1
Washington, D.C. 20549
-----------------------
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Year Ended Commission File Number
December 31, 1996 0-17124
GRANITE CONSTRUCTION INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 77-0239383
(State of incorporation) (I.R.S. Employer
Identification Number)
585 West Beach Street
Watsonville, California 95076
(Address of principal executive offices)
Telephone: (408) 724-1011
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
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. X
-----
The aggregate market value of voting stock held by nonaffiliates of the
registrant was approximately $211,488,200 as of March 20, 1997 based upon the
average of the high and low sales prices per share of the registrant's Common
Stock as reported on the NASDAQ National Market System on such date. Shares of
Common Stock held by each officer and director and by each person who owns 5%
or more of the outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliates status is not
necessarily a conclusive determination for other purposes.
At March 20, 1997, 18,111,784 shares of Common Stock, par value $0.01 of the
registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Form 10-K Reference
--------- -------------------
Proxy Statement for the Annual Meeting of Stockholders on May 19, 1997 Part III, Items 10-13
This report, including all exhibits and attachments, contains 197 pages. The
exhibit index is on pages 23-24.
2
TABLE OF CONTENTS
Page
No.
-----
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES . . . . . . . . . . . 18
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 19
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . 20
2
3
PART I
ITEM 1. BUSINESS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of the changes in the
composition of applicable federal and state legislation appropriation
committees; federal and state appropriation changes for infrastructure
spending; the general state of the economy; competition and pricing pressures;
state referendums and initiatives; and other risks detailed from time to time
in the Company's filings with the Securities and Exchange Commission.
INTRODUCTION
Granite Construction Incorporated, the "Company", is one of the largest
heavy civil construction contractors in the United States. Granite operates
throughout the United States, focusing primarily in the west, southwest and
southeast and serves both public and private sector clients. Within the public
sector, the Company concentrates on infrastructure projects, including the
construction of roads, highways, bridges, dams, tunnels, canals, mass transit
facilities and airports. Within the private sector, the Company performs site
preparation services for buildings, plants, subdivisions and other facilities.
Granite's participation in both the public and private sectors and its diverse
mix of project types and sizes have contributed to the Company's revenue growth
and profitability in various economic environments.
Granite also owns and leases substantial aggregate reserves and owns 108
construction materials processing plants and one of the largest heavy
construction contractor equipment fleets in the United States. The Company
believes that the ownership of these assets enables it to compete more
effectively by ensuring availability of these resources at a favorable cost.
Granite operates primarily through its wholly owned subsidiary, Granite
Construction Company. In addition, other minor wholly-owned subsidiaries are
G.G.&R., Inc. and Desert Aggregates Inc., incorporated in Utah and California,
respectively, and there are four wholly-owned, non-operating subsidiaries.
RECENT DEVELOPMENT
At year-end 1996, the Company initiated the purchase of a 30% minority
interest in T.I.C. Holdings Inc. ("TIC") as part of its diversification
strategy (See Business Strategy). The transaction included a 10% ownership
interest acquired directly from the corporation on December 30, 1996 and a yet
to be completed 20% ownership interest to be acquired through a tender offer to
the TIC employee stockholders once the 1996 TIC audited financial statements
are complete and a price determined. The acquisition is expected to be
completed in the second quarter of 1997.
TIC, founded in 1974, is one of the leading merit shop, general heavy
industrial contractors in the U.S. The company is ranked in both the Top 20
industrial and power marketplaces by Engineering News-Record Magazine. TIC
performs all major disciplines including civil, structural steel erection,
heavy mechanical, process piping and electrical/instrumentation. TIC has
offices in Colorado, Georgia, California, Texas, Louisiana, Kansas, Nevada,
Oregon and Wyoming.
TIC operates both nationally and internationally. The Company had annual
revenues of $467 million in 1995. By market sector, 59% of its 1995 revenue
came from industrial/petrochemical projects, 23% from power-related projects,
16% from water/sewer/wastewater projects and the remaining 2% derived from
transportation-related work. The Company employs over 4,000 people nationwide.
OPERATING STRUCTURE
The principal operating company, Granite Construction Company, is
organized into two operating divisions. The Branch Division is comprised of
branch offices which serve local markets, while the Heavy Construction Division
pursues major infrastructure projects throughout the nation. The Heavy
Construction Division ("HCD") generally has large heavy civil projects with
contract amounts in excess of $15 million and contract durations greater than
two years, while the Branch Division projects are typically smaller in size and
shorter in duration.
3
4
The two divisions complement each other in a variety of ways. The Heavy
Construction Division is a major user of large construction equipment and
employs sophisticated techniques on complex projects. The branches draw on
these resources which are generally not available to smaller, local
competitors. Conversely, the Branch Division has greater knowledge of local
markets and provides the Heavy Construction Division with valuable information
regarding larger projects in the branches' areas. The two divisions sometimes
jointly perform projects when a project in a particular region exceeds the
local branch's capabilities.
As decentralized profit centers, the branch offices and the Heavy
Construction Division independently estimate, bid and complete contracts. Both
divisions are supported by centralized functions, including finance,
accounting, tax, human resources, labor relations, safety, legal, insurance,
surety and management information services. The Company believes that
centralized support for decentralized profit centers results in a more market
responsive business with effective controls and reduced overhead.
In addition to cost and profitability estimates, Granite considers several
factors when determining whether to bid on a project, including the client, the
geographic location, Granite's competitive advantages and disadvantages
relative to likely competitors for the project, current and projected workload,
and the likelihood of follow-up work. Both operating divisions use a
proprietary computer-based project estimating system which reflects Granite's
significant accumulated experience. Granite believes that an exhaustive,
detailed approach to a project's estimate and bid is important in order to best
identify the project's risks and opportunities. The Company's estimates are
comprehensive in nature, sometimes totaling hundreds of pages of analysis.
Each project is broken into phases and line items, for which separate labor,
equipment and material estimates are made. Once a project begins, the estimate
provides Granite with a budget against which actual project cost is regularly
measured, enabling Granite to manage its projects more effectively.
The Branch Division. In 1996, Branch Division contract revenue and sales
of aggregate products were $715.6 million (77% of Company revenue) as compared
with $676.0 million (76% of Company revenue) in 1995. The Branch Division has
both public and private sector clients. Public sector activities include both
new construction and improvement of streets, roads, highways and bridges. For
example, the branches widen and repave roads and modify and replace bridges.
Major private sector contracts include site preparation for housing, including
excavation, grading and street paving, and installation of curbs, gutters,
sidewalks and underground utilities.
The Company currently has 11 branch offices with 9 satellite operations.
The Company's branch offices in California are located in Bakersfield, Hanford,
Monterey Bay Area, Palm Springs (Southern California Region), Sacramento, San
Jose, Santa Barbara and Stockton. The Company's branch offices outside of
California are located in Arizona, Nevada and Utah. Each branch effectively
operates as a local or regional construction company and its management is
encouraged to participate actively in the local community. While individual
branch revenues vary from year to year, in 1996 these revenues ranged from $22
million to $118 million.
As part of the Company's strategy, many of Granite's branches mine
aggregates and operate plants which process aggregates into construction
materials for internal use and for sale to others. These activities provide
both a source of profits and a competitive advantage to the Company's
construction business. More than half of the aggregate products are used in
the Company's construction projects. The remainder is sold to unaffiliated
parties and accounted for $93.5 million of revenue in 1996, representing 10.1%
of the Company's total 1996 revenue. The Company has significant aggregate
reserves which it has acquired by ownership in fee or through long-term leases.
It is the Company's objective to continue to own or lease adequate aggregate
reserves.
Heavy Construction Division. In 1996, revenue from HCD was $213.2 million
(23% of Company revenue) as compared with $218.8 million (24% of Company
revenue) in 1995. HCD projects are usually larger and more complex than those
performed by the Branch Division. The Division has completed projects
throughout the nation, including mass transit projects in the metropolitan
areas of Atlanta, Baltimore, Los Angeles, San Francisco and Washington, D.C.,
and 27 major dam and tunnel projects in eight states.
HCD builds infrastructure projects, including major highways, large dams,
mass transit facilities, bridges, pipelines, canals, tunnels, waterway locks
and dams, and airport runways, and has engaged in contract mine stripping and
reclamation and large site preparation. It also performs activities such as
demolition, clearing, excavation, dewatering, drainage, embankment fill,
structural concrete, concrete and asphalt paving, and tunneling.
The Division markets, estimates, bids and provides management overview of
its projects from its Watsonville headquarters and satellite estimating offices
in Texas and Georgia. Project staffs located at jobsites have the managerial,
technical, and clerical capacity to meet on-site project management
requirements. HCD has the ability, if appropriate, to process locally sourced
aggregates into construction materials using its own portable crushing,
concrete and asphalt processing plants.
4
5
HCD participates in joint ventures with other large construction companies
from time to time. Joint ventures are used for large, technically complex
projects where it is desirable to share risk and resources. Joint ventures
provide independently prepared estimates, and shared financing, equipment and
expertise.
Privatization as a new market sector for the Division has emerged as the
Company pioneers the use of public/private partnerships to fund the
construction of public infrastructure projects which are not supported by
traditional tax-based revenue sources. Two such projects have been
successfully completed - in 1996, the joint venture to build the San Joaquin
Hills Transportation Corridor and, in 1995, the SR91 tollroad project. The
Company continues its participation in the SR91 project as an investor in the
partnership that will operate the tollroad under a 35 year franchise agreement
with the State of California. The Division continues to pursue opportunities
to bid in the privatization market.
BUSINESS STRATEGY
Granite's fundamental objective is to increase long-term shareholder value
with an emphasis on profitability and revenue growth and stability. It is
measured with the appreciation of the value of Granite stock over a period of
years, and to a minor degree, a return from dividends. Further, it is a
specific measure of the Company's financial success to achieve a Return on Net
Assets ("RONA") greater than the cost of capital, creating "Granite Value
Added". To accomplish this objective, Granite employs the following
strategies:
Heavy/Highway Construction Focus - Granite concentrates on selected facets
of the construction industry: the building of roads, highways, bridges,
dams and tunnels, mass transit facilities and site preparation. This
focus emphasizes the Company's specialized strengths which include earth
moving, paving and concrete structures.
Selective Bidding - Granite carefully selects projects to bid which it
believes offer an opportunity to meet the Company's profitability
objectives.
Diversification - Granite pursues projects (i) in both the public and
private sectors; (ii) for a wide range of customers within each sector
(from the federal government to small municipalities and from large
corporations to individual home owners); (iii) in diverse geographic
markets; (iv) of various sizes, durations and complexity; and (v) in the
heavy industrial market segment in conformity with the above
diversification strategies.
Decentralized Profit Centers - Granite positions itself to be responsive
to changes in its markets through its decentralized structure. Each of
Granite's branches and the Heavy Construction Division are individual
profit centers.
Management Incentives - The Company compensates its profit center managers
with lower-than-market fixed salaries coupled with a substantial variable
cash and restricted stock incentive element based on the annual profit
performance of their respective profit centers.
Ownership of Material and Equipment Assets - Granite owns aggregate
reserves and processing plants and maintains a fleet of heavy construction
equipment to compete more effectively by ensuring availability of these
resources at favorable cost.
Controlled Expansion - The Company intends to continue its geographic
expansion by selectively adding branches in the western United States, by
pursuing major infrastructure projects throughout the nation and expanding
into other construction market segments through acquisitions.
Accident Prevention - Granite believes that the prevention of accidents is
both a moral obligation and good business. By identifying potential
accidental losses and preventing them the Company continues to
significantly reduce the costs associated with accidents.
Environmental Affairs - Granite believes it benefits all parties to
maintain environmentally responsible operations. The Company is committed
to effective air quality control measures and reclamation at its plant
sites and to waste reduction and recycling of the environmentally
sensitive products used in its operations.
Quality and High Ethical Standards - Granite emphasizes the importance of
performing high quality work and maintaining high ethical standards.
5
6
CUSTOMERS
The Company has customers in both the public and private sectors. The
Branch Division's principal customers are state departments of transportation
in California, Arizona, Nevada and Utah. In 1996, contracts with the
California Department of Transportation represented 11.2% of the Company's
revenue. Other Branch Division clients include county and city public works
departments and developers and owners of industrial, commercial and residential
sites. The principal clients of the Heavy Construction Division are in the
public sector and currently include the U.S. Army Corps of Engineers, the U.S.
Bureau of Reclamation, the State Departments of Highways and Public
Transportation in Texas, Georgia and Florida and the Transportation Corridor
Agencies (See Note 10 of Notes to Consolidated Financial Statements).
A breakdown of the Company's revenues for the last three years by market
sector is as follows (in thousands):
1996 1995 1994
------------------- -------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------------------- -------------------- --------------------
Contract revenues . . . . .
Federal agencies . . . . $ 32,825 3.5% $ 53,018 5.9% $ 57,664 8.3%
State agencies . . . . . 345,505 37.2 283,272 31.7 245,221 35.4
Local public agencies . 278,917 30.0 338,350 37.8 244,757 35.3
Private sector . . . . . 178,053 19.2 129,028 14.4 87,067 12.6
Construction materials 93,499 10.1 91,128 10.2 58,679 8.4
sales . . . . . . . . . . . ------------------- -------------------- --------------------
Total . . . . . . . . $928,799 100.0% $894,796 100.0% $693,388 100.0%
=================== ===================== =====================
BACKLOG
The Company's backlog (anticipated revenue from uncompleted portions of
existing contracts) was $597.9 million at December 31, 1996, up from $590.1
million at December 31, 1995. The Company's backlog was $550.2 million at the
end of 1994, and $659.7 million at the end of 1993. Approximately $180 million
of the December 31, 1996 backlog will remain at December 31, 1997. The Company
includes a construction project in its backlog at such time as a contract is
awarded or a firm letter of commitment is obtained. (See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".)
The Company believes the backlog figures are firm, subject only to the
cancellation and modification provisions contained in various contracts.
Substantially all of the contracts in the backlog may be canceled or modified
at the election of the client. However, the Company has not been materially
adversely affected by contract cancellations or modifications in the past.
(See "Business-Contract Provisions and Subcontracting.") A substantial
percentage of the Company's anticipated revenue in any year is not reflected in
its backlog at the start of the year due to the short duration of smaller
Branch Division projects that are initiated and completed during such year
("Turn Business"). The following is a breakdown of backlog as of December 31,
1996 (in millions):
1996 1995 1994
------------------- --------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------------------- --------------------- --------------------
By Geographic Area:
California . . . . . . . . . . . $247.5 41.4% $227.9 38.6% $320.8 58.3%
West . . . . . . . . . . . . . . 72.6 12.1 79.2 13.4 83.1 15.1
Southeast . . . . . . . . . . . . 277.8 46.5 283.0 48.0 146.3 26.6
------------------ ------------------ -------------------
$597.9 100.0% $590.1 100.0% $550.2 100.0%
================== ================== ===================
By Market Sector:
Federal government . . . . . . . $ 28.7 4.8% $ 17.5 3.0% $ 49.7 9.0%
State agencies . . . . . . . . . 374.8 62.7 354.3 60.0 240.9 43.8
Local public agencies . . . . . . 123.0 20.6 152.6 25.9 245.3 44.6
Private companies . . . . . . . . 71.4 11.9 65.7 11.1 14.3 2.6
------------------ ------------------ -------------------
$597.9 100.0% $590.1 100.0% $550.2 100.0%
================== ================== ===================
6
7
EQUIPMENT
The Company purchases and maintains many pieces of equipment, including
cranes, bulldozers, scrapers, graders, loaders, trucks, pavers, rollers, and
construction materials processing plants. In 1996 and 1995, the Company spent
approximately $40.3 million and $35.4 million, respectively, for construction
equipment, plants and vehicles. The breakdown of the Company's construction
equipment, plants and vehicles at December 31, 1996 is as follows:
Heavy construction equipment . . . . . . . . . . . 1,936 units
Trucks, truck-tractors and trailers and vehicles . 2,842 units
Aggregate crushing plants . . . . . . . . . . . . . 38 plants
Asphalt concrete plants . . . . . . . . . . . . . . 43 plants
Portland cement concrete batch plants . . . . . . . 25 plants
Thermal Soil Remediation Plants . . . . . . . . . . 2 plants
The Company believes that ownership of equipment is preferable to leasing
because ownership ensures the equipment is available as needed and normally
results in lower equipment costs. The Company attempts to keep its equipment
as fully utilized as possible by pooling equipment for use by both the Branch
Division and the Heavy Construction Division. From time to time, the Company
leases or rents equipment on a short- term basis.
EMPLOYEES
On December 31, 1996, Granite employed 931 salaried employees, who work in
management, estimating and clerical capacities, and 2,344 hourly employees.
The total number of hourly personnel employed by the Company is subject to the
volume of construction in progress. During 1996, the number of hourly
employees ranged from 1,871 to 3,794 and averaged approximately 3,079. The
Company is a party to craft collective bargaining agreements in many areas in
which it is working.
The Company believes its employees are its most valuable resource and that
its workforce possesses a strong feeling of dedication to and pride in the
Company. Among salaried and non-union hourly employees, this dedication is
reinforced by 32% equity ownership through the Employee Stock Ownership Plan
("ESOP") and performance-based incentive compensation arrangements. The
Company's 324 managerial and supervisory personnel have an average of 10 years
of service with Granite.
COMPETITION
Factors influencing the Company's competitiveness are price, reputation
for quality, the availability of aggregate materials, machinery and equipment,
financial strength, knowledge of local markets and conditions and estimating
abilities. The Company believes that it competes favorably on the basis of the
foregoing factors. Branch Division competitors range from small local
construction companies to large regional construction companies. While the
market areas of these competitors overlap with several of the markets served by
the Company's branches, few, if any, compete in all of the Company's market
areas. The Heavy Construction Division normally competes with large regional
and national construction companies. Although the construction business is
highly competitive, particularly for competitively bid projects in the public
sector, the Company believes it is well positioned to compete effectively.
CONTRACT PROVISIONS AND SUBCONTRACTING
The Company's revenue is substantially derived from contracts that are
"fixed unit price" contracts under which the Company is committed to provide
materials or services required by a project at fixed unit prices (for example,
dollars per cubic yard of concrete or cubic yards of earth excavated). While
the fixed unit price contract shifts the risk of estimating the quantity of
units required for a particular project to the customer, any increase in the
Company's unit cost over the unit price bid, whether due to inflation,
inefficiency, faulty estimates or other factors, is borne by the Company unless
otherwise provided in the contract. The Company's contracts are obtained
primarily through competitive bidding in response to advertisements by federal,
state and local government agencies and private parties.
7
8
All federal government contracts and many of the Company's other contracts
provide for termination of the contract for the convenience of the party
contracting with the Company. In addition, many of the Company's contracts are
subject to certain completion schedule requirements with liquidated damages in
the event schedules are not met. The Company has not been materially adversely
affected by these provisions in the past.
The Company acts as prime contractor on most of the construction projects
it undertakes. The Company accomplishes the majority of its projects with its
own resources and subcontracts specialized activities such as electrical and
mechanical work. As prime contractor, the Company is responsible for the
performance of the entire contract, including subcontract work. Thus, the
Company is subject to increased costs associated with the failure of one or
more subcontractors to perform as anticipated. The Company generally requires
its subcontractors to furnish bonds guaranteeing their performance.
Affirmative action regulations require the Company to use its best efforts to
employ certain types of subcontractors for a specified portion (historically
ranging up to 25%) of contract work done for governmental agencies. Some of
these subcontractors may not be able to obtain surety bonds. The Company has
not incurred any significant loss or liability on work performed by
subcontractors to date.
INSURANCE AND BONDING
The Company maintains general and excess liability, construction
equipment, and workers' compensation insurance, all in amounts consistent with
industry practices. Management believes its insurance programs are adequate.
In connection with its business, the Company generally is required to
provide various types of surety bonds guaranteeing its performance under
certain public and private sector contracts. The Company's ability to obtain
surety bonds depends upon its capitalization, working capital, past
performance, management expertise and other factors. Surety companies consider
such factors in light of the amount of surety bonds then outstanding for the
Company and their current underwriting standards, which may change from time to
time. The Company has been bonded by the same surety for more than 60 years
and has never been refused a bond.
GOVERNMENT REGULATIONS
The Company's operations are subject to compliance with regulatory
requirements of federal, state and municipal agencies and authorities,
including regulations concerning labor relations, affirmative action and the
protection of the environment. While compliance with applicable regulatory
requirements has not adversely affected the Company's operations in the past
relative to its competitive position within its industry sector, there can be
no assurance that these requirements will not change and that compliance will
not adversely affect the Company's operations. In addition, the aggregate
materials operations of the Company require operating permits granted by
governmental agencies. The Company believes that tighter regulations for the
protection of the environment and other factors will make it increasingly
difficult to obtain new permits and renewal of existing permits may be subject
to more restrictive conditions than currently exist.
8
9
ITEM 2. PROPERTIES
The Company owns and leases real property for use in its construction and
aggregate mining and processing activities. The Company owns approximately
358,300 square feet of office and shop space and leases, pursuant to leases
expiring in the year 2000, an additional 63,700 square feet of office and shop
space. The Company owns approximately 7,650 acres of land of which 1,500 acres
are unpermitted reserves available for future use and leases approximately
5,300 additional acres of land at sites in California, Nevada, Arizona and
Utah. A majority of the land owned or leased by the Company is intended to
serve as aggregate reserves. There are no encumbrances against owned property.
The Company's leases for aggregate reserves generally limit the Company's
interest in the reserves to the right to mine the reserves. These leases range
from month-to-month leases to leases with expiration dates ranging from January
1997 to January 2038. The Company considers its available and future aggregate
reserves adequate to meet operating needs. The company pursues a plan of
acquiring new sources of aggregate reserves to replenish those depleted and to
assure future growth.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to a number of legal proceedings. The Company
believes that the nature and number of these proceedings are typical for a
construction firm of its size and scope and that none of these proceedings is
material to the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has not submitted any matters to a vote of security holders
during the fourth quarter of the year ended December 31, 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers of the Company are as follows:
Age Position
--- --------
David H. Watts 58 President, Chief Executive Officer and Director
William E. Barton 52 Vice President, Chief Financial Officer
Patrick M. Costanzo 58 Senior Vice President and Manager, Heavy Construction Division
William G. Dorey 52 Senior Vice President and Manager, Branch Division
Granite Construction Incorporated was incorporated in Delaware in January,
1990 as the holding company for Granite Construction Company, which was
incorporated in California in 1922. All dates of service for the executive
officers of the registrant include the periods in which they served for Granite
Construction Company.
Mr. Watts joined the Company in 1987 as President and Chief Executive
Officer and has served as a director since 1988. From 1984 until 1987, Mr.
Watts served as President, Chief Executive Officer and a director of Ford,
Bacon & Davis, Inc., an industrial engineering and construction firm. From
1965 until 1984, Mr. Watts was employed by an underwater services and
construction firm in various capacities, including as President and Chief
Operating Officer. He received a B.A. degree in economics from Cornell
University in 1960.
Mr. Barton has been an employee of the Company since 1980 and has served
in various capacities, including Vice President and Chief Financial Officer
since 1990, Controller in 1989, Treasurer in 1988 and Cash Manager from 1980
until 1988. He received a B.S. degree in accounting and finance from San Jose
State University in 1967 and an M.B.A. degree from the University of Santa
Clara in 1973.
9
10
Mr. Costanzo has been an employee of the Company since 1970 and has served
in various capacities, including Senior Vice President and Manager, Heavy
Construction Division, since 1990, Vice President and Assistant Manager, Heavy
Construction Division, from 1988 to 1989, and an Area or Project Manager with
the Heavy Construction Division from 1972 to 1987. He received a B.S. degree
in civil engineering from the University of Connecticut in 1960 and a M.S.
degree in civil engineering from Stanford University in 1961.
Mr. Dorey has been an employee of the Company since 1968 and has served in
various capacities, including Senior Vice President and Manager, Branch
Division since 1987, and as Vice President and Assistant Manager, Branch
Division from 1983 to 1987. He received a B.S. degree in construction
engineering from Arizona State University in 1967.
10
11
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's Common stock is traded on the NASDAQ National Market System
under the symbol GCCO. See Quarterly Results in Item 7 for a two-year summary
of quarterly dividends and high and low closing sales prices of the Company's
stock.
The Company expects to pay a quarterly cash dividend of $0.06 plus a
special dividend of $0.12 per share of Common Stock to stockholders of record
as of March 31, 1997 payable on April 18, 1997 (See Note 12 of Notes to
Consolidated Financial Statements). Declaration and payment of dividends is
within the sole discretion of the Company's Board of Directors, subject to
limitations imposed by Delaware law, and will depend on the Company's earnings,
capital requirements and financial conditions and such other factors as the
Board of Directors deems relevant. As of March 20, 1997 there were 18,111,784
shares of Common Stock outstanding held by approximately 322 stockholders of
record of the Company.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The selected Operations and Balance Sheet data set forth below have been
derived from Consolidated Financial Statements of the Company, which have been
audited by Coopers & Lybrand L.L.P., independent accountants.
11
12
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31, 1996 1995 1994 1993
----------- ------------ ------------ ------------
OPERATING SUMMARY
Revenue $ 928,799 $ 894,796 $ 693,388 $ 570,379
Gross profit 110,655 111,963 89,988 50,743
As a percent of revenue 11.9% 12.5% 13.0% 8.9%
General and administrative expenses 71,587 69,610 62,795 47,107
As a percent of revenue 7.7% 7.8% 9.1% 8.3%
Income before cumulative effect of change
in accounting principle * 27,348 28,542 19,488 3,492
Net income 27,348 28,542 19,488 4,492
As a percent of revenue 2.9% 3.2% 2.8% 0.8%
Income per share before cumulative effect
of change in accounting principle * 1.51 1.60 1.10 0.20
Net income per share $ 1.51 $ 1.60 $ 1.10 $ 0.26
Weighted average shares of common and
common stock equivalents outstanding 18,126 17,820 17,660 17,556
----------- ------------ ------------ ------------
FINANCIAL POSITION SUMMARY
Total assets $ 473,045 $ 454,744 $ 349,098 $ 319,416
Cash, cash equivalents and short-term
investments 72,230 66,992 48,638 48,810
Working capital 92,542 77,179 65,537 64,619
Current maturities of long-term debt 10,186 13,948 10,070 10,060
Long-term debt 43,602 39,494 17,237 28,585
Stockholders' equity 233,605 209,905 182,692 164,338
Book value per share 12.89 11.74 10.37 9.37
Dividends per share $ 0.37 $ 0.29 $ 0.13 $ 0.13
Common shares outstanding 18,126 17,885 17,622 17,534
----------- ------------ ------------ ------------
BACKLOG $ 597,876 $ 590,075 $ 550,166 $ 659,738
----------- ------------ ------------ ------------
YEARS ENDED DECEMBER 31, 1992 1991 1990 1989
----------- ------------ ------------ ------------
OPERATING SUMMARY
Revenue $ 518,312 $ 564,060 $ 557,996 $ 504,084
Gross profit 50,578 69,502 70,646 60,837
As a percent of revenue 9.8% 12.3% 12.7% 12.1%
General and administrative expenses 46,906 46,541 44,466 41,915
As a percent of revenue 9.0% 8.3% 8.0% 8.3%
Income before cumulative effect of change
in accounting principle * 3,924 17,622 18,811 14,211
Net income 3,924 17,622 18,811 14,211
As a percent of revenue 0.8% 3.1% 3.4% 2.8%
Income per share before cumulative effect
of change in accounting principle * 0.22 1.01 1.13 0.95
Net income per share $ 0.22 $ 1.01 $ 1.13 $ 0.95
Weighted average shares of common and
common stock equivalents outstanding 17,534 17,460 16,622 15,000
----------- ------------ ------------ ------------
FINANCIAL POSITION SUMMARY
Total assets $ 316,978 $ 277,426 $ 260,426 $ 245,880
Cash, cash equivalents and short-term
investments 54,139 54,973 50,451 46,306
Working capital 66,329 55,186 52,352 34,902
Current maturities of long-term debt 15,469 7,669 7,887 14,228
Long-term debt 38,618 14,816 19,084 39,707
Stockholders' equity 158,594 153,159 131,026 86,552
Book value per share 9.07 8.81 7.60 5.77
Dividends per share $ 0.13 $ 0.13 $ 0.10 $ -
Common shares outstanding 17,477 17,385 17,250 15,000
----------- ------------ ------------ ------------
BACKLOG $ 245,234 $ 292,017 $ 368,384 $ 377,529
----------- ------------ ------------ ------------
YEARS ENDED DECEMBER 31, 1988 1987 1986
----------- ------------ ------------
OPERATING SUMMARY
Revenue $ 437,230 $ 380,519 $ 374,489
Gross profit 55,614 46,621 55,836
As a percent of revenue 12.7% 12.3% 14.9%
General and administrative expenses 33,702 32,381 33,064
As a percent of revenue 7.7% 8.5% 8.8%
Income before cumulative effect of change
in accounting principle * 15,009 8,594 11,502
Net income 15,009 8,594 11,502
As a percent of revenue 3.4% 2.3% 3.1%
Income per share before cumulative effect
of change in accounting principle * 1.00 0.57 0.77
Net income per share $ 1.00 $ 0.57 $ 0.77
Weighted average shares of common and
common stock equivalents outstanding 15,000 15,000 15,000
----------- ------------ ------------
FINANCIAL POSITION SUMMARY
Total assets $ 205,847 $ 178,846 $ 168,328
Cash, cash equivalents and short-term
investments 44,911 41,959 34,824
Working capital 39,656 31,036 30,803
Current maturities of long-term debt 12,497 10,806 6,992
Long-term debt 44,328 49,542 50,229
Stockholders' equity 69,033 50,756 39,642
Book value per share 4.60 3.38 2.64
Dividends per share $ - $ - $ -
Common shares outstanding 15,000 15,000 15,000
----------- ------------ ------------
BACKLOG $ 231,338 $ 255,858 $ 178,014
----------- ------------ ------------
* Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes".
12
13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following "Management's Discussion and Analysis of Financial
Condition and Results of Operations" section contains forward-looking
statements which are made in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
such forward-looking statements involve risks and uncertainties, including,
without limitation, changes in the composition of applicable federal and state
legislation appropriation committees; federal and state appropriation changes
for infrastructure spending; the general state of the economy; competition and
pricing pressures; state referendums and initiatives; and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission.
GENERAL
Granite is one of the largest heavy civil contractors in the United
States and is engaged in the construction of highways, dams, airports, mass
transit facilities and other infrastructure-related projects. The Company has
offices in California, Texas, Georgia, Nevada, Arizona and Utah.
The Company's contracts are obtained primarily through competitive
bidding in response to advertisements by federal, state and local agencies and
private parties. The Company's bidding activity is affected by such factors as
backlog, current utilization of equipment and other resources, ability to
obtain necessary surety bonds and competitive considerations. Bidding
activity, backlog and revenue resulting from the award of new contracts to the
Company may vary significantly from period to period.
Revenue from construction contracts including construction joint
ventures is recognized using the percentage-of-completion method of accounting,
based upon costs incurred and projected costs. Revenue in an amount equal to
cost incurred is recognized prior to contracts reaching 25% completion. The
related earnings are not recognized until the period in which such percentage
completion is attained. Cost of revenue consists of direct costs on contracts,
including labor and materials, amounts payable to subcontractors, direct
overhead costs, equipment expense (primarily depreciation, maintenance and
repairs) and insurance costs. Depreciation is provided using accelerated
methods for construction equipment. Contracts frequently extend over a period
of more than one year and revisions in cost and profit estimates during
construction are reflected in the accounting period in which the facts that
require the revision become known. Losses on contracts, if any, are provided
in total when determined, regardless of the degree of project completion.
Claims and change orders for additional contract revenue are recognized to the
extent of costs incurred in the period when it is probable that the claim will
result in additional revenue and the amount can be reliably estimated. The
foregoing as well as weather, stage of completion, and mix of contracts at
different margins may cause fluctuations in gross profit between periods.
The Company's compensation strategy for selected management personnel
is to rely heavily on a variable cash and restricted stock performance-based
incentive element. Thus, the Company may experience an increase in general and
administrative expenses in a very profitable year and a decrease in less
profitable years. Further, the Company does not utilize incentives, such as
stock options, that are not reflected in current earnings. The Company's
pension contribution in excess of the 401K matching contributions is at the
discretion of the Board of Directors based on the Company reaching certain
levels of profitability each year.
CURRENT YEAR
REVENUE AND BACKLOG. During the year ended December 31, 1996, revenue
increased $34.0 million (3.8%) to $928.8 million. The increase in revenue is
associated with higher levels of bidding opportunities and awards in our Branch
Division and a full year of Utah Branch activity in 1996. The Branch Division
revenue increased $39.6 million to $715.6 million in 1996, from $676.0 million
in 1995. Heavy Construction Division (HCD) revenue decreased $5.6 million to
$213.2 million in 1996, from $218.8 million in 1995. The Company's revenue
from private sector contracts increased $49.1 million to $178.1 million, and
went from 14.4% of total revenue in 1995 to 19.2% of total revenue in 1996.
Revenue from public sector contracts decreased to $657.2 million, or 70.7% of
the Company's revenue in 1996, from $674.7 million, or 75.4% in 1995.
13
14
The Company's backlog at December 31, 1996 was $597.9 million, up $7.8
million, or 1.3% over the same period in 1995. Management expects that
approximately 70% of the work in the backlog at December 31, 1996 will be
recognized as revenue during 1997. The Company believes its bidding
opportunities in its major marketplaces remain strong (see "Outlook").
GROSS PROFIT. For the year ended December 31, 1996, gross profit
reached $110.7 million, a $1.3 million decrease from 1995. As a percentage of
revenue, gross profit decreased in 1996 to 11.9% from 12.5% in 1995.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses include salaries, incentive compensation, ESOP contribution, costs
associated with the Company's estimating and bidding activities, and other
administrative costs. General and administrative expenses increased from $69.6
million, or 7.8% of revenue in 1995, to $71.6 million, or 7.7% of revenue in
1996. The increase reflects a full year of Utah Branch activity as well as an
approximately $3.0 million increase to bad debt expense relating to one
project.
OTHER INCOME (EXPENSES). Other income increased $1.4 million to $4.3
million in 1996. The increase was influenced by $2.0 million of gain on sales
of joint venture owned equipment which cannot be expected to be repeated in
future years.
PROVISION FOR INCOME TAXES. The provision for income taxes in 1996
remained the same as 1995 at 37.0% of income before taxes. (See Note 9 of
Notes to Consolidated Financial Statements.)
OUTLOOK. This "Outlook" section contains forward-looking statements
which are made in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements involve risks and uncertainties, including, without
limitation, changes in the composition of applicable federal and state
legislation appropriation committees; federal and state appropriation changes
for infrastructure spending; the general state of the economy; competition and
pricing pressures; state referendums and initiatives; and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission.
Looking forward, 1997 will be a pivotal year for transportation
funding, particularly at the federal level, where Congress takes up
reauthorization of the Intermodal Surface Transportation Efficiency Act
(ISTEA). The bill, signed by then-President Bush in December, 1991, was a
six-year, $158 billion program providing federal monies for highway and transit
construction. The bill expires October 1, 1997. Any changes in actual
appropriations will not impact the Company or the industry until 1998 and
beyond.
Four reauthorization proposals have been submitted to the House
Subcommittee on Surface Transportation. The first proposal, "ISTEA Works", is
essentially a status quo of the existing legislation, albeit it does call for
the maximum level of federal investment possible over the next five years in
our nation's multi-modal transportation systems.
The second proposal, the "ISTEA Integrity Restoration Act", seeks to
simplify and reduce some of the complex funding formulas under ISTEA and would
specify that federal fuel taxes in the federal Highway Trust Fund be used
solely for highway construction, and not for deficit reduction or other
non-highway related purposes.
The third and perhaps most controversial proposal is the
"Transportation Empowerment Act", also known as "Devolution". This bill would
substantially reduce federal fuel taxes and shift the bulk of the
responsibility for levying fuel taxes and maintaining transportation systems to
the states. We believe this bill could prompt a reduction in total
transportation expenditures as states would find it extremely difficult to
raise taxes, even if the taxes merely replaced what was previously being levied
by the federal government.
The last transportation plan is that of the Clinton Administration's,
a proposal to fund the program at $175 billion over six years, which would be
approximately 11% more money than was authorized in the 1991 act.
In fact, there appears to be growing support on Capitol Hill for
substantial increases in highway spending. Senator John Warner (R- VA), is
proposing approximately $10 billion in increases in the highway program over
the next five years.
14
15
Efforts also continue in Washington to redirect the 4.3 cents of the
federal fuel tax being used for deficit reduction to the federal Highway Trust
Fund and to remove the trust fund from the Unified Federal Budget.
Furthermore, legislation was recently introduced to allow private developers to
issue tax-exempt bonds to finance public infrastructure projects.
Looking ahead in California, legislators in Sacramento this year will
resume the debate over how to pay for the unanticipated increase in cost to
retrofit the San Francisco-Oakland Bay Bridge as well as whether to retrofit
the eastern span or build a new bridge. Bay Area legislators are looking to
the state highway account to make up the shortfall while highway builders and
Southern California legislators argue that increasing bridge tolls is the
appropriate way to pay for the additional costs. In a recent survey by the San
Francisco Chronicle of Bay Area residents, 63% were said to favor raising the
bridge toll to finance a new bridge. Such support could make a toll increase
more politically palatable for Bay Area legislators and temper their zeal to
siphon monies out of the highway account. Maintaining a viable highway program
is vital to the state's economy and important to Granite's business. However
funded, Granite expects to bid on much of the bridge retrofit or replacement
projects.
Cautious optimism describes our outlook for private sector
opportunities in California. The California economy outpaced the nation in
income and job growth in 1996, according to the Center for the Continuing Study
of the California Economy. Moreover, the factors that created the strong
economy in 1996 - a leadership position in technology, foreign trade,
entertainment and tourism, and professional services - is expected to bring
continued growth in 1997 and the decade ahead. It is apparent to us, though,
that the real estate sector of the economy continues to lag the recovery and
has yet to translate into a big increase in bidding opportunities for
residential site development projects.
Looking at our concerns for 1997, our industry is confronted with a
shortage of skilled labor, which affects companies like ours in a number of
ways. Lack of skilled labor limits our ability to take on additional work,
impacts productivity and ultimately leads to higher wage rates. In response,
Granite has increased its investment in craft and technical training and will
continue to focus on education and training for all its employees. Recently we
have seen fuel prices creeping up as crude oil supplies recently hit a 19-year
low. Furthermore, we have witnessed increases in certain construction
materials such as Portland cement.
It is unclear at this point in time whether we could be successful in
raising margins to offset any additional costs. One way to gain insight into
this issue is examining the spread between the high and low bidders.
Historically, during competitive times, spreads are typically very narrow but
as demand increases and capacity tightens, spreads usually begin to widen and
margins improve. According to a recent study by Dr. Thomas C. Schleifer, a
noted industry economist, spreads, on an industry-wide basis, are starting to
widen but not to the point where pricing is necessarily improving.
Granite continues to be pleased with the bidding opportunities
available, both in the number and size of the potential projects to pursue.
Very large, technically complex projects, contracted using the design-build
contract delivery method, play to our strengths. Examples of opportunities
include, or have included, the Hudson Bergen Railroad in New Jersey, the
Interstate 15 rehabilitation in Salt Lake City, Utah, and the JFK light rail
system in New York. We have identified additional bidding opportunities in
Boston (large highway and tunnel projects - part of the city's Central Artery
program), the Foothill Transportation Corridor in Orange County, and
concurrently, we anticipate bidding on numerous highway and bridge projects in
all our geographic markets. Bidding, in general, is up and is expected to
remain robust. As a reminder, while these are attractive projects, if awarded,
their impact on Granite's earnings will be felt in 1998 and beyond due to their
size and the time it takes to reach the 25% threshold of completion for profit
recognition.
On March 26, 1997, the Company announced that Wasatch Constructors, a
joint venture of Kiewit Pacific Company, Granite Construction Company and
Morrison Knudsen Corp., was awarded a contract by the Utah Department of
Transportation for the I-15 Corridor Reconstruction Project in Salt Lake City,
Utah. The value of the project is approximately $1.4 billion. The Company's
share of the joint venture is 23 percent, or about $320 million. Work is
scheduled to start in late spring of 1997 and will be completed in late 2001.
In the first half of 1997, Granite expects to complete its 30%
investment in TIC through a tender offer to their employee stockholders for the
remaining 20%. The TIC investment provides an opportunity to diversify our
risks through geographical expansion, increased private work and entry into a
different but related construction industry sector.
Finally, our 1997 financial expectations are similar to 1996. On the
negative side, we will not have the successful San Joaquin Hills Toll Road in
our mix of business this year, as the project was completed in the fourth
quarter of 1996. We do, however, expect a positive earnings boost from
emergency flood-related work done early in the year in northern California and
Nevada. We expect the level of competition in our branch-related business to
be on par with last year but we are very bullish on this year's prospects for
the branch division's Turn Business.
15
16
PRIOR YEARS
REVENUE AND BACKLOG. During the year ended December 31, 1995, revenue
increased $201.4 million (29.0%) to $894.8 million. The increase in revenue
reflected a strong quality backlog, healthy Turn Business and the addition of
the Company's new branch in Utah. The Branch Division revenue increased $165.1
million to $676.0 million in 1995, from $510.9 million in 1994. Heavy
Construction Division (HCD) revenue increased $36.3 million to $218.8 million
in 1995, from $182.5 million in 1994. The Company's revenue from private
sector contracts increased $41.9 million to $129.0 million, and went from 12.6%
of total revenue in 1994 to 14.4% of total revenue in 1995. Revenue from
public sector contracts increased to $674.7 million, or 75.4% of the Company's
revenue in 1995, from $547.6 million or 79.0% in 1994. Revenues for the year
ended December 31, 1994 represented a $123.0 million, or 21.6%, increase over
1993.
The Company's backlog at December 31, 1995 was $590.1 million, up
$39.9 million, or 7.3%, from $550.2 million at December 31, 1994.
GROSS PROFIT. For the year ended December 31, 1995, gross profit
reached $112.0 million, a $22.0 million increase from 1994. As a percentage of
revenue, gross profit decreased in 1995 to 12.5% from 13.0% in 1994. The
decrease primarily reflected the 1994 recovery of significant claims revenue
without the associated costs that were recognized in years prior to 1994. For
the year ended December 31, 1994, gross profit reached $90.0 million, a $39.3
million increase from 1993, and as a percentage of revenue went from 8.9% in
1993 to 13.0% in 1994. The increase primarily reflected profits recognized on
contracts meeting the 25% complete threshold in 1994 and the recovery of
outstanding claims.
GENERAL AND ADMINISTRATIVE EXPENSES. For the year ended December 31,
1995, general and administrative expenses increased from the 1994 amount of
$62.8 million, or 9.1% of revenue, to $69.6 million, or 7.8% of revenue. The
increases primarily reflected the addition of the new branch in Utah plus
increased incentive compensation and retirement contribution expenses due to
higher profits and other increases in support of the Company's higher volume of
work. The 1994 general and administrative expenses represented an increase as
a percent of revenue from 8.3% or $47.1 million in 1993 to 9.1%, or $62.8
million, in 1994.
OTHER INCOME (EXPENSES). Other income decreased $0.3 million to $3.0
million in 1995.
PROVISION FOR INCOME TAXES. The provision for income taxes in 1995
increased to 37.0% of income before taxes from 36.0% in 1994. (See Note 9 of
Notes to Consolidated Financial Statements.)
LIQUIDITY AND CAPITAL RESOURCES
Dollars in thousands 1996 1995 1994
-------- ---------- ---------
Cash and cash equivalents $38,663 $22,410 $17,649
Net cash provided (used) by:
Operating activities 58,226 68,860 48,158
Investing activities (35,900) (48,977) (37,949)
Financing activities (6,073) (15,122) (13,457)
Capital expenditures 46,139 36,006 39,098
Working Capital 92,542 77,179 65,537
During 1996, cash provided from operations of $58.2 million was
primarily used to purchase $46.1 million of property and equipment, to repay
$14.7 million of long-term debt and to pay dividends of $6.6 million. Changes
in cash provided by operating activities primarily reflect normal variations in
the cash flow on contracts and payables.
The Company's policy has been to replace and replenish its equipment
fleet with cash generated from operations. Purchases of property, plants and
equipment increased $10.1 million from 1995 and $7.0 million over 1994
primarily reflecting the Company's purchase of the Utah Branch in 1995.
16
17
During 1996, the Company purchased 10% of T.I.C. Holdings, Inc. for
$8.0 million. The investment was financed under the Company's revolving line
of credit at 6.125% annual interest rate until June 30, 1997 with principal
payable semi-annually beginning December 31, 1998. The Company has an
agreement with T.I.C. Holdings, Inc. to acquire an additional 20% of its
outstanding stock during 1997 for approximately $13.0 million although the
final price is still to be determined. The transaction is expected to be
completed in the second quarter of 1997 and will be financed under the
Company's revolving line of credit.
Dividend payments for 1996 increased $1.8 million over 1995 and $4.2
million over 1994 reflecting the increase during the first quarter of 1996 in
the quarterly dividend amount from $0.05 per share to $0.06 per share plus the
payment of a special dividend of $0.13 per share in the second quarter of 1996.
On March 13, 1997, the Board of Directors declared a special dividend of $0.12
per share of common stock in addition to a $0.06 per share quarterly dividend,
payable on April 18, 1997 to stockholders of record as of March 31, 1997.
On March 13, 1997, the Board of Directors authorized the Company to
repurchase at management's discretion up to 500,000 shares of its own common
stock on the open market. The purchases will be made using the Company's own
cash resources. Shares repurchased will be held in the corporate treasury and
will be used to cover contributions to the current Employee Stock Ownership
Plan or for other corporate purposes.
The Company has budgeted $55.0 million for capital expenditures in
1997, which includes amounts for construction equipment, aggregate and asphalt
plants, buildings, leasehold improvements and the purchase of land and
aggregate reserves. The Company anticipates that cash generated internally and
amounts available under its existing credit facilities, as renegotiated during
1997, will be sufficient to meet its capital and other requirements, including
contributions to employee benefit plans, for the foreseeable future. The
Company currently has access to funds under its revolving credit agreement
which allow borrowings of up to $50.0 million, of which $25.9 million was
available at December 31, 1996.
QUARTERLY RESULTS
The following table sets forth selected unaudited financial
information for the Company for the eight quarters in the period ended December
31, 1996. This information has been prepared on the same basis as the audited
financial statements and, in the opinion of management, contains all
adjustments necessary for a fair presentation thereof.
QUARTERLY FINANCIAL DATA
(Unaudited - In Thousands, Except for Per Share Data)
1996 Quarters Ended Dec. 31 Sept. 30 June 30 March 31
-------- -------- -------- --------
Revenue $223,905 $302,646 $248,499 $153,749
Gross profit 25,979 40,816 29,218 14,642
As a percent of revenue 11.6% 13.5% 11.8% 9.5%
Net income 2,798 15,053 9,131 366
As a percent of revenue 1.2% 5.0% 3.7% 0.2%
Net income per share $ 0.15 $ 0.83 $ 0.51 $ 0.02
-------- -------- -------- --------
Dividends per share $ 0.06 $ 0.06 $ 0.06 $ 0.19
Market price
High $ 21.25 $ 23.50 $ 27.25 $ 21.83
Low 18.00 18.25 19.00 18.00
-------- -------- -------- --------
1995 Quarters Ended Dec. 31 Sept. 30 June 30 March 31
-------- -------- -------- --------
Revenue $256,251 $306,588 $226,684 $105,273
Gross profit 27,998 40,549 29,705 13,711
As a percent of revenue 10.9% 13.2% 13.1% 13.0%
Net income 5,788 13,194 8,332 1,228
As a percent of revenue 2.3% 4.3% 3.7% 1.2%
Net income per share $ 0.32 $ 0.74 $ 0.47 $ 0.07
-------- -------- -------- --------
Dividends per share $ 0.05 $ 0.05 $ 0.15 $ 0.04
Market price
High $ 21.25 $ 18.59 $ 15.25 $ 13.83
Low 17.00 14.25 12.17 12.00
-------- -------- -------- --------
17
18
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and
auditor's report are included in Item 8 and appear following Item 14:
Report of Independent Accountants
Consolidated Balance Sheets - At December 31, 1996 and 1995
Consolidated Statements of Income - Years Ended December 31,
1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - Years Ended December
31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Additionally, a two-year Summary of Quarterly Results is included in
Item 7 under "Quarterly Results".
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
18
19
PART III
Certain information required by Part III is omitted from this Report
in that the Company will file its definitive proxy statement (the "Proxy
Statement") pursuant to Regulation 14A not later than 120 days after the end of
the fiscal year covered by this report, and certain information included
therein is incorporated herein by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors of the Company is set forth
under the caption "Information about Granite - Management, Directors" in the
Company's definitive Proxy Statement in connection with the Annual Meeting of
Stockholders to be held May 19, 1997. Such information is incorporated herein
by reference. Information relating to the executive officers of the Company is
set forth in Part I of this report under the caption "Executive Officers of the
Registrant."
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is set forth under the
caption "Information about Granite - Compensation of Directors and Executive
Officers" in the Company's definitive Proxy Statement in connection with the
Annual Meeting of Stockholders to be held May 19, 1997. Such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to ownership of equity securities of the Company
by certain beneficial owners and Management is set forth under the caption
"Information about Granite - Stock Ownership of Certain Beneficial Owners and
Management" in the Company's definitive Proxy Statement in connection with the
Annual Meeting of Stockholders to be held May 19, 1997. Such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain relationships and related transactions
is set forth under the caption "Information about Granite - Management, Certain
Transactions with Management" in the Company's definitive Proxy Statement in
connection with the Annual Meeting of Stockholders to be held May 19, 1997.
Such information is incorporated herein by reference.
19
20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
The following documents are filed as part of this Report:
(a) 1. FINANCIAL STATEMENTS. The following consolidated financial
statements are filed as part of this Report:
Form 10-K
Pages
----------
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated Balance Sheets at December 31, 1996 and 1995 . . . . . . . . . F-2
Consolidated Statements of Income for the Years Ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . F-5
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . F-6 to F-15
2. FINANCIAL STATEMENT SCHEDULES. The following financial
statement schedule of Granite Construction Incorporated for the years
ended December 31, 1996, 1995 and 1994 is filed as part of this
Report and should be read in conjunction with the consolidated
financial statements of Granite Construction Incorporated.
Form 10-K
Pages
-----------
Report of Independent Accountants on Financial Statement Schedules . . . . . . . S-1
Schedule
--------
Schedule II - Schedule of Valuation and Qualifying Accounts . . . . . . S-2
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
3. EXHIBITS. The Exhibits listed in the accompanying Exhibit Index
are filed or incorporated by reference as part of this Report.
(b) REPORTS ON FORM 8-K. The registrant was not required to file any
reports on Form 8-K during the fourth quarter of fiscal 1996.
20
21
INDEPENDENT ACCOUNTANTS' REPORT
To the Stockholders and Board of Directors
Granite Construction Incorporated
Watsonville, California
We have audited the accompanying consolidated balance sheets of Granite
Construction Incorporated and Subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1996.
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 generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes 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 consolidated financial position of Granite
Construction Incorporated and Subsidiaries as of December 31, 1996 and 1995,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
San Jose, California
February 14, 1997, except
Note 12, as to which the
date is March 13, 1997
F-1
22
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 1996 1995
-------- --------
ASSETS
Current assets
Cash and cash equivalents $ 38,663 $ 22,410
Short-term investments 33,567 44,582
Accounts receivable 124,124 142,055
Costs and estimated earnings in excess of billings 29,494 16,147
Inventories 13,493 10,180
Deferred income taxes 13,060 16,717
Equity in joint ventures 5,371 210
Other current assets 6,033 5,953
-------- --------
Total current assets 263,805 258,254
-------- --------
Property and equipment 178,515 175,220
-------- --------
Other assets 30,725 21,270
-------- --------
$473,045 $454,744
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 10,186 $ 13,948
Accounts payable 64,058 68,056
Billings in excess of costs and estimated earnings 45,352 43,730
Accrued expenses and other current liabilities 51,667 55,341
-------- --------
Total current liabilities 171,263 181,075
-------- --------
Long-term debt 43,602 39,494
-------- --------
Deferred income taxes 24,575 24,270
-------- --------
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value, authorized 3,000,000 shares,
none outstanding - -
Common stock, $0.01 par value, authorized 27,000,000 shares;
1996-issued 18,161,611 shares, outstanding 18,121,253 shares;
1995-issued 17,897,018 shares, outstanding 17,884,268 shares 182 179
Additional paid-in capital 37,642 32,715
Retained earnings 201,663 180,341
-------- --------
239,487 213,235
Unearned compensation (5,141) (3,115)
Treasury Stock (741) (215)
-------- --------
233,605 209,905
-------- --------
$473,045 $454,744
======== ========
The accompanying notes are an integral part of these financial statements.
F-2
23
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31, 1996 1995 1994
-------- -------- --------
Revenue $928,799 $894,796 $693,388
Cost of revenue 818,144 782,833 603,400
-------- -------- --------
GROSS PROFIT 110,655 111,963 89,988
General and administrative expenses 71,587 69,610 62,795
-------- -------- --------
OPERATING INCOME 39,068 42,353 27,193
Other income (expense)
Interest income 6,330 6,395 4,332
Interest expense (4,367) (3,443) (2,532)
Gain on sales of property and equipment 3,458 31 1,332
Other, net (1,080) (32) 125
-------- -------- --------
4,341 2,951 3,257
-------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES 43,409 45,304 30,450
Provision for income taxes 16,061 16,762 10,962
-------- -------- --------
NET INCOME $ 27,348 $ 28,542 $ 19,488
======== ======== ========
Net income per share $ 1.51 $ 1.60 $ 1.10
Weighted average shares of common and
common stock equivalents outstanding 18,126 17,820 17,660
Dividends per share $ 0.37 $ 0.29 $ 0.13
======== ======== ========
The accompanying notes are an integral part of these financial statements.
F-3
24
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands, Except Per Share Data)
Additional
Common Paid-in Retained Unearned Treasury
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 Stock Capital Earnings Compensation Stock Total
------ -------- -------- ------------ -------- --------
BALANCES, DECEMBER 31, 1993 $177 $27,856 $138,883 $(2,363) $(215) $164,338
Net income - - 19,488 - - 19,488
Restricted stock issued - 79,706 shares 1 1,287 - (1,288) - -
Amortized restricted stock - - - 1,122 - 1,122
Employee stock options exercised - 8,234 shares - 93 - - - 93
Repurchase of common stock - (990) - - - (990)
Common stock contributed to ESOP - 990 - - - 990
Cash dividends on common stock - - (2,349) - - (2,349)
---- ------- -------- ------- ----- --------
BALANCES, DECEMBER 31, 1994 178 29,236 156,022 (2,529) (215) 182,692
Net income - - 28,542 - - 28,542
Restricted stock issued - 163,611 shares 1 2,134 - (2,135) - -
Amortized restricted stock - - - 1,549 - 1,549
Employee stock options exercised and
related tax benefit - 98,517 shares 1,345 - - - 1,345
Repurchase of common stock - (762) - - - (762)
Common stock contributed to ESOP - 762 - - - 762
Cash dividends on common stock - (5,049) - - (5,049)
Tax benefit from ESOP dividends - - 826 - - 826
---- ------- -------- ------- ----- --------
BALANCES, DECEMBER 31, 1995 179 32,715 180,341 (3,115) (215) 209,905
Net income - - 27,348 - - 27,348
Restricted stock issued - 182,089 shares, net 1 3,993 - (3,994) - -
Purchase of treasury stock - 27,608 shares - - - - (526) (526)
Amortized restricted stock - - - 1,968 - 1,968
Employee stock options exercised and
related tax benefit- 59,350 shares 2 934 - - - 936
Repurchase of common stock - (1,550) - - - (1,550)
Common stock contributed to ESOP - 1,550 - - - 1,550
Cash dividends on common stock - - (6,760) - - (6,760)
Tax benefit from ESOP dividends - - 734 - - 734
---- ------- -------- ------- ----- --------
BALANCES, DECEMBER 31, 1996 $182 $37,642 $201,663 $(5,141) (741) $233,605
==== ======= ======== ======= ===== ========
The accompanying notes are an integral part of these financial statements.
F-4
25
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31, 1996 1995 1994
-------------- -------------- --------------
Operating Activities
Net income $ 27,348 $ 28,542 $ 19,488
Add (deduct) noncash items included in net income:
Depreciation, depletion and amortization 37,775 32,481 25,723
Gain on sales of property and equipment (3,458) (31) (1,332)
Deferred income taxes 3,962 (5,825) 3,442
Decrease in unearned compensation 1,968 1,549 1,122
Cash provided by (used in):
Accounts and notes receivable 15,990 (24,092) (12,141)
Inventories (3,313) 1,541 (741)
Equity in joint ventures (5,161) 3,225 (3,108)
Other assets (277) (1,239) 2,127
Accounts payable (3,998) 17,483 6,484
Billings in excess of costs and estimated
earnings, net (9,739) 11,684 (431)
Accrued expenses (2,871) 3,542 7,525
-------------- -------------- --------------
Net cash provided by operating activities 58,226 68,860 48,158
-------------- -------------- --------------
Investing Activities
Additions to property and equipment (46,139) (36,006) (39,098)
Proceeds from sales of property and equipment 8,027 3,364 5,506
Acquisition, net of cash acquired - (1,280) -
Investment in TIC Holdings, Inc. - 10% (8,022) - -
Additions to notes receivable (874) (1,083) (1,018)
Repayments of notes receivable 618 1,588 687
Additions to investments and other assets (525) (1,967) (950)
Purchases of short-term investments (45,639) (56,324) (54,184)
Maturities of short-term investments 56,654 42,731 51,108
-------------- -------------- --------------
Net cash used by investing activities (35,900) (48,977) (37,949)
-------------- -------------- --------------
Financing Activities
Additions to long-term debt 15,000 - -
Repayments of long-term debt (14,654) (11,497) (11,204)
Employee stock options exercised 673 1,117 93
Purchase of Treasury Stock (526) - -
Dividends paid (6,566) (4,742) (2,346)
-------------- -------------- --------------
Net cash used by financing activities (6,073) (15,122) (13,457)
-------------- -------------- --------------
Increase (decrease) in cash and cash equivalents 16,253 4,761 (3,248)
Cash and cash equivalents at beginning of year 22,410 17,649 20,897
-------------- -------------- --------------
Cash and cash equivalents at end of year $ 38,663 $ 22,410 $ 17,649
============= ============= ============
Supplementary Information
Cash paid during the year for:
Interest $ 4,367 $ 3,445 $ 2,534
Income taxes 10,258 20,040 16,253
Noncash investing and financing activity:
Financed acquisition of Gibbons Company $ - $ 31,750 $ -
============= ============= =============
The accompanying notes are an integral part of these financial statements.
F-5
26
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS: The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts have been
eliminated.
The Company is a heavy civil contractor engaged in the construction of
highways, dams, airports, mass transit facilities, real estate site
developments and other infrastructure related projects. The Company has
offices in California, Texas, Georgia, Nevada, Arizona and Utah.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The
preparation of financial statements in conformity with generally accepted
accounting principles 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CONSTRUCTION CONTRACTS: Earnings on construction contracts including
construction joint ventures are recognized on the percentage of completion
method in the ratio of costs incurred to estimated final costs. Revenue in an
amount equal to cost incurred is recognized prior to contracts reaching 25%
completion. The related earnings are not recognized until the period in which
such percentage completion is attained. Revisions in contract revenue and cost
estimates are reflected in the accounting period when known. Provision for the
entire amount of estimated losses on uncompleted contracts is made in the
period such losses are determined. Claims for additional contract revenue are
recognized to the extent of costs incurred if it is probable that the claim
will result in additional revenue and the amount can be reliably estimated.
EQUITY IN JOINT VENTURES: Investments in joint ventures are accounted for
by the equity method. The Company's proportionate share of joint venture
revenue, cost of revenue and operating income is included in the consolidated
statements of income.
BALANCE SHEET CLASSIFICATIONS: The Company includes in current assets and
liabilities amounts receivable and payable under construction contracts which
may extend beyond one year. A one-year time period is used as the basis for
classifying all other current assets and liabilities.
CASH AND CASH EQUIVALENTS: Cash equivalents are securities held for cash
management purposes having maturities of three months or less from the date of
purchase.
SHORT-TERM INVESTMENTS: Short-term investments that are deemed by
management to be held-to-maturity are reported at amortized cost. Short-term
investments that are considered available-for-sale are carried at market value.
Unrealized gains and losses, if material, are reported net of tax as a separate
component of stockholders' equity until realized. Realized gains and losses,
if any, are determined using the specific identification method.
FINANCIAL INSTRUMENTS: The carrying value of short-term investments
approximates their fair value as determined by market quotes. All significant
debt obligations carry variable interest rates and their carrying value is
considered to approximate fair value. The carrying value of receivables and
other amounts arising out of normal contract activities, including retentions
which may be settled beyond one year, is estimated to approximate fair value.
INVENTORIES: Inventories consist primarily of quarry products valued at
the lower of average cost or market.
F-6
27
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost.
Depreciation is provided using accelerated methods for construction equipment
and the straight-line method for the remaining depreciable assets. Depletion
of quarry property is based on the usage of depletable reserves. The cost and
accumulated depreciation and depletion of property sold or retired are removed
from the accounts and gains or losses, if any, are reflected in earnings for
the period.
INTANGIBLE ASSETS: Intangible assets consist primarily of covenants not
to compete amortized on a straight-line basis over five years.
INCOME TAXES: Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences and
operating loss carryforwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
COMPUTATION OF EARNINGS PER SHARE: Earnings per share computations are
based on the weighted average common and common equivalent shares outstanding
during each period. Common equivalent shares include the dilution from the
potential exercise of stock options when the effect is dilutive.
STOCK SPLIT: On March 5, 1996, the Board of Directors approved a three
for two stock split in the form of a 50% stock dividend payable on April 19,
1996. All references in the financial statements to number of shares, per
share amounts and market prices have been retroactively restated to reflect the
stock split. In addition, an amount equal to the $0.01 par value of the shares
outstanding after the split has been transferred from additional paid in
capital to common stock.
RECLASSIFICATIONS: Certain financial statement items have been
reclassified to conform to the current year's format.
F-7
28
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SHORT-TERM INVESTMENTS
The carrying and market values of short-term investments are as follows at
December 31, 1996 and 1995:
Held-To-Maturity Held-To-Maturity
December 31, 1996 December 31, 1995
Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair
Value Gains Losses Value Value Gains Losses Value
------------------------------------------- --------------------------------------------
U.S. Government and
Agency Obligations $ 2,993 $ - $ - $ 2,993 $ 8,938 $ 6 $ - $ 8,944
Commercial Paper 3,977 - - 3,977 10,897 3 (6) 10,894
Municipal Bonds 6,011 6 - 6,017 2,012 4 - 2,016
Foreign Banker's
Acceptances 7,420 1 - 7,421 8,703 2 - 8,705
Domestic Banker's
Acceptances - - - - 1,996 4 - 2,000
------------------------------------------- --------------------------------------------
20,401 7 - 20,408 32,546 19 (6) 32,559
=========================================== ============================================
Available-For-Sale Available-For-Sale
December 31, 1996 December 31, 1995
Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair
Value Gains Losses Value Value Gains Losses Value
------------------------------------------- ----------------------------------------------
U.S. Government and
Agency Obligations 9,146 3 (14) 9,135 4,859 45 - 4,904
Municipal Bonds 4,020 23 - 4,043 5,226 74 (32) 5,268
Foreign Banker's
Acceptances - - - - - - - -
Domestic Banker's
Acceptances - - - - 1,951 13 - 1,964
------------------------------------------- -----------------------------------------------
13,166 26 (14) 13,178 12,036 132 (32) 12,136
------------------------------------------- -----------------------------------------------
Total Short-Term
Investments $33,567 $ 33 $(14) $33,586 $44,582 $151 $ (38) $44,695
=========================================== ===============================================
There were no sales of investments classified as available-for-sale for
the year ended December 31, 1996. At December 31, 1996, scheduled
maturities of investments are as follows:
Held-To- Available-
Maturity For-Sale Total
---------------------------------------------
Within one year $20,401 $ 5,117 $25,518
After one year through five
years - 8,049 8,049
---------------------------------------------
$20,401 $13,166 $33,567
=============================================
For the years ended December 31, 1996 and 1995, purchases and
maturities were as follows:
Held-To- Available Held-To- Available
Maturity For Sale Total Maturity For Sale Total
----------------------------------- ---------------------------------
Purchases $ 35,315 $ 10,324 $ 45,639 $43,751 $ 12,573 $56,324
Maturities 43,300 13,354 56,654 27,900 14,831 42,731
----------------------------------- ---------------------------------
Net change $ (7,985) $ (3,030) $(11,015) $15,851 $ (2,258) $13,593
=================================== =================================
F-8
29
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
3. ACCOUNTS RECEIVABLE
DECEMBER 31, 1996 1995
---------------------------
Construction Contracts
Completed and in progress $ 59,764 $ 81,240
Retentions 47,956 41,777
---------------------------
107,720 123,017
Construction material sales 12,651 12,380
Other 4,446 7,556
---------------------------
124,817 142,953
Less allowance for doubtful
accounts 693 898
---------------------------
$124,124 $142,055
===========================
The balances billed but not paid by customers pursuant to retainage provisions
in construction contracts generally become due upon completion of the
contracts and acceptance by the owners. Retainage amounts at December 31,
1996 are expected to be collected as follows: $38,470 in 1997; $6,507 in 1998;
$191 in 1999 and $2,788 in 2000.
4. INVESTMENTS AND EQUITY IN JOINT VENTURES
The Company participates in various construction joint venture
partnerships. Generally, each construction joint venture is formed to
accomplish a specific project and is dissolved upon completion of the project.
The combined assets, liabilities and net assets of these ventures are as
follows:
DECEMBER 31, 1996 1995
-----------------------------
Assets
Total $96,760 $125,019
Less other venturers' interest 69,175 87,513
-----------------------------
Company's interest 27,585 37,506
-----------------------------
Liabilities
Total 75,408 124,319
Less other venturers' interest 53,194 87,023
-----------------------------
Company's interest 22,214 37,296
-----------------------------
Company's interest in net assets $ 5,371 $ 210
=============================
F-9
30
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
4. INVESTMENTS AND EQUITY IN JOINT VENTURES, CONTINUED
The revenue and costs of revenue of joint ventures are as follows:
YEARS ENDED DECEMBER 31, 1996 1995 1994
---------------------------------------
Revenue
Total $234,824 $321,388 $160,865
Less other venturers' interest 164,676 224,972 112,606
---------------------------------------
Company's interest 70,148 96,416 48,259
---------------------------------------
Cost of Revenue
Total 160,056 267,650 145,351
Less other venturers' interest 112,313 187,355 101,746
---------------------------------------
Company's interest 47,743 80,295 43,605
---------------------------------------
$ 22,405 $ 16,121 $ 4,654
=======================================
Additionally, the Company has a 22.2% limited partnership interest in a
partnership which constructed and operates a private toll road. At December
31, 1996 the Company's investment was $2,600 plus a commitment supported by a
letter of credit for $3,800. The Company completed construction under the
contract in 1995 and is participating in the operating results of the tollroad.
5. PROPERTY AND EQUIPMENT
DECEMBER 31, 1996 1995
--------------------------
Land $ 15,328 $ 14,019
Quarry property 34,408 35,194
Buildings and leasehold
improvements 12,973 11,657
Equipment and vehicles 388,697 361,676
Office furniture and equipment 5,485 4,570
--------------------------
456,891 427,116
Less accumulated depreciation,
depletion and amortization 278,376 251,896
--------------------------
$178,515 $175,220
==========================
6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
DECEMBER 31, 1996 1995
--------------------------
Payroll and related employee
benefits $21,627 $21,371
Accrued insurance 19,997 19,957
Income taxes 53 2,425
Other 9,990 11,588
--------------------------
$51,667 $55,341
==========================
F-10
31
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT AND CREDIT ARRANGEMENTS
DECEMBER 31, 1996 1995
-------------------------
Bank revolving credit notes $ 18,000 $ 3,000
Notes payable to bank 35,000 48,133
Other notes payable 788 2,309
-------------------------
53,788 53,442
Less current maturities 10,186 13,948
-------------------------
$43,602 $39,494
=========================
The aggregate minimum principal maturities of long-term debt for each of the
five years following December 31, 1996 are as follows: 1997 - $10,186; 1998 -
$12,135; 1999 - $13,607; 2000 - $8,860; and 2001 - $3,600.
The Company has a bank revolving line of credit of $50,000 which
allows for unsecured borrowings for up to five years through June 30, 1998,
with interest rate options. Outstanding borrowings under the revolving line of
credit at December 31, 1996 are at the IBOR interest rate plus margin (6.143%
weighted average at December 31, 1996) with principal payable semiannually
beginning December 1998 through June 2003 and interest payable quarterly.
The Company has standby letters of credit totaling approximately
$10,000 outstanding at December 31, 1996 of which $6,100 reduces the amount
available under the line of credit and $3,800 supports the commitment by the
Company related to its investment in a limited partnership. The unused and
available portion of the line of credit at December 31, 1996 was $25,859.
Notes payable to bank are unsecured with principal payable
semiannually and interest payable quarterly at primarily the IBOR rate plus
margin (6.262% at December 31, 1996) through June 2000.
Restrictive covenants under the terms of the debt agreements include
the maintenance of certain levels of working capital and cash flow. Other
covenants prohibit capital expenditures in excess of specified limits and
require the maintenance of tangible net worth (as defined) of approximately
$174,000.
8. EMPLOYEE BENEFIT AND COMPENSATION PLANS
EMPLOYEE STOCK OWNERSHIP PLAN: The Company's Employee Stock Ownership
Plan ("ESOP") covers all employees not included in collective bargaining
agreements. As of December 31, 1996, the ESOP owned 5,780,211 shares of the
Company's common stock. Dividends on shares held by the ESOP are charged to
retained earnings and all shares held by the ESOP are treated as outstanding in
computing the Company's earnings per share.
Contributions to the ESOP are at the discretion of the Board of
Directors. Contributions for the years ended December 31, 1996, 1995 and 1994
were approximately $1,550, $762 and $990, respectively.
F-11
32
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
8. EMPLOYEE BENEFIT AND COMPENSATION PLANS, CONTINUED
PROFIT SHARING PLAN: The Profit Sharing Plan is a defined
contribution plan covering all employees not included in collective bargaining
agreements. The plan receives annual contributions at the discretion of the
Board of Directors. On January 1, 1995, the Company amended the Profit Sharing
Plan to create the Granite Construction Profit Sharing and 401K Plan, beginning
for the year ended December 31, 1995. The amended plan is also a defined
contribution plan covering all employees not included in collective bargaining
agreements. Each employee can elect to have up to 3% of gross pay contributed
to the plan on a before-tax basis. The plan allows for Company matching and
additional contributions at the discretion of the Board of Directors.
Contributions to the Profit Sharing Plan for the years ended December
31, 1996 and 1995 were $4,608 and $5,681, respectively. Included in the 1996
contributions were 401K matching contributions of $1,196. There was no
contribution for the year ended December 31, 1994.
1990 OMNIBUS STOCK AND INCENTIVE PLAN: Under the Company's 1990
Omnibus Stock and Incentive Plan (the "Stock Plan") a total of 1,000,000 shares
of the Company's common stock are reserved to grant key employees of the
Company restricted common stock, incentive and nonqualified stock options,
performance units and performance shares. Restricted common stock is issued
for services to be rendered and may not be sold, transferred or pledged for
such period as determined by the compensation committee.
Restricted shares outstanding under the Plan at December 31, 1996 were
594,667 shares. Unearned compensation is amortized over the restriction
periods of generally five years. Compensation expense related to restricted
shares for the years ended December 31, 1996, 1995 and 1994 was $1,968, $1,549
and $1,122, respectively.
The exercise price for incentive and nonqualified stock options
granted under the Stock Plan may not be less than 100% and 85%, respectively,
of the fair market value at the date of the grant. Options granted will be
exercisable at such times and be subject to such restrictions and conditions,
as determined by the compensation committee, but no option shall be exercisable
later than ten years from the date of grant. Options generally vest one third
after 3 years of service from the date of grant and one third during each of
the following two years. Stock option transactions during 1996, 1995 and 1994
are summarized as follows:
December 31, 1996 1995 1994
--------------------------------------
Options outstanding, beginning of year 186,000 284,517 296,501
Options exercised (59,350) (98,517) (8,234)
Options canceled - - (3,750)
--------------------------------------
Options outstanding, end of year 126,650 186,000 284,517
======================================
At December 31, 1996, all options are 100% vested. All shares have
been granted, exercised and canceled at $11.00 per share.
OTHER: The Company also contributes to various multi-employer pension
plans on behalf of union employees. Contributions to these plans for the years
ended December 31, 1996, 1995 and 1994 were approximately $10,406, $10,705 and
$9,200 respectively.
F-12
33
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
9. INCOME TAXES
Provision for income taxes:
Years Ended December 31, 1996 1995 1994
----------------------------------------
Federal
Current $ 9,727 $18,785 $ 6,113
Deferred 3,470 (5,108) 2,769
----------------------------------------
13,197 13,677 8,882
----------------------------------------
State
Current 2,372 3,802 1,407
Deferred 492 (717) 673
----------------------------------------
2,864 3,085 2,080
----------------------------------------
$16,061 $16,762 $10,962
========================================
Reconciliation of statutory to effective tax rate:
Years Ended December 31, 1996 1995 1994
-------------------------------------
Federal statutory tax rate 35.0 % 35.0 % 35.0 %
State taxes, net of federal tax benefit 4.3 4.4 4.4
Percentage depletion deduction (1.3) (1.3) (3.4)
Other (1.0) (1.1) -
-------------------------------------
37.0 % 37.0 % 36.0 %
======================================
Deferred tax assets and liabilities:
DECEMBER 31, 1996 1995
-------------------------
DEFERRED TAX ASSETS:
Accounts receivable $ 2,041 $ 1,581
Inventory 1,050 788
Property and equipment 2,319 2,429
Insurance accruals 7,529 7,222
Deferred compensation 1,879 1,851
Contract recognition (240) 4,011
Other accrued liabilities 3,012 2,866
Other 613 1,192
Valuation allowance - -
-------------------------
18,203 21,940
-------------------------
DEFERRED TAX LIABILITIES:
Property and equipment 28,553 28,032
Contract recognition (41) 484
Other 1,206 890
-------------------------
29,718 29,406
-------------------------
$(11,515) $(7,466)
=========================
F-13
34
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
10. DISCLOSURE OF SIGNIFICANT RISKS AND UNCERTAINTIES
DISCLOSURE OF SIGNIFICANT ESTIMATES - REVENUE RECOGNITION: As
outlined in the Summary of Significant Accounting Policies, the Company's
construction revenue is recognized on the percentage of completion basis.
Consequently, construction revenue and gross margin for each reporting period
is determined on a contract by contract basis by reference to estimates by the
Company's engineers of expected costs to be incurred to complete each project.
These estimates include provisions for known and anticipated cost overruns, if
any exist or are expected to occur. These estimates may be subject to revision
in the normal course of business.
DISCLOSURE OF SIGNIFICANT ESTIMATES - LITIGATION: The Company has
been named as defendants in legal proceedings wherein substantial damages are
claimed. Such proceedings are not uncommon in the Company's business and
usually involve claims against multiple defendants who were involved in the
project which is the subject of the proceeding. Historically, the Company has
been successful in defending such actions or have settled them within insured
limits.
CONCENTRATIONS: The Company maintains the majority of cash balances
and all of its short-term investments with ten financial institutions. The
Company invests with high credit quality financial institutions, and, by
policy, limits the amount of credit exposure to any financial institution.
Substantially all of the Company's labor force is subject to collective
bargaining agreements. Collective bargaining agreements covering 35.2% of the
Company's labor force at December 31, 1996 will expire during 1997.
The Company operates in a single industry segment encompassing the
construction of infrastructure assets and has no foreign operations. Revenue
received from federal, state and local government agencies amounted to $657,247
(70.8%) in 1996, $674,640 (75.4%) in 1995 and $547,642 (79.0%) in 1994. One
customer, California Department of Transportation, represented $104,171 (11.2%)
in 1996, $88,970 (9.9%) in 1995 and $88,262 (12.7%) in 1994 of total revenue.
During the year and at December 31, 1996, the Company had significant amounts
receivable from these agencies and customer. The Company performs ongoing
credit evaluations of its customers and generally does not require collateral
although the law provides the Company the ability to file mechanics liens on
real property improved for private customers in the event of non- payment by
such customers. The Company maintains reserves for potential credit losses and
such losses have been within management's expectations.
11. LEASES
Minimum rental commitments under all noncancellable operating leases,
primarily quarry property and construction equipment, in effect at December 31,
1996 were:
Years Ending December 31,
1997 $ 3,206
1998 2,710
1999 1,478
2000 832
2001 411
Later years (through 2039) 3,570
-------
Total minimum rental commitment $12,207
=======
Operating lease rental expense was $3,593 in 1996, $4,261 in 1995 and
$2,299 in 1994.
F-14
35
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
12. SUBSEQUENT EVENT
On March 13, 1997, the Board of Directors declared a cash dividend of
$0.06 plus a one-time special cash dividend of $0.12 per share of common stock
to stockholders of record as of March 31, 1997, payable on April 18, 1997.
F-15
36
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Granite Construction Incorporated
Watsonville, California
Our report on the consolidated financial statements of Granite Construction
Incorporated is included on page F-1 of this 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule listed in the index on page 20 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
San Jose, California
February 14, 1997, except
Note 12, as to which the
date is March 13, 1997
S-1
37
SCHEDULE II
GRANITE CONSTRUCTION INCORPORATED
--------
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
(In Thousands of Dollars)
ADDITIONS
-------------------------
BALANCE AT ADJUSTMENTS BALANCE AT
BEGINNING BAD DEBT AND END OF
DESCRIPTION OF YEAR EXPENSE COLLECTIONS DEDUCTIONS(1) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996
Allowance for doubtful accounts......... $ 898 $3,614 $1,576 $(5,395) $693
============================================================================
Allowance for notes receivable.......... $ 68 $ - $ - $ - $ 68
============================================================================
YEAR ENDED DECEMBER 31, 1995
Allowance for doubtful accounts(2)...... $ 655 $ 743 $ 531 $(1,031) $898
============================================================================
Allowance for notes receivable.......... $ 309 $ 68 $ (309) $ - $ 68
============================================================================
YEAR ENDED DECEMBER 31, 1994
Allowance for doubtful accounts......... $ 698 $ 178 $ 662 $ (883) $655
============================================================================
Allowance for notes receivable.......... $ - $ 309 $ - $ - $309
============================================================================
YEAR ENDED DECEMBER 31, 1993
Allowance for doubtful accounts......... $ 592 $ 17 $1,435 $(1,346) $698
============================================================================
(1) Accounts deemed to be uncollectible and (2) $542 of adjustments
related to the acquisition of Gibbons and Reed.
S-2
38
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Granite Construction Incorporated on Form S-8 (File No. 33-36482
and 33-36485) of our report dated February 14, 1996 (except Note 12, as to
which the date is March 13, 1997) on our audits of the consolidated financial
statements and the financial statement schedule of Granite Construction
Incorporated, as of December 31, 1996 and 1995, and the years ended December
31, 1996, 1995 and 1994, which report is included in the Annual Report on Form
10-K on Page F-1.
San Jose, California
March 20, 1997
S-3
39
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.
Date: March 20, 1997 GRANITE CONSTRUCTION INCORPORATED
By: /s/ William E. Barton
-----------------------------------
[William E. Barton, Vice President
and Chief Financial Officer]
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on March 20, 1997, by the following persons in the
capacities indicated.
/s/ Richard C. Solari Chairman of the Board
- ----------------------------------- and Director
[Richard C. Solari]
/s/ David H. Watts President, Chief Executive Officer,
- ----------------------------------- and Director
[David H. Watts]
/s/ William E. Barton Vice President and Chief Financial Officer
- ----------------------------------- [Principal Accounting and Financial Officer]
[William E. Barton]
/s/ Joseph J. Barclay Director
- -----------------------------------
[Joseph J. Barclay]
/s/ Richard M. Brooks Director
- -----------------------------------
[Richard M. Brooks]
/s/ Brian C. Kelly Director
- -----------------------------------
[Brian C. Kelly]
/s/ Rebecca A. McDonald Director
- -----------------------------------
[Rebecca A. McDonald]
/s/ Denman K. McNear Director
- -----------------------------------
[Denman K. McNear]
/s/ Raymond E. Miles Director
- -----------------------------------
[Raymond E. Miles]
22
40
INDEX TO FORM 10-K EXHIBITS
Exhibit Page
No. Description No.
- ------- ----------- -----
3.1 Certificate of Incorporation of Granite Construction Incorporated [a]
3.2 Bylaws of Granite Construction Incorporated (as amended and restated effective
February 27, 1991) [b]
10.1 Granite Construction Incorporated Employee Stock Ownership Plan, through amendments
and Trust Agreement (**as to Trust Agreements only) [b]
10.1.a Amendment 3 to the Granite Construction Incorporated Employee Stock Ownership Plan,
through amendments and Trust Agreement (**as to Trust Agreements only) [c]
10.1.b Amendment 4 to the Granite Construction Incorporated Employee Stock Ownership Plan
as of May 21, 1993 [d]
10.1.c Amendment 5 to the Granite Construction Incorporated Employee Stock Ownership Plan
adopted December 16, 1993 and effective January 1, 1994 [d]
10.1.d Amendment 6 to the Granite Construction Incorporated Employee Stock Ownership Plan
adopted December 15, 1994 and effective January 1, 1995 [e]
10.1.e Amendment 7 to Granite Construction Incorporated Employee Stock Ownership Plan and
Amendment 1 to the Trust Agreement adopted December 19, 1995, effective January 1, 1996 [g]
10.2 Amendment to and Restatement of the Granite Construction Company Profit Sharing and
401K Plan adopted December 15, 1994 and effective January 1, 1995 [e]
10.2.a Amendment to and Restatement of Granite Construction Incorporated Profit Sharing and
401K Plan and Trust Agreement adopted and effective as of December 15, 1994 [e]
10.2.b Amendment 2 to the Granite Construction Incorporated Profit Sharing and 401K Plan and
Amendment 2 to the Trust Agreement adopted March 20, 1995 and effective January 1, 1996 [g]
10.2.c Amendment 3 to the Granite Construction Incorporated Profit Sharing and 401K Plan adopted
August 23, 1996 and effective January 1, 1997 25
10.3 1995 Granite Construction Company Incentive Compensation Plan [g]
10.4 Restated and Amended Granite Construction Incorporated 1990 Omnibus Stock and
Incentive Plan effective December 31, 1994 [g]
10.5 Second Amended and Restated Credit Agreement dated and effective June 15, 1995 [g]
10.5.a First Amendment to the Second Amended and Restated Credit Agreement adopted
May 31, 1996 and effective June 30, 1996 28
10.5.b Second Amendment to the Second Amended and Restated Credit Agreement adopted and
effective December 31, 1996 38
10.6 Form of Director and Officer Indemnification Agreement [a]
S-23
41
10.7 Form of Executive Officer Employment Agreement [a]
10.8 Stock Purchase Agreement among Granite Construction Incorporated, Gibbons
Company and all of the Shareholders of Gibbons Company, dated March 17, 1995 [f]
10.9 Restated Gibbons Company Profit Sharing and Retirement Plan adopted December
30, 1994 and effective January 1, 1989 47
10.9.a First Amendment to the Restated Gibbons Company Profit Sharing and Retirement Plan
adopted March 29, 1995 and effective January 1, 1989 151
10.9.b Second Amendment to the Restated Gibbons Company Profit Sharing and Retirement Plan
adopted April 27, 1995 and effective May 8, 1995 and May 31, 1995 159
10.9.c Third Amendment to the restated Gibbons Company Profit Sharing and Retirement Plan
adopted June 23, 1995 and effective July 1, 1995 161
10.9.d Fourth Amendment to the Restated Gibbons Company Profit Sharing and Retirement Plan
adopted December 1, 1995 163
10.9.e Fifth Amendment to the Restated Gibbons Company Profit Sharing and Retirement Plan
adopted July 16, 1996 and effective January 1, 1995 165
10.10 Granite Construction Incorporated Key Management Deferred Compensation Plan
adopted and effective January 1, 1996 167
10.11 Granite Construction Incorporated Key Management Deferred Incentive Compensation
Plan adopted and effective January 1, 1996 173
11.1 Computation of Net Income per Share 179
21.1 List of Subsidiaries of Granite Construction Incorporated 180
24.1 Consent of Coopers & Lybrand L.L.P. is contained on page 21 of this Report
[A] Incorporated by reference to the exhibits filed with the Company's
Registration Statement on Form S-1 (No. 33-33795).
[B] Incorporated by reference to the exhibits filed with the Company's
Form 10-K for the year ended December 31, 1991.
[C] Incorporated by reference to the exhibits filed with the Company's
Form 10-K for the year ended December 31, 1992.
[D] Incorporated by reference to the exhibits filed with the Company's
Form 10-K for the year ended December 31, 1993.
[E] Incorporated by reference to the exhibits filed with the Company's
Form 10-K for the year ended December 31, 1994.
[F] Incorporated by reference to the exhibits filed with the Company's 8-K
dated May 8, 1995.
[G] Incorporated by reference to the exhibits filed with the Company's
10-K for the year ended December 31, 1995.
S-24