-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cv1oU2mZQjpRR31uPnkqfaPiJrUfZ9DaMeN4gDx16EtmoJEnKyZEnt+nDYU4IGDl UVAefouWccUofH42f6pHlQ== 0001054422-99-000002.txt : 19991115 0001054422-99-000002.hdr.sgml : 19991115 ACCESSION NUMBER: 0001054422-99-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S AGGREGATES INC CENTRAL INDEX KEY: 0001054422 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 570990958 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15217 FILM NUMBER: 99746456 BUSINESS ADDRESS: STREET 1: 400 SOUTH EL CAMINO REAL, SUITE 500 STREET 2: ATTN: CHIEF FINANCIAL OFFICER CITY: SAN MATEO STATE: CA ZIP: 94402 BUSINESS PHONE: 6506854880 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-15217 --------------------- U.S. AGGREGATES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 57-0990958 ----------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 South El Camino Real, Suite 500, San Mateo, California 94402 ---------------------------------------------------------- (Address, of principal executive offices) (Zip Code) (650) 685-4880 ---------------------------------------------------- (Registrant's telephone number, including area code) None -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class Shares outstanding as of October 29, 1999 - ---------------------------- ----------------------------------------------- Common stock, $.01 par value 14,900,593 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 CONTENTS PART I. FINANCIAL INFORMATION PAGE NO. -------- Item 1. Financial Statements Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operations 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 2. Changes in Securities and Use of Proceeds 15 Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 17 EXHIBIT INDEX 18 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
U.S. AGGREGATES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) ASSETS SEPTEMBER 30, DECEMBER 31, 1999 1998 --------------- --------------- CURRENT ASSETS: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 3,774 $ 2,849 Trade accounts receivable, net. . . . . . . . . . . . . . . . . . . . . . 65,139 37,703 Inventories, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,683 25,480 Prepaid expenses and other current assets . . . . . . . . . . . . . . . . 6,141 12,070 --------------- --------------- Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . 103,737 78,102 --------------- --------------- PROPERTY, PLANT AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . 304,484 253,910 Less: Accumulated Depreciation & Depletion. . . . . . . . . . . . . . . . . (29,589) (21,591) --------------- --------------- Net property, plant and equipment . . . . . . . . . . . . . . . . . . 274,895 232,319 --------------- --------------- INTANGIBLE ASSETS, net. . . . . . . . . . . . . . . . . . . . . . . . . . . 28,114 26,023 OTHER ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,204 1,167 --------------- --------------- Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 409,950 $ 337,611 =============== =============== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,958 $ 48,748 LONG-TERM DEBT, net of current portion. . . . . . . . . . . . . . . . . . . 165,279 185,790 DEFERRED INCOME TAXES, net. . . . . . . . . . . . . . . . . . . . . . . . . 52,614 44,611 OTHER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 192 --------------- --------------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 269,963 279,341 --------------- --------------- MINORITY INTEREST, net. . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3,160 --------------- --------------- MANDATORY REDEEMABLE PREFERRED STOCK, $.01 par value, 10,000,000 shares authorized. . . . . . . . . . . . . . . . . . . . . . . - 43,563 --------------- --------------- SHAREHOLDERS' EQUITY: Common stock, $.01 par value, 100,000,000 shares authorized,. . . . . . . 149 61 14,908,222 shares outstanding, including 7,629 shares of treasury stock Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . 123,648 2,887 Notes receivable from sale of stock . . . . . . . . . . . . . . . . . . . (1,177) (640) Treasury stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . (2) (2) Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,358 9,241 --------------- --------------- Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . 139,976 11,547 --------------- --------------- Total liabilities, mandatory redeemable preferred stock and shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . $ 409,950 $ 337,611 =============== ===============
The accompanying notes are an integral part of these statements. 3
U.S. AGGREGATES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share amounts) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------- -------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ NET SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 93,986 $ 82,512 $ 220,925 $ 165,554 COST OF PRODUCTS SOLD. . . . . . . . . . . . . . . . . . . . . 65,000 58,530 156,966 119,338 ------------ ------------ ------------ ------------ Gross profit . . . . . . . . . . . . . . . . . . . . . . 28,986 23,982 63,959 46,216 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES . . . . . . . . . 7,806 8,024 22,704 18,944 DEPRECIATION, DEPLETION AND AMORTIZATION . . . . . . . . . . . 3,517 3,470 9,211 8,019 ------------ ------------ ------------ ------------ Income from operations . . . . . . . . . . . . . . . . . 17,663 12,488 32,044 19,253 OTHER INCOME (EXPENSES): Interest, net. . . . . . . . . . . . . . . . . . . . . . . . (4,018) (4,469) (12,859) (10,023) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . 97 (386) (382) (1,104) ------------ ------------ ------------ ------------ Income from continuing operations before provision for income taxes, minority interest and extraordinary item 13,742 7,633 18,803 8,126 PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . . . (5,138) (3,191) (7,036) (3,397) ------------ ------------ ------------ ------------ Income from continuing operations before minority interest and extraordinary item. . . . . . . . . . . . 8,604 4,442 11,767 4,729 MINORITY INTEREST. . . . . . . . . . . . . . . . . . . . . . . (533) (584) (572) (484) ------------ ------------ ------------ ------------ Income from continuing operations. . . . . . . . . . . . 8,071 3,858 11,195 4,245 EXTRAORDINARY ITEM: Loss on extinguishment of debt, less applicable income tax benefit of $161 and $212. . . . . (264) - (264) (338) ------------ ------------ ------------ ------------ Net income . . . . . . . . . . . . . . . . . . . . . . . $ 7,807 $ 3,858 $ 10,931 $ 3,907 ============ ============ ============ ============ Income per common share - basic Income from continuing operations available for common shareholders. . . . . . . . . . . . . . . . . . . . $ 0.69 $ 0.46 $ 1.09 $ 0.20 Extraordinary item, net of tax . . . . . . . . . . . . . . . (0.02) - (0.03) (0.06) ------------ ------------ ------------ ------------ Net income available for common shareholders . . . . . . . . $ 0.67 $ 0.46 $ 1.06 $ 0.14 ============ ============ ============ ============ Weighted average common shares outstanding . . . . . . . . . 10,804,389 6,136,630 7,709,642 6,136,630 Income per common share - diluted Income from continuing operations available for common shareholders. . . . . . . . . . . . . . . . . . . . $ 0.67 $ 0.44 $ 1.05 $ 0.19 Extraordinary item, net of tax . . . . . . . . . . . . . . . (0.02) - (0.03) (0.05) ------------ ------------ ------------ ------------ Net income available for common shareholders . . . . . . . . $ 0.65 $ 0.44 $ 1.02 $ 0.14 ============ ============ ============ ============ Weighted average common shares outstanding . . . . . . . . . 11,078,626 6,423,011 7,991,930 6,368,306
The accompanying notes are an integral part of these statements. 4
U.S. AGGREGATES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except share amounts) NINE MONTHS ENDED SEPTEMBER 30, ------------------------ 1999 1998 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES. . . . . . . . . . . . . . . . $ 4,103 $ 587 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment . . . . . . . . . . . . . . (43,251) (21,453) Acquisition of subsidiaries, net of cash acquired. . . . . . . . . . . (325) (82,724) Proceeds from sale of fixed assets . . . . . . . . . . . . . . . . . . 2,874 5,712 ----------- ----------- Net cash used in investing activities. . . . . . . . . . . . . (40,702) (98,465) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt . . . . . . . . . . . . . . . . . (92,342) (121,475) New borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,115 221,823 Proceeds from sale of stock, net . . . . . . . . . . . . . . . . . . . 65,706 300 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 (456) ----------- ----------- Net cash provided by financing activities. . . . . . . . . . . 37,524 100,192 ----------- ----------- NET INCREASE IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . . 925 2,314 CASH, beginning of period. . . . . . . . . . . . . . . . . . . . . . . . 2,849 479 ----------- ----------- CASH, end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,774 $ 2,793 =========== =========== DISCLOSURE OF SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,260 $ 9,596 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755 110 NONCASH TRANSACTIONS: Accretion of preferred stock dividend. . . . . . . . . . . . . . . . . 2,814 3,035 Conversion of minority interest to equity. . . . . . . . . . . . . . . 8,273 - Conversion of preferred shares and accreted dividends to common shares 46,377 -
The accompanying notes are an integral part of these statements. 5 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation Founded in 1994, U.S. Aggregates, Inc. ("USAI" or the "Company") is a leading producer of aggregates. Aggregates consist of crushed stone, sand and gravel. The Company's products are used primarily for construction and maintenance of highways, other infrastructure projects, and for commercial and residential construction. USAI serves local markets in nine states in two regions of the United States, the Mountain states and the Southeast. The accompanying unaudited condensed consolidated financial statements of U.S. Aggregates, Inc. and subsidiaries have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and to Article 10 of Regulation S-X. In the opinion of management, the interim financial information provided herein reflects all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations for the interim periods. The results of operations for the nine months ended September 30, 1999, are not necessarily indicative of the results to be expected for the full year. The Statements should be read in conjunction with the summary of accounting policies and notes to financial statements included in the Company's registration statement on Form S-1 No. 333-79209, which was declared effective on August 12, 1999. 2. Risk Factors The Company's business is seasonal with peak revenue and profits occurring primarily in the months of April through November. Bad weather conditions during this period could adversely affect operating income and cash flow and could therefore have a disproportionate impact on the Company's results for the full year. Quarterly results have varied significantly in the past and are likely to vary significantly from quarter to quarter in the future. A majority of the Company's revenues are from customers who are in industries and businesses that are cyclical in nature and subject to changes in general economic conditions. In addition, since operations occur in a variety of geographic markets, the Company's business is subject to the economic conditions in each such geographic market. General economic downturns or localized downturns in the regions where the Company has operations, including any downturns in the construction industry, could have a material adverse effect on the Company's business, financial condition and results of operations. The Company's operations are subject to and affected by federal, state and local laws and regulations including such matters as land usage, street and highway usage, noise level and health, safety and environmental matters. In many instances, various permits are required. Although management believes that the Company is in compliance with regulatory requirements, there can be no assurance that the Company will not incur material costs or liabilities in connection with regulatory requirements. Certain of the Company's operations may from time to time involve the use of substances that are classified as toxic or hazardous substances within the meaning of these laws and regulations. Risk of environmental liability is inherent in the operation of the Company's business. As a result, it is possible that environmental liabilities will have a material adverse effect on the Company in the future. 6 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3. Long-Term Debt A summary of long-term debt is as follows:
SEPTEMBER 30, DECEMBER 31, 1999 1998 --------------- --------------- (dollars in thousands) Prudential Insurance subordinated notes, net of discount of $686 and $753, respectively. . . . . . . . . . . . . $ 44,314 $ 44,247 Bank of America term loan A . . . . . . . . . . . . . . . 39,782 53,500 Bank of America term loan B . . . . . . . . . . . . . . . 46,404 58,500 Bank of America revolving loan. . . . . . . . . . . . . . 31,000 24,200 Notes payable to former stockholders. . . . . . . . . . . 4,963 4,997 Other . . . . . . . . . . . . . . . . . . . . . . . . . . 6,013 7,127 --------------- --------------- Total long-term debt. . . . . . . . . . . . . . . . . 172,476 192,571 Less: Current portion . . . . . . . . . . . . . . . . . . (7,197) (6,781) --------------- --------------- Long-term debt, net of current portion. . . . . . . . $ 165,279 $ 185,790 =============== ===============
In April 1999, the Company's revolving loan facility was increased from $40 million to $60 million. The revolving loan is to be paid in full by the revolving facility termination date in June 2004. In addition to the above described long-term debt, the Company also had a demand note in the amount of $8.0 million at December 31, 1998, which was later increased to $16.1 million and was retired with the proceeds of the initial public offering. 7 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4. Equity Structure On August 18, 1999 the minority owned shares of SRM Holdings Corp. (SRMHC) and Western Aggregates Holding Corp. (WAHC) were converted to 649,363 of U.S. Aggregates, Inc.'s common shares. These shares were valued at $8.8 million. The Company's initial public offering was consummated on August 18, 1999 offering 5,000,000 shares of common stock at $15.00 per share resulting in net proceeds of approximately $65.7 million. Concurrent with the consummation of the offering, 300,842 shares of preferred stock owned by Golder, Thoma, Cressey, Rauner Fund IV, LP, Messrs. Harris and Dougherty, a trust for the benefit of Mr. Stone and his wife for which they also serve as trustees and Mrs. Jeanne T. Richey, were converted into an aggregate of 3,091,808 shares of common stock. The preferred stock was converted into common stock at the initial public offering price of $15.00. The following schedule of change in stockholder's equity statement summarizes the Company's equity transactions between December 31, 1998 and September 30, 1999:
NOTES TREASURY STOCK ----------------- ADDITIONAL RECEIVABLE SHARES TOTAL COMMON STOCK PAID-IN FROM SALE HELD IN RETAINED SHAREHOLDERS' ------------------- SHARES AMOUNT CAPITAL OF STOCK TREASURY AMOUNT EARNINGS EQUITY ---------- ------- --------- ---------- -------- -------- ---------- --------- (in thousands, except share amounts) BALANCE AT DECEMBER 31, 1998 . . . . . . . . . 6,144,251 $ 61 $ 2,887 $ (640) 7,629 $ (2) $ 9,241 $ 11,547 Notes receivable, net of payments. . . . . . . . . . . . . - - - (44) - - - (44) Conversion of minority. . . . . . . 649,363 6 8,760 (493) - - - 8,273 interest to equity Issuance of common stock. . . . . . 5,000,000 50 65,656 - - - - 65,706 Exercise of warrants. . . . . . . . 22,800 1 (1) - - - - - Accretion of mandatory redeemable preferred stock dividend. . . . . . . . . . - - - - - - (2,814) (2,814) Conversion of preferred shares and accreted dividends to common shares . . . . . . . . . . 3,091,808 31 46,346 - - - - 46,377 Net income. . . . . . . . . . . . . - - - - - - 10,931 10,931 ---------- ------- --------- ---------- -------- -------- ---------- --------- BALANCE AT SEPTEMBER 30, 1999. . . . . . . . . 14,908,222 $ 149 $123,648 $ (1,177) 7,629 $ (2) $ 17,358 $139,976 ========== ======= ========= ========== ======== ======== ========== =========
8 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5. Inventories Inventories consist of the following as of:
SEPTEMBER 30, DECEMBER 31, 1999 1998 --------------- --------------- (dollars in thousands) Finished products . . . $ 25,076 $ 19,014 Raw materials . . . . . 2,568 5,730 Supplies and parts. . . 590 888 Fuel. . . . . . . . . . 465 348 Less: Allowances. . . . (16) (500) --------------- --------------- $ 28,683 $ 25,480 =============== ===============
Inventories are pledged as security under various debt agreements. 6. Earnings per Common Share
THREE MONTHS ENDED SEPTEMBER 30, --------------------------------------------------------------- 1999 1998 ------------------------------ ------------------------------- (in thousands, except share amounts) PER SHARE PER SHARE INCOME SHARES AMOUNT INCOME SHARES AMOUNT ------- ---------- --------- -------- --------- ---------- Income from continuing operations . . . . . . . . . . . $ 8,071 $ 3,858 Less: Accretion of preferred stock dividend . . . . . 609 1,037 ------- ------- Basic income from continuing operations available to common shareholders . . . . . . . . . . . . . . . . . 7,462 10,804,389 $ 0.69 2,821 6,136,630 $ 0.46 Effect of warrants 274,237 286,381 ---------- --------- Dilutive income from continuing operations available to common shareholders . . . . . . . . . . . . . . . . . $ 7,462 11,078,626 $ 0.67 $ 2,821 6,423,011 $ 0.44 ======= ========== ========== ======= ========= ==========
NINE MONTHS ENDED SEPTEMBER 30, -------------------------------------------------------------- 1999 1998 ------------------------------ ------------------------------ (in thousands, except share amounts) PER SHARE PER SHARE INCOME SHARES AMOUNT INCOME SHARES AMOUNT ------- --------- ---------- -------- -------- ---------- Income from continuing operations . . . . . . . . . . . $11,195 $ 4,245 Less: Accretion of preferred stock dividend . . . . . 2,814 3,035 ------- ------- Basic income from continuing operations available to common shareholders . . . . . . . . . . . . . . . . . 8,381 7,709,642 $ 1.09 1,210 6,136,630 $ 0.20 Effect of warrants 282,288 231,676 --------- --------- Dilutive income from continuing operations available to common shareholders . . . . . . . . . . . . . . . . . $ 8,381 7,991,930 $ 1.05 $ 1,210 6,368,306 $ 0.19 ======= ========= ========== ======= ========= ==========
9 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7. Related Party Transactions The Company paid an advisory fee of approximately $146,986 and $415,691 for the quarter and nine months ended September 30, 1999, respectively, to a director and shareholder of U.S. Aggregates, Inc. These fees were paid in connection with various financing transactions undertaken by the Company, including $165,219 in connection with the initial public offering. 8. Stock Option Plan The Board of Directors of the Company has adopted the U.S. Aggregates, Inc. Long Term Incentive Plan, whereby the Company is authorized to issue up to 700,840 shares of the Company's common stock. On August 16, 1999, the Compensation Committee of the Board of Directors granted options to purchase an aggregate of 280,336 shares of the Company's common stock at a price of $15.00 per share under the plan to 60 employees of the Company. Options granted under this plan will be accounted for in accordance with APB No. 25 wherein no compensation expense would be recognized for options issued to employees. 10 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION On August 18, 1999 U.S. Aggregates, Inc., completed its initial public offering (IPO), in which it issued and sold 5.0 million shares of its common stock at $15.00 per share. The net proceeds from the IPO (after underwriting discounts, commission and offering expenses of $9.3 million) were approximately $65.7 million. We conduct our operations through the quarrying and distribution of aggregate products in nine states in two regions of the United States, the Mountain states and the Southeast. Our operations have the same general economic characteristics including the nature of the products, production processes, type and class of customers, methods of distribution and governmental regulations. Over the last three years, our net sales and profitability have increased as a result of internal growth, the maturation of recently developed aggregate production sites and the completion of several business and asset acquisitions. In February 1998, we completed the acquisition of Falcon Ridge Quarry, Inc. and the acquisition of Geodyne Transport, Inc. In June 1998, we completed the acquisition of Monroc, Inc. Collectively, these acquisitions are referred to as the 1998 acquired businesses. The 1998 acquired businesses and the start-up of several other operations significantly expanded our business in the Mountain states and increased our presence in a number of local markets. Since 1996, we have started nine major greenfield aggregate production sites serving large metropolitan markets. The development of greenfield aggregate production sites includes securing all necessary permits and zoning to ensure that commercially economic quantities of aggregates can be produced. These new sites include both sites which have never been permitted or mined, as well as sites which may have been properly zoned, but were not operating at sufficient volumes to be economically viable. Based on our experience, a new aggregate production site's net sales, cash flow and profitability tend to increase over the first five years of operation as production increases and the site matures. Our business is seasonal, with peak sales and profits occurring primarily in the months of April through November. Accordingly, our results of operations for any individual quarter are not necessarily indicative of our results for the full year. RESULTS OF OPERATIONS The following Management's Discussion and Analysis needs to be read in conjunction with the MD&A included in our registration statement on Form S-1 No. 333-79209, which was declared effective on August 12, 1999. Three Months Ended September 30, 1999 Compared to Three Months Ended September 30, 1998 Net sales for the third quarter in 1999 increased by 13.9% to $94.0 million compared to $82.5 million for the third quarter in 1998. This was due to strong demand for our aggregates and related products resulting in increased aggregate shipments. Total shipments of processed aggregates increased to 4.9 million tons for the three months ended September 30, 1999 from 4.3 million tons for the same period in 1998, a 13.3% increase. The average selling price of processed aggregates increased 7.0% over 1998. The associated products sales volumes and prices generally increased at a lower rate partially due to delays in several larger projects in Utah. Gross profit for the three months ended September 30, 1999 increased 20.9% to $29.0 million from $24.0 million for the three months ended September 30, 1998. The gross margin percent grew to 30.8% in 1999 from 29.1% in 1998. 11 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 Selling, general and administrative expenses were $7.8 million for the third quarter in 1999 versus $8.0 million in 1998 due to administrative efficiencies resulting from the ongoing consolidation of the accounting functions in our Mountain states operations. As a percentage of net sales, selling, general and administrative expenses decreased to 8.3% in 1999 from 9.7% in 1998, due to the leveraging of these costs over a larger sales base. Income from operations for the third quarter in 1999 increased to $17.7 million compared to $12.5 million for 1998, an increase in operating margin to 18.8% from 15.1% because of the factors discussed above. Net interest expense decreased to $4.0 million for the three months ended September 30, 1999 from $4.5 million for the same period ended September 30, 1998 primarily as a result of debt reduction from the use of proceeds from the initial public offering on August 18, 1999. The effective tax rate for the quarter was 37.4%, down from last year's third quarter of 41.8%. In 1998, we anticipated that our future taxable income would exceed $10.0 million and provided for a required 1% increase in the statutory tax rate on cumulative deferred tax items. Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30, 1998 Year-to-date net sales in 1999 increased by 33.4% to $220.9 million from $165.6 million in 1998. This increase consists of $31.0 million of additional net sales from the 1998 acquired businesses and an increase in net sales by our existing business of $24.3 million, a 17.4% increase. Year-to-date shipments of processed aggregates increased to 12.3 million tons for 1999 from 9.3 million tons for 1998, a 32.2% increase. Approximately half of the increases in processed aggregate volumes were contributed by our 1998 acquired businesses, while our existing businesses continue to experience strong growth in demand. We also experienced increases in selling prices ranging from 2.1% to 7.2% for our aggregates and related products. Gross profit for 1999 increased 38.4% to $64.0 million from $46.2 million for the same period in 1998. The increase consists of $5.4 million additional gross profit from our 1998 acquired businesses and a $12.4 million increase in gross profit from our existing business, a 32.8% increase. The increased profitability was primarily due to increases in prices as well as cost reductions resulting from improved efficiencies and higher volumes. The gross margin percent grew to 29.0% in 1999 from 27.9% in 1998. Selling, general and administrative expenses increased to $22.7 million in the first nine months of 1999 from $18.9 million compared to the same period in 1998 primarily due to the 1998 acquired businesses. As a percentage of net sales, selling, general and administrative expenses decreased to 10.3% this year compared to 11.4% in the prior year, due to the leveraging of these costs over a larger sales base. Year-to-date income from operations increased to $32.0 million compared to $19.3 million in the same period last year, a margin improvement to 14.5% from 11.6% because of the factors discussed above. Net interest expense increased to $12.9 million for the nine months ended September 30, 1999 from $10.0 million for the nine months ended September 30, 1998 as a result of increased borrowings used to fund the purchase of the 1998 acquired businesses and other expansion and capital needs, offset by the reduction in our debt after we applied our IPO proceeds. The effective tax rate for the first nine months of 1999 was 37.4%, down from 41.8% for the same period last year. In 1998, we anticipated that our future taxable income would exceed $10.0 million and provided for a required 1% increase in the statutory tax rate on cumulative deferred tax items. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1999, working capital, exclusive of current maturities of debt and cash items, totaled $55.2 million compared to $41.3 million at December 31, 1998, up 33.6% and compared to $48.6 million at June 30, 1999, up 13.5%. These increases were attributable to the seasonal nature of our business. 12 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 Net cash provided by operating activities for the nine months ended September 30, 1999 was $4.1 million, up from the $0.6 million generated during the same period last year. The $3.5 million increase in net cash provided reflects higher earnings offset by heightened working capital needs. Net cash used in investing activities for the nine months ended September 30, 1999 was $40.7 million compared to $98.5 million used in the same period in 1998. This $57.8 million decrease in cash used reflects the significant acquisition activities in 1998 offset by a $21.8 million increase in capital expenditures as we continue to expand our operations. On August 18, 1999, we completed our IPO resulting in net proceeds, to the Company of $65.7 million which was used to reduce our short and long term debt. Based on prior performance and current expectations, we expect cash flows from internally generated funds and our access to capital markets will continue to be sufficient to provide the capital resources necessary to fund the operating needs of our existing businesses, cover debt service requirements, and allow for the payment of dividends. YEAR 2000 ISSUE The Company recognizes the importance of Year 2000 issues and has made the resolution of these issues a priority by creating Year 2000 task forces whose project scopes include the assessment and ongoing monitoring of all information technology, computer hardware and software and non-information technology equipment affected by the Year 2000 issue. The task forces are granted the authority and resources to address the Year 2000 issue and receive supervisory support, as needed, from our Chief Financial Officer. Our plan to resolve the Year 2000 issue involves the following four phases: systems and hardware assessment, resolution, testing and implementation. To date, the task forces have completed their assessment of all our systems that could be significantly affected by the Year 2000 issue. We have installed or are in the process of installing new hardware and system solutions. We estimate that we have completed 90% of this process. We have contacted all major third party vendors to obtain representations and assurances that their hardware, embedded technology systems and software which we will use or will impact us are, or will be modified on a timely basis to be, Year 2000 compliant. These third parties include banks, cement and aggregates suppliers, gas, electricity and water suppliers and telephone companies. All of the third parties that have responded have stated that they are or expect to be Year 2000 compliant by the end of 1999. To date, our costs associated with assessing and monitoring the progress of third parties in resolving their Year 2000 issues have not been significant, and we do not expect to incur any material costs in the future relating to this aspect of our Year 2000 program. In 1998 and 1999 we spent $499,400 and $421,843, respectively, on system improvements . We believe these improvements, along with the program described above, should resolve our Year 2000 issues. The results of ongoing system resolution and testing, however, could result in additional costs to us. Management believes it has an effective program in place to resolve the impact of the Year 2000 issue in a timely manner and does not expect the Year 2000 issue to have a material adverse effect on our business, financial condition and results of operations, but we cannot assure you that this will be the case. We have not yet completed the conversion of all information technologies identified in our Year 2000 program. We do not anticipate any material adverse effect from Year 2000 failures, but you have no guarantee that we will be able to achieve total compliance. Factors that give rise to this uncertainty include our possible failure to identify all susceptible systems, noncompliance by third parties whose systems and operations impact us and a possible loss of technical resources to perform the necessary work. 13 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 Our most likely worst case Year 2000 noncompliance scenarios are: - loss of gas, electricity, water or phone services; - failures or delays in the daily delivery of raw materials; - equipment failures; - an interruption in our ability to collect amounts due from customers;and - loss of accurate accounting records. Depending on the length of any noncompliance or system failure, any of these situations could have a material adverse impact on our ability to serve our customers in a timely manner and result in lost business and revenues or increased costs. We currently have no formal contingency plans in place if we do not complete all phases of our Year 2000 program. However, the progress of the Year 2000 program continues to be closely monitored, and additional measures will be taken as risks are identified. We will continue to evaluate the status of completion throughout the fourth quarter of 1999 and determine whether such a plan is necessary in any part of our business. This disclosure is subject to protection under the Year 2000 Information and Readiness Disclosure Act of 1998, 15 U.S.C. I (1999), as a "Year 2000 Statement" and "Year 2000 Readiness Disclosure" as that Act defines these terms. EFFECT OF INFLATION Management believes that inflation has not had a material effect on our results. FORWARD LOOKING STATEMENTS Certain matters discussed in this report contain forward-looking statements and information based on management's belief as well as assumptions made by and information currently available to management. Such statements are subject to risks, uncertainties and assumptions including, among other matters, future growth in the construction industry; the ability of U.S. Aggregates, Inc. to complete acquisitions and effective integration of acquired companies operations; and general risks related to the markets in which U.S. Aggregates, Inc. operates. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those projected. Additional information regarding these risk factors and other uncertainties may be found in the Company's filings with the Securities and Exchange Commission. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to certain market risks arising from transactions that are entered into in the normal course of business. All of the Company's borrowings under our floating rate credit facilities are subject to interest rate risk. Borrowings under our syndicated revolving credit facility bear interest, at our option, at either the Eurodollar rate or the ABR rate, plus margin. Each 1.0% increase in the interest rates on the total of our floating rate debt would impact pretax earnings by approximately $1.2 million. The Company does not use interest rate swap contracts to hedge the impact of interest rate fluctuations on certain variable rate debt. 14 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS U.S. Aggregates, Inc. is subject to legal proceedings and claims that arise in the ordinary course of business. Management does not believe that the outcome of any of those matters will have a material adverse effect on U.S. Aggregates, Inc.'s consolidated financial position, operating results or cash flows. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (a) Changes in Securities During the three months ended September 30, 1999, the Company granted options to purchase an aggregate of 280,336 shares of common stock at an exercise price of $15.00 per share to 60 employees pursuant to the U.S. Aggregates, Inc. 1999 Long Term Incentive Plan. The issuances described were not registered under the Securities Act of 1933 pursuant to the exemption under Section 4 (2). (b) Use of Proceeds The shares of common stock issued and sold in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (Reg. No. 333-79209), which the SEC declared effective on August 12, 1999. That registration statement registered 5,000,000 shares of common stock having a maximum aggregate offering price of $75,000,000. Also, four of the Company's Stockholders granted the underwriters the right to purchase up to 750,000 additional shares to cover any over-allotments . The IPO was completed through a syndicate of underwriters for which Deutsche Banc Alex. Brown, Schroder & Co. Inc. and The Robinson-Humphrey Company acted as representatives. In the IPO, the Company issued and sold 5,000,000 shares of common stock on August 18, 1999 at an initial public offering price of $15.00 per share, resulting in gross proceeds of $75,000,000. On September 15, 1999, four of the Company's stockholders sold an additional 475,000 shares of common stock on the partial exercise of the underwriters' over-allotment option granted in connection with the IPO. Following the closing of the sale of those shares, the IPO was terminated. Through September 30, 1999, we incurred the following expenses in connection with the issuance and distribution of the shares of common stock registered pursuant to our IPO registration statement, none of which constituted direct or indirect payments to any of our officers, directors or any of their associates, or any person owning 10% or more of USAI or any of its affiliates, except for a $165,219 payment to Edward Dougherty, a director of the Company for consulting services (other expenses represent a reasonable estimate of actual costs incurred): Underwriting discounts and commissions $ 5,250,000 Finders' fees - Expenses paid to or for Underwriters - Other expenses 4,050,000 --------------- Total expenses $ 9,300,000 =============== 15 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 The net proceeds we received from the IPO, after deducting the expenses detailed above, were $65,700,000. From August 18, 1999 through September 30, 1999, we have applied the following amounts of our net proceeds from the IPO.
Payment to Officers, Payment to Directors and Use of Proceeds Others 10% Stockholders - --------------- ----------- --------------------- Construction of plant, building and facilities $ - $ - Purchase and installation of machinery and equipment . . . . . . . . . . . . . . - - Purchase of real estate. . . . . . . . . . . . - - Acquisition of other businesses. . . . . . . . - - Repayment of indebtedness. . . . . . . . . . . 65,700,000 - Working Capital. . . . . . . . . . . . . . . . - - Temporary investments. . . . . . . . . . . . . - -
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description - ------------ ----------- 3.1* Form of Restated Certificate of Incorporation of the Company (Form S-1 (Reg. No. 333-79209), Exhibit 3.1(vi)) 3.2* Form of Restated By-laws of the Company (Form S-1 (Reg. No. 333-79209), Exhibit 3.2(ii)) 10.1* U.S. Aggregates, Inc. 1999 Long Term Incentive Plan (Form S-1 (Reg. No. 333-79209), Exhibit 10.49) 10.2 Amended and Restated Employment Agreement dated August 18, 1999 with James A. Harris 10.3 Amended and Restated Employment Agreement dated August 18, 1999 with Michael J. Stone 10.4 Amended and Restated Employment Agreement dated August 18, 1999 with Morris L. Bishop, Jr. 10.5* Form of Underwriting Agreement among the Company, the Selling Stockholders, BT Alex Brown Incorporated, The Robinson- Humphrey Company, LLC and J. Henry Schroder & Co. Limited (Form S-1 (Reg. No. 333-79209), Exhibit 1.1) 21.1* Subsidiaries of the Company (Form S-1 (Reg. No. 333-79209), Exhibit 21.1) 27.1 Financial Data Schedule (EDGAR Filing Only) * Incorporated by reference to the filing indicated. (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the three months ended September 30, 1999. All other items specified by Part II of this report are inapplicable and accordingly have been omitted. 16 U.S. AGGREGATES, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. U.S. AGGREGATES, INC. Dated: November 8, 1999 /s/ Michael J. Stone ------------------------------------- Michael J. Stone Executive Vice President, Chief Financial Officer, Treasurer and Secretary 17 EXHIBIT INDEX Exhibit No. Description - ------------ ----------- 3.1* Form of Restated Certificate of Incorporation of the Company (Form S-1 (Reg. No. 333-79209), Exhibit 3.1(vi)) 3.2* Form of Restated By-laws of the Company (Form S-1 (Reg. No. 333-79209), Exhibit 3.2(ii)) 10.1* U.S. Aggregates, Inc. 1999 Long Term Incentive Plan (Form S-1 (Reg. No. 333-79209), Exhibit 10.49) 10.2 Amended and Restated Employment Agreement dated August 18, 1999 with James A. Harris 10.3 Amended and Restated Employment Agreement dated August 18, 1999 with Michael J. Stone 10.4 Amended and Restated Employment Agreement dated August 18, 1999 with Morris L. Bishop, Jr. 10.5* Form of Underwriting Agreement among the Company, the Selling Stockholders, BT Alex Brown Incorporated, The Robinson- Humphrey Company, LLC and J. Henry Schroder & Co. Limited (Form S-1 (Reg. No. 333-79209), Exhibit 1.1) 21.1* Subsidiaries of the Company (Form S-1 (Reg. No. 333-79209), Exhibit 21.1) 27.1 Financial Data Schedule (EDGAR Filing Only) * Incorporated by reference to the filing indicated. 18 EX-10.2 2 EMPLOYMENT AGREEMENT - JAMES A. HARRIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT is made as of August 18, 1999, between U.S. Aggregates, Inc., a Delaware corporation (the "Company"), and James A. Harris ("Executive"). The parties hereto desire to enter into an agreement pursuant to which Executive shall be employed by the Company as the Company's Chief Executive Officer. Certain defined terms used herein are set forth in Section 9 below. The parties hereto agree as follows: 1. Employment. The Company agrees to employ Executive and Executive accepts such employment for the period beginning as of the date hereof and ending upon termination pursuant to Section 3(a) hereof (the "Employment Period"). During the Employment Period, Executive shall serve as the Chief Executive Officer of the Company, subject to customary oversight by the Company's board of directors (the "Board"). 2. Compensation. During the Employment Period, the Company will pay Executive a base salary (the "Annual Base Salary") as the Board may designate from time to time, at a rate initially equal to $300,000 per annum, which amount shall be reviewed annually and shall be subject to adjustment as determined by the Board in its discretion, based upon, among other things, the Company's achievement of certain performance objectives; provided Annual Base Salary shall not be less than $300,000 per annum. Following the end of each fiscal year, the Board may, in its sole discretion, award a bonus (a "Bonus") to Executive in an amount as determined by the Board in its discretion, based upon, among other things, the Company's achievement of budgetary and other objectives. The Board will consult with Executive at the beginning of each budgetary period to set reasonable budgetary and other objectives against which the Company's performance will be measured. Executive's Annual Base Salary for any partial year will be prorated based upon the number of days elapsed in such year. 3. Termination. (a) Employment Period. Unless renewed upon mutual agreement of the Company and Executive, the Employment Period will continue until December 31, 2002, Executive's resignation, Disability or death or until the Board determines in its good faith judgment that termination of Executive's employment is in the best interests of the Company. Upon mutual agreement of the Company and Executive, the Employment Period may be extended for successive one-year terms. (b) Severance Payments. (i) In the event Executive's employment is terminated by the Company without Cause (excluding any expiration of the initial or any renewal of the Employment Period) or as a result of Executive's death or Disability, the Company shall pay to Executive severance pay ("Severance Pay") equal to Executive's Annual Base Salary, plus the amount of any Bonus received for the year prior to such termination, per year for a period of two years following the date of such termination, payable within 15 days following such termination. (ii) In the event the Employment Period is terminated for any reason other than Cause prior to December 31, 2002, Executive shall be entitled to health insurance of such coverage as provided to Executive prior to such termination until December 31, 2004. In the event the Employment Period is terminated for Cause prior to December 31, 2002 or for any reason (including expiration and non-renewal) on or after December 31, 2002, Executive shall be entitled to health insurance of such coverage as provided to Executive prior to such termination until two years after the end of the Employment Period. 4. Confidential Information. Executive acknowledges that the information, observations and data obtained by him during the course of his performance under this Agreement concerning the business and affairs of the Company and its affiliates (the "Confidential Information") are the property of the Company. Therefore, Executive agrees that he will not disclose to any unauthorized person or use for his own account any of such information, observations or data without the Board's written consent, unless and to the extent that the aforementioned matters become generally known to and available for use by the public, other than as a result of Executive's acts or omissions to act. Executive agrees to deliver to the Company at the termination of his employment, or at any other time the Company may request in writing, all memoranda, notes, plans, records, reports and other documents (and copies thereof) relating to the Confidential Information (including, without limitation, all acquisition prospects, lists and contact information) which he may then possess or have under his control. 5. Noncompetition and Nonsolicitation. (a) Noncompetition. Executive acknowledges that in the course of his employment with the Company he will become familiar with the Company's trade secrets and with other confidential information concerning the Company and that his services will be of special, unique and extraordinary value to the Company. Therefore, Executive agrees that during the Noncompete Period (as defined in Section 9 below) he shall not directly or indirectly own, manage, control, participate in, consult with, render services for or in any manner engage in any business competing with the businesses of the Company or its Subsidiaries as such businesses exist on the date of the termination of Executive's employment, within 100 miles any site of operations in which the Company or its Subsidiaries engage in such businesses or are then in negotiations to acquire such businesses. (b) Nonsolicitation. During the Noncompete Period, Executive shall not directly or indirectly through another entity (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way knowingly interfere with the relationship between the Company or any Subsidiary and any employee thereof, (ii) hire any person who was an employee of the Company or any Subsidiary at any time during the last - 2 - 12 months of the Employment Period or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way knowingly interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or any Subsidiary. (c) Enforcement. If, at the time of enforcement of Section 4 or 5 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law. Because Executive's services are unique and because Executive has access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security). 6. Executive Representations. Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement, confidentiality agreement or other similar agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. 7. Survival. Paragraphs 4 and 5 shall survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period. 8. Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated: If to the Company: U.S. Aggregates, Inc. 400 South El Camino Real, Suite 500 San Mateo, California 94402 Attention: Michael J. Stone - 3 - with a copy to: Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attention: Kevin R. Evanich John A. Schoenfeld If to Executive: James A. Harris U.S. Aggregates, Inc. 400-4 College Avenue Clemson, South Carolina 29631 or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement will be deemed to have been given when so delivered or sent or, if mailed, five days after deposit in the U.S. mail. 9. Definitions. "Cause" means (i) the commission of a felony or a crime involving moral turpitude or the commission of any other act involving dishonesty, disloyalty or fraud with respect to the Company or any of its Subsidiaries, (ii) conduct tending to bring the Company or any of its Subsidiaries into public disgrace or disrepute, (iii) failure to perform duties as reasonably directed by the Board, (iv) gross negligence or willful misconduct with respect to the Company or any of its Subsidiaries or (v) any other material breach of this Agreement or any other agreement to which Executive and the Company are parties which is not cured within 10 days after written notice thereof to Executive. "Disability" means Executive's inability, because of injury, illness or other incapacity to perform the services to the Company contemplated hereby for a continuous period of 90 days or for 120 days out of a continuous period of 360 days. Such Disability shall be deemed to have occurred on the 90th consecutive day or the 120th day within the specified period, as applicable. "Noncompete Period" means the Employment Period plus the two year period immediately subsequent the Employment Period. "Subsidiary" means any corporation of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors directly or through one or more subsidiaries. - 4 - 10. General Provisions. (a) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (b) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior under-standings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. (c) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. (d) Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company and their respective successors and assigns; provided that the rights and obligations of Executive and the Company under this Agreement shall not be assignable without the prior written consent of the other party. (e) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement will be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. (f) Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorneys' fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. - 5 - (g) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive. * * * * * - 6 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above. U.S. Aggregates, Inc. By: /S/ Michael J. Stone -------------------------- Its: Executive Vice President /S/ James A. Harris ---------------------------------- James A. Harris - 7 - EX-10.3 3 EMPLOYMENT AGREEMENT - MICHAEL J. STONE AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT is made as of August 18, 1999, between U.S. Aggregates, Inc., a Delaware corporation (the "Company"), and Michael J. Stone ("Executive"). The parties hereto desire to enter into an agreement pursuant to which Executive shall be employed by the Company as the Company's Executive Vice President - Development, Chief Financial Officer, Treasurer and Secretary. Certain defined terms used herein are set forth in Section 9 below. The parties hereto agree as follows: 1. Employment. The Company agrees to employ Executive and Executive accepts such employment for the period beginning as of the date hereof and ending upon termination pursuant to Section 3(a) hereof (the "Employment Period"). During the Employment Period, Executive shall serve as the Executive Vice President - Development, Chief Financial Officer, Treasurer and Secretary of the Company, subject to customary oversight by the Company's board of directors (the "Board"). 2. Compensation. During the Employment Period, the Company will pay Executive a base salary (the "Annual Base Salary") as the Board may designate from time to time, at a rate initially equal to $250,000 per annum, which amount shall be reviewed annually and shall be subject to adjustment as determined by the Board in its discretion, based upon, among other things, the Company's achievement of certain performance objectives; provided Annual Base Salary shall not be less than $250,000 per annum. Following the end of each fiscal year, the Board may, in its sole discretion, award a bonus (a "Bonus") to Executive in an amount as determined by the Board in its discretion, based upon, among other things, the Company's achievement of budgetary and other objectives. The Board will consult with Executive at the beginning of each budgetary period to set reasonable budgetary and other objectives against which the Company's performance will be measured. Executive's Annual Base Salary for any partial year will be prorated based upon the number of days elapsed in such year. 3. Termination. (a) Employment Period. Unless renewed upon mutual agreement of the Company and Executive, the Employment Period will continue until December 31, 2002, Executive's resignation, Disability or death or until the Board determines in its good faith judgment that termination of Executive's employment is in the best interests of the Company. Upon mutual agreement of the Company and Executive, the Employment Period may be extended for successive one-year terms. (b) Severance Payments. (i) In the event Executive's employment is terminated by the Company without Cause (excluding any expiration of the initial or any renewal of the Employment Period) or as a result of Executive's death or Disability, the Company shall pay to Executive severance pay ("Severance Pay") equal to Executive's Annual Base Salary, plus the amount of any Bonus received for the year prior to such termination, per year for a period of two years following the date of such termination, payable within 15 days following such termination. (ii) In the event the Employment Period is terminated for any reason other than Cause prior to December 31, 2002, Executive shall be entitled to health insurance of such coverage as provided to Executive prior to such termination until December 31, 2004. In the event the Employment Period is terminated for Cause prior to December 31, 2002 or for any reason (including expiration and non-renewal) on or after December 31, 2002, Executive shall be entitled to health insurance of such coverage as provided to Executive prior to such termination until two years after the end of the Employment Period. 4. Confidential Information. Executive acknowledges that the information, observations and data obtained by him during the course of his performance under this Agreement concerning the business and affairs of the Company and its affiliates (the "Confidential Information") are the property of the Company. Therefore, Executive agrees that he will not disclose to any unauthorized person or use for his own account any of such information, observations or data without the Board's written consent, unless and to the extent that the aforementioned matters become generally known to and available for use by the public, other than as a result of Executive's acts or omissions to act. Executive agrees to deliver to the Company at the termination of his employment, or at any other time the Company may request in writing, all memoranda, notes, plans, records, reports and other documents (and copies thereof) relating to the Confidential Information (including, without limitation, all acquisition prospects, lists and contact information) which he may then possess or have under his control. 5. Noncompetition and Nonsolicitation. (a) Noncompetition. Executive acknowledges that in the course of his employment with the Company he will become familiar with the Company's trade secrets and with other confidential information concerning the Company and that his services will be of special, unique and extraordinary value to the Company. Therefore, Executive agrees that during the Noncompete Period (as defined in Section 9 below) he shall not directly or indirectly own, manage, control, participate in, consult with, render services for or in any manner engage in any business competing with the businesses of the Company or its Subsidiaries as such businesses exist on the date of the termination of Executive's employment, within 100 miles any site of operations in which the Company or its Subsidiaries engage in such businesses or are then in negotiations to acquire such businesses. - 2 - (b) Nonsolicitation. During the Noncompete Period, Executive shall not directly or indirectly through another entity (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way knowingly interfere with the relationship between the Company or any Subsidiary and any employee thereof, (ii) hire any person who was an employee of the Company or any Subsidiary at any time during the last 12 months of the Employment Period or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way knowingly interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or any Subsidiary. (c) Enforcement. If, at the time of enforcement of Section 4 or 5 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law. Because Executive's services are unique and because Executive has access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security). 6. Executive Representations. Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement, confidentiality agreement or other similar agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. 7. Survival. Paragraphs 4 and 5 shall survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period. 8. Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated: - 3 - If to the Company: U.S. Aggregates, Inc. 400-4 College Avenue Clemson, South Carolina 29631 Attention: James A. Harris with a copy to: Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attention: Kevin R. Evanich John A. Schoenfeld If to Executive: Michael J. Stone U.S. Aggregates, Inc. 400 South El Camino Real, Suite 500 San Mateo, California 94402 or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement will be deemed to have been given when so delivered or sent or, if mailed, five days after deposit in the U.S. mail. 9. Definitions. "Cause" means (i) the commission of a felony or a crime involving moral turpitude or the commission of any other act involving dishonesty, disloyalty or fraud with respect to the Company or any of its Subsidiaries, (ii) conduct tending to bring the Company or any of its Subsidiaries into public disgrace or disrepute, (iii) failure to perform duties as reasonably directed by the Board, (iv) gross negligence or willful misconduct with respect to the Company or any of its Subsidiaries or (v) any other material breach of this Agreement or any other agreement to which Executive and the Company are parties which is not cured within 10 days after written notice thereof to Executive. "Disability" means Executive's inability, because of injury, illness or other incapacity to perform the services to the Company contemplated hereby for a continuous period of 90 days or for 120 days out of a continuous period of 360 days. Such Disability shall be deemed to have occurred on the 90th consecutive day or the 120th day within the specified period, as applicable. "Noncompete Period" means the Employment Period plus the two year period immediately subsequent the Employment Period. - 4 - "Subsidiary" means any corporation of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors directly or through one or more subsidiaries. 10. General Provisions. (a) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (b) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. (c) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. (d) Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company and their respective successors and assigns; provided that the rights and obligations of Executive and the Company under this Agreement shall not be assignable without the prior written consent of the other party. (e) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement will be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. (f) Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorneys' fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond - 5 - or other security) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. (g) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive. * * * * * - 6 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above. U.S. Aggregates, Inc. By: /S/ James A. Harris -------------------------- Its: Chief Executive Officer /S/ Michael J. Stone ---------------------------------- Michael J. Stone - 7 - EX-10.4 4 EMPLOYMENT AGREEMENT - MORRIS BISHOP,JR. AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT is made as of August 18, 1999, between U.S. Aggregates, Inc., a Delaware corporation (the "Company"), and Morris L. Bishop, Jr. ("Executive"). The parties hereto desire to enter into an agreement pursuant to which Executive shall be employed by the Company as the Company's President and Chief Operating Officer. Certain defined terms used herein are set forth in Section 9 below. The parties hereto agree as follows: 1. Employment. The Company agrees to employ Executive and Executive accepts such employment for the period beginning as of the date hereof and ending upon termination pursuant to Section 3(a) hereof (the "Employment Period"). During the Employment Period, Executive shall serve as the President and Chief Operating Officer of the Company, subject to customary oversight by the Company's board of directors (the "Board"). 2. Compensation. During the Employment Period, the Company will pay Executive a base salary (the "Annual Base Salary") as the Board may designate from time to time, at a rate initially equal to $250,000 per annum, which amount shall be reviewed annually and shall be subject to adjustment as determined by the Board in its discretion, based upon, among other things, the Company's achievement of certain performance objectives; provided Annual Base Salary shall not be less than $250,000 per annum. Following the end of each fiscal year, the Board may, in its sole discretion, award a bonus (a "Bonus") to Executive in an amount as determined by the Board in its discretion, based upon, among other things, the Company's achievement of budgetary and other objectives. The Board will consult with Executive at the beginning of each budgetary period to set reasonable budgetary and other objectives against which the Company's performance will be measured. Executive's Annual Base Salary for any partial year will be prorated based upon the number of days elapsed in such year. 3. Termination. (a) Employment Period. Unless renewed upon mutual agreement of the Company and Executive, the Employment Period will continue until December 31, 2002, Executive's resignation, Disability or death or until the Board determines in its good faith judgment that termination of Executive's employment is in the best interests of the Company. Upon mutual agreement of the Company and Executive, the Employment Period may be extended for successive one-year terms. (b) Severance Payments. (i) In the event Executive's employment is terminated by the Company without Cause (excluding any expiration of the initial or any renewal of the Employment Period) or as a result of Executive's death or Disability, the Company shall pay to Executive severance pay ("Severance Pay") equal to Executive's Annual Base Salary, plus the amount of any Bonus received for the year prior to such termination, per year for a period of two years following the date of such termination, payable within 15 days following such termination. (ii) In the event the Employment Period is terminated for any reason other than Cause prior to December 31, 2002, Executive shall be entitled to health insurance of such coverage as provided to Executive prior to such termination until December 31, 2004. In the event the Employment Period is terminated for Cause prior to December 31, 2002 or for any reason (including expiration and non-renewal) on or after December 31, 2002, Executive shall be entitled to health insurance of such coverage as provided to Executive prior to such termination until two years after the end of the Employment Period. 4. Confidential Information. Executive acknowledges that the information, observations and data obtained by him during the course of his performance under this Agreement concerning the business and affairs of the Company and its affiliates (the "Confidential Information") are the property of the Company. Therefore, Executive agrees that he will not disclose to any unauthorized person or use for his own account any of such information, observations or data without the Board's written consent, unless and to the extent that the aforementioned matters become generally known to and available for use by the public, other than as a result of Executive's acts or omissions to act. Executive agrees to deliver to the Company at the termination of his employment, or at any other time the Company may request in writing, all memoranda, notes, plans, records, reports and other documents (and copies thereof) relating to the Confidential Information (including, without limitation, all acquisition prospects, lists and contact information) which he may then possess or have under his control. 5. Noncompetition and Nonsolicitation. (a) Noncompetition. Executive acknowledges that in the course of his employment with the Company he will become familiar with the Company's trade secrets and with other confidential information concerning the Company and that his services will be of special, unique and extraordinary value to the Company. Therefore, Executive agrees that during the Noncompete Period (as defined in Section 9 below) he shall not directly or indirectly own, manage, control, participate in, consult with, render services for or in any manner engage in any business competing with the businesses of the Company or its Subsidiaries as such businesses exist on the date of the termination of Executive's employment, within 100 miles any site of operations in which the Company or its Subsidiaries engage in such businesses or are then in negotiations to acquire such businesses. (b) Nonsolicitation. During the Noncompete Period, Executive shall not directly or indirectly through another entity (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way knowingly - 2 - interfere with the relationship between the Company or any Subsidiary and any employee thereof, (ii) hire any person who was an employee of the Company or any Subsidiary at any time during the last 12 months of the Employment Period or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way knowingly interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or any Subsidiary. (c) Enforcement. If, at the time of enforcement of Section 4 or 5 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law. Because Executive's services are unique and because Executive has access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security). 6. Executive Representations. Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement, confidentiality agreement or other similar agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. 7. Survival. Paragraphs 4 and 5 shall survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period. 8. Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated: If to the Company: U.S. Aggregates, Inc. 400 South El Camino Real, Suite 500 San Mateo, California 94402 Attention: Michael J. Stone - 3 - with a copy to: Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attention: Kevin R. Evanich John A. Schoenfeld If to Executive: Morris L. Bishop, Jr. U.S. Aggregates, Inc. 3800 Colonnade Parkway, Suite 525 Birmingham, Alabama 35243 or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement will be deemed to have been given when so delivered or sent or, if mailed, five days after deposit in the U.S. mail. 9. Definitions. "Cause" means (i) the commission of a felony or a crime involving moral turpitude or the commission of any other act involving dishonesty, disloyalty or fraud with respect to the Company or any of its Subsidiaries, (ii) conduct tending to bring the Company or any of its Subsidiaries into public disgrace or disrepute, (iii) failure to perform duties as reasonably directed by the Board, (iv) gross negligence or willful misconduct with respect to the Company or any of its Subsidiaries or (v) any other material breach of this Agreement or any other agreement to which Executive and the Company are parties which is not cured within 10 days after written notice thereof to Executive. "Disability" means Executive's inability, because of injury, illness or other incapacity to perform the services to the Company contemplated hereby for a continuous period of 90 days or for 120 days out of a continuous period of 360 days. Such Disability shall be deemed to have occurred on the 90th consecutive day or the 120th day within the specified period, as applicable. "Noncompete Period" means the Employment Period plus the two year period immediately subsequent the Employment Period. "Subsidiary" means any corporation of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors directly or through one or more subsidiaries. - 4 - 10. General Provisions. (a) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (b) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. (c) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. (d) Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company and their respective successors and assigns; provided that the rights and obligations of Executive and the Company under this Agreement shall not be assignable without the prior written consent of the other party. (e) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement will be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. (f) Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorneys' fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. - 5 - (g) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive. * * * * * - 6 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above. U.S. Aggregates, Inc. By: /S/ Michael J. Stone --------------------------- Its: Executive Vice President /S/ Morris L. Bishop, Jr. ----------------------------------- Morris L. Bishop, Jr. - 7 - EX-27.1 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1999 AND THE RELATED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 3774 0 66493 1354 28683 103737 304484 29589 409950 51958 165279 0 0 149 139827 409950 220925 220925 156966 188881 382 0 12859 18803 7036 11195 0 (264) 0 10931 1.09 1.05
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