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 June 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 August 7,
1995: 5,211,026
-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 June 30, 1995, the
consolidated statements of operations and retained
earnings and the consolidated statements of cash flows
for the six months ended June 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)
June 30 December 31,
1995 1994
Assets:
Cash and cash equivalents $57,043 $54,756
Marketable Securities 4,586 4,251
Construction receivables:
Due on contracts including 410,020 356,160
retainage
Estimated unbilled construction 46,072 70,733
costs and related earnings
Real Estate 100,347 106,300
Property and equipment, net 17,866 17,490
Prepaid pension cost 63,858 64,259
Other assets 31,118 31,140
Total assets $730,910 $705,089
Liabilities:
Construction accounts payable:
Trade $296,512 $276,391
Due on completion of contracts 128,119 118,959
Accrued estimated work completed 43,769 67,196
Notes payable and convertible 99,184 106,879
debenture
Deferred income taxes 12,795 12,731
Other liabilities 88,877 63,717
Total liabilities 669,256 645,873
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 5,259 5,200
Paid in capital 38,207 37,778
Net unrealized loss on marketable (142) (276)
securities
Retained earnings 27,899 26,656
72,081 70,216
Less: Loan to Employee stock (9,895) (10,468)
ownership plan
Treasury stock, at cost (532) (532)
Total stockholders' equity 61,654 59,216
Total liabilities and stockholders' $730,910 $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)
Six Months Ended Three Months Ended
June 30, June 30,
1995 1994 1995 1994
Value of construction completed $1,513,744 $1,269,019 $812,939 $676,629
Earnings from construction $33,816 $ 29,203 $ 17,865 $13,687
contracts
Earnings/(Losses) from real (886) 735 (344) 1,522
estate operations
Gross earnings 32,930 29,938 17,521 15,209
Operating expenses - 18,138 18,932 9,992 9,574
construction
Operating expenses - real estate 780 1,462 325 638
General & administrative 9,676 6,342 4,808 3,237
expenses
28,594 26,736 15,125 13,449
Other income (loss), net (414) (429) (200) (109)
Income before income taxes 3,922 2,773 2,196 1,651
Income tax, provision 1,765 717 1,045 654
Net income 2,157 2,056 1,151 997
Dividends on preferred stock (914) (914) (457) (457)
Net income available for common 1,243 1,142 694 540
stockholders
Retained earnings, beginning of 26,656 24,834 27,205 25,436
period
Retained earnings, end of period $27,899 $25,976 $27,899 $25,976
Earnings per common share:
Primary $0.24 $0.22 $0.13 $0.10
Fully diluted $0.20 $0.19 $0.11 $0.09
Weighted average common and
common equivalent shares
outstanding:
Primary 5,270,936 5,188,322 5,277,510 5,195,960
Fully diluted 6,119,496 6,037,278 6,126,070 6,044,916
See Notes to Consolidated Financial Statements
-5-
THE TURNER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share amounts)
(Unaudited)
Six Months Ended June 30,
1995 1994
Cash flows from operating activities:
Net income 2,157 2,056
Adjustments to reconcile net income to
net cash flows
from operating activities:
Equity in affiliates' net loss 1,180 1,175
Depreciation and amortization 3,929 4,580
Net periodic pension charge (credit) 401 (965)
Loss on sale of marketable - 79
securities
Changes in operating assets and
liabilities:
Increase in construction (29,272) (12,402)
receivables
Increase (decrease) in 5,854 (16,058)
construction payables
Decrease in restructuring (711) (2,017)
reserve
Increase in other assets and 25,094 1,072
liabilities, net
Net cash provided by operating 8,632 (22,480)
activities
Cash flows from investing activities:
Proceeds from sale of marketable - -
securities
Purchases of marketable securities (131) 8,565
Distributions from joint ventures 1,387 (650)
Proceeds from real estate sales, net 2,406 682
Increase in real estate (1,249) (764)
Purchases of property & equipment (2,279) (1,511)
Proceeds from sale of property & 154 1,189
equipment
Repayments on notes receivable 1,301 -
Net cash provided by investing 1,589 7,511
activities
Cash flows from financing activities:
Common stock issued 488 382
Cash dividends to preferred shareholders (1,299) (1,300)
Repayments from loan to Employee Stock 573 674
Ownership Plan
Proceeds from borrowing 22,325 39,348
Payments on borrowing (30,021) (16,068)
Net cash provided by (used in) (7,934) 23,036
financing activities
Net increase (decrease) in cash and cash 2,287 8,067
equivalents
Cash and cash equivalents at beginning of 54,756 25,485
period
Cash and cash equivalents at end of period 57,043 33,552
Noncash investing activities:
Net unrealized gain (loss) on marketable $134 $151
securities
Notes provided upon the sale of real - -
estate
-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:
Six Months Ended
June 30,
1995 1994
Revenue from construction contracts:
Construction costs incurred by $1,102,538 $862,476
the company
Company's share of joint 143,366 84,983
venture construction costs
Earnings from construction
contracts 33,816 29,203
Total revenue from construction 1,279,720 976,662
contracts
Construction costs incurred by
owners in connection with
work under construction
management and similar contracts 234,024 292,357
Value of construction completed $1,513,744 $1,269,019
Three Months Ended
June 30,
1995 1994
Revenue from construction contracts:
Construction costs incurred by $ 590,459 $473,601
the company
Company's share of joint 69,923 46,232
venture construction costs
Earnings from construction
contracts 17,865 13,687
Total revenue from construction 678,247 533,520
contracts
Construction costs incurred by
owners in connection with
work under construction 134,691 143,109
management and similar contracts
Value of construction completed $812,938 $676,629
2. Earnings/(losses) from real estate operations consist
of revenues and related costs as follows:
Six Months Ended
June 30,
1995 1994
Real estate sales $5,291 $2,632
Cost of sales (5,010) (832)
Rental and other income 4,646 6,429
Direct operating costs (3,804) (4,658)
Depreciation and amortization
expense (2,009) (2,836)
Earnings/(losses) from real estate
operations (886) 735
Three Months Ended
June 30,
1995 1994
Real estate sales $5,116 $2,067
Cost of sales (4,835) (267)
Rental and other income 2,177 3,483
Direct operating costs (1,853) (2,403)
Depreciation and amortization
expense (949) (1,358)
Earnings/(losses) from real estate
operations (344) 1,522
3.Interest costs incurred and expensed for the six
months and three months ended June 30, 1995 were
$4,613 and $2,266, respectively. Interest costs
incurred and expensed for the six months and three
months ended June 30, 1994 were $3,748 and $1,913,
respectively.
-7-
Item 2. Management's Discussion & Analysis of Financial
Condition and Results of Operations
Results of operations in the six months ended June 30,
1995 produced net income of $2.2 million essentially
unchanged from the corresponding period of 1994.
Value of construction completed for the six months
ended June 30, 1995, increased by 19% from the level
recorded during the corresponding period in 1994 to
$1.51 billion. Earnings from construction contracts
increased 16% from the prior year level to $33.8
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 six months
ended June 30, 1995 amounted to $886,000. 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 six months ended June 30, 1995, increased 7%
from the corresponding period of 1994 to $28.6 million
primarily due to higher interest rate levels and
increases in benefit costs. Operating expenses for
construction and real estate showed significant
declines from the corresponding period in 1994 as a
result of restructuring steps taken in the second
quarter of 1994.
During the first six months of 1995, approximately
$711,000 was charged to the remaining restructuring
reserve consisting primarily of the finalization of
reorganization steps taken in prior years.
Other income for the six months ended June 30, 1995
amounted to a loss of $414,000 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 June 30, 1995, the company's backlog of value of
construction to be completed was $4.42 billion and
anticipated earnings associated with backlog from
construction contracts was $98.7 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 six months ended June
30, 1995 resulted in a net increase of funds of $2.3
million. Cash flows from operating activities amounted
to $8.6 million due primarily to increases in other
liabilities. Cash flows from investing activities
amounted to $1.6 million which is principally due to
the payments on notes receivable and the distributions
from construction joint ventures offset by the purchase
of property and equipment. Cash flows used in
financing activities amounted to $7.9 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
June 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 six months ended June 30, 1995 and 1994.
(b) During the six months ended June 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: August 10, 1995
(Signature)
H.J. Parmelee
President
Date: August 10, 1995
(Signature)
D.J. Smith
Senior Vice President
and
Chief Financial Officer
THE TURNER CORPORATION Exhibit 11
AND ITS SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
(unaudited)
Six Months Ended
June 30,
1995 1994
PRIMARY
Weighted average common shares outstanding 5,174 5,108
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 97 80
Weighted average common and common equivalent 5,271 5,188
shares outstanding
Earnings available to common shareholders less
dividends
on preferred stock, net of tax $1,243 $1,142
Earnings per common share $0.24 $0.22
FULLY DILUTED
Weighted average shares outstanding used in the
computation of primary
earnings per share 5,174 5,108
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 97 80
Conversion of convertible preferred stock to 849 849
common stock
Stock option equivalent shares - -
Weighted average common and common equivalent 6,120 6,037
shares outstanding
Earnings available for common shareholders less
preferred dividend differential $1,243 $1,142
Fully diluted earnings per common share:
Earnings per share $0.20 $0.19
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The schedule contains certain summary financial information extracted from the
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except share amounts are in thousands.
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