RMX 10K 2006 Annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006


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 001-32440

READY MIX, INC.

(Exact name of registrant as specified in its charter)


Nevada		86-0830443
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

3430 East Flamingo Road Suite 100, Las Vegas, NV		89121
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (702) 433-2090
Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:


Title of each class:		Name of exchange on which registered:

Common stock, $.001 par value		American Stock Exchange

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso Noþ

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yeso Noþ

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. Yesþ Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filero; Accelerated filero; Non-accelerated filerþ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

On June 30, 2006, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates was $23,101,200.

On March 13, 2007, there were 3,807,500 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant incorporates by reference into Part III of this Report, information contained in its definitive proxy statement to be disseminated in connection with its Annual Meeting of Shareholders for the year ended December 31, 2006.

READY MIX, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2006

TABLE OF CONTENTS


		Page
	PART I

Item 1.	Business		1

Item 1A.	Risk Factors		10

Item 1B.	Unresolved Staff Comments		14

Item 2.	Properties		14

Item 3.	Legal Proceedings		14

Item 4.	Submission of Matters to a Vote of Security Holders		14

	PART II

Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters		15

Item 6.	Selected Financial Data		18

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		27

Item 8.	Financial Statements and Supplementary Data		28

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		50

Item 9A.	Controls and Procedures		50

Item 9B.	Other Information		50

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance		50

Item 11.	Executive Compensation		50

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		50

Item 13.	Certain Relationships and Related Transactions, and Director Independence		51

Item 14.	Principal Accountant Fees and Services		51

	PART IV

Item 15.	Exhibits and Financial Statement Schedules		51
EX-3.1
EX-23.1
EX-31.1
EX-31.2
EX-32

Special Note Regarding Forward Looking Statements

This Annual Report on Form 10-K and the documents we incorporate by reference herein include forward-looking statements. All statements other than statements of historical facts contained in this Form 10-K and the documents we incorporate by reference, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and elsewhere in this Annual Report on Form 10-K. In addition, our past results of operations do not necessarily indicate our future results. Moreover, the ready-mix concrete business is very competitive and rapidly changing. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this Annual Report on Form 10-K or in the documents we incorporate by reference, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Annual Report on Form 10-K. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

PART I

Item 1.Business

General

Ready Mix, Inc. (“Company,” “Ready Mix,” “RMI,” “we,” “us” and “our”), based in Las Vegas, Nevada, is engaged in the construction industry as a supplier of construction materials. We provide ready mix concrete, sand and gravel products to a variety of customers, including but not limited to, contractors, subcontractors, individuals and owners of both private and public construction projects. We have operations in the Las Vegas, Nevada and Phoenix, Arizona metropolitan areas. Our operations consist of seven permanent ready mix concrete batch plants, three sand and gravel crushing and screening facilities and a fleet of approximately 180 ready mix concrete trucks and other assorted support vehicles for transporting cement powder, sand and gravel, as well as maintenance and service vehicles. From our three aggregate production facilities located in the vicinity of Las Vegas, Nevada, we expect to supply approximately 95% of the total sand and gravel that are part of the raw materials for the ready mix concrete that we manufacture and deliver. Our ready mix batch plants in the Phoenix, Arizona area are located on or near sand and gravel production sites operated by third parties from whom we purchase our sand and gravel. In most instances, these third-party batch plant site leases also include long term sand and gravel purchase obligations which serve to assure a supply of key raw materials and to provide advantageous geographic locations in proximity to areas of concentrated construction activity. Besides sand and gravel, cement is the other most expensive and important raw material used in the production of ready mix concrete. We purchase our cement from a variety of suppliers with whom we share excellent relationships, although it is rare that we obtain firm supply agreements from cement suppliers. In recent years, particularly 2005, world-wide high cement demand created shortages of supply. No such shortages have occurred since early 2006 when residential construction activity in our market began to subside. Since 1997, our operations have consisted principally of formulating, preparing and delivering ready-mix

concrete to the job sites of our customers. We also provide services to reduce our customers’ overall construction costs by lowering the installed, or “in-place”, cost of concrete. These services include the formulation of new mixtures for specific design uses, on-site and lab-based product quality control and delivery programs configured to meet our customers’ needs.

We produce rock and sand for our Las Vegas area ready-mix plants from two separate production facilities. One quarry, located approximately 50 miles northeast of Las Vegas in Moapa, Nevada, has historically produced all of our sand requirements and approximately 60% of the coarse aggregate requirements of our Nevada concrete batch plants. Beginning in 2007, a second aggregate production facility located approximately 15 miles north of Las Vegas is expected to share in supplying the sand and gravel needs of our Las Vegas plants. A third sand and gravel production facility located approximately 40 miles southeast of Las Vegas will not likely have any appreciable demand for product until highway improvements over Hoover Dam are completed and transportation is facilitated. In the Phoenix metropolitan area, all three of our existing ready-mix concrete plants are currently supplied rock and sand from third parties. We hold mining rights on a property in the southeast Phoenix area that we have not yet begun to mine.

Prior to the completion of our public offering in August of 2005, we had been funded, owned and controlled by Meadow Valley Corporation (“Meadow Valley”). Meadow Valley continues to own approximately 53% of our common stock and we share some common management and directors. As a provider of construction services in the heavy construction sector, Meadow Valley, on occasion, purchases our products for its construction projects. Purchases for the years ended December 31, 2006, 2005 and 2004 amounted to $.44 million, $.68 million and $.47 million, respectively. Our business has not been dependent upon Meadow Valley, but as we continue to expand our capacity in terms of units of production and delivery capabilities, sales to Meadow Valley may increase.

For the years ended December 31, 2006, 2005 and 2004, our revenue was $83.6 million, $67.7 million and $59.1 million, respectively. Our revenue mix is comprised of the following:


	December 31*,
	2006			2005			2004
Commercial and industrial construction		27	%		28	%		34	%
Residential construction		53	%		55	%		47	%
Street and highway construction and paving		7	%		7	%		5	%
Other public works and infrastructure construction		13	%		10	%		14	%

		100	%		100	%		100	%


*		Percentages are approximate.

Business Strategy

Our objective is to expand the geographic scope of our operations, within the metropolitan areas of Las Vegas, Nevada and Phoenix, Arizona, to become a leading value-added provider of ready-mix concrete and related services in each market. We plan to achieve this objective by:

	•		increasing our operating assets and marketing presence within our two metropolitan markets we currently serve;

	•		expanding beyond the metropolitan areas of our two existing markets, but initially within the states of Nevada and Arizona; and

	•		continuing our existing operating strategy aimed at increasing revenue growth and market share, achieving cost efficiencies and enhancing profitability.

We intend to continue to manage our operations on a relatively decentralized basis to allow the local management within our state markets to focus on their existing customer relationships and local strategy. Our executive management team is responsible for executing our company-wide strategy, including execution and integration and initiating and overseeing operational improvements.

Expanding Beyond the Metropolitan Areas of Our Two Existing Markets

We will seek to enter new geographic sub-markets initially within the Phoenix and Las Vegas metropolitan areas. These markets will likely be located at the outer edges of the two metropolitan markets, but at a sufficient distance from these metropolitan markets so as to require the development of newer plants to service job sites in these areas.

Continuing Our Existing Operating Strategies

We intend to continue to implement an operating strategy which we believe will (1) increase revenue and market share through increased marketing and sales initiatives and enhanced operations and (2) achieve further cost efficiencies.

Increasing Marketing and Sales Initiatives and Enhancing Operations.Our basic operating strategy will continue to emphasize the sale of value-added product to customers who are more focused on reducing their installed, or in-place, concrete costs than on the price per cubic yard of the ready-mix concrete they purchase. Key elements of this service-oriented strategy include:

	•		developing additional local-level marketing and sales expertise;

	•		establishing company-wide quality control improvements;

	•		developing and implementing training programs that emphasize successful marketing, sales and training techniques and the sale of high-margin concrete mix designs; and

	•		investing in computer and communications technology at each of our locations to improve purchasing, accounting, load dispatch, delivery efficiency and reliability and customer relations.

Achieving Cost Efficiencies and Enhancing Profitability.We will continue to seek to reduce our operating expenses by eliminating duplicative administrative functions and consolidating other functions between our various plants and facilities. In addition, we believe that, as we increase in size, we should experience reduced costs as a percentage of revenue in such areas as:

	•		materials procurement;

	•		purchases of mixer trucks and other equipment, spare parts and tools;

	•		vehicle and equipment maintenance;

	•		equipment financing terms;

	•		employee benefit plans; and

	•		insurance and other risk management programs.

Market Overview

According to the National Ready Mix Concrete Association the 2006 annual usage of ready-mix concrete in the United States is approximately 430 million cubic yards, or $30 billion. The total concrete market closely mirrors the trends of the total cement market and total construction market. According to the U.S. Census Bureau, total construction put in place in 2006 was valued at $1.2 trillion, a 4.8% increase over the previous year. As has been well publicized, the residential construction sector, a key metric of ready-mix concrete demand, experienced a decline of 1.9% in 2006, but was somewhat offset by the strength of the non-residential construction sector which grew 16.2% in 2006. According to Fails Management Institute, a leading construction industry consulting firm also known as FMI, construction put in place is expected to grow year over year at approximately 2.2%.

Because our business currently focuses primarily in Arizona and Southern Nevada, certain demographic drivers, such as population growth, have a significant impact on the local construction market. According to projections from the U.S. Census Bureau, Nevada and Arizona rank #1 and #2 respectively in percentage increase of population between 2000 and 2030. By 2030, Nevada is predicted to grow 114.3%, Arizona 108.8% and Florida is third at 79.5%. More specifically, the populations of Clark County, Nevada and Maricopa County, Arizona have increased 24.3% and 18.3% respectively during the period of April 1, 2000 through July 1, 2005.

Ready-mix concrete is a versatile, low-cost manufactured material that the construction industry uses in substantially all of its projects. It is a stone-like compound that results from combining fine and coarse aggregates, such as sand, gravel and crushed stone, with water, various admixtures and cement. Ready-mix concrete can be manufactured in thousands of variations which in each instance may reflect a specific design use. Manufacturers of ready-mix concrete generally maintain at least one day’s inventory of raw materials and must coordinate their daily material purchases with the time-sensitive delivery requirements of their customers.

Ready-mix concrete begins to harden when mixed and generally becomes difficult to place after 90 minutes from mixing. This characteristic generally limits the market for a permanently installed ready-mix plant to an area within a 25-mile radius of its location. Concrete manufacturers produce ready-mix concrete in batches at their plants and use mixer and other trucks to distribute and place it at the job sites of their customers. These manufacturers generally do not provide paving or other finishing services that construction contractors or subcontractors typically perform.

On the basis of information provided by the National Ready-Mix Concrete Association, in addition to vertically integrated manufacturers of cement and ready-mix concrete, more than 2,500 independent producers such as ourselves currently operate a total of approximately 6,000 plants in the United States. Larger markets generally have numerous producers competing for business on the basis of price, timing of delivery and reputation for quality and service.

Historically, barriers to the start-up of a new ready-mix concrete manufacturing operation were relatively low. Recently, however, public concerns over the dust, noise and heavy mixer and other truck traffic associated with the operation of ready-mix concrete plants and their general appearance have made obtaining the necessary permits and licenses required for new plants more difficult. Delays in the regulatory process, when coupled with the substantial capital investment that start-up operations require, have raised the barriers to entry for new companies entering the industry.

Products and Services

Ready-Mix Concrete

Dry batched concrete is mixed in the mixer truck en route to the job site, whereas wet batched concrete is mixed at the plant and then delivered to the job site. We produce dry batched ready-mix concrete products which requires us to proportion the dry components, add water when the components are in the ready-mix truck and then deliver the product in an unhardened state, which we refer to as a plastic state, for placement and shaping into designed forms at the job site. Selecting the optimum mix for a job entails determining not only the ingredients that will produce the desired permeability, strength, appearance and other properties of the concrete after it has hardened and cured, but also the ingredients necessary to achieve a workable consistency under the weather and other conditions at the job site. We can achieve product differentiation for the mixes we offer because of the variety of mixes we are able to produce, our production capacity and our scheduling, delivery and placement reliability. We also believe we distinguish ourselves with our value-added service approach that emphasizes reducing our customers’ overall construction costs by lowering the installed, or in-place, cost of concrete.

From a contractor’s perspective, the in-place cost of concrete includes both the amount paid to the ready-mix concrete manufacturer and the internal costs associated with the labor and equipment the contractor provides. A contractor’s unit cost of concrete is often only a small component of the total in-place cost that takes into account all the labor and equipment costs required to place and finish the ready-mix concrete, including the cost of additional labor and time lost due to substandard products or delivery delays. By carefully designing proper mixes and using recent advances in mixing technology, we assist our customers in reducing the amount of reinforcing steel and labor required in various applications.

We provide a variety of services in connection with our sale of ready-mix concrete which can help reduce our customers’ in-place cost of concrete. These services include:

•

production of new formulations and alternative product recommendations that reduce labor and materials costs;

	•		quality control, through automated production and testing, that ensures consistent results and minimizes the need to correct completed work; and

	•		scheduling and tracking systems that ensure timely delivery and reduce the downtime incurred by the customer’s finishing crew.

We produce ready-mix concrete by combining the desired type of cement, sand, gravel and crushed stone with water and typically one or more admixtures. These admixtures, such as chemicals, minerals and fibers, determine the usefulness of the product for particular applications. We use a variety of chemical admixtures to achieve one or more of five basic purposes:

	•		relieve internal pressure and increase resistance to cracking in cold weather;

	•		retard the hardening process to make concrete more workable in hot weather;

	•		strengthen concrete by reducing its water content;

	•		accelerate the hardening process and reduce the time required for curing; and

	•		facilitate the placement of concrete having low water content.

We use various mineral admixtures as supplementary cementing materials to alter the permeability, strength and other properties of concrete. These materials include fly ash, ground granulated blast-furnace slag and silica fume. We may also use fibers, such as steel, glass, synthetic and carbon filaments, as an additive in various formulations of concrete. Fibers help to control shrinkage and cracking, thus reducing permeability and improving abrasion resistance. In many applications, fibers replace welded steel wire and reinforcing bars. Relative to the other components of ready-mix concrete, these additives generate comparatively high margins.

Operations

We have made substantial capital investments in equipment, systems and personnel at our concrete plants to facilitate continuous multi-customer deliveries of a highly perishable product.

Our ready-mix concrete plants consist of five permanent installations and two portable facilities. Several factors govern the choice of plant type, including:

	•		capital availability;

	•		production consistency requirements; and

	•		daily production capacity requirements.

The market primarily will drive our future plant construction decisions. The relevant market factors include:

	•		the expected production demand for the plant;

	•		the expected types of projects the plant will service; and

	•		the desired location of the plant.

Portable plants will also play a part in our growth plans to service large, long term projects within our market areas, as well as projects in more remote locations.

We produce ready-mix concrete in batches. The batch operator in a dry batch plant simultaneously loads the dry components of stone, sand and cement with water and admixtures in a mixer truck that begins the mixing process during loading and completes that process while driving to the job site. In a wet batch plant, the batch operator blends the dry components and water in a plant mixer from which he loads the already mixed concrete into the mixer truck, which leaves for the job site promptly after loading.

Mixer trucks slowly rotate their loads en route to job sites in order to maintain product consistency. A mixer truck typically has a load capacity of ten cubic yards, or approximately 20 tons, and a useful life of 12 years, although for accounting purposes we depreciate them over 10 years. In addition to normal maintenance, after five

years, some components of the mixer trucks require refurbishment. New mixer trucks currently cost approximately $140,000 to $155,000. We currently operate a fleet of approximately 180 owned and leased mixer trucks.

In our manufacture and delivery of ready-mix concrete, we emphasize quality control, pre-job planning, customer service and coordination of supplies and delivery. A typical order contains various specifications that the contractor requires the concrete to meet. After receiving the specifications for a particular job, we formulate a variety of mixtures of cement, aggregates, water and admixtures which will meet or exceed the contractor’s specifications. We perform testing to determine which mix design is most appropriate to meet the required specifications. The test results enable us to select the mixture that has the lowest cost and meets or exceeds the job specifications. We also maintain a project file that details the mixture to be used when the concrete for the job is actually prepared. For quality control purposes, we maintain batch samples of concrete from selected job sites.

We prepare bids for particular jobs based on the size of the job, location, desired profit margin, cost of raw materials and the design mixture identified in our testing process. If the job is large enough, we will obtain quotes from our suppliers as to the cost of raw materials we will use in preparing the bid. Once we obtain a quotation from our suppliers, the price of the raw materials for the specified job is established. Several months may elapse from the time a contractor has accepted our bid until actual delivery of the ready-mix concrete begins. During this time, we maintain regular communication with the contractor concerning the status of the job and any changes in the job’s specifications in order to coordinate the multi-sourced purchases of cement and other materials we will need to fill the job order and meet the contractor’s delivery requirements. We must confirm that our customers are ready to take delivery of manufactured product throughout the placement process.

On any given day, a particular plant may have production orders for many customers at various locations throughout its area of operation. To fill an order:

	•		the dispatch office coordinates the timing and delivery of the concrete to the job site;

	•		an operator supervises and coordinates the receipt of the necessary raw materials and operates the hopper that dispenses those materials into the appropriate storage bins;

	•		a batch operator prepares the specified mixture from the order and oversees the loading of the mixer truck with dry ingredients and water; and

	•		the driver of the mixer truck delivers the load to the job site, discharges the load and, after washing the truck, departs at the direction of the dispatch office.

We track the status of each mixer truck as to whether a particular truck is:

	•		loading concrete;

	•		in route to a particular job site;

	•		on the job site;

	•		being washed; or

	•		in route to a particular plant.

We are continuously updated by the individual mixer truck operators as to their status. In this manner, we are able to determine the optimal routing and timing of subsequent deliveries by each mixer truck and to monitor the performance of each driver.

A plant manager oversees the operation of each plant. Our employees also include:

	•		maintenance personnel who perform routine maintenance work throughout our plants;

	•		mechanics who perform substantially all the maintenance and repair work on our vehicles;

	•		quality control staff who prepare mixtures for particular job specifications;

	•		various clerical personnel who are responsible for our day-to-day operations; and

	•		sales personnel who are responsible for identifying potential customers and maintaining existing customer relationships.

We generally operate on a single shift although we have the capability of conducting 24 hour a day operations during times of heavy demand.

Cement and Raw Materials

We obtain most of the materials necessary to manufacture ready-mix concrete at each of our facilities on a daily basis. These raw materials include cement, which is a manufactured product, stone, gravel and sand. Each plant typically maintains an inventory level of these materials sufficient to satisfy its operating needs for at least one day. Cement represents the single most expensive raw material used in manufacturing a cubic yard of ready-mix concrete. In each of our markets, we purchase cement from any one of several suppliers and do not have any written supply agreements with any cement supplier. However, the symbiotic relationship between ourselves and the cement suppliers provides us with some assurance that we will be able to obtain the cement to produce ready-mix concrete to meet our customers’ demands.

We lease, on a royalty basis, and operate three sand and aggregate production facilities in the Las Vegas, Nevada vicinity, which provide the majority of the rock and sand used in our Las Vegas area concrete plants. These aggregate leases range in duration from one to two years remaining on our leases. In each lease we have certain rights to extend our leases under certain conditions. At our Arizona locations, our supply contracts for sand and gravel have remaining terms ranging from approximately three to ten years. Since we do not self-produce all of the rock and sand used in our ready-mix concrete, but only that used in certain plant locations, we have entered into lease agreements with third party sand and gravel producers to establish our ready-mix plants on their properties in exchange for our agreeing to purchase their rock and sand as a raw material for our products. These leases are long term in nature, from five to ten years, and generally have renewal options for additional terms. The obligations to purchase the rock and sand from these lessors may contain provisions to pay minimum monthly amounts regardless of our consumption levels, but in some cases, do allow for past payments to apply toward future use. These types of leases reduce the amount of capital equipment we would otherwise need to perform our own crushing and screening and also eliminate the need to own or lease our own mining properties. The leases also specify parameters for the quality of the rock and sand to be supplied by the lessors. These leases are important to us as they are the basis upon which we obtain rock and sand from which we produce ready-mix concrete at these plant locations.

Customers

We target concrete subcontractors, prime contractors, homebuilders, commercial and industrial property developers in the Las Vegas, Nevada and Phoenix, Arizona metropolitan areas. Revenue generated from our top 10 customers represented approximately 44% of our revenue. The discontinuance of service to any of these customers or a general economic downturn could have a material adverse effect on our business, financial condition and results of operations.

We rely heavily on repeat customers. We estimate that repeat customer revenue for the years ended December 31, 2006, 2005 and 2004 accounted for approximately 99%, 99% and 98%, respectively, of our revenue. Management and dedicated sales personnel at each of these businesses have been responsible for developing and maintaining successful long-term relationships with key customers. We believe that by operating in more markets and locations, we will be in a better position to market to and service larger regional contractors.

Competition

The ready-mix concrete industry is highly competitive. Our ability to compete in our two markets depends largely on the proximity of our customers’ job sites to our ready-mix concrete plant locations, our plant operating costs and the prevailing ready-mix concrete prices in each market. Price is the primary competitive factor among suppliers for small or simple jobs, principally in residential construction, while timeliness of delivery and consistency of quality and service as well as price are the principal competitive factors among suppliers for large or complex jobs. Our competitors range from small, owner-operated private companies to subsidiaries or operating units of large, vertically integrated cement manufacturing and concrete products companies.

Our direct competitors include Rinker Materials, Nevada Ready Mix and Silver State Materials in Nevada and Rinker Materials, Cemex, Vulcan Materials and Hanson Materials in Arizona. We also face significant competition from many smaller ready-mix concrete providers. We believe we compete favorably with all of our competitors due to our plant locations, quality of our raw materials, our delivery and service, and our competitive prices. However, competitors having lower operating costs than we do or having the financial resources to enable them to accept lower margins than we do have competitive advantages over us for jobs that are particularly price-sensitive. Moreover, competitors having greater financial resources to invest in new mixer trucks or build plants in new areas than we do also have competitive advantages over us.

Training and Safety

Our future success will depend, in part, on the extent to which we are able to attract, retain and motivate qualified employees. We believe that our ability to do so will depend on the quality of our recruiting, training, compensation and benefits, the opportunities we afford for advancement and our safety record. Historically, we have supported and funded continuing education programs for our employees. We intend to continue to expand these programs. We require all field employees to attend periodic safety training meetings and all drivers to participate in training seminars followed by certification testing.

Sales and Marketing

General contractors and subcontractors typically select their suppliers of ready-mix concrete. In large, complex projects, an engineering firm or division within a state transportation or public works department may influence the purchasing decision, particularly where the concrete has complicated design specifications. In those projects and in government-funded projects generally, the general contractor or subcontractor usually awards supply orders on the basis of either direct negotiation or competitive bidding. We believe that the purchasing decision in many cases ultimately is relationship-based. Our marketing efforts target general contractors, concrete subcontractors, design engineers and architects whose focus extends beyond the price of ready-mix concrete to product quality and consistency and reducing their in-place cost of concrete.

We currently have 10 full-time sales persons. We also intend to develop and implement training programs to increase the marketing and sales expertise and technical abilities of our staff. Our goal is to maintain a sales force whose service-oriented approach will appeal to our targeted prospective customers and differentiate us from our competitors.

Seasonality

The construction industry is seasonal, generally due to inclement weather and length of daylight hours occurring in the winter months. Accordingly, we may experience a seasonal pattern in our operating results with lower revenue in the first and fourth quarters of each calendar year than other quarters. Results for any one particular quarter, therefore, may not be indicative of results for other quarters or for the year.

Insurance

Our business is subject to claims and litigation brought by employees, customers and third parties for personal injuries, property damage, product defects and delay damages, that have, or allegedly have, resulted from the conduct of our operations.

Our operations involve providing blends of ready-mix concrete that are required to meet building code or other regulatory requirements and contractual specifications for durability, compressive strength, weight-bearing capacity and other characteristics. If we fail or are unable to provide product in accordance with these requirements and specifications, claims may arise against us or our reputation could be damaged. Although we have not experienced any material claims of this nature in the past, we may experience such claims in the future. In addition, our employees perform a significant portion of their work moving and storing large quantities of heavy raw materials, driving large mixer trucks in heavy traffic conditions and pouring concrete at construction sites or in other areas that may be hazardous. These operating hazards can cause personal injury and loss of life, damage to or destruction of property and equipment and environmental damage. We maintain insurance coverage in amounts and

against the risks we believe are consistent with industry practice, but this insurance may not be adequate to cover all losses or liabilities we may incur in our operations, and we may not be able to maintain insurance of the types or at levels we deem necessary or adequate or at rates we consider reasonable.

Equipment

Currently, we operate a fleet of approximately 180 owned and leased ready-mix trucks, which are serviced by our mechanics. We believe these vehicles are generally well-maintained and adequate for our operations. The average age of our ready-mix trucks is approximately four years. Since inception, we have elected to finance the purchase of our trucks and other plant equipment with operating leases upon terms generally available in the industry and at rates disclosed in our financial statements. We will utilize proceeds from operations to purchase equipment which in the past has been financed. When placing orders for new equipment, it can be expected that lead times may be as much as four to six months, therefore, actual delivery may not necessarily meet the timing of our production needs and can cause disruption of service or diminished productivity.

We have used a broad range of financing arrangements to acquire the equipment necessary for our business. We commonly lease our trucks and other operating equipment, which we believe has allowed us to minimize the initial cash outlay for such equipment when we commenced our business operations. The terms of these equipment leases are similar to other equipment leases and specify a term, a monthly payment, usually require a down payment, and may or may not specify a buyout option.

Government Regulation

A wide range of federal, state and local laws apply to our operations, which include the regulation of:

	•		zoning regulations;

	•		street and highway usage;

	•		noise levels; and

	•		health, safety and environmental matters.

In many instances, we are required to have certificates, permits or licenses in order to conduct our business. Our failure to maintain required certificates, permits or licenses or to comply with applicable laws could result in substantial fines or possible revocation of our authority to conduct certain of our operations.

Environmental laws that impact our operations include those relating to air quality, solid waste management and water quality. Environmental laws are complex and subject to frequent change. These laws impose strict liability in some cases without regard to negligence or fault. Sanctions for non-compliance may include revocation of permits, corrective action orders, administrative or civil penalties and criminal prosecution. Some environmental laws provide for joint and several strict liability for remediation of spills and releases of hazardous substances. In addition, businesses may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, as well as damage to natural resources. These laws also expose us to liability for the conduct of or conditions caused by others, or for acts which complied with all applicable laws when performed. We are not aware of any environmental issues which we believe are likely to have a material adverse effect on our business, financial condition or results of operations, but we can provide no assurance that material liabilities will not occur. There also can be no assurance that our compliance with amended, new or more stringent laws, stricter interpretations of existing laws or the future discovery of environmental conditions will not require additional, material expenditures. Additionally, OSHA and the Mining Safety and Health Agency have established requirements for our training programs and dictate working conditions which we must meet.

We have all material permits and licenses required to conduct our operations and are in substantial compliance with applicable regulatory requirements relating to our operations. Our capital expenditures relating to environmental matters have not been material. We do not currently anticipate any material adverse effect on our business or financial position as a result of our future compliance with existing environmental laws controlling the discharge of materials into the environment.

We also require permits to obtain and use water in connection with our production of ready-mix concrete. We believe we have access to, and permitting for, sufficient water supplies to maintain our operations in Arizona and Nevada for the foreseeable future.

Employees

As of February 5, 2007, we employed approximately 260 employees including executive officers, management personnel, sales personnel, technical personnel, administrative staff, clerical personnel, and drivers, of which approximately 30 were salaried and approximately 230 were hourly personnel generally employed on an as-needed basis, including approximately 180 truck drivers. The number of employees fluctuates depending on the number and size of projects ongoing at any particular time, which may be impacted by variations in weather conditions and length of daylight hours throughout the year. During the year ended December 31, 2006, the number of hourly employees ranged from approximately 270 to approximately 300 and averaged approximately 290. None of our employees belong to a labor union and we believe our relationship with our employees is satisfactory.

Website Access

Our website address is www.readymixinc.com. On our website we make available, free of charge, our annual report on Form 10-K, our most recent quarterly reports on Form 10-Q, current reports on Form 8-K, Forms 3, 4, and 5 related to beneficial ownership of securities, code of ethics and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the United States Securities and Exchange Commission. The information on our website is not incorporated into, and is not part of, this report.

Item 1A.Risk Factors

The risk factors listed in this section and other factors noted herein or incorporated by reference could cause our actual results to differ materially from those contained in any forward-looking statements. The following risk factors, in addition to the information discussed elsewhere herein, should be carefully considered in evaluating us and our business:

We are and will continue to be subject to conflicts of interest resulting from Meadow Valley’s control of us, and we do not have any procedures in place to resolve such conflicts.

Meadow Valley owns approximately 53% of our outstanding common stock and may be able to control our business. Additionally, Meadow Valley’s chief executive officer also serves us in similar capacities, and all five of Meadow Valley’s directors serve on our seven member board of directors. Only one of our outside directors is independent of Meadow Valley. We also sell a small amount of concrete to Meadow Valley. These relationships could create, or appear to create, potential conflicts of interest when Meadow Valley’s officers and directors are faced with decisions that could have different implications for Meadow Valley and us. These decisions could result in reducing our profitability. Also, the appearance of conflicts, even if such conflicts do not materialize, might adversely affect the investing public’s perception of us. We do not have any formal procedure for resolving such conflicts of interest.

At any given time, one or a limited number of customers may account for a large percentage of our revenue, which means that we face a greater risk of loss of revenue and a reduction in our profitability if we lose a major customer or if a major customer faces financial difficulties.

At times, a small number of customers have generated a large percentage of our revenue in any given period. For the year ended December 31, 2006, our largest customer provided approximately 9.2% of our revenue and our ten largest customers provided approximately 44.2% of our revenue. In 2005, one customer provided approximately 14.3% of our revenue and our ten largest customers provided approximately 53.4% of our revenue. In 2004 one customer provided approximately 15.4% of our revenue and our ten largest customers provided approximately 50.2% of our revenue. Companies that constitute our largest customers vary from year to year, and our revenue from individual customers fluctuates each year. If we lose one or more major customers or if any of these customers face financial difficulties, our revenue could be substantially reduced, thereby reducing our profitability.

We may lose business to competitors who underbid us or who have greater resources to supply larger jobs than we have, and we may be otherwise unable to compete favorably in our highly competitive industry.

Our competitive position in a given market depends largely on the location and operating costs of our ready-mix concrete plants and prevailing prices in that market. Price is a primary competitive factor among suppliers for small or simple jobs, principally in residential construction, while timeliness of delivery and consistency of quality and service, in addition to price, are the principal competitive factors among suppliers for large or complex jobs. Our competitors range from small, owner-operated private companies offering simple mixes to subsidiaries or operating units of large, vertically integrated cement manufacturing and concrete products companies. Our vertically integrated competitors generally have greater manufacturing, financial and marketing resources than we, providing them with a competitive advantage. Competitors having lower operating costs than we do or having the financial resources to enable them to accept lower margins than we do will have a competitive advantage over us for larger jobs which are particularly price-sensitive. Competitors having greater financial resources than we do to invest in new mixer trucks or build plants in new areas also have competitive advantages over us.

We depend on third parties for cement and other supplies essential to operate our business. The loss of any such suppliers could impact our ability to provide concrete to, or otherwise service our customers, as well as our ability to retain and attract customers.

We rely on third parties to provide us with supplies, including cement and other raw materials, necessary for our operations. We cannot be sure that these relationships will continue in the future or that raw materials will continue to be available to us when required and at a reasonable price. For instance, in recent years there has been a worldwide shortage of cement, which has caused cement prices, and therefore concrete prices, to rise. If we are unable to purchase cement or other raw materials in sufficient quantities to meet our needs, we might be unable to meet our supply commitments to our customers which would severely impact our ability to retain and attract customers.

Our operating results may vary significantly from reporting period to reporting period and may be adversely affected by the cyclical nature of the ready-mix concrete markets we serve, causing significant reductions in our revenue.

Our business and the business environment which supports the ready-mix concrete business can be cyclical in nature. As a result, our revenue may be significantly reduced as a result of declines in construction in Nevada and Arizona caused by:

	•		the level of residential and commercial construction in Nevada and Arizona;

	•		the availability of funds for public or infrastructure construction from local, state and federal sources;

	•		changes in interest rates;

	•		variations in the margins of jobs performed during any particular quarter; and

	•		the budgetary spending patterns of our customers.

As a result, our operating results in any particular quarter may not be indicative of the results that you can expect for any other quarter or for the entire year. Furthermore, negative trends in the ready-mix concrete industry or in our markets could reduce our revenue, thereby decreasing our gross profit and reducing our profitability.

Our business is seasonal, causing quarterly variations in our revenue and earnings, which in turn could negatively affect our stock price.

The construction industry, even in Arizona and Nevada, is seasonal in nature, often as a result of adverse weather conditions, with significantly stronger construction activity in the second and third calendar quarters, than in the first and fourth quarters. Such seasonality or unanticipated inclement weather could cause our quarterly revenue and earnings to vary significantly. Because of our relatively small size, even a short acceleration or delay in filling customers’ orders can have a material adverse effect on our financial results in a given reporting period. Our varying quarterly results may result in a decline in our common stock price if investors react to our reporting operating results which are less favorable than in a prior period or than those anticipated by investors or the financial community generally.

Governmental regulations covering the ready-mix concrete industry, including environmental regulations, may result in increases in our operating costs and capital expenditures and decreases in our earnings.

A wide range of federal, state and local laws, ordinances and regulations apply to our production of ready-mix concrete, including:

	•		zoning regulations affecting plant locations;

	•		restrictions on street and highway usage;

	•		limitations on noise levels; and

	•		regulation of health, safety and environmental matters.

In many instances, we must have various certificates, permits or licenses in order to conduct our business. Our failure to maintain required certificates, permits or licenses or to comply with applicable governmental requirements could result in substantial fines or possible revocation of our authority to conduct some of our operations. Governmental requirements that impact our ready-mix concrete operations also include those relating to air quality, solid waste management and water quality. These requirements are complex and subject to frequent change. They impose strict liability in some cases without regard to negligence or fault and expose us to liability for the conduct of, or conditions caused by others, or for our acts that may otherwise have complied with all applicable requirements when we performed them. Our compliance with amended, new or more stringent requirements, stricter interpretations of existing requirements or the future discovery of environmental conditions may require us to make material expenditures we currently do not anticipate, thereby decreasing our earnings, if any.

There are special risks related to our operating and internal growth strategies that could adversely affect our operating practices and overall profitability.

One key component of our strategy is to operate our businesses on a decentralized basis, with local Phoenix and Las Vegas metro-wide management retaining responsibility for day-to-day operations, profitability and the internal growth of the local business. If we do not maintain proper overall internal controls, this decentralized operating strategy could result in inconsistent operating and financial practices and our overall profitability could be adversely affected. Our internal growth will also be affected by local management’s ability to:

	•		attract new customers and retain existing customers;

	•		differentiate our company in a competitive market by successfully emphasizing the quality of our products and our service;

	•		hire and retain mixer truck drivers and other specialized employees; and

	•		place orders for new equipment on a timely basis to meet production needs.

The departure of key personnel could disrupt our business and limit our growth, as this growth requires the hiring of new local senior managers and executive officers.

We depend on the continued efforts of our executive officers, some of whom are executive officers of Meadow Valley, and, in many cases, on our local senior management. In addition, any future growth will impose significant additional responsibilities on members of our senior management and executive officers. The success of our operations, which is based upon a decentralized management, will depend on recruiting new local senior level managers and officers, and we cannot be certain that we can recruit and retain such additional managers and officers. To the extent we are unable to attract and retain qualified management personnel, our growth could be limited and our business could be disrupted, resulting in decreased revenue and increased costs associated with the loss of experienced managers responsible for new client generating, marketing and cost containment efforts.

If some or all of our employees unionize, it could result in increases in our operating costs, disruptions in our business and decreases in our earnings.

If our employees were to become represented by a labor union, we could experience disruptions of our operations caused by labor strikes or slow downs as well as higher ongoing labor costs, which could increase our overall costs to do business. In addition, the coexistence of union and non-union employees on particular jobs may lead to conflicts between these employees or impede our ability to integrate our operations efficiently. Labor relations matters affecting our suppliers could increase our costs, disrupt our supply chains and adversely impact our business.

Our operations are subject to special hazards that may cause personal injury or property damage, subjecting us to liabilities and possible losses some of which may not be covered by insurance.

Operating mixer trucks, particularly when loaded, exposes our drivers and others to traffic hazards. Our drivers are subject to the usual hazards associated with providing services on construction sites, while our plant personnel are subject to the hazards associated with moving and storing large quantities of heavy raw materials. Operating hazards can cause personal injury and loss of life, damage to or destruction of property, plant and equipment and environmental damage. We maintain insurance coverage in amounts and against the risks we believe are consistent with industry practice, but this insurance may not be adequate to cover all losses or liabilities we may incur in our operations. Our insurance policies are subject to varying levels of deductibles. Losses up to our deductible amounts will be accrued based upon our estimates of the ultimate liability for claims incurred and an estimate of claims incurred but not reported. However, insurance liabilities are difficult to assess and estimate due to unknown factors, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents not reported and the effectiveness of our safety program. If we were to experience insurance claims or costs above our estimates, we might also be required to use working capital to satisfy these claims rather than using the working capital to maintain or expand our operations.

We may incur material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications.

Our operations involve providing ready-mix formulations that must meet building code or other regulatory requirements and contractual specifications for durability, compressive strength, weight-bearing capacity and other characteristics. If we fail or are unable to provide products meeting these requirements and specifications, material claims may arise against us and our reputation could be damaged. Additionally, if a significant uninsured or unindemnified formulation or product-related claim is resolved against us in the future, that resolution may increase our costs and reduce our profitability and cash flows.

Our revenue attributable to public works projects could be negatively impacted by a decrease or delay in governmental spending.

Our business depends to some extent on the level of federal, state and local spending on public works projects in our markets. Reduced levels of governmental funding for public works projects or delays in that funding could significantly reduce our revenue and thereby reduce our cash flow and profitability.

Item 1B.Unresolved Staff Comments

None

Item 2.Properties

We owned or leased the following properties at December 31, 2006:


		Approximate		Approximate
		Building Size in		Land		Owned or	Monthly		Lease
Location	Purpose	Square Feet		in Acres		Leased	Rental		Expires
3430 East Flamingo Suite 100, Las Vegas, Nevada	Area office		3,500		—	Leased	$	8,230	4/30/2007

4602 East Thomas Road Phoenix, Arizona	Area office		18,400		2	Owned		—	—

109 West Delhi, North Las Vegas, Nevada	Ready Mix production facility		4,470		5	Owned		—	—

11500 West Beardsley Road, Sun City, Arizona (1)	Ready Mix production facility		440		5	Leased		—	5/31/2010

39245 North Schnepf Road, Queen Creek, Arizona	Ready Mix production facility		440		5	Owned		—	—

Richmar Ave., Las Vegas, Nevada	Ready Mix production facility		440		5	Owned		—	—

Moapa, Nevada (1)	Sand and Aggegate production facility		840		40	Leased		—	1/1/2009

Moapa, Nevada (1)	Ready Mix production facility		440		—	Leased		—	—

Northwest Arizona (1)	Sand and Aggegate production facility		840		40	Leased		—	8/27/2007

Northwest Las Vegas, Nevada (1)	Sand and Aggegate production facility		—		40	Leased		—	4/30/2007

Northwest Las Vegas, Nevada (1)	Ready Mix production facility		440		—	Leased		—	—


(1)		Our facility rent is included in the cost of the material which we purchase from the lessors.

We have determined that the above properties are sufficient to meet our current needs. We will continue to search for possible additional site locations to expand our operations if market conditions warrant.

Item 3.Legal Proceedings

The Company is from time to time involved in legal proceedings arising in the normal course of business. As of the date of this report, the Company is not involved in any material legal proceedings.

Item 4.Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the year ended December 31, 2006.

PART II

Item 5.Market for Registrant’s Common Equity and Related Stockholder Matters

Our common stock is listed on the American Stock Exchange and trades under the symbol “RMX.” The following table represents the high and low closing prices for our common stock on the American Stock Exchange during 2006. As of March 2, 2007, there were approximately 2,300 record and beneficial owners of our common stock. On March 2, 2007, our common stock closed at $13.35 per share. Our stock began trading on August 24, 2005, at the completion of our initial public offering.


	2006 *				2005 *
	High		Low		High		Low
First quarter	$	16.95	$	13.30		n/a		n/a
Second quarter	$	15.62	$	12.80		n/a		n/a
Third quarter	$	14.10	$	9.48		n/a		n/a
Fourth quarter	$	11.42	$	10.25	$	14.48	$	11.62


*		- The quarterly highs and lows are based on daily market closing prices during each respective period.

We have never declared or paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements, general business conditions and other such factors as our Board of Directors deems relevant.

Equity Compensation Plan Information

Number of securities

remaining available

Number of securities

for future issuance

to be issued upon

Weighted-average

under equity

exercise of

exercise price of

compensation plans

outstanding options,

(excluding securities

Plan category

warrants and rights

reflected in column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders (1)(2)

466,875

11.47

324,375

Equity compensation plans not approved by security holders

—

Total

466,875

324,375


(1)	-	Includes an individual compensation agreement for 116,250 warrants issued to our underwriters as a portion of their compensation in connection with our initial public offering.

(2)	-	Includes 350,625 stock options issued to employees, directors and consultants from our 2005 equity incentive plan.

Our approved equity compensation plan, which we refer to as the 2005 Plan, permits the granting of any or all of the following types of awards: (1) incentive and nonqualified stock options, (2) stock appreciation rights, (3) stock awards, restricted stock and stock units, (4) and other stock or cash-based awards. In connection with any award or any deferred award, payments may also be made representing dividends or their equivalent.

We have reserved 675,000 shares of our common stock for issuance under the 2005 Plan. As of December 31, 2006, 324,375 shares were available for future grant under the 2005 Plan. The term of the stock options are five years and may be exercised after issuance as follows: 33.3% after one year of continuous service, 66.6% after two

years of continuous service and 100% after three years of continuous service. The exercise price of each option is equal to the market price of the Company’s common stock on the date of grant.

Our employees are eligible for participation in Meadow Valley’s (our parent company) equity compensation plan. The table below summarizes Meadow Valley’s equity compensation plan.

Equity Compensation Plan Information

Number of securities

remaining available

Number of securities

for future issuance

to be issued upon

Weighted-average

under equity

exercise of

exercise price of

compensation plans

outstanding options,

(excluding securities

Plan category

warrants and rights

reflected in column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders (1)

434,542

4.86

90,149

Equity compensation plans not approved by security holders

—

Total

434,542

90,149


(1)		- Includes 434,542 stock options issued to employees, directors and consultants from Meadow Valley’s 2004 equity incentive plan.

We did not sell any unregistered securities during the year ended December 31, 2006, nor did we repurchase any of our equity securities during the same period.

The graph below compares the cumulative 16-month total return of holders of Ready Mix, Inc.’s common stock with the cumulative total returns of the AMEX Composite Index, and a customized peer group of six companies that includes: Eagle Materials, Inc., Florida Rock Industries, Inc., Martin Marietta Materials, Texas Industries, Inc., US Concrete, Inc. and Vulcan Materials Corp. The graph tracks the performance of a $100 investment in our common stock, in the peer group, and the *index (with the reinvestment of all dividends) from 8/24/2005 to 12/31/2006.

COMPARISON OF 16 MONTH CUMULATIVE TOTAL RETURN*
Among Ready Mix, Inc, The AMEX Composite Index
And A Peer Group

* $100 invested on 8/24/05 in stock or on 7/31/05 in index-including reinvestment of dividends.

Fiscal year ending December 31.



	8/24/2005		12/31/2005		12/31/2006
Ready Mix, Inc.		100.00		113.22		91.74
AMEX Composite Index		100.00		105.16		125.13
Peer Group		100.00		104.87		129.00

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Item 6.Selected Financial Data

Statement of Operations Information:

The selected financial data as of and for each of the five years ended December 31, 2006, are derived from the Financial Statements of the Company and should be read in conjunction with the financial statements included elsewhere in this Annual Report on Form 10-K and the related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Statement of Operations Information:

In thousands, except share and per share data.


	Years ended December 31,
	2006		2005		2004			2003			2002
Revenue	$	83,589	$	67,734	$	59,136		$	44,128		$	38,849
Gross profit		9,206		7,072		6,627			4,107			3,890
Income from operations		4,927		3,943		4,055			1,620			1,874
Income before income taxes		5,212		3,921		3,811			1,674			1,750
Net income		3,339		2,486		2,440			1,040			1,252
Basic net income per common share	$	0.88	$	0.94	$	1.20		$	0.51		$	0.62
Diluted net income per common share	$	0.87	$	0.93	$	1.20		$	0.51		$	0.62
Basic weighted average common shares outstanding		3,807,500		2,654,688		2,025,000			2,025,000			2,025,000
Diluted weighted average common shares outstanding		3,833,580		2,681,053		2,025,000			2,025,000			2,025,000
Dividends		—		—		—			—			—

Balance Sheet Information:
	December 31,
	2006		2005		2004			2003			2002
Total assets	$	47,023	$	39,907	$	22,414		$	16,025		$	16,002
Total notes payable and capital lease obligations		11,040		8,020		8,342			5,239			7,225
Due to affiliate		73		85		1,380			2,416			2,859
Intercompany income tax allocation payable		—		—		1,298			658			—
Total shareholders’ equity		27,467		23,966		4,344			1,904			864

Financial Position Information:
	Years ended December 31,
	2006		2005		2004			2003			2002
Working capital	$	10,404	$	14,186	$	(1,057	)	$	(563	)	$	(1,578	)
Current ratio		2.08		2.70		0.90			0.94			0.83
Debt to equity		0.40		0.33		1.92			2.75			8.36

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial condition should be read in conjunction with our financial statements and notes thereto included elsewhere herein. Historical results and percentage relationships among accounts are not necessarily an indication of trends in operating results for any future period. In these discussions, most percentages and dollar amounts have been rounded to aid presentation. As a result, all such figures are approximations.

Executive Overview

Our revenue is directly related to the level of construction activity in our markets. Ordinarily, the construction segments that affect our business the most are: the single-family residential segment, the commercial construction segment and, to a lesser degree, the public works infrastructure segment, both highway and non-highway. Accordingly, the significant reduction in residential construction during 2006 would likely have caused a corresponding drop in demand for our product. Fortunately, the construction activity in the non-residential sectors remained sufficiently strong to mitigate the affect of the residential slowdown. A prolonged decline in residential activity coinciding with a decline in one or more of the other sectors of the construction market could result in a significant reduction in demand for our product.

Results of Operations

The following table sets forth statement of operations data expressed as a percentage of revenue for the periods indicated:

In Thousands


	Years ended December 31,
	2006					2005					2004

Revenue	$	83,152		99.5	%	$	66,898		98.8	%	$	58,645		99.2	%
Related party revenue		437		0.5	%		836		1.2	%		491		0.8	%

Total revenue		83,589		100.0	%		67,734		100.0	%		59,136		100.0	%

Gross profit		9,206		11.0	%		7,072		10.4	%		6,627		11.2	%
General and administrative expenses		4,279		5.1	%		3,128		4.6	%		2,572		4.3	%

Income from operations		4,927		5.9	%		3,943		5.8	%		4,055		6.9	%
Interest income		395		0.5	%		174		0.3	%		29		0.0	%
Interest expense		(163	)	-0.2	%		(227	)	-0.3	%		(252	)	-0.4	%
Income tax expense		1,872		2.2	%		1,435		2.1	%		1,372		2.3	%

Net income	$	3,339		4.0	%	$	2,486		3.7	%	$	2,440		4.1	%


Depreciation and amortization	$	3,439		4.1	%	$	2,411		3.6	%	$	1,615		2.7	%

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

Revenue.Revenue improved 23.4% to $83.6 million for the year ended December 31, 2006, which we refer to as “2006,” from $67.7 million for the year ended December 31, 2005, which we refer to as “2005.” The increase in revenue resulted from a 15.6% increase in the average unit sales price, complemented by an 8.2% increase in sales of cubic yards of concrete, which we refer to as “units.” The increased average sales price reflects our ability to pass our additional costs to our customers, such as the increased costs of raw materials and transportation of those materials and the change in our category of sales which require higher strength concrete typically used in the commercial and infrastructure segments. The increased volume in 2006 was primarily attributable to our expansion efforts, including the opening of two new concrete batch plants during the year and increased focus to obtain commercial projects. We provide ready-mix concrete to our related party, but the revenue represented only .5% of our 2006 revenue. The decrease in related party revenue when compared to 2005 was the result of the location of the projects, type of products needed and the availability of product and personnel. Location of the project, type of product needed and the availability of product and personnel are factors which we consider when quoting prices to our customers, including our related party. Based on that criteria, future sales to the related party could increase or decrease in any given year, but are not anticipated to be material. We expect raw material prices and transport costs associated with those materials to remain stable during 2007 and do not foresee spot shortages as we did through 2005 and early 2006.

Gross Profit.Gross profit increased by 30.2% to $9.2 million for 2006 from $7.1 million for 2005 and gross margins, as a percent of revenue, increased to 11.0% in 2006 from 10.4% in 2005. Gross profit margins can be affected by a variety of factors including customers’ construction schedules, weather conditions and availability of raw materials. The increase in gross profit and gross margin during 2006 resulted primarily from the expansion of our operations and utilizing new equipment placed in service. During 2007 we anticipate under-utilizing new equipment recently placed in service, but long term margins will benefit from the expansion efforts. Our fixed costs will increase in 2007 as a result of our expansion efforts and could impact our gross profit margin in the interim as we are bringing the equipment up to full utilization.

Depreciation and Amortization.Depreciation and amortization expense increased $1.0 million, or 42.7%, to $3.4 million for 2006 from $2.4 million for 2005. This increase resulted from the additional plant, equipment and vehicles we placed in service in 2006.

General and Administrative Expenses.General and administrative expenses increased to $4.3 million for 2006 from $3.1 million for 2005. The increase resulted primarily from a $.4 million increase in administrative salaries, wages, bonuses and related payroll taxes, a $.1 million increase in public company expense, $.3 million increase in bad debt expense and a $.1 million increase in insurance expense.

Interest Income and Expense.Interest income for 2006 increased to $.39 million from $.17 million for 2005 resulting primarily from an increase in invested cash reserves from our initial public offering. Interest expense decreased in 2006 to $.16 compared to $.23 million for 2005. The decrease in interest expense was related to the repayment of related party debt and repayment of our outstanding balance on our line of credit, thereby reducing interest expense. Interest expense associated with assets used to generate revenue is included in cost of revenue. We intend to enter into additional financing agreements to acquire equipment and fund working capital when needed, which will increase our overall interest expense in future periods.

Income Taxes.The income tax provision for 2006 increased to $1.9 million from $1.4 million for 2005. For 2006, our effective income tax rate differed from the statutory rate due primarily to state income taxes, non-deductible expenses and the Domestic Production Activities deduction.

Net Income.Net income was $3.3 million for 2006 as compared to a net income of $2.5 million for 2005. The increase in net income resulted from an increase in our average unit sales price and our sales of cubic yards of concrete as discussed above.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Revenue.Revenue improved 14.5% to $67.7 million for the year ended December 31, 2005, which we refer to as “2005,” from $59.1 million for the year ended December 31, 2004, which we refer to as “2004.” The increase in revenue resulted from an 18.1% increase in the average unit sales price, offset by a 3.1% decrease in sales of cubic yards of concrete, which we refer to as “units.” The increased average sales price reflects our ability to pass our additional costs to our customers, such as the increased costs of raw materials and transportation of those materials. The decreased volume in 2005 was primarily attributable to wet weather conditions during January and February reducing our ability to deliver material to our customers and our customers’ ability to place the material and a slight general slowing in the residential markets. We provided ready-mix concrete to our related parties; the revenue represented only 1.2% of our 2005 revenue. The increase in related party revenue when compared to 2004 was the result of the location of the project, type of product needed and the availability of product and personnel.

Gross Profit.Gross profit increased by 6.7% to $7.1 million for 2005 from $6.6 million for 2004 and gross margins, as a percent of revenue, decreased to 10.4% in 2005 from 11.2% in 2004. Gross profit margins can be affected by a variety of factors including customers’ construction schedules, weather conditions and availability of raw materials. The increase in gross profit and decrease in the gross margins during 2005 resulted primarily from the expansion of our operations and under utilizing new equipment.

Depreciation and Amortization.Depreciation and amortization expense increased $.8 million, or 49.3%, to $2.4 million for 2005 from $1.6 million for 2004. This increase resulted from the additional plant, equipment and vehicles we placed in service in 2005.

General and Administrative Expenses.General and administrative expenses increased to $3.1 million for 2005 from $2.6 million for 2004. The increase resulted primarily from a $.45 million increase in administrative salaries, wages, bonuses and related payroll taxes, a $.16 million increase in public company expense and a $.26 million increase in administrative services fees paid to Meadow Valley, offset by a $.54 million decrease in bad debt expense.

Interest Income and Expense.Interest income for 2005 increased to $.17 million from $.03 million for 2004 resulting primarily from an increase in invested cash reserves from our initial public offering. Interest expense decreased in 2005 to $.23 compared to $.25 million for 2004.

Income Taxes.The income tax provision for 2005 was relatively flat at $1.4 million when compared to 2004. For 2005, our effective income tax rate differed from the statutory rate due primarily to state income taxes. The difference between the amount of the tax provision and the actual cash outlay was due to the net operating loss carry-forward.

Net Income.Net income of $2.5 million for 2005 was relatively flat when compared to 2004.

Liquidity and Capital Resources

Our primary need for capital has been to increase the number of mixer trucks in our fleet, to increase the number of concrete batch plant locations, to purchase support equipment at each location, to secure and equip aggregate sources to insure a long term source and quality of the aggregate products used to produce our concrete and to provide working capital to support the expansion of our operations. As we expand our business, we will continue to utilize the availability of capital offered by financial institutions, in turn increasing our total debt and debt service obligations. Historically, our largest provider of financing has been CIT Construction, who we refer to as “CIT.” We believe our working capital and our historical sources of capital will be satisfactory to meet our needs for at least one year from the date of this Annual Report on Form 10-K.

We have a credit facility with CIT which provides a $5.0 million revolving credit facility, as well as $10.0 million capital expenditure commitment. The CIT revolving credit facility is collateralized by all of our assets as well as the assets of Meadow Valley, our parent. Under the terms of the agreement, Meadow Valley is required to maintain a certain level of tangible net worth as well as maintain a ratio of total debt to tangible net worth, and earnings before interest, tax, depreciation and amortization (EBITDA). We are also required to maintain a cash flow to current portion of long term debt. As of December 31, 2006, both Meadow Valley and ourselves were compliant with the facility covenants.

Over the next 24 months, if market conditions warrant, we intend to expand our operations by adding one additional ready-mix production plant, in addition to the two plants added during 2006, purchasing related production plant equipment and completing site improvements at each of the new sites, for which we anticipate utilizing the capital expenditure commitment of our CIT credit facility. We also intend to lease an additional 20 to 25 mixer trucks when we add the additional ready-mix production facility.

In February 2007, we completed the purchase and installation of needed equipment, which allowed us to begin to produce aggregate products from our pit in the northwest metropolitan Las Vegas area, which we refer to as Lee Canyon. The completion of the pit and the ability to produce aggregates from this location should improve our ability to better service this expanding portion of the Las Vegas metropolitan area.

As a result of the expansion efforts we have already executed, we have entered into additional debt and operating lease obligations which, in turn, have increased our total fixed minimum monthly payment obligations. To date we have not been impacted by this increase in our fixed minimum monthly payments as our cash flow from operations has provided an amount in excess of the increase in these payments. We do not expect this trend to change in 2007, but no assurance can be given that cash flow from operations will be adequate to provide for the cash outflow needed to service all obligations for our expansion efforts.

The following table sets forth, for the periods presented, certain items from our Statements of Cash Flows.

In Thousands


	For the years ended December 31,
	2006			2005		2004
Cash provided by operating activities	$	5,158		$	2,123	$	5,801
Cash used in investing activities		8,394			4,582		1,372
Cash provided by (used in) financing activities		(504	)		13,145		(3,305	)

Cash provided by operating activities during 2006 of $5.2 million represents a $3.0 million increase from the amount provided by operating activities during 2005. The change was primarily due to improved net income, reduction of tax obligations due and payable during the year and the change in depreciation expense year over year offset by deposits made near the end of 2006, which were primarily made to secure the production equipment at our Lee Canyon facility as mentioned above.

Cash used in investing activities during 2006 of $8.4 million represents a $3.8 million increase from the amount used by investing activities during 2005. The increase in investing activities during 2006 was due primarily to the expansion of our production facilities and equipment to be used at those locations.

Cash used in financing activities during 2006 of $.5 million represents a $13.6 million decrease from the amount provided by financing activities during 2005. The decrease in financing activities during 2006 was the result of not obtaining additional proceeds from a public offering or obtaining extensive debt to fund our expansion efforts.

Cash provided by operating activities during 2005 of $2.1 million represents a $3.7 million decrease from the amount provided by operating activities during 2004. The change was primarily due to the increase in our average days outstanding associated with our accounts receivable balance as well as the repayment of our tax obligation to Meadow Valley.

Cash used in investing activities during 2005 of $4.6 million represents a $3.2 million increase from the amount used by investing activities during 2004. The increase in investing activities during 2005 was due primarily to the expansion of our production facilities and equipment to be used at those locations.

Cash provided by financing activities during 2005 of $13.1 million represents a $16.4 million increase from the amount used in financing activities during 2004. The increase in financing activities during 2005 was the result of receiving the proceeds from the initial public offering offset by the repayment of notes and capital leases as well as the repayment of the amount due to an affiliate.

Summary of Contractual Obligations and Commercial Commitments

Contractual obligations at December 31, 2006, and the effects such obligations are expected to have on liquidity and cash flow in future periods, are summarized as follows:


	Payments Due by Period
			Less than		1 - 3		4 - 5		After
(Dollars in thousands)	Total		1 Year		Years		Years		5 Years
Contractual Obligations

Long-term debt	$	10,785	$	2,515	$	4,517	$	2,481	$	1,272

Interest payments on long-term debt (1)		2,591		761		1,006		376		448

Capital lease obligations		281		275		6		—		—

Operating leases		9,449		2,904		4,594		1,951		—

Purchase obligations		27,468		3,705		7,150		5,158		11,455

Other long-term liabilities (2)		827		540		287		—		—


Total contractual obligations	$	51,401	$	10,700	$	17,560	$	9,966	$	13,175


(1)		Interest payments are based on the individual interest rates of each obligation, which range from 5.22% to 9.75% per annum. We do not assume an increase in the variable interest rate. See Note 7 – Line of Credit and Note 8 – Notes payable in the notes to the financial statements included in Item 8.

(2)		Other long-term liabilities include employment contracts with two of our key executive officers that call for annual salaries of $150,000 and $126,000 through January 2008, respectively, and are to be reviewed annually by our Compensation Committee. In addition, other long-term liabilities include an administrative services agreement with Meadow Valley in the amount of $22,000 per month expiring December 31, 2008.

Impact of Inflation

There have been increases in the cost of our raw materials and the transport of those materials, however, we have been able to pass these additional costs on to our customers. Therefore, we believe that inflation has not had a material impact on our operations. However, additional substantial increases in labor costs, worker compensation rates and employee benefits, equipment costs, or material or subcontractor costs could adversely affect our operations in future periods. Furthermore, increased interest rates typically track rising inflation. To the extent that rising interest rates equate to higher home mortgage rates, which have an impact on construction activity, a material rise in the inflation rate could cause a decline in residential or commercial construction and a negative impact on our business.

Critical Accounting Estimates

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our financial statements, which have been prepared in accordance with accounting policies generally accepted in the United States of America, or “GAAP.” We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our financial statements. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements. Our significant accounting policies are described below and in Note 1 to our financial statements included in Item 8.

Reportable Segments

We currently operate our business within one reportable segment of operation. All of the revenue from our customers is substantially from the sale of ready-mix concrete. Ready-mix concrete can have many different variations and characteristics, from the strength of the concrete to its color and consistency. However, we do not maintain the quantity or dollar amount of each variation of our product sold as the variations in the ready-mix concrete sales are simply variations of ready-mix concrete. We also sell sand, aggregate and colored rock from our production facility in Moapa, Nevada, but the primary purpose of this production facility is to provide us with more control over quality and assurance of timely availability of a portion of the raw materials used in the product we sell to customers. The revenue generated from the sale of sand, aggregate and colored rock represented less than 4% of our gross revenue for the years ended December 31, 2006 and 2005. In addition, we view the market similarities between the Phoenix, Arizona and the Las Vegas, Nevada metropolitan areas to be of such a similar nature that we do not distinguish between them.

Collectibility of Account Receivables

We are required to estimate the collectibility of our account receivables. A considerable amount of judgment is required in assessing the realization of these receivables, including the current credit worthiness of each customer and the related aging of the past due balances. Our provision for bad debt as of December 31, 2006 and 2005 amounted to approximately $309,000 and $260,000, respectively. The increase in our provision for bad debt as of December 31, 2006 represented the use of our historic bad debt rate, identifying specific accounts potentially uncollectible and write offs in the amount of approximately $49,000 during 2006. We determine our reserve by using percentages applied to certain types of revenue, as well as a review of individual accounts outstanding and our collection history. Furthermore, if one or more major customer fails to pay us, it would significantly affect our current results as well as future estimates. We pursue our lien rights to minimize our exposure to delinquent accounts.

Valuation of Property and Equipment

We are required to provide property and equipment net of depreciation and amortization expense. We expense depreciation and amortization utilizing the straight-line method, over what we believe to be the estimated useful lives. Leasehold improvements are amortized over their estimated useful lives or the lease term, whichever is shorter. The estimated useful lives of property and equipment are:


Batch plants		4-15 years
Office buildings		39 years
Computer equipment		3-5 years
Equipment		3-10 years
Leasehold improvements		2-10 years
Office furniture and equipment		5-7 years
Vehicles		5-10 years

The life on any piece of equipment can vary, even within the same category of equipment, due to the quality of the maintenance, care provided by the operator and the general environmental conditions, such as temperature, rain and the terrain conditions to reach the job site where the material is delivered. We maintain, service and repair approximately 95% of our equipment through the use of our mechanics. If we inaccurately estimate the life of any given piece of equipment or category of equipment we may be overstating or understating earnings in any given period.

We also review our property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The impairments are

recognized in the period during which they are identified. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Income taxes

We are required to estimate our income taxes in each jurisdiction in which we operate. This process requires us to estimate the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These temporary differences result in deferred tax assets and liabilities on our balance sheets. We must calculate the blended tax rate, combining all applicable tax jurisdictions, which can vary over time as a result of the allocation of taxable income between the tax jurisdictions and the changes in tax rates. We must also assess the likelihood that the deferred tax assets, if any, will be recovered from future taxable income and, to the extent recovery is not likely, must establish a valuation allowance.

Furthermore, we are subject to periodic review by domestic tax authorities for audit of our income tax returns. These audits generally include questions regarding our tax filing positions, including the amount and timing of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposures associated with our various tax filing positions, including federal and state taxes, we believe we have complied with the rules of the service codes and therefore have not recorded reserves for any possible exposure. Typically the taxing authorities can audit the previous three years of tax returns and in certain situations audit additional years, therefore a significant amount of time may pass before an audit is conducted and fully resolved. Although no audits are currently being conducted, if a taxing authority would require us to amend a prior year’s tax return we would record the increase or decrease in our tax obligation in the year in which it is more likely than not to be realized.

Classification of Leases

We follow the standards established by Statements of Financial Accounting Standards No. 13, “Accounting for Leases,” which we will refer to as “FAS 13.” One factor when determining if a lease is an operating lease or a capital lease is the intention from the inception of the lease regarding the final ownership, or transfer of title, of the asset to be leased. We are currently leasing 92 ready-mix trucks under operating lease agreements, since at the inception of those leases we had not intended to take title to those vehicles at the conclusion of the leases. Therefore, we did not request transfer of ownership provisions at the conclusion of the leases such as bargain purchase options or direct transfers of ownership. Since we do not intend to take ownership at the conclusion of the leases and we do not meet the remaining criteria of FAS 13 for capitalization, the leases are classified as operating leases. If we would have desired at the inception of the leases to have the ownership transfer at the conclusion of the leases, we would have classified those leases as capital leases and would have recorded the ready-mix trucks as assets on our balance sheet as well as recording the liability as capital lease obligations. We believe that the lease expense under the operating lease classification approximates the depreciation expense which would have been incurred if the leases would have been classified as capital leases.

Recent Accounting Pronouncements

In September 2006, the SEC issued SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” to address diversity in practice in quantifying financial statement misstatements. SAB No. 108 requires that we quantify misstatements based on their impact on each of our financial statements and related disclosures. SAB No. 108 is effective as of the end of the 2006 fiscal year, allowing a one-time transitional cumulative effect adjustment to retained earnings as of January 1, 2006 for errors that were not previously deemed material, but are material under the guidance in SAB No. 108. The adoption of SAB No. 108 did not have a material effect on our financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R).” SFAS No. 158 requires the recognition of the overfunded or underfunded status of defined benefit and retiree medical plans as an asset or liability in the Company’s 2006 year-end balance sheet, with changes in the funded status recognized through comprehensive income in the year in which they occur. SFAS No. 158 also requires us to measure the funded status of defined benefit and retiree medical plans as of our year-end balance sheet date no later than 2008. We do not expect SFAS No. 158 will have a material effect on our financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We do not expect SFAS No. 157 will have a material effect on our financial statements.

In June 2006, the FASB issued FASB Interpretation No. 48, “An Interpretation of FASB Statement No. 109,” which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 reflects the benefit recognition approach, where a tax benefit is recognized when it is “more likely than not” to be sustained based on the technical merits of the position. This Interpretation is effective for fiscal years beginning after December 15, 2006. We do not expect FIN No. 48 will have a material effect on our financial statements.

In April 2006, the FASB issued FASB Staff Position (FSP) FIN No. 46(R)-6, “Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R)”, that became effective beginning the third quarter of 2006. FSP FIN No. 46(R)-6 clarifies that the variability to be considered in applying FASB Interpretation 46(R) shall be based on an analysis of the design of the variable interest entity. The adoption of this FSP did not have a material effect on our financial statements.

In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets,” which provides an approach to simplify efforts to obtain hedge-like (offset) accounting. This new Statement amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” with respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 is effective for all separately recognized servicing assets and liabilities as of the beginning of an entity’s fiscal year that begins after September 15, 2006, with earlier adoption permitted in certain circumstances. We do not expect SFAS No. 156 will have a material effect on our financial statements.

The FASB has revised its guidance on SFAS No. 133 Implementation Issues as of March 2006. Several Implementation Issues were revised to reflect the issuance of SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments – an Amendment of FASB Statements No. 133 and 140,” in February 2006. SFAS No. 155 allows any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” to be carried at fair value in its entirety, with changes in fair value recognized in earnings. In addition, SFAS No. 155 requires that beneficial interests in securitized financial assets be analyzed to determine whether they are freestanding derivatives or contain an embedded derivative. SFAS No. 155 also eliminates a prior restriction on the types of passive derivatives that a qualifying special purpose entity is permitted to hold. SFAS No. 155 is applicable to new or modified financial instruments in fiscal years beginning after September 15, 2006, though the provisions related to fair value accounting for hybrid financial instruments can also be applied to existing instruments. We do not expect SFAS No. 155 will have a material effect on our financial statements.

Off-Balance Sheet Arrangements

The company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Known and Anticipated Future Trends and Contingencies

We have grown steadily since our inception and we plan to continue to exploit opportunities within our markets. The key dynamics of employment and population growth within our geographic markets appear to present us with continued growth opportunities. It appears that demand for construction materials will remain steady and that the supply of raw materials will remain stable as well as prices of the product we provide and the required materials used in the production of concrete.

In light of the rising need for infrastructure work throughout the nation and the tendency of the current need to out-pace the supply of funds, it is anticipated that alternative funding sources will continue to be sought. Funding for infrastructure development in the United States is coming from a growing variety of innovative sources. An increase of funding measures is being undertaken by various levels of government to help solve traffic congestion and related air quality problems. Sales taxes, fuel taxes, user fees in a variety of forms, vehicle license taxes, private toll roads and quasi-public toll roads are examples of how transportation funding is evolving. Transportation norms are being challenged by federally mandated air quality standards. Improving traffic movement, eliminating congestion, increasing public transit, adding or designating high occupancy vehicle (HOV) lanes to encourage car pooling and other solutions are being considered in order to help meet EPA-imposed air quality standards. There is also a trend toward local and state legislation regulating growth and urban sprawl. The passage of such legislation and the degree of growth limits imposed by it could dramatically affect the nature of our markets.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Market risk generally represents the risk that losses may occur in the values of financial instruments as a result of movements in interest rates, foreign currency exchange rates and commodity prices. We do not have foreign currency exchange rate and commodity price market risk.

Interest Rate Risk—From time to time we temporarily invest our excess cash in interest-bearing securities issued by high-quality issuers. We monitor risk exposure to monies invested in securities in our financial institutions. Due to the short time the investments are outstanding and their general liquidity, these instruments are classified as cash equivalents in the balance sheet and do not represent a material interest rate risk. Our primary market risk exposure for changes in interest rates relates to our long-term debt obligations. We manage our exposure to changing interest rates principally through the use of a combination of fixed and floating rate debt.

We evaluated the potential effect that near term changes in interest rates would have had on the fair value of our interest rate risk sensitive financial instruments at December 31, 2006. Assuming a 100 basis point increase in the prime interest rate at December 31, 2006 the potential increase in the fair value of our debt obligations would have been approximately $.02 million at December 31, 2006. See Note 7— Line of credit and Note 8— Notes payable in the accompanying December 31, 2006 financial statements included in Item 8.

Item 8.Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

Board of Directors and
Stockholders of Ready Mix, Inc.

We have audited the accompanying balance sheets of Ready Mix, Inc. as of December 31, 2006 and 2005 and the related statements of income, stockholders’ equity, and cash flows for the years ended December 31, 2006, 2005 and 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ready Mix, Inc. at December 31, 2006 and 2005, and the results of its operations and its cash flows for the years ended December 31, 2006, 2005 and 2004 in conformity with accounting principles generally accepted in the United States of America.

Certified Public Accountants

Phoenix, Arizona
February 15, 2007

INDEPENDENT MEMBER OF THE BDO SEIDMAN ALLIANCE

READY MIX, INC.
BALANCE SHEETS


	December 31,
	2006		2005
Assets:
Current assets:
Cash and cash equivalents	$	8,369,875	$	12,110,417
Accounts receivable, net		8,864,436		8,502,504
Inventory		1,301,842		604,906
Prepaid expenses		1,169,041		1,114,001
Deferred tax asset		361,206		184,591

Total current assets		20,066,400		22,516,419
Property and equipment, net		25,481,056		17,049,210
Refundable deposits		1,475,297		341,165

Total assets	$	47,022,753	$	39,906,794

Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable	$	4,269,519	$	4,146,636
Accrued liabilities		2,443,258		1,735,287
Notes payable		2,515,522		1,670,643
Obligations under capital leases		250,313		468,972
Due to affiliate		73,395		84,810
Income tax payable		110,458		224,514

Total current liabilities		9,662,465		8,330,862
Notes payable, less current portion		8,269,789		5,625,360
Obligations under capital leases, less current portion		4,634		254,946
Deferred tax liability		1,619,009		1,729,472

Total liabilities		19,555,897		15,940,640

Commitments and contingencies
Stockholders’ equity:
Preferred stock — $.001 par value; 5,000,000 shares authorized, none issued and outstanding		—		—
Common stock — $.001 par value; 15,000,000 shares authorized, 3,807,500 issued and outstanding		3,808		3,808
Additional paid-in capital		17,793,892		17,632,465
Retained earnings		9,669,156		6,329,881

Total stockholders’ equity		27,466,856		23,966,154

Total liabilities and stockholders’ equity	$	47,022,753	$	39,906,794

The accompanying notes are an integral part of these financial statements.

READY MIX, INC.
STATEMENTS OF OPERATIONS


	For the years ended December 31,
	2006			2005			2004
Revenue:

Revenue	$	83,151,938		$	66,898,161		$	58,644,397
Revenue — related parties		436,865			836,263			491,261

Total revenue		83,588,803			67,734,424			59,135,658

Cost of revenue		74,382,436			60,662,744			52,508,936

Gross profit		9,206,367			7,071,680			6,626,722

General and administrative expenses		4,279,252			3,128,416			2,572,050


Income from operations		4,927,115			3,943,264			4,054,672


Other income (expense):
Interest income		394,779			173,574			28,637
Interest expense		(163,229	)		(227,341	)		(251,796	)
Other income (expense)		52,941			31,135			(20,014	)

		284,491			(22,632	)		(243,173	)


Income before income taxes		5,211,606			3,920,632			3,811,499

Income tax expense		1,872,331			1,435,042			1,371,532


Net income	$	3,339,275		$	2,485,590		$	2,439,967


Basic net income per common share	$	0.88		$	0.94		$	1.20


Diluted net income per common share	$	0.87		$	0.93		$	1.20


Basic weighted average common shares outstanding		3,807,500			2,654,688			2,025,000


Diluted weighted average common shares outstanding		3,833,580			2,681,053			2,025,000

The accompanying notes are an integral part of these financial statements.

READY MIX, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


	Common Stock
	Number of				Additional
	Shares				Paid-in		Retained
	Outstanding		Amount		Capital		Earnings
Balance at January 1, 2004		2,025,000	$	2,025	$	497,975	$	1,404,324
Net income for the year ended 2004								2,439,967

Balance at December 31, 2004		2,025,000		2,025		497,975		3,844,291
Common stock issued during initial public offering (1)		1,782,500		1,783		17,134,490
Net income for the year ended 2005								2,485,590

Balance at December 31, 2005		3,807,500		3,808		17,632,465		6,329,881
Stock based compensation expense						161,427
Net income for the year ended 2006							��	3,339,275

Balance at December 31, 2006		3,807,500	$	3,808	$	17,793,892	$	9,669,156


(1)		– Additional paid-in capital as reported is net of offering costs, in the amount of $2,471,227.

The accompanying notes are an integral part of these financial statements.

READY MIX, INC.
STATEMENTS OF CASH FLOWS


	For the years ended December 31,
	2006			2005			2004
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Cash received from customers	$	83,209,417		$	66,064,739		$	59,187,743
Cash paid to suppliers and employees		(76,009,924	)		(61,719,515	)		(53,163,678	)
Taxes paid		(2,273,465	)		(2,168,368	)		—
Interest received		394,779			173,574			28,637
Interest paid		(163,229	)		(227,341	)		(251,796	)

Net cash provided by operating activities		5,157,578			2,123,089			5,800,906


Cash flows from investing activities:
Purchase of property and equipment		(8,439,469	)		(4,582,027	)		(1,431,756	)
Cash received from sale of equipment		45,500			—			60,000

Net cash used in investing activities		(8,393,969	)		(4,582,027	)		(1,371,756	)


Cash flows from financing activities:
Proceeds from the issuance of common stock		—			17,747,900			—
Offering costs from the issuance of common stock		—			(611,627	)		—
Repayment of due to affiliate		(11,415	)		(1,294,516	)		(975,184	)
Proceeds from notes payable		3,083,540			543,998			68,570
Repayment of notes payable		(3,107,304	)		(2,800,163	)		(1,846,110	)
Repayment of capital lease obligations		(468,972	)		(440,866	)		(552,464	)

Net cash provided by (used in) financing activities		(504,151	)		13,144,726			(3,305,188	)


Net increase (decrease) in cash and cash equivalents		(3,740,542	)		10,685,788			1,123,962
Cash and cash equivalents at beginning of year		12,110,417			1,424,629			300,667

Cash and cash equivalents at end of year	$	8,369,875		$	12,110,417		$	1,424,629


Reconciliation of net income to net cash provided by operating activities:
Net income	$	3,339,275		$	2,485,590		$	2,439,967

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,439,208			2,410,900			1,615,050
Deferred income taxes, net		(287,078	)		340,527			731,468
Loss (gain) on sale of equipment		(21,360	)		—			31,545
Intercompany income tax allocation payable		—			—			640,064
Stock-based compensation expense		161,427			—			—
Provision for doubtful accounts		49,035			(277,180	)		(83,596	)

Changes in operating assets and liabilities:
Accounts receivable		(410,967	)		(1,700,820	)		40,554
Prepaid expenses		2,308			(320,984	)		(240,537	)
Inventory		(696,936	)		(348	)		1,606
Refundable deposits		(1,134,132	)		(333,057	)		55,102
Accounts payable		122,883			103,086			533,943
Accrued liabilities		707,971			489,228			35,740
Intercompany income tax allocation payable		—			(1,298,367	)		—
Income tax payable		(114,056	)		224,514			—


Net cash provided by operating activities	$	5,157,578		$	2,123,089		$	5,800,906

The accompanying notes are an integral part of these financial statements.

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates:

Nature of the Corporation:

Ready Mix, Inc. (the “Company”), was organized under the laws of the State of Nevada on June 21, 1996. The principal business purpose of the Company is to manufacture and distribute ready mix concrete. The Company targets prospective customers such as concrete subcontractors, prime contractors, homebuilders, commercial and industrial property developers and homeowners in the states of Nevada and Arizona. The Company began operations in March 1997 and is a subsidiary of Meadow Valley Corporation (the “Parent”).

Accounting Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates.

Significant estimates are used when accounting for the allowance for doubtful accounts, depreciation and amortization, accruals, taxes, contingencies and the valuation of stock options, which are discussed in the respective notes to the financial statements.

Cash and Cash Equivalents:

The Company considers all highly liquid instruments purchased with an initial maturity of three (3) months or less to be cash equivalents.

Accounts Receivable, net:

The Company follows the allowance method of recognizing uncollectible accounts receivable. The allowance method recognizes bad debt expense based on a review of the individual accounts outstanding and the Company’s prior history of uncollectible accounts receivable. As of December 31, 2006 and 2005, an allowance of $308,679 and $259,644, respectively, was established for potentially uncollectible accounts receivable. During the years ended December 31, 2006, 2005 and 2004, the Company recognized ($97,974), $244,189 and ($293,497), respectively, in bad debt recovery (expense). The Company records delinquent finance charges on outstanding accounts receivables only if they are collected. At December 31, 2006 and 2005 all of the Company’s accounts receivable was pledged as collateral for a line of credit.

Inventory:

Inventory, which consists primarily of raw materials, comprised of aggregates, fly ash, cement powder and admixture is stated at the lower of cost, determined by the first-in, first-out method, or market. Inventory quantities are determined by physical measurements. No allowance for slow moving or obsolete inventory has been established as of December 31, 2006 and 2005. At December 31, 2006 and 2005, the Company’s entire inventory was pledged as collateral for a line of credit.

Property and Equipment:

Property and equipment are recorded at cost. Depreciation is provided for on the straight-line method, over the estimated useful lives. Depreciation expense for the years ended December 31, 2006, 2005 and 2004 amounted to $3,439,208, $2,410,900 and $1,615,050, respectively. Leasehold improvements are recorded at cost and are amortized over their estimated useful lives or the lease term, whichever is shorter. The estimated useful lives of property and equipment are:


Computer equipment		3 — 5 years
Equipment		3 — 10 years
Batch plants		4 — 15 years
Vehicles		5 — 10 years
Office furniture and equipment		5 — 7 years
Leasehold improvements		2 — 10 years

Building 39 years

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates (Continued):

Property and Equipment (Continued):

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

At December 31, 2006 and 2005, all property and equipment were pledged as collateral for a line of credit, notes payable or capital lease obligations.

Income Taxes:

The Company accounts for income taxes in accordance with the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). SFAS 109 requires the Company to recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Prior to 2005, the Company filed consolidated tax returns with its Parent. The Parent absorbed the net income of the Company pursuant to a tax sharing agreement, which called for any income tax receivable or payable to be remitted to, or paid by, the Parent. As a result of the public offering of its stock the Company can no longer include its income as a part of its Parent’s consolidated tax return and the Company filed its own income tax return in its respective tax jurisdictions.

Revenue Recognition:

We recognize revenue on the sale of our concrete and aggregate products at the time of delivery.

Reportable Segments:

The Company currently operates its business within one reportable segment of operation. Substantially all of the revenue from its customers is from the sale of ready-mix concrete. Ready-mix concrete can have many different variations and characteristics, including strength, color and consistency. However, the Company does not maintain the quantity or dollar amount of each variation of its product sold because the variations in the ready-mix concrete sales are simply variations of ready-mix concrete. The Company also sells sand, aggregate and colored rock from its production facilities, but the primary purpose of its production facilities are to provide the Company with more control over quality and assurance of timely availability of a portion of the raw materials used in the product that the Company sells to its customers. The revenue generated from the sale of sand, aggregate and colored rock represented less than 4% of the Company’s gross revenue for the years ended December 31, 2006, 2005 and 2004, and are included in the table below. In addition, the Company views the market similarities between the Phoenix, Arizona and the Las Vegas, Nevada metropolitan areas to be of such a similar nature that the Company does not distinguish between them.

For the years ended December 31, 2006, 2005 and 2004, Company revenue of $83.6 million, $67.7 million and $59.1 million, respectively, was approximately divided by the general type of construction work its customers typically perform as follows:


	December 31,
	2006			2005			2004
Commercial and industrial construction		27	%		28	%		34	%
Residential construction		53	%		55	%		47	%
Street and highway construction and paving		7	%		7	%		5	%
Other public works and infrastructure construction		13	%		10	%		14	%


Total		100	%		100	%		100	%

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates (Continued):

Fair Value of Financial Instruments:

The carrying amounts of financial instruments including cash, certain current maturities of long-term debt, accrued liabilities and long-term debt approximate fair value because of their short maturities or on borrowing rates currently available to the Company for loans with similar terms and maturities.

The balance of due to affiliate as of December 31, 2006 and 2005 was in the amounts of $73,395 and $84,810, respectively, on which the Company paid interest during the year ended December 31, 2005 at Chase Manhattan Bank’s prime, plus 1.25%. During the year ended December 31, 2006, no interest was paid as the balance due to affiliate was paid monthly. The balance due to affiliate is due on demand. Interest paid to the affiliate for the years ended December 31, 2005 and 2004 was $77,561 and $113,182, respectively. As of September 2005, the Company repaid its balance due to affiliate in full. Each current month-end balance is repaid in the following month for expenses incurred by the affiliate on behalf of the Company. Since September 2005, the Company has not been charged interest.

The carrying amount of long-term debt approximates fair value because the interest rates on these instruments approximate the rates at which the Company could borrow at December 31, 2006 and 2005.

Earnings per Share:

Statement of Financial Accounting Standards No. 128, “Earnings per Share,” (“SFAS 128”) provides for the calculation of Basic and Diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity.

On June 15, 2005, the Board of Directors authorized an increase in the number of common stock shares the Company could issue to 15,000,000 and an 810 for one stock split, thereby increasing the number of issued and outstanding shares to 2,025,000. All references in the accompanying financial statements to the number of common shares and per share amounts for December 31, 2004 have been restated to reflect the 810 for one stock split.

On January 28, 2005, the Board of Directors authorized a change in the par value of the Company’s common stock from a no par value to $.001 par value. All references in the accompanying financial statements to the par value and any additional paid in capital in excess of par for December 31, 2004 have been restated to reflect the change in par value.

On January 28, 2005, the Board of Directors granted the Company the ability to issue 5,000,000 shares of preferred stock, $.001 par value. All references in the accompanying financial statements to the preferred stock as of December 31, 2004 have been restated to reflect the ability to issue 5,000,000 shares of preferred stock.

On August 24, 2005, the Company issued 1,782,500 shares of its common stock, $.001 par value, through its initial public offering.

Stock-Based Compensation:

Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), using the modified prospective transition method and therefore the Company has not restated its results for prior periods. Under this transition method, stock-based compensation expense for the year ended December 31, 2006 includes compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provision of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is three years. Stock-based compensation expense for all stock-based compensation awards granted after January 1, 2006 is based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R.

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates (Continued):

We estimate fair value using the Black-Scholes valuation model. Assumptions used to estimate the compensation expense are determined as follows:

	•		Expected term is determined using a weighted average of the contractual term and vesting period of the award;

	•		Expected volatility is measured using the weighted average of historical daily changes in the market price of the Company’s common stock over the expected term of the award.

	•		Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and,

	•		Forfeitures are based on the history of cancellations of similar awards granted by the Company and management’s analysis of potential forfeitures.

Prior to the adoption of SFAS 123R, the Company recognized stock-based compensation expense in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the SEC’s interpretation of SFAS 123R and the valuation of share-based payments for public companies. The Company has applied the provisions of SAB 107 in its adoption of SFAS 123R. See Note 2 to the financial statements for a further discussion on stock-based compensation.

The table below illustrates the effect on net income and net income per share if the Company had applied the fair value recognition provisions of SFAS 123 to options granted under the stock option plans, non-vested stock awards granted and shares issued under their respective plans in the year ended December 31, 2005 and 2004. For purposes of pro forma disclosures, the value of the options are estimated using the Black-Scholes option-pricing formula and amortized to expense over the options’ vesting periods; using the straight line method.


	Years ended December 31,
	2005		2004
Net income, as reported	$	2,485,590	$	2,439,967
Add: Stock-based employee compensation expense included in reported income, net of related tax effects		—		—
Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects		99,943		—

Pro forma net income	$	2,385,647	$	2,439,967


Basic net income per common share
As reported	$	0.94	$	1.20
Pro forma		0.90		1.20
Diluted net income per common share
As reported	$	0.93	$	1.20
Pro forma		0.89		1.20

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates (Continued):

Recent Accounting Pronouncements:

In September 2006, the SEC issued SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” to address diversity in practice in quantifying financial statement misstatements. SAB No. 108 requires that the Company quantify misstatements based on their impact on each of its financial statements and related disclosures. SAB No. 108 is effective as of the end of the 2006 fiscal year, allowing a one-time transitional cumulative effect adjustment to retained earnings as of January 1, 2006 for errors that were not previously deemed material, but are material under the guidance in SAB No. 108. The adoption of SAB No. 108 did not have a material effect on its financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R).” SFAS No. 158 requires the recognition of the overfunded or underfunded status of defined benefit and retiree medical plans as an asset or liability in the Company’s 2006 year-end balance sheet, with changes in the funded status recognized through comprehensive income in the year in which they occur. SFAS No. 158 also requires the Company to measure the funded status of defined benefit and retiree medical plans as of the Company’s year-end balance sheet date no later than 2008. The Company does not expect SFAS No. 158 will have a material effect on its financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company does not expect SFAS No. 157 will have a material effect on its financial statements.

In June 2006, the FASB issued FASB Interpretation No. 48, “An Interpretation of FASB Statement No. 109,” which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 reflects the benefit recognition approach, where a tax benefit is recognized when it is “more likely than not” to be sustained based on the technical merits of the position. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company does not expect FIN No. 48 will have a material effect on its financial statements.

In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets,” which provides an approach to simplify efforts to obtain hedge-like (offset) accounting. This new Statement amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” with respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 is effective for all separately recognized servicing assets and liabilities as of the beginning of an entity’s fiscal year that begins after September 15, 2006, with earlier adoption permitted in certain circumstances. The Company does not expect SFAS No. 156 will have a material effect on its financial statements.

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates (Continued):

Recent Accounting Pronouncements (Continued):

The FASB has revised its guidance on SFAS No. 133 Implementation Issues as of March 2006. Several Implementation Issues were revised to reflect the issuance of SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments – an Amendment of FASB Statements No. 133 and 140,” in February 2006. SFAS No. 155 allows any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” to be carried at fair value in its entirety, with changes in fair value recognized in earnings. In addition, SFAS No. 155 requires that beneficial interests in securitized financial assets be analyzed to determine whether they are freestanding derivatives or contain an embedded derivative. SFAS No. 155 also eliminates a prior restriction on the types of passive derivatives that a qualifying special purpose entity is permitted to hold. SFAS No. 155 is applicable to new or modified financial instruments in fiscal years beginning after September 15, 2006, though the provisions related to fair value accounting for hybrid financial instruments can also be applied to existing instruments. The Company does not expect SFAS No. 155 will have a material effect on its financial statements.

2. Stock-Based Compensation:

On January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R. Prior to January 1, 2006, the Company accounted for share-based payments under the recognition and measurement provisions of APB 25, and related Interpretations, as permitted by SFAS 123. In accordance with APB 25, no compensation cost was required to be recognized for options granted that had an exercise price equal to the market value of the underlying common stock on the date of grant.

The Company adopted SFAS 123R using the modified prospective transition method. Under this transition method, compensation cost recognized in the year ended December 31, 2006 includes: a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. The results for the prior periods have not been restated.

The Company recognizes expected tax benefits related to employee stock based compensation as awards are granted and the incremental tax benefit or liability when related awards are deductible. No stock-based compensation costs were recognized in expense for the years ended December 31, 2005 and 2004.

As of December 31, 2006, the Company has the following stock-based compensation plan:

Equity Incentive Plan

In 2005, the Company adopted the 2005 Equity Incentive Plan (“2005 Plan”). The 2005 Plan permits the granting of any or all of the following types of awards: (1) incentive and nonqualified stock options, (2) stock appreciation rights, (3) stock awards, restricted stock and stock units, (4) and other stock or cash-based awards. In connection with any award or any deferred award, payments may also be made representing dividends or their equivalent.

The Company has reserved 675,000 shares of its common stock for issuance under the 2005 Plan. Shares of common stock covered by an award granted under the 2005 Plan will not be counted as used unless and until they are actually issued and delivered to a participant. As of December 31, 2006, 324,375 shares were available for future grant under the 2005 Plan. The term of the stock options are five years and may be exercised after issuance as follows: 33.3% after one year of continuous service, 66.6% after two years of continuous service and 100% after three years of continuous service. The exercise price of each option is equal to the market price of the Company’s common stock on the date of grant.

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

2. Stock-Based Compensation (Continued):

The Company uses the Black-Scholes option pricing model to estimate fair value of stock-based awards with the following assumptions for the indicated periods:


	Awards during
	the year ended			Awards prior to
	December 31, 2006			January 1, 2006
Dividend yield		0	%		0	%
Expected volatility		39.10	%		21.4% - 23.3	%
Weighted-average volatility		39.10	%		21.55	%
Risk-free interest rate		5.00	%		5.00	%
Expected life of options (in years)		3			3
Weighted-average grant-date fair value	$	3.33		$	2.02

The following table summarizes the stock option activity during the year ended fiscal 2006:


						Weighted Average
				Weighted Average		Remaining		Aggregate			Aggregate
				Exercise Price		Contractural		Fair			Intrinsic
	Shares			per Share		Term (1)		Value			Value (2)
Outstanding January 1, 2006		253,125		$	11.12		3.89	$	511,616
Granted		100,000			10.35				333,000
Exercised		—			—				—
Forfeited or expired		(2,500	)		11.00				(4,875	)

Outstanding December 31, 2006		350,625		$	10.90		3.65	$	839,741		$	98,038

Exercisable December 31, 2006		83,541		$	11.12		3.14	$	168,912		$	7,679


(1)		Remaining contractual term is presented in years.

(2)		The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of our common stock as of December 31, 2006, for those awards that have an exercise price currently below the closing price as of December 31, 2006. Awards with an exercise price above the closing price as of December 31, 2006 are considered to have no intrinsic value.

A summary of the status of the Company’s nonvested shares as of December 31, 2006 and changes during the year ended December 31, 2006 is presented below:


				Weighted Average
				Grant-Date
	Shares			Fair Value
Nonvested stock options at January 1, 2006		253,125		$	2.02
Granted		100,000			3.33
Vested		(83,541	)		2.02
Forfeited		(2,500	)		1.95

Nonvested stock options at December 31, 2006		267,084		$	2.51

During the year ended December 31, 2006 the Company recognized compensation expense of $161,427 and a tax benefit of $10,198, related thereto. As of December 31, 2006, there was $508,801 of total unrecognized compensation cost, net of $7,487 attributable to estimated forfeitures, related to nonvested stock options granted under the 2005 Plan. That cost is expected to be recognized over the weighted average vesting period of 2.36 years. The total fair value of 83,541 options vested during the year ended December 31, 2006, was $168,912. Awards granted during the year ended December 31, 2006, total 100,000 options, which were granted on November 30, 2006, with an exercise price of $10.35. During the year ended December 31, 2006, 2,500 options were forfeited, of which, 833 options were vested.

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

3. Concentration of Credit Risk:

The Company maintains cash balances at various financial institutions. Deposits not to exceed $100,000 for each institution are insured by the Federal Deposit Insurance Corporation. At December 31, 2006 and 2005, the Company has uninsured cash and cash equivalents in the amounts of approximately $8,700,000 and $12,800,000, respectively.

The Company’s business activities and accounts receivable are with customers in the construction industry located primarily in the Las Vegas, Nevada and Phoenix, Arizona metropolitan areas. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses.

4. Accounts Receivable, net:

Accounts receivable, net consists of the following:


	December 31,
	2006			2005
Trade receivables	$	8,965,685		$	8,636,323
Other receivables		207,430			125,825
Less: allowance for doubtful accounts		(308,679	)		(259,644	)

	$	8,864,436		$	8,502,504

5. Property and Equipment, net:

Property and equipment consists of the following:


	December 31,
	2006			2005
Land and building	$	4,821,556		$	2,647,763
Computer equipment		533,766			462,468
Equipment		7,981,967			5,152,843
Batch plants		11,529,746			7,699,304
Vehicles		9,159,380			6,563,241
Office furniture and equipment		75,050			46,643
Leasehold improvements		497,654			284,544
Water rights		2,250,000			2,250,000

		36,849,119			25,106,806
Less: Accumulated depreciation		(11,368,063	)		(8,057,596	)

	$	25,481,056		$	17,049,210

6. Accrued Liabilities:

Accrued liabilities consist of the following:


	December 31,
	2006		2005
Compensation	$	1,590,728	$	1,172,136
Taxes		300,527		345,986
Insurance		360,352		—
Other		191,651		217,165

	$	2,443,258	$	1,735,287

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

7. Line of Credit:

As of December 31, 2006, the Company had a $5,000,000 line of credit loan agreement, with an interest rate at Chase Manhattan Bank’s prime, plus .25%. The interest rate as of December 31, 2006 was 8.50%. The balance outstanding on the line of credit as of December 31, 2006 was $650,180 and is reported in Note 8 of these notes to financial statements. The line of credit agreement allows interest only payments until December 31, 2008. If the agreement is not renewed by December 31, 2008 and a balance is outstanding, then the line of credit converts into a term agreement requiring equal monthly principal plus interest payments through December 31, 2011 and is collateralized by all of the Company’s assets. Under the terms of the agreement, the Company andor its Parent are required to maintain a certain level of tangible net worth, a ratio of total debt to tangible net worth as well as a minimum cash flow to debt ratio. As of December 31, 2006, the Company and its Parent were in compliance with these covenants.

In addition to the line of credit agreement mentioned above, the Company has also established a capital expenditure commitment in the amount of $10,000,000. The purpose of this commitment is to fund certain acquisitions of capital equipment that the Company may need to improve capacity or productivity. As of December 31, 2006, the Company had approximately $4,750,000 of availability under the commitment.

8. Notes Payable:

Notes payable consists of the following:


	December 31,
	2006		2005
Note payable, variable interest rate was 7.25% at December 31, 2005, with monthly principal payments of $4,121, due March 11, 2006, collateralized by equipment	$	—	$	12,363

6.65% note payable, with monthly payments of $723, due July 9, 2006, collateralized by equipment		—		4,255

5.99% note payable, with monthly payments of $471, due September 28, 2008, collateralized by a vehicle		9,375		14,307

Non-interest bearing note payable, with monthly payments of $390, due February 12, 2007, collateralized by equipment		780		5,459

5.31% note payable, with monthly payments of $1,730, due March 22, 2009, collateralized by vehicles		43,944		61,855

5.31% note payable, with monthly payments of $788, due April 8, 2009, collateralized by a vehicle		20,005		28,159

	$	74,104	$	126,398

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

8. Notes Payable (Continued):

Notes payable consists of the following:


	December 31,
	2006		2005
Total from previous page	$	74,104	$	126,398

6.21% note payable, with monthly payments of $4,921 and a principal payment of $443,902, due April 16, 2009, collateralized by land		507,381		534,022

6.34% note payable, with monthly payments of $3,450 and a principal payment of $309,412, due April 16, 2009, collateralized by land		353,222		371,604

5.90% note payable, with monthly principal payments of $1,905, plus interest, due May 24, 2007, collateralized by equipment		9,524		32,380

5.22% note payable, with monthly payments of $10,398, due May 25, 2008, collateralized by equipment		170,053		282,736

5.75% note payable, with monthly payments of $59,149, due April 20, 2006, collateralized by equipment		—		233,790

7.05% note payable, with monthly payments of $2,930 and a principal payment of $254,742, due August 27, 2009, collateralized by land		293,555		307,645

8.55% note payable, with monthly payments of $22,071, due February 27, 2006, collateralized by vehicles		—		43,676

5.90% note payable, with monthly payments of $593, due December 15, 2009, collateralized by vehicles		19,529		25,309

6.60% note payable, with monthly payments of $30,812, due December 15, 2007, collateralized by equipment		356,862		690,992

6.60% note payable, with monthly payments of $22,806, due December 29, 2007, collateralized by equipment		264,130		511,434

5.90% notes payable, with combined monthly payments of $5,322, due dates ranging from January 31, 2010 to March 11, 2010, collateralized by vehicles		181,698		233,187

7.25% note payable, with monthly payments of $4,153, due May 4, 2009, collateralized by equipment		116,297		166,139

Note payable, variable interest rate was 9.75% at December 31, 2006, with monthly principal payments of $21,429 plus interest, due July 29, 2012, collateralized by mining water rights		1,435,714		1,692,857

7.50% notes payable, with combined monthly principal payments of $15,100 plus interest, due September 1, 2008, collateralized by equipment		301,999		483,198

6.85% notes payable, with combined monthly payments of $1,098, due September 28, 2010, collateralized by vehicles		43,473		53,305

6.85% note payable, with a monthly payment of $522, due October 13, 2010, collateralized by a vehicle		21,059		25,705

	$	4,148,600	$	5,814,377

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

8. Notes Payable (Continued):

Notes payable consists of the following:


	December 31,
	2006			2005
Total from previous page	$	4,148,600		$	5,814,377

5.99% note payable, with a monthly payment of $496, due November 30, 2008, collateralized by a vehicle		10,751			15,893

7.99% note payable, with monthly principal payments of $14,362 plus interest, due March 25, 2011, collateralized by equipment		732,457			—

8.14% note payable, with monthly principal payments of $30,470 plus interest, due March 28, 2011, collateralized by equipment		1,553,990			—

8.45% notes payable, with combined monthly principal payments of $26,182 plus interest, due June 28, 2011, collateralized by equipment		1,413,855			—

7.46% note payable, with a monthly payment of $13,867, due May 26, 2021, collateralized by a building and land		1,465,927			—

7.04% note payable, with monthly principal payments of $4,496 plus interest, due September 30, 2009, collateralized by equipment		148,378			—

7.55% note payable, with a monthly payment of $550, due July 20, 2011, collateralized by a vehicle		25,491			—

7.90% note payable, with monthly principal payments of $10,774 plus interest, due November 30, 2011, collateralized by equipment		635,682			—

Line of credit, variable interest rate was 8.50% at December 31, 2006, interest only payments until December 31, 2008, 36 equal monthly principal payments plus interest therafter, collateralized by all of the Company’s assets		650,180			1,465,733

		10,785,311			7,296,003
Less: current portion		(2,515,522	)		(1,670,643	)

	$	8,269,789		$	5,625,360

Following are maturities of long-term debt as of December 31, 2006 for each of the following years:


2007	$	2,515,522
2008		1,770,585
2009		2,746,042
2010		1,600,861
2011		880,445
Subsequent to 2011		1,271,856

	$	10,785,311

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

9. Related Party Transactions:

Related Party:

During the years ended December 31, 2006, 2005 and 2004, the Company provided construction materials to a related party in the amounts of $0, $152,630 and $18,346, respectively. Included in accounts receivable at December 31, 2005 is an amount due from a related party, in the amount of $15,416.

Affiliate:

During the years ended December 31, 2006, 2005 and 2004, the Company provided construction materials to an affiliate in the amounts of $436,865, $683,633 and $472,915, respectively. During the years ended December 31, 2006, 2005 and 2004, the Company received construction services from an affiliate in the amounts of $1,012,085, $590,376 and $6,742. The balance due to affiliate at December 31, 2006 and 2005 was $73,395 and $84,810, respectively. These advances are considered short-term in nature. Prior to August 2005, the Company agreed to pay interest at Chase Manhattan Bank’s prime, plus 1.25%. For the years ended December 31, 2006, 2005 and 2004 the Company paid interest in the amount of $0, $77,561 and $113,182, respectively. The Company repays each current month-end balance in the following month for expenses incurred by the affiliate on behalf of the Company. As a result the Company has not been charged interest.

During the year ended December 31, 2006, the Company acquired equipment from an affiliate in the amount of $224,058. During the year ended December 31, 2005, the Company acquired equipment from an affiliate in the amount of $207,341 and assumed a debt obligation in the amount of $17,541.

For the years ended December 31, 2006, 2005 and 2004, the Company, pursuant to a tax sharing agreement, utilized a net operating loss carry-forward incurred by the Parent in the amounts of approximately $0, $2,416,000 and $1,298,000, respectively.

During the year ended December 31, 2006, the Company leased office space to an affiliate in the amount of $10,326. The lease agreement is for approximately 7,500 square feet of office space for a monthly rent of $10,326, plus a proportionate charge for common area maintenance, the lease term is month to month.

The Company has an administrative service agreement with Meadow Valley to receive management and administrative services for a monthly fee of $22,000. For the years ended December 31, 2006 and 2005, the total fees associated with the above services totaled $264,000 each year.

Professional Services:

During the year ended December 31, 2006 and 2005, the Company incurred director fees of $52,000 and $61,750 in aggregate to outside members of the board of directors. During the year ended December 31, 2005, a related party rendered professional services to the Company in the amount of $143,494. At December 31, 2006 and 2005, the amount due to related parties which included amounts due to outside directors totaled $52,000 and $68,250, respectively.

10. Income Taxes:

The provisions for income tax (benefit) expense from operations consist of the following:


	For the years ended December 31,
	2006			2005		2004
Current:
Intercompany	$	—		$	870,000	$	640,064
Federal and State		2,159,409			224,515		—

		2,159,409			1,094,515		640,064
Deferred		(287,078	)		340,527		731,468

	$	1,872,331		$	1,435,042	$	1,371,532

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

10. Income Taxes (Continued):

The Company’s deferred tax asset (liability) consists of the following:


	December 31,
	2006			2005
Deferred tax asset:
Bad debt allowance	$	111,063		$	93,472
Accrued vacation payable		124,902			91,119
Director stock-based compensation		10,192			—
Accrued insurance payable		115,049			—

		361,206			184,591

Deferred tax liability:
Depreciation		(1,619,009	)		(1,729,472	)

Net deferred tax liability	$	(1,257,803	)	$	(1,544,881	)

For the years ended December 31, 2006, 2005 and 2004, the effective tax rate differs from the federal statutory rate primarily due to state income taxes and permanent differences, as follows:


	For the years ended December 31,
	2006		2005		2004
Statutory rate of 34% applied to income before income taxes	$	1,771,946	$	1,333,015	$	1,295,910

State income taxes, net of federal benefit		85,848		77,817		64,608

Increase (decrease) in income taxes resulting from:
Non-deductible items		14,537		24,210		15,518
Other		—		—		(4,504	)

	$	1,872,331	$	1,435,042	$	1,371,532

11. Commitments and Contingencies:

The Company leases batch plants, equipment, mixer trucks and property under operating leases and raw material purchase obligations expiring in various years through 2016. Rent expense under the aforementioned operating leases was $2,529,996, $2,059,657 and $2,595,055 for the years ended December 31, 2006, 2005 and 2004. Purchases under the aforementioned purchase agreements were $2,591,748, $3,965,569 and $4,809,494, respectively.

Minimum future rental payments under non-cancelable operating lease agreements as of December 31, 2006, for each of the following years and in aggregate are:


Year ending December 31,	Amount

2007	$	2,903,794
2008		2,529,784
2009		2,063,967
2010		1,365,034
2011		586,747

	$	9,449,326

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

11. Commitments and Contingencies (Continued):

Minimum future purchase agreement payments under non-cancelable purchase agreements as of December 31, 2006, for each of the following years and in aggregate are:


Year ending December 31,	Amount

2007	$	3,705,444
2008		3,615,444
2009		3,534,644
2010		2,787,935
2011		2,370,000
Subsequent to 2012		11,455,000

	$	27,468,467

The Company has entered into employment contracts with two of its executive officers that provide for an annual salary, issuance of the Company’s common stock and various other benefits and incentives. As of December 31, 2006, the total commitments, excluding benefits and incentives, for each of the following years and in aggregate are:


Year ending December 31,	Amount

2007	$	276,000
2008		23,000

	$	299,000

The Company has entered into an administrative service agreement to receive management and administrative services for a monthly fee of $22,000. As of December 31, 2006, the total commitment for each of the following years is as follows:


Year ending December 31,	Amount

2007	$	264,000
2008		264,000

	$	528,000

The Company is the lessee of vehicles and equipment under capital leases expiring in various years through 2008. The assets and liabilities under a capital lease are initially recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. Each asset is depreciated over its expected useful life or the lease term whichever is shorter. Depreciation on the assets under capital leases charged to expense in 2006, 2005 and 2004 was $276,426, $277,584 and $163,527. At December 31, 2006 and 2005, property and equipment included $652,030 and $946,810, net of accumulated depreciation, of vehicles and equipment under capital leases.

Minimum future lease payments under capital leases as of December 31, 2006 for each of the following years and in aggregate are:


Year ended December 31,	Amount

2007	$	275,281
2008		6,433

Total minimum lease payment		281,714
Less: amount representing interest		(26,767	)

Present value of net minimum lease payment		254,947
Less: current portion		(250,313	)

	$	4,634

�� Interest rates on capitalized leases vary from 5.79% to 6.25% and are imputed based on the lower of the Company’s incremental borrowing rate at the inception of the lease or the lessor’s implicit rate of return.

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

11. Commitments and Contingencies (Continued):

All of the Company’s assets are pledged as collateral for certain surety bonds of Meadow Valley Contractors, Inc. (“Meadow Valley”). Should Meadow Valley’s assets be insufficient to satisfy these obligations, then our assets could be foreclosed upon in order to satisfy Meadow Valley’s obligations. Based on current facts and circumstances management believes that the likelihood of any default by Meadow Valley is remote. As of December 31, 2006, the amount of bonds collateralized by our assets was approximately $.1 million.

The Company has agreed to indemnify its officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. However, the Company has a directors and officers’ liability insurance policy that enables it to recover a portion of any future amounts paid up to $10 million. As a result of its insurance policy coverage and no current or expected litigation, the Company believes the estimated fair value of these indemnification agreements is minimal and has no liabilities recorded for these agreements as of December 31, 2006.

The Company enters into indemnification provisions under its agreements with other companies in its ordinary course of business, typically with business partners, customers, landlords, lenders and lessors. Under these provisions the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2006.

12. Earnings per Share:

Statement of Financial Accounting Standards No. 128, “Earnings per Share,” provides for the calculation of Basic and Diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period.

Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity, as set forth below:


	For the years ended December 31,
	2006		2005		2004
Weighted average common shares outstanding		3,807,500		2,654,688		2,025,000
Dilutive effect of:
Stock options and warrants		26,080		26,365		—

Weighted average common shares outstanding assuming dilution		3,833,580		2,681,053		2,025,000

All dilutive common stock equivalents are reflected in our earnings per share calculations. Anti-dilutive common stock equivalents are not included in our earnings per share calculations. For the year ended December 31, 2006, the Company had options to purchase 100,000 shares of common stock at $10.35, which were not included in our earnings per share calculation as they were anti-dilutive. For the years ended December 31, 2005 and 2004 the Company had no anti-dilutive common stock equivalents.

The Company’s diluted net income per common share for the year ended December 31, 2006 was computed based on the weighted average number of shares of common stock outstanding during the period and the weighted average of options to purchase 230,375 shares of common stock at $11.00 per share, 20,250 shares of common stock at $12.50 per share and in connection with the public offering the Company issued the underwriters warrants entitling them to purchase 116,250 shares of common stock at a price of $13.20 per share.

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

12. Earnings per Share (Continued):

The Company’s diluted net income per common share for the year ended December 31, 2005 was computed based on the weighted average number of shares of common stock outstanding during the period and the weighted average of options to purchase 232,875 shares of common stock at $11.00 per share, 20,250 shares of common stock at $12.50 per share and in connection with the public offering the Company issued the underwriters warrants entitling them to purchase 116,250 shares of common stock at a price of $13.20 per share.

The Company’s diluted net income per common share for the year ended December 31, 2004 was computed based on the weighted average number of shares of common stock outstanding during the period as no options or warrants to purchase common stock were outstanding.

13. Stockholders’ Equity:

Preferred Stock:

The Company has authorized 5,000,000 shares of $.001 par value preferred stock to be issued, with such rights, preferences, privileges, and restrictions as determined by the Board of Directors.

Initial Public Offering:

During August 2005, the Company completed an initial public offering (“Offering”) of the Company’s common stock. The Offering included the sale of 1,782,500 shares of common stock at $11.00 per share. Net proceeds of the Offering, after deducting underwriting commissions and offering expenses of $2,471,227, amounted to $17,136,273. In connection with the offering the Company issued the underwriters warrants entitling them to purchase 116,250 shares of common stock at a price of $13.20 per share. The warrants expire August 23, 2010.

14. Statement of Cash Flows:

Non-Cash Investing and Financing Activities:

The Company recognized investing and financing activities that affected assets and liabilities, but did not result in cash receipts or payments. These non-cash activities are as follows:

During the years ended December 31, 2006, 2005 and 2004, the Company financed the purchase of property and equipment in the amounts of $3,513,072, $2,357,135 and $5,061,676.

During the year ended December 31, 2005, the Company refinanced a note payable obligation in the amount of $1,465,733.

During the year ended December 31, 2005, the Company acquired equipment at book value of $17,541, from an affiliate and assumed a debt obligation in the amount of $17,541.

15. Significant Customer:

For the year ended December 31, 2006, the Company did not recognize a significant portion of its revenue from any one customer.

For the years ended December 31, 2005 and 2004, the Company recognized a significant portion of its revenue from a single customer (as an approximate percentage of total revenue) 14.3% and 15.4%, respectively.

At December 31, 2005, amount due from the aforementioned customer included in accounts receivables, was $605,216.

READY MIX, INC.
NOTES TO FINANCIAL STATEMENTS

16. Employee Benefit Plan:

The Company maintains a 401(k) profit sharing plan allowing substantially all employees to participate. Under the terms of the Plan, the employees may elect to contribute a portion of their salary to the Plan. The matching contributions by the Company are at the discretion of the Board of Directors, and are subject to certain limitations. For the years ended December 31, 2006, 2005 and 2004, the Company contributed $257,413, $175,806 and $123,124 to the Plan.

17.Quarterly Financial Data (Unaudited):


	March 31,		June 30,		September 30,		December 31,
2006
Revenue	$	21,131,524	$	22,997,614	$	20,593,013	$	18,866,652
Gross profit		2,672,958		2,840,575		1,921,029		1,771,805
Income from operations		1,536,287		1,588,010		1,019,192		783,626
Net income		1,015,712		1,043,326		680,088		600,149
Basic net income per common share		0.27		0.27		0.18		0.16
Diluted net income per common share		0.26		0.27		0.18		0.16
Basic weighted average common shares outstanding		3,807,500		3,807,500		3,807,500		3,807,500
Diluted weighted average common shares outstanding		3,866,588		3,852,732		3,807,500		3,807,500

2005
Revenue	$	14,331,497	$	17,485,941	$	18,851,538	$	17,065,448
Gross profit		1,082,050		2,069,218		2,443,686		1,476,726
Income from operations		369,189		1,199,812		1,872,179		502,084
Net income		198,593		738,796		1,194,528		353,673
Basic net income per common share		0.10		0.36		0.43		0.09
Diluted net income per common share		0.10		0.36		0.42		0.09
Basic weighted average common shares outstanding		2,025,000		2,025,000		2,761,250		3,807,500
Diluted weighted average common shares outstanding		2,025,000		2,025,000		2,820,220		3,853,991

2004
Revenue	$	13,594,641	$	14,856,075	$	16,307,321	$	14,377,621
Gross profit		1,352,415		1,501,799		2,022,168		1,750,340
Income from operations		755,932		909,538		1,412,937		976,265
Net income		451,152		521,037		828,077		639,701
Basic net income per common share		0.22		0.26		0.41		0.31
Diluted net income per common share		0.22		0.26		0.41		0.31
Basic weighted average common shares outstanding		2,025,000		2,025,000		2,025,000		2,025,000
Diluted weighted average common shares outstanding		2,025,000		2,025,000		2,025,000		2,025,000

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

An evaluation as of the end of the period covered by this report was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that those disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. In addition, there has been no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Item 9B. Other Information

None.

PART III

Item 10.Directors, Executive Officers and Corporate Governance

The information required by Item 10 is incorporated herein by reference to the information contained under the headings “Election of Directors” and “Executive Officers” as set forth in our definitive proxy statement for our 2006 annual meeting of shareholders.

Item 11.Executive Compensation

The information required by Item 11 relating to our directors is incorporated herein by reference to the information contained under the heading “Compensation of Directors” and the information relating to our executive officers is incorporated herein by reference to the information contained under the heading “Executive Compensation” as set forth in our definitive proxy statement for our 2006 annual meeting of shareholders.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 is incorporated herein by reference to the information contained under the headings “Election of Directors,” “Equity Compensation Plan Information,” and “Security Ownership of Certain Beneficial Owners and Management” as set forth in our definitive proxy statement for our 2006 annual meeting of shareholders.

Item 13.Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is incorporated herein by reference to the information contained under the heading “Certain Relationships and Related Transactions” as set forth in our definitive proxy statement for our 2006 annual meeting of shareholders.

Item 14.Principal Accounting Fees and Services

The information required by Item 14 is incorporated herein by reference to the information contained under the heading “Disclosure of Audit and Non-Audit Fees” as set forth in our definitive proxy statement for our 2006 annual meeting of shareholders.

PART IV

Item 15.Exhibits and Financial Statement Schedules

(a) (1) Financial Statements

See Item 8 of Part II hereof.

(2) Financial Statement Schedules

See Schedule below and Item 8 of Part II hereof.

Schedule of Valuation and Qualifying Accounts


In Thousands	Balance at		Charged to						Balance at
	Beginning		Expense						End of
Description	of Year		Account			Deductions			Year
Year ended December 31, 2004
Allowance for doubtful accounts	$	620	$	293		$	(376	)	$	537

Year ended December 31, 2005
Allowance for doubtful accounts	$	537	$	(244	)	$	(33	)	$	260

Year ended December 31, 2006
Allowance for doubtful accounts	$	260	$	98		$	(49	)	$	309

(3) Exhibits


Exhibit
Number		Description

3.1		Articles of Incorporation of the Registrant, as amended

3.2		Amended and Restated Bylaws of the Registrant

10.1		2005 Equity Incentive Plan

10.2		Loan Agreement with Meadow Valley Corporation

10.4		Office Lease (Las Vegas)

10.5		Employment Agreement (Mr. Morris)

10.6		Employment Agreement (Mr. De Ruiter)

10.7		Administrative Services Agreement

10.8		Production Facility Lease (Sun City, Arizona)

10.9		Production Facility Lease (Henderson, Nevada)

10.10		Production Facility Lease (Moapa, Nevada)


Exhibit
Number		Description

10.11		Decorative Rock Lease (Moapa, Nevada)

10.12		Oliver Mining Lease (Queen Creek, Arizona)

10.14		Indemnity Agreement

10.15		Office Lease (Las Vegas)

14.1		Code of Ethics

23.1		Consent of Independent Auditors

31.1		Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of The Securities Exchange Act of 1934

31.2		Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of The Securities Exchange Act of 1934

32		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.


	READY MIX, INC.
	/s/ Bradley E. Larson
	Bradley E. Larson
	Chief Executive Officer (Principal Executive Officer) Date: March 30, 2007

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints BRADLEY E. LARSON and CLINT TRYON, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him in his name, place and stead, in any and all capacities, to sign any and all amendments to this Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith with the Securities and Exchange Commission, granting onto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully and to all intent and purposes as he might or could do in person hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


/s/ Bradley E. Larson		/s/ Robert R. Morris

Bradley E. Larson		Robert R. Morris
Director and Chief Executive Officer		Director and President
Date: March 30, 2007		Date: March 30, 2007

/s/ Kenneth D. Nelson		/s/ Don A. Patterson

Kenneth D. Nelson		Don A. Patterson
Director and Vice President		Director
Date: March 30, 2007		Date: March 30, 2007

/s/ Charles E. Cowan		/s/ Dan H. Stewart

Charles E. Cowan		Dan H. Stewart
Director		Director
Date: March 30, 2007		Date: March 30, 2007

/s/ Charles R. Norton		/s/ Clint Tryon

Charles R. Norton		Clint Tryon
Director		Chief Financial Officer, Principal Financial and Accounting Officer
Date: March 30, 2007		Date: March 30, 2007

EXHIBIT INDEX


Exhibit		By Reference
Number	Description	from Document

3.1	Articles of Incorporation of the Registrant, as amended		*

3.2	Amended and Restated Bylaws of the Registrant		(2	)

10.1	2005 Equity Incentive Plan		(1	)

10.2	Loan Agreement with Meadow Valley Corporation		(1	)

10.4	Office Lease (Las Vegas)		(1	)

10.5	Employment Agreement (Mr. Morris)		(1	)

10.6	Employment Agreement (Mr. De Ruiter)		(1	)

10.7	Administrative Services Agreement		(1	)

10.8	Production Facility Lease (Sun City, Arizona)		(1	)

10.9	Production Facility Lease (Henderson, Nevada)		(1	)

10.10	Production Facility Lease (Moapa, Nevada)		(1	)

10.11	Decorative Rock Lease (Moapa, Nevada)		(1	)

10.12	Oliver Mining Lease (Queen Creek, Arizona)		(1	)

10.14	Indemnity Agreement		(3	)

10.15	Office Lease (Las Vegas)		(3	)

14.1	Code of Ethics		(1	)

23.1	Consent of Independent Auditors		*

31.1	Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of The Securities Exchange Act of 1934		*

31.2	Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of The Securities Exchange Act of 1934		*

32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		*


*		Filed herewith.

(1)		Previously filed as an Exhibit with the same Exhibit number to the registrant’s Form S-1 Registration Statement (SEC File No. 333-122754).

(2)		Previously filed as an Exhibit with the same Exhibit number to the registrant’s Form 8-K Current Report dated February 12, 2007.

(3)		Previously filed as an Exhibit with the same Exhibit number to the registrant’s Form S-1/A Registration Statement filed on June 28, 2005 (SEC File No. 333-122754)

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RMX (RMX) Inactive 10-K2006 FY Annual report

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