Overview -- U.S.-based New Enterprise Stone & Lime Co. Inc. has failed to provide annual and quarterly financial reports as required under its note indentures. Failure to provide the reports by Jan. 3, 2013 constitutes a default under the indentures. -- New Enterprise is making efforts to file its delinquent financial statements prior to the default date. -- It is our expectation that New Enterprise will file its 10-K and first-quarter 10-Q prior to the default date, although no assurances can be provided that the filings will not be further delayed. -- The ratings on New Enterprise, including the 'CCC-' corporate credit rating, remain on CreditWatch with negative implications. Rating Action On Dec. 13, 2012, Standard & Poor's Ratings Services said its ratings on New Enterprise Stone & Lime Co. Inc., including its 'CCC-' corporate credit rating, remain on CreditWatch with negative implications. Rationale The continued CreditWatch listing follows the failure of New Enterprise Stone & Lime to file its already delinquent annual and quarterly financial reports on Form 10-K and 10-Q. Also, the trustee under the existing notes has provided notice to the company that New Enterprise is not in compliance with the financial reporting requirements of the indentures. Failure to provide such reports by Jan. 3, 2013, would result in an event of default under the indentures. New Enterprise is endeavoring to provide financial statements prior to that date. Our baseline expectation is that the company will file its 10-K and first-quarter 10-Q prior to the deadline, however, there can be no assurances that the preparation and filing of these statements will not be further delayed. In addition to technical defaults under various debt obligations, the delayed filing limits visibility of the company's operating results and raises concern that liquidity could become more constrained than we previously anticipated if cash flows are weaker than our most recent estimates. However, we have been provided with information from the company regarding its current liquidity situation, which appears to be sufficient for near-term needs as long as the company's asset based revolving credit lenders continue to provide availability under the company's $170 million revolving credit facility. New Enterprise is a privately held company that sells construction materials including aggregates, concrete, and concrete products; engages in highway construction and paving; and provides traffic safety services and equipment. Its operations are concentrated in Pennsylvania and western New York. CreditWatch We will review the CreditWatch listing once the company files its delinquent annual and quarterly reports and after we have had an opportunity to discuss the company's liquidity, the state of its internal controls, and its most recent operating performance. We could affirm our ratings and remove them from CreditWatch if the company resolves any potential default under its indentures, and if it appears that 2012 and 2013 and future operating cash flows will be neutral or modestly positive as per our estimates. We would lower our rating to 'D' if the company fails to meet the Jan. 3, 2013, date for filing its delinquent financial statements or if lenders pursue remedies under any defaults and demand payment. Related Criteria And Research -- Use Of CreditWatch And Outlooks, Sept. 14, 2009 -- General Criteria: How Standard & Poor's Uses Its 'CCC' Rating, Dec. 12, 2008 Ratings List Ratings On CreditWatch New Enterprise Stone & Lime Co. Inc. Corporate Credit Rating CCC-/Watch Neg/-- Senior Secured CCC-/Watch Neg Recovery Rating 3 Senior Unsecured C/Watch Neg Recovery Rating 6 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings referenced herein can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.