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 September 30, 1995 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 November 6,
1995: 5,213,551.
-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 September 30,
1995, the consolidated statements of operations and
retained earnings and the consolidated statements of
cash flows for the nine months ended September 30, 1995
and 1994 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 SHEETS
(in thousands except share amounts)
(unaudited)
September 30 December 31,
1995 1994
Assets:
Cash and cash equivalents $58,798 $54,756
Marketable securities 4,673 4,251
Construction receivables:
Due on contracts including 444,978 356,160
retainage
Estimated unbilled construction 51,544 70,733
costs and related earnings
Real estate 97,465 106,300
Property and equipment, net 17,615 17,490
Prepaid pension cost 63,700 64,259
Other assets 30,020 31,140
Total assets $768,793 $705,089
Liabilities:
Construction accounts payable:
Trade $331,726 $276,391
Due on completion of contracts 133,517 118,959
Accrued estimated work completed 48,967 67,196
Notes payable and convertible 95,220 106,879
debenture
Deferred income taxes 12,802 12,731
Other liabilities 83,210 63,717
Total liabilities 705,442 645,873
Stockholders' Equity:
Series C, 8-1/2% cumulative
convertible
preferred stock, $1 par value 9 9
Series B, cumulative convertible,
preferred stock, $1 par value 849 849
Common stock, $1 par value 5,267 5,200
Paid in capital 38,278 37,778
Net unrealized loss on marketable (129) (276)
securities
Retained earnings 28,603 26,656
72,877 70,216
Less: Loan to Employee stock (8,994) (10,468)
ownership plan
Treasury stock, at cost (532) (532)
Total stockholders' equity 63,351 59,216
Total liabilities and stockholders' $768,793 $705,089
equity
See Notes to Consolidated Financial
Statements
-4-
THE TURNER CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(in thousands, except share amounts)
(unaudited) (unaudited)
Nine Months Three Months
Ended Ended
September 30, September 30,
1995 1994 1995 1994
Value of construction completed $2,397,446 $1,927,868 $883,702 $658,849
Earnings from construction contracts $52,969 $41,012 $19,153 $11,809
Losses from real estate operations (1,477) (322) (591) (1,057)
Gross earnings 51,492 40,690 18,562 10,752
Operating expenses - construction 28,619 27,390 10,481 8,458
Operating expenses - real estate 929 1,929 149 467
General & administrative expenses 14,525 9,714 4,849 3,372
44,073 39,033 15,479 12,297
Other income (loss), net (1,038) (721) (624) (292)
Income before income taxes 6,381 936 2,459 (1,837)
Income tax provision (benefit) 3,063 (2,016) 1,298 (2,733)
Net income 3,318 2,952 1,161 896
Dividends on preferred stock (1,371) (1,372) (457) (458)
Net income available for common 1,947 1,580 704 438
stockholders
Retained earnings, beginning of 26,656 24,834 27,899 25,976
period
Retained earnings, end of period $28,603 $26,414 $28,603 $26,414
Earnings per common share:
Primary $0.37 $0.30 $0.13 $0.08
Fully diluted $0.32 $0.26 $0.11 $0.07
Weighted average common and common
equivalent shares outstanding:
Primary 5,290,116 5,189,749 5,305,340 5,232,535
Fully diluted 6,138,676 6,038,705 6,153,900 6,081,491
See Notes to Consolidated Financial
Statements
-5-
THE TURNER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share amounts)
(Unaudited)
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Net income 3,318 2,952
Adjustments to reconcile net income to
net cash flows
from operating activities:
Equity in affiliates' net loss 1,909 1,272
Depreciation and amortization 6,569 7,154
Net periodic pension charge 559 (1,173)
(credit)
Loss on sale of marketable - 79
securities
Changes in operating assets and
liabilities:
Increase in construction (69,702) (24,681)
receivables
Increase in construction 51,664 6,407
payables
Decrease in restructuring (752) (4,239)
reserve
Change in other assets and 18,072 (6,429)
liabilities, net
Net cash provided by (used in) 11,637 (18,658)
operating activities
Cash flows from investing activities:
Proceeds from sale of marketable - 8,565
securities
Purchases of marketable securities (199) (191)
Distributions from joint ventures 1,300 1,000
Investments in joint ventures (2,020) (900)
Proceeds from real estate sales, net 6,627 6,460
Increase in real estate (1,468) (2,177)
Purchases of property & equipment (3,406) (1,991)
Proceeds from sale of property & 52 133
equipment
Collections on notes receivable 3,086 2,871
Net cash provided by investing 3,972 13,770
activities
Cash flows from financing activities:
Common stock issued 567 479
Cash dividends to preferred (1,949) (1,950)
shareholders
Repayments from loan to Employee Stock 1,474 1,322
Ownership Plan
Proceeds from borrowing 24,001 41,450
Payments on borrowing (35,660) (27,544)
Net cash provided by (used in) (11,567) 13,757
financing activities
Net increase in cash and cash equivalents 4,042 8,869
Cash and cash equivalents at beginning of 54,756 25,485
period
Cash and cash equivalents at end of period 58,798 34,354
Noncash investing activities:
Net unrealized gain (loss) on $147 ($191)
marketable securities
Notes provided upon the sale of real - 447
estate
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:
Nine Months
Ended
September 30,
1995 1994
Revenue from construction contracts:
Construction costs incurred by $1,711,696 $1,337,243
the company
Company's share of joint 249,443 161,317
venture construction costs
Earnings from construction
contracts 52,969 41,012
Total revenue from construction 2,014,108 1,539,572
contracts
Construction costs incurred by
owners in connection with
work under construction
management and similar contracts 383,338 388,296
Value of construction completed $2,397,446 $1,927,868
Three Months
Ended
September 30,
1995 1994
Revenue from construction contracts:
Construction costs incurred by
the company $ 609,158 $ 474,767
Company's share of joint 106,077 76,334
venture construction costs
Earnings from construction
contracts 19,153 11,809
Total revenue from construction 734,388 562,910
contracts
Construction costs incurred by
owners in connection with work under
construction management and 149,314 95,939
similar contracts
Value of construction completed $ 883,702 $ 658,849
2. Losses from real estate operations consist of revenues
and related costs as follows:
Nine Months
Ended
September 30,
1995 1994
Real estate sales $ 6,299 $ 9,081
Cost of sales (6,018) (7,403)
Rental and other income 6,821 9,465
Direct operating costs (5,615) (7,178)
Depreciation and amortization
expense (2,964) (4,287)
Losses from real estate operations $(1,477) $ (322)
Three Months
Ended
September 30,
1995 1994
Real estate sales $1,008 $ 6,449
Cost of sales (1,008) (6,571)
Rental and other income 2,175 3,036
Direct operating costs (1,811) (2,519)
Depreciation and amortization (955) (1,452)
Losses from real estate operations $ (591) $(1,057)
3.Interest costs incurred and expensed for the nine
months and three months ended September 30, 1995
were $6,731 and $2,118, respectively. Interest
costs incurred and expensed for the nine months and
three months ended September 30, 1994 were $5,668
and $1,920, respectively.
-7-
Item 2. Management's Discussion & Analysis of Financial
Condition and Results of Operations
Results of operations in the nine months ended
September 30, 1995 produced net income of $3.3 million
compared to net income of $3.0 million from the
corresponding period of 1994. Pre-tax income for the
nine months ended September 30, 1995 was significantly
higher than the same period of 1994. Net inome in 1994
was positively impacted because excess tax reserves
were taken into income at September 30, 1994.
Value of construction completed for the nine months
ended September 30, 1995 increased 24% to $2.4 billion
from the level recorded during the corresponding period
in 1994. Earnings from construction contracts
increased 29% from the prior year level to $53.0
million. The increase in construction activity and
related earnings reflects the growth in sales activity
in 1994 due to a resurgence of the company's markets.
Losses from real estate operations for the nine months
ended September 30, 1995 amounted to $1.5 million. The
corresponding period for 1994 reflected the gain
realized on the sale of lease rights of the company's
Rickenbacker facility.
Operating and general and administrative expenses
during the nine months ended September 30, 1995
increased 13% to $44.1 million from the corresponding
period of 1994, primarily due to higher interest rate
levels, increases in benefit costs and the increase in
construction activity. Operating expenses for real
estate showed significant declines from 1994 due to
restructuring steps taken in the second quarter of
1994.
During the first nine months of 1995, approximately
$752,000 was charged to the remaining restructuring
reserve consisting of the finalization of
reorganization steps taken in prior years.
Other income for the nine months ended September 30,
1995 amounted to a loss of $1.0 million mostly due to
losses in overseas operations as a result of continued
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 for the
company's Turner Steiner venture. To mitigate the
impact of these developments, the company continues to
seek new business in construction sectors less affected
by the cyclical economic decline. The company is also
continuing its efforts to maintain operating
efficiencies experienced by its restructuring program.
At September 30, 1995, the company's backlog of value
of construction to be completed was $4.24 billion and
anticipated earnings associated with backlog from
construction contracts was $96.9 million, compared to
$4.55 billion and $92.6 million at December 31, 1994.
Estimated earnings from construction contracts cannot
and should not be used as the basis of predictions with
respect to future net income.
-8-
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 nine months ended
September 30, 1995 resulted in a net increase of funds
of $4.0 million. Cash flows from operating activities
amounted to $11.6 million due primarily to increased
construction activity. Cash flows from investing
activities amounted to $4.0 million which is
principally due to collections on notes receivable,
distributions from construction joint ventures, and
proceeds from real estate sales. Cash flows used in
financing activities amounted to $11.6 million
primarily due to pay downs on existing credit
facilities. The company's management believes that the
company's financial condition and available credit
facilities at September 30, 1995 are sufficient to
support the present and prospective levels of the
company's operations.
-9-
Part II - OTHER INFORMATION
Item 5 Legal Proceedings
In July 1995, a jury rendered a verdict in
litigation between Turner Construction Company and a
joint venture including Prudential Insurance Company
of America in the Circuit Court of Cook County,
Illinois (1) awarding Turner $8.33 million with
regard to Turner's claim for the unpaid portion of
the costs of construction of Prudential Plaza II in
Chicago, and (2) denying all of Prudential's claims
for damages for alleged construction delays and
construction defects. The amount awarded to Turner
approximates the net account receivable on Turner's
books.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Earnings Per Share for
the nine months ended
September 30, 1995 and 1994.
(b)During the nine months ended September 30, 1995 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: November 13, 1995
(Signature)
H.J. Parmelee
President
Date: November 13, 1995
(Signature)
D.J. Smith
Senior Vice President
and
Chief Financial Officer
Exhibit 11
THE TURNER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
"(in thousands, except per share amounts)"
(unaudited)
Nine Months Ended
September 30
1995 1994
PRIMARY
Weighted average common shares outstanding "5,186 " "5,103 "
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 104 87
Weighted average common and common equivalent shares outstanding "5,290" 5,190 "
Earnings available for common shareholders less dividends
" on preferred stock, net of tax" "$1,947 " "$1,580 "
Earnings per common share $0.37 $0.30
FULLY DILUTED
Weighted average shares outstanding used in the computation of primary
earnings per share "5,186 " "5,103 "
Common stock equivalents (assuming the use of the proceeds from
their exercise or issuance to acquire treasury stock using the
quarter ended market price) granted under employee stock
option and stock purchase plans 104 87
Conversion of convertible preferred stock to common stock 849 849
Weighted average common and common equivalent shares outstanding "6,139 "6,039 "
Earnings available for common shareholders less
preferred dividend differential "$1,947 " "$1,580 "
Fully diluted earnings per common share $0.32 $0.26
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The schedule contains certain summary financial information extracted from the
Company's financial statements and notes thereto and is qualified in its
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except share amounts are in thousands.
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