 

 

Total current assets

   234,634   242,349 

Property, plant and equipment, net

   831,778   813,607 

Goodwill

   127,038   179,120 

Intangible assets, net

   15,147   8,606 

Other assets

   39,197   37,531 
  

 

 

  

 

 

 

Total assets

  $1,247,794  $1,281,213 
  

 

 

  

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest   

Current liabilities:

   

Current portion of debt

  $30,220  $4,000 

Current portion of acquisition-related liabilities

   10,635   9,525 

Accounts payable

   72,104   61,634 

Accrued expenses

   57,251   49,822 

Billings in excess of costs and estimated earnings

   9,263   6,926 
  

 

 

  

 

 

 

Total current liabilities

   179,473   131,907 

Long-term debt

   658,767   635,843 

Acquisition-related liabilities

   23,756   23,919 

Other noncurrent liabilities

   77,480   84,266 
  

 

 

  

 

 

 

Total liabilities

   939,476   875,935 
  

 

 

  

 

 

 

Commitments and contingencies (see note 13)

   

Redeemable noncontrolling interest

   24,767    22,850 

Member’s interest:

   

Member’s equity

   486,896    484,584 

Accumulated deficit

   (198,511  (94,085)

Accumulated other comprehensive loss

   (6,045  (9,130)
  

 

 

  

 

 

 

Member’s interest

   282,340    381,369 

Noncontrolling interest

   1,211    1,059 
  

 

 

  

 

 

 

Total member’s interest

   283,551    382,428 
  

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

  $1,247,794  $1,281,213 
  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended December 28, 2013, December 29, 2012 and December 31, 2011

(In thousands)

 

   2012  2011 
Assets   

Current assets:

   

Cash

  $27,431  $42,790 

Accounts receivable, net

   100,298   105,233 

Costs and estimated earnings in excess of billings

   11,575   18,506 

Inventories

   92,977   84,263 

Other current assets

   10,068   12,382 
  

 

 

  

 

 

 

Total current assets

   242,349   263,174 

Property, plant and equipment, net

   813,607   821,903 

Investments in affiliates

   12,989   13,123 

Goodwill

   179,120   153,375 

Intangible assets, net

   8,606   9,179 

Other assets

   24,542   23,511 
  

 

 

  

 

 

 

Total assets

  $1,281,213  $1,284,265 
  

 

 

  

 

 

 

Liabilities, Redeemable Noncontrolling Interest and Member’s Interest

   

Current liabilities:

   

Current portion of long-term debt

  $4,000   $7,960  

Current portion of acquisition-related liabilities

   9,525    8,465  

Accounts payable

   61,634   69,643 

Accrued expenses

   49,822   33,995 

Billings in excess of costs and estimated earnings

   6,926   4,336 
  

 

 

  

 

 

 

Total current liabilities

   131,907   124,399 

Long-term debt

   635,843   601,021 

Acquisition-related liabilities

   23,919   20,238 

Other noncurrent liabilities

   84,266   80,935 
  

 

 

  

 

 

 

Total liabilities

   875,935   826,593 
  

 

 

  

 

 

 

Commitments and contingencies (see note 13)

   

Redeemable noncontrolling interest

   22,850   21,300 

Member’s interest:

   

Member’s equity

   484,584    482,707  

Accumulated deficit

   (94,085  (40,932

Accumulated other comprehensive loss

   (9,130  (6,577
  

 

 

  

 

 

 

Member’s interest

   381,369    435,198  

Noncontrolling interest

   1,059    1,174  
  

 

 

  

 

 

 

Total member’s interest

   382,428    436,372  
  

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

  $1,281,213  $1,284,265 
  

 

 

  

 

 

 

   2013  2012  2011 

Revenue:

    

Product

  $593,570   $588,762   $427,419  

Service

   322,631    337,492    361,657  
  

 

 

  

 

 

  

 

 

 

Total revenue

   916,201    926,254    789,076  
  

 

 

  

 

 

  

 

 

 

Cost of revenue (excluding items shown separately below):

    

Product

   430,172    444,569    317,360  

Service

   246,880    268,777    280,294  
  

 

 

  

 

 

  

 

 

 

Total cost of revenue

   677,052    713,346    597,654  
  

 

 

  

 

 

  

 

 

 

General and administrative expenses

   142,000    127,215    95,826  

Goodwill impairment

   68,202    —      —    

Depreciation, depletion, amortization and accretion

   72,934    68,290    61,377  

Transaction costs

   3,990    1,988    9,120  
  

 

 

  

 

 

  

 

 

 

Operating (loss) income

   (47,977  15,415    25,099  

Other (income), net

   (1,737  (1,182  (21,244

Loss on debt financings

   3,115    9,469    —    

Interest expense

   56,443    58,079    47,784  
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations before taxes

   (105,798  (50,951  (1,441

Income tax (benefit) expense

   (2,647  (3,920  3,408  
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations

   (103,151  (47,031  (4,849

Loss from discontinued operations

   528    3,546    5,201  
  

 

 

  

 

 

  

 

 

 

Net loss

   (103,679  (50,577  (10,050

Net income attributable to noncontrolling interest

   3,112    1,919    695  
  

 

 

  

 

 

  

 

 

 

Net loss attributable to member of Summit Materials, LLC

  $(106,791 $(52,496 $(10,745
  

 

 

  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended December 29, 2012, December 31, 2011 and December 31, 2010

(In thousands)

   2012  2011  2010 

Revenue:

    

Product

  $588,762  $427,419  $240,120 

Service

   374,140   395,129   190,238 
  

 

 

  

 

 

  

 

 

 

Total revenue

   962,902   822,548   430,358 
  

 

 

  

 

 

  

 

 

 

Costs of revenue (exclusive of items shown separately below):

    

Product

   444,569   317,360   181,901 

Service

   304,794   313,584   126,396 
  

 

 

  

 

 

  

 

 

 

Total costs of revenue

   749,363   630,944   308,297 

General and administrative expenses

   128,032    96,886   49,479 

Depreciation, depletion, amortization and accretion

   68,876   61,964   34,415 

Transaction costs

   1,988   9,120   22,268 
  

 

 

  

 

 

  

 

 

 

Operating income

   14,643    23,634   15,899 

Other (income) expense, net

   (1,182  (21,244  1,583 

Loss on debt refinancing

   9,469   —     9,975 

Interest expense

   58,079   47,784   25,430 
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations before income tax (benefit) expense

   (51,723  (2,906  (21,089

Income tax (benefit) expense

   (3,920  3,408   2,363 
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations

   (47,803  (6,314  (23,452

Loss from discontinued operations

   (2,774  (3,736  (411
  

 

 

  

 

 

  

 

 

 

Net loss

   (50,577  (10,050  (23,863

Net income attributable to noncontrolling interest

   1,919   695   86 
  

 

 

  

 

 

  

 

 

 

Net loss attributable to member of Summit Materials, LLC

  $(52,496 $(10,745 $(23,949
  

 

 

  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Comprehensive (Loss) Income

Years ended December 28, 2013, December 29, 2012 and December 31, 2011 and December 31, 2010

(In thousands)

 

   2012  2011  2010 

Net loss

  $(50,577 $(10,050 $(23,863

Other comprehensive loss:

    

Pension and postretirement adjustment

   (3,648  (5,675  (2,708
  

 

 

  

 

 

  

 

 

 

Comprehensive loss

   (54,225  (15,725  (26,571

Less comprehensive income (loss) attributable to the noncontrolling interest

   824   (675  (350
  

 

 

  

 

 

  

 

 

 

Comprehensive loss attributable to member of Summit Materials, LLC

  $(55,049 $(15,050 $(26,221
  

 

 

  

 

 

  

 

 

 

   2013  2012  2011 

Net loss

  $(103,679 $(50,577 $(10,050

Other comprehensive income (loss):

    

Pension and postretirement liability adjustment

   4,407    (3,648  (5,675
  

 

 

  

 

 

  

 

 

 

Comprehensive loss

   (99,272  (54,225  (15,725

Less comprehensive income (loss) attributable to the noncontrolling interest

   4,434    824    (675
  

 

 

  

 

 

  

 

 

 

Comprehensive loss attributable to member of Summit Materials, LLC

  $(103,706 $(55,049 $(15,050
  

 

 

  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 28, 2013, December 29, 2012 and December 31, 2011 and December 31, 2010

(In thousands)

 

   2012  2011  2010 

Cash flow from operating activities:

    

Net loss

  $(50,577 $(10,050 $(23,863

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    

Depreciation, depletion, amortization and accretion

   72,179   64,983   35,456 

Share-based compensation expense

   2,533   2,484   1,169 

Financing fee amortization

   3,266   2,335   2,067 

Deferred income tax benefit

   (3,468  (1,974  (2,022

Loss on sale of property, plant and equipment

   2,564   2,349   242 

Bargain purchase gain

   —     (12,133  —   

Revaluation of asset retirement obligations

   —      (3,420  —   

Revaluation of contingent consideration

   (409  (10,344  —   

Loss on debt refinancing

   9,469   —     9,975 

Other

   (465  894   656 

Decrease (increase) in operating assets, net of acquisitions:

    

Accounts receivable

   5,201   13,901   12,242 

Costs and estimated earnings in excess of billings

   6,931   (613  (5,088

Inventories

   (1,726  (12,643  184 

Other current assets

   3,494   (4,823  (245

Other assets

   1,189   (1,016  3,164 

(Decrease) increase in operating liabilities, net of acquisitions:

    

Accounts payable

   (6,076  6,612   (14,128

Accrued expenses

   17,175    (6,455  (28,547

Billings in excess of costs and estimated earnings

   2,589   (8,209  (4,828

Other liabilities

   (1,590  1,375   (6,963
  

 

 

  

 

 

  

 

 

 

Net cash provided by (used in) operating activities

   62,279   23,253   (20,529
  

 

 

  

 

 

  

 

 

 

Cash flow from investing activities:

    

Acquisitions, net of cash acquired

   (48,757  (161,073  (482,333

Purchases of property, plant and equipment

   (45,488  (38,656  (21,145

Proceeds from the sale of property, plant and equipment

   8,836   7,157   4,700 

Other

   69   241   (603
  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (85,340  (192,331  (499,381
  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities:

    

Proceeds from investment by member

   —     103,630   338,639 

Net proceeds from debt issuance

   713,361   96,748   485,373 

Payments on long-term debt

   (697,438  (49,000  (245,855

Payments on acquisition-related liabilities

   (7,519  (4,593  (2,721

Other

   (702  (10  (47
  

 

 

  

 

 

  

 

 

 

Net cash provided by financing activities

   7,702   146,775   575,389 
  

 

 

  

 

 

  

 

 

 

Net (decrease) increase in cash

   (15,359  (22,303  55,479 

Cash — beginning of period

   42,790   65,093   9,614 
  

 

 

  

 

 

  

 

 

 

Cash — end of period

  $27,431  $42,790  $65,093 
  

 

 

  

 

 

  

 

 

 

   2013  2012  2011 

Cash flow from operating activities:

    

Net loss

  $(103,679 $(50,577 $(10,050

Adjustments to reconcile net loss to net cash provided by operating activities:

    

Depreciation, depletion, amortization and accretion

   75,927    72,179    64,983  

Financing fee amortization

   3,256    3,266    2,335  

Share-based compensation expense

   2,315    2,533    2,484  

Deferred income tax benefit

   (4,408  (3,468  (1,974

Net loss on asset disposals

   12,419    2,564    2,349  

Goodwill impairment

   68,202    —      —    

Bargain purchase gain

   —      —      (12,133

Revaluation of asset retirement obligations

   —      —      (3,420

Revaluation of contingent consideration

   —      (409  (10,344

Loss on debt financings

   2,989    9,469    —    

Other

   (1,098  (465  894  

Decrease (increase) in operating assets, net of acquisitions:

    

Account receivable

   9,884    5,201    13,901  

Inventories

   499    (1,726  (12,643

Costs and estimated earnings in excess of billings

   196    6,931    (613

Other current assets

   (453  3,494    (4,823

Other assets

   (1,708  1,189    (1,016

Increase (decrease) in operating liabilities, net of acquisitions:

    

Accounts payable

   4,067    (6,076  6,612  

Accrued expenses

   (742  17,175    (6,455

Billings in excess of costs and estimated earnings

   1,998    2,589    (8,209

Other liabilities

   (3,252  (1,590  1,375  
  

 

 

  

 

 

  

 

 

 

Net cash provided by operating activities

   66,412    62,279    23,253  
  

 

 

  

 

 

  

 

 

 

Cash flow from investing activities:

    

Acquisitions, net of cash acquired

   (61,601  (48,757  (161,073

Purchases of property, plant and equipment

   (65,999  (45,488  (38,656

Proceeds from the sale of property, plant and equipment

   16,085    8,836  �� 7,157  

Other

   —      69    241  
  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (111,515  (85,340  (192,331
  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities:

    

Capital contributions by member

   —      —      103,630  

Net proceeds from debt issuance

   230,817    713,361    96,748  

Payments on long-term debt

   (188,424  (697,438  (49,000

Payments on acquisition-related liabilities

   (9,801  (7,519  (4,593

Other

   (3  (702  (10
  

 

 

  

 

 

  

 

 

 

Net cash provided by financing activities

   32,589    7,702    146,775  
  

 

 

  

 

 

  

 

 

 

Net decrease in cash

   (12,514  (15,359  (22,303

Cash—beginning of period

   27,431    42,790    65,093  
  

 

 

  

 

 

  

 

 

 

Cash—end of period

  $14,917   $27,431   $42,790  
  

 

 

  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

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

Years ended December 28, 2013, December 29, 2012 and December 31, 2011 and December 31, 2010

(In thousands)

 

  Total member’s interest          
  Member’s
equity
  Retained
earnings/
accumulated
deficit
  Accumulated
other
comprehensive
income (loss)
(AOCI)
  Noncontrolling
interest
  Total
member’s
interest
  Redeemable
noncontrolling
interest
 
      
      
      
      

Balance — December 31, 2009

 $36,785  $(5,256 $—    $—    $31,529  $—   

Contributed capital

  338,639   —     —     1,274   339,913   21,300 

Accretion / redemption value adjustment

  —     (350  —     —     (350  350 

Net (loss) income

  —     (23,949  —     —     (23,949  86 

Other comprehensive loss

  —     —     (2,272  —     (2,272  (436

Share-based compensation

  1,169   —     —     —     1,169   —   

Payment of dividends

  —     —     —     (47  (47  —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance — December 31, 2010

  376,593   (29,555  (2,272  1,227   345,993   21,300 

Contributed capital

  103,630   —     —     —     103,630   —   

Accretion / redemption value adjustment

  —     (632  —     —     (632  632 

Net (loss) income

  —     (10,745  —     (43  (10,788  738 

Other comprehensive loss

  —     —     (4,305  —     (4,305  (1,370

Share-based compensation

  2,484   —     —     —     2,484   —   

Payment of dividends

  —     —     —     (10  (10  —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance — December 31, 2011

  482,707   (40,932  (6,577  1,174   436,372   21,300 

Accretion / redemption value adjustment

  —      (657  —      —      (657  657  

Net (loss) income

  —      (52,496)  —      (69)  (52,565)  1,988 

Other comprehensive loss

  —     —     (2,553  —     (2,553  (1,095

Repurchase of member’s interest

  (656  —     —     —     (656  —   

Share-based compensation

  2,533   —     —     —     2,533   —   

Payment of dividends

  —     —     —     (46  (46  —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance — December 29, 2012

 $484,584  $(94,085 $(9,130 $1,059  $382,428  $22,850  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

  Total Member’s Interest          
  Member’s
equity
  Accumulated
deficit
  Accumulated
other
comprehensive
loss (AOCI)
  Noncontrolling
interest
  Total
member’s
interest
  Redeemable
noncontrolling
interest
 

Balance—December 31, 2010

 $376,593   $(29,555 $(2,272 $1,227   $345,993   $21,300  

Contributed capital

  103,630    —      —      —      103,630    —    

Accretion / Redemption value adjustment

  —      (632  —      —      (632  632  

Net (loss) income

  —      (10,745  —      (43  (10,788  738  

Other comprehensive loss

  —      —      (4,305  —      (4,305  (1,370

Share-based compensation

  2,484    —      —      —      2,484    —    

Payment of dividends

  —      —      —      (10  (10  —    
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance—December 31, 2011

  482,707    (40,932  (6,577  1,174    436,372    21,300  

Accretion / Redemption value adjustment

  —      (657  —      —      (657  657  

Net (loss) income

  —      (52,496  —      (69  (52,565  1,988  

Other comprehensive loss

  —      —      (2,553  —      (2,553  (1,095

Repurchase of member’s interest

  (656  —      —      —      (656  —    

Share-based compensation

  2,533    —      —      —      2,533    —    

Payment of dividends

  —      —      —      (46  (46  —    
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance—December 29, 2012

  484,584    (94,085  (9,130  1,059    382,428    22,850  

Accretion / Redemption value adjustment

  —      2,365    —      —      2,365    (2,365

Net (loss) income

  —      (106,791  —      152    (106,639  2,960  

Other comprehensive gain

  —      —      3,085    —      3,085    1,322  

Repurchase of member’s interest

  (3  —      —      —      (3  —    

Share-based compensation

  2,315    —      —      —      2,315    —    
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance—December 28, 2013

 $486,896   $(198,511 $(6,045 $1,211   $283,551   $24,767  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

(1)(1) Summary of Organization and Significant Accounting Policies

Summit Materials, LLC (“Summit”Summit Materials” or the “Company”) is a wholly ownedvertically-integrated, heavy building materials company. Across its subsidiaries, it is engaged in the manufacturing and sale of aggregates, cement, ready-mixed concrete and asphalt paving mix. It is also engaged in road paving and related construction services. Summit Materials owns and operates quarries, sand and gravel pits, a cement plant, cement distribution terminals, asphalt plants, ready–mixed concrete plants and landfill sites. The operations of Summit Materials are conducted primarily across 14 states, with the most significant portion of the Company’s revenue generated in Texas, Kansas, Kentucky, Missouri and Utah.

Summit Materials is a 100 percent-owned subsidiary of Summit Materials Holdings L.P. (“Parent”) whose major indirect owners are certain investment funds affiliated with Blackstone Capital Partners V L.P. (“BCP”). Summit Materials has a number of subsidiaries including Summit Materials Holdings I, LLC (“Summit I”) and Summit Materials Holdings II, LLC (“Summit II”), whichthat have individually made a number of acquisitions through 2012.

2013. The Company is organized by geographic region and has three operating segments, which are also its reporting segments: the Central; West; and East regions.

Noncontrolling interests represent a 20% ownership of Ohio Valley Asphalt, LLC (“OVA”) and a 30% redeemable ownership in Continental Cement Company, L.L.C. (“Continental Cement”).

The Company’s fiscal year-end and a 20% ownership in 2010 was December 31.Ohio Valley Asphalt, LLC. In 2011, the Company2013, Continental Cement changed its fiscal year from a calendar year to be 52 weeksa 52-week year with each quarter comprisedcomposed of 13 weeks ending on a Saturday. The Company’s year-endSaturday, consistent with Summit Materials’ fiscal year. Continental Cement’s fiscal year end in 2013 was December 28 compared to the calendar year ended December 31 in 2012 and 2011 fell on December 292011. The effect of this change to Summit Materials’ financial position, results of operations and December 31, respectively.liquidity was immaterial.

Company’s Activities — Summit is a vertically-integrated, heavy building materials company. Across its subsidiaries, it is engaged in the manufacturing and sale of aggregate material, hot-mix asphalt, Portland cement and ready-mixed concrete. It is also engaged in road paving and related construction services. Summit owns and operates stone quarries, asphalt plants, ready-mix plants, a cement plant and landfill sites. Most of the Company’s construction work is performed under fixed unit-price contracts with state and local governmental entities. The operations of Summit are conducted primarily across 12 states, with the most significant revenues generated in Texas, Kansas, Kentucky, Missouri and Utah.

Principles of Consolidation—The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany balances and transactions have been eliminated. The Company attributes consolidated member’s interests and net (loss) income separately to the controlling and noncontrolling interest, whereby consolidated member’s interests and net (loss) income are separately attributable to the controlling interest and to the noncontrolling interest.interests. The Company accounts for investments in entities for which it has an ownership of 20% to 50% using the equity method of accounting.

Use of Estimates—The consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), which require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenuesrevenue and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangible and other long-lived assets, pension and other postretirement obligations, asset retirement obligations and the redeemable noncontrolling interest. Estimates also include revenue earned and costs to complete open contracts. Management evaluates its estimates and assumptions on an ongoing basis using 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 could differ significantly from estimates made. Changes in estimates, including those resulting from continuing changes in the economic environment, will be reflected in the Company’s consolidated financial statements in the period in which the change in estimate occurs.

Business and Credit Concentrations—The majority of Summit’sSummit Materials’ customers are located in Texas, Kansas, Kentucky, Missouri and Utah. Summit’sSummit Materials’ accounts receivable consist primarily of amounts due from individuals, corporations and governmental entitiescustomers within these areas. Collection of these accounts is, therefore, dependent on the economic conditions in the aforementioned states.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

However, credit granted within Summit’sSummit Materials’ trade areas has been granted to a wide variety of customers. No single customer accounted for more than 10% of revenue in 2013, 2012 2011 or 2010.2011. Management does not believe that any significant concentrations of credit exist with respect to individual customers or groups of customers.

Cash — The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. As of December 29, 2012 and December 31, 2011, the Company had no cash equivalents.

Accounts Receivable—Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the collectability of individual accounts. In establishing the allowance, management considers historical losses adjusted to take into account current market conditions and its customers’ financial condition, the amount of receivables in dispute, the current receivables aging and current payment terms. Balances that remain outstanding after reasonable collection efforts are exercised are written off through a charge to the valuation allowance.

The balances billed but not paid by customers, pursuant to retainage provisions included in contracts, will be due upon completion of the contracts.

Revenue and Cost Recognition RevenuesRevenue for product sales are recognized when evidence of an arrangement exists, the fee is fixed or determinable, title passes, which is generally when the product is shipped, and collection is reasonably assured. Product revenue includes sales of aggregates, cement and other materials to customers, net of discounts, allowances or taxes, as applicable. Internal product sales are eliminated from service revenue in the consolidated statements of operations.

Revenue from construction contracts are included in service revenue in the consolidated statements of operations and are recognized under the percentage-of-completion accounting method. The percent complete is measured by the cost incurred to date compared to the estimated total cost of each project. This method is used as management considers expended cost to be the best available measure of progress on these contracts, the majority of which are completed within one year, but may occasionally extend beyond one year. Inherent uncertainties in estimating costs make it at least reasonably possible that the estimates used will change within the near term and over the life of the contracts.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance and completion. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.estimable. General and administrative costs are charged to expense as incurred.

Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income. Such revisions are recognized in the period in which they are determined. An amount equal to contract costs incurred that are attributable to claims is included in revenue when realization is probable and the amount can be reliably estimated.

Costs and estimated earnings in excess of billings are comprisedcomposed principally of revenue recognized on contracts (on the percentage-of-completion method) for which billings had not been presented to customers because the amount were not billable under the contract terms at the balance sheet date. In accordance with the contract terms, the unbilled receivables at December 29, 201228, 2013 will be billed in 2013. Amounts are billed based on contractual terms.2014. Billings in excess of costs and estimated earnings represent billings in excess of revenuesrevenue recognized.

Revenues for product sales are recognized when evidence of an arrangement exists, the fee is fixed or determinable, title passes, which is generally when the product is shipped, and collection is reasonably assured. Product revenues include sales of aggregates, cement and other materials to customers, net of discounts, allowances or taxes, if any. Internal product sales are eliminated from service revenue in the consolidated statements of operations.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

RevenuesRevenue from the receipt of waste arefuels is classified as service revenue and is based on fees charged for the waste transfer and disposal, upon acceptance ofwhich are recognized when the waste.waste is accepted.

Inventories—Inventories consist of stone removed from quarries and processed for future sale, cement, raw materials and finished concrete blocks. Inventories are valued at the lower of cost or market and are accounted for on a first-in first-out basis or an average cost basis. If items become obsolete or otherwise unusable or if quantities exceed what is projected to be sold within a reasonable period of time, they will be charged to costs of production in the period that determination is made by management.the items are designated as obsolete or excess inventory. Stripping costs are costs of removing overburden and waste material to access aggregate materials. Stripping costs incurred during the production process are considered costs of extractionmaterials and are capitalized and recognized in cost of revenue in the same period as the revenue from the sale of the inventory.

Property, Plant and Equipment, net—Property, plant and equipment are recorded at cost, less accumulated depreciation, depletion and depletion.amortization. Expenditures for additions and improvements that significantly add to

the productive capacity or extend the useful life of an asset are capitalized. Repair and maintenance costs that do not substantially add to the productive capacity or extend the useful life of the asset are expensed as incurred.

Landfill airspace is included in property, plant and equipment at cost and is amortized based on utilization of the asset. Management reassesses the landfill airspace capacity with any changes in value recorded in cost of revenue. Capitalized landfill costs include expenditures for the acquisition of land and related airspace, engineering and permitting costs, cell construction costs and direct site improvement costs.

Upon disposal, the cost and related accumulated depreciation are removed from the Company’s accounts and any gain or loss is included in operating income.

general and administrative expenses.

Depreciation on property, plant and equipment, including assets subject to capital lease assets,leases, is computed on a straight-line basis or based on the economic usage over the estimated useful life of the asset. The estimated useful lives are generally as follows:

 

Buildings and improvements

   7–40 years  

Plant, machinery and equipment

   3–40 years  

Truck and auto fleet

   3–10 years  

Mobile equipment and barges

   3–20 years  

Landfill airspace and improvements

   5–60 years  

Depletion of mineral reserves is calculated for proven and probable reserves by the units of production method on a quarry-by-quarrysite-by-site basis. Leasehold improvements are amortized on a straight-line basis over the lesser of the asset’s useful life or the remaining lease term.

The Company reviews the carrying value of property, plant and equipment for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. Such indicators may include, among others, deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows or a trend of negative or declining cash flows over multiple periods. In 2012,addition, assets are assessed for impairment charges of $1.6 million werewhen identified for disposition. Projected losses from disposition are recognized in operating income.the period in which they become estimable, which may be in advance of the actual disposition. The net loss from asset dispositions recognized in general and administrative expenses in fiscal years 2013, 2012 and 2011 was $12.4 million, $2.6 million and $2.3 million, respectively. No material impairment charges werehave been recognized on assets held for use in 20112013, 2012 or 2010.2011. The losses are commonly a result of the cash flows expected from selling the asset being less than the expected cash flows that could be generated from holding the asset for use.

Accrued Mining and Landfill Reclamation—The mining reclamation reserve and financial commitments for landfill closure and post-closure activities are based on management’s estimate of future cost requirements to reclaim property at both currently operating and closed sites. Estimates of these obligations have been

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

developed based on management’s interpretation of current requirements and proposed regulatory changes and are intended to approximate fair value. Costs are estimated in current dollars, inflated until the expected time of payment, using an inflation rate of 2.5%, and then discounted back to present value using a credit-adjusted, risk-free rate on obligations of similar maturity, adjusted to reflect the Company’s credit rating. Changes in the credit-adjusted, risk-free rate do not change recorded liabilities, but subsequentlyliabilities. However, subsequent increases in the recognized obligations are measured using the reviseda current credit-adjusted, risk-free rate.

Decreases in the recognized obligations are measured at the initial credit-adjusted, risk-free rate.

Significant changes in inflation rates or the amount or timing of future cost estimates typically result in both (1) a current adjustment to the recorded liability (and corresponding adjustment to the asset) and (2) a change in accretion of the liability and depreciation of the asset amounts to be recorded prospectively over the remaining capacity of the landfillunmined quarry or unmined quarry. Any changes related to the capitalized and future cost of the related assets are recognized in accordance with Summit’s amortization policy, which would generally result in amortization expense being recognized prospectively over the remaining life of the asset.landfill.

Intangible Assets—The Company’s intangible assets are comprisedprimarily composed of quarry lease agreements, reserve rights and trade names. The assets related to quarry lease agreements are a result of the submarket royalty rates paid under agreements, primarily, for extracting aggregate. The values were determined as of the respective acquisition dates by a comparison of market-royalty rates to contract-royalty rates. The reserve rights relate to aggregate reserves to which the Company has the rights of ownership, but do not own the reserves. The intangible assets are amortized on a straight-line basis over the lives of the leases. Continental Cement’s trade name comprisescomposes the majority of the remaining intangible assets. The following table shows intangible assets by type and in total (in thousands):total:

 

  December 29, 2012   December 31, 2011   December 28, 2013   December 29, 2012 
  Gross
Carrying
Amount
   Accumulated
Amortization
 Net
Carrying
Amount
   Gross
Carrying
Amount
   Accumulated
Amortization
 Net
Carrying
Amount
   Gross
Carrying
Amount
   Accumulated
Amortization
 Net
Carrying
Amount
   Gross
Carrying
Amount
   Accumulated
Amortization
 Net
Carrying
Amount
 

Quarry leases

  $8,940    $(1,092 $7,848    $8,940    $(623 $8,317  

Leases

  $10,430    $(1,604 $8,826    $8,940    $(1,092 $7,848  

Reserve rights

   5,890     (221 5,669     —       —      —    

Trade names

   1,020     (262  758     1,020     (158  862     1,020     (368 652     1,020     (262 758  
  

 

   

 

  

 

   

 

   

 

  

 

   

 

   

 

  

 

   

 

   

 

  

 

 

Total intangible assets

  $9,960    $(1,354 $8,606    $9,960    $(781 $9,179    $17,340    $(2,193 $15,147    $9,960    $(1,354 $8,606  
  

 

   

 

  

 

   

 

   

 

  

 

   

 

   

 

  

 

   

 

   

 

  

 

 

The weighted average useful life of the quarry intangible assets is 19.8 years and 10.0 years for the Continental Cement trade name. Amortization expense in 2013, 2012 and 2011 and 2010 was $0.8 million, $0.6 million $0.5 million and $0.3$0.5 million, respectively. The estimated amortization expense for intangible assets for each of the next five years and thereafter is as follows (in thousands):follows:

 

2013

  $546  

2014

   549    $897  

2015

   549     897  

2016

   549     897  

2017

   545     893  

2018

   893  

Thereafter

   5,868     10,670  
  

 

   

 

 

Total

  $8,606    $15,147  
  

 

   

 

 

Goodwill—Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired. Goodwill recorded in connection with the Company’s acquisitions is primarily attributable to the expected profitability, assembled workforces of the acquired businesses and the synergies expected to arise after the Company’s acquisition of those businesses. Goodwill is not amortized, but is tested

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

annually for impairment as of the first day of the fourth quarter and whenever events or circumstances indicate that goodwill may be impaired. The test for goodwill impairment is a two-step process to first identify potential goodwill impairment for each reporting unit and then, if necessary, measure the amount of the impairment loss. Goodwill is tested for impairment based on the Company’s operating companies, which management has determined to be the Company’s reporting units, which are one level below its segments.

As of December 29, 2012, we had eight reporting units with goodwill for which we completed our annual goodwill impairment test. The first step of the goodwill impairment test employed by the company compares the fair value of the reporting units to their carrying values. Management estimates the fair value of the reporting units primarily based on the discounted projected cash flows of the underlying operations. A number of significant assumptions and estimates are required to forecast operating cash flows, including macroeconomic trendssegments in the publicCentral and private construction industry, the timing of work embedded in backlog, performance and profitability under contracts, expected success in securing future sales and the appropriate interest rate usedWest regions. The East region is considered to discount the projected cash flows. These assumptions may vary significantly among thebe a single reporting units. During the 2012 annual review of goodwill, management concluded that the estimated fair value of the reporting units was substantially in excess of their carrying values, resulting in no impairment. The Company has recorded no goodwill impairment charges to date.unit.

The following table presents goodwill by reportable segments and in total (in thousands):

   Central   West  East   Total 

Beginning balance — January 1, 2011

  $48,210   $63,905  $5,071   $117,186 

Acquisitions

   5,375    27,693   3,121    36,189 
  

 

 

   

 

 

  

 

 

   

 

 

 

Balance — December 31, 2011

   53,585    91,598   8,192    153,375 

Acquisitions(i)

   19,204    (205  6,746    25,745 
  

 

 

   

 

 

  

 

 

   

 

 

 

Ending balance — December 29, 2012

  $72,789   $91,393  $14,938   $179,120 
  

 

 

   

 

 

  

 

 

   

 

 

 

(i)Includes certain immaterial working capital adjustments in the West region related to 2011 acquisitions.

Income Taxes The Company isAs a limited liability company, and passes tax attributes for Federal and state tax purposes to Parent and is generally not subject to Federal or state income tax. However, the consolidated financial statements of the Company includeSummit Materials’ federal and state income tax provisions and related accounts forattributes are generally passed to Parent. However, certain of the Company’s subsidiaries that are taxable entities.

entities, the provisions for which are included in the consolidated financial statements. For the Company’s taxable entities, deferred income tax assets and liabilities are computed for differences between the tax basis and financial statement amounts and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized for deferred tax assets if it is more likely than not that some portion or all of the net deferred tax assets will not be realized.

The Company evaluates the tax positions taken on income tax returns that remain open to examination by the respective tax authorities from prior years and positions expected to be taken on the current year tax returns to identify uncertain tax positions. Interest and penalties are recorded in income tax expense.

Fair Value Measurements—The fair value accounting guidance establishes the following fair value hierarchy that prioritizes the inputs used to measure fair value:

 

Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Level 2 — Inputs other than Level 1 that are based on observable market data, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs that are observable that are not prices and inputs that are derived from or corroborated by observable markets.

Level 3 — Valuations developed from unobservable data, reflecting the Company’s own assumptions, which market participants would use in pricing the asset or liability.

Unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2

Inputs other than Level 1 that are based on observable market data, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs that are observable that are not prices and inputs that are derived from or corroborated by observable markets.

Level 3

Valuations developed from unobservable data, reflecting the Company’s own assumptions, which market participants would use in pricing the asset or liability.

Assets and liabilities measured at fair value in the consolidated balance sheets as of year-end 20122013 and 20112012 are as follows (in thousands):follows:

 

   2012   2011 

Accrued expenses:

    

Current portion of contingent consideration

  $746    $1,155  

Acquisition-related liabilities:

    

Contingent consideration

  $1,908    $2,123  

   2013   2012 

Accrued expenses:

    

Current portion of contingent consideration

  $—      $746  

Acquisition- related liabilities

    

Contingent consideration

  $1,908    $1,908  

Certain acquisitions made by the Company require the payment of additional consideration contingent upon the achievement of specified operating results, referred to as contingent consideration or earn-out obligations. These payments will not be made if earn-out thresholds are not achieved. No material earn-out payments have been made to date.

Summit Materials records contingent consideration at fair value on the acquisition date and then remeasuresmeasures its fair value each reporting period. Any adjustments to fair value are recognized in earnings in the period identified. Management of the Company determines the appropriate policies and procedures to be used when determining the fair value of contingent consideration. Its fair values are based on unobservable inputs, or Level 3 assumptions, including projected probability-weighted cash payments and an 8.5%8.4% discount rate, which reflects the Company’s credit risk. 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 significantly lower, or higher, fair value measurement. In 2012 and 2011, we recognized reductions to contingent consideration of $0.4 million and $10.3 million, respectively, due primarily to revised estimates of the probability of achieving the specified targets.

Financial Instruments—The Company’s financial instruments include certain acquisition relatedacquisition-related liabilities (deferred consideration and noncompete obligations) and debt. The fair value of the deferred consideration and noncompete obligations approximate their carrying value of $28.3 million and $4.2 million, respectively, as of December 28, 2013 and $23.4 million and $7.4 million, respectively, as of December 29, 2012, and $15.1 million and $10.3 million, respectively, as of December 31, 2011.2012. The fair value was determined based on levelLevel 3 inputs of the fair value hierarchy, including the cash payment terms in the purchase agreements and a discount rate reflecting the Company’s credit risk.

The fair value of long-term debt approximates $670.7was approximately $696.5 million and $605.0$670.7 million as of December 29, 201228, 2013 and December 31, 2011,29, 2012, respectively, compared to its carrying value of $639.8$663.0 million and $609.0$639.8 million, respectively. Fair value was determined based on Level 2 inputs of the fair value hierarchy, including observable inputs, such as interest rates, bond yields andspecifically quoted prices for these instruments in inactive markets.

Kiln-Down Costs — Continental Cement experiences periodic major maintenance of its kiln (referred to as a kiln-down). The Company accounts for these costs under the direct expensing method, whereby costs are charged to operations as incurred.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

New Accounting Standards — In May 2011, the FASB issued Accounting Standards Update No. 2011-04 Fair Value Measurement (Topic 820)Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S.GAAP and IFRSs(“ASU 2011-04”). The amendments in this update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fairCompany’s revolving credit facility approximated its carrying value and for disclosing information about fair value measurements. For many of the requirements, the FASB does not intend for the amendments in this update to result in a change in the application of the existing requirements. Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this update are effective prospectively during interim and annual periods beginning after$26.0 million at December 15, 2011. The Company adopted ASU 2011-04 as of January 1, 2012, which did not result in a material impact on fair value measurements or related disclosures.28, 2013.

ReclassificationsReclassifications—Certain amounts have been reclassified in prior periods to conform to the presentation in the consolidated financial statements as of and for the year-endedyear ended December 29, 2012.28, 2013.

(2)

(2) Acquisitions

The Company has acquired a number of entities since its formation in 2009, which were financed through a combination of debt and contributions from the Company’s member. Debt financing was composed of term loan debt and revolver facilities. Member’s contributions were provided by Parent to the Company.Parent. The operations of each acquisition have been included in the Company’s consolidated results of operations since the respective dates of the acquisitions. The Company measures all assets acquired and liabilities assumed at their acquisition-date fair value. The purchase price allocation for the acquisitions has been finalized with the exception of Kay & Kay Contracting, LLC and Sandco Inc. due to the recent nature of the acquisitions.

20122013 Acquisitions — The following describes the acquisitions that occurred in 2012 by region.

Central region

 

On April 1, 2013, the Company acquired certain aggregates, ready-mixed concrete and asphalt assets of Lafarge North America, Inc. in and around Wichita, Kansas, with borrowings under the Company’s senior secured revolving credit facility.

West region

On April 1, 2013, the Company acquired all of the membership interests of Westroc, LLC, an aggregates and ready-mixed concrete provider near Salt Lake City, Utah, with borrowings under the Company’s senior secured revolving credit facility.

2012 Acquisitions

Central region

On February 29, 2012, the Company acquired certain assets of Norris Quarries, LLC, an aggregates business in northwest Missouri, with cash raised throughproceeds from debt, including the January 2012 financing transaction and drawn from theCompany’s senior secured revolving credit facility.

West region

 

On November 30, 2012, the Company acquired all of the stock of Sandco, Inc., an aggregates and ready-mixready-mixed concrete business in Colorado, with cash on-hand.

East region

 

On October 5, 2012, the Company acquired certain assets of Kay & Kay Contracting, LLC, an aggregates, asphalt and paving business in Kentucky, with cash on-hand.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Pro formaForma Financial Information (Unaudited)—The following unaudited supplemental pro forma information presents the financial results as if the 2012 acquisitions occurred on January 1, 2011. The acquisitions made in 2011 are not included in the pro forma summary as these acquisitions were not material individually or in the aggregate. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisitionacquisitions been made on January 1, 2011, nor is it indicative of any future results. The 2013 acquisitions were not material individually or in the aggregate.

 

(in thousands)  Year ended 
  Year ended 
  December 29,
2012
 December 31,
2011
   December 28, 2013 December 29, 2012 

Revenue

  $976,797   $870,414   $916,201   $976,797  

Net loss

   (45,976  (657   (103,679 (45,976

2011 acquisitions — The following describes the acquisitions that occurred in 2011 by region.

Central region

On May 27, 2011, the Company acquired the membership interests of Fischer Quarries, L.L.C. using funds provided by Parent.

West region

On January 14, 2011, the Company acquired all of the stock of Triple C Concrete, Inc. in Idaho, financed with cash raised from the December 2010 refinancing.

On March 31, 2011, the Company acquired Elam Construction, Inc. in Colorado, financed with cash from the December 2010 refinancing.

On June 8, 2011, the Company acquired B & B Resources, Inc. using cash funded through a combination of debt and funds provided by Parent.

On June 10, 2011, the Company acquired the stock of Grand Junction Pipe, Inc. using funds provided by Parent.

On August 2, 2011, the Company, acquired the stock of Asphalt Paving Company of Austin, L.L.C. and certain of its Affiliates (“Asphalt Paving”) in Texas with funds provided by Parent.

On October 28, 2011, the Company acquired the stock of JD Ramming, Inc., RTI Hot Mix, Inc., RTI Equipment, Inc. and Ramming Transportation, Inc. in Texas funded through a combination of debt, cash on hand and funds provided by Parent.

East region

On May 27, 2011, the Company acquired the remaining 50% interest in a joint venture it had with Bourbon Limestone, Company using funds provided by Parent.

The application of purchase accounting resulted in a bargain purchase gain of $2.6 million and $9.6 million for Elam Construction, Inc. and Grand Junction Pipe, Inc., respectively, which is reflected in other (income) expense in the consolidated statement of operationsprice allocation for the year-ended December 31, 2011. The amount of the bargain purchase gain is equal to the amount by which the fair value of net assets acquired exceeded the consideration transferred. The Company believes that the resulting bargain purchase gains are reasonable as the sellers were highly motivated.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

2010 Acquisitions — The following describes the2013 acquisitions that occurred in 2010 by region.

Central region

On April 16, 2010, the Company purchased 100% of the outstanding ownership interests in Cornejo & Sons, L.L.C., C&S Group, Inc., Concrete Materials Company of Kansas, LLC and Cornejo Materials, Inc, collectively referred to as Cornejo. Cornejo provides construction, excavation and paving contracting services for government agencies and private industry primarily within the state of Kansas. Cornejo operates concrete, sand and asphalt production facilities. It also operates a landfill that is open to the public.

On June 15, 2010, the Company purchased the lease on a quarry and assets from Harshman Construction L.L.C. and Harshman Farms, Inc. (collectively, Harshman), in Moline, Kansas.

On May 27, 2010, the Company acquired 70% of the outstanding ownership interests of Continental Cement. The proceeds from the purchase were used by Continental Cement to repay certain outstanding indebtedness.

On September 15, 2010, the Company acquired 100% of the outstanding ownership interests of Con-Agg of MO, L.L.C. (“Con-Agg”). Con-Agg owns and operates aggregate, ready-mix facilities and an underground storage facility.

West region

The Company acquired the assets of Harper Contracting, Inc., Harper Sand and Gravel, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc. (collectively referred to as Harper) and the assets of Kilgore Pavement Maintenance, LLC and Kilgore Properties, LLC, pursuant to two separate purchase agreements (collectively referred to as Kilgore). The transactions closed on August 2, 2010. Kilgore is engaged in various contracting and construction projects, primarily road and earthwork for governmental and commercial properties located in Utah. It also owns and operates quarry and asphalt production facilities.

On September 15, 2010, the Company purchased all interests in Altaview Concrete, LLC, Peak Construction Materials, LLC, Peak Management, L.C. and Wasatch Concrete Pumping, LLC (collectively, Altaview). Altaview is engaged primarily in the production and delivery of concrete to governmental, commercial and private properties in Utah.

On September 28, 2010, the Company purchased certain assets of EnerCrest Products, Inc. (Enercrest). Enercrest is engaged primarily in the mining and selling of quarry aggregates, including crushed stone and other similar products to customers located in Wyoming.

On November 30, 2010, the Company acquired 100% of the ownership equity interests of RK Hall Construction, Ltd., RHMB Capital, L.L.C., Hall Materials, Ltd., SCS Materials, L.P., B&H Contracting, L.P. and RKH Capital, LLC (collectively referred to as RK Hall) pursuant to an interest purchase agreement. RK Hall is engaged in road and bridge building and the third-party sale of aggregate material and hot-mix asphalt. It owns and operates a number of asphalt plant facilities and a concrete plant facility, all located in Northeast Texas.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

East region

On February 1, 2010, the Company acquired 100% of the outstanding ownership interests of Hinkle Contracting Company, LLC (“Hinkle”). The purchase included the remaining 20% interests in Hinkle’s subsidiary, Glass Aggregates, LLC (Glass f.k.a. Glass Paving and Stone, LLC). Hinkle owns 80% of OVA. The remaining 20% noncontrolling interest was valued based on the fair value of net assets adjusted for income or losses, dividends received and contributions made. Hinkle is primarily engaged in business as a highway and site contractor. It also owns and operates stone quarries, asphalt plants and concrete block plants.

On April 20, 2010, the Company purchased certain assets of Elmo Greer & Sons, LLC (“Greer”), including three asphalt plants, mobile equipment and a leased quarry.

On July 23, 2010, the Company sold two asphalt plants and related construction assets in Hart and Barren counties in Kentucky in exchange for the long-term leases of four active quarries in Barren, Metcalfe, Monroe and Allen counties in Kentucky held by Scotty’s Contracting & Stone, LLC (“Scottys”). Inventory and quarry equipment were also included in the exchange.

has been finalized. The following table summarizes aggregated information regarding the fair values of the assets acquired and liabilities assumed as oftheof the respective acquisition dates in 2012, 20112013 and 2010 (in thousands):2012:

 

   Year-ended 
   2012  2011  2010 

Financial assets

  $1,397  $50,036  $96,759 

Inventories

   6,988   22,329   41,474 

Plant and equipment

   21,543   125,187   658,524 

Other assets

   1,330   4,811   14,879 

Investments in affiliates

   —     —     21,655 

Intangible assets (quarry lease)

   3,172   2,708   7,232 

Financial liabilities

   (944  (27,304  (94,380

Long-term debt

   —     —     (160,480

Other long term liabilities

   (364  (17,503  (20,083
  

 

 

  

 

 

  

 

 

 

Net assets acquired

   33,122   160,264   565,580 

Goodwill

   26,230   36,189   117,186 

Pre-existing interest

   —     (7,565  —   

Noncontrolling interest

   —     —     (22,574
  

 

 

  

 

 

  

 

 

 

Total purchase price

   59,352   188,888   660,192 
  

 

 

  

 

 

  

 

 

 

Noncash transactions:

    

Acquisition related liabilities

   (10,547  (7,603  (36,942

Continental Cement member’s interest

   —      —      (135,000

Other

   (48  (20,212  (5,917
  

 

 

  

 

 

  

 

 

 

Total noncash transactions

   (10,595  (27,815  (177,859
  

 

 

  

 

 

  

 

 

 

Net cash paid for acquisitions

  $48,757  $161,073  $482,333 
  

 

 

  

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

   2013  2012 

Financial assets

  $8,302  $1,397 

Inventories

   3,954   6,988 

Property, plant and equipment

   40,580   21,543 

Other assets

   52   1,330 

Intangible assets(1)

   7,428   3,172 

Financial liabilities

   (6,164)  (944)

Other long-term liabilities

   (1,050)  (364)
  

 

 

  

 

 

 

Net assets acquired

   53,102   33,122 

Goodwill

   16,120   26,230 
  

 

 

  

 

 

 

Total purchase price

   69,222   59,352 
  

 

 

  

 

 

 

Noncash transactions:

   

Acquisition related liabilities

   (7,902)  (10,547)

Other

   281   (48)
  

 

 

  

 

 

 

Total noncash transactions

   (7,621)  (10,595)
  

 

 

  

 

 

 

Net cash paid for acquisitions

  $61,601  $48,757 
  

 

 

  

 

 

 

 

(3)(1)Discontinued OperationsIntangible assets acquired relate to aggregate reserves to which the Company has the rights of ownership, but do not own the reserves ($5.9 million) and the differential between contractual lease rates and market rates for leases of aggregate reserves and office space. The acquired intangible assets in total, the reserve rights and the lease assets have weighted-average lives of 18 years, 20 years and 11 years, respectively.

(3) Goodwill

In 2012,As of December 28, 2013, the Company soldhad eight reporting units with goodwill for which the annual goodwill impairment test was completed. The first step of the goodwill impairment test employed by the Company compares the fair value of the reporting units to their carrying values. Management estimates the fair value of the reporting units primarily based on the discounted projected cash flows of the underlying operations. A number of significant assumptions and estimates are required to forecast operating cash flows, including macroeconomic trends in the public infrastructure and private construction industry, the timing of work embedded in backlog, performance and profitability under contracts, expected success in securing future sales and the appropriate interest rate used to discount the projected cash flows. These assumptions may vary significantly among the reporting units. This discounted cash flow analysis is corroborated by “top-down” analyses, including a market assessment of the Company’s enterprise value.

During the annual test performed as of the first day of the fourth quarter of 2013, management concluded that the estimated fair value of the Utah-based operations in the West region and the East region were less than their carrying values. The estimated fair value of these operating units was estimated by applying a 50 percent weighting to both the discounted cash flow valuation and the market assessment, a discount rate of 11.0% and internal growth projections.

The second step of the test requires the allocation of the reporting unit’s fair value to its assets and liabilities, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill is less than the carrying value, the difference is recorded as an impairment loss. Based on the step two analysis, goodwill impairment charges recognized in the year ended December 28, 2013 was $68.2 million, as a result of current uncertainties in the timing of a sustained recovery in the construction industry. No impairment charges were recognized prior to 2013.

The following table presents goodwill by reportable segments and in total:

   Central   West  East  Total 

Beginning Balance- December 31, 2011

  $53,585    $91,598   $8,192   $153,375  

Acquisitions

   19,204     (205  6,746    25,745  
  

 

 

   

 

 

  

 

 

  

 

 

 

Balance, December 29, 2012

   72,789     91,393    14,938    179,120  

Acquisitions

   —       16,120    —      16,120  

Impairment

   —       (53,264  (14,938  (68,202
  

 

 

   

 

 

  

 

 

  

 

 

 

Balance, December 28, 2013

  $72,789    $54,249   $—     $127,038  
  

 

 

   

 

 

  

 

 

  

 

 

 

(4) Discontinued Operations

The Company’s discontinued operations include a railroad construction and repair business (referred to herein as railroad), environmental remediation operations and certain concrete paving operations. The railroad business)business involved building and itsrepairing railroad sidings. The environmental business, which isremediation operations primarily associated with buildinginvolved the repair of retaining walls along highways in Kentucky and the removal and remediation of underground fuel storage tanks,tanks. The railroad and environmental remediation operations were sold in 2012 in separate transactions for aggregate proceeds of $3.1 million. The concrete paving operations were wound down in the second quarter of 2013 and, as of March 7, 2014, all assets have been sold. The results of these operations have been removed from the results of continuing operations for all periods presented. Prior to recognition as discontinued operations, the railroad and environmentalall of these businesses were included as components ofin the East region’s operations.

Debt and interest expense were not allocated to the railroad and environmentalthese businesses since there was no debt specifically attributable to the operations. The railroad and environmentaldiscontinued businesses are organized within a limited liability company andthat passes its tax attributes for Federalfederal and state tax purposes to its parent company and is generally not subject to Federalfederal or state income tax. The railroad, environmental remediation and environmentalconcrete paving businesses’ revenue and loss before income tax expense, including an immaterial gain on sale, in fiscal years 2013, 2012 2011 and 20102011 are summarized below (in thousands):below:

 

  2012 2011 2010  2013 2012 2011 

Revenue

  $13,505   $16,065   $20,495  

Total revenue

 $3,884   $50,152   $49,537  

Loss from discontinued operations before income tax expense

   (2,774  (3,736  (411 528   3,546   5,201  

(4)(5) Accounts Receivable, Net

Accounts receivable, net consists of the following as of year-end 20122013 and 2011 (in thousands):2012:

 

   2012  2011 

Trade accounts receivable

  $88,637   $94,420 

Retention receivables

   13,181   13,321 

Receivables from related parties

   1,871    1,052 

Other

   —     70 
  

 

 

  

 

 

 

Accounts receivable

   103,689   108,863 

Less allowance for doubtful accounts

   (3,391  (3,630
  

 

 

  

 

 

 

Accounts receivable, net

  $100,298  $105,233 
  

 

 

  

 

 

 

   2013  2012 

Trade accounts receivable

  $85,188   $88,637  

Retention receivables

   15,966    13,181  

Receivables from related parties

   202    1,871  
  

 

 

  

 

 

 

Accounts receivable

   101,356    103,689  

Less: Allowance for doubtful accounts

   (2,019  (3,391
  

 

 

  

 

 

 

Accounts receivable, net

  $99,337   $100,298  
  

 

 

  

 

 

 

Retention receivables are amounts earned by the Company, but held by customers until construction contracts and projects have been fully completed or near completion. Amounts are expected to be billed and collected within a year.

(5)

(6) Inventories

Inventories consist of the following as of year-end 20122013 and 2011 (in thousands):2012:

 

  2012   2011   2013   2012 

Aggregate stockpiles

  $62,872    $52,219    $70,300    $62,872  

Finished goods

   9,342     11,728     11,207     9,342  

Work-in-process

   2,679     2,961  

Work in process

   2,623     2,679  

Raw materials

   18,084     17,355     12,302     18,084  
  

 

   

 

   

 

   

 

 

Total

  $92,977    $84,263    $96,432    $92,977  
  

 

   

 

   

 

   

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012(7) Property, Plant and December 31, 2011

(6)Property, Plant and Equipment, Net

Equipment, net

Property, plant and equipment, net consist of the following as of year-end 20122013 and 2011 (in thousands):2012:

 

   2012  2011 

Land (mineral bearing) and asset retirement costs

  $106,135   $93,899  

Land (nonmineral bearing)

   69,560    71,996  

Buildings and improvements

   78,168    77,330  

Plants, machinery and equipment

   623,949    589,622  

Truck and auto fleet

   19,399    20,930  

Landfill airspace and improvements

   46,841    46,734  

Construction in progress

   20,734    11,877  

Other

   5,134    5,175  
  

 

 

  

 

 

 

Property, plant and equipment

   969,920    917,563  

Less accumulated depreciation, depletion and amortization

   (156,313  (95,660
  

 

 

  

 

 

 

Property, plant and equipment, net

  $813,607   $821,903  
  

 

 

  

 

 

 

   2013  2012 

Land (mineral bearing) and asset retirement costs

  $107,007   $106,135  

Land (non-mineral bearing)

   81,331    69,560  

Buildings and improvements

   77,535    78,168  

Plants, machinery and equipment

   680,942    623,949  

Truck and auto fleet

   19,165    19,399  

Landfill airspace and improvements

   46,841    46,841  

Construction in progress

   29,560    20,734  

Other

   1,779    5,134  
  

 

 

  

 

 

 

Property, plant and equipment

   1,044,160    969,920  

Less accumulated depreciation, depletion and amortization

   (212,382  (156,313
  

 

 

  

 

 

 

Property, plant and equipment, net

  $831,778   $813,607  
  

 

 

  

 

 

 

Depreciation, depletion and amortization expense of property, plant and equipment was $71.4 million, $68.6 million $61.8 million and $34.7$61.8 million for the years ended December 28, 2013, December 29, 2012 and December 31, 2011, and December 31, 2010, respectively.

Property, plant and equipment at year-end 2013 and 2012 and 2011 include $3.1$11.3 million (net of $0.2$1.3 million accumulated amortization) and $3.3$3.1 million (net of $0.2 million accumulated amortization), respectively, of capital leases for certain equipment and a building. Approximately $0.4$2.1 million of the future obligations associated with the capital leases are included in accrued expenses and the present value of the remaining future capital lease payments is included in other noncurrent liabilities on the consolidated balance sheets. Future minimum rental commitments under long-term capital leases over the next five years as of December 29, 2012 are $2.1 million, $1.1 million, $2.9 million, $0.4 million annually.

(7)Investments in Affiliates

Summit’s investments in affiliates are accountedand $0.4 million for using the equity method. Summit’s share of the net income from affiliates was $0.7 million in 2012years ended 2014, 2015, 2016, 2017 and $0.9 million and $0.7 million of the net loss in 2011 and 2010, respectively, which is included in other (income) expense. Distributions from affiliates during 2012 were $0.7 million. No material distributions were made in 2011. In 2012, Summit sold its investment in Hinkle Meyer Environmental Services, LLC in conjunction with the sale of the environmental business. Investments in affiliates as of year-end 2012 and 2011 are as follows (in thousands):

   Ownership
percentage
  2012   Ownership
percentage
  2011 

Nally & Gibson, Georgetown, LLC

   50 $12,138     50 $12,027  

Carrollton River Terminal, LLC

   50  722     50  642  

The Rock Group, LLC

   50  129     50  245  

Hinkle Meyer Environmental

      

Services, LLC

   —      —       50  209  
   

 

 

    

 

 

 

Total

   $12,989     $13,123  
   

 

 

    

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 20112018, respectively.

(8)

(8) Debt

Debt as of year-end 20122013 and 20112012 are summarized as follows (in thousands):follows:

 

   2012   2011 

Borrowings on revolver facilities:

    

Current portion

  $—      $4,000  

Long-term portion

   —       57,000  
  

 

 

   

 

 

 

Total borrowings on revolver facilities

  $—      $61,000  
  

 

 

   

 

 

 

Long-term debt:

    

$250.0 million senior notes, net of $4.7 million discount

  $245,303    $—    

$400.0 million senior secured credit facility, net of $3.5 million discount

   394,540     —    

Summit I $400.0 million credit facility

   —       396,001  

Summit II:

    

$45.0 million term loan

   —       39,000  

Subordinated secured credit note

   —       100,000  

Unsecured note payable to related party

   —       12,980  
  

 

 

   

 

 

 

Total debt

   639,843     547,981  

Current portion of debt

   4,000     3,960  
  

 

 

   

 

 

 

Long-term debt

  $635,843    $544,021  
  

 

 

   

 

 

 

   2013   2012 

Senior secured revolving credit facility

  $26,000    $—    
  

 

 

   

 

 

 

Long-term debt:

    

$250.0 million senior notes, net of discount of $4.0 million at December 28, 2013 and $4.7 million at December 29, 2012

  $245,971    $245,303  

$419.9 million senior secured term loan credit facility, net of discount of $2.9 million at December 28, 2013 and $3.5 million at December 29, 2012

   417,016     394,540  
  

 

 

   

 

 

 

Total

   662,987     639,843  

Current portion of long-term debt

   4,220     4,000  
  

 

 

   

 

 

 

Long-term debt

  $658,767    $635,843  
  

 

 

   

 

 

 

Accrued interest expense on long-term debt as of year-end 2013 and 2012 and 2011 was $19.7$17.1 million and $3.7$19.7 million, respectively, and is included in accrued expenses on the consolidated balance sheets. The year-end 2012 balance includes accrued interest on the Senior Notes and the December 31 interest payment on the senior secured credit facility, both payable in January 2013.

As of December 29, 2012, the Company has no outstanding borrowings on the revolving credit commitments. The total contractual payments of long-term debt for the five years subsequent to December 29, 2012,28, 2013 are as follows (in thousands):follows:

 

2013

  $4,000  

2014

   4,000    $4,220  

2015

   4,000     4,220  

2016

   5,000     5,275  

2017

   4,000     4,220  

2018

   3,165  

Thereafter

   627,000     648,790  
  

 

   

 

 

Total

   648,000     669,890  

Less: Original issue discount

   8,157     (6,903
  

 

   

 

 

Total debt

  $639,843    $662,987  
  

 

   

 

 

January 2012 Financing Transactions

On January 30, 2012, Summit Materials and Summit Materials Finance Corp (collectively, the “Issuers”)Corp. issued $250.0 million aggregate principal amount of 10.5% Senior Notes due January 31, 2020 (“Senior Notes”) under an indenture dated January 30, 2012 (as amended and supplemented, the “Indenture”). Concurrently with the issuance ofIn addition to the Senior Notes, on January 30, 2012, Summit entered into a new senior securedthe Company has credit facility that providedfacilities which provide for term loans in an initial aggregate amount of $400.0$422.0 million and revolving credit commitments in an initial aggregate amount of $150.0 million (the “Senior Secured Credit Facility”Facilities”).

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Summit, along with all of its wholly-owned subsidiaries and its non wholly-owned subsidiary, Continental Cement, are named as guarantors of the Senior Secured Credit Facility and the Senior Notes. In addition, Summit has pledged substantially all of its assets and those of Continental Cement as collateral for the Senior Secured Credit Facility.

Proceeds from the Senior Notes and the Senior Secured Credit Facility were used primarily for (i) repayment of $451.0 million of borrowings under the existing credit facility, consisting of $396.0 million of term debt and $55.0 million of revolving credit facility debt, (ii) repayment of $142.7 million of secured debt of Continental Cement, (iii) repayment of $13.0 million due under a promissory note by and between Continental Cement and a related party, (iv) payment of $4.5 million of accrued interest related to the existing credit facility and the Continental Cement debt, (v) payment of $12.9 million of fees and (vi) $16.5 million to cash on hand. The refinancing of the pre-existing credit facility was partially accounted for as an extinguishment.

As a result, $9.5 million of deferred financing fees were charged to earnings in January 2012 and $15.0 million in deferred financing fees were recorded and are being amortized over the term of the debt using the effective interest method. The Company recognized $1.3 million of amortization on the original issuance discount in 2012. In addition, the debt was initially issued with an original issuance discount of $9.5 million, which was recorded as a reduction to debt in January 2012, and is being accreted with a charge to earningsas interest expense over the term of the debt. As a result of these transactions, $9.5 million of financing fees were charged to earnings in the year ended December 29, 2012.

Senior Notes—The $250.0 million Senior Notes bear interest at 10.5% per year, payable semi-annually in arrears; interest payments commenced on July 31, 2012. The Notes will mature on January 31, 2020.

At any time prior to January 31, 2015, the Issuers may redeem some or all of the Senior Notes at a redemption price equal to 110.500% of the principal amount thereof, plus accrued and unpaid interest. The redemption price decreases to 105.250%, 102.625% and 100.000% of the principal amount on January 31, 2016, January 31, 2017 and January 31, 2018 and thereafter, respectively.

Upon the occurrence of a change of control or upon the sale of certain assets in which Summit does not apply the proceeds as required, the holders of the Senior Notes will have the right to require the Issuers to make an offer to repurchase each holder’s Notes at a price equal to 101% (in the case of a change of control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest.

The Senior Notes containIndenture contains covenants limiting, among other things, Summitthe Company and the guarantorits restricted subsidiaries’ ability to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of Summit’sthe Company’s assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The Senior NotesIndenture also containcontains customary events of default. As of December 28, 2013 and December 29, 2012, Summitthe Company was in compliance with all covenants.

Senior Secured Credit Facility Facilities TheUnder the Senior Secured Credit Facility includes aFacilities, the Company has entered into term loan in the amount of $400.0loans totaling $422.0 million with a 6.0% interest rate and requiresrequired principal repayments of $1.0 million0.25% of term debt due on the last business day of each March, June, September and December, commencing in June 2012.December. In February 2013, the Company consummated a repricing, which included additional borrowings of $25.0 million, an interest rate reduction of 1.0% and a deferral of the March 2013 principal payment. The remainingunpaid principal balance is due in full on the maturity date, which is January 30, 2019.

The Senior Secured Credit Facility has revolving As a result of this repricing, $3.1 million of financing fees were charged to earnings in the year ended December 28, 2013. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. Our senior secured credit commitments of $150.0 million. Thefacilities include an uncommitted incremental facility that will allow us the option to increase the amount available under the term loan facility and/or the senior secured revolving credit facility matures on January 30, 2017. Borrowings under the Senior Secured Credit Facilityby (i) $135.0 million plus (ii) an additional amount so long as we are in pro forma compliance with a consolidated first lien net leverage ratio. The term loans bear interest per annum equal to, an applicable margin of 4.5% plus, at the Company’s option, either (i) a base rate determined by reference to the highest of (a) the Federal Fundsfederal funds rate plus 0.50%, (b) the prime rate of

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Bank of America, N.A. and (c) the British Bankers Association London Interbank Offered Rate (“LIBOR”) Rate plus 1.00%, subject to a base rate floor of 2.25%, plus an applicable margin of 2.75% for base rate loans, or (ii) a British Bankers Association LIBOR rate determined by reference to Reuters prior to the interest period relevant to such borrowing adjusted for certain additional costs.costs, subject to a LIBOR floor of 1.25% plus an applicable margin of 3.75% for LIBOR rate loans. The interest rate in effect at December 28, 2013 was 5.0%.

Under the Senior Secured Credit Facilities, the Company has revolving credit commitments of $150.0 million. The available borrowings under the revolving credit facility were reducedmatures on January 30, 2017 and bears interest per annum equal to, at the Company’s option, either (i) a base rate determined by $14.5reference 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 December 28, 2013 was 4.4%.

There was $26.0 million of irrevocable letters of credit issued to Summit. As of December 29, 2012, the Company has no outstanding balance under the revolver facility as of December 28, 2013, leaving remaining borrowing capacity of $105.7 million, which is net of $18.3 million of outstanding letters of credit. The outstanding letters of credit are renewed annually and $135.5 million was available for borrowings.

support required bonding on construction projects and the Company’s insurance liabilities.

The Senior Secured Credit Facility containsCompany must adhere to certain financial covenants related to its debt and interest leverage calculated based on definitions set forthratios, as defined in the agreement.Senior Secured Credit Facilities. The consolidated first lien net leverage ratio, reported each quarter, should be no greater than 4.75:1.0 through December 31, 2012; 4.25:1.0 from January 1, 2013 to Septemberthrough June 30, 2013; 4.00:2014; 4.50:1.0 from OctoberJuly 1, 2013 to December 31, 2014 through June 30, 2015, and 3.85:4.25:1.0 thereafter. The interest coverage ratio must be at least 1.75:1.0 from April 1, 2012 through December 31, 2012; 1.85:1.70:1.0 from January 1, 2013 tothrough December 31, 20132014 and 2.0:1.85:1.0 thereafter. As of December 28, 2013 and December 29, 2012, Summitthe Company was in compliance with all covenants.

A summary of the significant terms of the December 31, 2011 credit facilities, which were repaid with the January 30, 2012 transactions, follows:

Summit I

On February 1, 2010, Summit I entered into a credit agreement with a syndicate of banks secured by assets within The Company’s 100 percent-owned subsidiary companies and administered by Summit I. The original credit agreement provided for a four-and-a-half-year term loan with interest charged at a rate of 6.75% and a repayment of principal at a rate of 1% per annum payable quarterly. Summit I’s total borrowings under the original term loan were $136.4 million at February 1, 2010. On December 17, 2010, Summit I finalized an amendment to the credit agreement, which amended and restated the original facility (the “Amended Credit Agreement”). Under the Amended Credit Agreement, Summit I’s term loan borrowings increased to $400.0 million with a 6.5% interest rate and required principal repayments of 1% of term debt per annum which are payable quarterly. There were $11.0 million in capitalized loan fees associated with this transaction.

Summit I’s revolver facility increased from $50.0 million to $75.0 million with the Amended Credit Agreement. There are two classes within the facility: Class A matures on January 31, 2014 and makes up $17.5 million of the revolver facility, and Class B matures on January 31, 2015 and makes up $57.5 million of the facility. The available borrowings under the revolver facility remained reduced by $13.3 million irrevocable letters of credit issued to Summit I. The letters of credit were required by insurance carriers to secure surety bonds for certain construction contracts. There was a $61.0 million outstanding balance under the revolver facility as of December 31, 2011, which was repaid in conjunction with the January 2012 financing transaction.

Summit I must adhereits non wholly-owned subsidiary, Continental Cement, subject to certain financial covenants related to debtexclusions and interest leverage calculated based on definitions laid out in the amended credit agreement. As of December 31, 2011, Summit I was in compliance with all financial covenants.

Summit I, along with all its subsidiary companies, wereexceptions are named as subsidiary guarantors of the term loanSenior Notes and on the revolver facility.Senior Secured Credit Facilities. In addition, Summit I hadthe Company has pledged substantially all of its assets as collateral, subject to certain exclusions and exceptions, for the term loanSenior Secured Credit Facilities.

As of December 28, 2013 and revolver facility.

Summit II

Continental Cement, a subsidiary of Summit II, entered into its Second Amended and Restated Credit Agreement (“First Lien Credit Agreement”) on May 27, 2010 with its syndicate banks providing a term loan

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012, $11.5 million and December 31, 2011

commitment and revolving line$12.6 million, respectively, of credit facility, with swing line, and letter of credit sub-limit. Interest was charged on outstanding borrowings at increments of either, (a) the Base Rate, as defined in the credit agreement, plus 3.5% margin or (b) the greater of (i) 1.5% or (ii) the LIBOR plus 4.5% margin. Continental Cement has the option of selecting either rate but must have minimum levels and increments for selecting the LIBOR rate. Interest on funds borrowed at the Base Rate is payable quarterly, except the swing line which is paid monthly. Alternatively, interest on funds borrowed based on the LIBOR rate is payable in either one-, two-, three-, or nine-month intervals. Outstanding borrowingsdeferred financing fees were secured by substantially all of Continental Cement’s assets and all such commitments were set to expire on May 27, 2013. The revolving line of credit facility had $20.0 million available and included a $10.0 million sub-limit for standby letter of credits and a $2.0 million swingline sub-limit.

Continental Cement borrowed $45.0 million frombeing amortized over the term loan facility and repaid $6.0 million in optional principle payments during 2010. Under the terms of the First Lien Credit Agreement, Continental Cement was required to adhere to certain financial covenants related to debt andusing the effective interest leverage calculated based on definitions laid out in the First Lien Credit Agreement.method.

(9) Member’s Interest

On May 27, 2010, Continental Cement amended its Second Lien Credit Agreement with its subordinated lenders of the subordinated secured credit facility totalling $100.0 million. The Second Lien Credit Agreement provided for a term loan maturing August 28, 2013. The Second Lien Credit Agreement was subject to the same financial covenants in the First Lien Credit Agreement.

On May 27, 2010, the Company executed an unsecured note payable from a related party totalling $13.0 million. Payment including principal and interest were due in one lump-sum on May 30, 2015 subject to a subordination agreement requiredCompany’s membership interests are held by Continental Cement’s term loan.

(9)Member’s Interest

Parent. Business affairs of the Company are managed by the Board of Directors (“Board”) of Summit Materials Holdings, GP, Ltd., the general partner of Parent, which, isas of December 28, 2013, was composed of six directors. Directors of the Board are appointed by the unit holders of Summit Materials Holdings L.P.,Parent, which is the indirect sole member of the Company. Additional directors may be admitted to Summit with the written consent of Summit Materials Holdings L.P.

(10) Income Taxes

DuringFor the years ended December 31,2013, 2012 and 2011, and December 31, 2010, the Member of the Company contributed $103.6 million and $338.6 million, respectively, to Summit. No contributions were made during the year-ended December 29, 2012. Contributions are presented as member’s interest in the consolidated statements of changes in member’s interest.

(10)Income Taxes

As of year-end 2012, 2011 and 2010, income taxes consist of the following (in thousands):following:

 

   2012  2011  2010 

Provision for income taxes:

    

Current

  $(452 $5,382  $4,385 

Deferred

   (3,468  (1,974  (2,022
  

 

 

  

 

 

  

 

 

 

Income tax (benefit) expense

  $(3,920 $3,408  $2,363 
  

 

 

  

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

   2013  2012  2011 

Provision for income taxes:

    

Current

  $1,761   $(452 $5,382  

Deferred

   (4,408  (3,468  (1,974
  

 

 

  

 

 

  

 

 

 

Income tax (benefit) expense

  $(2,647 $(3,920 $3,408  
  

 

 

  

 

 

  

 

 

 

The effective tax rate on pre-tax income differs from the U.S. statutory rate due to the following (in thousands):following:

 

   2012  2011  2010 

Income tax provision (benefit) at federal statutory tax rate

  $(19,074 $(6,895 $(7,310

Book loss (income) not subject to income tax

   16,167    13,790   9,364 

State and local income taxes

   (90  666   241 

Depletion expense

   (377  (372  (377

Domestic production activities deduction

   —      (273  (213

Bargain purchase gain

   —     (4,250  —   

Effective rate change

   (532  627   —   

Valuation allowance

   36   (360  359 

Other

   (50)  475   299 
  

 

 

  

 

 

  

 

 

 

Income tax provision (benefit)

  $(3,920 $3,408  $2,363 
  

 

 

  

 

 

  

 

 

 

   2013  2012  2011 

Income tax benefit at federal statutory tax rate

  $(37,160 $(19,074 $(6,895

Book loss not subject to income tax

   32,801    16,167    13,790  

State and local income taxes

   130    (90  666  

Depletion expense

   (411  (377  (372

Domestic production activities deduction

   —      —      (273

Goodwill impairment

   1,046    —      —    

Bargain purchase gain

   —      —      (4,250

Effective rate change

   —      (532  627  

Valuation allowance

   729    36    (360

Other

   218    (50  475  
  

 

 

  

 

 

  

 

 

 

Income tax (benefit) provision

  $(2,647 $(3,920 $3,408  
  

 

 

  

 

 

  

 

 

 

The following table summarizes the components of the net deferred income tax liability as of year-end 20122013 and 2011 (in thousands):2012:

 

   2012  2011 

Deferred tax assets (liabilities):

   

Mining reclamation reserve

  $1,449  $865 

Accelerated depreciation

   (34,733  (41,892

Net operating loss

   2,134   1,037 

Capital losses on securities

   989    1,734 

Landfill closure reserve

   (30  92 

Working capital (e.g., accrued compensation, prepaid assets)

   3,101    3,189 
  

 

 

  

 

 

 

Defered tax liabilities, net

   (27,090  (34,975

Less valuation allowance on loss carryforwards

   (1,025  (1,010
  

 

 

  

 

 

 

Total

  $(28,115 $(35,985
  

 

 

  

 

 

 

Included in accompanying consolidated balance sheets under the following captions:

   

Current asset — deferred income taxes

  $2,275  $2,426 

Other noncurrent liability

   (30,390  (38,411
  

 

 

  

 

 

 

Total

  $(28,115 $(35,985
  

 

 

  

 

 

 

   2013  2012 

Deferred tax assets (liabilities):

   

Mining reclamation reserve

  $1,502   $1,449  

Accelerated depreciation

   (33,146  (34,733

Net operating loss

   2,227    2,134  

Capital losses on securities

   997    989  

Landfill closure reserve

   (63  (30

Working capital (e.g., accrued compensation, prepaid assets)

   2,399    3,101  
  

 

 

  

 

 

 

Deferred tax liabilities, net

   (26,084  (27,090

Less valuation allowance on loss carryforwards

   (1,826  (1,025
  

 

 

  

 

 

 

Total

  $(27,910 $(28,115
  

 

 

  

 

 

 

Included in accompanying consolidated balance sheets under the following captions:

   

Other current assets

  $2,316   $2,275  

Other noncurrent liability

   (30,226  (30,390
  

 

 

  

 

 

 

Total

  $(27,910 $(28,115
  

 

 

  

 

 

 

In assessing the realizability of deferred tax assets as of year-end 20122013 and 2011,2012, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. 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 (including the impacteffect of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment. Management anticipates the deferred income tax asset related to losses on securities and net operating losses will not be fully utilized before their expiration in 2014; therefore, a valuation allowance has been recorded as of year-end 20122013 and 2011.2012. In 2011, $0.8 million of capital loss was carried back for a tax benefit recovery of $0.3 million. The remaining capital loss of $1.0 million is not expected to be utilized

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

prior to expiration in 2014;utilized; therefore, the remaining balance has been fully reserved in the valuation allowance as of year-end 2012.2013. At December 29, 2012,28, 2013, the Company has net operating loss carryforwards for Federalfederal and state income tax purposes of $2.0$5.2 million and $0.1$0.7 million, respectively, which are available to offset future Federalfederal and state taxable income, if any, through 2032.

2033.

Summit Materials does not have any uncertain tax positions as of December 29, 2012.28, 2013. Tax years from 20092010 to 20112013 remain open and subject to audit by Federalfederal and state tax authorities. No income tax expense or benefit was recognized in other comprehensive loss in 2013, 2012 2011 or 2010.2011.

(11)(11) Employee Benefit Plans

Deferred Compensation Plan—The Company sponsors employee 401(k) savings plans for all salaried employees and certain union employees. The plans provide for various required and discretionary Company matches of employees’ eligible compensation contributed to the plans. The expense for all defined contribution plans amounted to $2.3 million, $2.2 million $1.9 million and $0.8$1.9 million for the years ended December 28, 2013, December 29, 2012 and December 31, 2011, and December 31 2010, respectively.

Defined Benefit and Other Postretirement Benefits Plans One of theThe Company’s subsidiaries,subsidiary, Continental Cement, sponsors two noncontributory defined benefit pension plans for hourly and salaried employees. The salarysalaried employee pension plan was closed to new participants and frozen in January 2000 and the hourly employee pension plan was closed to new participants in May 2003.2003 and frozen in January 2014. Pension benefits for certain eligible hourly employees are based on a monthly pension factor for each year of credited service. Pension benefits for certain eligible salaried employees are generally based on years of service and average eligible compensation.

Continental Cement also sponsors unfunded healthcare and life insurance benefits plan for certain eligible retired employees, which are not funded.employees. Effective January 1, 2012, the Company eliminated all future retiree health and life coverage for active salaried, nonunion hourly and certain union employees that retire on or after January 1, 2012. This change inEffective January 1, 2014, the other postretirement benefit plans resulted in a $1.7 million reduction inplan was amended to eliminate all future retiree health and life coverage for the December 31, 2011 accumulated benefit obligations.

remaining union employees.

The funded status of the pension and other postretirement benefit plans is recognized in the consolidated balance sheets as the difference between the fair value of plan assets and the benefit obligations. For defined benefit pension plans, the benefit obligation is the projected benefit obligation (“PBO”) and for the other postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation (“APBO”). The PBO represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels. However, since the plans’ participants are not subject to future compensation increases, the plans’ PBO equals the APBO. The APBO represents the actuarial present value of postretirement benefits attributed to employee services already rendered. The fair value of plan assets represents the current market value of assets held by an irrevocable trust fund for the sole benefit of participants. The measurement of the benefit obligations are based on the Company’s estimates and actuarial valuations. These valuations reflect the terms of the plan and use participant-specific information, such as compensation, age and years of service, as well as certain assumptions that require significant judgment, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest-crediting rates and mortality rates.

The Company uses its fiscal year-end as the measurement date for its defined benefit pension plans and for its other postretirement benefit plans.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Obligations and Funded Status—The following information is as of year-end 2013 and 2012 and 2011 (in thousands):for the years ended December 28, 2013, December 29, 2012 and December 31, 2011:

 

   2012  2011 
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
 

Change in benefit obligations:

     

Beginning of period

  $26,514   $14,467   $23,732   $13,110  

Service cost

   276    207    275    227  

Interest cost

   1,056    585    1,161    710  

Actuarial loss

   2,347    1,597    2,710    3,390  

Change in plan provisions

   —      —      —      (1,705

Benefits paid

   (1,518  (1,046  (1,364  (1,265
  

 

 

  

 

 

  

 

 

  

 

 

 

End of period

   28,675    15,810    26,514    14,467  
  

 

 

  

 

 

  

 

 

  

 

 

 

Change in plan assets:

     

Fair value of assets at beginning of period

   16,639    —      16,531    —    

Actual return on plan assets

   1,205    —      43    —    

Employer contributions

   1,537    1,046    1,428    1,265  

Benefits paid

   (1,518  (1,046  (1,363  (1,265
  

 

 

  

 

 

  

 

 

  

 

 

 

Fair value of assets at end of period

   17,863    —      16,639    —    
  

 

 

  

 

 

  

 

 

  

 

 

 

Liability recognized

  $10,812  $15,810  $9,875  $14,467 
  

 

 

  

 

 

  

 

 

  

 

 

 

Approximately $1.1 million and $1.0 million of the obligation for postretirement benefits is included in current liabilities as of year-end 2012 and 2011, respectively.

   2012  2011 
   Pension
benefits
   Other
benefits
  Pension
benefits
   Other
benefits
 

Amounts recognized in accumulated other comprehensive income:

       

Net actuarial loss

  $8,056    $5,501   $5,875    $4,213  

Prior service cost

   —       (1,526  —       (1,705
  

 

 

   

 

 

  

 

 

   

 

 

 

Total amount recognized

  $8,056    $3,975   $5,875    $2,508  
  

 

 

   

 

 

  

 

 

   

 

 

 

   2013  2012 
   Pension  Other  Pension  Other 
   benefits  benefits  benefits  benefits 

Change in benefit obligations:

     

Beginning of period

  $28,674   $15,810   $26,514   $14,467  

Service cost

   295    236    276    207  

Interest cost

   963    513    1,055    585  

Actuarial (gain) loss

   (2,674  (1,048  2,347    1,597  

Special termination benefits

   —      39    —      —    

Benefits paid

   (1,614  (1,395  (1,518  (1,046
  

 

 

  

 

 

  

 

 

  

 

 

 

End of period

   25,644    14,155    28,674    15,810  
  

 

 

  

 

 

  

 

 

  

 

 

 

Change in fair value of plan assets:

     

Beginning of period

   17,863    —      16,639    —    

Actual return on plan assets

   1,512    —      1,205    —    

Employer contributions

   1,313    1,395    1,537    1,046  

Benefits paid

   (1,614  (1,395  (1,518  (1,046
  

 

 

  

 

 

  

 

 

  

 

 

 

End of period

   19,074    —      17,863    —    
  

 

 

  

 

 

  

 

 

  

 

 

 

Funded status of plans

  $(6,570 $(14,155 $(10,811 $(15,810
  

 

 

  

 

 

  

 

 

  

 

 

 

Current liabilities

  $—     $(1,268 $—     $(1,055

Noncurrent liabilities

   (6,570  (12,887  (10,811  (14,755
  

 

 

  

 

 

  

 

 

  

 

 

 

Liability recognized

  $(6,570 $(14,155 $(10,811 $(15,810
  

 

 

  

 

 

  

 

 

  

 

 

 

Amounts recognized in accumulated other comprehensive income:

     

Net actuarial loss

  $4,831   $4,139   $8,056   $5,501  

Prior service cost

   —      (1,346  —      (1,526
  

 

 

  

 

 

  

 

 

  

 

 

 

Total amount recognized

  $4,831   $2,793   $8,056   $3,975  
  

 

 

  

 

 

  

 

 

  

 

 

 

The amount recognized in accumulated other comprehensive income (“AOCI”) is the actuarial loss and prior service cost, which has not yet been recognized in periodic benefit cost, adjusted for amounts allocated to the redeemable noncontrolling interest. At December 29, 2012,28, 2013, the actuarial loss expected to be amortized from AOCI to periodic benefit cost in 20132014 is $0.4$0.1 million and $0.2 million for the pension and postretirement obligations, respectively.

 

  2013  2012  2011 
  Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
 

Amounts recognized in other comprehensive (gain) loss:

      

Net actuarial (gain) loss

 $(2,838 $(1,048 $2,444   $1,597   $4,066   $3,390  

Prior service cost

  —      180    —      —      —      (1,705

Amortization of prior year service cost

  —      —      —      180    —      —    

Amortization of (gain) loss

  (387  (314  (261  (312  (5  (71
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total amount recognized

 $(3,225 $(1,182 $2,183   $1,465   $4,061   $1,614  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Components of net periodic benefit cost:

      

Service cost

 $295   $236   $276   $207   $275   $227  

Interest cost

  963    513    1,055    585    1,161    710  

Amortization of loss

  387    314    262    312    5    69  

Expected return on plan assets

  (1,348  —      (1,301  (180  (1,400  —    

Special termination benefits

  —      39    —      —      —      —    

Amortization of prior service credit

  —      (180  —      —      —      —    
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net periodic benefit cost

 $297   $922   $292   $924   $41   $1,006  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

   Year-end 2012  Year-end 2011  Year-end 2010 
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
  Pension
benefits
   Other
benefits
 

Amounts recognized in other comprehensive loss:

        

Net actuarial loss

  $2,444  $1,597  $4,066  $3,390  $1,814   $894 

Prior service cost

   —       —      (1,705  —       —    

Amortization of prior year service cost

   —      180   —      —      —       —    

Amortization of loss

   (261  (312  (5  (71  —       —    
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

Total amount recognized

  $2,183  $1,465  $4,061  $1,614  $1,814   $894 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

 

   Year-end
2012
  Year-end
2011
   Year-end
2010
 
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
   Pension
benefits
  Other
benefits
 

Components of net periodic benefit cost:

        

Service cost

  $276   $207   $275   $227    $121   $116  

Interest cost

   1,056    585    1,161    710     677    380  

Amortization of loss

   261    312    5    69     —      —    

Expected return on plan assets

   (1,301  (180  (1,400  —       (788  —    
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net periodic benefit cost

  $292   $924   $41   $1,006    $10   $496  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Assumptions —Assumptions—Weighted-average assumptions used to determine the benefit obligations as of year-end 2013 and 2012 are:

 

   2012   2011 
   Pension
benefits
   Other
benefits
   Pension
benefits
   Other
benefits
 

Discount rate

   3.30% – 3.57%     3.41%     3.89% – 4.07%     4.00%  
  2013 2012
  Pension
benefits
 Other
benefits
 Pension
benefits
 Other
benefits

Discount rate

 4.21% - 4.46% 4.33% 3.30% - 3.57% 3.41%

Expected long-term rate of return on plan assets

 7.50% N/A 7.50% N/A

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 28, 2013, December 29, 2012 and December 31, 2011:

 

   2013  2012  2011
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits

Discount rate

  3.30% - 3.57%  3.41%  3.89% - 4.07%  4.00%  4.94% - 5.12.%  5.07%

Expected long-term rate of return on plan assets

  7.50%  N/A  7.50%  N/A  8.50%  N/A

The expected long-term return on plan assets is based upon the Plans’ consideration of historical and forward-looking returns and the Company’s estimation of what a portfolio, with the target allocation described below, will earn over a long-term horizon. The discount rate is derived using the Citigroup Pension Discount Curve.

Weighted-average assumptions used to determine net periodic benefit cost for the period are:

   Year-end
2012
   Year-end
2011
 
   Pension
benefits
   Other
benefits
   Pension
benefits
   Other
benefits
 

Discount rate

   3.89% – 4.07%     4.00%     4.94% – 5.12%     5.07%  

Expected long-term rate of return on plan assets

   7.50%     NA     8.50%     NA  

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Assumed health care cost trend rates are 9% grading to 7% and 7%9% grading to 5%7% as of year-end 20122013 and 2011,2012, respectively. Assumed health care cost trend rates have a significant effect on the amounts reported for the Company’s post retirement medical and life plans. A one percentage-point change in assumed health care cost trend rates would have the following effects (in thousands):as of year-end 2013 and 2012:

 

  2012 2011   2013 2012 
  Increase   (Decrease) Increase   (Decrease)   Increase   Decrease Increase   Decrease 

Total service cost and interest cost components

  $73    $(63 $93    $(77  $66    $(55 $73    $(63

Estimated APBO

   1,555     (1,331  1,348     (1,145   1,251     (1,073 1,555     (1,331

Plan Assets—The defined benefit pension plans’ (the “Plans”) investment strategy is to minimize investment risk while generating acceptable returns. The Plans currently invest a relatively high proportion of the plan assets in fixed income securities, while the remainder is invested in equity securities.securities, cash reserves and precious metals. The equity securities are diversified into funds with growth and value investment strategies. The target allocation for plan assets is as follows: equity securities – securities—30%; fixed income securities –65%securities—63%; cash reserves—5%; and cash reserves –5%precious metals—2%. The Plans’ current investment allocations are within the tolerance of the target allocation. The Company hashad no levelLevel 3 investments as of or for the years-endedyears ended December 28, 2013 and December 29, 2012 and December 31, 2011.

2012.

At year-end 2013 and 2012, and 2011, the trust wasPlans’ assets were invested largelypredominantly in fixed-income securities and publicly traded equities, and fixed-income securities, but may invest in other asset classes in the future consistent with oursubject to the parameters of the investment policy. The Plans’ investments in equity assets include U.S. and international securities and equity funds. The Plans’ investments in fixed-income assets include U.S. Treasury and U.S. agency securities and corporate bonds. Retirement planThe Plans’ investments in equity assets are reported at fair value at each measurement date.include U.S. and international securities and equity funds. The Company estimates the fair value of the Plans’ assets using various valuation techniques and, to the extent available, quoted market prices in active markets or observable market inputs are used in estimating the fair value of the Plans’ assets.inputs. The descriptions and fair value methodologies for the Plans’ assets are as follows:

Cash— The carrying amounts of cash approximate fair value due to the short-term maturity.

Equity Securities — Equity securities are valued at the closing market price reported on a U.S. exchange where the security is actively traded and are therefore classified as Level 1 assets.

Fixed Income Securities—Corporate and government bonds are classified as Level 2 assets, as they are either valued at quoted market prices from observable pricing sources at the reporting date or valued based upon comparable securities with similar yields and credit ratings.

SUMMIT MATERIALS, LLC AND SUBSIDIARIESEquity Securities—Equity securities are valued at the closing market price reported on a U.S. exchange where the security is actively traded and are therefore classified as Level 1 assets.

Cash—The carrying amounts of cash approximate fair value due to the short-term maturity.

Notes to Consolidated Financial Statements

December 29, 2012Precious Metals—Precious metals are valued at the closing market price reported on a U.S. exchange where the security is actively traded and December 31, 2011

are therefore classified as Level 1 assets.

The fair value of the Company’s pension plans’ assets by asset class and fair value hierarchy level as of year-end 20122013 and 20112012 are as follows (in thousands):follows:

 

  Fair value measurements at year-end 2012   2013 
  Total
fair
value
   Quoted prices in
active markets for
identical assets
(Level 1)
   Observable
inputs
(Level 2)
   Total fair
value
   Quoted prices in active
markets for identical
assets (Level 1)
   Observable
inputs (Level 2)
 

Cash

  $1,656    $1,656    $—    

Fixed income securities:

      

Intermediate—government

  $1,647    $—      $1,647  

Intermediate—corporate

   3,138     —       3,138  

Short-term—government

   2,168     —       2,168  

Short-term—corporate

   4,040     —       4,040  

Equity securities:

            

U.S. Large cap value

   1,063     1,063     —       1,221     1,221     —    

U.S. Large cap growth

   1,037     1,037     —       1,536     1,536     —    

U.S. Mid cap value

   542     542     —       600     600     —    

U.S. Mid cap growth

   536     536     —       603     603     —    

U.S. Small cap value

   546     546     —       610     610     —    

U.S. Small cap growth

   539     539     —       599     599     —    

International

   1,134     1,134     —       889     889     —    

Fixed income securities:

      

Intermediate-government

   1,247     —       1,247  

Intermediate-corporate

   4,402     —       4,402  

Short term-government

   2,038     —       2,038  

Short term-corporate

   3,123     —       3,123  

Cash

   1,665     1,665     —    

Precious metals

   358     358     —    
  

 

   

 

   

 

   

 

   

 

   

 

 

Total

  $17,863    $7,053    $10,810    $19,074    $8,081    $10,993  
  

 

   

 

   

 

   

 

   

 

   

 

 

 

  Fair value measurements at year-end 2011   2012 
  Total
fair
value
   Quoted prices in
active markets for
identical assets
(Level 1)
   Observable
inputs
(Level 2)
   Total
fair
value
   Quoted prices in active
markets for identical
assets (Level 1)
   Observable
inputs (Level 2)
 

Cash

  $1,217    $1,217    $—    

Fixed income securities:

      

Intermediate—government

  $1,247    $—      $1,247  

Intermediate—corporate

   4,402     —       4,402  

Short-term—government

   2,038     —       2,038  

Short-term—corporate

   3,123     —       3,123  

Equity securities:

            

U.S. Large cap value

   1,399     1,399     —       1,063     1,063     —    

U.S. Large cap growth

   1,388     1,388     —       1,037     1,037     —    

U.S. Mid cap value

   700     700     —       542     542     —    

U.S. Mid cap growth

   687     687     —       536     536     —    

U.S. Small cap value

   701     701     —       546     546     —    

U.S. Small cap growth

   705     705     —       539     539     —    

International

   1,378     1,378     —       1,134     1,134     —    

Fixed income securities:

      

Intermediate-government

   1,100     —       1,100  

Intermediate-corporate

   2,418     —       2,418  

Short term-government

   2,067     —       2,067  

Short term-corporate

   2,879     —       2,879  

Cash

   1,656     1,656     —    
  

 

   

 

   

 

   

 

   

 

   

 

 

Total

  $16,639    $8,175    $8,464    $17,863    $7,053    $10,810  
  

 

   

 

   

 

   

 

   

 

   

 

 

Cash Flows—The Company expects to contribute approximately $1.0 million and $1.3 million in 2014 to its pension plans and $1.1 million to its other postretirement benefit plans, in 2013.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

respectively.

The estimated benefit payments for each of the next five years and the five-year period thereafter are as follows (in thousands):follows:

 

  Pension
benefits
   Other
benefits
   Pension
benefits
   Other
benefits
 

2013

  $1,718    $1,055  

2014

   1,707     1,113    $1,694    $1,269  

2015

   1,715     1,022     1,704     1,109  

2016

   1,748     1,079     1,739     1,130  

2017

   1,744     945     1,737     963  

2018–2022

   8,738     4,724  

2018

   1,774     1,018  

2019 - 2023

   8,667     4,512  
  

 

   

 

   

 

   

 

 

Total

  $17,370    $9,938    $17,315    $10,001  
  

 

   

 

   

 

   

 

 

(12)(12) Accrued Mining and Landfill Reclamation

The Company has asset retirement obligations arising from regulatory requirements to perform certain reclamation activities at the time that certain quarries and landfills are closed.closed, which are primarily included in other noncurrent liabilities on the consolidated balance sheets. The current portion of the liabilities, $0.5 million and $0.4 million as of December 28, 2013 and December 29, 2012, respectively, is included in accrued and other liabilities on the consolidated balance sheets. The liability was initially measured at fair value and subsequently is adjusted for accretion expense, payments and changes in the amount or timing of the estimated cash flows. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s remaining useful life. The following table presents the activity for the asset retirement obligations for the years-endedyears ended December 28, 2013 and December 29, 2012 and December 31, 2011 (in thousands):2012:

 

  2012 2011   2013 2012 

Beginning balance

  $13,328   $13,766    $14,844   $13,328  

Acquired obligations

   364    1,884     286   364  

Change in cost estimate

   604    (4,530   721   604  

Settlement of reclamation obligations

   (77  (993   (1,201 (77

Additional liabilities incurred

   —      2,511     414    —    

Accretion expense

   625    690     717   625  
  

 

  

 

   

 

  

 

 

Ending balance

  $14,844   $13,328    $15,781   $14,844  
  

 

  

 

   

 

  

 

 

(13) Commitments and Contingencies

In 2011, the Company received an interpretation of the landfill reclamation requirements from the State of Kansas, which resulted in an approximate $4.5 million reduction to the post-closure liabilities. This adjustment, after reducing the related asset retirement landfill asset to zero, was included in cost of revenue for the year-ended December 31, 2011.

(13)Commitments and Contingencies

Litigation and Claims—Summit Materials is party to certain legal actions arising from the ordinary course of business activities. In the opinion of management, these actions are without merit or the ultimate disposition, if any, resulting from them will not have a material effect on Summit’sSummit Materials’ consolidated financial position, results of operations or liquidity. Summit’sSummit Materials’ policy is to record legal fees as incurred.

Environmental Remediation — Summit’s mining operations are subject to and affected by Federal, state 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. Summit regularly monitors and reviews its operations, procedures and policies for compliance

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

with these laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of Summit’s business, as it is with other companies engaged in similar businesses and there can be no assurance that environmental liabilities will not have a material adverse effect on Summit’s consolidated financial position, results of operations or liquidity.

On July 11, 2006, the Company received a construction permit for a new kiln system for the cement plant to replace the current system at that time. The new kiln began shakedown operations in 2008 and is operating under the Hazardous Waste Combustor National Emission Standards for Hazardous Air Pollutants (“NESHAP”). Continental Cement performed the required Comprehensive Performance Test in 2009/2010 and submitted the Notification of Compliance (“NOC”) to the regulatory agencies. In 2012, the Company tested and passed the required Confirmatory Performance Test and submitted an amended NOC at that time. The next required Confirmatory Performance Test will be in 2015. Summit applied for renewal of their Part 70 Operating Permit in 2010 and received the permit on September 22, 2011. This permit encompasses all active construction permits and general operating requirements for the entire plant, and will remain in effect for five years.

On October 14, 1999, the Missouri Dept. of Natural Resources (“MDNR”) and the EPA granted the company a Final Hazardous Waste Management Facility Permit that authorizes the Company to handle, treat, store, recover energy from and dispose of hazardous waste as a supplemental fuel source (RCRA Part B Permit). This permit also incorporated certain Boiler and Industrial Furnace (“BIF”) regulation emission limits and operating parameters that the company was subject to prior to the Hazardous Waste Combustor Maximum Achievable Control Technology standards. On October 13, 2009, a permit renewal application was submitted to MDNR. The application was accepted as complete and MDNR annually issues a notification that the Company can operate under the original permit until review of the renewal is complete. MDNR has delayed review of the renewal application until the agency revises their Health Profile regulations. MDNR has authorized the company to operate under interim status. Once the permit renewal is approved, the renewal will cover another ten-year period.

OtherThe 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’ ownership interests in a joint venture agreement. Summit Materials 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 has incurred significant losses on a highway project in Utah, which have resulted in requests for funding from the joint venture partners and ultimately from the Company. Through year-end 2012,2013, the Company has funded $8.8 million, $4.0 million in

2012 and $4.8 million in 2011. In 2012 and 2011, the Company recognized losses on the indemnification agreement of $8.0 million and $1.9 million, respectively, which are included in general and administrative expenses. As of year endyear-end 2013 and 2012, and 2011, accrualsan accrual of $4.3 million and $0.3 million, respectively, werewas recorded in other noncurrent liabilities as management’s best estimate of future funding obligations.

In February 2011, Continental Cementthe Company incurred a property loss related to a sunken barge with cement product aboard. At which time,In the year-ended December 28, 2013, the Company recognized a loss$0.8 million of $0.6 millioncharges for the lost product aboard the barge and property.costs to remove the barge from the waterway. As of December 28, 2013 and December 29, 2012, the Company has a $0.9 million accrualis included in accrued expenses as management’s best estimate of the remaining costs to remove the barge.

Environmental Remediation—Summit Materials’ mining operations are subject to and affected by federal, state 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. Summit Materials 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 estimated reclamation costs. Any insurance recoveries from the lossoperation of Summit Materials’ business, as it is with other companies engaged in similar businesses and there can be no assurance that environmental liabilities will be recognized when probable.not have a material adverse effect on Summit Materials’ consolidated financial position, results of operations or liquidity.

OtherDuring the course of business, there may be revisions to project costs and conditions that can give rise to change orders. Revisions can also result in claims we might make against the customer or a subcontractor to recover project variances that have not been satisfactorily addressed through change orders with the customer. As of year-end 20122013 and 2011,2012, unapproved change orders and claims arewere $3.2 million ($0.5 million in costs and estimated earnings in excess of billings and $2.7 million in other assets) and $4.8 million ($1.6 million in costs and estimated earnings in excess of billings and $3.2 million in other assets) and $4.7 million ($0.4 million in accounts receivable, $1.1 million in costs and estimated earnings in excess of billings and $3.2 million in other assets), respectively.

SUMMIT MATERIALS, LLC AND SUBSIDIARIESThe Company is obligated under various firm purchase commitments for certain raw materials and services that are in the ordinary course of business. 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, and cash flows of the Company. The terms of the purchase commitments are generally less than one year.

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

(14)(14) Related-Party Transactions

The Company incurred management fees paid to Blackstone Management Partners L.L.C. (“BMP”) totaling $2.6 million, $2.1 million and $3.0 million in 2013, 2012 and $2.5 million in 2012, 2011, and 2010, respectively, under terms of an agreement dated July 30, 2009, between Summit Materials Holdings L.P.Parent and BMP. Under the terms of the agreement, BMP is permitted to, and has, assigned a portion of the fees to which it is entitled to receive to Silverhawk Summit, L.P. and to certain members of management. The fees were paid for consultancy services related to acquisition activities and are included in general and administrative expenses.

The Company purchased equipment from a noncontrolling member of Continental Cement for approximately $2.3 million, inclusive of $0.1 million of interest, in 2011, which was paid for in 2012.

Summit Materials earned revenue of $0.6 million, $7.9 million $8.6 million and $8.5$8.6 million and incurred costs of $0.2 million, $0.7$0.2 million and $1.1$0.7 million in connection with several transactions with unconsolidated affiliates for the years ended December 29, 2012, December 31, 2011 and December 31, 2010, respectively. As of28, 2013, December 29, 2012 and December 31, 2011, respectively. As of December 28, 2013 and December 29, 2012, accounts receivable from affiliates was $1.9$0.4 million and $1.1$1.9 million, respectively, and accounts payable to affiliates was zero and $0.2 million, and $2.2 million, respectively.

Cement sales to companies owned by certain noncontrolling members of Continental Cement were approximately $12.7 million, $12.5 million $9.5 million and $9.0$9.5 million for the years ended December 28, 2013, December 29, 2012 December 2011 and December 31, 2010,2011, respectively, and accounts receivablesreceivable due from these parties were approximately $1.0$0.2 million and $1.3$1.0 million as of December 28, 2013 and December 29, 2012, and December 2011, respectively.

TheAs of year-end 2013 and 2012, the Company oweshad accrued interest payments of $0.7 million and $2.1 million, respectively, due to a certain noncontrolling member of Continental Cement for accrued interest on a related partyrelated-party note, which is expected to be fully settled bypaid in 2014. The principal balance on the note was repaid as part of the January 2012 financing transactions.

Lease payments of $1.0 million, $0.4 million and $0.2 million were made to related parties for the years ended December 29, 2012, December 2011 and December 31, 2010, respectively.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

(15)(15) Acquisition-Related Costs and Liabilities

A number of acquisition-related liabilities have been recorded subject to terms in the relevant purchase agreements. There are three main categories of such obligations, deferred consideration, noncompete payments and earn-out obligations. Noncompete payments have been accrued where certain former owners of newly acquired companies have entered into standard noncompete arrangements. Subject to terms and conditions stated in these noncompete agreements, payments are generally made over a five-year period. Deferred consideration is purchase price consideration paid in the future as agreed to in the purchase agreement and is not contingent on future events. Deferred consideration is scheduled to be paid in years ranging from 5 to 20 years in either monthly, quarterly or annual installments. The remaining payments due under these noncompete and deferred consideration agreements are as follows (in thousands):follows:

 

2013

  $8,779  

2014

   8,528  

2015

   4,545  

2016

   3,790  

2017

   3,790  

Thereafter

   13,254  
  

 

 

 

Total scheduled payments

   42,686  

Present value adjustments

   (11,896
  

 

 

 

Total noncompete obligations and deferred consideration

  $30,790  
  

 

 

 

2014

  $10,790  

2015

   6,742  

2016

   5,950  

2017

   5,910  

2018

   5,370  

Thereafter

   9,963  
  

 

 

 

Total scheduled payments

   44,725  

Present value adjustments

   (12,242
  

 

 

 

Total noncompete obligations and deferred consideration

  $32,483  
  

 

 

 

Accretion on the deferred consideration and noncompete obligations is charged torecorded in interest expense.

Certain acquisitions require purchase consideration if specified operating results are achieved. The changes to earn-out obligations as of year-end 2012 and 2011 are as follows (in thousands):

   2012  2011 

Beginning balance

  $3,278   $13,622  

Payments

   (215  —    

Revaluation

   (409  (10,344
  

 

 

  

 

 

 

Ending balance

  $2,654   $3,278  
  

 

 

  

 

 

 

Current portion of earn-out obligations

  $746   $1,155  

Long-term portion of earn-out obligations

   1,908    2,123  
  

 

 

  

 

 

 

Total earn-out obligations

  $2,654   $3,278  
  

 

 

  

 

 

 

(16)(16) Supplemental Cash Flow Information

Supplemental cash flow information for year-end 2012, 2011 and 2010 is as follows (in thousands):

   2012  2011  2010 

Cash payments:

    

Interest

  $36,357   $41,790   $36,862  

Income taxes

   799    5,608    5,755  

Noncash investing activities:

    

Acquisitions

  $(10,595 $(27,815 $(177,859

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

the years ended December 28, 2013, December 29, 2012 and December 31, 2011

is as follows:

 

(17)
   2013   2012   2011 

Cash payments:

      

Interest

  $52,001    $36,357    $41,790  

Income taxes

   457     799     5,608  

(17) Leasing Arrangements

Rent expense, including short-term rentals, during the years ended December 28, 2013, December 29, 2012 and December 31, 2011 and December 31, 2010 was $4.0 million, $3.5 million and $4.3 million, and $4.2 million, respectively.

Minimum rental commitments under long-term operating leases, which primarily relate to land, plant and equipment as of December 29, 2012, are as follows (in thousands):

2013

  $3,614  

2014

   2,807  

2015

   2,385  

2016

   1,745  

2017

   1,350  

The Company has lease agreements associated with quarry facilities under which royalty payments are made. The payments are generally based on tons sold in a particular period; however, certain agreements have minimum annual payments. Royalty expense recorded in cost of revenue in forduring the years ended December 28, 2013, December 29, 2012 and

December 31, 2011 and December 31, 2010 werewas $4.5 million, $3.9 million and $3.1 million, respectively. Minimum contractual commitments under long-term operating leases, which primarily relate to land, plant and $1.0 million, respectively. Future contractual minimum commitmentsequipment and under royalty agreements as of December 29, 201228, 2013, are as follows (in thousands):follows:

 

2013

  $1,593  
  Operating
Leases
   Royalty
Agreements
 

2014

   1,586    $4,034    $2,044  

2015

   1,621     3,890     2,065  

2016

   1,585     3,098     1,974  

2017

   1,659     2,376     2,047  

2018

   1,983     1,434  

(18)(18) Redeemable Noncontrolling Interest

The Company owns 100 Class A Units of Continental Cement, which represent aan approximately 70% economic interest in Continental Cement and have a preference in liquidation to the Class B Units. Continental Cement issued 100,000,000 Class B Units in May 2010, which remain outstanding. These unitsoutstanding and represent aan approximately 30% economic interest in Continental Cement and are subordinate to the Class A Units.

interest.

Continental Cement’s Class A Units include a cumulative distribution preference which requires, to the extent distributions are authorized by its Board of Directors, Continental Cement Class A Units receive, prior to any distributions to the Class B Unit holders, a priority return of 11% accruing daily and compounding annually on each anniversary of the date of issuance to Class A Unit holders. To the extent the priority return is not made in a given year, the amount of the priority return will increase the liquidation preference of the Class A Units up to an 80% allowable sharing percentage in distributions and liquidation proceeds. The Company holds all the Class A Units. No distributions are currently anticipated.

The Continental Cement Amended and Restated Limited Liability Company Agreement (“Subscription(as amended, the “LLC Agreement”) provides Summitthe Company with a call optionright that allows the Company to require Continental Cement to call the Class B Units held by the owners of Continental Cement (the “Rollover Members”) prior to Summit’s purchase of the Company’s investment in Class A Units (“Rollover Members”),of the Company, at a strike price that approximates fair value, on the earlier ofvalue. The call right is exercisable after May 2016 on the date that Summit affectseither in anticipation of an initial public offering of the Company or upon any other changeif an initial public offering of control of Summit.the Company has already occurred. The Rollover Members also have a put optionright that allows them to put the Class B Units to Summit,Continental Cement, at a strike price that approximates fair value,value. The put right is exercisable if there isprior to May 2016 upon a changesale of control of the Summit Class A Units,Company or at any time after May 2016. Finally, the

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Subscription Agreement includes transfer restrictions whichthat prohibit the Rollover Members from transferring their Class B Units to third parties without the consent of the Boardboard of directors of Continental Cement.

Because the Class B Units are puttablecan be put to Continental Cement by the Rollover Members in the future based on the passage of time, which can be accelerated upon the occurrence of a contingent event, Summit’sSummit Materials’ noncontrolling interest is classified in temporary equity. The redemption value is based upon the estimated fair value of Continental Cement, which is valued using Level 3 inputs. Summit Materials elected to accrete changes in the redemption value of the noncontrolling interest over the period from the date of issuance to the earliest anticipated redemption date of the instrument, which is currently May 2016, using an interest method. The accretion is as an adjustment to the consolidated accumulated deficit. The redemption value of the redeemable noncontrolling interest as of year-end 20122013 and 20112012 approximated its carrying value.

(19)(19) Employee Long Term Incentive Plan

Certain employees of the Company hold Class D unit interests in Summit Materials Holdings L.P. The Class D unitsParent that provide rights to cash distributions based on a predetermined distribution formula upon the general partner of Summit Materials Holdings L.P.Parent declaring a distribution.

Certain of the Class D units vest with the passage of time (time-vesting interests) and the remaining vest when certain investment returns are achieved by the investors of Summit Materials Holdings L.P.Parent (performance-vesting interests). Of the time-vesting-interests,time-

vesting-interests, 20% vest on the first anniversary and the remaining 80% vest monthly over a period of four years following the first anniversary date. The performance-vesting interests vest when certain specified cash distribution targetsUnits that are achieved by Summit Materials Holdings L.P. not vested in accordance with their terms within eight years are automatically forfeited without consideration.

If the employee leaves the Company, the Company can (1) purchase the vested Class D units for a lump sum payment provided certain conditions have been met or (2) elect to convert all of the employee’s Class D units into a right to receive future distributions capped at a termination amount. The termination amount is determined as an amount equal to the fair market value of the Class D unit holder’s vested interests minus any amounts already distributed to the Class D unit holders respective of those Class D units.units plus interest on the difference between such fair market value and amounts already distributed. The fair value of the time-vesting Class D units granted in 2013, 2012 and 2011 and 2010 totaled $1.6 million, $1.1 million $3.4 million and $11.1$3.4 million, respectively. The weighted-average grant-date fair value in 2013, 2012 and 2011 was $2,786, $3,761 and 2010 was $3,761; $3,876, and $4,110, respectively.

The following table summarizes information for the Class D unit interests in Summit Materials Holdings L.P.:interests:

 

  Time-vesting interests   Performance-vesting
interests
   Time-vesting Interests   Performance-vesting
Interests
 
  Number of
Awards
 Weighted
average
grant-date
fair value
   Number of
Awards
 Weighted
average
grant-date
fair value
   Number of
units
 Weighted
average grant-
date fair value
per unit
   Number of
units
 Weighted
average grant-
date fair value
per unit
 

Beginning balance — January 1, 2012

   2,750   $3,949     4,801   $3,081  

Beginning balance—December 29, 2012

   1,692   $3,864     4,202   $3,087  

Granted

   300    3,761     390    3,050     584   2,786     759   2,314  

Vested

   (825  3,884     —      —       (772 3,896     —      —    

Forfeited

   (497  4,184     (989  3,419     (2 3,893     (5 3,176  

Redeemed

   (36  4,629     —      —    

Cancelled

   (61 2,208     (79 1,388  
  

 

    

 

    

 

    

 

  

Balance — December 29, 2012

   1,692   $3,864     4,202   $3,087  

Balance—December 28, 2013

   1,441      4,877   
  

 

    

 

    

 

    

 

  

The estimated fair value at December 28, 2013 of shares vested during 2013 was $2.2 million. As of year-end 20122013 and 2011,2012, the cumulative amount of units vested total 1,7322,531 and 943,1,732, respectively. The fair value of the Class D units is estimated as of the grant date using Monte Carlo simulations, which

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

requires the input of subjective assumptions, including the expected volatility and the expected term. The following table presents the weighted average assumptions used to estimate the fair value of grants in 2013, 2012 2011 and 2010:2011:

 

   2012  2011  2010

Class D Units:

      

Risk-free interest rate

  1.62%  1.71% – 2.39%  1.65% – 3.47%

Dividend yield

  None  None  None

Volatility

  47%  42% – 49%  41% – 51%

Expected term

  6 – 8 years  6 – 8 years  6 – 8 years

   2013  2012  2011

Class D Units

      

Risk-free interest rate

  0.50%  1.62%  1.71% - 2.39%

Dividend yield

  None  None  None

Volatility

  58%  47%  42% - 49%

Expected term

  4 years  6 - 8 years  6 - 8 years

The risk-free rate is based on the yield at the date of grant of a U.S. Treasury security with a maturity period approximating the expected term. As the Company has no plans to issue regular dividends, a dividend yield of zero was used. The volatility assumption is based on reported data of a peer group of publically traded companies for which historical information was available adjusted for the Company’s capital structure. The expected term is based on expectations about future exercises and represents the period of time that the units granted are expected to be outstanding.

Compensation expense for time-vesting interest granted is based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the service period, which is generally the vesting period of the award. A forfeiture rate assumption is factored into the compensation cost based on historical forfeitures. Compensation expense for performance-vesting interests would be recognized based on the grant date fair value. However, no compensation expense has been recognized for the performance-vesting interests, as management does not believe it is currently probable that certain investment returns, the performance criteria, will be achieved.

Share-based compensation expense, which is recognized in general and administrative expenses, totaled $2.5$2.3 million, $2.5 million and $1.2$2.5 million forin the years ended December 28, 2013, December 29, 2012 and December 31, 2011, and December 31, 2010, respectively. As of December 29, 2012,28, 2013, unrecognized compensation cost totaled $5.2$4.6 million. The weighted average remaining contractual term over which the unrecognized compensation cost is to be recognized is 3.02.6 years as of year-end 2012.2013.

(20)(20) Segment Information

The Company has determined that it has three operating segments, which are its reportable segments: Central region, West regionCentral; West; and East region.regions. These segments are consistent with the Company’s management reporting structure. The operating results of each segment are regularly reviewed and evaluated separately by the Chief Executive Officer, the Company’s Chief Operating Decision Maker (“CODM”). The CODM primarily evaluates the performance of its segments and allocates resources to them based on segment profit, which is computed as earnings from continuing operations before interest, taxes, depreciation, depletion, amortization, accretion and accretion.goodwill impairment. In addition, certain items such as management fees are excluded from the calculation of segment profit.

Each region has several acquired subsidiaries that are engaged in various activities including quarry mining, aggregate production and contracting. 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 the consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

The following tables display selected financial data for the Company’s reportable business segments (in thousands):for the following fiscal years:

 

   2012  2011  2010 

Revenue:

    

Central region

  $302,113   $264,008   $211,238  

West region

   484,922    362,577    59,337  

East region

   175,867    195,963    159,783  
  

 

 

  

 

 

  

 

 

 

Total revenue

  $962,902   $822,548   $430,358  
  

 

 

  

 

 

  

 

 

 
   2012  2011  2010 

Segment profit:

    

Central region

  $65,767   $65,651   $43,639  

West region

   14,429    36,442    (1,710

East region

   10,596    14,626    7,223  

Corporate and other

   (15,560  (9,877  (10,396
  

 

 

  

 

 

  

 

 

 

Total reportable segments and corporate

   75,232    106,842    38,756  

Interest expense

   (58,079  (47,784  (25,430

Depreciation, depletion, amortization and accretion

   (68,876  (61,964  (34,415
  

 

 

  

 

 

  

 

 

 

Loss before income tax expense (benefit)

  $(51,723 $(2,906 $(21,089
  

 

 

  

 

 

  

 

 

 
   2012  2011  2010 

Cash paid for capital expenditures:

    

Central region

  $20,996   $20,078   $8,384  

West region

   14,993    9,256    3,512  

East region

   8,736    9,311    9,114  
  

 

 

  

 

 

  

 

 

 

Total reportable segments

   44,725    38,645    21,010  

Corporate and other

   763    11    135  
  

 

 

  

 

 

  

 

 

 

Total capital expenditures

  $45,488   $38,656   $21,145  
  

 

 

  

 

 

  

 

 

 
   2012  2011  2010 

Depreciation, depletion, amortization and accretion:

    

Central region

  $30,215   $27,646   $18,352  

West region

   23,771    19,706    3,971  

East region

   14,809    14,525    12,052  
  

 

 

  

 

 

  

 

 

 

Total reportable segments

   68,795    61,877    34,375  

Corporate and other

   81    87    40  
  

 

 

  

 

 

  

 

 

 

Total depreciation, depletion, amortization and accretion

  $68,876   $61,964   $34,415  
  

 

 

  

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

   2013   2012   2011 

Revenue:

      

Central region

  $329,621    $302,113    $264,008  

West region

   426,195     484,922     362,577  

East region

   160,385     139,219     162,491  
  

 

 

   

 

 

   

 

 

 

Total revenue

  $916,201    $926,254    $789,076  
  

 

 

   

 

 

   

 

 

 

 

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

   2012  2011  2010 

Total assets:

    

Central region

  $610,003   $587,341   $577,808  

West region

   428,115    451,017    263,388  

East region

   224,603    238,018    220,809  
  

 

 

  

 

 

  

 

 

 

Total reportable segments

   1,262,721    1,276,376    1,062,005  

Corporate and other

   18,492    7,889    39,576  
  

 

 

  

 

 

  

 

 

 

Total

  $1,281,213   $1,284,265   $1,101,581  
  

 

 

  

 

 

  

 

 

 
   2012  2011  2010 

Revenue by product(a):

    

Aggregates

  $146,991   $116,082   $69,848  

Asphalt

   242,458    182,952    82,338  

Readymix

   100,941    94,302    31,756  

Cement

   77,676    69,664    50,272  

Construction and paving

   541,837    498,338    241,565  

Other

   (147,001  (138,790  (45,421
  

 

 

  

 

 

  

 

 

 

Total reportable segments

  $962,902   $822,548   $430,358  
  

 

 

  

 

 

  

 

 

 
   2013  2012  2011 

Segment profit (loss):

    

Central region

  $72,918   $65,767   $65,651  

West region

   28,607    14,429    36,442  

East region

   15,134    10,782    15,504  

Corporate and other (1)

   (24,878  (15,560  (9,877
  

 

 

  

 

 

  

 

 

 

Total reportable segments and corporate

   91,781    75,418    107,720  

Interest expense

   56,443    58,079    47,784  

Depreciation, depletion, amortization and accretion

   72,934    68,290    61,377  

Goodwill impairment

   68,202    —      —    
  

 

 

  

 

 

  

 

 

 

Loss from continuing operations before taxes

  $(105,798 $(50,951 $(1,441
  

 

 

  

 

 

  

 

 

 

 

(1)(a)Corporate results primarily consist of compensation and office expenses for employees included in the Company’s headquarters and transactions costs.

   2013   2012   2011 

Cash paid for capital expenditures:

      

Central region

  $33,030    $20,996    $20,078  

West region

   21,856     14,993     9,256  

East region

   7,753     8,736     9,311  
  

 

 

   

 

 

   

 

 

 

Total reportable segments

   62,639     44,725     38,645  

Corporate and other

   3,360     763     11  
  

 

 

   

 

 

   

 

 

 

Total capital expenditures

  $65,999    $45,488    $38,656  
  

 

 

   

 

 

   

 

 

 

   2013   2012   2011 

Depreciation, depletion, amortization and accretion:

      

Central region

  $33,808    $30,215    $27,646  

West region

   24,167     23,771     19,706  

East region

   14,493     14,223     13,938  
  

 

 

   

 

 

   

 

 

 

Total reportable segments

   72,468     68,209     61,290  

Corporate and other

   466     81     87  
  

 

 

   

 

 

   

 

 

 

Total depreciation, depletion, amortization and accretion

  $72,934    $68,290    $61,377  
  

 

 

   

 

 

   

 

 

 

   2013   2012   2011 

Total assets:

      

Central region

  $657,421    $610,003    $587,341  

West region

   383,544     428,115     451,017  

East region

   192,486     224,603     238,018  
  

 

 

   

 

 

   

 

 

 

Total reportable segments

   1,233,451     1,262,721     1,276,376  

Corporate and other

   14,343     18,492     7,889  
  

 

 

   

 

 

   

 

 

 

Total assets

  $1,247,794    $1,281,213    $1,284,265  
  

 

 

   

 

 

   

 

 

 

   2013  2012  2011 

Revenue by product:*

    

Aggregates

  $159,019   $146,991   $116,082  

Cement

   76,211    77,676    69,664  

Ready-mixed concrete

   112,878    100,941    94,302  

Asphalt

   219,811    242,458    182,952  

Construction and paving

   478,280    505,189    464,866  

Other

   (129,998  (147,001  (138,790
  

 

 

  

 

 

  

 

 

 

Total revenue

  $916,201   $926,254   $789,076  
  

 

 

  

 

 

  

 

 

 

*Revenue by product includes intercompanyintracompany sales transferred at market value. The elimination of intercompanyintracompany transactions is included in Other.

(21)Condensed Consolidating(21) Senior Notes’ Guarantor and Non-Guarantor Financial Information

On January 30, 2012, the Issuers issued $250.0 million aggregate principal amount of 10.5% Senior Notes due January 31, 2020 (the Senior Notes). Concurrently with the issuance of the Senior Notes, on January 30, 2012, Summit entered into a new credit facility which provided for term loans in an initial aggregate amount of $400.0 million and revolving credit commitments in an initial aggregate amount of $150.0 million (the Senior Secured Credit Facility).

The Company, along with all of its domestic wholly ownedCompany’s 100 percent-owned subsidiary companies (Wholly owned Guarantors)(“Wholly-owned Guarantors”) and non wholly owned subsidiary, Continental Cement (Non-Wholly owned Guarantor)(“Non Wholly-owned Guarantor”), are named as guarantors (collectively, the Guarantors)“Guarantors”) of the Senior Secured Credit Facility and the Senior Notes. Certain other partially ownedOther partially-owned subsidiaries do not guarantee the notesSenior Notes (collectively, the Non-Guarantors)“Non-Guarantors”), which includesincluding a subsidiary of Continental Cement. The Guarantors provide a joint and several, full and

unconditional guarantee of the securities.Senior Notes. There are no significant restrictions on the Company’s ability to obtain funds from any of the Guarantor Subsidiaries in the form of a dividend or loan. Additionally, there are no significant restrictions on a Guarantor Subsidiary’s ability to obtain funds from the Company or its direct or indirect subsidiaries.

The following condensed consolidating balance sheets, statements of operations and statements of cash flows are provided for Summit Materials (referred to as “Parent” in the Company,condensed financial statements below), the Wholly ownedNon-Wholly-owned Guarantor, the Wholly-owned Guarantors the Non-Wholly owned Guarantor and the Non Guarantors.Non-Guarantors. Summit Materials Finance CorpCorp. as a co-issuer of the Senior Notes, had no transactions during 2012the respective periods or assets as of December 28, 2013 and December 29, 2012. Earnings from subsidiaries are included in other (income) expenseincome in the condensed consolidated statements of operations below. The financial information may not necessarily be indicative of results of operations, and comprehensive income, cash flows or financial position had the guarantor or nonguarantornon-guarantor subsidiaries operated as independent entities.

SUMMIT MATERIALS, LLC AND SUBSIDIARIESCondensed Consolidating Balance Sheets

December 28, 2013

 

Notes to Consolidated Financial Statements
   Summit
Materials,
LLC
(Parent)
   Non-
Wholly-
owned
Guarantor
   Wholly-
owned
Guarantors
   Non-
Guarantors
   Eliminations  Consolidated 
Assets           

Current assets:

           

Cash

  $10,375    $9    $3,442    $3,631    $(2,540 $14,917  

Accounts receivable, net

   —       4,587     93,102     3,100     (1,452  99,337  

Intercompany receivables

   38,134     3,433     30,787     —       (72,354  —    

Cost and estimated earnings in excess of billings

   —       —       10,539     228     —      10,767  

Inventories

   —       10,402     85,372     658     —      96,432  

Other current assets

   750     444     11,715     272     —      13,181  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current assets

   49,259     18,875     234,957     7,889     (76,346  234,634  

Property, plant and equipment, net

   3,969     301,908     518,935     6,966     —      831,778  

Goodwill

   —       23,124     102,942     972     —      127,038  

Intangible assets, net

   —       642     14,505     —       —      15,147  

Other assets

   296,494     17,973     37,535     1,303     (314,108  39,197  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total assets

  $349,722    $362,522    $908,874    $17,130    $(390,454 $1,247,794  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest           

Current liabilities:

           

Current portion of debt

  $26,010    $1,018    $3,192    $—      $—     $30,220  

Current portion of acquisition-related liabilities

   2,000     —       8,635     —       —      10,635  

Accounts payable

   5,455     9,387     57,142     1,572     (1,452  72,104  

Accrued expenses

   12,041     9,185     37,342     1,223     (2,540  57,251  

Intercompany payables

   —       —       71,556     798     (72,354  —    

Billings in excess of costs and estimated earnings

   —       —       8,837     426     —      9,263  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current liabilities

   45,506     19,590     186,704     4,019     (76,346  179,473  

Long-term debt

   19,587     154,590     484,590     —       —      658,767  

Acquisition-related liabilities

   85     —       23,671     —       —      23,756  

Other noncurrent liabilities

   959     20,306     56,215     —       —      77,480  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities

   66,137     194,486     751,180     4,019     (76,346  939,476  

Redeemable noncontrolling interest

   —       —       —       —       24,767    24,767  

Redeemable members’ interest

   —       23,450     —       —       (23,450  —    

Total member’s interest

   283,585     144,586     157,694     13,111     (315,425  283,551  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

  $349,722    $362,522    $908,874    $17,130    $(390,454 $1,247,794  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

December 29, 2012 and December 31, 2011

Condensed Consolidating Balance Sheets

December 29, 2012

 

  Summit
Materials,
LLC
(Parent)
  Non
wholly
owned
Guarantor
  Wholly
owned
Guarantors
  Non
Guarantors
  Eliminations  Consolidated 
Assets      

Current assets:

      

Cash

 $697  $397  $30,981  $680  $(5,324 $27,431 

Accounts receivable, net

  —      7,421   90,765   3,255   (1,143  100,298 

Intercompany receivables

  14,931   15,557   9,018   —      (39,506  —    

Cost and estimated earnings in excess of billings

  —      —      11,428   147   —      11,575 

Inventories

  —      7,073   84,555   1,349   —      92,977 

Other current assets

  25   726   8,447   2,409   (1,539  10,068 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total current assets

  15,653   31,174   235,194   7,840   (47,512  242,349 

Property, plant and equipment, net

  1,074   287,677   517,994   6,862   —      813,607 

Investments in affiliates

  374,528   1,779   147,658   722   (511,698  12,989 

Goodwill

  —      23,124   155,024   972   —      179,120 

Intangible assets, net

  —      742   7,864   —      —      8,606 

Other assets

  53   10,112   13,784   593   —      24,542 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total assets

 $391,308  $354,608  $1,077,518  $16,989  $(559,210 $1,281,213 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest      

Current liabilities:

      

Current portion of debt

 $—     $965  $3,035  $—     $—     $4,000 

Current portion of acquisition-related liabilities

  —      —      9,525   —      —      9,525 

Accounts payable

  2,745   6,715   51,179   2,138   (1,143  61,634 

Accrued expenses

  6,877   10,742   38,050   1,015   (6,862  49,822 

Intercompany payables

  —      —      33,396   6,110   (39,506  —    

Billings in excess of cost and estimated earnings

  —      —      6,656   270   —      6,926 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total current liabilities

  9,622   18,422   141,841   9,533   (47,511  131,907 

Long-term debt

  —      155,394   480,449   —      —      635,843 

Acquisition-related liabilities

  —      —      23,919   —      —      23,919 

Other noncurrent liabilities

  395   27,091   56,780   —      —      84,266 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total liabilities

  10,017   200,907   702,989   9,533   (47,511  875,935 

Redeemable noncontrolling interest

  —      —      —      —      22,850   22,850 

Redeemable members’ interest

  —      22,850   —      —      (22,850  —    

Total member’s interest

  381,291   130,851   374,529   7,456   (511,699  382,428 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

 $391,308  $354,608  $1,077,518  $16,989  $(559,210 $1,281,213 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES
   Summit
Materials,
LLC
(Parent)
   Non-
Wholly-
owned
Guarantor
   Wholly-
owned
Guarantors
   Non-
Guarantors
   Eliminations  Consolidated 
Assets           

Current assets:

           

Cash

  $697    $397    $30,981    $680    $(5,324 $27,431  

Accounts receivable, net

   —       7,421     90,765     3,255     (1,143  100,298  

Intercompany receivables

   14,931     15,557     9,018     —       (39,506  —    

Cost and estimated earnings in excess of billings

   —       —       11,428     147     —      11,575  

Inventories

   —       7,073     84,555     1,349     —      92,977  

Other current assets

   25     726     8,447     2,409     (1,539  10,068  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current assets

   15,653     31,174     235,194     7,840     (47,512  242,349  

Property, plant and equipment, net

   1,074     287,677     517,994     6,862     —      813,607  

Goodwill

   —       23,124     155,024     972     —      179,120  

Intangible assets, net

   —       742     7,864     —       —      8,606  

Other assets

   374,581     11,891     161,442     1,315     (511,698  37,531  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total assets

  $391,308    $354,608    $1,077,518    $16,989    $(559,210 $1,281,213  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest           

Current liabilities:

           

Current portion of debt

  $—      $965    $3,035    $—      $—     $4,000  

Current portion of acquisition-related liabilities

   —       —       9,525     —       —      9,525  

Accounts payable

   2,745     6,715     51,179     2,138     (1,143  61,634  

Accrued expenses

   6,877     10,742     38,050     1,015     (6,862  49,822  

Intercompany payables

   —       —       33,396     6,110     (39,506  —    

Billings in excess of costs and estimated earnings

   —       —       6,656     270     —      6,926  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current liabilities

   9,622     18,422     141,841     9,533     (47,511  131,907  

Long-term debt

   —       155,394     480,449     —       —      635,843  

Acquisition-related liabilities

   —       —       23,919     —       —      23,919  

Other noncurrent liabilities

   395     27,091     56,780     —       —      84,266  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities

   10,017     200,907     702,989     9,533     (47,511  875,935  

Redeemable noncontrolling interest

   —       —       —       —       22,850    22,850  

Redeemable members’ interest

   —       22,850     —       —       (22,850  —    

Total member’s interest

   381,291     130,851     374,529     7,456     (511,699  382,428  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

  $391,308    $354,608    $1,077,518    $16,989    $(559,210 $1,281,213  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Condensed Consolidating Balance SheetsStatements of Operations and Comprehensive (Loss) Income

Year ended December 31, 201128, 2013

 

   Summit
Materials,
LLC
(Parent)
   Non
wholly
owned
Guarantor
   Wholly
owned
Guarantors
   Non
Guarantors
   Eliminations  Consolidated 
Assets           

Current assets:

           

Cash

  $6,701   $8   $33,997   $2,084   $—     $42,790 

Accounts receivable, net

   —      5,419    97,010    3,059    (255  105,233 

Intercompany receivables

   6,819    7,330    17,341    —       (31,490  —    

Cost and estimated earnings in excess of billings

   —       —       18,425    81    —      18,506 

Inventories

   —       9,914    73,832    517    —      84,263 

Other current assets

   124    770    11,591    185    (288  12,382 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current assets

   13,644    23,441    252,196    5,926    (32,033  263,174 

Property, plant and equipment, net

   393    285,305    528,640    7,565    —      821,903 

Investments in affiliates

   431,317    —       148,154    622    (566,970  13,123 

Goodwill

   —       23,124    129,279    972    —      153,375 

Intangible assets, net

   —       842    8,337    —       —      9,179 

Other assets

   —       11,050    12,006    455    —      23,511 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total assets

  $445,354   $343,762   $1,078,612   $15,540   $(599,003 $1,284,265 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Liabilities, Redeemable Noncontrolling Interest and Member’s Interest

           

Current liabilities:

           

Current portion of debt

  $—      $—      $7,960   $—      $—     $7,960 

Current portion of acquisition-related liabilities

   —       —       8,465    —       —      8,465 

Accounts payable

   1,903    8,012    59,162    2,252    (1,686  69,643 

Accrued expenses

   6,607    5,354    21,587    741    (294  33,995 

Intercompany payables

   —       —       22,721    7,330    (30,051  —    

Billings in excess of cost and estimated earnings

   —       —       4,318    18    —      4,336 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current liabilities

   8,510    13,366    124,213    10,341    (32,031  124,399 

Long-term debt

   —       153,980    447,041    —       —      601,021 

Acquisition-related liabilities

   —       —       20,238    —       —      20,238 

Other noncurrent liabilities

   472    24,374    55,803    286    —      80,935 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities

   8,982    191,720    647,295    10,627    (32,031  826,593 

Redeemable noncontrolling interest

   —       —       —       —       21,300   21,300 

Redeemable members’ interest

   —       22,250    —       —       (22,250  —    

Total member’s interest

   436,372    129,792    431,317    4,913    (566,022  436,372 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

  $445,354   $343,762   $1,078,612   $15,540   $(599,003 $1,284,265 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES
   Summit
Materials
LLC
(Parent)
  Non-
Wholly-
owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
   Eliminations  Consolidated 

Total revenue

  $—     $80,759   $807,921   $41,910    $(14,389 $916,201  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Cost of revenue (excluding items shown separately below)

   —      55,241    611,799    24,401     (14,389  677,052  

General and administrative expenses

   7,241    7,673    125,778    1,308     —      142,000  

Goodwill impairment

   —      —      68,202    —       —      68,202  

Depreciation, depletion, amortization and accretion

   465    11,378    60,078    1,013     —      72,934  

Transaction costs

   —      —      3,990    —       —      3,990  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Operating (loss) income

   (7,706  6,467    (61,926  15,188     —      (47,977

Other expense (income), net

   99,085    (3,737  (3,410  274     (90,834  1,378  

Interest expense

   —      10,702    49,591    382     (4,232  56,443  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) income from continuing operations before taxes

   (106,791  (498  (108,107  14,532     95,066    (105,798

Income tax expense

   —      —      (2,647  —       —      (2,647
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) income from continuing operations

   (106,791  (498  (105,460  14,532     95,066    (103,151

Loss from discontinued operations

   —      —      528    —       —      528  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income

   (106,791  (498  (105,988  14,532     95,066    (103,679

Net income attributable to noncontrolling interest

   —      —      —      —       3,112    3,112  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income attributable to member of Summit Materials, LLC

  $(106,791 $(498 $(105,988 $14,532    $91,954   $(106,791
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Comprehensive (loss) income attributable to member of Summit Materials, LLC

  $(106,791 $3,909   $(105,988 $14,532    $90,632   $(103,706
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income

Year ended December 29, 2012

 

   Summit
Materials,
LLC
(Parent)
  Non wholly
owned
Guarantor
  Wholly
owned
Guarantors
  Non
Guarantors
  Eliminations  Consolidated 

Revenue

  $—     $81,516  $861,444  $33,074  $(13,132 $962,902 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cost of revenue (exclusive of items shown separately below)

   —      58,319   685,594   18,582   (13,132  749,363 

General and administrative expenses

   8   6,235   120,462   1,327   —      128,032 

Depreciation, depletion, amortization and accretion

   81   10,093   57,666   1,036   —      68,876 

Transaction costs

   —      —      1,988   —      —      1,988 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income (expense)

   (89  6,869   (4,266  12,129   —      14,643 

Other (income) expense

   52,400   (2,065  6,630   (101  (48,577  8,287 

Interest expense

   —      12,045   47,293   633   (1,892  58,079 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(Loss) gain from continuing operations before taxes

   (52,489  (3,111  (58,189  11,597   50,469   (51,723

Income tax expense (benefit)

   5   —      (3,925  —      —      (3,920
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(Loss) income from continuing operations

   (52,494  (3,111  (54,264  11,597   50,469   (47,803

Loss from discontinued operations

   —      —      (2,774  —      —      (2,774
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net (loss) income

   (52,494  (3,111  (57,038  11,597   50,469   (50,577

Net income attributable to noncontrolling interest

   —      —      —      —      1,919   1,919 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net (loss) income attributable to member of Summit Materials, LLC

  $(52,494 $(3,111 $(57,038 $11,597  $48,560  $(52,496
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive (loss) income attributable to member of Summit Materials, LLC

  $(52,494 $(6,759 $(57,038 $11,597  $49,645  $(55,049
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES
   Summit
Materials
LLC
(Parent)
  Non-
Wholly-
owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
  Eliminations  Consolidated 

Total revenue

  $—     $81,516   $824,796   $33,074   $(13,132 $926,254  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cost of revenue (excluding items shown separately below)

   —      58,319    649,577    18,582    (13,132  713,346  

General and administrative expenses

   8    6,235    119,645    1,327    —      127,215  

Depreciation, depletion, amortization and accretion

   81    10,093    57,080    1,036    —      68,290  

Transaction costs

   —      —      1,988    —      —      1,988  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Operating (loss) income

   (89  6,869    (3,494  12,129    —      15,415  

Other expense (income), net

   52,400    (2,065  6,630    (101  (48,577  8,287  

Interest expense

   —      12,045    47,293    633    (1,892  58,079  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(Loss) income from continuing operations before taxes

   (52,489  (3,111  (57,417  11,597    50,469    (50,951

Income tax expense

   5    —      (3,925  —      —      (3,920
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(Loss) income from continuing operations

   (52,494  (3,111  (53,492  11,597    50,469    (47,031

Loss from discontinued operations

   —      —      3,546    —      —      3,546  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net (loss) income

   (52,494  (3,111  (57,038  11,597    50,469    (50,577

Net income attributable to noncontrolling interest

   —      —      —      —      1,919    1,919  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net (loss) income attributable to member of Summit Materials, LLC

  $(52,494 $(3,111 $(57,038 $11,597   $48,550   $(52,496
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive (loss) income attributable to member of Summit Materials, LLC

  $(52,494 $(6,759 $(57,038 $11,597   $49,645   $(55,049
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income

Year ended December 31, 2011

 

   Summit
Materials,
LLC
(Parent)
  Non wholly
owned
Guarantor
  Wholly
owned
Guarantors
  Non
Guarantors
   Eliminations  Consolidated 

Revenue

  $—    $70,064  $734,388  $21,566   $(3,470 $822,548 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Cost of revenue (exclusive of items shown separately below)

   —     41,221   575,989   17,204    (3,470  630,944 

General and administrative expenses

   1,453   3,933   90,071   1,429    —     96,886 

Depreciation, depletion, amortization and accretion

   87   9,697   51,227   953    —     61,964 

Transaction costs

   —      —      9,120   —       —      9,120 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Operating income (expense)

   (1,540  15,213   7,981   1,980    —      23,634 

Other expense (income)

   8,510   (61  (24,375  124    (5,442  (21,244

Interest expense

   —      14,004   33,685   647    (552  47,784 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) gain from continuing operations before taxes

   (10,050  1,270   (1,329  1,209    5,994   (2,906

Income tax expense (benefit)

   —      —      3,408   —       —      3,408 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) income from continuing operations

   (10,050  1,270   (4,737  1,209    5,994   (6,314

Loss from discontinued operations

   —      —      (3,736  —       —      (3,736
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income

   (10,050  1,270   (8,473  1,209    5,994   (10,050

Net income attributable to noncontrolling interest

   695   —      695   —       (695  695 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income attributable to member of Summit Materials, LLC

  $(10,745 $1,270  $(9,168 $1,209   $6,689  $(10,745
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Comprehensive (loss) income attributable to member of Summit Materials, LLC

  $(9,375 $(4,405 $(13,473 $1,209   $10,994  $(15,050
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES
   Summit
Materials
LLC
(Parent)
  Non-
Wholly-
owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
   Eliminations  Consolidated 

Total revenue

  $—     $70,064   $700,916   $21,566    $(3,470 $789,076  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Cost of revenue (excluding items shown separately below)

   —      41,221    542,699    17,204     (3,470  597,654  

General and administrative expenses

   1,453    3,933    89,011    1,429     —      95,826  

Depreciation, depletion, amortization and accretion

   87    9,697    50,640    953     —      61,377  

Transaction costs

   —      —      9,120    —       —      9,120  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Operating (loss) income

   (1,540  15,213    9,446    1,980     —      25,099  

Other expense (income), net

   8,510    (61  (24,375  124     (5,442  (21,244

Interest expense

   —      14,004    33,685    647     (552  47,784  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) income from continuing operations before taxes

   (10,050  1,270    136    1,209     5,994    (1,441

Income tax expense

   —      —      3,408    —       —      3,408  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) income from continuing operations

   (10,050  1,270    (3,272  1,209     5,994    (4,849

Loss from discontinued operations

   —      —      5,201    —       —      5,201  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income

   (10,050  1,270    (8,473  1,209     5,994    (10,050

Net income attributable to noncontrolling interest

   695    —      695    —       (695  695  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income attributable to member of Summit Materials, LLC

  $(10,745 $1,270   $(9,168 $1,209    $6,689   $(10,745
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Comprehensive (loss) income attributable to member of Summit Materials, LLC

  $(9,375 $(4,405 $(13,473 $1,209    $10,994   $(15,050
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Condensed Consolidating Statements of Operations and Comprehensive (Loss) IncomeCash Flows

Year ended December 31, 201028, 2013

 

   Summit
Materials,
LLC
(Parent)
  Non wholly
owned
Guarantor
  Wholly
owned
Guarantors
  Non
Guarantors
   Eliminations  Consolidated 

Revenue:

  $—     $50,597  $366,036  $14,052   $(327 $430,358 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Cost of revenue (exclusive of items shown separately below):

   —      30,424   266,577   11,623    (327  308,297 

General and administrative expenses

   4,604   1,402   42,237   1,236    —      49,479 

Depreciation, depletion, amortization and accretion

   40   5,258   28,392   725    —      34,415 

Transaction costs

   1,712   5,671   14,885   —       —      22,268 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Operating income (expense)

   (6,356  7,842   13,945   468    —      15,899 

Other (income) expense

   17,507   (141  12,132   18    (17,958  11,558 

Interest expense

   —      7,799   17,213   418    —      25,430 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) gain from continuing operations before taxes

   (23,863  184   (15,400  32    17,958   (21,089

Income tax expense

   —      —      2,363   —       —      2,363 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) income from continuing operations

   (23,863  184   (17,763  32    17,958   (23,452

Loss from discontinued operations

   —      —      (411  —       —      (411
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income

   (23,863  184   (18,174  32    17,958   (23,863

Net income attributable to noncontrolling interest

   86   —      86   —       (86  86 
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income attributable to member of Summit Materials, LLC

  $(23,949 $184  $(18,260 $32   $18,044  $(23,949
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Comprehensive (loss) income attributable to member of Summit Materials, LLC

  $(23,513 $(2,524 $(20,532 $32   $20,316  $(26,221
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES
   Summit
Materials,
LLC
(Parent)
  Non-
Wholly-
owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
  Eliminations  Consolidated 

Net cash (used for) provided by operating activities

  $(232 $9,003   $44,746   $12,895   $—     $66,412  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from investing activities:

       

Acquisitions, net of cash acquired

   —      —      (61,601  —      —      (61,601

Purchase of property, plant and equipment

   (3,359  (24,896  (36,629  (1,115  —      (65,999

Proceeds from the sale of property, plant, and equipment

   —      3    16,020    62    —      16,085  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (3,359  (24,893  (82,210  (1,053  —      (111,515
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities

       

Net proceeds from debt issuance

   230,817    —      —      —      —      230,817  

Loans received from and payments made on loans from other Summit Companies

   (29,121  15,502    19,726    (8,891  2,784    —    

Payments on long-term debt

   (188,424  —      —      —      —      (188,424

Payments on acquisition-related liabilities

   —      —      (9,801  —      —      (9,801

Other

   (3  —      —      —      —      (3
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash provided by (used for) financing activities

   13,269    15,502    9,925    (8,891  2,784    32,589  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net decrease (increase) in cash

   9,678    (388  (27,539  2,951    2,784    (12,514

Cash—Beginning of period

   697    397    30,981    680    (5,324  27,431  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash—End of period

  $10,375   $9   $3,442   $3,631   $(2,540 $14,917  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Condensed Consolidating Statements of Cash Flows

Year ended December 29, 2012

 

   Summit
Materials,
LLC
(Parent)
  Non wholly
owned
Guarantor
  Wholly owned
Guarantors
  Non
Guarantors
  Eliminations  Consolidated 

Net cash provided by operating activities

  $4,845  $12,806  $36,649  $8,217  $(238 $62,279 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from investing activities:

       

Acquisitions — net of cash acquired

   —      —      (48,757  —      —      (48,757

Purchases of property, plant and equipment

   (762  (12,174  (31,818  (734  —      (45,488

Proceeds from the sale of property, plant and equipment

   —      69   8,577   190   —      8,836 

Other

   —      —      69   —      —      69 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (762  (12,105  (71,929  (544  —      (85,340
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities:

       

Net proceeds from debt issuance

   713,378   (17  —      —      —      713,361 

Loans received from and payments made on loans from other Summit Companies

   (25,371  (295  39,783   (8,793  (5,324  —    

Payments on long-term debt

   (697,438  —      —      —      —      (697,438

Payments on acquisition-related liabilities

   —      —      (7,519  —      —      (7,519

Other

   (656  —      —      (284  238   (702
  

 

��

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash (used for) provided by financing activities

   (10,087  (312  32,264   (9,077  (5,086  7,702 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net increase (decrease) in cash

   (6,004  389   (3,016  (1,404  (5,324  (15,359

Cash — beginning of period

   6,701   8   33,997   2,084   —      42,790 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash — end of period

  $697  $397  $30,981  $680  $(5,324 $27,431 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIES
   Summit
Materials,
LLC
(Parent)
  Non-
Wholly-
owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
  Eliminations  Consolidated 

Net cash provided by operating activities

  $4,845   $12,806   $36,649   $8,217   $(238 $62,279  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from investing activities:

       

Acquisitions, net of cash acquired

   —      —      (48,757  —      —      (48,757

Purchase of property, plant and equipment

   (762  (12,174  (31,818  (734  —      (45,488

Proceeds from the sale of property, plant, and equipment

   —      69    8,577    190    —      8,836  

Other

   —      —      69    ���      —      69  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (762  (12,105  (71,929  (544  —      (85,340
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities

       

Net proceeds from debt issuance

   713,378    (17  —      —      —      713,361  

Loans received from and payments made on loans from other Summit Companies

   (25,371  (295  39,783    (8,793  (5,324  —    

Payments on long-term debt

   (697,438  —      —      —      —      (697,438

Payments on acquisition-related liabilities

   —      —      (7,519  —      —      (7,519

Other

   (656  —      —      (284  238    (702
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash (used for) provided by financing activities

   (10,087  (312  32,264    (9,077  (5,086  7,702  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net decrease (increase) in cash

   (6,004  389    (3,016  (1,404  (5,324  (15,359

Cash—Beginning of period

   6,701    8    33,997    2,084    —      42,790  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash—End of period

  $697   $397   $30,981   $680   $(5,324 $27,431  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011

Condensed Consolidating Statements of Cash Flows

Year ended December 31, 2011

 

   Summit
Materials,
LLC
(Parent)
  Non wholly
owned
Guarantor
  Wholly owned
Guarantors
  Non
Guarantors
  Eliminations  Consolidated 

Net cash (used in) provided by operating activities

  $(824 $3,808  $17,262  $2,586  $421  $23,253 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flows from investing activities:

       

Acquisitions — net of cash acquired

   —      —      (161,073  —      —      (161,073

Proceeds from the sale of investments

   —      —      377   (136  —      241 

Purchases of property, plant and equipment

   (11  (5,933  (31,210  (1,502  —      (38,656

Proceeds from the sale of property, plant and equipment

   —      168   6,880   109   —      7,157 

Cash contribution to affiliates

   (135,530  —      —      —      135,530   —    
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (135,541  (5,765  (185,026  (1,529  135,530   (192,331
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities:

       

Proceeds from investment by member

   103,630   —      135,530   421   (135,951  103,630 

Net proceeds from debt issuance

   —      36,456   60,292   —      —      96,748 

Payments on long-term debt

   —      (34,500  (14,500  —      —      (49,000

Payments on acquisition-related liabilities

   —      —      (4,593  —      —      (4,593

Payment of dividends

   —      —      —      (10  —      (10
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash provided by (used for) financing activities

   103,630   1,956   176,729   411   (135,951  146,775 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net (decrease) increase in cash

   (32,735  (1  8,965   1,468   —      (22,303

Cash — beginning of period

   39,436   9   25,032   616   —      65,093 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash — end of period

  $6,701  $8  $33,997  $2,084  $—     $42,790 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
   Summit
Materials,
LLC
(Parent)
  Non-
Wholly-
owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
  Eliminations  Consolidated 

Net cash provided by operating activities

  $(824 $3,808   $17,262   $2,586   $421   $23,253  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from investing activities:

       

Acquisitions, net of cash acquired

   —      —      (161,073  —      —      (161,073

Purchase of property, plant and equipment

   (11  (5,933  (31,210  (1,502  —      (38,656

Proceeds from the sale of property, plant, and equipment

   —      168    6,880    109    —      7,157  

Proceeds from the sale of investments

   —      —      377    (136  —      241  

Cash contribution to affiliates

   (135,530  —      —      —      135,530    —    
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (135,541  (5,765  (185,026  (1,529  135,530    (192,331
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities

       

Proceeds from investment by member

   103,630    —      135,530    421    (135,951  103,630  

Net proceeds from debt issuance

   —      36,456    60,292    —      —      96,748  

Payments on long-term debt

   —      (34,500  (14,500  —      —      (49,000

Payments on acquisition-related liabilities

   —      —      (4,593  —      —      (4,593

Other

   —      —      —      (10  —      (10
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash (used for) provided by financing activities

   103,630    1,956    176,729    411    (135,951  146,775  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net decrease (increase) in cash

   (32,735  (1  8,965    1,468    —      (22,303

Cash—Beginning of period

   39,436    9    25,032    616    —      65,093  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash—End of period

  $6,701   $8   $33,997   $2,084   $—     $42,790  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(22) Supplementary Data (Unaudited)

Supplemental financial information (unaudited) by quarter is as follows for the years ended 2013 and 2012:

  2013  2012 
  4Q  3Q  2Q  1Q  4Q  3Q  2Q  1Q 

Revenue

 $238,267   $316,263   $254,842   $106,829   $231,634   $319,181   $255,556   $119,883  

Operating (loss) income

  (57,742  37,895    13,731    (41,861  13,322    33,249    9,015    (40,171

(Loss) income from continuing operations

  (70,191  22,950    244    (56,154  433    19,656    (5,621  (61,499

Loss (income) from discontinued operations

  271    160    (26  123    535    1,287    2,221    (497

Net (loss) income

 $(70,462 $22,790   $270   $(56,277 $(102 $18,369   $(7,842 $(61,002

(23) Subsequent Events

On January 17, 2014, Summit Materials and Summit Materials Finance Corp. issued and sold $260.0 million aggregate principal amount of their 10.5% Senior Notes due 2020 (the “Additional Notes”), which mature on January 31, 2020, pursuant to an indenture governing the $250.0 million aggregate principal amount of 10.5% Senior Notes due 2020 that were issued on January 30, 2012 (the “Existing Notes”). The Additional Notes are treated as a single series with the Existing Notes and have substantially the same terms as those of the Existing Notes. The Additional Notes and the Existing Notes will vote as one class under the Indenture. In addition, on January 16, 2014, the Senior Secured Credit Agreement was amended to allow for the issuance of the Additional Notes.

On January 17, 2014, the Company completed its acquisition of Alleyton Resource Corporation, a Texas corporation, and Colorado Gulf, LP, a Texas limited partnership, and certain real property from Barten Shepard Investments, LP, a Texas limited partnership (“BSI”), collectively, referred to as “Alleyton”, for approximately $179.25 million, with an additional $30.75 million in deferred and contingent payments. The Alleyton acquisition consideration was funded through a portion of the net proceeds from the issue and sale of the Additional Notes.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

 

   June 28,
2014
(unaudited)
  December 28,
2013
(audited)
 

Assets

   

Current assets:

   

Cash

  $20,802   $14,917  

Accounts receivable, net

   143,768    99,337  

Costs and estimated earnings in excess of billings

   21,779    10,767  

Inventories

   119,171    96,432  

Other current assets

   13,235    13,181  
  

 

 

  

 

 

 

Total current assets

   318,755    234,634  

Property, plant and equipment, less accumulated depreciation, depletion and amortization (June 28, 2014—$246,098 and December 28, 2013—$212,382)

   920,513    831,778  

Goodwill

   317,323    127,038  

Intangible assets, less accumulated amortization (June 28, 2014—$2,577 and December 28, 2013—$2,193)

   15,275    15,147  

Other assets

   45,774    39,197  
  

 

 

  

 

 

 

Total assets

  $1,617,640   $1,247,794  
  

 

 

  

 

 

 

Liabilities, Redeemable Noncontrolling Interest and Member’s Interest

   

Current liabilities:

   

Current portion of debt

  $69,220   $30,220  

Current portion of acquisition-related liabilities

   19,039    10,635  

Accounts payable

   78,244    72,104  

Accrued expenses

   87,913    57,251  

Billings in excess of costs and estimated earnings

   4,902    9,263  
  

 

 

  

 

 

 

Total current liabilities

   259,318    179,473  

Long-term debt

   938,290    658,767  

Acquisition-related liabilities

   40,947    23,756  

Other noncurrent liabilities

   83,415    77,480  
  

 

 

  

 

 

 

Total liabilities

   1,321,970    939,476  
  

 

 

  

 

 

 

Commitments and contingencies (see note 9)

   

Redeemable noncontrolling interest

   26,825    24,767  

Member’s interest:

   

Member’s equity

   512,297    486,896  

Accumulated deficit

   (239,213  (198,511

Accumulated other comprehensive loss

   (5,472  (6,045
  

 

 

  

 

 

 

Member’s interest

   267,612    282,340  

Noncontrolling interest

   1,233    1,211  
  

 

 

  

 

 

 

Total member’s interest

   268,845    283,551  
  

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

  $1,617,640   $1,247,794  
  

 

 

  

 

 

 

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(In thousands)

   Six months ended 
   June 28,
2014
  June 29,
2013
 

Revenue:

   

Product

  $329,769   $237,181  

Service

   145,617    124,490  
  

 

 

  

 

 

 

Total revenue

   475,386    361,671  
  

 

 

  

 

 

 

Cost of revenue (excluding items shown separately below):

   

Product

   245,003    181,932  

Service

   115,434    95,984  
  

 

 

  

 

 

 

Total cost of revenue

   360,437    277,916  
  

 

 

  

 

 

 

General and administrative expenses

   70,355    73,395  

Depreciation, depletion, amortization and accretion

   40,695    36,026  

Transaction costs

   4,996    2,464  
  

 

 

  

 

 

 

Operating income (loss)

   (1,097  (28,130

Other (income) expense, net

   (891  163  

Loss on debt financings

   —      3,115  

Interest expense

   40,470    27,849  
  

 

 

  

 

 

 

Income (loss) from continuing operations before taxes

   (40,676  (59,257

Income tax benefit

   (1,460  (3,347
  

 

 

  

 

 

 

Income (loss) from continuing operations

   (39,216  (55,910

(Income) loss from discontinued operations

   (349  97  
  

 

 

  

 

 

 

Net income (loss)

   (38,867  (56,007

Net income (loss) attributable to noncontrolling interest

   (569  (1,518
  

 

 

  

 

 

 

Net income (loss) attributable to member of Summit Materials, LLC

  $(38,298 $(54,489
  

 

 

  

 

 

 

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

   Six months ended 
   June 28,
2014
  June 29,
2013
 

Net income (loss)

  $(38,867 $(56,007

Other comprehensive (loss) income:

   

Postretirement curtailment adjustment

   (1,346  —    

Postretirement liability adjustment

   2,164    —    
  

 

 

  

 

 

 

Other comprehensive income

   818    —    
  

 

 

  

 

 

 

Comprehensive income (loss)

   (38,049  (56,007

Less comprehensive income (loss) attributable to the noncontrolling interest

   (324  (1,518
  

 

 

  

 

 

 

Comprehensive income (loss) attributable to member of Summit Materials, LLC

  $(37,725 $(54,489
  

 

 

  

 

 

 

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)

   Six months ended 
   June 28,
2014
  June 29,
2013
 

Cash flow from operating activities:

   

Net loss

  $(38,867 $(56,007

Adjustments to reconcile net loss to net cash used in operating activities:

   

Depreciation, depletion, amortization and accretion

   43,296    37,404  

Financing fee amortization

   470    1,629  

Share-based compensation expense

   1,138    1,114  

Deferred income tax benefit

   (525  (2,969

Net (gain) loss on asset disposals

   (76  5,574  

Loss on debt financings

   —      2,989  

Other

   559    755  

(Increase) decrease in operating assets, net of acquisitions:

   

Account receivable, net

   (28,917  (11,610

Inventories

   (17,820  (13,222

Costs and estimated earnings in excess of billings

   (10,246  (13,688

Other current assets

   (2,128  (491

Other assets

   2,214    (118

Increase (decrease) in operating liabilities, net of acquisitions:

   

Accounts payable

   3,589    6,691  

Accrued expenses

   8,511    (4,722

Billings in excess of costs and estimated earnings

   (4,361  (1,493

Other liabilities

   (2,717  404  
  

 

 

  

 

 

 

Net cash used for operating activities

   (45,880  (47,760
  

 

 

  

 

 

 

Cash flow from investing activities:

   

Acquisitions, net of cash acquired

   (234,870  (60,779

Purchases of property, plant and equipment

   (49,260  (40,528

Proceeds from the sale of property, plant and equipment

   5,985    7,086  

Other

   757    —    
  

 

 

  

 

 

 

Net cash used for investing activities

   (277,388  (94,221
  

 

 

  

 

 

 

Cash flow from financing activities:

   

Proceeds from investment by member

   24,350    —    

Proceeds from debt issuances

   424,750    189,681  

Payments on long-term debt

   (109,246  (61,343

Payments on acquisition-related liabilities

   (4,259  (3,426

Financing costs

   (6,354  (2,707

Other

   (88  —    
  

 

 

  

 

 

 

Net cash provided by financing activities

   329,153    122,205  
  

 

 

  

 

 

 

Net increase (decrease) in cash

   5,885    (19,776

Cash—beginning of period

   14,917    27,431  
  

 

 

  

 

 

 

Cash—end of period

  $20,802   $7,655  
  

 

 

  

 

 

 

See notes to unaudited consolidated financial statements.

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 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) income

   —       (38,298  —      22    (38,276  (591

Other comprehensive income

   —       —      573    —      573    245  

Share-based compensation

   1,051     —      —      —      1,051    —    
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance—June 28, 2014

  $512,297    $(239,213 $(5,472 $1,233   $268,845   $26,825  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance—December 29, 2012

  $484,584    $(94,085 $(9,130 $1,059   $382,428   $22,850  

Accretion/ redemption value adjustment

   —       (1,788  —      —      (1,788  1,788  

Net (loss) income

   —       (54,489  —      (30  (54,519  (1,488

Share-based compensation

   1,114     —      —      —      1,114    —    
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance—June 29, 2013

  $485,698    $(150,362 $(9,130 $1,029   $327,235   $23,150  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

See notes to unaudited consolidated financial statements.

SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Tables in thousands)

1.SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Summit Materials, LLC (“Summit Materials”) is a vertically integrated construction materials company. Across its subsidiaries, it is engaged in the production and sale of aggregates, cement, ready-mixed concrete, asphalt paving mix and concrete products. Summit Materials, 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.

Summit Materials is a wholly owned indirect subsidiary of Summit Materials Holdings L.P., whose major indirect owners are certain investment funds affiliated with Blackstone Capital Partners V L.P. and Silverhawk Summit, L.P.

The consolidated financial statements of the Company include the accounts of Summit Materials and its wholly and non-wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Basis of Presentation—These consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“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 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 28, 2013. 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 28, 2014, the results of operations and cash flows for the six month periods ended June 28, 2014 and June 29, 2013.

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. The additional week in the 53 week year will be included in the fourth quarter. The Company’s second quarter ended on June 28 and June 29 in 2014 and 2013, respectively. In 2013, Continental Cement Company, L.L.C. (“Continental Cement”), an indirect majority owned subsidiary of Summit Materials, changed its fiscal year to be consistent with the Company’s fiscal year. Prior to fiscal 2013, Continental Cement’s fiscal year was based on the calendar year with quarter-end dates of March 31, June 30, September 30 and December 31. The effect of this change to the Company’s financial position, results of operations and liquidity is immaterial.

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 its services. Therefore, the financial results for any interim period are not necessarily 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.

Use of Estimates—Preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported and the 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 construction work is 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 during the period in which the change in estimate occurs.

Business and Credit Concentrations—The Company’s operations are conducted primarily across 17 states, 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 six month periods ended June 28, 2014 and June 29, 2013.

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 not be made if earn-out thresholds are not achieved. Contingent consideration obligations are measured at fair value each reporting period, and any adjustments to fair value are recognized in earnings in the period identified. As of June 28, 2014 and December 28, 2013, contingent consideration obligations of $3.6 million and $1.9 million were included in the non-current portion of acquisition-related liabilities and, as of June 28, 2014, $2.5 million was included in the current portion of acquisition related liabilities. The $4.2 million increase in contingent consideration obligations relates to the January 17, 2014 acquisition of Alleyton Resource Corporation, Colorado Gulf, LP and certain assets of Barten Shepard Investments, LP (collectively, “Alleyton”).

The fair value of the contingent consideration obligations approximated their carrying value of $6.1 million and $1.9 million as of June 28, 2014 and December 28, 2013, respectively. 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 six month periods ended June 28, 2014 or June 29, 2013.

Financial Instruments—The Company’s financial instruments include certain acquisition-related liabilities (deferred consideration and noncompete obligations) and debt. The fair value of the deferred consideration and noncompete obligations approximate their carrying value of $46.9 million and $6.9 million, respectively, as of June 28, 2014, and $28.3 million and $4.2 million, respectively, as of December 28, 2013. The $21.3 million increase in the deferred consideration and noncompete obligations primarily relate to the acquisitions completed in 2014. The fair value was 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.

The fair value of long-term debt approximated $990.8 million and $696.5 million as of June 28, 2014 and December 28, 2013, respectively, compared to its carrying value of $927.8 million and $663.0 million,

respectively. Fair value was determined based on observable, or Level 2 inputs, such as interest rates, bond yields and quoted prices in inactive markets.

Redeemable Noncontrolling Interest—The Company owns all of the outstanding Class A Units of Continental Cement, which represent a 69.7% economic interest. Continental Cement’s Class B Units, which represent a 30.3% economic interest, are subordinate to the Class A Units. The Class B Units can be put to Continental Cement in the future based on the passage of time, which can be accelerated upon the occurrence of a contingent event; therefore, the noncontrolling interest of the Class B unit holders is classified in temporary equity. The redemption value was based upon the estimated fair value of Continental Cement at the date of acquisition and the Company has elected to accrete changes in the redemption value of the noncontrolling interest over the period from the date of issuance to the earliest anticipated redemption date, which is currently May 2016. The accretion is recognized through an adjustment to accumulated deficit. The redemption value of the redeemable noncontrolling interest as of June 28, 2014 and December 28, 2013 approximated its carrying value.

2.ACQUISITIONS

The Company completed a number of immaterial acquisitions during 2014 and 2013. The operating results of the acquired businesses have been included in the Company’s results of operations since the respective dates of the acquisitions. Assets acquired and liabilities assumed are measured at their acquisition-date fair value. Goodwill recognized in connection with the Company’s acquisitions is primarily attributable to the expected profitability, assembled workforces and operational infrastructure of the acquired businesses and the synergies expected to result after integration of those acquired businesses. The purchase price allocation for the 2014 acquisitions has not been finalized due to the recent timing of the acquisitions.

2014 Acquisitions

West region

On March 31, 2014, the Company acquired all of the stock of Troy Vines, Inc., an integrated aggregates and ready-mixed concrete business headquartered in Midland, Texas, which serves the Permian Basin region of West Texas. The acquisition was funded with cash on hand.

On January 17, 2014, the Company acquired all of the membership interests of Alleyton Resource Corporation, Colorado Gulf, LP and certain assets of Barten Shepard Investments, LP, an aggregates and ready-mixed concrete business in Houston, Texas. The Alleyton acquisition was funded with a portion of the proceeds from the January 17, 2014 issue and sale of $260.0 million aggregate principal amount of 10.5% senior notes due 2020 by the Company.

East region

On June 9, 2014, the Company acquired all of the membership interests of Buckhorn Materials LLC, an aggregates quarry in South Carolina, and Construction Materials Group LLC, a sand pit in South Carolina. The acquisition was funded with borrowings under the Company’s revolving credit facility.

2013 Acquisitions

West region

On April 1, 2013, the Company acquired all of the membership interests of Westroc, LLC, an aggregates and ready-mixed concrete provider near Salt Lake City, Utah, with borrowings under the Company’s revolving credit facility.

Central region

On April 1, 2013, the Company acquired certain aggregates, ready-mixed concrete and asphalt assets of Lafarge North America, Inc. in and around Wichita, Kansas, with borrowings under the Company’s revolving credit facility.

3.GOODWILL

Changes in the carrying amount of goodwill, by reportable segment, from December 28, 2013 to June 28, 2014 are summarized as follows:

   West   Central   East   Total 

Balance, December 28, 2013

  $54,249    $72,789    $—      $127,038  

Acquisitions

   164,125     —       26,160     190,285  
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 28, 2014

  $218,374    $72,789    $26,160    $317,323  
  

 

 

   

 

 

   

 

 

   

 

 

 

4.ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consisted of the following as of June 28, 2014 and December 28, 2013:

   June 28,
2014
  December 28,
2013
 

Trade accounts receivable

  $131,026   $85,188  

Retention receivables

   14,185    15,966  

Receivables from related parties

   1,262    202  
  

 

 

  

 

 

 

Accounts receivable

   146,473    101,356  

Less: Allowance for doubtful accounts

   (2,705  (2,019
  

 

 

  

 

 

 

Accounts receivable, net

  $143,768   $99,337  
  

 

 

  

 

 

 

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.

5.INVENTORIES

Inventories consisted of the following as of June 28, 2014 and December 28, 2013:

   June 28,
2014
   December 28,
2013
 

Aggregate stockpiles

  $80,232    $70,300  

Finished goods

   14,104     11,207  

Work in process

   4,629     2,623  

Raw materials

   20,206     12,302  
  

 

 

   

 

 

 

Total

  $119,171    $96,432  
  

 

 

   

 

 

 

6.ACCRUED EXPENSES

Accrued expenses consist of the following as of June 28, 2014 and December 28, 2013:

   June 28,   December 28, 
   2014   2013 

Interest

  $27,633    $16,456  

Payroll and benefits

   16,066     16,368  

Capital lease obligations

   13,528     2,068  

Insurance

   8,212     7,445  

Taxes (1)

   6,084     4,168  

Professional fees

   2,177     2,352  

Other (2)

   14,213     8,394  
  

 

 

   

 

 

 

Total

  $87,913    $57,251  
  

 

 

   

 

 

 

(1)Consists primarily of real estate, personal property and sales taxes.
(2)Consists primarily of subcontractor, management fee and working capital settlement accruals.

7.DEBT

Debt consisted of the following as of June 28, 2014 and December 28, 2013:

   June 28,   December 28, 
   2014   2013 

Revolver

  $65,000    $26,000  
  

 

 

   

 

 

 

Long-term debt:

    

$510.0 million senior notes, including a $17.3 million net premium at June 28, 2014 and $250 million senior notes, net of $4.0 million discount at December 28, 2013

   527,319     245,971  

$417.8 million credit facility, term loan, net of $2.6 million and $2.9 million discount at June 28, 2014 and December 28, 2013, respectively

   415,191     417,016  
  

 

 

   

 

 

 

Total

   942,510     662,987  

Current portion of long-term debt

   4,220     4,220  
  

 

 

   

 

 

 

Long-term debt

  $938,290    $658,767  
  

 

 

   

 

 

 

The contractual payments of long-term debt, including current maturities, for the five years subsequent to June 28, 2014, are as follows:

2014 (six months)

  $2,110  

2015

   5,275  

2016

   4,220  

2017

   4,220  

2018

   3,165  

2019

   398,790  

Thereafter

   510,000  
  

 

 

 

Total

   927,780  

Plus: Original issue net premium

   14,730  
  

 

 

 

Total debt

  $942,510  
  

 

 

 

Senior Notes—Summit Materials and its wholly-owned indirect subsidiary, Summit Materials Finance Corp. (“Finance Corp.” and, together with Summit Materials, the “Issuers”), are co-issuers of the 10.5% Senior Notes due January 31, 2020 (the “Senior Notes”) that have been issued under an indenture dated as of January 30, 2012 (as amended and supplemented, the “Indenture”). The Senior Notes bear interest at 10.5% per year, payable semi-annually in arrears. The Indenture contains covenants limiting, among other things, the ability of Summit Materials and its restricted subsidiaries to Consolidated Financial Statementsincur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make 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.

The Issuers issued $250.0 million aggregate principal amount of Senior Notes (the “Existing Notes”) in January 2012. On January 17, 2014, the Issuers issued an additional $260.0 million aggregate principal amount of Senior Notes (the “Additional Notes”), receiving proceeds of $282.8 million, before payment of fees and expenses and including a $22.8 million premium. The proceeds from the sale of the Additional Notes were used for the purchase of Alleyton, to make payments on the Company’s Revolver (discussed and defined below) and for general corporate purposes. The Additional Notes are treated as a single series with the Existing Notes and have substantially the same terms as those of the Existing Notes. The Additional Notes and the Existing Notes vote as one class under the Indenture.

Senior Secured Credit Facilities—The Company has a senior secured credit facilities (the “Senior Secured Credit Facilities”) providing for term loans in an aggregate amount of $422.0 million (the “Term Debt”) and revolving credit commitments in an aggregate amount of $150.0 million (the “Revolver”). The Company is required to make principal repayments of 0.25% of borrowings under the Term Debt on the last business day of each March, June, September and December. The current outstanding principal amount of Term Debt and applicable interest rate reflect the terms of a repricing consummated by the Company in February 2013, which included additional borrowings of $25.0 million, an interest rate reduction of 1.0% and a deferral of the March 2013 principal payment. The unpaid principal balance of Term Debt is due in full on the maturity date, which is January 30, 2019. On January 16, 2014, the Senior Secured Credit Facilities was amended to allow for the issuance of the Additional Notes.

The Revolver matures on January 30, 2017 and bears interest per annum equal to an applicable margin of 3.25% plus, at the Company’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) the British Bankers Association London Interbank Offered Rate (“LIBOR”) plus 1.00% or (ii) a British Bankers Association LIBOR rate determined by reference to Reuters prior to the interest period relevant to such borrowing adjusted for certain additional costs. As of June 28, 2014, the borrowing capacity under the Revolver was $62.2 million, which is net of $22.8 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.

The Company must adhere to certain financial covenants related to its borrowings under the Senior Secured Credit Facilities 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 4.75:1.0 from April 1, 2012 through June 30, 2014; 4.50:1.0 from July 1, 2014 to June 30, 2015, and 4.25:1.0 thereafter. The interest coverage ratio must be at least 1.70:1.0 from January 1, 2013 to December 31, 2014 and 1.85:1.0 thereafter.

As of June 28, 2014 and December 28, 2013, the Company was in compliance with all covenants applicable to the Senior Notes and the Senior Secured Credit Facilities. The Company’s wholly-owned subsidiary companies and its non wholly-owned subsidiary, Continental Cement, are named as issuers or guarantors, as applicable, of the Senior Notes and the Senior Secured Credit Facilities. In addition, the Company has pledged substantially all of its assets as collateral for the Senior Secured Credit Facilities.

Accrued interest on long-term debt as of June 28, 2014 and December 28, 2013 was $27.4 million and $17.1 million, respectively. Interest expense related to the debt totaled $36.5 million and $24.6 million for the six months ended June 28, 2014 and ended June 29, 2013, respectively. As of June 28, 2014 and December 28, 2013, $16.3 million and $11.5 million, respectively, of deferred financing fees were being amortized over the term of the debt using the effective interest method.

8.INCOME TAXES

Summit Materials 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 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) depletion expense and domestic production activities deduction, which are allowed as deductions for tax purposes but not recorded under 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 28, 2014 and December 28, 2013, 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 six month periods ended June 28, 2014 and June 29, 2013.

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 in accordance with applicable accounting requirements. 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 Ready Mix Company, Inc. and Harper Investments, Inc. (collectively, “Harper”) for the sellers’ 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 28, 2014, the Company has funded $8.8 million, of which $4.0 million was funded in 2012 and $4.8 million was funded in 2011. As of June 28, 2014 and December 28, 2013, an accrual of $4.3 million was recorded in other noncurrent liabilities for this matter.

During the 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 28, 2014 and December 28, 2013, unapproved change orders and claims totaled $4.0 million ($0.5 million in costs and estimated earnings in excess of billings, $1.2 million in accounts receivable and $2.3 million in other assets) and $3.2 million ($0.5 million in costs and estimated earnings in excess of billings and $2.7 million in other assets), respectively.

Environmental Remediation—The Company’s operations are subject to and affected by federal, state 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. Management 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 will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity in the future.

Other—In February 2011, the Company incurred a property loss related to a sunken barge with cement product aboard. During the six months ended June 29, 2013, the Company recorded a $1.8 million charge for costs to remove the barge from the waterway. As of June 28, 2014 and December 28, 2013, the Company had $0.4 million and $0.9 million, respectively, included in accrued expenses as management’s best estimate of the remaining costs to remove the barge.

In the ordinary course of business, the Company enters into various firm purchase commitments with terms generally less than one year for certain raw materials and services. 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.

10.SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

   Six months ended 
   June 28,
2014
   June 29,
2013
 

Cash payments:

    

Interest

  $25,881    $31,439  

Income taxes

   1,320     653  

11.SEGMENT INFORMATION

The Company has determined that it 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 construction 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:

   Six months ended 
   June 28,
2014
   June 29,
2013
 

Revenue:

    

West region

  $267,130    $179,719  

Central region

   156,659     128,680  

East region

   51,597     53,272  
  

 

 

   

 

 

 

Total revenue

  $475,386    $361,671  
  

 

 

   

 

 

 

   Six months ended 
   June 28,
2014
  June 29,
2013
 

Segment profit:

   

West region

  $32,541   $85  

Central region

   28,400    19,182  

East region

   (1,406  (2,377

Corporate and other

   (19,046  (12,272
  

 

 

  

 

 

 

Total reportable segments and corporate

   40,489    4,618  

Interest expense

   40,470    27,849  

Depreciation, depletion, amortization and accretion

   40,695    36,026  
  

 

 

  

 

 

 

Income (loss) from continuing operations before taxes

  $(40,676 $(59,257
  

 

 

  

 

 

 

   Six months ended 
   June 28,
2014
   June 29,
2013
 

Cash paid for capital expenditures:

    

West region

  $17,924    $14,194  

Central region

   23,372     19,826  

East region

   5,533     5,742  
  

 

 

   

 

 

 

Total reportable segments

   46,829     39,762  

Corporate and other

   2,431     766  
  

 

 

   

 

 

 

Total capital expenditures

  $49,260    $40,528  
  

 

 

   

 

 

 

   Six months ended 
   June 28,
2014
   June 29,
2013
 

Depreciation, depletion, amortization and accretion:

    

West region

  $14,414    $12,291  

Central region

   18,351     16,329  

East region

   7,288     7,362  
  

 

 

   

 

 

 

Total reportable segments

   40,053     35,982  

Corporate and other

   642     44  
  

 

 

   

 

 

 

Total depreciation, depletion, amortization and accretion

  $40,695    $36,026  
  

 

 

   

 

 

 

   June 28,
2014
   December 28,
2013
 

Total assets:

    

West region

  $659,071    $383,544  

Central region

   694,582     657,421  

East region

   235,835     192,486  
  

 

 

   

 

 

 

Total reportable segments

   1,589,488     1,233,451  

Corporate and other

   28,152     14,343  
  

 

 

   

 

 

 

Total

  $1,617,640    $1,247,794  
  

 

 

   

 

 

 

   Six months ended 
   June 28,
2014
  June 29,
2013
 

Revenue by product:*

   

Aggregates

  $91,365   $68,304  

Cement

   33,387    30,914  

Ready-mixed concrete

   113,769    46,412  

Asphalt

   99,082    75,208  

Paving and related services

   199,420    171,946  

Other

   (61,637  (31,113
  

 

 

  

 

 

 

Total revenue

  $475,386   $361,671  
  

 

 

  

 

 

 

*Revenue by product includes intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other.

12.RELATED PARTY TRANSACTIONS

The Company incurred certain management fees due to Blackstone Management Partners L.L.C. (“BMP”) totaling $2.3 million and $1.2 million during the six months ended June 28, 2014 and June 29, 2013, respectively. Under the terms of an agreement with Summit Materials Holdings L.P. and BMP, BMP provides monitoring, advisory and consulting services to the Company. In consideration for these services, the Company pays BMP the greater of $300,000 or 2.0% of the Company’s annual consolidated profit, as defined in the agreement. The management fees paid pursuant to this agreement are included in general and administrative expenses.

BMP also undertakes financial and structural analysis, due diligence investigations, corporate strategy and other advisory services and negotiation assistance related to acquisitions, for which the Company pays BMP a transaction fee equal to 1.0% of the aggregate enterprise value of any acquired entity or, if such transaction is structured as an asset purchase or sale, 1.0% of the consideration paid for or received in respect of the assets acquired or disposed. Under the terms of the agreement, BMP is permitted to assign, and has assigned, a portion of the fees to which it is entitled to Silverhawk Summit, L.P. and to certain other equity-holding current and former employees and board members. During the six months ended June 28, 2014, the Company paid BMP $2.3 million under this agreement and paid immaterial amounts to Silverhawk Summit, L.P. and to other equityholders. The acquisition-related fees paid pursuant to this agreement are included in transaction costs.

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

In addition to the fees paid to BMP pursuant to the agreements described above, the Company reimburses BMP for direct expenses incurred, which were not material in the three and six month periods ended June 28, 2014 and June 29, 2013.

The Company had an immaterial amount and $0.4 million of revenue from unconsolidated affiliates during the six month periods ended June 28, 2014 and June 29, 2013, respectively. As of June 28, 2014 and December 28, 2013, accounts receivable from affiliates was zero and $0.4 million, respectively.

Cement sales to companies owned by a noncontrolling member of Continental Cement were approximately $6.2 million and $5.1 million during the six month periods ended June 28, 2014 and June 29, 2013, respectively. Accounts receivables due from the noncontrolling member were $1.2 million and $0.2 million

as of June 28, 2014 and December 28, 2013, respectively. In addition, as of December 28, 2013, the Company had accrued interest payments of $0.7 million due to a certain noncontrolling member for a related party note, which the Company paid in the first quarter of 2014. The principal balance on the note was repaid in January 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.SENIOR NOTES’ GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

Summit Materials’ wholly-owned subsidiary companies other than Finance Corp. (“Wholly-owned Guarantors”) and non wholly-owned subsidiary, Continental Cement (“Non Wholly-owned Guarantor”), are named as guarantors (collectively, the “Guarantors”) of the Senior Notes. Certain other partially-owned subsidiaries, including a subsidiary of Continental Cement, do not guarantee the Senior Notes (collectively, the “Non-Guarantors”). Summit Materials (“Parent”) and Finance Corp. (collectively, the “Issuers”) were co-issuers of the Senior Notes. The Guarantors provide a joint and several, full and unconditional guarantee of the Senior Notes. There are no significant restrictions on Summit Materials 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 Materials or its direct or indirect subsidiaries.

The following condensed consolidating balance sheets, statements of operations and cash flows are provided for the Issuers, the Non-Wholly-owned Guarantor, the Wholly-owned Guarantors and the Non-Guarantors. 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 results of operations, cash flows or financial position had the guarantor or non-guarantor subsidiaries operated as independent entities.

Condensed Consolidating Balance Sheets

June 28, 2014

   Issuers  Non-Wholly-owned
Guarantor
   Wholly-
owned
Guarantors
   Non-
Guarantors
   Elim-
inations
  Consol-
idated
 
Assets          

Current assets:

          

Cash

  $21,685   $7    $2,681    $4,723    $(8,294 $20,802  

Accounts receivable, net

   —      12,338     128,876     4,922     (2,368  143,768  

Intercompany receivables

   264,955    —       33,532     —       (298,487  —    

Cost and estimated earnings in excess of billings

   —      —       21,018     761     —      21,779  

Inventories

   —      14,569     102,293     2,309     —      119,171  

Other current assets

   2,791    722     9,645     375     (298  13,235  
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current assets

   289,431    27,636     298,045     13,090     (309,447  318,755  

Property, plant and equipment, net

   5,755    305,274     602,744     6,740     —      920,513  

Goodwill

   —      23,124     293,227     972     —      317,323  

Intangible assets, net

   —      592     14,683     —       —      15,275  

Other assets

   499,692    20,378     63,234     1,235     (538,765  45,774  
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total assets

  $794,878   $377,004    $1,271,933    $22,037    $(848,212 $1,617,640  
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest          

Current liabilities:

          

Current portion of debt

  $69,220   $1,018    $3,192    $—      $(4,210 $69,220  

Current portion of acquisition-related liabilities

   1,141    —       17,898     —       —      19,039  

Accounts payable

   4,517    7,978     64,426     3,691     (2,368  78,244  

Accrued expenses

   25,566    7,691     62,068     1,180     (8,592  87,913  

Intercompany payables

   101,411    21,810     174,376     890     (298,487  —    

Billings in excess of costs and estimated earnings

   —      —       4,877     25     —      4,902  
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current liabilities

   201,855    38,497     326,837     5,786     (313,657  259,318  

Long-term debt

   938,290    154,081     482,993     —       (637,074  938,290  

Acquisition-related liabilities

   —      —       40,947     —       —      40,947  

Other noncurrent liabilities

   879    17,570     64,966     —       —      83,415  
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities

   1,141,024    210,148     915,743     5,786     (950,731  1,321,970  

Redeemable noncontrolling interest

   —      —       —       —       26,825    26,825  

Redeemable members’ interest

   —      23,750     —       —       (23,750  —    

Total member’s interest

   (346,146  143,106     356,190     16,251     99,444    268,845  
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

  $794,878   $377,004    $1,271,933    $22,037    $(848,212 $1,617,640  
  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Condensed Consolidating Balance Sheets

December 29, 2012 and December 31, 2011

28, 2013

 

   Issuers   Non-Wholly-owned
Guarantor
   Wholly-
owned
Guarantors
   Non-
Guarantors
   Elim-
inations
  Consol-
idated
 
Assets           

Current assets:

           

Cash

  $10,375    $9    $3,442    $3,631    $(2,540 $14,917  

Accounts receivable, net

   —       4,587     93,102     3,100     (1,452  99,337  

Intercompany receivables

   38,134     3,433     30,787     —       (72,354  —    

Cost and estimated earnings in excess of billings

   —       —       10,539     228     —      10,767  

Inventories

   —       10,402     85,372     658     —      96,432  

Other current assets

   750     444     11,715     272     —      13,181  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current assets

   49,259     18,875     234,957     7,889     (76,346  234,634  

Property, plant and equipment, net

   3,969     301,908     518,935     6,966     —      831,778  

Goodwill

   —       23,124     102,942     972     —      127,038  

Intangible assets, net

   —       642     14,505     —       —      15,147  

Other assets

   296,494     17,973     37,535     1,303     (314,108  39,197  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total assets

  $349,722    $362,522    $908,874    $17,130    $(390,454 $1,247,794  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest           

Current liabilities:

           

Current portion of debt

  $26,010    $1,018    $3,192    $—      $—     $30,220  

Current portion of acquisition-related liabilities

   2,000     —       8,635     —       —      10,635  

Accounts payable

   5,455     9,387     57,142     1,572     (1,452  72,104  

Accrued expenses

   12,041     9,185     37,342     1,223     (2,540  57,251  

Intercompany payables

   —       —       71,556     798     (72,354  —    

Billings in excess of costs and estimated earnings

   —       —       8,837     426     —      9,263  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total current liabilities

   45,506     19,590     186,704     4,019     (76,346  179,473  

Long-term debt

   19,587     154,590     484,590     —       —      658,767  

Acquisition-related liabilities

   85     —       23,671     —       —      23,756  

Other noncurrent liabilities

   959     20,306     56,215     —       —      77,480  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities

   66,137     194,486     751,180     4,019     (76,346  939,476  

Redeemable noncontrolling interest

   —       —       —       —       24,767    24,767  

Redeemable members’ interest

   —       23,450     —       —       (23,450  —    

Total member’s interest

   283,585     144,586     157,694     13,111     (315,425  283,551  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

  $349,722    $362,522    $908,874    $17,130    $(390,454 $1,247,794  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

Condensed Consolidating Statements of Operations

For the six months ended June 28, 2014

   Issuers  Non-Wholly-owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
   Elim-
inations
  Consol-
idated
 

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
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Condensed Consolidating Statements of Operations

For the six months ended June 29, 2013

   Issuers  Non-Wholly-owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
   Elim-
inations
  Consol-
idated
 

Revenue

  $—     $32,799   $314,895   $20,486    $(6,509 $361,671  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Cost of revenue (excluding items shown separately below)

   —      27,833    243,357    13,235     (6,509  277,916  

General and administrative expenses

   2,896    5,083    67,296    584     —      75,859  

Depreciation, depletion, amortization and accretion

   44    5,532    29,938    512     —      36,026  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Operating (loss) income

   (2,940  (5,649  (25,696  6,155     —      (28,130

Other expense (income), net

   51,549    (1,295  1,529    174     (48,679  3,278  

Interest expense

   —      5,423    24,095    239     (1,908  27,849  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) income from continuing operations before taxes

   (54,489  (9,777  (51,320  5,742     50,587    (59,257

Income tax benefit

   —      —      (3,347  —       —      (3,347
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

(Loss) income from continuing operations

   (54,489  (9,777  (47,973  5,742     50,587    (55,910

Loss from discontinued operations

   —      —      97    —       —      97  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income

   (54,489  (9,777  (48,070  5,742     50,587    (56,007

Net loss attributable to noncontrolling interest

   —      —      —      —       (1,518  (1,518
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Net (loss) income attributable to member of Summit Materials, LLC

  $(54,489 $(9,777 $(48,070 $5,742    $52,105   $(54,489
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

 

Condensed Consolidating Statements of Cash Flows

YearFor the six months ended December 31, 2010June 28, 2014

 

   Summit
Materials,
LLC
(Parent)
  Non wholly
owned
Guarantor
  Wholly
owned
Guarantors
  Non
Guarantors
  Eliminations  Consolidated 

Net cash (used in) provided by operating activities

  $(669 $(12,379 $(8,626 $1,145  $—     $(20,529
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flows from investing activities:

       

Acquisitions — net of cash acquired

   —      —      (482,333  —      —      (482,333

Proceeds from the sale of investments

   —      —      —      —      —      —    

Purchases of property, plant and equipment

   (135  (5,334  (15,312  (364  —      (21,145

Proceeds from the sale of property, plant and equipment

   —      475   4,162   63   —      4,700 

Cash contribution to affiliates

   (336,280  —      (135,000  —      471,280   —    

Other

   —      —      —      (603  —      (603
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash (used for) provided by investing activities

   (336,415  (4,859  (628,483  (904  471,280   (499,381
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities:

       

Proceeds from investment by member

   338,639   135,000   336,280   —      (471,280  338,639 

Net proceeds from debt issuance

   37,478   7,300   439,383   1,212   —      485,373 

Payments on long-term debt

   —      (125,053  (120,202  (600  —      (245,855

Payments on acquisition-related liabilities

   —      —      (2,721  —      —      (2,721

Payment of dividends

   —      —      190   (237  —      (47
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash provided by (used for) financing activities

   376,117   17,247   652,930   375   (471,280  575,389 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net (decrease) increase in cash

   39,033   9   15,821   616   —      55,479 

Cash — beginning of period

   403   —      9,211   —      —      9,614 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash — end of period

  $39,436  $9  $25,032  $616  $—     $65,093 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
   Issuers  Non-Wholly-owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
  Elim-
inations
  Consol-
idated
 

Net cash (used in) provided by 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 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  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

SUMMIT MATERIALS, LLC AND SUBSIDIARIESCondensed Consolidating Statements of Cash Flows

For the six months ended June 29, 2013

 

   Issuers  Non-Wholly-owned
Guarantor
  Wholly-
owned
Guarantors
  Non-
Guarantors
  Elim-
inations
  Consol-
idated
 

Net cash (used in) provided by operating activities

  $(28 $(12,542 $(39,989 $4,799   $—     $(47,760
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from investing activities:

       

Acquisitions, net of cash acquired

   —      —      (60,779  —      —      (60,779

Purchase of property, plant and equipment

   (766  (15,214  (23,514  (1,034  —      (40,528

Proceeds from the sale of property, plant, and equipment

   —      —      7,086    —      —      7,086  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (766  (15,214  (77,207  (1,034  —      (94,221
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities:

       

Net proceeds from debt issuance

   189,681    —      —      —      —      189,681  

Loans received from and payments made on loans from other Summit Companies

   (124,587  27,367    100,970    (4,338  588    —    

Payments on long-term debt

   (61,343  —      —      —      —      (61,343

Payments on acquisition-related liabilities

   —      —      (3,426  —      —      (3,426

Financing costs

   (2,707  —      —      —      —      (2,707
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net cash provided by (used for) financing activities

   1,044    27,367    97,544    (4,338  588    122,205  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net (decrease) increase in cash

   250    (389  (19,652  (573  588    (19,776

Cash—Beginning of period

   697    397    30,981    680    (5,324  27,431  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Cash—End of period

  $947   $8   $11,329   $107   $(4,736 $7,655  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Notes to Consolidated Financial Statements

December 29, 2012 and December 31, 2011* * *

(22)Subsequent Events

The Company has evaluated its December 29, 2012 consolidated financial statements for subsequent events through March 27, 2013, the date the financial statements were available to be issued.

On February 5, 2013, the Company entered into an amendment to its existing Senior Notes and Senior Secured Credit Facility (Amendment No. 1). On February 7, 2013, the Company entered into a Tranche A Revolving Credit Commitment Conversion Agreement. The terms of Amendment No.1 include the following:

reduction in the applicable margins used to calculate interest rates for term loans and $131.0 million of the $150.0 million revolving credit loans by 1.0%;

increase in the principal amount of the term loans borrowed by $25.0 million with the same terms as the existing term loans;

a requirement that the Company pay a fee equal to 1.0% of the principal amount of term loans repaid in connection with certain repricing or refinancing transactions within six months after February 5, 2013; and

additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated Net Leverage Ratio and reducing the applicable minimum Interest Coverage Ratio.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Member

of Summit Materials, LLC:

We have audited the accompanying consolidated balance sheetsheets of Continental Cement Company, L.L.C. and subsidiary as of December 28, 2013 and December 31, 2012, and the related consolidated statements of operations, comprehensive income (loss), cash flows and changes in redeemable members’ interest and member’s interest for the yearyears then ended. The consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements based on our audit.

audits.

We conducted our auditaudits 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit providesaudits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Continental Cement Company, L.L.C. and subsidiary as of December 28, 2013 and December 31, 2012, and the results of their operations and their cash flows for the yearyears then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

McLean, Virginia

March 27, 20137, 2014

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Member of

Summit Materials, LLC and Subsidiaries

Washington, D.C.

We have audited the accompanying consolidated balance sheet of Continental Cement Company, L.L.C. and Subsidiary (the “Company”) as of December 31, 2011, and the related consolidated statements of operations, comprehensive (loss) income, changes in redeemable member’s interest and equity, and cash flows of Continental Cement Company, L.L.C. and Subsidiary (the “Company”) for the year ended December 31, 2011 and for the periods from May 27, 2010 to December 31, 2010 (Successor) and from January 1, 2010 to May 26, 2010 (Predecessor).2011. 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.

audit.

We conducted our auditsaudit 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our auditsaudit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. We believe that our auditsaudit provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements, present fairly, in all material respects, the financial positionresults of operations and cash flows of Continental Cement Company, L.L.C. and Subsidiary as of December 31, 2011, and the results of their operations and their cash flows for the year ended December 31, 2011, and for the periods from May 27, 2010 to December 31, 2010 (Successor) and from January 1, 2010 to May 26, 2010 (Predecessor), in conformity with accounting principles generally accepted in the United States of America.

/s/DELOITTE & TOUCHE LLP

McLean, Virginia

April 18, 2012

CONTINENTAL CEMENT COMPANY, L.L.C.

AND SUBSIDIARY

Consolidated Balance Sheets

December 28, 2013 and December 31, 2012 and 2011

(In thousands, except unit amounts)

 

   2012  2011 
Assets   

Current assets:

   

Cash

  $599  $55 

Accounts receivable, net

   9,924   7,657 

Due from Summit

   10,303   —   

Inventories

   7,073   9,914 

Other current assets

   815   795 
  

 

 

  

 

 

 

Total current assets

   28,714   18,421 

Property, plant and equipment, net

   291,666   289,083 

Goodwill

   24,096   24,096 

Intangible asset, net

   742   842 

Other assets

   10,705   11,505 
  

 

 

  

 

 

 

Total assets

  $355,923  $343,947 
  

 

 

  

 

 

 

Liabilities, Redeemable Members’

Interest and Member’s Interest

   
   2012  2011 

Current liabilities:

   

Accounts payable

  $7,248  $8,550 

Accrued expenses

   11,301   5,509 

Deferred sales revenue

   222   585 

Current portion of long-term debt

   965   —   
  

 

 

  

 

 

 

Total current liabilities

   19,736   14,644 

Long-term debt

   155,394   153,980 

Pension and postretirement benefit obligations

   25,568   23,322 

Other noncurrent liabilities

   1,524   1,339 
  

 

 

  

 

 

 

Total liabilities

   202,222   193,285 
  

 

 

  

 

 

 

Redeemable members’ interest (100,000,000 Class B units issued and authorized)

   22,850   22,250 

Member’s interest:

   

Member’s equity (100 Class A units issued and authorized)

   135,000   135,000 

Paid-in capital

   118   56 

Retained earnings

   7,764   1,739 

Accumulated other comprehensive loss

   (12,031  (8,383
  

 

 

  

 

 

 

Total member’s interest

   130,851   128,412 
  

 

 

  

 

 

 

Total liabilities, redeemable members’ interest and member’s interest

  $355,923  $343,947 
  

 

 

  

 

 

 

   2013  2012 
Assets   

Current assets:

   

Cash

  $9  $599 

Accounts receivable, net

   7,353   9,924 

Due from Affiliates

   2,990   10,303 

Inventories

   10,402   7,073 

Other current assets

   482   815 
  

 

 

  

 

 

 

Total current assets

   21,236   28,714 

Property, plant and equipment, net

   306,204   291,666 

Goodwill

   24,096   24,096 

Other assets

   12,576   11,447 
  

 

 

  

 

 

 

Total assets

  $364,112  $355,923 
  

 

 

  

 

 

 
Liabilities, Redeemable Members’ Interest and Member’s Interest   

Current liabilities:

   

Current portion of long-term debt due to Summit Materials

  $1,018  $965 

Accounts payable

   10,165   7,248 

Accrued expenses

   9,997   11,523 
  

 

 

  

 

 

 

Total current liabilities

   21,180   19,736 

Long-term debt due to Summit Materials

   154,590   155,394 

Pension and post-retirement benefit obligations

   19,457   25,568 

Other noncurrent liabilities

   850   1,524 
  

 

 

  

 

 

 

Total liabilities

   196,077   202,222 
  

 

 

  

 

 

 

Commitments and contingencies (see note 9)

   

Redeemable members’ interest (100,000,000 Class B units issued and authorized)

   23,450   22,850 

Member’s interest:

   

Member’s equity (100 Class A units issued and authorized)

   135,180   135,118 

Retained earnings

   17,029   7,764 

Accumulated other comprehensive loss

   (7,624)  (12,031)
  

 

 

  

 

 

 

Total member’s interest

   144,585   130,851 
  

 

 

  

 

 

 

Total liabilities, redeemable members’ interest and member’s interest

  $364,112  $355,923 
  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

CONTINENTAL CEMENT COMPANY, L.L.C.

AND SUBSIDIARY

Consolidated Statements of Operations

Years ended December 28, 2013, December 31, 2012 and 2011 and periods

from May 27, 2010 to December 31, 2010 (Successor) and

January 1, 2010 to May 26, 2010 (Predecessor)2011

(In thousands)

 

   Successor      Predecessor 
   Year ended December 31,  May 27, 2010
to
December 31,

2010
      January  1,
2010

to
May 26, 2010
 
   2012  2011     

Revenue:

        

Revenue from third parties:

        

Product

  $65,213  $57,804  $37,763     $18,466 

Service

   13,366   8,708   4,084      1,454 

Revenue from related parties:

        

Product

   16,303   12,269   12,990      3,976 

Service

   —     707   668      379 
  

 

 

  

 

 

  

 

 

     

 

 

 

Total revenue

   94,882   79,488   55,505      24,275 
  

 

 

  

 

 

  

 

 

     

 

 

 

Cost of revenue (exclusive of items shown separately below):

        

Product

   49,541   41,221   30,424      24,474 

Service

   8,778   6,500   3,237      1,994 
  

 

 

  

 

 

  

 

 

     

 

 

 

Total cost of revenue

   58,319   47,721   33,661      26,468 

General and administrative expenses

   6,706   4,761   2,547      3,549 

Depreciation, depletion, amortization and accretion

   10,479   9,984   5,390      4,317 

Transaction costs

   —     —     5,671      7,989 
  

 

 

  

 

 

  

 

 

     

 

 

 

Operating income (loss)

   19,378   17,022   8,236      (18,048

Other income (expense)

   (131  61   141      27 

Interest expense

   (12,622  (14,621  (8,150     (18,536
  

 

 

  

 

 

  

 

 

     

 

 

 

Net income (loss)

   6,625   2,462   227      (36,557

Net loss attributable to noncontrolling interest

   —     —     —        (97
  

 

 

  

 

 

  

 

 

     

 

 

 

Net income (loss) attributable to controlling interest

  $6,625  $2,462  $227     $(36,460
  

 

 

  

 

 

  

 

 

     

 

 

 

   2013  2012   2011 

Revenue:

     

Revenue from third parties:

     

Product

  $64,181   $65,213    $57,804  

Service

   15,490    13,366     8,708  

Revenue from related parties:

     

Product

   16,578    16,303     12,269  

Service

   —      —       707  
  

 

 

  

 

 

   

 

 

 

Total revenue

   96,249    94,882     79,488  
  

 

 

  

 

 

   

 

 

 

Cost of revenue (exclusive of items shown separately below):

     

Product

   46,137    49,541     41,221  

Service

   9,105    8,778     6,500  
  

 

 

  

 

 

   

 

 

 

Total cost of revenue

   55,242    58,319     47,721  

General and administrative expenses

   8,367    6,706     4,761  

Depreciation, depletion, amortization and accretion

   11,812    10,479     9,984  
  

 

 

  

 

 

   

 

 

 

Operating income

   20,828    19,378     17,022  

Other (income) expense, net

   (90  131     (61

Interest expense

   11,053    12,622     14,621  
  

 

 

  

 

 

   

 

 

 

Net income

  $9,865   $6,625    $2,462  
  

 

 

  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

CONTINENTAL CEMENT COMPANY, L.L.C.

AND SUBSIDIARY

Consolidated Statements of Comprehensive Income (Loss)

Years ended December 28, 2013, December 31, 2012 and 2011 and periods

from May 27, 2010 to December 31, 2010 (Successor) and

January 1, 2010 to May 26, 2010 (Predecessor)2011

(In thousands)

 

   Successor  

 

  Predecessor 
   Year ended December 31,  May 27, 2010
to
December 31,

2010
  

 

  January  1,
2010

to
May 26, 2010
 
       2012          2011         

Net income (loss)

  $6,625  $2,462  $227     $(36,557

Other comprehensive loss – pension and post-retirement liability adjustment

   (3,648  (5,675  (2,708     (3,546
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Comprehensive income (loss)

   2,977   (3,213  (2,481     (40,103

Less comprehensive loss attributable to the noncontrolling interest

   —     —     —        (97
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Comprehensive income (loss) attributable to the controlling interest

  $2,977  $(3,213 $(2,481    $(40,006
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

   2013   2012  2011 

Net income

  $9,865    $6,625   $2,462  

Pension and postretirement liability adjustment

   4,407     (3,648  (5,675
  

 

 

   

 

 

  

 

 

 

Comprehensive income (loss)

  $14,272    $2,977   $(3,213
  

 

 

   

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

CONTINENTAL CEMENT COMPANY, L.L.C.

AND SUBSIDIARY

Consolidated Statements of Cash Flows

Years ended December 28, 2013, December 31, 2012 and 2011 and periods

from May 27, 2010 to December 31, 2010 (Successor) and

January 1, 2010 to May 26, 2010 (Predecessor)2011

(In thousands)

 

   Successor  

 

  Predecessor 
   Year ended December 31,  May 27, 2010
to
December 31,

2010
  

 

  January  1,
2010

to
May 26, 2010
 
       2012          2011         

Cash flows from operating activities:

        

Net income (loss)

  $6,625  $2,462  $227     $(36,557

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

        

Depreciation, depletion, amortization and accretion

   10,479   9,985   5,390      4,317 

Financing fee amortization

   12   138   80      1,166 

Interest expense paid in kind

   —     —     —        4,421 

Grant of redeemable members’ interest to interest expense

   —     —     —        3,528 

Interest payments on loans from other Summit companies

   (83  —     —        —   

Other

   (10  170   25      (224

(Increase) decrease in operating assets, net of acquisitions:

        

Account receivable

   (1,924  (1,232  2,819      (2,834

Other current assets

   58   (251  (119     (202

Inventories

   2,841   (3,191  9,750      7,014 

Other assets

   308   (2,872  1,939      25 

(Decrease) increase in operating liabilities, net of acquisitions:

        

Accounts payable

   (907  865   640      (2,553

Accrued expenses

   6,685   650   (26,359     15,606 

Pension and postretirement benefit obligations

   (1,368  (1,644  (2,328     —   

Other liabilities

   (340  (49  (5,236     (95
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Net cash provided by (used in) operating activities

   22,379   5,031   (13,172     (6,388
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Cash flows from investing activities:

        

Loans to affiliates

   (10,220  —     —        —   

Decrease in restricted cash

   —     —     —        3,105 

Purchase of property, plant and equipment

   (12,805  (7,110  (6,726     (4,341

Proceeds from the sale of property, plant and equipment

   69   168   475      —   

Other

   (79  —     —        —   
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Net cash used in investing activities

   (23,035  (6,942  (6,251     (1,236
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Cash flows from financing activities:

        

Member contribution

   —     —     135,000      —   

Proceeds from borrowing

   7,000   36,500   7,300      21,900 

Principal payments on long-term debt

   (5,783  (34,500  (125,053     (12,100

Deferred financing fees

   (17  (43  —        —   
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Net cash provided by financing activities

   1,200   1,957   17,247      9,800 
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Net increase (decrease) in cash

   544   46   (2,176     2,176 

Cash – beginning of period

   55   9   2,185      9 
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

Cash – end of period

  $599  $55  $9     $2,185 
  

 

 

  

 

 

  

 

 

  

 

  

 

 

 

   2013  2012  2011 

Cash flow from operating activities:

    

Net income

  $9,865   $6,625    2,462  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation, depletion, amortization and accretion

   11,812    10,479    9,984  

Other

   801    (78  308  

Decrease (increase) in operating assets:

    

Accounts receivable

   2,695    (1,924  (1,232

Inventories

   (3,329  2,841    (3,191

Other current assets

   333    58    (251

Other assets

   (1,304  308    (2,872

Increase (decrease) in operating liabilities:

    

Accounts payable

   2,093    (907  865  

Accrued expenses

   (1,574  6,685    650  

Pension and post-retirement benefit obligations

   (1,704  (1,368  (1,644

Other liabilities

   (1,099  (340  (48
  

 

 

  

 

 

  

 

 

 

Net cash provided by operating activities

   18,589    22,379    5,031  
  

 

 

  

 

 

  

 

 

 

Cash flow from investing activities:

    

Loans to and repayments from affiliates, net

   7,118    (10,220  —    

Purchases of property, plant and equipment

   (25,594  (12,805  (7,110

Proceeds from the sale of property, plant and equipment

   3    69    168  

Other

   —      (79  —    
  

 

 

  

 

 

  

 

 

 

Net cash used for investing activities

   (18,473  (23,035  (6,942
  

 

 

  

 

 

  

 

 

 

Cash flow from financing activities:

    

Proceeds from borrowings

   —      7,000    36,500  

Principal payments on long-term debt

   (750  (5,783  (34,500

Other

   44    (17  (43
  

 

 

  

 

 

  

 

 

 

Net cash provided by financing activities

   (706  1,200    1,957  
  

 

 

  

 

 

  

 

 

 

Net (decrease) increase in cash

   (590  544    46  

Cash—beginning of period

   599    55    9  
  

 

 

  

 

 

  

 

 

 

Cash—end of period

  $9   $599    55  
  

 

 

  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

CONTINENTAL CEMENT COMPANY, L.L.C.

AND SUBSIDIARY

Consolidated Statements of Changes in Redeemable Members’ Interest and Member’s Interest

Years ended December 28, 2013, December 31, 2012 and 2011 and periods

from May 27, 2010 to December 31, 2010 (Successor) and

January 1, 2010 to May 26, 2010 (Predecessor)2011

(In thousands)

 

  Redeemable
members’
interest
  Member’s
equity
  Paid
in
capital
  Retained
earnings
(accumulated
deficit)
  Accumulated
other
comprehensive
loss
  Total
controlling
interest in
member’s
equity (deficit)
  Noncontrolling
interest
  Total
member’s
interest
 

Balance – January 1, 2010

 $5,000  $16,000  $—    $(26,884 $(12,465 $(23,349 $(161 $(23,510

Net loss

  —     —     —     (36,460  —     (36,460  (97  (36,557

Other comprehensive loss

  —     —     —     —     (3,546  (3,546  —     (3,546

Grant of redeemable members’ units

  3,528   —     —     —     —     —     —     —   

Fair value adjustment – redeemable members’ units

  1,526   —     —     (1,526  —     (1,526  —     (1,526
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance – May 26, 2010 (Predecessor)

 $10,054  $16,000  $—    $(64,870 $(16,011 $(64,881 $(258 $(65,139
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
        

Balance – May 27, 2010 (Successor)

 $21,300  $135,000  $—    $—    $ —    $135,000  $—    $135,000 

Accretion of redeemable noncontrolling interest

  350   —     —     (350  —     (350  —     (350

Other comprehensive loss

  —     —     —     —     (2,708  (2,708  —     (2,708

Net income

  —     —     —     227   —     227   —     227 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance – December 31, 2010

  21,650   135,000   —     (123  (2,708  132,169   —     132,169 

Accretion of redeemable members’ interest

  600   —     —     (600  —     (600  —     (600

Other comprehensive loss

  —     —     —     —     (5,675  (5,675  —     (5,675

Net income

  —     —     —     2,462   —     2,462   —     2,462 

Share-based compensation

  —     —     56   —     —     56   —     56 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance – December 31, 2011

  22,250   135,000   56   1,739   (8,383  128,412   —     128,412 

Accretion of redeemable members’ interest

  600   —     —     (600  —     (600  —     (600

Other comprehensive loss

  —     —     —     —     (3,648  (3,648  —     (3,648

Net income

  —     —     —     6,625   —     6,625   —     6,625 

Share-based compensation

  —     —     62   —     —     62   —     62 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance – December 31, 2012

 $22,850  $135,000  $118  $7,764  $(12,031 $130,851  $—    $130,851 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

   Redeemable
members’
interest
   Member’s
equity
   Retained
earnings
  Accumulated
other
comprehensive
(loss) income
  Total
member’s
interest
 

Balance—December 31, 2010

  $21,650    $135,000    $(123 $(2,708 $132,169  

Accretion of redeemable members’ interest

   600     —       (600  —      (600

Other comprehensive loss

   —       —       —      (5,675  (5,675

Net income

   —       —       2,462    —      2,462  

Share-based compensation

   —       56     —      —      56  
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

 

Balance—December 31, 2011

   22,250     135,056     1,739    (8,383  128,412  

Accretion of redeemable members’ interest

   600     —       (600  —      (600

Other comprehensive loss

   —       —       —      (3,648  (3,648

Net income

   —       —       6,625    —      6,625  

Share-based compensation

   —       62     —      —      62  
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

 

Balance—December 31, 2012

   22,850     135,118     7,764    (12,031  130,851  

Accretion of redeemable members’ interest

   600     —       (600  —      (600

Other comprehensive income

   —       —       —      4,407    4,407  

Net income

   —       —       9,865    —      9,865  

Share-based compensation

   —       62     —      —      62  
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

 

Balance—December 28, 2013

  $23,450    $135,180    $17,029   $(7,624 $144,585  
  

 

 

   

 

 

   

 

 

  

 

 

  

 

 

 

See accompanying notes to consolidated financial statements.

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(InTables in thousands)

 

(1)Summary of Organization and Significant Accounting Policies

 

 (a)Business Activities and Organization

Continental Cement Company, L.L.C. (the “Company” or “Continental Cement”), a Delaware limited liability company, was formed pursuant to the Amended and Restated Continental Cement Limited Liability Company Agreement (“LLC Agreement”). As such, liability of its Members is generally limited to the amount of their net investment in the Company.

(b)Successor/Predecessor Presentation

As a result of Summit Holdings II, LLC (“Summit II”), a wholly-owned subsidiary of Summit Materials, LLC (“Summit”), purchasing a controlling interest in Continental Cement effective May 27, 2010 (“Transaction”), the consolidated financial statements and certain footnote presentations included herein separate the Company’s presentations into two distinct periods, the periods subsequent to Summit’s acquisition of a majority of the Company’s membership interests (labeled Successor) and the preceding period (labeled Predecessor), to indicate the application of different bases of accounting between the periods presented. This is presented in the consolidated financial statements with a black line separating Predecessor and Successor indicating that the amounts shown for the periods before and after the Transaction of Continental Cement are not comparable.

(c)Company’s Activities

The Company produces Portland cement at its plant located in Hannibal, Missouri. Cement distribution terminals are maintained in Hannibal and St. Louis, Missouri and Bettendorf, Iowa. The Company’s primary cement operation customers are ready-mix operatorsready-mixed concrete and concrete products producers and contractors located in the Midwestern United States.

Green America Recycling, L.L.C. (“GAR”), a wholly owned subsidiary of the Company, is engaged in the business of securing, processing and blending hazardous and nonhazardous waste materials primarily for use as supplemental fuels in Continental Cement’s manufacturing process. GAR’s primary customers are commercial transportation disposal facilities and petroleum and chemical manufacturers located in the continental United States.

The Company, a Delaware limited liability company, is governed by the Amended and Restated Continental Cement Limited Liability Company Agreement (as amended, the “LLC Agreement”). As such, liability of the Company’s members is generally limited to the amount of their net investment in the Company. Continental Cement is an indirect non–wholly owned subsidiary of Summit Materials, LLC (“Summit Materials”).

In 2013, Continental Cement changed its fiscal year from a calendar year to a 52-week year with each quarter composed of 13 weeks ending on a Saturday, consistent with that of Summit Materials. Continental Cement’s fiscal year end in 2013 was December 28 compared to the calendar year ended December 31 in 2012 and 2011. The effect of this change to Continental Cement’s financial position, results of operations and liquidity was immaterial.

 

 (d)(b)Principles of Consolidation

The consolidated financial statements of the Company include the accounts of Continental Cement and its wholly owned subsidiary, GAR. All significant intercompany balances and transactions have been eliminated.

 

 (e)(c)Use of Estimates

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

revenues and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangible and other long-lived assets, pension and other postretirement obligations, asset retirement obligations and the redeemable members’ interest. Management evaluates its estimates and assumptions on an ongoing basis using 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 could differ significantly from estimates made. Changes in estimates, including those resulting from continuing changes in the economic environment, will be reflected in the Company’s consolidated financial statements in the period in which the change in estimate occurs.

 (f)(d)Business and Credit Concentrations

The majority of the Company’s customers are primarily located in Missouri, Iowa Illinois, and Missouri.Illinois. The Company’s accounts receivable consistbalances are due primarily of accounts of ready-mix operatorsfrom ready-mixed concrete and concrete products producers and contractors within this area. Collection of these accounts is, therefore, dependent on the economic conditions of the area. However, credit granted within the Company’s trade area has been granted to a wide variety of customers, and management does not believe that any significant concentrations of credit exist with respect to individual customers or groups of customers who are engaged in similar activities that would be similarly affected by changes in economic or other conditions. The Company had approximately 16%, 13%, and 14%, 16%, and 18%of cement sales concentration with companies owned by a certain minority owner of the Company for the years ended December 28, 2013, December 31, 2012 and 2011 and the periods from May 27, 2010 to December 31, 2010 (Successor) and January 1, 2010 to May 26, 2010 (Predecessor),2011, respectively.

 

 (g)(e)Cash

During 2012, the Company began participating in Summit’s centralized treasury function whereby cash is periodically swept to an intercompany bank account with Summit. As of December 31, 2012, the Company’s net cash position held by Summit was $10,303.

(h)Accounts Receivable

Accounts receivable is stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollected amounts through a charge to earnings and a credit to the allowance for doubtful accounts based on its assessment of the status of individual accounts. In establishing the allowance, management considers historical losses adjusted to take into account current market conditions and ourthe Company’s customers’ financial condition, the amount of receivables in dispute, the current receivables aging and current payment terms. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts. Changes in the allowance for doubtful accounts have not been material to the consolidated financial statements.

 

 (i)(f)Revenue Recognition

Revenue from the sale of cement is recordedrecognized when evidence of an arrangement exists, the fee is fixed or determinable, title passes, which is generally when the product is shipped, and collection is reasonably assured. Cement sales are recorded net of discounts, allowances and sales taxes, as applicable. The Company records freight revenue on a net basis together with freight costs within cost of sales.

RevenuesRevenue from the receipt of waste fuels are based on fees charged for the waste disposal and recordedis recognized when the waste is accepted.

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notesaccepted and a corresponding liability is recognized for the costs to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

process the waste into fuel for the manufacturing of cement or to ship the waste offsite for disposal in accordance with applicable regulations.

 

 (j)(g)Inventories

Inventories of raw materials, work in process and finished goods are carried at the lower of cost (determined using the average cost method) or market. If items become obsolete or otherwise unusable, they will be charged to costs of production when that determination is made by management.

 

 (k)(h)Property, Plant and Equipment, net

Property, plant and equipment are recorded at cost, less accumulated depreciation depletion and amortization.depletion. Expenditures for additions and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Repair and maintenance costs that do not substantially extend the life of the Company’s property, plant and equipment are expensed as incurred.

Upon disposal, the cost and related accumulated depreciation are removed from the Company’s accounts and any gain or loss is included in operating income.

Depreciation on property, plant and equipment is computed on a straight-line basis. These estimated useful lives are as follows:

 

Building and improvements

  30 – 40 years

Plant, machinery and equipment

  3 – 40 years

Mobile equipment and barges

  3 – 20 years

Other

 3 – 7 years

Depletion of mineral reserves is calculated over proven and probable reserves by the units of production method on a quarry-by-quarrysite-by-site basis.

The Company reviews the carrying value of property, plant and equipment for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. Such indicators may include, among others, deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows or a trend of negative or declining cash flows over multiple periods.

 

 (l)(i)Accrued Mining Reclamation

The mining reclamation obligations are based on management’s estimate of future cost requirements to reclaim property at quarry sites. Estimates of these obligations have been developed based on management’s interpretation of current requirements and proposed regulatory changes and are intended to approximate fair value. Costs are estimated in current dollars, inflated until the expected time of payment, using an inflation rate of 2.5%, and then discounted back to present value using a risk-free rate on obligations of similar maturity, adjusted to reflect the Company’s credit rating. Changes in the credit-adjusted, risk-free rate do not change recorded liabilities, but subsequentlyliabilities. However, subsequent increases in the recognized obligations are measured using the reviseda current credit-adjusted, risk-free rate.

Decreases in the recognized obligations are measured at the initial credit-adjusted, risk-free rate.

Significant changes in inflation rates or the amount or timing of future cost estimates typically result in both (1) a current adjustment to the recorded liability (and corresponding adjustment to the asset) and (2) a change in accretion of the liability and depreciation of the asset amounts to be recorded prospectively over the remaining capacity of

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

the unmined quarry. Any changes related to the capitalized and future cost of the related assets are recognized in accordance with Continental Cement’s amortization policy, which would generally result in amortization expense being recognized prospectively over the remaining life of the asset.

 

 (m)(j)Intangible Asset

The Company’s intangible asset related to its trade name was $742 and $842 as of December 31, 2012 and 2011, respectively. The intangible asset is amortized on a straight-line basis over its ten year life. Amortization expense for the years ended December 31, 2012 and 2011 and for the period from May 27, 2010 to December 31, 2010, was $100, $100 and $58, respectively. The estimated amortization expense for the intangible asset for each of the next five years and thereafter is as follows:

2013

  $ 100 

2014

   100 

2015

   100 

2016

   100 

2017

   100 

Thereafter

   242 
  

 

 

 

Total

  $742 
  

 

 

 

(n)Goodwill

Goodwill is the excess of cost over the fair value of net assets of businesses acquired. Goodwill recorded in connection with the Transaction described in note 2 is primarily attributable to the expected profitabilityacquired and assembled workforce of the Company. The value of goodwillwas $24.1 million as of December 28, 2013 and December 31, 2012 and 2011 was $24,096.2012. Goodwill is not amortized, but is tested annually for impairment and whenever events or circumstances change that would make it more likely than not that an impairment may have occurred.

Continental Cement performs an annual impairment analysis as of the first day of the fourth quarter of each fiscal year for its one reporting unit. The first step of the goodwill impairment test compares the fair value of the reporting unit to its carrying value. Management estimates the fair value of the reporting unit primarily based on the discounted projected cash flows of the underlying operations. A number of significant assumptions and estimates are required to forecast operating cash flows, including macroeconomic trends in the public and private construction industry, the timing of work embedded in backlog, performance and profitability under contracts,public infrastructure industries, expected success in securing future sales and the appropriate interest rate used to discount the projected cash flows. During the 2013 and 2012 and 2011 annual reviewreviews of goodwill, management concluded that the estimated fair value of the reporting unit was substantially in excess of its carrying value, resulting in no indication of impairment. The Company has recorded no goodwill impairment charges to date.

 (o)(k)Income Taxes

Continental Cement and GAR are limited liability companies that pass their tax attributes for Federalfederal and state tax purposes to their members and are generally not subject to Federalfederal or state income tax.

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

 

 (p)(m)Kiln-Down CostsReclassifications

Continental Cement experiences annual major maintenance of its kiln (referred to as a kiln-down). The Company accounts for these costs under the direct expensing method, whereby costs are charged to operations as incurred.

(q)New Accounting Standards

In May 2011, the FASB issued Accounting Standards Update No. 2011-04 Fair Value Measurement (Topic 820)Amendments to Achieve Common Fair Value Measurement and Disclosure RequirementsCertain amounts have been reclassified in U.S. GAAP and IFRSs (“ASU 2011-04”). The amendments in this update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the FASB does not intend for the amendments in this update to result in a change in the application of the existing requirements. Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this update are effective prospectively during interim and annualprior periods beginning after December 15, 2011. The Company adopted ASU 2011-04 as of January 1, 2012, which did not result in a material impact on fair value measurements or related disclosures.

(2)Sale of Controlling Interest

On May 27, 2010, the Company became a 70% owned subsidiary of Summit II pursuant to the Transaction whereby the Company issued new Class A units representing 70% ownership interests in the Company to Summit II for $135,000 while the Company’s former owners received Class B units representing the remaining 30% ownership of the Company. Pursuant to the terms of the Amended and Restated Continental Cement Company Limited Liability Company Agreement to the extent distributions are authorized by the Company’s Board of Directors, Summit is entitled up to an 11% priority return which accrues daily and compounds annually on the date of issuance of the Class A units. To the extent that the priority return is not made in a given year, the priority return increases Summit’s sharing percentage in distributions and liquidation proceeds of the Company up to a maximum of 80 percent.

The proceeds from the new equity raised by the Company of $135,000, together with the issuance of $1,000 of subordinated debt to the existing shareholders were used to repay the outstanding balance on the Company’s senior secured credit facility (the First Lien Facility) of $107,600 and the outstanding balance on the Company’s subordinated debt facility (the Second Lien Facility) of $2,700. Concurrent with the Transaction, the Company entered into second amendments to their First Lien Facility and Second Lien Facility (the Second Amendments) which provide, among other things, for the admission of Summit as permitted holder and amends relevant portions of the First Lien Facility and Second Lien Facility agreements to conform to the recapitalized structure. The Second Amendments also reducepresentation in the revolving credit line available underconsolidated financial statements as of and for the First Lien Facility to $20,000.

The Transaction was accounted for under the acquisition method of accounting as Summit, together with the non-controlling interest holders acting as a collaborative group, obtained substantial

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

year ended December 31, 2012 and 201128, 2013.

(In thousands)

ownership of the Company. Accordingly, the assets acquired and liabilities assumed, as well as redeemable members’ interests, were recorded at fair value at the Transaction date. The purchase price for Summit’s 70% of the Company of $135,000 was first allocated to the identified assets acquired and liabilities assumed based on their estimated fair values at the date of the transaction and the excess was allocated to goodwill. The transaction costs associated with the Transaction totaled $5,671.

The following table summarizes the finalized fair value of the assets and liabilities at the date of Transaction:

Financial assets

  $9,753 

Inventories

   11,179 

Property, plant and equipment

   289,960 

Other assets

   12,502 

Intangible assets (trade name)

   1,000 

Current liabilities

   (11,627

Long-term debt

   (160,480

Other long-term liabilities

   (20,083

Goodwill

   24,096 

Redeemable members’ interest

   (21,300
  

 

 

 

Fair value of net assets acquired

  $135,000 
  

 

 

 

 

(2)(3)Accounts Receivable, net

Accounts receivable, net consists of the following:following as of year-end 2013 and 2012:

 

  December 31, 
  2012 2011   2013 2012 

Trade accounts receivable from unaffiliated entities

  $8,859   $6,745    $6,961   $8,859  

Trade accounts receivable from related parties

   1,193    1,501     422   1,193  
  

 

  

 

 

Accounts receivable

   10,052    8,246     7,383    10,052  

Less allowance for doubtful accounts

   (128  (589

Less: allowance for doubtful accounts

   (30  (128
  

 

  

 

   

 

  

 

 

Accounts receivable, net

  $9,924   $7,657    $7,353   $9,924  
  

 

  

 

   

 

  

 

 

 

(3)(4)Inventories

Inventories consist of the following:following as of year-end 2013 and 2012:

 

   December 31, 
   2012   2011 

Raw materials

  $475    $604  

Work-in-process

   2,248     2,961  

Finished goods

   4,350     6,349  
  

 

 

   

 

 

 

Total inventories

  $7,073    $9,914  
  

 

 

   

 

 

 

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

   2013   2012 

Raw materials

  $972    $475  

Work-in-process

   2,623     2,248  

Finished goods

   6,807     4,350  
  

 

 

   

 

 

 

Total inventories

  $10,402    $7,073  
  

 

 

   

 

 

 

 

(4)(5)Property, Plant and Equipment, net

Property, plant and equipment, net consist of the following:following as of year-end 2013 and 2012:

 

  December 31,   2013 2012 
  2012 2011 

Land (nonmineral bearing)

  $4,605   $4,605  

Land (non-mineral bearing)

  $4,605   $4,605  

Land (mineral bearing) and asset retirement costs

   15,449    14,832     16,524   15,449  

Building and improvements

   40,681    40,393  

Plant, machinery and equipment

   231,454    227,655  

Buildings and improvements

   40,795   40,681  

Plants, machinery and equipment

   247,681   231,454  

Mobile equipment and barges

   7,859    7,857     8,060   7,859  

Construction in progress

   15,301    7,933     23,394   15,301  

Other

   1,373    825     1,845   1,373  
  

 

  

 

   

 

  

 

 

Property, plant and equipment

   316,722    304,100     342,904    316,722  

Less accumulated depreciation, depletion and accretion

   (25,056  (15,017

Less accumulated depreciation, depletion and amortization

   (36,700  (25,056
  

 

  

 

   

 

  

 

 

Property, plant and equipment, net

  $291,666   $289,083    $306,204   $291,666  
  

 

  

 

   

 

  

 

 

The Company is developing an underground mine through which over 200 years of limestone reserves may be accessed. Limestone is a raw material used in the production of cement. As of year-end 2013 and 2012, the underground mine development costs included in construction in progress totaled $22.9 million and $6.6 million, respectively. Costs for mine development are capitalized and include costs incurred for site preparation and development of the mine.

Depreciation depletion and accretiondepletion expense of property, plant and equipment was $10,295, $9,818, $5,329$11.6 million, $10.3 million and $4,270$9.8 million, for the years ended December 28, 2013, December 31, 2012 and 2011 and the periods from May 27, 2010 to December 31, 2010 (Successor) and January 1, 2010 to May 26, 2010 (Predecessor),2011, respectively.

 

(5)(6)Other AssetsAccrued Expenses

Other assets consist of the following:

   December 31, 
   2012   2011 

Spare repair parts

  $10,059    $9,973  

Other

   646     1,532  
  

 

 

   

 

 

 

Total other assets

  $10,705    $11,505  
  

 

 

   

 

 

 

(7)Accrued Expenses

Accrued expenses and other liabilities consist of the following:following as of year-end 2013 and 2012:

 

   December 31, 
   2012   2011 

Accrued interest due to Summit

  $4,283    $120  

Accrued interest due to certain members

   2,149     2,273  

Accrued postretirement benefits other than pensions, current portion

   1,055     1,021  

Accrued professional fees

   1,250     742  

Accrued payroll, insurance, and benefits

   897     1,013  

Accrued bonus liability

   1,153     194  

Other

   514     146  
  

 

 

   

 

 

 

Total

  $11,301    $5,509  
  

 

 

   

 

 

 

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

   2013   2012 

Accrued interest due to Summit Materials

  $3,848    $4,283  

Accrued interest due to noncontrolling interest

   723     2,149  

Accrued post-retirement benefits other than pensions, current portion

   1,268     1,055  

Accrued professional fees

   340     400  

Accrued payroll, insurance and benefits

   758     897  

Accrued bonus liability

   884     1,153  

Accrued costs to remove barge from waterway

   880     850  

Other

   1,296     736  
  

 

 

   

 

 

 

Total

  $9,997    $11,523  
  

 

 

   

 

 

 

 

(6)(8)Long-Term Debt

Long-term debt, including the current portion of long-term debt, consistswas $155.6 million and $156.4 million as of the following:

   December 31, 
   2012   2011 

Debt due to Summit

  $ 156,359    $—    

1st lien facility

   —       2,000  

2nd lien facility

   —       39,000  

Subordinated secured credit note

   —       100,000  

Unsecured note payable to related party

   —       12,980  
  

 

 

   

 

 

 

Total debt

  $156,359    $153,980  
  

 

 

   

 

 

 

year-end 2013 and 2012, respectively. Interest costs incurred were $12,622, $14,621, $8,150$11.1 million, $12.6 million and $18,536$14.6 million for the years ended December 28, 2013, December 31, 2012 and 2011 and the periods from May 27, 2010 to December 31, 2010 (Successor) and January 1, 2010 to May 26, 2010 (Predecessor),2011, respectively.

(a)January 2012 Financing Transactions

The interest rate in effect at December 28, 2013 was 3.7%.

On January 30, 2012, Summit Materials refinanced its consolidated outstanding indebtedness, including $142.7 million of the Company’s indebtedness and interest thereon.thereon, by issuing $250.0 million aggregate principal amount of 10.5% Senior Notes due January 31, 2020 (the “Senior Notes”) and borrowing under its senior secured credit facilities composed of $422.0 million in term loans as of December 28, 2013 that mature January 30, 2019 and a $150.0 million revolving credit facility that matures January 30, 2017 (the “Senior Secured Credit Facilities”). As a result of the January 2012 financing transactions, Continental Cement’s existing debt was repaid by Summit Materials and was replaced by $156.8 million of long-term debt due to Summit.Summit Materials. In addition, Continental Cement recognized a charge to earnings of $0.3 million related to financing fees on the debt repaid.

The terms of Summit’sSummit Materials’ debt limit certain transactions of its subsidiaries, including those of Continental Cement. Continental Cement’s ability to incur additional indebtedness or issue certain preferred shares, pay dividends to the noncontrolling members, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets, enter into certain transactions with affiliates are limited.

Continental Cement, excluding GAR, is named as a guarantor of Summit’sSummit Materials’ debt, andfor which the Company pledged substantially all of its assets as collateral for Summit’scollateral. Continental Cement, excluding GAR, provides a joint and several, full and unconditional guarantee of Summit Materials’ debt. Summit Materials is and has been current on all required principal and interest payments. As of December 28, 2013, approximately $95.3 million and $60.3 million of the Company’s long-term debt due to Summit Materials represent the amount of Summit Materials’ debt under the Senior Secured Credit Facilities and Senior Notes, respectively, that has been allocated to the Company.

Future maturities of long-term debt due to Summit as allocated to the CompanyMaterials as of December 31, 201228, 2013 are as follows:

 

2013

  $965  

2014

   965  

2015

   965  

2016

   965  

2017

   965  

Thereafter

   151,534  
  

 

 

 

Total

  $156,359  
  

 

 

 

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

2014

  $1,018  

2015

   1,018  

2016

   1,273  

2017

   1,018  

2018

   764  

Thereafter

   150,517  
  

 

 

 

Total

  $155,608  
  

 

 

 

 

(7)(b)May 2010 Financing TransactionsMembers’ Interest

Continental Cement entered into the Second Amended and Restated Credit Agreement (First Lien Credit Agreement) on May 27, 2010, with its syndicate banks providing a term loan commitment and revolving line of credit facility, with swing line and letter of credit sub-limit. Interest was charged on outstanding borrowings at increments of either, (a) the Base Rate, as defined in the credit agreement, plus 3.5% margin or (b) the greater of (i) 1.5% or (ii) the LIBOR plus 4.5% margin. The interest rate during 2011 varied from 6.0% to 6.75%. Continental Cement had the option of selecting either rate but must have minimum levels and increments for selecting the LIBOR rate. Interest on funds borrowed at the Base Rate was payable quarterly, except the swing line which was paid monthly. Alternatively, interest on funds borrowed based on the LIBOR rate was payable in either one-, two-, three-, or six-month intervals. Outstanding borrowings were secured by substantially all of Continental Cement’s assets and all such commitments expire on May 27, 2013. The revolving line of credit facility has $20,000 available and included a $10,000 sub-limit for standby letters of credit and a $2,000 swingline sub-limit. At December 31, 2012, all outstanding debt was reported as long-term debt in the accompanying balance sheet reflecting the Company’s intent and ability to refinance these borrowings on a long-term basis. On January 30, 2012, Continental Cement’s debt was refinanced.

Prior to the Transaction, the term loan was to mature in May 2013. Under the terms of the First Lien Credit Agreement, Continental Cement had to adhere to certain financial covenants related to debt and interest leverage calculated based on definitions laid out in the First Lien Credit Agreement. The senior leverage ratio, reported each quarter, was to be no greater than 2.75:1.0 through March 31, 2011 and no greater than 2.25:1 for the period June 30, 2011 to March 31, 2013. The total leverage ratio, reported each quarter, was to be no greater than 7.25:1.0 through March 31, 2011; 6.75:1.0 for the period June 30, 2011 to September 30, 2011; 6.5:1.0 for the period December 31, 2011; 6.25:1 for the period March 31, 2012 to June 30, 2012 and 6.0:1 for the period September 30, 2012 to March 31, 2013. The interest coverage ratio needed to be at least 1.5:1.0. Capital expenditures could not exceed $15,000 for fiscal year ended December 31, 2010; $17,000 for fiscal year ended December 31, 2011; $20,000 in fiscal years ending December 31, 2012 and 2013, and dividends were restricted, absent Continental Cement meeting certain requirements outlined in the First Lien Credit Agreement. As of December 31, 2011, Continental Cement was in compliance with all financial covenants. There were no financial covenants as of December 31, 2012 related to amounts due to Summit.

On May 27, 2010, Continental Cement amended its Second Lien Credit Agreement with its subordinated lenders of the subordinated secured credit facility totaling $100,000. The Second Lien Credit Agreement provided for a term loan at 10.0% until May 27, 2012, at which point the interest rate increases to 12.0%, maturing August 28, 2013 and was subject to the same financial covenants in the First Lien Credit Agreement.

On May 27, 2010, Continental Cement executed an unsecured note payable at 11% from a related party totaling $12,980. Payment including principal and interest were due in one lump-sum on May 30, 2015, subject to a subordination agreement required by Continental Cement’s term loan.

Borrowings under the First Lien Credit Agreement, Second Lien Credit Agreement, the subordinated secured credit note and the unsecured note payable were retired in conjunction with the January 2012 financing transactions, as described above.

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

(9)Members’ Interest

Business affairs of the Company are managed by the Boarda board of directors (the “Board”) composed of up to seven Directors. As of December 28, 2013 and December 31, 2012, and 2011, Summit Members areMaterials is entitled to appoint four Directorsdirectors to the Board and Rollover Members (the Predecessor Members that collaborated with Summit to completemembers representing the Transaction)noncontrolling interest are entitled to appoint three Directorsdirectors to the Board. Any Directordirector may be removed from the Board with or without cause at any time by the Directorsdirectors entitled to appoint such Director.

The LLC Agreement provides that resolutions of the Board of Directorsgenerally require the consent of at least a majority of the Directors, with the exception of matters requiring Special Board Approval. Special Board Approval requires the consent of one or two directors appointed by the Rollover Members (depending on the level of ownership held by the Rollover Members in the aggregate as of the approval date). Such matters included (1) a merger or consolidation of Continental Cement with or into any other company, (2) any transfer of Class A or Class B Units that would cause a change in control, (3) any acquisition or divestiture by the Company of any of its subsidiaries at a price equal to or greater than $15,000, (4) the creation or issuance of any new Units, any new class of Units or any other form of equity securities, (5) the liquidation, dissolution or winding up of the Company and (6) any amendments to the LLC Agreement or other governing documents of the Company except as specifically permitted by the LLC Agreement.

(a)Class A Units

Directors.

The Company has issuedhad 100 Class A Units issued and outstanding as of December 28, 2013 and December 31, 2012, and 2011 to Summit. These unitsall of which were indirectly held by Summit Materials. The Class A Units represent aan approximately 70% economic interest in the Company and they have a preference in liquidation to the Class B Units. Class A Units are entitled to a priority distribution which accrues daily and compounds annually and requires that Continental Cement make distributions ahead of the Class B Units up to an amount equal to the capital contributions made by Summit Materials in respect to the Class A Units, plus interest on such capital contributions of 11%, to Class A Unit holders prior to making distributions to the Class B Unit holders. To the extent that the priority return is not made in a given year, the amount of the priority return will increase the liquidation preference of the Class A Units.

(b)Class B Units

The Company has issuedhad 100,000,000 Class B Units issued and outstanding as of December 28, 2013 and December 31, 2012 and 2011. These units2012. The Class B Units represent aan approximately 30% economic interest in Continental Cementthe Company and are subordinate to the Class A Units.

The LLC Agreement also provides Summit Materials with a call option that allows itthe right to require the Company to call all of the Class B Units held by the original owners of Continental Cement, at a strike price that approximates fair value after the sixth anniversaryMay 27, 2016, either in anticipation of the Transaction, on the date that Summit affectsMaterials effecting an initial public offering or upon any other changeif an initial public offering has already occurred. In addition, subject to certain conditions, holders of control of Summit. The original owners have a put option that allows them to put the Class B Units have the right to Summit,require the Company to purchase all of the Class B Units at a strike price that approximates fair value, exercisable on the second anniversary of the Transactionafter May 27, 2012 if there is a change of control of the Summit Class A unitsMaterials or at any time after the sixth anniversary of the Transaction. Finally, theMay 27, 2016. The LLC Agreement also includes transfer restrictions which prohibit the Rollover MembersClass B Unit holders from transferring their Class B Units without the consent of the Board until May 27, 2015.

Because the fifth anniversary afterClass B Units can be put to the Transaction.Company by the Class B Unit holders in the future based on the passage of time, which can be accelerated upon the occurrence of a contingent event, the noncontrolling members’ interest is classified in temporary equity. The redemption value is based upon the estimated fair value of Continental Cement, which is valued using Level 3 inputs. Continental Cement elected to accrete changes in the redemption value of the noncontrolling interest over the period from the date of issuance to the earliest anticipated redemption date of the instrument, which is currently May 2016, using an interest method. The accretion is recorded as an adjustment to retained earnings. The redemption value of the redeemable members’ interest as of year-end 2013 and 2012 approximated its carrying value.

Net incomeearnings or loss from operations islosses are generally allocated in a manner such that the capital account of each Member is equal to the distributions that would be made to such Member if the Company were dissolved, its affairs wound up, its assets and liabilities settled for cash and the net assets of the Company were distributed in accordance with the LLC Agreement.

 

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

(8)(c)Predecessor

On March 31, 2009, the Company entered into an agreement with its subordinated secured lenders providing for the automatic execution of an amended operating agreement contingent on the event that $10,152 of the subordinated notes issued on March 31, 2009, were not repaid in full before August 31, 2009. The contingent amended agreement, if executed, granted membership units to the subordinated secured lenders on a graduated scale. These membership units are puttable at fair value with a floor of $0.925 per unit by the subordinated secured lenders after five years and contain certain protective rights.

At May 26, 2010, 8,108,108 membership units had been issued based on the passage without payment of the August 31, 2009, November 30, 2009, and February 28, 2010 early payment dates. On February 28, 2010, 2,844,950 units were issued to the subordinated secured lenders valued at $3,528.

The Company voluntarily adopted FASB Accounting Standards Codification (ASC) 480-10-S99-3A and because the membership units are puttable by and at the discretion of the subordinated secured lenders, classified the membership units in mezzanine equity. The Company elected to recognize changes in the greater of redemption value or fair value as they occur and adjust the carrying amount of the instrument to equal the greater of redemption value or fair value at the end of each reporting period. The fair value is determined using Level 3 inputs and redemption value is determined based on the contractual terms of the underlying agreement. A $1,526 fair value adjustment to member’s interest was recognized in the period from January 1, 2010 to May 26, 2010. These membership units were settled for no compensation with the Transaction discussed in note 2.

(10)Employee Benefit Plans

(a)Deferred Compensation Plan

The Company sponsors an Employee 401(k) Savings Plan for all salaried employees and certain union employees. The plan provides for various required and discretionary Company matches of employees’ eligible compensation contributed to the plan and a discretionary profit sharing contribution as determined by the Board.Company’s Board of Directors. The CompanyCompany’s contributions to the plan were $385, $294, $192$0.5 million, $0.4 million and $133$0.3 million, for the years ended December 28, 2013, December 31, 2012 and 2011 and the periods from May 27, 2010 to December 31, 2010 (Successor)2011, respectively.

Defined Benefit Plans and January 1, 2010 to May 26, 2010 (Predecessor), respectively.

(b)Other Postretirement BenefitsDefined Benefit Plans and Postretirement Benefits Other than Pensions

Continental Cement sponsors two noncontributory defined benefit pension plans for hourly and salaried employees. The salarysalaried employee pension plan was closed to new participants and frozen in January 2000 and the hourly employee pension plan was closed to new participants in May 2003.2003 and frozen in January 2014. Pension benefits for certain eligible hourly employees are based on a monthly pension factor for each year of credited service. Pension benefits for certain eligible salaried employees are generally based on years of service and average eligible compensation.

Continental Cement also sponsors an unfunded healthcare and life insurance benefits plan for certain eligible retired employees, which are not funded.employees. The retiree healthcare and life insurance plan was closed for salaried employees in January 2003 and hourly employees in July 2006. Effective January 1, 2012, the Company eliminated all future retiree health and life coverage for active salaried, nonunion hourly and

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

certain union employees that retire on or after January 1, 2012. This change inEffective January 1, 2014, the other postretirement benefit plans resulted in a $1.7 million reduction inplan was amended to eliminate all future retiree health and life coverage for the December 31, 2011 accumulated benefit obligations. remaining union employees.

The funded status of the pension and other postretirement benefit plans is recognized in the consolidated balance sheets as the difference between the fair value of plan assets and the benefit obligations. For defined benefit pension plans, the benefit obligation is the projected benefit obligation (“PBO”) and for the other postretirement benefit plans the benefit obligation is the accumulated postretirement benefit obligation (“APBO”). The PBO represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels. However, since the plans’ participants are not subject to future compensation increases, the plans’ PBO equals the APBO. The APBO represents the actuarial present value of postretirement benefits attributed to employee services already rendered. Starting in 2010, the PBO equals the APBO because no employees included in the plan have future salary increases. The fair value of plan assets represents the current market value of assets held by an irrevocable trust fund for the sole benefit of participants. The measurement of the benefit obligation is based on Continental Cement’s estimates and actuarial valuations provided by third-party actuaries. These valuations reflect the terms of the plan and use participant-specific information such as compensation, age and years of service, as well as certain assumptions that require significant judgment, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates.

The Company uses its fiscal year-end as the measurement date for its defined benefit pension plans and for its other postretirement benefit plans.

Obligations and Funded Status -Status—The following information is as of year-end 2013 and 2012 and for the years ended December 28, 2013, December 31, 2012 and December 31, 2011:

 

   2012  2011 
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
 

Change in benefit obligations:

     

Beginning of period

  $26,514   $14,467   $23,732   $13,110  

Service cost

   276    207    275    227  

Interest cost

   1,056    585    1,161    710  

Actuarial loss

   2,347    1,597    2,710    3,390  

Change in plan provisions

   —      —      —      (1,705

Benefits paid

   (1,518  (1,046  (1,364  (1,265
  

 

 

  

 

 

  

 

 

  

 

 

 

End of period

   28,675    15,810    26,514    14,467  
  

 

 

  

 

 

  

 

 

  

 

 

 

Change in plan assets:

     

Fair value of assets at beginning of period

   16,639    —      16,531    —    

Actual return on plan assets

   1,205    —      43    —    

Employer contributions

   1,537    1,046    1,428    1,265  

Benefits paid

   (1,518  (1,046  (1,363  (1,265
  

 

 

  

 

 

  

 

 

  

 

 

 

Fair value of assets at end of period

   17,863    —      16,639    —    
  

 

 

  

 

 

  

 

 

  

 

 

 

Liability recongized

  $10,812  $15,810  $9,875  $14,467 
  

 

 

  

 

 

  

 

 

  

 

 

 

Current liabilities

  $—     $(1,055 $—     $(1,021

Noncurrent liabilities

   (10,812  (14,755  (9,875  (13,447
  

 

 

  

 

 

  

 

 

  

 

 

 

Liability recognized

  $(10,812 $(15,810 $(9,875 $(14,468
  

 

 

  

 

 

  

 

 

  

 

 

 

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

Approximately $1.1 million and $1.0 million of the obligation for postretirement benefits is included in current liabilities as of year-end 2012 and 2011, respectively.

   2012  2011 
   Pension
benefits
   Other
benefits
  Pension
benefits
   Other
benefits
 
        

Amounts recognized in accumulated other comprehensive income:

       

Net actuarial loss

  $8,056    $5,501   $5,875    $4,213  

Prior service cost

   —       (1,526  —       (1,705
  

 

 

   

 

 

  

 

 

   

 

 

 

Total amount recognized

  $8,056    $3,975   $5,875    $2,508  
  

 

 

   

 

 

  

 

 

   

 

 

 

   2013  2012 
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
 

Change in benefit obligations:

     

Beginning of period

  $28,674   $15,810   $26,514   $14,467  

Service cost

   295    236    276    207  

Interest cost

   963    513    1,055    585  

Actuarial (gain) loss

   (2,674  (1,048  2,347    1,597  

Special termination benefits

   —      39    —      —    

Benefits paid

   (1,614  (1,395  (1,518  (1,046
  

 

 

  

 

 

  

 

 

  

 

 

 

End of period

   25,644    14,155    28,674    15,810  
  

 

 

  

 

 

  

 

 

  

 

 

 

Change in fair value of plan assets:

     

Beginning of period

   17,863    —      16,639    —    

Actual return on plan assets

   1,512    —      1,205    —    

Employer contributions

   1,313    1,395    1,537    1,046  

Benefits paid

   (1,614  (1,395  (1,518  (1,046
  

 

 

  

 

 

  

 

 

  

 

 

 

End of period

   19,074    —      17,863    —    
  

 

 

  

 

 

  

 

 

  

 

 

 

Funded status of plans

  $(6,570 $(14,155 $(10,811 $(15,810
  

 

 

  

 

 

  

 

 

  

 

 

 

Current liabilities

  $—     $(1,268 $—     $(1,055

Noncurrent liabilities

   (6,570  (12,887  (10,811  (14,755
  

 

 

  

 

 

  

 

 

  

 

 

 

Liability recognized

  $(6,570 $(14,155 $(10,811 $(15,810
  

 

 

  

 

 

  

 

 

  

 

 

 

Amounts recognized in accumulated other comprehensive income:

     

Net actuarial loss

  $4,831   $4,139   $8,056   $5,501  

Prior service cost

   —      (1,346  —      (1,526
  

 

 

  

 

 

  

 

 

  

 

 

 

Total amount recognized

  $4,831   $2,793   $8,056   $3,975  
  

 

 

  

 

 

  

 

 

  

 

 

 

The amount recognized in accumulated other comprehensive income (“AOCI”) is the actuarial loss, which has not yet been recognized in periodic benefit cost. At December 31, 2012,28, 2013, the actuarial loss expected to be amortized from AOCI to periodic benefit cost in 20132014 is $0.4$0.1 million and $0.2 million for the pension and postretirement obligations, respectively.

 

  Successor     Predecessor   2013 2012 2011 
  Year ended December 31, May 27, 2010 to
December 31, 2010
      January 1, 2010 to
May 26, 2010
   Pension
benefits
 Other
benefits
 Pension
benefits
 Other
benefits
 Pension
benefits
 Other
benefits
 
  2012 2011     
  Pension
benefits
 Other
benefits
 Pension
benefits
 Other
benefits
 Pension
benefits
   Other
benefits
     Pension
benefits
   Other
benefits
 

Amounts recognized in other comprehensive loss:

              

Net actuarial loss

  $2,444   $1,597   $4,066   $3,390   $1,814    $894      $1,696    $2,242  

Amounts recognized in other comprehensive (gain) loss:

       

Net actuarial (gain) loss

  $(2,838 $(1,048 $2,444   $1,597   $4,066   $3,390  

Prior service cost

            (1,705              (47   80     —     180    —      —      —     (1,705

Amortization of prior year service cost

       180                                  —      —      —     180    —      —    

Gain due to curtailment

                               (38     

Amortization of loss

   (261  (312  (5  (71              (300   (87

Amortization of (gain) loss

   (387 (314 (261 (312 (5 (71
  

 

  

 

  

 

  

 

  

 

   

 

     

 

   

 

   

 

  

 

  

 

  

 

  

 

  

 

 

Total amount recognized

  $2,183   $1,465   $4,061   $1,614   $1,814    $894      $1,311    $2,235    $(3,225 $(1,182 $2,183   $1,465   $4,061   $1,614  
  

 

  

 

  

 

  

 

  

 

   

 

     

 

   

 

   

 

  

 

  

 

  

 

  

 

  

 

 

Components of net periodic benefit cost:

       

Service cost

  $295   $236   $276   $207   $275   $227  

Interest cost

   963    513    1,055    585    1,161    710  

Amortization of loss

   387    314    262    312    5    69  

Expected return on plan assets

   (1,348  —      (1,301  (180  (1,400  —    

Special termination benefits

   —      39    —      —      —      —    

Amortization of Prior Service Credit

   —      (180  —      —      —      —    
  

 

  

 

  

 

  

 

  

 

  

 

 

Net periodic benefit cost

  $297   $922   $292   $924   $41   $1,006  
  

 

  

 

  

 

  

 

  

 

  

 

 
   Successor      Predecessor 
   Year ended December 31,   May 27, 2010 to
December 31, 2010
      January 1, 2010 to
May 26, 2010
 
   2012  2011        
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
   Pension
benefits
  Other
benefits
      Pension
benefits
   Other
benefits
 

Components of net periodic benefit cost:

              

Service cost

  $276    207    275    227     121    116       84     59  

Interest cost

   1,056    585    1,161    710     677    380       507     256  

Amortization of loss

   261    312    5    69                347     7  

Expected return on plan assets

   (1,301  (180  (1,400       (788         (566     
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

     

 

 

   

 

 

 

Net periodic pension benefit cost

   292    924    41    1,006     10    496       372     322  
  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

 

 

     

 

 

   

 

 

 

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

Assumptions -Assumptions—Weighted-average assumptions used to determine the benefit obligations as of year-end 2013 and 2012 are:

 

   2012  2011 
   Pension
benefits
   Other
benefits
  Pension
benefits
   Other
benefits
 

Discount rate

   3.30% – 3.57%     3.41  3.89% – 4.07%     4.00
   2013  2012
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits

Discount rate

  4.21% - 4.46%  4.33%  3.30% - 3.57%  3.41%

Expected long-term rate of return on plan assets

  7.50%  N/A  7.50%  N/A

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 28, 2013, December 31, 2012 and December 31, 2011:

 

   2013  2012  2011
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits

Discount rate

  3.30% - 3.57%  3.41%  3.89% - 4.07%  4.00%  4.94% - 5.12.%  5.07%

Expected long-term rate of return on plan assets

  7.50%  N/A  7.50%  N/A  8.50%  N/A

The expected long-term return on plan assets is based upon the plans’ consideration of historical and forward-looking returns and the Company’s estimation of what a portfolio, with the target allocation described below, will earn over a long-term horizon. The discount rate is derived using the Citigroup Pension Discount Curve.

Weighted-average assumptions used to determine net periodic benefit cost for the period are:

   Year-end 2012  Year-end 2011 
   Pension
benefits
  Other
benefits
  Pension
benefits
  Other
benefits
 

Discount rate

   3.89% – 4.07%    4.00  4.94% – 5.12%    5.07

Expected long-term rate of return on plan assets

   7.50  NA    8.50  NA  

Assumed health care cost trend rates are 9% grading to 7% and 7%9% grading to 5%7% as of year-endyear end 2013 and 2012, and 2011, respectively. Assumed health care cost trend rates have a significant effect on the amounts reported for the Company’s post-retirement medical and life plans. A one percentage-point change in assumed health care cost trend rates would have the following effects (in thousands):as of year-end 2013 and 2012:

 

  2012 2011   2013 2012 
  Increase   (Decrease) Increase   (Decrease)   Increase   Decrease Increase   Decrease 

Total service cost and interest cost components

  $73    $(63 $93    $(77  $66    $(55 $73    $(63

Estimated APBO

   1,555     (1,331  1,348     (1,145   1,251     (1,073 1,555     (1,331

Plan Assets - The defined benefit pension plans’ (the “Plans”) investment strategy is to minimize investment risk while generating acceptable returns. The Plans currently invest a relatively high proportion of the plantheir assets in fixed income securities, while the remainder is invested in equity securities.securities, cash reserves and precious metals. The equity securities are diversified into funds with growth and value investment strategies. The target allocation for plan assets is as follows: equity securities – securities—30%; fixed income securities –65%securities—63%; cash reserves—5%; and cash reserves –5%precious metals—2%. The Plans’ current investment allocations are within the tolerance of the target allocation.

Fair value determinations are based on the following hierarchy, which prioritizes the inputs used to measure fair value:

 

Level 1 – Unadjusted quoted1—Quoted prices in active markets for identical assets orand liabilities in active markets.

 

Level 2 – Inputs2—Observable inputs, other than Level 1 that are based on observable market data, either directly or indirectly. These include quoted prices, for similar assets or liabilities in active markets quoted prices for identical assets or liabilities in inactive markets,

Level 3—Unobservable inputs, that are observable that are not prices and inputs that are derived from or corroborated by observable markets.

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

Level 3 – Developed from unobservable data, reflectingwhich includes the Company’s own assumptions.

use of valuation models

The Company hashad no levelLevel 3 investments as of or forduring the years-endedyears ended December 28, 2013 and December 31, 2012 and 2011.

2012. At year-end 2013 and 2012, and 2011, the trust wasPlans’ assets were invested largelypredominantly in publicly traded equitiesfixed-income securities and fixed-income securities,equities, but may invest in other asset classes in the future consistent with oursubject to the parameters of the investment policy. The Plans’ investments in equity assets include U.S. and international securities and equity funds. The Plans’ investments in fixed-income assets include U.S. Treasury and U.S. agency securities and corporate bonds. Retirement plan assets are reported at fair value at each measurement date.The Plans’ investments in equities include

U.S. and international securities and equity funds. The Company estimates the fair value of the Plans’ assets using various valuation techniques and, to the extent available, quoted market prices in active markets or observable market inputs are used in estimating the fair value of the Plans’ assets.inputs. The descriptions and fair value methodologies for the Plans’ assets are as follows:

Cash- The carrying amounts of cash approximate fair value due to the short-term maturity.

Equity Securities - Equity securities are valued at the closing market price reported on a U.S. exchange where the security is actively traded and are therefore classified as Level 1 assets.

Fixed Income SecuritiesCorporate and government bonds are classified as Level 2 assets, as they are either valued at quoted market prices from observable pricing sources at the reporting date or valued based upon comparable securities with similar yields and credit ratings.

Equity Securities—Equity securities are valued at the closing market price reported on a U.S. exchange where the security is actively traded and are therefore classified as Level 1 assets.

Cash—The carrying amounts of cash approximate fair value due to the short-term maturity.

Precious Metals—Precious metals are valued at the closing market price reported on a U.S. exchange where the security is actively traded and are therefore classified as Level 1 assets.

The fair value of the Company’s pension plans’ assets by asset class and fair value hierarchy level as of year-end 20122013 and 20112012 are as follows:

 

   Fair value measurements at year-end
2012
 
   Total fair
value
   Quoted
prices

in active
markets

for identical
assets

(Level 1)
   Observable
inputs

(Level  2)
 

Cash

  $1,656    $1,656    $—    

Equity securities:

      

U.S. Large cap value

   1,063     1,063     —    

U.S. Large cap growth

   1,037     1,037     —    

U.S. Mid cap value

   542     542     —    

U.S. Mid cap growth

   536     536     —    

U.S. Small cap value

   546     546     —    

U.S. Small cap growth

   539     539     —    

International

   1,134     1,134     —    

Fixed income securities:

      

Intermediate-government

   1,247     —       1,247  

Intermediate-corporate

   4,402     —       4,402  

Short term-government

   2,038     —       2,038  

Short term-corporate

   3,123     —       3,123  
  

 

 

   

 

 

   

 

 

 

Total

  $17,863    $7,053    $10,810  
  

 

 

   

 

 

   

 

 

 

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY
   2013 
   Total fair
value
   Quoted prices in active
markets for identical
assets (Level 1)
   Observable
inputs (Level 2)
 

Fixed income securities:

      

Intermediate—government

  $1,647    $—      $1,647  

Intermediate—corporate

   3,138     —       3,138  

Short-term—government

   2,168     —       2,168  

Short-term—corporate

   4,040     —       4,040  

Equity securities:

      

U.S. Large cap value

   1,221     1,221     —    

U.S. Large cap growth

   1,536     1,536     —    

U.S. Mid cap value

   600     600     —    

U.S. Mid cap growth

   603     603     —    

U.S. Small cap value

   610     610     —    

U.S. Small cap growth

   599     599     —    

International

   889     889     —    

Cash

   1,665     1,665     —    

Precious metals

   358     358     —    
  

 

 

   

 

 

   

 

 

 

Total

  $19,074    $8,081    $10,993  
  

 

 

   

 

 

   

 

 

 

   2012 
   Total
fair
value
   Quoted prices in active
markets for identical
assets (Level 1)
   Observable
inputs (Level 2)
 

Fixed income securities:

      

Intermediate—government

  $1,247    $—      $1,247  

Intermediate—corporate

   4,402     —       4,402  

Short-term—government

   2,038     —       2,038  

Short-term—corporate

   3,123     —       3,123  

Equity securities:

      

U.S. Large cap value

   1,063     1,063     —    

U.S. Large cap growth

   1,037     1,037     —    

U.S. Mid cap value

   542     542     —    

U.S. Mid cap growth

   536     536     —    

U.S. Small cap value

   546     546     —    

U.S. Small cap growth

   539     539     —    

International

   1,134     1,134     —    

Cash

   1,656     1,656     —    
  

 

 

   

 

 

   

 

 

 

Total

  $17,863    $7,053    $10,810  
  

 

 

   

 

 

   

 

 

 

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

   Fair value measurements at year-end 2011 
   Total fair
value
   Quoted
prices in
active
markets
for identical
assets
(Level 1)
   Observable
inputs
(Level 2)
 

Cash

  $1,217    $1,217    $—    

Equity securities:

      

U.S. Large cap value

   1,399     1,399     —    

U.S. Large cap growth

   1,388     1,388     —    

U.S. Mid cap value

   700     700     —    

U.S. Mid cap growth

   687     687     —    

U.S. Small cap value

   701     701     —    

U.S. Small cap growth

   705     705     —    

International

   1,378     1,378     —    

Fixed income securities:

      

Intermediate-government

   1,100     —       1,100  

Intermediate-corporate

   2,418     —       2,418  

Short term-government

   2,067     —       2,067  

Short term-corporate

   2,879     —       2,879  
  

 

 

   

 

 

   

 

 

 

Total

  $16,639    $8,175    $8,464  
  

 

 

   

 

 

   

 

 

 

Cash Flows-The Company expects to contribute approximately $1.3$1.0 million to its pension plans and $1.1$1.3 million to its other postretirement benefit plans in 2013.

2014.

The estimated benefit payments for each of the next five years and the five-year period thereafter are as follows:

 

   Pension
benefits
   Other
benefits
 

2013

  $1,718    $1,055  

2014

   1,707     1,113  

2015

   1,715     1,022  

2016

   1,748     1,079  

2017

   1,744     945  

2018–2022

   8,738     4,724  
  

 

 

   

 

 

 

Total

  $17,370    $9,938  
  

 

 

   

 

 

 

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

   Pension
benefits
   Other
benefits
 

2014

  $1,694    $1,269  

2015

   1,704     1,109  

2016

   1,739     1,130  

2017

   1,737     963  

2018

   1,774     1,018  

2019 - 2023

   8,667     4,512  
  

 

 

   

 

 

 

Total

  $17,315    $10,001  
  

 

 

   

 

 

 

 

(11)(9)Accrued Mining Reclamation

The Company has asset retirement obligations arising from regulatory requirements to perform certain reclamation activities at the time that certain quarries are closed. The liability was initially measured at fair value and subsequently is adjusted for accretion expense, payments and changes in the amount or timing of the estimated cash flows. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s remaining useful life. The following table presents the activity for the asset retirement obligations for the years-ended December 31, 2012 and 2011:

   Year ended December 31, 
     2012       2011   

Beginning balance

  $687    $659  

Increase in cost estimate

   532     —   

Accretion expense

   30     28  
  

 

 

   

 

 

 

Ending balance

  $1,249    $687  
  

 

 

   

 

 

 

(12)Commitments and Contingencies

(a)Litigation and Claims

Continental Cement is party to certain legal actions arising from the ordinary course of business activities. In the opinion of management, these actions are without merit or that the ultimate disposition, if any, resulting from them will not have a material effect on Continental Cement’s consolidated financial position, results of operations or liquidity. Continental Cement’s policy is to record legal fees as incurred.

In February 2011, Continental Cement incurred a property loss related to a sunken barge with cement product aboard. As of December 28, 2013 and December 31, 2012, the Company had a $0.9 million accrual for the estimated remaining costs to remove the barge.

(b)

Environmental Remediation

Continental Cement’s miningmanufacturing operations are subject to and affected by Federal, state 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.

Continental Cement 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 Continental Cement’s business, as it is with other companies engaged in similar businesses and there can be no assurance that environmental liabilities will not have a material adverse effect on Continental Cement in the future.

On October 14, 1999, the Missouri Department of Natural Resources (MDNR) and the EPA granted the Company a Final Hazardous Waste Management Facility Permit that authorizes Continental Cement to handle, treat, store, recover energy from and dispose of hazardous waste as a supplemental fuel source (RCRA Part B Permit). This permit also incorporated certain Boiler and Industrial Furnace (BIF) regulation emission limits and operating parameters that the Company was subject to prior to the Maximum Achievable Control Technology Standards. On October 13, 2009, a permit renewal application was submitted to MDNR. MDNR has authorized the Company to operate under interim status. Once approved, the renewal will cover another ten-year period.

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

On July 11, 2006, Continental Cement received a Construction Permit for a new kiln system to replace the system in operation at that time. The new kiln began shakedown operations in 2008 and is operating under the new Hazardous Waste Combustor Maximum Achievable Control Technology Standards. Continental Cement has performed the required confirmatory permit tests and submitted a Notification of Compliance to the regulatory agencies. The amended Construction Permit is in place and Continental Cement is now preparing an application for renewal of the Part 70 Operating Permit that will encompass the new permit requirements as well as those that still apply to the components of the existing facility.

(c)Other

In February 2011, Continental Cement incurred a property loss related to a sunken barge with cement product aboard. At which time, the Company recognized a loss of $0.6 million for the lost product and property. As of December 31, 2012, the Company has a $0.9 million accrual for the estimated remaining costs to remove the barge. Any insurance recoveries from the loss will be recorded when probable.

Continental Cement is obligated under various firm purchase commitments for certain raw materials and services that are in the ordinary course of business. 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, and cash flows of Continental Cement. The terms of the purchase commitments are generally less than one year.

Approximately 64%As of December 28, 2013, approximately 62% of the Company’s employees arewere represented by labor organizations under collective bargaining agreements. The Company’s collective bargaining agreements for such employees generally expire between 2013 and 2015. Historically,The contract that expired in 2013 contract was successfully renegotiated and ratified in December 2013 and is expected to be finalized in the Company has been successful at negotiating successor agreements without any material disruptions to operating activities. The Company does not expect the 2013 negotiations to havefirst quarter of 2014 with a material impact on its results of operations, financial position or liquidity.term that will extend through 2018.

 

(13)(10)Related-Party Transactions

The Company purchased equipment from a certain noncontrolling member for approximately $2.3 million in 2011, which was paid for in 2012.

As of year-end 2013 and 2012, the Company for approximately $2,130 during the year ended December 31, 2011. In addition,had accrued interest expensepayments of $90 was recorded on this purchase during the year ended December 31, 2011. This related party equipment purchase$0.7 million and interest was included in accounts payable at December 31, 2011 and paid in 2012.

The Company owes $2.1 million, respectively, due to a certain noncontrolling member of Continental Cement for accrued interest on a related party note.related-party note, which is expected to be paid in 2014. The principal balance on the note was repaid as part of thein January 2012 financing transactions.

2012.

Cement sales to companies owned by certain noncontrolling members of Continental Cement were approximately $12.7 million, $12.5 million and $9.5 million $9.0 million and $4.0 million forduring the years ended December 28, 2013, December 31, 2012 and December 31, 2011, and for the periods from May 27, 2010 to December 31, 2010 (Successor) and from January 1, 2010 to May 26, 2010 (Predecessor), respectively, and accounts receivables due from these parties were approximately $1.0 million and $1.3 million as of December 31, 2012 and 2011, respectively.

Cement sales to other companies owned by Summit were approximately $3.8 million, $2.8 million and $3.9 million for the years ended December 31, 2012 and December 31, 2011 and for the period from May 27, 2010 to December 31, 2010, respectively, and accounts receivables due from these parties were approximately $0.2 million and $1.0 million as of December 28, 2013 and December 31, 2012, respectively.

Cement sales to subsidiaries of Summit Materials were approximately $4.5 million, $3.8 million and $2.8 million for the years ended December 28, 2013, December 31, 2012 and December 31, 2011, respectively, and accounts receivable due from these parties were approximately $0.2 million as of December 31, 201228, 2013 and 2011, respectively.

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2012 and 2011

(In thousands)

2012.

Waste fuel sales by Continental Cement to American Environmental Services, Inc. (related through common ownership, which owned a noncontrolling interest in Green America Recycling)GAR until the Company purchased its interest in 2011, were approximately $0.7 million forin the year ended December 31, 2011 and the period from May 27, 2010 through December 31, 2010 (Successor) and $0.4 million for the period from January 1, 2010 through May 26, 2010 (Predecessor). During 2011,2011. After the Company purchased the remainingAmerican Environmental Services, Inc.’s interest in Green America Recycling for $1, at which pointGAR, American Environmental Services, Inc. was no longerceased to be a related party.

 

From January 1, 2010 to May 26, 2010 (Predecessor), the Company’s Operating Agreement provided for $121 for non-compete fee to be paid to the Managing Member of the Company.

(14)(11)Supplemental Cash Flow Information

Supplemental cash flow information is as follows:follows for the years ended December 28, 2013, December 31, 2012 and December 31, 2011:

 

   Successor      Predecessor 
       May  27,
2010
to
December 31,
2010
      January  1,
2010

to
May  26,
2010
 
   Year ended December 31,      
   2012  2011      

Cash paid for interest

  $7,353   $12,946    $22,389      $8,321  

Non cash financing activities:

         

Financing fees

  $—    $—     $424      $800  

Redeemable members unit

   —     —      —        3,528  

Long-term debt due to Summit

   156,842    —      —        —   

Repayment of long-term debt and accrued interest by Summit

   (156,842  —      —        —   
   2013   2012  2011 

Cash paid for interest

  $11,488    $7,353   $12,946  

Non cash financing activities:

     

Proceeds on borrowings due to Summit Materials

  $—      $156,842   $—    

Repayment by Summit Materials of long-term debt and accrued interest

   —       (156,842  —    

(15)(12)Leasing Arrangements

Rent expense incurred, including short term rentals, and primarily related to land and equipment, was $524, $426, $542,$0.4 million, $0.5 million and $521$0.4 million for the years ended December 28, 2013, December 31, 2012 and 2011 and the periods from May 27, 2010 to December 31, 2010 (Successor) and January 1, 2010 to May 26, 2010 (Predecessor),2011, respectively.

Minimum rental commitments under long-term operating leases as of December 31, 2012,28, 2013, are as follows:

 

Year ending December 31:

  

2013

  $377 

2014

   209   $378  

2015

   177    341  

2016

   172    325  

2017

   172    291  

2018

   291  

 

(16)(13)Subsequent EventsSupplementary Data (Unaudited)

The Company has evaluated its December 31, 2012 consolidatedSupplemental financial statements for subsequent events through March 27, 2013, the date the financial statements were available to be issued.

LOGO

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors

Cornejo & Sons, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Cornejo & Sons, Inc. and Subsidiariesinformation (unaudited) by quarter is as of October 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flowsfollows for the years ended OctoberDecember 28, 2013 and December 31, 2009, 20082012:

   2013  2012 
(in thousands)  4Q   3Q   2Q   1Q  4Q   3Q   2Q   1Q 

Revenues

  $22,509    $34,155    $27,224    $12,361   $25,304    $30,430    $26,141    $13,007  

Operating income (loss)

   9,259     10,965     9,053     (8,449  7,625     7,124     9,097     (4,468

Net income (loss)

  $6,668    $8,157    $6,272    $(11,232 $4,694    $3,977    $5,999    $(8,045

(14)Subsequent Events

On January 17, 2014, Summit Materials and 2007. These financial statements areSummit Materials Finance Corp. issued and sold an additional $260.0 million aggregate principal amount of their 10.5% Senior Notes due 2020, which mature on January 31, 2020, pursuant to an indenture which also governs the responsibility$250.0 million aggregate principal amount of 10.5% Senior Notes due 2020 that were issued on January 30, 2012. As a result, the Company’s guarantee of the Company’s management. Our responsibility isSenior Notes increased by the additional $260.0 million of notes issued to express an opinion on these financial statements based on our audits.$510.0 million.

CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Consolidated Balance Sheets

(In thousands, except unit amounts)

 

   June 28, 2014
(unaudited)
  December 28, 2013
(audited)
 

Assets

  

Current assets:

   

Cash

  $8  $9 

Accounts receivable, net

   14,839   7,353 

Due from Summit Materials

   —     2,990 

Inventories

   14,569   10,402 

Other current assets

   771   482 
  

 

 

  

 

 

 

Total current assets

   30,187   21,236 

Property, plant and equipment, less accumulated depreciation and depletion (June 28, 2014—$43,353 and December 28, 2013—$36,700)

   309,671   306,204 

Goodwill

   24,096   24,096 

Other assets

   13,050   12,576 
  

 

 

  

 

 

 

Total assets

  $377,004  $364,112 
  

 

 

  

 

 

 

Liabilities, Redeemable Members’ Interest and Member’s Interest

  

Current liabilities:

   

Current portion of long-term debt due to Summit Materials

  $1,018  $1,018 

Accounts payable

   8,587   10,165 

Accrued expenses

   8,466   9,997 

Due to Summit Materials

   20,371   —   
  

 

 

  

 

 

 

Total current liabilities

   38,442   21,180 

Long-term debt due to Summit Materials

   154,081   154,590 

Pension and post-retirement benefit obligations

   16,666   19,457 

Other noncurrent liabilities

   904   850 
  

 

 

  

 

 

 

Total liabilities

   210,093   196,077 
  

 

 

  

 

 

 

Commitments and contingencies (see note 6)

   

Redeemable members’ interest (100,000,000 Class B units issued and authorized)

   23,750   23,450 

Member’s interest:

   

Member’s equity (100 Class A units issued and authorized)

   135,211   135,180 

Retained earnings

   14,756   17,029 

Accumulated other comprehensive loss

   (6,806)  (7,624)
  

 

 

  

 

 

 

Total member’s interest

   143,161   144,585 
  

 

 

  

 

 

 

Total liabilities, redeemable members’ interest and member’s interest

  $377,004  $364,112 
  

 

 

  

 

 

 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the auditsSee notes 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Cornejo & Sons, Inc. and Subsidiaries as of October 31, 2009 and 2008 and the results of their operations and their cash flows for the years ended October 31, 2009, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ Allen, Gibbs & Houlik, L.C.

December 15, 2011

301 N. Main, Suite 1700 · Wichita, Kansas 67202-4868 · (316) 267-7231 ·(316) 267-0339 fax · www.aghlc.com

CORNEJO & SONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

October 31, 2009 and 2008

   2009   2008 
ASSETS    

CURRENT ASSETS

    

Cash and cash equivalents

  $11,659,720    $5,343,679  

Receivables (including retainage), less allowance for doubtful accounts of $47,385 and $58,597

   7,314,880     10,738,012  

Notes receivable, related party

   101,997     11,320  

Inventory

   640,827     295,290  

Costs and estimated earnings in excess of billings on uncompleted contracts

   2,225,358     1,934,321  

Prepaid expenses

   239,393     132,309  
  

 

 

   

 

 

 

Total current assets

   22,182,175     18,454,931  
  

 

 

   

 

 

 

PROPERTY AND EQUIPMENT

    

Property and equipment

   47,443,915     42,100,844  

Less accumulated depreciation

   30,261,970     26,739,922  
  

 

 

   

 

 

 
   17,181,945     15,360,922  
  

 

 

   

 

 

 

OTHER ASSETS

    

Cash surrender value of life insurance

   931,180     959,101  

Land and buildings held for investment

   1,243,184     1,243,184  

Notes receivable, related party

   1,180,880     1,066,119  

Income tax deposit

   449,446     337,123  

Goodwill

   1,949,021     1,949,021  

Other assets

   2,251,245     2,459,590  
  

 

 

   

 

 

 
   8,004,956     8,014,138  
  

 

 

   

 

 

 
  $47,369,076    $41,829,991  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY    

CURRENT LIABILITIES

    

Current maturities of long-term debt

  $792,619    $1,121,360  

Current maturities of related party notes payable

   267,705     441,455  

Accounts payable, including retainage of $1,065,191 and $857,442

   6,243,871     5,096,669  

Billings in excess of costs and estimated earnings on uncompleted contracts

   1,439,934     1,537,568  

Accrued liabilities:

    

Salaries and wages

   256,053     462,853  

Property, payroll, and other taxes

   1,102,164     1,326,411  

Other

   213,176     225,521  
  

 

 

   

 

 

 

Total current liabilities

   10,315,522     10,211,837  
  

 

 

   

 

 

 

Long-term debt, less current maturities

   1,824,753     3,415,360  

Related party notes payable, less current maturities

   762,206     965,082  

Deferred income taxes

   160,151     168,000  
  

 

 

   

 

 

 

Total long-term liabilities

   2,747,110     4,548,442  
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

Common stock — no par value

   30,000     30,000  

Retained earnings

   37,085,246     29,848,514  
  

 

 

   

 

 

 
   37,115,246     29,878,514  

Less treasury stock — 1,221,000 shares at cost

   2,808,802     2,808,802  
  

 

 

   

 

 

 

Total stockholders’ equity

   34,306,444     27,069,712  
  

 

 

   

 

 

 
  $47,369,076    $41,829,991  
  

 

 

   

 

 

 

The accompanying notes are an integral

part of theseunaudited consolidated financial statements.

CORNEJO & SONS, INC.CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARIESSUBSIDIARY

Unaudited Consolidated Statements of Operations

(In thousands)

 

   Six months ended 
   June 28, 2014  June 29, 2013 

Revenue:

   

Revenue from third parties:

   

Product

  $27,150  $25,820 

Service

   7,186   6,786 

Revenue from related parties:

   

Product

   8,114   6,979 
  

 

 

  

 

 

 

Total revenue

   42,450   39,585 
  

 

 

  

 

 

 

Cost of revenue (excluding items shown separately below):

   

Product

   22,963   23,389 

Service

   4,664   4,443 
  

 

 

  

 

 

 

Total cost of revenue

   27,627   27,832 

General and administrative expenses

   3,868   5,400 

Depreciation, depletion, amortization and accretion

   7,045   5,750 
  

 

 

  

 

 

 

Operating income

   3,910   603 

Other income, net

   (11)  (72)

Interest expense

   5,894   5,635 
  

 

 

  

 

 

 

Net income (loss)

  $(1,973) $(4,960)
  

 

 

  

 

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended October 31, 2009, 2008 and 2007

   2009  2008  2007 

Revenues earned

  $84,507,746   $79,554,879   $65,632,472  

Cost of revenues earned

   66,246,714    64,524,133    54,005,588  
  

 

 

  

 

 

  

 

 

 

Gross profit

   18,261,032    15,030,746    11,626,884  

Selling, general, and administrative expenses

   (8,655,619  (6,767,591  (6,103,254

Gain on disposal of property and equipment

   1,420,833    18,244    199,075  
  

 

 

  

 

 

  

 

 

 

Income from operations

   11,026,246    8,281,399    5,722,705  
  

 

 

  

 

 

  

 

 

 

Other income (expense):

    

Interest and dividend income

   93,875    127,655    103,062  

Interest expense

   (236,439  (299,504  (235,760

Miscellaneous

   249,638    270,965    178,908  
  

 

 

  

 

 

  

 

 

 
   107,074    99,116    46,210  
  

 

 

  

 

 

  

 

 

 

Net income before taxes

   11,133,320    8,380,515    5,768,915  

Income tax benefit (expense)

   5,000    (589,000  (119,000
  

 

 

  

 

 

  

 

 

 

Net income

  $11,138,320   $7,791,515   $5,649,915  
  

 

 

  

 

 

  

 

 

 

The accompanyingSee notes are an integral

part of theseto unaudited consolidated financial statements.

CORNEJO & SONS, INC.CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARIESSUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYUnaudited Consolidated Statements of Comprehensive Income (Loss)

Years Ended October 31, 2009, 2008 and 2007(In thousands)

 

  Common Stock –
Class A
  Common Stock –
Class B
          
  Number
of
Shares
  Par
Value
  Number
of
Shares
  Par
Value
  Retained
Earnings
  Treasury
Stock
  Total 

Balance, October 31, 2006

  17,787   $300    1,760,906   $29,700   $21,608,179   $(2,808,802 $18,829,377  

Stockholder distributions

      (2,968,947   (2,968,947

Net income

      5,649,915     5,649,915  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance, October 31, 2007

  17,787    300    1,760,906    29,700    24,289,147    (2,808,802  21,510,345  

Stockholder distributions

      (2,232,148   (2,232,148

Net income

      7,791,515     7,791,515  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance, October 31, 2008

  17,787    300    1,760,906    29,700    29,848,514    (2,808,802  27,069,712  

Stockholder distributions

      (3,901,588   (3,901,588

Net income

      11,138,320     11,138,320  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance, October 31, 2009

  17,787   $300    1,760,906   $29,700   $37,085,246   $(2,808,802 $34,306,444  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
   Six months ended 
   June 28,
2014
  June 29,
2013
 

Net income (loss)

  $(1,973 $(4,960

Other comprehensive (loss) income:

   

Postretirement curtailment adjustment

   (1,346  —    

Postretirement liability adjustment

   2,164    —    
  

 

 

  

 

 

 

Other comprehensive income

   818    —    
  

 

 

  

 

 

 

Comprehensive income (loss)

  $(1,155 $(4,960
  

 

 

  

 

 

 

The accompanyingSee notes are an integral

part of theseto unaudited consolidated financial statements.

CORNEJO & SONS, INC.CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARIESSUBSIDIARY

Unaudited Consolidated Statements of Cash Flows

(In thousands)

 

   Six months ended 
   June 28, 2014  June 29, 2013 

Cash flows from operating activities:

   

Net loss

  $(1,973) $(4,960)

Adjustments to reconcile net loss to net cash used in operating activities:

   

Depreciation, depletion, amortization and accretion

   7,045   5,750 

Other

   887   234 

Decrease (increase) in operating assets:

   

Accounts receivable, net

   (7,699)  (3,593)

Inventories

   (4,168)  (2,561)

Other current assets

   (288)  66 

Other assets

   (550)  70 

(Increase) decrease in operating liabilities:

   

Accounts payable

   (158)  549 

Accrued expenses

   (1,887)  (2,193)

Other liabilities

   (1,973)  (1,034)
  

 

 

  

 

 

 

Net cash used in operating activities

   (10,764)  (7,672)
  

 

 

  

 

 

 

Cash flows from investing activities:

   

Purchase of property, plant and equipment

   (12,166)  (15,888)
  

 

 

  

 

 

 

Net cash used in investing activities

   (12,166)  (15,888)
  

 

 

  

 

 

 

Cash flows from financing activities:

   

Principal payments on long-term debt

   (509)  (496)

Book overdraft

   356   128 

Net borrowings from Summit Materials

   23,082   23,337 
  

 

 

  

 

 

 

Net cash provided by financing activities

   22,929   22,969 
  

 

 

  

 

 

 

Net decrease in cash

   (1)  (591)

Cash—beginning of period

   9   599 
  

 

 

  

 

 

 

Cash—end of period

  $8  $8 
  

 

 

  

 

 

 

Supplemental disclosures of cash flow information

   

Cash interest paid during the period

  $5,935  $7,408 
  

 

 

  

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended October 31, 2009, 2008 and 2007

   2009  2008  2007 

Cash flows from operating activities:

    

Net income

  $11,138,320   $7,791,515   $5,649,915  

Adjustments to reconcile net income to net cash flows from operating activities:

    

Depreciation and amortization

   4,147,493    4,000,603    3,210,240  

Gain on disposal of property and equipment

   (1,420,833  (18,244  (199,075

Deferred income taxes

   (7,849  155,410    126,017  

Changes in operating assets and liabilities:

    

Receivables

   3,423,132    (2,225,351  (1,930,898

Inventory

   (345,537  19,152    (237,208

Costs and estimated earnings in excess of billings on uncompleted contracts

   (291,037  (841,114  126,466  

Interest receivable

   —      2,301    (1,020

Prepaid expenses

   (107,084  3,548    (35,412

Income tax deposit

   (112,323  59,032    (218,197

Accounts payable

   1,147,202    (194,712  1,549,863  

Billings in excess of costs and estimated earnings on uncompleted contracts

   (97,634  211,790    (70,172

Accrued liabilities

   (443,392  654,251    (16,226
  

 

 

  

 

 

  

 

 

 

Net cash flow from operating activities

   17,030,458    9,618,181    7,954,293  
  

 

 

  

 

 

  

 

 

 

Cash flows from investing activities:

    

Proceeds from sale of property and equipment

   1,971,409    41,877    354,238  

Acquisition of property and equipment

   (6,309,976  (4,634,813  (3,347,187

Disbursement of notes receivable, related party

   (496,838  (1,418,366  (380,418

Proceeds from notes receivable, related party

   291,400    350,327    510,916  

Purchase of other assets

   (771  (1,406  (1,136

Proceeds from sale of land and buildings held for investment

   —      25,000    11,100  

Purchase of land and buildings held for investment

   —      —      (92,946

Decrease in cash surrender value of life insurance

   27,921    728,927    91,686  
  

 

 

  

 

 

  

 

 

 

Net cash flow from investing activities

   (4,516,855  (4,908,454  (2,853,747
  

 

 

  

 

 

  

 

 

 

Cash flows from financing activities:

    

Distributions to stockholders

   (3,901,588  (2,232,148  (2,968,947

Payment of long-term debt

   (2,551,503  (2,898,054  (1,092,470

Proceeds from long-term debt

   632,155    423,528    988,616  

Payment of related party notes payable

   (376,626  (173,397  (245,399

Proceeds from related party notes payable

   —      1,425,000    —    
  

 

 

  

 

 

  

 

 

 

Net cash flow from financing activities

   (6,197,562  (3,455,071  (3,318,200
  

 

 

  

 

 

  

 

 

 

Increase in cash and cash equivalents

   6,316,041    1,254,656    1,782,346  

Cash and cash equivalents, beginning of year

   5,343,679    4,089,023    2,306,677  
  

 

 

  

 

 

  

 

 

 

Cash and cash equivalents, end of year

  $11,659,720   $5,343,679   $4,089,023  
  

 

 

  

 

 

  

 

 

 

Non-cash transaction:

    

Acquisition of other assets and property and equipment with the issuance of long-term debt

  $—     $3,500,000   $—    
  

 

 

  

 

 

  

 

 

 

The accompanyingSee notes are an integral

part of theseto unaudited consolidated financial statements.

CORNEJO & SONS, INC.CONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARIESSUBSIDIARY

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

(In thousands)

 

   Member’s
equity
   Retained
earnings
  Accumulated
other
comprehensive
loss
  Total
member’s

interest
  Redeemable
members’
interest
 

Balance—December 28, 2013

  $135,180    $17,029   $(7,624 $144,585   $23,450  

Accretion of redeemable members’ interest

   —      (300)  —     (300)  300 

Net loss

   —      (1,973)  —     (1,973)  —   

Other comprehensive income

   —      —     818   818   —   

Share-based compensation

   31    —     —     31   —   
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

Balance—June 28, 2014

  $135,211    $14,756   $(6,806 $143,161   $23,750  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

Balance—December 31, 2012

  $135,118    $7,764   $(12,031 $130,851   $22,850  

Accretion of redeemable members’ interest

   —      (300)  —     (300)  300 

Net loss

   —      (4,960)  —     (4,960)  —   

Share-based compensation

   31    —     —     31   —   
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

Balance—June 29, 2013

  $135,149    $2,504   $(12,031 $125,622   $23,150  
  

 

 

   

 

 

  

 

 

  

 

 

  

 

 

 

See notes to unaudited consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSCONTINENTAL CEMENT COMPANY, L.L.C. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

(Tables in thousands)

 

(1)Summary of Organization and Significant Accounting Policies

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESContinental Cement Company, L.L.C. (“Continental Cement”) produces portland cement at its plant located in Hannibal, Missouri. Cement distribution terminals are maintained in Hannibal and St. Louis, Missouri and Bettendorf, Iowa. The Company’s primary customers are ready-mixed concrete and concrete products producers and contractors located in the Midwestern United States.

Green America Recycling, L.L.C. (“GAR”), a wholly-owned subsidiary of Continental Cement, is engaged in the business of securing, processing and blending hazardous and nonhazardous waste materials primarily for use as supplemental fuels in the cement manufacturing process. GAR’s primary customers are commercial transportation disposal facilities and petroleum and chemical manufacturers located in the continental United States. Continental Cement and GAR collectively are referred to as the “Company.”

Business Operations — Cornejo & Sons, Inc. (Company) was incorporated on May 2, 1983,Continental Cement, a Delaware limited liability company, is governed by an amended and performs construction, excavation, and paving contracting services for governmental agencies and private industry primarily within the staterestated limited liability company agreement, as amended (the “LLC Agreement”). As such, liability of Kansas. The workits members is generally performed under fixed price contracts. In connection with its normal construction activities, the Company may be required to purchase bid and performance bonds. The surety issuing the bonds has recourse against certain of the Company’s assets in the event the surety is required to honor the bonds. The length of the Company’s contracts varies, but is generally under one year. Billings are submitted as work progresses, and retainages are generally due upon job completion and acceptance.

The Company’s wholly-owned subsidiary, Concrete Materials Company of Kansas, L.L.C. (CMC), operates concrete production facilities and provides concretelimited to the Company, as well as unrelated third parties.amount of their net investment in Continental Cement. Continental Cement is an indirect non-wholly owned subsidiary of Summit Materials, LLC (“Summit Materials”).

The Company’s wholly-owned subsidiary, Cornejo Materials, Inc., (CMI) operates sand production facilities and provides sand and top soil to the Company and CMC, as well as unrelated third parties.

The Company’s wholly-owned subsidiary, Allmetal Recycling, L.L.C. (AMR), operates a facility that buys and accepts scrap metal from the Company as well as unrelated third parties, and sells metal.

PrinciplesBasis of ConsolidationPresentation TheThese unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries (Companies). All material intercompany accounts and transactions are eliminated in the consolidation. Management has determined that there are no other entities that require consolidation under authoritative literature.

Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect: (1) the reported amounts of assets and liabilities, (2) disclosures such as contingencies, and (3) the reported amounts of revenues and expenses included in such financial statements. Actual results could differ from those estimates.

Cash and Cash Equivalents — The Companies consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Companies maintain cash in bank accounts that, at times, may exceed federally insured limits. The Companies have not experienced any losses in such accounts and believe they are not exposed to any significant credit risk on cash and cash equivalents.

Receivables — Receivables are carried at the original billing amount less an estimate made for doubtful receivables based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received.

A receivable is considered to be past due if any portion of the receivable balance is outstanding more than 90 days. Interest is charged on receivables outstanding for more than 60 days and is recognized as it is charged. Interest charges are suspended when the balance is deemed uncollectible.

Inventory — Inventory consists of various asphalt and concrete aggregates and is stated at the lower of cost (determined on the first-in, first-out basis) or market.

Contracts — Profits on long-term contracts are recorded on the basis of the Company’s estimates of the percentage-of-completion of individual contracts. That portion of the total contract is accrued, which is allocable, on the basis of the Company’s engineering estimates of the percentage-of-completion, to contract expenditures

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

incurred and work performed. In circumstances where estimating the final outcome is impractical except to assure no loss will be incurred, the Company uses a zero estimate of profit.

Contract costs include all direct costs plus indirect shop costs related to contract performance. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Revisions in the costs and profit estimates during the course of the work are reflected in the accounting period in which the facts that require the revision become known.

The asset, “costs and estimated earnings in excess of billings on uncompleted contracts,” represents costs in excess of revenues recognized. The liability, “billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized.

Non-Contract Revenue Recognition — CMC and CMI generally recognize revenue when product is delivered to the customers. AMR generally recognizes revenue upon the sale of metal to a customerwere prepared in accordance with pre-approved agreements.

Property and Equipment — Property and equipment are carried at cost. Depreciation is computed using both the straight-line and declining-balance methods. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in incomeU.S. generally accepted accounting principles (“GAAP”) for the period. The cost of maintenance and repairs is charged to expense as incurred; significant renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments.

Goodwill — The Companies record as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. Authoritative literature prescribes a two-step process for impairment testing of goodwill, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. The Companies have elected to perform the annual analysis during the fourth quarter of each fiscal year as of October 31st. No indicators of impairment were identified as of October 31, 2009 or 2008.

Other Assets — Other assets consist of non-compete agreements and acquired landfill rights of $2,246,733 less accumulated amortization, and are amortized on the straight-line method over their estimated useful lives, generally 5 years and 15 years, respectively. Total amortization was $209,116, $184,152 and $59,334 for the years ended October 31, 2009, 2008 and 2007, respectively. Estimated aggregate amortization expenses will approximate $209,116 for each of the next three years and then will be approximately $173,000 after that until each asset is fully amortized.

Fair Value of Financial Instruments — Non-derivativeinterim financial instruments included in the balance sheets are cash value of life insurance. These instruments are carried at amounts approximating fair value.

Income Taxes — Effective November 1, 2002, the Company and CMC each elected to be taxed as an ‘S’ Corporation. CMI was a ‘C’ Corporation for tax purposes until electing to be taxed as an ‘S’ Corporation effective January 1, 2009. AMR is organized as a limited liability company and will be included with the Company for tax purposes.

Under an ‘S’ Corporation election, income and losses, along with any tax credits, will be reportable for income tax purposes by the stockholders on their individual income tax returns. Accordingly, the accompanying financial statements do not include a provision for income taxes on ‘S’ corporate earnings. Customarily,

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

stockholders in ‘S’ Corporations withdraw funds from equity to make quarterly and annual income tax payments. The Companies do not accrue such withdrawals as the taxable income is earned, instead, the Companies’ policy is to record such withdrawals when the cash is distributed.

Prior to January 1, 2009, CMI filed its own tax return on a calendar year-end basis. After January 1, 2009, CMI will be consolidated with the Company’s tax return.

As a condition of this ‘S’ Corporation election, the Internal Revenue Service (IRS) requires a tax deposit for fiscal years other than a calendar year-end. As of October 31, 2009 and 2008, the deposit with the IRS in order for the Companies to maintain a fiscal year-end of October 31 is $449,446 and $337,123, respectively.

Companies making the election to become an ‘S’ Corporation are subject to a tax on any unrecognized “built-in” gain realized during the 10-year period after the conversion. The unrecognized built-in gain is any gain realized upon disposing of an asset that can be attributed to appreciation before the conversion to ‘S’ status. During the years ended October 31, 2009, 2008 and 2007, the Companies did not recognize any built-in gains tax expense from the sale of appreciated assets. The Company has reduced its deferred tax liability to its estimate of future tax obligations related to disposals of assets subject to the built-in gains tax. However, the Company intends to utilize tax planning techniques in an effort to defer tax obligations as a result of disposals of assets subject to the built-in gains tax when possible.

Stockholder’s Equity — During January 2010, the Companies amended the Articles of Incorporation to allow for the issuance of up to 10 million shares of common stockinformation, without par value with the shares divided into two classes: 100,000 shares of Class A shares (voting) and 9,900,000 shares of Class B shares (non-voting). Further, the Companies declared a 1,000: 1 stock split based on the respective numbers of outstanding shares owned by each shareholder of record as of January 14, 2010. Shares were issued on the basis of 1% of the common stock issued as Class A voting stock and 99% issued as Class B non-voting stock. This resulted in 3,000 shares of common stock issued at October 31, 2009 and 2008 being retroactively split into 17,787 shares of Class A and 1,760,906 shares of Class B stock issued. This had no effect on the total stockholder’s equity or value of common stock issued.

Advertising — The Companies charge the cost of advertising to expense as incurred. Advertising expense was $60,041, $86,170 and $64,539 for the years ended October 31, 2009, 2008 and 2007, respectively.

Asset Retirement Obligation — In connection with the Companies’ landfill operations, the Companies accrue annually a portion of the estimated liability expected to close the landfills at the end of their operational lives as well as the estimated post-closure costs. At October 31, 2009 and 2008, the Companies have accrued $104,286 and $29,750, respectively, in estimated asset retirement obligations, which is included in other accrued liabilities.

Subsequent Events — Subsequent events have been evaluated through the date of the independent auditor’s report, December 15, 2011, which is the date these financial statements were available to be issued.

Recently Issued Accounting Standards — The FASB has issued interpretations related to the accounting for uncertain tax positions, which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements for both ‘C’ corporations and pass-through entities. This guidance prescribes a recognition threshold and measurement standard for the financial statement recognition and measurement of an income tax position taken or expected to be taken in a tax return including positions that the organization is exempt from

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

income taxes or not subject to income taxes on unrelated business income. In addition, it provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company presently discloses or recognizes income tax positions based on management’s estimate of whether it is reasonably possible or probable, respectively, that a liability has been incurred for unrecognized income tax expense or benefits by applying accounting literature on accounting for contingencies.

The Company will adopt this new interpretation in its 2010 annual financial statements but does not anticipate it will significantly affect its financial statements.

2. RECEIVABLES

   October 31, 
   2009   2008 

Completed contracts and other

  $3,593,779    $5,291,185  

Contracts-in-process

   2,442,989     3,388,344  

Retainage

   1,278,112     2,058,483  
  

 

 

   

 

 

 
  $7,314,880    $10,738,012  
  

 

 

   

 

 

 

3. RECEIVABLES, RELATED PARTY

The Companies have various unsecured demand notes receivable at October 31, 2009 and 2008, in the aggregate amount of $101,997 and $11,320, respectively, due from stockholders or related parties.

The Companies have an unsecured note receivable at October 31, 2009 and 2008, in the amount of $1,180,880 and $1,066,119, respectively, due from a related party. The Companies anticipate the collection of this note via proceeds from the ultimate maturity of a life insurance policy on this related party. As such, this note has been classified as long-term.

4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

   2009   2008 

Costs incurred on uncompleted contracts

  $57,877,170    $45,183,095  

Estimated earnings

   11,888,838     8,173,404  
  

 

 

   

 

 

 
   69,766,008     53,356,499  

Less: billings to date

   68,980,584     52,959,746  
  

 

 

   

 

 

 
  $785,424    $396,753  
  

 

 

   

 

 

 

Included in accompanying balance sheets under the following captions:

Costs and estimated earnings in excess of billings on uncompleted contracts

  $2,225,358   $1,934,321  

Billings in excess of costs and estimated earnings on uncompleted contracts

   (1,439,934  (1,537,568
  

 

 

  

 

 

 
  $785,424   $396,753  
  

 

 

  

 

 

 

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at October 31:

Classification

  Useful Life   2009   2008 

Land

    $1,970,633    $1,970,633  

Buildings and improvements

   12 to 40 years     3,611,875     3,585,796  

Automobiles and trucks

   5 to 15 years     6,019,170     5,526,690  

Construction equipment

   5 to 20 years     29,050,211     26,085,454  

Office equipment

   5 to 10 years     285,249     241,351  

Asphalt plant equipment

   10 years     1,520,581     1,520,581  

Rock crushing equipment

   10 years     1,285,965     1,073,900  

Concrete plant equipment

   10 years     3,700,231     2,096,439  
    

 

 

   

 

 

 
    $47,443,915    $42,100,844  
    

 

 

   

 

 

 

Depreciation expense for 2009, 2008 and 2007 was $3,938,377, $3,816,451 and $3,150,906, respectively.

6. LONG-TERM DEBT

The Companies have an unsecured note payable to an unrelated third party. The note is payable in annual installments of $50,552 through April 2012 and bears interest at 4.5%. The balance of this note was $138,965 and $181,355 at October 31, 2009 and 2008, respectively.

The Companies had a secured note payable to a bank for the purchase of land. The note was payable in monthly installments of $7,807 at a variable interest rate of 0.5% below prime rate. The note was to mature on May 1, 2012. This note was paid off during 2009. The balance of this note was $0 and $324,034 at October 31, 2009 and 2008, respectively.

In April 2006, the Companies secured a note payable for $1,000,000 to a bank. The note was payable in monthly installments of $15,069 at a variable interest rate of 2.0% above the London Interbank Offered Rate (LIBOR) (2.24% at October 31, 2009). The note was to mature on May 1, 2013. This note was paid off during 2009. The balance of this note was $0 and $706,369 at October 31, 2009 and 2008, respectively, and was secured by substantially all assets of the Company.

The Companies have several secured notes payable to certain finance companies for the acquisition of equipment. The notes are interest free and call for monthly payments between approximately $1,400 and $11,000 through maturity. The aggregate outstanding balance on these notes at October 31, 2009 and 2008 was $15,327 and $168,411, respectively.

The Companies have interest free, unsecured notes payable for acquisition of equipment and construction of a plant, payable in monthly installments. The aggregate outstanding balance on these notes is $17,765 and $25,661, at October 31, 2009 and 2008, respectively.

In connection with the acquisition of the remaining interest of CMI during 2006, the Companies entered into a financing arrangement for the payment of a non-compete agreement with the former stockholder. The agreement calls for monthly payments of $3,000 for five years. The remaining balance on this agreement at October 31, 2009 and 2008 was $54,000 and $90,000, respectively.

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6. LONG-TERM DEBT (CONTINUED)

During 2008, in connection with the acquisition of property and equipment and landfill rights (included in other assets), the Companies have a 5.80% interest rate note payable to a Bank payable in monthly installments of $67,682 with all outstanding principal and interest due January 1, 2011. The balance on this note at October 31, 2009 and 2008 is $2,391,315 and $3,040,890, respectively, and is secured by substantially all assets of the Companies.

Maturities of long-term debt are as follows:

   Year Ending October 31, 

2010

  $792,619  

2011

   1,774,404  

2012

   50,349  
  

 

 

 
  $2,617,372  
  

 

 

 

Interest paid on long-term debt above for the years ended October 31, 2009, 2008 and 2007 was $238,024, $286,419 and $236,194, respectively.

The Company and CMC each have revolving credit agreements with a local bank secured by substantially all assets. Under these agreements, the Company and CMC may borrow up to $2,500,000 and $500,000, respectively, at 2.00% above LIBOR (2.24% at October 31, 2009). At October 31, 2009 and 2008, no amounts were drawn on these agreements, and the full balances were available for borrowing.

7. RELATED PARTY NOTES PAYABLE

   October 31, 
   2009   2008 

Note payable to a relative of the stockholders for acquisition of land and buildings. This secured note is structured as a life annuity with monthly payments of $13,120. Monthly payments are expected to continue until paid and/or cancellation of the life annuity.

  $1,029,911    $1,406,537  

Less current maturities

   267,705     441,455  
  

 

 

   

 

 

 
  $762,206    $965,082  
  

 

 

   

 

 

 

Interest imputed on the above related party notes payable for the years ended October 31, 2009 and 2008 was $3,149 and $10,533, respectively.

8. EMPLOYEE BENEFIT PLANS

The Companies have a profit sharing retirement plan for the benefit of all qualified employees. The Trust Agreement stipulates the amount of the annual contribution to the plan shall be determined by the Board of Directors of the Companies. The amount so determined is not to exceed the amount deductible for income tax purposes. The Companies did not make contributions in 2009, 2008 or 2007.

The Companies also have a 401(k) plan for the benefit of substantially all of its employees. The Companies contribute a matching contribution at the discretion of the Board of Directors. The Companies’ contributions for 2009, 2008 and 2007 were $104,351, $127,332 and $91,565, respectively.

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. EMPLOYEE BENEFIT PLANS (CONTINUED)

The Companies have a deferred compensation agreement with three key employees that will pay each employee monthly an agreed upon amount for 10 years (aggregates to approximately $105,000 annually) after the earlier of retirement or a change in control event (as defined). The agreements are partially funded through Company owned life insurance policies on the three employees. The total amount accrued is $43,766 at October 31, 2009 and $0 at October 31, 2008.

9. INCOME TAXES

At October 31, 2009 and 2008, deferred taxes consist of management’s estimate of future tax obligations related to disposals of assets subject to built-in gains tax. Management’s historical practice has been to defer gains on disposals for tax purposes by trading in assets via tax-free exchanges. Should this historical practice change or not be available, the potential liability for future built-in gains tax could be substantially greater. Deferred taxes consist of the following at October 31:

   2009  2008 

Deferred tax liability:

   

Built-in gains tax

  $(160,151 $(168,000
  

 

 

  

 

 

 

The income tax provision on CMI (attributed to operations prior to the conversion to an ‘S’ corporation) differs from the amount of income tax determined by applying the U.S. Federal income tax rate (34%) to pretax income for the years ended October 31, 2009 and 2008, primarily due to non-deductible items.

10. RELATED PARTY TRANSACTIONS

The Companies leased their office and other shop facilities from entities owned by the officers and stockholders of the Corporation, under an operating lease agreement that expired in October 2007. The leases contained a one-year renewal option, which was exercised, and required monthly payment aggregating $14,000. The lease also required the Companies to pay all executor costs (such as property taxes, maintenance, and insurance). Rents paid under this agreement were approximately $146,000 for the year ended October 31, 2008 and $168,000 for the year ended October 31, 2007. During fiscal 2008, the Companies acquired the office and shop facilities that were previously rented from related entities by issuing debt (see Note 7).

11. MAJOR CUSTOMERS

Revenue from one of the Companies’ customers during the years ended October 31, 2009, 2008 and 2007 was approximately $34 million, $22 million and $19 million, respectively. The amount receivable from this same customer at October 31, 2009 and 2008 was $1,141,079 and $2,615,891, respectively.

12. COMMITMENTS AND CONTINGENCIES

From time to time, the Companies are subject to claims and litigation that arise in the ordinary course of business. Management does not expect these matters to have a material adverse effect on the Companies’ financial condition.

13. FAIR VALUE MEASUREMENT

In September 2006, the FASB issued guidance which defines fair value, establishes a framework for measuring fair value under current accounting pronouncements that require or permit fair value measurement and enhances disclosures about fair value measurements. Effective November 1, 2008, the Company adopted this

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13. FAIR VALUE MEASUREMENT (CONTINUED)

guidance. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction value hierarchy which requires an entity to maximize the use of observable inputs when measuring fair value.

The guidance describes three levels of inputs that may be used to measure fair value:

Level 1 — Inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date;

Level 2 — Inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value can be determined through the use of models or other valuation methodologies; and

Level 3 — Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instrumentsaudit, pursuant to the valuation hierarchy.

Cash Value of Life Insurance — These instruments are classified as Level 3. The values are determined by the underwriting insurance company’s valuation modelsrules and represent the guaranteed value the Company would receive upon surrenderregulations of the policies as of October 31, 2009. These policies are held on key employees.

Below are the Company’s financial instruments carried at fair value on a recurring basis by the fair value hierarchy levels described above.

   Assets at Fair Value as of October 31, 2009   Fair Value 
       Level 1           Level 2           Level 3       

Cash value of life insurance

  $—      $—      $931,180    $931,180  
  

 

 

   

 

 

   

 

 

   

 

 

 

The table below sets forth a summary of changes in the fair value of the Company’s level 3 assets for the year ended October 31, 2009:

   Level 3 Assets 
   Cash Value of  Life
Insurance
 

Balance, beginning of year

  $959,101  

Net of change in fair market value and premiums paid

   (27,921
  

 

 

 

Balance, end of year

  $931,180  
  

 

 

 

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. ACQUISITION

Effective August 7, 2009, the Company (through a wholly-owned subsidiary specifically created for this acquisition, AMR) acquired the assets of an entity in Wichita. This acquisition has been accounted for in accordance with applicable accounting guidance on business combinations. The aggregate purchase price of $1,500,000 was all allocated to the estimated fair values of the fixed assets acquired.

15. SUBSEQUENT EVENT

Effective April 16, 2010, the Companies sold substantially all assets to an unrelated third party. This transaction triggered the change of control provision in the deferred compensation agreements. This resulted in an additional accrual, on the effective date of the transaction, of approximately $572,000. This transaction also triggered built-in gains tax (see Note 9) of approximately $516,000 on the effective date of the transaction.

CORNEJO & SONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended January 31, 2010Securities and 2009

   2010  2009 

Revenues earned

  $15,566,623   $15,148,511  

Cost of revenues earned

   10,957,490    12,396,098  
  

 

 

  

 

 

 

Gross profit

   4,609,133    2,752,413  

Selling, general, and administrative expenses

   2,285,313    1,738,645  

Gain on disposal of property and equipment

   240,171    —    
  

 

 

  

 

 

 

Income from operations

   2,563,991    1,013,768  
  

 

 

  

 

 

 

Other income (expense):

   

Interest and dividend income

   31,940    16,457  

Interest expense

   (39,188  (60,086

Miscellaneous

   66,001    63,048  
  

 

 

  

 

 

 
   58,753    19,419  
  

 

 

  

 

 

 

Net income before taxes

   2,622,744    1,033,187  

Income tax expense

   —      (90,000
  

 

 

  

 

 

 

Net income

  $2,622,744   $943,187  
  

 

 

  

 

 

 

The accompanying notes are an integral

part of these unaudited interim financial statements.

CORNEJO & SONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended January 31, 2010 and 2009

   2010  2009 

Cash flows from operating activities:

   

Net income

  $2,622,744   $943,187  

Adjustments to reconcile net income to net cash flow from operating activities:

   

Depreciation and amortization

   1,096,008    1,420,670  

Gain on disposal of property and equipment

   (240,171  —    

Changes in operating assets and liabilities:

   

Receivables

   1,141,118    4,048,040  

Inventory

   (304,647  (305,636

Costs and estimated earnings in excess of billings on uncompleted contracts

   181,784    1,206,294  

Prepaid expenses

   (1,108,005  (1,054,328

Income tax deposit

   —      (7,500

Accounts payable

   (4,227,489  (2,287,361

Billings in excess of costs and estimated earnings on uncompleted contracts

   440,617    342,153  

Accrued liabilities

   92,946    (532,655
  

 

 

  

 

 

 

Net cash flow from operating activities

   (305,095  3,772,864  
  

 

 

  

 

 

 

Cash flows from investing activities:

   

Proceeds from sale of property and equipment

   385,495    —    

Acquisition of property and equipment

   (1,019,411  (1,709,542

Disbursement of notes receivable, related party

   (27,488  (60,502

Receipts on notes receivable, related party

   96,397    —    

Purchases of/change in other assets

   (466,152  30,970  
  

 

 

  

 

 

 

Net cash flow from investing activities

   (1,031,159  (1,739,074
  

 

 

  

 

 

 

Cash flows from financing activities:

   

Distributions to stockholders

   (802,704  (1,291,425

Payment of long-term debt

   (449,036  (480,560

Proceeds from long-term debt

   898,241    632,155  

Payment of related party notes payable

   (38,301  (43,357

Proceeds from related party notes payable

   46,715    218,025  
  

 

 

  

 

 

 

Net cash flow from financing activities

   (345,085  (965,162
  

 

 

  

 

 

 

Increase in cash and cash equivalents

   (1,681,339  1,068,628  

Cash and cash equivalents, beginning of period

   11,659,720    5,343,679  
  

 

 

  

 

 

 

Cash and cash equivalents, end of period

  $9,978,381   $6,412,307  
  

 

 

  

 

 

 

The accompanying notes are an integral

part of these unaudited interim financial statements.

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated interim financial statements for Cornejo & Sons, Inc. and Subsidiaries have been prepared by the Company, without audit.Exchange Commission. Certain information and footnote disclosures normallytypically included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of AmericaGAAP have been condensed or omitted. 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 28, 2013. The Company continues to follow the accounting policies set forth in those consolidated financial statements.

Management believes that the disclosuresthese consolidated interim financial statements include all adjustments, normal and recurring in nature, that are adequatenecessary to present fairly the financial position of the Company as of June 28, 2014 and the results of operations and cash flows at the dates and for the six month periods presented. It is suggestedended June 28, 2014 and June 29, 2013.

In 2013, the Company changed its fiscal year from a calendar year to a 52-53 week year with each quarter composed of 13 weeks ending on a Saturday, consistent with that this interim financial information be read in conjunction with the financial statements and notes thereto appearingof Summit Materials. The 53 week year occurs approximately once every seven years. The additional week in the Company’s latest annual audit report. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

Stockholders’ Equity — During January 2010, the Companies amended the Articles of Incorporation to allow for the issuance of up to 10 million shares of common stock without par value with the shares divided into two classes: 100,000 shares of Class A shares (voting) and 9,900,000 shares of Class B shares (non-voting). Further, the Companies declared a 1,000:1 stock split based on the respective number of outstanding shares owned by each shareholder of record as of January 14, 2010. Shares were issued on the basis of 1% of the common stock issued as Class A voting stock and 99% issued as Class B non-voting stock. This resulted in 3,000 shares of common stock issued at October 31, 2009 split into 17,787 shares of Class A and 1,760,906 shares of Class B stock issued at January 31, 2010. This had no effect on the total stockholders’ equity or value of common stock issued.

Asset Retirement Obligation — In connection with the Companies’ landfill operations, the Companies accrue a portion of the estimated liability expected to close the landfills at the end of their operational lives as well as the estimated post-closure costs. The Company established a new estimate of this retirement obligation based on revised cash flow projections, which primarily relate to capping and closing the landfills. This change in estimate, that resulted in the recognition of an additional liability of approximately $500,000, was recognized as of November 1, 2009. At January 31, 2010 and October 31, 2009, the Companies have accrued $602,305 and $104,286, respectively, in estimated asset retirement obligations, which53 week year is included in other liabilities.

Subsequent Events — These financial statements considered subsequent events through December 15, 2011, the datefourth quarter. The Company’s six months ended June 28, 2014 included a full 26 weeks, or 182 days, of results compared to the financial statements were available to be issued.

Future Adoption of New Accounting Standards — In January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements”,six months ended June 29, 2013, which also requires additional disclosures about purchases, sales, issuances and settlements in the roll-forward of Level 3 fair value measurements. This new guidance will be effective for the Company on January 1, 2011.included 184 days. The adoptioneffect of this new accounting guidance is not expected to have a material impact on the Company’s consolidated financial statements.

2. RECEIVABLES

   January 31,
2010
   October 31,
2009
 

Construction contracts (completed and in-process)

  $4,950,350    $6,036,768  

Retainage

   1,223,412     1,278,112  
  

 

 

   

 

 

 
  $6,173,762    $7,314,880  
  

 

 

   

 

 

 

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. NOTES RECEIVABLE, RELATED PARTY

The Companies have various unsecured demand notes receivable at January 31, 2010 and October 31, 2009, in the aggregate amount of $19,966 and $101,997, respectively, due from stockholders, employees or related parties.

The Companies have an unsecured note receivable at January 31, 2010 and October 31, 2009, in the amount of $1,194,002 and $1,180,880, respectively, due from a related party. The Companies anticipate the collection of this note via proceeds from the ultimate maturity of a life insurance policy on this related party. As such, this note has been classified as long-term.

4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

   January 31,
2010
  October 31,
2009
 

Costs incurred on uncompleted contracts

  $65,194,582   $57,877,170  

Estimated earnings

   15,260,938    11,888,838  
  

 

 

  

 

 

 
   80,455,520    69,766,008  

Less: billings to date

   80,292,497    68,980,584  
  

 

 

  

 

 

 
  $163,023   $785,424  
  

 

 

  

 

 

 

Included in accompanying balance sheets under the following captions:

   

Costs and estimated earnings in excess of billings on uncompleted contracts

  $2,043,574   $2,225,358  

Billings in excess of costs and estimated earnings on uncompleted contracts

   (1,880,551  (1,439,934
  

 

 

  

 

 

 
  $163,023   $785,424  
  

 

 

  

 

 

 

5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

Classification

  

Useful Life

  January 31,
2010
   October 31,
2009
 

Land

    $1,970,633    $1,970,633  

Buildings and improvements

  12 to 40 years   3,611,875     3,611,875  

Automobiles and trucks

  5 to 15 years   5,868,995     6,019,170  

Construction equipment

  5 to 20 years   29,606,480     29,050,211  

Office equipment

  5 to 10 years   286,128     285,249  

Asphalt plant equipment

  10 years   1,520,581     1,520,581  

Rock crushing equipment

  10 years   1,285,965     1,285,965  

Concrete plant equipment

  10 years   3,413,241     3,700,231  
    

 

 

   

 

 

 
    $47,563,898    $47,443,915  
    

 

 

   

 

 

 

Depreciation expense for the three months ended January 31, 2010 and 2009 was $1,043,728 and $1,368,390, respectively.

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. LONG-TERM DEBT

The Companies have an unsecured note payable to an unrelated third party. The note is payable in annual installments of $50,552 through April 2012 and bears interest at 4.5%. The balance of this note was $138,965 at January 31, 2010 and October 31, 2009.

The Companies have several secured notes payable to certain finance companies for the acquisition of equipment. The notes are interest free and call for monthly payments between approximately $1,400 and $11,000 through maturity. The aggregate outstanding balance on these notes at January 31, 2010 and October 31, 2009 was $11,147 and $15,327, respectively.

The Companies have interest free, unsecured notes payable for acquisition of equipment and construction of a plant, payable in monthly installments. The aggregate outstanding balance on these notes is $16,446 and $17,765 at January 31, 2010 and October 31, 2009, respectively.

In connection with the acquisition of the remaining interest of CMI during 2006, the Companies entered into a financing arrangement for the payment of a non-compete agreement with the former stockholder. The agreement calls for monthly payments of $3,000 for five years. The remaining balance on this agreement at January 31, 2010 and October 31, 2009 was $45,000 and $54,000, respectively.

The Companies have an unsecured note payable to an unrelated third party. The note is payable in monthly installments of $91,475 through August 2010 and bears interest at 3.99%. The balance of this note was $631,893 and $0 at January 31, 2010 and October 31, 2009, respectively.

During 2008, in connection with the acquisition of property and equipment and landfill rights (included in other assets), the Companies have a 5.80% interest rate note payable to a bank payable in monthly installments of $67,682 with all outstanding principal and interest due January 1, 2011. The balance on this note at January 31, 2010 and October 31, 2009 is $2,223,126 and $2,391,315, and is secured by substantially all assets of the Companies.

Maturities of long-term debt are as follows:

Periods Ending October 31,

    

2010 (nine months)

  $1,241,167  

2011

   1,774,404  

2012

   51,006  
  

 

 

 
  $3,066,577  
  

 

 

 

Interest paid on long-term debt above for the three months ended January 31, 2010 and 2009 was $45,424 and $60,086, respectively.

The Company and CMC each have revolving credit agreements with a local bank secured by substantially all assets. Under these agreements, the Company and CMC may borrow up to $2,500,000 and $500,000, respectively, at 2.00% above LIBOR (0.90% at January 31, 2010). At January 31, 2010 and October 31, 2009, no amounts were drawn on these agreements, and the full balances were available for borrowing.

CORNEJO & SONS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7. RELATED PARTY NOTES PAYABLE

    January 31,
2010
   October 31,
2009
 

Note payable to a relative of the stockholders for acquisition of land and buildings. This secured note is structured as a life annuity with monthly payments of $13,120. Monthly payments are expected to continue until paid and/or cancellation of the life annuity.

  $1,038,325    $1,029,911  

Less current maturities

   314,420     267,705  
  

 

 

   

 

 

 
  $723,905    $762,206  
  

 

 

   

 

 

 

8. INCOME TAXES

At January 31, 2010 and October 31, 2009, deferred taxes consist of management’s estimate of future tax obligations related to disposals of assets subject to built-in gains tax. Management’s historical practice has been to defer gains on disposals for tax purposes by trading in assets via tax-free exchanges (see also Note 9). Should this historical practice change or not be available, the potential liability for future built-in gains tax could be substantially greater. Deferred taxes consist of a $168,000 and $160,151 built-in gains tax liability at January 31, 2010 and October 31, 2009, respectively.

The income tax provision on CMI (attributed to operations prior to the conversion to an ‘S’ corporation) differs from the amount of income tax determined by applying the U.S. Federal income tax rate (34%) to pretax income for the three months ended January 31, 2010 and 2009, primarily due to non-deductible items.

9. SUBSEQUENT EVENT

Effective April 16, 2010, the Companies sold substantially all assets to an unrelated third party. This transaction triggered the change of control provisions in the deferred compensation agreements. This resulted in an additional accrual, on the effective date of the transaction, of approximately $572,000. This transaction also triggered built-in gains tax (see Note 8) of approximately $516,000 on the effective date of the transaction.

INDEPENDENT AUDITORS’ REPORT

Board of Directors

Kilgore Pavement Maintenance, LLC

Salt Lake City, Utah

We have audited the accompanying balance sheets of Kilgore Pavement Maintenance, LLC as of August 1, 2010 and December 31, 2009, and the related statements of operations and members’ equity, and cash flows for the period from January 1, 2010 through August 1, 2010 and for the year ended December 31, 2009. 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 in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kilgore Pavement Maintenance, LLC as of August 1, 2010 and December 31, 2009 and the results of its operations and its cash flows for the period from January 1, 2010 through August 1, 2010 and for the year ended December 31, 2009 in conformity with U.S. generally accepted accounting principles.

/s/ Wisan, Smith, Racker & Prescott, LLP

Salt Lake City, Utah

October 25, 2011

KILGORE PAVEMENT MAINTENANCE, LLC

BALANCE SHEETS

August 1, 2010 and December 31, 2009

   2010  2009 
ASSETS   

CURRENT ASSETS

   

Cash and cash equivalents

  $793,485   $2,237,524  

Receivables:

   

Trade accounts including amounts retained on construction contracts of $437,804 and $1,343,104, respectively

   8,365,634    12,021,269  

Employee advances

   —      700  
  

 

 

  

 

 

 

Total receivables

   8,365,634    12,021,969  

Less allowance for doubtful accounts

   (12,238  (100,000
  

 

 

  

 

 

 

Net receivables

   8,353,396    11,921,969  

Costs and estimated earnings in excess of billings on uncompleted contracts

   247,209    75,721  

Inventories

   2,165,882    453,280  

Prepaid expenses

   —      73,111  
  

 

 

  

 

 

 

TOTAL CURRENT ASSETS

   11,559,972    14,761,605  

EQUIPMENT, net of accumulated depreciation of $9,552,839 and $8,397,963, respectively

   4,461,276    5,582,298  

OTHER ASSETS

   

Deposits

   71,821    71,821  
  

 

 

  

 

 

 

TOTAL ASSETS

  $16,093,069   $20,415,724  
  

 

 

  

 

 

 
LIABILITIES AND MEMBERS’ EQUITY   

CURRENT LIABILITIES

   

Accounts payable including amounts retained on construction contracts of $114,167 and $177,725, respectively

  $1,971,247   $1,677,171  

Accrued expenses

   217,644    70,026  

Accrued losses on uncompleted contracts

   41,012    —    

Current portion of long-term liabilities

   612,290    669,646  

Current portion of obligations under capital leases

   28,279    59,136  

Billings in excess of costs and estimated earnings on uncompleted contracts

   21,734    244,976  
  

 

 

  

 

 

 

TOTAL CURRENT LIABILITIES

   2,892,206    2,720,955  

LONG-TERM LIABILITIES

   1,446,585    1,817,364  

OBLIGATIONS UNDER CAPITAL LEASES

   20,593    37,181  

MEMBERS’ EQUITY

   11,733,685    15,840,224  
  

 

 

  

 

 

 

TOTAL LIABILITIES AND MEMBERS’ EQUITY

  $16,093,069   $20,415,724  
  

 

 

  

 

 

 

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

KILGORE PAVEMENT MAINTENANCE, LLC

STATEMENTS OF OPERATIONS AND MEMBERS’ EQUITY

Period ended August 1, 2010 and Year ended December 31, 2009

   2010  2009 

INCOME

   

Contract revenues earned

  $11,037,841   $37,616,032  

EXPENSES

   

Cost of revenues earned

   6,454,067    21,101,592  

Selling, general and administrative

   5,759,705    5,846,665  

Bad debts

   927,551    100,000  

Depreciation

   1,154,876    1,973,739  
  

 

 

  

 

 

 
   14,296,199    29,021,996  
  

 

 

  

 

 

 

OPERATING INCOME (LOSS)

   (3,258,358  8,594,036  

OTHER INCOME (EXPENSE)

   

Interest income

   3,296    55,175  

Interest expense

   (68,592  (71,161
  

 

 

  

 

 

 
   (65,296  (15,986
  

 

 

  

 

 

 

NET INCOME (LOSS)

   (3,323,654  8,578,050  

MEMBERS’ EQUITY

   

Balance — beginning of period

   15,840,224    15,806,806  

Distributions to members

   (782,885  (8,544,632
  

 

 

  

 

 

 

Balance — end of period

  $11,733,685   $15,840,224  
  

 

 

  

 

 

 

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

KILGORE PAVEMENT MAINTENANCE, LLC

STATEMENTS OF CASH FLOWS

Period ended August 1, 2010 and Year ended December 31, 2009

   2010  2009 

CASH FLOWS FROM OPERATING ACTIVITIES

   

Net income (loss)

  $(3,323,654 $8,578,050  

Adjustments to reconcile net income (loss) to net cash flows from (used by) operating activities:

   

Depreciation

   1,154,876    1,973,739  

Bad debts

   927,551    100,000  

Loss on sale of assets

   —      19,945  

(Increase) decrease in assets:

   

Trade accounts receivable

   2,640,322    2,669,852  

Employee advances

   700    (50

Costs and estimated earnings in excess of billings on uncompleted contracts

   (171,488  (25,571

Inventories

   (1,712,602  (427,291

Prepaid expenses

   73,111    (3,980

Deposits

   —      (10,374

Increase (decrease) in liabilities:

   

Accounts payable

   294,076    (959,749

Accrued expenses

   147,618    (37,427

Accrued losses on uncompleted contracts

   41,012    —    

Billings in excess of costs and estimated earnings on uncompleted contracts

   (223,242  228,924  
  

 

 

  

 

 

 

Net cash flows from (used by) operating activities

   (151,720  12,106,068  

CASH FLOWS FROM INVESTING ACTIVITIES

   

Cash from disposal of equipment

   —      61,312  

Cash paid for purchases of equipment

   (33,854  (283,130
  

 

 

  

 

 

 

Net cash used by investing activities

   (33,854  (221,818

CASH FLOWS FROM FINANCING ACTIVITIES

   

Distributions to members

   (782,885  (8,544,632

Cash paid to reduce long-term liabilities

   (428,135  (1,756,068

Cash paid to reduce obligations under capital leases

   (47,445  (81,816
  

 

 

  

 

 

 

Net cash used by financing activities

   (1,258,465  (10,382,516
  

 

 

  

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

   (1,444,039  1,501,734  

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

   2,237,524    735,790  
  

 

 

  

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  $793,485   $2,237,524  
  

 

 

  

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

   

Equipment acquired through assumption of long-term liabilities

  $—     $1,886,671  
  

 

 

  

 

 

 

Refinanced debt

  $—     $377,921  
  

 

 

  

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

   

Cash paid for interest

  $68,592   $71,161  
  

 

 

  

 

 

 

Cash paid for income taxes

  $—     $—    
  

 

 

  

 

 

 

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

KILGORE PAVEMENT MAINTENANCE, LLC

NOTES TO FINANCIAL STATEMENTS

August 1, 2010 and December 31, 2009

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

The Company’s accounting policies conform to U.S. generally accepted accounting principles. The following policies are considered to be significant:

Business Activity

The Company operates in the construction industry, paving and maintaining asphalt surfaces. The work is usually performed under fixed price contracts. Projects are generally located in the State of Utah. The Company files statutory liens on all construction projects where collection problems are anticipated.

Income Recognition — Construction Contracts

The financial statements are prepared on the percentage-of-completion method of accounting. Profits on contracts are recorded on the basis of “cost-to-cost” determination of percentage-of-completion on individual contracts, commencing when progress reaches a point where cost and estimate analysis and other evidence of trend are sufficient to estimate final results with reasonable accuracy. That portion of the total contract price which is allocable to contract expenditures incurred and work performed is accrued as earned income. At the time a loss on a contract becomes known, the entire amount of the estimated ultimate loss is accrued. Claims for additional revenue are recognized when settled.

Costs and Billings on Uncompleted Contracts

Costs and estimated earnings in excess of billings on uncompleted contracts represent the amount by which costs of contracts in progress plus estimated earnings exceed related progress billings.

Billings in excess of costs and estimated earnings on uncompleted contracts represent the amount by which progress billings on contracts in progress exceed related costs and estimated earned profit.

Cash and Cash Equivalents

Cash equivalents are generally comprised of certain highly liquid investments with original maturities of less than three months.

Trade Accounts Receivable

Trade accounts receivable are stated at the amount management expects to collect from balances outstanding at year end. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, it has concluded that realization losses on balances outstanding at year end will be immaterial.

Inventories

Inventories consist mainly of the components necessary to produce asphalt and inventories are reflected in the financial statements at their aggregate lower of cost (first-in, first-out) or market.

Equipment

Equipment is recorded at cost less accumulated depreciation with depreciation expense computed using the straight-line method in amounts sufficient to write off the cost of depreciable assets over their estimated useful lives.

KILGORE PAVEMENT MAINTENANCE, LLC

NOTES TO FINANCIAL STATEMENTS

August 1, 2010 and December 31, 2009

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Normal maintenance and repair items are charged to costs and expenses as incurred. The cost and accumulated depreciation of equipment sold or otherwise retired is removed from the accounts and gain or loss on disposition is reflected in net income in the period of disposition.

Income Taxes

The Company is a limited liability company and as allowed under IRS statutes, the Company has elected to report taxable income as an “S” Corporation. Under such election, federal and state income taxes on earnings of the Company are generally the responsibility of the individual member.

Concentrations of Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash deposits, trade accounts receivable and accounts payable.

The Company maintains its cash deposits at one financial institution. At times such deposits may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash.

Approximately 33% and 51% of the Company’s trade accounts receivable balance is derived from one and three customers at August 1, 2010 and December 31, 2009, respectively. One and two of the Company’s customers accounted for approximately 22% of 2010 and 25% of 2009 revenues, respectively. Concentrations of credit risk with respect to trade accounts receivable are limited because the Company routinely assesses the financial strength of its customers and follows the practice of filing statutory liens or filing claims against payment and performance bonds on all construction projects where collection problems are anticipated.

Approximately 43% and 71% of the Company’s August 1, 2010 and December 31, 2009 trade accounts payable, respectively, are due to two and one suppliers, respectively. The materials and products provided by one of these suppliers plus three others represent approximately 52% and 12% of the Company’s 2010 and 2009 cost of revenues earned. The Company limits its exposure by maintaining buying relationships with other capable vendors.

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. In these financial statements assets, liabilities, and earnings from contracts involve extensive reliance on management’s estimates. Actual results could differ from those estimates.

Advertising and Promotion

All costs associated with advertising and promoting the Company’s services are expensed in the period incurred. Advertising and promotion expenses during the period ended August 1, 2010 totaled $31,783. Advertising and promotion expenses for the year ended December 31, 2009 totaled $75,511.

KILGORE PAVEMENT MAINTENANCE, LLC

NOTES TO FINANCIAL STATEMENTS

August 1, 2010 and December 31, 2009

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Subsequent Events

Management has evaluated subsequent events through October 25, 2011, which is also the date the financial statements were available to be issued. Except as disclosed in Note 13, no subsequent events were noted during this evaluation that require disclosure in these financial statements.

NOTE 2 — CONTRACTS IN PROGRESS

Information with respect to contracts in progress at August 1, 2010 and December 31, 2009 follows:

   2010  2009 

Expenditures on uncompleted contracts

  $1,635,886   $4,342,922  

Estimated earnings (losses) thereon

   (57,760  1,840,975  
  

 

 

  

 

 

 
   1,578,126    6,183,897  

Less billings applicable thereto

   (1,352,651  (6,353,152
  

 

 

  

 

 

 

Net (over)/under billings

  $225,475   $(169,255
  

 

 

  

 

 

 

   2010  2009 

Included in the accompanying balance sheets under the following captions:

   

Costs and estimated earnings in excess of billings on uncompleted contracts

  $247,209   $75,721  

Billings in excess of costs and estimated earnings on uncompleted contracts

   (21,734  (244,976
  

 

 

  

 

 

 

Net (over)/under billings

  $225,475   $(169,255
  

 

 

  

 

 

 

NOTE 3 — INVENTORIES

Inventories at August 1, 2010 and December 31, 2009 consist of the following:

   2010   2009 

Road base and fill materials

  $1,890,425    $360,008  

Oils

   240,504     59,700  

Fuel

   34,953     33,572  
  

 

 

   

 

 

 
  $2,165,882    $453,280  
  

 

 

   

 

 

 

NOTE 4 — EQUIPMENT

Equipment as of August 1, 2010 and December 31, 2009 is summarized as follows:

   2010  2009 

Cost:

   

Autos and trucks

  $5,763,558   $5,805,958  

Asphalt plant and equipment

   2,801,050    2,801,050  

Construction equipment

   5,290,186    5,213,932  

Office equipment

   159,321    159,321  
  

 

 

  

 

 

 
   14,014,115    13,980,261  

Less accumulated depreciation

   (9,552,839  (8,397,963
  

 

 

  

 

 

 

Net book value

  $4,461,276   $5,582,298  
  

 

 

  

 

 

 

KILGORE PAVEMENT MAINTENANCE, LLC

NOTES TO FINANCIAL STATEMENTS

August 1, 2010 and December 31, 2009

NOTE 4 — EQUIPMENT (CONTINUED)

Amounts included in equipment for assets capitalized under capital lease obligations at August 1, 2010 and December 31, 2009 are $130,388 and $450,738, respectively. Accumulated amortization for items capitalized under capital leases was $84,752 and $324,566 at August 1, 2010 and December 31, 2009, respectively. Amortization expense on assets recorded under capital leases is included in depreciation expense.

NOTE 5 — LINE OF CREDIT

The Company has a $1,500,000 line of credit with a bank. This line bears interest at the greater of the bank’s prime rate or 5.0%, but never below 5.0% and is secured by assets of the Company. As of August 1, 2010, there were no draws against the line of credit. The line of credit matures on July 5, 2011.

NOTE 6 — LONG-TERM LIABILITIES

Long-term liabilities as of August 1, 2010 and December 31, 2009 are summarized below:

   2010  2009 

Notes to a bank, interest ranging from 2.5% to 5.0%, due in monthly installments of $30,844, including interest, secured by equipment

  $1,577,867   $1,735,752  

Notes to equipment finance companies, interest ranging from 4% to 5%, due in monthly installments of $29,475, including interest, secured by equipment

   481,008    751,258  
  

 

 

  

 

 

 
   2,058,875    2,487,010  

Less current portion of long-term liabilities

   (612,290  (669,646
  

 

 

  

 

 

 

Long-term liabilities excluding current portion

  $1,446,585   $1,817,364  
  

 

 

  

 

 

 

Aggregate maturities of long-term liabilities in each of the next five years are summarized as follows:

2011

  $612,290  

2012

   452,472  

2013

   315,560  

2014

   332,508  

2015

   278,522  

Thereafter

   67,523  
  

 

 

 
  $2,058,875  
  

 

 

 

KILGORE PAVEMENT MAINTENANCE, LLC

NOTES TO FINANCIAL STATEMENTS

August 1, 2010 and December 31, 2009

NOTE 7 — OBLIGATIONS UNDER CAPITAL LEASES

The Company has entered into capital leases for construction equipment. Aggregate future minimum lease payments under these leases are as follows:

2011

  $30,894  

2012

   23,170  

2013

   —    

2014

   —    

2015

   —    

Thereafter

   —    
  

 

 

 

Total minimum lease payments

   54,064  

Less amount representing interest

   (5,192
  

 

 

 

Present value of minimum lease payments (including $28,279 classified as current)

  $48,872  
  

 

 

 

NOTE 8 — OPERATING LEASE

The Company leases its facilities from a related entity through common ownership under a long-term operating lease agreement. This lease expires in October 2025. The Company also has operating leases for construction equipment and also leases other equipment under short-term arrangements as needed. These leases expire in March 2011 and May 2012. Rents expensed, including rents to the related entity, under operating leases during the period ended August 1, 2010 totaled $381,053 and for the year ended December 31, 2009 totaled $851,602.

The following is a schedule of the future minimum lease payments as of August 1, 2010:

   Third
Party
   Related
Entity
   Total 

2011

  $249,978    $360,000    $609,978  

2012

   127,762     360,000     487,762  

2013

   —       360,000     360,000  

2014

   —       360,000     360,000  

2015

   —       360,000     360,000  

Thereafter

   —       3,660,000     3,660,000  
  

 

 

   

 

 

   

 

 

 
  $377,740    $5,460,000    $5,837,740  
  

 

 

   

 

 

   

 

 

 

The total amount expensed on the related entity lease was $210,000 and $360,000 during the period ended August 1, 2010 and the year ended December 31, 2009, respectively.

NOTE 9 — BENEFIT PLAN

The Company sponsors a 401(k) contributory retirement plan (the Plan) covering all full-time personnel who have attained the age of twenty-one and who have been employed longer than one year. The Company may elect to make matching contributions to the Plan matching 50% of employee contributions up to 6% of eligible compensation. Matching contributions to the Plan amounted to $73,467 and $120,437 for the period ended August 1, 2010 and for the year ended December 31, 2009, respectively. Administrative expenses paid by the Company for the Plan totaled $4,269 and $2,880 for the period ended August 1, 2010 and for the year ended December 31, 2009, respectively.

KILGORE PAVEMENT MAINTENANCE, LLC

NOTES TO FINANCIAL STATEMENTS

August 1, 2010 and December 31, 2009

NOTE 10 — RELATED-PARTY TRANSACTIONS

The Company leases its facilities from a related entity that is owned by a member of the Company. (See note 8).

NOTE 11 — COMMITMENTS AND CONTINGENCIES

In connection with the sale of the Company described in Note 13, the Company’s acquirer also acquired the operations of another entity that was subsequently merged into the operations acquired from the Company. This other entity has historically been the Company’s largest customer and largest vendor and the two companies have had other business relationships. In connection with the sale, the former owner of the other entity required that the Company pay a fee for land previously used and pay an additional amount related to shared use of a permit. In the Company’s dealings with this entity as supplier and customer, the use of the land and the permit was considered part of the business relationship. The amounts paid of $500,000 and $245,800 for the land fee and permit, respectively, have been included in selling, general and administrative expense on the statement of operations.

NOTE 12 — MEMBERS’ EQUITY

In connection with the sale of the Company discussed in Note 13, the major member of the Company elected to award $2.1 million of the sales proceeds to three key employees and two nonemployees. These awards of sales proceeds were based on services these individuals provided to the Company. As the amount is known as of August 1, 2010 and the award was based on services provided and no future services were required from these individuals, the Company recorded the $2.1 million as an expense and as a capital contribution from the member. The capital contribution of $2.1 million is included in net distributions for the period ended August 1, 2010. The member contributed cash equal to the $2.1 million expense.

NOTE 13 — SUBSEQUENT EVENTS

On July 12, 2010, the Company signed an agreement and plan of merger and asset purchase agreement (the “Agreement”) with the Kilgore Companies, LLC formerly known as Harper-Kilgore, LLC that became effective after the close of business on August 1, 2010. The Agreement calls for Kilgore Companies, LLC to acquire the membership units of the Company less cash and other excluded items for approximately $42.5 million.

These financial statements have been presented as though the Company was continuing on, no adjustments or reclasses have been recorded to reflect that certain liabilities were paid shortly after the period end or for any effects of the sale, except as disclosed.

Also in connection with the sale of the Company, the Company incurred legal fees of $152,409. This amount is included in selling, general and administrative expenses on the statement of operations.

Independent Auditor’s Report

Board of Directors

Norris Asphalt Paving Co.

Ottumwa, Iowa

We have audited the accompanying balance sheets of Norris Aggregate Products, a division of Norris Asphalt Paving Co., as of February 28, 2012 and December 31, 2011 and the related statements of operations, stockholders’ equity, and cash flows for the two month period and year then ended. 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 in accordance with auditing standards generally accepted in the United States of America. 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Norris Aggregate Products, a division of Norris Asphalt Paving Co., as of February 28, 2012 and December 31, 2011, and the results of its operations and its cash flows for the two month period and year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ CliftonLarsonAllen LLP

West Des Moines, Iowa

October 23, 2012

NORRIS AGGREGATE PRODUCTS

BALANCE SHEETS

February 28, 2012 and December 31, 2011

ASSETS

   2012   2011 

CURRENT ASSETS

    

Cash

  $92,123    $8,477  

Accounts and contracts receivable

   945,183     2,055,930  

Accounts receivable — related party

   3,241,672     2,045,144  

Inventories

   8,462,461     9,079,143  

Prepaid stripping

   1,111,360     1,161,355  

Prepaid expenses

   415,906     390,520  
  

 

 

   

 

 

 

Total current assets

   14,268,705     14,740,569  
  

 

 

   

 

 

 

PROPERTY AND EQUIPMENT

    

Cost

   23,611,303     23,645,302  

Less accumulated depreciation

   17,034,716     16,820,001  
  

 

 

   

 

 

 

Total property and equipment

   6,576,587     6,825,301  
  

 

 

   

 

 

 

OTHER ASSETS

    

Prepaid stripping — noncurrent

   1,071,689     664,099  

Other

   169,167     180,834  
  

 

 

   

 

 

 

Total other assets

   1,240,856     844,933  
  

 

 

   

 

 

 

TOTAL ASSETS

  $22,086,148    $22,410,803  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY  

LIABILITIES

    

Checks written in excess of bank balance

  $—       $28,373  

Accounts payable — trade

   202,715     285,281  

Other liabilities

   880,504     836,833  
  

 

 

   

 

 

 

Total liabilities

   1,083,219     1,150,487  
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

Retained earnings

   21,002,929     21,260,316  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

  $22,086,148    $22,410,803  
  

 

 

   

 

 

 

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

NORRIS AGGREGATE PRODUCTS

STATEMENTS OF OPERATIONS

Two Month Period Ended February 28, 2012 and Year Ended December 31, 2011

   2012  2011 

SALES

   

Aggregates

  $1,912,298   $32,145,782  

Trucking

   158,665    3,147,383  
  

 

 

  

 

 

 

Total sales

   2,070,963    35,293,165  
  

 

 

  

 

 

 

COST OF SALES

   

Aggregates

   1,728,480    20,468,923  

Trucking

   162,143    3,156,011  
  

 

 

  

 

 

 

Total cost of sales

   1,890,623    23,624,934  
  

 

 

  

 

 

 

Gross profit

   180,340    11,668,231  

OPERATING EXPENSES

   424,514    3,640,997  

GAIN ON SALE OF PROPERTY AND EQUIPMENT

   3,900    158,471  
  

 

 

  

 

 

 

(Loss) income from operations

   (240,274  8,185,705  

OTHER (EXPENSE) INCOME

   

Interest expense

   (1,622  (130,996

Other

   (15,491  114,510  
  

 

 

  

 

 

 

Total other expense

   (17,113  (16,486
  

 

 

  

 

 

 

NET (LOSS) INCOME

  $(257,387 $8,169,219  
  

 

 

  

 

 

 

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

NORRIS AGGREGATE PRODUCTS

STATEMENTS OF STOCKHOLDERS’ EQUITY

Two Month Period Ended February 28, 2012 and Year Ended December 31, 2011

   Retained
Earnings
 

BALANCE, DECEMBER 31, 2010

  $13,091,097  

Net income

   8,169,219  
  

 

 

 

BALANCE, DECEMBER 31, 2011

   21,260,316  

Net loss

   (257,387
  

 

 

 

BALANCE, FEBRUARY 28, 2012

  $21,002,929  
  

 

 

 

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

NORRIS AGGREGATE PRODUCTS

STATEMENT OF CASH FLOWS

Two Month Period Ended February 28, 2012 and Year Ended December 31, 2011

   2012  2011 

CASH FLOWS FROM OPERATING ACTIVITIES

   

Net (loss) income

  $(257,387 $8,169,219  

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

   

Depreciation and amortization

   260,381    1,656,201  

Gain on sale of property and equipment

   (3,900  (158,471

Effects of changes in operating assets and liabilities:

   

Accounts and contracts receivable

   1,110,747    (704,632

Accounts receivable — related party

   (1,196,528  (9,035,563

Inventories

   616,682    986,280  

Prepaid stripping

   (357,595  (94,694

Prepaid expenses

   (25,386  (31,697

Accounts payable

   (82,566  (234,244

Other liabilities

   43,671    68,313  
  

 

 

  

 

 

 

Net cash provided by operating activities

   108,119    620,712  
  

 

 

  

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

   

Purchases of property and equipment

   —      (994,343

Proceeds from sale of property and equipment

   3,900    344,905  
  

 

 

  

 

 

 

Net cash provided by (used in) investing activities

   3,900    (649,438
  

 

 

  

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

   

Checks written in excess of bank balance

   (28,373  28,373  
  

 

 

  

 

 

 

NET INCREASE (DECREASE) IN CASH

  $83,646   $(353

CASH, BEGINNING OF YEAR

   8,477    8,830  
  

 

 

  

 

 

 

CASH, END OF YEAR

  $92,123   $8,477  
  

 

 

  

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

   

Interest paid

  $1,622   $130,996  

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

NORRIS AGGREGATE PRODUCTS

NOTES TO FINANCIAL STATEMENTS

February 28, 2012 AND December 31, 2011

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Norris Aggregate Products (the Company) is an aggregates producer that operates quarries in northern Missouri. The Company is a division of Norris Asphalt Paving Co. (NAPCO). NAPCO also operates an asphalt division (Asphalt) that specializes in the placement of asphalt paving and sales of asphalt mix in southeastern Iowa and northern Missouri. The accounting policies of both divisions are identical and further described in this Note 1.

On February 29, 2012, NAPCO entered into an agreement to sell the Company. See Note 9.

Basis of presentation

The accompanying financial statements present the financial position, results of operations, stockholders’ equity and cash flows as if the Company operated as a separate, stand-alone entity. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial position and results of operations is immaterial.

Substantially all of the Company’s products are consumed outdoors, primarily in the spring, summer and fall. Seasonal changes and other weather-related conditions can affect the sales volumes of its products. Therefore, the financial results for any interim period are not necessarily 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.

Principles of Consolidation—The consolidated financial statements of the Company are accounted for as division withininclude the combined NAPCO financial statementsaccounts of Continental Cement and therefore, reflect the portion of the assets, liabilitiesGAR. All significant intercompany balances and operations directly associated with the Company. In addition, on a basis determined by NAPCO management, shared expenses, generally administrative in nature,transactions have been allocated between the Company and Asphalt. Management believes these estimates are reasonable and appropriate in the circumstances.eliminated.

Use of estimates in preparing financial statements

The preparationEstimates—Preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and the underlying assumptions that affect the reported amounts of assets and liabilities reported and disclosure ofthe disclosures about contingent assets and liabilities atliabilities. Such estimates include the datevaluation of accounts receivable, inventories, goodwill, intangible and

other long-lived assets, pension and other postretirement obligations, asset retirement obligations and redeemable members’ interest. Management regularly evaluates its estimates and assumptions based on historical experience and other factors, including the financial statementscurrent economic environment. Management adjusts such estimates and the reported amounts of revenuesassumptions when circumstances dictate. As future events and expenses during the reporting period. Actualtheir effects cannot be determined with precision, actual results could differ significantly from estimates made. Changes in estimates, including those estimates.resulting from continuing changes in the economic environment, will be reflected in the Company’s consolidated financial statements for the period in which the change in estimate occurs.

Business and Credit ConcentrationsThe majority of the Company’s customers are located in Missouri, Iowa and Illinois. The Company’s accounts receivable consist primarily of accounts of ready-mixed concrete and concrete products producers and contractors located within these states. Therefore, collection of these accounts is dependent on the economic conditions therein. Management does not believe that there are significant concentrations of credit with respect to individual customers or groups of customers, as credit has been granted to many customers within the Company’s market.

Approximately 18% and 16% of cement sales were made to companies owned by a noncontrolling member of the Company during the six months ended June 28, 2014 and June 29, 2013, respectively. The Company has historically had no collection issues with the noncontrolling member, and management expects full collection on all outstanding accounts receivable due from the noncontrolling member.

 

Receivables and credit policies

(2)Accounts Receivable, net

Accounts receivable, are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Accounts receivable are stated at the invoice amount plus accrued interest. Account balances with invoices over ninety days old are considered delinquent. Payments of accounts receivable are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.

The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts that reflects management’s best estimate of amounts that will not be collected. Management reviews individual accounts receivable balances that exceed ninety days from the invoice date and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. All accounts or portions thereof deemed to be uncollectible or to require an excessive collection cost are written off to the allowance for doubtful accounts. No allowance for doubtful accounts was deemed necessary at February 28, 2012 and December 31, 2011.

Revenue recognition

Revenues are recognized when risks associated with ownership have passed to unaffiliated customers. Typically this occurs when products are shipped. Product revenues generally include sales of aggregates to customers, net of discounts or allowances, if any, and include freight and delivery charges billed to customers.

NORRIS AGGREGATE PRODUCTS

NOTES TO FINANCIAL STATEMENTS

February 28, 2012 AND December 31, 2011

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Inventories

Inventories consist of mined aggregate material and are stated at the lower of cost or market with cost determined on a first-in, first-out (FIFO) basis.

Property and equipment

The Company’s buildings are depreciated on the straight-line method over their estimated useful lives of thirty-nine years. Equipment consists of various manufacturing equipment, vehicles, computer equipment, and office furniture. These assets are depreciated on the straight-line method over their estimated useful lives, which range from three to seven years.

Prepaid stripping

Prepaid stripping is allocated to aggregate reserves based on the costs to remove the overburden to allow those reserves to be mined. Stripping cost is charged to the production process as aggregate reserves are mined. The current portion of the prepayment was determined utilizing the estimated aggregate tonnage to be mined in the following year.

Impairment of long-lived assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or the fair value less costs to sell.

Sales taxes collected and remitted

The Company presents sales taxes collected from customers and remitted to governmental authorities on a net basis, excluding such amounts from sales and cost of sales.

Advertising

Advertising costs are charged to operations when incurred.

Income taxes

Income taxes have not been provided as NAPCO has elected to be treated as a Subchapter S corporation for federal and state income tax purposes. Under this election, the net income or loss of NAPCO is passed through to the stockholders and reported on their individual income tax returns.

NORRIS AGGREGATE PRODUCTS

NOTES TO FINANCIAL STATEMENTS

February 28, 2012 AND December 31, 2011

NOTE 2 — PROPERTY AND EQUIPMENT

Property and equipment cost consists of the following as of FebruaryJune 28, 20122014 and December 31, 2011:28, 2013:

 

   2012   2011 

Land

  $2,599,467    $2,599,467  

Buildings & office equipment

   578,148     578,148  

Quarry equipment

   19,093,710     19,093,710  

Vehicles

   1,339,978     1,373,977  
  

 

 

   

 

 

 

Total property and equipment

  $23,611,303    $23,645,302  
  

 

 

   

 

 

 
   June 28, 2014  December 28, 2013 

Trade accounts receivable from unaffiliated entities

  $13,455   $6,961  

Trade accounts receivable from related parties

   1,628    422  
  

 

 

  

 

 

 

Accounts receivable

   15,083    7,383  

Less: allowance for doubtful accounts

   (244  (30
  

 

 

  

 

 

 

Accounts receivable, net

  $14,839   $7,353  
  

 

 

  

 

 

 

 

(3)Inventories

Depreciation expense forInventories consist of the twofollowing as of June 28, 2014 and December 28, 2013:

   June 28, 2014   December 28, 2013 

Raw materials

  $972    $972  

Work-in-process

   4,629     2,623  

Finished goods

   8,968     6,807  
  

 

 

   

 

 

 

Total inventories

  $14,569    $10,402  
  

 

 

   

 

 

 

(4)Accrued Expenses

Accrued expenses consist of the following as of June 28, 2014 and December 28, 2013:

   June 28, 2014   December 28, 2013 

Accrued interest due to Summit Materials

  $3,806    $3,848  

Accrued post-retirement benefits other than pensions, current portion

   1,268     1,268  

Accrued bonus liability

   326     884  

Accrued payroll, insurance and benefits

   793     758  

Accrued interest due to noncontrolling member

   —       723  

Accrued professional fees

   269     340  

Accrued costs to remove barge from waterway

   380     880  

Other

   1,624     1,296  
  

 

 

   

 

 

 

Total

  $8,466    $9,997  
  

 

 

   

 

 

 

(5)Long-Term Debt

Long-term debt due to Summit Materials, including the current portion of long-term debt, was $155.1 million and $155.6 million as of June 28, 2014 and December 28, 2013, respectively. Interest costs incurred on the long-term debt were $5.6 million and $5.5 million in the six months ended FebruaryJune 28, 20122014 and June 29, 2013, respectively. The interest rate in effect at June 28, 2014 was 3.7%.

Continental Cement is named as a guarantor of Summit Materials’ debt, for which Continental Cement pledged substantially all of its assets as collateral. Continental Cement provides a joint and several, full and unconditional guarantee of borrowings under Summit Materials’ senior secured credit facilities (“Senior Secured Credit Facilities”). As of June 28, 2014 and December 28, 2013, Summit Materials’ debt included $510 million and $250 million, respectively, of senior notes due January 31, 2020 (“Senior Notes”) and borrowings under the year ended December 31, 2011 was $248,714Senior Secured Credit Facilities composed of $422.0 million in term loans that mature January 30, 2019 and $1,586,201, respectively.a $150.0 million revolving credit facility that matures January 30, 2017.

NOTE 3 — FINANCIAL INSTRUMENT RISK

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The CompanySummit Materials is and has not experienced any losses in such accounts. Management believesbeen current on all required principal and interest payments. As of June 28, 2014, approximately $94.8 million and $60.3 million of the Company’s long-term debt due to Summit Materials represented the amount of Summit Materials’ debt that has been allocated to the Company is not exposedunder the Senior Secured Credit Facilities and Senior Notes, respectively, compared to any significant credit risk on$95.3 million and $60.3 million, respectively, as of December 28, 2013. The terms of Summit Materials’ debt limit certain transactions of its cash.

NOTE 4 — PROFIT SHARING PLAN

NAPCO has a profit sharing plan that covers all Company employees upon hire that are age nineteensubsidiaries, including those of Continental Cement. Continental Cement’s ability to incur additional indebtedness or older. The Company’s contributionsissue certain preferred shares, pay dividends to the plannoncontrolling members, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets or enter into certain transactions with affiliates are based on years of service and allow for a maximum annual contribution of $2,500 per employee. The contributions may be limited by the employee’s contribution to the plan. Plan expense for the two months ended February 28, 2012 and the year ended December 31, 2011 was $4,784 and $57,410, respectively.terms of Summit Materials’ debt.

 

NOTE 5 — RELATED PARTIES

A summary of the transactions between the Company and NAPCO is as follows:

   Sales   Purchases   Accounts
Receivable
   Fees
Paid
 

February 28, 2012

  $—      $—      $3,241,672    $24,000  

December 31, 2011

  $1,604,902    $118,038    $2,045,144    $144,000  

Purchases from NAPCO are recorded in cost of sales. Fees paid are for management services provided by NAPCO and are included in operating expenses.

The Company incurred $1,622 and $130,996 in interest for the two month period and year ended February 28, 2012 and December 31, 2011, respectively, for its portion of debt service incurred by NAPCO, as determined by management.

Related party commitments

NAPCO has a revolving line of credit agreement with a financial institution. Maximum borrowings under the line of credit agreement, which matures on September 5, 2012, are $8,500,000 in the months of March to

NORRIS AGGREGATE PRODUCTS

NOTES TO FINANCIAL STATEMENTS

February 28, 2012 AND December 31, 2011

NOTE 5 — RELATED PARTIES (CONTINUED)

November and $4,500,000 for December through February. Interest is payable monthly at the 1 month London Interbank Offered Rate (LIBOR) rate plus 2.00% (2.25% at February 28, 2012). As of February 28, 2012 and December 31, 2011, there were no borrowings on this line of credit. The loan is secured by both NAPCO’s and the Company’s accounts receivable, equipment, inventory and certain other assets.

In 2011, NAPCO obtained a revolving reducing term loan agreement with the same financial institution. The revolving reducing term loan has a maximum amount of $5,666,667 at December 31, 2011 with the borrowing base decreasing at a rate of $188,889 per month. Interest is payable monthly at the 1 month LIBOR plus 2.00% (2.25% at February 28, 2012). The loan is secured by both NAPCO’s and the Company’s accounts receivable, inventory and equipment and matures on September 5, 2012. No advances were made on the note in 2011 or during the two months ended February 28, 2012.

The loan agreement with the financial institution requires NAPCO to pay a fee of 0.25% per year on the average daily unused amount of the revolving line of credit, calculated on a quarterly basis. The loan agreement with the financial institution contains various covenants pertaining to, among other things, cash flow coverage, debt to tangible net worth, levels of tangible net worth, capital expenditures, and dividend restrictions. Management believes NAPCO met all debt covenants at February 28, 2012 and December 31, 2011.

NOTE 6 — COMMITMENTS

The Company has agreements to pay royalties on aggregate sold from certain leased quarries. The agreements expire at various dates through December 31, 2099. The agreements require that the following minimum annual royalty amounts be remitted:

2012 (remaining 10 months)

  $113,750  

2013

   135,500  

2014

   125,500  

2015

   125,500  

2016

   120,500  

2017

   94,000  

Thereafter

   2,709,000  
  

 

 

 

Total

  $3,423,750  
  

 

 

 

Royalties paid for the two month period ended February 28, 2012 and year ended December 31, 2011 were $46,587 and $572,782, respectively, and are recorded as a cost of sales.

NOTE 7 — CONTINGENCIES

(6)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 in accordance with applicable accounting requirements. 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—In February 2011, the Company incurred a property loss related to a sunken barge with cement product aboard. During the six months ended June 29, 2013, the Company recognized a $1.8 million charge for costs to remove the barge from the waterway. As of June 28, 2014 and December 28,

2013, the Company had $0.4 million and $0.9 million, respectively, included in accrued expenses as management’s best estimate of the remaining costs to remove the barge.

Environmental Remediation—The Company’s operations are subject to and affected by federal, state 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 normaloperation of the Company’s business, as it is with other companies engaged in similar businesses, and there can be no assurance that environmental liabilities will not have a material adverse effect on the Company’s financial position, results of operations or liquidity in the future.

Other—The Company is obligated under various firm purchase commitments for certain raw materials and services that are in the ordinary course of business. WhileThe terms of the ultimate outcomepurchase commitments are generally less than one year. Management does not expect any significant changes in the market value of these matters is uncertain, management believesgoods and services during the commitment period that thewould have a material adverse effect if any, will not be significant to the financial statements. Nevertheless, it is at least reasonably possible that management’s view of the outcome in legal matters that involve considerable uncertainty could change materially in the near term.

The Company is subject to various federal and state regulations regarding the care, delivery, and containment of various products, which the Company either does or has handled. The Company could be contingently liable for any associated costs, which could arise from the handling, delivery, and containment of these products.

NORRIS AGGREGATE PRODUCTS

NOTES TO FINANCIAL STATEMENTS

February 28, 2012 AND December 31, 2011

NOTE 8 — INCOME TAXES

NAPCO files income tax returns in the U.S. federal jurisdiction and two states. NAPCO is a pass through entity for income tax purposes whereby any income tax liabilities or benefits are attributable to NAPCO’s owners. Any amounts paid by NAPCO for income taxes are accounted for as dividend transactions with NAPCO’s owners.

The federal and state income tax returns of NAPCO for 2008 and thereafter are subject to examination by the Internal Revenue Service and state taxing authorities, generally for three years after filing.

The Company follows the requirements for accounting for uncertain tax positions. The Company has determined no liability related to uncertain tax positions was required at February 28, 2012 and December 31, 2011.

NOTE 9 — SUBSEQUENT EVENTS

On February 29, 2012, NAPCO sold all the assets, liabilities and ongoing operations of the Company. NAPCO management has determined that the proceeds exceeded the bases of the net assets sold.

Management evaluated subsequent events through October 23, 2012, the date the financial statements were available to be issued. Events or transactions occurring after February 28, 2012, but prior to October 23, 2012 that provided additional evidence about conditions that existed at February 28, 2012, have been recognized in the financial statements for the period ended February 28, 2012. Events or transactions that provided evidence about conditions that did not exist at February 28, 2012 but arose before the financial statements were available to be issued have not been recognized in the financial statements for the two months ended February 28, 2012.

This information is an integral part of the accompanying financial statements.

INDEPENDENT AUDITOR’S REPORT

To the Partners and Members

R.K. Hall Construction, Ltd. and Affiliates

Paris, Texas

We have audited the accompanying combined balance sheets of R.K. Hall Construction, Ltd. and affiliates as of December 31, 2009 and 2008, and the related combined statements of operations and equity and cash flows for the years ended December 31, 2009, 2008 and 2007. The combined financial statements are the responsibility of the Companies’ management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. These 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position, of R.K. Hall Construction, Ltd. and affiliates as of December 31, 2009 and 2008, and the results of operations or liquidity of the Company.

As of both June 28, 2014 and cash flowsDecember 28, 2013 approximately 62% of the Company’s employees were represented by labor organizations under collective bargaining agreements. The Company’s collective bargaining agreements for such employees generally expire between 2015 and 2018.

(7)Related Party Transactions

As of December 28, 2013, the years ended December 31, 2009, 2008 and 2007, in conformity with accounting principles generally acceptedCompany had accrued interest payments of $0.7 million due to a certain noncontrolling member for a related party note, which was paid in the United Statesfirst quarter of America.2014. The principal balance on the note was repaid in January 2012.

Cement sales to companies owned by a certain noncontrolling member of Continental Cement were approximately $6.2 million and $5.1 million in the six months ended June 28, 2014 and June 29, 2013, respectively, and accounts receivables due from this party was approximately $1.2 million and $0.2 million as of June 28, 2014 and December 28, 2013, respectively.

/s/ Perryman Chaney Russell, LLP

September 21, 2011Cement sales to companies owned by Summit Materials were approximately $1.9 million in both of the six month periods ended June 28, 2014 and June 29, 2013. Accounts receivables due from these parties were approximately $0.5 million and $0.2 million as of June 28, 2014 and December 28, 2013, respectively.

R.K. HALL CONSTRUCTION, LTD.

AND AFFILIATES

Combined Balance Sheets

December 31

   2009   2008 
Assets    

Current assets:

    

Cash

  $10,016,193    $7,582,598  

Receivables

   8,259,171     11,465,007  

Inventory

   4,940,793     3,618,341  

Cost and estimated earnings in excess of billings on contracts in progress

   889,919     4,027,730  

Prepaid expenses

   226,378     255,710  
  

 

 

   

 

 

 

Total current assets

   24,332,454     26,949,386  
  

 

 

   

 

 

 

Property and equipment:

    

Land

   2,065,334     2,065,334  

Buildings and improvements

   1,532,903     1,498,256  

Plants

   12,344,109     11,969,382  

Machinery, equipment, vehicles and tools

   19,776,471     16,115,143  

Office furniture, equipment and software

   491,320     360,032  
  

 

 

   

 

 

 
   36,210,137     32,008,147  

Less accumulated depreciation

   9,876,453     6,489,642  
  

 

 

   

 

 

 
   26,333,684     25,518,505  
  

 

 

   

 

 

 

Other assets

   1,000     1,000  
  

 

 

   

 

 

 
  $50,667,138    $52,468,891  
  

 

 

   

 

 

 
Liabilities and Equity    

Current liabilities:

    

Current portion of long-term debt

  $5,991,424    $8,373,559  

Accounts payable

   5,638,529     6,282,437  

Accrued liabilities

   538,378     763,307  

Billings in excess of costs and estimated earnings on contracts in progress

   3,185,041     1,665,666  

State income tax payable

   123,984     65,446  
  

 

 

   

 

 

 

Total current liabilities

   15,477,356     17,150,415  
  

 

 

   

 

 

 

Long-term debt

   17,559,708     21,803,599  

Deferred state income tax

   73,604     60,910  
  

 

 

   

 

 

 
   17,633,312     21,864,509  
  

 

 

   

 

 

 

Equity

   17,556,470     13,453,967  
  

 

 

   

 

 

 
  $50,667,138    $52,468,891  
  

 

 

   

 

 

 

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

R.K. HALL CONSTRUCTION, LTD.

AND AFFILIATES

Combined Statements of Operations and Equity

For the Years Ended December 31

   2009  2008  2007 

Income from construction:

    

Revenue earned

  $128,514,888   $141,528,394   $97,558,425  

Job costs

   (115,407,218  (132,947,706  (88,825,589
  

 

 

  

 

 

  

 

 

 

Gross profit on construction

   13,107,670    8,580,688    8,732,836  

General and administrative expenses

   (7,084,438  (6,841,727  (5,259,417

Gain on sale of assets

   230,615    78,248    7,343  
  

 

 

  

 

 

  

 

 

 

Income from operations

   6,253,847    1,817,209    3,480,762  

Other income and (expenses):

    

Interest income

   280,841    279,691    243,900  

Other income

   49,484    113,806    202,818  

Interest expense

   (2,037,097  (2,222,811  (1,743,210
  

 

 

  

 

 

  

 

 

 

Net income (loss) before provision for state income tax

   4,547,075    (12,105  2,184,270  

Provision for state income tax

   (87,768  (82,961  (93,834
  

 

 

  

 

 

  

 

 

 

Net income (loss)

   4,459,307    (95,066  2,090,436  

Equity:

    

Beginning of year

   13,453,967    14,266,913    9,721,721  

Contributions

   130,000    —      3,000,000  

Distributions

   (486,804  (717,880  (545,244
  

 

 

  

 

 

  

 

 

 

End of year

  $17,556,470   $13,453,967   $14,266,913  
  

 

 

  

 

 

  

 

 

 

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

R.K. HALL CONSTRUCTION, LTD.

AND AFFILIATES

Combined Statements of Cash Flows

For the Years Ended December 31

   2009  2008  2007 

Cash flows from operating activities:

    

Net income (loss)

  $4,459,307   $(95,066 $2,090,436  

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation

   3,450,406    3,668,025    3,617,109  

Gain on sale of assets

   (230,615  (78,248  (7,343

(Increase) decrease in:

    

Receivables

   3,205,836    2,872,000    (5,733,654

Inventory

   (1,322,452  362,042    (1,250,338

Costs and estimated earnings in excess of billings

   3,137,811    (3,288,291  788,956  

Prepaid expenses

   29,332    (98,324  (147,607

Increase (decrease) in:

    

Accounts payable

   (643,908  (1,796,983  3,591,745  

Accrued liabilities

   (224,929  56,035    337,715  

Billings in excess of costs and estimated earnings

   1,519,375    261,685    (363,249

Income taxes

   71,232    24,487    93,834  
  

 

 

  

 

 

  

 

 

 

Net cash provided by operating activities

   13,451,395    1,887,362    3,017,604  
  

 

 

  

 

 

  

 

 

 

Cash flows from investing activities:

    

Proceeds from sale of equipment

   290,205    1,071,295    80,000  

Purchases of property and equipment

   (4,325,175  (4,386,049  (10,890,152
  

 

 

  

 

 

  

 

 

 

Net cash used in investing activities

   (4,034,970  (3,314,754  (10,810,152
  

 

 

  

 

 

  

 

 

 

Cash flows from financing activities:

    

Proceeds from borrowings

   2,316,852    5,336,766    11,118,953  

Payment on principal of notes payable

   (8,942,878  (5,702,674  (4,108,279

Partner contributions

   130,000    —      3,000,000  

Partner withdrawals

   (486,804  (636,646  (545,244

Contribution of additional paid-in capital

   —      —      26,092  
  

 

 

  

 

 

  

 

 

 

Net cash provided by (used in) financing activities

   (6,982,830  (1,002,554  9,491,522  
  

 

 

  

 

 

  

 

 

 

Net increase (decrease) in cash

   2,433,595    (2,429,946  1,698,974  

Beginning cash and cash equivalents

   7,582,598    10,012,544    8,313,570  
  

 

 

  

 

 

  

 

 

 

Ending cash and cash equivalents

  $10,016,193   $7,582,598   $10,012,544  
  

 

 

  

 

 

  

 

 

 

Supplemental cash flow information:

    

Partner withdrawals of non-cash assets

  $—     $81,234   $—    

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

R.K. HALL CONSTRUCTION, LTD. AND AFFILIATES

Notes to the Combined Financial Statements

For the Years Ended

December 31, 2009, 2008 and 2007

Note 1 — Summary of Significant Accounting Policies

The combined financial statements include the accounts of R.K. Hall Construction, Ltd. and affiliates through common ownership (the Companies) and have been prepared in accordance with accounting principals generally accepted in the United States of America (U.S. GAAP). All significant intercompany transactions and balances have been eliminated in combination. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements in accordance with U.S. GAAP have been recorded.

History

The Companies are engaged in road and bridge construction and the related sale and manufacturing of hot mix asphalt concrete. The Companies are organized in the states of Texas and Arkansas.

The Companies operate eleven asphalt plant facilities and one concrete plant facility located throughout Northeast Texas. Job sites are located in Texas, Arkansas and Oklahoma. The length of the Companies’ contracts varies but typically averages less than one year.

Use of estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used.

Recognition of income and costs on construction contracts

The Companies use the percentage-of-completion method of reporting profits on major construction contracts. Under this method, the percentage of the cost incurred to date to the total estimated costs is used to determine the portion of the contract amount which is considered earned to date. At the time a loss on a contract becomes known, the full amount of the projected loss is recognized. Contract costs include all direct material and labor costs as well as indirect construction costs. Selling, general and administrative costs are charged to expense as incurred.

On contracts in progress where costs and estimated earnings are in excess of billings, the excess is treated as a current asset. Where billings are in excess of costs and estimated earnings, this excess is shown as a current liability. These amounts are as follows at December 31:

   2009  2008 

Costs and estimated earnings on contracts in progress

  $131,474,992   $87,373,998  

Billings on contracts in progress

   133,770,114    85,011,934  
  

 

 

  

 

 

 
  $(2,295,122 $2,362,064  
  

 

 

  

 

 

 

R.K. HALL CONSTRUCTION, LTD. AND AFFILIATES

Notes to the Combined Financial Statements

For the Years Ended

December 31, 2009, 2008 and 2007

Note 1 — Summary of Significant Accounting Policies (Continued)

Recognition of income and costs on construction contracts (Continued)

These amounts are shown in the accompanying financial statements as follows at December 31:

   2009  2008 

Current assets

  $889,919   $4,027,730  

Current liabilities

   3,185,041    1,665,666  
  

 

 

  

 

 

 
  $(2,295,122 $2,362,064  
  

 

 

  

 

 

 

Property and equipment

Property and equipment are stated at cost and depreciated over estimated useful lives using the straight-line method, ranging from three to thirty-nine years. Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. Depreciation expense is included in job costs and general and administrative expenses on the statements of operations and equity.

   2009   2008   2007 

Depreciation expense for the years ended December 31:

  $3,450,406    $3,668,025    $3,617,109  

Statements of cash flows

For purposes of the statements of cash flows, the Companies consider all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

   2009   2008   2007 

The Companies paid the following during the years ended December 31:

      

Interest expense

  $2,256,366    $2,000,461    $1,746,999  

Income taxes

   16,536     58,474     —    

The Companies had exposure related to cash balances with financial institutions in excess of federally insured amounts before outstanding items not yet cleared at December 31:

   5,311,909     9,101,772    

Management monitors these balances to insure funds are not at risk.

Inventory

Inventory, consisting of stone, sand, asphalt and diesel fuel, is stated at the lower of cost or market. The Companies value all inventory utilizing the first-in, first-out method.

Presentation of taxes

The Companies collect various taxes from customers and remit these amounts to applicable taxing authorities. The Companies’ accounting policy is to exclude these taxes from revenues and job costs.

R.K. HALL CONSTRUCTION, LTD. AND AFFILIATES

Notes to the Combined Financial Statements

For the Years Ended

December 31, 2009, 2008 and 2007

Note 2 — Receivables

Receivables consist of the following at December 31:

   2009  2008 

Contract billings

  $5,707,256   $8,286,918  

Contract retainage

   2,610,762    3,168,355  

Allowance for doubtful accounts

   (60,000  —    

Employees

   1,153    9,734  
  

 

 

  

 

 

 
  $8,259,171   $11,465,007  
  

 

 

  

 

 

 

Note 3 — Accounts Payable

   2009   2008 

Amounts due to subcontractors have been retained pending the completion and customer acceptance of jobs at December 31:

  $1,855,461    $1,264,324  

These amounts are included in accounts payable.

Note 4 — Long-term Debt

Long-term debt consists of the following at December 31:

   2009   2008 

Notes payable to bank, payable in monthly installments of $418,922 including interest ranging from 5% to 7.6%; secured by machinery, equipment, vehicles, plants and partners’ guaranty

  $10,043,220    $13,822,542  

Notes payable to finance companies, payable in monthly installments of $75,024 including interest ranging from 0% to 7.82%; secured by machinery, equipment and vehicles

   2,094,368     1,171,129  

Note payable to bank, payable in monthly installments of $87,500 plus interest at 7.5%; secured by equipment and partners’ guaranty

   8,414,255     9,467,480  

Note payable to bank, payable in monthly installments of $12,500 plus interest at 7.5%; secured by real estate and members’ guaranty

   1,237,500     1,387,500  

Note payable to finance company, payable in semi-annual installments of $71,864.58 including interest at 4.25%; secured by real estate and members’ guaranty

   1,761,789     1,828,507  

Note payable to bank, line of credit up to $4,500,000, interest at 5.75%, maturing May 25, 2010; secured by inventory and equipment and partners’ guaranty

   —       2,500,000  
  

 

 

   

 

 

 
   23,551,132     30,177,158  

Less current maturities

   5,991,424     8,373,559  
  

 

 

   

 

 

 
  $17,559,708    $21,803,599  
  

 

 

   

 

 

 

R.K. HALL CONSTRUCTION, LTD. AND AFFILIATES

Notes to the Combined Financial Statements

For the Years Ended

December 31, 2009, 2008 and 2007

Note 4 — Long-term Debt (Continued)

Future maturities of long-term debt are as follows:

For the years ending December 31:

  

2010

  $5,991,424  

2011

   5,266,114  

2012

   3,748,646  

2013

   2,101,079  

2014

   1,409,448  

Thereafter

   5,034,421  

Note 5 — Operating Leases

The Companies are obligated under operating leases for asphalt plants and equipment. The lease payments amount to $125,761 per month and are guaranteed by the partners and members.

   2009   2008   2007 

Lease expense for the years ended December 31:

  $783,809    $379,656    $379,655  

Lease expense is included in job costs on the statements of operations and equity.

Minimum future lease payments are as follows:

For the years ending December 31:

  

2010

  $1,509,130  

2011

   1,509,130  

2012

   1,509,130  

2013

   1,088,402  

2014

   558,603  

Thereafter

   228,956  

Note 6 — Related Party Transactions

The Companies lease equipment from entities owned by its partners. The equipment leases are on a month-to-month basis.

   2009   2008   2007 

Lease expense during the years ended December 31:

  $1,274,583    $1,124,179    $681,202  

Included in accounts payable at December 31:

   298,886     155,894    

The Companies also purchased materials from an entity owned by one of its partners.

   2009   2008   2007 

Material purchased during the years ended December 31:

  $2,465,334    $2,182,187    $—    

Included in accounts payable at December 31:

   99,524     97,810    

R.K. HALL CONSTRUCTION, LTD. AND AFFILIATES

Notes to the Combined Financial Statements

For the Years Ended

December 31, 2009, 2008 and 2007

Note 6 — Related Party Transactions (Continued)

All of these related party expenses are included in job costs and general and administrative expenses on the statements of operations and equity.

Partner/member guaranties are included in long-term debt and in operating leases (Note 4 and Note 5).

Note 7 — Concentrations

Concentrations of business with a single entity (Texas Department of Transportation) subjects the Companies to the potential for credit risk.

   Accounts Receivable  Revenue 
   Amount   Percent  Amount   Percent 

Concentrations of contracts receivable and revenue as of and for the years ended December 31:

       

2009

  $2,955,100     36 $54,154,276     42

2008

   5,034,844     44  84,164,723     59

2007

      57,113,165     59

Note 8 — Profit Sharing Plan

The Companies have a profit sharing plan for the primary purpose of providing retirement benefits to all eligible employees. The Companies’ contributions each year are subject to the discretion of management.

   2009   2008   2007 

The Companies made contributions to the plan as follows for the years ended December 31:

  $61,532    $—      $7,986  

Note 9 — Income Taxes

The Companies are not tax paying entities for Federal income tax purposes and, accordingly, does not incur Federal income tax. Instead, the partners and members are liable for individual Federal income tax on the Companies’ income or loss.

The income tax provision includes deferred state income tax attributable to temporary differences between income reported for financial purposes versus income tax purposes resulting from the Companies’ use of the accelerated method of computing tax depreciation.

The provision for income tax consists of the following for the years ended December 31:

   2009   2008   2007 

Current state income tax

  $75,074    $64,337    $59,583  

Deferred state income tax

   12,694     18,624     34,251  
  

 

 

   

 

 

   

 

 

 
  $87,768    $82,961    $93,834  
  

 

 

   

 

 

   

 

 

 

The Companies do not have any unrecognized tax benefit which could significantly change its provision for income tax. The Companies are subject to examination for the prior three years by Federal taxing authorities and the prior four years for state taxing authorities.

R.K. HALL CONSTRUCTION, LTD. AND AFFILIATES

Notes to the Combined Financial Statements

For the Years Ended

December 31, 2009, 2008 and 2007

Note 10 — Subsequent Events

Management has evaluated subsequent events through September 21, 2011, the date the financial statements were available to be issued.

In November, 2010, RK Hall, LLC (an indirect, wholly-owned subsidiary of Summit Materials, LLC) was formed to effect the acquisition of the business and partner/member interests of the Companies. On November 12, 2010, the Companies and its partners/members entered into an Interest Purchase Agreement with RK Hall, LLC, pursuant to which the business and partner/member interests of the Companies were acquired by RK Hall, LLC. The effective date of the transaction was November 30, 2010.

R.K. HALL CONSTRUCTION, LTD.

AND AFFILIATES

Unaudited Combined Balance Sheets

   September 30,
2010
   December 31,
2009
 
Assets    

Current assets:

    

Cash

  $11,501,871    $10,016,193  

Receivables

   18,468,757     8,259,171  

Inventory

   5,271,623     4,940,793  

Cost and estimated earnings in excess of billings on contracts in progress

   1,942,309     889,919  

Prepaid expenses

   380,342     226,378  
  

 

 

   

 

 

 

Total current assets

   37,564,902     24,332,454  
  

 

 

   

 

 

 

Property and equipment:

    

Land

   2,065,334     2,065,334  

Buildings and improvements

   1,552,281     1,532,903  

Plants

   15,249,887     12,344,109  

Machinery, equipment, vehicles and tools

   22,824,487     19,776,471  

Office furniture, equipment and software

   514,767     491,320  
  

 

 

   

 

 

 
   42,206,756     36,210,137  

Less accumulated depreciation

   12,874,176     9,876,453  
  

 

 

   

 

 

 
   29,332,580     26,333,684  
  

 

 

   

 

 

 

Other assets

   1,000     1,000  
  

 

 

   

 

 

 
  $66,898,482    $50,667,138  
  

 

 

   

 

 

 
Liabilities and Equity    

Current liabilities:

    

Current portion of long-term debt

  $7,206,571    $5,991,424  

Accounts payable

   17,309,949     5,638,529  

Accrued liabilities

   1,515,942     538,378  

Billings in excess of costs and estimated earnings on contracts in progress

   2,729,902     3,185,041  

State income tax payable

   104,808     123,984  
  

 

 

   

 

 

 

Total current liabilities

   28,867,172     15,477,356  
  

 

 

   

 

 

 

Long-term debt

   15,228,840     17,559,708  

Deferred state income tax

   75,000     73,604  
  

 

 

   

 

 

 
   15,303,840     17,633,312  
  

 

 

   

 

 

 

Equity

   22,727,470     17,556,470  
  

 

 

   

 

 

 
  $66,898,482    $50,667,138  
  

 

 

   

 

 

 

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

R.K. HALL CONSTRUCTION, LTD.

AND AFFILIATES

Unaudited Combined Statements of Operations and Equity

For the Nine Months Ended September 30

   2010  2009 

Income from construction:

   

Revenue earned

  $105,283,347   $102,440,270  

Job costs

   (92,204,521  (92,261,985
  

 

 

  

 

 

 

Gross profit on construction

   13,078,826    10,178,285  

General and administrative expenses

   (5,829,467  (5,064,343

Gain on sale of assets

   51,796    200,108  
  

 

 

  

 

 

 

Income from operations

   7,301,155    5,314,050  

Other income and (expenses):

   

Interest income

   68,856    210,630  

Other income

   53,218    34,857  

Interest expense

   (1,493,101  (1,564,809
  

 

 

  

 

 

 

Net income before provision for income tax

   5,930,128    3,994,728  

Provision for state income tax

   (59,920  (116,505
  

 

 

  

 

 

 

Net income

   5,870,208    3,878,223  

Equity:

   

Beginning of period

   17,556,471    13,453,967  

Contributions

   —      —    

Distributions

   (699,209  (380,931
  

 

 

  

 

 

 

End of period

  $22,727,470   $16,951,259  
  

 

 

  

 

 

 

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

R.K. HALL CONSTRUCTION, LTD.

AND AFFILIATES

Unaudited Combined Statements of Cash Flows

For the Nine Months Ended September 30

   2010  2009 

Cash flows from operating activities:

   

Net income

  $5,870,208   $3,878,223  

Adjustments to reconcile net income to net cash provided by operating activities:

   

Depreciation

   3,087,390    2,480,672  

Gain on sale of assets

   (51,796  (200,108

(Increase) decrease in:

   

Receivables

   (10,209,586  (3,375,967

Inventory

   (330,830  (1,044,597

Costs and estimated earnings in excess of billings

   (1,052,390  3,330,544  

Prepaid expenses

   (153,964  (99,691

Increase (decrease) in:

   

Accounts payable

   11,671,420    7,133,210  

Accrued liabilities

   977,564    646,778  

Billings in excess of costs and estimated earnings

   (455,139  2,140,446  

Income taxes

   (17,780  56,755  
  

 

 

  

 

 

 

Net cash provided by operating activities

   9,335,097    14,946,265  
  

 

 

  

 

 

 

Cash flows from investing activities:

   

Proceeds from sale of property and equipment

   116,457    254,801  

Purchases of property and equipment

   (6,150,946  (4,027,144
  

 

 

  

 

 

 

Net cash used in investing activities

   (6,034,489  (3,772,343
  

 

 

  

 

 

 

Cash flows from financing activities:

   

Proceeds from borrowings

   4,756,215    2,316,852  

Payment on principal of notes payable

   (5,871,936  (7,272,665

Partner contributions

   —      —    

Partner withdrawals

   (699,209  (380,931
  

 

 

  

 

 

 

Net cash used in financing activities

   (1,814,930  (5,336,744
  

 

 

  

 

 

 

Net increase in cash

   1,485,678    5,837,178  

Beginning cash and cash equivalents

   10,016,193    7,582,598  
  

 

 

  

 

 

 

Ending cash and cash equivalents

  $11,501,871   $13,419,776  
  

 

 

  

 

 

 

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

R.K. HALL CONSTRUCTION, LTD.

Notes to the Unaudited Combined Financial Statements

At September 30, 2010 and December 31, 2009 and

For the Nine Months Ended

September 30, 2010 and 2009

Note 1 — Summary of Significant Accounting Policies

The combined financial statements include the accounts of R.K. Hall Construction, Ltd. and affiliates through common ownership (the Companies) and have been prepared in accordance with accounting principals generally accepted in the United States of America (U.S. GAAP). All significant intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements in accordance with U.S. GAAP have been recorded.

History

The Companies are engaged in road and bridge construction and the related sale and manufacturing of hot mix asphalt concrete. The Companies are organized in the state of Texas and Arkansas.

The Companies operate eleven asphalt plant facilities and one concrete plant facility located throughout Northeast Texas. Job sites are located in Texas, Arkansas and Oklahoma. The length of the Companies’ contracts varies but typically average less than one year.

Use of estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used.

Recognition of income and costs on construction contracts

The Companies use the percentage-of-completion method of reporting profits on major construction contracts. Under this method, the percentage of the cost incurred to date to the total estimated costs is used to determine the portion of the contract amount which is considered earned to date. At the time a loss on a contract becomes known, the full amount of the projected loss is recognized. Contract costs include all direct material and labor costs as well as indirect construction costs. Selling, general and administrative costs are charged to expense as incurred.

On contracts in progress where costs and estimated earnings are in excess of billings, the excess is treated as a current asset. Where billings are in excess of costs and estimated earnings, this excess is shown as a current liability. These amounts are as follows at:

   September 30,
2010
  December 31,
2009
 

Costs and estimated earnings on contracts in progress

  $134,037,362   $131,474,992  

Billings on contracts in progress

   134,824,955    133,770,114  
  

 

 

  

 

 

 
  $(787,593 $(2,295,122
  

 

 

  

 

 

 

R.K. HALL CONSTRUCTION, LTD.

Notes to the Unaudited Combined Financial Statements

At September 30, 2010 and December 31, 2009 and

For the Nine Months Ended

September 30, 2010 and 2009

Note 1 — Summary of Significant Accounting Policies (Continued)

These amounts are shown in the accompanying financial statements as follows at:

   September 30,
2010
  December 31,
2009
 

Current assets

  $1,942,309   $889,919  

Current liabilities

   2,729,902    3,185,041  
  

 

 

  

 

 

 
  $(787,593 $(2,295,122
  

 

 

  

 

 

 

Property and equipment

Property and equipment are stated at cost and depreciated over estimated useful lives using the straight-line method, ranging from three to thirty-nine years. Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. Depreciation expense amounted to $3,087,390 and $2,480,672 for the nine months ended September 30, 2010 and 2009, respectively, and is included in job costs and general and administrative expenses on the statements of operations and equity.

Statements of cash flows

For purposes of the statements of cash flows, the Companies consider all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

   September 30,
2010
   September 30,
2009
 

The Companies paid the following during the nine months ended:

    

Interest expense

  $1,668,502    $1,564,809  

Income taxes

   77,700     59,150  

   September 30,
2010
   December 31,
2009
 

The Companies had exposure related to cash balances with financial institutions in excess of federally insured amounts before outstanding items not yet cleared:

  $5,818,075    $5,311,909  

Management monitors these balances to insure funds are not at risk.

Inventories

Inventory, consisting of stone, sand, asphalt and diesel fuel, is stated at the lower of cost or market. The Companies value all inventory utilizing the first-in, first-out method.

Presentation of taxes

The Companies collect various taxes from customers and remit these amounts to applicable taxing authorities. The Companies’ accounting policy is to exclude these taxes from revenues and job costs.

R.K. HALL CONSTRUCTION, LTD.

Notes to the Unaudited Combined Financial Statements

At September 30, 2010 and December 31, 2009 and

For the Nine Months Ended

September 30, 2010 and 2009

Note 2 — Receivables

Receivables consist of the following at:

   September 30,
2010
  December 31,
2009
 

Contract billings

  $16,623,182   $5,707,256  

Contract retainage

   1,872,559    2,610,762  

Allowance for doubtful accounts

   (30,000  (60,000

Employees

   3,016    1,153  
  

 

 

  

 

 

 
  $18,468,757   $8,259,171  
  

 

 

  

 

 

 

Note 3 — Accounts Payable

Amounts due to subcontractors that have been retained pending the completion and customer acceptance of jobs amounted to $1,302,672 and $1,855,461 at September 30, 2010 and December 31, 2009, respectively. These amounts are included in accounts payable.

Note 4 — Long-term Debt

Long-term debt consists of the following at:

   September 30,
2010
   December 31,
2009
 

Notes payable to bank, payable in monthly installments of $345,090 including interest ranging from 5% to 7.6%; secured by machinery, equipment, vehicles, plants and partners’ guaranty

  $7,745,377    $10,043,220  

Notes payable to finance companies, payable in monthly installments of $127,457 including interest ranging from 0% to 7.46%; secured by machinery, equipment and vehicles

   3,272,974     2,094,368  

Note payable to bank, payable in monthly installments of $87,500 plus interest at 7.5%; secured by equipment and partners’ guaranty

   7,511,796     8,414,255  

Note payable to bank, payable in monthly installments of $12,500 plus interest at 7.5%; secured by real estate and members’ guaranty

   1,125,000     1,237,500  

Note payable to finance company, payable in semi-annual installments of $71,865 including interest at 4.25%; secured by real estate and members’ guaranty

   1,727,362     1,761,789  

Note payable to finance company, payable in quarterly installments of $284,955 including interest at 13.00%; secured by equipment

   1,052,902     —    
  

 

 

   

 

 

 
   22,435,411     23,551,132  

Less current maturities

   7,206,571     5,991,424  
  

 

 

   

 

 

 
  $15,228,840    $17,559,708  
  

 

 

   

 

 

 

R.K. HALL CONSTRUCTION, LTD.

Notes to the Unaudited Combined Financial Statements

At September 30, 2010 and December 31, 2009 and

For the Nine Months Ended

September 30, 2010 and 2009

Note 4 — Long-term Debt (Continued)

Future maturities of long-term debt are as follows:

For the years ending December 31:

  

2010 (Three months)

  $1,564,021  

2011

   7,051,262  

2012

   4,799,877  

2013

   2,613,266  

2014

   1,487,524  

2015

   1,285,869  

Thereafter

   3,633,592  

Note 5 — Operating Leases

The Companies are obligated under operating leases for asphalt plants and equipment. The lease payments amount to $125,761 per month and are guaranteed by the partners and members.

   2010   2009 

Lease expense for the nine months ended September 30:

  $1,131,847    $549,943  

Lease expense is included in job costs on the statements of operations and equity.

Minimum future lease payments are as follows:

For the years ending December 31:

  

2010 (Three months)

  $377,282  

2011

   1,509,130  

2012

   1,509,130  

2013

   1,088,402  

2014

   558,603  

2015

   228,956  

Note 6 — Related Party Transactions

The Companies lease equipment from entities owned by its partners. The equipment leases are on a month-to-month basis.

   September 30,
2010
   September 30,
2009
 

Lease expense during the nine months ended:

  $677,595    $1,011,888  

   September 30,
2010
   December 31,
2009
 

Included in accounts payable at:

  $—      $298,886  

The Companies also purchased materials from an entity owned by one of its partners.

   September 30,
2010
   September 30,
2009
 

Material purchased during the nine months ended:

  $524,685    $2,108,760  

R.K. HALL CONSTRUCTION, LTD.

Notes to the Unaudited Combined Financial Statements

At September 30, 2010 and December 31, 2009 and

For the Nine Months Ended

September 30, 2010 and 2009

Note 6 — Related Party Transactions (Continued)

   September 30,
2010
   December 31,
2009
 

Included in accounts payable at:

  $203,459    $99,524  

All of these related party expenses are included in job costs and general and administrative expenses on the statements of operations and equity.

Partner/member guaranties are included in long-term debt and in operating leases (Note 4 and Note 5).

Note 7 — Concentrations

Concentrations of business with a single entity (Texas Department of Transportation) subjects the Companies to the potential for credit risk.

   Accounts Receivable  Revenue 
   Amount   Percent  Amount   Percent 

Concentrations of contracts receivable and revenue as of and/or for the nine months ended:

       

September 30, 2010

  $7,738,018     39 $51,373,696     49

September 30, 2009

      42,678,971     42

December 31, 2009

  $2,955,100     36   

Note 8 — Profit Sharing Plan

The Companies have a profit sharing plan for the primary purpose of providing retirement benefits to all eligible employees. The Companies’ contributions each year are subject to the discretion of management.

   2010   2009 

The Companies made contributions to the plan as follows for the nine months ended September 30:

  $98,576    $35,393  

Note 9 — Income Taxes

The Companies are not tax paying entities for Federal income tax purposes and, accordingly, does not incur Federal income tax. Instead, the partners and members are liable for individual Federal income tax on the Companies’ income or loss.

The income tax provision includes deferred state income tax attributable to temporary differences between income reported for financial purposes versus income tax purposes resulting from the Companies’ use of the accelerated method of computing tax depreciation.

The provision for income tax consists of the following for the nine months ended September 30:

   2010   2009 

Current state income tax

  $58,524    $105,970  

Deferred state income tax

   1,396     10,535  
  

 

 

   

 

 

 
  $59,920    $116,505  
  

 

 

   

 

 

 

R.K. HALL CONSTRUCTION, LTD.

Notes to the Unaudited Combined Financial Statements

At September 30, 2010 and December 31, 2009 and

For the Nine Months Ended

September 30, 2010 and 2009

Note 9 — Income Taxes (Continued)

The Companies do not have any unrecognized tax benefit which could significantly change its provision for income tax. The Companies are subject to examination for the prior three years by Federal taxing authorities and the prior four years for state taxing authorities.

Note 10 — Subsequent Events

Management has evaluated subsequent events through September 29, 2011, the date the financial statements were available to be issued.

In November, 2010, RK Hall, LLC (an indirect, wholly-owned subsidiary of Summit Materials, LLC) was formed to effect the acquisition of the business and partner/member interests of the Companies. On November 12, 2010, the Companies and its partners/members entered into an Interest Purchase Agreement with RK Hall, LLC, pursuant to which the business and partner/member interests of the Companies were acquired by RK Hall, LLC. The effective date of the transaction was November 30, 2010.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

(a) The following entities are incorporated under the laws of the State of Delaware: Summit Materials Finance Corp.Corporations I, Inc. and Summit Materials Corporations I, Inc.Finance Corp. (collectively, the “Delaware Corporations”).

Delaware General Corporation Law

Section 145(a) of the Delaware General Corporation Law provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea ofnolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

Section 145(b) of the Delaware General Corporation Law provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.

Section 145(c) of the Delaware General Corporation Law provides that to the extent that a present or former director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 145(a) and (b), or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

Section 145(d) of the Delaware General Corporation Law provides that any indemnification under Section 145(a) and (b) (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 145(a) and (b). Such determination shall be made, with respect to a person who is a director or officer of the

 

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the corporation at the time of such determination (1) by a majority vote of the directors who were not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum; or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.

Section 145(e) of the Delaware General Corporation Law provides that expenses (including attorneys’ fees) incurred by an officer or director of the corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in Section 145. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents of the corporation or by persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate.

Section 145(f) of the Delaware General Corporation Law provides that the indemnification and advancement of expenses provided by, or granted pursuant to, Section 145 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to the certificate of incorporation or the bylaws after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.

Section 145(g) of the Delaware General Corporation Law provides that a corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under Section 145.

Section 174 of the Delaware General Corporation Law provides, among other things, that a director, who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption, may be held liable for such actions. A director who was either absent when the unlawful actions were approved or dissented at the time, may avoid liability by causing his or her dissent to such actions to be entered in the books containing the minutes of the meetings of the board of directors at the time such action occurred or immediately after such absent director receives notice of the unlawful acts.

Organizational Documents of Delaware Registrants

The articles of incorporation and/or bylaws of each of the Delaware Corporations provide that, to the fullest extent permitted by the Delaware General Corporation Law, the corporation shall indemnify any current or former Director or officer of the corporation and may, at the discretion of the Board of Directors, indemnify any current or former employee or agent of the corporation against all expenses, liabilities and losses reasonably incurred or suffered by him or her in connection with any action, suit or proceeding brought by or in the right of the corporation or otherwise, to which he or she was or is a party or is threatened to be made a party by reason of his or her current or former position with the corporation or by reason of the fact that he or she is or was serving, at the request of the corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

 

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(b) Summit Materials, LLC, Alcomat, LLC, Alleyton Resource Company, LLC, Alleyton Services Company, LLC, Austin Materials, LLC, Continental Cement Company, L.L.C., Kilgore Companies, LLC, Norris Quarries, LLC, RK Hall, LLC, Summit Materials Companies I, LLC, Summit Materials Holdings I,II, LLC and Summit Materials Holdings II,International, LLC, are limited liability companies organized under the laws of the State of Delaware (collectively, the “Delaware Limited Liability Companies”).Delaware.

Delaware Limited Liability Company Act

Section 18-108 of the Delaware Limited Liability Company Act empowers a Delaware limited liability company to indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.

In accordance with these provisions, the Amended and Restated Limited Liability Company Agreement of Summit Materials, LLC states that, to the fullest extent permitted by applicable law, the member and any duly appointed officer shall be entitled to indemnification for any loss, damage or claim incurred by the member or such officer by reason of any act or omission performed or omitted by the member or such officer in good faith on behalf of Summit Materials, LLC and in a manner reasonably believed to be within the scope of the authority conferred on the member or such officer pursuant to the Amended and Restated Limited Liability Company Agreement (or by action of the member acting in accordance Amended and Restated Limited Liability Company Agreement and the Delaware Limited Liability Company Act), except that any such officer shall not be entitled to be indemnified in respect of any loss, damage or claim incurred by reason of such person’s gross negligence or willful misconduct with respect to such acts or omissions;provided,however, that any indemnity shall be provided out of and to the extent of Summit Materials, LLC’s assets only, and no member shall have personal liability on account thereof.

In accordance with these provisions, the Amended and Restated Limited Liability Company Agreement of Continental Cement Company, L.L.C. states that, to the fullest extent permitted by applicable law, Continental Cement Company, L.L.C. shall indemnify and hold harmless, among others, officers, directors, members (and affiliates), in each case in his, her or its capacity as such, and each such person’s successors, heirs, estates or legal representative, from and against any and all liabilities, obligations, losses, damages, fines, taxes and interest and penalties thereon, claims, demands, actions, suits, proceedings (whether civil, criminal, administrative, investigative or otherwise), costs, expenses and disbursements (including reasonable and documented legal and accounting fees and expenses, costs of investigation and sums paid in settlement) of any kind or nature whatsoever, which may be imposed on, incurred by or asserted at any time against such covered person in any way related to or arising out of the Amended and Restated Limited Liability Company Agreement, Continental Cement Company, L.L.C. or the management or administration of Continental Cement Company, L.L.C. or in connection with the business or affairs of Continental Cement Company, L.L.C. or the activities of such Covered Person on behalf of Continental Cement Company, L.L.C.;provided, that a covered person shall not be entitled to indemnification against claims and expenses that are finally determined by a court of competent jurisdiction to have resulted from such Covered Person’s act or omission that is a criminal act by such Person that such Person had no reasonable cause to believe was lawful, that constitutes fraud, gross negligence or willful misconduct by such Person or that is a material breach of the Amended and Restated Limited Liability Company Agreement.

In accordance with these provisions, the Limited Liability Company Agreements of each of the Delaware Limited LiabilityAlcomat, LLC, Alleyton Resource Company, LLC, Alleyton Services Company, LLC, Austin Materials, LLC, Kilgore Companies, LLC, RK Hall, LLC, Summit Materials Holdings II, LLC and Summit Materials International, LLC state that toexcept in the fullest extent permitted by applicable law, the company shall indemnify a member, manager, an officer, a person to whom the managers delegate management responsibilities, any affiliate, officer, director or shareholdercase of a member, or manager, or any employee or agent of the company or of the indemnified party from any loss, damage or claim incurred by the indemnified party by reason of any act performed or omitted to be performed by the indemnified party in goodbad faith, in connection with the business of the company including expenses (including legal fees) incurred by such indemnified person in defending any claim, demand, action, suit or proceeding;provided however, that an indemnified party shall not be indemnified for any loss, damage or claim incurred by such party by reason of gross negligence or willful misconduct, witheach person (and the heirs, executors or administrators of such actsperson) who was or omissions.is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a member or officer, shall be indemnified and held harmless to the same extent as permitted by the laws of the State of Delaware for directors and officers of corporations organized under the laws of the State of Delaware. Any indemnity under shall be provided out of and to the extent of the applicable company’s assets only, and no member shall have personal liability on account thereof.

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(c) The following entity is incorporated under the laws of the State of Colorado: Elam Construction, Inc. (the “Colorado Corporation”).

Colorado Business Corporation Act

Section 7-109-102 and Section 7-109-107 of the Colorado Business Corporation Act provide that a corporation may indemnify a person made party to a proceeding because the person is or was a director, officer, employee, fiduciary or agent if (a) such person’s conduct was in good faith; and (b) such person reasonably believed (i) in the case of conduct in such person’s official capacity with the corporation, that such conduct was in the corporation’s best interests; and (ii) in all other cases (other than criminal cases), that such conduct was at least not opposed to the corporation’s best interests; and (c) in the case of any criminal proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, in itself, determinative that such person did not meet the standard of care under Section 7-109-102. A corporation may not indemnify a director, officer, employee, fiduciary or agent under Section 7-109-102 of the Colorado Business Corporation Act in connection with any proceeding (y) by or in the right of the corporation in which such person was adjudged liable to the corporation; or (z) charging that such person derived an improper personal benefit, whether or not involving an action in an official capacity, in which proceeding such person was adjudged liable on the basis that such person derived an improper personal benefit. Indemnification under Section 7-109-102 of the Colorado Business Corporation Act shall be limited to reasonable expenses incurred in connection with such proceeding.

Section 7-109-103 and Section 7-109-107 of the Colorado Business Corporation Act provide that, unless limited by a corporation’s articles of incorporation, a corporation shall indemnify directors and officers of the corporation, and may indemnify an employee, fiduciary or agent of the corporation, who are wholly successful, on the merits or otherwise, in the defense of any proceeding to which such director, officer, employee, fiduciary or agent was a party because the person was a director, officer, employee, fiduciary or agent against reasonable expenses incurred by such person in connection with the proceeding. The Colorado Corporation’s articles of incorporation do not contain a contrary provision.

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Section 7-109-104 and Section 7-109-107 of the Colorado Business Corporation Act permit a corporation to advance reasonable expenses incurred by a director, officer, employee, fiduciary or agent who is a party to a proceeding in advance of final disposition of the proceeding if: (a) the director, officer, employee, fiduciary or agent furnishes to the corporation a written affirmation of such director, officer, employee, fiduciary or agent’s good faith belief that he or she has met the standard of conduct set forth in Section 7-109-102 of the Colorado Business Corporation Act; (b) the director, officer, employee, fiduciary or agent furnishes to the corporation a written undertaking to repay the advance if it is ultimately determined that he or she did not meet the standard of conduct set forth in Section 7-109-102 of the Colorado Business Corporation Act; and (c) a determination is made that the facts then known to those making the determination would not preclude indemnification under the Colorado Business Corporation Act. Section 7-109-107 of the Colorado Business Corporation Act permits a corporation to indemnify and advance expenses to officers, employees, fiduciaries or agents who are not directors, to a greater extent than directors if not inconsistent with public policy, and if provided for by the corporation’s bylaws, general or specific action of its board of directors or shareholders, or contract.

Section 7-109-106 of the Colorado Business Corporation Act provides that a corporation may not indemnify a director, officer, employee, fiduciary or agent under Section 7-109-102 of the Colorado Business Corporation Act unless authorized in the specific case after a determination has been made that indemnification of such person is permissible in the circumstances because such person has met the standard of conduct set forth in Section 7-109-102 of the Colorado Business Corporation Act. Such determination shall be made, (a) by a majority vote of the directors who are not parties to such action, (b) by a committee of such directors designated by the board of directors, even though less than a quorum, (c) if there are no such directors, or if such directors so direct, by independent legal counsel, or (d) by the shareholders.

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Section 7-109-108 of the Colorado Business Corporation Act provides that a corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, fiduciary or agent of the corporation, or who, while a director, officer, employee, fiduciary, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary or agent of another entity, against liability asserted against or incurred by the person in that capacity or arising from the person’s status as a director, officer, employee, fiduciary or agent, whether or not the corporation would have the power to indemnify the person against the same liability under the Colorado Business Corporation Act.

Organizational Documents of the Colorado Corporation

The articles of incorporation and bylaws of the Colorado Corporation provide that, to the fullest extent permitted by the Colorado Business Corporation Act, the Colorado Corporation shall indemnify any current or former director or officer of the Colorado Corporation and may, at the discretion of the Board of Directors of the Colorado Corporation, indemnify any current or former employee, fiduciary or agent of the Colorado Corporation against expenses, liabilities and losses reasonably incurred or suffered by such person in connection with any action, suit, or proceeding, to which such person is a party or is threatened to be made a party by reason of such person’s current or former position with the Colorado Corporation, as a director, officer, employee, fiduciary or agent or by reason of the fact that such person is or was serving, at the request of the Colorado Corporation as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise; provided, however, prior to such indemnification, the Board of Directors of the Colorado Corporation or a committee thereof must determine that such indemnitee conducted himself or herself in good faith and reasonably believed, (i) in such person’s official capacity that such conduct was in the Colorado Corporation’s best interests, (ii) in all other cases (other than criminal cases), that such conduct was not opposed to the Colorado Corporation’s best interests, or (iii) in the case of any criminal action, that such conduct was not unlawful.

(d) The following entity is incorporated under the laws of the State of Kansas: Hamm, Inc. (the “Kansas Corporation”).

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Kansas General Corporation Code

The Kansas General Corporation Code, as amended Chapter 17, Articles 60 to 74 of the Kansas Statutes Annotated, provides in K.S.A. 17-6305(a) that a corporation shall have power to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the corporation, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, including attorney fees, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea ofnolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

The Kansas General Corporation Code provides in K.S.A. 17-6305(b) that a corporation shall have power to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint

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venture, trust or other enterprise against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, including attorney fees, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

The Kansas General Corporation Code provides in K.S.A. 17-6305(c) that to the extent that a present or former director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of K.S.A. 17-6305, or in defense of any claim, issue or matter therein, such director, officer, employee or agent shall be indemnified against expenses actually and reasonably incurred by such person in connection therewith, including attorney fees.

The Kansas General Corporation Code provides in K.S.A. 17-6305(d) that any indemnification under subsections (a) and (b) of K.S.A. 17-6305, unless ordered by a court, shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because such director, officer, employee or agent has met the applicable standard of conduct set forth in subsections (a) and (b) of K.S.A. 17-6305. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination: (1) by a majority vote of the directors who were not parties to such action, suit or proceeding, even though less than a quorum; (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum; (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion; or (4) by the stockholders.

The Kansas General Corporation Code provides in K.S.A. 17-6305(e) that expenses, including attorney fees, incurred by a director or officer in defending a civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it is ultimately

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determined that the director or officer is not entitled to be indemnified by the corporation as authorized in K.S.A. 17-6305. Such expenses, including attorney fees, incurred by former directors and officers or incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate.

The Kansas General Corporation Code provides in K.S.A. 17-6305(f) that the indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of K.S.A. 17-6305 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in a person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the articles of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.

The Kansas General Corporation Code provides in K.S.A. 17-6305(g) that a corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of K.S.A. 17-6305.

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Organizational Documents of the Kansas Corporation

The articles of incorporation of the Kansas Corporation provide that each person who is or was a director or officer of the corporation, and each director, officer, employee or agent of the corporation who is or was serving at the request of the corporation as a director or officer of another corporation (including the heirs, executors, administrators and estate of such person) shall be indemnified by the corporation as of right to the full extent permitted or authorized by the laws of the State of Kansas, as now in effect and as hereafter amended, against any expenses, judgments, fines and amounts paid in settlement (including attorneys’ fees) actually and reasonably incurred by such person in his capacity as or arising out of his status as a director or officer of the corporation or if serving at the request of the corporation as a director or officer of another corporation. The indemnification provided by this provision shall not be exclusive of any other rights to which those indemnified may be entitled under the articles of incorporation, under any other bylaw or under any agreement, vote of stockholders or disinterested directors or otherwise, and shall not limit in any way any right which the corporation may have to make different or further indemnifications with respect to the same or different persons or classes of persons.

The bylaws of the Kansas Corporation provide that when a person is sued, either alone or with others, because he is or was a director or officer of the corporation, or of another corporation serving at the request of the corporation, in any proceeding arising out of his alleged misfeasance or nonfeasance in the performance of his duties or out of any alleged wrongful act against the corporation or by the corporation, he shall be indemnified for his reasonable expenses, including attorneys’ fees incurred in the defense of the proceeding, if both of the following conditions exist: (a) the person sued is successful in whole or in part, or the proceeding against him is settled with the approval of the court and (b) the court finds that his conduct fairly and equitably merits such indemnity.

(e) Cornejo & Sons, L.L.C., Hamm Asphalt, LLC, N.R. Hamm Contractor, LLC and N.R. Hamm Quarry, LLC are limited liability companies organized under the laws of the State of Kansas (collectively, the “Kansas Limited Liability Companies”).

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Kansas Revised Limited Liability Company Act

The Kansas Revised Limited Liability Company Act, K.S.A. 17-7662 through K.S.A. 17-76,142, as amended, provides in K.S.A. 17-7670(a) that subject to such standards and restrictions, if any, as are set forth in its operating agreement, a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. To the extent that a present or former member, manager, officer, employee or agent of a limited liability company has been successful on the merits or otherwise oras a plaintiff in an action to determine that the defensesplaintiff is a member of any action, suits or proceeding,a limited liability company or in defense of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a member, manager, officer, employee or agent of the limited liability company, or is or was serving at the request of the limited liability company as a member, manager, director, officer, employee or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, or in defense of any claim, issue or matter therein, such director,member, manager, officer, employee or agent shall be indemnified by the limited liability company against expenses actually and reasonably incurred by such person in connection therewith, including attorney fees.

Organizational Documents of the Kansas Limited Liability Companies

The operating agreement of each of the Kansas Limited Liability Companies provides that to the fullest extent permitted by the laws of the State of Kansas and except in the case of bad faith, gross negligence or willful misconduct, no member or officer shall be liable to the company or any other member for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such member or officer in good faith on behalf of the company and in a manner reasonably believed to be within the scope of the authority conferred on such member or officer by the operating agreement. Except in the case of bad faith, gross negligence or willful

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misconduct, each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a member or officer, shall be indemnified and held harmless by the company to the same extent as permitted by the laws of the State of Kansas for directors and officers of corporations organized under the laws of the State of Kansas. Any indemnity under the operating agreement shall be provided out of and to the extent of company assets only, and no member shall have personal liability on account thereof.

(f) The following entities areentity is incorporated under the laws of the Commonwealth of Kentucky: Bourbon Limestone Company and Kentucky Hauling, Inc. (together, the(the “Kentucky Corporations”Corporation”).

Kentucky Business Corporations Act

Section 8-510 of KRS Chapter 271B (the “Kentucky Business Corporations Act”) provides that a corporation may indemnify an individual made a party to a proceeding because he is or was a directorsdirector against liability incurred in the proceeding if he conducted himself in good faith and he reasonably believed in the case of conduct in his official capacity with the corporation that his conduct was in its best interests and in all other cases, that his conduct was at least not opposed to its best interests and in the case of any criminal proceeding, he hashad no reasonable cause to believe his conduct was unlawful. A director’s conduct with respect to an employee benefit plan for a purpose he reasonablereasonably believed to be in the interests of the participants in and beneficiaries of the plan shall be conduct that satisfies the requirement that he reasonably believed that his conduct was at least not opposed to the corporation’s best interests. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not be, of itself, determinative that the director did not meet the standard of conduct described herein.in Section 8-510 of the Kentucky Business Corporations Act. A corporation may not indemnify a director under Section 8-510 of the Kentucky Business Corporations Act in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation or in connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. Indemnification permitted under Section 8-510 of the Kentucky Business Corporations Act in connection with a proceeding by or in the right of the corporation shall be limited to reasonable expenses incurred in connection with the proceeding.

Section 8-520 of the Kentucky Business Corporations Act provides that unless limited by its articles of incorporation, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.

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Section 8-530 of the Kentucky Business Corporations Act provides that a corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if the director furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct described in Section 8-510 of the Kentucky Business Corporations Act, the director furnishes the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct and a determination is made that the facts then known to those making the determination would not preclude indemnification under Sections 8-500 to 8-580 of the Kentucky Business Corporations Act. The written undertaking shall be an unlimited general obligation of the director but shall not be required to be secured and may be accepted without reference to financial ability to make repayment. Determinations and authorizations of payments under this sectionSection 8-530 of the Kentucky Business Corporations Act shall be made in the manner specified in 8-550 of the Kentucky Business Corporations Act.

Section 8-540 of the Kentucky Business Corporations Act provides that unless a corporation’s articles of incorporation provide otherwise, a director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt

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of an application, the court after giving any notice the court considers necessary may order indemnification if it determines the director is entitled to mandatory indemnification under Section 8-520 of the Kentucky Business Corporations Act, in which case the court shall also order the corporation to pay the director’s reasonable expenses incurred to obtain court-ordered indemnification, or the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he met the standard of conduct set forth in Section 8-510 of the Kentucky Business Corporations Act or was adjudged liable as described in subsection (4) of Section 8-510 of the Kentucky Business Corporations Act, but if he was adjudged so liable his indemnification shall be limited to reasonable expenses incurred.

Section 8-550 of the Kentucky Business Corporations Act provides that a corporation shall not indemnify a director under Section 8-510 of the Kentucky Business Corporations Act unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he met the standard of conduct set forth in Section 8-510 of the Kentucky Business Corporations Act. The determination shall be made by the board of directors by majority vote of a quorum consisting of directors not at that time parties to the proceeding, or, if a quorum cannot be obtained, by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding, or by special legal counsel selected by the board of directors or its committee in the manner prescribed above, or if a quorum of the board of directors cannot be obtained, selected by a majority vote of the full board of directors (in which selection directors who are parties may participate), or by the shareholders, but shares owned by or voted under the control of directors who are at the time parties to the proceeding shall not be voted on the determination. Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled to select special legal counsel as set forth above.

Section 8-560 of the Kentucky Business Corporations Act provides that unless the articles of incorporation provide otherwise, an officer of the corporation who is not a director shall be entitled to mandatory indemnification under Section 8-520 of the Kentucky Business Corporations Act, and is entitled to apply for court-ordered indemnification under Section 8-540 of the Kentucky Business Corporations Act, in each case to the same extent as a director, the corporation may indemnify and advance expenses under Sections 8-500 to 8-580 of the Kentucky Business Corporations Act to an officer, employee, or agent of the corporation who is not a director to the same extent as to a director and a corporation may also indemnify and advance expenses to an officer, employee, or agent who is not a director to the extent, consistent with public policy, that may be provided by its articles of incorporation, bylaws, general or specific actions of its board of directors, or contract.

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Section 8-570 of the Kentucky Business Corporations Act provides that a corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee or agent of the corporation, is or was serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another entity, or of an employee benefit plan or other enterprise, against liability asserted against or incurred in that capacity or arising from the status as a director, officer, manager, employee, or agent, whether or not the corporation would have power to indemnify against the same liability under Sections 8-510 or 8-520 of the Kentucky Business Corporations Act.

Section 8-580 of the Kentucky Business Corporations Act provides that the indemnification and advancement of expenses provided by, or granted pursuant to, Sections 8-500 to 8-580 of the Kentucky Business Corporations Act shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Sections 8-500 to 8-580 of the Kentucky Business Corporations Act shall not limit a corporation’s power to pay or reimburse expenses incurred by a director in connection with his appearance as a witness at a proceeding at a time when he has not been made a named defendant or responded to the proceeding.

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Section 8-330 of the Kentucky Business Corporations Act provides, among other things, that a director who votes for or who assents to a distribution made in violation of Section 6-400 of the Kentucky Business Corporations Act or the articles of incorporation shall be personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating Section 6-400 of the Kentucky Business Corporations Act or the articles of incorporation if it is established that he did not perform his duties in compliance with Section 8-300 of the Kentucky Business Corporations Act.

Organizational Documents of the Kentucky CorporationsCorporation

The articles of incorporation of Bourbon Limestone Company state that the corporation shall, to the fullest extent permitted by Kentucky law, indemnify any director of the corporation from and against any and all reasonable costs and expenses (including, but not limited to, attorneys’ fees) and any liabilities (including, but not limited to, judgments, fines, penalties and reasonable settlements) paid by or on behalf of, or imposed against, such person in connection with any threatened, pending or completed claim, action, suit or proceeding, whether civil, criminal, administrative, investigative or other (including any appeal relating thereto), whether formal or informal, and whether made or brought by or in the right of the corporation or otherwise, in which such person is, was or at any time becomes a party or witness, or is threatened to be made a party or witness, or otherwise, by reason of the fact that such person is, was or at any time becomes a director of the corporation or, at the corporation’s request, a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

The bylaws of Kentucky Hauling, Inc. state that any person who was or is a party or is threatened to be made a party to any threatened or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the corporation against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted I good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

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(g) Glass Aggregates, LLC, Hinkle Contracting Company, LLC and South Central Kentucky Limestone, LLC areis a limited liability companiescompany organized under the laws of the Commonwealth of Kentucky (together, the “Kentucky Limited Liability Companies”).Kentucky.

Section 180 of KRS Chapter 275 (the “Kentucky Limited Liability Company Act”) provides that a written operating agreement may eliminate the personal liability of a member ofor manager for monetary damages for breach of any duty provided for in Section 170 of the Kentucky Limited Liability Company Act and provide for indemnification of a member or manager for judgments, settlements, penalties, fines, or expenses incurred in a proceeding to which a person is a party because the person is or was a member or manager.

The Operating Agreement of Hinkle Contracting Company, LLC states that, except in casesthe case of bad faith, gross negligence or willful misconduct, each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a member or officer, shall be indemnified and held harmless by the company to the same extent as permitted by the laws of the Commonwealth of Kentucky for directors and officers of corporations organized under the laws of the Commonwealth of Kentucky.

The Operating Agreement of South Central Kentucky Limestone, LLC states that, to the greatest extent allowed by the laws of the Commonwealth of Kentucky, the company will indemnify the member if made a party to any proceeding because the member is or was a member against all liability incurred by the member in accordance with any proceeding and pay for or reimburse the reasonable expenses incurred by the member in connection with any such proceeding in advance of final disposition thereof. The company will have the power but not the obligation to indemnify any person who is or was an employee or agent of the company to the same extent as if such person was a member.

The Articles of Organization of Glass Aggregates, LLC state that the company shall indemnify any member, officer and or manager for any judgments, settlements, penalties, fines or expenses incurred in a proceeding to which a person is a party because the person is or was a member of the limited liability company.

The Operating Agreement of Glass Aggregates, LLC states that the company shall indemnify and hold harmless, to the fullest extent permitted by the Kentucky Limited Liability Company Act as it presently exists or as it may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he, or a person for whom he is the legal representative, is or was a manager, member, officer, employee or agent of the company or is or was serving at the request of the company as a director, trustee, officer, manager, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise, limited liability company, or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The company shall be required to indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the board of managers of the company.

(h) Con-Agg of MO, L.L.C., Fischer Quarries, L.L.C. and Quarry Properties, L.L.C. are is a limited liability companiescompany organized under the laws of the State of Missouri (collectively, the(the “Missouri Limited Liability Companies”Company”).

Missouri Limited Liability Company Act

The Missouri Limited Liability Company Act, Sections 347.010 to 347.187 of the Revised Statutes of Missouri, provides in Section 347.057, RSMo., that a person who is a member, manager, or both, of a limited liability company is not liable, solely by reason of being a member or manager, or both, under a judgment, decree or order of a court, or in any other manner, for a debt, obligation or liability of the limited liability company, whether arising in contract, tort or otherwise or for the acts or omissions of any other member, manager, agent or employee of the limited liability company.

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The Missouri Limited Liability Company Act provides in Section 347.088.1, RSMo., that except as otherwise provided in the operating agreement an authorized person shall discharge his or her duty under the Missouri Limited Liability Company Act and the operating agreement in good faith, with the care a corporate

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officer of like position would exercise under similar circumstances, in the manner a reasonable person would believe to be in the best interest of the limited liability company, and shall not be liable for any such action so taken or any failure to take such action, if he or she performs such duties in compliance with such subsection.

The Missouri Limited Liability Company Act provides in Section 347.088.2, RSMo., that to the extent that, at law or equity, a member or manager or other person has duties, including fiduciary duties, and liabilities relating to those duties to the limited liability company or to another member, manager, or other person that is party to or otherwise bound by an operating agreement: (1) any such member, manager, or other person acting under the operating agreement shall not be liable to the limited liability company or to any such other member, manager, or other person for the member’s, manager’s, or other person’s good faith reliance on the provisions of the operating agreement; and (2) the member’s, manager’s or other person’s duties and liabilities may be expanded or restricted by provision in the operating agreement.

Organizational Documents of the Missouri Limited Liability CompaniesCompany

The operating agreement of Con-Agg of MO, L.L.C., contains no indemnification provisions. The operating agreement

(i) Buckhorn Materials, LLC is a limited liability company organized under the laws of Fischer Quarries, L.L.C.the State of South Carolina (the “South Carolina Limited Liability Company”).

South Carolina Uniform Limited Liability Company Act of 1996

Section 33-44-302 of the South Carolina Uniform Limited Liability Company Act of 1996 (the “South Carolina LLC Act”) provides that noa limited liability company, and not a member shall be liable under a judgment, decree or order of a court, or in any other manner, for any debt, obligation or liability of the company. A membermanager of the company, shall not be personallyis liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a member or manager acting in the ordinary course of business of the company or its members for any monetary damages for breach of fiduciary duty, except for liability for any acts or omissions which involve intentional misconduct, fraud or knowing violation of law or for a distribution, redemption or purchase of or with respect to a member’s ownership interest in the company in violation of Missouri law. Any repeal or modification of such provisionsauthority of the operating agreement bycompany.

Section 33-44-303 of the South Carolina LLC Act provides that unless (a) the articles of organization of a limited liability company contain a provision that the members of the company shall be prospective only,are liable in their capacity as members, and shall not adversely affect any limitation on the personal liability of(b) a member of the company existing athas consented in writing to the timeadoption of such repealprovision or modificationto be bound by the provision, (i) the debts, obligations, and liabilities of a limited liability company, whether arising in contract, tort, or thereafter arisingotherwise, are solely the debts, obligations, and liabilities of the company, and a member or manager shall not be liable personally for the debts, obligations, and liabilities of the company solely by reason of being or acting as a resultmanager or member, and (ii) the failure of a limited liability company to observe the usual company formalities or requirements relating to the exercise of its company powers or management of its business is not a ground for imposing personal liability on the members or managers for liabilities of the actscompany.

Section 33-44-403 of the South Carolina LLC Act provides that a limited liability company shall reimburse a member or omissions priormanager for payments made and indemnify a member or manager for liabilities incurred by the member or manager in the ordinary course of the business of the company or for the preservation of its business or property.

Section 33-44-409 of the South Carolina LLC Act provides that, to the timeextent of such repealthe managerial authority delegated to the members by a limited liability company’s operating agreement, the manager of a member-managed limited liability company is relieved of liability imposed by law for violation of (a) the member-manager’s duty of loyalty to the company (which duty of loyalty is limited to (i) accounting to the company and holding as trustee for the company any property, profit, or modification. benefit derived by the member-manager in the conduct or winding up of the company’s business or derived from a use by the member-manager of the company’s property, including the appropriation of a company’s opportunity, (ii) refraining from dealing with the company in the conduct or winding up of the company’s business as or on behalf of a party having an interest adverse to the company, and (iii) refraining from competing with the company in the conduct of the company’s business before the dissolution of the company), (b) the member-manager’s duty of care to the company and its other

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members in the conduct of and winding up of the company’s business (which duty of care is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law), and (c) the member-manager’s obligation of good faith and fair dealing in the discharge of the member-manager’s duties to the company and its other members. A member of a member-managed limited liability company does not violate a duty or obligation to the company, either under the South Carolina LLC Act or under the company’s operating agreement, merely because the member’s conduct furthers the member’s own interest.

Organizational Documents of the South Carolina Limited Liability Company

The companyAmended and Restated Operating Agreement of the South Carolina Limited Liability Company (the “Operating Agreement”) provides that, to the fullest extent permitted by the laws of the State of South Carolina and except in the case of bad faith, gross negligence or willful misconduct, no member or officer of the South Carolina Limited Liability Company shall indemnify, save and hold harmless abe liable to the Company or any other member fromfor any loss, damage liability or expenseclaim incurred or sustained by him by reason of any act or omission performed or omitted by himsuch member or officer in good faith on behalf of the companyCompany and in furtherancea manner reasonably believed to be within the scope of its interest; provided, however,the authority conferred on such member or officer by the Operating Agreement.

Additionally, the Operating Agreement also provides that, such right to indemnification shall not apply to relieveexcept in the member from liability forcase of bad faith, gross negligence or willful malfeasance.

The operating agreement of Quarry Properties, L.L.C. provides that nomisconduct, each person shall be liable to(and the companyheirs, executors or its members for any loss, damage, liability or expense suffered by the company or its members on account of any action taken or omitted to be taken by such person as a member or as manager of the company or by such person while serving at the request of the company as a director, officer or in any other comparable position of any other enterprise, if such person discharges such person’s duties in good faith, exercising the same degree of care and skill that a prudent person would have exercised under the circumstances in the conductadministrators of such prudent person’s own affairs, and in a manner such person reasonably believes to be in the best interest of the company. A member’s liability under such provision shall be so limited for those actions taken or omitted to be taken by such member in connection with the management of the business and affairs of the company. Such operating agreement further provides that the company shall indemnify each personperson) who has beenwas or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative investigative or appellateinvestigative, by reason of the fact that such person is or was a member or managerofficer of the company, or is or was serving at the request of the company as a director, officer or in any other comparable position of any other enterprise, such indemnity shall apply against all liabilities and expenses, including, without limitation, judgments, amounts paid in settlement, attorneys’ fees, ERISA excise taxes or penalties, fines and other expenses, actually and reasonably incurred by such person in connection with any such action, suit or proceeding; provided, however, that the company shall not be required to indemnify or advance expenses to any person from or on account of such person’s conduct that was finally adjudged to have been knowingly fraudulent, deliberately dishonest, or willful misconduct; provided further that the company shall not

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be required to indemnify or advance expenses to any person in connection with an action, suit or proceeding initiated by such person unless the initiation of such action, suit or proceeding was authorized in advance by the members of the company; provided further that a memberCompany, shall be indemnified underand held harmless by the operating agreement only for those actions taken or omittedCompany to be takenthe same extent as permitted by such member in connection with the managementlaws of the businessState of South Carolina for directors and affairsofficers of the company.

(i) The following entity is incorporatedcorporations organized under the laws of the State of New Mexico: Elam Paving, Inc. (the “New Mexico Corporation”).

New Mexico Business Corporation Act

Section 53-11-4.1South Carolina. Any such indemnity shall be provided out of and to the New Mexico Business Corporation Act provides that a corporationextent of Company assets only, and no member shall have power to indemnify any person made (or threatened to be made) a party to any proceeding (whether threatened, pending or completed) by reason of the fact that the person is or was a director (or, while a director, is or was serving in any of certain other capacities) if: (1) the person acted in good faith; (2) the person reasonably believed: (a) in the case of conduct in the person’s official capacity with the corporation, that the person’s conduct was in its best interests; and (b) in all other cases, that the person’s conduct was at least not opposed to its best interests; and (3) in the case of any criminal proceeding, the person had no reasonable cause to believe the person’s conduct was unlawful. Indemnification may be made against judgments, penalties, fines, settlements and reasonable expenses actually incurred by the person in connection with the proceeding, but may be limited or unavailable with respect to certain proceedings. In some instances, indemnification of a director may be mandatory or, upon the application of a director, may be ordered by a court. Reasonable expenses incurred by a director may, under certain circumstances, be paid or reimbursed in advance of a final disposition of a proceeding. Unless limited by its articles of incorporation, a corporation may (or, as the case may be, shall) indemnify and advance expenses to an officer of the corporation to the same extent as to a director under Section 53-11-4.1. Also, unless limited by its articles of incorporation, a corporation has: (1) the power to indemnify and to advance expenses to an employee or agent of the corporation to the same extent that it may indemnify and advance expenses to directors under the statute; and (2) additional power to indemnify and to advance reasonable expenses to an officer, employee or agent who is not a director to such further extent, consistent with law, as may be provided by its articles of incorporation, by-laws, general or specific action of its Board of Directors, or contract.

Section 53-11-4.1 also provides that the indemnification authorized thereunder shall not be deemed exclusive of any rights to which those seeking indemnification may be entitled under the articles of incorporation, the by-laws, an agreement, a resolution of shareholders or directors or otherwise.

Organizational Documents of the New Mexico Corporation

The bylaws of the New Mexico Corporation provide that, to the fullest extent permitted by the New Mexico Business Corporation Act, the New Mexico Corporation shall indemnify any current or former director or officer of the New Mexico Corporation and may, at the discretion of the Board of Directors of the New Mexico Corporation, indemnify any current or former employee, fiduciary or agent of the New Mexico Corporation against expenses, liabilities and losses reasonably incurred or suffered by such person in connection with any action, suit, or proceeding, to which such person is a party or is threatened to be made a party by reason of such person’s current or former position with the New Mexico Corporation, as a director, officer, employee, fiduciary or agent or by reason of the fact that such person is or was serving, at the request of the New Mexico Corporation as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise.personal liability on account thereof.

(j) Industrial Asphalt, LLC and RKH Capital, L.L.C.SCS Materials, LLC are limited liability companies organized under the laws of the State of Texas (collectively, the “Texas Limited Liability Companies”).

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Texas Business Organizations Code

Section 8.002(a) of the Texas Business Organizations Code provides that except as provided by Section 8.002(b), Chapter 8 of the Texas Business Organizations Code does not apply to a (1) general partnership; or (2) limited liability company.

Section 8.002(b) of the Texas Business Organizations Code provides that the governing documents of a general partnership or a limited liability company may adopt provisions of Chapter 8 of the Texas Business Organizations Code or may contain other provisions, which will be enforceable, relating to: (1) indemnification; (2) advancement of expenses; (3) insurance or another arrangement to indemnify or hold harmless a governing person.

Section 101.402 of the Texas Business Organizations Code provides that a limited liability company may indemnify, pay in advance or reimburse expenses incurred by a person, and purchase or procure or establish and maintain insurance or another arrangement to indemnify or hold harmless a person. In Section 101.402 of the Texas Business Organizations Code, a “person” includes a member, manager or officer of a limited liability company or an assignee of a membership interest in the company.

Organizational Documents of Texas Limited Liability Companies

In accordance with the above provisions of the Texas Business Organizations Code, the company agreement of Industrial Asphalt, LLC provides that, to the fullest extent permitted by law, the company shall indemnify and hold harmless each member and manager of the company and its officers, directors, shareholders, managers, members, employees, agents, subsidiaries and assigns from and against any and all losses, claims, demands,

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liabilities, expenses, judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the indemnitee may be involved, or threatened to be involved, as a party or otherwise, which relates to or arises out of the company or its property, business or affairs; provided, however, that an indemnitee shall not be entitled to indemnification under the indemnification provisions of the company agreement with respect to (a) any claim with respect to which the indemnitee has engaged in fraud, willful misconduct, bad faith or gross negligence or (b) any claim initiated by an indemnitee unless that claim (or any part thereof) was brought to enforce that an indemnitee’s rights to indemnification under the company agreement. The company shall pay in advance of the final disposition of any such claim expenses incurred by an indemnitee in defending that claim if, but only if, that indemnitee so requests and delivers to the company of an undertaking by or on behalf of that indemnitee to repay amounts so advanced if it ultimately is determined that the indemnitee is not entitled indemnification under the indemnification provisions of the company agreement.

In accordance with the above provisions of the Texas Business Organizations code, the company agreement of RKH Capital, L.L.C.SCS Materials, LLC provides that the company may indemnify any person who was or is a party defendant or is threatened to be made a party defendant, in any pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the company) by reason of the fact that he or she is or was the member of the company, an employee or agent of the company, or is or was serving at the request of the company, for expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, if the member determines that he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.fullest extent provided by law.

(k) B&H Contracting, L.P., SCS Materials, L.P. and R.K. Hall Construction, Ltd. are limited partnerships formedThe following entity is incorporated under the laws of the State of Texas (collectively, theTexas: Troy Vines, Incorporated (the “Texas Limited Partnerships”Corporation”).

Texas Business Organizations Code

Section 8.003(a) of the Texas Business Organizations Code provides that the certificate of formation of an enterprise may restrict the circumstances under which the enterprise must or may indemnify or may advance expenses to a person under Chapter 8 of the Texas Business Organizations Code.

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Section 8.003(b) of the Texas Business Organizations Code provides that the written partnership agreement of a limited partnership may restrict the circumstances in the same manner as the certificate of formation under Section 8.003(a).

Section 8.004 of the Texas Business Organizations Code provides that except as provided in Section 8.151, a provision for an enterprise to indemnify or advance expenses to a governing person is valid only to the extent it is consistent with Chapter 8 of the Texas Business Organizations Code.

Section 8.051(a) of the Texas Business Organizations Code provides that an enterprise shall indemnify a governing person, former governing person, or delegate against reasonable expenses actually incurred by the person in connection with a proceeding in which the person is a respondent because the person is or was a governing person or delegate if the person is wholly successful, on the merits or otherwise, in the defense of the proceeding.

Section 8.051(b) of the Texas Business Organizations Code provides that a court that determines, in a suit for indemnification, that a governing person, former governing person, or delegate is entitled to indemnification under Section 8.051 shall order indemnification and award to the person the expenses incurred in securing the indemnification.

Section 8.052(a) of the Texas Business Organizations Code provides that on application of a governing person, former governing person, or delegate and after notice is provided as required by the court, a court may order an enterprise to indemnify the person to the extent the court determines that the person is fairly and reasonably entitled to indemnification in view of all the relevant circumstances.

Section 8.052(b) of the Texas Business Organizations Code provides that Section 8.052 applies without regard to whether the governing person, former governing person, or delegate applying to the court satisfies the requirements of Section 8.101, has been found liable (1) to the enterprise; or (2) because the person improperly received a personal benefit, without regard to whether the benefit resulted from an action taken in the person’s official capacity.

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Section 8.052(c) of the Texas Business Organizations Code provides that the indemnification ordered by the court under Section 8.052 is limited to reasonable expenses if the governing person, former governing person, or delegate is found liable (1) to the enterprise; or (2) because the person improperly received a personal benefit, without regard to whether the benefit resulted from an action taken in the person’s official capacity.

Section 8.101(a) of the Texas Business Organizations Code provides that an enterprise may indemnify a governing person, former governing person, or delegate who was, is, or is threatened to be made a respondent in a proceeding to the extent permitted by Section 8.102 if it is determined in accordance with Section 8.103 that: (1) the person: (A) acted in good faith; (B) reasonably believed: (i) in the case of conduct in the person’s official capacity, that the person’s conduct was in the enterprise’s best interests; and (ii) in any other case, that the person’s conduct was not opposed to the enterprise’s best interests; and (C) in the case of a criminal proceeding, did not have a reasonable cause to believe the person’s conduct was unlawful; (2) with respect to expenses, the amount of expenses other than a judgment is reasonable; and (3) indemnification should be paid.

Section 8.101(b) of the Texas Business Organizations Code provides that action taken or omitted by a governing person or delegate with respect to an employee benefit plan in the performance of the person’s duties for a purpose reasonably believed by the person to be in the interest of the participants and beneficiaries of the plan is for a purpose that is not opposed to the best interests of the enterprise.

Section 8.101(c) of the Texas Business Organizations Code provides that action taken or omitted by a delegate to another enterprise for a purpose reasonably believed by the delegate to be in the interest of the other enterprise or its owners or members is for a purpose that is not opposed to the best interests of the enterprise.

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Section 8.101(d) of the Texas Business Organizations Code provides that a person does not fail to meet the standard under Section 8.101(a)(1) solely because of the termination of a proceeding by: (1) judgment; (2) order; (3) settlement; (4) conviction; or (5) a plea of nolo contendere or its equivalent.

Section 8.102(a) of the Texas Business Organizations Code provides that, subject to Section 8.102(b), an enterprise may indemnify a governing person, former governing person, or delegate against: (1) a judgment; and(2)and (2) expenses, other than a judgment, that are reasonable and actually incurred by the person in connection with a proceeding.

Section 8.102(b) of the Texas Business Organizations Code provides that indemnification under Section 8.102 of a person who is found liable to the enterprise or is found liable because the person improperly received a personal benefit: (1) is limited to reasonable expenses actually incurred by the person in connection with the proceeding; (2) does not include a judgment, a penalty, a fine, and an excise or similar tax, including an excise tax assessed against the person with respect to an employee benefit plan; and (3) may not be made in relation to a proceeding in which the person has been found liable for: (A) wilfulwillful or intentional misconduct in the performance of the person’s duty to the enterprise; (B) breach of the person’s duty of loyalty owed to the enterprise; or (C) an act or omission not committed in good faith that constitutes a breach of a duty owed by the person to the enterprise.

Section 8.102(c) of the Texas Business Organizations Code provides that a governing person, former governing person, or delegate is considered to have been found liable in relation to a claim, issue, or matter only if the liability is established by an order, including a judgment or decree of a court, and all appeals of the order are exhausted or foreclosed by law.

Section 8.103(a) of the Texas Business Organizations Code provides that except as provided by Sections 8.103(b) and (c), the determinations required under Section 8.101(a) must be made by: (1) a majority vote of the governing persons who at the time of the vote are disinterested and independent, regardless of whether the governing persons who are disinterested and independent constitute a quorum; (2) a majority vote of a committee of the governing authority of the enterprise if the committee: (A) is designated by a majority vote of the governing persons who at the time of the vote are disinterested and independent, regardless of whether the governing persons who are disinterested and independent constitute a quorum; and (B) is composed solely of one

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or more governing persons who are disinterested and independent; (3) special legal counsel selected by the governing authority of the enterprise, or selected by a committee of the governing authority, by vote in accordance with Section 8.103(a)(1) or Section 8.103(a)(2); (4) the owners or members of the enterprise in a vote that excludes the ownership or membership interests held by each governing person who is not disinterested and independent; or (5) a unanimous vote of the owners or members of the enterprise.

Section 8.103(b) of the Texas Business Organizations Code provides that if special legal counsel determines under Section 8.103(a)(3) that a person meets the standard under Section 8.101(a)(1), the special legal counsel shall determine whether the amount of expenses other than a judgment is reasonable under Section 8.101(a)(2) but may not determine whether indemnification should be paid under Section 8.101(a)(3). The determination whether indemnification should be paid must be made in a manner specified by Section 8.103(a)(1), (2), (4), or (5).

Section 8.103(c) of the Texas Business Organizations Code provides that a provision contained in the governing documents of the enterprise, a resolution of the owners, members, or governing authority, or an agreement that requires the indemnification of a person who meets the standard under Section 8.101(a)(1) constitutes a determination under Section 8.101(a)(3) that indemnification should be paid even though the provision may not have been adopted or authorized in the same manner as the determinations required under Section 8.101(a). The determinations required under Sections 8.101(a)(1) and (2) must be made in a manner provided by Section 8.103 (a)8.103(a).

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Section 8.103(d) of the Texas Business Organizations Code provides that with respect to a limited partnership, a vote of a majority-in-interest of the limited partners in a vote that excludes the interest held by each general partner who is not disinterested and independent constitutes a determination under Section 8.103(a)(4). For purposes of Section 8.103(d), “majority-in-interest” means, with respect to limited partners, limited partners who own more than 50 percent of the current percentage or other interest in the profits of the partnership that is owned by all of the limited partners.

Section 8.104(a) of the Texas Business Organizations Code provides that an enterprise may pay or reimburse reasonable expenses incurred by a present governing person or delegate who was, is, or is threatened to be made a respondent in a proceeding in advance of the final disposition of the proceeding without making the determinations required under Section 8.101(a) after the enterprise receives: (1) a written affirmation by the person of the person’s good faith belief that the person has met the standard of conduct necessary for indemnification under Chapter 8 of the Texas Business Organizations Code; and (2) a written undertaking by or on behalf of the person to repay the amount paid or reimbursed if the final determination is that the person has not met that standard or that indemnification is prohibited by Section 8.102.

Section 8.104(b) of the Texas Business Organizations Code provides that a provision in the governing documents of the enterprise, a resolution of the owners, members, or governing authority, or an agreement that requires the payment or reimbursement permitted under Section 8.104 authorizes that payment or reimbursement after the enterprise receives an affirmation and undertaking described by Section 8.104(a).

Section 8.104(c) of the Texas Business Organizations Code provides that the written undertaking required by Section 8.104(a)(2) must be an unlimited general obligation of the person but need not be secured and may be accepted by the enterprise without regard to the person’s ability to make repayment.

Section 8.104(d) of the Texas Business Organizations Code provides that with respect to a limited partnership, a vote of a majority-in-interest of the limited partners in a vote that excludes the interest held by each general partner who is not disinterested and independent constitutes an authorization under Section 8.104(b). For purposes of Section 8.104(b), “majority-in-interest” means, with respect to limited partners, limited partners who own more than 50 percent of the current percentage or other interest in the profits of the partnership that is owned by all of the limited partners.

Section 8.105(a) of the Texas Business Organizations Code provides that notwithstanding any other provision of Chapter 8 of the Texas Business Organizations Code but subject to Section 8.003 and to the extent consistent with other law, an enterprise may indemnify and advance expenses to a person who is not a governing person, including an officer, employee, or agent, as provided by: (1) the enterprise’s governing documents; (2) general or specific action of the enterprise’s governing authority; (3) resolution of the enterprise’s owners or members; (4) contract; or (5) common law.

Section 8.105(b) of the Texas Business Organizations Code provides that an enterprise shall indemnify an officer to the same extent that indemnification is required under Chapter 8 of the Texas Business Organizations Code for a governing person.

Section 8.105(c) of the Texas Business Organizations Code provides that a person described by Section 8.105(a) may seek indemnification or advancement of expenses from an enterprise to the same extent that a governing person may seek indemnification or advancement of expenses under Chapter 8 of the Texas Business Organizations.

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Section 8.105(d) of the Texas Business Organizations Code provides that notwithstanding any authorization or determination specified in Chapter 8 of the Texas Business Organizations Code, an enterprise may pay or reimburse, in advance of the final disposition of a proceeding and on terms the enterprise considers appropriate, reasonable expenses incurred by: (1) a former governing person or delegate who was, is, or is threatened to be

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made a respondent in the proceeding; or (2) a present or former employee, agent, or officer who is not a governing person of the enterprise and who was, is, or is threatened to be made a respondent in the proceeding.

Section 8.105(e) of the Texas Business Organizations Code provides that a determination of indemnification for a person who is not a governing person of an enterprise, including an officer, employee, or agent, is not required to be made in accordance with Section 8.103.

Section 8.106 of the Texas Business Organizations Code provides that notwithstanding any other provision of Chapter 8 of the Texas Business Organizations Code, an enterprise may pay or reimburse reasonable expenses incurred by a governing person, officer, employee, agent, delegate, or other person in connection with that person’s appearance as a witness or other participation in a proceeding at a time when the person is not a respondent in the proceeding.

Section 8.151(a) of the Texas Business Organizations Code provides that notwithstanding any other provision of Chapter 8 of the Texas Business Organizations Code, an enterprise may purchase or procure or establish and maintain insurance or another arrangement to indemnify or hold harmless an existing or former governing person, delegate, officer, employee, or agent against any liability: (1) asserted against and incurred by the person in that capacity; or (2) arising out of the person’s status in that capacity.

Section 8.151(b) of the Texas Business Organizations Code provides that the insurance or other arrangement established under Section 8.151(a) may insure or indemnify against the liability described by Section 8.151(a) without regard to whether the enterprise otherwise would have had the power to indemnify the person against that liability under Chapter 8 of the Texas Business Organizations Code.

Section 8.151(c) of the Texas Business Organizations Code provides that insurance or another arrangement that involves self-insurance or an agreement to indemnify made with the enterprise or a person that is not regularly engaged in the business of providing insurance coverage may provide for payment of a liability with respect to which the enterprise does not otherwise have the power to provide indemnification only if the insurance or arrangement is approved by the owners or members of the enterprise.

Section 8.151(c-1) of the Texas Business Organizations Code provides that with respect to a limited partnership, a vote of a majority-in-interest of the limited partners constitutes approval of the owners for purposes of Section 8.151(c).

Section 8.151(d) of the Texas Business Organizations Code provides that for the benefit of persons to be indemnified by the enterprise, an enterprise may, in addition to purchasing or procuring or establishing and maintaining insurance or another arrangement: (1) create a trust fund; (2) establish any form of self-insurance, including a contract to indemnify; (3) secure the enterprise’s indemnity obligation by grant of a security interest or other lien on the assets of the enterprise; or (4) establish a letter of credit, guaranty, or surety arrangement.

Section 8.151(e) of the Texas Business Organizations Code provides that insurance or another arrangement established under Section 8.151 may be purchased or procured or established and maintained: (1) within the enterprise; or (2) with any insurer or other person considered appropriate by the governing authority, regardless of whether all or part of the stock, securities, or other ownership interest in the insurer or other person is owned in whole or in part by the enterprise.

Section 8.151(f) of the Texas Business Organizations Code provides that the governing authority’s decision as to the terms of the insurance or other arrangement and the selection of the insurer or other person participating in an arrangement is conclusive. The insurance or arrangement is not voidable and does not subject the governing persons approving the insurance or arrangement to liability, on any ground, regardless of whether the governing persons participating in approving the insurance or other arrangement are beneficiaries of the insurance or arrangement. Section 8.151(f) does not apply in case of actual fraud.

 

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Section 8.152(a) of the Texas Business Organizations Code provides that an enterprise shall report in writing to the owners or members of the enterprise an indemnification of or advance of expenses to a governing person.

Section 8.152(b) of the Texas Business Organizations Code provides that subject to Section 8.152(c), the report must be made with or before: (1) the notice or waiver of notice of the next meeting of the owners or members of the enterprise; or (2) the next submission to the owners or members of a consent to action without a meeting.

Section 8.152(c) of the Texas Business Organizations Code provides that the report must be made not later than the first anniversary of the date of the indemnification or advance.

Organizational Documents of the Texas Limited PartnershipsCorporation

The partnership agreement for eachbylaws of the Texas Limited Partnerships providesCorporation provide that the partners, and their affiliates, officers, directors, employees and agentseach person who was or is a party or is threatened to be made a party to, or was or is otherwise involved in, any action, suit, arbitration, alternative dispute mechanism, inquiry, judicial, administrative or legislative hearing, investigation or any person performing a similar function on behalfother threatened, pending or completed proceeding, whether brought by or in the right of the Texas Corporation or otherwise, including any and all appeals, whether of a civil, criminal, administrative, legislative, investigative or other nature (for purpose of this provision, a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Texas Corporation is or was serving at the request of the Texas Corporation as a director, officer, employee, agent or trustee of another corporation or of a partnership, mayjoint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), or by reason of anything done or not done by him or her in any such capacity, shall be indemnified and held harmless by the partnership from and against any and all judgments, penalties, settlements and reasonable expenses actually incurred by any indemnitee who was, is or is threatened to be made a named defendant or respondent in any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the indemnitee may be involved, or threatened to be involved, as a party or otherwise, by reason of its status as a partner or an affiliate thereof or an officer, director, employee or agent of the partnership, or a partner or affiliate thereof, if the indemnitee acted in good faith and in a manner it reasonably believed to be in, or not opposedTexas Corporation to the best interest offullest extent authorized by the partnership. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that the indemnitee acted in a manner contrary to that specified above.

The partnership agreement for each of the Texas Limited Partnerships further provides that the partnership, through its general partner, in its sole discretion, may purchase and maintain insurance on behalf of the general partner and such other personsTBOC, as the general partner shall determine,same exists or may hereafter be amended, against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in its sole discretion, against any liability that may be asserted against or expense that may be incurred by such person in connection with the partnership’s activities, regardless of whether the partnership would have the power to indemnify such person against such liability under the provisions of the partnership agreement.

The partnership agreement for each of the Texas Limited Partnerships further provides that expenses incurred by an indemnitee in defending any claim, demand, action, suit or proceeding subject to the indemnification provisions of the partnership agreement may, from time to time, be advanced by the partnership prior to the final disposition of such claim, demand, action, suit or proceeding (i) upon written affirmation by the indemnitee of its good faith belief that it has met the standard of conduct necessary for indemnification and (ii) upon receipt by the partnership of any undertakingsettlement by or on behalf of the indemnitee) actually and reasonably incurred by such indemnitee in connection therewith; provided, however, that, except as otherwise required by law or provided in Section 6.3 of the bylaws of the Texas Corporation with respect to proceedings to enforce rights under this provision, the Texas Corporation shall indemnify any such indemnitee in connection with a proceeding, or part thereof, initiated by such indemnitee (including claims and counterclaims, whether such counterclaims are asserted by (i) such indemnitee, or (ii) the Texas Corporation in a proceeding initiated by such indemnitee) only if such proceeding, or part thereof, was authorized or ratified by the Board of Directors.

To receive indemnification under the bylaws of the Texas Corporation, an indemnitee shall submit a written request to the secretary of the Texas Corporation. Such request shall include documentation or information that is necessary to determine the entitlement of the indemnitee to repayindemnification and that is reasonably available to the indemnitee. Upon receipt by the secretary of the Texas Corporation of such amount if ita written request, the entitlement of the indemnitee to indemnification shall be determined thatby the following person or persons who shall be empowered to make such person is not entitled to be indemnified as authorized underdetermination: (i) the indemnification provisionsboard of directors of the partnership agreement. The indemnification providedTexas Corporation by a majority vote of the directors who are not parties to such proceeding, whether or not such majority constitutes a quorum, (ii) a committee of such directors designated by a majority vote of such directors, whether or not such majority constitutes a quorum, (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion to the board of directors, a copy of which shall be delivered to the indemnitee, (iv) the stockholders of the Texas Corporation or (v) in the event that a change of control (as defined below) has occurred, by independent legal counsel in a written opinion to the board of directors, a copy of which shall be delivered to the indemnitee. The determination of entitlement to indemnification provisionsshall be made and, unless a contrary determination is made, such indemnification shall be paid in full by the Texas Corporation not later than 60 days after receipt by the secretary of the partnership agreement isTexas Corporation of a written request for the benefitindemnification. For purposes of the indemnitees and shall notthis provision, a “change of control” will be deemed to create any right to indemnificationhave occurred if the individuals who, as of the effective date of the bylaws, constitute the board of directors (the “incumbent board”) cease for any reason to constitute at least a majority of the board of directors; provided, however, that any individual becoming a director subsequent to such effective date whose election, or nomination for election by the stockholders of the Texas

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Corporation, was approved by a vote of at least a majority of the directors then comprising the incumbent board shall be considered as though such individual were a member of the incumbent board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other persons.actual or threatened solicitation of proxies or consents by or on behalf of a person other than the board of directors.

(l) The following entities areentity is incorporated under the laws of the State of Utah: B&B Resources, Inc., Salt Lake Valley Sand & Gravel, Inc. and Valley Ready Mix, Inc. (collectively, ( the “Utah Corporations”Corporation”).

Utah Revised Business Corporation Act

Section 16-10a-902 (“Section 902”) of the Utah Revised Business Corporation Act provides that a corporation may indemnify any individual who was, is, or is threatened to be made a named defendant or respondent (a “Party”) in any threatened, pending or completed action, suit or proceeding, whether civil,

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criminal, administrative or investigative and whether formal or informal (a “Proceeding”), because he is or was a director of the corporation or is or was serving at its request as a director, officer, partner, trustee, employee, fiduciary or agent of another corporation or other person or of an employee benefit plan against any obligation incurred with respect to a Proceeding, including any judgment, settlement, penalty, fine or reasonable expenses (including attorneys’ fees), incurred in the Proceeding if his conduct was in good faith, he reasonably believed that his conduct was in, or not opposed to, the best interests of the corporation, and, in the case of any criminal Proceeding, he had no reasonable cause to believe his conduct was unlawful; except that (i) indemnification under Section 902 in connection with a Proceeding by or in the right of the corporation is limited to payment of reasonable expenses (including attorneys’ fees) incurred in connection with the Proceeding and (ii) the corporation may not indemnify a director in connection with a Proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation, or in connection with any other Proceeding charging that the director derived an improper personal benefit, whether or not involving action in his official capacity, in which Proceeding he was adjudged liable on the basis that he derived an improper personal benefit.

Section 16-10a-903 (“Section 903”) of the Utah Revised Business Corporation Act provides that, unless limited by its articles of incorporation, a corporation shall indemnify a director who was successful, on the merits or otherwise, in the defense of any Proceeding, or in the defense of any claim, issue or matter in the proceeding, to which he was a Party because he is or was a director of the corporation, against reasonable expenses (including attorneys’ fees) incurred by him in connection with the Proceeding or claim with respect to which he has been successful.

In addition to the indemnification provided by Sections 902 and 903, Section 16-10a-905 (“Section 905”) of the Utah Revised Business Corporation Act provides that, unless otherwise limited by a corporation’s articles of incorporation, a director may apply for indemnification to the court conducting the Proceeding or to another court of competent jurisdiction. On receipt of an application and after giving any notice the court considers necessary, (i) the court may order mandatory indemnification under Section 903, in which case the court shall also order the corporation to pay the director’s reasonable expenses to obtain court-ordered indemnification, or (ii) upon the court’s determination that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances and regardless of whether the director met the applicable standard of conduct set forth in Section 902, the court may order indemnification as the court determines to be proper, except that indemnification with respect to certain Proceedings resulting in a director being found liable for certain actions against the corporation may be limited to reasonable expenses (including attorneys’ fees) incurred by the director.

TheSection 16-10a-904 (“Section 904”) of the Utah Revised Business Corporation Act provides that a corporation may pay for or reimburse the reasonable expenses (including attorneys’ fees) incurred by a director who is a Party to a Proceeding in advance of the final disposition of the Proceeding if (i) the director furnishes the corporation a written affirmation of his good faith belief that he has met the applicable standard of conduct described in Section 902, (ii) the director furnishes to the corporation a written undertaking, executed personally

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or in his behalf, to repay the advance if it is ultimately determined that he did not meet the required standard of conduct, and (iii) a determination is made that the facts then known to those making the determination would not preclude indemnification under Section 904.

Unless a corporation’s articles of incorporation provide otherwise, (i) an officer of the corporation is entitled to mandatory indemnification and is entitled to apply for court ordered indemnification, in each case to the same extent as a director, (ii) the corporation may indemnify and advance expenses to an officer, employee, fiduciary or agent of the corporation to the same extent as a director, and (iii) a corporation may also indemnify and advance expenses to an officer, employee, fiduciary or agent who is not a director to a greater extent than the right of indemnification granted to directors, if not inconsistent with public policy, and if provided for by its articles of incorporation, bylaws, general or specific action of its board of directors or contract.

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Organizational Documents of the Utah CorporationsCorporation

The articles of incorporation and/or bylaws of each of the Utah CorporationsCorporation provide that, to the fullest extent permitted by the Utah Revised Business Corporation Act, the corporationUtah Corporation shall indemnify any current or former director or officer of the corporationUtah Corporation and may, at the discretion of the board of directors, indemnify any current or former employee or agent of the corporationUtah Corporation against all expenses, liabilities and losses reasonably incurred or suffered by him or her in connection with any action, suit or proceeding brought by or in the right of the corporationUtah Corporation or otherwise, to which he or she is a party or is threatened to be made a party by reason of his or her current or former position with the corporationUtah Corporation or by reason of the fact that he or she is or was serving, at the request of the corporation,Utah Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture or other enterprise.

(m) Altaview Concrete, LLC, Kilgore Equipment, LLC, Kilgore Trucking, LLC, Peak Construction Materials, LLC, Peak Management, L.C. and Wasatch Concrete Pumping, LLC are limited liability companies organized under the laws of the State of Utah (collectively, the “Utah Limited Liability Companies”).

Utah Revised Limited Liability Company Act

Sections 48-2c-1802 and 48-2c-1807 of the Utah Revised Limited Liability Company Act empowers a Utah limited liability company to indemnify any manager or other person from and against liability incurred in any proceeding if (i) his conduct was in good faith, (ii) he reasonably believed that his conduct was in, or not opposed to, the company’s best interests, and (iii) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. A company may not indemnify a manager under Section 48-2c-1802 in connection with a proceeding by or in the right of the company in which the manager was adjudged liable to the company or in connection with any other proceeding charging that the manager derived an improper personal benefit, whether or not involving action in his official capacity, in which proceeding he was adjudged liable on the basis that he derived an improper personal benefit.

In accordance with this provision, the Operating Agreements of the Utah Limited Liability Companies each states that the company has the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that the person is or was, or is or was serving at the request of, a manager, member, or authorized representative of the company. Such indemnification shall be against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if the indemnified person acted in good faith and in a manner the indemnified person reasonably believed to be not opposed to the best interests of the company and, with respect to any criminal action or proceeding, had no reasonable cause to believe the indemnified person’s conduct was unlawful.

(n) Wind River Materials, LLC was organized as a limited liability company under the laws of the State of Wyoming (the “Wyoming Limited Liability Company”).

Wyoming Limited Liability Company Act

Section 17-29-408 of the Wyoming Limited Liability Company Act empowers a Wyoming limited liability company to indemnify any member of a member-manager company or any manager of a manager-managed company for any debt, obligation or other liability incurred by such member or manager in the course of the member’s or manager’s activities on behalf of the Wyoming limited liability company, if in making the payment or incurring the debt, obligation or other liability, the member or manager was acting within the scope of his or her duties.

 

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In accordance with this provision, the Operating Agreement of the Wyoming Limited Liability Company states that the company has the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that the person is or was, or is or was serving at the request of, a manager, member, or authorized representative of the company. Such indemnification shall be against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if the indemnified person acted in good faith and in a manner the indemnified person reasonably believed to be not opposed to the best interests of the company and, with respect to any criminal action or proceeding, had no reasonable cause to believe the indemnified person’s conduct was unlawful.

II-21


Item 21. Exhibits and Financial Statement Schedules.

(a) Exhibits

 

Exhibit No.

  

Description

3.1*3.1  Certificate of Formation of Summit Materials, LLC, as amended.amended (incorporated by reference to Exhibit 3.1 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.2*3.2  Amended and Restated Limited Liability Company Agreement of Summit Materials, LLC. (incorporated by reference to Exhibit 3.2 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.3*3.3  Certificate of Incorporation of Summit Materials Finance Corp. (incorporated by reference to Exhibit 3.3 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.4*3.4  By-laws of Summit Materials Finance Corp. (incorporated by reference to Exhibit 3.4 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.5*3.5Amended and Restated Articles of Incorporation of Elam Construction, Inc. (incorporated by reference to Exhibit 3.24 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.6Amended and Restated By-laws of Elam Construction, Inc. (incorporated by reference to Exhibit 3.25 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.7Certificate of Formation of Alcomat, LLC (incorporated by reference to Exhibit 3.7 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.8Limited Liability Company Agreement of Alcomat, LLC (incorporated by reference to Exhibit 3.8 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.9Certificate of Formation of Alleyton Resource Company, LLC (incorporated by reference to Exhibit 3.9 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.10Amended and Restated Limited Liability Company Agreement of Alleyton Resource Company, LLC (incorporated by reference to Exhibit 3.10 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.11Certificate of Formation of Alleyton Services Company, LLC (incorporated by reference to Exhibit 3.11 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.12Limited Liability Company Agreement of Alleyton Services Company, LLC (incorporated by reference to Exhibit 3.12 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.13  Certificate of Formation of Austin Materials, LLC.LLC (incorporated by reference to Exhibit 3.5 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.6*3.14  Limited Liability Company Agreement of Austin Materials, LLC.LLC (incorporated by reference to Exhibit 3.6 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).

II-20


Exhibit No.

Description

3.7*3.15  Certificate of Formation of Continental Cement Company, L.L.C., as amended.amended (incorporated by reference to Exhibit 3.7 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.8*3.16  Amended and Restated Limited Liability Company Agreement of Continental Cement Company, L.L.C. (incorporated by reference to Exhibit 3.8 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.9*3.17  First Amendment to Amended and Restated Limited Liability Company Agreement of Continental Cement Company, L.L.C. (incorporated by reference to Exhibit 3.9 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.10*3.18  Certificate of Formation of Kilgore Companies, LLC, as amended.amended (incorporated by reference to Exhibit 3.10 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.11*3.19  Limited Liability Company Agreement of Kilgore Companies, LLC, as amended.amended (incorporated by reference to Exhibit 3.11 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.12*Certificate of Formation of Norris Quarries, LLC.
3.13*Limited Liability Company Agreement of Norris Quarries, LLC.
3.14*3.20  Certificate of Formation of RK Hall, LLC.LLC (incorporated by reference to Exhibit 3.14 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.15*3.21  Limited Liability Company Agreement of RK Hall, LLC.LLC (incorporated by reference to Exhibit 3.15 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.16*Certificate of Formation of Summit Materials Companies I, LLC, as amended.
3.17*Limited Liability Company Agreement of Summit Materials KY Acquisition LLC, as amended.
3.18*3.22  Certificate of Incorporation of Summit Materials Corporations I, Inc. (incorporated by reference to Exhibit 3.18 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.19*3.23  By-laws of Summit Materials Corporations I, Inc. (incorporated by reference to Exhibit 3.19 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.20*Certificate of Formation of Summit Materials Holdings I, LLC, as amended.
3.21*Limited Liability Company Agreement of Summit Materials Holdings I, LLC, as amended.
3.22*3.24  Certificate of Formation of Summit Materials Holdings II, LLC, as amended.amended (incorporated by reference to Exhibit 3.22 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.23*3.25  Limited Liability Company Agreement of Summit Materials Holdings II, LLC.
3.24*Amended and Restated ArticlesLLC (incorporated by reference to Exhibit 3.23 of Incorporation of Elam Construction, Inc.
3.25*Amended and Restated By-laws of Elam Construction, Inc.Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.26*Certificate of Formation of Summit Materials International, LLC
3.27*Limited Liability Company Agreement of Summit Materials International, LLC
3.28  Articles of Organization of Cornejo & Sons, L.L.C., as amended.amended (incorporated by reference to Exhibit 3.26 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.27*3.29  Amended and Restated Limited Liability Company Operating Agreement of Cornejo & Sons, L.L.C. (incorporated by reference to Exhibit 3.27 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.28*Articles of Organization of Hamm Asphalt, LLC.
3.29*Limited Liability Company Operating Agreement of Hamm Asphalt, LLC.
3.30*3.30  Articles of Incorporation of Hamm, Inc., as amended.amended (incorporated by reference to Exhibit 3.30 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).

 

II-22II-21


Exhibit No.

  

Description

3.31*3.31  By-laws of Hamm, Inc. (incorporated by reference to Exhibit 3.31 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.32*3.32  Articles of Organization of N.R. Hamm Contractor, LLC.LLC (incorporated by reference to Exhibit 3.32 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.33*3.33  Limited Liability Company Operating Agreement of N.R. Hamm Contractor, LLC.LLC (incorporated by reference to Exhibit 3.33 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.34*3.34  Articles of Organization of N.R. Hamm Quarry, LLC.LLC (incorporated by reference to Exhibit 3.34 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.35*3.35  Limited Liability Company Operating Agreement of N.R. Hamm Quarry, LLC.LLC (incorporated by reference to Exhibit 3.35 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.36*3.36  Articles of Incorporation of Bourbon Limestone Company, as amended.amended (incorporated by reference to Exhibit 3.36 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.37*3.37  By-laws of Bourbon Limestone Company.Company (incorporated by reference to Exhibit 3.37 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.38*Articles of Organization of Glass Aggregates, LLC, as amended.
3.39*Limited Liability Company Operating Agreement of Glass Aggregates, LLC.
3.40*3.38  Articles of Organization of Hinkle Contracting Company, LLC.LLC (incorporated by reference to Exhibit 3.40 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.41*3.39  Limited Liability Company Agreement of Hinkle Contracting Company, LLC.LLC (incorporated by reference to Exhibit 3.41 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.42*Articles of Incorporation of Kentucky Hauling, Inc., as amended.
3.43*By-laws of Kentucky Hauling, Inc., as amended.
3.44*Articles of Organization of South Central Kentucky Limestone, LLC.
3.45*Amended and Restated Operating Agreement of South Central Kentucky Limestone, LLC.
3.46*3.40  Articles of Organization of Con-Agg of MO, L.L.C., as amended.amended (incorporated by reference to Exhibit 3.46 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.47*3.41  Second Amended and Restated Operating Agreement of Con-Agg of MO, L.L.C. (incorporated by reference to Exhibit 3.47 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.42*Articles of Organization of Buckhorn Materials, LLC, as amended
3.43*Amended and Restated Operating Agreement of Buckhorn Materials, LLC
3.44Certificate of Formation of Industrial Asphalt, LLC (incorporated by reference to Exhibit 3.56 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.45Company Agreement of Industrial Asphalt, LLC, as amended (incorporated by reference to Exhibit 3.57 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.46*Certificate of Conversion of SCS Materials, LLC
3.47*Company Agreement of SCS Materials, LLC
3.48*  Articles of OrganizationIncorporation of Fischer Quarries, L.L.C.Troy Vines, Incorporated
3.49*  Operating Agreement of Fischer Quarries, L.L.C.
3.50*Articles of Organization of Quarry Properties, L.L.C.
3.51*Operating Agreement of Quarry Properties, L.L.C.
3.52*Articles of Incorporation of Elam Paving, Inc.
3.53*By-laws of Elam Paving, Inc.
3.54*Certificate of Formation of B&H Contracting, L.P.
3.55*Amended and Restated Partnership AgreementBylaws of B&H Contracting, L.P.
3.56*Certificate of Formation of Industrial Asphalt, LLC.
3.57*Company Agreement of Industrial Asphalt, LLC, as amended.
3.58*Certificate of Formation of R.K. Hall Construction, Ltd.
3.59*Second Amended and Restated Partnership Agreement of R.K. Hall Construction, Ltd.
3.60*Certificate of Formation of RKH Capital, L.L.C.
3.61*Second Amended and Restated Company Agreement of RKH Capital, L.L.C.
3.62*Certificate of Limited Partnership of SCS Materials, L.P.
3.63*Second Amended and Restated Partnership Agreement of SCS Materials, L.P.
3.64*Articles of Organization of Altaview Concrete, LLC, as amended.Troy Vines, Incorporated

 

II-23II-22


Exhibit No.

  

Description

3.65*Amended and Restated Operating Agreement of Altaview Concrete, LLC.
3.66*3.50  Amended Articles of Incorporation of B&B Resources, Inc. (incorporated by reference to Exhibit 3.66 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.67*3.51  By-laws of B&B Resources, Inc. (incorporated by reference to Exhibit 3.64 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.68*Articles of Organization of Kilgore Equipment, LLC.
3.69*Operating Agreement of Kilgore Equipment, LLC.
3.70*Articles of Organization of Kilgore Trucking, LLC.
3.71*Operating Agreement of Kilgore Trucking, LLC.
3.72*Articles of Organization of Peak Construction Materials, LLC, as amended.
3.73*Amended and Restated Operating Agreement of Peak Construction Materials, LLC.
3.74*Articles of Organization of Peak Management, L.C.
3.75*Amended and Restated Operating Agreement of Peak Management, L.C.
3.76*Articles of Incorporation of Salt Lake Valley Sand & Gravel, Inc.
3.77*By-laws of Salt Lake Valley Sand & Gravel, Inc.
3.78*Articles of Incorporation of Valley Ready Mix, Inc.
3.79*By-laws of Valley Ready Mix, Inc.
3.80*Articles of Organization of Wasatch Concrete Pumping, LLC, as amended.
3.81*Amended and Restated Operating Agreement of Wasatch Concrete Pumping, LLC.
3.82*Articles of Organization of Wind River Materials, LLC, as amended.
3.83*Operating Agreement of Wind River Materials, LLC.
4.1*4.1  Indenture, dated as of January 30, 2012, among Summit Materials, LLC, Summit Materials Finance Corp., the guarantors named therein and Wilmington Trust, National Association, as trustee.trustee (incorporated by reference to Exhibit 4.1 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
4.2*4.2  First Supplemental Indenture, dated as of March 13, 2012, among Norris Quarries, LLC and Wilmington Trust, National Association, as trustee.
4.3*Form of Note (attached as exhibittrustee (incorporated by reference to Exhibit 4.1)4.2 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
4.4*4.3  Registration Rights Agreement,Second Supplemental Indenture, dated as of January 30, 2012,17, 2014, among Summit Materials, LLC, Summit Materials Finance Corp., the guarantors named therein Citigroup Global Markets Inc.and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.4 filed with Summit Materials, LLC’s Current Report on Form 8-K, filed January 23, 2014 (File No. 333-187556)).
4.4Third Supplemental Indenture, dated as of February 21, 2014, among Alcomat, LLC, Alleyton Resource Company, LLC, Alleyton Services Company, LLC and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.4 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
4.5Fourth Supplemental Indenture, dated as of July 30, 2014, among Buckhorn Materials, LLC and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 of Summit Materials, LLC’s Quarterly Report on Form 10-Q, filed August 6, 2014 (File No. 333-187556)).
4.6Fifth Supplemental Indenture, dated as of September 2, 2014, among Summit Materials International, LLC, Troy Vines, Incorporated and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.3 of Summit Materials, LLC’s Current Report on Form 8-K, filed September 9, 2014 (File No. 333-187556)).
4.7Sixth Supplemental Indenture, dated as of September 8, 2014, among Summit Materials, LLC, Summit Materials Finance Corp., the guarantors named therein and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.4 filed with Summit Materials, LLC’s Current Report on Form 8-K, filed September 9, 2014 (File No. 333-187556)).
4.8Form of 10 12% Senior Note due 2020 (included in Exhibit 4.1).
4.9Registration Rights Agreement, dated as of September 8, 2014, among Summit Materials, LLC, Summit Materials Finance Corp., the guarantors named therein, Merrill Lynch, Pierce, Fenner & Smith Incorporated and the several other initial purchasers.purchasers (incorporated by reference to Exhibit 4.5 filed with Summit Materials, LLC’s Current Report on Form 8-K, filed September 9, 2014 (File No. 333-187556)).
5.1*  Opinion of Simpson Thacher & Bartlett LLP.
5.2*  Opinion of Holland & Hart LLP.
5.3**  Opinion of Kutak Rock LLP.
5.4**  Opinion of Kutak Rock LLP.
5.5*  Opinion of Stites & Harbison PLLC.
5.6*Opinion of Bell Nunnally & Martin LLP.

 

II-24II-23


Exhibit No.

  

Description

10.1**  5.6*Opinion of Kirk Palmer & Thigpen, P.A.
  5.7*Opinion of Winstead PC.
10.1  Credit Agreement, dated as of January 30, 2012, by and among Summit Materials, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc., as joint lead arrangers, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., UBS Securities LLC, Barclays Capital, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc., as joint bookrunners, Bank of America, N.A., as administrative agent, collateral agent and swing line lender, Bank of America, N.A., as letter of credit issuer, and Citigroup Global Markets Inc., as syndication agent.agent (incorporated by reference to Exhibit 10.1 of Summit Materials, LLC’s Amendment No. 1 to the Registration Statement on Form S-4, filed May 3, 2013 (File No. 333-187556)).
10.2*10.2  Amendment No. 1, dated as of February 5, 2013, to the Credit Agreement, dated as of January 30, 2012, by and among Summit Materials, LLC, Bank of America, N.A. as sole lead arranger, and Bank of America, N.A. and Citigroup Global Markets Inc., as joint bookrunners.bookrunners (incorporated by reference to Exhibit 10.2 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.3*10.3Amendment No. 2, dated as of January 16, 2014, to the Credit Agreement, dated as of January 30, 2012, by and among Summit Materials, LLC, the guarantors party thereto, Bank of America, N.A., as administrative agent, collateral agent, L/C issuer and swing line lender and the other parties thereto (incorporated by reference to Exhibit 10.1 filed with Summit Materials, LLC’s Current Report on Form 8-K, filed January 23, 2014 (File No. 333-187556)).
10.4  Tranche A Revolving Credit Commitment Conversion Agreement, dated as of February 11, 2013, under the Credit Agreement, dated as of January 30, 2012, among Summit Materials, LLC, the guarantors party thereto, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement, Bank of America, N.A., as administrative agent, collateral agent, L/C issuer and swing line lender and the other parties thereto.thereto (incorporated by reference to Exhibit 10.3 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.4*10.5  Security Agreement, dated as of January 30, 2012, by and among the grantors identified therein and Bank of America, N.A., as collateral agent.agent (incorporated by reference to Exhibit 10.4 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.5*†10.6Acquisition Agreement, dated as of December 5, 2013, among Alleyton Resource Corporation, Colorado Gulf, LP, Texas CGC, LLC, Barten Shepard Investments, LP, TBGSI Corp., the individuals signatory thereto and Summit Materials, LLC. (incorporated by reference to Exhibit 10.6 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.7Amendment dated January 14, 2014, to Acquisition Agreement, dated as of December 5, 2013, among Alleyton Resource Corporation, Colorado Gulf, LP, Texas CGC, LLC, Barten Shepard Investments, LP, TBGSI Corp., the individuals signatory thereto and Summit Materials, LLC. (incorporated by reference to Exhibit 10.7 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.8†Form of Management Interest Subscription Agreement for executive officers (incorporated by reference to Exhibit 10.8 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.9†Form of Management Interest Subscription Agreement for directors (incorporated by reference to Exhibit 10.9 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).

II-24


Exhibit No.

Description

10.10†  Employment Agreement, dated July 30, 2009, by and between Summit Materials Holdings L.P. and Thomas Hill.W. Hill (incorporated by reference to Exhibit 10.5 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.6*†10.11†  Employment Agreement, dated December 29, 2011, by and between Summit Materials Holdings L.P. and Douglas Rauh.C. Rauh (incorporated by reference to Exhibit 10.6 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.12†Employment Agreement, dated November 11, 2013, by and between Summit Materials Holdings L.P. and Kevin A. Gill (incorporated by reference to Exhibit 10.12 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.13†Employment Agreement, dated May 20, 2013, by and between Summit Materials Holdings L.P. and Julio Ramirez (incorporated by reference to Exhibit 10.7 Summit Materials, LLC’s Registration Statement on Form S-4, filed May 24, 2013 (File No. 333-187556)).
10.14†Agreement and Release between Summit Materials Holdings L.P. and Julio Ramirez, Chief Financial Officer (incorporated by reference to Exhibit 10.1 of Summit Materials, LLC’s Quarterly Report on Form 10-Q, filed November 6, 2013 (File No. 333-187556)).
10.15†Compensation Arrangement between Summit Materials Holdings L.P. and John Murphy, Interim Chief Financial Officer (incorporated by reference to Exhibit 10.2 of Summit Materials, LLC’s Quarterly Report on Form 10-Q, filed November 6, 2013 (File No. 333-187556)).
10.16†Employment Agreement, dated as of December 3, 2013, between Summit Materials Holdings L.P. and Brian J. Harris (incorporated by reference to Exhibit 10.1 of Summit Materials, LLC’s Current Report on Form 8-K/A, filed December 4, 2013 (File No. 333-187556)).
12*  Computation of Ratio of Earnings to Fixed Charges.Charges
16*  Letter regarding change in certifying accountant.
21*21  Subsidiaries of Summit Materials, LLC.LLC (incorporated by reference to Exhibit 21 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
23.1**  Consent of KPMG LLP, Independent Registered Public Accounting Firm.
23.2**  Consent of KPMG LLP, Independent Registered Public Accounting Firm.
23.3**  Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.
23.4**  Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.
23.5**Consent of Allen, Gibbs & Houlik, L.C., Independent Registered Public Accounting Firm.
23.6**Consent of Wisan, Smith, Racker & Prescott, LLP, Independent Registered Public Accounting Firm.
23.7**Consent of CliftonLarsonAllen LLP, Independent Registered Public Accounting Firm.
23.8**Consent of Perryman Chaney Russell, LLP, Independent Auditors.
23.9*  Consent of Simpson Thacher & Bartlett LLP (included as part of its opinion filed as Exhibit 5.1 hereto).
23.10*23.6*  Consent of Holland & Hart LLP (included as part of its opinion filed as Exhibit 5.2 hereto).
23.11**23.7*  Consent of Kutak Rock LLP (included as part of its opinion filed as Exhibit 5.3 hereto).
23.12**23.8*  Consent of Kutak Rock LLP (included as part of its opinion filed as Exhibit 5.4 hereto).
23.13*23.9*  Consent of Stites & Harbison PLLC (included as part of its opinion filed as Exhibit 5.5 hereto).

II-25


Exhibit No.23.10*

Description

23.14*  Consent of Bell NunnallyKirk Palmer & Martin LLPThigpen, P.A. (included as part of its opinion filed as Exhibit 5.6 hereto).
23.11*Consent of Winstead PC (included as part of its opinion filed as Exhibit 5.7 hereto).
24*  Power of Attorney (included in signature pages of this registration statement).
25.1*  Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wilmington Trust, National Association as trustee under the Indenture dated January 30, 2013, among Summit Materials, LLC, Summit Materials Finance Corp.,governing the guarantors named therein and Wilmington Trust, National Association, as trustee.10 12% Senior Notes due 2020.

II-25


Exhibit No.

Description

99.1* Form of Letter of Transmittal.
99.2* Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.3* Form of Letter to Clients.
99.4* Form of Notice of Guaranteed Delivery.
101.INS**XBRL Instance Document.
101.SCH**XBRL Taxonomy Extension Schema Document.
101.CAL**XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**XBRL Taxonomy Extension Definitions Linkbase Document.
101.LAB**XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**XBRL Taxonomy Extension Presentation Linkbase Document.

 

*Previously filed.Filed herewith.
**Filed herewith.These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.
Management contract or compensatory plan or arrangement.

Item 22. Undertakings.

(a) Each of the undersigned registrants hereby undertakes:

(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

(3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;

(4) that, for the purpose of determining liability under the Securities Act to any purchaser, if the registrants are subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration

II-26


statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a

II-26


registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use; and

(5) that, for the purpose of determining liability of the registrants under the Securities Act to any purchaser in the initial distribution of the securities, each of the undersigned registrants undertakes that in a primary offering of securities of the undersigned registrants pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrants will be sellers to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) Each of the undersigned registrants hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(c) Each of the undersigned registrants hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

(d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or controlling persons of each of the registrants pursuant to the foregoing provisions, or otherwise, each of the registrants has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person of the registrants in connection with the securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

II-27


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington, D.C.,Denver, State of Colorado, on May 3, 2013.September 26, 2014.

 

SUMMIT MATERIALS, LLC

By:

 

SUMMIT MATERIALS

INTERMEDIATE HOLDINGS,Summit Materials Intermediate Holdings, LLC, its Sole Member

 

By: Summit Materials Holdings, LLC,

its sole memberSole Member

 

By: Summit Materials Holdings L.P.,

its sole memberSole Member

 

By: Summit Materials Holdings GP, Ltd.,

its general partnerGeneral Partner (the “Parent”“Parent GP”)

 

By: /s/ THOMAS HILLThomas W. Hill

Name: Thomas W. Hill

Title: PresidentChief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

 

Title(s)

 

Date

/s/ THOMAS HILLThomas W. Hill

Thomas W. Hill

 

President and Chief
Executive Officer (Principal

(Principal Executive Officer);

Director of Parent GP

 May 3, 2013September 26, 2014

*/s/ Brian J. Harris

John MurphyBrian J. Harris

 Interim

Chief Financial Officer

(Principal Financial
and Accounting Officer);

of Parent GP

September 26, 2014

Howard L. Lance

Director of Parent GP 

May 3, 2013

September 26, 2014

 

II-28


Signature

 

Title(s)

 

Date

*/s/ John R. Murphy

Howard LanceJohn R. Murphy

 Director of Parent GP May 3, 2013September 26, 2014

*/s/ Neil P. Simpkins

Neil P. Simpkins

 Director of Parent GP May 3, 2013September 26, 2014

*/s/ Ted A. Gardner

Ted A. Gardner

 Director of Parent GP May 3, 2013September 26, 2014

*/s/ Julia C. Kahr

Julia C. Kahr

 Director of Parent GP May 3, 2013
*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-29


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington, D.C.,Denver, State of Colorado, on May 3, 2013.September 26, 2014.

 

SUMMIT MATERIALS FINANCE CORP.
By: 

/s/ DAPHNE TONGThomas W. Hill

 Name: Daphne TongThomas W. Hill
 Title:President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

 

Title

 

Date

/s/ DAPHNE TONGThomas W. Hill

Daphne TongThomas W. Hill

 

President, (PrincipalChief Executive Officer and Director

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*/s/ Brian J. Harris

John R. MurphyBrian J. Harris

 Treasurer (Principal

Chief Financial Officer

(Principal Financial and Accounting Officer)

 May 3, 2013September 26, 2014

*/s/ Julia C. Kahr

Thomas HillJulia C. Kahr

 Director May 3, 2013September 26, 2014

*/s/ Neil P. Simpkins

Neil P. Simpkins

 Director May 3, 2013September 26, 2014

II-30


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Grand Junction, State of Colorado, on September 26, 2014.

ELAM CONSTRUCTION, INC.
By:

/s/ Todd Bauer

Name: Todd Bauer
Title: President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

*/s/ Todd Bauer

Julia KahrTodd Bauer

President

(Principal Executive Officer)

September 26, 2014

/s/ Aly Blanchard

Aly Blanchard

Treasurer

(Principal Financial and Accounting Officer)

September 26, 2014

/s/ M. Shane Evans

M. Shane Evans

  Director May 3, 2013September 26, 2014

/s/ Jason T. Kilgore

Jason T. Kilgore

DirectorSeptember 26, 2014

/s/ Clint Pulley

Clint Pulley

DirectorSeptember 26, 2014

II-31


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Richmond, State of Texas, on September 26, 2014.

ALCOMAT, LLC

By:Alleyton Resource Company, LLC, its Sole Member
By: Summit Materials, LLC, its Sole Member

By: /s/ Thomas W. Hill

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Johnny Cook

Johnny Cook

President

(Principal Executive Officer)

September 26, 2014

/s/ John McKirahan

John McKirahan

Treasurer

(Principal Financial and Accounting Officer)

September 26, 2014

II-32


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Richmond, State of Texas, on September 26, 2014.

ALLEYTON RESOURCE COMPANY, LLC
By:Summit Materials, LLC, its Sole Member

By: /s/ Thomas W. Hill

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Bryan Kalbfleisch

Bryan Kalbfleisch

President

(Principal Executive Officer)

September 26, 2014

/s/ John McKirahan

John McKirahan

Treasurer

(Principal Financial and Accounting Officer)

September 26, 2014

II-33


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Richmond, State of Texas, on September 26, 2014.

ALLEYTON SERVICES COMPANY, LLC
By:    Alcomat, LLC, its Sole Member
*By: /s/ JENNIFER ROSE

By: Alleyton Resource Company, LLC,

its Sole Member

 Name: Jennifer RoseBy: Summit Materials, LLC, its Sole Member
 

By: /s/ Thomas W. Hill

Name: Thomas W. Hill

Title: Attorney-in-FactPresident and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Bryan Kalbfleisch

Bryan Kalbfleisch

President

(Principal Executive Officer)

September 26, 2014

/s/ John McKirahan

John McKirahan

Treasurer

(Principal Financial and Accounting Officer)

September 26, 2014

 

II-30II-34


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Austin, State of Texas, on May 3, 2013.September 26, 2014.

 

AUSTIN MATERIALS, LLC
By: 

SUMMIT MATERIALS

COMPANIES I,Summit Materials, LLC, its Sole Member

 

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

 

By: /s/ THOMAS HILLThomas W. Hill

 

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

*

/s/ John Ramming

John Ramming

  

President (Principal

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*/s/ Chase Vernieuw

Clint PulleyChase Vernieuw

  

Treasurer (Principal

(Principal Financial and Accounting Officer)

 May 3, 2013
*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-31II-35


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chesterfield, State of Missouri, on May 3, 2013.September 26, 2014.

 

CONTINENTAL CEMENT COMPANY, L.L.C.
By: 

/s/ THOMAS BECKThomas A. Beck

 Name: Thomas A. Beck
 Title: President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

 

Title

 

Date

/s/ THOMAS BECKThomas A. Beck

Thomas A. Beck

 

President and Director (Principal

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*/s/ Mark Strieker

Mark Strieker

 

Vice President of Finance and Administration (Principal

(Principal Financial and Accounting Officer)

 May 3, 2013September 26, 2014

*/s/ Thomas W. Hill

Thomas W. Hill

 Director May 3, 2013September 26, 2014

*/s/ Julia C. Kahr

Julia C. Kahr

 Director May 3, 2013September 26, 2014

*/s/ Michael J. Brady

Michael J. Brady

 Director May 3, 2013September 26, 2014

*/s/ Damian J. Murphy

Damian J. Murphy

 Director May 3, 2013September 26, 2014

II-36


Signature

Title

Date

*/s/ Michael K. Farmer

Michael K. Farmer

 Director May 3, 2013September 26, 2014

*/s/ Elliot E. Farmer

Elliot E. Farmer

 Director May 3, 2013September 26, 2014
*By: 

/s/ R. Michael Johnson

R. Michael Johnson

 /s/ JENNIFER ROSEDirector 
Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-32II-37


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.September 26, 2014.

 

KILGORE COMPANIES, LLC
By: 

SUMMIT MATERIALS

COMPANIES I,Summit Materials, LLC, its Sole Member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

 

By: /s/ THOMAS HILLThomas W. Hill

 

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

*/s/ Jason T. Kilgore

Jason T. Kilgore

  

President (Principal

(Principal Executive Officer)

 

May 3, 2013

September 26, 2014

*/s/ Brian Hall

Brian Hall

  

Treasurer (Principal

(Principal Financial and Accounting Officer)

 

May 3, 2013

*By:

/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

September 26, 2014

 

II-33II-38


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Colombia, State of Missouri, on May 3, 2013.

NORRIS QUARRIES, LLC
By:

CON-AGG OF MO, LLC, its Sole Member

By: Summit Materials Companies, I, LLC,

its sole member

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

*

George Barnes

General Manager (Principal Executive Officer)

May 3, 2013

*

C. Scott Anderson

Treasurer (Principal
Financial and Accounting Officer)

May 3, 2013

*By:

/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-34


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Texas, on May 3, 2013.September 26, 2014.

 

RK HALL, LLC

By:

 

SUMMIT MATERIALS

COMPANIES I,Summit Materials, LLC, its Sole Member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

 

By: /s/ THOMAS HILLThomas W. Hill

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

*/s/ Robert Hall

Robert Hall

  President (Principal Executive Officer) 

May 3, 2013

September 26, 2014

*/s/ Lex Huie

Lex Huie

  

Vice President and Treasurer (Principal

(Principal Financial and Accounting Officer)

 

May 3, 2013

*By:

/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

September 26, 2014

 

II-35II-39


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington, D.C.,Denver, State of Colorado, on May 3, 2013.September 26, 2014.

 

SUMMIT MATERIALS COMPANIESCORPORATIONS I, LLCINC.
By: SUMMIT MATERIALS HOLDINGS I, LLC, its Sole Member

/s/ Michael J. Brady

 By: Summit Materials, LLC, its sole member
Name: Michael J. Brady
 

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ THOMAS HILL
Michael J. Brady

Thomas HillMichael J. Brady

  

President (Principaland Director

(Principal Executive Officer)

 

May 3, 2013

September 26, 2014

*/s/ Jennifer Rose

John MurphyJennifer Rose

  Interim Chief Financial Officer (Principal

Treasurer

(Principal Financial and Accounting Officer)

 

May 3, 2013

September 26, 2014

/s/ Anya Fonina

Anya Fonina

DirectorSeptember 26, 2014
*By:

/s/ Anthony Keenan

Anthony Keenan

  /s/ JENNIFER ROSE
Director Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-36II-40


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington, D.C.,Denver, State of Colorado, on May 3, 2013.September 26, 2014.

 

SUMMIT MATERIALS CORPORATIONS I, INC.HOLDINGS II, LLC
By: /s/ THOMAS HILLSummit Materials, LLC, its Sole Member
 Name:

By: /s/ Thomas W. Hill

 

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ THOMAS HILL
Thomas W. Hill

Thomas Hill

  

President (Principal

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*/s/ Jennifer Rose

John MurphyJennifer Rose

  

Interim Chief Financial OfficerVice President and Corporate Controller

(Principal Financial and Accounting Officer)

 

May 3, 2013

*

Michael Brady

Director

May 3, 2013

*

Anthony Keenan

Director

May 3, 2013

*

Anya Fonina

Director

May 3, 2013

*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-37II-41


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington, D.C.,Denver, State of Colorado, on May 3, 2013.September 26, 2014.

 

SUMMIT MATERIALS HOLDINGS I,INTERNATIONAL, LLC

By:

 

SUMMIT MATERIALS HOLDINGS I,Summit Materials, LLC, its Sole Member

By: Summit Materials, LLC, its sole member
 

By: /s/ THOMAS HILLThomas W. Hill

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ THOMAS HILL
Thomas W. Hill

Thomas W. Hill

  

President (Principal

(Principal Executive Officer)

May 3, 2013

*

John Murphy

 Interim Chief Financial Officer (Principal Financial and Accounting Officer)

May 3, 2013

*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-Fact

II-38


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington, D.C., on May 3, 2013.

SUMMIT MATERIALS HOLDINGS II, LLC
By:SUMMIT MATERIALS, LLC, its sole member

BY: /S/ THOMAS HILL

Name: Thomas Hill

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

September 26, 2014

/s/ THOMAS HILLJennifer Rose

Thomas HillJennifer Rose

  

Vice President (Principal Executive Officer)

May 3, 2013

*and Corporate Controller

John Murphy

Interim Chief Financial Officer (Principal(Principal Financial and Accounting Officer)

 

May 3, 2013

*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-39II-42


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Grand Junction, State of Colorado, on May 3, 2013.

ELAM CONSTRUCTION, INC.
By:/s/ LANE BYBEE
Name: Lane Bybee
Title: Chief Executive Officer

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ LANE BYBEE

Lane Bybee

Chief Executive Officer (Principal Executive Officer)

May 3, 2013

*

Chase Vernieuw

Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)

May 3, 2013

*

Shane Evans

Director

May 3, 2013

*

Anthony Keenan

Director

May 3, 2013

*

Anya Fonina

Director

May 3, 2013

*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-Fact

II-40


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Wichita, State of Kansas, on May 3, 2013.September 26, 2014.

 

CORNEJO & SONS, L.L.C.
By: 

SUMMIT MATERIALS

COMPANIES I,Summit Materials, LLC, its Sole Member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

 

By: /s/ THOMAS HILLThomas W. Hill

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

*/s/ Georges Ausseil

Ronald CornejoGeorges Ausseil

  Chief

President

(Principal Executive Officer (Principal Executive Officer)

 

May 3, 2013

September 26, 2014

*/s/ Amanda Mohr

C. Scott AndersonAmanda Mohr

  

Treasurer (Principal

(Principal Financial and Accounting Officer)

 

May 3, 2013

*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

September 26, 2014

 

II-41II-43


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Perry, State of Kansas, on May 3, 2013.September 26, 2014.

 

HAMM, ASPHALT, LLCINC.
By: HAMM, INC., its Sole Member

By: /s/ GARY HAMM/s/ Gary E. Hamm

 

Name: Gary E. Hamm

Title: President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ GARY HAMMGary E. Hamm

Gary E. Hamm

  

President (Principal

(Principal Executive Officer)

 

May 3, 2013

September 26, 2014

*/s/ Amanda Mohr

C. Scott AndersonAmanda Mohr

  

Treasurer (Principaland Director

(Principal Financial and Accounting Officer)

 

May 3, 2013

September 26, 2014

/s/ Thomas W. Hill

Thomas W. Hill

DirectorSeptember 26, 2014
*By:

/s/ Michael J. Brady

Michael J. Brady

  /s/ JENNIFER ROSEDirectorSeptember 26, 2014

Name: Jennifer Rose/s/ Damian J. Murphy

Title: Attorney-in-FactDamian J. Murphy

DirectorSeptember 26, 2014

 

II-42II-44


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Perry, State of Kansas, on May 3, 2013.September 26, 2014.

 

N.R. HAMM INC.CONTRACTOR, LLC
By: /s/ GARY HAMMHamm, Inc., its Sole Member
 

By: /s/ Gary E. Hamm

Name: Gary E. Hamm

Title: President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ GARY HAMM
Gary E. Hamm

Gary E. Hamm

  

President (Principal

(Principal Executive Officer)

 

May 3, 2013

September 26, 2014

*/s/ Amanda Mohr

C. Scott AndersonAmanda Mohr

  

Treasurer and Director (Principal

(Principal Financial and Accounting Officer)

May 3, 2013

*

Thomas Hill

 Director

May 3, 2013

*

Michael Brady

Director

May 3, 2013

*

Anthony Keenan

Director

May 3, 2013

*

N. Rodney Hamm

Director

May 3, 2013

*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

September 26, 2014

 

II-43II-45


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Perry, State of Kansas, on May 3, 2013.

N.R. HAMM CONTRACTOR, LLC
By:Hamm, Inc., its Sole Member

By: /s/ GARY HAMM

Name: Gary Hamm

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ GARY HAMM

Gary Hamm

President (Principal Executive Officer)

May 3, 2013

*

C. Scott Anderson

Treasurer (Principal Financial and Accounting Officer)

May 3, 2013

*By:

/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-44


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Perry, State of Kansas, on May 3, 2013.September 26, 2014.

 

N.R. HAMM QUARRY, LLC
By: Hamm, Inc., its Sole Member
 

By: /s/ GARY HAMMGary E. Hamm

Name: Gary E. Hamm

Title: President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ GARY HAMM
Gary E. Hamm

Gary E. Hamm

  

President (Principal

(Principal Executive Officer)

 

May 3, 2013

September 26, 2014

*/s/ Amanda Mohr

C. Scott AndersonAmanda Mohr

  

Treasurer (Principal

(Principal Financial and Accounting Officer)

 

May 3, 2013

*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

September 26, 2014

 

II-45II-46


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Kentucky, on May 3, 2013.September 26, 2014.

 

BOURBON LIMESTONE COMPANY
By: 

/s/ THOMAS HINKLEThomas Hinkle

 Name: Thomas Hinkle
 Title: President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ THOMAS HINKLEThomas Hinkle

Thomas Hinkle

  

President and Director (Principal

(Principal Executive Officer)

 

May 3, 2013

September 26, 2014

*/s/ Steve Hullett

Steve Hullett

  Chief Financial Officer, Secretary

Treasurer and Director (Principal

(Principal Financial and Accounting Officer)

 

May 3, 2013

September 26, 2014

*/s/ Douglas C. Rauh

Anthony KeenanDouglas C. Rauh

  Director 

May 3, 2013

*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

September 26, 2014

 

II-46II-47


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Kentucky, on May 3, 2013.September 26, 2014.

 

GLASS AGGREGATES,HINKLE CONTRACTING COMPANY, LLC
By: 

/s/ LARRY GLASS

Summit Materials, LLC, its Sole Member
 

By: /s/ Thomas W. Hill

Name: Larry Glass

Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ LARRY GLASS

Larry Glass

President (Principal Executive Officer)May 3, 2013

*

Steve Hullett

Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)May 3, 2013

*

Michael Brady

Vice President and ManagerMay 3, 2013

*

Anthony Keenan

Assistant Secretary and ManagerMay 3, 2013

*

Thomas Hinkle

ManagerMay 3, 2013
*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-Fact

II-47


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Kentucky, on May 3, 2013.

HINKLE CONTRACTING COMPANY, LLC
By:

SUMMIT MATERIALS

COMPANIES I, LLC, its Sole Member

By: Summit Materials Holdings I, LLC,
its sole member
By: Summit Materials, LLC,
its sole member

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

*

Thomas Hinkle

President (Principal Executive Officer)May 3, 2013

*

Steve Hullett

Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)May 3, 2013
*By:

/s/ JENNIFER ROSE

Name: Jennifer Rose
Title: Attorney-in-Fact

II-48


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Kentucky, on May 3, 2013.

KENTUCKY HAULING, INC.
By:/s/ THOMAS HINKLE
Name: Thomas Hinkle
Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ THOMAS HINKLE

Thomas Hinkle

President and Director (Principal Executive Officer)May 3, 2013

*

Steve Hullett

Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)May 3, 2013

*

Michael Brady

DirectorMay 3, 2013

*

Anthony Keenan

DirectorMay 3, 2013

*

Doug Rauh

DirectorMay 3, 2013
*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-49


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Kentucky, on May 3, 2013.

SOUTH CENTRAL KENTUCKY LIMESTONE, LLC
By:GLASS AGGREGATES, LLC, its Sole Member

By: /s/ LARRY GLASS

Name: Larry Glass

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

*

Thomas Hinkle

  

President

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*/s/ Steve Hullett

Steve Hullett

  

Chief Financial OfficerTreasurer

(Principal Financial and Accounting Officer)

 May 3, 2013
*By:

/s/ JENNIFER ROSE

Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-50II-48


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbia, State of Missouri, on May 3, 2013.September 26, 2014.

 

CON-AGG OF MO, L.L.C.
By: 

SUMMIT MATERIALS
COMPANIES I,Summit Materials, LLC, its Sole Member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

 

By: /s/ THOMAS HILLThomas W. Hill

 

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

*
/s/ George A. Barnes

George A. Barnes

  

President

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*
/s/ Amanda Mohr

C. Scott AndersonAmanda Mohr

  

Treasurer (Principal

(Principal Financial and Accounting Officer)

 May 3, 2013
*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-51II-49


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbia,Jefferson, State of Missouri,South Carolina, on May 3, 2013.September 26, 2014.

 

FISCHER QUARRIES, L.L.C.BUCKHORN MATERIALS, LLC
By: 

CON-AGG OF MO, L.L.C.,Hinkle Contracting Company, LLC, its Sole Member

By: Summit Materials Companies I, LLC,
its sole member
By: Summit Materials Holdings I, LLC,
its sole member
 By: Summit Materials, LLC,
its sole memberSole Member
 

By: /s/ THOMAS HILLThomas W. Hill

 

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ THOMAS HILL
Thomas Hinkle

Thomas HillHinkle

  

President (Principal

(Principal Executive

Officer)

 May 3, 2013September 26, 2014

*
/s/ Steve Hullett

C. Scott AndersonSteve Hullett

  

Treasurer (Principal

(Principal Financial and

Accounting Officer)

 May 3, 2013
*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-52II-50


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbia,Austin, State of Missouri,Texas, on May 3, 2013.September 26, 2014.

 

QUARRY PROPERTIES, L.L.C.INDUSTRIAL ASPHALT, LLC
By: /s/ DAMIAN MURPHYAustin Materials, LLC, its Sole Member
 Name: By: Summit Materials, LLC, its Sole Member
Damian Murphy
 Title:

By: /s/ Thomas W. Hill

 

RegionalName: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/s/ DAMIAN MURPHY
John Ramming

Damian MurphyJohn Ramming

  

Regional President and Manager

(Principal Executive Officer)

 May 3, 2013

*

C. Scott Anderson

Treasurer (Principal Financial and Accounting Officer)May 3, 2013

*

Michael Brady

ManagerMay 3, 2013

*

Anya Fonina

ManagerMay 3, 2013
*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-Fact

II-53


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Grand Junction, State of Colorado, on May 3, 2013.

ELAM PAVING, INC.
By:/s/ LANE BYBEE
Name: Lane Bybee
Title:Chief Executive Officer

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

September 26, 2014

/s/ LANE BYBEE

Lane Bybee

Chief Executive Officer (Principal Executive Officer)May 3, 2013

*
Chase Vernieuw

Chase Vernieuw

  Chief Financial Officer and Secretary (Principal

Treasurer

(Principal Financial and Accounting Officer)

May 3, 2013

*

Shane Evans

 DirectorMay 3, 2013

*

Anthony Keenan

DirectorMay 3, 2013

*

Anya Fonina

DirectorMay 3, 2013
*By: 

/s/ JENNIFER ROSE

Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-54II-51


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Texas, on May 3, 2013.September 26, 2014.

 

B&H CONTRACTING, L.P.SCS MATERIALS, LLC
By: RKH CAPITAL, L.L.C.,RK Hall, LLC, its General PartnerSole Member
 By: RK Hall,Summit Materials, LLC, its sole memberSole Member
 

By: Summit Materials Companies I, LLC,

its sole member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

By: /s/ THOMAS HILL
Thomas W. Hill

Name: Thomas W. Hill

Title: President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

*
/s/ Robert Hall

Robert Hall

  

President

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*
/s/ Lex Huie

Lex Huie

  

Vice President and Treasurer

(Principal Financial and Accounting Officer)

 May 3, 2013
*By: /s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-FactSeptember 26, 2014

 

II-55II-52


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Austin,Midland, State of Texas, on May 3, 2013.September 26, 2014.

 

INDUSTRIAL ASPHALT, LLCTROY VINES, INCORPORATED
By: /s/ JOHN RAMMING

By: /s/ John Malcolm

Name:

John Ramming
Malcolm

Title:

General Manager President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ JOHN RAMMING

John Ramming

General Manager

(Principal Executive Officer)

May 3, 2013

*

Clint Pulley

Treasurer and Manager (Principal Financial and Accounting Officer)May 3, 2013

*

Anya Fonina

ManagerMay 3, 2013

*

Shane Evans

ManagerMay 3, 2013
*By: 

/s/ JENNIFER ROSE

Name: Jennifer Rose
Title: Attorney-in-Fact

II-56


SIGNATURES

Pursuant to the requirementsPower of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Texas, on May 3, 2013.

R.K. HALL CONSTRUCTION, LTD.
By:RKH CAPITAL, L.L.C., its General Partner
By: RK Hall, LLC, its sole member

By: Summit Materials Companies I, LLC,

its sole member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

Pursuant to the requirements of the Securities Act, this Registration StatementAttorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

*

Robert Hall

President
(Principal Executive Officer)

May 3, 2013

*

Lex Huie

Vice President and Treasurer (Principal Accounting and Financial Officer)

May 3, 2013
*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-Fact

II-57


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Texas, on May 3, 2013.

RKH CAPITAL, L.L.C.
By:/s/ ROBERT HALL
Name: Robert Hall
Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ ROBERT HALL
John Malcolm

Robert HallJohn Malcolm

  

President
(Principal Executive Officer)

May 3, 2013

*

Lex Huie

Vice President and Treasurer

(Principal Accounting and Financial Officer)

May 3, 2013
*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-58


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Paris, State of Texas, on May 3, 2013.

SCS MATERIALS, L.P.
By:RKH CAPITAL, L.L.C., its General Partner

By: Summit Materials Companies I, LLC,

its sole member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

*

Robert Hall

President

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*/s/ Chase Vernieuw

Lex HuieChase Vernieuw

  

Vice PresidentTreasurer

(Principal Financial and Treasurer (Principal Accounting and Financial Officer)

 May 3, 2013September 26, 2014

/s/ M. Shane Evans

M. Shane Evans

DirectorSeptember 26, 2014
*By:

/s/ Clint Pulley

Clint Pulley

  /s/ JENNIFER ROSEDirectorSeptember 26, 2014
Name: Jennifer Rose

/s/ Anthony Keenan

Anthony Keenan

  Title: Attorney-in-FactDirectorSeptember 26, 2014

 

II-59II-53


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.September 26, 2014.

 

ALTAVIEW CONCRETE, LLCB&B RESOURCES, INC.
By: KILGORE COMPANIES, LLC, its Sole Member

/s/ Jason T. Kilgore

 

By: Summit Materials Companies I, LLC,

its sole member

Name: Jason T. Kilgore
 

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Anne Lee Benedict and Jennifer Rose, and each of them, the true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign this Registration Statement and any and all amendments (including post-effective amendments) to this Registration Statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

*

Jason Kilgore

President (Principal Executive Officer)May 3, 2013

*

Clint Pulley

Assistant Treasurer (Principal Accounting and Financial Officer)May 3, 2013
*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-Fact

II-60


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

B&B RESOURCES, INC.
By:/s/ JASON KILGORE
Name: Jason Kilgore
Title: General Manager

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ JASON KILGORE
Jason T. Kilgore

Jason T. Kilgore

  

General ManagerPresident

(Principal Executive Officer)

 May 3, 2013September 26, 2014

*/s/ Brian Hall

Brian Hall

  

Treasurer (Principal

(Principal Accounting and Financial Officer)

 May 3, 2013September 26, 2014

*/s/ Michael J. Brady

Michael J. Brady

  Director May 3, 2013September 26, 2014

*/s/ M. Shane Evans

M. Shane Evans

  Director May 3, 2013September 26, 2014

*/s/ Anthony Keenan

Anthony Keenan

  Director May 3, 2013
*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

September 26, 2014

 

II-61II-54


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

KILGORE EQUIPMENT, LLC
By:/s/ JASON KILGORE
Name: Jason Kilgore
Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ JASON KILGORE

Jason Kilgore

President (Principal Executive Officer)

May 3, 2013

*

Brian Hall

Treasurer (Principal Financial and Accounting Officer)

May 3, 2013

*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-62


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

KILGORE TRUCKING, LLC
By:/s/ JASON KILGORE
Name: Jason Kilgore
Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ JASON KILGORE

Jason Kilgore

President (Principal Executive Officer)

May 3, 2013

*

Brian Hall

Chief Financial Officer (Principal Financial and Accounting Officer)

May 3, 2013

*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-63


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

PEAK CONSTRUCTION MATERIALS, LLC
By:

KILGORE COMPANIES, LLC, its Sole Member

By: Summit Materials Companies I, LLC,

its sole member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

*

Jason Kilgore

President (Principal Executive Officer)

May 3, 2013

*

Clint Pulley

Treasurer (Principal Accounting and Financial Officer)

May 3, 2013

*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-64


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

PEAK MANAGEMENT, L.C.
By:

KILGORE COMPANIES, LLC, its Sole Member

By: Summit Materials Companies I, LLC,

its sole member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

*

Jason Kilgore

President (Principal Executive Officer)May 3, 2013

*

Clint Pulley

Treasurer (Principal Accounting and Financial Officer)May 3, 2013
*By:/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-65


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

SALT LAKE VALLEY SAND & GRAVEL, INC.
By:/s/ JASON KILGORE
Name: Jason Kilgore
Title: General Manager

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ JASON KILGORE

Jason Kilgore

General Manager (Principal Executive Officer)

May 3, 2013

*

Brian Hall

Treasurer (Principal Accounting and Financial Officer)

May 3, 2013

*

Michael Brady

Director

May 3, 2013

*

Shane Evans

Director

May 3, 2013

*

Anthony Keenan

Director

May 3, 2013

*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-Fact

II-66


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

VALLEY READY MIX, INC.
By:

/s/ JASON KILGORE

Name: Jason Kilgore

Title: General Manager

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ JASON KILGORE

Jason Kilgore

General Manager (Principal Executive Officer)

May 3, 2013

*

Brian Hall

Treasurer (Principal Accounting and Financial Officer)

May 3, 2013

*

Michael Brady

Director

May 3, 2013

*

Shane Evans

Director

May 3, 2013

*

Anthony Keenan

Director

May 3, 2013

*By:

/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-67


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

WASATCH CONCRETE PUMPING, LLC
By:KILGORE COMPANIES, LLC, its Sole Member

By: Summit Materials Companies I, LLC,

its sole member

By: Summit Materials Holdings I, LLC,

its sole member

By: Summit Materials, LLC,

its sole member

By: /s/ THOMAS HILL

Name: Thomas Hill

Title: President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

*

Jason Kilgore

President (Principal Executive Officer)

May 3, 2013

*

Clint Pulley

Treasurer (Principal Accounting and Financial Officer)

May 3, 2013

*By:

/s/ JENNIFER ROSE

Name: Jennifer Rose

Title: Attorney-in-Fact

II-68


SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Valley, State of Utah, on May 3, 2013.

WIND RIVER MATERIALS, LLC

By:/s/ JASON KILGORE
Name: Jason Kilgore
Title: General Manager and Manager

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ JASON KILGORE

Jason Kilgore

General Manager and Manager (Principal Executive Officer)

May 3, 2013

*

Clint Pulley

Treasurer (Principal Accounting and Financial Officer)

May 3, 2013

*

Shane Evans

Manager

May 3, 2013

*

Brian Hall

Manager

May 3, 2013

*

Richard Barrett

Manager

May 3, 2013

*By:/s/ JENNIFER ROSE
Name: Jennifer Rose
Title: Attorney-in-Fact

II-69


EXHIBIT INDEX

 

Exhibit No.

  

Description

  3.1*3.1  Certificate of Formation of Summit Materials, LLC, as amended.amended (incorporated by reference to Exhibit 3.1 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.2*3.2  Amended and Restated Limited Liability Company Agreement of Summit Materials, LLC. (incorporated by reference to Exhibit 3.2 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.3*3.3  Certificate of Incorporation of Summit Materials Finance Corp. (incorporated by reference to Exhibit 3.3 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.4*3.4  By-laws of Summit Materials Finance Corp. (incorporated by reference to Exhibit 3.4 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.5*3.5Amended and Restated Articles of Incorporation of Elam Construction, Inc. (incorporated by reference to Exhibit 3.24 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.6Amended and Restated By-laws of Elam Construction, Inc. (incorporated by reference to Exhibit 3.25 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
3.7Certificate of Formation of Alcomat, LLC (incorporated by reference to Exhibit 3.7 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.8Limited Liability Company Agreement of Alcomat, LLC (incorporated by reference to Exhibit 3.8 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.9Certificate of Formation of Alleyton Resource Company, LLC (incorporated by reference to Exhibit 3.9 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.10Amended and Restated Limited Liability Company Agreement of Alleyton Resource Company, LLC (incorporated by reference to Exhibit 3.10 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.11Certificate of Formation of Alleyton Services Company, LLC (incorporated by reference to Exhibit 3.11 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.12Limited Liability Company Agreement of Alleyton Services Company, LLC (incorporated by reference to Exhibit 3.12 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 28, 2014 (File No. 333-187556)).
3.13  Certificate of Formation of Austin Materials, LLC.LLC (incorporated by reference to Exhibit 3.5 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.6*3.14  Limited Liability Company Agreement of Austin Materials, LLC.LLC (incorporated by reference to Exhibit 3.6 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.7*3.15  Certificate of Formation of Continental Cement Company, L.L.C., as amended.amended (incorporated by reference to Exhibit 3.7 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).


Exhibit No.

Description

  3.8*3.16  Amended and Restated Limited Liability Company Agreement of Continental Cement Company, L.L.C. (incorporated by reference to Exhibit 3.8 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.9*3.17  First Amendment to Amended and Restated Limited Liability Company Agreement of Continental Cement Company, L.L.C. (incorporated by reference to Exhibit 3.9 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.10*3.18  Certificate of Formation of Kilgore Companies, LLC, as amended.amended (incorporated by reference to Exhibit 3.10 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.11*3.19  Limited Liability Company Agreement of Kilgore Companies, LLC, as amended.amended (incorporated by reference to Exhibit 3.11 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.12*Certificate of Formation of Norris Quarries, LLC.
  3.13*Limited Liability Company Agreement of Norris Quarries, LLC.
  3.14*3.20  Certificate of Formation of RK Hall, LLC.LLC (incorporated by reference to Exhibit 3.14 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.15*3.21  Limited Liability Company Agreement of RK Hall, LLC.LLC (incorporated by reference to Exhibit 3.15 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.16*Certificate of Formation of Summit Materials Companies I, LLC, as amended.
  3.17*Limited Liability Company Agreement of Summit Materials KY Acquisition LLC, as amended.
  3.18*3.22  Certificate of Incorporation of Summit Materials Corporations I, Inc. (incorporated by reference to Exhibit 3.18 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.19*3.23  By-laws of Summit Materials Corporations I, Inc. (incorporated by reference to Exhibit 3.19 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.20*Certificate of Formation of Summit Materials Holdings I, LLC, as amended.
  3.21*Limited Liability Company Agreement of Summit Materials Holdings I, LLC, as amended.
  3.22*3.24  Certificate of Formation of Summit Materials Holdings II, LLC, as amended.amended (incorporated by reference to Exhibit 3.22 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.23*3.25  Limited Liability Company Agreement of Summit Materials Holdings II, LLC.LLC (incorporated by reference to Exhibit 3.23 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.24*3.26*  Amended and Restated ArticlesCertificate of IncorporationFormation of Elam Construction, Inc.Summit Materials International, LLC
  3.25*3.27*  Amended and Restated By-lawsLimited Liability Company Agreement of Elam Construction, Inc.Summit Materials International, LLC
  3.26*3.28  Articles of Organization of Cornejo & Sons, L.L.C., as amended.amended (incorporated by reference to Exhibit 3.26 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.27*3.29  Amended and Restated Limited Liability Company Operating Agreement of Cornejo & Sons, L.L.C. (incorporated by reference to Exhibit 3.27 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.28*Articles of Organization of Hamm Asphalt, LLC.
  3.29*Limited Liability Company Operating Agreement of Hamm Asphalt, LLC.
  3.30*3.30  Articles of Incorporation of Hamm, Inc., as amended.amended (incorporated by reference to Exhibit 3.30 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.31*3.31  By-laws of Hamm, Inc.


(incorporated by reference to Exhibit 3.31 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No.

Description

333-187556)).
  3.32*3.32  Articles of Organization of N.R. Hamm Contractor, LLC.LLC (incorporated by reference to Exhibit 3.32 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).


Exhibit No.

Description

  3.33*3.33  Limited Liability Company Operating Agreement of N.R. Hamm Contractor, LLC.LLC (incorporated by reference to Exhibit 3.33 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.34*3.34  Articles of Organization of N.R. Hamm Quarry, LLC.LLC (incorporated by reference to Exhibit 3.34 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.35*3.35  Limited Liability Company Operating Agreement of N.R. Hamm Quarry, LLC.LLC (incorporated by reference to Exhibit 3.35 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.36*3.36  Articles of Incorporation of Bourbon Limestone Company, as amended.amended (incorporated by reference to Exhibit 3.36 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.37*3.37  By-laws of Bourbon Limestone Company.Company (incorporated by reference to Exhibit 3.37 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.38*Articles of Organization of Glass Aggregates, LLC, as amended.
  3.39*Limited Liability Company Operating Agreement of Glass Aggregates, LLC.
  3.40*3.38  Articles of Organization of Hinkle Contracting Company, LLC.LLC (incorporated by reference to Exhibit 3.40 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.41*3.39  Limited Liability Company Agreement of Hinkle Contracting Company, LLC.LLC (incorporated by reference to Exhibit 3.41 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.42*Articles of Incorporation of Kentucky Hauling, Inc., as amended.
  3.43*By-laws of Kentucky Hauling, Inc., as amended.
  3.44*Articles of Organization of South Central Kentucky Limestone, LLC.
  3.45*Amended and Restated Operating Agreement of South Central Kentucky Limestone, LLC.
  3.46*3.40  Articles of Organization of Con-Agg of MO, L.L.C., as amended.amended (incorporated by reference to Exhibit 3.46 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.47*3.41  Second Amended and Restated Operating Agreement of Con-Agg of MO, L.L.C. (incorporated by reference to Exhibit 3.47 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.48*3.42*  Articles of Organization of Fischer Quarries, L.L.C.Buckhorn Materials, LLC, as amended
  3.49*Operating Agreement of Fischer Quarries, L.L.C.
  3.50*Articles of Organization of Quarry Properties, L.L.C.
  3.51*Operating Agreement of Quarry Properties, L.L.C.
  3.52*Articles of Incorporation of Elam Paving, Inc.
  3.53*By-laws of Elam Paving, Inc.
  3.54*Certificate of Formation of B&H Contracting, L.P.
  3.55*3.43*  Amended and Restated PartnershipOperating Agreement of B&H Contracting, L.P.Buckhorn Materials, LLC
  3.56*3.44  Certificate of Formation of Industrial Asphalt, LLC.LLC (incorporated by reference to Exhibit 3.56 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.57*3.45  Company Agreement of Industrial Asphalt, LLC, as amended.amended (incorporated by reference to Exhibit 3.57 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.58*3.46*  Certificate of FormationConversion of R.K. Hall Construction, Ltd.SCS Materials, LLC
  3.59*3.47*  Second Amended and Restated PartnershipCompany Agreement of R.K. Hall Construction, Ltd.SCS Materials, LLC
  3.60*3.48*  CertificateArticles of FormationIncorporation of RKH Capital, L.L.C.Troy Vines, Incorporated
  3.61*Second Amended and Restated Company Agreement of RKH Capital, L.L.C.
  3.62*Certificate of Limited Partnership of SCS Materials, L.P.
  3.63*Second Amended and Restated Partnership Agreement of SCS Materials, L.P.
  3.64*Articles of Organization of Altaview Concrete, LLC, as amended.
  3.65*3.49*  Amended and Restated Operating AgreementBylaws of Altaview Concrete, LLC.


Exhibit No.

Description

Troy Vines, Incorporated
  3.66*3.50  Amended Articles of Incorporation of B&B Resources, Inc. (incorporated by reference to Exhibit 3.66 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  3.67*3.51  By-laws of B&B Resources, Inc. (incorporated by reference to Exhibit 3.64 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).


Exhibit No.

Description

  3.68*Articles of Organization of Kilgore Equipment, LLC.
  3.69*Operating Agreement of Kilgore Equipment, LLC.
  3.70*Articles of Organization of Kilgore Trucking, LLC.
  3.71*Operating Agreement of Kilgore Trucking, LLC.
  3.72*Articles of Organization of Peak Construction Materials, LLC, as amended.
  3.73*Amended and Restated Operating Agreement of Peak Construction Materials, LLC.
  3.74*Articles of Organization of Peak Management, L.C.
  3.75*Amended and Restated Operating Agreement of Peak Management, L.C.
  3.76*Articles of Incorporation of Salt Lake Valley Sand & Gravel, Inc.
  3.77*By-laws of Salt Lake Valley Sand & Gravel, Inc.
  3.78*Articles of Incorporation of Valley Ready Mix, Inc.
  3.79*By-laws of Valley Ready Mix, Inc.
  3.80*Articles of Organization of Wasatch Concrete Pumping, LLC, as amended.
  3.81*Amended and Restated Operating Agreement of Wasatch Concrete Pumping, LLC.
  3.82*Articles of Organization of Wind River Materials, LLC, as amended.
  3.83*Operating Agreement of Wind River Materials, LLC.
  4.1*4.1  Indenture, dated as of January 30, 2012, among Summit Materials, LLC, Summit Materials Finance Corp., the guarantors named therein and Wilmington Trust, National Association, as trustee.trustee (incorporated by reference to Exhibit 4.1 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  4.2*4.2  First Supplemental Indenture, dated as of March 13, 2012, among Norris Quarries, LLC and Wilmington Trust, National Association, as trustee.
  4.3*Form of Note (attached as exhibittrustee (incorporated by reference to Exhibit 4.1)4.2 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
  4.4*4.3  Registration Rights Agreement,Second Supplemental Indenture, dated as of January 30, 2012,17, 2014, among Summit Materials, LLC, Summit Materials Finance Corp., the guarantors named therein Citigroup Global Markets Inc.and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.4 filed with Summit Materials, LLC’s Current Report on Form 8-K, filed January 23, 2014 (File No. 333-187556)).
4.4Third Supplemental Indenture, dated as of February 21, 2014, among Alcomat, LLC, Alleyton Resource Company, LLC, Alleyton Services Company, LLC and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.4 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
4.5Fourth Supplemental Indenture, dated as of July 30, 2014, among Buckhorn Materials, LLC and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 of Summit Materials, LLC’s Quarterly Report on Form 10-Q, filed August 6, 2014 (File No. 333-187556)).
4.6Fifth Supplemental Indenture, dated as of September 2, 2014, among Summit Materials International, LLC, Troy Vines, Incorporated and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.3 of Summit Materials, LLC’s Current Report on Form 8-K, filed September 9, 2014 (File No. 333-187556)).
4.7Sixth Supplemental Indenture, dated as of September 8, 2014, among Summit Materials, LLC, Summit Materials Finance Corp., the guarantors named therein and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.4 filed with Summit Materials, LLC’s Current Report on Form 8-K, filed September 9, 2014 (File No. 333-187556)).
4.8Form of 10 12% Senior Note due 2020 (included in Exhibit 4.1).
4.9Registration Rights Agreement, dated as of September 8, 2014, among Summit Materials, LLC, Summit Materials Finance Corp., the guarantors named therein, Merrill Lynch, Pierce, Fenner & Smith Incorporated and the several other initial purchasers.purchasers (incorporated by reference to Exhibit 4.5 filed with Summit Materials, LLC’s Current Report on Form 8-K, filed September 9, 2014 (File No. 333-187556)).
5.1*  Opinion of Simpson Thacher & Bartlett LLP.
5.2*  Opinion of Holland & Hart LLP.
5.3**  Opinion of Kutak Rock LLP.
5.4**  Opinion of Kutak Rock LLP.
5.5*  Opinion of Stites & Harbison PLLC.
5.6*  Opinion of Bell NunnallyKirk Palmer & Martin LLP.Thigpen, P.A.
10.1**5.7*Opinion of Winstead PC.


Exhibit No.

Description

10.1  Credit Agreement, dated as of January 30, 2012, by and among Summit Materials, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc., as joint lead arrangers, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., UBS Securities LLC, Barclays Capital, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc., as joint bookrunners, Bank of America, N.A., as administrative agent, collateral agent and swing line lender, Bank of America, N.A., as letter of credit issuer, and Citigroup Global Markets Inc., as syndication agent.


agent (incorporated by reference to Exhibit 10.1 of Summit Materials, LLC’s Amendment No.

Description

1 to the Registration Statement on Form S-4, filed May 3, 2013 (File No. 333-187556)).
10.2*10.2  Amendment No. 1, dated as of February 5, 2013, to the Credit Agreement, dated as of January 30, 2012, by and among Summit Materials, LLC, Bank of America, N.A. as sole lead arranger, and Bank of America, N.A. and Citigroup Global Markets Inc., as joint bookrunners.bookrunners (incorporated by reference to Exhibit 10.2 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.3*10.3Amendment No. 2, dated as of January 16, 2014, to the Credit Agreement, dated as of January 30, 2012, by and among Summit Materials, LLC, the guarantors party thereto, Bank of America, N.A., as administrative agent, collateral agent, L/C issuer and swing line lender and the other parties thereto (incorporated by reference to Exhibit 10.1 filed with Summit Materials, LLC’s Current Report on Form 8-K, filed January 23, 2014 (File No. 333-187556)).
10.4  Tranche A Revolving Credit Commitment Conversion Agreement, dated as of February 11, 2013, under the Credit Agreement, dated as of January 30, 2012, among Summit Materials, LLC, the guarantors party thereto, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement, Bank of America, N.A., as administrative agent, collateral agent, L/C issuer and swing line lender and the other parties thereto.thereto (incorporated by reference to Exhibit 10.3 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.4*10.5  Security Agreement, dated as of January 30, 2012, by and among the grantors identified therein and Bank of America, N.A., as collateral agent.agent (incorporated by reference to Exhibit 10.4 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.5*†10.6Acquisition Agreement, dated as of December 5, 2013, among Alleyton Resource Corporation, Colorado Gulf, LP, Texas CGC, LLC, Barten Shepard Investments, LP, TBGSI Corp., the individuals signatory thereto and Summit Materials, LLC. (incorporated by reference to Exhibit 10.6 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.7Amendment dated January 14, 2014, to Acquisition Agreement, dated as of December 5, 2013, among Alleyton Resource Corporation, Colorado Gulf, LP, Texas CGC, LLC, Barten Shepard Investments, LP, TBGSI Corp., the individuals signatory thereto and Summit Materials, LLC. (incorporated by reference to Exhibit 10.7 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.8†Form of Management Interest Subscription Agreement for executive officers (incorporated by reference to Exhibit 10.8 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.9†Form of Management Interest Subscription Agreement for directors (incorporated by reference to Exhibit 10.9 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.10†  Employment Agreement, dated July 30, 2009, by and between Summit Materials Holdings L.P. and Thomas Hill.W. Hill (incorporated by reference to Exhibit 10.5 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).


Exhibit No.

Description

10.6*†10.11†  Employment Agreement, dated December 29, 2011, by and between Summit Materials Holdings L.P. and Douglas Rauh.C. Rauh (incorporated by reference to Exhibit 10.6 of Summit Materials, LLC’s Registration Statement on Form S-4, filed March 27, 2013 (File No. 333-187556)).
10.12†Employment Agreement, dated November 11, 2013, by and between Summit Materials Holdings L.P. and Kevin A. Gill (incorporated by reference to Exhibit 10.12 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
10.13†Employment Agreement, dated May 20, 2013, by and between Summit Materials Holdings L.P. and Julio Ramirez (incorporated by reference to Exhibit 10.7 Summit Materials, LLC’s Registration Statement on Form S-4, filed May 24, 2013 (File No. 333-187556)).
10.14†Agreement and Release between Summit Materials Holdings L.P. and Julio Ramirez, Chief Financial Officer (incorporated by reference to Exhibit 10.1 of Summit Materials, LLC’s Quarterly Report on Form 10-Q, filed November 6, 2013 (File No. 333-187556)).
10.15†Compensation Arrangement between Summit Materials Holdings L.P. and John Murphy, Interim Chief Financial Officer (incorporated by reference to Exhibit 10.2 of Summit Materials, LLC’s Quarterly Report on Form 10-Q, filed November 6, 2013 (File No. 333-187556)).
10.16†Employment Agreement, dated as of December 3, 2013, between Summit Materials Holdings L.P. and Brian J. Harris (incorporated by reference to Exhibit 10.1 of Summit Materials, LLC’s Current Report on Form 8-K/A, filed December 4, 2013 (File No. 333-187556)).
12*  Computation of Ratio of Earnings to Fixed Charges.Charges
16*  Letter regarding change in certifying accountant.
21*21  Subsidiaries of Summit Materials, LLC.LLC (incorporated by reference to Exhibit 21 of Summit Materials, LLC’s Annual Report on Form 10-K, filed March 7, 2014 (File No. 333-187556)).
23.1**  Consent of KPMG LLP, Independent Registered Public Accounting Firm.
23.2**  Consent of KPMG LLP, Independent Registered Public Accounting Firm.
23.3**  Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.
23.4**  Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.
23.5**Consent of Allen, Gibbs & Houlik, L.C., Independent Registered Public Accounting Firm.
23.6**Consent of Wisan, Smith, Racker & Prescott, LLP, Independent Registered Public Accounting Firm.
23.7**Consent of CliftonLarsonAllen LLP, Independent Registered Public Accounting Firm.
23.8**Consent of Perryman Chaney Russell, LLP, Independent Auditors.
23.9*  Consent of Simpson Thacher & Bartlett LLP (included as part of its opinion filed as Exhibit 5.1 hereto).
23.10*23.6*  Consent of Holland & Hart LLP (included as part of its opinion filed as Exhibit 5.2 hereto).
23.11**23.7*  Consent of Kutak Rock LLP (included as part of its opinion filed as Exhibit 5.3 hereto).
23.12**23.8*  Consent of Kutak Rock LLP (included as part of its opinion filed as Exhibit 5.4 hereto).
23.13*23.9*  Consent of Stites & Harbison PLLC (included as part of its opinion filed as Exhibit 5.5 hereto).
23.14*23.10*  Consent of Bell NunnallyKirk Palmer & Martin LLPThigpen, P.A. (included as part of its opinion filed as Exhibit 5.6 hereto).
23.11*Consent of Winstead PC (included as part of its opinion filed as Exhibit 5.7 hereto).
24*  Power of Attorney (included in signature pages of this registration statement).
25.1*  Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wilmington Trust, National Association as trustee under the Indenture dated January 30, 2013, among Summit Materials, LLC, Summit Materials Finance Corp.,governing the guarantors named therein and Wilmington Trust, National Association, as trustee.10 12% Senior Notes due 2020.
99.1*  Form of Letter of Transmittal.


Exhibit No.

Description

99.2*  Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.3*  Form of Letter to Clients.


Exhibit No.

Description

99.4* Form of Notice of Guaranteed Delivery.
101.INS**XBRL Instance Document.
101.SCH**XBRL Taxonomy Extension Schema Document.
101.CAL**XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**XBRL Taxonomy Extension Definitions Linkbase Document.
101.LAB**XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**XBRL Taxonomy Extension Presentation Linkbase Document.

 

*Previously filed.Filed herewith.
**Filed herewith.These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.
Management contract or compensatory plan or arrangement.