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) October 26, 2005

GRANITE CONSTRUCTION INCORPORATED
(Exact name of registrant as specified in its charter)

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

585 West Beach Street

Watsonville, California 95076

(Address of principal executive offices) (Zip Code)

(831) 724-1011

Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

          On October 26, 2005, Granite Construction Incorporated (the “Company”) issued a press release with respect to its earnings for the quarter ended September 30, 2005, a copy of which is attached as Exhibit 99.1.

          The information set forth is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall the information, including the Exhibit, be deemed incorporated by reference in any filing of the Company, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits. The following exhibit is attached hereto and furnished herewith:

Exhibit Number	Exhibit Title
99.1	Press Release of Registrant, dated October 26, 2005, its third quarter financial results

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 hereunto duly authorized.

	GRANITE CONSTRUCTION INCORPORATED
Date:  October 26, 2005	BY:	/s/ William E. Barton
		William E. Barton
		Senior Vice President and
		Chief Financial Officer

3

INDEX TO EXHIBITS

Exhibit Number	Document
99.1	Press Release of Registrant, dated October 26, 2005, its third quarter financial results

4

EX-99.1

Exhibit 99.1

Granite Construction Incorporated Reports Third Quarter 2005 Results

WATSONVILLE, Calif., Oct. 26 /PRNewswire-FirstCall/ -- Granite Construction Incorporated (NYSE: GVA) today announced its results for the third quarter ended September 30, 2005. The Company reported net income for the quarter of $40.7 million, or $0.98 per diluted share. This compares with net income of $32.8 million, or $0.80 per diluted share for the same period last year. For the nine-month period ended September 30, 2005, net income was $47.3 million or $1.15 per diluted share compared with $37.5 million or $0.91 per diluted share for the same period in 2004.

Commenting on the results, President and Chief Executive Officer, William G. Dorey said, “Our record third quarter results were driven by strong markets in the West and an outstanding performance from our Branch Division. We are very pleased with our branch operations, which are capitalizing on healthy public transportation budgets, demand for our construction materials, and a healthy private sector market.”

“We continue, however, to be very disappointed with the results from our Heavy Construction Division (HCD). Although these results have yet to reflect the improvements that we have made throughout the division, I believe we are on the right path to turn this segment of our business around. We are applying more patience and discipline on bid day in an effort to book backlog that will consistently deliver acceptable levels of profitability. We are making progress, and I remain confident in our plan of focusing on quality bids, project execution and bottom line results that will deliver the performance improvement we expect from this business in the future,” said Dorey.

Operating Results - Quarter and Year-To-Date

For the third quarter of 2005, total revenue increased 23.5% to $864.2 million compared with $699.8 million a year ago. Total gross profit as a percent of revenue for the third quarter 2005 decreased to 12.7% compared with 13.6% for the same period last year. Operating income increased to $62.0 million for the third quarter of 2005 compared with $54.0 million for the third quarter 2004.

For the nine-month period ended September 30, 2005, revenue for the Company totaled $2.0 billion compared with $1.6 billion for the same period last year. Total gross profit as a percent of revenue for the nine months ended September 30, 2005 increased to 10.9% compared with 10.4% last year. Operating income for the nine month period increased to $79.1 million compared with $66.4 million for the same period in 2004. Total company backlog at September 30, 2005 was $2.4 billion compared with $2.3 billion a year ago.

Results by Segment

HCD revenue for the quarter totaled $291.2 million versus $237.1 million for the same period last year. HCD backlog increased slightly to $1.72 billion compared with $1.71 billion for the same period last year. HCD gross profit as a percent of revenue decreased in the quarter to 3.6% compared with 7.9% in the prior period. This decrease reflects a net reduction of gross profit of approximately $10.0 million primarily resulting from changes in the estimated profitability of six projects compared with $4.0 million in changes on two projects in the third quarter 2004. As a product of lower gross profit in the quarter, operating income for HCD decreased for the third quarter 2005 to $1.4 million compared with $9.9 million in the prior year.

For the nine-month period ended September 30, 2005, HCD revenue totaled $769.4 million compared with $627.3 million for the same period last year. HCD gross profit as a percent of revenue for the nine months ended September 30, 2005 decreased to 4.2% compared with 5.3% last year. HCD operating income for the nine-month period decreased to $8.1 million compared with a $8.9 million for the same period in 2004.

Branch Division revenue for the quarter totaled $570.8 million, an increase of $108.1 million or 23.4% over the same period in 2004. Backlog for the division increased in the third quarter 2005 to $674.3 million compared with $606.8 million for the third quarter 2004. Gross profit as a percent of revenue for the division increased slightly for the third quarter 2005 to 16.8% compared with 16.7% for the third quarter 2004. Operating income increased $15.8 million for the quarter to $72.4 million compared with $56.6 million for the third quarter last year.

For the nine-month period ended September 30, 2005, Branch Division revenue totaled $1.2 billion compared with $968.3 million for the same period last year. Branch Division gross profit as a percent of revenue for the nine months ended September 30, 2005 increased to 14.9% compared with 13.7% last year due primarily to improved performance on construction projects. Branch operating income increased $27.1 million to $101.8 million for the same period compared with $74.7 million in 2004.

Business Outlook

The outlook for the Branch Division continues to be very positive provided the housing market in the West remains strong and the state of California continues to adequately fund infrastructure improvements. The demand for our construction materials is primarily driven by residential, commercial and industrial markets in the West, where all of our materials operations are located.

Looking ahead for HCD, the primary focus for the division will continue to be on improving operating performance and execution of the existing backlog. While healthy bidding opportunities are expected to continue for large heavy- civil transportation projects, increasing operating margins and controlling costs will continue to be a priority over revenue growth.

The Company’s earnings guidance for 2005 is in the range of $1.55 to $1.60 per diluted share. The ability to achieve these forecasted results is contingent on a number of factors, including the amount of work the Company is able to complete in the fourth quarter, which can vary significantly due to the onset of winter weather conditions.

Third Quarter Conference Call Information

The Company will host a conference call on Thursday, October 27, 2005, at 11:00 a.m. Eastern time. Investors and other interested parties may access the call live by dialing (888) 515-2781, conference identification is “Granite Construction.” A live Webcast will also be available via the Internet at www.graniteconstruction.com. The conference call will be recorded and available for replay approximately two hours after the call through November 3, 2005. In the U.S. and Canada, dial (888) 203-1112. For international listeners, dial (719) 457-0820. The pass code required for the recording is 4867408. An audio archive of the call will also be available on the Company’s website.

Granite, a member of the S&P 400 Midcap Index, the Domini 400 Social Index and the Russell 2000, is one of the nation’s largest diversified heavy civil contractors and construction materials producers. Granite Construction serves public and private sector clients through its offices nationwide. For more information about the company, please visit their website at www.graniteconstruction.com.

This press release contains forward-looking statements, such as statements related to the existence of bidding opportunities and economic conditions on the Company’s future results. Additionally, forward-looking statements include statements that can be identified by the use of forward-looking terminology such as “believes,” “expects,” “appears,” “may,” “will,” “should,” “look for,” or “anticipates,” or the negative thereof or comparable terminology, or by discussions of strategy. All such forward-looking statements are subject to risks and uncertainties that could cause actual results of operations and financial condition and other events to differ materially from those expressed or implied in such 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 of the date of this news release. Granite undertakes no obligation to revise or update publicly any forward-looking statements to conform the statement to actual results or changes in the Company’s expectations.

For further information regarding risks and uncertainties associated with Granite’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and “Quantitative and Qualitative Disclosures About Market Risk” sections of Granite’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Granite’s investor relations department at (831) 724-1011 or at Granite’s website at www.graniteconstruction.com.

GRANITE CONSTRUCTION INCORPORATED
COMPARATIVE FINANCIAL SUMMARY
(Unaudited - In Thousands, Except Per Share Data)

	Three Months Ended September 30,						Variance
	2005			2004			Amount			Percent
Operations
Revenue	$	864,162		$	699,825		$	164,337			23.5
Gross profit	$	109,701		$	95,348		$	14,353			15.1
Gross profit as a percent of revenue		12.7	%		13.6	%		(0.9	)%		—
General and administrative expenses	$	50,149		$	44,007		$	(6,142	)		(14.0	)
G&A expenses as a percent of revenue		5.8	%		6.3	%		0.5	%		—
Provision for legal judgment		—			—			—			—
Gain on sales of property and equipment	$	2,441		$	2,638		$	(197	)		(7.5	)
Other income (expense)
Interest income	$	2,693		$	1,353		$	1,340			99.0
Interest expense	$	(1,734	)	$	(1,813	)	$	79			4.4
Equity in income of affiliates	$	85		$	3		$	82			****
Other, net	$	176		$	59		$	117			****
Total other income (expense)	$	1,220		$	(398	)	$	1,618			****
Income before provision for income taxes and minority interest	$	63,213		$	53,581		$	9,632			18.0
Minority interest	$	(3,771	)	$	(3,892	)	$	121			3.1
Net income	$	40,651		$	32,785		$	7,866			24.0
Net income per share:
Basic	$	1.00		$	0.81		$	0.19			23.5
Diluted	$	0.98		$	0.80		$	0.18			22.5
Weighted average shares of common stock:
Basic		40,656			40,433			223			0.6
Diluted		41,340			41,083			257			0.6

	Nine Months Ended September 30,						Variance
	2005			2004			Amount			Percent
Operations
Revenue	$	1,961,800		$	1,595,597		$	366,203			23.0
Gross profit	$	213,348		$	165,776		$	47,572			28.7
Gross profit as a percent of revenue		10.9	%		10.4	%		0.5	%		—
General and administrative expenses	$	129,625		$	116,465		$	(13,160	)		(11.3	)
G&A expenses as a percent of revenue		6.6	%		7.3	%		0.7	%		—
Provision for legal judgment	$	9,300			—		$	(9,300	)		—
Gain on sales of property and equipment	$	4,656		$	17,077		$	(12,421	)		(72.7	)
Other income (expense)
Interest income	$	6,820		$	4,068		$	2,752			67.6
Interest expense	$	(5,401	)	$	(5,412	)	$	11			0.2
Equity in income of affiliates	$	8		$	2,876		$	(2,868	)		(99.7	)
Other, net	$	(548	)	$	154		$	(702	)		****
Total other income (expense)	$	879		$	1,686		$	(807	)		(47.9	)
Income before provision for income taxes and minority interest	$	79,958		$	68,074		$	11,884			17.5
Minority interest	$	(9,301	)	$	(8,833	)	$	(468	)		(5.3	)
Net income	$	47,338		$	37,482		$	9,856			26.3
Net income per share:
Basic	$	1.17		$	0.93		$	0.24			25.8
Diluted	$	1.15		$	0.91		$	0.24			26.4
Weighted average shares of common stock:
Basic		40,594			40,372			222			0.5
Diluted		41,192			40,974			218			0.5

					Variance
	Sept.  30, 2005		Dec.  31, 2004		Amount			Percent
Working capital	$	333,155	$	355,927	$	(22,772	)		(6.4	)
Current ratio		1.48		1.76		(0.28	)		(15.9	)
Long-term debt	$	128,539	$	148,503	$	(19,964	)		(13.4	)
Total liabilities to equity ratio		1.61		1.32		0.29			22.0
Shareholders’ equity	$	587,330	$	550,474	$	36,856			6.7
Total assets	$	1,532,027	$	1,277,954	$	254,073			19.9
Book value per common share	$	14.08	$	13.23	$	0.85			6.4
Backlog	$	2,393,744	$	2,437,994	$	(44,250	)		(1.8	)

	September 30,				Variance
	2005		2004		Amount			Percent
Working capital	$	333,155	$	329,921	$	3,234			1.0
Current ratio		1.48		1.64		(0.16	)		(9.8	)
Long-term debt	$	128,539	$	125,850	$	2,689			2.1
Total liabilities to equity ratio		1.61		1.41		0.20			14.2
Shareholders’ equity	$	587,330	$	532,190	$	55,140			10.4
Total assets	$	1,532,027	$	1,284,543	$	247,484			19.3
Book value per common share	$	14.08	$	12.79	$	1.29			10.1
Backlog	$	2,393,744	$	2,317,974	$	75,770			3.3

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands, except share and per share data)

	September 30, 2005			December 31, 2004
Assets
Current assets
Cash and cash equivalents	$	159,297		$	161,627
Short-term marketable securities		81,043			102,237
Accounts receivable, net		586,476			357,842
Costs and estimated earnings in excess of billings		50,306			54,384
Inventories		31,699			31,711
Deferred income taxes		20,581			21,012
Equity in construction joint ventures		24,514			20,895
Other current assets		76,260			75,630
Total current assets		1,030,176			825,338
Property and equipment, net		408,912			376,197
Long-term marketable securities		32,163			13,828
Investment in affiliates		10,887			10,725
Other assets		49,889			51,866
Total assets	$	1,532,027		$	1,277,954
Liabilities and Shareholders’ Equity
Current liabilities
Current maturities of long-term debt	$	21,772		$	15,861
Accounts payable		309,281			191,782
Billings in excess of costs and estimated earnings		189,067			144,401
Accrued expenses and other current liabilities		176,901			117,367
Total current liabilities		697,021			469,411
Long-term debt		128,539			148,503
Other long-term liabilities		46,007			40,641
Deferred income taxes		44,135			44,135
Minority interest in consolidated subsidiaries		28,995			24,790
Shareholders’ 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 41,699,060 shares in 2005 and 41,612,319 shares in 2004		417			416
Additional paid-in capital		79,148			76,766
Unearned compensation		(11,807	)		(10,818	)
Retained earnings		517,460			482,635
Accumulated other comprehensive income		2,112			1,475
Total shareholders’ equity		587,330			550,474
Total liabilities and shareholders’ equity	$	1,532,027		$	1,277,954

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

BY MARKET SECTOR

	Revenue
	Three Months Ended September 30,				Variance
	2005		2004		Amount			Percent
Contracts
Federal	$	33,455	$	48,333	$	(14,878	)		(30.8	)
State		278,204		214,576		63,628			29.7
Local		294,065		246,309		47,756			19.4
Total public sector		605,724		509,218		96,506			19.0
Private sector		150,666		99,582		51,084			51.3
Aggregate sales		107,772		91,025		16,747			18.4
	$	864,162	$	699,825	$	164,337			23.5

	Backlog
	September 30,				Variance
	2005		2004		Amount			Percent
Contracts
Federal	$	83,133	$	76,581	$	6,552			8.6
State		1,005,450		773,633		231,817			30.0
Local		1,026,657		1,236,939		(210,282	)		(17.0	)
Total public sector		2,115,240		2,087,153		28,087			1.3
Private sector		278,504		230,821		47,683			20.7
Aggregate sales		—		—		—			—
	$	2,393,744	$	2,317,974	$	75,770			3.3

BY GEOGRAPHIC AREA

	Revenue
	Three Months Ended September 30,				Variance
	2005		2004		Amount			Percent
California	$	341,334	$	255,906	$	85,428			33.4
West (Excl. CA)		300,176		239,041		61,135			25.6
Midwest		23,637		23,546		91			0.4
New York		60,359		84,816		(24,457	)		(28.8	)
Northeast (Excl. NY)		24,841		3,546		21,295			****
South		113,815		92,970		20,845			22.4
	$	864,162	$	699,825	$	164,337			23.5

	Backlog
	September 30,				Variance
	2005		2004		Amount			Percent
California	$	567,155	$	674,622	$	(107,467	)		(15.9	)
West (Excl. CA)		468,261		377,770		90,491			24.0
Midwest		62,204		144,973		(82,769	)		(57.1	)
New York		455,845		466,850		(11,005	)		(2.4	)
Northeast (Excl. NY)		99,980		132,743		(32,763	)		(24.7	)
South		740,299		521,016		219,283			42.1
	$	2,393,744	$	2,317,974	$	75,770			3.3

**** Represents percentages greater than 100%

SOURCE  Granite Construction Incorporated
           -0-                                                10/26/2005
           /CONTACT:  Jacqueline Underdown, Investor Relations of Granite Construction Incorporated, +1-831-761-4741/
           /Web site:  http://www.graniteconstruction.com /