sum_Ex99

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2016 and January 2, 2016

(In thousands)


	2016		2015
Assets
Current assets:
Cash and cash equivalents	$	142,672	$	185,388
Accounts receivable, net		162,377		145,544
Costs and estimated earnings in excess of billings		7,450		5,690
Inventories		157,679		130,082
Other current assets		12,800		4,807
Total current assets		482,978		471,511
Property, plant and equipment, net		1,446,452		1,269,006
Goodwill		782,212		596,397
Intangible assets, net		17,989		15,005
Other assets		46,789		43,243
Total assets	$	2,776,420	$	2,395,162
Liabilities and Member’s Interest
Current liabilities:
Current portion of debt	$	6,500	$	6,500
Current portion of acquisition-related liabilities		21,663		18,084
Accounts payable		81,610		81,397
Accrued expenses		110,473		92,942
Billings in excess of costs and estimated earnings		15,456		13,081
Total current liabilities		235,702		212,004
Long-term debt		1,514,456		1,273,652
Acquisition-related liabilities		25,161		31,028
Other noncurrent liabilities		124,708		100,186
Total liabilities		1,900,027		1,616,870
Commitments and contingencies (see note 13)
Member’s equity		1,087,558		1,050,882
Accumulated deficit		(185,099)		(245,486)
Accumulated other comprehensive loss		(27,444)		(28,466)
Member’s interest		875,015		776,930
Noncontrolling interest		1,378		1,362
Total member’s interest		876,393		778,292
Total liabilities and member’s interest	$	2,776,420	$	2,395,162

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended December 31, 2016, January 2, 2016, and December 27, 2014

(In thousands)


	2016		2015		2014
Revenue:
Product	$	1,223,008	$	1,043,843	$	806,280
Service		265,266		246,123		264,325
Net revenue		1,488,274		1,289,966		1,070,605
Delivery and subcontract revenue		137,789		142,331		133,626
Total revenue		1,626,063		1,432,297		1,204,231
Cost of revenue (excluding items shown separately below):
Product		751,697		676,457		566,986
Service		182,584		171,857		186,548
Net cost of revenue		934,281		848,314		753,534
Delivery and subcontract cost		137,789		142,331		133,626
Total cost of revenue		1,072,070		990,645		887,160
General and administrative expenses		243,862		177,769		150,732
Depreciation, depletion, amortization and accretion		149,300		119,723		87,826
Transaction costs		6,797		9,519		8,554
Operating income		154,034		134,641		69,959
Interest expense		96,483		83,757		86,742
Loss on debt financings		—		71,631		—
Other expense (income), net		746		(2,425)		(3,447)
Income (loss) from operations before taxes		56,805		(18,322)		(13,336)
Income tax benefit		(5,282)		(18,263)		(6,983)
Income (loss) from continuing operations		62,087		(59)		(6,353)
Income from discontinued operations		—		(2,415)		(71)
Net income (loss)		62,087		2,356		(6,282)
Net income (loss) attributable to noncontrolling interest		16		(1,826)		2,495
Net income (loss) attributable to member of Summit LLC	$	62,071	$	4,182	$	(8,777)

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

Years ended December 31, 2016, January 2, 2016, and December 27, 2014

(In thousands)



	2016		2015		2014
Net income (loss)	$	62,087	$	2,356	$	(6,282)
Other comprehensive income (loss):
Postretirement curtailment adjustment		—		—		(1,346)
Postretirement liability adjustment		426		2,123		(3,919)
Foreign currency translation adjustment		2,125		(14,099)		(5,816)
Loss on cash flow hedges		(1,529)		(944)		—
Other comprehensive income (loss)		1,022		(12,920)		(11,081)
Comprehensive income (loss)		63,109		(10,564)		(17,363)
Less comprehensive income (loss) attributable to the noncontrolling interest in consolidated subsidiaries		16		(1,826)		915
Comprehensive income (loss) attributable to member of Summit LLC	$	63,093	$	(8,738)	$	(18,278)

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2016, January 2, 2016, and December 27, 2014

(In thousands)


	2016		2015		2014
Cash flow from operating activities:
Net income (loss)	$	62,087	$	2,356	$	(6,282)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		159,579		124,147		95,463
Share-based compensation expense		49,940		19,899		2,235
Deferred income tax benefit		(8,572)		(19,838)		(5,927)
Net gain on asset disposals		(3,102)		(23,087)		6,500
Net gain on debt financings		—		(9,877)		—
Other		(1,282)		(1,629)		(957)
Decrease (increase) in operating assets, net of acquisitions:
Accounts receivable, net		2,511		3,852		(10,366)
Inventories		(10,297)		4,275		(3,735)
Costs and estimated earnings in excess of billings		(2,684)		6,604		1,359
Other current assets		(5,518)		11,438		(3,997)
Other assets		1,976		(1,369)		4,767
(Decrease) increase in operating liabilities, net of acquisitions:
Accounts payable		(5,706)		(4,241)		(6,455)
Accrued expenses		12,064		(14,354)		13,311
Billings in excess of costs and estimated earnings		700		1,313		(305)
Other liabilities		(6,819)		(1,286)		(6,373)
Net cash provided by operating activities		244,877		98,203		79,238
Cash flow from investing activities:
Acquisitions, net of cash acquired		(336,958)		(510,017)		(397,854)
Purchases of property, plant and equipment		(153,483)		(88,950)		(76,162)
Proceeds from the sale of property, plant and equipment		16,868		13,110		13,366
Other		2,921		1,510		(630)
Net cash used for investing activities		(470,652)		(584,347)		(461,280)
Cash flow from financing activities:
Capital contributions by member		27,377		507,766		27,617
Capital issuance costs		(136)		(12,930)		—
Proceeds from debt issuances		354,000		1,748,875		762,250
Debt issuance costs		(5,801)		(14,246)		(9,085)
Payments on debt		(120,702)		(1,505,486)		(389,270)
Payments on acquisition-related liabilities		(29,540)		(18,056)		(10,935)
Distributions		(42,192)		(46,603)		—
Other		(16)		—		(88)
Net cash provided by financing activities		182,990		659,320		380,489
Impact of foreign currency on cash		69		(1,003)		(149)
Net (decrease) increase in cash		(42,716)		172,173		(1,702)
Cash and cash equivalents – beginning of period		185,388		13,215		14,917
Cash and cash equivalents – end of period	$	142,672	$	185,388	$	13,215

See accompanying notes to consolidated financial statements.

SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Members’ Interest

Years ended December 31, 2016, January 2, 2016, and December 27, 2014

(In thousands)


	Total Member’s Interest
					Accumulated
					other				Total		Redeemable
	Member’s		Accumulated		comprehensive		Noncontrolling		member’s		noncontrolling
	equity		deficit		loss		interest		interest		interest
Balance — December 28, 2013	$	486,896	$	(198,511)	$	(6,045)	$	1,211	$	283,551	$	24,767

Net contributed capital		27,617		—		—				27,617
Accretion/ redemption value adjustment		—		(8,145)		—		—		(8,145)		8,145
Net (loss) income		—		(8,777)		—		87		(8,690)		2,408
Other comprehensive loss		—		—		(9,501)		—		(9,501)		(1,580)
Repurchase of member’s interest		(88)		—		—		—		(88)		—
Share-based compensation		4,222		(1,983)		—		—		2,239		—
Balance — December 27, 2014	$	518,647	$	(217,416)	$	(15,546)	$	1,298	$	286,983	$	33,740

Net contributed capital		558,939		—		—		—		558,939		—
Accretion/ redemption value adjustment		—		(32,252)		—		—		(32,252)		(31,850)
Net income		—		4,182		—		64		4,246		(1,890)
Other comprehensive loss		—		—		(12,920)		—		(12,920)		—
Distributions		(46,603)		—		—		—		(46,603)		—
Share-based compensation		19,899		—		—		—		19,899		—
Balance — January 2, 2016	$	1,050,882	$	(245,486)	$	(28,466)	$	1,362	$	778,292	$	—

Net contributed capital		27,260		—		—		—		27,260		—
Net income		—		62,071		—		16		62,087		—
Other comprehensive income		—		—		1,022		—		1,022		—
Distributions		(42,192)		—		—		—		(42,192)		—
Share-based compensation		51,624		(1,684)		—		—		49,940		—
Other		(16)		—		—		—		(16)		—
Balance — December 31, 2016	$	1,087,558	$	(185,099)	$	(27,444)	$	1,378	$	876,393	$	—

See accompanying notes to consolidated financial statements.

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 occurred in 2015. The additional week in the 53-week year was included in the fourth quarter of 2015.

Use of Estimates— Preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles (“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, valuation of deferred tax assets, 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. 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 21 U.S. states and in British Columbia, Canada, with the most significant revenue generated in Texas, Kansas, 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 the Company’s total revenue in 2016, 2015 or 2014.

Accounts Receivable—Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the collectability of individual accounts. In establishing the allowance, management considers historical losses adjusted to take into account current market conditions and its customers’ financial condition, the amount of receivables in dispute, the current receivables aging and current payment terms. Balances that remain outstanding after reasonable collection efforts are exercised are written off through a charge to the valuation allowance.

The balances billed but not paid by customers, pursuant to retainage provisions included in contracts, are generally due upon completion of the contracts.

Revenue and Cost Recognition—Revenue for product sales are recognized when evidence of an arrangement exists, the fee is fixed or determinable, title passes, which is generally when the product is shipped, and collection is reasonably assured. Product revenue includes sales of aggregates, cement and other materials to customers, net of discounts, allowances or taxes, as applicable.

Revenue from construction contracts are included in service revenue and are recognized under the percentage-of-completion accounting method. The percent complete is measured by the cost incurred to date compared to the estimated total cost of each project. This method is used as management considers expended cost to be the best available measure of progress on these contracts, the majority of which are completed within one year, but may occasionally extend beyond one year. Inherent uncertainties in estimating costs make it at least reasonably possible that the estimates used will change within the near term and over the life of the contracts.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance and completion. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are estimable. General and administrative costs are charged to expense as incurred.

Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income. Such revisions are recognized in the period in which they are determined. An amount equal to contract costs incurred that are attributable to claims is included in revenue when realization is probable and the amount can be reliably estimated.

Costs and estimated earnings in excess of billings are composed principally of revenue recognized on contracts (on the percentage-of-completion method) for which billings had not been presented to customers because the amount were not billable under the contract terms at the balance sheet date. In accordance with the contract terms, the unbilled receivables at December 31, 2016 will be billed in 2017. Billings in excess of costs and estimated earnings represent billings in excess of revenue recognized.

Revenue from the receipt of waste fuels is classified as service revenue and is based on fees charged for the waste disposal, which are recognized when the waste is accepted.

Inventories—Inventories consist of stone that has been removed from quarries and processed for future sale, cement, raw materials and finished concrete blocks. Inventories are valued at the lower of cost or market and are accounted for on a first-in first-out basis or an average cost basis. If items become obsolete or otherwise unusable or if quantities exceed what is projected to be sold within a reasonable period of time, they will be charged to costs of production in the period that the items are designated as obsolete or excess inventory. Stripping costs are costs of removing overburden and waste material to access aggregate materials and are recognized in cost of revenue in the same period as the revenue from the sale of the inventory.

Property, Plant and Equipment, net—Property, plant and equipment are recorded at cost, less accumulated depreciation, depletion and amortization. Expenditures for additions and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Repair and maintenance costs that do not substantially expand productive capacity or extend the life of property, plant and equipment are expensed as incurred.

Landfill airspace is included in property, plant and equipment at cost and is amortized based on the portion of the airspace used during the period compared to the gross estimated value of available airspace, which is updated periodically as circumstances dictate. Management reassesses the landfill airspace capacity with any changes in value recorded in cost of revenue. Capitalized landfill costs include expenditures for the acquisition of land and related airspace, engineering and permitting costs, cell construction costs and direct site improvement costs.

Upon disposal of an asset, the cost and related accumulated depreciation are removed from the Company’s accounts and any gain or loss is included in general and administrative expenses.

Depreciation on property, plant and equipment, including assets subject to capital leases, is generally computed on a straight-line basis. Depletion of mineral reserves is computed based on the portion of the reserves used during the period compared to the gross estimated value of proven and probable reserves, which is updated periodically as circumstances dictate. Leasehold improvements are amortized on a straight-line basis over the lesser of the asset’s useful life or the remaining lease term. The estimated useful lives are generally as follows:


Buildings and improvements	10 - 30	years
Plant, machinery and equipment	15 - 20	years
Office equipment	3 - 7	years
Truck and auto fleet	5 - 8	years
Mobile equipment and barges	6 - 8	years
Landfill airspace and improvements	10 - 30	years
Other	4 - 20	years

The Company reviews the carrying value of property, plant and equipment for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. Such indicators may include, among others, deterioration in general economic conditions, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows or a trend of negative or declining cash flows over multiple periods.

Property, plant and equipment is tested for impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. As a result, the property, plant and equipment impairment test is at a significantly lower level than the level at which goodwill is tested for impairment. In markets where the Company does not produce downstream products, such as ready-mix concrete, asphalt paving mix and paving and related services, the lowest level of largely independent identifiable cash flows is at the individual aggregates operation or a group of

aggregates operations collectively serving a local market or the cement operations. Conversely, in vertically-integrated markets, the cash flows of the downstream and upstream businesses are not largely independently identifiable and the vertically-integrated operations are considered the lowest level of largely independent identifiable cash flows.

Assets are assessed for impairment charges when identified for disposition. Projected losses from disposition are recognized in the period in which they become estimable, which may be in advance of the actual disposition. The net gain (loss) from asset dispositions recognized in general and administrative expenses in fiscal years 2016, 2015 and 2014 was $6.8 million, $23.5 million and ($2.6 million), respectively. No material impairment charges have been recognized on assets held for use in 2016, 2015 or 2014. The losses are commonly a result of the cash flows expected from selling the asset being less than the expected cash flows that could be generated from holding the asset for use.

Accrued Mining and Landfill Reclamation—The mining reclamation reserve and financial commitments for landfill closure and post-closure activities are based on management’s estimate of future cost requirements to reclaim property at both currently operating and closed sites. Estimates of these obligations have been developed based on management’s interpretation of current requirements and proposed regulatory changes and are intended to approximate fair value. Costs are estimated in current dollars, inflated until the expected time of payment, using an inflation rate of 2.5%, and then discounted back to present value using a credit-adjusted, risk-free rate on obligations of similar maturity, adjusted to reflect the Company’s credit rating. Changes in the credit-adjusted, risk-free rate do not change recorded liabilities. However, subsequent increases in the recognized obligations are measured using a current credit-adjusted, risk-free rate. Decreases in the recognized obligations are measured at the initial credit-adjusted, risk-free rate.

Significant changes in inflation rates or the amount or timing of future cost estimates typically result in both (1) a current adjustment to the recorded liability (and corresponding adjustment to the asset) and (2) a change in accretion of the liability and depreciation of the asset to be recorded prospectively over the remaining capacity of the unmined quarry or landfill.

Intangible Assets—The Company’s intangible assets are primarily composed of lease agreements and reserve rights. The assets related to lease agreements reflect the submarket royalty rates paid under agreements, primarily, for extracting aggregates. The values were determined as of the respective acquisition dates by a comparison of market-royalty rates to contract-royalty rates. The reserve rights relate to aggregate reserves to which the Company has the rights of ownership, but do not own the reserves. The intangible assets are amortized on a straight-line basis over the lives of the leases. The following table shows intangible assets by type and in total:


	December 31, 2016						January 2, 2016
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Leases	$	15,888	$	(3,382)	$	12,506	$	10,357	$	(2,531)	$	7,826
Reserve rights		8,706		(3,710)		4,996		8,636		(2,078)		6,558
Trade names		1,000		(658)		342		1,000		(558)		442
Other		249		(104)		145		249		(70)		179
Total intangible assets	$	25,843	$	(7,854)	$	17,989	$	20,242	$	(5,237)	$	15,005

Amortization expense in 2016, 2015 and 2014 was $2.6 million, $2.2 million and $0.9 million, respectively. The estimated amortization expense for intangible assets for each of the next five years and thereafter is as follows:


2017	$	1,222
2018		1,217
2019		1,198
2020		1,114
2021		1,073
Thereafter		12,165
Total	$	17,989

Goodwill—Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired. Goodwill recorded in connection with the Company’s acquisitions is primarily attributable to the expected profitability, assembled workforces of the acquired businesses and the synergies expected to arise after the Company’s acquisition of those businesses. Goodwill is not amortized, but is tested annually for impairment as of the

first day of the fourth quarter and at any time that events or circumstances indicate that goodwill may be impaired. A qualitative approach may first be applied to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If, as a result of the qualitative assessment, it is determined that an impairment is more likely than not, the two-step quantitative impairment test is then performed, otherwise further analysis is not required. The two-step impairment test first identifies potential goodwill impairment for each reporting unit and then, if necessary, measures the amount of the impairment loss.

Income Taxes—As a limited liability company, the Company’s federal and state income tax attributes are generally passed to its member. However, certain subsidiaries, or subsidiary groups, of the Company are taxable entities subject to income taxes in the United States and Canada, the provisions for which are included in the consolidated financial statements. Significant judgments and estimates are required in the determination of the consolidated income tax expense.

For the Company’s taxable entities, deferred income tax assets and liabilities are computed for differences between the tax basis and financial statement amounts that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the jurisdictions in which they arise and periods in which the differences are expected to affect taxable income. A valuation allowance is recognized for deferred tax assets if it is more likely than not that some portion or all of the net deferred tax assets will not be realized. In making such a determination, all available positive and negative evidence is considered, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines it would be able to realize its deferred tax assets for which a valuation allowance had been recorded then an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company evaluates the tax positions taken on income tax returns that remain open to examination by the respective tax authorities from prior years and positions expected to be taken on the current year tax returns to identify uncertain tax positions. Unrecognized tax benefits on uncertain tax positions are recorded on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority is recognized. Interest and penalties related to unrecognized tax benefits are recorded as income tax expense.

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.

The Company has 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 income 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 December 31, 2016 and January 2, 2016 was:


	2016		2015
Current portion of acquisition-related liabilities and Accrued expenses:
Contingent consideration	$	9,288	$	4,918
Cash flow hedges		942		224
Acquisition-related liabilities and Other noncurrent liabilities
Contingent consideration	$	2,377	$	2,475
Cash flow hedges		1,438		681

The fair value accounting guidance establishes the following fair value hierarchy that prioritizes the inputs used to measure fair value:


Level 1 —	Unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 —	Inputs other than Level 1 that are based on observable market data, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs that are observable that are not prices and inputs that are derived from or corroborated by observable markets.

Level 3 —	Valuations developed from unobservable data, reflecting the Company’s own assumptions, which market participants would use in pricing the asset or liability.

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 cash flow hedges are based on observable, or Level 2, inputs such as interest rates, bond yields and prices in inactive markets. There were no material adjustments to the fair value of contingent consideration in 2015 or to cash flow hedges in 2016 or 2015. In 2016, a $6.1 million increase in the fair value of contingent consideration was recognized as a result of a change in projected cash payments.

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 December 31, 2016 and January 2, 2016 were:


	December 31, 2016				January 2, 2016
	Fair Value		Carrying Value		Fair Value		Carrying Value

Level 2
Long-term debt(1)	$	1,586,102	$	1,536,065	$	1,283,799	$	1,291,858

Level 3
Current portion of deferred consideration and noncompete obligations(2)		12,375		12,375		13,166		13,166
Long term portion of deferred consideration and noncompete obligations(3)		22,784		22,784		28,553		28,553

(1)$6.5 million included in current portion of debt as of December 31, 2016 and January 2, 2016.

(2)Included in current portion of acquisition-related liabilities on the consolidated balance sheet.

(3)Included in acquisition-related liabilities on the consolidated 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. The discount rate used is generally consistent with that used when the obligations were initially recorded.

Securities with a maturity of three months or less are considered cash equivalents and the fair value of these assets approximates their carrying value.

New Accounting Standards — In January 2017, the Financial Accounting Standards Board (“FASB”) issued a new Accounting Standards Update (“ASU”) 2017-04 Intangibles - Goodwill and Other (Topic 350), which simplifies the test for goodwill impairment. The ASU eliminates the two step goodwill impairment test and replaces it with a single step test. The single step test compares the carrying amount of a reporting unit to its fair value; if the carrying amount is greater than the fair value the difference is the amount of the goodwill impairment. Step zero is left unchanged.

Therefore, entities that wish do a qualitative assessment are still permitted to do so. The ASU is effective for SEC filers for fiscal years beginning after December 15, 2020. However, the Company will early adopt this ASU as of the beginning of fiscal year 2017.

In March 2016, the FASB issued a new accounting standard with targeted amendments to the accounting for employee share-based payments. ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, requires that the income tax effect of share-based awards be recognized in the income statement and allows entities to elect an accounting method to recognize forfeitures as they occur or to estimate forfeitures, as is currently required. The ASU is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. However, the Company early adopted this ASU as of the beginning of fiscal year 2016 and made an election to recognize forfeitures as they occur. The ASU adoption was applied using a modified retrospective method by means of a $1.7 million cumulative-effect adjustment to accumulated earnings as of the beginning of the fiscal year.

In February 2016, the FASB issued a new accounting standard related to lease accounting, ASU No. 2016-02, Leases, which will result in lessees recognizing most leases on the balance sheet. Lessees are required to disclose more quantitative and qualitative information about their leases than current U.S. GAAP requires. The ASU is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. As of December 31, 2016 and January 2, 2016, the Company’s undiscounted minimum contractual commitments under long-term operating leases, which were not recorded on the balance sheet, were $31.3 million and $21.9 million, respectively, which is an estimate of the effect to lease obligations and property, plant and equipment that the new accounting standard would have as of the dates noted, prior to the effect of discounting.

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 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. In 2016, the Company established an implementation team (“team”) and engaged external advisers to develop a multi-phase plan to assess the Company’s business and contracts, as well as any changes to processes or systems to adopt the requirements of the new standard. The team has updated the assessment for new ASU updates and for newly acquired businesses. The team is in the process of developing its conclusions on several aspects of the standard including variable consideration, identification of performance obligations and the determination of when control of goods and services transfers to the Company’s customers.

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

(2) Acquisitions

The Company has completed numerous acquisitions since its formation in 2009, which have been financed through a combination of debt and equity funding. The operations of each acquisition have been included in the Company’s consolidated results of operations since the respective closing dates of the acquisitions. The Company measures all assets acquired and liabilities assumed at their acquisition-date fair value.

West segment

On October 3, 2016, the Company acquired Midland Concrete Ltd. (“Midland Concrete”), a ready-mix company with one plant servicing the Midland, Texas market. The acquisition was funded with cash on hand.

On August 19, 2016, the Company acquired H.C. Rustin Corporation (“Rustin”), a ready-mix company with 12 ready-mix plants servicing the Southern Oklahoma market. The acquisition was funded with cash on hand.

On April 29, 2016, the Company acquired Sierra Ready Mix, LLC (“Sierra Ready Mix”), a vertically integrated aggregates and ready-mix concrete business with one sand and gravel pit and two ready-mix concrete plants located in Las Vegas, Nevada. The acquisition was funded with cash on hand and $11.1 million of contingent consideration, $10.0 million of which related to the execution of a lease and the remaining to the achievement of certain earnings targets. The lease contingency criteria was met in 2016 and the $10.0 million of consideration was paid in the year ended December 31, 2016.

On December 11, 2015, the Company acquired all of the assets of Pelican Asphalt Company, LLC, an asphalt terminal business in Houston, Texas. The acquisition was funded with cash on hand.

On August 21, 2015, the Company acquired all of the stock of LeGrand Johnson Construction Co., a vertically integrated company based in Utah with five sand and gravel pits, four ready-mix concrete plants and three asphalt plants and servicing the northern and central Utah, western Wyoming and southern Idaho markets. The acquisition was funded with borrowings under the Company’s revolving credit facility.

On June 1, 2015, the Company acquired all of the stock of Lewis & Lewis, Inc., a vertically integrated business in Wyoming. The acquisition was funded with borrowings under the Company’s revolving credit facility.

East segment

On August 26, 2016, the Company acquired R.D. Johnson Excavating Company, LLC and Asphalt Sales of Lawrence, LLC (“RD Johnson”), an asphalt producer and construction services company based in Lawrence, Kansas. The acquisition was funded with both cash on hand and borrowings under the Company’s revolving credit facility.

On August 8, 2016, the Company acquired the assets of Weldon Real Estate, LLC (“Weldon”) and the membership interests of Honey Creek Disposal Service, LLC. (‘‘Honey Creek’’). Honey Creek is a trash collection business, which was sold immediately after acquisition. The Company retained the building assets of Weldon, where its recycling business in Kansas is operated. The acquisition was funded with borrowings under the Company’s revolving credit facility.

On May 20, 2016, the Company acquired seven aggregates quarries in central and northwest Missouri from APAC-Kansas, Inc. and APAC-Missouri, Inc., subsidiaries of Oldcastle Materials, Inc. (“Oldcastle Assets”). The acquisition was funded with cash on hand.

On March 18, 2016, the Company acquired Boxley Materials Company (“Boxley Materials”), a vertically integrated company based in Roanoke, Virginia with six quarries, four ready-mix concrete plants and four asphalt plants. The acquisition was funded with a portion of the proceeds from $250.0 million of 8.500% senior notes issued on March 8, 2016 and due April 15, 2022 (see note 8).

On February 5, 2016, the Company acquired American Materials Company (“AMC”), an aggregates company with five sand and gravel pits servicing coastal North and South Carolina. The acquisition was funded with cash on hand.

Cement segment

On August 30, 2016, the Company acquired two river-supplied cement and fly-ash distribution terminals in Southern Louisiana (“Angelle Assets”). The acquisition was funded with borrowings under the Company’s revolving credit facility.

On July 17, 2015, the Company completed the acquisition of the Davenport Assets, a cement plant and a quarry in Davenport, Iowa, and seven cement terminals along the Mississippi River for $450.0 million in cash and a cement distribution terminal in Bettendorf, Iowa, for which a $16.6 million gain on disposition was recognized in general and administrative expenses. The cash purchase price was funded through a combination of debt (see Note 8) and $80.0 million with proceeds from the August 2015 follow-on offering. Combined with the Company’s cement plant in Hannibal, Missouri, the Company has over two million short

tons of cement capacity and eight cement distribution terminals along the Mississippi River from Minneapolis, Minnesota to New Orleans, Louisiana. The $170.1 million of goodwill that was acquired with the Davenport Assets reflects the value from estimated synergies and cost savings, primarily from the expanded geographic area, overhead cost reductions and best practice sharing of operating efficiencies between the acquired assets and the Company’s existing cement plant in Hannibal, Missouri. 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.

The purchase price allocation for the 2016 acquisitions, excluding AMC, has not yet been finalized due to the recent timing of the acquisitions and status of the valuation of property, plant and equipment. The table below summarizes aggregated information regarding the fair values of the assets acquired and liabilities assumed as of the respective acquisition dates. Information related to the 2016 acquisitions is shown on an aggregated basis as the acquisitions were not material individually, or collectively.


	Year ended		Davenport		Year Ended
	December 31,		July 17,		January 2, 2016
	2016		2015		(excluding Davenport)

Financial assets	$	21,008	$	—	$	12,555
Inventories		17,215		21,776		2,036
Property, plant and equipment		180,321		275,436		57,817
Intangible assets		5,531		—		—
Other assets		6,757		6,450		(745)
Financial liabilities		(19,052)		(2,190)		(13,733)
Other long-term liabilities		(36,074)		(4,086)		(11,289)
Net assets acquired		175,706		297,386		46,641
Goodwill		176,319		170,067		15,710
Purchase price		352,025		467,453		62,351
Acquisition related liabilities		(11,113)		—		(1,044)
Bettendorf assets		(5,921)		(18,743)		—
Other		1,967		—		—
Net cash paid for acquisitions	$	336,958	$	448,710	$	61,307

(3) Goodwill

As of December 31, 2016, the Company had 12 reporting units with goodwill for which the annual goodwill impairment test was completed. To perform the annual impairment test on the first day of the fourth quarter of 2016, seven of our reporting units were assessed under a qualitative assessment. As a result of this analysis, it was determined that it is more likely than not that the fair value of the seven reporting units were greater than its carrying value. Accordingly, for those reporting units, the two-step quantitative impairment test was not performed. For the remaining reporting units, Step 1 of the impairment test was performed. The Company estimated the fair value of the reporting units using an income approach (i.e., a discounted cash flow technique) and a market approach. These valuation methods used Level 2 and Level 3 assumptions, including, but not limited to, sales prices of similar assets, assumptions related to future profitability, cash flows, and discount rates. These estimates are based upon historical trends, management’s knowledge and experience and overall economic factors, including projections of future earnings potential. Developing discounted future cash flow estimates in applying the income approach required management to evaluate its intermediate to longer-term strategies, including, but not limited to, estimates about revenue growth, operating margins, capital requirements, inflation and working capital management. The development of appropriate rates to discount the estimated future cash flows required the selection of risk premiums, which can materially affect the present value of estimated future cash flows. Based on this analysis, it was determined that the reporting units’ fair values were greater than their carrying values and no impairment charges were recognized in 2016. The accumulated impairment charges recognized in prior periods totaled $68.2 million.

The following table presents goodwill by reportable segments and in total:


	West		East		Cement		Total
Balance, December 27, 2014	$	297,085	$	98,089	$	24,096	$	419,270
Acquisitions		15,491		219		170,067		185,777
Foreign currency translation adjustments		(8,650)		—		—		(8,650)
Balance, January 2, 2016	$	303,926	$	98,308	$	194,163	$	596,397
Acquisitions(1)		29,006		145,109		10,375		184,490
Foreign currency translation adjustments		1,325		—		—		1,325
Balance, December 31, 2016	$	334,257	$	243,417	$	204,538	$	782,212

Accumulated impairment losses as of December 31, 2016 and January 2, 2016	$	(53,264)	$	(14,938)	$	—	$	(68,202)

(1)

Reflects goodwill from 2016 acquisitions and working capital adjustments from prior year acquisitions in the West and Cement segments, including $5.4 million related to below-market contracts assumed with the Davenport Assets acquisition.

(4) Accounts Receivable, Net

Accounts receivable, net consisted of the following as of December 31, 2016 and January 2, 2016:


	2016		2015
Trade accounts receivable	$	152,845	$	133,418
Retention receivables		12,117		13,217
Receivables from related parties		721		635
Accounts receivable		165,683		147,270
Less: Allowance for doubtful accounts		(3,306)		(1,726)
Accounts receivable, net	$	162,377	$	145,544

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 generally billed and collected within one year.

(5) Inventories

Inventories consisted of the following as of December 31, 2016 and January 2, 2016:


	2016		2015
Aggregate stockpiles	$	103,073	$	86,236
Finished goods		35,071		14,840
Work in process		6,440		5,141
Raw materials		13,095		23,865
Total	$	157,679	$	130,082

(6) Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following as of December 31, 2016 and January 2, 2016:


	2016		2015
Land (mineral bearing) and asset retirement costs	$	227,558	$	142,645
Land (non-mineral bearing)		146,099		151,008
Buildings and improvements		160,638		133,043
Plants, machinery and equipment		965,522		860,085
Mobile equipment and barges		307,885		231,523
Truck and auto fleet		32,236		24,539
Landfill airspace and improvements		48,513		48,513
Office equipment		26,096		17,708
Construction in progress		16,459		26,447
Property, plant and equipment		1,931,006		1,635,511
Less accumulated depreciation, depletion and amortization		(484,554)		(366,505)
Property, plant and equipment, net	$	1,446,452	$	1,269,006

Depreciation, depletion and amortization expense of property, plant and equipment was $144.2 million, $111.6 million and $85.8 million in the years ended December 31, 2016, January 2, 2016 and December 27, 2014, respectively.

Property, plant and equipment at December 31, 2016 and January 2, 2016 included $49.8 million and $47.0 million, respectively, of capital leases for certain equipment and a building with accumulated amortization of $10.6 million and $7.0 million, respectively. The equipment leases generally have terms of less than five years and the building lease had an original term of 30 years. Approximately $11.8 million and $15.3 million of the future obligations associated with the capital leases are included in accrued expenses as of December 31, 2016 and January 2, 2016, respectively, and the present value of the remaining capital lease payments, $27.5 million and $29.5 million, respectively, is included in other noncurrent liabilities on the consolidated balance sheets. Future minimum rental commitments under long-term capital leases are $13.6 million, $17.6 million, $5.7 million, $2.6 million, and $0.7 million for the years ended 2017, 2018, 2019, 2020 and 2021, respectively.

(7) Accrued Expenses

Accrued expenses consisted of the following as of December 31, 2016 and January 2, 2016:


	2016		2015
Interest	$	22,991	$	19,591
Payroll and benefits		30,546		24,714
Capital lease obligations		11,766		15,263
Insurance		11,966		9,824
Non-income taxes		5,491		4,618
Professional fees		2,459		2,528
Other(1)		25,254		16,404
Total	$	110,473	$	92,942

(1)

Consists primarily of subcontractor and working capital settlement accruals and deferred revenue.

(8) Debt

Debt consisted of the following as of December 31, 2016 and January 2, 2016:


	2016		2015
Term Loan, due 2022:
$640.3 million and $646.8 million, net of $2.6 million and $3.1 million discount at December 31, 2016 and January 2, 2016, respectively	$	637,658	$	643,693
81⁄₂% Senior Notes, due 2022		250,000		—
61⁄₈% Senior Notes, due 2023:
$650 million, net of $1.6 million and $1.8 million discount at December 31, 2016 and January 2, 2016, respectively		648,407		648,165
Total		1,536,065		1,291,858
Current portion of long-term debt		6,500		6,500
Long-term debt	$	1,529,565	$	1,285,358

The contractual payments of long-term debt, including current maturities, for the five years subsequent to December 31, 2016, are as follows:


2017	$	6,500
2018		4,875
2019		6,500
2020		8,125
2021		6,500
Thereafter		1,507,750
Total		1,540,250
Less: Original issue net discount		(4,185)
Less: Capitalized loan costs		(15,109)
Total debt	$	1,520,956

Senior Notes— On March 8, 2016, Summit LLC and Summit Materials Finance Corp., an indirect wholly-owned subsidiary of Summit LLC ("Finance Corp." and with Summit LLC, the “Issuers”) issued $250.0 million of 8.500% senior notes due April 15, 2022 (the “2022 Notes”). The 2022 Notes were issued at 100.0% of their par value with proceeds of $246.3 million, net of related fees and expenses. The proceeds from the sale of the 2022 Notes were used to fund the acquisition of Boxley Materials, replenish cash used for the acquisition of AMC and pay expenses incurred in connection with these acquisitions. The 2022 Notes were issued under an indenture dated March 8, 2016 (as amended and supplemented, the “2016 Indenture”). The 2016 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 its assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The 2016 Indenture also contains customary events of default. Interest on the 2022 Notes is payable semi-annually in arrears on April 15 and October 15 of each year commencing on October 15, 2016.

In 2015, the Issuers issued $650.0 million of 6.125% senior notes due July 2023 (the "2023 Notes” and collectively with the 2022 Notes, the “Senior Notes”). 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, to redeem $336.8 million in aggregate principal amount of the then outstanding 2020 Notes and pay related fees and expenses. Of the aggregate $650.0 million of 2023 Notes, $350.0 million were issued at par and $300.0 million were issued at 99.375% of par. The 2023 Notes were issued under an indenture dated July 8, 2015, the terms of which are generally consistent with the 2016 Indenture. 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.

In April, August and November 2015, using proceeds from the IPO, the refinancing of the term loan described below and the proceeds from the 2023 Notes, $288.2 million, $183.0 million and $153.8 million, respectively, in aggregate principal amount of the then outstanding 2020 Notes were redeemed at a price equal to par plus an applicable premium and the indenture under which the 2020 Notes were issued was satisfied and discharged. As a result of the

The following table presents the activity for the deferred financing fees for the years ended December 31, 2016 and January 2, 2016:


	Deferred financing fees
Balance—December 27, 2014	$	17,215
Loan origination fees		14,246
Amortization		(3,390)
Write off of deferred financing fees		(12,179)
Balance—January 2, 2016	$	15,892
Loan origination fees		5,801
Amortization		(3,403)
Balance—December 31, 2016	$	18,290

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 December 31, 2016 or January 2, 2016.

(9) Accumulated Other Comprehensive Loss

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


							Accumulated
			Foreign currency				other
	Change in		translation		Cash flow hedge		comprehensive
	retirement plans		adjustments		adjustments		loss
Balance — December 28, 2013	$	(6,045)	$	—	$	—	$	(6,045)
Postretirement curtailment adjustment		(942)		—		—		(942)
Postretirement liability adjustment		(2,743)		—		—		(2,743)
Foreign currency translation adjustment		—		(5,816)		—		(5,816)
Balance — December 27, 2014	$	(9,730)	$	(5,816)	$	—	$	(15,546)
Postretirement liability adjustment		2,123		—		—		2,123
Foreign currency translation adjustment		—		(14,099)		—		(14,099)
Loss on cash flow hedges		—		—		(944)		(944)
Balance — January 2, 2016	$	(7,607)	$	(19,915)	$	(944)	$	(28,466)
Postretirement liability adjustment		426		—		—		426
Foreign currency translation adjustment		—		2,125		—		2,125
Loss on cash flow hedges		—		—		(1,529)		(1,529)
Balance — December 31, 2016	$	(7,181)	$	(17,790)	$	(2,473)	$	(27,444)

(10) Income Taxes

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

As of December 31, 2016 and January 2, 2016, 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 years ended December 31, 2016 and January 2, 2016.

For the years ended December 31, 2016, January 2, 2016 and December 27, 2014, income taxes consisted of the following:


	2016		2015		2014
Provision for income taxes:
Current	$	2,835	$	1,605	$	(905)
Deferred		(8,117)		(19,868)		(6,078)
Income tax benefit	$	(5,282)	$	(18,263)	$	(6,983)

The effective tax rate on pre-tax income differs from the U.S. statutory rate of 35% due to the following:


	2016		2015		2014
Income tax expense (benefit) at federal statutory tax rate	$	19,882	$	(6,412)	$	(4,643)
Less: Income tax benefit at federal statutory tax rate for LLC entities		(21,042)		(9,908)		(2,272)
State and local income taxes		1,279		(2,389)		(224)
Permanent differences		(1,726)		2,147		(129)
Effective tax rate change		(1,432)		10		(241)
Valuation allowance		148		—		1,693
Other		(2,391)		(1,711)		(1,167)
Income tax benefit	$	(5,282)	$	(18,263)	$	(6,983)

The following table summarizes the components of the net deferred income tax liability as December 31, 2016 and January 2, 2016:


	2016		2015
Deferred tax (liabilities) assets:
Accelerated depreciation	$	(58,094)	$	(35,221)
Net operating loss		24,884		25,767
Investment in limited partnership		(12,899)		(13,135)
Net intangible assets		(999)		(880)
Mining reclamation reserve		582		2,411
Working capital (e.g., accrued compensation, prepaid assets)		1,386		1,662
Net deferred tax liabilities		(45,140)		(19,396)
Less valuation allowance		(2,677)		(2,523)
Net deferred tax liability	$	(47,817)	$	(21,919)

The net deferred income tax liability as of December 31, 2016 and January 2, 2016, are included in other noncurrent liabilities on the consolidated balance sheets. As of December 31, 2016, Summit LLC had federal net operating loss carryforwards of $72.6 million, which expire between 2030 and 2036. Summit LLC has alternative minimum tax credits of $0.2 million as of December 31, 2016, which do not expire.

Valuation Allowance—The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible (including the effect of available carryback and carryforward periods) and tax-planning strategies. The deferred income tax asset related to net operating losses resides with two separate tax paying subsidiaries (or subsidiary groups) of Summit LLC. These tax payers have historically generated taxable income and forecast to continue generating taxable income; however, the use of a portion of the net operating may be limited. Therefore, a $2.7 million and $2.5 million, respectively, valuation allowance has been recorded on a portion of the total net operating loss carryforwards as of December 31, 2016 and January 2, 2016, respectively. At December 31, 2016, the Company had net operating loss carryforwards for federal and state income tax purposes of $63.7 million and $72.5 million, respectively, which are available to offset future federal and state taxable income, if any, through 2035.

Tax years from 2013 to 2016 remain open and subject to audit by federal, Canadian, and state tax authorities. No income tax expense or benefit was recognized in other comprehensive loss in 2016, 2015 or 2014.

Obligations and Funded Status—The following information is as of December 31, 2016 and December 31, 2015 and for the years ended December 31, 2016, December 31, 2015 and December 27, 2014:



	2016				2015
	Pension		Healthcare		Pension		Healthcare
	benefits		& Life Ins.		benefits		& Life Ins.
Change in benefit obligations:
Beginning of period	$	27,914	$	13,458	$	28,909	$	13,356
Service cost		279		230		159		149
Interest cost		1,049		470		1,041		447
Actuarial loss (gain)		22		(682)		(1,464)		(1,720)
Change in plan provision		—		65		908		1,896
Benefits paid		(1,656)		(771)		(1,639)		(670)
End of period		27,608		12,770		27,914		13,458

Change in fair value of plan assets:
Beginning of period	$	18,336	$	—	$	18,872	$	—
Actual return on plan assets		719				(63)
Employer contributions		996		771		1,166		670
Benefits paid		(1,656)		(771)		(1,639)		(670)
End of period		18,395		—		18,336		—

Funded status of plans	$	(9,213)	$	(12,770)	$	(9,578)	$	(13,458)
Current liabilities	$	—	$	(844)	$	—	$	(964)
Noncurrent liabilities		(9,213)		(11,926)		(9,578)		(12,494)
Liability recognized	$	(9,213)	$	(12,770)	$	(9,578)	$	(13,458)

Amounts recognized in accumulated other comprehensive income:
Net actuarial loss	$	9,248	$	3,060	$	9,024	$	3,949
Prior service cost		—		(1,968)		—		(2,206)
Total amount recognized	$	9,248	$	1,092	$	9,024	$	1,743

The amount recognized in accumulated other comprehensive income (“AOCI”) is the actuarial loss and prior service cost, which has not yet been recognized in periodic benefit cost. At December 31, 2016, the actuarial loss expected to be amortized from AOCI to periodic benefit cost in 2017 is $0.6 million and $0.1 million for the pension and postretirement obligations, respectively.


	2016				2015				2014
	Pension		Healthcare		Pension		Healthcare		Pension		Healthcare
	benefits		& Life Ins.		benefits		& Life Ins.		benefits		& Life Ins.
Amounts recognized in other comprehensive (income) loss:
Net actuarial gain (loss)	$	688	$	(682)	$	(16)	$	(1,720)	$	4,650	$	1,992
Prior service cost		—		64		—		—		—		(2,553)
Amortization of prior year service cost		—		174		—		174		—		174
Curtailment benefit		—		—		—		—		—		1,346
Amortization of gain		(463)		(207)		(326)		(235)		(117)		(227)
Total amount recognized	$	225	$	(651)	$	(342)	$	(1,781)	$	4,533	$	732

Components of net periodic benefit cost:
Service cost	$	279	$	230	$	159	$	149	$	75	$	106
Interest cost		1,049		470		1,041		447		1,081		493
Amortization of gain		463		207		326		235		117		227
Expected return on plan assets		(1,386)		—		(1,385)		—		(1,378)		—
Curtailments		—		—		—		—		—		(1,346)
Amortization of prior service credit		—		(174)		—		(174)		—		(174)
Net periodic benefit cost	$	405	$	733	$	141	$	657	$	(105)	$	(694)

Assumptions—Weighted-average assumptions used to determine the benefit obligations as of year-end 2016 and 2015 are:


	2016		2015
		Healthcare		Healthcare
	Pension benefits	& Life Ins.	Pension benefits	& Life Ins.
Discount rate	3.61% - 3.81%	3.32% - 3.65%	3.74% - 3.97%	3.34% - 3.80%
Expected long-term rate of return on plan assets	7.00%	N/A	7.30%	N/A

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, 2016, January 2, 2016 and December 27, 2014:


	2016		2015		2014
		Healthcare		Healthcare		Healthcare
	Pension benefits	& Life Ins.	Pension benefits	& Life Ins.	Pension benefits	& Life Ins.
Discount rate	3.74% - 3.97%	3.34% - 3.80%	3.50% - 3.98%	3.39% - 3.52%	4.21% - 4.46%	4.33%
Expected long-term rate of return on plan assets	7.30%	N/A	7.30%	N/A	7.50%	N/A

The expected long-term return on plan assets is based upon the Plans’ consideration of historical and forward-looking returns and the Company’s estimation of what a portfolio, with the target allocation described below, will earn over a long-term horizon. The discount rate is derived using the Citigroup Pension Discount Curve.

Assumed health care cost trend rates were 8.0% grading to 4.5% as of year-end 2016 and 2015. Assumed health care cost trend rates have a significant effect on the amounts reported for the Company’s healthcare and life insurance

benefits plans. A one percentage-point change in assumed health care cost trend rates would have the following effects as of year-end 2016 and 2015:



	2016				2015
	Increase		Decrease		Increase		Decrease
Total service cost and interest cost components	$	55	$	(47)	$	45	$	(36)
APBO		1,197		(1,038)		1,302		(1,121)

Plan Assets—The defined benefit pension plans’ (the “Plans”) investment strategy is to minimize investment risk while generating acceptable returns. The Plans currently invest a relatively high proportion of the plan assets in fixed income securities, while the remainder is invested in equity securities, cash reserves and precious metals. The equity securities are diversified into funds with growth and value investment strategies. The target allocation for plan assets is as follows: equity securities—30%; fixed income securities—63%; cash reserves—5%; and precious metals—2%. The Plans’ current investment allocations are within the tolerance of the target allocation. The Company had no Level 3 investments as of or for the years ended December 31, 2016 and January 2, 2016.

At year-end 2016 and 2015, the Plans’ assets were invested predominantly in fixed-income securities and publicly traded equities, but may invest in other asset classes in the future subject to the parameters of the investment policy. The Plans’ investments in fixed-income assets include U.S. Treasury and U.S. agency securities and corporate bonds. The Plans’ investments in equity assets include U.S. and international securities and equity funds. The Company estimates the fair value of the Plans’ assets using various valuation techniques and, to the extent available, quoted market prices in active markets or observable market inputs. The descriptions and fair value methodologies for the Plans’ assets are as follows:

Fixed Income Securities—Corporate and government bonds are classified as Level 2 assets, as they are either valued at quoted market prices from observable pricing sources at the reporting date or valued based upon comparable securities with similar yields and credit ratings.

Equity Securities—Equity securities are valued at the closing market price reported on a U.S. exchange where the security is actively traded and are therefore classified as Level 1 assets.

Cash—The carrying amounts of cash approximate fair value due to the short-term maturity.

Precious Metals—Precious metals are valued at the closing market price reported on a U.S. exchange where the security is actively traded and are therefore classified as Level 1 assets.

The fair value of the Plans’ assets by asset class and fair value hierarchy level as of December 31, 2016 and December 31, 2015 are as follows:


	2016
			Quoted prices in active
	Total fair		markets for identical		Observable
	value		assets (Level 1)		inputs (Level 2)
Fixed income securities:
Intermediate—government	$	1,770	$	—	$	1,770
Intermediate—corporate		2,658		—		2,658
Short-term—government		912		—		912
Short-term—corporate		3,613		—		3,613
Equity securities:		—
U.S. Large cap value		1,181		1,181		—
U.S. Large cap growth		1,103		1,103		—
U.S. Mid cap value		577		577		—
U.S. Mid cap growth		546		546		—
U.S. Small cap value		551		551		—
U.S. Small cap growth		540		540		—
Managed Futures		366		366
International		1,099		1,099		—
Emerging Markets		359		359
Commodities Broad Basket		707		707
Cash		2,094		2,094		—
Precious metals		319		319		—
Total	$	18,395	$	9,442	$	8,953


	2015
			Quoted prices in active
	Total fair		markets for identical		Observable
	value		assets (Level 1)		inputs (Level 2)
Fixed income securities:
Intermediate—government	$	1,410	$	—	$	1,410
Intermediate—corporate		3,376		—		3,376
Short-term—government		390		—		390
Short-term—corporate		5,571		—		5,571
Equity securities:
U.S. Large cap value		1,148		1,148		—
U.S. Large cap growth		1,153		1,153		—
U.S. Mid cap value		557		557		—
U.S. Mid cap growth		569		569		—
U.S. Small cap value		554		554		—
U.S. Small cap growth		554		554		—
International		1,118		1,118		—
Cash		1,592		1,592		—
Precious metals		345		345		—
Total	$	18,337	$	7,590	$	10,747

Cash Flows—The Company expects to contribute approximately $1.7 million in 2017 to both its pension plans and to its healthcare and life insurance benefits plans.

The estimated benefit payments for each of the next five years and the five-year period thereafter are as follows:



	Pension		Healthcare and Life
	benefits		Insurance Benefits
2017	$	1,777	$	844
2018		1,813		882
2019		1,817		869
2020		1,793		910
2021		1,762		898
2022 - 2026		8,590		4,579

(12) Accrued Mining and Landfill Reclamation

The Company has asset retirement obligations arising from regulatory or contractual requirements to perform certain reclamation activities at the time that certain quarries and landfills are closed, which are primarily included in other noncurrent liabilities on the consolidated balance sheets. The current portion of the liabilities, $5.1 million and $2.0 million as of December 31, 2016 and January 2, 2016, respectively, is included in accrued and other liabilities on the consolidated balance sheets. The total undiscounted anticipated costs for site reclamation as of December 31, 2016 and January 2, 2016 were $63.6 million and $56.7 million, respectively. The liabilities were initially measured at fair value and are subsequently adjusted for accretion expense, payments and changes in the amount or timing of the estimated cash flows. The corresponding asset retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the asset’s remaining useful life. The following table presents the activity for the asset retirement obligations for the years ended December 31, 2016 and January 2, 2016:


	2016		2015
Beginning balance	$	20,735	$	18,310
Acquired obligations		835		745
Change in cost estimate		3,055		907
Settlement of reclamation obligations		(2,283)		(689)
Additional liabilities incurred		—		60
Accretion expense		1,564		1,402
Ending balance	$	23,906	$	20,735

(13) 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. for the sellers’ 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 has incurred significant losses on a highway project in Utah, which have resulted in requests for funding from the joint venture partners and ultimately from the Company. Through December 31, 2016, the Company has funded $8.8 million, $4.0 million in 2012 and $4.8 million in 2011. In 2012 and 2011, the Company recognized losses on the indemnification agreement of $8.0 million and $1.9 million, respectively. As of December 31, 2016 and January 2, 2016, an accrual of $4.3 million was recorded in other noncurrent liabilities as management’s best estimate of future funding obligations.

Environmental Remediation and Site Restoration—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

Cement sales to companies owned by certain noncontrolling members of Continental Cement were approximately $1.4 million, and $14.3 million for the period between December 28, 2014 and March 17, 2015 and the year ended December 27, 2014, respectively.

In the year ended December 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) Acquisition-Related Liabilities

A number of acquisition-related liabilities have been recorded subject to terms in the relevant purchase agreements, including deferred consideration and noncompete payments. Noncompete payments have been accrued where certain former owners of newly acquired companies have entered into standard noncompete arrangements. Subject to terms and conditions stated in these noncompete agreements, payments are generally made over a five-year period. Deferred consideration is purchase price consideration paid in the future as agreed to in the purchase agreement and is not contingent on future events. Deferred consideration is generally scheduled to be paid in years ranging from 5 to 20 years in annual installments. The remaining payments due under these noncompete and deferred consideration agreements are as follows:


2017		12,467
2018		10,327
2019		5,862
2020		4,728
2021		4,728
Thereafter		6,813
Total scheduled payments		44,925
Present value adjustments		(9,766)
Total noncompete obligations and deferred consideration	$	35,159

Accretion on the deferred consideration and noncompete obligations is recorded in interest expense.

(16) Supplemental Cash Flow Information

Supplemental cash flow information for the years ended December 31, 2016, January 2, 2016 and December 27, 2014 was as follows:


	2016		2015		2014
Cash payments:
Interest	$	82,540	$	89,102	$	64,097
Income taxes		2,645		1,685		1,361
Non cash financing activities:
Purchase of noncontrolling interest in Continental Cement	$	—	$	(64,102)	$	—

(17) Leasing Arrangements

Rent expense, which primarily relates to land, plants and equipment, during the years ended December 31, 2016, January 2, 2016 and December 27, 2014 was $18.6 million, $12.1 million and $5.5 million, respectively. The Company has lease agreements associated with quarry facilities under which royalty payments are made. The payments are generally based on tons sold in a particular period; however, certain agreements have minimum annual payments. Royalty expense recorded in cost of revenue during the years ended December 31, 2016, January 2, 2016 and December

27, 2014 was $15.6 million, $12.6 million and $9.0 million, respectively. Minimum contractual commitments for the subsequent five years under long-term operating leases and under royalty agreements are as follows:


	Operating		Royalty
	Leases		Agreements
2017	$	7,673	$	5,288
2018		5,841		5,122
2019		4,852		4,723
2020		4,169		4,540
2021		3,340		4,241

(18) 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 Inc. 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.

Prior to the March 17, 2015 purchase of the noncontrolling interest, the Company owned 100 Class A Units of Continental Cement, which represented an approximately 70% economic interest and had a preference in liquidation to the Class B Units. Continental Cement issued 100,000,000 Class B Units in May 2010, which remained outstanding until March 17, 2015 and represented an approximately 30% economic interest.

(19) Employee Long Term Incentive Plan

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 as of the date of the Reclassification (as defined below). A portion, but not all, of the Class D-1 and D-2 units were vested. As of their respective grant date, approximately half of the Class D-1 units were subject to a vesting period of five years (“time-vesting interests”), 20% on the first anniversary of the grant date and the remaining 80% vested monthly over a period of four years following the first anniversary date. Approximately half of the D-1 units and all of the D-2 units vested upon Summit Holdings’ investors achieving certain investment returns (“performance-vesting interests”). The fair value of the time-vesting Class D units granted in 2014 totaled $0.6 million. The weighted-average grant-date fair value in 2014 was $1,368.

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 the LP Units (“Reclassification”). Immediately following the Reclassification, 69,007,297 LP Units were outstanding, of which 575,256 time-vesting interests were not fully vested and 2,425,361 performance-vesting interests were not vested.

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 Class A common stock, and options were issued to holders of Class D interests to purchase an aggregate of 4,358,842 shares of 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 expenses in the year ended January 2, 2016.

The leverage restoration options were granted under the Summit Materials, Inc. 2015 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). The leverage restoration options that correlated to time-vesting interests vest over four years beginning on the Reclassification date and the leverage restoration options that correlated to performance-vesting interests vest when both the applicable return multiple is achieved and a four year time-vesting condition is satisfied. The four-year time-vesting condition will be satisfied with respect to 25% 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 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. The weighted-average grant date fair value of all stock options granted in 2015 was $9.00 per stock option.

In the year ended December 31, 2016, Summit Inc. acquired 45,124,528 LP Units in exchange for an equal number of shares of Class A common stock, of which 37,933,804 LP Units were exchanged by certain investment funds associated with or designated by The Blackstone Group L.P. (“Blackstone”). Blackstone subsequently sold the shares of Class A common stock it received through underwritten public offerings. As a result of these transactions and Blackstone’s prior exchange and sale of LP Units, the performance target associated with certain LP Units and leverage restoration options which was based on Blackstone receiving a 1.75 times return on its initial investment, was achieved, which had historically been considered improbable for accounting purposes.

In addition, on August 9, 2016, the Board of Directors of Summit Inc. determined that it was in the best interest of the Company to waive the 3.0 times threshold on the remaining unvested performance-based LP Units and leverage restoration options. The waiver of the 3.0 times threshold was accounted for as a modification of the applicable LP Units and stock options whereby the performance metric was previously considered improbable and became probable with the modification. The fair value of the LP Units was based on the closing stock price of Summit Inc.’s shares of Class A common stock on the modification date and the fair value of the affected options was determined using the Black-Scholes, Merton model, which requires the input of subjective assumptions, including the expected volatility and the expected term. The assumptions used included the $18.00 exercise price, 1.55% risk-free interest rate, no dividend yield, a 48% volatility rate and expected term of approximately 9 years. The Company recognized $37.3 million in general and administrative expenses in the year ended December 31, 2016 related to the vesting of these performance-based awards, which does not include expense on the stock options that will be recognized over the remaining 4-year vesting period. As of December 31, 2016 and January 2, 2016, 190,020 and 411,727 respectively, of time-vesting LP Units were unvested and 187,879 vested during the year ended December 31, 2016

In 2016, 2,822,259 stock options, 363,800 restricted stock units and 130,691 performance stock units were granted. Excluding 34,928 restricted stock units that have a one-year vesting period, these awards vest over three years at a rate of 33.3% of the award on each of the first three anniversaries, subject to the employee’s continued employment through the applicable vesting date. These stock options have an exercise price between $17.07 per share and $21.63 per share.

In 2015, 10,000 restricted stock units were granted at a weighted-average grant date fair value of $23.79 per restricted stock unit, which vest over four years at a rate of 25% of the award on each of the first four anniversaries, subject to the employee’s continued employment through the applicable vesting date. The fair value of restricted stock units was determined based on the closing stock price of Summit Inc.’s Class A common shares on the date of grant.

The outstanding warrants, restricted stock units and options granted have a ten year contractual term at which point any unexercised awards are cancelled. As of December 31, 2016, 5,473,736 awards have been granted under the Omnibus Incentive Plan of the 13,500,000 shares of Class A common stock authorized for issuance. The following table summarizes information for the equity awards granted in 2016:


	Options			Restricted Stock Units			Performance Stock Units			Warrants
		Weighted			Weighted			Weighted			Weighted
		average grant-		Number of	average grant-		Number of	average grant-		Number of	average grant-
	Number of	date fair value		restricted	date fair value		performance	date fair value		performance	date fair value
	options	per unit		stock units	per unit		stock units	per unit		stock units	per unit
Beginning balance—January 2, 2016	2,265,584	$	9.00	10,000	$	23.79	—	$	—	160,333	$	18.00
Granted	2,822,259		8.90	363,800		17.52	130,691		18.71	—		—
Forfeited	(73,046)		9.08	(18,698)		18.65	—		—	—		—
Exercised	(24,354)		8.78	—		—	—		—	—		—
Vested	—		—	(2,500)		23.79	—		—	—		—
Balance—December 31, 2016	4,990,443	$	8.95	352,602	$	17.77	130,691	$	18.71	160,333	$	18.00

The fair value of the time-vesting options granted in 2016 and 2015 was estimated as of the grant date using the Black-Scholes-Merton model, which requires the input of subjective assumptions, including the expected volatility and the expected term. The fair value of the performance stock units granted in 2016 and the Class D units granted in 2014 was estimated as of the grant date using Monte Carlo simulations, which requires the input of subjective assumptions, including the expected volatility and the expected term. The following table presents the weighted average assumptions used to estimate the fair value of grants in 2016, 2015 and 2014:


				Performance
	Options			Stock Units
	2016	2015	2014	2016
Risk-free interest rate	1.75% - 1.97%	1.68% - 1.92%	0.50% - 0.68%	0.88%
Dividend yield	None	None	None	None
Volatility	48%	50%	58%	37%
Expected term	10 Years	7 - 10 years	3 - 4 Years	3 Years

The risk-free rate is based on the yield at the date of grant of a U.S. Treasury security with a maturity period approximating the expected term. As Summit Holdings has not historically and does not plan to issue regular dividends, a dividend yield of zero was used. The volatility assumption is based on reported data of a peer group of publically traded companies for which historical information was available adjusted for the Company’s capital structure. The expected term is based on expectations about future exercises and represents the period of time that the units granted are expected to be outstanding.

Compensation expense for time-vesting interests granted is based on the grant date fair value. The Company recognizes compensation costs on a straight-line basis over the service period, which is generally the vesting period of the award. Forfeitures are recognized as they occur. Share-based compensation expense, which is recognized in general and administrative expenses, totaled $49.9 million, $19.9 million and $2.2 million in the years ended December 31, 2016, January 2, 2016 and December 27, 2014, respectively. As of December 31, 2016, unrecognized compensation cost totaled $29.9 million. The weighted average remaining contractual term over which the unrecognized compensation cost is to be recognized is 2.8 years as of year-end 2016.

As of December 31, 2016, the intrinsic value of outstanding options, restricted stock units and performance stock units was $29.2 million, $8.4 million and $3.1 million, respectively, and the remaining contractual term was 8.3 years, 9.2 years and 9.2 years, respectively. The weighted average strike price of stock options outstanding as of December 31, 2016 was $17.94 per share. At December 31, 2016, the intrinsic value of stock options exercised and restricted stock units vested were both $0.1 million. The intrinsic value of 1.1 million exercisable stock options as of December 31, 2016 was $6.4 million with a weighted average strike price of $18.03 and a weighted average remaining vesting period of 8.2 years.

(20) Segment Information

The Company has three operating segments: West; East; and Cement, which are its reporting segments. These segments are consistent with the Company’s management reporting structure. The operating results of each segment are regularly reviewed and evaluated by the Chief Executive Officer, the Company’s Chief Operating Decision Maker (“CODM”). The CODM primarily evaluates the performance of its segments and allocates resources to them based on a segment profit metric that we call Adjusted EBITDA, which is computed as earnings from continuing operations before interest, taxes, depreciation, depletion, amortization, accretion, share-based compensation, and transaction costs, as well as various other non-recurring, non-cash amounts.

The West and East segments have several acquired subsidiaries that are engaged in various activities including quarry mining, aggregate production and contracting. The Cement segment is engaged in the production of Portland cement. Assets employed by each 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 the consolidated financial statements.

The following tables display selected financial data for the Company’s reportable business segments as of and for the years ended December 31, 2016, January 2, 2016 and December 27, 2014:


	2016		2015		2014
Revenue*:
West	$	813,682	$	804,503	$	665,716
East		531,294		432,310		432,942
Cement		281,087		195,484		105,573
Total revenue	$	1,626,063	$	1,432,297	$	1,204,231

* Intercompany sales are immaterial and the presentation above only reflects sales to external customers.


	2016		2015		2014
Adjusted EBITDA:
West	$	167,434	$	150,764	$	102,272
East		126,007		92,303		73,822
Cement		112,991		74,845		35,133
Corporate and other		(35,098)		(30,384)		(22,194)
Total Adjusted EBITDA		371,334		287,528		189,033
Interest expense		96,483		83,757		86,742
Depreciation, depletion and amortization		147,736		118,321		86,955
Accretion		1,564		1,402		871
IPO/ Legacy equity modification costs		37,257		28,296		—
Loss on debt financings		—		71,631		—
Transaction costs		6,797		9,519		8,554
Management fees and expenses		(1,379)		1,046		4,933
Non-cash compensation		12,683		5,448		2,235
(Gain) loss on disposal and impairment of assets		3,805		(16,561)		8,735
Other		9,583		2,991		3,344
Income (loss) from continuing operations before taxes	$	56,805	$	(18,322)	$	(13,336)


	2016		2015		2014
Purchases of property, plant and equipment
West	$	77,335	$	39,896	$	31,968
East		45,492		26,268		23,702
Cement		25,408		17,151		15,959
Total reportable segments		148,235		83,315		71,629
Corporate and other		5,248		5,635		4,533
Total purchases of property, plant and equipment	$	153,483	$	88,950	$	76,162


	2016		2015		2014
Depreciation, depletion, amortization and accretion:
West	$	65,345	$	53,727	$	33,271
East		51,540		38,923		38,035
Cement		30,006		24,758		15,052
Total reportable segments		146,891		117,408		86,358
Corporate and other		2,409		2,315		1,468
Total depreciation, depletion, amortization and accretion	$	149,300	$	119,723	$	87,826


	2016		2015		2014
Total assets:
West	$	902,763	$	821,479	$	771,234
East		870,613		545,187		553,843
Cement		868,440		843,941		364,351
Total reportable segments		2,641,816		2,210,607		1,689,428
Corporate and other		134,604		184,555		23,225
Total	$	2,776,420	$	2,395,162	$	1,712,653


	2016		2015		2014
Revenue by product*:
Aggregates	$	264,609	$	219,040	$	161,496
Cement		250,349		167,696		89,911
Ready-mix concrete		395,917		350,262		274,220
Asphalt		239,419		252,031		237,510
Paving and related services		304,041		295,995		326,378
Other		171,728		147,273		114,716
Total revenue	$	1,626,063	$	1,432,297	$	1,204,231

*Revenue from the liquid asphalt terminals is included in asphalt revenue.

(21) Senior Notes’ 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 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 year ended December 31, 2016. 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.

Condensed Consolidating Balance Sheets

December 31, 2016


			100%
			Owned		Non-
	Issuers		Guarantors		Guarantors		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	133,862	$	4,820	$	14,656	$	(10,666)	$	142,672
Accounts receivable, net		—		155,389		7,090		(102)		162,377
Intercompany receivables		521,658		321,776		—		(843,434)		—
Cost and estimated earnings in excess of billings		—		6,830		620		—		7,450
Inventories		—		153,374		4,305		—		157,679
Other current assets		1,259		11,012		529		—		12,800
Total current assets		656,779		653,201		27,200		(854,202)		482,978
Property, plant and equipment, net		7,033		1,418,902		20,517		—		1,446,452
Goodwill		—		735,490		46,722		—		782,212
Intangible assets, net		—		17,989		—		—		17,989
Other assets		3,202,706		125,270		1,946		(3,283,133)		46,789
Total assets	$	3,866,518	$	2,950,852	$	96,385	$	(4,137,335)	$	2,776,420
Liabilities and Member’s Interest
Current liabilities:
Current portion of debt	$	6,500	$	—	$	—	$	—	$	6,500
Current portion of acquisition-related liabilities		1,000		20,663		—		—		21,663
Accounts payable		1,497		76,886		3,329		(102)		81,610
Accrued expenses		46,460		73,807		872		(10,666)		110,473
Intercompany payables		509,503		327,405		6,526		(843,434)		—
Billings in excess of costs and estimated earnings		—		15,242		214		—		15,456
Total current liabilities		564,960		514,003		10,941		(854,202)		235,702
Long-term debt		1,514,456		—		—		—		1,514,456
Acquisition-related liabilities		—		25,161		—		—		25,161
Other noncurrent liabilities		2,395		231,199		56,356		(165,242)		124,708
Total liabilities		2,081,811		770,363		67,297		(1,019,444)		1,900,027
Total member's interest		1,784,707		2,180,489		29,088		(3,117,891)		876,393
Total liabilities and member’s interest	$	3,866,518	$	2,950,852	$	96,385	$	(4,137,335)	$	2,776,420

Condensed Consolidating Balance Sheets

January 2, 2016


			100%
			Owned		Non-
	Issuers		Guarantors		Guarantors		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	180,712	$	4,068	$	12,208	$	(11,600)	$	185,388
Accounts receivable, net		1		136,916		8,681		(54)		145,544
Intercompany receivables		562,311		114,402		10,670		(687,383)		—
Cost and estimated earnings in excess of billings		—		5,389		301		—		5,690
Inventories		—		126,553		3,529		—		130,082
Other current assets		764		3,306		737		—		4,807
Total current assets		743,788		390,634		36,126		(699,037)		471,511
Property, plant and equipment, net		10,355		1,232,340		26,311		—		1,269,006
Goodwill		—		550,028		46,369		—		596,397
Intangible assets, net		—		13,797		1,208		—		15,005
Other assets		1,840,889		130,992		2,288		(1,930,926)		43,243
Total assets	$	2,595,032	$	2,317,791	$	112,302	$	(2,629,963)	$	2,395,162
Liabilities and Member’s Interest
Current liabilities:
Current portion of debt	$	6,500	$	—	$	—	$	—	$	6,500
Current portion of acquisition-related liabilities		1,400		16,684		—		—		18,084
Accounts payable		2,138		74,111		5,202		(54)		81,397
Accrued expenses		40,437		62,217		1,888		(11,600)		92,942
Intercompany payables		122,174		562,537		2,672		(687,383)		—
Billings in excess of costs and estimated earnings		—		12,980		101		—		13,081
Total current liabilities		172,649		728,529		9,863		(699,037)		212,004
Long-term debt		1,273,652		—		—		—		1,273,652
Acquisition-related liabilities		—		31,028		—		—		31,028
Other noncurrent liabilities		1,292		197,484		56,703		(155,293)		100,186
Total liabilities		1,447,593		957,041		66,566		(854,330)		1,616,870
Total member's interest		1,147,439		1,360,750		45,736		(1,775,633)		778,292
Total liabilities and member’s interest	$	2,595,032	$	2,317,791	$	112,302	$	(2,629,963)	$	2,395,162

Condensed Consolidating Statements of Operations and Comprehensive Loss

Year ended December 31, 2016


			100%
			Owned		Non-
	Issuers		Guarantors		Guarantors		Eliminations		Consolidated

Revenue	$	—		1,586,858		47,064		(7,859)	$	1,626,063
Cost of revenue (excluding items shown separately below)		—		1,047,398		32,531		(7,859)		1,072,070
General and administrative expenses		91,533		152,752		6,374		—		250,659
Depreciation, depletion, amortization and accretion		2,410		142,773		4,117		—		149,300
Operating (loss) income		(93,943)		243,935		4,042		—		154,034
Other (income) loss, net		(239,082)		1,280		(326)		238,874		746
Interest expense		83,068		9,956		3,459		—		96,483
Income from continuing operations before taxes		62,071		232,699		909		(238,874)		56,805
Income tax (benefit) expense		—		(5,551)		269		—		(5,282)
Income from continuing operations		62,071		238,250		640		(238,874)		62,087
Income from discontinued operations		—		—		—		—		—
Net income		62,071		238,250		640		(238,874)		62,087
Net income attributable to noncontrolling interest		—		—		—		16		16
Net income attributable to member of Summit Materials, LLC	$	62,071	$	238,250	$	640	$	(238,890)	$	62,071
Comprehensive income attributable to member of Summit Materials, LLC	$	63,093	$	239,353	$	(1,485)	$	(237,868)	$	63,093

Condensed Consolidating Statements of Operations and Comprehensive Loss

Year ended January 2, 2016


			100%
			Owned		Non-
	Issuers		Guarantors		Guarantors		Eliminations		Consolidated

Revenue	$	—	$	1,364,622	$	100,360	$	(32,685)	$	1,432,297
Cost of revenue (excluding items shown separately below)		—		958,527		64,803		(32,685)		990,645
General and administrative expenses		73,555		107,282		6,451		—		187,288
Depreciation, depletion, amortization and accretion		2,316		112,166		5,241		—		119,723
Operating (loss) income		(75,871)		186,647		23,865		—		134,641
Other (income) expense, net		(107,275)		9,555		294		166,632		69,206
Interest expense		27,222		52,970		3,565		—		83,757
Income from continuing operations before taxes		4,182		124,122		20,006		(166,632)		(18,322)
Income tax (benefit) expense		—		(18,664)		401		—		(18,263)
Income from operations		4,182		142,786		19,605		(166,632)		(59)
Income from discontinued operations		—		(2,415)		—		—		(2,415)
Net income		4,182		145,201		19,605		(166,632)		2,356
Net loss attributable to noncontrolling interest		—		—		—		(1,826)		(1,826)
Net income attributable to member of Summit Materials, LLC	$	4,182	$	145,201	$	19,605	$	(164,806)	$	4,182
Comprehensive (loss) income attributable to member of Summit Materials, LLC	$	(8,738)	$	146,380	$	5,506	$	(151,886)	$	(8,738)

Condensed Consolidating Statements of Operations and Comprehensive Loss

Year ended December 27, 2014


			Non-
			Wholly-		100%
			owned		Owned		Non-
	Issuers		Guarantor		Guarantors		Guarantors		Eliminations		Consolidated

Revenue	$	—	$	94,402	$	1,065,590	$	72,172	$	(27,933)	$	1,204,231
Cost of revenue (excluding items shown separately below)		—		67,951		796,078		51,064		(27,933)		887,160
General and administrative expenses		30,736		6,763		119,250		2,537		—		159,286
Depreciation, depletion, amortization and accretion		1,468		14,500		70,116		1,742		—		87,826
Operating (loss) income		(32,204)		5,188		80,146		16,829		—		69,959
Other income, net		(53,827)		(14,444)		(6,687)		(3)		71,514		(3,447)
Interest expense		31,827		11,608		51,248		1,172		(9,113)		86,742
(Loss) income from continuing operations before taxes		(10,204)		8,024		35,585		15,660		(62,401)		(13,336)
Income tax (benefit) expense		(1,427)		—		(5,766)		210		—		(6,983)
(Loss) income from operations		(8,777)		8,024		41,351		15,450		(62,401)		(6,353)
Income from discontinued operations		—		—		(71)		—		—		(71)
Net (loss) income		(8,777)		8,024		41,422		15,450		(62,401)		(6,282)
Net income attributable to noncontrolling interest		—		—		—		—		2,495		2,495
Net (loss) income attributable to member of Summit Materials, LLC	$	(8,777)	$	8,024	$	41,422	$	15,450	$	(64,896)	$	(8,777)
Comprehensive (loss) income attributable to member of Summit Materials, LLC	$	(18,278)	$	2,759	$	41,422	$	9,634	$	(53,815)	$	(18,278)

Condensed Consolidating Statements of Cash Flows

For the year ended December 31, 2016


			100%
			Owned		Non-
	Issuers		Guarantors		Guarantors		Eliminations		Consolidated

Net cash (used in) provided by operating activities	$	(132,328)	$	373,588	$	3,617	$	—	$	244,877
Cash flow from investing activities:
Acquisitions, net of cash acquired		(42,844)		(294,114)		—		—		(336,958)
Purchase of property, plant and equipment		(5,247)		(146,336)		(1,900)		—		(153,483)
Proceeds from the sale of property, plant, and equipment		—		16,606		262		—		16,868
Other		—		2,921		—		—		2,921
Net cash used for investing activities		(48,091)		(420,923)		(1,638)		—		(470,652)
Cash flow from financing activities:
Proceeds from investment by member		(502,140)		529,517		—		—		27,377
Capital issuance costs		(136)		—		—		—		(136)
Net proceeds from debt issuance		354,000		—		—		—		354,000
Loans received from and payments made on loans from other Summit Companies		440,738		(442,072)		400		934		—
Payments on long-term debt		(110,500)		(10,202)		—		—		(120,702)
Payments on acquisition-related liabilities		(400)		(29,140)		—		—		(29,540)
Financing costs		(5,801)		—		—		—		(5,801)
Distributions from partnership		(42,192)		—		—		—		(42,192)
Other		—		(16)		—		—		(16)
Net cash provided by financing activities		133,569		48,087		400		934		182,990
Impact of cash on foreign currency		—		—		69		—		69
Net (decrease) increase in cash		(46,850)		752		2,448		934		(42,716)
Cash — Beginning of period		180,712		4,068		12,208		(11,600)		185,388
Cash — End of period	$	133,862	$	4,820	$	14,656	$	(10,666)	$	142,672

Condensed Consolidating Statements of Cash Flows

For the year ended January 2, 2016


			100%
			Owned		Non-
	Issuers		Guarantors		Guarantors		Eliminations		Consolidated

Net cash (used in) provided by operating activities	$	(276,104)	$	356,187	$	18,287	$	(167)	$	98,203
Cash flow from investing activities:
Acquisitions, net of cash acquired		—		(510,017)		—		—		(510,017)
Purchase of property, plant and equipment		(5,636)		(81,980)		(1,334)		—		(88,950)
Proceeds from the sale of property, plant, and equipment		—		12,945		165		—		13,110
Other		—		1,510		—		—		1,510
Net cash used for investing activities		(5,636)		(577,542)		(1,169)		—		(584,347)
Cash flow from financing activities:
Proceeds from investment by member		(155,060)		662,826		—		—		507,766
Capital issuance costs		(12,930)		—		—		—		(12,930)
Net proceeds from debt issuance		1,748,875		—		—		—		1,748,875
Loans received from and payments made on loans from other Summit Companies		(208,459)		226,703		(12,700)		(5,544)		—
Payments on long-term debt		(859,796)		(646,746)		—		1,056		(1,505,486)
Payments on acquisition-related liabilities		(166)		(17,890)		—		—		(18,056)
Financing costs		(14,246)		—		—		—		(14,246)
Distributions from partnership		(46,603)		—		—		—		(46,603)
Other		—		(167)		—		167		—
Net cash provided by (used for) financing activities		451,615		224,726		(12,700)		(4,321)		659,320
Impact of cash on foreign currency		—		—		(1,003)		—		(1,003)
Net increase (decrease) in cash		169,875		3,371		3,415		(4,488)		172,173
Cash — Beginning of period		10,837		697		8,793		(7,112)		13,215
Cash — End of period	$	180,712	$	4,068	$	12,208	$	(11,600)	$	185,388

Condensed Consolidating Statements of Cash Flows

For the year ended December 27, 2014



			Non-
			Wholly-		100%
			owned		Owned		Non-
	Issuers		Guarantor		Guarantors		Guarantors		Eliminations		Consolidated

Net cash (used in) provided by operating activities	$	(40,964)	$	11,776	$	102,219	$	8,207	$	(2,000)	$	79,238
Cash flow from investing activities:
Acquisitions, net of cash acquired		(181,754)		—		(216,100)		—		—		(397,854)
Purchase of property, plant and equipment		(4,534)		(14,941)		(55,222)		(1,465)		—		(76,162)
Proceeds from the sale of property, plant, and equipment		—		—		13,134		232		—		13,366
Other		—		(1,387)		(597)		—		1,354		(630)
Net cash used for investing activities		(186,288)		(16,328)		(258,785)		(1,233)		1,354		(461,280)
Cash flow from financing activities:
Proceeds from investment by member		27,617		—		—		1,354		(1,354)		27,617
Net proceeds from debt issuance		762,250		—		—		—		—		762,250
Loans received from and payments made on loans from other Summit Companies		(170,915)		5,338		173,166		(3,017)		(4,572)		—
Payments on long-term debt		(380,065)		(793)		(8,412)		—		—		(389,270)
Payments on acquisition-related liabilities		(2,000)		—		(8,935)		—		—		(10,935)
Financing costs		(9,085)		—		—		—		—		(9,085)
Other		(88)		—		(2,000)		—		2,000		(88)
Net cash provided by (used for) financing activities		227,714		4,545		153,819		(1,663)		(3,926)		380,489
Impact of cash on foreign currency		—		—		—		(149)		—		(149)
Net increase (decrease) in cash		462		(7)		(2,747)		5,162		(4,572)		(1,702)
Cash — Beginning of period		10,375		9		3,442		3,631		(2,540)		14,917
Cash — End of period	$	10,837	$	2	$	695	$	8,793	$	(7,112)	$	13,215

(22) Supplementary Data (Unaudited)

Supplemental financial information (unaudited) by quarter is as follows for the years ended January 2, 2016 and December 27, 2014:


	2016								2015
	4Q		3Q		2Q		1Q		4Q		3Q		2Q		1Q
Net revenue	$	387,389	$	480,210	$	412,636	$	208,039	$	359,532	$	426,286	$	329,009	$	175,139
Operating income (loss)		48,604		88,253		46,732		(29,555)		67,990		83,357		42,300		(59,006)
Income (loss) from continuing operations		21,211		61,360		21,759		(42,243)		46,106		34,106		(434)		(79,837)
Net income (loss)		21,211		61,360		21,759		(42,243)		47,706		34,163		324		(79,837)

(23) Subsequent Events

On January 10, 2017, Summit Inc. raised $237.6 million, net of underwriting discounts, through the issuance of 10,000,000 shares of Class A common stock at a public offering price of $24.05 per share. Summit Inc. used these proceeds to purchase an equal number of LP Units and intends to cause Summit Holdings to use a portion of the proceeds from the offering to acquire two materials-based companies for a combined purchase price of approximately $110 million in cash, with remaining net proceeds to be used for general corporate purposes, which may include, but is not limited to, funding acquisitions, repaying indebtedness, capital expenditures and funding working capital.

On January 19, 2017, Summit LLC entered into Amendment No. 1 (“Amendment No. 1”) to the Credit Agreement, which, among other things, reduced the applicable margin in respect of the $640.3 million outstanding principal amount of term loans thereunder and included a 1.00% prepayment premium in connection with certain further repricing events that occur on or prior to the six-month anniversary of the effective date of Amendment No. 1. All other material terms and provisions remain substantially identical to the terms and provisions in place immediately prior to the effectiveness of Amendment No. 1.