SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994 Commission File Number 1-
8719
THE TURNER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3209884
(State or other jurisdiction of (I.R.S. Employer
Id. No.)
incorporation or organization)
375 Hudson Street New York, New York 10014
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code
(212) 229-6000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of May 9, 1994:
5,120,940.
-2-
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company or group of companies for which report is filed:
THE TURNER CORPORATION AND CONSOLIDATED SUBSIDIARIES
The consolidated balance sheet as of March 31, 1994, the
consolidated statements of operations and retained earnings
and the consolidated statements of cash flows for the three
months ended March 31, 1994 and 1993 are unaudited, but, in
the opinion of the company's management reflect all
adjustments, consisting only of normal recurring
adjustments, which are necessary to present fairly the
financial condition and results of operations at those dates
and for those periods. The results of operations for any
three month period is not necessarily indicative of results
for a full year. It is suggested that these financial
statements be read in conjunction with the audited financial
statements and notes thereto included in the company's
latest annual report.
-3-
THE TURNER CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEET
March 31, 1994
WITH COMPARATIVE FIGURES
FOR DECEMBER 31, 1993
(in thousands except
share amounts)
<TABLE>
(unaudited (unaudited
) )
Assets Liabilities
March 31, December March 31, December
31, 31,
1994 1993 <S> <C> 1994<C> 1993
Construction accounts
<S> <C> <C> payable:
Cash and cash $ 28,256 $25,485 Trade $215,408 $239,156
equivalents
Marketable Securities 4,264 13,046 Due on completion of 112,807 117,647
contracts
Accrued estimated work 68,187 78,495
completed
Construction
receivables:
Due on contracts 319,738 315,741 Notes payable and 127,405 102,365
including retainage convertible debenture
Estimated unbilled
construction costs
and related earnings 71,725 83,135 Deferred income taxes 13,590 13,708
Real Estate 116,076 117,275 Other liabilities 56,578 58,152
Property and equipment, 18,594 17,725 Total liabilities 593,975 609,523
net
Stockholders' Equity:
Prepaid pension cost 65,582 63,207 Series C, cumulative
convertible
preferred stock, $1 par 9 9
value
Other assets 25,491 28,592 Series B, cumulative
convertible,
preferred stock, $1 par 849 849
value
Total assets $649,726 $664,206 Common stock, $1 par value 5,163 5,135
Paid in capital 37,504 37,280
Net unrealized loss on (130) -
marketable securities
Cumulative foreign (787) (787)
translation adjustment
Retained earnings 25,436 24,834
68,044 67,320
Less: Loan to Employee (11,761) (12,105)
stock ownership plan
Treasury stock, (532) (532)
at cost
Total stockholders' equity 55,751 54,683
Total liabilities and $649,726 $664,206
stockholders' equity
See Notes to
Consolidated Financial
Statements
</TABLE>
-4-
THE TURNER CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS of
OPERATIONS AND RETAINED EARNINGS
(in thousands, except share
amounts)
(unaudited
)
Three
Months
Ended
March 31,
1994 1993
Value of construction completed $592,390 $580,941
Earnings from construction 15,516 16,660
contracts
Losses from real estate (787) (902)
operations
Gross earnings 14,729 15,758
Operating expense - construction 9,358 9,986
Operating expense - real estate 824 782
& other
General & administrative expense 3,105 2,976
13,287 13,744
Other income (loss), net (320) (310)
Income before taxes on income 1,122 1,704
Provision for income taxes 63 758
Net Income 1,059 946
Dividends on preferred stock -457 (465)
Net Income available for common 602 481
shareholders
Retained earnings, beginning of 24,834 32,869
period
Less common dividends paid - -
Retained earnings, end of period $25,436 $33,350
Earnings per common share:
Primary $0.12 $0.09
Fully diluted $0.10 $0.08
Weighted average common shares
outstanding
Primary 5,159,632 5,147,004
Fully diluted 6,016,534 6,016,940
See Notes to Consolidated
Financial Statements
-5-
The Turner Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, except share amounts)
(Unaudited)
Three
Months
Ended March
31,
1994 1993
Cash flows from operating activities:
Net income $1,059 $946
Adjustments to reconcile net income
to net cash flows
from operating activities:
Equity in affiliates' net loss 606 686
Depreciation and amortization 2,420 2,067
Pension credit (2,375) (2,663)
Changes in operating assets and
liabilities:
Decrease in restructuring (297) 0
reserve
Decrease in construction 7,413 37,445
receivables
Decrease in construction (38,897) (54,258)
accounts payable
Decrease (increase) in other 492 (1,842)
assets and liabilities, net
Net cash used in operating (29,579) (17,619)
activities
Cash flows from investing activities:
Sale of marketable securities 8,565 0
Proceeds from sale of real estate, 415 14,638
net
Decrease (increase) in real estate (663) 2,489
Purchases of property and equipment (999) (1,333)
Proceeds from sale of property & 47 590
equipment
Net cash provided by (used in) 7,365 16,384
investing activities
Cash flows from financing activities:
Common stock issued 252 287
Cash dividends to preferred (650) (650)
shareholders
Repayments from loan to Employee 344 332
Stock Ownership Plan
Proceeds from borrowing 33,060 28,581
Payments on borrowing (8,021) (23,550)
Proceeds from issuance of treasury 0 33
stock
Net cash (used in) provided by 24,985 5,033
financing activities
Net increase (decrease) in cash and cash 2,771 3,798
equivalents
Cash and cash equivalents at beginning of 25,485 38,305
period
Cash and cash equivalents at end of $28,256 $42,103
period
Noncash investing activities:
In 1994,the company recorded a net
unrealized loss on marketable
securities of $130.
See Notes to Consolidated Financial
Statements
-6-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share amounts)
1. Value of construction completed represents construction
costs incurred and earnings during the year as follows:
Three Months
Ending
March
31,
1994 1993
Revenue from construction contracts
Construction costs incurred by the company $388,875 $389,448
Company's share of joint venture
construction costs 38,751 38,709
Earnings from construction contracts 15,516 16,660
Total revenue from construction contracts 443,142 444,816
Construction costs incurred by owners in
connection with work under construction
management and similar contracts 149,248 136,125
Value of construction completed $592,390 $580,941
2. Losses from real estate operations consist of revenues
and related costs as follows:
Three Months
Ending
March
31
1994 1993
Real estate sales $ 565 $14,638
Costs of sales (565) (14,638)
Rental income 2,965 3,643
Direct cost of real
estate operations (3,752) (4,545)
Losses from real estate operations$ (787) $ (902)
3. Interest costs incurred and expensed for the three
months ended March 31, 1994 and 1993 were $1,835 and
$1,774, respectively.
4. Effective January 1, 1994, the company adopted
Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and
Equity Securities." Under SFAS No. 115 Debt and Equity
Securities not classified as either held-to-maturity
securities or trading securities are classified as
available-for-sale securities and reported at fair value,
with unrealized gains and losses excluded from earnings
and reported as a separate component of Stockholders
equity.
During the first three months of 1994, the company charged
$130,000 of unrealized losses to Stockholders equity.
5. Effective January 1, 1994, the company adopted
Statement of Financial Accounting Standards (SFAS) No.
112 "Employers Accounting for Postemployment Benefits."
Under SFAS No. 112 an accrual must be made for all types
of postemployment benefits provided to former or inactive
employees, their beneficiaries and covered dependents
after employment, but before retirement. The impact of
the adoption of SFAS has not been material to the
consolidated financial statements.
-7-
Item 2. Management's Discussion & Analysis of Financial
Condition and Results of Operations
Results of operations in the nine months ended March 31,
1994 produced net income of $1.0 million compared to net
income of $946,000 for the corresponding period of 1993.
This change in net income from the prior year is discussed
below.
Value of construction completed for the three months
ended March 31, 1994, increased by 2.0% from the level
recorded during the corresponding period in 1993 to $592
million. Earnings from construction contracts decreased
6.9% from the prior year level to $15.5 million.
Construction earnings for the three months ended March 31,
1994 includes an increase in construction management
activity which traditionally carries a lower fee.
Losses from real estate operations for the three months
ended March 31, 1994 decreased 12.7% to $787,000 from the
corresponding period in 1993. This decrease is primarily
the result of reduced property management expenses resulting
from the sale of properties in 1993.
Operating and general and administrative expenses
during the three months ended March 31, 1994, decreased
overall by 3.3% from the corresponding period of 1993 to
$13.3 million due to the company's continued overhead
reduction program which was begun in prior years. In
addition, the company reduced expenses by $300,000 from the
same period last year as a result of the restructuring
program that was reserved for in 1993. The reduction was
reflected in construction operations. The cost associated
with the restructuring actions taken in the first quarter
were charged to the restructuring reserve and consisted
primarily of salary and benefit continuation costs.
Other income for the three months ended March 31, 1994
amounted to a loss of $320,000 mostly due to losses in
overseas operations as a result of soft market conditions.
The construction industry in the United States has
continued to experience spotty economic recovery.
Additionally, the present soft economic conditions in
Western Europe have reduced opportunities in that area for
the company's Turner Steiner venture. To moderate the
impact of these developments, the company is successfully
increasing its overall market share by acquiring increased
new business in construction sectors less affected by the
cyclical economic decline. The company is also continuing
its efforts to reduce expenses in both the construction and
real estate operations.
-8-
At March 31, 1994, the company's backlog of value of
construction to be completed was $4.82 billion and
anticipated earnings associated with backlog from
construction contracts was $97.0 million, compared to $4.66
billion and $91.8 million respectively, as of December 31,
1993. Estimated earnings from construction contracts cannot
and should not be used as the basis of predictions with
respect to future net income.
Because of the constantly changing proportion of
construction management contracts, consulting work,
construction contract types (cost plus percentage fee, cost
plus fixed fee, guaranteed total and lump sum), and other
factors, the relationship of value of work completed and
earnings from construction contracts is not necessarily
meaningful in the short run.
The company's cash flow for the three months ended March
31, 1994 resulted in a net increase of funds of $2.8
million. Cash flows used in operating activities amounted
to $29.6 million due primarily to the payment of trade
payables. Cash flows from investing activities amounted to
$7.3 million which is principally the result of the sale of
marketable securities. Cash flows provided by financing
activities amounted to $25.0 million primarily due to
increased borrowings on existing credit facilities. The
company's management believes that the company's financial
condition and available credit facilities at March 31, 1994
are sufficient to support the present and prospective levels
of the company's operations.
-9-
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Earnings Per Share for
the nine months ended
September 30, 1993 and 1992.
(b) During the nine months ended September 30, 1993 no
Form 8-K was required to be filed reporting any
material or unusual charges or credits to income, or
any change in independent accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized:
THE TURNER CORPORATION
(Registrant)
Date: May 13, 1994 H. J. Parmelee
(Signature)
H. J. Parmelee
President
Date: May 13, 1994 D.J. Smith
(Signature)
D.J. Smith
Senior Vice President
and
Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized:
THE TURNER CORPORATION
(Registrant)
Date: May 13, 1994
(Signature)
H. J. Parmelee
President
Date: May 13, 1994
(Signature)
D.J. Smith
Senior Vice President
and
Chief Financial Officer
THE TURNER CORPORATION
AND ITS SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
"(in thousands, except per share amounts)"
<TABLE>
"March 31,"
1994 1993
<S> <C> <C>
PRIMARY
Weighted average common shares outstanding "5,103 " "5,072 "
Common stock equivalents (assuming the use of the proceeds
from their exercise or issuance to acquire treasury stock using
the average quarterly market price) granted under employee stock
option and stock purchase plans 57 75
Weighted average common and common equivalent shares outstanding "5,160" "5,147"
Earnings available to common shareholders less dividends
" on preferred stock, net of tax" $602 $481
Earnings per common share $0.12 $0.09
FULLY DILUTED
Weighted average shares outstanding used in the computation of primary
earnings per share "5,103 " "5,072 "
Common stock equivalents (assuming the use of the proceeds from
their exercise or issuance to acquire treasury stock using the quarter
ended market price or average quarterly price if higher) granted under
employee stock option and stock purchase plans 57 75
Conversion of convertible preferred stock to common stock 849 849
Stock option equivalent shares 8 20
Weighted average common and common equivalent shares outstanding "6,017" "6,016" "Earnings available for common shareholders less di
" on preferred stock, net of tax" $602 $481
Earnings per share $0.10 $0.08
See Notes to Consolidated Financial Statements
</TABLE>
