-----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, BM2YgotqWqY+W5dMY18BK0xXnQ+0qTlW+7c72qDgHX4KqNkmzVp09pCw3OU/Nw4L rbcnWrSzDOYXc7R9g+faJQ== 0000077543-97-000013.txt : 19971117 0000077543-97-000013.hdr.sgml : 19971117 ACCESSION NUMBER: 0000077543-97-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 001-06314 FILM NUMBER: 97719790 BUSINESS ADDRESS: STREET 1: 73 MT WAYTE AVE CITY: FRAMINGHAM STATE: MA ZIP: 01701 BUSINESS PHONE: 5086282000 10-Q 1 PERINI CORPORATION 1997 3RD 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 September 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 November 13, 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 NINE MONTHS ENDED SEPTEMBER 30, 1997 TABLE OF CONTENTS Page Number ----------- Part I. - Financial Information: Item 1. Financial Statements Consolidated Condensed Balance Sheets - 3 September 30, 1997 and December 31, 1996 Consolidated Condensed Statements of Income - 4 Three Months and Nine Months ended September 30, 1997 and 1996 Consolidated Condensed Statements of Cash Flows - 5 Nine Months ended September 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 - 13 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
2 PERINI CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) SEPTEMBER 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996 (1) (In Thousands)
ASSETS SEPT. 30, DEC. 31, 1997 1996 ---------------- ---------------- Cash $ 17,066 $ 9,745 Accounts and Notes Receivable 179,268 188,120 Unbilled Work 39,835 35,600 Construction Joint Ventures 74,266 78,233 Real Estate Inventory, at the lower of cost or market 18,710 37,914 Deferred Tax Asset 2,150 3,513 Other Current Assets 7,639 1,655 ---------------- ---------------- Total Current Assets $ 338,934 $ 354,780 ---------------- ---------------- Land Held for Sale or Development $ 19,210 $ 21,520 Investments in and Advances to Real Estate Joint Ventures 78,010 71,253 Other --- 49 ---------------- ---------------- Total Real Estate Development Investments $ 97,220 $ 92,822 ---------------- ---------------- Other Assets $ 4,760 $ 5,574 ---------------- ---------------- Property and Equipment, less Accumulated Depreciation of $20,366 in 1997 and $23,013 in 1996 $ 10,614 $ 11,116 ---------------- ---------------- $ 451,528 $ 464,292 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current Maturities of Long-Term Debt $ 6,907 $ 16,421 Accounts Payable 172,142 183,407 Advances from Construction Joint Ventures 17,131 47,544 Deferred Contract Revenue 21,677 23,841 Accrued Expenses 39,295 26,823 ---------------- ---------------- Total Current Liabilities $ 257,152 $ 298,036 ---------------- ---------------- Deferred Income Taxes and Other Liabilities $ 12,401 $ 31,297 ---------------- ---------------- Long-Term Debt, including real estate development debt of $549 in 1997 and $4,287 in 1996 $ 108,096 $ 96,893 ---------------- ---------------- Minority Interest $ 1,064 $ 2,508 ---------------- ---------------- Redeemable Convertible Series B Preferred Stock $ 28,862 $ --- ---------------- ---------------- 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 54,437 57,080 Retained Deficit (13,545) (20,666) ESOT Related Obligations (2,784) (3,856) ---------------- ---------------- $ 45,708 $ 37,690 Less - Treasury Stock 1,755 2,132 ---------------- ---------------- Total Stockholders' Equity $ 43,953 $ 35,558 ---------------- ---------------- $ 451,528 $ 464,292 ================ ================
(1) Derived from the audited December 31, 1996 financial statements. The accompanying notes are an integral part of these financial statements. 3 PERINI CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, Except Per Share Data) THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 1997 1996 1997 1996 --------------- --------------- --------------- ---------------- REVENUES FROM OPERATIONS: Construction $ 320,711 $ 319,645 $ 999,879 $ 885,398 Real Estate 7,458 21,025 44,433 41,793 --------------- --------------- --------------- ---------------- TOTAL REVENUES FROM OPERATIONS $ 328,169 $ 340,670 $ 1,044,312 $ 927,191 --------------- --------------- --------------- ---------------- COST AND EXPENSES: Cost of Operations $ 314,971 $ 327,670 $ 1,005,770 $ 888,730 General, Administrative and Selling Expenses 7,207 7,976 22,143 24,632 --------------- --------------- --------------- ---------------- $ 322,178 $ 335,646 $ 1,027,913 $ 913,362 --------------- --------------- --------------- ---------------- INCOME FROM OPERATIONS $ 5,991 $ 5,024 $ 16,399 $ 13,829 Other Income (Expense), Net (233) (13) (1,158) (382) Interest Expense (2,611) (2,590) (7,670) (7,065) --------------- --------------- --------------- ---------------- Income Before Income Taxes $ 3,147 $ 2,421 $ 7,571 $ 6,382 (Provision) Benefit for Income Taxes (Note 2) (220) (110) (450) (560) --------------- --------------- --------------- ---------------- NET INCOME $ 2,927 $ 2,311 $ 7,121 $ 5,822 =============== =============== =============== ================ EARNINGS PER COMMON SHARE (Note 3) $ 0.30 $ 0.37 $ 0.64 $ 0.88 =============== =============== =============== ================ DIVIDENDS PER COMMON SHARE (Note 4) $ --- $ --- $ --- $ --- =============== =============== =============== ================ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 3) 5,157,046 4,847,187 5,030,093 4,785,264 =============== =============== =============== ================
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 NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (In Thousands) NINE MONTHS ENDED SEPT 30, 1997 1996 -------------- -------------- Cash Flows from Operating Activities: Net Income $ 7,121 $ 5,822 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization 2,073 1,938 Noncurrent deferred taxes and other liabilities (18,896) 6,447 Distributions greater than earnings of joint ventures and affiliates 2,829 2,820 Cash provided from (used by) changes in components of working capital other than cash, notes payable and current maturities of long-term debt (32,997) (46,894) Sale of interest in real estate joint ventures 19,856 --- Real estate development investments other than joint ventures 2,630 1,286 Other non-cash items, net (1,800) (1,103) -------------- -------------- NET CASH USED BY OPERATING ACTIVITIES $ (19,184) $ (29,684) -------------- -------------- Cash Flows from Investing Activities: Proceeds from sale of property and equipment $ 733 $ 1,551 Cash distributions of capital from unconsolidated joint ventures 5,630 6,732 Acquisition of property and equipment (1,181) (1,225) Improvements to land held for sale or development (334) (397) Improvements to real estate properties used in operations --- (120) Capital contributions to unconsolidated joint ventures (4,271) (14,654) Advances to real estate joint ventures, net (7,700) (5,706) Investments in other activities 768 (2,158) -------------- -------------- NET CASH USED BY INVESTING ACTIVITIES $ (6,355) $ (15,977) -------------- -------------- Cash Flows from Financing Activities: Series B preferred stock issued, net $ 26,558 $ --- Proceeds of long-term debt 17,885 32,355 Repayment of long-term debt (13,449) (1,997) Common stock issued 1,701 --- Treasury stock issued 165 1,139 -------------- -------------- NET CASH PROVIDED FROM FINANCING ACTIVITIES $ 32,860 $ 31,497 -------------- -------------- Net Increase (Decrease) in Cash $ 7,321 $ (14,164) Cash at Beginning of Year 9,745 29,059 -------------- -------------- Cash at End of Period $ 17,066 $ 14,895 ============== ============== Supplemental Disclosures of Cash paid during the period for: Interest $ 7,580 $ 6,717 ============== ============== Income tax payments $ 349 $ 201 ============== ==============
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 nine month periods ended September 30, 1997 and September 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 Nine Months Ended September 30, September 30, ------------------------------ ------------------------------ 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Net Income $ 2,927 $ 2,311 $ 7,121 $ 5,822 ------------ ------------ ------------ ------------ Less: Accrued dividends on Senior Preferred Stock $ (531) $ (531) $ (1,592) $ (1,592) Dividends declared on Series B Preferred Stock (782) --- (2,028) --- Accretion deduction required to reinstate mandatory redemption value of Series B Preferred Stock over a period of 8-10 years (95) --- (279) --- ------------ ------------ ------------ ------------ $ (1,408) $ (531) $ (3,899) $ (1,592) ------------ ------------ ------------ ------------ Earnings Available for Common Shares $ 1,519 $ 1,780 $ 3,222 $ 4,230 ============ ============ ============ ============
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 approximately $4,250,000 at September 30, 1997, which represents approximately $42.50 per share of Preferred Stock or approximately $4.25 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 the Series B Preferred Stock as follows: Payment --------------------------------------- Series B At $200.00 Record Date Payment Date Shares per Share - -------------------------- -------------------------- ---------------- ---------------- March 1, 1997 March 17, 1997 2,419 $ 483,815 June 1, 1997 June 16, 1997 3,814 $ 762,846 September 2, 1997 September 15, 1997 3,910 $ 781,916
(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 September 30, 1997 and results of operations and cash flows for the nine month periods ended September 30, 1997 and 1996. The results of operations for the nine month period ended September 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 approximately $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 Third Quarter of 1997 with the Third Quarter of 1996 Revenues decreased $12.5 million (or 3.7%), from $340.7 million in 1996 to $328.2 million in 1997. While total construction revenues remained at approximately $320 million during both 1997 and 1996, real estate revenues decreased by $13.5 million (or 64%), from $21.0 million in 1996 to $7.5 million in 1997 primarily due to less revenues from The Resort at Squaw Creek which was sold during the second quarter of 1997. Increases in construction revenues due to the timing in the start-up of certain fast track hotel/casino projects in the Western United States and the impact of several large infrastructure projects in the Metropolitan New York area were offset by decreases in revenues from the Midwest area due primarily to the two divisions which the Company is in the process of phasing out. While the gross profit from construction operations remained at approximately $13 million during both 1997 and 1996, the gross profit from real estate operations increased by $.5 million, from a loss of $.2 million in 1996 to a profit of $.3 million in 1997 due primarily to improved operating performance from certain properties in the Southwest. Increased gross profit from construction operations related to the revenue increases referred to above were offset by additional losses incurred on the closeout of certain projects in the Midwest including those related to the two divisions which the Company is in the process of phasing out. The decrease in general, administrative and selling expenses of $.8 million (or 10%), from $8 million in 1996 to $7.2 million in 1997, resulted primarily from phasing out of two divisions in the Midwest. The lower than normal tax rate in 1997 and 1996 is due to the realization of a portion of the Federal tax benefit resulting from the operating loss recorded in prior years, because of certain accounting limitations. Comparison of the Nine Months Ended September 30, 1997 with the Nine Months Ended September 30, 1996 Revenues increased $117.1 million (or 12.6 %), from $927.2 million in 1996 to $1,044.3 billion in 1997. This increase resulted from increased construction revenues of $114.5 million (or 12.9%), from $885.4 million in 1996 to $999.9 million in 1997, due primarily to an increase in revenues from building construction operations of $99.5 million (or 16.4 %), from $606.6 million in 1996 to $706.1 million in 1997, as well as an increase in revenues from civil construction operations of $15.0 million (or 5.4%), from $278.8 million in 1996 to $293.8 million in 1997. These revenue fluctuations reflect the timing in the start- up of new construction projects, in particular several fast track hotel/casino projects in the Western United States, several prison/detention and medical facilities projects in the northeastern United States, and several long-term infrastructure rehabilitation projects in the metropolitan New York, Boston and Los Angeles areas. Revenues from real estate operations increased $2.6 million, from $41.8 million in 1996 to $44.4 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 remained the same at approximately $38.5 million. The gross loss from real estate operations remained at approximately $.5 million. In spite of the increase in construction revenues referred to above, the overall gross profit remained the same at approximately $39.0 million since the increased profits related to revenue increases were offset 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. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) General, administrative and selling expenses decreased by $2.5 million (or 10 %), from $24.6 million in 1996 to $22.1 million in 1997 primarily due to the phasing out of two divisions in the Midwest. Other income (expense) net increased $.8 million, from a net expense of $.3 million in 1996 to a net expense of $1.1 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 9%), from $7.1 million in 1996 to $7.7 million in 1997 due to a higher average level of borrowings during 1997 as well as higher effective interest rates. The lower than normal tax rate in 1997 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 $25.0 million, from $56.7 million at the end of 1996 to $81.7 million at September 30, 1997 primarily as a result of increased borrowings under the Company's Revolving Credit Agreement. The current ratio increased from 1.19 to 1 to 1.32 to 1 during this same period. During the first nine months of 1997, the Company generated $32.8 million in cash from financing activities, primarily from the $26.6 million in net proceeds from the sale of the Series B Preferred Stock. These funds, as well as the cash generated from the sale of the Company's interest in The Resort at Squaw Creek, were used to fund operating activities of $19.2 million, investment activities of $6.3 million, primarily advances to real estate joint ventures, and to increase cash on hand by $7.3 million. Long term debt at September 30, 1997 was $108.1 million, an increase of $11.2 million from December 31, 1996. The long-term debt to equity ratio at September 30, 1997 was 2.46 to 1, compared to 2.72 to 1 at December 31, 1996. In addition, in connection with Rincon Center, a mixed-use development in San Francisco, Perini Land and Development Company ("PL&D"), the Company's real estate subsidiary, continued discussions with parties including the Master Lessor and Lenders toward reaching agreement on the replacement or extension of various financings which mature in 1998. In October, the Lender provided a short-term extension on one segment of that financing to facilitate continued discussions. PL&D, in turn, provided a $3.7 million unscheduled paydown of loan principal through the calling of a Letter of Credit it had provided as collateral for the loan. The $3.7 million was funded through short-term borrowings. 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. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) 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 September 30, 1997 was a $1.4 billion, which represented a 5% decrease over the backlog at December 31, 1996. While approximately 51% of the current backlog relates to building construction projects, which generally represent lower risk and lower margin work, approximately 49% 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 September, 1997 for a total arrearage of $42.50 per share (or $4.25 per depositary share) which aggregates $4,250,000 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 - None - -------------------------------------------------------------------- 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: 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. 13 PART II. - OTHER INFORMATION (CONTINUED) 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, 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. 14 PART II. - OTHER INFORMATION (CONTINUED) 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. Filed herewith: 10.6 Amendment No. 1 as of November 10, 1997 to the 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 of Massachusetts, as Co-Agent - filed herewith. (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: November 14, 1997 /s/ John H. Schwarz John H. Schwarz, Executive Vice President, Finance and Administration Date: November 14, 1997 /s/ Barry R. Blake Barry R. Blake, Vice President and Controller 16 EX-10 2 EXHIBIT 10.6 - AMENDMENT NO. 1 TO CREDIT AGREEMENT [CONFORMED COPY] AMENDMENT NO. 1 TO CREDIT AGREEMENT AMENDMENT NO. 1 dated as of November 10, 1997 among PERINI CORPORATION (the "Borrower"), the BANKS listed on the signature pages hereof (collectively, the "Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent"). WITNESSETH: WHEREAS, the Borrower, the Banks and the Agent are parties to an Amended and Restated Credit Agreement dated as of January 17, 1997 (the "Credit Agreement"); WHEREAS, the Borrower has requested an amendment to the operating cash flow covenant contained in Section 5.10 of the Credit Agreement for the period from January 1, 1997 through September 30, 1997; WHEREAS, the Borrower and the Banks have agreed to modify the obligations of the Borrower under Section 9.03 of the Credit Agreement to pay certain out-of-pocket expenses of the Agent; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Credit Agreement shall from and after the date hereof refer to the Credit Agreement as amended hereby. SECTION 2. Amendment of Minimum Operating Cash Flow Covenant. Section 5.14 of the Credit Agreement is amended to change the minimum amount of Operating Cash Flow required for the period from January 1, 1997 through September 30, 1997 from "$0" to "(8,000,000)". SECTION 3. Amendments to Expense Provision. Section 9.03(a) of the Credit Agreement is amended (a) to change the reference to "$60,000" therein to "$85,000" and (b) to change the reference to "$50,000" therein to "$75,000". SECTION 4. Agreement to Provide Detailed Plan. The Borrower agrees to provide each Bank, prior to the date of its meeting with the Banks in December, 1997, a plan describing the steps that it will take to ensure its future compliance with the covenants contained in the Credit Agreement, which plan shall be in sufficient detail as may be reasonably acceptable to the Required Banks. SECTION 5. Representations and Warranties Correct; No Default. The Borrower and each Subsidiary Guarantor represents and warrants that on and as of the date hereof, after giving effect to this Amendment No. 1, (a) the representations and warranties of each Obligor contained in each Financing Document, as amended, to which it is a party are true and (b) no Default under the Credit Agreement exists. SECTION 6. Effect of Amendments. Except as expressly set forth herein, the amendments contained herein shall not constitute an amendment or waiver of any term or condition of the Credit Agreement or of any other Financing Document, and all such terms and conditions shall remain in full force and effect and are hereby ratified and confirmed in all respects. SECTION 7. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 8. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. SECTION 9. Consent by Subsidiary Guarantors. By signing this Amendment below, each Subsidiary Guarantor affirms its obligations under the Subsidiary Guarantee Agreement and acknowledges that this Amendment shall 2 ot alter, release, discharge or otherwise affect any of such obligations, all of which shall remain in full force and effect and are hereby ratified and confirmed in all respects. SECTION 10. Effectiveness. This Amendment No. shall become effective as of the date hereof when the Agent shall have received duly executed counterparts hereof signed by the Borrower, the Required Banks and the Agent (or, in the case of any party as to which an executed counterpart shall not have been received, the Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party). IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the date first above written. PERINI CORPORATION By: /s/ John H. Schwarz Exec. V.P., Finance & Administration BANKS: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent and as a Bank By: /s/ Stephen J. Hannan FLEET NATIONAL BANK By: /s/ Frederick W. Reinhardt BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ Marlene M. Tuma 3 BANKBOSTON, N.A. By: /s/ David F. Eusden COMERICA BANK By: ____________________ HARRIS TRUST & SAVINGS BANK By: /s/ Michael C. Wood STATE STREET BANK AND TRUST COMPANY By: /s/ Kenneth J. Mooney Each of the undersigned Subsidiary Guarantors consents to the foregoing Consent and confirms its agreement with Section 9 of the Consent: PERINI BUILDING COMPANY, INC. By: /s/ Susan C. Mellace V.P. & Treasurer PERINI INTERNATIONAL CORPORATION By: /s/ Barry R. Blake Assistant Treasurer PERINI LAND AND DEVELOPMENT COMPANY, INC. By: /s/ Carl P. Gauthier V.P. and Secretary 4 R.E. DAILEY & CO. By: /s/ David B. Perini President PARAMOUNT DEVELOPMENT ASSOCIATES, INC. By: /s/ Carl P. Gauthier V.P. and Secretary PERINI ENVIRONMENTAL SERVICES, INC. By: /s/ David B. Perini Director PERINI RESORTS, INC. By: /s/ Carl P. Gauthier V.P. and Secretary 5 EX-27 3 09/30/97 FINANCIALS
5 This schedule containes summary financial information extracted from Consolidated Balance Sheets as of September 30, 1997 and the Consolidated Statements of Operations for the nine months ended September 30, 1997 as qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1997 SEP-30-1997 17,066 0 179,268 0 18,710 338,934 30,980 (20,366) 451,528 257,152 108,096 100 0 5,267 0 451,528 0 1,044,312 0 1,005,770 (1,158) 0 (7,670) 7,571 450 7,121 0 0 0 7,121 .64 0 Includes Equity in Construction Joint Ventures of $74,266, Unbilled Work of $39,835, and Other Short-Term Assets of $9,789, not currently reflected in this tag list. Includes investments in and advances to Real Estate Joint Ventures of $78,010, Land Held for Sale or Development of $19,210, and Other Long-Term Assets of $4,760, not currently reflected in this tag list. Includes Deferred Income Taxes and Other Liabilities of $12,401, Minority Interest of $1,064, Paid-In Surplus of $54,437, Retained Deficit of $(13,545), 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 $28,862. Includes General, Administrative and Selling Expenses of $(22,143), not currently reflected on this tag list.
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