2005 Financial Survey

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© 2005 by theConstruction FinancialManagement Association29 Emmons Drive, Suite F-50Princeton, NJ 08540Phone: 609.452.8000 FAX: 609.452.0474www.cfma.org

William M. SchwabPresident & CEO

Brian K. SummersChief Operations Officer

Joe GrossoDirector, Graphic Design Services

All rights reserved. No part of thisbook may be reproduced in any way,or by any means, without permissionin writing from the publisher.

Printed in the United States of America



C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

GENERAL INFORMATION



Please note that some numbers may not sum due to rounding. General Information

About CFMA — The Source & Resource for

Construction Financial Professionals

The Construction Financial Management Association (CFMA) is the source and resource for construction

industry professionals and the only nonprofit organization dedicated to serving the construction financial professional. Established in 1981, CFMA now boasts 7,000 members and 89 chapters in major cities across

the country. CFMA is the communications leader and premier source of education and information

about those aspects of financial management unique to the construction industry.

CFMA meets the needs of a broad spectrum of financial managers: CFOs, treasurers, controllers, and

accountants. CFMA’s General Membership represents all types of contractors, including generals and subs, as

well as developers, construction managers, architects, engineers, principals, and material and equipment

suppliers.

CFMA’s Associate Membership is open to those serving the construction industry, such as lawyers, public

accountants, bankers, sureties, insurance agents and carriers, and other service providers.

As the primary forum for education and networking among today’s construction financial managers, CFMA is

proud of its highly rated educational products. In addition to the 2005 Construction Industry Annual

Financial Survey, these specialized communications include:

CFMA Building Profits – CFMA’s bimonthly magazine featuring an outstanding selection of

feature articles, technical pieces, and industry news.

Financial Management and Accounting for the Construction Industry – The definitive reference book, written and updated annually by CFMA members.

CFMA’s Construction Industry Information Technology Survey – A comprehensive report on

the industry’s use of technology, including hardware, software applications, operating systems, and

emerging technology trends. THE SOURCE Online – CFMA’s Online Membership Directory is easy to use, always up-to-

date, and just a mouse click away.

www.cfma.org – CFMA’s 24-hour virtual association.

CFMA’s extensive education services include an Annual Conference and Exhibition each May, mini-

conferences, co-sponsored seminars, and specialized training workshops for chapter leaders. Dedicated to

excellence, CFMA’s conferences and seminars provide unique opportunities for the exchange of information

and technical support, networking referrals, and employment opportunities.

CFMA began as an informal gathering of construction financial executives 25 years ago and has since growninto a vital industry participant. CFMA has testified, submitted comments, and worked with industry coalitions

on: the definition of an independent contractor and the Section 530 Safe Harbor, the definition of temporaryassignment, the ADA and the EEOC, Look-Back Rules, tax reporting requirements, and more. Two keyCFMA committees (Tax & Legislative Affairs and Accounting & Reporting) continue to provide memberswith timely and critical information and analyses on tax, accounting, and legal issues affecting the industry.



General Information

Letter to the Users of CFMA’s 2005 Financial Survey

I am particularly pleased to present the results of CFMA’s 2005 Construction Industry Annual Financial

Survey – regarded by many as the financial benchmarking tool for our industry. Everything is covered – fromcomposite financial statements and key financial ratios to Best in Class analyses by industry segment.

The 2005 edition contains two discussion and analysis sections: one on this year’s Hot Topic on Employee

Incentives and Bonuses, and the other on the performance and practices of Best in Class companies. Weinvite you to read these sections, and we welcome any feedback or questions you may have regarding theresults.

The Benchmarking Builder , CFMA’s CD-ROM tool allowing the user to comparetheir company’s financial results with survey results, is now in its third year. The 2005version of Benchmarking Builder is updated and improved, coming complete withinterpretive commentary on company results and a graphical presentation of keyfinancial data.

CFMA’s Survey is the only survey designed by construction financial professionals for construction financial

professionals. For the 17th consecutive year, it details the important data contractors need to stay competitive.

For instance:

CFMA’s Survey provides aggregate data by type of contactor (Industrial & Nonresidential,

Heavy & Highway, and Specialty Trade), dollar volume, and geographic region.

– PLUS –

It provides an exclusive look at how the industry operates in the critical areas of accounting, cash

and risk management, bonding, taxes, and corporate policies.

CFMA is indebted to Scott Hursh, with Stambaugh-Ness, P.C. located in York, PA and Co-Chair of CFMA’s

Accounting & Reporting Committee, which oversees the production of the Survey. In addition, we would liketo thank Rebecca Pomering, Business Consulting Manager, and Ken Evans, Senior Analyst, both with Moss

Adams LLP, and their entire staff, for the time and effort spent on the compilation and analysis of the survey

data.

As always, the intent of this survey is to provide a meaningful and analytical resource tool for our members

and other individuals interested in the financial and operational aspects of the construction industry. We

encourage your use and support of this survey and invite your comments and suggestions for improvements.

Respectfully,

Dennis Joyce

Chairman, CFMA



Please note that some numbers may not sum due to rounding. General Information

Description of CFMA’s 2005 Financial Survey

CFMA’s 2005 Construction Industry Annual Financial Survey was designed to provide critical benchmarking andfinancial information on the construction industry. The results are presented in the form of financial statementinformation, financial ratios, charts, graphs, and narrative analysis.

The information for this study was compiled and analyzed by Moss Adams LLP. Moss Adams LLP was not engagedto and did not audit this information, and accordingly, does not express an opinion or any other form of assurance onit.

It is important to note the new areas included in the 2005 report:

1. Return on Assets (ROA) and Return on Equity (ROE) are calculated using net earnings (loss) before incometaxes. Studies conducted in prior years used net earnings (loss) after taxes to calculate ROA and ROE. Allreferences to ROAs and ROEs from prior studies have been updated to reflect this change.

2. Specific state data has been collected. For more information on how to obtain this data, contact a MossAdams representative at 206-442-2646. (Note: Some industry segment breakouts are unavailable due to aminimal response rate.)

3. In prior years, direct cost information was gathered, but not presented in the overall report due to a significantnumber of participants omitting detailed expense information. This year, 515 companies submitted direct

cost information and a detailed report on Direct Costs appears in Appendix D on page 280.

The report is presented in the following sections:

The Executive Summary condenses the overall survey results and provides a summary of important issues and trends,as well as financial information and comparative financial data. In addition, various topics are compared over a five-year period (2001-2005) when significant industry trends have been observed.

Once again, the 2005 edition contains two additional discussion and analysis sections: one on this year’s Hot Topic, Employee Incentives and Bonuses, and the other on the performance and practices of Best in Class companies. Weinvite you to read these sections, and we welcome any feedback or questions you may have regarding the results.

The Overall Survey Results section presents data in two formats. First, information is provided graphically in theform of charts and tables. This first section is enhanced by a discussion that compares data from each chart/table to prior year results and then points out trends or differences between classifications. This first section is divided into

eight parts and includes: General Profile, Economy and Competition, Cash Management and Finance, Bondingand Sureties, Insurance, Professional Consultants, Taxation, Accounting Policies and Methods.

The second section provides detailed financial data on the survey respondents as a whole. Detailed composite balancesheets, earning statements, and financial ratios are presented for the 2005 and 2004 survey participants. Compositefinancial statements and ratios are also presented on a regional basis.

The survey data is then presented for each of the three major classifications of contractors: Industrial &Nonresidential, Heavy & Highway, and Specialty Trade. For each classification, the survey data is compared to thecomposite results or prior period results. Financial data is then presented by geographic size and contractor size (basedon annual revenue).

The survey data is intended to provide a source of information on the entire group of respondents first, then on specificsegments of the entire group. Therefore, the needs of the individual reader will determine which sections will be mostuseful. There are limited comparisons of data among the three major classifications of contractors to allow for a more

focused analysis.

CFMA’s 2005 Construction Industry Annual Financial Survey is not intended to, nor does it, provide a statisticallyvalid representation of the construction industry as a whole; rather, it is representative of approximately 4,100 CFMAgeneral members employed by U.S. construction companies, plus a small number of other U.S. contractors. Thenumber and mix of respondents in each year’s survey affect trends in the financial statement information.



M oss Adams LLP is pleased to have compiled

and analyzed the 17th edition of the CFMA Construction

Industry Annual Financial Survey.

Moss Adams LLP provides accounting, tax, and consulting

services to public and private middle-market enterprises in construction

and many other industries.

Moss Adams is the 12th largest accounting and consulting firm in the U.S.

and the largest headquartered on the West Coast.

For further information about Moss Adams, contact:

AC C O U N T I N G SE R V I C E S: EL A I N E ERVIN , CPA

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2 0 6 - 4 4 2 - 2 3 5 8 / F a x : 2 0 6 - 6 2 2 - 9 9 7 5 / E l a i n e . E r v i n @ m o s s a d a m s . c o m

CONSULT ING SE R V I C E S: RE B E C C A PO M E R I N G

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2 0 6 - 4 4 2 - 2 6 2 2 / F a x : 2 0 6 - 2 3 3 - 9 2 1 4 / R e b e c c a . P o m e r i n g @ m o s s a d a m s . c o m

Certified Public Accountants and Business Consultants

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C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

EXECUTIVE SUMMARY



Executive Summary

EXECUTIVE SUMMARY

We are pleased to present the results of CFMA’s 2005 Construction Industry Annual Financial Survey. Distinctive features this year include a Hot Topic section on Employee Bonuses and Incentives,

discussion of Best in Class company profiles and practices, and an updated version of CFMA’s Benchmarking Builder CD-ROM, which can be purchased separately.

The survey is conducted by CFMA’s Accounting & Reporting Committee, and survey results arecompiled and analyzed by Moss Adams LLP. The Committee wishes to thank all participants andencourages all CFMA General Members to participate in future studies.

Introduction

CFMA’s Financial Survey is a benchmarking tool that allows construction companies to comparetheir financial information, as well as their business practices and strategies, with their peers inthe industry. CFMA’s Financial Surveys are confidential and unique to the industry.

The 2005 Construction Industry Annual Financial Survey questionnaire was distributed in April2005 to approximately 4,100 general members employed within U.S. construction companies anda small number of other U.S. contractors. Survey responses were received between May and July2005.

A total of 660 companies participated in the 2005 Financial Survey. A total of 538 submitteddetailed financial data, with 532 included in the study. Of those, 72% participated in the 2004survey and 97% are CFMA members.

The Financial Survey presents data in composite form, and according to the type of constructionwork performed, the region, revenues, and financial performance. Details are provided for thefollowing sectors: Industrial & Nonresidential, Heavy & Highway, and Specialty Trade.

The Benchmarking Builder , CFMA’s CD-ROM tool that allows users to compare their

company’s financial results with survey results, is now in its fourth year. The 2005 version of Benchmarking Builder is updated and improved, complete with interpretive commentary oncompany results and a graphical presentation of key financial data, along with greater flexibilityin selecting benchmarks and easier data entry.

Hot Topic Focus: Employee Incentives and Bonuses

When employees leave a company, it is not inherently a bad thing — some level of turnover is healthy asit can allow someone with different skills, experiences, and/or point of view to address challenges.Similarly, losing poorly performing employees who would do better elsewhere is usually good for both parties involved. However, losing competent employees to competitors means that another company iscapitalizing on your investment in those employees. While compensation might not keep employees fromlooking for work elsewhere, it can be a very important factor in their decision to stay. In the following

chart, participants were asked to rank nine factors (from 1 to 9, with 9 being the most important factor)they believed contribute to the overall satisfaction and attitude of their employees. Participantsoverwhelmingly selected compensation as the most important factor.



Executive Summary

Average

Ranking 1 2 3

Compensation 2.8 35% 18% 17%

Overall employee morale 3.5 24% 18% 13%

Comfortable balance between work and life 4.6 12% 13% 14%

Level of effective communication 4.7 8% 14% 11%

Collaborative teamwork 5.0 5% 7% 15%

Intellectual challenge 5.7 4% 8% 9%

General caring for one another 6.0 5% 8% 7%

Clarity of future vision 6.0 5% 7% 8%

Adequacy of facilities and equipment 6.7 2% 5% 8%

Percent Selecting As

With compensation representing a critical factor of overall employee satisfaction, a majority of participants defensively set compensation at industry competitive levels. When asked what their overallcompensation philosophy is, the majority of participants (71%) answered they, “Pay competitively withthe industry.” However, the single largest reason cited by participants for employee turnover was betteropportunity elsewhere — 51% of employees that left went to a competing company. This suggests that

current compensation packages might not be as competitive as perceived, or that “opportunity” extends beyond compensation. In any event, contractors would probably benefit from re-examining (orestablishing) their compensation strategy/philosophy.

More information on current compensation practices and developing a compensation strategy/philosophyis provided in the Hot Topic Section.

Best in Class Companies

The CFMA Construction Industry Financial Survey recognizes the Best in Class contractors for theirstrong financial performance as the top 25% of their peer group. Best in Class status is based on fiveindicators of financial health: ROA1, ROE1, Fixed Asset Ratio, Debt to Equity, and Working Capital

Turnover. The following graph contrasts these factors for the Best in Class contractors and this year’saverage survey participant. Figures shown are the ratios calculated from common-sized financialstatements.

1 In the CFMA’s 2005 Construction Industry Annual Financial Survey, Return on Assets (ROA) and Return onEquity (ROE) are calculated using net earnings (loss) before income taxes. Studies conducted in prior years used netearnings (loss) after taxes to calculate ROA and ROE. All references to ROA and ROE from prior studies have beenupdated to reflect this change.



Executive Summary

B E S T I N C L A S S K E Y F I N A N C I A L C H A R A C T E R I S T IC S

36.536.5

2.35.2

13.516.9

2.2

11.3

15.1

27.1

0

10

20

30

40

50

Return on

Assets (%)

Return on

Equity (%)

Fixed Asset

Ratio (%)

Debt to

Equity

Working

Capital

Turnover

All Companies Best in Class

• Return on Assets: Best in Class companies had an average ROA of 11.3% — 6.1 percentage points higher than the typical company. Best in Class companies use their assets moreeffectively and efficiently to generate profits.

• Return on Equity: Best in Class companies had an average ROE of 36.5% — 19.6 percentage points higher than the typical company. Best in Class companies utilize equitymore effectively to generate profits.

• Fixed Asset Ratio: Best in Class companies had an average Fixed Asset Ratio of 27.1 — 9.4 percentage points lower than the typical company. Best in Class companies are using lessequity to finance the purchase of fixed assets than the typical company and have superiorliquidity.

• Debt to Equity: Best in Class companies had an average Debt to Equity ratio of 2.2 — 0.1lower than the typical company. Best in Class companies are taking slightly less financial riskto generate superior financial performance as compared to the typical company.

• Working Capital Turnover: Best in Class companies turned over their working capital anaverage of 15.1 times — 1.6 times more than the typical company. This indicates that forevery dollar of working capital, the Best in Class companies generate $1.60 more in sales,which indicates either a more strategic pursuit of projects and/or better sales and marketing.



Executive Summary

General Profile

Survey data is broken out by industry classification as follows:

Classification Number of Companies Percentage of Total

Industrial & Nonresidential 227 43%

Heavy & Highway 106 20%

Specialty Trade 165 31%

Other 34 6%

TOTAL 532 100%

In addition, financial data is presented for S corporations, publicly owned companies, minority business enterprises, companies performing work in foreign regions, residential contractors, andspecific specialty trades.

Only 1% of participants were public companies. The percentage of participants who areS corporations has risen steadily each year and is now at 64%.

The percentage of companies that experienced a change in majority ownership in the last fiveyears remained similar to that of prior years at 17%. Of those who had experienced a change,31% went to family members, and 31% went to company employees.

A total of 11% of survey participants were qualified to bid on public projects as DisadvantagedBusiness Enterprises. Of those, 22% were Minority Business Enterprises, 20% were Woman-Owned Business Enterprises, and the remaining 58% were Small Business Enterprises.

The majority of all companies surveyed (60%) were general contractors. However, 89% ofIndustrial & Nonresidential companies were general contractors, while 89% of Specialty Tradecompanies were subcontractors.

The private sector accounted for a majority of revenue for all companies at 67%. Heavy &

Highway contractors differ from other types in this regard, deriving 64% of their revenue fromthe public sector.

Only 8% of contractors participating in the study had been operating for 10 years or less.



Executive Summary

Economy and Competition

A majority of survey participants (63%) expected their sales volume to increase over the nextyear. Another 24% expected volume to remain unchanged. Overall, an 11.3% growth in volumewas anticipated.

Fifty-five percent of survey participants increased their backlog compared to the prior year.

However, the average months in backlog decreased from 8.2 months in the 2004 survey to 7.8months in the 2005 survey. The trend in average reported backlog for the past five years is presented in the graph below.

B A C K L O G

A L L C O M P A N IE S

$76.2

$62.8

$76.0

$57.1

$68.8

$0

$25

$50

$75

$100

2001 2002 2003 2004 2005

$ M i l l i o n s

Competitive bid remains the most common way to acquire work-in-progress and backlog, at 57%.

Overall, 20% of participants were planning on entering new geographic regions in 2005,

primarily in the Southeast and Northeast regions. Existing U.S. contractors within the region pursuing growth and/or aggressive marketing remains

the primary source of competition, with 77% of respondents reporting it as the number one threat.





Executive Summary

Cash Management and Finance

Zero-balance arrangements remain the industry’s most popular cash management technique,employed by 80% of respondents.

The availability of bank credit has improved slightly, with 35% of respondents indicating that it

was better than the previous year. Similarly, 29% of respondents indicated they experienced anincrease in their working capital line of credit.

Over half of the respondents finance equipment purchases through current cash flows.

Bonding and Sureties

Not surprisingly, the vast majority of participants (94%) bond some portion of their project work.Among those who do, 39% bond less than 20%.

Among those who bond subcontractor dollars, most bond less than 20%.

Professional Consultants

About two-thirds (70%) of participants had their financial statements audited.

The most common type of accounting firm with which participants have a relationship is aregional firm with construction focus (47%).

Taxation

Over 90% of participants use the percentage-of-completion method for recognition of contractrevenue and gross profit for tax reporting purposes.

Eight percent of respondents reported having an AMT liability for the last tax year.

Fifty-six percent of all respondents filed IRS Form 8697 (Look-Back Interest Computation) withtheir last tax return.

One-third of all participants have never had an IRS examination, 26% have had an examination

within the last six years, and the remainder have not had an examination in the last six years.

Almost exclusively, tax examinations resulted in either an immaterial change or no change in taxliability.

Accounting Policies and Methods

Sixty-five percent of survey participants report their earnings on a calendar year basis.

The vast majority (97%) of respondents recognize revenue for financial statement purposes usingthe percentage-of-completion method.

Most companies (72%) recognize profits as soon as costs are charged to the job.

Fixed-price contracts are the most common type of contract.

Approximately half of those participants who need to account for joint ventures use the equitymethod.



Executive Summary

TYPES OF CONTRACTS

All Industrial & Heavy & Specialty

Companies Nonresidential Highway Trade

Fixed Price - Hard Bid 39% 30% 40% 50%

Fixed Price - Negotiated 20% 22% 10% 23%

Cost with Guaranteed Maximum 14% 28% 1% 5%

Unit Price 10% 0% 37% 3%

Time and Materials 8% 3% 7% 15%

Cost Plus Fee 5% 8% 2% 2%

Construction Management 3% 7% 1% 0%

Other 1% 1% 1% 1%

TOTAL 100% 100% 100% 100%

Financial Information

The composite balance sheet for all companies responding to the 2005 Financial Survey had totalassets of $33.1M and total net worth of $10.1M in 2005. This compares with $28.2M and $8.9Min 2004, respectively.

Average total revenue was $96.0M, compared with $82.2M from the prior year. Net earningsmargin before income taxes remained the same at 1.8%.

While net margin was virtually unchanged, the respondents’ median composite ROA and ROEincreased from 4.8% and 15.7% to 5.3% and 18.5%, respectively. However, on average, therespondents’ composite ROA and ROE both decreased by 0.1% to 5.2% and 16.9% respectively.



Executive Summary

The typical operating cycle improved slightly in 2005. Both accounts payable and accountsreceivable days increased over the last year, as illustrated in the following graph.

50494847

53

413839

34

42

0

20

40

60

2001 2002 2003 2004 2005

Days in A/R Days in A/P

DAYS IN ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE

ALL COMP ANIES

Across almost all industry classifications gross margins declined over the last year as shown inthe graph below. Overall, the margin decreased from 8.1% in 2004 to 7.8% in 2005.

GR OSS MAR GI N (% )

7 . 8 9

. 2

8 . 1

8 . 5

8 . 3

5 . 3 6

. 0 5 . 7

5 . 9

5 . 1

8 . 8

9 . 3 1

0 . 9 1

3 . 4

1 0 . 6

1 4 . 0

1 3 . 9

1 5 . 2

1 6 . 0

1 5 . 6

0

5

10

15

20

2001 2002 2003 2004 2005

All Industrial & Nonresidential Heavy & Highway Specialty Trade



Executive Summary

The net margin before income taxes was flat for all participants, but across industryclassifications there were mixed results, as illustrated in the graph below.

N E T M A R G I N BE F O R E I N C O M E T A X E S ( % )

1 . 8

2 . 9

1 . 8

2 . 0 2

. 3

1 . 2

1 . 4

1 . 6

1 . 8

1 . 4

2 . 8

2 . 6

3 . 9

7 . 0

3 . 3

2 . 5

2 . 5

1 . 7

3 . 0

4 . 5

0

2

4

6

8

2001 2002 2003 2004 2005

All Industrial & Nonresidential Heavy & Highway Specialty Trade



Balance SheetMost Recent Year End

Amount Percent Amount Percent Amount Percent Amount Percent

Current assets:Cash and cash equivalents $ 4,818,236 14.6 % $ 7,286,579 17.7 % $ 6,230,400 15.4 % $ 1,088,211 5.7 %

Marketable securities & short-term investments 1,983,264 6.0 3,748,113 9.1 1,440,197 3.5 207,217 1.1

Receivables:

Contract receivables currently due 12,856,421 38.9 17,039,458 41.4 10,507,240 25.9 9,631,845 50.8

Retainages on contracts 3,919,134 11.9 5,739,338 13.9 3,881,865 9.6 1,897,498 10.0

Unbilled work 337,890 1.0 231,244 0.6 863,719 2.1 187,032 1.0

Other receivables 419,224 1.3 564,447 1.4 600,087 1.5 141,500 0.7

Less allowance for doubtful accounts (64,638) (0.2) (37,123) (0.1) (59,944) (0.1) (104,242) (0.5)

Total receivables, net: 17,468,032 52.8 23,537,363 57.1 15,792,968 38.9 11,753,632 62.0

Inventories 509,170 1.5 62,318 0.2 937,194 2.3 348,254 1.8

Costs and recognized earnings in excess

of billings on uncompleted contracts 1,735,737 5.3 1,771,079 4.3 2,235,049 5.5 1,434,561 7.6

Investments in and advances to

construction joint ventures 205,853 0.6 267,770 0.7 419,628 1.0 20,934 0.1

Income taxes:

Current/refundable 22,668 0.1 24,682 0.1 26,004 0.1 10,216 0.1

Deferred 59,853 0.2 62,432 0.2 106,147 0.3 38,629 0.2

Other current assets 705,247 2.1 848,258 2.1 824,579 2.0 453,047 2.4

Total current assets 27,508,059 83.2 37,608,594 91.3 28,012,166 69.0 15,354,703 80.9

Property, plant and equipment 9,304,496 28.2 5,129,943 12.5 23,506,239 57.9 5,245,272 27.6

Less accumulated depreciation (5,629,779) (17.0) (3,184,441) (7.7) (14,018,135) (34.5) (3,248,038) (17.1)

Property, plant and equipment, net 3,674,716 11.1 1,945,503 4.7 9,488,103 23.4 1,997,235 10.5

Noncurrent assets:

Long-term investments 350,514 1.1 594,860 1.4 372,452 0.9 68,375 0.4

Deferred income taxes 92,363 0.3 152,721 0.4 79,188 0.2 29,033 0.2

Other assets 1,427,615 4.3 890,988 2.2 2,630,588 6.5 1,522,569 8.0

Total noncurrent assets 1,870,491 5.7 1,638,569 4.0 3,082,228 7.6 1,619,977 8.5

Total assets $ 33,053,266 100.0 % $ 41,192,667 100.0 % $ 40,582,497 100.0 % $ 18,971,914 100.0 %


Current liabilities:

Current maturity on long-term debt $ 505,428 1.5 % $ 192,110 0.5 % $ 1,175,606 2.9 % $ 298,946 1.6 %

Notes payable and lines of credit 549,390 1.7 216,248 0.5 468,741 1.2 1,000,402 5.3

Accounts payable:

Trade, including currently due

to subcontractors 9,779,664 29.6 15,924,529 38.7 8,432,234 20.8 3,243,596 17.1

Subcontracts retainages 2,774,589 8.4 5,716,494 13.9 925,713 2.3 259,732 1.4

Other 203,446 0.6 174,023 0.4 342,847 0.8 166,585 0.9

Total accounts payable 12,757,700 38.6 21,815,045 53.0 9,700,794 23.9 3,669,913 19.3

Accrued expenses 2,117,744 6.4 2,367,884 5.7 2,221,762 5.5 1,920,132 10.1

Billings in excess of costs and recognized

earnings on uncompleted contracts 4,008,261 12.1 5,128,250 12.4 4,541,773 11.2 2,501,947 13.2

Income taxes:

Current 47,657 0.1 27,894 0.1 109,226 0.3 43,294 0.2

Deferred 41,700 0.1 70,298 0.2 25,941 0.1 17,993 0.1

Other current liabilities 374,427 1.1 403,782 1.0 338,119 0.8 366,373 1.9

Total current liabilities 20,402,306 61.7 30,221,513 73.4 18,581,961 45.8 9,819,000 51.8

Noncurrent liabilities

Long-term debt, excluding current maturities 2,038,046 6.2 840,236 2.0 5,178,864 12.8 1,387,425 7.3

Deferred income taxes 141,937 0.4 35,588 0.1 452,939 1.1 76,990 0.4

Other 354,694 1.1 413,410 1.0 616,693 1.5 143,594 0.8

Total liabilities 22,936,983 69.4 31,510,746 76.5 24,830,458 61.2 11,427,010 60.2

Minority interests 45,041 0.1 49,308 0.1 54,805 0.1 15,266 0.1

Net worth:

Common stock, par value 332,075 1.0 267,875 0.7 603,495 1.5 237,508 1.3

Preferred stock, stated value 62,793 0.2 134,469 0.3 9,031 0.0 11,663 0.1

Additional paid-in capital 1,939,629 5.9 879,010 2.1 3,733,958 9.2 2,421,325 12.8

Retained earnings 7,370,741 22.3 7,614,959 18.5 10,831,199 26.7 5,116,098 27.0

Treasury stock (506,391) (1.5) (374,562) (0.9) (360,443) (0.9) (822,400) (4.3)

Excess value of marketable securities 52,536 0.2 98,515 0.2 20,247 0.0 17,474 0.1

Other equity 819,859 2.5 1,012,347 2.5 859,748 2.1 547,970 2.9

Total net worth 10,071,243 30.5 9,632,612 23.4 15,697,235 38.7 7,529,638 39.7

Total liabilities and net wort $ 33,053,266 100.0 % $ 41,192,667 100.0 % $ 40,582,497 100.0 % $ 18,971,914 100.0 %

Note: Not all figures will apear to sum due to rounding.

CFMA Comparative Financial Data

All Companies Industrial & Nonresidential Heavy & Highway Specialty Trade


Executive Summary 13



Statement of EarningsMost Recent Year End


Contract revenue $ 94,479,099 98.5 % $ 133,182,935 99.9 % $ 90,746,172 96.9 $ 52,768,222 97.1 %

Other revenue 1,479,664 1.5 130,634 0.1 2,922,353 3.1 1,568,925 2.9

Total Revenue 95,958,762 100.0 133,313,569 100.0 93,668,525 100.0 54,337,147 100.0

Contract cost (87,359,593) (91.0) (126,002,256) (94.5) (82,906,467) (88.5) (45,528,011) (83.8)

Other cost (1,155,465) (1.2) (200,044) (0.2) (2,480,502) (2.6) (1,198,314) (2.2)

Total cost (88,515,059) (92.2) (126,202,300) (94.7) (85,386,969) (91.2) (46,726,324) (86.0)

Gross Profit 7,443,704 7.8 7,111,269 5.3 8,281,556 8.8 7,610,823 14.0

Selling, general & administrative expenses:

Payroll (2,853,533) (3.0) (3,002,109) (2.3) (2,618,696) (2.8) (2,865,192) (5.3)

Professional fees (192,060) (0.2) (229,973) (0.2) (175,848) (0.2) (147,747) (0.3)

Sales & marketing costs (227,170) (0.2) (283,391) (0.2) (157,591) (0.2) (208,037) (0.4)

Technology costs (156,413) (0.2) (224,549) (0.2) (121,201) (0.1) (97,418) (0.2)

Administrative bonuses (374,451) (0.4) (445,999) (0.3) (415,481) (0.4) (273,443) (0.5)

Other (2,040,813) (2.1) (1,577,207) (1.2) (2,120,781) (2.3) (2,677,039) (4.9)

Total SG&A expenses (5,844,439) (6.1) (5,763,229) (4.3) (5,609,599) (6.0) (6,268,875) (11.5)

Income from operations 1,599,265 1.7 1,348,040 1.0 2,671,958 2.9 1,341,947 2.5

Interest income 134,207 0.1 221,383 0.2 146,619 0.2 20,603 0.0

Interest expense (130,092) (0.1) (66,769) (0.1) (246,264) (0.3) (125,746) (0.2)

Other income / (expense), net 100,078 0.1 111,901 0.1 70,265 0.1 99,088 0.2

Net earnings / (loss) before income taxes 1,703,457 1.8 1,614,555 1.2 2,642,577 2.8 1,335,892 2.5

Income tax (expense) / benefit (175,569) (0.2) (164,042) (0.1) (220,445) (0.2) (172,942) (0.3)

Net earnings $ 1,527,888 1.6 $ 1,450,513 1.1 $ 2,422,132 2.6 $ 1,162,950 2.1

Number of ParticipantsNumber Number Number Number

2005 532 227 106 1652004 537 250 106 171

Financial RatiosMost Recent Year End

Average Median Average Median Average Median Average Median

Liquidity Ratios

Current Ratio 1.3 1.4 1.2 1.3 1.5 1.5 1.6 1.6

Quick Ratio 1.2 1.2 1.1 1.2 1.3 1.3 1.3 1.3

Days of Cash 18.1 11.2 19.7 16.3 23.9 13.5 7.2 4.1

Working Capital Turnover 13.5 12.9 18.0 18.5 9.9 10.5 9.8 9.7

Profitability Ratios

Return on Assets * 5.2 % 5.3 % 3.9 % 4.1 % 6.5 % 7.8 % 7.0 % 6.8 %

Return on Equity * 16.9 % 18.5 % 16.8 % 16.9 % 16.8 % 19.4 % 17.7 % 19.9 %

Times Interest Earned 14.1 11.5 25.2 14.3 11.7 12.5 11.6 11.1

Leverage Ratios

Debt to Equity 2.3 2.2 3.3 3.1 1.6 1.5 1.5 1.7

Revenue to Equity 9.5 9.9 13.8 14.9 6.0 5.9 7.2 8.4

Asset Turnover 2.9 3.1 3.2 3.5 2.3 2.5 2.9 3.0

Fixed Asset Ratio 36.5 % 25.3 % 20.2 % 16.7 % 60.4 % 68.4 % 26.5 % 25.8 %

Equity to SG&A Expense 1.7 1.2 1.7 1.2 2.8 2.1 1.2 1.0

Underbillings to Equity 20.6 % 13.4 % 20.8 % 10.6 % 19.7 % 9.8 % 21.5 % 20.1 %

Backlog to Equity 8.6 5.3 12.4 9.2 5.0 3.4 6.0 3.4

Efficiency Ratios

Backlog to Working Capital 11.8 7.2 16.3 11.9 8.8 6.4 8.2 4.3

Months in Backlog 7.7 6.3 8.6 7.3 8.6 7.0 6.0 5.3

Days in Accounts Receivable 49.6 51.7 47.4 47.3 42.5 42.9 64.1 61.8

Days in Inventory 2.1 2.2 0.2 0.6 4.0 3.7 2.7 3.0

Days in Accounts Payable 40.6 33.8 45.9 43.3 37.0 26.7 26.3 27.4

Operating Cycle 29.1 33.3 21.4 24.3 33.4 38.9 47.7 45.7

14 Executive Summary


CFMA Comparative Financial Data


* In the CFMA's 2005 Annual Financial Study, Return on Assets (ROA) and Return on Equity (ROE) are calculated using net earnings (loss) before income taxes. Studies conducted in prior years used net earnings (loss)

after taxes to calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect this change.




C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

HOT TOPIC: EMPLOYEE

INCENTIVES & BONUSES



Hot Topic: Employee Incentives and Bonuses

HOT TOPIC EMPLOYEE INCENTIVES AND BONUSES

For the third consecutive year, the Construction Industry Annual Financial Survey is featuring a sectiondevoted to a Hot Topic challenging the industry. Employee incentives and bonuses were chosen as thisyear’s topic due to pressures most construction companies face in developing a compensation packagethat attracts and retains good employees while simultaneously keeping a trained eye on the bottom line.Over 80% of the participants in the CFMA’s 2005 Annual Construction Industry Annual Financial

Survey elected to participate in the optional Hot Topic section.

A deliberate compensation strategy enables contractors to recruit with confidence, allows companies tocapitalize on their investment in good employees, and helps advance long-range goals and businessstrategies. While designing an effective compensation strategy is not necessarily easy, it need not beoverly complicated either. In fact, the most effective compensation strategies are often the simplest.

Compensation Trends

In each of the three previous years of this study, Selling, General and Administrative (SG&A) payrollcosts (base pay and administrative bonuses) increased, as a percent of revenue. However, it appears that

contractors felt some relief from increasing payroll costs over the past year.

P A Y R O L L C O S T S , S G & A

3.4%

3.7%3.9%

3.4%

2%

3%

4%

5%

2002 2003 2004 2005

Pc

toTa Re

ue

In addition to the SG&A payroll expenses, contractors were also spending 15.9% of revenue on directlabor for their construction and other revenue generating activities. In an industry generally operating onlow margins, it is likely that the pressure associated with controlling compensation costs will remain high.




Compensation Philosophies

When asked what their overall compensation philosophy is, the majority of participantsanswered they, “Pay competitively with the Industry.”

C O M P E N S A T I O N S T R A T E G Y / P H I L O S O P H Y

0%

1%

7%

10%

11%

71%

0% 25% 50% 75% 100%

Other

Pay Less Than Industry Competitive Rates

No Strategy/Philosophy

Minimize Base/Maximize Incentive

Pay More Than Industry Competitive Rates

Pay Competitively with the Industry

P e r c e n t o f R e s p o n d e n t s

It comes as no surprise that “Pay Competitively with the Industry” was the most commonly cited answer.Most contractors generally rely on industry rates to determine compensation packages and setcompensation at industry levels to keep employees from seeking more lucrative opportunities elsewherein the industry. Interestingly, 7% of all participants do not have a compensation strategy or philosophy. Incomparing the Best in Class companies to all other companies we found that the Best in Class were evenmore likely to pay industry competitive rates and were less likely to operate without a compensationstrategy or philosophy.




COMP ENSATION STRATEGY/PHILOSOPHY

0%

1%

2%

10%

11%

75%

1%

1%

9%

10%

11%

69%

0% 25% 50% 75% 100%

Other

Pay Less Than Industry Competitive Rates

No Strategy/Philosophy

Minimize Base/Maximize Incentive

Pay More Than Industry Competitive Rates

Pay Competitively with the Industry

Percent of Respondents

Best In Class All Other Companies

Employee Retention

When asked to rank nine factors that contribute to overall employee satisfaction and attitude, participantsoverwhelmingly selected compensation as the most important factor.

Average

Ranking 1 2 3



Comfortable balance between work and life 4.6 12% 13% 14%Level of effective communication 4.7 8% 14% 11%










It would seem contractors feel that compensation is the largest component to both attracting and retainingemployees — with overall morale and a comfortable work/life balance being second and third,respectively. Positions where contractors were most confident and least confident in their compensation packages are shown in the following charts:

PO SITIONS W HERE CO NTRACTORS ARE MOST

35%

21%

42%

39%

75%

61%

32%

0% 25% 50% 75% 100%

Network Administrator

Project Engineer

Controller

CFO

Accountant

Estimator

Superintendent

Project Manager

P e r c e n t S e l e c t in gParticipants could select

multiple answers.

P O S I TI O N S W H E R E C O N T R A C T O R S AR E L E A S T

C O N F ID E N T TH A T C O M P E N S A TI O N I S C O M P E T T IV E

23%

24%

30%

27%

24%

17%

19%

16%

0% 10% 20% 30% 40%

Project Engineer

Superintendent

Project Manager

Estimator

CFO

Accountant

Controller


Percent SelectingParticipants could select

multiple answers.

76%

CONFIDENT THAT COMPENSATION IS COMPET TIVE




The positions with the highest turnover were as follows:

3%

2%

1%

7%1

0%1

5%

25%

36%

0%

10%

20%

30%

40%

Project

Manager

Superintendent

E

stimator

Project

Engineer

Accountant

Controller

CFO

N

etwork

Adm

inistrator

P O S I TI O N S W I TH T H E H I G H E S T T U R N O V E R D U R I N G L A S T 3 Y E A R S

Interestingly, the position in which contractors were most confident in their compensation packages(project manager) was also the position with the highest turnover. This suggests there is some level ofdisconnect between the perceived importance of compensation as part of employee satisfaction andconfidence in current compensation packages. The following chart shows how contractors perceive whyemployees left their company:

R E A S O N S W H Y E M P L O Y E E S L E F T

24%27%28%

49%

55%

0%

20%

40%

60%

80%

Better

Opportunity

Elsewhere

Terminated for

Poor

Performance

Layoff/Reduction

in Staff

Incompatible

with Company

Culture

Terminated for

CauseParticipants

co uld select

multiple

answers.




The single largest reason cited by participants for employee turnover was better opportunity elsewhere at55%. Fifty-one percent of the employees that left went to a competing company. This could suggest thatcurrent compensation packages might not be as competitive as perceived or that “opportunity” extends beyond compensation. In any event, contractors would probably benefit from re-examining (orestablishing) their compensation strategy/philosophy.

Developing a Compensation PhilosophySome general philosophies or belief systems exist regarding compensation, each addressing this question:“In respect to paying my employees, what is important?”

1. General economic climate/cost of living

2. What an individual contractor can afford

3. Employee tenure

4. Employee competency

As illustrated in the following graph, respondents indicated overwhelmingly that performance drivescompensation in the majority instances:

3%

60%

8%

12%

18%

0% 25% 50% 75%

Length of Employment

Cost of Living/Annual Increase

What the Firm Can Afford

Owner’s Discretion

Employee Competency

P e r c e n t o f R e s p o n d e n t s

M O S T I M P O R T A N T F AC T O R A F F E C T IN G C O M P E N S A T IO N

In addition to being the most popular philosophy, paying people based on how well they do their job isalso the hardest to implement. Once the decision is made to have performance drive compensation, thequestion is how to measure performance. There was some evidence that defining performanceexpectations and measuring actual performance may require improvement in many companies. While themajority of participants (82%) conduct performance evaluations, the second most common cause for

turnover among participating companies in 2004 was termination due to poor performance. Though thiscould be the result of poor hiring or insufficient skills, it likely points to a need to improve one or more ofthe following:

• Definition, clarity, and communication of performance expectations

• Effectiveness of performance measurement

• Employee performance review process

• Clarity of roles and responsibilities in the performance management process




Incentive Pay Trends

Although participants in the study indicated how competent an individual is at his or her job as the singlemost important factor in determining employee compensation, their actual pay practices may not fullysupport that philosophy. Participants were asked to indicate, for a list of positions, whether incentivecompensation was primarily based on performance or subject to the owner’s discretion. In the majority ofcompanies, for the majority of positions, bonuses were primarily discretionary.

U S E O F P E R F O R M A N C E - BA S E D IN C E N T I V E S

26%

27%

51%

29%

25%

39%

33%

31%

39%

41%

49%

39%

0% 25% 50% 75% 100%

Accounting Support Staff


Accountant

Controller

CFO

Vice-President (non-operational)

Estimator

Project Engineer

Chief Estimator

Vice-President (operational)

Superintendent

Project Manager

P e r ce n t o f R e s p o n d e n t s

A discretionary bonus program does not support a performance-based compensation strategy, whichsuggests that in these instances, the owner or manager determines how well employees do their jobs usingsubjective judgment rather than a formalized process. If a company’s philosophy is to pay employees based on performance, but there is no performance review process in place and/or pay raises andincentives are not tied to measurable performance expectations, their compensation plan will not do whatit is intended to.

If employees do not know the criteria by which they are being evaluated, and on which theircompensation is based, they are being “bonus”-ed, not “incent”-ed. The difference being: incentive pay is

truly performance-based, while bonuses are discretionary in nature. Although it’s all money, it has verydifferent value. Bonuses run the risk of becoming an entitlement. Since they are not tied to any defined performance measures, bonuses can become an expectation instead of an incentive, and their impact isgenerally short-lived.

True incentive plans are different in theory and design. Even if someone cannot be motivated with pay, itcan shape his or her behavior. Tying incentive compensation to defined, understood measurements allows business owners to tell their compensation plan what they want it to do, while communicating preciselythe same message to their employees.




The primary elements that contribute to this trend of not tying “performance-based compensation” tomeasurable performance expectations are:

1. Control. Many business owners/managers want to control the compensation activities within thecompany, making a defined, performance-based compensation program difficult to implement.

2. Discretion. Many business owners/managers want to have ultimate discretion over whatemployees earn and the ability to include subjective measures in the evaluation process.

3. Privacy. In some cases, owners do not want to share the financial results of the company withemployees, making some financial performance measures impossible to communicate.

For those participants using performance-based incentive programs, the drivers of the program were asfollows:

INCENTIVE CO MPENSATION DRIVERS

29%30%35%

38%

74%

0%

20%

40%

60%

80%

Budget Safety Client

Satisfaction

Schedule Other

Participants could select

multiple answers.




Conclusion

There are several things to consider when revisiting/establishing a compensation philosophy/strategy,including:

1. What do you want to pay and can you afford to pay it ? Although you may want to pay more

than the competition, it may not be economical to do so. Define both your philosophy and internaleconomics to ensure they are aligned.

2. How will you determine industry compensation rates? Reliable data from relevantcompensation benchmarking studies is a major component of “good” compensation programs.The most sophisticated programs carefully compare the skills, qualifications, job duties, andfunctions of a given position against industry data to establish a competitive compensation range.A significant number of owners/managers feel that they have a good sense of what is considered“competitive,” but using a formalized process of benchmarking adds transparency andobjectivity.

3. How will you structure your compensation package? Will compensation be primarily salary based or will incentive compensation comprise a significant component of total compensation? If

incentive compensation will be used, what drives the incentive program — individual performance? Team performance? Company-wide performance? How do perquisites factor intototal compensation?

4. Does your compensation strategy/philosophy promote and/or reinforce the achievement of

company-wide goals? A compensation plan will always do what you tell it to do. If yourcompensation plan is tied to an underlying business strategy, the plan will reinforce that strategy.And, if your compensation strategy is arbitrary or undefined, the plan’s effectiveness will belimited.




AverageRanking 1 2 3



Comfortable balance between work and life 4.6 12% 13% 14%

Level of effective communication 4.7 8% 14% 11%






Do you conduct performance evaluations for employees?

Yes 82%

No 18%

100%

If yes, how often are the evaluations conducted?

Annually 88%

Semi-annually 7%

Other 5%

100%

What type(s) of evaluations are conducted? (Participants could select multiple answers.)

1 Supervisor evaluations (employees are evaluated by supervisors) 94%

2 Subordinate evaluations (employees are evaluated by subordinates) 13%

3 Peer evaluations (employees are evaluated by peers) 12%

4 Customer evaluations (employees are evaluated by customers) 9%

5 Other 2%

What is the compensation strategy/philosophy in your company?

1 Pay competitively with the industry 71%

2 Pay more than industry competitive rates 11%

3 Minimize base pay and maximize incentive pay 10%

4 No strategy/philosophy 7%

5 Pay less than industry competitive rates 1%

6 Other 0%

100%

1 Project Manager 76%

2 Superintendent 75%

3 Estimator 61%

4 Accountant 42%

5 CFO 39%

6 Controller 35%

7 Project Engineer 32%

8 Network Administrator 21%

For which position(s) are you most confident that your company’s compensation package is competitive?

(Participants could select multiple answers.)

Several factors contribute to employee attitudes and satisfaction. How would you rate the following environmental

office factors in your business? (1 = greatest factor, 9 = least factor)







2 Controller 27%3 Accountant 24%

4 CFO 24%

5 Estimator 23%



8 Project Engineer 16%

Average

Ranking 1 2 3

Employee competency 1.8 60% 19% 11%

Owner’s discretion 3.2 18% 18% 20%What the firm can afford 3.2 12% 26% 18%

Cost of living/general annual increase 3.3 8% 21% 25%

Length of employment 3.5 3% 16% 27%

Does your company have a 401(k) and/or retirement plan?

Yes 95%

No 5%

100%

Median 4%

Median Years 1.0

Median 19%

For each employee level, is incentive compensation primarily discretionary or performance-based?

Discretionary- Performance-

Based BasedVice-President Level (operational) 59% 41%

Vice-President Level (non-operational) 67% 33%

Project Manager 49% 51%

Superintendent 51% 49%

Chief Estimator 61% 39%

Estimator 61% 39%

Project Engineer 61% 39%

CFO 69% 31%

Controller 71% 29%

Accountant 73% 27%

Accounting Support Staff 75% 25%

Network Administrator 74% 26%

How many years does an employee have to be with the company before the company starts matching 401(k)contributions?

What is the total cost of your employee benefits package as a percentage of payroll, including health, dental, disability,

pharmaceutical, profit sharing, pension plan, life insurance, and 401(k) matching?


For which position(s) are you least confident that your company’s compensation package is competitive?


Many factors affect employee compensation. In your company, how would you rate the following factors?

(1 = greatest factor, 5 = least factor)

If you offer a 401(k) Plan, what percentage of an employee’s 401(k) contribution does your company match?





1 Budget 74%

2 Safety 38%3 Client satisfaction 35%

4 Schedule 30%

5 Other 29%

Do you have a company-wide incentive pool?

Yes 39%

No 61%

100%

If yes, what percentage of company revenue or profit goes to the pool?

Percent of total revenue (median) 1%

Percent of profit (median) 20%

How can employees obtain equity in the company? (Participants could select multiple answers.)

1 Employees cannot obtain equity 71%

2 Equity purchase 16%

3 ESOP 9%

4 Phantom stock 4%

5 Stock bonus 3%

6 Stock options 3%

7 Equity award 2%

8 Deferred equity 0%

Have you introduced new owners to the business in the last five years?

Yes 31%

No 69%

100%

If yes, how many new owners have been admitted? (median) 3

What percentage of ownership has been granted? (median) 10%


If incentive compensation is primarily performance-based, what drives the incentive for the company?





Which class of employee listed below had the highest turnover rate within the last three years?



3 Estimator 15%4 Project Engineer 10%

5 Accountant 7%

6 Controller 3%

7 CFO 2%


100%

What is your reaction to your current overall level of employee turnover?

More than expected 16%

About as expected 60%

Less than expected 24%

100%

1 Better opportunity elsewhere 55%

2 Terminated for poor performance 49%

3 Layoff/reduction in staff 28%

4 Incompatible with company culture 27%

5 Terminated for cause 24%

6 Relocation 21%

7 Retirement 20%

8 Insufficient compensation 17%

9 Lifestyle change 11%

# Do not know 7%

# Health 7%

# Other 6%

What career choices did employees make after leaving your company?

1 Went to a competing company 51%

2 Do not know 28%

3 Changed careers 9%

4 Started their own business 6%

5 Left the workforce 6%

6 Continued their education 1%

100%

Have you reduced your workforce due to the economic environment?

Yes 23%

No 77%

100%

If yes, how many positions have you terminated? (Median) 5


Regarding recent employee turnover, indicate from the following list why employee(s) left your company:




C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

BEST IN CLASS

COMPANIES



Best In Class Companies

BEST IN CLASS COMPANIES

The Best in Class contractors presented in the CFMA Financial Survey are the top 25% of their peergroup. Best in Class status is calculated using the following five factors that are key indicators of financialhealth:

Factor Formula InterpretationReturn on Assets Net Earnings Before Income

Taxes/Total Assets

Indicates the profit generated by the total assetsemployed. A higher ratio reflects a more effective use ofcompany assets.

Return on Equity Net Earnings Before IncomeTaxes/

Total Net Worth

Indicates the profit generated by net assets (assets toliabilities) employed. This ratio reflects the stockholders’return on investment. A high ratio may indicate anundercapitalized company (low equity) or, conversely, avery profitable company (high net earnings).

Fixed Asset Ratio Net Fixed Assets/

Total Net Worth

Indicates the level of stockholders’ equity invested in net

fixed assets. A higher ratio may indicate a lack of fundsfor current operations. Usually, a low ratio indicates afavorable liquidity position.

Debt to Equity Total Liabilities/

Total Net Worth

Indicates the relationship between creditors and owners.Generally, a ratio of three or lower is consideredacceptable.

Working Capital

Turnover

Revenue/

Working Capital

(Current Assets/CurrentLiabilities)

Indicates the amount of revenue being supported by each$1 of net working capital employed. A ratio exceeding 30may indicate a need for increased working capital tosupport future revenue growth.

Participants in the survey are ranked on each factor to arrive at an overall ranking, of which the top 25%make up the Best in Class group reported in the study. Examining the practices, views, and financialstructure of these companies can provide guidance on how to improve a contracting business. This sectionof the report reviews the characteristics of the Best in Class companies in order to provide insight intowhat makes a contracting company successful.




Best in Class Selection

The following graph illustrates how the Best in Class companies are differentiated from the participant body as a whole, according to the five factors used for determining Best in Class status.


36.536.5

2.35.2

13.516.9

2.2

11.3

15.1

27.1

0

10

20

30

40

50

Return on

Assets (%) *

Return on

Equity (%) *

Fixed Asset

Ratio (%)

Debt to

Equity

Working

Capital

Turnover


• Return on Assets: Best in Class companies had an average ROA of 11.3% — 6.1 percentage points higher than the typical company. Best in Class companies use their assets moreeffectively and efficiently to generate profits.

• Return on Equity: Best in Class companies had an average ROE of 36.5% — 19.6 percentage points higher than the typical company. Best in Class companies utilize equitymore effectively to generate profits.

• Fixed Asset Ratio: Best in Class companies had an average Fixed Asset Ratio of 27.1 — 9.4 percentage points lower than the typical company. Best in Class companies are using lessequity to finance the purchase of fixed assets than the typical company and have superiorliquidity.

• Debt to Equity: Best in Class companies had an average Debt to Equity ratio of 2.2 — 0.1lower than the typical company. Best in Class companies are taking slightly less financial riskto generate superior financial performance as compared to the typical company.

• Working Capital Turnover: Best in Class companies turned over their working capital anaverage of 15.1 times — 1.6 times more than the typical company. This indicates that forevery dollar of working capital, the Best in Class companies generate $1.60 more in sales,

which indicates either a more strategic pursuit of projects and/or better sales and marketing.

* In the CFMA's 2005 Annual Financial Study, Return on Assets (ROA) and Return on Equity (ROE) are calculated

using net earnings (loss) before income taxes. Studies conducted in prior years used net earnings (loss) after taxes

to calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect this

change.




Sales and Profitability

Best in Class companies reap benefits from monitoring the use of their assets and equity and their cashflow. The following graph shows these companies are generating lower sales than the participant body asa whole, but with significantly less asset (24.7%) and equity (23.7%) bases.

B E S T I N C L A S S C O M P A N Y S I ZE ( M )

$10.1$33.1

$96.0

$7.7$24.9

$84.1

$0

$40

$80

$120

Revenue Assets Net Worth


Although revenues are lower, the operating and net margins are significantly higher. The following graphshows the financial margins for Best in Class companies:

BEST I N C LASS F I N AN C I AL MAR GI N S

1.8%1.7%

7.8%

3.3%3.2%

9.6%

0%

2%

4%

6%

8%

10%

Gross Margin Operating Margin Net Margin Before

Income Taxes


If the average company could improve their net margin by 1.5 percentage points to the Best in Class3.3%, it would mean additional net profit of almost $1.5M.




Company Profile

Specialty Trade contractors are significantly more likely to be Best in Class companies. Heavy &Highway companies generally have a much higher fixed asset ratio due to the nature of the equipmentrequired, making it more difficult for these companies to make the Best in Class cut.

B E S T I N C L A S S I N D U S T R Y P R O F I L E

43%

40%

20%

16%

31%

40%

4%

6%

0% 20% 40% 60% 80% 100%

All Companies

Best in Class

Industrial & Nonresidential Heavy & Highway Specialty Trade Other

Construction companies have been trending towards becoming S corporations over the last decade due tothe ability to tax earnings only once versus the double taxation that occurs within a C corporation. Best inClass companies are much more likely to be S corporations.

B E S T I N C L A S S L E G A L E N T I T Y P R O F I L E

25%

17%

64%

73%

11%

10%

0% 20% 40% 60% 80% 100%

All Companies

Best in Class

C corporation S corporation Other




More Best in Class companies operated in the Midwest, West, and Far West regions in 2005.

BEST IN CLASS REGIONAL PROFILE

15%

9%

18%

16%

30%

34% 5% 12%

16%

24%

11% 11%

0% 20% 40% 60% 80% 100%

All Companies

Best in Class

Northeast Southeast Midwest Southwest West Far West

Best in Class companies generate slightly more revenue from private clients than other companies. Thiscould be attributed partially to the fact that Heavy & Highway companies are less likely to be part of theBest of Class classification due to their higher fixed asset ratio, and Heavy & Highway companies perform a higher percentage of public work.

B E S T IN C L A S S C L I E N T P R O F I L E

33%

30%

67%

70%

0% 20% 40% 60% 80% 100%

All Companies

Best in Class

Public Private




Best in Class companies have slightly smaller, but significantly more profitable client relationships. Asshown in the graph below, the median contract size, as measured by revenue per contract, was similar forBest in Class and the average company.

B E S T IN C L A S S - R E V E N U E P E R C O N T R AC T

$504,007$529,165


More importantly, the profitability of contracts was over two times greater for Best in Class contractors.This was due to a combination of better pricing, better project management, and/or better costmanagement, in addition to targeting a client base that can afford larger contracts.

$19,020

$8,867


B E S T IN C L A S S - N E T IN C O M E P E R C O N T R A C T




The following graph further illustrates the superior profitability of the Best in Class companies byshowing the significantly higher net income margins per contract.

2.5%

4.4%


BEST IN CLASS -

NET MARGIN (BEFORE INCO ME TAXES) PER CO NTRACT

Views and Outlook

Most companies are optimistic about the future; however, Best in Class companies are a little moreconfident about sales growth in the coming year.

BEST IN CLASS SALES VOLUME GROW TH OUTLOOK

63%

64%

12%

17%

24%

19%

0% 20% 40% 60% 80% 100%

All Companies

Best in Class

Increase Decrease Stay the Same




Likewise, Best in Class companies have a similar outlook with respect to future prospects for backloggrowth as compared to the participant body as a whole.

B E S T IN C L A S S B A C K L O G G R O W T H O U T L O O K

55%

56%

23%

24%

22%

20%

0% 20% 40% 60% 80% 100%

All Companies

Best in Class

Increase Decrease Stay the Same



Balance Sheet

All Participants Best in Class All Participants Best in Class


Current assets: Current liabilities:

Cash and cash equivalents $ 4,818,236 14.6 % $ 4,404,370 17.7 % Current maturity on long-term debt $ 505,428 1.5 % $ 132,576 0.5 %Marketable securities & short-term investments 1,983,264 6.0 1,379,088 5.5 Notes payable and lines of credit 549,390 1.7 288,054 1.2

Receivables: Accounts payable:

Contr act r ecei va ble s c urr ent ly du e 12, 856, 421 3 8.9 10, 677, 379 4 2.8 Tr ade, inc lu din g c urr ent ly due

Retainages on contracts 3,919,134 11.9 3,292,397 13.2 to subcontractors 9,779,664 29.6 7,341,608 29.4

Unbilled work 337,890 1.0 206,036 0.8 Subcontracts retainages 2,774,589 8.4 2,429,390 9.7

Other receivables 419,224 1.3 346,767 1.4 Other 203,446 0.6 210,421 0.8

Less allowance for doubtful accounts (64,638) (0.2) (44,348) (0.2) Total accounts payable 12,757,700 38.6 9,981,419 40.0

Total receivables, net: 17,468,032 52.8 14,478,231 58.1

Accrued expenses 2,117,744 6.4 1,863,032 7.5

Inventories 509,170 1.5 160,129 0.6 Billings in excess of costs and recognized

Costs and recognized earnings in excess earnings on uncompleted contracts 4,008,261 12.1 3,936,763 15.8

of billings on uncompleted contracts 1,735,737 5.3 1,099,513 4.4 Income taxes:

Investments in and advances to Current 47,657 0.1 41,123 0.2

construction joint ventures 205,853 0.6 162,530 0.7 Deferred 41,700 0.1 13,662 0.1

Income taxes: Other current liabilities 374,427 1.1 389,705 1.6

Current/refundable 22,668 0.1 7,548 0.0 Total current liabilities 20,402,306 61.7 16,646,332 66.8

Deferred 59,853 0.2 8,756 0.0 Noncurrent liabilities

Other current assets 705,247 2.1 502,153 2.0 Long-term debt, excluding current maturities 2,038,046 6.2 344,990 1.4

Total current assets 27,508,059 83.2 22,202,317 89.0 Deferred income taxes 141,937 0.4 16,828 0.1

Other 354,694 1.1 196,171 0.8

Property, plant and equipment 9,304,496 28.2 5,433,893 21.8 Total liabilities 22,936,983 69.4 17,204,321 69.0

Less accumulated depreciation (5,629,779) (17.0) (3,340,333) (13.4) Minority interests 45,041 0.1 19,498 0.1

Property, plant and equipment, net 3,674,716 11.1 2,093,561 8.4 Net worth:

Common stock, par value 332,075 1.0 262,246 1.1

Noncurrent assets: Preferred stock, stated value 62,793 0.2 30,215 0.1

Long-term investments 350,514 1.1 132,685 0.5 Additional paid-in capital 1,939,629 5.9 863,720 3.5

Deferred income taxes 92,363 0.3 5,826 0.0 Retained earnings 7,370,741 22.3 5,763,191 23.1

Other assets 1,427,615 4.3 500,529 2.0 Treasury stock (506,391) (1.5) (441,184) (1.8)

Total noncurrent assets 1,870,491 5.7 639,040 2.6 Excess value of marketable securities 52,536 0.2 84,968 0.3

Other equity 819,859 2.5 1,147,941 4.6

Total net worth 10,071,243 30.5 7,711,098 30.9

Total assets $ 33,053,266 100.0 % $ 24,934,917 100.0 % Total liabilities and net worth $ 33,053,266 100.0 % $ 24,934,917 100.0 %

Statement of Earnings Financial Ratios


Amount Percent Amount Percent Average Median Average Median

Contract revenue $ 94,479,099 98.5 % $ 83,799,198 99.6 % Liquidity Ratios

Other revenue 1,479,664 1.5 326,794 0.4

Total Revenue 95,958,762 100.0 84,125,992 100.0 Current Ratio 1.3 1.4 1.3 1.4

Quick Ratio 1.2 1.2 1.2 1.3

Contract cost (87,359,593) (91.0) (75,814,902) (90.1) Days of Cash 18.1 11.2 18.8 14.8

Other cost (1,155,465) (1.2) (238,967) (0.3) Working Capital Turnover 13.5 12.9 15.1 14.2

Total cost (88,515,059) (92.2) (76,053,869) (90.4)


Gross Profit 7,443,704 7.8 8,072,123 9.6

Return on Assets * 5.2 % 5.3 % 11.3 % 13.5 %

Selling, general & administrative expenses: Return on Equity * 16.9 % 18.5 % 36.5 % 38.0 %

Payroll (2,853,533) (3.0) (2,571,550) (3.1) Times Interest Earned 14.1 11.5 76.1 28.4

Professional fees (192,060) (0.2) (156,591) (0.2)

Sales & marketing costs (227,170) (0.2) (194,101) (0.2) Leverage Ratios

Technology costs (156,413) (0.2) (118,055) (0.1)

Administrative bonuses (374,451) (0.4) (388,854) (0.5) Debt to Equity 2.3 2.2 2.2 1.9

Other (2,040,813) (2.1) (1,985,550) (2.4) Revenue to Equity 9.5 9.9 10.9 10.4

Total SG&A expenses (5,844,439) (6.1) (5,414,701) (6.4) Asset Turnover 2.9 3.1 3.4 3.5

Fixed Asset Ratio 36.5 % 25.3 % 27.1 % 19.7 %

Income from operations 1,599,265 1.7 2,657,423 3.2 Equity to SG&A Expense 1.7 1.2 1.4 1.1

Underbillings to Equity 20.6 % 13.4 % 16.9 % 10.7 %

Interest income 134,207 0.1 89,757 0.1 Backlog to Equity 8.6 5.3 6.5 4.0

Interest expense (130,092) (0.1) (37,468) (0.0)

Other income / (expense), net 100,078 0.1 105,254 0.1

Efficiency Ratios

Net ear ni ngs / ( los s) bef or e i nco me t axes 1 ,703 ,45 7 1. 8 2 ,81 4,96 6 3. 3

Backlog to Working Capital 11.8 7.2 8.3 5.8

Income tax (expense) / benefit (175,569) (0.2) (214,182) (0.3) Months in Backlog 7.7 6.3 6.7 5.7

Days in Accounts Receivable 49.6 51.7 47.0 47.6

Net earnings $ 1,527,888 1.6 % $ 2,600,785 3.1 % Days in Inventory 2.1 2.2 0.8 1.7

Days in Accounts Payable 40.6 33.8 35.7 29.2

Operating Cycle 29.1 33.3 30.8 33.2

Number of ParticipantsNumber Number

532 134


Best In Class Companies 4

All CompaniesComposite: Best in Class

* In theCFMA's 2005 Annual Financial Study, Returnon Assets(ROA)and Return on Equity (ROE) are calculated using

net earnings (loss) before income taxes. Studies conducted in prior years used net earnings (loss) after taxes to

calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect this change.




Best in Class Industry Sector Comparisons

Industrial & Nonresidential

Best in Class Industrial & Nonresidential companies exhibit the following characteristics:

• Return on Assets: Best in Class Industrial & Nonresidential companies had an average ROAof 9.2% — 5.3 percentage points higher than the typical company. Best in Class Industrial & Nonresidential companies use their assets more effectively and efficiently to generate profits.

• Return on Equity: Best in Class Industrial & Nonresidential companies had an average ROEof 36.2% — 19.4 percentage points higher than the typical company. Best in Class Industrial& Nonresidential companies utilize equity more effectively to generate profits.

• Fixed Asset Ratio: Best in Class Industrial & Nonresidential companies had an averageFixed Asset Ratio of 20.4 — 0.2 percentage points higher than the typical company. Best inClass Industrial & Nonresidential companies are using slightly more equity to finance the purchase of fixed assets than the typical company.

• Debt to Equity: Best in Class Industrial & Nonresidential companies had an average Debt toEquity ratio of 2.9 — 0.4 lower than the typical company. Best in Class Industrial & Nonresidential companies are taking less financial risk to generate superior financial performance as compared to the typical company.

• Working Capital Turnover: Best in Class Industrial & Nonresidential companies turnedover their working capital an average of 17.1 times — 0.9 times less than the typicalcompany. The advantages held in other areas make up for the lower working capital turnoverratio.

BEST IN CLASS KEY FINANCIAL CHARACTERISTICS

INDUSTRIAL & NONRESIDENTIAL

3 . 9

3 . 3 1

8 . 0

2 0

. 2

1 6

. 8

2 . 9 1

7 . 1

2 0

. 4

3 6

. 2

9 . 2

0

10

20

30

40

Return on

Assets (%) *

Return on

Equity (%) *

Fixed Asset

Ratio (%)

Debt to

Equity

Working

Capital

Turnover

All Industrial & Nonresidential Companies

Best in Class Industrial & Nonresidential


using net earnings (loss) before income taxes. Studies conducted in prior years used net earnings (loss) after taxesto calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect this

change.



B E S T I N C L A S S R E V E N U E

I N DU STR I AL & N ON R ES I DEN T I A L

$133,313,569$138,769,383

All Industrial & Nonresidential

Companies

Best in Class Industrial &

Nonresidential

Best in Class Industrial & Nonresidential companies have slightly higher revenues, but they havesignificantly higher operating and net margins than their peers. This means over $2.1M in additional net profits before income taxes for Best in Class companies.

BEST IN CLASS FINANCIAL MARGINS


1.2%1.0%

5.3%

2.7%2.4%

6.9%

0%

2%

4%

6%

8%


Income Taxes

All Industrial & Nonresidential Companies

Best in Class Industrial & Nonresidential




Heavy & Highway

Best in Class Heavy & Highway companies exhibit the following characteristics:

• Return on Assets: Best in Class Heavy & Highway companies had an average ROA of15.7% — 9.2 percentage points higher than the typical company. Best in Class Heavy &

Highway companies use their assets more effectively and efficiently to generate profits.

• Return on Equity: Best in Class Heavy & Highway companies had an average ROE of32.8% — 16.0 percentage points higher than the typical Heavy & Highway company. Best inClass Heavy & Highway companies utilize equity more effectively to generate profits.

• Fixed Asset Ratio: Best in Class Heavy & Highway companies had an average Fixed AssetRatio of 55.0 — 5.4 percentage points lower than the typical Heavy & Highway company.Best in Class Heavy & Highway companies are using less equity to finance the purchase offixed assets than the typical Heavy & Highway company and have superior liquidity.

• Debt to Equity: Best in Class Heavy & Highway companies had an average Debt to Equityratio of 1.1 — 0.5 lower than the typical Heavy & Highway company. Best in Class Heavy &Highway companies are taking less financial risk to generate superior financial performanceas compared to the typical Heavy & Highway company.

• Working Capital Turnover: Best in Class Heavy & Highway companies turned over theirworking capital an average of 13.1 times — 3.2 times more than the typical Heavy &Highway company. This means that for every dollar of working capital, the Best in ClassHeavy & Highway companies generate $3.20 more in sales, which indicates either a morestrategic pursuit of projects and/or better sales and marketing.


HEAVY & HIGHWAY

6 . 5

1 . 6

1 . 1 9

. 9

6 0 . 4

1 6 . 8

1 5 . 7

1 3 . 1

5 5

3 2 . 8

0

25

50

75

Return on

Assets (%) *

Return on

Equity (%) *

Fixed Asset

Ratio (%)

Debt to

Equity

Working

Capital

Turnover

All Heavy & Highway Companies Best in Class Heavy & Highway



to calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect thischange.




BEST IN CLASS REVENUE

HEAVY & HIGHWAY

$93,668,525

$41,055,186


Best in Class Heavy & Highway companies generated significantly lower revenue, but have higher grossmargins, higher operating margins, and significantly higher net margins than their peers.

BEST IN CLASS FINANCIAL MARGINS

HEAVY & HIGHWAY

2.8%2.9%

8.8%

5.7%5.5%

12.3%

0%

5%

10%

15%


Income Taxes





Specialty Trade

Best in Class Specialty Trade companies exhibit the following characteristics:

• Return on Assets: Best in Class Specialty Trade companies had an average ROA of 14.4% — 7.4 percentage points higher than the typical company. Best in Class Specialty Trade

companies use their assets more effectively and efficiently to generate profits.

• Return on Equity: Best in Class Specialty Trade companies had an average ROE of 38.0% — 20.3 percentage points higher than the typical Specialty Trade company. Best in ClassSpecialty Trade companies utilize equity more effectively to generate profits.

• Fixed Asset Ratio: Best in Class Specialty Trade companies had an average Fixed AssetRatio of 24.3 — 2.2 percentage points lower than the typical Specialty Trade company. Bestin Class Specialty Trade companies are using less equity to finance the purchase of fixedassets than the typical Specialty Trade company and have superior liquidity.

• Debt to Equity: Best in Class Specialty Trade companies had an average Debt to Equity ratioof 1.6 — 0.1 higher than the typical Specialty Trade company.

• Working Capital Turnover: Best in Class Specialty Trade companies turned over theirworking capital an average of 12.4 times — 2.6 times more than the typical Specialty Tradecompany. This means that for every dollar of working capital, the Best in Class SpecialtyTrade companies generate $2.60 more in sales, which indicates either a more strategic pursuitof projects and/or better sales and marketing.


SPEC I ALTY TR ADE

1 . 6 1

7 . 7 2

6 . 5

9 . 8

7 . 0

1 . 5

1 2 . 4

2 4 . 3

3 8 . 0

1 4 . 4

0

10

20

30

40

Return on

Assets (%)

Return on

Equity (%)

Fixed Asset

Ratio (%)

Debt To

Equity

Working

Capital

Turnover

All Specialty Trade Companies Best in Class Specialty Trade



to calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect this

change.




B E S T I N C L A S S R E V E N U E

SPEC I ALTY TR ADE

$51,346,228

$54,337,147


Although Best in Class Specialty Trade companies do not have higher revenues, they have higheroperating and net margins than their peers. This means $0.5M in additional net profits to Best in Classcompanies.

BEST I N C LASS F I N AN C I AL MAR GI N S

SPEC I ALTY TR ADE

14.0%

2.5% 2.5%

15.6%

4.1% 4.2%

0%

5%

10%

15%

20%


Income Taxes




C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

OVERALL SURVEY

RESULTS



Overall Survey Results

General Profile

General Profile: A total of 660 construction companies participated in CFMA’s 2005 Construction

Industry Annual Financial Survey. Of those, 538 submitted complete financial statements and 532 wereincluded as participants. Seventy-two percent of participants participated in the 2004 study, and 97% wereCFMA members.

For a complete breakdown of survey answers, please see Appendix A.

Legal Form of Business: The number of C corporations has diminished in favor of S corporations acrossall contractor types. This year’s 64% S corporations compares to 60% in 2004 and 58% in 2003.

L E G A L F O R M O F B U S I N E S S

25%

23%

25%

27%

64%

67%

60%

6

2%

11%

14%

11%

10%

0%

20%

40%

60%

80%

All Companies Industrial &

Nonresidential

Heavy &

Highway

Specialty Trade

C corporation S corporation Other

Ownership of Business: Only a handful of participants were publicly owned or owned by foreign entities(see actual number of companies in graph below). The vast majority (94%) were domestic, privatelyowned companies.

PUBLIC/FOREIGN BUSINESS OW NERSHIP

3

1

2

0

5

0 1 0

0

2

4

6

All Companies Industria l &

Nonresidential

Heavy &

Highway

Specialty Trade

Public Contractors Foreign Contractors




Type of Contractor: Respondents to the survey identified the type of work performed by estimating the percentage of annual contract revenue derived from each of the North American Industry Classification(NAIC) codes. The NAIC codes were grouped into three major classifications: Industrial & Nonresidential, Heavy & Highway, and Specialty Trade. Respondents were included in one of the majorclassifications if at least 50% of their annual revenue was performed in that classification. The percentageof respondents for each classification is given in the graph below.

T YP E O F C O N T R AC T O R

Other

6%

Specialty

Trade

31%

Industrial &

Nonresidential

43%

Heavy &

Highway

20%

Role of Contractor: The table below shows the percentage of general contractors, subcontractors, andother contractors within each industry classification. Industrial & Nonresidential and Heavy & Highwaycontractors are predominantly general contractors, while Specialty Trade companies tend to besubcontractors given the nature of their work.

ROLE OF CONTRACTOR



General Contractor 60% 89% 78% 8%

Subcontractor 33% 1% 18% 89%

Construction Manager 3% 7% 0% 0%

Other 4% 3% 4% 2%

TOTAL 100% 100% 100% 100%




Source of Work: The private sector accounts for the majority of contractor project revenues. Theexception is within the Heavy & Highway classification, which derives approximately two-thirds ofannual revenue from public sources. This is not surprising given the nature of their work (predominantlyroad, bridge, and tunnel projects).

S O U RC E O F W O R K

67% 78%

36%

72%

33% 22%

64%

28%

0%

20%

40%

60%

80%

100%


Nonresidential

Heavy &

Highway

Specialty

Trade

Private Sector Public Sector

The table below details the source of public projects, as a percentage of public project contract revenue.

SOURCE OF PUBLIC SECTOR WORK



State Government 41% 30% 49% 38%

Local Government 40% 49% 39% 35%

Federal Government 18% 20% 13% 25%

Foreign Government 1% 2% 0% 2%

TOTAL 100% 100% 100% 100%




Location of Work Performed: The following table shows the composite breakdown of the location ofwork performed, as indicated by percent of annual contract revenue derived from each region. A detailedexplanation of the states that comprise each region is located in Appendix B. “Foreign” includes allinternational work. A separate question required participants to indicate the headquarters of theiroperations along the same regional lines.

LOCATION OF WORK PERFORMED

Headquarters

2004 2005 2005

Midwest 28% 30% 32%

Northeast 16% 15% 16%

Southeast 18% 18% 15%

Far West 16% 16% 14%

Southwest 12% 11% 13%

West 9% 11% 10%

Foreign 0% 0% 0%

TOTAL 100% 100% 100%

Longevity of Business: Most survey participants are experienced contractors, with a large majorityhaving been in operation for over 20 years.

L O N G E V I TY O F B U S I N E S SA L L C O M P A N IE S

21–50 years

40%

11–20 years

16%

6–10 years

5%

0–5 years

3%

More than 50 years

37%




Majority Ownership: Overall, 17% of survey participants experienced a change in majority ownershipover the last five years. The most prevalent form of ownership change is a transition to family membersand to employees — each of which comprised 31% of all transitions. Twenty-four percent were sold toanother domestic company, and 12% went into an employee stock ownership trust.

Disadvantaged Business Enterprise: This year’s participant body included 60 companies, or 11% of

respondents, that were eligible to bid on projects as Disadvantaged Business Enterprises. Of those, 35were Small Businesses, 13 were Minority Businesses, and 12 were Woman-Owned.

Design-Build: Fifteen percent of participants perform 40% or more of their contracts by the design-buildmethod. Four percent reported that 80% or more of their contracts were design-build.

Accounting Personnel: The average number of accounting personnel is influenced by both contractorsize and company type, as seen in the following graph. The largest companies generally employ asignificantly greater number of accounting personnel. Specialty Trade contractors tend to have moreaccounting personnel on staff, particularly compared to other contractors under $100M in annual revenue.

A V E R A G E A C C O U N T I N G P E R S O N N E L

B Y C O M P A N Y R E V E N U E

2 8

3 5 5 4 3 4

1 4

6

1 2

1 2

2 6

2 1

9

1 6

2 4

1 4

2 6

2 6

0

5

10

15

20

25

30


Nonresidential

Heavy &

Highway

Specialty Trade

<10M 10M-25M 25M-50M 50M-100M >100M




Project Managers: The average number of project managers was influenced primarily by revenue size.The largest companies employ a significantly greater number of project management personnel.

A V E R A G E N U M B E R P R O J E C T M A N A GE R S


3 4 3 6 5 4 6 5 7 7 5 9 1 3 1

4 1 1 1

5

4 7

5 5

3 7 4

0

0

10

20

30

40

5060


Nonresidential

Heavy &

Highway

Specialty Trade

<10M 10M-25M 25M-50M 50M-100M >100M

Estimators: The average number of estimators is influenced by both contractor size and company type.Specialty Trade contractors tend to have more estimators on staff.

AVERAGE NUMBER OF ESTIMATORS

BY COMPANY REVENUE

2 2 2 2 3 3

2 3

6

3 3 4

6 5 4

5

1

9

1 3

1 6

1 6

0

5

10

15

20


Nonresidential

Heavy &

Highway

Specialty Trade

<10M 10M-25M 25M-50M 50M-100M >100M




Open-Shop/Union Contractor: Open-shop contractors dominate the industry. The exception is withinthe Specialty Trade classification, in which more than half are union contractors, as illustrated in thegraph below.

P E R C E N T A G E O F O P E N -S H O P

A N D U N I O N C O N T R A C T O R S

4 6 %

4 8 %

3 5 %

5 1 %

3 6 %

2 3 %

4 0 %

5 3 %

9 %

9 %

1 0 %

9 %

9 %

1 7 %

2 %

3 %

0%

30%

60%


Nonresidential

Heavy &

Highway

Specialty Trade

Open-shop contractor Union contractor

Double-breasted contractor Merit

Length of Contracts: Nearly two-thirds of this year’s participants indicated that their average contractlength is less than one year. Very few perform projects that extend beyond two years.

AVERAGE CONTRACT DURATION

5 7 %

7 2 %

5 8 % 6

2 %

2 8 %

3 3 % 4

2 %

3 5 %

0 %

9 %

1 % 2

%

0%

20%

40%

60%

80%


Nonresidential

Heavy &

Highway

Specialty Trade

<12 Months 12-24 Months >24 Months





Anticipated Growth in Next Year’s Volume: All contractor types had similar optimism about revenuegrowth as compared to the 2004 study. Overall, 63% of participants expected revenues to go up,compared to 58% last year. The overall expected change in revenues over the year is 11.3%. Among those participants anticipating an increase, their average expected change is a very substantial 21.5%.

A N T IC I P A T E D G R O W T H I N N E X T Y E A R' S V O L U M E

63% 63% 62% 65%

12% 13% 11% 12%

24% 24% 27% 23%

0%

20%

40%

60%

80%

100%


Nonresidential

Heavy &

Highway

Specialty Trade

Increase Decrease No Change

Markets with Highest Anticipated Growth: Overall market rankings did not change significantly fromlast year, but Real Estate Development moved up one spot to overtake Heavy & Highway. However, in aninteresting disparity of opinion, Heavy & Highway contractors continue to expect their own fortunes torise faster than anticipated by other sectors.

MARKETS WITH THE HIGHEST ANTICIPATED GROWTH

(Highest growth market = 1, lowest growth market = 5)



Residential 1 1 1 1

Industrial & Nonresidential 2 2 3 2

Real Estate Development 3 3 4 3

Heavy & Highway 4 4 2 4

Specialty Trade 5 5 5 5




Regional Growth: Continuing the trend from last year, anticipated regional expansion is at a several yearlow, particularly among Specialty Trade companies. Even so, one-fifth of participants planned to enter anew region in 2005.

The most highly targeted region for growth, domestically, continues to be the Southeast at 39%.Internationally, Canada surpassed last year’s target, the Caribbean.

C O M P A N IE S E N T E R IN G N E W G E O G R A P H IC M A R KE T S

16%

23%22%20%

0%

5%

10%

15%

20%

25%


Nonresidential

Heavy &

Highway

Specialty Trade

Most plan to enter new markets by following present customers (74%), but many plan to do so byopening a new office (19%) or through a joint venture (16%). It is noteworthy that the method ofexpansion is typically correlated to company size. As illustrated in the graph below, smaller companies pursue their present customers, while only the largest participants are contemplating opening a new officeor beginning joint ventures.

$120

$249$257

$0

$100

$200

$300

Follow Customers Open New Office Joint Ventures

v

aeRe

ue

R E V E N U E ( M ) C O M P A R I S O N - A L L C O M P A N I E S

B Y E N TR Y M E T H O D I N TO A N E W R E G I O N




Sources of Increased Competition: The competitive outlook remains identical to 2004, with a majorityof contractors expecting the most pressure from familiar competitors.

SOURCES OF INCREASED CO MPETITION

(1 = greatest factor, 4 = least factor)



Existing Contractors Pursuing

Growth in Your Region 1 1 1 1

Existing Contractors Entering

Your Type of Construction2 2 2 2

New US Contractors 3 3 3 3

Foreign Contractors 4 4 4 4




Top Five Challenges in the Next Five Years: Although insurance remains a concern, sources of futurework and the shortage of trained field help continue to hold their long-time positions as the top challengesfor construction companies.

TOP FIVE CHALLENGES IN THE NEXT FIVE YEARS

Percent Selected Within Top Five

2004 2005

Challenge % Challenge %

Healthcare Insurance Costs 65% Healthcare Insurance Costs 71%

Shortage of Trained Field Help 61% Shortage of Trained Field Help 66%

54% 48%

General Liability Insurance Costs 54% Sources of Future Work 47%

Sources of Future Work 50% General Liability Insurance Costs 44%

Percent Selected as Number One Challenge

2004 2005


Sources of Future Work 22% Shortage of Trained Field Help 27%

Shortage of Trained Field Help 20% Sources of Future Work 18%


General Liability Insurance Costs 10% Shortage of Project Managers 7%

9% 6%

Workers' Compensation Insurance CostsWorkers' Compensation Insurance Costs

Workers' Compensation Insurance Costs Workers' Compensation Insurance Costs




Backlog: The number of contractors experiencing an increase in backlog improved significantlycompared to the 2004 study. Over half of all participants experienced backlog increase. The relative sizeof backlog at year-end was also significantly improved as compared to the prior year.

S I Z E O F B A C K L O G C O M P A R E D T O L A S T YE A R

55% 50%64%

54%

23% 29%16%

21%

22% 21% 20% 25%

0%

20%

40%

60%

80%

100%


Nonresidential

Heavy &

Highway

Specialty Trade


BAC KL OG AT YEAR -EN D ( M )

$27.6

$113.7

$87.9

$76.2

$0

$50

$100

$150


Nonresidential

Heavy &

Highway

Specialty Trade




Methods of Obtaining Work: Overall, competitive bid is the most common form of obtaining projectwork. The exception to this is Industrial & Nonresidential contractors that obtain work throughnegotiation more often.

M E T H O D S O F O B T AI N I N G W O R K - IN - P R O G R E S S

A N D B AC K L O G

2%

1%

0%

1%

1%

1% 2

%

66%8

0%

41%

57%

55%

18%

32%4

0%

3%

0%

20%

40%

60%

80%

100%


Nonresidential

Heavy &

Highway

Specialty Trade

Competitive Bid Negotiation Related Parties Other

The majority of survey participants did not experience a change in the amount of bid work performedduring the last year.

CHANGE IN AMOUNT OF BID WORK

33% 32% 25%42%

12% 12%

11%

56% 56%66%

47%

8%

0%

20%

40%

60%

80%

100%


Nonresidential

Heavy &

Highway

Specialty Trade





Strategies to Improve Future Profitability: Most participants (91%) hope to improve their profitabilitythrough “Doing What We Do Better.” Safety and risk management continues to be the key to profitabilityimprovement. Many also indicated employee training and technology are further strategies they intend touse to improve future profits.

STRATEGIES TO IMPROVE FUTURE PROFITABILITY

ALL CO MPANIES

5%

3%

48%

60%

39%

38%

55%

91%

8%

32%

0% 20% 40% 60% 80% 100%

Other

Invest in Unrelated Business

M&A

Related Services

Cut Overhead

Design-Build

IT

Training

Safety / Risk Mgmt.

Do What We Do Better





Preparing a Formalized Budget: In addition to budgeting for estimating and job costing purposes, overthree-quarters (78%) of participants prepared and/or used a formalized budget.

Bank Debt: Over half of this year’s participants (55%) indicated that their bank debt is covered bycovenants. The following table lists the covenants they were subject to:

FINANCIAL RATIO COVENA NTS



Have Bank Debt Covered by

Covenants 55% 40% 62% 72%

Current Ratio 20% 17% 19% 26%

Median Covenant Value 1.2 1.1 1.3 1.2

Minimum Working Capital 14% 9% 19% 17%

Debt to Equity 19% 12% 26% 23%


Total Liability to Tangible Net

Worth 15% 8% 13% 26%


Minimum Tangible Net Worth 34% 24% 41% 41%

Minimum EBITDA 11% 5% 17% 15%

Other 13% 9% 17% 13%

Minimum Tangible Net Worth was the most frequent type of covenant, at 34%. Other covenantsmentioned were debt service coverage, fixed charge coverage, and capital expenditure limitations.




Cash Management Techniques: Electronic forms of cash management continue to make incrementalstrides against other techniques. Online banking moved up 5%; electronic payments from customersmoved up 7%; electronic bank reconciliation moved up 1%; electronic payments to vendors increased5%; and EDI moved up 1%.

CASH MANAGEMENT TECHNIQUES



Zero Balance / Sweep Account

Arrangements 80% 84% 82% 74%

On-Line Banking 74% 77% 75% 72%

Electronic Payments from

Customers 63% 68% 61% 58%

Sweep Against Line of Credit orOther Debt

38% 25% 39% 55%

Corporate Purchasing Cards 31% 30% 28% 36%

Interest-Bearing Checking Account 29% 37% 29% 20%

Electronic Bank

Reconciliation/Download 29% 28% 37% 27%

Savings Accounts 28% 30% 33% 24%

Electronic Payments to

Vendors/Subs 23% 19% 38% 22%

Positive Pay 22% 25% 16% 22%

Remote Disbursement Bank

Accounts 17% 16% 23% 17%

Lockbox 12% 10% 12% 16%

EDI (Electronic Data Interchange) 10% 7% 8% 15%

Non-Bank Checking Accounts 3% 2% 4% 3%

Other 3% 4% 3% 2%




Availability of Credit: The majority of participants experienced no change in this regard.

A V A IL A B I L IT Y O F C R E D I T C O M P A R E D T O L A S T Y E A R

35%25%

38% 45%

61%72%

59% 50%

5%3%

3%3%

0%

25%

50%

75%

100%


Nonresidential

Heavy &

Highway

Specialty Trade

Better Worse Same

Working Capital Line of Credit: Most survey participants (93%) indicated that they have a workingcapital line of credit. Almost two-thirds of those have a secured line of credit. The majority of this year’s participants indicated that their working capital line of credit did not change during the year.

WO RKING CAPITAL LINE OF CREDIT

31%22%

37% 36%

65%75%

62% 57%

4%3%

1% 7%

0%

25%

50%

75%

100%


Nonresidential

Heavy &

Highway

Specialty Trade

Increased Decreased Stayed the Same




Financing for Equipment Purchases: Cash continues to be the most common method of equipment purchase financing, particularly among Industrial & Nonresidential companies.

FINANCING FOR EQUIPMENT PURCH ASES



Current Cash Flow 54% 66% 38% 52%

Bank Installment Loans 18% 13% 25% 18%

Leasing Companies 12% 7% 13% 17%

Vendor Financing 9% 7% 17% 8%

Vendor Lease-Purchase 3% 3% 3% 2%

Related Party Lease 3% 2% 3% 2%

Brokerage Firm 0% 0% 0% 0%

Other 1% 2% 1% 1%

TOTAL 100% 100% 100% 100%




As can be seen in the first graph below, those financing equipment purchases are choosing cash more thanloans on financing. Debt to equity is still high; however, the debt is now more balanced between short andlong term, as can be seen in the second graph below. This is an improvement compared to 2004, when themajority of debt was long-term.

R A TI O S B Y E Q U I P M E N T F I N A N C I N G M E T H O D

A L L C O M P A N IE S

2.1

14.9

2.25.3 2.57.7

2.3

11.8

0

10

20

Days of Cash Debt to Equity

Cash Bank Loan Leasing Co. Loan Vendor Financing

1 7

%

3 % 4

% 8 % 1

0 %

1 1 %

9 % 9

%

8 %

1 5 %

9 %

6 %

0%

5%

10%

15%

20%

Cash Current Debt Long Term Debt


P E R C E N T A G E O F A S S E TS

B Y E Q U I P M E N T F IN A N C I N G M E T H O D





Percentage of Total Contract Revenue Bonded: Overall, most contractors bond less than 40% of theirrevenue. In contrast, Heavy & Highway Contractors are more likely to bond over 40%, and in fact, wellover one-third of these contractors bond more than 80% of their annual contract revenues. A detailed breakdown is provided in the table below.

PERCENTAGE OF TOTAL CONTRACT REVENUE BONDED



>80% 14% 10% 40% 2%

60 –79% 8% 10% 12% 4%

40–59% 16% 16% 18% 15%

20–39% 23% 25% 13% 29%

<19% 33% 34% 14% 44%

Not Applicable 6% 4% 2% 6%

TOTAL 100% 100% 100% 100%

Bonding Credit: Two-thirds of participants (67%) indicated that bonding credit remained the same overthe year. Forty-three percent of participants secure bonding credit with personal guarantees.

Percentage of Subcontractor Dollars Bonded, if a General Contractor: Among participants who bond

subcontractor dollars, most bond less than 19% of subcontractor revenues. The table below provides adetailed breakdown of subcontractor bonding within the different industry classifications.

PERCENTAGE OF SUBCON TRACTOR DOLLARS BONDED (If a General Contractor)



>80% 6% 4% 13% 4%

60 –79% 5% 4% 11% 1%

40–59% 8% 10% 6% 0%

20–39% 10% 13% 6% 6%

<19% 40% 49% 38% 16%

Not Applicable 31% 21% 26% 73%

TOTAL 100% 100% 100% 100%




Current Bonding Program: Most participants within each industry classification bond with only onesurety. About one-quarter have a standby surety, and a small percentage actively use more than onesurety.

B O N D I N G P R O G R A M

3%7

%7%

6%

17%

32%

26%

24%

79%

61%

67%

71%

0%

20%

40%

60%

80%

100%


Nonresidential

Heavy &

Highway

Specialty Trade

More Than One Surety One Surety + One Standby One Surety




Insurance

Cost of Various Types of Insurance as a Percentage of Payroll: Healthcare insurance costs, as a percentage of total payroll costs, were the same as last year. Healthcare cost increases were experienced by almost three-quarters of participants. However, workers compensation and general liability insurancedecreased as a percentage of total payroll costs. The table below outlines the portion of participants whoexperienced changes in their insurance costs, and the average cost of insurance as measured by the percentage of total payroll costs.

INSURANCE COSTS AS A PERCENTAGE OF PAYROLL



Healthcare - Increase 72% 73% 78% 70%

Healthcare - Decrease 9% 11% 7% 9%

Healthcare - Remained the Same 18% 17% 15% 21%

Average Percentage of Payroll 8.5% 7.6% 9.6% 9.0%

Workers' Comp - Increase 42% 45% 42% 37%

Workers' Comp - Decrease 23% 22% 22% 26%

Workers' Comp - Remained the Same 35% 32% 36% 38%


General Liability - Increase 50% 54% 51% 43%

General Liability - Decrease 18% 18% 15% 19%

General Liability - Remained the

Same 32% 28% 34% 38%





Actions Taken to Control Insurance Costs: Similar to last year, construction companies have becomemore proactive about controlling insurance costs. The following table summarizes actions they are taking:

ACTIONS TAKEN TO CONTROL INSURANCE COSTS



Aggressive Loss Control 57% 53% 65% 56%

Competitive Bids 49% 46% 47% 55%

Raised Deductible 39% 35% 44% 39%

Changed Carriers 28% 26% 27% 30%

Reduced Coverage 11% 11% 8% 10%

Changed Brokers 11% 9% 11% 12%

Other 6% 5% 8% 7%

Workers’ Compensation: Most companies (80%) have a workers’ compensation experience modifierwithin the range of 0.5 and 0.99, as seen in prior years.

W O R K E R S ' C O M P E N S A TI O N E X P E R IE N C E M O D I F IE R

2 %

2 %

1 % 3

% 4 %

4 % 6

% 4 %

4 5 % 5 1

%

4 2 %

3 7 %

3 8 %

3 6 %

3 3 %

3 5 %

1 5 % 1

0 %

1 8 %

1 4 %

0%

20%

40%

60%


Nonresidential

Heavy &

Highway

Specialty Trade

<0.30 0.30-0.49 0.50-0.79 0.80-0.99 >1.0




Consistent with prior years, the typical number of claims per year falls between the 1 to 10 range.

NUMBER OF WO RKERS' COMPE NSATION CLAIMS

7 %

3 %

1 % 8

% 6 % 7

% 4 % 7

% 4 %

2 % 8

% 4 %

1 3 %

4 5 %

4 3 %

6 4 %

5 3 %

3 4 %

3 3 %

1 2 %

2 4 %

1 0 %

5 % 6

%

0%

25%

50%

75%


Nonresidential

Heavy &

Highway

Specialty Trade

None 1-10 11-25 26-50 51-100 >100

On average, most companies pay $5,000 per claim or less.

7 %

1 0 % 1

5 % 2

2 %

3 6 %

3 4 %

3 5 % 4 0

%

2 1 %

1 8 % 2

6 %

2 2 %

1 3 %

1 5 %

1 7 %

1 4 %

1 2 %

1 0 %

1 1 %

9 %

4 %

1 % 4

% 3 %

0%

20%

40%

60%


Nonresidential

Heavy &

Highway

Specialty Trade

<$500 $500-$2,500 $2,500-$5,000

$5,000-$10,000 $10,000-$25,000 >$25,000

AVERAGE COST OF E ACH WO RKERS' COMPE NSATION CLAIM





Attestation of Year-End Financial Statements: The majority of companies (70%) have their financialstatements audited. Only 1% have no form of attestation.

ATTESTATION OF YEAR-END FINANCIAL STATEMENTS

1

%

1

%

0 %

1

%

1

%

0 %

0 % 4

%

5 5 %

8 2 %

7 6 %

7 0 %

2

4 %

1 8

%

4 1 %

2 8 %

0%

20%

40%

60%

80%

100%


Nonresidential

Heavy &

Highway

Specialty Trade

Audited Reviewed Compiled No Attesta tion

Assurance Services: As in prior years, most participants use a local or regional accounting firm with aconstruction focus. Only a handful use a sole practitioner to perform their assurance services.

47%

25%

14%

10% 3%

0%

20%

40%

60%

Local/Regional Firm With

Construction Focus

Local/Regional Firm With

General Focus

Next Tier National Firm

"Big Four" Firm

Sole Practitioner

ACCOUNTING FIRMS PROVIDING ASSURANCESERVICES - ALL COMPANIES




Taxation

Revenue and Gross Profit Recognition: Most respondents (91%) use some form of the percentage-of-completion method (PCM) to recognize contract revenue and gross profit for tax reporting purposes. Thefollowing table provides a detailed breakdown of revenue and profit recognition methods.

REVENUE RECOGNITION METHOD FOR TAX REPORTING PURPOSES



PCM - >$10m Average

Annual Revenue 67% 72% 74% 62%

PCM - Simplified Cost-to-Cost 20% 21% 16% 20%

PCM - <$10m Average

Annual Revenue 4% 2% 3% 6%

Completed Contract 5% 3% 4% 8%

Accrual 2% 1% 3% 1%

Cash 2% 0% 1% 1%

Accrual Exclusive of

Retainage 1% 0% 0% 2%

Other 0% 0% 0% 1%

TOTAL 100% 100% 100% 100%

Alternative Minimum Tax and Look-Back Interest: Most participants (84%) did not have an AMTliability for the previous year. A little over half (56%) of participants filed IRS Form 8697 (Look-BackInterest Computation) with their last tax return. Of those, approximately half were due a refund and halfowed interest to the IRS.

IRS Examinations: One-third of participants have never been subject to an IRS examination. Of thosewho have, most had their exam more than six years ago. Few exams (5%) resulted in a material increase

or decrease to their tax liability for the period examined.

Executive Compensation: Most construction company CEOs make between $100,000 and $500,000 perannum (79%).




TOTAL CEO COMPENSATION



Less than $100,000 4% 4% 4% 4%

$100,001 –$250,000 49% 47% 46% 53%

$250,001–$500,000 30% 30% 32% 27%

$500,001–$1 Million 12% 14% 13% 10%

Over $1 Million 5% 5% 5% 5%

TOTAL 100% 100% 100% 100%





Fiscal Year End: About two-thirds of participants (65%) report earnings on a calendar year basis. Eleven percent reported for years ending September 30, and the remainder used some other reporting period.

Supplemental Schedules to Financial Statements: The following graph illustrates the use of

supplemental schedules within industry classifications. A schedule of uncompleted contracts and percentcomplete is the most common supplement.

SUPPLEMENTAL SCHEDULES DISCLOSED

8 1 %

8 5 %

8 7 %

7 5 %

6 9 %

6 9 %

7 3 %

6 7 %

6 8 % 7

7 %

7 5 %

5 3 %

4 7 % 5

4 %

5 1 %

5 2 %

1

5 %

1 8 %

1 7 %

2 3 % 1

1 %

9 %

1 1 %

1 0 %

0%

20%

40%

60%

80%

100%


Nonresidential

Heavy & Highway Specialty Trade

Uncompleted Contracts and % Complete SG&A Expenses

Completed Contracts Reconciliation of Revenues, Costs, and Profits

Aging of Accounts Receivable Other

Contract Revenue Recognition: Overall, 97% of companies used the percentage-of-completion method

of accounting (either cost-to-cost, physical percent complete, or labor hours complete). There are severalacceptable methods for estimating the percentage of a project that is completed. The following graphillustrates how survey participants are estimating project completion. The most common is to recognizerevenue as soon as costs are charged to the job (72%).

P E R C E N T A G E - O F - C O M P L E T I O N P R O F I T R E C O G N I T I O N

72% 72%63%

75%

9%9%

13% 10% 14%

5%11%5% 5%

6%

5% 22%

0%

20%

40%

60%

80%

100%


Nonresidential


When C osts Are C harged As Soon As Work Begins

When the Ultimate Profit Can Be Estimated When a "Base" Level of Completion Is Reached




Treatment of Unpriced Change Orders: Most companies (70%) take a facts and circumstance approachto recognize revenues associated with unpriced change orders. Among those who use a single policy(30%) the most common treatment is to recognize costs, but not revenues, of an unpriced change order inthe current period (48%). The graph below details, for those who use a single policy, the various forms ofaccounting for unpriced change orders within each industry classification.

T R E A TM E N T O F U N P R I C E D C H A N G E O R D E R S

3 %

3 %

0 % 5

% 1 6 %

2 4 %

3 %

5 %

1 %

1 % 3

% 0 %

4 8 %

3 4 %

8 0 %

4 9 %

1 8 %

1 0 %

1 8 %

2 3 %

1 4 %

2 3 %

1 4 %

3 %

0%

25%

50%

75%

100%


Nonresidential


Deferred Until the Change Is Settled Deferred Until the Change Is Paid

Costs Are Recognized, but not Revenues Revenue Is Recognized Equal to Costs

Revenue Is Recognized in Excess of Costs Other

Methods of Accounting for Joint Ventures: The equity method, or some variation thereof, continues to be the most common method of accounting for joint ventures. The following table provides a detailed breakdown of how participants are accounting for joint ventures. This section was relevant to 25% of participants.

METHODS OF ACCOUNTING FOR JOINT VENTURES



Equity 46% 49% 39% 44%

Part Equity/Part

Consolidation 18% 11% 25% 28%

Full Consolidation 17% 22% 7% 17%

Partial or ProportionateConsolidation 12% 14% 18% 6%

Cost 2% 1% 0% 6%

Other 2% 1% 4% 0%

Expanded Equity 2% 1% 7% 0%

TOTAL 100% 100% 100% 100%




Types of Contracts: Altogether, fixed-price contracts accounted for 59% of participant revenue in thelast year. Heavy & Highway contractors are much more likely than the other classifications to employunit price contracts. A detailed breakdown of contract type is provided below.

TYPES OF CONTRACTS



Fixed Price - Hard Bid 39% 30% 40% 50%

Fixed Price - Negotiated 20% 22% 10% 23%

Cost with Guaranteed Maximum 14% 28% 1% 5%

Unit Price 10% 0% 37% 3%

Time and Materials 8% 3% 7% 15%

Cost Plus Fee 5% 8% 2% 2%

Construction Management 3% 7% 1% 0%

Other 1% 1% 1% 1%

TOTAL 100% 100% 100% 100%




Selected Financial Data

This section of the survey analyzes the composite financial statement data and financial ratios for the 532companies that provided complete financial information and were included as participants for the most

recent year-end. Separate sections of the survey are devoted to analysis of the composite financialstatements and ratios for each classification of contractor. This section provides insight on the industry asa whole. Conclusions on individual industry classifications may differ, so it is advisable to also examinethe results from the section relevant to your business. It should also be noted that the number and mix ofrespondents for each year’s survey affect trends in financial statement information.

Composite Balance Sheets

Liquidity remained constant in 2005. The Current and Quick Ratios were essentially unchanged for2003 and 2004 at 1.3 and 1.2, respectively.

Leverage essentially remained constant in 2005. Debt to equity was at 2.3.

Efficiency increased in 2005. Overall, the operating cycle was shortened by almost a day in 2005 to 29.1days.

The average asset size for participants in the 2005 survey was $33.1M. This is an increase from the$28.2M reported in 2004.

Net Receivables are the largest single asset, accounting for 52.8% of total assets. This is a slight increasefrom 2004 (51.6%).

Current liabilities increased as compared to 2004 (61.7% versus 58.3%). Noncurrent liabilities decreasedand total liabilities increased to 69.4%, from 68.4% in 2004.

Retained earnings continue to be the most prevalent form of Net Worth. Given that private companiesdominate within the participant body, this result is not surprising.

Composite Statement of Earnings

Profitability was similar to 2004. The net margin before income taxes remained constant at 1.8%.

ROA and ROE both remained consistent. ROA went from 5.3% in 2004 to 5.2% in 2005. ROE went from17.0% in 2004 to 16.9% in 2005.

Total revenue was higher by about $13.8M in 2005. SG&A expenses decreased slightly to 6.1%, butdirect costs increased slightly to 92.2%.



Balance Sheet

2005 Participants 2004 Participants 2005 Participants 2004 Participants


Current assets: Current liabilities:Cash and cash equivalents $ 4,818,236 14.6 % $ 3,849,489 13.7 % Current maturity on long-term debt $ 505,428 1.5 % $ 440,487 1.6 %

Marketable securities & short-term investments 1,983,264 6.0 1,620,890 5.8 Notes payable and lines of credit 549,390 1.7 443,402 1.6


Cont rac t r eceivab les cu rrent ly due 12,856 ,421 38.9 10,741 ,070 38.1 T rade, i nc luding cu rren tl y due


Unbilled work 337,890 1.0 205,744 0.7 Subcontracts retainages 2,774,589 8 .4 2,305,985 8.2













Other current assets 705,247 2.1 694,657 2.5 Long-term debt, excluding current maturities 2,038,046 6.2 2,115,115 7.5


Other 354,694 1.1 592,959 2.1Property, plant and equipment 9,304,496 28.2 9,631,053 34.2 Total liabilities 22,936,983 69.4 19,263,522 68.4





Long-term investments 350,514 1.1 249,691 0.9 Additional paid-in capital 1,939,629 5.9 1,393,052 4.9


Other assets 1,427,615 4.3 1,317,149 4.7 Treasury stock (506,391) (1.5) (411,600) (1.5)

Total noncurrent assets 1,870,491 5.7 1,650,283 5.9 Excess value of marketable securities 52,536 0.2 38,396 0.1

Other equity 819,859 2.5 529,071 1.9

Total net worth 10,071,243 30.5 8,875,792 31.5






Other revenue 1,479,664 1.5 1,713,217 2.1


Quick Ratio 1.2 1.2 1.2 1.2


Other cost (1,155,465) (1.2) (1,558,113) (1.9) Working Capital Turnover 13.5 12.9 13.2 12.9

Total cost (88,515,059) (92.2) (75,470,957) (91.9)


Gross Profit 7,443,704 7.8 6,689,295 8.1

Return on Assets * 5.2 % 5.3 % 5.3 % 4.8 %















Efficiency Ratios

Ne t ea rnings / ( loss) before i ncome taxes 1 ,703,457 1 .8 1 ,505 ,184 1 .8




Net earnings $ 1,527,888 1.6 $ 1,323,240 1.6 Days in Inventory 2.1 2.2 1.8 2.1



Number of ParticipantsNumber

2005 5322004 537


Composite

All Companies

* Inthe CFMA's2005Annual FinancialStudy, Returnon Assets(ROA)and Returnon Equity(ROE) arecalculatedusing

net earnings (loss) before income taxes. Studies conducted in prior years used net earnings (loss) after taxes to calculate

ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect this change.

Overall Survey Results 8




Selected Financial Data by Region

The composite regional financial statements are presented on the following pages. Selected financial datafrom these regions and the overall composite financial data are presented in the following chart.

All Companies NE SE MW SW W FW

Number of Companies 532 85 79 172 68 52 76

Assets ( ) 33,053 34,738 26,653 31,798 57,852 27,960 21,960

Liabilities ( ) 22,937 24,014 18,024 21,658 41,523 18,930 15,847

Net Worth ( ) 10,071 10,723 8,548 10,094 16,307 9,015 6,018

Net Worth to A ssets 30.5 % 30.9 % 32.1 % 31.7 % 28.2 % 32.2 % 27.4 %

Revenues ( ) 95,959 94,805 77,412 91,485 168,837 85,012 68,937

Gross Profit ( ) 7,444 6,763 6,410 7,349 11,903 6,211 6,348

Gross Profit Margin 7.8 % 7.1 % 8.3 % 8.0 % 7.1 % 7.3 % 9.2 %

SG&A Expense ( ) 5,844 6,124 4,803 5,537 9,582 4,569 4,839

SG&A Expense Margin 6.1 % 6.5 % 6.2 % 6.1 % 5.7 % 5.4 % 7.0 %

Net Earnings ( ) * 1,703 779 1,707 1,896 2,488 1,733 1,575

Net Earnings Margin * 1.8 % 0.8 % 2.2 % 2.1 % 1.5 % 2.0 % 2.3 %Current Ratio 1.3 1.3 1.3 1.4 1.3 1.4 1.3

Return on Assets 5.2 % 2.2 % 6.4 % 6.0 % 4.3 % 6.2 % 7.2 %

Return on Equity 16.9 % 7.3 % 20.0 % 18.8 % 15.3 % 19.2 % 26.2 %

* Before Taxes

REGION

Note: All dollar amounts are in thousands.

The level of participant overlap from year-to-year usually 60% to 70%, can impact financial resultsmaterially. Differences seen in the financial statements between years are due in part to market influencesand individual company performance, and in part to the different makeup of the participant body eachyear.

As compared to 2004, participants from the Southwest were significantly larger in terms of assets andrevenue.

Financial Performance, as measured by net earnings before income taxes, remained fairly consistentacross all regions in 2005. The exceptions were the Southeast, which experienced an increase, and the Northeast, which experienced a decrease.

Regional performance was fairly comparable across regions.



Balance Sheet




Cash and cash equivalents $ 5,189,627 14.9 % $ 3,138,080 12.0 % Current maturity on long-term debt $ 1,044,210 3.0 % $ 595,474 2.3 %Marketable securities & short-term investments 934,113 2.7 959,836 3.7 Notes payable and lines of credit 600,137 1.7 614,588 2.3


Contr act r ecei va ble s c urr ent ly du e 13, 141, 613 3 7.8 9 ,628 ,84 5 3 6.7 Tr ade, inc lu din g c urr ent ly due

















Other 377,883 1.1 632,931 2.4


Less accumulated depreciation (5,471,325) (15.8) (7,480,334) (28.5) Minority interests 721 0.0 2,149 0.0








Other equity 246,116 0.7 19,780 0.1

Total net worth 10,723,162 30.9 9,459,673 36.0






Other revenue 1,410,896 1.5 974,354 1.4


Quick Ratio 1.1 1.2 1.2 1.2



Total cost (88,042,277) (92.9) (61,169,079) (90.5)


Gross Profit 6,762,753 7.1 6,414,791 9.5

Return on Assets * 2.2 % 4.4 % 4.8 % 3.7 %










Income from operations 639,161 0.7 1,172,711 1.7 Equity to SG&A Expense 1.8 1.4 1.8 1.3





Efficiency Ratios

Net ear ni ngs / ( los s) bef or e i nco me t axes 779, 257 0. 8 1 ,25 8,62 1 1. 9




Net earnings $ 462,615 0.5 % $ 1,078,456 1.6 % Days in Inventory 4.1 2.8 2.7 2.2



Number of Participants

2005 852004 89


All CompaniesNortheast Region

* In theCFMA's 2005 Annual Financial Study, Returnon Assets(ROA)and Returnon Equity (ROE) are calculated using






Balance Sheet




Cash and cash equivalents $ 3,386,402 12.7 % $ 3,629,709 11.5 % Current maturity on long-term debt $ 334,667 1.3 % $ 604,058 1.9 %




















Other 291,415 1.1 601,496 1.9






Long-term investments 94,600 0.4 516,128 1.6 Additional paid-in capital 581,625 2.2 972,197 3.1


Other assets 937,244 3.5 1,629,324 5.2 Treasury stock (358,725) (1.3) (268,482) (0.9)


Other equity 2,076,469 7.8 1,463,888 4.6

Total net worth 8,547,979 32.1 9,193,434 29.1






Other revenue 1,899,321 2.5 3,936,325 4.2


Quick Ratio 1.2 1.3 1.2 1.2



Total cost (71,001,775) (91.7) (86,202,453) (91.6)


Gross Profit 6,410,120 8.3 7,854,714 8.4

Return on Assets * 6.4 % 5.0 % 4.4 % 3.9 %













Interest expense (102,749) (0.1) (201,993) (0.2)Other income / (expense), net 101,376 0.1 185,119 0.2

Efficiency Ratios

Net ear ni ngs / ( los s) bef or e i nco me t axes 1, 706 ,77 4 2. 2 1 ,39 7,34 4 1. 5








2005 792004 94






All CompaniesSoutheast Region



Balance Sheet





Marketable securities & short-term investments 885,294 2.8 616,357 2.7 Notes payable and lines of credit 381,144 1.2 477,744 2.1



















Other 393,200 1.2 232,114 1.0





Noncurrent assets: Preferred stock, stated value 156,595 0.5 0 0.0





Other equity 305,679 1.0 203,110 0.9

Total net worth 10,093,747 31.7 7,877,520 34.5






Other revenue 1,135,399 1.2 857,702 1.3


Quick Ratio 1.2 1.2 1.2 1.2


Other cost (908,739) (1.0) (1,312,572) (2.0) Working Capital Turnover 13.3 12.6 12.7 13.5

Total cost (84,136,311) (92.0) (60,652,352) (91.3)


Gross Profit 7,348,531 8.0 5,770,632 8.7

Return on Assets * 6.0 % 5.7 % 5.8 % 5.6 %














Efficiency Ratios









2005 1722004 154



All Companies




Midwest Region



Balance Sheet





Marketable securities & short-term investments 6,980,664 12.1 6,578,589 15.8 Notes payable and lines of credit 1,307,978 2.3 662,183 1.6














Income taxes: Other current liabilities 1,249,404 2.2 791,721 1.9



Other current assets 1,488,160 2.6 1,048,191 2.5 Long-term debt, excluding current maturities 2,396,653 4.1 1,872,056 4.5


Other 623,478 1.1 1,422,923 3.4








Other assets 1,520,176 2.6 1,903,955 4.6 Treasury stock (2,071,467) (3.6) (1,055,905) (2.5)


Other equity 2,099,506 3.6 1,174,857 2.8

Total net worth 16,307,217 28.2 13,620,765 32.8






Other revenue 1,165,410 0.7 3,372,222 3.0


Quick Ratio 1.2 1.2 1.2 1.3



Total cost (156,933,500) (92.9) (106,190,925) (92.9)


Gross Profit 11,903,273 7.1 8,090,805 7.1

Return on Assets * 4.3 % 4.2 % 5.3 % 5.3 %













Interest expense (235,576) (0.1) (172,210) (0.2)Other income / (expense), net (1,320) (0.0) 333,925 0.3

Efficiency Ratios









2005 682004 68



Southwest Region

All Companies






Balance Sheet





Marketable securities & short-term investments 2,681,087 9.6 580,030 1.7 Notes payable and lines of credit 337,975 1.2 333,251 1.0



Retainages on contracts 2,816,181 10.1 4,405,123 12.8 to subcontractors 8,036,225 28.7 12,259,740 3 5.5


Other receivables 234,980 0.8 1,158,421 3.4 Other 421,304 1.5 239,070 0.7






of billings on uncompleted contracts 1,383,777 4.9 873,364 2.5 Income taxes:






Other current assets 557,782 2.0 1,044,928 3.0 Long-term debt, excluding current maturities 1,288,767 4.6 1,228,118 3.6


Other 217,908 0.8 1,076,601 3.1





Noncurrent assets: Preferred stock, stated value 0 0.0 1,634 0.0





Other equity 132,351 0.5 49,653 0.1

Total net worth 9,015,311 32.2 9,347,441 27.1






Other revenue 1,167,218 1.4 1,089,905 0.9


Quick Ratio 1.2 1.2 1.2 1.2

Contract cost (78,064,965) (91.8) (110,720,536) (92.8) Days of Cash 16.1 9 .5 19.9 11.5

Other cost (736,140) (0.9) (810,453) (0.7) Working Capital Turnover 13.3 15.4 16.3 14.9

Total cost (78,801,105) (92.7) (111,530,989) (93.5)


Gross Profit 6,210,918 7.3 7,782,934 6.5

Return on Assets * 6.2 % 4.1 % 6.5 % 5.8 %














Efficiency Ratios









2005 522004 45



All Companies




West Region



Balance Sheet







Contr act r ecei va ble s c urr ent ly du e 9 ,248 ,01 6 4 2.1 10, 046, 334 45.4 Tr ade, in clu din g c urr ent ly du e















Other current assets 469,095 2.1 443,058 2.0 Long-term debt, excluding current maturities 590,957 2.7 1,098,287 5.0


Other 160,490 0.7 282,717 1.3








Other assets 387,582 1.8 450,831 2.0 Treasury stock (56,983) (0.3) (61,074) (0.3)

Total noncurrent assets 457,648 2.1 599,103 2.7 Excess value of marketable securities 2,478 0.0 4,130 0.0

Other equity 644,458 2.9 360,250 1.6

Total net worth 6,017,507 27.4 5,749,674 26.0






Other revenue 2,394,432 3.5 607,153 0.9


Quick Ratio 1.2 1.2 1.2 1.2



Total cost (62,588,112) (90.8) (62,074,546) (91.6)


Gross Profit 6,348,411 9.2 5,675,955 8.4

Return on Assets * 7.2 % 8.4 % 5.6 % 6.1 %














Efficiency Ratios









2005 762004 87






Far West Region

All Companies



C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

INDUSTRIAL &

NONRESIDENTIAL CONTRACTORS



Industrial & Nonresidential Contractors

General Profile

Forty-three percent of this year’s survey participants were Industrial & Nonresidentialcontractors. The NAIC codes represented in this group include commercial and institutional building construction (23332) and manufacturing and light industrial building (23331).

Almost three-quarters (75%) of the participants in this classification participated in last year’ssurvey. A large majority (97%) are CFMA members.

Most Industrial & Nonresidential contractors are privately held S corporations. This is consistentwith prior years.

A significant majority of Industrial & Nonresidential contractors are general contractors.

About a quarter of Industrial & Nonresidential project revenues were derived from the publicsector.

Industrial & Nonresidential participants continue to hail from throughout the U.S.

Ninety-six percent of this year’s Industrial & Nonresidential participants have over 11 years oftenure in the industry.

Eleven percent of Industrial & Nonresidential contractors have experienced a change inownership in the last five years.

Half of those companies eligible to bid on projects as Disadvantaged Business Enterprises withinthis classification do so as Small Business Enterprises.




3 6 %

3 1 %

3 0 %

2 8 %

2 3 %

5 9 %

6 0 %

6 0 %

6 1 % 6

7 %

0%

20%

40%

60%

80%

2001 2002 2003 2004 2005

C corporation S corporation




O W N E R S HI P O F B U S IN E S S

96%

0% 3% 0%

Private Public Employee Other

I n d u s t r i a l & N o n r e s i d e n t i a l

4% 1%1%

94%

A ll C o m p a n i e s

T YP E O F C O N T R AC T O R

Other

6%

Specialty

Trade

31%

Industrial &

Nonresidential

43%

Heavy &

Highway

20%




ROLE OF CONTRACTOR

1%

9%

89%

General Contractor Subcontractor Other

Industrial & Nonres idential

6%

33%

60%

All Companies


I N D U S TR I A L & N O N R E S I D E N T I A L

78% 76% 72% 75% 78%

22% 24% 28% 25% 22%

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005

Private Public




LOC ATION OF W ORK BY REGION


1 4 %

2 0 %

2 8 %

1 6 %

1 0 %

1 2 % 1

6 %

1 8 %

2 8 %

1 3 %

1 2 % 1

3 %

0%

5%

10%

15%

20%

25%

30%

35%


2004 2005 Headquarters

L O N G E V I TY O F B U S I N E S S


30

%40%

23%

4%

3%

38%4

2%

16%4

%1%

0%

10%

20%

30%

40%

50%

0-5 Years 6-10 Years 11-20 Years 21-50 Years Over 50

Years

2004 2005 All Companies




M A J O R I TY O W N E R S H I P C H A N G E S

89%

11%

Majority Ownership Changed Within the Last Five Years

No Change in Majority Ownership Within the Last Five Years


17%

83%


M E T H O D S O F C H A N G I N G M A JO R I T Y O W N E R S H I P

1 %

1 %

0 %

0 %

0 %

0 %

0 %

0 %

3 1 %

3 1 %

2 4

%

1 2 % 5 %

1 0 %

4 8 %

3 8 %

0%

10%

20%

30%

40%

50%

E m p l o y e e

S a l e

T r a n s f e r t o

F a m i l y

D o m e s t i c

S a l e

E S O P

F o r e i g n

S a l e

B a n k r u p t c y

I P O

O t h e r

All Companies Industrial & Nonresidential




DI SADVAN TAGED BU S I N ESS EN TER PR I SES


( Br e a k d o w n O f T h o s e T h a t Q u a lif y)

50%

29%

21%

0%

20%

40%

60%

Minority Business

Enterprise

Woman-Owned

Business Enterprise

Small Business

Enterprise

A V E R A G E A C C O U N T I N G P E R S O N N E L


26

5 4

12

16

26

9

12

23

0

5

10

15

20

25

30

<10M 10M-25M 25M-50M 50M-100M >100M






A majority of Industrial & Nonresidential contractors expect increased sales volume in 2005. The averageexpected growth in percentage terms is somewhat higher than the average for all companies at 13.4%.

(The average company expects revenues to grow at 11.3%.)

Industrial & Nonresidential contractors ranked their niche second behind Residential for highestanticipated growth in the coming year.

The percentage of Industrial & Nonresidential contractors anticipating entering a new region is higherthan the overall average at 22%. Relatively similar to the average, growth is primarily anticipated in the Northwest, Midwest, and West. Twelve percent also plan on entering Canada.

Existing contractors pursuing growth and/or aggressive marketing remains the largest perceivedcompetitive threat to Industrial & Nonresidential contractors.

A shortage of trained field help has replaced sources of future work as the most frequently cited, numberone challenge.

Seventy-one percent of Industrial & Nonresidential contractors expected backlog to increase or remainthe same over 2005.

Industrial & Nonresidential contractors continue to rely more on negotiation to obtain new projects ascompared to the rest of the industry.

24%

63%13%


2 0 0 5

A N T IC I P A T E D G R O W T H I N N E X T Y E A R' S S AL E S V O L U M E

I N D U S TR I A L & N O N R E S I D E N T I A L

61%17%

22%

2 0 0 4





(Highest growth market = 1, lowest growth market = 5)

Industrial & Industrial & All

Nonresidential Nonresidential Companies

2004 2005 2005

Residential 1 1 1

Industrial & Nonresidential 2 2 2

Real Estate Development 4 3 3

Heavy & Highway 3 4 4

Specialty Trade 5 5 5

C O M P A N IE S E N T E R I N G N E W G E O G R AP H I C R E G I O N S

20%21% 22%

18%

0%

10%

20%

30%

2004 2005





A R E A S O F R E G I O N A L G R O W T H


3 2 %

2 6 % 3

2 %

2 2 %

3 4 %

2 4 %

1 2 %

0%

10%

20%

30%

40%

50%

Northeast Southeast Midwest Southwest West Far West Foreign

S O U R C E S O F I N C R E A S E D C O M P E T IT IO N


74% 77%

10%1% 0%

8% 10%7% 13%

*N/A0%

25%

50%

75%

100%

2004 2005

Existing Contractors Pursuing Growth New Contractors in Your Type of Construction

Foreign Contractors New Contractors in Your Region

Other

* N/A: Other was not included as an option in 2005.






2004 2005



General Liability Insurance Costs 59% Shortage of Trained Field Help 62%



Workers' Compensation Insurance Costs 50% Shortage of Project Managers 44%


2004 2005





General Liability Insurance Costs 12% Surety Bonds 7%

Surety Bonds 7% Shortage of Project Managers 7%

S I ZE O F B A C K L O G C O M P A R E D T O L A S T YE A R

21%

50%

29%



22%

23%

55%





BAC KL OG AT YEAR -EN D ( M )

$27.6

$76.2

$113.7

$87.9

$0

$20

$40

$60

$80

$100

$120


Nonresidential

Heavy &

Highway

Specialty Trade

M E T H O D S O F O B T A I N IN G W O R K - I N -P R O G R E S S

A N D BA C K L O G

57%

40%

2% 1% 1%3%

41%

55%

0%

20%

40%

60%

80%






S T R AT E G I E S T O I M P R O V E F U T U R E P R O F I T AB I L I TY

5%

3%

8%

32%

60%

4%

4%

6%

56%

93%

91%

55%

48%

38%

39%

49%

44%

52%

37%

30%

0% 25% 50% 75% 100%

Other


M&A

Related Services

Cut Overhead

Design-Build

IT

Training

Risk Mgmt



C H A N G E I N A M O U N T O F B I D W O R K

33% 32%

12% 12%

56% 56%

0%

20%

40%

60%

80%

100%







Eighty-four percent of Industrial & Nonresidential contractors prepare and/or use a formalized budget for purposes other than job cost estimates.

The majority of Industrial & Nonresidential contractors use zero-balance arrangements, online banking,and electronic payments to manage their cash.

Credit availability for Industrial & Nonresidential contractors was slightly improved when compared tothe previous year.

The working capital line of credit remained constant for most companies over the year.

Current cash flow remains the most common source of financing for equipment purchases amongIndustrial & Nonresidential contractors. It is noteworthy that the number of participants using currentcash flow increased by 11% from the previous year.

CASH MANAGEMENT TEC HNIQUES

2

3 %

2 8 %

2 9 %

2 9 %

3 1 % 3

8 %

6 3 % 7

4 %

8 0 %

1 9 % 3

0 %

2

8 % 3

7 %

3 0 %

2 5 %

6 8 %

7 7 % 8

4 %

0%

25%

50%

75%

100%

Z e r o

B a

l a n c e

O n

l i n e

B a n

k i n g

E l e c t r o n

i c

C u s t o m e r

P a y m e n t s

L i n e o

f C r e

d i t

S w e e p

C o r p o r a t e

P u r c h a s i n g

C a r d s

C h e c

k i n g

A c c o u n t s

E l e c t r o n

i c

B a n

k

R e c o n c i l i a t i o n

S a v

i n g s

A c c o u n t s

E l e c r o n

i c

V e n

d o r

P a y m e n t s

All Companies Industrial & Nonres idential




R A TI O S B Y E Q U I P M E N T F I N A N C I N G M E T H O D


3.0

19.0

3.6

6.65.0

14.5

2.3

12.1

0

10

20



35%

3%

61%

72%

25%

3%

0%

20%

40%

60%

80%

Better Worse About the Same


AVAILABILITY OF BANK CREDIT COMPARED TO LAST YEAR




W ORKING CAPITAL LINE OF CREDIT


17% 22%

81%75%

3%2%

0%

20%

40%

60%

80%

100%

2004 2005

Increased Decreased Remained the Same

F I N A N C I N G F O R E Q U I P M E N T P U R C H A S E S

I N D U S T RI A L & N O N R E S I D E N T I A L

7%

7%

66%

13%

8%

Current Cash Flow Bank Insta llment LoansLeas ing Companies Vendor FinancingOther

2 0 0 5

5%

11%

13%

15%

55%

2 0 0 4





A majority of Industrial & Nonresidential contractors bond less than 40% of their work.

The majority of Industrial & Nonresidential contractors bond less than 20% of subcontractor dollars.

Most (71%) of Industrial & Nonresidential participants indicated that bonding credit availability is aboutthe same as the prior year.

PE RCENTAGE OF CONTRACT REVENUE BONDED

8 %

1 6 %

2 3 %

3 9 %

1 4 %

2 5 %

3 9 %

1 6 %

1 0 %

1 0 %

0%

25%

50%

<19% 20-39% 40-59% 60-79% >80%


PERC ENTAGE O F SUBCONTRACTOR DOLLARS BONDED

(If a Gene ral Contractor)

4%4%

10%

70%

13%

<19% 20-39% 40-59% 60-79% >80%

Industrial & Nonresiden tial

6%

71%

10%

5%

8%

All Companies




AVAILABILITY OF BONDING CREDIT


11%

71%

18%

Bette r Worse About the Same




Insurance

The majority of Industrial & Nonresidential contractors experienced an increase in insurance costs overthe year. Healthcare insurance increased for 73%; workers’ compensation increased for 45%; and general

liability increased for 54% of Industrial & Nonresidential contractors.

Industrial & Nonresidential contractors reported that healthcare insurance costs were 7.6% of payroll,workers’ compensation costs were 4.5% of payroll; and general insurance costs were 4.1% of payroll.

A majority of Industrial & Nonresidential contractors (77%) file between 0 and 10 workers’compensation claims per year. The average cost is less than $5,000 per claim.


The majority of Industrial & Nonresidential contractors (76%) have their year-end financial statements

audited by a professional. This is slightly higher than for all companies.

Most Industrial & Nonresidential contractors use a regional accounting firm, but those regionalaccounting firms with a construction focus were more likely to be used (49%) than those with a generalfocus (26%.)

YEAR-END FINANCIAL STATEMENTS


Reviewed

24%

Compiled

1%

Audited

76%




Taxation

Industrial & Nonresidential contractors use the percentage-of-completion method of revenue and profitrecognition almost exclusively (95%).

Most (88%) did not have an alternative minimum tax (AMT) liability last year.

Sixty-two percent of the Industrial & Nonresidential participants filed IRS Form 8697 for the prior taxyear. Of those who filed, about half owed interest to the IRS.

About two-thirds of Industrial & Nonresidential contractors have had an IRS examination. Mostexperienced an immaterial or no change, although 2% experienced a material increase as a result of theexamination.

A large majority (81%) of Industrial & Nonresidential CEOs make $500,000 or less per year.

REVENUE RECOGNITION METHOD

72%

21%

2%3% 2%

PCM - Section 460 PCM - "Simplified" PCM - Elected

Completed Contract Other Methods


67%

20%

4%

4%5%

All Companies




AMT TAX LIABILITY LAST YEAR

No

88%

Yes

6%Don't Know

6%

Industrial & Nonres idential

No

84%

Yes

8%

All Companies

Don't Know

8%

F I L E D L O O K - BA C K I N TE R E S T C O M P U T A T I O N

32%

30%

5%

33%

Yes, for an Interest Refund Yes, with Interest Due to the IRS

No, I Didn't File Not Applicable


29%

36%

7%

27%





L A S T I R S IN C O M E T A X E X A M


Over 6 Years

Ago

41%

Within Past

Year

4%

Never

36%

4-6 Years Ago

12% 1-3 Years Ago

5%

Currently

3%

RESULTS OF LAST IRS INCOME EXAM


No Change

46%

Immaterial

Increase

48%

Immaterial

Decrease

3%

Material

Decrease

1%

Material

Increase

2%




T O T A L C O M P E N S A T IO N - C E O

47%

5%

14%

30%

4%

<$100,000 $100,000-$250,000

$250,000-$500,000 $500,000-$1,000,000

>$1,000,000


30%

5% 4%

12%

49%






The majority of Industrial & Nonresidential contractors report earnings on a calendar-year basis.

The vast majority (98%) of Industrial & Nonresidential contractors use some form of the percentagecompletion method for revenue recognition. The majority estimate the percentage completion based onwhen costs are charged to the job.

Industrial & Nonresidential contractors typically employ fixed-price contracts. However, they are morelikely than other industry classifications to use a cost with guaranteed maximum contract.

CORP ORATE FISCAL YEAR-END

63%

27%

10%

Dec 31 Sept 30 Other


24%

11%

65%

All Companies

CONTRACT REVENUE RECOGNITION

7%1%1%

90%

PCM (Cost-to-Cost) PCM (Physical Percent Complete)

PCM (Labor Hours or Dollars) Other

Industrial & Nonresidential

2%7%

3%

88%

All Companies




73% 73%

9% 12%

13% 10%5%

5%

0%

20%

40%

60%

80%

100%


When Costs Are Charged When Work Begins

When the Ultimate Profit Can Be Estimated When a Base Level of Completion is Reached

P E R C E N T A G E -O F - C O M P L E T IO N P R O F I T R E C O G N I T IO N P R O C E S S

UNPRICED CHANGE ORDER COST


25%34% 30% 35% 37%

38% 19% 19% 14% 15%

38% 36% 35%

11% 12% 13% 15% 13%

35%26%

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005

Deferred Until the Change Order Is Priced Recognized in the Current Accounting Period

Costs Are Recognized, Not Revenues Other/Not Applicable




2%

2%

2%

22%

12%

17%

18%

46%49%

11%

14%

1%

1%

1%

0% 20% 40% 60%

Expanded

Cost

Other

Equity/ Consolidation

Full Consolidation

Partial Consolidation

Equity


M E T H O D S F O R A C C O U N T I N G F O R J O I N T V E N T U R E S

( 2 5 P e r c e n t o f A ll P a r t ic ip a n t s A c c o u n t F o r Jo i n t V e n t u r e s )

TYPES OF CONTRACTS Industrial & Industrial & All

Nonresidential Nonresidential Companies

2004 2005 2005

Fixed Price - Hard Bid 31% 30% 39%

Fixed Price - Negotiated 26% 22% 20%

Cost With Guaranteed Maximum 26% 28% 14%

Unit Price 0% 0% 10%

Time and Materials 3% 3% 8%

Cost Plus Fee 8% 8% 5%

Construction Management 5% 7% 3%

Other 1% 1% 1%

TOTAL 100% 100% 100%






57%

42%

1%

<12 months 12-24 months >24 months





All Industrial &

All Companies Nonresidential

Number of Companies 532 227

Assets ( ) 33,053 41,193

Liabilities ( ) 22,937 31,511

Net Worth ( ) 10,071 9,633

Net Worth to Assets 30.5 % 23.4 %

Revenues ( ) 95,959 133,314

Gross Profit ( ) 7,444 7,111

Gross Profit Margin 7.8 % 5.3 %

SG&A Expense ( ) 5,844 5,763

SG&A Expense Margin 6.1 % 4.3 %

Net Earnings ( ) * 1,703 1,615

Net Earnings Margin * 1.8 % 1.2 %

Current Ratio 1.3 1.2Return on Assets 5.2 % 3.9 %

Return on Equity 16.9 % 16.8 %

* Before Taxes


The level of participant overlap from year-to-year, usually around 60% to 70%, can impact financialresults materially. Differences seen in the financial statements between years are due in part to marketinfluences and individual company performance, as well as in part to the different makeup of the participant body each year.

Liquidity remained virtually constant in 2005. The current and quick ratios decreased slightly, but daysof cash increased from 17.1 to 19.7 days.

Profitability decreased in 2005. Income from operations went down from 1.2% to 1.0% due to anincrease in direct costs as a percentage of revenue. ROA declined from 4.6% to 3.9%, and ROE declinedfrom 19.4 to 16.8%.

Leverage increased slightly in 2005. Debt to equity was slightly higher, but the fixed asset ratiodecreased by 5.5% points to 20.2%.

Efficiency increased in 2005. The operating cycle extended by 1.8 days.

Backlog decreased in 2005. The average months in backlog went from 9.9 in 2004 to 8.6 in 2005.

The average total assets reported in the Industrial & Nonresidential sector was higher in 2005 at $41.2M,

compared to $31.6M in 2004.

The average total revenue reported was also higher at $133.3M in 2005 versus $105.5M in 2004.



Balance Sheet






Cont rac t r eceivab les cu rrent ly due 17,039 ,458 41.4 13,401 ,900 42.4 T rade, i nc luding cu rren tl y due















Other current assets 848,258 2.1 758,827 2.4 Long-term debt, excluding current maturities 840,236 2.0 850,318 2.7











Other equity 1,012,347 2.5 793,473 2.5

Total net worth 9,632,612 23.4 7,446,694 23.5






Other revenue 130,634 0.1 1,151,758 1.1


Quick Ratio 1.1 1.2 1.2 1.2



Total cost (126,202,300) (94.7) (99,116,678) (94.0)


Gross Profit 7,111,269 5.3 6,339,097 6.0

Return on Assets * 3.9 % 4.1 % 4.6 % 4.5 %















Efficiency Ratios









2005 2272004 250


Composite










All Industrial &

Nonresidential NE SE MW SW W FW


Assets ( ) 41,193 39,349 31,727 32,714 78,790 34,765 36,444

Liabilities ( ) 31,511 30,716 23,385 25,222 59,708 26,684 28,388

Net Worth ( ) 9,633 8,632 8,287 7,390 19,064 8,050 8,027


Revenues ( ) 133,314 132,426 102,729 107,545 234,417 125,278 121,264

Gross Profit ( ) 7,111 4,715 5,905 6,710 11,297 7,716 7,375


SG&A Expense ( ) 5,763 4,999 3,997 5,277 9,657 5,827 5,525


Net Earnings ( ) * 1,615 (49) 2,177 1,591 2,169 2,116 2,139

Net Earnings Margin * 1.2 % 0.0 % 2.1 % 1.5 % 0.9 % 1.7 % 1.8 %

Current Ratio 1.2 1.2 1.3 1.2 1.3 1.3 1.2

Return on Assets 3.9 % (0.1) % 6.9 % 4.9 % 2.8 % 6.1 % 5.9 %

Return on Equity 16.8 % (0.6) % 26.3 % 21.5 % 11.4 % 26.3 % 26.7 %

* Before Taxes

REGION


Financial performance, as measured by net earnings before income taxes, was the same or improved in allregions but the Northeast (down considerably) and the Southwest (down slightly).

The size profiles, in terms of assets and revenue, changed compared to 2004. Several regions havesignificantly smaller or larger companies participating. This may have an effect on the performance ratios.This should be considered when examining the detailed financial statements.

Net Worth ranged between 21.9% and 26.1%.



Balance Sheet























Other 562,196 1.4 88,704 0.4






Long-term investments 1,360,295 3.5 199,487 1.0 Additional paid-in capital 1,180,637 3.0 316,829 1.5




Other equity 372,809 0.9 322,750 1.5

Total net worth 8,632,223 21.9 4,977,116 23.8






Other revenue 63,886 0.0 33,782 0.0


Quick Ratio 1.1 1.2 1.1 1.1


Other cost (48,187) (0.0) 0 0.0 Working Capital Turnover 23.2 16.8 20.9 15.5

Total cost (127,711,058) (96.4) (65,211,580) (93.7)


Gross Profit 4,715,188 3.6 4,403,704 6.3

Return on Assets * (0.1) % 2.9 % 4.6 % 4.7 %

Selling, general & administrative expenses: Return on Equity * (0.6) % 14.1 % 19.3 % 18.8 %






Other (785,160) (0.6) (1,286,914) (1.8) Revenue to Equity 15.3 14.3 14.0 15.3



Income from operations (283,403) (0.2) 672,113 1.0 Equity to SG&A Expense 1.7 1.4 1.3 1.0





Efficiency Ratios

Net ear ni ngs / ( los s) bef or e i nco me t axes ( 48, 575) ( 0. 0) 961, 210 1. 4




Net earnings $ (334,720) (0.3) % $ 904,539 1.3 % Days in Inventory 0.2 0.5 0.4 1.2




2005 382004 33


Industrial & Nonresidential ContractorsNortheast Region







Balance Sheet


















construction joint ventures 49,772 0.2 136,702 0.4 Deferred 304 0.0 6,349 0.0






Other 288,691 0.9 853,154 2.5










Other equity 3,799,677 12.0 2,680,856 7.9

Total net worth 8,286,645 26.1 8,880,143 26.3






Other revenue 40,057 0.0 4,135,785 3.4


Quick Ratio 1.2 1.3 1.2 1.2



Total cost (96,823,837) (94.3) (112,634,821) (93.2)


Gross Profit 5,904,726 5.7 8,278,688 6.8

Return on Assets * 6.9 % 4.4 % 6.1 % 4.4 %














Efficiency Ratios









2005 372004 48



Southeast Region







Balance Sheet
























Other 264,576 0.8 112,946 0.5










Other equity 524,931 1.6 208,108 0.9

Total net worth 7,390,150 22.6 4,417,603 19.9






Other revenue 194,485 0.2 252,343 0.3


Quick Ratio 1.1 1.1 1.1 1.1



Total cost (100,835,026) (93.8) (70,443,921) (93.4)


Gross Profit 6,709,514 6.2 4,943,298 6.6

Return on Assets * 4.9 % 4.8 % 4.9 % 3.9 %










Income from operations 1,432,856 1.3 983,059 1.3 Equity to SG&A Expense 1.4 1.1 1.1 1.1

Underbillings to Equity 22.6 % 9 .1 % 20.4 % 14.5 %


Interest expense (66,991) (0.1) (50,168) (0.1)Other income / (expense), net 131,529 0.1 (18,453) (0.0)

Efficiency Ratios





Net earnings $ 1,472,364 1.4 % $ 963,629 1.3 % Days in Inventory 0.3 0.7 0.9 0.7




2005 692004 72


Industrial & Nonresidential ContractorsMidwest Region







Balance Sheet










Other receivables 1,638,042 2.1 468,465 0.8 Other 255,827 0.3 220,126 0.4









Income taxes: Other current liabilities 1,609,172 2.0 1,345,311 2.3



Other current assets 1,854,398 2.4 1,467,902 2.6 Long-term debt, excluding current maturities 411,123 0.5 289,396 0.5


Other 829,944 1.1 1,446,865 2.5








Other assets 1,072,372 1.4 2,441,102 4.3 Treasury stock (1,181,436) (1.5) (457,392) (0.8)


Other equity 1,005,701 1.3 1,173,497 2.0

Total net worth 19,064,122 24.2 15,975,573 27.9






Other revenue 174,978 0.1 1,969,859 1.2


Quick Ratio 1.2 1.1 1.2 1.2



Total cost (223,120,413) (95.2) (159,726,980) (95.1)


Gross Profit 11,296,537 4.8 8,301,636 4.9

Return on Assets * 2.8 % 2.1 % 3.8 % 4.4 %














Efficiency Ratios









2005 342004 32



Industrial & Nonresidential ContractorsSouthwest Region






Balance Sheet










Other receivables 253,310 0.7 2,241,744 5.8 Other 366,721 1.1 61,257 0.2






of billings on uncompleted contracts 723,007 2.1 781,906 2.0 Income taxes:







Total current assets 32,055,396 92.2 36,401,176 93.9 Deferred income taxes 33,162 0.1 (20,872) (0.1)

Other 377,563 1.1 1,516,297 3.9





Noncurrent assets: Preferred stock, stated value 0 0.0 0 0.0


Deferred income taxes 394 0.0 32,045 0.1 Retained earnings 7,434,084 21.4 8,206,643 21.2


Total noncurrent assets 799,677 2.3 672,623 1.7 Excess value of marketable securities 40,332 0.1 (511) (0.0)

Other equity (37,239) (0.1) (15,028) (0.0)

Total net worth 8,050,360 23.2 8,859,443 22.8

Total assets $ 34,764,991 100.0 % $ 38,772,548 100.0 % Total liabilities and net worth $ 34,764,991 100.0 % $ 38,772,548 X 100.0 %





Other revenue 49,862 0.0 25,675 0.0


Quick Ratio 1.2 1.2 1.2 1.2


Other cost 0 0.0 (11,836) (0.0) Working Capital Turnover 18.5 21.2 17.5 21.2

Total cost (117,562,116) (93.8) (140,972,630) (95.5)


Gross Profit 7,715,891 6.2 6,716,503 4.5

Return on Assets * 6.1 % 4.5 % 3.6 % 5.1 %














Efficiency Ratios









2005 242004 21






Industrial & Nonresidential ContractorsWest Region



Balance Sheet










Other receivables 494,094 1.4 274,375 0.9 Other 149,675 0.4 1,626,896 5.3






of billings on uncompleted contracts 874,666 2.4 1,001,315 3.3 Income taxes:








Other 250,543 0.7 250,722 0.8









Total noncurrent assets 831,961 2.3 546,570 1.8 Excess value of marketable securities 624 0.0 6,406 0.0

Other equity 221,103 0.6 154,917 0.5

Total net worth 8,026,539 22.0 5,814,722 18.9






Other revenue 207,148 0.2 149,174 0.2


Quick Ratio 1.2 1.2 1.1 1.2



Total cost (113,888,729) (93.9) (92,660,571) (93.6)


Gross Profit 7,375,435 6.1 6,351,332 6.4

Return on Assets * 5.9 % 7.7 % 3.9 % 5.3 %














Efficiency Ratios









2005 252004 44






Industrial & Nonresidential ContractorsFar West Region




Selected Financial Data by Revenue

All Industrial &

Nonresidential 0- 10M 10- 25M 25- 50M 50- 100M > 100M

Number of Companies 227 15 43 61 43 65

Assets ( ) 41,193 2,121 4,510 10,969 21,047 116,167

Liabilities ( ) 31,511 1,333 3,073 7,948 15,650 89,893

Net Worth ( ) 9,633 788 1,437 3,012 5,381 26,121

Net Worth to Assets 23.4 % 37.2 % 31.9 % 27.5 % 25.6 % 22.5 %

Revenues ( ) 133,314 7,504 16,995 37,441 67,119 373,059

Gross Profit ( ) 7,111 943 1,575 2,914 3,248 18,692

Gross Profit Margin 5.3 % 12.6 % 9.3 % 7.8 % 4.8 % 5.0 %

SG&A Expense ( ) 5,763 753 1,430 2,411 3,934 14,142

SG&A Expense Margin 4.3 % 10.0 % 8.4 % 6.4 % 5.9 % 3.8 %

Net Earnings ( ) * 1,615 202 179 573 (470) 5,247

Net Earnings Margin * 1.2 % 2.7 % 1.1 % 1.5 % (0.7) % 1.4 %

Current Ratio 1.2 1.5 1.4 1.3 1.3 1.2

Return on Assets 3.9 % 9.5 % 4.0 % 5.2 % (2.2) % 4.5 %

Return on Equity 16.8 % 25.7 % 12.5 % 19.0 % (8.7) % 20.1 %

* Before Taxes

ANNUAL REVENUE


Participation among the different size categories remained fairly comparable to 2004, although there weredecreases in both the less than $10M and $10 to $25M categories.

The different categories had varied financial performance. Companies with less than $10M in revenuesaw increases in profitability; however, this could be a result of fewer participants in the category in 2005.The $25-$50M and greater than $100M categories saw similar performance to 2004. All remainingcategories saw decreased in profitability.



Balance Sheet




Cash and cash equivalents $ 427,413 20.2 % $ 423,652 21.4 % Current maturity on long-term debt $ 17,284 0.8 % $ 21,337 1.1 %Marketable securities & short-term investments 173,294 8.2 51,451 2.6 Notes payable and lines of credit 34,137 1.6 80,999 4.1


Contract receivables currently due 944,138 44.5 842,179 42.5 Trade, including currently due

Retainages on contracts 159,773 7.5 161,671 8.1 to subcontractors 787,100 37.1 665,589 33.6

Unbilled work 52,991 2.5 669 0.0 Subcontracts retainages 138,680 6.5 119,485 6.0

Other receivables 964 0.0 21,382 1.1 Other 22,092 1.0 9,730 0.5

Less allowance for doubtful accounts (1,198) (0.1) (250) (0.0) Total accounts payable 947,872 44.7 794,804 40.1


Accrued expenses 97,616 4.6 59,458 3.0


Costs and recognized earnings in excess earnings on uncompleted contracts 141,644 6.7 200,425 10.1



construction joint ventures 0 0.0 0 0.0 Deferred 6,631 0.3 2,785 0.1


Current/refundable 797 0.0 7,027 0.4 Total current liabilities 1,269,589 59.9 1,167,574 58.9




Other 6,667 0.3 700 0.0

Property, plant and equipment 604,471 28.5 522,601 26.3 Total liabilities 1,332,645 62.8 1,277,237 64.4

Less accumulated depreciation (453,672) (21.4) (332,732) (16.8) Minority interests 0 0.0 0 0.0

Property, plant and equipment, net 150,800 7.1 189,868 9.6 Net worth:



Long-term investments 0 0.0 60 0.0 Additional paid-in capital 54,592 2.6 76,124 3.8

Deferred income taxes 6,420 0.3 0 0.0 Retained earnings 580,354 27.4 655,157 33.0


Total noncurrent assets 16,469 0.8 37,431 1.9 Excess value of marketable securities 2,467 0.1 0 0.0

Other equity 93,247 4.4 44,230 2.2

Total net worth 788,211 37.2 706,607 35.6






Other revenue 110,406 1.5 31,892 0.5


Quick Ratio 1.4 1.4 1.3 1.2



Total cost (6,561,099) (87.4) (5,517,439) (88.1)


Gross Profit 942,574 12.6 746,136 11.9

Return on Assets * 9.5 % 6.8 % 5.3 % 4.6 %


Payroll (355,697) (4.7) (319,406) (5.1) Times Interest Earned 52.4 7.8 14.5 13.6





Other (308,616) (4.1) (248,329) (4.0) Revenue to Equity 9.5 8.9 8.9 9.9

Total SG&A expenses (753,498) (10.0) (653,288) (10.4) Asset Turnover 3.5 3.4 3.2 3.4


Income from operations 189,076 2.5 92,848 1.5 Equity to SG&A Expense 1.0 1.0 1.1 1.0





Efficiency Ratios

Net earnings / (loss) before income taxes 202,182 2.7 104,445 1.7




Net earnings $ 193,348 2.6 % $ 101,696 1.6 % Days in Inventory 0.3 0.9 0.3 0.9




2005 152004 20



Industrial & Nonresidential ContractorsLess Than $10 Million Revenue






Balance Sheet




Cash and cash equivalents $ 799,116 17.7 % $ 965,994 18.8 % Current maturity on long-term debt $ 34,607 0.8 % $ 38,189 0.7 %



Contract receivables currently due 1,978,011 43.9 2,138,614 41.7 Trade, including currently due

Retainages on contracts 530,839 11.8 465,176 9.1 to subcontractors 1,641,731 36.4 1,725,648 33.6

Unbilled work 72,427 1.6 17,421 0.3 Subcontracts retainages 449,218 10.0 379,037 7.4









construction joint ventures 0 0.0 71,909 1.4 Deferred 3,435 0.1 3,170 0.1



Deferred 167 0.0 3,159 0.1 Noncurrent liabilities



Other 48,486 1.1 51,431 1.0










Other equity 74,229 1.6 150,546 2.9

Total net worth 1,436,780 31.9 1,873,705 36.5






Other revenue 14,635 0.1 36,490 0.2


Quick Ratio 1.3 1.2 1.3 1.2



Total cost (15,419,625) (90.7) (14,492,436) (89.9)


Gross Profit 1,575,074 9.3 1,625,548 10.1

Return on Assets * 4.0 % 3.9 % 4.8 % 4.1 %














Efficiency Ratios









2005 432004 67


Industrial & Nonresidential Contractors$10 - $25 Million Revenue







Balance Sheet








Retainages on contracts 1,187,594 10.8 930,992 9.8 to subcontractors 4,442,151 40.5 3,760,110 39.5

Unbilled work 112,320 1.0 14,544 0.2 Subcontracts retainages 1,353,834 12.3 893,161 9.4















Other 20,367 0.2 12,646 0.1










Other equity 164,684 1.5 240,241 2.5

Total net worth 3,011,830 27.5 2,615,843 27.5






Other revenue 169,429 0.5 404,126 1.2


Quick Ratio 1.2 1.2 1.2 1.2



Total cost (34,527,458) (92.2) (32,030,644) (92.1)


Gross Profit 2,913,775 7.8 2,732,630 7.9

Return on Assets * 5.2 % 4.1 % 5.2 % 4.6 %














Efficiency Ratios









2005 612004 60



Industrial & Nonresidential Contractors$25 - $50 Million Revenue






Balance Sheet
























Other 123,383 0.6 76,743 0.4






Long-term investments 1,034,649 4.9 173,985 0.8 Additional paid-in capital 534,636 2.5 184,781 0.9




Other equity 368,689 1.8 429,641 2.0

Total net worth 5,381,058 25.6 5,557,817 25.8






Other revenue 123,516 0.2 25,537 0.0


Quick Ratio 1.2 1.1 1.2 1.1



Total cost (63,871,105) (95.2) (63,322,201) (93.0)


Gross Profit 3,247,888 4.8 4,757,067 7.0

Return on Assets * (2.2) % 3.8 % 3.1 % 3.2 %

Selling, general & administrative expenses: Return on Equity * (8.7) % 17.3 % 12.0 % 11.6 %

Payroll (1,844,132) (2.7) (2,173,881) (3.2) Times Interest Earned (7.2) 9.9 18.6 5.5








Income from operations (685,779) (1.0) 510,977 0.8 Equity to SG&A Expense 1.4 1.2 1.3 1.3




Efficiency Ratios

Net earnings / (loss) before income taxes (470,426) (0.7) 667,374 1.0




Net earnings $ (499,144) (0.7) % $ 548,114 0.8 % Days in Inventory 0.0 0.1 0.0 0.2




2005 432004 42


$50 - $100 Million Revenue








Balance Sheet










Other receivables 1,777,554 1.5 1,384,299 1.4 Other 459,979 0.4 1,301,071 1.3














Other 1,309,404 1.1 2,192,501 2.2






Long-term investments 1,350,572 1.2 785,324 0.8 Additional paid-in capital 2,448,128 2.1 1,872,279 1.9




Other equity 3,066,351 2.6 2,539,964 2.6

Total net worth 26,121,402 22.5 21,829,907 22.0






Other revenue 180,341 0.0 4,254,702 1.3


Quick Ratio 1.1 1.1 1.1 1.1



Total cost (354,366,604) (95.0) (313,384,533) (94.6)


Gross Profit 18,692,181 5.0 17,986,644 5.4

Return on Assets * 4.5 % 4.4 % 4.7 % 4.1 %






Administrative bonuses (1,130,417) (0.3) (982,374) (0.3) Debt to Equity 3.4 3.9 3.5 3.9








Efficiency Ratios

Net earnings / (loss) before income taxes 5,247,019 1.4 4,660,287 1.4








2005 652004 61






Industrial & Nonresidential ContractorsMore Than $100 Million Revenue




Selected Financial Data by Revenue Best in Class Contractors

Best in Best in

All Industrial & Best in All Class All Class

Nonresidential Class 0- 50M 0- 50M > 50M > 50M


Assets ( ) 41,193 40,475 7,520 6,234 78,295 88,725

Liabilities ( ) 31,511 30,179 5,353 4,123 60,333 66,894

Net Worth ( ) 9,633 10,292 2,162 2,111 17,864 21,819


Revenues ( ) 133,314 138,769 26,279 25,870 251,249 297,856

Gross Profit ( ) 7,111 9,560 2,182 2,389 12,543 19,666


SG&A Expense ( ) 5,763 6,188 1,848 1,572 10,078 12,691


Net Earnings ( ) * 1,615 3,728 384 905 2,971 7,705

Net Earnings Margin * 1.2 % 2.7 % 1.5 % 3.5 % 1.2 % 2.6 %

Current Ratio 1.2 1.3 1.4 1.4 1.2 1.3Return on Assets 3.9 % 9.2 % 5.1 % 14.5 % 3.8 % 8.7 %

Return on Equity 16.8 % 36.2 % 17.8 % 42.9 % 16.6 % 35.3 %

* Before Taxes

ANNUAL REVENUE


B E S T I N C L A S S K E Y F I N A N C I A L C H A R A C T E R I S TI C S

I N D U S TR I AL & N O N R E S I D E N T I A L

1 8

. 0 2 0

. 2

1 6

. 8

1 7

. 1 2 0

. 4

3 6

. 2

9 . 2

0

10

20

30

40

Return on

Assets (%)

Return on

Equity (%)

Fixed Asset

Ratio (%)

Debt to

Equity

Working

Capital

Turnover


• Return on Assets: Best in Class Industrial & Nonresidential companies had an average ROAof 9.2% — 5.3 percentage points higher than the typical Industrial & Nonresidentialcompany. Best in Class Industrial & Nonresidential companies use their assets moreeffectively and efficiently to generate profits.

• Return on Equity: Best in Class Industrial & Nonresidential companies had an average ROEof 36.2% — 19.4 percentage points higher than the typical company. Best in Class Industrial& Nonresidential companies utilize equity more effectively to generate profits.

2 . 9

3 . 3

3 . 9




• Fixed Asset Ratio: Best in Class Industrial & Nonresidential companies had an averageFixed Asset Ratio of 20.4 — 0.2 percentage points higher than the typical company. Best inClass Industrial & Nonresidential companies are using slightly more equity to finance the purchase of fixed assets than the typical company.

• Debt to Equity: Best in Class Industrial & Nonresidential companies had an average Debt to

Equity ratio of 2.9 — 0.4 lower than the typical company. Best in Class Industrial & Nonresidential companies take less financial risk to generate superior financial performanceas compared to the typical company.

• Working Capital Turnover: Best in Class Industrial & Nonresidential companies turnedover their working capital an average of 17.1 times — 0.9 times less than the typicalcompany. The advantages held in other areas are making up for the lower working capitalturnover ratio.



Balance Sheet























Other 413,410 1.0 426,630 1.1







Deferred income taxes 152,721 0.4 0 0.0 Retained earnings 7,614,959 18.5 7,329,149 18.1



Other equity 1,012,347 2.5 2,428,472 6.0

Total net worth 9,632,612 23.4 10,291,774 25.4






Other revenue 130,634 0.1 24,572 0.0


Quick Ratio 1.1 1.2 1.2 1.3



Total cost (126,202,300) (94.7) (129,208,914) (93.1)


Gross Profit 7,111,269 5.3 9,560,469 6.9

Return on Assets * 3.9 % 4.1 % 9.2 % 11.9 %















Efficiency Ratios









227 53


Industrial & Nonresidential ContractorsComposite: Best in Class

* In theCFMA's 2005 Annual Financial Study, Return on Assets (ROA) andReturn on Equity (ROE) are calculated using






Balance Sheet
























Other 28,801 0.4 22,252 0.4


Less accumulated depreciation (972,161) (12.9) (643,450) (10.3) Minority interests 4,798 0.1 0 0.0








Other equity 122,994 1.6 (5,905) (0.1)

Total net worth 2,162,406 28.8 2,110,917 33.9






Other revenue 106,055 0.4 42,011 0.2


Quick Ratio 1.2 1.2 1.4 1.4



Total cost (24,097,775) (91.7) (23,480,966) (90.8)


Gross Profit 2,181,572 8.3 2,388,571 9.2

Return on Assets * 5.1 % 3.9 % 14.5 % 13.6 %


Payroll (1,020,674) (3.9) (911,130) (3.5) Times Interest Earned 23.5 13.4 944.5 73.4











Interest expense (17,076) (0.1) (960) (0.0)Other income / (expense), net 40,874 0.2 66,884 0.3

Efficiency Ratios









119 31






Industrial & Nonresidential ContractorsLess Than $50 Million Revenue: Best in Class



Balance Sheet










Other receivables 1,119,329 1.4 1,672,620 1.9 Other 331,495 0.4 592,135 0.7









Income taxes: Other current liabilities 794,463 1.0 1,146,026 1.3


Deferred 119,067 0.2 0 0.0 Noncurrent liabilities

Other current assets 1,524,424 1.9 1,602,421 1.8 Long-term debt, excluding current maturities 1,536,936 2.0 400,373 0.5


Other 837,192 1.1 996,435 1.1








Other assets 1,754,339 2.2 958,253 1.1 Treasury stock (744,342) (1.0) (1,350,086) (1.5)


Other equity 1,992,282 2.5 5,858,731 6.6

Total net worth 17,863,672 22.8 21,819,345 24.6






Other revenue 157,716 0.1 0 0.0


Quick Ratio 1.1 1.1 1.2 1.2



Total cost (238,706,359) (95.0) (278,189,205) (93.4)


Gross Profit 12,543,065 5.0 19,666,325 6.6

Return on Assets * 3.8 % 4.2 % 8.7 % 8.9 %






Administrative bonuses (828,671) (0.3) (1,144,203) (0.4) Debt to Equity 3.4 3.7 3.1 2.9








Efficiency Ratios









108 22





More Than $50 Million Revenue: Best in Class





C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

HEAVY & HIGHWAY

CONTRACTORS



Heavy & Highway Contractors

General Profile

Twenty percent of this year’s survey participants were Heavy & Highway contractors. The NAIC codesrepresented by this group include Highway and Street Construction (NAIC 23411), Bridge and TunnelConstruction (NAIC 23412), Water, Sewer and Pipeline Construction (NAIC 23491), Power andCommunication Transmission Line Construction (NAIC 23492), Industrial Non-Building StructureConstruction (NAIC 23493), and All Other Heavy Construction (NAIC 23499).

Two-thirds, or 67%, of this year’s participants also participated in 2004. A large majority (95%) areCFMA members.

The percentage of participants incorporated as S corporations increased to 60%; up from 57% in 2004.

As compared to the industry average, slightly more Heavy & Highway companies are employee-owned.There are more foreign-owned Heavy & Highway companies (2%) than all companies (1%).

Seventy-eight percent of Heavy & Highway companies are general contractors.

Consistent with prior years, almost two-thirds of Heavy & Highway revenue is derived from publicsources.

Heavy & Highway participants are fairly well distributed across the geographic regions. A quarter of participants were from the Midwest.

Seventy-six percent of the Heavy & Highway participants have been in business over 20 years.

Twenty-two percent of Heavy & Highway contractors have had a change in majority ownership over thelast five years. Of those, a sale to another domestic company is the most common form of transition.Other forms of transition included transfer to family or into an employee stock ownership plan trust(ESOP).

Eleven percent of Heavy & Highway contractors were eligible to bid on public projects as DisadvantagedBusiness Enterprises. The majority of those were Small Business Enterprises.

The number of accounting personnel at Heavy & Highway companies typically ranged from 3 to 21,depending on the size of the company.






H E A V Y & H IG H W A Y

2 5 % 3

4 %

3 9 %

4 1 %

4 3 %

6 0 %

5 7 %

5 2 %

5 5 %

4 9 %

0%

20%

40%

60%

80%

2001 2002 2003 2004 2005


OWNERSHIP OF BUSINESS

2%2%7%

90%


Heavy & Highw ay

4% 1%1%

94%

All Companies

TYPE OF C ONTRACTOR

Other

6%

Specialty

Trade

31%

Industrial &

Nonresidential

43%

Heavy &

Highway

20%




ROLE OF CONTRACTOR

18%

78%

4%


Heavy & Highwa y

6%

33%

60%

All Companies

S O U RC E O F W O R KH E A V Y & H IG H W A Y

35% 32% 35% 31% 36%

65% 68% 65% 69% 64%

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005

Private Public


HEAVY & HIGHWAY

1 8 % 2

1 %

2 6 %

1 6 %

9 % 1

1 % 1 5

%

1 6 %

2 5 %

1 2 % 1 5 %

1 8 %

0%

5%

10%

15%

20%

25%

30%






LONGEVITY OF BUSINESS

HEAVY & HIGHWAY

2 % 5

%

1 0 %

3 8 %

4 5 %

4 % 7

%

1 4 %

4 1 %

3 5 %

0%

10%

20%

30%

40%

50%

0-5 Years 6-10 Years 11-20 Years 21-50 Years More Than

50 Years


MAJORITY OW NERSHIP CHANGES

78%

22%

Majority Ownership Changed W ithin the Las t Five Years


Heavy & Highwa y

17%

83%

All Companies





1 %

1 %

0 %

0 %

0 %

0 %

0 %

3 1 %

3 1 %

2 4 %

1 2 % 6

% 1 8 %

3 5 %

1 2 %

2 9 %

0%

10%

20%

30%

40%

E m p l o y e e

S a l e

T r a n s f e r t o

F a m i l y

D o m e s t i c

S a l e

E S O P

F o r e i g n

S a l e

B a n k r u p t c y

I P O

O t h e r

All Companies Heavy & Highway



( Br e a k d o w n o f T h o s e T h a t Q u a l if y)

64%

9%27%

0%

20%

40%

60%

80%

Minority BusinessEnterprise

Woman-OwnedBusiness Enterprise

Small BusinessEnterprise

AVERAGE ACCO UNTING PERSONNEL

BY COMPANY REVENUE

26

5 4

12

1614

21

63 4

0

10

20

30

<10M 10M-25M 25M-50M 50M-100M >100M






Heavy & Highway contractors are as optimistic in their expectations of sales growth over 2005 ascompared to other contractor types. Sixty-two percent expect growth.

Heavy & Highway contractors expected the highest growth markets to be in their own sector and inresidential construction.

Twenty-three percent of Heavy & Highway contractors anticipate entering new markets in 2005.Domestically, the highest growth is anticipated in the Southeast. Canada is the top target outside the US.

Existing contractors pursuing growth and/or aggressive marketing remains the frontrunner in terms of perceived competitive threats.

Although healthcare insurance costs remains a challenge facing the Heavy & Highway sector, the topchallenge is the shortage of trained field help.

Most contractors either had an increase in backlog or maintained the same level of backlog, although 16%experienced a decrease.

27%

62%11%


2 0 0 5

A N T IC I P A T E D G R O W T H I N N E X T Y E A R' S SA L E S V O L U M E


49%

19%

32%

2 0 0 4





(Highest growth market = 1, lowest growth market = 5 )

Heavy & Heavy & All

Highway Highway Companies

2004 2005 2005

Residential 2 1 1





COMPANIES ENTERING NEW GEOGRAPHIC REGIONS

20%21%23%25%

0%

10%

20%

30%

2004 2005





AREAS OF REGIONAL GROWTH

HEAVY & HIGHWAY

2 6 %

5 7 %

2 2 %

1 7 %

2 6 %

2 6 %

0 %

0%

20%

40%

60%




1%

71%

62%

19%17%

11% 0% 11%8% *N/A0%

25%

50%

75%

2004 2005


Foreign C ontractors New C ontractors in Your Region

Other







2004 2005




Workers' Compensation Insurance Costs 58% Workers' Compensation Insurance Costs 54%




2004 2005




Workers' Compensation Insurance Costs 11% Healthcare Insurance Costs 11%


Healthcare Insurance Costs 7% Workers' Compensation Insurance Costs 7%




SIZE OF BACKLOG COMPARED TO LAST YEAR

16%

64%

20%


Heavy & Highwa y

22%

23%

55%

All Companies

BACKLOG AT YEAR-END ( M)

$27.6

$76.2

$113.7

$87.9

$0

$20

$40

$60

$80

$100

$120


Nonresidential


M E T H O D S O F O B T AI N I N G W O R K - IN - P R O G R E S S

A N D B AC K L O G

57%

40%

2% 1% 1%1%

80%

18%

0%

20%

40%

60%

80%

100%






S T RA T E G IE S T O I M P R O V E F U T U R E P R O F I T A B IL I T Y

1%

7%

91%

55%

48%

39%

38%

32%

8%

3%

5%

60%

11%

25%

35%

30%

56%

68%

90%

44%

0% 25% 50% 75% 100%

Other


M&A

Related Services

Cut Overhead

Design-Build

IT

Training

Risk Management



C H A N G E I N A M O U N T O F B I D W O R K

33%25%

12%

8%

56%66%

0%

20%

40%

60%

80%

100%







Aside from job cost estimates, 70% of the Heavy & Highway respondents prepare and/or use a formalized budget.

The most common techniques for cash management are zero-balance arrangements, used by 82% ofHeavy & Highway participants, followed by online banking and electronic payments from customers.

Heavy & Highway contractors (59%) found credit availability to be about the same as the previous year.

Almost two-thirds of Heavy & Highway contractors (62%) had the same working capital line of availablecredit. A significant number found that it had improved. The amount of bank installment loans almosttripled, while the use of leasing companies and vendor financing decreased by 10% and 14%,respectively.

Cash financing remains the dominant form of financing for equipment purchases.

CASH MANAGEMENT TEC HNIQUES

8 0 %

7 4 %

6 3 %

3 8 %

3 1 %

2 9 %

2 9 %

2 8 %

2 3 %

8 2 %

7 5 %

6 1 %

3 9 %

2 8 %

2 9 % 3

7 %

3 3 %

3 8 %

0%

25%

50%

75%

100%

Z e r o

B a

l a n c e

O n

l i n e

B a n

k i n g

E l e c t r o n i c

C u s t o m e r

P a y m e n t s

L i n e o

f C r e d i t

S w e e p

C o r p o r a t e

P u r c

h a s i n g

C a r d s

C h e c

k i n g

A c c o u n t s

E l e c t r o n

i c

B a n

k

R e c o n c

i l i a t i o n

S a v

i n g s

A c c o u n t s

E l e c r o n i c

V e n

d o r

P a y m e n t s





R A T IO S B Y E Q U I P M E N T F I N A N C I N G M E T H O D


1.4

21.8

1.3

9.72.0

16.0

2.48.0

0

10

20

30



61%

3%

35%

3%

38%

59%

0%

20%

40%

60%

80%







W O R K IN G C A P I T AL L I N E O F C R E D I T


17%

37%

81%62%

2%

1%

0%

20%

40%

60%

80%

100%

2004 2005


FINANCING FOR EQUIP MENT PURCHASES

HEAVY & HIGHWAY

17%

13%

38%

25%

7%

Current Cash Flow Bank Installment Loans Leasing Companies

Vendor Financing Other

20055%

23%

31%

9%

32%

2004





Heavy & Highway contractors bond a significantly higher percentage of contract revenue than other typesof contractors. A majority bond more than 40%. Heavy & Highway companies also tend to bond a greater

portion of subcontractor dollars.

Most Heavy & Highway contractors have found the availability of bonding credit to be about the samethis year as compared to last year. However, 7% have found availability has worsened.

P E R C E N T A G E O F C O N T R AC T R E V E N U E B O N D E D

8 %

1 6 %

2 3 %

3 9 %

1 4 %

1 3 %

1 6 %

1 8 %

1 2 %

4 0 %

0%

25%

50%

<19% 20-39% 40-59% 60-79% >80%




13%

11%

6%

64%6%

<19% 20-39% 40-59% 60-79% >80%

Heavy & Highwa y

6%

71%

10%

5%

8%

All Companies




AVAILABILITY OF BONDING CREDIT

HEAVY & HIGHWAY

28%

7%65%





Insurance

The majority of Heavy & Highway contractors experienced an increase in insurance costs during the year.Healthcare insurance increased for 78% of participants; workers’ compensation increased for 42%; and

general liability increased for 51% of participants.

On average, healthcare insurance is about 9.6% of payroll, workers’ compensation is 6.0% of payroll, andgeneral liability is 4.5% of payroll.

Forty-six percent of Heavy & Highway contractors filed ten workers’ compensation claims or fewer.Seventy-nine percent filed 25 or fewer. The average cost per claim was $5,000 or less for the majority ofcompanies.


The majority of Heavy & Highway contractors (82%) have their year-end financial statements audited bya professional. This is significantly higher than for other contractor types.

Heavy & Highway contractors were much more likely than the industry average to use a Big Four ornational firm to audit or review their statements (18% versus 10%). However, regional accounting firmswith a construction focus were still the most common pick at 44%.

YEAR-END FINANCIAL STATEMENTS

HEAVY & HIGHWAY

Audited

82%

Reviewed

18%







No

79%

Yes

10%

Don't Know

11%

Heavy & Highwa y

No

84%

Yes

8%

All Companies

Don't Know

8%

FILED LO OK-BACK INTEREST COMPUTATION

33%

31%

4%

32%

Yes, for an Interest Re fund Yes, with Interest Due to the IRS


Heavy & Highwa y

29%

36%

7%

27%

All Companies




LAST IRS INCOME TAX EXAM

HEAVY & HIGHWAY

Over 6 Years

Ago

43%

4-6 Years Ago

15%

1-3 Years Ago

6%

Within Past

Year

3%

Currently

5%

Never

29%


HEAVY & HIGHWAY

No Change

52%

Immaterial

Increase

39%

Material

Increase

7%

Immaterial

Decrease

1%




T O T A L C O M P E N S A T IO N - C E O

4%

32%

13%

5%

46%

<$100,000 $100,00-$250,000 $250,000-$500,000

$500,000-$1,000,000 >$1,000,000

H e a v y & H ig h w a y

30%

5% 4%

12%

49%






Over two-thirds of Heavy & Highway contractors report on a calendar-year basis.

Consistent with prior years, Heavy & Highway contractors most frequently use some form of the percentage-of-completion method to recognize contract revenue. The cost-to-cost method is utilized mostfrequently with 84% of participants in this industry classification. Generally, profits will begin to berecognized as soon as costs are charged to the job.

Fixed price, hard bid contracts are the most frequently used contract price in this contractor type.However, Heavy & Highway contractors are much more likely (37%) to use unit price contracts than thetypical participant (10%).

Heavy & Highway contractors typically derive most of their revenues from projects lasting less than twoyears.


73%

22%

6%


Heavy & Highw ay

24%

11%

65%

All Companies





14%

2%

84%



Heavy & Highway

2%7%

3%

88%

All Companies

P E R C E N T A G E -O F - C O M P L E T IO N P R O F I T

R E C O G N I TI O N P R O C E S S

73%63%

9%

9%

13%22%

6%

5%

0%

20%

40%

60%

80%

100%



When the Ultimate Profit Can Be Estimated When a Base Level of Completion Is Reached




UNPRICED CHANGE ORDER COST

HEAVY & HIGHWAY

19%31% 26%

29% 36%

41% 20%18%

13% 13%

48% 46% 47%

10% 8% 8%

41%30%

4%

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005



18%

46%

17%

2%

2%

2%

12%

39%

7%

18%

7%

4%

0%

25%

0% 20% 40% 60%

Expanded

Cost

Other

Equity Consolidation

Full Consolidation


Equity


METHODS FOR ACCOUNTING FOR JOINT VENTURES

(25 Percent of P artic ipant s Account Fo r Joint Ventures )




TYPES OF CONTRACTS Heavy & Heavy & All

Highway Highway Companies

2004 2005 2005








Other 1% 1% 1%

TOTAL 100% 100% 100%


HEAVY & HIGHWAY

58%

33%

9%





All Heavy &

All Companies Highway


Assets ( ) 33,053 40,582

Liabilities ( ) 22,937 24,830

Net Worth ( ) 10,071 15,697


Revenues ( ) 95,959 93,669

Gross Profit ( ) 7,444 8,282


SG&A Expense ( ) 5,844 5,610


Net Earnings ( ) * 1,703 2,643




* Before Taxes


The level of participant overlap from year-to-year, usually around 60% to 70%, can impact financialresults materially. Differences seen in the financial statements between years are due in part to marketinfluences and individual company performance, and in part to the different makeup of the participant body each year.

Liquidity increased slightly in 2005. Both the current and quick ratios were unchanged. However, thenumber of days in cash increased slightly to 23.9 — up 0.6 days.

Profitability increased in 2005. Net earnings before income taxes for Heavy & Highway contractors was2.8% in 2005 — up from 2.6 a year ago. Average ROA and ROE increased as a result.

Leverage increased in 2005. The debt to equity ratio increased by 0.3 to 1.6. The fixed asset ratio wasdown significantly, though underbillings to equity was up significantly.

Efficiency increased in 2005. The number of days in the operating cycle went down by a tremendous11.0 days.

This year’s Heavy & Highway participants are again larger than in the previous year, both in terms ofassets and revenue. The average asset base is $3.6M greater, and total revenue was $8.2M larger.

Heavy & Highway companies tend to have significantly larger net worth to assets that may affect ROErelative to other industry classifications.



Balance Sheet



Current assets: Current liabilities:Cash and cash equivalents $ 6,230,400 15.4 % $ 5,527,581 15.0 % Current maturity on long-term debt $ 1,175,606 2.9 % $ 1,288,117 3.5 %



Cont rac t r eceivab les cu rrent ly due 10,507 ,240 25.9 8 ,946 ,371 24.2 T rade, i nc luding cu rren tl y due


Unbilled work 863,719 2.1 237,719 0.6 Subcontracts retainages 925,713 2.3 1,194,696 3.2





Inventories 937,194 2.3 1,076,157 2.9 Billings in excess of costs and recognized



















Other equity 859,748 2.1 414,281 1.1

Total net worth 15,697,235 38.7 15,814,179 42.8






Other revenue 2,922,353 3.1 2,756,362 3.2


Quick Ratio 1.3 1.3 1.3 1.3



Total cost (85,386,969) (91.2) (77,552,402) (90.7)


Gross Profit 8,281,556 8.8 7,937,562 9.3

Return on Assets * 6.5 % 7.8 % 6.1 % 5.8 %















Efficiency Ratios









2005 1062004 106



Composite









All Heavy &

Highway NE SE MW SW W FW


Assets ( ) 40,582 33,100 25,794 71,793 36,427 31,005 17,400

Liabilities ( ) 24,830 21,707 14,786 45,273 19,811 17,429 11,009

Net Worth ( ) 15,697 11,393 11,007 26,501 16,616 13,576 6,100


Revenues ( ) 93,669 70,869 50,710 177,546 75,856 58,476 48,778

Gross Profit ( ) 8,282 7,033 5,581 13,867 8,551 3,298 5,850


SG&A Expense ( ) 5,610 6,136 4,424 9,163 4,755 2,115 3,523


Net Earnings ( ) * 2,643 951 1,204 4,683 3,467 1,103 2,420


Current Ratio 1.5 1.5 1.4 1.5 1.8 1.5 1.4

Return on Assets 6.5 % 2.9 % 4.7 % 6.5 % 9.5 % 3.6 % 13.9 %

Return on Equity 16.8 % 8.3 % 10.9 % 17.7 % 20.9 % 8.1 % 39.7 %

* Before Taxes

REGION


The Midwest region within the Heavy & Highway classification has a noticeably larger average asset base as compared to the prior year. Generally there were significant fluctuations based on changes in the participant body as compared to the prior study.

The Southeast, Southwest and Midwest (slight) showed improved profitability over the year; in terms ofnet earnings margin before income taxes.

There were fluctuations in net worth to assets, which has the propensity to impact equity returns. Thisshould be kept in mind when evaluating performance.



Balance Sheet




Cash and cash equivalents $ 5,770,977 17.4 % $ 4,652,517 14.5 % Current maturity on long-term debt $ 1,538,711 4.6 % $ 1,055,068 3.3 %Marketable securities & short-term investments 1,258,057 3.8 855,549 2.7 Notes payable and lines of credit 934,586 2.8 798,049 2.5



















Other 514,523 1.6 431,012 1.3


Less accumulated depreciation (11,436,521) (34.6) (13,133,002) (41.0) Minority interests 0 0.0 0 0.0







Total noncurrent assets 3,034,228 9.2 2,029,124 6.3 Excess value of marketable securities (7,294) (0.0) (383) (0.0)

Other equity 283,306 0.9 (211,035) (0.7)

Total net worth 11,393,345 34.4 13,006,183 40.6






Other revenue 285,555 0.4 1,066,061 1.5


Quick Ratio 1.3 1.3 1.2 11.3



Total cost (63,835,832) (90.1) (63,293,447) (90.6)


Gross Profit 7,033,325 9.9 6,535,943 9.4

Return on Assets * 2.9 % 6.5 % 3.1 % 2.7 %















Efficiency Ratios









2005 162004 19






Heavy & Highway ContractorsNortheast Region



Balance Sheet




Cash and cash equivalents $ 2,503,605 9.7 % $ 4,298,975 11.8 % Current maturity on long-term debt $ 947,179 3.7 % $ 2,321,109 6.4 %



Contr act r ecei va ble s c urr ent ly du e 5 ,665 ,37 9 2 2.0 8 ,83 0,62 8 24.3 Tr ade, in clu din g c urr ent ly du e






Accrued expenses 877,367 3.4 1,218,507 3.4

Inventories 1,214,981 4.7 1,457,275 4.0 Billings in excess of costs and recognized




construction joint ventures 65,126 0.3 38,064 0.1 Deferred 0 0.0 125 0.0






Other 746,340 2.9 595,179 1.6







Deferred income taxes 2,049 0.0 (153) (0.0) Retained earnings 8,442,366 32.7 13,900,390 38.2


Total noncurrent assets 1,964,596 7.6 2,740,302 7.5 Excess value of marketable securities (262) (0.0) 12,438 0.0

Other equity 644,673 2.5 341,367 0.9

Total net worth 11,007,331 42.7 16,697,045 45.9






Other revenue 1,610,285 3.2 1,812,786 2.6


Quick Ratio 1.1 1.4 1.2 1.2


Other cost (1,438,627) (2.8) (975,806) (1.4) Working Capital Turnover 11.7 8 .0 10.1 10.8

Total cost (45,128,951) (89.0) (63,138,457) (90.4)


Gross Profit 5,580,564 11.0 6,711,241 9.6

Return on Assets * 4.7 % 5.2 % 3.4 % 3.0 %













Interest expense (169,998) (0.3) (205,091) (0.3)Other income / (expense), net (518) (0.0) 90,264 0.1

Efficiency Ratios









2005 142004 19


Southeast Region








Balance Sheet




Cash and cash equivalents $ 11,115,642 15.5 % $ 5,453,948 13.6 % Current maturity on long-term debt $ 1,701,397 2.4 % $ 921,481 2.3 %





Unbilled work 1,873,437 2.6 276,505 0.7 Subcontracts retainages 1,279,603 1.8 1,427,908 3.6













Other current assets 1,284,743 1.8 999,997 2.5 Long-term debt, excluding current maturities 9,993,652 13.9 7,906,015 19.7


Other 1,407,586 2.0 599,879 1.5


Less accumulated depreciation (24,313,737) (33.9) (19,263,998) (48.1) Minority interests 18,589 0.0 0 0.0

Pro pert y, p lan t and equi pment , net 16, 076, 728 2 2.4 12, 116, 797 30.2 Ne t wort h:







Other equity 216,217 0.3 (64,927) (0.2)

Total net worth 26,501,007 36.9 18,623,310 46.5






Other revenue 4,453,248 2.5 2,271,338 2.4


Quick Ratio 1.2 1.4 1.5 1.5



Total cost (163,679,504) (92.2) (86,298,918) (91.2)


Gross Profit 13,866,502 7.8 8,350,883 8.8

Return on Assets * 6.5 % 8.8 % 5.6 % 6.1 %














Efficiency Ratios









2005 302004 31



Midwest Region







Balance Sheet




Cash and cash equivalents $ 5,774,497 15.9 % $ 4,539,636 14.0 % Current maturity on long-term debt $ 1,445,465 4.0 % $ 1,594,870 4.9 %

Marketable securities & short-term investments 2,263,355 6.2 679,475 2.1 Notes payable and lines of credit 1,003,571 2.8 273,529 0.8













construction joint ventures 1,145,429 3.1 116,152 0.4 Deferred 13,052 0.0 20,952 0.1






Other 163,929 0.5 762,891 2.4




Common stock, par value 2,897,653 8.0 30,622 0.1


Long-term investments 272,357 0.7 645,836 2.0 Additional paid-in capital 472,807 1.3 2,913,108 9.0


Other assets 3,418,757 9.4 1,610,313 5.0 Treasury stock (378,010) (1.0) (2,245,664) (6.9)


Other equity 3,929,929 10.8 1,857,983 5.7

Total net worth 16,615,941 45.6 15,281,151 47.1






Other revenue 194,101 0.3 9,045,892 13.7


Quick Ratio 1.5 1.4 1.3 1.3


Other cost (208,546) (0.3) (7,599,391) (11.5) Working Capital Turnover 7.4 7 .4 11.0 12.4

Total cost (67,304,812) (88.7) (59,261,863) (89.5)


Gross Profit 8,551,459 11.3 6,967,098 10.5

Return on Assets * 9.5 % 7.6 % 8.1 % 6.1 %














Efficiency Ratios









2005 142004 17


Southwest Region








Balance Sheet




Cash and cash equivalents $ 4,459,989 14.4 % $ 13,077,388 21.4 % Current maturity on long-term debt $ 709,753 2.3 % $ 1,395,680 2.3 %





Unbilled work 0 0.0 336,600 0.5 Subcontracts retainages 793,766 2.6 2,804,135 4.6









construction joint ventures 0 0.0 2,781,100 4.5 Deferred 1,571 0.0 17,200 0.0



Deferred 468,821 1.5 1,437,200 2.3 Noncurrent liabilities



Other 107,138 0.3 1,482,201 2.4









Total noncurrent assets 2,245,241 7.2 3,722,323 6.1 Excess value of marketable securities (3,500) (0.0) 0 0.0

Other equity 281,565 0.9 150,326 0.2

Total net worth 13,575,981 43.8 18,532,799 30.3






Other revenue 0 0.0 610,109 0.3


Quick Ratio 1.2 1.2 1.1 1.1



Total cost (55,177,663) (94.4) (174,429,385) (91.8)


Gross Profit 3,297,971 5.6 15,631,127 8.2

Return on Assets * 3.6 % 2.6 % 9.3 % 4.0 %














Efficiency Ratios



Income tax (expense) / benefit (16,247) (0.0) (2,415,942) (1.3) Months in Backlog 5.5 6.3 4.3 4.4






2005 142004 10



Heavy & Highway ContractorsWest Region






Balance Sheet













Accrued expenses 1,830,662 10.5 953,101 4.5











Other 36,991 0.2 1,205,762 5.7







Deferred income taxes 0 0.0 0 0.0 Retained earnings 3,082,019 17.7 6,602,140 31.4

Other assets 387,580 2.2 1,835,113 8.7 Treasury stock (21,482) (0.1) 0 0.0

Total noncurrent assets 389,136 2.2 2,296,851 10.9 Excess value of marketable securities 0 0.0 0 0.0

Other equity 673,751 3.9 1,036,126 4.9

Total net worth 6,099,646 35.1 8,951,144 42.6






Other revenue 8,130,092 16.7 718,348 1.6


Quick Ratio 1.3 1.2 1.3 1.3



Total cost (42,927,795) (88.0) (39,133,641) (87.5)


Gross Profit 5,849,822 12.0 5,605,580 12.5

Return on Assets * 13.9 % 12.9 % 11.1 % 10.0 %











Underbillings to Equity 24.4 % 13.6 % 10.5 % 8 .0 %



Efficiency Ratios









2005 182004 10





Heavy & Highway ContractorsFar West Region






All Heavy &

Highway 0- 10M 10- 25M 25- 50M 50- 100M > 100M


Assets ( ) 40,582 2,729 13,335 15,466 28,156 122,516

Liabilities ( ) 24,830 1,678 8,005 8,160 15,135 79,162

Net Worth ( ) 15,697 1,051 5,330 7,305 13,021 43,102


Revenues ( ) 93,669 6,351 18,395 37,090 67,982 287,706

Gross Profit ( ) 8,282 1,076 2,553 4,368 8,096 20,653


SG&A Expense ( ) 5,610 937 1,838 2,787 5,645 13,825


Net Earnings ( ) * 2,643 162 666 1,596 2,335 6,849


Current Ratio 1.5 1.5 1.3 1.6 1.7 1.5

Return on Assets 6.5 % 5.9 % 5.0 % 10.3 % 8.3 % 5.6 %

Return on Equity 16.8 % 15.4 % 12.5 % 21.8 % 17.9 % 15.9 %

* Before Taxes

ANNUAL REVENUE


Participation was generally consistent across all categories in 2005 compared to 2004, although there wasa slight decrease in the number of Heavy & Highway contractors with under $10M in revenue.

Performance among companies was fairly comparable among the various size categories, with mostobserving improved performance in 2005.

Gross profits and net profits generally increased across all segments.



Balance Sheet




Cash and cash equivalents $ 170,395 6.2 % $ 586,729 17.7 Current maturity on long-term debt $ 193,044 7.1 % $ 74,876 2.3 %Marketable securities & short-term investments 1,667 0.1 50,138 1.5 Notes payable and lines of credit 167,174 6.1 338,857 10.2


Contract receivables currently due 935,018 34.3 864,821 26.1 Trade, including currently due




Less allowance for doubtful accounts 0 0.0 (7,083) (0.2) Total accounts payable 464,366 17.0 692,563 20.9













Other 77,444 2.8 2,031 0.1



Property, plant and equipment, net 1,005,105 36.8 989,813 29.9 Net worth:



Long-term investments 0 0.0 2,901 0.1 Additional paid-in capital 7,355 0.3 51,508 1.6

Deferred income taxes 0 0.0 0 0.0 Retained earnings 725,540 26.6 1,324,540 40.0

Other assets 87,086 3.2 183,597 5.5 Treasury stock 0 0.0 (43,182) (1.3)

Total noncurrent assets 87,086 3.2 186,498 5.6 Excess value of marketable securities 0 0.0 0 0.0

Other equity 170,973 6.3 86,696 2.6

Total net worth 1,050,757 38.5 1,465,203 44.2

Total assets $ 2,729,070 100.0 % $ 3,312,846 100.0 Total liabilities and net worth $ 2,729,070 100.0 % $ 3,312,846 100.0 %





Other revenue 0 0.0 16,055 0.3


Quick Ratio 1.2 1.1 1.3 1.1



Total cost (5,275,437) (83.1) (5,231,093) (83.4)


Gross Profit 1,076,021 16.9 1,039,228 16.6

Return on Assets * 5.9 % 2.3 % 1.4 % 3.3 %








Total SG&A expenses (936,748) (14.7) (915,773) (14.6) Asset Turnover 2.3 2.4 1.9 2.0






Other income / (expense), net 42,320 0.7 (63,572) (1.0)

Efficiency Ratios



Income tax (expense) / benefit (8,455) (0.1) 20,693 0.3 Months in Backlog 5.5 4.0 5.1 4.6






2005 92004 12


Heavy & Highway ContractorsLess Than $10 Million Revenue


* In theCFMA's 2005 Annual Financial Study, Returnon Assets(ROA) and Return on Equity (ROE) arecalculated using





Balance Sheet




Cash and cash equivalents $ 1,275,019 9.6 % $ 843,755 9.6 % Current maturity on long-term debt $ 888,974 6.7 % $ 685,586 7.8 %




















Other 20,759 0.2 53,644 0.6










Other equity 212,554 1.6 335,065 3.8

Total net worth 5,330,215 40.0 3,414,276 38.9






Other revenue 541,985 2.9 777,182 4.6


Quick Ratio 1.1 1.2 1.2 1.3



Total cost (15,842,214) (86.1) (14,811,398) (87.5)


Gross Profit 2,553,026 13.9 2,119,089 12.5

Return on Assets * 5.0 % 10.4 % 5.2 % 8.3 %














Efficiency Ratios









2005 192004 19



Heavy & Highway Contractors$10 - $25 Million Revenue






Balance Sheet
























Other 170,068 1.1 482,369 2.5









Total noncurrent assets 535,705 3.5 1,297,669 6.6 Excess value of marketable securities (9,081) (0.1) 2,198 0.0

Other equity 373,556 2.4 865,773 4.4

Total net worth 7,305,403 47.2 9,079,683 46.5






Other revenue 242,465 0.7 427,320 1.1


Quick Ratio 1.4 1.4 1.4 1.3



Total cost (32,722,774) (88.2) (34,675,594) (89.0)


Gross Profit 4,367,534 11.8 4,288,104 11.0

Return on Assets * 10.3 % 14.1 % 6.3 % 7.0 %














Efficiency Ratios









2005 272004 25







$25 - $50 Million Revenue



Balance Sheet


















construction joint ventures 634,063 2.3 152,506 0.5 Deferred 78,064 0.3 0 0.0






Other 580,937 2.1 793,005 2.6










Other equity 1,339,528 4.8 (10,920) (0.0)

Total net worth 13,021,142 46.2 14,776,248 48.0






Other revenue 628,422 0.9 3,238,876 4.7


Quick Ratio 1.4 1.4 1.4 1.4



Total cost (59,886,063) (88.1) (62,691,496) (90.2)


Gross Profit 8,096,435 11.9 6,803,021 9.8

Return on Assets * 8.3 % 7.8 % 6.8 % 5.9 %














Efficiency Ratios









2005 282004 28






Heavy & Highway Contractors$50 - $100 Million Revenue



Balance Sheet




Cash and cash equivalents $ 19,320,801 15.8 % $ 15,773,114 14.7 % Current maturity on long-term debt $ 3,052,798 2.5 % $ 3,587,860 3.3 %






Other receivables 1,887,322 1.5 3,186,769 3.0 Other 1,064,836 0.9 930,144 0.9








construction joint ventures 1,125,968 0.9 1,367,955 1.3 Deferred 10,921 0.0 27,752 0.0





Total current assets 86,590,471 70.7 67,004,468 62.5 Deferred income taxes 1,114,707 0.9 1,318,074 1.2

Other 1,887,825 1.5 1,937,987 1.8






Long-term investments 1,418,297 1.2 1,148,727 1.1 Additional paid-in capital 11,328,688 9.2 11,145,374 10.4


Other assets 8,662,752 7.1 7,521,000 7.0 Treasury stock (967,060) (0.8) (2,262,939) (2.1)


Other equity 1,650,574 1.3 689,483 0.6

Total net worth 43,101,657 35.2 43,323,737 40.4






Other revenue 11,970,839 4.2 7,992,895 3.1


Quick Ratio 1.2 1.2 1.2 1.1



Total cost (267,052,740) (92.8) (238,823,325) (91.5)


Gross Profit 20,653,465 7.2 22,316,408 8.5

Return on Assets * 5.6 % 5.0 % 5.9 % 3.5 %














Efficiency Ratios









2005 232004 22





More Than $100 Million Revenue






Selected Financial Data by Revenue — Best in Class Contractors

Best in Best in

All Heavy & Best in All Class All Class

Highway Class 0- 50M 0- 50M > 50M > 50M


Assets ( ) 40,582 14,976 12,646 10,198 70,711 31,219

Liabilities ( ) 24,830 7,797 7,046 5,735 44,010 14,806

Net Worth ( ) 15,697 7,179 5,600 4,463 26,587 16,413


Revenues ( ) 93,669 41,055 25,602 29,338 167,074 80,894

Gross Profit ( ) 8,282 5,039 3,202 3,852 13,759 9,076


SG&A Expense ( ) 5,610 2,765 2,156 2,076 9,334 5,107


Net Earnings ( ) * 2,643 2,353 1,040 1,799 4,371 4,238



Return on Equity 16.8 % 32.8 % 18.6 % 40.3 % 16.4 % 25.8 %

* Before Taxes

ANNUAL REVENUE



HEAVY & HIGHWAY

6 . 5

1 . 6

1 . 1 9

. 9

6 0 . 4

1 6 . 8

1 5 . 7

1 3 . 1

5 5

3 2 . 8

0

25

50

75

Return on

Assets (%)

Return on

Equity (%)

Fixed Asset

Ratio (%)

Debt To

Equity

Working

Capital

Turnover


• Return on Assets: Best in Class Heavy & Highway companies had an average ROA of

15.7% — 9.2 percentage points higher than the typical company. Best in Class Heavy &Highway companies use their assets more effectively and efficiently to generate profits.

• Return on Equity: Best in Class Heavy & Highway companies had an average ROE of32.8% — 16.0 percentage points higher than the typical Heavy & Highway company. Best inClass Heavy & Highway companies utilize equity more effectively to generate profits.




• Fixed Asset Ratio: Best in Class Heavy & Highway companies had an average Fixed AssetRatio of 55.0 — 5.4 percentage points lower than the typical Heavy & Highway company.Best in Class Heavy & Highway companies use less equity to finance the purchase of fixedassets than the typical Heavy & Highway company and have superior liquidity.

• Debt to Equity: Best in Class Heavy & Highway companies had an average Debt to Equity

ratio of 1.1 — 0.5 lower than the typical Heavy & Highway company. Best in Class Heavy &Highway companies are taking slightly less financial risk to generate superior financial performance as compared to the typical Heavy & Highway company.

• Working Capital Turnover: Best in Class Heavy & Highway companies turned over theirworking capital an average of 13.1 times — 3.2 times more than the typical Heavy &Highway company. This indicates that for every dollar of working capital, the Best in ClassHeavy & Highway companies generate $3.20 more in sales, which indicates either a morestrategic pursuit of projects and/or better sales and marketing.



Balance Sheet




Cash and cash equivalents $ 6,230,400 15.4 % $ 1,788,022 11.9 % Current maturity on long-term debt $ 1,175,606 2.9 % $ 330,684 2.2 %Marketable securities & short-term investments 1,440,197 3.5 12,672 0.1 Notes payable and lines of credit 468,741 1.2 130,567 0.9













construction joint ventures 419,628 1.0 0 0.0 Deferred 25,941 0.1 4,409 0.0






Other 616,693 1.5 85,840 0.6









Total noncurrent assets 3,082,228 7.6 1,172,901 7.8 Excess value of marketable securities 20,247 0.0 0 0.0

Other equity 859,748 2.1 516,867 3.5

Total net worth 15,697,235 38.7 7,178,964 47.9






Other revenue 2,922,353 3.1 213,841 0.5


Quick Ratio 1.3 1.3 1.3 1.3



Total cost (85,386,969) (91.2) (36,015,808) (87.7)


Gross Profit 8,281,556 8.8 5,039,378 12.3

Return on Assets * 6.5 % 7.8 % 15.7 % 14.9 %















Efficiency Ratios









106 22



Heavy & Highway ContractorsComposite: Best in Class

* Inthe CFMA's2005 AnnualFinancialStudy, Returnon Assets(ROA) andReturn onEquity (ROE)are calculated using


calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to ref lect this

change.



Balance Sheet
























Other 103,332 0.8 10,855 0.1









Total noncurrent assets 553,047 4.4 541,951 5.3 Excess value of marketable securities (2,951) (0.0) 0 0.0

Other equity 284,787 2.3 235,124 2.3

Total net worth 5,599,578 44.3 4,463,174 43.8






Other revenue 306,260 1.2 276,735 0.9


Quick Ratio 1.3 1.3 1.3 1.3



Total cost (22,399,925) (87.5) (25,485,757) (86.9)


Gross Profit 3,202,092 12.5 3,852,155 13.1

Return on Assets * 8.2 % 9.6 % 17.6 % 15.0 %














Efficiency Ratios









55 17





change.


Heavy & Highway ContractorsLess Than $50 Million Revenue: Best in Class



Balance Sheet





Marketable securities & short-term investments 2,711,953 3.8 0 0.0 Notes payable and lines of credit 694,741 1.0 52,358 0.2




Unbilled work 1,776,211 2.5 1,078,682 3.5 Subcontracts retainages 1,658,542 2.3 1,170,197 3.7

Other receivables 1,110,801 1.6 16,589 0.1 Other 567,429 0.8 151,327 0.5




Inventories 1,783,823 2.5 507,786 1.6 Billings in excess of costs and recognized






Current/refundable 39,416 0.1 0 0.0 Total current liabilities 32,942,442 46.6 12,992,089 41.6


Other current assets 1,315,418 1.9 910,133 2.9 Long-term debt, excluding current maturities 9,210,187 13.0 636,212 2.0


Other 1,170,318 1.7 340,790 1.1






Long-term investments 764,408 1.1 0 0.0 Additional paid-in capital 6,784,218 9.6 1,807,993 5.8


Other assets 4,881,410 6.9 3,318,131 10.6 Treasury stock (650,522) (0.9) 0 0.0

Total noncurrent assets 5,809,776 8.2 3,318,131 10.6 Excess value of marketable securities 45,264 0.1 0 0.0

Other equity 1,479,803 2.1 1,474,794 4.7

Total net worth 26,586,864 37.6 16,412,651 52.6






Other revenue 5,743,629 3.4 0 0.0


Quick Ratio 1.3 1.3 1.2 1.2


Other cost (4,871,048) (2.9) 0 0.0 Working Capital Turnover 10.0 10.6 14.8 13.2

Total cost (153,314,172) (91.8) (71,817,983) (88.8)


Gross Profit 13,759,409 8.2 9,075,934 11.2

Return on Assets * 6.2 % 6.3 % 13.6 % 14.3 %














Efficiency Ratios









51 5






change.

Heavy & Highway ContractorsMore Than $50 Million Revenue: Best in Class



C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

SPECIALTY TRADE

CONTRACTORS



Specialty Trade Contractors

General Profile

A total of 31% of this year’s participants were Specialty Trade contractors. Of those, over two-thirds(69%) participated in last year’s survey and 97% are CFMA members.

The following NAIC codes are represented in this classification:

23511 Plumbing, Heating and Air Conditioning Contractors23521 Painting and Wall Covering Contractors23531 Electrical Contractors23541 Masonry and Stone Contractors23542 Drywall, Plastering, Acoustical, and Insulation Contractors23543 Tile, Marble, Terrazzo, and Mosaic Contractors23551 Carpentry Contractors23552 Floor Laying and Other Floor Contractors23561 Roofing, Siding, and Sheet Metal Contractors23571 Concrete Contractors

23581 Water Well Drilling Contractors23591 Structural Steel Erection Contractors23592 Glass and Glazing Contractors23593 Excavation Contractors23594 Wrecking and Demolition Contractors23595 Building Equipment and Other Machinery Installation23599 All Other Special Trade Contractors56162 Security Systems Services (except Locksmiths)56291 Environmental Remediation Services

The trend towards incorporation as an S corporation continues within the Specialty Trade sector. Thisyear 62% of respondents in this classification were S corporations.

Specialty Trade contractors are almost exclusively privately owned companies.

Not surprisingly, and in contrast to the other classifications, Specialty Trade predominantly operate assubcontractors.

Consistent with prior years, nearly three-quarters of Specialty Trade revenues come from the privatesector.

Specialty Trade participants continue to be well represented in the Midwest region, however, there is stillsomewhat low representation in the West and Southwest again this year.

The majority of Specialty Trade contractors have been in business for more than 20 years.






SPEC I ALTY TR ADE

4 7 %

4 0 %

3 5 %

3 3 %

2 7 %

4 7 % 5

4 %

5 9 %

5 9 %

6 2 %

0%

20%

40%

60%

80%

2001 2002 2003 2004 2005


OWNERSHIP OF BUSINESS

2%

93%

4% 1%


Specialty Trade

4% 1%1%

94%

All Companies

TYPE OF CONTRACTOR

Heavy &

Highway

20%

Industrial &

Nonresidential43%

Specialty

Trade31%

Other

6%




ROLE OF CONTRACTOR

89%

8%2%


Specialty Trade

6%

33%

60%

All Companies


SPEC I ALTY TR ADE

75% 75% 73% 72% 72%

25% 25% 27% 28% 28%

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005

Private Public





SPECIALTY TRADE

1 9 %

1 7 %

2 9 %

8 % 9

%

1 7 %

1 4 %

1 7 %

3 5 %

9 %

7 %

1 7 %

0%

5%

10%

15%

20%

25%

30%

35%

40%



LONGEVITY OF BUSINESS

SPECIALTY TRADE

4 0 %

3 3 %

1 9 %

4 %

4 %

3 9 %

3 5 %

1 4 %

5 % 7 %

0%

10%

20%

30%

40%

50%

0-5 Years 6-10 Years 11-20 Years 21-50 Years More Than

50 Years





MAJORITY OW NERSHIP C HANGES

79%

21%

Majority Ownership Changed Within the Last Five Years


Specialty Trade

17%

83%

All Companies


1 %

1 %

0 %

0 %

0 %

4 %

0 %

0 %

1 2 %

2 4 %

3 1 %

3 1 %

3 0 %

2 6 % 3

0 %

1 1 %

0%

10%

20%

30%

40%

E m p l o y e e

S a l e

T r a n s f e r t o

F a m i l y

D o m e s t i c

S a l e

E S O P

F o r e i g n

S a l e

B a n k r u p t c y

I P O

O t h e r

All Companies Specialty Trade





SPEC I ALTY TR ADE

( Br e a k d o w n o f T h o s e T h a t Q u a lif y)

65%

20%15%

0%

20%

40%

60%

80%

Minority Business

Enterprise

Woman-Owned

Business Enterprise

Small Business

Enterprise

26

54

12

16

2426

14

8

5

0

10

20

30

<10M 10M-25M 25M-50M 50M-100M >100M


AVERAGE ACCOUNTING PERSONNEL BY COMPANY REVENUE





The majority of specialty trade contractors (65%) expect revenue to increase, while a significant percentage expect it to remain the same (23%).

Only 16% of Specialty Trade contractors anticipate entering a new geographical region in the next year.This is down the 4% of participants who anticipated entering a new region in 2004. The Northeast andSoutheast are the top picks for expansion. Overseas expansion is generally targeted at Western Europe.

Existing contractors pursuing growth and/or aggressive marketing is perceived as the most significantcompetitive threat to Specialty Trade contractors participating in the study.

The shortage of trained field help and sources of future work are significant challenges; however,healthcare insurance costs is also one of the top challenges to Specialty Trade contractors.

Most Specialty Trade contractors (54%) experienced an increased backlog over the last year. Overall backlog increases were significantly lower than other contractor types.

The three most common strategies espoused to improve profitability were “To Do What We Do Better”

(90%), safety and risk management (64%), and provide training (57%).Eleven percent of Specialty Trade contractors saw a decrease in the amount of bid work in the last year.

A N T IC I P A T E D G R O W T H I N N E X T Y E A R' S V O L U M E

SPEC I ALTY TR ADE

23%

65%

12%


2 0 0 5

45%

21%

34%

2 0 0 4





(Highest growth market = 1, lowest growth market = 5 )

Specialty Specialty All

Trade Trade Companies

2004 2005 2005

Residential 2 1 1





COMPANIES ENTERING NEW GEOGRAPHIC REGIONS

20%21%

16%

25%

0%

10%

20%

30%

2004 2005





AREAS OF REGIONAL GROWTH

SPECIALTY TRADE

11%

11%

30%

26%

52%

44%

33%

0%

20%

40%

60%



SPEC I ALTY TR ADE

7% 8% 7%1%

84%

72%

12% 8%0%

*N/A0%

25%

50%

75%

100%

2004 2005


Foreign C ontractors New C ontractors in Your Region

Other







2004 2005




Workers' Compensation Insurance Costs 60% Workers' Compensation Insurance Costs 50%

Sources of Future Work 54% Sources of Future Work 44%

General Liability Insurance Costs 47% General Liability Insurance Costs 43%


2004 2005




12% Healthcare Insurance Costs 10%

Healthcare Insurance Costs 9% Unions 8%

Workers' Compensation Insurance Costs 6% Shortage of Project Managers 7%

Litigation 6%

General Liability Insurance Costs




SIZE OF BACKLOG COMPARED TO LAST YEAR

21%

54%

25%


Specialty Trade

22%

23%

55%

All Companies

BACKLOG AT YEAR-END ( M)

$27.6

$76.2

$113.7

$87.9

$0

$20

$40

$60

$80

$100

$120

All Companies Industria l & Nonresidential

Heavy & Highway

Specialty Trade

METHODS OF OBTAINING W ORK-IN-PROGRESS

AND BACKLOG

57%

40%

2% 1% 2%0%

66%

32%

0%

20%

40%

60%

80%









Aside from job cost estimates, 77% of Specialty Trade contractors prepared and/or used a formalized budget.

The three most common cash management techniques for Specialty Trade contractors were zero-balancearrangements (74%), online banking (72%), and electronic payments from customers (58%).

Only 5% of Specialty Trade contractors reported that credit availability was worse in 2005 compared to prior years. Only 7% reported a decrease in the working capital line of available credit.

Consistent with last year, slight more than half of Specialty Trade contractors used free cash flow tofinance equipment purchases, while the rest used some form of interest-bearing debt for financing.

CASH MANAGEMENT TECHNIQUE S

8 0 %

7 4 %

6 3 %

3 8 %

3 1 %

2 9 %

2 9 %

2 8 %

2 3 %

7 4 %

7 2 %

5 8 %

5 5 %

3 6 %

2 0 %

2 7 %

2 4 %

2 2 %

0%

25%

50%

75%

100%

Z e r o

B a

l a n c e

O n

l i n e

B a n

k i n g

E l e c t r o n

i c

C u s t o m e r

P a y m e n t s

L i n e o

f C r e

d i t

S w e e p

C o r p o r a t e

P u r c

h a s i n g

C a r d s

C h e c k

i n g

A c c o u n t s

E l e c t r o n

i c

B a n

k

R e

c o n c i l i a t i o n

S a v

i n g s

A c c o u n t s

E l e c r o n

i c

V e n

d o r

P a y m e n t s


R A T IO S B Y E Q U I P M E N T F I N A N C I N G M E T H O D

SPEC I ALTY TR ADE

5.41.2

1.9 2.31.9 2.2

13.7

1.80

10

20






61%

3%

35%

5%

45%50%

0%

20%

40%

60%

80%




W O R K I N G C A P I T A L L I N E O F C R E D I T

SPEC I ALTY TR ADE

27% 36%

66% 57%

7%

7%

0%

20%

40%

60%

80%

100%

2004 2005




Specialty Trade Contractors206

FINANCING FOR EQUIPMENT PURCHASES

SPECIALTY TRADE

8%

17% 52%

18%

5%

Current Cash Flow Bank Installment LoansLeasing Companies Vendor FinancingOther

2005

4%

15%

12%

21%

48%

2004





Specialty Trade contractors bond the smallest percentage of their contract revenues compared to the otherindustry classifications. Over three-quarters (79%) of participants in this sector bond less than 40% of

contract revenue. The same principle holds true for subcontractor dollars.

Only 8% of Specialty Trade contractors found that the availability of bonding credit had worsened overthe year.

PERCE NTAGE OF C ONTRACT REVENUE BONDED

8 % 1

6 %

2 3 %

3 9

%

1 4 %

2 9 %

5 0 %

1 5 %

4 %

2 %

0%

20%

40%

60%

<19% 20-39% 40-59% 60-79% >80%




89%

1% 4%

6%

<19% 20-39% 40-59% 60-79% >80%

Specialty Trade

6%

71%

10%

5%

8%

All Companies



Balance Sheet
























Other 1,407,586 2.0 599,879 1.5



Pro pert y, p lan t and equi pment , net 16, 076, 728 2 2.4 12, 116, 797 30.2 Ne t wort h:







Other equity 216,217 0.3 (64,927) (0.2)

Total net worth 26,501,007 36.9 18,623,310 46.5






Other revenue 4,453,248 2.5 2,271,338 2.4


Quick Ratio 1.2 1.4 1.5 1.5



Total cost (163,679,504) (92.2) (86,298,918) (91.2)


Gross Profit 13,866,502 7.8 8,350,883 8.8

Return on Assets * 6.5 % 8.8 % 5.6 % 6.1 %














Efficiency Ratios









2005 302004 31



Midwest Region











Specialty Trade Contractors 211


No

80%

Yes

10%

Don't Know

10%

Specialty Trade

No

84%

Yes

8%

All Companies

Don't Know

8%

FILED LO OK-BACK INTEREST COMPUTATION

23%

25%

13%

39%

Yes, for an Interest Re fund Yes, with Interest Due to the IRS


Specialty Trade

29%

36%

7%

27%

All Companies




LAST IRS INCOME TAX EXAM

SPECIALTY TRADE

Over 6 Years

Ago

37%

4-6 Years Ago

13% 1-3 Years Ago

10%

Within Past

Year

2%

Currently

4%

Never

34%


SPECIALTY TRADE

Immaterial

Increase

48%

No Change

45%

Immaterial

Decrease

2%

Material

Increase

6%







Most Specialty Trade contractors use December 31 as their fiscal year end.

As with other industry sectors, Specialty Trade contractors almost exclusively use the percentage-of-completion method of recognizing revenue for accounting purposes. Specialty Trade contractors are morelikely to use labor dollars spent to estimate the percent complete.

When recognizing profits, Specialty Trade contractors are most likely to begin once costs are charged tothe job.

No participants within this sector reported an average contract length of over two years.


63%

21%

16%


Specialty Trade

24%

11%

65%

All Companies





4%

4%5%

87%



Specialty Trade

2%7%

3%

88%

All Companies

PERCENTAGE-OF-COMPLETION PROFIT

RECOGNITION PROCESS

73% 75%

9%

13% 14%

6%

5% 5%

0%

20%

40%

60%

80%

100%



When the Ultimate Profit Can Be Estimated When a Base Level of Completion Is Reached

U N P R I C E D C H A N G E O R D E R C O S T

SPEC I ALTY TR ADE

13%27% 24% 20%

32%

36% 14% 21% 22%

27%

43% 51%35%

12% 14% 12%

45%38%

6% 5%

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005






6%

12%

17%

18%

46%

2%

2%

2%

0%

28%

44%

17%

6%

0%

0% 20% 40% 60%

Equity


Full Consolidation

Equity Consolidation

Expanded

Cost

Other


METHODS FOR ACC OUNTING FOR JOINT VENTURES

(25 Percent o f Partic ipants Account For Joint Ventures)

TYPES OF CONTRACTS Specialty Specialty All

Trade Trade Companies

2004 2005 2005








Other 0% 1% 1%

TOTAL 100% 100% 100%





SPECIALTY TRADE

72%

28%






All Specialty

All Companies Trade


Assets ( ) 33,053 18,972

Liabilities ( ) 22,937 11,427

Net Worth ( ) 10,071 7,530


Revenues ( ) 95,959 54,337

Gross Profit ( ) 7,444 7,611


SG&A Expense ( ) 5,844 6,269


Net Earnings ( ) * 1,703 1,336




* Before Taxes


The level of participant overlap from year-to-year, usually around 60% to 70%, can impact financialresults materially. Differences seen in the financial statements between years are due in part to marketinfluences and individual company performance, and in part to the different makeup of the participant body each year.

Liquidity decreased within the Specialty Trade classification in 2005. Both the current and quick ratiosdeclined, and days of cash decreased from 9.4 days to 7.2 days.

Profitability increased in 2005. The average net margin before income taxes was flat from 2004 to 2005, but ROA and ROE were both higher than in 2004.

Leverage essentially remained constant in 2005, although there was a notable decrease in the fixed assetratio.

Efficiency increased in 2005. The operating cycle shortened by 0.8 days between 2004 and 2005.

Specialty Trade companies tend to be smaller than the industry average, both in terms of assets and

revenue.

This year’s participants had slightly higher assets and revenues compared to last year.



Balance Sheet




Marketable securities & short-term investments 207,217 1.1 341,095 2.0 Notes payable and lines of credit 1,000,402 5.3 577,931 3.4




























Other equity 547,970 2.9 240,989 1.4

Total net worth 7,529,638 39.7 6,538,837 38.1






Other revenue 1,568,925 2.9 1,358,851 2.9


Quick Ratio 1.3 1.3 1.4 1.4


Other cost (1,198,314) (2.2) (1,618,423) (3.5) Working Capital Turnover 9.8 9 .7 8.4 9.7

Total cost (46,726,324) (86.0) (39,744,185) (86.1)


Gross Profit 7,610,823 14.0 6,413,537 13.9

Return on Assets * 7.0 % 6.8 % 6.6 % 5.1 %















Efficiency Ratios









2005 1652004 171


Composite










All Specialty

Trade NE SE MW SW W FW

Number of Companies 165 27 22 62 18 9 27Assets ( ) 18,972 29,367 16,827 13,287 36,191 13,585 13,695

Liabilities ( ) 11,427 15,491 9,648 7,879 25,028 7,730 9,124

Net Worth ( ) 7,530 13,875 7,183 5,402 11,113 5,851 4,524


Revenues ( ) 54,337 62,598 49,469 41,539 118,523 40,348 41,304

Gross Profit ( ) 7,611 8,982 7,443 5,575 15,912 6,129 6,010


SG&A Expense ( ) 6,269 7,437 5,840 4,527 13,172 5,144 5,222


Net Earnings ( ) * 1,336 1,645 1,531 1,065 2,640 990 736


Current Ratio 1.6 1.6 1.7 1.6 1.5 1.7 1.4

Return on Assets 7.0 % 5.6 % 9.1 % 8.0 % 7.3 % 7.3 % 5.4 %

Return on Equity 17.7 % 11.9 % 21.3 % 19.7 % 23.8 % 16.9 % 16.3 %

* Before Taxes

REGION


Financial performance between the regions generally decreased compared to 2004. However, theSoutheast region saw significantly increased performance.

The relative breakdown between regions is generally comparable to last year, but there was increased participation from Specialty Trade contractors in the Midwest region.

The Southwest and Far West have unusually low net worth to assets, which can impact performance.



Balance Sheet




Cash and cash equivalents $ 1,167,374 4.0 % $ 1,375,818 6.1 % Current maturity on long-term debt $ 549,235 1.9 % $ 307,340 1.4 %Marketable securities & short-term investments 137,079 0.5 755,128 3.3 Notes payable and lines of credit 1,025,927 3.5 850,188 3.8













construction joint ventures 0 0.0 2,954 0.0 Deferred 19,467 0.1 (3,048) (0.0)






Other 93,492 0.3 235,729 1.0










Other equity (26,310) (0.1) (139,448) (0.6)

Total net worth 13,875,153 47.2 10,366,023 45.9




Amount Percent Average Median Average Median Average Median


Other revenue 4,168,167 6.7 1,867,073 3.5


Quick Ratio 1.3 1.2 1.4 1.4



Total cost (53,615,747) (85.7) (45,709,128) (85.8)


Gross Profit 8,982,224 14.3 7,582,182 14.2

Return on Assets * 5.6 % 6.1 % 6.7 % 3.4 %















Efficiency Ratios









2005 272004 35






Specialty Trade ContractorsNortheast Region



Balance Sheet









Unbilled work 80,041 0 .5 61,441 0 .3 Subcontracts retainages 256,677 1.5 399,249 1.8

Other receivables 378,912 2.3 1,380,174 6.1 Other 90,488 0.5 1,320,118 5.9







Investments in and advances to Current 78,560 0.5 (67,208) (0.3)







Other 75,293 0.4 164,647 0.7


Less accumulated depreciation (3,119,726) (18.5) (2,999,564) (13.3) Minority interests (3,030) (0.0) 39,456 0.2


Common stock, par value 142,581 0.8 1,183,658 5.3





Total noncurrent assets 294,544 1.8 2,531,675 11.3 Excess value of marketable securities 490 0.0 (4,917) (0.0)

Other equity 651,363 3.9 93,783 0.4

Total net worth 7,182,538 42.7 3,966,240 17.7






Other revenue 1,360,725 2.8 2,605,522 4.3


Quick Ratio 1.5 1.5 1.5 1.5



Total cost (42,025,584) (85.0) (52,213,126) (87.1)


Gross Profit 7,442,995 15.0 7,707,972 12.9

Return on Assets * 9.1 % 6.5 % 1.7 % 4.2 %














Efficiency Ratios

Net ear ni ngs / ( los s) bef or e i nco me t axes 1, 531 ,38 5 3. 1 383, 164 0. 6








2005 222004 26




Southeast Region








Balance Sheet
























Other 660,189 1.8 2,082,775 8.5








Other assets 857,777 2.4 1,332,129 5.5 Treasury stock (5,299,934) (14.6) (1,054,929) (4.3)

Total noncurrent assets 1,120,246 3.1 1,518,399 6.2 Excess value of marketable securities 0 0.0 5,458 0.0

Other equity 2,193,865 6.1 597,370 2.4

Total net worth 11,113,390 30.7 8,618,688 35.3






Other revenue 3,397,227 2.9 661,116 0.9


Quick Ratio 1.3 1.4 1.4 1.3



Total cost (102,610,626) (86.6) (61,237,104) (86.9)


Gross Profit 15,911,982 13.4 9,193,687 13.1

Return on Assets * 7.3 % 7.3 % 8.3 % 7.1 %














Efficiency Ratios









2005 182004 18





Southwest Region





Balance Sheet

















Investments in and advances to Current 0 0.0 4,128 0.0

construction joint ventures 0 0.0 0 0.0 Deferred 0 0.0 10,426 0.1





Total current assets 12,057,601 88.8 7,737,953 86.2 Deferred income taxes 0 0.0 10,332 0.1

Other 85,530 0.6 162,073 1.8






Long-term investments 0 0.0 0 0.0 Additional paid-in capital 116,051 0.9 88,379 1.0



Total noncurrent assets 155,326 1.1 168,420 1.9 Excess value of marketable securities (1,997) (0.0) 0 0.0

Other equity 0 0.0 95,158 1.1

Total net worth 5,850,966 43.1 2,731,959 30.4






Other revenue 548,749 1.4 435,566 1.6


Quick Ratio 1.4 1.2 1.4 1.5



Total cost (34,218,728) (84.8) (23,379,863) (86.5)


Gross Profit 6,129,427 15.2 3,634,706 13.5

Return on Assets * 7.3 % 3.4 % 8.1 % 7.2 %














Efficiency Ratios









2005 92004 11





West Region





Balance Sheet
























Other 66,001 0.5 50,232 0.4






Long-term investments 47,476 0.3 0 0.0 Additional paid-in capital 561,095 4.1 843,305 7.3


Other assets 174,983 1.3 165,319 1.4 Treasury stock 0 0.0 (41,008) (0.4)


Other equity 1,160,137 8.5 451,474 3.9

Total net worth 4,523,543 33.0 4,975,739 43.0





Contract revenue $ 40,598,380 98.3 % $ 33,290,690 96.2 Liquidity Ratios

Other revenue 705,539 1.7 1,302,507 3.8


Quick Ratio 1.2 1.3 1.4 1.3



Total cost (35,294,140) (85.4) (29,540,507) (85.4)


Gross Profit 6,009,778 14.6 5,052,691 14.6

Return on Assets * 5.4 % 7.9 % 8.6 % 3.7 %














Efficiency Ratios

Net ear ni ngs / ( los s) bef or e i nco me t axes 735, 655 1. 8 1 ,00 1,16 7 2. 9




Net earnings $ 686,090 1.7 % $ 959,657 2.8 Days in Inventory 2.3 2.3 2.2 2.0




2005 272004 30







Far West Region





All Sp ecialty

Trade 0- 10M 10- 25M 25- 50M 50- 100M > 100M

Number of Companies 165 26 48 36 28 27Assets ( ) 18,972 2,288 6,196 12,747 22,024 62,885

Liabilities ( ) 11,427 1,490 3,474 7,938 14,058 37,058

Net Worth ( ) 7,530 799 2,720 4,804 7,965 25,746


Revenues ( ) 54,337 6,759 17,072 34,882 65,035 181,249

Gross Profit ( ) 7,611 1,259 2,960 4,962 8,958 24,131


SG&A Expense ( ) 6,269 1,092 2,430 4,374 7,593 19,232


Net Earnings ( ) * 1,336 138 550 642 1,244 4,906


Current Ratio 1.6 1.5 1.7 1.5 1.5 1.6

Return on Assets 7.0 % 6.0 % 8.9 % 5.0 % 5.6 % 7.8 %

Return on Equity 17.7 % 17.3 % 20.2 % 13.4 % 15.6 % 19.1 %* Before Taxes

ANNUAL REVENUE


ROA and ROE were highest for Specialty Trade contractors with $10–$25M and greater than $100M inrevenue.

The smaller companies (less than $25M) saw increases in the net margin before income taxes. However,the larger companies generally experienced decreases.

There was a significant increase in the number of participants with greater than $100M of revenue.

However, participation among firms with $10-$25M and $25-$50M decreased.



Balance Sheet




Cash and cash equivalents $ 185,942 8.1 % $ 329,327 13.8 % Current maturity on long-term debt $ 56,444 2.5 % $ 98,300 4.1 %Marketable securities & short-term investments 94,471 4.1 76,374 3.2 Notes payable and lines of credit 340,862 14.9 86,732 3.6


Contract receivables currently due 1,113,447 48.7 982,809 41.2 Trade, including currently due




Less allowance for doubtful accounts (10,845) (0.5) (13,927) (0.6) Total accounts payable 488,431 21.3 354,881 14.9








Income taxes: Other current liabilities 11,585 0.5 296 0.0

Current/refundable 5,799 0.3 11,755 0.5 Total current liabilities 1,261,593 55.1 918,063 38.5




Other 0 0.0 80,699 3.4

Property, plant and equipment 933,866 40.8 1,510,477 63.3 Total liabilities 1,489,512 65.1 1,250,234 52.4






Deferred income taxes 3,835 0.2 6,160 0.3 Retained earnings 695,235 30.4 1,064,495 44.6


Total noncurrent assets 61,429 2.7 55,033 2.3 Excess value of marketable securities 723 0.0 (4,855) (0.2)

Other equity (13,920) (0.6) (1,794) (0.1)

Total net worth 798,513 34.9 1,136,051 47.6






Other revenue 326,587 4.8 27,927 0.5


Quick Ratio 1.3 1.1 1.7 1.4



Total cost (5,499,797) (81.4) (4,586,773) (80.9)


Gross Profit 1,258,982 18.6 1,084,439 19.1

Return on Assets * 6.0 % 4.2 % 0.5 % 3.5 %














Other income / (expense), net (7,880) (0.1) 11,333 0.2

Efficiency Ratios



Income tax (expense) / benefit (149) (0.0) 24,020 0.4 Months in Backlog 5.1 4.9 3.9 3.5






2005 262004 25


* Inthe CFMA's2005 AnnualFinancial Study,Returnon Assets (ROA)and Return onEquity (ROE)are calculated using



change.

Specialty Trade ContractorsLess Than $10 Million Revenue




Balance Sheet
























Other 25,868 0.4 58,257 1.0










Other equity 143,387 2.3 82,714 1.4

Total net worth 2,719,756 43.9 2,414,831 41.5






Other revenue 610,717 3.6 553,307 3.4


Quick Ratio 1.4 1.4 1.5 1.4



Total cost (14,111,919) (82.7) (13,914,687) (84.7)


Gross Profit 2,959,846 17.3 2,516,600 15.3

Return on Assets * 8.9 % 7.6 % 4.9 % 6.3 %














Efficiency Ratios









2005 482004 56





change.

Specialty Trade Contractors$10 - $25 Million Revenue




Balance Sheet
























Other 93,183 0.7 154,590 1.3










Other equity 467,191 3.7 170,169 1.5

Total net worth 4,803,568 37.7 4,484,689 38.6






Other revenue 472,606 1.4 526,998 1.5


Quick Ratio 1.3 1.3 1.3 1.3



Total cost (29,919,565) (85.8) (28,997,914) (84.4)


Gross Profit 4,962,141 14.2 5,361,166 15.6

Return on Assets * 5.0 % 5.3 % 6.5 % 5.2 %














Efficiency Ratios









2005 362004 44






change.




Balance Sheet





Marketable securities & short-term investments 269,732 1.2 725,057 2.6 Notes payable and lines of credit 1,587,216 7.2 1,183,444 4.2













construction joint ventures 0 0.0 671 0.0 Deferred (148) (0.0) 101,881 0.4





Total current assets 18,759,094 85.2 21,855,481 78.1 Deferred income taxes (1,876) (0.0) 136,354 0.5

Other 140,991 0.6 337,274 1.2








Other assets 714,556 3.2 1,793,179 6.4 Treasury stock (798,313) (3.6) (1,001,952) (3.6)

Total noncurrent assets 783,705 3.6 1,842,870 6.6 Excess value of marketable securities 0 0.0 2,603 0.0

Other equity 576,984 2.6 411,870 1.5

Total net worth 7,964,651 36.2 12,117,739 43.3






Other revenue 3,983,906 6.1 3,092,653 4.4


Quick Ratio 1.2 1.2 1.4 1.3



Total cost (56,077,548) (86.2) (61,435,741) (87.1)


Gross Profit 8,957,539 13.8 9,101,108 12.9

Return on Assets * 5.6 % 7.1 % 5.2 % 4.1 %














Efficiency Ratios









2005 282004 28






change.




Balance Sheet





Marketable securities & short-term investments 600,651 1.0 1,512,343 2.2 Notes payable and lines of credit 1,689,741 2.7 312,185 0.4





Other receivables 265,138 0.4 2,033,324 2.9 Other 347,333 0.6 2,032,459 2.9







Investments in and advances to Current 114,206 0.2 (8,362) (0.0)

construction joint ventures 127,928 0.2 219,345 0.3 Deferred 8,370 0.0 (113,430) (0.2)






Other 561,075 0.9 2,266,820 3.2








Other assets 7,375,078 11.7 9,083,015 13.0 Treasury stock (3,772,076) (6.0) (1,529,279) (2.2)


Other equity 1,885,923 3.0 977,898 1.4

Total net worth 25,746,000 40.9 23,215,907 33.2






Other revenue 3,426,065 1.9 5,049,887 2.7


Quick Ratio 1.4 1.4 1.5 1.5



Total cost (157,118,554) (86.7) (161,458,610) (86.9)


Gross Profit 24,130,795 13.3 24,330,665 13.1

Return on Assets * 7.8 % 8.6 % 8.3 % 8.7 %














Efficiency Ratios









2005 272004 18



Specialty Trade ContractorsMore Than $100 Million Revenue




change.



Balance Sheet


















construction joint ventures 0 0.0 517 0.0 Deferred 17,934 0.1 (20,347) (0.1)






Other 205,494 1.0 481,858 2.5

Property, plant and equipment 6,004,318 28.4 5,606,237 29.6 Total liabilities 12,220,515 57.8 10,934,133 57.8Less accumulated depreciation (3,725,342) (17.6) (3,583,457) (18.9) Minority interests 17,753 0.1 1,684 0.0








Other equity 1,094,465 5.2 314,043 1.7

Total net worth 8,903,767 42.1 7,977,516 42.2





Contract revenue $ 59,308,531 96.2 % $ 51,035,502 94.9 % Liquidity RatiosOther revenue 2,338,832 3.8 2,732,394 5.1


Quick Ratio 1.3 1.3 1.4 1.3



Total cost (53,316,433) (86.5) (46,641,829) (86.7)


Gross Profit 8,330,930 13.5 7,126,067 13.3

Return on Assets * 6.8 % 7.6 % 5.7 % 5.6 %















Efficiency Ratios









2005 582004 67


* In the CFMA's 2005AnnualFinancialStudy, Return on Assets (ROA)and Return on Equity (ROE)are calculated using



Specialty Trade Contractors23511 Plumbing, Heating, and Air-Conditioning Contractors




Balance Sheet




Cash and cash equivalents $ 1,395,053 5.5 % $ 854,451 4.2 % Current maturity on long-term debt $ 284,248 1.1 % $ 185,167 0.9 %












o f billings on uncompleted contracts 2,058,529 8.2 1,528,407 7.5 Income taxes:








Other 176,707 0.7 595,404 2.9









Other equity 1,349,580 5.4 770,071 3.8

Total net worth 10,842,155 43.0 10,114,027 49.5







Quick Ratio 1.4 1.4 1.5 1.5



Total cost (62,617,814) (86.4) (48,217,589) (86.3)


Gross Profit 9,834,763 13.6 7,683,346 13.7

Return on Assets * 4.2 % 4.9 % 3.5 % 4.3 %















Efficiency Ratios

Net earnings / (loss) before income taxes 1,047,030 1.4 710,627 1.3








2005 552004 48


* Inthe CFMA's2005AnnualFinancial Study,Returnon Assets (ROA) and Returnon Equity(ROE) arecalculatedusing



Specialty Trade Contractors23531 Electrical Contractors




Balance Sheet





Marketable securities & short-term investments 53,287 0.5 0 0.0 Notes payable and lines of credit 157,515 1.3 1,139,792 5.4




Unbilled work 40,887 0.3 0 0.0 Subcontracts retainages 358,470 3.1 573,918 2.7









construction joint ventures 0 0.0 176,293 0.8 Deferred 39,357 0.3 0 0.0



Deferred 0 0.0 0 0.0 Noncurrent liabilities


Total current assets 9,455,970 80.6 17,988,538 84.6 Deferred income taxes 11,212 0.1 0 0.0

Other 59,752 0.5 247,321 1.2

Property, plant and equipment 4,070,473 34.7 2,790,308 13.1 Total liabilities 8,287,162 70.7 13,141,827 61.8Less accumulated depreciation (2,611,611) (22.3) (1,406,679) (6.6) Minority interests 0 0.0 165,156 0.8






Other assets 739,814 6.3 1,882,609 8.9 Treasury stock (9,576) (0.1) 0 0.0

Total noncurrent assets 812,808 6.9 1,882,609 8.9 Excess value of marketable securities 0 0.0 0 0.0

Other equity 5,553 0.0 0 0.0

Total net worth 3,440,479 29.3 7,947,794 37.4





Contract revenue $ 30,747,841 98.7 % $ 75,546,675 100.0 % Liquidity RatiosOther revenue 407,122 1.3 896 0.0


Quick Ratio 1.2 1.5 1.4 1.5



Total cost (27,775,478) (89.2) (66,479,856) (88.0)


Gross Profit 3,379,484 10.8 9,067,716 12.0

Return on Assets * 7.5 % 10.5 % 7.5 % 7.1 %












Interest income (60,252) (0.2) 43,860 0.1 Backlog to Equity 4.3 1.4 6.4 6.8



Efficiency Ratios

Net earnings / (loss) before income taxes 882,123 2.8 1,588,723 2.1








2005 72004 6


* In the CFMA's 2005 Annual Financial Study, Return on Assets (ROA) and Returnon Equity (ROE) are calculated

usingnet earnings (loss) before incometaxes. Studies conductedin prioryears used net earnings(loss) after taxes

to calculateROA and ROE. All references to ROAs and ROEs from prior studies have been updatedto reflect this

change.

23541 Masonry and Stone Contractors





Balance Sheet









Unbilled work 0 0.0 34,077 0.2 Subcontracts retainages 316,763 1.2 554,517 2.6









construction joint ventures 0 0.0 76,896 0.4 Deferred 153 0.0 4,857 0.0






Other 15,945 0.1 1,213,093 5.6







Other assets 499,471 2.0 396,401 1.8 Treasury stock (4,421,049) (17.3) (4,560) (0.0)


Other equity 10,316 0.0 0 0.0

Total net worth 8,077,928 31.7 8,693,609 40.5





Contract revenue $ 89,107,120 100.0 % $ 70,771,059 100.0 % Liquidity RatiosOther revenue 34,033 0.0 27,311 0.0


Quick Ratio 1.3 1.3 1.6 1.6


Other cost (26,501) (0.0) (18) (0.0) Working Capital Turnover 11.0 9.8 8.3 9.4

Total cost (76,506,234) (85.8) (60,618,890) (85.6)


Gross Profit 12,634,920 14.2 10,179,480 14.4

Return on Assets * 9.7 % 10.8 % 10.3 % 6.8 %















Efficiency Ratios









2005 172004 14


* In theCFMA's 2005 Annual Financial Study, Return on Assets (ROA)and Return on Equity (ROE)are calculatedusing



Specialty Trade Contractors23542 Drywall, Plastering, Acoustical, and Insulation Contractors




Balance Sheet




Cash and cash equivalents $ 982,063 7.7 % $ 1,231,581 6.0 % Current maturity on long-term debt $ 87,705 0.7 % $ 268,139 1.3 %











Costs and recognized earnings in excess earnings on uncompleted contracts 890,928 6.9 2,734,662 13.3









Other 50,889 0.4 124,926 0.6







Other assets 352,211 2.7 488,999 2.4 Treasury stock (1,482,238) (11.6) (1,820,991) (8.8)


Other equity (30,073) (0.2) 125,133 0.6

Total net worth 6,376,304 49.7 8,798,754 42.8





Contract revenue $ 41,603,144 98.2 % $ 68,579,549 99.0 % Liquidity RatiosOther revenue 771,319 1.8 668,447 1.0


Quick Ratio 1.4 1.3 1.5 1.5



Total cost (35,582,922) (84.0) (60,445,957) (87.3)


Gross Profit 6,791,541 16.0 8,802,039 12.7

Return on Assets * 10.7 % 11.6 % 8.2 % 3.9 %















Efficiency Ratios









2005 132004 13


* In theCFMA's 2005Annual Financial Study, Return on Assets (ROA)and Return on Equity (ROE)are calculatedusing



Specialty Trade Contractors23561 Roofing, Siding, and Sheetmetal Contractors




Balance Sheet





Marketable securities & short-term investments 137,035 0.7 1,021,521 4.2 Notes payable and lines of credit 392,518 2.0 680,846 2.8



















Other 55,523 0.3 166,890 0.7








Total noncurrent assets 813,468 4.1 1,248,389 5.2 Excess value of marketable securities 2,574 0.0 12,044 0.1

Other equity 600,904 3.1 367,922 1.5

Total net worth 7,141,601 36.4 10,109,333 42.0





Contract revenue $ 63,021,413 97.9 % $ 71,000,756 99.4 % Liquidity RatiosOther revenue 1,379,158 2.1 426,606 0.6


Quick Ratio 1.4 1.5 1.5 1.4



Total cost (58,083,787) (90.2) (63,114,490) (88.4)


Gross Profit 6,316,784 9.8 8,312,872 11.6

Return on Assets * 7.7 % 6.2 % 10.5 % 4.8 %















Efficiency Ratios









2005 192004 23



using netearnings (loss) before income taxes. Studiesconductedin prior years used netearnings (loss) after taxes to


change.

Specialty Trade Contractors23571 Concrete Contractors




Balance Sheet




Cash and cash equivalents $ 903,416 4.1 % $ 1,155,359 6.2 % Current maturity on long-term debt $ 312,091 1.4 % $ 292,044 1.6 %



















Total current assets 16,384,727 74.5 13,827,386 74.7 Deferred income taxes (187,814) (0.9) 124,607 0.7

Other 6,697 0.0 197,082 1.1

Property, plant and equipment 11,446,504 52.1 11,436,599 61.8 Total liabilities 12,859,203 58.5 10,474,743 56.6Less accumulated depreciation (7,512,427) (34.2) (7,499,862) (40.5) Minority interests 116 0.0 (194) (0.0)







Total noncurrent assets 1,665,849 7.6 754,434 4.1 Excess value of marketable securities 0 0.0 0 0.0

Other equity 912,971 4.2 2,088 0.0

Total net worth 9,125,334 41.5 8,044,008 43.4







Quick Ratio 1.2 1.3 1.3 1.3



Total cost (60,043,968) (90.1) (52,590,900) (89.4)


Gross Profit 6,578,987 9.9 6,221,980 10.6

Return on Assets * 6.4 % 6.2 % 2.6 % 0.2 %















Efficiency Ratios

Net earnings / (loss) before income taxes 1,408,408 2.1 478,856 0.8








2005 112004 8


* In theCFMA's 2005 Annual Financial Study, Return on Assets (ROA)and Returnon Equity (ROE)are calculatedusing net

earnings (loss) before income taxes. Studies conducted in prior years used net earnings (loss) after taxes to calculate


Specialty Trade Contractors23591 Structural Steel Erection Contractors




Balance Sheet






Cont ract r ecei vab les cur rent ly due 14,221,144 46 .0 10,693,269 46.9 Trade, i nc luding curren tl y due


























Other equity 607,798 2.0 381,687 1.7

Total net worth 16,437,773 53.2 11,816,080 51.8






Other revenue 2,660,207 3.5 2,859,693 4.8


Quick Ratio 1.5 1.6 1.5 1.4



Total cost (64,433,182) (85.4) (51,460,967) (86.3)


Gross Profit 10,992,478 14.6 8,192,993 13.7

Return on Assets * 5.4 % 9.2 % 6.1 % 6.6 %















Efficiency Ratios

Ne t ea rnings / ( loss) before i ncome taxes 1,664 ,069 2 .2 1 ,386,060 2 .3








2005 332004 36


* In theCFMA's 2005 AnnualFinancial Study,Return on Assets(ROA) andReturn on Equity(ROE)are calculated using



Specialty Trade Contractors23599 All Other Specialty Trade Contractors





Selected Financial Data by Revenue Best in Class Contractors

Best in Best in

All Specialty Best in All Class All Class

Trade Class 0- 50M 0- 50M > 50M > 50M


Assets ( ) 18,972 14,974 7,416 6,229 42,083 29,839

Liabilities ( ) 11,427 9,267 4,466 3,650 25,349 18,816

Net Worth ( ) 7,530 5,662 2,948 2,573 16,694 10,914


Revenues ( ) 54,337 51,346 20,463 20,681 122,086 103,477

Gross Profit ( ) 7,611 7,986 3,213 3,744 16,406 15,198


SG&A Expense ( ) 6,269 5,871 2,750 2,836 13,307 11,031


Net Earnings ( ) * 1,336 2,151 483 984 3,042 4,135



Return on Equity 17.7 % 38.0 % 16.4 % 38.2 % 18.2 % 37.9 %

* Before Taxes

ANNUAL REVENUE



SPEC I ALTY TR ADE

1 . 6 1

7 . 7 2

6 . 5

9 . 8

7 . 0

1 . 5

1 2

. 4 2 4

. 3 3

8 . 0

1 4

. 4

0

10

20

30

40

Return on

Assets (%)

Return on

Equity (%)

Fixed Asset

Ratio (%)

Debt To

Equity

Working

Capital

Turnover


•

Return on Assets: Best in Class Specialty Trade companies had an average ROA of 14.4% — 7.4 percentage points higher than the typical company. Best in Class Specialty Tradecompanies used their assets more effectively and efficiently to generate profits.

• Return on Equity: Best in Class Specialty Trade companies had an average ROE of 38.0% — 20.3 percentage points higher than the typical Specialty Trade company. Best in ClassSpecialty Trade companies utilized equity more effectively to generate profits.

• Fixed Asset Ratio: Best in Class Specialty Trade companies had an average Fixed AssetRatio of 24.3 — 2.2 percentage points lower than the typical Specialty Trade company. Best




in Class Specialty Trade companies use using less equity to finance the purchase of fixedassets than the typical Specialty Trade company and have superior liquidity.

• Debt to Equity: Best in Class Specialty Trade companies had an average Debt to Equity ratioof 1.6 — 0.1 higher than the typical Specialty Trade company.

• Working Capital Turnover: Best in Class Specialty Trade companies turned over their

working capital an average of 12.4 times — 2.6 times more than the typical Specialty Tradecompany. This indicates that for every dollar of working capital, the Best in Class SpecialtyTrade companies generate $2.60 more in sales, which indicates either a more strategic pursuitof projects and/or better sales and marketing.



Balance Sheet




Cash and cash equivalents $ 1,088,211 5.7 % $ 1,243,077 8.3 % Current maturity on long-term debt $ 298,946 1.6 % $ 124,597 0.8 %Marketable securities & short-term investments 207,217 1.1 270,980 1.8 Notes payable and lines of credit 1,000,402 5.3 570,925 3.8



















Other 143,594 0.8 33,094 0.2









Total noncurrent assets 1,619,977 8.5 366,401 2.4 Excess value of marketable securities 17,474 0.1 (333) (0.0)

Other equity 547,970 2.9 196,417 1.3

Total net worth 7,529,638 39.7 5,662,238 37.8






Other revenue 1,568,925 2.9 551,025 1.1


Quick Ratio 1.3 1.3 1.3 1.3



Total cost (46,726,324) (86.0) (43,360,018) (84.4)


Gross Profit 7,610,823 14.0 7,986,210 15.6

Return on Assets * 7.0 % 6.8 % 14.4 % 13.5 %















Efficiency Ratios









165 54


Specialty Trade ContractorsComposite: Best in Class

* In theCFMA's 2005 Annual Financial Study, Returnon Assets(ROA)and Returnon Equity(ROE)are calculated using






Balance Sheet
























Other 41,784 0.6 21,796 0.3


Less accumulated depreciation (1,516,636) (20.5) (795,549) (12.8) Minority interests 2,684 0.0 6,067 0.1







Total noncurrent assets 371,530 5.0 191,676 3.1 Excess value of marketable securities 26,211 0.4 (529) (0.0)

Other equity 212,177 2.9 24,132 0.4

Total net worth 2,947,619 39.7 2,572,869 41.3






Other revenue 498,359 2.4 393,139 1.9


Quick Ratio 1.3 1.3 1.4 1.4



Total cost (17,249,738) (84.3) (16,937,447) (81.9)


Gross Profit 3,213,120 15.7 3,743,818 18.1

Return on Assets * 6.5 % 6.0 % 15.8 % 14.8 %














Efficiency Ratios









110 34





Less Than $50 Million Revenue: Best in Class





Balance Sheet
























Other 347,214 0.8 52,300 0.2








Other assets 3,984,267 9.5 594,439 2.0 Treasury stock (2,258,160) (5.4) (1,229,150) (4.1)

Total noncurrent assets 4,116,870 9.8 663,434 2.2 Excess value of marketable securities 0 0.0 0 0.0

Other equity 1,219,554 2.9 489,300 1.6

Total net worth 16,693,677 39.7 10,914,164 36.6






Other revenue 3,710,057 3.0 819,432 0.8


Quick Ratio 1.3 1.3 1.2 1.2



Total cost (105,679,496) (86.6) (88,278,388) (85.3)


Gross Profit 16,406,228 13.4 15,198,277 14.7

Return on Assets * 7.2 % 7.2 % 13.9 % 11.7 %














Efficiency Ratios









55 20





Specialty Trade ContractorsMore Than $50 Million Revenue: Best in Class






Additional Composite Financial Data

Selected Financial Data for S corporations

All Companies S Corp


Assets ( ) 33,053 31,599

Liabilities ( ) 22,937 22,337Net Worth ( ) 10,071 9,225


Revenues ( ) 95,959 93,853

Gross Profit ( ) 7,444 7,495


SG&A Expense ( ) 5,844 5,762


Net Earnings ( ) * 1,703 1,806


Current Ratio 1.3 1.3

Return on Assets 5.2 % 5.7 %


* Before Taxes


The percentage of companies operating as S corporations for legal purposes increased from 60% in 2004to 64% in 2005, continuing a multi-year trend. S corporations are often a preferred form of organization, because they combine the benefits of limited liability, similar to C corporations, and pass-through taxstatus (i.e., income is passed directly to owners and not taxed at the corporate level).

In prior years, S corporations were smaller than the participant body as a whole, both in terms of assetsand revenue. However, in 2005 the average S corporation is only slightly smaller than the average

participant. In terms of profitability, S corporations tend to be superior to that of the industry average.



Balance Sheet






Contrac t r ece ivab les cur ren tl y due 12,541,792 39.7 9 ,451,847 39 .2 Trade, i nc luding curren tl y due


























Other equity 99,504 0.3 (51,830) (0.2)

Total net worth 9,224,969 29.2 8,062,246 33.4






Other revenue 759,445 0.8 1,211,165 1.7


Quick Ratio 1.2 1.2 1.2 1.2



Total cost (86,358,633) (92.0) (66,512,118) (91.6)


Gross Profit 7,494,811 8.0 6,108,710 8.4

Return on Assets * 5.7 % 6.1 % 6.2 % 5.7 %















Efficiency Ratios

Net earnings / ( loss) before income taxes 1,806,362 1.9 1 ,501,240 2 .1








2005 3412004 315



using net earnings (loss) before income taxes. Studies conducted in prior years used net earnings (loss) after taxes to

calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect this

change.

S CorporationsComposite






Balance Sheet






Contract r ece ivables cur ren tl y due 8,357 ,961 55 .8 10,959,663 53.5 Trade , i nc lud ing cur rent ly due

Retainages on contracts 553,680 3.7 1,662,553 8.1 to subcontractors 4,548,406 30.4 7,885,902 38.5












Current/refundable 746 0 .0 40,150 0.2 Total current liabilities 9,614,781 64.2 12,914,201 63.1



Total current assets 12,754,673 85.1 17,545,382 85.7 Deferred income taxes 0 0.0 25,728 0.1

Other 388,028 2.6 1,808,450 8.8Property, plant and equipment 5,723,991 38.2 5,975,062 29.2 Total liabilities 10,298,347 68.7 15,613,918 76.2







Other assets 173,508 1.2 229,775 1.1 Treasury stock (1,383,664) (9.2) (1,440,035) (7.0)


Other equity 2,151,851 14.4 312,150 1.5

Total net worth 4,682,350 31.3 4,864,435 23.8






Other revenue 3,096,236 6.4 25,314 0.0


Quick Ratio 1.2 1.1 1.2 1.2



Total cost (43,370,662) (90.3) (58,577,564) (92.4)


Gross Profit 4,650,920 9.7 4,849,301 7.6

Return on Assets * 2.4 % 5.0 % 3.9 % 5.0 %















Efficiency Ratios









2005 132004 13


* Inthe CFMA's2005Annual FinancialStudy, Returnon Assets(ROA) andReturnon Equity(ROE)are calculated using



Minority Business EnterprisesComposite





Selected Financial Data for CompaniesPerforming Work in a Foreign Region

All Companies Foreign


Assets ( ) 33,053 96,689Liabilities ( ) 22,937 67,061

Net Worth ( ) 10,071 29,448


Revenues ( ) 95,959 265,990

Gross Profit ( ) 7,444 19,557


SG&A Expense ( ) 5,844 17,813


Net Earnings ( ) * 1,703 1,876



Return on Assets 5.2 % 1.9 %


* Before Taxes


Companies operating outside the U.S. were generally similar in size as measured by total assets from2004 to 2005, although there was a noticeable decrease in total revenue.

Companies operating outside U.S. borders also saw a profitability decline in 2004, and did not perform aswell as the industry, on average.



Balance Sheet



Current assets: Current liabilities:Cash and cash equivalents $ 9,558,762 9.9 % $ 15,571,265 16.5 % Current maturity on long-term debt $ 1,503,253 1.6 % $ 499,741 0.5 %

Marketable securities & short-term investments 4,197,928 4.3 1,317,660 1.4 Notes payable and lines of credit 3,404,016 3.5 851,377 0.9


Cont ract r ecei vables cu rren tl y due 32,746,041 33.9 38,258,049 40.5 T rade, i nc luding cu rren tl y due











construction joint ventures 949,328 1.0 2,562,555 2.7 Deferred 60,717 0.1 1,311 0.0

Income taxes: Other current liabilities 961,868 1.0 1 ,963,151 2.1


Deferred 464,522 0.5 1,824,420 1.9 Noncurrent liabilities



Other 2,523,857 2.6 2,566,735 2.7Property, plant and equipment 27,156,387 28.1 17,989,892 19.1 Total liabilities 67,060,661 69.4 64,876,041 68.7





Long-term investments 176,400 0.2 1,529,030 1.6 Additional paid-in capital 16,244,113 16.8 3,305,922 3.5

Deferred income taxes 1,601,270 1.7 1,201,571 1.3 Retained earnings 14,553,525 15.1 23,355,354 24.7

Other assets 10,226,645 10.6 2,787,329 3.0 Treasury stock (3,823,947) (4.0) (230,263) (0.2)


Other equity 2,019,606 2.1 1,585,035 1.7

Total net worth 29,447,607 30.5 29,216,131 31.0






Other revenue 6,614,926 2.5 17,409,895 5.6


Quick Ratio 1.1 1.2 1.2 1.3



Total cost (246,432,859) (92.6) (284,423,011) (91.3)


Gross Profit 19,556,892 7.4 26,997,697 8.7

Return on Assets * 1.9 % 4.5 % 6.2 % 5.7 %














Other income / (expense), net 564,088 0.2 (176,663) (0.1)

Efficiency Ratios

Ne t ea rnings / ( loss) before i ncome taxes 1,876,320 0.7 5,836 ,365 1.9


Income tax (expense) / benefit 165,214 0.1 (2,292,628) (0.7) Months in Backlog 8.9 7.5 5.6 5.1






2005 202004 14



usingnet earnings(loss) before incometaxes. Studies conductedin prioryearsusednetearnings(loss) after taxesto

calculate ROA and ROE. All references to ROAs and ROEs from prior studies have been updated to reflect this

change.

Companies Working in a Foreign RegionComposite





Selected Financial Data for Residential Contractors

All Companies Residential


Assets ( ) 33,053 16,436

Liabilities ( ) 22,937 13,603

Net Worth ( ) 10,071 2,833


Revenues ( ) 95,959 39,270

Gross Profit ( ) 7,444 4,640


SG&A Expense ( ) 5,844 3,393


Net Earnings ( ) * 1,703 1,035



Return on Assets 5.2 % 6.3 %Return on Equity 16.9 % 36.6 %

* Before Taxes


Residential contractors tend to be among the smaller participants in the CFMA’s 2005 Annual Financial

Survey. This year is no exception, and these contractors are about half the size of the average contractor interms of assets. However, this is an increase from the prior year’s survey.

The residential sector was chosen by this year’s participants as the sector with the highest anticipated

growth in the coming year.



Balance Sheet



Current assets: Current liabilities:Cash and cash equivalents $ 1,164,425 7.1 % $ 2,003,792 15.1 % Current maturity on long-term debt $ 3,082,000 18.8 % $ 101,784 0.8 %



Contract receivables currently due 4,996,613 30.4 5,598,390 42.2

Retainages on contracts 887,380 5.4 1,979,721 14.9 Trade, including currently due to subcontractors 3,657,325 22.3 5,468,872 41.2

Unbilled work 0 0.0 1,009,389 7.6 Subcontracts retainages 773,505 4.7 1,669,581 12.6


Less allowance for doubtful accounts (50,724) (0.3) 0 0.0 Total accounts payable 4,515,467 27.5 7,304,261 55.0




Costs and recognized earnings in excess earnings on uncompleted contracts 838,411 5.1 1,665,931 12.5


Investments in and advances to Current 894 0.0 790 0.0







Other 316,890 1.9 0 0.0Property, plant and equipment 2,728,004 16.6 1,348,305 10.2 Total liabilities 13,603,080 82.8 10,889,318 82.0

Less accumulated depreciation (1,354,565) (8.2) (690,850) (5.2) Minority interests 0 0.0 0 0.0

Property, plant and equipment, net 1,373,439 8.4 657,455 5.0 Net worth:





Other assets 99,724 0.6 185,052 1.4 Treasury stock (34,000) (0.2) 0 0.0

Total noncurrent assets 134,903 0.8 194,905 1.5 Excess value of marketable securities (3,890) (0.0) 20,574 0.2

Other equity 614,969 3.7 217,925 1.6

Total net worth 2,832,951 17.2 2,392,477 18.0






Other revenue 35,368 0.1 918,441 1.7


Quick Ratio 0.7 1.1 1.0 1.0



Total cost (34,629,649) (88.2) (50,088,617) (94.1)


Gross Profit 4,639,947 11.8 3,135,036 5.9

Return on Assets * 6.3 % 4.2 % 3.9 % 6.1 %







Other (1,406,706) (3.6) (752,832) (1.4) Revenue to Equity 13.9 15.5 22.2 23.3








Efficiency Ratios

Ne t ea rnings / ( loss) before i ncome taxes 1 ,035,478 2 .6 518,606 1 .0


Income tax (expense) / benefit (3,420) (0.0) (167) (0.0) Months in Backlog 4.0 7.4 4.5 6.5






2005 112004 17






Residential ContractorsComposite



C F M A ’s 2 0 0 5

Construction

Industry Annual

Financial Survey

APPENDICES



Note: Not all figures will appear to sum due to rounding. Appendices

APPENDIX A — COMPLETE SURVEY ANSWERS



1 Did you participate in the 2004 survey?

72% 75% 67% 69%

2 Is someone in your company a member of CFMA?

Yes 97% 97% 95% 97%

3 What is the ownership of the business?

Private - Domestic U.S. 94% 96% 88% 93%

Public - Domestic U.S. (SEC Registrant) 1% 0% 0% 1%

Private - Foreign 0% 0% 2% 0%

Public - Foreign 1% 0% 2% 1%

ESOP - Employee Stock Ownership Plan 4% 3% 7% 4%Other 1% 0% 2% 1%

4 How many full-time accounting personnel did you employ in 2004?

<$10M in Revenue 5 2 3 8

$10M - $25M in Revenue 4 3 4 5

$25M - $50M in Revenue 12 12 6 14

$50M - $100M in Revenue 16 9 21 26

>$100M in Revenue 26 26 14 24

5 Does your company qualify under any of the DBE categories?

Minority business enterprise 2% 2% 3% 2%

Woman-owned business enterprise 2% 3% 1% 2%

Small business enterprise 7% 5% 7% 8%

6 Has majority ownership changed in the last five years?

Yes 17% 11% 22% 21%

7 If yes, how was the transaction accomplished?

Sale to another domestic company 24% 10% 35% 30%

Sale to a foreign entity 1% 0% 6% 0%

Direct sale to employees 31% 48% 12% 26%

Employee stock ownership plan trust (ESOT) 12% 5% 18% 11%

Transfer to family 31% 38% 29% 30%

Initial public offering (IPO) 0% 0% 0% 0%

Bankruptcy/reorganization 1% 0% 0% 4%

Other 0% 0% 0% 0%

8 What is the legal form of the business?

Regular C Corporation 25% 23% 25% 27%

S Corporation 64% 67% 60% 62%

General Partnership 1% 1% 1% 1%

Limited Partnership 3% 3% 3% 2%

Joint Venture 0% 0% 0% 0%

Limited Liability Company 7% 6% 9% 8%

Sole Proprietorship 0% 0% 0% 0%

Other 1% 0% 1% 1%

General Profile



Appendices Note: Not all figures will appear to sum due to rounding.260



9 How long has the company been in business?

<5 years 3% 1% 4% 7%

6-10 years 5% 4% 7% 5%

11-20 years 16% 16% 14% 14%

21-50 years 40% 42% 41% 35%

>50 years 37% 38% 35% 39%

10 Which is the company's primary role?

General/prime contractor 60% 89% 78% 8%

Subcontractor 33% 1% 18% 89%

Construction manager 3% 7% 0% 0%

Subdivider and/or developer 0% 1% 0% 0%

Other 3% 2% 4% 2%

11 Which best describes your company?

Open-shop contractor 46% 51% 48% 35%Union contractor 36% 23% 40% 53%

Double-breasted contractor 9% 9% 10% 9%

Merit shop contractor 9% 17% 2% 3%

13 Where does your company conduct business?

Northeast 15% 16% 15% 14%

Southeast 18% 18% 16% 17%

Midwest 30% 28% 25% 35%

Southwest 11% 13% 12% 9%

West 11% 12% 15% 7%

Far West 16% 13% 18% 17%

Foreign 0% 0% 0% 1%

14 Where are foreign contracts conducted?Canada 14% 0% 70% 0%

Mexico 2% 0% 10% 0%

Central/South America 2% 0% 0% 0%

Caribbean 24% 0% 20% 33%

Western Europe 38% 0% 0% 33%

Eastern Europe 0% 0% 0% 0%

Middle East 0% 0% 0% 0%

Asia/Pacific Rim 20% 0% 0% 33%

Africa 0% 0% 0% 0%

15 Where is the company's headquarters located?

Northeast 16% 17% 15% 16%

Southeast 15% 16% 13% 13%

Midwest 32% 30% 28% 38%Southwest 13% 15% 13% 11%

West 10% 11% 13% 5%

Far West 14% 11% 17% 16%

Overseas 0% 0% 0% 0%

General Profile, continued

Note: Question 12 asks for revenue breakdown by SIC code and is too lengthy to include in this table.



Note: Not all figures will appear to sum due to rounding. Appendices 261



16 What are the company's revenue sources?

Public - federal 6% 4% 8% 7%

Public - state 13% 7% 31% 11%

Public - local 13% 11% 25% 10%

Public - foreign 0% 0% 0% 1%

Private 66% 76% 35% 71%

Self or related party 1% 1% 1% 0%

17 What types of contracts does the company perform?

Fixed price (lump sum, hard bid) 39% 30% 40% 50%

Fixed price (lump sum, negotiated) 20% 22% 10% 23%

Cost plus fee with guaranteed maximum price 14% 28% 1% 5%

Unit price 10% 0% 37% 3%

Time and materials 8% 3% 7% 15%

Cost plus fee 5% 8% 2% 2%

Construction management 3% 7% 1% 0%

Other 1% 1% 1% 1%

18 On average, how many full-time or equivalent full-time project managers did your company employ in 2004?


$10M - $25M in Revenue 5 4 6 5

$25M - $50M in Revenue 7 7 5 9

$50M - $100M in Revenue 13 14 11 15

>$100M in Revenue 47 55 37 40

19 On average, how many full-time or equivalent full-time estimators did your company employ in 2004?


$10M - $25M in Revenue 3 2 3 3

$25M - $50M in Revenue 4 3 3 6

$50M - $100M in Revenue 5 4 5 6>$100M in Revenue 16 16 13 19

20 What is the average length of the contracts performed by your company?

< 12 months 62% 57% 58% 72%

12 - 24 months 35% 42% 33% 28%

> 24 months 2% 1% 9% 0%

21 What percent of your contracts are performed by the design-build method?

>80% 4% 5% 2% 2%

40% - 79% 11% 15% 5% 10%

<39% 56% 62% 45% 57%

None 29% 19% 49% 30%

22 How many contracts did your company perform in 2004?<$10M in Revenue 108 77 57 144

$10M - $25M in Revenue 145 72 106 228

$25M - $50M in Revenue 146 71 99 345

$50M - $100M in Revenue 300 142 159 669

>$100M in Revenue 547 276 250 1,458

General Profile, continued






23 What are the future sources of increased competition? (1 = greatest source, 4 = least source)

Foreign contractors 3.9 4.0 3.9 3.9

New U.S. contractors coming into your region 2.5 2.6 2.5 2.5

Existing contractors pursuing your type of contsr. 2.2 2.2 2.2 2.3

Existing contractors pursuing growth 1.3 1.3 1.4 1.3

24 Which construction market has the highest anticipated growth?

Industrial & Nonresidential 2.7 2.5 2.9 2.7

Residential 2.5 2.4 2.7 2.6

Heavy & Highway 3.1 3.2 2.7 3.3

Specialty Trade 3.6 3.8 3.7 3.4

Real Estate Development 3.0 3.1 3.0 3.0

25 Do you expect next year's volume to increase, decrease, or stay the same?

Increase 63% 63% 62% 65%

Decrease 12% 13% 11% 12%Stay the same 24% 24% 27% 23%

Average expected increase 21% 25% 18% 18%

Average expected decrease -19% -20% -19% -18%

Average overall expected change 11% 13% 9% 9%

26 Do you plan to enter new geographic areas in the upcoming year?

Yes 20% 22% 23% 16%

27 If yes, which regions do you plan to enter? (Participants could select multiple answers.)

Southeast 39% 26% 57% 44%

Northeast 35% 32% 22% 52%

West 30% 34% 26% 30%

Midwest 29% 32% 26% 33%Southwest 22% 22% 17% 26%

Far West 8% 12% 0% 11%

Canada 8% 12% 13% 0%

Mexico 3% 2% 4% 4%

Caribbean 3% 4% 4% 0%

Western Europe 3% 0% 4% 7%

Middle East 3% 4% 0% 0%

Central/South America 0% 0% 0% 0%

Eastern Europe 1% 2% 0% 0%

Asia/Pacific Rim 1% 0% 0% 0%

Africa 0% 0% 0% 0%

28 If yes, how do you plan to enter new regions? (Participants could select multiple answers.)

Follow present customers 74% 80% 48% 89%

Open new office 19% 20% 13% 19%

Joint ventures 16% 18% 13% 15%

Mergers and acquisitions 4% 6% 4% 0%

Other 17% 16% 35% 7%







29 What other strategies are you considering to improve your profitability? (Participants could select multiple answers.)

Do what we do better 91% 93% 90% 90%Safety and risk management 60% 52% 68% 64%

Training 55% 56% 56% 57%

Information technology 48% 49% 44% 46%

Design-build projects 39% 44% 30% 39%

Cut overhead 38% 37% 35% 41%

Offer additional, related services 32% 30% 25% 39%

Mergers and acquisitions of related businesses 8% 6% 11% 10%

Investment in unrelated businesses 3% 4% 1% 2%

Other 5% 4% 7% 5%

30 Is your backlog higher than, lower than, or equal to last year's?

Increase 55% 50% 64% 54%

Decrease 23% 29% 16% 21%

Stayed the same 22% 21% 20% 25%

Average increase 51% 45% 46% 61%

Average decrease -28% -29% -32% -26%

Overall change 21% 14% 24% 27%

31 How was your work-in-progress and backlog acquired?

Competitive bid 57% 41% 80% 66%

Negotiation 40% 55% 18% 32%

Related parties 2% 3% 1% 0%

Other 1% 1% 1% 2%

32 How has the amount of competitive bid work you pursue changed over the last year?

Increase 33% 32% 25% 42%

Decrease 12% 12% 8% 11%

Stayed the same 56% 56% 66% 47%

Average increase 25% 26% 25% 25%

Average decrease -28% -34% -15% -23%

Overall change 5% 4% 5% 8%

33

Healthcare insurance costs 71% 72% 71% 72%

Shortage of trained field help 66% 62% 73% 66%

Workers' compensation insurance costs 48% 43% 54% 50%

Sources of future work 47% 52% 41% 44%

General liability insurance costs 44% 45% 42% 43%

Shortage of project managers 43% 44% 43% 41%

Litigation 36% 41% 28% 34%

Surety bonds 26% 31% 18% 25%

Unions 20% 15% 18% 30%

State legislation 18% 18% 25% 13%Safety / OHSA 17% 13% 18% 22%

Changing technology 11% 15% 10% 9%

Environmental concerns 10% 13% 9% 5%

Financing costs 9% 8% 8% 10%

Other federal legislation 8% 4% 17% 9%

Federal tax legislation 7% 6% 8% 10%

International expansion 2% 2% 0% 2%

Privatization 1% 1% 1% 1%

Foreign investment in U.S. 0% 0% 0% 1%

Other 7% 10% 6% 5%

What are the greatest challenges facing the construction industry? (Percent ranking in the top five.)

Economy and Competition, continued






34 Aside from estimating, do you prepare a formalized budget?

Yes 78% 84% 70% 77%

35 Is the availability of bank credit better or worse than twelve months ago?

Better 35% 25% 38% 45%

Worse 3% 3% 3% 5%

About the same 61% 72% 59% 50%

36 Do you have bank debt covered by covenants?

Have bank debt covered by covenants 55% 40% 62% 72%

Current ratio 20% 17% 19% 26%

Median covenant value 1.2 1.1 1.3 1.2

Minimum working capital 14% 9% 19% 17%

Debt to equity 19% 12% 26% 23%


Total liability to tangible net worth 15% 8% 13% 26%


Minimum tangible net worth 34% 24% 41% 41%

Minimum EBITDA 11% 5% 17% 15%

Other 13% 9% 17% 13%

37 How has your working capital line of credit changed over the year?

Increased 29% 20% 35% 35%

Decreased 4% 3% 1% 7%

Remained the same 60% 69% 58% 55% N/A, no line of credit 7% 8% 6% 3%

38 Is your working capital line of credit secured?

Yes 67% 53% 72% 78%

39 Does ownership provide personal guarantees on any financing arrangements?

Yes 52% 49% 46% 56%

40 Primary sources of financing for equipment purchases:

Current cash flow 54% 66% 38% 52%

Bank installment loans 18% 13% 25% 18%

Leasing companies 12% 7% 13% 17%

Vendor financing 9% 7% 17% 8%

Vendor lease-purchase 3% 3% 3% 2%

Related-party lease/financing 3% 2% 3% 2%

Brokerage firm 0% 0% 0% 0%

Other 1% 2% 1% 1%







41 Cash management techniques: (Participants could select multiple answers.)

Zero balance / sweep account 80% 84% 82% 74%

Online banking 74% 77% 75% 72%

Electronic payments from customers 63% 68% 61% 58%

Sweep against line of credit 38% 25% 39% 55%

Corporate purchasing cards 31% 30% 28% 36%

Interest-bearing checking account 29% 37% 29% 20%

Electronic bank reconciliation/download 29% 28% 37% 27%

Savings account 28% 30% 33% 24%

Electronic payments to vendors 23% 19% 38% 22%

Positive pay 22% 25% 16% 22%

Remote disbursement bank account 17% 16% 23% 17%

Lockbox 12% 10% 12% 16%

Electronic data interchange (EDI) 10% 7% 8% 15%

Non-bank checking account 3% 2% 4% 3%

Other 3% 4% 3% 2%

42 Percentage of contracts bonded:

>80% 13.9% 10% 40% 2%

60% - 79% 8.4% 10% 12% 4%

40% - 59% 15.8% 16% 18% 15%

20% - 39% 23% 25% 13% 29%

<20% 33% 34% 14% 44%

N/A 6% 4% 2% 6%

43

Better 23% 18% 28% 27%

Worse 9% 11% 7% 8%

About the same 67% 71% 65% 65%

44 Is your bonding credit secured by personal guarantees?

Yes 43% 42% 36% 46%

45 Which of the following describes your current bonding program?

Actively bond with more than one surety 6% 7% 7% 3%

Actively bond with one surety, but have standby 24% 26% 32% 17%

Bond with only one surety 71% 67% 61% 79%

46 If a general contractor, percent of subcontractor dollars bonded:

>80% 6% 4% 13% 4%

60% - 79% 5% 4% 11% 1%

40% - 59% 8% 10% 6% 0%20% - 39% 10% 13% 6% 6%

<19% 40% 49% 38% 16%

N/A 31% 21% 26% 73%


Is the general availability of bonding credit for your company better or worse than 12 months ago?

Cash Management and Finance, continued






47 Insurance costs as a percent of payroll:

Healthcare - increase 72% 73% 78% 70%

Healthcare - decrease 9% 11% 7% 9%

Healthcare - remained the same 18% 17% 15% 21%

Average percent of payroll 8% 8% 10% 9%

Workers' compensation - increase 42% 45% 42% 37%

Workers' compensation - decrease 23% 22% 22% 26%

Workers' compensation - remained the same 35% 32% 36% 38%


General liability - increase 50% 54% 51% 43%

General liability - decrease 18% 18% 15% 19%

General liability - remained the same 32% 28% 34% 38%


48 If your company performs design-build, do you carry professional liability insurance?

Yes 70% 72% 64% 73%

49 What is your current worker's compensation experience modifier?

<0.30 2% 2% 1% 3%

0.30 - 0.49 4% 4% 6% 4%

0.50 - 0.79 45% 51% 42% 37%

0.80 - 0.99 35% 33% 36% 38%

>1.0 14% 10% 15% 18%

50 How many workers' compensation claims were filed by your company in the last year?

None 7% 13% 3% 1%

1 - 10 53% 64% 43% 45%

11 - 25 24% 12% 33% 34%

26 - 50 8% 6% 7% 10%

51 - 100 5% 4% 7% 6%

>100 4% 2% 8% 4%

51 What is the average cost of the workers' compensation claims filed over the last year?

<$500 15% 22% 7% 10%

$500 - $2,500 36% 34% 35% 40%

$2,500 - $5,000 21% 18% 26% 22%

$5,000 - $10,000 14% 13% 17% 15%$10,000 - $25,000 10% 9% 11% 12%

>$25,000 3% 4% 4% 1%

Insurance






52

Undertook aggressive loss control 57% 53% 65% 56%

Competitive bids 49% 46% 47% 55%

Raised deductible 39% 35% 44% 39%

Changed carriers 28% 26% 27% 30%

Reduced coverage 11% 11% 8% 10%

Changed brokers 11% 9% 11% 12%

Other 6% 5% 8% 7%

53 What level of assurance service is performed on your year-end financial statements?

Audited 70% 76% 82% 55%

Reviewed 28% 24% 18% 41%

Compiled 1% 1% 0% 1%

None - internal statements only 1% 0% 0% 4%

54 What type of accounting firm performs the assurance services?

"Big four" national firm 10% 10% 18% 8%

Next tier national / super-regional firm 14% 12% 18% 14%

Local / regional firm - construction focus 47% 49% 44% 50%

Local / regional firm - general focus 25% 26% 19% 24%

Sole practitioner 3% 3% 1% 5%

55 What revenue recognition method is used for contracts for tax reporting purposes?

Percent completion - section 460 67% 72% 74% 62%Percent completion - section 460 "simplified" 20% 21% 16% 20%

Percent completion - elected 4% 2% 3% 6%

Completed contract 5% 3% 4% 8%

Accrual 2% 1% 3% 1%

Cash 2% 0% 1% 1%

Accrual, exclusive of retainage 1% 0% 0% 2%

Other 0% 0% 0% 1%

56 Did your company have an AMT liability for the last tax year?

Yes 8% 6% 10% 10%

No 84% 88% 79% 80%

Do not know 8% 6% 11% 10%

57 Did your company file Form 8697 for the last tax year?

Yes, filed for an interest refund 29% 32% 33% 23%

Yes, filed with interest due to the IRS 27% 30% 31% 25%

No, did not file 36% 33% 32% 39%

N/A 7% 5% 4% 13%

What actions have you taken during the past year to control your company's insurance costs? (Participants could select

multiple answers.)


Taxation

Insurance, continued






58 When did your company last have an IRS income tax examination?

Never 33% 36% 29% 34%

Currently under examination 3% 3% 5% 4%

One year ago 3% 4% 3% 2%

1-3 years ago 7% 5% 6% 10%

4-6 years ago 13% 12% 15% 13%

Over 6 years ago 40% 41% 43% 37%

59 What was the outcome of your company's last IRS income tax examination

Material increase in tax liability 5% 2% 7% 6%

Immaterial increase in tax liability 46% 48% 39% 48%

No change 47% 46% 52% 45%

Immaterial decrease in tax liability 2% 3% 1% 2%

Material decrease in tax liability 0% 1% 0% 0%

60<$100,000 4% 4% 4% 4%

$100,000 - $250,000 49% 47% 46% 53%

$250,000 - $500,000 30% 30% 32% 27%

$500,000 - $1,000,000 12% 14% 13% 10%

>$1,000,000 5% 5% 5% 5%

61 What is the principal method used for revenue recognition?

Percent Complete (cost to cost) 88% 90% 84% 87%

Percent Complete (physical percent complete) 7% 7% 14% 4%

Percent Complete (hours of labor, labor dollars) 2% 1% 0% 5%

Completed contract 1% 0% 0% 2%

Accrual 2% 1% 2% 2%

Other 1% 0% 0% 1%

62 At what point of the job do you begin to realize profit?

As soon as costs are charged to the job 72% 72% 63% 75%

As soon as work begins 9% 11% 9% 5%

When the profit can be reasonably estimated 5% 5% 6% 5%

When the contract has reached a base level 13% 10% 22% 14%

Other 1% 1% 0% 1%

63 How do you recognize costs associated with unpriced change orders?

Associated costs are deferred until it is priced 34% 37% 36% 32%

Revenues are recognized in excess of costs 19% 15% 13% 27%

Costs are not recognized, but revenues are 38% 35% 47% 35%

Not applicable 8% 11% 3% 4%Other 1% 2% 1% 1%

Taxation, continued

What was the approximate total compensation for the highest paid executive at your company?







64 How do you recognize revenues associated with unpriced change orders?

Single policy 30% 32% 28% 25%

Facts and circumstances approach 70% 68% 72% 75%

65 If single policy, which best describes the policy:

Deferred until the change is settled 16% 24% 3% 5%

Deferred until the change is paid 1% 1% 3% 0%

Costs are recognized, but not revenues 48% 34% 80% 49%

Revenue is recognized equal to costs 18% 23% 10% 18%

Revenue is recognized in excess of costs 14% 14% 3% 23%

Other 3% 3% 0% 5%

66 How do you segregate costs relating to unpriced change orders and/or contract claims?

Not applicable, costs are not segregated 45% 45% 27% 54%

Separate job 3% 3% 2% 5%

Same job, separate cost code 49% 47% 70% 38%Other 3% 5% 1% 2%

67

Uncompleted contracts/percent complete 81% 85% 87% 75%

G & A expenses 69% 69% 73% 67%

Completed contracts 68% 77% 75% 53%

Reconciliation of revenues, costs, gross profit 51% 52% 54% 47%

Aging of accounts receivable 17% 15% 23% 18%

Other 10% 11% 11% 9%

68 How does your company account for its share of joint ventures?

Not applicable 75% 68% 74% 89%

Full consolidation 4% 7% 2% 2%Partial or proportionate consolidation 5% 4% 7% 3%

Equity method 11% 16% 10% 5%

Expanded equity method 0% 0% 1% 0%

Cost method 1% 0% 0% 1%

Part equity/part consolidation 3% 4% 5% 1%

Other 1% 0% 2% 0%

Accounting Policies and Methods, continued

Which supplemental schedules does your company include with its financial statements? (Participants could select multiple

answers.)



Appendix B — Direct Cost Breakouts

Gross Profit Margin Gross Profit Margin

Amount Percent Amount Percent

Contract revenue $ 93,165,504 98.4 % Contract revenue $ 131,103,367 99.9 %

Other revenue 1,527,917 1.6 Other revenue 135,254 0.1

Total revenue 94,693,421 100.0 Total revenue 131,238,621 100.0

Contract costs Contract costs

Labor (14,631,047) (15.5) Labor (11,312,750) (8.6)

Materials (13,843,782) (14.6) Materials (12,106,599) (9.2)

Subcontracts (46,544,291) (49.2) Subcontracts (90,629,510) (69.1)

Equipment (2,799,122) (3.0) Equipment (1,420,476) (1.1)

Other (6,840,781) (7.2) Other (7,645,982) (5.8)

Total direct costs (84,659,023) (89.4) Total direct costs (123,115,317) (93.8)

Indirect contract costs (1,449,279) (1.5) Indirect contract costs (938,137) (0.7)

Total contract costs (86,108,303) (90.9) Total contract costs (124,053,454) (94.5)

Other operations costs Other operations costs

Labor (401,723) (0.4) Labor (12,827) (0.0)

Materials (363,323) (0.4) Materials (18,468) (0.0)

Subcontracts (92,748) (0.1) Subcontracts (29,170) (0.0)

Equipment (106,918) (0.1) Equipment (52,591) (0.0)

Other (104,356) (0.1) Other (17,385) (0.0)

Total other operations direct costs (1,069,067) (1.1) Total other operations direct costs (130,441) (0.1)

Indirect costs (115,551) (0.1) Indirect costs (57,490) (0.0)

Total other operations costs (1,184,619) (1.3) Total other operations costs (187,931) (0.1)

Total cost (87,292,921) (92.2) Total cost (124,241,385) (94.7)

Gross profit $ 7,400,500 7.8 % Gross profit $ 6,997,236 5.3 %

Count Count

515 217



Contract revenue $ 90,752,333 96.8 % Contract revenue $ 52,663,417 97.0 %Other revenue 3,007,470 3.2 Other revenue 1,607,904 3.0


Contract costs Contract costsLabor (16,905,957) (18.0) Labor (18,651,914) (34.4)Materials (19,637,192) (20.9) Materials (13,211,060) (24.3)Subcontracts (25,328,678) (27.0) Subcontracts (6,491,189) (12.0)Equipment (6,994,001) (7.5) Equipment (1,973,736) (3.6)Other (10,813,671) (11.5) Other (3,979,725) (7.3)

Total direct costs (79,679,499) (85.0) Total direct costs (44,307,624) (81.6)Indirect contract costs (3,171,332) (3.4) Indirect contract costs (1,157,944) (2.1)


Other operations costs Other operations costsLabor (1,078,684) (1.2) Labor (425,757) (0.8)Materials (621,910) (0.7) Materials (431,795) (0.8)Subcontracts (44,093) (0.0) Subcontracts (202,017) (0.4)Equipment (227,418) (0.2) Equipment (21,150) (0.0)Other (225,125) (0.2) Other (116,514) (0.2)

Total other operations direct costs (2,197,231) (2.3) Total other operations direct costs (1,197,233) (2.2)

Indirect costs (355,519) (0.4) Indirect costs (30,852) (0.1)Total other operations costs (2,552,749) (2.7) Total other operations costs (1,228,086) (2.3)



Count Count

103 161

Composite Composite

All CompaniesComposite

Industrial & Nonresidential ContractorsComposite

Appendices


2005 Participants 2005 Participants


Heavy & Highway Contractors Specialty Trade Contractors









Labor (13,298,897) (13.9) Labor (10,934,169) (8.1)




Other (6,082,468) (6.3) Other (2,587,321) (1.9)


Indirect contract costs (3,304,615) (3.4) Indirect contract costs (3,643,833) (2.7)



Labor (380,101) (0.4) Labor (9,119) (0.0)




Other (207,044) (0.2) Other (4,154) (0.0)Total other operations direct costs (1,154,849) (1.2) Total other operations direct costs (46,455) (0.0)





Count Count

84 37



Contract revenue $ 70,583,601 99.6 % Contract revenue $ 58,429,804 93.3 %Other revenue 285,555 0.4 Other revenue 4,168,167 6.7


Contract costs Contract costsLabor (14,857,287) (21.0) Labor (16,350,874) (26.1)

Materials (13,226,804) (18.7) Materials (13,386,273) (21.4)Subcontracts (14,720,230) (20.8) Subcontracts (7,693,153) (12.3)Equipment (4,604,967) (6.5) Equipment (2,146,853) (3.4)Other (11,061,345) (15.6) Other (8,502,312) (13.6)



Other operations costs Other operations costsLabor (29,375) (0.0) Labor (1,143,990) (1.8)Materials (50,313) (0.1) Materials (1,409,926) (2.3)

Subcontracts (5,688) (0.0) Subcontracts (236,898) (0.4)Equipment (6,813) (0.0) Equipment (32,344) (0.1)Other (133,724) (0.2) Other (559,126) (0.9)

Total other operations direct costs (225,911) (0.3) Total other operations direct costs (3,382,284) (5.4)Indirect costs (11,563) (0.0) Indirect costs (41,769) (0.1)

Total other operations costs (237,474) (0.3) Total other operations costs (3,424,053) (5.5)



Count Count

16 27



Heavy & Highway Contractors Specialty Trade ContractorsNortheast Region Northeast Region

All CompaniesNortheast Region

Industrial & Nonresidential ContractorsNortheast Region


Appendices 271









Labor (8,917,415) (13.8) Labor (4,420,211) (6.1)



Equipment (2,052,130) (3.2) Equipment (506,011) (0.7)

Other (2,506,027) (3.9) Other (2,263,406) (3.1)


Indirect contract costs (644,507) (1.0) Indirect contract costs (484,597) (0.7)



Labor (356,399) (0.6) Labor 0 0.0

Materials (609,034) (0.9) Materials 0 0.0

Subcontracts (19,244) (0.0) Subcontracts 0 0.0

Equipment (251,089) (0.4) Equipment 0 0.0


Indirect costs (23,805) (0.0) Indirect costs (271) (0.0)




Count Count

71 33







Total direct costs (42,236,124) (84.9) Total direct costs (43,089,761) (80.3)Indirect contract costs (393,934) (0.8) Indirect contract costs (1,209,957) (2.3)


Other operations costs Other operations costsLabor (87,837) (0.2) Labor (399,671) (0.7)Materials (1,203,073) (2.4) Materials (518,119) (1.0)

Subcontracts (73,425) (0.1) Subcontracts (14,516) (0.0)Equipment (121,866) (0.2) Equipment (445) (0.0)Other (74,593) (0.1) Other (125,209) (0.2)

Total other operations direct costs (1,560,794) (3.1) Total other operations direct costs (1,057,960) (2.0)Indirect costs 11,504 0.0 Indirect costs (75,566) (0.1)

Total other operations costs (1,549,291) (3.1) Total other operations costs (1,133,526) (2.1)



Count Count

13 19

All Companies Industrial & Nonresidential ContractorsSoutheast Region Southeast Region


Heavy & Highway Contractors Specialty Trade ContractorsSoutheast Region Southeast Region


272 Appendices










Labor (16,735,300) (18.2) Labor (12,794,785) (11.6)




Other (5,189,098) (5.6) Other (4,297,887) (3.9)





Labor (145,526) (0.2) Labor (18,836) (0.0)




Other (96,064) (0.1) Other (8,880) (0.0)Total other operations direct costs (688,198) (0.7) Total other operations direct costs (301,470) (0.3)


Total other operations costs (900,299) (1.0) Total other operations costs (325,840) (0.3)



Count Count

169 67



Contract revenue $ 173,092,758 97.5 % Contract revenue $ 39,101,826 98.7 %Other revenue 4,453,248 2.5 Other revenue 512,423 1.3




Total direct costs (155,223,677) (87.4) Total direct costs (33,070,311) (83.5)Indirect contract costs (4,936,351) (2.8) Indirect contract costs (955,187) (2.4)


Other operations costs Other operations costsLabor (331,618) (0.2) Labor (208,079) (0.5)Materials (1,368,146) (0.8) Materials (112,653) (0.3)


Total other operations direct costs (2,399,210) (1.4) Total other operations direct costs (377,649) (1.0)Indirect costs (1,120,266) (0.6) Indirect costs (5,376) (0.0)




Count Count

30 61

All Companies Industrial & Nonresidential ContractorsMidwest Region Midwest Region


Heavy & Highway Contractors Specialty Trade ContractorsMidwest Region Midwest Region



Appendices 273









Labor (26,706,316) (15.8) Labor (21,136,898) (8.8)




Other (5,087,804) (3.0) Other (4,188,870) (1.7)





Labor (178,624) (0.1) Labor (37,005) (0.0)



Equipment (22,110) (0.0) Equipment (62) (0.0)

Other 66,181 0.0 Other (3,827) (0.0)Total other operations direct costs (808,524) (0.5) Total other operations direct costs (108,970) (0.0)





Count Count

65 32



Contract revenue $ 67,943,567 99.7 % Contract revenue $ 115,125,380 97.1 %Other revenue 209,031 0.3 Other revenue 3,397,227 2.9






Other operations costs Other operations costsLabor 0 0.0 Labor (513,290) (0.4)Materials (431,496) (0.6) Materials (543,613) (0.5)

Subcontracts 0 0.0 Subcontracts (1,305,167) (1.1)Equipment (106,950) (0.2) Equipment 0 0.0Other 313,857 0.5 Other 20,510 0.0

Total other operations direct costs (224,588) (0.3) Total other operations direct costs (2,341,559) (2.0)Indirect costs 0 0.0 Indirect costs (57,458) (0.0)




Count Count

13 18

All Companies Industrial & Nonresidential ContractorsSouthwest Region Southwest Region


Heavy & Highway Contractors Specialty Trade ContractorsSouthwest Region Southwest Region


274 Appendices










Labor (8,919,298) (10.2) Labor (9,931,972) (7.7)




Other (11,652,864) (13.4) Other (7,244,196) (5.6)





Labor (86,556) (0.1) Labor 0 0.0




Other (64,399) (0.1) Other 0 0.0Total other operations direct costs (763,842) (0.9) Total other operations direct costs 0 0.0

Indirect costs (1,744) (0.0) Indirect costs 0 0.0

Total other operations costs (765,586) (0.9) Total other operations costs 0 0.0



Count Count

50 23



Contract revenue $ 60,463,716 100.0 % Contract revenue $ 39,799,405 98.6 %Other revenue 0 0.0 Other revenue 548,749 1.4






Other operations costs Other operations costsLabor 0 0.0 Labor (151,084) (0.4)Materials 0 0.0 Materials (81,153) (0.2)

Subcontracts 0 0.0 Subcontracts (7,723) (0.0)Equipment 0 0.0 Equipment (4,491) (0.0)Other 0 0.0 Other (7,176) (0.0)

Total other operations direct costs 0 0.0 Total other operations direct costs (251,626) (0.6)Indirect costs 0 0.0 Indirect costs (9,690) (0.0)

Total other operations costs 0 0.0 Total other operations costs (261,315) (0.6)



Count Count

13 9

All Companies Industrial & Nonresidential ContractorsWest Region West Region


Heavy & Highway Contractors Specialty Trade ContractorsWest Region West Region



Appendices 275









Labor (10,192,162) (14.8) Labor (5,694,756) (4.7)




Other (13,734,721) (19.9) Other (36,005,445) (29.7)


Indirect contract costs (559,357) (0.8) Indirect contract costs 267,467 0.2



Labor (1,435,817) (2.1) Labor 0 0.0









Count Count

76 25



Contract revenue $ 40,647,524 83.3 % Contract revenue $ 40,598,380 98.3 %Other revenue 8,130,092 16.7 Other revenue 705,539 1.7




Total direct costs (34,881,094) (71.5) Total direct costs (33,976,768) (82.3)Indirect contract costs (797,319) (1.6) Indirect contract costs (767,865) (1.9)


Other operations costs Other operations costsLabor (5,530,222) (11.3) Labor (250,876) (0.6)Materials (53,222) (0.1) Materials (156,275) (0.4)


Total other operations direct costs (7,084,105) (14.5) Total other operations direct costs (514,160) (1.2)Indirect costs (165,278) (0.3) Indirect costs (35,347) (0.1)




Count Count

18 27

All Companies Industrial & Nonresidential ContractorsFar West Region Far West Region


Heavy & Highway Contractors Specialty Trade ContractorsFar West Region Far West Region


276 Appendices







Other revenue 127,391 1.6 Other revenue 0 0.0



Labor (936,330) (12.1) Labor (1,231,629) (19.4)

Materials (935,399) (12.1) Materials (1,537,056) (24.2)

Subcontracts (4,226,597) (54.7) Subcontracts (616,077) (9.7)

Equipment (47,471) (0.6) Equipment (1,033,638) (16.3)

Other (216,832) (2.8) Other (664,310) (10.5)





Labor (19,742) (0.3) Labor 0 0.0



Equipment 0 0.0 Equipment 0 0.0

Other (8,614) (0.1) Other 0 0.0Total other operations direct costs (89,760) (1.2) Total other operations direct costs 0 0.0





Count Count

13 9

Gross Profit Margin

Amount Percent

Contract revenue $ 6,432,192 95.2 %Other revenue 326,587 4.8

Total revenue 6,758,778 100.0

Contract costsLabor (2,096,227) (31.0)

Materials (1,954,449) (28.9)Subcontracts (546,474) (8.1)Equipment (190,592) (2.8)Other (323,541) (4.8)

Total direct costs (5,111,282) (75.6)Indirect contract costs (174,463) (2.6)

Total contract costs (5,285,745) (78.2)

Other operations costsLabor (54,153) (0.8)Materials (135,373) (2.0)

Subcontracts (2,338) (0.0)Equipment (3,017) (0.0)Other (4,323) (0.1)

Total other operations direct costs (199,203) (2.9)Indirect costs (14,849) (0.2)

Total other operations costs (214,052) (3.2)

Total cost (5,499,797) (81.4)

Gross profit $ 1,258,982 18.6 %

Count

26

Industrial & Nonresidential ContractorsLess Than $10 Million Revenue

Heavy & Highway ContractorsLess Than $10 Million Revenue


2005 Participants

Specialty Trade ContractorsLess Than $10 Million Revenue


Appendices 277






Other revenue 15,349 0.1 Other revenue 541,985 2.9



Labor (1,427,037) (8.4) Labor (3,761,271) (20.4)




Other (2,073,836) (12.2) Other (1,518,496) (8.3)


Indirect contract costs (147,109) (0.9) Indirect contract costs (1,626,299) (8.8)



Labor 0 0.0 Labor (50,477) (0.3)

Materials 0 0.0 Materials (4,031) (0.0)

Subcontracts 0 0.0 Subcontracts (50,238) (0.3)

Equipment 0 0.0 Equipment (78,670) (0.4)


Indirect costs 0 0.0 Indirect costs 7,871 0.0




Count Count

41 19

Gross Profit Margin

Amount Percent




Materials (3,994,099) (23.4)Subcontracts (2,225,559) (13.1)Equipment (577,349) (3.4)Other (1,065,408) (6.3)

Total direct costs (12,988,458) (76.2)Indirect contract costs (611,081) (3.6)






Total cost (14,066,757) (82.5)

Gross profit $ 2,976,986 17.5 %

Count

46


2005 Participants


Industrial & Nonresidential Contractors Heavy & Highway Contractors$10 - $25 Million Revenue $10 - $25 Million Revenue

278 Appendices










Labor (3,010,084) (8.0) Labor (7,925,548) (21.3)




Other (1,830,885) (4.9) Other (2,173,217) (5.8)





Labor (15,917) (0.0) Labor (7,032) (0.0)




Other (224) (0.0) Other 99,919 0.3Total other operations direct costs (316,172) (0.8) Total other operations direct costs (266,526) (0.7)





Count Count

58 26

Gross Profit Margin

Amount Percent




Materials (8,855,679) (25.4)Subcontracts (4,231,157) (12.1)Equipment (1,479,654) (4.2)Other (1,420,759) (4.1)

Total direct costs (28,490,794) (81.6)Indirect contract costs (1,011,411) (2.9)






Total cost (29,887,841) (85.6)

Gross profit $ 5,031,803 14.4 %

Count

35


2005 Participants




Appendices 279









Labor (5,396,346) (8.0) Labor (16,534,269) (24.3)




Other (4,390,977) (6.5) Other (3,381,555) (5.0)





Labor (9,757) (0.0) Labor 0 0.0









Count Count

43 27

Gross Profit Margin

Amount Percent

Contract revenue $ 61,051,181 93.9 %Other revenue 3,983,906 6.1



Materials (14,740,635) (22.7)Subcontracts (7,103,266) (10.9)Equipment (3,435,682) (5.3)Other (6,389,112) (9.8)

Total direct costs (51,193,227) (78.7)Indirect contract costs (1,669,145) (2.6)


Other operations costsLabor (1,485,093) (2.3)Materials (837,200) (1.3)


Total other operat ions d irect costs (3,150,066) (4.8)Indirect costs (65,109) (0.1)

Total other operations costs (3,215,175) (4.9)

Total cost (56,077,548) (86.2)

Gross profit $ 8,957,539 13.8 %

Count

28


2005 Participants



280 Appendices












Labor (12,416,181) (16.3) Labor (9,988,179) (8.2)




Other (4,153,533) (5.4) Other (5,977,114) (4.9)





Labor (99,919) (0.1) Labor 0 0.0




Other (40,693) (0.1) Other 0 0.0

Total other operations direct costs (221,924) (0.3) Total other operations direct costs 0 0.0Indirect costs (24,522) (0.0) Indirect costs (20,082) (0.0)




Count Count

128 50




Other revenue 213,841 0.5 Other revenue 583,438 1.2Total revenue 41,055,186 100.0 Total revenue 50,322,071 100.0

Contract costs Contract costsLabor (7,817,980) (19.0) Labor (17,062,709) (33.9)Materials (11,858,453) (28.9) Materials (10,456,270) (20.8)Subcontracts (9,612,705) (23.4) Subcontracts (7,770,164) (15.4)

Equipment (3,233,767) (7.9) Equipment (3,095,508) (6.2)Other (2,984,008) (7.3) Other (3,135,876) (6.2)


Indirect contract costs (319,184) (0.8) Indirect contract costs (596,629) (1.2)Total contract costs (35,826,097) (87.3) Total contract costs (42,117,155) (83.7)

Other operations costs Other operations costsLabor 0 0.0 Labor (222,924) (0.4)Materials 0 0.0 Materials (111,263) (0.2)Subcontracts 0 0.0 Subcontracts (31,108) (0.1)

Equipment 0 0.0 Equipment (4,765) (0.0)Other (189,712) (0.5) Other (19,765) (0.0)

Total other operations direct costs (189,712) (0.5) Total other operations direct costs (389,825) (0.8)

Indirect costs 0 0.0 Indirect costs (18,329) (0.0)Total other operations costs (189,712) (0.5) Total other operations costs (408,154) (0.8)



Count Count

22 51

All CompaniesComposite: Best in Class

Industrial & Nonresidential ContractorsComposite: Best in Class


Heavy & Highway Contractors Specialty Trade ContractorsComposite: Best in Class Composite: Best in Class


282 Appendices










Labor (5,057,446) (20.3) Labor (2,344,602) (8.9)




Other (1,072,604) (4.3) Other (830,394) (3.2)





Labor (57,287) (0.2) Labor 0 0.0




Other (56,570) (0.2) Other 0 0.0

Total other operations direct costs (175,728) (0.7) Total other operations direct costs 0 0.0Indirect costs (14,631) (0.1) Indirect costs (34,624) (0.1)




Count Count

81 29




Other revenue 276,735 0.9 Other revenue 417,710 2.0Total revenue 29,337,912 100.0 Total revenue 20,495,385 100.0


Equipment (3,024,566) (10.3) Equipment (1,170,373) (5.7)Other (2,244,951) (7.7) Other (654,751) (3.2)




Equipment 0 0.0 Equipment (7,595) (0.0)Other (245,509) (0.8) Other (12,704) (0.1)

Total other operations direct costs (245,509) (0.8) Total other operations direct costs (303,378) (1.5)

Indirect costs 0 0.0 Indirect costs (5,500) (0.0)Total other operations costs (245,509) (0.8) Total other operations costs (308,878) (1.5)



Count Count

17 32


Heavy & Highway Contractors Specialty Trade ContractorsLess Than $50 Million Revenue: Best in Class Less Than $50 Million Revenue: Best in Class


All Companies Industrial & Nonresidential ContractorsLess Than $50 Million Revenue: Best in Class Less Than $50 Million Revenue: Best in Class


Appendices 283






Other revenue 511,229 0.3 Other revenue 0 0.0



Labor (25,098,257) (15.2) Labor (20,543,594) (8.1)




Other (9,463,217) (5.7) Other (13,084,490) (5.2)





Labor (173,393) (0.1) Labor 0 0.0



Equipment (953) (0.0) Equipment 0 0.0

Other (13,331) (0.0) Other 0 0.0

Total other operations direct costs (301,538) (0.2) Total other operations direct costs 0 0.0Indirect costs (41,570) (0.0) Indirect costs 0 0.0




Count Count

47 21




Other revenue 0 0.0 Other revenue 862,560 0.9Total revenue 80,893,916 100.0 Total revenue 100,556,489 100.0


Equipment (3,945,047) (4.9) Equipment (6,337,840) (6.3)Other (5,496,800) (6.8) Other (7,314,612) (7.3)




Equipment 0 0.0 Equipment 0 0.0Other 0 0.0 Other (31,657) (0.0)

Total other operations direct costs 0 0.0 Total other operations direct costs (535,421) (0.5)

Indirect costs 0 0.0 Indirect costs (39,935) (0.0)Total other operations costs 0 0.0 Total other operations costs (575,356) (0.6)



Count Count

5 19


Heavy & Highway Contractors Specialty Trade ContractorsMore Than $50 Million Revenue: Best in Class More Than $50 Million Revenue: Best in Class


All Companies Industrial & Nonresidential ContractorsMore Than $50 Million Revenue: Best in Class More Than $50 Million Revenue: Best in Class

284 Appendices







Other revenue 2,422,361 4.0 Other revenue 3,132,922 4.3



Labor (19,842,960) (32.7) Labor (24,888,541) (34.4)




Other (3,587,375) (5.9) Other (4,195,261) (5.8)





Labor (703,127) (1.2) Labor (705,698) (1.0)




Other (19,553) (0.0) Other (263,356) (0.4)Total other operations direct costs (1,605,639) (2.6) Total other operations direct costs (2,390,264) (3.3)





Count Count

56 55



Contract revenue $ 30,747,841 98.7 % Contract revenue $ 89,107,120 100.0 %Other revenue 407,122 1.3 Other revenue 34,033 0.0



Materials (7,650,182) (24.6) Materials (18,831,270) (21.1)Subcontracts (4,223,594) (13.6) Subcontracts (9,767,264) (11.0)Equipment (832,883) (2.7) Equipment (1,635,935) (1.8)Other (2,830,904) (9.1) Other (2,963,410) (3.3)



Other operations costs Other operations costsLabor 0 0.0 Labor 0 0.0Materials (292,579) (0.9) Materials (26,501) (0.0)

Subcontracts 0 0.0 Subcontracts 0 0.0Equipment 0 0.0 Equipment 0 0.0Other 0 0.0 Other 0 0.0

Total other operations direct costs (292,579) (0.9) Total other operations direct costs (26,501) (0.0)Indirect costs 0 0.0 Indirect costs 0 0.0




Count Count

7 17

Specialty Trade Contractors23511 Plumbing, Heating, and Air-Conditioning Contractors

Specialty Trade Contractors23531 Electrical Contractors


Specialty Trade Contractors Specialty Trade Contractors23541 Masonry and Stone Contractors 23542 Drywall, Plastering, Acoustical, and Insulation Contractors



Appendices 285






Other revenue 771,319 1.8 Other revenue 1,455,778 2.2



Labor (16,863,278) (39.8) Labor (24,721,163) (37.4)




Other (955,861) (2.3) Other (4,922,419) (7.4)





Labor (345,202) (0.8) Labor 0 0.0


Subcontracts (8,735) (0.0) Subcontracts (1,305,167) (2.0)


Other (58,995) (0.1) Other 0 0.0Total other operations direct costs (541,128) (1.3) Total other operations direct costs (1,305,167) (2.0)

Indirect costs 0 0.0 Indirect costs (54,722) (0.1)




Count Count

13 18



Contract revenue $ 64,141,500 96.3 % Contract revenue $ 86,974,678 100.0 %Other revenue 2,481,455 3.7 Other revenue 0 0.0






Other operations costs Other operations costsLabor (30,636) (0.0) Labor 0 0.0Materials (9,455) (0.0) Materials 0 0.0

Subcontracts (2,135,727) (3.2) Subcontracts 0 0.0Equipment (13,091) (0.0) Equipment 0 0.0Other (43,455) (0.1) Other 0 0.0

Total other operations direct costs (2,232,364) (3.4) Total other operations direct costs 0 0.0Indirect costs (94,021) (0.1) Indirect costs (24,618) (0.0)




Count Count

11 2


Specialty Trade Contractors Specialty Trade Contractors23591 Structural Steel Erection Contractors 23592 Glass and Glazing Contractors


Specialty Trade Contractors Specialty Trade Contractors23561 Roofing, Siding, and Sheetmetal Contractors 23571 Concrete Contractors

286 Appendices










Labor (27,110,997) (35.9) Labor (14,757,337) (15.6)




Other (6,928,942) (9.2) Other (7,385,615) (7.8)





Labor (385,475) (0.5) Labor (122,786) (0.1)



Equipment (516) (0.0) Equipment (66,687) (0.1)






Count Count

33 331






Materials (93,024,833) (13.0) Materials (10,861,190) (22.6)Subcontracts (492,152,151) (68.9) Subcontracts (16,060,972) (33.4)Equipment (3,478,333) (0.5) Equipment (1,207,488) (2.5)Other 5,193,871 0.7 Other (2,400,963) (5.0)

Total direct costs (653,032,986) (91.4) Total direct costs (41,026,294) (85.4)Indirect contract costs (832,117) (0.1) Indirect contract costs (578,965) (1.2)


Other operations costs Other operations costsLabor (2,487,788) (0.3) Labor (875,052) (1.8)Materials (7,003,201) (1.0) Materials (801,464) (1.7)

Subcontracts (1,146,327) (0.2) Subcontracts (99,615) (0.2)Equipment 0 0.0 Equipment (13,462) (0.0)Other 243,466 0.0 Other 26,190 0.1

Total other operations direct costs (10,393,850) (1.5) Total other operations direct costs (1,763,403) (3.7)Indirect costs (354,765) (0.0) Indirect costs (2,000) (0.0)




Count Count

3 13


Public Companies Minority Business EnterprisesComposite Composite


Specialty Trade Contractors S Corporations23599 All Other Specialty Trade Contractors Composite


Appendices 287









Labor (53,406,266) (20.1) Labor (5,725,709) (16.7)




Other (41,226,891) (15.5) Other (743,303) (2.2)





Labor (494,464) (0.2) Labor (25,933) (0.1)

Materials (1,980,484) (0.7) Materials (8,644) (0.0)

Subcontracts (1,200,903) (0.5) Subcontracts (4,333) (0.0)


Other (585,928) (0.2) Other (222) (0.0)Total other operations direct costs (4,544,833) (1.7) Total other operations direct costs (39,133) (0.1)

Indirect costs (752,663) (0.3) Indirect costs (556) (0.0)




Count Count

20 9


Companies Working in a Foreign Region Residential ContractorsComposite Composite

288 Appendices




Note: Not all figures will appear to sum due to rounding. Appendices

Appendix C — Definitions of Key Terms COMPOSITE FINANCIAL DATA

This financial data includes balance sheets, statements of earnings, and financial ratios. The balance sheets andstatements of earnings represent an average of all companies included in each classification. Percentages are

presented for each dollar amount in the financial statements. Due to rounding, the totals may not agree to the sum of

various accounts. Such variations are few and insignificant.

The financial ratios are calculated from the composite balance sheets and statements of earnings data. They are not

averages of ratios for all companies included in the classification, except where specifically indicated.

AVERAGE FINANCIAL RATIOS

Certain financial ratios included in the survey represent the simple average of those ratios for each company

reporting financial information in the survey. These ratios are not calculated from the composite financial

information because the elements needed to calculate the ratio were not compiled on a composite basis. These ratios

are labeled “average” and include Backlog to Equity, Backlog to Working Capital, and Months in Backlog.

TYPE OF CONTRACTOR

The survey respondents were classified into three categories of construction based on the type of work performed.

Classification was based on the level of contract volume completed for various SIC codes. A contractor was

included in a classification if the majority of its annual contract revenue was completed within that classification.

The classifications and SIC codes included for each are as follows:

1987 Standard Industrial

Classification (SIC) Codes

1997 North American Industrial

Classification (NAIC) Codes

INDUSTRIAL & NONRESIDENTIAL CONTRACTORS

1541 General Contractors - Industrial Buildingsand Warehouses

23332 Commercial and Institutional BuildingConstruction

23331 Manufacturing and Light Industrial BuildingConstruction (Except Warehouse Construction)

1542 General Contractors - NonresidentialBuildings

HEAVY & HIGHWAY CONTRACTORS

1611 Highway and Street Construction (ExceptElevated Highways)

23411 Highway and Street Construction

1622 Bridge, Tunnel, and Elevated Highway

Construction

23412 Bridge and Tunnel Construction

1623 Water, Sewer, Pipeline, andCommunications, Power Line Construction

23491 Water, Sewer, and Pipeline Construction

23492 Power and Communication Transmission LineConstruction

1629 Heavy Construction, NEC 23493 Industrial Non-Building Structure Construction

23499 All Other Heavy Construction




SPECIALTY TRADE CONTRACTORS

1711 Plumbing, Heating, and Air-Conditioning 23511 Plumbing, Heating, and Air-ConditioningContractors

1721 Painting and Paper Hanging 23521 Painting and Wall Covering Contractors

1731 Electrical Work 561621 Security Systems Services (Except Locksmiths)

23531 Electrical Contractors1741 Masonry, Stone Setting, and Other Stone

Work23541 Masonry and Stone Contractors

1742 Plastering, Drywall, Acoustical, andInsulation Work

23542 Drywall, Plastering, Acoustical and InsulationContractors

1743 Terrazzo, Tile, Marble, and Mosaic Work

23543 Tile, Marble, Terrazzo, and Mosaic Contractors

1751 Carpentry Work 23551 Carpentry Contractors

1752 Floor Laying and Other Floor Work, NEC 23552 Floor Laying and Other Floor Contractors

1761 Roofing, Siding, and Sheet Metal Work 23561 Roofing, Siding, and Sheet Metal Contractors

1771 Concrete Work Stucco Construction

23571 Concrete Contractors1781 Water Well Drilling 23581 Water Well Drilling Contractors

1791 Structural Steel Erection 23591 Structural Steel Erection Contractors

1793 Glass and Glazing Work 23592 Glass and Glazing Contractors

1794 Excavation Work 23593 Excavation Contractors

1795 Wrecking and Demolition Work 23594 Wrecking and Demolition Contractors

1796 Installation or Erection of BuildingEquipment

23595 Building Equipment and Other MachineryInstallation Contractors

1799 Special Trade Contractors, NEC

GEOGRAPHIC REGIONS

The financial data included in the survey were classified into six geographic regions, plus two additional regions forforeign and national contractors. A contractor was included in a region if the majority of its annual contract volume

was performed in that region. Using the aforementioned criterion, it was possible for a company to be excluded from

all geographic regions if no more than 33% of its annual volume was performed in a region. These companies are

included in the category of National Companies. The location of a contractor’s headquarters was not a factor in

determining the regional classification. The regions and the states included in each are as follows:

1. Northeast: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont

2. Southeast: Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee,Virginia, West Virginia

3. Southwest: Arkansas, Kansas, Louisiana, Missouri, Oklahoma, Texas

4. Midwest: Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota, South Dakota, Ohio,Wisconsin

5. West: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming

6. Far West: Alaska, California, Hawaii, Oregon, Washington

7. Foreign: All international work.




8. National: Contractors performing less than one-third of their annual contract volume in any one geographicregion.

NUMBER OF COMPANIES

This term represents the number of companies included in a given classification, such as a geographic region or typeof contractor. Because of the criteria used to determine classifications, there may be situations where the sum of the

number of companies in a classification exceeds the total for all companies in that classification. This situation does

not materially distort the analysis of data or conclusions stated in the survey.



Appendices Note: Not all figures will appear to sum due to rounding.

Appendix D — Financial Ratios, Formulas, and Interpretation

One key element in any financial analysis is the comparison of financial ratios. The usefulness offinancial ratios is increased as individual ratios are compared to each other over time. For instance, an

analysis that explains a change in the current ratio over the past two years will be more useful to thereader than an explanation of the variance between that company’s current ratio and a published “industryaverage” current ratio. The use of financial ratios can be an excellent tool in financial analysis; however,mere comparison to industry averages may have limited value.

The primary benefit of financial ratio analysis lies in determining the cause of changes in ratios over time.Industry averages of various ratios can be useful as a beginning benchmark for comparison purposes andas an indication of industry competition. The interpretation of financial ratios provided on the following pages is not intended to represent all possible interpretations and is only an example of how these ratiosmay be used. There may be other interpretations of these financial ratios.

LIQUIDITY RATIOS

Ratio Formula Interpretation

Current Ratio Current Assets

Current Liabilities

Indicates the extent to which current assets areavailable to satisfy current liabilities. Usually statedin terms of absolute values (i.e., 2.1 to 1.0 or simply2.1). Generally, a minimum current ratiois 1.0, which indicates that current assets at leastequal current liabilities.

Quick Ratio Cash and Cash Equivalents + Short-term

Investments + Receivables, net

Current Liabilities

Indicates the extent to which the more liquid assetsare available to satisfy current liabilities. Usuallystated in terms of absolute values, a quick ratio of1.0 is generally considered a liquid position.

Days of Cash (Cash and Cash Equivalents) x 360

Revenue

Indicates the number of days revenue in cash.Generally, a ratio of seven days or more is

considered adequate.

Working Capital

Turnover

Revenue

Working Capital

(Current Assets - Current Liabilities)

Indicates the amount of revenue being supported byeach $1 of net working capital employed. A ratioexceeding 30 may indicate a need for increasedworking capital to support future revenue growth.




PROFITABILITY RATIOS


Return on Assets Net Earnings Before Income Taxes

Total Assets

Indicates the profit generated by the total assetsemployed. A higher ratio reflects a more effectiveemployment of company assets. This ratio isgenerally stated in terms of percentages (i.e., 10%

return on assets).

Return on Equity Net Earnings Before Income Taxes

Total Net Worth

Indicates the profit generated by the net assetsemployed. This ratio reflects the stockholders’return on investment and is generally stated as a percentage. A very high ratio may indicate anundercapitalized situation or conversely, a very profitable company.

Times InterestEarned

Net Earnings + Income Taxes

+ Interest Expense

Interest Expense

Indicates the company’s ability to pay interestexpense from operations. A low ratio may indicatean over-leveraged situation and a need for more permanent equity.

LEVERAGE RATIOS


Debt to Equity Total Liabilities

Total Net Worth

Indicates the relationship between creditors andowners. Generally, a ratio of three or lower isconsidered acceptable.

Revenue to Equity Revenue

Total Net Worth

Indicates the level of revenue being supported byeach $1 of equity. Generally, a ratio of 15 or less isconsidered acceptable.

Asset Turnover Revenue

Total Assets

Indicates the level of revenue being supported byeach $1 of assets. By reviewing the trend of this

ratio, one can determine the effectiveness ofasset expansion.

Fixed Asset Ratio Net Fixed Assets

Total Net Worth

Indicates the level of stockholders’ equity investedin net fixed assets. A higher ratio may indicate alack of funds for current operations. Usually, a lowratio indicates a more favorable liquidity position;however, off balance sheet financing of equipmentmay offset this apparent positive indication.

Equity to Generaland AdministrativeExpenses

Total Net Worth

General and Administrative Expenses

Indicates the level of overhead in relation to networth. Generally, a ratio of 1.0 or more isconsidered acceptable.

Under billings to

Equity

Unbilled Work + Cost in Excess

Total Net Worth

Indicates the level of unbilled contract volume

being financed by the stockholders. Usually statedas a percentage, a ratio of 30% or lessis considered acceptable.

Backlog to Equity Backlog

Total Net Worth

Indicates the relationship of signed or committedwork to total stockholders’ equity. Generally, a ratioof 20 or less is considered acceptable. A higherratio may indicate the need for additional permanentequity.




EFFICIENCY RATIOS


Backlog to

Working Capital

Backlog

Current Assets - Current Liabilities

Indicates the relationship between signed orcommitted work and working capital. A higher ratio

may indicate a need for an increase in permanentworking capital.

Months in Backlog Backlog

Revenue/12

Indicates the average number of monthsit will take to complete all signed or committedwork.

Days in Accounts

Receivable

(Contract Accounts Receivable +

Other Accounts Receivable -

Allowance for Doubtful Accounts) x 360

Revenue

Indicates the number of days to collect accountsreceivable. A lower ratio indicates a fastercollection of receivables, thus more liquidity.Consideration should be given to the days inaccounts payable ratio, because higher days inaccounts receivable ratio may indicate a drain oncash flow.

Days in Inventory Inventory x 360

Cost of Sales

Indicates the number of days required to sellinventory. A high ratio may indicate overstockingof inventory.

Days in Accounts

Payable

(Accounts Payable - Retainage) x 360

Total Cost

Indicates the average number of days it takes toliquidate trade payables. The ratio should becompared to credit terms of vendors. Retainage has been excluded.

Operating Cycle Days in Cash + Days in Accounts

Receivable + Days in Inventory –

Days in Accounts Payable

Indicates the length of time it takes for the companyto complete a normal operating cycle. A low ratiomay indicate a need for more permanent workingcapital.



Documents

2005 Financial Survey