##### 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
    
    COMMISSION FILE NUMBERJuly 1, 2005
    
    1-11781
 DAYTON SUPERIOR CORPORATION
  OHIO
    
    31-0676346(State or other jurisdiction of
    
    (I.R.S. EmployerIncorporation or organization)
    
    Identification No.)7777 Washington Village Dr., Suite 130Dayton, Ohio
    
    45459(Address of principal
    
    (Zip Code)executive offices)
 937-428-6360
  
 
 þ o
 o þ




---



TABLE OF CONTENTS  Part I.  Financial InformationItem 1  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 6. ExhibitsSIGNATURESINDEX TO EXHIBITSEX-31.1 Rule 13A-14(A)/15D-14(A) Certification of CEOEX-31.2 Rule 13A-14(A)/15D-14(A) Certification of CFOEX-32.1 Section 1350 Certification of CEOEX-32.2 Section 1350 Certification of CFO    Table of Contents  
 Part I.  Financial Information
 
 Item 1  Financial Statements
  
 July 1,
    
    December 31,2005
    
    2004ASSETSCurrent assets:Cash
    
    $
    
    
    
    $
    4,504Accounts receivable, net of allowances for doubtful accounts and
sales returns and allowances of $4,414 and $5,379
    
    
    78,372
    
    
    
    68,031Inventories
    
    
    64,352
    
    
    
    59,389Prepaid expenses and other current assets
    
    
    6,728
    
    
    
    8,392Prepaid income taxes
    
    
    431
    
    
    
    365Deferred income taxes
    
    
    5,467
    
    
    
    5,465Total current assets
    
    
    155,350
    
    
    
    146,146Rental equipment, net of accumulated depreciation of $45,666 and $38,756
    
    
    68,928
    
    
    
    69,662Property, plant and equipment
    
    
    113,398
    
    
    
    118,385Less accumulated depreciation
    
    
    (60,586
    )
    
    
    (58,927
    )Net property, plant and equipment
    
    
    52,812
    
    
    
    59,458Goodwill
    
    
    107,643
    
    
    
    107,643Intangible assets, net of accumulated amortization
    
    
    6,079
    
    
    
    7,185Other assets
    
    
    1,868
    
    
    
    4,044Total assets
    
    $
    392,680
    
    
    $
    394,138LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilities:Current maturities of long-term debt
    
    $
    2,439
    
    
    $
    2,455Accounts payable
    
    
    25,064
    
    
    
    21,086Accrued compensation and benefits
    
    
    10,878
    
    
    
    12,700Accrued interest
    
    
    7,384
    
    
    
    6,746Accrued freight
    
    
    3,687
    
    
    
    3,722Current portion of deferred gain on sale-leaseback
    
    
    3,336
    
    
    
    Other accrued liabilities
    
    
    4,599
    
    
    
    4,154Total current liabilities
    
    
    57,387
    
    
    
    50,863Revolving credit facility
    
    
    67,475
    
    
    
    58,800Other long-term debt, net of current portion
    
    
    317,423
    
    
    
    316,389Deferred gain on sale-leaseback, net of current portion
    
    
    2,632
    
    
    
    Other long-term liabilities
    
    
    23,736
    
    
    
    23,616Total liabilities
    
    
    468,653
    
    
    
    449,668Shareholders deficit:Common shares
    
    
    116,037
    
    
    
    116,024Loans to shareholders
    
    
    (2,414
    )
    
    
    (2,767
    )Treasury shares, at cost, 51,293 and 36,747 shares
    
    
    (1,509
    )
    
    
    (1,184
    )Cumulative other comprehensive loss
    
    
    (1,335
    )
    
    
    (1,137
    )Accumulated deficit
    
    
    (186,752
    )
    
    
    (166,466
    )Total shareholders deficit
    
    
    (75,973
    )
    
    
    (55,530
    )Total liabilities and shareholders deficit
    
    $
    392,680
    
    
    $
    394,138
 
 2




---



##### Table of Contents



Three Fiscal Months Ended
    
    Six Fiscal Months EndedJuly 1, 2005
    
    July 2, 2004
    
    July 1, 2005
    
    July 2, 2004Product sales
    
    $
    101,997
    
    
    $
    101,170
    
    
    $
    173,086
    
    
    $
    176,461Rental revenue
    
    
    12,015
    
    
    
    9,914
    
    
    
    22,145
    
    
    
    19,343Used rental equipment sales
    
    
    3,692
    
    
    
    4,122
    
    
    
    8,255
    
    
    
    8,519Net sales
    
    
    117,704
    
    
    
    115,206
    
    
    
    203,486
    
    
    
    204,323Product cost of sales
    
    
    77,863
    
    
    
    74,672
    
    
    
    133,012
    
    
    
    133,506Rental cost of sales
    
    
    9,294
    
    
    
    7,399
    
    
    
    17,795
    
    
    
    15,548Used rental equipment cost of sales
    
    
    1,695
    
    
    
    1,686
    
    
    
    2,918
    
    
    
    3,213Cost of sales
    
    
    88,852
    
    
    
    83,757
    
    
    
    153,725
    
    
    
    152,267Product gross profit
    
    
    24,134
    
    
    
    26,498
    
    
    
    40,074
    
    
    
    42,955Rental gross profit
    
    
    2,721
    
    
    
    2,515
    
    
    
    4,350
    
    
    
    3,795Used rental equipment gross profit
    
    
    1,997
    
    
    
    2,436
    
    
    
    5,337
    
    
    
    5,306Gross profit
    
    
    28,852
    
    
    
    31,449
    
    
    
    49,761
    
    
    
    52,056Selling, general and administrative
expenses
    
    
    23,243
    
    
    
    21,871
    
    
    
    46,257
    
    
    
    44,537Facility closing and severance expenses
    
    
    81
    
    
    
    492
    
    
    
    331
    
    
    
    964(Gain) loss
on disposals of property, plant, and equipment
    
    
    (1,147
    )
    
    
    19
    
    
    
    (1,086
    )
    
    
    78Amortization of intangibles
    
    
    164
    
    
    
    307
    
    
    
    306
    
    
    
    555Income from operations
    
    
    6,511
    
    
    
    8,760
    
    
    
    3,953
    
    
    
    5,922Other expensesInterest income
    
    
    (43
    )
    
    
    (23
    )
    
    
    (122
    )
    
    
    (28
    )Interest expense
    
    
    12,136
    
    
    
    11,714
    
    
    
    24,356
    
    
    
    23,612Loss on
early extinguishment of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    842Other expense (income)
    
    
    16
    
    
    
    (250
    )
    
    
    5
    
    
    
    45Loss before benefit for income taxes
    
    
    (5,598
    )
    
    
    (2,681
    )
    
    
    (20,286
    )
    
    
    (18,549
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (5,598
    )
    
    $
    (2,681
    )
    
    $
    (20,286
    )
    
    $
    (18,549
    )
 
 3




---



##### Table of Contents



Six Fiscal Months EndedJuly 1, 2005
    
    July 2, 2004Cash Flows From Operating Activities:Net loss
    
    $
    (20,286
    )
    
    $
    (18,549
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    14,990
    
    
    
    13,490Amortization of intangibles
    
    
    306
    
    
    
    555Loss on early extinguishment of long-term debt
    
    
    
    
    
    
    842Deferred income taxes
    
    
    (118
    )
    
    
    158Amortization of deferred financing costs and debt discount
    
    
    2,678
    
    
    
    2,565Amortization of deferred gain from sale-leaseback
    
    
    (647
    )
    
    
    Gain on sales of rental equipment
    
    
    (5,337
    )
    
    
    (5,306
    )(Gain) loss on sales of property, plant and equipment
    
    
    (573
    )
    
    
    78Changes in assets and liabilities:Accounts receivable
    
    
    (10,345
    )
    
    
    (12,116
    )Inventories
    
    
    (4,963
    )
    
    
    (11,879
    )Accounts payable
    
    
    3,978
    
    
    
    6,615Accrued liabilities and other long-term liabilities
    
    
    (609
    )
    
    
    (2,206
    )Prepaid expenses and other assets
    
    
    3,694
    
    
    
    (4,440
    )Net cash used in operating activities
    
    
    (17,232
    )
    
    
    (30,193
    )Cash Flows From Investing Activities:Property, plant and equipment additions
    
    
    (3,060
    )
    
    
    (2,199
    )Proceeds from sales of property, plant and equipment
    
    
    987
    
    
    
    4Rental equipment additions
    
    
    (12,845
    )
    
    
    (8,143
    )Proceeds from sales of rental equipment
    
    
    8,255
    
    
    
    8,519Acquisition
    
    
    
    
    
    
    (245
    )Net cash used in investing activities
    
    
    (6,663
    )
    
    
    (2,064
    )Cash Flows From Financing Activities:Repayments of other long-term debt
    
    
    (757
    )
    
    
    (836
    )Borrowings under revolving credit facility, net
    
    
    8,675
    
    
    
    33,575Financing costs incurred
    
    
    (3
    )
    
    
    (2,301
    )Proceeds from sale-leaseback
    
    
    11,636
    
    
    
    Purchase of treasury shares
    
    
    (325
    )
    
    
    Changes in loans to shareholders
    
    
    350
    
    
    
    (19
    )Issuance of common shares
    
    
    13
    
    
    
    73Net cash provided by financing activities
    
    
    19,589
    
    
    
    30,492Effect of Exchange Rate Changes on Cash
    
    
    (198
    )
    
    
    (230
    )Net decrease in cash
    
    
    (4,504
    )
    
    
    (1,995
    )Cash, beginning of period
    
    
    4,504
    
    
    
    1,995Cash, end of period
    
    $
    
    
    
    $
    Supplemental Disclosures:Cash paid for income taxes
    
    $
    150
    
    
    $
    697Cash paid for interest
    
    
    20,918
    
    
    
    20,647Purchases of equipment on capital leases
    
    
    
    
    
    
    301
 
 4




---



##### Table of Contents



Three Fiscal Months Ended
    
    Six Fiscal Months EndedJuly 1, 2005
    
    July 2, 2004
    
    July 1, 2005
    
    July 2, 2004Net loss
    
    $
    (5,598
    )
    
    $
    (2,681
    )
    
    $
    (20,286
    )
    
    $
    (18,549
    )Other comprehensive income:Foreign currency
translation
adjustment
    
    
    (86
    )
    
    
    (420
    )
    
    
    (198
    )
    
    
    (230
    )Comprehensive loss
    
    $
    (5,684
    )
    
    $
    (3,101
    )
    
    $
    (20,484
    )
    
    $
    (18,779
    )
 
 5




---



##### Table of Contents



Dayton Superior Corporation and Subsidiary
 Notes to Consolidated Financial Statements
(Amounts in thousands, except share and per share amounts)
(Unaudited)
 (1)
    
    Consolidated Financial StatementsThe interim consolidated financial statements included herein have been prepared by the
Company, without audit, and include, in the opinion of management, all adjustments necessary to
state fairly the information set forth therein. Any such adjustments were of a normal recurring
nature. Certain information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United States have
been omitted, although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these unaudited consolidated
financial statements be read in conjunction with the audited consolidated financial statements
and the notes thereto included in the Companys annual financial statements for the year ended
December 31, 2004. The interim results may not be indicative of future periods.(2)
    
    Accounting PoliciesThe interim consolidated financial statements have been prepared in accordance with the
accounting policies described in the notes to the Companys consolidated financial statements
for the year ended December 31, 2004. While management believes that the procedures followed in
the preparation of interim financial information are reasonable, the accuracy of some estimated
amounts is dependent upon facts that will exist or calculations that will be made at year end.
Examples of such estimates include changes in the deferred tax accounts and management bonuses,
among others. Any adjustments pursuant to such estimates during the fiscal quarter were of a
normal recurring nature.
 (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.Following is a summary of the components of inventories as of July 1, 2005 and December
31, 2004:
 July 1, 2005
    
    December 31, 2004Raw materials
    
    $
    16,970
    
    
    $
    21,663Work in progress
    
    
    3,306
    
    
    
    2,588Finished goods
    
    
    44,076
    
    
    
    35,138Total Inventory
    
    $
    64,352
    
    
    $
    59,389
 (c)
    
    New Accounting Pronouncements  In November 2004, the FASB issued SFAS No. 151,
Inventory Costs, an amendment of ARB No. 43, Chapter 4, to clarify the accounting for
abnormal amounts of idle facility expense, freight, handling costs, and waste material
(spoilage). This statement requires those items to be recognized as current period charges.
The Company will be required to comply with the provision of SFAS No. 151 as of the first
fiscal year beginning after June 15, 2005. The Company has not determined the impact that
SFAS No. 151 will have on its financial statements.In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment. This
statement requires that the cost resulting from all share-based payment transactions are
recognized in the financial statements. That cost will be measured based on the fair value
of the equity of liability instruments issued. SFAS 123 (R) is effective as of the beginning
of the first fiscal year beginning after
 6




---



##### Table of Contents



June 15, 2005. The Company is currently evaluating this pronouncement and does not
anticipate a material impact on the Companys results of operations.In June 2005, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 154, Accounting Changes and Error Corrections. The
statement applies to all voluntary changes in accounting principle, and changes the
requirement for accounting for and reporting a change in accounting principle. This
statement is a replacement for Accounting Principles Board Opinion No. 20, Accounting
Changes and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements. This statement is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005. Early adoption is permitted for
accounting changes and corrections of errors made in fiscal years beginning after May 31,
2005. The company does not anticipate a material impact on the results of operations from
the adoption of this pronouncement.(d)
    
    Stock Options  The Company measures compensation cost for stock options
issued using the intrinsic value-based method of accounting in accordance with Accounting
Principles Board Opinion (APB) No. 25. If compensation cost for the Companys stock
options had been determined based on the fair value method of SFAS No. 123, Accounting
for Stock-Based Compensation, the Companys net loss and net loss per share would have
been increased to the pro forma amounts as follows:
 Three fiscal months ended
    
    Six fiscal months endedJuly 1, 2005
    
    July 2, 2004
    
    July 1, 2005
    
    July 2, 2004Net income (loss)As Reported
    
    $
    (5,598
    )
    
    $
    (2,681
    )
    
    $
    (20,286
    )
    
    $
    (18,549
    )Deduct: Total
stock-based
employee
compensation
expense determined
under fair
value-based method
for all awards, net
of related tax
effect
    
    
    (72
    )
    
    
    (62
    )
    
    
    (144
    )
    
    
    (124
    )Pro Forma
    
    $
    (5,670
    )
    
    $
    (2,743
    )
    
    $
    (20,430
    )
    
    $
    (18,673
    )
 (e)
    
    Reclassifications  Certain reclassifications have been made to the 2004
amounts to conform to their 2005 classifications.
 (3) Credit Arrangements
  7




---



##### Table of Contents



Three fiscal months ended
    
    Six fiscal months endedJuly 1, 2005
    
    July 2, 2004
    
    July 1, 2005
    
    July 2, 2004Revolving Credit Facility:Average borrowings
    
    $
    68,010
    
    
    $
    56,703
    
    
    $
    65,381
    
    
    $
    46,107Maximum borrowing
    
    
    77,500
    
    
    
    63,075
    
    
    
    77,500
    
    
    
    63,075Weighted average interest rate
    
    
    6.0
    %
    
    
    3.9
    %
    
    
    5.8
    %
    
    
    4.2
    %
  December 31,July 1, 2005
    
    2004Senior Second Secured Notes, interest rate of 10.75%
    
    $
    165,000
    
    
    $
    165,000Debt discount on Senior Second Secured Notes
    
    
    (5,506
    )
    
    
    (6,194
    )Senior Subordinated Notes, interest rate of 13.0%
    
    
    154,729
    
    
    
    154,729Debt discount on Senior Subordinated Notes
    
    
    (6,778
    )
    
    
    (7,397
    )Notes payable to seller of Safway, non-interest
bearing, accreted at 6.0% to 14.5%
    
    
    8,179
    
    
    
    7,794Debentures previously held by Dayton Superior Capital
Trust, interest rate of 9.1%, due on demand
    
    
    1,080
    
    
    
    1,102Capital lease obligations
    
    
    3,158
    
    
    
    3,794City of Parsons, Kansas Economic Development Loan,
interest rate of 7.0%
    
    
    
    
    
    
    16Total long-term debt
    
    
    319,862
    
    
    
    318,844Less current maturities
    
    
    (2,439
    )
    
    
    (2,455
    )Long-term portion
    
    $
    317,423
    
    
    $
    316,389
   (4) Stock Option Plans
   8




---



##### Table of Contents



Weighted AverageNumber of
    
    Exercise Price PerShares
    
    ShareOutstanding at December 31, 2004
    
    
    682,978
    
    
    $
    26.13Cancelled / expired
    
    
    (100,000
    )
    
    
    27.50Outstanding at July 1, 2005
    
    
    582,978
    
    
    $
    24.27
 (5) Retirement Plans
    Symons
    
    SymonsPension
    
    Pension
    
    Postretirement
    
    PostretirementBenefits 2005
    
    Benefits 2004
    
    Benefits 2005
    
    Benefits 2004Service cost
    
    $
    346
    
    
    $
    299
    
    
    $
    0
    
    
    $
    0Interest cost
    
    
    327
    
    
    
    298
    
    
    
    13
    
    
    
    18Expected return on plan assets
    
    
    (369
    )
    
    
    (299
    )
    
    
    0
    
    
    
    0Amortization of prior service cost
    
    
    7
    
    
    
    3
    
    
    
    12
    
    
    
    12Amortization of net loss
    
    
    45
    
    
    
    38
    
    
    
    (5
    )
    
    
    0Net periodic benefit cost
    
    $
    356
    
    
    $
    339
    
    
    $
    20
    
    
    $
    30
  9




---



##### Table of Contents



(6) Segment Reporting
       Three Fiscal Months Ended
    
    Six Fiscal Months EndedJuly 1, 2005
    
    July 2, 2004
    
    July 1, 2005
    
    July 2, 2004Product sales
    
    $
    101,997
    
    
    $
    101,170
    
    
    $
    173,086
    
    
    $
    176,461Rental revenue
    
    
    12,015
    
    
    
    9,914
    
    
    
    22,145
    
    
    
    19,343Used rental equipment sales
    
    
    3,692
    
    
    
    4,122
    
    
    
    8,255
    
    
    
    8,519Net sales
    
    
    117,704
    
    
    
    115,206
    
    
    
    203,486
    
    
    
    204,323Product cost of sales
    
    
    77,863
    
    
    
    74,672
    
    
    
    133,012
    
    
    
    133,506Rental cost of sales
    
    
    9,294
    
    
    
    7,399
    
    
    
    17,795
    
    
    
    15,548Used rental equipment cost of sales
    
    
    1,695
    
    
    
    1,686
    
    
    
    2,918
    
    
    
    3,213Cost of sales
    
    
    88,852
    
    
    
    83,757
    
    
    
    153,725
    
    
    
    152,267Product gross profit
    
    
    24,134
    
    
    
    26,498
    
    
    
    40,074
    
    
    
    42,955Rental gross profit
    
    
    2,721
    
    
    
    2,515
    
    
    
    4,350
    
    
    
    3,795Used rental equipment gross profit
    
    
    1,997
    
    
    
    2,436
    
    
    
    5,337
    
    
    
    5,306Gross profit
    
    $
    28,852
    
    
    $
    31,449
    
    
    $
    49,761
    
    
    $
    52,056Depreciation Expense:Product sales (property, plant,
and equipment)
    
    $
    1,472
    
    
    $
    1,604
    
    
    $
    2,917
    
    
    $
    2,933Rental Revenue (rental equipment)
    
    
    5,515
    
    
    
    4,464
    
    
    
    10,661
    
    
    
    9,400Corporate
    
    
    694
    
    
    
    562
    
    
    
    1,412
    
    
    
    1,157Total depreciation
    
    $
    7,681
    
    
    $
    6,630
    
    
    $
    14,990
    
    
    $
    13,490
 10




---



##### Table of Contents



(7) Facility Closing and Severance Expenses
  Involuntary
    
    Lease
    
    Relocation
    
    Other Post-Termination
    
    Termination
    
    of
    
    ClosingBenefits
    
    Costs
    
    Operations
    
    Costs
    
    TotalBalance, January 1, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Facility closing and severance expenses
    
    
    63
    
    
    
    1
    
    
    
    
    
    
    
    61
    
    
    
    125Items charged against reserve
    
    
    (63
    )
    
    
    (1
    )
    
    
    
    
    
    
    (61
    )
    
    
    (125
    )Balance, December 31, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  Involuntary
    
    Lease
    
    Relocation
    
    Other Post-Termination
    
    Termination
    
    of
    
    ClosingBenefits
    
    Costs
    
    Operations
    
    Costs
    
    TotalBalance, January 1, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Facility closing and severance expenses
    
    
    611
    
    
    
    307
    
    
    
    595
    
    
    
    398
    
    
    
    1,911Items charged against reserve
    
    
    (611
    )
    
    
    (187
    )
    
    
    (595
    )
    
    
    (398
    )
    
    
    (1,791
    )Balance, December 31, 2004
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    120Facility closing and severance expenses
    
    
    82
    
    
    
    115
    
    
    
    4
    
    
    
    130
    
    
    
    331Items charged against reserve
    
    
    (82
    )
    
    
    (146
    )
    
    
    (4
    )
    
    
    (130
    )
    
    
    (362
    )Balance, July 1, 2005
    
    $
    
    
    
    $
    89
    
    
    $
    
    
    
    $
    
    
    
    $
    89
  (8) Benefit for Income Taxes
  (9) Sale-Leaseback Transaction
  11




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
     
    
    Product sales consist primarily of:
 
    
    Concrete accessories,which are used for connecting forms for
poured-in-place concrete walls, anchoring or bracing for walls and floors,
supporting bridge framework and positioning steel reinforcing bars, and include
products which remain in place at the convenience of the contractors.
    
    Masonry products,which are placed between layers of brick and concrete
blocks and covered with mortar to provide additional strength to walls.
    
    Paving products,which are used in the construction and rehabilitation
of concrete roads, highways and airport runways to extend the life of the pavement,
and include products which remain in place at the convenience of the contractors.
Welded dowel assemblies are a paving product used to transfer dynamic loads between
two adjacent slabs of concrete roadway. Metal dowels are part of a dowel basket
design that is imbedded in two adjacent slabs to transfer the weight of vehicles as
they move over a road.
    
    Chemicals,which include a broad spectrum of chemicals for use in
concrete construction, including form release agents, bond breakers, curing
compounds, liquid hardeners, sealers, water repellents, bonding agents, grouts and
epoxies, and other chemicals used in the pouring, placement, and stamping of
concrete as well as curing compounds used in concrete road construction.
 12




---



##### Table of Contents




    
    Rental equipment consists primarily of:
 
    
    Forming Systems,which are reusable engineered modular forms; hold
liquid concrete in place on concrete construction jobs while it hardens. Standard
forming systems are made of steel and plywood and are used in the creation of
concrete walls and columns. Specialty forming systems consist primarily of steel
forms that are designed to meet architects specific needs for concrete placements.
Both standard and specialty forming systems and related accessories are sold as
used rental equipment and rented.
    
    Shoring Systems,including aluminum beams and joists, are reusable post
shores and shoring frames which are used to support deck and other raised forms
while concrete is being poured.
 Facility Closing and Severance Expenses
  In 000sInvoluntary
    
    Lease
    
    Relocation
    
    Other Post-Termination
    
    Termination
    
    of
    
    ClosingBenefits
    
    Costs
    
    Operations
    
    Costs
    
    TotalBalance, January 1, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Facility closing and severance expenses
    
    
    63
    
    
    
    1
    
    
    
    
    
    
    
    61
    
    
    
    125Items charged against reserve
    
    
    (63
    )
    
    
    (1
    )
    
    
    
    
    
    
    (61
    )
    
    
    (125
    )Balance, December 31, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  In
000sInvoluntary
    
    Lease
    
    Relocation
    
    Other Post-Termination
    
    Termination
    
    of
    
    ClosingBenefits
    
    Costs
    
    Operations
    
    Costs
    
    TotalBalance, January 1, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Facility closing and severance expenses
    
    
    611
    
    
    
    307
    
    
    
    595
    
    
    
    398
    
    
    
    1,911Items charged against reserve
    
    
    (611
    )
    
    
    (187
    )
    
    
    (595
    )
    
    
    (398
    )
    
    
    (1,791
    )Balance, December 31, 2004
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    120Facility closing and severance expenses
    
    
    82
    
    
    
    115
    
    
    
    4
    
    
    
    130
    
    
    
    331Items charged against reserve
    
    
    (82
    )
    
    
    (146
    )
    
    
    (4
    )
    
    
    (130
    )
    
    
    (362
    )Balance, July 1, 2005
    
    $
    
    
    
    $
    89
    
    
    $
    
    
    
    $
    
    
    
    $
    89
  13




---



##### Table of Contents



Results of Operations
  Three Fiscal Months Ended
    
    Six Fiscal Months EndedJuly 1, 2005
    
    July 2, 2004
    
    July 1, 2005
    
    July 2, 2004Product sales
    
    
    86.7
    %
    
    
    87.8
    %
    
    
    85.1
    %
    
    
    86.4
    %Rental revenue
    
    
    10.2
    
    
    
    8.6
    
    
    
    10.9
    
    
    
    9.4Used rental equipment sales
    
    
    3.1
    
    
    
    3.6
    
    
    
    4.0
    
    
    
    4.2Net sales
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Product cost of sales
    
    
    76.3
    
    
    
    73.8
    
    
    
    76.8
    
    
    
    75.7Rental cost of sales
    
    
    77.4
    
    
    
    74.6
    
    
    
    80.4
    
    
    
    80.4Used rental equipment cost of sales
    
    
    45.9
    
    
    
    40.9
    
    
    
    35.3
    
    
    
    37.7Cost of sales
    
    
    75.5
    
    
    
    72.7
    
    
    
    75.5
    
    
    
    74.5Product gross profit
    
    
    23.7
    
    
    
    26.2
    
    
    
    23.2
    
    
    
    24.3Rental gross profit
    
    
    22.6
    
    
    
    25.4
    
    
    
    19.6
    
    
    
    19.6Used rental equipment gross profit
    
    
    54.1
    
    
    
    59.1
    
    
    
    64.7
    
    
    
    62.3Gross profit
    
    
    24.5
    
    
    
    27.3
    
    
    
    24.5
    
    
    
    25.5Selling, general and administrative expenses
    
    
    19.8
    
    
    
    19.0
    
    
    
    22.7
    
    
    
    21.8Facility closing and severance expenses
    
    
    0.1
    
    
    
    0.4
    
    
    
    0.2
    
    
    
    0.5(Gain) loss on disposals of property, plant,
and equipment
    
    
    (1.0
    )
    
    
    
    
    
    
    (0.5
    )
    
    
    Amortization of intangibles
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.3Income from operations
    
    
    5.5
    
    
    
    7.6
    
    
    
    1.9
    
    
    
    2.9Interest income
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    Interest expense
    
    
    10.3
    
    
    
    10.1
    
    
    
    12.0
    
    
    
    11.6Loss on early extinguishment of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4Other expense (income)
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    Loss before benefit for income taxes
    
    
    (4.8
    )
    
    
    (2.3
    )
    
    
    (10.0
    )
    
    
    (9.1
    )Benefit for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    (4.8
    %)
    
    
    (2.3
    %)
    
    
    (10.0
    %)
    
    
    (9.1
    %)
 14




---



##### Table of Contents



Comparison of Three Fiscal Months Ended July 1, 2005 and July 2, 2004
 Net Sales
  Three fiscal months endedJuly 1, 2005
    
    July 2, 2004(In thousands)Net Sales
    
    %
    
    Net Sales
    
    %
    
    % ChangeProduct sales
    
    $
    101,997
    
    
    
    86.7
    %
    
    $
    101,170
    
    
    
    87.8
    %
    
    
    0.8
    %Rental revenue
    
    
    12,015
    
    
    
    10.2
    
    
    
    9,914
    
    
    
    8.6
    
    
    
    21.2Used rental equipment sales
    
    
    3,692
    
    
    
    3.1
    
    
    
    4,122
    
    
    
    3.6
    
    
    
    (10.4
    )Net sales
    
    $
    117,704
    
    
    
    100.0
    %
    
    $
    115,206
    
    
    
    100.0
    %
    
    
    2.2
    %
    Gross Profit
    15




---



##### Table of Contents



Operating Expenses
     Other Expenses
  Loss Before Income Taxes
  Benefit for Income Taxes
  Net Loss
  16




---



##### Table of Contents



Comparison of Six Fiscal Months Ended July 1, 2005 and July 2, 2004
 Net Sales
  Six fiscal months endedJuly 1, 2005
    
    July 2, 2004(In thousands)Net Sales
    
    %
    
    Net Sales
    
    %
    
    % ChangeProduct sales
    
    $
    173,086
    
    
    
    85.1
    %
    
    $
    176,461
    
    
    
    86.4
    %
    
    
    (1.9
    )%Rental revenue
    
    
    22,145
    
    
    
    10.9
    
    
    
    19,343
    
    
    
    9.4
    
    
    
    14.5Used rental equipment sales
    
    
    8,255
    
    
    
    4.0
    
    
    
    8,519
    
    
    
    4.2
    
    
    
    (3.1
    )Net sales
    
    $
    203,486
    
    
    
    100.0
    %
    
    $
    204,323
    
    
    
    100.0
    %
    
    
    (0.4
    )%
    Gross Profit
    17




---



##### Table of Contents



Operating Expenses
     Other Expenses
  Loss Before Income Taxes
  Benefit for Income Taxes
  Net Loss
  Liquidity and Capital Resources
   18




---



##### Table of Contents



2005
    
    2004(in millions)Net loss
    
    $
    (20.3
    )
    
    $
    (18.5
    )Non-cash adjustments
    
    
    11.3
    
    
    
    12.4Net loss after non-cash adjustments
    
    
    (9.0
    )
    
    
    (6.1
    )Changes in assets and liabilities
    
    
    (8.2
    )
    
    
    (24.0
    )Net cash used in operating activities
    
    $
    (17.2
    )
    
    $
    (30.1
    )
  
    
    A higher net loss in the first six months of 2005 of $(20.3) million compared to an
$(18.5) million net loss in the first six months of 2004.
    
    No loss on the early extinguishment of long-term debt in 2005, while there was a loss
of $0.8 million in the first six months of 2004.
    
    A gain on the sale of property, plant and equipment and on the sale-leaseback of $1.2
million in the first half of 2005 compared with a loss of $0.1 million in the first half
of 2004.
    
    Changes in other items of $0.3 million.
   
    
    A lower use of cash in accounts receivable, which was a $(10.3) million use of cash in
the first six months of 2005 as compared to a $(12.1) million use of cash in the first six
months of 2004. This decrease was primarily due to better collections in 2005.
    
    A lower use of cash in inventory of $(5.0) million in the first six months of 2005 as
compared to an $(11.9) million use of cash in the first six months of 2004. The 2005
decline in cash used was due to a less dramatic rise in inventory quantities as a result
of having more inventory on-hand at year-end and greater cost increases in the first six
months of 2004.
    
    Cash provided by prepaid expense and other assets increasing to a $3.7 million source
of cash in the first six months of 2005, compared to a $(4.4) million use of cash in the
first six months of 2004. This source of cash in 2005 was primarily due to payments on
notes receivable from customers, while the use in 2004 was due to prepayments for steel.
    
    A lower use of cash in accrued liabilities of $(0.6) million in the first half of 2005,
compared to a $(2.2) million use in the first half of 2004. This decline was due to
higher 2004 payments for facility closing, severance and rebates.
   19




---



##### Table of Contents



July 1, 2005(in $000s)Senior Second Secured Notes, interest rate of 10.75%
    
    $
    165,000Debt discount on Senior Second Secured Notes
    
    
    (5,506
    )Senior Subordinated Notes, interest rate of 13.0%
    
    
    154,729Debt discount on Senior Subordinated Notes
    
    
    (6,778
    )Notes payable to seller of Safway, non-interest
bearing, accreted at 6.0% to 14.5%
    
    
    8,179Debentures previously held by Dayton Superior Capital
Trust, interest rate of 9.1%, due on demand
    
    
    1,080Capital lease obligations
    
    
    3,158Total long-term debt
    
    
    319,862Less current maturities
    
    
    (2,439
    )Long-term portion
    
    $
    317,423
    
    
    $10.3 million increase in accounts receivable due to the normal seasonal
increase in net sales from December to June,
    
    $5.0 million increase in inventories due to the anticipated seasonal higher
sales in the third quarter and to higher raw material costs,
    
    $0.8 million of changes in other items,
    
    These were partially offset by a $4.5 million decrease in cash due to the
timing of cash receipts and disbursements at December and June,
    
    $1.7 million decrease in prepaid expenses due to collections on notes receivable,
    
    $4.0 million increase in accounts payable due to higher inventories; and,
    
    $3.3 million increase in deferred gain on the sale of the Des Plaines facility.
 20




---



##### Table of Contents



Commitments
  Seasonality
  Inflation
  21




---



##### Table of Contents



Stock Collateral Valuation  Senior Second Secured Notes
   22




---



##### Table of Contents



DaytonSuperiorCanada Ltd.Net Income
    
    $
    1,624Provision for Income Taxes
    
    
    151Income from Operations
    
    
    1,775Depreciation Expense
    
    
    66Adjusted valuation EBITDA
    
    
    1,841Multiple
    
    
    5.5Estimated Fair Value
    
    $
    10,126
   Change in
    
    Change in AdjustedSubsidiary
    
    Applicable Value
    
    Valuation EBITDADayton Superior Canada Ltd.
    
    $
    22,875
    
    
    $
    4,159
 Critical Accounting Policies
  Forward-Looking Statements
  23




---



##### Table of Contents



24




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
    
    $95.0 million revolving credit facility, $67.5 million of which was outstanding at July 1, 2005;
    
    $165.0 million of Senior Second Secured Notes, with a net book value of $159.5 million;
    
    $154.7 million of Senior Subordinated Notes, with a net book value of $148.0 million;
    
    $8.1 million of notes payable to the seller of Safway;
    
    $3.2 million in capital lease obligations;
    
    $1.1 million in other fixed-rate, long-term debt.
        25




---



##### Table of Contents



Item 4. Controls and Procedures.
    26




---



##### Table of Contents



Part II.  Other Information
 
 Item 6. Exhibits
  27




---



##### Table of Contents



SIGNATURES
  DAYTON SUPERIOR CORPORATIONDATE: August 15, 2005
    
    
    
    BY: /s/ Edward J. PuisisEdward J. PuisisVice President and Chief Financial Officer
 28




---



##### Table of Contents



INDEX TO EXHIBITS
 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 Officer31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Vice
President and Chief Financial Officer(32)
    
    Section 1350 Certifications32.1
    
    
    Section 1350 Certification of President and
Chief Executive Officer32.2
    
    
    Section 1350 Certification of Vice President and
Chief Financial Officer
 29