SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______ to_______
Commission File No. 1-8719
THE TURNER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3209884
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
375 Hudson Street, New York, New York 10014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area
code: (212) 229-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Class on which registered
Common Stock, $1 Par Value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
As of March 20, 1995, the aggregate market value on that date of the
common stock held by non-affiliates (based upon the last sale price for the
common stock on the American Stock Exchange) was $41,633,056.
As of March 20, 1995, 5,167,219 shares of the registrant's common stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of definitive proxy statement to be filed pursuant to Section
14(a) of the Securities Exchange Act of 1934 - Part III, Items 10-13.
PART I
Item 1. Business.
The Turner Corporation (the "Company") is a
holding company that is engaged together with its
subsidiaries in general building construction and
construction management in the United States and
abroad and in real estate investment in the United
States. The Turner Corporation establishes
general policy direction, coordination and
planning, and provides cash management, internal
accounting control and other management services
for its operating subsidiaries.
Due to economic conditions generally, and to
factors specifically affecting the commercial real
estate market, beginning in 1989, there was a
significant slowdown in commercial construction.
In an effort to minimize the effects of this
slowdown, during the last several years, the
company's construction subsidiaries increased
their focus on manufacturing, municipal,
institutional, public, justice and amusement
(i.e., hospital, university, aviation, aquariums,
arenas and similar) projects. Approximately 70%
in dollar value of the contracts awarded to the
construction subsidiaries in 1994 were in these
areas.
During 1993, plans were developed to
significantly reduce the company's future
operating costs and expenses and to improve
productivity. This restructuring program
principally involved a reduction in the number of
staff, plus the consolidation of offices and
facilities and the reorganization of support
functions. This program was implemented and
substantially completed in 1994. Its final phase
is expected to be completed in 1995. While a
portion of the benefits of restructuring were
realized in 1994, the full benefits are expected
to be realized in 1995 and thereafter.
During the early 1980's, the Company acquired
and developed a number of properties. In 1987,
the Company decided to discontinue its new
development activities and began trying to dispose
of the properties it owned.
During 1994, the Company sold one developed real
estate property, two land parcels and a number of
condominium units for $7.5 million which was
essentially the carrying amount of the properties on the company's books.
While the Company continues to seek purchasers for
its real estate properties, it is unlikely it will
be able to dispose of its properties in their
entirety until there are more stable market
conditions in the areas in which the company's
properties are located.
In addition to its property sales, during 1994
the Company sold its master lease and development
rights at the Rickenbacker Air Industrial Park for
$1.8 million.
Financial information about the registrant's
operations in its construction and real estate
segments appear in the consolidated financial
statements and in footnote 15 on page 34 in Part
II, Item 8 of this report.
At December 31, 1994, The Turner Corporation
and subsidiaries employed approximately 2,500
staff employees, of which 1,400 held supervisory
positions and 1,100 held non-supervisory
positions.
Construction Business
The Turner Corporation's construction
business is conducted by a number of construction
subsidiaries (together, "Turner Construction").
Turner Construction is engaged primarily in the
construction of commercial and multi-family
residential buildings, manufacturing and research
facilities, hospitals, correctional facilities,
stadiums and other entertainment facilities,
airports and other structures. It also has a
division which does interior work, such as
building-out office space. Turner Construction
normally does not build roads, dams, or similar
infrastructure elements. Turner Construction
primarily acts as a general building contractor or
as a construction manager. However, Turner
Construction also sometimes acts as a consultant
to owners and others.
Although Turner Construction is a nationwide
(and to a lesser extent, worldwide) construction
firm, Turner Construction attempts to compete
locally in major cities of the United States
through essentially self-contained regional
offices and partially self-contained branch
offices. Its objective is to be a major builder in
each city or region in which it has an office.
The Turner Corporation's principal
construction subsidiary is Turner Construction
Company. Universal Construction Co., Inc., The
Lathrop Company Inc., and Turner Caribe Inc.,
wholly-owned subsidiary companies of The Turner
Corporation or Turner Construction Company, are
also engaged in construction activities in the
United States principally in the Southeast,
Midwest and the Caribbean Islands.
When it acts as a general building
contractor, Turner Construction normally
undertakes to construct a project and is paid the
entire price for the completed project. Most
aspects of the construction, however, are
performed by subcontractors who are paid by Turner
Construction. The functions actually performed by
Turner Construction are the planning and
scheduling of a construction project, the
procurement of materials, the marshaling of the
manpower required for the project, the awarding of
subcontracts and the direction and management of
the construction operation. During 1994, 1993,
and 1992 general building contracting activities
represented 81%, 75%, and 83%, respectively, of
Turner Construction's value of work completed.
Turner Construction makes extensive use of
specialty contractors (such as structural steel
contractors, electrical contractors and plumbing
contractors) as subcontractors in the performance
of its construction contracts. The extent to
which work is performed by workmen on its own
payroll varies with the location of a particular
project and is largely dependent on the
availability of experienced subcontractors in a
particular area. Work performed by Turner
Construction is generally limited to temporary
facilities, foundation, concrete, masonry and
carpentry work.
In its performance of construction management
services, Turner Construction, for a fee, monitors
and coordinates the progress of the work done by
specialty contractors who are employed directly by
the owner to build the project. During 1994, 1993
and 1992 management construction services and
consulting represented 19%, 25% and 17%,
respectively, of Turner Construction's value of
work completed. Construction management contracts
involve less risk than do projects in which Turner
Construction is a general building contractor.
However, the profit from construction management
contracts can be substantially less than that
which Turner Construction can earn when it acts as
a general building contractor.
Construction contracts include lump sum or
fixed price contracts, cost-plus fixed fee
contracts and variations thereof including cost-
plus guaranteed total contracts. The majority of
Turner Construction's business involves negotiated
contracts. The remainder of its contracts are
secured by competitive bidding.
The Company is a partner with Karl Steiner
Holding AG ("Steiner") of Switzerland in a joint
venture by the name of Turner Steiner
International SA, which renders general building
construction and construction consulting services
outside Turner Construction's and Steiner's
respective home markets.
In South America, Turner Construction Company
is a partner with Birmann SA of Brazil in a joint
venture by the name of Turner Birmann Construction
Management Do Brazil SA. The purpose of the joint
venture is to provide construction management and
consulting services to clients in Brazil and other
South American markets.
The Company is also a partner with EMCON
in a joint venture by the name of ET Environmental
Corporation which provides environmental
engineering, general building
construction, and construction management services
on environmental projects throughout the United
States.
The United States building construction
industry is intensely competitive and Turner
Construction Company and the other domestic
construction subsidiaries compete with other major
contractors as well as with small contractors.
Competition in the industry takes on a number of
forms, including fee levels, quality of service
and degree of risk assumption. Construction
companies can expand their operations rapidly and
each large population center generally has a
number of medium-sized building contractors
accustomed to undertaking all but the largest and
most complicated projects. Through its
organizational structure of permanently
established decentralized branch offices and
subsidiaries, Turner Construction competes
directly with those locally based contractors.
Year-to-year operations may be adversely affected
by general economic conditions which are
unfavorable for business and industry. Exact
statistical data is not available for determining
the relative size of construction companies,
however, based on the contract value of
construction contracts received in 1994 and
published industry data, Turner Construction
believes that it is one of the largest building
contractors operating principally within the
United States.
A portion of the Company's construction
activity is performed under payment and
performance bonds obtained through bonding
capacity from its sureties. Projects requiring
surety bonds are usually either publicly funded or
private projects, which often require FHA - type
mortgage insurance. While the Company's sureties
limit the amount of new payment and performance
bonds available, this limitation did not restrict
the Company's ability to secure new work. There
could be certain circumstances, however, when this
limitation could influence the Company's selection
of prospective projects to pursue.
At December 31, 1994, the anticipated
earnings associated with backlog from work to be
completed under construction, construction
management and construction consulting contracts
and under awards believed to be firm but not yet
confirmed by signed formal contracts was $92.6
million. The anticipated earnings from work to be
completed on contracts and awards at December 31,
1993 was $91.8 million. Approximately 44% of the
December 31, 1994 earnings backlog from
construction contracts relates to work expected to
be performed during 1996 and beyond. The backlog
is important to long-range planning and continuity
of work for the company's permanent staff.
However, anticipated earnings from construction
contracts cannot and should not be used as the
basis of predictions with respect to future
operating results.
The anticipated value of work to be completed
under construction, construction management and
construction consulting contracts and under awards
believed to be firm but not yet confirmed by
signed formal contracts was $4.55 billion at
December 31, 1994. The anticipated value of work
to be completed on contracts and awards at
December 31, 1993 was $4.66 billion.
Approximately 48% of the December 31, 1994
construction backlog is expected to be completed
during 1996 and beyond.
Value of construction completed represents
the cost of work put in place and materials
fabricated during the year and related earnings
pursuant to construction and construction
management contracts, together with fees and
reimbursed expenses from consulting contracts. It
is essentially a measure of construction activity
during the year rather than "sales" or "revenues"
in the sense that those terms are used in other
industries.
Because of the varying proportion of
construction, construction management and
construction consulting work, the impact of
inflation on the value of construction completed,
changes in anticipated earnings from construction
contracts and anticipated value of work completed
will not necessarily be correlative.
At December 31, 1994, Turner Construction
employed approximately 2,400 staff employees, of
whom about 1,200 were executives, project
managers, superintendents, engineers, purchasing
agents, estimators, senior accountants and other
supervisory personnel. In addition, Turner
Construction employs foremen and building
craftsmen for construction work which has not been
subcontracted to specialty contractors. During
1994, approximately 2,300 foremen and building
craftsmen were employed at various times.
Real Estate.
The Company's subsidiaries involved in real
estate operations are Rickenbacker Holdings, Inc.
("RHI"), and Turner Development Corporation and
subsidiaries ("TDC"). The Company also has
certain other real estate holdings, either directly
or through joint venture interests, which are
currently being marketed. These holdings relate
to residential condominium developments in Boston
and Puerto Rico.
From 1980 to 1987, TDC engaged in real estate
development in the United States, principally in
Florida, Georgia, Illinois, Michigan and Virginia.
TDC developed and marketed office buildings and
other commercial and residential properties,
principally in metropolitan suburban areas.
TDC essentially discontinued new development
activity in 1987. It is attempting to sell land
parcels previously held for development as well as
certain developed projects. At December 31, 1994,
TDC owned properties in seven states.
TDC's development projects were financed
principally by construction and mortgage loans.
TDC is attempting to market projects to
institutional and other investors in commercial
real estate. In connection with sales of
projects, TDC may be required to guarantee levels
of occupancy and rentals for limited periods.
Turner Medical Building Services ("TMBS") is
engaged in project consulting and development
services for ancillary medical and other health
care facilities. Its principal clients are
hospitals, physician group practice clinics,
nursing home and life care sponsors. TMBS
provides management of architectural and
construction services. TMBS subcontracts the
design and construction of its projects.
At December 31, 1994, TDC (including Turner
Medical Building Services) had 3 employees, of
whom 2 were management, and marketing personnel.
RHI owns and leases an air cargo distribution
facility located at the Rickenbacker Air Industrial
Park in Columbus, Ohio. In 1994, the Company sold its
master lease and development rights to the 1600
acre air industrial park adjacent to the
distribution facility. In addition, the Company
has renegotiated a lease with the existing lessee
extending the maturity date from 1996 to 2010.
Item 2. Properties.
The Company's executive offices and offices
of subsidiary companies are located in leased
facilities in commercial office buildings, except
for Universal Construction Co., Inc., which owns a
small office building in which its offices are
located. The Company's corporate headquarters and
New York branch office occupy 100,000 square feet
of space which is leased until 2005. Rental expense
for this space during 1994 was $2.14 million.
Each construction project has temporary field
offices.
Turner Construction operates three equipment
and storage yards, located in Newark, New Jersey,
Cincinnati, Ohio and St. Louis, Missouri for the
storage and repair of its construction tools and
equipment. Turner Construction owns the Ohio
storage and repair yards and leases the New
Jersey and Missouri facilities. Universal
Construction Co., Inc., owns a yard, while The
Lathrop Company, Inc., leases yards for the
storage and repair of construction equipment.
Turner Construction leases major construction
equipment such as hoists, cranes and personnel
lifts from equipment suppliers for use on
particular projects and generally owns only small
tools and other miscellaneous equipment; Universal
Construction Co., Inc., and The Lathrop Company,
Inc. each own construction equipment, earth-moving
equipment and small tools.
TDC holds as an investment a wholly-owned
apartment complex which it had previously
developed, located in Orlando, Florida (200
units). This property is encumbered by a mortgage
note payable.
RHI owns certain buildings and air cargo
handling equipment at the Rickenbacker Air Industrial
Air Park in Columbus, Ohio, which collateralize related
revenue bonds.
Item 3. Legal Proceedings.
Since 1990, the Company and a joint venture
including Prudential Insurance Company of America,
have been engaged in a litigation in the Circuit
Court of Cook County, Illinois in which the
Company is seeking an unpaid portion of the cost
of constructing the Prudential Plaza 2 Tower in
Chicago and Prudential is seeking damages for
alleged construction delays. The Company believes
it fully performed its obligations with regard to
the Prudential Tower. If it were determined that
there were impermissible construction delays, the
Company might have resulting claims against
others.
The Company is a defendant in various litigations
incident to its business. In some instances the amounts
sought are very substantial, including some which are
proceeding to trial involving substantial claims and
counterclaims, and certain parties are withholding
significant amounts included in construction receivables
pending the outcome of the litigation. Although the
outcome of the litigation cannot be predicted with
certainty, in the opinion of management based on the
facts known at this time, the resolution of such
litigation is not anticipated to have a material adverse
effect on the financial position or results of operations
of the Company.
Item 4. Submission of Matters to a Vote of
Security Holders.
None
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters.
The Turner Corporation common stock is listed
on the American Stock Exchange under the
symbol TUR.
Quarterly Stock Information
1994 High Low Close
First $9.50 $7.375 $8.375
Second 9.00 8.00 8.375
Third 9.625 8.375 8.75
Fourth 8.875 7.25 8.25
1993 High Low Close
First $11.750 $7.375 $11.50
Second 12.875 11.00 12.50
Third 13.00 9.625 9.875
Fourth 10.50 6.75 7.875
No dividends were declared or paid in 1994 or
1993. As of March 20, 1995, there were
approximately 3,517 record holders of the
registrant's common stock.
Item 6. Selected Financial Data
The Turner Corporation and
Subsidiaries
FIVE-YEAR SUMMARY OF FINANCIAL
INFORMATION
(in thousands, except share
amounts)
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C>
<S> 1994 1993 1992 1991 1990
Value of construction completed $2,638,579 $2,768,379 $2,644,794 $2,672,475 $3,258,325
Earnings from construction
contracts $ 54,892 $ 67,434 $ 73,118 $ 68,672 $ 84,107
Earnings(losses) from real estate (277) (8,069) (7,603) (10,712) (30,233)(e) (
operations
Gross earnings $ 54,615 $ 59,365 $ 65,515 $ 57,960 $ 53,874
Net income(loss) 3,650(a) (6,205(b) 4,000(c) 11,342(d) (10,768)
Net income(loss) per common share
share - primary 0.35 (1.55) 0.50 2.06 (2.41)
Dividends per Series B preferred 2.16 2.16 2.16 2.16 2.16
share
Dividends per Series C preferred 85.00 85.00 38.00 - -
share
Dividends per common share - - - 0.50 1.00
Stockholders' equity $ 59,216 $ 54,683 $ 60,721 $ 46,403 $ 35,755
Weighted average common shares
outstanding - primary 5,186,879 5,186,442 5,074,943 4,981,152 4,925,072
Total assets $ 705,089 $ 664,206 $ 726,558 $ 734,841 $ 782,256
Notes payable due after one year
and convertible debenture $ 94,892 $ 69,545 $ 77,635 $ 103,420 $ 78,393
(a) Includes restructuring credits of $1,145.
(b) Includes restructuring charges of $8,500.
(c) Includes extraordinary gain of $316 and cumulative effect of
accounting change of $1,454.
(d) Includes pension curtailment gain of $29,862.
(e) Includes write-down of real estate properties of $15,900.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition
Results of Operations 1994 vs. 1993
The Company reported net income of $3.7 million or
$0.35 per common share compared to a net loss of
$6.2 million in 1993 or $1.55 per common share.
The most significant factors contributing to this
change were improvements in real estate
operations, reductions in operating and general
and administrative expenses and the recognition of
income tax benefits resulting from both operations
and excess tax reserves. In addition, 1993's
results included pretax charges of $8.5 million
for restructuring costs and $6.0 million for real estate
valuation adjustments. Results for 1994 include a
pretax restructuring credit of $1.1 million which
represents excess restructuring reserves.
Gross earnings declined 8 percent from 1993 to
$54.6 million primarily due to losses on
construction projects in the Caribbean of $7.7
million and a decline in the value of construction
completed. These reductions were offset by an
improvement in real estate operations.
General and administrative expenses decreased 10
percent primarily due to savings from
restructuring steps taken, as well as a leveling
off of the start-up costs of the Company's "Total
Quality Management" program. 1994's results are
more fully described in the discussion that
follows.
Construction:
Earnings from construction contracts declined 19
percent from 1993 to $54.9 million. While a
portion of that can be attributed to a 5 percent
decline in construction completed, the majority
was the result of the $7.7 million loss incurred
by the Company's Caribbean operations in the U.S.
Virgin Islands and Puerto Rico. These losses
stemmed from overruns on lump sum contracts begun
in prior years and substantially completed in
1994.
In recent years construction management contracts
have figured more significantly in the mix of the
Company's value of construction completed. In
1994 construction management projects amounted to
19 percent of the value of construction completed
compared to 25 percent in 1993 and 17 percent in
1992. Construction management contracts normally
involve lower risk than other types of contracts;
they also typically carry lower fees. The
significant proportion of construction management
contracts has, therefore, contributed to the
decline in the profitability ratio (construction
earnings divided by value of construction
completed).
The value of new contracts secured in 1994 was
$2.69 billion, essentially unchanged from 1993.
Although the expected growth in the Company's
traditional markets did take place, the flat sales
numbers reflect the fact that the Company's
penetration in fact declined in the face of
intense competition. Construction management
contract sales in 1994 declined in favor of more
traditional general contracting projects reversing
the trends previously noted.
According to F.W. Dodge, the Company's traditional
non-residential building markets for 1994 grew by
12 percent over 1993. Projections are that these
markets will continue to grow in 1995, and the
Company should be in a position to take advantage
of that growth.
The Company's sureties limit the annual amount of
new payment and performance bonds available to the
Company. This limitation did not restrict the
Company's ability to secure new business in 1994;
however, there could be circumstances in which it
could influence the Company's selection of
prospective projects.
At the end of 1994, the anticipated earnings
associated with backlog from work to be completed
under contracts and awards believed to be firm
were $92.6 million_essentially unchanged from
1993. The backlog in terms of value of
construction to be completed declined 2 percent
from 1993 to $4.55 billion. The decline in
backlog volume is a result of the cancellation in
1994 of certain projects that had been secured in
1993 and in prior years. The unchanged earnings
backlog does represent, however, an improvement in
the profitability ratio of the construction
backlog when compared to prior years. In support
of this, fees on contracts secured in 1994 were
slightly higher, on average, than fees on
contracts secured in 1993, which is a continuation
of the trend begun in 1993.
Approximately 44 percent of the earnings backlog
and 48 percent of the value of construction
backlog relates to work to be performed in 1996
and beyond. Estimated earnings from construction
backlog cannot and should not be used as a basis
for predicting future net income.
Real Estate:
Losses from real estate operations amounted to
$277,000 in 1994 compared to $8.1 million in 1993.
Included in the 1993 losses was a $6.0 million
valuation provision set up as additional reserves
against asset values in relation to their carrying
value. During 1994, the Company sold one
developed property, two land parcels and certain
condominium units, all at their approximate
carrying value.
The majority of 1994's excess of real estate sales
over the cost of sales comes from the sale of
lease rights at the Company's Rickenbacker
facility. Rental income and direct operating
costs declined by 8 percent and 13 percent,
respectively, due to sales of properties in 1993
and 1994.
The Company's real estate portfolio is carried at
estimated net realizable value or at cost, as
applicable. Management believes that the timing
of future sales will depend upon achieving
reasonable values under more stable market
conditions which the Company believes will be
within the next few years for developed properties
and a more prolonged period for undeveloped land
parcels. Until conditions in the real estate
market improve to the point that will permit the
Company to conduct real estate transactions, the
Company will continue to review the asset values
of the properties in relation to prospective net
realizable value and make adjustments as
necessary.
During 1994, the Company sold its master lease and
development rights to the 1,600-acre Rickenbacker
Air Industrial Park for $1.8 million. In
addition, the Company as lessor, successfully
renegotiated a lease for a 66-acre site, with the
existing lessee, extending the maturity date from
1996 to 2010. As a result of these transactions,
the operations of the Rickenbacker facility should
not have any future adverse effect on the
Company's cash flow.
Operating and General and Administrative Expenses:
Restructuring credits and charges - in the fourth
quarter of 1993 the Company recorded an $8.5
million provision for restructuring. The
provision included estimated expenses required to
implement the Company's plan to consolidate
certain support functions and scale down
operations in shrinking geographic markets.
During 1994, the Company charged $6.5 million of
expenditures against the reserve which included
severance, benefits and other incentives
associated with staff reductions, the costs of
the consolidation of offices and facilities resulting
from down-sizing operations in shrinking geographic markets, and
the reorganization of certain support functions.
Approximately $897,000 of the reserve remains in
accrued liabilities at December 31, 1994,
representing the balance of the charges to be
funded in 1995. The remainder of the unused
reserve of $1.1 million was credited to income in
1994.
The benefits of the restructuring efforts taken in
1994 are reflected in the 11 percent reduction in
operating and general and administrative expenses
to $53.4 million from $59.8 million in 1993
(exclusive of the restructuring credits and
charges). Management believes that the full
benefit of the restructuring efforts will be
realized in 1995 and thereafter.
Other Income:
In 1994 the Company recorded other losses of $1.9
million compared to $870,000 in 1993. A major
part of the loss is attributable to the
absorption, on a pretax basis, of the cumulative
foreign translation adjustment relating to the
planned liquidation of one of the Company's
inactive foreign subsidiaries. Cumulative
translation adjustments had previously been
charged directly to stockholders' equity net of
tax.
The Company's investment in Turner Steiner
International SA resulted in a $1.7 million loss
to the Company in 1994 compared to a $3.0 million
loss in 1993. This foreign joint venture has
secured work in Europe, the Middle East and Asia-
Pacific markets and is expected to break-even in
1995.
1994 losses were partially offset by interest and
dividend income and other foreign investments.
Income Taxes:
The net tax benefit for 1994 amounted to $3.2
million and is due primarily to the benefits
derived from losses incurred in Puerto Rico as
well as the reversal of excess reserves resulting
from the planned liquidation of one of the
Company's inactive foreign subsidiaries.
The Company has recorded $18.4 million of deferred
tax assets having resulted principally from net
operating loss and tax credit carryforwards.
Management believes that no valuation allowance is
required for these assets due to the future
reversals of existing taxable temporary
differences primarily related to the Company's
pension plan.
Fourth Quarter 1994 Compared to Third Quarter
1994:
Results for the fourth quarter amounted to net
income of $698,000 or $0.05 per common share
compared to net income of $896,000 or $0.08 per
common share recorded in the third quarter.
Fourth quarter construction operations reported
value of construction completed of $711 million
and operating income of $4.8 million compared to
$659 million and $3.4 million, respectively, in
the third quarter. The improvement is
attributable to the change in construction
activity and the increase in productivity as a
result of the restructuring program.
Real estate reported operating losses of $23,000
in the fourth quarter compared to $1.5 million in
the third quarter. This improvement is
attributable to reduced direct operating costs due
to the sale of properties as well as a reduction
in operating expenses as a result of the
restructuring steps taken in previous quarters.
The excess restructuring reserve of $1.1 million
was credited to income in the fourth quarter.
Exclusive of the restructuring credit, general and
administrative expenses increased 56 percent to
$5.3 million in the fourth quarter from $3.4
million in the third quarter. These changes are
primarily attributable to the payment of certain
incentive benefits which are typically charged to
the fourth quarter and the growth in interest
expense from slightly increased borrowings and
higher interest rates.
The Company recorded a $1.2 million charge to
other income representing the recognition of the
cumulative foreign translation adjustment which
had previously been charged directly to
stockholders' equity. In addition, the Company
released tax reserves in the fourth quarter that
had been held pending the planned liquidation of
an inactive foreign subsidiary.
Results of Operations 1993 vs. 1992
The Company reported a net loss of $6.2 million in
1993 or $1.55 per common share compared to net
income of $4.0 million in 1992 or $0.50 per common
share. This change was primarily attributable to
provisions for restructuring charges in 1993 of
$5.6 million and real estate valuation adjustments
in 1993 of $4.0 million, both net of tax. In
addition, 1992's net income included a non-
recurring extraordinary gain of $316,000 from the
extinguishment of debt and a gain of $1.5 million
due to the cumulative effect of an accounting
change, both net of tax.
1993 gross earnings declined 9.4 percent from 1992
to $59.4 million primarily due to a decline in
construction earnings and an increase in the real
estate loss due to the valuation adjustments noted
above.
General and administrative expenses increased 26
percent primarily due to increased interest costs
associated with corporate credit facilities and
costs incurred in implementing the Company's
"Total Quality Management" program.
Financial Condition:
In total, the Company recorded an increase in cash
and cash equivalents in 1994 of $29.3 million.
Operating activities provided positive cash flow
of $7.8 million primarily as a result of domestic
construction profitability and reduced overhead
expenditures.
Cash expended to fund the restructuring program
amounted to $6.5 million in 1994 and was provided
by operations. The remaining balance of the
restructuring charge amounts to $897,000 and will
be expended in early 1995.
Cash flows from investing activities amounted to
$17.4 million and were due primarily to sales of
marketable securities and the three real estate
properties noted earlier. $5.0 million was also
returned to the Company from its investment in a
Boston condominium project from unit sales. The
remainder of this project is expected to be
substantially sold in 1995.
Cash flows from financing activities amounted to
$4.1 million which represents the excess of
borrowings over debt paydowns during the year. In
the fourth quarter of 1994, the Company sold $39.5
million of Senior Notes in a private placement to
institutional investors, including the Company's
pension plan which participated to the extent of
$9.5 million. Proceeds from the sale were used to
paydown short-term borrowings under the Company's
revolving credit facility. The revolving credit
facility remains available to the Company.
Management believes the Company's cash flows from
construction backlog, its $40 million revolving
credit facility and amounts available from
overnight credit facilities will be sufficient to
support the Company's operations. Debt maturing
in 1995 will be paid from funds generated from
operations or will be refinanced prior to its
actual maturity date.
Fair Value of Financial Instruments:
As described in Note 16 to the financial
statements, certain financial instruments have
fair values which differ from their carrying
amounts. The difference in the values related to
Notes Payable reflect current favorable interest
rates and terms, given the underlying value of the
loan collateral.
Inflation:
Inflation and changing prices during the current
fiscal year have not significantly affected the
major markets in which the Company conducts its
business. Domestically, prices have remained
relatively stable. In view of the moderate rate
of inflation, its impact on the Company's business
has not been significant.
Impairment of Loans:
In May of 1993, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for
Impairment of a Loan", which was amended in
October 1994 by Statement of Financial Accounting
Standards No. 118.
These statements require that a loan be recognized
as impaired when, based on current information and
events, it is probable that a creditor will be
unable to collect all amounts due according to the
contractual terms of the loan agreement.
Impairments would be recognized by creating
valuation allowances with corresponding charges to
bad debt expense.
The statements are effective for fiscal years
beginning after December 15, 1994, and are to be
initially applied as of the beginning of an
enterprise's fiscal year.
The Company will adopt the standard at the
beginning of 1995, and management believes that
the impact will not be material to the financial
statements.
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS
Page No.
Financial Statements:
Report of Independent Public Accountants 14
Consolidated Balance Sheets - as of December 31, 1994
and 1993 15
Consolidated Statements of Operations - for the years ended
December 31, 1994, 1993 and 1992 16
Consolidated Statements of Stockholders' Equity - for the
years ended December 31, 1994, 1993 and 1992 17
Consolidated Statements of Cash Flows - for the years
ended December 31, 1994, 1993 and 1992 18
Notes to Consolidated Financial Statements 19-36
Responsibilities for Financial Reporting 37
Report of Independent Public Accountants
To The Turner Corporation:
We have audited the accompanying consolidated
balance sheets of The Turner Corporation (a
Delaware corporation) and Subsidiaries as of
December 31, 1994 and 1993, and the related
consolidated statements of operations,
stockholders' equity and cash flows for each of
the three years in the period ended December 31,
1994. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. 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.
As further discussed in Note 4 to the consolidated
financial statements, the Company has significant
interests in real estate properties which are
carried at the lower of cost or estimated net
realizable value. The financial statements do not
purport to present the Company's entire portfolio
of real estate interests at their current market
value or liquidation value, which may be less than
the carrying amounts presented. The Company's
management presently intends to hold these real
estate interests until they can be sold for prices
which they believe reflect reasonable values under
more stable market conditions. Given the current
market for land, management expects to hold the
undeveloped land parcels for a prolonged period of
time.
In our opinion, the financial statements referred
to above present fairly, in all material respects,
the financial position of The Turner Corporation
and Subsidiaries as of December 31, 1994 and 1993,
and the results of their operations and their cash
flows for each of the three years in the period
ended December 31, 1994, in conformity with
generally accepted accounting principles.
As further discussed in Note 10 to the
consolidated financial statements, effective
January 1, 1993, the Company changed its method of
accounting for postretirement benefits other than
pensions. As also discussed in Note 10 to the
consolidated financial statements, effective
January 1, 1992, the Company changed its method of
accounting for amortizing unrecognized pension
actuarial gains and losses for the defined benefit
pension plan.
New York, New York ARTHUR ANDERSEN LLP
March 7, 1995
The Turner Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share amounts)
As of December 31, 1994 1993
Assets
Cash and cash equivalents $ 54,756 $ 25,485
Marketable securities 4,251 13,046
Construction receivable: (Note 3)
Due on contracts including
retainage 356,160 314,435
Estimated unbilled construction
costs and related earnings 70,733 80,572
Real estate (Note 4) 106,300 119,892
Property and equipment, net (Note 5) 17,490 17,725
Prepaid pension cost (Note 10) 64,259 63,207
Other assets 31,140 29,844
Total assets $705,089 $664,206
Liabilities
Construction accounts payable:
Trade $276,391 $239,156
Due on completion of contracts 118,959 117,647
Accrued estimated work completed 67,196 78,495
Notes payable and convertible
debenture (Note 6) 106,879 102,365
Deferred income taxes (Note 7) 12,731 13,708
Other liabilities 63,717 58,152
Total liabilities 645,873 609,523
Commitments and contingencies (Note 13)
Stockholders' Equity (Note 12)
Preferred stock, $1 par value (2,000,000
shares authorized):
Series C 8.5% cumulative
convertible (9,000 shares issued and
outstanding; $9,000 9 9
liquidation preference)
Series B cumulative convertible
(850,000 shares issued; 848,956
and 849,011 outstanding) 849 849
Common stock, $1 par value
(20,000,000 shares authorized, 5,200 5,135
5,199,941 and 5,134,778 issued)
Paid in capital 37,778 37,280
Net unrealized loss on marketable (276) -
securities
Cumulative foreign translation - (787)
adjustment
Retained earnings 26,656 24,834
70,216 67,320
Less: Loan to Employee Stock Ownership
Plan (Note 11) (10,468) (12,105)
Treasury stock, at cost
(53,489 common shares) (532) (532)
Total stockholders' equity 59,216 54,683
Total liabilities and stockholders'
equity $705,089 $664,206
The accompanying Notes to Consolidated Financial
Statements are an integral part of these
statements.
The Turner Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
For the years ended December 31, 1994 1993 1992
Value of construction completed (see below) $ 2,638,579 $ 2,768,379 $ 2,644,794
Earnings from construction contracts $ 54,892 $ 67,434 $ 73,118
Losses from real estate operations (see below) (277) (8,069) (7,603)
Gross earnings 54,615 59,365 65,515
Operating expenses - construction 36,450 40,156 41,160
Operating expenses - real estate 1,997 3,053 4,143
General and administrative expenses 14,969 16,555 13,107
Restructuring charges (credits) (Note 2) (1,145) 8,500 -
Income (loss) from operations 2,344 (8,899) 7,105
Other income (loss), net (Note 14) (1,854) (870) (2,903)
Income (loss) before income taxes 490 (9,769) 4,202
Income tax provision (benefit): (Note 7)
Current (2,329) 252 405
Deferred (831) (3,816) 1,567
Total income tax provision (benefit) (3,160) (3,564) 1,972
Income (loss) before extraordinary
gain and cumulative effect of accounting change 3,650 (6,205) 2,230
Extraordinary gain, net of tax (Note 6) - - 316
Cumulative effect of accounting change,
net of tax (Note 10) - - 1,454
Net income (loss) $ 3,650 $ (6,205) $ 4,000
Primary earnings (loss) per common
share:
Before extraordinary gain and
cumulative effect of accounting change $ 0.35 $ (1.55) $ 0.15
Extraordinary gain - - 0.06
Cumulative effect of accounting change - - 0.29
Net income (loss) per common share $ 0.35 $ (1.55) $ 0.50
Fully diluted earnings (loss) per
common share:
Before extraordinary gain and
cumulative effect of accounting change $ 0.30 (a) $ 0.15
Extraordinary gain - - 0.05
Cumulative effect of accounting change - - 0.25
Net income (loss) per common share $ 0.30 (a) $ 0.45
Weighted average common and common
equivalent shares outstanding
Primary 5,186,879 5,186,442 5,074,943
Fully diluted 6,035,835 (a) 5,924,437
Value of construction completed
consists of the following:
Revenue from construction contracts:
Construction costs incurred by the company $1,835,010 $1,848,800 $1,993,749
Company's share of joint venture 253,080 160,021 134,280
construction costs
Earnings from construction
contracts (including joint venture
earnings of $5,153, $3,253 and $3,785 54,892 67,434 73,118
for 1994, 1993 and 1992, respectively)
Total revenue from construction contracts 2,142,982 2,076,255 2,201,147
Construction costs incurred by
owners in connection with work
under construction management
and similar contracts 495,597 692,124 443,647
Value of construction completed 2,638,579 2,768,379 2,644,794
Losses from real estate operations
consist of the following:
Real estate sales $ 9,279 $ 23,537 $ 252
Cost of sales (7,600) (23,571) (252)
Rental and other income 12,416 13,497 15,026
Direct operating costs (8,776) (10,054) (14,879)
Depreciation and amortization expense (5,596) (5,460) (5,930)
Write-downs and reserves - (6,018) (1,820)
Losses from real estate operations $ (277) $ (8,069)$ (7,603)
The accompanying Notes to Consolidated (a) Antidilutive
Financial Statements are an integral
part of these statements.
The Turner Corporation and
Subsidiaries
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
For the years ended December 31, 1994 1993 1992
Shares Amount Shares Amount Shares Amount
Convertible preferred stock,
Series C
Balance at beginning of year 9,000 $9 9,000 $9 - $-
Preferred stock issued - - - - 9,000 9
Balance at end of year 9,000 9 9,000 9 9,000 9
Convertible preferred stock,
Series B
Balance at beginning of year 849,011 849 849,494 849 850,000 850
Preferred stock retired (55) - (483) - (506) (1)
Balance at end of year 848,956 849 849,011 849 849,494 849
Common stock
Balance at beginning of year 5,134,778 5,135 5,070,535 5,071 4,980,088 4,980
Common stock issued 65,163 65 64,243 64 90,447 91
Balance at end of year 5,199,941 5,200 5,134,778 5,135 5,070,535 5,071
Paid in capital
Balance at beginning of year 37,280 36,699 26,997
Excess of proceeds over par
value of Series C preferred
stock issued - - 8,991
Excess of proceeds over par
value of common stock issued 498 575 695
Excess of proceeds over cost
of treasury stock issued - 6 16
Balance at end of year 37,778 37,280 36,699
Net unrealized loss on marketable securities
Balance at beginning of year - - -
Net unrealized loss for the year (276) - -
Balance at end of year (276) - -
Cumulative foreign translation adjustment
Balance at beginning of year (787) (783) (1,088)
Change in cumulative
translation adjustments
during the year 787 (4) 305
Balance at end of year - (787) (783)
Retained earnings
Balance at beginning of year 24,834 32,869 30,306
Net income (loss) for the year 3,650 (6,205) 4,000
Cash dividends on Series C
preferred stock,$85.00, $85.00
$38.00 per share (765) (765) (342)
Cash dividends on Series B
preferred stock, $2.16 per share (1,833) (1,835) (1,835)
Tax benefits on Series B
preferred stock dividends 770 770 740
Balance at end of year 26,656 24,834 32,869
Loan to Employee Stock
Ownership Plan (ESOP)
Balance at beginning of year (12,105) (13,668) (15,260)
Repayment from loan to ESOP 1,637 1,563 1,592
Balance at end of year (10,468) (12,105) (13,668)
Treasury stock
Balance at beginning of year 53,489 (532) 22,647 (325) 25,965 (382)
Purchase of treasury stock - - 32,900 (240) - -
Treasury stock issued - - (2,058) 33 (3,318) 57
Balance at end of year 53,489 (532) 53,489 (532) 22,647 (325)
Total stockholders' equity $59,216 $54,683 $60,721
The accompanying Notes to
Consolidated Financial
Statements are an integral part
of these statements.
The Turner Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share amounts)
For the years ended December 31, 1994 1993 1992
Cash flows from operating activities:
Net income (loss) 3,650 (6,205) 4,000
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Restructuring charges (credits) (1,145) 8,500 -
(Gain) loss on sale of real (1,679) - -
estate sales
Cumulative foreign translation 1,193 34 -
charge
Write-downs and reserves - 6,018 1,820
Extraordinary gain - - (571)
Cumulative effect of accounting change - - (2,423)
Equity in affiliates' net loss 1,915 3,027 3,928
Depreciation and amortization 9,366 9,824 11,043
Net periodic pension credit (1,052) (9,674) (9,549)
Provision (benefit) for deferred (831) (3,816) 2,536
income taxes
Changes in operating assets and
liabilities:
Decrease (increase) in (31,886) 27,703 23,757
construction receivables
Increase (decrease) in 27,248 (32,110) (25,857)
construction accounts payable
Decrease in restructuring (6,458) - -
reserve
Decrease (increase) in other 7,484 4,780 (7,207)
assets and liabilities, net
Net cash provided by 7,805 8,081 1,477
operating activities
Cash flows from investing activities:
Purchases of marketable securities - (25,913) (13,613)
Proceeds from sale of marketable 8,389 26,480 -
securities
Distributions from joint ventures 5,000 - -
Investments in joint ventures (900) (8,137) (3,180)
Purchases of property and equipment (3,569) (4,610) (4,373)
Proceeds from sale of property 1,916 4,162 591
and equipment
Proceeds from sale of real estate net 7,049 17,465 -
Increase in real estate (3,423) (3,911) (2,468)
Repayments on notes receivable 2,888 416 474
Net cash provided by (used in) 17,350 5,952 (22,569)
investing activities
Cash flows from financing activities:
Common stock issued 563 639 786
Convertible preferred stock issued - - 15,000
Cash dividends to preferred stock- (2,598) (2,600) (2,177)
holders
Repayments from loan to ESOP 1,637 1,563 1,592
Proceeds from borrowings 80,497 62,963 42,386
Payments on borrowings (75,983) (89,217) (34,321)
Cash used for debt restructuring - - (1,201)
Funding of joint venture borrowings - - (5,034)
Proceeds from issuance of - 39 73
treasury stock
Purchases of treasury stock - (240) -
Net cash provided by (used in) 4,116 (26,853) 17,104
financing activities
Net increase (decrease) in cash and 29,271 (12,820) (3,988)
cash equivalents
Cash and cash equivalents at 25,485 38,305 42,293
beginning of year
Cash and cash equivalents at end of
year $54,756 $25,485 $38,305
Noncash financing activities:
Mortgage note assumed by the
buyer in connection with the sale
of real estate $ - $ 4,426 $ -
Series D convertible preferred
stock exchanged for a convertible
debenture - - 6,000
Note payable forgiven related
to the air industrial park - - 2,500
Noncash investing activities:
Net unrealized loss on
marketable securities 276 - -
Note provided upon the sale of
certain assets and liabilities
of a construction subsidiary - 1,577 -
Notes provided upon the sale
of real estate 1,849 1,185 -
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
THE TURNER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share amounts)
1. Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated
financial statements include the accounts of The
Turner Corporation and Subsidiaries and their
proportionate interest in the accounts of
construction joint ventures (the Company). The
Company also has investments in affiliates and in
real estate joint ventures, which are accounted
for under the equity or cost method, as
appropriate. All significant intercompany
transactions and balances are eliminated. Certain
prior year balances have been reclassified in the
consolidated financial statements in order to
provide a presentation consistent with the current
year.
Construction Operations: The Company determines
construction earnings under the percentage of
completion method. Under this method, the Company
recognizes as earnings that portion of the total
earnings anticipated from a contract which the
value of the work completed bears to the estimated
total value of the work covered by the contract.
As the Company's construction contracts generally
extend over more than one year, revisions in costs
and earnings estimates during the course of the
work are reflected in the year in which the facts
which require the revision become known. When a
loss is forecasted for a contract, the full amount
of the anticipated loss is recognized in the
period in which it is determined that a loss will
occur. Claims are included in earnings from
construction contracts at an amount based on the
related contract costs when realization is
probable and the amount can be reliably estimated.
The Company continuously reviews estimated
earnings from construction contracts and makes
necessary adjustments based on current evaluations
of the indicated outcome. In 1994 and 1993, the
Company wrote down certain construction
receivables and claims deemed unrecoverable.
Under certain contracts, owners of buildings make
payments directly to suppliers and subcontractors
for all or for portions of work covered by the
contract. The Company considers such costs in
determining contract percentage of completion and
reports such amounts in the value of construction
completed.
Real Estate Operations: Rental income, including
fixed minimum rents and additional rents, under
operating leases with tenants is generally
recognized on a contractual basis.
Profit on sales of real estate is recognized in
full when the profit is determinable, an adequate
down payment has been received, collectability of
the sales price is reasonably assured and the
earnings process is substantially complete. If
the sales transaction does not meet these
criteria, all profit or a portion thereof is
deferred until such criteria are met.
The real estate properties which are held for
investment are carried at cost less accumulated
depreciation and are assessed periodically for
impairment based on the sum of undiscounted
estimated future cash flows. All other real
estate properties and investments in real estate
joint ventures are carried at the lower of cost or
estimated net realizable value (Note 4).
Depreciation and Amortization: The Company
calculates depreciation on property and equipment,
and on real estate primarily on the straight-line
method. Estimated useful lives are as follows:
buildings and improvements, 20-40 years; office
machines and furniture, 5-10 years; and equipment,
10 years. Leasehold improvements (the Company as
lessee) to property used in Company operations are
amortized on a straight-line basis over the lease
terms. Tenant improvements (the Company as
lessor) on real estate properties are amortized on
a straight-line basis over the term of the lease.
Maintenance and repairs are expensed currently,
except that expenditures for betterments are
capitalized.
In connection with the renegotiated lease of
certain facilities at the Rickenbacker Air
Industrial Park, effective January 1, 1995, the
Company revised the estimated depreciable life of
the facilities to coincide with the new lease
term.
Cash: The Company considers all investments
purchased with maturities of 90 days or less to be
cash equivalents.
The Company's other liabilities include
approximately $36,800 and $26,400 net payable to
banks for checks drawn but not cleared as of
December 31, 1994 and 1993, respectively.
Marketable Securities:
On January 1, 1994, the Company adopted Statement
of Financial Accounting Standards (SFAS) No. 115
"Accounting for Certain Investments in Debt and
Equity Securities." In accordance with the
provisions of SFAS No. 115, marketable securities
which consist primarily of equity and bond mutual
funds are classified as available-for-sale and are
reported in the Balance Sheet at fair value as of
December 31, 1994. Prior to that date, marketable
securities were carried at the lower of cost or
market at the Balance Sheet date.
Unrealized gains and losses in 1994 are reported
as a separate component of stockholders' equity.
In prior periods, net unrealized losses were
charged to expense. The effect of the adoption of
the Standard was not material to the financial
statements.
Loans Receivable: Effective January 1, 1995, the
Company will adopt SFAS No. 114 "Accounting by
Creditors for Impairment of a Loan" which was
amended by SFAS No. 118. These statements require
that a loan be recognized as impaired when, based
on current information and events, it is probable
that a creditor will be unable to collect all
amounts due according to the contractual terms of
the loan agreement. Impairments would be
recognized by creating valuation allowances with
corresponding charges to bad debt expense.
Management believes the impact of the standards
upon adoption will not be material to the
financial statements.
Income Taxes: Prior to January 1, 1993, deferred
income tax expenses or benefits were recorded to
reflect the tax consequences of timing differences
between the recording of income and expenses for
financial reporting purposes and for purposes of
filing income tax returns in effect when the
difference arose.
Effective January 1, 1993, the Company adopted
SFAS No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred assets or liabilities
are computed based on the difference between the
financial statement and income tax bases of assets
and liabilities using the enacted marginal tax
rate. Deferred income tax expenses or benefits
are based on the changes in the asset or liability
from period to period. The adoption of the
standard was not material to the financial
statements.
The Company does not provide for U.S. Federal
income taxes on undistributed earnings of foreign
subsidiaries since it is the Company's intention
to permanently reinvest those earnings outside the
United States.
Foreign Currency Translation: Assets and
liabilities of operations that represent an
investment in a foreign country are translated
into U.S. dollars at exchange rates in effect at
year-end, while revenues and expenses are
translated at average exchange rates prevailing
during the year. The resulting translation gains
and losses are accumulated as a separate component
of stockholders' equity. Foreign exchange
transaction gains and losses are included in
results of operations during the periods in which
they arise.
Earnings Per Common Share: Primary earnings per
common share is based on net income less preferred
stock dividends (net of tax benefits relating to
Series B preferred stock) divided by the weighted
average number of common and common equivalent
shares outstanding. Fully diluted earnings per
common share is further adjusted to reflect the
assumed conversion of convertible preferred stock
and the convertible debenture, and the elimination
of the preferred stock dividends and interest
expense on the convertible debenture, net of
applicable income taxes, if such conversions are
dilutive.
2. Restructuring Charges
During 1993, plans were developed to significantly
reduce the Company's future operating costs and
expenses and to improve productivity. This
restructuring program principally involved a
reduction in the number of staff, plus the
consolidation of offices and facilities and the
reorganization of support functions. The results
of operations for 1993 included $8,500 of pretax
charges ($5,600 net of tax benefits, or $1.08 per
share) related to this program. The charges
included provisions for severance pay, incentive
programs relating to employee terminations, costs
related to the consolidation of offices and other
reorganization costs. This program was
implemented in 1994 and was substantially
completed by the end of the year. During 1994,
$6,458 was charged to the reserve and $897 remains
in accrued liabilities at December 31, 1994. The
balance of the unused reserve of $1,145 was
credited to income in the fourth quarter of 1994.
3. Construction Receivables
Due on contracts included $116,856 of retainage at
December 31, 1994. It is expected that
approximately 86% of such retainage will be
collected by December 31, 1995. At December 31,
1993, retainage was $106,665. Construction
receivables include estimated net claims. The
settlement of the claims depends on individual
circumstances, accordingly, the timing of the
collection will vary and may extend beyond one
year. Those claims, primarily due to owner-caused
delays, incomplete specifications or similar
reasons, amounted to $8,600 and $10,800 at
December 31, 1994 and 1993, respectively.
4. Real Estate
The Company owns a portfolio of real estate,
either directly or through joint venture
interests, that includes commercial office
properties, mixed-use warehouse/service
properties, residential properties, undeveloped
land, and certain buildings and hangars located at
an air industrial park. The properties are
located throughout the United States, but
primarily in the Southeast and Great Lakes
regions. Accumulated depreciation at December 31,
1994 and 1993 was $34,639 and $32,037,
respectively.
Given the current real estate market, the Company
has determined that its interests in commercial
office, mixed-use and residential condominium
properties, and undeveloped land parcels will be
available for sale when they can be sold for
prices which the Company believes reflect the
reasonable value of the properties under more
stable market conditions. Management expects to
dispose of its interests in commercial office,
mixed-use and residential condominium properties
for those prices generally within the next few
years. Based on management's intended holding
period, the Company's interests in certain
developed properties are carried at their
estimated fair value. Given the current market
for undeveloped land parcels, management
anticipates a prolonged period before land values
recover. Due to the relatively low holding costs
of the Company's undeveloped land parcels, the
Company intends to and has the ability to hold the
properties for a prolonged period of time in order
to achieve more reasonable prices upon
disposition. The carrying amounts of the
Company's interests in these developed properties
were $45,934 and $57,692, and in the undeveloped
land parcels were $30,458 and $31,076 at December
31, 1994 and 1993, respectively. These real
estate interests are carried at the lower of cost
or estimated net realizable value. The net
realizable values reflect the Company's estimates
of the net sales proceeds less anticipated capital
expenditures through the estimated date of sale
and disposal costs, which have not been discounted
to net present value.
The Company estimates the net realizable values by
evaluating and making assumptions about future
events with respect to the property, market
conditions and anticipated investor rates of
return. The net realizable values reflect each
disposition based on the Company's current
intended holding period, and do not represent
liquidation values. Judgments regarding future
events are not subject to precise quantification
or verification and may change from time to time
as economic and market factors, and the Company's
evaluation of them, change and the effects of such
changes may be significant.
The Company actively monitors market conditions
and reviews, on a quarterly basis, the net
realizable values of its real estate interests and
reduces carrying amounts when required. On a
periodic basis, generally not exceeding two to
three years, the Company has independent
appraisals performed for significant real estate
interests for the purpose of assisting management
in determining their fair value and the
appropriate timing of disposition. In connection
with the Company's review of the carrying amounts
of its real estate interests, additional write-
downs and reserves of $6,018 were recorded for the
year ended December 31, 1993.
5. Property and Equipment
Property and equipment as of December 31, 1994 and 1993 consisted of:
1994 1993
Buildings and $14,063 $12,633
improvements
Office machines and 17,000 16,610
furniture
Equipment 16,470 16,508
Total 47,533 45,751
Less: accumulated
depreciation and
amortization (30,043)(28,026)
Net $17,490 $17,725
6. Notes Payable and Convertible Debenture
Notes payable and convertible debenture as of
December 31, 1994 and 1993 consisted of the
following:
1994 1993
Senior Notes $ 39,500 $ -
Land and building 24,845 31,877
mortgages
Revenue bonds 18,400 20,500
Employee Stock 11,100 12,800
Ownership Plan
Revolving credit - 24,000
facility
Convertible 6,000 6,000
debenture
Other 7,034 7,188
Total $ 106,879 $ 102,365
Senior Notes: On December 21, 1994, the Company
sold $39,500 of Senior Notes in a private
placement to institutional investors, including
the Company's pension plan (Note 10). Proceeds of
the Notes were used to paydown short-term
borrowings under the revolving credit facility.
The Notes bear interest at a fixed rate of 11.74%
and mature in even principal amounts on the third
through seventh anniversary dates of the Notes.
The Note Purchase Agreement contains various
covenants, the most restrictive of which is a
fixed-charge coverage requirement.
Land and Building Mortgages: Variable rate
mortgages bear interest at rates of LIBOR plus
2.25% or prime plus 0.5% and mature in varying
installments through 1999. The weighted average
interest rate for 1994 and 1993 was approximately
7.47% and 6.64%, respectively. In connection with
a variable rate building mortgage, in 1994, the
Company entered into an interest rate swap
agreement with a bank for a notional amount equal
to the underlying mortgage ($9,562 at December 31,
1994). The swap agreement provides for a fixed
interest rate of 6.96% through January 27, 1998.
Fixed rate mortgages of $5,163 bear interest at 7%
or 9.375% and are due in varying installments
through 2001.
Revenue Bonds: Adjustable rate revenue refunding
bonds collateralized by properties at the air
industrial park mature in varying installments
through 2010. The bonds bear interest at a weekly
variable rate. The weighted average interest rate
for 1994 and 1993 was approximately 2.89% and
2.46%, respectively. The bonds are supported by a
letter of credit for which the Company pays 1.50%
per annum. The Company entered into an interest
rate swap agreement with a bank for a $15,000
notional amount providing for a fixed interest
rate of 4.13% through December 15, 1996.
Multi-family facility revenue bonds collateralized
by a residential property were retired in 1993
upon disposition of the property. The bonds bore
interest at a weekly variable rate. The weighted
average interest rate for 1993 was approximately
3.32%.
Extinguishment of Debt: In December 1992, the
Company restructured certain debt relating to the
air industrial park. The previously outstanding
revenue bonds, which carried a fixed interest rate
of 8.75% were redeemed at 102% of par value. In
addition, $2,500 of other debt was forgiven.
Proceeds for the redemption were primarily
provided by a series of adjustable rate revenue
refunding bonds issued in November 1992. The
transaction resulted in a net extraordinary gain
of $316.
Employee Stock Ownership Plan (ESOP): This loan
was used to fund the Company's loan to the ESOP
and is payable in varying installments through
1999. Interest is payable quarterly at a variable
rate equal to 83% of the prime rate or a
percentage of LIBOR, at the Company's option. The
loan is collateralized by first mortgages on
certain real estate properties and letters of
credit. The loan allows for collateral
substitution and upon disposition of such
properties may require additional collateral to
maintain loan-to-value relationships. The
weighted average interest rate for 1994 and 1993
was approximately 4.56% and 3.44%, respectively.
The loan agreement contains various covenants,
including the maintenance of a minimum amount of
stockholders' equity and debt coverage ratio. At
December 31, 1994, the minimum stockholders'
equity required was $54,000 and increases by
$4,000 annually to $74,000 in 1999.
Revolving Credit Facility: The Company has an
unsecured $40,000 revolving credit facility
maturing in 1996, the proceeds of which are being
used for general corporate purposes. The current
facility permits the Company to choose between
various interest rate options. The weighted
average interest rate for 1994 and 1993 was
approximately 6.84% and 5.97%, respectively. The
Company pays a commitment fee at an annual rate of
0.5% on the unused portion of the facility. The
facility contains various covenants, the most
restrictive of which is a fixed-charge coverage
requirement.
Convertible Debenture: In July 1992, the Company
issued a $6,000 8.5% convertible debenture which
matures in 1997. The Company may not prepay the
principal balance prior to its maturity. At the
option of the holder, the debenture is convertible
into 6,000 shares of Series D 8.5% convertible
preferred stock of the Company. The holder must
convert the full debenture principal balance at
the time of conversion. The Series D stock is
ultimately convertible into 600,000 shares of the
Company's common stock and carries terms similar
to the Series C stock of the Company, except as to
the election of directors (Note 12).
Other: This amount includes a bank loan for the
purpose of financing improvements to the Company's
corporate offices which had an outstanding balance
of $3,000 and $5,000 at December 31, 1994 and
1993, respectively. The principal is payable in
semi-annual installments through 1995. The loan
bears interest at LIBOR plus 0.25%. The weighted
average interest rate for 1994 and 1993, including
associated letter of credit fees, was
approximately 7.74% and 4.85%, respectively.
The Company maintains overnight credit facilities
with various banks at varying rates. The Company
had available $10,500 of which $2,400 was
outstanding at December 31, 1994. The facilities
are subject to periodic renewal from the banks and
certain facilities carry annual commitment fees
ranging from 0.375% to 0.5%. During 1994 and
1993, the weighted average interest rates were
7.59% and 6.31%, respectively.
Aggregate maturities of notes due are as follows:
1995 1996 1997 1998 1999 Thereafter
$11,9888 $3,288 $22,971 $20,190 $11,926 $36,516
Interest cost, which approximates amounts paid,
for the years ended December 31, 1994, 1993 and
1992 was $7,923, $7,427 and $8,124, respectively.
At December 31, 1994, the carrying value of the
real estate that was pledged as collateral for
notes payable was $68,629.
7. Income Taxes
The components of the income tax provision (benefit) are as follows:
1994 1993 1992
Current:
Federal $ (2,924) $ - $ -
Foreign 59 145 196
State & Local 536 107 464
(2,329) 252 660
Deferred:
Federal 1,659 (4,027) 2,099
Foreign (2,482) - -
State & Local (8) 211 437
(831) (3,816) 2,536
Total $ (3,160) $(3,564) $ 3,196
The income tax provision (benefit) above consists of the following components:
1994 1993 1992
Operations $ (3,160) $ (3,564) $ 1,972
Extraordinary gain - - 255
Accounting change - - 969
$ (3,160) $ (3,564) $ 3,196
In the Statement of Operations for the year ended
December 31, 1992, the extraordinary gain and the
cumulative effect of the accounting change are
shown net of the related tax provision.
Deferred income taxes result from temporary
differences between the financial statement
carrying amounts and the tax bases of assets and
liabilities. The source of these differences and
tax effect of each at December 31, 1994 and 1993
and for the year ended December 31, 1992 are as
follows:
Deferred Income Tax Provision (Benefit) for
Liability (Asset) Deferred Income Taxes
1994 1993 1992
Construction earnings $ 656 $ 556 $ (314)
Pension plans 24,629 24,287 4,216
Depreciation 5,857 5,572 (156)
Real estate properties (2,736) (2,362) 159
Net operating loss benefits (11,163) (7,375) (1,886)
Restructuring charges (239) (2,890) -
Alternative minimum tax
credit carryforward (2,451) (2,451) -
Jobs credit carryforward (75) (75) -
Deferred compensation plan (611) (787) (100)
Contributions carryover (1,056) (848) (231)
Other (80) 81 848
$ 12,731 $ 13,708 $ 2,536
The Company has recorded $18,411 of deferred tax
assets having resulted principally from net
operating loss and tax credit carryforwards.
Management believes that no valuation allowance is
required for these assets due to the future
reversals of existing taxable temporary
differences primarily related to the Company's
defined benefit pension plan.
A comparison of the Federal statutory rate with
the company's effective tax rate is as follows:
1994 1993 1992
Statutory Federal income 34.0 % (34.0) % 34.0 %
tax rate (benefit)
State and local taxes, 86.6 % 2.2 % 8.3 %
net of Federal benefit
Effective foreign tax (489.3) % (3.0) % 0.7 %
rate
Reserve reversals (355.2) % -- --
Other 79.0 % (1.7) % 1.4 %
Effective tax rate (644.9) % (36.5) % 44.4 %
(benefit)
Income taxes paid (refunded) were $(455), $73 and
$(3,397) for 1994, 1993, and 1992, respectively.
For Federal income tax purposes, the company has
available at December 31, 1994 a net operating
loss carryforward of $26,422 which is available to
offset future taxable income and expires from 2006
through 2009, and an alternative minimum tax
credit carryforward of $2,451 which can be carried
forward indefinitely.
The unrecognized deferred tax liability related to
cumulative undistributed earnings of foreign
subsidiaries which were permanently reinvested was
$164 at December 31, 1994.
8. Incentive Compensation Plans
The Company sponsors two incentive compensation
plans. The Executive Incentive Compensation Plan
(EICP) authorizes payments of awards to executive
officers and other designated employees of the
Company in the form of cash and common stock of
the Company, which may be deferred in part at the
election of the recipient. The committee that
administers the plan determines the particular
recipients who are to receive awards and the
amounts of their respective awards. The amounts
charged to expense in 1994, 1993 and 1992
aggregated $849, $39, and $1,092, respectively.
The staff Incentive Compensation Plan (ICP)
authorizes payment of awards in the form of cash
and common stock of the Company to certain
salaried employees who are not participants in the
Company's EICP. All awards are deferred for a
period of five years and are paid out in cash and
common stock over a six-year period thereafter.
Recipients must remain in the continuous
employment of the Company up to the distribution
date in order to receive the award. The amounts
charged to expense in 1994, 1993 and 1992
aggregated $134, $116 and $78, respectively.
The Company plans to liquidate the ICP during the
first quarter of 1995. The liquidation of the
plan will be done through issuance of 21,379
shares of the Company's common stock to the
current participants of the program. Each share
will be valued at $7.919, which is the average
market price of the Company's common stock over
the last 20 business days of December, 1994. The
total gross value of the liquidation is $283.
9. Stock Options
The Company has incentive stock option plans
adopted in 1986 and 1992 which provide for the
granting of options to officers and designated
employees of the Company to purchase shares of the
common stock of the Company at a price not less
than the market value of the common stock on the
date the option is granted. In addition, an
incentive plan adopted in 1981 has been terminated
and no new options can be granted under this plan,
although unexercised options remain outstanding.
Options are exercisable in whole or in part from
one to ten years from the date of the grant at the
discretion of the stock option committee. Options
granted under each plan may not exceed 400,000
shares. No charges to income arise in connection
with the plans.
Option plan transactions during 1994 and 1993 are summarized in the
following table:
Price Range
1994 1993 Per Share
Outstanding January 1 759,788 645,328 $8.00 - 27.50
Granted 99,000 135,500 7.75 - 8.56
Exercised - (800) 8.50
Canceled (114,360) (20,240) 7.75 - 27.50
Outstanding December 31 744,428 759,788 7.75 - 27.50
Exercisable at December 31 617,449 636,568 8.00 - 27.50
Options available for
grant at January 1 277,530 405,290
Options available for
grant at December 31 247,390 277,530
10. Employee Benefit Plans
Defined Benefit Pension Plan:
The Company has a noncontributory defined benefit
pension plan which covers salaried employees who
meet minimum age and length of service
requirements.
On March 31, 1991, the Company curtailed its
defined benefit pension plan such that benefits do
not accrue to plan participants for future years
of service under the benefit formula. Benefits
earned prior to the curtailment were based on
members' years of service and averaged final
salary.
Effective January 1, 1994, the Company amended the
defined benefit pension plan to add a cash balance
plan feature, to provide benefits to plan
participants that were previously provided under
the defined contribution retirement plan. Past
benefits earned by plan participants prior to
curtailment are not changed and benefits earned by
participants for future service are provided under
a different benefit formula. New participants
will earn benefits only under the revised formula.
The new benefit formula provides for credits into
notional individual account balances based upon
salary and years of service. Management
anticipates that the cash balance plan will
significantly reduce the net periodic pension
credit recognized in future years, and result in a
reduction of the prepaid pension asset.
The projected unit credit actuarial method is used
to determine the recognition of net periodic
pension expense and to determine funding
requirements. The Company will continue to fund
the plan as required.
The Company amortizes unrecognized prior service
costs on a straight-line basis over a period not
exceeding the average life expectancy of retirees.
Effective January 1, 1992, the Company changed the
method for amortizing unrecognized pension
actuarial gains and losses, under which the full
amount of the net actuarial gain or loss in the
year is being amortized over a period not
exceeding the average life expectancy of
employees. The effect of the change in accounting
method for the year ended December 31, 1992
related to the 1992 pension expense was to
increase net income by $641, net of tax, or $0.12
per share on primary earnings per share and $0.10
per share on fully diluted earnings per share.
Plan assets consist primarily of pooled equity,
debt and short-term investment funds, a pooled
real estate equity fund, 675,000 shares of the
Company's common stock and $9,500 of the Company's
Senior Notes (Note 6).
The table below sets forth the funded status of
the defined benefit pension plan and the amounts
recognized in the Company's financial statements
at December 31, 1994 and 1993 and for the years
then ended:
1994 1993
Actuarial present value of benefit
obligations:
Vested benefits $ 100,201 $ 81,843
Accumulated benefit obligation 104,602 86,670
Projected benefit obligation 104,602 86,670
Plan assets at fair value 154,918 163,099
Plan assets in excess of projected
benefit obligation 50,316 76,429
Unrecognized prior service cost 8,832 1,825
Unrecognized net loss (gain) 9,514 (9,763)
Remaining unrecognized net asset
being recognized over 15 years (4,403) (5,284)
Prepaid pension cost $ 64,259 $ 63,207
Components of net periodic pension
credit:
Service cost $ 7,910 $ -
Interest cost on projected benefit
obligation 7,651 6,829
Actual return on plan assets 1,370 (15,646)
Net amortization and deferral (17,983) (857)
Net periodic pension credit $ (1,052) $ (9,674)
The assumptions used in measuring the actuarial
value of projected benefit obligations and
determining the net periodic pension credit were:
1994 1993
Weighted average discount rate 8.25% 8.25%
Rate of compensation increase -
cash balance feature 6.8% N/A
Weighted average expected long-term
rate of return on plan assets 9.96% 10.00%
Defined Contribution Pension Plans
From April 1, 1991 to December 31, 1993, the
Company sponsored a defined contribution
retirement plan covering salaried employees who
met minimum age and length of service
requirements. Contributions were based on
salaries and length of service. The Company also
sponsors a Section 401(k) tax deferred savings
plan which covers salaried employees who meet
minimum age and length of service requirements.
Matching contributions are based on employee
contributions and are limited to one-half of the
first 3% of the employee's compensation.
Effective January 1, 1994, the defined
contribution retirement plan was merged into the
Section 401(k) tax deferred savings plan. No
additional contributions will be made to the
defined contribution retirement plan. Benefits
earned under the Section 401(k) tax deferred
savings plan remain unchanged. The aggregate
amount charged to expense for these plans was
$1,653 and $6,933 in 1994 and 1993, respectively.
Postretirement Benefit Plan
Employees retiring from the Company and eligible
for an immediate benefit from the retirement plans
(generally age 55 with 15 years of service) are
eligible to continue their current medical
insurance coverage into retirement. The medical
benefits continue to be subject to the
deductibles, copayment provisions and other
limitations. Retirees pay for a portion of the
total cost of their medical insurance and starting
with 1993 retirements, the portion of the total
cost will be dependent on the individual's total
Company service at retirement. The medical plans
of the Company are funded on a pay-as-you-go
basis.
Effective January 1, 1993, the Company adopted
SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions,"
which mandates the accrual of postretirement
health benefits during the years that employees
render service.
The following table sets forth the funded status
of the plan and the amounts recognized in the
Company's financial statements at December 31,
1994 and 1993 and for the years then ended:
1994 1993
Actuarial present value of accumulated postretirement
benefit obligation:
Retirees $14,023 $16,162
Fully eligible active plan participants 1,569 1,371
Other active plan participants 3,590 4,788
Accumulated unfunded postretirement benefit
obligation 19,182 22,321
Remaining unrecognized transition obligation
being recognized over 20 years (17,829) (18,820)
Unrecognized net gain (loss) 2,183 (1,744)
Accrued postretirement benefit obligation $ 3,536 $ 1,757
Net periodic postretirement benefit cost includes
the following components:
Service cost $ 336 $ 286
Interest cost 1,652 1,612
Amortization of unrecognized transition
obligation 991 991
Net periodic postretirement benefit cost $ 2,979 $ 2,889
Impact of one percent increase in healthcare trend rate:
Aggregate impact on annual service cost and
interest cost $ 106 $ 120
Increase in accumulated postretirement
benefit obligation $ 1,186 $ 1,619
The accumulated postretirement benefit obligation
was computed using an assumed weighted average
discount rate of 8.5% in 1994 and 7.5% in 1993.
The healthcare cost trend rate was assumed to be
12% in 1994 decreasing by 1% a year to 6% in 2000
and 5.5% in 2001 and beyond.
Effective January 1, 1994, the Company adopted
SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." This statement mandates
the accrual of all types of postemployment
benefits provided to former or inactive employees,
their beneficiaries and covered dependents after
employment but before retirement. The effect of
the adoption of the standard was not material to
the financial statements.
11. Employee Stock Ownership Plan
The Company has a leveraged Employee Stock
Ownership Plan (ESOP) for salaried employees who
meet minimum age and length of service
requirements. To fund the ESOP, the Company
originally borrowed $18,092. Proceeds of this
borrowing were loaned to the ESOP, which purchased
850,000 shares of Series B convertible preferred
stock.
Eligible employees are allocated the Series B
stock over the term of the ten-year ESOP loan.
The allocated shares vest after five years of
service.
The Series B stock is callable, in whole or in
part, at the option of the Company at any time
after July 1, 1994, at a price per share expressed
as a percentage of the issue price of $21.29. At
the Company's option, the call may be satisfied by
common shares, cash or a combination thereof. The
call price is 112% in 1995 and decreases to 100%
in 1999 and for years thereafter. The trustee
may, at any time, convert each share of Series B
stock into one share of common stock.
Prior to the retirement of the ESOP debt,
employees can only redeem their vested preferred
shares upon death or age 70 1/2. Once the debt is
retired, shares can be redeemed at retirement,
termination or death. The redemption value is
established at the end of each year by an
independent appraiser. The latest appraised value
dated March 7, 1995 was $17 per preferred share.
At the Company's option, redemption by an employee
may be satisfied by common shares, cash or a
combination thereof.
The preferred stockholders are entitled to
identical voting rights as the holders of common
shares.
The loan to the ESOP is on the same terms as the
Company's bank loan. The ESOP will repay the loan
(plus interest) with proceeds from the quarterly
dividends paid on the Series B stock and
contributions from the Company. All contributions
to the ESOP in excess of dividends are treated as
compensation expense.
Compensation expense and interest income for the
years ended December 31, 1994, 1993 and 1992 were:
1994 1993 1992
Compensation expense $412 $340 $215
Interest income $546 $509 $627
The interest income earned by the Company on the
ESOP loan offsets the interest expense incurred on
the original borrowing, with no impact on the
results of operations.
12. Stockholders' Equity
On July 20, 1992, the Company sold Karl Steiner
Holding AG (Steiner) 9,000 shares of Series C 8.5%
convertible preferred stock and 6,000 shares
of Series D 8.5% convertible preferred stock for a
total of $15,000. On July 22, 1992, the Series D
stock was exchanged for an 8.5% convertible debenture
due in 1997 in the principal amount of $6,000 (Note 6).
The Series C stock is convertible into 1,000,000
shares of common stock or can be exchanged for
9,000 shares of Series E 8.5% convertible preferred
stock (which is substantially identical to the Series
C stock, except as to transferability and election of directors).
The debenture is convertible into 6,000 shares of
Series D stock, which is convertible into 600,000
shares of common stock. The Series C stock has,
and the Series D and Series E stock will have a
liquidation preference of $1,000 per share and a
cumulative dividend preference of $85 per share
per year. At their option, the holders of the
Series C, Series D and Series E stock will have
the right to convert either the full amount or a
partial percentage into common stock.
While the Series C stockholders own securities
constituting (after conversion) more
than 10 percent of the Company's outstanding
common stock, on a fully diluted basis, the Series
C stockholders have the right to elect, as a
class, between one and three directors, depending
on the percentage of the outstanding stock owned.
Holders of Series D and Series E stock, and Series
C stock (except when they are entitled to elect at
least one director as a class), vote on an as-
converted basis as though they held common stock.
Holders of Series C or Series D stock also have
the right to elect a director if the Company is
six quarters or more in arrears in paying
dividends.
In connection with the purchase of the Company's
securities by Steiner, the Company executed an
agreement providing the Company and Steiner with
certain rights, obligations and options which
terminate on June 30, 2002, unless extended.
Under this agreement, Steiner has the right of
first refusal in some instances with regard to
sales by the Company of more than five percent of
its stock. In addition, if the Company issues
additional stock or convertible or exchangeable
securities, Steiner will have the option in some
instances to purchase similar securities to the
extent necessary to maintain its percentage
ownership.
If the Company issues, in a transaction or related
series of transactions, common stock or
convertible or exchangeable securities totaling at
least 15% of the Company's outstanding
common stock, on a fully diluted basis, the Series
C stock will be redeemable during a 30-day period
at its liquidation preference plus accrued or
accumulated dividends, unless the holders of two-
thirds of the Series C stock approve the
transaction.
The Company has a right of first refusal with
regard to sales or transfers of the Company's
securities owned by Steiner constituting more than
five percent of the Company's outstanding common
stock, on a fully diluted basis. In addition, the
Company has the option to repurchase the Company's
securities owned by Steiner, upon a change in
control in the ownership of Steiner.
If after December 31, 1994, the price of the
Company's common stock is below $7 for at least 20
consecutive trading days (or if the agreement is
not extended), Steiner may require the Company
either to find a buyer (which may be the Company)
for all of Steiner's holdings (or all its holdings
except the debenture or Series D stock), or to
sell Steiner additional common stock equal to
Steiner's existing holdings on an as-converted
basis, at a price selected by Steiner which is not
higher than 115% of the market price of the
Company's common stock. The Company will not
decide until it knows the terms on which it is to
find a buyer for Steiner's holdings or to sell
Steiner additional common stock, which of the two
options it would elect.
13. Commitments and Contingencies
The Company (as lessee) leases office space under
operating leases having remaining non-cancelable
lease terms in excess of one year. Rental expense
for the years ended December 31, 1994, 1993 and
1992 amounted to $9,254, $9,779 and $10,103,
respectively. Future minimum rental payments are
as follows:
1995 1996 1997 1998 1999 Thereafter
$8,597 $7,740 $6,604 $5,599 $5,079 $15,652
The Company (as lessor) has operating leases with
tenants that provide for fixed minimum rent and
reimbursement of a portion of operating costs.
Additional rents for reimbursements included in
rental income amounted to $373, $390, and $447 for
1994, 1993 and 1992, respectively.
Tenant leases on commercial office and mixed-use
properties have terms of up to ten years, and
leases on residential properties generally have
terms of one year or less. Minimum future rental
revenue from non-cancelable leases in effect at
December 31, 1994 are as follows:
1995 1996 1997 1998 1999 Thereafter
$8,199 $5,405 $4,198 $3,147 $2,553 $17,499
The Company has jointly and severally guaranteed
completion of an $93,300 construction contract
which was entered into by Turner Steiner
International SA in which the Company has a 50%
interest. The Company has guaranteed $2,750 of a
$5,000 letter of credit facility and $275 of a
$500 line of credit facility of Turner Steiner
International SA.
In connection with the sale of certain assets and
liabilities of a construction subsidiary, the
Company agreed to guaranty or otherwise indemnify
their surety up to $15,000 in obtaining bonds in
excess of $45,000 through December 31, 1997.
The Company owns certain buildings, hangars and
equipment and is the ground lessee on the
underlying land located at an air industrial park.
The Company has leased to a tenant the buildings,
hangars, equipment and land with a term of 15
years expiring in 2010. Rental income under this
lease represented 37%, 33% and 30% of total rental
income for 1994, 1993 and 1992, respectively.
The Company is a defendant in various litigations
incident to its business. In some instances the
amounts sought are very substantial, including
some which are proceeding to trial involving
substantial claims and counterclaims, and certain
parties are withholding significant amounts
included in construction receivables pending
the outcome of the litigation. Although the outcome
of litigation cannot be predicted with certainty,
in the opinion of management based on the facts
known at this time, the resolution of such
litigation is not anticipated to have a material
adverse effect on the financial position or
results of operations of the Company.
14. Other Income, net
The major components of Other Income, net are as follows:
1994 1993 1992
Interest and dividend income $ 1,074 $ 1,036 $ 1,035
Investment income (loss) (79) 861 -
Equity in affiliates'net loss (1,915) (3,027) (3,928)
Cumulative foreign translation
reversal (1,193) - -
Other 259 260 (10)
$ (1,854) $ (870) $(2,903)
Equity in affiliates' net loss includes losses
from Turner Steiner International SA of $1,730,
$3,027 and $1,726 for the years 1994, 1993 and
1992, respectively.
15. Business Segments
The Consolidated Statements of Operations provide
segment information regarding revenues and
operating expenses. Certain other financial data
of the Company's business segments (construction
and real estate) are presented below:
1994 1993 1992
Identifiable assets at year end:
Construction $502,498 $ 448,524 $ 483,245
Real estate 116,007 128,597 143,792
General corporate 86,584 87,085 99,521
$705,089 $ 664,206 $ 726,558
Depreciation and amortization expense:
Construction $ 2,522 $ 3,034 $ 3,706
Real estate 5,644 5,460 5,930
General corporate 1,200 1,330 1,407
$9,366 $ 9,824 $ 11,043
Interest expense:
Construction $ 82 $ 65 $ 94
Real estate 3,586 4,252 6,528
General corporate 4,255 3,110 1,502
$ 7,923 $ 7,427 $ 8,124
16. Disclosures about Fair Value of Financial Instruments
The following methods and assumptions were used to
estimate the fair value of each class of financial
instruments:
Cash and Cash Equivalents: The carrying amount of
cash and cash equivalents approximates fair value
due to the short-term maturity of these amounts.
Marketable Securities: The fair value of
marketable securities is based on quoted market
prices for such investments. At December 31, 1994
and 1993, the fair value approximates the carrying
amount.
Construction Receivables and Construction
Payables: The carrying amount of construction
receivables and construction payables approximate
fair value as these amounts generally are due or
payable within the Company's operating cycle.
Notes Payable:
The fair value of notes payable secured by real
estate properties is estimated based on
discounting the future cash flows at the Company's
year-end risk-adjusted incremental borrowing rate
for a similar debt instrument, given the
underlying value of the loan collateral.
The fair value of unsecured notes payable is
estimated based on the Company's year-end, risk-
adjusted incremental borrowing rate for similar
liabilities.
At December 31, 1994 and 1993, the fair value of
notes payable was $99,064 and $95,021,
respectively.
Convertible Debenture: The fair value of the
convertible debenture is estimated based on the
greater of the Company's risk-adjusted incremental
borrowing rate for a similar debt instrument, or
the value of the debt assuming conversion at the
year-end stock price, which would reflect the
probability of conversion by the debt holder. At
December 31, 1994 and 1993, the fair value was
$5,700.
ESOP Loan Receivable: The fair value of the loan
receivable from the ESOP is estimated based on the
fair value of the Company's borrowing to fund the
ESOP. At December 31, 1994 and 1993, the fair
value was $10,714 and $12,255, respectively.
Interest Rate Swap Agreements: The Company uses
unleveraged interest rate swaps to provide fixed
interest rates for selected periods of time on
certain outstanding loans (Note 6). Cash
settlements on the swaps occur monthly and are
recorded as an adjustment to interest expense.
The fair value of the interest rate swap
agreements is estimated based on the discounted
value of the difference between the fixed payments
on the swap and the payments that would be
required at current market fixed rates for a
similar financial instrument. The fair value of
the interest rate swap asset was $869 at December
31, 1994. The fair value of the interest rate
swap liability was $286 at December 31, 1993.
17. Quarterly Financial Information (Unaudited)
1994 Quarter Ended March 31 June 30 September 30 December 31
Value of construction completed $592,390 $676,629 $658,849 $710,711
Gross earnings $ 14,729 $ 15,209 $ 10,752 $ 13,925
Income (loss) before income taxes 1,122 1,651 (1,837) (446)(a)
Net income 1,059 997 896(b) 698(b)
Primary earnings per common
share (c) 0.12 0.10 0.08 0.05
Fully diluted earnings per
common share (c) 0.10 0.09 0.07 0.04
1993 Quarter Ended March 31 June 30 September 30 December 31
Value of construction completed $580,941 $737,080 $735,223 $715,135
Gross earnings $ 15,758 $ 14,936 $ 16,952 $ 11,719
Income (loss) before income
taxes 1,704 1,280 1,816 (14,569)(d)
Net income (loss) 946 909 911 (8,971)
Primary earnings (loss) per common
share (c) 0.09 0.09 0.09 (1.83)
Fully diluted earnings per
common share (c) 0.08 0.07 0.07 (e)
(a) Includes restructuring credits of $1,145.
(b) Includes income tax benefits resulting
from operations and excess tax reserves.
(c) The quarterly per share amounts are
computed independently of annual amounts.
(d) Includes restructuring charges of $8,500 and real
estate write-downs and reserves of $5,188.
(e) Antidilutive.
Responsibilities for Financial Reporting:
The management of The Turner Corporation and
Subsidiaries has the responsibility for preparing
the accompanying consolidated financial statements
and for their integrity and objectivity. The
financial statements were prepared in accordance
with generally accepted accounting principles
applied on a consistent basis and are not
misstated due to material fraud or error. The
financial statements include amounts that are
based on management's best estimates and
judgments. Management also prepared the other
information in the annual report and is
responsible for its accuracy and consistency with
the financial statements.
The fair presentation of the Company's financial
position, results of operations and cash flows are
reported on by the independent public accountants,
Arthur Andersen LLP (see Report of Independent
Public Accountants) for each of the three years in
the period ended December 31, 1994. Their report
emphasizes that the Company has significant
interests in real estate properties, the carrying
amounts of which are based on management's present
intent to hold these properties until market
conditions improve to the extent necessary to
achieve reasonable prices upon disposition.
Management has made available to Arthur Andersen
LLP all of the Company's financial records and
related data, as well as the minutes of
stockholders' and directors' meetings.
Furthermore, management believes that all
representations made to Arthur Andersen LLP during
its audit were valid and appropriate.
To fulfill the responsibility for the reporting of
financial results, management maintains a system
of accounting and internal controls. Management
has operational and financial personnel perform
procedures to provide assurance of compliance with
controls and policies. In addition, based upon
management's assessments of risk, operational,
financial and special reviews are performed by
contracted auditors to monitor the effectiveness
of selected controls. Management seeks to assure
the quality of financial reporting by careful
selection and training of supervisory and
management personnel, by organization structures
that provide an appropriate division of
responsibility, and by communication of accounting
and business policies and procedures throughout
the Company. Management believes the internal
accounting controls in use provide reasonable
assurance that the Company's assets are
safeguarded, that transactions are executed in
accordance with management's authorizations, and
that the financial records are reliable for the
purpose of preparing financial statements. In
addition, the Company has distributed a statement
of its policies for conducting business affairs in
a lawful and ethical manner and receives reports
of compliance annually.
The Board of Directors, through the Audit
Committee of the Board, meets separately and
jointly with management, the contracted auditors
and the independent public accountants on a
periodic basis to assure itself that each is
carrying out its responsibilities.
Item 9. Change in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information with respect to the
directors and nominees for directors which will
appear in the registrant's definitive proxy
statement to be filed with the Securities and
Exchange Commission prior to April 30, 1995, is
incorporated herein by reference.
Executive Officers of the Registrant.
Served as an Officer
in the Capacity
Name Age Office Indicated Since
Alfred T. McNeill 58 Chairman of the Board, Chairman since 3/1/89.
Chief Executive Officer
and Director
Harold J. Parmelee 57 President and Director President since 5/11/90.
Joseph V. Vumbacco 49 Executive Vice President Executive Vice President
and General Counsel since November 11, 1994
David J. Smith 54 Senior Vice President and 1/1/94.
Chief Financial Officer
Ralph W. Johnson 58 Senior Vice President 6/11/93.
Donald R. Kerstetter 64 Senior Vice President 6/11/93.
Richard H. Esau, Jr. 60 Vice President 6/11/93.
Francis C. O'Connor 52 Vice President 11/1/92.
Sara J. Gozo 31 Vice President, Secretary
and Associate General
Counsel 10/24/94.
Donald G. Sleeman 40 Vice President and
Treasurer Treasurer since 1/15/92.
Anthony C. Breu 47 Vice President and
Controller Controller since 6/1/88.
Each executive officer holds office at the pleasure of the Board of
Directors.
Each of the executive officers listed above is an employee of The Turner
Corporation or Turner Construction Company and has been an employee of
these companies or other construction subsidiaries in an executive,
managerial or engineering capacity for the past five years except for Mr.
Smith and Ms. Gozo. From 1983 to 1993 Mr. Smith served as Vice President
and Treasurer of Mack Trucks, Inc., a subsidiary of Renault. From 1976
to 1983 Mr. Smith held various executive financial
positions within the Renault organization. From 1989 to 1993, Ms. Gozo
practiced construction law at Shea & Gould, and until October 1994, at
Thelen, Marrin, Johnson & Bridges.
Item 11. Executive Compensation.
The information which will appear under the
caption "Remuneration of Executive Officers" in
the registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission
prior to April 30, 1995, is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial
Owners and Management.
The information under the caption "Election
of Directors" in the registrant's definitive proxy
statement to be filed with the Securities and
Exchange Commission prior to April 30, 1995 with
respect to the ownership by certain beneficial
owners and management of the registrant's stock is
incorporated herein by reference.
Item 13. Certain Relationships and Related
Transactions.
The information under the caption "Election
of Directors" in the registrant's definitive proxy
statement to be filed with the Securities and
Exchange Commission prior to April 30, 1995 with
respect to certain relationships and related
transactions is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form -8-K.
a) Documents filed as part of this report (including
documents incorporated herein by reference):
1. Financial Statements:
Page No.
- Report of Independent Public Accountants 14
- Consolidated Balance Sheets - as of December 31, 1994 and 1993 15
- Consolidated Statements of Operations - for the years ended
December 31, 1994, 1993 and 1992 16
- Consolidated Statements of Stockholders' Equity - for the years
ended December 31, 1994, 1993 and 1992 17
- Consolidated Statements of Cash Flows - for the years ended
December 31, 1994, 1993 and 1992 18
- Notes to Consolidated Financial Statements 19-36
- Responsibilities for Financial Reporting 37
2. Consent of Independent Public Accountants 45
Individual financial statements of the
registrant and financial statement schedules not
included above are omitted since they are either
not required or not applicable or the information
has been presented in the notes to consolidated
financial statements.
3. Exhibits
Exhibit No. Description
3(a)(i) Certificate of Incorporated herein by
Incorporation, as reference to Exhibit 3 to the
amended to 7/10/89. Registration Statement on
Form S-14 of The Turner
Corporation, No. 2- 90235.
3(a)(ii) Amendment dated, 5/19/86 Incorporated herein
3(a)(iii) Amendment dated, 9/12/88 by reference to
Exhibit 3(a)
3(a)(iv) Amendment dated, 7/10/89 to the Company's
1989 Annual
Report on Form 10-K.
Exhibit No. Description
3(b) By-Laws, as amended Incorporated herein by reference
to 6/11/93. to Exhibit 3(b) to the Company's
1993 Annual Report on Form 10-K
3(c)(i) Certificate of Designations Incorporated herein
relating to Series C 8-1/2% by reference to Exhibit
Convertible Preference Stock. 2 to the Company's Form 8-K
dated July 20, 1992.
3(c)(ii) Certificate of Designations Incorporated herein
relating to Series D 8-1/2% by reference to
Convertible Preference Stock. Exhibit 3 to the
Company's Form 8-K
dated July 20, 1992.
3(c)(iii) Certificate of Designations Incorporated herein by
relating to Series E 8-1/2% reference to Exhibit 4 to
Convertible Preference Stock. the Company's Form 8-K
dated July 20, 1992.
4(a) Shareholders Rights Incorporated herein by
Agreement. reference to the Registration
Statement on Form 8-A
dated September 9, 1988.
4(b) Agreement regarding Security Incorporated herein
Holder's Rights, Obligations by reference to
and Options. Exhibit 5 to the
Company's Form 8-K
dated July 20, 1992.
10(c)(i)The Company's Executive Incorporated herein
Incentive Compensation by reference to
Plan. Exhibit 10.3 to the Registration
Statement on Form S-14 of The
Turner Corporation, No. 2-90235.
10(c)(ii)The Company's 1981 Stock Incorporated herein by
Option Plan, as amended. reference to Exhibit 10(c)(v)
1988 Annual Report on Form
10-K.
10(c)(iii)The Company's 1986 Incorporated herein by reference
Stock Option Plan, to Exhibit 10(c)(vii) to the as amended
as amended. Company's 1988 Annual Report on
Form 10-K.
10(c)(iv)The Company's 1992 Stock Incorporated herein by reference to the
Option Plan. Registration Statement on Form S-8.
10(c)(v) The Company's Incentive Incorporated herein
Compensation Plan. by reference to Exhibit 10(c)(v) to
the Company's 1983 Annual Report
on Form 10-K.
Exhibit No.Description
10(c)(vi) The Company's Retirement Incorporated herein by reference
Benefit Equalization Plan, to Exhibit 10(c)(vi) to the Company's
amended and restated as of 1992 Annual Report
1/22/92. on Form 10-K.
10(c)(vii) The Company's Defined Incorporated herein by reference
Contribution Retirement to Exhibit 10(c)(vii) to the Company's
Equalization Plan. 1992 Annual Report on Form 10-K
10(c)(viii)The Company's Supplemental Incorporated herein by reference
Executive Defined Benefit to Exhibit 10(c)(viii) to the Company's
Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(ix) The Company's Supplemental Incorporated herein by reference
Executive Defined Contribution to Exhibit 10(c)(ix) to the Company's
Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(x) Tax Deferred Savings Incorporated herein by reference to
Income Plan amended and Exhibit 10(c)(ix) to the Company's
restated as of 1/1/89. 1991 Annual Report on Form 10-K.
10(c)(xi) Option Exchange and Incorporated herein by reference to
Stock Purchase Plan. Registration Statement on Form S-8,
File No. 33-33867.
10(c)(xii)Employees' Retirement Incorporated herein by reference to
Plan - Restated as of Exhibit 10(c)(vii) to the Company's
1/1/87. 1991 Annual Report on Form 10-K.
10(c)(xiii)Employees' Retirement Incorporated herein by reference
Income Plan as of 4/1/91. to Exhibit 10(c)(viii) to
the Company's 1991 Annual Report
on Form 10-K.
10(c)(xiv)Director's Retirement Plan
10(d) Asset Purchase Agreement Incorporated herein by reference
dated 6/3/92, between to Exhibit 10(d) to the Company's
Turner Steiner International 1992 Annual Report on Form 10-K.
S.A. and Turner International
Industries, Inc., and Turner
International Industries (U.K.)
Ltd.
10(e) Joint Venture and Shareholders Incorporated herein by reference
Agreement dated 6/3/92 between to Exhibit 10(e) to the Company's
The Turner Corporation and Karl 1992 Annual Report on Form 10-K.
Steiner Holding AG.
10(f) Purchase Agreement dated Incorporated herein by reference
June 3, 1992 between Karl to Exhibit 1 to the Company's
Steiner Holding AG and The Form 8-K dated July 20, 1992.
Turner Corporation.
Exhibit No.Description
10(g)(i) The Company's Revolving Incorporated herein by reference
Credit Facility dated as of to Exhibit 10(g)(i) to the Company's
12/30/92. 1993 Annual Report on Form 10-K.
10(g)(ii)Amendment No. 1 to Incorporated herein by reference
Credit Agreement dated to Exhibit 10(g)(ii) to the Company's
as of 12/31/93. 1993 Annual Report on Form 10-K.
10(h) Form of Change of Control Agree- Incorporated herein by reference
ment between The Turner Corp- to Exhibit 10(h) to the Company's
oration and Messrs. McNeill, 1993 Annual Report on Form 10-K.
Parmelee, Smith and Vumbacco,
respectively, Chairman,
President, Chief Financial Officer
and General Counsel dated
July 1, 1993.
10(i) Form of Change of Control Incorporated herein by reference
Agreement with 56 other to Exhibit 10(i) to the Company's
officers of parent or 1993 Annual Report on Form 10-K.
subsidaries dated July 1, 1993.
10(j) Note Purchase Agreement 11.74%
Senior Notes Due 2001 dated as of
December 1, 1994.
11 Computation of earnings per share.
21 Subsidiaries of the Registrant.
27 Financial Data Schedules.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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: March 10, 1995 By: A. T. McNeill
A. T. McNeill
Chairman of the Board,
Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Name Capacity Date
H. Baumann - Steiner Director March 10, 1995
(H. Baumann-Steiner)
W. G. Ehlers Director March 10, 1995
(W. G. Ehlers)
A. G. Fieger Director March 10, 1995
(A. G. Fieger)
E. T. Gravette, Jr. Director March 10, 1995
(E. T. Gravette, Jr.)
L. Lomo Director March 10, 1995
(L. Lomo)
A. T. McNeill Chairman of the Board, March 10, 1995
(A. T. McNeill) Chief Executive Officer
and Director
Name Capacity Date
C. H. Moore, Jr Director March 10, 1995
(C. H. Moore, Jr.)
H. J. Parmelee President and Director March 10, 1995
(H. J. Parmelee)
D. J. Smith Senior Vice President March 10, 1995
(D. J. Smith) and Chief Financial
Officer
P. K. Steiner Director March 10, 1995
(P. K. Steiner)
G. A. Walker Director March 10, 1995
(G. A. Walker)
J. O. Whitney Director March 10, 1995
(J. O. Whitney)
F. W. Zuckerman Director March 10, 1995
(F. W. Zuckerman)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation of our report dated March 7, 1995
included in this Form 10-K, into the Company's
previously filed Registration Statements on Form S-8
(File Nos. 2-64509 and 33-33867).
ARTHUR ANDERSEN LLP
New York, New York
March 30, 1995
EXHIBIT INDEX
Exhibit No. Description
3(a)(i) Certificate of Incorporated herein by
Incorporation, as reference to Exhibit 3 to the
amended to 7/10/89. Registration Statement on
Form S-14 of The Turner
Corporation, No. 2- 90235.
3(a)(ii) Amendment dated, 5/19/86 Incorporated herein
3(a)(iii) Amendment dated, 9/12/88 by reference to
Exhibit 3(a)
3(a)(iv) Amendment dated, 7/10/89 to the Company's
1989 Annual
Report on Form 10-K.
3(b) By-Laws, as amended Incorporated herein by reference
to 6/11/93. to Exhibit 3(b) to the Company's
1993 Annual Report on Form 10-K
3(c)(i) Certificate of Designations Incorporated herein
relating to Series C 8-1/2% by reference to Exhibit
Convertible Preference Stock.2 to the Company's Form 8-K
dated July 20, 1992.
3(c)(ii) Certificate of Designations Incorporated herein
relating to Series D 8-1/2% by reference to
Convertible Preference Stock.Exhibit 3 to the
Company's Form 8-K
dated July 20, 1992.
3(c)(iii)Certificate of Designations Incorporated herein by
relating to Series E 8-1/2% reference to Exhibit 4 to
Convertible Preference Stock.the Company's Form 8-K
dated July 20, 1992.
4(a) Shareholders Rights Incorporated herein by
Agreement. reference to the Registration
Statement on Form 8-A
dated September 9, 1988.
4(b) Agreement regarding Security Incorporated herein
Holder's Rights, Obligations by reference to
and Options. Exhibit 5 to the
Company's Form 8-K
dated July 20, 1992.
10(c)(i)The Company's Executive Incorporated herein
Incentive Compensation by reference to
Plan. Exhibit 10.3 to the Registration
Statement on Form S-14 of The
Turner Corporation, No. 2-90235.
Exhibit No.Description
10(c)(ii)The Company's 1981 Stock Incorporated herein by reference
Option Plan, as amended. to Exhibit 10(c)(v) to the Company's
1988 Annual Report on Form 10-K.
10(c)(iii)The Company's 1986 Incorporated herein by reference
Stock Option Plan, to Exhibit 10(c)(vii) to the as amended
as amended. Company's 1988 Annual Report on
Form 10-K.
10(c)(iv)The Company's 1992 Stock Incorporated herein by reference to the
Option Plan. Registration Statement on Form S-8.
10(c)(v) The Company's Incentive Incorporated herein
Compensation Plan. by reference to Exhibit 10(c)(v) to
the Company's 1983 Annual Report
on Form 10-K.
10(c)(vi)The Company's Retirement Incorporated herein by reference
Benefit Equalization Plan, to Exhibit 10(c)(vi) to the Company's
amended and restated as of 1992 Annual Report
1/22/92. on Form 10-K.
10(c)(vii)The Company's Defined Incorporated herein by reference
Contribution Retirement to Exhibit 10(c)(vii) to the Company's
Equalization Plan. 1992 Annual Report on Form 10-K
10(c)(viii)The Company's Supplemental Incorporated herein by reference
Executive Defined Benefit to Exhibit 10(c)(viii) to the Company's
Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(ix) The Company's Supplemental Incorporated herein by reference
Executive Defined Contri- to Exhibit 10(c)(ix) to the Company's
bution Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(x) Tax Deferred Savings Incorporated herein by reference to
Income Plan amended and Exhibit 10(c)(ix) to the Company's
restated as of 1/1/89. 1991 Annual Report on Form 10-K.
10(c)(xi) Option Exchange and Incorporated herein by reference to
Stock Purchase Plan. Registration Statement on Form S-8,
File No. 33-33867.
10(c)(xii) Employees' Retirement Incorporated herein by reference to
Plan - Restated as of Exhibit 10(c)(vii) to the Company's
1/1/87. 1991 Annual Report on Form 10-K.
10(c)(xiii)Employees' Retirement Incorporated herein by reference
Income Plan as of 4/1/91. to Exhibit 10(c)(viii) to
the Company's 1991 Annual Report
on Form 10-K.
10(c)(xiv)Director's Retirement Plan
Exhibit No. Description
10(d) Asset Purchase Agreement Incorporated herein by reference
dated 6/3/92, between to Exhibit 10(d) to the Company's
Turner Steiner International 1992 Annual Report on Form 10-K.
S.A. and Turner International
Industries, Inc., and Turner
International Industries (U.K.)
Ltd.
10(e) Joint Venture and Shareholders Incorporated herein by reference
Agreement dated 6/3/92 between to Exhibit 10(e) to the Company's
The Turner Corporation and Karl 1992 Annual Report on Form 10-K.
Steiner Holding AG.
10(f) Purchase Agreement dated Incorporated herein by reference
June 3, 1992 between Karl to Exhibit 1 to the Company's
Steiner Holding AG and The Form 8-K dated July 20, 1992.
Turner Corporation.
10(g)(i)The Company's Revolving Incorporated herein by reference
Credit Facility dated as of to Exhibit 10(g)(i) to the Company's
12/30/92. 1993 Annual Report on Form 10-K.
10(g)(ii) Amendment No. 1 to Incorporated herein by reference
Credit Agreement dated to Exhibit 10(g)(ii) to the Company's
as of 12/31/93. 1993 Annual Report on Form 10-K.
10(h) Form of Change of Control Agree- Incorporated herein by reference
ment between The Turner Corp- to Exhibit 10(h) to the Company's
oration and Messrs. McNeill, 1993 Annual Report on Form 10-K.
Parmelee, Smith and Vumbacco,
respectively, Chairman,
President, Chief Financial Officer
and General Counsel dated
July 1, 1993.
10(i) Form of Change of Control Incorporated herein by reference
Agreement with 56 other to Exhibit 10(i) to the Company's
officers of parent or 1993 Annual Report on Form 10-K.
subsidiaries dated July 1, 1993.
10(j) Note Purchase Agreement 11.74%
Senior Notes Due 2001 dated as of
December 1, 1994.
11 Computation of earnings per share.
21 Subsidiaries of the Registrant.
27 Financial Data Schedules.
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<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the Company's
financial statements and notes thereto and is qualified in its entirety by
reference to such financial statements. The Company files an unclassified
balance sheet, certain line items are not applicable. All values except
per share amounts are in thousands.
</LEGEND>
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 54756
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<RECEIVABLES> 356160
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 47533
<DEPRECIATION> 30043
<TOTAL-ASSETS> 705089
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0
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<TOTAL-LIABILITY-AND-EQUITY> 705089
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<TOTAL-REVENUES> 2164677
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<OTHER-EXPENSES> 53416
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<INTEREST-EXPENSE> 7923
<INCOME-PRETAX> 490
<INCOME-TAX> (3160)
<INCOME-CONTINUING> 3650
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</TABLE>
[COMPOSITE CONFORMED COPY]
==========================================================================
THE TURNER CORPORATION
---------------------------------
NOTE PURCHASE AGREEMENT
---------------------------------
11.74% Senior Notes due 2001
Dated as of December 1, 1994
The Turner Corporation
375 Hudson Street
New York, NY 10014
NOTE PURCHASE AGREEMENT
As of December 1, 1994
TO THE PURCHASER WHOSE NAME
APPEARS IN THE ACCEPTANCE
FORM AT THE END HEREOF
Ladies and Gentlemen:
THE TURNER CORPORATION, a Delaware corporation (the
"COMPANY"), hereby agrees with you as follows:
SECTION 1. ISSUANCE OF NOTES.
1.1 AUTHORIZATION. The Company has duly authorized the
issue and sale of up to $40,000,000 aggregate principal amount of
its 11.74% Senior Notes due 2001 (the "NOTES"), each such Note to
be substantially in the form of Exhibit A attached hereto. As used
herein, the term "NOTES" shall mean all notes originally delivered
pursuant to this Agreement and the other agreements referred to in
Section 2.19 and all notes delivered in substitution or exchange
for any such note and, where applicable, shall include the singular
number and the plural.
The obligations of the Company under this Agreement and
the Notes will be unconditionally guaranteed by Turner Construction
Company, a New York corporation and a Wholly-owned Subsidiary of
the Company (the "GUARANTOR"), pursuant to a Guaranty Agreement
(the "GUARANTY AGREEMENT") in the form of Exhibit B attached
hereto.
1.2 PURCHASE AND SALE OF NOTES; THE CLOSING. Subject to
the terms and conditions hereof, the Company hereby agrees to sell
to you, and you agree to purchase from the Company, the aggregate
principal amount of Notes as set forth opposite your name in
Schedule I attached hereto, at a purchase price equal to 100% of
the principal amount of each Note being purchased by you. The
closing of such purchase shall be held at 10:00 A.M., New York
time, on December 21, 1994 or on such later Business Day as may be
<PAGE>
<PAGE>
agreed to by you and the Company (the "CLOSING DATE"), at the
offices of Willkie Farr & Gallagher, 153 East 53rd Street, New
York, NY 10022.
On the Closing Date, the Company will deliver to you one
or more Notes, dated the Closing Date and registered in your name
or in the name of one or more of your nominees, in any
denominations (in a minimum amount of $1,000,000 and otherwise in
integral multiples of $50,000) and in the aggregate principal
amount to be purchased by you, all as you may specify by timely
notice to the Company (or, in the absence of such notice, one Note
registered in your name) in each case against your delivery to the
Company of immediately available funds in the amount of the
purchase price of such Notes, such delivery to be by wire transfer
to the Company's Account No. 06300892 at Morgan Guaranty Trust
Company of New York (ABA No. 021000238).
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you as follows:
2.1 ORGANIZATION, QUALIFICATION, AUTHORIZATION.
A. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has
all requisite power and authority to own or hold under lease the
property it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes and to perform the provisions
hereof and thereof. The Company is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which
the character of the properties owned or held under lease by it or
the nature of the business transacted by it requires such
qualification, except where the failure to be so qualified
individually or in the aggregate would not have a Material Adverse
Effect.
The execution, delivery and performance of this Agreement
and the Notes have been duly authorized by all necessary action on
the part of the Company. This Agreement is, and the Notes when
executed and delivered by the Company will be, legal, valid and
binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency or other similar laws
relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
2.2 BUSINESS, PROPERTIES AND OTHER INFORMATION. The
Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, and has delivered to you copies
of the following reports and proxy statement filed with the
Commission:
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A. its Annual Report on Form 10-K for its fiscal
year ended December 31, 1993, filed pursuant to Section 13(a)
of said Act;
B. its Quarterly Reports on Form 10-Q for its
fiscal quarters ended March 31, June 30 and September 30,
1994, each filed pursuant to Section 13(a) of said Act; and
C. the definitive Proxy Statement for its 1994
Annual Meeting of Stockholders, filed pursuant to Section 14
of said Act.
Said reports and proxy statement comprise all reports and proxy
statements required to be filed by the Company with the Commission
since December 31, 1993 and are collectively called the "SEC
REPORTS", which term shall also include on the Closing Date all
further reports and proxy statements which the Company may
theretofore have furnished to you pursuant to Section 6D.
The Company has also delivered to you an Executive
Summary dated July 1994 and a Confidential Memorandum dated October
1994, each prepared by J.P. Morgan Securities Inc. for use in
connection with the transaction contemplated hereby. The SEC
reports listed above, this Agreement, said Executive Summary, said
Confidential Memorandum and the items listed on Schedule 2.2
(comprising each other document, slide presentation, certificate
and written statement furnished to you by or on behalf of the
Company in connection with the transactions contemplated hereby),
as any of the same may have been supplemented or corrected in
writing and furnished to you, and all statements made to you by
officers and other representatives of the Company in connection
herewith at meetings with you on July 12 and October 24, 1994 (if
you are The Equitable Life Assurance Society of the United States)
and July 13, August 3 and October 24, 1994 (if you are The
Travelers Insurance Company or The Travelers Indemnity Company),
are collectively called the "DISCLOSURE INFORMATION". None of the
Disclosure Information contains any untrue statement of a material
fact and the Disclosure Information taken together, does not omit
to state a material fact necessary, in order to make the statements
contained therein, in the light of the circumstances under which
they were made, not misleading. The Company knows of no facts
(other than matters of a general economic nature) not disclosed in
the Disclosure Information which individually or in the aggregate,
so far as the Company can now foresee, could have a Material
Adverse Effect.
2.3 INCORPORATION, GOOD STANDING AND OWNERSHIP OF
SUBSIDIARIES. Schedule 2.3 is a complete and correct list of
Subsidiaries of the Company, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its incorporation and the
percentage of shares of each class of securities of such Subsidiary
owned by the Company and each other Subsidiary of the Company. All
of the outstanding shares of each of the Subsidiaries shown in
Schedule 2.3 as being owned by the Company and its Subsidiaries
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have been validly issued, are fully paid and nonassessable and,
except as set forth in Schedule 2.3, are owned by the Company or
another Subsidiary free and clear of any Lien. All of the
Subsidiaries are consolidated Subsidiaries of the Company. No
shares of the Company are owned by any of its Subsidiaries.
Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which the character
of the properties owned or held under lease by it or nature of the
business transacted by it requires such qualification, except where
the failure to be so qualified individually and in the aggregate
would not have a Material Adverse Effect. Each Subsidiary has all
requisite power and authority to own or hold under lease the
property it purports to own or hold under lease and to transact the
business it transacts and, in the case of the Guarantor, to
execute and deliver the Guaranty Agreement and to perform the
provisions thereof.
2.4 FINANCIAL STATEMENTS. The Company has delivered to
you copies of
A. the consolidated balance sheets of the Company
and its Subsidiaries as of December 31, 1991, 1992 and 1993
and the related consolidated statements of operations,
stockholders' equity and cash flows of the Company and its
Subsidiaries for each of the fiscal years ending on said
dates, all with reports thereon of Arthur Andersen & Co.,
independent public accountants; and
B. the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of September 30, 1994 and the
related consolidated statements of operations and cash flows
of the Company and its Subsidiaries for the fiscal quarter and
nine-month period then ended.
All such financial statements (including any related schedules and
notes) are complete and correct and present fairly the consolidated
financial condition of the Company and its Subsidiaries as of the
respective dates of such consolidated balance sheets and the
consolidated results of their operations for the periods ended on
said dates and have been prepared in accordance with GAAP
consistently applied by the Company and its Subsidiaries throughout
the periods involved (subject to normal year-end audit
adjustments). Since December 31, 1993, there has been no change in
the assets, liabilities, financial condition or results of
operations of the Company and its Subsidiaries, other than changes
(which have not, either individually or in the aggregate, been
materially adverse) reflected in the financial statements referred
to in Subsection B above or in the ordinary course of business.
2.5 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The
execution, delivery and performance by the Company of this
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Agreement and the Notes and the execution, delivery and performance
by the Guarantor of the Guaranty Agreement will not: (A) conflict
with the corporate charter, by-laws or other organizational
documents of the Company or any Subsidiary; (B) result in any
breach of, or constitute a default under, or result in the creation
of, or obligation to create, any Lien in respect of any property of
the Company or any Subsidiary under, any indenture, mortgage, deed
of trust, bank loan or credit agreement, or any other agreement or
instrument to which the Company or any Subsidiary is a party or by
which their respective properties may be bound or affected; or (C)
conflict with or result in a breach of any of the terms, conditions
or provisions of any Order of any court, arbitrator or Governmental
Body applicable to the Company or any Subsidiary or violate any
provision of any law, statute, rule or regulation of any
Governmental Body applicable to the Company or any Subsidiary.
As used in this Agreement, the term "GOVERNMENTAL BODY"
includes any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign; and the term "ORDER" includes any order, writ,
injunction, decree, judgment, award, penalty, determination,
direction or demand.
2.6 NO DEFAULTS UNDER EXISTING DEBT. Schedule 2.6 is a
complete and correct list of all outstanding Debt of the Company
and each Subsidiary as of the dates therein stated, showing as to
each item the obligor, the obligee, the aggregate principal amount
outstanding and the final maturity date and a brief description of
any security therefor. Neither the Company nor any Subsidiary is
in default (whether or not waived) in the performance or observance
of any of the terms, covenants or conditions contained in any
instrument evidencing any Debt and no event has occurred and is
continuing which, with the giving of notice or the lapse of time or
both, would become such a default and there is no pending request
for any waiver in respect of any contemplated or possible default.
2.7 GOVERNMENTAL AUTHORIZATIONS, ETC. No consent,
approval or authorization of, or declaration, registration or
filing with, any Governmental Body is required for the validity of
the execution and delivery or for the performance of this
Agreement, the Notes or the Guaranty Agreement.
2.8 LITIGATION; OBSERVANCE OF STATUTES, REGULATIONS AND
ORDERS. There are no actions, suits or proceedings (including
counterclaims) pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental
Body, except actions, suits or proceedings which (A) individually
do not in any manner draw into question the validity of this
Agreement, the Guaranty Agreement or the Notes and (B) in the
aggregate do not involve the reasonable possibility of adverse
decisions which would have a Material Adverse Effect.
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Neither the Company nor any Subsidiary is in default
under any Order of any court, arbitrator or Governmental Body or in
violation of any statute, rule or regulation of any Governmental
Body, except for possible defaults or violations which would not in
the aggregate have a Material Adverse Effect.
2.9 TAXES. The Company and its Subsidiaries have filed
all tax returns in all jurisdictions in which such returns are
required to have been filed by them and have paid all taxes,
assessments, fees and governmental charges due and payable with
respect to such returns to the extent the same have become due and
payable and before they have become delinquent, other than those
being contested in good faith by appropriate means and with respect
to which the Company or a Subsidiary, as the case may be, has set
aside on its books adequate reserves in conformity with GAAP. The
federal income tax liabilities of the Company have been determined
by the Internal Revenue Service and paid, or closed by lapse of
time, for all tax years up to and including the tax year ended
December 31, 1990.
2.10 TITLE TO PROPERTIES; POSSESSION UNDER LEASES. The
Company and its Subsidiaries have good and marketable title to
their respective real properties and good title to their respective
other properties reflected in the consolidated balance sheet as at
December 31, 1993, described in Section 2.4A, or purported to have
been acquired by the Company or a Subsidiary after said date (other
than properties and assets disposed of in the ordinary course of
business and real properties disposed of prior to September 30,
1994), subject to no Liens except as described in Schedule 2.6.
The Company and each Subsidiary have complied with all
material obligations under all leases to which the Company or such
Subsidiary is a party, and all such leases are valid, subsisting
and in full force and effect. Each of the Company and its
Subsidiaries enjoys peaceful and undisturbed possession under all
such leases under which it is tenant.
2.11 LICENSES, PERMITS, ETC. The Company and its Subsid-
iaries own or possess all licenses, permits, franchises, authori-
zations, patents, copyrights, trademarks and trade names, or rights
thereto, material to the conduct of their respective businesses,
without known conflict with the rights of others, and there are no
agreements providing for the expiration or termination of any of
the same prior to the final maturity of the Notes, except that
construction licenses and permits must be renewed periodically.
2.12 COMPLIANCE WITH ERISA. Neither the Company nor any
ERISA Affiliate has incurred with respect to an ERISA Plan (A) any
"accumulated funding deficiency" or "waived funding deficiency"
within the meaning of Section 412 of the Code or Sections 302 and
303(c) of ERISA which has not been fully satisfied, or (B) any
liability to the PBGC established under ERISA (other than for the
payment of current premiums); nor has the Company or any ERISA
Affiliate had any tax or penalty assessed against it by the
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Internal Revenue Service or the Department of Labor for any alleged
violation under Section 406 of ERISA or Section 4975 of the Code.
The current value (as determined using the actuarial assumptions
used for the most recent valuation of the applicable ERISA Plan
submitted with such ERISA Plan's annual report) of the benefit
liabilities (as defined in Section 4001(a)(16) of ERISA) of each
ERISA Plan which is subject to Title IV of ERISA, other than a
Multiemployer Plan, does not exceed the fair market value of the
assets of such ERISA Plan as of the most recently ended plan year
of each such ERISA Plan. Neither the Company nor any ERISA
Affiliate has incurred an unsatisfied withdrawal liability
obligation with respect to a Multiemployer Plan which is not
reflected in the most recent audited financial statements referred
to in Section 2.4A, and neither the Company nor any ERISA Affiliate
would incur such a liability if it were to make a partial or
complete withdrawal from any Multiemployer Plan, except as would
not have a Material Adverse Effect. The transactions contemplated
by this Agreement to occur on the Closing Date will not involve a
prohibited transaction (as such term is defined in Section
4975(c)(1)(A),(B),(C) or (D) of the Code or Section 406(a) of
ERISA) that could subject the Company or any holder of a Note to
any tax or penalty on prohibited transactions imposed under said
Section 4975 of the Code or by Section 502(i) of ERISA.
Immediately following the purchase and sale of the Notes on the
Closing Date by or on behalf of the Retirement Plan, the Notes will
constitute "qualifying employer securities", as defined in Section
407(d)(5) of ERISA, with respect to the Retirement Plan. The
representations by the Company in the preceding two sentences are
made in part in reliance upon your representation in Section 3.2
and the representations of the other purchasers in Section 3.2 of
the other agreements referred to in Section 2.19.
2.13 PRIVATE OFFERING. Neither the Company nor anyone
acting on its behalf has offered the Notes or any similar securi-
ties for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof
with, any Person other than you, the other purchasers listed in
Schedule I and not more than 40 other institutional investors.
Neither the Company nor anyone acting on its behalf has taken, or
will take, any action which would subject the issuance or sale of
the Notes to Section 5 of the Securities Act of 1933, as amended.
2.14 USE OF PROCEEDS; MARGIN REGULATIONS. The Company
will use the proceeds of the issuance of the Notes to repay
existing Indebtedness under the Revolving Credit Agreement. No
part of the proceeds from the sale of the Notes hereunder will be
used, and no part of the proceeds of such existing Indebtedness was
used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System (12 CFR 207, as
amended), or for the purpose of buying or carrying or trading in
any securities under such circumstances as to involve the Company
in a violation of Regulation X of said Board (12 CFR 224) or to
involve any broker or dealer in a violation of Regulation T of said
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Board (12 CFR 220). The assets of the Company and its Subsidiaries
do not include any such margin stock and the Company does not
presently intend that margin stock will at any time constitute more
than 25% of such assets. As used in this Section, the terms
"MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the
meanings assigned to them in the aforementioned Regulation G.
2.15 FOREIGN ASSETS CONTROL REGULATIONS. None of the
transactions contemplated by this Agreement (including the use of
proceeds of the sale of the Notes) will result in a violation of
any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended), or
any ruling issued thereunder or any enabling legislation or
Presidential Executive Order in connection therewith.
2.16 INVESTMENT COMPANY ACT AND HOLDING COMPANY STATUS.
Neither the Company nor any Subsidiary is an "investment company"
or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended. Neither
the Company nor any Subsidiary is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company", or a "public utility", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
2.17 ENVIRONMENTAL MATTERS. A. The operations of the
Company and its Subsidiaries comply in all respects with all
Environmental Laws and all other applicable Requirements of Law
concerning environmental health and safety, except where the
failure so to comply individually or in the aggregate would not
have a Material Adverse Effect.
In addition to the foregoing, except as set forth on
Schedule 2.17, and except for matters relating to construction
sites not owned by the Company, a Subsidiary or a Joint Venture
Arrangement (which matters in the aggregate would not have a
Material Adverse Effect):
neither the Company nor any Subsidiary, nor any
property or operations currently owned or leased by the
Company or any Subsidiary, is subject to, and no property or
operations formerly owned or leased by the Company or any
Subsidiary during such period of ownership or lease were
subject to, any outstanding Order from or agreement with any
court, arbitrator or Governmental Body of competent juris
diction or subject to any judicial or docketed administrative
proceeding respecting (x) any Environmental Law or any other
environmental or health or safety Requirement of Law, (y) any
action required to clean up, remove, treat or in any other way
address Contaminants in the indoor environment or (z) any
claim under any Environmental Law arising from the release or
threatened release of a Contaminant into the environment;
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all necessary authorizations, consents, permissions,
licenses and agreements under Environmental Laws (collectively
"ENVIRONMENTAL CONSENTS") required to be obtained by the
Company and its Subsidiaries have been lawfully obtained to
enable each of such entities to carry on its business
effectively in the places and in the manner in which such
business is now carried on, and all Environmental Consents are
valid and subsisting and are in full force and effect;
the Company and its Subsidiaries have complied at
all times with all material conditions attaching to
Environmental Consents (whether such conditions are expressly
imposed or implied by statute) and the Company is not aware of
any circumstances which would render it impossible for the
Company or any Subsidiary to comply with such conditions in
the future;
neither the Company nor any Subsidiary has received
any notice, Order, correspondence or communication in any
other form from any Governmental Body in respect of any
Environmental Consent revoking, suspending, modifying or
varying the same, or threatening to do so, and the Company
does not know of any reason for any Environmental Consent to
be revoked, suspended, modified or varied;
neither the Company nor any Subsidiary has received
any communication in any form from any Governmental Body in
respect of any violation of any Environmental Law; and the
Company is not aware of any circumstances which would be
reasonably expected to give rise to such a communication being
received, or of any intention on the part of any competent
authority to deliver any such communication;
there are no conditions or circumstances associated
with any property of the Company or any Subsidiary currently
owned or operated by the Company or any Subsidiary or any of
their predecessors or with the current or, to the best of the
Company's knowledge, former operations of the Company or any
Subsidiary, and there were no such conditions or circumstances
associated with any property of the Company or any Subsidiary
formerly owned or operated by the Company or any Subsidiary or
with their former operations which were applicable during such
period of ownership or operation, in all cases including
off-site disposal practices, of the Company or any Subsidiary
which would reasonably be expected to give rise to liability
to any Person in respect of any Environmental Law;
no site owned or occupied by the Company or any
Subsidiary has been used for the deposit of waste during the
ownership or occupation of the Company or any Subsidiary
except for such usage in accordance with Environmental Law or
pursuant to all requisite material consents thereunder;
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all Contaminants produced in the course of the
businesses of the Company and its Subsidiaries have been
lawfully disposed of; and
the Company and its Subsidiaries have at all times
supplied to the competent authorities such information as is
required by Environmental Laws, and all such information given
was correct in all material respects at the time such
information was supplied.
2.18 SOLVENCY. The Company is, and after giving effect
to the issuance of the Notes on the Closing Date will be, a
"solvent institution", as said term is used in Section 1405(c) of
the New York Insurance Law, whose "obligations . . . are not in
default as to principal or interest", as said terms are used in
said Section 1405(c).
2.19 OTHER AGREEMENTS. Concurrently with the execution
and delivery of this Agreement, the Company is entering into Note
Purchase Agreements identical with this Agreement (except as to the
aggregate principal amount of Notes to be purchased) with the other
purchasers named in Schedule I. The sales to you and said other
purchasers are to be separate and several sales.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER. You represent and warrant to the Company as follows:
3.1 PURCHASE OF NOTES. You are acquiring the Notes
being purchased by you on the Closing Date without a view to the
distribution thereof, provided that the disposition of your
property shall at all times be within your control.
3.2 SOURCE OF FUNDS. With respect to each source of
funds to be used by you to purchase the Notes being purchased by
you on the Closing Date (respectively, the "SOURCE"), at least one
of the following statements is accurate as of the Closing Date:
the Source is an "insurance company general
account", as such term is defined in the proposed Prohibited
Transaction Class Exemption published on August 22, 1994 at 59
Federal Register 43,134 et seq., and there is no "plan" with
respect to which the aggregate amount of such general
account's reserves for the contracts held by or on behalf of
such "plan" and all other "plans" maintained by the same
employer (and affiliates thereof as defined in Section V(a)(1)
of such proposed Exemption) or by the same employee
organization (in each case determined under Section 807(d) of
the Code) exceeds or will exceed 10% of the total of all
liabilities of such general account (within the meaning of
such proposed Exemption) as of the Closing Date;
the Source is the Retirement Plan;
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the Source is either an insurance company pooled
separate account or a bank collective investment fund, in
which case (1) the purchase of Notes is exempt in accordance
with Prohibited Transaction Exemption ("PTE") 90-1 (issued
January 29, 1990) or PTE 91-38 (issued July 12, 1991) with
respect to each "plan" whose assets in such separate account
or investment fund do not exceed and are not expected to
exceed 10% of the total assets of such account or fund as of
the Closing Date and (2) on or prior to the Closing Date you
shall have identified to the Company in writing pursuant to
this Subsection C each "plan" whose assets in such separate
account or investment fund exceed or are expected to exceed
10% of the total assets of such account or fund as of the
Closing Date;
the Source is one or more "plans", or a separate
account or trust fund comprising one or more "plans", each of
which has been identified in writing pursuant to this
Subsection D; or
the Source is not a "plan".
As used in this Section, "plan" or "plans" shall have the
meaning set forth in Section 3(3) of ERISA and, for purposes of the
foregoing provisions of this Section 3.2, each reference to a
"plan" or "plans" shall be deemed to include any entity whose
assets are deemed for purposes of ERISA or Section 4975 of the
Code, or such other similar laws relating to plans as may be
applicable, to be assets of a plan.
SECTION 4. CONDITIONS OF CLOSING. Your obligation to
purchase and pay for the Notes to be purchased by you hereunder is
subject to the satisfaction on or before the Closing Date of the
following conditions:
4.1 PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contem-
plated hereby and all documents and papers incident thereto shall
be satisfactory in form and substance to you, and you and your
special counsel shall have received all such counterpart originals
or certified or other copies of such documents and papers as you
may reasonably request related thereto.
4.2 REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in Section 2 shall (except
as expressly affected by the transactions contemplated hereby) be
true on and as of the Closing Date as if made on and as of the
Closing Date; the Company shall have performed all agreements to be
performed by it under this Agreement on or before the Closing Date;
there shall exist on the Closing Date no Default or Event of
Default; the Company shall not have consolidated with, merged with
or into, or sold, leased or otherwise disposed of its properties as
an entirety or substantially as an entirety to any Person, whether
or not permitted by Section 8.10; and the Company shall have
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delivered to you a certificate of the Chief Executive Officer or
the Chief Financial Officer of the Company, dated the Closing Date,
to each such effect.
4.3 OPINIONS OF COUNSEL. You shall have received from
(A) Willkie Farr & Gallagher, who are acting as your special
counsel in connection with the transactions contemplated hereby,
(B) Rogers & Wells, counsel to the Company in connection with such
transactions, and (C) Joseph V. Vumbacco, Esq., Executive Vice
President and General Counsel of the Company, opinions
substantially in the respective forms of Exhibits C and D-1 and D-2
attached hereto, each dated the Closing Date and addressed to you.
Each such opinion shall also cover such other legal matters as you
may reasonably request.
4.4 GUARANTY AGREEMENT; INTERCREDITOR AGREEMENT. The
Guaranty Agreement shall have been duly executed and delivered in
the form hereinabove recited and shall be in full force and effect
and you shall have received an executed counterpart thereof; and
you and the other purchasers referred to in Section 2.19 shall have
entered into an Intercreditor Agreement with the banks party to the
Revolving Credit Agreement, substantially in the form of Exhibit E
hereto, with respect to treatment of certain claims against the
Guarantor on a parity (without regard to any differences between
the benefits derived by the Guarantor from the Guaranty Agreement
and from such other Debt).
4.5 PRIVATE PLACEMENT NUMBER. The Notes shall have been
assigned a Private Placement Number by Standard & Poor's
Corporation.
4.6 LEGALITY. On the Closing Date, the Notes to be
purchased by you hereunder shall be a legal investment for you
under the laws of each jurisdiction to which you may be subject
(without resort, unless you so choose, to any so-called basket or
leeway provision of said laws, such as Section 1405(a)(8) of the
Insurance Law of the State of New York), and you shall have
received such certificates or other evidence as you may reasonably
request demonstrating the legality of such purchase under such
laws.
If you are The Bank of New York, as trustee of the
Retirement Plan, the fiduciary that is authorized to make the
decision to purchase Notes on your behalf shall have determined
that such purchase would not violate any provision of ERISA or the
Code, including without limitation Sections 404, 406 and 407 of
ERISA and Sections 4975 of the Code.
4.7 PAYMENT OF FEES. The Company shall have paid the
fees and disbursements of your special counsel as contemplated by
the second paragraph of Section 17.1.
4.8 OTHER PURCHASERS. The other purchasers referred to
in Section 2.19 shall have purchased and made payment for the Notes
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respectively to be purchased by them pursuant to the other
agreements referred to in said Section; and in connection
therewith, if you are The Bank of New York, as trustee of the
Retirement Plan, you shall have purchased at least $9,000,000
aggregate principal amount of Notes (taking into account
limitations on your purchase under the provisions of ERISA and the
Code described in the second paragraph of Section 4.6).
SECTION 5. PREPAYMENTS OF NOTES; PURCHASE OF NOTES. In
addition to the payment of the entire unpaid principal amount of
the Notes at the final maturity thereof, the Company will make
required, and may make optional, prepayments in respect of the
Notes as hereinafter set forth.
5.1 PREPAYMENTS. On December 21, 1997 and on each
December 21 thereafter to and including December 21, 2000, the
Company will prepay $8,000,000 aggregate principal amount of the
Notes (or, if less, the unpaid balance thereof), each such
prepayment to be made at the principal amount to be prepaid,
together with accrued interest thereon to the date of such
prepayment, without premium and allocated as provided in Section
5.4. No prepayment of less than all of the outstanding Notes
pursuant to Section 5.2 shall relieve the Company of its
obligations to make prepayments of Notes required by this Section
5.1.
5.2 PREPAYMENT. Upon notice given as provided in
Section 5.3, the Company may at any time prepay the Notes as a
whole, or from time to time in part (in a minimum amount of
$5,000,000 and otherwise in integral multiples of $100,000), in
each case at the principal amount to be prepaid, together with
interest accrued thereon to the date fixed for such prepayment,
plus the applicable Make-Whole Premium (if any) for each such Note.
5.3 NOTICE OF OPTIONAL PREPAYMENT; MAKE-WHOLE COMPUTA-
TION. The Company shall call Notes for prepayment pursuant to
Section 5.2 by giving written notice thereof to each holder of the
Notes, which notice shall be given not less than 30 nor more than
60 days prior to the date fixed for such prepayment and shall
specify the principal amount so to be prepaid and the date fixed
for such prepayment and shall also set forth the Company's estimate
(which may be a range based upon then current market information)
of the Make-Whole Premium (if any) with respect to such prepayment
for the Notes being prepaid (and include calculations in reasonable
detail used in determining such Make-Whole Premium together with
the source of market data used in respect of such calculations).
Notice of prepayment having been so given, the aggregate principal
amount of the Notes as specified in such notice, together with
interest accrued thereon to the date of such prepayment, plus the
Make-Whole Premium, if any, with respect to each such Note, shall
become due and payable on the specified prepayment date.
Three Business Days prior to the date fixed for
prepayment of Notes pursuant to Section 5.2, the Company will
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furnish to each holder of a Note being so prepaid a certificate
signed by an Executive Officer of the Company setting forth in
reasonable detail the computation and the methodology and
assumptions made in connection therewith and attaching a copy of
the source of the market data by which the Treasury Yield was
determined in connection with such computation. If for any reason
the Required Holders, by notice to the Company, object to such
calculation of the Make-Whole Premium, the Make-Whole Premium
calculated by such Holders and specified in such notice shall be
final and binding upon the Company and the holders of the Notes
absent manifest error. If the Required Holders shall give the
notice specified in the preceding sentence, the Company will
forthwith provide a copy of such notice to all other holders of
outstanding Notes.
5.4 PARTIAL PREPAYMENTS PRO RATA. Upon any prepayment
of less than all of the outstanding Notes pursuant to Section 5.1
or 5.2, the principal amount so prepaid shall be allocated to all
Notes at the time outstanding ratably in proportion to the
respective unpaid principal amounts thereof.
5.5 PURCHASE OF NOTES. The Company will not, and will
not permit any of its Subsidiaries or Affiliates to, acquire
directly or indirectly by purchase or otherwise any of the
outstanding Notes except by way of payment or prepayment in
accordance with the provisions of the Notes and of this Agreement.
SECTION 6. FINANCIAL STATEMENTS AND INFORMATION. The
Company will furnish to you, so long as you shall be obligated to
purchase or shall hold any of the Notes and to each other institu-
tional investor holder of a Note, in duplicate:
A. promptly upon their becoming available and in any
event within 90 days after the end of each fiscal year of the
Company, copies of:
(i) a consolidated balance sheet of the
Company and its Subsidiaries as of the end of such fiscal
year and the related consolidated statements of
operations, cash flows and stockholders' equity of the
Company and its Subsidiaries for such fiscal year, all in
reasonable detail and stating in comparative form the
respective consolidated figures as of the end of and for
the previous fiscal year and all accompanied by a report
of independent public accountants of recognized national
standing selected by the Company, which report shall
state that such financial statements have been prepared
in accordance with GAAP; and
(ii) a written statement of the accountants referred
to in clause A. above to the effect that in making the
examination necessary for their report on such financial
statements they obtained no knowledge of any Default or
Event of Default or, if such accountants shall
14<PAGE>
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have obtained any such knowledge, specifying the same and
the nature and status thereof;
B. promptly upon their becoming available and in any
event within 45 days after the end of each quarterly
accounting period (other than the fourth quarterly period) in
each fiscal year of the Company, an unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the
last day of such quarterly period and the related unaudited
consolidated statements of operations, cash flows and
stockholders' equity of the Company and its Subsidiaries for
such quarterly period and the portion of such fiscal year then
ended, all in reasonable detail and stating in comparative
form the consolidated figures for the corresponding date and
period in the previous fiscal year, and all certified by the
Chief Financial Officer of the Company to present fairly in
all material respects the information contained therein, in
each case in accordance with GAAP, subject to normal year-end
audit adjustments;
C. concurrently with each delivery of financial
statements required to be furnished pursuant to Subsections A
and B above, a certificate of the Chief Financial Officer of
the Company;
(1) setting forth computations in reasonable detail
showing as at the end of such quarterly accounting period
or fiscal year whether there was compliance with the
covenants contained in Sections 8.5, 8.6, 8.7 and 8.8;
(2) containing schedules of depreciation,
amortization and interest expenses for such quarterly
accounting period or fiscal year (a) for each major
segment of the business of the Company and its
Subsidiaries and (b) for the Company and its Subsidiaries
on a consolidated basis;
(3) containing schedules of all outstanding Debt
(including separate listings for current Debt and funded
Debt and recourse and non-recourse Debt) as at the end of
such quarterly accounting period or fiscal year, for the
Company and each Subsidiary and for the Company and its
Subsidiaries on a consolidated basis;
(4) stating the surety bonding capacity of the
Company and its Subsidiaries and Joint Venture
Arrangements as at the end of such quarterly accounting
period or fiscal year and the highest usage thereof
during such quarterly accounting period or fiscal year
and whether during such quarterly accounting period or
fiscal year there was any material adverse change in such
surety bonding capacity and describing in reasonable
detail any material cutback by any surety, any refusal to
bond, any notice from any surety as to a refusal to bond
15<PAGE>
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in the future or any requirement by any surety that the
Company, a Subsidiary or a Joint Venture Arrangement post
collateral in connection with any bond;
(5) containing a schedule of all real estate then
owned by the Company and its Subsidiaries and the book
value of each such property as at the end of such
quarterly accounting period or fiscal year;
(6) containing a schedule in reasonable detail of
all construction work-in-progress of the Company and its
Subsidiaries and Joint Venture Arrangements as of the
end of such quarterly accounting period or fiscal year;
and
(7) stating that, based upon such examination or
investigation and review of this Agreement as in the
opinion of the signer is necessary to enable the signer
to express an informed opinion with respect thereto, no
Default or Event of Default has occurred during such
period, or, if any Default or Event of Default shall have
occurred, specifying all of the same and the nature and
period of existence thereof and what action the Company
has taken, is taking or proposes to take with respect
thereto.
D. promptly upon their becoming available;
copies of all other financial statements sent
or made available by the Company or a Subsidiary to its
equity or other security holders (other than the Company
or another Subsidiary), all regular and periodic reports
and proxy statements, and all registration statements and
prospectuses, if any, filed by the Company or any
Subsidiary with any securities exchange or with the
Commission;
copies of all press releases and other
statements made available generally by the Company or any
Subsidiary to the public relating to financial matters or
to other material developments in the business of the
Company or any Subsidiary; and
until Rickenbacker Holdings has entered into a
long-term lease relating to the Air Hub property located
in Columbus, Ohio, reports at least monthly describing in
reasonable detail the status of negotiations with respect
to such lease;
E. annually within 20 days after the Board of Directors
approves the same, a copy of the Company's financial forecast
for the then current fiscal year, in form and detail
comparable to the pro forma financial information included in
the Disclosure Information listed on Schedule 2.2, accompanied
16<PAGE>
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by forecasts for and as at the end of such fiscal year of the
information required to be provided pursuant to clauses (1),
(2) and (3) of Subsection C above and a statement of the chief
financial officer of the Company describing the material
assumptions upon which each such forecast is based and to the
effect that, to the best of his knowledge and belief, such
forecast and such assumptions are reasonable under the
circumstances;
F. promptly after receipt thereof, copies of each
management letter submitted to the Company or any Subsidiary
by independent public accountants in connection with any
annual, interim or special audit made by them of the books of
the Company or such Subsidiary;
G. promptly and in any event within five Business Days
after an officer of the Company becomes aware of the
occurrence of any Default or Event of Default, or with respect
to a default in respect of Indebtedness of the Company or any
Subsidiary outstanding in an aggregate unpaid principal amount
of at least $5,000,000, or any other event that, individually
or together with any other circumstance, could reasonably be
expected to have a Material Adverse Effect, an Officer's
Certificate specifying the nature and period of existence
thereof and what action the Company or such Subsidiary has
taken and proposes to take with respect thereto; and
H. such other financial statements, computations and
other information relating to the affairs of the Company and
its Subsidiaries as you or such other holder may from time to
time reasonably request.
The Company will keep at its principal executive office
a true copy of this Agreement (as at the time in effect), and cause
the same to be available for inspection at said office during
normal business hours by any holder of a Note or any prospective
transferee of a Note designated by a holder thereof. The Company
also agrees to provide, at any time that it is not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, to any such prospective transferee information satisfying
the requirements of subsection (d)(4)(i) of Rule 144A of the
Commission or any similar rule then in effect.
SECTION 7. INSPECTION OF PROPERTIES AND BOOKS;
CONFIDENTIALITY. A. The Company will permit you and each
institutional investor holder of a Note (and your or such holder's
agents or representatives) to visit and inspect any of the
properties of the Company or any Subsidiary and examine such of
their corporate books and financial records, and make copies
thereof or extracts therefrom, and discuss the affairs, finances
and accounts of the Company and its Subsidiaries with their
respective officers and independent public accountants (and by this
provision the Company authorizes such accountants to discuss such
affairs, finances and accounts whether or not a representative of
17<PAGE>
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the Company is present), in each case upon reasonable notice and at
such reasonable times during normal business hours and as often as
you or such holder may reasonably request. All expenses incurred
by you or any such other holder in connection with your and such
holder's exercise of rights pursuant to this subsection shall be
borne by you or by such holder, except that the Company agrees to
pay all out-of-pocket expenses incurred by you and such other
holder in connection with such exercise of rights at any time when
a Default or an Event of Default has occurred and is continuing.
B. You agree that you will use your commercially
reasonable efforts not to disclose without the prior consent of the
Company (other than to your and your Affiliates' directors,
employees, trustees, agents, representatives, investment advisers,
auditors or counsel who are subject to confidentiality obligations
in the course of their duties) any information with respect to the
Company or any Subsidiary which is furnished pursuant to or
obtained under this Agreement and which is designated by the
Company to you in writing as confidential, provided that you may
disclose any such information (1) as has become generally available
to the public (other than through disclosure by you or your
Affiliate in contravention of this Agreement), (2) as may be
required or appropriate in any report, statement or testimony
submitted to any Governmental Body having or claiming to have
jurisdiction over you or to the National Association of Insurance
Commissioners or similar organizations or their successors, (3) as
may be required or appropriate in response to any summons or
subpoena or in connection with any litigation in which you are
involved, (4) to the extent you believe it necessary in order to
comply with any law, Order, regulation or ruling applicable to you,
(5) to a prospective transferee in connection with any contemplated
transfer of any of the Note by you (provided that such prospective
transferee agrees to be bound by the provisions of this
Subsection), or (6) to the extent you reasonably believe such
disclosure is necessary to correct any public information
attributed to you or the Company or any Subsidiary about the
relationship of you to the Company or any Subsidiary under this
Agreement. Without limiting your right to disclose information as
provided in clause (3) or (4) of the preceding sentence without
giving notice to the Company, the Company requests that you inform
the Company in connection with any such summons or subpoena or
action (other than routine filings) to comply.
SECTION 8. COVENANTS. The Company covenants and agrees
that so long as any of the Notes shall be outstanding:
8.1 PAYMENT OF PRINCIPAL, INTEREST AND PREMIUM, ETC.
The Company will duly and punctually pay the principal of, interest
and premium, if any, on, the Notes in accordance with the terms of
the Notes and this Agreement.
18<PAGE>
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8.2 TO KEEP BOOKS, RESERVES; CORPORATE EXISTENCE;
PAYMENT OF TAXES; MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LAWS;
INSURANCE; ETC. The Company will, and will cause each Subsidiary
to:
A. keep proper books of record and account, and keep
appropriate reserves, all in accordance with GAAP;
B. subject to Section 8.10, do or cause to be done all
things necessary to preserve and keep in full force and effect
its corporate existence, material rights (charter and
statutory) and franchises, provided that the Company shall not
be required to preserve any of its rights or franchises, and
no Subsidiary shall be required to preserve its corporate
existence or any right or franchise of such Subsidiary, if the
Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business
of the Company and the Company and its Subsidiaries taken as
a whole and that the loss thereof would not have a Material
Adverse Effect;
C. pay and discharge or cause to be paid and discharged
all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any of
its property, real, personal or mixed, or upon any part
thereof, when due and so long as the same can be paid without
interest or penalty, as well as all lawful claims for labor,
materials and supplies which, if unpaid, could by law become
a Lien upon its property, provided that neither the Company
nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim if (1) the amount,
applicability or validity thereof shall be contested on a
timely basis in good faith by appropriate proceedings (so long
as the enforcement of any Lien arising out of such nonpayment
shall be stayed during any proceedings) and if appropriate
reserves, to the extent required by GAAP, shall have been made
therefor, and (2) the nonpayment of all such taxes,
assessments, charges, levies or claims in the aggregate would
not have a Material Adverse Effect;
D. maintain and keep, or cause to be maintained and
kept, its material properties in good repair, working order
and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly
and advantageously conducted at all times, provided that
nothing in this Subsection shall prevent the Company or any
Subsidiary from discontinuing the operation and the
maintenance of any such properties if such discontinuance is,
in the opinion of the senior management of the Company, in the
best interest of the Company and the Company and its
Subsidiaries taken as a whole and would not have a Material
Adverse Effect;
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E. obtain, comply in all material respects with,
preserve and keep in full force and effect all licenses,
permits, authorizations and approvals of all Governmental
Bodies individually or in the aggregate material to the
conduct of its business and its ownership of properties and
comply with all applicable statutes, regulations and Orders
of, and all applicable material restrictions imposed by, any
Governmental Body, in respect of the conduct of its business
and the ownership of its properties (including without
limitation applicable Environmental Laws and statutes,
regulations and Orders relating to equal employment opportu
nities and employee benefits), except to the extent any
failure so to comply would not either individually or in the
aggregate have a Material Adverse Effect; and
F. insure and keep insured with financially sound and
reputable insurers so much of its respective properties, and
such insurance shall be against such hazards and risks and in
such amounts (and with such deductibles), and maintain surety
bonding capacity with financially sound and reputable sureties
in respect of its construction activities, in each case as is
reasonable and prudent in the circumstances and as is in
accordance with good business practice for companies in the
same or similar businesses, of the same or similar size and in
the same or similar localities, provided that such insurance
may be subject to co-insurance, deductibility or similar
clauses which, in effect, result in self-insurance of certain
losses if and to the extent that (1) adequate reserves in
accordance with GAAP are maintained with respect thereto, and
(2) such self-insurance is consistent with good business
practices of corporations of established reputation engaged in
the same or similar businesses and owning or operating similar
properties.
8.3 LINES OF BUSINESS. The Company and itsSubsidiaries
will remain principally engaged in general building construction
and construction management in the United States, and other
businesses directly related thereto.
8.4 COMPLIANCE WITH ERISA. The Company will not, and
will not permit any ERISA Affiliate to (A) take any of the
following actions:
(1) engage in any transaction involving an ERISA
Plan in connection with which the Company or such
Subsidiary could be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Code;
(2) terminate or withdraw from any ERISA Plan,
including a Multiemployer Plan, in a manner, or take any
other action with respect to any such ERISA Plan
(including without limitation a substantial cessation of
operations within the meaning of Section 4062(e) of
20<PAGE>
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ERISA), which could result in any liability of the
Company or a Subsidiary to a Multiemployer Plan, to the
PBGC or to a trustee appointed under Section 4042(b) of
ERISA;
(3) incur any liability to the PBGC on account of
a termination of an ERISA Plan under Section 4064 of
ERISA; or
(4) adopt any amendment to any ERISA Plan which
would require the Company or any of its Subsidiaries to
provide security to such ERISA Plan under Section 307 of
ERISA or Section 401(a)(29) of the Code;
if such actions individually or in the aggregate would have a
Material Adverse Effect;
(B) permit to exist any accumulated funding
deficiency, within the meaning of Section 412 of the Code
or Sections 302 and 303(c) of ERISA with respect to any
ERISA Plan (other than a Multiemployer Plan); or
(C) take any action or allow any circumstance to
occur which would cause the Notes to cease to be
"qualifying employer securities", as defined in Section
407(d)(5) of ERISA, with respect to (and while Notes are
held by) the Retirement Plan or any successor plan
thereto.
8.5 DEBT, ETC. A. The Company will not, and will not
permit any Subsidiary to, create, assume, incur, guarantee or
otherwise become or be liable with respect to any Debt except:
(i) the Notes and the Guaranty Agreement;
(ii) subject to Subsection B below in the case
of Debt of a Subsidiary, Debt described in Schedule 2.6,
which may not be extended, renewed or refunded unless
permitted by another provision of this Section;
(iii) Debt of a Subsidiary owing to the Company
or a Wholly-owned Subsidiary;
(iv) subject to Subsection B below in the case
of Debt of a Subsidiary, other Debt, provided that after
giving effect to the incurrence of such Debt (including
without limitation each borrowing under the Revolving
Credit Agreement), Consolidated Debt will not exceed the
applicable percentage of Consolidated Total
Capitalization specified below:
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Percentage of Consolidated
Date of Incurrence Total Capitalization
--------------------- --------------------------
Closing Date to December 31, 1995 75%
thereafter to December 31, 1996 70%
thereafter to December 31, 1997 67.5%
thereafter to December 31, 1998 65%
thereafter 60%
(iv) The Company will not permit the sum
(without duplication) of (1) the aggregate unpaid
principal amount of Debt of the Company and its
Subsidiaries secured by Liens permitted by Section 8.6I
plus (2) the aggregate unpaid principal amount of
unsecured Debt of all Subsidiaries (other than Debt
permitted by Subsection A(3) above and Debt of the
Guarantor in respect of Guarantees pursuant to the
Guaranty Agreement and, subject to the Intercreditor
Agreement, the Revolving Credit Agreement), plus (3) the
aggregate liquidation preference of all outstanding
shares of non-redeemable Preferred Stock of all
Subsidiaries at any time to exceed 15% of Consolidated
Net Worth.
8.6 LIENS. The Company will not, and will not permit
any Subsidiary to, create, assume, incur or suffer to exist any
Lien upon or with respect to any property or assets, whether now
owned or hereafter acquired, provided that nothing in this Section
8.6 shall prohibit:
A. Liens in respect of property of the Company or a
Subsidiary existing on the Closing Date and described in
Schedule 2.6;
B. Liens in respect of property acquired by the Company
or a Subsidiary after the Closing Date, existing on such
property at the time of acquisition thereof (and not incurred
in anticipation thereof), whether or not the Debt secured
thereby is assumed by the Company or a Subsidiary, and Liens
which are created within 90 days after acquisition or
completion of construction of such property, to secure Debt
assumed or incurred to finance all or any part of the purchase
price or cost of construction of such property, or in the case
of any Person that hereafter becomes a Subsidiary or is
consolidated with or merged with or into the Company or a
Subsidiary or sells, leases or otherwise disposes of all or
substantially all of its property to the Company or a
Subsidiary, Liens existing at the time such Person becomes a
Subsidiary or is so consolidated or merged or effects such
sale, lease or other disposition of property (and not incurred
in anticipation thereof), provided that in any such case;
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(i) no such Lien shall extend to or cover any other
property of the Company or such Subsidiary, as the case
may be; and
(ii) the aggregate principal amount of Debt secured
by all such Liens in respect of any such property shall
not exceed the lesser of the cost and the fair market
value of such property at the time of such acquisition
or, in the case of Liens in respect of property existing
at the time of such Person becoming a Subsidiary or being
so consolidated or merged or effecting such sale, lease
or other disposition, the aggregate fair market value of
all such property at such time;
C. any Lien relating to any extension, renewal or
replacement of any Debt secured by a Lien permitted by
Subsection A or B above, provided that the principal amount of
Debt secured thereby is not increased and such Lien does not
extend to or cover any other property;
D. Liens securing obligations owed by a Subsidiary to
the Company or to a Wholly-owned Subsidiary;
E. Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security or
to secure the performance of tenders, statutory obligations,
bids, leases, government contracts, performances and return of
money bonds and similar obligations, but not any Lien in favor
of a surety arising in connection with an actual default under
a construction contract;
F. Liens incidental to the normal conduct of the
business of the Company or any Subsidiary or the ownership of
its property (including, without limitation, leases or
subleases granted to other Persons, mechanics' Liens, minor
survey exceptions, title defects, minor encumbrances, ease
ments, reservations, rights of others for rights-of-way,
zoning or other restrictions as to the use of real property),
which are not created in connection with the incurrence of
Debt and which do not in the aggregate materially interfere
with the use or value of such property in the operation of the
business of the Company and its Subsidiaries taken as a whole;
G. Liens of or resulting from any judgment rendered by
a court of competent jurisdiction (other than judgments and
awards which if not discharged would result in a Default under
Section 10.11), the appeal of which the Company or a
Subsidiary is prosecuting in good faith, and for which the
Company shall have made reserves or other appropriate provi-
sion, if any, in respect thereof in accordance with GAAP;
H. Liens for taxes, assessments or other governmental
charges or levies, either not yet due and payable or to the
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extent that nonpayment thereof shall be permitted by the
proviso to Section 8.2C; and
I. Liens which would otherwise not be permitted by
Subsection A, B, C or D above, subject to the limitations of
Section 8.5B.
8.7 MAINTENANCE OF FINANCIAL CONDITIONS. The Company
will not at any time permit:
A. Consolidated Net Worth to be less than the sum of
(1) $50,000,000 plus (2) 50% of Consolidated Net Income for
each fiscal year (commencing with the fiscal year ending
December 31, 1994) in which Consolidated Net Income is
positive;
B. Consolidated Adjusted Current Assets to be less than
100% of Consolidated Adjusted Current Liabilities; or
C. Net Income Available for Fixed Charges for any
period of four consecutive quarterly accounting periods
(commencing with the four quarterly accounting periods ending
December 31, 1994) to be less than the applicable percentage
of Fixed Charges during the respective periods specified
below:
Percentage of
Period Fixed Charges
------ -------------
Closing Date to December 31, 1994 120%
thereafter to September 30, 1995 125%
thereafter to December 31, 1995 135%
thereafter to September 30, 1996 140%
thereafter to September 30, 1997 145%
thereafter 150%
8.8 ASSET SALES. The Company will not, and will not
permit any Subsidiary to, directly or indirectly, make any sale,
lease (as lessor), transfer or other disposition of any property or
assets (an "Asset Sale") other than:
A. Asset Sales in the ordinary course of business;
B. Asset Sales by any Subsidiary to the Company or to
a Wholly-owned Subsidiary or a Person becoming a Wholly-owned
Subsidiary as a result of one or several such Asset Sales;
C. Asset Sales of real estate owned by the Company or
a Subsidiary on the Closing Date; and
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D. other Asset Sales, provided in each case that;
(i) immediately before and after giving effect
thereto, no Default or Event of Default shall have
occurred and be continuing; and
(ii) the aggregate net book value of property
or assets disposed of in such proposed Asset Sale and all
other Asset Sales not permitted by Subsection A, B or C
above (x) during any period of twelve consecutive
calendar months (commencing with the 12-month period
ending December, 1995) does not exceed 15% of Consoli
dated Assets (as of the last day of the fiscal year or
quarterly accounting period, as the case may be, ending
on or most recently prior to the date of such proposed
Asset Sale) and (y) during the period from the Closing
Date to and including the effective date of such proposed
Asset Sale does not exceed 25% of Consolidated Assets (as
of the last day of the fiscal year or quarterly
accounting period, as the case may be, ending on or most
recently prior to the date of such proposed Asset Sale).
8.9 LIMITATION ON INVESTMENTS, ETC. A. The Company
will not, and will not permit any Subsidiary to, directly or
indirectly make any Investment other than:
A. Investments existing on the Closing Date and
described in Schedule 8.9, provided that no proceeds or other
amounts realized in respect of the sale or operation of the
properties described in Schedule 8.9 may be re-invested in
such properties or in other real estate Investments (other
than to the extent necessary to maintain existing properties
or prepare them for sale);
B. Investments in open market commercial paper,
maturing within 270 days after the date of acquisition
thereof, having a rating in the highest rating category
obtainable from Standard & Poor's or Moody's Investors
Service, Inc.;
C. Investments in direct obligations of the United
States of America or of any agency or instrumentality thereof
(to the extent the obligations of such agency are backed by
the full faith and credit of the United States of America),
maturing within one year after the date of acquisition
thereof;
D. Investments in domestic and Eurodollar time deposits
or certificates of deposit maturing within one year from the
date of acquisition thereof or money market deposit accounts
issued by commercial banks incorporated under the laws of the
United States of America or any state thereof or the District
of Columbia, each of which banks shall, as of any date of
determination, (1) have combined capital and surplus in excess
25<PAGE>
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of $100,000,000 and (2) have been assigned a rating on its
long-term certificates of deposit of either "A-2" or higher by
Moody's Investors Service, Inc. or "A" or higher by Standard
& Poor's;
E. Investments in repurchase agreements with respect to
securities meeting the requirements of clause (3) above,
entered into with a commercial bank meeting the requirements
of clause (4) above, provided that such repurchase agreements
are secured by a perfected transfer of and security interest
in securities meeting the requirements of clause (3) above;
F. Investments in a Subsidiary or Joint Venture
Arrangement engaged in the construction business and other
businesses directly related thereto, provided that the
aggregate amount of such Investments in all Joint Venture
Arrangements shall not at any time exceed $10,000,000 (ex-
cluding any undistributed earnings of any such Joint Venture
Arrangement); and
G. other Investments (including without limitation in
notes and other securities evidencing the obligations of
purchasers of real estate or customers to pay the balance of
the purchase price or construction contract price, as the case
may be), provided that the aggregate amount of such
Investments shall not at any time exceed $20,000,000
In computing the amount of any Investment in any Person, unrealized
increases or decreases in value or write-ups, write-downs or write-
offs of Investments in such Person shall be disregarded (except to
the extent included in the determination of net income of the
Company or a Subsidiary).
H. The Company will not, and will not permit any
Subsidiary to, enter into any Guarantee unless the maximum
dollar amount of the Debt or other obligation being guaranteed
is readily ascertainable by the terms of such obligation or
the agreement or instrument evidencing such Guarantee
specifically limits the dollar amount of the maximum exposure
of the Company or such Subsidiary as guarantor thereunder.
8.10 CONSOLIDATION, MERGER OR DISPOSITION OF ASSETS AS AN
ENTIRETY. The Company will not, and will not permit any Subsidiary
to, directly or indirectly, merge, consolidate or amalgamate with
any other Person or sell, lease, transfer or otherwise dispose of
all or substantially all of its assets to any Person, except:
A. Asset Sales involving shares of Subsidiaries, to the
extent permitted by Section 8.8;
B. subject to the last paragraph of this Section, any
Subsidiary may merge into or consolidate or amalgamate with or
sell, lease, transfer or otherwise dispose of all or
substantially all of its assets to the Company or a Wholly-
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owned Subsidiary or a Person which thereupon becomes a Wholly-
owned Subsidiary, provided that;
(1) if the Guarantor is a party to such transaction
and is not the continuing or surviving corporation, the
continuing, surviving or acquiring Person shall be a
solvent corporation organized in the United States of
America and having a majority of its assets situated in
the United States of America and shall expressly assume
in writing (in a form reasonably satisfactory to the
Required Holders) all of the obligations of the Guarantor
under the Guaranty Agreement; and
(2) the Company shall have delivered to each holder
of a Note an opinion of legal counsel (in form and
substance reasonably satisfactory to the Required
Holders) stating that such transaction complies with this
Subsection and all conditions precedent provided herein
with respect to such transaction have been satisfied;
C. subject to the last paragraph of this Section, the
Company may merge into, or consolidate or amalgamate with, or
sell or otherwise (except by lease) dispose of all or
substantially all of its assets to, any Person, provided that;
(1) the Company shall be the continuing or
surviving corporation or the continuing, surviving or
acquiring Person shall be a solvent corporation and shall
expressly assume in writing (in a form reasonably
satisfactory to the Required Holders) the due and
punctual payment of the principal, premium (if any) and
interest on the Notes and all of the other obligations of
the Company under this Agreement;
(2) in case the continuing, surviving or acquiring
Person shall be organized outside the United States of
America or shall have a majority of its assets situated
outside the United States of America, this Agreement
shall be amended to provide (in form and substance
satisfactory to the Required Holders) so that all
payments whatsoever under this Agreement and the Notes
will be made free and clear of, and without liability or
withholding or deduction for or on account of, any tax,
duty, levy, impose, fee, charge or withholding imposed or
levied by or on behalf of any jurisdiction other than the
United States of America or a political subdivision or
taxing authority thereof or therein; and
(3) the Company shall have delivered to each holder
of a Note an opinion of legal counsel (in form and
substance reasonably satisfactory to the Required
Holders) stating that such transaction complies with this
Section 8.10 and all conditions precedent provided herein
with respect to such transaction have been satisfied.
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Immediately before and after any such merger,
consolidation, amalgamation, sale or other disposition and giving
effect to any concurrent transactions, (a) no Default or Event of
Default shall have occurred and be continuing, and (b) the Company
(or the continuing, surviving or acquiring corporation if not the
Company) would be entitled to incur at least $1 of additional Debt
under Section 8.5A(4).
8.11 AGREEMENTS RESTRICTING DIVIDENDS. The Company will
not permit any Subsidiary to become or remain a party to any
agreement or arrangement (other than the Revolving Note dated
December 29, 1993 of The Lathrop Company, Inc., to Fifth Third
Bancorp in the maximum principal amount of $2,000,000) that
restricts or has the effect of restricting to any material extent
the ability of such Subsidiary to pay dividends or make other
distributions with respect to its capital stock or other equity
interests.
8.12 TRANSACTIONS WITH AFFILIATES. The Company will not,
and will not permit any Subsidiary to, engage in any transaction or
arrangement with an Affiliate (other than the Company or a Wholly-
owned Subsidiary) except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would have been
obtained in arms' length dealing with a Person other than an
Affiliate.
SECTION 9. DEFINITIONS.
9.1 DEFINITIONS. Except as otherwise specified or as
the context may otherwise require, the following terms shall have
the respective meanings set forth below whenever used in this
Agreement and shall include the singular as well as the plural:
"AFFILIATE" of any specified Person shall mean any other
Person (A) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, such Person, (B) which beneficially owns or holds 5%
or more of the Voting Stock of such Person, or (C) 5% or more of
the Voting Stock of which is beneficially owned or held by such
Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the
foregoing, in no event shall you or any of your Affiliates or any
other holder of any Notes be deemed to be an Affiliate of the
Company solely by reason of the ownership of the Notes or your
status as the Retirement Plan.
"BOARD OF DIRECTORS" shall mean the Board of Directors of
the Company or any committee of directors lawfully exercising the
relevant powers of said Board or Directors, as the case may be.
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"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks are required or
authorized by law to be closed in New York, New York.
"CAPITAL LEASE" shall mean any lease of property which in
accordance with GAAP is required to be capitalized on the lessee's
balance sheet.
"CAPITALIZED LEASE OBLIGATIONS" shall mean, with respect
to any Person, all outstanding obligations of such Person in
respect of Capital Leases, taken at the capitalized amount thereof
accounted for as indebtedness (net of interest expense) in
accordance with GAAP.
"CLOSING DATE" shall have the meaning specified in
Section 1.2.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMMISSION" shall mean the Securities and Exchange
Commission and any successor agency of the United States federal
government having similar powers.
"CONSOLIDATED ADJUSTED CURRENT ASSETS" shall mean all
assets of the Company and its Subsidiaries which may properly be
classified as current assets, determined on a consolidated basis in
accordance with GAAP, provided that in determining such current
assets (A) notes and accounts receivable shall be included only if
good and collectible and arising in connection with the sale of
goods or the performance of services in the ordinary course of
business and shall be taken at their face value less reserves
determined to be sufficient in accordance with GAAP, (B) life
insurance policies (other than the cash surrender value of
unencumbered policies) shall be excluded, and (C) real estate that
is held for sale may be included.
"CONSOLIDATED ADJUSTED CURRENT LIABILITIES" shall mean,
as of any date of determination, all liabilities of the Company and
its Subsidiaries which may properly be classified as current
liabilities in accordance with GAAP, determined on a consolidated
basis in accordance with GAAP, provided that in determining such
current liabilities (A) Guarantees in respect of current
liabilities of any other Person other than the Company or a
Subsidiary shall be included, (B) obligations of the Company or any
Subsidiary of which the Company reasonably expects the obligor to
be relieved (by discharge, assumption by a third party or
otherwise) upon the sale of real estate that is then held for sale
shall be included, and (C) Debt under the Revolving Credit
Agreement shall be excluded except in connection with a
determination within 12 months of the expiration or final maturity
of the Revolving Credit Agreement.
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"CONSOLIDATED ASSETS" means total assets of the Company
and its Subsidiaries, as determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED DEBT" shall mean all Debt of the Company
and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED NET INCOME" for any period shall mean the
net income of the Company and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP,
excluding:
the proceeds of any life insurance policy;
any gains arising from (1) the sale or other
disposition of any assets (other than current assets and
real estate held for sale) to the extent that the
aggregate amount of the gains during such period exceeds
the aggregate amount of the losses during such period
from the sale, abandonment or other disposition of assets
(other than current assets and assets held as
investments), (2) any write-up of assets, or (3) the
acquisition of outstanding securities of the Company or
any Subsidiary;
any amount representing any interest in the
undistributed earnings of any other Person (other than a
Subsidiary or a Joint Venture Arrangement);
any earnings, prior to the date of acquisition, of
any Person acquired in any manner, and any earnings of
any Subsidiary acquired prior to its becoming a
Subsidiary;
any earnings of a successor to or transferee of the
assets of the Company prior to its becoming such succes-
sor or transferee;
any deferred credit (or amortization of a deferred
credit) arising from the acquisition of any Person; and
any extraordinary gains not covered by Subsection B
above.
"CONSOLIDATED NET WORTH" shall mean all amounts that
would in accordance with GAAP be included under stockholders'
equity on a consolidated balance sheet of the Company and its
Subsidiaries, excluding (A) any such amounts attributable to
Preferred Stock of any Subsidiary not owned by the Company or a
Wholly-owned Subsidiary or redeemable Preferred Stock of the
Company, (B) any non-cash reserves resulting from accruals and
other accounting changes required in connection with the
implementation of Statement of Financial Accounting Standards Board
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No. 106 ("Employers' Accounting for Postretirement Benefits Other
Than Pensions"), and (C) any Investments not permitted by clauses
(2) to (7), inclusive, of Section 8.9A.
"CONSOLIDATED TOTAL CAPITALIZATION" shall mean the sum of
Consolidated Net Worth and Consolidated Debt.
"CONTAMINANT" shall mean any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special or toxic
waste, petroleum or petroleum-derived substance or waste, or any
constituent of any such substance or waste, including any such
substance regulated under any Environmental Law.
"DEBT" of a Person shall mean (without duplication):
A. all Indebtedness of such Person for borrowed money
or for the deferred purchase price of property acquired by
such Person;
B. all obligations of such Person evidenced by any
debenture, bond, note or similar instrument and all
obligations of such Person to reimburse any bank or other
Person in respect of letters of credit and bankers'
acceptances;
C. all Indebtedness of such Person created or arising
under any conditional sale or other title retention agreement
with respect to any property acquired by such Person (other
than in each case accounts payable and accrued liabilities
that arose in the ordinary course of business and are not
overdue);
D. all Capitalized Lease Obligations of such Person;
E. reimbursement obligations of such Person under
letters of credit issued to secure Indebtedness of the types
described in Subsection A, B or C above;
F. the aggregate redemption value of all outstanding
shares of redeemable Preferred Stock issued by such Person;
and
G. all Indebtedness of others Guaranteed by, or secured
by a Lien on any asset of, such Person, whether or not such
Indebtedness is assumed by such Person.
"DISCLOSURE INFORMATION" shall have the meaning specified
in Section 2.2.
"DEFAULT" shall mean an event which, with the lapse of
time or the giving of notice, or both, would constitute an Event of
Default.
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"ENVIRONMENTAL CLAIM" shall mean any written notice by
any court, arbitrator or Governmental Body or other Person alleging
potential liability of the Company or any Subsidiary for damage to
the environment or potential liability for personal injury
(including sickness, disease or death), resulting from or based
upon (A) the presence or release (including sudden or nonsudden,
accidental or nonaccidental, leaks or spills) of any Contaminant
at, in or from property, whether or not owned by the Company or any
Subsidiary, or (B) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" shall mean any and all Federal,
state, local, and foreign statutes, laws, regulations, ordinances,
rules, Orders, permits, concessions, grants, franchises, licenses,
agreements or governmental restrictions relating to pollution and
the protection of the environment or the release of any materials
into the environment, including but not limited to those related to
hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA AFFILIATE" shall mean each trade or business
(whether or not incorporated) which together with the Company would
be deemed to be a "single employer" within the meaning of Section
414 of the Code.
"ERISA PLAN" shall mean an "employee benefit plan" (as
such term is defined in Section 3(3) of ERISA) which is (or within
six years prior to the Closing Date was) maintained, sponsored or
contributed to by the Company or an ERISA Affiliate.
"EVENT OF DEFAULT" shall have the meaning specified in
Section 10.1.
"ESOP LOAN AGREEMENT" shall mean the Amended and Restated
Secured Loan Agreement dated as of July 7, 1989 between the Company
and Wells Fargo Bank, N.A.
"EXECUTIVE OFFICER" shall mean, in the case of the
Company or any Subsidiary, the Chairman, President, Chief Executive
Officer, any Executive Vice President, the Chief Financial
Officer, any person reporting directly to the Chief Financial
Officer whose duties include matters relating to financing, and the
Treasurer.
"FIXED CHARGES" shall mean for any period the sum
(without duplication) for the Company and its Subsidiaries on a
consolidated basis of (A) all Interest Expense, (B) all dividends
required to be paid in respect of Preferred Stock of the Company
and its Subsidiaries (other than Preferred Stock of Subsidiaries
owned by the Company directly or indirectly through one or more
Wholly-owned Subsidiaries), net of any tax deduction realized by
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the Company from dividends payable on its Series B ESOP Convertible
Preference Stock, and (C) all minimum rental and other obligations
required to be paid by the lessee under all operating leases
(excluding any amounts required to be paid by the lessee on account
of maintenance and repairs, insurance, taxes, assessments,
utilities, operating and labor costs and similar charges).
"GAAP" shall mean generally accepted accounting
principles from time to time in the United States.
"GOVERNMENTAL BODY" shall have the meaning specified in
Section 2.5.
"GUARANTEE" by any Person shall mean any obligation,
contingent or non-contingent, of such Person directly or indirectly
guaranteeing any Indebtedness of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or non-contingent, of such Person (A) to
purchase, pay or support (or advance or supply funds for the
purchase or payment or support of) such Indebtedness (whether
arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or
otherwise), or (B) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary
course of business. The amount of any Guarantee shall be equal to
the outstanding amount of the Indebtedness or other obligation
directly or indirectly guaranteed. The term "GUARANTEE" used as a
verb has a correlative meaning.
"INDEBTEDNESS" of any Person shall mean all obligations
which in accordance with GAAP are classified as liabilities upon a
balance sheet of such Person.
"INTEREST EXPENSE" shall mean all amounts which, in
accordance with GAAP, would be deducted in computing Consolidated
Net Income on account of interest on Indebtedness, including
imputed interest in respect of Capitalized Lease Obligations and
amortization of debt discount and expense.
"INVESTMENT" shall mean with respect to any Person, any
direct or indirect purchase or other acquisition by such Person of
stock or other securities of any other Person, or any direct or
indirect loan or advance (other than loans or advances to employees
for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business and not more than
$3,000,000 aggregate unpaid principal amount of loans to employees
for purchases of shares of the Company from the Company) or capital
contribution by such Person to any other Person, including all
Indebtedness and accounts receivable from such other Person which
are not current assets or did not arise from sales to such other
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Person in the ordinary course of business, and any direct or
indirect purchase or other acquisition by such Person of any
property or assets other than property or assets used in the
ordinary course of business.
"JOINT VENTURE ARRANGEMENT" shall mean an arrangement
entered into by the Company or a Subsidiary in the ordinary course
of business with one or more other entities pursuant to which the
Company or such Subsidiary acts as general contractor or co-general
contractor, general partner or co-general partner, construction
manager or co-construction manager, co-equity investor, or in a
similar capacity to any of the foregoing, with respect to a
specific construction project or group of construction projects;
provided that such arrangement does not involve an Investment in
real property by the Company, such Subsidiary or any other such
entity.
"LIEN" shall mean as to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance in or on, or
interest or title of any vendor, lessor, lender or other secured
party to or of such Person under a conditional sale or other title
retention agreement or capital lease in the nature of the foregoing
with respect to, any property or asset of such Person, or the
signing or filing of a financing statement which names such Person
as debtor (other than in connection with an operating lease or a
sale of intangibles), or the signing of any security agreement
authorizing any other party as the secured party thereunder to file
any financing statement.
"MAKE-WHOLE PREMIUM" shall mean, in connection with any
prepayment of a Note, the amount (but not less than zero) equal to
the excess, if any, of:
A. the sum of the Present Values (as hereinafter
defined) of (1) the principal amount of such Note being
prepaid (assuming the required prepayments pursuant to Section
5.1 and the principal balance of such Note payable upon
maturity are paid when due), and (2) the amount of interest
which would have accrued after the date of such prepayment and
been payable on each interest payment date on the amount of
such principal being prepaid (assuming the required
prepayments pursuant to Section 5.1 and the principal balance
of such Note payable upon maturity and interest payments are
paid when due), OVER; and
B. the principal amount of such Note being prepaid.
For purposes of this definition, "PRESENT VALUE" of a sum due to be
paid in the future shall be determined in accordance with generally
accepted financial practice by discounting that sum on a semiannual
basis from the date it is due to be paid to the date of such
prepayment at a discount rate per annum equal to the sum of the
applicable Treasury Yield plus 0.50%; the "TREASURY YIELD" for such
purpose shall be determined as of 10:00 A.M. New York City time on
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the fourth Business Day prior to the date of such prepayment by
reference to the yields of those actively traded "On The Run"
United States Treasury securities having a maturity equal to the
then-remaining weighted average life to maturity of such Note as
reported by the Bloomberg Financial Markets Commodities News screen
USD or the equivalent screen provided by Bloomberg Financial
Markets Commodities News (or, if such data for any reason ceases to
be available through such service, any publicly available on-line
source of similar market data), provided that if such weighted
average life to maturity is not equal to the maturity of an
actively traded "On The Run" United States Treasury security, such
yield shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the yields as so reported of
actively traded "ON THE RUN" Treasury securities having a maturity
closest to such weighted average life to maturity; and "ON THE RUN"
United States Treasury securities refers to those United States
Treasury securities which are most recently auctioned.
"MATERIAL ADVERSE EFFECT" shall mean (A) a material
adverse effect on the business, properties, assets, condition
(financial or other), results of operations or prospects of the
Company and its Subsidiaries taken as a whole, (B) a material
impairment of the ability of the Company to perform its obligations
under this Agreement and the Notes, (C) a material impairment of
the ability of the Guarantor to perform its obligations under the
Guaranty Agreement, or (D) a material impairment of the legality,
validity or enforceability of this Agreement, the Notes or the
Guaranty Agreement.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan"
(as such term is defined in Section 3(37) of ERISA and Section
414(f) of the Code) to which contributions are or have been made by
the Company or any ERISA Affiliate.
"NET INCOME AVAILABLE FOR FIXED CHARGES" means for any
period the sum of Consolidated Net Income plus all amounts that
were deducted from gross income in the computation of such
Consolidated Net Income on account of (A) income taxes, (B)
depreciation and amortization, and (C) Fixed Charges plus (D) any
reduction in the carrying value (or MINUS any increase in such
carrying value, to the extent such increase is included in gross
income) of the Company's Rickenbacker Facility located in Columbus,
Ohio.
"NOTE REGISTER" shall have the meaning specified in
Section 10.1.
"NOTES" shall have the meaning specified in Section 1.1.
"OFFICER'S CERTIFICATE" shall mean a certificate signed
in the name of the Company by an Executive Officer.
"ORDER" shall have the meaning specified in Section 2.5.
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"PBGC" shall mean the Pension Benefit Guaranty
Corporation established under ERISA or any successor thereto.
"PERSON" or "PERSON" shall mean and include an
individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an association, a joint-stock
company, an unincorporated organization and a government or any
department or agency thereof.
"PREFERRED STOCK" shall mean, with respect to any Person,
shares of such Person which are entitled to preference or priority
over other shares of such Person in respect of either the payment
of dividends or the distribution of assets upon liquidation or
both.
"PTE" shall have the meaning specified in Section 3.2C.
"REPORTABLE EVENT" shall mean any reportable event as
defined in Section 4043(b) of ERISA or the regulations issued
thereunder with respect to an ERISA Plan.
"REQUIRED HOLDERS" shall mean the holder or holders of at
least 66 2/3% of the aggregate unpaid principal amount of the Notes
at the time outstanding.
"REQUIREMENT OF LAW" shall mean, as to any Person, each
law, rule or regulation, including Environmental Laws and ERISA, or
unstayed Order, decree or other determination of an arbitrator or
a court or other Governmental Body applicable to or binding upon
such Person or any of its property or to which such Person or any
of its property is subject.
"RETIREMENT PLAN" shall mean the Employees' Cash Balance
Retirement Plan of The Turner Corporation (including its related
trust).
"REVOLVING CREDIT AGREEMENT" shall mean the Credit
Agreement dated as of December 30, 1992 among the Company, Turner
Construction Company, the banks from time to time party thereto and
Morgan Guaranty Trust Company of New York, as supplemented and
amended from time to time.
"SEC REPORTS" shall have the meaning specified in Section
2.2.
"SUBSIDIARY" of any Person shall mean any corporation or
other entity a majority of the total combined voting power of all
classes of Voting Stock of which shall, at the time as of which any
determination is being made, be owned by such Person and/or one or
more of its Subsidiaries. Except as otherwise expressly indicated
herein, references to Subsidiaries shall mean Subsidiaries of the
Company.
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"VOTING STOCK" shall mean, with respect to any Person,
any shares of stock or other equity interests of any class or
classes of such Person whose holders are entitled under ordinary
circumstances (irrespective of whether at the time stock or other
equity interests of any other class or classes shall have or might
have voting power by reason of the happening of any contingency) to
vote for the election of a majority of the directors, managers,
trustees or other governing body of such Person.
"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary all
of the equity ownership of which (other than directors' qualifying
shares required by law) is at the time owned by the Company and/or
one or more other Wholly-owned Subsidiaries.
9.2 ACCOUNTING TERMS. All accounting terms used herein
which are not expressly defined in this Agreement have the
meanings respectively given to them in accordance with GAAP.
Except as otherwise specifically provided herein, all computations
made pursuant to this Agreement shall be made in accordance with
GAAP and all balance sheets and other financial statements with
respect thereto shall be prepared in accordance with GAAP
consistently applied. Except as otherwise expressly provided, any
consolidated financial statement or financial computation shall be
done in accordance with GAAP; and, if at the time that any such
statement or computation is required to be made the Company shall
not have any Subsidiary, such terms shall mean a financial
statement or a financial computation, as the case may be, with
respect to the Company only.
SECTION 10. EVENTS OF DEFAULT; REMEDIES.
10.1 EVENTS OF DEFAULT; ACCELERATION OF MATURITY AND
RESCISSION. If any of the following Events of Default shall occur
and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
A. default shall be made in the due and punctual
payment of any principal of or premium, if any, on any Note
when and as the same shall become due and payable, whether at
stated maturity, by acceleration, by notice of prepayment or
otherwise;
B. default shall be made in the due and punctual
payment of any interest on any Note when and as the same shall
become due and payable and such default shall have continued
for a period of five days;
C. default shall be made in the due performance or
observance of any term, covenant or agreement contained in
Section 6H or 8.5 to 8.8, inclusive, 8.10 or 8.12;
D. default shall be made in the due performance or
observance of any term, covenant or agreement contained in
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Section 8.9 or 8.11 and such default shall have continued for
a period of fifteen days after an officer of the Company first
becomes aware thereof;
E. default shall be made in the due performance or
observance of any other term, covenant or agreement contained
in this Agreement or the Guaranty Agreement and such default
shall have continued for a period of 30 days after an officer
of the Company first becomes aware thereof;
F. the Company or any Subsidiary shall (1) default
beyond any applicable grace period in any payment of principal
of or premium or interest on any Debt (other than the Notes),
or (2) default in the due performance or observance of any
provision contained in any agreement relating to any Debt
(other than the Notes) the effect of which is to cause, or
permit the holder or holders of such Debt (or a trustee on
behalf of such holder or holders) to declare, such Debt to
become or be due and payable prior to its stated maturity or
to require the repayment or repurchase of such Debt prior to
its stated maturity, provided that the aggregate unpaid
principal amount of Debt affected by all defaults described in
this Subsection shall exceed $5,000,000;
G. any representation or warranty made by the Company
or any Subsidiary in this Agreement or the Guaranty Agreement
or in any certificate or other writing furnished pursuant
hereto or thereto shall prove to have been false, incorrect or
misleading in any material respect on the date as of which
made;
H. the Company or any Subsidiary shall (1) apply for or
consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its property, (2) admit in
writing its inability to pay its debts as such debts become
due, (3) make a general assignment for the benefit of its
creditors, (4) commence a voluntary case under any law
relating to bankruptcy, insolvency or reorganization, (5) file
a petition seeking to take advantage of any other law
providing for the relief of debtors, (6) fail to controvert
in a timely or appropriate manner (but within 30 days in any
event), or acquiesce in writing to, any petition filed against
it in an involuntary case under any law relating to
bankruptcy, insolvency or reorganization, (7) take any action
under the laws of its jurisdiction of incorporation analogous
to any of the foregoing, or (8) take any corporate action for
the purpose of effecting any of the foregoing;
I. a proceeding or case shall be commenced against the
Company or any Subsidiary, without the application or consent
of the Company or such Subsidiary in any court of competent
jurisdiction seeking (1) its liquidation, reorganization,
dissolution or winding up, or composition or readjustment of
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its debts, (2) the appointment of a trustee, receiver,
custodian, liquidator, encumbrancer or the like of it or of
all or any substantial part of its assets or (3) similar
relief in respect of it under any law providing for the relief
of debtors, and such proceeding or case shall continue
undismissed, or unstayed and in effect, for a period of 60
days; or an order for relief shall be entered in an
involuntary case under any law relating to bankruptcy,
insolvency or reorganization against the Company or any
Subsidiary;
J. final judgment for the payment of money in excess of
$5,000,000 shall be rendered by a court of competent
jurisdiction against the Company or any Subsidiary and such
judgment shall not be discharged or execution thereof stayed
pending appeal within 30 days from the date of entry thereof
or within such longer period as is specified in such judgment,
or in the event of such a stay, such judgment shall not be
discharged within 30 days after such stay expires; or
K. any provision of the Guaranty Agreement shall cease
to be in full force and effect for any reason whatsoever
(other than the release or waiver thereof by the holders of
the Notes) or the Guarantor shall contest or deny the validity
or enforceability of any of its obligations under the Guaranty
Agreement;
then (i) upon the occurrence of any Event of Default described in
Subsection H or I, the unpaid principal amount of all Notes,
together with the interest accrued thereon and an amount equal to
the Additional Amount (as hereinafter defined) in respect of each
such Note, shall automatically become immediately due and payable,
without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by the Company, or
(ii) upon the occurrence and during the continuance of any other
Event of Default, the Required Holders may, by written notice to
the Company, declare the unpaid principal amount of all Notes to
be, and the same shall forthwith become, due and payable, together
with the interest accrued thereon and an amount equal to the
Additional Amount in respect of each such Note, without
presentment, further demand, protest or other requirements of any
kind, all of which are hereby expressly waived by the Company,
provided that during the existence of an Event of Default described
in Subsection A or B above with respect to any Note, the holder of
such Note may, by written notice to the Company declare such Note
to be, and the same shall forthwith become, due and payable,
together with the interest accrued thereon and an amount equal to
the Additional Amount, without presentment, further demand, protest
or other requirements of any kind, all of which are hereby
expressly waived by the Company. If any holder of any Note shall
exercise the option specified in the proviso to the preceding
sentence, the Company will forthwith give written notice thereof to
the holders of all other outstanding Notes and each such holder may
(whether or not such notice is given or received), by written
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notice to the Company, declare the unpaid principal amount of all
Notes held by it to be, and the same shall forthwith become, due
and payable, together with the interest accrued thereon and an
amount equal to the Additional Amount, without presentment, further
demand, protest or other requirements of any kind, all of which are
hereby expressly waived by the Company.
For purposes of this Section, the term "ADDITIONAL
AMOUNT" shall mean, with respect to any Note, an amount equal to
Make-Whole Premium that would be payable with respect to such Note
if the Company had elected to prepay such Note in full pursuant to
Section 5.2 on the date of acceleration.
The provisions of this Section are subject, however, to
the condition that if, at any time after any Note shall have
become declared due and payable, the Company shall pay all arrears
of interest on the Notes and all payments on account of the
principal of and premium (if any) on the Notes which shall have
become due otherwise than by acceleration (with interest on such
principal, premium (if any) and, to the extent permitted by law, on
overdue payments of interest, at the rate specified in the Notes
with respect to overdue payments) and an additional amount
sufficient to reimburse the holders of the Notes for the reasonable
costs and expenses incurred in connection with any such
declaration, and all Events of Default (other than nonpayment of
principal of, premium, if any, and accrued interest on Notes due
and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to Section 15, then, and in every such case, the
Required Holders, by written notice to the Company, may rescind and
annul any such acceleration of Notes and its consequences; but no
such action shall affect any subsequent Default or Event of Default
or impair any right consequent thereon.
10.2 SUITS FOR ENFORCEMENT. If any Event of Defaultshall
have occurred and be continuing, the holder of any of the Notes may
proceed to protect and enforce its rights, either by suit in equity
or by action at law, or both, whether for the specific performance
of any covenant or agreement contained in this Agreement or in the
Notes or in aid of the exercise of any power granted in this
Agreement or in the Notes, or the holder of any Note may proceed to
enforce the payment of all sums due upon such Note or to enforce
any other legal or equitable right of the holder of such Note.
Without limiting the generality of Section 17.1, the
Company covenants that, if default shall be made in the making of
any payment due under any Note or in the performance or observance
of any agreement contained in this Agreement or the Notes, the
Company will pay to each holder of a Note such further amounts, to
the extent lawful, as shall be sufficient to pay all costs and
expenses of collection or of otherwise enforcing such holder's
rights under this Agreement, the Guaranty Agreement or the other
Notes, including counsel fees.
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10.3 REMEDIES CUMULATIVE. No remedy herein conferred
upon you or the holder of any Note is intended to be exclusive of
any other remedy and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or
otherwise.
10.4 REMEDIES NOT WAIVED. No course of dealing between
the Company and you or the holder of any Note (other than a waiver
obtained in compliance with Section 13) and no delay or failure in
exercising any rights hereunder or under this Agreement in respect
of such Note shall operate as a waiver of any of your rights or the
rights of any holder of such Note.
SECTION 11. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.
The Company will keep at the Company's principal office, or at such
other office or agency in the United States as the Company may from
time to time designate in writing to the holders of the Notes, a
register (the "NOTE REGISTER") in which, subject to such reasonable
regulations as it may prescribe, but at its expense (other than
transfer taxes, if any), it will provide for the registration and
transfer of Notes.
Whenever a Note shall be surrendered at the principal
office or at such other office or agency of the Company for
transfer or exchange, within five Business Days thereafter the
Company will execute and deliver in exchange therefor a new Note or
Notes, as may be requested by such holder, in the same aggregate
unpaid principal amount as the unpaid principal amount of the Note
so surrendered. Each such new Note shall be payable to such Person
as such holder may request. Each Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or such holder's attorney duly
authorized in writing. Any Note issued in exchange for any other
Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so
exchanged or transferred, and neither gain nor loss of interest
shall result from any such transfer or exchange. Any transfer tax
relating to such transaction shall be paid by the holder requesting
the exchange and the Company may refuse to deliver any such new
Note until it shall have received evidence (provided the Company
makes timely request for such evidence) reasonably satisfactory to
it as to the payment of such transfer tax or the absence of any
requirement to pay the same. In the case of you or any other
institutional investor holder of a Note, a written statement to
such effect by an authorized person (or an opinion to such effect
of your or such holder's in-house counsel) shall be deemed
satisfactory evidence to the Company.
The Company and any agent of the Company may deem and
treat the Person in whose name any Note is registered as the owner
of such Note for the purpose of receiving payment of the principal
of and premium, if any, and interest on such Note and for all other
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purposes whatsoever, whether or not such Note be overdue and the
Company shall not be affected by notice to the contrary.
You agree that the Company shall not be required to
register the transfer of any Note to any Person (other than your
nominee) or to any separate account maintained by you unless the
Company receives from the transferee a representation to the
Company (and appropriate information as to any separate accounts or
other matters) to the same or similar effect with respect to the
transferee as is contained in Section 3.2 or other assurances
reasonably satisfactory to the Company that such transfer does not
involve a prohibited transaction (as such term is used in Section
2.12) and that such transfer does not cause the Notes to fail to
constitute qualifying employer securities (as such term is used in
said section). You shall not be liable for any damages in
connection with any such representations or assurances provided to
the Company by any transferee.
SECTION 12. LOST, ETC., NOTES. Upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Note, and (in case of loss, theft
or destruction) of indemnity satisfactory to it, and upon surrender
and cancellation of such Note, if mutilated, within five Business
Days thereafter the Company will deliver in lieu of such Note a new
Note in a like unpaid principal amount, dated as of the date to
which interest has been paid thereon or dated the date of the lost,
stolen, destroyed or mutilated Note if no interest shall have been
paid thereon. In the case of you or any other institutional
investor holder of a Note, your or such holder's unsecured
agreement of indemnity shall be deemed satisfactory to the Company.
SECTION 13. AMENDMENT AND WAIVER. A. Any provision of
this Agreement or the Notes may, with the consent of the Company,
be amended or waived (either generally or in a particular instance
and either retroactively or prospectively), by one or more
substantially concurrent written instruments signed by the Required
Holders, provided that:
no such amendment or waiver shall;
change the rate or time of payment of interest on
any of the Notes, change the amount or time of payment or
prepayment of any of the Notes or affect the premium
payable on any prepayment or purchase of a Note, or
modify Section 14, without the consent of the holder of
each Note so affected;
modify any of the provisions of this Agreement with
respect to the payment or prepayment or purchase of
Notes, or change the percentage of the principal amount
of the Notes the holders of which are required with
respect to any such amendment or to effectuate any such
waiver, or to accelerate any Note or Notes, without the
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consent of the holders of all of the Notes then
outstanding, or;
be effective prior to the Closing Date without your
consent; and
no such waiver shall extend to or affect any
obligation not expressly waived or impair any right
consequent thereon.
Any amendment or waiver pursuant to Subsection A above
shall apply equally to all of the holders of the Notes and shall
be binding upon them, upon each future holder of any such Note and
upon the Company, in each case whether or not a notation thereof
shall have been placed on any Note.
The Company will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the
provisions of this Agreement or the Notes unless each holder of a
Note affected thereby (irrespective of the principal amount of
Notes then held by it) shall be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall
be supplied by the Company with sufficient information to enable it
to make an informed decision with respect thereto. Executed or
true and correct copies of any amendment or waiver effected
pursuant to the provisions of this section shall be delivered by
the Company to each holder of Notes forthwith following the date on
which the same shall have become effective. Neither the Company
nor any of its Affiliates will directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of a Note as
consideration for or as an inducement to the entering into by such
holder of any such amendment or waiver unless such remuneration is
concurrently paid ratably to the holders of all of the Notes then
outstanding.
For purposes of determining whether the holders of
outstanding Notes of the requisite percentage of outstanding shares
or unpaid principal amount at any time have taken any action
authorized by this section or otherwise by this Agreement, any
Notes owned by the Company, any Subsidiary or any Affiliate (other
than the Retirement Plan) of the Company shall not be deemed
outstanding.
SECTION 14. HOME OFFICE PAYMENT. Notwithstanding anything
to the contrary in this Agreement or the Notes, so long as you or
any nominee designated by you shall be the holder of any Note, the
Company shall pay all amounts which become due and payable on such
Note by wire or electronic funds transfer of immediately available
funds to you at your address set forth in Schedule I by 11:00 A.M.,
New York City time, on the date any such amounts become due, or at
such other place in the United States and in such other manner as
you may designate by notice to the Company, without presentation or
surrender of such Note. You agree that prior to the sale, transfer
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or other disposition of any Note, you will make notation thereon of
the portion of the principal amount prepaid and the date to which
interest has been paid thereon, or surrender the same in exchange
for a Note or Notes aggregating the same principal amount as the
unpaid principal amount of the Note so surrendered. The Company
agrees that the provisions of this section shall inure to the
benefit of any other institutional investor holder of a Note (or
nominee thereof) who shall have agreed to comply with the
requirements of this Section and furnished the Company with payment
information in connection herewith.
SECTION 15. LIABILITIES OF THE PURCHASER. Neither this
Agreement nor any disposition of any of the Notes shall be deemed
to create any liability or obligation of you or any other holder of
any of the Notes to enforce any provision hereof for the benefit or
on behalf of any other Person who may be the holder of any of the
Notes.
SECTION 16. CERTAIN TAXES. The Company agrees to pay all
stamp, documentary or similar taxes which may be payable in respect
of the execution and delivery of this Agreement or of the execution
and delivery (but not the transfer) of any of the Notes or of any
amendment of, or waiver or consent under or with respect to, this
Agreement or any of the Notes and will save you and all subsequent
holders harmless against any loss or liability resulting from
nonpayment or delay in payment of any such tax. The obligations of
the Company under this Section shall survive the payment of the
Notes.
SECTION 17. MISCELLANEOUS.
17.1 EXPENSES. The Company agrees, whether or not the
transactions hereby contemplated shall be consummated, to pay all
reasonable expenses incident to such transactions (including all
document production costs and other expenses, the fees and
disbursements of Willkie Farr & Gallagher, your special counsel,
for their services with relation to such transactions, the expenses
of obtaining a private placement number for the Notes and all
out-of- pocket expenses in connection with the shipping to and from
your office or the office of your nominee of the Notes and upon any
exchange or substitution pursuant to the provisions of this
Agreement), and to reimburse you for any reasonable out-of-pocket
expenses in connection therewith. The Company also agrees to pay
all reasonable expenses incurred by you (including reasonable
counsel and financial adviser fees) in connection with the
enforcement and collection of the Notes or the enforcement of this
Agreement or the Guaranty Agreement, responding to any subpoena or
other legal process or informal investigative demand issued in
connection with this Agreement or the transactions contemplated
hereby or by reason of any holder's having acquired any Note (other
than in connection with any investigation relating to your
activities and only indirectly involving the Company or the
issuance of the Notes), including without limitation costs and
expenses incurred in any bankruptcy case, and in connection with
44<PAGE>
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any amendment or requested amendment of, or waiver or consent or
requested waiver or consent under or with respect to, this
Agreement or any of the Notes or the Guaranty Agreement, whether or
not the same shall become effective. The obligations of the
Company under this section and Section 10.2 shall survive the
payment of the Notes.
In furtherance of the foregoing, on the Closing Date the
Company will pay or cause to be paid the fees and disbursements
(including estimated unposted disbursements as of the Closing Date)
of your special counsel which are reflected in the statement of
such special counsel submitted to the Company on or prior to the
Closing Date. The Company will also pay, promptly upon receipt of
supplemental statements therefor, additional fees, if any, and
disbursements of such special counsel in connection with the
transactions hereby contemplated (including disbursements unposted
as of the Closing Date to the extent such disbursements exceed
estimated disbursements paid as aforesaid).
17.2 RELIANCE ON AND SURVIVAL OF REPRESENTATIONS. All
agreements, representations and warranties of the Company or any
Subsidiary contained herein and in any certificates or other
instruments delivered pursuant to this Agreement shall (A) be
deemed to have been relied upon by you, notwithstanding any
investigation heretofore or hereafter made by you or on your
behalf, and (B) shall survive the execution and delivery of this
Agreement and the delivery of the Notes to you, and shall continue
in effect so long as any Security is outstanding and thereafter as
provided in Sections 16, 17.1 and 17.6.
17.3 SUCCESSORS AND ASSIGNS. This Agreement shall bind
and inure to the benefit of and be enforceable by the Company and
its permitted successors and assigns hereunder, you and your
successors and assigns, and, in addition, shall inure to the
benefit of and be enforceable by all holders from time to time of
the Notes, provided that the benefits of Sections 6, 7, 12 (as to
satisfactory indemnity) and 14 shall be limited as provided
therein.
17.4 COMMUNICATIONS. Except as otherwise specifically
provided herein, all notices and other communications provided for
in this Agreement shall be in writing and shall be sent by
confirmed facsimile transmission (hard copy to be sent by overnight
mail on the date of such transmission) or delivered by hand or sent
by a reputable overnight courier service prepaid (with confirmation
of receipt):
if to the Company, at 375 Hudson Street, New York,
NY 10014, Attention: Chief Financial Officer, or at such other
address as the Company may hereafter designate by notice to
you and to each other holder of a Note at the time
outstanding;
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if to you, at your address as set forth in Schedule
I or at such other address as you may hereafter designate by
notice to the Company; or
if to any other holder of a Note, at the address of
such holder as it appears on the Note Register.
Any notice or other communication herein provided to be
given to the holders of all outstanding Notes shall be deemed to
have been duly given if sent as aforesaid to each of the registered
holders of the Notes at the time outstanding at the address for
such purpose of such holder as it appears on Schedule I or the Note
Register, as the case may be.
WAIVER OF JURY TRIAL. THE COMPANY WAIVES TRIAL BY JURY
IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE
NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR
THEREWITH.
17.5 INDEMNIFICATION. The Company agrees, to the fullest
extent permitted by applicable law, to indemnify, exonerate and
hold you and each of your officers, directors, employees and agents
(collectively the "INDEMNITEES" and individually an "INDEMNITEE")
free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities and damages, and expenses in
connection therewith, including without limitation reasonable
counsel fees and disbursements (collectively the "INDEMNIFIED
LIABILITIES") incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to, any transaction
financed or to be financed in whole or in part directly or
indirectly with proceeds from the sale of any of the Notes or the
execution, delivery, performance or enforcement of this Agreement
or any instrument contemplated hereby by any of the Indemnitees,
except as to any Indemnitee for any such Indemnified Liabilities
arising on account of such Indemnitee's gross negligence or willful
misconduct; and if and to the extent the foregoing undertaking may
be unenforceable for any reason, the Company agrees to make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
The obligations of the Company under this section shall survive
payment of the Notes.
17.6 GOVERNING LAW. This Agreement and the Notes shall
be governed by and construed in accordance with the laws of the
State of New York.
17.7 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect any of the terms hereof.
17.8 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
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If you are in agreement with the foregoing, please sign
the form of acceptance in the space below provided, whereupon this
Agreement shall become a binding agreement between you and the
Company.
Very truly yours,
THE TURNER CORPORATION
By DONALD G. SLEEMAN DAVID J. SMITH
Vice President Senior Vice President and
and Treasurer Chief Financial Officer
The foregoing Agreement is
hereby accepted as of the
date first above written.
[The forms of signature by each of the purchasers, as they appear
in the respective Note Purchase Agreements, are set forth below.]
THE TRAVELERS INSURANCE COMPANY
By T.M. TORREY
Second Vice President
THE TRAVELERS INDEMNITY COMPANY
By T.M. TORREY
Second Vice President
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By ROBERT M. FLOWERS
Investment Officer
EQUITABLE VARIABLE LIFE INSURANCE
COMPANY
By ROBERT M. FLOWERS
Investment Officer
THE BANK OF NEW YORK, AS TRUSTEE OF
THE TRUST MAINTAINED UNDER THE
EMPLOYEES' CASH BALANCE RETIREMENT
PLAN OF THE TURNER CORPORATION
By JOHN V. STENERSON
Vice President
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TABLE OF CONTENTS
Page
SECTION 1. ISSUANCE OF NOTES. . . . . . . . . . . . . . . . . 1
1.1 Authorization. . . . . . . . . . . . . . . . . . . 1
1.2 Purchase and Sale of Notes; the Closing. . . . . . 1
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY. . . . . . . . . . . . . . . . . . . . . 2
2.1 Organization, Qualification, Authorization.. . . . 2
2.2 Business, Properties and Other Information.. . . . 2
2.3 Incorporation, Good Standing and Ownership of
Subsidiaries.. . . . . . . . . . . . . . . . . . 3
2.4 Financial Statements.. . . . . . . . . . . . . . . 4
2.5 Compliance with Laws, Other Instruments, Etc.. . . 4
2.6 No Defaults Under Existing Debt. . . . . . . . . . 5
2.7 Governmental Authorizations, Etc.. . . . . . . . . 5
2.8 Litigation; Observance of Statutes,
Regulations and Orders.. . . . . . . . . . . . . 5
2.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Title to Properties; Possession Under Leases.. . . 6
2.11 Licenses, Permits, Etc.. . . . . . . . . . . . . . 6
2.12 Compliance with ERISA. . . . . . . . . . . . . . . 6
2.13 Private Offering.. . . . . . . . . . . . . . . . . 7
2.14 Use of Proceeds; Margin Regulations. . . . . . . . 7
2.15 Foreign Assets Control Regulations.. . . . . . . . 8
2.16 Investment Company Act and Holding Company
Status.. . . . . . . . . . . . . . . . . . . . . 8
2.17 Environmental Matters. . . . . . . . . . . . . . . 8
2.18 Solvency.. . . . . . . . . . . . . . . . . . . . . 10
2.19 Other Agreements.. . . . . . . . . . . . . . . . . 10
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER.. . . . . . . . . . . . . . . . . . . 10
3.1 Purchase of Notes. . . . . . . . . . . . . . . . . 10
3.2 Source of Funds. . . . . . . . . . . . . . . . . . 10
SECTION 4. CONDITIONS OF CLOSING. . . . . . . . . . . . . . . 11
4.1 Proceedings. . . . . . . . . . . . . . . . . . . . 11
4.2 Representations and Warranties; No Default.. . . . 11
4.3 Opinions of Counsel. . . . . . . . . . . . . . . . 12
4.4 Guaranty Agreement; Intercreditor Agreement. . . . 12
4.5 Private Placement Number.. . . . . . . . . . . . . 12
4.6 Legality.. . . . . . . . . . . . . . . . . . . . . 12
4.7 Payment of Fees. . . . . . . . . . . . . . . . . . 12
4.8 Other Purchasers.. . . . . . . . . . . . . . . . . 12
SECTION 5. PREPAYMENTS OF NOTES; PURCHASE OF NOTES. . . . . . 13
5.1 Prepayments. . . . . . . . . . . . . . . . . . . . 13
5.2 Prepayment.. . . . . . . . . . . . . . . . . . . . 13
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5.3 Notice of Optional Prepayment; Make-Whole
Computation. . . . . . . . . . . . . . . . . . . 13
5.4 Partial Prepayments Pro Rata.. . . . . . . . . . . 14
5.5 Purchase of Notes. . . . . . . . . . . . . . . . . 14
SECTION 6. FINANCIAL STATEMENTS AND INFORMATION.. . . . . . . 14
SECTION 7. INSPECTION OF PROPERTIES AND BOOKS; CONFIDENTIALITY. 17
SECTION 8. COVENANTS. . . . . . . . . . . . . . . . . . . . . 18
8.1 Payment of Principal, Interest and Premium, Etc. . 18
8.2 To Keep Books, Reserves; Corporate Existence;
Payment of Taxes; Maintenance of
Properties; Compliance with Laws;
Insurance; Etc.. . . . . . . . . . . . . . . . . 19
8.3 Lines of Business. . . . . . . . . . . . . . . . . 20
8.4 Compliance with ERISA. . . . . . . . . . . . . . . 20
8.5 Debt, Etc. . . . . . . . . . . . . . . . . . . . . 21
8.6 Liens. . . . . . . . . . . . . . . . . . . . . . . 22
8.7 Maintenance of Financial Conditions. . . . . . . . 24
8.8 Asset Sales. . . . . . . . . . . . . . . . . . . . 24
8.9 Limitation on Investments, Etc.. . . . . . . . . . 25
8.10 Consolidation, Merger or Disposition of
Assets as an Entirety. . . . . . . . . . . . . . 26
8.11 Agreements Restricting Dividends.. . . . . . . . . 28
8.12 Transactions with Affiliates.. . . . . . . . . . . 28
SECTION 9. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 28
9.1 Definitions. . . . . . . . . . . . . . . . . . . . 28
9.2 Accounting Terms.. . . . . . . . . . . . . . . . . 37
SECTION 10. EVENTS OF DEFAULT; REMEDIES. . . . . . . . . . . . 37
10.1 Events of Default; Acceleration of Maturity
and Rescission.. . . . . . . . . . . . . . . . . 37
10.2 Suits for Enforcement. . . . . . . . . . . . . . . 40
10.3 Remedies Cumulative. . . . . . . . . . . . . . . . 41
10.4 Remedies Not Waived. . . . . . . . . . . . . . . . 41
SECTION 11. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.. . . 41
SECTION 12. LOST, ETC., NOTES. . . . . . . . . . . . . . . . . 42
SECTION 13. AMENDMENT AND WAIVER.. . . . . . . . . . . . . . . 42
SECTION 14. HOME OFFICE PAYMENT. . . . . . . . . . . . . . . . 43
SECTION 15. LIABILITIES OF THE PURCHASER.. . . . . . . . . . . 44
SECTION 16. CERTAIN TAXES. . . . . . . . . . . . . . . . . . . 44
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SECTION 17. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 44
17.1 Expenses.. . . . . . . . . . . . . . . . . . . . . 44
17.2 Reliance on and Survival of Representations. . . . 45
17.3 Successors and Assigns.. . . . . . . . . . . . . . 45
17.4 Communications.. . . . . . . . . . . . . . . . . . 45
17.5 Indemnification. . . . . . . . . . . . . . . . . . 46
17.6 Governing Law. . . . . . . . . . . . . . . . . . . 46
17.7 Headings.. . . . . . . . . . . . . . . . . . . . . 46
17.8 Counterparts.. . . . . . . . . . . . . . . . . . . 46
SCHEDULE I -- Names and Addresses of Purchasers
EXHIBIT A -- FORM OF NOTE
EXHIBIT B -- FORM OF GUARANTY AGREEMENT
EXHIBIT C -- FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
EXHIBIT D-1 -- FORM OF OPINION OF COUNSEL TO THE COMPANY
EXHIBIT D-2 -- FORM OF OPINION OF SENIOR VICE PRESIDENT AND
GENERAL COUNSEL TO THE COMPANY
EXHIBIT E -- FORM OF INTERCREDITOR AGREEMENT
SCHEDULE 2.2 -- DISCLOSURE INFORMATION
SCHEDULE 2.3 -- SUBSIDIARIES
SCHEDULE 2.6 -- EXISTING DEBT AND LIENS
SCHEDULE 2.17 -- ENVIRONMENTAL MATTERS
SCHEDULE 8.9 -- EXISTING INVESTMENTS
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THE TURNER CORPORATION
DIRECTORS' RETIREMENT PLAN
This is the Directors' Retirement Plan (the "Plan") of
The Turner Corporation (the "Company"), which was adopted by the
Board of Directors of the Company on December , 1994.
1. Purpose of the Plan. The purpose of the Plan is to
provide retirement benefits to persons who, while not employed by
the Company or any of its subsidiaries, served as Directors of the
Company. These retirement benefits are given to those persons in
recognition of the services they rendered to the Company and its
shareholders while serving as directors of the Company.
2. Participants. Each person who has served or serves in
the future as a Non-Employee Director will be a participant in the
Plan (a "Participant"). A "Non-Employee Director" is a member of
the Board of Directors of the Company who is not an employee of the
Company or of any entity 50% or more of the equity of which is
owned by the Company.
3. Retirement Benefits. (a) Each Participant will receive
Retirement Payments during each calendar year in which the
Participant is alive following the later of (i) the year in which
the Participant ceased or ceases to be a Director of the Company,
and (ii) the year in which the Participant had or has his or her<PAGE>
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seventieth birthday, except that if a person ceases to be a
Director of the Company because of physical or mental disability
which the Board of Directors determines makes it impracticable for
the person to continue as a Director of the Company, Retirement
Payments to that person will begin in the calendar year following
the year in which the person ceases to be a Director of the
Company, without regard to whether that is before or after the
person's seventieth birthday. Retirement Payments to a Participant
in a calendar year will be paid in equal quarterly installments on
the first day of January, April, August and October of the year.
(b) The Retirement Payments in a calendar year to a
Participant whose service as a Non-Employee Director (including
service prior to the date of this Plan) totals at least five years
will be equal to the amount paid during that calendar year to
Non-Employee Directors for serving on the Board of Directors
(without including any compensation they receive for serving on
Committees of the Board of Directors).
(c) The Retirement Payments in a year to a Participant
whose service as a Non-Employee Director (including service prior
to the date of this Plan) will be (i) the payments the person would
have received if the person had served as a Non-Employee Director
for a total of at least five years, times (ii) a fraction the
numerator of which is the number of full years (with partial years
aggregated) the person served as a Non-Employee Director and the
denominator of which is five.
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(d) Notwithstanding what is said in subparagraphs (a),
(b) and (c), no Retirement Payments will be made to any Partici-
pants prior to January 1, 1996, and no Participant will have any
right to receive payments after January 1, 1996 with regard to
Retirement Payments the Participant would have received prior to
January 1, 1996 but for the provisions of this subparagraph (c).
4. Effects of Change of Control. If there is a Change in
Control, the following will occur:
(a) Each person who is serving as a Non-Employee
Director immediately prior to the Change of Control will be treated
for the purposes of this Plan, including but not limited to for the
purpose of determining whether he or she had served as a
Non-Employee Director for at least five years, as though he or she
would continue to serve as a Non-Employee Director until the Annual
Meeting of Shareholders of the Company following his or her
seventieth birthday.
(b) At or before the time the Change of Control occurs
(or, if that is not possible, as soon as practicable after the
Change of Control occurs), the Company will purchase for each
Participant from an insurance company rated by Best's Insurance
Reports as A or better an annuity contract under which that
insurance company will agree make payments to the Participant which
are identical as to amount and date of payment with the payments
the Participant is or would become entitled to receive under the
3<PAGE>
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Plan assuming (i) if the Participant is a Non-Employee Director at
the time of the Change of Control, that person will remain a
Non-Employee Director until, and will cease to be a Non-Employee
Director on, the Participants' seventieth birthday, and (ii) the
fee paid to Non-Employee Directors each calendar year after the
Change of Control occurs will be (i) the annual fee being paid to
Non-Employee Directors immediately before the Change of Control
occurs, increased each year by a percentage equal to the yield on
ten-year United States Treasury bonds on the thirtieth day before
the day on which the Change of Control takes place. For the
purposes of this Plan, (A) there will be a "Change of Control" if,
and at the time when, (x) securities which entitle the holders to
cast more than 30% of the votes in elections of directors (other
than solely as a result of a failure to pay dividends on preferred
shares) are acquired by any person (as that term is used in
Sections 13(d), including Section 13(d)(3) and Section 14(d),
including Section 14(d)(2), of the Securities Exchange Act of 1934)
after the date this Plan is adopted, (y) the Board of Directors
determines that a tender offer statement filed by any person (as
defined in clause (x)) with the Securities and Exchange Commission
indicates an intention on the part of that person to acquire
control of the Company, or (z) during any period of 24 consecutive
months, individuals who at the beginning of the period were members
of the Board of Directors of the Company cease to constitute a
majority of the members of the Board of Directors, and (B) the
yield on ten-year United States Treasury bonds on a day will be the
mid-afternoon yield quotation issued by the Federal Reserve Bank of
4<PAGE>
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New York for that day (or, if that day is not a day for which the
Federal Reserve Bank of New York issues quotations, on the next
preceding day for which it issues quotations) with regard to United
States Treasury bonds maturing as early as possible ten years after
that day.
5. Interpretations. Any interpretations by the Board of
Directors of the terms of this Plan will be binding on all
Participants, except that an interpretation by the Board of
Directors made after there has been a Change of Control will be
binding on Participants only if it is determined by a court in a
proceeding in which the affected Participants are parties to be a
reasonable interpretation.
6. Governing Law. This Plan will be governed by, and
construed under, the laws of the State of New York.
7. Amendment and Termination. This Plan may be amended or
terminated at any time by the Board of Directors of the Company.
However, (i) neither an amendment to, nor termination of, this Plan
may deprive any Participant of any benefits to which the Partici-
pant is or will become entitled under this Plan (without taking
account of the amendment) by reason of service on the Board of
Directors of the Company prior to the date the Plan is amended or
terminated, including, but not limited to, benefits to which the
Participant is or will become entitled because of the operation of
Paragraph 4.
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EXHIBIT 11
THE TURNER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
PRIMARY 1994 1993 1992
Weighted average common and common
equivalent shares outstanding 5,186,879 5,186,442 5,074,943
Income (loss) before extraordinary
gain and cumulative effect of
accounting change,less Series B
preferred dividends (net of tax)
and Series C preferred dividends $1,822,000 ($8,035,000) $792,000
Extraordinary gain, net of tax - - 316,000
Cumulative effect of accounting
change,net of tax - - 1,454,000
Net income (loss) available
to common shareholders $1,822,000 ($8,035,00) $2,562,000
Primary earnings (loss) per
common share:
Before extraordinary gain and
cumulative effect of
accounting change $ 0.35 ($1.55) $ 0.15
Extraordinary gain - - 0.06
Cumulative effect of
accounting change - - 0.29
Net income (loss) per common
share $0.35 ($1.55) $0.50
FULLY DILUTED
Weighted average shares outstanding used
in the computation of primary
earnings per share 5,186,879 5,186,442 5,074,943
Conversion of Series B
convertible preferred stock
to common stock 848,956 849,011 849,494
Weighted average common and
common equivalent shares
outstanding 6,035,835 6,035,453 5,924,437
Income (loss) before
extraordinary gain and
cumulative effect of accounting
change, less Series C preferred
dividends and Series B preferred
dividend differential, net of tax $1,822,000 ($8,035,000) $868,000
Extraordinary gain, net of tax - - 316,000
Cumulative effect of
accounting change, net of tax - - 1,454,000
Net income (loss) available
to common shareholders $1,822,000 ($8,035,000) $2,638,000
Fully diluted earnings per common share:
Before extraordinary gain and
cumulative effect of accounting
change $0.30 ($1.33) $0.15
Extraordinary gain - - 0.05
Cumulative effect of accounting
change - - 0.25
Net income (loss) per common
share $0.30 ($1.33) $0.45
Note: The Series C Convertible Preferred Stock and the
Convertible Debenture are antidilutive.
EXHIBIT 21
Subsidiaries Of The Registrant
Percentage
Jurisdiction of Voting Securities
Incorporation Held
Ameristone, Incorporated Delaware 100
Burwharf Corporation Delaware 100
Mideast Construction Services, Inc. Delaware 100
Turner Investment Corporation Delaware 100
Universal Construction Company Inc. Delaware 100
Trans-Con of Delaware Inc. Delaware 100
TDC of Texas Delaware 100
Turner Construction Company New York 100
Turner Construction Company of Texas Texas 100
The Lathrop Company, Inc. Delaware 100
Service Products Buildings, Inc. Ohio 100
Auburndale Company Inc. Ohio 100
Turner Caribe, Inc. Delaware 100
Caribe Investment Corporation Delaware 100
Offshore Services, Inc. Delaware 100
Turner International (U.S.V.I.), Inc. Delaware 100
Turner Development Corporation Delaware 100
TDC Corp. of Florida Delaware 100
Turner International Industries, Inc. Delaware 100
Turner (East Asia) Pte. Limited Singapore 100
Turner International Industries (UK)
Limited England 100
Turner International Limited Bermuda 100
Turner International (Mirconesia) Inc. Delaware 100
Turner Overseas Services Limited Delaware 100
Turner International (Pakistan), Inc. Delaware 100
Rickenbacker Holdings, Inc. Delaware 100
Rickenbacker Development Corporation Delaware 100
Other subsidiaries of the company are omitted since such subsidiaries,
considered in the aggregate as a single subsidiary,would not constitute
a significant subsidiary. All of the foregoing subsidiaries are consolidated
in the financial statements.
