##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTER ENDED September 26, 2008
 COMMISSION FILE NUMBER 1-11781
 DAYTON SUPERIOR CORPORATION
  DELAWARE
    
    31-0676346(State or other jurisdiction of 
Incorporation or organization)
    
    (I.R.S. Employer
Identification No.)7777 Washington Village Dr., Suite 130Dayton, Ohio
    
    45459(Address of principal 
executive offices)
    
    (Zip Code)
 937-428-6360
 (Former name, former address and former fiscal year,
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




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TABLE OF CONTENTS  Part I.  Financial InformationItem 1  Financial StatementsCondensed Consolidated Balance SheetsCondensed Consolidated Statements of OperationsCondensed Consolidated Statements of Cash FlowsCondensed Consolidated Statements of Comprehensive Income (Loss)Notes to Condensed Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II.  Other InformationItem 1A. Risk FactorsItem 6. ExhibitsSIGNATURESINDEX OF EXHIBITSExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2    Table of Contents  
 
 Part I.  Financial Information
 
 
 Item 1  Financial Statements
  
 
     September 26,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    833
    
    
    $
    3,381Accounts receivable, net of allowances for doubtful accounts and
sales returns and allowances of $4,407 and $4,447
    
    
    86,469
    
    
    
    68,593Inventories
    
    
    95,253
    
    
    
    66,740Prepaid expenses and other current assets
    
    
    6,323
    
    
    
    5,718Prepaid income taxes
    
    
    82
    
    
    
    740Total current assets
    
    
    188,960
    
    
    
    145,172Rental equipment, net of accumulated depreciation of $72,310 and $67,276
    
    
    63,432
    
    
    
    67,640Property, plant and equipment, net of accumulated depreciation of
$57,829 and $58,542
    
    
    54,267
    
    
    
    56,812Goodwill
    
    
    43,643
    
    
    
    43,643Other assets
    
    
    4,837
    
    
    
    3,986Total assets
    
    $
    355,139
    
    
    $
    317,253LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Revolving credit facility
    
    $
    116,346
    
    
    $
    Current maturities of long-term debt
    
    
    258,469
    
    
    
    8,990Accounts payable
    
    
    28,267
    
    
    
    39,204Accrued compensation and benefits
    
    
    13,359
    
    
    
    15,456Accrued interest
    
    
    9,128
    
    
    
    6,193Accrued freight
    
    
    4,416
    
    
    
    4,065Other accrued liabilities
    
    
    9,085
    
    
    
    9,219Total current liabilities
    
    
    439,070
    
    
    
    83,127Other long-term debt, net of current portion
    
    
    69
    
    
    
    315,607Other long-term liabilities
    
    
    7,572
    
    
    
    8,162Total liabilities
    
    
    446,711
    
    
    
    406,896Stockholders deficit:Common stock, $0.01 par value, 100,000,000 shares authorized,
19,066,212 shares issued and outstanding, 502,984 shares unvested
    
    
    191
    
    
    
    191Additional paid-in capital
    
    
    208,243
    
    
    
    207,181Loans to stockholders
    
    
    (1,109
    )
    
    
    (1,085
    )Accumulated other comprehensive loss
    
    
    (749
    )
    
    
    (618
    )Accumulated deficit
    
    
    (298,148
    )
    
    
    (295,312
    )Total stockholders deficit
    
    
    (91,572
    )
    
    
    (89,643
    )Total liabilities and stockholders deficit
    
    $
    355,139
    
    
    $
    317,253
 
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Three Fiscal Months Ended
    
    
    Nine Fiscal Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Product sales
    
    $
    117,086
    
    
    $
    112,327
    
    
    $
    315,656
    
    
    $
    309,677Rental revenue
    
    
    15,274
    
    
    
    14,707
    
    
    
    42,469
    
    
    
    44,211Used rental equipment sales
    
    
    3,415
    
    
    
    3,789
    
    
    
    14,066
    
    
    
    13,473Net sales
    
    
    135,775
    
    
    
    130,823
    
    
    
    372,191
    
    
    
    367,361Product cost of sales
    
    
    79,056
    
    
    
    82,394
    
    
    
    218,229
    
    
    
    226,160Rental cost of sales
    
    
    7,977
    
    
    
    8,784
    
    
    
    24,740
    
    
    
    25,129Used rental equipment cost of sales
    
    
    974
    
    
    
    581
    
    
    
    2,038
    
    
    
    3,214Cost of sales
    
    
    88,007
    
    
    
    91,759
    
    
    
    245,007
    
    
    
    254,503Product gross profit
    
    
    38,030
    
    
    
    29,933
    
    
    
    97,427
    
    
    
    83,517Rental gross profit
    
    
    7,297
    
    
    
    5,923
    
    
    
    17,729
    
    
    
    19,082Used rental equipment gross profit
    
    
    2,441
    
    
    
    3,208
    
    
    
    12,028
    
    
    
    10,259Gross profit
    
    
    47,768
    
    
    
    39,064
    
    
    
    127,184
    
    
    
    112,858Selling, general and administrative
expenses
    
    
    28,327
    
    
    
    26,677
    
    
    
    84,781
    
    
    
    79,837Facility closing and severance expenses
    
    
    158
    
    
    
    140
    
    
    
    1,332
    
    
    
    591(Gain) loss on disposals of property,
plant, and equipment
    
    
    107
    
    
    
    217
    
    
    
    (306
    )
    
    
    478Income from operations
    
    
    19,176
    
    
    
    12,030
    
    
    
    41,377
    
    
    
    31,952Other expenses:Interest expense
    
    
    12,308
    
    
    
    11,682
    
    
    
    37,348
    
    
    
    34,996Interest income
    
    
    (15
    )
    
    
    (47
    )
    
    
    (186
    )
    
    
    (227
    )Loss on extinguishment of long-term
debt
    
    
    
    
    
    
    
    
    
    
    6,224
    
    
    
    Other expense (income)
    
    
    102
    
    
    
    (214
    )
    
    
    156
    
    
    
    119Income (loss) before provision for
income taxes
    
    
    6,781
    
    
    
    609
    
    
    
    (2,165
    )
    
    
    (2,936
    )Provision for income taxes
    
    
    415
    
    
    
    223
    
    
    
    671
    
    
    
    454Net income (loss)
    
    $
    6,366
    
    
    $
    386
    
    
    $
    (2,836
    )
    
    $
    (3,390
    )Basic net income (loss) per common
share
    
    $
    0.34
    
    
    $
    0.02
    
    
    $
    (0.15
    )
    
    $
    (0.19
    )Average number of shares of common
stock outstanding
    
    
    18,563,228
    
    
    
    18,311,736
    
    
    
    18,563,228
    
    
    
    18,273,146Diluted net income (loss) per common
share
    
    $
    0.33
    
    
    $
    0.02
    
    
    $
    (0.15
    )
    
    $
    (0.19
    )Average number of shares of common
stock and equivalents outstanding
    
    
    19,297,587
    
    
    
    19,302,123
    
    
    
    18,563,228
    
    
    
    18,273,146
 
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Nine Fiscal Months EndedSeptember 28,2007 (AsSeptember 26,
    
    
    restated, see2008
    
    
    Note 8)Cash Flows From Operating Activities:Net loss
    
    $
    (2,836
    )
    
    $
    (3,390
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    18,254
    
    
    
    18,482Amortization of intangibles
    
    
    99
    
    
    
    133Loss on extinguishment of long-term debt
    
    
    6,224
    
    
    
    Stock compensation expense
    
    
    1,063
    
    
    
    2,062Deferred income taxes
    
    
    (56
    )
    
    
    (36
    )Amortization of deferred financing costs and debt discount
    
    
    8,961
    
    
    
    5,229Amortization of deferred gain on sale-leaseback transactions
    
    
    (683
    )
    
    
    (1,217
    )Gain on sales of rental equipment
    
    
    (12,028
    )
    
    
    (10,259
    )(Gain) loss on sales of property, plant and equipment
    
    
    (130
    )
    
    
    837Changes in assets and liabilities:Accounts receivable
    
    
    (20,541
    )
    
    
    (11,243
    )Inventories
    
    
    (28,588
    )
    
    
    (14,013
    )Prepaid expenses and other assets
    
    
    (1,215
    )
    
    
    (577
    )Prepaid income taxes
    
    
    658
    
    
    
    (156
    )Accounts payable
    
    
    (8,815
    )
    
    
    (8,025
    )Accrued liabilities and other long-term liabilities
    
    
    1,317
    
    
    
    (4,859
    )Net cash used in operating activities
    
    
    (38,316
    )
    
    
    (27,032
    )Cash Flows From Investing Activities:Property, plant and equipment additions
    
    
    (8,461
    )
    
    
    (13,944
    )Proceeds from sales of property, plant and equipment
    
    
    1,425
    
    
    
    37Rental equipment additions
    
    
    (9,227
    )
    
    
    (19,483
    )Proceeds from sales of used rental equipment
    
    
    17,621
    
    
    
    15,380Net cash provided by (used in) investing activities
    
    
    1,358
    
    
    
    (18,010
    )Cash Flows From Financing Activities:Borrowings under revolving credit facility
    
    
    211,187
    
    
    
    83,324Repayments of revolving credit facility
    
    
    (94,841
    )
    
    
    (65,424
    )Repayments of long-term debt
    
    
    (166,854
    )
    
    
    (1,118
    )Issuance of long-term debt
    
    
    94,250
    
    
    
    Financing costs paid
    
    
    (4,643
    )
    
    
    (659
    )Prepayment premium on redemption of long-term debt
    
    
    (4,641
    )
    
    
    Changes in loans to stockholders
    
    
    (24
    )
    
    
    1,191Issuance of shares of common stock
    
    
    
    
    
    
    808Net cash provided by financing activities
    
    
    34,434
    
    
    
    18,122Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    (24
    )
    
    
    169Net decrease in cash and cash equivalents
    
    
    (2,548
    )
    
    
    (26,751
    )Cash and cash equivalents, beginning of period
    
    
    3,381
    
    
    
    26,813Cash, end of period
    
    $
    833
    
    
    $
    62Supplemental Disclosures:Cash paid (refunded) for income taxes
    
    $
    (221
    )
    
    $
    413Cash paid for interest
    
    
    25,452
    
    
    
    29,243Financing cost additions in accounts payable
    
    
    796
    
    
    
    Sales of used rental equipment in accounts receivable and notes receivable
    
    
    8,896
    
    
    
    9,376Property, plant and equipment and rental equipment additions in accounts payable
    
    
    885
    
    
    
    2,560
 
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Three Fiscal Months Ended
    
    
    Nine Fiscal Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income (loss)
    
    $
    6,366
    
    
    $
    386
    
    
    $
    (2,836
    )
    
    $
    (3,390
    )Other comprehensive
gain (loss):Foreign currency
translation
adjustment
    
    
    (132
    )
    
    
    98
    
    
    
    (220
    )
    
    
    766Amortization of pension
and other
post-retirement
benefits amounts
    
    
    89
    
    
    
    
    
    
    
    89
    
    
    
    Comprehensive
income (loss)
    
    $
    6,323
    
    
    $
    484
    
    
    $
    (2,967
    )
    
    $
    (2,624
    )
 
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##### Table of Contents



Dayton Superior Corporation and Subsidiary
 
 
 Notes to Condensed Consolidated Financial Statements
 (Amounts in thousands, except share and per share amounts)
 (Unaudited)
 (1) Condensed Consolidated Financial Statements
   (2) Accounting Policies
  (a)
    
    Fiscal Quarter  The Companys fiscal year end is December 31. The Companys
fiscal quarters are defined as the 13-week periods ending on a Friday near the end of
March, June and September.(b)
    
    Inventories  The Company values all inventories at the lower of first-in,
first-out (FIFO) cost or market. The Company provides net realizable value reserves which
reflect the Companys best estimate of the excess of the cost of potential obsolete and
slow moving inventory over the expected net realizable value.
  6




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Following is a summary of the components of inventories as of September 26, 2008 and
December 31, 2007:
 September 26, 2008
    
    
    December 31, 2007Raw materials
    
    $
    25,140
    
    
    $
    13,534Work in progress
    
    
    8,890
    
    
    
    3,518Finished goods
    
    
    66,203
    
    
    
    53,358Total gross inventories
    
    
    100,233
    
    
    
    70,410Net realizable value reserve
    
    
    (4,980
    )
    
    
    (3,670
    )Total Inventory
    
    $
    95,253
    
    
    $
    66,740
 (c)
    
    Income (Loss) Per Share of Common Stock  Basic income (loss) per share of
common stock is computed by dividing net income (loss) by the weighted average number of
vested shares of common stock outstanding during the period. Diluted income (loss) per
share is computed by dividing net income (loss) by the weighted average number of shares of
common stock and common stock equivalents outstanding, if dilutive, during each period. The
Companys common stock equivalents consist of unvested shares and unexercised warrants and
stock options. Their effect is calculated using the treasury stock method. The
reconciliation of average number of shares of common stock outstanding to average number of
 shares of common stock and equivalents outstanding for three fiscal months ended September
26, 2008 is as follows:
 Three fiscal
    
    
    Three fiscalmonths ended
    
    
    months endedSeptember 26,
    
    
    September 28,2008
    
    
    2007Average number of vested shares of common
stock outstanding
    
    
    18,563,228
    
    
    
    18,311,736Shares of unvested common stock
    
    
    502,984
    
    
    
    754,476Assumed exercise of dilutive warrants
    
    
    231,375
    
    
    
    231,770Assumed exercise of dilutive stock options
    
    
    
    
    
    
    4,141Average number of common shares and equivalents
    
    
    19,297,587
    
    
    
    19,302,123
 For the nine fiscal months ended September 26, 2008 and September 28, 2007, common stock
equivalents of 734,444 and 997,958 respectively, were not included as their effect would
have been anti-dilutive.(d)
    
    New Accounting Pronouncements  In September 2006, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No.
157, Fair Value Measurements. This Statement clarifies the definition of fair value,
establishes a framework for measuring fair value, and expands the disclosures on fair value
measurements. Two FASB Staff Positions (FSP) on SFAS No. 157 were subsequently issued. In
February 2008, FSP No. 157-1 excluded SFAS No. 13, Accounting for Leases, and other
accounting pronouncements that address fair value measurements for purposes of lease
classification or measurement under SFAS No. 13, from the scope of SFAS No. 157. FSP No.
157-1 was effective as of the initial adoption of SFAS No. 157 on January 1, 2008. However,
this scope exception does not apply to assets acquired and liabilities assumed in a
business combination that are required to be measured at fair value under SFAS No. 141,
Business Combinationsor SFAS No. 141(R), Business Combinations.In February 2008, FSP No.
157-2 delayed the effective date of SFAS No. 157 for non-financial assets and non-financial
liabilities that are recognized or disclosed at fair value in the consolidated financial
statements on a nonrecurring basis to fiscal years beginning after November 15, 2008. As a
result, the Company has partially adopted SFAS No. 157 in accordance with FSP No. 157-2 as
it relates to nonrecurring non-financial assets and non-financial liabilities. However,
there were no material financial assets or liabilities measured at fair value on a
recurring basis upon adoption and no non-financial assets or liabilities measured at fair
value on a nonrecurring basis.
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In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115. This
Statement provides entities with an option to report selected financial assets and
liabilities at fair value and establishes presentation and disclosure requirements designed
to facilitate comparisons between
entities that choose different measurement attributes for similar types of assets and
liabilities. The Company complied with SFAS No. 159 as of January 1, 2008. SFAS No. 159 did
not have an impact on the Companys consolidated financial statements, as the Company did
not elect to report selected financial assets and liabilities at fair value.In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations. SFAS
No. 141(R) changes the accounting for business combinations, including the measurement of
acquirer shares issued in consideration for a business combination, the recognition of
contingent consideration, the accounting for preacquisition gain and loss contingencies, the
recognition of capitalized in-process research and development, the accounting for
acquisition-related restructuring cost accruals, the treatment of acquisition related
transaction costs and the recognition of changes in the acquirers income tax valuation
allowance. SFAS No. 141(R) applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008, except for certain tax adjustments for prior business
combinations. The Company is evaluating the effect that SFAS No. 141(R) will have on the
accounting for prior business combinations in its consolidated financial statements.In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and
Hedging Activitiesan amendment of FASB Statement No. 133.SFAS No. 161 requires enhanced
disclosures about an entitys derivative and hedging activities and is intended to improve
the transparency of financial reporting. This Statement is effective for consolidated
financial statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. This Statement encourages, but does not
require, comparative disclosures for earlier periods at initial adoption. The Company does
not expect the adoption of this Statement to have a material impact on its consolidated
financial statements.In April 2008, the FASB issued FSP 142-3, Determination of the Useful Lives of Intangible
Assets. This FSP amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized intangible asset
under SFAS No. 142, Goodwill and Other Intangible Assets. The intent of this FSP is to
improve the consistency between the useful life of a recognized intangible asset under SFAS
No. 142 and the period of expected cash flows used to measure the fair value of the asset.
The guidance for determining the useful life of a recognized intangible asset shall be
applied prospectively to intangible assets acquired after the effective date. This FSP shall
be effective for consolidated financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Accordingly, the Company
will adopt this position for any intangible assets acquired on or after January 1, 2009.
Additional disclosures for existing intangible assets may be required.
  8




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(3) Credit Arrangements
  Sources:Issuance of $100,000 term loan, net of discount
    
    $
    94,250Initial draw on new revolving credit facility
    
    
    88,666$
    182,916Uses:Repayment of Senior Second Secured Notes
    
    $
    165,000Prepayment premium on Senior Second Secured Notes
    
    
    4,641Accrued interest
    
    
    9,836Financing costs paid at closing
    
    
    3,439$
    182,916
  Prepayment premium on Senior Second Secured Notes
    
    $
    4,641Unamortized debt discount on Senior Second Secured Notes
    
    
    1,063Unamortized financing costs on Senior Second Secured Notes
    
    
    243Unamortized financing costs on previous revolving credit facility
    
    
    277Loss on extinguishment of long-term debt
    
    $
    6,224
   Three fiscal months ended
    
    
    Nine fiscal months endedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Average borrowings
    
    $
    123,263
    
    
    $
    20,591
    
    
    $
    91,995
    
    
    $
    12,233Maximum borrowing
    
    
    129,346
    
    
    
    27,050
    
    
    
    129,346
    
    
    
    27,050Weighted average
interest rate
    
    
    5.7
    %
    
    
    10.4
    %
    
    
    6.1
    %
    
    
    13.3
    %
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##### Table of Contents



September 26, 2008
    
    
    December 31, 2007Senior Subordinated Notes, interest rate of 13.0%
    
    $
    154,729
    
    
    $
    154,729Debt discount on Senior Subordinated Notes
    
    
    (1,616
    )
    
    
    (3,045
    )Term loan, interest rate of 7.9%
    
    
    99,750
    
    
    
    Debt discount on term loan
    
    
    (2,678
    )
    
    
    Senior Second Secured Notes, interest rate of 10.75%
    
    
    
    
    
    
    165,000Debt discount on Senior Second Secured Notes
    
    
    
    
    
    
    (1,393
    )Senior notes payable to seller in 2003 acquisition,
non-interest bearing, accreted at 14.5%
    
    
    6,790
    
    
    
    6,907Debentures previously held by Dayton Superior
Capital Trust, interest rate of 9.1%, due on demand
    
    
    1,024
    
    
    
    1,035Capital lease obligations
    
    
    539
    
    
    
    1,364Total long-term debt
    
    
    258,538
    
    
    
    324,597Less current maturities
    
    
    (258,469
    )
    
    
    (8,990
    )Long-term portion
    
    $
    69
    
    
    $
    315,607
    (4) Stock Option Plans
  Granted and outstanding
    
    
    867,068Granted and exercised
    
    
    122,998Available for granting
    
    
    677,138Total
    
    
    1,667,204
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Nine fiscal months ended
    
    
    Nine fiscal months endedSeptember 26, 2008
    
    
    September 28 ,2007Risk-free interest rates
    
    
    2.6
    %
    
    
    4.6
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Expected life
    
    5 years
    
    
    2 yearsExpected volatility
    
    
    81.5
    %
    
    
    16.3
    %
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Unvested
    
    
    Average
    
    
    AggregateNumber of
    
    
    Exercise Price
    
    
    Number of
    
    
    Grant-Date
    
    
    ntrinsicShares
    
    
    Per Share
    
    
    Shares
    
    
    Value
    
    
    ValueOutstanding at
December 31, 2007
    
    
    743,762
    
    
    $
    11.74
    
    
    
    483,249
    
    
    $
    2.96
    
    
    $
    Granted
    
    
    145,000
    
    
    
    3.19
    
    
    
    145,000
    
    
    
    2.11
    
    
    
    Expired
    
    
    (16,228
    )
    
    
    8.18
    
    
    
    
    
    
    
    Forfeited
    
    
    (5,466
    )
    
    
    12.46
    
    
    
    (5,466
    )
    
    
    3.53Outstanding at
September 26, 2008
    
    
    867,068
    
    
    $
    10.38
    
    
    
    622,783
    
    
    $
    2.75
    
    
    $
    
     11




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##### Table of Contents



(5) Retirement Plans
    Pension BenefitsFor the three
    
    
    For the three
    
    
    For the nine
    
    
    For the ninefiscal months
    
    
    fiscal months
    
    
    fiscal months
    
    
    fiscal monthsended
    
    
    ended
    
    
    ended
    
    
    endedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    114
    
    
    $
    171
    
    
    $
    343
    
    
    $
    515Interest cost
    
    
    215
    
    
    
    205
    
    
    
    646
    
    
    
    616Expected return on plan assets
    
    
    (269
    )
    
    
    (243
    )
    
    
    (809
    )
    
    
    (729
    )Amortization of prior service cost
    
    
    3
    
    
    
    3
    
    
    
    7
    
    
    
    7Amortization of net loss
    
    
    23
    
    
    
    20
    
    
    
    70
    
    
    
    58Net periodic benefit cost
    
    $
    86
    
    
    $
    156
    
    
    $
    257
    
    
    $
    467
 Symons Postretirement BenefitsFor the three
    
    
    For the three
    
    
    For the nine
    
    
    For the ninefiscal months
    
    
    fiscal months
    
    
    fiscal months
    
    
    fiscal monthsended
    
    
    ended
    
    
    ended
    
    
    endedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    7
    
    
    
    7
    
    
    
    22
    
    
    
    22Expected return on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    6
    
    
    
    6
    
    
    
    18
    
    
    
    18Amortization of net loss
    
    
    (2
    )
    
    
    (2
    )
    
    
    (6
    )
    
    
    (6
    )Net periodic benefit cost
    
    $
    11
    
    
    $
    11
    
    
    $
    34
    
    
    $
    34
   12




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##### Table of Contents



(6) Segment Reporting
    Three Fiscal Months Ended
    
    
    Nine Fiscal Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Product sales
    
    $
    117,086
    
    
    $
    112,327
    
    
    $
    315,656
    
    
    $
    309,677Rental revenue
    
    
    15,274
    
    
    
    14,707
    
    
    
    42,469
    
    
    
    44,211Used rental equipment sales
    
    
    3,415
    
    
    
    3,789
    
    
    
    14,066
    
    
    
    13,473Net sales
    
    
    135,775
    
    
    
    130,823
    
    
    
    372,191
    
    
    
    367,361Product cost of sales
    
    
    79,056
    
    
    
    82,394
    
    
    
    218,229
    
    
    
    226,160Rental cost of sales
    
    
    7,977
    
    
    
    8,784
    
    
    
    24,740
    
    
    
    25,129Used rental equipment cost of sales
    
    
    974
    
    
    
    581
    
    
    
    2,038
    
    
    
    3,214Cost of sales
    
    
    88,007
    
    
    
    91,759
    
    
    
    245,007
    
    
    
    254,503Product gross profit
    
    
    38,030
    
    
    
    29,933
    
    
    
    97,427
    
    
    
    83,517Rental gross profit
    
    
    7,297
    
    
    
    5,923
    
    
    
    17,729
    
    
    
    19,082Used rental equipment gross profit
    
    
    2,441
    
    
    
    3,208
    
    
    
    12,028
    
    
    
    10,259Gross profit
    
    $
    47,768
    
    
    $
    39,064
    
    
    $
    127,184
    
    
    $
    112,858Depreciation Expense:Product sales (property, plant,
and equipment)
    
    $
    1,809
    
    
    $
    1,654
    
    
    $
    4,889
    
    
    $
    4,228Rental revenue (rental equipment)
    
    
    2,929
    
    
    
    4,207
    
    
    
    10,676
    
    
    
    12,145Corporate
    
    
    925
    
    
    
    788
    
    
    
    2,689
    
    
    
    2,109Total depreciation
    
    $
    5,663
    
    
    $
    6,649
    
    
    $
    18,254
    
    
    $
    18,482
 (7) Provision for Income Taxes
   13




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##### Table of Contents



Balance at January 1, 2008
    
    $
    987Additions to existing tax positions from prior year
    
    
    33Reductions in tax positions taken during a prior period
    
    
    (722
    )Reductions in tax positions from expiration of statute
    
    
    (2
    )Interest
    
    
    6Foreign currency translation adjustment
    
    
    (5
    )Balance at September 26, 2008
    
    $
    297
  (8) Restatement of Previously Issued Financial Statements
 Statement of Cash Flows
 For the nine fiscal months ended September 28, 2007As PreviouslyReported
    
    
    Adjustments
    
    
    As RestatedChanges in assets and liabilities  Accounts receivable
    
    $
    (7,589
    )
    
    $
    (3,654
    )
    
    $
    (11,243
    )Changes in assets and liabilities  Prepaid expenses
and other assets
    
    
    (2,324
    )
    
    
    1,747
    
    
    
    (577
    )Net cash used in operating activities
    
    
    (25,125
    )
    
    
    (1,907
    )
    
    
    (27,032
    )Proceeds from sales of rental equipment
    
    
    13,473
    
    
    
    1,907
    
    
    
    15,380Net cash used in investing activities
    
    
    (19,917
    )
    
    
    1,907
    
    
    
    (18,010
    )Supplemental Disclosures  Sale of used rental
equipment in accounts and notes receivable
    
    
    
    
    
    
    9,376
    
    
    
    9,376
 (9) Subsequent Event
   14




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Certain amounts in condensed consolidated statements of cash flows in the following discussion
related to 2007 include the effects of a restatement. See Note 8  Restatement of Previously Issued
Financial Statements contained in the Notes to Condensed Consolidated Financial Statements in Item
1 for a more detailed discussion of the restatement. The following discussion should be read in
conjunction with our condensed consolidated financial statements and the related notes included
elsewhere in this document. This discussion contains forward-looking statements that involve risks
and uncertainties. See Risk Factors included in our Annual Report on Form 10-K for the year
ended December 31, 2007 for a discussion of important factors that could cause actual results to
differ materially from those described or implied by the forward-looking statements contained in
this discussion. Please refer to Forward-Looking Statements included elsewhere in this document.
 Overview
  
    
    infrastructure projects, such as highways, bridges, airports, power plants and water
management projects;
    
    institutional projects, such as schools, stadiums, hospitals and government buildings;
and
    
    commercial projects, such as retail stores, offices, and recreational, distribution and
manufacturing facilities.
    15




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##### Table of Contents



Results of Operations
  Three fiscal months ended
    
    
    Nine fiscal months endedSeptember 26, 2008
    
    
    September 28, 2007
    
    
    September 26, 2008
    
    
    September 28, 2007Product sales
    
    
    86.2
    %
    
    
    85.9
    %
    
    
    84.8
    %
    
    
    84.3
    %Rental revenue
    
    
    11.3
    
    
    
    11.2
    
    
    
    11.4
    
    
    
    12.0Used rental equipment sales
    
    
    2.5
    
    
    
    2.9
    
    
    
    3.8
    
    
    
    3.7Net sales
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Product cost of sales
    
    
    67.5
    
    
    
    73.4
    
    
    
    69.1
    
    
    
    73.0Rental cost of sales
    
    
    52.2
    
    
    
    59.7
    
    
    
    58.3
    
    
    
    56.8Used rental equipment cost of sales
    
    
    28.5
    
    
    
    15.3
    
    
    
    14.5
    
    
    
    23.9Cost of sales
    
    
    64.8
    
    
    
    70.1
    
    
    
    65.8
    
    
    
    69.3Product gross profit
    
    
    32.5
    
    
    
    26.6
    
    
    
    30.9
    
    
    
    27.0Rental gross profit
    
    
    47.8
    
    
    
    40.3
    
    
    
    41.7
    
    
    
    43.2Used rental equipment gross profit
    
    
    71.5
    
    
    
    84.7
    
    
    
    85.5
    
    
    
    76.1Gross profit
    
    
    35.2
    
    
    
    29.9
    
    
    
    34.2
    
    
    
    30.7Selling, general and administrative
expenses
    
    
    20.9
    
    
    
    20.4
    
    
    
    22.8
    
    
    
    21.7Facility closing and severance expenses
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.4
    
    
    
    0.2(Gain) loss on disposals of property,
plant, and equipment
    
    
    0.1
    
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    0.1Income from operations
    
    
    14.1
    
    
    
    9.2
    
    
    
    11.1
    
    
    
    8.7Interest expense
    
    
    9.1
    
    
    
    8.9
    
    
    
    10.0
    
    
    
    9.5Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on extinguishment of long-term
debt
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    Other expense
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    
    
    
    
    Income (loss) before provision for
income taxes
    
    
    4.9
    
    
    
    0.5
    
    
    
    (0.6
    )
    
    
    (0.8
    )Provision for income taxes
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.1Net income (loss)
    
    
    4.6
    %
    
    
    0.3
    %
    
    
    (0.8
    )%
    
    
    (0.9
    )%
 Comparison of Three Fiscal Months Ended September 26, 2008 and September 28, 2007
 Net Sales
  Three fiscal months endedSeptember 26, 2008
    
    
    September 28, 2007($ in thousands)
    
    Net Sales
    
    
    %
    
    
    Net Sales
    
    
    %
    
    
    % ChangeProduct sales
    
    $
    117,086
    
    
    
    86.2
    %
    
    $
    112,327
    
    
    
    85.9
    %
    
    
    4.2
    %Rental revenue
    
    
    15,274
    
    
    
    11.3
    
    
    
    14,707
    
    
    
    11.2
    
    
    
    3.9Used rental equipment sales
    
    
    3,415
    
    
    
    2.5
    
    
    
    3,789
    
    
    
    2.9
    
    
    
    (9.9
    )Net sales
    
    $
    135,775
    
    
    
    100.0
    %
    
    $
    130,823
    
    
    
    100.0
    %
    
    
    3.8
    %
  16




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Gross Profit
     Operating Expenses
  Other Expenses
    17




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##### Table of Contents



Income Before Income Taxes
  Provision for Income Taxes
   Net Income
  Comparison of Nine Fiscal Months Ended September 26, 2008 and September 28, 2007
 Net Sales
  Nine fiscal months endedSeptember 26, 2008
    
    
    September 28, 2007($ in thousands)
    
    Net Sales
    
    
    %
    
    
    Net Sales
    
    
    %
    
    
    % ChangeProduct sales
    
    $
    315,656
    
    
    
    84.8
    %
    
    $
    309,677
    
    
    
    84.3
    %
    
    
    1.9
    %Rental revenue
    
    
    42,469
    
    
    
    11.4
    
    
    
    44,211
    
    
    
    12.0
    
    
    
    (3.9
    )Used rental equipment sales
    
    
    14,066
    
    
    
    3.8
    
    
    
    13,473
    
    
    
    3.7
    
    
    
    4.4Net sales
    
    $
    372,191
    
    
    
    100.0
    %
    
    $
    367,361
    
    
    
    100.0
    %
    
    
    1.3
    %
     18




---



##### Table of Contents



Gross Profit
     Operating Expenses
  Other Expenses
    19




---



##### Table of Contents



($ in millions)Prepayment premium on Senior Second Secured Notes
    
    $
    4.6Unamortized discount on Senior Second Secured Notes
    
    
    1.1Unamortized financing costs on Senior Second Secured Notes
    
    
    0.2Unamortized financing costs on previous revolving credit facility
    
    
    0.3Loss on extinguishment of long-term debt
    
    $
    6.2
 Loss Before Income Taxes
  Provision for Income Taxes
   Net Loss
  Early Retirement Program
  Liquidity and Capital Resources
   20




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##### Table of Contents



Nine fiscal months endedSeptember 26,
    
    
    September($ in thousands)
    
    2008
    
    
    28, 2007Capital expenditures:Additions to rental equipment
    
    $
    9,227
    
    
    $
    19,483Property, plant and equipment additions
    
    
    8,461
    
    
    
    13,944Proceeds from sales of used rental equipment
    
    
    (17,621
    )
    
    
    (15,380
    )Proceeds from sales of property, plant and equipment
    
    
    (1,425
    )
    
    
    (37
    )Net additions (reductions) to rental equipment and
property, plant, and equipment
    
    $
    (1,358
    )
    
    $
    18,010
   Nine fiscal months endedSeptember 26,
    
    
    September 28,($ in millions)
    
    2008
    
    
    2007Net loss
    
    $
    (2.8
    )
    
    $
    (3.4
    )Adjustments to reconcile net loss to net cash
used in operating activities
    
    
    21.7
    
    
    
    15.2Subtotal
    
    
    18.9
    
    
    
    11.8Changes in assets and liabilities
    
    
    (57.2
    )
    
    
    (38.8
    )Net cash used in operating activities
    
    $
    (38.3
    )
    
    $
    (27.0
    )
   
    
    Accounts receivable increased during the first nine fiscal months of 2008 by $20.5
million, compared to an increase of $11.2 million in the first nine fiscal months of 2007,
primarily due to the higher net sales in the third quarter of 2008.
    
    Inventories increased during the first nine months of 2008 by $28.6 million, compared to
$14.0 million in the first nine fiscal months of 2007, primarily due to inflation and lower
unit volume of sales.
  21




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##### Table of Contents



($ in thousands)Senior Subordinated Notes, interest rate of 13.0%
    
    $
    154,729Debt discount on Senior Subordinated Notes
    
    
    (1,616
    )Term loan, interest rate of 7.9%
    
    
    99,750Debt discount on term loan
    
    
    (2,678
    )Senior notes payable to seller of Safway, non-interest bearing,
accreted at 14.5%
    
    
    6,790Debentures previously held by Dayton Superior Capital Trust,
interest rate of 9.1%, due on demand
    
    
    1,024Capital lease obligations
    
    
    539Total long-term debt
    
    
    258,538Less current maturities
    
    
    258,469Long-term portion
    
    $
    69
    22




---



##### Table of Contents




    
    $116.3 million increase in the revolving credit facility and
    
    $249.5 million increase in the current portion of long-term debt due to the term
loan and Senior Subordinated Notes maturing within twelve months, and
    
    $3.6 million of other net decreases, offset by
    
    $17.9 million increase in accounts receivable due to the higher net sales in the
third quarter of 2008 relative to the fourth quarter of 2007, and
    
    $28.5 million increase in inventories due to material cost inflation and lower unit
volume of sales, and
    
    $10.9 million decrease in accounts payable due to the timing of vendor purchases and
payments.
    23




---



##### Table of Contents



Commitments
  Seasonality
  Inflation
  Critical Accounting Policies
  Forward-Looking Statements
   
    
    the cyclical nature of nonresidential building and infrastructure construction
activity, which can be affected by factors outside our control such as the general
economy, governmental expenditures, interest rate increases, and changes in banking and
tax laws;
    
    the amount of debt we must service;
    
    the effects of weather and the seasonality of the construction industry;
    
    our ability to implement cost savings programs successfully and on a timely basis;
    
    our ability to successfully integrate acquisitions on a timely basis;
    
    the mix of product sales, rental revenues, and sales of used rental equipment;
    
    cost increases in raw materials and operating costs; and
    
    favorable market response to sales price increases.
  24




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
     
 
 Item 4. Controls and Procedures.
    25




---



##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 
 Part II.  Other Information
 
 
 Item 1A. Risk Factors
  Our substantial level of indebtedness, most of which matures in March and June 2009, could
adversely affect our ability to continue as a going concern and adversely affect the price of our
common stock.
 
    
    increase our vulnerability to general adverse economic and industry conditions;
    
    require us to dedicate a substantial portion of our cash flow from operations to
payments of principal and interest on our indebtedness, thereby reducing the availability
of our cash flow for operations and other general purposes;
    
    limit our flexibility in planning for, or reacting to, changes in our business and the
industry in which we operate;
    
    place us at a disadvantage to our competitors that have less debt; and
    
    limit, along with restrictive covenants in our indebtedness agreements, among other
things, our ability to borrow additional funds.
  26




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##### Table of Contents



Increased costs of raw materials and energy resources may result in increased operating expenses
and adversely affect our results of operations and cash flow.
 
 
 Item 6. Exhibits
   27




---



##### Table of Contents



SIGNATURES
  DAYTON SUPERIOR CORPORATIONDATE:  October 30, 2008
    BY:
    /s/ Edward J. PuisisEdward J. PuisisExecutive Vice President and
Chief Financial Officer  28




---



##### Table of Contents



INDEX OF EXHIBITS
 Description
 Exhibit No.
    
    Description(31)
    
    Rule 13a-14(a)/15d-14(a) Certifications31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive Officer
    
    
    
    **31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Vice President and Chief Financial Officer
    
    
    
    **(32)
    
    Section 1350 Certifications32.1
    
    Sarbanes-Oxley Section 1350 Certification of President and Chief Executive Officer
    
    
    
    **32.2
    
    Sarbanes-Oxley Section 1350 Certification of Vice President and Chief Financial Officer
    
    
    
    **
 
 **
    
    Filed herewith  29