##### 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, 2007
 OR
 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.)
 4602 E. Thomas Road, Phoenix, AZ
    
    85018(Address of principal executive offices)
    
    (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 Capital Market
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 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, 2007
 TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    12Item 1B.
    
    Unresolved Staff Comments
    
    
    15Item 2.
    
    Properties
    
    
    16Item 3.
    
    Legal Proceedings
    
    
    16Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    16PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    17Item 6.
    
    Selected Financial Data
    
    
    20Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 8.
    
    Financial Statements and Supplementary Data
    
    
    30Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    59Item 9A(T)
    
    Controls and Procedures
    
    
    59Item 9B.
    
    Other Information
    
    
    59PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    59Item 11.
    
    Executive Compensation
    
    
    59Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    60Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    60Item 14.
    
    Principal Accounting Fees and Services
    
    
    60PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    60EX-10.38EX-23EX-31.1EX-31.2EX-32




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Special Note Regarding Forward Looking Statements
    
 PART I
 
 Item 1. Business
 About Meadow Valley
  Comments on 2007 and 2008
 A Tale of Two Cities
 2




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History
      3




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##### Table of Contents



Business Strategy
  
    
    Continuing to actively bid in the construction markets in Arizona and 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 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 additional 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 Utah for which we are seeking reimbursement. We believe that much of the costs are
reimbursable due to changed conditions, owners plan errors and omissions, conflicting
utility right of ways and delays not attributable to us. As of December 31, 2007, the
total amount of claims on the New Mexico and Utah projects that have been submitted and
remain unpaid is approximately $19.1 million, of which $15.1 million represents our
portion of the claims.
    
    Implementing the growth strategy for Ready Mix, Inc.We will seek to enter new
geographic sub-markets initially within the Phoenix, Arizona and Las Vegas, Nevada
metropolitan areas. These markets will likely be located at the outer edges of the two
metropolitan markets, but at a sufficient distance from these metropolitan markets so
as to require the development of newer plants to service job sites in these areas.
    
    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.
 4




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Market Overview
 The 2008 U.S.
Markets Construction Overview
   Construction Services Segment (CSS)
 Operations
    5




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Projects and Customers
   For the Years Ended December 31,2007
    
    2006
    
    2005Arizona Department of Transportation (Public)
    
    
    24.7
    %
    
    
    20.9
    %
    
    
    21.0
    %Clark County (Public)
    
    
    21.0
    %
    
    
    9.1
    %
    
    
    23.5
    %Del Webb (Private)
    
    
    2.9
    %
    
    
    5.1
    %
    
    
    11.6
    %
 The Contract Process
   6




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Backlog
  7




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Competition
   Insurance and Bonding
   Marketing
  8




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Construction Materials Segment (CMS)
 Operations
  Projects and Customers
  Competition
   Marketing
  9




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##### Table of Contents



Construction Materials Testing Segment (CMTS)
 Operations
  Projects and Customers
  Competition
  Marketing
   10




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Meadow Valley Corporation and our Segments
 Seasonality
  Insurance
  Government Regulation
  Employees
  Website Access
  11




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##### Table of Contents



Item 1A. Risk Factors
  We are Subject to the Reporting Requirements of Federal Securities Laws, Which Impose
Additional Burdens.
   If We Fail to Maintain an Effective System of Internal Controls, We May Not be Able to
Accurately Report Our Financial Results or Prevent Fraud. As a Result, Current and Potential
Shareholders Could Lose Confidence in Our Financial Reporting, Which Could Harm Our Business and
the Trading Price of Our Stock.
 Your Ownership Could be Diluted by Future Issuances of Our Stock, Options, Warrants or Other
Securities.
 Our Certificate of Incorporation Authorizes our Board of Directors to Create New Series of
Preferred Stock Without Further Approval by Our Stockholders, Which Could Adversely Affect the
Rights of the Holders of our Common Stock or Delay or Prevent a Change in Control.
 12




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Our Companys Stock Price is Highly Volatile.
 
    
    quarterly variations in our operating results;
    
    operating results that vary from the expectations of securities analysts and investors;
    
    changes in the construction and real estate industries;
    
    changes in expectations as to our future financial performance,
including financial estimates by securities analysts and investors or such guidance
provided by us;
    
    announcements by us or our competitors of significant contracts,
acquisitions, dispositions, strategic partnerships, joint ventures or capital
commitments;
    
    additions or departures of key personnel;
    
    future issuances and sales of our securities;
    
    trading and volume fluctuations;
    
    other risk factors as discussed above; and
    
    other unforeseen events.
  We Do Not Intend to Pay Dividends on Our Common Stock.
 Anti-Takeover Provisions Affecting Our Company Could Prevent or Delay a Change of Control that
may be Beneficial to Its Shareholders.
 
    
    delay, defer or prevent a change in control in our Company;
    
    discourage bids for our Companys securities at a premium over the market price;
    
    adversely affect the market price of, and the voting and other rights
of the holders of, our Companys securities; or
    
    impede the ability of the holders of our Companys securities to change
its management.
 We are Dependent on Public Sector Customers.
 We are Responsible for Subcontractor Performance.
 A Significant Number of Our Project Contracts are Based on Fixed Unit Price.
 13




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We Experience Weather and Seasonal Related Variations that May Affect Quarterly Operating
Results.
 Potential Liability for Environmental Damages and Personal Injury.
 An Inability to Secure and Permit Aggregate Reserves Could Negatively Impact 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.
 14




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Dependence upon Executive Officers.
 Strikes or Work Stoppages Could Have a Negative Impact on Our Operations and Results.
 Unavailability of Insurance Coverage Could Have a Negative Impact on 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
  15




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Item 2. Properties
  Approximate
    
    ApproximateBuilding Size in
    
    Land
    
    Owned/
    
    Monthly
    
    LeaseLocation
    
    Segment
    
    Purpose
    
    Square Feet
    
    in Acres
    
    Leased
    
    Rental
    
    Expires4602 East Thomas 
Road, 
Phoenix, Arizona
    
    CSS, CMS
    
    Corporate office,
Area office
    
    
    18,400
    
    
    
    2
    
    
    Owned
    
    
    
    
    
    3430 East Flamingo
Suite 100,
Las Vegas, Nevada
    
    CMS
    
    Area office
    
    
    5,900
    
    
    
    
    
    
    Leased
    
    $
    9,870
    
    
    03/10/20102250 West Center 
Street, Springville, 
Utah
    
    CSS
    
    Field office
    
    
    1,600
    
    
    
    
    
    
    Leased
    
    $
    2,370
    
    
    04/30/20084635 Andrews Street, 
North Las Vegas, 
Nevada
    
    CSS
    
    Area office
    
    
    4,320
    
    
    
    
    
    
    Leased
    
    $
    3,906
    
    
    09/30/2009109 West Delhi, 
North Las 
Vegas, Nevada
    
    CMS
    
    Ready Mix
production facility
    
    
    4,470
    
    
    
    5
    
    
    Owned
    
    
    
    
    
    11500 West Beardsley 
Road, Sun 
City, Arizona (1)
    
    CMS
    
    Ready Mix
production facility
    
    
    440
    
    
    
    5
    
    
    Leased
    
    
    
    
    
    05/31/201039245 North Schnepf 
Road, 
Queen Creek, Arizona
    
    CMS
    
    Ready Mix
production facility
    
    
    440
    
    
    
    5
    
    
    Owned
    
    
    
    
    
    Richmar Ave.,
Las Vegas,
Nevada
    
    CMS
    
    Ready Mix
production facility
    
    
    440
    
    
    
    5
    
    
    Owned
    
    
    
    
    
    6204 West Southern 
Avenue, Tolleson, 
Arizona (1)
    
    CMS
    
    Ready Mix
production facility
    
    
    440
    
    
    
    5
    
    
    Leased
    
    
    
    
    
    10/31/20166210 Annie Oakley
Drive Suite 102, Las
Vegas, Nevada
    
    CSS
    
    Field office
    
    
    1,000
    
    
    
    
    
    
    Leased
    
    $
    1,800
    
    
    03/31/2009North Schnepf Road, 
Queen 
Creek, Arizona
(1)(2)
    
    CMS
    
    Sand and Aggegate
production facility
    
    
    
    
    
    
    15
    
    
    Leased
    
    
    
    
    
    08/30/2009Moapa, Nevada (1)
    
    CMS
    
    Sand and Aggegate
production facility
    
    
    840
    
    
    
    40
    
    
    Leased
    
    
    
    
    
    01/01/2009Moapa, Nevada (1)
    
    CMS
    
    Ready Mix
production facility
    
    
    440
    
    
    
    
    
    
    Leased
    
    
    
    
    
    Northwest Arizona (1)
    
    CMS
    
    Sand and Aggegate
production facility
    
    
    840
    
    
    
    40
    
    
    Leased
    
    
    
    
    
    08/27/2008Northwest Las Vegas, 
Nevada (1)
    
    CMS
    
    Sand and Aggegate
production facility
    
    
    
    
    
    
    40
    
    
    Leased
    
    
    
    
    
    03/31/2008Northwest Las Vegas, 
Nevada (1)
    
    CMS
    
    Ready Mix
production facility
    
    
    440
    
    
    
    
    
    
    Leased
    
    
    
    
    
    3155 East Patrick 
Lane Suite #12, Las 
Vegas, Nevada
    
    CMTS
    
    Area office,
laboratory facility
    
    
    3,300
    
    
    
    
    
    
    Leased
    
    $
    2,898
    
    
    
 
 (1)
    
     Our facility rent is included in the cost of the material which we purchase from the lessors.(2)
    
     Currently we are not mining at this site.  
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  16




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
  2007 *
    
    2006 *High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    13.11
    
    
    $
    10.31
    
    
    $
    15.59
    
    
    $
    11.12Second Quarter
    
    
    14.09
    
    
    
    12.81
    
    
    
    12.35
    
    
    
    10.13Third Quarter
    
    
    13.98
    
    
    
    11.75
    
    
    
    12.34
    
    
    
    8.78Fourth Quarter
    
    
    13.50
    
    
    
    11.29
    
    
    
    10.80
    
    
    
    9.80
 
 *
    
     The quarterly highs and lows are based on daily market closing prices during each
respective period.  Meadow Valley CorporationEquity Compensation Plan InformationNumber of securitiesremaining availableNumber of securities
    
    
    
    
    
    
    for future issuanceto be issued upon
    
    
    Weighted-average
    
    
    under equityexercise of
    
    
    exercise price of
    
    
    compensation plansoutstanding options,
    
    
    outstanding options,
    
    
    (excluding securitiesPlan category
    
    warrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
(1)
    
    
    320,011
    
    
    $
    5.35
    
    
    
    150,149Equity compensation
plans not approved
by security
holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    320,011
    
    
    
    
    
    
    
    150,149
 
 (1)
    
     Includes 320,011 options to purchase shares of our common stock issued to employees
and directors from our 2004 Plan.   17




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##### Table of Contents



Ready Mix, Inc.Equity Compensation Plan InformationNumber of securitiesremaining availablefor future issuanceNumber of securities
    
    
    
    
    
    
    under equityto be issued upon
    
    
    Weighted-average
    
    
    compensation plansexercise of
    
    
    exercise price of
    
    
    (excluding securitiesoutstanding options,
    
    
    outstanding options,
    
    
    reflected in columnPlan category
    
    warrants and rights
    
    
    warrants and rights
    
    
    (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
(1)(2)
    
    
    482,375
    
    
    $
    11.54
    
    
    
    306,875Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    482,375
    
    
    
    
    
    
    
    306,875
 
 (1)
    
     Includes an individual compensation agreement for 116,250 warrants to
purchase shares of RMIs common stock issued to RMIs underwriters as a portion of
their compensation in connection with RMIs initial public offering.(2)
    
     Includes 366,125 options to purchase shares of RMIs common stock issued to
RMIs employees and directors from the RMI 2005 Plan.     18




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##### Table of Contents



COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $100 invested on 12/31/02 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31. 12/31/2002
    
    12/31/2003
    
    12/31/2004
    
    12/31/2005
    
    12/31/2006
    
    12/31/2007Meadow Valley Corporation
    
    
    100.00
    
    
    
    219.23
    
    
    
    510.26
    
    
    
    1,484.62
    
    
    
    1,301.28
    
    
    
    1,632.05NASDAQ Composite Index
    
    
    100.00
    
    
    
    149.75
    
    
    
    164.64
    
    
    
    168.60
    
    
    
    187.83
    
    
    
    205.22Dow Jones US Heavy
Construction Index
    
    
    100.00
    
    
    
    136.41
    
    
    
    165.42
    
    
    
    239.03
    
    
    
    298.17
    
    
    
    566.39
 The stock price performance included in this graph is not necessarily indicative of future stock
price performance.
 19




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Item 6.
    
    Selected Financial Data
 Statement of Operations Information:
  Years Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Statement of Operations Data:Revenue
    
    $
    205,919,004
    
    
    $
    195,521,951
    
    
    $
    183,872,863
    
    
    $
    166,831,664
    
    
    $
    154,106,865Gross profit
    
    
    17,415,250
    
    
    
    19,310,088
    
    
    
    15,187,579
    
    
    
    6,967,790
    
    
    
    6,343,618Income (loss) from operations
    
    
    5,601,948
    
    
    
    8,148,269
    
    
    
    6,521,006
    
    
    
    457,951
    
    
    
    (150,667
    )Income before income taxes
and minority interest
    
    
    7,288,861
    
    
    
    8,893,156
    
    
    
    7,063,197
    
    
    
    890,443
    
    
    
    162,381Net income
    
    
    4,060,806
    
    
    
    4,165,922
    
    
    
    4,203,719
    
    
    
    573,639
    
    
    
    91,635Basic net income per common share
    
    $
    0.79
    
    
    $
    0.96
    
    
    $
    1.11
    
    
    $
    0.16
    
    
    $
    0.03Diluted net income per common share
    
    $
    0.77
    
    
    $
    0.90
    
    
    $
    1.01
    
    
    $
    0.15
    
    
    $
    0.03Basic weighted average common shares
outstanding
    
    
    5,129,275
    
    
    
    4,328,160
    
    
    
    3,783,089
    
    
    
    3,601,250
    
    
    
    3,593,102Diluted weighted average common shares
outstanding
    
    
    5,306,294
    
    
    
    4,621,124
    
    
    
    4,151,096
    
    
    
    3,780,597
    
    
    
    3,599,259Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Financial Position Data:Working capital
    
    $
    22,970,687
    
    
    $
    27,255,590
    
    
    $
    21,913,277
    
    
    $
    2,294,162
    
    
    $
    5,757,671Total assets
    
    
    101,752,276
    
    
    
    102,105,655
    
    
    
    87,016,530
    
    
    
    65,328,832
    
    
    
    55,366,528Long-term debt
    
    
    12,269,017
    
    
    
    13,996,482
    
    
    
    11,858,042
    
    
    
    11,785,816
    
    
    
    8,084,793Stockholders equity
    
    
    34,526,728
    
    
    
    31,341,214
    
    
    
    19,795,787
    
    
    
    12,716,188
    
    
    
    12,142,549
 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Executive Overview
  
    
    focus on the construction markets of Nevada and Arizona which have historically
been more profitable for us,
    
    be selective in the projects we choose to bid, provide incentives and reward
outstanding project management,
    
    concentrate our efforts to prevail in our past construction claims and eliminate
distractions from lingering claims as well as to avoid future claims,
    
    gradually increase our bonding capacity in order to bid on larger single
projects and increase our contract backlog to levels that provide more sustainable
momentum, and
    
    implement expansion plans for our materials segment and focus marketing efforts
on non-residential market sector.
 20




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Results of Operations
   For the Years Ended December 31,2007
    
    
    2006
    
    
    2005Revenue:Construction services
    
    $
    129,262
    
    
    
    62.8
    %
    
    $
    111,936
    
    
    
    57.3
    %
    
    $
    116,822
    
    
    
    63.5
    %Construction materials
    
    
    75,620
    
    
    
    36.7
    %
    
    
    83,152
    
    
    
    42.5
    %
    
    
    67,051
    
    
    
    36.5
    %Construction materials testing
    
    
    1,037
    
    
    
    0.5
    %
    
    
    434
    
    
    
    0.2
    %
    
    
    
    
    
    
    0.0
    %Total revenue
    
    
    205,919
    
    
    
    100.0
    %
    
    
    195,522
    
    
    
    100.0
    %
    
    
    183,873
    
    
    
    100.0
    %Gross profit
    
    
    17,415
    
    
    
    8.5
    %
    
    
    19,310
    
    
    
    9.9
    %
    
    
    15,188
    
    
    
    8.3
    %General and administrative
expenses
    
    
    11,813
    
    
    
    5.7
    %
    
    
    11,162
    
    
    
    5.7
    %
    
    
    8,667
    
    
    
    4.7
    %Income from operations
    
    
    5,602
    
    
    
    2.7
    %
    
    
    8,148
    
    
    
    4.2
    %
    
    
    6,521
    
    
    
    3.6
    %Interest income
    
    
    1,558
    
    
    
    0.8
    %
    
    
    1,010
    
    
    
    0.5
    %
    
    
    563
    
    
    
    0.3
    %Interest expense
    
    
    (239
    )
    
    
    -0.1
    %
    
    
    (339
    )
    
    
    -0.2
    %
    
    
    (362
    )
    
    
    -0.2
    %Other income
    
    
    368
    
    
    
    0.2
    %
    
    
    74
    
    
    
    0.0
    %
    
    
    342
    
    
    
    0.2
    %Income tax expense
    
    
    (2,564
    )
    
    
    -1.2
    %
    
    
    (3,164
    )
    
    
    -1.6
    %
    
    
    (2,571
    )
    
    
    -1.4
    %Minority interest in consolidated
subsidiary
    
    
    (664
    )
    
    
    -0.3
    %
    
    
    (1,563
    )
    
    
    -0.8
    %
    
    
    (289
    )
    
    
    -0.2
    %Net income
    
    $
    4,061
    
    
    
    2.0
    %
    
    $
    4,166
    
    
    
    2.1
    %
    
    $
    4,204
    
    
    
    2.3
    %Depreciation and
amortization
    
    $
    7,082
    
    
    
    3.4
    %
    
    $
    5,885
    
    
    
    3.0
    %
    
    $
    4,499
    
    
    
    2.4
    %
 Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Revenue and Backlog.
 Gross Profit.
 21




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##### Table of Contents



Depreciation and Amortization.
 General and Administrative Expenses.
 Interest Income, Expense and Other Income.
 Minority Interest in Consolidated Subsidiary.
 Income Taxes.
 Net Income.
 Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
 Revenue and Backlog.
 Gross Profit.
 22




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##### Table of Contents



Depreciation and Amortization.
 General and Administrative Expenses.
 Interest Income, Expense and Other Income.
 Minority Interest in Consolidated Subsidiary.
 Income Taxes.
 Net Income.
 Liquidity and Capital Resources
      23




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##### Table of Contents



For the Years Ended December 31,2007
    
    2006
    
    2005Cash provided by operating activities
    
    $
    16,746,813
    
    
    $
    10,323,569
    
    
    $
    5,217,432Cash used in investing activities
    
    
    (11,573,019
    )
    
    
    (8,002,773
    )
    
    
    (5,128,942
    )Cash provided by (used in) financing activities
    
    
    (6,382,348
    )
    
    
    3,468,469
    
    
    
    13,312,609
       Impact of Inflation
  24




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##### Table of Contents



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 obligations
    
    $
    16,485
    
    
    $
    4,216
    
    
    $
    8,162
    
    
    $
    3,001
    
    
    $
    1,106Interest payments on long-term debt (1)
    
    
    2,697
    
    
    
    1,037
    
    
    
    1,189
    
    
    
    327
    
    
    
    144Capital lease obligations
    
    
    104
    
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    7,945
    
    
    
    3,135
    
    
    
    4,019
    
    
    
    791
    
    
    
    Purchase obligations
    
    
    24,086
    
    
    
    3,857
    
    
    
    6,353
    
    
    
    4,770
    
    
    
    9,106Other long-term liabilities (2)
    
    
    1,897
    
    
    
    979
    
    
    
    918
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    53,214
    
    
    $
    13,328
    
    
    $
    20,641
    
    
    $
    8,889
    
    
    $
    10,356
 
 (1)
    
    Interest payments are based on the individual interest rates of each obligation, which
range from 1.9% to 9.5% per annum. We do not assume an increase in the variable interest rate.
See Item 8, Note 10  Notes Payable and Note 11  Lines of Credit in the notes to the
consolidated financial statements.(2)
    
    Other long-term liabilities reflected on our balance sheets under GAAP include employment
contracts with officers and key employees that call for annual salaries ranging from $118,450 to
$262,500 through October 2010, and are to be reviewed annually by our Compensation Committee. Known and Anticipated Future Trends and Contingencies
      25




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##### Table of Contents



Critical Accounting Policies
   Revenue and Cost Recognition
   26




---



##### Table of Contents



Collectibility of Accounts Receivable
  Inventory, net
  Valuation of Property and Equipment:
  Plants
    
    4  15 yearsComputer equipment
    
    3  5 yearsEquipment
    
    3  10 yearsLeasehold improvements
    
    2  10 yearsOffice furniture and equipment
    
    5  7 yearsVehicles
    
    3  10 yearsBuilding
    
    39 years
   27




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##### Table of Contents



Income taxes
   Classification of Leases:
  Recent Accounting Pronouncements
    28




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##### Table of Contents



Off-Balance Sheet Arrangements
  
 Item 7A Quantitative and Qualitative Disclosures About Market Risk
    29




---



##### Table of Contents



Item 8 Financial Statements and Supplementary Data
 
 Report of Independent Registered Public Accounting Firm
 
    
  
 INDEPENDENT MEMBER OF THE BDO SEIDMAN ALLIANCE
 30




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 December 31,2007
    
    
    2006Assets:Current assets:Cash and cash equivalents
    
    $
    28,146,028
    
    
    $
    29,354,582Restricted cash
    
    
    327,886
    
    
    
    605,243Accounts receivable, net
    
    
    28,565,983
    
    
    
    25,990,763Prepaid expenses and other
    
    
    2,973,664
    
    
    
    2,820,768Inventory, net
    
    
    1,232,478
    
    
    
    1,366,534Costs and estimated earnings in excess of billings on uncompleted
contracts
    
    
    567,013
    
    
    
    1,254,860Note receivable
    
    
    110,824
    
    
    
    106,499Deferred tax asset
    
    
    580,103
    
    
    
    561,199Total current assets
    
    
    62,503,979
    
    
    
    62,060,448Property and equipment, net
    
    
    36,173,373
    
    
    
    35,553,000Refundable deposits
    
    
    186,508
    
    
    
    1,492,967Note receivable, less current portion
    
    
    424,536
    
    
    
    535,360Claims receivable
    
    
    2,463,880
    
    
    
    2,463,880Total assets
    
    $
    101,752,276
    
    
    $
    102,105,655Liabilities and Stockholders Equity:Current liabilities:Accounts payable
    
    $
    15,288,168
    
    
    $
    13,298,114Accrued liabilities
    
    
    6,907,633
    
    
    
    7,569,928Notes payable
    
    
    4,216,498
    
    
    
    4,837,628Obligations under capital leases
    
    
    102,100
    
    
    
    332,898Income tax payable
    
    
    1,770,786
    
    
    
    399,536Billings in excess of costs and estimated earnings on uncompleted
contracts
    
    
    11,248,107
    
    
    
    8,366,754Total current liabilities
    
    
    39,533,292
    
    
    
    34,804,858Notes payable, less current portion
    
    
    12,269,017
    
    
    
    13,894,382Obligations under capital leases, less current portion
    
    
    
    
    
    
    102,100Deferred tax liability
    
    
    2,610,836
    
    
    
    2,974,857Total liabilities
    
    
    54,413,145
    
    
    
    51,776,197Commitments and contingenciesMinority interest in consolidated subsidiary
    
    
    12,812,403
    
    
    
    18,988,244Stockholders 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,
5,148,404 and 5,098,679 issued and outstanding
    
    
    5,148
    
    
    
    5,099Additional paid-in capital
    
    
    20,322,115
    
    
    
    21,197,456Capital adjustments
    
    
    (799,147
    )
    
    
    (799,147
    )Retained earnings
    
    
    14,998,612
    
    
    
    10,937,806Total stockholders equity
    
    
    34,526,728
    
    
    
    31,341,214Total liabilities and stockholders equity
    
    $
    101,752,276
    
    
    $
    102,105,655
  31




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Years Ended December 31,2007
    
    
    2006
    
    
    2005Revenue:Construction services
    
    $
    129,262,421
    
    
    $
    111,936,285
    
    
    $
    116,822,072Construction materials
    
    
    75,620,128
    
    
    
    83,151,938
    
    
    
    67,050,791Construction materials testing
    
    
    1,036,455
    
    
    
    433,728
    
    
    
    Total revenue
    
    
    205,919,004
    
    
    
    195,521,951
    
    
    
    183,872,863Cost of revenue:Construction services
    
    
    117,924,528
    
    
    
    101,866,540
    
    
    
    108,706,174Construction materials
    
    
    69,465,646
    
    
    
    73,945,571
    
    
    
    59,979,110Construction materials testing
    
    
    1,113,580
    
    
    
    399,752
    
    
    
    Total cost of revenue
    
    
    188,503,754
    
    
    
    176,211,863
    
    
    
    168,685,284Gross profit
    
    
    17,415,250
    
    
    
    19,310,088
    
    
    
    15,187,579General and administrative expenses
    
    
    11,813,302
    
    
    
    11,161,819
    
    
    
    8,666,573Income from operations
    
    
    5,601,948
    
    
    
    8,148,269
    
    
    
    6,521,006Other income (expense):Interest income
    
    
    1,557,627
    
    
    
    1,010,144
    
    
    
    562,914Interest expense
    
    
    (238,866
    )
    
    
    (338,886
    )
    
    
    (362,326
    )Other income
    
    
    368,152
    
    
    
    73,629
    
    
    
    341,6031,686,913
    
    
    
    744,887
    
    
    
    542,191Income before income taxes and minority
interest in consolidated subsidiary
    
    
    7,288,861
    
    
    
    8,893,156
    
    
    
    7,063,197Income tax expense
    
    
    2,564,376
    
    
    
    3,163,785
    
    
    
    2,570,955Income before minority interest
in consolidated subsidiary
    
    
    4,724,485
    
    
    
    5,729,371
    
    
    
    4,492,242Minority interest in consolidated subsidiary
    
    
    663,679
    
    
    
    1,563,449
    
    
    
    288,523Net income
    
    $
    4,060,806
    
    
    $
    4,165,922
    
    
    $
    4,203,719Basic net income per common share
    
    $
    0.79
    
    
    $
    0.96
    
    
    $
    1.11Diluted net income per common share
    
    $
    0.77
    
    
    $
    0.90
    
    
    $
    1.01Basic weighted average common shares outstanding
    
    
    5,129,275
    
    
    
    4,328,160
    
    
    
    3,783,089Diluted weighted average common shares outstanding
    
    
    5,306,294
    
    
    
    4,621,124
    
    
    
    4,151,096
  32




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Common StockNumber of
    
    
    
    
    
    
    AdditionalShares
    
    
    
    
    
    
    Paid-in
    
    
    Capital
    
    
    RetainedOutstanding
    
    
    Amount
    
    
    Capital
    
    
    Adjustments
    
    
    EarningsBalance at January 1, 2005
    
    
    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
    
    
    
    2,875,344
    
    
    
    
    
    
    
    Net income for the year ended 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,203,719Balance at December 31, 2005
    
    
    4,136,912
    
    
    
    4,137
    
    
    
    13,818,913
    
    
    
    (799,147
    )
    
    
    6,771,884Common stock issued in
private placement offering
    
    
    817,120
    
    
    
    817
    
    
    
    6,567,083
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    267,110
    
    
    
    
    
    
    
    Excess tax benefits from stock-based
payment arrangements
    
    
    
    
    
    
    
    
    
    
    144,879
    
    
    
    
    
    
    
    Common stock issued on exercise
of options
    
    
    144,647
    
    
    
    145
    
    
    
    399,471
    
    
    
    
    
    
    
    Net income for the year ended 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,165,922Balance at December 31, 2006
    
    
    5,098,679
    
    
    
    5,099
    
    
    
    21,197,456
    
    
    
    (799,147
    )
    
    
    10,937,806Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    626,509
    
    
    
    
    
    
    
    Excess tax benefits from stock-based
payment arrangements
    
    
    
    
    
    
    
    
    
    
    97,077
    
    
    
    
    
    
    
    Excess payments from purchase of
minority interest common stock
    
    
    
    
    
    
    
    
    
    
    (1,783,424
    )
    
    
    
    
    
    
    Common stock issued on exercise
of options
    
    
    49,725
    
    
    
    49
    
    
    
    184,497
    
    
    
    
    
    
    
    Net income for the year ended 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,060,806Balance at December 31, 2007
    
    
    5,148,404
    
    
    $
    5,148
    
    
    $
    20,322,115
    
    
    $
    (799,147
    )
    
    $
    14,998,612
 
 (1)
    
     Additional paid-in capital associated with the issuance of common stock on exercise of
options for 2005 includes an income tax benefit of $884,083.  33




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2007
    
    
    2006
    
    
    2005Increase (decrease) in cash and cash equivalents:Cash flows from operating activities:Cash received from customers
    
    $
    206,770,970
    
    
    $
    198,871,293
    
    
    $
    178,671,433Cash paid to suppliers and employees
    
    
    (189,766,867
    )
    
    
    (186,080,171
    )
    
    
    (173,653,659
    )Interest received
    
    
    1,557,627
    
    
    
    1,010,144
    
    
    
    562,914Interest paid
    
    
    (238,866
    )
    
    
    (338,886
    )
    
    
    (362,326
    )Income taxes paid
    
    
    (1,576,051
    )
    
    
    (3,138,811
    )
    
    
    (930
    )Net cash provided by operating activities
    
    
    16,746,813
    
    
    
    10,323,569
    
    
    
    5,217,432Cash flows from investing activities:Decrease in restricted cash
    
    
    277,357
    
    
    
    661,847
    
    
    
    1,359Proceeds from sale of property and equipment
    
    
    775,667
    
    
    
    552,270
    
    
    
    391,504Purchase of property and equipment
    
    
    (4,087,598
    )
    
    
    (9,368,571
    )
    
    
    (5,521,805
    )Proceeds from note receivable
    
    
    106,499
    
    
    
    151,681
    
    
    
    Purchase of minority interest common stock
    
    
    (8,644,944
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (11,573,019
    )
    
    
    (8,002,773
    )
    
    
    (5,128,942
    )Cash flows from financing activities:Proceeds from the issuance of common stock
    
    
    184,546
    
    
    
    7,753,696
    
    
    
    1,991,797Offering costs associated with private placement offering
    
    
    
    
    
    
    (786,180
    )
    
    
    Proceeds from minority interest in consolidated subsidiary
    
    
    22,000
    
    
    
    
    
    
    
    17,747,900Offering costs associated with minority interest
in consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    (611,628
    )Repayment of capital lease obligations
    
    
    (332,898
    )
    
    
    (546,801
    )
    
    
    (531,746
    )Proceeds received from notes payable
    
    
    2,956,120
    
    
    
    3,083,540
    
    
    
    543,998Repayment of notes payable
    
    
    (9,309,193
    )
    
    
    (6,180,665
    )
    
    
    (5,827,712
    )Excess tax benefits from share-based payment arrangements
    
    
    97,077
    
    
    
    144,879
    
    
    
    Net cash provided by (used in) financing
activities
    
    
    (6,382,348
    )
    
    
    3,468,469
    
    
    
    13,312,609Net increase (decrease) in cash and cash equivalents
    
    
    (1,208,554
    )
    
    
    5,789,265
    
    
    
    13,401,099Cash and cash equivalents at beginning of year
    
    
    29,354,582
    
    
    
    23,565,317
    
    
    
    10,164,218Cash and cash equivalents at end of year
    
    $
    28,146,028
    
    
    $
    29,354,582
    
    
    $
    23,565,317
  34




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
 For the Years Ended December 31,2007
    
    
    2006
    
    
    2005Increase (decrease) in cash and cash equivalents (Continued):Reconciliation of net income to net cash
provided by operating activities:Net income
    
    $
    4,060,806
    
    
    $
    4,165,922
    
    
    $
    4,203,719Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    7,082,406
    
    
    
    5,885,481
    
    
    
    4,499,044Gain on sale of property and equipment
    
    
    (310,687
    )
    
    
    (42,002
    )
    
    
    (9,397
    )Share-based compensation expense
    
    
    626,509
    
    
    
    267,110
    
    
    
    Deferred taxes, net
    
    
    (382,925
    )
    
    
    (3,389
    )
    
    
    2,198,853Allowance for doubtful accounts
    
    
    199,479
    
    
    
    69,131
    
    
    
    (281,565
    )Inventory allowance
    
    
    (64
    )
    
    
    (44,271
    )
    
    
    (42,551
    )Minority interest in consolidated
subsidiary
    
    
    663,679
    
    
    
    1,563,449
    
    
    
    288,523Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,774,699
    )
    
    
    (940,284
    )
    
    
    (2,674,326
    )Income taxes receivable
    
    
    
    
    
    
    20,030
    
    
    
    (20,030
    )Claims receivable
    
    
    
    
    
    
    1,057,200
    
    
    
    Prepaid expenses and other
    
    
    (126,479
    )
    
    
    92,456
    
    
    
    62,742Inventory
    
    
    134,120
    
    
    
    (545,285
    )
    
    
    136,685Costs and estimated earnings in excess of billings on
uncompleted contracts
    
    
    687,847
    
    
    
    737,133
    
    
    
    (1,542,635
    )Refundable deposits
    
    
    1,306,459
    
    
    
    (1,014,002
    )
    
    
    (457,185
    )Other receivables
    
    
    
    
    
    
    115,000
    
    
    
    Accounts payable
    
    
    1,990,054
    
    
    
    (5,223,444
    )
    
    
    (1,190,013
    )Accrued liabilities
    
    
    (662,295
    )
    
    
    1,691,333
    
    
    
    971,041Income taxes payable
    
    
    1,371,250
    
    
    
    8,334
    
    
    
    391,202Billings in excess of costs and estimated earnings on
uncompleted contracts
    
    
    2,881,353
    
    
    
    2,463,667
    
    
    
    (1,316,675
    )Net cash provided by operating activities
    
    $
    16,746,813
    
    
    $
    10,323,569
    
    
    $
    5,217,432
  35




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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:
    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):
 Revenue and Cost Recognition
     Claims Receivable:
      37




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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):
 Claims Receivable (Continued):
  Cash and Cash Equivalents:
  Restricted Cash:
  Accounts Receivable, net:
    Inventory, net
   Property and Equipment:
  38




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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):
 Property and Equipment (Continued):
  Plants
    
    4  15 yearsComputer equipment
    
    3  5 yearsEquipment
    
    3  10 yearsVehicles
    
    3  10 yearsOffice furniture and equipment
    
    5  7 yearsLeasehold improvements
    
    2  10 yearsBuilding
    
    39 years
  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:
  39




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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:
   
    
    Expected term is generally determined using an average of the contractual term and
vesting period of the award;
    
    Expected volatility is measured using the average of historical daily changes in the
market price of the Companys common stock over the expected term of the award;
    
    Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury
bonds with a remaining maturity equal to the expected term of the awards; and,
    
    Forfeitures are based on the history of cancellations of awards granted by both
companies and managements analysis of potential forfeitures.
   Year Ended December 31,2005Net income, as reported
    
    $
    4,203,719Add: 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
    )Pro forma net income
    
    $
    4,046,573Basic net income per common shareAs reported
    
    $
    1.11Pro forma
    
    
    1.07Diluted net income per common shareAs reported
    
    $
    1.01Pro forma
    
    
    0.97
 40




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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:
     2. Stock-Based Compensation:
    41




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Stock-Based Compensation (Continued):
  Meadow Valley Corporation Equity Incentive Plan:
    Awards duringthe year ended
    
    Awards prior toDecember 31, 2007
    
    January 1, 2007Dividend yield
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    58.95
    %
    
    
    23.94%  82.23
    %Weightedaverage expected volatility
    
    
    58.95
    %
    
    
    50.04
    %Riskfree interest rate
    
    
    5.00
    %
    
    
    5.00
    %Expected life of options (in years)
    
    
    5
    
    
    
    3Weightedaverage grant-date fair value
    
    $
    7.67
    
    
    $
    1.34
 42




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##### Table of Contents



MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Stock-Based Compensation (Continued):
  Weighted AverageWeighted Average
    
    
    Remaining
    
    
    Aggregate
    
    
    AggregateExercise Price
    
    
    Contractural
    
    
    Fair
    
    
    IntrinsicShares
    
    
    per Share
    
    
    Term1
    
    
    Value
    
    
    Value2Outstanding January 1, 2007
    
    
    434,542
    
    
    $
    4.86
    
    
    
    3.98
    
    
    $
    818,371Granted
    
    
    15,000
    
    
    
    13.88
    
    
    
    
    
    
    
    115,050Exercised
    
    
    (49,531
    )
    
    
    3.73
    
    
    
    
    
    
    
    (80,837
    )
    
    $
    402,799Forfeited or expired
    
    
    (80,000
    )
    
    
    5.31
    
    
    
    
    
    
    
    (80,800
    )Outstanding December 31, 2007
    
    
    320,011
    
    
    $
    5.35
    
    
    
    3.87
    
    
    $
    771,784
    
    
    $
    2,379,777Exercisable December 31, 2007
    
    
    258,341
    
    
    $
    4.22
    
    
    
    3.88
    
    
    $
    473,301
    
    
    $
    2,214,552
 
 1
    
    Remaining contractual term is presented in years.2
    
    The aggregate intrinsic value is calculated as the difference between the
exercise price of the underlying awards and the closing price of the Companys common
stock as of December 31, 2007, for those awards that have an exercise price currently
below the closing price as of December 31, 2007. Awards with an exercise price above
the closing price as of December 31, 2007 are considered to have no intrinsic value.  Weighted AverageGrant-DateShares
    
    Fair ValueNonvested stock options at January 1, 2007
    
    
    95,000
    
    
    $
    4.85Granted
    
    
    15,000
    
    
    
    7.67Vested
    
    
    (48,330
    )
    
    
    5.74Forfeited
    
    
    
    
    
    
    Nonvested stock options at December 31, 2007
    
    
    61,670
    
    
    $
    4.84
   Ready Mix, Inc. Equity Incentive Plan:
  43




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Stock-Based Compensation (Continued):
   Awards duringthe year ended
    
    Awards prior toDecember 31, 2007
    
    January 1, 2007Dividend yield
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    36.70
    %
    
    
    21.4%  39.1
    %Weighted-average volatility
    
    
    36.70
    %
    
    
    26.60
    %Risk-free interest rate
    
    
    5.00
    %
    
    
    5.00
    %Expected life of options (in years)
    
    
    5
    
    
    
    3Weighted-average grant-date fair value
    
    $
    5.21
    
    
    $
    2.40
  Weighted AverageWeighted Average
    
    
    Remaining
    
    
    Aggregate
    
    
    AggregateExercise Price
    
    
    Contractural
    
    
    Fair
    
    
    IntrinsicShares
    
    
    per Share
    
    
    Term1
    
    
    Value
    
    
    Value2Outstanding January 1, 2007
    
    
    350,625
    
    
    $
    10.90
    
    
    
    3.65
    
    
    $
    839,741Granted
    
    
    20,000
    
    
    
    12.85
    
    
    
    
    
    
    
    104,200Exercised3
    
    
    (2,000
    )
    
    
    11.00
    
    
    
    
    
    
    
    (3,900
    )Forfeited or expired
    
    
    (2,500
    )
    
    
    11.00
    
    
    
    
    
    
    
    (4,875
    )Outstanding December 31, 2007
    
    
    366,125
    
    
    $
    11.01
    
    
    
    2.75
    
    
    $
    935,166
    
    
    $
    Exercisable December 31, 2007
    
    
    218,750
    
    
    $
    11.16
    
    
    
    2.63
    
    
    $
    380,865
    
    
    $
    
 
 1
    
    Remaining contractual term is presented in years.2
    
    The aggregate intrinsic value is calculated as the difference between the
exercise price of the underlying awards and the closing price of RMIs common stock as
of December 31, 2007, for those awards that have an exercise price currently below
RMIs closing price as of December 31, 2007. Awards with an exercise price above RMIs
closing price as of December 31, 2007 are considered to have no intrinsic value.3
    
    RMIs aggregate intrinsic value for exercised options was $4,400 for the year
ended December 31, 2007.  Weighted AverageGrant-DateShares
    
    Fair ValueNonvested stock options at January 1, 2007
    
    
    267,084
    
    
    $
    2.51Granted
    
    
    20,000
    
    
    
    5.21Vested
    
    
    (135,209
    )
    
    
    2.82Forfeited
    
    
    (2,500
    )
    
    
    1.95Nonvested stock options at December 31, 2007
    
    
    149,375
    
    
    $
    2.61
 44




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 2. Stock-Based Compensation (Continued):
  3. Note Receivable:
  4. Concentration of Credit Risk:
   5. Accounts Receivable, net:
  December 31,2007
    
    
    2006Contracts in progress
    
    $
    14,156,776
    
    
    $
    11,781,074Contracts in progress  retention
    
    
    5,297,883
    
    
    
    3,928,480Completed contracts
    
    
    
    
    
    
    9,481Completed contracts  retention
    
    
    888,649
    
    
    
    964,255Other trade receivables
    
    
    8,593,891
    
    
    
    9,468,930Other receivables
    
    
    223,506
    
    
    
    233,78629,160,705
    
    
    
    26,386,006Less: Allowance for doubtful accounts
    
    
    (594,722
    )
    
    
    (395,243
    )$
    28,565,983
    
    
    $
    25,990,763
 45




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 6. Contracts in Progress:
  December 31,2007
    
    
    2006Costs incurred on uncompleted contracts
    
    $
    182,467,584
    
    
    $
    200,904,026Estimated earnings to date
    
    
    14,965,044
    
    
    
    17,742,674197,432,628
    
    
    
    218,646,700Less: billings to date
    
    
    (208,113,722
    )
    
    
    (225,758,594
    )$
    (10,681,094
    )
    
    $
    (7,111,894
    )
  December 31,2007
    
    
    2006Costs and estimated earnings in excess of billings
on uncompleted contracts
    
    $
    567,013
    
    
    $
    1,254,860Billings in excess of costs and estimated earnings
on uncompleted contracts
    
    
    (11,248,107
    )
    
    
    (8,366,754
    )$
    (10,681,094
    )
    
    $
    (7,111,894
    )
 7. Property and Equipment, net:
  December 31,2007
    
    
    2006Land and building
    
    $
    4,878,126
    
    
    $
    4,821,556Plants
    
    
    17,177,402
    
    
    
    13,683,086Computer equipment
    
    
    1,062,719
    
    
    
    964,178Equipment
    
    
    22,180,190
    
    
    
    21,214,671Vehicles
    
    
    14,147,149
    
    
    
    12,572,265Office furniture and equipment
    
    
    147,467
    
    
    
    123,831Mineral rights and pit development
    
    
    
    
    
    
    97,488Leasehold improvements
    
    
    526,386
    
    
    
    497,654Water rights
    
    
    2,250,000
    
    
    
    2,250,00062,369,439
    
    
    
    56,224,729Less: Accumulated depreciation and amortization
    
    
    (26,196,066
    )
    
    
    (20,671,729
    )$
    36,173,373
    
    
    $
    35,553,000
 8. Accounts Payable:
  December 31,2007
    
    
    2006Trade
    
    $
    13,216,787
    
    
    $
    11,917,720Retentions
    
    
    2,071,381
    
    
    
    1,380,394$
    15,288,168
    
    
    $
    13,298,114
 46




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 9. Accrued Liabilities:
  December 31,2007
    
    
    2006Compensation
    
    $
    4,534,707
    
    
    $
    4,894,724Taxes
    
    
    471,929
    
    
    
    516,683Insurance
    
    
    868,805
    
    
    
    1,572,996Other
    
    
    1,032,192
    
    
    
    585,525$
    6,907,633
    
    
    $
    7,569,928
 10. Notes Payable:
  December 31,2007
    
    
    2006Notes payable, interest rates ranging from 5.22% to 8.18% with
combined monthly payments of $29,052 and balloon payments of
$1,119,909 with due dates ranging from May 25, 2008 to November 14,
2009, collateralized by real property and equipment
    
    $
    1,388,055
    
    
    $
    1,634,855Note payable, variable interest rate with monthly principal payments
of $21,429 plus interest, due July 29, 2012,
collateralized by mining water rights
    
    
    
    
    
    
    1,435,714Note payable, 7.46% interest rate with a monthly payment of $13,867,
due May 26, 2021, collateralized by real property
    
    
    1,406,689
    
    
    
    1,465,927Line of credit for $10,000,000, variable interest at prime plus .25%
(7.5% at December 31, 2007), interest only payments until January
31,
2009, then principal plus interest payments, due January 31, 2012,
collateralized by all assets of the Company (See Note 11)
    
    
    340,669
    
    
    
    1,240,669Line of credit for $5,000,000, variable interest at prime plus .25%
(7.5% at December 31, 2007), 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)
    
    
    664,012
    
    
    
    650,180Notes payable, interest rates ranging from 1.902% to 9.5% with
combined monthly payments of $54,155 with due dates ranging from
September 28, 2008 to November 20, 2012, collateralized by vehicles
    
    
    1,449,026
    
    
    
    1,569,770Notes payable, non-interest bearing, with combined monthly payments
of
$5,858 with due dates ranging from August 15, 2008 to February 29,
2012, collateralized by vehicles
    
    
    73,338
    
    
    
    125,967Note payable, 7.79% interest rate with monthly payments of $45,141,
due September 1, 2007, collateralized by the Companys general
liability insurance policy
    
    
    
    
    
    
    350,806$
    5,321,789
    
    
    $
    8,473,888
 47




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 10. Notes Payable (Continued):
  December 31,2007
    
    
    2006Totals from Previous Page
    
    $
    5,321,789
    
    
    $
    8,473,888Notes payable, interest rates of 3.848% with interest only monthly
payments until April 1, 2006 then combined monthly payments of
$4,780 due December 1, 2009, collateralized by equipment
    
    
    105,814
    
    
    
    158,004Notes payable, interest rates ranging from 2.83% to 6.87% with
combined monthly payments of $86,912 with due dates ranging from
November 10, 2008 to January 9, 2013, collateralized by equipment
    
    
    2,385,280
    
    
    
    3,518,055Notes payable, interest rates ranging from 6.5% to 8.65% with
combined monthly payments of $211,811 plus interest, due dates
ranging from July 5, 2008 to February 28, 2013, collateralized
by equipment
    
    
    8,672,632
    
    
    
    6,582,06316,485,515
    
    
    
    18,732,010Less Current Portion
    
    
    (4,216,498
    )
    
    
    (4,837,628
    )$
    12,269,017
    
    
    $
    13,894,382
  2008
    
    $
    4,216,4982009
    
    
    5,217,1662010
    
    
    2,944,5592011
    
    
    2,128,5582012
    
    
    872,729Subsequent to 2011
    
    
    1,106,005$
    16,485,515
 11. Lines of Credit:
  48




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 11. Lines of Credit (Continued):
   12. Related Party Transactions:
 Revenue and Accounts Receivable:
  Professional Services:
  Subcontractor/Supplier:
  13. Income Taxes:
  For the Years Ended December 31,2007
    
    
    2006
    
    
    2005Current
    
    $
    (2,947,301
    )
    
    $
    (3,167,174
    )
    
    $
    (372,102
    )Deferred
    
    
    382,925
    
    
    
    3,389
    
    
    
    (2,198,853
    )$
    (2,564,376
    )
    
    $
    (3,163,785
    )
    
    $
    (2,570,955
    )
 49




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 13. Income Taxes (Continued):
  December 31,2007
    
    
    2006Deferred tax asset:Nonqualified stock-based
compensation
    
    $
    144,159
    
    
    $
    25,991Allowance for bad debt and other
    
    
    363,967
    
    
    
    462,216Inventory allowance
    
    
    71,977
    
    
    
    72,000NOL carryforward
    
    
    
    
    
    
    992580,103
    
    
    
    561,199Deferred tax liability:Depreciation
    
    
    (2,610,836
    )
    
    
    (2,974,857
    )Net deferred tax liability
    
    $
    (2,030,733
    )
    
    $
    (2,413,658
    )
  For the Years Ended December 31,2007
    
    
    2006
    
    
    2005Statutory rate of 34% applied to
income before income taxes
    
    $
    2,516,000
    
    
    $
    3,024,000
    
    
    $
    2,401,000State taxes, net of federal benefit
    
    
    196,000
    
    
    
    202,000
    
    
    
    140,000Increase (decrease) in income taxes
resulting from:Non-Deductible items
    
    
    36,000
    
    
    
    40,000
    
    
    
    30,000Domestic production activities
deduction
    
    
    (184,000
    )
    
    
    (102,000
    )
    
    
    $
    2,564,000
    
    
    $
    3,164,000
    
    
    $
    2,571,000
  14. Commitments and Contingencies:
  50




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 14. Commitments and Contingencies (Continued):
  For the Years Ending December 31,
    
    Amount2008
    
    $
    3,135,1712009
    
    
    2,486,7392010
    
    
    1,532,7542011
    
    
    717,6422012
    
    
    73,213$
    7,945,519
  For the Years Ending December 31,
    
    Amount2008
    
    $
    3,857,2932009
    
    
    3,549,6442010
    
    
    2,802,9352011
    
    
    2,385,0002012
    
    
    2,385,000Subsequent to 2012
    
    
    9,106,250$
    24,086,122
  For the Years Ending December 31,
    
    Amount2008
    
    $
    979,2082009
    
    
    557,5002010
    
    
    360,417$
    1,897,125
  51




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 14. Commitments and Contingencies (Continued):
  For the Year Ending December 31,
    
    Amount2008
    
    $
    104,193Total minimum payments
    
    
    104,193Less: amount representing interest
    
    
    (2,093
    )Present value of net minimum lease
payment
    
    
    102,100Less: current portion
    
    
    (102,100
    )$
    
    15. Minority Interest in Consolidated Subsidiary:
   52




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 16. Stockholders Equity:
 Preferred Stock:
  Common Stock and Warrants to Purchase Common Stock:
  17. Litigation and Claim Matters:
   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. The trial date
has been postponed to May 4, 2009.(2)
    
    Federal Highway Administration  The approximate total value of claims on this
project is $7,081,529, of which $6,751,940 is on behalf of MVCI and the balance of
$329,589 is on behalf of a subcontractor. The primary issues are unforeseen
conditions, 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. On September 18,
2006, MVCI submitted a formal claim with the Federal Highway Administration. On
September 28, 2007, the Federal Highway Administration denied all of MVCIs claims. On
November 6, 2007, MVCI filed an appeal with the United States Civilian Board of
Contract Appeals and no trial date has been set as of the date of this report. MVCI
and the Federal Highway Administration have since engaged in settlement discussions of
all claims.
 53




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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 Contractors, Inc. and Ready Mix, Inc.
 (1)
    
    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. In January of 2008,
the court entered judgment against MVCI in the amount of approximately $185,000,
representing the original claim amount plus interest. MVCI continues to believe that
the payment is not a preference, and is vigorously appealing the judgment, and in
contemplation of the minimal after tax effect of the judgment, MVCI has not recorded
any liability in regards to this claim at December 31, 2007.(2)
    
    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 and he has appealed the dismissal. During 2007,
MVCIs insurance company settled with the remaining plaintiffs with no additional
responsibility for MVCI. MVCI denies responsibility for the accident and is vigorously
defending the action. MVCI is unable to ascertain if any loss is probable or even
estimatable and accordingly, has not accrued a liability related to this complaint as
of December 31, 2007.
 54




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 17. Litigation and Claim Matters (Continued):
 (3)
    
    On November 8, 2007 Kitchell Contractors, Inc. of Arizona filed a complaint
(CV2007-020708), in the Superior Court of the State of Arizona, against RMI for
re-imbursement of costs they incurred to remove and replace concrete totaling
approximately $200,000. The claim alleges that the materials supplied to a
construction project did not meet the minimum standards as defined in the contract
between the parties. RMI is disputing their claims and are vigorously defending
against the complaint.
 18. Statement of Cash Flows:
 Non-Cash Investing and Financing Activities:
      19. Significant Customers:
  For the Years Ended December 31,2007
    
    2006
    
    2005A
    
    
    24.7
    %
    
    
    20.9
    %
    
    
    21.0
    %B
    
    
    21.0
    %
    
    
    9.1
    %
    
    
    23.5
    %C
    
    
    2.9
    %
    
    
    5.1
    %
    
    
    11.6
    %
  December 31,2007
    
    2006A
    
    $
    2,500,347
    
    
    $
    1,874,446B
    
    
    8,172,638
    
    
    
    4,789,025C
    
    
    1,964,328
    
    
    
    2,153,500
 20. Employee Benefit Plan:
  55




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 21. Earnings per Share:
   For the Years Ended December 31,2007
    
    2006
    
    2005Weighted average common shares
outstanding
    
    
    5,129,275
    
    
    
    4,328,160
    
    
    
    3,783,089Dilutive effect of:Stock options
    
    
    177,019
    
    
    
    292,964
    
    
    
    368,007Weighted average common shares
outstanding assuming dilution
    
    
    5,306,294
    
    
    
    4,621,124
    
    
    
    4,151,096
     22. Backlog:
  23. Other Informative Disclosures:
  56




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 23. Other Informative Disclosures (Continued):
    Construction
    
    Construction
    
    ConstructionServices
    
    Materials
    
    Materials TestingFor the twelve months ended December 31, 2007Gross revenue
    
    $
    129,262,421
    
    
    $
    77,364,672
    
    
    $
    1,383,085Intercompany revenue
    
    
    
    
    
    
    (1,744,544
    )
    
    
    (346,630
    )Cost of revenue
    
    
    117,924,528
    
    
    
    71,210,190
    
    
    
    1,460,210Interest income
    
    
    1,172,274
    
    
    
    385,353
    
    
    
    Interest expense
    
    
    101,333
    
    
    
    137,533
    
    
    
    Depreciation and amortization
    
    
    2,686,412
    
    
    
    4,376,723
    
    
    
    19,271Income (loss) before taxes
    
    
    5,773,251
    
    
    
    2,111,309
    
    
    
    (595,699
    )Income tax benefit (expense)
    
    
    (2,011,750
    )
    
    
    (756,107
    )
    
    
    203,481Net income (loss)*
    
    
    3,761,501
    
    
    
    691,523
    
    
    
    (392,218
    )Total assets
    
    
    54,836,237
    
    
    
    46,279,080
    
    
    
    636,959For the twelve months ended December 31, 2006Gross revenue
    
    $
    112,948,370
    
    
    $
    83,588,803
    
    
    $
    546,548Intercompany revenue
    
    
    (1,012,085
    )
    
    
    (436,865
    )
    
    
    (112,820
    )Cost of revenue
    
    
    102,878,625
    
    
    
    74,382,436
    
    
    
    512,572Interest income
    
    
    615,365
    
    
    
    394,779
    
    
    
    Interest expense
    
    
    (175,657
    )
    
    
    (163,229
    )
    
    
    Depreciation and amortization
    
    
    2,438,374
    
    
    
    3,439,208
    
    
    
    7,899Income (loss) before taxes
    
    
    3,863,765
    
    
    
    5,211,606
    
    
    
    (182,216
    )Income tax benefit (expense)
    
    
    (1,357,211
    )
    
    
    (1,872,331
    )
    
    
    65,757Net income (loss)*
    
    
    2,506,554
    
    
    
    1,775,827
    
    
    
    (116,459
    )Total assets
    
    
    54,463,850
    
    
    
    47,022,753
    
    
    
    619,052For the twelve months ended December 31, 2005Gross revenue
    
    $
    116,822,072
    
    
    $
    67,734,424
    
    
    $
    Intercompany revenue
    
    
    
    
    
    
    (683,633
    )
    
    
    Cost of revenue
    
    
    108,706,174
    
    
    
    60,662,743
    
    
    
    Interest income
    
    
    466,901
    
    
    
    173,574
    
    
    
    Interest expense
    
    
    (212,546
    )
    
    
    (227,341
    )
    
    
    Intercompany interest income (expense)
    
    
    77,561
    
    
    
    (77,561
    )
    
    
    Depreciation and amortization
    
    
    2,088,144
    
    
    
    2,410,900
    
    
    
    Income before taxes
    
    
    3,142,565
    
    
    
    3,920,632
    
    
    
    Income tax expense
    
    
    (1,135,913
    )
    
    
    (1,435,042
    )
    
    
    Net income *
    
    
    2,006,652
    
    
    
    2,197,067
    
    
    
    Total assets
    
    
    47,109,736
    
    
    
    39,906,794
    
    
    
    
 
 *
    
    Net income for the construction materials segment includes the minority interest deduction
of $663,679, $1,563,449 and $288,523 for the years ended December 31, 2007, 2006 and 2005,
respectively. In addition, in 2005 net income has been re-allocated for comparative purposes. 57




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MEADOW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 23. Other Informative Disclosures (Continued):
  24. Quarterly Financial Data, Unaudited:
 March 31,
    
    June 30,
    
    September 30,
    
    December 31,2007Revenue
    
    $
    42,648,675
    
    
    $
    58,651,001
    
    
    $
    54,891,341
    
    
    $
    49,727,987Gross profit
    
    
    3,952,970
    
    
    
    4,798,300
    
    
    
    4,377,543
    
    
    
    4,286,437Income from operations
    
    
    935,994
    
    
    
    1,592,777
    
    
    
    1,317,322
    
    
    
    1,755,855Net income
    
    
    529,894
    
    
    
    856,472
    
    
    
    1,106,972
    
    
    
    1,567,468Basic net income per common share
    
    
    0.10
    
    
    
    0.17
    
    
    
    0.22
    
    
    
    0.31Diluted net income per common share
    
    
    0.10
    
    
    
    0.16
    
    
    
    0.21
    
    
    
    0.30Basic weighted average common shares
outstanding
    
    
    5,120,296
    
    
    
    5,128,793
    
    
    
    5,130,980
    
    
    
    5,137,030Diluted weighted average common shares
outstanding
    
    
    5,295,852
    
    
    
    5,314,305
    
    
    
    5,310,448
    
    
    
    5,304,5712006Revenue
    
    $
    45,749,668
    
    
    $
    48,316,869
    
    
    $
    51,704,022
    
    
    $
    49,751,392Gross profit
    
    
    4,747,913
    
    
    
    4,766,927
    
    
    
    4,043,279
    
    
    
    5,751,969Income from operations
    
    
    1,988,971
    
    
    
    2,053,758
    
    
    
    1,692,828
    
    
    
    2,412,712Net income
    
    
    863,958
    
    
    
    873,727
    
    
    
    885,266
    
    
    
    1,542,971Basic net income per common share
    
    
    0.21
    
    
    
    0.21
    
    
    
    0.21
    
    
    
    0.32Diluted net income per common share
    
    
    0.19
    
    
    
    0.19
    
    
    
    0.20
    
    
    
    0.31Basic weighted average common shares
outstanding
    
    
    4,154,444
    
    
    
    4,161,732
    
    
    
    4,165,760
    
    
    
    4,830,704Diluted weighted average common shares
outstanding
    
    
    4,476,559
    
    
    
    4,481,183
    
    
    
    4,470,241
    
    
    
    5,056,5132005Revenue
    
    $
    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
    
    
    
    4,405,220
 25. Subsequent Events:
  58




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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
  
 Item 9A(T). Controls and Procedures
        
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  59




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##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a) (1)
    
    Financial Statements
See Item 8 of Part II hereof.(2)
    
    Financial Statement Schedules
See Schedule below and Item 8 of Part II hereof.
 Schedule of Valuation and Qualifying Accounts:
 Balance at
    
    Charged to
    
    
    
    
    
    Balance atIn Thousands
    
    Beginning
    
    Expense
    
    
    
    
    
    EndingDescription
    
    of Year
    
    Account
    
    Deductions
    
    of YearYear ended December 31, 2005
Allowance for doubtful accounts
    
    $
    608
    
    
    $
    (207
    )
    
    $
    (75
    )
    
    $
    326Allowance for potentially
obsolete or slow moving
inventory
    
    $
    287
    
    
    $
    
    
    
    $
    (43
    )
    
    $
    244Year ended December 31, 2006
Allowance for doubtful accounts
    
    $
    326
    
    
    $
    126
    
    
    $
    (57
    )
    
    $
    395Allowance for potentially
obsolete or slow moving
inventory
    
    $
    244
    
    
    $
    (44
    )
    
    $
    
    
    
    $
    200Year ended December 31, 2007
Allowance for doubtful accounts
    
    $
    395
    
    
    $
    338
    
    
    $
    (138
    )
    
    $
    595Allowance for potentially
obsolete or slow moving
inventory
    
    $
    200
    
    
    $
    
    
    
    $
    (1
    )
    
    $
    199
 60




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##### Table of Contents



(3)
    
    Exhibits
 ExhibitNo.
    
    Title3.01
    
    Articles of Incorporation and amendments thereto of the Registrant (1)3.02
    
    Certificate of Designation of Series A Participating Preferred Stock Effective February 13, 2007 (17)3.03
    
    Amended and Restated Bylaws effective November 8, 2007 (2)4.1
    
    Rights Plan effective February 13, 2007 (18)10.1
    
    Form of Indemnification Agreement entered into by the Registrant with its directors and executive
officers (21)10.2
    
    Employment Agreement with Bradley E. Larson (22)10.3
    
    Employment Agreement with Kenneth D. Nelson (22)10.5
    
    Property Lease and Aggregate Supply Agreement with Sun State Rock & Materials Corp. (7)10.6
    
    Property Lease and Aggregate Supply Agreement with Clay R. Oliver d.b.a. Oliver Mining Company (7)10.7
    
    Office Lease Agreement (20)10.8
    
    Amendment to Office Lease Agreement of the Registrant (9)10.9
    
    Amendment to Office Lease Agreement of the Registrant (9)10.10
    
    General Agreement of Indemnity between the Registrant and Liberty Mutual Insurance Company (3)10.11
    
    Settlement Agreement and Release between the Registrant and New Mexico Department of Transportation
(11)10.12
    
    Promissory Note with Nevada State Bank (12)10.13
    
    Promissory Note with Nevada State Bank (12)10.14
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (7)10.15
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (7)10.16
    
    Master Security Agreement with The CIT Group/Equipment Financing, Inc. (7)10.17
    
    Master Security Agreement with The CIT Group/Equipment Financing, Inc. (7)10.18
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (7)10.19
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (13)10.20
    
    Master Lease Agreement with The CIT Group/Equipment Financing, Inc. (12)10.21
    
    Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (7)10.22
    
    Amended and Restated Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (8)10.23
    
    Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (8)10.24
    
    Amendment No. 1 to Restated and Amended Revolving Loan Agreement with The CIT Group/Equipment
Financing, Inc. (20)10.25
    
    Amendment No. 2 to Restated and Amended Revolving Loan Agreement with The CIT Group/Equipment
Financing, Inc. (20)10.26
    
    Renewal and Amendment of Amended and Restated Revolving Loan Agreement with The CIT Group/Equipment
Financing, Inc. (5)
 61




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##### Table of Contents



ExhibitNo.
    
    Title10.27
    
    Renewal and Amendment of Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (5)10.28
    
    Amendment of Amended and Restated Revolving Loan Agreement with The CIT Group/Equipment Financing,
Inc. (13)10.29
    
    Amendment of Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. (13)10.30
    
    Line of Credit Agreement with GMAC Financial Services (10)10.31
    
    Line of Credit Agreement with Ford Motor Credit Company (10)10.32
    
    Commitment letter from DaimlerChrysler Services (14)10.33
    
    Master Lease Agreement with Wells Fargo Equipment Finance, Inc. (14)10.34
    
    Employment Agreement with David D. Doty (19)10.35
    
    Office Lease Agreement (22)10.36
    
    Amendment to Office Lease Agreement of the Registrant (22)10.37
    
    Amended and Restated Revolving Loan Agreement with Wells Fargo Equipment Finance, Inc. (23)10.38
    
    General Agreement of Indemnity between the Registrant and Safeco Insurance Companies *14.1
    
    Code of Ethics for Senior Management (11)21
    
    Subsidiaries of the Registrant (1)23
    
    Consent of Independent Auditors *24
    
    Power of Attorney (included on the signature pages hereto) *31.1
    
    Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of The Securities
Exchange Act of 1934 *31.2
    
    Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of The Securities
Exchange Act of 1934 *32
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
 
 (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)
    
    Previously filed as Exhibit 3.1 to the Companys Form 8-K Current Report dated November 8, 2007(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 62




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##### Table of Contents



ExhibitNo.
    
    Title(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(15)
    
    Previously filed as an Exhibit with the same Exhibit number to the Companys Form 8-K Current Report
dated September 13, 2004(16)
    
    Previously filed as Exhibit 3.2 to the Companys Form 8-K Current Report dated February 9, 2007(17)
    
    Previously filed as Exhibit 3.1 to the Companys Form 8-K Current Report dated February 14, 2007(18)
    
    Previously filed as an Exhibit with the same Exhibit number to the Companys Form 8-K Current Report
dated February 14, 2007(19)
    
    Previously filed without exhibit to the Companys Form 8-K Current Report dated November 7, 2006(20)
    
    Incorporated by reference to the Companys December 31, 2001 Annual Report on Form 10-K(21)
    
    Previously filed as an Exhibit with the same Exhibit number to the Companys Form 8-K Current Report
dated March 6, 2007(22)
    
    Incorporated by reference to the Companys December 31, 2006 Annual Report on Form 10-K(23)
    
    Previously filed as an Exhibit with the same Exhibit number to the Companys Form 8-K Current Report
dated October 9, 2007
 
 *
    
    Filed herewith. 63




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##### Table of Contents



SIGNATURES
  MEADOW VALLEY CORPORATION/s/ Bradley E. LarsonBradley E. LarsonDirector, President and Chief Executive Officer
(Principal Executive Officer)  /s/ David D. DotyDavid D. DotySecretary, Treasurer and Chief Financial Officer
(Principal Financial and Accounting Officer)  POWER OF ATTORNEY
   /s/ Charles R. Norton
    
    
    
    /s/ Don A. PattersonCharles R. Norton
    
    
    
    Don A. PattersonDirector
    
    
    
    DirectorDate: March 31, 2008
    
    
    
    Date: March 31, 2008/s/ Kenneth D. Nelson
    
    
    
    /s/ Charles E. CowanKenneth D. Nelson
    
    
    
    Charles E. CowanDirector
    
    
    
    DirectorDate: March 31, 2008
    
    
    
    Date: March 31, 2008
 64