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 September 26, 2008

COMMISSION FILE NUMBER 1-11781

DAYTON SUPERIOR CORPORATION

(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
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, or a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer, large 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

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 October 30, 2008

 

 

TABLE OF CONTENTS

Part I. — Financial Information

Item 1 — Financial Statements

Dayton Superior Corporation and Subsidiary

Condensed Consolidated Balance Sheets

As of September 26, 2008 and December 31, 2007

(Amounts in thousands, except share and per share amounts)

(Unaudited)

		September 26,				December 31,
		2008				2007
ASSETS
Current assets:
Cash and cash equivalents		$	833			$	3,381
Accounts receivable, net of allowances for doubtful accounts and sales returns and allowances of $4,407 and $4,447			86,469				68,593
Inventories			95,253				66,740
Prepaid expenses and other current assets			6,323				5,718
Prepaid income taxes			82				740
Total current assets			188,960				145,172
Rental equipment, net of accumulated depreciation of $72,310 and $67,276			63,432				67,640
Property, plant and equipment, net of accumulated depreciation of $57,829 and $58,542			54,267				56,812
Goodwill			43,643				43,643
Other assets			4,837				3,986
Total assets		$	355,139			$	317,253
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Revolving credit facility		$	116,346			$	—
Current maturities of long-term debt			258,469				8,990
Accounts payable			28,267				39,204
Accrued compensation and benefits			13,359				15,456
Accrued interest			9,128				6,193
Accrued freight			4,416				4,065
Other accrued liabilities			9,085				9,219
Total current liabilities			439,070				83,127
Other long-term debt, net of current portion			69				315,607
Other long-term liabilities			7,572				8,162
Total liabilities			446,711				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			208,243				207,181
Loans to stockholders			(1,109	)			(1,085	)
Accumulated other comprehensive loss			(749	)			(618	)
Accumulated deficit			(298,148	)			(295,312	)
Total stockholders’ deficit			(91,572	)			(89,643	)
Total liabilities and stockholders’ deficit		$	355,139			$	317,253

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

Dayton Superior Corporation and Subsidiary

Condensed Consolidated Statements of Operations

For The Three and Nine Fiscal Months Ended September 26, 2008 and September 28, 2007

(Amounts in thousands, except share and per share amounts)

(Unaudited)

		Three Fiscal Months Ended								Nine Fiscal Months Ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Product sales		$	117,086			$	112,327			$	315,656			$	309,677
Rental revenue			15,274				14,707				42,469				44,211
Used rental equipment sales			3,415				3,789				14,066				13,473
Net sales			135,775				130,823				372,191				367,361
Product cost of sales			79,056				82,394				218,229				226,160
Rental cost of sales			7,977				8,784				24,740				25,129
Used rental equipment cost of sales			974				581				2,038				3,214
Cost of sales			88,007				91,759				245,007				254,503
Product gross profit			38,030				29,933				97,427				83,517
Rental gross profit			7,297				5,923				17,729				19,082
Used rental equipment gross profit			2,441				3,208				12,028				10,259
Gross profit			47,768				39,064				127,184				112,858
Selling, general and administrative expenses			28,327				26,677				84,781				79,837
Facility closing and severance expenses			158				140				1,332				591
(Gain) loss on disposals of property, plant, and equipment			107				217				(306	)			478
Income from operations			19,176				12,030				41,377				31,952
Other expenses:
Interest expense			12,308				11,682				37,348				34,996
Interest income			(15	)			(47	)			(186	)			(227	)
Loss on extinguishment of long-term debt			—				—				6,224				—
Other expense (income)			102				(214	)			156				119
Income (loss) before provision for income taxes			6,781				609				(2,165	)			(2,936	)
Provision for income taxes			415				223				671				454
Net income (loss)		$	6,366			$	386			$	(2,836	)		$	(3,390	)
Basic net income (loss) per common share		$	0.34			$	0.02			$	(0.15	)		$	(0.19	)
Average number of shares of common stock outstanding			18,563,228				18,311,736				18,563,228				18,273,146
Diluted net income (loss) per common share		$	0.33			$	0.02			$	(0.15	)		$	(0.19	)
Average number of shares of common stock and equivalents outstanding			19,297,587				19,302,123				18,563,228				18,273,146

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

Dayton Superior Corporation and Subsidiary

Condensed Consolidated Statements of Cash Flows

For The Nine Fiscal Months Ended September 26, 2008 and September 28, 2007

(Amounts in thousands)

(Unaudited)

		Nine Fiscal Months Ended
						September 28,
						2007 (As
		September 26,				restated, see
		2008				Note 8)
Cash Flows From Operating Activities:
Net loss		$	(2,836	)		$	(3,390	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			18,254				18,482
Amortization of intangibles			99				133
Loss on extinguishment of long-term debt			6,224				—
Stock compensation expense			1,063				2,062
Deferred income taxes			(56	)			(36	)
Amortization of deferred financing costs and debt discount			8,961				5,229
Amortization of deferred gain on sale-leaseback transactions			(683	)			(1,217	)
Gain on sales of rental equipment			(12,028	)			(10,259	)
(Gain) loss on sales of property, plant and equipment			(130	)			837
Changes in assets and liabilities:
Accounts receivable			(20,541	)			(11,243	)
Inventories			(28,588	)			(14,013	)
Prepaid expenses and other assets			(1,215	)			(577	)
Prepaid income taxes			658				(156	)
Accounts payable			(8,815	)			(8,025	)
Accrued liabilities and other long-term liabilities			1,317				(4,859	)
Net cash used in operating activities			(38,316	)			(27,032	)
Cash Flows From Investing Activities:
Property, plant and equipment additions			(8,461	)			(13,944	)
Proceeds from sales of property, plant and equipment			1,425				37
Rental equipment additions			(9,227	)			(19,483	)
Proceeds from sales of used rental equipment			17,621				15,380
Net cash provided by (used in) investing activities			1,358				(18,010	)
Cash Flows From Financing Activities:
Borrowings under revolving credit facility			211,187				83,324
Repayments of revolving credit facility			(94,841	)			(65,424	)
Repayments of long-term debt			(166,854	)			(1,118	)
Issuance of long-term debt			94,250				—
Financing costs paid			(4,643	)			(659	)
Prepayment premium on redemption of long-term debt			(4,641	)			—
Changes in loans to stockholders			(24	)			1,191
Issuance of shares of common stock			—				808
Net cash provided by financing activities			34,434				18,122
Effect of Exchange Rate Changes on Cash and Cash Equivalents			(24	)			169
Net decrease in cash and cash equivalents			(2,548	)			(26,751	)
Cash and cash equivalents, beginning of period			3,381				26,813
Cash, end of period		$	833			$	62
Supplemental Disclosures:
Cash paid (refunded) for income taxes		$	(221	)		$	413
Cash paid for interest			25,452				29,243
Financing cost additions in accounts payable			796				—
Sales of used rental equipment in accounts receivable and notes receivable			8,896				9,376
Property, plant and equipment and rental equipment additions in accounts payable			885				2,560

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

Dayton Superior Corporation and Subsidiary

Condensed Consolidated Statements of Comprehensive Income (Loss)

For The Three and Nine Fiscal Months Ended September 26, 2008 and September 28, 2007

(Amounts in thousands)

(Unaudited)

		Three Fiscal Months Ended								Nine Fiscal Months Ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Net income (loss)		$	6,366			$	386			$	(2,836	)		$	(3,390	)
Other comprehensive gain (loss):
Foreign currency translation adjustment			(132	)			98				(220	)			766
Amortization of pension and other post-retirement benefits amounts			89				—				89				—
Comprehensive income (loss)		$	6,323			$	484			$	(2,967	)		$	(2,624	)

The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed 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 report on Form 10-K for the year ended December 31, 2007. The interim results may not be indicative of future periods.

The Company has $379,109, excluding debt discount, of 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. The offer is conditioned upon acceptance of the offer by the holders of 95% in aggregate principal amount of the Senior Subordinated Notes outstanding. The Company has periodically extended the offer beyond its original expiration date and has granted withdrawal rights. A successful extension of the maturity date of the Senior Subordinated Notes would automatically extend the maturity of $216,096, excluding debt discount, of the Company’s other debt to March 2014; however, there is no assurance that the exchange offer will be accepted by the holders of the required minimum principal amount of the Senior Subordinated Notes or that the Company otherwise will be able to refinance or extend the term of the Senior Subordinated Notes. The Company’s inability to complete the exchange offer prior to March 2009 or otherwise to refinance and/or extend the term of the Senior Subordinated Notes would adversely affect our ability to continue as a going concern. 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 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 September 26, 2008 and December 31, 2007:

		September 26, 2008				December 31, 2007
Raw materials		$	25,140			$	13,534
Work in progress			8,890				3,518
Finished goods			66,203				53,358
Total gross inventories			100,233				70,410
Net realizable value reserve			(4,980	)			(3,670	)
Total Inventory		$	95,253			$	66,740

(c)

Income (Loss) Per Share of Common Stock — Basic income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of vested shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding, if dilutive, during each period. The Company’s common stock equivalents consist of unvested shares and unexercised warrants and stock options. Their effect is calculated using the treasury stock method. The reconciliation of average number of shares of common stock outstanding to average number of shares of common stock and equivalents outstanding for three fiscal months ended September 26, 2008 is as follows:

		Three fiscal				Three fiscal
		months ended				months ended
		September 26,				September 28,
		2008				2007
Average number of vested shares of common stock outstanding			18,563,228				18,311,736
Shares of unvested common stock			502,984				754,476
Assumed exercise of dilutive warrants			231,375				231,770
Assumed exercise of dilutive stock options			—				4,141
Average number of common shares and equivalents			19,297,587				19,302,123

			For the nine fiscal months ended September 26, 2008 and September 28, 2007, common stock equivalents of 734,444 and 997,958 respectively, were not included as their effect would have been anti-dilutive.
	(d)		New Accounting Pronouncements — In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, Fair Value Measurements . This Statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. Two FASB Staff Positions (“FSP”) on SFAS No. 157 were subsequently issued. In February 2008, FSP No. 157-1 excluded SFAS No. 13, Accounting for Leases , and other accounting pronouncements that address fair value measurements for purposes of lease classification or measurement under SFAS No. 13, from the scope of SFAS No. 157. FSP No. 157-1 was effective as of the initial adoption of SFAS No. 157 on January 1, 2008. However, this scope exception does not apply to assets acquired and liabilities assumed in a business combination that are required to be measured at fair value under SFAS No. 141, Business Combinations or SFAS No. 141(R), Business Combinations. In February 2008, FSP No. 157-2 delayed the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a nonrecurring basis to fiscal years beginning after November 15, 2008. As a result, the Company has partially adopted SFAS No. 157 in accordance with FSP No. 157-2 as it relates to nonrecurring non-financial assets and non-financial liabilities. However, there were no material financial assets or liabilities measured at fair value on a recurring basis upon adoption and no non-financial assets or liabilities measured at fair value on a nonrecurring basis.

			In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 . This Statement provides entities with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The Company complied with SFAS No. 159 as of January 1, 2008. SFAS No. 159 did not have an impact on the Company’s consolidated financial statements, as the Company did not elect to report selected financial assets and liabilities at fair value.
			In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations . SFAS No. 141(R) changes the accounting for business combinations, including the measurement of acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting for preacquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition-related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for certain tax adjustments for prior business combinations. The Company is evaluating the effect that SFAS No. 141(R) will have on the accounting for prior business combinations in its consolidated financial statements.
			In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities and is intended to improve the transparency of financial reporting. This Statement is effective for consolidated financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company does not expect the adoption of this Statement to have a material impact on its consolidated financial statements.
			In April 2008, the FASB issued FSP 142-3, Determination of the Useful Lives of Intangible Assets . This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets . The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset. The guidance for determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets acquired after the effective date. This FSP shall be effective for consolidated financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Accordingly, the Company will adopt this position for any intangible assets acquired on or after January 1, 2009. Additional disclosures for existing intangible assets may be required.

(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 September 26, 2008, $144,843 was available, of which $116,346 was outstanding at a weighted average interest rate of 5.8%. Outstanding letters of credit were $9,924, resulting in available borrowings of $18,573. 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								Nine fiscal months ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Average borrowings		$	123,263			$	20,591			$	91,995			$	12,233
Maximum borrowing			129,346				27,050				129,346				27,050
Weighted average interest rate			5.7	%			10.4	%			6.1	%			13.3	%

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 availability) by average borrowings. The high weighted average interest rate during the three and nine month periods ended September 28, 2007 is a reflection of the limited average borrowings during those periods. Interest expense on the facility for the three fiscal months ended September 28, 2007 was $534, consisting of $383 of interest on borrowings (7.5%), $57 of letter of credit fees (1.1%), and $94 for commitment fees on unused availability (1.8%). Interest expense on the facility for the nine fiscal months ended September 28, 2007 was $1,207, consisting of $718 of interest on borrowings (7.9%), $186 of letter of credit fees (2.1%), and $303 for commitment fees on unused availability (3.3%).

Following is a summary of the Company’s other long-term debt as of September 26, 2008 and December 31, 2007:

		September 26, 2008				December 31, 2007
Senior Subordinated Notes, interest rate of 13.0%		$	154,729			$	154,729
Debt discount on Senior Subordinated Notes			(1,616	)			(3,045	)
Term loan, interest rate of 7.9%			99,750				—
Debt discount on term loan			(2,678	)			—
Senior Second Secured Notes, interest rate of 10.75%			—				165,000
Debt discount on Senior Second Secured Notes			—				(1,393	)
Senior notes payable to seller in 2003 acquisition, non-interest bearing, accreted at 14.5%			6,790				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			539				1,364
Total long-term debt			258,538				324,597
Less current maturities			(258,469	)			(8,990	)
Long-term portion		$	69			$	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 estimated fair value of the Senior Subordinated Notes as of September 26, 2008 is $116,047.

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 September 26, 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. The estimated fair value of the term loan as of September 26, 2008 was approximately $91,300.

(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 September 26, 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 4.2 years as of September 26, 2008. The options granted in 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 2003, 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 was estimated on the date of grant using the Black Scholes option pricing model with the following assumptions used for grants during the nine fiscal months ended September 26, 2008 and September 28, 2007:

		Nine fiscal months ended				Nine fiscal months ended
		September 26, 2008				September 28 ,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 was based on the estimated future exercises and forfeitures. 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 $85 and $154 for the three and nine fiscal months ended September 26, 2008, respectively, and $38 and $86 for the three and nine fiscal months ended September 28, 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 14%, was $475 as of September 26, 2008, and is expected to be expensed over a weighted average period of 1.1 years.

A summary of the status of the Company’s stock option plan as of and for the nine fiscal months ended September 26, 2008 is presented in the table and narrative below:

						Weighted								Weighted
						Average				Unvested				Average				Aggregate
		Number of				Exercise Price				Number of				Grant-Date				ntrinsic
		Shares				Per Share				Shares				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 September 26, 2008			867,068			$	10.38				622,783			$	2.75			$	—

As of September 26, 2008, the number of common shares for which options were exercisable and expected to become exercisable was 777,007. The weighted average exercise price was $10.51, the weighted average remaining life was 4.1 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 $909 of compensation expense for the three and nine fiscal months ended September 26, 2008, respectively, and $658 and $1,976 for the three and nine fiscal months ended September 28, 2007. The remaining compensation expense for unvested restricted stock will be $303 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 nine fiscal months ended September 26, 2008. As of September 26, 2008, the unvested stock had an aggregate intrinsic value of $860 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 nine fiscal months ended September 26, 2008 and September 28, 2007:

		Pension Benefits
		For the three				For the three				For the nine				For the nine
		fiscal months				fiscal months				fiscal months				fiscal months
		ended				ended				ended				ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Service cost		$	114			$	171			$	343			$	515
Interest cost			215				205				646				616
Expected return on plan assets			(269	)			(243	)			(809	)			(729	)
Amortization of prior service cost			3				3				7				7
Amortization of net loss			23				20				70				58
Net periodic benefit cost		$	86			$	156			$	257			$	467

		Symons Postretirement Benefits
		For the three				For the three				For the nine				For the nine
		fiscal months				fiscal months				fiscal months				fiscal months
		ended				ended				ended				ended
		September 26,				September 28,				September 26,				September 28,
		2008				2007				2008				2007
Service cost		$	—			$	—			$	—			$	—
Interest cost			7				7				22				22
Expected return on plan assets			—				—				—				—
Amortization of prior service cost			6				6				18				18
Amortization of net loss			(2	)			(2	)			(6	)			(6	)
Net periodic benefit cost		$	11			$	11			$	34			$	34

The Company’s contributions meet the minimum funding requirements of the Internal Revenue Service. For the nine fiscal months ended September 26, 2008, contributions totaling $844 have been made, comprised of $300 for the fourth quarterly installment for the 2007 plan year, and two quarterly installments of $272 each for the 2008 plan year. Additional quarterly installments of $272 for the 2008 plan year are expected to be made in the fourth quarter 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 nine fiscal months ended September 26, 2008 and September 28, 2007 are as follows:

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

(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, to zero, 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 2005 through 2007, and in other jurisdictions for 2001 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			(2	)
Interest			6
Foreign currency translation adjustment			(5	)
Balance at September 26, 2008		$	297

Of the September 26, 2008 balance, $142 represents a reduction to the deferred tax asset related to the net operating loss carryforwards and $155 represents a long-term income tax payable. There was no material 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 September 26, 2008 was $20. 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 nine fiscal months ended September 28, 2007
		As Previously
		Reported				Adjustments				As Restated
Changes in assets and liabilities — Accounts receivable		$	(7,589	)		$	(3,654	)		$	(11,243	)
Changes in assets and liabilities — Prepaid expenses and other assets			(2,324	)			1,747				(577	)
Net cash used in operating activities			(25,125	)			(1,907	)			(27,032	)
Proceeds from sales of rental equipment			13,473				1,907				15,380
Net cash used in investing activities			(19,917	)			1,907				(18,010	)
Supplemental Disclosures — Sale of used rental equipment in accounts and notes receivable			—				9,376				9,376

(9) Subsequent Event

In October 2008, the Company announced a voluntary early retirement program. Certain employees will be eligible for a severance package that is significantly enhanced from the Company’s normal policy. If all eligible employees accept the offer, expense of approximately $4,000 would be recorded in the fourth quarter of 2008, with the cash payments occurring in the fourth quarter of 2008 through the third quarter of 2009.

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								Nine fiscal months ended
		September 26, 2008				September 28, 2007				September 26, 2008				September 28, 2007
Product sales			86.2	%			85.9	%			84.8	%			84.3	%
Rental revenue			11.3				11.2				11.4				12.0
Used rental equipment sales			2.5				2.9				3.8				3.7
Net sales			100.0				100.0				100.0				100.0
Product cost of sales			67.5				73.4				69.1				73.0
Rental cost of sales			52.2				59.7				58.3				56.8
Used rental equipment cost of sales			28.5				15.3				14.5				23.9
Cost of sales			64.8				70.1				65.8				69.3
Product gross profit			32.5				26.6				30.9				27.0
Rental gross profit			47.8				40.3				41.7				43.2
Used rental equipment gross profit			71.5				84.7				85.5				76.1
Gross profit			35.2				29.9				34.2				30.7
Selling, general and administrative expenses			20.9				20.4				22.8				21.7
Facility closing and severance expenses			0.1				0.1				0.4				0.2
(Gain) loss on disposals of property, plant, and equipment			0.1				0.2				(0.1	)			0.1
Income from operations			14.1				9.2				11.1				8.7
Interest expense			9.1				8.9				10.0				9.5
Interest income			—				—				—				—
Loss on extinguishment of long-term debt			—				—				1.7				—
Other expense			0.1				(0.2	)			—				—
Income (loss) before provision for income taxes			4.9				0.5				(0.6	)			(0.8	)
Provision for income taxes			0.3				0.2				0.2				0.1
Net income (loss)			4.6	%			0.3	%			(0.8	)%			(0.9	)%

Comparison of Three Fiscal Months Ended September 26, 2008 and September 28, 2007

Net Sales

Net sales increased $5.0 million, or 3.8%, to $135.8 million in the third quarter of 2008 from $130.8 million in the third quarter of 2007. The following table summarizes our net sales by product segment:

		Three fiscal months ended
		September 26, 2008								September 28, 2007
($ in thousands)		Net Sales				%				Net Sales				%				% Change
Product sales		$	117,086				86.2	%		$	112,327				85.9	%			4.2	%
Rental revenue			15,274				11.3				14,707				11.2				3.9
Used rental equipment sales			3,415				2.5				3,789				2.9				(9.9	)
Net sales		$	135,775				100.0	%		$	130,823				100.0	%			3.8	%

Product sales increased $4.8 million, or 4.2%, to $117.1 million in the third quarter of 2008 from $112.3 million in the third quarter of 2007. Price increases of $22.0 million were partially offset by lower unit volume of $17.2 million, or 15.4%, due to lower non-residential construction activity.

Rental revenue increased to $15.3 million for the third quarter of 2008 from $14.7 million in the third quarter of 2007, due to higher prices.

Used rental equipment sales decreased to $3.4 million in the third quarter of 2008 from $3.8 million in the third quarter of 2007 due to the timing of customer demand.

Gross Profit

Gross profit of $47.8 million, or 35.2% of sales, in the third quarter of 2008 increased from $39.0 million, or 29.9% of sales, in the third quarter of 2007.

Product gross profit contributed $38.0 million, or 32.5% of product sales, an increase from the $29.9 million, or 26.6% of product sales, in the third quarter of 2007. The $8.1 million increase in product gross profit was due to $22.0 million of higher sales prices, partially offset by $4.6 million of lower unit volume and $9.3 million of net cost inflation, primarily related to steel, other raw materials, and freight.

Rental gross profit for the third quarter of 2008 was $7.3 million, as compared to $5.9 million in the third quarter of 2007, due to lower depreciation expense and to the higher rental revenue discussed above. Depreciation on rental equipment for the third quarter of 2008 was $2.9 million, as compared to $4.2 million in the same period of 2007, due to lower rental equipment additions. Rental gross profit before depreciation was $10.2 million in the quarter, 67.0% of rental revenue, as compared to $10.1 million, or 68.9% of rental revenue reported in the third quarter of 2007, due primarily to freight between facilities increasing as a result of regional demand.

Gross profit on sales of used rental equipment for the third quarter of 2008 was $2.4 million, or 71.5% of sales, as compared to $3.2 million, or 84.7% of sales, in the third quarter of 2007. Gross margin percentages fluctuate based on the mix and age of rental equipment sold and was higher in the third quarter of 2007 due to higher sales of fully depreciated used rental equipment.

Operating Expenses

Selling, general, and administrative expenses increased to $28.3 million in the third quarter of 2008 from $26.7 million for the third quarter of 2007. The increase was primarily due to inflation and costs related to the higher net sales and gross profit. Salaries, health care and other personnel related expenses accounted for $0.5 million of the increase.

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 $12.3 million for the third quarter of 2008, comprised of $8.8 million of interest charges and $3.5 million of non-cash amortization of debt discount and financing costs. This compares to interest expense of $11.7 million for the third quarter of 2007, comprised of $10.0 million of interest charges and $1.7 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 third quarter of 2008 was $6.8 million compared to income of $0.6 million in the third quarter of 2007, due to the factors described above.

Provision for Income Taxes

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

We have recorded a non-cash valuation allowance to reduce our net deferred tax assets, primarily related to our domestic net operating loss carryforwards, to zero, 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.

Net Income

Net income for the third quarter of 2008 was $6.4 million, or $0.33 per diluted share, compared to net income of $0.4 million, or $0.02 per diluted share, in the third quarter of 2007, due to the factors described above.

Comparison of Nine Fiscal Months Ended September 26, 2008 and September 28, 2007

Net Sales

Net sales increased $4.8 million, or 1.3%, to $372.2 million in the first nine fiscal months of 2008 from $367.4 million in the first nine fiscal months of 2007. The following table summarizes our net sales by product segment:

		Nine fiscal months ended
		September 26, 2008								September 28, 2007
($ in thousands)		Net Sales				%				Net Sales				%				% Change
Product sales		$	315,656				84.8	%		$	309,677				84.3	%			1.9	%
Rental revenue			42,469				11.4				44,211				12.0				(3.9	)
Used rental equipment sales			14,066				3.8				13,473				3.7				4.4
Net sales		$	372,191				100.0	%		$	367,361				100.0	%			1.3	%

Product sales increased $6.0 million, or 1.9%, to $315.7 million in the first nine fiscal months of 2008 from $309.7 million in the first nine fiscal months of 2007. The increase in sales was due to $38.5 million of higher sales prices, offset by $32.5 million, or 10.5%, of lower unit volume from less non-residential construction activity.

Rental revenue decreased to $42.5 million for the first nine fiscal months of 2008, from $44.2 million in the first nine fiscal months of 2007, also due to lower non-residential construction activity.

Used rental equipment sales increased to $14.1 million in the first nine fiscal months of 2008 from $13.5 million in the first nine fiscal months of 2007 due to the timing of customer demand.

Gross Profit

Gross profit of $127.2 million, or 34.2% of net sales, in the first nine fiscal months of 2008 increased from $112.9 million, or 30.7% of net sales, in the first nine fiscal months of 2007.

Product gross profit contributed $97.4 million, or 30.9% of product sales, a 16.7% increase from the $83.5 million, or 27.0% of product sales, in the first nine fiscal months of 2007. The $13.9 million increase in product gross profit was due to $38.5 million of higher sales prices, partially offset by $8.8 million of lower unit volume and $15.8 million of net cost inflation, primarily related to steel, other raw materials, and freight.

Rental gross profit for the first nine fiscal months of 2008 was $17.7 million, as compared to $19.1 million in the first nine fiscal months of 2007, due primarily to the lower rental revenues discussed above. Depreciation expense on rental equipment for the first nine fiscal months of 2008 was $10.7 million, as compared to $12.1 million in the same period of 2007. Rental gross profit before depreciation was $28.4 million in the first nine fiscal months of 2008, or 66.9% of rental revenue, as compared to $31.2 million, or 70.6% of rental revenue, reported in the first nine fiscal months of 2007. Freight between facilities increased as a result of regional mix.

Gross profit on sales of used rental equipment for the first nine fiscal months of 2008 was $12.0 million, or 85.5% of used rental equipment sales, an increase from $10.3 million, or 76.1% of sales, in the first nine fiscal months of 2007. Gross margin percentages fluctuate based on the mix and age of rental equipment sold and was higher in the first nine fiscal months of 2008 due to higher sales of fully depreciated used rental equipment.

Operating Expenses

Selling, general, and administrative expenses increased to $84.8 million in the first nine fiscal months of 2008 from $79.8 million for the first nine fiscal months of 2007. The increase was primarily due to inflation and costs related to the higher net sales and gross profit. Salaries, health care and other personnel related expenses accounted for $1.5 million of the increase. Depreciation expense increased $0.6 million due to the additions to property, plant, and equipment during 2007.

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 $37.3 million for the first nine fiscal months of 2008, comprised of $28.3 million of interest charges and $9.0 million of non-cash amortization of debt discount and financing costs. This compares to interest expense of $35.0 million for the first nine fiscal months of 2007, comprised of $29.8 million of interest charges and $5.2 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.

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 nine fiscal months of 2008 was $2.2 million compared to $2.9 million in the first nine fiscal months of 2007, due to the factors described above.

Provision for Income Taxes

The provision for income taxes in the first nine fiscal months of 2008 and 2007 relates to foreign and certain state income taxes.

We have recorded a non-cash valuation allowance to reduce its net deferred tax assets, primarily related to its domestic net operating loss carryforwards, to zero, 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.

Net Loss

The net loss for the first nine fiscal months of 2008 was $2.8 million, or $0.15 per diluted share, compared to $3.4 million, or $0.19 per diluted share in the first nine fiscal months of 2007, due to the factors described above.

Early Retirement Program

In October 2008, we announced a voluntary early retirement program. Certain employees will be eligible for a severance package that is significantly enhanced from our normal policy. If all eligible employees accept the offer, expense of approximately $4 million would be recorded in the fourth quarter of 2008, with the cash payments occurring in the fourth quarter of 2008 through the third quarter of 2009.

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 September 26, 2008, we had $18.6 million available for borrowing under our revolving credit facility, which we believe is adequate for our planned operating and investing 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.

		Nine fiscal months ended
		September 26,				September
($ in thousands)		2008				28, 2007
Capital expenditures:
Additions to rental equipment		$	9,227			$	19,483
Property, plant and equipment additions			8,461				13,944
Proceeds from sales of used rental equipment			(17,621	)			(15,380	)
Proceeds from sales of property, plant and equipment			(1,425	)			(37	)
Net additions (reductions) to rental equipment and property, plant, and equipment		$	(1,358	)		$	18,010

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

Net cash used in operating activities in the first nine fiscal months of 2008 was $(38.3) million, compared to $(27.0) million in the first nine fiscal months of 2007. This activity is comprised of the following:

		Nine fiscal months ended
		September 26,				September 28,
($ in millions)		2008				2007
Net loss		$	(2.8	)		$	(3.4	)
Adjustments to reconcile net loss to net cash used in operating activities			21.7				15.2
Subtotal			18.9				11.8
Changes in assets and liabilities			(57.2	)			(38.8	)
Net cash used in operating activities		$	(38.3	)		$	(27.0	)

Adjustments to reconcile net loss to net cash used in operating activities were $21.7 million for the first nine fiscal months of 2008 as compared to $15.2 million in the first nine fiscal months of 2007, primarily due to the loss on extinguishment of long-term debt discussed in “Other Expenses” above.

Changes in assets and liabilities resulted in a $57.2 million use of cash in the first nine fiscal months of 2008, compared to a $38.8 million use in the first nine fiscal months of 2007. The change consisted principally of the following:

	•		Accounts receivable increased during the first nine fiscal months of 2008 by $20.5 million, compared to an increase of $11.2 million in the first nine fiscal months of 2007, primarily due to the higher net sales in the third quarter of 2008.
	•		Inventories increased during the first nine months of 2008 by $28.6 million, compared to $14.0 million in the first nine fiscal months of 2007, primarily due to inflation and lower unit volume of sales.

Net cash provided by investing activities was $1.4 million in the first nine fiscal months of 2008 compared to net cash used of $18.0 million in the first nine fiscal months of 2007. Property, plant, and equipment additions decreased to $8.5 million in the first nine fiscal months of 2008 from $13.9 million in the first nine fiscal months of 2007, as fewer investments were needed. Proceeds from sales of property, plant, and equipment of $1.4 million in the first nine fiscal months of 2008, were primarily related to the sale of a facility we previously vacated. Additions to rental equipment decreased to $9.2 million in the first nine fiscal months of 2008 as compared to $19.5 million in the first nine fiscal months of 2007 as the decline in demand for rental equipment required less investment in additional rental equipment and we renovated existing equipment rather than manufacturing or purchasing equipment. Proceeds from sales of used rental equipment, which tend to lag the actual sales of the equipment approximately by a quarter, increased to $17.6 million from $15.4 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 nine fiscal months ended September 26, 2008, our net borrowings on the new revolving line of credit facility and its predecessor were $116.3 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 $211.2 million and gross repayments of $94.9 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 September 26, 2008, $144.8 million was available, of which $116.3 million was outstanding at a weighted average interest rate of 5.8%. Outstanding letters of credit were $9.9 million, resulting in available borrowings of $18.6 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. The new revolving credit facility is secured by substantially all of our assets.

As of September 26, 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			(1,616	)
Term loan, interest rate of 7.9%			99,750
Debt discount on term loan			(2,678	)
Senior notes payable to seller of Safway, non-interest bearing, accreted at 14.5%			6,790
Debentures previously held by Dayton Superior Capital Trust, interest rate of 9.1%, due on demand			1,024
Capital lease obligations			539
Total long-term debt			258,538
Less current maturities			258,469
Long-term portion		$	69

The Senior Subordinated Notes 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.

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. 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.

At September 26, 2008, working capital (deficit) was $(250.1) million, compared to $62.0 million at December 31, 2007. The decrease was comprised primarily of the following:

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

Our new revolving credit facility and term loan expire in March 2009 and our 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 offer is being made only to qualified institutional buyers and institutional accredited investors inside the United States and to certain non-US investors located outside of the United States, and is conditioned upon acceptance of the offer by the holders of 95% in aggregate principal amount of the Senior Subordinated Notes outstanding. We have periodically extended the offer and have granted withdrawal rights. Successful completion of the exchange offer would automatically extend the maturity of the new revolving credit facility and term loan to March 2014; however, there is no assurance that the exchange offer will be accepted by the holders of the required minimum principal amount of the Senior Subordinated Notes or that we otherwise will be able to refinance or extend the term of the Senior Subordinated Notes. Our inability to complete the exchange offer prior to March 2009 or otherwise to refinance and/or extend the term of the Senior Subordinated Notes likely would force us to seek the protection of the bankruptcy laws and could adversely affect our ability to continue as a going concern, as we do not expect that our liquidity and cash flows from operations would be sufficient to allow us to pay either the Senior Subordinated Notes, the new revolving credit facility, or the term loan at maturity. Even if we are successful in refinancing our indebtedness through the exchange offer or otherwise, there is no assurance that the terms of the refinanced or extended indebtedness would be commercially reasonable, which could have a material adverse effect on our business, financial condition and results of operations. Our 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 we be deemed to be unable to continue as a going concern.

If we are able to refinance and/or extend our Senior Subordinated Notes on a timely basis, we believe that our liquidity and cash flows from operations will be sufficient to fund the capital expenditures and rental equipment additions we have planned for at least the next twelve months, as well as allow us to meet scheduled debt service requirements during that period. However, our ability to make scheduled payments of principal and interest on our indebtedness, or to fund planned capital expenditures and rental equipment additions, will depend on our future performance, which 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. In addition to the previously described proposed refinancing of our Senior Subordinated Notes, we from time to time may seek to retire 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.

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 60% from December 2007 to September 2008. We expect overall steel costs to be flat for the balance of 2008 and for the first quarter of 2009, with possible further increases occurring later in 2009. We cannot assure you that we will be able to pass any 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 September 26, 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 September 26, 2008 was $116.3 million, and the average borrowings for the nine fiscal months ended September 26, 2008 were $92.0 million. The facility has several interest rate options that re-price on a short-term basis. During the nine fiscal months ended September 26, 2008, our weighted average interest rate on the facility was 6.1%. 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 $0.9 million. Subsequent to September 26, 2008, these borrowings re-priced at approximately one percentage point higher than the September 26, 2008 weighted average rate.

Our $100.0 million term loan bears interest at three-month LIBOR plus 4.50%, with a LIBOR floor of 3.25%. Due to the floor, a one percentage point decrease in three-month LIBOR would have decreased our annual interest expense by $0.5 million. A one percentage point increase in three-month LIBOR would have increased our annual interest expense by approximately $1.0 million. Subsequent to September 26, 2008, the term loan re-priced at approximately one-half percentage point higher than the September 26, 2008 rate.

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 September 26, 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 Organizations 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 September 26, 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 September 26, 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, most of which matures in March and June 2009, could adversely affect our ability to continue as a going concern and adversely affect the price of our common stock. We currently have substantial indebtedness, virtually all of which matures on or before June 15, 2009. As of September 26, 2008, we had debt of $379.1 million, excluding debt discounts, maturing within twelve months. In July 2008, we commenced a private offer to exchange our 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. The offer is being made only to qualified institutional buyers and institutional accredited investors inside the United States and to certain non-US investors located outside of the United States, and is conditioned upon acceptance of the offer by the holders of 95% in aggregate principal amount of the Senior Subordinated Notes outstanding. We have periodically extended the offer beyond its original expiration date and have granted withdrawal rights. A successful extension of the maturity date of the required minimum principal amount of the Senior Subordinated Notes would automatically extend the maturity of $216.1 million, excluding debt discount, of the Company’s other long-term debt to March 2014; however, we cannot assure you that the exchange offer will be accepted by the holders of the Senior Subordinated Notes or that we otherwise will be able to refinance or extend the term of any of our long-term debt on commercially reasonable terms, or at all. Our inability to complete the exchange offer prior to March 2009 or otherwise to refinance and/or extend the term of the Senior Subordinated Notes likely would force us to seek the protection of the bankruptcy laws and could adversely affect our ability to continue as a going concern, as we do not expect that our liquidity and cash flows from operations would be sufficient to allow us to pay either the Senior Subordinated Notes, the new revolving credit facility, and the term loan at maturity. 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 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 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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