UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-Q

 

 

(Mark One)

T

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 2, 2010

OR

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the transition period from ______________ to ______________

 

 

Commission file number: 0-29464

 

ROCK OF AGES CORPORATION
(Exact name of Registrant as Specified in its Charter)

 

 

Vermont

03-0153200

(State or other jurisdiction of
incorporation or organization)

(I. R. S. Employer
Identification Number)

 

560 Graniteville Road, Graniteville, Vermont

05654

  (Address of principal executive offices)

(Zip Code)

 

(802) 476-3121
(Registrant's telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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  x No  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o  Smaller Reporting Company x

 

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

As of November 12, 2010, 4,812,342 shares of Class A Common Stock and 2,603,721 shares of Class B Common Stock of the registrant were outstanding.

 

   

ROCK OF AGES CORPORATION

 

INDEX

 

Form 10-Q for the Quarterly Period
Ended October 2, 2010

 

PART I

FINANCIAL INFORMATION

PAGE NO.

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets - October 2, 2010 (Unaudited) and December 31, 2009

4

 

 

 

 

Consolidated Statements of Operations (Unaudited) - Three and Nine Months Ended October 2, 2010 and October 3, 2009

5

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended October 2, 2010 and October 3, 2009

6

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

7

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

15

 

  

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

 

 

 

Item 4.

Controls and Procedures

20

 

  

 

PART II

OTHER INFORMATION

 

 

  

 

Item 1.

Legal Proceedings

20

 

  

 

Item 1A.

Risk Factors

 21

 

  

 

Item 4

Submission of Matters to a Vote of Security Holders

21

 

 

 

Item 6.

Exhibits

23

 

  

 

Signature

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2, contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Rock of Ages Corporation ("Rock of Ages" or the "Company") and events to differ materially from those contained in such statements. All statements other than statements of historical fact could be deemed forward-looking statements, and may include projections of revenue, gross profit, expenses, earnings or losses from operations or other financial items; any statements of the plans, strategies and objectives of the Company or its management for future operations; any statements regarding future economic conditions or performance; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing.

 

The risks, uncertainties and assumptions may include, but are not limited to, the following:

 

  • our ability to certify adequate internal controls over our financial reporting;

  • our reliance on our line of credit with the CIT Group to fund our business operations and/or strategy;

  • our ability to maintain compliance with our covenants in our credit facility;

  • our ability to form and maintain strategic alliances with cemeteries, funeral homes and memorial retailers;

  • uncertainties involving production recovery, quarry yields and demand for Rock of Ages' dimension stone;

  • the impact of the weak economic conditions and the future impact of such conditions on the granite and granite memorial industries, and demand for our products;

  • uncertainties related to the purported class action lawsuit filed in connection with the acquisition proposal received from Swenson Granite Company LLC ("Swenson") on May 6, 2010 and the purported class action lawsuit filed in connection with the recently announced merger agreement (the "Merger Agreement") among the Company, Swenson and Granite Acquisition, LLC ("Merger Sub");

  • unanticipated overhead or other expenses, including expenses in connection with the Merger Agreement and the transactions contemplated thereby;  

 

and other risks and uncertainties described herein, including, but not limited to the items discussed in "Risk Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the year ended December 31, 2009, filed on March 31, 2010 (the "2009 Annual Report") and in Part II, Item 1A of this report, and that are otherwise described from time to time in Rock of Ages' reports filed with the Securities and Exchange Commission after the date of filing of this report.

 

We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3


  

 

PART I: FINANCIAL INFORMATION
Item 1: Financial Statements

ROCK OF AGES CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in thousands, except par value amounts)

 

 

 

October 2,

 

 

December 31,

ASSETS

 

2010

 

 

2009

 

 

(Unaudited)

 

 

(Audited)

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

1,163

 

$

1,713

Trade receivables, net

 

10,954

 

 

7,241

Inventories

 

14,845

 

 

15,077

Income taxes receivable

 

129

 

 

429

Other current assets

 

1,220

 

 

1,191

Assets held for sale

 

621

 

 

758

            Total current assets            

 

28,932

 

 

26,409

Property, plant and equipment, net

 

30,551

 

 

30,559

Identified intangible assets, net

 

458

 

 

582

Goodwill

 

387

 

 

387

Other long term assets

 

235

 

 

515

            Total assets

$

60,563

 

$

58,452

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Borrowings under line of credit

$

-

 

 

$

214

Current maturities of long-term debt

 

1,315

 

 

801

Trade payables

 

1,851

 

 

1,285

Accrued expenses

 

2,612

 

 

1,264

Salary continuation and other post-employment benefits

 

702

 

 

691

Customer deposits

 

1,233

 

 

774

Income taxes payable

 

53

   

-

Current deferred tax liabilities

 

-

 

 

236

            Total current liabilities

 

7,766

 

 

5,265

Long-term debt, excluding current installments

 

11,660

 

 

13,361

Salary continuation liability, net of current portion

 

5,218

 

 

5,386

Accrued pension cost

 

4,322

 

 

4,810

Deferred salary liability

 

1,504

 

 

1,504

Accrued other post-employment benefits, net of current portion

 

1,603

 

 

1,622

            Total liabilities

 

32,073

 

 

31,948

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

    Preferred stock - No par value; 2,500,000 shares authorized; No shares issued or outstanding

 

 

 

 

 

    Common stock - Class A, No par value; 30,000,000 shares authorized; 4,812,342  

         shares issued and outstanding as of October 2, 2010 and December 31, 2009

 

48

 

 

48

     Common stock - Class B, No par value; 15,000,000 shares authorized; 2,603,721           shares issued and outstanding as of October 2, 2010 and December 31, 2009

 

26

 

 

26

     Additional paid-in capital

 

65,790

 

 

65,751

     Accumulated deficit

 

(33,077

) 

 

(34,746)

     Accumulated other comprehensive loss

 

(4,297

) 

 

(4,575)

            Total stockholders' equity

 

28,490

 

 

26,504

            Total liabilities and stockholders' equity

$

60,563

 

$

58,452

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 

4


 

 

ROCK OF AGES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

October 2, 2010

 

 

October 3, 2009

 

 

October 2, 2010

 

 

October 3, 2009

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

     Quarry

$

8,037

 

$

5,914

 

$

18,298

 

$

15,949

 

     Manufacturing

 

7,719

 

 

6,967

 

 

19,633

 

 

17,293

 

 

 

 

 

 

 

 

 

 

 

 

 

     Total net revenues

 

15,756

 

 

12,881

 

 

37,931

 

 

33,242

 

Cost of goods sold:

 

 

 

 

 

 

 

 

 

 

 

 

     Quarry

 

5,114

 

 

4,003

 

 

13,591

 

 

12,516

 

     Manufacturing

 

5,322

 

 

4,945

 

 

14,123

 

 

12,737

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of goods sold

 

10,436

 

 

8,948

 

 

27,714

 

 

25,253

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

     Quarry

 

2,923

 

 

1,911

 

 

4,707

 

 

3,433

 

     Manufacturing

 

2,397

 

 

2,022

 

 

5,510

 

 

4,556

 

 

 

 

 

 

 

 

 

 

 

 

Total gross profit

 

5,320

 

 

3,933

 

 

10,217

 

 

7,989

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

   Selling, general and administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

      Quarry

 

604

 

 

503

 

 

1,694

 

 

1,633

 

      Manufacturing

 

1,133

 

 

938

 

 

3,168

 

 

2,964

 

      Corporate overhead

 

622

 

 

660

 

 

1,977

 

 

2,393

 

      Strategic options and lawsuit expenses

 

358

 

 

-

 

 

852

 

 

-

 

      Effect of pension curtailment

 

-

 

 

-

 

 

-

 

 

95

 

      Foreign exchange loss (income)

 

-

   

-

   

(83)

   

-

 

 

      Other income, net

 

(46)

 

 

(76)

 

 

(191)

 

 

(219)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Total selling, general and administrative expenses

 

2,671

 

 

2,025

 

 

7,417

 

 

6,866

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before interest expense and income taxes

 

2,649

 

 

1,908

 

 

2,800

 

 

1,123

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

254

 

 

334

 

 

827

 

 

871

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

2,395

 

 

1,574

 

 

1,973

 

 

252

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

195

 

 

40

 

 

305

 

 

59

 

 

 

 

 

 

 

 

 

 

 

 

 

     Net income

$

2,200

 

$

1,534

 

$

1,668

 

$

193

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

$

0.30

 

$

0.21

 

$

0.22

 

$

0.03

 

Net income per share - diluted

 

0.30

 

 

0.21

 

 

0.22

 

 

0.03

 

Weighted average number of common shares outstanding - basic

 

 

7,416

 

 

 

7,416

 

 

 

7,416

 

 

 

7,416

 

Weighted average number of common shares outstanding - diluted

 

 

7,451

 

 

 

7,416

 

 

 

7,435

 

 

 

7,416

 

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5

 

 

 

  

ROCK OF AGES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

   

 

Nine Months Ended

 

 

October 2,

 

 

October 3,

 

 

2010

 

 

2009

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

  Net income

$

1,668

 

$

193

   Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

      Gain on sale of assets

 

(79)

 

 

(49)

      Loss on sale of marketable securities

 

11

 

 

-

      Depreciation, depletion and amortization

 

1,796

 

 

1,840

      Deferred taxes

 

(238)

 

 

-

      Stock compensation expense

 

40

 

 

46

    Changes in operating assets and liabilities:

 

 

 

 

 

      Trade receivables, net

 

(3.663)

 

 

4,321

      Inventories

 

356

 

 

2,004

      Other assets

 

526

 

 

(113)

      Trade payables, accrued expenses and income taxes

 

     1,937

 

 

(678)

      Customer deposits

 

459

 

 

348

      Salary continuation and pension

 

(666)

 

 

(420)

      Other liabilities

 

-

 

 

(20)

 

 

 

 

 

 

      Net cash provided by operating activities

 

2,147

 

 

7,472

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

    Purchases of other property, plant and equipment

 

(1,633)

 

 

(1,406)

    Proceeds from sale of assets

 

246

 

 

243

    Proceeds from sale of marketable securities

 

48

 

 

-

    Purchase of land and granite reserves

 

-

 

 

(1,428)

 

 

 

 

 

 

       Net cash used in investing activities

 

(1,339)

 

 

(2,591)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

   Net repayments under lines of credit

 

(216)

 

 

(4,863)

   Principal borrowings on long-term debt

 

3,967

 

 

-

   Principal payments on long-term debt

 

(5,198)

 

 

(251)

 

 

 

 

 

 

      Net cash used in financing activities

 

(1,447)

 

 

(5,114)

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

89

 

 

187

 

 

 

 

 

 

     Net decrease in cash and cash equivalents

 

(550)

 

 

(46)

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

1,713

 

 

888

 

 

 

 

 

 

Cash and cash equivalents, end of period

$

1,163

 

$

842

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

   Cash paid during the period for:

 

 

 

 

 

             Interest

$

864

 

$

906

             Income taxes

 

198

 

 

274

 

 

 

 

 

 

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

6

 

 

ROCK OF AGES CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 

   

 (1)

Basis of Presentation

  

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States of America ("U.S. GAAP") for complete financial statements are not included herein. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the results that may be expected for a full year. The Company has historically experienced certain seasonal patterns. Generally, our net sales have been highest in the second or third quarter and lowest in the first quarter of each year due primarily to weather conditions affecting operations in Vermont and Canada and the setting of memorials in cemeteries located in northern regions. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2009, filed on March 31, 2010 (SEC File No. 000-29464) (the "2009 Annual Report").

 

In this report, the terms "Company," "we," "us," or "our" mean Rock of Ages Corporation and all subsidiaries included in our consolidated financial statements.

 

The Company's fiscal year ends on December 31 and its fiscal quarters are the 13-week periods ending on the Saturday nearest March 31, June 30 and September 30. As a result, the first and fourth quarter may be more or less than 13 weeks, by 1 to 6 days, which can affect comparability between periods. The third quarters of 2010 and 2009 each have 91 days.

   

(2)

Stock-Based Compensation

 

The following tables set forth stock option activity for the periods ended October 2, 2010 and October 3, 2009 and information on outstanding and exercisable options at such dates:

 

 

Nine Months Ended

 

October 2, 2010

 

October 3, 2009

 

Number
Of Options

 

 

Weighted
Average
Exercise Price

Aggregate Intrinsic Value

Number
Of Options

 

 

Weighted
Average
Exercise Price

Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

Outstanding at beginning of period

314,000

 

$

4.08

 

324,000

 

$

4.06

 

 

 

 

 

 

 

 

 

 

 

 

   Granted

-

 

 

-

 

20,000

 

 

2.63

 

   Exercised

-

 

 

-

 

-

 

 

-

 

   Canceled

-

 

 

-

 

(20,000)

)

 

3.05

 

Outstanding at end of period

314,000

 

$

4.08

$257,375

324,000

 

$

4.04

$97,500

Exercisable at end of period

193,500

 

$

4.82

$97,150

155,000

 

$ 

5.25

$17,420

Weighted average remaining contractual life

5.5

 

 

 

 

6.6 years

 

 

 

 

 

 

(3)

Inventories

Inventories consist of the following (in thousands):

 

October 2,

 

December 31,

 

 

2010

 

2009

Raw materials

$

9,366

$

10,402

Work-in-process

 

1,477

 

1,057

Finished goods and supplies

 

4,002

 

3,618

 

$

14,845

$

15,077

 

 

 

 

 

7

 

 

The finished goods and supplies inventory includes $1,810,000 and $1,905,000 of retail display inventory as of October 2, 2010 and December 31, 2009, respectively that is located at various retail locations and is consigned to PKDM Holdings Inc., ("PKDM") the owner of the Company's former retail division. PKDM is responsible for purchasing this inventory at the Company's book value, as it is sold, plus any inventory remaining after the tenth anniversary of the transaction (January 2018).
   

 (4)

Earnings Per Share

 

The following is a reconciliation of shares used in calculating basic and diluted earnings per share (in thousands):

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

October 2, 2010

 

October 3, 2009

 

October 2, 2010

 

October 3, 2009

Basic weighted average shares

 

7,416

 

7,416

 

7,416

 

7,416

Effect of dilutive stock options

 

35

 

-

 

19

 

-

Diluted weighted average shares

 

7,451

 

7,416

 

7,435

 

7,416

 

 

 

 

 

 

 

 

 

Options to purchase 136,500 shares of Class A common stock were outstanding at October 2, 2010, but were not included in the computation of diluted earnings per share for the three and nine months ended October 2, 2010 because they were out of the money.

 

Options to purchase 324,000 shares of Class A common stock were outstanding at October 3, 2009, but were not included in the computation of diluted earnings per share for the three and nine months ended October 3, 2009 because they were out of the money.

  (5)

Segment Information

  

The Company is organized based on the products and services it offers. The Company operates in two segments: quarry and manufacturing.

  

The quarry segment extracts granite from the ground and sells it to either the Company's manufacturing segment or to outside manufacturers, as well as to distributors in Europe and China. There were two quarry customers that represented approximately 25.8% of accounts receivable at October 2, 2010 and one customer that represented approximately 20.8% of accounts receivable at December 31, 2009.  These receivables were backed by irrevocable letters of credit.

  

The manufacturing segment's principal products are granite memorials and mausoleums used primarily in cemeteries and, to a lesser extent, specialized granite products for industrial applications.

Inter-segment revenues are accounted for as if the sales were to third parties. These are eliminated on consolidation in the statements of operations.

The following tables present unaudited segment information for the three and nine month periods ended October 2, 2010 and October 3, 2009 (in thousands):

Three month period:

2010

 

Quarry

 

 

Manufacturing

 

 

Unallocated Corporate Overhead

 

 

Total

Total net revenues

$

8,700

 

$

7,719

 

$

-

 

$

16,419

Inter-segment net revenues

 

(663

)

 

-

 

 

-

 

 

(663)

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

8,037

 

 

7,719

 

 

-

 

 

15,756

 

 

 

 

 

 

 

 

 

 

 

 

Total gross profit

 

3,135

 

 

2,185

 

 

-

 

 

5,320

Inter-segment gross profit

 

(212

)

 

212

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

2,923

 

 

2,397

 

 

-

 

 

5,320

8

Selling, general & administrative expenses  

604

   

1,133

   

622

   

2,359

Strategic options and lawsuit expenses

 

-

 

 

-

 

 

358

 

 

358

Other income, net

 

-

 

 

-

 

 

(46

)

 

(46)

Income before interest and taxes

$

2,319

 

$

1,264

 

$

(934

)

$

2,649

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

Quarry

 

 

Manufacturing

 

 

Unallocated Corporate Overhead

 

 

Total

Total net revenues

$

6,486

 

$

6,967

 

$

-

 

$

13,453

Inter-segment net revenues

 

(572

)

 

-

 

 

-

 

 

(572)

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

5,914

 

 

6,967

 

 

-

 

 

12,881

 

 

 

 

 

 

 

 

 

 

 

 

Total gross profit

 

2,074

 

 

1,859

 

 

-

 

 

3,933

Inter-segment gross profit

 

(163

)

 

163

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

1,911

 

 

2,022

 

 

-

 

 

3,933

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

503

 

 

938

 

 

660

 

 

2,101

Other income, net

 

-

 

 

-

 

 

(76

)

 

(76)

Income before interest and taxes

$

1,408

 

$

1,084

 

$

(584

)

$

1,908

 

 

 

 

 

 

 

 

 

 

 

 

 Nine month period:

2010

 

Quarry

 

 

Manufacturing

 

 

Unallocated Corporate Overhead

 

 

Total

Total net revenues

$

20,398

 

$

19,633

 

$

-

 

$

40,031

Inter-segment net revenues

 

(2,100

)

 

-

 

 

-

 

 

(2,100)

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

18,298

 

 

19,633

 

 

-

 

 

37,931

 

 

 

 

 

 

 

 

 

 

 

 

Total gross profit

 

5,183

 

 

5,034

 

 

-

 

 

10,217

Inter-segment gross profit

 

(476

)

 

476

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

4,707

 

 

5,510

 

 

-

 

 

10,217

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

1,694

 

 

3,168

 

 

1,977

 

 

6,839

Strategic options and lawsuit expenses

 

-

 

 

-

 

 

852

 

 

852

Foreign exchange income

 

-

 

 

-

 

 

(83

)

 

(83)

Other income, net

 

-

 

 

-

 

 

(191

)

 

(191)

Income before interest and taxes

$

3,013

 

$

2,342

 

$

(2,555

)

$

2,800

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

Quarry

 

 

Manufacturing

 

 

Unallocated Corporate Overhead

 

 

Total

Total net revenues

$

17,175

 

$

17,293

 

$

-

 

$

34,468

Inter-segment net revenues

 

(1,226

)

 

-

 

 

-

 

 

(1,226)

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

15,949

 

 

17,293

 

 

-

 

 

33,242

 

 

 

 

 

 

 

 

 

 

 

 

Total gross profit

 

3,667

 

 

4,322

 

 

-

 

 

7,989

Inter-segment gross profit

 

(234

)

 

234

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

3,433

 

 

4,556

 

 

-

 

 

7,989

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

1,633

 

 

2,964

 

 

2,393

 

 

6,990

Effect of pension curtailment

 

-

 

 

-

 

 

95

 

 

95

Other income, net

 

-

 

 

-

 

 

(219

)

 

(219)

Income (loss) before interest and taxes

$

1,800

 

$

1,592

 

$

(2,269

)

$

1,123

9

 

 

Net revenues by geographic area, based on shipping destination, for the three and nine months ended October 2, 2010 and October 3, 2009 are as follows (in thousands):

  

 

Three Months Ended

 

Nine Months Ended

 

 

October 2, 2010

 

October 3, 2009

 

October 2, 2010

 

October 3, 2009

Net revenues:

 

 

 

 

 

 

 

 

  China

$

3,332

$

1,741

$

6,541

$

5,177

  Italy

 

138

 

68

 

580

 

103

  Other foreign countries

 

19

 

90

 

146

 

191

 

 

3,489

 

1,899

 

7,267

 

5,471

  United States and Canada

 

12,267

 

10,982

 

30,664

 

27,771

Total net revenues

$

15,756

$

12,881

$

37,931

$

33,242

 

 

 

 

 

 

 

 

 

 

Net property, plant and equipment by geographic area are as follows (in thousands):

 

 

October 2, 2010

 

December 31, 2009

United States

$

26,488

$

26,232

Canada

 

4,063

 

4,327

 

$

30,551

$

30,559

 

 

 

 

 

   

(6)

Comprehensive Income (Loss)

  

Accumulated other comprehensive loss consists of the following components (in thousands): 

 

 

 

Foreign Currency Translation

 

 

Unfunded Pension Liability

 

 

Investment Available for Sale

 

 

Accumulated Other Comprehensive Loss

Balance at December 31, 2009

$

3,028

 

$

(7,569)

 

$

(34)

 

$

(4,575)

Changes in 2010

 

252

 

 

-

 

 

26

 

 

278

Balance at October 2, 2010

$

3,280

 

 

(7,569)

 

 

(8)

 

 

(4,297)

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in other comprehensive income/loss was a reclassification adjustment of $235,000 and $397,000 in 2010 and 2009, respectively for the unfunded pension liability.

 

Comprehensive income (loss) is as follows (in thousands): 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 2,

 

 

October 3,

 

 

October 2,

 

 

October 3,

 

 

2010

 

 

2009

 

 

2010

 

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

2,200

 

$

1,534

 

$

1,668

 

 $

193

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

    Foreign currency translation adjustment

 

327

 

 

752

 

 

252     

 

 

1,200

    Unrealized gain on investment in

 

 

 

 

 

 

 

 

 

 

 

       available for sale securities

 

9

 

 

-

 

 

26

 

 

95

    Pension related adjustment:

 

 

 

 

 

 

 

 

 

 

 

        Curtailment

 

-

 

 

-

 

 

-

 

 

1,503

        Pension liability adjustment, net of

          reclassification adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,517

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

$

2,536

 

$

2,286

 

$

1,946

 

$

5,508

 

10

  (7)

Components of Net Periodic Benefit Cost

Components of net periodic benefit cost for the three months ended October 2, 2010 and October 3, 2009 are as follows (in thousands):

 

 

NON-UNION
PENSION BENEFITS

 

 

SALARY CONTINUATION BENEFITS

 

 

OTHER POST-EMPLOYMENT BENEFITS

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2, 2010

 

 

October 3, 2009

 

 

October 2, 2010

 

 

October 3, 2009

 

 

October 2, 2010

 

 

October 3,

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$

-

 

$

-

 

$

-

 

$

-

 

$

2

 

$

1

Interest cost

 

347

 

 

371

 

 

78

 

 

84

 

 

26

 

 

26

Expected return on plan assets

 

(379

 

) 

(302

 )

 

-

 

 

-

 

 

-

 

 

-

Amortization of prior service costs

 

-

 

 

-

 

 

20

 

 

28

 

 

15

 

 

12

Amortization of net actuarial loss

 

43

 

 

45

 

 

-

 

 

-

 

 

-

 

 

-

Net periodic benefit cost

$

11

 

$

114

 

$

98

 

$

112

 

$

43

 

$

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of net periodic benefit cost for the nine months ended October 2, 2010 and October 3, 2009 are as follows (in thousands):

 

 

 

NON-UNION
PENSION BENEFITS

 

 

SALARY CONTINUATION BENEFITS

 

 

OTHER POST-EMPLOYMENT

BENEFITS

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2, 2010

 

 

October 3, 2009

 

 

 October 2, 2010

 

 

October 3,

 2009

 

 

 October 2, 2010

 

 

  October 3, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$

-

 

$

65

 

$

-

 

$

-

 

$

5

 

$

3

 

Interest cost

 

1,041

 

 

1,129

 

 

235

 

 

252

 

 

78

 

 

78

 

Expected return on plan assets

 

(1,137)

 

 

(922)

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization of prior service costs

 

-

 

 

32

 

 

60

 

 

84

 

 

46

 

 

36

 

Amortization of net actuarial loss

 

129

 

 

245

 

 

-

 

 

-

 

 

-

 

 

-

 

Effect of curtailment

 

-

 

 

95

 

 

-

 

 

-

 

 

-

 

 

-

 

Net periodic benefit cost

$

33

 

$

644

 

$

295

 

$

336

 

$

129

 

$

117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective March 31, 2009, the Company's defined benefit pension plan was amended by freezing membership and future benefits in the plan.  We recognized additional pension expense of $95,000 as the effect of the pension curtailment in the first quarter of 2009. Additionally, the defined benefit pension plan was revalued as of the date of the curtailment. The effect of the curtailment and re-measurement resulted in a decrease of the projected benefit obligation of $3.8 million and a decrease in the accumulated other comprehensive loss of $4.0 million.

 

The Company expects to contribute approximately $850,000 to the defined benefit pension plan during 2010.  A $212,000 contribution was made during the quarter ended October 2, 2010, bringing the total contribution to $423,000 for 2010.  We also contributed $98,000 in January 2010 for the 2009 plan year.

   

(8)

Recent Accounting Pronouncements

 

Effective January 1, 2010, the Company adopted new accounting guidance on fair value measurements and disclosures. The new guidance requires more robust disclosures about (1) the different classes of assets and

 

11

 liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3. The adoption of this new accounting guidance did not have a material effect on the Company's financial position or results of operations.

 

(9)

Credit Facility

 

In October 2007, the Company entered into a new credit facility with its existing lenders, the CIT Group/Business Credit and Chittenden Trust Company (the "Lenders") that will expire in October 2012 and is secured by substantially all assets of the Company located in the United States.  The credit facility consists of an acquisition term loan line of credit of up to $30.0 million and a revolving credit facility of up to another $20.0 million based on eligible accounts receivable, inventory and certain fixed assets. Amounts outstanding were $-0- and $11,206,000 as of October 2, 2010 and $2,565,000 and $13,886,000 as of October 3, 2009 on the revolving credit facility and the term loan line of credit, respectively. Availability under the revolving credit facility was $12.9 million as of October 2, 2010. The credit facility financing agreement places restrictions on our ability to, among other things, sell assets, participate in mergers, incur debt, pay dividends, make capital expenditures, repurchase stock and make investments or guarantees, without pre-approval by the Lenders.

 

Repayment Terms. As the aggregate unpaid principal balance of the outstanding term loan is less than $17,500,000, quarterly principal payments are no longer required. The principal balance is payable in full on the expiration date of the facility in October 2012.  The Company does have the right to make voluntary pre-payments on the term loan.  In the first quarter of 2010 our Canadian subsidiary borrowed $4 million on its term loan. The proceeds, net of the Canadian withholding tax, were used to pay $2 million on the term debt with the remainder used for working capital. During the second and third quarters the company voluntarily pre-paid an additional $680,000 on its term loan.  The revolving credit facility is paid down daily with all proceeds received by the Company.

 

The Company is required to repay its term loan to the extent it sells certain assets collateralizing the loan. Accordingly, the Company has classified a portion of the term loan as a current liability based on the estimated proceeds of fixed assets classified as held for sale.

 

Minimum Fixed Charge Coverage Ratio . The facility requires the ratio of the sum of earnings before interest, taxes, depreciation and amortization (EBITDA), to the sum of income taxes paid, capital expenditures, interest and scheduled debt repayments be at least 1.10 for the trailing twelve-month period at the end of each quarter. The Company was in compliance with this covenant at October 2, 2010.

 

Total Liabilities to Net Worth Ratio. The credit facility also requires that the ratio of our total liabilities to net worth (the "Leverage Ratio") not exceed 2.25 for the first two quarters of 2009 and 2.00 for the remainder of the term of the loan. The Leverage Ratio excludes from the calculation the change in tangible net worth directly resulting from the Company's compliance with changes in accounting for pensions of $6.0 million.  As of October 2, 2010, we were in compliance with the Leverage Ratio covenant.

 

Canadian Facility. The Company's Canadian subsidiary has a line of credit agreement with the Royal Bank of Canada that is renewable annually. Under the terms of this agreement, a maximum of $2.5 million CDN may be advanced based on eligible accounts receivable, eligible inventory, and tangible fixed assets.  The line of credit bears interest at the Canadian prime rate plus 0.5%.  There was $-0- outstanding as of October 2, 2010 and October 3, 2009, respectively.

 

The Canadian subsidiary also has a non-revolving term loan with the Royal Bank of Canada which cannot exceed $4 million CDN bearing interest at the Canadian prime rate plus 0.95%. There was $1.5 million and $-0- outstanding as of October 2, 2010 and October 3, 2009, respectively. The effective interest rate was 3.95% as of October 2, 2010.

 

(10)

Income Taxes

 
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2007 or Canadian tax authorities for years before 2004. However, even though the tax years are closed the tax attributes may remain open to adjustment. On October 6, 2010 we were notified that the Canada Revenue Agency will be auditing our income tax return for the 2008 tax year.
 

Income tax expense in the first half of 2010 and 2009 result primarily from income at our Canadian subsidiary. Tax expense is calculated based on the estimated annual effective Canadian tax rate of 29.9% for 2010 and 2009.

12

In 2005, the Company adjusted its valuation allowance to fully reserve for the entire net U.S. deferred tax asset. At each subsequent period, including at the end of the third quarter of 2010, we reached a similar conclusion, therefore we have continued to fully reserve for the entire net U.S. deferred tax asset. We will continue to assess the valuation allowance on a regular basis and may reduce the valuation allowance if and/or when the Company has taxable income from its U.S. operations.

 

As of October 2, 2010 and December 31, 2009, the Company recorded no unrecognized tax benefits or liabilities related to uncertain tax positions.

(11)

Intangible Assets and Goodwill

 

We test goodwill for impairment annually and when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. In the first quarter of 2010, we performed our annual assessment for the quarry reporting unit. We calculated the fair value of the quarry reporting unit based on the estimated expected discounted future cash flows. Based on this analysis we concluded that there was no indication of impairment as of April 3, 2010, although there can be no assurance that goodwill will not become impaired in future periods. We have reviewed the events of the last two quarters and believe that no triggering events have occurred that would require an assessment of impairment.

   

(12)

Fair Value Measurements

 

The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the short-term nature of these instruments. Investment securities are carried at fair value using level one inputs. The long-term and short-term debt instruments bear interest at variable rates, which at October 2, 2010 and December 31, 2009 we estimated to be at market.

 

The assets in our pension plan are Separate Investment Accounts and their fair value is based on unit values and not net asset values. Unit values are calculated based on observable net asset values of the underlying investment and are considered Level 2 inputs.

   

(13)

Regulatory Matters

 

In 2009 the U.S. Mine Safety and Health Administration (MSHA) issued citations to one of our subsidiaries, Pennsylvania Granite, asserting various violations and assessed fines totaling approximately $280,000.  The Company disagrees with the validity of these violations and how they are characterized. We are appealing the citations. Based on experience of our legal counsel in settling similar assessments and available historical MSHA settlement data, we estimate our final exposure will be no greater than $125,000.

In 2010 MSHA again inspected the Pennsylvania Quarry operations and issued 25 citations. We were assessed additional fines totaling $4,575 for these citations. We are contesting these citations and additional fines. We also received five citations of a more serious nature for which we have not been assessed additional fines yet. We do not have an estimate of the amount of the additional fines but are planning on contesting those citations as well.

   

(14)

Assets Held For Sale

 

As of October 2, 2010, the Company held various assets for sale, which were no longer being used in production, totaling $621,000 and $758,000 at December 31, 2009.  During the quarter ended July 3, 2010, we sold property located in Hardwick, Vermont with a book value of $137,000. The remaining assets have been classified as current assets held for sale. The estimated sales prices for the assets are expected to exceed the carrying values therefore no impairments were recognized.  Accordingly, these amounts have been reclassified from the term loan to current maturities of long term debt since the Company is required to apply the proceeds from the sale of these assets, when they are sold, against the term loan.

(15)

Merger Agreement

 

On October 15, 2010, a special committee of the Company's independent directors, formed for the purpose of exploring and considering possible strategic alternatives for the Company  (the "Special Committee"), and the Company's Board of Directors, approved the Merger Agreement by and among Rock of Ages, Swenson and Merger Sub. The Merger Agreement, dated as of October 18, 2010, provides for the merger of Merger Sub with and into

13

the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Swenson. Merger Sub, which is wholly owned by Swenson, is a recently-formed Vermont limited liability company established for the sole purpose of effecting the merger. If the proposed merger is consummated, shareholders of the Company (other than shareholders who are members of Swenson to the extent they have contributed their shares of Company common stock in exchange for additional shares of membership interest in Swenson, and other than shareholders to the extent they have properly asserted dissenters' rights in accordance with the Vermont Business Corporation Act) will be entitled to receive $5.25 in cash per share of common stock, without interest.

 

The merger is subject to a number of conditions, including, in addition to approval by a majority of the votes represented by the outstanding shares of Class A and Class B common stock voting together, approval by a majority of the outstanding shares of the Company's Class A common stock, not including (in the number of outstanding shares of Class A common stock, or in the number of shares of Class A common stock voted in favor of the merger agreement) shares of Class A common stock owned directly or through a broker or other nominee by members of Swenson. Although the merger is not subject to a financing contingency, Swenson is seeking debt financing in connection with the merger and will require that financing in order to consummate the merger and related transactions. Swenson has received an amended and restated commitment letter from certain lenders, pursuant to which such lenders have committed, subject to certain specified conditions, to enter into a definitive financing agreement to provide funding for, among other things, the merger.

 

The Company plans to schedule a special meeting of its shareholders for the purpose of obtaining shareholder approval of the merger agreement. If the necessary shareholder approval is obtained, then the merger is expected to be completed as quickly as possible after the special meeting, subject to customary conditions.  See Item 1A - "Risk Factors" of this Form 10-Q.

 

(16)

Litigation

A purported shareholder of Rock of Ages commenced a purported class action lawsuit against Rock of Ages, all of the members of its Board of Directors, certain of its officers, and Swenson, shortly after Swenson's initial proposal, submitted to the Company's board of directors on May 6, 2010, to acquire the Company at $4.38 per share of common stock. The complaint was filed in Vermont Superior Court, Washington County and subsequently removed to the United States District Court for the District of Vermont. The plaintiff alleges, among other things, that the Rock of Ages directors and officers named in the complaint breached their fiduciary duties in connection with the Swenson proposal, that Swenson's proposed offer is inadequate, and that the defendants would benefit from the proposed transaction to the detriment of Rock of Ages' other shareholders. Plaintiff seeks an order certifying the proposed class, granting preliminary and permanent injunctive relief against the consummation of the merger, or if the merger is consummated, rescinding the merger and/or awarding rescissory damages and ordering an accounting, and an award of costs and attorneys fees.  Rock of Ages believes the complaint is without merit and is engaged in a vigorous defense . The plaintiff has asserted to the court that he intends to amend his complaint, but has not indicated when he will do so.

 

A second purported class action was commenced by a purported shareholder against Rock of Ages, each of its current directors, Swenson and Merger Sub on October 27, 2010 in the United States District Court for the District of Vermont.    The plaintiff alleges, among other things, that the individual defendants breached their fiduciary duties in approving the previously announced merger agreement among the Company, Swenson and Merger Sub, providing for the acquisition of the Company through a merger of Merger Sub with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Swenson.  Plaintiff further alleges that Swenson and Merger Sub aided and abetted such breaches of duty.  Plaintiff seeks an order certifying the proposed class, granting preliminary and permanent injunctive relief against the consummation of the merger, or, if the merger is consummated, rescinding the merger and/or awarding rescissory damages and ordering an accounting, and an award of costs and attorneys fees.  Rock of Ages believes the complaint is without merit and plans a vigorous defense. Plaintiff's counsel has notified defendants' counsel that they intend to amend their complaint, but have not yet done so.

 

 

(17)

Subsequent Events

In February 2010, the FASB issued ASU No. 2010-09, Amendments to Certain Recognition and Disclosure Requirements .  The standard amends ASC Topic 855 to address certain implementation issues related to an entities requirement to perform and disclose subsequent-event procedures. The standard requires SEC filers to "evaluate subsequent events through the date the financial statements are issued" and exempts SEC filers from disclosing the date through which subsequent events have been evaluated. The Company evaluates subsequent events through the date and time of the filing of the applicable periodic report with the SEC. The Company evaluated subsequent events through the date of issuance of its Quarterly Report on Form 10-Q.

14

 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

  

Rock of Ages is an integrated quarrier and manufacturer of granite and products manufactured from granite. During the first three quarters of 2010, we had two business segments:  quarry and manufacturing. The quarry division sells granite blocks to the manufacturing division and to outside manufacturers, as well as to customers outside North America. The manufacturing division's principal products are granite memorials and mausoleums used primarily in cemeteries. It also manufactures specialized granite products for industrial applications.

  

Historically, the Company's operations have experienced certain seasonal patterns. Generally, our net sales have been highest in the second or third quarter and lowest in the first quarter of each year due primarily to weather. Cemeteries in northern areas generally do not accept granite memorials during winter months when the ground is frozen because they cannot be properly set under those conditions. In addition, we either close or reduce the operations of our Vermont and Canadian quarries during these months because of increased operating costs attributable to adverse weather conditions. As a result, we have historically incurred a significant net loss during the first three months of each calendar year.

 

In the third quarter of 2010 total revenue increased $2.9 million or 22% from the same period last year mainly due to increased export granite sales of our Bethel and Salisbury quarries and increased sales of industrial products and monumental sales in our Canadian subsidiary.  Total gross profit increased $1.4 million from the same period last year.  SG&A expenses increased 32% or $646,000 due partly to costs associated with the consideration of the Swenson proposal, and the process commenced by the special committee of independent directors (the "Committee") to explore and consider strategic alternatives for the Company (the "Strategic Process"), as well as costs associated with defending against the shareholder lawsuit described in Part II, Item 1 of this Report. Total net income increased by $666,000 over the same period last year.

 

Critical Accounting Policies

 

General

 

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

 

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

 

Our critical accounting policies are as follows:  revenue recognition, impairment of long-lived assets, valuation of deferred tax assets, accounting for pensions and other post-employment benefits and valuation of inventory. There have been no material changes in the Company's critical accounting policies or changes in the methodology applied by management for critical accounting policies from what was previously disclosed in our most recent Form 10-K.

 

Results of Operations  

The following table sets forth certain statement of operations data as a percentage of total net revenues with the exception of quarry and manufacturing gross profit and SG&A, which are shown as a percentage of their respective segment's net revenues. 

 

 

Three Months Ended

 

Nine Months Ended

 

 

October 2, 2010

 

October 3, 2009

 

October 2, 2010

 

October 3, 2009

Net Revenues:

 

 

 

 

 

 

 

 

        Quarry

 

51.0%

 

45.9%

 

48.2%

 

48.0%

        Manufacturing

 

49.0%

 

54.1%

 

51.8%

 

52.0%

 

 

 

 

 

 

 

 

 

            Total net revenues

 

100.0%

 

100.0%

 

100.0%

 

100.0%

15

Gross Profit:

 

 

 

 

 

 

 

 

        Quarry

 

36.4%

 

32.3%

 

25.7%

 

21.5%

        Manufacturing

 

31.1%

 

29.0%

 

28.1%

 

26.3%

 

 

 

 

 

 

 

 

 

             Total gross profit

 

33.8%

 

30.5%

 

26.9%

 

24.0%

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses:

 

 

 

 

 

 

 

 

        Quarry

 

7.5%

 

8.5%

 

9.3%

 

10.2%

        Manufacturing

 

14.7%

 

13.5%

 

16.1%

 

17.1%

        Corporate overhead

 

3.9%

 

5.1%

 

5.2%

 

7.2%

        Strategic options and lawsuit expenses

 

2.3%

 

-

 

2.2%

 

-

        Effect of pension  curtailment

 

-

 

-

 

-

 

0.3%

        Foreign exchange loss (income)

 

-

 

-

 

(0.2%

)

-

        Other income, net

 

(0.3%

)

(0.6%

)

(0.5%

)

(0.7%)

 

 

 

 

 

 

 

 

 

              Total SG&A expenses

 

17.0%

 

15.7%

 

19.5%

 

20.6%

 

 

 

 

 

 

 

 

 

Income before interest and income taxes

 

 16.8%

 

14.8%

 

7.4%

 

3.4%

 

 

 

 

 

 

 

 

 

Interest expense

 

1.6%

 

2.6%

 

2.2%

 

2.6%

 

 

 

 

 

 

 

 

 

 Income before income taxes

 

 15.2%

 

 12.2%

 

 5.2%

 

0.8%

 

 

 

 

 

 

 

 

 

Income tax expense

 

1.2%

 

0.3%

 

0.8%

 

0.2%

 

 

 

 

 

 

 

 

 

Net income

 

14.0%

 

11.9%

 

4.4%

 

0.6%

 

 

 

 

 

 

 

 

 

Three Months Ended October 2, 2010 Compared to Three Months Ended October 3, 2009  

On a consolidated basis for the three-month period ended October 2, 2010, compared to the three-month period ended October 3, 2009, revenue increased $2.9 million or 22%, gross profit increased $1.4 million or 35% and total operating expenses increased $646,000 or 32%. The Company reported net income of $2.2 million in the third quarter of 2010 compared to $1.5 million for the third quarter of 2009.

 

Quarry Segment Analysis  

In the third quarter of 2010 revenues in our quarry division increased $2.1 million or 36% from the same period last year mainly due to increased export sales of Bethel White and Salisbury. The development performed at our quarries earlier in the year is allowing us to produce higher volumes of quality granite to meet demand and bring sales back to historical levels.  Gross profit increased $1 million from the same period last year mainly due to increased sales and higher profit margins in our Barre and Salisbury quarries. In each of these quarries the cost per cubic foot has decreased and the gross profit margins have increased.

 

SG&A expenses increased 20% or $101,000 due to an increase in our incentive accrual and a large repair to a holding pond in Vermont.  Despite the higher SG&A expenses quarry divisional operating income increased 65% or $910,000 compared to the same period last year.

 

Manufacturing Segment Analysis  

Revenue in our manufacturing division was $752,000 higher in the third quarter of 2010 than the same period last year. The increase in manufacturing revenue is due to increased shipments of industrial products and monumental sales from our Canadian subsidiary, which is partly due to the increase in the exchange rate.  

 

Gross profit for the third quarter of 2010 was $2,397,000 or 19% higher than the same period last year. The gross profit margin increased from 29% to 31%. Even though shipments from our Barre monumental plant were down from the prior year, the gross profit margin on those shipments increased from 20% to 22%, due to cost savings from a smaller workforce.

 

SG&A costs for the quarter ended October 2, 2010 for the manufacturing division increased $195,000 or 21% compared to the quarter ended October 3, 2009. This increase is due to additional sales personnel, increased incentive expenses at both the Barre and Beebe plants, increased bad debt accruals for the industrial products division and the increase in the Canadian exchange rate. The manufacturing operating income was $180,000 higher than last year's third quarter.

16

Consolidated Items  

Corporate overhead, consisting of operating costs not directly related to an operating segment, decreased 6%, or $38,000, for the quarter ended October 2, 2010 compared to the quarter ended October 3, 2009 due in part to decreased salaries & benefits, legal expenses and Delaware franchise tax accruals which were partially offset by increased bank charges and incentive accrual. In the third quarter of 2010 we incurred $217,000 in costs related to the Strategic Process and we incurred $141,000 in costs related to the shareholder lawsuit Described in Part II, Item 1 of this Report.

 

Other income, which includes rental income from non-operating properties and miscellaneous reimbursements, was down 39%, or $30,000, in the third quarter of 2010.

 

Due to the decreased level of U.S. debt in 2010, net interest expense decreased $81,000, or 24%, for the quarter ended October 2, 2010 compared to the quarter ended October 3, 2009. On March 30, 2009, we reached a definitive agreement with our lenders on the conditions of the grant of a waiver from compliance with certain covenants contained in our Amended and Restated Financing Agreement. In consideration of the consents and waivers, the unused line fee went from .25% to .50% and the existing interest rate pricing grid was changed and interest rates increased approximately 3%. Despite the higher rates the decreased level of debt and the decreased interest rate on the Canadian debt, resulted in a decrease in interest expense.   

 

Income tax expense was $195,000 for the quarter ended October 2, 2010, compared to $40,000 for the same quarter in 2009. The tax expense reported in both periods was primarily due to our Canadian subsidiary and is more in 2010 than 2009 due to a larger third quarter net income in our Canadian subsidiary and the increase in the exchange rate. During the third quarter of both years we continued to fully reserve against all our U.S. deferred tax assets.  

Nine Months Ended October 2, 2010 Compared to Nine Months Ended October 3, 2009  

On a consolidated basis for the nine-month period ended October 2, 2010, compared to the nine-month period ended October 3, 2009, revenue increased $4.7 million or 14%, gross profit increased $2.2 million or 28% and total operating expenses increased $551,000 or 8%. The Company reported net income of $1.7 million in the third quarter of 2010 compared to net income of $193,000 for the third quarter of 2009.

 

Quarry Segment Analysis

In the first nine months of 2010 revenues in our quarry division increased $2.3 million or 15% from the same period last year mainly due to increased sales in all but one quarry. The increase in the sales of Stanstead is due in part to the purchase of the Polycor quarry which was completed in April 2009 and in part due to the increase in the exchange rate. Gross profit increased $1.3 million from the same period last year due to increased sales and an overall increase in the quarry profit margin from 22% to 26% which was mainly due to our Stanstead, Barre, Salisbury and Gardenia quarries. In each of these quarries the cost per cubic foot has decreased and the gross profit margins have increased.  In 2010 we had a mild winter so quarry operations started sooner in 2010 than in 2009 resulting in much better production. Production in both Salisbury and Gardenia is better in 2010 due to the development we have done in each of those quarries.

 

SG&A expenses increased 4% or $61,000 due to increases in sales travel and convention expenses, a one-time repair to a holding pond in Vermont and incentive accrual. The increases were somewhat offset by decreases in pension, office expenses and legal expense related to the appeal of our property tax valuations. The quarry divisional operating income increased 67% or $1.2 million compared to the same period last year.

 

Manufacturing Segment Analysis  

Revenue in our manufacturing division was 14% or $2.3 million higher in the first nine months of 2010 than the same period last year. The increase in manufacturing revenue is due to increased shipments of industrial products and monumental shipments from our plant in Canada and the increase in the exchange rate.

 

Gross profit for the first nine months of 2010 was $954,000 or 21% higher than the same period last year. The gross profit margin increased from 26% to 28% due to the larger profit margin for industrial products.

 

SG&A costs for the nine-month period ended October 2, 2010 for the manufacturing division increased $204,000, compared to the nine-month period ended October 3, 2009 mainly due to increased incentive accrual and the increase in the exchange rate. The manufacturing operating income was $750,000 higher than the same period last year.

 

Consolidated Items

17

Corporate overhead, consisting of operating costs not directly related to an operating segment, decreased 17%, or $416,000, for the nine-month period ended October 2, 2010 compared to the nine-month period ended October 3, 2009 due to decreased pension, legal and accounting expenses and Delaware franchise tax accruals. The decreases were somewhat offset by increased bank fees and accruals for incentive payments. In the first nine months of 2010 we incurred $553,000 in costs related to the Strategic Process and $299,000 in costs related to the shareholder lawsuit described in Part II, Item 1 of this Report.

 

Other income, which includes rental income from non-operating properties and miscellaneous reimbursements, decreased by $28,000 or 13% in the first nine-months compared to the prior year.

 

Effective March 31, 2009 the Company's defined benefit pension plan was amended by freezing membership and future benefits in the plan. Accordingly, we recognized an additional pension expense of $95,000 as the effect of the pension curtailment in the first nine months of 2009. There was no comparable expense in 2010.

 

Net interest expense decreased $44,000, or 5%, for the nine-month period ended October 2, 2010 compared to the nine-month period ended October 3, 2009. On March 30, 2009, we reached a definitive agreement with our lenders on the conditions of the grant of a waiver from compliance with certain covenants contained in our Amended and Restated Financing Agreement. In consideration of the consents and waivers the unused line fee went from .25% to .50% and the existing interest rate pricing grid was changed and interest rates increased approximately 3%. 

 

Income tax expense was $305,000 for the nine-month period ended October 2, 2010, compared to $59,000 for the same nine-month period in 2009. The tax expense reported in both periods was primarily due to our Canadian subsidiary; is calculated using an effective rate of 29.9% and is more in 2010 than 2009 due to a larger pre-tax income in our Canadian subsidiary and the increase in the exchange rate. During the first nine months of both years we continued to fully reserve against all our U.S. deferred tax assets.  

 

Liquidity and Capital Resources  

Historically, we have met our short-term liquidity requirements primarily from cash generated by operating activities and periodic borrowings under the commercial credit facilities described below. Our $50 million credit facility with our Lenders was renewed on October 24, 2007 for a term of five years.

 

We have historically contributed between $800,000 and $1.0 million per year to the defined benefit pension plan.  We expect to contribute $850,000 to the defined benefit plan this year, which, we believe, we will be able to fund from cash from operations.  A $212,000 contribution was made to the plan during the quarter ended October 2, 2010 for 2010 bringing total contributions to $423,000 for 2010.  We also contributed $98,000 in January 2010 for the 2009 plan year. See note 7 of the Notes to Unaudited Consolidated Financial Statements.

 

Our primary need for capital will be to maintain and improve our quarry and manufacturing facilities.  We have approximately $2 million planned for capital expenditures in 2010 and have spent $1.6 million to date. We believe we will be able to fund these capital expenditures either from cash from operations or borrowings under our credit facilities.

 

On April 17, 2009, ROA Canada signed an Asset Purchase Agreement and completed the purchase of the real and personal property comprising the Polycor Stanstead Quarry, located in Stanstead, Quebec, Canada from Carrieres Polycor, Inc. ("Polycor"). The purchase price for the quarry, building and inventory was $1.3 million CDN. This purchase was funded by ROA Canada's line of credit with the Royal Bank of Canada.

 

In March 2010, we received $3.8 million, net of the Canadian withholding taxes, as a dividend from our Canadian subsidiary.  We applied $2 million of this dividend to the long-term debt and $1.8 million was retained for working capital needs.

 

Cash Flows

 

At October 2, 2010, we had cash and cash equivalents of $1.2 million and working capital of $21.2 million, compared to $1.7 million of cash and cash equivalents and working capital of $21.1 million at December 31, 2009.

 

Cash Flows from Operations. Net cash provided by operating activities was $2.1 million for the nine-month period ended October 2, 2010 compared to $7.5 million in the nine-month period ended October 3, 2009. The decrease in cash flow from operations is due primarily to the decrease in the amount of collections on accounts receivable and the change in inventory in the first nine months of 2010 compared to 2009. The significant decrease in trade

18

 receivables in 2009 was partly due to the high level of receivables as of December 31, 2008 which was driven by a very large sale at the end of the year of $1.4 million and the high level of sales in Q4 2008 in general - especially quarry export sales. Combine this with a very low level of accounts receivable at the end of 2009 and accounts receivable goes from a source of funds of $4.3 million in the first nine months of 2009 to a use of funds of $3.7 million in the first nine months of 2010.

 

Cash Flows from Investing Activities. Cash flows used in investing activities were $1.3 million in the first nine months of 2010 compared to $2.6 million for the same period in 2009. In 2010 we spent $1.6 million for capital expenditures, of which, $819,000 was for quarry development. We also received $246,000 on sales of assets and $48,000 from sales of stock in Family Memorials.  In 2009, we purchased property, plant and equipment (PP&E) totaling $1.4 million and land and granite reserves in Canada for $1.4 million less $243,000 received on sales of assets. Cash used in investing activities comes from either borrowings under our credit facilities or from operations.

 

Cash Flows from Financing Activities. Net cash used in financing activities in the nine-month period ended October 2, 2010 was $1.4 million which consisted of $4 million in gross proceeds from long-term debt of our Canadian subsidiary less $5.2 million paid on long-term debt in the U.S. and Canada plus $216,000 paid on the revolving line of credit. This compares to $5.1 million used in financing activities in the nine-month period ended October 3, 2009 which consisted of repayments on the long-term debt of $251,000 and net repayments on the revolving line of credit of $4.9 million.

 

CIT Credit Facility  

We have a credit facility with the CIT Group/Business Credit and Chittenden Trust Company (the "Lenders") that is scheduled to expire in October 2012 and is secured by substantially all assets of the Company located in the United States. The credit facility consists of an acquisition term loan line of credit of up to $30.0 million and a revolving credit facility of up to another $20.0 million based on eligible accounts receivable, inventory and certain fixed assets. Amounts outstanding were $-0- and $11,206,000 as of October 2, 2010 and $2,565,000 and $13,886,000 as of October 3, 2009 on the revolving credit facility and the term loan line of credit, respectively. Availability under the revolving credit facility was $12.9 million as of October 2, 2010. The credit facility financing agreement places restrictions on our ability to, among other things, sell assets, participate in mergers, incur debt, pay dividends, make capital expenditures, repurchase stock and make investments or guarantees, without pre-approval by the Lenders.  The credit facility requires a minimum fixed charge coverage ratio and a total liabilities to net worth ratio. See footnote No. 9 to the financial statements for more details.

 

Interest Rates. We can elect the interest rate under the credit facility based on the prime rate or LIBOR for both the revolving credit facility and the term loan. The revolving credit facility's rate is based on Prime plus 3% or LIBOR plus 4% with a 2% floor for LIBOR. The term loan's rate is based on Prime plus 3.5% or LIBOR plus 4.5% with a 2% floor for LIBOR.

 

The rates in effect as of October 2, 2010 were as follows:

 

 

Amount

 

Formula

 

Effective Rate

Revolving Credit Facility

$

-

 

Prime + 3.00%

 

6.25%

Term Loan

$

2.2 million

 

Prime + 3.50%

 

6.75%

Term Loan

$

9.0 million

 

Libor + 4.5%

 

6.50%

 

Canadian Credit Facility  

The Company's Canadian subsidiary has a line of credit agreement with the Royal Bank of Canada that is renewable annually. Under the terms of this agreement, a maximum of $2.5 million CDN may be advanced based on eligible accounts receivable, eligible inventory, and tangible fixed assets.  The line of credit bears interest at the Canadian prime rate plus 0.5%.  There was $-0- outstanding as of October 2, 2010 and October 3, 2009, respectively.

 

The Canadian subsidiary also has a non-revolving term loan which cannot exceed $4 million CDN bearing interest at the Canadian prime rate plus 0.95%. There was $1.5 million and $-0- outstanding as of October 2, 2010 and October 3, 2009, respectively. The effective rate was 3.95% as of October 2, 2010.

 

Off-Balance Sheet Arrangements

 

With the exception of our operating leases, we do not have any off-balance sheet arrangements, and we do not have, nor do we engage in, transactions with any special purpose entities.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk  

19

   

The Company has financial instruments that are subject to interest rate risk, principally debt obligations under its credit facilities. Historically, the Company has not experienced material gains or losses due to interest rate changes. Based on the October 2, 2010 outstanding borrowings under the credit facilities of $13 million, the impact of a 1% increase in the interest rates would be approximately $130,000 a year.

   

The Company is subject to foreign currency exchange rate risk primarily from the operations of its Canadian subsidiary. At October 2, 2010, the Canadian subsidiary had total assets of $11.3 million exposed to changes in the Canadian/U.S. dollar exchange rate.  The impact of the change in the exchange rate in the first nine months of 2010 was $252,000 due to an increase in the value of the Canadian dollar.

   

Item 4.

Controls and Procedures  

Disclosure Controls and Procedures. The Company, with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended as of the end of the period covered by this report.  Based on this evaluation, our CEO and CFO have determined, that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include controls and procedures designed to reasonably ensure that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Management has concluded that the consolidated financial statements in this Form 10-Q fairly present, in all material respects, the Company's financial position, results of operations and cash flows for the periods and dates presented.

 

Changes in Internal Control Over Financial Reporting. There have been no significant changes in the Company's internal control over financial reporting identified during the quarter ended October 2, 2010.

PART II

OTHER INFORMATION

  

Item 1.

Legal Proceedings

We are a party to legal proceedings that arise from time to time in the ordinary course of our business. While the outcome of these proceedings cannot be predicted with certainty, we do not expect them to have a material adverse effect on our business or financial condition.

 

The Company carries insurance with coverage that it believes to be customary in its industry. Although there can be no assurance that such insurance will be sufficient to protect us against all contingencies, management believes that its insurance protection is reasonable in view of the nature and scope of our operations.

 

The U.S. Mine Safety and Health Administration (MSHA) issued citations to one of our subsidiaries, Pennsylvania Granite, asserting various violations and assessed fines totaling approximately $280,000.  The Company disagrees with the validity of these violations and how they are characterized. We are appealing the citations. Based on experience of our legal counsel in settling similar assessments and available historical MSHA settlement data, we estimate our final exposure will be no greater than $125,000.

 

A purported shareholder of Rock of Ages commenced a purported class action lawsuit against Rock of Ages, all of the members of its Board of Directors , certain of its officers, and Swenson, shortly after Swenson's initial proposal , submitted to the Company's board of directors on May 6, 2010, to acquire the Company at $4.38 per share of common stock.  The complaint was filed in Vermont Superior Court, Washington County and subsequently removed to the United States District Court for the District of Vermont . The plaintiff alleges, among other things, that the Rock of Ages directors and officers named in the complaint breached their fiduciary duties in connection with the Swenson proposal, that Swenson's proposed offer is inadequate, and that the defendants would benefit from the proposed transaction to the detriment of Rock of Ages' other shareholders. Plaintiff seeks an order certifying the proposed class, granting preliminary and permanent injunctive relief against the consummation of the merger, or, if the merger is consummated, rescinding the merger and/or awarding rescissory damages and ordering an accounting, and an award of costs and attorneys fees .  Rock of Ages believes the complaint is without merit and is engaged in a vigorous defense. The plaintiff has asserted to the court that he intends to amend his complaint, but has not indicated when he will do so.  

 

A second purported class action was commenced by a purported shareholder against Rock of Ages, each of its current directors, Swenson and Merger Sub on October 27, 2010 in the United States District Court for the

20

 District of Vermont.  The plaintiff alleges, among other things, that the individual defendants breached their fiduciary duties in approving the previously announced merger agreement among the Company, Swenson and Merger Sub , providing for the acquisition of the Company through a merger of Merger Sub with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Swenson.  Plaintiff further alleges that Swenson and Merger Sub aided and abetted such breaches of duty. Plaintiff seeks an order certifying the proposed class, granting preliminary and permanent injunctive relief against the consummation of the merger, or, if the merger is consummated, rescinding the merger and/or awarding rescissory damages and ordering an accounting, and an award of costs and attorneys fees.  Rock of Ages believes the complaint is without merit and plans a vigorous defense. Plaintiff's counsel has notified defendants' counsel that they intend to amend their complaint, but have not yet done so.

 

Item 1A.

Risk Factors

Other than the risk factors described below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A of the Company's 2009 Annual Report.

 

As described above in this Form 10-Q, the Company recently entered into a merger agreement with Swenson which provides for the acquisition of the Company by Swenson at a cash price of $5.25 per share ; there can be no assurance that the merger agreement will receive the necessary shareholder approval required under the merger agreement or that the merger will be consummated .  The Company has incurred, and will continue to incur, significant fees and expenses in connection with the proposed merger and related matters whether or not the merger agreement receives the requisite shareholder approval of the merger is consummated.

  On October 15, 2010, the Company's Board of Directors and the Special Committee approved a definitive merger agreement by and among the Company, Swenson and Merger Sub. For further information, refer to Footnote 15 - "Merger Agreement" under "ROCK OF AGES CORPORATION - NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS" of this Form 10-Q, above .

The Company is responsible for payment of the fees and expenses of the Special Committee's financial advisor and counsel, as well as of its own counsel; such fees and expenses are, and will continue to be, significant and will adversely impact the Company's results of operations.

 

A purported shareholder of Rock of Ages has commenced a purported class action lawsuit against Rock of Ages, all of the members of its Board of Directors, certain of its officers, and Swenson, in connection with Swenson's initial proposal, submitted to the board of directors on May 6, 2010, to acquire the Company at $4.38 per share of Company common stock.

A second purported shareholder of Rock of Ages has commenced another purported class action lawsuit against Rock of Ages, all of the members of its Board of Directors, Swenson and Merger Sub , in connection with the approval of the acquisition proposal by the Rock of Ages' Board of Directors on October 15, 2010.

 

For further information regarding these class action lawsuits, please refer to Part II, Item 1 - "Legal Proceedings" of this Form 10-Q, above .

There can be no assurance that we will prevail in our defense and even if we do, the legal fees and expenses related to these lawsuits are, and will likely continue to be significant. To the extent these legal fees and expenses are not promptly paid or reimbursed by the Company's director and officer liability insurance carrier, such fees and expenses will adversely impact the Company's results of operations.

 

If we are unable to affirm the effectiveness of our internal controls over financial reporting in future years, the market value of our common stock could be adversely affected.

 

We must report on our internal controls over financial reporting as of the end of each fiscal quarter and as of the end of each fiscal year.  In 2007 we disclosed material weaknesses in our internal controls over financial reporting in Item 9A(T) - Controls and Procedures of the Annual Report on Form 10-K. In 2008 we remediated the weaknesses and accordingly reported no material weaknesses in our internal controls over financial reporting as of December 31, 2008 and December 31, 2009. However, we cannot assure you that we will continue to be able to report that our internal controls over financial reporting are effective as of December 31, 2010 and subsequent fiscal year end dates, respectively. In this event, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the market value of our Class A Common Stock.

Item 4.

Submission of Matters to a Vote of Security Holders

21

The Company held its annual meeting of stockholders on August 12, 2010 (the "Annual Meeting"), to elect two each Class I, II and III directors and to ratify the selection of Grant Thornton LLP as the Company's registered public accounting firm for the 2010 fiscal year.

 

Kurt M. Swenson and Frederick E. Webster, Jr. were elected to serve as Class I directors for a one-year term expiring at the annual meeting of stockholders in 2011 and until their successors are duly elected and qualified. Pamela G. Sheiffer and Donald M. Labonte were elected to serve as Class II directors for a two-year term expiring at the annual meeting of stockholders in 2012 and until their successors are duly elected and qualified.  James L. Fox and Richard C. Kimball were elected to serve as Class III directors for a three-year term expiring at the annual meeting of stockholders in 2013 and until their successors are duly elected and qualified.

 

The following table sets forth the number of votes cast for, against or withheld, as well as the number of abstentions, as to the election of each of the directors and the ratification of the selection of Grant Thornton LLP as the Company's registered public accounting firm for the 2010 fiscal year.

             

 

 

Votes For

 

Votes Withheld/
Votes Against

 

 Abstentions

Election of

 

 

 

 

 

 

    Kurt M. Swenson

 

25,082,295

 

3,140,777

 

-

    Frederick E. Webster, Jr.

 

25,367,994

 

2,855,078

 

-

    Pamela G. Sheiffer

 

25,366,194

 

2,856,878

 

-

    Donald M. Labonte

 

25,368,494

 

2,854,578

 

-

    James L. Fox

 

25,368,394

 

2,854,678

 

-

    Richard C. Kimball

 

25,354,933

 

2,868,139

 

-

Grant Thornton LLP

 

28,171,392

 

48,323

 

3,357

 

 

 

 

 

 

 

 

 

 

 

 

 

22


 

Item 6.

Exhibits

  

 

Number

Exhibits

 

 

2.1

Agreement and Plan of Merger dated October 18, 2010 by and among Swenson Granite Company, LLC, Granite Acquisition, LLC, and Rock of Ages Corporation (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 18, 2010).

 

 

2.2

Agreement and Plan of Merger dated October 21, 2009 by and between Rock of Ages Corporation, a Delaware corporation and Rock of Ages Corporation (Vermont), a Vermont corporation, (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

3.1

Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

3.2

By-laws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K and filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

3.3

Articles of Merger filed with the Vermont Secretary of State dated December 7, 2009 (incorporated herein by reference to Exhibit 3.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

3.4

Certificate of Merger filed with the Delaware Secretary of State dated December 7, 2009 (incorporated herein by reference to Exhibit 3.4 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

4.1

Specimen Certificate representing the Class A Common Stock incorporated by reference to Exhibit 4.1 to the Company's Amendment No. 2 to Registration Statement on Form 8-A (Commission File No. 0-2964) filed with the Securities and Exchange Commission on December 15, 2009.

 

 

 

 

31.1

Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

31.2

Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

32.1

Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

32.2

Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

23

 

SIGNATURE

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 hereunto duly authorized.

 

 

ROCK OF AGES CORPORATION

 

 

Dated: November 16, 2010

By: /s/ Laura A Plude                                        
       Laura A. Plude
       Vice President, Chief Financial Officer
       and Treasurer
       (Duly Authorized Officer and Principal Financial and Accounting Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24

EXHIBIT INDEX

 

Number

Exhibits

 

 

2.1

Agreement and Plan of Merger dated October 18, 2010 by and among Swenson Granite Company, LLC, Granite Acquisition, LLC, and Rock of Ages Corporation (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 18, 2010).

 

 

2.2

Agreement and Plan of Merger dated October 21, 2009 by and between Rock of Ages Corporation, a Delaware corporation and Rock of Ages Corporation (Vermont), a Vermont corporation, (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

3.1

Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

3.2

By-laws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K and filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

3.3

Articles of Merger filed with the Vermont Secretary of State dated December 7, 2009 (incorporated herein by reference to Exhibit 3.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

3.4

Certificate of Merger filed with the Delaware Secretary of State dated December 7, 2009 (incorporated herein by reference to Exhibit 3.4 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2009).

 

 

 

 

4.1

Specimen Certificate representing the Class A Common Stock incorporated by reference to Exhibit 4.1 to the Company's Amendment No. 2 to Registration Statement on Form 8-A (Commission File No. 0-2964) filed with the Securities and Exchange Commission on December 15, 2009.

 

 

 

 

31.1

Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

31.2

Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

32.1

Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

32.2

Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

25

 

Rock OF Ages (NASDAQ:ROAC)
Historical Stock Chart
From Oct 2024 to Nov 2024 Click Here for more Rock OF Ages Charts.
Rock OF Ages (NASDAQ:ROAC)
Historical Stock Chart
From Nov 2023 to Nov 2024 Click Here for more Rock OF Ages Charts.