EX-99.1 13 d69739dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

 

     September 26,
2015
(unaudited)
    December 27,
2014
(audited)
 
Assets     

Current assets:

    

Cash and cash equivalents

   $ 5,482     $ 13,215  

Accounts receivable, net

     205,939       141,302  

Costs and estimated earnings in excess of billings

     34,175       10,174  

Inventories

     138,036       111,553  

Other current assets

     21,762       17,172  
  

 

 

   

 

 

 

Total current assets

     405,394       293,416  

Property, plant and equipment, less accumulated depreciation, depletion and amortization (September 26, 2015 - $343,087 and December 27, 2014 - $279,375)

     1,276,227       950,601  

Goodwill

     567,836       419,270  

Intangible assets, less accumulated amortization (September 26, 2015 - $4,851 and December 27, 2014 - $3,073)

     15,481       17,647  

Other assets

     51,798       48,843  
  

 

 

   

 

 

 

Total assets

   $ 2,316,736     $ 1,729,777  
  

 

 

   

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest     

Current liabilities:

    

Current portion of debt

   $ 68,125     $ 5,275  

Current portion of acquisition-related liabilities

     17,691       18,402  

Accounts payable

     113,226       78,854  

Accrued expenses

     90,880       101,496  

Billings in excess of costs and estimated earnings

     11,005       8,958  
  

 

 

   

 

 

 

Total current liabilities

     300,927       212,985  

Long-term debt

     1,148,068       1,059,642  

Acquisition-related liabilities

     33,320       42,736  

Other noncurrent liabilities

     114,575       93,691  
  

 

 

   

 

 

 

Total liabilities

     1,596,890       1,409,054  
  

 

 

   

 

 

 

Commitments and contingencies (see note 11)

    

Redeemable noncontrolling interest

     —         33,740  

Member’s equity

     1,039,763       518,647  

Accumulated deficit

     (293,101 )     (217,416 )

Accumulated other comprehensive loss

     (28,087 )     (15,546 )
  

 

 

   

 

 

 

Member’s interest

     718,575       285,685  

Noncontrolling interest

     1,271       1,298  
  

 

 

   

 

 

 

Total member’s interest

     719,846        286,983  
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

   $ 2,316,736     $ 1,729,777  
  

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

1


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(In thousands)

 

     Three months ended     Nine months ended  
     September 26,
2015
    September 27,
2014
    September 26,
2015
    September 27,
2014
 

Revenue:

        

Product

   $ 338,020      $ 258,860      $ 748,210      $ 580,351   

Service

     88,266        89,276        182,224        196,214   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenue

     426,286        348,136        930,434        776,565   

Delivery and subcontract revenue

     45,619        46,623        100,401        93,580   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     471,905        394,759        1,030,835        870,145   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below):

        

Product

     207,500        176,967        490,923        411,581   

Service

     59,280        61,907        128,514        140,773   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cost of revenue

     266,780        238,874        619,437        552,354   

Delivery and subcontract cost

     45,619        46,623        100,401        93,580   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     312,399        285,497        719,838        645,934   
  

 

 

   

 

 

   

 

 

   

 

 

 

General and administrative expenses

     42,539        35,517        149,484        105,872   

Depreciation, depletion, amortization and accretion

     33,306        23,255        86,818        63,950   

Transaction costs

     304        2,741        8,044        7,737   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     83,357        47,749        66,651        46,652   

Other income, net

     (1,171     (1,408     (678     (2,299

Loss on debt financings

     32,641        —          64,313        —     

Interest expense

     20,436        22,085        61,649        62,555   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before taxes

     31,451        27,072        (58,633     (13,604

Income tax benefit

     (2,655     (1,038     (12,468     (2,498
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     34,106        28,110        (46,165     (11,106

Income from discontinued operations

     (57     (7     (815     (356
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     34,163        28,117        (45,350     (10,750

Net income (loss) attributable to noncontrolling interest

     52        1,243        (1,917     674   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to member of Summit Materials, LLC

   $ 34,111      $ 26,874      $ (43,433   $ (11,424
  

 

 

   

 

 

   

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

2


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

 

     Three months ended     Nine months ended  
     September 26,     September 27,     September 26,     September 27,  
     2015     2014     2015     2014  

Net income (loss)

   $ 34,163      $ 28,117      $ (45,350   $ (10,750

Other comprehensive (loss) income:

        

Postretirement curtailment adjustment

     —          —          —          (1,346

Postretirement liability adjustment

     —          —          —          2,164   

Foreign currency translation adjustment

     (6,296     (1,764     (11,531     (1,764

Loss on cash flow hedges

     (1,010     —          (1,010     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

     (7,306     (1,764     (12,541     (946
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     26,857        26,353        (57,891     (11,696

Less comprehensive income (loss) attributable to the noncontrolling interest

     52        1,243        (1,917     919   
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to member of Summit Materials, LLC

   $ 26,805      $ 25,110      $ (55,974   $ (12,615
  

 

 

   

 

 

   

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

3


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)

 

     Nine months ended  
     September 26,     September 27,  
     2015     2014  

Cash flow from operating activities:

    

Net loss

   $ (45,350   $ (10,750

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation, depletion, amortization and accretion

     90,207        68,467   

Share-based compensation expense

     18,589        1,746   

Deferred income tax benefit

     —          (525

Net gain on asset disposals

     (4,990     (219

Net gain on debt financings

     (4,570     —     

Other

     136        (463

(Increase) decrease in operating assets, net of acquisitions:

    

Accounts receivable, net

     (56,287     (54,463

Inventories

     (3,830     (3,843

Costs and estimated earnings in excess of billings

     (23,402     (15,009

Other current assets

     (4,401     (3,910

Other assets

     (524     (675

Increase (decrease) in operating liabilities, net of acquisitions:

    

Accounts payable

     29,383        9,433   

Accrued expenses

     (12,272     2,578   

Billings in excess of costs and estimated earnings

     (763     270   

Other liabilities

     (853     (3,473
  

 

 

   

 

 

 

Net cash used in operating activities

     (18,927     (10,836
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Acquisitions, net of cash acquired

     (505,466     (351,941

Purchases of property, plant and equipment

     (69,672     (64,244

Proceeds from the sale of property, plant and equipment

     8,883        9,575   

Other

     610        757   
  

 

 

   

 

 

 

Net cash used for investing activities

     (565,645     (405,853
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Capital contributions by member

     490,916        24,350   

Capital issuance costs

     (12,539     —     

Proceeds from debt issuances

     1,415,750        657,217   

Debt issuance costs

     (10,911     (8,834

Payments on debt

     (1,251,407     (258,337

Payments on acquisition-related liabilities

     (15,018     (5,807

Distributions from partnership

     (39,952     —     

Other

     —          (88
  

 

 

   

 

 

 

Net cash provided by financing activities

     576,839        408,501   
  

 

 

   

 

 

 

Net decrease in cash

     (7,733     (8,188

Cash – beginning of period

     13,215        14,917   
  

 

 

   

 

 

 

Cash – end of period

   $ 5,482      $ 6,729   
  

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

 

4


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Member’s Interest

(In thousands)

 

     Total Member’s Interest                    
     Member’s
equity
    Accumulated
deficit
    Accumulated
other
comprehensive
loss
    Noncontrolling
interest
    Total
member’s
interest
    Redeemable
noncontrolling
interest
 

Balance — December 27, 2014

   $ 518,647      $ (217,416   $ (15,546   $ 1,298      $ 286,983      $ 33,740   

Contributed capital

     542,479        —          —          —          542,479     

Accretion/ redemption value adjustment

     —          (32,252     —          —          (32,252     (31,850

Net loss

     —          (43,433     —          (27     (43,460     (1,890

Other comprehensive loss

     —          —          (12,541     —          (12,541     —     

Distributions

     (39,952     —          —          —          (39,952     —     

Share-based compensation

     18,589        —          —          —          18,589        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance — September 26, 2015

   $ 1,039,763      $ (293,101   $ (28,087   $ 1,271      $ 719,846      $ —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
            

Balance — December 28, 2013

     486,896        (198,511     (6,045     1,211        283,551        24,767   

Contributed capital

     24,350        —          —          —          24,350        —     

Accretion/ redemption value adjustment

     —          (6,211     —          —          (6,211     6,211   

Net loss

     —          (11,424     —          77        (11,347     597   

Other comprehensive income

     —          —          (1,191     —          (1,191     245   

Share-based compensation

     3,732        (1,982     —          —          1,750        —     

Repurchase of member’s interest

     (88     —          —          —          (88     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance —September 27, 2014

   $ 514,890      $ (218,128   $ (7,236   $ 1,288      $ 290,814      $ 31,820   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

5


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Tables in thousands)

 

1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Summit Materials, LLC (“Summit LLC” and, together with its subsidiaries, the “Company”) is a vertically integrated, construction materials company. The Company is engaged in the production and sale of aggregates, cement, ready-mixed concrete, asphalt paving mix and concrete products and owns and operates quarries, sand and gravel pits, two cement plants, cement distribution terminals, ready-mixed concrete plants, asphalt plants and landfill sites. It is also engaged in paving and related services. The Company is organized by geographic region and has three operating segments, which are also its reporting segments: the West; Central; and East regions.

Substantially all of the Company’s products and services are produced, consumed and performed outdoors, primarily in the spring, summer and fall. Seasonal changes and other weather-related conditions can affect the production and sales volumes of its products and delivery of services. Therefore, the financial results for any interim period are typically not indicative of the results expected for the full year. Furthermore, the Company’s sales and earnings are sensitive to national, regional and local economic conditions and to cyclical changes in construction spending, among other factors.

Summit LLC is a wholly owned indirect subsidiary of Summit Materials Holdings L.P. (“Summit Holdings”), whose primary owners are Summit Materials, Inc. (“Summit Inc.”) and certain investment funds affiliated with Blackstone Capital Partners V L.P. and Silverhawk Summit, L.P. (collectively, the “Sponsors”). Summit Inc. was formed as a Delaware corporation on September 23, 2014 to be a holding company. Its sole material asset is a controlling equity interest in Summit Holdings. Pursuant to a reorganization into a holding company structure (the “Reorganization”) in connection with Summit Inc.’s March 2015 initial public offering, Summit Inc. became a holding corporation operating and controlling all of the business and affairs of Summit Holdings and its subsidiaries, including Summit LLC.

Initial Public Offering—Summit Inc. commenced operations on March 11, 2015 upon the pricing of the initial public offering of its Class A common stock (“IPO”). Summit Inc. raised $433.0 million, net of underwriting discounts, through the issuance of 25,555,555 shares of Class A common stock at a public offering price of $18.00 per share. Summit Inc. used the offering proceeds to purchase a number of newly-issued Class A Units (“LP Units”) from Summit Holdings equal to the number of shares of Class A common stock issued to the public. Summit Inc. caused Summit Holdings to use these proceeds: (i) to redeem $288.2 million in aggregate principal amount of outstanding 10 1/2% Senior Notes due January 31, 2020 (“2020 Notes”); (ii) to purchase 71,428,571 Class B Units of Continental Cement Company, L.L.C. (“Continental Cement”); (iii) to pay a one-time termination fee of $13.8 million primarily to affiliates of the Sponsors in connection with the termination of a transaction and management fee agreement; and (iv) for general corporate purposes. The $288.2 million redemption of 2020 Notes was completed in the second quarter of 2015 at a redemption price equal to par plus an applicable premium of $38.2 million plus $5.2 million of accrued and unpaid interest.

Follow-On Offering—On August 11, 2015, Summit Inc. raised $555.8 million, net of underwriting discounts, through the issuance of 22,425,000 shares of Class A common stock at a public offering price of $25.75 per share. Summit Inc. used these proceeds to purchase 3,750,000 newly-issued LP Units from Summit Holdings and 18,675,000 LP Units from certain of our pre-IPO owners, at a purchase price per LP Unit equal to the public offering price per share of Class A common stock, less underwriting discounts and commissions. Summit Holdings used the proceeds from the 3,750,000 newly-issued LP Units to pay the deferred purchase price of $80.0 million related to the July 17, 2015 acquisition of a cement plant and a quarry in Davenport, Iowa, and seven cement terminals along the Mississippi River (the “Davenport Assets”) and for general corporate purposes.

Basis of Presentation—These unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto as of and for the year ended December 27, 2014. The Company continues to follow the accounting policies set forth in those consolidated financial statements.

Management believes that these consolidated interim financial statements include all adjustments, normal and recurring in nature, that are necessary to present fairly the financial position of the Company as of September 26, 2015, the results of operations for the three and nine months ended September 26, 2015 and September 27, 2014 and cash flows for the nine months ended September 26, 2015 and September 27, 2014. All significant intercompany balances and transactions have been eliminated.

 

6


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

The Company’s fiscal year is based on a 52-53 week year with each quarter composed of 13 weeks ending on a Saturday. The 53-week year occurs approximately once every seven years and will occur in 2015. The additional week in the 53-week year will be included in the fourth quarter.

The consolidated financial statements of the Company include the accounts of Summit LLC and its subsidiaries, including noncontrolling interests. Noncontrolling interests in consolidated subsidiaries represent a 20% ownership in Ohio Valley Asphalt, LLC and, prior to the IPO and concurrent purchase of the noncontrolling interests of Continental Cement, a 30% redeemable ownership in Continental Cement.

Use of Estimates—Preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenue and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangibles and other long-lived assets, pension and other postretirement obligations and asset retirement obligations. Estimates also include revenue earned on contracts and costs to complete contracts. Most of the Company’s paving and related services are performed under fixed unit-price contracts with state and local governmental entities. Management regularly evaluates its estimates and assumptions based on historical experience and other factors, including the current economic environment. Management adjusts such estimates and assumptions when circumstances dictate. As future events and their effects cannot be determined with precision, actual results can differ significantly from estimates made. Changes in estimates, including those resulting from continuing changes in the economic environment, are reflected in the Company’s consolidated financial statements when the change in estimate occurs.

Business and Credit Concentrations—The Company’s operations are conducted primarily across 18 U.S. states and in British Columbia, Canada, with the most significant revenue generated in Texas, Kansas, Kentucky, Utah and Missouri. The Company’s accounts receivable consist primarily of amounts due from customers within these areas. Therefore, collection of these accounts is dependent on the economic conditions in the aforementioned states, as well as specific situations affecting individual customers. Credit granted within the Company’s trade areas has been granted to many customers, and management does not believe that a significant concentration of credit exists with respect to any individual customer or group of customers. No single customer accounted for more than 10% of total revenue in the three and nine months ended September 26, 2015 and September 27, 2014.

Fair Value Measurements—Certain acquisitions made by the Company require the payment of contingent amounts of purchase consideration. These payments are contingent on specified operating results being achieved in periods subsequent to the acquisition and will only be made if earn-out thresholds are achieved. Contingent consideration obligations are measured at fair value each reporting period. Any adjustments to fair value are recognized in earnings in the period identified. In the third quarter of 2015, the Company entered into interest rate derivatives on $200.0 million of its term loan borrowings to add stability to interest expense and to manage its exposure to interest rate movements. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and will be subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The fair value of contingent consideration and derivatives as of September 26, 2015 and December 27, 2014 was:

 

     September 26,
2015
     December 27,
2014
 

Current portion of derivatives and acquisition-related liabilities:

     

Contingent consideration

   $ 4,559       $ 2,375   

Cash flow hedge

     114      

Derivatives and acquisition- related liabilities:

     

Contingent consideration

   $ 2,711       $ 5,379   

Cash flow hedge

     897      

The fair value of contingent consideration was based on unobservable, or Level 3, inputs, including projected probability-weighted cash payments and an 11.0% discount rate, which reflects a market discount rate. Changes in fair value may occur as a result of a change in actual or projected cash payments, the probability weightings applied by the Company to projected payments or a change in the discount rate. Significant increases or decreases in any of these inputs in isolation could result in a lower, or higher, fair value measurement. The fair value of the derivatives are based on observable, or Level 2, inputs such as interest rates, bond yields and prices in inactive markets. There were no material valuation adjustments in the three or nine months ended September 26, 2015 or September 27, 2014.

 

7


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

Financial Instruments—The Company’s financial instruments include debt and certain acquisition-related liabilities (deferred consideration and noncompete obligations). The carrying value and fair value of these financial instruments as of September 26, 2015 and December 27, 2014 was:

 

     September 26, 2015      December 27, 2014  
     Fair Value      Carrying Value      Fair Value      Carrying Value  

Level 2

           

Long-term debt(1)

   $ 1,155,557       $ 1,156,193       $ 1,101,873       $ 1,064,917   

Level 3

           

Current portion of deferred consideration and noncompete obligations(2)

     13,132         13,132         16,027         16,027   

Long term portion of deferred consideration and noncompete obligations(3)

     30,609         30,609         37,357         37,357   

 

  (1) $8.1 million and $5.3 million included in current portion of debt as of September 26, 2015 and December 27, 2014, respectively. Excludes $60.0 million outstanding on the revolving credit facility as of September 26, 2015.
  (2) Included in current portion of acquisition-related liabilities on the balance sheet.
  (3) Included in acquisition-related liabilities on the balance sheet.

The fair value of debt was determined based on observable, or Level 2 inputs, such as interest rates, bond yields and quoted prices in inactive markets. The fair values of the deferred consideration and noncompete obligations were determined based on unobservable, or Level 3, inputs, including the cash payment terms in the purchase agreements and a discount rate reflecting the Company’s credit risk.

Redeemable Noncontrolling Interest — On March 17, 2015, upon the consummation of the IPO and the transactions contemplated by a contribution and purchase agreement entered into with the holders of all of the outstanding Class B Units of Continental Cement, Continental Cement became a wholly-owned indirect subsidiary of Summit LLC. The noncontrolling interests of Continental Cement were acquired for aggregate consideration of $64.1 million, consisting of $35.0 million of cash, 1,029,183 shares of Summit Inc.’s Class A common stock and $15.0 million aggregate principal amount of non-interest bearing notes payable in six annual installments of $2.5 million, beginning on March 17, 2016. The notes payable is a liability of Summit Holdings and, is therefore not included in the liabilities of Summit LLC.

New Accounting Standards — In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity will present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The ASU is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The guidance will be applied retrospectively to all prior periods (i.e., the balance sheet for each period will be adjusted). Had the Company adopted this guidance as of the current period, both Other Assets (noncurrent) and Long-term Debt as of September 26, 2015 and December 27, 2014, would have decreased by $8.8 million and $16.8 million, respectively.

In April 2015, the FASB issued a new accounting standard, ASU 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets, which gives an employer whose fiscal year-end does not coincide with a calendar month-end (e.g., an entity that has a 52- or 53-week fiscal year) the ability, as a practical expedient, to measure defined benefit retirement obligations and related plan assets as of the month-end that is closest to its fiscal year-end. The ASU is effective for public business entities for financial statements issued for fiscal years beginning after December 31, 2015, and interim periods within those fiscal years. Early application is permitted, and the ASU should be applied prospectively. The Company does not expect the adoption of this ASU to have a material effect on its financial position or results of operations.

In May 2014, the FASB issued a new accounting standard to improve and converge the financial reporting requirements for revenue from contracts with customers. ASU No. 2014-09, Revenue from Contracts with Customers, prescribes a five-step model for revenue recognition that will replace most existing revenue recognition guidance in U.S. GAAP. The ASU will supersede nearly all existing revenue recognition guidance under U.S. GAAP and provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and

 

8


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB postponed the effective date of the new revenue standard by one year to the first quarter of 2018. Early adoption is permitted, but no earlier than 2017. Management is currently assessing the effect that the adoption of this standard will have on the consolidated financial statements.

Reclassifications — Certain amounts in the prior year have been reclassified to conform to the current period’s presentation.

 

2. REORGANIZATION

Prior to the IPO and Reorganization, the capital structure of Summit Holdings consisted of six different classes of limited partnership interests (Class A-1, Class A-2, Class B-1, Class C, Class D-1 and Class D-2), each of which was subject to unique distribution rights. There were no outstanding Class A-2 interests. In connection with the IPO and the Reorganization, the limited partnership agreement of Summit Holdings was amended and restated to, among other things, modify its capital structure by creating a single new class of units (the “LP Units”), referred to as the “Reclassification.” Immediately following the Reclassification, 69,007,297 LP Units were outstanding. In addition, in substitution for part of the economic benefit of the Class C and Class D interests that was not reflected in the conversion of such interests to LP Units, warrants were issued to holders of Class C interests to purchase an aggregate of 160,333 shares of Summit Inc.’s Class A common stock, and options were issued to holders of Class D interests to purchase an aggregate of 4,358,842 shares of Summit Inc.’s Class A common stock (“leverage restoration options”). The exercise price of the warrants and leverage restoration options is the IPO price of $18.00 per share. In conjunction with the Reclassification of the equity-based awards, the Company recognized a $14.5 million modification charge in general and administrative costs.

The leverage restoration options were granted under the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). The leverage restoration options that correlate to time-vesting interests vest over four years, beginning on the Reclassification date and the leverage restoration options that correlate to performance-vesting interests vest only when both the relevant return multiple is achieved and a four year time-vesting condition is satisfied. The time-based vesting condition for both the time-vesting and performance-vesting interests will be satisfied with respect to 25% of the performance-vesting options on each of the first four anniversaries of the Reclassification date, subject to the employee’s continued employment through the applicable vesting date.

The Company also granted 240,000 options to purchase shares of Summit Inc.’s Class A common stock under the Omnibus Incentive Plan to certain employees some of whom had not previously been granted equity-based interests. These stock options have an exercise price of $18.00 per share, the IPO price, and are subject to a time-based vesting condition that will be satisfied with respect to 25% of the award on each of the first four anniversaries of the grant date, subject to the employee’s continued employment through the applicable vesting date.

 

3. ACQUISITIONS

On July 17, 2015, the Company acquired the Davenport Assets for a purchase price of $450.0 million in cash and a cement distribution terminal in Bettendorf, Iowa. The operating results of the acquired business have been included in the Central region’s results of operations since the date of the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair value. Goodwill recognized in connection with the acquisition is primarily attributable to the expected profitability, assembled workforces and operational infrastructure of the acquired business and the synergies expected to result after its integration. The Davenport Assets were immediately integrated into the Company’s existing cement operations such that it is not practicable to report revenue and net income separately for the Davenport Assets.

Pro Forma Financial Information (unaudited) — The following unaudited supplemental pro forma information presents the financial results as if the Davenport Assets had been acquired on the first day of the 2014 fiscal year. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on the first day of the preceding fiscal year, nor is it indicative of any future results. The pro forma adjustments include a reduction of transaction costs of $6.5 million and additional depreciation, depletion, amortization and accretion of $7.5 million.

 

     Three months ended      Nine months ended  
     September 26, 2015      September 26, 2015  

Revenue

   $ 477,706       $ 1,069,305   

Net income

     67,229         24,506   

 

9


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

The purchase price allocation for the Davenport Assets has not been finalized due to the recent timing of the acquisition. The following table summarizes aggregated information regarding the estimated fair values of the assets acquired and liabilities assumed in conjunction with the acquisition:

 

     September 26, 2015  

Inventories

   $ 21,538  

Property, plant and equipment

     272,815  

Other assets

     6,537  

Financial liabilities

     (1,509 )

Other long-term liabilities

     (95 )
  

 

 

 

Net assets acquired

     299,286  

Goodwill

     150,710  
  

 

 

 

Total consideration

     449,996  
  

 

 

 

Transfer of assets

     (2,182 )

Working capital true-up

     896  
  

 

 

 

Net cash paid for acquisitions

   $ 448,710  
  

 

 

 

 

4. GOODWILL

Changes in the carrying amount of goodwill, by reportable segment, from December 27, 2014 to September 26, 2015 are summarized as follows:

 

     West      Central      East      Total  

Balance, December 27, 2014

   $ 297,085       $ 96,025       $ 26,160       $ 419,270   

Acquisitions (1)

     4,579         150,929         —           155,508   

Foreign currency translation adjustments

     (6,942      —           —           (6,942
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance, September 26, 2015

   $ 294,722       $ 246,954       $ 26,160       $ 567,836   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (1) Includes certain working capital adjustments related to 2014 acquisitions

 

5. ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consisted of the following as of September 26, 2015 and December 27, 2014:

 

     September 26,      December 27,  
     2015      2014  

Trade accounts receivable

   $ 194,235       $ 131,060   

Retention receivables

     13,396         12,053   

Receivables from related parties

     705         333   
  

 

 

    

 

 

 

Accounts receivable

     208,336         143,446   

Less: Allowance for doubtful accounts

     (2,397      (2,144
  

 

 

    

 

 

 

Accounts receivable, net

   $ 205,939       $ 141,302   
  

 

 

    

 

 

 

Retention receivables are amounts earned by the Company but held by customers until paving and related service contracts and projects are near completion or fully completed. Amounts are expected to be billed and collected within one year.

 

10


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

 

6. INVENTORIES

Inventories consisted of the following as of September 26, 2015 and December 27, 2014:

 

     September 26,      December 27,  
     2015      2014  

Aggregate stockpiles

   $ 90,776       $ 88,211   

Finished goods

     11,284         8,826   

Work in process

     6,511         1,801   

Raw materials

     29,465         12,715   
  

 

 

    

 

 

 

Total

   $ 138,036       $ 111,553   
  

 

 

    

 

 

 

 

7. ACCRUED EXPENSES

Accrued expenses consisted of the following as of September 26, 2015 and December 27, 2014:

 

     September 26,      December 27,  
     2015      2014  

Interest

   $ 12,973       $ 32,475   

Payroll and benefits

     22,095         20,326   

Capital lease obligations

     16,065         17,530   

Insurance

     13,710         11,402   

Non-income taxes

     10,221         5,520   

Professional fees

     1,305         3,299   

Other (1)

     14,511         10,944   
  

 

 

    

 

 

 

Total

   $ 90,880       $ 101,496   
  

 

 

    

 

 

 

 

  (1) Consists primarily of subcontractor and working capital settlement accruals.

 

11


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

 

8. DEBT

Debt consisted of the following as of September 26, 2015 and December 27, 2014:

 

     September 26,      December 27,  
     2015      2014  

Revolving credit facility

   $ 60,000       $ —     
  

 

 

    

 

 

 

Long-term debt:

     

10 1/2% Senior Notes, due 2020:

     

$153.8 million senior notes, including a $5.5 million net premium at September 26, 2015 and $625.0 million senior notes, including a $26.5 million net premium at December 27, 2014

     159,365         651,548   

6 1/8% Senior Notes, due 2023:

     

$350.0 million senior notes, issued at par at September 26, 2015

     350,000      

Term Loan, due 2022:

     

$650.0 million term loan, net of $3.1 million discount at September 26, 2015 and $415.7 million term loan, net of $2.3 million discount at December 27, 2014

     646,828         413,369   

Total

     1,156,193         1,064,917   

Current portion of long-term debt

     8,125         5,275   
  

 

 

    

 

 

 

Long-term debt

   $ 1,148,068       $ 1,059,642   
  

 

 

    

 

 

 

The contractual payments of long-term debt, including current maturities, for the five years subsequent to September 26, 2015, are as follows:

 

2015 (three months)

   $ 3,250   

2016

     6,500   

2017

     6,500   

2018

     4,875   

2019

     6,500   

2020

     161,925   

Thereafter

     964,250   
  

 

 

 

Total

     1,153,800   

Plus: Original issue net premium

     2,393   
  

 

 

 

Total debt

   $ 1,156,193   
  

 

 

 

Senior Notes—The 2020 Notes were issued under an indenture dated January 30, 2012 (as amended and supplemented, the “2012 Indenture”) by Summit LLC and Summit Materials Finance Corp. (collectively, the “Issuers”). The Indenture contains covenants limiting, among other things, Summit LLC and its restricted subsidiaries’ ability to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The 2012 Indenture also contains customary events of default. Interest on the 2020 Notes is payable semi-annually in arrears. On September 8, 2014 and January 17, 2014, the Issuers issued an additional $115.0 million and $260.0 million, respectively, aggregate principal amount of 2020 Notes (the “Additional Notes”), receiving proceeds of $409.3 million, before payment of fees and expenses and including an aggregate $34.3 million premium. The proceeds from the sale of the Additional Notes were used for the purchases of acquisitions, to make payments on the revolving credit facility and for general corporate purposes. The Additional Notes are treated as a single series with the $250.0 million of 2020 Notes issued in January 2012 (the “Existing Notes”) and have substantially the same terms as those of the Existing Notes. The Additional Notes and the Existing Notes are treated as one class under the 2012 Indenture.

 

12


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

The Issuers issued $350.0 million in aggregate principal amount of 6.125% senior notes due July 15, 2023 (the “2023 Notes”) under an indenture dated July 28, 2015 (as amended and supplemented, the “2015 Indenture”). The net proceeds from the 2023 Notes, with proceeds from the refinancing of the term loan described below, were used to pay the $370.0 million initial purchase price for the Davenport Assets and to redeem $183.0 million aggregate principal amount of the 2020 Notes and pay related fees and expenses. The 2015 Indenture contains covenants and events of default generally consistent with the 2012 Indenture. The 2023 Notes were issued at 100% of their par value. Interest on the 2023 Notes is payable semi-annually in arrears on January 15 and July 15 of each year commencing on January 15, 2016. As of September 26, 2015 and December 27, 2014, the Company was in compliance with all covenants under both indentures, as applicable.

In April and August 2015, using proceeds from the IPO and the refinancing of the term loan described below, $288.2 million and $183.0 million, respectively, aggregate principal amount of the outstanding 2020 Notes were redeemed at a price equal to par plus an applicable premium. As a result of the redemptions, net charges of $14.1 million and $45.4 million were recognized in the three and nine months ended September 26, 2015, respectively. The fees included $18.2 million and $56.4 million for the applicable prepayment premium and $2.8 million and $7.5 million for the write-off of deferred financing fees, partially offset by $6.9 million and $18.5 million of net benefit from the write-off of the original issuance net premium in the three and nine months ended September 26, 2015, respectively.

Senior Secured Credit Facilities— Summit LLC has credit facilities that provide for term loans in an aggregate amount of $650.0 million and revolving credit commitments in an aggregate amount of $235.0 million (the “Senior Secured Credit Facilities”). Under the Senior Secured Credit Facilities, required principal repayments of 0.25% of term debt are due on the last business day of each March, June, September and December. The unpaid principal balance is due in full on the maturity date, which is July 17, 2022.

On July 17, 2015, Summit LLC refinanced its term loan under the Senior Secured Credit Facilities (the “Refinancing”). The Refinancing, among other things: (i) reduced the applicable margins used to calculate interest rates for term loans under our Senior Secured Credit Facilities to 3.25% for LIBOR rate loans and 2.25% for base rate loans, subject to a LIBOR floor of 1.00% (and one 25 basis point step down upon Summit LLC achieving a certain first lien net leverage ratio); (ii) increased term loans borrowed under our term loan facility from $422.0 million to an aggregate $650.0 million; and (iii) created additional flexibility under the financial maintenance covenants, which are tested quarterly, by increasing the applicable maximum Consolidated First Lien Net Leverage Ratio (as defined in the credit agreement governing the Senior Secured Credit Facilities).

On March 11, 2015, Summit LLC entered into Amendment No. 3 to the credit agreement governing the Senior Secured Credit Facilities, which became effective on March 17, 2015 upon the consummation of the IPO. The amendment: (i) increased the size of the revolving credit facility from $150.0 million to $235.0 million; (ii) extended the maturity date of the revolving credit facility to March 11, 2020; (iii) amended certain covenants; and (iv) permits periodic tax distributions as contemplated in a tax receivable agreement, dated as of March 11, 2015, with Summit Holdings. As a result of this amendment, a charge of $0.4 million of deferred financing was recognized in the nine months ended September 26, 2015.

The revolving credit facility bears interest per annum equal to, at Summit LLC’s option, either (i) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A. and (c) LIBOR plus 1.00%, plus an applicable margin of 2.5% for base rate loans or (ii) a LIBOR rate determined by reference to Reuters prior to the interest period relevant to such borrowing adjusted for certain additional costs plus an applicable margin of 3.5% for LIBOR rate loans. The interest rate in effect at September 26, 2015 was 3.6%.

There were $60.0 million of outstanding borrowings under the revolving credit facility as of September 26, 2015, leaving remaining borrowing capacity of $150.6 million, which is net of $24.4 million of outstanding letters of credit. The outstanding letters of credit are renewed annually and support required bonding on construction projects and the Company’s insurance liabilities.

Summit LLC’s Consolidated First Lien Net Leverage Ratio, as such term is defined in the Senior Secured Credit Facilities, should be no greater than 4.75:1.0 as of each quarter-end. As of September 26, 2015 and December 27, 2014, Summit LLC was in compliance with all covenants.

Summit LLC’s wholly-owned domestic subsidiary companies, subject to certain exclusions and exceptions, are named as subsidiary guarantors of the 2020 Notes, the 2023 Notes and the Senior Secured Credit Facilities. In addition, Summit LLC has pledged substantially all of its assets as collateral, subject to certain exclusions and exceptions, for the Senior Secured Credit Facilities.

Interest expense related to debt totaled $17.8 million and $54.6 million in the three and nine months ended September 26, 2015, respectively, and $19.9 million and $56.4 million in the three and nine months ended September 27, 2014, respectively. The

 

13


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

following table presents the activity for the deferred financing fees for the nine months ended September 26, 2015 and September 27, 2014:

 

     Deferred financing fees  

Balance — December 27, 2014

   $ 17,215   

Loan origination fees

     10,911   

Amortization

     (2,731

Write off of deferred financing fees

     (12,135
  

 

 

 

Balance — September 26, 2015

   $ 13,260   
  

 

 

 

Balance — December 28, 2013

   $ 11,485   

Loan origination fees

     9,281   

Amortization

     (2,875
  

 

 

 

Balance —September 27, 2014

   $ 17,891   
  

 

 

 

Other—On January 15, 2015, the Company’s wholly-owned subsidiary in British Columbia, Canada entered into an agreement with HSBC for a (i) $6.0 million Canadian dollar (“CAD”) revolving credit commitment to be used for operating activities that bears interest per annum equal to the bank’s prime rate plus 0.20%, (ii) $0.5 million CAD revolving credit commitment to be used for capital equipment that bears interest per annum at the bank’s prime rate plus 0.90% and (iii) $0.4 million CAD revolving credit commitment to provide guarantees on behalf of that subsidiary. There were no amounts outstanding under this agreement as of September 26, 2015.

 

9. ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in each component of accumulated other comprehensive loss consisted of the following:

 

     Change in
retirement plans
     Foreign currency
translation
adjustments
     Cash flow hedge
adjustments
     Accumulated
other
comprehensive
loss
 

Balance — December 27, 2014

   $ (9,730    $ (5,816    $ —         $ (15,546

Foreign currency translation adjustment

     —           (11,531      —           (11,531

Loss on cash flow hedges

     —           —           (1,010      (1,010
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance — September 26, 2015

   $ (9,730    $ (17,347    $ (1,010    $ (28,087
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance — December 28, 2013

   $ (6,045    $ —         $ —         $ (6,045

Postretirement curtailment adjustment

     (942      —           —           (942

Postretirement liability adjustment

     1,515         —           —           1,515   

Foreign currency translation adjustment

     —           (1,764      —           (1,764
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance —September 27, 2014

   $ (5,472    $ (1,764    $ —         $ (7,236
  

 

 

    

 

 

    

 

 

    

 

 

 

 

14


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

 

10. INCOME TAXES

Summit LLC is a limited liability company and passes its tax attributes for federal and state tax purposes to its parent company and is generally not subject to federal or state income tax. However, certain subsidiary entities file federal and state income tax returns due to their status as C corporations. The provision for income taxes is primarily composed of federal, state and local income taxes for the subsidiary entities that have C corporation status.

The effective income tax rate for these entities differs from the statutory federal rate primarily due to (1) tax depletion expense in excess of the expense recorded under U.S. GAAP, (2) state income taxes and the effect of graduated tax rates and (3) certain non-recurring items, such as differences in the treatment of transaction costs, which are often not deductible for tax purposes.

As of September 26, 2015 and December 27, 2014, the Company has not recognized any liabilities for uncertain tax positions. The Company records interest and penalties as a component of the income tax provision. No material interest or penalties were recognized in income tax expense during the three or nine months ended September 26, 2015 and September 27, 2014.

Tax Distributions – The holders of Summit Holdings’ LP Units, including Summit Inc., incur U.S. federal, state and local income taxes on their share of any taxable income of Summit Holdings. The limited partnership agreement of Summit Holdings provides for pro rata cash distributions (“tax distributions”) to the holders of the LP Units in an amount generally calculated to provide each holder of LP Units with sufficient cash to cover its tax liability in respect of the LP Units. In general, these tax distributions are computed based on Summit Holdings’ estimated taxable income allocated to each holder of LP Units multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate applicable to an individual or corporate resident in New York, New York (or a corporate resident in certain circumstances). Summit LLC paid distributions totaling $23.5 million and $39.9 million, of which $14.6 million and $26.4 million was paid to Summit Holdings, who, in turn, distributed the funds to its partners, other than Summit Inc., and $8.9 million and $13.5 million was paid to Summit Inc., in the three and nine months ended September 26, 2015, respectively.

 

11. COMMITMENTS AND CONTINGENCIES

The Company is party to certain legal actions arising from the ordinary course of business activities. Accruals are recorded when the outcome is probable and can be reasonably estimated. While the ultimate results of claims and litigation cannot be predicted with certainty, management expects that the ultimate resolution of all pending or threatened claims and litigation will not have a material effect on the Company’s consolidated results of operations, financial position or liquidity. The Company records legal fees as incurred.

Litigation and Claims—The Company is obligated under an indemnification agreement entered into with the sellers of Harper Contracting, Inc., Harper Sand and Gravel, Inc., Harper Excavating, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc. (collectively, “Harper”) for the sellers’ 40% ownership interests in a joint venture agreement. The Company has the rights to any benefits under the joint venture as well as the assumption of any obligations, but does not own equity interests in the joint venture. The joint venture incurred significant losses on a highway project in Utah, which resulted in requests for funding from the joint venture partners and, ultimately, from the Company. Through September 26, 2015, the Company has funded $8.8 million, of which $4.0 million was funded in 2012 and $4.8 million was funded in 2011. On April 2, 2015, the Utah Department of Transportation filed suit in the Fourth District Court of Utah County, Utah against the joint venture and the parties to the joint venture seeking damages of at least $29.4 million. As of September 26, 2015 and December 27, 2014, an accrual of $4.3 million was recorded in other noncurrent liabilities as management’s best estimate of loss related to this matter.

During the ordinary course of business, there may be revisions to project costs and conditions that can give rise to change orders on construction contracts. Revisions can also result in claims made against a customer or subcontractor to recover project variances that have not been satisfactorily addressed through change orders with a customer. The Company had unapproved change orders and claims of $1.2 million in accounts receivable and $3.9 million ($1.2 million in accounts receivable, $0.5 million in costs and estimated earnings in excess of billings and $2.2 million in other assets) as of September 26, 2015 and December 27, 2014, respectively.

Environmental Remediation—The Company’s operations are subject to and affected by federal, state, provincial and local laws and regulations relating to the environment, health and safety and other regulatory matters. These operations require environmental operating permits, which are subject to modification, renewal and revocation. The Company regularly monitors and reviews its operations, procedures and policies for compliance with these laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of the Company’s business, as it is with other companies engaged in similar businesses, and there can be no assurance that environmental liabilities or noncompliance will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity in the future.

 

15


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

Other—In the ordinary course of business, the Company enters into various firm purchase commitments for certain raw materials and services. The terms of the firm purchase commitments are generally less than one year. Management does not expect any significant changes in the market value of these goods and services during the commitment period that would have a material adverse effect on the financial position, results of operations or liquidity of the Company.

 

12. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

 

     Nine months ended  
     September 26,      September 27,  
     2015      2014  

Cash payments:

     

Interest

   $ 75,990       $ 59,179   

Income taxes

     1,516         1,345   

Non cash financing activities:

     

Purchase of noncontrolling interest in Continental Cement

   $ (64,102    $ —     

 

13. SEGMENT INFORMATION

The Company has three operating segments, which are its reportable segments: the West; Central; and East regions. These segments are consistent with the Company’s management reporting structure. Each region’s operations consist of various activities related to the production, distribution and sale of construction materials, products and the provision of paving and related services. Assets employed by segment include assets directly identified with those operations. Corporate assets consist primarily of cash, property, plant and equipment for corporate operations and other assets not directly identifiable with a reportable business segment. The accounting policies applicable to each segment are consistent with those used in preparing the consolidated financial statements. The following tables display selected financial data for the Company’s reportable segments:

 

     Three months ended      Nine months ended  
     September 26,      September 27,      September 26,      September 27,  
     2015      2014      2015      2014  

Revenue:

           

West region

   $ 261,742       $ 211,302       $ 597,484       $ 478,432   

Central region

     164,084         126,882         338,613         283,541   

East region

     46,079         56,575         94,738         108,172   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 471,905       $ 394,759       $ 1,030,835       $ 870,145   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

16


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

 

     Three months ended      Nine months ended  
     September 26,      September 27,      September 26,      September 27,  
     2015      2014      2015      2014  

Adjusted EBITDA

           

West region

   $ 59,574       $ 39,105       $ 110,940       $ 71,646   

Central region

     53,756         30,820         89,984         59,220   

East region

     13,383         11,868         15,096         10,462   

Corporate and other

     (8,879      (9,381      (33,577      (28,427
  

 

 

    

 

 

    

 

 

    

 

 

 

Total reportable segments and corporate

     117,834         72,412         182,443         112,901   

Interest expense

     20,436         22,085         61,649         62,555   

Depreciation, depletion, amortization and accretion

     33,306         23,255         86,818         63,950   

Initial public offering costs

     —           —           28,296         —     

Loss on debt financings

     32,641         —           64,313         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) from continuing operations before taxes

   $ 31,451       $ 27,072       $ (58,633    $ (13,604
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Nine months ended  
     September 26,      September 27,  
     2015      2014  

Cash paid for capital expenditures:

     

West region

   $ 32,192       $ 25,496   

Central region

     24,335         28,485   

East region

     9,401         6,590   
  

 

 

    

 

 

 

Total reportable segments

     65,928         60,571   

Corporate and other

     3,744         3,673   
  

 

 

    

 

 

 

Total capital expenditures

   $ 69,672       $ 64,244   
  

 

 

    

 

 

 

 

     Three months ended      Nine months ended  
     September 26,      September 27,      September 26,      September 27,  
     2015      2014      2015      2014  

Depreciation, depletion, amortization and accretion:

           

West region

   $ 13,786       $ 9,155       $ 38,508       $ 23,569   

Central region

     15,778         9,710         37,198         28,061   

East region

     3,114         3,984         9,426         11,272   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total reportable segments

     32,678         22,849         85,132         62,902   

Corporate and other

     628         406         1,686         1,048   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total depreciation, depletion, amortization and accretion

   $ 33,306       $ 23,255       $ 86,818       $ 63,950   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

17


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

 

     September 26,      December 27,  
     2015      2014  

Total assets:

     

West region

   $ 866,516       $ 777,981   

Central region

     1,189,565         704,134   

East region

     224,720         221,598   
  

 

 

    

 

 

 

Total reportable segments

     2,280,801         1,703,713   

Corporate and other

     35,935         26,064   
  

 

 

    

 

 

 

Total

   $ 2,316,736       $ 1,729,777   
  

 

 

    

 

 

 

 

     Three months ended      Nine months ended  
     September 26,      September 27,      September 26,      September 27,  
     2015      2014      2015      2014  

Revenue by product:*

           

Aggregates

   $ 86,070       $ 68,636       $ 218,336       $ 160,002   

Cement

     68,481         34,171         110,477         69,435   

Ready-mixed concrete

     95,481         75,429         254,878         189,198   

Asphalt

     113,249         104,862         219,492         203,944   

Paving and related services

     185,092         191,157         366,321         391,925   

Other

     (76,468      (79,496      (138,669      (144,359
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 471,905       $ 394,759       $ 1,030,835       $ 870,145   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  * Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.

 

14. RELATED PARTY TRANSACTIONS

Under the terms of a transaction and management fee agreement between Summit Holdings and Blackstone Management Partners L.L.C. (“BMP”), whose affiliates include controlling stockholders of Summit Inc., BMP provided monitoring, advisory and consulting services to the Company through March 17, 2015. Under the terms of the agreement, BMP was permitted to assign, and had assigned, a portion of the fees to which it was entitled to Silverhawk Summit, L.P. and to certain other equity investors.

The management fee was calculated based on the greater of $300,000 or 2.0% of the Company’s annual consolidated profit, as defined in the agreement, and is included in general and administrative expenses. The Company incurred management fees totaling $1.0 million during the period between December 28, 2014 and March 17, 2015 and $1.3 million and $2.3 million in the three and nine months ended September 27, 2014, respectively. During these periods, the Company paid immaterial amounts to Silverhawk Summit, L.P. and to other equity investors.

Also under the terms of the transaction and management fee agreement, BMP undertook financial and structural analysis, due diligence investigations, corporate strategy and other advisory services and negotiation assistance related to acquisitions for which the Company paid BMP transaction fees equal to 1.0% of the aggregate enterprise value of any acquired entity or, if such transaction was structured as an asset purchase or sale, 1.0% of the consideration paid for or received in respect of the assets acquired or disposed. The Company paid BMP $0.6 million and $2.3 million during the three and nine months ended September 27, 2014, respectively. During these periods, the Company paid immaterial amounts to Silverhawk Summit, L.P. and to other equity investors. The acquisition-related fees paid pursuant to this agreement are included in transaction costs.

In connection with the IPO, the transaction and management fee agreement with BMP was terminated on March 17, 2015 for a final payment of $13.8 million; $13.4 million was paid to affiliates of BMP and the remaining $0.4 million was paid to affiliates of Silverhawk Summit, L.P. and to certain other equity investors.

 

18


SUMMIT MATERIALS, LLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Tables in thousands)

 

In addition to the transaction and management fees paid to BMP, the Company reimburses BMP for direct expenses incurred, which were not material in the three and nine months ended September 26, 2015 and September 27, 2014.

On July 17, 2015, the Company purchased the Davenport Assets from Lafarge North America Inc. for a purchase price of $450.0 million in cash and a cement distribution terminal in Bettendorf, Iowa. At closing, $370.0 million of the purchase price was paid, and the remaining $80.0 million was paid on August 13, 2015. Summit Holdings entered into a commitment letter dated April 16, 2015, with Blackstone Capital Partners V L.P. (“BCP”) for equity financing up to $90.0 million in the form of a preferred equity interest (the “Equity Commitment Financing”), which would have been used to pay the $80.0 million deferred purchase price if other financing was not attained by December 31, 2015. For the Equity Commitment Financing, the Company paid a $1.8 million commitment fee to BCP in the nine months ended September 26, 2015.

Blackstone Advisory Partners L.P., an affiliate of BMP, served as an initial purchaser of $5.75 million and $13.0 million principal amount of the 2020 Notes issued in September 2014 and January 2014, respectively, and received compensation in connection therewith.

Cement sales to companies owned by a former noncontrolling member of Continental Cement were approximately $1.4 million during the period between December 28, 2014 and March 11, 2015 and $4.7 million and $10.9 million during the three and nine months ended September 27, 2014, respectively. Accounts receivable due from the former noncontrolling member were $0.2 million as of December 27, 2014.

In the nine months ended September 27, 2014, the Company made an interest payment of $0.7 million to a certain former noncontrolling member of Continental Cement for a related party note. The principal balance on the note was repaid in 2012.

In the nine months ended September 27, 2014, the Company sold certain assets associated with the production of concrete blocks, including inventory and equipment, to a related party for $2.3 million.

 

15. GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

Summit LLC’s domestic wholly-owned subsidiary companies other than Finance Corp. are named as guarantors (collectively, the “Guarantors”) of the 2020 Notes and the 2023 Notes (collectively, the “Senior Notes”). Certain other partially-owned subsidiaries and a non-U.S. entity do not guarantee the Senior Notes (collectively, the “Non-Guarantors”). The Guarantors provide a joint and several, full and unconditional guarantee of the Senior Notes.

There are no significant restrictions on Summit LLC’s ability to obtain funds from any of the Guarantor Subsidiaries in the form of dividends or loans. Additionally, there are no significant restrictions on a Guarantor Subsidiary’s ability to obtain funds from Summit LLC or its direct or indirect subsidiaries.

The following condensed consolidating balance sheets, statements of operations and cash flows are provided for the Issuers, the Wholly-owned Guarantors and the Non-Guarantors. On March 17, 2015, the noncontrolling interests of Continental Cement were purchased resulting in Continental Cement being a wholly-owned indirect subsidiary of Summit LLC. Continental Cement’s results of operations and cash flows are reflected with the Guarantors for the three and nine months ended September 26, 2015. In 2014, Continental Cement’s results are shown separately as a Non Wholly-owned Guarantor.

Earnings from subsidiaries are included in other income in the condensed consolidated statements of operations below. The financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the guarantor or non-guarantor subsidiaries operated as independent entities.

 

19


Condensed Consolidating Balance Sheets

September 26, 2015

 

     Issuers      Wholly-
owned
Guarantors
     Non-
Guarantors
     Eliminations     Consolidated  
Assets              

Current assets:

             

Cash and cash equivalents

   $ 8,989       $ 1,025       $ 8,130       $ (12,662   $ 5,482   

Accounts receivable, net

     —           195,120         11,163         (344     205,939   

Intercompany receivables

     1,322,050         14,869         8,996         (1,345,915     —     

Cost and estimated earnings in excess of billings

     —           33,447         728         —          34,175   

Inventories

     —           132,734         5,302         —          138,036   

Other current assets

     1,088         19,319         1,355         —          21,762   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total current assets

     1,332,127         396,514         35,674         (1,358,921     405,394   

Property, plant and equipment, net

     9,433         1,240,126         26,668         —          1,276,227   

Goodwill

     —           519,759         48,077         —          567,836   

Intangible assets, net

     —           14,044         1,437         —          15,481   

Other assets

     881,923         132,532         1,271         (963,928     51,798   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 2,223,483       $ 2,302,975       $ 113,127       $ (2,322,849   $ 2,316,736   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest              

Current liabilities:

             

Current portion of debt

   $ 68,125       $ —         $ —         $ —        $ 68,125   

Current portion of acquisition-related liabilities

     —           17,691         —           —          17,691   

Accounts payable

     7,436         102,571         3,563         (344     113,226   

Accrued expenses

     30,998         70,386         2,158         (12,662     90,880   

Intercompany payables

     67,671         1,274,510         3,734         (1,345,915     —     

Billings in excess of costs and estimated earnings

     —           10,983         22         —          11,005   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total current liabilities

     174,230         1,476,141         9,477         (1,358,921     300,927   

Long-term debt

     1,148,068         61,377         —           (61,377     1,148,068   

Acquisition-related liabilities

     —           33,320         —           —          33,320   

Other noncurrent liabilities

     1,558         110,856         57,268         (55,107     114,575   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     1,323,856         1,681,694         66,745         (1,475,405     1,596,890   

Redeemable noncontrolling interest

     —           —           —           —          —     

Redeemable members’ interest

     —           —           —           —          —     

Total stockholders’ equity/partners’ interest

     899,627         621,281         46,382         (847,444     719,846   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

   $ 2,223,483       $ 2,302,975       $ 113,127       $ (2,322,849   $ 2,316,736   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

20


Condensed Consolidating Balance Sheets

December 27, 2014

 

     Issuers      Non-
Wholly-
owned
Guarantor
     Wholly-
owned
Guarantors
     Non-
Guarantors
     Elim-
inations
    Consol-
idated
 
Assets                 

Current assets:

                

Cash and cash equivalents

   $ 10,837       $ 2       $ 695       $ 8,793       $ (7,112   $ 13,215   

Accounts receivable, net

     1         6,629         124,380         11,525         (1,233     141,302   

Intercompany receivables

     376,344         4,095         30,539         4,052         (415,030     —     

Cost and estimated earnings in excess of billings

     —           —           9,819         355         —          10,174   

Inventories

     —           8,696         98,188         4,669         —          111,553   

Other current assets

     7,148         464         9,638         1,775         (1,853     17,172   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total current assets

     394,330         19,886         273,259         31,169         (425,228     293,416   

Property, plant and equipment, net

     7,035         302,524         610,717         30,325         —          950,601   

Goodwill

     —           23,124         340,969         55,177         —          419,270   

Intangible assets, net

     —           542         14,245         2,860         —          17,647   

Other assets

     1,153,204         25,233         125,462         1,362         (1,256,418     48,843   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 1,554,569       $ 371,309       $ 1,364,652       $ 120,893       $ (1,681,646   $ 1,729,777   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest                 

Current liabilities:

                

Current portion of debt

   $ 5,275       $ 1,273       $ 3,990       $ —         $ (5,263   $ 5,275   

Current portion of acquisition-related liabilities

     166         —           18,236         —           —          18,402   

Accounts payable

     3,655         6,845         65,018         4,569         (1,233     78,854   

Accrued expenses

     37,101         10,178         59,477         3,705         (8,965     101,496   

Intercompany payables

     162,728         4,052         245,416         2,834         (415,030     —     

Billings in excess of costs and estimated earnings

     —           —           8,931         27         —          8,958   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total current liabilities

     208,925         22,348         401,068         11,135         (430,491     212,985   

Long-term debt

     1,059,642         153,318         480,599         —           (633,917     1,059,642   

Acquisition-related liabilities

     —           —           42,736         —           —          42,736   

Other noncurrent liabilities

     796         24,787         65,479         57,736         (55,107     93,691   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     1,269,363         200,453         989,882         68,871         (1,119,515     1,409,054   

Redeemable noncontrolling interest

     —           —           —           —           33,740        33,740   

Redeemable members’ interest

     —           34,543         —           —           (34,543     —     

Total stockholders’ equity/partners’ interest

     285,206         136,313         374,770         52,022         (561,328     286,983   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

   $ 1,554,569       $ 371,309       $ 1,364,652       $ 120,893       $ (1,681,646   $ 1,729,777   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

21


Condensed Consolidating Statements of Operations

For the three months ended September 26, 2015

 

     Issuers     Wholly-
owned
Guarantors
    Non-
Guarantors
    Eliminations     Consolidated  

Revenue

   $ —        $ 454,501      $ 21,472      $ (4,068   $ 471,905   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below)

     —          304,204        12,263        (4,068     312,399   

General and administrative expenses

     8,881        32,362        1,600        —          42,843   

Depreciation, depletion, amortization and accretion

     628        31,374        1,304        —          33,306   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (9,509     86,561        6,305        —          83,357   

Other (income) expense, net

     (58,666     3,639        (17     86,514        31,470   

Interest expense

     15,046        15,286        900        (10,796     20,436   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before taxes

     34,111        67,636        5,422        (75,718     31,451   

Income tax benefit (expense)

     —          (2,690     35        —          (2,655
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     34,111        70,326        5,387        (75,718     34,106   

Income from discontinued operations

     —          (57     —          —          (57
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     34,111        70,383        5,387        (75,718     34,163   

Net income attributable to minority interest

     —          —          —          52        52   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to member of Summit Materials, LLC

   $ 34,111      $ 70,383      $ 5,387      $ (75,770   $ 34,111   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to member of Summit Materials, LLC

   $ 26,805      $ 69,373      $ (909   $ (68,464   $ 26,805   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

22


Condensed Consolidating Statements of Operations

For the three months ended September 27, 2014

 

     Issuers     Non-
Wholly-
owned
Guarantor
    Wholly-
owned
Guarantors
    Non-
Guarantors
    Elim-
inations
    Consol-
idated
 

Revenue

   $ —        $ 34,171      $ 348,785      $ 22,626      $ (10,823   $ 394,759   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below)

     —          25,603        253,284        17,433        (10,823     285,497   

General and administrative expenses

     8,694        1,651        27,418        495        —          38,258   

Depreciation, depletion, amortization and accretion

     406        3,708        18,618        523        —          23,255   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (9,100     3,209        49,465        4,175        —          47,749   

Other (income) expense, net

     (43,887     (945     (2,679     (16     46,119        (1,408

Interest expense

     7,913        2,931        13,416        233        (2,408     22,085   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before taxes

     26,874        1,223        38,728        3,958        (43,711     27,072   

Income tax benefit (expense)

     —          —          (1,038     —          —          (1,038
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     26,874        1,223        39,766        3,958        (43,711     28,110   

Income from discontinued operations

     —          —          (7     —          —          (7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     26,874        1,223        39,773        3,958        (43,711     28,117   

Net income attributable to minority interest

     —          —          —          —          1,243        1,243   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to member of Summit Materials, LLC

   $ 26,874      $ 1,223      $ 39,773      $ 3,958      $ (44,954   $ 26,874   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to member of Summit Materials, LLC

   $ 25,110      $ 1,223      $ 39,773      $ 2,194      $ (43,190   $ 25,110   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

23


Condensed Consolidating Statements of Operations

For the nine months ended September 26, 2015

 

     Issuers     Wholly-
owned
Guarantors
    Non-
Guarantors
     Eliminations     Consolidated  

Revenue

   $ —        $ 980,153      $ 78,821       $ (28,139   $ 1,030,835   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below)

     —          696,068        51,909         (28,139     719,838   

General and administrative expenses

     61,634        90,959        4,935         —          157,528   

Depreciation, depletion, amortization and accretion

     1,686        80,997        4,135         —          86,818   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Operating (loss) income

     (63,320     112,129        17,842         —          66,651   

Other (income) expense, net

     (55,083     7,140        142         111,436        63,635   

Interest expense

     35,196        45,332        2,689         (21,568     61,649   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Income from continuing operations before taxes

     (43,433     59,657        15,011         (89,868     (58,633

Income tax benefit (expense)

     —          (12,852     384         —          (12,468
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Income from continuing operations

     (43,433     72,509        14,627         (89,868     (46,165

Income from discontinued operations

     —          (815     —           —          (815
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Net income

     (43,433     73,324        14,627         (89,868     (45,350

Net income attributable to minority interest

     —          —          —           (1,917     (1,917
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Net income attributable to member of Summit Materials, LLC

   $ (43,433   $ 73,324      $ 14,627       $ (87,951   $ (43,433
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Comprehensive income attributable to member of Summit Materials, LLC

   $ (55,974   $ 72,314      $ 3,096       $ (75,410   $ (55,974
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

24


Condensed Consolidating Statements of Operations

For the nine months ended September 27, 2014

 

     Issuers     Non-
Wholly-
owned
Guarantor
    Wholly-
owned
Guarantors
    Non-
Guarantors
     Elim-
inations
    Consol-
idated
 

Revenue

   $ —        $ 69,435      $ 776,502      $ 43,900       $ (19,692   $ 870,145   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below)

     —          53,229        581,602        30,795         (19,692     645,934   

General and administrative expenses

     26,384        5,225        80,938        1,062         —          113,609   

Depreciation, depletion, amortization and accretion

     1,047        10,484        51,351        1,068         —          63,950   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Operating (loss) income

     (27,431     497        62,611        10,975         —          46,652   

Other expense (income), net

     (36,161     (2,303     (4,233     29         40,369        (2,299

Interest expense

     21,581        8,788        37,831        289         (5,934     62,555   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

(Loss) income from continuing operations before taxes

     (12,851     (5,988     29,013        10,657         (34,435     (13,604

Income tax benefit

     (1,427     —          (1,071     —           —          (2,498
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

(Loss) income from continuing operations

     (11,424     (5,988     30,084        10,657         (34,435     (11,106

Income from discontinued operations

     —          —          (356     —           —          (356
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income

     (11,424     (5,988     30,440        10,657         (34,435     (10,750

Net loss attributable to noncontrolling interest

     —          —          —          —           674        674   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income attributable to member of Summit Materials, LLC

   $ (11,424   $ (5,988   $ 30,440      $ 10,657       $ (35,109   $ (11,424
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Comprehensive (loss) income attributable to member of Summit Materials, LLC

   $ (12,615     (5,170   $ 30,440      $ 8,893       $ (34,163   $ (12,615
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

25


Condensed Consolidating Statements of Cash Flows

For the nine months ended September 26, 2015

 

     Issuers     Wholly-
owned
Guarantors
    Non-
Guarantors
    Elim-
inations
    Consol-
idated
 

Net cash (used in) provided by operating activities

   $ (140,504   $ 112,541      $ 9,203      $ (167   $ (18,927
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flow from investing activities:

          

Acquisitions, net of cash acquired

     —          (505,466     —          —          (505,466

Purchase of property, plant and equipment

     (3,743     (65,001     (928     —          (69,672

Proceeds from the sale of property, plant, and equipment

     —          8,821        62        —          8,883   

Other

     —          610        —          —          610   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for investing activities

     (3,743     (561,036     (866     —          (565,645
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flow from financing activities:

          

Proceeds from investment by member

     490,916        —          —          —          490,916   

Capital issuance costs

     (12,539     —          —          —          (12,539

Net proceeds from debt issuance

     1,415,750        —          —          —          1,415,750   

Loans received from and payments made on loans from other Summit Companies

     (1,031,576     1,047,015        (9,000     (6,439     —     

Payments on long-term debt

     (669,123     (583,340     —          1,056        (1,251,407

Payments on acquisition-related liabilities

     (166     (14,852     —          —          (15,018

Financing costs

     (10,911     —          —          —          (10,911

Distributions from partnership

     (39,952     —          —          —          (39,952

Other

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) financing activities

     142,399        448,823        (9,000     (5,383     576,839   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash

     (1,848     328        (663     (5,550     (7,733

Cash — Beginning of period

     10,837        697        8,793        (7,112     13,215   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash— End of period

   $ 8,989      $ 1,025      $ 8,130      $ (12,662   $ 5,482   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

26


Condensed Consolidating Statements of Cash Flows

For the nine months ended September 27, 2014

 

     Issuers     Non-
Wholly-
owned
Guarantor
    Wholly-
owned
Guarantors
    Non-
Guarantors
    Elim-
inations
    Consol-
idated
 

Net cash used in operating activities

   $ (36,504   $ (2,408   $ 28,727      $ 668      $ (1,319   $ (10,836
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flow from investing activities:

            

Acquisitions, net of cash acquired

     (181,754     —          (170,187     —          —          (351,941

Purchase of property, plant and equipment

     (3,674     (13,472     (46,575     (523     —          (64,244

Proceeds from the sale of property, plant, and equipment

     —          —          9,345        230        —          9,575   

Other

     —          —          (409     —          1,166        757   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used for) provided by investing activities

     (185,428     (13,472     (207,826     (293     1,166        (405,853
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flow from financing activities:

            

Proceeds from investment by member

     24,350        —          —          1,353        (1,353     24,350   

Net proceeds from debt issuance

     657,217        —          —          —          —          657,217   

Loans received from and payments made on loans from other Summit Companies

     (195,590     16,383        189,243        (2,113     (7,923     —     

Payments on long-term debt

     (251,062     (509     (6,766     —          —          (258,337

Payments on acquisition-related liabilities

     (1,500     —          (4,307     —          —          (5,807

Financing costs

     (8,834     —          —          —          —          (8,834

Other

     (88     —          (1,500     —          1,500        (88
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) financing activities

     224,493        15,874        176,670        (760     (7,776     408,501   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash

     2,561        (6     (2,429     (385     (7,929     (8,188

Cash — Beginning of period

     10,375        9        3,442        3,631        (2,540     14,917   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash— End of period

   $ 12,936      $ 3      $ 1,013      $ 3,246      $ (10,469   $ 6,729   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

* * *

 

27