SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission File Number 1-8719
THE TURNER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3209884
(State or other jurisdiction of (I.R.S. Employer Id. No.)
incorporation or organization)
375 Hudson Street New York, New York 10014
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (212) 229-6000
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days. Yes X
No .
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of May 8,
1995: 5,172,977.
-2-
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company or group of companies for which report is
filed:
THE TURNER CORPORATION AND CONSOLIDATED SUBSIDIARIES
The consolidated balance sheet as of March 31, 1995,
the consolidated statements of operations and retained
earnings and the consolidated statements of cash flows
for the three months ended March 31, 1995 and 1994 are
unaudited, but, in the opinion of the company's
management reflect all adjustments, consisting only of
normal recurring adjustments, which are necessary to
present fairly the financial condition and results of
operations at those dates and for those periods. The
results of operations for any three month period is not
necessarily indicative of results for a full year. It
is suggested that these financial statements be read in
conjunction with the audited financial statements and
notes thereto included in the company's latest annual
report.
-3-
THE TURNER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
WITH COMPARATIVE FIGURES FOR DECEMBER 31, 1994
(in thousands except share amounts)
(unaudited)
March 31, December 31,
1995 1994
Assets:
Cash and cash equivalents $34,059 $54,756
Marketable Securities 4,475 4,251
Construction receivables:
Due on contracts including 387,356 356,160
retainage
Estimated unbilled construction 62,280 70,733
costs and related earnings
Real Estate 105,272 106,300
Property and equipment, net 17,873 17,490
Prepaid pension cost 63,858 64,259
Other assets 33,135 31,140
Total assets $708,308 $705,089
Liabilities:
Construction accounts payable:
Trade $285,742 $276,391
Due on completion of contracts 125,789 118,959
Accrued estimated work completed 59,166 67,196
Notes payable and convertible 102,768 106,879
debenture
Deferred income taxes 12,780 12,731
Other liabilities 61,738 63,717
Total liabilities 647,983 645,873
Stockholders' Equity:
Series C, 8-1/2% cumulative
convertible
preferred stock, $1 par value 9 9
Series B, cumulative convertible,
preferred stock, $1 par value 849 849
Common stock, $1 par value 5,221 5,200
Paid in capital 37,926 37,778
Net unrealized loss on marketable (171) (276)
securities
Retained earnings 27,205 26,656
71,039 70,216
Less: Loan to Employee stock (10,182) (10,468)
ownership plan
Treasury stock, at cost (532) (532)
Total stockholders' equity 60,325 59,216
Total liabilities and stockholders' $708,308 $705,089
equity
See Notes to Consolidated Financial Statements
-4-
THE TURNER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS of OPERATIONS AND RETAINED EARNINGS
(in thousands, except share amounts)
(unaudited)
Three Months Ended March 31,
1995 1994
Value of construction completed $700,806 $592,390
Earnings from construction contracts $15,951 $15,516
Losses from real estate operations (542) (787)
Gross earnings 15,409 14,729
Operating expenses - construction 8,146 9,358
Operating expenses - real estate 455 824
General & administrative expenses 4,868 3,105
13,469 13,287
Other income (loss), net (214) (320)
Income before income taxes 1,726 1,122
Income tax provision 720 63
Net income 1,006 1,059
Dividends on preferred stock (457) (457)
Net income available for common 549 602
stockholders
Retained earnings, beginning of 26,656 24,834
period
Retained earnings, end of period $27,205 $25,436
Earnings per common share:
Primary $0.11 $0.12
Fully diluted $0.09 $0.10
Weighted average common and common
equivalent
shares outstanding
Primary 5,215,340 5,159,632
Fully diluted 6,064,296 6,016,534
See Notes to Consolidated Financial Statements
-5-
THE TURNER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands, except share amounts)
(Unaudited)
Three Months Ended March 31,
1995 1994
Cash flows from operating activities:
Net income 1,006 1,059
Adjustments to reconcile net
income to net cash flows
from operating activities:
Equity in affiliates' net loss 573 606
Depreciation and amortization 1,946 2,420
Net periodic pension charge (credit) 401 (2,375)
Changes in operating assets
and liabilities:
Decrease (increase) in (22,744) 7,413
construction receivables
Increase (decrease) in 8,151 (38,897)
construction payables
Decrease in restructuring (636) (297)
reserve
Increase in other assets (5,141) (568)
and liabilities, net
Net cash used in operating (16,444) (30,639)
activities
Cash flows from investing activities:
Proceeds from sale of marketable - 8,565
securities
Purchases of marketable (65) (63)
securities
Distributions from joint ventures 372 -
Proceeds from real estate sales 160 415
Increase in real estate (443) (663)
Purchases of property & equipment (1,266) (999)
Proceeds from sale of property & 196 47
equipment
Repayments on notes receivable 1,099 1,123
Net cash provided by investing 53 8,425
activities
Cash flows from financing activities:
Common stock issued 169 252
Cash dividends to preferred (650) (650)
shareholders
Repayments from loan to Employee 286 344
Stock Ownership Plan
Proceeds from borrowing 22,326 33,060
Payments on borrowing (26,437) (8,021)
Net cash provided by (used in) (4,306) 24,985
financing activities
Net increase (decrease) in cash and (20,697) 2,771
cash equivalents
Cash and cash equivalents at 54,756 25,485
beginning of period
Cash and cash equivalents at end of 34,059 28,256
period
Noncash investing activities:
Net unrealized gain (loss) on $105 ($130)
marketable securities
Notes provided upon the sale of - 138
real estate
See Notes to Consolidated Financial Statements
-6-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share amounts)
1.Value of construction completed represents
construction costs incurred and earnings during the
year as follows:
Three Months Ending
March 31,
1995 1994
Revenue from construction contracts
Construction costs incurred by the company $512,079 $388,875
Company's share of joint venture
construction costs 73,443 38,751
Earnings from construction contracts 15,951 15,516
Total revenue from construction contracts 601,473 443,142
Construction costs incurred by owners in
connection with work under construction
management and similar contracts 99,333 149,248
Value of construction completed $700,806 $592,390
2. Losses from real estate operations consist of revenues
and related costs as follows:
Three Months Ending
March 31
1995 1994
Real estate sales $ 175 $ 565
Costs of sales (175) (565)
Rental and other income 2,469 2,965
Direct cost of real estate operations (3,011) (3,752)
Losses from real estate operations $ (542) $ (787)
3.Interest costs incurred and expensed for the three
months ended March 31, 1995 and 1994 were $2,346 and
$1,835, respectively.
4.Effective January 1, 1995, the company adopted
Statement of Financial Accounting Standards (SFAS)
No. 114 "Accounting by Creditors for Impairment of a
Loan" which was amended by Statement of Financial
Accounting Standards No. 118. Under SFAS Nos. 114
and 118, a loan must 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
impact of the adoption of SFAS Nos. 114 and 118 was
not material to the consolidated financial
statements.
-7-
Item 2.Management's Discussion & Analysis of Financial
Condition and Results of Operations
Results of operations in the three months ended March
31, 1995 produced net income of $1.0 million
essentially unchanged from the corresponding period of
1994.
Value of construction completed for the three months
ended March 31, 1995, increased by 18% from the level
recorded during the corresponding period in 1994 to
$701 million. Earnings from construction contracts
increased 3% from the prior year level to $16 million.
The increase in construction activity reflects a
continuation of the levels experienced in the fourth
quarter of 1994, which benefited from an uncommonly
mild winter throughout the Midwest and Northeast.
Construction earnings for the three months ended March
31, 1994 reflected significant savings recognized on
completed contracts which were not repeated in 1995.
Losses from real estate operations for the three months
ended March 31, 1995 decreased 31% to $542,000 from the
corresponding period in 1994. This decrease is
primarily the result of reduced property management
expenses and interest on lower debt levels.
Operating and general and administrative expenses
during the three months ended March 31, 1995, increased
slightly by 1% from the corresponding period of 1994 to
$13.5 million primarily due to higher interest rate
levels and increases in benefit costs. Operating
expenses for construction and real estate showed
significant declines from the corresponding period in
1994 as a result of restructuring steps taken in the
second quarter of 1994.
During the first quarter of 1995, approximately
$636,000 was charged to the remaining restructuring
reserve consisting primarily of the finalization of
reorganization steps taken in prior years.
Other income for the three months ended March 31, 1995
amounted to a loss of $214,000 mostly due to losses in
overseas operations as a result of continued soft
market conditions.
The construction industry in the United States has
continued to experience spotty economic recovery.
Additionally, the present soft economic conditions in
Western Europe have reduced opportunities for the
company's Turner Steiner venture. To mitigate the
impact of these developments, the company continues to
seek new business in construction sectors less affected
by the cyclical economic decline. The company is also
continuing its efforts to maintain operating
efficiencies experienced by its restructuring program.
At March 31, 1995, the company's backlog of value of
construction to be completed was $4.52 billion and
anticipated earnings associated with backlog from
construction contracts was $97.2 million, compared to
$4.55 billion and $92.6 million, respectively.
Estimated earnings from construction contracts cannot
and should not be used as the basis of predictions with
respect to future net income.
-8-
Because of the constantly changing proportion of
construction management contracts, consulting work,
construction contract types (cost plus percentage fee,
cost plus fixed fee, guaranteed total and lump sum),
and other factors, the relationship of value of work
completed and earnings from construction contracts is
not necessarily meaningful in the short run.
The company's cash flow for the three months ended
March 31, 1995 resulted in a net decrease of funds of
$20.7 million. Cash flows used in operating activities
amounted to $16.4 million due primarily to increases in
construction receivables. Cash flows from investing
activities amounted to $53,000 which is principally due
to the payments on notes receivable and the
distributions from construction joint ventures offset
by the purchase of property and equipment. Cash flows
used in financing activities amounted to $4.3 million
primarily due to pay downs on existing credit
facilities. The company's management believes that the
company's financial condition and available credit
facilities at March 31, 1995 are sufficient to support
the present and prospective levels of the company's
operations.
-9-
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Earnings Per Share for
the three months ended
March 31, 1995 and 1994.
(b)During the three months ended March 31, 1995 no
Form 8-K was required to be filed reporting any
material or unusual charges or credits to income, or
any change in independent accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized:
THE TURNER CORPORATION
(Registrant)
Date: May 12, 1995 H.J. Parmelee
(Signature)
H.J. Parmelee
President
Date: May 12, 1995 D.J. Smith
(Signature)
D.J. Smith
Senior Vice President
and Chief Financial Officer
THE TURNER CORPORATION AND SUBSIDIARIES Exhibit 11
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
1995 1994
PRIMARY
Weighted average common shares outstanding 5,160 5,103
Common stock equivalents (assuming the use of the
proceeds
from their exercise or issuance to acquire
treasury stock using
the average quarterly market price) granted
under employee stock
option and stock purchase plans 55 57
Weighted average common and common equivalent 5,215 5,160
shares outstanding
Earnings available to common shareholders less
dividends
on preferred stock, net of tax $549 $602
Earnings per common share $0.11 $0.12
FULLY DILUTED
Weighted average shares outstanding used in the
computation of primary
earnings per share 5,160 5,103
Common stock equivalents (assuming the use of the
proceeds from
their exercise or issuance to acquire treasury
stock using the
quarter ended market price) granted under
employee stock
option and stock purchase plans 55 57
Conversion of convertible preferred stock to 849 849
common stock
Stock option equivalent shares - 8
Weighted average common and common equivalent 6,064 6,017
shares outstanding
Earnings available for common shareholders less
preferred dividend differential $549 $602
Earnings per share $0.09 $0.10
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<LEGEND>
The schedule contains certain 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 share amounts are in thousands.
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