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corresp

October 6, 2005

Securities and Exchange Commission

Washington, D.C. 20549-7010

    Subject:

    Response to Correspondence Dated September 27, 2005

Meadow Valley Corporation

Form 10-K for the fiscal year ended December 31, 2004

Filed March 31, 2005

File No. 0-25428

Dear Ms. Do:

          In response to your letter to us dated September 27, 2005, we have responded to the Staff’s
comments using the same paragraph numbers contained in the Staff’s letter to us dated September 27,
2005.

Form 10-K for the year ended December 31, 2004

12. Income Taxes, page 37

    1.

    Below is a draft of our proposed additional disclosure for inclusion in the form 10-Q
for the quarter ended September 30, 2005, for your review:

    The Company’s deferred tax asset (liability) consists of the following:

    September 30,

    December 31,

    2005

    2004 *

    Deferred tax asset:

    Allowance for bad debt and other

    $
    —

    $
    355,564

    Inventory allowance

    —

    91,095

    NOL carryforward

    —

    2,210,000

    Less: NOL valuation

    (0
    )

    (1,059,032
    )

    (0
    )

    1,597,627

    Deferred Tax liability:

    Depreciation and other

    (0
    )

    (3,243,268
    )

    Net deferred tax liability

    $
    (0
    )

    $
    (1,645,641
    )

     * — As restated, to report net operating loss carryforward and valuation allowance at the
gross amounts, which we previously reported at their net amounts.

     At December 31, 2004, the Company has available federal and state operating loss
carry-forwards of approximately $6,136,550 and $3,550,000, respectively. The federal and state
operating loss carry-forwards will expire through the years 2024 and 2009, respectively.

Securities and Exchange Commission

October 6, 2005

Page 2

     Supplemental, please note that the provision in SFAS 109 paragraph 48(b) does not have
application in this instance. Further we will provide the valuation allowance schedule pursuant to
schedule II of Rule 5-04 of Regulation S-X with the next audited financial statement. We
anticipate that schedule, in regards to the deferred tax asset valuation allowance, to appear as
follows:

Schedule of Valuation and Qualifying Accounts

    Balance

    Charged

    Balance

    at beginning

    to expense

    at end

    Description

    of year

    account

    Deductions

    of year

    Year ended December 31, 2003

Deferred tax asset valuation allowance

    $
    132,122

    $
    312,643

    $
    —

    $
    444,765

    Year ended December 31, 2004

Deferred tax asset valuation allowance

    444,765

    614,267

    —

    1,059,032

    Year ended December 31, 2005

Deferred tax asset valuation allowance

    $
    1,059,032

    $
    —

    $
    (x,xxx,xxx)

    $
    (xxx,xxx)

    2.

    Below are our responses corresponding to each bullet point in comment two:

    •

    To clarify our net operating loss (NOL) carryforwards and their relation to our
deferred tax asset perhaps the following chart will help to resolve any questions.

    Net

    Deferred

    Operating

    Tax

    Tax

    Loss

    Rate

    Asset

    Federal

    $
    6,136,550

    34.0
    %

    $
    2,086,000

    State

    $
    3,550,000

    3.5
    %

    124,000

    Deferred
tax asset

    $
    2,210,000

     Using the $9,686,550, as mentioned in the first bullet of the comment, would assume
application of the federal tax rate to both the federal and state NOLs, which would greatly
overstate the deferred tax asset. We disclose an overall effective tax rate of 36% due to
the fact that a significant portion of our taxable income is generated in the State of
Nevada, which has no corporate income tax.

• Meadow Valley Corporation, post-IPO of Ready Mix, Inc. (RMI), has an approximate
53% ownership of RMI’s common stock outstanding. RMI has no other classes of stock
outstanding. Pursuant to Internal Revenue Code Section 1501 a corporation may only file a
consolidated return with members of an “affiliated group.” Code Section 1504(a)(2) defines
an affiliated group and requires that the common parent must directly own stock that
represents at least 80% (by total voting power and total value) of the stock of the
subsidiary. Therefore our ownership percentage does not meet the requirements to file a consolidated tax return post-IPO. All earnings of
RMI pre-IPO will be included in the consolidated return of Meadow Valley Corporation for
the year ended December 31, 2005.

• The impact of the IPO and the non-consolidation would not impact the December 31,
2004 operating results, but would impact the future expected earnings of the entities and
their abilities to utilize their NOLs in future periods. We believe that our valuation
allowance of approximately

Securities and Exchange Commission

October 6, 2005

Page 3

45-50% was reasonable based upon the information available at
the time of preparation of our form 10-K. Supplementally, and with the hindsight of nine
months of operations, we have exceeded our profit expectations and believe our original
valuation allowance has proven to be reasonable and conservative and are confident that we
will utilize our entire NOL. However, based upon our preliminary indications of our first
quarter results of operations we believe our allowance was appropriate.

• The development of our valuation allowance of 45-50% involved numerous aspects
including: a) Although post-IPO RMI taxable income will not be consolidated in the Meadow
Valley’s (MVCO) tax return for the year ending December 31, 2005, pre-IPO RMI taxable
income will be consolidated. It was anticipated that RMI would generate taxable income
during the period prior to its IPO. b) An analysis of the operating results of the
Construction Services segment indicates that the primary reason for the operating losses of
the past two years was derived from a single project, discussed in the 2004 form 10-K’s
management’s discussion and analysis (MD&A) and referred to as the Gooseberry project.
Entering the year 2005 we had fully reserved the anticipated costs to complete the project.
Further, our clear expectations for 2005 operating results of the Construction Services
segment were that it would generate taxable income in 2005. As disclosed in our MD&A we no
longer bid projects in the nature of Gooseberry. c) The prior NOLs were also predicated on
the utilization of accelerated tax depreciation methods; this is supported by SFAS 109
paragraph 21a, which we did not anticipate continuing at the same rate as prior years.

• Please see our response to comment one to revise our disclosure in regards to the
valuation allowance which was previously reported net of our valuation allowance.

    3.

    Below are our responses corresponding to each bullet point in comment three:

• The amount of our internal reserve (valuation allowance) as of December 31, 2004,
2003 and 2002 was approximately $1,059,000, $445,000 and $132,000 respectively.

• The purpose of our internal reserve (valuation allowance) was to reasonably and
conservatively present the deferred tax asset arising from our net operating losses.

• As discussed in our letter dated September 8, 2005, response one, while we believe
that we will fully utilize our net operating loss carryforward in future periods it is
common practice to limit the recognition of the deferred tax asset based upon prior
earnings history. Considering that our subsidiary, Ready Mix, Inc, earnings will no longer
be consolidated for tax purposes, post-IPO, and considering the past two years taxable
income/(loss), we believed the proper recognition of the deferred tax asset as of December
31, 2004 should involve a valuation allowance of approximately 45-50%. Now that we have
nine months of operating results in 2005 and have the benefit of hindsight our valuation
allowance was reasonably and conservatively stated. When the 2004 10K was drafted we used
all available information at the time and used our best judgment to properly represent our
financial position.

• The internal reserve referred to is represented by our valuation allowance. The
valuation allowance is determined in accordance with GAAP and specifically in accordance
with the provisions of paragraph 23-26 of SFAS 109. We do not believe paragraphs 27 and 28
have application in this instance as there has been no change in the enacted tax rates, and
no change in the tax status of our enterprise. We have sought (from time to time) to make
modifications to our blended tax rate due to variations in the allocation of state income
between taxable and non-taxable states.

Securities and Exchange Commission

October 6, 2005

Page 4

    4.

    Below please see a roll forward of our internal reserve (valuation allowance):

    Balance

    Charged

    Balance

    at beginning

    to expense

    at end

    Description

    of year

    account

    Deductions

    of year

    Year ended December 31, 2003

Deferred tax asset valuation allowance

    $
    132,122

    $
    312,643

    $
    —

    $
    444,765

    Year ended December 31, 2004

Deferred tax asset valuation allowance

    444,765

    614,267

    —

    1,059,032

    Six months ended June 30, 2005

Deferred tax asset valuation allowance

    $
    1,059,032

    $
    —

    $
    —

    1,059,032

     The changes in the reserve year over year directly track with the changes in the net
operating loss carryforward with a deferred tax asset calculated at a blended tax rate of 36%
and a deferred tax valuation allowance reserve established at 45-50% of the deferred tax asset
arising from the NOL.

    5.

    We will revise our disclosure in future 10K filings to include in management’s
discussion and analysis a critical accounting policy that discusses income taxes and is
included below as requested for your review:

We are required to estimate our income taxes in each jurisdiction in which we operate.
This process requires us to estimate the actual current tax exposure together with
assessing temporary differences resulting from differing treatment of items for tax and
financial reporting purposes. These temporary differences result in deferred tax assets
and liabilities on our consolidated balance sheets. We must calculate the blended tax
rate, combining all applicable tax jurisdictions, which can vary over time as a result of
the allocation of taxable income between the tax jurisdictions and the changes in tax
rates. We must also assess the likelihood that the deferred tax assets, if any, will be
recovered from future taxable income and, to the extent recovery is not likely, must
establish a valuation allowance. This assessment is complicated by the fact that we are
required to consolidate our subsidiaries for financial reporting purposes, while being
separately reported for tax purposes. As of December 31, 2005, the Company had total
deferred tax assets of $x.xx million (before valuation allowance) a valuation allowance
of $x.xx million and total deferred tax liabilities of $x.xx million. The net deferred
tax asset contains a valuation allowance representing the portion that management does
not believe will be recovered from future taxable income. Management believes that
sufficient taxable income will be generated in the future, primarily through our
Construction Services segment, which will still be consolidated for tax purposes and the
reversal of the deferred tax liabilities, to realize the benefit of our deferred tax
assets for which valuation allowances have not been recorded against. If we were to incur
substantial tax losses for a number of years, the carryforwards against which we have not
recorded a valuation allowance could expire without being utilized resulting in an
increased tax expense in the period in which we believe it more likely than not that the
carryforwards will not be realized. If we were to earn substantial taxable income for a
number of years, the carryforwards against which we have recorded a valuation allowance
could be utilized resulting in a decreased tax expense in the period in which we believe it
more likely than not that the carryforwards will be realized.

Furthermore, we are subject to periodic review by domestic tax authorities for audit of
our income tax returns. These audits generally include questions regarding our tax filing
positions, including the amount and timing of deductions and the allocation of income
among various tax jurisdictions. In evaluating the exposures associated with our various
tax filing positions, including federal and state taxes, we believe we have complied with
the rules of the service codes and therefore have not recorded reserves for any possible
exposure. Typically the taxing authorities can audit the previous three years of tax
returns and in certain situations audit

Securities and Exchange Commission

October 6, 2005

Page 5

additional years, therefore a significant amount
of time may pass before an audit is conducted and fully resolved. Although no audits are
currently being conducted if a taxing authority would require us to amend a prior years
tax return we would record the increase or decrease in our tax obligation in the year in
which it is more likely than not to be realized.

     We trust that the responses provided herein satisfactorily address your comments. We
acknowledge that the company is: a) responsible for the adequacy and accuracy of the disclosures in
our filings; b) that our responses to the Staff comments or changes in our disclosures do not
foreclose the Commission from taking any action with respect to the filing, and; c) that the
company may not assert Staff comments as a defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

Sincerely,

MEADOW VALLEY CORPORATION

/s/ Clint
L. Tryon

Clint L. Tryon

Principal Accounting Officer