-----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, KMOhRLj+CsqpStlTtlI5MnuOgfq7FOlAw05oCkYtAeSATC99gYEWJMxd4yhQVowU jwMGGgUTE0QGwAY6BDKovg== 0000077543-99-000014.txt : 19990816 0000077543-99-000014.hdr.sgml : 19990816 ACCESSION NUMBER: 0000077543-99-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 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: 99687114 BUSINESS ADDRESS: STREET 1: 73 MT WAYTE AVE CITY: FRAMINGHAM STATE: MA ZIP: 01701 BUSINESS PHONE: 5086282000 10-Q 1 PERINI CORPORATION 1999 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, 1999 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 Number of shares of common stock of registrant outstanding at August 12, 1999: 5,680,485 Page 1 of 21
PERINI CORPORATION & SUBSIDIARIES INDEX Page Number ----------- Part I. - Financial Information: Item 1. Financial Statements Consolidated Condensed Balance Sheets - 3 June 30, 1999 and December 31, 1998 Consolidated Condensed Statements of Operations - 4 Three Months and Six Months ended June 30, 1999 and 1998 Consolidated Condensed Statements of Cash Flows - 5 Six Months ended June 30, 1999 and 1998 Notes to Consolidated Condensed Financial Statements 6 - 9 Item 2. Management's Discussion and Analysis of the Consolidated 10 - 14 Financial Condition and Results of Operations Part II. - Other Information: Item 1. Legal Proceedings 15 Item 2. Changes in Securities 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15 - 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 - 20 Signatures 21
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PERINI CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) JUNE 30, 1999 AND DECEMBER 31, 1998 (In Thousands) ASSETS JUNE 30, DEC. 31, 1999 1998 -------------- ------------- (Note 3) Cash $ 51,983 $ 46,507 Accounts and Notes Receivable 148,463 113,052 Unbilled Work 18,806 19,585 Construction Joint Ventures 74,619 67,100 Net Current Assets of Discontinued Operations (Note 3) 15,311 8,068 Deferred Tax Assets 1,076 1,076 Other Current Assets 4,943 2,469 -------------- ------------- Total Current Assets $ 315,201 $ 257,857 -------------- ------------- Net Long-Term Assets of Discontinued Operations (Note 3) $ --- $ 104,017 -------------- ------------- Other Assets $ 4,321 $ 3,734 -------------- ------------- Property and Equipment, less Accumulated Depreciation of $16,874 in 1999 and $16,378 in 1998 $ 9,769 $ 9,858 -------------- ------------- $ 329,291 $ 375,466 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Maturities of Long-Term Debt $ 18,697 $ 2,036 Accounts Payable 141,336 127,349 Advances from Construction Joint Ventures 15,749 17,300 Deferred Contract Revenue 27,654 14,350 Accrued Expenses 37,076 38,763 -------------- ------------- Total Current Liabilities $ 240,512 $ 199,798 -------------- ------------- Deferred Income Taxes and Other Liabilities $ 18,637 $ 15,713 -------------- ------------- Long-Term Debt, less current maturities included above $ 77,371 $ 75,857 -------------- ------------- Redeemable Convertible Series B Preferred Stock $ 35,566 $ 33,540 -------------- ------------- Stockholder's Equity (Deficit): Preferred Stock $ 100 $ 100 Series A Junior Participating Preferred Stock --- --- Stock Purchase Warrants 2,233 2,233 Common Stock 5,743 5,506 Paid-In Surplus 46,763 49,219 Retained Deficit (96,521) (3,642) ESOT Related Obligations (120) (1,381) -------------- ------------- $ (41,802) $ 52,035 Less - Treasury Stock 993 1,477 -------------- ------------- Total Stockholders' Equity (Deficit) $ (42,795) $ 50,558 -------------- ------------- $ 329,291 $ 375,466 ============== =============
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 SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, 1999 1998 1999 1998 --------------- --------------- -------------- -------------- (Note 3) (Note 3) CONTINUING OPERATIONS: Construction Revenues $ 279,527 $ 273,761 $ 531,346 $ 492,963 --------------- --------------- -------------- -------------- Cost And Expenses: Cost of Operations $ 266,267 $ 261,186 $ 507,021 $ 468,253 General, Administrative and Selling Expenses 6,267 7,186 12,435 13,535 --------------- --------------- -------------- -------------- $ 272,534 $ 268,372 $ 519,456 $ 481,788 --------------- --------------- -------------- -------------- INCOME FROM OPERATIONS $ 6,993 $ 5,389 $ 11,890 $ 11,175 Other Expense, Net (584) (173) (888) (428) Interest Expense (1,788) (1,466) (3,376) (4,213) --------------- --------------- -------------- -------------- Income from Continuing Operations before Income Taxes $ 4,621 $ 3,750 $ 7,626 $ 6,534 Provision for Income Taxes (Note 4) 300 200 500 390 --------------- --------------- -------------- -------------- INCOME FROM CONTINUING OPERATIONS $ 4,321 $ 3,550 $ 7,126 $ 6,144 --------------- --------------- -------------- -------------- DISCONTINUED OPERATIONS (Note 3): Loss from Operations (Note 4) $ (313) $ (436) $ (694) $ (811) Estimated Loss on Disposal of Real Estate Business Segment (Note 4) (99,311) --- (99,311) --- --------------- --------------- -------------- -------------- LOSS FROM DISCONTINUED OPERATIONS $ (99,624) $ (436) $ (100,005) $ (811) --------------- --------------- -------------- -------------- NET INCOME (LOSS) $ (95,303) $ 3,114 $ (92,879) $ 5,333 =============== =============== ============== ============== BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE (Note 5): Income from Continuing Operations $ .49 $ .39 $ .73 $ .62 Loss from Discontinued Operations (.05) (.08) (.13) (.16) Estimated Loss on Disposal (17.67) --- (17.92) --- --------------- --------------- -------------- -------------- Total $ (17.23) $ (.31) $ (17.32) $ .46 --------------- --------------- -------------- -------------- DIVIDENDS PER COMMON SHARE (Note 6) $ --- $ --- $ --- $ --- =============== =============== ============== ============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 5) 5,621,366 5,294,042 5,541,019 5,235,329 =============== =============== ============== ==============
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, 1999 AND 1998 (In Thousands) SIX MONTHS ENDED JUNE 30, 1999 1998 ------------ -------------- (Note 3) Cash Flows from Operating Activities: Net Income (Loss) $ (92,879) $ 5,333 Adjustments to reconcile net income (loss) to net cash from operating activities: Loss from discontinued operations 100,005 811 Depreciation and amortization 1,609 1,512 Noncurrent deferred taxes and other liabilities 2,924 480 Distributions greater (less) than earnings of joint ventures and affiliates (1,108) 668 Cash provided from (used by) changes in components of working capital other than cash, net current assets of discontinued operations and current maturities of long-term debt (14,000) 26,592 Other non-cash items, net (148) 48 ------------ -------------- NET CASH PROVIDED FROM (USED BY) OPERATING ACTIVITIES $ (3,597) $ 35,444 ------------ -------------- Cash Flows from Investing Activities: Proceeds from sale of property and equipment $ 215 $ 461 Cash distributions of capital from unconsolidated joint ventures 1,050 2,018 Acquisition of property and equipment (758) (428) Capital contributions to unconsolidated joint ventures (7,575) --- Investment in discontinued operations (Note 3) (3,231) (1,396) Investment in other activities (1,044) 54 ------------ -------------- NET CASH PROVIDED FROM (USED BY) INVESTING ACTIVITIES $ (11,343) $ 709 ------------ -------------- Cash Flows from Financing Activities: Proceeds of long-term debt $ 19,064 $ 2,000 Repayment of long-term debt --- (24,245) Common Stock issued 1,197 2,482 Treasury Stock issued 155 151 ------------ -------------- NET CASH PROVIDED FROM (USED BY) FINANCING ACTIVITIES $ 20,416 $(19,612) ------------ -------------- Net Increase in Cash $ 5,476 $ 16,541 Cash at Beginning of Year 46,507 31,305 ------------ -------------- Cash at End of Period $ 51,983 $ 47,846 ============ ============== Supplemental Disclosure of Cash paid during the period for: Interest $ 3,573 $ 3,331 ============ ============== Income tax payments $ 69 $ 261 ============ ============== Supplemental Disclosures of Non-cash Transactions: Dividends paid in shares of Series B Preferred Stock (Note 6) $ 1,836 $ 1,664 ============ ==============
The accompanying notes are an integral part of these financial statements. 5 PERINI CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (1) 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, 1998. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting only of normal recurring adjustments, except for the presentation of Discontinued Operations and related non-cash provision for estimated loss on disposal of the Company's real estate development business segment as more fully described in Note 3 below, necessary to present fairly the Company's financial position as of June 30, 1999 and December 31, 1998 and results of operations and cash flows for the three month and six month periods ended June 30, 1999 and 1998. The results of operations for the six month period ended June 30, 1999 may not be indicative of the results that may be expected for the year ending December 31, 1999 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. (2) 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, 1998. The Company has made no significant change in these policies during 1999. (3) Discontinued Operations Effective June 30, 1999, management adopted a plan to withdraw completely from the real estate development business and to wind down the operations of Perini Land and Development Company ("PL&D"), the Company's real estate development subsidiary. Therefore, both historical and current real estate results through June 30, 1999 have been presented as a discontinued operation in accordance with generally accepted accounting principles. Based on the plan, the 1999 second quarter and six month results include a $99,311,000 non-cash provision which represents the estimated loss on disposal of this business segment. This non-cash charge reflects the estimated impact of the previously announced foreclosure proceedings on the Rincon Center property located in San Francisco and the reduction in projected future cash flow from the disposition of PL&D's remaining real estate development operations resulting from the change in strategy of holding the properties through the necessary development and stabilization periods to a new strategy of generating short-term liquidity through an accelerated disposition or bulk sale. The estimated loss on disposal of the real estate business segment also includes a provision for shut down costs related to PL&D during the wind down period. No Federal tax benefit was attributable to the estimated loss on disposal of the real estate business segment (see Note 4). Several of the remaining real estate properties now being offered for sale are currently under or are pending a purchase and sale agreement. At June 30, 1999 the net assets of discontinued real estate development operations, consisting primarily of real estate properties for sale, have been reclassified as current assets at estimated net realizable value. At December 31, 1998 the net current assets of discontinued real estate development operations consist primarily of certain real estate properties for sale. The net long- 6 PERINI CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued) term assets of discontinued operations at December 31, 1998 consist primarily of land held for sale or development and investments in and advances to real estate joint ventures. In accordance with generally accepted accounting principles, the results of discontinued real estate development operations have been reclassified to "Loss from Operations" of Discontinued Operations. In connection therewith, the revenues related to these operations are summarized below (in thousands): Three Months Ended Six Months Ended June 30, June 30, ---------------------------- -------------------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Revenues $4,199 $4,450 $8,931 $14,630 ============== ========== ============ ===============
(4) Provision For Income Taxes The provision for income taxes applicable to Income from Continuing Operations reflects a lower-than-normal tax rate in 1999 and 1998 due to the realization of a portion of the Federal tax benefit not recognized in prior years due to certain accounting limitations. No tax benefit was attributable to Losses from Discontinued Operations in either 1999 or 1998 due to the same accounting limitations. (5) Per Share Data Computations of basic and diluted earnings (loss) per common share amounts are based on the weighted average number of the Company's common shares outstanding during the periods presented. Earnings from Income from Continuing Operations available for common shares are calculated as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, --------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ----------- ------------ ------------ Income from Continuing Operations $ 4,321 $ 3,550 $ 7,126 $ 6,144 ------------ ----------- ------------ ------------ Less: - Accrued dividends on $21.25 Senior Preferred Stock $ (531) $ (531) $ (1,062) $ (1,062) - - Dividends declared on Series B Preferred Stock (929) (842) (1,836) (1,664) - - Accretion deduction required to reinstate mandatory redemption value of Series B Preferred Stock over a period of 8-10 years (94) (92) (189) (187) ------------ ------------ ----------- ------------ $ (1,554) $ (1,465) $ (3,087) $ (2,913) ------------ ----------- ------------ ------------ Earnings from Income from Continuing Operations available for Common Stockholders $ 2,767 $ 2,085 $ 4,039 $ 3,231 ============ =========== ============ ============ Weighted average shares outstanding 5,621 5,294 5,541 5,235 ------------ ----------- ------------ ------------ Basic and diluted earnings per Common Share on Income from Continuing Operations $ 0.49 $ 0.39 $ 0.73 $ 0.62 ============ =========== ============ ============
Basic EPS equals diluted EPS for the periods presented due to the immaterial effect of stock options and the antidilutive effect of conversion of the Company's depositary convertible exchangeable preferred shares, Series B preferred shares and stock purchase warrants into common stock. 7 (6) Dividends There were no cash dividends on common stock declared or paid during the periods presented in the consolidated condensed financial statements presented herein. As previously disclosed, in conjunction with the covenants of the Company's Revolving Credit Agreement, the Company is required to suspend the payment of quarterly dividends on its $21.25 preferred stock ("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 $7,968,000 at June 30, 1999 which represents approximately $79.68 per share of Preferred Stock or approximately $7.97 per Depositary Share and is included in "Other Liabilities" (long-term) in the accompanying Consolidated Condensed Balance Sheet. Under the terms of the Preferred Stock, the holders of the Depositary Shares were entitled to elect two additional Directors since dividends had been deferred for more than six quarters and they did so at both the May 14, 1998 and the May 13, 1999 Annual Meetings. Quarterly In-kind dividends (based on an annual rate of 10%) were paid on March 15, 1999 on the Series B Preferred Stock to the stockholders of record on March 1, 1999. The dividend was paid in the form of approximately 4,534 additional shares of Series B Preferred Stock valued at $200.00 per share for a total of $906,783. In-kind dividends for the second quarter were paid on June 15, 1999 to stockholders of record on June 1, 1999. The dividend was paid in the form of approximately 4,647 additional shares of Series B Preferred Stock valued at $200.00 per share for a total of $929,453. (7) Business Segments The following tables set forth certain updated business segment information relating to the Company's operations for the three and six month periods ended June 30, 1999 and 1998 (in thousands):
Three months ended June 30, 1999 - -------------------------------- Reportable Segments ------------------------------------------- Consolidated Building Civil Totals Corporate Totals ---------- ---------- ----------- ----------- ------------ Revenues $201,726 $ 77,801 $279,527 $ - $279,527 Income (Loss) from Ops. $ 4,831 $ 3,886 $ 8,717 $(1,724)* $ 6,993 Three months ended June 30, 1998 - -------------------------------- Reportable Segments --------------------------------------- Consolidated Building Civil Totals Corporate Totals ---------- ---------- ----------- ----------- ------------ Revenues $189,320 $ 84,441 $273,761 $ - $273,761 Income (Loss) from Ops. $ 5,156 $ 2,268 $ 7,424 $(2,035)* $ 5,389 Six months ended June 30, 1999 - ------------------------------ Reportable Segments ------------------------------------------- Consolidated Building Civil Totals Corporate Totals ---------- ---------- ----------- ----------- ------------ Revenues $384,692 $146,654 $531,346 $ - $531,346 Income (Loss) from Ops. $ 9,454 $ 5,856 $ 15,310 $(3,420)* $ 11,890 Assets $152,757 $106,091 $258,848 $70,443** $329,291
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Six months ended June 30, 1998 - ------------------------------ Reportable Segments --------------------------------------- Consolidated Building Civil Totals Corporate Totals ---------- ---------- ----------- ----------- ------------ Revenues $345,548 $147,415 $492,963 $ - $492,963 Income (Loss) from Ops. $ 9,984 $ 5,025 $ 15,009 $ (3,834)* $ 11,175 Assets $113,988 $104,654 $218,642 $161,615** $380,257
* In all periods, consists of corporate general and administrative expenses. ** In all periods, corporate assets consist principally of cash, cash equivalents, marketable securities and other investments available for general corporate purposes plus the net assets of discontinued operations. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Discontinued Operations - ----------------------- Effective June 30, 1999, management adopted a plan to withdraw completely from the real estate development business and to wind down the operations of Perini Land and Development Company ("PL&D"), the Company's real estate development subsidiary. Therefore, both historical and current real estate results through June 30, 1999 have been presented as a discontinued operation in accordance with generally accepted accounting principles. Based on the plan, the 1999 second quarter and six month results include a $99,311,000 non-cash provision which represents the estimated loss on disposal of this business segment. This non-cash charge reflects the estimated impact of the previously announced foreclosure proceedings on the Rincon Center property located in San Francisco and the reduction in projected future cash flow from the disposition of PL&D's remaining real estate development operations resulting from the change in strategy of holding the properties through the necessary development and stabilization periods to a new strategy of generating short-term liquidity through an accelerated disposition or bulk sale. The estimated loss on disposal of the real estate business segment also includes a provision for shut down costs related to PL&D during the wind down period. No Federal tax benefit was attributable to the estimated loss on disposal of the real estate business segment (see Note 4). Several of the remaining real estate properties now being offered for sale are currently under or are pending a purchase and sale agreement. Results of Operations from Continuing Operations Comparison of the Second Quarter of 1999 with the Second Quarter of 1998 Overall revenue from construction operations increased by $5.7 million (or 2.1%), from $273.8 million in 1998 to $279.5 million in 1999. This increase represents increased revenues from building operations of $12.4 million (or 6.6%), from $189.3 million in 1998 to $201.7 million in 1999 due primarily to the start-up of several new fast track hotel/casino projects. This revenue increase was partially offset by a decrease in revenues from civil operations of $6.7 million (or 7.8%), from $84.5 million in 1998 to $77.8 million in 1999 resulting from less new work acquired during 1999. Overall, income from construction operations (before corporate G&A expenses) increased $1.3 million (or 17.6%), from $7.4 million in 1998 to $8.7 million in 1999. This increase represents increased operating income from civil operations of $1.6 million (or 70.0%), from $2.3 million in 1998 to $3.9 million in 1999 primarily because of profit write downs on certain projects recorded during second quarter of 1998. This increase in operating income was partially offset by an operating income decrease from building operations of $.3 million (or 5.9%), from $5.1 million in 1998 to $4.8 million in 1999 because of the favorable close out of several projects during 1998. Other expense, net increased by $.4 million from $.2 million in 1998 to $.6 million in 1999 due to an increase in bank financing fees. Interest expense increased by $.3 million from $1.5 million in 1998 to $1.8 million in 1999 due primarily to higher average levels of borrowing in 1999 under the Company's Revolving Credit Agreement. The provision for income taxes applicable to Income from Continuing Operations reflected a lower-than-normal tax rate in 1999 and 1998 due to the realization of a portion of the Federal tax benefit not recognized in prior years due to certain accounting limitations. No tax benefit was attributable to Losses from Discontinued Operations in either 1999 or 1998 due to the same accounting limitations. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) Comparison of the Six Months Ended June 30, 1999 with the Six Months Ended June 30, 1998 Overall revenue from construction operations increased $38.4 million (or 7.8%), from $493.0 million in 1998 to $531.4 million in 1999. This increase was entirely the result of an increase in revenues from building operations of $39.1 million (or 11.3%), from $345.6 million in 1998 to $384.7 million in 1999 due primarily to the start up of several new fast track hotel/casino projects during both the first and second quarters of 1999. The revenue from civil operations was approximately $147 million during both 1999 and 1998. Overall, income from construction operations (before corporate G&A expenses) increased by $.3 million (or 2.0%), from $15.0 million in 1998 to $15.3 million in 1999. The increase in operating income results from an increase from civil operations of $.9 million (or 18.0%), from $5.0 million in 1998 to $5.9 million in 1999, primarily because of profit write downs on certain projects recorded during the second quarter of 1998 and a $.3 million reduction in G&A expenses. This increase in operating income was partially offset by a decrease in operating income from building operations of $.6 million (or 6.0%), from $10.0 million in 1998 to $9.4 million in 1999 because of the favorable close out of several projects during 1998. Corporate G&A expenses decreased by $.4 million (or 10.5%) from $3.8 million in 1998 to $3.4 million in 1999 as the impact of various ongoing cost reduction programs continues to be realized. Other expenses, net increased by $.5 million, from $.4 million in 1998 to $.9 million in 1999 as a result of increased bank financing fees. Interest expense decreased by $.8 million, from $4.2 million in 1998 to $3.4 million in 1999 due primarily to a reduction in the average amount borrowed under the Company's Revolving Credit Agreement during the first quarter of 1999. Financial Condition - ------------------- Working capital increased $16.6 million, from $58.1 million at the end of 1998 to $74.7 million at June 30, 1999. The current ratio increased from 1.29:1 to 1.31:1 during this same period. During the first six months of 1999, the Company used $19.1 million of additional borrowings under the Company's Revolving Credit Agreement to fund $3.6 million used by operating activities, primarily for changes in working capital, and $11.3 million for investing activities, primarily to fund the working capital needs of construction joint ventures. Long-term debt at June 30, 1999 was $77.4 million, an increase of $1.5 million from December 31, 1998. Effective March 23, 1999, the Company finalized certain changes to its Revolving Credit Agreement with its Bank Group, including extending the Revolving Credit Agreement from January 3, 2000 to January 3, 2001. Other changes to the Revolving Credit Agreement include, among other things, a scheduled mandatory reduction in the maximum commitment of $20.0 million in 1999 and $15.0 million in 2000, with the balance in 2001, additional permanent mandatory reductions, as defined, from the net proceeds from real estate sales, an interest rate increase of 1/2 of 1% in 1999 and an additional 1/4 of 1% increase in 2000, and a one-time bank fee of $483,000. At June 30, 1999, the Company had $1.8 million available to borrow under its $91.8 million Revolving Credit Agreement. As a result of the net loss recorded in the second quarter of 1999, the Company's stockholders' equity was reduced to a negative $42.8 million. Management is currently working with its investment bankers to develop plans to raise additional capital, restore balance sheet net worth and improve liquidity. Management believes that cash generated from operations, existing credit lines, and additional borrowings 11 should be adequate to meet the Company's funding requirements for at least the next twelve months. Outlook - ------- o General - 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, whether as a result of new information, future events or otherwise. o Continuing Construction Operations - Looking ahead, we must consider the Company's construction backlog. The overall construction backlog at June 30, 1999 was at $1.612 billion, a 30.8% increase from the backlog at December 31, 1998. Projects awarded during 1999 and included in the backlog at June 30, 1999 totaled in excess of $825 million, including the previously announced construction management services contract for the $650 million Mohegan Sun Phase II Expansion Project in Uncasville, CT. Approximately 60% of the current backlog relates to building construction projects which generally represent lower risk, lower margin work and approximately 40% of the current backlog relates to heavy construction projects which generally represent higher risk, but correspondingly higher margin work. o Discontinued Real Estate Operations - Effective June 30, 1999, management adopted a plan to withdraw completely from the real estate development business and to wind down the operations of Perini Land & Development Company ("PL&D"), the Company's real estate development subsidiary. As previously reported, the non-binding agreement between PL&D, the Managing General Partner of Rincon Center Associates, and the lenders to Rincon Center, a mixed-use property in San Francisco, will not be implemented because of the failure to obtain agreement of all necessary parties. The lenders have issued formal notices of default thereby commencing the foreclosure process. Also, management decided to adopt a change in strategy with regards to the remaining real estate development properties, from one of holding the properties through the necessary development and stabilization periods to a new strategy of generating short-term liquidity through an accelerated disposition or bulk sale. While the decision to discontinue real estate development operations resulted in the recognition of a significant non-cash charge in the second quarter of 1999 and eroded the Company's net worth, it is the opinion of management that this decision will allow the Company to improve its short-term liquidity and to better focus its management and financial resources on the Company's profitable core building and civil construction business. Several of the remaining real estate properties now being offered for sale are currently under or are pending a purchase and sale agreement. It is the opinion of management that the provision for the estimated loss on disposal of the Company's real estate business segment is adequate; however, any significant changes to the assumptions inherent in the calculation of the provision, such as the anticipated timing of closings or sales price of the properties, could result in future adjustments of the provision. Rebuilding Equity - As a result of the net loss recorded in the second quarter of 1999, the Company's stockholders' equity was reduced to a deficit of $42.8 million. Management is currently working with its investment bankers to develop plans to raise additional capital, restore balance sheet net worth and improve liquidity. o Year 2000 Readiness Disclosures - Since many computers, related software and certain devices 12 with embedded microchips record only the last two digits of a year, they may not be able to recognize that January 1, 2000 (or subsequent dates) comes after December 31, 1999. This situation could cause erroneous calculations or system shutdowns, causing problems that could range from merely inconvenient to significant. As previously reported, the Company began a project to review all of its computer systems in 1995. One factor, among many, to consider was what impact, if any, would the Year 2000 have on computer systems. As a result of this project, the Company implemented new fully integrated on-line construction specific financial systems during the first quarter of 1998 which are Year 2000 compliant. The cost of these new systems, including the hardware, software and implementation costs, approximated $1.5 million which was capitalized and is being amortized over ten years on a straight-line basis. The Company recognizes the Year 2000 issue could be an overall business problem, not just a technical problem. Therefore, it established a Year 2000 Committee early in 1998 to identify all of the other potential Year 2000 problems that could impact the Company, including readiness issues for its computer applications and business processes, non-information technology systems such as those of its facilities and equipment, along with relationships with third parties, such as our customers, vendors, subcontractors, joint ventures, and other business partners; develop plans to evaluate the significance of the potential problem; develop plans to remedy or minimize the potential problem; assign appropriate resources; and monitor the implementation of the plans. During the third quarter of 1998, the Committee, which included both the Company's Chairman and CEO, designated the Year 2000 Project Manager. The Project Manager has organized a Year 2000 Team, consisting of specific individuals assigned from each operating unit and each corporate department. In addition, the Company developed, published and commenced implementation of its Year 2000 Readiness Plan which has as its overall objective "to eliminate or minimize the potential internal and external impact of the Year 2000 issue on the normal business operations of the Company, its subsidiaries, and joint ventures in a timely and cost effective manner". In addition to addressing its own computer applications, facilities, and construction equipment, the Plan includes communication with critical third parties as stated above. The Year 2000 Plan includes the following phases: (1) potential problem identification, (2) resource commitment, (3) inventory, (4) assessment, (5) prioritization, (6) remediation and (7) testing. While the Company completed the problem identification, resource commitment and prioritization phases during 1998, and inventory phase during the first quarter of 1999, it is currently in various stages of the "assessment", "testing", and "remediation" phases as of June 30, 1999. As part of the Plan, the Company is evaluating alternative solutions and developing contingency plans for handling certain critical areas in the event remediation is unsuccessful. Completion of the Year 2000 Plan, including final testing and development of final contingency plans, is currently on schedule and should be completed by its October 1999 targeted completion date. The Company currently estimates that costs related to the Year 2000 Plan, over and above the cost of the new financial systems referred to above, will approximate $0.3 million which are being expensed as incurred. The Company, as a general contractor, generally provides its construction services in accordance with detailed contracts and specifications provided by its clients. Also, the Company recently installed all new mission critical financial system software on new hardware, all of which are Year 2000 compliant. In light of the above, the Company has defined its most reasonably likely worst case scenario at this stage of implementing its Year 2000 Plan to include last minute inquiries and requests for assistance in determining Year 2000 compliance by some limited number of clients who have not properly prepared 13 for this event. In addition, the possible filing of frivolous lawsuits against the Company, among others, by a party or parties that claim they were adversely impacted by a Year 2000 issue related to one of the many projects with which the Company was associated is also a concern. The Company currently plans to have a Year 2000 Urgent Response Team defined and available to respond to last minute Year 2000 issues raised by clients or others in a timely, proactive and cost effective manner. In addition, the Company currently plans to develop prepackaged legal defenses in advance assuming various types of complaints. 14 PART II. - OTHER INFORMATION Item 1. - Legal Proceedings - None Item 2. - Changes in Securities (a) None (b) None (c) None Item 3. - Defaults Upon Senior Securities (a) None (b) In accordance with the provisions of the 1995 Amended Revolving Credit Agreement and the Credit Agreement which became effective on January 17, 1997, 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 1999 for a total arrearage of $79.68 per share (or $7.97 per depositary share) which aggregates approximately $7,968,000 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 (a) May 13, 1999 - Annual Meeting of Stockholders (b) Not applicable (c) (1) Nominees for Class III Directors as listed in the proxy statement, to hold office for a three year term, expiring in 2002 and until their successors are chosen and qualified, were elected by holders of Common Stock and Series B Preferred Stock with the following vote: Number of Votes ------------------------------------------------------------------- Authority Class III Director For Against Withheld - ----------------------------------------------- ---------------------- --------------------- --------------- Nancy Hawthorne 8,808,360 --- 57,319 Douglas J. McCarron 8,806,229 --- 59,450 David B. Perini 8,814,088 --- 51,591
15 Part II. - Other Information (Continued) (2) Two nominees for Preferred Directors (the "Preferred Directors") as listed in the proxy statement to hold office until the earlier of (i) the 2000 Annual Meeting of Stockholders and until their successors are chosen and qualified, or (ii) all dividends in arrears on the Preferred Stock have been paid or declared and funds therefor set apart for payment, were elected by the Depositary, based on the two nominees who received the greatest number of votes as indicated by the holders of the Depositary Shares. A summary of the voting results follows: Number of Votes ------------------------------------------------------ Nominees for Authority Preferred Directors For Against Withheld ---------------------------------------- -------------- ------------------ --------------- Arthur I. Caplan 931,389 --- 6,700 Frederick Doppelt 929,789 --- 8,300
(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: 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. 16 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 1997 Form 10-K filed on March 30, 1998. 17 10.3 Perini Corporation Amended and Restated Construction Business Unit Incentive Compensation Plan - Exhibit 10.3 to 1997 Form 10-K filed on March 30, 1998. 10.4 $125 million Credit Agreement dated as of December 6, 1994 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Shawmut Bank, N.A., Co-Agent - Exhibit 10.4 to 1994 Form 10-K, as filed. 10.5 Amendment No. 1 as of February 26, 1996 to the Credit Agreement dated as of December 6, 1994 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts (f/k/a Shawmut Bank, N.A.), as Co-Agent - Exhibit 10.5 to 1995 Form 10-K, as filed. 10.6 Bridge Credit Agreement dated as of February 26, 1996 among Perini Corporation, the Bridge Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts (f/k/a Shawmut Bank, N.A.) as Co-Agent - Exhibit 10.6 to 1995 Form 10-K, as filed. 10.7 Amendment No. 2 as of July 30, 1996 to the Credit Agreement dated as of December 6, 1994 and Amendment No. 1 as of July 30, 1996 to the Bridge Credit Agreement dated February 26, 1996 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.7 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 10.8 Amendment No. 2 as of September 30, 1996 to the Bridge Credit Agreement dated as of February 26, 1996 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.8 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 10.9 Amendment No. 3 as of October 2, 1996 to the Bridge Credit Agreement dated as of February 26, 1996 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.9 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 10.10 Amendment No. 4 as of October 15, 1996 to the Bridge Credit Agreement dated as of February 26, 1996 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.10 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 18 10.11 Amendment No. 5 as of October 21, 1996 to the Bridge Credit Agreement dated as of February 26, 1996 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.11 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 10.12 Amendment No. 6 as of October 24, 1996 to the Bridge Credit Agreement dated as of February 26, 1996 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.12 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 10.13 Amendment No. 7 as of November 1, 1996 to the Bridge Credit Agreement dated as of February 26, 1996 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.13 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 10.14 Amendment No. 8 as of November 4, 1996 to the Bridge Credit Agreement dated as of February 26, 1996 and Amendment No. 3 as of November 4, 1996 to the Credit Agreement dated December 6, 1994 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.14 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 10.15 Amendment No. 9 as of November 12, 1996 to the Bridge Credit Agreement dated as of February 26, 1996 and Amendment No. 4 as of November 12, 1996 to the Credit Agreement dated December 6, 1994 among Perini Corporation, the Banks listed herein, Morgan Guaranty Trust Company of New York, as Agent, and Fleet National Bank of Massachusetts, as Co-Agent - Exhibit 10.15 to Perini Corporation's Form 10-Q/A for the fiscal quarter ended September 30, 1996 filed on December 11, 1996. 10.16 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. 10.17 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 1996 Form 10-K - as filed. 10.18 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, as Co-Agent - Exhibit 10.18 to 1998 Form 10-K - as filed. 19 10.19 Amendment No. 2 as of August 31, 1998 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, as Co-Agent - Exhibit 10.19 to 1998 Form 10-K - as filed. 10.20 Amendment No. 3 as of September 9, 1998 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, as Co-Agent - Exhibit 10.20 to 1998 Form 10-K - as filed. 10.21 Amendment No. 4 as of September 30, 1998 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, as Co-Agent - Exhibit 10.21 to 1998 Form 10-K - as filed. 10.22 Amendment No. 5 as of November 16, 1998 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, as Co-Agent - Exhibit 10.22 to 1998 Form 10-K - as filed. 10.23 Amendment No. 6 as of December 1, 1998 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, as Co-Agent - Exhibit 10.23 to 1998 Form 10-K - as filed. 10.24 Amendment No. 7 as of March 23, 1999 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, as Co-Agent - Exhibit 10.24 to Perini Corporation's Form 10-Q for the fiscal quarter ended March 31, 1999 filed on May 14, 1999. 10.25 Amendment No. 8 as of July 19, 1999 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, as Co-Agent - filed herewith. (b) Reports on Form 8-K - None. 20 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 13, 1999 /s/ Robert Band ----------------------------------------------- Robert Band, President, Chief Executive Officer and Chief Financial Officer Date: August 13, 1999 /s/ Michael E. Ciskey ----------------------------------------------- Michael E. Ciskey, Vice President and Controller 21 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Balance Sheets as of June 30, 1999 and the Consolidated Statements of Operations for the six months ended June 30, 1999 as qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 JUN-30-1999 51,983 0 148,463 0 0 315,201 26,643 16,874 329,291 240,512 77,371 100 0 5,743 0 329,291 0 531,346 0 (507,021) (888) 0 (3,376) 7,626 (500) 7,126 (100,005) 0 0 (92,879) (17.32) (17.32) Includes Equity in Construction Joint Ventures of $74,619, Unbilled Work of $18,806, Net Current Assets of Discontinued Operations of $15,311, and Other Short-Term Assets of $6,019, not currently reflected in this tag list. Includes Other Long-Term Assets of $4,321, not currently reflected in this tag list. Includes Deferred Income Taxes and Other Liabilities of $18,637, Redeemable Series B Preferred Stock of $35,566, Stock Purchase Warrants of $2,233, Paid-In Surplus of $46,763, Retained Deficit of $(96,521), ESOT Related Obligations of $(120), and Treasury Stock of $(993). Includes General, Administrative and Selling Expenses of $12,435 not currently refelected on this tag list.
EX-10 3 EXHIBIT 10.25 AMENDMENT NO. 8 TO CREDIT AGREEMENT AND WAIVERS AMENDMENT and WAIVERS dated as of July 19, 1999 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"). W I T N E S S E T H : WHEREAS, the Borrower, the Banks and Morgan Guaranty Trust Company of New York, as Agent, are parties to an Amended and Restated Credit Agreement dated as of January 17, 1997 (as heretofore amended, the "Credit Agreement"); WHEREAS, the parties have agreed to amend certain provisions of the Credit Agreement as provided herein, and at the request of the Borrower the Banks have agreed to grant the waivers provided herein; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions. 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 to Application of Mandatory Commitment Reductions. Section 2.10(b) of the Credit Agreement is amended by deleting the reference to "$5,000,000" in the proviso therein and inserting "$7,500,000" in lieu thereof. SECTION 3. Amendment to Mandatory Commitment Reductions from Dispositions of Real Estate Investments and Other Property. Section 2.10(c) of the Credit Agreement is amended as follows: (a) Clause (i) is amended and restated in its entirety to read as follows: "(i) immediately upon receipt by the Borrower or any Subsidiary at any time of any proceeds from any Disposition of any Real Estate 1 Exhibit 10.25 Investment or any other real property of the Borrower or any Subsidiary (including without limitation any proceeds received by the Borrower or any Subsidiary as consideration for the granting of any right or option providing for a Disposition but excluding operating receipts from Real Estate Investments), by an amount equal to 100% of the Net Proceeds realized by the Borrower or any Subsidiary in respect thereof." (b) Clause (ii) is amended by: (i) deleting in subclause (C) thereof "80%" and inserting "100%" in lieu thereof; and (ii) deleting the phrase "at which time the Commitments shall be reduced by 80% of $125,000 (i.e., $100,000) or 80% of such higher integral multiple of $125,000, as the case may be" and inserting in its place the following phrase: "at which time the Commitments shall be reduced by $125,000 or such higher integral multiple of $125,000, as the case may be." SECTION 4. Amendment to Eliminate Limitation on Fees and Expenses of Independent Public Accountants, Financial Advisors and Other Experts. Section 9.03(a) of the Credit Agreement is amended by deleting the entire parenthetical containing the proviso in clause (i) thereof. SECTION 5. Bank Meeting. The Borrower agrees to hold a meeting prior to September 10, 1999, and that its Chairman, the chairman of the special committee of the Borrower's Board of Directors appointed to consider refinancing alternatives, the other members of such special committee to the extent such other members are available and other members of the Borrower's senior management will be present at the meeting, to discuss the Borrower's cash flow projections for the remainder of 1999 and 2000-2002, the status of the Rincon Center project and a proposal for refinancing the Borrower's obligations under the Financing Documents, including the proposed capital structure for the Borrower. If requested by any Bank prior to such meeting, the Borrower will ensure that any financial advisor retained by such special committee and Richard C. Blum will be present at appropriate times during such meeting. Any failure by the Borrower to comply with this Section 5 shall constitute an Event of Default. SECTION 6. Waivers With Respect to the Rincon. Solely for the period from the date hereof through and including the "Rincon Waivers Termination Date" (as defined below), each Bank waives the Defaults (including notice thereof) arising under the Credit Agreement solely as a result of the fact that: 2 Exhibit 10.25 (i) the Rincon Restructuring shall not have become effective on or before April 30, 1999; (ii) the Borrower's shall have failed to comply with its obligations under Section 5.02 of the Credit Agreement, but solely to the extent such obligations would require the Borrower to cause Perini Land and Development and Rincon Center Associates to pay and discharge, at or before maturity, all of their respective material obligations and liabilities relating to the Rincon Center project; (iii) Rincon Center Associates shall have failed to make any payment in respect of Debt relating to the Rincon Center project; or (iv) any event or condition shall occur which results in the acceleration of the maturity of any Debt of Rincon Center Associates relating to the Rincon Center project or enables (or, with the giving of notice or lapse of time or both, would enable) the holder of such Debt or any Person acting on such holder's behalf to accelerate the maturity thereof. These waivers do not affect the Borrower's obligation to pay the $300,000 fee that was to be payable if the Rincon Restructuring did not become effective on or before July 16, 1999, as required by Section 3(b) of Waiver No. 2 With Respect to the Rincon Restructuring dated as of May 15, 1999. As used herein, "Rincon Waivers Termination Date" means the earlier of September 30, 1999 and the first date, if any, when any of the following events shall occur: (i) The Borrower or Perini Land and Development shall become a named party in any proceeding relating to the Rincon Center project, other than the proceeding commenced by Pacific Gateway Properties, Inc., Case No. 301993 (the "PGP Lawsuit"); (ii) Any development occurs in the PGP Lawsuit that is adverse to the Borrower or Perini Land and Development; (iii) An Event of Default described in Section 6.01(i) shall occur with respect to Rincon Center Associates, other than an Event of Default arising solely from Rincon Center Associates' failure generally to pay its debts as they become due; and (iv) An involuntary case or other proceeding shall be commenced against Rincon Center Associates seeking liquidation, reorganization or other relief with 3 Exhibit 10.25 respect to it or its debts under any bankruptcy, insolvency or similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any material part of its property. SECTION 7. Waiver of Minimum Consolidated Adjusted Tangible Net Worth Covenant. The Banks hereby waive the Borrower's obligations to comply with Section 5.09 of the Credit Agreement through and including the Rincon Waivers Termination Date. This waiver shall not affect the Borrower's obligation to comply with Section 5.09 of the Credit Agreement for any other period specified therein. SECTION 8. Waiver of Condition to Borrowings. Solely for Borrowings on any date from the date hereof through and including the Rincon Waivers Termination Date, the Banks hereby waive the condition to Borrowing contained in Section 3.02(d) of the Credit Agreement, but only to the extent such condition cannot be satisfied due solely to the inability of the Borrower to make the representation and warranty contained in Section 4.04(c) of the Credit Agreement as a result of the write-down of its investment in the Rincon Center project. The Banks acknowledge that a Borrowing on any day from the date hereof through and including the Rincon Waivers Termination Date shall not be deemed to be a representation and warranty by the Borrower on such date as to the condition specified in Section 3.02(d) to the extent that such condition is waived hereunder. SECTION 9. Representations and Warranties Correct; No Default. The Borrower represents and warrants that on and as of the date hereof (a) the representations and warranties of each Obligor contained in each Financing Document, as amended, to which it is a party are true, other than the representation and warranty contained in Section 4.04(c) of the Credit Agreement to the extent that the Borrower cannot make such representation and warranty due solely to the status of the Rincon Center project and (b) no Default under the Credit Agreement exists. SECTION 10. Effect of Amendments and Waivers. Except as expressly set forth herein, the amendments and waivers contained herein shall not constitute an amendment or waiver of any term or condition of the Credit Agreement or 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 11. Governing Law. This Amendment and Waiver shall be governed by and construed in accordance with the laws of the State of New York. SECTION 12. Counterparts. This Amendment and Waiver 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. 4 Exhibit 10.25 SECTION 13. Consent by Subsidiary Guarantors. By signing this Amendment and Waiver below, each Subsidiary Guarantor affirms its obligations under the Subsidiary Guarantee Agreement and acknowledges that this Amendment and Waiver shall not 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 14. Effectiveness. This Amendment and Waiver shall become effective as of the date hereof when the Agent shall have received: (a) duly executed counterparts hereof signed by the Borrower, each Bank and each Subsidiary Guarantor (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); and (b) the $300,000 fee payable in accordance with Section 3(b) of Waiver No. 2 With Respect to the Rincon Restructuring dated as of May 15, 1999. SECTION 15. Effect of Rincon Waivers Termination Date. The waivers granted pursuant to Sections 6, 7 and 8 shall terminate and be of no further force and effect on the Rincon Waivers Termination Date. The Banks shall retain, and upon such termination the Banks shall be entitled to exercise, any and all rights and remedies with respect to the Defaults waived pursuant thereto. 5 Exhibit 10.25 IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waivers to be duly executed by their respective authorized officers as of the date first above written. -----END PRIVACY-ENHANCED MESSAGE-----