DSUP Dayton Superior Corp (MM)

 

 

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

(Exact name of registrant as specified in its charter)

DELAWARE		31-0676346
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)
7777 Washington Village Dr., Suite 130
Dayton, Ohio		45459
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 937-428-6360

NOT APPLICABLE

(Former name, former address and former fiscal year,
if changed from last report)

Indicate by mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO þ

19,066,212 Shares of Common Stock were outstanding as of July 31, 2008

 

 

TABLE OF CONTENTS

Part I. – Financial Information

Item 1 – Financial Statements

Dayton Superior Corporation and Subsidiary
Condensed Consolidated Balance Sheets
As of June 27, 2008 and December 31, 2007
(Amounts in thousands, except share and per share amounts)
(Unaudited)

		June 27,				December 31,
		2008				2007
ASSETS
Current assets:
Cash and cash equivalents		$	574			$	3,381
Accounts receivable, net of allowances for sales returns and allowances and doubtful accounts of $4,273 and $4,447			90,454				68,593
Inventories			81,898				66,740
Prepaid expenses and other current assets			7,029				5,718
Prepaid income taxes			720				740
Total current assets			180,675				145,172
Rental equipment, net of accumulated depreciation of $72,173 and $67,276			65,495				67,640
Property, plant and equipment, net of accumulated depreciation of $56,388 and $58,542			55,706				56,812
Goodwill			43,643				43,643
Other assets			5,639				3,986
Total assets		$	351,158			$	317,253
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Revolving credit facility		$	118,721			$	—
Current maturities of other long-term debt			256,849				8,990
Accounts payable			40,223				39,204
Accrued compensation and benefits			11,585				15,456
Accrued interest			2,395				6,193
Accrued freight			3,685				4,065
Other accrued liabilities			8,171				9,219
Total current liabilities			441,629				83,127
Other long-term debt, net of current portion			98				315,607
Other long-term liabilities			7,707				8,162
Total liabilities			449,434				406,896
Stockholders’ deficit:
Common stock, $0.01 par value, 100,000,000 shares authorized, 19,066,212 shares issued and outstanding, 502,984 shares unvested			191				191
Additional paid-in capital			207,854				207,181
Loans 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

The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed consolidated balance sheets.

Dayton Superior Corporation and Subsidiary
Condensed Consolidated Statements of Operations
For The Three and Six Fiscal Months Ended June 27, 2008 and June 29, 2007
(Amounts in thousands, except share and per share amounts)
(Unaudited)

		Three Fiscal Months Ended								Six Fiscal Months Ended
		June 27,				June 29,				June 27,				June 29,
		2008				2007				2008				2007
Product sales		$	121,267			$	117,174			$	198,570			$	197,350
Rental revenue			13,615				14,931				27,195				29,504
Used rental equipment sales			6,155				5,411				10,651				9,684
Net sales			141,037				137,516				236,416				236,538
Product cost of sales			80,936				83,334				139,173				143,766
Rental cost of sales			8,226				8,252				16,763				16,345
Used rental equipment cost of sales			514				1,507				1,064				2,633
Cost of sales			89,676				93,093				157,000				162,744
Product gross profit			40,331				33,840				59,397				53,584
Rental gross profit			5,389				6,679				10,432				13,159
Used rental equipment gross profit			5,641				3,904				9,587				7,051
Gross profit			51,361				44,423				79,416				73,794
Selling, general and administrative expenses			29,619				27,302				56,454				53,160
Facility closing and severance expenses			472				83				1,174				451
(Gain) loss on disposals of property, plant, and equipment			118				178				(413	)			261
Income from operations			21,152				16,860				22,201				19,922
Other expenses:
Interest expense			12,534				12,126				25,040				23,311
Interest income			(59	)			(42	)			(171	)			(177	)
Loss on extinguishment of long-term debt			—				—				6,224				—
Other expense			24				221				54				333
Income (loss) before provision for income taxes			8,653				4,555				(8,946	)			(3,545	)
Provision for income taxes			192				172				256				231
Net 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				18,253,636
Diluted 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

The accompanying notes to condensed consolidated financial statements are
an integral part of these consolidated statements.

Dayton Superior Corporation and Subsidiary
Condensed Consolidated Statements of Cash Flows
For The Six Fiscal Months Ended June 27, 2008 and June 29, 2007
(Amounts in thousands)
(Unaudited)

		Six Fiscal Months Ended
						June 29, 2007 (As
						restated –
		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				11,833
Amortization of intangibles			69				91
Loss on extinguishment of long-term debt			6,224				—
Stock compensation expense			675				1,366
Deferred income taxes			(58	)			2
Amortization of deferred financing costs and debt discount			5,434				3,569
Amortization 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	)			525
Changes 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				978
Accrued 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				5
Rental equipment additions			(7,366	)			(15,259	)
Proceeds from sales of used rental equipment			12,690				9,913
Net cash used in investing activities			(181	)			(15,359	)
Cash Flows From Financing Activities:
Borrowings under revolving credit facilities			174,887				49,500
Repayments 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	)			1,133
Issuance of shares of common stock			—				826
Net cash provided by financing activities			37,741				20,873
Effect of Exchange Rate Changes on Cash and Cash Equivalents			(155	)			668
Net decrease in cash and cash equivalents			(2,807	)			(26,813	)
Cash and cash equivalents, beginning of period			3,381				26,813
Cash, end of period		$	574			$	—
Supplemental Disclosures:
Cash paid for income taxes			256			$	268
Cash paid for interest			23,404				19,843
Financing cost additions in accounts payable			699				—
Sales of used rental equipment in accounts receivable and notes receivable			10,412				11,054
Property, plant and equipment and rental equipment additions in accounts payable			1,010				2,760

The accompanying notes to condensed consolidated financial statements are
an integral part of these consolidated statements.

Dayton Superior Corporation and Subsidiary
Condensed Consolidated Statements of Comprehensive Income (Loss)
For The Three and Six Fiscal Months Ended June 27, 2008 and June 29, 2007
(Amounts in thousands)
(Unaudited)

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

The accompanying notes to condensed consolidated financial statements are
an integral part of these consolidated statements.

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

The interim condensed consolidated financial statements included herein have been prepared by Dayton Superior Corporation and its wholly-owned subsidiary (collectively, “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 of America 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 consolidated financial statements and the notes thereto included in the Company’s annual financial statements for the year ended December 31, 2007. The interim results may not be indicative of future periods.

The Company has $381,735, excluding debt discount, of long-term debt maturing within twelve months. In July 2008, the Company commenced a private offer to exchange its Senior Subordinated Notes due June 2009 with a face value of $154,729 in a private placement for an equal amount of newly issued Senior Secured Notes due September 2014. A successful extension of the maturity date of the Senior Subordinated Notes would automatically extend the maturity of $218,721, excluding debt discount, of the Company’s other long-term debt to March 2014. The new notes are being offered with interest in cash at an interest rate equal to the greater of 12.0% and three-month London Interbank Offered Rate (“LIBOR”) plus 9.0% or, at the Company’s option, in kind at an interest rate equal to the greater of 12.75% and three-month LIBOR plus 9.75%. The Company’s ability to continue as a going concern is contingent upon a successful completion of such exchange offer or other refinancing. It is possible that a refinancing might have an effective interest rate that is higher than the rate initially offered in the exchange offer and higher than the rate currently borne by the Senior Subordinated Notes. There is no assurance that the offer will be accepted or that the Company will be able to refinance any of its indebtedness on commercially reasonable terms, or at all. Such circumstances may have a material adverse effect on the Company’s business, financial condition and results of operations. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts or amounts and reclassification of liabilities that might be necessary should the Company be deemed to be unable to continue as a going concern.

(2) Accounting Policies

The interim condensed 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, 2007. While the Company 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 June 27, 2008 and December 31, 2007:

		June 27, 2008				December 31, 2007
Raw materials		$	22,987			$	13,534
Work in progress			9,190				3,518
Finished goods			54,469				53,358
Total gross inventories			86,646				70,410
Net 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 Combinations or 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

			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

During the first quarter of 2008, the Company refinanced a portion of its long-term debt. The Company entered into a new $150,000 revolving credit facility and issued a $100,000 term loan. The proceeds of the term loan and an initial draw on the revolving credit facility were used to repay the Company’s $165,000 Senior Second Secured Notes. A summary of the sources and uses of cash at the closing of the refinancing was as follows:

Sources:
Issuance of $100,000 term loan, net of discount		$	94,250
Initial draw on new revolving credit facility			88,666
		$	182,916
Uses:
Repayment of Senior Second Secured Notes		$	165,000
Prepayment premium on Senior Second Secured Notes			4,641
Accrued interest			9,836
Financing costs paid at closing			3,439
		$	182,916

In conjunction with the refinancing, the Company recorded a loss on extinguishment of long-term debt, comprised of the following:

Prepayment premium on Senior Second Secured Notes		$	4,641
Unamortized debt discount on Senior Second Secured Notes			1,063
Unamortized financing costs on Senior Second Secured Notes			243
Unamortized financing costs on previous revolving credit facility			277
Loss on extinguishment of long-term debt		$	6,224

Under the new revolving credit facility, borrowings are limited to 85% of eligible accounts receivable and 60% of eligible inventories and rental equipment. At June 27, 2008, all of the $150,000 was available, of which $118,721 was outstanding at a weighted average interest rate of 5.5%. Outstanding letters of credit were $10,309, resulting in available borrowings of $20,970. The new revolving credit facility expires in March 2009, but is automatically extended to March 2014 if the Company repays, refinances, or extends the maturity of the Senior Subordinated Notes prior to the initial maturity of the new revolving credit facility. The credit facility is secured by substantially all assets of the Company.

The average borrowings, maximum borrowings and weighted average interest rates on the new revolving credit facility and its predecessor for the periods indicated were as follows:

		Three fiscal months ended								Six fiscal months ended
		June 27, 2008				June 29, 2007				June 27, 2008				June 29, 2007
Revolving Credit Facility:
Average borrowings		$	112,771			$	14,427			$	76,098			$	8,008
Maximum borrowing			122,821				25,750				122,821				25,750
Weighted average interest rate			5.9	%			13.0	%			6.3	%			17.0	%

The weighted average interest rate is calculated by dividing interest expense (which is the sum of interest on borrowings, letter of credit fees, and commitment fees on unused credit and borrowing availability) by average borrowings. The high weighted average interest rate during the three and six month periods ended June 29, 2007 is a reflection of the limited average borrowings during those periods. Interest expense on the facility for the three fiscal months ended June 29, 2007 was $466, consisting of $301 of interest on borrowings (8.4%), $65 of letter of credit fees (1.8%), and $100 for commitment fees on unused availability (2.8%). Interest expense on the facility for the six fiscal months ended June 29, 2007 was $670, consisting of $332 of interest on borrowings (8.4%), $129 of letter of credit fees (3.3%), and $209 for commitment fees on unused availability (5.3%).

Following is a summary of the Company’s other long-term debt as of June 27, 2008 and December 31, 2007:

		June 27, 2008				December 31, 2007
Senior Subordinated Notes, interest rate of 13.0%		$	154,729			$	154,729
Debt 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%			—				165,000
Debt 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				6,907
Debentures previously held by Dayton Superior Capital Trust, interest rate of 9.1%, due on demand			1,024				1,035
Capital lease obligations			806				1,364
Total long-term debt			256,947				324,597
Less current maturities			(256,849	)			(8,990	)
Long-term portion		$	98			$	315,607

The Senior Subordinated Notes have a principal amount of $154,729 and mature in June 2009. The Senior Subordinated Notes were issued at a discount, which is being accreted to the face value using the effective interest method and is reflected as interest expense. In July 2008, the Company commenced a private offer to exchange its Senior Subordinated Notes in a private placement for an equal amount of newly issued Senior Secured Notes due September 2014. The new notes are being offered with interest in cash at a interest rate equal to the greater of 12.0% and three-month LIBOR plus 9.0% or, at the Company’s option, in kind at an interest rate equal to the greater of 12.75% and three-month LIBOR plus 9.75%. The estimated fair value of the Senior Subordinated Notes as of June 27, 2008 is $130,900.

The Senior Subordinated Notes were issued with warrants that allow the holders to purchase shares of the Company’s common stock for $0.0046 per share. As of June 27, 2008, warrants to purchase 231,880 shares of common stock were outstanding.

The term loan was issued at a discount, which is being accreted to the face value using the effective interest method and reflected as interest expense. The loan initially matures in March 2009, but is automatically extended to March 2014 if the Company repays, refinances, or extends the maturity of the Senior Subordinated Notes prior to the initial maturity of the term loan. The term loan is subject to financial covenants based on debt to adjusted EBITDA, as defined in the agreement, and interest coverage. The Company is in compliance with both of these covenants. The term loan is secured by a second security interest in substantially all assets of the Company. As required by the term loan, during the third quarter of 2008, the Company entered into an agreement to cap LIBOR at 6.25% for $50,000 of face amount of the term loan until July 1, 2011. The estimated fair value of the term loan as of June 27, 2008 was approximately $99,400.

(4) Stock Option Plans

The 2000 Dayton Superior Corporation Stock Option Plan, as amended, (‘‘Stock Option Plan’’), permits the grant of stock options to purchase 1,667,204 shares of common stock. Options that are cancelled may be reissued. The following table sets forth the status of the authorized options as of June 27, 2008:

Granted and outstanding			867,068
Granted and exercised			122,998
Available for granting			677,138
Total			1,667,204

The terms of the option grants are five or ten years from the date of grant. The weighted average remaining life of the outstanding options was 4.5 years as of June 27, 2008. The options granted during 2008 vest at a rate of 25% on each of the first four anniversaries of the grant date. The options granted in 2007 vested upon the later of stockholder approval and grant date. The options granted in 2006 vested on the grant date. For the options granted from 2000 to 2006, 10% to 25% of the options had a fixed vesting period of less than three years, with the remaining 75% to 90% of the options becoming exercisable nine years after the grant date. Under the Stock Option Plan, the option exercise price must not be less than the stock’s market price on date of grant.

The fair value of each option grant is estimated on the date of grant using the Black Scholes options pricing model with the following assumptions used for grants during the six fiscal months ended June 27, 2008 and June 29, 2007:

		Six fiscal months				Six fiscal months
		ended June 27, 2008				ended June 29, 2007
Risk-free interest rates			2.6	%			4.6	%
Expected dividend yield			0.0	%			0.0	%
Expected life		5 years				2 years
Expected volatility			81.5	%			16.3	%

The expected life is based on the estimated future exercise and patterns. The expected volatility was based on the continuously compounded rate of return of the Company’s daily stock price.

The Company recorded non-cash compensation expense of $68 and $69 for the three and six fiscal months ended June 27, 2008, respectively, and $48 and $48 for the three and six fiscal months ended June 29, 2007. Due to the Company’s net operating losses, no income tax benefit was recognized related to these options. The remaining expected future compensation expense for unvested stock options, based on estimated forfeitures of 17%, was $449 as of June 27, 2008, and is expected to be expensed over a weighted average period of 1.4 years.

A summary of the status of the Company’s stock option plan as of and for the six fiscal months ended June 27, 2008 is presented in the table and narrative below:

						Weighted Average
		Number of				Exercise Price Per				Unvested Number of				Weighted Average				Aggregate Intrinsic
		Shares				Share				Shares				Grant-Date Value				Value
Outstanding 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	)			3.53
Outstanding at June 27, 2008			867,068			$	10.38				622,783			$	2.75			$	—

As of June 27, 2008, the number of common shares for which options were exercisable and expected to become exercisable was 759,720. The weighted average exercise price was $10.49, the weighted average remaining life was 4.4 years, and the aggregate intrinsic value was $0.

During 2006, the Company issued 1,005,967 shares of restricted common stock to certain executives. Due to the completion of the Company’s initial public offering in December 2006, 25% of the stock vested on each of December 31, 2006 and 2007 and 25% will vest on each of December 31, 2008 and 2009. The unvested portion of the stock is subject to forfeiture by the executives under certain circumstances and is subject to accelerated vesting upon a change of control, as defined.

The per share grant-date fair value was the fair value of a share of common stock on the grant date. The Company recorded $303 and $606 of compensation expense for the three and six fiscal months ended June 27, 2008, respectively, and $659 and $1,318 for the three and six fiscal months ended June 29, 2007. The remaining compensation expense for unvested restricted stock will be $605 for the balance of 2008 and $485 in 2009. There was no cash impact to the Company from the granting or vesting of the restricted stock. Due to the Company’s net operating losses, no income tax benefit was recognized related to the stock.

There was no change in the Company’s outstanding restricted stock for the six fiscal months ended June 27, 2008. As of June 27, 2008, the unvested stock had an aggregate intrinsic value of $1,383 and had an indefinite remaining term.

(5) Retirement Plans

The Company’s pension plans cover virtually all hourly employees not covered by multi-employer pension plans and provide benefits of stated amounts for each year of credited service. The Company funds such plans at a rate that meets or exceeds the minimum amounts required by applicable regulations. The plans’ assets are primarily invested in mutual funds comprised primarily of common stocks and corporate and U.S. government obligations.

The Company provides postretirement health care benefits on a contributory basis and life insurance benefits for Symons salaried and hourly employees who retired prior to May 1, 1995.

The following are the components of net periodic benefit cost for the three and six fiscal months ended June 27, 2008 and June 29, 2007:

		Pension Benefits
		Three fiscal				Three fiscal				Six fiscal				Six fiscal
		months				months				months				months
		ended June				ended June				ended June				ended June
		27, 2008				29, 2007				27, 2008				29, 2007
Service cost		$	115			$	172			$	229			$	344
Interest cost			215				206				431				411
Expected return on plan assets			(270	)			(243	)			(540	)			(486	)
Amortization of prior service cost			2				2				4				4
Amortization of net loss			23				19				47				38
Net periodic benefit cost		$	85			$	156			$	171			$	311

		Symons Postretirement Benefits
		Three fiscal				Three fiscal				Six fiscal				Six fiscal
		months				months				months				months
		ended June				ended June				ended June				ended June
		27, 2008				29, 2007				27, 2008				29, 2007
Service cost		$	—			$	—			$	—			$	—
Interest cost			8				8				15				15
Expected return on plan assets			—				—				—				—
Amortization of prior service cost			6				6				12				12
Amortization of net gain			(2	)			(2	)			(4	)			(4	)
Net periodic benefit cost		$	12			$	12			$	23			$	23

The Company’s contributions meet the minimum funding requirements of the Internal Revenue Service. For the six fiscal months ended June 27, 2008, contributions of $572 were made, which represented $300 for the fourth quarterly installment for the 2007 plan year and $272 for the first quarterly installment for the 2008 plan year. Quarterly installments of $272 for the 2008 plan year are expected to be made in each of the third and fourth quarters of 2008, and the first quarter of 2009.

(6) Segment Reporting

The Company has three reporting segments to monitor gross profit by sales type: product sales, rental revenue, and used rental equipment sales. These types of sales are differentiated by their source and gross margin percentage of sales.

Product sales represent sales of new products carried in inventories on the balance sheet. Cost of goods sold for product sales include material, labor, overhead, and freight. Rental revenues are derived from leasing the rental equipment, and are recognized ratably over the term of the lease. Cost of goods sold for rental revenues include depreciation of the rental equipment, maintenance of the rental equipment, and freight. Sales of used rental equipment are sales of rental equipment after a period of generating rental revenue. Cost of goods sold for sales of used rental equipment is the net book value of the equipment. All other expenses, as well as assets and liabilities, are not tracked by sales type. Export sales and sales by non-U.S. affiliates are not significant.

Information about the gross profit of each sales type and the reconciliations to the consolidated amounts for the three and six fiscal months ended June 27, 2008 and June 29, 2007 are as follows:

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

(7) Provision for Income Taxes

The Company has recorded a non-cash valuation allowance to reduce its net deferred tax assets, primarily related to its domestic net operating loss carryforwards, as estimated levels of future taxable income are less than the amount needed to realize these assets. If such estimates change in the future, the valuation allowance will be decreased or increased appropriately, resulting in a non-cash increase or decrease to net income.

The Company files income tax returns in the United States, Canada, and in various state, local, and provincial jurisdictions. The Company is subject to U.S. Federal income tax examination for 2004 through 2006, and in other jurisdictions for 2000 through 2007. Use of net operating losses from years prior to these may re-open the examination period for those prior years. The Company recognizes interest and penalties as a component of the provision for income taxes. A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows:

Balance at January 1, 2008		$	987
Additions to existing tax positions from prior year			33
Reductions in tax positions taken during a prior period			(722	)
Reductions in tax positions from expiration of statute			(3	)
Interest			3
Balance at June 27, 2008		$	298

Of that amount, $142 represents a reduction to the deferred tax asset related to the net operating loss carryforwards and $156 represents a long-term income tax payable. There was no impact to the provision for income taxes or the effective rate reconciliation as a result of the above changes in unrecognized tax benefits. The total amount of accrued interest and penalties at June 27, 2008 was $18. The Company does not expect any material changes in its uncertain tax positions for the next twelve months.

(8) Restatement of Previously Issued Financial Statements

During the reporting and closing process relating to the preparation of the December 31, 2007 consolidated financial statements, the Company determined that it had misapplied SFAS No. 95, Statement of Cash Flows , in that it had reported proceeds from sales of rental equipment on the statements of cash flows incorrectly. The Company had reported proceeds from sales of rental equipment on the statements of cash flows equal to used rental equipment sales on the statements of operations rather than adjusting for the change in the non-cash portion of such sales. The effects of the restatement on the condensed consolidated financial statements are as follows:

		For the six fiscal months ended June 29, 2007
		As Previously
		Reported				Adjustments				As Restated
Changes 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				9,913
Net 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

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

We believe we are both the leading North American provider of specialized products consumed in non-residential, concrete construction and the largest concrete forming and shoring rental company serving the domestic, non-residential construction market. Demand for our products and rental equipment is driven primarily by the level of non-residential construction activity in the United States, which consists primarily of:

	•		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.

Although certain of our products can be used in residential construction projects, we believe that less than 5% of our revenues are attributable to residential construction activity.

We use three segments to monitor gross profit by sales type: product sales, rental revenue, and used rental equipment sales. These sales are differentiated by their source and gross margin as a percentage of sales. Accordingly, this segmentation provides information for decision-making and resource allocation. Product sales represent sales of new products carried in inventories on the balance sheet. Cost of goods sold for product sales include material, manufacturing labor, overhead costs, and freight. Rental revenues represent the leasing of the rental equipment and are recognized ratably over the lease term. Cost of goods sold for rental revenues includes depreciation of the rental equipment, maintenance of the rental equipment, and freight. Sales of used rental equipment represent sales of the rental equipment after a period of generating rental revenue. Cost of goods sold for sales of used rental equipment consists of the net book value of the rental equipment.

Results of Operations

The following table summarizes our results of operations as a percentage of net sales for the periods indicated.

		Three fiscal months ended								Six fiscal months ended
		June 27, 2008				June 29, 2007				June 27, 2008				June 29, 2007
Product sales			86.0	%			85.2	%			84.0	%			83.4	%
Rental revenue			9.6				10.9				11.5				12.5
Used rental equipment sales			4.4				3.9				4.5				4.1
Net sales			100.0				100.0				100.0				100.0
Product cost of sales			66.7				71.1				70.1				72.8
Rental cost of sales			60.4				55.3				61.6				55.4
Used rental equipment cost of sales			8.4				27.9				10.0				27.2
Cost of sales			63.6				67.7				66.4				68.8
Product gross profit			33.3				28.9				29.9				27.2
Rental gross profit			39.6				44.7				38.4				44.6
Used rental equipment gross profit			91.6				72.1				90.0				72.8
Gross profit			36.4				32.3				33.6				31.2
Selling, general and administrative expenses			21.0				19.8				23.9				22.5
Facility 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	)			0.1
Income from operations			15.0				12.3				9.4				8.4
Interest expense			8.8				8.8				10.6				9.9
Interest income			—				—				(0.1	)			(0.1	)
Loss on extinguishment of long-term debt			—				—				2.6				—
Other expense			—				0.2				0.1				0.1
Income (loss) before provision for income taxes			6.2				3.3				(3.8	)			(1.5	)
Provision for income taxes			0.1				0.1				0.1				0.1
Net 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

Net sales increased $3.5 million, or 2.6%, to $141.0 million in the second quarter of 2008 from $137.5 million in the second quarter of 2007. The following table summarizes our net sales by segment:

		Three fiscal months ended
		June 27, 2008								June 29, 2007
($ in thousands)		Net Sales				%				Net Sales				%				% Change
Product 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				13.7
Net sales		$	141,037				100.0	%		$	137,516				100.0	%			2.6	%

Product sales increased $4.1 million, or 3.5%, to $121.3 million in the second quarter of 2008 from $117.2 million in the second quarter of 2007. Price increases of $12.4 million were partially offset by lower unit volume of $8.3 million, or 7.1%, due to lower non-residential construction activity in some regions.

Rental revenue decreased $1.3 million to $13.6 million for the second quarter of 2008, compared to $14.9 million in the second quarter of 2007, also due to lower non-residential construction activity in some regions.

Used rental equipment sales increased to $6.2 million in the second quarter of 2008 from $5.4 million in the second quarter of 2007 due to the timing of customer demand.

Gross Profit

Gross profit of $51.4 million in the second quarter of 2008 increased 15.6% from $44.4 million in the second quarter of 2007. Gross profit was 36.4% of sales in the second quarter of 2008, increasing from 32.3% in the second quarter of 2007.

Product sales contributed $40.3 million of gross profit during the second quarter of 2008, a 19.2% increase from $33.8 million in the second quarter of 2007. The $6.5 million increase in product gross profit was due to $12.4 million of higher sales prices, partially offset by $2.4 million of lower unit volume and $3.5 million of cost inflation, primarily related to steel. Increases in freight costs related to fuel surcharges have been offset by greater efficiencies in shipping practices. As a percentage of product sales, gross profit in the second quarter of 2008 increased to 33.3% from 28.9% in the second quarter of 2007. A portion of this improvement is related to the timing of sales price increases relative to a delay in the impact of the cost increases because of first-in, first-out inventory accounting.

Rental gross profit for the second quarter of 2008 was $5.4 million, as compared to $6.7 million in the second quarter of 2007, due primarily to the reduced rental revenue discussed above. Depreciation on rental equipment for the second quarter of 2008 was $3.5 million, as compared to $4.0 million in the same period of 2007. Rental gross profit before depreciation was $8.9 million in the quarter, 65.3% of rental revenue, as compared to $10.6 million, or 71.2% of rental revenue reported in the second quarter of 2007. Renovation expense increased due to timing of the expenditures and freight between facilities increased as a result of regional mix.

Gross profit on sales of used rental equipment for the second quarter of 2008 was $5.6 million, or 91.6% of sales, as compared to $3.9 million, or 72.1% of sales, in the second quarter of 2007. Gross margin percentages fluctuate based on the mix and age of rental equipment sold and was higher in the second quarter of 2008 due to higher sales of fully depreciated used rental equipment.

Operating Expenses

Selling, general, and administrative expenses increased to $29.6 million in the second quarter of 2008 from $27.3 million for the second quarter of 2007. The increase was primarily due to increased headcount, salaries, and health care and other personnel related expenses of $1.5 million and the timing of professional fees of $0.3 million.

Other Expenses

During the first quarter of 2008, we refinanced a portion of our long-term debt. We entered into a new $150 million revolving credit facility and issued a $100 million term loan. The proceeds of the term loan and an initial draw on the revolving credit facility were used to repay our $165 million Senior Second Secured Notes.

Interest expense was $12.5 million for the second quarter of 2008, comprised of $9.1 million of interest charges and $3.4 million of non-cash amortization of debt discount and financing costs. This compares to

interest expense of $12.1 million for the second quarter of 2007, comprised of $10.0 million of interest charges and $2.1 million of non-cash amortization of debt discount and financing costs. The decrease in interest charges was due to lower interest rates on the new revolving credit facility and new term loan as compared to the previous revolving credit facility and Senior Second Secured Notes. The increase in non-cash amortization of debt discount and financing costs was due to the debt discount and financing costs on the new term loan and revolving credit facility being amortized over the initial terms of the new facilities of approximately one year.

Income Before Income Taxes

Income before income taxes in the second quarter of 2008 was $8.7 million compared to $4.6 million in the second quarter of 2007, due to the factors described above.

Provision for Income Taxes

The provision for income taxes in the second quarter of 2008 and 2007 relates to foreign and certain state income taxes.

The Company has recorded a non-cash valuation allowance to reduce its deferred tax asset related to net operating loss carryforwards to zero, as estimated levels of future taxable income are less than the amount needed to realize this asset. If such estimates change in the future, the valuation allowance will be decreased or increased appropriately, resulting in a non-cash increase or decrease to net income.

Net Income

Net income for the second quarter of 2008 was $8.5 million, compared to $4.4 million in the second quarter of 2007, due to the factors described above.

Comparison of Six Fiscal Months Ended June 27, 2008 and June 29, 2007

Net Sales

Net sales were virtually flat at $236.4 million in the first six fiscal months of 2008 compared to the same period in 2007. The following table summarizes our net sales by product segment:

		Six fiscal months ended
		June 27, 2008								June 29, 2007
($ in thousands)		Net Sales				%				Net Sales				%				% Change
Product 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				10.0
Net sales		$	236,416				100.0	%		$	236,538				100.0	%			(0.1	)%

Product sales increased $1.2 million, or 0.6%, to $198.6 million in the first six fiscal months of 2008 from $197.4 million in the first six fiscal months of 2007. The increase in sales was due to $16.0 million of higher sales prices, offset by $14.8 million, or 7.5%, of lower unit volume from less non-residential construction activity in some regions.

Rental revenue decreased $2.3 million to $27.2 million for the first six fiscal months of 2008, compared to $29.5 million in the first six fiscal months of 2007, also due to lower non-residential construction activity in some regions.

Used rental equipment sales increased to $10.7 million in the first six fiscal months of 2008 from $9.7

million in the first six fiscal months of 2007 due to the timing of customer demand.

Gross Profit

Gross profit of $79.4 million, or 33.6% of net sales, in the first six fiscal months of 2008 increased 7.6% from $73.8 million, or 31.2% of net sales, in the first six fiscal months of 2007.

Product sales contributed $59.4 million, or 29.9% of product sales, a 10.8% increase from the $53.6 million, or 27.2% of product sales, in the first six fiscal months of 2007. The $5.8 million increase in product gross profit was due to $16.0 million of higher sales prices, partially offset by $4.0 million of lower unit volume and $6.2 million of cost inflation, primarily related to steel. Increases in freight costs related to fuel surcharges have been offset by greater efficiencies in shipping practices. As a percentage of product sales, gross profit in the first six fiscal months of 2008 increased to 29.9% from 27.2% in the first six fiscal months of 2007. A portion of this improvement is related to the timing of sales price increases relative to a delay in the impact of the cost increases because of first-in, first-out inventory accounting.

Rental gross profit for the first six fiscal months of 2008 was $10.4 million, as compared to $13.2 million in the first six fiscal months of 2007, due primarily to the lower rental revenues discussed above. Depreciation expense on rental equipment for the first six fiscal months of 2008 was $7.7 million, as compared to $7.9 million in the same period of 2007. Rental gross profit before depreciation was $18.2 million in the first six fiscal months of 2008, or 66.8% of rental revenue, as compared to $21.1 million, or 71.5% of rental revenue, reported in the first six fiscal months of 2007. Renovation expense increased due to timing of the expenditures and freight between facilities increased as a result of regional mix.

Gross profit on sales of used rental equipment for the first six fiscal months of 2008 was $9.6 million, or 90.0% of used rental equipment sales, an increase from $7.1 million, or 72.8% of sales, in the first six fiscal months of 2007. Gross margin percentages fluctuate based on the mix and age of rental equipment sold and was higher in the first six fiscal months of 2008 due to higher sales of fully depreciated used rental equipment.

Operating Expenses

Selling, general, and administrative expenses increased to $56.5 million in the first six fiscal months of 2008 from $53.2 million for the first six fiscal months of 2007. The increase was primarily due to increased headcount, salaries, and health care and other personnel related expenses of $1.7 million, depreciation expense of $0.4 million, and taxes of $0.4 million.

Other Expenses

During the first quarter of 2008, we refinanced a portion of our long-term debt. We entered into a new $150 million revolving credit facility and issued a $100 million term loan. The proceeds of the term loan and an initial draw on the revolving credit facility were used to repay our $165 million Senior Second Secured Notes.

Interest expense was $25.0 million for the first six fiscal months of 2008, comprised of $19.6 million of interest charges and $5.4 million of non-cash amortization of debt discount and financing costs. This compares to interest expense of $23.3 million for the first six fiscal months of 2007, comprised of $19.7 million of interest charges and $3.6 million of non-cash amortization of debt discount and financing costs. The increase in non-cash amortization of debt discount and financing costs was due to the debt discount and financing costs on the new term loan and revolving credit facility being amortized over the initial terms of the new facilities of approximately one year.

In conjunction with the refinancing, the Company recorded a loss on extinguishment of long-term debt, comprised of the following:

($ in millions)
Prepayment premium on Senior Second Secured Notes		$	4.6
Unamortized discount on Senior Second Secured Notes			1.1
Unamortized financing costs on Senior Second Secured Notes			0.2
Unamortized financing costs on previous revolving credit facility			0.3
Loss on extinguishment of long-term debt		$	6.2

Loss Before Income Taxes

Loss before income taxes in the first six fiscal months of 2008 was $8.9 million compared to $3.5 million in the first six fiscal months of 2007, due to the factors described above.

Provision for Income Taxes

The provision for income taxes in the first six fiscal months of 2008 and 2007 relates to foreign and certain state income taxes. We have recorded a non-cash valuation allowance to reduce our deferred tax asset related to U.S. net operating loss carryforwards to zero, as estimated levels of future taxable income are less than the amount needed to realize this asset. If such estimates change in the future, the valuation allowance will be decreased or increased appropriately, resulting in a non-cash increase or decrease to net income.

Net Loss

The net loss for the first six fiscal months of 2008 was $9.2 million, compared to $3.8 million in the first six fiscal months of 2007, due to the factors described above.

Liquidity and Capital Resources

Historically, our primary sources of financing have been borrowings under our revolving credit facility and the issuance of long-term debt and equity. Working capital borrowings under our revolving credit facility fluctuate with sales volume, such that our peak revolving credit borrowings are generally in the late second or early third quarter. Our key measure of liquidity and capital resources is the amount available under our revolving credit facility. As of June 27, 2008, we had $21.0 million available for borrowing under our revolving credit facility, which we believe is adequate for our planned needs.

Our capital uses relate primarily to capital expenditures and debt service. Our capital expenditures consist of additions to our rental equipment and additions to our property, plant, and equipment. Additions to rental equipment are based on expected product and geographic demand for the equipment. Property, plant, and equipment consist of manufacturing and distribution equipment and management information systems. We finance these capital expenditures with cash on hand, borrowings under our revolving credit facility, and with proceeds from sales of used rental equipment. The following table sets forth a summary of these capital events for the periods indicated.

		Six fiscal months ended
($ in thousands)		June 27, 2008				June 29, 2007
Capital expenditures:
Rental equipment additions		$	7,366			$	15,259
Property, plant and equipment additions			6,930				10,018
Proceeds 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

We believe we can manage the capital requirements of our rental fleet, and thus our cash flow, through the careful monitoring of our rental fleet additions.

Net cash used in operating activities in the first six fiscal months of 2008 was $40.2 million, compared to $33.0 million in the first six fiscal months of 2007. This activity is comprised of the following:

		Six fiscal months ended
($ in millions)		June 27, 2008				June 29, 2007
Net loss		$	(9.2	)		$	(3.8	)
Adjustments to reconcile net loss to net cash used in operating activities			14.5				9.5
Subtotal			5.3				5.7
Changes in assets and liabilities			(45.5	)			(38.7	)
Net cash used in operating activities		$	(40.2	)		$	(33.0	)

The subtotal of net loss and adjustments to reconcile net loss to net cash used in operating activities was $5.3 million for the first six fiscal months of 2008, as compared to $5.7 million in the first six fiscal months of 2007.

Changes in assets and liabilities resulted in a $45.5 million use of cash in the first six fiscal months of 2008, compared to a $38.7 million use in the first six fiscal months of 2007. The $6.8 million increased use of cash primarily related to changes in assets and liabilities as follows:

	•		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.

Net cash used in investing activities was $0.2 million in the first six fiscal months of 2008 compared to $15.4 million in the first six fiscal months of 2007. Property, plant, and equipment additions decreased to $6.9 million in the first six fiscal months of 2008 from $10.0 million in the first six fiscal months of 2007, as fewer investments were needed. Proceeds from sales of property, plant, and equipment of $1.4 million in the first six fiscal months of 2008, were primarily related to the sale of a facility we previously vacated. Additions to rental equipment decreased to $7.4 million in the first six fiscal months of 2008 as compared to $15.3 million in the first six fiscal months of 2007 as the decline in demand for rental equipment required less rental equipment and we renovated existing equipment rather than manufacturing or purchasing equipment. Proceeds from sales of used rental equipment, which tend to lag sales of used rental equipment approximately by a quarter, increased to $12.7 million from $9.9 million due to the increase in used rental equipment sales from the fourth quarter of 2007 when compared to the fourth quarter of 2006.

During the first quarter of 2008, we refinanced a portion of our long-term debt. We entered into a new $150.0 million revolving credit facility and issued a $100.0 million term loan, which was issued at a discount for net proceeds of $94.2 million. The proceeds of the term loan and an initial $88.7 million draw on the revolving credit facility were used to repay our $165.0 million Senior Second Secured Notes, including prepayment premium of $4.6 million, accrued interest of $9.8 million, and financing costs related to the new debt instruments of $3.4 million. For the six fiscal months ended June 27, 2008, our net

borrowings on the new revolving line of credit facility and its predecessor were $118.7 million, which primarily related to the initial $88.7 million draw discussed above and were also due to normal seasonal working capital growth. Net borrowings were comprised of gross borrowings of $174.9 million and gross repayments of $56.2 million.

Under the new revolving credit facility, borrowings are limited to 85% of eligible accounts receivable and 60% of eligible inventories and rental equipment. At June 27, 2008, all of the $150.0 million was available, of which $118.7 million was outstanding at a weighted average interest rate of 5.5%. Outstanding letters of credit were $10.3 million, resulting in available borrowings of $21.0 million. The new revolving credit facility expires in March 2009, but is automatically extended to March 2014 if we repay or refinance the Senior Subordinated Notes prior to the initial maturity of the new revolving credit facility. In July 2008, we commenced a private offer to exchange the Senior Subordinated Notes in a private placement for newly issued Senior Secured Notes due September 2014. The new revolving credit facility is secured by substantially all of our assets.

As of June 27, 2008, our other long-term debt consisted of the following:

($ in thousands)
Senior Subordinated Notes, interest rate of 13.0%		$	154,729
Debt discount on Senior Subordinated Notes			(2,114	)
Term loan, interest rate of 7.9%			100,000
Debt discount on term loan			(4,051	)
Senior notes payable to seller of Safway, non-interest bearing, accreted at 14.5%			6,553
Debentures previously held by Dayton Superior Capital Trust, interest rate of 9.1%, due on demand			1,024
Capital lease obligations			806
Total long-term debt			256,947
Less current maturities			256,849
Long-term portion		$	98

The Senior Subordinated Notes mature in June 2009. In July 2008, we commenced a private offer to exchange the Senior Subordinated Notes in a private placement for newly issued Senior Secured Notes due September 2014. The Senior Subordinated Notes were issued at a discount, which is being accreted to the face value using the effective interest method and is reflected as interest expense. The estimated fair value of the Senior Subordinated Notes was $130.9 million as of June 27, 2008.

The term loan initially matures in March 2009, but is automatically extended to March 2014 if we repay or refinance the Senior Subordinated Notes prior to the initial maturity of the term loan. In July 2008, we commenced a private offer to exchange the Senior Subordinated Notes in a private placement for newly issued Senior Secured Notes due September 2014. The term loan was issued at a discount, which is being accreted to the face value using the effective interest method and reflected as interest expense. The term loan is subject to financial covenants for debt to adjusted EBITDA, as defined in the agreement, and interest coverage, and has a second security interest in substantially all of our assets. As required by the term loan, during the third quarter of 2008, we entered into an agreement to cap LIBOR at 6.25% for $50 million of face amount of the term loan until July 1, 2011.

At June 27, 2008, working capital (deficit) was $(261.0) million, compared to $62.0 million at December 31, 2007. The decrease was comprised primarily of the following:

	•		$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

			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.

We believe our liquidity and cash flows from operations are sufficient to fund the capital expenditures and rental equipment additions we have planned for at least the next twelve months. We believe we will be able to repay, refinance or extend our Senior Subordinated Notes prior to March 14, 2009, which, combined with our liquidity and cash flow, will allow us to meet our debt service requirements for the next twelve months. However, our ability to make scheduled payments of principal, or to pay the interest on, or to refinance, our indebtedness, or to fund planned capital expenditures and rental equipment additions will depend on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or that operating improvements will be realized on schedule or that future borrowings will be available to us under our revolving credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may from time to time seek to retire our outstanding debt through exchanges for equity securities, in open market purchases, in privately negotiated transactions, or otherwise. Any such repurchases or exchanges will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. The new revolving credit facility and term loan expire in March 2009 and the Senior Subordinated Notes mature in June 2009. In July 2008, we commenced a private offer to exchange the Senior Subordinated Notes in a private placement for newly issued Senior Secured Notes due September 2014. A successful extension of the maturity date of the Senior Subordinated Notes would automatically extend the maturity of the new revolving credit facility and term loan to March 2014. However, there is no assurance that the offer will be accepted or that we will be able to refinance any of the indebtedness on commercially reasonable terms, or at all. Such circumstances may have a material adverse effect on our business, financial condition and results of operations. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts or amounts and reclassification of liabilities that might be necessary should the Company be deemed to be unable to continue as a going concern.

Commitments

There were no material changes to minimum future payments from December 31, 2007.

Seasonality

Our operations are seasonal in nature with approximately 55% of sales historically occurring in the second and third quarters. Working capital and borrowings fluctuate with the volume of our sales.

Inflation

We may not be able to pass on the cost of commodity price increases to our customers. Steel, in its various forms, is our principal raw material, constituting approximately 23% of our product cost of sales in 2007. Our steel costs increased approximately 40% from December 2007 to June 2008. We expect overall steel costs to continue to increase significantly during the balance of 2008. Additionally, we expect continued increases in energy costs, including natural gas and petroleum products, which will impact our overall operating costs in the form of higher raw material, utilities, and freight costs. We cannot assure you we will be able to pass these cost increases on to our customers.

Critical Accounting Policies

In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures. On an ongoing basis, we evaluate our estimates, including those related to allowance for doubtful accounts, inventories, long-lived assets, income taxes, self-insurance reserves, environmental contingencies, and litigation. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Forward-Looking Statements

This Form 10-Q includes, and future filings by us on Form 10-K, Form 10-Q, and Form 8-K, and future oral and written statements by us and our management may include certain forward-looking statements, including (without limitation) statements with respect to anticipated future operating and financial performance, growth opportunities and growth rates, acquisition and divestitive opportunities and other similar forecasts and statements of expectation. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and “should,” and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements by our management and us are based on estimates, projections, beliefs and assumptions of management and are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information, or otherwise.

Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of important factors. Representative examples of these factors include (without limitation):

	•		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.

This list of factors is not intended to be exhaustive, and additional information concerning relevant risk factors can be found in our Annual Report for the year ended December 31, 2007, and in future Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and current Reports on Form 8-K we file with the Securities and Exchange Commission. Consequently, such forward-looking statements should be regarded solely as our current plans, estimates and beliefs. You are cautioned not to place undue reliance on forward-looking statements. We cannot guarantee future results, events, levels of activity, performance or achievements. We do not undertake and specifically decline any obligation to update, republish or revise forward-looking statements to reflect future events or circumstances or to reflect the occurrences of unanticipated events.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of June 27, 2008, the financial instruments we had that were sensitive to changes in interest rates are our $150.0 million revolving credit facility and our $100.0 million term loan.

The outstanding balance under the revolving credit facility as of June 27, 2008 was $118.7 million, and the average borrowings for the six fiscal months ended June 27, 2008 were $76.1 million. The facility has several interest rate options that re-price on a short-term basis. During the six fiscal months ended June 27, 2008, our weighted average interest rate on the facility was 6.3%. A one percentage point increase or decrease in our weighted average interest rate on the facility would have increased or decreased our annual interest expense by approximately $0.8 million.

Our $100.0 million term loan bears interest at LIBOR plus 4.50%, with a LIBOR floor of 3.25%. Due to the floor, a one percentage point decrease in LIBOR would not have decreased our annual interest expense. A one percentage point increase in LIBOR would have increased our annual interest expense by approximately $0.2 million. During the third quarter of 2008, we entered into an agreement to cap LIBOR at 6.25% for $50 million of face amount of the term loan until July 1, 2011.

In the ordinary course of our business, we also are exposed to price changes in raw materials (particularly steel rod and steel bar), freight due to fuel costs, and products purchased for resale. The prices of these items can change significantly due to changes in the markets in which our suppliers operate. We do not use financial instruments to manage our exposure to changes in commodity prices.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In connection with the preparation of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 27, 2008, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Management based its evaluation on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s procedures for internal control over financial reporting and disclosure controls were effective as of June 27, 2008.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by the Exchange Act Rules 13a-15(e) and 15d-15(e) that was conducted during the quarter ended June 27, 2008, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. — Other Information

Item 1A. Risk Factors

For a discussion identifying risk factors affecting us, see Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2007 and the following:

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. We currently have substantial indebtedness, virtually all of which matures on or before June 15, 2009. As of June 27, 2008, we had long-term debt of $381.7 million, excluding debt discounts, maturing within twelve months. In July 2008, the Company commenced a private offer to exchange its Senior Subordinated Notes due June 2009 with a face value of $154.7 million in a private placement for an equal amount of newly issued Senior Secured Notes due September 2014. A successful extension of the maturity date of the Senior Subordinated Notes would automatically extend the maturity of $218.7 million, excluding debt discount, of the Company’s other long-term debt to March 2014. We cannot assure you that we will be able to refinance any of our long-term debt on commercially reasonable terms, or at all. In addition, our substantial indebtedness could:

	•		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. Significant variations in the costs, quality and availability of raw materials and energy may negatively affect our results of operations. Steel, in its various forms, is our principal raw material, constituting approximately 23% of our product cost of sales in 2007. Increases in the cost of steel could adversely impact our operating costs, and any decrease in our volume of steel purchases could affect our ability to secure volume purchase discounts that we have obtained in the past. In addition, an overall increase in energy costs, including the cost of natural gas and petroleum products, could also adversely impact our operating costs in the form of higher raw material, utilities, and freight costs. We typically do not enter into forward contracts to hedge commodity price risks that we face. Even though our costs may increase, our customers may not accept corresponding price increases for our products, or the prices for our products may decline. Our ability to achieve acceptable margins is principally dependent on managing our cost structure and managing changes in raw materials prices, which fluctuate based upon factors beyond our control. If the prices of our products decline, or if our raw material costs increase, such changes could have a material adverse effect on our operating margins and profitability.

Item 4. Submission of Items to a Vote of Security Holders.

We held our Annual Meeting of Stockholders on April 22, 2008. At the Annual Meeting, our stockholders elected as Class I directors two nominees proposed by the Board of Directors for a term expiring at the Annual Meeting of Stockholders to be held in 2011. No other nominations were made, and the two nominees were re-elected. There were 16,481,545 shares of our common stock present at the meeting, and the number of votes cast for each of the two nominees and the number of votes withheld were as follows:

Name		Votes For				Votes Withheld
Eric R. Zimmerman			15,045,947				1,435,598
Douglas W. Rotatori			15,045,947				1,435,598

In addition to Messrs. Zimmerman and Rotatori, our continuing directors are Stephen Berger, Steven M. Berzin, Joseph D. Hinkel, William F. Hopkins, and Sidney J. Nurkin.

Item 6. Exhibits

See Index to Exhibits following the signature page to this report for a list of Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INDEX OF EXHIBITS

Description

		Exhibit No.				Description
(31)		Rule 13a-14(a)/15d-14(a) Certifications
			31.1			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 Certifications
			32.1			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		**

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