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0001193125-03-096752.txt : 20031219
0001193125-03-096752.hdr.sgml : 20031219
20031218215629
ACCESSION NUMBER: 0001193125-03-096752
CONFORMED SUBMISSION TYPE: S-1
PUBLIC DOCUMENT COUNT: 16
FILED AS OF DATE: 20031219
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: S-1
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-111338
FILM NUMBER: 031063569
BUSINESS ADDRESS:
STREET 1: 73 MT WAYTE AVE
CITY: FRAMINGHAM
STATE: MA
ZIP: 01701
BUSINESS PHONE: 5086282000
S-1
1
ds1.htm
PERINI CORPORATION FORM S-1
PERINI CORPORATION FORM S-1
As filed with the Securities and Exchange Commission on December 18, 2003
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
PERINI CORPORATION
(Exact Name of
Registrant as Specified in its Charter)
Massachusetts |
|
1542 |
|
04-1717070 |
(State or Other Jurisdiction of Incorporation or Organization) |
|
(Primary Standard Industrial Classification Code Number) |
|
(I.R.S. Employer Identification No.) |
73 Mt. Wayte Avenue
Framingham, MA 01701
(508) 628-2000
(Address, including zip code, and telephone number, including area code, of registrants principal executive office)
Robert Band
President and Chief Operating Officer
Perini Corporation
73 Mt. Wayte Avenue
Framingham, MA 01701
(508) 628-2000
(Name, address,
including zip code and telephone number, including area code, of agent for service)
Copies to:
Richard A. Soden, Esq. |
|
Kris F. Heinzelman, Esq. |
Robert P. Whalen, Jr., Esq. |
|
Cravath, Swaine & Moore LLP |
Goodwin Procter LLP |
|
825 Eighth Avenue |
Exchange Place |
|
New York, New York 10019 |
Boston, Massachusetts 02109 |
|
(212) 474-1000 |
(617) 570-1000 |
|
Fax: (212) 474-3700 |
Fax: (617) 523-1231 |
|
|
Approximate date of commencement of proposed
sale to public: As soon as practicable after this Registration Statement becomes effective.
If any of the
securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨
If this Form is used to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering. ¨
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ¨
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities To be Registered |
|
Amount To Be Registered (1) |
|
Proposed Maximum Offering Price Per Share (2) |
|
Proposed Maximum Aggregate Offering Price (1)(2) |
|
Amount of Registration Fee |
|
Common Stock, $1.00 par value per share |
|
6,797,420 |
|
$8.22 |
|
$55,874,792 |
|
$4,521 |
|
Preferred Stock Purchase Rights (3) |
|
|
|
N/A |
|
N/A |
|
N/A |
(1) |
Includes 886,620 shares of common stock that the underwriters have the option to purchase to cover over-allotments, if any. |
(2) |
Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) based on the average of the high and low prices per share of the
Registrants common stock on the American Stock Exchange on December 11, 2003. |
(3) |
This registration statement also relates to Preferred Stock Purchase Rights to purchase shares of Series A Junior Participating Cumulative Preferred Stock of the Registrant, which
are attached to all shares of common stock issued, pursuant to the terms of the Registrants Amended and Restated Shareholders Rights Agreements dated January 17, 1997, as amended. Until the occurrence of the prescribed events, the rights are
not exercisable, are evidenced by the certificates for the common stock and will be transferred with and only with such stock. Because no separate consideration is paid for the rights, the registration fee therefore is included in the fee for the
common stock. |
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
SUBJECT TO COMPLETION,
DATED ,
5,910,800 Shares
Common Stock
The shares of common stock are being sold by the selling stockholders. We will not receive any of the proceeds from the shares of common stock sold by the selling
stockholders.
Our common stock is listed on the American Stock Exchange
under the symbol PCR. The last reported sale price on December 17, 2003, was $8.26 per share.
The underwriters have an option to purchase a maximum of 886,620 additional shares to cover over-allotments of shares.
Investing in our common stock involves risks. See
Risk Factors on page 8.
|
|
Price to Public
|
|
Underwriting Discounts and Commissions
|
|
Proceeds to Selling Stockholders
|
Per Share |
|
|
$ |
|
|
$ |
|
|
$ |
Total |
|
$ |
|
|
$ |
|
|
$ |
|
Delivery of the shares of common
stock will be made on or about , .
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Credit Suisse First Boston
D.A. Davidson & Co.
Morgan Joseph & Co. Inc.
The date of this prospectus is ,
.
[Headings Perini Building Company, Perini Civil Construction and Perini Management
Services with various pictures of completed construction sites.]
TABLE OF CONTENTS
You should rely only on the information contained in this document or to which we have referred you. We have not
authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.
PROSPECTUS SUMMARY
The
following summary contains information about our business and the offering of our common stock. It does not contain all of the information that you need to consider in making an investment decision. You should read this entire prospectus carefully,
including the information under Risk Factors and our consolidated financial statements and the related notes included elsewhere in this prospectus. In this prospectus, unless the context requires otherwise, Perini,
we, us and our refer to Perini Corporation, a Massachusetts corporation, and our subsidiaries, including the operations of businesses we acquired prior to the date of acquisition, and not to the underwriters.
Our Company
We are a leading construction services company offering diversified general
contracting, construction management and design-build services to private clients and public agencies throughout the world. We have provided construction services since 1894 and have established a strong reputation within our markets by executing
large, complex projects on time and within budget while adhering to strict quality control measures. We offer general contracting, preconstruction planning and comprehensive project management services, including the planning and scheduling of the
manpower, equipment, materials and subcontractors required for a project. We also offer self-performed construction services including earthwork, concrete forming and placement and steel erection. During the nine months ended September 30, 2003, we
performed work on over 100 construction projects for over 75 federal, state and local government agencies or authorities and private customers. Our headquarters are in Framingham, Massachusetts, and we have seven other principal offices throughout
the United States. As of September 30, 2003, we employed approximately 3,400 people. Our common stock is currently listed on the American Stock Exchange under the symbol PCR.
Our business is now conducted through three primary segments: building, civil, and management services. Our building segment
is comprised of Perini Building Company and James A. Cummings, Inc., or Cummings, and focuses on large, complex projects in the hospitality and gaming, sports and entertainment, educational, transportation and healthcare markets. Our civil segment
is involved in public works construction primarily in the northeastern United States, including the repair, replacement and reconstruction of the United States public infrastructure such as highways, bridges and mass transit systems. Our management
services segment provides diversified construction, design-build and maintenance services to the U.S. military and government agencies as well as power producers, surety companies and multi-national corporations.
For the nine months ended September 30, 2003, our revenues were $873.4
million and income before income taxes was $15.0 million, which represents a 6.2% and 6.5% increase, respectively, over the same period in 2002. Our backlog was $1.33 billion as of September 30, 2003, an increase of 34.5% from $990 million at the
end of 2002.
The following chart presents our revenues by
segment for the nine months ended September 30, 2003 and our backlog by segment as of September 30, 2003 (in millions):
Revenue by Segment (Nine Months Ended 9/30/03) |
|
Backlog by Segment (As of 9/30/03) |
|
|
|
1
The table below is a summary of on-going and recently completed projects organized by our current primary
end markets within each of our business segments:
End Market
|
|
Percentage of Backlog as of 9/30/03
|
|
Representative Clients/Projects
|
|
Location
|
Building Segment |
|
56% |
|
|
|
|
|
|
|
|
|
|
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|
|
|
Hospitality and Gaming |
|
|
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|
|
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General |
|
|
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Paris Hotel & Casino |
|
Las Vegas, NV |
|
|
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Gaylord Palms Resort and Convention Center |
|
Orlando, FL |
|
|
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|
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Grand Resorts Hotel/Casino Expansion |
|
Atlantic City, NJ |
|
|
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|
|
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Native American |
|
|
|
|
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Mohegan Sun Hotel/Casino Expansion |
|
Uncasville, CT |
|
|
|
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Pechanga Resort and Casino |
|
Temecula, CA |
|
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Seminole Hard Rock Hotel and Casino |
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Hollywood, FL |
|
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Sports and Entertainment |
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|
|
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Bank One Ballpark |
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Phoenix, AZ |
|
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The Palace at Auburn Hills |
|
Auburn Hills, MI |
|
|
|
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|
|
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Education Facilities |
|
|
|
|
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Florida International University, Health & Life Sciences Building |
|
Miami, FL |
|
|
|
|
|
|
|
|
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|
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|
|
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East Connecticut State University Dormitory |
|
Willimantic, CT |
|
|
|
|
|
|
|
|
Transportation Facilities |
|
|
|
|
|
100th Street Bus Depot |
|
New York, NY |
|
|
|
|
|
|
|
|
|
|
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|
|
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Airport Parking Garage and Rental Car Facility |
|
Ft. Lauderdale, FL |
|
|
|
|
|
|
|
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Healthcare Facilities |
|
|
|
|
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South Shore Hospital Expansion |
|
Weymouth, MA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
La Posada Senior Living Community |
|
Palm Beach Gardens, FL |
|
|
|
|
|
|
Civil Segment |
|
18% |
|
|
|
|
|
|
|
|
|
|
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|
|
|
Highways |
|
|
|
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I-93 Northbound Tunnel/Atlantic Avenue (Central Artery/Tunnel Project) |
|
Boston, MA |
|
|
|
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|
|
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|
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Long Island Expressway Reconstruction |
|
Queens, NY |
|
|
|
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|
|
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Bridges |
|
|
|
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|
Williamsburg Bridge Reconstruction |
|
New York, NY |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Triborough Bridge Deck Replacement |
|
New York, NY |
|
|
|
|
|
|
|
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Mass Transit |
|
|
|
|
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Hudson-Bergen Light Rail Transit System |
|
Jersey City, NJ |
|
|
|
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|
|
|
|
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Jamaica Station Reconstruction |
|
Jamaica, NY |
2
End Market
|
|
Percentage of Backlog as of 9/30/03
|
|
Representative Clients/Projects
|
|
Location
|
|
|
|
|
|
Management Services Segment |
|
26% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Services |
|
|
|
|
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U.S. Embassy Security Upgrade (U.S. Department of State) |
|
Worldwide |
|
|
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|
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|
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Reconstruction of Electric Power Facilities |
|
Southern Iraq |
|
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Power Facilities Maintenance |
|
|
|
|
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Exelon Nuclear, |
|
IL, NJ and PA |
|
|
|
|
|
|
|
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Maintenance Modification Contract (10 Stations, 17 Units) |
|
|
Our Strengths
We believe our core strengths provide us with a significant competitive
advantage and allow us to profitably deliver large and complex construction projects on time for our clients. Our commitment to producing high quality results is augmented by the following principal competitive strengths:
|
|
|
Market Leadership in Several High-Growth Building End Markets. We are among the nations largest contractors for hospitality and gaming facilities and sports and
entertainment arenas. Our significant experience, strong relationships, market leadership, design-build expertise and presence in certain key areas throughout the United States allow us to successfully compete for projects in these high-growth
building end markets. |
|
|
|
Extensive Experience in Complex Civil Construction. For over 100 years, we have provided specialized civil construction services, with an emphasis on large, complex projects
in dense urban areas, principally in the metropolitan New York and Boston markets. |
|
|
|
Responsiveness and Performance with Challenging Projects. Our clients often rely on us to respond rapidly with the resources and expertise necessary to complete large,
complex projects in challenging business or operating environments throughout the world. |
|
|
|
Long-Term Relationships and Operating History with Clients. We maintain strong, long-term relationships with many of our clients. This is particularly beneficial in our
building and management services segments where it often enables us to negotiate, rather than bid for, contracts. |
|
|
|
Focus on Managing Contract and Project Risk. Our extensive experience and history in our markets provide us with an understanding of the risks associated with certain
projects. We mitigate risk in a variety of ways, including a thorough bid review and approval process, incorporating safeguards into our contracts, subcontracting certain project components and pursuing joint venture arrangements where appropriate.
|
|
|
|
Experienced Management Team and Highly Skilled Workforce. Our senior management team and workforce bring significant industry work experience and specialized project
expertise to our project execution capabilities. |
Our Strategy
We will seek to increase shareholder value by pursuing
the following growth strategies:
|
|
|
Leverage Leadership Position in Hospitality and Gaming Market. We intend to leverage our leadership position in this market by emphasizing our experience and expertise, as
well as our proven ability to complete challenging projects on accelerated schedules. |
3
|
|
|
Extend Building Construction Expertise to Additional Markets. As we expand our market presence within particular project types or geographic areas, we will seek opportunities
to cross-utilize our building construction expertise. We intend, for example, to use our resources and experience to expand Cummings capabilities and market focus throughout Florida. |
|
|
|
Pursue Expanding Federal Contracting Opportunities for Defense, Reconstruction and Security. We have well established relationships with U.S. government agencies that
include, among others, the Departments of Defense and State. Given our history with these customers, including our recent construction contract awards in Iraq and Afghanistan, we will continue to pursue construction and support projects at various
domestic and overseas locations such as military bases, military installations and U.S. embassies. |
|
|
|
Seek Complex Civil Construction Projects in the Northeast. We intend to maintain and build upon our established position as a leading civil construction contractor in the
northeastern United States. As one of a limited number of firms that has the ability to consistently pre-qualify for major projects, we will selectively focus on large, complex projects where our competitive advantages can be leveraged.
|
|
|
|
Focus on Margin Expansion Opportunities. We will actively seek to expand our profit margins by managing our business mix, targeting high value-added projects and continuously
evaluating our corporate support and field operations cost structures. |
|
|
|
Pursue Selected Strategic Acquisitions. We intend to supplement our internal growth and achieve strategic benefits by pursuing selected acquisitions, similar to the
acquisition of Cummings in January 2003. See Managements Discussion and Analysis of Financial Condition and Results of OperationsRecent Developments. |
We are a Massachusetts corporation. Our principal office is located at 73 Mt. Wayte Avenue, Framingham, Massachusetts 01701
and our telephone number is (508) 628-2000.
4
The Offering
Common stock offered by the selling stockholders (1) |
|
5,910,800 shares |
|
|
Common stock outstanding before and after this offering |
|
22,885,535 shares |
|
|
Dividend policy |
|
We have not paid any cash dividends on our common stock since 1990 and currently do not expect to pay dividends or make any other distributions on such stock in the immediate
future. |
|
|
Use of proceeds |
|
We will not receive any proceeds from the sale of common stock by the selling stockholders. |
|
|
American Stock Exchange Symbol |
|
PCR |
(1) |
Assumes no exercise by the underwriters of their option to purchase up to 886,620 additional shares from the selling stockholders to cover over-allotments. |
All of the shares offered by this prospectus are being offered by the
selling stockholders.
The number of shares of common stock
outstanding before and after this offering is based on the number of shares outstanding as of December 15, 2003 and excludes:
|
|
|
3,005,800 shares of common stock reserved for issuance upon the exercise of outstanding stock options at a weighted average exercise price per share of $5.00;
|
|
|
|
195,634 shares of common stock reserved for future awards under our Special Equity Incentive Plan; |
|
|
|
370,239 shares of common stock reserved for issuance upon conversion of our $21.25 Preferred Stock at a conversion price of $377.50 per share (or $37.75 per Depositary Share); and
|
|
|
|
420,000 shares of common stock reserved for issuance upon exercise of outstanding warrants at an exercise price per share of $8.30, subject to anti-dilution adjustment in the event
of certain transactions and other corporate events. |
As of December 15, 2003 the selling stockholders held approximately 52% of our outstanding common stock. After giving effect to this offering and assuming the full exercise of the underwriters option to purchase 886,620 additional
shares, the selling stockholders will own approximately 22% of our outstanding common stock.
Unless otherwise indicated, the information in this prospectus assumes that the underwriters will not exercise the over-allotment option granted to them by the selling stockholders.
5
Summary Consolidated Financial Data
The following summary consolidated financial data should be read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations and Selected Historical Financial Data and our consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated financial
data for the years ended December 31, 2002, 2001 and 2000, and as of December 31, 2002 and 2001, are derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data for the
years ended December 31, 1999 and 1998 and as of December 31, 2000, 1999 and 1998 are derived from our audited financial statements not included in this prospectus. The summary consolidated condensed financial data for the nine months ended
September 30, 2003 and 2002 and as of September 30, 2003 and 2002, are derived from our unaudited consolidated condensed financial statements included elsewhere in this prospectus. Backlog and new business awarded are not measures defined in
generally accepted accounting principles and have not been derived from our consolidated financial statements. In the opinion of management the unaudited consolidated financial statements include all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the information set forth therein. The historical results are not necessarily indicative of our future results of operations or financial performance and the results for the nine months ended September 30,
2003 should not be considered indicative of results expected for the full fiscal year.
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
|
|
|
2003
|
|
|
2002
|
|
2002
|
|
2001
|
|
2000
|
|
|
1999
|
|
|
1998
|
|
|
|
(in thousands, except per share data) |
|
Statement of Operations Data: |
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|
|
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|
|
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|
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CONTINUING OPERATIONS: |
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|
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|
|
|
|
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|
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|
|
|
|
|
|
|
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Revenues |
|
$ |
873,451 |
|
|
$ |
822,482 |
|
$ |
1,085,041 |
|
$ |
1,553,396 |
|
$ |
1,105,660 |
|
|
$ |
1,019,484 |
|
|
$ |
1,011,322 |
|
Cost of Operations |
|
|
829,590 |
|
|
|
784,744 |
|
|
1,026,391 |
|
|
1,495,834 |
|
|
1,053,328 |
|
|
|
969,015 |
|
|
|
957,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
43,861 |
|
|
|
37,738 |
|
|
58,650 |
|
|
57,562 |
|
|
52,332 |
|
|
|
50,469 |
|
|
|
53,671 |
|
G&A Expense |
|
|
27,709 |
|
|
|
22,132 |
|
|
32,770 |
|
|
28,061 |
|
|
24,977 |
|
|
|
26,635 |
|
|
|
27,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Operations |
|
|
16,152 |
|
|
|
15,606 |
|
|
25,880 |
|
|
29,501 |
|
|
27,355 |
|
|
|
23,834 |
|
|
|
26,274 |
|
Other (Income) Expense, Net |
|
|
428 |
|
|
|
360 |
|
|
520 |
|
|
227 |
|
|
(949 |
) |
|
|
(72 |
) |
|
|
652 |
|
Interest Expense |
|
|
701 |
|
|
|
1,146 |
|
|
1,485 |
|
|
2,006 |
|
|
3,966 |
|
|
|
7,128 |
|
|
|
8,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
|
15,023 |
|
|
|
14,100 |
|
|
23,875 |
|
|
27,268 |
|
|
24,338 |
|
|
|
16,778 |
|
|
|
17,149 |
|
Provision (Credit) for Income Taxes |
|
|
(6,410 |
) |
|
|
551 |
|
|
801 |
|
|
850 |
|
|
(43 |
) |
|
|
421 |
|
|
|
1,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Continuing Operations |
|
|
21,433 |
|
|
|
13,549 |
|
|
23,074 |
|
|
26,418 |
|
|
24,381 |
|
|
|
16,357 |
|
|
|
16,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss From Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(694 |
) |
|
|
(4,397 |
) |
Loss on Disposal of Real Estate Business Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(99,311 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss From Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,005 |
) |
|
|
(4,397 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
21,433 |
|
|
$ |
13,549 |
|
$ |
23,074 |
|
$ |
26,418 |
|
$ |
24,381 |
|
|
$ |
(83,648 |
) |
|
$ |
11,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Available for Common Stockholders (1) |
|
$ |
27,331 |
|
|
$ |
11,955 |
|
$ |
20,949 |
|
$ |
24,293 |
|
$ |
7,299 |
|
|
$ |
(89,917 |
) |
|
$ |
5,743 |
|
|
|
|
|
|
|
|
|
Per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Continuing Operations (2) |
|
$ |
1.20 |
|
|
$ |
0.53 |
|
$ |
0.92 |
|
$ |
1.07 |
|
$ |
0.39 |
|
|
$ |
1.80 |
|
|
$ |
1.91 |
|
Loss From Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.12 |
) |
|
|
(0.83 |
) |
Estimated Loss on Disposal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17.72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1.20 |
|
|
$ |
0.53 |
|
$ |
0.92 |
|
$ |
1.07 |
|
$ |
0.39 |
|
|
$ |
(16.04 |
) |
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Continuing Operations (2) |
|
$ |
1.17 |
|
|
$ |
0.52 |
|
$ |
0.91 |
|
$ |
1.04 |
|
$ |
0.39 |
|
|
$ |
1.80 |
|
|
$ |
1.91 |
|
Loss From Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.12 |
) |
|
|
(0.83 |
) |
Estimated Loss on Disposal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17.72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1.17 |
|
|
$ |
0.52 |
|
$ |
0.91 |
|
$ |
1.04 |
|
$ |
0.39 |
|
|
$ |
(16.04 |
) |
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
22,726 |
|
|
|
22,664 |
|
|
22,664 |
|
|
22,623 |
|
|
18,521 |
|
|
|
5,606 |
|
|
|
5,318 |
|
Diluted |
|
|
23,399 |
|
|
|
23,028 |
|
|
22,939 |
|
|
23,442 |
|
|
18,527 |
|
|
|
5,606 |
|
|
|
5,318 |
|
6
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
|
|
2003
|
|
2002
|
|
2002
|
|
2001
|
|
2000
|
|
1999
|
|
|
1998
|
|
|
(in thousands, except per share data) |
Balance Sheet Data (end of period): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (3) |
|
$ |
464,412 |
|
$ |
395,326 |
|
$ |
402,389 |
|
$ |
501,241 |
|
$ |
487,478 |
|
$ |
385,767 |
|
|
$ |
452,496 |
Working Capital |
|
|
122,110 |
|
|
130,346 |
|
|
115,908 |
|
|
93,369 |
|
|
80,477 |
|
|
48,430 |
|
|
|
57,665 |
Long-term Debt, Less Current Maturities |
|
|
25,566 |
|
|
33,700 |
|
|
12,123 |
|
|
7,540 |
|
|
17,218 |
|
|
41,091 |
|
|
|
75,857 |
Stockholders Equity (Deficit) |
|
|
103,510 |
|
|
91,364 |
|
|
86,649 |
|
|
79,408 |
|
|
60,622 |
|
|
(36,618 |
) |
|
|
50,558 |
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization |
|
$ |
2,524 |
|
$ |
2,309 |
|
$ |
3,202 |
|
$ |
2,602 |
|
$ |
2,191 |
|
$ |
3,342 |
|
|
$ |
3,059 |
Capital Expenditures |
|
|
4,406 |
|
|
3,710 |
|
|
4,510 |
|
|
4,528 |
|
|
1,793 |
|
|
1,599 |
|
|
|
1,418 |
Backlog (end of period) (4) |
|
|
1,332,148 |
|
|
1,124,818 |
|
|
990,175 |
|
|
1,213,535 |
|
|
1,788,731 |
|
|
1,658,077 |
|
|
|
1,232,256 |
New Business Awarded (5) |
|
|
1,215,423 |
|
|
733,256 |
|
|
861,681 |
|
|
978,200 |
|
|
1,236,314 |
|
|
1,445,305 |
|
|
|
934,124 |
(1) |
Income available for common stockholders includes adjustments to net income for (a) accrued and unpaid dividends on our $21.25 Preferred Stock, or $2.125 Depositary Shares, (b) the
reversal of previously accrued and unpaid dividends in the amount of approximately $7.3 million applicable to 440,627 of the $2.125 Depositary Shares purchased and retired by us on June 9, 2003, (c) dividends declared and paid on our Series B
Preferred Stock until its exchange for shares of common stock on March 29, 2000 and (d) the $13.7 million assigned to the induced conversion of the Series B Preferred Stock into common stock on March 29, 2000 (see Note (2) below).
|
(2) |
As discussed in Note (1)(i) of Notes to Consolidated Financial Statements, basic and diluted earnings per share for 2000 have been restated. |
(3) |
As discussed in Note (1)(b) of Notes to Consolidated Financial Statements, we now present our interests in joint ventures in the Consolidated Balance Sheets using the proportionate
consolidation method. Accordingly, total assets included above have been restated for all periods presented to reflect this change. |
(4) |
A construction project is included in our backlog at such time as a contract is awarded or a firm letter of commitment is obtained and funding is in place. Backlog is not a measure
defined in generally accepted accounting principles, or GAAP, and our backlog may not be comparable to the backlog of other companies. Management uses backlog to assist in forecasting future results. |
(5) |
New business awarded consists of the original contract price of projects added to our backlog in accordance with Note (4) above plus or minus subsequent changes to the estimated
total contract price of existing contracts. Management uses new business awarded to assist in forecasting future results. |
7
RISK FACTORS
You should
carefully consider the following risks and all other information contained in this prospectus before purchasing our common stock. If any of the following risks occur, our business, prospects, reputation, results of operations or financial condition
could be harmed. In that case, the trading price of our common stock could decline, and you could lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below and elsewhere in this prospectus.
Risks Relating to Our Business
We face intense competition which could reduce our market share and profits.
We compete with many national, regional and local construction firms. Some of these competitors have achieved greater market
penetration than we have in certain of the markets in which we compete and some have greater financial and other resources than we do. If we are unable to compete successfully in one or more markets, our relative market share could be reduced. In
addition, competition for new projects, particularly government projects, is often based primarily on price. In order for us to compete effectively, we may need to accept lower contract margins and/or more fixed price or unit price contracts, which
could have a material adverse effect on us.
Increased regulation of the
hospitality and gaming industry could have a material adverse effect on us.
The hospitality and gaming industry is regulated extensively by federal and state regulatory bodies, including state gaming commissions, the National Indian Gaming Commission and state and federal taxing and law
enforcement agencies. From time to time, legislation is proposed in the legislatures of some of these jurisdictions that, if enacted, could adversely affect the tax, regulatory, operational or other aspects of the hospitality and gaming industry.
Legislation of this type may be enacted in the future. The federal government has also previously considered a federal tax on casino revenues and may consider such a tax in the future. In addition, companies that operate in the hospitality and
gaming industry are currently subject to significant state and local taxes and fees in addition to normal federal and state corporate income taxes, and such taxes and fees are subject to increase at any time. For example, a new tax law enacted in
Nevada on July 22, 2003 increased the taxes applicable to Nevada gaming operations. Similar legislation or new hospitality and gaming regulations could deter future hospitality and gaming construction projects in jurisdictions in which we derive
significant revenue. As a result, the enactment of such legislation or regulations could have a material adverse effect on us.
A decrease in government funding of infrastructure projects could adversely affect our business.
Our civil construction markets are dependent on the amount of infrastructure work funded by various governmental agencies
which, in turn, depends on the condition of the existing infrastructure, the need for new or expanded infrastructure and federal, state or local government spending levels. A decrease in government funding of infrastructure projects could decrease
the number of projects available and limit our ability to obtain new contracts, which could have a material adverse effect on us.
Economic downturns impact the markets we serve and could adversely affect demand for our services.
The building construction markets we serve, such as hospitality and gaming, sports and entertainment, education,
transportation and healthcare facilities, are affected by changes in general economic conditions. During economic downturns, the ability of both private and governmental entities to make capital expenditures may decline significantly, which could
result in fewer projects or the suspension or cancellation of existing or planned projects and difficulty in collecting amounts owed to us for work completed or in progress.
8
In addition, consumer spending in the hospitality and gaming industry is discretionary and may decline
during economic downturns, when consumers have less disposable income. Even an uncertain economic outlook may adversely affect consumer spending in hospitality and gaming operations, as consumers may spend less in anticipation of a potential
economic downturn. Decreased spending in the hospitality and gaming market could deter new projects within the industry and the expansion or renovation of existing hospitality and gaming facilities, which could adversely affect us.
Our contracts require us to perform extra or change order work, which can result in
disputes and adversely affect our business.
Our contracts
generally require us to perform extra or change order work as directed by the client even if the client has not agreed in advance on the scope or price of the work to be performed. This process may result in disputes over whether the work performed
is beyond the scope of the work included in the original project plans and specifications or, if the client agrees that the work performed qualifies as extra work, the price the client is willing to pay for the extra work. Even when the client
agrees to pay for the extra work, we may be required to fund the cost of such work for a lengthy period of time until the change order is approved and funded by the client.
Also, these unapproved change orders, contract disputes or claims result in costs being incurred by us that cannot be billed
currently and therefore, are reflected as unbilled work in our balance sheet. See Note 1(d) of Notes to Consolidated Financial Statements. To the extent actual recoveries with respect to unapproved change orders, contract disputes or
claims are lower than our estimates, the amount of any shortfall will reduce our revenues and the amount of unbilled work recorded on our balance sheet, and could have a material adverse effect on us. In addition, any delay caused by the extra work
may adversely impact the timely scheduling of other project work and our ability to meet specified contract milestone dates. For example, we are currently, along with our joint venture partners, pursuing a series of claims for additional contract
time and compensation against the Massachusetts Highway Department for work performed by the joint venture on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. During construction, the Massachusetts Highway Department ordered
the joint venture to perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs, in excess of $100 million. In addition, we encountered a number of unforeseen conditions
during construction that greatly increased our cost of performance. See BusinessLegal Proceedings.
We are subject to significant legal proceedings the outcomes and effects of which are not possible to predict.
We are involved in various lawsuits, including the legal proceedings
described under BusinessLegal Proceedings. Some of these proceedings involve claims and judgments against us for significant amounts. For example, the litigation with the Los Angeles MTA has resulted in an award against the
Tutor-Saliba-Perini joint venture (a joint venture in which we have a 40% interest), Tutor-Saliba and us, jointly and severally, for $63.0 million plus accrued interest. This award is currently being appealed by the joint venture. We do not
believe that this or any other pending litigation will ultimately result in a final judgment against us that would materially adversely affect us. Litigation is, however, inherently uncertain and it is not possible to predict what the final outcome
will be of any legal proceeding. A final judgment against us would require us to record the related liability and fund the payment of the judgment and, if such adverse judgment is significant, it could have a material adverse effect on us.
In addition, legal proceedings resulting in judgments or
findings against us may harm our reputation and prospects for future contract awards. For example, we are defendants in a civil action brought by the San Francisco City Attorney on behalf of the City and County of San Francisco and the citizens of
California, in which it is alleged, among other things, that we violated various bidding practices and minority contracting regulations and committed acts of fraud. If a final judgment is determined adversely to us, it may harm our reputation among
other municipalities, which could preclude us from being qualified to bid on future municipal projects.
9
Our participation in joint ventures exposes us to liability for failures of our partners.
We sometimes enter into joint venture arrangements with outside partners on a
joint and several basis so that we can jointly bid on and execute a particular project and reduce our financial or operational risk with respect to such projects. Success on these joint projects depends in large part on whether our joint venture
partners satisfy their contractual obligations. If a joint venture partner fails to perform or is financially unable to bear its portion of required capital contributions, we could be required to make additional investments and provide additional
services in order to make up for our partners shortfall. Further, if we are unable to adequately address our partners performance issues, the client may terminate the project, which could have a material adverse effect on us.
Our international operations involve risks that could adversely affect our business.
Approximately 10% of our revenue for the nine months ended
September 30, 2003 was derived from our work on projects located outside of the United States. We expect non-U.S. projects to continue to contribute to our revenue and earnings for the foreseeable future. Our international operations expose us to
risks inherent in doing business outside the United States, including:
|
|
|
political risks, including risks of loss due to civil disturbances, acts of terrorism, acts of war, guerilla activities and insurrection; |
|
|
|
unstable economic, financial and market conditions; |
|
|
|
potential incompatibility with foreign joint venture partners; |
|
|
|
foreign currency controls and fluctuations; |
|
|
|
increases in taxes; and |
|
|
|
changes in labor conditions, labor strikes and difficulties in staffing and managing international operations. |
A decrease in government funding or change in government plans with respect to rebuilding
Iraq and Afghanistan, as well as the risks associated with undertaking projects in these countries, could adversely affect our business.
We recently performed design-build security upgrades at United States embassies and consulates throughout the world, and we are currently engaged in
significant building and infrastructure re-construction activities in Iraq and Afghanistan. The United States federal government has recently approved a spending bill for the reconstruction and defense of Iraq and has allocated significant funds to
the defense of United States interests around the world from the threat of terrorism. A decrease in government funding of these projects or a decision by the federal government to reduce or eliminate the use of outside contractors to perform this
work would decrease the number of projects available to us and limit our ability to obtain new contracts in this area.
In addition, our projects in Iraq, Afghanistan and other areas of political and economic instability carry with them specific security and operational
risks. Intentional or unintentional acts in those countries could result in damage to our construction sites or harm to our employees and could result in our decision to withdraw our operations from the area. Also, as a result of these acts, the
federal government could decide to cancel or suspend our operations in these areas.
We are subject to a number of risks as a government contractor.
We are a major provider of services to government agencies and therefore are exposed to risks associated with government contracting. For example, we must
comply with and are affected by laws and regulations
10
relating to the formation, administration and performance of government contracts, such as the Federal Acquisition Regulation, the Cost Accounting Standards
and Department of Defense security regulations. A violation of these laws or regulations could require us to pay fines and penalties, result in the termination of existing contracts or result in our being suspended from future government contracts.
If a government agency determines that we or a subcontractor engaged in improper conduct, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of
payments, fines and suspension or prohibition from doing business with the government, any of which could have a material adverse effect on us.
Government clients generally can terminate or modify their contract with us at their convenience and some government contracts must be renewed annually.
If a government client terminates or fails to renew a contract, our backlog may be reduced. If a government client terminates a contract due to our unsatisfactory performance, it could result in liability to us and harm our ability to compete for
future contracts.
We have been, are and will be in the future,
the subject of audits and cost reviews by contracting agencies, such as the United States Defense Contract Audit Agency, or the DCAA. These agencies review a contractors performance and may disallow costs if the agency determines that we
accounted for such costs in a manner inconsistent with Cost Accounting Standards or other regulatory and contractual requirements. Therefore, a negative audit could result in a substantial adverse adjustment to our revenues and costs, harm our
reputation and result in civil and criminal penalties.
An inability to
obtain bonding could adversely affect our business.
As is
customary in the construction business, we often are required to provide surety bonds to secure our performance under construction contracts. Our ability to obtain surety bonds primarily depends upon our capitalization, working capital, past
performance, management expertise and certain external factors, including the overall capacity of the surety market. Surety companies consider such factors in relationship to the amount of our backlog and their underwriting standards, which may
change from time to time. Since 2001, the surety industry has undergone significant changes with several companies withdrawing completely from the industry or significantly reducing their bonding commitment. In addition, certain re-insurers of
surety risk have limited their participation in this market. Therefore, we may be unable to obtain surety bonds, which could have a material adverse effect on us.
Conflicts of interest may arise with respect to our Chairman and Chief Executive Officer.
Ronald N. Tutor, our chief executive officer and chairman of our Board of
Directors, is the sole shareholder and chief executive officer of Tutor-Saliba Corporation, or Tutor-Saliba, a California corporation that beneficially owns approximately 27% of our common stock. Mr. Tutor also devotes a substantial amount of time
to the business activities of Tutor-Saliba. Tutor-Saliba is engaged in the construction industry, and, as described under Certain Transactions, we have participated in joint ventures with Tutor-Saliba and expect to continue to do so.
Although our joint ventures with Tutor-Saliba are discussed with our Audit Committee, transactions we enter into with Tutor-Saliba could be influenced by Mr. Tutor. As in any joint venture, we could have disagreements with Tutor-Saliba over the
operation of the joint ventures or the joint ventures could be involved in disputes with third parties, such as the litigation described under BusinessLegal Proceedings, where we may or may not have an identity of interest with
Tutor-Saliba. When such situations arise, we may feel constrained in aggressively pursuing all options available to us because of Mr. Tutors importance to us as our Chief Executive Officer and Chairman and a significant shareholder. If we face
such a situation and elect to pursue options against Tutor-Saliba, it is possible that Mr. Tutor or we could terminate his management relationship with us, which could have a material adverse effect on us.
We could incur significant costs as a result of liability under environmental laws.
Our operations are subject to environmental laws and
regulations governing among other things, the discharge of pollutants to air and water, the handling, storage and disposal of solid or hazardous materials or
11
wastes and the remediation of contamination, sometimes associated with leaks or releases of hazardous substances. For example, we own, lease, or have used,
in our construction, real estate and environmental remediation operations property upon which solid or hazardous wastes may have been disposed of or released. Any release of such materials or wastes by us or by third parties who operated on these
properties may result in liability for investigation or remediation costs. In addition, violations of these environmental laws and regulations could subject us and our management to fines, civil and criminal penalties, cleanup costs and third party
property damage or personal injury claims.
Various federal,
state and local environmental laws and regulations may impose liability for the entire cost of investigation and clean-up of hazardous or toxic substances. These laws may impose liability without regard to ownership at the time of the contamination
or whether or not we caused the presence of contaminants.
Our projects
expose us to potential liability claims.
We construct many
facilities where design, construction or systems failures can result in substantial injury or damage to third parties. Any liability for an uninsured claim or claims in excess of our insurance limits at projects constructed by us or where our
services are performed could result in a significant liability to us.
If we
are unable to accurately estimate the overall risks, revenues or costs on a contract, we may incur a lower than anticipated profit or a loss on the contract.
We generally enter into four principal types of contracts with our clients: fixed price contracts, cost plus award fee
contracts, guaranteed maximum price contracts, and, to a lesser extent, construction management, or design-build, contracts. A substantial portion of our revenues and backlog are derived from fixed price contracts. For example, approximately 25% of
our revenues for the first nine months of 2003 were derived from fixed price contracts. Fixed price contracts require us to perform the contract for a fixed price irrespective of our actual costs. As a result, we realize a profit on these contracts
only if we successfully control our costs and avoid cost overruns. Cost plus award fee contracts provide for reimbursement of the costs required to complete a project, but generally have a lower base fee and an incentive fee based on cost and/or
schedule performance. If our costs exceed the revenues available under such a contract or are not allowable under the provisions of the contract, we may not receive reimbursement for these costs. Guaranteed maximum price contracts provide for a cost
plus fee arrangement up to a maximum agreed-upon price. These contracts also place the risk on us for cost overruns that exceed the guaranteed maximum price. Construction management and design-build contracts are those under which we agree to manage
a project for the client for an agreed upon fee, which may be fixed or may vary based upon negotiated factors. Profitability on these types of contracts is driven by changes in the scope of work or design issues, which could cause cost overruns
beyond our control and limit profits on these contracts.
Cost
overruns, whether due to inefficiency, faulty estimates or other factors, result in lower profit or a loss on a project. A significant number of our contracts are based in part on cost estimates that are subject to a number of assumptions. If our
estimates of the overall risks, revenues or costs prove inaccurate or circumstances change, then we may incur a lower profit or a loss on the contract.
The percentage-of-completion method of accounting for contract revenue may result in material adjustments adversely affecting our business.
We recognize contract revenue using the percentage-of-completion method.
Under this method, estimated contract revenue is recognized by applying the percentage of completion of the project for the period to the total estimated revenue for the contract. Estimated contract losses are recognized in full when determined.
Contract revenue and total cost estimates are reviewed and revised at a minimum on a quarterly basis as the work
12
progresses and as change orders are approved, and adjustments based upon the percentage of completion are reflected in contract revenue in the period when
these estimates are revised. To the extent that these adjustments result in an increase, a reduction or an elimination of previously reported contract profit, we recognize a credit or a charge against current earnings, which could be material.
Our failure to meet schedule requirements of our contracts could adversely
affect us.
Many of our contracts are subject to specific
completion schedule requirements with liquidated damages charged to us in the event the construction schedules are not achieved. Failure to meet any such schedule requirements could have a material adverse effect on us.
If we are unable to attract and retain key personnel, we could be adversely affected.
Our business substantially depends on the continued
service of key members of our management, particularly Ronald N. Tutor, Robert Band, Craig W. Shaw, Zohrab B. Marashlian and Michael E. Ciskey. The loss of the services of any of our key senior management could have a material adverse effect on us.
Our future success will also depend on our ability to attract and retain highly skilled personnel, such as engineering, project management and senior management professionals. Competition for these employees is intense, and we could experience
difficulty from time to time in hiring and retaining the personnel necessary to support our business. If we do not succeed in retaining our current employees and attracting new high quality employees, we could be adversely affected.
Work stoppages and other labor problems could adversely affect us.
We are a signatory to numerous local and regional collective bargaining
agreements, both directly and through trade associations. Future agreements reached in collective bargaining could increase our operating expenses and reduce our profits as a result of increased wages and benefits. If the industry were unable to
negotiate with any of the unions, it could result in strikes, work stoppages or increased operating costs as a result of higher than anticipated wages or benefits. If the unionized workers engage in a strike or other work stoppage, or other
employees become unionized, we could experience a disruption of our operations and higher ongoing labor costs, which could adversely affect us.
Our pension plan is underfunded and we may be required to make significant future contributions to the plan.
Our defined benefit pension plan is a non-contributory pension plan covering
substantially all of our employees. As of December 31, 2002, our pension plan is underfunded by approximately $32.3 million. We are required to make cash contributions to our pension plan to the extent necessary to comply with minimum funding
requirements imposed by employee benefit and tax laws. The amount of any such required contributions is determined based on an annual actuarial valuation of the plan as performed by the plans actuaries. During 2002, we contributed $2.4 million
in cash to our defined benefit pension plan, of which $2.2 million was voluntary. Through September 30, 2003, we contributed $3.1 million to our defined benefit pension plan, of which $3.0 million was voluntary. The amount of future contributions
will depend upon asset returns, then-current discount rates and a number of other factors, and, as a result, the amount we may elect or be required to contribute to our pension plan in the future may increase significantly. See
Managements Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting PoliciesDefined Benefit Retirement Plan.
We are subject to restrictive covenants under our credit facility that limit our flexibility in managing the business.
Our credit facility imposes operating and financial restrictions on us. These
restrictions include, among other things, limitations on our ability to:
|
|
|
create liens or other encumbrances; |
13
|
|
|
enter into certain types of transactions with our affiliates; |
|
|
|
make certain capital expenditures; |
|
|
|
make investments, loans or other guarantees; |
|
|
|
sell or otherwise dispose of a portion of our assets; or |
|
|
|
merge or consolidate with another entity. |
Our credit facility contains financial covenants that require us to maintain specified working capital, tangible net worth and operating profit levels.
Our credit facility also requires us to comply with a minimum interest coverage ratio. Our ability to borrow funds for any purpose will depend on our satisfying these tests.
If we are unable to meet the terms of the financial covenants or fail to comply with any of the other restrictions contained
in our credit facility, an event of default could occur. An event of default, if not waived by our lenders, could result in the acceleration of the outstanding indebtedness, causing such debt to become immediately due and payable. If such an
acceleration occurs, we may not be able to repay, or obtain sufficient funds to repay, such indebtedness.
We may have difficulty raising needed capital in the future, which could adversely affect us.
We may require additional financing in order to make future investments, make acquisitions or provide needed additional working capital. Our ability to
arrange such financing in the future will depend in part upon prevailing capital market conditions, as well as our business and operating results. We may not be successful in our efforts to arrange additional financing on terms satisfactory to us.
If additional financing is obtained by the issuance of additional shares of common stock, control of Perini may change and stockholders may suffer dilution. If adequate funds are not available, or are not available on acceptable terms, we may not be
able to make future investments, take advantage of acquisition or other opportunities, or otherwise respond to competitive challenges.
Our results of operations depend on the award of new contracts and the timing of the performance of these contracts.
At any point in time, a substantial portion of our revenues is directly or
indirectly derived from a limited number of large construction projects. It is generally very difficult to predict whether and when we will receive such awards as these contracts frequently involve a lengthy and complex bidding and selection process
which is affected by a number of factors, such as market conditions, financing arrangements and governmental approvals. Because a significant portion of our revenue is generated from large projects, our results of operations and cash flows can
fluctuate from quarter to quarter depending on the timing of our new contract awards.
In addition, timing of the revenues, earnings and cash flows from our projects can be delayed by a number of factors, including weather conditions, delays in receiving material and equipment from vendors and changes
in the scope of work to be performed. Such delays, if they occur, could have an adverse effect on our operating results for a particular period.
We may not be able to fully realize the revenue value reported in our backlog.
As of September 30, 2003, our backlog was approximately $1.3 billion. We include a construction project in our backlog at
such time as a contract is awarded or a firm letter of commitment is obtained and funding is in place. The revenue projected in our backlog may not be realized or, if realized, may not result in profits. For example, if a project reflected in our
backlog is terminated, suspended or reduced in scope, it would result in a reduction to our backlog which would reduce, potentially to a material extent, the revenue and profit we actually receive from contracts in backlog. If a client cancels a
project, we may be reimbursed for certain costs but typically have no contractual right to the total revenues reflected in our backlog. Significant cancellations or delays of projects in our backlog could have a material adverse effect on us.
14
We have not paid dividends on our $21.25 Preferred Stock in several years and are currently in litigation with certain
of our preferred stockholders.
Under the terms of our
$21.25 Preferred Stock, the holders of shares of our $21.25 Preferred Stock are entitled to receive an annual cash dividend of $21.25 per share when and as declared by the Board of Directors out of funds legally available for such purposes. We have
not paid dividends on our $21.25 Preferred Stock since 1995, though they have been fully accrued due to the cumulative feature of the $21.25 Preferred Stock. The holders of our $21.25 Preferred Stock have the right to elect two directors
to our board in the event that dividends are in arrears for at least six quarters, and they have done so at each of our last six annual meetings of stockholders. We are currently in litigation with certain holders of our $21.25 Preferred Stock. See
Managements Discussion and Analysis of Financial Condition and Results of OperationsDividends and BusinessLegal Proceedings$21.25 Preferred Shareholders Class Action Lawsuit. If this litigation results
in a final judgment against us, and such adverse judgment is significant, it could have a material adverse effect on us.
Our acquisition strategy involves a number of risks.
As a part of our growth strategy, we plan to pursue selective strategic acquisitions of businesses. This strategy involves risks, including diversion of
managements attention, potential loss of key employees of acquired businesses and difficulties in integrating operations and systems. We cannot be certain that we will be able to locate suitable acquisitions or consummate any such transactions
on terms and conditions acceptable to us or that such transactions will be successful. An inability to successfully integrate acquired businesses into our operations could have a material adverse effect on us.
Risks Relating to Our Common Stock
This offering will result in a substantial amount of previously unregistered shares of our
common stock being registered, which may depress the market price of our common stock.
As of December 15, 2003, the number of shares of our outstanding common stock freely tradeable on the American Stock Exchange and not owned by our officers, directors, or affiliates was approximately 5.5 million. The
sale of the shares of common stock in this offering could depress the market price of our common stock.
Future sales or the possibility of future sales of a substantial amount of our common stock may cause our stock price to decline.
Upon completing this offering, we will have approximately 22.9 million shares of common stock outstanding. Our principal
stockholders, directors and executive officers will own approximately 11.5 million of these shares. These stockholders will be free to sell those shares, subject to the limitations of Rule 144 or Rule 144(k) under the Securities Act of 1933, as
amended (which are discussed under Shares Eligible for Future Sale), applicable restrictions on transfer contained in our shareholders agreement and, subject to certain exceptions, the 90-day lock-up agreements that these stockholders
will enter into with the underwriters. See Underwriting. In addition, after giving effect to the sale of shares in this offering (excluding any exercise of the over-allotment option granted to the underwriters), the holders of
approximately 11.8 million of our shares have the right to require us to register all or part of their shares under registration rights agreements. See Description of Capital StockRegistration Rights Agreements for a more
detailed discussion of the registration rights agreements. Registration of these restricted shares of common stock would permit their sale into the public market immediately. See Shares Eligible for Future Sale. We cannot predict when
these stockholders may sell their shares or in what volumes. However, the market price of our common stock could decline significantly if these stockholders sell a large number of shares into the public market after this offering or if the market
believes that these sales may occur.
15
We may also issue our common stock from time to time as consideration for future acquisitions and
investments. In the event any such acquisition or investment is significant, the number of shares of our common stock that we may issue could in turn be significant. In addition, we may also grant registration rights covering those shares in
connection with any such acquisitions and investments.
Limited trading
volume of our common stock may contribute to its price volatility.
Our common stock is traded on the American Stock Exchange. For the third quarter of 2003, the average daily trading volume for our common stock as reported by the American Stock Exchange was approximately 22,500 shares. Even if we achieve a
wider dissemination by means of the shares offered pursuant to this prospectus, we are uncertain as to whether a more active trading market in our common stock will develop. As a result, relatively small trades may have a significant impact on the
price of our common stock.
Our stock price has been and may continue to be
volatile and may result in substantial losses for investors.
The market price of our common stock has been, and is likely to continue to be, volatile. Since January 1, 2003, the market price for our common stock has been as high as $10.10 per share and as low as $3.62 per share. Additionally, the
stock market in general has been highly volatile during the 2000 through 2003 period. This volatility in stock price often has been unrelated to our operating performance.
In addition, the trading price of our common stock could be subject to wide fluctuations in response to:
|
|
|
our prospects as perceived by others; |
|
|
|
variations in our operating results and our achievement of key business targets; |
|
|
|
changes in securities analysts recommendations or earnings estimates; |
|
|
|
differences between our reported results and those expected by investors and securities analysts; |
|
|
|
announcements of new contracts or service offerings by us or our competitors; |
|
|
|
market reaction to any acquisitions, joint ventures or strategic investments announced by us or our competitors; and |
|
|
|
general economic or stock market conditions unrelated to our operating performance. |
Fluctuations in our quarterly revenues and operating results may lead to reduced prices for our stock.
Because our operating results are primarily generated from a limited number
of significant active construction projects, operating results in any given fiscal quarter can vary depending on the timing of progress achieved and changes in the estimated profitability of the projects being reported. Progress on projects in
certain areas may also be delayed by weather conditions. Such delays, if they occur, may result in inconsistent quarterly operating results due to more or less progress than anticipated being achieved on certain projects, which may in turn lead to
reduced prices for our stock.
Ownership of our common stock is concentrated
among a few stockholders who could act in a way that favors their interests to the detriment of our interests and those of other stockholders.
Following this offering, the percentage of shares owned by our executive officers, directors and 5% stockholders would be reduced to 50.2%. These
stockholders have the power to control the election of most of our directors, and the approval of any action requiring majority approval of our common stockholders, including certain amendments to our charter. In addition, without the consent of
these stockholders, we may not be able to enter into transactions that could be beneficial to us or our other stockholders.
16
Provisions of Massachusetts law and of our charter and bylaws may make a takeover more difficult.
Provisions in our restated articles of organization and bylaws and in the
Massachusetts corporate law may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt which is opposed by our management and Board of Directors. Public stockholders who might desire to
participate in such a transaction may not have an opportunity to do so. Our bylaws provide for a staggered Board of Directors which makes it difficult for stockholders to change the composition of the Board of Directors in any one year. Our Board of
Directors has the authority to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to effect a change in control or takeover of Perini. Also, we have adopted a rights plan that limits the
ability of any person to acquire more than 10% of our common stock, except in limited circumstances. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or to change our
management and Board of Directors. See Description of Capital Stock.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this prospectus, including under the section titled Managements Discussion and Analysis of Financial Condition and Results of Operations, and other sections of this
prospectus 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 without limitation, statements regarding
Perinis or our managements expectations, hopes, beliefs, intentions or strategies regarding the future. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential
effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other
assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the
heading Risk Factors. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as may be required under applicable securities laws.
17
USE OF PROCEEDS
We will not
receive any proceeds from the sale of shares by the selling stockholders or the additional shares to be sold by the selling stockholders if the underwriters exercise their over-allotment option.
DIVIDEND POLICY
We have not paid
any cash dividends on our common stock since 1990. For the foreseeable future, we intend to retain any earnings in our business and we do not anticipate paying any cash dividends. In addition, under the terms of our preferred stock, we cannot pay
dividends on our common stock until all accrued dividends on our preferred stock have been paid. Whether or not to declare any dividends will be at the discretion of our Board of Directors, considering then existing conditions, including our
financial condition and results of operations, capital requirements, bonding prospects, contractual restrictions, business prospects and other factors that our Board of Directors considers relevant.
MARKET PRICE OF OUR COMMON STOCK
Our common stock is traded on the American Stock Exchange under the symbol PCR. The quarterly market high and low sales prices for our common stock for 2003 (through December 17, 2003), 2002 and 2001 are summarized below:
|
|
High
|
|
Low
|
Year Ended December 31, 2001 |
|
|
|
|
|
|
First Quarter |
|
$ |
7.35 |
|
$ |
2.94 |
Second Quarter |
|
|
10.00 |
|
|
5.90 |
Third Quarter |
|
|
9.40 |
|
|
5.45 |
Fourth Quarter |
|
|
7.60 |
|
|
6.10 |
Year Ending December 31, 2002 |
|
|
|
|
|
|
First Quarter |
|
|
7.28 |
|
|
5.75 |
Second Quarter |
|
|
6.40 |
|
|
3.40 |
Third Quarter |
|
|
4.58 |
|
|
3.50 |
Fourth Quarter |
|
|
4.44 |
|
|
3.00 |
Year Ending December 31, 2003 |
|
|
|
|
|
|
First Quarter |
|
|
4.70 |
|
|
3.62 |
Second Quarter |
|
|
9.05 |
|
|
3.80 |
Third Quarter |
|
|
8.99 |
|
|
6.26 |
Fourth Quarter (through December 17, 2003) |
|
|
10.10 |
|
|
6.95 |
On December 17, 2003,
the closing sale price of our common stock as reported on the American Stock Exchange was $8.26 per share. At December 15, 2003, there were 1,059 holders of record of our common stock, including record holders on behalf of an indeterminate number of
beneficial owners, based on the stockholders list maintained by our transfer agent.
18
CAPITALIZATION
The table below
sets forth our consolidated short-term debt and capitalization as of September 30, 2003 (in thousands, except share data). We have not provided an adjusted capitalization table because we will not receive any of the proceeds from this offering. You
should read the following information in conjunction with our consolidated financial statements and related notes and the information provided under the captions Selected Historical Financial Data and Managements Discussion
and Analysis of Financial Condition and Results of Operations which are included elsewhere in this prospectus.
Short-term debt: |
|
|
|
|
Notes payable to banks |
|
$ |
|
|
Current maturities of long-term debt |
|
|
831 |
|
|
|
|
|
|
Total short-term debt |
|
$ |
831 |
|
|
|
|
|
|
Long-term debt: |
|
|
|
|
Mortgages on real estate |
|
$ |
8,489 |
|
Revolving credit loans (1) |
|
|
17,000 |
|
Other indebtedness |
|
|
77 |
|
|
|
|
|
|
Total long-term debt |
|
|
25,566 |
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
Preferred stock, $1.00 par value |
|
|
|
|
Authorized - 1,000,000 shares |
|
|
|
|
Designated, issued and outstanding 55,927 shares, aggregate liquidation preference of $13,982 |
|
|
56 |
|
Series A junior participating preferred stock, $1.00 par value |
|
|
|
|
Designated - 200,000 shares |
|
|
|
|
Issued none |
|
|
|
|
Stock purchase warrants |
|
|
2,233 |
|
Common stock, $1.00 par value |
|
|
|
|
Authorized - 40,000,000 shares (2) |
|
|
|
|
Issued 22,903,064 shares (2) |
|
|
22,903 |
|
Paid-in surplus (2) |
|
|
91,137 |
|
Retained earnings |
|
|
7,719 |
|
Less - common stock in treasury, at cost - 60,529 shares (2) |
|
|
(965 |
) |
Accumulated other comprehensive loss |
|
|
(19,573 |
) |
|
|
|
|
|
Total stockholders equity |
|
|
103,510 |
|
|
|
|
|
|
Total capitalization |
|
$ |
129,076 |
|
|
|
|
|
|
(1) |
The revolving credit facility provides for revolving loans up to a maximum of $50 million to June 20, 2005, at which time any amounts unpaid convert to a three-year term loan with
equal quarterly principal payments. The weighted average interest rate at September 30, 2003 was 3.81%. On November 5, 2003, the terms of our revolving credit facility were amended to provide a temporary $20 million increase in the revolving credit
facility from $50 million to $70 million until January 31, 2004, to support the procurement requirements of a major project. |
(2) |
As of September 30, 2003, we had 22,842,535 shares outstanding. As of September 30, 2003, options to purchase 3,048,800 shares of our common stock were outstanding and 195,634
shares were available for future awards under our Special Equity Incentive Plan. In addition, as of September 30, 2003, we had 370,279 shares of common stock reserved for issuance upon conversion of our $21.25 Preferred Stock at a conversion price
of $377.50 per share (or $37.75 per Depositary Share) and 420,000 shares of common stock reserved for issuance upon exercise of stock purchase warrants at an exercise price of $8.30 per share. |
19
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data shown below for the five-year period ended December 31, 2002 has been derived from our consolidated financial statements audited by Deloitte & Touche LLP
(three-year period ended December 31, 2002) and by Arthur Andersen LLP (two-year period ended December 31, 1999), our current and former independent auditors, respectively.
The information for the nine months ended September 30, 2003 and 2002 has been derived from unaudited consolidated condensed
financial statements and, in our opinion, includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly such financial information in accordance with generally accepted accounting principles applied on a
consistent basis. Our results are generated from a limited number of significant active construction projects. Consequently, quarterly results can vary depending on the timing of progress and changes in the estimated profitability of the projects
being reported. For the foregoing and other reasons, results for the nine months ended September 30, 2003 may not necessarily be indicative of results to be expected for the full year ended December 31, 2003. Backlog and new business awarded are not
measures defined in generally accepted accounting principles and have not been derived from our consolidated financial statements. The selected historical consolidated financial data should be read in conjunction with our consolidated financial
statements and related notes, Capitalization and Managements Discussion and Analysis of Financial Condition and Results of Operations, which are included elsewhere in this prospectus.
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
|
|
|
2003
|
|
|
2002
|
|
2002
|
|
2001
|
|
2000
|
|
|
1999
|
|
|
1998
|
|
|
|
(in thousands, except per share data) |
|
Statement of Operations Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTINUING OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
873,451 |
|
|
$ |
822,482 |
|
$ |
1,085,041 |
|
$ |
1,553,396 |
|
$ |
1,105,660 |
|
|
$ |
1,019,484 |
|
|
$ |
1,011,322 |
|
Cost of Operations |
|
|
829,590 |
|
|
|
784,744 |
|
|
1,026,391 |
|
|
1,495,834 |
|
|
1,053,328 |
|
|
|
969,015 |
|
|
|
957,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
43,861 |
|
|
|
37,738 |
|
|
58,650 |
|
|
57,562 |
|
|
52,332 |
|
|
|
50,469 |
|
|
|
53,671 |
|
G&A Expense |
|
|
27,709 |
|
|
|
22,132 |
|
|
32,770 |
|
|
28,061 |
|
|
24,977 |
|
|
|
26,635 |
|
|
|
27,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Operations |
|
|
16,152 |
|
|
|
15,606 |
|
|
25,880 |
|
|
29,501 |
|
|
27,355 |
|
|
|
23,834 |
|
|
|
26,274 |
|
Other (Income) Expense, Net |
|
|
428 |
|
|
|
360 |
|
|
520 |
|
|
227 |
|
|
(949 |
) |
|
|
(72 |
) |
|
|
652 |
|
Interest Expense |
|
|
701 |
|
|
|
1,146 |
|
|
1,485 |
|
|
2,006 |
|
|
3,966 |
|
|
|
7,128 |
|
|
|
8,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
|
15,023 |
|
|
|
14,100 |
|
|
23,875 |
|
|
27,268 |
|
|
24,338 |
|
|
|
16,778 |
|
|
|
17,149 |
|
Provision (Credit) for Income Taxes |
|
|
(6,410 |
) |
|
|
551 |
|
|
801 |
|
|
850 |
|
|
(43 |
) |
|
|
421 |
|
|
|
1,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Continuing Operations |
|
|
21,433 |
|
|
|
13,549 |
|
|
23,074 |
|
|
26,418 |
|
|
24,381 |
|
|
|
16,357 |
|
|
|
16,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss From Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(694 |
) |
|
|
(4,397 |
) |
Loss on Disposal of Real Estate Business Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(99,311 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss From Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,005 |
) |
|
|
(4,397 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
21,433 |
|
|
$ |
13,549 |
|
$ |
23,074 |
|
$ |
26,418 |
|
$ |
24,381 |
|
|
$ |
(83,648 |
) |
|
$ |
11,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Available for Common Stockholders (1) |
|
$ |
27,331 |
|
|
$ |
11,955 |
|
$ |
20,949 |
|
$ |
24,293 |
|
$ |
7,299 |
|
|
$ |
(89,917 |
) |
|
$ |
5,743 |
|
20
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
|
|
|
2003
|
|
2002
|
|
2002
|
|
2001
|
|
2000
|
|
1999
|
|
|
1998
|
|
|
|
(in thousands, except per share data) |
|
Per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations (2) |
|
$ |
1.20 |
|
$ |
0.53 |
|
$ |
0.92 |
|
$ |
1.07 |
|
$ |
0.39 |
|
$ |
1.80 |
|
|
$ |
1.91 |
|
Loss From Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.12 |
) |
|
|
(0.83 |
) |
Estimated Loss on Disposal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17.72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1.20 |
|
$ |
0.53 |
|
$ |
0.92 |
|
$ |
1.07 |
|
$ |
0.39 |
|
$ |
(16.04 |
) |
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Continuing Operations (2) |
|
$ |
1.17 |
|
$ |
0.52 |
|
$ |
0.91 |
|
$ |
1.04 |
|
$ |
0.39 |
|
$ |
1.80 |
|
|
$ |
1.91 |
|
Loss From Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.12 |
) |
|
|
(0.83 |
) |
Estimated Loss on Disposal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17.72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1.17 |
|
$ |
0.52 |
|
$ |
0.91 |
|
$ |
1.04 |
|
$ |
0.39 |
|
$ |
(16.04 |
) |
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
22,726 |
|
|
22,664 |
|
|
22,664 |
|
|
22,623 |
|
|
18,521 |
|
|
5,606 |
|
|
|
5,318 |
|
Diluted |
|
|
23,399 |
|
|
23,028 |
|
|
22,939 |
|
|
23,442 |
|
|
18,527 |
|
|
5,606 |
|
|
|
5,318 |
|
|
|
|
|
|
|
|
|
Balance Sheet Data (end of period): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (3) |
|
$ |
464,412 |
|
$ |
395,326 |
|
$ |
402,389 |
|
$ |
501,241 |
|
$ |
487,478 |
|
$ |
385,767 |
|
|
$ |
452,496 |
|
Working Capital |
|
|
122,110 |
|
|
130,346 |
|
|
115,908 |
|
|
93,369 |
|
|
80,477 |
|
|
48,430 |
|
|
|
57,665 |
|
Long-term Debt, Less Current Maturities |
|
|
25,566 |
|
|
33,700 |
|
|
12,123 |
|
|
7,540 |
|
|
17,218 |
|
|
41,091 |
|
|
|
75,857 |
|
Stockholders Equity (Deficit) |
|
|
103,510 |
|
|
91,364 |
|
|
86,649 |
|
|
79,408 |
|
|
60,622 |
|
|
(36,618 |
) |
|
|
50,558 |
|
Redeemable Series B Cumulative Convertible Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,685 |
|
|
|
33,540 |
|
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization |
|
$ |
2,524 |
|
$ |
2,309 |
|
$ |
3,202 |
|
$ |
2,602 |
|
$ |
2,191 |
|
$ |
3,342 |
|
|
$ |
3,059 |
|
Capital Expenditures |
|
|
4,406 |
|
|
3,710 |
|
|
4,510 |
|
|
4,528 |
|
|
1,793 |
|
|
1,599 |
|
|
|
1,418 |
|
Backlog (end of period) (4) |
|
|
1,332,148 |
|
|
1,124,818 |
|
|
990,175 |
|
|
1,213,535 |
|
|
1,788,731 |
|
|
1,658,077 |
|
|
|
1,232,256 |
|
New Business Awarded (5) |
|
|
1,215,423 |
|
|
733,256 |
|
|
861,681 |
|
|
978,200 |
|
|
1,236,314 |
|
|
1,445,305 |
|
|
|
934,124 |
|
(1) |
Income available for common stockholders includes adjustments to net income for (a) accrued and unpaid dividends on our $21.25 Preferred Stock, or $2.125 Depositary Shares, (b) the
reversal of previously accrued and unpaid dividends in the amount of approximately $7.3 million applicable to 440,627 of the $2.125 Depositary Shares purchased and retired by us on June 9, 2003, (c) dividends declared and paid on our Series B
Preferred Stock until its exchange for shares of common stock on March 29, 2000 and (d) the $13.7 million assigned to the induced conversion of the Series B Preferred Stock into common stock on March 29, 2000 (see Note (2) below).
|
(2) |
As discussed in Note (1)(i) of Notes to Consolidated Financial Statements, basic and diluted earnings per share for 2000 have been restated. |
(3) |
As discussed in Note (1)(b) of Notes to Consolidated Financial Statements, we now present our interests in joint ventures in the Consolidated Balance Sheets using the proportionate
consolidation method. Accordingly, total assets included above have been restated for all periods presented to reflect this change. |
(4) |
A construction project is included in our backlog at such time as a contract is awarded or a firm letter of commitment is obtained and funding is in place. Backlog is not a measure
defined in generally accepted accounting principles, or GAAP, and our backlog may not be comparable to the backlog of other companies. Management uses backlog to assist in forecasting future results. |
(5) |
New business awarded consists of the original contract price of projects added to our backlog in accordance with Note (4) above plus or minus subsequent changes to the estimated
total contract price of existing contracts. Management uses new business awarded to assist in forecasting future results. |
21
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
We were incorporated in 1918 as a successor to businesses which had been engaged in providing construction services since
1894. We provide diversified general contracting, construction management and design-build services to private clients and public agencies throughout the world. Our construction business is now conducted through three business segments or
operations: building, civil and management services. The general contracting and management services that we provide consist of general contracting, preconstruction planning and comprehensive project management services, including planning and
scheduling the manpower, equipment, materials and subcontractors required for the timely completion of a project in accordance with the terms and specifications contained in a construction contract. We provide these services by using traditional
general contracting arrangements, such as fixed price, guaranteed maximum price and cost plus award fee contracts and, to a lesser extent, construction management or design-build contracting arrangements. In the normal conduct of our business, we
enter into partnership arrangements, referred to as joint ventures, for certain construction projects. Each of the joint venture participants is usually committed to supply a predetermined percentage of capital, as required, and to share
in a predetermined percentage of the income or loss of the project.
Critical Accounting Policies
Our significant
accounting policies are described in Note 1 of Notes to Consolidated Financial Statements included in this prospectus.
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Our construction business involves making significant estimates and assumptions in the normal course of business relating to our contracts and our joint venture contracts due to, among other things, the
one-of-a-kind nature of most of our projects, the long-term duration of our contract cycle and the type of contract utilized. Therefore, management believes that Method of Accounting for Contracts is the most important and critical
accounting policy. The most significant estimates with regard to these financial statements relate to the estimating of total forecasted construction contract revenues, costs and profits in accordance with accounting for long-term contracts (see
Note 1(d) of Notes to Consolidated Financial Statements) and estimating potential liabilities in conjunction with certain contingencies, including the outcome of pending or future litigation, arbitration or other dispute resolution proceedings
relating to contract claims. See Note 2 of Notes to Consolidated Financial Statements. Actual results could differ from these estimates and such differences could be material.
Method of Accounting for Contracts Revenues and profits from our contracts and construction joint venture
contracts are recognized by applying percentages of completion for the period to the total estimated profits for the respective contracts. Percentage of completion is determined by relating the actual cost of the work performed to date to the
current estimated total cost of the respective contracts. When the estimate on a contract indicates a loss, our policy is to record the entire loss during the accounting period in which it is estimated. In the ordinary course of business, at a
minimum on a quarterly basis, we prepare updated estimates of the total forecasted revenue, cost and profit or loss for each contract. The cumulative effect of revisions in estimates of the total forecasted revenue and costs, including unapproved
change orders and claims, during the course of the work is reflected in the accounting period in which the facts that caused the revision become known. The financial impact of these revisions to any one contract is a function of both the amount of
the revision and the percentage of completion of the contract. An amount equal to the costs incurred which are attributable to unapproved change orders and claims is included in the total estimated revenue when realization is probable. For a further
discussion of unapproved change orders and claims, see BusinessTypes of Contracts and The Contract Process. Profit from unapproved change orders and claims is recorded in the period such amounts are resolved.
22
Deferred contract revenue represents the excess of billings to date over the amount of contract costs and
profits (or contract revenue) recognized to date on the percentage of completion accounting method on certain contracts. Unbilled work represents the excess of contract costs and profits (or contract revenue) recognized to date on the percentage of
completion accounting method over billings to date on the remaining contracts. Unbilled work results when (1) the appropriate contract revenue amount has been recognized in accordance with the percentage of completion accounting method, but a
portion of the revenue recorded cannot be billed currently due to the billing terms defined in the contract and/or (2) costs, recorded at estimated realizable value, related to unapproved change orders or claims are incurred. For unapproved change
orders or claims that cannot be resolved in accordance with the normal change order process as defined in the contract, we may employ other dispute resolution methods, including mediation, binding and non-binding arbitration, or litigation. See
BusinessLegal Proceedings and Note 2, Contingencies and Commitments, of Notes to Consolidated Financial Statements. The prerequisite for billing unapproved change orders and claims is the final resolution and agreement
between the parties. Unbilled work related to our contracts and joint venture contracts at December 31, 2002 is discussed in Note 1(d) of Notes to Consolidated Financial Statements.
Accounting for Construction Joint Ventures Prior to 2002, our interests in construction joint ventures were
accounted for on the equity method in the Consolidated Balance Sheets and on the proportionate consolidation method in the Consolidated Statements of Income, with our share of revenues and costs in these interests included in revenues and cost of
operations, respectively. Beginning in 2002, construction joint venture interests are accounted for using the proportionate consolidation method in the Consolidated Balance Sheets as well as the Consolidated Statements of Income, whereby our
proportionate share of each joint ventures assets, liabilities, revenues and cost of operations are included in the appropriate classifications in the consolidated financial statements. We believe the change, which results in presenting all
joint venture activity using a consistent methodology in both the Consolidated Balance Sheets and Consolidated Statements of Income, is preferable.
Although this change impacted various classifications within current assets and current liabilities in the consolidated Balance Sheets and the
Consolidated Statements of Cash Flows, it had no impact on net working capital or other categories of long-term assets or liabilities in the Consolidated Balance Sheets. It also had no impact on the Consolidated Statements of Income or basic or
diluted earnings per common share for any period presented. Prior year Consolidated Balance Sheets and Consolidated Statements of Cash Flows have been restated to conform to the 2002 presentation.
Defined Benefit Retirement Plan The status of our defined
benefit pension plan obligations, related plan assets and cost is presented in Note 10 of Notes to Consolidated Financial Statements entitled Employee Benefit Plans. Plan obligations and annual pension expense are determined by actuaries
using a number of key assumptions which include, among other things, the discount rate, the estimated future return on plan assets and the anticipated rate of future salary increases. The discount rate of 7.25% used for purposes of computing the
2002 annual pension expense was determined at the beginning of the calendar year based on high-quality corporate bond yields as of that date. We plan to lower the discount rate used for computing the 2003 annual pension expense to 6.75% due to a
decline in high-quality corporate bond yields as of the end of 2002.
The estimated return on plan assets is primarily based on historical long-term returns of equity and fixed income markets according to our targeted allocation of plan assets (70% equity and 30% fixed income). While the weighted estimated
return on asset rate assumption has been 9% in recent years, we plan to lower this rate to 7% for 2003 based on recent equity market performance compared to long-term historical averages.
The plans accumulated benefit obligation exceeded the fair value of plan assets on December 31, 2002 and 2001 in
amounts greater than the accrued pension liability previously recorded. Accordingly, we increased our accrual by $13.7 million in 2002 and $5.9 million in 2001 with the offset to accumulated other comprehensive loss, a reduction of
stockholders equity.
As a result of the expected changes
in assumptions for 2003 noted above and asset losses during 2002, we anticipate that pension expense will increase from $1.2 million in 2002 to $3.4 million in 2003. Cash contributions are anticipated to stay at the 2002 level in the range of $2
million to $3 million for 2003 and 2004, but using our current assumptions regarding asset performance and the interest rate environment, these will likely increase significantly in the future.
23
Related Party Transactions
As part of a $30 million equity infusion in January 1997, we entered into an agreement with Tutor-Saliba Corporation, or
Tutor-Saliba, a construction company based in California, and Ronald N. Tutor, chief executive officer and sole stockholder of Tutor-Saliba, to provide certain management services. Tutor-Saliba participated in joint ventures with us before the
agreement and continues to participate in joint ventures with us after the agreement. Our share of revenue from these joint ventures amounted to $36.8 million for the nine months ended September 30, 2003 and $48.8 million, $17.9 million and $4.6
million for the years ended December 31, 2002, 2001 and 2000, respectively. Primarily as a result of Tutor-Saliba participating in a $40 million equity infusion in March 2000, Tutor-Saliba currently owns approximately 12% of our outstanding common
stock. Mr. Tutor has been our Chairman and Chief Executive Officer since March 2000. For details of compensation to Mr. Tutor, arrangements with Tutor-Saliba and other information on related party transactions, see Note 13 of Notes to Consolidated
Financial Statements, Management and Certain Transactions included elsewhere in this prospectus.
Recent Developments
On January 23, 2003, we completed the acquisition of James A. Cummings, Inc., or Cummings, a privately held construction company based in Fort Lauderdale,
Florida. The acquisition was effective as of January 1, 2003 and, accordingly, the financial results of Cummings are included in our consolidated condensed financial statements since that date. See Note 5 of Notes to Consolidated Condensed Financial
Statements as of September 30, 2003, for a further discussion and analysis of the acquisition of Cummings and related pro forma financial information.
In February 2003, the terms of our existing revolving credit facility were amended to, among other things, increase the revolving credit facility from $45
million to $50 million and to extend the term of our credit facility from January 2004 to June 2005. The credit facility, as amended, will provide us with greater flexibility in providing the working capital needed to support the anticipated growth
of our construction activities. At September 30, 2003, we had $30.2 million available to borrow under our credit facility. On November 5, 2003, the terms of our revolving credit facility were further amended to provide a temporary $20 million
increase in the revolving credit facility from $50 million to $70 million until January 31, 2004, to support the procurement requirements of a major project.
On June 9, 2003, we completed a tender offer for our $2.125 Depositary Convertible Exchangeable Preferred Shares, or Depositary Shares, each of which
represent 1/10th of a share of $21.25 Convertible Exchangeable Preferred Stock, or the $21.25 Preferred Stock. As a
result of this transaction, we purchased 440,627 of our Depositary Shares (representing approximately 44.1% of the outstanding $21.25 Preferred Stock) at a purchase price of $25.00 per Depositary Share, net to the seller without interest. See Note 8
of Notes to Consolidated Condensed Financial Statements. Including related expenses, this transaction resulted in an $11.3 million decrease in stockholders equity. Also as a result of this transaction, approximately $7.3 million of previously
accrued and unpaid dividends on the $21.25 Preferred Stock was reversed and restored to paid-in surplus in the Consolidated Condensed Balance Sheets. Since these accrued dividends had previously been deducted from net income in the computation of
earnings per share in prior fiscal quarters, the reversal of these accrued dividends resulted in the addition of $7.3 million to income available for common stockholders in the computation of earnings per share for the nine month period ended
September 30, 2003.
Historically, we have evaluated our
operating results based on two reportable segments: building and civil. During the fourth quarter of 2003, we adjusted the responsibilities of certain of our executive officers and, in accordance with Statement of Financial Accounting Standards No.
131, Disclosures about Segments of an Enterprise and Related Information, we reevaluated the criteria for determining our reportable segments. We have determined that a third business segment, management services, will be included as a
reportable segment prospectively to align our reportable segments with current management responsibilities. Previously, our management services operations were included as part of our building segment. The management services segment will aggregate
contracts that have a higher than normal geopolitical and operational risk and a
24
corresponding potential for greater than normal gross margin volatility. The results to reflect this change for the nine months ended September 30, 2003 and
2002 and for each of the years ended December 31, 2002, 2001 and 2000 are set forth below:
Nine Months Ended September 30, 2003
|
|
Reportable Segments
|
|
|
|
|
|
|
|
Building
|
|
Civil
|
|
Management Services
|
|
Totals
|
|
Corporate
|
|
|
Consolidated Total
|
|
|
(in thousands) |
Revenues |
|
$ |
629,305 |
|
$ |
134,507 |
|
$ |
109,639 |
|
$ |
873,451 |
|
$ |
|
|
|
$ |
873,451 |
Income from Operations |
|
|
9,228 |
|
|
1,684 |
|
|
11,389 |
|
|
22,301 |
|
|
(6,149 |
) |
|
|
16,152 |
Assets |
|
|
163,055 |
|
|
245,573 |
|
|
23,618 |
|
|
432,246 |
|
|
32,166 |
|
|
|
464,412 |
Nine Months Ended September 30,
2002 |
|
|
Reportable Segments
|
|
|
|
|
|
|
|
Building
|
|
Civil
|
|
Management Services
|
|
Totals
|
|
Corporate
|
|
|
Consolidated Total
|
|
|
(in thousands) |
Revenues |
|
$ |
488,111 |
|
$ |
236,409 |
|
$ |
97,962 |
|
$ |
822,482 |
|
$ |
|
|
|
$ |
822,482 |
Income from Operations |
|
|
11,087 |
|
|
1,849 |
|
|
7,345 |
|
|
20,281 |
|
|
(4,675 |
) |
|
|
15,606 |
Assets |
|
|
129,794 |
|
|
224,126 |
|
|
20,008 |
|
|
373,928 |
|
|
21,398 |
|
|
|
395,326 |
Year Ended December 31, 2002
|
|
|
Reportable Segments
|
|
|
|
|
|
|
|
Building
|
|
Civil
|
|
Management Services
|
|
Totals
|
|
Corporate
|
|
|
Consolidated Total
|
|
|
(in thousands) |
Revenues |
|
$ |
631,860 |
|
$ |
312,528 |
|
$ |
140,653 |
|
$ |
1,085,041 |
|
$ |
|
|
|
$ |
1,085,041 |
Income from Operations |
|
|
14,487 |
|
|
6,390 |
|
|
11,738 |
|
|
32,615 |
|
|
(6,735 |
) |
|
|
25,880 |
Assets |
|
|
130,270 |
|
|
223,036 |
|
|
27,971 |
|
|
381,277 |
|
|
21,112 |
|
|
|
402,389 |
Capital Expenditures |
|
|
1,828 |
|
|
2,335 |
|
|
347 |
|
|
4,510 |
|
|
|
|
|
|
4,510 |
Year Ended December 31, 2001
|
|
|
Reportable Segments
|
|
|
|
|
|
|
|
Building
|
|
Civil
|
|
Management Services
|
|
Totals
|
|
Corporate
|
|
|
Consolidated Total
|
|
|
(in thousands) |
Revenues |
|
$ |
1,120,161 |
|
$ |
353,957 |
|
$ |
79,278 |
|
$ |
1,553,396 |
|
$ |
|
|
|
$ |
1,553,396 |
Income from Operations |
|
|
26,596 |
|
|
3,918 |
|
|
5,016 |
|
|
35,530 |
|
|
(6,029 |
) |
|
|
29,501 |
Assets |
|
|
213,463 |
|
|
246,326 |
|
|
20,559 |
|
|
480,348 |
|
|
20,893 |
|
|
|
501,241 |
Capital Expenditures |
|
|
1,005 |
|
|
3,120 |
|
|
403 |
|
|
4,528 |
|
|
|
|
|
|
4,528 |
Year Ended December 31, 2000
|
|
|
Reportable Segments
|
|
|
|
|
|
|
|
Building
|
|
Civil
|
|
Management Services
|
|
Totals
|
|
Corporate
|
|
|
Consolidated Total
|
|
|
(in thousands) |
Revenues |
|
$ |
740,555 |
|
$ |
279,469 |
|
$ |
85,636 |
|
$ |
1,105,660 |
|
$ |
|
|
|
$ |
1,105,660 |
Income from Operations |
|
|
22,892 |
|
|
5,624 |
|
|
4,184 |
|
|
32,700 |
|
|
(5,345 |
) |
|
|
27,355 |
Assets |
|
|
209,739 |
|
|
215,886 |
|
|
14,763 |
|
|
440,388 |
|
|
47,090 |
|
|
|
487,478 |
Capital Expenditures |
|
|
513 |
|
|
1,066 |
|
|
214 |
|
|
1,793 |
|
|
|
|
|
|
1,793 |
Results of Operations
As discussed above, during the fourth quarter of 2003, we
determined that a third business segment, management services, will be included as a reportable segment prospectively. Therefore, in order to provide a more meaningful discussion and analysis based on our prospective segment reporting structure, the
historical Results of Operations below has been adjusted to reflect three business segments instead of two.
25
Comparison of the Nine Months Ended September 30, 2003 with the Nine Months Ended September 30, 2002
The overall increase in net income of $7.9 million, from $13.5 million to
$21.4 million, was due primarily to the recognition of a $7.0 million federal tax benefit based on the expectation that we will be able to utilize a portion of our net operating loss carryforwards in future years.
Overall revenues increased by $50.9 million (or 6.2%), from $822.5 million in
2002 to $873.4 million in 2003. This increase was due primarily to an increase in building construction revenues of $141.2 million (or 28.9%), from $488.1 million in 2002 to $629.3 million in 2003, due primarily to the impact of the Cummings
acquisition in January 2003 and improved new work acquisition results during the second and third quarters of 2003. Management services revenues increased by $11.6 million (or 11.8%), from $98.0 million in 2002 to $109.6 million in 2003. These
increases were partly offset by a decrease in civil construction revenues of $101.9 million (or 43.1%), from $236.4 million in 2002 to $134.5 million in 2003. The decrease in revenues from civil construction operations primarily reflects the
decrease in our year-end backlog at December 31, 2002 compared to the year-end backlog at December 31, 2001, as the pace of new contract awards slowed during the past 18 months.
Income from operations (excluding corporate) increased by $2.0 million (or 9.9%), from $20.3 million in 2002 to $22.3
million in 2003. Management services income from operations increased by $4.0 million (or 54.1%), from $7.4 million in 2002 to $11.4 million in 2003 due primarily to favorable experiences on two overseas projects. Despite the favorable impact of the
Cummings acquisition, building construction income from operations decreased by $1.8 million, from $11.0 million in 2002 to $9.2 million in 2003. Building construction income from operations was negatively impacted by a $1.5 million increase in
building construction-related general and administrative expenses (exclusive of Cummings) primarily in connection with the pursuit of new work opportunities. Civil construction income from operations decreased by $0.2 million, from $1.9 million in
2002 to $1.7 million in 2003, due primarily to the decrease in revenues discussed above and partly offset by a higher gross profit margin in 2003 primarily because 2002 included recognition of our share of a loss on a Central Artery/Tunnel Big
Dig joint venture project, or the Big Dig Project, in Boston, Massachusetts. Income from operations was negatively impacted by a $1.5 million increase in corporate general and administrative expenses, from $4.7 million in 2002 to $6.2 million
in 2003, due primarily to an aggregate increase in several items including outside professional fees relating to the annual audit of our financial statements and to the $21.25 Preferred Shareholders Class Action Lawsuit (see Note 6(g) of Notes
to Consolidated Condensed Financial Statements) and certain corporate insurance premium costs.
Interest expense decreased by $0.4 million, from $1.1 million in 2002 to $0.7 million in 2003, due to lower interest rates.
The credit for income taxes in 2003 is due primarily to the recognition of a $7.0 million federal tax benefit in accordance with SFAS No. 109,
Accounting for Income Taxes, based on the expectation that we will be able to utilize an additional amount of our net operating loss carryforwards in future years. In addition, the (provision) credit for income taxes reflects a
lower-than-normal tax rate in both years due primarily to the realization of a portion of the federal tax benefit not recognized in prior years due to certain accounting limitations. Also, the provision for income taxes in 2002 reflects the reversal
of the federal alternative minimum tax provided in 2001 which was no longer required based on the provisions of the Job Creation and Worker Assistance Act of 2002.
As discussed above, as a result of the completion of our tender offer for our Depositary Shares, $7.3 million in previously
accrued preferred stock dividends was reversed and added back to income available for common stockholders in the computation of earnings per share for the nine months ended September 30, 2003. Accordingly, in addition to the higher net income for
the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002, basic and diluted earnings per common share in 2003 benefited by $0.32 and $0.31 per share, respectively, from the impact of the completion of the tender
offer transaction. Basic earnings per common share were $1.20 in 2003 compared to $0.53 in 2002. Diluted earnings per common share were $1.17 in 2003 compared to $0.52 in 2002.
26
Comparison of the Year Ended December 31, 2002 to December 31, 2001
Net income for the year ended 2002 was $23.1 million, a 12.5% decrease from
the record $26.4 million net income recorded in 2001. Basic earnings per common share were $0.92 for the year ended 2002 compared to $1.07 for the year ended 2001. Diluted earnings per common share were $0.91 per common share compared to $1.04 for
the year ended 2001. Overall, the decrease in 2002 operating results reflected a continued strong but lower profit contribution from the building construction segment and increased profit contributions from both the management services and civil
construction segments.
Overall, revenues decreased by $468.4
million (or 30.2%), from $1,553.4 million in 2001 to $1,085.0 million in 2002. This decrease was due primarily to a decrease in building construction revenues of $488.2 million (or 43.6%), from $1,120.1 million in 2001 to $631.9 million in 2002.
Civil construction revenues decreased $41.5 million (or 11.7%), from $354.0 million in 2001 to $312.5 million in 2002. The decrease in revenues from building construction operations was due primarily to the decrease in our year-end backlog at
December 31, 2001 compared to the record year-end backlog at December 31, 2000, including a decreased volume of work at the Mohegan Sun Project in Connecticut, as well as on two large hotel/casino projects in the southwestern United States, all of
which were substantially completed in early 2002. The decrease in revenues from civil construction operations was also due primarily to the decrease in our year-end backlog at December 31, 2001 compared to the record year-end backlog at December 31,
2000. These decreases were partly offset by an increase in management services revenues of $61.3 million (or 77.3%), from $79.3 million in 2001 to $140.6 million in 2002, due primarily to a higher volume of work on power facilities maintenance
projects.
Income from operations (excluding corporate)
decreased by $2.9 million (or 8.2%), from $35.5 million in 2001 to $32.6 million in 2002. Building construction income from operations decreased by $12.1 million, from $26.6 million in 2001 to $14.5 million in 2002, due primarily to the decrease in
revenues discussed above. This decrease was partly offset by an increase in the average gross margin on building construction contracts from 3.5% in 2001 to 4.7% in 2002, due primarily to favorable close-out experience on several hotel/casino
projects in 2002. In addition, building construction income from operations was negatively impacted by a $1.8 million (or 13.7%) increase in building construction-related general and administrative expenses primarily in connection with the pursuit
of new work opportunities, including the opening of a new office near Orlando, Florida. Management services income from operations increased by $6.7 million, from $5.0 million in 2001 to $11.7 million in 2002, due primarily to the increase in
revenues discussed above and to an upward profit revision on an overseas project. Civil construction income from operations increased by $2.5 million, from $3.9 million in 2001 to $6.4 million in 2002, due primarily to an upward profit revision on a
civil infrastructure project in New York City in 2002 as well as recognition of a smaller loss in 2002 compared to 2001 on the Big Dig Project. In addition, civil construction income from operations was negatively impacted by a $1.2 million (or
20.7%) increase in civil construction-related general and administrative expenses, due primarily to a reduced ability to allocate expenses to various joint ventures as well as an increase in outside professional fees.
Interest expense decreased by $0.5 million, from $2.0 million in 2001 to $1.5
million in 2002, due primarily to a reduction in the average amount of debt outstanding under our credit facility as well as lower interest rates in 2002.
The lower than normal tax rate for the three-year period ended December 31, 2002 is primarily due to the utilization of tax loss carryforwards from prior
years. Because of certain accounting limitations, we were not able to recognize a portion of the tax benefit related to the operating losses experienced in fiscal 1999, 1996 and 1995. As of December 31, 2002, an amount estimated to be approximately
$79 million of future pretax earnings could benefit from minimal, if any, federal tax provisions. The net deferred tax assets reflect managements estimate of the amount that will, more likely than not, be realized. See Note 4 of Notes to
Consolidated Financial Statements. In addition, the provision for income taxes in 2002 reflects the reversal of the federal alternative minimum tax provided in 2001, which is no longer required based on the provisions of the Job Creation and Worker
Assistance Act of 2002, and the credit for income taxes in 2000 reflect the reversal of foreign taxes accrued in prior years that were no longer required.
27
Comparison of the Year Ended December 31, 2001 to December 31, 2000
Net income for the year ended 2001 increased 8% to a record $26.4 million,
compared to net income of $24.4 million for the year ended 2000. Basic earnings per common share were $1.07 for the year ended 2001, as compared to $0.39 for the year ended 2000. Diluted earnings per common share were $1.04 for the year ended 2001,
as compared to $0.39 for the year ended 2000. Overall, the improved 2001 operating results reflect a continued strong and improved profit contribution from the building construction segment and, to a lesser extent, the positive impact of lower
interest expense due primarily to continued reduction in the amount of long-term debt outstanding and lower interest rates in 2001.
Overall, revenues increased $447.7 million (or 40.5%), from $1,105.7 million in 2000 to a record $1,553.4 million in 2001. This increase was due primarily
to an increase in building construction revenues of $379.5 million (or 51.2%), from $740.6 million in 2000 to $1,120.1 million in 2001. In addition, civil construction revenues increased $74.5 million (or 26.7%), from $279.5 million in 2000 to
$354.0 million in 2001. Management services revenues decreased by $6.3 million (or 7.4%), from $85.6 million in 2000 to $79.3 million in 2001. The increase in revenues from building construction operations was due primarily to our record year-end
backlog at December 31, 2000, including an increase in the volume of work completed at the Mohegan Sun Project in Connecticut, as well as the construction of three large hotel/casino projects in the southwestern United States. The increase in
revenues from civil construction operations also reflected our record year-end backlog at December 31, 2000, including the start-up of several infrastructure projects in the metropolitan New York area.
Income from operations (excluding corporate) increased by $2.8 million (or
8.6%), from $32.7 million in 2000 to $35.5 million in 2001 due to increases in income from building construction operations and management services operations that more than offset a decrease in income from civil construction operations. Building
construction income from operations increased by $3.7 million (or 16.2%), from $22.9 million in 2000 to $26.6 million in 2001, due primarily to the increase in revenues discussed above which was largely offset by a decrease in the gross margin from
4.6% in 2000 to 3.5% in 2001 because 2000 included the favorable close-out of certain projects. In addition, building construction income from operations was negatively impacted by a $2.1 million (or 19.1%) increase in building construction-related
general and administrative expenses primarily in connection with the pursuit of new work opportunities. Despite the slight decrease in management services revenues discussed above, management services income from operations increased by $0.8 million
(or 19.0%), from $4.2 million in 2000 to $5.0 million in 2001, due primarily to an upward profit revision on an overseas project. Moreover, management services income from operations was negatively impacted by a $1.5 million (or 88.2%) increase in
management services related general and administrative expenses primarily in connection with the pursuit of new work opportunities. Despite the increase in civil construction revenues discussed above, civil construction income from operations
decreased by $1.7 million (or 30.4%), from $5.6 million in 2000 to $3.9 million in 2001, due primarily to a downward profit revision on the Big Dig Project.
Other (income) expense decreased by $1.1 million, from a net income of $0.9 million in 2000 to a net expense of $0.2 million in 2001, due primarily to a
decrease in interest income as a result of a decrease in the level of short-term cash investments, as well as lower interest rates in 2001.
Interest expense decreased by $2.0 million, from $4.0 million in 2000 to $2.0 million in 2001, due primarily to the continued reduction in the amount of
long-term debt outstanding under our credit facility as described in Note 3 of Notes to Consolidated Financial Statements, as well as lower interest rates in 2001.
Liquidity and Capital Resources
Cash and Working Capital
Cash and cash equivalents as reported in the accompanying Consolidated Condensed Statements of Cash Flows consist of amounts held by us as well as our
proportionate share of amounts held by construction joint
28
ventures. Cash held by us is available for general corporate purposes while cash held by construction joint ventures is available only for joint
venture-related uses. Cash held by construction joint ventures is distributed from time to time to us and to the other joint venture participants in accordance with their percentage interest after the joint venture partners determine that a cash
distribution is prudent. Cash distributions received by us from our construction joint ventures are then available for general corporate purposes. At September 30, 2003 and December 31, 2002, cash held by us and available for general corporate
purposes was $17.0 million and $11.2 million, respectively, and our proportionate share of cash held by joint ventures and available only for joint venture-related uses was $28.4 million and $35.8 million, respectively.
During the first nine months of 2003, we generated $4.7 million in cash flow
from operating activities, $13.9 million from a net increase in debt and $2.1 million in net proceeds from the sale of certain remaining parcels of developed land held for sale to fund the $11.3 million required to complete our tender offer for our
Depositary Shares, as well as to fund a net $11.8 million used by investing activities, primarily for the acquisition of Cummings in January and to acquire construction equipment and an office building and equipment storage facility to be used by
our civil construction operations. As a result, our consolidated cash balance decreased by $1.6 million, from $47.0 million at December 31, 2002 to $45.4 million at September 30, 2003. As more fully discussed in Note 6(d) of Notes to Consolidated
Condensed Financial Statements, in the first quarter of 2003 we received our proportionate share of provisional payments against outstanding claims on the Big Dig Project, as a result of an agreement reached in December 2002. This approximately
$13.3 million payment was a significant contributor to the $4.7 million in cash flow generated from operating activities in the first nine months of 2003.
During 2002, we used $9.5 million of cash on hand to fund operating activities ($3.6 million), investing activities ($0.6 million) and financing
activities to reduce debt by a net amount of $5.3 million. The $3.6 million in cash used by operating activities was due primarily to the need to fund working capital requirements on certain joint venture construction contracts where unapproved
change orders and contract claims remain to be resolved. See Note 1(d) of Notes to Consolidated Financial Statements.
During 2001, we used $39.2 million of cash on hand to fund operating activities ($24.2 million), investing activities ($5.5 million), primarily for the
acquisition of property and equipment, and financing activities ($9.5 million), primarily to reduce debt by a net amount of $9.8 million. Cash generated from operating activities decreased from a positive $0.8 million in 2000 to a negative $24.2
million in 2001 due primarily to the need to fund working capital requirements on certain of our construction contracts where unapproved change orders or contract claims remain to be resolved. See Note 1(d) of Notes to Consolidated Financial
Statements.
During 2000, we generated $0.8 million in cash
from operating activities and $0.1 million in cash from investing activities. The funds generated together with $7.4 million in cash on hand were used for financing activities ($8.3 million) primarily to reduce debt. Financing activities in 2000
include net proceeds of $37.3 million received from the issuance of common stock in connection with our recapitalization as discussed in Note 7 of Notes to Consolidated Financial Statements, as well as net proceeds of $7.1 million received from a
refinancing of our corporate headquarters building. These funds were primarily used to reduce debt.
During 2000, our liquidity was significantly enhanced by the sale of 9,411,765 shares of common stock for an aggregate of $40 million (before fees and
expenses) and by the refinancing of our corporate headquarters building for $7.5 million (before fees and expenses). See Notes 3 and 7 of Notes to Consolidated Financial Statements. These financing transactions enabled us to reduce our dependence on
bank debt to fund the working capital needs of our core construction operations, resulting in a significant reduction in interest expense. Also, in January 2002, we entered into an agreement with a new lender group to refinance our existing credit
facility with a new $45 million revolving credit facility.
Working capital increased, from $115.9 million at the end of 2002 to $122.1 million at September 30, 2003. The current ratio decreased from 1.44x compared to 1.40x during the same period. Since December 31, 2000, working capital has
increased by $41.6 million (or 52%), from $80.5 million to $122.1 million at September 30, 2003, and the current ratio has improved to 1.40x from 1.20x during the same period.
29
In February 2003, the terms of our existing revolving credit facility were amended to, among other
things, increase the revolving credit facility from $45 million to $50 million and to extend the term of our credit facility from January 2004 to June 2005. The credit facility, as amended, will provide us with greater flexibility in providing the
working capital needed to support the anticipated growth of our construction activities. At September 30, 2003, we had $30.2 million available to borrow under our credit facility. On November 5, 2003, the terms of our revolving credit facility were
further amended to provide a temporary $20 million increase in the revolving credit facility from $50 million to $70 million until January 31, 2004, to support the procurement requirements of a major project. Our obligations under our credit
facility are guaranteed by substantially all of our current and future subsidiaries, and secured by substantially all of our and our subsidiary guarantors assets, including a pledge of all of the capital stock of our subsidiary guarantors.
Long-term Debt
Long-term debt at September 30, 2003 was $25.6 million, an increase of $13.4
million from December 31, 2002, due primarily to our completion in June of a tender offer for our Depositary Shares which required a cash outlay of approximately $11.3 million (including related expenses). The long-term debt to equity ratio was .25x
at September 30, 2003, compared to .14x at December 31, 2002. Long-term debt was $12.1 million at the end of 2002, up from $7.5 million in 2001 and down compared to $17.2 million in 2000 and $41.1 million in 1999.
Stockholders Equity
As more fully described in Note 7 of Notes to Consolidated Financial
Statements, effective March 29, 2000, we completed a recapitalization which included the sale of 9,411,765 shares of common stock for an aggregate of $40 million in cash (before fees and expenses) and the exchange of 100% of our Redeemable Series B
Cumulative Convertible Preferred Stock for an aggregate of 7,490,417 shares of common stock. The effect of the recapitalization on our stockholders equity was to increase stockholders equity by approximately $76.2 million, from a
negative net worth of approximately $36.6 million at December 31, 1999 to a positive net worth of approximately $39.6 million upon completion of the recapitalization.
Our book value per common share was $3.92 at September 30, 2003, compared to $2.72 at December 31, 2002, $2.40 at December
31, 2001, and $1.57 at December 31, 2000. The major factors impacting stockholders equity during the three year and nine month period ended September 30, 2003 were the recapitalization completed in 2000, the net income recorded, the tender
offer completed in June 2003, and, to a lesser extent, preferred dividends paid in-kind or accrued, and common stock options exercised. Also, we were required to recognize an additional minimum pension liability of approximately $13.7 million in
2002 and $5.9 million in 2001 in accordance with SFAS No. 87, Employers Accounting for Pensions which resulted in an aggregate $19.6 million accumulated other comprehensive loss deduction in stockholders equity. See Note 10
of Notes to Consolidated Financial Statements. Adjustments to the amount of this additional minimum pension liability will be recorded in future years based upon periodic re-evaluation of the funded status of our pension plans.
Dividends
Common Stock
There were no cash dividends declared or paid on our outstanding common stock during the three years ended December 31, 2002
or during the nine months ended September 30, 2003.
$21.25 Preferred Stock
The covenants in our
prior credit agreements required us to suspend the payment of quarterly dividends on our $21.25 Preferred Stock in 1995 until certain financial criteria were met. While quarterly dividends on the $21.25 Preferred Stock have not been paid since 1995,
they have been fully accrued due to the cumulative feature of the $21.25 Preferred Stock.
30
As of December 31, 2002, the aggregate amount of dividends in arrears was approximately $15.4 million,
which represented approximately $154.05 per share of $21.25 Preferred Stock or approximately $15.41 per Depositary Share and is included in other long-term liabilities in the Consolidated Balance Sheets. On June 9, 2003, we completed a tender offer
for our Depositary Shares pursuant to which we purchased 440,627 Depositary Shares for $25 per share. See Recent Developments. As a result of this transaction, approximately $7.3 million of previously accrued and unpaid dividends
was reversed and restored to paid-in surplus in the Consolidated Condensed Balance Sheets. Accordingly, the aggregate amount of dividends in arrears at September 30, 2003 is $9.5 million, which represents approximately $170.00 per share of $21.25
Preferred Stock or approximately $17.00 per Depositary Share and is included in other long-term liabilities in the Consolidated Condensed Balance Sheets. Under the terms of the $21.25 Preferred Stock, the holders of Depositary Shares became entitled
to elect two additional Directors once dividends were deferred for more than six quarters, and they have done so at each of the last six annual meetings of stockholders.
As of December 31, 2000, our credit facility no longer restricted the payment of dividends. However, our Board of Directors
has not since then decided that our working capital and other conditions warranted the resumption of payment of the regular dividend or any of the dividends in arrears on the $21.25 Preferred Stock. We do not have any plans or target date for
resuming the dividend, given the following circumstances:
|
|
|
A strong working capital position provides us with the option of performing large projects without a joint venture partner or to assume the sponsoring partner position resulting in
a larger proportionate interest and a greater share of joint venture profits. |
|
|
|
A significant amount of working capital is dedicated to the funding requirements of our construction backlog, including collection of receivables and the resolution of unapproved
change orders and contract claims, and to obtaining surety bonds required by our business. |
|
|
|
We are pursuing a strategy of expanding our construction business internally and through acquisitions, both of which will likely require additional capital. In January 2003, we
completed the acquisition of Cummings for $20.0 million. See Note 14 of Notes to Consolidated Financial Statements. |
Series B Cumulative Convertible Preferred Stock
For an analysis of in-kind dividends paid on the Series B Cumulative Convertible Preferred Stock, or the Series B Preferred
Stock, for the period from December 31, 1999 to March 29, 2000, the date on which the holders of Series B Preferred Stock exchanged their shares of Series B Preferred Stock into shares of our common stock, see Note 8(b) of Notes to Consolidated
Financial Statements.
Quantitative and Qualitative Disclosures About Market
Risk
Our exposure to market risk for changes in interest
rates relates primarily to our revolving credit debt (see Note 3 of Notes to Consolidated Financial Statements) and short-term investment portfolio. As of September 30, 2003, we had $17.0 million borrowed under our revolving credit facility and
$37.3 million of short-term investments classified as cash equivalents.
We borrow under our revolving credit facility for general corporate purposes, including working capital requirements and capital expenditures. Borrowings under the credit facility bear interest at the applicable LIBOR or base rate, as
defined, and therefore, we are subject to fluctuations in interest rates. If the average effective 2003 borrowing rate to date of 3.75% changed by 10% (or 0.375%) during the next twelve months, the impact, based on our September 30, 2003 revolving
debt balance, would be an increase or decrease in net income and cash flow of approximately $64,000.
Our short-term investment portfolio consists primarily of highly liquid instruments with maturities of three months or less.
31
BUSINESS
General
We are a leading construction services company offering diversified general
contracting, construction management and design-build services to private clients and public agencies throughout the world. We have provided construction services since 1894 and have established a strong reputation within our markets by executing
large, complex projects on time and within budget while adhering to strict quality control measures. We offer general contracting, preconstruction planning and comprehensive project management services, including the planning and scheduling of the
manpower, equipment, materials and subcontractors required for a project. We also offer self-performed construction services including earthwork, concrete forming and placement and steel erection. During the nine months ended September 30, 2003, we
performed work on over 100 construction projects for over 75 federal, state and local government agencies or authorities and private customers. Our headquarters are in Framingham, Massachusetts, and we have seven other principal offices throughout
the United States. As of September 30, 2003, we employed approximately 3,400 people. Our common stock is currently listed on the American Stock Exchange under the symbol PCR.
Our business is now conducted through three primary segments: building, civil, and management services. Our building
segment, comprised of Perini Building Company and James A. Cummings, Inc., accounted for approximately 56% of our backlog as of September 30, 2003, and focuses on large, complex projects in the hospitality and gaming, sports and entertainment,
educational, transportation and healthcare markets. Our civil segment, which accounted for approximately 18% of our backlog as of September 30, 2003, is involved in public works construction primarily in the northeastern United States, including the
repair, replacement and reconstruction of the United States public infrastructure such as highways, bridges and mass transit systems. Our management services segment, which accounted for approximately 26% of our backlog as of September 30, 2003,
provides diversified construction, design-build and maintenance services to the U.S. military and government agencies as well as power producers, surety companies and multi-national corporations.
For the nine months ended September 30, 2003, our revenues were $873.4
million and income before income taxes was $15.0 million, which represents a 6.2% and 6.5% increase, respectively, over the same period in 2002. Our backlog was $1.33 billion as of September 30, 2003, an increase of 34.5% from $990 million at the
end of 2002.
Industry Overview
The overall construction industry has experienced significant growth over
the past seven years. According to the U.S. Census Bureau, the annual value of construction put-in-place has grown at a 6.4% compound annual growth rate since 1995. Growth in our private end markets is largely driven by the continued strong demand
for hospitality and gaming, sports and entertainment, education and healthcare facilities. McGraw-Hill, an industry data source, is projecting that the value of contracts for hotels, motels and convention centers will increase 14.6% in 2004,
representing the fastest growing segment of non-residential construction which is projected to grow by approximately 4.0% in 2004. In addition, the U.S. Department of Commerce is projecting 5.0% and 1.9% growth in 2004 for construction put-in-place
within healthcare and education construction, respectively.
In
our public end markets, despite declining tax revenues, the federal government has increased expenditures on national defense, and municipalities have increased expenditures on the repair, replacement and reconstruction of the public infrastructure.
For example, the United States federal government has recently approved a spending bill for the reconstruction and defense of Iraq and has allocated significant funds to the defense of United States interests around the world from the threat of
terrorism. In addition, McGraw-Hill is forecasting an increase in the value of contracts in highways and bridges of 2.0% in 2004.
We are currently tracking more than 90 opportunities for our building segment, which include private and public projects with combined potential revenue
to the successful contractors in excess of $10 billion for the period between
32
2004 and 2006. In the civil segment, we have identified approximately 60 opportunities with potential revenue to the successful contractors of $8 billion
over that same time period to repair and replace the aging infrastructure in the markets we serve. Our management services segment has identified approximately 10 opportunities with potential revenues to the successful contractors in excess of $2
billion during that same time period.
Business Segment Overview
Historically, we have evaluated our operating results
based on two reportable segments: building and civil. During the fourth quarter of 2003, we adjusted the responsibilities of certain of our executive officers and, in accordance with Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information, we reevaluated the criteria for determining our reportable segments. We have determined that a third business segment, management services, will be included as a
reportable segment prospectively to align our reportable segments with current management responsibilities. Previously, our management services operations were included as part of our building segment. The management services segment will aggregate
contracts that have a higher than normal geopolitical and operational risk and a corresponding potential for greater than normal gross margin volatility.
Building Segment
Our building segment has significant experience providing services to a number of high growth, specialized building markets, including the hospitality and
gaming, sports and entertainment, education, transportation and healthcare markets. We believe our success within the building segment results from our proven ability to manage and perform large, complex projects with aggressive fast-track
schedules, elaborate designs and advanced systems while providing accurate budgeting and strict quality control. Although price is a key competitive factor, we believe our strong reputation, long-standing customer relationships and significant
levels of repeat and referral business have enabled us to achieve our leading position.
We believe the hospitality and gaming market provides significant opportunities for growth. We are a recognized leader in this market, specializing in the construction of high-end destination resorts and casinos and
Native American developments. We work with hotel operators, Native American tribal councils, developers and architectural firms to provide diversified construction services to meet the challenges of new construction and renovation of hotel and
resort properties. We believe that our reputation for completing projects on time is a significant competitive advantage in this market, as any delay in project completion may result in significant loss of revenues for the customer. In Engineering
News-Records, or ENRs, 2003 rankings, we ranked as the nations 26th largest contractor in the
general building market, 3rd largest builder in the hotel, motel and convention center market and as one of the top
25 builders in the sports, entertainment and government office buildings markets, based on revenue.
As a result of our reputation and track record, we have been involved in many marquee projects. These include hospitality and gaming projects such as the
Paris Hotel and Casino in Las Vegas, NV; the Gaylord Palms Resort and Convention Center in Orlando, FL; and the Grand Resorts Hotel/Casino Expansion in Atlantic City, NJ. In the sports and entertainment market, we have been involved in projects such
as the Bank One Ballpark in Phoenix, AZ and The Palace at Auburn Hills in Auburn Hills, MI. In our other end markets, we have been involved in large, complex projects such as the Airport Parking Garage and Rental Car Facility in Ft. Lauderdale, FL;
the Florida International University Health & Life Sciences Building in Miami, FL; and the South Shore Hospital expansion in Weymouth, MA.
In January 2003, we acquired Cummings to expand our presence in the southeast region of the United States. Cummings, which is now our wholly owned
subsidiary, specializes in the construction of schools, municipal buildings and commercial developments.
Our building segment revenues and income from operations for the nine months ended September 30, 2003 were $629.3 million and $9.2 million, respectively,
which is an increase of 28.9% and a decrease of 16.4%, respectively, over the same period in 2002. This segment also accounted for $749 million, or 56%, of our $1.33 billion backlog as of September 30, 2003.
33
Civil Segment
Our civil segment specializes in new public works construction and the repair, replacement and reconstruction of infrastructure, principally in the
metropolitan New York and Boston markets. Our civil contracting services include construction and rehabilitation of highways, bridges, light rail transit systems, subways, airports and wastewater treatment facilities. Our customers primarily award
contracts through one of two methods: the traditional public competitive bid method, in which price is the major determining factor, or through a request for proposals where contracts are awarded based on a combination of technical
capability and price. Traditionally, our customers require each contractor to pre-qualify for construction business by meeting criteria that include technical capabilities, financial strength and corporate integrity. We believe that our financial
strength and outstanding record of performance on challenging civil works projects enables us to pre-qualify for projects in situations where smaller, less diversified contractors are unable to meet the qualification requirements. We believe this is
a competitive advantage that makes us an attractive partner on the largest infrastructure projects and prestigious DBOM (design-build-operate-maintain) contracts, which combine the nations top contractors with engineering firms, equipment
manufacturers and project development consultants in a competitive bid selection process to execute highly sophisticated public works projects.
We have been active in civil construction since 1894 and believe we have developed a particular expertise in large, complex civil construction projects.
ENRs 2003 rankings place us as the 20th largest builder of general transportation projects in the country and
as a top 25 builder in mass transit and rail, bridges and highways. We have completed or are currently working on some of the most significant civil construction projects in the northeast including a portion of Bostons Big Dig
project, the Williamsburg Bridge reconstruction, New Jersey Light Rail Transit, the Triborough Bridge, Jamaica Station and the Long Island Expressway.
Our civil segment revenues and income from operations for the nine months ended September 30, 2003 were $134.5 million and $1.7 million, respectively,
which is a decrease of 43.1% and 10.5%, respectively, over the same period in 2002. This segment also accounted for $243 million, or 18%, of our $1.33 billion backlog as of September 30, 2003.
Management Services Segment
Our management services segment provides diversified construction,
design-build and maintenance services to the U.S. military and government agencies, power suppliers, surety companies and multi-national corporations in the United States and overseas. We believe customers choose our services based on our ability to
plan and execute rapid response assignments and multi-year contracts through our diversified construction and design-build abilities. Furthermore, we believe we have demonstrated consistently superior performance on competitively bid or negotiated
multi-year, multi-trade, task order and ID/IQ (Indefinite Delivery/Indefinite Quantity) construction programs. Most recently, we have been chosen by the federal government for significant projects related to defense and reconstruction projects in
Iraq and Afghanistan. For example, we are currently working on the reconstruction of electric power facilities in southern Iraq. In addition, we recently completed a project to construct the entire infrastructure for a 6,000-person base for the new
Afghan army and have recently begun construction of similar facilities at another base.
We believe we are well positioned to capture additional projects that involve long-term contracts and provide a recurring source of revenues as government expenditures for defense and homeland security increase in
response to the global threat of terrorism. For example, we have a multi-year contract with the U.S. Department of State, Office of Overseas Buildings Operations, to perform design-build security upgrades at U.S. embassies and consulates throughout
the world including Argentina, Brazil, Czech Republic, Laos, Pakistan, the Philippines and Taiwan. In addition, our proven abilities with federal government projects have enabled us to win contracts from private defense contractors who are executing
projects for the federal government. For example, we have been awarded design and construction contracts by Raytheon Integrated Defense Systems for upgrades to radar facilities at Beale Air Force Base in California and the Cobra Dane Facility on
Shemya Island, Alaska, to meet the requirements of a new early warning radar system.
34
We also provide diversified management services to power producers, surety companies and multi-national
corporations. Under a five-year contract expiring at the end of 2006, we provide planning, management, maintenance and modification services at 10 nuclear power generating stations, including 17 operating units. We are also under agreement with a
major North American surety company to provide rapid response, contract completion services. Upon notification from the surety of a contractor bond default, we provide management or general contracting services to fulfill the contractual and
financial obligations of the surety.
Our management services
segment revenue and income from operations for the nine months ended September 30, 2003 were $109.6 million and $11.4 million, respectively, which is an increase of 11.8% and 54.1%, respectively, over the same period in 2002. This segment also
accounted for $340 million, or 26%, of our $1.33 billion backlog as of September 30, 2003.
Competitive Strengths
We believe our record of delivering large, complex construction projects on time for our clients provides us with a significant competitive advantage. Our commitment to producing high quality results is augmented by the following principal
competitive strengths:
Market Leadership in Several
High-Growth Building End Markets. In ENRs 2003 rankings, based on revenue, we ranked as the nations 26th largest contractor in the general building market, 3rd largest builder in the hotel, motel and
convention center market and one of the top 25 builders in the sports, entertainment and government office buildings markets, based on revenue. We also have significant experience in constructing educational facilities, such as university buildings
and schools, correctional and healthcare facilities. Our significant experience, strong relationships, market leadership, design-build expertise and presence in key domestic markets allow us to successfully complete large projects that often require
responsiveness, fast-track schedules, elaborate designs and advanced construction techniques in these high-growth building end markets.
Extensive Experience in Complex Civil Construction. For over 100 years, we have specialized in the repair, replacement and construction of highways
and bridges, mass transit systems and water and wastewater systems, principally in the metropolitan New York and Boston markets. Our expertise and focus is on large, complex projects, particularly in dense urban areas and extends from publicly bid
construction projects to negotiated design-build contracts.
Responsiveness and Performance with Challenging Projects. We have established a favorable reputation for our ability to execute challenging projects on time, on budget and to the customers specifications. For example, we have
been the contractor of choice for many large hotels, casinos and sports arenas because of our demonstrated ability to complete technically challenging construction projects. These projects often have accelerated completion schedules and demanding
standards for quality, factors which are often more important to their owners than achieving the lowest cost. Furthermore, in providing services to government agencies, we have demonstrated our ability to rapidly and effectively respond to
construction and related support needs in remote and sometimes volatile environments. For example, we recently performed design-build security upgrades at U.S. embassies throughout the world and currently are engaged in significant re-construction
activities in Iraq and Afghanistan. Our clients often rely on us to respond rapidly to complete large, complex projects in challenging business or operating environments throughout the world.
Long-Term Relationships and Operating History with Clients. We
maintain strong, long-term relationships with many of our clients. This is particularly beneficial in our building and management services segments where it often enables us to negotiate, rather than bid for, contracts. These relationships are very
valuable as project owners begin to plan renovations of, or expansions to, existing projects, which occurs frequently in the hospitality and gaming market, or when owners such as the U.S. Army Corps of Engineers seek to execute support facility
construction. Due to our historical involvement with numerous large projects, we have developed a detailed database of significant contract cost elements, project specifications and owner requirements, which often allows us to complete expansions or
renovations, or to integrate improvements into new projects faster and more efficiently than our competitors.
35
Focus on Managing Contract and Project Risk. Our extensive experience and history in our markets
provide us with an understanding of the risks associated with certain projects. We mitigate risk in a variety of ways, including a thorough bid review and approval process, incorporating safeguards into our contracts, subcontracting certain project
components to other contractors, quickly and effectively communicating with our clients with regard to changes in project scope or size and by structuring our contracts or pursuing joint venture arrangements to provide a balance between risk and
reward opportunity. For example, approximately 25% of our revenues for the first nine months of 2003 were earned through fixed price contracts, which provide greater reward opportunities but are accompanied by higher risk, while the remaining 75%
were earned through lower risk cost-plus, guaranteed maximum price or construction management contracts. We constantly weigh opportunity and risks in our overall project portfolio and balance exposures across project types, industries, owners and
contract types.
Experienced Management Team and Highly
Skilled Workforce. Our senior management team has an average of 29 years in the construction industry and 23 years with us. We benefit from this experience in many ways, including construction and management expertise, extensive customer
relationships, longstanding relationships with experienced subcontractors in various markets and a strong corporate culture. Our workforce is also key to our success, bringing diverse work experiences as well as specialized project expertise to our
team.
Growth Strategy
We will seek to increase shareholder value by pursuing the following growth
strategies:
Leverage Leadership Position in Hospitality
and Gaming Market. We are among the nations largest contractors for casinos, hotels and convention centers. We believe that demand for new construction in the hospitality and gaming market will continue to expand due to increased consumer
spending on leisure and sports and entertainment activities driven by increasing consumer disposable income. In addition, we are observing increased planning and construction activities for hospitality and gaming projects among Native American
sovereign nations in locations throughout the country. Moreover, even after initial construction, hospitality and gaming facilities often undertake significant renovation and expansion projects in order to continue to attract clientele. These market
dynamics present an attractive business opportunity for our building segment. We intend to leverage our leadership position in this market by emphasizing our experience and expertise, as well as our proven ability to complete challenging projects on
accelerated schedules on time and within budget, and our strong relationships and reputation among industry participants.
Extend Building Construction Expertise to Additional Markets. As we expand our market presence within particular project types or geographic areas,
we will seek opportunities to cross-utilize our building construction expertise. For instance, we have been able to successfully leverage the experience we gained from constructing hospitality and gaming projects in Nevada and selected sports arenas
into new markets and related projects. Also, with our recent acquisition of Cummings, we established a significant market presence in south Florida, particularly in the construction of schools, municipal buildings and commercial facilities. We
believe this market presence will enhance and accelerate our ability to successfully compete in other end markets in the state of Florida. We will pursue these and related opportunities to extend our construction expertise to building end markets
and geographical areas where we hold a competitive advantage.
Pursue Expanding Federal Contracting Opportunities for Defense, Reconstruction and Security. We have well established relationships with U.S. government agencies that include, among others, the Departments of Defense and State. These
customers represent growth opportunities for us, particularly with the expanded outsourcing of federal jobs and increased spending on defense, reconstruction and security. Our ability to effectively compete for this growing business is strengthened
by our proven ability to respond rapidly to technically challenging assignments. During the 1995 through 2001 period, we were under contract with the United States Navy to provide rapid response construction services worldwide. In Afghanistan, we
recently completed the construction of buildings and infrastructure for a 6,000-person base to be used by the new Afghan army and have recently begun construction of similar facilities at another base. In April 2003, we were awarded a
36
contract by the U.S. Army Corps of Engineers to help rebuild Iraq, a contract for which spending authorization was recently increased from $100 million to a
maximum of $500 million, subject to identification and award of specific contract task orders. We will continue to pursue additional opportunities in Iraq and Afghanistan, as well as construction and support projects at various domestic and overseas
locations, including military bases, military installations and U.S. embassies.
Seek Complex Civil Construction Projects in the Northeast. We intend to maintain and build upon our established position as a leading civil construction contractor in the northeastern United States. However, we
will do so selectively, with our business levels reflective of our risk tolerance, resource allocation, joint venture opportunities and targeted profit margins. As an example, during the nine months ended September 30, 2003, our revenues from civil
construction declined to $134.5 million from $236.4 million during the same period in 2002. This decline in revenue occurred despite the fact that our overall bidding activity in the civil market during the periods remained relatively constant. Our
reduced revenues were reflective of our unwillingness to bid work at unacceptable levels of profit or business risk in an unusually competitive bidding environment. We believe our opportunities and activity in winning civil work will increase as
some competitors experience unacceptable profit margins and challenging construction conditions. Moreover, we believe there is a substantial and growing backlog of infrastructure replacement and repair needs in our principal markets that must be
addressed in the near future. We will focus on large, complex public works projects in dense urban areas, particularly in the metropolitan New York area, where we are one of a limited number of construction firms that can consistently pre-qualify
for these types of projects. We believe we have a competitive advantage on these projects as a result of our technical expertise, our significant local resources and our proven record of performance.
Focus on Margin Expansion Opportunities. We will actively seek to
expand our profit margins by managing our business mix, targeting high value-added projects and continuously evaluating our corporate support and field operations cost structures. We anticipate that our business opportunities and revenues will grow
more rapidly in our building and management services segments, as a result of both private and federal contracting opportunities. Additionally, in targeting our business development and bidding activity, we will emphasize large, complex projects
that require innovative engineering, challenging logistics or completion schedules and construction capabilities where we have demonstrated expertise. These projects can generate and justify higher profit margins due to the higher value-added nature
of our services. We will also seek to control our corporate overhead expenses and closely monitor field operations, with a view toward discontinuing unprofitable and unpromising operations. For example, in 1998 we closed unprofitable business units
in the Midwest region after concluding that future business prospects did not justify the operating losses experienced by the units. As we pursue opportunities to expand our profit margins, we will remain attentive to our rigorous standards for
quality, risk mitigation, market leadership and safety.
Pursue Selected Strategic Acquisitions. We intend to supplement our internal growth and achieve strategic benefits by pursuing selected acquisitions. In particular, we will seek profitable, well managed businesses with operations
complementary to our building and management services activities. We believe that our recent acquisition of Cummings demonstrates our ability to successfully identify, execute and integrate strategic acquisitions.
Markets and Clients
Our construction services are targeted toward end markets that are diversified across project types, client characteristics
and geographic locations. Revenues by business segment for the nine months ended September 30, 2003 and 2002 and for each of the three years ended December 31, 2002, 2001 and 2000 are set forth below:
|
|
Revenues by Segment
|
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
|
|
2003
|
|
2002
|
|
2002
|
|
2001
|
|
2000
|
|
|
(in thousands) |
Building |
|
$ |
629,305 |
|
$ |
488,111 |
|
$ |
631,860 |
|
$ |
1,120,161 |
|
$ |
740,555 |
Civil |
|
|
134,507 |
|
|
236,409 |
|
|
312,528 |
|
|
353,957 |
|
|
279,469 |
Management Services |
|
|
109,639 |
|
|
97,962 |
|
|
140,653 |
|
|
79,278 |
|
|
85,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
873,451 |
|
$ |
822,482 |
|
$ |
1,085,041 |
|
$ |
1,553,396 |
|
$ |
1,105,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
Revenues by end market for the building segment for the nine months ended September 30, 2003 and 2002 and
for each of the three years ended December 31, 2002, 2001 and 2000 are set forth below:
|
|
Building Segment Revenues by End Market
|
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
|
|
2003
|
|
2002
|
|
2002
|
|
2001
|
|
2000
|
|
|
(in thousands) |
Hospitality and Gaming |
|
$ |
375,605 |
|
$ |
406,188 |
|
$ |
513,374 |
|
$ |
1,013,206 |
|
$ |
583,918 |
Sports and Entertainment |
|
|
95,808 |
|
|
49,508 |
|
|
72,729 |
|
|
22,699 |
|
|
21,845 |
Education Facilities |
|
|
72,256 |
|
|
103 |
|
|
1,181 |
|
|
8,460 |
|
|
6,197 |
Transportation Facilities |
|
|
32,507 |
|
|
12,006 |
|
|
14,096 |
|
|
18,134 |
|
|
10,827 |
Healthcare Facilities |
|
|
31,629 |
|
|
7,393 |
|
|
11,264 |
|
|
28,121 |
|
|
14,121 |
Other |
|
|
21,500 |
|
|
12,913 |
|
|
19,216 |
|
|
29,541 |
|
|
103,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
629,305 |
|
$ |
488,111 |
|
$ |
631,860 |
|
$ |
1,120,161 |
|
$ |
740,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by end market
for the civil segment for the nine months ended September 30, 2003 and 2002 and for each of the three years ended December 31, 2002, 2001 and 2000 are set forth below:
|
|
Civil Segment Revenues by End Market
|
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
|
|
2003
|
|
2002
|
|
2002
|
|
2001
|
|
2000
|
|
|
(in thousands) |
Highways |
|
$ |
48,935 |
|
$ |
71,334 |
|
$ |
92,486 |
|
$ |
142,144 |
|
$ |
135,565 |
Bridges |
|
|
15,073 |
|
|
56,972 |
|
|
72,312 |
|
|
65,117 |
|
|
47,481 |
Mass Transit |
|
|
65,781 |
|
|
88,176 |
|
|
145,160 |
|
|
146,397 |
|
|
87,930 |
Other |
|
|
4,718 |
|
|
19,927 |
|
|
2,570 |
|
|
299 |
|
|
8,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
134,507 |
|
$ |
236,409 |
|
$ |
312,528 |
|
$ |
353,957 |
|
$ |
279,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by end market
for the management services segment for the nine months ended September 30, 2003 and 2002 and for each of the three years ended December 31, 2002, 2001 and 2000 are set forth below:
|
|
Management Services Segment Revenues by End Market
|
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
|
|
2003
|
|
2002
|
|
2002
|
|
2001
|
|
2000
|
|
|
(in thousands) |
U.S. Government Services |
|
$ |
56,430 |
|
$ |
32,306 |
|
$ |
46,749 |
|
$ |
37,348 |
|
$ |
39,125 |
Power Facilities Maintenance |
|
|
31,774 |
|
|
54,411 |
|
|
74,948 |
|
|
28,616 |
|
|
37,126 |
Other |
|
|
21,435 |
|
|
11,245 |
|
|
18,956 |
|
|
13,314 |
|
|
9,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
109,639 |
|
$ |
97,962 |
|
$ |
140,653 |
|
$ |
79,278 |
|
$ |
85,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We provide our
services to a broad range of private and public clients. The allocation of our revenues by client source for the nine months ended September 30, 2003 and 2002 and for each of the three years ended December 31, 2002, 2001 and 2000 is set forth below:
|
|
Revenues by Client Source
|
|
|
|
Nine Months Ended September 30,
|
|
|
Year Ended December 31,
|
|
|
|
2003
|
|
|
2002
|
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
Private Owners |
|
67 |
% |
|
66 |
% |
|
65 |
% |
|
73 |
% |
|
68 |
% |
State and Local Governments |
|
26 |
|
|
30 |
|
|
30 |
|
|
24 |
|
|
28 |
|
Federal Governmental Agencies |
|
7 |
|
|
4 |
|
|
5 |
|
|
3 |
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
Private Owners. We derived approximately 67% of our revenues from private clients during the first
nine months of 2003. Our private clients include major hospitality and gaming resort owners, Native American sovereign nations, private developers, healthcare and retirement companies and a leading owner and operator of power facilities. We provide
services to our private clients primarily through negotiated contract arrangements, as opposed to competitive bids.
State and Local Governments. We derived approximately 26% of our revenues from state and local government clients during the first nine months of
2003. Our state and local government clients include state transportation departments, state and local correctional departments, metropolitan authorities, cities, municipal agencies, school districts and public universities. We provide services to
our state and local clients primarily pursuant to contracts awarded through competitive bidding processes. Our civil contracting services are concentrated in the northeast, principally in the metropolitan New York and Boston markets. Our building
construction services for state and local government clients, which have included schools and dormitories, correctional and healthcare facilities, parking structures and municipal buildings, are in locations throughout the country. Since our
acquisition of Cummings in January 2003, we have been particularly active in providing construction services for local government clients in Florida.
Federal Government Agencies. We derived approximately 7% of our revenues from federal governmental agencies during the first nine months of 2003.
These agencies have included the State Department, the U.S. Navy and the U.S. Army Corps of Engineers. We provide services to federal agencies primarily pursuant to contracts for specific or multi-year assignments that involve new construction or
infrastructure improvements. A substantial portion of our revenues from federal agencies is derived from projects in overseas locations. Our share of revenues derived from federal customers has increased steadily in recent years. We expect this
trend to continue for the foreseeable future as a result of our expanding base of experience and relationships with federal agencies, together with favorable market and expenditure trends for defense, security and reconstruction work.
Backlog
We include a construction project in our backlog at such time as a contract is awarded or a firm letter of commitment is
obtained and funding is in place. As a result, the backlog figures are firm, subject only to the cancellation provisions contained in the various contracts. Historically, these provisions have not had a material adverse effect on us.
As of September 30, 2003, we had a construction backlog of $1.332 billion
compared to $990 million at December 31, 2002, $1.214 billion at December 31, 2001 and compared to the record year-end backlog of $1.789 billion at December 31, 2000. Backlog is summarized below by business segment as of September 30, 2003 and
December 31, 2002:
|
|
Backlog by Business Segment
|
|
|
|
September 30, 2003
|
|
|
December 31, 2002
|
|
|
|
(dollars in thousands) |
|
Building |
|
$ |
749,450 |
|
56 |
% |
|
$ |
525,433 |
|
53 |
% |
Civil |
|
|
243,044 |
|
18 |
|
|
|
210,562 |
|
21 |
|
Management Services |
|
|
339,654 |
|
26 |
|
|
|
254,180 |
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,332,148 |
|
100 |
% |
|
$ |
990,175 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
We estimate that
approximately $364 million (or 27%) of our backlog at September 30, 2003 will not be completed during the next 12 months.
39
Backlog by end market for the building segment as of September 30, 2003 and December 31, 2002 is set
forth below:
|
|
Building Segment Backlog by End Market
|
|
|
|
September 30, 2003
|
|
|
December 31, 2002
|
|
|
|
(dollars in thousands) |
|
Hospitality and Gaming |
|
$ |
393,593 |
|
53 |
% |
|
$ |
341,115 |
|
65 |
% |
Sports and Entertainment |
|
|
36,259 |
|
5 |
|
|
|
115,759 |
|
22 |
|
Education Facilities |
|
|
135,251 |
|
18 |
|
|
|
13,805 |
|
3 |
|
Transportation Facilities |
|
|
61,932 |
|
8 |
|
|
|
2,931 |
|
|
|
Healthcare Facilities |
|
|
47,477 |
|
6 |
|
|
|
42,504 |
|
8 |
|
Other |
|
|
74,938 |
|
10 |
|
|
|
9,319 |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
749,450 |
|
100 |
% |
|
$ |
525,433 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog by end market
for the civil segment as of September 30, 2003 and December 31, 2002 is set forth below:
|
|
Civil Segment Backlog by End Market
|
|
|
|
September 30, 2003
|
|
|
December 31, 2002
|
|
|
|
(dollars in thousands) |
|
Highways |
|
$ |
36,192 |
|
15 |
% |
|
$ |
65,260 |
|
31 |
% |
Bridges |
|
|
8,862 |
|
4 |
|
|
|
20,815 |
|
10 |
|
Mass Transit |
|
|
73,435 |
|
30 |
|
|
|
106,473 |
|
51 |
|
Other |
|
|
124,555 |
|
51 |
|
|
|
18,014 |
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
243,044 |
|
100 |
% |
|
$ |
210,562 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog by end market
for the management services segment as of September 30, 2003 and December 31, 2002 is set forth below:
|
|
Management Services Segment Backlog by End Market
|
|
|
|
September 30, 2003
|
|
|
December 31, 2002
|
|
|
|
(dollars in thousands) |
|
U.S. Government Services |
|
$ |
161,309 |
|
48 |
% |
|
$ |
69,904 |
|
27 |
% |
Power Facilities Maintenance |
|
|
170,258 |
|
50 |
|
|
|
175,032 |
|
69 |
|
Other |
|
|
8,087 |
|
2 |
|
|
|
9,244 |
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
339,654 |
|
100 |
% |
|
$ |
254,180 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Competition
The construction industry is highly competitive and the markets in which we
compete have numerous and often larger companies that provide similar services. In certain end markets of the building segment, such as hospitality and gaming, we are one of the largest providers of construction services in the United States, but
within other end markets of the building segment, and within the civil and management services segments, there are competitors with significantly greater capabilities and resources. In our building segment, we compete with a variety of national and
regional contractors. In the west, our primary competitors are Marnell-Carrao, Huntcor and McCarthy. In the northeast, our primary competitors are Suffolk, Gilbane and Turner and in the southeast our primary competitors include Centex-Rooney, James
B. Pirtle and Whiting-Turner. In our management services segment, we compete principally with national engineering and construction firms such as Fluor, Bechtel, Washington Group International and Kellogg Brown & Root. In our civil
segment, we compete principally with large civil construction firms that operate in the northeast, including Slattery/Skanska, Granite Construction/Halmar, Tully and Schiavone. We believe price, experience, reputation, responsiveness, customer
relationships, project completion track record and quality of work are key factors in clients awarding contracts across our end markets.
40
Types of Contracts and The Contract Process
The general contracting and management services we provide consist of planning and scheduling the manpower, equipment,
materials and subcontractors required for the timely completion of a project in accordance with the terms, plans and specifications contained in a construction contract. We provide these services by using traditional general contracting
arrangements, such as fixed price, guaranteed maximum price and cost plus award fee contracts and, to a lesser extent, construction management or design-build contracting arrangements. These contract types and the risks generally inherent therein
are discussed below:
|
|
|
Fixed price (FP) contracts, which include fixed unit price contracts, are generally used in competitively bid public civil construction projects and, to a lesser degree, building
construction projects and generally commit the contractor to provide all of the resources required to complete a project for a fixed sum or at fixed unit prices. Usually FP contracts transfer more risk to the contractor but offer the opportunity,
under favorable circumstances, for greater profits. FP contracts represent a significant portion of our publicly bid civil construction projects. Design-build projects are also generally performed under a FP contract. |
|
|
|
Cost plus award fee (CPAF) contracts provide for reimbursement of the costs required to complete a project, but usually have a lower base fee and an incentive fee based on cost
and/or schedule performance. CPAF contracts serve to minimize the contractors financial risk, but may also limit profits. |
|
|
|
Guaranteed maximum price (GMP) contracts provide for a cost plus fee arrangement up to a maximum agreed upon price. These contracts place risks on the contractor for amounts in
excess of the GMP, but may permit an opportunity for greater profits than under CPAF contracts through sharing agreements with the owner on any cost savings that may be realized. |
|
|
|
Construction management (CM) contracts are those under which a contractor agrees to manage a project for the owner for an agreed-upon fee, which may be fixed or may vary based upon
negotiated factors. CM contracts serve to minimize the contractors financial risk, but may also limit profit relative to the overall scope of a project. |
Historically, a high percentage of our contracts have been of the fixed price and GMP type. A summary of revenues and
backlog by type of contract for the nine-month period ended September 30, 2003 and for each of the three years in the period ended December 31, 2002 follows:
|
|
Backlog as of
|
|
|
|
September 30, 2003
|
|
|
December 31,
|
|
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
Fixed Price |
|
30 |
% |
|
30 |
% |
|
41 |
% |
|
46 |
% |
CPAF, GMP or CM |
|
70 |
|
|
70 |
|
|
59 |
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
September 30, 2003
|
|
|
December 31,
|
|
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
Fixed Price |
|
25 |
% |
|
35 |
% |
|
25 |
% |
|
32 |
% |
CPAF, GMP or CM |
|
75 |
|
|
65 |
|
|
75 |
|
|
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
We identify potential
projects from a variety of sources, including advertisements by federal, state and local governmental agencies, through the efforts of our business development personnel and through meetings with other participants in the construction industry such
as architects and engineers. After determining which projects are available, we make a decision on which projects to pursue based on such factors as project size, duration, availability of personnel, current backlog, competitive advantages and
disadvantages, prior experience, contracting agency or owner, geographic location and type of contract.
41
After deciding which contracts to pursue, we generally have to complete a prequalification process with
the applicable agency or owner. The prequalification process generally limits bidders to those companies with operational experience and financial capability to effectively complete the particular project(s) in accordance with the plans,
specifications and construction schedule.
The estimating
process typically involves three phases. Initially, we perform a detailed review of the plans and specifications, summarize the various types of work involved and related estimated quantities, determine the project duration or schedule and highlight
the unique and riskier aspects of the project. The second phase of the estimating process consists of estimating the cost and availability of labor, material, equipment, subcontractors and the project team required to complete the project on time
and in accordance with the plans and specifications. The final phase consists of a detailed review of the estimate by management including, among other things, assumptions regarding cost, approach, means and methods, productivity and risk. After the
final review of the cost estimate, management adds an amount for profit to arrive at the total bid amount.
Public bids to various governmental agencies are generally awarded to the lowest bidder. Requests for proposals or negotiated contracts with public or
private owners are generally awarded based on a combination of technical capability and price, taking into consideration factors such as project schedule and prior experience.
During the normal course of most projects, the owner and sometimes the contractor initiate modifications or changes to the
original contract to reflect, among other things, changes in specifications or design, method or manner of performance, facilities, equipment, materials, site conditions and period for completion of the work. Generally the scope and price of these
modifications are documented in a change order to the original contract and reviewed, approved and paid in accordance with the normal change order provisions of the contract.
Our contracts generally involve work durations in excess of one year. Revenue on contracts in process is generally recorded
under the percentage of completion contract accounting method. For a more detailed discussion of our policy in these areas, see Note 1(d) of Notes to Consolidated Financial Statements, entitled Method of Accounting for Contracts.
Environmental Matters
Our properties and operations are subject to federal, state and municipal
laws and regulations relating to the protection of the environment, including requirements for water discharges, air emissions, the use, management and disposal of solid or hazardous materials or wastes and the cleanup of contamination. For example,
we must apply water or chemicals to reduce dust on road construction projects and to contain contaminants in storm run-off water at construction sites. In certain circumstances, we may also be required to hire subcontractors to dispose of hazardous
wastes encountered on a project in accordance with a plan approved in advance by the owner. We believe that we are in substantial compliance with all applicable laws and regulations. However, future requirements or amendments to current laws or
regulations imposing more stringent requirements could require us to incur costs to maintain or achieve compliance.
In addition, some environmental laws, such as the U.S. federal Superfund law and similar state statutes, can impose liability for the entire
cost of cleanup of contaminated sites upon any of the current or former owners or operators or upon parties who sent wastes to these sites, regardless of who owned the site at the time of the release or the lawfulness of the original disposal
activity. Contaminants have been detected at some of the sites that we own, or where we worked as a contractor in the past, and we have incurred costs for investigation or remediation of hazardous substances. We also believe that our liability for
these sites will not be material, either individually or in the aggregate, and have pollution legal liability insurance available for such matters. We believe that we have minimal exposure to environmental liability as a result of the activities of
Perini Environmental Services, Inc., or Perini Environmental, a wholly owned subsidiary of Perini that was phased out during 1997. Perini Environmental provided hazardous waste engineering and construction services to both private clients and public
agencies nationwide. Perini Environmental was responsible for compliance with applicable laws in connection with its activities; however, Perini and Perini Environmental generally carried insurance or received indemnification from customers to cover
the risks associated with the remediation business.
42
We currently own real estate in three states and as an owner, are subject to laws governing environmental
responsibility and liability based on ownership. We are not aware of any significant environmental liability associated with our ownership of real estate.
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 and Development Company, or PL&D, our wholly owned real estate development subsidiary. Accordingly, approximately 97% of the property has been liquidated since June 30, 1999. As of September 30, 2003, the remaining property consists
of 92 buildable acres available for sale in the Raynham Woods Commerce Center, an industrial park located in Raynham, Massachusetts. This property is classified on the balance sheet as either Land held for sale, net or included in
Other Assets. See Note 5 of Notes to Consolidated Financial Statements.
Insurance and Bonding
All of our properties
and equipment, both directly owned or owned through joint ventures with others, are covered by insurance and management believes that such insurance is adequate. In addition, we maintain general liability, excess liability and workers
compensation insurance in amounts that we believe are consistent with our risk of loss and industry practice. During 2000 and 2001, we were able to significantly limit our financial risk under our workers compensation and general liability
insurance coverage by purchasing traditional insurance policies in a favorable insurance market. Due to tight conditions in the insurance market, effective for the calendar year 2002 and continuing into 2003, we found it necessary to purchase
workers compensation and general liability policies at substantially higher premiums with a self-insured deductible limit of $250,000 per occurrence, with appropriate aggregate caps on losses retained.
As a normal part of the construction business, we are often required to
provide various types of surety bonds as an additional level of security of our performance. We have surety arrangements with several sureties, one of which we have dealt with for over 75 years and another of which owns approximately 21% of our
outstanding common stock. See Note 13 of Notes to Consolidated Financial Statements.
Employees
The total number of personnel
employed by us is subject to seasonal fluctuations, the volume of construction in progress and the relative amount of work performed by subcontractors. During 2002, the average number of employees was approximately 3,200, with a maximum of
approximately 4,800 and a minimum of approximately 1,800. As of September 30, 2003, the number of employees was approximately 3,400.
We operate as a union contractor. As such, we are a signatory to numerous local and regional collective bargaining agreements, both directly and through
trade associations, throughout the country. These agreements cover all necessary union crafts and are subject to various renewal dates. Estimated amounts for wage escalation related to the expiration of union contracts are included in our bids on
various projects and, as a result, the expiration of any union contract in the next fiscal year is not expected to have any material impact on us.
43
Properties
Properties used in our construction operations as of September 30, 2003 are summarized below:
|
|
Business Segment(s)
|
|
Owned or Leased by Perini
|
|
Approximate Acres
|
|
Approximate Square Feet of Office Space
|
Principal Offices |
|
|
|
|
|
|
|
|
Framingham, MA |
|
Building, Civil and Management Services |
|
Owned |
|
9 |
|
100,000 |
Phoenix, AZ |
|
Building |
|
Leased |
|
|
|
22,700 |
Peekskill, NY |
|
Civil |
|
Owned |
|
2 |
|
21,000 |
Ft. Lauderdale, FL |
|
Building |
|
Leased |
|
|
|
17,500 |
Las Vegas, NV |
|
Building |
|
Leased |
|
|
|
7,400 |
Celebration, FL |
|
Building |
|
Leased |
|
|
|
4,800 |
Carlsbad, CA |
|
Building |
|
Leased |
|
|
|
3,900 |
Detroit, MI |
|
Building |
|
Leased |
|
|
|
2,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 |
|
179,800 |
|
|
|
|
|
|
|
|
|
Principal Permanent Storage Yards |
|
|
|
|
|
|
|
|
Bow, NH |
|
Civil |
|
Owned |
|
70 |
|
|
Framingham, MA |
|
Building and Civil |
|
Owned |
|
6 |
|
|
Las Vegas, NV |
|
Building |
|
Leased |
|
2 |
|
|
Peekskill, NY |
|
Civil |
|
Owned |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81 |
|
|
|
|
|
|
|
|
|
|
|
We believe our
properties are well maintained, in good condition, adequate and suitable for our purpose and fully utilized. Properties for sale applicable to our previously discontinued real estate activities are described above in Real Estate
Operations.
Legal Proceedings
Mergentime Perini Joint Ventures vs. WMATA Matter
On May 11, 1990, contracts with two joint ventures in which Perini held a
40% interest were terminated by the Washington Metropolitan Area Transit Authority, or WMATA, on two subway construction projects in the District of Columbia. The contracts were awarded to the joint ventures in 1985 and 1986. However, Perini and
Mergentime Corporation, or Mergentime, the 60% managing partner, entered into an agreement in 1987 under which Perini withdrew from the joint ventures and Mergentime assumed complete control over the performance of both projects. This agreement did
not relieve Perini of its responsibilities to WMATA as a joint venture partner. After Perini withdrew from the joint ventures, Mergentime and WMATA had a dispute regarding progress on the projects. After both construction contracts were terminated,
WMATA retained Perini, acting independently, to complete both projects.
Subsequently, the joint ventures brought an action in the United States District Court for the District of Columbia against WMATA, seeking damages for delays, unpaid extra work and wrongful termination and WMATA brought an action against
the joint ventures seeking damages for additional costs to complete the projects. After a bench trial, the District Court found the joint ventures liable to WMATA for damages in the amount of approximately $16.5 million and WMATA liable to the joint
ventures for damages in the amount of approximately $4.3 million.
The joint ventures appealed the judgment to the United States Court of Appeals for the District of Columbia, and on February 16, 1999, the Court of Appeals vacated the District Courts final judgment and ordered the
44
District Court to review its prior findings and hold further hearings in regard to the joint ventures affirmative claims. In addition, the Court of
Appeals held that statutory interest on any of the claims will not accrue until final judgment is entered sometime in the future.
On February 28, 2001, a successor District Court Judge informed the parties that he could not certify adequate familiarity with the record to complete the
remaining proceedings; therefore, he granted the joint ventures motion for a new trial. A new trial was completed in January 2002 and a decision is still pending. The ultimate financial impact of the Judges pending decision is not yet
determinable; therefore, no provision for loss, if any, has been recorded in the financial statements.
Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter
During 1995, a joint venture, Tutor-Saliba-Perini, or TSP, in which Perini is the 40% minority partner and Tutor-Saliba Corporation of Sylmar, California
is the 60% managing partner, filed a complaint in the Superior Court of the State of California for the County of Los Angeles against the Los Angeles County Metropolitan Transportation Authority, or the MTA, seeking to recover costs for extra work
required by the MTA in connection with the construction of certain tunnel and station projects. In February 1999 the MTA countered with civil claims under the California False Claims Act against TSP, Tutor-Saliba and Perini jointly and severally.
Ronald N. Tutor, the Chairman and Chief Executive Officer of Perini since March 2000, is also the chief executive officer and the sole stockholder of Tutor-Saliba Corporation.
Claims concerning the construction of the MTA projects were tried before a jury in 2001. During trial, the Judge ruled that
TSP had failed to comply with the Courts prior discovery orders and the Judge penalized TSP, Tutor-Saliba and Perini for the alleged non-compliance by dismissing TSPs claims and by ruling, without a jury finding, that TSP, Tutor-Saliba
and Perini were liable to the MTA for damages on the MTAs counterclaims. The Judge then instructed the jury that TSP, Tutor-Saliba and Perini were liable to the MTA and charged the jury with the responsibility of determining the amount of the
damages based on the Judges ruling. The jury awarded the MTA approximately $29.6 million in damages.
On March 26, 2002, the Judge amended the award, ordering TSP to pay the MTA an additional $33.4 million in costs and attorney fees, with the aggregate
$63.0 million award subject to interest at an annual rate of 10% from the date of the award.
TSP and the other plaintiffs/defendants in the counterclaim have appealed the Judges discovery sanction, the subsequent jury award and the amended award. Oral arguments on the appeal are anticipated to be set
some time in Summer 2004. The ultimate financial impact of the Judges ruling and/or the awards is not yet determinable. Therefore, no provision for loss, if any, has been recorded in the financial statements.
City of San Francisco vs. Tutor-Saliba, Perini & Buckley Joint Venture Matter
In November 2002, the San Francisco City Attorney, on
behalf of the City and County of San Francisco and the citizens of California, filed a civil action with a demand for a jury trial against Perini, Tutor-Saliba Corporation, or TSC, the Tutor-Saliba, Perini & Buckley Joint Venture, Buckley &
Company, Inc. and their bonding companies in the United States District Court in San Francisco relating to seven projects for work on the expansion of the San Francisco International Airport. A second amended complaint was filed in July 2003 which,
among other things, added Ronald N. Tutor as a defendant. The joint venture was established by TSC, Perini and Buckley through two joint venture agreements dated October 28, 1996 and February 11, 1997. The joint venture had agreements with the Owner
to perform work (Contracts) on two of the above projects (Projects) and, as part of those Contracts, the joint venture provided performance and payment bonds to the Owner (Bonds).
In the second amended complaint, the plaintiffs allege, among other things,
various overcharges, bidding violations, violations of minority contracting regulations, civil fraud and violation of the California and San Francisco False Claims and California Unfair Competition Acts. In addition, the plaintiffs allege that the
45
defendants have violated the United States Racketeer Influenced Corrupt Organizations Act. The plaintiffs have asserted $30 million in damages and are
seeking treble damages, punitive and exemplary damages, various civil penalties and a declaration that TSC and the joint venture are irresponsible bidders. It is unclear based on the plaintiffs current complaint what portion of the
plaintiffs claims relate to the two projects that the joint venture participated in.
On October 3, 2003, the Court granted the defendants motion to specify damages allegedly sustained for each contract. The defendants motion to dismiss the plaintiffs second amended complaint is
pending.
TSC is the managing partner of the joint venture and,
in December 1997, Perini sold its entire 20% interest in the joint venture to TSC. As part of that sale agreement, TSC agreed to indemnify Perini from any liability that Perini is required to pay by reason of or arising out of any event or
occurrence subsequent to the date of the sale of Perinis interest in the joint venture in any way connected with the joint venture agreements, the Contracts, the Projects and the Bonds. It is unclear based on the plaintiffs current
complaint whether the claims against the joint venture arise out of events that occurred subsequent to the date of the sale of Perinis interest. The ultimate financial impact of this action is not yet determinable.
Perini/Kiewit/Cashman Joint Venture Central Artery/Tunnel Project Matter
Perini/Kiewit/Cashman Joint Venture, or PKC, a joint
venture in which Perini holds a 56% interest and is the managing partner, is currently pursuing a series of claims for additional contract time and/or compensation against the Massachusetts Highway Department, or MHD, for work performed by PKC on a
portion of the Central Artery/Tunnel project in Boston, Massachusetts. During construction, MHD ordered PKC to perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs,
in excess of $100 million. In addition, PKC encountered a number of unforeseen conditions during construction that greatly increased PKCs cost of performance.
Certain of PKCs claims have been presented to a Disputes Review Board, or the DRB, which consists of three
construction experts chosen by the parties. To date, the DRB has ruled on a binding basis that PKC is entitled to additional compensation for its contract time delay claim in the amount of $17.4 million. On March 20, 2002, the Superior Court of the
Commonwealth of Massachusetts approved PKCs request to have MHD comply with the DRBs $17.4 million award. The MHD has appealed the Superior Court decision to the Appeals Court of the Commonwealth of Massachusetts.
The DRB has also ruled on a binding basis that PKC is entitled to additional
compensation awards totaling $17.1 million for impacts and inefficiencies caused by MHD to certain of PKCs work. PKC has filed applications in these actions seeking to confirm the awards and MHD has filed civil actions in Massachusetts
Superior Court seeking to vacate these awards.
Under the
Dispute Resolution Rules of the contract, either party may periodically terminate the services of some or all of the DRB members provided that members who are removed under this provision will remain on the DRB through the completion of any then
pending claims. The MHD has chosen to remove the current DRB members under this provision and those members are in the process of completing hearings on all pending claims. Although the replacement DRB members have been agreed upon, proceedings
before the current DRB and the new DRB have been postponed pending completion of the negotiation and mediation discussed below.
The pending claims yet to be decided by the current DRB on a binding basis have an anticipated value of $49.4 million. The remaining claims to be decided
by the replacement DRB on a non-binding basis have an anticipated value of $72.6 million.
On August 14, 2002 the Massachusetts Attorney Generals office, pursuant to its authority under the Massachusetts False Claims Act, served a Civil Investigative Demand (CID) on Perini and the other
joint
46
venture partners. The CID sought the production of certain construction claims documentation in connection with the Central Artery/Tunnel Contract No. C11A1.
PKC vigorously denies that it submitted any false claims and is cooperating with the Attorney Generals Office in the ongoing investigation.
In December 2002, PKC and MHD entered into an agreement to attempt to resolve by negotiation and mediation all of the outstanding claims on the project.
As part of the agreement, the MHD recommended for approval by the Massachusetts Turnpike Authority a contract modification that provides for provisional payments to PKC totaling $25 million against PKCs outstanding claims. To date, PKC has
received $23.75 million of those provisional payments. The parties also agreed to stay the pending litigation and DRB proceedings during the negotiations. Perini began mediation on all claims in September 2003. The ultimate financial impact of
resolving all of the claims on this project is not yet determinable.
Redondo/Perini Joint Venture vs. Siemens Transportation Matter
This is a binding arbitration proceeding arising out of a contract between the Redondo/Perini Joint Venture, or RPJV, a joint venture in which Perini and Redondo Construction Corp., or Redondo, each have a 50%
interest and the Siemens Transportation Partnership, S.E., Puerto Rico, or STP. STP is constructing a public metropolitan passenger rail transportation project for the Commonwealth of Puerto Rico and RPJV is responsible for the design and
construction of a portion of the project.
On March 19, 2002,
Redondo filed a petition for reorganization under 11 U.S.C. Chapter 11 in U.S. Bankruptcy Court for the District of Puerto Rico.
On December 23, 2002, RPJV filed an arbitration demand against STP seeking the recovery of approximately $38 million of additional costs related to design
changes and the late completion of the design. On January 31, 2003, STP filed a counter-demand against RPJV seeking the recovery of damages allegedly related to defects in design and construction and the late completion of RPJVs work in the
amount of approximately $17.9 million along with the repayment of approximately $22.6 million for alleged advances previously paid to RPJV.
On October 31, 2003, the parties each revised their statement of damages. RPJVs total claim is now approximately $71 million. STPs revised
claim is approximately $69.5 million, including its claim for alleged advances already paid.
Discovery has begun, an arbitration panel has been chosen and arbitration evidentiary hearings are scheduled to begin on February 23, 2004. The ultimate financial impact of resolving all of the claims on this project
is not yet determinable.
$21.25 Preferred Shareholders Class Action Lawsuit
On October 15, 2002, Frederick Doppelt, Arthur I. Caplan
and Leland D. Zulch filed a lawsuit individually, and as representatives of a class of holders of our Depositary Shares against certain current and former directors of Perini. This lawsuit is captioned Doppelt, et al. v. Tutor, et al., United States
District Court for the District of Massachusetts, No. 02CV12010MLW. Mr. Doppelt is a current director of Perini and Mr. Caplan is a former director of Perini.
Specifically, the original complaint alleged that the defendants breached their fiduciary duties owed to the holders of the Depositary Shares and to
Perini. The plaintiffs principally allege that the defendants improperly authorized the exchange of Series B Preferred Stock for common stock while simultaneously refusing to pay accrued dividends due on the Depositary Shares.
On January 6, 2003, the defendants moved to dismiss the lawsuit. Among other
things, the defendants argued that: (1) they did not owe fiduciary duties to the holders of the Depositary Shares and (2) the claims of breach of fiduciary duty owed to Perini must be dismissed because the claim could only be brought as a derivative
action.
47
On March 21, 2003, the plaintiffs filed an opposition to the motion to dismiss and in May 2003 the
plaintiffs asked the Court for leave to file an amended complaint.
In June 2003 the plaintiffs were given leave to file an amended complaint. The amended complaint filed in July 2003 adds an allegation that the defendants have further breached their fiduciary duties by authorizing a tender offer for the
purchase of up to 90% of the Depositary Shares and an allegation that the collective actions of the defendants constitute unfair and deceptive business practices under the provisions of the Massachusetts Consumer Protection Act. The amended
complaint withdrew the allegation of a breach of fiduciary duty owed to Perini, but retained the allegation with respect to a breach of those duties owed to the holders of the Depositary Shares. The plaintiffs seek damages in an amount not less than
$15,937,500, trebled, plus interest, costs, fees and other unspecified punitive and exemplary damages.
On August 29, 2003, the defendants filed a motion to dismiss the amended complaint. The plaintiffs filed an opposition thereto and on October 14, 2003,
the defendants filed their reply.
In 2001, a similar lawsuit
was filed by some of the same plaintiffs in the United States District Court for the Southern District of New York, which claimed that we breached our contract with the holders of Depositary Shares. In 2002, the case was dismissed and upon appeal by
the plaintiffs to the United States Court of Appeals for the Second Circuit, the Court of Appeals affirmed the dismissal.
48
MANAGEMENT
The following table
shows information about our executive officers and directors as of December 15, 2003:
Name
|
|
Age
|
|
Position
|
Ronald N. Tutor |
|
62 |
|
Chairman, Chief Executive Officer and Director (Class II) |
Robert Band |
|
56 |
|
President, Chief Operating Officer and Director (Class I) |
Michael E. Ciskey |
|
53 |
|
Vice President, Chief Financial Officer |
Zohrab B. Marashlian |
|
59 |
|
President, Perini Civil Construction, a division of Perini |
Craig W. Shaw |
|
49 |
|
President, Perini Building Company, Inc., a wholly owned subsidiary of Perini |
Peter Arkley |
|
49 |
|
Director (Class III) |
Wayne L. Berman |
|
46 |
|
Director (Class I) |
James A. Cummings |
|
58 |
|
Director (Class III) |
Frederick Doppelt |
|
84 |
|
Director |
Asher B. Edelman |
|
63 |
|
Director |
Robert A. Kennedy |
|
67 |
|
Director (Class II) |
Michael R. Klein |
|
61 |
|
Director (Class I) |
Raymond R. Oneglia |
|
55 |
|
Director (Class III) |
Ronald N. Tutor
has served as our Chief Executive Officer since March 2000 and as one of our directors since January 1997. He has also served as our Chairman since July 1999. He previously served as our Vice Chairman from January 1998 to July 1999, and Chief
Operating Officer from January 1997 until March 2000 when he became Chief Executive Officer. Mr. Tutor also serves as chairman, president and chief executive officer of Tutor-Saliba Corporation, a California corporation engaged in the construction
industry.
Robert Band has served as a director since
May 1999. He has also served as Chief Operating Officer since March 2000 and as President since May 1999. He previously served as Chief Executive Officer from May 1999 until March 2000, Executive Vice President and Chief Financial Officer from
December 1997 until May 1999 and President of Perini Management Services, Inc. since January 1996.
Michael E. Ciskey has served as Chief Financial Officer since November 2003 and as Vice President since May 1984. He previously served as Corporate
Controller from April 1999 until November 2003, Operations Controller from May 1998 until April 1999 and as Division Controller for various Perini civil construction business units from 1984 until 1998.
Zohrab B. Marashlian has served as President of Perini Civil
Construction, a division of Perini that is responsible for Perinis civil construction operations, since December 1997. From April 1995 until December 1997, he served as President of Perinis Metropolitan New York Division.
Craig W. Shaw has served as President of Perini Building Company, a
wholly owned subsidiary of Perini that is responsible for Perinis building construction operations, since October 1999. From April 1995 until October 1999, he served as President of Perini Building Company, Western U.S. Division.
Peter Arkley has served as a director since May 2000. He has served
as Western Regional Managing Director of AON Risk Services, Inc., an insurance and bonding brokerage firm, since January 1996.
Wayne L. Berman has served as a director since March 2002. He has served as founder and chief executive officer of Berman Enterprises, Inc., a
business development consultancy company since January 1993.
James A. Cummings has served as a director since March 2003. He has served as Chairman and Chief Executive Officer of James A. Cummings, Inc. since 2001. He previously served as President of Cummings from 1981 until 2001.
49
Frederick Doppelt has served as a director since May 1998. He has been a self-employed attorney
specializing in trust and estate matters since 1983.
Asher
B. Edelman has served as a director since May 2001. Mr. Edelman has served as general partner of Asco Partners, a general partner of Edelman Securities Company L.P. (formerly Arbitrage Securities Company) since June 1984 and is a General Partner
and Manager of various investment partnerships and funds. Mr. Edelman also serves as chairman of the board of directors of Canal Capital Corporation, a company engaged in the management and development of agri-business related real estate properties
and chairman of the board of directors of Cattle Sale Company, formerly Dynacore Holdings Corp., a provider of auction trading services to beef and dairy producers. On May 3, 2000, while Mr. Edelman was chairman of the board of directors,
Dynacore Holdings Corporation filed for bankruptcy pursuant to Chapter 11 of the United States Bankruptcy Code. Dynacore Holdings Corp. emerged from bankruptcy in December 2000. In addition, Mr. Edelman was a member of a member-managed limited
liability company that was a general partner in each of the following two partnerships that declared bankruptcy pursuant to Chapter 11 of the United States Bankruptcy Code: Papier I Partners, L.P. and Papier II Partners, L.P.
Robert A. Kennedy has served as a director since March 2000. From 1994
to 2003, Mr. Kennedy served in various capacities for The Union Labor Life Insurance Company, a provider of insurance and certain financial services to its union members and related trust funds, including as Vice President of Special Projects from
2001 to 2003. Mr. Kennedy currently serves as a consultant to The Union Labor Life Insurance Company.
Michael R. Klein has served as a director since January 1997 and as Vice Chairman of our Board since September 2000. Mr. Klein has been a partner
of the law firm of Wilmer, Cutler & Pickering since 1974. Mr. Klein also serves as chairman of the board of directors of CoStar Group, Inc., a provider of commercial real estate information, and as a director of SRA International, Inc., a
provider of technology services and solutions to the United States federal government organizations.
Raymond R. Oneglia has served as a director since March 2000. He has also served as vice chairman of the board of directors of O&G Industries,
Inc., a Connecticut corporation engaged in the construction industry, since 1997 and has served in various operating and administrative capacities since 1970.
Information Regarding our Board of Directors
Our affairs are managed under the direction of our Board of Directors. Our Directors serve until their successors are duly elected and qualified or until
their earlier resignation, removal or disqualification. There are no family relationships between our directors and executive officers. For certain relationships between Perini and our directors see Certain Transactions. The Board of
Directors met four times during 2002. Our Board of Directors is divided into three approximately equal classes, each of whose members will serve for a staggered three-year term. Our Board of Directors consists of Mr. Band, Mr. Berman and Mr. Klein
as Class I directors, whose term of office will continue until the 2006 annual meeting of stockholders, Mr. Kennedy and Mr. Tutor as Class II directors, whose term of office will continue until the 2004 annual meeting of stockholders, and Mr.
Arkley, Mr. Cummings and Mr. Oneglia as Class III directors, whose term of office will continue until the 2005 annual meeting of stockholders.
The holders of the $21.25 Preferred Stock have the right to elect, voting as a separate class, two directors in the event that dividends on the $21.25
Preferred Stock are in arrears for at least six quarters. We have not paid any dividends on the $21.25 Preferred Stock since 1995. Mr. Edelman and Mr. Doppelt have been elected by the holders of the $21.25 Preferred Stock to serve as directors of
Perini, and their terms will continue until the 2004 annual meeting of stockholders.
During 2002 all of our Directors attended at least 75% of the meetings of our Board of Directors and committees of which they are members, except for Peter Arkley who attended approximately 38% of such meetings.
50
Committees of Our Board of Directors
Audit Committee
Our Board of Directors has an Audit Committee, which consists of Raymond R. Oneglia, Michael R. Klein and Robert A. Kennedy. We believe that each of the
members of the Audit Committee is independent under the rules of the American Stock Exchange. The Audit Committee met nine times during 2002 and is required to have at least four regular meetings each year. The primary duties and responsibilities of
the Audit Committee are to oversee that management:
|
|
|
maintains the integrity of our internal controls, financial systems and financial statements; |
|
|
|
maintains compliance with legal and regulatory requirements and our Business Conduct Policy; and |
|
|
|
monitors the independence and performance of both our internal and external auditors. |
Compensation Committee
Our Board of Directors has a Compensation Committee, which consists of Raymond R. Oneglia, Michael R. Klein and Peter Arkley. The duties of the
Compensation Committee are summarized in The Compensation Committee Report on pages 52 through 54 herein. The Compensation Committee met four times during 2002 and is required to have at least two regular meetings each year.
Nominating Committee
Our Board of Directors has a Nominating Committee, which consists of Raymond R. Oneglia, Michael R. Klein and Ronald N.
Tutor. The duties of the Nominating Committee include identifying individuals qualified to become directors and recommending to the Board the persons to be nominated for election as directors at the annual meeting of stockholders.
Directors Compensation
During 2002, fees for our outside directors consisted of an annual retainer
fee of $25,000, plus $900 per Board meeting attended, as well as $900 per Committee meeting attended by members of the Audit, Compensation and Nominating Committees. Mr. Ronald N. Tutor, our Chairman since July 1, 1999 and our Chairman and Chief
Executive Officer since March 29, 2000, has opted to receive no director fees since he is party to a Management Agreement described in Certain Transactions below.
On September 10, 2003, the directors fees were reviewed and the following changes made: The Chair of the Audit
Committee will receive an additional annual retainer fee of $10,000 and each member will receive a per meeting fee of $2,000 for meetings attended in person and $500 for meetings attended telephonically. In addition, the per meeting fee of $900 for
attendance at meetings of the Board of Directors, Compensation and Nominating Committees was reduced to $300 for members that attend telephonically.
Director and Officer Indemnification
Our charter provides that no director shall be personally liable to us or to our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability for any breach of the directors duty of loyalty to us or our stockholders, for acts or omissions not in good faith, for acts or omissions involving intentional misconduct or a knowing violation of law or for any
transaction from which the director derived an improper personal benefit. Our bylaws provide that our directors and officers will be indemnified against liabilities that arise from their service as directors and officers, subject to certain
exceptions. We have entered into agreements with our directors and officers that also provide for such indemnification and expenses and liability reimbursement. We have obtained insurance which insures our directors and officers against certain
losses and which insures us against our obligations to indemnify our directors and officers.
51
Tutor-Saliba Management Agreement
In January 1997 we entered into a management agreement with Tutor-Saliba and Ronald N. Tutor, chief executive officer and
sole stockholder of Tutor-Saliba, pursuant to which Mr. Tutor provides us with certain management services. This agreement is described under Certain TransactionsTutor-Saliba Management Agreement.
Employment Agreement with James A. Cummings
Mr. Cummings, a director of Perini, serves as chief executive officer of
Cummings pursuant to an employment agreement dated January 21, 2003. The employment agreement has a five-year term, subject to termination by notice. The employment agreement provides for an initial base salary of $250,000 through May 31, 2004 with
the opportunity to earn an annual bonus of 100% of base salary if certain performance goals are met by Cummings. Under the employment agreement, Mr. Cummings is entitled to participate in any compensation, benefit and insurance programs maintained
by us in which our senior executives are eligible to participate and certain other benefits, including reimbursement for automobile leases, general contracting license fees and any continuing education fees to maintain such license and certain
reimbursements for country club dues.
If Mr. Cummings
employment is terminated by Cummings without cause or Mr. Cummings terminates his employment with Cummings for cause (as such term is defined in the employment agreement), then Mr. Cummings is entitled to receive his base salary until the earlier of
(i) one year from the date of termination or (ii) the expiration of the employment agreement, subject to certain limitations, a pro rata portion of his annual bonus and approximately $727,000 as payment for amounts otherwise due to Mr. Cummings in
January 2008 under the purchase agreement pursuant to which we acquired Cummings. The agreement contains confidentiality and noncompetition provisions applicable to Mr. Cummings that are customary for an agreement of this type.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the board of directors
or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our Board of Directors or Compensation Committee. None of the current members of
our Compensation Committee has ever been an employee of Perini.
Executive
Officers
Each officer serves at the discretion of our
Board of Directors and holds office until his or her successor is elected and qualified or until his or her earlier resignation or removal.
The Compensation Committee Report
During 2002, the Compensation Committee of our Board of Directors consisted of three Directors, none of whom is an employee or an officer of Perini. The
principal powers and duties of the Compensation Committee as established by the Board of Directors are:
|
1. |
To review the Executive Compensation programs and policies and to employ outside expert assistance, if required, to analyze our compensation practices to assure that they are
consistent with corporate goals and objectives, and competitive with those of comparable firms in the construction industry; |
|
2. |
To recommend to the Board of Directors for its approval the base compensation of our Chairman and Chief Executive Officer and to review and approve the salary recommendations of our
Chairman and Chief Executive Officer with respect to other members of top management; |
|
3. |
To recommend to the Board of Directors annual profit and other targets for Perini for the purpose of determining incentive compensation awards under the provisions of the Amended
and Restated General and Construction Business Unit Incentive Compensation Plans, or the Incentive Compensation Plan; and |
52
|
4. |
To administer the Incentive Compensation Plan; such administration includes power to (i) approve Participants participation in the plan, (ii) establish performance goals,
(iii) determine if and when any bonuses shall be paid, (iv) pay out any bonuses, in cash or stock or a combination thereof, as the Committee shall determine from year to year, (v) construe and interpret the Incentive Compensation Plan, and (vi)
establish rules and regulations and perform all other acts it believes reasonable and proper. |
Compensation Policy
The Compensation Committee strives to maintain corporate base salaries and the total compensation package appropriate to attract and retain highly qualified executives. This results in base salaries that generally are at the median range of
those of other construction companies but allows executives to substantially exceed the median compensation levels when incentive compensation is earned. While recognizing that it may be difficult to find other companies with the same mix of
business as Perini, the Committee, nevertheless, believes that a comparison with other construction companies is appropriate.
The compensation program for executive officers is composed of three elements: base salaries, annual incentive bonuses and long-term incentive stock
awards. These elements of compensation are designed to provide incentives to achieve both short-term and long-term objectives and to reward exceptional performance. Salaries and annual incentive compensation bonuses result in payment for performance
and are tied to the achievement of profit and/or cash flow targets. The value of the incentive stock awards depends upon the appreciation in market value of our common stock.
Executive Salary Increases in 2002
Although certain members of top management designated as Named Executive Officers in the Summary Compensation Table on page 55 did not receive
salary increases in 2001, they did receive salary increases at the beginning of 2002 that ranged from 15% to 32%. Other senior officers received salary increases in March 2002 that ranged from approximately 3 1/2% to 5 1/2%.
Section 162 (m) of the Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to our Chief Executive Officer and four other most highly compensated executive
officers. The Compensation Committee has not established any policy regarding annual compensation to such executive officers in excess of $1,000,000. However, to date, none of our officers has received compensation in excess of $1,000,000 for any
annual period.
Compensation of the Chairman and Chief Executive Officer
Our Chairman and Chief Executive Officer, Ronald N.
Tutor, is generally compensated for his services under a management services contract between Perini and Tutor-Saliba Corporation, a company in which Mr. Tutor is the chief executive officer and sole stockholder, at an annual rate of $250,000,
which represented the same annual rate as 2001. In addition, Mr. Tutor was awarded $231,000 in incentive compensation for 2002.
The Perini Incentive Compensation Plan
The Incentive Compensation Plan is an integral part of the total compensation package of the Chairman and Chief Executive Officer, as well as the six
executives whose salaries were reviewed by the Compensation Committee in 2002 and approximately 55 other employees. Eligibility and designated levels of participation are determined by the Chairman and Chief Executive Officer subject to Compensation
Committee approval. Eligibility to participate under the Incentive Compensation Plan is limited to individuals who are executives, managers and key employees of Perini and our wholly owned subsidiaries, whose duties and responsibilities provide them
the opportunity to (i) make a material and significant impact to our financial performance; (ii) have major responsibility in the control of the corporate assets; and (iii) provide critical staff support necessary to enhance operating profitability.
53
Under the terms of the Incentive Compensation Plan, participants can achieve incentive compensation
awards ranging from zero to as much as 100% of base salary, which depends on the achievement of certain corporate goals, as defined. In addition, the Committee has the authority, when appropriate, to make certain discretionary incentive compensation
awards. The mechanisms of the Incentive Compensation Plan are expressed in terms of levels of participation, points deriving therefrom calculated on base salary, and achievement of our net income target for the year.
No sums attributed to a participant in the Incentive Compensation Plan become
vested until the Compensation Committee approves the payment, usually in March following the year earned. At the discretion of the Committee, payment can be made in cash, stock or a combination of cash and stock.
In 2003, the Committee authorized the payment of $3,912,000 of incentive
compensation payments for 2002 operations, to 62 participants. Payment of incentive compensation awards for 2002 performance were paid 100% in cash.
COMPENSATION COMMITTEE |
Raymond R. Oneglia, Chair |
Peter Arkley |
Michael R. Klein |
54
Executive Compensation and Other Information
Summary of Cash and Certain Other Compensation
The following table sets forth the cash compensation paid by us and our subsidiaries, as well as certain other compensation
paid or accrued for those years, to our Chief Executive Officer and each of our three other most highly compensated Executive Officers whose salary and bonus exceeded $100,000 (the Named Executive Officers) for the years ended December
31, 2002, 2001 and 2000, or for each year in which a Named Executive Officer served as such.
Summary Compensation Table
Name and Principal Position
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation
|
|
All Other Compensation (3)
|
|
|
|
|
|
|
|
|
|
Awards
|
|
Payouts
|
|
|
Annual Compensation
|
|
Number of Securities Underlying Options Granted
|
|
Long-Term Performance Units Payout
|
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Other (1),(2)
|
|
|
|
Ronald N. Tutor Chairman and Chief Executive Officer |
|
2002 2001 2000 |
|
$ |
|
|
$ |
231,000 250,000 |
|
$ |
250,000 250,000 250,000 |
|
1,000,000 |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
Robert Band President and Chief Operating Officer |
|
2002 2001 2000 |
|
|
375,000 285,000
284,500 |
|
|
346,000 385,000 284,500 |
|
|
|
|
200,000 |
|
|
|
|
|
2,800 200 1,200 |
|
|
|
|
|
|
|
|
Zohrab B. Marashlian President, Perini Civil Construction |
|
2002 2001 2000 |
|
|
375,000 325,000
323,600 |
|
|
325,000 425,000 323,600 |
|
|
|
|
400,000 |
|
|
|
|
|
2,800 200 1,300 |
|
|
|
|
|
|
|
|
Craig W. Shaw President, Perini Building Company, Inc. |
|
2002 2001 2000 |
|
|
375,000 325,000
323,600 |
|
|
348,000 425,000 385,500 |
|
|
|
|
400,000 |
|
|
|
|
|
2,800 200 1,300 |
(1) |
Other annual compensation does not include a dollar amount which we are unable to quantify, but which is estimated at not more than the lesser of $50,000 or 10% of the
salary and bonus reported for each Named Executive Officer, resulting from executive perquisites which may be of personal benefit to such individuals. |
(2) |
Represents a management services fee paid to Tutor-Saliba Corporation of which Mr. Tutor is the chief executive officer and sole stockholder. See Certain
TransactionsTutor-Saliba Management Agreement. |
(3) |
All Other Compensation primarily represents estimated annual Perini 401(k) retirement contributions for each of the Named Executive Officers, except for Mr. Tutor.
|
55
Equity Compensation Plans
The following table sets forth certain summary information with respect to stock options granted and available for future
grants under equity compensation plans approved and not approved by our stockholders as of December 31, 2002:
Equity Compensation Plan Information
Plan category
|
|
Shares of Common Stock to be issued upon exercise of outstanding options
|
|
Weighted-average exercise price of outstanding options
|
|
Shares of Common Stock remaining available for future issuance under equity compensation plans (excluding shares
of Common Stock reflected in column (a))
|
|
|
(a) |
|
(b) |
|
(c) |
Equity Compensation Plans: Approved by Stockholders -
Special Equity Incentive Plan* |
|
2,733,034 |
|
$ |
4.50 |
|
187,300 |
1982 Stock Option Plan* |
|
67,500 |
|
|
5.29 |
|
|
Not approved by Stockholders - |
|
|
|
|
|
|
|
Options Granted to Certain Directors and Executive Officers* |
|
435,000 |
|
$ |
7.92 |
|
|
|
|
|
|
|
|
|
|
Total |
|
3,235,534 |
|
$ |
4.98 |
|
187,300 |
|
|
|
|
|
|
|
|
* |
For detailed information concerning our equity compensation plans, see Note 9 entitled Stock Options of Notes to Consolidated Financial Statements.
|
Special Equity Incentive Plan - On May 25, 2000, our
stockholders approved our Special Equity Incentive Plan. The aggregate number of shares of common stock that may be subject to outstanding options under the plan is 3,000,000 shares. As of September 30, 2003, options to purchase a total of 2,812,700
shares of common stock have been granted, options to purchase 258,066 shares of common stock have been exercised and 195,634 shares remain available for future grants under this plan.
Under the plan we are authorized to grant non-qualified stock options to our key executives, employees and directors.
Options granted under the plan may not be granted at less than 100% of the fair market value of a share of common stock as of the date of grant and must be exercised within ten years of the date of grant.
The plan is administered by the Compensation Committee or other committee
designated by the Board of Directors (the Plan Administrator). Subject to the provisions of the plan, the Plan Administrator has the authority to select the persons to whom options are granted and determine the terms of each option,
including the number of options to be granted and the vesting schedule of each option. Unless otherwise permitted by us, options are not assignable or transferable except by will or the laws of descent and distribution.
The Plan Administrator may, in its sole discretion, amend, modify, or
terminate any option granted or made under the plan, so long as such amendment, modification or termination would not materially and adversely affect the participant. The Plan Administrator may also, in its sole discretion, accelerate or extend the
date or dates on which all or any particular option or options granted under the plan may be exercised.
1982 Stock Option Plan - During 2002, the provisions of the 1982 Stock Option Plan expired. Therefore, the only shares of our authorized, but unissued, common stock still reserved under this plan are the 67,500
shares applicable to the remaining outstanding options.
56
Option Exercises and Holdings
The following table sets forth information with respect to our Named Executive Officers concerning the exercise of options
during the year ended December 31, 2002 and unexercised options held as of December 31, 2002:
Aggregated Option Exercises in the Last Fiscal Year
and Fiscal Year-End Option Values
Name
|
|
Number of Securities Underlying Shares Acquired on Exercise
|
|
Value Realized
|
|
Number of Unexercised Options at December 31, 2002
|
|
Value of Unexercised In-the-Money Options at December 31, 2002
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
Ronald N. Tutor |
|
|
|
$ |
|
|
1,225,000 |
|
|
|
$ |
|
|
$ |
|
Robert Band |
|
|
|
|
|
|
237,500 |
|
|
|
|
|
|
|
|
Zohrab B. Marashlian |
|
|
|
|
|
|
475,000 |
|
|
|
|
|
|
|
|
Craig W. Shaw |
|
|
|
|
|
|
475,000 |
|
|
|
|
|
|
|
|
There were no stock
options or Stock Appreciation Rights granted to any of the Named Executive Officers during the year ended December 31, 2002.
Incentive Compensation Plans
We have an incentive compensation plan for certain employees at the corporate level (The Perini Corporation Amended and Restated (1997) General Incentive
Compensation Plan), or corporate plan, and an incentive compensation plan for certain employees at the business unit level (The Perini Corporation Amended and Restated Construction Business Unit Incentive Compensation Plan), or business unit plan.
Under these plans, eligibility and designated levels of participation are determined by our Chief Executive Officer subject to Compensation Committee approval. Eligibility to participate under the corporate plan is limited to individuals who are
executives, managers and key employees at the corporate level and eligibility to participate under the business unit plan is limited to individuals who are managers and key employees at our construction business unit level.
Under the terms of the plans, participants can receive incentive compensation
awards ranging from zero to as much as 100% of base salary. Awards are based on established corporate goals, levels of achievement of these goals and the base salaries and individual bonus limits assigned to the participants. In addition, the actual
incentive compensation amounts available to participants at a business unit are based on the level of achievement of the corporate goal applied to the profit generated by that business unit. No amounts attributed to a participant in the plans become
vested until the Compensation Committee approves the payment, usually in March following the year earned. At the discretion of the Compensation Committee, payment can be made in cash, stock or a combination of cash and stock. Incentive compensation
for the Named Executive Officers is included in the Summary Compensation Table under the Bonus column.
401(k) Plan
We have a tax-qualified Section 401(k) Retirement Plan covering all of our executive, professional, administrative and clerical employees who are over 21
years of age and who have completed three months of service with us. Under the 401(k) plan, participants may elect to defer a portion of their compensation on a pre-tax basis and have it contributed to the plan. In addition, we make employer
contributions into the 401(k) plan based on a non-discretionary match of employees contributions, as defined, since 2002. Prior to 2002, our contribution to the 401(k) plan was based on a specified level of profits, subject to certain
limitations, as well as approval by our Board of Directors of any discretionary contributions.
57
Pension Plan Disclosure
The following table sets forth pension benefits payable based on an employees remuneration (final average earnings) and years
of service as defined under our non-contributory Retirement Plan for all its full-time employees, and to the extent covered remuneration is limited by the Internal Revenue Code of 1986, as amended, pension benefits payable have been augmented
based on our Benefit Equalization Plan:
|
|
Pension Plan Table Estimated Annual Pension Benefits (2) for Years of Service Indicated
(3)
|
Remuneration (1)
|
|
15 Years
|
|
20 Years
|
|
25 Years
|
|
30 Years
|
|
35 Years
|
$ 125,000 |
|
$ 23,688 |
|
$ 31,583 |
|
$ 39,479 |
|
$ 39,479 |
|
$ 39,479 |
150,000 |
|
29,313 |
|
39,083 |
|
48,854 |
|
48,854 |
|
48,854 |
175,000 |
|
34,938 |
|
46,583 |
|
58,229 |
|
58,229 |
|
58,229 |
200,000 |
|
40,563 |
|
54,083 |
|
67,604 |
|
67,604 |
|
67,604 |
225,000 |
|
46,188 |
|
61,583 |
|
76,979 |
|
76,979 |
|
76,979 |
250,000 |
|
51,813 |
|
69,083 |
|
86,354 |
|
86,354 |
|
86,354 |
300,000 |
|
63,063 |
|
84,083 |
|
105,104 |
|
105,104 |
|
105,104 |
400,000 |
|
85,563 |
|
114,083 |
|
142,604 |
|
142,604 |
|
142,604 |
500,000 |
|
108,063 |
|
144,083 |
|
180,104 |
|
180,104 |
|
180,104 |
(1) |
Remuneration covered by the plan and the Benefit Equalization Plan is limited to an employees annual salary and for the Named Executive Officers is limited to the amounts in
the Annual Salary column included in the Summary Compensation Table on page 55. |
(2) |
The estimated annual benefits are calculated on a straight-line annuity basis and are not subject to any further deductions for Social Security since the Plan formula integrates the
calculation of the benefits with certain adjustments for Social Security, as defined. |
(3) |
The estimated credited years of service for our Named Executive Officers are as follows: R. Band (29 years), Z.B. Marashlian (30 years) and C.W. Shaw (24 years).
|
58
CERTAIN TRANSACTIONS
Tutor-Saliba Management
Agreement
In January 1997, we entered into a management
agreement with Tutor-Saliba, a California corporation engaged in the construction industry, and Ronald N. Tutor, chief executive officer and sole stockholder of Tutor-Saliba, to provide certain management services. The management agreement has been
renewed annually under the same basic terms and conditions as the initial agreement except that the amount of the fee payable thereunder by us to Tutor-Saliba was increased effective January 1, 2000, from $150,000 to $250,000 per year and effective
January 1, 2004, from $250,000 to $375,000 per year. Effective December 31, 2001, Mr. Tutor will be included as a participant in our incentive compensation plan. Tutor-Saliba initially held 351,318 shares of our common stock before
Tutor-Salibas additional investment in our common stock effective March 29, 2000. Since January 17, 1997, Mr. Tutor has been a member of our Board of Directors and an officer of Perini and effective July 1, 1999 was elected Chairman of our
Board of Directors and effective March 29, 2000 was elected Chairman and Chief Executive Officer.
Compensation for the management services consists of payments to Tutor-Saliba under the management agreement described above, options granted to Mr. Tutor
and incentive compensation awarded to Mr. Tutor as a participant in our incentive compensation plan. See ManagementSummary Compensation Table. All of the stock options granted to Mr. Tutor were granted at or above fair market value
on the date of grant, are currently exercisable and are otherwise summarized below:
Grant Date
|
|
Option Price Per Share
|
|
Number of Shares
|
|
Expiration Date
|
01-17-97 |
|
$8.3750 |
|
150,000 |
|
01-16-05 |
12-10-98 |
|
$5.2875 |
|
45,000 |
|
12-09-06 |
01-04-99 |
|
$5.1250 |
|
30,000 |
|
01-03-07 |
03-29-00 |
|
$4.5000 |
|
1,000,000 |
|
03-28-10 |
Series B Preferred Stock Exchange
Effective March 29, 2000, a new investor group led by
Tutor-Saliba, and including O&G Industries, Inc., or O&G, and National Union Fire Insurance Company of Pittsburgh, Pa., or National Union, a wholly owned subsidiary of American International Group, Inc., or AIG, collectively purchased
9,411,765 shares of our common stock, hereafter referred to as the Purchase Shares, for $40 million, or $4.25 per share, in what we refer to herein as the Transaction. Each of Tutor-Saliba, O&G and National Union are
referred to herein individually as a Purchaser, and collectively as the Purchasers. In connection therewith, we exchanged 7,490,417 shares of common stock for all of the outstanding shares of Series B Preferred Stock at an
exchange price of $5.50 per share of common stock, hereafter referred to as the Exchange. See Principal and Selling Stockholders.
Perini and the Purchasers and former holders of the Series B Preferred Stock entered into a Shareholders Agreement and a Registration Rights
Agreement at the closing of the Transaction. Among other things, the Shareholders Agreement provides for the following:
|
|
|
That between the third and sixth anniversaries of the closing of the Transaction, National Union will have a put right to cause Tutor-Saliba and/or Mr. Tutor or certain
permitted transferees to purchase half (but not less than half) of its Purchase Shares at a price so that National Union earns a 10% internal rate of return on its investment in such shares. During the same period Tutor-Saliba will have a
call right to cause National Union and/or its permitted transferees, if any, to sell such shares to Tutor-Saliba at a price so that National Union earns a 14% internal rate of return on its investment in such shares. In addition to the
foregoing put and call rights, National Union will have a right of first refusal on Tutor-Salibas disposition of its Purchase Shares and Tutor-Saliba will have a right of first refusal on one half of National Unions Purchase Shares.
|
59
|
|
|
Subject to the right of first refusal described in the prior paragraph, the parties to the Shareholders Agreement have certain tag-along rights. If any party to
the Shareholders Agreement desires to sell its shares, each of the non-selling parties to the Shareholders Agreement will have the right to participate in such sale and to dispose of its pro rata share of the stock to be sold in such
transaction. However, National Union may sell up to one half of its Purchase Shares without triggering the foregoing tag-along right. |
|
|
|
Each of the parties to the Shareholders Agreement has the right to subscribe to any new issuance of equity securities (except for certain issuances such as conversions of
convertible securities, exercises of options or issuances pursuant to a benefit plan) by us in an amount up to such stockholders pro rata share of the new issuance of securities based on its percentage ownership of our outstanding common
stock. |
|
|
|
The Shareholders Agreement gives National Union, Tutor-Saliba, O&G, PB Capital and The Union Labor Life Insurance Company acting on behalf of its Separate Account P, or
ULLICO, the right to designate one director each for election to our Board of Directors. We agreed to nominate such individuals for election or appointment to our Board of Directors at the earliest possible time, to use our best efforts to cause
such persons to be elected to the Board, and to renominate each such person (or other person as may be designated by National Union, Tutor-Saliba, O&G, PB Capital or ULLICO) at such time as he or she is required to stand for reelection to the
Board. The right to designate a person to be elected as a director terminates in the case of each Purchaser when such Purchaser and its permitted transferees own less than 25% of the common stock purchased by such Purchaser in the Transaction and in
the case of PB Capital and ULLICO, when such stockholder and its permitted transferees own less than 5% of the outstanding shares of common stock received by such party in the Exchange. Each of PB Capital and ULLICO also has certain observer rights
on the Board until such time as it ceases to own 2.5% of the outstanding shares of common stock. Each party to the Shareholders Agreement has agreed to vote all of its shares in favor of the directors designated by each of the other parties
thereto. |
After this offering, ULLICO will not
hold any of our outstanding common stock and, as a result, it will no longer have the right to designate a director for election or appoint an observer on our Board of Directors.
Since the common stock issued in connection with the Transaction and the Exchange was not registered under the Securities
Act of 1933, as amended, we entered into a Registration Rights Agreement with the Purchasers and former holders of the Series B Preferred Stock which requires us, under certain circumstances, to register some or all of the shares held by such
parties under the Securities Act after March 29, 2003. See Description of Capital StockRegistration Rights Agreements.
Joint Ventures
Tutor-Saliba Joint Ventures
Historically, we have participated in joint ventures with Tutor-Saliba both on a sponsored and a non-sponsored basis and currently participate in certain joint ventures with them, our share of which contributed $36.8 million (or 4.2%),
$48.8 million (or 4.5%), $17.9 million (or 1.1%) and $4.6 million (or 0.4%) to our consolidated revenues for the nine months ended September 30, 2003 and the years ended December 31, 2002, 2001 and 2000, respectively.
In late 2000, we entered into a joint venture arrangement with Tutor-Saliba,
the sponsoring partner, whereby we were to primarily provide certain prequalification and proposal support services to the joint venture in return for a fixed fee of $500,000 payable subsequent to the award and start-up of the project. In addition,
the agreement provided that we would not be liable for any costs, losses, liabilities or damages that may arise from the project. Payment of the fee was received from Tutor-Saliba in February 2002. In late 2001, we entered into a similar joint
venture arrangement with Tutor-Saliba, the sponsoring partner, whereby we were to primarily
60
provide certain prequalification and proposal support services to the joint venture in return for a fixed fee of $200,000 payable subsequent to the award and
start-up of the project. In addition, the agreement provided that we would not be liable for any costs, losses, liabilities or damages that may arise from the project. Payment of the fee was received from Tutor-Saliba in February 2002.
In late 2002, we entered into an arrangement with Tutor-Saliba whereby
Tutor-Saliba provided a financial guarantee in order for us to secure a performance and payment bond on a building project with an estimated contract value of approximately $135 million. As compensation for the financial guarantee, we paid
Tutor-Saliba a fee of $1.0 million in February 2003.
As more
fully discussed in BusinessLegal Proceedings, we have been a party to certain joint ventures with Tutor-Saliba in the past which are currently in litigation.
O&G Joint Ventures
We also participated in certain joint ventures with O&G Industries, Inc., of which Raymond R. Oneglia, a director of Perini, is vice chairman of the
board of directors. Our share of these joint ventures contributed $0.9 million and $0.6 million to our consolidated revenues for the nine months ended September 30, 2003 and the year ended December 31, 2001, respectively.
AIG Relationship
National Union Fire Insurance Company of Pittsburgh, Pa., a wholly owned subsidiary of AIG, is one of our sureties and a
provider of insurance and insurance related services to us. Payments to AIG for surety, insurance and insurance related services approximated $6.3 million, $9.5 million, $8.2 million and $4.6 million for the nine months ended September 30, 2003 and
the years ended December 31, 2002, 2001 and 2000, respectively.
Tender
Offer for Depositary Shares
On June 9, 2003, we completed
a tender offer for our Depositary Shares at a purchase price of $25.00 per Depositary Share, net to the seller without interest. See Managements Discussion and Analysis of Financial Condition and Results of OperationsRecent
Developments. Mr. Asher Edelman, a director of Perini, tendered or caused to be tendered 174,500 Depositary Shares that he beneficially owned or controlled.
61
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information concerning beneficial ownership as of December 15, 2003 of our common stock by:
|
|
|
each person known by us to beneficially own 5% or more of our common stock and total as a group; and; |
|
|
|
each of our directors and each of our executive officers for whom compensation information is given in the Summary Compensation Table in this prospectus. |
Pursuant to the Registration Rights Agreement described under
Description of Capital StockRegistration Rights Agreements, certain of the stockholders listed below have requested that we register for sale their previously unregistered shares. The following table sets forth the number of shares
of common stock beneficially owned by all of our principal stockholders (including the selling stockholders) as of December 15, 2003, the number of shares of common stock covered by this prospectus and the percentage of total shares of common stock
that the selling stockholders will beneficially own upon completion of this offering if such percentage exceeds one percent. This table assumes that the selling stockholders will offer for sale all of the shares of common stock covered by this
prospectus.
The amounts and information set forth below are
based upon information provided to us by representatives of the selling stockholders, or on our records, as of December 15, 2003 and are accurate to the best of our knowledge. It is possible, however, that the selling stockholders may acquire or
dispose of additional shares of common stock from time to time after the date of this prospectus.
|
|
Shares Beneficially Owned Prior to the Offering (1)
|
|
|
|
|
Shares Beneficially Owned After the Offering (3)
|
|
Name and Address
|
|
Shares
|
|
|
%
|
|
|
Amount Offered (2)
|
|
Shares
|
|
|
%
|
|
Beneficial Ownership of 5% or More |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tutor-Saliba Corporation 15901 Olden
Street Sylmar, CA 91342 |
|
6,527,729 |
(4),(10) |
|
27.07 |
% |
|
|
|
6,527,729 |
|
|
27.07 |
% |
|
|
|
|
|
|
National Union Fire Insurance Company of Pittsburgh, Pa. 70 Pine Street New York, NY 10270 |
|
4,705,882 |
(5),(10) |
|
20.56 |
% |
|
2,046,036 |
|
2,659,846 |
|
|
11.62 |
% |
|
|
|
|
|
|
O&G Industries, Inc. 112 Wall
Street Torrington, CT 06790 |
|
2,502,941 |
(6),(10) |
|
10.94 |
% |
|
|
|
2,502,941 |
|
|
10.94 |
% |
|
|
|
|
|
|
Blum Capital Partners, L.P. 909 Montgomery
Street, Suite 400 San Francisco, CA 94133 |
|
5,485,324 |
(7),(10) |
|
23.97 |
% |
|
22,421 |
|
3,117,147 |
(8) |
|
13.62 |
% |
|
|
|
|
|
|
PB Capital Partners, L.P. 909 Montgomery
Street, Suite 400 San Francisco, CA 94133 |
|
4,244,149 |
(10) |
|
18.55 |
% |
|
1,183,408 |
|
3,060,741 |
|
|
13.37 |
% |
|
|
|
|
|
|
The Common Fund for Non-Profit Organizations c/o Blum Capital Partners, L.P. 909 Montgomery Street, Suite 400 San Francisco, CA 94133 |
|
1,162,348 |
(10) |
|
5.08 |
% |
|
1,162,348 |
|
|
|
|
|
|
|
|
|
|
|
|
The Union Labor Life Insurance Company, acting on behalf of Separate Account P 111 Massachusetts Avenue, NW Washington, DC 20001 |
|
1,721,075 |
(9),(10) |
|
7.52 |
% |
|
1,496,587 |
|
224,488 |
|
|
0.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total beneficial owners of more than 5% of Perinis Common Stock |
|
18,590,010 |
(11) |
|
77.10 |
%(11) |
|
5,910,800 |
|
12,679,210 |
(12) |
|
52.59 |
%(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
|
|
Shares Beneficially Owned Prior to the Offering (1)
|
|
|
|
|
Shares Beneficially Owned After the Offering (3)
|
|
Name
|
|
Shares
|
|
|
%
|
|
|
Amount Offered (2)
|
|
Shares
|
|
%
|
|
Beneficial Ownership of Directors and Executive Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald N. Tutor |
|
6,527,729 |
(13) |
|
27.07 |
% |
|
|
|
6,527,729 |
|
27.07 |
% |
Robert Band |
|
242,011 |
(14) |
|
1.05 |
% |
|
|
|
242,011 |
|
1.05 |
% |
Peter Arkley |
|
4,700 |
(15) |
|
* |
|
|
|
|
4,700 |
|
* |
|
Michael R. Klein (16) |
|
202,255 |
(17) |
|
* |
|
|
|
|
202,255 |
|
* |
|
Robert A. Kennedy (18) |
|
6,000 |
(19) |
|
* |
|
|
|
|
6,000 |
|
* |
|
Raymond R. Oneglia (20) |
|
6,000 |
(21) |
|
* |
|
|
|
|
6,000 |
|
* |
|
Wayne L. Berman |
|
|
|
|
* |
|
|
|
|
|
|
* |
|
James A. Cummings (22) |
|
|
|
|
* |
|
|
|
|
|
|
* |
|
Michael E. Ciskey |
|
33,000 |
(23) |
|
* |
|
|
|
|
33,000 |
|
* |
|
Zohrab B. Marashlian |
|
444,600 |
(24) |
|
1.91 |
% |
|
|
|
444,600 |
|
1.91 |
% |
Craig W. Shaw |
|
447,120 |
(25) |
|
1.92 |
% |
|
|
|
447,120 |
|
1.92 |
% |
Frederick Doppelt |
|
54,622 |
(26) |
|
* |
|
|
|
|
55,622 |
|
* |
|
Asher B. Edelman |
|
699 |
(27) |
|
* |
|
|
|
|
699 |
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a group |
|
7,968,736 |
|
|
31.29 |
% |
|
|
|
7,969,736 |
|
31.29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Represents less than 1% of the outstanding shares of common stock |
(1) |
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to
securities. Shares of common stock and options or warrants that are currently exercisable or exercisable within 60 days of December 15, 2003 are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose
of computing the percentage ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. |
(2) |
The number of shares being sold excludes any shares that may be sold as a result of the exercise by the underwriters of their over-allotment option. |
(3) |
Based on 22,885,535 shares of common stock outstanding as of December 15, 2003. |
(4) |
Includes 2,704,260 shares of common stock that represent sole voting and investing power based on information contained in Schedule 13D/A of Tutor-Saliba Corporation, or
Tutor-Saliba, dated April 5, 2000. Ronald N. Tutor, our Chairman and Chief Executive Officer, is also the sole stockholder and chief executive officer of Tutor-Saliba. Also includes 1,225,000 shares for which Mr. Tutor holds options and 2,352,941
shares for which Tutor-Saliba has the right to call and purchase from National Union Fire Insurance Company of Pittsburgh, Pa., or National Union, during a three-year period commencing on March 29, 2003 in accordance with the Shareholders
Agreement discussed under Certain Transactions. Also includes 245,528 shares of common stock representing Tutor-Salibas former limited partnership interest in PB Capital Partners, L.P., or PB Capital (see Note 7 below), that was
distributed to Tutor-Saliba on November 13, 2003. Upon such distribution by PB Capital, Tutor-Salibas limited partnership interest in PB Capital was liquidated. |
(5) |
Represents shared voting and investment powers based on information contained in Schedule 13D/A of American International Group, Inc., the parent company of National Union, filed on
April 12, 2000. See Certain Transactions. |
(6) |
Represents sole voting and investment powers based on information contained in Schedule 13D of O&G Industries, Inc., or O&G, filed on February 15, 2000 and as updated for
O&Gs participation in the Transaction, as described in Certain Transactions. |
(7) |
Blum Capital Partners, L.P., or BCP, formerly known as Richard C. Blum & Associates, L.P., is the sole general partner of PB Capital. The amount in the table includes:
|
|
|
|
4,244,149 shares of common stock held by PB Capital, over which BCP beneficially has shared voting and investment power; |
63
|
|
|
49,801 shares of common stock held by a limited partner of PB Capital for which BCP serves as an investment advisor; |
|
|
|
1,162,348 shares held by The Common Fund for Non-Profit Organizations for the account of its Equity Fund, or The Common Fund, a fund for which BCP serves as an investment adviser
and over which BCP beneficially has shared voting and investment power; and |
|
|
|
29,026 shares of common stock held directly by BCP (22,421 shares of which are being sold in this offering, see Note 8 below). |
Until November 13, 2003, Tutor-Saliba was a limited partner of PB Capital.
See Note 4 above and Note 13 below. Richard C. Blum & Associates, Inc., or RCBA Inc., also at 909 Montgomery Street, Suite 400, San Francisco, California 94133, is the sole general partner of BCP. Richard C. Blum is the chairman of the board of
directors and a substantial shareholder of RCBA Inc. Mr. Blum disclaims beneficial ownership of the securities reported in the table except to the extent of his pecuniary interest therein. The Common Fund expressly disclaims membership in any group
with BCP, Richard C. Blum or any other related entity and disclaims beneficial ownership of securities owned directly or indirectly by any other person or entity. Also, see Certain Transactions.
(8) |
Includes (a) 3,060,741 shares of common stock held by PB Capital after this offering, over which BCP beneficially has shared voting and investment power, (b) 6,605 shares of common
stock which will be held directly by BCP and (c) the 49,801 shares of common stock held by a limited partner of PB Capital for which BCP serves as an investment advisor. |
(9) |
Represents sole voting and investing power based on information contained in Schedule 13D/A dated April 12, 2000, filed by The Union Labor Life Insurance Company, or ULLICO. Also,
see Certain Transactions. |
(10) |
Pursuant to the Shareholders Agreement discussed under Certain Transactions, these stockholders and Perini agreed to, among other things, nominate certain
individuals designated by these stockholders for election or appointment to our Board of Directors and the stockholders have agreed to vote for each of the designated nominees. |
(11) |
The share amount and share percentage eliminates the duplication relating to (a) PB Capitals 4,224,149 shares of common stock and The Common Funds 1,162,348 shares of
common stock listed separately above and also included in the totals for BCP (see Note 7 above) and (b) 2,352,941 shares of common stock included in Tutor-Salibas total for which Tutor-Saliba has the right to call and purchase from National
Union (see Note 4 above) and also included in National Unions total (see Note 5 above). |
(12) |
The share amount and share percentage eliminates the duplication relating to (a) PB Capitals 3,060,741 shares of common stock which are also included in BCPs total (see
Note 7 above) and (b) 2,352,941 shares of common stock included in Tutor-Salibas total for which Tutor-Saliba has the right to call and purchase from National Union (see Note 4 above) and also included in National Unions total (see Note
5 above). |
(13) |
Includes 2,704,260 shares held in the name of Tutor-Saliba Corporation, a company in which Mr. Tutor is the sole stockholder and chief executive officer. See Note 4 above. Also
includes 1,225,000 shares for which Mr. Tutor holds options and 2,352,941 shares for which Tutor-Saliba Corporation has the right to call and purchase from National Union during a three-year period commencing on March 29, 2003 in accordance with the
Shareholders Agreement discussed under Certain Transactions. Also includes 245,528 shares of common stock representing Tutor-Salibas former limited partnership interest in PB Capital (see Note 7 above), that was distributed
to Tutor-Saliba on November 13, 2003. Upon such distribution by PB Capital, Tutor-Salibas limited partnership interest in PB Capital was liquidated. |
(14) |
Includes 237,500 shares for which Mr. Band holds options. |
(15) |
Includes 4,700 shares for which Mr. Arkley holds options. |
(16) |
Mr. Klein was originally elected to our Board of Directors as the designated nominee of PB Capital, a partnership that owned 4,224,149 shares of common stock and a partnership whose
sole general partner is BCP. BCP is an investment advisor to The Common Fund for Non-Profit Organizations for the account of its Equity Fund that owns 1,162,348 shares of common stock. Mr. Klein generally disclaims beneficial ownership in these
shares owned by these entities. See Note 7 and Note 17. |
64
(17) |
Includes 7,261 shares of common stock received in payment of the directors annual retainer from 1997 to 1999. See ManagementDirectors Compensation.
Also includes 133,000 shares for which Mr. Klein holds options. Includes (a) 53,694 shares of common stock representing Mr. Kleins former limited partnership interest in PB Capital (see Note 7 above), and (b) 8,300 shares of common stock
representing his minor childrens interest in the same partnership that were distributed to Mr. Klein on November 13, 2003. As a result of such distribution, Mr. Kleins limited partnership interest and the limited partnership interest of
his minor children were liquidated. |
(18) |
Mr. Kennedy is the designated nominee to the Board of Directors of ULLICO, a company that owns 1,721,075 shares of common stock on behalf of its Separate Account P and a company in
which Mr. Kennedy was the Vice President of Special Projects until his retirement in 2003. Mr. Kennedy disclaims any beneficial ownership of these shares. See Note 9 above. |
(19) |
Includes 6,000 shares for which Mr. Kennedy holds options. |
(20) |
Mr. Oneglia is the designated nominee to the Board of Directors of O&G, a company that owns 2,502,941 shares of common stock, and a company in which Mr. Oneglia is the vice
chairman. Mr. Oneglia disclaims any beneficial ownership of these shares. See Note 6 above. |
(21) |
Includes 6,000 shares for which Mr. Oneglia holds options. |
(22) |
Mr. Cummings appointment as a director was in accordance with the terms of the Stock Purchase and Sale Agreement dated December 16, 2002 between Perini, James A. Cummings,
Inc. and the James A. Cummings, Inc. stockholders, of which Mr. Cummings was one, whereby Perini purchased 100% of the outstanding common stock of James A. Cummings, Inc. effective as of January 1, 2003. See Note 14 entitled Subsequent
Events of Notes to Consolidated Financial Statements. |
(23) |
Includes 33,000 shares for which Mr. Ciskey holds options. |
(24) |
Includes 444,600 shares for which Mr. Marashlian holds options. |
(25) |
Includes 445,000 shares for which Mr. Shaw holds options. |
(26) |
Includes 3,121 shares of common stock received in payment of the 1999 directors annual retainer and 8,000 shares for which Mr. Doppelt holds options. See
ManagementDirectors Compensation. Also includes 42,501 shares of common stock resulting from the assumed conversion of 64,200 Depositary Shares at a conversion rate of .662 shares of common stock for each Depositary Share. Of
the 64,200 Depositary Shares, 2,000 Depositary Shares are owned by Mr. Doppelts wife and 17,600 shares are owned by trusts or estates as to which Mr. Doppelt serves as trustee and disclaims any beneficial ownership. The percentage of
Depositary Shares beneficially owned by Mr. Doppelt to the total number of shares of Depositary Shares outstanding is 11.48%. Mr. Doppelt is a plaintiff in a suit against certain current and former directors of Perini with respect to the Depositary
Shares, discussed under BusinessLegal Proceedings$21.25 Preferred Shareholders Class Action Lawsuit. |
(27) |
Includes 199 shares of common stock resulting from the assumed conversion of 300 Depositary Shares at a conversion rate of .662 shares of common stock for each Depositary Share.
These shares are held by a custodian on behalf of certain funds for which Mr. Edelmans firm is an investment advisor. Mr. Edelman tendered, or caused to be tendered, 174,500 Depositary Shares that he beneficially owned or controlled in the
tender offer which we completed on June 9, 2003 at a purchase price of $25.00 per Depositary Share net to the seller, without interest. The percentage of Depositary Shares now beneficially owned by Mr. Edelman to the total number of shares of
Depositary Shares outstanding is less than 1%. |
Each of the principal stockholders listed above as well as certain of our directors and executive officers listed above have agreed, subject to certain exceptions, not to dispose of or hedge any common stock or any securities convertible
into or exchangeable or exercisable for any shares of our common stock without the prior consent of Credit Suisse First Boston LLC for a period of 90 days after the date of this prospectus. As of the date of this filing, two of our directors, who
currently beneficially own 56,321 shares of our common stock (including 42,700 shares of common stock issuable upon conversion of Depositary Shares at a conversion rate of .662 shares of common stock for each Depositary Share), have not signed the
lock-up agreements described above. See Underwriting. Following the expiration of the lock-up period, the shareholders party thereto will be able to dispose of certain of their shares of common stock pursuant to the Registration Rights
Agreement discussed under Description of Capital StockRegistration Rights Agreements.
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DESCRIPTION OF CAPITAL STOCK
Our
articles of organization, as amended, authorize the issuance of 40,000,000 shares of common stock, par value $1.00 per share and 1,000,000 shares of preferred stock, par value $1.00 per share. As of September 30, 2003, there were 22,842,535 shares
of common stock outstanding, 55,927 shares of $21.25 Preferred Stock outstanding, 370,239 shares of common stock reserved for issuance upon conversion of the $21.25 Preferred Stock, options to purchase 3,048,800 shares of common stock outstanding,
and warrants to purchase 420,000 shares of our common stock outstanding.
Common Stock
Subject to the rights of the
holders of preferred stock then outstanding, holders of common stock are entitled to one vote per share on matters to be voted on by stockholders and are entitled to receive such dividends, if any, as may be declared from time to time by our Board
of Directors in its discretion out of funds legally available therefor. Upon our liquidation or dissolution, the holders of common stock are entitled to receive pro rata all assets remaining available for distribution to stockholders after payment
of all liabilities and provision for the liquidation of any shares of preferred stock at the time outstanding. The common stock has no preemptive or other subscription rights, and there are no conversion rights or redemption or sinking fund
provisions with respect to such stock. The payment of dividends on the common stock is subject to the prior payment of dividends on any outstanding preferred stock. Further, our revolving credit facility, as well as certain other agreements,
provides for, among other things, maintaining specified working capital and tangible net worth levels and limitations on indebtedness, all of which could impact our ability to pay dividends. The foregoing summary of the common stock does not purport
to be complete and is subject to and qualified in its entirety by our charter and the laws of the Commonwealth of Massachusetts.
Preferred Stock
Our charter authorizes the issuance of 1,000,000 shares of preferred stock, par value $1.00 per share. Currently, 100,000 shares of preferred stock are
designated as the $21.25 Convertible Exchangeable Preferred Stock, of which 55,927 shares are outstanding, and 200,000 shares are designated as Series A Junior Participating Cumulative Preferred Stock in connection with the adoption of our
Shareholder Rights Plan described below. Our authorized but unissued preferred stock may be issued from time to time in one or more series, without stockholders approval. Subject to limitations prescribed by law and by our charter, the Board
of Directors is authorized to determine the relative rights and preferences for each series of preferred stock that may be issued, and to fix the number of shares of such series. Thus, our Board of Directors, without stockholder approval, could
authorize the issuance of additional preferred stock with voting, conversion and other rights that could adversely affect the voting power and other rights of holders of our common stock or that could make it more difficult for another company to
effect certain business combinations with us.
Notwithstanding
the fixing of the number of shares constituting a particular series, our Board of Directors may at any time authorize the issuance of additional shares of the same series. Any preferred stock converted, redeemed, exchanged or otherwise acquired by
us will, upon cancellation, have the status of authorized but unissued preferred stock undesignated as to series subject to reissuance by our Board of Directors.
$21.25 Preferred Stock
Holders of shares of $21.25 Preferred Stock are entitled to receive an annual cash dividend of $21.25 per share, or $2.125 per Depositary Share, when and
as declared by the Board of Directors out of funds legally available for such purposes. Unless full cumulative dividends have been paid or declared, no cash dividends may be declared or paid or other cash distribution made on the common stock.
Holders of the $21.25 Preferred Stock are entitled at any time to convert shares of $21.25 Preferred Stock into our common stock at the conversion price of $377.50, subject to adjustment in certain circumstances. Each share of the $21.25 Preferred
Stock is
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exchangeable, in whole but not in part, at our option, for $250 principal amount of our 8 1/2% Convertible Subordinated Debentures Due 2012. Holders of such debentures will be entitled at any time to convert such debentures into common stock at the conversion price of
$377.50 per Depositary Share, subject to adjustment in certain circumstances.
The $21.25 Preferred Stock is redeemable at our option, in whole or in part, at specified redemption prices per share. The $21.25 Preferred Stock is not entitled to vote, except as to certain matters in regard to the
creation of an additional series of preferred stock or in the event of an arrearage on dividends. The terms of the $21.25 Preferred Stock provide that if six quarterly dividends on the $21.25 Preferred Stock shall have accumulated and been unpaid,
the number of directors on our Board will be increased by two and the holders of the $21.25 Preferred Stock, voting together as a class with any other series of preferred stock with the same rank similarly affected, will be entitled to elect those
additional two directors until all dividends in default have been paid or declared and funds have been set apart for payment therefor, at which time those two directors would resign from our Board and the number of directors would be reduced by two.
While quarterly dividends on the $21.25 Preferred Stock have not been paid since 1995, they have been fully accrued due to the cumulative feature of the $21.25 Preferred Stock. As a result of exceeding the six-quarter limitation, the
holders of the $21.25 Preferred Stock have been entitled to elect two additional Directors, and they have done so at each of the last six annual meetings of stockholders. As discussed under Managements Discussion and Analysis of
Financial Condition and Results of OperationsDividends$21.25 Preferred Stock, there are no plans for payment of any such dividends.
In the event of an involuntary liquidation, or an amount equal to the then applicable optional redemption price in the event of a voluntary liquidation,
holders of the $21.25 Preferred Stock are entitled to receive a liquidating distribution of $250 per share.
The outstanding $21.25 Preferred Stock are represented by Depositary Shares. Each Depositary Share (evidenced by a depositary receipt) represents a
one-tenth fractional interest in the respective share of $21.25 Preferred Stock (including dividend, voting, redemption and liquidation rights and preferences). The $21.25 Preferred Stock have been deposited with EquiServe Trust Company, N.A., as
Depositary, under a Deposit Agreement between Perini, EquiServe Trust Company, N.A., and the holders from time to time of the depositary receipts issued under the Deposit Agreement. The depositary receipts evidence the Depositary Shares.
Stock Purchase Warrants
As of September 30, 2003, we have reserved 420,000 shares of common stock
for issuance upon the exercise of stock purchase warrants issued in January 1997 to members of our banking group at that time in connection with an amended credit agreement. The warrants are exercisable at a per share exercise price of $8.30 subject
to anti-dilution adjustment in the event of certain distributions and other corporate events. The warrants expire on January 17, 2007.
Registration Rights Agreements
Registration Rights Agreements
The following is a summary of material terms and provisions of registration rights agreements that we have entered into with certain existing
stockholders.
In March 2000, we entered into a registration
rights agreement with certain existing stockholders, as may hereafter be referred to as the March 2000 Registration Rights Agreement. Under this agreement, we granted these stockholders the right to require us, subject to the terms and conditions
set forth in the agreement, to register shares of common stock held by them for sale.
Each of the stockholders that is a party to this agreement may request one demand registration, except National Union, which may request two. Subject to limitations set forth in this agreement, the parties also have
the right to
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participate in any demand registration requested by any other stockholder that is a party to the agreement. In addition, we have granted the parties to this
agreement the right, subject to exceptions set forth therein, to participate in registrations of common stock initiated by us on our own behalf or on behalf of any other stockholder. BCP, PB Capital and The Common Fund have exercised their right
requiring us to register a portion of their shares under the Securities Act, precipitating this offering. All of the other selling stockholders named in this offering have exercised their piggyback rights in connection with this offering.
Under the March 2000 Registration Rights Agreement, we are
required to pay the fees and expenses of the selling stockholders in connection with any demand and piggyback registrations. We also have agreed to indemnify the holders of registration rights under this agreement against specified liabilities,
including liabilities under the Securities Act, and to contribute to payments they may be required to make. The March 2000 Registration Rights Agreement will terminate on the earlier of the date upon which the parties to the agreement no longer hold
any shares of common stock that must be registered in order to be sold or the date upon which the parties agree that the agreement should be terminated.
In December 2003, we entered into a letter agreement with BCP, PB Capital and The Common Fund, hereinafter collectively referred to as the Blum parties.
Under this letter agreement, we granted these stockholders an additional demand registration right to require us, subject to the terms and conditions set forth in the letter agreement, to register shares of common stock held by them for sale. The
letter agreement provides that this demand registration right is subject to certain terms and conditions set forth in the March 2000 Registration Rights Agreement discussed above. Parties to the March 2000 Registration Rights Agreement may
participate in the demand registration of common stock requested by the Blum parties.
Under this letter agreement, we agreed to pay the fees and expenses of the selling stockholders in connection with the exercise of their demand right and any piggyback registrations. This letter agreement will not
become effective, and the Blum holders will have no right to exercise their demand registration rights until this Registration Statement has become effective. Under this letter agreement, the Blum holders may exercise their demand registration
rights until they no longer hold any shares of common stock that must be registered in order to be sold.
Warrantholders Rights Agreement
In January 1997, we issued warrants to purchase our common stock to members of our banking group in connection with an amended credit agreement. As part of this issuance, we entered into a warrantholder rights agreement with the
warrantholders. Under this agreement, we granted these warrantholders the right to require us, upon request by holders of a majority of warrants and common stock received upon exercise of warrants, subject to the terms and conditions set forth in
this agreement, to register the resale of shares of the common stock held by them upon exercise of their warrants. Under this agreement, we agreed to pay the fees and expenses of one counsel to the selling stockholders in connection with their
registration. We have also agreed to indemnify the holders of these registration rights under this agreement against specified liabilities, including liabilities under the Securities Act, and to contribute to payments that they may be required to
make. This warrantholders rights agreement will terminate on the date upon which the parties to the warrantholders rights agreement no longer hold any shares, or warrants to purchase shares, of common stock that must be registered in order to be
sold. The warrants expire in January 2007.
Shareholder Rights Plan
We have adopted a Shareholder Rights Plan pursuant to
which we issued one preferred stock purchase right, or a Right, for each outstanding share of common stock. Each Right entitles the registered holder to purchase
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from us a unit consisting of one one-hundredth of a share of Series A Junior Participating Cumulative Preferred Stock, par value $1.00 per share, or the
Series A Preferred Stock, at a cash exercise price of $100 per unit, subject to adjustment. Each share of Series A Preferred Stock will be entitled to receive a minimum preferential quarterly dividend equal to the greater of $20.00 or 100 times the
dividend payable to holders of shares of common stock. In the event of a liquidation, no distribution shall be made (x) to the holders of stock ranking junior to the Series A Preferred Stock unless, prior thereto, the holders of Series A Preferred
Stock receive a distribution equal to the greater of $10,000.00 or 100 times the payment made for each share of common stock or (y) to the holders of any other class or series of stock ranking on a parity (either as to dividends or liquidation
preferences) with the Series A Preferred Stock except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which holders of all such shares are entitled upon a liquidation.
The Series A Preferred Stock ranks junior to the $21.25 Preferred Stock with respect to dividends and liquidation preferences but senior to the common stock.
The Shareholder Rights Plan may have the effect of delaying, deferring or preventing a change in control of us. State Street Bank and Trust Company is the
agent for the Rights. Currently, the Rights are not exercisable and are attached to all outstanding shares of common stock and will be attached to the shares of common stock being offered hereby. No separate Right Certificates will be distributed
until the distribution date. Upon occurrence of the distribution date, the Rights will separate from the common stock.
Under the Shareholder Rights Plan, the distribution date is defined as the earlier of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons is an acquiring person (the date of said announcement being referred to as the stock acquisition date), or (ii) 10 business days following the commencement of a tender offer or exchange
offer that would result in a person or group becoming an acquiring person, or (iii) the declaration by the Board of Directors that any person is an adverse person.
Under the Shareholder Rights Plan, an acquiring person is defined as a person or group of affiliated or
associated persons (other than us and certain of our affiliates and other exempted persons) that has acquired beneficial ownership of 10% or more of the outstanding shares of common stock.
Under the Shareholder Rights Plan, an adverse person is defined
as any individual, group, firm, corporation, partnership or other entity (other than us and certain of our affiliates and other exempted persons) declared to be an adverse person by our Board of Directors upon a determination of our Board that the
criteria set forth in the Shareholder Rights Plan apply to such individual, group or entity.
In the event that a stock acquisition date occurs or our Board of Directors determines that a person is an adverse person, proper provision will be made so that after the distribution date each holder of a Right will
thereafter have the right to receive upon exercise that number of units of Series A Preferred Stock having a market value of two times the exercise price of the Right, such right hereafter referred to as the subscription right. In the
event that, at any time following the stock acquisition date, (i) we are acquired in a merger or other business combination transaction or (ii) 50% or more of our assets or earning power is sold, after the distribution date each holder of a Right
shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a market value equal to two times the exercise price of the Right, such right hereafter referred to as a merger right. The holder of
a Right will continue to have the merger right whether or not such holder has exercised the subscription right. Rights that are or were beneficially owned by an acquiring person or an adverse person may (under certain circumstances specified in the
Shareholder Rights Plan) become null and void. At any time after a stock acquisition date occurs or the Board of Directors determines that a person is an adverse person, the Board of Directors may, at its option, exchange all or any part of the then
outstanding and exercisable Rights for shares of common stock or units of preferred stock at an exchange ratio of one share of common stock or one unit of preferred stock per Right.
The Rights may be redeemed in whole, but not in part, at a price of $0.02 per Right (payable in cash, common stock or other
consideration deemed appropriate by the Board of Directors) by the Board of Directors at
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any time prior to the date on which a person is declared to be an adverse person, the tenth day after the stock acquisition date or the occurrence of an
event giving rise to the merger right. Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and thereafter the only right of the holders of Rights will be to receive the redemption price.
Until a Right is exercised, the holder will have no rights as a stockholder of Perini (beyond those as an existing stockholder, including the right to vote or to receive dividends).
On January 17, 1997, the Board of Directors amended our Shareholder Rights Plan to (i) permit the acquisition of the Series
B Preferred Stock by certain investors, any additional preferred stock issued as a dividend thereon, any common stock issued upon conversion of the Series B Preferred Stock and certain other events without triggering the distribution of the Rights
and (ii) extend the expiration date of the Shareholder Rights Plan from September 23, 1998 to January 21, 2007. In addition, our Board of Directors amended the Shareholder Rights Plan, effective March 29, 2000, to permit the transactions as
described in under Certain TransactionsSeries B Preferred Stock Exchange and certain other events without triggering the distribution of the Rights.
Massachusetts Anti-Takeover Laws
We are subject to Chapter 110F of the Massachusetts General Laws, an anti-takeover law. In general, this statute prohibits a publicly held Massachusetts
corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction which results in the stockholder becoming an interested stockholder, unless:
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our Board of Directors approves the business combination or transaction which results in the stockholder becoming an interested stockholder prior to such event; or
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the interested stockholder acquires at least 90% of our outstanding voting stock, excluding shares held by certain of our directors who also serve as our officers and by certain
employee stock plans, at the time it becomes an interested stockholder; or |
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the business combination is approved by both our Board of Directors and the holders of two-thirds of our outstanding voting stock at a meeting of stockholders, excluding shares held
by the interested stockholder. |
The Massachusetts
General Laws defines the term business combination to include a merger, a stock or asset sale, and certain other transactions resulting in a financial benefit to the interested stockholder. An interested stockholder is
generally a person who, together with affiliates and associates, owns, or within three years, owned, 5% or more of our voting stock.
Our bylaws include a provision excluding us from the applicability of Massachusetts General Laws Chapter 110D, entitled Regulation of Control Share
Acquisitions. In general, this statute provides that any stockholder of a corporation subject to this statute who acquires 20% or more of the outstanding voting stock of a corporation may not vote such stock unless the stockholders of the
corporation so authorize. Our Board of Directors may amend our bylaws at any time to subject us to this statute prospectively.
Certain Anti-takeover Provisions of our Charter and Bylaws
Our charter and bylaws contain provisions which may prevent, discourage or delay any change in the control of Perini and may make it more difficult to
remove a member of the Board of Directors or management. These provisions include:
Blank Check Preferred Stock
Our Board of
Directors has the authority to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to effect a change in control or takeover of Perini.
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Staggered Board of Directors
Massachusetts General Laws Chapter 156B, Section 50A requires publicly-held Massachusetts corporations, such as Perini, to
have a classified board of directors consisting of three classes as nearly equal in size as possible, unless the corporation elects to opt out of the statutes coverage. Our Board of Directors is currently divided into three classes. Each class
of directors serves a three-year term. The classification of Directors could have the effect of making it more difficult for our stockholders, including those holding a majority of the outstanding shares, to force an immediate change in the
composition of our Board.
Director Removal and Vacancies
Pursuant to our bylaws, stockholders may effectuate the removal of a
director only for cause and with the affirmative vote of the majority of shares outstanding and entitled to vote. Vacancies in our Board of Directors may be filled only by the affirmative vote of a majority of the directors then in office.
Meeting of Stockholders
Our bylaws provide that a special meeting of stockholders may be called by
our Chairman, President, our Board of Directors, or upon written application of one or more stockholders who hold at least 40% of our common stock entitled to vote at such meeting. In addition, our bylaws include advance notice and information
requirements and time limitations on any director nomination or any new proposal which a stockholder desires to make at an annual meeting of stockholders.
Limitation on Liability and Indemnification of Directors and Officers
Our charter provides that no director shall be personally liable to us or to our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability for any breach of the directors duty of loyalty to us or our stockholders, for acts or omissions not in good faith, for acts or omissions involving intentional misconduct or a knowing violation of law or for any
transaction, or for any transaction from which the director derived an improper personal benefit. Our bylaws provide that our directors and officers will be indemnified against liabilities that arise from their service as directors and officers,
subject to certain exceptions. We have entered into agreements with our directors and officers that also provide for such indemnification and expenses and liability reimbursement. We have obtained insurance which insures our directors and officers
against certain losses and which insures us against our obligations to indemnify the directors and officers.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is EquiServe Trust Company, N.A.
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SHARES ELIGIBLE FOR FUTURE SALE
We cannot predict what effect, if any, market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of our common stock. Nevertheless, sales of substantial amounts of common
stock, including shares issued upon the exercise of outstanding options, in the public market, or the perception that these sales could occur, could materially and adversely affect the market price of our common stock and could impair our future
ability to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate.
As of the close of business on December 15, 2003, we had outstanding an aggregate of 22,885,535 shares of common stock, and this offering will not affect
the number of our outstanding shares. All the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except that any shares held by our Affiliates, as that term is
defined under Rule 144 of the Securities Act, may be sold only in compliance with the limitations described below.
Assuming the underwriters do not exercise their over-allotment option, additional shares of our common stock will be available for sale in the public
market under exemptions from registration requirements subsequent to the expiration of the lock-up agreements described below, as follows:
Number of Shares
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Date
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14,064,896 |
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After 90 days from the date of this prospectus |
Tutor-Saliba, Ronald
N. Tutor, BCP, National Union, PB Capital, O&G and ULLICO, which will beneficially own 52.6% of our shares (or 48.9% if the underwriters exercise their over-allotment option in full) upon the closing of this offering, have the ability, subject
to certain restrictions, to cause us to register the resale of certain of their shares.
Rule 144
In general, under Rule 144 as
currently in effect, a person (or persons whose shares are required to be aggregated), including an affiliate, who has beneficially owned shares of our common stock for at least one year is entitled to sell in any three-month period a number of
shares that does not exceed the greater of:
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1% of then-outstanding shares of common stock, or 228,856 shares; and |
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the average weekly trading volume in the common stock on the American Stock Exchange during the four calendar weeks preceding the date on which notice of sale is filed, subject to
restrictions. |
Sales under Rule 144 are also
subject to manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 144(k)
In addition, a person who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale and who has beneficially owned
the shares proposed to be sold for at least two years, would be entitled to sell those shares under Rule 144(k) without regard to the manner of sale, public information, volume limitation or notice requirements of Rule 144. To the extent that our
affiliates sell their shares, other than pursuant to Rule 144 or a registration statement, the purchasers holding period for the purpose of effecting a sale under Rule 144 commences on the date of transfer from the affiliate.
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Lock-Up Agreements
We have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to
make any offer, sale, pledge, disposition or filing, without the prior written consent of Credit Suisse First Boston LLC for a period of 90 days after the date of this prospectus.
Our officers, certain of our directors and the principal stockholders have agreed, subject to certain exceptions, that they
will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction
that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by
delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the
prior written consent of Credit Suisse First Boston LLC for a period of 90 days after the date of this prospectus. As of the date of this filing, two of our directors, who currently beneficially own 56,321 shares of our common stock (including
42,700 shares of common stock issuable upon conversion of Depositary Shares at a conversion rate of .662 shares of common stock for each Depositary Share), have not signed the lock-up agreements described above.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
General
The following is a general discussion
of the material United States federal income and estate tax consequences of the ownership and disposition of common stock that may be relevant to you if you are a non-United States Holder. In general, a non-United States Holder is any
person or entity that is, for United States federal income tax purposes, a foreign corporation, a nonresident alien individual, a foreign partnership or a foreign estate or trust. This discussion is based on current law, which is subject to change,
possibly with retroactive effect, or different interpretations that could affect the tax consequences described herein. This discussion is limited to non-United States Holders who hold shares of common stock as capital assets. Moreover, this
discussion is for general information only and does not address all the tax consequences that may be relevant to you in light of your personal circumstances, nor does it discuss special tax provisions that may apply to you if you relinquished United
States citizenship or residence.
If you are an individual, you
may, in many cases, be deemed to be a resident alien, as opposed to a nonresident alien, by virtue of being present in the United States for at least 31 days in the current calendar year and for an aggregate of at least 183 days during a three-year
period ending in the current calendar year. For the aggregate days test, all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are
counted. Resident aliens are subject to United States federal income tax as if they were United States citizens.
EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS ADVISED TO CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT AND POSSIBLE FUTURE TAX CONSEQUENCES OF PURCHASING,
OWNING AND DISPOSING OF OUR COMMON STOCK AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE AS A RESULT OF YOUR PARTICULAR SITUATION OR UNDER THE LAWS OF ANY UNITED STATES STATE, MUNICIPALITY, FOREIGN OR OTHER TAXING JURISDICTION.
Dividends
If dividends are paid on the common stock, as a non-United States Holder, you generally will be subject to withholding of
United States federal income tax at a 30% rate or at a lower rate as may be specified by an applicable income tax treaty, unless you are a foreign government or other foreign organization exempt from U.S. withholding. To claim the benefit of a lower
rate under an income tax treaty, you must properly file with the payor an Internal Revenue Service Form W-8BEN, or successor form, claiming an exemption from or reduction in withholding under the applicable tax treaty. In addition, where dividends
are paid to a non-United States Holder that is a partnership or other flow-through entity, the entity must properly file an Internal Revenue Service Form W-8IMY, or successor form, and persons holding an interest in the entity may need to provide
certification claiming an exemption or reduction in withholding under the applicable treaty.
If dividends are considered effectively connected with the conduct of a trade or business by you within the United States and, where a tax treaty applies, are attributable to a United States permanent establishment of
yours, those dividends generally will not be subject to withholding tax, but instead will be subject to United States federal income tax on a net basis at applicable graduated individual or corporate rates, provided you file an Internal Revenue
Service Form W-8ECI, or successor form, with the payor. If you are a foreign corporation, any effectively connected dividends may, under certain circumstances, be subject to an additional branch profits tax at a rate of 30% or at a lower
rate as may be specified by an applicable income tax treaty.
If you are a foreign government, foreign tax-exempt organization or other foreign organization exempt from U.S. withholding, you must properly file an Internal Revenue Service Form W-8EXP with the payor.
You must comply with either the certification procedures described above, or,
in the case of payments made outside the United States with respect to an offshore account, certain documentary evidence procedures, directly
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or under certain circumstances through an intermediary, to obtain the benefits of a reduced rate under an income tax treaty with respect to dividends paid
with respect to your common stock. In addition, if you are required to provide an Internal Revenue Service Form W-8ECI or successor form, as discussed above, you must also provide your tax identification number.
If you are eligible for a reduced rate of United States withholding tax
pursuant to an income tax treaty, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service.
Gain on Disposition of Common Stock
As a non-United States Holder, you generally will not be subject to United States federal income tax on any gain recognized on the sale or other
disposition of common stock unless:
|
|
|
the gain is considered effectively connected with the conduct of a trade or business by you within the United States and, where a tax treaty applies, is attributable to a United
States permanent establishment of yours (and, in which case, if you are a foreign corporation, you may be subject to an additional branch profits tax at a rate of 30% or at a lower rate as may be specified by an applicable income tax treaty).
|
|
|
|
you are an individual who holds the common stock as a capital asset and you are present in the United States for 183 or more days in the taxable year of the sale, or certain other
disposition and other conditions are met; or |
|
|
|
we are or have been a United States real property holding corporation, or a USRPHC, for United States federal income tax purposes. We believe that we are not
currently, and are not likely to become, a USRPHC. If we were to become a USRPHC, then gain on the sale or other disposition of common stock by you generally would not be subject to United States federal income tax provided:
|
|
|
|
the common stock was regularly traded on an established securities market; and |
|
|
|
you do not actually or constructively own more than 5% of the common stock during the shorter of the five-year period preceding the disposition or your holding period.
|
Federal Estate Tax
If you are an individual, common stock held at the time of your death will
be included in your gross estate for United States federal estate tax purposes, and may be subject to United States federal estate tax, unless an applicable estate tax treaty provides otherwise. You should consult your tax advisor for a full
discussion of United States federal estate tax treatment.
Information
Reporting and Backup Withholding Tax
We must report
annually to the Internal Revenue Service and to you the amount of dividends paid to you and the tax withheld with respect to those dividends, regardless of whether withholding was required. Copies of the information returns reporting those dividends
and withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty or other applicable agreements.
Backup withholding is currently imposed at a rate of 28% on certain payments
to persons that fail to furnish the necessary identifying information to the payor. You generally will be subject to backup withholding tax with respect to dividends paid on your common stock unless you certify your non-United States status.
75
The payment of proceeds of a sale of common stock effected by or through a United States office of a
broker is subject to both backup withholding and information reporting unless you provide the payor with your name and address and you certify your non-United States status or you otherwise establish an exemption. In general, backup withholding and
information reporting will not apply to the payment of the proceeds of a sale of common stock by or through a foreign office of a broker. If, however, such broker is, for United States federal income tax purposes, a United States person, a
controlled foreign corporation, a foreign person that derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States, or, a foreign partnership that at any time during its tax year either is
engaged in the conduct of a trade or business in the United States or has as partners one or more United States persons that, in the aggregate, hold more than 50% of the income or capital interest in the partnership, such payments will be subject to
information reporting, but not backup withholding, unless such broker has documentary evidence in its records that you are a non-United States Holder and certain other conditions are met or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules generally will be
allowed as a refund or a credit against your United States federal income tax liability provided the required information is furnished in a timely manner to the Internal Revenue Service.
76
UNDERWRITING
Under the terms and
subject to the conditions contained in an underwriting agreement dated , 2004, the selling stockholders have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston LLC is acting as representative, the following respective numbers of shares of common stock:
Underwriter |
|
Number of Shares
|
Credit Suisse First Boston LLC |
|
|
D.A. Davidson & Co. |
|
|
Morgan Joseph & Co. Inc. |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
The underwriting
agreement provides that the underwriters are obligated to purchase all the shares of common stock in the offering if any are purchased, other than those shares covered by the over-allotment option described below. The underwriting agreement also
provides that if an underwriter defaults the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.
The selling stockholders have granted to the underwriters a 30-day option to purchase on a pro rata basis up to an aggregate of 886,620 additional
outstanding shares at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of
this prospectus and to selling group members at that price less a selling concession of $ per share. The underwriters and selling group members may allow a discount of $
per share on sales to other broker/dealers. After the initial public offering, the representative may change the public offering price and concession and discount to broker/dealers.
The following table summarizes the compensation and estimated expenses we and
the selling stockholders will pay:
|
|
Per Share
|
|
Total
|
|
|
Without Over-allotment
|
|
With Over-allotment
|
|
Without Over-allotment
|
|
With Over-allotment
|
Underwriting Discounts and Commissions paid by us |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Expenses payable by us |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Underwriting Discounts and Commissions paid by selling stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Expenses payable by the selling stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
We have agreed that we
will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act relating to, any shares of our common stock or
securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Credit Suisse First Boston
LLC for a period of 90 days after the date of this prospectus.
Our officers, certain of our directors and principal stockholders have agreed that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible
into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in
77
whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our
common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written
consent of Credit Suisse First Boston LLC for a period of 90 days after the date of this prospectus, other than:
|
|
|
the shares of common stock sold in this offering; |
|
|
|
transactions by any person relating to shares of common stock or our other securities acquired in open market transactions after the date of this prospectus;
|
|
|
|
transfers of shares of common stock or any security convertible into or exercisable or exchangeable for our common stock as a bona fide gift or gifts; or |
|
|
|
(1) transfers or distributions of shares of common stock or any security convertible into or exercisable or exchangeable into our common stock to affiliates of that stockholder, (2)
if the stockholder is a partnership or corporation, a distribution to the partners or shareholders of that stockholder; or (3) transfers by the stockholder (or its distributee or transferee) of common stock or securities convertible into or
exercisable or exchangeable for our common stock to a family member of that stockholder (or its distributee or transferee) or trust created for the benefit of that stockholder (or its distributee or transferee), provided that, in each case, the
transferee or distributee agrees to be bound by the restrictions contained in that stockholders lock-up agreement. |
As of the date of this filing, two of our directors, who currently beneficially own 56,321 shares of our common stock (including 42,700 shares of common stock issuable
upon conversion of Depositary Shares at a conversion rate of .662 shares of common stock for each Depositary Share), have not signed the lock-up agreements described above.
We and the selling stockholders have agreed to indemnify the underwriters against liabilities under the Securities Act, or
contribute to payments that the underwriters may be required to make in that respect.
Certain of the underwriters and their respective affiliates may have from time to time performed and may in the future perform various financial advisory, commercial banking and investment banking services for us in
the ordinary course of business, for which they received or will receive customary fees.
In connection with the offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions, and penalty bids in accordance with Regulation M under the
Exchange Act.
|
|
|
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. |
|
|
|
Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position.
The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the
over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment
option and/or purchasing shares in the open market. |
|
|
|
Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short
positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase
|
78
|
shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short position,
the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after
pricing that could adversely affect investors who purchase in the offering. |
|
|
|
Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a
stabilizing or syndicate covering transaction to cover syndicate short positions. |
These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market
price of the common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on The American Stock Exchange and, if commenced, may be
discontinued at any time.
A prospectus in electronic format
may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may deliver prospectuses
electronically. The representative may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group
members that will make internet distributions on the same basis as other allocations.
79
NOTICE TO CANADIAN RESIDENTS
Resale
Restrictions
The distribution of the common stock in
Canada is being made only on a private placement basis exempt from the requirement that we and the selling stockholders prepare and file a prospectus with the securities regulatory authorities in each province where trades of common stock are made.
Any resale of the common stock in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary
exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common stock.
Representations of Purchasers
By purchasing common stock in Canada and accepting a purchase confirmation a purchaser is representing to us, the selling stockholders and the dealer from
whom the purchase confirmation is received that
|
|
|
the purchaser is entitled under applicable provincial securities laws to purchase the common stock without the benefit of a prospectus qualified under those securities laws,
|
|
|
|
where required by law, that the purchaser is purchasing as principal and not as agent, and |
|
|
|
the purchaser has reviewed the text above under Resale Restrictions. |
Rights of Action - Ontario Purchasers Only
Under Ontario securities legislation, a purchaser who purchases a security offered by this prospectus during the period of distribution will have a
statutory right of action for damages, or while still the owner of the shares, for rescission against us and the selling stockholders in the event that this prospectus contains a misrepresentation. A purchaser will be deemed to have relied on the
misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment
is made for the shares. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the shares. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no
right of action for damages against us or the selling stockholders. In no case will the amount recoverable in any action exceed the price at which the shares were offered to the purchaser and if the purchaser is shown to have purchased the
securities with knowledge of the misrepresentation, we and the selling stockholders will have no liability. In the case of an action for damages, we and the selling stockholders will not be liable for all or any portion of the damages that are
proven to not represent the depreciation in value of the shares as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser.
The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.
Enforcement of Legal Rights
All of our directors and officers as well as the experts named herein and the selling stockholders may be located outside of Canada and, as a result, it
may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.
Taxation and Eligibility for Investment
Canadian purchasers of common stock should consult their own legal and tax advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and about the eligibility of the common stock for investment by the purchaser under relevant Canadian legislation.
80
LEGAL MATTERS
The validity of
the shares of common stock offered by this prospectus will be passed upon by Goodwin Procter LLP, Boston, Massachusetts. The underwriters have been represented by Cravath, Swaine & Moore LLP, New York, New York.
EXPERTS
The consolidated
financial statements included in this prospectus and the related financial statement schedules included elsewhere in the registration statement have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein and elsewhere in the registration statement (which reports express an unqualified opinion and include an explanatory paragraph referring to a retroactive change in presentation of Perinis joint ventures in the consolidated
balance sheets from the equity method to the proportionate consolidation method and the restatement of basic and diluted earnings per share for the year ended December 31, 2000), and have been so included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and file reports, proxy statements and other information with the Securities and Exchange Commission. We have also filed with the
Securities and Exchange Commission a registration statement on Form S-1 to register our common stock. This prospectus, which forms part of the registration statement, does not contain all of the information included in the registration statement.
For further information about us and our common stock offered in this prospectus, you should refer to the registration statement and its exhibits. You may read and copy the registration statement and any other document we file with the Securities
and Exchange Commission at the Securities and Exchange Commissions Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the
operation of the Public Reference Room. In addition, the Securities and Exchange Commission maintains a web site that contains registration statements, reports, proxy statements and other information regarding registrants, such as us, that file
electronically with the Securities and Exchange Commission. The address of the web site is www.sec.gov. Except for the registration statement and its exhibits, the information we file with the Securities and Exchange Commission is not included or
incorporated in the registration statement and should not be relied upon by potential investors in determining whether to purchase shares of our common stock in this offering.
Our common stock is listed on the American Stock Exchange under the symbol PCR, and you may also read and copy
the documents referenced above at the offices of the American Stock Exchange, 86 Trinity Place, New York, New York 10006.
81
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Page
|
AUDITED FINANCIAL STATEMENTS |
|
|
|
|
Independent Auditors Report |
|
F-2 |
|
|
Consolidated Balance Sheets as of December 31, 2002 and 2001 |
|
F-3 |
|
|
Consolidated Statements of Income for the year ended December 31, 2002, 2001 and 2000 |
|
F-4 |
|
|
Consolidated Statements of Stockholders Equity for the year ended December 31, 2000, 2001 and 2002 |
|
F-5 |
|
|
Consolidated Statements of Cash Flows for the year ended December 31, 2002, 2001 and 2000 |
|
F-6 |
|
|
Notes to Consolidated Financial Statements |
|
F-7 |
|
|
UNAUDITED FINANCIAL STATEMENTS |
|
|
|
|
Consolidated Condensed Balance Sheets (Unaudited) as of September 30, 2003 and December 31, 2002 |
|
F-34 |
|
|
Consolidated Condensed Statement of Income (Unaudited) for the Nine Months Ended September 30, 2003 and 2002 |
|
F-35 |
|
|
Consolidated Condensed Statements of Stockholders Equity (Unaudited) for the Nine Months Ended September 30, 2003 |
|
F-36 |
|
|
Consolidated Condensed Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2003 and 2002 |
|
F-37 |
|
|
Notes to Consolidated Condensed Financial Statements |
|
F-38 |
F-1
Independent Auditors Report
To the Stockholders of Perini Corporation:
We have audited the accompanying consolidated balance sheets of PERINI CORPORATION (a Massachusetts corporation) and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income,
stockholders equity and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our
audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Perini
Corporation and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in
the United States of America.
As discussed in Note (1)(b) to
the consolidated financial statements, in 2002 the Company changed its method of reporting its interests in construction joint ventures in the Consolidated Balance Sheets from the equity method to the proportionate consolidation method and
retroactively restated the 2001 and 2000 consolidated financial statements for the change. As discussed in Note (1)(i) to the consolidated financial statements, basic and diluted earnings per share for the year ended December 31, 2000 have been
restated.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
March 21, 2003
F-2
Consolidated Balance Sheets
December 31, 2002 and 2001
(In thousands, except share data)
|
|
2002
|
|
|
2001
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash, including cash equivalents of $30,042 and $36,686 (Note 1) |
|
$ |
47,031 |
|
|
$ |
56,542 |
|
Accounts and notes receivable, including retainage of $66,284 and $97,610 |
|
|
218,172 |
|
|
|
318,174 |
|
Unbilled work (Note 1) |
|
|
112,563 |
|
|
|
97,425 |
|
Land held for sale, net (Note 5) |
|
|
2,173 |
|
|
|
11,740 |
|
Other current assets |
|
|
1,992 |
|
|
|
1,949 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
$ |
381,931 |
|
|
$ |
485,830 |
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, at cost (Note 1): |
|
|
|
|
|
|
|
|
Land |
|
$ |
489 |
|
|
$ |
489 |
|
Buildings and improvements |
|
|
13,496 |
|
|
|
12,850 |
|
Construction equipment |
|
|
12,338 |
|
|
|
10,240 |
|
Other equipment |
|
|
7,577 |
|
|
|
7,594 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
33,900 |
|
|
$ |
31,173 |
|
|
|
|
Less Accumulated depreciation |
|
|
19,858 |
|
|
|
18,768 |
|
|
|
|
|
|
|
|
|
|
Total property and equipment, net |
|
$ |
14,042 |
|
|
$ |
12,405 |
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS (Notes 5 and 6) |
|
$ |
6,416 |
|
|
$ |
3,006 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
402,389 |
|
|
$ |
501,241 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Current maturities of long-term debt (Note 3) |
|
$ |
416 |
|
|
$ |
10,249 |
|
Accounts payable, including retainage of $37,357 and $72,275 |
|
|
162,456 |
|
|
|
265,008 |
|
Deferred contract revenue (Note 1) |
|
|
65,868 |
|
|
|
72,129 |
|
Accrued expenses |
|
|
37,283 |
|
|
|
45,075 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
$ |
266,023 |
|
|
$ |
392,461 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT, less current maturities included above (Note 3) |
|
$ |
12,123 |
|
|
$ |
7,540 |
|
|
|
|
|
|
|
|
|
|
OTHER LONG-TERM LIABILITIES (Notes 6, 8 and 10) |
|
$ |
37,594 |
|
|
$ |
21,832 |
|
|
|
|
|
|
|
|
|
|
CONTINGENCIES AND COMMITMENTS (Note 2) |
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY (Notes 1, 7, 8, 9 and 10): |
|
|
|
|
|
|
|
|
Preferred stock, $1 par value - |
|
|
|
|
|
|
|
|
Authorized 1,000,000 shares |
|
|
|
|
|
|
|
|
Designated, issued and outstanding 99,990 shares of $21.25 convertible exchangeable preferred stock ($24,998 aggregate
liquidation preference) |
|
$ |
100 |
|
|
$ |
100 |
|
Series A junior participating preferred stock, $1 par value - |
|
|
|
|
|
|
|
|
Designated 200,000 shares |
|
|
|
|
|
|
|
|
Issued none |
|
|
|
|
|
|
|
|
Stock purchase warrants |
|
|
2,233 |
|
|
|
2,233 |
|
Common stock, $1 par value - |
|
|
|
|
|
|
|
|
Authorized 40,000,000 shares |
|
|
|
|
|
|
|
|
Issued 22,724,664 shares |
|
|
22,725 |
|
|
|
22,725 |
|
Paid-in surplus |
|
|
95,546 |
|
|
|
97,671 |
|
Retained earnings (deficit) |
|
|
(13,417 |
) |
|
|
(36,491 |
) |
Less common stock in treasury, at cost 60,529 shares |
|
|
(965 |
) |
|
|
(965 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
106,222 |
|
|
$ |
85,273 |
|
Accumulated other comprehensive loss |
|
|
(19,573 |
) |
|
|
(5,865 |
) |
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
$ |
86,649 |
|
|
$ |
79,408 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
402,389 |
|
|
$ |
501,241 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial statements.
F-3
Consolidated Statements of Income
For the Years Ended December 31, 2002, 2001 and 2000
(In thousands, except per share data)
|
|
2002
|
|
2001
|
|
2000
|
|
Revenues (Note 12) |
|
$ |
1,085,041 |
|
$ |
1,553,396 |
|
$ |
1,105,660 |
|
|
|
|
|
Cost of Operations |
|
|
1,026,391 |
|
|
1,495,834 |
|
|
1,053,328 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
$ |
58,650 |
|
$ |
57,562 |
|
$ |
52,332 |
|
|
|
|
|
General and Administrative Expenses |
|
|
32,770 |
|
|
28,061 |
|
|
24,977 |
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS (Note 12) |
|
$ |
25,880 |
|
$ |
29,501 |
|
$ |
27,355 |
|
|
|
|
|
Other (Income) Expense, Net (Note 6) |
|
|
520 |
|
|
227 |
|
|
(949 |
) |
Interest Expense (Note 3) |
|
|
1,485 |
|
|
2,006 |
|
|
3,966 |
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income Taxes |
|
$ |
23,875 |
|
$ |
27,268 |
|
$ |
24,338 |
|
|
|
|
|
Provision (Credit) for Income Taxes (Notes 1 and 4) |
|
|
801 |
|
|
850 |
|
|
(43 |
) |
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
23,074 |
|
$ |
26,418 |
|
$ |
24,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS (Note 1) |
|
$ |
20,949 |
|
$ |
24,293 |
|
$ |
7,299 |
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER COMMON SHARE (Note 1) |
|
$ |
0.92 |
|
$ |
1.07 |
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER COMMON SHARE (Note 1) |
|
$ |
0.91 |
|
$ |
1.04 |
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
Consolidated Statements of Stockholders Equity
For the Years Ended December 31, 2002, 2001 and 2000
(In thousands, except per share data)
|
|
Preferred Stock
|
|
Stock Purchase Warrants
|
|
Common Stock
|
|
Paid-In Surplus
|
|
|
Retained Earnings (Deficit)
|
|
|
Treasury Stock
|
|
|
Accumulated Other Comprehensive Loss
|
|
|
Total
|
|
Balance - December 31, 1999 |
|
$ |
100 |
|
$ |
2,233 |
|
$ |
5,743 |
|
$ |
43,561 |
|
|
$ |
(87,290 |
) |
|
$ |
(965 |
) |
|
$ |
|
|
|
$ |
(36,618 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,381 |
|
|
|
|
|
|
|
|
|
|
|
24,381 |
|
Preferred Stock dividends accrued ($21.25 per share*) |
|
|
|
|
|
|
|
|
|
|
|
(2,125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,125 |
) |
Series B Preferred Stock dividends in kind issued (Note 8) |
|
|
|
|
|
|
|
|
|
|
|
(1,161 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,161 |
) |
Accretion related to Series B Preferred Stock (Note 8) |
|
|
|
|
|
|
|
|
|
|
|
(96 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(96 |
) |
Net proceeds received from issuance of Common Stock (Note 7) |
|
|
|
|
|
|
|
|
9,412 |
|
|
27,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,299 |
|
Exchange of Series B Preferred Stock for Common Stock (Note 7) |
|
|
|
|
|
|
|
|
7,490 |
|
|
31,452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2000 |
|
$ |
100 |
|
$ |
2,233 |
|
$ |
22,645 |
|
$ |
99,518 |
|
|
$ |
(62,909 |
) |
|
$ |
(965 |
) |
|
$ |
|
|
|
$ |
60,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,418 |
|
|
|
|
|
|
|
|
|
|
|
26,418 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum pension liability (Note 10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,865 |
) |
|
|
(5,865 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock dividends accrued ($21.25 per share*) |
|
|
|
|
|
|
|
|
|
|
|
(2,125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,125 |
) |
Common Stock options exercised |
|
|
|
|
|
|
|
|
80 |
|
|
278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2001 |
|
$ |
100 |
|
$ |
2,233 |
|
$ |
22,725 |
|
$ |
97,671 |
|
|
$ |
(36,491 |
) |
|
$ |
(965 |
) |
|
$ |
(5,865 |
) |
|
$ |
79,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,074 |
|
|
|
|
|
|
|
|
|
|
|
23,074 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum pension liability (Note 10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,708 |
) |
|
|
(13,708 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock dividends accrued ($21.25 per share*) |
|
|
|
|
|
|
|
|
|
|
|
(2,125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2002 |
|
$ |
100 |
|
$ |
2,233 |
|
$ |
22,725 |
|
$ |
95,546 |
|
|
$ |
(13,417 |
) |
|
$ |
(965 |
) |
|
$ |
(19,573 |
) |
|
$ |
86,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Equivalent to $2.125 per Depositary Share (see Note 8). |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2002, 2001 and 2000
(In thousands)
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
23,074 |
|
|
$ |
26,418 |
|
|
$ |
24,381 |
|
Adjustments to reconcile net income to net cash from operating activities - |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,457 |
|
|
|
1,915 |
|
|
|
1,617 |
|
Amortization of deferred debt expense and other deferred expenses |
|
|
745 |
|
|
|
687 |
|
|
|
574 |
|
Cash provided from (used by) changes in components of working capital other than cash and current maturities of long-term
debt: |
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes receivable |
|
|
102,322 |
|
|
|
(49,253 |
) |
|
|
(87,467 |
) |
Unbilled work |
|
|
(15,138 |
) |
|
|
(1,008 |
) |
|
|
(25,850 |
) |
Other current assets |
|
|
(43 |
) |
|
|
309 |
|
|
|
2,215 |
|
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
(102,552 |
) |
|
|
13,606 |
|
|
|
106,655 |
|
Deferred contract revenue |
|
|
(6,261 |
) |
|
|
4,159 |
|
|
|
(18,658 |
) |
Accrued expenses |
|
|
(7,792 |
) |
|
|
(18,656 |
) |
|
|
3,319 |
|
Other long-term liabilities |
|
|
(405 |
) |
|
|
(2,321 |
) |
|
|
(5,652 |
) |
Other items, net |
|
|
(39 |
) |
|
|
(101 |
) |
|
|
(332 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH (USED BY) PROVIDED FROM OPERATING ACTIVITIES |
|
$ |
(3,632 |
) |
|
$ |
(24,245 |
) |
|
$ |
802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of property and equipment |
|
$ |
455 |
|
|
$ |
199 |
|
|
$ |
435 |
|
Acquisition of property and equipment |
|
|
(4,510 |
) |
|
|
(4,528 |
) |
|
|
(1,793 |
) |
Proceeds from (investment in) land held for sale, net |
|
|
4,072 |
|
|
|
(1,126 |
) |
|
|
2,081 |
|
Investment in other activities |
|
|
(646 |
) |
|
|
(57 |
) |
|
|
(609 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH (USED BY) PROVIDED FROM INVESTING ACTIVITIES |
|
$ |
(629 |
) |
|
$ |
(5,512 |
) |
|
$ |
114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock, net |
|
$ |
|
|
|
$ |
|
|
|
$ |
37,299 |
|
Proceeds from long-term debt |
|
|
5,000 |
|
|
|
572 |
|
|
|
7,757 |
|
Reduction of long-term debt |
|
|
(10,250 |
) |
|
|
(10,399 |
) |
|
|
(53,390 |
) |
Proceeds from exercise of common stock options |
|
|
|
|
|
|
358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED BY FINANCING ACTIVITIES |
|
$ |
(5,250 |
) |
|
$ |
(9,469 |
) |
|
$ |
(8,334 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Decrease in Cash |
|
$ |
(9,511 |
) |
|
$ |
(39,226 |
) |
|
$ |
(7,418 |
) |
Cash and Cash Equivalents at Beginning of Year |
|
|
56,542 |
|
|
|
95,768 |
|
|
|
103,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year (Note (1)(j) |
|
$ |
47,031 |
|
|
$ |
56,542 |
|
|
$ |
95,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Paid During the Year For: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
$ |
2,441 |
|
|
$ |
2,063 |
|
|
$ |
4,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax payments |
|
$ |
1,885 |
|
|
$ |
1,130 |
|
|
$ |
1,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Noncash Transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid in shares of Series B Preferred Stock (Note 8) |
|
$ |
|
|
|
$ |
|
|
|
$ |
1,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange of Series B Preferred Stock into Common Stock at $5.50 per share (Note 7) |
|
$ |
|
|
|
$ |
|
|
|
$ |
38,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial statements.
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000
[1]
Summary of Significant Accounting Policies
[a] Nature of Business
The Company was incorporated in 1918 as a successor
to businesses which had been engaged in providing construction services since 1894. The Company currently provides general contracting, construction management and design-build services to private clients and public agencies throughout the United
States and selected overseas locations. The Companys construction business involves two basic segments or operations: building and civil. The general building and civil contracting services provided by the Company consist of planning and
scheduling the manpower, equipment, materials and subcontractors required for the timely completion of a project in accordance with the terms and specifications contained in a construction contract. The Company provides these services by using
traditional general contracting arrangements, such as fixed price, guaranteed maximum price and cost plus award fee contracts and, to a lesser extent, construction management or design-build contracting arrangements.
In an effort to limit its financial and/or operational risk on certain large
or complex projects, the Company participates in construction joint ventures, often as sponsor or manager of the project, for the purpose of bidding and, if awarded, providing the agreed upon construction services. Each participant usually agrees in
advance to provide a predetermined percentage of capital, as required, and to share in the same percentage of profit or loss of the project.
[b] Principles of Consolidation
The consolidated financial statements include the accounts of Perini Corporation and its wholly owned subsidiaries (the Company). All
significant intercompany transactions and balances have been eliminated in consolidation.
Prior to 2002, the Companys interests in construction joint ventures were accounted for on the equity method in the Consolidated Balance Sheets and on the proportionate consolidation method in the Consolidated
Statements of Income. Beginning in 2002, construction joint venture interests are accounted for using the proportionate consolidation method in the Consolidated Balance Sheets as well as the Consolidated Statements of Income, whereby the
Companys proportionate share of each joint ventures assets, liabilities, revenues and cost of operations are included in the appropriate classifications in the consolidated financial statements. The Company believes the change, which
results in presenting all joint venture activity using a consistent methodology in both the Consolidated Balance Sheets and Consolidated Statements of Income, is preferable.
Although this change impacted various classifications within Current Assets and Current Liabilities in the Consolidated
Balance Sheets and the Consolidated Statements of Cash Flows, it had no impact on net working capital or other categories of long-term assets or liabilities in the Consolidated Balance Sheets. It also had no impact on the Consolidated Statements of
Income or basic or diluted earnings per common share for any period presented. Prior year Consolidated Balance Sheets and Consolidated Statements of Cash Flows have been restated to conform to the 2002 presentation.
[c] Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. The Companys construction business involves making significant estimates and assumptions in the normal course of business relating to its Company and
joint venture construction contracts due to, among other things, the one-of-a-kind nature of most of its
F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[1] Summary of Significant Accounting Policies (continued)
[c] Use of Estimates (continued)
projects, long-term duration of its contract cycle and type of contract utilized. The most significant estimates with regard to these financial statements
relate to the estimating of total forecasted construction contract revenues, costs and profits in accordance with accounting for long-term contracts (see Note 1(d) below) and estimating potential liabilities in conjunction with certain
contingencies, including the outcome of pending or future litigation, arbitration or other dispute resolution proceedings (see Note 2 below). Actual results could differ in the near term from these estimates and such differences could have a
material adverse effect on the Companys financial condition, results of operations and cash flows.
[d] Method of Accounting for Contracts
Revenues and profits from the Companys contracts and construction joint venture contracts are generally recognized by applying percentages of completion for the period to the total estimated profits for the
respective contracts. The percentages of completion are determined by relating the actual cost of the work performed to date to the current estimated total cost of the respective contracts. However, on construction management contracts, profit is
generally recognized in accordance with the contract terms, usually on the as billed method, which is generally consistent with the level of effort incurred over the contract period. When the estimate on a contract indicates a loss, the
Companys policy is to record the entire loss during the accounting period in which it is estimated. In the ordinary course of business, at a minimum on a quarterly basis, the Company prepares updated estimates of the total forecasted revenue,
cost and profit or loss for each contract. The cumulative effect of revisions in estimates of total cost or revenue, including unapproved change orders and claims, during the course of the work is reflected in the accounting period in which the
facts that caused the revision become known. An amount equal to the costs incurred which are attributable to unapproved change orders and claims is included in the total estimated revenue when realization is probable. Profit from unapproved
change orders and claims is recorded in the period such amounts are resolved.
In accordance with normal practice in the construction industry, the Company includes in current assets and current liabilities amounts related to construction contracts realizable and payable over a period in excess
of one year. Deferred contract revenue represents the excess of billings to date over the amount of contract costs and profits recognized to date on the percentage of completion accounting method on certain contracts. Unbilled work represents the
excess of contract costs and profits recognized to date on the percentage of completion accounting method over billings to date on the remaining contracts. Unbilled work at December 31, 2002 and 2001, consisted of the following (in thousands):
|
|
2002
|
|
|
2001
|
|
Unbilled costs and profits incurred to date |
|
$ |
19,498 |
* |
|
$ |
23,784 |
* |
Unapproved change orders |
|
|
30,289 |
|
|
|
25,638 |
|
Claims |
|
|
62,776 |
|
|
|
48,003 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
112,563 |
|
|
$ |
97,425 |
|
|
|
|
|
|
|
|
|
|
* |
Represents the excess of contract costs and profits recognized to date on the percentage of completion accounting method over billings to date on certain contracts.
|
The prerequisite for billing Unbilled
costs and profits incurred to date is provided in the defined billing terms of each of the applicable contracts. The prerequisite for billing Unapproved change orders or Claims is the final resolution and agreement
between the parties. The amount of unbilled work at December 31, 2002 estimated by management to be collected beyond one year is approximately $22.1 million.
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[1] Summary of Significant Accounting Policies (continued)
[e] Property and Equipment
Land, buildings and improvements, construction and computer-related
equipment and other equipment are recorded at cost. Depreciation is provided primarily using accelerated methods for construction and computer-related equipment over lives from three to seven years and the straight-line method for the remaining
depreciable property over lives from three to thirty years.
[f]
Long-Lived Assets
Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Recoverability is evaluated by comparing the carrying value of the asset to the undiscounted cash flows associated with the affected
assets. When this comparison indicates that the carrying value of the asset is greater than the undiscounted cash flows, a loss is recognized for the difference between the carrying value and estimated fair value. Fair value is determined based on
market quotes, if available, or is based on valuation techniques.
[g]
Goodwill
Effective January 1, 2002, the accounting
for goodwill changed to comply with SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill in the amount of approximately $1 million is included in Other Assets in the accompanying Consolidated Balance Sheets and
represents the excess of the costs of subsidiaries acquired over the fair value of their net assets as of the dates of acquisition (see Note 6). While these amounts were being amortized on a straight-line basis over 40 years through 2001 at an
annual rate of $63,000, amortization was discontinued in 2002 in accordance with SFAS No. 142. Goodwill is now subject to an assessment for impairment by applying a fair value test, at a minimum, on an annual basis. Based on the initial and annual
impairment tests completed during 2002, the Company concluded that goodwill was not impaired. Therefore, the implementation of SFAS No. 142 did not have a material impact on the Companys financial statements.
[h] Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes, (see Note
4). Deferred income tax assets and liabilities are recognized for the effects of temporary differences between the financial statement carrying amounts and the income tax basis of assets and liabilities using enacted tax rates. In addition, future
tax benefits, such as net operating loss carryforwards, are recognized currently to the extent such benefits are more likely than not to be realized as an economic benefit in the form of a reduction of income taxes in future years.
[i] Earnings Per Common Share
Earnings per common share amounts were calculated in accordance with SFAS
No. 128, Earnings Per Share. Basic earnings per common share (EPS) was computed by dividing net income less dividends, other requirements related to Preferred Stock and the loss on the induced conversion of Series B Preferred
in 2000 by the weighted average number of common shares outstanding. Diluted earnings per common share was computed by giving effect to all dilutive potential common shares outstanding. For all of the applicable periods presented, the assumed
conversion of the Companys Depositary Convertible Exchangeable Preferred Shares, Series B Preferred Shares and Stock Purchase Warrants into common stock was not included in the computation of diluted earnings per common share since the effect
would be antidilutive.
F-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[1] Summary of Significant Accounting Policies (continued)
[i] Earnings Per Common Share (continued)
Basic and diluted earnings per common share for each of the three years in
the period ending December 31, 2002 are calculated as follows (in thousands except per share amounts):
|
|
2002
|
|
|
2001
|
|
|
2000, As Restated
|
|
Net Income |
|
$ |
23,074 |
|
|
$ |
26,418 |
|
|
$ |
24,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Accrued dividends on $21.25 Preferred Stock (Note 8) |
|
$ |
(2,125 |
) |
|
$ |
(2,125 |
) |
|
$ |
(2,125 |
) |
Dividends declared on Series B Preferred Stock (Note 8) |
|
|
|
|
|
|
|
|
|
|
(1,161 |
) |
Accretion deduction required to reinstate mandatory redemption value of Series B Preferred Stock over a period of 8-10 years (Note
8) |
|
|
|
|
|
|
|
|
|
|
(96 |
) |
Loss on the induced conversion of Series B Preferred (Note 7) |
|
|
|
|
|
|
|
|
|
|
(13,700 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(2,125 |
) |
|
$ |
(2,125 |
) |
|
$ |
(17,082 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available for common stockholders |
|
$ |
20,949 |
|
|
$ |
24,293 |
|
|
$ |
7,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for basic EPS |
|
|
22,664 |
|
|
|
22,623 |
|
|
|
18,521 |
|
Effect of dilutive stock options outstanding |
|
|
275 |
|
|
|
819 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for diluted EPS |
|
|
22,939 |
|
|
|
23,442 |
|
|
|
18,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per Common Share |
|
$ |
0.92 |
|
|
$ |
1.07 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per Common Share |
|
$ |
0.91 |
|
|
$ |
1.04 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsequent to the
issuance of the 2001 financial statements, management has determined that EITF D-42, The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock, required that the fair value of the common
shares issued in excess of the common shares issuable under the original conversion terms as a result of the recapitalization discussed in Note 7, should have been subtracted from net income to determine net earnings available for common
stockholders for the purpose of computing earnings per share. This charge had previously been excluded from the calculation. Accordingly, actual basic and diluted earnings per share for 2000 have been restated from $1.13 per share to $0.39 per
share.
[j] Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with original
maturities of three months or less.
Cash and cash equivalents
as reported in the accompanying Consolidated Balance Sheets consist of amounts held by the Company that are available for general corporate purposes and the Companys proportionate share of amounts held by construction joint ventures that are
available only for joint venture-related uses. Cash held by construction joint ventures is distributed from time to time to the Company and to the other joint venture participants in accordance with their percentage interest after the joint venture
partners determine that a cash distribution is prudent. Cash distributions received by the Company from its construction joint ventures are then available for general corporate purposes. At December 31, 2002 and 2001, cash and cash equivalents
consisted of the following (in thousands):
|
|
2002
|
|
2001
|
Corporate cash and cash equivalents (available for general corporate purposes) |
|
$ |
11,220 |
|
$ |
7,164 |
Companys share of joint venture cash and cash equivalents (available only for joint venture purposes, including future
distributions) |
|
|
35,811 |
|
|
49,378 |
|
|
|
|
|
|
|
|
|
$ |
47,031 |
|
$ |
56,542 |
|
|
|
|
|
|
|
F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000(continued)
[1] Summary of Significant Accounting Policies (continued)
[k] Stock-Based Compensation
The Company accounts for stock options granted to employees and directors
using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income since
all stock options granted by the Company had an exercise price equal to or greater than the fair market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the
Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee and director compensation (in thousands). The effect of applying SFAS No. 123 in this pro forma
disclosure may not be indicative of future charges.
|
|
Year Ended December 31,
|
|
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
Net income, as reported |
|
$ |
23,074 |
|
|
$ |
26,418 |
|
|
$ |
24,381 |
|
Less: Total stock-based employee compensation expense determined under fair value based method for all awards |
|
|
(2,831 |
) |
|
|
(2,846 |
) |
|
|
(3,194 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, pro forma |
|
$ |
20,243 |
|
|
$ |
23,572 |
|
|
$ |
21,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
As reported (see Note (1)(i)) |
|
$ |
0.92 |
|
|
$ |
1.07 |
|
|
$ |
0.39 |
|
Pro forma |
|
$ |
0.80 |
|
|
$ |
0.94 |
|
|
$ |
0.22 |
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
As reported (see Note (1)(i)) |
|
$ |
0.91 |
|
|
$ |
1.04 |
|
|
$ |
0.39 |
|
Pro forma |
|
$ |
0.79 |
|
|
$ |
0.91 |
|
|
$ |
0.22 |
|
[l] Fair Value of Financial
Instruments
The carrying amount of cash and cash
equivalents approximate fair value due to the short term nature of these items. The carrying value of receivables and other amounts arising out of normal contract activities, including retentions, which may be settled beyond one year, is estimated
to approximate fair value. See Note 3, Financial Commitments for disclosure of the fair value of long-term debt.
[m] Reclassifications
Certain prior year amounts have been reclassified to be consistent with the current year classifications.
[n] New Accounting Pronouncements
In June 2002, the Financial Accounting Standards Board (FASB)
issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. The FASB also issued SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure an Amendment of FASB
Statement No. 123.
SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities and is effective for exit or disposal activities that are initiated after December 31, 2002. The Company expects that the adoption of the provisions of SFAS No. 146 will
not have a material impact on its consolidated financial position or results of operations.
SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation and amends the disclosure requirements prescribed by SFAS No.
123, Accounting for Stock-Based Compensation. As permitted under SFAS No. 148, the Company adopted the disclosure requirements in 2002 and plans to evaluate the effect of the remaining provisions of SFAS No. 148 in 2003.
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[2] Contingencies and Commitments
(a) Mergentime Perini Joint Ventures vs. WMATA Matter
On May 11, 1990, contracts with two joint ventures in which Perini
Corporation held a minority interest (Joint Ventures) were terminated by the Washington Metropolitan Area Transit Authority (WMATA) on two adjacent subway construction contracts in the District of Columbia. The contracts were
awarded to the Joint Ventures in 1985 and 1986. However, Perini and Mergentime Corporation (Mergentime), the 60% managing partner, entered into an agreement in 1987 under which Perini withdrew from the Joint Ventures and Mergentime
assumed complete control over the performance of both projects. This agreement did not relieve Perini of its responsibilities to WMATA as a Joint Venture partner. After Perini withdrew from the Joint Ventures, Mergentime and WMATA were embroiled in
a dispute regarding progress on the projects. Each party blamed the other for delays that were impacting both cost and progress and the parties were unable to resolve their dispute. Ultimately, both construction contracts were terminated by WMATA
and WMATA retained Perini, acting independently, to complete both projects.
Subsequently, the Joint Ventures brought an action in the United States District Court for the District of Columbia against WMATA, seeking damages for delays, unpaid extra work and wrongful termination and WMATA
brought an action against the Joint Ventures seeking damages for additional costs to complete the projects. After a bench trial before two District Court Judges (the initial Judge died before the matter could be concluded), the District Court found
the Joint Ventures liable to WMATA for damages in the amount of approximately $16.5 million and WMATA liable to the Joint Ventures for damages in the amount of approximately $4.3 million.
The Joint Ventures appealed the judgment to the United States Court of Appeals for the District of Columbia (Court of
Appeals), arguing, among other things, that the second District Court Judge had issued his final decision without fully familiarizing himself with the record of the initial District Court Judge. On February 16, 1999, the Court of Appeals
vacated the District Courts final judgment and ordered the successor District Court Judge to review the findings of the initial Judge and hold further hearings in regard to the Joint Ventures affirmative claims. In addition, the Court of
Appeals held that statutory interest on any of the claims will not accrue until final judgment is entered sometime in the future. Later in 1999, the case was transferred to a new successor District Court Judge.
On February 28, 2001, the new successor District Court Judge informed the
parties that in the absence of a new trial, he could not certify adequate familiarity with the record to complete the remaining proceedings; therefore, he ordered that the Joint Ventures motion for a new trial be granted.
A new trial before the new successor District Court Judge was completed in
January 2002 and a decision is still pending. The ultimate financial impact of the Judges pending decision is not yet determinable; therefore, no provision for loss, if any, has been recorded in the financial statements.
(b) TutorSalibaPerini Joint Venture vs. Los Angeles MTA Matter
During 1995, a joint venture, Tutor-Saliba-Perini
(TSP), in which Perini Corporation is a 40% minority partner and Tutor-Saliba Corporation of Sylmar, CA is the 60% managing partner, filed a complaint in the Superior Court of the State of California for the County of Los Angeles against
the Los Angeles County Metropolitan Transportation Authority (MTA) seeking to recover costs for extra work required by the MTA in connection with the construction of the Wilshire/Normandie Subway Station. TSP is seeking additional
compensation from the MTA for claims related to the construction and in February 1999 the MTA countered
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[2] Contingencies and Commitments (continued)
(b) TutorSalibaPerini Joint Venture vs. Los Angeles MTA Matter
(continued)
with civil claims under the California False Claims Act against TSP, Tutor-Saliba Corporation, Perini Corporation and other parties. Ronald N. Tutor, the
Chairman and CEO of Perini Corporation since March of 2000, is also the CEO and the sole stockholder of Tutor-Saliba Corporation (see Note 13).
Claims concerning the construction of the Wilshire/Normandie Subway Station were tried before a Jury in 2001. During trial, the Judge ruled that TSP had
failed to comply with the Courts prior discovery orders and the Judge penalized TSP for its alleged non-compliance by dismissing TSPs claim and by ruling, without a Jury finding, that TSP was liable to the MTA for damages on the
MTAs counterclaim. The Judge then instructed the Jury that TSP was liable to the MTA and charged the Jury with the responsibility of determining the amount of the damages based on the Judges ruling. The Jury awarded the MTA approximately
$29.6 million in damages.
On March 26, 2002, the Judge amended
the award, ordering TSP to pay the MTA an additional $33.4 million in costs and attorney fees, with the aggregate $63.0 million award subject to interest at an annual rate of 10% from the date of the award.
TSP and the other plaintiffs/defendants in counterclaim have appealed the
Judges discovery sanction, the subsequent Jury award and the amended award. The ultimate financial impact of the Judges ruling and/or the awards is not yet determinable. Therefore, no provision for loss, if any, has been recorded in the
financial statements.
(c) City of San Francisco vs. Tutor-Saliba, Perini
& Buckley Joint Venture Matter
On November 1,
2002, the San Francisco City Attorney, on behalf of the City and County of San Francisco and the citizens of California (Plaintiffs), filed a civil action with a demand for a jury trial against Tutor-Saliba Corporation (TSC),
the Tutor-Saliba, Perini & Buckley, Joint Venture (JV), Perini Corporation (Perini), Buckley & Company, Inc. (Buckley) and their bonding companies in the United States District Court in San Francisco
relating to seven contracts for work on the expansion of the San Francisco International Airport. The Plaintiffs allege various overcharges, bidding violations, violations of minority contracting regulations, civil fraud, and violation of the
California and San Francisco False Claims and California Unfair Competition Acts. In addition, the Plaintiffs allege that TSC has violated the United States Racketeer Influenced Corrupt Organizations Act. The Plaintiffs have asserted $30 million in
damages and are seeking treble damages, various civil penalties and debarment of the JV and TSC from doing business with the City of San Francisco. The Plaintiffs have not allocated their claims for damages and penalties amongst the defendants or
the seven contracts at issue, only two of which involved the JV. TSC is the managing partner of the JV, and in December 1997, Perini sold its entire 20% interest in the JV to TSC. TSC has agreed to indemnify Perini from any liability arising out of
the joint venture, including legal fees and expenses.
(d)
Perini/Kiewit/Cashman Joint Venture Central Artery/Tunnel Project Matter
Perini/Kiewit/Cashman Joint Venture (PKC), a joint venture in which Perini Corporation holds a 56% interest and is the managing partner, is currently pursuing a series of claims for additional contract
time and/or compensation against the Massachusetts Highway Department (MHD) for work performed by PKC on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. The claims relate to the construction of the Northbound
Mainline Central Artery Tunnel from Kneeland Street to Congress Street. During construction, MHD ordered PKC to perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs,
in excess of $100 million. In addition, PKC encountered a number of unforeseen conditions during construction that greatly increased PKCs cost of performance.
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[2] Contingencies and Commitments (continued)
(d) Perini/Kiewit/Cashman Joint Venture Central Artery/Tunnel Project Matter
(continued)
Certain of PKCs
claims have been presented to a Disputes Review Board (DRB) which consists of three construction experts chosen by the parties. To date, the DRB has ruled on a binding basis that PKC is entitled to additional compensation for its
contract time delay claim in the amount of $17.4 million. A Judge of the Massachusetts Superior Court has issued a decision upholding the DRBs binding award to PKC. Although MHD challenged several of the DRBs decisions relative to the
contract time delay award discussed above, PKC received a favorable ruling on March 20, 2002 from the Superior Court of the Commonwealth of Massachusetts that approved PKCs request to have MHD comply with the DRBs decision to award the
$17.4 million for the time delay. The MHD has appealed the Superior Court decision to the Appeals Court of the Commonwealth of Massachusetts.
The DRB has also ruled on a binding basis that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKCs
underpinning work in the amount of $5.6 million and that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKCs utility work in the amount of $11.5 million. PKC has filed applications in these actions
seeking to confirm the awards and MHD has filed civil actions in Massachusetts Superior Court seeking to vacate these awards.
Under the Dispute Resolution Rules of the contract, either party may periodically terminate the services of some or all of the DRB members provided that
members who are removed under this provision will remain on the DRB through the completion of any then pending claims. The MHD has chosen to remove the current DRB members under this provision and those members are in the process of completing
hearings on all pending claims. Although the replacement DRB members have been agreed upon, proceedings before the current DRB and the new DRB have been postponed pending resolution of the current negotiations discussed below.
The pending claims yet to be decided by the current/replacement DRB on a
binding basis have an anticipated value of $43 million. The remaining claims to be decided by the replacement DRB on a non-binding basis have an anticipated value of $80 million.
On August 14, 2002 the Massachusetts Attorney Generals office, pursuant to its authority under the Massachusetts False
Claims Act, served a Civil Investigative Demand (CID) on Perini and the other joint venture partners. The CID sought the production of certain construction claims documentation in connection with the Central Artery/Tunnel Contract No.
C11A1. PKC vigorously denies that it submitted any false claims and is cooperating with the Attorney Generals Office in the ongoing investigation
In December 2002, PKC and MHD entered into an agreement whereby the parties agreed to attempt to resolve by negotiation and mediation all of the
outstanding claims on the project. As part of the agreement, the MHD recommended for approval by the Massachusetts Turnpike Authority a contract modification that provides for provisional payments to PKC totaling $25 million against PKCs
outstanding claims. To date, PKC has received $23.75 million of those provisional payments. The parties also agreed to stay the pending litigation and DRB proceedings during the negotiations. The ultimate financial impact of resolving all of the
claims on this project is not yet determinable.
(e) $21.25 Preferred
Shareholders Class Action Lawsuit
On May 3, 2001 the
Company, including several of its current and former directors (Defendant Directors), was served with a complaint entitled Frederick Doppelt, Arthur I. Caplan and Michael Miller v. Perini Corporation, et al, Supreme Court of the
State of New York, County of New York, Civil Action No. 602156/01.
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[2] Contingencies and Commitments (continued)
(e) $21.25 Preferred Shareholders Class Action Lawsuit
(continued)
Each plaintiff is a holder of the Companys $21.25 Convertible Exchangeable Preferred Stock ($21.25 Preferred Stock). One plaintiff, Mr.
Doppelt, is a current Director of the Company and one plaintiff, Mr. Caplan, is a former Director of the Company. Plaintiffs purport to bring the action individually and on behalf of the entire class of holders of the $21.25 Preferred Stock.
The Plaintiffs have asserted claims for breach of contract,
breach of fiduciary duty, fraud and negligent misrepresentation. The Plaintiffs principally allege that the Company and its Defendant Directors improperly authorized the exchange of Series B Preferred Stock for Common Stock without first paying all
accrued dividends on the $21.25 Preferred Stock. More specifically, Plaintiffs allege that the Company and its Defendant Directors violated the terms of the $21.25 Preferred Stock when, in March 2000, the Company authorized the exchange of Series B
Preferred Stock for Common Stock. The Plaintiffs further allege that the Company and its Defendant Directors issued a false and misleading prospectus in 1987 relating to the issuance of the $21.25 Preferred Stock. The Plaintiffs seek payment of
accrued dividends, claiming they are owed approximately $11.7 million as of May 3, 2001, and other unspecified punitive and exemplary damages.
On May 23, 2001, the Company and the Defendant Directors removed the action from the Supreme Court of New York to the United States District Court for the
Southern District of New York. On June 26, 2001, the Plaintiffs filed an Amended Complaint whereby the Plaintiffs limited their Class Action to an action for breach of contract against the Company and an action for breach of fiduciary duty against
the Defendant Directors. The Company and the Defendant Directors moved to dismiss all of Plaintiffs claims. On March 12, 2002, all claims against the Company and the Defendant Directors were dismissed by the United States District Court for
the Southern District of New York.
In April 2002, the
Plaintiffs appealed the dismissal to the United States Court of Appeals for the Second Circuit. On December 23, 2002, the Plaintiffs appeal was dismissed by the United States Court of Appeals for the Second Circuit.
On October 15, 2002, the Plaintiffs filed a new action for breach of
fiduciary duty against the Defendant Directors in the United States District Court for the District of Massachusetts. On January 6, 2003, the Defendant Directors moved to dismiss all of the Plaintiffs Massachusetts claims. The Defendant
Directors are awaiting the Plaintiffs response.
(f) Other
Contingent liabilities also include liability of
contractors for performance and completion of both Company and joint venture construction contracts. In addition to the legal matters described above, the Company is involved in various lawsuits, arbitration and alternative dispute resolution
(ADR) proceedings. In the opinion of management, the resolution of these proceedings will not have a material effect on the Companys results of operations or financial condition.
F-15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[3] Financial Commitments
Long-term Debt
Long-term debt of the Company at December 31, 2002 and 2001 consists of the following (in thousands):
|
|
2002
|
|
2001
|
Borrowing under revolving credit facility at an average rate of 4.5% in 2002 |
|
$ |
5,000 |
|
$ |
|
Term loan under credit facility at an average rate of 6.8% in 2001 |
|
|
|
|
|
9,764 |
Mortgage on corporate headquarters building, at a rate of approximately 9%, payable in equal monthly installments over a ten year
period, with a balloon payment of approximately $5.3 million in 2010 |
|
|
7,162 |
|
|
7,322 |
Other indebtedness |
|
|
377 |
|
|
703 |
|
|
|
|
|
|
|
Total |
|
$ |
12,539 |
|
$ |
17,789 |
Less current maturities |
|
|
416 |
|
|
10,249 |
|
|
|
|
|
|
|
Net long-term debt |
|
$ |
12,123 |
|
$ |
7,540 |
|
|
|
|
|
|
|
Payments required
under these obligations amount to approximately $416,000 in 2003, $272,000 in 2004, $5,241,000 in 2005, $241,000 in 2006, $247,000 in 2007 and $6,122,000 in 2008 and beyond.
On January 23, 2002, the Company entered into an agreement with two banks to refinance its former credit facility with a new
credit agreement (the Credit Agreement). The Credit Agreement provides for a $45 million revolving credit facility through January 2004 which, if not extended or repaid, converts amounts then outstanding to a three year term loan with
equal quarterly principal payments.
The Credit Agreement
provides that the Company can choose from interest rate alternatives including a prime-based rate, as well as options based on LIBOR (London inter-bank offered rate). Up to $5.0 million of the unborrowed revolving commitment is available for letters
of credit.
The Credit Agreement requires, among other things,
maintaining specified working capital, tangible net worth and operating profit levels, interest coverage minimums, and limitations on indebtedness. The Credit Agreement also provides that collateral shall consist of all available assets not included
as collateral in other agreements.
In February 2003, the terms
of the Credit Agreement were amended to increase the revolving credit facility from $45 million to $50 million; to extend the term of the Credit Agreement from January 2004 to June 2005; to increase the amount of unborrowed revolving commitment
available for letters of credit from $5.0 million to $7.5 million; and to adjust certain financial covenants. Other terms of the Credit Agreement remained the same, including the provision that amounts due in June 2005, if not extended or repaid,
convert to a three year term loan.
The fair value of the
balance outstanding under the Credit Agreement approximates the carrying value due to the variable nature of the interest rates. For fixed rate debt, fair value is determined based on discounted cash flows for the debt at Companys current
incremental borrowing rate for similar types of debt. The estimated fair value of fixed rate debt at December 31, 2002 is $8.2 million.
F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[3] Financial Commitments (continued)
Leases
The Company leases certain construction equipment, vehicles and office space under non-cancelable operating leases. Future
minimum rent payments under non-cancelable operating leases as of December 31, 2002 are as follows (in thousands):
|
|
Amount
|
|
2003 |
|
$ |
3,595 |
|
2004 |
|
|
3,036 |
|
2005 |
|
|
2,516 |
|
2006 |
|
|
1,432 |
|
2007 |
|
|
802 |
|
Thereafter |
|
|
1,301 |
|
|
|
|
|
|
Subtotal |
|
$ |
12,682 |
|
|
|
Less - Sublease rental agreements |
|
|
(836 |
) |
|
|
|
|
|
Total |
|
$ |
11,846 |
|
|
|
|
|
|
Rental expense under
long-term operating leases of construction equipment, vehicles and office space was $3,781,000 in 2002, $3,146,000 in 2001 and $2,567,000 in 2000.
Although not material to the Companys consolidated financial position or results of operations, the Company also leases certain construction
equipment under capital lease arrangements from time to time. Amounts relating to capital leases are included in the accompanying Consolidated Balance Sheets under Construction Equipment and Long-term Debt.
[4] Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109. This standard determines deferred income taxes based
on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities, given the provisions of enacted tax laws.
The provision (credit) for income taxes expense is comprised of the following (in thousands):
|
|
Federal
|
|
|
State
|
|
Foreign
|
|
|
Total
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
(249 |
) |
|
$ |
1,050 |
|
$ |
|
|
|
$ |
801 |
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(249 |
) |
|
$ |
1,050 |
|
$ |
|
|
|
$ |
801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
360 |
|
|
$ |
490 |
|
$ |
|
|
|
$ |
850 |
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
360 |
|
|
$ |
490 |
|
$ |
|
|
|
$ |
850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
580 |
|
|
$ |
209 |
|
$ |
(832 |
) |
|
$ |
(43 |
) |
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
580 |
|
|
$ |
209 |
|
$ |
(832 |
) |
|
$ |
(43 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[4] Income Taxes (continued)
The table below reconciles the difference between the statutory federal
income tax rate and the effective rate provided for income before income taxes in the consolidated statements of income.
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
Statutory federal income tax rate |
|
35 |
% |
|
35 |
% |
|
34 |
% |
State income taxes, net of federal tax benefit |
|
3 |
|
|
1 |
|
|
1 |
|
Foreign taxes |
|
0 |
|
|
0 |
|
|
(3 |
) |
Recognition of tax benefit |
|
(35 |
) |
|
(33 |
) |
|
(32 |
) |
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
3 |
% |
|
3 |
% |
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
The following is a
summary of the significant components of the Companys deferred tax assets and liabilities as of December 31, 2002 and 2001 (in thousands):
|
|
2002
|
|
|
2001
|
|
Deferred Tax Assets |
|
|
|
|
|
|
|
|
Provision for estimated real estate losses |
|
$ |
175 |
|
|
$ |
7,728 |
|
Contract losses |
|
|
1,985 |
|
|
|
231 |
|
Timing of expense recognition |
|
|
383 |
|
|
|
3,026 |
|
Net operating loss and capital loss carryforwards |
|
|
33,689 |
|
|
|
31,759 |
|
Alternative minimum tax credit carryforwards |
|
|
2,960 |
|
|
|
3,310 |
|
General business tax credit carryforwards |
|
|
3,045 |
|
|
|
3,533 |
|
Other, net |
|
|
953 |
|
|
|
868 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
43,190 |
|
|
$ |
50,455 |
|
Valuation allowance for deferred tax assets* |
|
|
(28,208 |
) |
|
|
(35,854 |
) |
|
|
|
|
|
|
|
|
|
Deferred tax assets |
|
$ |
14,982 |
|
|
$ |
14,601 |
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities |
|
|
|
|
|
|
|
|
Joint ventures - construction |
|
$ |
(14,569 |
) |
|
$ |
(11,999 |
) |
Joint ventures - real estate |
|
|
|
|
|
|
(29 |
) |
Capitalized carrying charges |
|
|
(413 |
) |
|
|
(2,573 |
) |
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
$ |
(14,982 |
) |
|
$ |
(14,601 |
) |
|
|
|
|
|
|
|
|
|
Net deferred tax asset (liability) |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
* |
A valuation allowance is provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. The ultimate realization of deferred tax assets is
dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The net deferred tax assets reflect managements estimate of the amount which will, more likely than not, be
realized from future taxable income. |
As a result
of not providing federal income tax benefit applicable to losses recorded in certain prior years for financial reporting purposes, benefit from these losses is realized in 2002, 2001 and 2000 by not having to provide federal income tax of
approximately $8.5 million, $9.0 million and $8.0 million, respectively. At December 31, 2002, approximately $79 million of future pretax book earnings could benefit from minimal, if any, federal tax provisions.
F-18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[4] Income Taxes (continued)
At December 31, 2002, the Company has unused tax credits and net operating
loss carryforwards for income tax reporting purposes which expire as follows (in thousands):
|
|
Unused Investment Tax Credits
|
|
Net Operating Loss Carryforwards
|
2003 |
|
$ |
3,045 |
|
$ |
|
2004 - 2006 |
|
|
|
|
|
1,404 |
2007 - 2021 |
|
|
|
|
|
94,849 |
|
|
|
|
|
|
|
|
|
$ |
3,045 |
|
$ |
96,253 |
|
|
|
|
|
|
|
Net operating loss
carryforwards and unused tax credits may be limited in the event of certain changes in ownership interests of significant stockholders. In addition, approximately $1.4 million of the net operating loss carryforwards can only be used against the
taxable income of the corporation in which the loss was recorded for tax and financial reporting purposes.
[5] Land Held for Sale, Net
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 Companys wholly
owned real estate development subsidiary. Accordingly, both the historical and current real estate results were presented as a discontinued operation in accordance with accounting principles generally accepted in the United States of America. A
$99,311,000 non-cash provision, which represents the estimated loss on disposal of this business segment, was recorded at that time. Although the Company had a reasonable expectation that the plan, when adopted, could be executed within a
twelve-month period, the plan was not entirely completed because potential buyers who had executed purchase and sale agreements with the Company withdrew from the purchase of two properties, namely the bulk sale of the Massachusetts properties and
the sale of the Perini Central property in Phoenix, AZ. In addition, a program to pursue the bulk sale of the Sabino Springs property in Tucson, Arizona took longer than originally anticipated. With the sale of the Perini Central property in 2001
and the bulk sale of the Sabino Springs property in the fourth quarter of 2002, the remaining land to be sold at December 31, 2002 consists of certain fully-developed parcels in Raynham, Massachusetts. Managements current plan is to continue
to market the remaining land for sale as a bulk sale or as individual parcels over an estimated 36 to 48 month sell off period.
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets and managements revised plans, the
remaining inventory of land has been classified as Land held for sale, net in the accompanying Consolidated Balance Sheets as of December 31, 2002 with the amount estimated to be sold during the next twelve months included in Current
Assets and the balance included in Other Assets (see Note 6 Other Assets). Operating results from the remaining land are included in Other (Income) Expense, Net.
Real estate revenues related to continuing operations were $8,304,000 in 2002
which were offset by related costs and expenses of a similar amount. Real estate revenues related to discontinued operations were $1,936,000 in 2001 and $3,491,000 in 2000. Also, in accordance with SFAS No. 144, land held for sale is stated at the
lower of its carrying amount ($5,348,000) or its fair value less cost to sell. A provision to reflect a write-down of the carrying amount of the remaining land to fair value less cost to sell was not required during 2002.
F-19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[6] Other Assets, Other Long-term Liabilities and Other (Income)
Expense, Net
Other Assets, Other Long-term Liabilities and
Other (Income) Expense, Net consist of the following (in thousands) for the periods presented:
Other Assets
|
|
2002
|
|
2001
|
Land held for sale, net (Note 5) |
|
$ |
3,175 |
|
$ |
|
Deferred expenses |
|
|
1,801 |
|
|
1,900 |
Goodwill (Note 1) |
|
|
1,017 |
|
|
1,017 |
Other investments |
|
|
63 |
|
|
63 |
Intangible asset (Note 10) |
|
|
360 |
|
|
26 |
|
|
|
|
|
|
|
|
|
$ |
6,416 |
|
$ |
3,006 |
|
|
|
|
|
|
|
Other Long-term Liabilities
|
|
2002
|
|
2001
|
Accrued dividends on $21.25 |
|
|
|
|
|
|
Preferred Stock (Note 8) |
|
$ |
15,405 |
|
$ |
13,280 |
Employee benefit related liabilities |
|
|
2,256 |
|
|
2,661 |
Minimum pension liability adjustment (Note 10) |
|
|
19,933 |
|
|
5,891 |
|
|
|
|
|
|
|
|
|
$ |
37,594 |
|
$ |
21,832 |
|
|
|
|
|
|
|
Other (Income) Expense, Net
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
Interest income |
|
$ |
(297 |
) |
|
$ |
(404 |
) |
|
$ |
(1,216 |
) |
Bank fees |
|
|
302 |
|
|
|
328 |
|
|
|
341 |
|
Miscellaneous (income) expense, net |
|
|
515 |
|
|
|
303 |
|
|
|
(74 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
520 |
|
|
$ |
227 |
|
|
$ |
(949 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
[7] Recapitalization
On March 29, 2000 (the Closing Date), the
Company completed the sale of 9,411,765 shares of its common stock, par value $1.00 (the Common Stock), for an aggregate of $40 million, or $4.25 per share (the Purchase), to an investor group led by Tutor-Saliba Corporation
(TSC), and including O&G Industries, Inc. (O&G), and National Union Fire Insurance Company of Pittsburgh, Pa., a wholly owned subsidiary of American International Group, Inc. (National Union and together
with TSC and O&G, the New Investors) pursuant to a Securities Purchase Agreement dated as of February 5, 2000 by and among the Company and the New Investors. Tutor-Saliba Corporation is owned and controlled by Ronald N. Tutor, who
serves as Chairman of the Companys Board of Directors and Chief Executive Officer. (See Note 13 for disclosure of Related Party Transactions between the New Investors and the Company.)
In connection with the Purchase, TSC acquired 2,352,942 shares of Common
Stock for a total consideration of $10,000,000, O&G acquired 2,352,941 shares of Common Stock for a total consideration of $10,000,000 and National Union acquired 4,705,882 shares of Common Stock for a total consideration of $20,000,000.
F-20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[7] Recapitalization (continued)
Concurrent with the closing of the Purchase and as a condition thereto, the
Company converted, pursuant to what was considered to be an induced conversion from an accounting perspective, 100% of its Redeemable Series B Cumulative Convertible Preferred Stock (the Series B Preferred Stock) (which had a current
accreted face amount of approximately $41.2 million) for an aggregate of 7,490,417 shares of common stock at an exchange price of $5.50 per share (the Exchange and together with the Purchase, the Transaction) pursuant to
certain Exchange Agreements by and between the Company and each of The Union Labor Life Insurance Company, acting on behalf of its Separate Account P (ULLICO), PB Capital Partners, L.P. (PB Capital) and The Common Fund for
Non-Profit Organizations (The Common Fund). The holders of the Series B Preferred Stock had previously been entitled to convert their shares to common stock at an exchange price of $9.68. The Company recognized a charge to earnings
available to common shareholders of $13.7 million relative to this transaction in the Companys calculation of basic and diluted earnings per share in 2000 (see Note (1)(i)).
In connection with the Transaction, the Company amended its bylaws to remove provisions creating an Executive Committee of
the Board of Directors and granting certain powers to it and amended its Restated Articles of Organization as of the Closing Date to increase the number of authorized shares of Common Stock from 15,000,000 shares to 40,000,000 shares and to amend
the Series B Preferred Stock Certificate of Vote. The Company also entered into a Shareholders Agreement and a Registration Rights Agreement, each by and among the Company, the New Investors, Ronald N. Tutor, BLUM Capital Partners, L.P., PB
Capital, The Common Fund and ULLICO dated as of the Closing Date. The Shareholders Agreement contains provisions that define, among other things, certain put and call rights and rights of first refusal between National Union and TSC, tag-along
rights of the New Investors and former holders of Series B Preferred Stock and certain procedures to protect the Companys use of its net operating losses (NOLs) for tax purposes. Since the Common Stock issued in connection with the
Transaction was not registered under the Securities Act, the Registration Rights Agreement contains provisions that define the rights of the New Investors and former holders of Series B Preferred Stock to require the Company, under certain
circumstances, to register some or all of the shares under the Securities Act after March 29, 2003. In addition, the Company entered into an Amendment to the Shareholder Rights Agreement dated as of the Closing Date whereby the Transaction would not
trigger the dilutive provisions of the Agreement.
A Special
Committee of the Companys Board of Directors approved the Transaction after receiving a fairness opinion from an investment banking firm. A majority of outstanding common shares, including a majority of shares held by disinterested
shareholders, were voted in favor of the Transaction at a Special Meeting of Stockholders held on March 29, 2000.
The shares of Common Stock issued in the Purchase represent approximately 42% of the Companys voting rights and the New Investors have the right to
nominate three members to the Companys Board of Directors. The former holders of the Series B Preferred Stock now control approximately 33% of the Companys voting rights and continue to be entitled to nominate two members to the
Companys Board of Directors.
In connection with the
Transaction and as a condition thereto, the Company also entered into an Amended and Restated Credit Agreement with its lenders that extended the credit facility from January 2001 to January 2003 (see Note 3).
The effect of the Transaction on Stockholders Equity was to increase
Stockholders Equity by approximately $76.2 million, $37.3 million from the Purchase (gross proceeds of $40.0 million less related capital expenses of $2.7 million) and $38.9 million from the Exchange (current accreted value of $41.2 million
less non-accreted capital expenses of $2.3 million). See the Consolidated Statement of Stockholders Equity for the year ended December 31, 2000.
F-21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[8] Capital Stock and Stock Purchase Warrants
(a) $21.25 Convertible Exchangeable Preferred Stock ($21.25 Preferred
Stock)
In June 1987, net proceeds of
approximately $23,631,000 were received from the sale of 1,000,000 Depositary Convertible Exchangeable Preferred Shares (each Depositary Share representing ownership of 1/10 of a share of $21.25 Convertible Exchangeable Preferred Stock, $1 par
value) at a price of $25 per Depositary Share. Annual dividends are $2.125 per Depositary Share and are cumulative. Generally, the liquidation preference value is $25 per Depositary Share plus any accumulated and unpaid dividends. The $21.25
Preferred Stock of the Company, as evidenced by ownership of Depositary Shares, is convertible at the option of the holder, at any time, into Common Stock of the Company at a conversion price of $37.75 per share of Common Stock. The $21.25 Preferred
Stock is redeemable at the option of the Company at any time at $25 per share plus any unpaid dividends. The $21.25 Preferred Stock is also exchangeable at the option of the Company, in whole but not in part, on any dividend payment date into 8 1/2% convertible subordinated debentures due in 2012 at a rate equivalent to $25 principal amount of debentures for
each Depositary Share. In conjunction with the covenants of certain of the Companys prior Credit Agreements, the Company was required to suspend the payment of quarterly dividends on its $21.25 Preferred Stock (equivalent to $2.125 per
Depositary Share) until certain financial criteria were met. Dividends on the $21.25 Preferred Stock have not been declared since 1995 (although they have been fully accrued due to the cumulative feature of the $21.25 Preferred Stock).
The aggregate amount of dividends in arrears is approximately $15,405,000 at December 31, 2002, which represents approximately $154.05 per share of $21.25 Preferred Stock or approximately $15.41 per Depositary Share and is included in Other
Long-term Liabilities in the accompanying Consolidated Balance Sheets. Under the terms of the $21.25 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 have done so at each of the last five Annual Meetings of Stockholders.
(b) Redeemable Series B Cumulative Convertible Preferred Stock
At a special stockholders meeting on January 17, 1997, the Companys stockholders approved two proposals that allowed the Company to close an
equity transaction with a private investor group. The transaction included, among other things, classification by the Board of Directors of 500,000 shares of Preferred Stock of the Company as Redeemable Series B Cumulative Convertible Preferred
Stock, par value $1.00 per share, (the Series B Preferred Stock), issuance of 150,150 shares of Series B Preferred Stock at $200 per share (or $30 million) to the investor group, (with the remainder of the shares set aside for possible
future payment-in-kind dividends to the holders of the Series B Preferred Stock), amendments to the Companys Bylaws that redefined the Executive Committee and added certain powers (generally financial in nature), including the power to give
overall direction to the Companys Chief Executive Officer, appointment of three new members, recommended by the investor group, to the Board of Directors, and appointment of these same new directors to constitute a majority of the Executive
Committee referred to above. Tutor-Saliba Corporation, a corporation controlled by the Chairman of the Board of Directors of the Company, who was also a member of the Executive Committee, is a participant in certain construction joint ventures with
the Company (see Note 13 Related Party Transactions).
In-kind dividends on the Series B Preferred Stock were paid at an annual rate of 10% of the liquidation preference of $200.00 per share with additional shares of Series B Preferred Stock compounded on a quarterly basis. According to the
terms of the Series B Preferred Stock, it (i) ranked junior in cash dividend and liquidation preference to the $21.25 Convertible Exchangeable Preferred Stock and senior to Common Stock, (ii) provided that no cash dividends will be paid on any
shares of Common Stock except for certain limited dividends beginning in 2001, (iii) was convertible into shares of Common Stock at an initial conversion price of approximately $9.68 per share (equivalent to 3,101,571 shares on January 17, 1997),
(iv) had the same voting rights as shareholders of Common Stock immediately equal to the number of shares of Common Stock into which the Series B Preferred
F-22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[8] Capital Stock and Stock Purchase Warrants (continued)
(b) Redeemable Series B Cumulative Convertible Preferred Stock
(continued)
Stock could be converted, (v) generally had a liquidation preference of $200 per share of Series B Preferred Stock, (vi) was optionally redeemable by the
Company after three years at a redemption price equal to the liquidating value per share and higher amounts if a Special Default, as defined, had occurred, (vii) was mandatorily redeemable by the Company if a Special Default had occurred and a
holder of the Series B Preferred Stock requested such a redemption, (viii) was mandatorily redeemable by the Company for approximately one-third of the shares still outstanding on January 17, 2005 and one-third of the shares in each of the next two
years.
The initial proceeds ($30,030,000) received upon the
issuance of 150,150 Series B Preferred Shares were reduced by related expenses of approximately $3.5 million. Due to the redeemable feature of the Series B Preferred Stock, this reduction had to be added back (or accreted) to reinstate its mandatory
redemption value over a period of 8-10 years, with an offsetting charge to paid-in surplus.
Concurrent with the Purchase described in Note 7 above and as a condition thereto, the Company exchanged 100% of its Series B Preferred Stock for Common Stock, $1.00 par value. See Note 7 for details of the Exchange
and other changes related to the Series B Preferred Stock.
An
analysis of Series B Preferred Stock transactions from December 31, 1999 to the March 29, 2000 Exchange date follows:
|
|
Number of Shares
|
|
Amount
|
|
|
|
|
(in thousands) |
Balance at December 31, 1999 |
|
200,184 |
|
$ |
37,685 |
10% in-kind dividends issued |
|
5,802 |
|
|
1,161 |
Accretion |
|
|
|
|
96 |
|
|
|
|
|
|
Balance March 29, 2000 |
|
205,986 |
|
$ |
38,942 |
|
|
|
|
|
|
(c) Series A Junior
Participating Preferred Stock
Under the terms of the
Companys Shareholder Rights Plan, as amended, the Board of Directors of the Company declared a distribution on September 23, 1988 of one Preferred Stock purchase right (a Right) for each outstanding share of Common Stock. Under
certain circumstances, each Right will entitle the holder thereof to purchase from the Company one one-hundredth of a share (a Unit) of Series A Junior Participating Cumulative Preferred Stock, $1 par value (the Preferred
Stock), at an exercise price of $100 per Unit, subject to adjustment. The Rights will not be exercisable or transferable apart from the Common Stock until the earlier to occur of (i) 10 days following a public announcement that a person or
group (an Acquiring Person) has acquired 20% or more of the Companys outstanding Common Stock (the Stock Acquisition Date), (ii) 10 business days following the announcement by a person or group of an intention to make
an offer that would result in such persons or group becoming an Acquiring Person or (iii) the declaration by the Board of Directors that any person is an Adverse Person, as defined under the Plan. The Rights will not have any voting
rights or be entitled to dividends.
Upon the occurrence of a
triggering event as described above, each Right will be entitled to that number of Units of Preferred Stock of the Company having a market value of two times the exercise price of the Right. If the Company is acquired in a merger or 50% or more of
its assets or earning power is sold, each Right will be
F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[8] Capital Stock and Stock Purchase Warrants (continued)
(c) Series A Junior Participating Preferred Stock
(continued)
entitled to receive Common Stock of the acquiring company having a market value of two times the exercise price of the Right. Rights held by such a person or
group causing a triggering event may be null and void. The Rights are redeemable at $.02 per Right by the Board of Directors at any time prior to the occurrence of a triggering event.
On January 17, 1997, the Board of Directors amended the Companys Shareholder Rights Plan to (i) permit the acquisition
of the Series B Preferred Stock by certain investors (see Note 8(b) above), any additional Preferred Stock issued as a dividend thereon, any Common Stock issued upon conversion of the Series B Preferred Stock and certain other events without
triggering the distribution of the Rights; (ii) lower the threshold for the occurrence of a Stock Acquisition Date from 20% to 10%; and (iii) extend the expiration date of the Plan from September 23, 1998 to January 21, 2007. In addition, the Board
of Directors amended the Companys Shareholder Rights Plan, effective March 29, 2000, to permit the Purchase and Exchange as described in Note 7 above and certain other events without triggering the distribution of the Rights.
(d) Stock Purchase Warrants
In connection with an Amended Credit Agreement effective January 17, 1997
with the Companys bank group at that time, the bankers received Stock Purchase Warrants to purchase up to 420,000 shares of the Companys Common Stock, $1.00 par value, at a purchase price of $8.30 per share, at any time during the ten
year period ending January 17, 2007. The grant date present value of the Stock Purchase Warrants ($2,233,000) was calculated using the Black-Scholes option pricing model and was accounted for by an increase in Stockholders Equity, with the
offset being a valuation account netted against the related Revolving Credit Loans. The valuation account was amortized over the three year term of the Credit Agreement, with the offsetting charge being to Other (Income) Expense, Net.
[9] Stock Options
Effective May 25, 2000, the Companys stockholders approved the adoption of the Special Equity Incentive Plan which
provides that up to 3,000,000 shares of the Companys Common Stock will be available for the granting of non-qualified stock options to key executives, employees and directors of the Company. Options are granted at not less than the fair market
value on the date of grant, as defined. Options granted during the years ended December 31, 2000 and 2001 were granted at amounts ranging from fair market value to $1.50 per share in excess of fair market value. Options generally expire 10 years
from the date of grant. Options outstanding under the Special Equity Incentive Plan are exercisable in three equal annual installments, on the date of grant and on the first and second anniversary of the date of grant, except for options granted on
May 25, 2000 to purchase 62,700 shares that are exercisable in full on the third anniversary of the date of grant. A summary of stock option activity related to the Companys Special Equity Incentive Plan is as follows:
|
|
Number of Shares
|
|
|
Option Price Per Share
|
|
Shares Available to Grant
|
|
|
|
|
Range
|
|
Weighted Average
|
|
Approved May 25, 2000 |
|
|
|
|
|
|
|
|
|
|
3,000,000 |
|
Granted |
|
2,792,700 |
|
|
$ |
3.13-$4.50 |
|
$ |
4.47 |
|
(2,792,700 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2000 |
|
2,792,700 |
|
|
$ |
3.13-$4.50 |
|
$ |
4.47 |
|
207,300 |
|
Granted |
|
20,000 |
|
|
|
$8.10 |
|
$ |
8.10 |
|
(20,000 |
) |
Exercised |
|
(79,666 |
) |
|
|
$4.50 |
|
$ |
4.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2001 and 2002 |
|
2,733,034 |
|
|
$ |
3.13-$8.10 |
|
$ |
4.50 |
|
187,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[9] Stock Options (continued)
At December 31, 2001, 481,610 shares of the Companys authorized but
unissued Common Stock were reserved for issuance to employees under its 1982 Stock Option Plan. Options under this plan were granted at fair market value on the date of grant, as defined, and generally become exercisable in two equal annual
installments on the second and third anniversary of the date of grant and expire eight to ten years from the date of grant. Options for 184,000 shares of Common Stock granted in 1992 and options for 10,000 shares of Common Stock granted in 1994
expired in 2002. In addition, during 2002 the provisions of the 1982 Stock Option Plan expired. Therefore, at December 31, 2002, the only shares of the Companys authorized but unissued Common Stock still reserved for issuance under the 1982
Stock Option Plan were the 67,500 shares applicable to the remaining outstanding options. A summary of stock option activity related to the Companys 1982 Stock Option Plan is as follows:
|
|
Number of Shares
|
|
|
Option Price Per Share
|
|
Shares Available to Grant
|
|
|
|
Range
|
|
Weighted Average
|
|
Outstanding at December 31, 2000 and 2001 |
|
261,500 |
|
|
$ 5.29-$16.44 |
|
$ |
13.43 |
|
220,110 |
|
Canceled |
|
(194,000 |
) |
|
$13.00-$16.44 |
|
$ |
16.26 |
|
(220,110 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2002 |
|
67,500 |
|
|
$5.29 |
|
$ |
5.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition, the
Company has authorized but unissued Common Stock reserved for certain other options granted as follows:
Grantee
|
|
Grant Date
|
|
Options Outstanding
|
|
Exercise Price
|
Members of former Board Executive Committee, As Redefined (see Note 8) |
|
01/17/97 |
|
225,000 |
|
$ |
8.38 |
|
|
|
|
Certain Executive Officers |
|
01/19/98 |
|
135,000 |
|
$ |
8.66 |
|
|
|
|
Member of former Board Executive Committee |
|
12/10/98 |
|
45,000 |
|
$ |
5.29 |
|
|
01/04/99 |
|
30,000 |
|
$ |
5.13 |
The terms of these
options are generally similar to options granted under the 1982 Plan, including the exercise price being equal to fair market value, as defined, at date of grant, and timing of installment exercise dates, except for the timing of the exercisability
of the January 1997 options, which was May 17, 2000.
Options
outstanding at December 31, 2002 and related weighted average price and life information follows:
Remaining Life (Years)
|
|
Grant Date
|
|
Options Outstanding
|
|
Options Exercisable
|
|
Exercise Price
|
3 |
|
01/17/97 |
|
225,000 |
|
225,000 |
|
$8.38 |
4 |
|
01/19/98 |
|
135,000 |
|
135,000 |
|
$8.66 |
4 |
|
12/10/98 |
|
112,500 |
|
112,500 |
|
$5.29 |
5 |
|
01/04/99 |
|
30,000 |
|
30,000 |
|
$5.13 |
8 |
|
03/29/00 |
|
2,000,000 |
|
2,000,000 |
|
$4.50 |
8 |
|
05/25/00 |
|
234,700 |
|
172,000 |
|
$4.13 |
8 |
|
09/12/00 |
|
378,334 |
|
378,334 |
|
$4.50 |
8 |
|
11/15/00 |
|
100,000 |
|
100,000 |
|
$4.50 |
9 |
|
07/09/01 |
|
20,000 |
|
13,334 |
|
$8.10 |
When options are
exercised, the proceeds are credited to stockholders equity. In addition, the income tax savings attributable to nonqualified options exercised are credited to paid-in surplus.
F-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[9] Stock Options (continued)
The Company has elected the optional pro forma disclosures under SFAS No.
123, Accounting for Stock-Based Compensation as if the Company adopted the cost recognition requirements in 1995 (see Note 1(k)). The Company has no options outstanding relating to either 1995 or 1996. The estimated values shown below
and utilized in the Companys pro forma SFAS No. 123 disclosures are based on the Black-Scholes option pricing model for options granted in 1997 through 2002.
Grant Date
|
|
Fair Value
|
|
Assumptions
|
|
|
Dividend Yield
|
|
|
Expected Volatility
|
|
|
Risk-free Interest Rate
|
|
|
Expected Life
|
01/17/97 |
|
$ |
1,070,127 |
|
0 |
% |
|
39 |
% |
|
6.50 |
% |
|
8 |
07/08/97 |
|
$ |
44,086 |
|
0 |
% |
|
38 |
% |
|
6.31 |
% |
|
8 |
01/19/98 |
|
$ |
1,027,758 |
|
0 |
% |
|
37 |
% |
|
5.57 |
% |
|
8 |
12/10/98 |
|
$ |
399,485 |
|
0 |
% |
|
39 |
% |
|
4.63 |
% |
|
8 |
01/04/99 |
|
$ |
75,600 |
|
0 |
% |
|
37 |
% |
|
4.82 |
% |
|
8 |
03/29/00 |
|
$ |
6,180,000 |
|
0 |
% |
|
54 |
% |
|
6.17 |
% |
|
10 |
05/25/00 |
|
$ |
125,400 |
|
0 |
% |
|
49 |
% |
|
6.38 |
% |
|
10 |
05/25/00 |
|
$ |
382,000 |
|
0 |
% |
|
54 |
% |
|
6.38 |
% |
|
10 |
09/12/00 |
|
$ |
1,358,800 |
|
0 |
% |
|
55 |
% |
|
5.78 |
% |
|
10 |
11/15/00 |
|
$ |
245,000 |
|
0 |
% |
|
53 |
% |
|
5.71 |
% |
|
10 |
07/09/01 |
|
$ |
124,600 |
|
0 |
% |
|
66 |
% |
|
5.34 |
% |
|
10 |
[10] Employee Benefit Plans
The Company has a defined benefit pension plan that
covers its executive, professional, administrative and clerical employees, subject to certain specified service requirements. The plan is noncontributory and benefits are based on an employees years of service and final average
earnings, as defined. The plan provides reduced benefits for early retirement and takes into account offsets for social security benefits. All employees are vested after five years of service. The Company also has an unfunded supplemental
retirement plan for certain employees whose benefits under the defined benefit pension plan are reduced because of compensation limitations under federal tax laws. In accordance with SFAS No. 132, Employers Disclosures About Pensions and
Other Post-Retirement Benefits, pension disclosure as presented below includes aggregated amounts for both of the Companys plans, except where otherwise indicated.
Net pension cost for 2002, 2001 and 2000 follows (in thousands):
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
Service cost benefits earned during the period |
|
$ |
1,459 |
|
|
$ |
1,094 |
|
|
$ |
963 |
|
Interest cost on projected benefit obligation |
|
|
4,529 |
|
|
|
4,404 |
|
|
|
4,259 |
|
Expected return on plan assets |
|
|
(4,899 |
) |
|
|
(4,831 |
) |
|
|
(4,633 |
) |
Amortization of transition obligation |
|
|
|
|
|
|
|
|
|
|
6 |
|
Amortization of prior service costs |
|
|
25 |
|
|
|
(26 |
) |
|
|
(4 |
) |
Recognized actuarial loss |
|
|
56 |
|
|
|
68 |
|
|
|
33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net pension cost |
|
$ |
1,170 |
|
|
$ |
709 |
|
|
$ |
624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial assumptions used: |
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
|
|
7.25 |
% |
|
|
7.50 |
% |
|
|
7.75 |
% |
Rate of increase in compensation |
|
|
6.00 |
% |
|
|
6.00 |
% |
|
|
6.00 |
% |
Long-term rate of return on assets |
|
|
9.00 |
% |
|
|
9.00 |
% |
|
|
9.00 |
% |
F-26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[10] Employee Benefit Plans (continued)
The following tables provide a reconciliation of the changes of the fair
value of assets in the plan and plan benefit obligations during the two year period ended December 31, 2002, and a statement of the funded status as of December 31, 2002 and 2001 (in thousands):
Reconciliation of Fair Value of Plan Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
2002
|
|
|
2001
|
|
Balance at beginning of year |
|
$ |
46,164 |
|
|
$ |
52,567 |
|
Actual return on plan assets |
|
|
(6,387 |
) |
|
|
(2,994 |
) |
Employer contribution |
|
|
2,370 |
|
|
|
159 |
|
Benefit payments |
|
|
(3,620 |
) |
|
|
(3,568 |
) |
|
|
|
|
|
|
|
|
|
Balance at end of year |
|
$ |
38,527 |
|
|
$ |
46,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Projected Benefit Obligation |
|
|
|
|
|
|
|
|
|
|
2002
|
|
|
2001
|
|
Balance at beginning of year |
|
$ |
64,244 |
|
|
$ |
59,992 |
|
Service cost |
|
|
1,459 |
|
|
|
1,094 |
|
Interest cost |
|
|
4,529 |
|
|
|
4,404 |
|
Plan amendments |
|
|
298 |
|
|
|
|
|
Actuarial loss |
|
|
3,893 |
|
|
|
2,322 |
|
Benefit payments |
|
|
(3,620 |
) |
|
|
(3,568 |
) |
|
|
|
|
|
|
|
|
|
Balance at end of year |
|
$ |
70,803 |
|
|
$ |
64,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded Status |
|
|
|
|
|
|
|
|
|
|
2002
|
|
|
2001
|
|
Funded status at December 31, |
|
$ |
(32,276 |
) |
|
$ |
(18,080 |
) |
Unrecognized prior service cost |
|
|
299 |
|
|
|
26 |
|
Unrecognized loss |
|
|
28,098 |
|
|
|
12,975 |
|
|
|
|
|
|
|
|
|
|
Net amount recognized, before additional minimum liability |
|
$ |
(3,879 |
) |
|
$ |
(5,079 |
) |
|
|
|
|
|
|
|
|
|
The following table
presents amounts included in the Consolidated Balance Sheets as of December 31, 2002 and 2001 (in thousands):
|
|
2002
|
|
|
2001
|
|
Accrued benefit liability |
|
$ |
(23,812 |
) |
|
$ |
(10,970 |
) |
Intangible asset (Note 6) |
|
|
360 |
|
|
|
26 |
|
Accumulated other comprehensive income |
|
|
19,573 |
|
|
|
5,865 |
|
|
|
|
|
|
|
|
|
|
Net amount recognized at year end |
|
$ |
(3,879 |
) |
|
$ |
(5,079 |
) |
|
|
|
|
|
|
|
|
|
Other comprehensive
income attributable to a change in the additional minimum pension liability recognized pursuant to SFAS No. 87, Employers Accounting for Pensions amounted to $13.7 million in 2002 and $5.9 million in 2001. The cumulative amount of
$19.6 million generally represents the excess of the accumulated benefit obligations of the Companys pension plans over the fair value of the plans assets as of December 31, 2002 compared to the unfunded accrued pension liability
previously recognized. This amount is
F-27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[10] Employee Benefit Plans (continued)
reflected as a long-term liability as of December 31, 2002 (see Note 6) with the offset being a reduction in stockholders equity. Subsequent
adjustments to the amount of this additional minimum pension liability will be recorded in future years, if required, based upon periodic re-evaluation of the funded status of the Companys pension plans.
The Companys plans have benefit obligations in excess of the fair value
of the plans assets. Plan assets generally include equity and fixed income funds. The following table provides information relating to each of the plans benefit obligations compared to the fair value of its assets as of December 31, 2002
and 2001 (in thousands):
|
|
2002
|
|
2001
|
|
|
Pension Plan
|
|
Benefit Equalization Plan
|
|
Total
|
|
Pension Plan
|
|
Benefit Equalization Plan
|
|
Total
|
Projected benefit obligation |
|
$ |
68,107 |
|
$ |
2,696 |
|
$ |
70,803 |
|
$ |
61,470 |
|
$ |
2,774 |
|
$ |
64,244 |
Accumulated benefit obligation |
|
$ |
59,986 |
|
$ |
2,353 |
|
$ |
62,339 |
|
$ |
54,894 |
|
$ |
2,240 |
|
$ |
57,134 |
Fair value of plan assets |
|
$ |
38,527 |
|
$ |
|
|
$ |
38,527 |
|
$ |
46,164 |
|
$ |
|
|
$ |
46,164 |
|
|
|
|
|
|
|
Projected benefit obligation greater than Fair value of plan assets |
|
$ |
29,580 |
|
$ |
2,696 |
|
$ |
32,276 |
|
$ |
15,306 |
|
$ |
2,774 |
|
$ |
18,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation greater than Fair value of plan assets |
|
$ |
21,459 |
|
$ |
2,353 |
|
$ |
23,812 |
|
$ |
8,730 |
|
$ |
2,240 |
|
$ |
10,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has a
contributory Section 401(k) plan which covers its executive, professional, administrative and clerical employees, subject to certain specified service requirements. The 401(k) expense provision approximated $0.7 million in 2002, $0.1 million in 2001
and $0.6 million in 2000. Prior to 2002, the Companys contribution was generally based on a specified percentage of profits, subject to certain limitations, as well as approval by the Companys Board of Directors of any discretionary
Company contributions to the Section 401(k) plan. Beginning in 2002, the Companys contribution is based on a non-discretionary match of employees contributions, as defined.
In addition, the Company has an incentive compensation plan for key employees which is generally based on the Companys
achievement of a certain level of profit.
The Company also
contributes to various multi-employer union retirement plans under collective bargaining agreements which provide retirement benefits for substantially all of its union employees. The aggregate amounts provided in accordance with the requirements of
these plans were approximately $7.3 million in 2002, $8.8 million in 2001 and $4.9 million in 2000. The Multi-employer Pension Plan Amendments Act of 1980 defines certain employer obligations under multi-employer plans. Information regarding union
retirement plans is not available from plan administrators to enable the Company to determine its share of unfunded vested liabilities.
F-28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[11] Unaudited Quarterly Financial Data
The following table sets forth unaudited quarterly financial data for the
years ended December 31, 2002 and 2001 (in thousands, except per share amounts):
|
|
2002 by Quarter
|
|
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
Revenues |
|
$ |
321,370 |
|
$ |
268,307 |
|
$ |
232,805 |
|
$ |
262,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
12,999 |
|
$ |
12,363 |
|
$ |
12,376 |
|
$ |
20,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,215 |
|
$ |
4,690 |
|
$ |
3,644 |
|
$ |
9,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
0.21 |
|
$ |
0.18 |
|
$ |
0.14 |
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
0.20 |
|
$ |
0.18 |
|
$ |
0.14 |
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2001 by Quarter
|
|
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
Revenues |
|
$ |
352,178 |
|
$ |
421,222 |
|
$ |
417,476 |
|
$ |
362,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
13,499 |
|
$ |
14,857 |
|
$ |
13,608 |
|
$ |
15,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
6,820 |
|
$ |
7,359 |
|
$ |
5,843 |
|
$ |
6,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
0.28 |
|
$ |
0.30 |
|
$ |
0.23 |
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
0.28 |
|
$ |
0.29 |
|
$ |
0.22 |
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
F-29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[12] Business Segments
Business segment information presented below was determined in accordance
with SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information.
The Company provides general contracting, construction management and design-build services to private clients and public agencies throughout the United
States and selected overseas locations. The Companys construction business involves two basic segments: building and civil. The building operation services both private clients and public agencies from offices located in Boston, Phoenix, Las
Vegas, Detroit and Celebration, FL and includes a broad range of building construction projects, such as hotels, casinos, healthcare facilities, correctional facilities, sports complexes, multi-unit residential, commercial, civic, cultural and
educational facilities. The civil operation is focused on public civil work in the East and selectively in other geographic locations and includes large, ongoing urban infrastructure repair and replacement projects such as highway and bridge
rehabilitation, mass transit projects and waste water treatment facilities. During the years 2000 through 2002, the Companys chief operating decision making group consisted of the Chairman and Chief Executive Officer, the President and Chief
Operating Officer, the President of Perini Building Company and the President of Perini Civil Construction. This group decides how to allocate resources and assess performance of the business segments. Generally, the Company evaluates performance of
its operating segments on the basis of income from operations and cash flow. The accounting policies applied by each of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note 1). The following tables
set forth certain business and geographic segment information relating to the Companys operations for each of the three years in the period ended December 31, 2002 (in thousands):
|
|
Reportable Segments
|
|
Corporate
|
|
|
Consolidated Total
|
|
|
Building
|
|
Civil
|
|
Totals
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
772,513 |
|
$ |
312,528 |
|
$ |
1,085,041 |
|
$ |
|
|
|
$ |
1,085,041 |
Income from Operations |
|
$ |
26,225 |
|
$ |
6,390 |
|
$ |
32,615 |
|
$ |
(6,735 |
)(a) |
|
$ |
25,880 |
Assets |
|
$ |
158,241 |
|
$ |
223,036 |
|
$ |
381,277 |
|
$ |
21,112 |
(b) |
|
$ |
402,389 |
Capital Expenditures |
|
$ |
2,175 |
|
$ |
2,335 |
|
$ |
4,510 |
|
$ |
|
|
|
$ |
4,510 |
|
|
|
|
|
|
Reportable Segments
|
|
Corporate
|
|
|
Consolidated Total
|
|
|
Building
|
|
Civil
|
|
Totals
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
1,199,439 |
|
$ |
353,957 |
|
$ |
1,553,396 |
|
$ |
|
|
|
$ |
1,553,396 |
Income from Operations |
|
$ |
31,612 |
|
$ |
3,918 |
|
$ |
35,530 |
|
$ |
(6,029 |
)(a) |
|
$ |
29,501 |
Assets |
|
$ |
234,022 |
|
$ |
246,326 |
|
$ |
480,348 |
|
$ |
20,893 |
(b) |
|
$ |
501,241 |
Capital Expenditures |
|
$ |
1,408 |
|
$ |
3,120 |
|
$ |
4,528 |
|
$ |
|
|
|
$ |
4,528 |
|
|
|
|
|
|
Reportable Segments
|
|
Corporate
|
|
|
Consolidated Total
|
|
|
Building
|
|
Civil
|
|
Totals
|
|
|
2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
826,191 |
|
$ |
279,469 |
|
$ |
1,105,660 |
|
$ |
|
|
|
$ |
1,105,660 |
Income from Operations |
|
$ |
27,076 |
|
$ |
5,624 |
|
$ |
32,700 |
|
$ |
(5,345 |
)(a) |
|
$ |
27,355 |
Assets |
|
$ |
224,502 |
|
$ |
215,886 |
|
$ |
440,388 |
|
$ |
47,090 |
(b) |
|
$ |
487,478 |
Capital Expenditures |
|
$ |
727 |
|
$ |
1,066 |
|
$ |
1,793 |
|
$ |
|
|
|
$ |
1,793 |
(a) |
In all years, consists of corporate general and administrative expenses. |
(b) |
In all years, corporate assets consist principally of cash, cash equivalents, marketable securities, land held for sale and other investments available for general corporate
purposes. |
F-30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[12] Business Segments (continued)
Revenues from the Mohegan Sun Project in the building segment totaled
approximately $153 million (or 14% of consolidated revenues) in 2002, $457 million (or 29%) in 2001 and $319 million (or 29%) in 2000. Revenues from various agencies of the City of New York in the civil segment totaled approximately $185 million (or
17%) in 2002, $185 million (or 12%) in 2001, and $117 million (or 11%) in 2000.
Information concerning principal geographic areas is as follows:
|
|
Revenues
|
|
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
United States |
|
$ |
1,029,097 |
|
|
$ |
1,516,810 |
|
|
$ |
1,065,304 |
|
Foreign and U.S. Territories |
|
|
55,944 |
|
|
|
36,586 |
|
|
|
40,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,085,041 |
|
|
$ |
1,553,396 |
|
|
$ |
1,105,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations
|
|
|
|
2002
|
|
|
2001
|
|
|
2000
|
|
United States |
|
$ |
26,731 |
|
|
$ |
32,654 |
|
|
$ |
35,106 |
|
Foreign and U.S. Territories |
|
|
5,884 |
|
|
|
2,876 |
|
|
|
(2,406 |
) |
Corporate |
|
|
(6,735 |
) |
|
|
(6,029 |
) |
|
|
(5,345 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
25,880 |
|
|
$ |
29,501 |
|
|
$ |
27,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-lived assets
outside the United States are immaterial and therefore not presented here.
There have been no differences from the last annual report in the basis of measuring segment profit or loss. The decrease in assets related to the building segment in 2002 compared to 2001 is due primarily to a
decrease in retainage receivable on several large projects. This decrease is transitory and is not indicative of any long-term trend.
F-31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[13] Related Party Transactions
Effective with the issuance of Series B Preferred Stock in 1997, the Company
entered into an agreement with Tutor-Saliba Corporation (TSC), a California corporation engaged in the construction industry, and Ronald N. Tutor, Chief Executive Officer and sole stockholder of TSC, to provide certain management
services, as defined. At January 17, 1997, TSC held 351,318 shares of the Companys $1.00 par value Common Stock. TSC participates in joint ventures with the Company, the Companys share of which contributed $48.8 million, $17.9 million,
and $4.6 million to the Companys consolidated revenues in 2002, 2001 and 2000, respectively. Mr. Tutor was appointed as one of the three new directors in accordance with the terms of the Series B Preferred Stock transaction, a member of the
Executive Committee of the Board and, during 1997, acting Chief Operating Officer of the Company. Effective January 1, 1998, Mr. Tutor was elected Vice Chairman of the Board of Directors and effective July 1, 1999 was elected Chairman of the Board
of Directors. Effective March 29, 2000, Mr. Tutor was appointed Chief Executive Officer of the Company. Compensation for the management services consists of payment of $250,000 per year to TSC, options granted to Mr. Tutor, and incentive
compensation of $231,000 awarded to Mr. Tutor in 2002 and $250,000 awarded to Mr. Tutor in 2001. All of the stock options granted to Mr. Tutor were granted at or above fair market value on the date of grant and are summarized as follows:
Grant Date
|
|
Option Price Per Share
|
|
Number of Shares
|
|
Expiration Date
|
01-17-97 |
|
$ |
8.3750 |
|
150,000 |
|
01-16-05 |
12-10-98 |
|
$ |
5.2875 |
|
45,000 |
|
12-09-06 |
01-04-99 |
|
$ |
5.1250 |
|
30,000 |
|
01-03-07 |
03-29-00 |
|
$ |
4.5000 |
|
1,000,000 |
|
03-28-10 |
In late 2000, the
Company entered into a joint venture arrangement with TSC, the sponsoring partner, whereby the Company was to primarily provide certain prequalification and proposal support services to the joint venture in return for a fixed fee of $500,000 payable
subsequent to the award and start-up of the project. In addition, the agreement provided that the Company would not be liable for any costs, losses, liabilities or damages that may arise from the project. The Company recorded the $500,000 fixed fee
as income in 2001 when its commitment to the joint venture was fulfilled. Payment of the fee was received from TSC in February, 2002. In late 2001, the Company entered into a similar joint venture arrangement with TSC, the sponsoring partner,
whereby the Company was to primarily provide certain prequalification and proposal support services to the joint venture in return for a fixed fee of $200,000 payable subsequent to the award and start-up of the project. In addition, the agreement
provided that the Company would not be liable for any costs, losses, liabilities or damages that may arise from the project. The Company recorded the $200,000 fixed fee as income in 2002 when the contract was awarded to the joint venture. Payment of
the fee was received from TSC in February, 2002.
In late 2002,
the Company entered into an arrangement with TSC whereby TSC provided a financial guarantee in order for the Company to secure a performance and payment bond on a building project with an estimated contract value of approximately $135 million. As
compensation for the financial guarantee, the Company paid TSC a fee of $1.0 million in February 2003.
F-32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2002, 2001 and 2000 (continued)
[13] Related Party Transactions (continued)
The new investors that provided $40 million of new equity in the Company on
March 29, 2000 as described in Note 7 consist of Tutor-Saliba Corporation (see above), O&G Industries, Inc. (O&G), a participant in certain construction joint ventures with the Company, and National Union Fire Insurance Company
of Pittsburgh, Pa., a wholly owned subsidiary of American International Group, Inc. (AIG), one of the Companys sureties and a provider of insurance and insurance related services to the Company. After this investment, the
cumulative holdings of each of the new investors were as follows:
|
|
Number of Shares
|
|
Percentage of Total Shares Outstanding
|
|
TSC |
|
2,704,260 |
|
12.0 |
% |
O&G |
|
2,502,941 |
|
11.1 |
% |
AIG |
|
4,705,882 |
|
20.8 |
% |
Each of the new
investors is entitled to appoint a member to the Companys Board of Directors. O&G participates in joint ventures with the Company, the Companys share of which contributed $0.6 million to the Companys consolidated revenues in
2001. Payments to AIG for surety, insurance and insurance related services approximated $9.5 million in 2002, $8.2 million in 2001 and $4.6 million in 2000.
[14] Subsequent Events
On January 23, 2003, the Company completed the acquisition of James A. Cummings, Inc., a privately held construction company based in Fort Lauderdale,
Florida, for $20 million in cash, financed in part through the Companys credit facility. James A. Cummings, Inc. is an established building construction and construction management company in the South Florida region specializing in the
construction of schools, public and commercial facilities. At January 1, 2003, James A. Cummings, Inc. had a firm backlog of approximately $170 million. The acquisition will be effective as of January 1, 2003 and, accordingly, James A. Cummings,
Inc. will be included in the Companys consolidated results of operations and financial position beginning in the first quarter of 2003.
F-33
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 2003 (UNAUDITED) AND DECEMBER 31, 2002
(In Thousands)
|
|
SEPT. 30, 2003
|
|
|
DEC. 31, 2002
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents (Note 4) |
|
$ |
45,376 |
|
|
$ |
47,031 |
|
Accounts and Notes Receivable |
|
|
256,341 |
|
|
|
218,172 |
|
Unbilled Work |
|
|
115,017 |
|
|
|
112,563 |
|
Land Held for Sale, Net |
|
|
2,057 |
|
|
|
2,173 |
|
Other Current Assets |
|
|
5,984 |
|
|
|
1,992 |
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
$ |
424,775 |
|
|
$ |
381,931 |
|
|
|
|
|
|
|
|
|
|
Property and Equipment, less Accumulated Depreciation of $21,956 in 2003 and $19,858 in 2002 |
|
$ |
16,334 |
|
|
$ |
14,042 |
|
|
|
|
|
|
|
|
|
|
Other Assets |
|
$ |
23,303 |
|
|
$ |
6,416 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
464,412 |
|
|
$ |
402,389 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current Maturities of Long-term Debt (Note 7) |
|
$ |
831 |
|
|
$ |
416 |
|
Accounts Payable |
|
|
213,093 |
|
|
|
162,456 |
|
Deferred Contract Revenue |
|
|
61,631 |
|
|
|
65,868 |
|
Accrued Expenses |
|
|
27,110 |
|
|
|
37,283 |
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
$ |
302,665 |
|
|
$ |
266,023 |
|
|
|
|
|
|
|
|
|
|
Long-term Debt, less current maturities included above (Note 7) |
|
$ |
25,566 |
|
|
$ |
12,123 |
|
|
|
|
|
|
|
|
|
|
Other Long-term Liabilities (Note 11) |
|
$ |
32,671 |
|
|
$ |
37,594 |
|
|
|
|
|
|
|
|
|
|
Contingencies and Commitments (Note 6) |
|
|
|
|
|
|
|
|
|
|
|
Stockholders Equity (Note 8): |
|
|
|
|
|
|
|
|
Preferred Stock |
|
$ |
56 |
|
|
$ |
100 |
|
Series A Junior Participating Preferred Stock |
|
|
|
|
|
|
|
|
Stock Purchase Warrants |
|
|
2,233 |
|
|
|
2,233 |
|
Common Stock |
|
|
22,903 |
|
|
|
22,725 |
|
Paid-In Surplus |
|
|
91,137 |
|
|
|
95,546 |
|
Retained Earnings (Deficit) |
|
|
7,719 |
|
|
|
(13,417 |
) |
Less Treasury Stock |
|
|
(965 |
) |
|
|
(965 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
123,083 |
|
|
$ |
106,222 |
|
Accumulated Other Comprehensive Loss |
|
|
(19,573 |
) |
|
|
(19,573 |
) |
|
|
|
|
|
|
|
|
|
Total Stockholders Equity |
|
$ |
103,510 |
|
|
$ |
86,649 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
464,412 |
|
|
$ |
402,389 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated condensed financial statements.
F-34
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(In Thousands, Except Share and Per Share Data)
|
|
NINE MONTHS ENDED SEPT. 30,
|
|
|
|
2003
|
|
|
2002
|
|
Revenues (Note 12) |
|
$ |
873,451 |
|
|
$ |
822,482 |
|
Cost of Operations |
|
|
829,590 |
|
|
|
784,744 |
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
$ |
43,861 |
|
|
$ |
37,738 |
|
General and Administrative Expenses |
|
|
27,709 |
|
|
|
22,132 |
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONSTRUCTION OPERATIONS (Note 12) |
|
$ |
16,152 |
|
|
$ |
15,606 |
|
Other Income (Expense), Net |
|
|
(428 |
) |
|
|
(360 |
) |
Interest Expense |
|
|
(701 |
) |
|
|
(1,146 |
) |
|
|
|
|
|
|
|
|
|
Income before Income Taxes |
|
$ |
15,023 |
|
|
$ |
14,100 |
|
Credit (Provision) for Income Taxes (Note 9) |
|
|
6,410 |
|
|
|
(551 |
) |
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
21,433 |
|
|
$ |
13,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Accrued Dividends on $21.25 Preferred Stock (Note 11) |
|
|
(1,356 |
) |
|
|
(1,594 |
) |
Plus: Reversal of Accrued Dividends on $21.25 Preferred Stock based on results of 2003 tender offer (Notes 8 and
11) |
|
|
7,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS |
|
$ |
27,331 |
|
|
$ |
11,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER COMMON SHARE (Note 10) |
|
$ |
1.20 |
|
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER COMMON SHARE (Note 10) |
|
$ |
1.17 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
DIVIDENDS PER COMMON SHARE (Note 11) |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 10): |
|
|
|
|
|
|
|
|
BASIC |
|
|
22,726,132 |
|
|
|
22,664,135 |
|
Effect of Dilutive Stock Options Outstanding |
|
|
672,564 |
|
|
|
363,945 |
|
|
|
|
|
|
|
|
|
|
DILUTED |
|
|
23,398,696 |
|
|
|
23,028,080 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated condensed financial statements.
F-35
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS EQUITY
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(In Thousands, Except Share Data )
|
|
Preferred Stock
|
|
|
Stock Purchase Warrants
|
|
Common Stock
|
|
Paid-In Surplus
|
|
|
Retained Earnings (Deficit)
|
|
|
Treasury Stock
|
|
|
Accumulated Other Comprehensive Loss
|
|
|
Total
|
|
Balance - December 31, 2002 |
|
$ |
100 |
|
|
$ |
2,233 |
|
$ |
22,725 |
|
$ |
95,546 |
|
|
$ |
(13,417 |
) |
|
$ |
(965 |
) |
|
$ |
(19,573 |
) |
|
$ |
86,649 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,433 |
|
|
|
|
|
|
|
|
|
|
|
21,433 |
|
Preferred stock tendered (Note 8) |
|
|
(44 |
) |
|
|
|
|
|
|
|
|
(11,217 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,261 |
) |
Reversal of dividends previously accrued on preferred stock tendered (Note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
7,243 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
7,254 |
|
Preferred stock dividends accrued ( $15.938 per share *) |
|
|
|
|
|
|
|
|
|
|
|
|
(1,048 |
) |
|
|
(308 |
) |
|
|
|
|
|
|
|
|
|
|
(1,356 |
) |
Common stock options exercised |
|
|
|
|
|
|
|
|
|
178 |
|
|
613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - September 30, 2003 |
|
$ |
56 |
|
|
$ |
2,233 |
|
$ |
22,903 |
|
$ |
91,137 |
|
|
$ |
7,719 |
|
|
$ |
(965 |
) |
|
$ |
(19,573 |
) |
|
$ |
103,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Equivalent to $1.0625 per Depositary Share. |
The accompanying notes are an integral part of these consolidated condensed financial statements.
F-36
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(In Thousands)
|
|
NINE MONTHS ENDED SEPTEMBER 30,
|
|
|
|
2003
|
|
|
2002
|
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
21,433 |
|
|
$ |
13,549 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,524 |
|
|
|
2,309 |
|
Cash used by changes in components of working capital other than cash, current maturities of long-term debt and deferred tax
asset |
|
|
(12,592 |
) |
|
|
(49,607 |
) |
Net deferred tax asset |
|
|
(7,270 |
) |
|
|
|
|
Other long-term liabilities |
|
|
975 |
|
|
|
(941 |
) |
Other non-cash items, net |
|
|
(444 |
) |
|
|
(32 |
) |
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED FROM (USED BY) OPERATING ACTIVITIES |
|
$ |
4,626 |
|
|
$ |
(34,722 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Proceeds from sale of property and equipment |
|
$ |
767 |
|
|
$ |
140 |
|
Acquisition of property and equipment |
|
|
(4,406 |
) |
|
|
(3,710 |
) |
Acquisition of James A. Cummings, Inc., net of cash balance acquired (Note 5) |
|
|
(8,613 |
) |
|
|
|
|
Proceeds from (investment in) land held for sale, net |
|
|
2,125 |
|
|
|
(265 |
) |
Proceeds from sale of marketable securities |
|
|
380 |
|
|
|
|
|
Investment in other activities |
|
|
78 |
|
|
|
(498 |
) |
|
|
|
|
|
|
|
|
|
NET CASH USED BY INVESTING ACTIVITIES |
|
$ |
(9,669 |
) |
|
$ |
(4,333 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
$ |
14,192 |
|
|
$ |
26,816 |
|
Reduction of long-term debt |
|
|
(334 |
) |
|
|
(10,135 |
) |
Purchase of Preferred Stock pursuant to Tender Offer (Note 8) |
|
|
(11,261 |
) |
|
|
|
|
Proceeds from exercise of common stock options |
|
|
791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED FROM FINANCING ACTIVITIES |
|
$ |
3,388 |
|
|
$ |
16,681 |
|
|
|
|
|
|
|
|
|
|
Net Decrease in Cash |
|
$ |
(1,655 |
) |
|
$ |
(22,374 |
) |
Cash at Beginning of Year |
|
|
47,031 |
|
|
|
56,542 |
|
|
|
|
|
|
|
|
|
|
Cash at End of Period |
|
$ |
45,376 |
|
|
$ |
34,168 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Paid During the Period For: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
745 |
|
|
$ |
1,118 |
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
1,078 |
|
|
$ |
1,401 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated condensed financial statements.
F-37
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 accounting principles generally accepted in
the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included in the Companys Form 10-K for the year ended December 31, 2002. In the opinion of management, the
accompanying unaudited consolidated condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Companys financial position as of September 30, 2003 and December 31,
2002, results of operations for the three month and nine month periods ended September 30, 2003 and 2002, and cash flows for the nine month periods ended September 30, 2003 and 2002. The results of operations for the nine month period ended
September 30, 2003 may not be indicative of the results that may be expected for the year ending December 31, 2003 because the Companys results are primarily generated from a limited number of significant active construction contracts.
Therefore, such results can vary depending on the timing of progress achieved and changes in estimated 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, 2002. The Company has made no significant change in these policies during 2003.
(3) Stock-Based Compensation
The Company accounts for stock options granted to employees and directors using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income since all stock options granted by the Company had an
exercise price equal to or greater than the fair market value of the underlying common stock on the measurement date. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee and director compensation (in thousands). The effect of applying SFAS No. 123 in this pro forma disclosure may not be indicative of
future charges.
|
|
Nine Months Ended September 30,
|
|
|
|
2003
|
|
2002
|
|
Net income, as reported |
|
$ |
21,433 |
|
$ |
13,549 |
|
Less: Total stock-based employee compensation expense determined under fair value based method for all awards |
|
|
|
|
|
(2,124 |
) |
|
|
|
|
|
|
|
|
Net income, pro forma |
|
$ |
21,433 |
|
$ |
11,425 |
|
|
|
|
|
|
|
|
|
Basic earnings per common share: |
|
|
|
|
|
|
|
As reported (see Note 10) |
|
$ |
1.20 |
|
$ |
0.53 |
|
Pro forma |
|
$ |
1.20 |
|
$ |
0.43 |
|
|
|
|
Diluted earnings per common share: |
|
|
|
|
|
|
|
As reported (see Note 10) |
|
$ |
1.17 |
|
$ |
0.52 |
|
Pro forma |
|
$ |
1.17 |
|
$ |
0.42 |
|
F-38
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(4) Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with original
maturities of three months or less.
Cash and cash equivalents
as reported in the accompanying Consolidated Condensed Balance Sheets consist of amounts held by the Company that are available for general corporate purposes and the Companys proportionate share of amounts held by construction joint ventures
that are available only for joint venture-related uses. Cash held by construction joint ventures is distributed from time to time to the Company and to the other joint venture participants in accordance with their percentage interest after the joint
venture partners determine that a cash distribution is prudent. Cash distributions received by the Company from its construction joint ventures are then available for general corporate purposes. At September 30, 2003 and December 31, 2002, cash and
cash equivalents consisted of the following (in thousands):
|
|
Sept. 30, 2003
|
|
Dec. 31, 2002
|
Corporate cash and cash equivalents (available for general corporate purposes) |
|
$ |
16,959 |
|
$ |
11,220 |
Companys share of joint venture cash and cash equivalents (available only for joint venture purposes, including future
distributions) |
|
|
28,417 |
|
|
35,811 |
|
|
|
|
|
|
|
|
|
$ |
45,376 |
|
$ |
47,031 |
|
|
|
|
|
|
|
(5) Acquisition of James
A. Cummings, Inc.
On January 23, 2003, the
Company completed the acquisition of 100% of the outstanding common stock of James A. Cummings, Inc. (Cummings), a privately held construction company based in Fort Lauderdale, Florida, for $20 million in cash, financed in part through
the Companys credit facility. Cummings is an established building construction and construction management company in the South Florida region specializing in the construction of schools, municipal buildings, and commercial facilities. At
January 1, 2003, Cummings had a firm backlog of approximately $170 million. The acquisition is effective as of January 1, 2003 and, accordingly, Cummings financial results are included in the Companys consolidated results of operations
and financial position beginning in the first quarter of 2003.
The transaction was accounted for using the purchase method of accounting as required by FASB Statement No. 141, Business Combinations. Goodwill and identifiable intangible assets recorded in the acquisition will be tested
periodically for impairment as required by FASB Statement No. 142 Goodwill and Other Intangible Assets. The allocation of acquisition costs, which consists of the $20 million cash consideration referred to above and $565,000 of other
direct acquisition costs, is as follows (in thousands):
Current assets |
|
$ |
34,419 |
|
Property and equipment, net |
|
|
394 |
|
Other long-term assets |
|
|
23 |
|
Goodwill |
|
|
12,990 |
|
Other identifiable intangible assets |
|
|
575 |
|
|
|
|
|
|
Total assets acquired |
|
$ |
48,401 |
|
Less - Liabilities assumed |
|
|
(27,836 |
) |
|
|
|
|
|
Total Consideration and Acquisition Costs |
|
$ |
20,565 |
|
|
|
|
|
|
F-39
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(5) Acquisition of James A. Cummings, Inc. (continued)
Since the acquisition was effective as of January 1, 2003,
the Companys actual 2003 year to date results include Cummings for the total period. Therefore, the following pro forma financial information is only presented for the comparative nine month period ended September 30, 2002 (in thousands,
except per share data):
|
|
Nine Months Ended September 30, 2002
|
|
|
Actual
|
|
Pro forma
|
Revenues |
|
$ |
822,482 |
|
$ |
895,511 |
Gross profit |
|
$ |
37,738 |
|
$ |
42,523 |
Net income |
|
$ |
13,549 |
|
$ |
15,461 |
|
|
|
Basic earnings per common share |
|
$ |
0.53 |
|
$ |
0.61 |
Diluted earnings per common share |
|
$ |
0.52 |
|
$ |
0.60 |
The pro forma results
have been prepared for comparative purposes only and include certain adjustments such as increased interest expense on acquisition debt and additional amortization expenses related to intangible assets arising from the acquisition. The pro forma
results are not necessarily indicative either of the results of operations that actually would have resulted had the acquisition been in effect on January 1, 2002 or of future results.
(6) Contingencies and Commitments
(a) Mergentime Perini Joint Ventures Vs. WMATA Matter
On May 11, 1990, contracts with two joint ventures in which Perini
Corporation held a minority interest (Joint Ventures) were terminated by the Washington Metropolitan Area Transit Authority (WMATA) on two adjacent subway construction contracts in the District of Columbia. The contracts were
awarded to the Joint Ventures in 1985 and 1986. However, Perini and Mergentime Corporation (Mergentime), the 60% managing partner, entered into an agreement in 1987 under which Perini withdrew from the Joint Ventures and Mergentime
assumed complete control over the performance of both projects. This agreement did not relieve Perini of its responsibilities to WMATA as a Joint Venture partner. After Perini withdrew from the Joint Ventures, Mergentime and WMATA were embroiled in
a dispute regarding progress on the projects. Each party blamed the other for delays that were impacting both cost and progress and the parties were unable to resolve their dispute. Ultimately, both construction contracts were terminated by WMATA
and WMATA retained Perini, acting independently, to complete both projects.
Subsequently, the Joint Ventures brought an action in the United States District Court for the District of Columbia against WMATA, seeking damages for delays, unpaid extra work and wrongful termination and WMATA
brought an action against the Joint Ventures seeking damages for additional costs to complete the projects. After a bench trial before two District Court Judges (the initial Judge died before the matter could be concluded), the District Court found
the Joint Ventures liable to WMATA for damages in the amount of approximately $16.5 million and WMATA liable to the Joint Ventures for damages in the amount of approximately $4.3 million.
The Joint Ventures appealed the judgment to the United States Court of Appeals for the District of Columbia (Court of
Appeals), arguing, among other things, that the second District Court Judge had issued his final decision without fully familiarizing himself with the record of the initial District Court Judge. On February 16, 1999, the Court of Appeals
vacated the District Courts final judgment and ordered the successor District
F-40
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(6) Contingencies and Commitments (continued)
(a) Mergentime Perini Joint Ventures Vs. WMATA
Matter (continued)
Court Judge to review the findings of the initial Judge and hold further hearings in regard to the Joint Ventures affirmative claims. In addition, the
Court of Appeals held that statutory interest on any of the claims will not accrue until final judgment is entered sometime in the future. Later in 1999, the case was transferred to a new successor District Court Judge.
On February 28, 2001, the new successor District Court Judge informed the
parties that in the absence of a new trial, he could not certify adequate familiarity with the record to complete the remaining proceedings; therefore, he ordered that the Joint Ventures motion for a new trial be granted.
A new trial before the new successor District Court Judge was completed in
January 2002 and a decision is still pending. The ultimate financial impact of the Judges pending decision is not yet determinable; therefore, no provision for loss, if any, has been recorded in the financial statements.
(b) TutorSalibaPerini Joint Venture vs. Los Angeles MTA Matter
During 1995, a joint venture, Tutor-Saliba-Perini
(TSP), in which Perini Corporation is a 40% minority partner and Tutor-Saliba Corporation of Sylmar, CA is the 60% managing partner, filed a complaint in the Superior Court of the State of California for the County of Los Angeles against
the Los Angeles County Metropolitan Transportation Authority (MTA) seeking to recover costs for extra work required by the MTA in connection with the construction of certain tunnel and station projects. In February 1999 the MTA countered
with civil claims under the California False Claims Act against TSP, Tutor-Saliba Corporation and Perini Corporation. Ronald N. Tutor, the Chairman and CEO of Perini Corporation since March of 2000, is also the CEO and the sole stockholder of
Tutor-Saliba Corporation.
Claims concerning the construction
of the MTA projects were tried before a Jury in 2001. During trial, the Judge ruled that TSP had failed to comply with the Courts prior discovery orders and the Judge penalized TSP for its alleged non-compliance by dismissing TSPs claim
and by ruling, without a Jury finding, that TSP was liable to the MTA for damages on the MTAs counterclaim. The Judge then instructed the Jury that TSP was liable to the MTA and charged the Jury with the responsibility of determining the
amount of the damages based on the Judges ruling. The Jury awarded the MTA approximately $29.6 million in damages.
On March 26, 2002, the Judge amended the award, ordering TSP to pay the MTA an additional $33.4 million in costs and attorney fees, with the aggregate
$63.0 million award subject to interest at an annual rate of 10% from the date of the award.
TSP and the other plaintiffs/defendants in counterclaim have appealed the Judges discovery sanction, the subsequent Jury award and the amended award. The ultimate financial impact of the Judges ruling
and/or the awards is not yet determinable. Therefore, no provision for loss, if any, has been recorded in the financial statements.
(c) City of San Francisco vs. Tutor-Saliba, Perini & Buckley Joint Venture Matter
In November 2002, the San Francisco City Attorney, on behalf of the City and
County of San Francisco and the citizens of California (Plaintiffs), filed a civil action with a demand for a jury trial against Tutor-Saliba Corporation (TSC), the Tutor-Saliba, Perini & Buckley, Joint Venture
(JV), Perini Corporation (Perini), Buckley & Company, Inc. (Buckley) and their bonding companies in the United States District Court in San Francisco relating to seven projects for work on the expansion of the
San Francisco International Airport. A
F-41
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(6) Contingencies and Commitments (continued)
(c) City of San Francisco vs. Tutor-Saliba, Perini & Buckley Joint
Venture Matter (continued)
Second Amended Complaint was filed in July 2003 which, among other things, added Ronald N. Tutor as a defendant. The JV was established by TSC, Perini and
Buckley through two Joint Venture Agreements dated October 28, 1996 and February 11, 1997 (Joint Venture Agreements). The JV had agreements with the Owner to perform work (Contracts) on two of the above projects
(Projects) and, as part of those Contracts, the JV provided performance and payment bonds to the Owner (Bonds).
In the Second Amended Complaint, the Plaintiffs allege, among other things, various overcharges, bidding violations, violations of minority contracting
regulations, civil fraud, and violation of the California and San Francisco False Claims and California Unfair Competition Acts. In addition, the Plaintiffs allege that the defendants have violated the United States Racketeer Influenced Corrupt
Organizations Act. The Plaintiffs have asserted $30 million in damages and are seeking treble damages, punitive and exemplary damages, various civil penalties and a declaration that TSC and the JV are irresponsible bidders.
On October 3, 2003, the Court granted the defendants motion to specify
damages allegedly sustained for each contract. The defendants motion to dismiss the Plaintiffs Second Amended Complaint is on file and not yet ruled upon by the Court.
TSC is the managing partner of the JV and, in December 1997, Perini sold its entire 20% interest in the JV to TSC. As part
of that sale agreement, TSC agreed to indemnify Perini from any liability that Perini is required to pay by reason of or arising out of any event or occurrence subsequent to the date of the sale of Perinis interest in the JV in any way
connected with the Joint Venture Agreements, the Contracts, the Projects, and the Bonds. The ultimate financial impact of this action is not yet determinable.
(d) Perini/Kiewit/Cashman Joint Venture Central Artery/Tunnel Project Matter
Perini/Kiewit/Cashman Joint Venture (PKC), a joint venture in
which Perini Corporation holds a 56% interest and is the managing partner, is currently pursuing a series of claims for additional contract time and/or compensation against the Massachusetts Highway Department (MHD) for work performed by
PKC on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. The claims relate to the construction of the Northbound Mainline Central Artery Tunnel from Kneeland Street to Congress Street. During construction, MHD ordered PKC to
perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs, in excess of $100 million.
In addition, PKC encountered a number of unforeseen conditions during construction that greatly increased PKCs cost of
performance.
Certain of PKCs claims have been presented
to a Disputes Review Board (DRB) which consists of three construction experts chosen by the parties. To date, the DRB has ruled on a binding basis that PKC is entitled to additional compensation for its contract time delay claim in the
amount of $17.4 million. A Judge of the Massachusetts Superior Court has issued a decision upholding the DRBs binding award to PKC. Although MHD challenged several of the DRBs decisions relative to the contract time delay award discussed
above, PKC received a favorable ruling on March 20, 2002 from the Superior Court of the Commonwealth of Massachusetts that approved PKCs request to have MHD comply with the DRBs decision to award the $17.4 million for the time delay. The
MHD has appealed the Superior Court decision to the Appeals Court of the Commonwealth of Massachusetts.
F-42
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(6) Contingencies and Commitments (continued)
(d) Perini/Kiewit/Cashman Joint Venture Central Artery/Tunnel
Project Matter (continued)
The DRB has also ruled on a
binding basis that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKCs underpinning work in the amount of $5.6 million and that PKC is entitled to additional compensation for impacts and
inefficiencies caused by MHD to PKCs utility work in the amount of $11.5 million. PKC has filed applications in these actions seeking to confirm the awards and MHD has filed civil actions in Massachusetts Superior Court seeking to vacate these
awards.
Under the Dispute Resolution Rules of the contract,
either party may periodically terminate the services of some or all of the DRB members provided that members who are removed under this provision will remain on the DRB through the completion of any then pending claims. The MHD has chosen to remove
the current DRB members under this provision and those members are in the process of completing hearings on all pending claims. Although the replacement DRB members have been agreed upon, proceedings before the current DRB and the new DRB have been
postponed pending resolution of the current negotiations discussed below.
The pending claims yet to be decided by the current/replacement DRB on a binding basis have an anticipated value of $49.4 million. The remaining claims to be decided by the replacement DRB on a non-binding basis have
an anticipated value of $72.6 million.
On August 14, 2002 the
Massachusetts Attorney Generals office, pursuant to its authority under the Massachusetts False Claims Act, served a Civil Investigative Demand (CID) on Perini and the other joint venture partners. The CID sought the production of
certain construction claims documentation in connection with the Central Artery/Tunnel Contract No. C11A1. PKC vigorously denies that it submitted any false claims and is cooperating with the Attorney Generals Office in the ongoing
investigation.
In December 2002, PKC and MHD entered into an
agreement whereby the parties agreed to attempt to resolve by negotiation and mediation all of the outstanding claims on the project. As part of the agreement, the MHD recommended for approval by the Massachusetts Turnpike Authority a contract
modification that provides for provisional payments to PKC totaling $25 million against PKCs outstanding claims. To date, PKC has received $23.75 million of those provisional payments. The parties also agreed to stay the pending litigation and
DRB proceedings during the negotiations. Perini began mediation on all claims in September 2003. The ultimate financial impact of resolving all of the claims on this project is not yet determinable.
(e) Redondo/Perini Joint Venture vs. Siemens Transportation Matter
This is a binding arbitration proceeding arising out of a
contract between the Redondo/Perini Joint Venture (RPJV), a joint venture in which Perini Corporation (Perini) and Redondo Construction Corp. (Redondo) each have a 50% interest, and the Siemens Transportation
Partnership, S.E., Puerto Rico (STP). STP, in conjunction with the Siemens Transportation Team, is constructing a public metropolitan passenger rail transportation project for the Commonwealth of Puerto Rico known as the Tren Urbano
Phase I Project (the Project). Pursuant to its contract with STP, RPJV is responsible for the design and construction of two stations, 2.5 kilometers of guideway, the yard and maintenance shop facilities and all trackwork throughout the
17 kilometers of the Project.
On March 19, 2002, Redondo filed
a petition for reorganization under 11 U.S.C. Chapter 11 in U.S. Bankruptcy Court for the District of Puerto Rico.
On December 23, 2002, RPJV filed an arbitration demand against STP seeking the recovery of additional costs related to design changes and the late
completion of the design for Alignment Section 3 in the amount of
F-43
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(6) Contingencies and Commitments (continued)
(e) Redondo/Perini Joint Venture vs. Siemens Transportation Matter
(continued)
approximately $38 million. On January 31, 2003, STP filed a counter-demand against RPJV seeking the recovery of damages allegedly related to defects in
design and construction and the late completion of RPJVs work in the amount of approximately $17.9 million along with the repayment of approximately $22.6 million for alleged advances previously paid to RPJV.
An arbitration panel has been chosen and arbitration evidentiary hearings are
scheduled to begin on February 23, 2004. Discovery began on September 8, 2003. The ultimate financial impact of resolving all of the claims on this Project is not yet determinable.
(f) Polo Towers Master Owners Association, Inc. vs. Perini Building Company, Inc. et. al.
On July 25, 2003, a civil action was filed in Clark County Nevada District
Court by the Polo Towers Master Owners Association, Inc. (Owners Association) against Perini Building Company, Inc. (PBC), Hansen Mechanical Contractors, Inc. (Hansen) and twenty five unnamed
John Doe defendants. The Polo Towers is a time-share resort property located in Las Vegas, Nevada and PBC has constructed several projects for the developer of that property, the Nevada Resorts Property Polo Towers Limited Partnership
(Developer). Hansen was a mechanical subcontractor to PBC on those projects.
The Owners Association alleges that Hansen failed to construct and chlorinate the [Polo Towers Phase III] domestic water system per plans, specifications, building codes and industry standards, and [that
PBC] failed to monitor the workmanship of Hansen . . . to insure that the [Polo Towers Phase III] water system was properly prepared for use by employees and guests of the project. The Owners Association claims that those alleged
failures caused the Polo Towers Phase III domestic water system to become infected with legionella and that several guests who were allegedly exposed to legionella at Polo Towers Phase III have brought personal injury damage actions
against the Owners Association. Nine personal injury damage actions have been brought by individuals who were allegedly exposed to legionella at Polo Towers Phase III against PBC, the Developer and/or Hansen. PBC previously notified its
insurance carrier of these personal injury actions and the insurance carrier is presently defending the actions without any reservation of rights under the insurance policy.
The Owners Association alleges that it has suffered in excess of $8.0 million in property damages because of the
legionella and that it is the assignee of all rights against PBC under the Developer/PBC contract. PBC has forwarded the Owners Associations complaint to its insurance carrier and is awaiting the carriers response. PBC will demand
defense and indemnification from Hansen, as the mechanical subcontractor, and from the Developer for deficient maintenance. The Owners Association has not categorized the elements of its claim and it is unclear whether any portion of the
property damage claim will not be covered by insurance.
(g)
$21.25 Preferred Shareholders Class Action Lawsuit
On
October 15, 2002, Frederick Doppelt, Arthur I. Caplan and Leland D. Zulch filed a lawsuit individually, and as representatives of a class of holders of the Companys $2.125 Depositary Convertible Exchangeable Preferred Shares (the
Depositary Shares, each of which represents 1/10th of a share of the Companys $21.25 Convertible
Exchangeable Preferred Stock), against certain current and former directors of Perini (the Defendants). This lawsuit is captioned Doppelt, et al. v. Tutor, et al., United States District Court for the District of Massachusetts,
No. 02CV12010MLW. Mr. Doppelt is a current Director of the Company and Mr. Caplan is a former Director of the Company.
F-44
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(6) Contingencies and Commitments (continued)
(g) $21.25 Preferred Shareholders Class Action Lawsuit (continued)
Specifically, the Complaint alleges that the Defendants
breached their fiduciary duties owed to the holders of the Depositary Shares and to Perini. The Plaintiffs principally allege that the Defendants improperly authorized the exchange of Series B Preferred Stock for common stock while simultaneously
refusing to pay accrued dividends due on the Depositary Shares.
On January 6, 2003, the Defendants moved to dismiss the lawsuit. Among other things, the Defendants argued that: (1) they did not owe fiduciary duties to the holders of the Depositary Shares and (2) the claims of breach of fiduciary duty
owed to Perini must be dismissed because the claim could only be brought as a derivative action.
On March 21, 2003, the plaintiffs filed an opposition to the motion to dismiss and in May 2003 the Plaintiffs asked the Court for leave to file an Amended
Complaint.
In June 2003 the Plaintiffs were given leave to
file an Amended Complaint. The Amended Complaint adds an allegation that the Defendants have further breached their fiduciary duties by authorizing a tender offer for the purchase of up to 90% of the Depositary Shares and an allegation that the
collective actions of the Defendants constitute unfair and deceptive business practices under the provisions of the Massachusetts Consumer Protection Act. The Plaintiffs seek damages in an amount not less than $15,937,500, trebled, plus interest,
costs, fees, and other unspecified punitive and exemplary damages.
On August 29, 2003, the Defendants filed a Motion to Dismiss. Plaintiffs filed an opposition thereto and on October 14, 2003, the Defendants filed their reply.
In 2001, a somewhat similar lawsuit was filed by some of the same plaintiffs in the United States District Court for the
Southern District of New York. In 2002, the case was dismissed and upon appeal by the plaintiffs to the United States Court of Appeals for the Second Circuit, the appeal was dismissed.
(h) Other
Contingent liabilities also include liability of contractors for performance and completion of both Company and joint venture construction contracts. In
addition to the legal matters described above, the Company is involved in various lawsuits, arbitration and alternative dispute resolution proceedings. In the opinion of management, the resolution of these proceedings will not have a material effect
on the Companys results of operations or financial condition.
F-45
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(7) Long-term Debt
On January 23, 2002, the Company entered into an agreement with a bank group
to refinance its former credit facility with a new $45 million credit agreement (the Credit Agreement). In February 2003, the terms of the Credit Agreement were amended to increase the revolving credit facility from $45 million to $50
million; to extend the term of the Credit Agreement from January 2004 to June 2005; to increase the amount of unborrowed revolving commitment available for letters of credit from $5.0 million to $7.5 million; and to adjust certain financial
covenants. Other terms of the Credit Agreement remained the same, including the provision that amounts due in June 2005, if not extended or repaid, convert to a three year term loan with equal quarterly principal payments. Because of this provision,
borrowings under the Credit Agreement are classified as Long-term Debt in the accompanying Consolidated Condensed Balance Sheets.
(8) Tender Offer for $21.25 Preferred Stock
On June 9, 2003, the Company completed its tender offer to purchase up to 900,000 shares, or approximately 90% of its outstanding $2.125 Depositary
Convertible Exchangeable Preferred Shares (the Depositary Shares), each of which represents 1/10th of a
share of the Companys $21.25 Preferred Stock at a purchase price of $25.00 per share, net to the seller in cash without interest. The tender offer which commenced on March 31, 2003, expired on June 9, 2003, at which time the Company purchased
440,627 Depositary Shares.
The completion of the self tender
offer resulted in the Company purchasing and immediately retiring 440,627 Depositary Shares and a reduction of approximately $11.3 million, including related expenses, in Stockholders Equity. Also, approximately $7.3 million of previously
accrued and unpaid dividends relating to the purchased shares was reversed and restored to Paid-In Surplus.
(9) Credit (Provision) For Income Taxes
The credit for income taxes in 2003 is due primarily to the recognition in the first quarter of 2003 of a $7.0 million federal tax benefit in accordance
with SFAS No. 109, Accounting for Income Taxes based on the expectation that the Company will be able to utilize a portion of its net operating loss carryforwards in future years. In addition, the credit (provision) for income taxes
reflects a lower-than-normal tax rate in both years due primarily to the realization of a portion of the federal tax benefit not recognized in prior years. Also, the provision for income taxes for the nine months ended September 30, 2002 reflects
the reversal of the federal alternative minimum tax provided in 2001 which was no longer required based on the provisions of the Job Creation and Workers Assistance Act of 2002.
(10) Per Share Data
Basic earnings per common share was computed by dividing net income less dividends accrued on the $21.25 Preferred Stock during all periods presented plus
the reversal in both the second and third quarters of 2003 of dividends on the $21.25 Preferred Stock previously accrued, but no longer required based on the results of the tender offer completed in June, 2003 (see Notes 8 and 11) by the weighted
average number of common shares outstanding. Diluted earnings per common share was similarly computed after giving consideration to the dilutive effect of stock options outstanding on the weighted average number of common shares outstanding.
Options to purchase 380,000 shares of Common Stock at prices
ranging from $8.10 to $8.66 per share were outstanding at September 30, 2003 but were not included in the computation of diluted earnings per share because the options exercise price was greater than the average market price of the Common
Stock. Options to purchase 3,356,834 shares of Common Stock at prices ranging from $4.50 to $16.44 per share were outstanding at September 30, 2002 but were not included in the computation of diluted earnings per share because the options
exercise price was greater than the average market price of the Common Stock. In addition, the effect of the assumed conversion of the Companys outstanding $21.25 Preferred Stock and Stock Purchase Warrants into Common Stock is antidilutive
for all periods presented.
F-46
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
(11) Dividends
(a) Common Stock
There were no cash dividends declared or paid on the Companys
outstanding Common Stock during the periods presented in the consolidated condensed financial statements included herein.
(b) $21.25 Preferred Stock
In conjunction with the covenants of the Companys prior Credit Agreements, the Company was required to suspend the payment of quarterly dividends on
its $21.25 Preferred Stock until certain financial criteria were met. Quarterly dividends on the $21.25 Preferred Stock have not been paid since 1995 (although they have been fully accrued due to the cumulative feature of the $21.25
Preferred Stock). On June 9, 2003, the Company completed a tender offer on its $21.25 Preferred Stock whereby the Company purchased 440,627 Depositary Shares (see Note 8 above). As a result of this transaction, approximately $7.3 million of
previously accrued and unpaid dividends was reversed and restored to Paid-In Surplus in the Consolidated Condensed Balance Sheets. Accordingly, the aggregate amount of dividends in arrears at September 30, 2003 is approximately $9.5
million, which represents approximately $170.00 per share of $21.25 Preferred Stock or approximately $17.00 per Depositary Share and is included in Other Long-term Liabilities in the Consolidated Condensed Balance Sheets. Under the terms
of the $21.25 Preferred Stock, the holders of Depositary Shares are entitled to elect two additional Directors when dividends have been deferred for more than six quarters, and they did so at each of the last six Annual Meetings of Stockholders.
(12) Business Segments
The following tables set forth certain business segment information relating
to the Companys operations for the three month and nine month periods ended September 30, 2003 and 2002 (in thousands):
Nine months ended September 30, 2003 |
|
|
|
|
|
|
|
Reportable Segments
|
|
|
|
|
Building
|
|
Civil
|
|
Totals
|
|
Corporate
|
|
|
Consolidated Totals
|
Revenues |
|
$ |
738,944 |
|
$ |
134,507 |
|
$ |
873,451 |
|
$ |
|
|
|
$ |
873,451 |
Income from Operations |
|
$ |
20,617 |
|
$ |
1,684 |
|
$ |
22,301 |
|
$ |
(6,149 |
) * |
|
$ |
16,152 |
Assets |
|
$ |
186,673 |
|
$ |
245,573 |
|
$ |
432,246 |
|
$ |
32,166 |
** |
|
$ |
464,412 |
|
|
Nine months ended September 30, 2002 |
|
|
|
|
|
|
|
Reportable Segments
|
|
|
|
|
Building
|
|
Civil
|
|
Totals
|
|
Corporate
|
|
|
Consolidated Totals
|
Revenues |
|
$ |
586,073 |
|
$ |
236,409 |
|
$ |
822,482 |
|
$ |
|
|
|
$ |
822,482 |
Income from Operations |
|
$ |
18,432 |
|
$ |
1,849 |
|
$ |
20,281 |
|
$ |
(4,675 |
) * |
|
$ |
15,606 |
Assets |
|
$ |
152,044 |
|
$ |
221,884 |
|
$ |
373,928 |
|
$ |
21,398 |
** |
|
$ |
395,326 |
* |
In all periods, consists of corporate general and administrative expenses. |
** |
In all periods, corporate assets consist principally of cash, cash equivalents, marketable securities, net deferred tax asset, land held for sale and other investments available for
general corporate purposes. |
F-47
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses (excluding underwriting discounts and commissions) expected to be paid by the Company in connection
with the distribution of the common stock registered hereby:
Nature of Expense
|
|
Amount
|
SEC Registration Fee |
|
$ |
4,521 |
National Association of Securities Dealers, Inc. filing fee |
|
|
* |
Accounting Fees and Expenses |
|
|
* |
Legal Fees and Expenses |
|
|
* |
Printing Expenses |
|
|
* |
Miscellaneous |
|
|
* |
|
|
|
|
TOTAL |
|
$ |
* |
|
|
|
|
|
The amounts set forth above, except for the SEC registration fee, are estimated. |
* |
To be provided by amendment. |
Item 14. Indemnification of Directors and Officers
The Restated Articles of Organization, as amended, of the Registrant provide for the elimination of liability of directors to the Registrant or its stockholders for monetary damages for negligent acts or omissions to
the extent permitted by Section 13 of the Business Corporation Law of the Commonwealth of Massachusetts.
Section 67 of the Business Corporation Law of the Commonwealth of Massachusetts gives corporations the power to indemnify directors, officers, employees
and other agents and persons under certain circumstances.
The
bylaws of the Registrant provide for indemnification of officers, directors and certain other corporate representatives for all expenses incurred by them in defense of any proceeding or lawsuit in which they are successful on the merits. In such a
situation, the right to receive indemnification is mandatory and does not require an affirmative determination by the Board of Directors.
The bylaws also authorize indemnification of officers, directors and certain other corporate representatives for expenses and liabilities in cases other
than those in which they are successful on the merits, subject to specified conditions. No indemnification shall be provided with respect to any matter as to which an officer, director or corporate representative shall have been adjudicated not to
have acted in good faith and in the reasonable belief that his action was in the best interest of the Registrant, or, with respect to a criminal matter, that he had reasonable cause to believe that his conduct was unlawful. No indemnification shall
be provided for any director or officer or corporate representative with respect to a proceeding by or in the right of the Registrant in which he is adjudicated to be liable to the Registrant.
The bylaws provide that if a proceeding is compromised or settled in a manner
which imposes a liability or obligation upon a director or officer or corporate representative, no indemnification shall be provided to him with respect to (i) a proceeding by or in the right of the Registrant unless the Board of Directors
determines in its discretion that indemnification is appropriate under the circumstances, and (ii) any other type of proceeding if it is determined by the Board of Directors that said director or officer or corporate representative is ineligible to
be indemnified under the bylaws of the Registrant.
The bylaws
provide that any indemnification other than mandatory indemnification shall be authorized in each case as determined by the Board of Directors, which may act on the indemnification request notwithstanding that one or more of its members are parties
to the proceeding or otherwise have an interest in such indemnification.
II-1
The bylaws also authorize the Registrant to purchase and maintain insurance on behalf of officers and
directors against liabilities incurred by them in their capacities as such, whether or not the Registrant would have been able to indemnify them for such liabilities.
The bylaws of the Registrant authorize the Registrant to enter into specific agreements with its officers and directors to
indemnify them to the full extent permitted by law.
Item 15. Recent
Sales of Unregistered Securities
Not applicable.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibit Number
|
|
Description
|
*1.1 |
|
Form of Underwriting Agreement. |
|
|
3.1 |
|
Restated Articles of Organization (incorporated by reference to Exhibit 4 to Form S-2 (File No. 33-28401) filed on April 28, 1989). |
|
|
**3.2 |
|
Articles of Amendment to the Restated Articles of Organization of the Perini Corporation. |
|
|
3.3 |
|
Articles of Amendment to the Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on April 12, 2000). |
|
|
3.4 |
|
Amended and Restated Bylaws of Perini Corporation (incorporated by reference to Exhibit 3.2 of Form 8-K (File No. 001-06314) filed on February 14, 1997). |
|
|
3.5 |
|
Amendment No. 1 to the Amended and Restated Bylaws of Perini Corporation (incorporated by reference to Exhibit 3.2 to Form 8-K filed on April 12, 2000). |
|
|
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
(incorporated by reference to Exhibit 4(a) to the Registration Statement on Form S-2 (File No. 33-14434) filed on June 19, 1987). |
|
|
**4.2 |
|
Certificate of Vote of Directors Establishing a Series of a Class of Stock determining the relative rights and preferences of the Series A Junior Participating Cumulative
Preferred Stock. |
|
|
4.3 |
|
Certificate of Vote of Directors Establishing a Series of a Class of Stock determining the relative rights and preferences of the Series B Cumulative Convertible Preferred Stock
(incorporated by reference to Exhibit 4.8 of Form 8-K (File No. 001-06314) filed on February 14, 1997). |
|
|
4.4 |
|
Form of Deposit Agreement, including form of Depositary Receipt (incorporated by reference to Exhibit 4(b) to the Registration Statement on Form S-2 (File No. 33-14434) filed on
June 19, 1987). |
|
|
4.5 |
|
Form of Indenture with respect to the 8 1/2% Convertible Subordinated Debentures Due June 15, 2012, including form of Debenture (incorporated by reference to Exhibit 4(c) to the Registration Statement on Form S-2 (File No. 33-14434) filed on June 19,
1987). |
|
|
4.6 |
|
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 (incorporated by reference to Exhibit 4.4 to Amendment No. 1 to the Registration Statement on Form 8-A/A filed on January 29, 1997). |
II-2
Exhibit Number
|
|
Description
|
|
|
4.7 |
|
Amendment dated March 29, 2000 to the Shareholder Rights Agreement (incorporated by reference to Exhibit 4.3 to Form 8-K filed on April 12, 2000). |
|
|
4.8 |
|
Exchange Agreement by and between Perini Corporation and The Union Labor Life Insurance Company, acting on behalf of its Separate Account P, dated as of February 7, 2000
(incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 12, 2000). |
|
|
4.9 |
|
Exchange Agreement by and between Perini Corporation and PB Capital Partners, L.P., dated as of February 14, 2000 (incorporated by reference to Exhibit 10.2 to Form 8-K filed on
April 12, 2000). |
|
|
4.10 |
|
Exchange Agreement by and between Perini Corporation and The Common Fund for Non-Profit Organizations, dated as of February 14, 2000 (incorporated by reference to Exhibit 10.3 to
Form 8-K filed on April 12, 2000). |
|
|
4.11 |
|
Registration Rights Agreement by and among Perini Corporation, Tutor-Saliba Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union Fire Insurance Company of
Pittsburgh, Pa., BLUM Capital Partners, L.P., PB Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and The Union Labor Life Insurance Company, acting on behalf of its Separate Account P, dated as of March 29, 2000 (incorporated
by reference to Exhibit 4.1 to Form 8-K filed on April 12, 2000). |
|
|
4.12 |
|
Shareholders Agreement by and among Perini Corporation, Tutor-Saliba Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union Fire Insurance Company of
Pittsburgh, Pa., BLUM Capital Partners, L.P., PB Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and The Union Labor Life Insurance Company, acting on behalf of its Separate Account P, dated as of March 29, 2000 (incorporated
by reference to Exhibit 4.2 to Form 8-K filed on April 12, 2000). |
|
|
**4.13 |
|
Form of Warrant to purchase an aggregate of 420,000 shares of common stock of Perini Corporation, dated January 17, 1997 issued to former lenders of Perini
Corporation. |
|
|
**4.14 |
|
Letter Agreement by and among Perini Corporation, Blum Capital Partners, L.P., PB Capital Partners, L.P. and The Common Fund for Non-Profit Organizations, dated as of December 1,
2003. |
|
|
*5.1 |
|
Opinion of Goodwin Procter LLP as to the legality of the securities. |
|
|
10.1 |
|
Perini Corporation Amended and Restated General Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to Form 10-K (File No. 001-06314) filed on March 28,
1998). |
|
|
10.2 |
|
Perini Corporation Amended and Restated Construction Business Unit Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to Form 10-K (File No. 001-06314) filed
on March 28, 1998). |
|
|
10.3 |
|
Management Agreement dated as of January 17, 1997 by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.16 to Perini
Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
**10.4 |
|
Amendment No. 1 dated as of December 23, 1998 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation. |
|
|
10.5 |
|
Amendment No. 2 dated as of December 31, 1999 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to
Exhibit 10.31 to Perini Corporations Quarterly Report on Form 10-Q for the first quarter ended March 31, 2000 filed on May 9, 2000). |
|
|
**10.6 |
|
Amendment No. 3 dated as of December 31, 2001 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation. |
|
|
10.7 |
|
Amendment No. 4 dated as of December 31, 2001 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to
Exhibit 10.36 to Perini Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
II-3
Exhibit Number
|
|
Description
|
|
|
**10.8 |
|
Amendment No. 5 dated as of December 31, 2002 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation. |
|
|
**10.9 |
|
1982 Stock Option and Long Term Performance Incentive Plan, as amended. |
|
|
10.10 |
|
Special Equity Incentive Plan (incorporated by reference to Exhibit A to Perini Corporations Proxy Statement for Annual Meeting of Stockholders dated April 19,
2000). |
|
|
10.11 |
|
Securities Purchase Agreement by and among Perini Corporation and Tutor-Saliba Corporation, O&G Industries, Inc. and National Union Fire Insurance Company of Pittsburgh, PA,
dated as of February 5, 2000 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 9, 2000). |
|
|
10.12 |
|
Promissory Note dated as of September 6, 2000 by and among Mt. Wayte Realty, LLC (a wholly-owned subsidiary of Perini Corporation) and The Manufacturers Life Insurance Company
(U.S.A.) (incorporated by reference to Exhibit 10.34 to Perini Corporations Quarterly Report on Form 10-Q for the period ended September 30, 2000 filed on November 6, 2000). |
|
|
10.13 |
|
Credit Agreement dated January 23, 2002 among Perini Corporation, Fleet National Bank, as Administrative Agent, Fleet National Bank, as Arranger, and the Lenders Party Hereto
(incorporated by reference to Exhibit 10.35 to Perini Corporations Annual Report on Form 10-K for the year ended December 31, 2001 filed on March 21, 2002). |
|
|
10.14 |
|
Stock Purchase and Sale Agreement dated December 16, 2002 by and among the Company, James A. Cummings, Inc., James A. Cummings, William R. Derrer and Michael F. Lanciault
(incorporated by reference to Exhibit 10.37 to Perini Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
10.15 |
|
Employment Agreement dated January 23, 2003 by and among the Company, James A. Cummings, Inc. and James A. Cummings (incorporated by reference to Exhibit 10.38 to Perini
Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
10.16 |
|
First Amendment and Waiver dated February 14, 2003 to Credit Agreement among Perini Corporation, Fleet National Bank, as Administrative Agent, and the Lenders (incorporated by
reference to Exhibit 10.39 to Perini Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
**10.17 |
|
Second Amendment dated November 5, 2003 to Credit Agreement among Perini Corporation, Fleet National Bank, as Administrative Agent, and the Lenders. |
|
|
**21.1 |
|
List of Subsidiaries. |
|
|
*23.1 |
|
Consent of Goodwin Procter LLP (included in Exhibit 5.1 hereto). |
|
|
**23.2 |
|
Consent of Deloitte & Touche LLP. |
|
|
**24.1 |
|
Power of Attorney (included on signature page). |
* |
To be filed by amendment. |
II-4
(b) Financial Statement Schedules
The following financial statement schedules and report are filed as part of this report:
INDEX |
|
|
|
|
Schedule II(A)Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2002, 2001 and 2000
(referred to in Independent Auditors Report on page II-6) |
|
II-5 |
Independent Auditors Report on Schedule |
|
II-6 |
Schedule II(B)Valuation and Qualifying Accounts and Reserves for the nine months ended September 30, 2003
(unaudited) |
|
II-7 |
All other schedules
are omitted because of the absence of the conditions under which they are required or because the required information is included in the Consolidated Financial Statements or in the Notes thereto.
Schedule II(A)
Perini Corporation and Subsidiaries
Valuation and Qualifying Accounts and Reserves
for the Years Ended
December 31, 2002, 2001 and 2000
(In Thousands of Dollars)
|
|
|
|
Additions
|
|
|
|
|
|
|
|
Balance at Beginning of Year
|
|
Charged to Costs & Expenses
|
|
Charged to Other Accounts
|
|
Deductions from Reserves
|
|
|
Balance at End of Year
|
Description |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for real estate investments |
|
$ |
9,972 |
|
$ |
|
|
$ |
|
|
$ |
7,457 |
(1) |
|
$ |
2,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for real estate investments |
|
$ |
17,621 |
|
$ |
|
|
$ |
|
|
$ |
7,649 |
(1) |
|
$ |
9,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for real estate investments |
|
$ |
23,622 |
|
$ |
|
|
$ |
|
|
$ |
6,001 |
(1) |
|
$ |
17,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Represents sales or other dispositions of real estate properties. |
II-5
Independent Auditors Report on Schedule
To the Stockholders of Perini Corporation:
We have audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated financial statements included in this Registration Statement on Form S-1, and have issued our
report thereon dated March 21, 2003, which expresses an unqualified opinion and includes an explanatory paragraph concerning a retroactive change in presentation of the Companys joint ventures in the consolidated balance sheets from the equity
method to the proportionate consolidation method and the restatement of basic and diluted earnings per share for the year ended December 31, 2000. Our audits were made for the purpose of forming an opinion on the consolidated financial statements
taken as a whole. The supplemental schedule listed in the accompanying index is the responsibility of the Companys management and is presented for the purpose of complying with the Securities and Exchange Commissions rules and is not
part of the consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and, in our opinion, fairly states, in all material respects, the financial
data required to be set forth therein in relation to the consolidated financial statements taken as a whole.
DELOITTE & TOUCHE LLP
Boston,
Massachusetts
March 21, 2003
II-6
Schedule II(B)
Perini Corporation and Subsidiaries
Valuation and Qualifying Accounts and Reserves (Unaudited)
for the Nine Months Ended September 30, 2003
(In Thousands of Dollars)
|
|
|
|
Additions
|
|
|
|
|
|
|
|
Balance at Beginning of Year
|
|
Charged to Costs & Expenses
|
|
Charged to Other Accounts
|
|
Deductions from Reserves
|
|
|
Balance at End of Year
|
Description |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for real estate investments |
|
$ |
2,515 |
|
$ |
|
|
$ |
|
|
$ |
2,515 |
(1) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Primarily relates to a reduction in the carrying value of the remaining Land Held for Sale ($2,066) and the disposition of certain other real estate assets.
|
II-7
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of
such issue.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the Town of Framingham, Commonwealth of Massachusetts, on December 18, 2003.
PERINI CORPORATION |
|
|
By: |
|
/s/ ROBERT
BAND
|
|
|
Robert Band President and Chief Operating Officer |
POWER OF
ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each
individual whose signature appears below constitutes and appoints Robert Band and Michael E. Ciskey, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments, including post-effective amendments, to this Registration Statement, and to sign any registration statement for the same offering covered by this Registration Statement that is to be effective upon
filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, making such changes in this Registration
Statement as such attorneys-in-fact and agents so acting deems appropriate, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done with respect to the offering of securities contemplated by this Registration Statement, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or his, her or their substitute or substitutes, may lawfully do or cause to be done or by virtue hereof.
Pursuant to the requirement of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following person in the
capacities and on the date indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
/s/ RONALD N.
TUTOR Ronald N.
Tutor |
|
Chairman and Chief Executive Officer and Director (Principal Executive Officer) |
|
December 18, 2003 |
|
|
|
/s/ ROBERT
BAND Robert Band |
|
President, Chief Operating Officer and Director |
|
December 18, 2003 |
|
|
|
/s/ MICHAEL E.
CISKEY Michael E.
Ciskey |
|
Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
|
December 18, 2003 |
|
|
|
/s/ PETER
ARKLEY Peter
Arkley |
|
Director |
|
December 18, 2003 |
II-9
Signature
|
|
Title
|
|
Date
|
|
|
|
/s/ WAYNE L.
BERMAN Wayne L.
Berman |
|
Director |
|
December 18, 2003 |
|
|
|
/s/ JAMES A.
CUMMINGS James A.
Cummings |
|
Director |
|
December 18, 2003 |
|
|
|
Frederick Doppelt |
|
Director |
|
|
|
|
|
Asher B. Edelman |
|
Director |
|
|
|
|
|
/s/ ROBERT A.
KENNEDY Robert A.
Kennedy |
|
Director |
|
December 18, 2003 |
|
|
|
/s/ MICHAEL R.
KLEIN Michael R.
Klein |
|
Director |
|
December 18, 2003 |
|
|
|
/s/ RAYMOND R.
ONEGLIA Raymond R.
Oneglia |
|
Director |
|
December 18, 2003 |
II-10
EXHIBIT INDEX
Exhibit Number
|
|
Description
|
*1.1 |
|
Form of Underwriting Agreement. |
|
|
3.1 |
|
Restated Articles of Organization (incorporated by reference to Exhibit 4 to Form S-2 (File No. 33-28401) filed on April 28, 1989). |
|
|
**3.2 |
|
Articles of Amendment to the Restated Articles of Organization of Perini Corporation. |
|
|
3.3 |
|
Articles of Amendment to the Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on April 12, 2000). |
|
|
3.4 |
|
Amended and Restated Bylaws of Perini Corporation (incorporated by reference to Exhibit 3.2 of Form 8-K (File No. 001-06314) filed on February 14, 1997). |
|
|
3.5 |
|
Amendment No. 1 to the Amended and Restated Bylaws of Perini Corporation (incorporated by reference to Exhibit 3.2 to Form 8-K filed on April 12, 2000). |
|
|
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
(incorporated by reference to Exhibit 4(a) to the Registration Statement on Form S-2 (File No. 33-14434) filed on June 19, 1987). |
|
|
**4.2 |
|
Certificate of Vote of Directors Establishing a Series of a Class of Stock determining the relative rights and preferences of the Series A Junior Participating Cumulative
Preferred Stock. |
|
|
4.3 |
|
Certificate of Vote of Directors Establishing a Series of a Class of Stock determining the relative rights and preferences of the Series B Cumulative Convertible Preferred Stock
(incorporated by reference to Exhibit 4.8 of Form 8-K (File No. 001-06314) filed on February 14, 1997). |
|
|
4.4 |
|
Form of Deposit Agreement, including form of Depositary Receipt (incorporated by reference to Exhibit 4(b) to the Registration Statement on Form S-2 (File No. 33-14434) filed on
June 19, 1987). |
|
|
4.5 |
|
Form of Indenture with respect to the 8 1/2% Convertible Subordinated Debentures Due June 15, 2012, including form of Debenture (incorporated by reference to Exhibit 4(c) to the Registration Statement on Form S-2 (File No. 33-14434) filed on June 19,
1987). |
|
|
4.6 |
|
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 (incorporated by reference to Exhibit 4.4 to Amendment No. 1 to the Registration Statement on Form 8-A/A filed on January 29, 1997). |
|
|
4.7 |
|
Amendment dated March 29, 2000 to the Shareholder Rights Agreement (incorporated by reference to Exhibit 4.3 to Form 8-K filed on April 12, 2000). |
|
|
4.8 |
|
Exchange Agreement by and between Perini Corporation and The Union Labor Life Insurance Company, acting on behalf of its Separate Account P, dated as of February 7, 2000
(incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 12, 2000). |
|
|
4.9 |
|
Exchange Agreement by and between Perini Corporation and PB Capital Partners, L.P., dated as of February 14, 2000 (incorporated by reference to Exhibit 10.2 to Form 8-K filed on
April 12, 2000). |
|
|
4.10 |
|
Exchange Agreement by and between Perini Corporation and The Common Fund for Non-Profit Organizations, dated as of February 14, 2000 (incorporated by reference to Exhibit 10.3 to
Form 8-K filed on April 12, 2000). |
Exhibit Number
|
|
Description
|
4.11 |
|
Registration Rights Agreement by and among Perini Corporation, Tutor-Saliba Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union Fire Insurance Company of
Pittsburgh, Pa., BLUM Capital Partners, L.P., PB Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and The Union Labor Life Insurance Company, acting on behalf of its Separate Account P, dated as of March 29, 2000 (incorporated
by reference to Exhibit 4.1 to Form 8-K filed on April 12, 2000). |
|
|
4.12 |
|
Shareholders Agreement by and among Perini Corporation, Tutor-Saliba Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union Fire Insurance Company of
Pittsburgh, Pa., BLUM Capital Partners, L.P., PB Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and The Union Labor Life Insurance Company, acting on behalf of its Separate Account P, dated as of March 29, 2000 (incorporated
by reference to Exhibit 4.2 to Form 8-K filed on April 12, 2000). |
|
|
**4.13 |
|
Form of Warrant to purchase an aggregate of 420,000 shares of common stock of Perini Corporation, dated January 17, 1997 issued to former lenders of Perini
Corporation. |
|
|
**4.14 |
|
Letter Agreement by and among Perini Corporation, Blum Capital Partners, L.P., PB Capital Partners, L.P. and The Common Fund for Non-Profit Organizations, dated as of December 1,
2003. |
|
|
*5.1 |
|
Opinion of Goodwin Procter LLP as to the legality of the securities. |
|
|
10.1 |
|
Perini Corporation Amended and Restated General Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to Form 10-K (File No. 001-06314) filed on March 28,
1998). |
|
|
10.2 |
|
Perini Corporation Amended and Restated Construction Business Unit Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to Form 10-K (File No. 001-06314) filed
on March 28, 1998). |
|
|
10.3 |
|
Management Agreement dated as of January 17, 1997 by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.16 to Perini
Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
**10.4 |
|
Amendment No. 1 dated as of December 23, 1998 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation. |
|
|
10.5 |
|
Amendment No. 2 dated as of December 31, 1999 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to
Exhibit 10.31 to Perini Corporations Quarterly Report on Form 10-Q for the first quarter ended March 31, 2000 filed on May 9, 2000). |
|
|
**10.6 |
|
Amendment No. 3 dated as of December 31, 2001 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation. |
|
|
10.7 |
|
Amendment No. 4 dated as of December 31, 2001 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to
Exhibit 10.36 to Perini Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
**10.8 |
|
Amendment No. 5 dated as of December 31, 2002 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation. |
|
|
**10.9 |
|
1982 Stock Option and Long Term Performance Incentive Plan, as amended. |
|
|
10.10 |
|
Special Equity Incentive Plan (incorporated by reference to Exhibit A to Perini Corporations Proxy Statement for Annual Meeting of Stockholders dated April 19,
2000). |
|
|
10.11 |
|
Securities Purchase Agreement by and among Perini Corporation and Tutor-Saliba Corporation, O&G Industries, Inc. and National Union Fire Insurance Company of Pittsburgh, PA,
dated as of February 5, 2000 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 9, 2000). |
Exhibit Number
|
|
Description
|
|
|
10.12 |
|
Promissory Note dated as of September 6, 2000 by and among Mt. Wayte Realty, LLC (a wholly-owned subsidiary of Perini Corporation) and The Manufacturers Life Insurance Company
(U.S.A.) (incorporated by reference to Exhibit 10.34 to Perini Corporations Quarterly Report on Form 10-Q for the period ended September 30, 2000 filed on November 6, 2000). |
|
|
10.13 |
|
Credit Agreement dated January 23, 2002 among Perini Corporation, Fleet National Bank, as Administrative Agent, Fleet National Bank, as Arranger, and the Lenders Party Hereto
(incorporated by reference to Exhibit 10.35 to Perini Corporations Annual Report on Form 10-K for the year ended December 31, 2001 filed on March 21, 2002). |
|
|
10.14 |
|
Stock Purchase and Sale Agreement dated December 16, 2002 by and among the Company, James A. Cummings, Inc., James A. Cummings, William R. Derrer and Michael F. Lanciault
(incorporated by reference to Exhibit 10.37 to Perini Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
10.15 |
|
Employment Agreement dated January 23, 2003 by and among the Company, James A. Cummings, Inc. and James A. Cummings (incorporated by reference to Exhibit 10.38 to Perini
Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
10.16 |
|
First Amendment and Waiver dated February 14, 2003 to Credit Agreement among Perini Corporation, Fleet National Bank, as Administrative Agent, and the Lenders (incorporated by
reference to Exhibit 10.39 to Perini Corporations Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
|
|
**10.17 |
|
Second Amendment dated November 5, 2003 to Credit Agreement among Perini Corporation, Fleet National Bank, as Administrative Agent, and the Lenders. |
|
|
**21.1 |
|
List of Subsidiaries. |
|
|
*23.1 |
|
Consent of Goodwin Procter LLP (included in Exhibit 5.1 hereto). |
|
|
**23.2 |
|
Consent of Deloitte & Touche LLP. |
|
|
**24.1 |
|
Power of Attorney (included on signature page). |
* |
To be filed by amendment. |
EX-3.2
3
dex32.htm
ARTICLES OF AMENDMENT TO THE RESTATED ARTICLES OF ORGANIZATION OF PERINI
ARTICLES OF AMENDMENT TO THE RESTATED ARTICLES OF ORGANIZATION OF PERINI
Examiner |
|
Exhibit 3.2
The Commonwealth of Massachusetts OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE MICHAEL J.
CONNOLLY, Secretary ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108 |
|
|
ARTICLES OF AMENDMENT |
|
FEDERAL IDENTIFICATION |
|
|
General Laws, Chapter 156B, Section 72 |
|
NO. 04-1717070 |
Name
Approved |
|
We, James M. Markert, Vice President, and Robert E. Higgins, Clerk of PERINI CORPORATION (EXACT Name of Corporation) located at: 73 Mt. Wayte Avenue, Framingham, Massachusetts 01701 (MASSACHUSETTS Address of Corporation) do hereby certify that these ARTICLES OF AMENDMENT affecting Articles NUMBERED: 3 (Number those articles 1, 2, 3, 4, 5 and/or 6 being amended
hereby) of the Articles of Organization were duly adopted at a meeting held
on May 19, 1994, by vote of: 3,207,986 shares of Common Stock out of 4,330,807 shares
outstanding,
type, class & series (if any) |
|
|
CROSS OUT INAPPLICABLE CLAUSE |
|
being at least a majority of each type, class or series outstanding and entitled to vote thereon: |
C P M R.A. |
|
¨ ¨ ¨ ¨ |
|
1 For amendments adopted pursuant to Chapter 156B, Section
70. 2 For amendments adopted pursuant to Chapter 156B, Section 71. Note: If the space provided under any Amendment or item on this form is insufficient,
additions shall be set forth on separate 8 1/2x11 sheets of paper leaving a left-hand margin of at least 1 inch
for binding. Additions to more than one Amendment may be continued on a single sheet so long as each Amendment requiring each such addition is clearly indicated. |
To CHANGE the number of shares
and the par value (if any) of any type, class or series of stock which the corporation is authorized to issue, fill in the following:
The total presently authorized is:
WITHOUT PAR VALUE STOCKS
|
|
WITH PAR VALUE STOCKS
|
TYPE
|
|
NUMBER OF SHARES
|
|
TYPE
|
|
NUMBER OF SHARES
|
|
PAR VALUE
|
COMMON: |
|
|
|
COMMON: |
|
7,500,000 |
|
$ |
1.00 |
PREFERRED: |
|
|
|
PREFERRED: |
|
1,000,000 |
|
$ |
1.00 |
CHANGE the total authorized to:
WITHOUT PAR VALUE STOCKS
|
|
WITH PAR VALUE STOCKS
|
TYPE
|
|
NUMBER OF SHARES
|
|
TYPE
|
|
NUMBER OF SHARES
|
|
PAR VALUE
|
COMMON: |
|
|
|
COMMON: |
|
15,000,000 |
|
$ |
1.00 |
PREFERRED: |
|
|
|
PREFERRED: |
|
1,000,000 |
|
$ |
1.00 |
EX-4.2
4
dex42.htm
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING A SERIES OF A CLASS OF STOCK
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING A SERIES OF A CLASS OF STOCK
Exhibit 4.2
FORM CD-26-5M-8-83 |
|
|
|
FEDERAL IDENTIFICATION |
|
|
|
|
NO. 04-1717070 |
The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
A SERIES
OF A CLASS OF STOCK
General Laws, Chapter 156B, Section 26
We, David B. Perini |
|
, President/ , and |
Patricia A. Kelly |
|
, Clerk/ of |
Perini
Corporation
(Name of Corporation)
located at
73 Mt. Wayte Avenue, Framingham, Massachusetts
01701
do hereby certify that at a meeting of the directors of the corporation held
on September 23 , 1988, the following vote establishing and designating a series of a class of stock and determining the relative rights and preferences thereof was duly adopted:
See continuation sheets attached.
Note: |
Notes for which the space provided above is not sufficient should be set out on continuation sheets to be numbered 2A, 28, etc. Continuation sheets must have a left-hand margin 1
inch wide for binding and shall be 8 1/2" × 11". Only one side should be used.
|
VOTED: That pursuant to the authority vested in the Board of Directors of this Corporation in
accordance with the provisions of its Articles of Organization, a series of Preferred Stock of the Corporation is hereby created and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be designated as Series A Junior Participating Cumulative Preferred
Stock (the Series A Preferred Stock), and the number of shares constituting such series shall be 200,000.
Section 2. Dividends and Distributions.
(A)(i) The holders of shares of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a Quarterly Dividend Payment Date), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $20.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distribution other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $1.00 per share, of the Corporation (the Common Stock) since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. The multiple of cash non-cash dividends declared on the Common
Stock to which holders of the Series A Preferred Stock are entitled, which shall be 100 initially but which shall he adjusted from time to time as hereinafter provided, is hereinafter referred to as the Dividend Multiple. In the event
the Corporation shall at any time after September 23, 1988 (the Rights Declaration Date) declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by payment
2A
of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such
case the Dividend Multiple thereafter applicable to the determination of the amount of dividends which holders of shares of Series A Preferred Stock shall be entitled to receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to
such event.
(ii) Notwithstanding anything else contained in
this paragraph (A), the Corporation shall, out of funds legally available for that purpose, declare a dividend or distribution on the Series A Preferred Stock as provided in this paragraph (A) immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common Stock) provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $20.00 per share on the Series A Preferred Stock shall nevertheless be paid out of funds legally available for the purpose on such subsequent Quarterly Dividend Payment Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a Dividend or
distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof.
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Section 3. Voting Rights. In addition to any other voting rights required by law, the holders of
shares of Series A Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the
Corporation. The number of votes which a holder of a share of Series A Preferred Stock is entitled to cast, as the same may be adjusted from time to time as hereinafter provided, is hereinafter referred to as the Vote Multiple. In the
event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Vote Multiple thereafter applicable to the determination of the number of votes per share to which holders of shares of Series A Preferred Stock shall be entitled shall be the Vote Multiple
immediately prior to such event multiplied by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as
otherwise provided herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall be in
arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a default period) which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period,
the holders of the Series A Preferred Stock shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders of Series A Preferred stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders, provided that such voting right shall not be exercised unless the holders of
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ten percent (10%) in number of shares of Series A Preferred Stock outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Series A Preferred Stock of such voting right. At any meeting at which the holders of Series A Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Series A Preferred Stock shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of the required number.
(iii) Unless the holders of Series A Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Series A Preferred Stock outstanding may request, the calling of a special meeting of the holders of Series A Preferred Stock, which meeting shall
thereupon be called by the President, a Vice President or the Clerk of the Corporation. Notice of such meeting and of any annual meeting at which holders of Series A Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be
given to each holder of record of Series A Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not
later than 60 days after such order or request or, in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less
than ten percent (10%) of the total number of shares of Series A Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Series A Preferred Stock shall
have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Series A Preferred Stock shall continue in office until their successors shall have been
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elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may
(except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant.
References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right of the
holders of Series A Preferred Stock to elect Directors shall cease, (y) the term of any Directors elected by the holders of Series A Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided
for in the Articles of Organization or by-laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the
Articles of Organization or by-laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors.
(D) Except as otherwise required by applicable law or as set forth herein,
holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions payable
on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in
full, the Corporation shall not:
|
(i) |
declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; |
|
(ii) |
declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, |
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dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
|
(iii) |
redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or |
|
(iv) |
purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. |
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary
liquidation, dissolution or winding up of the Corporation, no distribution shall be made (x) to the holders
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of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an
amount equal to the greater of (1) $10,000.00 per share or (2) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common
Stock, or (y) to the holders of any other class or series of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (x) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Neither the consolidation of nor merging of the Corporation with or into any other corporation or corporations, nor the sale or other transfer of all or substantially all of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock or securities, cash or any other property, then in any such case the shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash or any other property (payable in kind), as the case may
2G
be, into which or for which each share of Common Stock is changed or exchanged, plus accrued and unpaid dividends, if
any, payable with respect to the Series A Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
Section 8. Redemption.
(A) For purposes of this Section 8, the following terms have the meanings indicated:
(i) Acquiring Person shall mean any Person (as such term is hereinafter defined) who or which, together with all
Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the shares of Common Stock then outstanding,
but shall not include the Corporation, any subsidiary of the Corporation, any employee benefit plan of the Corporation or any subsidiary thereof or any entity holding shares of Common Stock organized, appointed or established by the Corporation or
any subsidiary thereof for or pursuant to the terms of any such plan.
(ii.) Affiliate and Associate shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the Exchange
Act).
(iii) A Person shall be deemed the
Beneficial Owner of, and shall be deemed to beneficially own, any securities:
(a) which such Person or any of such Persons Affiliates or Associates beneficially owns, directly or indirectly (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act) or has the right to dispose of;
2H
(b) which such Person or any of such Persons Affiliates or Associates has (A) the
right to acquire (whether such right is exercisable immediately or after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights
(other than rights initially exercisable for Series A Preferred Stock), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by such Person or any of such Persons Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this clause (B) if
the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of
the Exchange Act and (2) is not also then reportable by such person on Schedule 13D under the Exchange Act (or any comparable or successor report); or
(c) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such
Person or any of such Persons Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant a revocable proxy as described in clause (B) of
subparagraph (b) of this paragraph (iii); or disposing of any securities of the Corporation.
(iv) Disinterested Director shall mean (A) any member of the Corporations Board of Directors who is not an officer or employee of the Corporation or any of its subsidiaries and who is not an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person or nominee of an Acquiring Person or any such Affiliate or Associate and was a member of the Corporations Board of Directors prior to the Rights Declaration Date, and (B)
any Person who subsequently becomes a member of the Companys Board of Directors who is not an Acquiring Person or an Affiliate or an Associate of an Acquiring Person or nominee of an Acquiring Person or any such Affiliate or Associate, if such
Persons nomination is recommended or approved by a majority of the Disinterested Directors.
2I
(v) Person shall mean any individual, firm, corporation, partnership or other entity.
(B) Subject to Section 4 hereof, the Corporation may, at any
time (unless otherwise prevented by law) by the affirmative vote of a majority of the directors then in office, including, if at the time of such vote there is an Acquiring Person, a majority of the Disinterested Directors, redeem all or any portion
of the Series A Preferred Stock then outstanding. The amount per share of Series A Preferred Stock to be redeemed to be paid upon any such redemption shall be equal to $10,000.00 plus accrued and unpaid dividends, if any, payable with respect
thereto. The total sum payable per share of Series A Preferred Stock on the date on which the Corporation redeems any shares of Series A Preferred Stock (the Redemption Date) is hereinafter referred to as the Redemption
Price.
(C) If less than all of the outstanding shares of
Series A Preferred Stock are to be redeemed, the Corporation shall select the shares to be redeemed by lot. Notice of redemption pursuant to this Section 8 shall be sent by first-class mail, postage prepaid, to the holders of record of the shares of
Series A Preferred Stock to be redeemed at their respective addresses as the same shall appear on the books of the Corporation. Such notice shall be mailed not less than 30 nor more than 60 days in advance of the applicable Redemption Date and shall
specify the Redemption Date, the Redemption Price and the place at which payment may be obtained as to such shares. At any time on or after the Redemption Date applicable thereto, the holders of record of shares of Series A Preferred Stock to be
redeemed on such Redemption Date shall be entitled to receive the Redemption Price therefor upon actual delivery to the Corporation or its agent of the certificates representing the shares to be redeemed.
If such notice of redemption shall have been duly given, and if on or before
any Redemption Date the funds necessary for such redemption (taking into account any conversions) shall have been deposited by the Corporation with a bank or trust company designated by the Board of Directors and having capital and surplus of at
least $50,000,000 in trust for the pro rata benefit of the holders of the shares of Series A Preferred Stock so called for redemption, then, notwithstanding that any certificate for shares of Series A Preferred Stock so called for redemption shall
not have been surrendered for cancellation, from and after such Redemption Date (unless there shall have been a default in payment of the Redemption Price) all shares of Series A Preferred Stock so called for redemption shall no longer be deemed to
be outstanding and all rights with
2J
respect to such shares shall forthwith cease and terminate, except only the right of the holders thereof to receive from
such bank or trust company upon surrender of their certificate or certificates at any time after the time of such deposit the funds so deposited, without interest. The balance of any funds so deposited and unclaimed at the end of one year from such
Redemption Date shall be released or repaid to the Corporation, after which the holders of the shares so called for redemption shall look only to the Corporation for payment thereof, without interest.
Section 9. Ranking. Unless otherwise provided in the Articles of
Organization of the Corporation or a Certificate of Vote of Directors Establishing a Class of Stock relating to a subsequently-designated series of Preferred Stock of the Corporation, the Series A Preferred Stock shall rank junior to the
Corporations $21.25 Convertible Exchangeable Preferred Stock and any other series of the Corporations Preferred Stock, as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up and shall rank
senior to the Common Stock.
Section 10. Amendment. The
Articles of Organization of the Corporation and this Certificate of Vote shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them
adversely (within the meaning of Section 77 of Chapter 156B of the Massachusetts General Laws) without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in proportion to such holders fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
2K
EX-4.13
5
dex413.htm
FORM OF WARRANT TO PURCHASE
FORM OF WARRANT TO PURCHASE
Exhibit 4.13
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD OR OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO AND HAVE
THE BENEFIT OF (1) A WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF JANUARY 17, 1997 AMONG PERINI CORPORATION AND THE INITIAL WARRANTHOLDERS LISTED ON THE SIGNATURE PAGES THEREOF AND (2) A SECURITYHOLDERS AGREEMENT DATED AS OF JANUARY 17, 1997 AMONG
PERINI CORPORATION AND THE SERIES B SHAREHOLDERS AND INITIAL WARRANTHOLDERS LISTED ON THE SIGNATURE PAGES THEREOF, A COPY OF EACH OF WHICH IS ON FILE WITH PERINI CORPORATION.
Dated: January 17, 1997
WARRANT
To Purchase Shares of Common Stock of
PERINI CORPORATION
Expiring January 17, 2007
THIS IS TO CERTIFY THAT, for value received,
or its registered assigns (the Holder) is entitled to purchase from Perini Corporation, a Massachusetts corporation (with its
successors, the Company), at any time or from time to time after 9:00 a.m., New York City time, on the Earliest Exercise Date (as defined herein) and prior to 5:00 p.m., New York City time, on January 17, 2007 (the
Expiration Date), at the place where the Warrant Agency (as defined herein) is located, at a price per share equal to the Exercise Price (as defined herein), the number of shares of common stock of the Company, par value $1.00 per
share (the Common Stock) shown above, all subject to adjustment and upon the terms and
conditions hereinafter provided, and is entitled also to exercise the other appurtenant rights, powers and privileges hereinafter described.
This Warrant is one of the Warrants (as defined herein) of the same form and
having the same terms as this Warrant, entitling the holders initially to purchase up to an aggregate of 420,000 shares of Common Stock. The Warrants have been issued pursuant to the Amended and Restated Credit Agreement dated as of January 17, 1997
(as amended from time to time, the Credit Agreement) among the Company, the Banks listed therein and Morgan Guaranty Trust Company of New York, as Agent, and the Holder is entitled to certain benefits as set forth therein, to
certain benefits described in the Warrantholders Rights Agreement dated as of January 17, 1997 among the Company and the Initial Warrantholders listed on the signature pages thereof (as amended from time to time, the Warrantholders Rights
Agreement) and to certain benefits described in the Securityholders Agreement dated as of January 17, 1997 among the Company and the Series B Shareholders and Initial Warrantholders listed on the signature pages thereof (as amended from
time to time, the Securityholders Agreement). The Company shall keep a copy of the Credit Agreement, the Warrantholders Rights Agreement and the Securityholders Agreement, and any amendments thereto, at the Warrant Agency and
shall furnish, without charge, copies thereof to the Holder upon request.
ARTICLE I
DEFINITIONS
The following terms, as used in this Warrant, have the
following meanings:
BHC Act means the Bank
Holding Company Act of 1956, as amended.
Business
Day means (a) if Common Stock is listed or admitted to trading on a national securities exchange, a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for business or
(b) if Common Stock is not so listed or admitted to trading, a day on which the New York Stock Exchange is open for business.
Capital Reorganization has the meaning set forth in Section 5.5.
Closing Price on any day means (a) if the Common Stock is listed or admitted for trading on a national
securities exchange, the reported last sales price regular way or, if no such reported sale occurs on such day, the average of the
2
closing bid and asked prices regular way on such day, in each case on the principal national securities exchange on which Common Stock is listed or admitted
to trading, or (b) if Common Stock is not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices in the over-the-counter market on such day as reported by NASDAQ or any comparable system.
Common Stock has the meaning set forth in
the first paragraph of this Warrant, subject to adjustment pursuant to Article V.
Common Stock Distribution has the meaning set forth in Section 5.3(a).
Common Stock Reorganization has the meaning set forth in Section 5.2.
Company means Perini Corporation, a Massachusetts corporation, and its successors.
Convertible Securities has the meaning set forth in
Section 5.3(b)
Credit Agreement has the
meaning set forth in the second paragraph of this Warrant.
Earliest Exercise Date means the date occurring after the date hereof that is the earliest to occur of: (i) the third anniversary of the date hereof; (ii) any date when an ownership change within the meaning
of Section 382(g) of the Internal Revenue Code of 1986, as amended, shall have occurred; (iii) any date when the Company or any shareholder of the Company shall enter into a definitive agreement for any merger, consolidation, recapitalization,
reorganization, restructuring or other business combination with respect to the Company or all or any substantial portion of the assets of the Company which will result in such an Ownership change; and (iv) any date when any Person shall
have made a definitive offer to purchase shares of Common Stock constituting at least 5% of the shares of Common Stock then outstanding, on a Fully Diluted Basis.
Exchange Act means the Securities Exchange Act of 1934, as amended, and any successor Federal statute,
and the rules and regulations of the Securities and Exchange Commission (or its successor) thereunder, all as the same shall be in effect at the time.
Exercise Price means the Market Price per share of Common Stock on the Effective Date (as defined in the Credit Agreement), subject to
adjustment pursuant to Article V.
3
Expiration Date has the meaning set forth in the first paragraph of this Warrant.
Fair Market Value means fair market value
as determined in good faith by the Board of Directors of the Company after consultation with and receipt of a written report thereon from an independent investment bank of national repute selected by the Company and acceptable to the Majority
Holders (which written report will be made available to each of the Warrantholders prior to any determination of fair market value).
Fully Diluted Basis means, with respect to any determination or calculation, that such determination or calculation is performed on a
fully diluted basis determined in accordance with GAAP.
GAAP means generally accepted accounting principles as in effect from time to time.
Holder has the meaning set forth in the first paragraph of this Warrant.
Majority Holders means, at any time, the holders of Warrants entitling such holders to purchase not less
than 60% of the aggregate number of shares of Common Stock then purchasable upon exercise of all Warrants at the time outstanding (exclusive of any Warrants then owned by the Company or any Subsidiary or Affiliate (in each case, as defined in the
Credit Agreement) thereof).
Market Price
means, on any date, the unweighted average of the daily Closing Prices per share of Common Stock for the five consecutive Business Days prior to such date: provided that for purposes of the application of Section 5.3 to a Common Stock
Distribution pursuant to a public offering registered under the Securities Act. Market Price means the Closing Price per share of Common Stock on the Business Day immediately preceding the effective date of the registration
statement with respect to such public offering; and provided further that if the Common Stock is not listed or admitted to trading on any national securities exchange, nor reported on NASDAQ or any comparable system, Market
Price means the Fair Market Value of a share of Common Stock (determined without giving effect to any discount for (i) a minority interest or (ii) any lack of liquidity of the Common Stock).
NASD means The National Association of Securities Dealers,
Inc.
NASDAQ means The National Association
of Securities Dealers, Inc. Automated Quotation System.
4
Options has the meaning set forth in Section 5.3(b).
Person means any natural person, corporation, limited
liability company, limited partnership, general partnership, limited liability partnership, joint stock company, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a
legal entity, and any government agency or political subdivision thereof.
Regulation Y Holder means a holder of Warrants or a holder of Warrant Shares, if such holder is a bank holding company within the meaning of the BHC Act or a subsidiary thereof subject to Regulation
Y under the BHC Act.
Rights Agreement means
the Shareholder Rights Agreement dated as of September 23, 1988, as amended and restated as of May 17, 1990, as the same may be amended from time to time.
Securities Act means the Securities Act of 1933, or any similar Federal statute, and the rules and regulations of the securities and
Exchange Commission (or its successor) thereunder, all as the same shall be in effect at the time.
Special Dividend has the meaning set forth in Section 5.4.
Warrant Agency has the meaning set forth in Section 3.1.
Warrant Shares means the shares of Common Stock issuable
upon the exercise of the Warrants.
Warrantholder means a holder of a Warrant.
Warrantholders Rights Agreement has the meaning set forth in the second paragraph of this Warrant.
Warrants shall mean this Warrant and the other Warrants issued pursuant to Section 2.18 of the Credit Agreement, as the same may be
amended from time to time, and all warrants issued upon transfer, division or combination of, or in substitution for, this Warrant or any other Warrants. All Warrants shall at all times be identical as to terms and conditions, except as to the
number of shares of Common Stock for which a Warrant may be exercised.
All references herein to days shall mean calendar days unless otherwise specified.
5
ARTICLE II
EXERCISE OF WARRANTS
SECTION 2.1. Method of Exercise.
(a) To exercise this Warrant in whole or in part, the Holder shall deliver on any Business Day to the Company, at the Warrant Agency:
(i) this Warrant;
(ii) a written notice of such Holders ejection to
exercise this Warrant, which notice shall specify the number of shares of Common Stock to be purchased (which shall be a whole number of shares if for less than all the shares then issuable hereunder). the denominations of the share certificate or
certificates desired and the name or names in which such certificates are to be registered; and
(iii) payment of the Exercise Price with respect to such shares.
Payment of the Exercise Price with respect to any shares may be made, at the option of the Holder, either (x) by cash, certified or bank
cashiers check or wire transfer in an amount equal to the product of (i) the Exercise Price times (ii) the number of Warrant Shares as to which this Warrant is being exercised or (y) by receiving from the Company the number of Warrant Shares
equal to (i) the number of Warrant Shares as to which this Warrant is being exercised minus (ii) the number of Warrant Shares having a value, based on the Closing Price on the Business Day immediately prior to the date of such exercise, equal to the
product of (x) the Exercise Price times (y) the number of Warrant Shares as to which this Warrant is being exercised.
(b) The Company shall, as promptly as practicable and in any event within five Business Days after receipt of such notice and payment, execute and deliver
or cause to be executed and delivered, in accordance with such notice, a certificate or certificates representing the aggregate number of shares of Common Stock specified in said notice together with cash in lieu of any fractions of a share as
provided in Section 2.3. The share certificate or certificates so delivered shall be in such denominations as may be specified in such notice, and shall be issued in the name of the Holder or such other name or names as shall be designated in such
notice. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and such Holder or any other Person so designated to be named therein shall be deemed for all purposes to have
become a holder of record of shares of Common Stock, as of the date the aforementioned notice and payment is received by the Company. If this Warrant shall have been exercised
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only in part, the Company shall, at the time of delivery of such certificate or certificates, deliver to the Holder a new Warrant evidencing the rights to
purchase the remaining shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant, or, at the request of the Holder, appropriate notation may be made on this Warrant which shall
then be returned to the Holder.
(c) The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation, issuance and delivery of share certificates and new Warrants, except that, if share certificates or new Warrants shall be registered in a name or names other than the name
of the Holder, funds sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by the Holder at the time of delivery of the aforementioned notice of exercise or promptly upon receipt of a written request of the Company
for payment.
SECTION 2.2. Shares to be Fully Paid and
Nonassessable. All shares of Common Stock issued upon the exercise of this Warrant shall be validly issued, fully paid and nonassessable and, if such class of Common Stock is then listed on any national securities exchange (as defined in the
Exchange Act) or quoted on NASDAQ, shall be duly listed or quoted thereon as the case may be.
SECTION 2.3. No Fractional Shares Required to be Issued. The Company shall not be required to issue any fractions of shares of Common Stock upon exercise of this Warrant. If any fraction of a share would, but
for this Section 2.3, be issuable upon final exercise of this Warrant, in lieu of such fractional share the Company shall pay to the Holder, in cash, an amount equal to the same fraction of the Market Price per share of Common Stock on the Business
Day on the date of such exercise.
SECTION 2.4. Share
Legend. Each certificate for shares of Common Stock issued upon exercise of this Warrant, unless at the time of exercise such shares are registered under the Securities Act, shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS SECURITY IS ALSO SUBJECT TO AND HAS THE BENEFIT OF (1) A
WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF JANUARY 17, 1997 AMONG PERINI CORPORATION AND THE INITIAL WARRANTHOLDERS LISTED ON THE SIGNATURE PAGES THEREOF AND (2) A SECURITYHOLDERS
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AGREEMENT DATED AS OF JANUARY 17, 1997 AMONG PERINI CORPORATION AND THE SERIES B SHAREHOLDERS AND INITIAL WARRANTHOLDERS LISTED ON THE SIGNATURE PAGES
THEREOF COPIES OF EACH OF WHICH ARE ON FILE WITH PERINI CORPORATION.
Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public offering pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of counsel selected by the holder of such certificate (who may be an employee of such holder) and reasonably acceptable to the Company, the securities represented thereby need no
longer be subject to restrictions on resale under the Securities Act.
SECTION 2.5. Reservation. The Company has duly reserved and will, keep available for issuance upon exercise of the Warrants the total number of Warrant Shares deliverable from time to time upon exercise of all Warrants from time to
time outstanding. The Company will not permit the par value of a share of Common Stock to be greater than the Exercise Price per share without the consent of the Majority Holders.
ARTICLE III
WARRANT AGENCY; TRANSFER; EXCHANGE AND
REPLACEMENT OF WARRANTS
SECTION 3.1. Warrant
Agency. As long as any of the Warrants remain outstanding, the Company shall perform the obligations of and be the warrant agency with respect to the Warrants (the Warrant Agency) at its address set forth in the Credit
Agreement or at such other address as the Company shall specify by notice to all Warrantholders.
SECTION 3.2. Ownership of Warrant. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon made by any person other than the Company) for all purposes and shall not be affected by any notice to the contrary, until due presentment of this Warrant for registration of
transfer as provided in this Article III.
SECTION 3.3.
Transfer of Warrant. The Company agrees to maintain at the Warrant Agency books for the registration of transfers of the Warrants, and transfer of this Warrant and all rights hereunder shall be registered, in
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whole or in part, on such books, upon surrender of this Warrant at the Warrant Agency, together with a written assignment of this Warrant duly executed by
the Holder or its duly authorized agent or attorney, with (if the Holder is a natural person) signatures guaranteed by a bank or trust company or a broker or dealer registered with the NASD, and funds sufficient to pay any transfer taxes payable
upon such transfer. Upon surrender and, if required such payment and compliance with the requirements of any legend set forth thereon, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in
the denominations specified in the instrument of assignment (which shall be whole numbers of shares only) and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and. this Warrant shall promptly be
canceled.
SECTION 3.4. Division or Combination of
Warrants. This Warrant may be divided or combined with other Warrants upon presentment of this Warrant and of any other Warrants with which this Warrant is to be combined at the Warrant Agency, together with a written notice specifying the names
and denominations (which shall be whole numbers of shares only) in which the new Warrant or Warrants are to be issued, signed by the holders and thereof or their respective duly authorized agents or attorneys. Subject to compliance with Section 3.3
as to any transfer or assignment which may be involved in the division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
SECTION 3.5. Loss, Theft, Destruction or Mutilation of
Warrant Certificates. Upon receipt of evidence satisfactory to the Company of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or
security satisfactory to the Company (it being understood and agreed that if the holder of such Warrant is a Bank (as defined in the Credit Agreement), then a written agreement of indemnity given by such Bank alone shall be satisfactory to the
Company and no further security shall be required) or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase the same aggregate number of shares of Common Stock.
SECTION 3.6. Expenses of Delivery of Warrants. The Company shall pay all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants hereunder.
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ARTICLE IV
CERTAIN RIGHTS
SECTION 4.1. Rights and Obligations under the Warrantholders Rights Agreement. This Warrant is entitled to the benefits and subject to the terms of
the Warrantholders Rights Agreement. The Company shall keep or cause to be kept a copy of the Warrantholders Rights Agreement and any amendments thereto, at the Warrant Agency and shall furnish, without charge copies thereof to the Holder upon
request.
SECTION 4.2. Financial Statements and Other
Information. The Company will, and will cause its subsidiaries to maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in accordance with GAAP, and
will deliver to each of the Warrantholders:
(a) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed: and
(b) with reasonable promptness, such other information and data with respect to the Company or any of its
subsidiaries as from time to time may be reasonably requested by any Warrantholder, including for purposes of determining whether the Earliest Exercise Date shall have occurred.
ARTICLE V
ANTIDILUTION PROVISIONS
SECTION 5.1. Adjustment Generally. The Exercise Price and the number of shares of Common Stock (or other securities or property) issuable upon
exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events as provided in this Article V; provided that notwithstanding anything to the contrary contained herein, the Exercise Price shall
not be less than the par value of the Common Stock.
SECTION
5.2. Common Stock Reorganization. If the Company shall subdivide its outstanding shares of Common Stock (or any class thereof) into a greater number of shares or consolidate its outstanding shares of Common Stock (or any class thereof) into a
smaller number of shares (any such event being called a Common Stock Reorganization), then (a) the Exercise Price shall be adjusted, effective
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immediately after the effective date of such Common Stock Reorganization, to a price determined by multiplying the Exercise Price in effect immediately prior
to such effective dare by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such effective date before giving effect to such Common Stock Reorganization and the denominator of which shall be the number
of shares of Common Stock outstanding after giving effect to such Common Stock Reorganization, and (b) the number of shares of Common Stock subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a number
determined by multiplying the number of shares of Common Stock subject to purchase immediately before such Common Stock Reorganization by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding after giving
effect to such Common Stock Reorganization and the denominator of which shall be the number of shares of Common Stock outstanding immediately before such Common Stock Reorganization.
SECTION 5.3. Common Stock Distribution. (a) If the Company shall issue, sell or otherwise distribute any shares of
Common Stock, other than pursuant to a Common Stock Reorganization (which shall be governed by Section 5.2 hereof) (any such event, including any event described in Section 5.3(b) or Section 5.3(c) below, being herein called a Common Stock
Distribution), for a consideration per share that is less than the Market Price per share of Common Stock on the date of such Common Stock Distribution, then, effective upon such Common Stock Distribution, the Exercise Price shall be
reduced to the lowest of the prices (calculated to the nearest one-thousandth of one cent) determined as provided in clauses (i), (ii) and (iii) below:
(i) if the Company shall receive any consideration for the Common Stock issued, sold or distributed in such Common Stock Distribution, the
consideration per share of Common Stock received by the Company upon such issue, sale or distribution;
(ii) by dividing (A) an amount equal to the sum of (1) the number of shares of Common Stock outstanding immediately prior to such Common
Stock Distribution multiplied by the then existing Exercise Price, plus (2) the consideration, if any, received by the Company upon such Common Stock Distribution by (B) the total number of shares of Common Stock outstanding immediately after such
Common Stock Distribution; and
(iii) by
multiplying the Exercise Price on the Business Day immediately prior to such Common Stock Distribution by a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding immediately prior to such Common
Stock Distribution multiplied by such Market Price per share on the date of such Common Stock
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Distribution, plus (B) the consideration, if any, received by the Company upon such Common Stock Distribution, and the denominator of which shall be the
product of (1) the total number of shares of Common Stock outstanding immediately after such Common Stock Distribution multiplied by (2) the Market Price per share on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment to the Exercise
Price pursuant to the foregoing provisions of this Section 5.3(a), including by operation of Section 5.3(b) or 5.3(c) below, then, effective at the time such adjustment is made, the number of shares of Common Stock subject to purchase upon exercise
of this Warrant shall be increased to a number determined by multiplying the number of shares of Common Stock subject to purchase immediately before such Common Stock Distribution by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after giving effect to such Common Stock Distribution and the denominator of which shall be the sum of the number of shares outstanding immediately before giving effect to such Common Stock Distribution (both
calculated on a Fully Diluted Basis) plus the number of shares of Common Stock with the aggregate consideration received by the Company with respect to such Common Stock Distribution would purchase at the Market Price per share of Common Stock on
the date of such Common Stock Distribution. In computing adjustments under this paragraph, fractional interests in Common Stock shall be taken into account to the nearest one-thousandth of a share.
The provisions of this Section 5.3(a), including by operation of Section
5.3(b) or 5.3(c) below, shall not operate to increase the Exercise Price or reduce the number of shares of Common Stock subject to purchase upon exercise of this Warrant.
(b) If after the date hereof the Company shall issue, sell, distribute or otherwise grant in any manner (including by
assumption) any rights to subscribe for or to purchase, or any warrants or options for the purchase of Common Stock or any stock or securities convertible into or exchangeable for Common Stock (such rights, warrants or options being herein called
Options and such convertible or exchangeable stock or securities being herein called Convertible Securities), whether or not such Options or the rights to convert or exchange any such Convertible Securities in
respect of such Options are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities in respect of such Options (determined by
dividing (i) the aggregate amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such
Options, plus, in the case of Options to acquire Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable
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upon the issuance or sale of such Convertible Securities and upon the conversion or exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options) shall be less than the Market Price per share of Common Stock on the date of granting
such Options, then, for purposes of Section 5.3(a) above, the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been issued as of the date of granting of such Options and thereafter shall be deemed to be outstanding and the Company shall be deemed to have received as consideration of such
price per share, determined as provided above, therefor. Except as otherwise provided in this Warrant (including Sections 5.3(d) and 5.3(g) below), no additional adjustment of the Exercise Price shall be made upon the actual exercise of any Options
or upon conversion or exchange of any Convertible Securities, notwithstanding any change in the Market Price between the date of issuance, sale, distribution or grant and the date of exercise, conversion or exchange.
(c) If the Company shall issue, sell or otherwise distribute (including by
assumption) any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (i)
the aggregate amount received or receivable by the Company as consideration for the issuance, sale or distribution of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Market Price per share of Common Stock on the date of such
issuance, sale or distribution, then, for purposes of Section 5.3(a) above, the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall be deemed to have been issued as of the date
of the issuance, sale or distribution of such Convertible Securities and thereafter shall be deemed to be outstanding and the Company shall be deemed to have received as consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in this Warrant (including Sections 5.3(d) and 5.3(g) below), no additional adjustment of the Exercise Price shall be made upon the actual conversion or exchange of any Convertible Securities, notwithstanding any change
in the Market Price between the date of issuance, sale or distribution and the date of conversion or exchange.
(d) If (i) the purchase price provided for in any Option referred to in Section 5.3(b) above or the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in Section 5.3(b) or
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5.3(c) above or the rate at which any Convertible Securities referred to in Section 5.3(b) or 5.3(c) above are convertible into or exchangeable for Common
Stock shall change at any time (other than under or by reason of provisions designed to protect against dilution upon an event which results in a related adjustment pursuant to this Article V, in accordance with 5.6(b)), or (ii) any of such Options
or Convertible Securities shall have terminated, lapsed or expired, the Exercise Price then in effect shall forthwith be readjusted (effective only with respect to any exercise of this Warrant after such readjustment) to the Exercise Price which
would then be in effect had the adjustment made upon the issuance, sale, distribution or grant of such Options or Convertible Securities been made based upon such changed purchase price, additional consideration or conversion rate, as the case may
be (in the case of any event referred to in clause (i) of this Section 5.3(d)) or had such adjustment not been made (in the case of any event referred to in clause (ii) of this Section 5.3(d)).
(e) If the Company shall pay a dividend or make any other distribution upon
any capital stock of the Company payable in Common Stock, Options or Convertible Securities, then, for purposes of Section 5.3(a) above, such Common Stock, Options or Convertible Securities shall be deemed to have been issued or sold without
consideration.
(f) If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for cash, the consideration received therefor shall be deemed to be the amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities shall be
issued, sold or distributed for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be deemed to be the Fair Market Value of such consideration, after deduction of any expenses incurred in
connection therewith. If any shares of Common Stock, Options or Convertible Securities shall be issued in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the
Fair Market Value of such portion of the assets and business of the non-surviving corporation as shall be attributable to such Common Stock, Options or Convertible Securities, as the case may be. If any Options shall be issued in connection with the
issuance and sale of other securities of the Company, together comprising one integral transaction, then such Options shall be deemed to have been issued (i) for such consideration as shall be allocated to such Options by the parties thereto, or
(ii) in the absense of such an allocation by the parties thereto, by a reasonable determination made in good faith by the Board of Directors of the Company, or (iii) in the absence of such an allocation by the parties thereto and such a
determination by the Board of Directors, without consideration.
(g) The distribution of the Rights pursuant to the Rights Agreement shall not be considered to be a Common Stock Distribution unless both a
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Distribution Date and a Section 11(a)(ii) Event (in each case, as defined in the Rights Agreement) shall have occurred, in which case
the later to occur of such events shall be deemed to constitute an issuance of rights to purchase Common Stock and, therefore, a Common Stock Distribution. If the Company shall enter into a new agreement that is comparable in purpose and effect to
the Rights Agreement (as determined by the Board of Directors of the Company, whose determination shall be conclusive), the execution of the new agreement and a distribution under the new agreement of securities analogous to the distribution of
Series A Junior Participating Preferred Stock under the Rights Agreement shall not be considered to be a Common Stock Distribution but, consistent with the immediately preceding sentence, a Common Stock Distribution shall occur upon the later to
occur of events analogous to a Distribution Event and a Section 11(a)(ii) Event under the Rights Agreement.
SECTION 5.4. Special Dividends. If the Company shall issue or distribute to any holder or holders of shares of Common Stock evidences of
indebtedness, any other securities of the Company or any cash, property or other assets (excluding a Common Stock Reorganization or a Common Stock Distribution), whether or not accompanied by a purchase, redemption or other acquisition of shares of
Common Stock (any such nonexcluded event being herein called a Special Dividend). (a) the Exercise Price shall be decreased, effective immediately after the effective date of such Special Dividend, to a price determined by
multiplying the Exercise Price then in effect by a fraction, the numerator of which shall be the Market Price per share of Common Stock as of such effective date less any cash and the then fair market value of any evidences of indebtedness,
securities or property or other assets issued or distributed in such Special Dividend with respect to one share of Common Stock, and the denominator of which shall be such Market Price per share and (b) the number of shares of Common Stock subject
to purchase upon exercise of this Warrant shall be increased to a number determined by multiplying the number of shares of Common Stock subject to purchase immediately before such Special Dividend by a fraction, the numerator of which shall be the
Exercise Price in effect immediately before such Special Dividend and the denominator of which shall be the Exercise Price in effect immediately after such Special Dividend. A reclassification of Common Stock (other than a change in par value, or
from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of such Common Stock of such shares of such other class
of stock and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as part of such reclassification, a Common Stock Reorganization.
SECTION 5.5. Capital Reorganizations. If there shall be any
consolidation or merger to which the Company is a party, other than a consolidation or a merger of which the Company is the continuing corporation and which does not
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result in any reclassification of, or change (other than a Common Stock Reorganization) in outstanding shares of Common Stock, or any sale or conveyance of
the property of the Company as an entirety or substantially as an entirery, or any recapitalization of the Company (any such event being called a Capital Reorganization), then effective upon the effective date of such Capital
Reorganization, the Holder shall no longer have the right to purchase Common Stock, but shall have instead the right to purchase, upon exercise of this Warrant, the kind and amount of shares of stock and other securities and property (including
cash) which the Holder would have owned or have been entitled to receive pursuant to such Capital Reorganization if this Warrant had been exercised immediately prior to the effective date of such Capital Reorganization. As a condition to effecting
any Capital Reorganization, the Company or the successor or surviving corporation, as the case may be, shall (a) execute and deliver to each Warrantholder and to the Warrant Agency an agreement as to the Warrantholders right in accordance with this
Section 5.5. providing, to the extent of any right to purchase equity securities hereunder, for subsequent adjustments as nearly equivalent as may be practicable to the adjustments provided for in this Article V and (b) provide each Regulation Y
Holder with an opinion of counsel reasonably satisfactory to such Regulation Y Holder and such other assurances as any Regulation Y Holder may reasonably request to the effect that the ownership and exercise of this Warrant by any Regulation Y
Holder after giving effect to such Capital Reorganization shall not be prohibited by the BHC Act or the regulations thereunder; provided that no such opinion or assurances shall be required if ownership and exercise of this Warrant by such
Regulation Y holder before giving effect to such Capital Reorganization shall be prohibited by the BHC Act or regulations thereunder. The provisions of this Section 5.5 shall similarly apply to successive Capital Reorganizations.
SECTION 5.6. Adjustment Rules. Any adjustments pursuant to this
Article V shall be made successively whenever an event referred to herein shall occur, except that, notwithstanding any other provision of this Article V;
(a) no adjustment shall be made to the number of shares of Common Stock to be delivered to each Holder (or to the Exercise Price) if such
adjustment represents less than 1% of the number of shares previously required to be so delivered, but any lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to 1 % or more of the number of shares to be so delivered;
(b) if any event occurs which shall cause an adjustment to be made pursuant to this Article V and such adjustment shall result in an
adjustment in the conversion price at which a share of Series B Cumulative Convertible Preferred Stock of the Company shall be convertible into Common Stock by
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reason of provisions designed to protect the holders thereof against dilution, the resulting adjustment of such conversion price shall not cause any further
adjustment pursuant to this Article V; and
(c) no adjustment shall be made pursuant to this Article V in respect of the issuance from time to time of shares of Common Stock upon the exercise of any of the Warrants.
If the Company shall take a record of the holders of its Common Stock for any purpose referred to in this Article V, then (i) such record
date shall be deemed to be the date of the issuance, sale, distribution or grant in question and (ii) if the Company shall legally abandon such action prior to effecting such action, no adjustment shall be made pursuant to this Article V in respect
of such action.
SECTION 5.7. Proceedings Prior to Any
Action Requiring Adjustment. As a condition precedent to the taking of any action which would require an adjustment pursuant to this Article V, the Company shall take any action which may be necessary, including obtaining regulatory approvals or
exemptions, in order that (a) the Company may thereafter validly and legally issue as fully paid and nonassessable all shares of Common Stock which the holders of Warrants are entitled to receive upon exercise thereof and (b) the ownership and
exercise of any Warrant by any Regulation Y Holder shall not be prohibited by the BHC Act or the regulations thereunder.
SECTION 5.8. Notice of Adjustment. Not less than 10 nor more than 30 days prior to the record date or effective date, as the case may be, of any
action which requires or might require an adjustment or readjustment pursuant to this Article V, the Company shall give notice to each Warrantholder of such even, describing such event in reasonable detail and specifying the record date or effective
date, as the case may be, and, if determinable, the required adjustment and the computation thereof. If the required adjustment is not determinable at the time of such notice, the Company shall give notice to each Warrantholder of such adjustment
and computation promptly after such adjustment becomes determinable.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Notices. Notices and other communications provided for
herein shall be in writing and may be given by mail, courier, confirmed telex or facsimile transmission and shall, unless otherwise expressly required, be deemed given when received or, if mailed, four Business Days after being deposited in the
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United States mail with postage prepaid and properly addressed. Notices and other communications to the Holder shall be addressed to its address as shown on
the books maintained by the Warrant Agency, unless the Holder shall notify the Warrant Agency that notices and communications should be sent to a different address (or telex or facsimile number), in which case such notices and communications shall
be sent to the address (or telex or facsimile number) specified by the Holder.
SECTION 6.2. Waivers; Amendments. No failure or delay of the Holder in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of step to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. No notice or demand on the Company in any case shall entitle the
Company to any other or future notice or demand in similar or other circumstances. The rights and remedies of the Holder are cumulative and not exclusive of any rights or remedies which it would otherwise have. The provisions of this Warrant may be
amended, modified or waived with (and only with) the written consent of the Company and the Majority Holders; provided, however, that no such amendment, modification or waiver shall, without the written consent of the holders of all
Warrants at the time outstanding, (a) change the number of shares of Common Stock subject to purchase upon exercise of this Warrant, the Exercise Price or provisions for payment thereof or (b) amend, modify or waive the provisions of Section 2.5,
this Section 6.2 or Article IV or V. The provisions of the Credit Agreement and the Warrantholders Rights Agreement may be amended, modified or waived only in accordance with the respective provisions thereof.
Any amendment, modification or waiver effected pursuant to and in accordance
with the provisions of this Section 6.2 or the applicable provisions of the Credit Agreement or the Warrantholders Rights Agreement shall be binding upon the holders of all Warrants and Warrant Shares, upon each future holder thereof and upon the
Company. In the event of any such amendment, modification or waiver the Company shall give prompt notice thereof to all holders of Warrants and Warrant Shares and, if appropriate, notation thereof shall be made on all Warrants thereafter surrendered
for registration of transfer or exchange.
SECTION 6.3.
GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW).
SECTION 6.4. Transfer; Covenants to Bind Successor and Assigns. All covenants, stipulations, promises and agreements
in this Warrant contained by or on behalf of the Company or the Holder shall bind its successors and assigns, whether
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so expressed or not. This Warrant shall be transferable and assignable by the Holder hereof in whole or from time to time in part to any other Person and the
provisions of this Warrant shall be binding upon and inure to the benefit of the Holder hereof and its successors and assigns.
SECTION 6.5. Severability. In case any one or more of the provisions contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 6.6. Section Headings. The section headings used herein are for convenience of reference only, are not part
of this Warrant and are not to affect the construction of or be taken into consideration in interpreting this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in its corporate name by one of
its officers thereunto duly authorized, and its corporate seal to be hereunto affixed, arrested by its Secretary or an Assistant Secretary, all as of the day and year first above written.
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EX-4.14
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dex414.htm
LETTER AGREEMENT
LETTER AGREEMENT
Exhibit 4.14
December 1, 2003
Reference is made to that certain Registration Rights Agreement dated as of March 29, 2000 by and among Perini Corporation, a Massachusetts corporation
(the Company), Blum Capital Partners, L.P., a California limited partnership (Blum), PB Capital Partners, LP, a Delaware limited partnership (PB Capital), The Common Fund for Non-Profit Organizations, a New York
non-profit corporation (The Common Fund and together with Blum and PB Capital, the Blum Holders), and the other parties thereto (the Registration Rights Agreement). Capitalized terms used and not defined herein
shall have the meanings ascribed thereto in the Registration Rights Agreement.
WHEREAS, pursuant to the Registration Rights Agreement, the Blum Holders collectively have the right to request one Demand Registration;
WHEREAS, pursuant to that certain letter dated September 10, 2003 from the Blum Holders to the Company, the Blum Holders
have requested their one Demand Registration (the Current Registration);
WHEREAS, in order to facilitate an orderly sale of Registrable Securities by the Blum Holders pursuant to the Current Registration with minimum disruption to the market for the Companys common stock, the Blum
Holders have agreed to request registration of only a portion of the Registrable Securities held by them and, in consideration of such agreement, the Company has agreed to provide the Blum Holders with an additional demand registration right on the
terms and conditions provided in this Agreement.
NOW
THEREFORE, in consideration of the foregoing and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
At any time during the period commencing after the sale of Registrable Securities pursuant to the Current Registration and
ending on the date on which the Blum Holders no longer hold any Registrable Securities, the Blum Holders may collectively request in writing that the Company file a Registration Statement under the Securities Act covering the registration of all or
a portion of the Registrable Securities then held by the Blum Holders (a Blum Registration). The Blum Holders are entitled to only one Blum Registration under this Agreement. The parties hereto agree that their rights and obligations
with respect to any Blum Registration will consist of those set forth in (i) Sections 2.2(a), 2.2(b), 2.2(d), 2.2(e) and 2.2(f) of the Registration Rights Agreement, which provisions are incorporated herein by reference (treating such Blum
Registration as if it were a Demand Registration and treating the Blum Holders as Demand Holders) and (ii) the applicable provisions of Articles IV, V, VI and VII of the Registration Rights Agreement, which provisions are incorporated herein by
reference. Further, the parties agree to the provisions (except for Sections 9.11, 9.12, 9.14 and 9.15(a)) contained in Article IX of the Registration Rights Agreement, which provisions are incorporated herein by reference.
1
The Blum Holders acknowledge and agree that (i) any exercise of the Blum Registration will give rise to
piggyback registration rights under Section 2.3 of the Registration Rights Agreement and (ii) any Blum Registration to be effected on an underwritten basis will be subject to the cutback provisions contained in Section 3.1(b) of the Registration
Rights Agreement.
This Agreement shall not become effective
and the Blum Holders shall have no right to any Blum Registration unless and until the Registration Statement relating to the Current Registration has become effective and the Current Registration constitutes the Blum Holders one Demand
Registration under the Registration Rights Agreement. If by March 31, 2004, either (i) the Registration Statement relating to the Current Registration has not become effective or (ii) the Blum Holders are not deemed to have exercised their one
Demand Registration under the Registration Rights Agreement, then this Agreement shall terminate without becoming effective and shall be of no force or effect.
No provision of this Agreement may be amended or modified except by an instrument in writing signed by the Company and each of the Blum Holders. The
parties represent and warrant to each other that this Agreement constitutes a valid and binding obligation of each party, has been appropriately authorized, and is enforceable in accordance with its terms.
END OF TEXT
2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date
first set forth above.
PERINI CORPORATION |
|
|
By: |
|
/s/ ROBERT BAND |
|
|
Name: |
|
Robert Band |
Title: |
|
President |
BLUM CAPITAL PARTNERS, L.P. |
|
|
By: |
|
Richard C. Blum & Associates, Inc., its
general partner |
|
|
By: |
|
/s/ MURRAY A. INDICK |
|
|
Name: |
|
Murray A. Indick |
Title: |
|
Partner, General Counsel and Secretary |
PB CAPITAL PARTNERS, LP |
|
|
By: |
|
Blum Capital Partners, L.P., its general partner |
|
|
By: |
|
Richard C. Blum & Associates, Inc., its
general partner |
|
|
By: |
|
/s/ MURRAY A. INDICK |
|
|
Name: |
|
Murray A. Indick |
Title: |
|
Partner, General Counsel and Secretary |
3
THE COMMON FUND FOR NON-PROFIT ORGANIZATIONS |
|
|
By: |
|
Blum Capital Partners, L.P., its investment advisor |
|
|
By: |
|
Richard C. Blum & Associates, Inc., its
general partner |
|
|
By: |
|
/s/ MURRAY A. INDICK |
|
|
Name: |
|
Murray A. Indick |
Title: |
|
Partner, General Counsel and Secretary |
4
EX-10.4
7
dex104.htm
AMEND #1 TO MANAGEMENT AGREEMENT
AMEND #1 TO MANAGEMENT AGREEMENT
Exhibit 10.4
AMENDMENT NUMBER 1
TO
MANAGEMENT AGREEMENT
THIS AMENDMENT NUMBER 1 TO MANAGEMENT AGREEMENT (the Amendment) is made and entered into as of December 23, 1998, by and between Perini Corporation, a
Massachusetts corporation (Perini), Tutor-Saliba Corporation, a California corporation (Tutor-Saliba) and Ronald N. Tutor (Tutor), an individual and President of Tutor-Saliba (Perini, Tutor-Saliba and Tutor
collectively, the Parties).
RECITALS
WHEREAS, Perini, Tutor-Saliba and Tutor entered into Management
Agreement as of January 17, 1997 (the Management Agreement), whereby, among other things, Tutor-Saliba agreed to provide certain services of Tutor to Perini;
WHEREAS, paragraph 6 of the Management Agreement provides that the Management Agreement shall terminate, if not earlier, on December 31,
1998; and
WHEREAS, the Parties desire to extend the termination date of the
Management Agreement.
NOW THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the Parties hereby agree as follows:
1. |
Paragraph 5 of the Management Agreement shall be amended in its entirety to read as follows: |
|
6. |
Termination. Unless earlier terminated by the parties, this Agreement shall terminate upon the earliest to occur of (i) December 31, 1999, (ii) Tutors inability to perform the
services contemplated hereby, whether because of death, disability or otherwise, (iii) written notice from Perini to Tutor after, in the determination of a majority of the Executive Committee of the Board of Directors of Perini, Tutor has failed to
perform his obligations under this Agreement, and (iv) the reasonable determination by the Board of Directors or Executive Committee of Perini, as written notice thereof to Tutor, that it would be inadvisable for Tutor to continue performing the
services contemplated by this Agreement. |
2. |
Except as specifically amended herein, all other provisions of the Management Agreement shall remain unchanged and in full force and effect. |
3. |
This Amendment may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
|
IN WITNESS WHEREOF, each of the parties hereto have caused a
counterpart of this Amendment to be executed and delivered as of the date first above written by their duly authorized representatives.
PERINI CORPORATION |
|
|
By: |
|
/s/ Roger Ludlam
|
Title: |
|
President and CEO |
TUTOR-SALIBA CORPORATION |
|
|
By: |
|
/s/ Ronald N. Tutor
|
Title: |
|
RONALD N. TUTOR, PRESIDENT |
RONALD N. TUTOR |
|
|
By: |
|
/s/ Ronald N. Tutor
|
Title: |
|
INDIVIDUAL |
EX-10.6
8
dex106.htm
AMEND #3 TO MANAGEMENT AGREEMENT
AMEND #3 TO MANAGEMENT AGREEMENT
Exhibit 10.6
AMENDMENT NUMBER 3 TO MANAGEMENT AGREEMENT
THIS AMENDMENT NUMBER 3 TO MANAGEMENT AGREEMENT (the Amendment) is made and entered into as of December
31, 2000, by and between Perini Corporation, a Massachusetts corporation (Perini), Tutor-Saliba Corporation, a California corporation (Tutor-Saliba) and Ronald N. Tutor (Tutor), an individual and President of
Tutor-Saliba (Perini, Tutor-Saliba and Tutor collectively, the Parties).
RECITALS
WHEREAS,
Perini, Tutor-Saliba and Tutor entered into Management Agreement as of January 17, 1997 (the Management Agreement), whereby, among other things, Tutor-Saliba agreed to provide certain services of Tutor to Perini;
WHEREAS, paragraph 6 of the Management Agreement provided that the
Management Agreement would terminate, if not earlier, on December 31, 1998;
WHEREAS, on or by December 31, 1999, by Amendment Number 2 to that Management Agreement it was extended so that it would terminate, if not earlier, on December 31, 2000, and
WHEREAS, the Parties desire again to extend the termination date of
the Management Agreement.
NOW THEREFORE, in
consideration of the premises and of the mutual covenants herein contained, the Parties hereby agree as follows:
1. |
Paragraph 6 of the Management Agreement, as amended , shall be amended in its entirety to read as follows: |
|
6. |
Termination. Unless earlier termination by the parties, this Agreement shall terminate upon the earliest to occur of (i) December 31, 2001, (ii) Tutors inability to perform
the services contemplated hereby, whether because of death, disability or otherwise, (iii) written notice from Perini to Tutor after, in the determination of a majority of the Executive Committee of the Board of Directors of Perini, Tutor has failed
to perform his obligations under this Agreement, and (iv) the reasonable determination by the Board of Directors or Executive Committee of Perini, and written notice thereof to Tutor, that it would be inadvisable for Tutor to continue performing the
services contemplated by this Agreement, or |
(v) the consummation of a recapitalization of Perini funded by a party other than Tutor or his
affiliates.
2. |
Section 3(b) of the Management agreement shall be amended in its entirety to read as follows: |
|
(b) |
Beginning on the Effective Date, Perini shall pay a fee to Tutor-Saliba at the rate of $250,000 per year, such amount to be paid in twelve equal monthly installments in arrears on
the 15th of each month, or as the parties hereto shall otherwise agree in writing. |
3. |
Except as specifically amended herein, all other provisions of the Management Agreement shall remain unchanged and in full force and effect. |
4. |
This Amendment may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
|
IN WITNESS HEREOF, each of the parties hereto
have caused a counterpart of this Amendment to be executed and delivered as of the date first above written by their duly authorized representatives.
PERINI CORPORATION |
|
|
By: |
|
/s/ Robert
Band
|
Title: |
|
President |
|
TUTOR-SALIBA CORPORATION |
|
|
By: |
|
/s/ Ronald N.
Tutor
|
Title: |
|
President |
|
RONALD N. TUTOR |
|
|
By: |
|
/s/ Ronald N.
Tutor
|
Title: |
|
|
EX-10.8
9
dex108.htm
AMEND #5 TO MANAGEMENT AGREEMENT
AMEND #5 TO MANAGEMENT AGREEMENT
Exhibit 10.8
AMENDMENT NUMBER 5 TO MANAGEMENT AGREEMENT
THIS AMENDMENT NUMBER 5 TO MANAGEMENT AGREEMENT (the Amendment) is made and entered into as of December 31,
2002, by and between Perini Corporation, a Massachusetts corporation (Perini), Tutor-Saliba Corporation, a California corporation (Tutor-Saliba) and Ronald N. Tutor (Tutor), an individual and President of
Tutor-Saliba (Perini, Tutor-Saliba and Tutor collectively, the Parties).
RECITALS
WHEREAS, Perini,
Tutor-Saliba and Tutor entered into Management Agreement as of January 17, 1997 (the Management Agreement), whereby, among other things, Tutor-Saliba agreed to provide certain services of Tutor to Perini;
WHEREAS, on or by December 31, 2001, by Amendment No. 4 to that Management
Agreement it was extended so that it would terminate, if not earlier, on December 31, 2002;
WHEREAS, the Parties desire again to extend the termination date of the Management Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the Parties hereby agree as follows:
1. |
Paragraph 6 of the Management Agreement, as amended, shall be amended in its entirety to read as follows: |
|
6. |
Termination. Unless earlier terminated by the parties, this Agreement shall terminate upon the earliest to occur of (i) December 31, 2003, (ii) Tutors inability to perform the
services comtemplated hereby, whether because of death, disability or otherwise, (iii) written notice from Perini to Tutor after, in the determination of a majority of the Board of Directors of Perini, Tutor has failed to perform his obligations
under this Agreement, and (iv) the reasonable determination by the Board of Directors of Perini, and written notice thereof to Tutor, that it would be inadvisable for Tutor to continue performing the services contemplated by this Agreement, of (v)
the consummation of a sale of Perini to a party other than Tutor or his affiliates. |
2. |
Except as specifically amended herein, all other provisions of the Management Agreement as amended shall remain unchanged and in full force and effect. |
3. |
This Amendment may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
|
IN WITNESS HEREOF, each of the parties hereto have caused a counterpart of this Amendment to be executed
and delivered as of the date above written by their duly authorized representatives.
PERINI CORPORATION |
|
|
By: |
|
/s/ Robert Band
|
Title: |
|
President & Chief Operating Officer |
TUTOR-SALIBA CORPORATION |
|
|
By: |
|
/s/ Ronald Tutor
|
Title: |
|
|
RONALD N. TUTOR |
|
|
By: |
|
/s/ Ronald Tutor
|
Title: |
|
|
EX-10.9
10
dex109.htm
1982 STOCK OPTION AND LONG TERM PERFORMANCE INCENTIVE PLAN AS AMENDED
1982 STOCK OPTION AND LONG TERM PERFORMANCE INCENTIVE PLAN AS AMENDED
Exhibit 10.9
PERINI CORPORATION
1982 STOCK OPTION AND LONG TERM
PERFORMANCE INCENTIVE PLAN
AS AMENDED
The Plan is intended to enhance the profitability and value of the Perini Corporation for the benefit of its stockholders by permitting the Corporation to
grant stock ownership and long-term award opportunities to officers and other key employees. These opportunities are intended to provide additional incentive to such personnel by offering them a greater stake in the Corporations continued
success. Further, the availability and offering of award opportunities under the Plan is intended to enhance the Corporations ability to attract and retain individuals of exceptional managerial talent upon whom, in large measure, the sustained
progress, growth and profitability of the Corporation will depend. Through stock option grants and cash performance awards tied to the achievement of preestablished multi-year strategic goals, the proprietary position and outlook of officers and key
employees is furthered, thus tying their personal interests more closely to those of stockholders.
For Plan purposes, except where the context otherwise indicates, the following terms shall have the meanings which follow:
(a) Agreement shall mean a written agreement
(including any amendment or supplement thereto) between the Corporation and a Participant which specifies the terms and conditions of a Stock Option granted to such Participant.
(b) Award shall mean a Stock Option or Performance Unit Award granted to a Participant.
(c) Award Period shall mean a
period of not less than three or more than five consecutive calendar years, as determined by the Committee. Such determination shall be made prior to the end of the first six months of the Award Period over which the designated Units are to be
earned. No more than one Award Period may commence during any single calendar year.
(d) Beneficiary shall mean the person or persons, who may be designated by a Participant from time to time in writing to the
Committee, and who shall receive, if the Participant dies, any payments due for Units earned under the Plan or any Option exercise rights.
(e) Board shall mean the Board of Directors of the Corporation.
(f) Certificate shall mean a written notice delivered to a Participant which states that s/he is
the holder of a Performance Unit Award and specifies the terms and conditions of such Award.
(g) Code shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and the rules and regulations
promulgated thereunder.
(h)
Committee shall mean the Compensation Committee, or such other Committee of the Board, which shall be designated by the Board to administer the Plan. The Committee shall be composed of
1
three or more persons as from time to time are appointed to serve by the Board. Each member of the Committee, while serving as such, shall also be a member
of the Board and shall be a disinterested person within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934.
(i) Common Stock shall mean the Common Stock of the Corporation having a par value of $1.00 per share.
(j) Corporation shall mean Perini Corporation.
(k) Employee shall mean any
person who is employed on a full time basis by the Corporation or any subsidiary corporation of the Corporation and who is compensated, at least in part, on a regular salary basis.
(l) Fair Market Value shall mean, with respect to any given day, the mean average of the highest
and lowest reported sales prices on the principal national stock exchange on which the Common Stock is traded, or if such exchange was closed on such day or, if it was open but the Common Stock was not traded on such day, then on the next preceding
day that the Common Stock was traded on such exchange, as reported by such responsible reporting service as the Committee may select.
(m) Incentive Stock Option shall mean a stock option which is intended to meet and comply with the terms and conditions for an
incentive stock option as set forth in Section 422A of the Code.
(n) Participant shall mean an Employee, including an Employee who may also be a member of the Board, who is granted an Award under the Plan.
(o) Payment Value shall mean the amount per Unit to be paid to a Participant upon the conclusion
of an Award Period for the achievement of a Performance Goal specified for such Award Period for such Participant.
(p) Performance Goal shall mean such Award Period objective or objectives, as measured by important internal and/or competitor
performance indicators of the Corporations, a subsidiarys or a divisions results during an Award Period as the Committee shall determine prior to the end of the first six months of such Award Period. The Performance indicators used
may include earnings per share, return on stockholders equity, return on revenues or any other similar financial standards.
(q) Performance Unit or Unit shall mean a right to receive a payment of one hundred dollars ($100) if the Target
Objective for Performance Goal is attained or a greater or lesser amount, as determined by the applicable Earn Out Schedule, if the greater or lesser amount is attained.
(r) Performance Unit Award shall mean an Award of Units to a Participant for an Award Period.
(s) Plan shall mean the Perini
Corporation 1982 Stock Option and Long Term Performance Incentive Plan as set forth herein and as amended from time to time.
(t) Stock Option or Option shall mean a right, including an Incentive Stock Option, to purchase a stated number of
shares of Common Stock subject to such terms and conditions as are set forth in an Agreement and the Plan. Also included in this definition are any other forms of tax qualified stock options which may be incorporated and defined in the
Code as it may from time to time be amended.
(u) Subsidiary corporation shall mean any corporation which is a subsidiary corporation of the Corporation as defined in Section 425(f) of the Code.
2
(a) The Committee shall administer the Plan and, accordingly, it shall have full power to grant Awards, construe and interpret the Plan, establish rules
and regulations and perform all other acts it believes reasonable and proper, including the authority to delegate responsibilities to others to assist in administering the Plan.
(b) The determination of those eligible to receive Awards, and the amount, type and timing of each Award shall rest in the
sole discretion of the Committee, subject to the provisions of the Plan.
(c) The Committee may cancel any Awards awarded under the Plan if a Participant conducts oneself in a manner which the Committee determines to be inimical to the best interests of the Corporation. Any decision made,
or action taken, by the Committee, arising out of, or in connection with, the interpretation and administration of the Plan shall be final and conclusive.
4. |
Common Stock and Unit Limits |
(a) The total number of shares of Common Stock available for grants of Stock Options under the Plan shall be 637,760, subject to adjustment in accordance
with Section 8 of the Plan, which shares may be either authorized but unissued or reacquired shares of Common Stock. If a Stock Option or portion thereof shall expire or terminate for any reason without having been exercised in full, the unpurchased
shares covered by such Option shall again be available for grants.
(b) The total number of Units which may be awarded under the Plan shall be 125,000. Within the foregoing limitation, Units which are not earned out for an Award Period which are forfeited or cancelled shall become again available for the
granting of Awards.
(c) The number of Units which may be
awarded to any Participant for any Award period shall not exceed an aggregate value, as determined by using the Target Objective value of one hundred dollars ($100) per Unit, of 100% of such Participants annual salary at the start of the Award
Period.
(d) The maximum Payment Value shall be two hundred
dollars ($200) for any Unit granted for an Award Period and such maximum amount will only be payable upon attainment of the Maximum Objectives for the particular Award and Award Period.
5. |
Eligibility for Participation |
(a) Consistent with Plan objectives, eligibility to become a Participant in the Plan and receive Awards shall be limited to key Employees. Further, grants
of Performance Unit Awards will be limited to key Employees who make decisions and take independent actions that have a significant impact on the Corporations long-term growth and prosperity.
(b) No Incentive Stock Option shall be granted to an Employee ineligible at
the time to receive such an Option because of owning more than 10% of the Common Stock in accordance with the provisions of Section 422A(b) (6) of the Code, unless the Option meets the requirements of Section 422A(c) (8).
3
6. |
Stock Options Terms and Conditions |
All Stock Options granted under the Plan shall be evidenced by Agreements which shall be subject to applicable provisions of the Plan, and such other
provisions as the Committee may adopt, including the following provisions:
(a) Price: The Option price per share shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant.
(b) Period: An Option shall not be granted for a period longer than ten years from date of grant.
(c) Time of Exercise: The Committee
may establish installment exercise terms for an Option such that the Option becomes fully exercisable in a series of cumulating portions. The committee may also accelerate the exercise of any Option.
(d) Exercise: An Option, or portion thereof, shall be
exercised by delivery of a written notice of exercise to the Corporation and payment of the full price of the shares being exercised. Payment may be made: (i) in United States dollars in cash or by check, bank draft or money order payable to the
order of the Corporation, or (ii) at the discretion of the Committee, through the delivery of shares of Common Stock with a value equal to the Option Price, or (iii) by a combination of both (i) and (ii) above. The Committee shall determine
acceptable methods for tendering Common Stock as payment upon exercise of an Option and may impose such limitations and prohibitions on the use of Common Stock to exercise an Option as it deems appropriate. A Participant shall not have any of the
rights or privileges of a holder of Common Stock until such time as shares of Common Stock are issued or transferred to the Participant.
(e) Termination of Employment: In the event a Participant shall cease to be employed by the Corporation or any subsidiary
corporation of the Corporation while he is holding one or more Options, each Option shall expire at the earlier of the expiration of the Options term or the following:
(i) up to three years after termination due to normal retirement, or earlier retirement with Committee
consent, under a formal plan or policy or the Corporation;
(ii) one year after termination due to disability within the meaning of Section 105(d) 4 of the Code as determined by the Committee;
(iii) one year after the Participants death; and
(iv) Coincident with the date of termination if due to any
other reasons, except as and to the extent that the Committee may determine otherwise.
In the event of death following termination of employment while any portion of the Option remains exercisable the Committee in its
discretion may provide for an extension of the exercise period of up to one year after the Participants death but not beyond the expiration of the Options term.
(f) Effect of Leaves of Absence: For the purposes of this Section, it shall not be considered a
termination of employment when a Participant is placed by the Corporation or any subsidiary corporation of the Corporation on a military or sick leave or such other type of leave of absence which is considered as continuing intact the employment
relationship of the Participant. In case of such leave of absence the employment relationship shall be continued until the later of the date when such leave equals 90 days or the date when the Optionees right to reemployment with the
Corporation or such subsidiary shall no longer be guaranteed either by statute or contract.
(g) Special Rules for Incentive Stock Options: Notwithstanding any other provision of the Plan, in the case of any Incentive Stock
Option granted under the Plan, the following provisions will apply:
(i) The aggregate Fair Market Value of the shares of stock, determined as of the time the Option is granted, for which any Participant may be granted Incentive Stock Options under the Plan or any other plan of the
Corporation or any subsidiary corporation of the Corporation or any
4
corporation which is a parent corporation (as defined in Section 425(e) of the Code) of the Corporation, in any calendar year shall not exceed $100,000 plus
any unused limit carryover (or such larger individual employee maximum as may be in effect from time to time under the Code at the time the Incentive Stock Option is granted), computed in accordance with Section 422A(c)(4) of the Code. The
provisions of this Section 6(g)(i) shall apply only with respect to Options granted prior to January 1, 1987.
(ii) With respect to Options granted on or after January 1, 1987, the aggregate Fair Market Value (determined at the time the Option is
granted) of the shares of stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant under this Plan or any other plan of the Corporation or any subsidiary corporation of the Corporation or any
corporation which is a parent corporation (as defined in Section 425(e) of the Code) of the Corporation, in any calendar year, shall not exceed $100,000 (or such other individual employee maximum as may be in effect from time to time under the Code
at the time the Incentive Stock Option is granted).
(iii) No Incentive Stock Option granted prior to January 1, 1987 shall be exercisable while there is outstanding any other Incentive Stock Option (including any Option qualifying as an Incentive Stock Option by reason of any election by the
Corporation pursuant to Section 251(c)(1)(B) of the Economic Recovery Tax Act of 1981) which was granted to the Participant before the grant of such Option under the Plan or any other plan which gives the right to the Participant to purchase stock
in the Corporation or in a corporation which is a parent corporation (as defined in Section 425(e) of the Code) of the Corporation or a subsidiary corporation of the Corporation or any predecessor corporation of any of such corporations at the time
of grant. An Incentive Stock Option shall be treated as outstanding until it is either exercised in full or expires by reason of lapse of time.
(iv) Any participant who disposes of shares of Common Stock acquired on the exercise of an Incentive Stock Option by sale or exchange
either (i) within two years after the date of the grant of the Option under which the stock was acquired or (ii) within one year after the acquisition of such shares shall notify the Corporation of such disposition and of the amount realized upon
such disposition.
(h) Any Option shall not be
transferable by the individual to whom it is granted otherwise than by will or the laws of descent and distribution and is exercisable during his lifetime only by him.
7. |
Performance Units Terms and Conditions |
All Performance Units Awards granted under the Plan shall be evidenced by Certificates which shall be subject to applicable provisions of the Plan, and
such other provisions as the Committee may adopt, including the following provisions:
(a) Granting of Units: The Committee may, at any time prior to the end of the first six months of the applicable Award Period and
Subject to the provisions of the Plan, grant awards of Units to persons selected to be Participants in accordance with Section 5(a). In making such Awards the Committee shall prescribe the conditions and terms governing the Awards, including the
Performance Goals, Award Periods and Earn-Out Schedules for the awarded Units as provided for in subsection (b) below.
5
(b) Performance Goals Achievement: In setting Performance Goals for an Award
Period the Committee shall establish the following for each Award:
(i) Target Objective the objective or objectives which, if attained, will entitle the Participant to a payment for Units for the applicable Award Period earned equal to a Payment Value of one
hundred dollars ($100).
(ii) Minimum
Objective the objective or objectives which, if not attained, will result in no Units being earned and no payment to a Participant for the applicable Award Period.
(iii) Maximum Objective the objective or objectives which, if attained will result in a
Payment Value greater than the Payment Value for achieving the target objective, subject to the limitation set forth in subsection 4(d).
(iv) Earn-Out Schedule a schedule setting forth the Payment Value which the Participant is entitled to receive if
performance over the applicable Award Period is at or above the Minimum Objective. Each schedule may provide for Payment Values at intervening levels of performance achievement between the Minimum Objective and Maximum Objective.
(c) New Hires and Promotions: The Committee may,
during the first two years of an Award Period, award Units to persons who become Employees after the start of an Award Period. In that event, the Units awarded such a person shall be subject to the limits of subsection 4(c); provided, however, that
the annual rate of salary of such persons at the commencement of his or her employment shall be deemed the annual salary for purposes of subsection 4(c) hereof. Similarly, a Participant who is promoted during an Award Period may receive additional
Units under outstanding Awards if such promotion occurs during the first two years of the applicable Award Period. In such event, the aggregate Units covered by any single Award shall be limited as provided in subsection 4(c) using the
Participants annual rate of salary following such promotion. The Committee may, with respect to such person, make such other or different adjustments in the Units, Earned Units, Performance Goal, Earn-Out Schedules, Target Objective and
Minimum Objective as it shall, in its discretion, deem appropriate.
(d) Determination and Time of Payment: After the end of each Award Period, each Participant or Beneficiary shall be entitled to receive from the Corporation an amount equal to the number of Units earned
multiplied by the applicable Payment Value, in accordance with the determinations of the Committee and subject to the provisions of the Plan. The determination of the attainment of the Performance Goals shall be made as soon as practicable after the
end of the applicable Award Period. Such determination shall follow the completion of the audit of the consolidated financial statements of the Corporation for the year of such Award Period. Based on such determination, the Committee shall determine
the number of Units earned, if any, for the applicable Award Period.
(e) Payment: Payments for Units earned shall be made in cash.
(f) Termination of Employment: In the event a Participant ceases to be employed by the Corporation or any subsidiary corporation of
the Corporation:
(i) Due to normal
retirement, or early retirement with Committee consent, under a formal plan or policy of the Corporation, or total and permanent disability, as determined by the Committee, or death, and provided the Participant has been in the active service of the
Corporation or any subsidiary corporation of the Corporation for at least one year since the start of the applicable Award Period, his or her Units shall continue to remain in effect for the duration of the applicable Award Period.
6
In the event of such a termination of employment, and if any of the Units awarded to a
Participant for the applicable Award Periods are earned out, the Participant, or her or his Beneficiary, shall receive a portion of the Participants Units for each Award Period determined by multiplying the number of such Units by a fraction,
the numerator of which shall be the number of full calendar months between the start of the applicable Award Period and the date that employment terminated, and the denominator of which shall be the number of full calendar months in the applicable
Award period.
(ii) In the event that a
Participant shall cease to be an employee of the Corporation or any subsidiary corporation of the Corporation upon the occurrence of any other event, all Units held by her or him, for which the Award Periods have not yet ended, shall be cancelled
and terminated forthwith, except as and to the extent that the Committee may determine otherwise, provided that the number of Units which may be so determined by the Committee to have been Units for which a payment may be made shall not exceed the
number which would have been earned in accordance with the provisions of Subsection 7(b) above.
(iii) For purposes of the preceding, it shall not be considered a termination of employment when a Participant is placed by the
Corporation or subsidiary corporation of the Corporation on military or sick leave or such other type of leave of absence, for a period of six months or less, which is considered as continuing intact the employment relationship of the Participant.
For any such leave extending beyond six months the Committee shall decide whether and when there has been a termination of employment.
(a) In the event of a stock dividend, stock split or other subdivision, consolidation or change in the shares of Common Stock, or a spin-off, the number
of shares of Common Stock available for Options and subject to outstanding Options shall be adjusted proportionately. Likewise, the option price per share of outstanding Options shall be appropriately adjusted.
(b) At any time prior to the completion of an Award Period the Committee may
adjust the Performance Goals and other terms and conditions of outstanding Performance Unit Awards to reflect major unforeseen events such as changes in laws, regulations or accounting practices, mergers, acquisitions or divestitures or
extraordinary, unusual or nonrecurring items or events.
9. |
Merger, Consolidation or Tender Offer |
(a) If the Corporation shall be a party to a binding agreement to any merger, consolidation or reorganization or sale of substantially all the assets of
the Corporation, each outstanding Option shall pertain and apply to the securities and/or property which a holder of the number of shares of Common Stock subject to the Option would have been entitled to receive pursuant to such merger,
consolidation or reorganization or sale of assets.
(b) In the
event that:
(i) any person other than the
Corporation shall acquire more than 20% of the Common Stock through a tender offer, exchange offer or otherwise; or
(ii) a change in the control of the Corporation occurs, as such term is defined in Rule 405 under the Securities Act of 1934;
or
(iii) there shall be a sale of all or
substantially all of the assets of the Corporation;
7
any then outstanding Option which has been held for six months or longer by a Participant, who is deemed by the Committee
to be a statutory officer or insider for purposes of Section 16 of the Securities Exchange Act of 1934 shall be entitled to receive, subject to any action by the Committee revoking such an entitlement as provided for below, in lieu of exercise of
such Option, a cash payment in an amount equal to the difference between the aggregate exercise price of such Option and, (A) in the event of an offer or similar event, the final offer price per share paid for Common Stock, or such lower price as
the Committee may determine to conform an Option to preserve its Incentive Stock Option status, times the number of shares of Common Stock covered by the Option, or (B) in the case of any change of control or sale of assets covered by (iii) above,
the aggregate fair market value of the shares covered by the Option, as determined by the Committee at such time.
Any payment which the Corporation is required to make pursuant to the above, shall be made within fifteen business days following the event which results
in the Participants right to such payment. In the event of an offer in which fewer than all the shares which are validly tendered in compliance with such offer are purchased or exchanged, then only that portion of the shares covered by an
Option as results from multiplying such shares by a fraction, the numerator of which is the number of shares of Common Stock acquired pursuant to the offer and the denominator of which is the number of shares of Common Stock tendered in compliance
with such offer, shall be used to determine the payment thereupon. To the extent that all or any portion of an Option shall be affected by this provision all or such portion of the Option shall be terminated.
Notwithstanding the above, the Committee may, by unanimous vote and
resolution, unilaterally revoke the benefits of the above provision; provided, however, that such vote is taken no later than ten business days following public announcement of the intent of an offer or sale or the change of control, whichever
occurs earlier.
(c) Subject to the provisions of Sections 4
and 10, but notwithstanding any other provisions of this Plan, the Committee may take such action as it, in its sole discretion, deems necessary or advisable to establish fair and equitable treatment to Participants with respect to any Performance
Unit Awards held by them in the event of any merger, reorganization, sale of substantially all the assets of the Corporation, successful tender offer or exchange offer for Common Stock or other securities of the Corporation. In the event of any of
the occurrences noted above, the Committees action may include the acceleration and proration of the payment of Units based upon actual attainment of the applicable Performance Goals for the portions of the applicable Award Periods up to the
date of such occurrence or such adjustments or modifications in the applicable Performance Goals, Award Periods or other conditions and terms of Awards as the Committee deems appropriate.
10. |
Amendment and Termination of Plan |
(a) The Board, without further approval of the stockholders, may at any time, and from time to time, suspend or terminate the Plan in whole or in part or
amend it from time to time in such respects as the Board may deem appropriate and in the best interests of the Corporation; provided, however, that no such amendment shall be made, without approval of the stockholders, which would:
(i) materially modify the eligibility requirements for
Participants;
(ii) increase the total number
of Performance Units, or the total number of shares of Common Stock which may be issued pursuant to Stock Options, except as is provided for in accordance with subsection 8(a), under the Plan;
(iii) decrease the minimum option price per share;
8
(iv) increase the maximum Performance Unit Award that can be made to Participants for any
Award Period;
(v) increase the maximum
Payment Value;
(vi) extend the period for
granting Stock Options and Units; or
(vii)
materially increase benefits accruing to Participants.
(b) No
amendment, suspension or termination of this Plan shall, without the Participants consent, alter or impair any of the rights or obligations under any Award theretofore granted to her or him under the Plan.
(c) The Board may amend the Plan, subject to the limitations cited above, in
such manner as it deems necessary to permit the granting of Stock Options meeting the requirements of future amendments or issued regulations, if any, to the Code.
11. |
Government and Other Regulations |
The obligation of the Corporation to issue, or transfer and deliver shares for Stock Options exercised under the Plan shall be subject to all applicable
laws, regulations, rules and orders which shall then be in effect.
The Plan, insofar as it provides for payments, shall be unfunded and the Corporation shall not be required to segregate any assets which may at any time
be subject to Awards under the Plan. Any liability of the Corporation to any person with respect to any award under this Plan shall be based solely upon any contractual obligations which may be created by Agreements or Certificates reflecting grants
or awards under this Plan.
13. |
Miscellaneous Provisions |
(a) Rights to Continued Employment: No person shall have any claim or right to be granted an Award under the Plan, and the grant of an Award under
the Plan shall not be construed as giving any Participant the right to be retained in the employ of the Corporation or any subsidiary corporation of the Corporation and the Corporation expressly reserves the right at any time to dismiss a
Participant with or without cause, free from any liability, or any claim under the Plan, except as provided herein or in an Agreement or a Certificate.
(b) Non-Transferability: Except by will or the laws of descent and distribution, no right or interest of any Participant in the Plan shall be
assignable or transferable and no right or interest of any Participant shall be liable for, or subject to, any lien, obligation or liability of such Participant.
(c) Withholding Taxes:
(i) The Corporation shall have the right to withhold from cash payments for earned Units sufficient amounts to cover tax withholding for
income and employment taxes, and if the amount of cash payment is insufficient, the Corporation may require the Participant to pay to it the balance required to be withheld.
(ii) Likewise, the Corporation may require a payment to cover applicable withholding for income and
employment taxes in the event of the exercise of a Stock Option. At any time when a Participant is required to pay to the Corporation an amount required to be withheld under applicable income tax laws in connection with the exercise of a Stock
Option, the Participant may satisfy this obligation in whole or in part by electing (the Election) to have the Corporation withhold shares of Common Stock
9
having a value equal to the amount required to be withheld. The value of the shares to be withheld shall be equal to the Fair Market Value of the Common
Stock, as determined on the date that the amount of tax to be withheld shall be determined (the Tax Date). Each Election must be made prior to the Tax Date. The Committee may disapprove of any Election or may suspend or terminate the
right to make Elections. An Election is irrevocable.
(iii) If the Participant is an officer of the Corporation within the meaning of Section 16 of the Securities Exchange Act of 1934, then an Election is subject to the following additional restrictions:
(A) No Election shall be effective for a Tax Date which
occurs within six months of the grant of the Option.
(B) The Election must be made either six months prior to the Tax Date or must be made during a period beginning on the third business day following the date of release for publication of the Corporations quarterly or annual summary
statements of sales and earnings and ending on the twelfth business day following such date.
(d) Plan Expenses: Any expenses of administering this Plan shall be borne by the Corporation.
(e) Legal Considerations: No person, including a Participant, or his or her Beneficiary, shall have any claim or right to the payment of an award,
if, in the opinion of counsel for the Corporation, such payment does not comply with legal requirements, or is opposed to governmental public policy.
(f) Other Plans: Nothing contained herein shall prevent the Corporation from establishing other incentive and benefit plans in which Participants
in the Plan may also participate. However, any amounts paid to a Participant with respect to Awards under the Plan shall not affect the level of benefits provided to or received by any Participant (or his or her estate or Beneficiary) as part of any
other employee benefit plan of the Corporation.
(g) No
Warranty of Tax Effect: Except as may be contained in any Agreement or Certificate, no opinion shall be deemed to be expressed or warranties made as to the effect for federal, state or local tax purposes of any Awards.
(h) Construction of Plan: The place of administration of the Plan
shall be in the Commonwealth of Massachusetts, and the validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the
laws of the Commonwealth of Massachusetts.
14. |
Stockholder Approval and Effective Dates |
Upon approval by the stockholders of the Corporation, this Plan shall become unconditionally effective as of January 1, 1982. No Award Period under this
Plan shall commence and no Option shall be granted after December 31, 2001; provided, however, that the Plan and all outstanding Awards granted under the Plan prior to such date shall remain in effect until the applicable Award Periods and Options
have expired and the respective number of Units earned, if any, and applicable Payment Values have been determined and earned amounts paid, or until such Awards are cancelled in accordance with the terms of subsections 3(c), 6(e) and (h), 7(f) or
9(b). If the stockholders shall not approve the Plan, the Plan shall not be effective and any and all actions taken prior thereto shall be null and void or shall, if necessary, be deemed to have been fully rescinded.
10
EX-10.17
11
dex1017.htm
2ND AMENDMENT TO CREDIT AGREEMENT
2ND AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.17
Execution Version
PERINI CORPORATION
SECOND AMENDMENT
THIS SECOND AMENDMENT (this Amendment) is entered into as of November 5, 2003 by and among PERINI CORPORATION, a Massachusetts corporation (the Borrower), with its chief executive office at 73
Mt. Wayte Avenue, Framingham, Massachusetts 01701, FLEET NATIONAL BANK, as Administrative Agent (the Administrative Agent), and the Lenders under the Credit Agreement, as defined below. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Credit Agreement, as defined below.
R E C I T A L S
WHEREAS, the Borrower, the Administrative Agent and the Lenders have previously entered into a Credit Agreement dated as of January 23, 2002, as amended by a First Amendment and Waiver dated as of February 14, 2003
(the Credit Agreement);
WHEREAS, the
Borrower has requested, and the Lenders have agreed, to make certain modifications to the Credit Agreement on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing premises and the mutual benefits to be derived by the Borrower, the Administrative Agent and the Lenders
from a continuing relationship under the Credit Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
A. Amendments to Credit Agreement.
1. Section 1.01 of the Credit Agreement is hereby amended as follows:
(a) |
The following defined terms are hereby amended in their entirety to read as follows: |
Applicable Margin means the following percentages per annum based upon the Total Exposure, (i) with
respect to any interest rate calculated with respect to the Adjusted Libor Rate or the Prime Rate, and (ii) with respect to any fees payable on any Letter of Credit, the margin set forth below:
AGGREGATE AMOUNT OF OUTSTANDING REVOLVING LOANS AND LC EXPOSURE
|
|
PRIME RATE LOANS
|
|
LIBOR LOANS
|
|
LETTERS OF CREDIT
|
£ $50,000,000 |
|
.00% |
|
2.25% |
|
.00% |
> $50,000,000 |
|
.25% |
|
2.50% |
|
.25% |
Any increase or decrease in the Applicable Margin resulting from a change in the Total Exposure shall
become effective as of the first Business Day immediately following such change.
Revolving Credit Commitment means, (a) in the aggregate, (i) $70,000,000 for the period commencing November 5, 2003 and ending on the Reduction Date, and (ii) $50,000,000 thereafter; and (b) for
each Lender, the percentage set forth below for such Lender multiplied by (i) $70,000,000 for the period commencing November 5, 2003 and ending on the Reduction Date, and (ii) $50,000,000 thereafter:
Fleet National Bank |
|
66.67 |
% |
Banknorth, N.A. |
|
33.33 |
% |
(b) |
The following new defined terms are hereby added: |
Reduction Date means January 31, 2004.
Total Exposure means, as of any date, the aggregate amount of outstanding Revolving Loans and LC Exposure on such date.
2. Section 2.l8(c) of the Credit Agreement is hereby amended in its entirety to read
as follows:
(c) The Borrower shall pay to the Agent a letter
of credit fee at a rate per annum equal to the sum of (a) 1.5% plus (b) the Applicable Margin, multiplied by the aggregate amount available for drawings under each Letter of Credit issued from time to time, any such fee to be payable for the account
of the Lenders ratably in proportion to their respective Commitment Percentages. Such fee shall be payable in arrears on the last day of each fiscal quarter of the Borrower for so long as such Letter of Credit is outstanding and on the date of
termination thereof. The Borrower shall pay to the LC Bank additional fees and expenses in the amounts and at the times as agreed between the Borrower and the LC Bank.
B. Representations and Warranties. The Borrower represents and warrants to the Administrative Agent and the Lenders
that: (a) the Borrower has the full power and authority to execute, deliver and perform its respective obligations under, the Credit Agreement, as amended by this Amendment, (b) the execution and delivery of this Amendment has been duly authorized
by all necessary action of the Board of Directors of the Borrower; (c) the representations and warranties contained or referred to in Article IV of the Credit Agreement are true and accurate in all material respects as of the date of this Amendment;
and (d) no Event of Default has occurred and is continuing or will result after giving effect to this Amendment and the transactions contemplated by this Amendment and the Credit Agreement.
-2-
C. Other.
1. This Amendment shall take effect upon receipt by the Administrative Agent of:
|
(i) |
this Amendment duly executed and delivered by the Borrower; |
|
(ii) |
the (a) $46,669,000 Amended and Restated Revolving Credit Note payable by the Borrower to Fleet National Bank, and (b) the $23,331,000 Amended and Restated Revolving Credit Note
payable by the Borrower to Banknorth, N.A., each duly executed and delivered by the Borrower; |
|
(iii) |
a Clerks Certificate executed by the Clerk of the Borrower with regard to resolutions, organizational matters and officer incumbencies; |
|
(iv) |
Legal Existence/Good Standing Certificate issued by the Massachusetts Secretary of the Commonwealth for the Borrower; |
|
(v) |
payment to the Administrative Agent, for the pro rata accounts of the Lenders, of an Amendment Fee in the amount of $50,000 to be debited to account number #0236422481 with Fleet
National Bank; and |
|
(vi) |
Payment of all costs and expenses (including, without limitation, the reasonable costs and expenses of the Administrative Agents counsel) incurred by the Administrative Agent
in connection with this Amendment. |
2. This
Amendment is executed as an instrument under seal and shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to its conflicts of law rules. All parts of the Credit Agreement, the Financing
Documents and the Fee Letter not affected by this Amendment are hereby ratified and affirmed in all respects, provided that if any provision of the Credit Agreement shall conflict or be inconsistent with this Amendment, the terms of
this Amendment shall supersede and prevail. Upon the execution of this Amendment, all references to the Credit Agreement in that document, or in any related document, shall mean the Credit Agreement as amended by this Amendment. Except as expressly
provided in this Amendment, the execution and delivery of this Amendment does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of the Credit Agreement,
and, except as specifically provided in this Amendment, the Credit Agreement shall remain in full force and effect. This Amendment may be executed in one or more counterparts with the same effect as if the signatures hereto and thereto were upon the
same instrument.
[SIGNATURE PAGE FOLLOWS]
-3-
IN WITNESS WHEREOF, each of the Borrower, the Administrative Agent and the Lenders in accordance with
Section 9.05 of the Credit Agreement, has caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date set forth in the preamble on page one of this Amendment.
|
|
|
|
BORROWER: |
|
|
|
WITNESSED: |
|
|
|
PERINI CORPORATION |
|
|
|
|
/s/ TAMMI A.
RICE
|
|
|
|
By: |
|
/s/ SUSAN C. MELLACE |
|
|
|
|
|
|
Tammi A. Rice Print Name |
|
|
|
|
|
Susan C. Mellace Treasurer |
|
|
|
|
ADMINISTRATIVE AGENT: |
|
|
|
|
|
|
|
FLEET NATIONAL BANK, as Administrative Agent |
|
|
|
|
|
|
|
|
By: |
|
/s/ THOMAS F. BRENNAN |
|
|
|
|
|
|
|
|
|
|
|
|
Thomas F. Brennan Senior Vice President |
|
|
|
|
LENDERS: |
|
|
|
|
|
|
|
FLEET NATIONAL BANK |
|
|
|
|
|
|
|
|
By: |
|
/s/ THOMAS F. BRENNAN |
|
|
|
|
|
|
|
|
|
|
|
|
Thomas F. Brennan Senior Vice President |
|
|
|
|
BANKNORTH, N.A. |
|
|
|
|
|
|
|
|
By: |
|
/s/ JON R. SUNDSTROM |
|
|
|
|
|
|
|
|
|
|
|
|
Jon R. Sundstrom Senior Vice President |
Signature Page to Perini Second
Amendment
-4-
EX-21.1
12
dex211.htm
LIST OF SUBSIDIARIES
LIST OF SUBSIDIARIES
Exhibit 21.1
Perini Corporation
Subsidiaries of the Registrant
Name
|
|
Place of Organization
|
|
Percentage of Interest or Voting Securities Owned
|
|
|
|
|
Perini Corporation |
|
Massachusetts |
|
|
|
|
|
|
Perini Building Company, Inc. |
|
Arizona |
|
100 |
% |
|
|
|
Perini Management Services, Inc. (f/k/a Perini International Corporation) |
|
Massachusetts |
|
100 |
% |
|
|
|
James A. Cummings, Inc. |
|
Florida |
|
100 |
% |
|
|
|
Perini Environmental Services, Inc. |
|
Delaware |
|
100 |
% |
|
|
|
International Construction Management Services, Inc. |
|
Delaware |
|
100 |
% |
|
|
|
Percon Constructors, Inc. |
|
Delaware |
|
100 |
% |
|
|
|
Bow Leasing Company, Inc. |
|
New Hampshire |
|
100 |
% |
|
|
|
Perini Land & Development Company, Inc. |
|
Massachusetts |
|
100 |
% |
|
|
|
Paramount Development Associates, Inc. |
|
Massachusetts |
|
100 |
% |
EX-23.2
13
dex232.htm
CONSENT OF DELOITTE & TOUCHE LLP
CONSENT OF DELOITTE & TOUCHE LLP
Exhibit 23.2
INDEPENDENT AUDITORS CONSENT
We consent to the use in this Registration Statement of Perini Corporation on Form S-1 of our report dated March 21, 2003, (which report expresses an unqualified opinion
and includes an explanatory paragraph concerning a retroactive change in presentation of the Companys joint ventures in the consolidated balance sheets from the equity method to the proportionate consolidation method and the restatement of
basic and diluted earnings per share for the year ended December 31, 2000) appearing in the Prospectus, which is part of this Registration Statement, and of our report dated March 21, 2003 relating to the financial statement schedules appearing
elsewhere in this Registration Statement.
We also consent to the reference to
us under the headings Selected Historical Financial Data and Experts in such Prospectus.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
December 15, 2003
GRAPHIC
14
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end
-----END PRIVACY-ENHANCED MESSAGE-----