##### 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 
June 27, 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
  
 
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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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 1A. Risk FactorsItem 4. Submission of Items to a Vote of Security HoldersItem 6. ExhibitsSIGNATURESINDEX OF EXHIBITSEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 Part I.  Financial Information
 
 Item 1  Financial Statements
 
 June 27,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    574
    
    
    $
    3,381Accounts receivable, net of allowances for sales returns and
allowances and doubtful accounts of $4,273 and $4,447
    
    
    90,454
    
    
    
    68,593Inventories
    
    
    81,898
    
    
    
    66,740Prepaid expenses and other current assets
    
    
    7,029
    
    
    
    5,718Prepaid income taxes
    
    
    720
    
    
    
    740Total current assets
    
    
    180,675
    
    
    
    145,172Rental equipment, net of accumulated depreciation of $72,173 and $67,276
    
    
    65,495
    
    
    
    67,640Property, plant and equipment, net of accumulated depreciation of
$56,388 and $58,542
    
    
    55,706
    
    
    
    56,812Goodwill
    
    
    43,643
    
    
    
    43,643Other assets
    
    
    5,639
    
    
    
    3,986Total assets
    
    $
    351,158
    
    
    $
    317,253LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Revolving credit facility
    
    $
    118,721
    
    
    $
    Current maturities of other long-term debt
    
    
    256,849
    
    
    
    8,990Accounts payable
    
    
    40,223
    
    
    
    39,204Accrued compensation and benefits
    
    
    11,585
    
    
    
    15,456Accrued interest
    
    
    2,395
    
    
    
    6,193Accrued freight
    
    
    3,685
    
    
    
    4,065Other accrued liabilities
    
    
    8,171
    
    
    
    9,219Total current liabilities
    
    
    441,629
    
    
    
    83,127Other long-term debt, net of current portion
    
    
    98
    
    
    
    315,607Other long-term liabilities
    
    
    7,707
    
    
    
    8,162Total liabilities
    
    
    449,434
    
    
    
    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
    
    
    207,854
    
    
    
    207,181Loans to stockholders
    
    
    (1,101
    )
    
    
    (1,085
    )Accumulated other comprehensive loss
    
    
    (706
    )
    
    
    (618
    )Accumulated deficit
    
    
    (304,514
    )
    
    
    (295,312
    )Total stockholders deficit
    
    
    (98,276
    )
    
    
    (89,643
    )Total liabilities and stockholders deficit
    
    $
    351,158
    
    
    $
    317,253
 
 2




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##### Table of Contents



Three Fiscal Months Ended
    
    
    Six Fiscal Months EndedJune 27,
    
    
    June 29,
    
    
    June 27,
    
    
    June 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Product sales
    
    $
    121,267
    
    
    $
    117,174
    
    
    $
    198,570
    
    
    $
    197,350Rental revenue
    
    
    13,615
    
    
    
    14,931
    
    
    
    27,195
    
    
    
    29,504Used rental equipment sales
    
    
    6,155
    
    
    
    5,411
    
    
    
    10,651
    
    
    
    9,684Net sales
    
    
    141,037
    
    
    
    137,516
    
    
    
    236,416
    
    
    
    236,538Product cost of sales
    
    
    80,936
    
    
    
    83,334
    
    
    
    139,173
    
    
    
    143,766Rental cost of sales
    
    
    8,226
    
    
    
    8,252
    
    
    
    16,763
    
    
    
    16,345Used rental equipment cost of sales
    
    
    514
    
    
    
    1,507
    
    
    
    1,064
    
    
    
    2,633Cost of sales
    
    
    89,676
    
    
    
    93,093
    
    
    
    157,000
    
    
    
    162,744Product gross profit
    
    
    40,331
    
    
    
    33,840
    
    
    
    59,397
    
    
    
    53,584Rental gross profit
    
    
    5,389
    
    
    
    6,679
    
    
    
    10,432
    
    
    
    13,159Used rental equipment gross profit
    
    
    5,641
    
    
    
    3,904
    
    
    
    9,587
    
    
    
    7,051Gross profit
    
    
    51,361
    
    
    
    44,423
    
    
    
    79,416
    
    
    
    73,794Selling, general and administrative
expenses
    
    
    29,619
    
    
    
    27,302
    
    
    
    56,454
    
    
    
    53,160Facility closing and severance expenses
    
    
    472
    
    
    
    83
    
    
    
    1,174
    
    
    
    451(Gain) loss on disposals of property,
plant, and equipment
    
    
    118
    
    
    
    178
    
    
    
    (413
    )
    
    
    261Income from operations
    
    
    21,152
    
    
    
    16,860
    
    
    
    22,201
    
    
    
    19,922Other expenses:Interest expense
    
    
    12,534
    
    
    
    12,126
    
    
    
    25,040
    
    
    
    23,311Interest income
    
    
    (59
    )
    
    
    (42
    )
    
    
    (171
    )
    
    
    (177
    )Loss on extinguishment of long-term
debt
    
    
    
    
    
    
    
    
    
    
    6,224
    
    
    
    Other expense
    
    
    24
    
    
    
    221
    
    
    
    54
    
    
    
    333Income (loss) before provision for
income taxes
    
    
    8,653
    
    
    
    4,555
    
    
    
    (8,946
    )
    
    
    (3,545
    )Provision for income taxes
    
    
    192
    
    
    
    172
    
    
    
    256
    
    
    
    231Net income (loss)
    
    $
    8,461
    
    
    $
    4,383
    
    
    $
    (9,202
    )
    
    $
    (3,776
    )Basic net income (loss) per common
share
    
    $
    0.46
    
    
    $
    0.24
    
    
    $
    (0.50
    )
    
    $
    (0.21
    )Average number of shares of common
stock outstanding
    
    
    18,563,228
    
    
    
    18,297,728
    
    
    
    18,563,228
    
    
    
    18,253,636Diluted net income (loss) per common
share
    
    $
    0.44
    
    
    $
    0.23
    
    
    $
    (0.50
    )
    
    $
    (0.21
    )Average number of shares of common
stock and equivalents outstanding
    
    
    19,297,641
    
    
    
    19,319,773
    
    
    
    18,563,228
    
    
    
    18,253,636
 
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Six Fiscal Months EndedJune 29, 2007 (Asrestated June 27, 2008
    
    
    See Note 8)Cash Flows From Operating Activities:Net loss
    
    $
    (9,202
    )
    
    $
    (3,776
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    12,591
    
    
    
    11,833Amortization of intangibles
    
    
    69
    
    
    
    91Loss on extinguishment of long-term debt
    
    
    6,224
    
    
    
    Stock compensation expense
    
    
    675
    
    
    
    1,366Deferred income taxes
    
    
    (58
    )
    
    
    2Amortization of deferred financing costs and debt discount
    
    
    5,434
    
    
    
    3,569Amortization of deferred gain on sale-leaseback transactions
    
    
    (589
    )
    
    
    (811
    )Gain on sales of rental equipment
    
    
    (9,587
    )
    
    
    (7,056
    )(Gain) loss on sales of property, plant and equipment
    
    
    (237
    )
    
    
    525Changes in assets and liabilities:Accounts receivable
    
    
    (23,161
    )
    
    
    (16,565
    )Inventories
    
    
    (15,158
    )
    
    
    (15,076
    )Prepaid expenses and other assets
    
    
    (1,395
    )
    
    
    (2,439
    )Prepaid income taxes
    
    
    20
    
    
    
    (417
    )Accounts payable
    
    
    3,080
    
    
    
    978Accrued liabilities and other long-term liabilities
    
    
    (8,918
    )
    
    
    (5,219
    )Net cash used in operating activities
    
    
    (40,212
    )
    
    
    (32,995
    )Cash Flows From Investing Activities:Property, plant and equipment additions
    
    
    (6,930
    )
    
    
    (10,018
    )Proceeds from sales of property, plant and equipment
    
    
    1,425
    
    
    
    5Rental equipment additions
    
    
    (7,366
    )
    
    
    (15,259
    )Proceeds from sales of used rental equipment
    
    
    12,690
    
    
    
    9,913Net cash used in investing activities
    
    
    (181
    )
    
    
    (15,359
    )Cash Flows From Financing Activities:Borrowings under revolving credit facilities
    
    
    174,887
    
    
    
    49,500Repayments of revolving credit facilities
    
    
    (56,166
    )
    
    
    (29,500
    )Repayments of long-term debt
    
    
    (166,336
    )
    
    
    (453
    )Issuance of long-term debt
    
    
    94,250
    
    
    
    Financing costs paid
    
    
    (4,237
    )
    
    
    (633
    )Prepayment premium on redemption of long-term debt
    
    
    (4,641
    )
    
    
    Changes in loans to stockholders
    
    
    (16
    )
    
    
    1,133Issuance of shares of common stock
    
    
    
    
    
    
    826Net cash provided by financing activities
    
    
    37,741
    
    
    
    20,873Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    (155
    )
    
    
    668Net decrease in cash and cash equivalents
    
    
    (2,807
    )
    
    
    (26,813
    )Cash and cash equivalents, beginning of period
    
    
    3,381
    
    
    
    26,813Cash, end of period
    
    $
    574
    
    
    $
    Supplemental Disclosures:Cash paid for income taxes
    
    
    256
    
    
    $
    268Cash paid for interest
    
    
    23,404
    
    
    
    19,843Financing cost additions in accounts payable
    
    
    699
    
    
    
    Sales of used rental equipment in accounts receivable and notes receivable
    
    
    10,412
    
    
    
    11,054Property, plant and equipment and rental equipment additions in accounts payable
    
    
    1,010
    
    
    
    2,760
 
 4




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Three Fiscal Months Ended
    
    
    Six Fiscal Months EndedJune 27, 2008
    
    
    June 29, 2007
    
    
    June 27, 2008
    
    
    June 29, 2007Net income (loss)
    
    $
    8,461
    
    
    $
    4,383
    
    
    $
    (9,202
    )
    
    $
    (3,776
    )Other comprehensive
gain (loss):Foreign
currency
translation
adjustment
    
    
    51
    
    
    
    592
    
    
    
    (88
    )
    
    
    668Comprehensive
income (loss)
    
    $
    8,512
    
    
    $
    4,975
    
    
    $
    (9,290
    )
    
    $
    (3,108
    )
 
 5




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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.
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June 27, 2008
    
    December 31, 2007Raw materials
    
    $
    22,987
    
    
    $
    13,534Work in progress
    
    
    9,190
    
    
    
    3,518Finished goods
    
    
    54,469
    
    
    
    53,358Total gross inventories
    
    
    86,646
    
    
    
    70,410Net realizable value reserve
    
    
    (4,748
    )
    
    
    (3,670
    )Total inventories
    
    $
    81,898
    
    
    $
    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. For the six
fiscal months ended June 27, 2008 and June 29, 2007, common stock equivalents of 734,477
and 1,018,644 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. 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. However, these scope exceptions do 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. 141R, Business Combinations.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. At the
time of the partial adoption of SFAS 157, however, there were no financial assets or
liabilities measured at fair value on a recurring basis and no non-financial assets or
liabilities measured at fair value on a nonrecurring basis.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
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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. As of June 27,
2008, the Company does not have any instruments or activities to which this Statement would
apply, but entered into an interest rate cap agreement during the third quarter of 2008. The
Company is evaluating the effect that SFAS No. 161 will have 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.
 (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
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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
    
    Six fiscal months endedJune 27, 2008
    
    June 29, 2007
    
    June 27, 2008
    
    June 29, 2007Revolving Credit Facility:Average borrowings
    
    $
    112,771
    
    
    $
    14,427
    
    
    $
    76,098
    
    
    $
    8,008Maximum borrowing
    
    
    122,821
    
    
    
    25,750
    
    
    
    122,821
    
    
    
    25,750Weighted average
interest rate
    
    
    5.9
    %
    
    
    13.0
    %
    
    
    6.3
    %
    
    
    17.0
    %
   June 27, 2008
    
    
    December 31, 2007Senior Subordinated Notes, interest rate of 13.0%
    
    $
    154,729
    
    
    $
    154,729Debt discount on Senior Subordinated Notes
    
    
    (2,114
    )
    
    
    (3,045
    )Term loan, interest rate of 7.9%
    
    
    100,000
    
    
    
    Debt discount on term loan
    
    
    (4,051
    )
    
    
    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%
    
    
    6,553
    
    
    
    6,907Debentures previously held by Dayton Superior Capital Trust, interest rate of 9.1%, due on demand
    
    
    1,024
    
    
    
    1,035Capital lease obligations
    
    
    806
    
    
    
    1,364Total long-term debt
    
    
    256,947
    
    
    
    324,597Less current maturities
    
    
    (256,849
    )
    
    
    (8,990
    )Long-term portion
    
    $
    98
    
    
    $
    315,607
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(4) Stock Option Plans
  Granted and outstanding
    
    
    867,068Granted and exercised
    
    
    122,998Available for granting
    
    
    677,138Total
    
    
    1,667,204
   Six fiscal months
    
    Six fiscal monthsended June 27, 2008
    
    ended June 29, 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
    %
 10




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Weighted AverageNumber of
    
    Exercise Price Per
    
    Unvested Number of
    
    Weighted Average
    
    Aggregate IntrinsicShares
    
    Share
    
    Shares
    
    Grant-Date 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 June 27, 2008
    
    
    867,068
    
    
    $
    10.38
    
    
    
    622,783
    
    
    $
    2.75
    
    
    $
    
     (5) Retirement Plans
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Pension BenefitsThree fiscal
    
    
    Three fiscal
    
    
    Six fiscal
    
    
    Six fiscalmonths
    
    
    months
    
    
    months
    
    
    monthsended June
    
    
    ended June
    
    
    ended June
    
    
    ended June27, 2008
    
    
    29, 2007
    
    
    27, 2008
    
    
    29, 2007Service cost
    
    $
    115
    
    
    $
    172
    
    
    $
    229
    
    
    $
    344Interest cost
    
    
    215
    
    
    
    206
    
    
    
    431
    
    
    
    411Expected return on plan assets
    
    
    (270
    )
    
    
    (243
    )
    
    
    (540
    )
    
    
    (486
    )Amortization of prior service cost
    
    
    2
    
    
    
    2
    
    
    
    4
    
    
    
    4Amortization of net loss
    
    
    23
    
    
    
    19
    
    
    
    47
    
    
    
    38Net periodic benefit cost
    
    $
    85
    
    
    $
    156
    
    
    $
    171
    
    
    $
    311
 Symons Postretirement BenefitsThree fiscal
    
    
    Three fiscal
    
    
    Six fiscal
    
    
    Six fiscalmonths
    
    
    months
    
    
    months
    
    
    monthsended June
    
    
    ended June
    
    
    ended June
    
    
    ended June27, 2008
    
    
    29, 2007
    
    
    27, 2008
    
    
    29, 2007Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    8
    
    
    
    8
    
    
    
    15
    
    
    
    15Expected return on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    6
    
    
    
    6
    
    
    
    12
    
    
    
    12Amortization of net gain
    
    
    (2
    )
    
    
    (2
    )
    
    
    (4
    )
    
    
    (4
    )Net periodic benefit cost
    
    $
    12
    
    
    $
    12
    
    
    $
    23
    
    
    $
    23
  (6) Segment Reporting
   12




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##### Table of Contents



Three fiscal months ended
    
    
    Six fiscal months endedJune 27, 2008
    
    
    June 29, 2007
    
    
    June 27, 2008
    
    
    June 29, 2007Product sales
    
    $
    121,267
    
    
    $
    117,174
    
    
    $
    198,570
    
    
    $
    197,350Rental revenue
    
    
    13,615
    
    
    
    14,931
    
    
    
    27,195
    
    
    
    29,504Used rental equipment sales
    
    
    6,155
    
    
    
    5,411
    
    
    
    10,651
    
    
    
    9,684Net sales
    
    
    141,037
    
    
    
    137,516
    
    
    
    236,416
    
    
    
    236,538Product cost of sales
    
    
    80,936
    
    
    
    83,334
    
    
    
    139,173
    
    
    
    143,766Rental cost of sales
    
    
    8,226
    
    
    
    8,252
    
    
    
    16,763
    
    
    
    16,345Used rental equipment cost of sales
    
    
    514
    
    
    
    1,507
    
    
    
    1,064
    
    
    
    2,633Cost of sales
    
    
    89,676
    
    
    
    93,093
    
    
    
    157,000
    
    
    
    162,744Product gross profit
    
    
    40,331
    
    
    
    33,840
    
    
    
    59,397
    
    
    
    53,584Rental gross profit
    
    
    5,389
    
    
    
    6,679
    
    
    
    10,432
    
    
    
    13,159Used rental equipment gross profit
    
    
    5,641
    
    
    
    3,904
    
    
    
    9,587
    
    
    
    7,051Gross profit
    
    $
    51,361
    
    
    $
    44,423
    
    
    $
    79,416
    
    
    $
    73,794Depreciation Expense:Product sales (property, plant,
and equipment)
    
    $
    1,579
    
    
    $
    1,290
    
    
    $
    3,080
    
    
    $
    2,574Rental Revenue (rental equipment)
    
    
    3,501
    
    
    
    3,954
    
    
    
    7,747
    
    
    
    7,938Corporate
    
    
    918
    
    
    
    742
    
    
    
    1,764
    
    
    
    1,321Total depreciation
    
    $
    5,998
    
    
    $
    5,986
    
    
    $
    12,591
    
    
    $
    11,833
 (7) Provision for Income Taxes
   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
    
    
    (3
    )Interest
    
    
    3Balance at June 27, 2008
    
    $
    298
  13




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##### Table of Contents



(8) Restatement of Previously Issued Financial Statements
 Statement of Cash Flows
 For the six fiscal months ended June 29, 2007As PreviouslyReported
    
    Adjustments
    
    As RestatedChanges in assets and liabilities  Accounts receivable
    
    $
    (15,022
    )
    
    $
    (1,543
    )
    
    $
    (16,565
    )Changes in assets and liabilities  Prepaid expenses
and other assets
    
    
    (3,753
    )
    
    
    1,314
    
    
    
    (2,439
    )Net cash provided by (used in) operating activities
    
    
    (32,766
    )
    
    
    (229
    )
    
    
    (32,995
    )Proceeds from sales of rental equipment
    
    
    9,684
    
    
    
    229
    
    
    
    9,913Net cash provided by (used in) investing activities
    
    
    (15,588
    )
    
    
    229
    
    
    
    (15,359
    )Supplemental Disclosures  Sale of used rental
equipment in accounts and notes receivable
    
    
    
    
    
    
    11,054
    
    
    
    11,054
 14




---



##### 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




---



##### Table of Contents



Results of Operations
  Three fiscal months ended
    
    
    Six fiscal months endedJune 27, 2008
    
    
    June 29, 2007
    
    
    June 27, 2008
    
    
    June 29, 2007Product sales
    
    
    86.0
    %
    
    
    85.2
    %
    
    
    84.0
    %
    
    
    83.4
    %Rental revenue
    
    
    9.6
    
    
    
    10.9
    
    
    
    11.5
    
    
    
    12.5Used rental equipment sales
    
    
    4.4
    
    
    
    3.9
    
    
    
    4.5
    
    
    
    4.1Net sales
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Product cost of sales
    
    
    66.7
    
    
    
    71.1
    
    
    
    70.1
    
    
    
    72.8Rental cost of sales
    
    
    60.4
    
    
    
    55.3
    
    
    
    61.6
    
    
    
    55.4Used rental equipment cost of sales
    
    
    8.4
    
    
    
    27.9
    
    
    
    10.0
    
    
    
    27.2Cost of sales
    
    
    63.6
    
    
    
    67.7
    
    
    
    66.4
    
    
    
    68.8Product gross profit
    
    
    33.3
    
    
    
    28.9
    
    
    
    29.9
    
    
    
    27.2Rental gross profit
    
    
    39.6
    
    
    
    44.7
    
    
    
    38.4
    
    
    
    44.6Used rental equipment gross profit
    
    
    91.6
    
    
    
    72.1
    
    
    
    90.0
    
    
    
    72.8Gross profit
    
    
    36.4
    
    
    
    32.3
    
    
    
    33.6
    
    
    
    31.2Selling, general and administrative
expenses
    
    
    21.0
    
    
    
    19.8
    
    
    
    23.9
    
    
    
    22.5Facility closing and severance expenses
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.5
    
    
    
    0.2(Gain) loss on disposals of property,
plant, and equipment
    
    
    0.1
    
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    0.1Income from operations
    
    
    15.0
    
    
    
    12.3
    
    
    
    9.4
    
    
    
    8.4Interest expense
    
    
    8.8
    
    
    
    8.8
    
    
    
    10.6
    
    
    
    9.9Interest income
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )Loss on extinguishment of long-term
debt
    
    
    
    
    
    
    
    
    
    
    2.6
    
    
    
    Other expense
    
    
    
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.1Income (loss) before provision for
income taxes
    
    
    6.2
    
    
    
    3.3
    
    
    
    (3.8
    )
    
    
    (1.5
    )Provision for income taxes
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Net income (loss)
    
    
    6.1
    %
    
    
    3.2
    %
    
    
    (3.9
    )%
    
    
    (1.6
    )%
 Comparison of Three Fiscal Months Ended June 27, 2008 and June 29, 2007
 Net Sales
  Three fiscal months endedJune 27, 2008
    
    
    June 29, 2007($ in thousands)
    
    Net Sales
    
    
    %
    
    
    Net Sales
    
    
    %
    
    
    % ChangeProduct sales
    
    $
    121,267
    
    
    
    86.0
    %
    
    $
    117,174
    
    
    
    85.2
    %
    
    
    3.5
    %Rental revenue
    
    
    13,615
    
    
    
    9.6
    
    
    
    14,931
    
    
    
    10.9
    
    
    
    (8.8
    )Used rental equipment sales
    
    
    6,155
    
    
    
    4.4
    
    
    
    5,411
    
    
    
    3.9
    
    
    
    13.7Net sales
    
    $
    141,037
    
    
    
    100.0
    %
    
    $
    137,516
    
    
    
    100.0
    %
    
    
    2.6
    %
 16




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Gross Profit
     Operating Expenses
  Other Expenses
   17




---



##### Table of Contents



Income Before Income Taxes
  Provision for Income Taxes
   Net Income
  Comparison of Six Fiscal Months Ended June 27, 2008 and June 29, 2007
 Net Sales
  Six fiscal months endedJune 27, 2008
    
    
    June 29, 2007($ in thousands)
    
    Net Sales
    
    
    %
    
    
    Net Sales
    
    
    %
    
    
    % ChangeProduct sales
    
    $
    198,570
    
    
    
    84.0
    %
    
    $
    197,350
    
    
    
    83.4
    %
    
    
    0.6
    %Rental revenue
    
    
    27,195
    
    
    
    11.5
    
    
    
    29,504
    
    
    
    12.5
    
    
    
    (7.8
    )Used rental equipment sales
    
    
    10,651
    
    
    
    4.5
    
    
    
    9,684
    
    
    
    4.1
    
    
    
    10.0Net sales
    
    $
    236,416
    
    
    
    100.0
    %
    
    $
    236,538
    
    
    
    100.0
    %
    
    
    (0.1
    )%
    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
  Liquidity and Capital Resources
   Six fiscal months ended($ in thousands)
    
    June 27, 2008
    
    
    June 29, 2007Capital expenditures:Rental equipment additions
    
    $
    7,366
    
    
    $
    15,259Property, plant and equipment additions
    
    
    6,930
    
    
    
    10,018Proceeds from sales of used rental equipment
    
    
    (12,690
    )
    
    
    (9,913
    )Proceeds from sales of property, plant and equipment
    
    
    (1,425
    )
    
    
    (5
    )Net additions to rental equipment and property, plant, and equipment
    
    $
    181
    
    
    $
    15,359
 20




---



##### Table of Contents



Six fiscal months ended($ in millions)
    
    June 27, 2008
    
    
    June 29, 2007Net loss
    
    $
    (9.2
    )
    
    $
    (3.8
    )Adjustments to reconcile net loss to net
cash used in operating activities
    
    
    14.5
    
    
    
    9.5Subtotal
    
    
    5.3
    
    
    
    5.7Changes in assets and liabilities
    
    
    (45.5
    )
    
    
    (38.7
    )Net cash used in operating activities
    
    $
    (40.2
    )
    
    $
    (33.0
    )
   
    
    The increase in accounts receivable during the first six fiscal months of 2008 was a
$23.2 million use of operating cash, compared to $16.6 million in the first six fiscal
months of 2007, due to the higher net sales in the second quarter of 2008.
    
    The decrease in accrued and other long-term liabilities was an $8.9 million use of cash
in the first six fiscal months of 2008, as compared to a $5.2 million use in the first six
fiscal months of 2007, due to the timing of interest payments. Interest on the new term
loan is paid monthly as compared to semi-annually on the Senior Second Secured Notes that
were refinanced in the first quarter of 2008.
    
    The increase in accounts payable represented a larger source of cash of $3.1 million as
compared to $1.0 million in the first six fiscal months of 2007, due to the timing of
purchases and vendor payments within the respective quarters.
   21




---



##### Table of Contents



($ in thousands)Senior Subordinated Notes, interest rate of 13.0%
    
    $
    154,729Debt discount on Senior Subordinated Notes
    
    
    (2,114
    )Term loan, interest rate of 7.9%
    
    
    100,000Debt discount on term loan
    
    
    (4,051
    )Senior notes payable to seller of Safway, non-interest bearing,
accreted at 14.5%
    
    
    6,553Debentures previously held by Dayton Superior Capital Trust,
interest rate of 9.1%, due on demand
    
    
    1,024Capital lease obligations
    
    
    806Total long-term debt
    
    
    256,947Less current maturities
    
    
    256,849Long-term portion
    
    $
    98
    
    
    $118.7 million increase in the revolving credit facility,
    
    $247.9 million increase in the current portion of long-term debt due to the term
loan and Senior Subordinated Notes maturing within twelve months, and
    
    $2.8 million less cash and cash equivalents, offset by
    
    $21.9 million increase in accounts receivable due to the higher net sales in the
second
 22




---



##### Table of Contents



quarter of 2008 relative to the fourth quarter of 2007, and
    
    $15.2 million increase in inventories due to material cost inflation and higher
quantities in anticipation of seasonally higher third quarter sales and to buy ahead of
cost increases, and
    
    $9.1 million decrease in accrued liabilities due to the payment of incentives,
annual retirement plan contributions, customer rebates and the timing of interest
payments.
  Commitments
  Seasonality
  Inflation
  Critical Accounting Policies
 23




---



##### Table of Contents



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




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
     
 Item 4. Controls and Procedures.
   Changes in Internal Control over Financial Reporting
  25




---



##### Table of Contents



Part II.  Other Information
 
 Item 1A. Risk Factors
  Our substantial level of indebtedness could adversely affect our business, financial condition or
results of operations 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.
 Increased costs of raw materials and energy resources may result in increased operating expenses
and adversely affect our results of operations and cash flow.
 26




---



##### Table of Contents



Item 4. Submission of Items to a Vote of Security Holders.
  Name
    
    Votes For
    
    Votes WithheldEric R. Zimmerman
    
    
    15,045,947
    
    
    
    1,435,598Douglas W. Rotatori
    
    
    15,045,947
    
    
    
    1,435,598
  
 Item 6. Exhibits
  27




---



##### Table of Contents



SIGNATURES
  DAYTON SUPERIOR CORPORATIONDATE:  July 31, 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