ý
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF
1934
|
State
of Incorporation:
|
I.R.S.
Employer Identification Number:
|
Delaware
|
77-0239383
|
Large accelerated
filer ý
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller reporting
company ¨
|
Class
|
Outstanding
|
|
Common
Stock, $0.01 par value
|
38,262,061 shares
|
GRANITE
CONSTRUCTION INCORPORATED
|
||||||||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||||||
(Unaudited
- in thousands, except share and per share data)
|
||||||||||||
September 30,
|
December
31,
|
September 30,
|
||||||||||
2008
|
2007
|
2007
|
||||||||||
ASSETS
|
||||||||||||
Current
assets
|
||||||||||||
Cash
and cash equivalents
|
$ | 281,046 | $ | 352,434 | $ | 265,605 | ||||||
Short-term
marketable securities
|
101,112 | 77,758 | 106,675 | |||||||||
Accounts
receivable, net
|
480,315 | 397,097 | 536,519 | |||||||||
Costs
and estimated earnings in excess of billings
|
34,759 | 17,957 | 24,489 | |||||||||
Inventories,
net
|
61,342 | 55,557 | 50,438 | |||||||||
Real
estate held for development and sale
|
52,165 | 51,688 | 57,296 | |||||||||
Deferred
income taxes
|
46,233 | 43,713 | 36,041 | |||||||||
Equity
in construction joint ventures
|
45,219 | 34,340 | 36,851 | |||||||||
Other
current assets
|
65,182 | 96,969 | 43,370 | |||||||||
Total
current assets
|
1,167,373 | 1,127,513 | 1,157,284 | |||||||||
Property
and equipment, net
|
522,733 | 502,901 | 487,000 | |||||||||
Long-term
marketable securities
|
30,209 | 55,156 | 61,308 | |||||||||
Investments
in affiliates
|
27,518 | 26,475 | 23,256 | |||||||||
Other
noncurrent assets
|
73,696 | 74,373 | 78,119 | |||||||||
Total
assets
|
$ | 1,821,529 | $ | 1,786,418 | $ | 1,806,967 | ||||||
LIABILITIES AND
SHAREHOLDERS’ EQUITY
|
||||||||||||
Current
liabilities
|
||||||||||||
Current
maturities of long-term debt
|
$ | 34,886 | $ | 28,696 | $ | 26,589 | ||||||
Accounts
payable
|
234,126 | 213,135 | 261,379 | |||||||||
Billings
in excess of costs and estimated earnings
|
251,402 | 275,849 | 274,209 | |||||||||
Accrued
expenses and other current liabilities
|
227,611 | 212,265 | 209,894 | |||||||||
Total
current liabilities
|
748,025 | 729,945 | 772,071 | |||||||||
Long-term
debt
|
246,487 | 268,417 | 140,410 | |||||||||
Other
long-term liabilities
|
46,178 | 46,441 | 65,111 | |||||||||
Deferred
income taxes
|
18,733 | 17,945 | 19,788 | |||||||||
Commitments and contingencies | ||||||||||||
Minority
interest in consolidated subsidiaries
|
26,729 | 23,471 | 28,148 | |||||||||
Shareholders’
equity
|
||||||||||||
Preferred
stock, $0.01 par value, authorized 3,000,000 shares, none
outstanding
|
- | - | - | |||||||||
Common
stock, $0.01 par value, authorized 150,000,000 shares; issued and
outstanding 38,264,058 shares as of September 30,
2008, 39,450,923 shares as of December 31, 2007 and 41,916,706 shares as
of September 30, 2007
|
383 | 395 | 419 | |||||||||
Additional
paid-in capital
|
83,041 | 79,007 | 82,678 | |||||||||
Retained
earnings
|
655,287 | 619,699 | 694,557 | |||||||||
Accumulated
other comprehensive (loss) income
|
(3,334 | ) | 1,098 | 3,785 | ||||||||
Total
shareholders’ equity
|
735,377 | 700,199 | 781,439 | |||||||||
Total
liabilities and shareholders’ equity
|
$ | 1,821,529 | $ | 1,786,418 | $ | 1,806,967 |
GRANITE
CONSTRUCTION INCORPORATED
|
||||||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||||||||||
(Unaudited
- in thousands, except per share data)
|
||||||||||||||||
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenue
|
||||||||||||||||
Construction
|
$ | 771,941 | $ | 701,622 | $ | 1,755,457 | $ | 1,778,638 | ||||||||
Material
sales
|
124,478 | 123,453 | 283,321 | 289,655 | ||||||||||||
Real
estate
|
1,369 | 21,238 | 8,142 | 36,556 | ||||||||||||
Total
revenue
|
897,788 | 846,313 | 2,046,920 | 2,104,849 | ||||||||||||
Cost
of revenue
|
||||||||||||||||
Construction
|
643,531 | 601,880 | 1,437,093 | 1,543,960 | ||||||||||||
Material
sales
|
109,068 | 96,130 | 247,959 | 229,116 | ||||||||||||
Real
estate
|
887 | 11,666 | 9,846 | 19,466 | ||||||||||||
Total
cost of revenue
|
753,486 | 709,676 | 1,694,898 | 1,792,542 | ||||||||||||
Gross
profit
|
144,302 | 136,637 | 352,022 | 312,307 | ||||||||||||
General
and administrative expenses
|
71,933 | 63,666 | 198,344 | 183,133 | ||||||||||||
Gain
on sales of property and equipment
|
2,008 | 2,994 | 4,564 | 8,053 | ||||||||||||
Operating
income
|
74,377 | 75,965 | 158,242 | 137,227 | ||||||||||||
Other
(expense) income
|
||||||||||||||||
Interest
income
|
5,439 | 7,514 | 15,087 | 20,796 | ||||||||||||
Interest
expense
|
(5,303 | ) | (1,884 | ) | (12,871 | ) | (4,998 | ) | ||||||||
Equity
in (loss) income of affiliates
|
(1,257 | ) | 4,037 | (1,436 | ) | 4,359 | ||||||||||
Other,
net
|
549 | (391 | ) | 9,196 | (1,057 | ) | ||||||||||
Total
other (expense) income
|
(572 | ) | 9,276 | 9,976 | 19,100 | |||||||||||
Income
before provision for income taxes and
minority interest
|
73,805 | 85,241 | 168,218 | 156,327 | ||||||||||||
Provision
for income taxes
|
21,473 | 25,437 | 46,681 | 47,680 | ||||||||||||
Income
before minority interest
|
52,332 | 59,804 | 121,537 | 108,647 | ||||||||||||
Minority
interest in consolidated subsidiaries
|
(594 | ) | (6,504 | ) | (31,058 | ) | (13,750 | ) | ||||||||
Net
income
|
$ | 51,738 | $ | 53,300 | $ | 90,479 | $ | 94,897 | ||||||||
Net
income per common share
|
||||||||||||||||
Basic
|
$ | 1.38 | $ | 1.30 | $ | 2.40 | $ | 2.31 | ||||||||
Diluted
|
$ | 1.36 | $ | 1.28 | $ | 2.37 | $ | 2.28 | ||||||||
Weighted
average shares of common stock
|
||||||||||||||||
Basic
|
37,430 | 41,106 | 37,664 | 41,065 | ||||||||||||
Diluted
|
37,975 | 41,640 | 38,138 | 41,587 | ||||||||||||
Dividends
per common share
|
$ | 0.13 | $ | 0.10 | $ | 0.39 | $ | 0.30 |
GRANITE
CONSTRUCTION INCORPORATED
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited - in
thousands)
|
||||||||
Nine
Months Ended September 30,
|
2008
|
2007
|
||||||
Operating
Activities
|
||||||||
Net
income
|
$ | 90,479 | $ | 94,897 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Impairment
of real estate held for development and sale
|
4,500 | - | ||||||
Depreciation,
depletion and amortization
|
64,036 | 60,621 | ||||||
Provision
for doubtful accounts
|
8,914 | 1,119 | ||||||
Gain
on sales of property and equipment
|
(4,564 | ) | (8,053 | ) | ||||
Change
in deferred income taxes
|
1,116 | (11 | ) | |||||
Stock-based
compensation
|
5,135 | 4,600 | ||||||
Excess
tax benefit on stock-based compensation
|
(743 | ) | (3,042 | ) | ||||
Minority
interest in consolidated subsidiaries
|
31,058 | 13,750 | ||||||
Equity
in loss (income) of affiliates
|
1,436 | (4,359 | ) | |||||
Acquisition
of minority interest
|
(16,616 | ) | - | |||||
Changes
in assets and liabilities, net of the effects of
acquisitions:
|
||||||||
Accounts
receivable
|
(85,557 | ) | (35,805 | ) | ||||
Inventories,
net
|
(4,083 | ) | (4,794 | ) | ||||
Real
estate held for development and sale
|
(13,425 | ) | (2,139 | ) | ||||
Equity
in construction joint ventures
|
(10,879 | ) | (4,939 | ) | ||||
Other
assets, net
|
34,698 | 18,621 | ||||||
Accounts
payable
|
20,991 | 3,742 | ||||||
Accrued
expenses and other current liabilities
|
19,650 | 25,685 | ||||||
Billings
in excess of costs and estimated earnings, net
|
(41,249 | ) | (22,326 | ) | ||||
Net
cash provided by operating activities
|
104,897 | 137,567 | ||||||
Investing
Activities
|
||||||||
Purchases
of marketable securities
|
(68,732 | ) | (126,464 | ) | ||||
Maturities
of marketable securities
|
64,090 | 140,225 | ||||||
Release
of funds for acquisition of minority interest
|
28,332 | - | ||||||
Additions
to property and equipment
|
(76,098 | ) | (82,744 | ) | ||||
Proceeds
from sales of property and equipment
|
12,253 | 12,765 | ||||||
Acquisition
of businesses
|
(14,022 | ) | (76,313 | ) | ||||
Contributions
to affiliates
|
(5,345 | ) | (3,772 | ) | ||||
Other
investing activities
|
626 | 3,459 | ||||||
Net
cash used in investing activities
|
(58,896 | ) | (132,844 | ) | ||||
Financing
Activities
|
||||||||
Proceeds
from long-term debt
|
2,660 | 111,634 | ||||||
Long-term
debt principal payments
|
(15,748 | ) | (49,376 | ) | ||||
Cash
dividends paid
|
(15,081 | ) | (12,572 | ) | ||||
Purchase
of common stock
|
(45,489 | ) | (5,083 | ) | ||||
Contributions
from minority partners
|
4,955 | 30,436 | ||||||
Distributions
to minority partners
|
(37,713 | ) | (22,458 | ) | ||||
Acquisition
of minority interest
|
(11,716 | ) | - | |||||
Excess
tax benefit on stock-based compensation
|
743 | 3,042 | ||||||
Other
financing, net
|
- | 366 | ||||||
Net
cash (used in) provided by financing activities
|
(117,389 | ) | 55,989 | |||||
(Decrease)
increase in cash and cash equivalents
|
(71,388 | ) | 60,712 | |||||
Cash
and cash equivalents at beginning of period
|
352,434 | 204,893 | ||||||
Cash
and cash equivalents at end of period
|
$ | 281,046 | $ | 265,605 |
GRANITE
CONSTRUCTION INCORPORATED
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
|
||||||||
(Unaudited - in
thousands)
|
||||||||
Nine
Months Ended September 30,
|
2008
|
2007
|
||||||
Supplementary
Information
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | 9,204 | $ | 3,623 | ||||
Income
taxes
|
37,848 | 36,715 | ||||||
Non-cash
investing and financing activity:
|
||||||||
Restricted
stock issued for services, net
|
$ | 6,934 | $ | 10,809 | ||||
Restricted
stock units issued
|
3,208 | - | ||||||
Accrued
cash dividends
|
4,974 | 4,192 | ||||||
Assets
acquired through issuances of debt
|
2,660 | 1,492 | ||||||
Debt
repayments from sale of assets
|
2,652 | 9,237 |
1.
|
Basis
of Presentation:
|
2.
|
Recently
Issued Accounting
Pronouncements:
|
3.
|
Change
in Accounting
Estimates:
|
Granite
East Change in Accounting Estimates
|
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
|||||||||||||||
(dollars
in millions)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Reduction
in gross profit
|
$ | (6.2 | ) | $ | (20.2 | ) | $ | (16.1 | ) | $ | (65.3 | ) | |||||
Increase
in gross profit
|
12.1 | 11.6 | 68.6 | 43.5 | |||||||||||||
Net
increase (reduction) in gross profit
|
$ | 5.9 | $ | (8.6 | ) | $ | 52.5 | $ | (21.8 | ) |
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
|||||||||||||||
(dollars
in millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Number
of projects with downward estimate changes
|
2 | 3 | 3 | 10 | ||||||||||||
Range
of net reduction in gross profit from each project
|
$ | 2.0 - 2.3 | $ | 1.9 - 10.9 | $ | 1.4 - 4.0 | $ | 1.0 - 36.5 | ||||||||
Number
of projects with upward estimate changes
|
4 | 6 | 6 | 10 | ||||||||||||
Range
of net increase in gross profit from each project
|
$ | 1.1 - 2.8 | $ | 1.0 - 4.4 | $ | 1.2 - 32.2 | $ | 1.1 - 19.2 |
Granite
West Change in Accounting Estimates
|
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
|||||||||||||||
(dollars
in millions)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Reduction
in gross profit
|
$ | (7.8 | ) | $ | (7.8 | ) | $ | (11.9 | ) | $ | (13.0 | ) | |||||
Increase
in gross profit
|
26.6 | 13.5 | 65.2 | 32.6 | |||||||||||||
Net
increase in gross profit
|
$ | 18.8 | $ | 5.7 | $ | 53.3 | $ | 19.6 |
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
|||||||||||||||
(dollars
in millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Number
of projects with downward estimate changes
|
2 | - | 2 | 2 | ||||||||||||
Range
of net reduction in gross profit from each project
|
$ | 1.1 - 1.7 | $ | - | $ | 1.1 - 3.0 | $ | 1.4 - 1.4 | ||||||||
Number
of projects with upward estimate changes
|
6 | 1 | 11 | 5 | ||||||||||||
Range
of net increase in gross profit from each project
|
$ | 1.5 - 5.1 | $ | 1.3 | $ | 1.2 - 18.4 | $ | 1.3 - 2.6 |
4.
|
Fair
Value Measurement:
|
September
30, 2008
|
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||
(in
thousands)
|
||||||||||||||||
Available-for-sale
securities
|
$ | 28,441 | $ | - | $ | - | $ | 28,441 |
5.
|
Inventories,
net:
|
6.
|
Real
Estate Entities:
|
September
30,
|
December
31,
|
September
30,
|
||||||||||
(in
thousands)
|
2008
|
2007
|
2007
|
|||||||||
Residential
|
$ | 42,576 | $ | 42,344 | $ | 43,860 | ||||||
Commercial
|
9,589 | 9,344 | 13,436 | |||||||||
Total
|
$ | 52,165 | $ | 51,688 | $ | 57,296 | ||||||
Washington
|
$ | 29,134 | $ | 26,521 | $ | 25,394 | ||||||
California
|
15,153 | 17,606 | 25,954 | |||||||||
Texas
|
7,878 | 7,561 | 5,948 | |||||||||
Total
|
$ | 52,165 | $ | 51,688 | $ | 57,296 |
September
30,
|
December
31,
|
September
30,
|
||||||||||
(in
thousands)
|
2008
|
2007
|
2007
|
|||||||||
Total
assets
|
$ | 197,591 | $ | 138,262 | $ | 124,188 | ||||||
Net
assets
|
91,985 | 66,589 | 60,103 | |||||||||
Granite's
share of net assets
|
|
20,192
|
17,472 | 14,575 |
September
30,
|
December
31,
|
September
30,
|
||||||||||
(in
thousands)
|
2008
|
2007
|
2007
|
|||||||||
Residential
|
$ | 15,162 | $ | 11,990 | $ | 11,486 | ||||||
Commercial
|
5,030 | 5,482 | 3,089 | |||||||||
Total
|
$ | 20,192 | $ | 17,472 | $ | 14,575 | ||||||
Texas
|
$ | 12,564 | $ | 12,427 | $ | 9,761 | ||||||
Oregon
|
4,766 | 5,045 | 4,814 | |||||||||
Washington
|
2,862 | - | - | |||||||||
Total
|
$ | 20,192 | $ | 17,472 | $ | 14,575 |
7.
|
Construction
Joint Ventures and Line Item Joint
Ventures:
|
8.
|
Property
and Equipment, net:
|
September 30,
|
December
31,
|
September 30,
|
||||||||||
(in
thousands)
|
2008
|
2007
|
2007
|
|||||||||
Land
and land improvements
|
$ | 115,389 | $ | 93,862 | $ | 74,693 | ||||||
Quarry
property
|
140,917 | 135,749 | 130,319 | |||||||||
Buildings
and leasehold improvements
|
92,661 | 79,663 | 75,971 | |||||||||
Equipment
and vehicles
|
846,629 | 843,570 | 847,629 | |||||||||
Office
furniture and equipment
|
33,262 | 28,889 | 28,819 | |||||||||
Property
and equipment
|
1,228,858 | 1,181,733 | 1,157,431 | |||||||||
Less:
accumulated depreciation, depletion and amortization
|
706,125 | 678,832 | 670,431 | |||||||||
Property
and equipment, net
|
$ | 522,733 | $ | 502,901 | $ | 487,000 |
9.
|
Intangible
Assets:
|
September 30,
|
December
31,
|
September
30,
|
||||||||||
(in
thousands)
|
2008
|
2007
|
2007
|
|||||||||
Unamortized
intangible assets:
|
||||||||||||
Goodwill
|
$ | 9,900 | $ | 9,900 | $ | 9,900 | ||||||
Use
rights
|
2,954 | - | - | |||||||||
Total
unamortized intangible assets
|
$ | 12,854 | $ | 9,900 | $ | 9,900 |
September 30,
2008
|
||||||||||||
Accumulated
|
||||||||||||
(in
thousands)
|
Gross
Value
|
Amortization
|
Net
Value
|
|||||||||
Amortized
intangible assets:
|
||||||||||||
Permits
|
$ | 36,070 | $ | (3,249 | ) | $ | 32,821 | |||||
Trade
names
|
1,583 | (1,256 | ) | 327 | ||||||||
Covenants
not to compete
|
1,588 | (593 | ) | 995 | ||||||||
Customer
lists and other
|
3,725 | (1,452 | ) | 2,273 | ||||||||
Total
amortized intangible assets
|
$ | 42,966 | $ | (6,550 | ) | $ | 36,416 |
December 31,
2007
|
||||||||||||
(in
thousands)
|
Gross
Value
|
Accumulated
Amortization
|
Net
Value
|
|||||||||
Amortized
intangible assets:
|
||||||||||||
Permits
|
$ | 36,362 | $ | (1,953 | ) | $ | 34,409 | |||||
Trade
names
|
1,425 | (972 | ) | 453 | ||||||||
Covenants
not to compete
|
1,661 | (410 | ) | 1,251 | ||||||||
Customer
lists and other
|
1,712 | (671 | ) | 1,041 | ||||||||
Total
amortized intangible assets
|
$ | 41,160 | $ | (4,006 | ) | $ | 37,154 | |||||
September 30,
2007
|
||||||||||||
(in
thousands)
|
Gross
Value
|
Accumulated
Amortization
|
Net
Value
|
|||||||||
Amortized
intangible assets:
|
||||||||||||
Permits
|
$ | 36,362 | $ | (1,502 | ) | $ | 34,860 | |||||
Trade
names
|
1,425 | (921 | ) | 504 | ||||||||
Covenants
not to compete
|
1,661 | (308 | ) | 1,353 | ||||||||
Customer
lists and other
|
1,712 | (528 | ) | 1,184 | ||||||||
Total
amortized intangible assets
|
$ | 41,160 | $ | (3,259 | ) | $ | 37,901 |
10.
|
Weighted
Average Common Shares
Outstanding:
|
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
|||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||
Basic
weighted average common shares outstanding:
|
||||||||
Weighted
average common stock outstanding
|
38,272
|
41,939
|
38,486
|
41,906
|
||||
Less:
weighted average restricted stock outstanding
|
842
|
833
|
822
|
841
|
||||
Total
basic weighted average shares outstanding
|
37,430
|
41,106
|
37,664
|
41,065
|
||||
Diluted
weighted average common shares outstanding:
|
||||||||
Basic
weighted average shares outstanding
|
37,430
|
41,106
|
37,664
|
41,065
|
||||
Effect
of dilutive securities:
|
||||||||
Restricted
stock
|
418
|
489
|
378
|
477
|
||||
Common
stock options and units
|
127
|
45
|
96
|
45
|
||||
Total
diluted weighted average common shares outstanding
|
37,975
|
41,640
|
38,138
|
41,587
|
11.
|
Comprehensive
Income:
|
|
The
components of comprehensive income are as
follows:
|
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
||||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
income
|
$ | 51,738 | $ | 53,300 | $ | 90,479 | $ | 94,897 | |||||||||
Other
comprehensive income (loss):
|
|||||||||||||||||
Changes
in unrealized (loss) gain on investments
|
(3,931 | ) | (66 | ) | (7,280 | ) | 1,889 | ||||||||||
Tax
benefit (provision) on unrealized (loss) gain
|
1,538 | 25 | 2,848 | (735 | ) | ||||||||||||
Total
comprehensive income
|
$ | 49,345 | $ | 53,259 | $ | 86,047 | $ | 96,051 |
12.
|
Legal
Proceedings:
|
13.
|
Business
Segment Information:
|
|
|
Three
Months Ended September 30,
|
||||||||||||||||
(in
thousands)
|
Granite
West
|
Granite
East
|
Granite
Land Company
|
Total
|
||||||||||||
2008
|
||||||||||||||||
Revenue
from external customers
|
$ | 749,368 | $ | 147,051 | $ | 1,369 | $ | 897,788 | ||||||||
Intersegment
revenue transfer
|
119 | (119 | ) | - | - | |||||||||||
Net
revenue
|
749,487 | 146,932 | 1,369 | 897,788 | ||||||||||||
Depreciation,
depletion and amortization
|
18,865 | 1,949 | 86 | 20,900 | ||||||||||||
Operating
income (loss)
|
93,404 | 3,653 | (191 | ) | 96,866 | |||||||||||
2007
|
||||||||||||||||
Revenue
from external customers
|
$ | 641,717 | $ | 183,358 | $ | 21,238 | $ | 846,313 | ||||||||
Intersegment
revenue transfer
|
711 | (711 | ) | - | - | |||||||||||
Net
revenue
|
642,428 | 182,647 | 21,238 | 846,313 | ||||||||||||
Depreciation,
depletion and amortization
|
18,331 | 3,044 | 54 | 21,429 | ||||||||||||
Operating
income (loss)
|
89,755 | (3,174 | ) | 8,241 | 94,822 |
Nine
Months Ended September 30,
|
||||||||||||||||
(in
thousands)
|
Granite
West
|
Granite
East
|
Granite
Land Company
|
Total
|
||||||||||||
2008
|
||||||||||||||||
Revenue
from external customers
|
$ | 1,504,498 | $ | 534,280 | $ | 8,142 | $ | 2,046,920 | ||||||||
Intersegment
revenue transfer
|
2,454 | (2,454 | ) | - | - | |||||||||||
Net
revenue
|
1,506,952 | 531,826 | 8,142 | 2,046,920 | ||||||||||||
Depreciation,
depletion and amortization
|
54,546 | 6,125 | 267 | 60,938 | ||||||||||||
Operating
income (loss)
|
155,284 | 67,795 | (3,795 | ) | 219,284 | |||||||||||
Segment
assets
|
460,347 | 20,575 | 68,284 | 549,206 | ||||||||||||
2007
|
||||||||||||||||
Revenue
from external customers
|
$ | 1,478,561 | $ | 589,732 | $ | 36,556 | $ | 2,104,849 | ||||||||
Intersegment
revenue transfer
|
4,408 | (4,408 | ) | - | - | |||||||||||
Net
revenue
|
1,482,969 | 585,324 | 36,556 | 2,104,849 | ||||||||||||
Depreciation,
depletion and amortization
|
50,359 | 7,812 | 99 | 58,270 | ||||||||||||
Operating
income (loss)
|
186,476 | (13,359 | ) | 14,120 | 187,237 | |||||||||||
Segment
assets
|
423,299 | 28,414 | 66,352 | 518,065 |
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
||||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Total
operating income for reportable segments
|
$ | 96,866 | $ | 94,822 | $ | 219,284 | $ | 187,237 | |||||||||
Other
(expense) income, net
|
(572 | ) | 9,276 | 9,976 | 19,100 | ||||||||||||
Gain
on sales of property and equipment
|
2,008 | 2,994 | 4,564 | 8,053 | |||||||||||||
Unallocated
other corporate expense
|
(24,497 | ) | (21,851 | ) | (65,606 | ) | (58,063 | ) | |||||||||
Income
before provision for income taxes and minority interest
|
$ | 73,805 | $ | 85,241 | $ | 168,218 | $ | 156,327 |
14.
|
Acquisition:
|
15.
|
Share
Purchase
Authorization:
|
|
|
Comparative
Financial Summary
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenue
|
$ | 897,788 | $ | 846,313 | $ | 2,046,920 | $ | 2,104,849 | |||||||||
Gross
profit
|
144,302 | 136,637 | 352,022 | 312,307 | |||||||||||||
General
and administrative expenses
|
71,933 | 63,666 | 198,344 | 183,133 | |||||||||||||
Gain
on sales of property and equipment
|
2,008 | 2,994 | 4,564 | 8,053 | |||||||||||||
Operating
income
|
74,377 | 75,965 | 158,242 | 137,227 | |||||||||||||
Other
(expense) income, net
|
(572 | ) | 9,276 | 9,976 | 19,100 | ||||||||||||
Minority
interest in consolidated subsidiaries
|
(594 | ) | (6,504 | ) | (31,058 | ) | (13,750 | ) | |||||||||
Net
income
|
51,738 | 53,300 | 90,479 | 94,897 |
Total
Revenue
|
Three
Months Ended September 30,
|
Nine Months
Ended September 30,
|
||||||||||||||||||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||||||||||||||||||
(in
thousands)
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||||||||
Revenue
by Division:
|
||||||||||||||||||||||||||||||||
Granite
West
|
$ | 749,487 | 83.4 | $ | 642,428 | 75.9 | $ | 1,506,952 | 73.6 | $ | 1,482,969 | 70.5 | ||||||||||||||||||||
Granite
East
|
146,932 | 16.4 | 182,647 | 21.6 | 531,826 | 26.0 | 585,324 | 27.8 | ||||||||||||||||||||||||
Granite
Land Company
|
1,369 | 0.2 | 21,238 | 2.5 | 8,142 | 0.4 | 36,556 | 1.7 | ||||||||||||||||||||||||
Total
|
$ | 897,788 | 100.0 | $ | 846,313 | 100.0 | $ | 2,046,920 | 100.0 | $ | 2,104,849 | 100.0 |
Granite
West Revenue
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||||||||||||||
(in
thousands)
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||||
California:
|
||||||||||||||||||||||||||||
Public
sector
|
$ | 275,768 | 73.4 | $ | 181,094 | 55.7 | $ | 507,645 | 65.7 | $ | 456,639 | 56.8 | ||||||||||||||||
Private
sector
|
26,930 | 7.2 | 67,169 | 20.6 | 86,047 | 11.1 | 163,409 | 20.3 | ||||||||||||||||||||
Material
sales
|
73,065 | 19.4 | 77,122 | 23.7 | 179,653 | 23.2 | 183,397 | 22.9 | ||||||||||||||||||||
Total
|
$ | 375,763 | 100.0 | $ | 325,385 | 100.0 | $ | 773,345 | 100.0 | $ | 803,445 | 100.0 | ||||||||||||||||
West
(excluding California):
|
||||||||||||||||||||||||||||
Public
sector
|
$ | 293,242 | 78.4 | $ | 220,885 | 69.7 | $ | 554,499 | 75.6 | $ | 433,775 | 63.8 | ||||||||||||||||
Private
sector
|
29,069 | 7.8 | 49,827 | 15.7 | 75,440 | 10.3 | 139,491 | 20.5 | ||||||||||||||||||||
Material
sales
|
51,413 | 13.8 | 46,331 | 14.6 | 103,668 | 14.1 | 106,258 | 15.7 | ||||||||||||||||||||
Total
|
$ | 373,724 | 100.0 | $ | 317,043 | 100.0 | $ | 733,607 | 100.0 | $ | 679,524 | 100.0 | ||||||||||||||||
Total
Granite West Revenue:
|
||||||||||||||||||||||||||||
Public
sector
|
$ | 569,010 | 75.9 | $ | 401,979 | 62.6 | $ | 1,062,144 | 70.5 | $ | 890,414 | 60.0 | ||||||||||||||||
Private
sector
|
55,999 | 7.5 | 116,996 | 18.2 | 161,487 | 10.7 | 302,900 | 20.4 | ||||||||||||||||||||
Material
sales
|
124,478 | 16.6 | 123,453 | 19.2 | 283,321 | 18.8 | 289,655 | 19.6 | ||||||||||||||||||||
Total
|
$ | 749,487 | 100.0 | $ | 642,428 | 100.0 | $ | 1,506,952 | 100.0 | $ | 1,482,969 | 100.0 |
Granite
East Revenue
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||||||||||||||
(in
thousands)
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||||
Revenue
by Geographic Area:
|
||||||||||||||||||||||||||||
Midwest
|
$
|
49,520
|
33.7
|
$
|
29,620
|
16.2
|
$
|
133,333
|
25.1
|
$
|
72,373
|
12.4
|
||||||||||||||||
Northeast
|
25,295
|
17.2
|
52,542
|
28.8
|
97,338
|
18.3
|
150,794
|
25.8
|
||||||||||||||||||||
South
|
28,322
|
19.3
|
24,993
|
13.7
|
92,417
|
17.4
|
97,258
|
16.6
|
||||||||||||||||||||
Southeast
|
41,520
|
28.3
|
65,364
|
35.8
|
164,973
|
31.0
|
223,721
|
38.2
|
||||||||||||||||||||
West
|
2,275
|
1.5
|
10,128
|
5.5
|
43,765
|
8.2
|
41,178
|
7.0
|
||||||||||||||||||||
Total
|
$
|
146,932
|
100.0
|
$
|
182,647
|
100.0
|
$
|
531,826
|
100.0
|
$
|
585,324
|
100.0
|
||||||||||||||||
Revenue
by Contract Type:
|
||||||||||||||||||||||||||||
Fixed
unit price
|
$
|
10,630
|
7.2
|
$
|
29,229
|
16.0
|
$
|
45,099
|
8.5
|
$
|
101,961
|
17.4
|
||||||||||||||||
Fixed
price, including design/build
|
136,302
|
92.8
|
153,418
|
84.0
|
486,727
|
91.5
|
483,363
|
82.6
|
||||||||||||||||||||
Total
|
$
|
146,932
|
100.0
|
$
|
182,647
|
100.0
|
$
|
531,826
|
100.0
|
$
|
585,324
|
100.0
|
Total
Contract Backlog
|
September
30, 2008
|
June 30,
2008
|
September
30, 2007
|
|||||||||||||||||||||
(in
thousands)
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||
Backlog
by Division:
|
||||||||||||||||||||||||
Granite
West
|
$ | 915,472 | 50.3 | $ | 1,188,948 | 55.5 | $ | 950,833 | 40.7 | |||||||||||||||
Granite
East
|
906,116 | 49.7 | 952,700 | 44.5 | 1,385,688 | 59.3 | ||||||||||||||||||
Total
|
$ | 1,821,588 | 100.0 | $ | 2,141,648 | 100.0 | $ | 2,336,521 | 100.0 |
Granite
West Contract Backlog
|
September
30, 2008
|
June 30,
2008
|
September
30, 2007
|
|||||||||||||||||||||
(in
thousands)
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||
California:
|
||||||||||||||||||||||||
Public
sector
|
$ | 408,652 | 93.4 | $ | 597,257 | 93.5 | $ | 342,971 | 79.4 | |||||||||||||||
Private
sector
|
28,922 | 6.6 | 41,548 | 6.5 | 89,004 | 20.6 | ||||||||||||||||||
Total
|
$ | 437,574 | 100.0 | $ | 638,805 | 100.0 | $ | 431,975 | 100.0 | |||||||||||||||
West
(excluding California):
|
||||||||||||||||||||||||
Public
sector
|
$ | 457,686 | 95.8 | $ | 523,629 | 95.2 | $ | 463,764 | 89.4 | |||||||||||||||
Private
sector
|
20,212 | 4.2 | 26,514 | 4.8 | 55,094 | 10.6 | ||||||||||||||||||
Total
|
$ | 477,898 | 100.0 | $ | 550,143 | 100.0 | $ | 518,858 | 100.0 | |||||||||||||||
Granite
West Contract Backlog:
|
||||||||||||||||||||||||
Public
sector
|
$ | 866,338 | 94.6 | $ | 1,120,886 | 94.3 | $ | 806,735 | 84.8 | |||||||||||||||
Private
sector
|
49,134 | 5.4 | 68,062 | 5.7 | 144,098 | 15.2 | ||||||||||||||||||
Total
|
$ | 915,472 | 100.0 | $ | 1,188,948 | 100.0 | $ | 950,833 | 100.0 |
Granite
East Contract Backlog
|
September
30, 2008
|
June 30,
2008
|
September
30, 2007
|
|||||||||||||||||||||
(in
thousands)
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||
Backlog
by Geographic Area:
|
||||||||||||||||||||||||
Midwest
|
$ | 204,166 | 22.5 | $ | 248,888 | 26.1 | $ | 350,496 | 25.3 | |||||||||||||||
Northeast
|
107,575 | 11.9 | 88,686 | 9.3 | 166,453 | 12.0 | ||||||||||||||||||
South
|
135,534 | 15.0 | 114,365 | 12.0 | 166,168 | 12.0 | ||||||||||||||||||
Southeast
|
455,260 | 50.2 | 495,007 | 52.0 | 679,301 | 49.0 | ||||||||||||||||||
West
|
3,581 | 0.4 | 5,754 | 0.6 | 23,270 | 1.7 | ||||||||||||||||||
Total
|
$ | 906,116 | 100.0 | $ | 952,700 | 100.0 | $ | 1,385,688 | 100.0 |
Gross
Profit (Loss)
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Granite
West
|
$
|
133,738
|
$
|
124,656
|
$
|
267,057
|
$
|
286,394
|
|||||||||
Percent
of division revenue
|
17.8
|
%
|
19.4
|
%
|
17.7
|
%
|
19.3
|
%
|
|||||||||
Granite
East
|
$
|
9,750
|
$
|
2,075
|
$
|
87,868
|
$
|
8,478
|
|||||||||
Percent
of division revenue
|
6.6
|
%
|
1.1
|
%
|
16.5
|
%
|
1.4
|
%
|
|||||||||
Granite
Land Company
|
$
|
482
|
$
|
9,571
|
$
|
(1,704)
|
$
|
17,090
|
|||||||||
Percent
of division revenue
|
35.2
|
%
|
45.1
|
%
|
-20.9
|
%
|
46.8
|
%
|
|||||||||
Other
|
$
|
332
|
$
|
335
|
$
|
(1,199)
|
$
|
345
|
|||||||||
Total
gross profit
|
$
|
144,302
|
$
|
136,637
|
$
|
352,022
|
$
|
312,307
|
|||||||||
Percent
of total revenue
|
16.1
|
%
|
16.1
|
%
|
17.2
|
%
|
14.8
|
%
|
Revenue
from Contracts with Deferred Profit
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Granite
West
|
$ | 18,070 | $ | 18,382 | $ | 18,757 | $ | 21,235 | ||||||||
Granite
East
|
20,922 | 40,370 | 63,729 | 88,274 | ||||||||||||
Total
revenue from contracts with deferred profit
|
$ | 38,992 | $ | 58,752 | $ | 82,486 | $ | 109,509 |
General
and Administrative Expenses
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Salaries
and related expenses
|
$ | 31,925 | $ | 30,008 | $ | 102,520 | $ | 96,374 | |||||||||
Incentive
compensation, discretionary profit sharing and other variable
compensation
|
14,069 | 13,484 | 29,879 | 30,174 | |||||||||||||
Provision (recovery) for doubtful accounts | 7,531 |
(37
|
) | 8,914 | 1,119 | ||||||||||||
Other
general and administrative expenses
|
18,408 | 20,211 | 57,031 | 55,466 | |||||||||||||
Total
|
$ | 71,933 | $ | 63,666 | $ | 198,344 | $ | 183,133 | |||||||||
Percent
of revenue
|
8.0 | % | 7.5 | % | 9.7 | % | 8.7 | % |
Other
(Expense) Income
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Interest
income
|
$ | 5,439 | $ | 7,514 | $ | 15,087 | $ | 20,796 | |||||||||
Interest
expense
|
(5,303 | ) | (1,884 | ) | (12,871 | ) | (4,998 | ) | |||||||||
Equity
in (loss) income of affiliates
|
(1,257 | ) | 4,037 | (1,436 | ) | 4,359 | |||||||||||
Other,
net
|
549 | (391 | ) | 9,196 | (1,057 | ) | |||||||||||
Total
|
$ | (572 | ) | $ | 9,276 | $ | 9,976 | $ | 19,100 |
Provision
for Income Taxes
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Provision
for income taxes
|
$ | 21,473 | $ | 25,437 | $ | 46,681 | $ | 47,680 | |||||||||
Effective
tax rate
|
29.1 | % | 29.8 | % | 27.8 | % | 30.5 | % |
Minority
Interest in Consolidated Subsidiaries
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Minority
interest in consolidated subsidiaries
|
$ | (594 | ) | $ | (6,504 | ) | $ | (31,058 | ) | $ | (13,750 | ) |
Cash
and Marketable Securities (in
thousands)
|
September
30,
|
||||||||
|
2008
|
2007
|
|||||||
Cash
and cash equivalents excluding consolidated joint ventures
|
$ | 146,138 | $ | 139,368 | |||||
Consolidated
joint venture cash and cash equivalents
|
134,908 | 126,237 | |||||||
Total
consolidated cash and cash equivalents
|
281,046 | 265,605 | |||||||
Short-term
and long-term marketable securities
|
131,321 | 167,983 | |||||||
Total
cash, cash equivalents and marketable securities
|
$ | 412,367 | $ | 433,588 |
Cash
Flows (in
thousands)
|
Nine Months
Ended September 30,
|
||||||||
|
2008
|
2007
|
|||||||
Net
cash provided by (used in):
|
|||||||||
Operating
activities
|
$ | 104,897 | $ | 137,567 | |||||
Investing
activities
|
(58,896 | ) | (132,844 | ) | |||||
Financing
activities
|
(117,389 | ) | 55,989 |
Item
3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Item
4.
|
CONTROLS AND
PROCEDURES
|
Item
1.
|
LEGAL
PROCEEDINGS
|
Item
1A.
|
RISK
FACTORS
|
Item
2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
Item
3.
|
DEFAULTS UPON SENIOR
SECURITIES
|
Item
4.
|
SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
Item
5.
|
OTHER
INFORMATION
|
Item
6.
|
10.1
|
†
|
Amendment
No. 1, dated August 6, 2008, to the Key Management Deferred Compensation
Plan II
|
31.1
|
†
|
Certification
of Principal Executive Officer
|
31.2
|
†
|
Certification
of Principal Financial Officer
|
32
|
††
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
†
|
Filed
herewith
|
|
††
|
Furnished
herewith
|
GRANITE
CONSTRUCTION INCORPORATED
|
|||||
Date:
|
October 30,
2008
|
By:
|
/s/
LeAnne M. Stewart
|
||
LeAnne
M. Stewart
|
|||||
Senior
Vice President and Chief Financial Officer
|