8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 5, 2004

GRANITE CONSTRUCTION INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware	1-12911	77-0239383
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation)

585 West Beach Street
Watsonville, California 95076
(Address of principal executive offices) (Zip Code)

(831) 724-1011
Registrant’s telephone number, including area code

TABLE OF CONTENTS

	Item 12. Disclosure of Results of Operations and Financial Condition.
	Item 7. Financial Statement, Pro Forma Financial Information and Exhibits
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 20.1
EXHIBIT 20.2
EXHIBIT 20.3
EXHIBIT 20.4

Item 12. Disclosure of Results of Operations and Financial Condition.

On May 5, 2004, Granite Construction Incorporated released its first quarter 2004 financial results. Granite announced that a net loss of $9.1 million, or $0.23 per diluted share for the first quarter ended March 31, 2004, which includes a gain on the sale of certain assets related to our ready-mix concrete business in the quarter of approximately $10.0 million pre-tax. This compares with net income of $10.0 million or $0.25 per share for the same period last year. First quarter 2003 results include $18.4 million in pre-tax income related to the sale of the State Route 91 tollroad franchise by the California Private Transportation Corporation, of which Granite is a 22.2% limited partner.

Revenue for the quarter totaled $337.0 million, an increase of 11.5% over the same period in 2003 and includes the $23.0 million impact of consolidating certain construction joint ventures in the quarter as required by new accounting rules*. (See Note)

First quarter 2004 results reflect approximately $19.0 million in higher than anticipated estimated costs on a number of large, complex contracts located throughout the United States operating under the Company’s Heavy Construction Division. These forecast adjustments were attributable to unanticipated changes in project conditions occurring in the quarter resulting in changes to the estimates of the cost to complete the projects. These changes to the estimates were primarily due to the recognition of costs associated with changes in productivity expectations, added scope changes, extended overhead due to owner and weather delays, design problems on Design/Build projects, subcontractor performance issues and higher estimated liquidated damages on two projects.

Backlog at March 31, 2004 totaled $2.0 billion compared with $1.9 billion at March 31, 2003. Backlog at March 31, 2004 includes $122.9 million resulting from the consolidation of our partners’ share of construction joint venture backlog in the quarter under the new accounting rules*. (See Note)

First Quarter Conference Call Information: Granite will host a conference call at 8:00 a.m. Pacific Time, 11:00 a.m. Eastern Time on Thursday, May 6, 2004 which will be live on the internet, and can be accessed at www.graniteconstruction.com or by calling (913) 981-5559. A replay of the call can be accessed on the Company’s website or by calling (888) 203-1112 for domestic U.S. and Canada or (719) 457-0820 for international callers, access code 660459. The replay will be available beginning at 11:00 a.m. Pacific Time on May 6, 2004 through 9:00 p.m. Pacific Time on May 14, 2004.

*Note:

     The Company has determined that certain of the construction joint ventures in which it participates are variable interest entities as defined by FIN No. 46 “Consolidation of Variable Interest Entities” issued by the Financial Accounting Standards Board. Accordingly, the Company has consolidated those joint ventures where it has determined that the Company is the primary beneficiary. There was no effect on the Company’s net loss as a result of these consolidations for the three months ended March 31, 2004.

2

Item 7. Financial Statement, Pro Forma Financial Information and Exhibits

(a)	Not applicable.
(b)	Not applicable.
(c)	Exhibits. The following exhibits are attached hereto and furnished herewith:

Exhibit Number
20.1	Press Release of Registrant, dated May 5, 2004, its first quarter financial results
20.2	Comparative Financial Summary
20.3	Condensed Consolidated Balance Sheets
20.4	Revenue and Backlog Analysis

3

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GRANITE CONSTRUCTION INCORPORATED
Date: May 5, 2004	By:	/s / William E. Barton
		William E. Barton
		Senior Vice President and Chief Financial Officer

4

INDEX TO EXHIBITS

Exhibit
Number	Document
20.1	Press Release of Registrant, dated May 5, 2004, its first quarter financial results
20.2	Comparative Financial Summary
20.3	Condensed Consolidated Balance Sheets
20.4	Revenue and Backlog Analysis

5

EX-20.1

EXHIBIT 20.1

FOR FURTHER INFORMATION CONTACT:
Jacque Underdown (831) 761-4741

FOR IMMEDIATE RELEASE

GRANITE CONSTRUCTION REPORTS FIRST QUARTER 2004 RESULTS

Watsonville, California (May 5, 2004) Granite Construction Incorporated (NYSE:GVA) today announced a net loss of $9.1 million, or $0.23 per diluted share for the first quarter ended March 31, 2004, which includes a gain on the sale of certain assets related to our ready-mix concrete business in the quarter of approximately $10.0 million pre-tax. This compares with net income of $10.0 million or $0.25 per share for the same period last year. First quarter 2003 results include $18.4 million in pre-tax income related to the sale of the State Route 91 tollroad franchise by the California Private Transportation Corporation, of which Granite is a 22.2% limited partner.

Revenue for the quarter totaled $337.0 million, an increase of 11.5% over the same period in 2003 and includes the $23.0 million impact of consolidating certain construction joint ventures in the quarter as required by new accounting rules*. (See Note)

First quarter 2004 results reflect approximately $19.0 million in higher than anticipated estimated costs on a number of large, complex contracts located throughout the United States operating under the Company’s Heavy Construction Division. These forecast adjustments were attributable to unanticipated changes in project conditions occurring in the quarter resulting in changes to the estimates of the cost to complete the projects. These changes to the estimates were primarily due to the recognition of costs associated with changes in productivity expectations, added scope changes, extended overhead due to owner and weather delays, design problems on Design/Build projects, subcontractor performance issues and higher estimated liquidated damages on two projects.

Backlog at March 31, 2004 totaled $2.0 billion compared with $1.9 billion at March 31, 2003. Backlog at March 31, 2004 includes $122.9 million resulting from the consolidation of our

partners’ share of construction joint venture backlog in the quarter under the new accounting rules*. (See Note)

First Quarter Conference Call Information:

Granite will host a conference call at 8:00 a.m. Pacific Time, 11:00 a.m. Eastern Time on Thursday, May 6, 2004 which will be live on the internet, and can be accessed at www.graniteconstruction.com or by calling (913) 981-5559. A replay of the call can be accessed on the Company’s website or by calling (888) 203-1112 for domestic U.S. and Canada or (719) 457-0820 for international callers, access code 660459. The replay will be available beginning at 11:00 a.m. Pacific Time on May 6, 2004 through 9:00 p.m. Pacific Time on May 14, 2004.

Granite Construction, a member of the S&P 400 Index, is one of the nation’s largest heavy civil contractors and construction materials producers. The Company serves both public and private sector clients through its offices nationwide. For more information about the Company, please visit its website at www.graniteconstruction.com.

*Note:

The Company has determined that certain of the construction joint ventures in which it participates are variable interest entities as defined by FIN No. 46 “Consolidation of Variable Interest Entities” issued by the Financial Accounting Standards Board. Accordingly, the Company has consolidated those joint ventures where it has determined that the Company is the primary beneficiary. There was no effect on the Company’s net loss as a result of these consolidations for the three months ended March 31, 2004.

This press release contains forward-looking statements, such as statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and the future results of Granite that are based on current expectations, estimates, forecasts, and projects as well as the beliefs and assumptions of Granite’s management. Words such as “outlook”, “believes,” “expects,” “appears,” “may,” “will,” “should,” “or “anticipates,” or the negative thereof or comparable terminology, are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore actual results may differ materially and adversely from those expressed in any forward-looking statements. Specific risk factors include, without limitation, changes in the composition of applicable federal and state legislation appropriation committees; federal and state appropriation changes for infrastructure spending; the general state of the economy; job productivity; accuracy of project estimates; weather conditions; competition and pricing pressures; and state referendums and initiatives. You should not place undue reliance on these forward-looking statements, which speak only as to the date of this news release. Granite undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

EX-20.2

EXHIBIT 20.2

GRANITE CONSTRUCTION INCORPORATED
COMPARATIVE FINANCIAL SUMMARY
(Unaudited — in Thousands, Except Per Share Data)

	Three Months Ended
	March 31,						Variance
Operations	2004			2003			Amount			Percent
Revenue	$	337,018		$	302,160		$	34,858			11.5
Gross profit	$	10,684		$	33,017		$	(22,333	)		(67.6	)
Gross profit as a percent of revenue		3.2	%		10.9	%		(7.7	%)		—
General and administrative expenses	$	(36,544	)	$	(36,550	)	$	6			—
G&A expenses as a percent of revenue		-10.8	%		-12.1	%		1.3	%		—
Gain on sales of property and equipment	$	13,330		$	296		$	13,034			4403.4
Other income (expense) Interest income	$	1,398		$	1,486		$	(88	)		(5.9	)
Interest expense	$	(1,740	)	$	(2,109	)	$	369			17.5
Equity in income of affiliates	$	107		$	18,015		$	(17,908	)		(99.4	)
Other, net	$	102		$	327		$	(225	)		(68.8	)
Total other income (expense)	$	(133	)	$	17,719		$	(17,852	)		(100.8	)
Income(loss) before income taxes and minority interest	$	(12,663	)	$	14,482		$	(27,145	)		(187.4	)
Minority interest	$	(830	)	$	777		$	(1,607	)		(206.8	)
Net income (loss)	$	(9,109	)	$	10,018		$	(19,127	)		(190.9	)
Net income (loss) per share:
Basic	$	(0.23	)	$	0.25		$	(0.48	)		(192.0	)
Diluted	$	(0.23	)	$	0.25		$	(0.48	)		(192.0	)
Weighted average shares of common stock:
Basic		40,266			40,048			218			0.5
Diluted		40,266			40,510			(244	)		(0.6	)

	March 31,		Dec. 31,		Variance
Financial Position	2004		2003		Amount			Percent
Working capital	$	266,026	$	269,947	$	(3,921	)		(1.5	)
Current ratio		1.74		1.77		(0.03	)		(1.7	)
Long-term debt	$	126,154	$	126,708	$	(554	)		(0.4	)
Total liabilities to equity ratio		1.20		1.10		0.10			9.1
Stockholders’ equity	$	490,843	$	504,891	$	(14,048	)		(2.8	)
Total assets	$	1,079,139	$	1,060,410	$	18,729			1.8
Book value per common share	$	11.80	$	12.16	$	(0.36	)		(3.0	)
Backlog	$	2,046,367	$	1,985,788	$	60,579			3.1

EX-20.3

EXHIBIT 20.3

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)

	March 31,			December 31,
	2004			2003
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	102,006		$	69,919
Short-term marketable securities		80,299			90,869
Accounts receivable, net		276,486			288,210
Costs and estimated earnings in excess of billings		41,392			31,189
Inventories		30,400			29,878
Deferred income taxes		22,173			22,421
Equity in construction joint ventures		21,005			42,250
Other current assets		53,553			43,915
Total current assets		627,314			618,651
Property and equipment, net		349,883			344,734
Long-term marketable securities		37,611			41,197
Investments in affiliates		18,273			18,295
Other assets		46,058			37,533
	$	1,079,139		$	1,060,410
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt	$	8,788		$	8,182
Accounts payable		135,134			135,468
Billings in excess of costs and estimated earnings		116,965			99,337
Accrued expenses and other current liabilities		100,401			105,717
Total current liabilities		361,288			348,704
Long-term debt		126,154			126,708
Other long-term liabilities		26,851			24,938
Deferred income taxes		45,775			44,297
Commitments and contingencies
Minority interest in consolidated subsidiaries		28,228			10,872
Stockholders’ equity
Preferred stock, $0.01 par value, authorized 3,000,000 shares, none outstanding		—			—
Common stock, $0.01 par value, authorized 100,000,000 shares; issued and outstanding 41,601,622 shares in 2004 and 41,528,317 in 2003		416			415
Additional paid-in capital		75,732			73,651
Retained earnings		429,003			442,272
Accumulated other comprehensive income		512			76
		505,663			516,414
Unearned compensation		(14,820	)		(11,523	)
		490,843			504,891
	$	1,079,139		$	1,060,410

EX-20.4

EXHIBIT 20.4

GRANITE CONSTRUCTION INCORPORATED
REVENUE AND BACKLOG ANALYSIS
(Dollars In Thousands)

BY MARKET SECTOR

	Revenue										Backlog
	Three Months Ended March 31,				Variance						March 31,				Variance
	2004		2003		Amount			Percent			2004		2003		Amount			Percent
Contracts
Federal	$	12,304	$	9,330	$	2,974			31.9		$	122,960	$	87,386	$	35,574			40.7
State		126,495		110,309		16,186			14.7			780,550		798,061		(17,511	)		(2.2	)
Local		108,204		96,391		11,813			12.3			976,396		823,067		153,329			18.6
Total public sector		247,003		216,030		30,973			14.3			1,879,906		1,708,514		171,392			10.0
Private sector		50,349		46,436		3,913			8.4			166,461		162,314		4,147			2.6
Aggregate sales		39,666		39,694		(28	)		(0.1	)		—		—		—			—
	$	337,018	$	302,160	$	34,858			11.5		$	2,046,367	$	1,870,828	$	175,539			9.4

BY GEOGRAPHIC AREA

	Revenue										Backlog
	Three Months Ended March 31,				Variance						March 31,				Variance
	2004		2003		Amount			Percent			2004		2003		Amount			Percent
California	$	114,317	$	111,002	$	3,315			3.0		$	235,753	$	264,106	$	(28,353	)		(10.7	)
West (Excl. CA)		74,453		96,034		(21,581	)		(22.5	)		369,439		463,986		(94,547	)		(20.4	)
Midwest		18,651		9,845		8,806			89.4			41,743		78,356		(36,613	)		(46.7	)
Northeast		53,315		28,187		25,128			89.1			755,936		469,449		286,487			61.0
South		76,282		57,092		19,190			33.6			643,496		594,931		48,565			8.2
	$	337,018	$	302,160	$	34,858			11.5		$	2,046,367	$	1,870,828	$	175,539			9.4