Statements we make in the following discussion that express a belief, expectation or intention, as well as those that are not historical facts, are forward-looking statements that are subject to various risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties to which we refer under the headings "Cautionary Statement Concerning Forward-Looking Statements" preceding Item 1 of this report, "Risk Factors" in Item 1A of this report and "-Risks and Uncertainties" below.

Our Business

We operate our business in two business segments: ready-mixed concrete and concrete-related products; and precast concrete products.

Ready-Mixed Concrete and Concrete-Related Products. Our ready-mixed concrete and concrete-related products segment is engaged primarily in the production, sale and delivery of ready-mixed concrete to our customers' job sites. To a lesser extent, this segment is engaged in the mining and sale of aggregates; and the resale of building materials, primarily to our ready-mixed concrete customers. We provide these products and services from our operations in north and west Texas, northern California, New Jersey, New York, Washington, D.C., Michigan and Oklahoma.

Precast Concrete Products. Our precast concrete products segment engages principally in the production, distribution and sale of precast concrete products from its seven plants located in California, Arizona and Pennsylvania. From these facilities, we produce precast concrete structures such as utility vaults, manholes and other wastewater management products, specialty engineered structures, pre-stressed bridge girders, concrete piles, curb-inlets, catch basins, retaining and other wall systems, custom designed architectural products and other precast concrete products.

Our Markets; Pricing and Demand Trends

We derive substantially all our revenues from the sale of ready-mixed concrete, precast concrete and concrete-related products to the construction industry in the United States. We typically sell our products under purchase orders that require us to formulate, prepare and deliver the product to our customers' job sites. We recognize revenue from these orders when we deliver the ordered products. The principal states in which we operate are Texas (39% of 2008 revenue and 35% of 2007 revenue), California (31% of 2008 revenue and 32% of 2007 revenue), New Jersey/New York (14% of 2008 revenue and 14% of 2007 revenue) and Michigan (9% of 2008 revenue and 11% of 2007 revenue). We serve substantially all segments of the construction industry in our markets. Our customers include contractors for commercial and industrial, residential, street and highway and other public works construction. The approximate percentages of our concrete product revenue by construction type activity were as follows in 2008 and 2007:

                                                        2008      2007
               Commercial and industrial                   55 %      49 %
               Residential                                 26 %      35 %
               Street, highway and other public works      19 %      16 %

The markets for our products are generally local, and our operating results are subject to fluctuations in the level and mix of construction activity that occur in our markets. The level of activity affects the demand for our products, while the product mix of activity among the various segments of the construction industry affects both our relative competitive strengths and our operating margins. Commercial and industrial projects generally provide more opportunities to sell value-added products that are designed to meet the high-performance requirements of these types of projects.

Our customers are generally involved in the construction industry, which is a cyclical business and is subject to both general and more localized economic conditions, including the ongoing credit and U.S. recessionary conditions impacting all our markets. In addition, our business is impacted by seasonal variations in weather conditions, which vary by regional market. Accordingly, demand for our products and services during the winter months is typically lower than in other months of the year because of inclement weather. Also, sustained periods of inclement weather and other adverse weather conditions could cause the delay of construction projects during other times of the year.

For 2008, our overall average sales prices were modestly higher than in 2007. However, pricing trends varied by region in our ready-mixed concrete markets. We experienced pricing improvements in our northern California and north and west Texas markets, and pricing declines in our New Jersey, Michigan and Washington, D.C. markets, as compared to 2007 We announced price increases in several of our markets, generally effective October 1, 2008 and early 2009. The extent to which we realize benefits from these announced price increases will depend on market conditions and whether such increases exceed our raw material and other cost increases.

During 2008, we experienced marked declines in the demand for our products, primarily in our residential end-use markets. We experienced weaker demand in our commercial end-use markets in the latter half of 2008. Ready-mixed concrete sales volumes generally began to decline during the early summer of 2006 and continued to decline throughout 2007 and 2008. This decline reflects a sustained downward trend in residential construction activity and commercial projects in many of our markets. The overall construction downturn, in both residential and commercial end-use markets, was consistent throughout 2008, resulting in ready-mixed concrete sales volumes being down on a same-plant-sales basis in 2008 in all of our markets as compared to 2007. Ready-mixed concrete sales volumes related to public works construction were higher in 2008, as compared to 2007. We expect ready-mixed concrete sales volumes in 2009 to be lower than sales volumes achieved in 2008 because of continued sluggishness in the residential and commercial end-use construction markets, which will be exacerbated by the financial crisis and U.S. recession, as described further under "Item 1A. Risk Factors- Further tightening of mortgage lending or mortgage financing requirements could adversely affect the residential construction market and prolong the downturn in, or further reduce, the demand for new home construction which began in 2006 and has had a negative effect on our sales volumes and revenues" and "-The global financial crisis may impact our business and financial condition in ways that we currently cannot predict."

Demand for our products in our precast concrete products segment decreased in 2008, as compared to 2007. This decline is reflective of the decline in residential construction starts in our northern California and Phoenix, Arizona markets, where our precast business has been heavily weighted toward products used in new residential construction projects. We are continuing the process of refocusing our product lines and streamlining our operations in these markets to better serve existing demand and penetrate additional end-use markets. This streamlining has resulted in the closure of one of our facilities in northern California, resulting in a pre-tax charge of approximately $0.7 million in the fourth quarter of 2008. We also closed a small operating facility and consolidated the operations on one site in Phoenix, Arizona during 2008.

Our Michigan market remains subject to a prolonged economic downturn, which is projected to continue throughout 2009. As a result, our 60%-owned Michigan subsidiary, which was formed in April 2007, has experienced same-plant-sales volume declines. We maintain a strong competitive position in Michigan and believe we are well positioned for growth when the Michigan economy, and related construction activity, begins to recover.

Sustaining or improving our operating margins in the future will depend on market conditions, including the impact of continued weakness in the residential and commercial construction sectors and the uncertainty of public works projects in light of state budgetary shortfalls and the U.S. economic recession. The impact of the American Recovery and Reinvestment Act passed by the U.S. government in early 2009 on our sales volumes, operating margins and liquidity remains uncertain.

Cement and Other Raw Materials

We obtain most of the raw materials necessary to manufacture ready-mixed concrete and precast concrete products on a daily basis. These materials include cement, other cementitious materials (generally, fly ash and blast furnace slag) and aggregates (stone, gravel and sand), in addition to certain chemical admixtures. With the exception of chemical admixtures, each plant typically maintains an inventory level of these materials sufficient to satisfy its operating needs for a few days. Typically, cement, other cementitious materials and aggregates represent the highest-cost materials used in manufacturing a cubic yard of ready-mixed concrete. In each of our markets, we purchase each of these materials from several suppliers. Admixtures are generally purchased from suppliers under national purchasing agreements.

We negotiate cement and aggregates pricing with suppliers both on a company-wide basis and at the local market level, in an effort to obtain the most competitive pricing available for cement and aggregates. We anticipate that the residential construction downturn that began in the second half of 2006 and continued throughout 2007 and 2008 will continue through 2009 and, therefore, commercial construction and other building segments will comprise a larger percentage of overall product demand. Due to the severe slowdown in residential housing starts and decreased demand in other construction activity, combined with increased U.S. cement capacity, we have not experienced cement shortages during 2008 and we do not expect to experience cement shortages in 2009. We expect that demand for cement consumption nationally will be down in 2009 as compared to 2008. Announced cement price increases in 2008 were delayed or withdrawn in many of our markets, and price increases in certain markets realized by our cement suppliers have been significantly lower than in 2007. Although several cement suppliers have announced price increases effective in the first quarter of 2009 in several of our markets, overall, we expect average 2009 cement prices to be flat or lower than cement prices in 2008.

Aggregates pricing in 2008 has increased moderately over 2007 levels. Today, in most of our markets, we believe there is an adequate supply of aggregates. Should demand for aggregates increase significantly, we could experience escalating prices or shortages of aggregates. During the first nine months of 2008, we experienced higher diesel fuel surcharges from our cement and aggregates suppliers, including third-party haulers, due to increases in costs of diesel fuel. The price of diesel fuel declined significantly in the fourth quarter of 2008, and fuel surcharges have been removed by the majority of our suppliers and third-party haulers. Many of our aggregates suppliers have announced modest price increases effective January 1, 2009. Certain aggregate suppliers have reduced their pricing in exchange for non-binding volume commitments in 2009. However, on average we expect aggregate prices to be up modestly over 2008 aggregate prices.

Acquisitions

Since our inception in 1999, our growth strategy has contemplated acquisitions. The rate and extent to which appropriate further acquisition opportunities are available, and the extent to which acquired businesses are integrated and anticipated synergies and cost savings are achieved, can affect our operations and results. We expect the rate of our acquisitions in 2009 to be significantly lower than prior years due to the global credit crisis, our limited available capital and ongoing recessionary conditions in the United States. Our recent acquisitions are discussed briefly below.

Ready-Mixed Concrete and Concrete-Related Products Segment

New York Acquisitions. In November 2008, we paid $2.5 million to acquire a ready-mixed concrete operation in Brooklyn, New York. We used borrowings under our existing credit facility to fund the payment of the purchase price. In August 2008, we paid $2.0 million to acquire a ready-mixed concrete operation in Mount Vernon, New York. We used borrowings under our existing credit facility to fund the purchase price. In January 2008, we acquired a ready-mixed concrete operation in Staten Island, New York. The purchase price was approximately $1.8 million.

West Texas Acquisitions. In June 2008, we acquired nine ready-mixed concrete plants, together with related real property, rolling stock and working capital, in our west Texas market for approximately $13.5 million. In June 2007, we acquired two ready-mixed concrete plants, including real property and certain raw material inventories, in our west Texas market for approximately $3.6 million.

Superior Materials Joint Venture. In April 2007, we formed a jointly owned company (Superior Materials Holdings, LLC) with the Edw. C. Levy Co., which operates in Michigan. Under the contribution agreement, we contributed substantially all of our ready-mixed concrete and concrete-related products assets, except our quarry assets and working capital, in Michigan, in exchange for a 60% ownership interest, while the Edw. C. Levy Co. contributed its Michigan ready-mixed concrete and related concrete products assets, its 24,000-ton cement terminal and $1.0 million for a 40% ownership interest.

Precast Concrete Products Segment

Pomeroy Precast. In August 2008, we paid $2.5 million to acquire a precast operation to augment our existing precast operations in San Diego, California. We used borrowings under our existing credit facility to fund the payment of the purchase price.

Architectural Precast, LLC ("API"). In October 2007, we acquired the operating assets, including working capital and real property, of API, a leading designer and manufacturer of premium quality architectural and structural precast concrete products serving the Mid-Atlantic region, for approximately $14.5 million plus a $1.5 million contingent payment based on the future earnings of API. For the quarter ended September 30, 2008, API attained 50% of its established earnings target, and we made an additional $750,000 payment, reduced for certain uncollected pre-acquisition customer receivables, to the sellers in the first quarter of 2009 in partial satisfaction of our contingent payment obligation.

Divestitures

In the fourth quarter of 2007, we began to implement our strategy of exiting markets that do not meet our performance and return criteria or fit our long-term strategic objectives. We sold our Knoxville, Tennessee and Wyoming, Delaware operations in November 2007 for $16.5 million, plus certain adjustments for working capital. In addition, we sold our Memphis, Tennessee operations for $7.2 million, plus the payment for certain inventory on hand at closing, on January 31, 2008 (see Note 3 to our Consolidated Financial Statements included in this report). These operations have been aggregated and presented in our accompanying Consolidated Financial Statements as "discontinued operations."

Risks and Uncertainties

Numerous factors could affect our future operating results, including those discussed under the heading "Risk Factors" in Item 1A of Part I of this report and the following factors:

Internal Computer Network and Applications. We rely on our network infrastructure, enterprise applications and internal technology systems for our operational, support and sales activities. The hardware and software systems related to such activities are subject to damage from earthquakes, floods, fires, power loss, telecommunication failures and other similar events. They are also subject to computer viruses, physical or electronic vandalism or other similar disruptions that could cause system interruptions, delays and loss of critical data and could prevent us from fulfilling our customers' orders. We have developed disaster recovery plans and backup systems to reduce the potentially adverse effects of such events. Any event that causes failures or interruption in our hardware or software systems could result in disruption in our business operations, loss of revenues or damage to our reputation.

During the second half of 2007, we began a process to select a new enterprise resource planning solution to provide for enhanced control, business efficiency and effectiveness, more timely and consistent reporting of both operational and financial data, and provide a platform to more adequately support our long-term growth plans. In the fourth quarter of 2007, a plan of implementation was approved which included a phased implementation across our regions, which has been substantially completed. Delays or system problems or failures related to the finalization of this implementation could adversely affect our financial reporting.

Accounting Rules and Regulations. We prepare our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). A change in these policies can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Our accounting policies that recently have been or may be affected by changes in the accounting rules are as follows:

• accounting for income taxes; and

• accounting for business combinations and related goodwill.

Tax Liabilities. We are subject to federal, state and local income taxes applicable to corporations generally, as well as nonincome-based taxes. Significant judgment is required in determining our provision for income taxes and other tax liabilities. In the ordinary course of business, we make calculations in which the ultimate tax determination is uncertain. We are also, from time to time, under audit by state and local tax authorities. Although we can provide no assurance that the final determination of our tax liabilities will not differ from what our historical income tax provisions and accruals reflect, we believe our tax estimates are reasonable.

Critical Accounting Policies and Estimates

Preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to our Consolidated Financial Statements included in this report describes the significant accounting policies we use in preparing those statements. We believe the most complex and sensitive judgments, because of their significance to our financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. The most significant areas involving our management's judgments and estimates are described below. Actual results in these areas could differ from our estimates.

Allowance for Doubtful Accounts

We extend credit to customers and other parties in the normal course of business. We regularly review outstanding receivables and provide for estimated losses on accounts receivable we believe we may not collect in full. A provision for bad debt expense recorded to selling, general and administrative expenses increases the allowance, and accounts receivable that we write off our books decrease the allowance. We determine the amount of bad debt expense we record each period and assess the resulting adequacy of the allowance at the end of each period by using a combination of our historical loss experience, customer-by-customer analyses of our accounts receivable balances each period and subjective assessments of our bad debt exposure. Our allowance for doubtful accounts was $3.3 million as of December 31, 2008 and $3.1 million as of December 31, 2007.

Goodwill

We record as goodwill the amount by which the total purchase price we pay in our acquisition transactions exceeds our estimated fair value of the identifiable net assets we acquire. We test goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment. We generally test for goodwill impairment in the fourth quarter of each year, because this period gives us the best visibility of the reporting units' operating performances for the current year (seasonally, April through October are highest revenue and production months) and outlook for the upcoming year, since much of our customer base is finalizing operating and capital budgets. The impairment test we use consists of comparing our estimates of the current fair values of our reporting units with their carrying amounts. We currently have seven reporting units. Reporting units are organized based on our two product segments ((1) ready-mix concrete and concrete related products and (2) precast concrete products) and geographic regions.

In 2008, macro economic factors including the unprecedented and continuing credit crisis, the U.S. recession, the escalating unemployment rate and the severe downturn in the U.S. construction markets, had a significant impact on the valuation metrics used in determining the long-term value of our reporting units. In particular, the cost of capital has increased substantially, while the availability of funds from capital markets has diminished significantly. Lack of available capital also impacts our end-use customers by causing project delays or cancellations, thereby impacting our revenue and growth assumptions. The continued downturn in residential construction has expanded into the commercial and public works sectors of our revenue base. The higher cost of capital combined with a negative outlook for product sales growth in all of our regions has resulted in lower sales volumes and more competition for construction projects, thereby reducing expected future cash flows. The October 2008 cement consumption forecast for 2009 through 2013 indicated further deterioration in cement consumption. In light of this, coupled with the slowdown in construction activity, persistently challenging interest rates and credit environments and our depressed stock price in October 2008, we recorded an impairment charge in the fourth quarter of 2008. These specific negative factors, combined with (i) lower enterprise values resulting from lower multiples of sales and EBITDA comparables, and (ii) the lack of recent third party transactions due to depressed macro economic conditions, resulted in a goodwill impairment expense of $135.3 million for 2008.

In 2007, we recorded goodwill impairments of $81.9 million relating to our Michigan, South Central and our Northern California Precast reporting units. Our Michigan reporting unit's economic outlook continued to soften at greater levels throughout 2007, resulting in lower projected cash flow. Our South Central reporting unit's outlook deteriorated, resulting in lower projected cash flow and continued competitive pressures and limited our future profitability expectations. Our Northern California Precast reporting unit was significantly impacted by the continued slowdown in residential housing construction, which impacted our projected future cash flows. These specific negative factors in the above mentioned reporting units, combined with lower enterprise values and sales transaction values for participants in our industry, resulted in the goodwill impairment expense.

In 2006, we recorded a $38.8 million goodwill impairment associated with our Michigan operations, which resulted from the continued slowdown and negative economic outlook regarding construction activities for the Michigan region throughout 2006. This negative outlook resulted in lower selling volumes, lower product pricing and more competition for construction projects, thereby reducing our outlook for expected future cash flows. Specifically, the downturn in the U.S. automotive manufacturing industry, primarily based in the greater Detroit market, combined with the slowdown in residential, commercial and public works projects resulted in lower sales volumes and product selling price pressures in an already highly competitive ready-mixed concrete market. These changes resulted in a significantly lower estimated fair value.

Our fair value analysis is supported by a weighting of three generally accepted valuation approaches.

These valuation methods include the following:

· Income Approach - discounted cash flows of future benefit streams;

· Market Approach - public comparable company multiples of sales and earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA"); and

· Market Approach - multiples generated from recent transactions comparable in size, nature and industry.

These approaches include numerous assumptions with respect to future circumstances, such as industry and/or local market conditions that might directly impact each of the reporting units operations in the future, and are, therefore uncertain. These approaches are utilized to develop a range of fair values and a weighted average of these approaches is utilized to determine the best fair value estimate within that range.

Income Approach - Discounted Cash Flows. This valuation approach derives a present value of the reporting unit's projected future annual cash flows over the next 15 years and the present residual value of the reporting unit. We use a variety of underlying assumptions to estimate these future cash flows, including assumptions relating to future economic market conditions, product pricing, sales volumes, costs and expenses and capital expenditures. These assumptions vary by each reporting unit depending on regional market conditions, including competitive position, degree of vertical integration, supply and demand for raw materials and other industry conditions. The discount rate used in the Income Approach, specifically, the weighted average cost of capital, used in our analysis for 2008, 2007 and 2006 was 14.0%, 8.9% and 11.0%, respectively. Our increased cost of capital assumption for 2008 reflects the current credit crisis which negatively affects the ability to borrow cost effectively. The revenue compounded annual growth rates used in the Income Approach for 2008, 2007 and 2006 varied from -0.1% to 3.6%, depending on the reporting unit and the year. Our EBITDA margins derived from these underlying assumptions varied between approximately 4% and 21% for 2006 and 3% to 20% for 2007, depending on the reporting unit. For 2008, our EBITDA margins varied between approximately 3% and 22%, depending on the reporting unit.

Market Approach - Multiples of Sales and EBITDA. This valuation approach utilizes publicly traded construction materials companies' enterprise values, as compared to their recent sales and EBITDA information. For 2008, we used an average sales multiple of 0.48 times and an average EBITDA multiple of 5.29 times in determining this market approach metric. For 2007, we used an average sales multiple of 0.57 times and an average EBITDA multiple of 5.90 times. For 2006, we used an average sales multiple of 1.03 times and an average EBITDA multiple of 6.90 times. These multiples are used as a valuation metric to our most recent financial performance. We use sales as an indicator of demand for our products/services and EBITDA because it is a widely used key indicator of the cash generating capacity of construction material companies.

Market Approach - Comparisons of Recent Transactions. This valuation approach uses publicly available information regarding recent third-party sales . . .