-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OTBhz1Y0M1HXol2SAwNeqE/m+1KdqD4OCE+SGl/QhGH/PcgxyyRG1esprDCfPh4C Wf8P0PQcRF/KIWHBKi68SQ== 0000077543-97-000009.txt : 19970815 0000077543-97-000009.hdr.sgml : 19970815 ACCESSION NUMBER: 0000077543-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERINI CORP CENTRAL INDEX KEY: 0000077543 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL BUILDING CONTRACTORS - NONRESIDENTIAL BUILDINGS [1540] IRS NUMBER: 041717070 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06314 FILM NUMBER: 97662087 BUSINESS ADDRESS: STREET 1: 73 MT WAYTE AVE CITY: FRAMINGHAM STATE: MA ZIP: 01701 BUSINESS PHONE: 5086282000 10-Q 1 PERINI CORPORATION 1997 2ND QUARTER FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-6314 Perini Corporation (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-1717070 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 73 MT. WAYTE AVENUE, FRAMINGHAM, MASSACHUSETTS 01701-9160 (Address of principal executive offices) (Zip code) (508)-628-2000 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No At August 12, 1997, 5,157,046 shares of common stock of the registrant were outstanding. Page 1 of 16 PERINI CORPORATION & SUBSIDIARIES QUARTERLY REPORT ON FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997 TABLE OF CONTENTS Page Number Part I. - Financial Information: Item 1. Financial Statements Consolidated Condensed Balance Sheets - 3 June 30, 1997 and December 31, 1996 Consolidated Condensed Statements of Income - 4 Three Months and Six Months ended June 30, 1997 and 1996 Consolidated Condensed Statements of Cash Flows - 5 Six Months ended June 30, 1997 and 1996 Notes to Consolidated Condensed Financial Statements 6 - 8 Item 2. Management's Discussion and Analysis of the Consolidated 9 - 11 Financial Condition and Results of Operations Part II. - Other Information: Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 - 15 Signatures 16
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PERINI CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) JUNE 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996 (1) (In Thousands) ASSETS JUNE 30, DEC. 31, 1997 1996 ---------------- ---------------- Cash $ 41,978 $ 9,745 Accounts and Notes Receivable 171,191 188,120 Unbilled Work 41,386 35,600 Construction Joint Ventures 72,231 78,233 Real Estate Inventory, at the lower of cost or market 15,198 37,914 Deferred Tax Asset 3,285 3,513 Other Current Assets 7,440 1,655 ---------------- ---------------- Total Current Assets $ 352,709 $ 354,780 ---------------- ---------------- Land Held for Sale or Development $ 24,901 $ 21,520 Investments in and Advances to Real Estate Joint Ventures 74,827 71,253 Other --- 49 ---------------- ---------------- Total Real Estate Development Investments $ 99,728 $ 92,822 ---------------- ---------------- Other Assets $ 4,658 $ 5,574 ---------------- ---------------- Property and Equipment, less Accumulated Depreciation of $22,445 in 1997 and $23,013 in 1996 $ 10,940 $ 11,116 ---------------- ---------------- $ 468,035 $ 464,292 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current Maturities of Long-Term Debt $ 7,084 $ 16,421 Accounts Payable 193,493 183,407 Advances from Construction Joint Ventures 25,391 47,544 Deferred Contract Revenue 28,467 23,841 Accrued Expenses 22,101 26,823 ---------------- ---------------- Total Current Liabilities $ 276,536 $ 298,036 ---------------- ---------------- Deferred Income Taxes and Other Liabilities $ 31,161 $ 31,297 ---------------- ---------------- Long-Term Debt, including real estate development debt of $2,558 in 1997 and $4,287 in 1996 $ 87,734 $ 96,893 ---------------- ---------------- Minority Interest $ 2,185 $ 2,508 ---------------- ---------------- Redeemable Convertible Series B Preferred Stock $ 27,988 $ --- ---------------- ---------------- Stockholders' Equity: Preferred Stock $ 100 $ 100 Series A Junior Participating Preferred Stock --- --- Stock Purchase Warrants 2,233 --- Common Stock 5,267 5,032 Paid-In Surplus 55,842 57,080 Retained Deficit (16,472) (20,666) ESOT Related Obligations (2,784) (3,856) ---------------- ---------------- $ 44,186 $ 37,690 Less - Treasury Stock 1,755 2,132 ---------------- ---------------- Total Stockholders' Equity $ 42,431 $ 35,558 ---------------- ---------------- $ 468,035 $ 464,292 ================ ================
The accompanying notes are an integral part of these financial statements. (1) Derived from the audited December 31, 1996 financial statements. 3
PERINI CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, Except Per Share Data) THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------- -------------- 1997 1996 1997 1996 --------------- --------------- --------------- --------------- REVENUES FROM OPERATIONS: Construction $ 361,651 $ 307,238 $ 679,168 $ 565,753 Real Estate 27,273 9,254 36,975 20,768 --------------- --------------- --------------- --------------- TOTAL REVENUES FROM OPERATIONS $ 388,924 $ 316,492 $ 716,143 $ 586,521 --------------- --------------- --------------- --------------- COST AND EXPENSES: Cost of Operations $ 375,712 $ 302,810 $ 690,799 $ 561,060 General, Administrative and Selling Expenses 8,116 8,522 14,936 16,656 --------------- --------------- --------------- --------------- $ 383,828 $ 311,332 $ 705,735 $ 577,716 --------------- --------------- --------------- --------------- INCOME FROM OPERATIONS $ 5,096 $ 5,160 $ 10,408 $ 8,805 Other Income (Expense), Net (327) (33) (925) (369) Interest Expense (2,321) (2,768) (5,059) (4,475) --------------- --------------- --------------- --------------- Income Before Income Taxes $ 2,448 $ 2,359 $ 4,424 $ 3,961 Provision for Income Taxes (Note 2) 115 335 230 450 --------------- --------------- --------------- --------------- NET INCOME $ 2,333 $ 2,024 $ 4,194 $ 3,511 =============== =============== =============== =============== EARNINGS PER COMMON SHARE (Note 3) $ 0.19 $ 0.31 $ 0.34 $ 0.51 =============== =============== =============== =============== DIVIDENDS PER COMMON SHARE (Note 4) $ --- $ --- $ --- $ --- =============== =============== =============== =============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 3) 5,033,462 4,785,537 4,975,685 4,758,440 =============== =============== =============== ===============
The accompanying notes are an integral part of these financial statements. 4
PERINI CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (In Thousands) SIX MONTHS ENDED JUNE 30, 1997 1996 -------------- -------------- Cash Flows from Operating Activities: Net Income $ 4,194 $ 3,511 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization 1,293 1,329 Noncurrent deferred taxes and other liabilities (136) 2,831 Distributions greater (less) than earnings of joint ventures and affiliates (6,563) 2,735 Cash provided from (used by) changes in components of working capital other than cash, notes payable and current maturities of long-term debt (6,826) (32,851) Sale of interest in real estate joint venture 17,149 --- Real estate development investments other than joint ventures (377) 411 Other non-cash items, net (600) (978) -------------- -------------- NET CASH PROVIDED FROM (USED BY) OPERATING ACTIVITIES $ 8,134 $ (23,012) -------------- -------------- Cash Flows from Investing Activities: Proceeds from sale of property and equipment $ 400 $ 1,210 Cash distributions of capital from unconsolidated joint ventures 16,904 4,182 Acquisition of property and equipment (840) (783) Improvements to land held for sale or development (90) (62) Improvements to real estate properties used in operations --- (111) Capital contributions to unconsolidated joint ventures (1,948) (7,248) Advances to real estate joint ventures, net (4,072) (1,664) Investments in other activities 885 (557) -------------- -------------- NET CASH PROVIDED FROM (USED BY) INVESTING ACTIVITIES $ 11,239 $ (5,033) -------------- -------------- Cash Flows from Financing Activities: Series B preferred stock issued, net $ 26,558 $ --- Proceeds of long-term debt --- 11,593 Repayment of long-term debt (15,564) (715) Common stock issued 1,701 --- Treasury stock issued 165 1,107 -------------- -------------- NET CASH PROVIDED FROM FINANCING ACTIVITIES $ 12,860 $ 11,985 -------------- -------------- Net Increase (Decrease) in Cash $ 32,233 $ (16,060) Cash at Beginning of Year 9,745 29,059 -------------- -------------- Cash at End of Period $ 41,978 $ 12,999 ============== ============== Supplemental Disclosures of Cash paid during the period for: Interest $ 5,013 $ 4,118 ============== ============== Income tax payments (refunds) $ 253 $ 183 ============== ==============
The accompanying notes are an integral part of these financial statements. 5 PERINI CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (1) Significant Accounting Policies The significant accounting policies followed by the Company and its subsidiaries in preparing its consolidated financial statements are set forth in Note (1) to such financial statements included in Form 10-K for the year ended December 31, 1996. The Company has made no significant change in these policies during 1997. The Financial Accounting Standards Board has issued Statement No. 128 Earnings per Share. The Company will implement the provisions of the Statement for the year ending December 31, 1997. The Statement requires replacement of primary earnings per shares (EPS) with basic EPS, which is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding. Diluted EPS, which gives effect to all dilutive potential common shares outstanding, will still be required. All prior-period EPS data presented shall be restated. The EPS amounts shown on the Company's consolidated statement of operations for the three month and six month periods ended June 30, 1997 and June 30, 1996 are the equivalents of basic EPS. Diluted EPS are not required (see Note 3 below). The Financial Accounting Standards Board has issued Statement No. 129 Disclosure of Information about Capital. The Statement continues the requirements to disclose certain information about an enterprise's capital structure prescribed by previous accounting standards. The Company's current disclosures are in compliance with the requirements of the Statement. The Financial Accounting Standards Board has issued Statement No. 130 Reporting Comprehensive Income. The Company will implement the provisions of the Statement in the quarter ending March 31, 1998. The Statement requires an enterprise to report certain changes in stockholders' equity that are not reported in net income, except those resulting from investments by and distributions to stockholders, and display these gains and losses below net income in the income statement, in a separate statement that begins with net income or in the statement of changes in stockholders' equity. The provisions of the Statement are limited to issues of reporting and presentation and do not affect matters of recognition and measurement of items of comprehensive income. Consequently, the Company does not expect the effect of its adoption of the Statement to be material. The Financial Accounting Standards Board has issued Statement No. 131 Disclosures about Segments of an Enterprise and Related Information which supersedes Statement No. 14 Financial Reporting for Segments of a Business Enterprise. The Company will implement the provisions of the Statement for the year ending December 31, 1998. Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. The Statement requires an enterprise to report a measure of segment profit or loss, certain specific revenue and expense items and segment assets. It requires reconciliations of total segment revenues, total segment profit or loss, total segment assets, and other amounts disclosed for segments to corresponding amounts in the enterprise's financial statements. It requires an enterprise to report information about the revenues derived from its products or services (or groups of similar products and services), about the countries in which the enterprise earns revenues and holds assets, and about major customers. The provisions of the Statement relate primarily to issues of reporting and presentation, and the Company does not expect the effect of its adoption of the Statement to be material. 6 PERINI CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) (2) Provision For Income Taxes The lower-than-normal tax rate in 1997 and 1996 reflects the realization of a portion of the tax benefit not recognized in prior years due to certain accounting limitations. (3) Per Share Data Computations of earnings per common share amounts are based on the weighted average number of the Company's common shares outstanding during the periods presented. Earnings available for common shares are calculated as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, ------------------------------ ------------------------------ 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Net Income $ 2,333 $ 2,024 $ 4,194 $ 3,511 ------------ ------------ ------------ ------------ Less: Accrued dividends on Senior Preferred Stock (531) (531) (1,062) (1,062) Dividends declared on Series B Preferred Stock (762) --- (1,246) --- Accretion deduction required to reinstate mandatory redemption value of Series B Preferred Stock over a period of 8-10 years (95) --- (184) --- ------------ ------------ ------------ ------------ $ (1,388) $ (531) $ (2,492) $ (1,062) ------------ ------------ ------------ ------------ Earnings Available for Common Shares $ 945 $ 1,493 $ 1,702 $ 2,449 ============ ============ ============ ============
Common stock equivalents related to additional shares of common stock issuable upon exercise of stock options have not been included since their effect would be antidilutive. Per share data on a fully diluted basis is not presented because the effect of conversion of the Company's depositary convertible exchangeable preferred shares and Series B preferred shares into common stock is also antidilutive. (4) Dividends There were no cash dividends on common stock declared or paid during the periods included in the consolidated condensed financial statements presented herein. As previously disclosed, in conjunction with the covenants of the Company's Amended Revolving Credit Agreement as well as the New Credit Agreement, effective January 17, 1997, the Company is required to suspend the payment of quarterly dividends on its $21.25 preferred stock (equivalent to $2.125 per depositary share) ("Senior Preferred Stock") until certain financial criteria are met. Therefore, the dividends on the Senior Preferred Stock have not been declared since 1995 (although they have been fully accrued due to the "cumulative" feature of the Senior Preferred Stock). The aggregate amount of dividends in arrears is $3,787,500 at June 30, 1997, which represents approximately $37.88 per share of Preferred Stock or approximately $3.79 per depositary share. 7 PERINI CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) In-kind dividends (based on an annual rate of 10%) were paid on March 17, 1997 on the Series B Preferred Stock for the period from January 17, 1997 (date of issuance) to March 15, 1997 to the stockholders of record on March 1, 1997. The dividend was paid in the form of approximately 2,419 additional shares of Series B Preferred Stock valued at $200.00 per share for a total of $483,815. In-kind dividends for the seconds quarter were paid on June 16, 1997 on the Series B Preferred Stock to the stockholders of record on June 1, 1997. The dividend was paid in the form of approximately 3,814 additional shares of Series B Preferred Stock valued at $200.00 per share for a total of $762,846. (5) Basis of Presentation The unaudited consolidated condensed financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 1996. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company's financial position as of June 30, 1997 and results of operations and cash flows for the six month periods ended June 30, 1997 and 1996. The results of operations for the six month period ended June 30, 1997 may not be indicative of the results that may be expected for the year ending December 31, 1997, because the Company's results generally consist of a limited number of large transactions in both construction and real estate. Therefore, such results can vary depending on the timing of transactions and the profitability of projects being reported. (6) New Equity and New Credit Agreement As disclosed in Note 14 to the Company's financial statements included in the Company's Form 10-K for the year ended December 31, 1996, on January 17, 1997, the Company's stockholders approved two proposals that allowed the Company to close its new equity transaction and receive net proceeds of $27 million. Concurrent with the closing of the equity transaction, the Company entered into a new renegotiated Revolving Credit Agreement. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Results of Operations - --------------------- Comparison of the Second Quarter of 1997 with the Second Quarter of 1996 Revenues increased $72.4 million (or 23%), from $316.5 million in 1996 to $388.9 million in 1997. This increase resulted from increased construction revenues of $54.4 million (or 18%), from $307.2 million in 1996 to $361.6 million in 1997, due primarily to an increase in revenues from building operations of $40.0 million (or 20%), from $203.5 million in 1996 to $243.5 million in 1997, and to a lesser degree, an increase in revenues from civil operations of $14.4 million (or 14%), from $103.7 million in 1996 to $118.1 million in 1997. Increased building construction revenues were due primarily to hotel/casino projects in Las Vegas which was partially offset by a decrease in building construction revenues in the Midwest due to a substantial decrease in backlog going into 1997. Increased civil construction revenues were due primarily to the favorable impact from several large infrastructure projects in the Boston and Metropolitan New York areas which was partially offset by a decrease in civil construction revenues in the Midwest due to a substantial decrease in backlog going into 1997. Real estate revenues also increased by $18.0 million, from $9.3 million in 1996 to $27.3 million in 1997 because of revenues related to the sale of the Company's interest in the Resort at Squaw Creek in Squaw Valley, California. In spite of the increase in revenues, total gross profit decreased slightly by $.5 million (or 3%), from $13.7 million in 1996 to $13.2 million in 1997 due to an overall decrease in gross profit from construction operations of $.5 million, from $14.1 million in 1996 to $13.6 million in 1997. This net decrease in gross profit from construction was caused by losses incurred in closing out work in two Midwest divisions, which the Company is in the process of phasing out, and an increase in the estimated loss on the completion of a large tunnel project in the Midwest. These gross profit decreases were partially offset by profits related to the increased building and civil construction revenues referred to above. In spite of the Company's sale of its interest in the Resort at Squaw Creek, the gross loss in 1997 was comparable to the $.4 million gross loss reported in 1996, since the loss realized on the sale of the Resort was fully provided for in prior years. General, administrative and selling expenses decreased by $.4 million (or 5%), from $8.5 million in 1996 to $8.1 million in 1997 primarily due to down-sizing and refocusing of certain marginal construction units. Other income (expense) net decreased by $.3 million, from a net expense of zero in 1996 to a net expense of $.3 million in 1997 due to increased amortization of deferred debt expense related to the new credit agreement. Interest expense decreased by $.4 million (or 15%), from $2.7 million in 1996 to $2.3 million in 1997, due primarily to less borrowings from construction joint ventures during the period. The lower than normal tax rate in 1997 and 1996 is due to the utilization of tax loss carry forwards from prior years. Because of certain accounting limitations, the Company was not able to recognize a portion of the tax benefit related to the operating loss experienced in fiscal 1996 and 1995. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) Comparison of the Six Months Ended June 30, 1997 with the Six Months Ended June 30, 1996 Revenues increased $129.6 million (or 22%), from $586.5 million in 1996 to $716.1 million in 1997. This increase resulted from increased construction revenues of $113.4 million (or 20%), from $565.7 million in 1996 to $679.1 million in 1997, due primarily to an increase in revenues from building construction operations of $107.0 million (or 28%), from $381.7 million in 1996 to $488.7 million in 1997. Increased building construction revenues were due primarily to hotel/casino projects in Las Vegas and to a lesser degree an increase in revenues from correctional facility projects in the East, which were partially offset by a decrease in building construction revenues in the Midwest due to a substantial decrease in backlog going into 1997. In addition, revenues from civil construction operations increased $6.4 million (or 3.5%), from $184.0 million in 1996 to $190.4 million in 1997 due primarily to several large infrastructure projects in the Boston and Metropolitan New York areas, which was partially offset by a decrease in civil construction revenues in the Midwest due to a substantial decrease in backlog going into 1997. Revenues from real estate operations increased $16.2 million, from $20.8 million in 1996 to $37.0 million in 1997 because of revenues related to the sale of the Company's interest in the Resort at Squaw Creek. In spite of the increase in revenues described above, total gross profit decreased slightly from $25.4 million in 1996 to $25.3 million in 1997. The gross loss from real estate operations increased by $.3 million, from $.3 million in 1996 to $.6 million in 1997 due primarily to a decrease in condominium sales in Georgia on a project that was completely sold out in 1996. In spite of the increase in construction revenues referred to above, the overall gross profit reflected a net increase of only $.2 million, from $25.7 million in 1996 to $25.9 million in 1997 due to losses incurred in closing out work in two Midwest divisions, which the Company is in the process of phasing out, and an increase in the estimated loss on the completion of a large tunnel project in the Midwest, which substantially offset increases in gross profit related to the increase in revenues. General, administrative and selling expenses decreased by $1.7 million (or 10%), from $16.6 million in 1996 to $14.9 million in 1997 primarily due to down-sizing and refocusing of certain marginal construction units. Other income (expense) net increased by $.5 million, from a net expense of $.4 million in 1996 to a net expense of $.9 million in 1997 due primarily to increased amortization of deferred debt expense related to the new credit agreement. Interest expense increased by $.6 million (or 13%), from $4.5 million in 1996 to $5.1 million in 1997 due to a higher average level of borrowings during the first quarter of 1997 as well as higher effective interest rates. The lower than normal tax rate in 1997 and 1996 is due to the utilization of tax loss carry forwards from prior years. Because of certain accounting limitations, the Company was not able to recognize a portion of the tax benefit related to the operating losses experienced in fiscal 1996 and 1995. Financial Condition - ------------------- Working capital increased $19.5 million, from $56.7 million at the end of 1996 to $76.2 million at June 30, 1997. The current ratio increased slightly from 1.19 to 1 to 1:28 to 1 during this same period. During the first six months of 1997, the Company generated $32.2 million in cash from the following sources: $8.1 million in cash from operating activities, primarily from the sale of its interest in the Resort 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) at Squaw Creek; $11.2 million from investing activities, primarily from distributions of capital from various construction joint ventures; and $12.9 million net from financing activities due to $26.6 million in net proceeds from the sale of the Series B Preferred Stock and repayment of approximately $16 million in long-term debt. Long-term debt at June 30, 1997 was $87.7 million, a decrease of $9.2 million from December 31, 1996. The long-term debt to equity ratio at June 30, 1997 was 2:07 to 1, compared to 2:72 to 1 at December 31, 1996. Effective January 17, 1997 the Company's liquidity and access to future borrowings, as required, during the next few years were significantly enhanced by the $27 million in net proceeds received upon the issuance of the new Series B Preferred Stock and a new renegotiated Revolving Credit Agreement. Under the new Credit Agreement, the previous Revolving Credit Agreement and Bridge Loan Facility were combined into a single $129.5 million credit facility and the expiration dates extended from 1997 to January 1, 2000. The new Credit Agreement provides for scheduled mandatory reductions in the commitment in the amount of $15.0 million in 1997, $15.0 million in 1998, $12.5 million in 1999 and the balance in 2000. Management believes that cash generated from operations, existing credit lines and additional borrowings should be adequate to meet the Company's funding requirements for at least the next twelve months. Outlook - ------- The statements contained in this Outlook that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding the Company's expectations, hopes, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this Outlook are based on information available to the Company on the date hereof. It is important to note that the Company's actual results could differ materially from those in such forward-looking statements. Looking ahead, we must consider the Company's construction backlog and remaining portfolio of real estate projects. The overall construction backlog at June 30, 1997 was a $1.59 billion, which represented a 5% increase over the backlog at December 31, 1996. While approximately 53% of the current backlog relates to building construction projects, which generally represent lower risk and lower margin work, approximately 47% of the current backlog relates to civil construction projects, which generally represent higher risk, but correspondingly higher margin work. The Company's strategic plan to generate up to $30 million in short-term liquidity from certain of its real estate properties, through accelerated sales, is proceeding according to plan. 11 Part II. - Other Information - ---------------------------- Item 1. - Legal Proceedings On July 30, 1993, the U.S. District Court (D.C.), in a preliminary opinion, upheld terminations for default on two adjacent contracts for subway construction between Mergentime-Perini, under two joint ventures, and the Washington Metropolitan Area Transit Authority ("WMATA") and found the Mergentime Corporation, Perini Corporation and the Insurance Company of North America, the surety, jointly and severally liable to WMATA for damages in the amount of $16.5 million, consisting primarily of excess reprocurement costs to complete the projects. Many issues were left partially or completely unresolved by the opinion, including substantial joint venture claims against WMATA. As a result of developments in the case during the third quarter of 1995, the Company established a reserve with respect to the litigation. In July 1997, the remaining issues were ruled on by the Court, which awarded approximately $4.3 million to the joint venture, thereby reducing the net amount payable to approximately $12.2 million. The joint venture currently plans to appeal the decision. As a result of the decision, there is no immediate impact on the Company's Statement of Income because of the reserve provided in prior years. The actual funding of net damages, if any, will be deferred until the appeal process is complete. Item 2. - Changes in Securities (a)(b)(c) On January 17, 1997, the Company issued and sold 150,150 shares of Series B Cumulative Convertible Preferred Stock, par value $1.00 per share (the "Series B Preferred"), to PB Capital Partners, L.P., The Union Labor Life Insurance Company Separate Account P and The Common Fund for Non-Profit Organizations for a price of $200 per share, or a total purchase price of $30,030,000. Dividends are payable on the Series B Preferred either in cash or in additional shares of Series B Preferred (a "Payment- In-Kind"). The cash dividend rate is 7 percent (9 percent upon the occurrence of certain defaults) and the Payment-In-Kind dividend rate is 10 percent (12 percent upon the occurrence of certain defaults) of the Liquidation Preference, which is equal to $200 per share of Series B Preferred. The terms of the Series B Preferred provide that no cash dividends or other cash distributions may be paid in respect of the Company's Common Stock until 2001, at which time limited dividends may be paid if authorized by the Board of Directors. Each share of Series B Preferred is convertible, at any time, at the election of the holder, into fully paid and nonassessable shares of Common Stock at the rate of that number of shares of Common Stock that is equal to the Liquidation Preference. Holders of the Series B Preferred have voting rights equal to the number of shares of Common Stock into which it is convertible and will vote as a class with holders of the Common Stock. Upon the issuance of the Series B Preferred, the rights of existing stockholders were affected in several principal ways. As the Series B Preferred is convertible and have voting rights equal to the number of shares of Common Stock into which it is convertible, the voting rights of existing stockholders is diluted. In addition, the right of the holders of the Series B Preferred to designate certain directors and members of the Executive Committee, including providing such Executive Committee members with an effective veto over certain major decisions of the Company, is also a dilutive effect on the voting rights of stockholders. In addition, the Series B Preferred may also have a dilutive effect on the earnings per share of the Company due to the increase in number of shares of Common Stock on a fully diluted basis. Furthermore, the book value of each share of Common Stock may decrease due to a conversion price below book value. Registration under the Securities Act of 1933, as amended (the "Act"), of the Series B 12 Part II. - Other Information (Continued) - ---------------------------------------- Preferred was not required for the reason that the Series B Preferred was issued and sold to a limited number of investors and accomplished in transactions not involving a public offering within the meaning of Section 4(2) of the Act. Item 3. - Defaults Upon Senior Securities (a) None (b) In accordance with the provisions of the 1995 Amended Revolving Credit Agreement and the recently renegotiated new Credit Agreement, the Company suspended payment of quarterly dividends on its $21.25 Convertible Exchangeable Preferred Stock ("Senior Preferred Stock") commencing with the dividend that normally would have been declared during December, 1995 through the dividend that would normally have been declared during June, 1997 for a total arrearage of $37.1875 per share (or $3.71875 per depositary share) which aggregates $3,718,750 to date. While these dividends have not been declared or paid, they have been fully accrued in accordance with the "cumulative" feature of the stock. Item 4. - Submission of Matters to a Vote of Security Holders (a) May 15, 1997 - Annual Meeting of Shareholders (b) Not applicable (c) (1) Nominees for Class I Directors as listed in the proxy statement, to hold office for a three year term, expiring in 2000 and until their successors are chosen and qualified, were elected with the following vote: Number of Votes ------------------------------------------ Class I Director For Against Abstain - -------------------------- ------------ ------------- ------------- Marshall M. Criser 6,659,957 --- 101,136 Arthur J. Fox, Jr. 6,658,990 --- 102,103 Nancy Hawthorne 6,658,704 --- 102,389 Michael R. Klein 6,659,974 --- 101,119 (d) Not applicable Item 5. - Other Information - None Item 6. - Exhibits and Reports on Form 8-K (a) The following designated exhibits are, as indicated below, either filed herewith or have heretofore been filed with the Securities and Exchange Commission under the Securities Act of 1933 or the Securities Act of 1934 and are referred to and incorporated herein by reference to such filings. Exhibit 3. Articles of Incorporation and By-laws Incorporated herein by reference: 13 Part II. - Other Information (Continued) 3.1 Restated Articles of Organization - As amended through January 17, 1997 - Exhibit 3.1 to 1996 Form 10-K filed March 31, 1997. 3.2 By-laws - As amended and restated as of January 17, 1997 - Exhibit 3.2 to Form 8-K filed on February 14, 1997. Exhibit 4. Instruments Defining the Rights of Security Holders, Including Indentures Incorporated herein by reference: 4.1 Certificate of Vote of Directors Establishing a Series of a Class of Stock determining the relative rights and preferences of the $21.25 Convertible Exchangeable Preferred Stock - Exhibit 4(a) to Amendment No. 1 to Form S- 2 Registration Statement filed June 19, 1987; SEC Registration No. 33- 14434. 4.2 Form of Deposit Agreement, including form of Depositary Receipt - Exhibit 4(b) to Amendment No. 1 to Form S-2 Registration Statement filed June 19, 1987; SEC Registration No. 33-14434. 4.3 Form of Indenture with respect to the 8 1/2% Convertible Subordinated Debentures Due June 15, 2012, including form of Debenture - Exhibit 4(c) to Amendment No. 1 to Form S-2 Registration Statement filed June 19, 1987; SEC Registration No. 33-14434. 4.4 Shareholder Rights Agreement dated as of September 23, 1988, as amended and restated as of May 17, 1990, as amended and restated as of January 17, 1997, between Perini Corporation and State Street Bank and Trust Company, as Rights Agent - Exhibit 4.4 to Amendment No. 1 to Registration Statement on Form 8-A/A filed on January 29, 1997. 4.5 Stock Purchase and Sale Agreement dated as of July 24, 1996 by and among the Company, PB Capital and RCBA, as amended - Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 4.8 Certificate of Vote of Directors Establishing a Series of Preferred Stock determining the relative rights and preferences of the Series B Cumulative Convertible Preferred Stock, dated January 16, 1997 - Exhibit 4.8 to Form 8- K filed on February 14, 1997. 4.9 Stock Assignment and Assumption Agreement dated as of December 13, 1996 by and among the Company, PB Capital and ULLICO (filed as Exhibit 4.1 to the Schedule 13D filed by ULLICO on December 16, 1996 and incorporated herein by reference). 4.10 Stock Assignment and Assumption Agreement dated as of January 17, 1997 by and among the Company, RCBA and The Common Fund - Exhibit 4.10 to Form 8-K filed on February 14, 1997. 4.11 Voting Agreement dated as of January 17, 1997 by and among PB Capital, 14 Part II. - Other Information (Continued) David B. Perini, Perini Memorial Foundation, David B. Perini Testamentary Trust, Ronald N. Tutor, and Tutor-Saliba Corporation - Exhibit 4.11 to Form 8-K filed on February 14, 1997. 4.12 Registration Rights Agreement dated as of January 17, 1997 by and among the Company, PB Capital and ULLICO - Exhibit 4.12 to Form 8-K filed on February 14, 1997. Exhibit 10. Material Contracts Incorporated herein by reference: 10.1 1982 Stock Option and Long Term Performance Incentive Plan - Exhibit A to Registrant's Proxy Statement for Annual Meeting of Stockholders dated April 15, 1992. 10.2 Perini Corporation Amended and Restated General Incentive Compensation Plan - Exhibit 10.2 to 1991 Form 10-K, as filed. 10.3 Perini Corporation Amended and Restated Construction Business Unit Incentive Compensation Plan - Exhibit 10.3 to 1991 Form 10-K, as filed. 10.4 Management Agreement dated as of January 17, 1997 by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation - Exhibit 10.16 to Form 8-K filed on February 14, 1997. 10.5 Amended and Restated Credit Agreement dated as of January 17, 1997 among Perini Corporation, the Banks listed herein and Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank, as Co- Agent - Exhibit 10.17 to Form 10-K filed March 31, 1997. (b) None 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Perini Corporation Registrant Date: August 14, 1997 /s/ John H. Schwarz ------------------- John H. Schwarz, Executive Vice President, Finance and Administration Date: August 14, 1997 /s/ Barry R. Blake ------------------ Barry R. Blake, Vice President and Controller 16 EX-27 2 06/30/97 FINANCIALS
5 This schedule containes summary financial information extracted from Consolidated Balance Sheets as of June 30, 1997 and the Consolidated Statements of Operations for the six months ended June 30, 1997 as qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1997 41,978 0 171,191 0 15,198 352,709 33,385 (22,445) 468,035 276,536 87,734 100 0 5,267 0 468,035 0 716,143 0 690,799 (925) 0 (5,059) 4,424 230 4,194 0 0 0 4,194 .34 0 Includes Equity in Construction Joint Ventures of $72,231, Unbilled Work of $41,386, and Other Short-Term Assets of $10,725, not currently reflected in this tag list. Includes investments in and advances to Real Estate Joint Ventures of $74,827, Land Held for Sale or Development of $24,901, and Other Long-Term Assets of $4,658, not currently reflected in this tag list. Includes Deferred Income Taxes and Other Liabilities of $31,161, Minority Interest of $2,185, Paid-In Surplus of $55,842, Retained Deficit of $(16,472), ESOT Related Obligations of $(2,784), Treasury Stock of $(1,755), Stock Purchase Warrants of $2,233 and Redeemable Convertible Series B Preferred Stock of $27,988. Includes General, Administrative and Selling Expenses of $(14,936), not currently relfected on this tag list.
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