10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2012
OR
o	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: 333-

NEW ENTERPRISE STONE & LIME CO., INC.

(Exact name of registrant as specified in its charter)

Delaware	23-1374051
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

3912 Brumbaugh Road

P.O. Box 77

New Enterprise, PA 16664

(Address, including zip code, of principal executive offices)

(814) 766-2211

(Registrant’s telephone number, including area code)

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 o  No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o  No x

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

As of March 15, 2013, the number of shares outstanding of the registrant’s Class A Voting Common Stock, $1.00 par value, was 500 shares and the number of shares outstanding of the registrant’s Class B Non-Voting Common Stock, $1.00 par value, was 273,285 shares.

Explanatory Note

The sole purpose of this Amendment No. 1 to the Quarterly Report on Form 10-Q (the “Form 10-Q”) of New Enterprise Stone & Lime Co., Inc. for the quarterly period ended August 31, 2012, filed with the Securities and Exchange Commission on February 22, 2013, is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T.  Exhibit 101 to the Form 10-Q provides the financial statements and related notes from the Form 10-Q formatted in XBRL (extensible Business Reporting Language).

No other changes have been made to the Form 10-Q.  This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

2

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.

	NEW ENTERPRISE STONE & LIME CO., INC.
Date: March 15, 2013	By:	/S/ Paul I. Detwiler, III
		Paul I. Detwiler, III
		President, Chief Financial Officer, and Secretary

3

EXHIBIT INDEX

ExhibitNumber	Description
31.1*	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
31.2*	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
32.1**	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
32.2**	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
101.INS XBRL***	Instance document
101.SCH XBRL***	Taxonomy Extension Schema
101.CAL XBRL***	Taxonomy Extension Calculation Linkbase
101.DEF XBRL***	Taxonomy Extension Definition Linkbase
101.LAB XBRL***	Taxonomy Extension Label Linkbase
101.PRE XBRL***	Taxonomy Extension Presentation Linkbase

*	Filed herewith.
**	Furnished with original Form 10-Q on February 22, 2013.
***	XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.

4

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a)

I, Donald L. Detwiler, certify that:

1.      I have reviewed this report on Form 10-Q/A of New Enterprise Stone & Lime Co., Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)      Paragraph omitted pursuant to Rule 13a-14(a) or 15d-(14(a) of the Securities Exchange Act of 1934, as amended.

c)      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 15, 2013
	/s/ Donald L. Detwiler
	Donald L. Detwiler
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a)

I, Paul I. Detwiler, III, certify that:

1.I have reviewed this report on Form 10-Q/A of New Enterprise Stone & Lime Co., Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Paragraph omitted pursuant to Rule 13a-14(a) or 15d-(14(a) of the Securities Exchange Act of 1934, as amended.

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 15, 2013
	/s/ Paul I. Detwiler, III
	Paul I. Detwiler, III
	President, Chief Financial Officer, and Secretary

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Condensed Issuer, Guarantor and Non Guarantor Financial Information (Details) (USD $)	3 Months Ended		6 Months Ended			3 Months Ended
	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2011 Revision of errors in noncontrolling interest and certain other eliminating adjustments	Aug. 31, 2011 Restatement adjustment Revision of errors in noncontrolling interest and certain other eliminating adjustments	Aug. 31, 2012 Secured Notes	Mar. 15, 2012 Secured Notes	Aug. 31, 2012 Notes	Aug. 31, 2010 Notes
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Face amount of debt							$ 265,000,000	$ 265,000,000	$ 250,000,000	$ 250,000,000
Ownership interest in subsidiaries (as a percent)	100.00%		100.00%
Net decreases to Income before income taxes	14,093,000	25,415,000	(15,508,000)	12,618,000	600,000	300,000
Increases to Less: comprehensive income attributable to noncontrolling interest	$ 334,000	$ 300,000	$ 639,000	$ 599,000	$ 600,000	$ 300,000

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Nature of Operations and Summary of Significant Accounting Policies (Details 3) (USD $)	3 Months Ended	6 Months Ended
	Aug. 31, 2012	Aug. 31, 2012	Mar. 15, 2012	Feb. 29, 2012
Other Assets
Deferred financing fees	$ 16,352,000	$ 16,352,000		$ 10,409,000
Current portion of deferred financing fees	3,658,000	3,658,000		4,882,000
Cash value of life insurance	4,012,000	4,012,000		1,006,000
Loans on life insurance policy	0	0		3,000,000
Capitalized software	10,230,000	10,230,000		11,719,000
Accumulated amortization of capitalized software	715,000	715,000		160,000
Deferred stripping costs	3,366,000	3,366,000		2,994,000
Other	389,000	389,000		697,000
Other assets	34,349,000	34,349,000		26,825,000
Capitalized deferred financing fees			15,000,000
Loss recognized on debt retirement		6,400,000
Reduction to capitalized software cost	1,300,000
Change in the asset retirement obligations
Balance at the beginning of the period		11,360,000
Accretion expense		309,000
Changes in estimated obligations		1,105,000
Liabilities settled		(3,831,000)
Balance at the ending of the period	$ 8,943,000	$ 8,943,000

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Subsequent Events (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended		0 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2012 Subsequent events	Dec. 28, 2012 Subsequent events Common Stock, Class A	Dec. 28, 2012 Subsequent events Common Stock, Class B	Aug. 31, 2012 Subsequent events ABL Facility	Aug. 31, 2012 Subsequent events ABL Facility Amendment 1	Aug. 31, 2012 Subsequent events ABL Facility Maximum	Aug. 31, 2012 Subsequent events ABL Facility Maximum M&T	Sep. 07, 2012 Subsequent events ABL Facility Minimum
Subsequent Events
Fixed charge coverage ratio							1.0
Base dollar amount used in determining the borrowing base					$ 65.0	$ 56.0
Percentage of appraised value of the eligible real property to determine borrowing base					75.00%	65.00%
Percentage of outstanding balance of eligible accounts receivable to determine borrowing base					85.00%	70.00%
Percentage of eligible inventory to determine borrowing base					60.00%	40.00%
Borrowing rate (as a percent)									1.25%
Final M&T participation amount								$ 75.0
Number of days available from the date of notices to cure default by complying with its reporting requirements and related filings	120 days	120 days
Number of shares of common stock exchanged			10,000
Number of shares of common stock issued				11,180

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Long-Term Debt

6 Months Ended

Aug. 31, 2012

Long-Term Debt

Long-Term Debt

4. Long-Term Debt

	August 31,			February 29,
(In thousands)	2012			2012
Land, equipment and other obligations	$	28,828		$	23,016
First lien term loan A & B	—			145,383
First lien revolving credit facility	—			100,113
ABL Facility	56,446			—
Notes due 2018	250,000			250,000
Secured notes due 2018	265,000			—
Obligations under capital leases	9,773			10,501
Total debt	610,047			529,013
Less: Current portion	(20,662		)	(7,538		)
Total long-term debt	$	589,385		$	521,475

Refinancing

On March 15, 2012, the Company completed the sale of $265.0 million of its 13.0% Secured Notes due 2018 at par.  In connection with the sale of the Secured Notes, the Company also entered into a new $170.0 million ABL Facility.  The Company utilized the proceeds from the sale of the Secured Notes and the new ABL Facility to repay all amounts outstanding under, and terminate the Credit Agreement and certain other debt.  See Note 2, “Risks and Uncertainties” and Note 10, “Subsequent Events” for additional discussion of the Secured Notes, the ABL Facility and the debt refinanced, as well as details on amendments received and notices of default received from the trustee. The Company classified the components of the debt refinanced on March 15, 2012 as long-term in the condensed consolidated balance sheet as of February 29, 2012.

Land, equipment and other obligations

The Company has various notes, mortgages and other financing arrangements resulting from the purchase of principally land and equipment.  All loans provide for at least annual payments, which include interest ranging up to 10.0% per annum.  Principally all loans are secured by the land and equipment acquired.

Obligations include three revenue bonds, as of August 31, 2012, to different industrial development authorities with counties in Pennsylvania with a total outstanding of $6.2 million and four revenue bonds with a total outstanding of $10.6 million as of February 29, 2012. The effective interest rate on the industrial development bonds ranged from 0.28% to 0.40% for three months ended August 31, 2012 and 0.28% to 0.46% for the year ended February 29, 2012.  The Company prepaid $3.8 million of industrial development bonds during the first quarter of fiscal year 2012 with the proceeds from an unsecured borrowing which was subsequently refinanced on March 15, 2012.

Cash overdrafts liability of $10.0 million, as disclosed in Note 1, “Nature of Operations and Summary of Significant Accounting Policies - Cash and Cash Equivalents and Restricted Cash”, is included within the current portion of long-term debt as of August 31, 2012.

First lien term loan A & B

The Company repaid all borrowings under the first lien term loan A & B and terminated the associated Credit Agreement on March 15, 2012.

First lien revolving credit facility

The Company repaid all borrowings under the first lien revolving credit facility and terminated the associated Credit Agreement on March 15, 2012.

Asset-Based Loan Facility

On March 15, 2012, the Company entered into a credit agreement for the ABL Facility (the “ABL Facility Agreement”) with M&T, as the issuing bank, a lender, the swing lender, the agent and the arranger. The ABL Facility provides for maximum borrowings on a revolving basis of up to $170.0 million from time to time for general corporate purposes, including working capital.  The ABL Facility includes a $15.0 million letter of credit sub-facility and a $20.0 million swing line sub-facility for short-term borrowings. The ABL Facility will mature on March 15, 2017.  At August 31, 2012, the Company classified borrowings under the ABL Facility as long-term due to its ability to maintain such borrowings on a long term basis.  The borrowing base as of August 31, 2012 was $162.5 million.

Borrowings under the ABL Facility (except swing line loans) bear interest at a rate per annum equal to, at the Company’s option, either (a) a base rate or (b) a LIBOR rate, in each case plus an applicable margin.  Swing line loans bear interest at the base rate plus the applicable margin. Pricing on the ABL Facility is tied to the quarterly average Excess Availability, as defined in the ABL Facility Agreement. LIBOR margins for the ABL Facility range from 2.50% to 3.50% and base rate margins range from 0.50% to 1.50%.  The ABL Facility also contains a commitment fee that is tied to the quarterly average Excess Availability, as defined in the ABL Facility Agreement. The commitment fee ranges from 0.25% to 0.63%.  From the commencement of the ABL Facility Agreement until August 31, 2012, the LIBOR margin was 2.75%, the base rate margin was 0.75% and the commitment fee was 0.50%.

Borrowings under the ABL Facility are guaranteed by all of the Company’s subsidiaries that guarantee the Secured Notes and the Notes and are secured, subject to certain permitted liens, by first-priority liens on the ABL Priority Collateral and by second priority liens on the collateral securing the Secured Notes on a first-priority basis, except for certain real property.

Covenants

The ABL Facility provides that if excess availability is less than the greater of (i) $25.0 million or (ii) 15% of the lesser of the commitments and the borrowing base, the Company must comply with a minimum fixed charge coverage ratio test of at least 1.0 to 1.0 for the immediately preceding four fiscal quarters or twelve consecutive months, as applicable. In addition, the ABL Facility includes affirmative and negative covenants that, subject to significant exceptions, limit the ability of the Company and the Guarantors to undertake certain actions, including, among other things, limitations on (i) the incurrence of indebtedness and liens, (ii) asset sales, (iii) dividends and other payments with respect to capital stock, (iv) acquisitions, investments and loans, (v) affiliate transactions, (vi) altering the business, (vii) issuances of equity that have mandatory redemption or put rights prior to the maturity of the ABL Facility and (viii) providing negative pledges to third parties.

Amendment of ABL Facility

The ABL Facility contained a covenant that required the Company to deliver its fiscal year 2012 annual financial statements to the lender by May 29, 2012.  On September 7, 2012, the Company entered into the first amendment to the ABL Facility, and subsequent letters on September 28, 2012, November 9, 2012, December 7, 2012 and February 14, 2013 to change the required delivery date of the audited February 29, 2012 financial statements and the required delivery date of its first and second quarter results and financial statements to December 15, 2012, January 1, 2013, and February 28, 2013, respectively.

Availability under the ABL Facility is restricted to a borrowing base formula. As part of the first amendment entered into on September 7, 2012, the borrowing base formula under the ABL Facility became subject to adjustment based on the most recent Fixed Charge Coverage Ratio.  If the calculation of the Fixed Charge Coverage Ratio was less than 1.0 to 1.0, the borrowing base would be equal to the sum of (a) the lesser of (i) $56.0 million (from $65 million) and (ii) 65% (from 75%) of the appraised value of the eligible real property plus (b) 70% (from 85%) of the outstanding balance of eligible accounts receivable plus (c) 40% (from 60%) of eligible inventory, minus (d) reserves imposed by the agent of the ABL Facility in the exercise of reasonable business judgment from the perspective of a secured asset-based lender, minus (e) reserves imposed by the agent to the ABL Facility with respect to branded inventory in its sole discretion.

The first amendment also allows M&T, in the event M&T is unable to reduce its final participation in the ABL Facility to no more than $75.0 million during the primary syndication of the ABL Facility by December 15, 2012, to add or modify terms of the ABL Facility that were previously prohibited from being added or modified, including but not limited to the advance rates, and certain covenants and the interest and fees payable.  M&T has not syndicated the ABL Facility. However, there have been no further modifications of the terms of the ABL Facility.

On February 14, 2013, the Company received additional extension of time to issue its Quarterly report on Form 10-Q for the third quarter of fiscal 2013 to April 1, 2013.  There can be no guarantee the Company will not need to obtain similar amendments in the future. A failure to obtain such amendment could result in an acceleration of the Company’s indebtedness under the ABL Facility and a cross-default under the Company’s other indebtedness, including the Notes and Secured Notes.

Notes due 2018

In August 2010, the Company sold $250.0 million aggregate principal amount of Notes at par value.  Interest on the Notes is payable semi-annually in cash in arrears on March 1 and September 1 of each year.  From the proceeds of the issuance of Notes, the Company prepaid its second lien loan which had a principal balance outstanding of $85.0 million and paid down a portion of its term loan A, term loan B and the revolving credit facility in the amounts of $64.9 million, $50.1 million and $43.5 million, respectively.

Secured Notes due 2018

Interest on the Secured Notes will initially be payable at 13.0% per annum, semi-annually in arrears on March 15 and September 15, commencing on September 15, 2012. The Company will make each interest payment to the holders of record of the Secured Notes as of the immediately preceding March 1 and September 1. The Company used the proceeds from this offering to repay certain existing indebtedness and to pay related fees and expenses.  The Secured Notes will mature on March 15, 2018.

With respect to any interest payment date on or prior to March 15, 2017, the Company may, at its option, elect (an ‘‘Interest Form Election’’) to pay interest on the Secured Notes (i) entirely in cash (‘‘Cash Interest’’) or (ii) subject to any Interest Rate Increase (as defined below), initially at the rate of 4% per annum in cash (‘‘Cash Interest Portion’’) and 9% per annum by increasing the outstanding principal amount of the Secured Notes or by issuing additional paid in kind notes under the indenture on the same terms as the Secured Notes (‘‘PIK Interest Portion’’ or “PIK Interest”); provided that in the absence of an Interest Form Election, interest on the Secured Notes will be payable as PIK Interest.  At August 31, 2012, $10.9 million of accrued PIK interest was recorded as a long-term obligation in Other liabilities.

With respect to any interest payment payable after March 15, 2017, interest will be payable solely in cash. In addition, at the beginning of and with respect to each 12-month period that begins on March 15, 2013, March 15, 2014 and March 15, 2015, the interest rate on the Secured Notes as of such date shall permanently increase by an additional 1.0% per annum (an ‘‘Interest Rate Increase’’) unless the Company delivers a written notice to the Trustee of the Company’s election for such 12-month period to either (x) alter the manner of interest payment on the Secured Notes going forward by increasing the Cash Interest Portion and decreasing the PIK Interest Portion in each case in effect with respect to the immediately preceding interest period for which any PIK Interest was paid prior to each such election by, in each case, 1.0% per annum or (y) pay interest on the Secured Notes for such 12-month period entirely in cash (a ‘‘12-Month Cash Election’’). In the event of a 12-Month Cash Election for any 12-month period prior to March 15, 2017, the interest rate on the Secured Notes applicable for such 12-month period shall be 1.0% less than the total interest rate applicable to the Secured Notes in effect with respect to the immediately preceding interest period for which any PIK Interest was paid. Any Interest Rate Increase shall be affected by increasing the PIK Interest Portion in effect with respect to the immediately preceding interest period for which any PIK Interest was paid prior to each such Interest Rate Increase. If the Company makes a 12-Month Cash Election for and in respect of the 12-month period beginning on March 15, 2016, the same interest rate will apply for and in respect of the 12-month period beginning on March 15, 2017.  The additional 1.0% per annum Interest Rate Increase will only apply to the three consecutive annual periods beginning March 15, 2013.

At any time prior to March 15, 2015, the Company may redeem at its option up to 35% of the Secured Notes with the net cash proceeds from certain public equity offerings at a redemption price equal to 113.0% of the principal amount outstanding, plus accrued and unpaid interest. The Company may also redeem some or all of the Secured Notes at any time prior to March 15, 2015 at a redemption price equal to 100.0% of the principal amount of the outstanding Secured Notes, plus accrued and unpaid interest, plus a ‘‘make-whole’’ premium. On and after March 15, 2015, the Secured Notes will be redeemable, in whole or in part, at the redemption prices specified as follows:

Year	Percentage
2015	106.50	%
2016	103.25	%
2017	100.00	%

In addition, the Company may be required to make an offer to purchase the Secured Notes upon the sale of certain assets or upon a change of control. The Company will be required to redeem certain portions of the Secured Notes for tax purposes at the end of the first accrual period ending after the fifth anniversary of the Secured Notes issuance and each accrual period thereafter.

The Secured Notes are guaranteed on a joint and several basis by the Company’s existing and future domestic subsidiaries (the “Guarantors” as described in Note 9,” Condensed Issuer, Guarantor and Non Guarantor Financial Information”) that currently guarantee the Company’s Notes and the ABL Facility. The Secured Notes and related guarantees are senior secured obligations of the Company and the Guarantors that rank equally in right of payment with all existing and future senior debt of the Company and the Guarantors, including the Notes and ABL Facility, and senior to all existing and future subordinated debt of the Company and Guarantors.  The Secured Notes and related guarantees are secured, subject to certain permitted liens and except for certain excluded assets, by first priority liens on substantially all of the Company’s and Guarantors’ personal property and certain owned and leased real property and second-priority liens on certain real property and substantially all of the Company’s and Guarantors’ accounts receivable, inventory and deposit accounts and related assets and proceeds of the foregoing that secure the ABL Facility on a first-priority basis (the “ABL Priority Collateral”).

The indenture for the Secured Notes contains restrictive covenants that limit the Company’s ability and the ability of its subsidiaries that are restricted under the indenture to, among other things, incur additional debt, pay dividends or make distributions, repurchase capital stock or make other restricted payments, make certain investments, incur liens, merge, amalgamate or consolidate, sell, transfer, lease or otherwise dispose of all or substantially all assets and enter into transactions with affiliates.

In accordance with the indenture for the Secured Notes, the Company must file a registration statement with the Securities and Exchange Commission and consummate a registered offer to exchange the Secured Notes for new Secured Notes having terms substantially identical in all material respects to the Secured Notes by March 11, 2013.  If the Company fails to consummate the exchange offer within such time period, the interest rate on the Secured Notes will increase by up to an additional 1.0% per annum until such exchange offer is completed or the Secured Notes are redeemed.

Obligations under capital lease

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

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Income Taxes (Details)	3 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2012	Aug. 31, 2011
Effective income tax rate
Effective income tax rate	39.50%	53.80%	38.10%	43.20%
Statutory federal rate			35.00%

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Long-Term Debt (Details) (USD $)			3 Months Ended					6 Months Ended			6 Months Ended		3 Months Ended	6 Months Ended			6 Months Ended						6 Months Ended						6 Months Ended		6 Months Ended							6 Months Ended
	Aug. 31, 2012	Feb. 29, 2012	May 31, 2011 Land, equipment and other obligations	Aug. 31, 2012 Land, equipment and other obligations Item	Feb. 29, 2012 Land, equipment and other obligations Item	Aug. 31, 2012 Land, equipment and other obligations Minimum	Feb. 29, 2012 Land, equipment and other obligations Minimum	Aug. 31, 2012 Land, equipment and other obligations Maximum	Feb. 29, 2012 Land, equipment and other obligations Maximum	Feb. 29, 2012 First lien term loan A & B	Aug. 31, 2010 First lien revolving credit facility	Feb. 29, 2012 First lien revolving credit facility	Aug. 31, 2012 ABL Facility	Aug. 31, 2012 ABL Facility	Aug. 31, 2012 ABL Facility	Mar. 15, 2012 ABL Facility	Aug. 31, 2012 ABL Facility Amendment 1	Aug. 31, 2012 ABL Facility LIBOR	Aug. 31, 2012 ABL Facility Base rate	Aug. 31, 2012 ABL Facility Minimum	Aug. 31, 2012 ABL Facility Minimum LIBOR	Aug. 31, 2012 ABL Facility Minimum Base rate	Aug. 31, 2012 ABL Facility Maximum	Aug. 31, 2012 ABL Facility Maximum M&T	Aug. 31, 2012 ABL Facility Maximum LIBOR	Aug. 31, 2012 ABL Facility Maximum Base rate	Mar. 15, 2012 Letter of credit sub-facility	Mar. 15, 2012 Swing line sub-facility	Aug. 31, 2012 Secured notes due 2018 Item	Mar. 15, 2012 Secured notes due 2018	Aug. 31, 2012 Secured notes due 2018 Prior to March 15, 2015	Aug. 31, 2012 Secured notes due 2018 Twelve-month period beginning March 15, 2015	Aug. 31, 2012 Secured notes due 2018 Twelve-month period beginning March 15, 2016	Aug. 31, 2012 Secured notes due 2018 Twelve-month period beginning March 15, 2017	Aug. 31, 2012 Secured notes due 2018 Maximum Prior to March 15, 2015	Aug. 31, 2012 Obligations under capital leases	Feb. 29, 2012 Obligations under capital leases	Aug. 31, 2010 Second lien loan	Aug. 31, 2010 Term loan A	Aug. 31, 2010 Term loan B	Aug. 31, 2012 Senior notes due 2018	Feb. 29, 2012 Senior notes due 2018	Aug. 31, 2010 Senior notes due 2018
Long-Term Debt
Debt	$ 610,047,000	$ 529,013,000		$ 28,828,000	$ 23,016,000					$ 145,383,000		$ 100,113,000	$ 56,446,000	$ 56,446,000	$ 56,446,000														$ 265,000,000							$ 9,773,000	$ 10,501,000				$ 250,000,000	$ 250,000,000
Less: Current portion	(20,662,000)	(7,538,000)
Long-term debt	589,385,000	521,475,000
Face amount of debt																													265,000,000	265,000,000											250,000,000		250,000,000
Stated interest rate (as a percent)																														13.00%											11.00%
Maximum borrowing capacity													162,500,000	162,500,000	162,500,000	170,000,000											15,000,000	20,000,000
Interest rate (as a percent)								10.00%
Number of revenue bonds				3	4
Carrying value of bond				6,200,000	10,600,000
Effective interest rate (as a percent)						0.28%	0.28%	0.40%	0.46%
Prepayment of debt			3,800,000								43,500,000																											85,000,000	64,900,000	50,100,000
Cash overdrafts liability				10,000,000
Variable interest rate basis																		LIBOR	base rate
Margin added to variable interest rate basis (as a percent)																		2.75%	0.75%		2.50%	0.50%			3.50%	1.50%
Commitment fee (as a percent)														0.50%						0.25%			0.63%
Required available borrowing capacity under credit facility													25,000,000
Available borrowing capacity as a percentage of the lesser of commitments and the borrowing base													15.00%
Fixed charge coverage ratio																				1.0			1.0
Number of consecutive months used in calculating the fixed charge coverage ratio under credit facilities' covenants															12 months
Base dollar amount used in determining the borrowing base													65,000,000	65,000,000	65,000,000		56,000,000
Percentage of appraised value of the eligible real property to determine borrowing base															75.00%		65.00%
Percentage of outstanding balance of eligible accounts receivable to determine borrowing base															85.00%		70.00%
Percentage of eligible inventory to determine borrowing base															60.00%		40.00%
Final M&T participation amount																								75,000,000
Cash Interest Portion (as a percent)																													4.00%
PIK Interest Portion or PIK Interest (as a percent)																													9.00%
Accrued PIK interest																													$ 10,900,000
Interest form election period																													12 months
Interest Rate Increase (as a percent)																													0.010
PIK Interest rate prior to interest form election period (as a percent)																													1.00%
Decrease in interest rates as a result of 12-Month Cash Election (as a percent)																													1.00%
Number of consecutive annual periods beginning March 15, 2013																													3
Percentage of the principal amount that may be redeemed with proceeds from public equity offerings																																			35.00%
Redemption price as a percentage of principal amount, if using proceeds of equity offerings																															113.00%
Redemption price of debt instrument as a percentage of principal amount																															100.00%	106.50%	103.25%	100.00%
Maximum additional interest rate in case of failure to consummate exchange offer (as a percent)																													1.00%

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Retirement and Benefit Programs (Details) (USD $)	3 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2012 Item	Aug. 31, 2011
Retirement and Benefit Programs
Expense associated with retirement and benefit programs, excluding defined benefit plans	$ 2,200,000	$ 2,200,000	$ 3,900,000	$ 3,900,000
Number of defined benefit plans			2
Components of net periodic benefit cost
Service cost	68,000	54,000	135,000	109,000
Interest cost	99,000	110,000	198,000	220,000
Expected return on plan assets	(146,000)	(154,000)	(293,000)	(310,000)
Amortization of prior service cost	15,000	15,000	30,000	31,000
Recognized net actuarial loss	62,000	29,000	124,000	58,000
Total pension expense	98,000	54,000	194,000	108,000
Contributions to the defined benefit pension plans			200,000
Additional contributions in the remainder of fiscal year	$ 200,000		$ 200,000

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Commitments and Contingencies (Details) (Rock Solid, USD $) In Millions, unless otherwise specified	Aug. 31, 2012	Feb. 29, 2012
Rock Solid
Commitments and Contingencies
Amount of collateral recorded as a part of restricted cash	$ 8.8
Reserves for retained losses	8.4	9.7
Exposures for periods prior to captive insurance policy	$ 8.5	$ 8.5

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Accrued Liabilities

6 Months Ended

Aug. 31, 2012

Accrued Liabilities

Accrued Liabilities

3. Accrued Liabilities

Accrued liabilities consisted of the following:

	August 31,		February 29,
(In thousands)	2012		2012
Payroll and vacation	$	9,460	$	8,496
Contract expenses	250		518
Withholding taxes	3,033		2,862
Interest	18,845		14,055
Insurance	17,143		18,353
Deferred acquisition liability	3,521		3,610
Billings in excess of costs and estimated earnings on uncompleted contracts	3,371		255
Other	2,372		3,482
Total accrued liabilities	$	57,995	$	51,631

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Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2012 Item	Aug. 31, 2011
Segment Reporting
Number of reportable segments			3
Segment Reporting
Revenue	$ 260,542	$ 267,412	$ 418,523	$ 413,482
Operating income	31,735	37,397	25,064	36,195
Depreciation, depletion and amortization	13,280	12,288	25,123	23,633
Construction materials
Segment Reporting
Revenue	194,144	204,892	316,426	307,822
Operating income	32,107	35,970	36,089	38,099
Depreciation, depletion and amortization	7,585	8,791	15,301	16,014
Construction materials | Aggregates
Segment Reporting
Revenue	59,444	66,620	112,921	111,450
Operating income	14,074	19,341	17,008	22,375
Construction materials | Hot mix asphalt
Segment Reporting
Revenue	98,606	99,442	135,890	130,377
Operating income	15,885	13,701	16,498	13,173
Construction materials | Ready mixed concrete
Segment Reporting
Revenue	18,793	20,740	35,884	33,706
Operating income	1,548	2,544	2,758	2,503
Construction materials | Precast/prestressed structural concrete
Segment Reporting
Revenue	8,369	8,213	14,620	14,092
Operating income	137	(11)	(494)	(450)
Construction materials | Masonry products
Segment Reporting
Revenue	4,383	5,082	8,628	9,589
Operating income	(146)	(66)	(463)	(185)
Construction materials | Construction supply centers
Segment Reporting
Revenue	4,549	4,795	8,483	8,608
Operating income	609	461	782	683
Heavy/highway construction
Segment Reporting
Revenue	108,963	126,394	162,946	179,205
Operating income	3,576	2,877	1,939	729
Depreciation, depletion and amortization	2,920	1,363	4,817	3,381
Traffic safety services and equipment
Segment Reporting
Revenue	26,999	25,899	51,398	47,860
Operating income	(812)	2,950	(1,275)	3,177
Depreciation, depletion and amortization	1,722	1,756	3,414	3,470
Other revenues
Segment Reporting
Revenue	3,428	5,931	7,150	9,125
Segment totals
Segment Reporting
Revenue	333,534	363,116	537,920	544,012
Inter-segment eliminations
Segment Reporting
Revenue	(72,992)	(95,704)	(119,397)	(130,530)
Corporate and unallocated
Segment Reporting
Operating income	(3,136)	(4,400)	(11,689)	(5,810)
Depreciation, depletion and amortization	$ 1,053	$ 378	$ 1,591	$ 768

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Aug. 31, 2012	Feb. 29, 2012
Current assets
Cash and cash equivalents	$ 7,985	$ 15,032
Restricted cash	10,500	10,322
Accounts receivable (less allowance for doubtful accounts of $3,777 in August 2012 and $3,259 in February 2012)	170,435	76,841
Inventories	136,651	132,195
Deferred income taxes	15,699	16,019
Other current assets	7,662	7,788
Total current assets	348,932	258,197
Other assets
Property, plant and equipment, net	375,130	371,574
Goodwill	90,847	90,847
Other intangible assets	25,724	26,344
Other assets	34,349	26,825
Total assets	874,982	773,787
Current liabilities
Current maturities of long-term debt	20,662	7,538
Accounts payable - trade	48,288	27,558
Accrued liabilities	57,995	51,631
Total current liabilities	126,945	86,727
Long-term debt and other liabilities
Long-term debt, less current maturities	589,385	521,475
Deferred income taxes	90,454	96,674
Other liabilities	28,269	19,043
Total liabilities	835,053	723,919
Commitments and contingencies (Note 7)
Equity
Accumulated deficit	(87,010)	(76,779)
Additional paid in capital	126,964	126,964
Accumulated other comprehensive loss	(2,090)	(2,181)
Total New Enterprise Stone & Lime Co., Inc. equity	38,136	48,276
Noncontrolling interest in consolidated subsidiaries	1,793	1,592
Total equity	39,929	49,868
Total liabilities and equity	874,982	773,787
Common Stock, Class A
Equity
Common stock	21	21
Common Stock, Class B
Equity
Common stock	$ 251	$ 251

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Nature of Operations and Summary of Significant Accounting Policies

6 Months Ended

Aug. 31, 2012

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Summary of Significant Accounting Policies

1. Nature of Operations and Summary of Significant Accounting Policies

Company Activities

New Enterprise Stone & Lime Co., Inc., a Delaware corporation, is a leading privately held, vertically integrated construction materials supplier and heavy/highway construction contractor in Pennsylvania and western New York and a national traffic safety services and equipment provider.  Founded in 1924, the Company operates in three segments based upon the nature of its products and services: construction materials, heavy/highway construction and traffic safety services and equipment.  As used herein, the terms (“we,” “us,” “our,” “NESL,” or the “Company”) refer to New Enterprise Stone & Lime Co., Inc., and/or one or more of its subsidiaries.  Almost all of our products are produced and consumed outdoors.  Normally, our highest sales and earnings are in the second and third fiscal quarters and our lowest are in the first and fourth fiscal quarters.  As a result of this seasonality, our significant net working capital items, which are accounts receivable, inventories, accounts payable - trade and accrued liabilities, are typically higher as of interim period ends compared to fiscal year end.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and notes included in this report have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  All adjustments (all of which are of a normal recurring nature) that are necessary for a fair presentation are reflected in the condensed consolidated financial statements.  The condensed consolidated financial statements do not include all of the information or disclosures required for a complete presentation in accordance with GAAP.  Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2012 filed with the Securities and Exchange Commission (“SEC”). The results for interim periods are not necessarily indicative of the results for a full fiscal year.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and entities where the Company has a controlling equity interest. Intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain items previously reported in prior period financial statement captions have been conformed to agree with current period presentation.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.  Significant items subject to such estimates and assumptions include the carrying amount of property, plant and equipment; valuation of receivables, inventories and goodwill; recognition of revenue and loss contract reserves under the percentage-of-completion method; assets and obligations related to employee benefit plans; asset retirement obligations; income tax valuation; and self-insurance reserves.  Actual results could differ from those estimates.

Cash and Cash Equivalents and Restricted Cash

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

In March  2012, the Company started using a cash pooling arrangement with a single financial institution with specific provisions for the right to offset positive and negative cash balances.  Accordingly, we classify net aggregate bank overdraft positions as other obligations within the current maturities of long-term debt as of August 31, 2012, based on the short-term nature of these positions.

Trade Accounts Receivable

Trade accounts receivable, less allowance for doubtful accounts, are recorded at the invoiced amount plus service charges related to past due accounts.  The Company’s total accounts receivable consisted of the following:

	August 31,			February 29,
(In thousands)	2012			2012
Costs and estimated earnings in excess of billings	$	21,775		$	14,570
Trade	147,149			60,172
Retainages	5,288			5,358
	174,212			80,100
Allowance for doubtful accounts	(3,777		)	(3,259		)
Accounts receivable, net	$	170,435		$	76,841

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

Concentrations of Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and temporary investments with high-quality financial institutions. At times, such balances and investments may be in excess of Federal Deposit Insurance Corporation insured limits; however the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to its cash and cash equivalents. The Company conducts business with various governmental entities within the Commonwealth of Pennsylvania. These entities include the Pennsylvania Department of Transportation, the Pennsylvania Turnpike Commission and various townships, municipalities, school districts and universities within Pennsylvania. The Company has not experienced any material losses with these governmental agencies and does not believe it is exposed to any significant credit risk related to its outstanding accounts receivable.

Inventories

Inventories are stated at the lower of cost or market.  Cost is determined using either first-in, first-out (“FIFO”) or weighted average method based on the applicable category of inventories.

The Company’s total inventory consists of the following:

	August 31,		February 29,
(In thousands)	2012		2012
Crushed stone, agricultural lime, and sand	$	83,386	$	84,016
Raw materials	11,284		9,400
Parts, tires, and supplies	11,761		11,313
Concrete blocks	4,219		4,547
Building materials	4,236		3,982
Safety equipment	18,986		16,901
Other	2,779		2,036
	$	136,651	$	132,195

Property, Plant and Equipment

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

The Company’s property, plant and equipment consist of the following:

	August 31,			February 29,
(In thousands)	2012			2012
Limestone and sand acreage	$	139,318		$	142,034
Land, buildings and building improvements	100,042			96,504
Crushing, prestressing, and manufacturing plants	316,916			310,130
Contracting equipment, vehicles and other	294,265			281,543
Construction in progress	10,824			8,829
Property, plant and equipment	861,365			839,040
Less: Accumulated depreciation and depletion	(486,235		)	(467,466		)
Property, plant and equipment, net	$	375,130		$	371,574

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

Depreciation expense was $12.1 million and $11.7 million for three months ended August 31, 2012 and 2011, respectively.  Depreciation expense was $22.9 million and $22.6 million for the six months ended August 31, 2012 and 2011, respectively.  Included in the contracting equipment, vehicles and other asset category above are capital leases with a cost basis of $27.6 million and $25.8 million as of August 31, 2012 and February 29, 2012, respectively.

Goodwill

The Company tests goodwill for impairment on an annual basis or more frequently if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  There were no changes to the carrying value of goodwill during the six months ended August 31, 2012.  Management continues to monitor the impact of market and economic events to determine if it is more likely than not that the carrying value of these reporting units has been impaired.  The timing of a sustained recovery in the construction industry may have a significant effect on the fair value of our reporting units. A decrease in the estimated fair value of one or more of the Company’s reporting units as a result of changes in future earnings, interest rates, market trends and/or cash flows could result in the recognition of goodwill impairment.

In January 2013, we began the process of completing our annual goodwill impairment assessment.  During our initial review, we identified indications that there may be significant decreases in the fair values of our Traffic Safety Services and Equipment reporting unit with goodwill of $5.8 million and a reporting unit in our Construction Materials segment with goodwill of $68.4 million as of August 31, 2012.  As of the date of issuance of this Quarterly Report on Form 10-Q, we have not completed our annual impairment assessment and we currently do not expect an impairment charge.

Other Intangible Assets

The Company’s other intangible assets consist of the following:

						Net								Net
						Carrying								Carrying
	Gross					Amount								Amount
	Carrying		Accumulated			February 29,		Current			Current			August 31,
(In thousands)	Amount		Amortization			2012		Impairment			Amortization			2012
Amortizable intangible assets
Customer relationships	$	12,000	$	(2,400	)	$	9,600	$	—		$	(300	)	$	9,300
Technology	600		(160		)	440		—			(20		)	420
	12,600		(2,560		)	10,040		—			(320		)	9,720
Nonamortizable intangible assets
Trademarks	16,304		—			16,304		(300		)	—			16,004
Total other intangible assets	$	28,904	$	(2,560	)	$	26,344	$	(300	)	$	(320	)	$	25,724

Other intangible assets consist of technology, customer relationships and trademarks acquired in previous acquisitions. The technology is being amortized over a straight-line basis of 15 years. The customer relationships are being amortized on a straight-line basis over 20 years. The trademarks are considered to have indefinite-life and are not amortized, but tested for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company performs its annual impairment analysis of intangible assets as of fiscal year end. The Company uses a variety of methodologies in conducting the impairment assessment of its intangible assets, including, but not limited to, discounted cash flow models, which are based on the assumptions we believe hypothetical marketplace participants would use. For intangible assets, other than goodwill, if the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess.

We recorded a $1.1 million impairment of our Traffic Safety Services and Equipment reporting unit’s trademark in the fourth quarter of the fiscal year ended February 29, 2012 due to a decline in revenues and we took a $0.3 million impairment of our Traffic Safety Services and Equipment reporting unit’s trademark in the current quarter ended August 31, 2012 due to changes in underlying assumptions.  The remaining balance of our Traffic Safety Services and Equipment reporting unit’s trademark is $5.1 million as of August 31, 2012.  The timing of a sustained recovery in the construction industry, our ability to meet our expected operating results and changes in interest rates requires us to continuously evaluate the fair value of our trademarks.  A decrease in the estimated fair value of our trademarks could result in the recognition of additional impairments.

Amortization of intangible assets for each of the six months ended August 31, 2012 and August 31, 2011 was $0.3 million.

Other Assets

The Company’s long term other assets consist of the following:

	August 31,		February 29,
(In thousands)	2012		2012
Deferred financing fees (less current portion of $3,658 at August 2012 and $4,882 at February 2012)	$	16,352	$	10,409
Cash value of life insurance (net of loans of $0 at August 2012 and $3,000 at February 2012)	4,012		1,006
Capitalized software (net of accumulated amortization $715 at August 2012 and $160 at February 2012)	10,230		11,719
Deferred stripping costs	3,366		2,994
Other	389		697
Total other assets	$	34,349	$	26,825

As part of our debt refinancing transactions on March 15, 2012, we incurred and capitalized $15.0 million of deferred financing fees.  The Company recognized a loss on debt retirement of approximately $6.4 million related to the write-off of unamortized debt issuance costs.  The write-off of the debt issuance costs were recorded as a component of net interest expense.

During the three months ended August 31, 2012, the Company recorded a $1.3 million reduction to capitalized software related to our new ERP system.

Asset Retirement Obligations

The change in the asset retirement obligations for the six months ended August 31, 2012 consists of the following:

(In thousands)
Balance at February 29, 2012	$	11,360
Accretion expense	309
Change in estimated obligations	1,105
Liabilities settled	(3,831		)
Balance at August 31, 2012	$	8,943

Recently Issued Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. This ASU requires companies to disclose both gross and net information about financial instruments that have been offset on the consolidated balance sheet. This ASU will be effective commencing with the three months ending May 31, 2013. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU gives companies the option to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If it is determined that it is more likely than not the indefinite-lived intangible asset is impaired, a quantitative impairment test is required. However, if it is concluded otherwise, the quantitative test is not necessary. This ASU will be effective commencing with the three months ending May 31, 2013. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

Recently Adopted Accounting Standards

In May, 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”.  The amendments in this update result in common fair value measurement and disclosure requirements in GAAP and International Financial Reporting Standards (“IFRSs”) and change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, it is not intended for the amendments to result in a change in the application of the requirements in Topic 820. Some of the amendments clarify the 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. We adopted this standard on March 1, 2012, which did not have a material impact on the consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05 “Presentation of Comprehensive Income” which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update also eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.  We adopted this standard on March 1, 2012, which did not have a material impact on the consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08 “Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment” which amends the goodwill impairment testing guidance in ASC 350-20, “Goodwill.” Under the amended standard, an entity has the option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted.  We adopted this standard on March 1, 2012, which did not have a material impact on the consolidated financial statements.

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Condensed Issuer, Guarantor and Non Guarantor Financial Information (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2012	Aug. 31, 2011
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Revenue	$ 260,542	$ 267,412	$ 418,523	$ 413,482
Cost of revenue (exclusive of items shown separately below)	195,581	197,484	327,944	319,901
Depreciation, depletion and amortization	13,280	12,288	25,123	23,633
Intangible asset impairment	300		300
Pension and profit sharing	2,259	2,287	4,100	4,003
Selling, administrative, and general expenses	17,380	18,265	36,020	31,255
Gain on disposal of property and equipment	7	(309)	(28)	(1,505)
Operating income	31,735	37,397	25,064	36,195
Interest expense, net	(17,642)	(11,982)	(40,572)	(23,577)
(Loss) income before income taxes	14,093	25,415	(15,508)	12,618
Income tax expense (benefit)	5,571	13,682	(5,916)	5,447
Net income (loss)	8,522	11,733	(9,592)	7,171
Unrealized actuarial gains and amortization of prior service costs, net of income taxes	14	31	91	63
Comprehensive income (loss)	8,536	11,764	(9,501)	7,234
Less: Comprehensive income attributable to noncontrolling interest	(334)	(300)	(639)	(599)
Comprehensive income (loss) attributable to New Enterprise Stone & Lime Co., Inc.	8,202	11,464	(10,140)	6,635
New Enterprise Stone & Lime Co., Inc.
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Revenue	223,736	245,033	371,992	373,901
Cost of revenue (exclusive of items shown separately below)	164,347	183,561	293,470	294,703
Depreciation, depletion and amortization	11,460	10,386	21,421	19,829
Pension and profit sharing	2,154	2,221	3,916	3,893
Selling, administrative, and general expenses	15,241	15,778	30,918	26,425
Gain on disposal of property and equipment	(87)	(309)	(122)	(1,505)
Operating income	30,621	33,396	22,389	30,556
Interest expense, net	(17,444)	(11,740)	(40,154)	(23,127)
(Loss) income before income taxes	13,177	21,656	(17,765)	7,429
Income tax expense (benefit)	6,357	13,137	(4,455)	5,590
Equity in earnings of subsidiaries	1,368	2,914	3,079	4,733
Net income (loss)	8,188	11,433	(10,231)	6,572
Unrealized actuarial gains and amortization of prior service costs, net of income taxes	14	31	91	63
Comprehensive income (loss)	8,202	11,464	(10,140)	6,635
Comprehensive income (loss) attributable to New Enterprise Stone & Lime Co., Inc.	8,202	11,464	(10,140)	6,635
Guarantor Subsidiaries
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Revenue	27,079	25,429	48,699	45,705
Cost of revenue (exclusive of items shown separately below)	22,154	17,928	39,267	33,849
Depreciation, depletion and amortization	1,820	1,902	3,702	3,804
Intangible asset impairment	300		300
Pension and profit sharing	105	66	184	110
Selling, administrative, and general expenses	2,650	2,275	4,899	4,547
Gain on disposal of property and equipment	94		94
Operating income	(44)	3,258	253	3,395
Interest expense, net	(71)	(59)	(143)	(125)
(Loss) income before income taxes	(115)	3,199	110	3,270
Income tax expense (benefit)	(786)	545	(1,461)	(143)
Net income (loss)	671	2,654	1,571	3,413
Comprehensive income (loss)	671	2,654	1,571	3,413
Comprehensive income (loss) attributable to New Enterprise Stone & Lime Co., Inc.	671	2,654	1,571	3,413
Non Guarantors
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Revenue	1,975	1,953	3,953	3,828
Cost of revenue (exclusive of items shown separately below)	1,328	998	1,328	1,301
Selling, administrative, and general expenses	(511)	212	203	283
Operating income	1,158	743	2,422	2,244
Interest expense, net	(127)	(183)	(275)	(325)
(Loss) income before income taxes	1,031	560	2,147	1,919
Net income (loss)	1,031	560	2,147	1,919
Comprehensive income (loss)	1,031	560	2,147	1,919
Less: Comprehensive income attributable to noncontrolling interest	(334)	(300)	(639)	(599)
Comprehensive income (loss) attributable to New Enterprise Stone & Lime Co., Inc.	697	260	1,508	1,320
Eliminations
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Revenue	7,752	(5,003)	(6,121)	(9,952)
Cost of revenue (exclusive of items shown separately below)	7,752	(5,003)	(6,121)	(9,952)
Equity in earnings of subsidiaries	(1,368)	(2,914)	(3,079)	(4,733)
Net income (loss)	(1,368)	(2,914)	(3,079)	(4,733)
Comprehensive income (loss)	(1,368)	(2,914)	(3,079)	(4,733)
Comprehensive income (loss) attributable to New Enterprise Stone & Lime Co., Inc.	$ (1,368)	$ (2,914)	$ (3,079)	$ (4,733)

XML

Condensed Issuer, Guarantor and Non Guarantor Financial Information (Tables)

6 Months Ended

Aug. 31, 2012

Condensed Issuer, Guarantor and Non Guarantor Financial Information

Schedule of condensed consolidating balance sheet

Condensed Consolidating Balance Sheet at August 31, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.		Guarantor Subsidiaries		Non Guarantors		Eliminations			Total
Assets
Current assets
Cash and cash equivalents	$	28	$	20	$	7,937	$	—		$	7,985
Restricted cash	1,552		106		8,842		—			10,500
Accounts receivable	150,173		20,248		14		—			170,435
Inventories	117,535		19,116		—		—			136,651
Net investment in lease	—		—		610		(610		)	—
Deferred income taxes	14,647		1,052		—		—			15,699
Other current assets	6,783		827		52		—			7,662
Total current assets	290,718		41,369		17,455		(610		)	348,932
Other assets
Property, plant and equipment, net	351,175		23,768		7,160		(6,973		)	375,130
Goodwill	85,002		5,845		—		—			90,847
Other intangible assets	10,797		14,927		—		—			25,724
Investment in subsidiaries	85,245		—		—		(85,245		)	—
Intercompany receivables	280		11,759		—		(12,039		)	—
Other assets	33,091		1,258		—		—			34,349
Total assets	$	856,308	$	98,926	$	24,615	$	(104,867	)	$	874,982
Liabilities and Equity
Current liabilities
Current maturities of long-term debt	$	20,656	$	—	$	616	$	(610	)	$	20,662
Accounts payable - trade	44,122		4,037		129		—			48,288
Accrued liabilities	46,036		3,526		8,433		—			57,995
Total current liabilities	110,814		7,563		9,178		(610		)	126,945
Long-term debt and other liabilities
Intercompany payables	11,759		—		280		(12,039		)	—
Long-term debt, less current maturities	582,412		—		6,973		—			589,385
Obligations under capital leases, less current installments	6,973		—		—		(6,973		)	—
Deferred income taxes	78,413		12,041		—		—			90,454
Other liabilities	27,801		468		—		—			28,269
Total liabilities	818,172		20,072		16,431		(19,622		)	835,053
Equity
New Enterprise Stone & Lime Co., Inc. equity	38,136		78,854		6,391		(85,245		)	38,136
Noncontrolling interest	—		—		1,793		—			1,793
Total equity	38,136		78,854		8,184		(85,245		)	39,929
Total liabilities and equity	$	856,308	$	98,926	$	24,615	$	(104,867	)	$	874,982

Condensed Consolidating Balance Sheet at February 29, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.		Guarantor Subsidiaries		Non Guarantors		Eliminations			Total
Assets
Current assets
Cash and cash equivalents	$	7,106	$	476	$	7,450	$	—		$	15,032
Restricted cash	1,379		102		8,841		—			10,322
Accounts receivable	61,891		14,933		17		—			76,841
Inventories	114,888		17,307		—		—			132,195
Net investment in lease	—		—		610		(610		)	—
Deferred income taxes	14,912		1,107		—		—			16,019
Other current assets	7,434		326		28		—			7,788
Total current assets	207,610		34,251		16,946		(610		)	258,197
Other assets
Property, plant and equipment, net	345,461		25,947		7,451		(7,285		)	371,574
Goodwill	85,002		5,845		—		—			90,847
Other intangible assets	10,904		15,440		—		—			26,344
Investment in subsidiaries	82,166		—		—		(82,166		)	—
Intercompany receivables	280		16,310		—		(16,590		)	—
Other assets	26,825		—		—		—			26,825
Total assets	$	758,248	$	97,793	$	24,397	$	(106,651	)	$	773,787
Liabilities and Equity
Current liabilities
Current maturities of long-term debt	$	7,671	$	—	$	477	$	(610	)	$	7,538
Accounts payable - trade	24,239		3,166		153		—			27,558
Accrued liabilities	38,594		3,309		9,728		—			51,631
Total current liabilities	70,504		6,475		10,358		(610		)	86,727
Long-term debt and other liabilities
Intercompany payables	16,310		—		280		(16,590		)	—
Long-term debt, less current maturities	514,191		—		7,284		—			521,475
Obligations under capital leases, less current installments	7,285		—		—		(7,285		)	—
Deferred income taxes	82,772		13,902		—		—			96,674
Other liabilities	18,910		133		—		—			19,043
Total liabilities	709,972		20,510		17,922		(24,485		)	723,919
Equity
New Enterprise Stone & Lime Co., Inc. equity	48,276		77,283		4,883		(82,166		)	48,276
Noncontrolling interest	—		—		1,592		—			1,592
Total equity	48,276		77,283		6,475		(82,166		)	49,868
Total liabilities and equity	$	758,248	$	97,793	$	24,397	$	(106,651	)	$	773,787

Schedule of condensed consolidating statements of comprehensive income

Condensed Consolidating Statement of Comprehensive Income for the three months ending August 31, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Revenue	$	223,736		$	27,079		$	1,975		$	7,752		$	260,542
Cost of revenue (exclusive of items shown separately below)	164,347			22,154			1,328			7,752			195,581
Depreciation, depletion and amortization	11,460			1,820			—			—			13,280
	—			300			—			—			300
Pension and profit sharing	2,154			105			—			—			2,259
Selling, administrative, and general expenses	15,241			2,650			(511		)	—			17,380
Gain on sales of property and equipment	(87		)	94			—			—			7
Operating income	30,621			(44		)	1,158			—			31,735
Interest expense, net	(17,444		)	(71		)	(127		)	—			(17,642		)
Income before income taxes	13,177			(115		)	1,031			—			14,093
Income tax expense (benefit)	6,357			(786		)	—			—			5,571
Equity in earnings of subsidiaries	1,368			—			—			(1,368		)	—
Net income	8,188			671			1,031			(1,368		)	8,522
Unrealized actuarial gains and amortization of prior service costs, net of income tax	14			—			—			—			14
Comprehensive income	8,202			671			1,031			(1,368		)	8,536
Less: comprehensive income attributable to noncontrolling interest	—			—			(334		)	—			(334		)
Comprehensive income attributable to New Enterprise Stone & Lime Co., Inc.	$	8,202		$	671		$	697		$	(1,368	)	$	8,202

Condensed Consolidating Statement of Comprehensive Income for the three months ending August 31, 2011

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Revenue	$	245,033		$	25,429		$	1,953		$	(5,003	)	$	267,412
Cost of revenue (exclusive of items shown separately below)	183,561			17,928			998			(5,003		)	197,484
Depreciation, depletion and amortization	10,386			1,902			—			—			12,288
Pension and profit sharing	2,221			66			—			—			2,287
Selling, administrative, and general expenses	15,778			2,275			212			—			18,265
Gain on sales of property and equipment	(309		)	—			—			—			(309		)
Operating income	33,396			3,258			743			—			37,397
Interest expense, net	(11,740		)	(59		)	(183		)	—			(11,982		)
Income before income taxes	21,656			3,199			560			—			25,415
Income tax expense	13,137			545			—			—			13,682
Equity in earnings of subsidiaries	2,914			—			—			(2,914		)	—
Net income	11,433			2,654			560			(2,914		)	11,733
Unrealized actuarial gains and amortization of prior service costs, net of income tax	31			—			—			—			31
Comprehensive income	11,464			2,654			560			(2,914		)	11,764
Less: comprehensive income attributable to noncontrolling interest	—			—			(300		)	—			(300		)
Comprehensive income attributable to New Enterprise Stone & Lime Co., Inc.	$	11,464		$	2,654		$	260		$	(2,914	)	$	11,464

Condensed Consolidating Statement of Comprehensive (Loss) Income for the six months ending August 31, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Revenue	$	371,992		$	48,699		$	3,953		$	(6,121	)	$	418,523
Cost of revenue (exclusive of items shown separately below)	293,470			39,267			1,328			(6,121		)	327,944
Depreciation, depletion and amortization	21,421			3,702			—			—			25,123
Intangible asset impairment	—			300			—			—			300
Pension and profit sharing	3,916			184			—			—			4,100
Selling, administrative, and general expenses	30,918			4,899			203			—			36,020
Gain on sales of property and equipment	(122		)	94			—			—			(28		)
Operating income	22,389			253			2,422			—			25,064
Interest expense, net	(40,154		)	(143		)	(275		)	—			(40,572		)
(Loss) income before income taxes	(17,765		)	110			2,147			—			(15,508		)
Income tax benefit	(4,455		)	(1,461		)	—			—			(5,916		)
Equity in earnings of subsidiaries	3,079			—			—			(3,079		)	—
Net (loss) income	(10,231		)	1,571			2,147			(3,079		)	(9,592		)
Unrealized actuarial gains and amortization of prior service costs, net of income tax	91			—			—			—			91
Comprehensive (loss) income	(10,140		)	1,571			2,147			(3,079		)	(9,501		)
Less: comprehensive income attributable to noncontrolling interest	—			—			(639		)	—			(639		)
Comprehensive (loss) income attributable to New Enterprise Stone & Lime Co., Inc.	$	(10,140	)	$	1,571		$	1,508		$	(3,079	)	$	(10,140	)

Condensed Consolidating Statement of Comprehensive Income for the six months ending August 31, 2011

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Revenue	$	373,901		$	45,705		$	3,828		$	(9,952	)	$	413,482
Cost of revenue (exclusive of items shown separately below)	294,703			33,849			1,301			(9,952		)	319,901
Depreciation, depletion and amortization	19,829			3,804			—			—			23,633
Pension and profit sharing	3,893			110			—			—			4,003
Selling, administrative, and general expenses	26,425			4,547			283			—			31,255
Gain on sales of property and equipment	(1,505		)	—			—			—			(1,505		)
Operating income	30,556			3,395			2,244			—			36,195
Interest expense, net	(23,127		)	(125		)	(325		)	—			(23,577		)
Income before income taxes	7,429			3,270			1,919			—			12,618
Income tax expense (benefit)	5,590			(143		)	—			—			5,447
Equity in earnings of subsidiaries	4,733			—			—			(4,733		)	—
Net income	6,572			3,413			1,919			(4,733		)	7,171
Unrealized actuarial gains and amortization of prior service costs, net of income tax	63			—			—			—			63
Comprehensive income	6,635			3,413			1,919			(4,733		)	7,234
Less: comprehensive income attributable to noncontrolling interest	—			—			(599		)	—			(599		)
Comprehensive income attributable to New Enterprise Stone & Lime Co., Inc.	$	6,635		$	3,413		$	1,320		$	(4,733	)	$	6,635

Schedule of condensed consolidating statements of cash flows

Condensed Consolidating Statement of Cash Flows for the six months ending August 31, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations		Total
Cash flows from operating activities	$	(46,689	)	$	2,287		$	1,098		$	—	$	(43,304	)
Cash flows from investing activities
Capital expenditures	(22,269		)	(2,739		)	—			—		(25,008		)
Capitalized software	(401		)	—			—			—		(401		)
Proceeds from sale of property and equipment	153			—			—			—		153
Change in cash value of life insurance	(3,006		)	—			—			—		(3,006		)
Change in restricted cash	(173		)	(4		)	(1		)	—		(178		)
Net cash used in investing activities	(25,696		)	(2,743		)	(1		)	—		(28,440		)
Cash flows from financing activities
Proceeds from revolving credit	187,725			—			—			—		187,725
Repayment of revolving credit	(221,361		)	—			—			—		(221,361		)
Repayment of long-term debt	(153,119		)	—			(172		)	—		(153,291		)
Payments on capital leases	(2,564		)	—			—			—		(2,564		)
Proceeds from issuance of long-term debt	268,688			—			—			—		268,688
Debt issuance costs	(14,062		)	—			—			—		(14,062		)
Distribution to noncontrolling interest	—			—			(438		)	—		(438		)
Net cash provided by (used in) financing activities	65,307			—			(610		)	—		64,697
Net increase (decrease) in cash and cash equivalents	(7,078		)	(456		)	487			—		(7,047		)
Cash and cash equivalents
Beginning of period	7,106			476			7,450			—		15,032
End of period	$	28		$	20		$	7,937		$	—	$	7,985

Condensed Consolidating Statement of Cash Flows for the six months ending August 31, 2011

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Cash flows from operating activities	$	(33,606	)	$	2,282		$	151		$	(1,200	)	$	(32,373	)
Cash flows from investing activities
Capital expenditures	(16,406		)	(2,608		)	—			—			(19,014		)
Capitalized software	(3,892		)	—			—			—			(3,892		)
Proceeds from sale of property and equipment	1,305			330			—			—			1,635
Change in cash value of life insurance	2			—			—			—			2
Change in restricted cash	96			14			(8,840		)	—			(8,730		)
Net cash used in investing activities	(18,895		)	(2,264		)	(8,840		)	—			(29,999		)
Cash flows from financing activities
Proceeds from revolving credit	77,397			—			—			—			77,397
Repayment of revolving credit	(14,000		)	—			—			—			(14,000		)
Repayment of long-term debt	(11,173		)	—			(289		)	—			(11,462		)
Payments on capital leases	(2,627		)	—			—			—			(2,627		)
Proceeds from issuance of long-term debt	12,000			—			—			—			12,000
Debt issuance costs	(1,275		)	—			—			—			(1,275		)
Dividends paid	—			—			(1,200		)	1,200			—
Distribution to noncontrolling interest	—			—			(451		)	—			(451		)
Net cash provided by (used in) financing activities	60,322			—			(1,940		)	1,200			59,582
Net increase (decrease) in cash and cash equivalents	7,821			18			(10,629		)	—			(2,790		)
Cash and cash equivalents
Beginning of period	5,058			1,472			13,499			—			20,029
End of period	$	12,879		$	1,490		$	2,870		$	—		$	17,239

XML

Condensed Issuer, Guarantor and Non Guarantor Financial Information (Details 4) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 31, 2012	Aug. 31, 2011
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Cash flows from operating activities	$ (43,304)	$ (32,373)
Cash flows from investing activities
Capital expenditures	(25,008)	(19,014)
Capitalized software	(401)	(3,892)
Proceeds from sale of property and equipment	153	1,635
Change in cash value of life insurance	(3,006)	2
Change in restricted cash	(178)	(8,730)
Net cash used in investing activities	(28,440)	(29,999)
Cash flows from financing activities
Proceeds from revolving credit	187,725	77,397
Repayment of revolving credit	(221,361)	(14,000)
Repayment of long-term debt	(153,291)	(11,462)
Payments on capital leases	(2,564)	(2,627)
Proceeds from issuance of long-term debt	268,688	12,000
Debt issuance costs	(14,062)	(1,275)
Distribution to noncontrolling interest	(438)	(451)
Net cash provided by (used in) financing activities	64,697	59,582
Net decrease in cash and cash equivalents	(7,047)	(2,790)
Cash and cash equivalents
Beginning of period	15,032	20,029
End of period	7,985	17,239
New Enterprise Stone & Lime Co., Inc.
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Cash flows from operating activities	(46,689)	(33,606)
Cash flows from investing activities
Capital expenditures	(22,269)	(16,406)
Capitalized software	(401)	(3,892)
Proceeds from sale of property and equipment	153	1,305
Change in cash value of life insurance	(3,006)	2
Change in restricted cash	(173)	96
Net cash used in investing activities	(25,696)	(18,895)
Cash flows from financing activities
Proceeds from revolving credit	187,725	77,397
Repayment of revolving credit	(221,361)	(14,000)
Repayment of long-term debt	(153,119)	(11,173)
Payments on capital leases	(2,564)	(2,627)
Proceeds from issuance of long-term debt	268,688	12,000
Debt issuance costs	(14,062)	(1,275)
Net cash provided by (used in) financing activities	65,307	60,322
Net decrease in cash and cash equivalents	(7,078)	7,821
Cash and cash equivalents
Beginning of period	7,106	5,058
End of period	28	12,879
Guarantor Subsidiaries
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Cash flows from operating activities	2,287	2,282
Cash flows from investing activities
Capital expenditures	(2,739)	(2,608)
Proceeds from sale of property and equipment		330
Change in restricted cash	(4)	14
Net cash used in investing activities	(2,743)	(2,264)
Cash flows from financing activities
Net decrease in cash and cash equivalents	(456)	18
Cash and cash equivalents
Beginning of period	476	1,472
End of period	20	1,490
Non Guarantors
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Cash flows from operating activities	1,098	151
Cash flows from investing activities
Change in restricted cash	(1)	(8,840)
Net cash used in investing activities	(1)	(8,840)
Cash flows from financing activities
Repayment of long-term debt	(172)	(289)
Dividends paid		(1,200)
Distribution to noncontrolling interest	(438)	(451)
Net cash provided by (used in) financing activities	(610)	(1,940)
Net decrease in cash and cash equivalents	487	(10,629)
Cash and cash equivalents
Beginning of period	7,450	13,499
End of period	7,937	2,870
Eliminations
Condensed Issuer, Guarantor and Non Guarantor Financial Information
Cash flows from operating activities		(1,200)
Cash flows from financing activities
Dividends paid		1,200
Net cash provided by (used in) financing activities		$ 1,200

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Nature of Operations and Summary of Significant Accounting Policies (Details 2) (USD $)	3 Months Ended	6 Months Ended		3 Months Ended			6 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2012	Feb. 29, 2012	Aug. 31, 2012 Traffic safety services and equipment	Feb. 29, 2012 Traffic safety services and equipment	Aug. 31, 2012 Construction materials	Aug. 31, 2012 Customer relationships	Feb. 29, 2012 Customer relationships	Aug. 31, 2012 Technology	Feb. 29, 2012 Technology
Change in intangible assets
Intangible asset impairment on trademarks				$ 300,000	$ 1,100,000
Goodwill						68,400,000
Goodwill	90,847,000	90,847,000	90,847,000	5,800,000
Gross Carrying Amount			12,600,000					12,000,000		600,000
Accumulated amortization			(2,560,000)					(2,400,000)		(160,000)
Net Carrying Amount	9,720,000	9,720,000	10,040,000				9,300,000	9,600,000	420,000	440,000
Current Impairment	(300,000)	(300,000)
Current amortization		(320,000)					(300,000)		(20,000)
Amortization period (in years)							20 years		15 years
Nonamortizable intangible assets
Trademarks	16,004,000	16,004,000	16,304,000	5,100,000
Total other intangible assets			28,904,000
Other intangible assets	$ 25,724,000	$ 25,724,000	$ 26,344,000

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Risks and Uncertainties

6 Months Ended

Aug. 31, 2012

Risks and Uncertainties

Risks and Uncertainties

2. Risks and Uncertainties

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

On March 15, 2012, the Company sold $265.0 million aggregate principal amount of its 13.0% senior secured notes due 2018 (the “Secured Notes”) at par and entered into a new $170.0 million asset-based secured revolving credit facility (the “ABL Facility”) with Manufacturers and Traders Trust Company (“M&T”).  The Company used the net proceeds of this issuance of Secured Notes and borrowings under the ABL Facility to repay and terminate all of its outstanding indebtedness under its second amended and restated credit agreement dated January 11, 2008 (the “Credit Agreement”) and certain other debt.  See further discussion of the ABL Facility in Note 4, “Long-Term Debt - Asset-Based Loan Facility”.

The Company was unable to file its Form 10-K, its first quarter Form 10-Q, its second quarter Form 10-Q and its third quarter Form 10-Q timely as a result of complications in the ERP implementation and the material weaknesses in the Company’s internal control over financial reporting previously reported in the Company’s filings with the SEC.  The ABL Facility required the Company’s audited financial statements to be issued by May 29, 2012 and the Company’s first quarter Form 10-Q to be issued by July 16, 2012, and the Company’s second quarter Form 10-Q to be issued by October 15, 2012.  The indenture for the Secured Notes and the indenture for the Company’s $250.0 million 11% senior notes due 2018 (the “Notes”) required financial statements to be issued within 15 days of these aforementioned dates.  As a result, the Company obtained an amendment of the ABL Facility on September 7, 2012 and extensions to file its Form 10-K and first and second quarter Form 10-Q on September 28, 2012, November 9, 2012 and December 7, 2012. The Company filed its Form 10-K on December 17, 2012 and its Form 10-Q for the first quarter on December 26, 2012. In accordance with the extension letter dated February 14, 2013, the Company has until February 28, 2013 to file this Form 10-Q for the second quarter of the 2013 fiscal year.  Also, the first amendment to the ABL Facility required the Company to develop a Profit and Liquidity Enhancement Plan and a Reporting Enhancement Plan (together, the “Plans”) as defined in the amendment, by October 1, 2012 and October 15, 2012, respectively. The Company submitted the Plans to the bank in accordance with the first amendment. The first amendment also allows M&T, in the event they cannot syndicate the ABL Facility by December 15, 2012, to add or modify terms of the ABL Facility that were previously prohibited from being added or modified, including but not limited to the advance rates, certain covenants and the interest and fees payable. M&T has not syndicated the ABL Facility. However, there have been no further modifications to the terms of the ABL Facility.

As part of the first amendment entered into on September 7, 2012, the borrowing base formula under the ABL Facility became subject to adjustment based on the most recent Fixed Charge Coverage Ratio.  If the calculation of the Fixed Charge Coverage Ratio was less than 1.0 to 1.0, the borrowing base would be equal to the sum of (a) the lesser of (i) $56.0 million (from $65 million) and (ii) 65% (from 75%) of the appraised value of the eligible real property plus (b) 70% (from 85%) of the outstanding balance of eligible accounts receivable plus (c) 40% (from 60%) of eligible inventory, minus (d) reserves imposed by the agent of the ABL Facility in the exercise of reasonable business judgment from the perspective of a secured asset-based lender, minus (e) reserves imposed by the agent to the ABL Facility with respect to branded inventory in its sole discretion.

On September 5 and 6, 2012 the Company received notices of default from the trustee under the Secured Notes and the Notes (as defined in Note 4, “Long-Term Debt”), respectively. The notices of default were related to the Company’s inability to provide the trustee with copies of the Company’s Annual report on Form 10-K for the year ended February 29, 2012 and Quarterly report on Form10-Q for the period ended May 31, 2012 in a timely manner as required by the underlying indentures. In accordance with the terms and conditions of the underlying indentures, the Company had 120 days from the date of those notices to cure such default by complying with its reporting requirements and related filings.  The Company filed its Annual Report on Form 10-K for the year ended February 29, 2012 and its Quarterly report on Form 10-Q for the period ended May 31, 2012 and therefore has cured the defaults under the indentures.

On February 14, 2013, the Company received additional extension of time to issue its Quarterly report on Form 10-Q for the third quarter of fiscal 2013 to April 1, 2013.  There can be no guarantee the Company will not need to obtain similar amendments in the future. A failure to obtain such amendment could result in an acceleration of the Company’s indebtedness under the ABL Facility and a cross-default under the Company’s other indebtedness, including the Secured Notes and the Notes.

On January 14, 2013, the Company received a notice of default from the trustee under the indentures for the Secured Notes and Notes due to the Company’s  inability to provide its Quarterly Report on Form 10-Q for the second fiscal quarter ended August 31, 2012 in compliance with the indentures.  The issuance of this Quarterly Report on Form 10-Q for the second fiscal quarter ended August 31, 2012 will cure such default under the indentures.

The Company’s Quarterly Report on Form 10-Q for the third fiscal quarter ended November 30, 2012 was due on January 14, 2013. We have not received a notice of default from the trustee under the indentures for the Notes or Secured Notes.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Aug. 31, 2012	Feb. 29, 2012
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 3,777	$ 3,259
Common Stock, Class A
Common stock, par value (in dollars per share)	$ 1	$ 1
Common Stock, Class B
Common stock, par value (in dollars per share)	$ 1	$ 1

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Nature of Operations and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Aug. 31, 2012

Nature of Operations and Summary of Significant Accounting Policies

Schedule of total accounts receivable

	August 31,			February 29,
(In thousands)	2012			2012
Costs and estimated earnings in excess of billings	$	21,775		$	14,570
Trade	147,149			60,172
Retainages	5,288			5,358
	174,212			80,100
Allowance for doubtful accounts	(3,777		)	(3,259		)
Accounts receivable, net	$	170,435		$	76,841

Schedule of total inventory

	August 31,		February 29,
(In thousands)	2012		2012
Crushed stone, agricultural lime, and sand	$	83,386	$	84,016
Raw materials	11,284		9,400
Parts, tires, and supplies	11,761		11,313
Concrete blocks	4,219		4,547
Building materials	4,236		3,982
Safety equipment	18,986		16,901
Other	2,779		2,036
	$	136,651	$	132,195

Schedule of property, plant and equipment

	August 31,			February 29,
(In thousands)	2012			2012
Limestone and sand acreage	$	139,318		$	142,034
Land, buildings and building improvements	100,042			96,504
Crushing, prestressing, and manufacturing plants	316,916			310,130
Contracting equipment, vehicles and other	294,265			281,543
Construction in progress	10,824			8,829
Property, plant and equipment	861,365			839,040
Less: Accumulated depreciation and depletion	(486,235		)	(467,466		)
Property, plant and equipment, net	$	375,130		$	371,574

Schedule of other intangible assets

						Net								Net
						Carrying								Carrying
	Gross					Amount								Amount
	Carrying		Accumulated			February 29,		Current			Current			August 31,
(In thousands)	Amount		Amortization			2012		Impairment			Amortization			2012
Amortizable intangible assets
Customer relationships	$	12,000	$	(2,400	)	$	9,600	$	—		$	(300	)	$	9,300
Technology	600		(160		)	440		—			(20		)	420
	12,600		(2,560		)	10,040		—			(320		)	9,720
Nonamortizable intangible assets
Trademarks	16,304		—			16,304		(300		)	—			16,004
Total other intangible assets	$	28,904	$	(2,560	)	$	26,344	$	(300	)	$	(320	)	$	25,724

Schedule of long-term other assets

	August 31,		February 29,
(In thousands)	2012		2012
Deferred financing fees (less current portion of $3,658 at August 2012 and $4,882 at February 2012)	$	16,352	$	10,409
Cash value of life insurance (net of loans of $0 at August 2012 and $3,000 at February 2012)	4,012		1,006
Capitalized software (net of accumulated amortization $715 at August 2012 and $160 at February 2012)	10,230		11,719
Deferred stripping costs	3,366		2,994
Other	389		697
Total other assets	$	34,349	$	26,825

Schedule of change in the asset retirement obligations

(In thousands)
Balance at February 29, 2012	$	11,360
Accretion expense	309
Change in estimated obligations	1,105
Liabilities settled	(3,831		)
Balance at August 31, 2012	$	8,943

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Document and Entity Information	6 Months Ended
	Aug. 31, 2012	Mar. 15, 2013 Common Stock, Class A	Mar. 15, 2013 Common Stock, Class B
Entity Registrant Name	New Enterprise Stone & Lime Co., Inc.
Entity Central Index Key	0001527032
Document Type	10-Q
Document Period End Date	Aug. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--02-28
Entity Current Reporting Status	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		500	273,285
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Accrued Liabilities (Tables)

6 Months Ended

Aug. 31, 2012

Accrued Liabilities

Schedule of accrued liabilities

	August 31,		February 29,
(In thousands)	2012		2012
Payroll and vacation	$	9,460	$	8,496
Contract expenses	250		518
Withholding taxes	3,033		2,862
Interest	18,845		14,055
Insurance	17,143		18,353
Deferred acquisition liability	3,521		3,610
Billings in excess of costs and estimated earnings on uncompleted contracts	3,371		255
Other	2,372		3,482
Total accrued liabilities	$	57,995	$	51,631

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Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2012	Aug. 31, 2011
Revenue
Construction materials	$ 130,431	$ 129,314	$ 216,777	$ 205,857
Heavy/highway construction	106,095	110,292	157,126	158,273
Traffic safety services and equipment	21,425	22,195	40,488	40,666
Other revenues	2,591	5,611	4,132	8,686
Total revenue	260,542	267,412	418,523	413,482
Cost of revenue (exclusive of items shown separately below)
Construction materials	77,289	71,780	141,918	129,844
Heavy/highway construction	97,359	104,951	149,285	152,157
Traffic safety services and equipment	18,382	15,789	33,280	30,340
Other expenses	2,551	4,964	3,461	7,560
Total cost of revenue	195,581	197,484	327,944	319,901
Depreciation, depletion and amortization	13,280	12,288	25,123	23,633
Intangible asset impairment	300		300
Pension and profit sharing	2,259	2,287	4,100	4,003
Selling, administrative, and general expenses	17,380	18,265	36,020	31,255
Loss (gain) on sales of property and equipment	7	(309)	(28)	(1,505)
Operating income	31,735	37,397	25,064	36,195
Interest expense, net	(17,642)	(11,982)	(40,572)	(23,577)
Income (loss) before income taxes	14,093	25,415	(15,508)	12,618
Income tax expense (benefit)	5,571	13,682	(5,916)	5,447
Net income (loss)	8,522	11,733	(9,592)	7,171
Unrealized actuarial gains and amortization of prior service costs, net of income taxes	14	31	91	63
Comprehensive income (loss)	8,536	11,764	(9,501)	7,234
Less: Comprehensive income attributable to noncontrolling interest	(334)	(300)	(639)	(599)
Comprehensive income (loss) attributable to New Enterprise Stone & Lime Co., Inc.	$ 8,202	$ 11,464	$ (10,140)	$ 6,635

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Commitments and Contingencies

6 Months Ended

Aug. 31, 2012

Commitments and Contingencies.

Commitments and Contingencies

7. Commitments and Contingencies

In the normal course of business, the Company has commitments, lawsuits, claims and contingent liabilities. The ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s consolidated financial position, statement of comprehensive loss or liquidity.

The Company maintains a captive insurance company, Rock Solid Insurance Company (Rock Solid), for workers’ compensation (non-Pennsylvania employees), general liability, auto, health, and property coverage. On April 8, 2011, Rock Solid entered into a Collateral Trust Agreement with an insurer to eliminate a letter of credit that was required to maintain coverage of the deductible portion of its liability coverage.  The total amount of collateral provided in the arrangement was $8.8 million and is recorded as part of restricted cash as of August 31, 2012 on the Company’s condensed consolidated balance sheet.   Reserves for retained losses within this captive, which are recorded in accrued liabilities in the accompanying condensed consolidated balance sheet, were approximately $8.4 million and $9.7 million as of August 31, 2012 and February 29, 2012, respectively.  Exposures for periods prior to the inception of the captive are covered by pre-existing insurance policies.  Other accrued amounts included as insurance, which mostly relates to worker’s compensation, included in Note 3, “Accrued Liabilities” totaled $8.5 million as of August 31, 2012 and February 29, 2012.

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Retirement and Benefit Programs

6 Months Ended

Aug. 31, 2012

Retirement and Benefit Programs

Retirement and Benefit Programs

6. Retirement and Benefit Programs

Substantially all employees are covered by a defined contribution plan, a defined benefit plan, a collectively bargained multiemployer plan, or a noncontributory profit sharing plan.  The expense associated with these programs, excluding defined benefit plans, was $2.2 million for the three months ended August 31, 2012 and 2011, and $3.9 million for the six months ended August 31, 2012 and 2011.

The Company has two defined benefit pension plans covering certain union employees covered by labor union contracts. The benefits are based on years of service. Actuarial gains and losses are generally amortized subject to the corridor, over the average remaining service life of the Company’s active employees.  Net periodic pension expense recognized for the three and six months ended August 31, 2012 and 2011, was as follows:

	Three Months Ended August 31						Six Months Ended August 31
(In thousands)	2012			2011			2012			2011
Components of net periodic benefit cost
Service cost	$	68		$	54		$	135		$	109
Interest cost	99			110			198			220
Expected return on plan assets	(146		)	(154		)	(293		)	(310		)
Amortization of prior service cost	15			15			30			31
Recognized net actuarial loss	62			29			124			58
Total pension expense	$	98		$	54		$	194		$	108

The Company made contributions to the defined benefit pension plans of $0.2 million during the six months ended August 31, 2012 and expects to make additional contributions of $0.2 million in the remainder of fiscal year 2013.

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Nature of Operations and Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2011	Aug. 31, 2012 Item	Aug. 31, 2011	Feb. 29, 2012
Nature of Operations and Summary of Significant Accounting Policies
Number of Operating Segments			3
Trade Accounts Receivable
Costs and estimated earnings in excess of billings	$ 21,775,000		$ 21,775,000		$ 14,570,000
Trade	147,149,000		147,149,000		60,172,000
Retainages	5,288,000		5,288,000		5,358,000
Accounts receivable, gross	174,212,000		174,212,000		80,100,000
Allowance for doubtful accounts	(3,777,000)		(3,777,000)		(3,259,000)
Accounts receivable, net	170,435,000		170,435,000		76,841,000
Inventories
Crushed stone, agricultural lime and sand	83,386,000		83,386,000		84,016,000
Raw materials	11,284,000		11,284,000		9,400,000
Parts, tires and supplies	11,761,000		11,761,000		11,313,000
Concrete blocks	4,219,000		4,219,000		4,547,000
Building materials	4,236,000		4,236,000		3,982,000
Safety equipment	18,986,000		18,986,000		16,901,000
Other	2,779,000		2,779,000		2,036,000
Inventories	136,651,000		136,651,000		132,195,000
Property, Plant and Equipment
Property, plant and equipment	861,365,000		861,365,000		839,040,000
Less: Accumulated depreciation and depletion	(486,235,000)		(486,235,000)		(467,466,000)
Property, plant and equipment, net	375,130,000		375,130,000		371,574,000
Depreciation expense	12,100,000	11,700,000	22,900,000	22,600,000
Limestone and sand acreage
Property, Plant and Equipment
Property, plant and equipment	139,318,000		139,318,000		142,034,000
Land, buildings and building improvements
Property, Plant and Equipment
Property, plant and equipment	100,042,000		100,042,000		96,504,000
Crushing, prestressing and manufacturing plants
Property, Plant and Equipment
Property, plant and equipment	316,916,000		316,916,000		310,130,000
Contracting equipment, vehicles and other
Property, Plant and Equipment
Property, plant and equipment	294,265,000		294,265,000		281,543,000
Construction in progress
Property, Plant and Equipment
Property, plant and equipment	10,824,000		10,824,000		8,829,000
Assets under capital leases
Property, Plant and Equipment
Property, plant and equipment	$ 27,600,000		$ 27,600,000		$ 25,800,000

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Long-Term Debt (Tables)

6 Months Ended

Aug. 31, 2012

Long-Term Debt

Schedule of long-term debt

	August 31,			February 29,
(In thousands)	2012			2012
Land, equipment and other obligations	$	28,828		$	23,016
First lien term loan A & B	—			145,383
First lien revolving credit facility	—			100,113
ABL Facility	56,446			—
Notes due 2018	250,000			250,000
Secured notes due 2018	265,000			—
Obligations under capital leases	9,773			10,501
Total debt	610,047			529,013
Less: Current portion	(20,662		)	(7,538		)
Total long-term debt	$	589,385		$	521,475

Schedule of percentages of principal amount at which Secured Notes may be redeemed

Year	Percentage
2015	106.50	%
2016	103.25	%
2017	100.00	%

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Subsequent Events

6 Months Ended

Aug. 31, 2012

Subsequent Events

Subsequent Events

10. Subsequent Events

Amendment of ABL Facility

The ABL Facility required the Company’s fiscal year 2012 audited annual financial statements to be issued by May 29, 2012 and the Company’s first quarter and second quarter financial statement to be issued by July 16, 2012 and October 15, 2012, respectively.  The Company was unable to issue the reports by the due dates as a result of complications in the ERP implementation and the material weaknesses in the Company’s internal controls over financial reporting previously reported in the Company’s filings with the Securities and Exchange Commission.

On September 7, 2012, the Company entered into the first amendment of the ABL Facility to change the required delivery date of the fiscal year 2012 audited annual financial statements and the required delivery date of its first and second quarter results and subsequently received extensions of those dates on September 28, 2012, November 9, 2012 and December 7, 2012 to extend the delivery date of its Annual Report on Form 10-K to December 15, 2012, its Quarterly report on Form 10-Q for the first quarter of the fiscal year 2013 to January 1, 2013 and its Quarterly report on Form 10-Q for the second quarter of the 2013 fiscal year to February 15, 2013.

As part of the first amendment entered into on September 7, 2012, the borrowing base formula became subject to adjustment based on the most recent Fixed Charge Coverage Ratio.  If the calculation of the Fixed Charge Coverage Ratio was less than 1.0 to 1.0, the borrowing base would be equal to the sum of (a) the lesser of (i) $56.0 million (from $65 million) and (ii) 65% (from 75%) of the appraised value of the eligible real property plus (b) 70% (from 85%) of the outstanding balance of eligible accounts receivable plus (c) 40% (from 60%) of eligible inventory, minus (d) reserves imposed by the agent of the ABL Facility in the exercise of reasonable business judgment from the perspective of a secured asset-based lender, minus (e) reserves imposed by the agent to the ABL Facility with respect to branded inventory in its sole discretion.  The amendment also added a minimum LIBOR borrowing rate of 1.25%.

The first amendment also allows M&T, in the event M&T is unable to reduce its final participation in the ABL Facility to no more than $75.0 million during the primary syndication of the ABL Facility by December 15, 2012, to add or modify terms of the ABL Facility that were previously prohibited from being added or modified, including but not limited to the advance rates, and certain covenants and the interest and fees payable.  M&T has not syndicated the ABL Facility.  However, there have been no further modifications to the terms of the ABL Facility.

On December 7, 2012, the Company entered into the second amendment to the ABL Facility to change the required January 14, 2013 delivery date of its third quarter Form 10-Q to March 15, 2013.

On February 14, 2013, the Company received additional extensions of time to issue its Quarterly report on Form 10-Q for the second quarter of fiscal 2013 to February 28, 2013 and to issue its Quarterly report on Form 10-Q for the third quarter of fiscal 2013 to April 1, 2013.  There can be no guarantee the Company will not need to obtain similar amendments in the future. A failure to obtain such amendment could result in an acceleration of the Company’s indebtedness under the ABL Facility and a cross-default under the Company’s other indebtedness, including the Secured Notes and the Notes.

Notices of Default

On September 5, 2012, the Company received a notice of default from the trustee under the indenture for the Secured Notes, and on September 6, 2012, the Company received a notice of default from the trustee under the indenture for the Notes, each to the effect that the Company has failed to provide to the trustees its Annual Report on Form 10-K for the fiscal year ended February 29, 2012 and Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2012 in compliance with the indentures.  In accordance with the terms and conditions of indentures for the Secured Notes and Notes, the Company had 120 days from the date of those notices to cure such default by complying with its reporting requirements and related filings.  The Company filed its Annual Report on Form 10-K for the year ended February 29, 2012 and its Quarterly report on Form 10-Q for the period ended May 31, 2012 and therefore has cured the defaults under the indentures.

On January 14, 2013, the Company received a notice of default from the trustee under the indentures for the Secured Notes and Notes because we have failed to provide the Company’s Quarterly Report on Form 10-Q for the second fiscal quarter ended August 31, 2012 in compliance with indentures.  The issuance of this Quarterly Report on Form 10-Q for the second fiscal quarter ended August 31, 2012 will cure such default under the indentures.

The Company’s Quarterly Report on Form 10-Q for the third fiscal quarter ended November 30, 2012 was due on January 14, 2013. We have not received a notice of default from the trustee under the indentures for the Notes or Secured Notes.

Exchange of Common Stock

On December 28, 2012, each of Paul I. Detwiler, Jr. and Donald L. Detwiler exchanged 10,000 shares of Class A voting common stock of the Company for 11,180 shares of Class B non-voting common stock of the Company.  The shares of the exchanged Class B non-voting common stock were then gifted by such individuals to their family members, each of whom is an existing shareholder.  As a result of the exchange for Class B non-voting common stock, the gifting of such equity securities did not affect the voting control of the Company.

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Segment Reporting

6 Months Ended

Aug. 31, 2012

Segment Reporting

Segment Reporting

8. Segment Reporting

The Company reports information about its operating segments using the “management approach,” which is based on the way management organizes and reports the segments within the organization for making operating decisions and assessing performance to the chief operating decision maker. The Company’s three reportable segments are: (i) construction materials; (ii) heavy/highway construction; and (iii) traffic safety services and equipment.  Almost all activity of the Company is domestic.

The Company reviews earnings of the segments principally at the operating profit level and accounts for intersegment sales at prices that range from negotiated rates to those that approximate fair market value. Segment operating profit consists of revenue less operating costs and expenses. Corporate and unallocated costs include those administrative and financial costs which are not allocated to segment operations and are excluded from segment operating profit.  These costs include corporate administrative functions, unallocated corporate functions and divisional administrative functions.

The following is a summary of certain financial data for the Company’s operating segments:

	Three Months Ended						Six Months Ended
	August 31,						August 31,
(In thousands)	2012			2011			2012			2011
Revenue
Construction materials	$	194,144		$	204,892		$	316,426		$	307,822
Heavy/highway construction	108,963			126,394			162,946			179,205
Traffic safety services and equipment	26,999			25,899			51,398			47,860
Other revenues	3,428			5,931			7,150			9,125
Segment totals	333,534			363,116			537,920			544,012
Eliminations	(72,992		)	(95,704		)	(119,397		)	(130,530		)
Total net revenue	$	260,542		$	267,412		$	418,523		$	413,482
Operating income (loss)
Construction materials	$	32,107		$	35,970		$	36,089		$	38,099
Heavy/highway construction	3,576			2,877			1,939			729
Traffic safety services and equipment	(812		)	2,950			(1,275		)	3,177
Corporate and unallocated	(3,136		)	(4,400		)	(11,689		)	(5,810		)
Total operating income	$	31,735		$	37,397		$	25,064		$	36,195

	Three Months Ended						Six Months Ended
	August 31,						August 31,
(In thousands)	2012			2011			2012			2011
Product and services revenue
Construction materials
Aggregates	$	59,444		$	66,620		$	112,921		$	111,450
Hot mix asphalt	98,606			99,442			135,890			130,377
Ready mixed concrete	18,793			20,740			35,884			33,706
Precast/prestressed structural concrete	8,369			8,213			14,620			14,092
Masonry products	4,383			5,082			8,628			9,589
Construction supply centers	4,549			4,795			8,483			8,608
Heavy/highway construction	108,963			126,394			162,946			179,205
Traffic safety services and equipment	26,999			25,899			51,398			47,860
Other revenues	3,428			5,931			7,150			9,125
Inter-product sales eliminations	(72,992		)	(95,704		)	(119,397		)	(130,530		)
Total net revenue	$	260,542		$	267,412		$	418,523		$	413,482
Product and services operating income (loss)
Construction materials
Aggregates	$	14,074		$	19,341		$	17,008		$	22,375
Hot mix asphalt	15,885			13,701			16,498			13,173
Ready mixed concrete	1,548			2,544			2,758			2,503
Precast/prestressed structural concrete	137			(11		)	(494		)	(450		)
Masonry products	(146		)	(66		)	(463		)	(185		)
Construction supply centers	609			461			782			683
Heavy/highway construction	3,576			2,877			1,939			729
Traffic safety services and equipment	(812		)	2,950			(1,275		)	3,177
Corporate and unallocated	(3,136		)	(4,400		)	(11,689		)	(5,810		)
Total operating income	$	31,735		$	37,397		$	25,064		$	36,195

	Three Months Ended August 31,				Six Months Ended August 31,
(In thousands)	2012		2011		2012		2011
Depreciation, depletion and amortization
Construction materials	$	7,585	$	8,791	$	15,301	$	16,014
Heavy/highway construction	2,920		1,363		4,817		3,381
Traffic safety services and equipment	1,722		1,756		3,414		3,470
Corporate and unallocated	1,053		378		1,591		768
Total depreciation, depletion and amortization	$	13,280	$	12,288	$	25,123	$	23,633

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Condensed Issuer, Guarantor and Non Guarantor Financial Information

6 Months Ended

Aug. 31, 2012

Condensed Issuer, Guarantor and Non Guarantor Financial Information

Condensed Issuer, Guarantor and Non Guarantor Financial Information

9. Condensed Issuer, Guarantor and Non Guarantor Financial Information

The Company has $265.0 million in Secured Notes and $250.0 million in Notes for which certain subsidiaries are guarantors. Except for Rock Solid Insurance Company, NESL, II LLC, and Kettle Creek Partners GP, LLC, all existing consolidated subsidiaries of the Company are 100% owned and provide a joint and several, full and unconditional guarantee of the securities. These entities include Gateway Trade Center Inc., EII Transport Inc., Protections Services Inc., Work Area Protection Corp., SCI Products Inc., ASTI Transportation Systems, Inc., and Precision Solar Controls Inc. (“Guarantor Subsidiaries”).  There are no significant restrictions on the parent 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 parent Company or its direct or indirect subsidiaries. Certain other wholly owned subsidiaries and consolidated partially owned partnerships do not guarantee the Secured Notes or the Notes.  These entities include Rock Solid Insurance Company, South Woodbury, L.P., NESL, II LLC, Kettle Creek Partners L.P., and Kettle Creek Partners GP, LLC (“Non Guarantors”).

The following condensed consolidating balance sheets, statements of comprehensive income (loss) and statements of cash flows are provided for the Company, all Guarantor Subsidiaries and Non Guarantors. The information has been presented as if the parent Company accounted for its ownership of the Guarantor Subsidiaries and Non Guarantors using the equity method of accounting.

The Company revised its condensed consolidating statements of comprehensive income for the three and six months ended August 31, 2011, to correct certain errors in noncontrolling interest and certain other eliminating adjustments.  The revisions were made to accurately present parent company and eliminating activity in the appropriate columns of the consolidating schedules. For the three and six months ended August 31, 2011, the revisions resulted in net decreases of $0.3 million and $0.6 million, respectively, to “Income before income taxes” in the Eliminations columns and an offsetting increases in the New Enterprise Stone & Lime Co., Inc. columns.  In addition, increases of $0.3 million and $0.6 million for the three and six months ended August 31, 2011, respectively, were made to “Less: comprehensive income attributable to noncontrolling interest” in the Eliminations columns with offsetting decreases in the Non Guarantors columns.

Condensed Consolidating Balance Sheet at August 31, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.		Guarantor Subsidiaries		Non Guarantors		Eliminations			Total
Assets
Current assets
Cash and cash equivalents	$	28	$	20	$	7,937	$	—		$	7,985
Restricted cash	1,552		106		8,842		—			10,500
Accounts receivable	150,173		20,248		14		—			170,435
Inventories	117,535		19,116		—		—			136,651
Net investment in lease	—		—		610		(610		)	—
Deferred income taxes	14,647		1,052		—		—			15,699
Other current assets	6,783		827		52		—			7,662
Total current assets	290,718		41,369		17,455		(610		)	348,932
Other assets
Property, plant and equipment, net	351,175		23,768		7,160		(6,973		)	375,130
Goodwill	85,002		5,845		—		—			90,847
Other intangible assets	10,797		14,927		—		—			25,724
Investment in subsidiaries	85,245		—		—		(85,245		)	—
Intercompany receivables	280		11,759		—		(12,039		)	—
Other assets	33,091		1,258		—		—			34,349
Total assets	$	856,308	$	98,926	$	24,615	$	(104,867	)	$	874,982
Liabilities and Equity
Current liabilities
Current maturities of long-term debt	$	20,656	$	—	$	616	$	(610	)	$	20,662
Accounts payable - trade	44,122		4,037		129		—			48,288
Accrued liabilities	46,036		3,526		8,433		—			57,995
Total current liabilities	110,814		7,563		9,178		(610		)	126,945
Long-term debt and other liabilities
Intercompany payables	11,759		—		280		(12,039		)	—
Long-term debt, less current maturities	582,412		—		6,973		—			589,385
Obligations under capital leases, less current installments	6,973		—		—		(6,973		)	—
Deferred income taxes	78,413		12,041		—		—			90,454
Other liabilities	27,801		468		—		—			28,269
Total liabilities	818,172		20,072		16,431		(19,622		)	835,053
Equity
New Enterprise Stone & Lime Co., Inc. equity	38,136		78,854		6,391		(85,245		)	38,136
Noncontrolling interest	—		—		1,793		—			1,793
Total equity	38,136		78,854		8,184		(85,245		)	39,929
Total liabilities and equity	$	856,308	$	98,926	$	24,615	$	(104,867	)	$	874,982

Condensed Consolidating Balance Sheet at February 29, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.		Guarantor Subsidiaries		Non Guarantors		Eliminations			Total
Assets
Current assets
Cash and cash equivalents	$	7,106	$	476	$	7,450	$	—		$	15,032
Restricted cash	1,379		102		8,841		—			10,322
Accounts receivable	61,891		14,933		17		—			76,841
Inventories	114,888		17,307		—		—			132,195
Net investment in lease	—		—		610		(610		)	—
Deferred income taxes	14,912		1,107		—		—			16,019
Other current assets	7,434		326		28		—			7,788
Total current assets	207,610		34,251		16,946		(610		)	258,197
Other assets
Property, plant and equipment, net	345,461		25,947		7,451		(7,285		)	371,574
Goodwill	85,002		5,845		—		—			90,847
Other intangible assets	10,904		15,440		—		—			26,344
Investment in subsidiaries	82,166		—		—		(82,166		)	—
Intercompany receivables	280		16,310		—		(16,590		)	—
Other assets	26,825		—		—		—			26,825
Total assets	$	758,248	$	97,793	$	24,397	$	(106,651	)	$	773,787
Liabilities and Equity
Current liabilities
Current maturities of long-term debt	$	7,671	$	—	$	477	$	(610	)	$	7,538
Accounts payable - trade	24,239		3,166		153		—			27,558
Accrued liabilities	38,594		3,309		9,728		—			51,631
Total current liabilities	70,504		6,475		10,358		(610		)	86,727
Long-term debt and other liabilities
Intercompany payables	16,310		—		280		(16,590		)	—
Long-term debt, less current maturities	514,191		—		7,284		—			521,475
Obligations under capital leases, less current installments	7,285		—		—		(7,285		)	—
Deferred income taxes	82,772		13,902		—		—			96,674
Other liabilities	18,910		133		—		—			19,043
Total liabilities	709,972		20,510		17,922		(24,485		)	723,919
Equity
New Enterprise Stone & Lime Co., Inc. equity	48,276		77,283		4,883		(82,166		)	48,276
Noncontrolling interest	—		—		1,592		—			1,592
Total equity	48,276		77,283		6,475		(82,166		)	49,868
Total liabilities and equity	$	758,248	$	97,793	$	24,397	$	(106,651	)	$	773,787

Condensed Consolidating Statement of Comprehensive Income for the three months ending August 31, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Revenue	$	223,736		$	27,079		$	1,975		$	7,752		$	260,542
Cost of revenue (exclusive of items shown separately below)	164,347			22,154			1,328			7,752			195,581
Depreciation, depletion and amortization	11,460			1,820			—			—			13,280
	—			300			—			—			300
Pension and profit sharing	2,154			105			—			—			2,259
Selling, administrative, and general expenses	15,241			2,650			(511		)	—			17,380
Gain on sales of property and equipment	(87		)	94			—			—			7
Operating income	30,621			(44		)	1,158			—			31,735
Interest expense, net	(17,444		)	(71		)	(127		)	—			(17,642		)
Income before income taxes	13,177			(115		)	1,031			—			14,093
Income tax expense (benefit)	6,357			(786		)	—			—			5,571
Equity in earnings of subsidiaries	1,368			—			—			(1,368		)	—
Net income	8,188			671			1,031			(1,368		)	8,522
Unrealized actuarial gains and amortization of prior service costs, net of income tax	14			—			—			—			14
Comprehensive income	8,202			671			1,031			(1,368		)	8,536
Less: comprehensive income attributable to noncontrolling interest	—			—			(334		)	—			(334		)
Comprehensive income attributable to New Enterprise Stone & Lime Co., Inc.	$	8,202		$	671		$	697		$	(1,368	)	$	8,202

Condensed Consolidating Statement of Comprehensive Income for the three months ending August 31, 2011

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Revenue	$	245,033		$	25,429		$	1,953		$	(5,003	)	$	267,412
Cost of revenue (exclusive of items shown separately below)	183,561			17,928			998			(5,003		)	197,484
Depreciation, depletion and amortization	10,386			1,902			—			—			12,288
Pension and profit sharing	2,221			66			—			—			2,287
Selling, administrative, and general expenses	15,778			2,275			212			—			18,265
Gain on sales of property and equipment	(309		)	—			—			—			(309		)
Operating income	33,396			3,258			743			—			37,397
Interest expense, net	(11,740		)	(59		)	(183		)	—			(11,982		)
Income before income taxes	21,656			3,199			560			—			25,415
Income tax expense	13,137			545			—			—			13,682
Equity in earnings of subsidiaries	2,914			—			—			(2,914		)	—
Net income	11,433			2,654			560			(2,914		)	11,733
Unrealized actuarial gains and amortization of prior service costs, net of income tax	31			—			—			—			31
Comprehensive income	11,464			2,654			560			(2,914		)	11,764
Less: comprehensive income attributable to noncontrolling interest	—			—			(300		)	—			(300		)
Comprehensive income attributable to New Enterprise Stone & Lime Co., Inc.	$	11,464		$	2,654		$	260		$	(2,914	)	$	11,464

Condensed Consolidating Statement of Comprehensive (Loss) Income for the six months ending August 31, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Revenue	$	371,992		$	48,699		$	3,953		$	(6,121	)	$	418,523
Cost of revenue (exclusive of items shown separately below)	293,470			39,267			1,328			(6,121		)	327,944
Depreciation, depletion and amortization	21,421			3,702			—			—			25,123
Intangible asset impairment	—			300			—			—			300
Pension and profit sharing	3,916			184			—			—			4,100
Selling, administrative, and general expenses	30,918			4,899			203			—			36,020
Gain on sales of property and equipment	(122		)	94			—			—			(28		)
Operating income	22,389			253			2,422			—			25,064
Interest expense, net	(40,154		)	(143		)	(275		)	—			(40,572		)
(Loss) income before income taxes	(17,765		)	110			2,147			—			(15,508		)
Income tax benefit	(4,455		)	(1,461		)	—			—			(5,916		)
Equity in earnings of subsidiaries	3,079			—			—			(3,079		)	—
Net (loss) income	(10,231		)	1,571			2,147			(3,079		)	(9,592		)
Unrealized actuarial gains and amortization of prior service costs, net of income tax	91			—			—			—			91
Comprehensive (loss) income	(10,140		)	1,571			2,147			(3,079		)	(9,501		)
Less: comprehensive income attributable to noncontrolling interest	—			—			(639		)	—			(639		)
Comprehensive (loss) income attributable to New Enterprise Stone & Lime Co., Inc.	$	(10,140	)	$	1,571		$	1,508		$	(3,079	)	$	(10,140	)

Condensed Consolidating Statement of Comprehensive Income for the six months ending August 31, 2011

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Revenue	$	373,901		$	45,705		$	3,828		$	(9,952	)	$	413,482
Cost of revenue (exclusive of items shown separately below)	294,703			33,849			1,301			(9,952		)	319,901
Depreciation, depletion and amortization	19,829			3,804			—			—			23,633
Pension and profit sharing	3,893			110			—			—			4,003
Selling, administrative, and general expenses	26,425			4,547			283			—			31,255
Gain on sales of property and equipment	(1,505		)	—			—			—			(1,505		)
Operating income	30,556			3,395			2,244			—			36,195
Interest expense, net	(23,127		)	(125		)	(325		)	—			(23,577		)
Income before income taxes	7,429			3,270			1,919			—			12,618
Income tax expense (benefit)	5,590			(143		)	—			—			5,447
Equity in earnings of subsidiaries	4,733			—			—			(4,733		)	—
Net income	6,572			3,413			1,919			(4,733		)	7,171
Unrealized actuarial gains and amortization of prior service costs, net of income tax	63			—			—			—			63
Comprehensive income	6,635			3,413			1,919			(4,733		)	7,234
Less: comprehensive income attributable to noncontrolling interest	—			—			(599		)	—			(599		)
Comprehensive income attributable to New Enterprise Stone & Lime Co., Inc.	$	6,635		$	3,413		$	1,320		$	(4,733	)	$	6,635

Condensed Consolidating Statement of Cash Flows for the six months ending August 31, 2012

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations		Total
Cash flows from operating activities	$	(46,689	)	$	2,287		$	1,098		$	—	$	(43,304	)
Cash flows from investing activities
Capital expenditures	(22,269		)	(2,739		)	—			—		(25,008		)
Capitalized software	(401		)	—			—			—		(401		)
Proceeds from sale of property and equipment	153			—			—			—		153
Change in cash value of life insurance	(3,006		)	—			—			—		(3,006		)
Change in restricted cash	(173		)	(4		)	(1		)	—		(178		)
Net cash used in investing activities	(25,696		)	(2,743		)	(1		)	—		(28,440		)
Cash flows from financing activities
Proceeds from revolving credit	187,725			—			—			—		187,725
Repayment of revolving credit	(221,361		)	—			—			—		(221,361		)
Repayment of long-term debt	(153,119		)	—			(172		)	—		(153,291		)
Payments on capital leases	(2,564		)	—			—			—		(2,564		)
Proceeds from issuance of long-term debt	268,688			—			—			—		268,688
Debt issuance costs	(14,062		)	—			—			—		(14,062		)
Distribution to noncontrolling interest	—			—			(438		)	—		(438		)
Net cash provided by (used in) financing activities	65,307			—			(610		)	—		64,697
Net increase (decrease) in cash and cash equivalents	(7,078		)	(456		)	487			—		(7,047		)
Cash and cash equivalents
Beginning of period	7,106			476			7,450			—		15,032
End of period	$	28		$	20		$	7,937		$	—	$	7,985

Condensed Consolidating Statement of Cash Flows for the six months ending August 31, 2011

(In thousands)

	New Enterprise Stone & Lime Co., Inc.			Guarantor Subsidiaries			Non Guarantors			Eliminations			Total
Cash flows from operating activities	$	(33,606	)	$	2,282		$	151		$	(1,200	)	$	(32,373	)
Cash flows from investing activities
Capital expenditures	(16,406		)	(2,608		)	—			—			(19,014		)
Capitalized software	(3,892		)	—			—			—			(3,892		)
Proceeds from sale of property and equipment	1,305			330			—			—			1,635
Change in cash value of life insurance	2			—			—			—			2
Change in restricted cash	96			14			(8,840		)	—			(8,730		)
Net cash used in investing activities	(18,895		)	(2,264		)	(8,840		)	—			(29,999		)
Cash flows from financing activities
Proceeds from revolving credit	77,397			—			—			—			77,397
Repayment of revolving credit	(14,000		)	—			—			—			(14,000		)
Repayment of long-term debt	(11,173		)	—			(289		)	—			(11,462		)
Payments on capital leases	(2,627		)	—			—			—			(2,627		)
Proceeds from issuance of long-term debt	12,000			—			—			—			12,000
Debt issuance costs	(1,275		)	—			—			—			(1,275		)
Dividends paid	—			—			(1,200		)	1,200			—
Distribution to noncontrolling interest	—			—			(451		)	—			(451		)
Net cash provided by (used in) financing activities	60,322			—			(1,940		)	1,200			59,582
Net increase (decrease) in cash and cash equivalents	7,821			18			(10,629		)	—			(2,790		)
Cash and cash equivalents
Beginning of period	5,058			1,472			13,499			—			20,029
End of period	$	12,879		$	1,490		$	2,870		$	—		$	17,239

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Nature of Operations and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Aug. 31, 2012

Nature of Operations and Summary of Significant Accounting Policies

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and notes included in this report have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  All adjustments (all of which are of a normal recurring nature) that are necessary for a fair presentation are reflected in the condensed consolidated financial statements.  The condensed consolidated financial statements do not include all of the information or disclosures required for a complete presentation in accordance with GAAP.  Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2012 filed with the Securities and Exchange Commission (“SEC”). The results for interim periods are not necessarily indicative of the results for a full fiscal year.

Principles of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and entities where the Company has a controlling equity interest. Intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Reclassifications

Certain items previously reported in prior period financial statement captions have been conformed to agree with current period presentation.

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.  Significant items subject to such estimates and assumptions include the carrying amount of property, plant and equipment; valuation of receivables, inventories and goodwill; recognition of revenue and loss contract reserves under the percentage-of-completion method; assets and obligations related to employee benefit plans; asset retirement obligations; income tax valuation; and self-insurance reserves.  Actual results could differ from those estimates.

Cash and Cash Equivalents and Restricted Cash

Cash and Cash Equivalents and Restricted Cash

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

In March  2012, the Company started using a cash pooling arrangement with a single financial institution with specific provisions for the right to offset positive and negative cash balances.  Accordingly, we classify net aggregate bank overdraft positions as other obligations within the current maturities of long-term debt as of August 31, 2012, based on the short-term nature of these positions.

Trade Accounts Receivable

Trade Accounts Receivable

Trade accounts receivable, less allowance for doubtful accounts, are recorded at the invoiced amount plus service charges related to past due accounts.  The Company’s total accounts receivable consisted of the following:

	August 31,			February 29,
(In thousands)	2012			2012
Costs and estimated earnings in excess of billings	$	21,775		$	14,570
Trade	147,149			60,172
Retainages	5,288			5,358
	174,212			80,100
Allowance for doubtful accounts	(3,777		)	(3,259		)
Accounts receivable, net	$	170,435		$	76,841

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

Concentrations of Credit Risk

Concentrations of Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and temporary investments with high-quality financial institutions. At times, such balances and investments may be in excess of Federal Deposit Insurance Corporation insured limits; however the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to its cash and cash equivalents. The Company conducts business with various governmental entities within the Commonwealth of Pennsylvania. These entities include the Pennsylvania Department of Transportation, the Pennsylvania Turnpike Commission and various townships, municipalities, school districts and universities within Pennsylvania. The Company has not experienced any material losses with these governmental agencies and does not believe it is exposed to any significant credit risk related to its outstanding accounts receivable.

Inventories

Inventories

Inventories are stated at the lower of cost or market.  Cost is determined using either first-in, first-out (“FIFO”) or weighted average method based on the applicable category of inventories.

The Company’s total inventory consists of the following:

	August 31,		February 29,
(In thousands)	2012		2012
Crushed stone, agricultural lime, and sand	$	83,386	$	84,016
Raw materials	11,284		9,400
Parts, tires, and supplies	11,761		11,313
Concrete blocks	4,219		4,547
Building materials	4,236		3,982
Safety equipment	18,986		16,901
Other	2,779		2,036
	$	136,651	$	132,195

Property, Plant and Equipment

Property, Plant and Equipment

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

The Company’s property, plant and equipment consist of the following:

	August 31,			February 29,
(In thousands)	2012			2012
Limestone and sand acreage	$	139,318		$	142,034
Land, buildings and building improvements	100,042			96,504
Crushing, prestressing, and manufacturing plants	316,916			310,130
Contracting equipment, vehicles and other	294,265			281,543
Construction in progress	10,824			8,829
Property, plant and equipment	861,365			839,040
Less: Accumulated depreciation and depletion	(486,235		)	(467,466		)
Property, plant and equipment, net	$	375,130		$	371,574

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

Depreciation expense was $12.1 million and $11.7 million for three months ended August 31, 2012 and 2011, respectively.  Depreciation expense was $22.9 million and $22.6 million for the six months ended August 31, 2012 and 2011, respectively.  Included in the contracting equipment, vehicles and other asset category above are capital leases with a cost basis of $27.6 million and $25.8 million as of August 31, 2012 and February 29, 2012, respectively.

Goodwill and Other Intangible Assets

Goodwill

The Company tests goodwill for impairment on an annual basis or more frequently if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.  There were no changes to the carrying value of goodwill during the six months ended August 31, 2012.  Management continues to monitor the impact of market and economic events to determine if it is more likely than not that the carrying value of these reporting units has been impaired.  The timing of a sustained recovery in the construction industry may have a significant effect on the fair value of our reporting units. A decrease in the estimated fair value of one or more of the Company’s reporting units as a result of changes in future earnings, interest rates, market trends and/or cash flows could result in the recognition of goodwill impairment.

In January 2013, we began the process of completing our annual goodwill impairment assessment.  During our initial review, we identified indications that there may be significant decreases in the fair values of our Traffic Safety Services and Equipment reporting unit with goodwill of $5.8 million and a reporting unit in our Construction Materials segment with goodwill of $68.4 million as of August 31, 2012.  As of the date of issuance of this Quarterly Report on Form 10-Q, we have not completed our annual impairment assessment and we currently do not expect an impairment charge.

Other Intangible Assets

The Company’s other intangible assets consist of the following:

						Net								Net
						Carrying								Carrying
	Gross					Amount								Amount
	Carrying		Accumulated			February 29,		Current			Current			August 31,
(In thousands)	Amount		Amortization			2012		Impairment			Amortization			2012
Amortizable intangible assets
Customer relationships	$	12,000	$	(2,400	)	$	9,600	$	—		$	(300	)	$	9,300
Technology	600		(160		)	440		—			(20		)	420
	12,600		(2,560		)	10,040		—			(320		)	9,720
Nonamortizable intangible assets
Trademarks	16,304		—			16,304		(300		)	—			16,004
Total other intangible assets	$	28,904	$	(2,560	)	$	26,344	$	(300	)	$	(320	)	$	25,724

Other intangible assets consist of technology, customer relationships and trademarks acquired in previous acquisitions. The technology is being amortized over a straight-line basis of 15 years. The customer relationships are being amortized on a straight-line basis over 20 years. The trademarks are considered to have indefinite-life and are not amortized, but tested for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company performs its annual impairment analysis of intangible assets as of fiscal year end. The Company uses a variety of methodologies in conducting the impairment assessment of its intangible assets, including, but not limited to, discounted cash flow models, which are based on the assumptions we believe hypothetical marketplace participants would use. For intangible assets, other than goodwill, if the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess.

We recorded a $1.1 million impairment of our Traffic Safety Services and Equipment reporting unit’s trademark in the fourth quarter of the fiscal year ended February 29, 2012 due to a decline in revenues and we took a $0.3 million impairment of our Traffic Safety Services and Equipment reporting unit’s trademark in the current quarter ended August 31, 2012 due to changes in underlying assumptions.  The remaining balance of our Traffic Safety Services and Equipment reporting unit’s trademark is $5.1 million as of August 31, 2012.  The timing of a sustained recovery in the construction industry, our ability to meet our expected operating results and changes in interest rates requires us to continuously evaluate the fair value of our trademarks.  A decrease in the estimated fair value of our trademarks could result in the recognition of additional impairments.

Amortization of intangible assets for each of the six months ended August 31, 2012 and August 31, 2011 was $0.3 million.

Other Assets

Other Assets

The Company’s long term other assets consist of the following:

	August 31,		February 29,
(In thousands)	2012		2012
Deferred financing fees (less current portion of $3,658 at August 2012 and $4,882 at February 2012)	$	16,352	$	10,409
Cash value of life insurance (net of loans of $0 at August 2012 and $3,000 at February 2012)	4,012		1,006
Capitalized software (net of accumulated amortization $715 at August 2012 and $160 at February 2012)	10,230		11,719
Deferred stripping costs	3,366		2,994
Other	389		697
Total other assets	$	34,349	$	26,825

As part of our debt refinancing transactions on March 15, 2012, we incurred and capitalized $15.0 million of deferred financing fees.  The Company recognized a loss on debt retirement of approximately $6.4 million related to the write-off of unamortized debt issuance costs.  The write-off of the debt issuance costs were recorded as a component of net interest expense.

During the three months ended August 31, 2012, the Company recorded a $1.3 million reduction to capitalized software related to our new ERP system.

Asset Retirement Obligations

Asset Retirement Obligations

The change in the asset retirement obligations for the six months ended August 31, 2012 consists of the following:

(In thousands)
Balance at February 29, 2012	$	11,360
Accretion expense	309
Change in estimated obligations	1,105
Liabilities settled	(3,831		)
Balance at August 31, 2012	$	8,943

Recent Accounting Pronouncements

Recently Issued Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. This ASU requires companies to disclose both gross and net information about financial instruments that have been offset on the consolidated balance sheet. This ASU will be effective commencing with the three months ending May 31, 2013. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU gives companies the option to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If it is determined that it is more likely than not the indefinite-lived intangible asset is impaired, a quantitative impairment test is required. However, if it is concluded otherwise, the quantitative test is not necessary. This ASU will be effective commencing with the three months ending May 31, 2013. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

Recently Adopted Accounting Standards

In May, 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”.  The amendments in this update result in common fair value measurement and disclosure requirements in GAAP and International Financial Reporting Standards (“IFRSs”) and change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, it is not intended for the amendments to result in a change in the application of the requirements in Topic 820. Some of the amendments clarify the 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. We adopted this standard on March 1, 2012, which did not have a material impact on the consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05 “Presentation of Comprehensive Income” which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update also eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.  We adopted this standard on March 1, 2012, which did not have a material impact on the consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08 “Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment” which amends the goodwill impairment testing guidance in ASC 350-20, “Goodwill.” Under the amended standard, an entity has the option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted.  We adopted this standard on March 1, 2012, which did not have a material impact on the consolidated financial statements.

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Condensed Issuer, Guarantor and Non Guarantor Financial Information (Details 2) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2012	Feb. 29, 2012	Aug. 31, 2011	Feb. 28, 2011
Current assets
Cash and cash equivalents	$ 7,985	$ 15,032	$ 17,239	$ 20,029
Restricted cash	10,500	10,322
Accounts receivable	170,435	76,841
Inventories	136,651	132,195
Deferred income taxes	15,699	16,019
Other current assets	7,662	7,788
Total current assets	348,932	258,197
Other assets
Property, plant and equipment, net	375,130	371,574
Goodwill	90,847	90,847
Other intangible assets	25,724	26,344
Other assets	34,349	26,825
Total assets	874,982	773,787
Current liabilities
Current maturities of long-term debt	20,662	7,538
Accounts payable - trade	48,288	27,558
Accrued liabilities	57,995	51,631
Total current liabilities	126,945	86,727
Long-term debt and other liabilities
Long-term debt, less current maturities	589,385	521,475
Deferred income taxes	90,454	96,674
Other liabilities	28,269	19,043
Total liabilities	835,053	723,919
Equity
New Enterprise Stone & Lime Co., Inc. stockholders' equity	38,136	48,276
Noncontrolling interest	1,793	1,592
Total equity	39,929	49,868
Total liabilities and equity	874,982	773,787
New Enterprise Stone & Lime Co., Inc.
Current assets
Cash and cash equivalents	28	7,106	12,879	5,058
Restricted cash	1,552	1,379
Accounts receivable	150,173	61,891
Inventories	117,535	114,888
Deferred income taxes	14,647	14,912
Other current assets	6,783	7,434
Total current assets	290,718	207,610
Other assets
Property, plant and equipment, net	351,175	345,461
Goodwill	85,002	85,002
Other intangible assets	10,797	10,904
Investment in subsidiaries	85,245	82,166
Intercompany receivables	280	280
Other assets	33,091	26,825
Total assets	856,308	758,248
Current liabilities
Current maturities of long-term debt	20,656	7,671
Accounts payable - trade	44,122	24,239
Accrued liabilities	46,036	38,594
Total current liabilities	110,814	70,504
Long-term debt and other liabilities
Intercompany payables	11,759	16,310
Long-term debt, less current maturities	582,412	514,191
Obligations under capital leases, less current installments	6,973	7,285
Deferred income taxes	78,413	82,772
Other liabilities	27,801	18,910
Total liabilities	818,172	709,972
Equity
New Enterprise Stone & Lime Co., Inc. stockholders' equity	38,136	48,276
Total equity	38,136	48,276
Total liabilities and equity	856,308	758,248
Guarantor Subsidiaries
Current assets
Cash and cash equivalents	20	476	1,490	1,472
Restricted cash	106	102
Accounts receivable	20,248	14,933
Inventories	19,116	17,307
Deferred income taxes	1,052	1,107
Other current assets	827	326
Total current assets	41,369	34,251
Other assets
Property, plant and equipment, net	23,768	25,947
Goodwill	5,845	5,845
Other intangible assets	14,927	15,440
Intercompany receivables	11,759	16,310
Other assets	1,258
Total assets	98,926	97,793
Current liabilities
Accounts payable - trade	4,037	3,166
Accrued liabilities	3,526	3,309
Total current liabilities	7,563	6,475
Long-term debt and other liabilities
Deferred income taxes	12,041	13,902
Other liabilities	468	133
Total liabilities	20,072	20,510
Equity
New Enterprise Stone & Lime Co., Inc. stockholders' equity	78,854	77,283
Total equity	78,854	77,283
Total liabilities and equity	98,926	97,793
Non Guarantors
Current assets
Cash and cash equivalents	7,937	7,450	2,870	13,499
Restricted cash	8,842	8,841
Accounts receivable	14	17
Net investment in lease	610	610
Other current assets	52	28
Total current assets	17,455	16,946
Other assets
Property, plant and equipment, net	7,160	7,451
Total assets	24,615	24,397
Current liabilities
Current maturities of long-term debt	616	477
Accounts payable - trade	129	153
Accrued liabilities	8,433	9,728
Total current liabilities	9,178	10,358
Long-term debt and other liabilities
Intercompany payables	280	280
Long-term debt, less current maturities	6,973	7,284
Total liabilities	16,431	17,922
Equity
New Enterprise Stone & Lime Co., Inc. stockholders' equity	6,391	4,883
Noncontrolling interest	1,793	1,592
Total equity	8,184	6,475
Total liabilities and equity	24,615	24,397
Eliminations
Current assets
Net investment in lease	(610)	(610)
Total current assets	(610)	(610)
Other assets
Property, plant and equipment, net	(6,973)	(7,285)
Investment in subsidiaries	(85,245)	(82,166)
Intercompany receivables	(12,039)	(16,590)
Total assets	(104,867)	(106,651)
Current liabilities
Current maturities of long-term debt	(610)	(610)
Total current liabilities	(610)	(610)
Long-term debt and other liabilities
Intercompany payables	(12,039)	(16,590)
Obligations under capital leases, less current installments	(6,973)	(7,285)
Total liabilities	(19,622)	(24,485)
Equity
New Enterprise Stone & Lime Co., Inc. stockholders' equity	(85,245)	(82,166)
Total equity	(85,245)	(82,166)
Total liabilities and equity	$ (104,867)	$ (106,651)

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Segment Reporting (Tables)

6 Months Ended

Aug. 31, 2012

Segment Reporting

Summary of certain financial data for the company's operating segments

	Three Months Ended						Six Months Ended
	August 31,						August 31,
(In thousands)	2012			2011			2012			2011
Revenue
Construction materials	$	194,144		$	204,892		$	316,426		$	307,822
Heavy/highway construction	108,963			126,394			162,946			179,205
Traffic safety services and equipment	26,999			25,899			51,398			47,860
Other revenues	3,428			5,931			7,150			9,125
Segment totals	333,534			363,116			537,920			544,012
Eliminations	(72,992		)	(95,704		)	(119,397		)	(130,530		)
Total net revenue	$	260,542		$	267,412		$	418,523		$	413,482
Operating income (loss)
Construction materials	$	32,107		$	35,970		$	36,089		$	38,099
Heavy/highway construction	3,576			2,877			1,939			729
Traffic safety services and equipment	(812		)	2,950			(1,275		)	3,177
Corporate and unallocated	(3,136		)	(4,400		)	(11,689		)	(5,810		)
Total operating income	$	31,735		$	37,397		$	25,064		$	36,195

	Three Months Ended						Six Months Ended
	August 31,						August 31,
(In thousands)	2012			2011			2012			2011
Product and services revenue
Construction materials
Aggregates	$	59,444		$	66,620		$	112,921		$	111,450
Hot mix asphalt	98,606			99,442			135,890			130,377
Ready mixed concrete	18,793			20,740			35,884			33,706
Precast/prestressed structural concrete	8,369			8,213			14,620			14,092
Masonry products	4,383			5,082			8,628			9,589
Construction supply centers	4,549			4,795			8,483			8,608
Heavy/highway construction	108,963			126,394			162,946			179,205
Traffic safety services and equipment	26,999			25,899			51,398			47,860
Other revenues	3,428			5,931			7,150			9,125
Inter-product sales eliminations	(72,992		)	(95,704		)	(119,397		)	(130,530		)
Total net revenue	$	260,542		$	267,412		$	418,523		$	413,482
Product and services operating income (loss)
Construction materials
Aggregates	$	14,074		$	19,341		$	17,008		$	22,375
Hot mix asphalt	15,885			13,701			16,498			13,173
Ready mixed concrete	1,548			2,544			2,758			2,503
Precast/prestressed structural concrete	137			(11		)	(494		)	(450		)
Masonry products	(146		)	(66		)	(463		)	(185		)
Construction supply centers	609			461			782			683
Heavy/highway construction	3,576			2,877			1,939			729
Traffic safety services and equipment	(812		)	2,950			(1,275		)	3,177
Corporate and unallocated	(3,136		)	(4,400		)	(11,689		)	(5,810		)
Total operating income	$	31,735		$	37,397		$	25,064		$	36,195

	Three Months Ended August 31,				Six Months Ended August 31,
(In thousands)	2012		2011		2012		2011
Depreciation, depletion and amortization
Construction materials	$	7,585	$	8,791	$	15,301	$	16,014
Heavy/highway construction	2,920		1,363		4,817		3,381
Traffic safety services and equipment	1,722		1,756		3,414		3,470
Corporate and unallocated	1,053		378		1,591		768
Total depreciation, depletion and amortization	$	13,280	$	12,288	$	25,123	$	23,633

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Risks and Uncertainties (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended			6 Months Ended		6 Months Ended
	Aug. 31, 2012	Aug. 31, 2012 Secured Notes	Mar. 15, 2012 Secured Notes	Aug. 31, 2012 ABL Facility	Mar. 15, 2012 ABL Facility	Aug. 31, 2012 ABL Facility Amendment 1	Aug. 31, 2012 ABL Facility Maximum	Aug. 31, 2012 Notes	Aug. 31, 2010 Notes
Risks and Uncertainties
Face amount of debt		$ 265.0	$ 265.0					$ 250.0	$ 250.0
Interest rate (as a percent)			13.00%					11.00%
Maximum borrowing capacity				162.5	170.0
Period for issuance of financial statements								15 days
Fixed charge coverage ratio							1.0
Base dollar amount used in determining the borrowing base				$ 65.0		$ 56.0
Percentage of appraised value of the eligible real property to determine borrowing base				75.00%		65.00%
Percentage of outstanding balance of eligible accounts receivable to determine borrowing base				85.00%		70.00%
Percentage of eligible inventory to determine borrowing base				60.00%		40.00%
Number of days available from the date of notices to cure default by complying with its reporting requirements and related filings	120 days

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 31, 2012	Aug. 31, 2011
Reconciliation of net (loss) income to net cash used in operating activities
Net (loss) income	$ (9,592)	$ 7,171
Adjustments to reconcile net (loss) income to net cash used in operating activities
Depreciation and cost depletion	24,248	23,313
Intangible asset impairment	300
Gain on disposal of property and equipment	(28)	(1,505)
Amortization of other assets and liabilities	875	1,630
Noncash interest expense	19,162	2,037
Deferred income taxes	(5,900)	5,421
Bad debt expense	1,023	(906)
Changes in assets and liabilities:
Accounts receivable	(94,617)	(110,261)
Inventories	(6,261)	(9,263)
Other assets	(1,394)	10
Accounts payable	22,065	46,271
Other liabilities	6,815	3,709
Net cash used in operating activities	(43,304)	(32,373)
Cash flows from investing activities
Capital expenditures	(25,008)	(19,014)
Capitalized software	(401)	(3,892)
Proceeds from sale of property and equipment	153	1,635
Change in cash value of life insurance	(3,006)	2
Change in restricted cash	(178)	(8,730)
Net cash used in investing activities	(28,440)	(29,999)
Cash flows from financing activities
Proceeds from revolving credit	187,725	77,397
Repayment of revolving credit	(221,361)	(14,000)
Repayment of long-term debt	(153,291)	(11,462)
Payments on capital leases	(2,564)	(2,627)
Proceeds from issuance of long-term debt	268,688	12,000
Debt issuance costs	(14,062)	(1,275)
Distribution to noncontrolling interest	(438)	(451)
Net cash provided by financing activities	64,697	59,582
Net decrease in cash and cash equivalents	(7,047)	(2,790)
Cash and cash equivalents
Beginning of period	15,032	20,029
End of period	$ 7,985	$ 17,239

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Income Taxes

6 Months Ended

Aug. 31, 2012

Income Taxes

Income Taxes

5. Income Taxes

The Company’s tax provision and the corresponding effective tax rate are based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. For interim financial reporting the Company estimates the annual tax rate based on projected taxable income for the full year and records a quarterly tax provision in accordance with the anticipated annual rate. As the year progresses, the Company refines the estimates of the year’s taxable income as new information becomes available, including year-to-date financial results. This continual estimation process often results in a change to the Company’s expected effective tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual tax rate. Significant judgment is required in determining the Company’s effective interim tax rate and in evaluating its tax positions.

The Company’s effective income tax rate was 39.5% and 53.8% for the three months ended August 31, 2012 and 2011, respectively. The Company’s effective tax rate was 38.1% and 43.2% for the six months ended August 31, 2012 and 2011, respectively. The principal factor affecting the comparability of the effective income tax rate for the respective periods is a result of increased projected pre-tax book loss of the Company for the year ended February 28, 2013, when compared to projected pre-tax book loss of the Company for the year ended February 29, 2012. When pre-tax book income is projected for the year, favorable permanent items can decrease the Company’s effective tax rate well below the statutory rate of 35%. In the case where a pre-tax book loss is projected for the year, favorable permanent differences will increase this loss for tax purposes, and subsequently increase the effective tax rate projected for the year. The substantial increase in the estimated full year pre-tax book loss when compared to the prior period was the primary driver of the decrease in tax expense.  The significant pre-tax loss reduces the impact of permanent adjustments which did not materially change period over period.  The state tax impact on the effective tax rate was minimal because of anticipated valuation allowance needs for deferred tax assets relating to state losses originating in the current period.

The cash taxes paid were not material for the three and six months ended August 31, 2012 and August 31, 2011, respectively, primarily as a result of the net operating losses.

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Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2012	Feb. 29, 2012
Accrued Liabilities
Payroll and vacation	$ 9,460	$ 8,496
Contract expenses	250	518
Withholding taxes	3,033	2,862
Interest	18,845	14,055
Insurance	17,143	18,353
Deferred acquisition liability	3,521	3,610
Billings in excess of costs and estimated earnings on uncompleted contracts	3,371	255
Other	2,372	3,482
Accrued liabilities	$ 57,995	$ 51,631

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Retirement and Benefit Programs (Tables)

6 Months Ended

Aug. 31, 2012

Retirement and Benefit Programs

Schedule of net periodic pension expense recognized

	Three Months Ended August 31						Six Months Ended August 31
(In thousands)	2012			2011			2012			2011
Components of net periodic benefit cost
Service cost	$	68		$	54		$	135		$	109
Interest cost	99			110			198			220
Expected return on plan assets	(146		)	(154		)	(293		)	(310		)
Amortization of prior service cost	15			15			30			31
Recognized net actuarial loss	62			29			124			58
Total pension expense	$	98		$	54		$	194		$	108