SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2006

Commission File Number 0-18350

GRANITE CONSTRUCTION INCORPORATED

585 West Beach Street
Watsonville, California 95076
Telephone: (831) 724-1011

This report contains 16 pages.

 

 

Item 4.		FINANCIAL STATEMENTS AND SCHEDULE PREPARED IN ACCORDANCE WITH THE FINANCIAL REPORTING REQUIREMENTS OF ERISA

     The following documents are filed as part of this report:

1. Financial Statements. The following financial statements are filed as part of this report:

		Form 11-K
		Pages
Report of Independent Registered Public Accounting Firm			F-3
Statements of Net Assets Available for Benefits at December 31, 2006 and 2005			F-4
Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2006			F-5
Notes to Financial Statements			F-6-F-10

2. Financial Statements Schedule. The following financial statement schedule of the Granite Construction Profit Sharing and 401(K) Plan (“Plan”) for the year ended December 31, 2006 is filed as part of this report and shall be read in conjunction with the financial statements of the Plan.

		Form 11-K
		Pages
Schedule of Assets (Held at End of Year) at December 31, 2006			S-1

EXHIBITS

The following exhibit is attached hereto and filed herewith:

Exhibit
Number
23		Consent of Independent Registered Public Accounting Firm

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused the annual report to be signed on its behalf by the undersigned hereunto duly authorized.

		GRANITE CONSTRUCTION
		PROFIT SHARING AND 401(K) PLAN
Date: June 26, 2007		By:		/s/ Charles A. May
				Charles A. May
				Secretary
		By:		/s/ James H. Roberts
				James H. Roberts
				Committee Member

INDEX TO EXHIBITS

Exhibit
Number		Document
23		Consent of Independent Registered Public Accounting Firm

Granite Construction
Profit Sharing and 401(k) Plan
Financial Statements
as of December 31, 2006 and 2005 and
for the year ended December 31, 2006

Granite Construction
Profit Sharing and 401(k) Plan
Index of Financial Statements and Schedule

		Pages
Report of Independent Registered Public Accounting Firm			F-3
Financial Statements:
Statements of Net Assets Available for Benefits at December 31, 2006 and 2005			F-4
Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2006			F-5
Notes to Financial Statements			F-6
Supplemental Schedule:
Schedule H, line 4i — Schedule of Assets (Held At End of Year) at December 31, 2006			S-1
EXHIBIT 23

Supplemental schedules other than the above are omitted because they are not applicable.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants and
Plan Administrator of the
Granite Construction
Profit Sharing and 401(k) Plan

We have audited the financial statements of Granite Construction Profit Sharing and 401(k) Plan (the Plan) as of December 31, 2006 and 2005, and for the year ended December 31, 2006, as listed in the accompanying table of contents. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Plan’s management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2006 and 2005, and the changes in net assets available for benefits for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule, as listed in the accompanying table of contents, is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ Mohler, Nixon & Williams
MOHLER, NIXON & WILLIAMS
Accountancy Corporation

Campbell, California
June 22, 2007

Granite Construction
Profit Sharing and 401(k) Plan

		December 31,
		2006				2005
Assets
Investments, at fair value		$	181,727,858			$	151,103,458
Contributions receivable from employer			2,606,603				1,782,748
Contributions receivable from employees			9,236				18,876
Non-interest bearing cash			56,344				157,633
Net assets available for benefits		$	184,400,041			$	153,062,715

The accompanying notes are an integral part of these financial statements.

Granite Construction
Profit Sharing and 401(k) Plan

		Year ended
		December 31, 2006
Changes to net assets available for benefits attributed to:
Investment activities:
Net appreciation in fair value of investments		$	18,872,009
Interest and dividends			8,220,040
Net additions from investment activities			27,092,049
Contributions:
Employee			12,504,788
Employer			8,194,479
Total contributions			20,699,267
Distributions to participants			(17,767,976	)
Diversification from employee stock ownership plan			1,313,986
Change in net assets available for benefits during the year			31,337,326
Net assets available for benefits, beginning of year			153,062,715
Net assets available for benefits, end of year		$	184,400,041

The accompanying notes are an integral part of these financial statements.

Granite Construction
Profit Sharing and 401(k) Plan

1.		Description of Plan
		The following description of Granite Construction Profit Sharing and 401(k) Plan (the “Plan”) provides only general information. The Plan document provides a more complete description of the Plan’s provisions.
		General
		The Plan is a defined contribution Plan covering all eligible non-union employees of Granite Construction Incorporated and its participating subsidiaries (the “Company”). Employees generally become eligible to participate in the Plan as of December 31 of the year of hire if the employee is credited with at least 1,000 hours of work in that year and was an employee on December 31. The Company does not guarantee the benefits provided by the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.
		The Company has appointed an Administrative Committee (“Committee”). The Committee has exclusive authority and responsibility for all matters in connection with the operation and administration of the Plan (including the authority and responsibility to invest, manage, and control the assets of the Plan specifically allocated to the trustee and investment managers). The Company paid all necessary and proper expenses incurred in the administration of the Plan. Such expenses are primarily comprised of legal fees, auditing fees and expenses relating to the maintenance of the Plan’s records.
		Contributions
		The Company makes profit sharing and 401(k) matching contributions. Profit sharing contributions from the Company may be contributed to the Plan in an amount (or under such formula) as may be determined by the Company’s Board of Directors. Profit sharing contributions are payable solely out of the Company’s current or accumulated earnings and profits. The profit sharing contribution shall not exceed the maximum amount deductible under the provisions of the Internal Revenue Code. The Company must pay the total profit sharing contribution to the Plan trustee before the date the Company is required to file its federal income tax return (including extensions). Profit sharing contributions amounted to $2,597,681 in 2006.
		The Company’s 401(k) matching contribution is based on a formula, as described by the Plan. The Company’s matching contribution is paid into the Plan at the same time as the employee contributions are paid into the Plan. Matching contributions were $5,589,210 in 2006.
		All eligible Plan participants could make combined contributions to the Plan of up to $15,000 during 2006. Plan participants who reach age 50 during the Plan year have the option to make an additional pre-tax salary contribution of up to $5,000 in 2006. This “Catch Up” provision is offered as required by the Economic Growth and Tax Relief Reconciliation Act of 2001. “Catch Up” contributions are not provided a company matching contribution.

Granite Construction
Profit Sharing and 401(k) Plan
Notes to Financial Statements

		The Plan offers an option for deferring dividends from the Granite Construction Employee Stock Ownership Plan (“ESOP”). The Dividend Equivalent Deferral or 401(k) Switchback option allows participants in the ESOP to elect an additional pre-tax salary deferral to the 401(k) Plan equal to the amount of the ESOP dividend passed through to them.
		Employee Stock Ownership Plan Diversification Account
		The Plan permits certain participants under the ESOP to have monies from a portion of their ESOP stock account transferred to the Plan. No portion of the participant’s ESOP diversification account may be invested in the Granite Construction Inc. Common Stock Fund.
		Participant Accounts
		Contributions received by the Plan are deposited with the Plan trustee and custodian, Mercer Trust Company (“Mercer”). Each eligible participant’s account is credited with an allocation of (a) the Company’s 401(k) match and profit sharing contributions, (b) Plan earnings, (c) profit sharing forfeitures of terminated participant’s non-vested accounts and (d) participant contributions. All allocations, except participant contributions and Company’s match, are based on participants’ eligible earnings or account balances, as defined in the Plan document. The benefit to which a participant is entitled is the vested benefit that can be provided from the participant’s account. At December 31, 2006 and 2005, forfeited non-vested accounts totaled $506,778 and $503,522, respectively, and were allocated to eligible participants’ accounts.
		Benefits and Vesting
		The full amount of the participant’s profit sharing account becomes vested on his/her normal retirement date or when his/her employment with the Company terminates by reason of death or total disability, as defined in the Plan document, or when his/her five years of vesting service is completed. The full value of the participant’s elective contribution and matching account are fully vested at the time of deferral. On termination of service for any reason, including death or disability, participants with less than $1,000 in their accounts and who have not elected a rollover will receive one lump sum payout of the total value of their account balance as prescribed in the Plan. If the participant has more than $1,000 in their account upon termination, funds will not be distributed unless the participant elects to withdraw the funds as prescribed by the Plan.
		Hardship Withdrawals
		The Plan provides for withdrawals in the event of financial hardship, as defined in the Plan document.
		Plan Assets
		Participants may direct Company and participant contributions into any of the designated investment options approved by the Committee. Included in the designated investment options are various mutual funds, a common/collective trust and the Granite Construction Inc. Common Stock Fund, the publicly traded common stock of the Company.

Granite Construction
Profit Sharing and 401(k) Plan
Notes to Financial Statements

2.		Summary of Significant Accounting Policies
		Basis of Accounting
		The financial statements have been prepared on an accrual basis in conformity with accounting principles generally accepted in the United States of America.
		Use of Estimates
		The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
		Investments
		Investments are stated at fair value as determined by quoted market prices. The Plan presents, in the statement of changes in net assets available for benefits, the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and unrealized appreciation (depreciation) on those investments.
		Non-interest bearing cash
		Non-interest bearing cash is made up of unsettled transactions relating to the Granite Construction Inc. Common Stock Fund.
		Distributions
		Distributions to participants are recorded when paid.
		Risks and uncertainties
		The Plan provides for various investment options in any combination of mutual funds, the Granite Construction Inc. Common Stock Fund and other investment securities, which the Administrator may, from time to time, make available. Investment securities are exposed to various risks, such as interest rate, market fluctuations and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits.

Mutual Funds		$	8,798,893
Common/Collective Trust			1,071,138
Common Stock			9,001,978
		$	18,872,009

4.		Tax Status
		The Internal Revenue Service has determined and informed the Company by a letter dated December 23, 2002, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (“IRC”). The Plan has been amended since receiving the determination letter. The Plan Administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
5.		Related Party and Party in Interest Transactions
		The Plan allows investment in the common stock of Granite Construction Incorporated. In addition, certain Plan investments are managed by Putnam Investments (“Putnam”). Putnam and Mercer are subsidiaries of Marsh & McLennan Companies, Inc.

Granite Construction
Profit Sharing and 401(k) Plan
Notes to Financial Statements

		Any purchases and sales of such funds and common stock are performed in the open market at fair value. Transactions in these investments qualify as party-in-interest transactions, which are exempt from prohibited transaction rules.
		Aggregate investment in the Company’s common stock at December 31 was as follows:

Date		Number of shares				Fair Value
2006			528,898			$	26,614,155
2005			621,624			$	22,322,509

6.		Plan Termination
		Although it has not expressed any intent to do so, the Company may terminate the Plan at any time. In the event of termination of the Plan, all participants who are employed by the Company at the date of termination will become 100% vested in their account balances.
7.		Reconciliation of Financial Statements to Form 5500
		The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2006 and 2005 to Form 5500:

		December 31,
		2006				2005
Net assets available for benefits per the financial statements		$	184,400,041			$	153,062,715
Amounts allocated to withdrawing participants			(13,490,444	)			(11,564,817	)
Net assets available for benefits per the Form 5500		$	170,909,597			$	141,497,898

The following is a reconciliation of distributions to participants per the financial statements for the year ended December 31, 2006 to Form 5500:

Distributions to participants per the financial statements		$	17,767,976
Amounts allocated to withdrawing participants at December 31, 2006			13,490,444
Amounts allocated to withdrawing participants at December 31, 2005			(11,564,817	)
Distributions to participants per Form 5500		$	19,693,603

		Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims not yet paid for participants with termination dates equal to or prior to December 31.
8.		Subsequent Event

Effective January 1, 2007 the Plan was amended to conform with the Pension Protection Act (PPA). Participants who are credited with at least one hour of service on or after January 1, 2007 will be 100% vested when credited with a total of three years of service. In addition, the Plan was amended to include an auto-enrollment provision.

Granite Construction
Profit Sharing and 401(k) Plan

Description of

investments including

maturity date, rate of

interest, collateral,

Cost

Current

(a)

(b) Identity of issuer, borrower, lessor or similar party

(c)

par or maturity value

(d)

(1)

(e)

Value

*

Granite Construction Incorporated

Common Stock

$

26,614,155

Harbor Capital International Fund

Mutual Fund

18,998,424

Franklin-Templeton Balance Sheet Investment Fund

Mutual Fund

17,916,082

*

Putnam

Money Market Fund

15,430,050

Vanguard Capital Opportunities Admiral Share Fund

Mutual Fund

14,963,369

*

Putnam Asset Allocation Fund: Growth Portfolio

Mutual Fund

12,422,259

The Clipper Fund

Mutual Fund

12,130,337

Vanguard Morgan Growth Fund

Mutual Fund

10,761,184

Loomis Sayles Bond Fund

Mutual Fund

10,243,383

Lord Abbett Mid-Cap Value Fund

Mutual Fund

9,217,863

*

Putnam S&P 500 Index Fund

Common/Collective Trust

8,473,646

*

Putnam Asset Allocation Fund: Balanced Portfolio

Mutual Fund

7,017,609

PIMCO Total Return Fund

Mutual Fund

6,202,823

Fremont U.S. Micro Cap Institutional Fund

Mutual Fund

4,942,903

*

Putnam Diversified Income Trust Fund

Mutual Fund

2,883,174

*

Putnam Asset Allocation Fund: Conservative Portfolio

Mutual Fund

2,871,855

Northern Small-Cap Value Fund

Mutual Fund

638,742

Total investments

$

181,727,858