##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from      to
 Commission file number 0-25428
 MEADOW VALLEY CORPORATION
  Nevada
(State or other jurisdiction of
incorporation or organization)
    
    88-0328443
(I.R.S. Employer Identification No.)
 4411 South 40thStreet, Suite D-11, Phoenix, AZ
(Address of principal executive offices)
    
    85040
(Zip Code)
 Registrants telephone number, including area code: (602) 437-5400
   Title of each class:
    
    Name of exchange on which registered:Common stock, $.001 par value
    
    Nasdaq SmallCap Market
 o þ
 o þ
 þ o
 o
 o o þ
 o þ




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DOCUMENTS INCORPORATED BY REFERENCE




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##### 



MEADOW VALLEY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2005
 TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    10Item 1B.
    
    Unresolved Staff Comments
    
    
    12Item 2.
    
    Properties
    
    
    12Item 3.
    
    Legal Proceedings
    
    
    13Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    13PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    13Item 6.
    
    Selected Financial Data
    
    
    14Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 8.
    
    Financial Statements and Supplementary Data
    
    
    25Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    56Item 9A.
    
    Controls and Procedures
    
    
    56Item 9B.
    
    Other Information
    
    
    56PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    57Item 11.
    
    Executive Compensation
    
    
    57Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    57Item 13.
    
    Certain Relationships and Related Transactions
    
    
    57Item 14.
    
    Principal Accounting Fees and Services
    
    
    57PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    58EX-23EX-31.1EX-31.2EX-32
  i




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RESTATEMENT
  2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Fully diluted
earnings (loss) per
share
as reported
    
    $
    0.16
    
    
    $
    0.03
    
    
    $
    0.21
    
    
    $
    (0.71
    )
    
    $
    (0.44
    )Effect of restatement
    
    
    (0.01
    )
    
    
    
    
    
    
    (0.05
    )
    
    
    
    
    
    
    0.10Fully diluted
earnings (loss) per
share
as restated
    
    $
    0.15
    
    
    $
    0.03
    
    
    $
    0.16
    
    
    $
    (0.71
    )
    
    $
    (0.34
    )
 
 PART I
 
 Item 1. Business
 About Meadow Valley
  Special Note Regarding Forward Looking Statements
    1




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2005 Highlights
  th
  History
     2




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Business Strategy
  
    
    Continuing to actively bid in the construction markets in Arizona and southern
Nevada and improving construction project profitability.We will continue to focus our
construction services within the geographic markets that have historically produced the
best profits. Our emphasis is on building transportation infrastructure and other
related heavy civil projects in our core markets of Arizona and southern Nevada. At
the same time, we strive to improve margins on new contracts by, among other things,
increasing, when possible, margins on new work bidding, maximizing labor and equipment
productivity, negotiating more favorable material purchase contracts and employing the
most competitive subcontractors.
    
    Growing our client base for private construction services and ensuring satisfaction
of existing private customer base.We have succeeded in attracting and retaining a
nucleus of non-public clients for whom we regularly perform construction services. We
believe we can generate better margins in the private sector, therefore we seek to grow
our client base, add new customers and maintain continued customer satisfaction.
    
    Continuing to increase working capital and liquidity.We strive to grow cash
balances and employ available financing opportunities that will maximize working
capital and liquidity. By doing so, we expect to increase bonding capacity, thereby
allowing us to bid on more numerous or larger projects.
    
    Continuing diligent pursuit of the successful resolution of three construction
claims. Substantial costs were incurred in completing certain projects in New Mexico
and Clark County, Nevada. We believe that much of the costs are reimbursable due to
changed conditions, owners plan errors and omissions, conflicting utility right of
ways, delays not attributable to us and inadequate administration by third party
construction managers employed by the owners. The total amount of claims on the New
Mexico and Nevada projects that have been submitted and remain unpaid is approximately
$18.8 million, of which $10.5 million represents our portion of the claims, as of
December 31, 2005.
    
    Implementing the growth strategy for Ready Mix, Inc.Using the proceeds of the
public offering as well as other financing, we strive to execute the plans to increase
the number of batch plants and trucks in RMIs existing geographic markets.
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
    
    Acquiring sand and gravel mining rights.A key strategy for the future growth and
value of the construction materials segment is the acquisition of mining properties,
either by purchase or lease whichever is most advantageous, to decrease dependency on
third-party suppliers, to control production and to increase revenue from the sale of
sand and gravel products.
 Market Overview
     Construction Services Segment (CSS)
 Operations
   4




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Projects and Customers
   For the Years Ended December 31,2005
    
    2004
    
    2003Arizona Department of Transportation (Public)
    
    
    21.0
    %
    
    
    24.1
    %
    
    
    27.9
    %Del Webb (Private)
    
    
    11.6
    %
    
    
    6.8
    %
    
    
    7.7
    %Utah Department of Transportation (Public)
    
    
    0.2
    %
    
    
    2.2
    %
    
    
    11.8
    %
 The Contract Process
  5




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6




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Backlog
  Competition
   Insurance and Bonding
   7




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Marketing
  Construction Materials Segment (CMS)
 Operations
  Projects and Customers
  Competition
   8




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Marketing
   Meadow Valley Corporation and our Segments
 Seasonality
  Insurance
  Government Regulation
  9




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Employees
  Website Access
  
 Item 1A. Risk Factors
  Dependence on Public Sector Customers.
 Liability for Subcontractor Performance.
 Fixed Unit Price Risks.
 Variations in Quarterly Operating Results.
 Potential Liability for Environmental Damages and Personal Injury.
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An Inability to Secure and Permit Aggregate Reserves Could Negatively Impact Our Future
Operations and Results.
 We Are Subject to Significant Bonding Requirements.
 We Are Subject to Regulation.
 There Are Risks Associated with Concentration of Construction Projects and Customers.
 We Face Intense Competition.
 Our Success Depends on Attracting and Retaining Qualified Personnel in a Competitive
Environment.
 Dependence Upon Executive Officers.
 Strikes or Work Stoppages Could Have a Negative Impact on Our Operations and Results.
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##### Table of Contents



Unavailability of Insurance Coverage Could Have A Negative Impact on Our Operations and
Results.
 We Use Diesel Fuel, Asphalt Oil and Other Petroleum Based Products That Are Subject To
Significant Price Fluctuations.
 
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  Approximate
    
    
    ApproximateBuilding Size in
    
    
    Land
    
    
    Owned/Location
    
    Segment
    
    Purpose
    
    Square Feet
    
    
    in Acres
    
    
    Leased4411 South
40th Street, Suites D-8, D-10, D-11, Phoenix, Arizona
    
    CSS
    
    Corporate office, Area office
    
    
    8,280
    
    
    
    
    
    
    Leased3430 East Flamingo Suite 100, Las Vegas, Nevada
    
    CMS
    
    Area office
    
    
    3,500
    
    
    
    
    
    
    Leased2601 East Thomas Road Suite 120, Phoenix, Arizona
    
    CMS
    
    Area office
    
    
    3,200
    
    
    
    
    
    
    Leased2250 West Center Street Building two, Springville, Utah
    
    CSS
    
    Field Office
    
    
    1,600
    
    
    
    
    
    
    Leased4635 Andrews Street, North Las Vegas, Nevada
    
    CSS
    
    Area office
    
    
    4,320
    
    
    
    
    
    
    Leased109 West Delhi, North Las Vegas, Nevada
    
    CMS
    
    Ready Mixproduction facility
    
    
    4,470
    
    
    
    5
    
    
    Owned11500 West Beardsley Road, Sun City, Arizona
    
    CMS
    
    Ready Mixproduction facility
    
    
    440
    
    
    
    5
    
    
    Leased39245 North Schnepf Road, Queen Creek, Arizona
    
    CMS
    
    Ready Mixproduction facility
    
    
    440
    
    
    
    5
    
    
    OwnedRichmar Ave., Las Vegas, Nevada
    
    CMS
    
    Ready Mixproduction facility
    
    
    440
    
    
    
    5
    
    
    Owned6210 Annie Oakley Drive Suite 102, Las Vegas, Nevada
    
    CSS
    
    Field Office
    
    
    1,000
    
    
    
    
    
    
    LeasedMoapa, Nevada
    
    CMS
    
    Sand and Aggegate production facility
    
    
    840
    
    
    
    40
    
    
    LeasedMoapa, Nevada
    
    CMS
    
    Ready Mixproduction facility
    
    
    440
    
    
    
    
    
    
    LeasedNorthwest Arizona
    
    CMS
    
    Sand and Aggegate production facility
    
    
    840
    
    
    
    40
    
    
    LeasedNorthwest Las Vegas, Nevada  Future Site
    
    CMS
    
    Sand and Aggegate production facility
    
    
    
    
    
    
    40
    
    
    LeasedNorthwest Las Vegas, Nevada  Future Site
    
    CMS
    
    Ready Mixproduction facility
    
    
    
    
    
    
    
    
    
    Leased
   12




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Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  2005
    
    2004High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    7.35
    
    
    $
    3.96
    
    
    $
    2.75
    
    
    $
    1.59Second Quarter
    
    
    7.20
    
    
    
    4.56
    
    
    
    2.71
    
    
    
    2.07Third Quarter
    
    
    11.95
    
    
    
    6.34
    
    
    
    2.54
    
    
    
    1.84Fourth Quarter
    
    
    14.26
    
    
    
    7.88
    
    
    
    4.81
    
    
    
    2.43
  13




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Item 6. Selected Financial Data
 Statement of Operations Information:
  Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(as restated)
    
    
    (as restated)
    
    
    (as restated)Statement of Operations Data:Revenue
    
    $
    183,872,863
    
    
    $
    166,831,664
    
    
    $
    154,106,865
    
    
    $
    151,047,268
    
    
    $
    174,063,148Gross profit
    
    
    15,187,579
    
    
    
    6,967,790
    
    
    
    6,343,618
    
    
    
    7,531,597
    
    
    
    4,658,361Income (loss) from operations
    
    
    6,521,006
    
    
    
    457,951
    
    
    
    (150,667
    )
    
    
    932,657
    
    
    
    (3,404,262
    )Income (loss) before income taxes
and minority interest
    
    
    7,063,197
    
    
    
    890,443
    
    
    
    162,381
    
    
    
    936,770
    
    
    
    (3,192,562
    )Net income (loss)
    
    
    4,203,719
    
    
    
    573,639
    
    
    
    91,635
    
    
    
    566,803
    
    
    
    (2,523,931
    )Basic net income (loss) per common share
    
    $
    1.11
    
    
    $
    0.16
    
    
    $
    0.03
    
    
    $
    0.16
    
    
    $
    (0.71
    )Diluted net income (loss) per common share
    
    $
    1.01
    
    
    $
    0.15
    
    
    $
    0.03
    
    
    $
    0.16
    
    
    $
    (0.71
    )Basic weighted average common shares
outstanding
    
    
    3,783,089
    
    
    
    3,601,250
    
    
    
    3,593,102
    
    
    
    3,559,938
    
    
    
    3,559,938Diluted weighted average common shares
outstanding
    
    
    4,151,096
    
    
    
    3,780,597
    
    
    
    3,599,259
    
    
    
    3,559,938
    
    
    
    3,559,938Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Financial Position Data:Working capital
    
    $
    21,913,277
    
    
    $
    2,294,162
    
    
    $
    5,757,671
    
    
    $
    2,701,266
    
    
    $
    (887,784
    )Total assets
    
    
    87,016,530
    
    
    
    65,328,832
    
    
    
    55,366,528
    
    
    
    57,434,203
    
    
    
    62,823,852Long-term debt
    
    
    11,858,042
    
    
    
    11,785,816
    
    
    
    8,084,793
    
    
    
    11,132,310
    
    
    
    12,448,674Stockholders equity
    
    
    19,795,787
    
    
    
    12,716,188
    
    
    
    12,142,549
    
    
    
    12,050,914
    
    
    
    11,484,112
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Executive Overview
  14




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Results of Operations
  (dollars in thousands)
    
    For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(as restated)
    
    
    (as restated)Revenue:Construction services
    
    $
    116,822
    
    
    
    63.5
    %
    
    $
    108,169
    
    
    
    64.8
    %
    
    $
    110,120
    
    
    
    71.5
    %Construction materials
    
    
    67,051
    
    
    
    36.5
    %
    
    
    58,663
    
    
    
    35.2
    %
    
    
    43,987
    
    
    
    28.5
    %Total revenue
    
    
    183,873
    
    
    
    100.0
    %
    
    
    166,832
    
    
    
    100.0
    %
    
    
    154,107
    
    
    
    100.0
    %Gross profit
    
    
    15,188
    
    
    
    8.3
    %
    
    
    6,968
    
    
    
    4.2
    %
    
    
    6,344
    
    
    
    4.1
    %General and administrative
expenses
    
    
    8,667
    
    
    
    4.7
    %
    
    
    6,510
    
    
    
    3.9
    %
    
    
    6,494
    
    
    
    4.2
    %Income (loss) from operations
    
    
    6,521
    
    
    
    3.6
    %
    
    
    458
    
    
    
    0.3
    %
    
    
    (151
    )
    
    
    -0.1
    %Interest income
    
    
    563
    
    
    
    0.3
    %
    
    
    86
    
    
    
    0.1
    %
    
    
    59
    
    
    
    0.0
    %Interest expense
    
    
    (362
    )
    
    
    -0.2
    %
    
    
    (348
    )
    
    
    -0.2
    %
    
    
    (489
    )
    
    
    -0.3
    %Other income
    
    
    342
    
    
    
    0.2
    %
    
    
    695
    
    
    
    0.4
    %
    
    
    744
    
    
    
    0.5
    %Income tax expense
    
    
    2,571
    
    
    
    1.4
    %
    
    
    317
    
    
    
    0.2
    %
    
    
    71
    
    
    
    0.0
    %Minority interest in consolidated
subsidiary
    
    
    289
    
    
    
    0.2
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Net income
    
    $
    4,204
    
    
    
    2.3
    %
    
    $
    574
    
    
    
    0.3
    %
    
    $
    92
    
    
    
    0.1
    %Depreciation and
amortization
    
    $
    4,499
    
    
    
    2.4
    %
    
    $
    3,202
    
    
    
    1.9
    %
    
    $
    2,728
    
    
    
    1.8
    %
 15




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Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Revenue and Backlog.
 Gross Profit.
 Depreciation and Amortization. th
 General and Administrative Expenses.
 Interest Income, Expense and Other Income.
 Minority Interest in Consolidated Subsidiary.
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Income Taxes.
 Net Income.
 Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
 Revenue and Backlog.
 Gross Profit.
 Depreciation and Amortization.
 General and Administrative Expenses.
 17




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Interest Income, Expense and Other Income.
 Income Taxes.
 Net Income.
 Liquidity and Capital Resources
     For the Years Ended December 31,2005
    
    
    2004
    
    
    2003Cash provided by operating activities
    
    $
    5,217,432
    
    
    $
    10,986,026
    
    
    $
    5,033,068Cash provided by (used in) investing activities
    
    
    (5,128,942
    )
    
    
    (1,542,131
    )
    
    
    1,207,276Cash provided by (used in) financing activities
    
    
    13,312,609
    
    
    
    (4,018,065
    )
    
    
    (4,791,491
    )
  18




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Impact of Inflation
  19




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Summary of Contractual Obligations and Commercial Commitments
  Payments Due by PeriodLess than
    
    
    1 - 3
    
    
    4 - 5
    
    
    After(Dollars in thousands)
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsContractual ObligationsLong-term debt
    
    $
    14,942
    
    
    $
    3,519
    
    
    $
    5,442
    
    
    $
    5,002
    
    
    $
    979Interest payments on long-term debt (1)
    
    
    2,680
    
    
    
    911
    
    
    
    1,249
    
    
    
    468
    
    
    
    52Capital lease obligations
    
    
    1,042
    
    
    
    591
    
    
    
    451
    
    
    
    
    
    
    
    Operating leases
    
    
    6,918
    
    
    
    2,522
    
    
    
    3,437
    
    
    
    908
    
    
    
    51Purchase obligations
    
    
    5,332
    
    
    
    1,268
    
    
    
    2,481
    
    
    
    1,583
    
    
    
    Other long term liabilities (2)
    
    
    1,999
    
    
    
    800
    
    
    
    1,199
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    32,913
    
    
    $
    9,611
    
    
    $
    14,259
    
    
    $
    7,961
    
    
    $
    1,082
 
 (1)
    
    Interest payments are based on the individual interest rates of each obligation, which
range from 1.99% to 8.55% per annum. We do not assume an increase in the variable interest rate.
See Note 10  Notes payable and Note 11  Line of Credit in the notes to the consolidated financial
statements included in Item 8.(2)
    
    Other long-term liabilities include employment contracts with five of our key executives that
call for annual salaries ranging from $110,000 to $250,000 through October 2008, and are to be
reviewed annually by our Compensation Committee. Known and Anticipated Future Trends and Contingencies
    20




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Critical Accounting Policies
   Revenue and Cost Recognition
  21




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Collectibility of Accounts Receivable
  Inventory, net
  Valuation of Property, Plant and Equipment:
  Plants
    
    5-15 yearsComputer equipment
    
    5 yearsEquipment
    
    3-10 yearsLeasehold improvements
    
    2-10 yearsOffice furniture and equipment
    
    5-7 yearsVehicles
    
    5 years
   22




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Income taxes
   Classification of Leases:
  Recent Accounting Pronouncements
   23




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Item 7A Quantitative and Qualitative Disclosures About Market Risk
    24




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Item 8 Financial Statements and Supplementary Data
 
 Report of Independent Registered Public Accounting Firm
 
     
 
  25




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004(as restated)Assets:Current assets:Cash and cash equivalents
    
    $
    23,565,317
    
    
    $
    10,164,218Restricted cash
    
    
    1,267,090
    
    
    
    1,268,449Accounts receivable, net
    
    
    25,139,640
    
    
    
    22,163,719Prepaid expenses and other
    
    
    3,171,670
    
    
    
    2,818,395Inventory, net
    
    
    776,978
    
    
    
    871,112Costs and estimated earnings in excess of billings on uncompleted
contracts
    
    
    1,991,993
    
    
    
    449,358Deferred tax asset
    
    
    760,724
    
    
    
    2,141,731Total current assets
    
    
    56,673,412
    
    
    
    39,876,982Property and equipment, net
    
    
    26,033,096
    
    
    
    21,541,946Refundable deposits
    
    
    478,965
    
    
    
    21,780Mineral rights and pit development, net
    
    
    194,977
    
    
    
    252,044Claims receivable
    
    
    3,521,080
    
    
    
    3,521,080Other receivables
    
    
    115,000
    
    
    
    115,000Total assets
    
    $
    87,016,530
    
    
    $
    65,328,832Liabilities and Stockholders Equity:Current liabilities:Accounts payable
    
    $
    18,521,558
    
    
    $
    19,711,571Accrued liabilities
    
    
    5,878,595
    
    
    
    4,907,554Notes payable
    
    
    3,518,892
    
    
    
    5,212,187Obligations under capital leases
    
    
    546,801
    
    
    
    531,746Income tax payable
    
    
    391,202
    
    
    
    Billings in excess of costs and estimated earnings on uncompleted
contracts
    
    
    5,903,087
    
    
    
    7,219,762Total current liabilities
    
    
    34,760,135
    
    
    
    37,582,820Notes payable, less current portion
    
    
    11,423,044
    
    
    
    10,804,017Obligations under capital leases, less current portion
    
    
    434,998
    
    
    
    981,799Deferred tax liability
    
    
    3,177,771
    
    
    
    3,244,008Total liabilities
    
    
    49,795,948
    
    
    
    52,612,644Commitments and contingenciesMinority interest in consolidated subsidiary
    
    
    17,424,795
    
    
    
    Stockholders equity:Preferred stock  $.001 par value; 1,000,000 shares authorized, none
issued and outstanding
    
    
    
    
    
    
    Common stock  $.001 par value; 15,000,000 shares authorized,
4,136,912 and 3,601,250 issued and outstanding
    
    
    4,137
    
    
    
    3,601Additional paid-in capital
    
    
    13,818,913
    
    
    
    10,943,569Capital adjustments
    
    
    (799,147
    )
    
    
    (799,147
    )Retained earnings
    
    
    6,771,884
    
    
    
    2,568,165Total stockholders equity
    
    
    19,795,787
    
    
    
    12,716,188Total liabilities and stockholders equity
    
    $
    87,016,530
    
    
    $
    65,328,832
  26




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(as restated)
    
    
    (as restated)Revenue:Construction services
    
    $
    116,822,072
    
    
    $
    108,168,921
    
    
    $
    110,119,548Construction materials
    
    
    67,050,791
    
    
    
    58,662,743
    
    
    
    43,987,317Total revenue
    
    
    183,872,863
    
    
    
    166,831,664
    
    
    
    154,106,865Cost of revenue:Construction services
    
    
    108,706,174
    
    
    
    107,827,853
    
    
    
    107,883,229Construction materials
    
    
    59,979,110
    
    
    
    52,036,021
    
    
    
    39,880,018Total cost of revenue
    
    
    168,685,284
    
    
    
    159,863,874
    
    
    
    147,763,247Gross profit
    
    
    15,187,579
    
    
    
    6,967,790
    
    
    
    6,343,618General and administrative expenses
    
    
    8,666,573
    
    
    
    6,509,839
    
    
    
    6,494,285Income (loss) from operations
    
    
    6,521,006
    
    
    
    457,951
    
    
    
    (150,667
    )Other income (expense):Interest income
    
    
    562,914
    
    
    
    85,864
    
    
    
    58,622Interest expense
    
    
    (362,326
    )
    
    
    (348,229
    )
    
    
    (489,117
    )Other income
    
    
    341,603
    
    
    
    694,857
    
    
    
    743,543542,191
    
    
    
    432,492
    
    
    
    313,048Income
before income taxes and minority interest in consolidated subsidiary
    
    
    7,063,197
    
    
    
    890,443
    
    
    
    162,381Income tax expense
    
    
    2,570,955
    
    
    
    316,804
    
    
    
    70,746Income before minority interest
in consolidated subsidiary
    
    
    4,492,242
    
    
    
    573,639
    
    
    
    91,635Minority interest in consolidated subsidiary
    
    
    288,523
    
    
    
    
    
    
    
    Net income
    
    $
    4,203,719
    
    
    $
    573,639
    
    
    $
    91,635Basic net income per common share
    
    $
    1.11
    
    
    $
    0.16
    
    
    $
    0.03Diluted net income per common share
    
    $
    1.01
    
    
    $
    0.15
    
    
    $
    0.03Basic weighted average common shares outstanding
    
    
    3,783,089
    
    
    
    3,601,250
    
    
    
    3,593,102Diluted weighted average common shares outstanding
    
    
    4,151,096
    
    
    
    3,780,597
    
    
    
    3,599,259
  27




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Common StockNumber ofShares
    
    
    
    
    
    
    Paid-in
    
    
    Capital
    
    
    RetainedOutstanding
    
    
    Amount
    
    
    Capital
    
    
    Adjustment
    
    
    EarningsBalance at January 1, 2003
(as previously reported)
    
    
    3,559,938
    
    
    $
    3,601
    
    
    $
    10,943,569
    
    
    $
    (799,147
    )
    
    $
    1,304,424Prior period adjustment (See Note 2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    598,467Balance at January 1, 2003
(as restated)
    
    
    3,559,938
    
    
    
    3,601
    
    
    
    10,943,569
    
    
    
    (799,147
    )
    
    
    1,902,891Treasury stock used in funding
employer retirement plan
contributions
    
    
    41,312Net income for the year ended 2003
(as restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,635Balance at December 31, 2003
    
    
    3,601,250
    
    
    
    3,601
    
    
    
    10,943,569
    
    
    
    (799,147
    )
    
    
    1,994,526Net income for the year ended 2004
(as restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    573,639Balance at December 31, 2004
    
    
    3,601,250
    
    
    
    3,601
    
    
    
    10,943,569
    
    
    
    (799,147
    )
    
    
    2,568,165Common stock issued on exercise
of options, net of tax benefit (1)
    
    
    535,662
    
    
    
    536
    
    
    
    2,875,344Net income for the year ended 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,203,719Balance at December 31, 2005
    
    
    4,136,912
    
    
    $
    4,137
    
    
    $
    13,818,913
    
    
    $
    (799,147
    )
    
    $
    6,771,884
 
 (1) 
    
    Additional paid-in capital associated with the issuance of common stock on exercise
of options includes an income tax benefit in the amount of $884,083.  28




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(as restated)
    
    
    (as restated)Increase (decrease) in cash and cash equivalents:Cash flows from operating activities:Cash received from customers
    
    $
    178,671,433
    
    
    $
    173,023,546
    
    
    $
    156,457,827Cash paid to suppliers and employees
    
    
    (173,653,659
    )
    
    
    (161,769,236
    )
    
    
    (151,048,332
    )Interest received
    
    
    562,914
    
    
    
    85,864
    
    
    
    58,622Interest paid
    
    
    (362,326
    )
    
    
    (348,229
    )
    
    
    (489,117
    )Income taxes refunded (paid)
    
    
    (930
    )
    
    
    (5,919
    )
    
    
    54,068Net cash provided by operating activities
    
    
    5,217,432
    
    
    
    10,986,026
    
    
    
    5,033,068Cash flows from investing activities:Decrease (increase) in restricted cash
    
    
    1,359
    
    
    
    576,442
    
    
    
    (163,530
    )Proceeds from sale of property and equipment
    
    
    391,504
    
    
    
    2,450,931
    
    
    
    776,822Purchase of property and equipment
    
    
    (5,521,805
    )
    
    
    (4,569,504
    )
    
    
    (613,800
    )Proceeds from land held for sale
    
    
    
    
    
    
    
    
    
    
    942,701Proceeds from sale of mineral rights and
pit development
    
    
    
    
    
    
    
    
    
    
    265,083Net cash provided by (used in) investing activities
    
    
    (5,128,942
    )
    
    
    (1,542,131
    )
    
    
    1,207,276Cash flows from financing activities:Proceeds from the issuance of common stock
    
    
    1,991,797
    
    
    
    
    
    
    
    Proceeds from minority interest in consolidated subsidiary
    
    
    17,747,900
    
    
    
    
    
    
    
    Offering costs associated with minority interest
in consolidated subsidiary
    
    
    (611,628
    )
    
    
    
    
    
    
    Repayment of capital lease obligations
    
    
    (531,746
    )
    
    
    (906,191
    )
    
    
    (1,032,586
    )Proceeds received from notes payable
    
    
    543,998
    
    
    
    1,281,570
    
    
    
    Repayment of notes payable
    
    
    (5,827,712
    )
    
    
    (4,393,444
    )
    
    
    (3,758,905
    )Net cash provided by (used in) financing activities
    
    
    13,312,609
    
    
    
    (4,018,065
    )
    
    
    (4,791,491
    )Net increase in cash and cash equivalents
    
    
    13,401,099
    
    
    
    5,425,830
    
    
    
    1,448,853Cash and cash equivalents at beginning of year
    
    
    10,164,218
    
    
    
    4,738,388
    
    
    
    3,289,535Cash and cash equivalents at end of year
    
    $
    23,565,317
    
    
    $
    10,164,218
    
    
    $
    4,738,388
  29




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
 For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(as restated)
    
    
    (as restated)Increase (decrease) in cash and cash equivalents (Continued):Reconciliation of net income to net cash
provided by operating activities:Net income
    
    $
    4,203,719
    
    
    $
    573,639
    
    
    $
    91,635Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    4,499,044
    
    
    
    3,201,683
    
    
    
    2,728,309Gain on sale of property, equipment and land
    
    
    (9,397
    )
    
    
    (485,911
    )
    
    
    (537,173
    )Deferred taxes, net
    
    
    2,198,853
    
    
    
    310,885
    
    
    
    124,814Allowance for doubtful accounts
    
    
    (281,565
    )
    
    
    (102,476
    )
    
    
    422,820Inventory allowance
    
    
    (42,551
    )
    
    
    (917,375
    )
    
    
    186,197Minority interest in consolidated subsidiary
    
    
    288,523
    
    
    
    
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,674,326
    )
    
    
    (1,397,221
    )
    
    
    116,531Income taxes receivable
    
    
    (20,030
    )
    
    
    
    
    
    
    Claims receivable
    
    
    
    
    
    
    4,101,898
    
    
    
    (3,714,020
    )Prepaid expenses and other
    
    
    62,742
    
    
    
    (238,707
    )
    
    
    (100,620
    )Inventory
    
    
    136,685
    
    
    
    1,295,381
    
    
    
    382,920Costs and estimated earnings in excess of billings on
uncompleted contracts
    
    
    (1,542,635
    )
    
    
    1,013,951
    
    
    
    79,752Refundable deposits
    
    
    (457,185
    )
    
    
    72,519
    
    
    
    (43,695
    )Claims receivable, less current portion
    
    
    
    
    
    
    
    
    
    
    4,440,027Other receivables
    
    
    
    
    
    
    (115,000
    )
    
    
    32,223Accounts payable
    
    
    (1,190,013
    )
    
    
    1,064,714
    
    
    
    (1,265,659
    )Accrued liabilities
    
    
    971,041
    
    
    
    343,738
    
    
    
    866,705Income taxes payable
    
    
    391,202
    
    
    
    
    
    
    
    Billings in excess of costs and estimated earnings on
uncompleted contracts
    
    
    (1,316,675
    )
    
    
    2,264,308
    
    
    
    1,222,302Net cash provided by operating activities
    
    $
    5,217,432
    
    
    $
    10,986,026
    
    
    $
    5,033,068
  30




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    Summary of Significant Accounting Policies and Use of Estimates:
 Nature of the Corporation:
  Liquidity:
   Principles of Consolidation
  Accounting Estimates:
   Revenue and Cost Recognition
  31




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 1.
    
    Summary of Significant Accounting Policies and Use of Estimates (Continued):
 Revenue and Cost Recognition (Continued)
    Claims Receivable:
       32




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 1.
    
    Summary of Significant Accounting Policies and Use of Estimates (Continued):
 Cash and Cash Equivalents:
  Restricted Cash:
  Accounts Receivable, net:
    Inventory, net
   Property and Equipment:
   Plants
    
    5-15 yearsComputer equipment
    
    5 yearsEquipment
    
    3-10 yearsVehicles
    
    5 yearsOffice furniture and equipment
    
    5-7 yearsLeasehold improvements
    
    2-10 years
  33




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 1.
    
    Summary of Significant Accounting Policies and Use of Estimates (Continued):
 Income Taxes
  Fair Value of Financial Instruments
   Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed of:
  Earnings per Share:
  Stock-Based Compensation:
   34




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 1.
    
    Summary of Significant Accounting Policies and Use of Estimates (Continued):
 Stock Based Compensation (Continued)
     Years Ended December 31,2005
    
    
    2004
    
    
    2003(as restated)
    
    
    (as restated)Net income, as reported
    
    $
    4,203,719
    
    
    $
    573,639
    
    
    $
    91,635Add: Stock-based employee compensation
expense included in reported income,
net of related tax effects
    
    
    
    
    
    
    
    
    
    
    Deduct: Total stock-based employee
compensation expense determined under
fair value based methods for all awards,
net of related tax effects
    
    
    (157,146
    )
    
    
    (92,852
    )
    
    
    (58,604
    )Pro forma net income
    
    $
    4,046,573
    
    
    $
    480,787
    
    
    $
    33,031Basic net income per common shareAs reported
    
    $
    1.11
    
    
    $
    0.16
    
    
    $
    0.03Pro forma
    
    
    1.07
    
    
    
    0.13
    
    
    
    0.01Diluted net income per common shareAs reported
    
    $
    1.01
    
    
    $
    0.15
    
    
    $
    0.03Pro forma
    
    
    0.97
    
    
    
    0.13
    
    
    
    0.01
   35




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 1.
    
    Summary of Significant Accounting Policies and Use of Estimates (Continued):
 Stock-Based Compensation (Continued):
     Recent Accounting Pronouncements:
   36




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 1.
    
    Summary of Significant Accounting Policies and Use of Estimates (Continued):
 Recent Accounting Pronouncements (Continued):
   2.
    
    Restatement of Financial Statements:
  3.
    
    Concentration of Credit Risk:
  37




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 3.
    
    Concentration of Credit Risk (Continued):
  4.
    
    Accounts Receivable, net:
  December 31,2005
    
    
    2004Contracts in progress
    
    $
    12,101,708
    
    
    $
    11,635,825Contracts in progress  retention
    
    
    3,075,487
    
    
    
    1,801,612Completed contracts
    
    
    39,480
    
    
    
    273,364Completed contracts  retention
    
    
    1,044,929
    
    
    
    1,506,693Other trade receivables
    
    
    9,135,832
    
    
    
    7,176,141Other receivables
    
    
    68,316
    
    
    
    377,76125,465,752
    
    
    
    22,771,396Less: Allowance for doubtful accounts
    
    
    (326,112
    )
    
    
    (607,677
    )$
    25,139,640
    
    
    $
    22,163,719
 5.
    
    Contracts in Progress:
  December 31,2005
    
    
    2004Costs incurred on uncompleted contracts
    
    $
    165,582,867
    
    
    $
    97,962,831Estimated earnings (loss) to date
    
    
    2,196,947
    
    
    
    (4,500,300
    )167,779,814
    
    
    
    93,462,531Less: billings to date
    
    
    (171,690,908
    )
    
    
    (100,232,935
    )$
    (3,911,094
    )
    
    $
    (6,770,404
    )
  December 31,2005
    
    
    2004Costs and estimated earnings in excess of billings on
uncompleted contracts
    
    $
    1,991,993
    
    
    $
    449,358Billings in excess of costs and estimated earnings on
uncompleted contracts
    
    
    (5,903,087
    )
    
    
    (7,219,762
    )$
    (3,911,094
    )
    
    $
    (6,770,404
    )
 6.
    
    Land Held for Sale:
  38




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 7.
    
    Property and Equipment:
  December 31,2005
    
    
    2004Land
    
    $
    2,647,763
    
    
    $
    2,343,975Plants
    
    
    9,417,309
    
    
    
    7,656,292Computer equipment
    
    
    880,530
    
    
    
    783,460Equipment
    
    
    16,762,810
    
    
    
    14,131,600Vehicles
    
    
    9,307,975
    
    
    
    8,235,239Office furniture and fixtures
    
    
    90,029
    
    
    
    87,241Leasehold improvements
    
    
    286,607
    
    
    
    536,798Water rights
    
    
    2,250,000
    
    
    
    41,643,023
    
    
    
    33,774,605Less: Accumulated depreciation
    
    
    (15,609,927
    )
    
    
    (12,232,659
    )$
    26,033,096
    
    
    $
    21,541,946
 8.
    
    Accounts Payable:
  December 31,2005
    
    
    2004Trade
    
    $
    15,238,752
    
    
    $
    16,787,461Retentions
    
    
    3,282,806
    
    
    
    2,924,110$
    18,521,558
    
    
    $
    19,711,571
 9.
    
    Accrued Liabilities:
  December 31,2005
    
    
    2004Compensation
    
    $
    4,125,792
    
    
    $
    2,543,308Taxes
    
    
    449,445
    
    
    
    776,872Insurance
    
    
    699,928
    
    
    
    611,510Other
    
    
    603,430
    
    
    
    975,864$
    5,878,595
    
    
    $
    4,907,554
 10.
    
    Notes Payable:
  December 31,2005
    
    
    2004Notes payable, variable interest rate was 7.25% at December 31,
2005, with combined monthly principal payments of $14,186 and
$15,536, as of December 31, 2005 and 2004, due dates ranging
from July 14, 2005 to May 13, 2006, collateralized by equipment
    
    $
    58,139
    
    
    $
    237,813Note payable, 7.50% interest rate with monthly payments of
$29,855, due January 1, 2010, collateralized by equipment
    
    
    
    
    
    
    1,486,569$
    58,139
    
    
    $
    1,724,382
 39




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 10.
    
    Notes Payable (Continued):
  December 31,2005
    
    
    2004Totals from previous page
    
    $
    58,139
    
    
    $
    1,724,382Notes payable, interest rates ranging from 4.00% to 7.58%,
with combined monthly payments of $51,422, due dates ranging
from January 18, 2005 to October 20, 2005, collateralized by
equipment
    
    
    
    
    
    
    163,410Notes payable, interest rates ranging from 4.50% to 6.75%, with
combined monthly payments of $18,577, due dates ranging from
January 31, 2006 to December 1, 2008, collateralized by
equipment and vehicles
    
    
    454,636
    
    
    
    661,476Notes payable, non-interest bearing, with combined
monthly payments of $7,641, due dates ranging from
August 15, 2008 to September 15, 2008 (less unamortized
discount of $17,903 - effective rate of 6%), collateralized
by vehicles
    
    
    228,341
    
    
    
    337,390Line of credit for $2,023,102, variable interest was 8.00% at
December 31, 2005, interest only payments until December 31,
2007, then principal plus interest payments, due December 31, 2010,
collateralized by all assets in the Company (See Note 11)
    
    
    1,675,044
    
    
    
    5,191,102Notes payable, interest rates ranging from 1.99% to 6.75% with
combined monthly payments of $153,748 and $156,958,
as of December 31, 2005 and 2004, due dates ranging from
April 1, 2005 to November 10, 2008, collateralized by equipment
    
    
    2,465,831
    
    
    
    4,145,697Notes payable, interest rates ranging from 5.25% to 8.55% with
combined monthly payments of $23,711, due dates ranging from
December 18 , 2005 to February 27, 2006, collateralized by
equipment
    
    
    43,676
    
    
    
    312,941Notes payable, interest rates ranging from 5.31% to 5.99% with
combined monthly payments of $14,199, due dates ranging from
January 31, 2009 to January 5, 2010, collateralized by vehicles
    
    
    523,719
    
    
    
    660,371Notes payable, interest rates ranging from 6.21% to 6.34% with
combined monthly payments of $8,371 and a principal payment
of $753,314 due April 16, 2009, collateralized by land
    
    
    905,626
    
    
    
    947,927Note payable, 7.05% interest rate with monthly payments
of $2,930 and a principal payment of $254,742, due
August 27, 2009, collateralized by land
    
    
    307,645
    
    
    
    320,639Note payable, 6.50% interest rate with monthly payments of
$14,732, due October 11, 2009, collateralized by equipment
    
    
    973,296
    
    
    
    1,082,912$
    7,635,953
    
    
    $
    15,548,247
 40




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 10.
    
    Notes Payable (Continued):
  December 31,2005
    
    
    2004Totals from previous page
    
    $
    7,635,953
    
    
    $
    15,548,247Non-interest bearing notes payable, with combined monthly
payments of $5,148 and $6,151, as of December 31, 2005 and
2004, due dates ranging from May 7, 2005 to July 23, 2007,
(less unamortized discount of $4,818 - effective rate of 6%),
collateralized by equipment
    
    
    100,628
    
    
    
    166,422Note payable, 6.70% interest rate with monthly payments of
$35,976, due August 1, 2005, collateralized by the Companys
general liability insurance policy
    
    
    
    
    
    
    246,298Note payable, 5.90% interest rate with monthly principal
payments of $1,905 plus interest, due May 24, 2007,
collateralized by equipment
    
    
    32,380
    
    
    
    55,237Notes payable, interest rates ranging from 5.90% to 6.88% with
combined monthly payments of $14,883, due dates ranging from
January 31, 2010 to December 9, 2010, collateralized by vehicles
    
    
    681,717
    
    
    
    Notes payable, interest rates ranging from 1.90% to 7.90% with
combined monthly payments of $64,858, due dates ranging from
December 20, 2007 to December 21, 2010, collateralized by
equipment
    
    
    2,369,312
    
    
    
    Note payable, variable interest rate was 8.50% at December 31,
2005, with monthly principal payments of $21,429 plus interest,
due July 29, 2012, collateralized by mining water rights
    
    
    1,692,857
    
    
    
    Notes payable, 7.50% interest rates with combined monthly principal
payments of $15,100 plus interest, due September 1, 2008,
collateralized by equipment
    
    
    483,198
    
    
    
    Line of credit for $3,000,000, variable interest rate was 8.00% at
December 31, 2005, interest only payments until December 31, 2008,
then principal plus interest payments due December 31, 2011,
collateralized by all assets of the Company (See Note 11)
    
    
    250,000
    
    
    
    Line of credit for $5,000,000, variable interest was 7.50% at
December 31, 2005, interest only payments until December 31,
2008, then principal plus interest payments due December 31,
2011, collateralized by all assets of the Company (See Note 11)
    
    
    1,465,733
    
    
    
    Note payable, 6.88% interest rate with monthly payments of
$39,133, due August 1, 2006, collateralized by the Companys
general liability insurance policy
    
    
    230,158
    
    
    
    14,941,936
    
    
    
    16,016,204Less: current portion
    
    
    (3,518,892
    )
    
    
    (5,212,187
    )$
    11,423,044
    
    
    $
    10,804,017
 41




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 10.
    
    Notes Payable (Continued):
  2006
    
    $
    3,518,8922007
    
    
    2,911,1472008
    
    
    2,530,3762009
    
    
    3,514,7152010
    
    
    1,487,7522011 and thereafter
    
    
    979,054$
    14,941,936
 11.
    
    Lines of Credit:
     42




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 12. Related Party Transactions:
 Revenue and Accounts Receivable:
  Professional Services:
  Subcontractor/Supplier:
   13. Income Taxes:
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(as restated)
    
    (as restated)Current
    
    $
    (372,102
    )
    
    $
    (5,919
    )
    
    $
    54,068Deferred
    
    
    (2,198,853
    )
    
    
    (310,885
    )
    
    
    (124,814
    )$
    (2,570,955
    )
    
    $
    (316,804
    )
    
    $
    (70,746
    )
  December 31,2005
    
    
    2004(as restated)Deferred tax asset:Allowance for bad debt and other
    
    $
    417,186
    
    
    $
    355,564Inventory allowance
    
    
    87,938
    
    
    
    91,095NOL carryforward
    
    
    255,600
    
    
    
    1,695,072760,724
    
    
    
    2,141,731Deferred tax liability:Depreciation
    
    
    (3,177,771
    )
    
    
    (3,244,008
    )Net deferred tax liability
    
    $
    (2,417,047
    )
    
    $
    (1,102,277
    )
 43




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 13. Income Taxes (Continued):
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003(as restated)
    
    (as restated)Statutory rate of 34% applied to
income before income taxes
    
    $
    2,401,000
    
    
    $
    303,000
    
    
    $
    55,000State taxes, net of federal benefit
    
    
    140,000
    
    
    
    18,000
    
    
    
    3,000Increase (decrease) in income taxes
resulting from:Non-Deductible items
    
    
    30,000
    
    
    
    22,000
    
    
    
    12,000Change in combined tax rate
    
    
    
    
    
    
    (27,000
    )
    
    
    $
    2,571,000
    
    
    $
    316,000
    
    
    $
    70,000
  Federal
    
    
    StateTax Year
    
    
    Operating Loss
    
    
    Tax Year
    
    
    Operating LossExpiring
    
    
    Carryforward
    
    
    Expiring
    
    
    Carryforward2024
    
    
    $
    710,000
    
    
    
    2009
    
    
    $
    
  14. Commitments and Contingencies:
    For the Years Ending December 31,
    
    Amount2006
    
    $
    2,521,5152007
    
    
    1,947,6102008
    
    
    1,489,8352009
    
    
    807,2582010
    
    
    100,9632011 and thereafter
    
    
    51,250$
    6,918,431
 44




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 14. Commitments and Contingencies (Continued):
  For the Years Ending December 31,
    
    Amount2006
    
    $
    1,268,4442007
    
    
    1,235,4442008
    
    
    1,245,4442009
    
    
    1,164,6442010
    
    
    417,935$
    5,331,911
  For the Years Ending December 31,
    
    Amount2006
    
    $
    800,0002007
    
    
    800,0002008
    
    
    399,167$
    1,999,167
   For the Years Ending December 31,
    
    Amount2006
    
    $
    591,3482007
    
    
    346,1052008
    
    
    104,193Total minimum payments
    
    
    1,041,646Less: amount representing interest
    
    
    (59,847
    )Present value of net minimum lease payment
    
    
    981,799Less: current portion
    
    
    (546,801
    )$
    434,998
  45




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 14. Commitments and Contingencies (Continued):
   15. Minority Interest in Consolidated Subsidiary:
    16. Stockholders Equity:
 Preferred Stock:
  17. Litigation and Claim Matters:
  46




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 17. Litigation and Claim Matters (Continued):
  Requests for Equitable Adjustment to Construction Contracts
 (1)
    
    Two contracts with the New Mexico State Highway and Transportation Department 
The approximate total value of claims on these projects is $12,002,782 of which
$8,336,931 is on behalf of MVCI and the balance of $3,665,851 is on behalf of the prime
contractor or subcontractors. The primary issues are changed conditions, plan errors
and omissions, contract modifications and associated delay costs. In addition, the
projects were not completed within the adjusted contract time because of events giving
rise to the claims. The prosecution of the claims will include the appropriate
extensions of contract time to offset any potential liquidated damages. A trial date
has been set for fall of 2006.(2)
    
    Clark County Public Works, Clark County, Nevada  A final ruling on November 1,
2004, by the three-member arbitration panel awarded MVCI approximately $5,540,000 of
which $2,100,000 is due MVCI and the balance of $3,440,000 is due a subcontractor. The
award included prejudgment interest and post-judgment interest which continues to
accrue at approximately $900 per day. The approximate
total value of the claims ruled on above was $6,833,197 of which $2,211,947 was on
behalf of MVCI and the balance of $4,621,250 was on behalf of a subcontractor. MVCI has
not recognized any additional claim receivable related to this ruling since Clark County
Public Works has filed, on January 28, 2005 with the District Court, a Notice of and
Motion to Vacate Arbitration Award. The Countys motion was heard on May 9, 2005 and
was denied by the District Court, but has now been appealed to the Nevada Supreme Court.
In 2004, the three-member arbitration panel made a partial ruling rejecting a
significant portion of the original claim that was primarily asserted by another
subcontractor on the project, which we refer to as the Shoring Entitlement claim. MVCI
filed with the District Court a Notice of and Motion to Vacate Arbitration Award on the
Shoring Entitlement. The motion was denied by the district court and on February 7,
2005, MVCI filed an appeal to the Supreme Court of the State of Nevada. The primary
issues, related to the claim filed against Clark County Public Works, were changed
conditions, constructive changes, contract modifications and associated delay costs.
     47




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 17. Litigation and Claim Matters (Continued):
 Lawsuits Filed Against Meadow Valley Corporation and its Subsidiaries
 (1)
    
    Innovative Construction Systems, Inc. (ICS), District Court, Clark County, NV
 ICS was a subcontractor to MVCI on several projects. ICS failed to make payments of
payroll, pension fund contributions and other taxes for which the Internal Revenue
Service garnished any future payments due ICS on MVCI projects. As a result, ICS
failed to supply labor to perform its work and defaulted on its subcontracts. The
Company terminated the ICS subcontracts and performed the work with MVCIs personnel.
ICS alleges it was wrongfully terminated and is asserting numerous claims for damages.
ICS claims against MVCI total approximately $15,000,000. The Company does not believe
ICS claims have merit and intends to vigorously defend against these claims and has
filed counter-claims for approximately $3,200,000 seeking to recover the damages ICS has
caused MVCI through its failure to perform and satisfy its financial obligations. As
such, no liability has been recorded in the accompanying consolidated financial
statements for any potential loss arising from this claim. In September 2003, a binding
arbitration agreement was entered into between ICS and MVCI to stay all actions until
the Clark County, Nevada Shoring Entitlement claim, as mentioned above, has concluded, a
decision rendered, payment received from the county, and the funds are escrowed. As a
result of the Clark County arbitration panels decision referenced above, we have
requested binding arbitration concerning all remaining matters between MVCI and ICS. A
date has not been set for the arbitration.(2)
    
    Johnson & Danley Construction Co., Inc. (JDCC), J.D. Materials, Inc. (JDM)
and Joel T. Danley (Danley) (collectively J&D), Twelfth Judicial District, District
of New Mexico  JDCC was the prime contractor and MVCI was a subcontractor to JDCC on
one of the two contracts involved in MVCIs disputes with the state of New Mexico.
JDCC was also a subcontractor to MVCI on other contracts in New Mexico. JDM is the
owner of an aggregate pit in Alamogordo, NM and leased the pit to MVCI under a mineral
lease agreement. Danley is believed to be an officer and owner of JDCC and JDM. JDCC
filed for Chapter 11 bankruptcy protection, which in accordance with the contract,
resulted in the termination of its contract with the New Mexico State Highway and
Transportation Department (NMSHTD). The payment and performance bonds supplied by
JDCC in connection with the one contract for which JDCC was the prime contractor had
been furnished by the Companys surety companies. MVCI indemnified the surety
companies against losses and claims on the one contract. Upon JDCCs termination, the
NMSHTD entered into a takeover agreement with the surety companies who subsequently
entered into an agreement with MVCI to complete the work. MVCI has successfully
completed the projects. In its complaint, J&D alleged, among other things, that MVCI
was partially responsible for the cause of its bankruptcy and sought damages in an
undetermined amount. On February 10, 2003 for mutual consideration, J&D and MVCI
entered into a settlement agreement whereby the two parties dismissed their claims and
counterclaims in their entirety. The parties have agreed to jointly prosecute their
respective claims against the NMSHTD.(3)
    
    MVCI is defending a claimed preference, in the Third Judicial Court of Salt
Lake County, in connection with a payment made to it by an insurance company, Southern
America Insurance Company, in the approximate amount of $100,000. MVCI believes that
the payment is not a preference, and is vigorously defending the action.(4)
    
    MVCI has been named in two civil actions filed in Nevada District Court, Clark
County, Nevada as a result of a fatal traffic accident involving one of its trucks. The
first complaint, Case No. A485620, was filed on April 14, 2004 and is a civil action
titled Shotzie Thomas, individually and as Administratrix of the Estate of Emberly
Thomas, vs. Duward Leslie Vernon, Meadow Valley Contractors, Inc. d/b/a Meadow Valley
Contractors, Lawrence M. Thomas and Does I-X and Roes I-X. The second complaint, Case
No. A490720, was filed August 19, 2004 and is a civil action titled Arthur M. Hoolmalu,
individually and as Special Administrator of the Estate of Tulare M. Adams, deceased,
and Sandra K. Adams and Michael Adams, dependent parents, vs. Duward Leslie Vernon,
Meadow Valley Contractors, Inc. d/b/a Meadow Valley Contractors, Lawrence M. Thomas,
American Family Insurance Company and Does I-X and Roes I-X. The complaint seeks
damages from MVCI for losses
 48




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 17. Litigation and Claim Matters (Continued):
  (5)
    
    MVCI, through its insurance company, is providing a defense to the State of
Arizona, pursuant to its obligations under its contract, for a complaint brought by the
parents of Corey James and Michelle
James in the Superior Court of the State of Arizona, in and for the County of Pinal.
The Complaint, No.CV00400744, was filed on July 9, 2004. The complaint is a civil action
titled John James, the Father of Decedent Corey James, Donna James, the mother of
Decedent Corey James, Marjorie Surine, the Mother of Decedent Michelle James and Joseph
Burkhamer, the Father of Decedent Michelle James, Plaintiffs, vs. The State of Arizona,
a Body Politic; John Does and Jane Does 1-10; ABC Companies 1-5; and Black and White
Corporations, Partnerships and/or Sole proprietorships 1-10, or Other Entities,
Defendants. The complaint seeks damages from the State of Arizona for losses suffered
by the plaintiffs as a result of a traffic accident. In January of 2006 Joseph
Burkhamer, the Father of Decedent Michelle James, was dismissed from the complaint. The
Company denies responsibility for the accident and is vigorously defending the action.
The Company has not accrued a liability related to this complaint as of December 31,
2005.
 18.
    
    Statement of Cash Flows:Non-Cash Investing and Financing Activities:
     19. Significant Customers:
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003A
    
    
    21.0
    %
    
    
    24.1
    %
    
    
    27.9
    %B
    
    
    11.6
    %
    
    
    6.8
    %
    
    
    7.7
    %C
    
    
    0.2
    %
    
    
    2.2
    %
    
    
    11.8
    %
  For the Years Ended December 31,2005
    
    
    2004A
    
    $
    2,042,861
    
    
    $
    3,266,513B
    
    
    745,756
    
    
    
    2,071,254C
    
    
    30,645
    
    
    
    1,670,235
 49




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 20. Equity Incentive Plan:
    Weighted AverageShares
    
    
    Price per ShareOutstanding January 1, 2003
    
    
    744,025
    
    
    $
    4.46Granted
    
    
    369,000
    
    
    
    1.46Forfeited
    
    
    (37,200
    )
    
    
    4.68Outstanding December 31, 2003
    
    
    1,075,825
    
    
    
    3.42Forfeited
    
    
    (34,000
    )
    
    
    2.55Outstanding December 31, 2004
    
    
    1,041,825
    
    
    
    3.45Forfeited
    
    
    (26,306
    )
    
    
    3.49Granted
    
    
    15,000
    
    
    
    9.38Exercised
    
    
    (535,662
    )
    
    
    3.72Outstanding December 31, 2005
    
    
    494,857
    
    
    $
    3.34
 50




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 20. Equity Incentive Plan (Continued):
  Outstanding
    
    
    ExercisableWeighted Average
    
    
    
    
    
    
    Weighted AverageRemainingExercise Price per Share
    
    Shares
    
    
    Life ( in Years)
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise Price$5.410
    
    
    2,500
    
    
    
    1
    
    
    $
    5.410
    
    
    
    2,500
    
    
    $
    5.4104.375
    
    
    54,350
    
    
    
    1
    
    
    
    4.375
    
    
    
    54,350
    
    
    
    4.3755.310
    
    
    80,000
    
    
    
    2
    
    
    
    5.310
    
    
    
    80,000
    
    
    
    5.3105.875
    
    
    36,500
    
    
    
    3
    
    
    
    5.875
    
    
    
    36,500
    
    
    
    5.8754.563
    
    
    10,000
    
    
    
    4
    
    
    
    4.563
    
    
    
    10,000
    
    
    
    4.5634.000
    
    
    10,000
    
    
    
    4
    
    
    
    4.000
    
    
    
    10,000
    
    
    
    4.0003.875
    
    
    28,300
    
    
    
    4
    
    
    
    3.875
    
    
    
    28,300
    
    
    
    3.8752.438
    
    
    51,250
    
    
    
    6
    
    
    
    2.438
    
    
    
    51,250
    
    
    
    2.4381.460
    
    
    206,957
    
    
    
    8
    
    
    
    1.460
    
    
    
    97,957
    
    
    
    1.4609.380
    
    
    15,000
    
    
    
    10
    
    
    
    9.380
    
    
    
    
    
    
    
    9.380$1.46 to $9.38
    
    
    494,857
    
    
    
    
    
    
    $
    3.342
    
    
    
    370,857
    
    
    $
    3.650
    Weighted AverageShares
    
    
    Price per ShareOutstanding January 1, 2005
    
    
    
    
    
    $
    Granted
    
    
    253,125
    
    
    
    11.12Forfeited
    
    
    
    
    
    
    Outstanding December 31, 2005
    
    
    253,125
    
    
    $
    11.12
  Outstanding
    
    
    ExercisableWeighted Average
    
    
    
    
    
    
    Weighted AverageRemainingExercise Price per Share
    
    Shares
    
    
    Life ( in Years)
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise Price$11.00
    
    
    232,875
    
    
    
    4
    
    
    $
    11.00
    
    
    
    
    
    
    $
    11.0012.50
    
    
    20,250
    
    
    
    5
    
    
    
    12.50
    
    
    
    
    
    
    
    12.50$11.00 to $12.50
    
    
    253,125
    
    
    
    
    
    
    $
    11.12
    
    
    
    
    
    
    $
    11.12
  51




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 21. Employee Benefit Plan:
  22. Earnings per Share:
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003Weighted average common shares
outstanding
    
    
    3,783,089
    
    
    
    3,601,250
    
    
    
    3,593,102Dilutive effect of:Stock options
    
    
    368,007
    
    
    
    179,347
    
    
    
    6,157Weighted average common shares
outstanding assuming dilution
    
    
    4,151,096
    
    
    
    3,780,597
    
    
    
    3,599,259
     23. Backlog:
  52




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 24. Subsequent Events:
   25. Other Informative Disclosures:
    Construction
    
    
    ConstructionServices
    
    
    MaterialsFor the twelve months ended December 31, 2005Gross revenue
    
    $
    116,822,072
    
    
    $
    67,734,424Intercompany revenue
    
    
    
    
    
    
    (683,633
    )Cost of revenue
    
    
    108,706,174
    
    
    
    60,662,743Interest income
    
    
    466,901
    
    
    
    173,574Interest expense
    
    
    (212,546
    )
    
    
    (227,341
    )Intercompany interest income (expense)
    
    
    77,561
    
    
    
    (77,561
    )Depreciation and amortization
    
    
    2,088,144
    
    
    
    2,410,900Income before taxes
    
    
    3,142,565
    
    
    
    3,920,632Income tax expense
    
    
    (1,135,913
    )
    
    
    (1,435,042
    )Net income
    
    
    1,718,129
    
    
    
    2,485,590Total assets
    
    
    47,109,736
    
    
    
    39,906,794For the twelve months ended December 31, 2004*Gross revenue
    
    $
    108,175,663
    
    
    $
    59,135,658Intercompany revenue
    
    
    (6,742
    )
    
    
    (472,915
    )Cost of revenue
    
    
    107,834,595
    
    
    
    52,508,936Interest income
    
    
    170,409
    
    
    
    28,637Interest expense
    
    
    (209,615
    )
    
    
    (251,796
    )Intercompany interest income (expense)
    
    
    113,182
    
    
    
    (113,182
    )Depreciation and amortization
    
    
    1,586,633
    
    
    
    1,615,050Income (loss) before taxes
    
    
    (2,921,056
    )
    
    
    3,811,499Income tax benefit (expense)
    
    
    1,054,728
    
    
    
    (1,371,532
    )Net income (loss)
    
    
    (1,866,328
    )
    
    
    2,439,967Total assets
    
    
    42,915,047
    
    
    
    22,413,785
 53




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 25. Other Informative Disclosures (Continued):
  Construction
    
    
    ConstructionServices
    
    
    MaterialsFor the twelve months ended December 31, 2003*Gross revenue
    
    $
    110,119,548
    
    
    $
    44,128,065Intercompany revenue
    
    
    
    
    
    
    (140,748
    )Cost of revenue
    
    
    107,883,229
    
    
    
    40,020,766Interest income
    
    
    50,672
    
    
    
    7,950Interest expense
    
    
    (281,555
    )
    
    
    (207,562
    )Depreciation and amortization
    
    
    1,497,089
    
    
    
    1,231,220Income (loss) before taxes
    
    
    (1,511,323
    )
    
    
    1,673,704Income tax benefit (expense)
    
    
    562,648
    
    
    
    (633,394
    )Net income (loss)
    
    
    (948,675
    )
    
    
    1,040,310Total assets
    
    
    39,652,728
    
    
    
    15,713,800
 
 *
    
    - As restated to report corrections to income tax benefits in the years ended December 31,
2004 and 2003.  54




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUNSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 26. Quarterly Financial Data (Unaudited):
 March 31,
    
    June 30,
    
    September 30,
    
    December 31,(as restated*)
    
    (as restated*)2005Revenue
    
    $
    39,926,013
    
    
    $
    53,443,002
    
    
    $
    47,083,476
    
    
    $
    43,420,372Gross profit
    
    
    1,946,110
    
    
    
    3,638,552
    
    
    
    4,543,061
    
    
    
    5,059,856Income from operations
    
    
    290,496
    
    
    
    1,482,142
    
    
    
    2,726,120
    
    
    
    2,022,248Net income
    
    
    252,495
    
    
    
    997,684
    
    
    
    1,639,409
    
    
    
    1,314,131Basic net income per common share
    
    
    0.07
    
    
    
    0.27
    
    
    
    0.43
    
    
    
    0.32Diluted net income per common share
    
    
    0.06
    
    
    
    0.25
    
    
    
    0.39
    
    
    
    0.30Basic weighted average common shares
outstanding
    
    
    3,604,555
    
    
    
    3,653,501
    
    
    
    3,808,809
    
    
    
    4,065,489Diluted weighted average common shares
outstanding
    
    
    3,960,138
    
    
    
    4,040,282
    
    
    
    4,198,742
    
    
    
    4,405,2202004Revenue
    
    $
    39,168,733
    
    
    $
    43,708,119
    
    
    $
    42,103,802
    
    
    $
    41,851,010Gross profit
    
    
    2,463,975
    
    
    
    1,602,522
    
    
    
    936,807
    
    
    
    1,964,486Income (loss) from operations
    
    
    791,456
    
    
    
    182,985
    
    
    
    (657,160
    )
    
    
    140,670Net income (loss)
    
    
    436,663
    
    
    
    38,437
    
    
    
    (427,085
    )
    
    
    525,624Basic net income (loss) per common share
    
    
    0.12
    
    
    
    0.01
    
    
    
    (0.12
    )
    
    
    0.15Diluted net income (loss) per common share
    
    
    0.12
    
    
    
    0.01
    
    
    
    (0.12
    )
    
    
    0.14Basic weighted average common shares
outstanding
    
    
    3,601,250
    
    
    
    3,601,250
    
    
    
    3,601,250
    
    
    
    3,601,250Diluted weighted average common shares
outstanding
    
    
    3,754,754
    
    
    
    3,742,934
    
    
    
    3,601,250
    
    
    
    3,887,9002003Revenue
    
    $
    32,194,111
    
    
    $
    41,970,349
    
    
    $
    42,846,101
    
    
    $
    37,096,304Gross profit
    
    
    1,706,168
    
    
    
    2,486,882
    
    
    
    1,400,930
    
    
    
    749,638Income (loss) from operations
    
    
    126,502
    
    
    
    956,107
    
    
    
    (469,787
    )
    
    
    (763,489
    )Net income (loss)
    
    
    19,654
    
    
    
    521,303
    
    
    
    (97,094
    )
    
    
    (352,228
    )Basic net income (loss) per common share
    
    
    0.01
    
    
    
    0.14
    
    
    
    (0.03
    )
    
    
    (0.10
    )Diluted net income (loss) per common share
    
    
    0.01
    
    
    
    0.14
    
    
    
    (0.03
    )
    
    
    (0.10
    )Basic weighted average common shares
outstanding
    
    
    3,568,659
    
    
    
    3,601,250
    
    
    
    3,601,250
    
    
    
    3,601,250Diluted weighted average common shares
outstanding
    
    
    3,568,659
    
    
    
    3,601,250
    
    
    
    3,601,250
    
    
    
    3,625,878
 
 *
    
    - The quarter ended September 30, 2005 and the quarters ended December 31, 2004 and 2003 are
restated. See Item 15 of this 2005 Form 10-K. 55




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
  Inadequate Controls over the Preparation, Analysis, Documentation, and Review of Income Tax
Provision
  Facts and Circumstances Surrounding Inadequate Controls over the Preparation, Analysis,
Documentation, and Review of Income Tax Provision
  For the Years Ended December 31,In thousands, except per share data.
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Net income, as previously
reported
    
    $
    600
    
    
    $
    121
    
    
    $
    738
    
    
    $
    (2,524
    )
    
    $
    (1,575
    )Adjustment income tax benefit
(expense) *
    
    
    (26
    )
    
    
    (29
    )
    
    
    (171
    )
    
    
    
    
    
    
    362Net income, as restated
    
    $
    574
    
    
    $
    92
    
    
    $
    567
    
    
    $
    (2,524
    )
    
    $
    (1,213
    )Earnings (loss) per fully diluted
share (as reported)
    
    $
    0.16
    
    
    $
    0.03
    
    
    $
    0.21
    
    
    $
    (0.71
    )
    
    $
    (0.44
    )Effect of Amendment
    
    
    (0.01
    )
    
    
    
    
    
    
    (0.05
    )
    
    
    
    
    
    
    0.10Earnings (loss) per fully diluted
share (as restated)
    
    $
    0.15
    
    
    $
    0.03
    
    
    $
    0.16
    
    
    $
    (0.71
    )
    
    $
    (0.34
    )
 
 *
    
    - The remaining of the adjustment occurs in years prior to 2000. Remediation of Controls over the Preparation, Analysis, Documentation, and Review of the Income Tax
Provision Calculation
  
 Item 9B. Other Information
  56




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##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accounting Fees and Services
  57




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    (1)
    
    Financial StatementsSee Item 8 of Part II hereof.(2)
    
    Financial Statement SchedulesSee Schedules below and the accompanying consolidated financial statements (Item
8) of Part II hereof.
  Balance at
    
    Charged to
    
    
    
    
    
    Balance atIn Thousands
    
    Beginning
    
    Expense
    
    
    
    
    
    EndingDescription
    
    of Year
    
    Account
    
    Deductions
    
    of YearYear ended December 31, 2003Allowance for doubtful accounts
    
    $
    287
    
    
    $
    432
    
    
    $
    (9
    )
    
    $
    710Allowance for potentially obsolete or
slow moving inventory
    
    $
    1,000
    
    
    $
    186
    
    
    $
    
    
    
    $
    1,186Year ended December 31, 2004Allowance for doubtful accounts
    
    $
    710
    
    
    $
    278
    
    
    $
    (380
    )
    
    $
    608Allowance for potentially obsolete or
slow moving inventory
    
    $
    1,186
    
    
    $
    
    
    
    $
    (899
    )
    
    $
    287Year ended December 31, 2005Allowance for doubtful accounts
    
    $
    608
    
    
    $
    (207
    )
    
    $
    (75
    )
    
    $
    326Allowance for potentially obsolete or
slow moving inventory
    
    $
    287
    
    
    $
    
    
    
    $
    (43
    )
    
    $
    244
  Three months ended
    
    
    Three months endedSeptember 30,
    
    
    December 31,In thousands, except per share data.
    
    2005
    
    
    2004
    
    
    2004
    
    
    2003Net income (loss), as previously
reported
    
    $
    2,518
    
    
    $
    (427
    )
    
    $
    552
    
    
    $
    (323
    )Income tax expense adjustment
    
    
    (879
    )
    
    
    
    
    
    
    (26
    )
    
    
    (29
    )Net income (loss), as restated
    
    $
    1,639
    
    
    $
    (427
    )
    
    $
    526
    
    
    $
    (352
    )Earnings (loss) per basic share
(as reported)
    
    $
    0.66
    
    
    $
    (0.12
    )
    
    $
    0.16
    
    
    $
    (0.09
    )Effect of Amendment
    
    
    (0.23
    )
    
    
    
    
    
    
    (0.01
    )
    
    
    (0.01
    )Earnings (loss) per basic share
(as restated)
    
    $
    0.43
    
    
    $
    (0.12
    )
    
    $
    0.15
    
    
    $
    (0.10
    )Earnings (loss) per fully diluted
share (as reported)
    
    $
    0.60
    
    
    $
    (0.12
    )
    
    $
    0.15
    
    
    $
    (0.09
    )Effect of Amendment
    
    
    (0.21
    )
    
    
    
    
    
    
    (0.01
    )
    
    
    (0.01
    )Earnings (loss) per fully diluted
share (as restated)
    
    $
    0.39
    
    
    $
    (0.12
    )
    
    $
    0.14
    
    
    $
    (0.10
    )
 58




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##### Table of Contents



(3)
    
    Exhibits
 ExhibitNo.
    
    Title3.01
    
    Articles of Incorporation and Amendments thereto of the Registrant (1)3.02
    
    Bylaws of the Registrant (1)3.03
    
    Bylaws of the Registrant Effective October 20, 1995 (1)3.04
    
    Bylaws of the Registrant Effective April 28, 1997 (2)10.1
    
    Form of Indemnification Agreement with entered into by the Registrant with its Directors and
executive officers (2)10.2
    
    Employment Agreement with Robert DeRuiter (3)10.3
    
    Employment Agreement with Nicole R. Smith (4)10.4
    
    Employment Agreement with Robert Morris (4)10.5
    
    Employment Agreement with Robert Bottcher (4)10.6
    
    Employment Agreement with Robert Terril (4)10.7
    
    Employment Agreement with Sam Grasmick (4)10.8
    
    Employment Agreement with Bradley E. Larson (5)10.9
    
    Employment Agreement with Kenneth D. Nelson (5)10.10
    
    Employment Agreement with Alan A. Terril (5)10.11
    
    Addendum to Employment Contracts for Brad Larson, Ken Nelson, Ron Lewis and Alan Terril (3)10.12
    
    Lease Agreement between the Registrant and Ken Nosker (6)10.13
    
    Property Lease and Aggregate Supply Agreement with Sun State Rock & Materials Corp. (7)10.14
    
    Property Lease and Aggregate Supply Agreement with Clay R. Oliver d.b.a. Oliver Mining
Company (7)10.15
    
    Security Agreement with Associates Leasing, Inc. (7)10.16
    
    Security Agreement with FCC Equipment Financing, Inc. (8)10.17
    
    Lease Agreement with Thomas Mining, LLC (8)10.18
    
    Office Lease Agreement (2)10.19
    
    Amendment to Office Lease Agreement of the Registrant (9)10.20
    
    Amendment to Office Lease Agreement of the Registrant (9)
 59




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##### Table of Contents

\

ExhibitNo.
    
    Title10.21
    
    Amendment to Office Lease Agreement of the Registrant (10)10.22
    
    Amendment to Office Lease Agreement of the Registrant (11)10.23
    
    General Agreement of Indemnity between the Registrant and Liberty Mutual Insurance Company (3)10.24
    
    Contract between Registrant and Utah Department of Transportation (5)10.25
    
    Settlement Agreement and Release between the Registrant and New Mexico Department of
Transportation (11)10.26
    
    Promissory Note with Nevada State Bank (12)10.27
    
    Promissory Note with Nevada State Bank (12)10.28
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (7)10.29
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (7)10.30
    
    Master Security Agreement with The CIT Group/Equipment Financing, Inc. (7)10.31
    
    Master Security Agreement with The CIT Group/Equipment Financing, Inc. (7)10.32
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (7)10.33
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (13)10.34
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (12)10.35
    
    Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (7)10.36
    
    Amended and Restated Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (8)10.37
    
    Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (8)10.38
    
    Amendment No. 1 to Restated and Amended Revolving Loan Agreement with The CIT Group/Equipment
Financing, Inc. (2)10.39
    
    Amendment No. 2 to Restated and Amended Revolving Loan Agreement with The CIT Group/Equipment
Financing, Inc. (2)10.40
    
    Renewal and Amendment of Amended and Restated Revolving Loan Agreement with The CIT
Group/Equipment Financing, Inc.
(5)10.41
    
    Renewal and Amendment of Revolving Loan Agreement with The CIT Group/Equipment Financing,
Inc. (5)10.42
    
    Amendment of Amended and Restated Revolving Loan Agreement with The CIT Group/Equipment
Financing, Inc. (13)10.43
    
    Amendment of Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (13)10.44
    
    Notice of Assignment of Security Agreement from Astec Financial Services to The CIT
Group/Equipment Financing, Inc. (5)10.45
    
    Notice of Assignment of Security Agreement from Astec Financial Services to The CIT
Group/Equipment Financing, Inc. (5)10.46
    
    Line of Credit Agreement with GMAC Financial Services (10)10.47
    
    Line of Credit Agreement with Ford Motor Credit Company (10)10.48
    
    Commitment letter from DaimlerChrysler Services (14)10.49
    
    Master Lease Agreement with Wells Fargo Equipment Finance, Inc. (14)14.1
    
    Code of Ethics for Senior Management (11)
 60




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##### Table of Contents



ExhibitNo.
    
    Title21
    
    Subsidiaries of the Registrant (1)23
    
    Consent of Independent Auditors *31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. *31.2
    
    Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. *32
    
    Certifications of Chief Executive Officer and Principal Accounting Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
 
 (1)
    
    Incorporation by reference to the Companys Registration Statement on Form S-1, File Number
33-87750 declared effective on October 16, 1995(2)
    
    Incorporated by reference to the Companys December 31, 2001 Annual Report on Form 10-K(3)
    
    Incorporated by reference to the Companys June 30, 2002 Form 10-Q(4)
    
    Incorporated by reference to the Companys September 30, 2002 Form 10-Q(5)
    
    Incorporated by reference to the Companys December 31, 2002 Annual Report on Form 10-K(6)
    
    Incorporated by reference to the Companys December 31, 1998 Annual Report on Form 10-K(7)
    
    Incorporated by reference to the Companys December 31, 2000 Annual Report on Form 10-K(8)
    
    Incorporated by reference to the Companys September 30, 2001 Form 10-Q(9)
    
    Incorporated by reference to the Companys June 30, 2003 Form 10-Q(10)
    
    Incorporated by reference to the Companys September 30, 2003 Form 10-Q(11)
    
    Incorporated by reference to the Companys December 31, 2003 Annual Report on Form 10-K(12)
    
    Incorporated by reference to the Companys June 30, 2004 Form 10-Q(13)
    
    Incorporated by reference to the Companys March 31, 2003 Form 10-Q(14)
    
    Incorporated by reference to the Companys March 31, 2004 Form 10-Q*
    
    Filed herewith. 61




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##### Table of Contents



SIGNATURES
  MEADOW VALLEY CORPORATION/s/ Bradley E. LarsonBradley E. LarsonPresident and Chief Executive Officer(Principal Executive Officer)Date: March 30, 2006
 POWER OF ATTORNEY
   /s/ Bradley E. Larson
    
    
    
    /s/ Don A. PattersonBradley E. Larson
    
    
    
    Don A. PattersonDirector, President and Chief Executive Officer
    
    
    
    DirectorDate: March 30, 2006
    
    
    
    Date: March 30, 2006/s/ Kenneth D. Nelson
    
    
    
    /s/ Charles E. CowanKenneth D. Nelson
    
    
    
    Charles E. CowanDirector, Chief Administrative Officer and
Vice President
    
    
    
    Director
Date: March 30, 2006Date: March 30, 2006/s/ Charles R. Norton
    
    
    
    /s/ Clint TryonCharles R. Norton
    
    
    
    Clint TryonDirector
    
    
    
    Treasurer, Secretary and Principal Financial andDate: March 30, 2006
    
    
    
    Accounting OfficerDate: March 30, 2006
 62