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, 1997
[ ]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 other 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. [ ]
As of March 23, 1998, 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
$119,441,960.
As of March 23, 1998, 5,446,949 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.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER
THE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information contained herein, this Annual
Report on Form 10-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 which
involve certain risks and uncertainties. The Company's actual results
or outcomes may differ materially from those anticipated. Important
factors that the Company believes might cause such differences are
discussed in the cautionary statements accompanying the forward-
looking statements in this Annual Report on Form 10-K. In assessing
forward-looking statements contained herein, readers are urged to
carefully read those statements. When used in this Annual Report on
Form 10-K, the words "estimate," "anticipate," "expect," "believe,"
and similar expressions are intended to identify forward-looking
statements.
PART I
Item 1 Business
The Turner Corporation (the "Company") is a holding company that is
predominantly engaged through its subsidiaries in general building
construction and construction management in the United States and
abroad, and also has limited real estate operations 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.
Financial information about the Company's construction and real
estate segments appears in the Consolidated Financial Statements and
in Footnote 15 on page 29 in Part II, Item 8 of this report.
At December 31, 1997, The Turner Corporation and
subsidiaries employed approximately 3,000 staff employees, of
which 1,700 held supervisory positions and 1,300 held non-
supervisory positions.
Construction Business
The Company's construction business is conducted by a number of
construction subsidiaries (collectively, "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 full
service regional offices and satellite branch offices. Its objective
is to be a major builder in each city or region in which it has an
office.
The Company's principal construction subsidiary is Turner
Construction Company. Universal Construction Company Inc. and The
Lathrop Company, 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 and Midwest.
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 1997, 1996 and
1995, general building contracting activities represented 87%, 86%,
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
mechanical 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 1997, 1996 and 1995,
construction management services and consulting represented 13%,
14% 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 fixed price contracts, cost-plus
fixed fee contracts and variations of these types of contracts,
including cost-plus guaranteed maximum price contracts. The majority
of Turner Construction's business involves negotiated contracts. The
remainder of its contracts are secured by competitive bidding.
As the various segments of the United States non-residential
construction market continue to shift, the Company responds to and
positions itself to take advantage of the stronger market segments.
During the last several years, the Company's construction subsidiaries
increased their focus on amusement including stadiums, arenas,
speedways, and similar projects, manufacturing including research and
development and pharmaceutical, education, healthcare, public, and
aviation. Approximately 71% in dollar value of the contracts
awarded to the construction subsidiaries in 1997 were in these areas.
The remaining 29% of the contracts awarded were in the Company's
commercial market segment. Year-to-year operations may be adversely
affected by general economic conditions which are unfavorable for
business and industry.
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,
construction management and construction consulting services outside
Turner Construction's and Steiner's traditional home markets.
In South America, Turner Construction Company is a partner with
Birmann SA do Brasil in a joint venture doing business as Turner South
America. The purpose of the joint venture is to provide general
building construction, 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.
During 1997, the company completed work on the Swiss Bank
Headquarters in Stamford, Connecticut and began work on the Bristol-
Myers Squibb Laboratory Renovation project in New Brunswick, New
Jersey, the new Tiger Stadium in Detroit, Michigan, the Naval Sea
Systems Command Headquarters (NAVSEA) for the Navy in Washington, DC,
clean room renovations for Applied Materials, Inc. in Santa Clara,
California and construction management services for the Los Angeles
Unified School District for their modernization and new construction
program within the San Fernando Valley region. In total, the Company
completed approximately 24 million square feet of construction in
1997.
The United States building construction industry is intensely
competitive and Turner Construction competes with other major
contractors as well as with small contractors. Competition in the
industry takes 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 offices, Turner Construction
competes directly with those locally based contractors. Exact
statistical data is not available for determining the relative size of
construction companies. However, based on the contract value of
construction contracts secured in 1997 and published industry data,
Turner Construction believes that it is one of the largest general
building contractors operating principally within the United States.
A portion of the Company's construction activity is performed under
payment and performance bonds obtained from the Company's 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, to date this limitation has not
restricted the Company's ability to secure new work. There could be
circumstances, however, when this limitation could influence the
Company's selection of prospective projects to pursue.
At December 31, 1997, the anticipated earnings associated with
backlog from work to be completed under general building construction,
construction management and construction consulting contracts was
$104.7 million. Anticipated earnings from work to be completed on
contracts at December 31, 1996 was $99.5 million. Approximately 34%
of the December 31, 1997 earnings backlog from construction contracts
relates to work expected to be performed during 1999 and beyond.
Backlog is important to long-range planning and continuity of work for
the Company's permanent staff. However, anticipated earnings from
construction contracts should not be used as the basis of predictions
with respect to future operating results.
The anticipated value of work associated with backlog from work to
be completed under general building construction, construction
management and construction consulting contracts was $4.01 billion at
December 31, 1997. The anticipated value of work to be completed on
contracts at December 31, 1996 was $4.08 billion. Approximately 32%
of the December 31, 1997 construction backlog is expected to be
completed during 1999 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 also includes costs directly incurred by owners in connection with
work under construction management and similar contracts. It is
essentially a measure of construction activity.
Because of the varying proportion of general building construction,
construction management and construction consulting work, there is no
direct correlation between inflation and the anticipated work or
earnings associated with backlog.
At December 31, 1997, Turner Construction employed approximately
2,900 staff employees, of whom about 1,600 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 1997, 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"). During the early 1980's, the
Company acquired and developed a number of real estate properties. In
1987, the Company decided to cease its new development activities.
Since that time, the Company's real estate portfolio has been reduced
from $200 million at the end of 1987 to $44 million at the end of
1997. As of December 31, 1997, the real estate portfolio, which is
owned either directly or through joint venture interests, includes an
air cargo distribution facility, commercial office properties, and
undeveloped land. RHI owns an air cargo distribution facility and is
the ground lessee on the underlying land located at the Rickenbacker
Air Industrial Park in Columbus, Ohio. In 1995, the Company
renegotiated a lease with the existing lessee of such facility and
land extending the maturity date from 1996 to 2010.
During 1997, the Company sold three developed properties, a real
estate joint venture interest, a number of condominium units, and two
land parcels all at their approximate carrying value. The Company
continues to seek purchasers for its remaining real estate properties
if they can be sold at prices which management believes reflect
reasonable values. Management anticipates continued dispositions of
its real estate properties at such values, although the undeveloped
land parcels may be held for a longer period as land values have
generally been slower to recover than developed properties in
virtually all markets.
At December 31, 1997, TDC had 3 employees, who were management and
marketing personnel.
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 Company, 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 1997 was $2.53 million. Significant
construction projects typically have temporary field offices.
Turner Construction operates two equipment and storage yards,
located in Newark, New Jersey and Cincinnati, Ohio for the storage and
repair of its construction tools and equipment. Turner Construction
owns the Ohio storage and repair yard and leases the New Jersey
facility. Universal Construction Company 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 Company Inc. and The
Lathrop Company, Inc. each own construction equipment, earth-moving
equipment and small tools.
Item 3 Legal Proceedings
The Company is a defendant in various litigation incident to its
business and in some instances the amounts sought include substantial
claims and counterclaims. 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.
Each year the Company incurs substantial legal expenses in pursuit
of its claims or in defense against actions taken against it due to
the risk associated with the industry and the number of disputes that
often occur.
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
<TABLE>
<S> <C> <C> <C>
1997 High Low Close
First $14.25 $10.25 $12.00
Second 17.50 12.00 15.625
Third 23.00 15.625 21.25
Fourth 26.625 19.625 26.375
1996 High Low Close
First $10.125 $ 8.50 $10.00
Second 12.00 9.75 11.50
Third 11.625 10.125 11.125
Fourth 11.375 8.25 10.25
</TABLE>
No dividends were declared or paid in 1997 or 1996. As of March 23, 1998,
there were approximately 2,143 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>
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
Value of construction
completed $3,639,754 $3,317,774 $3,281,495 $2,670,433 $2,790,371
Revenue from
construction contracts $3,170,744 $2,838,052 $2,727,001 $2,174,836 $2,098,247
Cost of construction
contracts 3,084,236 2,765,901 2,658,462 2,118,361 2,029,478
Earnings from
construction contracts $ 86,508 $ 72,151 $ 68,539 $ 56,475 $ 68,769
Income from construction
operations $ 18,185 $ 5,304 $ 11,285 $ 7,103(b)$2,422(c)
Income (loss) from real
estate operations (839) (383) (227) 1,312 (6,870)
Net income (loss) 5,893(a) (1,695) 1,274 3,650 (6,205)
Basic earnings (loss) per
common share:
Income (loss) before
extraordinary loss 1.28 (0.67) (0.11) 0.36 (1.58)
Net income (loss) .73 (0.67) (0.11) 0.36 (1.58)
Diluted earnings per common
share:
Income before extraordinary
loss 1.03 (d) (d) 0.30 (d)
Net income .59 (d) (d) 0.30 (d)
Dividends per Series C
preferred share 85.00 85.00 85.00 85.00 85.00
Dividends per Series D
preferred share 35.42 - - - -
Dividends per Series B
preferred share 2.16 2.16 2.16 2.16 2.16
Stockholders' equity $ 76,136 $ 60,130 $ 61,296 $59,216 $ 54,683
Weighted average common
shares outstanding 5,286,493 5,238,681 5,193,792 5,124,834 5,088,403
Total assets $ 972,687 $ 894,596 $ 823,963 $ 715,329 $ 671,081
Notes payable due
after one year and
convertible debenture $ 16,770 $ 62,593 $ 88,610 $ 94,892 $ 69,545
</TABLE>
(a) Includes extraordinary loss of $2,899, net of tax.
(b) Includes restructuring credits of $1,145.
(c) Includes restructuring charges of $8,500.
(d) Antidilutive
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations 1997 vs. 1996
The Company reported net income of $5.9 million in 1997 compared to
a net loss of $1.7 million in 1996. After taking into account
dividends paid to preferred shareholders, the Company reported $0.73
basic earnings per common share in 1997. This compares to a loss of
$0.67 per share in 1996. The 1997 results include the impact of a
$2.9 million extraordinary loss ($0.55 per share) due to the early
extinguishment of debt, net of tax. Results for 1996 include the
impact of losses relating to a construction project in Minneapolis,
and losses incurred by the Company's Caribbean operations. Diluted
earnings per common share for 1997 were $0.59 per share, net of the
extraordinary loss of $0.44 per share. Earnings per share before the
extraordinary loss totaled $1.28 per share for basic earnings and
$1.03 per share for diluted earnings.
Revenue from construction contracts continued its upward trend,
increasing $333 million in 1997 to $3.17 billion. This growth reflects
the continuation of a strong market across the country in non-
residential construction, along with a continued increase in the
percentage of work put in place from new contracts secured. In 1997,
the Company secured $3.37 billion of new work, of which $1.02 billion
or 30% was put in place in 1997. In 1996, the Company secured $3.43
billion of new work, of which $937.4 million or 27% was put in place
in 1996. This increase in new work put in place is primarily due to
stronger 1997 first quarter sales.
Construction operating and general and administrative expenses
increased 2% to $68.3 million in 1997 compared to $66.8 million in
1996. This increase is primarily due to expenses recognized for stock
awards and stock option grants to the Company's Officers and Board of
Directors.
Interest expense decreased $1.3 million (or 17%) to $6.4 million in
1997. This decrease is primarily the result of lower debt levels in
1997 compared to 1996. These results are described more fully in the
discussion that follows.
Construction
The value of construction completed, which includes in addition to
revenue, construction costs incurred by owners on construction
management and similar projects, increased $322 million to $3.64
billion in 1997, a record level for the Company. The Company's
revenue from construction contracts and costs of construction
contracts both increased by 12% from 1996 to $3.17 billion and $3.08
billion, respectively.
The value of new contracts secured in 1997 was $3.37 billion,
slightly down from the $3.43 billion secured in 1996. Although
contracts secured were slightly down in 1997, anticipated earnings
associated with these new contracts increased 7% from 1996. At
December 31, 1997, the Company's backlog of value of construction to
be completed was $4.01 billion and anticipated earnings associated
with backlog from construction contracts was $104.7 million (its
highest level in seven years), compared to $4.08 billion and $99.5
million, respectively, at December 31, 1996. These results continue
to reflect the growth of the Company's non-residential construction
market and the high level of construction activity throughout the
country.
Approximately 34% of the earnings backlog and 32% of the value of
construction backlog relates to work to be performed in 1999 and
beyond. Estimated earnings from construction backlog should not be
used as a basis for predicting future operating results.
Earnings from construction contracts improved 20% in 1997 to $86.5
million from $72.2 million in 1996. As a percentage of revenue,
earnings from construction contracts increased from 2.54% to 2.73%,
its highest level since 1993. These results reflect not only the
growth in construction revenues but also an improvement in margins for
new contracts secured over the past several years. During 1997,
additional losses on construction contracts of $2 million were
incurred by the Company's Caribbean operations. These losses were the
result of continued labor inefficiencies and corrective work. As
noted in 1996, the Caribbean operations had losses from construction
contracts of $4.9 million, $2.1 million and $7.7 million in 1996, 1995
and 1994, respectively, and as a result the Company stopped actively
pursuing any new construction contracts in the Caribbean and plans to
cease activities in 1998. Also included in 1996, was the recognition
of $5.0 million of losses on a contract in Minneapolis. These losses
were in addition to the $4.9 million loss on the Minneapolis project
in 1995. The losses on the Minneapolis project are principally
related to significant changes in the design and scope of the project,
which resulted in increased costs and time extensions, as well as
certain changes to original estimates of costs. The Company is
currently seeking additional revenue from the owner relating to the
design and scope changes beyond the original contract. There are no
future losses anticipated by the Company relating to its Caribbean
operations and the Minneapolis project that have not been previously
provided for in the Company's financial statements.
Work under construction management contracts as a percentage of
value of construction completed continued to decline, from 14% in 1996
to 13% in 1997. Construction management contracts normally involve
lower risk, and therefore carry lower fees, than other types of
contracts. The trend away from less profitable construction
management work as well as the ability to negotiate staff recoveries
has therefore contributed to the improvement in construction earnings.
The Company's sureties limit the annual amount of new payment and
performance bonds available to the Company. Each year this limit has
increased commensurate with the Company's growth in revenues. While
the limitation did not restrict the Company's ability to secure new
work in 1997, there could be circumstances where the limitation might
influence the selection of prospective projects.
Construction Operating and General and Administrative Expenses
Construction operating expenses, which are costs incurred by the
Company's construction operating units and subsidiaries that are not
directly attributable and charged to construction contracts, were
virtually unchanged in 1997, decreasing 1% to $52.5 million. The
Company's operating units and subsidiaries were able to achieve record
revenue levels without adding to operating costs. These operating
costs include estimating, purchasing, general office support and other
costs associated with the local offices of the construction operating
units and subsidiaries. As a percentage of construction revenue,
construction operating expenses decreased from 1.87% in 1996 to 1.66%
in 1997.
General and administrative expenses, representing corporate overhead
expenses, increased 14% to $15.8 million from $13.9 million in 1996.
This increase is primarily the result of expenses recognized for stock
awards and stock option grants to the Company's Officers and Board of
Directors. Included in 1996 were expenses related to management
changes, and the write-off of $1.3 million of goodwill associated with
two subsidiaries acquired in the mid 1980's that management determined
was impaired.
Real Estate
Losses from real estate operations amounted to $839,000 in 1997
compared to losses of $383,000 in 1996. The Company sold three
developed properties, a real estate joint venture interest, two land
parcels and a number of condominium units in 1997 as it continues to
dispose of properties at essentially their carrying value. In 1996,
the Company sold two developed properties and two land parcels, all at
their carrying value. Rental and other income and the cost of
operations declined by 47% and 42%, respectively, due to the sales of
properties in 1997 and 1996.
Losses from real estate operations for 1997 and 1996 included
depreciation and amortization expense of $2.3 million and $3.7
million, respectively. Because these expenses are non-cash in
nature, the Company realized positive cash flow for each of these
years, even after payment of interest on real estate debt.
As conditions continue to improve in the real estate market, the
Company will actively monitor the fair values of the properties and
the appropriate timing of disposition, and make adjustments to the
recoverable carrying values as necessary. Management believes the
timing of future sales may be accelerated given improved market
conditions, although a longer period may result for the undeveloped
land parcels as land values have generally been slower to recover than
developed properties.
Interest Expense and Other Income
Interest expense decreased 17% to $6.4 million in 1997 from $7.7
million in 1996. This decrease was due primarily to lower debt levels
as a result of real estate sales and debt amortization. In 1997, the
Company paid down various building mortgages and in December 1997
repaid the $39.5 million 11.74% Senior Notes. Interest expense also
decreased as a result of Karl Steiner Holding's election to convert
the 8 1/2% convertible debenture into 6,000 shares of Series D 8 1/2%
Convertible Preferred Stock.
Interest expense associated with real estate debt declined by 41%
due primarily to debt paydowns from the sale of properties. Interest
expense is further discussed in Notes 5 and 15 to the Consolidated
Financial Statements.
Other income in 1997 amounted to $5.0 million compared to $1.8
million in 1996. Increased other income is due to increased interest
income attributable to higher investment balances maintained by the
Company.
Income Taxes
The provision for income taxes resulted in an effective tax rate of
45% in 1997. The difference between this rate and the 34% statutory
rate is primarily attributable to state and local taxes. In 1996, the
Company had a substantial provision for income taxes even though it
had a loss before income taxes. This was primarily attributable to
state income and other taxes and the non-deductibility of certain
operating costs, primarily the write-off of goodwill.
The Company has recorded $9.9 million of deferred tax assets that
resulted principally from net operating loss carryforwards and
deductible temporary differences related to real estate properties.
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 employee benefit plans.
Fourth Quarter 1997 Compared to Third Quarter 1997
Results for the fourth quarter of 1997 produced net income of
$795,000 compared to net income of $2.2 million for the third
quarter. After taking into account dividends on preferred shares, the
Company reported basic earnings of $0.04 per common share in the
fourth quarter of 1997. In the third quarter of 1997, the Company
reported basic earnings of $0.32 per share. The fourth quarter
includes the impact of a $2.9 million extraordinary loss ($0.55 per
share) on the early extinguishment of debt, net of tax. Construction
revenue was $970.6 million for the fourth quarter compared to $987.5
million in the third quarter, and earnings from construction contracts
were $27.9 million and $21.4 million for the same periods,
respectively.
Fourth quarter operating and general and administrative expenses
amounted to $21.5 million compared to $17 million in the third
quarter. The increase was primarily attributable to the new incentive
compensation plan (Note 7).
Interest expense decreased $199,000 in the fourth quarter due
primarily to the sale of a real estate property with associated debt
and the prepayment of the Company's Senior Notes. Other income
increased $493,000 in the fourth quarter due primarily to higher
investment balances maintained in the fourth quarter.
Results of Operations 1996 vs. 1995
The Company reported a net loss of $1.7 million in 1996 compared to
net income of $1.3 million in 1995. After taking into consideration
the payment of dividends to preferred shareholders, the Company
reported a basic loss of $0.67 per common share in 1996 compared to a
basic loss of $0.11 per common share in 1995.
The results reported in 1996 included the impact of losses relating
to a major project in Minneapolis, and losses incurred by the
Company's Caribbean operations. The 1995 results also included a loss
on the Minneapolis project, and the write-down of a long outstanding
account receivable associated with an overseas project. The write-
down was the result of a ruling against the Company in February 1996
in its effort to collect this receivable.
Construction operating and general and administrative expenses
increased 17% to $66.8 million in 1996 compared to $57.3 million in
1995. This increase was due primarily to increased construction
activity, expenses associated with management changes made during the
second half of 1996, and a write-off of goodwill.
Real estate operations produced a $383,000 loss in 1996 compared to
losses of $227,000 in 1995. The Company sold two developed properties
and two land parcels in 1996 as it continued to dispose of properties
at essentially their carrying value. In 1995, the Company sold one
developed property with an adjacent land parcel and a number of
condominium units, all at their carrying value. Rental and other
income and the cost of operations declined by 12% and 14%,
respectively, due to the sales of properties in 1996 and 1995.
Interest expense decreased 17% to $7.7 million in 1996 from $9.3
million in 1995. This decrease was due primarily to lower debt levels
in 1996. Interest expense associated with real estate debt declined
by 29% due primarily to debt paydowns from the sale of properties.
Other income in 1996 amounted to $1.8 million compared to $1.5
million in 1995. This increase was primarily due to increased
interest income attributable to higher investment balances maintained
by the Company.
Financial Condition
At December 31, 1997, the Company had cash and marketable
securities of $172.1 million, compared with $122 million at the
end of 1996.
Cash provided by operating activities amounted to $92.8 million and
is a reflection of the increase in construction activity and the
continued shift away from construction management contracts. The cash
generated from operations was sufficient to satisfy the Company's cash
requirements during the year.
Cash used in investing activities amounted to $235,000 and was due
primarily to the purchases of marketable securities and property and
equipment. These purchases were partially offset from cash provided
by sales of real estate.
Cash used in financing activities amounted to $61.3 million and is
primarily attributable to debt paydowns. In December 1997, the
Company repaid the $39.5 million 11.74% Senior Notes. In addition,
funds provided by the sale of real estate properties were used to pay
down associated debt. The Senior Notes and real estate debt are
further discussed in Note 5 to the Consolidated Financial Statements.
Management believes the Company's current cash position, in addition
to cash flows from construction activities, its $41 million revolving
credit facility and amounts available from overnight credit
facilities, will be sufficient to support the Company's short term and
foreseeable long term activities. Debt maturing in 1998 will be paid
from funds generated from operations.
Inflation
Inflation and changing prices during the current fiscal year did not
significantly affect the major markets in which the Company conducts
its business. In view of the moderate rate of inflation, its impact
on the Company's business has not been significant.
Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement No.
130 "Reporting Comprehensive Income," Statement No. 131 "Disclosures
about Segments of an Enterprise and Related Information" and Statement
No. 132 "Employers' Disclosures about Pensions and Other
Postretirement Benefits," all of which the Company will adopt in 1998
and require restatement of prior periods presented.
Statement No. 130 establishes standards for reporting and display of
comprehensive income and its components in a separate financial
statement. Comprehensive income generally includes net income as
reported by the Company adjusted for unrealized gains and losses on
marketable securities that are "available for sale," which are
currently reported in the stockholders' equity section of the balance
sheet.
Statement No. 131 requires that the Company report financial and
descriptive information about its reportable operating segments in
financial statements issued to shareholders for interim and annual
periods. The Statement also establishes standards for related
disclosures about products and services, geographic areas and major
customers. Under this Statement, operating segments are components of
an enterprise about which separate financial information is available
that is regularly evaluated by the enterprise's chief operational
decision-maker in deciding how to allocate resources and in assessing
performance. While the Company continues to evaluate the adoption of
the new standard, it is likely that its currently reported business
segments of Construction, Real Estate and General Corporate will be
maintained.
Statement No. 132 revises employers' disclosures about pension and
other postretirement benefit plans. The Statement does not change the
measurement or recognition of those plans. The Statement standardizes
the disclosure requirements for pensions and other postretirement
benefits to the extent practicable, requires additional information on
changes in the benefit obligations and fair value of plan assets that
will facilitate financial analysis, and eliminates certain
disclosures.
In July 1996, the Emerging Issues Task Force reached a consensus on
Issue 96-14, "Accounting for the Costs Associated with Modifying
Computer Software for the Year 2000," which requires that costs
associated with modifying computer software for the year 2000 be
expensed as incurred. Management has evaluated the impact of Year
2000 issues on the Company's business and operations. The Company
believes, based upon its internal reviews and other factors, that
future external and internal costs to be incurred relating to the
modification of internal-use software for the year 2000 will not have
a material effect on the Company's results of operations or financial
position.
Item 8 Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page No.
Financial Statements:
Report of Independent Public Accountants 11
Consolidated Balance Sheets - as of December 31,
1997 and 1996 12
Consolidated Statements of Operations - for the
years ended December 31, 1997, 1996 and 1995 13
Consolidated Statements of Stockholders'Equity-
for the years ended December 31, 1997,
1996 and 1995 14
Consolidated Statements of Cash Flows-for the
years ended December 31, 1997, 1996 and 1995 15
Notes to Consolidated Financial Statements 16-30
Responsibilities for Financial Reporting 31
Report of Independent Public Accountants
To the Stockholders and Board of Directors of The Turner Corporation:
We have audited the accompanying consolidated balance sheets of The
Turner Corporation (a Delaware corporation) and Subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements
of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. 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.
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, 1997 and 1996, and
the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
New York, New York
February 20, 1998
The Turner Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share amounts)
<TABLE>
<S> <C> <C>
As of December 31, 1997 1996
Assets
Cash and cash equivalents $153,241 $121,981
Marketable securities 18,902 -
Construction receivables: (Note 2)
Due on contracts 334,802 306,109
Retainage 180,329 147,640
Unbilled construction costs and related
earnings 139,969 142,654
Real estate (Note 3) 44,378 69,760
Property and equipment, net (Note 4) 23,241 23,225
Prepaid pension cost (Note 9) 62,854 63,471
Other assets 14,971 19,756
Total assets $972,687 $894,596
Liabilities
Construction accounts payable and
accrued expenses:
Trade $469,734 $410,304
Retainage 189,480 165,049
Billings in excess of construction costs
and related earnings 105,021 84,367
Notes payable and convertible debenture
(Note 5) 21,719 81,805
Deferred income taxes (Note 6) 14,615 11,526
Other liabilities 95,982 81,415
Total liabilities 896,551 834,466
Commitments and contingencies (Note 12)
Stockholders' Equity (Note 11)
Preferred stock, $1 par value (2,000,000
shares authorized):
Series C 8.5% cumulative convertible
(9,000 shares issued and outstanding;
$9,000 liquidation preference) 9 9
Series D 8.5% cumulative convertible
(6,000 shares issued and outstanding;
$6,000 liquidation preference) 6 -
Series B cumulative convertible (850,000
shares issued;844,966 and 847,925
outstanding) 845 848
Common stock, $1 par value
(20,000,000 shares authorized; 5,440,738
and 5,290,861 issued) 5,441 5,291
Paid in capital 50,250 38,388
Retained earnings 26,436 22,580
82,987 67,116
Less:Loan to Employee Stock Ownership
Plan (Note 10) (4,349) (6,595)
Treasury stock, at cost (138,509 and
45,549 common shares) (2,502) (391)
Total stockholders' equity 76,136 60,130
Total liabilities and stockholders' equity $972,687 $894,596
</TABLE>
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)
<TABLE>
<S> <C> <C> <C>
For the years ended December 31, 1997 1996 1995
Value of construction completed
(see below) $3,639,754 $3,317,774 $3,281,495
Revenue from construction contracts $3,170,744 $2,838,052 $2,727,001
Cost of construction contracts 3,084,236 2,765,901 2,658,462
Earnings from construction contracts 86,508 72,151 68,539
Construction operating expenses 52,500 52,962 45,699
General and administrative expenses 15,823 13,885 11,555
Income from construction operations 18,185 5,304 11,285
Losses from real estate operations
(see below) (839) (383) (227)
Interest expense (Note 15) (6,406) (7,735) (9,267)
Other income, net (Note 13) 5,046 1,782 1,470
Income (loss) before income taxes 15,986 (1,032) 3,261
Income tax provision: (Note 6)
Current 4,105 658 1,025
Deferred 3,089 5 962
Total income tax provision 7,194 663 1,987
Income (loss) before extraordinary loss 8,792 (1,695) 1,274
Extraordinary loss on early
extinguishment of debt, net of tax
(Note 5) (2,899) - -
Net income (loss) $ 5,893 $(1,695) $ 1,274
Basic earnings (loss) per common share:
Income (loss) before extraordinary
loss (Note 14) $ 1.28 $ (0.67) $ (0.11)
Extraordinary loss (0.55) - -
Net income (loss) $ 0.73 $ (0.67) $ (0.11)
Diluted earnings (loss) per common
share:
Income (loss) before extraordinary
loss (Note 14) $ 1.03 (a) (a)
Extraordinary loss (0.44) - -
Net income (loss) $ 0.59 (a) (a)
Weighted average common shares
outstanding 5,286,493 5,238,681 5,193,792
Weighted average common and common
equivalent shares outstanding 6,579,143 (a) (a)
Value of construction completed
consists of the following:
Revenue from construction contracts $3,170,744 $2,838,052 $2,727,001
Construction costs incurred by
owners in connection with work
under construction management
and similar contracts 469,010 479,722 554,494
Value of construction completed $3,639,754 $3,317,774 $3,281,495
Real estate operations consist of
the following:
Real estate sales $ 23,567 $ 19,454 $ 9,007
Cost of sales (23,567) (19,439) (8,725)
Rental and other income 4,137 7,834 8,886
Cost of operations (2,705) (4,498) (5,455)
Depreciation and amortization expense (2,271) (3,734) (3,940)
Losses from real estate operations $ (839) $ (383) $ (227)
</TABLE>
(a) Antidilutive
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
The Turner Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity
(in thousands, except share amounts)
<TABLE>
<S> <C> <C> <C>
For the years ended December 31, 1997 1996 1995
Shares Amount Shares Amount Shares Amount
Convertible preferred stock,
Series C
Balance at beginning and end
of year 9,000 $ 9 9,000 $ 9 9,000 $ 9
Convertible preferred stock,
Series D
Balance at beginning of year - - - - - -
Preferred stock issued 6,000 6 - - - -
Balance at end of year 6,000 6 - - - -
Convertible preferred stock,
Series B
Balance at beginning of year 847,925 848 848,560 849 848,956 849
Preferred stock retired (2,959) (3) (635) (1) (396) -
Balance at end of year 844,966 845 847,925 848 848,560 849
Common stock
Balance at beginning of year 5,290,861 5,291 5,270,040 5,270 5,199,941 5,200
Common stock issued 149,877 150 20,821 21 70,099 70
Balance at end of year 5,440,738 5,441 5,290,861 5,291 5,270,040 5,270
Paid in capital
Balance at beginning of year 38,388 38,305 37,778
Excess of proceeds over par
value of common stock
issued 1,335 151 527
Issuance of stock awards
and stock options 4,327 - -
Tax benefits from stock
options exercised 309 - -
Conversion of debenture
to Series D preferred
stock 5,994 - -
Retirement of shares (96) - -
Cost of treasury stock
issued in excess of
proceeds (7) (68) -
Balance at end of year 50,250 38,388 38,305
Net unrealized loss on
marketable securities
Balance at beginning of year - (58) (276)
Change in unrealized loss
for the year - 58 218
Balance at end of year - - (58)
Retained earnings
Balance at beginning of year 22,580 26,102 26,656
Net income (loss) for the year 5,893 (1,695) 1,274
Cash dividends on Series C
preferred stock, $85.00 per share (765) (765) (765)
Cash dividends on Series D
preferred stock, $35.42 per share (212) - -
Cash dividends on Series B
preferred stock,$2.16 per share (1,827) (1,832) (1,833)
Tax benefits on Series B
preferred stock dividends 767 770 770
Balance at end of year 26,436 22,580 26,102
Loan to Employee Stock Ownership
Plan (ESOP)
Balance at beginning of year (6,595) (8,673) (10,468)
Repayment from loan to ESOP 2,246 2,078 1,795
Balance at end of year (4,349) (6,595) (8,673)
Treasury stock
Balance at beginning of year 45,549 (391) 51,090 (508) 53,489 (532)
Purchases of treasury stock 97,079 (2,170) - - 3,000 (26)
Treasury stock issued (4,119) 59 (5,541) 117 (5,399) 50
Balance at end of year 138,509 (2,502) 45,549 (391) 51,090 (508)
Total stockholders' equity $76,136 $60,130 61,296
</TABLE>
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)
<TABLE>
<S> <C> <C> <C>
For the years ended December 31, 1997 1996 1995
Cash flows from operating activities:
Net income (loss) $ 5,893 $ (1,695) $ 1,274
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 10,708 12,685 11,526
Net periodic pension charge (credit) 617 (1,227) (685)
Stock-based compensation charge 4,379 - -
Extraordinary loss on early
extinguishment of debt 4,392 - -
Provision for deferred income taxes 3,089 5 962
Gain on real estate sales - (15) (282)
Write-off of goodwill - 1,290 -
Changes in operating assets and liabilities:
Increase in construction receivables (58,697) (67,087) (92,086)
Increase in construction accounts payable
and accrued expenses 104,515 85,350 102,497
Decrease in restructuring reserve - - (897)
Decrease in other assets 2,477 3,848 6,729
Increase in other liabilities 15,428 146 11,094
Net cash provided by operating activities 92,801 33,300 40,132
Cash flows from investing activities:
Purchases of marketable securities (18,902) (257) (267)
Proceeds from sale of marketable securities - 5,025 -
Distributions from joint ventures 590 1,215 5,628
Purchases of property and equipment (6,117) (7,371) (4,556)
Proceeds from sale of property and equipment 502 290 469
Proceeds from sale of real estate, net 22,942 18,509 8,581
Increase in real estate (431) (2,143) (2,064)
Repayments on notes receivable 1,181 1,295 3,807
Net cash provided by (used in) investing
activities (235) 16,563 11,598
Cash flows from financing activities:
Common stock issued 1,485 172 597
Cash dividends to preferred stockholders (2,804) (2,597) (2,598)
Repayments from loan to ESOP 2,246 2,078 1,795
Principal payments under capital
lease obligations (2,160) (3,016) (2,689)
Proceeds from borrowings - 5,507 24,001
Payments on borrowings (54,002) (18,044) (41,141)
Premium on early extinguishment of debt (3,901) - -
Proceeds from issuance of treasury stock - 49 50
Purchases of treasury stock (2,170) - (26)
Net cash used in financing activities (61,306) (15,851) (20,011)
Net increase in cash and cash equivalents 31,260 34,012 31,719
Cash and cash equivalents at beginning
of year 121,981 87,969 56,250
Cash and cash equivalents at end of year $153,241 $121,981 $87,969
Noncash investing activities:
Change in unrealized loss on marketable
securities $ - $ 58 $ 218
Noncash financing activities:
Capital lease obligations incurred by
the Company 2,076 2,568 7,740
Conversion of debenture to Series D
convertible preferred stock 6,000 - -
</TABLE>
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)
The Turner Corporation and Subsidiaries (the Company) is a
multinational construction contractor, which also has limited real
estate operations in the United States. The Company is predominantly
engaged in general building construction and construction management
throughout the United States. The construction operations primarily
relate to the construction of commercial, multifamily residential,
manufacturing, research and development, healthcare, amusement,
education, justice and other building structures. Construction
contracts include fixed price contracts, cost-plus fixed fee contracts
and variations of these types of contracts, including cost-plus
guaranteed maximum price contracts. The Company also performs
interior construction work and construction consulting services.
Specialty trade contractors are used extensively by the Company as
subcontractors in the performance of its construction contracts.
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its proportionate interest in the accounts of construction
affiliates and construction joint ventures. The Company also has
investments in real estate joint ventures, which are accounted for
under the cost method. 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.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Management
believes that the estimates utilized in preparing the Company's
financial statements are reasonable and prudent, however, actual
results could differ from those estimates.
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 cost of the work completed bears to the estimated
total cost 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. Due to uncertainties inherent in the
estimation process, it is reasonably possible that such estimates will
be revised over the next year. 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 1997, 1996 and 1995,
the Company wrote down certain construction receivables and claims
deemed unrecoverable.
Cost of construction contracts includes all direct material, labor
and subcontracting costs, and those indirect costs related to
contract performance that are identifiable with or allocable to the
contracts. Construction operating expenses are costs incurred by the
Company's construction operating units and subsidiaries that are not
directly attributable to construction contracts, such as estimating,
purchasing, general office support and other related costs, and are
expensed as incurred.
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
Fixed minimum rental income is generally recognized on a straight-
line basis over the life of the lease. Additional rents provided
under operating leases with tenants are recognized when earned and the
amounts can be reasonably estimated.
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 are carried at cost less accumulated
depreciation, write-downs and reserves.
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, 3-10 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, while
expenditures for betterments are capitalized.
Cash and Cash Equivalents
The Company considers all investments purchased with maturities
of 90 days or less to be cash equivalents.
The Company's other liabilities include approximately $57,600 and
$48,800 net payable to banks for checks drawn but not cleared as of
December 31, 1997 and 1996, respectively.
Marketable Securities
Marketable securities which consist primarily of commercial paper
and corporate notes maturing in one year or less are classified as
available-for-sale and reported at fair value. Unrealized gains and
losses, if any, are reported as a separate component of stockholders'
equity. The cost basis of securities is determined on a specific
identification basis in calculating gains and losses.
Long-Lived Assets
In 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of." This
statement requires that long-lived assets to be held and used be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
If such review indicates that the asset is impaired, given that the
carrying amount of an asset exceeds the sum of its expected future
cash flows, on an undiscounted basis, the asset's carrying amount
should be written down to fair value. In addition, SFAS No. 121
requires that long-lived assets to be disposed of be reported at the
lower of carrying amount or fair value less cost to sell. The effect
of the adoption of this standard was not material to the financial
statements.
Income Taxes
Deferred income tax assets or liabilities are computed based on
the difference between the financial reporting 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 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.
Earnings Per Common Share
In 1997, the Company adopted SFAS No. 128, "Earnings Per Share,"
which replaced the calculation of primary and fully diluted earnings
per share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for prior
periods have been restated to conform to the new requirements.
Basic earnings per common share are 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
shares outstanding. Diluted earnings per common share are 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.
Stock-Based Compensation
The Company accounts for its stock-based employee compensation
plans using the intrinsic value based method, under which compensation
cost is measured as the excess of the stock's market price at the
grant date over the amount an employee must pay to acquire the stock.
Comprehensive Income
In July 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Reporting Comprehensive Income." This statement establishes
standards for reporting and display of comprehensive income and its
components in a separate financial statement. Comprehensive income
generally includes net income as reported by the Company adjusted for
unrealized gains and losses on marketable securities that are
"available for sale," which are currently reported in the
stockholders' equity section of the balance sheet. The statement is
effective for fiscal years beginning after December 15, 1997. The
Company will adopt the standard at the beginning of 1998, and will
restate prior periods presented.
2. Construction Receivables
Construction receivables include $180,329 of retainage at
December 31, 1997, of which approximately 91% is anticipated to be
collected by December 31, 1998. Construction receivables include
estimated net claims. Claims made by the Company involve negotiations
and in some cases litigation. The Company believes that it has
established legal bases for pursuing recovery of recorded claims and
it is management's intention to pursue these claims and litigate, if
necessary, until a decision or settlement is reached. Claims involve
the use of estimates and it is reasonably possible that revisions to
the estimated recoverable amounts of recorded claims could be made
within the next year. 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 $6,900 and $9,400 at December 31, 1997 and
1996, respectively.
3. Real Estate
The Company owns a portfolio of real estate, either directly or
through joint venture interests, that includes an air cargo
distribution facility, commercial office properties, and undeveloped
land. The properties are located in the Southeast, Mid-Atlantic and
Midwest regions. The carrying amounts of the Company's interests in
developed properties were $20,767 and $41,129 and in undeveloped land
parcels were $23,611 and $28,631 at December 31, 1997 and 1996,
respectively. Accumulated depreciation at December 31, 1997 and 1996
was $23,393 and $28,195, respectively.
The Company's most significant real estate asset is the air cargo
distribution facility located in Columbus, Ohio, with a carrying
amount of $17,462 at December 31, 1997, which is under a long term
lease to a credit tenant until 2010. With recent improvements in the
real estate markets, the Company has been able to sell certain
developed and undeveloped properties at essentially their carrying
amount. The remaining properties will be held until such time that
they can be sold for prices which the Company believes reflects
reasonable values. Management anticipates a longer holding period may
result for its undeveloped land parcels as land values have generally
been slower to recover than developed properties. The Company
actively monitors market conditions and evaluates economic and market
factors to estimate the fair values of the properties and the
appropriate timing of disposition, both of which may change with
changes in economic and market conditions.
4. Property and Equipment
Property and equipment as of December 31, 1997 and 1996 consisted
of the following:
<TABLE>
<S> <C> <C>
1997 1996
Buildings and improvements $14,526 14,804
Office machines and furniture 26,921 25,856
Equipment 22,225 22,173
Total 63,672 62,833
Less: accumulated depreciation
and amortization (40,431) (39,608)
Net $23,241 23,225
</TABLE>
5. Notes Payable and Convertible Debenture
Notes payable and convertible debenture as of December 31, 1997 and
1996 consisted of the following:
<TABLE>
<S> <C> <C>
1997 1996
Revenue bonds $12,100 $12,800
Employee Stock Ownership Plan 5,100 7,300
Senior Notes - 39,500
Building mortgages - 10,336
Convertible debenture - 6,000
Other 4,519 5,869
Total $21,719 $81,805
</TABLE>
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 1997 and 1996 was approximately
3.72 and 3.53%, respectively. The bonds are supported by a
letter of credit for which the Company pays 1.25% per annum.
Employee Stock Ownership Plan (ESOP)
This loan was used to fund the Company's loan to the ESOP and
matures in July 1999. Interest is payable 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 1997 and 1996 was
approximately 6.09% and 5.99%, respectively. The loan agreement
contains various financial covenants, including the maintenance of a
minimum amount of stockholders' equity and debt coverage ratio. At
December 31, 1997, the minimum stockholders' equity required was
$54,945 and increases by the sum of 50% of the consolidated net
income and the aggregate net proceeds received by the Company from the
issuance of equity securities for each subsequent fiscal year.
Senior Notes
In December 1994, the Company sold $39,500 of Senior Notes in a
private placement to institutional investors, including the Company's
pension plan (Note 9). The Notes carried interest at a fixed rate of
11.74% with an original scheduled maturity of even principal amounts
on the third through seventh anniversary dates of the Notes. The Note
Purchase Agreement contains various financial covenants, the most
restrictive of which is a fixed-charge coverage requirement. On
December 22, 1997, the Company exercised its option to prepay the
remaining balance of $31,500. Under the note agreement, the Company
was required to pay a make-whole premium upon any debt prepayment,
which is reflected as an extraordinary loss of $2,899, net of tax.
Building Mortgages
The variable rate mortgage carried interest at prime plus 0.5% and
was retired upon the sale of the underlying property in August 1997
and matures in varying installments through 2000. In connection with
another variable rate building mortgage which carried interest at
LIBOR plus 2.25%, the Company entered into an interest rate swap
agreement with a bank in 1994 for a notional amount equal to the
underlying mortgage. The swap agreement had provided a fixed interest
rate of 6.96%. The underlying property and interest rate swap were
sold in October 1996. The weighted average interest rate for 1997
and 1996 on the variable rate mortgages was approximately 8.64%
and 8.80%, respectively. A fixed rate mortgage, which carried
interest of 7% was retired in December 1997. A fixed rate mortgage
of $4,473, which carried interest of 7.375% was retired upon the sale
of the underlying property in September 1997.
Convertible Debenture
The $6,000 8.5% convertible debenture was scheduled to
mature in July 1997. In June 1997, the holder exercised its
option to convert the full debenture principal balance into 6,000
shares Series D 8.5% convertible preferred stock of the
Company. 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 11).
Other
The Company maintains overnight credit facilities with various
banks at varying rates. The Company had available $10,000, none of
which was drawn down at December 31, 1997 and December 31, 1996.
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 1996, the weighted average interest rate was
8.80%. The Company did not use any of these facilities during
1997.
The Company leases certain computer equipment and vehicles under
agreements which are classified as capital leases and bear a weighted
average implicit interest rate of 6.69%. The leases have original
terms ranging from three to five years and payments under the leases
are due in varying installments through 2001. At December 31, 1997
and 1996, obligations under capital lease arrangements were
$4,519 and $4,603, respectively.
Revolving Credit Facility
In June 1996, the Company amended its unsecured revolving credit
facility to provide for borrowings up to $41,250, the proceeds of
which can be used for general corporate purposes. Up to $10 million
of the facility may be used for letters of credit. The facility
matures in June 2000, with the option to extend an additional year up
to June 2001. The Company did not use the facility at any time in 1997
and 1996. The current facility permits the Company to choose between
various interest rate options. The Company pays a commitment fee at an
annual rate of 0.5% on the unused portion of the facility. The
facility contains various financial covenants, the most restrictive of
which is a fixed-charge coverage.
Aggregate maturities of notes due are as follows:
1998 1999 2000 2001 2002 Thereafter
$4,949 $4,928 $1,830 $1,212 $1,000 $7,800
The Company was in compliance with all financial covenants under its
various credit facilities as of December 31, 1997.
Interest cost approximates amounts paid for the years ended December
31, 1997, 1996 and 1995.
At December 31, 1997, the carrying value of the real estate that
was pledged as collateral for notes payable was $26,253.
6. Income Taxes
The components of the income tax provision are as follows:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
Current:
Federal $2,889 $ 139 $ 131
Foreign - - 300
State & Local 1,216 519 594
4,105 658 1,025
Deferred:
Federal 3,089 5 962
Total $7,194 $ 663 $1,987
</TABLE>
The current Federal provision for the years ended December 31, 1997
and 1996 reflect the benefit of the utilization of net operating loss
carryforwards of approximately $10,600 and $3,000, respectively.
The extraordinary loss on early extinguishment of debt in 1997 is
reported net of the related tax benefit of $1,493.
Deferred income taxes result from temporary differences between the
financial reporting carrying amounts and the tax bases of assets and
liabilities. The source of these differences and tax effect of each
at December 31, 1997 and 1996 are as follows:
Deferred Income Tax
Liability (Asset)
<TABLE>
<S> <C> <C>
1997 1996
Employee benefit plans $20,614 $23,425
Depreciation 3,922 4,141
Real estate properties (2,592) (2,362)
Federal net operating loss
benefits (2,165) (6,489)
Foreign net operating loss
benefits (2,482) (2,482)
Alternative minimum tax
credit carryforward - (2,451)
Jobs credit carryforward (202) (75)
Deferred compensation plan (646) (470)
Contributions carryover (1,445) (1,525)
Other (389) (186)
$14,615 $11,526
</TABLE>
The Company has recorded $9,921 of deferred tax assets
having resulted principally from net operating loss carryforwards and
deductible temporary differences related to real estate properties.
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 employee benefit plans.
A comparison of the Federal statutory rate with the company's
effective tax rate is as follows:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
Statutory Federal income
tax rate (benefit) 34.0% (34.0)% 34.0%
State and local taxes,
net of Federal benefit 7.6%. 33.2 12.0
Effective foreign tax rate - - 6.1
Goodwill amortization and write-off 0.6% 51.9% 1.8
Other 2.8% 13.1 7.1
Effective tax rate (benefit) 45.0% 64.2% 61.0%
</TABLE>
Income taxes refunded were $661, $498 and $507 for 1997, 1996,
and 1995, respectively.
For Federal income tax purposes, the Company has available at
December 31, 1997 a net operating loss carryforward of $6,368
which is available to offset future taxable income and expires in
2009. The Company also has available a foreign net operating
loss carryforward of $6,368 which expires in 2001.
There was no unrecognized deferred tax liability related to
cumulative undistributed earnings of foreign subsidiaries which were
permanently reinvested at December 31, 1997.
7. Incentive Compensation Plans
The Company sponsors the Executive Incentive Compensation Plan
(EICP) which 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. The award 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
1997, 1996 and 1995 aggregated $362, $23 and $3,
respectively. The Company ceased granting awards under the EICP in
1997.
In 1997, the Company adopted a new Incentive Compensation Plan (ICP)
which authorizes payments of awards to executive officers and other
designated employees of the Company in the form of cash. The award
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 amount charged to expense in 1997 was $4,621.
8. Stock-Based Compensation Plans
The Company has an incentive stock option plan adopted in 1992 and a
non-qualified stock option plan adopted in 1997. These plans provide
for the granting of options to officers, directors and designated
employees of the Company to purchase shares of common stock of the
Company. The 1992 Plan provides for the options to be granted at a
price not less than the market price of the common stock on the date
of grant, while the 1997 Plan provides for the options to be granted
at a price that is not less than 85% of the average market price of
the stock for the twenty trading days prior to the date of grant. In
addition, the incentive stock option plans adopted in 1981 and 1986
have been terminated and no new options can be granted under these
plans, although unexercised options remain outstanding.
The Company may grant options for up to 400,000 and 500,000 shares
of common stock for the incentive stock option plan and the non-
qualified stock option plan, respectively. Options granted vest from
one to three years. 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.
In 1997, a total of 227,000 stock awards of the Company's common
stock were granted to the Chairman and to certain directors. The
stock awards, which were fully vested at the date of grant, had a
weighted average fair value of $16.25 at the date of grant and are
subject to certain contractual restrictions. The awards to directors
were granted in lieu of vested retirement benefits and will be
distributed to directors following the later of their seventieth
birthday or their ceasing to be a director. The award granted to the
Chairman will be distributed in March 1998. In conjunction with these
distributions the Company may withhold shares to satisfy tax
withholding requirements.
The Company accounts for these plans using the intrinsic value based
method, under which compensation cost is recognized on the date of
grant to the extent the exercise price is less than the market price
of the underlying stock at the date of grant. In 1997, compensation
costs of $4,379 were recognized related to the stock awards and stock
options granted during the year. The Company has decided not to
account for stock-based compensation awards using the fair value based
method pursuant to SFAS No. 123 "Accounting for Stock-Based
Compensation," under which compensation cost would be measured at the
grant date based on the fair value of the awards and recognized over
the vesting period. If the fair value based method had been used, the
Company would have recognized lower compensation costs, net of tax, of
$38 in 1997 and additional compensation costs, net of tax, of $123 and
$113 in 1996 and 1995, respectively. As a result, basic earnings per
common share would have been $0.01 higher in 1997 and $0.02 lower in
1996 and 1995. Diluted earnings per common share would not have
changed in 1997, but would have been $0.02 lower in 1996 and 1995.
Since the fair value based method has not been applied to options
granted prior to January 1, 1995, the resulting proforma compensation
cost may not be representative of that to be expected in future years.
The fair value of each option granted was estimated on the date of
grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants in 1997, 1996 and 1995,
respectively: dividend yield of 0.0%, 2.5% and 2.5%; expected
volatility of 33%, 30% and 30%; risk-free interest rates of 6.52%,
6.06% and 7.90% for stock options granted to officers and designated
employees and 6.13%, 6.50% and 5.96% for options granted to non-
employee directors; and expected lives of five years for all plans.
A summary of the status of the Company's stock option plans as of
December 31, 1997, 1996 and 1995, and changes during the years then
ended is presented in the table below:
<TABLE>
<C> <C> <C>
1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Exercise Exercise Exercise
Amount Price Amount Price Amount Price
Outstanding at January 1 710,068 $11.62 751,598 $12.46 744,428 $13.26
Granted at market price 153,000 16.14 93,250 9.03 69,300 8.18
Granted below market
price 219,776 11.09 - - - -
Exercised (144,310) 9.91 (14,900) 8.00 (9,000) 8.06
Canceled (81,525) 15.09(119,880) 15.32 (53,130) 18.82
Outstanding at
December 31 857,009 12.24 710,068 11.62 751,598 12.46
Exercisable at
December 31 509,358 11.60 632,118 11.97 745,453 12.48
Weighted average fair
value of options granted
at market price $6.42 $2.63 $2.57
Weighted average fair
value of options granted
below market price $6.90 - -
</TABLE>
The following table summarizes information about options outstanding
at December 31, 1997:
<TABLE>
<S> <C> <C> <C> <C> <C>
Options Outstanding Options Exercisable
Wtd. Avg.
Remaining Range of Wtd. Avg. Wtd. Avg.
Amount Contractual Exercise Exercise Amount Exercise
Outstanding Life (years) Price Price Exercisable Price
237,750 6.17 $ 7.75-8.69 $8.23 237,750 $ 8.23
222,151 9.13 9.19-11.09 10.99 18,500 9.86
236,958 2.95 11.31-15.88 14.65 236,958 14.65
160,150 8.74 16.13-20.25 16.39 16,150 18.50
857,009 6.53 7.75-20.25 12.24 509,358 11.60
</TABLE>
9.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. In 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.
In 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 a defined contribution retirement
plan. Past benefits earned by plan participants prior to curtailment
were not changed and benefits earned by participants for future
service are provided under a different benefit formula. New
participants 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 result in a reduction of
the prepaid pension asset in future years.
The Company established a health benefits account within the plan to
fund a portion of retiree medical costs from the overfunded plan
assets. The transfer of assets into the health benefits account is
subject to various restrictions and limitations. No assets were
transferred in 1997, while $1,200 and $900 were transferred in 1996
and 1995, respectively.
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 related to
the curtailed benefits on a straight-line basis over a period not
exceeding the average life expectancy of retirees. The Company
amortizes the full amount of the unrecognized pension actuarial gains
and losses for the year on a straight-line basis over the average
remaining service period of employees.
Plan assets consist primarily of pooled equity, debt and short-term
investment funds, a pooled real estate equity fund and 775,000 shares
of the Company's common stock.
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, 1997 and 1996 and for the years then ended:
<TABLE>
<S> <C> <C>
1997 1996
Actuarial present value of benefit
obligations:
Vested benefits $155,577 $129,922
Accumulated benefit obligation 159,490 133,911
Projected benefit obligation 159,490 133,911
Plan assets at fair value 257,164 207,886
Plan assets in excess of projected
benefit obligation 97,674 73,975
Unrecognized prior service cost 10,036 7,277
Unrecognized net gain (43,095) (15,139)
Remaining unrecognized net asset being
recognized over 15 years (1,761) (2,642)
Prepaid pension cost $ 62,854 $63,471
Components of net periodic pension
charge (credit):
Service cost $ 9,662 $ 8,432
Interest cost on projected benefit
obligation 10,624 9,301
Actual return on plan assets (58,956) (29,668)
Net amortization and deferral 39,287 10,708
Net periodic pension charge (credit) $ 617 $(1,227)
</TABLE>
The assumptions used in measuring the actuarial value of projected
benefit obligations and determining the net periodic pension charge
(credit) were:
<TABLE>
<S> <C> <C>
1997 1996
Weighted average discount rate 7.25% 7.50%
Rate of compensation increase-
cash balance feature 4.75% 4.25%
Weighted average expected long-term
rate of return on plan assets 9.59% 9.64%
</TABLE>
Defined Contribution Pension Plan
The Company 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. The aggregate amount charged to expense was
$1,911, $1,742 and $1,578 in 1997, 1996 and 1995,
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, co-payment provisions and other limitations.
Retirees pay for a portion of the total cost of their medical
insurance which is 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.
The following table sets forth the funded status of the plan and the
amounts recognized in the Company's financial statements at December
31, 1997 and 1996 and for the years then ended:
<TABLE>
<S> <C> <C>
1997 1996
Actuarial present value of
accumulated postretirement benefit
obligation:
Retirees $ 13,362 $ 13,854
Fully eligible active plan
participants 1,887 2,023
Other active plan participants 6,083 5,724
Accumulated unfunded postretirement
benefit obligation 21,332 21,601
Remaining unrecognized transition
obligation being recognized over
20 years (14,856) (15,847)
Unrecognized net gain 2,390 1,363
Accrued postretirement benefit
obligation $ 8,866 $ 7,117
Net periodic postretirement benefit
cost includes the following
components:
Service cost $ 425 $ 371
Interest cost 1,490 1,546
Amortization of unrecognized
transition obligation 991 991
Amortization of unrecognized gain (57) -
Net periodic postretirement benefit
cost $ 2,849 $ 2,908
Impact of one percent increase in
healthcare trend rate:
Aggregate impact on annual service
cost and interest cost $ 101 $ 111
Increase in accumulated
postretirement benefit obligation $ 1,319 $ 1,336
</TABLE>
The accumulated postretirement benefit obligation was computed using
an assumed weighted average discount rate of 7.25% in 1997 and 7.5% in
1996. The healthcare cost trend rate was assumed to be 9% in 1997
decreasing by 1% a year to 6% in 2000 and 5.5% in 2001 and beyond.
Employee benefit plan obligations are determined using actuarial
estimates. These estimates are based on historical information along
with certain assumptions about future events. Changes in those
assumptions as well as changes in actual experience could cause these
estimates to change within the next year.
In February 1998, the Financial Accounting Standards Board issued
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." This statement revises employers'
disclosures about pension and other postretirement benefit plans. The
Statement does not change the measurement or recognition of those
plans. The Statement standardizes the disclosure requirements for
pensions and other postretirement benefits to the extent practicable,
requires additional information on changes in the benefit obligations
and fair value of plan assets that will facilitate financial analysis,
and eliminates certain disclosures. The disclosure requirements for
this statement are effective for fiscal years beginning after December
15, 1997. The Company will adopt the standard in 1998.
10. 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 as the loan is repaid. The allocated shares
vest after five years of service. At December 31, 1997, the number
of allocated and unallocated shares were 700,343 and 144,623,
respectively.
The Series B stock is callable, in whole or in part, at the option
of the Company, 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 was 112% in 1995 and decreases to 100% by 1999. 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 10,
1998, was $29.15 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 the same 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 allocated and unallocated 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, 1997, 1996 and 1995 were:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
Compensation expense $726 $632 $589
Interest income $352 $464 $622
</TABLE>
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.
11. 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 5). On June 30, 1997, the 8.5% debenture was
converted into 6,000 shares of Series D 8.5% convertible preferred
stock.
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 Series D stock is convertible into 600,000 shares of
common stock. The Series C and the Series D stocks have, and the
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 (on an
as-converted basis) more than 10% 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 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 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.
12. 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, 1997, 1996 and 1995
amounted to $9,610, $9,392 and $9,438, respectively. Future
minimum rental payments are as follows:
<TABLE>
<C> <C> <C> <C> <C> <c.
1998 1999 2000 2001 2002 Thereafter
$8,290 $7,790 $7,140 $5,645 $4,398 $9,665
</TABLE>
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 $69, $247, and $285 for 1997,1996 and 1995,
respectively.
The Company owns an air cargo distribution facility and is the
ground lessee on the underlying land located at an air industrial
park. Rental income under this lease represented 39%, 21% and
23% of total rental income for 1997, 1996 and 1995, respectively.
Tenant leases on the air cargo distribution facility and the
commercial office property have terms of up to fifteen years. Future
minimum rental revenue from non-cancelable leases in effect at
December 31, 1997 are as follows:
<TABLE>
<C> <C> <C> <C> <C> <C>
1998 1999 2000 2001 2002 Thereafter
$1,838 $1,780 $1,788 $1,788 $1,788 $11,510
</TABLE>
The Company has jointly and severally guaranteed completion of a
$108,600 construction contract which was entered into by a
subsidiary of Turner Steiner International SA, a foreign corporation,
in which the Company has a 50% interest. The Company has also
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.
The Company has also guaranteed up to $1,476 for a credit
facility of a supplier of materials.
The Company is a defendant in various litigation incident to its
business and in some instances the amounts sought include substantial
claims and counterclaims. 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. As these matters
continue to proceed through the litigation process to ultimate
resolution, it is reasonably possible that the Company's estimation of
the effect of such matters could change within the next year.
13. Other Income, net
The major components of Other Income, net are as follows:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
Interest and dividend
income $5,108 $2,140 $1,260
Investment loss - (155) -
Other (62) (203) 210
$5,046 $1,782 $1,470
</TABLE>
14. Earnings Per Share
The following table reconciles the components of basic and diluted
earnings per share for "income (loss) before extraordinary loss" for
the years ended December 31, 1997, 1996 and 1995.
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
Numerator:
Income (loss) before extraordinary loss $8,792 $(1,695) $1,274
Preferred stock dividends, net of tax benefits (2,037) (1,827) (1,828)
Basic earnings (loss) per common share -
income (loss) available to common stockholders
before extraordinary loss 6,755 (3,522) (554)
Effect of dilutive securities (a):
Series B preferred stock dividends,
net of tax benefits 1,060 - -
Series B preferred dividend differential (1,060) - -
- - -
Diluted earnings (loss) per common share -
income (loss) available to common
stockholders before extraordinary loss $6,755 $(3,522) $(554)
Denominator:
Basic earnings per common share -
Weighted average common shares outstanding 5,286,493 5,238,681 5,193,792
Effect of dilutive securities (a)
Stock-based compensation plans 446,930 - -
Convertible preferred stock, Series B 845,720 - -
1,292,650 - -
Diluted earnings (loss) per common share-
weighted average common and common
equivalent shares outstanding 6,579,143 5,238,681 5,193,792
Basic earnings (loss) per common share before
extraordinary loss $1.28 $(0.67) $(0.11)
Diluted earnings (loss) per common share before
extraordinary loss. $1.03 (a) (a)
</TABLE>
(a)The common stock equivalent shares for the years ended December 31,
1996 and 1995 were: 82,930 and 76,661 for the Stock-based
compensation plans; and 847,925 and 848,560 for the Series B
convertible preferred stock. The common stock equivalents for these
shares were not included in the calculation of diluted earnings (loss)
per common share because the effect would be antidilutive.
The Series C and Series D convertible preferred stock, and the
convertible debenture, are not included in the calculation of diluted
earnings per common share as the effect of their assumed conversion
would be antidilutive.
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:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
Identifiable assets at year end
Construction $727,481 $678,422 $609,718
Real estate 46,509 72,606 95,221
General corporate 198,697 143,568 119,024
$972,687 $894,596 $823,963
Depreciation and amortization expense:
Construction $ 8,078 $ 8,525 $ 7,228
Real estate 2,271 3,734 3,940
General corporate 359 426 358
$ 10,708 $ 12,685 $ 11,526
Interest expense:
Construction $ 321 $ 393 $ 580
Real estate 1,263 2,147 3,011
General corporate 4,822 5,195 5,676
$ 6,406 $ 7,735 $ 9,267
</TABLE>
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related
Information." This statement requires that the Company report
financial and descriptive information about its reportable operating
segments in financial statements issued to shareholders for interim
and annual periods. The Statement also establishes standards for
related disclosures about products and services, geographic areas and
major customers. Under this Statement, operating segments are
components of an enterprise about which separate financial information
is available that is regularly evaluated by the enterprise's chief
operational decision-maker in deciding how to allocate resources and
in assessing performance. While the Company continues to evaluate the
adoption of the new standard, it is likely that its currently reported
business segments of Construction, Real Estate and General Corporate
will be maintained. The Statement is effective for fiscal years
beginning after December 15, 1997. The Company will adopt the
standard at the beginning of 1998.
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. Marketable securities are reported at
fair value.
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, 1997 and 1996, the fair value of notes payable was
$21,561 and $76,954, respectively.
Convertible Debenture
The fair value of the convertible debenture was estimated based on
the greater of the Company's year-end, 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. The holder
exercised its option to convert the debenture in June 1997 (Note 5).
At December 31, 1996, the fair value was $6,662.
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, 1997 and 1996, the fair value was $4,942 and $7,059,
respectively.
17. Quarterly Financial Information (unaudited)
<TABLE>
<S> <C> <C> <C> <C>
1997 Quarter Ended March 31 June 30 September 30 December 31
Value of construction
completed $792,338 $889,286 $987,532 $970,598
Revenue from construction
contracts 700,072 770,276 851,866 848,530
Earnings from construction
contracts 18,215 19,003 21,355 27,935
Income before income taxes 2,257 2,937 4,076 6,716
Income before extraordinary loss 1,241 1,615 2,242 3,694
Net income 1,241 1,615 2,242 795(a)
Basic earnings per common
share:(b)
Income before extraordinary loss $ 0.15 $ 0.22 $ 0.32 $ 0.59
Net income $ 0.15 $ 0.22 $ 0.32 $ 0.04
Diluted earnings per common
share: (b)
Income before extraordinary loss $ 0.13 $ 0.18 $ 0.24 $ 0.46
Net income $ 0.13 $ 0.18 $ 0.24 $ 0.03
1996 Quarter Ended March 31 June 30 September 30 December 31
Value of construction completed $733,375 $802,978 $912,133 $869,288
Revenue from construction
contracts 593,551 708,141 756,678 779,682
Earnings from construction
contracts 17,812 13,199 21,201 19,939
Income (loss) before income taxes 1,974 (2,772) 676 (910)
Net income (loss) 1,086 (1,525) 375 (1,631)
Basic earnings (loss) per common
share (b) $ 0.12 $ (0.38) $ (0.02) $ (0.40)
Diluted earnings per common
share (b) $ 0.10 (c) (c) (c)
</TABLE>
(a) The fourth quarter includes an extraordinary loss on early
extinguishment of debt of $2,899, net of tax.
(b) The quarterly per share amounts are computed independently
of annual amounts.
(c) 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 error or fraud. 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, 1997. 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 assessment of risk,
operational, financial and special reviews are performed by contracted
auditors to periodically test 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, 1998, is incorporated herein by reference.
Executive Officers of the Registrant
<TABLE>
<S> <C> <C> <C>
Served as an Officer in the
Name Age Office Capacity Indicated Since
Ellis T. Gravette, Jr. 72 Chairman of the Chairman since 8/9/96.
Board,Chief
Executive Officer
and Director
Harold J. Parmelee 60 President and President since 5/11/90.
Director
David J. Smith 57 Senior Vice Chief Administrative
President and Officer since 8/22/96.
Chief Admin-
istrative Officer
Donald G. Sleeman 43 Senior Vice Senior Vice President
President, Chief and Chief Financial Officer
Financial Officer since 8/22/96;
and Chief Chief Accounting Officer
Accounting Officer since 3/13/97.
Ralph W. Johnson 61 Senior Vice 6/11/93
President
Sara J. Gozo 34 Vice President, Vice President and
Secretary and Secretary since 10/24/94;
and General General Counsel since
Counsel 12/20/96.
Anthony C. Breu 50 Senior Vice 1/23/98
President
Roger M. Lang 57 Senior Vice 11/14/97
President
Robert T. Meyer 55 Vice President 3/13/97
Grant H. Liang 61 Vice President 8/7/97
</TABLE>
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. Gravette, Mr. Smith, Ms. Gozo and Mr. Liang. From 1986
to 1996 Mr. Gravette served as President, Ardath Associates, Inc.
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. From 1989 to 1996, Mr. Liang was the Director of Information
Systems at White & Case. From 1969 to 1989, Mr. Liang served as Vice
President, Manager, Information and Automation Planning, and held
various executive information systems positions within Bowery Savings
Bank.
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, 1998, 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, 1998 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, 1998 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 11
- Consolidated Balance Sheets-as of December
31, 1997 and 1996 12
- Consolidated Statements of Operations-for
the years ended December 31, 1997, 1996
and 1995 13
- Consolidated Statements of Stockholders'
Equity - for the years ended December
31, 1997, 1996 and 1995 14
- Consolidated Statements of Cash Flows-for
the years ended December 31, 1997, 1996
and 1995 15
- Notes to Consolidated Financial Statements 16-30
- Responsibilities for Financial Reporting 31
2.Consent of Independent Public Accountants 38
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
<TABLE>
<S> <C> <C>
Exhibit No. Description
3(a)(i) Certificate of Incorporation, Incorporated herein by reference to
as amended to 7/10/89. Exhibit 3 to the Registration
Statement on Form S-14 of The Turner
Corporation, No. 2-90235.
3(a)(ii) Amendment dated 5/19/86. Incorporated herein by reference to
Exhibit 3(a) to the Company's 1989
Annual Report on Form 10-K.
3(a)(iii) Amendment dated 9/12/88.
3(a)(iv) Amendment dated 7/10/89.
3(b) By-Laws, as amended 10/10/97. Incorporated herein by reference to
Exhibit 3(b) to the Company's 1993
annual Report on Form 10-K.
3(c)(i) Certificate of Designations Incorporated herein by reference to
relating to Series C 8-1/2% Exhibit 2 to the Company's Form 8-K
Convertible Preference Stock. dated July 20, 1992.
3(c)(ii) Certificate of Designations Incorporated herein by reference to
relating to Series D 8-1/2% Exhibit 3 to the Company's Form 8-K
Convertible Preference Stock. dated July 20, 1992.
3(c)(iii) Certificate of Designations Incorporated herein by reference to
relating to Series E 8-1/2% Exhibit 4 to the Company's Form 8-K
Convertible Preference Stock. dated July 20, 1992.
4(a) Shareholders' Rights Agreement. Incorporated herein by reference to
the Registration Statement on Form
8-A dated September 9, 1988.
4(b) Agreement regarding Security Incorporated herein by reference to
Holder's Rights, Obligations Exhibit 5 to the Company's Form
and Options. 8-K dated July 20, 1992.
10(c)(i) The Company's Executive Incentive Incorporated herein by reference to
Compensation 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 Option Incorporated herein by reference to
Plan, as amended. Exhibit 10(c)(v) to the Company's
1988 Annual Report on Form 10-K.
10(c)(iii)The Company's 1986 Stock Option Incorporated herein by reference to
the as amended Company's 1988
Annual Report on Form 10-K.
10(c)(iv) The Company's 1992 Stock Option Incorporated herein by reference to
Plan. the Registration Statement on Form
S-8.
10(c)(v) The Company's Incentive Incorporated herein by reference to
Compensation Plan. 10(c)(v)to the Company's 1983
Annual Report on Form 10-K.
10(c)(vi) The Company's Retirement Benefit Incorporated herein by reference
Equalization Plan, amended and to Exhibit 10(c)(vi) to the
restated as of 1/22/92. Company's 1992 Annual Report on
Form 10-K.
10(c)(vii)The Company's Defined Contribution Incorporated herein by reference to
Retirement Equalization Plan. Exhibit 10(c)(vii) to the Company's
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
Retirement Plan. Company's 1992 Annual Report on
Form 10-K.
10(c)(ix) The Company's Supplemental Incorporated herein by reference to
Executive Defined Contribution Exhibit 10(c)(ix) to the Company's
Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(x) Tax Deferred Savings Income Plan Incorporated herein by reference to
amended and restated as of 1/1/89. Exhibit 10(c)(ix)to the Company's
1991 Annual Report on Form 10-K.
Exhibit No. Description
10(c)(xi) Option Exchange and Stock Incorporated herein by reference to
Purchase Plan. Registration Statement on Form S-8,
File No. 33-33867
10(c)(xii)Employees' Retirement Plan- Incorporated herein by reference to
Restated as of 1/1/87. Exhibit 10(c)(vii) to the Company's
1991 Annual Report on Form 10-K.
10(c)(xiii)Employees' Retirement Incorporated herein by reference to
Income Plan as of 4/1/91. Exhibit 10(c)(viii) to the Company's
1991 Annual Report on Form 10-K.
10(c)(xiv) Directors' Retirement Plan. Incorporatedherein by reference to
Exhibit 10(c)(xiv) to the Company's
1994 Annual Report on Form 10-K.
10(c)(xv) Resolution Concerning The
Termination of The Director's
Retirement Plan, dated
8/7/97.
10(c)(xvi)Resolution Regarding The Director's
Option and Option Agreement, dated
8/7/97.
10(c)(xvii)The Restricted Stock Unit Agreement
between the Company and
E.T.Gravette, Jr.
10(c)(xviii)The Company's 1997 Non-Qualified Incorporated herein by
Stock Option Plan. Registration Statement on
Form S-8, File#33-33577.
10(d) Asset Purchase Agreement dated Incorporated herein by reference to
6/3/92, between Turner Steiner Exhibit 10(d) to the Company's 1992
International SA and Turner Annual Report on Form 10-K.
International Industries, Inc.,
and Turner International
(U.K.) Ltd.
10(e) Joint Venture and Shareholders' Incorporated herein by reference to
Agreement dated 6/3/92 between Exhibit 10(e) to the Company's
The Turner Corporation and 1992 Annual Report on Form 10-K.
Karl Steiner Holding AG.
10(f) Purchase Agreement dated June Incorporated herein by reference to
3, 1992 between Karl Steiner Exhibit 1 to the Company's Form
Holding AG and The Turner 8-K dated July 20, 1992.
Corporation.
10(g)(i) The Company's Revolving Credit Incorporated herein by reference to
Facility dated as of 12/30/92. Exhibit 10(g)(i) to the Company's
1993 Annual Report on Form 10-K.
10(g)(ii) Amendment No. 1 to Credit Incorporated herein by reference to
Agreement dated as of Exhibit 10(g)(ii)to the Company's
12/31/93. 1993 Annual Report on Form 10-K.
10(g)(iii)Amended and restated Credit Incorporated herein by reference to
Agreement as of 7/1/96. Exhibit 10(g)(iii) to the Company's
1996 Annual Report on Form 10-K.
10(h) Form of Change of Control Agreement
between The Turner Corporation and Messrs.
Parmelee, Smith, Sleeman, respectively,
President, Chief Administrative Officer,
Chief Financial Officer, and between The
Turner Corporation and Messrs. Fee,
Robinson, Manteuffel, respectively, President,
and Executive Vice Presidents of Turner
Construction Company dated November
25, 1997.
10(i) Form of Change of Control Agreement with
59 other officers of parent or subsidiaries
dated November 25, 1997.
10(j) Note Purchase Agreement 11.74% Incorporated herein by reference to
Senior Notes Due 2001 dated Exhibit 10(j) to the Company's 1994
as of December 1, 1994. Annual Report on Form 10-K.
11 Computation of earnings Incorporated herein by reference to
per share. Note 14 to the Company's
Consolidated Financial Statements.
21 Subsidiaries of the Registrant.
27(a) Financial Data Schedule-1997.
27(b) Financial Data Schedule-1996 Restated.
</TABLE>
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 1313, 19987 By: /s/ E. T. Gravette, Jr.
E. T. Gravette, Jr.
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
/s/H. Baumann-Steiner Director March 13, 1998
(H. Baumann-Steiner)
/s/W. G. Ehlers Director March 13, 1998
(W. G. Ehlers)
/s/R. E. Fee Director March 13, 1998
(R. E. Fee)
/s/A. G. Fieger Director March 13, 1998
(A. G. Fieger)
/s/E. T. Gravette, Jr. Chairman of the Board, March 13, 1998
(E. T. Gravette, Jr.) Chief Executive Officer
and Director
/s/L. Lomo Director March 13, 1998
(L. Lomo)
/s/C. H. Moore, Jr. Director March 13, 1998
(C. H. Moore, Jr.)
/s/H. J. Parmelee President, Chief March 13, 1998
(H. J. Parmelee) Operating Officer and
President and Director
/s/D. G. Sleeman Senior Vice President March 13, 1998
(D. G. Sleeman) and Chief Financial Officer
/s/G. J. Records, Jr. Director March 13, 1998
(G. J. Records, Jr.)
/s/P. K. Steiner Director March 13, 1998
(P. K. Steiner)
/s/G. A. Walker Director March 13, 1998
(G. A. Walker)
/s/J. O. Whitney Director March 13, 1998
(J. O. Whitney)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 20, 1998 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 13, 1998
3. Exhibits
<TABLE>
<S> <C> <C>
Exhibit No. Description
3(a)(i) Certificate of Incorporation, Incorporated herein by reference to
as amended to 7/10/89. Exhibit 3 to the Registration
Statement on Form S-14 of The
Turner Corporation, No.2-90235.
3(a)(ii) Amendment dated 5/19/86. Incorporated herein by reference to
Exhibit 3(a) to the Company's 1989
Annual Report on Form 10-K.
3(a)(iii) Amendment dated 9/12/88. Annual Report on Form 10-K.
3(a)(iv) Amendment dated 7/10/89.
3(b) By-Laws, as amended 10/10/97. Incorporated herein by reference to
Exhibit 3(b) to the Company's
1993 Annual Report on Form
10-K.
3(c)(i) Certificate of Designations Incorporated herein by reference to
relating to Series C 8-1/2% Exhibit 2 to the Company's Form
Convertible Preference Stock. 8-K dated July 20, 1992.
3(c)(ii) Certificate of Designations Incorporated herein by reference to
relating to Series D 8-1/2% Exhibit 3 to the Company's Form
Convertible Preference Stock. 8-K dated July 20, 1992.
3(c)(iii) Certificate of Designations Incorporated herein by reference to
relating to Series E 8-1/2% Exhibit 4 to the Company's Form
Convertible Preference Stock. 8-K dated July 20, 1992.
4(a) Shareholders' Rights Agreement. Incorporated herein by reference to
the Registration Statement on Form
8-A dated September 9, 1988.
4(b) Agreement regarding Security Incorporated herein by reference to
Holder's Rights, Obligations Exhibit 5 to the Company's Form 8-K
and Options. dated July 20,1992.
10(c)(i) The Company's Executive Incentive Incorporated herein by reference to
Compensation 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 Option Incorporated herein by reference to
Plan, as amended. Exhibit 10(c)(v)to the Company's
1988 Annual Report on Form 10-K.
10(c)(iii)The Company's 1986 Stock Option Incorporated herein by reference to
Plan, as amended. Exhibit 10(c)(vii)to the as amended
Company's 1988Annual Report on
Form 10-K.
10(c)(iv) The Company's 1992 Stock Option Incorporated herein by reference to
Plan. the Registration Statement on Form
Form S-8.
10(c)(v) The Company's Incentive Incorporated herein by reference to
Compensation Plan. 10(c)(v)to the Company's 1983
Annual Report on Form 10-K.
10(c)(vi) The Company's Retirement Benefit Incorporated herein by reference to
Equalization Plan, amended and Exhibit 10(c)(vi)to the Company's
restated as of 1/22/92. 1992 Annual Report on Form 10-K.
10(c)(vii)The Company's Defined Contribution Incorporated herein by reference to
Retirement Equalization Plan. Exhibit 10(c)(vii)to the Company's
1992 Annual Report on Form 10-K.
10(c)(viii)The Company's Supplemental Incorporated herein by reference to
Executive Defined Benefit 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 to
Executive Defined Contribution Exhibit 10(c)(ix) to the Company's
Retirement Plan. 1992 Annual Report on Form 10-K.
10(c)(x) Tax Deferred Savings Income Incorporated herein by reference to
Plan amended and restated Exhibit 10(c)(ix) to the Company's
as of 1/1/89. 1991 Annual Report on Form 10-K.
10(c)(xi) Option Exchange and Stock Incorporated herein by reference to
Purchase Plan. Registration Statement on Form S-8,
File No. 33-33867.
10(c)(xii)Employees'Retirement Plan Incorporated herein by reference to
Restated as of 1/1/87. Exhibit 10(c)(vii) to the Company's
1991 Annual Report on Form 10-K.
10(c)(xiii)Employees' Retirement Incorporated herein by reference to
Income Plan as of 4/1/91. Exhibit 10(c)(viii) to the Company's
1991 Annual Report on Form 10-K.
10(c)(xiv)Directors' Retirement Plan. Incorporated herein by reference to
Exhibit 10(c)(xiv) to the Company's 1994
Annual Report on Form 10-K.
10(c)(xv) Resolution Concerning The
Termination of The Director's
Retirement Plan, dated
8/7/97.
10(c)(xvi)Resolution Regarding The
Director's Option and Option
Agreement, dated 8/7/97.
10(c)(xvii)The Restricted Stock Unit
Agreement between the Company
and E. T. Gravette, Jr.
10(c)(xviii)The Company's 1997 Incorporated herein by reference to
Non-Qualified Stock Option Registration Statement on Form S-8,
Plan. File #33-33577.
10(d) Asset Purchase Agreement dated Incorporated herein by reference to
6/3/92, between Turner Steiner Exhibit 10(d) to the Company's 1992
International SA and Turner Annual Report on Form 10-K.
International Industries, Inc.,
and Turner International
(U.K.) Ltd.
10(e) Joint Venture and Shareholders' Incorporated herein by reference to
Agreement dated 6/3/92, between Exhibit 10(e) to the Company's 1992
The Turner Corporation and Annual Report on form 10-K.
Karl Steiner Holding AG.
10(f) Purchase Agreement dated June 3, Incorporated herein by reference to
1992 between Karl Steiner Exhibit 1 to the Company's Form 8-K
Holding AG and The Turner dated July 20, 1992.
Corporation.
10(g)(i) The Company's Revolving Credit Incorporated herein by reference to
Facility dated as of 12/30/92. Exhibit 10(g)(i) to the Company's
1993 Annual Report on Form 10-K.
10(g)(ii) Amendment No. 1 to Credit Incorporated herein by reference to
Agreement dated as of 12/31/93. Exhibit 10(g)(ii) to the Company's
1993 Annual Report on Form 10-K.
10(g)(iii)Amended and restated Credit Incorporated herein by reference to
Agreement as of 7/1/96. Exhibit 10(g)(iii) to the Company's
1996 Annual Report on Form 10-K.
10(h) Form of Change of Control
Agreement between The Turner
Corporation and Messrs.
Parmelee, Smith, Sleeman,
respectively,President, Chief
Administrative Officer,
Chief Financial Officer, and
between The Turner Corporation
and Messrs. Fee, Robinson,
Manteuffel, respectively,
President, and Executive Vice
Presidents of Turner Construction
Company dated November 25, 1997.
10(i) Form of Change of Control Agreement
with 59 other officers of parent
or subsidiaries dated November
25, 1997.
10(j) Note Purchase Agreement 11.74% Incorporated herein by reference to
Senior Notes Due 2001 dated as Exhibit 10(j) to the Company's
of December 1, 1994. 1994 Annual Report on Form 10-K.
11 Computation of earnings per Incorporated herein by reference to
share. Note 14 to the Company's
Consolidated Financial Statements.
21 Subsidiaries of the Registrant.
27(a) Financial Data Schedule-1997.
27(b) Financial Data Schedule-1996 Restated.
</TABLE>
Exhibit 3(b)
THE TURNER CORPORATION
BY-LAWS
DATED: OCTOBER 10, 1997
THE TURNER CORPORATION
BY-LAWS
ARTICLE I
Meetings of Stockholders
Section 1.1 Annual Meetings. The annual meeting of the
stockholders shall be held each year on such date, and at such time
and place (within or without the State of Delaware) as may be
designated by the Board of Directors.
Section 1.2 Special Meetings. Special meetings of the
stockholders may be called at any time by the Secretary at the
direction of the Board of Directors, to be held on such date, and at
such time and place (within or without the State of Delaware) as may
be designated by the Board of Directors.
Section 1.3 Notice of Meeting; Record Date; Quorum, Voting.
Notice of every meeting of stockholders shall be given, and a record
date for the meeting shall be established, in accordance with the
General Corporation Law of the State of Delaware. The presence at any
meeting, in person or by proxy, of the holders of record of a majority
of the shares then issued and outstanding and entitled to vote shall
be necessary and sufficient to constitute a quorum for the transaction
of business, except as otherwise provided by law. Directors shall be
chosen by a plurality of the votes cast. Except as otherwise provided
by the Certificate of Incorporation of the Corporation or by law, all
other questions shall be determined by a majority of the votes cast.
Section 1.4 Notification of Stockholder Nominations. In order
to nominate one or more candidates for election to the Board of
Directors at an annual meeting of stockholders, not later than 120
days before the first anniversary of the date of the preceding annual
meeting of stockholders, the stockholder must notify the Secretary of
the Corporation in writing of the name of each person whom the
stockholder proposes to nominate for election to the Board of
Directors and provide the Secretary of the Corporation with regard to
each such person the information about that person which would be
required to be included in a proxy statement subject to Section 14 of
the Securities Exchange Act of 1934, as amended (or the applicable
successor to that Section). No nomination by a stockholder will be
valid unless it is the subject of a notice to the Secretary of the
Corporation given as required by this Paragraph.
ARTICLE II
Board of Directors
Section 2.1 Number. The number of Directors which shall
constitute the whole Board of Directors shall be not less than nine
nor more than fifteen, as may be fixed from time to time by resolution
of the Board of Directors. The Board of Directors shall consist of
twelve Directors until changed as herein provided.
Section 2.2 Classification, Election and Term of Office. The
Board of Directors shall be divided into three classes, which shall be
as nearly equal in number as possible. Directors shall be elected for
three year terms. Newly created Directorships resulting from an
increase in the number of Directors or vacancies occurring in the
Board of Directors may be filled by the Board. Each Director (whether
elected at an annual meeting or to fill a vacancy or otherwise) shall
continue in office until his or her successor shall have been elected
and qualified or until his or her earlier death, resignation or
removal in the manner hereinafter provided.
Section 2.3 Meetings, Quorum and Manner of Acting. A meeting
("Organization Meeting") of the Board of Directors shall be held for
organization, for the election of officers and for the transaction of
such other business as may properly come before the meeting, within
thirty days after each annual election of Directors.
The Board of Directors by resolution may provide for the
holding of regular meetings and may fix the times and places at which
such meetings shall be held. Notice of regular meetings shall not be
required to be given, provided that whenever the time or place of
regular meetings shall be fixed or changed, notice of the action shall
be mailed promptly to each Director who shall not have been present at
the meeting at which the action was taken, addressed to the Director
at his or her residence or usual place of business.
Special meetings of the Board of Directors shall be held
upon call by or at the direction of the Chairman of the Board, the
President or any three Directors. Except as otherwise required by
law, notice of each special meeting shall be mailed to each Director,
addressed to the Director at his or her residence or usual place of
business, at least two days before the day on which the meeting is to
be held, or shall be sent to the Director at such place by telegram or
facsimile, or telephoned or delivered to the Director personally, not
later than the day before the day on which the meeting is to be held.
Such notice shall state the time and place of the meeting, but need
not state the purpose thereof, unless otherwise required by law.
Notice of any meeting need not be given to any Director who
shall attend the meeting in person or who shall waive notice thereof,
before or after the meeting, in writing. At each meeting of the Board
of Directors, the presence of a majority of the whole Board of
Directors as constituted from time to time shall be necessary and
sufficient to constitute a quorum for the transaction of business. In
the absence of a quorum, a majority of those present at the time and
place of any meeting may adjourn the meeting from time to time until a
quorum shall be present and the meeting may be held as adjourned
without further notice or waiver. A majority of those present at any
meeting at which a quorum is present may decide any question brought
before such meeting, except as otherwise provided by law, the
Certificate of Incorporation of the Corporation or these By-Laws.
Members of the Board of Directors may participate in a
meeting of the Board by means of conference telephone or similar
communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting in
such manner shall constitute presence in person at the meeting.
Section 2.4 Action Without a Meeting. Any action which might
have been taken under these By-Laws by vote of the Directors at a
meeting of the Board of Directors may be taken without a meeting if
all the members of the Board of Directors consent thereto in writing,
and the writing or writings are filed with the minutes of the Board of
Directors.
Section 2.5 Resignation of Directors. Any Director may resign
at any time by giving written notice of such resignation to the Board
of Directors. Unless otherwise specified in the notice, the
resignation shall take effect upon receipt thereof by the Board of
Directors, and the acceptance of such resignation shall not be
necessary to make it effective.
Section 2.6 Compensation of Directors. Directors who are not
employees of the Corporation or any subsidiary of the Corporation
shall receive such reasonable compensation for their services as
Directors, whether in the form of salary or a fixed fee for attendance
at meetings, as the Board of Directors may from time to time
determine, as well as reimbursement for expenses. Directors who are
employees of the Corporation or its subsidiaries may not receive
compensation, but shall be reimbursed for expenses incurred in
connection with, performing as Directors of the Corporation. Nothing
herein contained shall be construed to preclude any Director from
serving the Corporation or any subsidiary in any other capacity and
receiving compensation therefor.
ARTICLE III
Officers
Section 3.1 Officers. The Board of Directors shall elect a
Chairman of the Board, a President, one or more Vice Presidents, a
Treasurer and a Secretary and, in its discretion, may elect a Vice
Chairman of the Board, one or more Executive Vice Presidents, one or
more Senior Vice Presidents and a Controller, all of which officers
shall be Executive Officers. The Board of Directors may designate one
or more of these officers as the Chief Financial Officer, the Chief
Administrative Officer and the Chief Accounting Officer. The Board of
Directors may, from time to time, fill vacancies and elect additional
Executive Officers and such other officers (including one or more
Assistant Vice Presidents, Assistant Controllers, Assistant Treasurers
and Assistant Secretaries) as it may deem appropriate. Any two or
more offices may be held by the same person, except that the Offices
of the President and the Secretary may not be held by the same person.
Section 3.2. Election, Term of Office and Qualifications. Each
officer (except such officers as may be appointed in accordance with
the provisions of Section 3.3) shall be elected by the Board of
Directors. Except as specified in the resolution of the Board of
Directors electing a particular officer, each officer will hold office
until the officer resigns in the manner provided in Section 3.4 or is
removed in the manner provided in Section 3.5. The Chairman of the
Board, the Vice Chairman of the Board, if any, and the President must
be members of the Board of Directors. None of the other officers need
be a Director.
Section 3.3 Subordinate Officers and Agents. The Board of
Directors may from time to time appoint other officers or agents to
hold office for such period, have such authority and perform such
duties as may be provided in the resolutions appointing them. The
Board of Directors may delegate to any officer or agent the power to
appoint any such subordinate officers or agents and to prescribe their
respective authorities and duties.
Section 3.4 Resignations. Any officer may resign at any time by
giving written notice of such resignation to the Board of Directors,
or, in the case of a subordinate officer appointed in accordance with
Section 3.3, the appointing officer or agent. Unless otherwise
specified in such written notice, a resignation will take effect when
it is received by the Board of Directors, or, in the case of a
subordinate officer, by the appointing officer or agent, and the
acceptance of a resignation will not be necessary to make it
effective.
Section 3.5 Removal. Except as specified in the resolution of
the Board of Directors electing a particular officer, any officer
designated in Section 3.1 may be removed with or without cause at any
time by the Board of Directors. Any officer or agent appointed in
accordance with Section 3.3 may be removed with or without cause at
any time by the Board of Directors or by any Executive Officer of the
Corporation.
Section 3.6 Chairman of the Board. The Chairman of the Board
may be the Chief Executive Officer. The Chairman of the Board shall
preside at all meetings of the Board of Directors and of the
stockholders, and shall have such other powers and perform such other
duties as are given to him or her by these By-Laws or are from time to
time assigned to him or her by the Board of Directors. In the absence
or incapacity of the Chairman of the Board, (i) if there is a Vice
Chairman of the Board, all the duties of the Chairman of the Board,
shall be performed by Vice Chairman of the Board and (ii) if there is
no Vice Chairman of the Board, all the duties of the Chairman of the
Board shall be performed by the President.
Section 3.7 President. The President may be the Chief Executive
Officer of the Corporation. If the President is not the Chief
Executive Officer, the President shall assist the Chief Executive
Officer in the control and supervision of the business, property and
affairs of the Corporation. The President shall also have such
additional powers and duties as from time to time may be assigned to
the President by the Board of Directors or by the Chairman of the
Board. The President shall be the Chief Operating Officer of the
Corporation. In the absence or incapacity of the President, all the
duties of the President shall be performed by the Vice Chairman or, if
there is no Vice Chairman, by such other Executive Officer as is
designated by the Board of Directors.
Section 3.8 Vice Chairman of the Board. In the absence or
incapacity of the Chairman of the Board or the President, the Vice
Chairman of the Board, if any, shall perform the duties of the
Chairman of the Board or the President, as the case may be. The Vice
Chairman of the Board shall also have such other powers and perform
such other duties as from time to time may be assigned to the Vice
Chairman of the Board by the Board of Directors or by the Chairman of
the Board.
Section 3.9 Executive Vice Presidents and Senior Vice
Presidents. Executive Vice Presidents and Senior Vice Presidents
shall have such powers and perform such duties as may be assigned to
them by the Board of Directors, the Chief Executive Officer or the
President.
Section 3.10 Controller. The Controller, if there is one,
shall keep or cause to be kept full and accurate accounts of the
financial transactions of the Corporation and shall render an account
of such transactions whenever required by the Chief Executive Officer
or the Board of Directors. The Controller shall also perform such
other duties as the Chief Executive Officer or the President may
assign to the Controller.
Section 3.11 Treasurer. The Treasurer shall have custody of all
the funds and securities of the Corporation and shall also perform
such other duties as the Chief Executive Officer or the President may
assign to the Treasurer.
Section 3.12 Secretary. The Secretary shall give all required
notices of the meetings of the stockholders and of the Board of
Directors, attend and act as Secretary at all meetings of the
stockholders, the Board of Directors and the Executive Committee, keep
the records thereof and be the custodian of the seal of the
Corporation. The Secretary shall also perform such other duties as
the Chairman, Vice Chairman, Chief Executive Officer or the President
may assign to the Secretary.
Section 3.13 Chief Executive Officer. The Chief Executive
Officer will be the Chairman of the Board, the President or another
person designated by the Board of Directors. The Chief Executive
Officer shall have the responsibility for carrying out the policies of
the Board of Directors and, subject to the control of the Board, shall
provide general leadership in matters of policy and planning and have
general responsibility for supervising the business, property and
affairs of the Corporation.
Section 3.14 Chief Operating Officer. The Chief Operating
Officer shall have responsibility for overseeing the operations of the
Corporation and shall have such additional powers and duties as are
assigned to the Chief Operating Officer by the Chief Executive
Officer.
Section 3.15 Chief Financial Officer. The Chief Financial
Officer shall oversee the financial activities of the Corporation and
shall have such additional powers and duties as are assigned to the
Chief Financial Officer by the Chief Executive Officer.
Section 3.16 Chief Administrative Officer. The Chief
Administrative Officer shall oversee the operation of all the
administrative services of the corporation and shall have such
additional powers and duties as are assigned to the Chief
Administrative Officer by the Chief Executive Officer or the
President.
Section 3.17 Chief Accounting Officer. The Chief Accounting
Officer shall have responsibility for overseeing the financial
accounting and financial controls of the Corporation and shall have
such additional powers and duties as are assigned to the Chief
Accounting Officer by the Chief Executive Officer, the President or
the Chief Financial Officer.
Section 3.18 General Duties of Officers. Each officer other
than those specified above, shall perform such duties and have such
powers as from time to time may be assigned to him or her by the Board
of Directors, the Chief Executive Officer or the President.
ARTICLE IV
Committees
Section 4.1 Executive Committee. The Board of Directors at any
time may designate an Executive Committee consisting of the Chairman
of the Board, the Vice Chairman, if any, the Chief Executive Officer,
the President, and at least three additional members of the Board of
Directors. The members of the Executive Committee, other than the
Chairman of the Board and the President, will serve at the pleasure of
the Board of Directors. The Chairman of the Board shall be the
Chairman of the Executive Committee. If any member of the Committee
shall cease to be a member of the Board of Directors, he or she shall
cease to be a member of the Committee. If any vacancy in the
Committee shall occur, the remaining members of the Committee, though
less than a quorum, shall continue to act until such vacancy is filled
by the Board of Directors. The Secretary of the Corporation shall be
the Secretary of the Committee. The Committee may adopt rules for the
conduct of its business. Meetings of the Committee shall be held at
the call of the Chairman of the Executive Committee or any member of
the Committee. Four members will constitute a quorum at any meeting
of the Committee.
During the intervals between the meetings of the Board of
Directors, the Executive Committee shall have all the authority of the
Board of Directors, except in reference to (i) approving or adopting,
or recommending to the stockholders, any action or matter expressly
required by the General Corporation Law of the State of Delaware to be
submitted to stockholders for approval or (ii) adopting, amending or
repealing any By-law of the Corporation, or (iii) amending or
repealing any resolution of the Board of Directors. Action taken at
any meeting of the Committee shall be reported at the next meeting of
the Board of Directors.
Section 4.2 Compensation and Stock Option Committee. The Board
of Directors at any time may designate a Compensation and Stock Option
Committee consisting of five Directors who are not Executive Officers
or employees of the Corporation or any subsidiary and who are eligible
to serve under the terms of plans which the Board of Directors has
specified are to be administered by the Committee. Except to the
extent prohibited by specific plans or the laws (including tax laws)
regarding specific plans, or to the extent it would adversely affect
available exemptions from Section 16(b) of the Securities Exchange Act
of 1934, as amended, the Chairman of the Board, the Vice Chairman, the
Chief Executive Officer and the President of the Corporation will be
non-voting members of the Committee. The members of the Committee
shall serve at the pleasure of the Board of Directors. If any member
of the Committee shall cease to be a member of the Board of Directors,
or otherwise becomes ineligible to serve, he or she shall cease to be
a member of the Committee.
The Committee shall administer incentive plans to the extent
specified by the Board of Directors, will approve the salaries and
other compensation paid to the Executive Officers of the Corporation,
other than the compensation of the Chairman of the Board, the Vice
Chairman of the Board, if any, the Chief Executive Officer and the
President, the compensation of whom will be approved by the Board of
Directors. Action taken at any meeting of the Committee shall be
reported at the next meeting of the Board of Directors.
Section 4.3 Audit Committee. At each Organization Meeting, the
Board of Directors shall designate an Audit Committee, which shall
consist of five Directors who are not Executive Officers or employees
of the Corporation or any subsidiary. The members of the Committee
shall serve at the pleasure of the Board of Directors. If any member
of the Committee shall cease to be a member of the Board of Directors,
or otherwise becomes ineligible to serve, he or she shall cease to be
a member of the Committee.
The Committee shall recommend the firm of independent public
accountants to act as the Corporation's independent auditors, confer
with the Corporation's independent auditors as to the scope of their
proposed audit, review the findings and recommendations of the
independent auditors, review with the Corporation's internal audit and
accounting personnel the Corporation's financial controls, procedures
and practices, and review the Corporation's compliance with any
operating policy statement which may be in effect. Action taken at
any meeting of the Committee shall be reported at the next meeting of
the Board of Directors.
Section 4.4 Nominating Committee or Committee on Corporate
Governance. The Board of Directors shall designate a Nominating
Committee or a Committee on Corporate Governance, consisting of five
Directors who are not Executive Officers or employees of the
Corporation or any subsidiary. The Chairman of the Board, the Vice
Chairman, if any, the Chief Executive Officer and the President will
be non-voting members of the Committee. The members of the Committee,
other than the Chairman of the Board and the President, shall serve at
the pleasure of the Board of Directors. If any member of the
Committee shall cease to be a member of the Board of Directors, or
otherwise becomes ineligible to serve, he or she shall cease to be a
member of the Committee.
The Committee, shall, among other things, select and
recommend nominees for directorships to the Board of Directors.
Action taken at any meeting of the Committee shall be reported at the
next meeting of the Board of Directors.
Section 4.5 Other Committees. The Board of Directors may
designate such other committees as may from time to time be found
necessary or convenient for the proper conduct of the business of the
Corporation, and may specify the duties and authority of each of those
committees. Each committee designated by the Board of Directors will
consist of five Directors who are not Executive Officers or employees
of the Corporation or any subsidiary. The Chairman of the Board, the
Vice Chairman, if any, the Chief Executive Officer and the President
will serve as non-voting members of each committee designated by the
Board of Directors. Action taken at any meeting of any committee
designated by the Board of Directors shall be reported at the next
meeting of the Board of Directors.
Section 4.6 Actions by Committee Without Meetings. Any action
required or permitted to be taken by any committee of the Board of
Directors may be taken without a meeting if all members of the
committee consent in writing to the adoption of a resolution
authorizing the action.
Section 4.7 Participation in Meetings by Telephone. Any one or
more of the members of any committee of the Board of Directors may
participate in a meeting of such committee by means of a conference
telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a
meeting.
Section 4.8 Corporate Management Group. The Board of Directors
shall designate a Corporate Management Group which shall consist of
the Chairman of the Board, the Vice Chairman, if any, the Chief
Executive Officer, the President, the Chief Financial Officer, the
Chief Administrative Officer and one member of the Executive
Management Group of Turner Construction Company and shall serve at the
pleasure of the Board of Directors. The Corporate Management Group
shall serve as the Senior Operations Group of the Corporation and in
that capacity shall perform whatever oversight duties are deemed
necessary to assure that the operations of the Company are in
accordance with the standards as prescribed by the Board of Directors
or the Chairman of the Board. The Corporate Management Group shall
have such other duties and authority as prescribed by the Board of
Directors or the Chairman.
ARTICLE V
Execution of Instruments and
Deposit of Corporate Funds
Section 5.1 Construction Contracts. The Board of Directors may
from time to time adopt rules regarding authority of Executive
Officers or other employees or agents of the Corporation, or officers,
employees or agents of its subsidiaries, to approve contracts for, and
to submit binding proposals with respect to, the design, the
construction or the management of the construction of buildings and
other projects.
Section 5.2 Guarantees. (a) The Corporation may not guarantee
any single obligation of any other persons (including subsidiaries of
the Corporation), and the Corporation will cause the By-Laws of each
of its wholly-owned subsidiaries to provide that the subsidiary may
not guarantee any single obligation of any other persons (including
other subsidiaries of the Corporation), as to which the obligation of
the Corporation or the subsidiary which guarantees the obligation may
exceed the net worth of The Turner Corporation, without the prior
approval of the Board of Directors. The Board of Directors may from
time to time adopt rules regarding authority of Executive Officers or
other employees or agents of the Corporation, to approve guarantees by
the Corporation as to which the obligation of the Corporation will not
exceed that amount.
(b) The Corporation may not guarantee obligations of other
persons (including subsidiaries of the Corporation) as to which the
cumulative face amount of the guarantee obligations of the
Corporation, Turner Construction Company and their respective
subsidiaries for the preceding twelve month period exceeds in total
four (4) times the net worth of The Turner Corporation (not including
guarantees which have been separately approved by the Board of
Directors) without the prior approval of the Board of Directors.
Section 5.3 Bank Accounts. Funds of the Corporation not
otherwise employed shall be deposited to its credit in such banks or
trust companies or with such bankers or other depositories and in such
general accounts, payroll accounts, dividend accounts or special
accounts as may be designated by the Chairman of the Board, the Vice
Chairman of the Board, if any, the Chief Executive Officer, the
President, an Executive Vice President, the Chief Financial Officer,
the Treasurer or any other Executive Officer authorized to do so by
the Board of Directors.
Section 5.4 Checks and Drafts. All checks or drafts drawn on
the general accounts of the Corporation shall be signed by any two
Executive Officers or such other two persons as may be designated by
the Chairman of the Board, the Vice Chairman of the Board, if any, the
Chief Executive Officer, the President or the Chief Financial Officer,
or any other Executive Officer designated by the Board of Directors.
Checks or drafts drawn on payroll accounts, or dividend
accounts, or special accounts shall be signed by actual or facsimile
signature by any one Executive Officer or by such other person as may
be designated by the Chairman of the Board, the Vice Chairman of the
Board, if any, the Chief Executive Officer, the President or the Chief
Financial Officer.
Section 5.5 Notes and Loans. Promissory notes, bills of
exchange and/or acceptances, and loans of Corporation funds must be
signed or, in the case of loans, approved by two Executive Officers,
one of whom shall be the Chairman of the Board, the Vice Chairman of
the Board, if any, the Chief Executive Officer, the President, the
Chief Financial Officer or such other Executive Officer as may be
designated by the Chairman of the Board, the Vice Chairman of the
Board, if any, the Chief Executive Officer or the President.
Section 5.6 Other Contracts and Instruments. All other
contracts and instruments binding the Corporation shall be executed in
the name and on behalf of the Corporation by an Executive Officer or
by such other person as may be authorized by the Board of Directors.
Such authorization may be general or confined to specific instances.
Authorization of a person other than an Executive Officer to execute
contracts and instruments in the name and on behalf of the Company
will not be valid unless set forth in a formal resolution submitted
and approved by the Board of Directors or the members of the Corporate
Management Group as the case may be.
Section 5.7 Surety Bonds. The Chief Financial Officer, or such
other Executive Officer as may be designated by the Chairman of the
Board, the Vice Chairman of the Board, if any, the Chief Executive
Officer or the President may execute surety bonds and the applications
therefor in connection with any proposal or contract which has been
properly authorized.
Section 5.8 Capital Transactions and Investments. Capital
transactions in excess of $250,000 in the case of the Corporation or
Turner Construction Company, and $100,000 in the case of any other
subsidiary, including the purchase or sale of securities, real or
personal property or other investments, not made in the ordinary
course of the construction business of the Corporation or a
subsidiary, and acquisitions of or mergers with other companies shall
be authorized by the Board of Directors. Investments made and
disposed of pursuant to or in connection with the Corporation's cash
management program shall be authorized by the Chief Financial Officer
or such other Executive officer as the Chief Financial Officer or the
Chief Executive Officer may designate. Investments in, or disposals
of, undeveloped or developed real estate by the Corporation or any
subsidiary shall be authorized by the Board of Directors either
specifically or by delegation pursuant to such procedural policies as
may be established from time to time by the Board of Directors.
Section 5.9 Electronic Banking. Electronic banking agreements
entered into in the name of the Corporation must be signed by two
Executive Officers, one of whom shall be either the Chairman of the
Board, the Vice Chairman of the Board, if any, the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or
such other Executive Officer as may be designated by the Chairman of
the Board, the Vice Chairman of the Board, if any, the Chief Executive
Officer, the President or the Chief Financial Officer.
All electronic fund transfers must be authorized by two
Executive Officers, one of whom shall be either the Chairman of the
Board, the Vice Chairman of the Board, if any, the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or
such other Executive Officer or individual as may be designated by the
Chairman of the Board, the Vice Chairman of the Board, if any, the
Chief Executive Officer, the President or the Chief Financial Officer.
ARTICLE VI
Corporate Seal
Section 6.1 Corporate Seal. The corporate seal shall be
circular in form and shall bear the name of the Corporation and words
and figures denoting its organization under the laws of the State of
Delaware and the year thereof and otherwise shall be in such form as
shall be approved from time to time by the Board of Directors.
ARTICLE VII
Amendments
Section 7.1 Amendments. The By-Laws of the Corporation may be
amended or repealed and new By-Laws may be made, by an affirmative
vote of holders of a majority of the outstanding shares of stock of
the Corporation entitled to vote, or by the affirmative vote of a
majority of the Directors present at any meeting of the Board of
Directors.
ARTICLE VIII
Indemnification
Section 8.1 General. Each person who was or is made a party or
is threatened to be made a party to or is involved (including, without
limitation, as a witness) in any threatened, pending or completed
action, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or any other proceeding, whether
civil, criminal, administrative or investigative ("Proceeding")
brought by reason of the fact that such person (the "Indemnitee") is
or
was a director or officer of the Corporation or is or was serving at
the request of the Corporation as a director or officer of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit
plan, whether the basis of such Proceeding is alleged action in an
official capacity as a director or officer or in any other capacity
while serving as such a director or officer, shall be indemnified and
held harmless by the Corporation to the full extent authorized by the
General Corporation Law of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), or by other applicable law as
then in effect, against all expenses, liabilities, losses and claims
(including attorneys' fees, judgments, fines, excise taxes under the
Employee Retirement Income Security Act of 1974, as amended from time
to time, penalties and amounts to be paid in settlement) actually
incurred or suffered by such Indemnitee in connection with such
Proceeding (collectively, "Losses").
Section 8.2 Derivative Actions. The Corporation shall
indemnify any person who was or is a party or is threatened to be made
a party to or is involved (including, without limitation, as a
witness) in any Proceeding brought by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact
that such person (also an "Indemnitee") is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation or of a
partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan, against Losses
actually incurred or suffered by the Indemnitee in connection with the
defense or settlement of such action or suit if the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably believed
to be in or not opposed to the best interests of the Corporation,
provided that no indemnification shall be made in respect of any
claim, issue or matter as to which Delaware law expressly prohibits
such indemnification by reason of an adjudication of liability of the
Indemnitee unless and only to the extent that the Court of Chancery of
the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, the Indemnitee is fairly and reasonably entitled to indemnity
for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 8.3 Indemnification in Certain Cases. Notwithstanding
any other provision of this Article VIII, to the extent that an
Indemnitee has been wholly successful on the merits or otherwise in
any Proceeding referred to in Sections 8.1 or 8.2 of this Article VIII
on any claim, issue or matter therein, the Indemnitee shall be
indemnified against Losses actually incurred or suffered by the
Indemnitee in connection therewith. If the Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Corporation shall indemnify the
Indemnitee, against Losses actually incurred or suffered by the
Indemnitee in connection with each successfully resolved claim, issue
or matter. In any review or Proceeding to determine such extent of
indemnification, the Corporation shall bear the burden of proving any
lack of success and which amounts sought in indemnity are allocable to
claims, issues or matters which were not successfully resolved. For
purposes of this Section 8.3 and without limitation, the termination
of any such claim, issue or matter by dismissal with or without
prejudice shall be deemed to be a successful resolution as to such
claim, issue or matter.
Section 8.4 Procedure. (a) Any indemnification under Sections
8.1 and 8.2 of this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the Indemnitee is proper (except
that the right of the Indemnitee to receive payments pursuant to
Section 8.5 of this Article VIII shall not be subject to this Section
8.4) in the circumstances because the Indemnitee has met the
applicable standard of conduct. Such determination shall be made
promptly, but in no event later than 60 days after receipt by the
Corporation of the Indemnitee's written request for indemnification.
The Secretary of the Corporation shall, promptly upon receipt of the
Indemnitee's request for indemnification, advise the Board of
Directors that the Indemnitee has made such request for
indemnification.
(b) The entitlement of the Indemnitee to indemnification shall
be determined in the specific case (1) by the Board of Directors by a
majority vote of the directors who are not parties to such Proceeding,
even though less than a quorum (the "Disinterested Directors"), or (2)
by a committee of the Disinterested Directors designated by a majority
vote of the Disinterested Directors, even though less than a quorum,
or (3) if there are no Disinterested Directors, or if such
Disinterested Directors so direct, by independent legal counsel, or
(4) by the stockholders.
(c) In the event the determination of entitlement is to be made
by independent legal counsel, such independent legal counsel shall be
selected by the Board of Directors and approved by the Indemnitee.
Upon failure of the Board of Directors to so select such independent
legal counsel or upon failure of the Indemnitee to so approve, such
independent legal counsel shall be selected by the American
Arbitration Association in New York, New York or such other person as
such Association shall designate to make such selection.
(d) If the Board of Directors or independent legal counsel shall
have determined that the Indemnitee is not entitled to indemnification
to the full extent of the Indemnitee's request, the Indemnitee shall
have the right to seek entitlement to indemnification in accordance
with the procedures set forth in Section 8.6 of this Article VIII.
(e) If the person or persons empowered pursuant to Section
8.4(b) of this Article VIII to make a determination with respect to
entitlement to indemnification shall have failed to make the requested
determination within 60 days after receipt by the Corporation of such
request, the requisite determination of entitlement to indemnification
shall be deemed to have been made and the Indemnitee shall be
absolutely entitled to such indemnification, absent (i)
misrepresentation by the Indemnitee of a material fact in the request
for indemnification or (ii) a final judicial determination that all or
any part of such indemnification is expressly prohibited by law.
(f) The termination of any proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, adversely affect the rights of the
Indemnitee to indemnification hereunder except as may be specifically
provided herein, or create a presumption that the Indemnitee did not
act in good faith and in a manner which the Indemnitee reasonably
believed to be in or not opposed to the best interests of the
Corporation or create a presumption that (with respect to any criminal
action or proceeding) the Indemnitee had reasonable cause to believe
that the Indemnitee's conduct was unlawful.
(g) For purposes of any determination of good faith hereunder,
the Indemnitee shall be deemed to have acted in good faith if the
Indemnitee's action is based on the records or books of account of the
Corporation or an affiliate, including financial statements, or on
information supplied to the Indemnitee by the officers of the
Corporation or an affiliate in the course of their duties, or on the
advice of legal counsel for the Corporation or an affiliate or on
information or records given or reports made to the Corporation or an
affiliate by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care to the
Corporation or an affiliate. The Corporation shall have the burden of
establishing the absence of good faith. The provisions of this
Section 8.4(g) of this Article VIII shall not be deemed to be
exclusive or to limit in any way the other circumstances in which the
Indemnitee may be deemed to have met the applicable standard of
conduct set forth in these By-Laws.
(h) The knowledge and/or actions, or failure to act, of any
other director, officer, agent or employee of the Corporation or an
affiliate shall not be imputed to the Indemnitee for purposes of
determining the right to indemnification under these By-Laws.
Section 8.5 Advances for Expenses and Costs. All expenses
(including attorneys' fees) incurred by or on behalf of the Indemnitee
(or reasonably expected by the Indemnitee to be incurred by the
Indemnitee within three months) in connection with any Proceeding
shall be paid by the Corporation in advance of the final disposition
of such Proceeding within twenty days after the receipt by the
Corporation of a statement or statements from the Indemnitee
requesting from time to time such advance or advances whether or not a
determination to indemnify has been made under Section 8.4 of this
Article VIII. The Indemnitee's entitlement to such advancement of
expenses shall include those incurred in connection with any
Proceeding by the Indemnitee seeking an adjudication or award in
arbitration pursuant to these By-Laws. The financial ability of an
Indemnitee to repay an advance shall not be a prerequisite to the
making of such advance. Such statement or statements shall reasonably
evidence such expenses incurred (or reasonably expected to be
incurred) by the Indemnitee in connection therewith and shall include
or be accompanied by a written undertaking by or on behalf of the
Indemnitee to repay such amount if it shall ultimately be determined
that the Indemnitee is not entitled to be indemnified therefor
pursuant to the terms of this Article VIII.
Section 8.6 Remedies in Cases of Determination Not to Indemnify
or to Advance Expenses. (a) In the event that (i) a determination is
made that the Indemnitee is not entitled to indemnification hereunder,
(ii) advances are not made pursuant to Section 8.5 of this Article
VIII or (iii) payment has not been timely made following a
determination of entitlement to indemnification pursuant to Section
8.4 of this Article VIII, the Indemnitee shall be entitled to seek a
final adjudication either through an arbitration proceeding or in an
appropriate court of the State of Delaware or any other court of
competent jurisdiction of the Indemnitee's entitlement to such
indemnification or advance.
(b) In the event a determination has been made in accordance
with the procedures set forth in Section 8.4 of this Article VIII, in
whole or in part, that the Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration referred to in
paragraph (a) of this Section 8.6 shall be de novo and the Indemnitee
shall not be prejudiced by reason of any such prior determination
that the Indemnitee is not entitled to indemnification, and the
Corporation shall bear the burdens of proof specified in Sections 8.3
and 8.4 of this Article VIII in such proceeding.
(c) If a determination is made or deemed to have been made
pursuant to the terms of Sections 8.4 or 8.6 of this Article VIII that
the Indemnitee is entitled to indemnification, the Corporation shall
be bound by such determination in any judicial proceeding or
arbitration in the absence of (i) a misrepresentation of a material
fact by the Indemnitee or (ii) a final judicial determination that all
or any part of such indemnification is expressly prohibited by law.
(d) To the extent deemed appropriate by the court, interest
shall be paid by the Corporation to the Indemnitee at a reasonable
interest rate for amounts which the Corporation indemnifies or is
obliged to indemnify the Indemnitee for the period commencing with the
date on which the Indemnitee requested indemnification (or
reimbursement or advancement of expenses) and ending with the date on
which such payment is made to the Indemnitee by the Corporation.
Section 8.7 Rights Non-Exclusive. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other
Sections of this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under any law, by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in such person's official capacity and as to action in another
capacity while holding such office.
Section 8.8 Insurance. The Corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was
a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to an employee
benefit plan, against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the
power to indemnify such person against such liability under the
provisions of this Article VIII.
Section 8.9 Definition of Corporation. For purposes of this
Article VIII, references to "the Corporation" shall include, in
addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan, shall
stand in the same position under this Article VIII with respect to the
resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence had
continued.
Section 8.10 Other Definitions. For purposes of this Article
VIII, references to "fines" shall include any excise taxes assessed on
a person with respect to any employee benefit plan; and references to
"serving at the request of the Corporation" shall include any service
as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith
and in a manner such person reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
Section 8.11 Survival of Rights. The indemnification and
advancement of expenses provided by, or granted pursuant to this
Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person. No amendment,
alteration, rescission or replacement of these By-Laws or any
provision hereof shall be effective as to an Indemnitee with respect
to any action taken or omitted by such Indemnitee in Indemnitee's
position with the Corporation or any other entity which the Indemnitee
is or was serving at the request of the Corporation prior to such
amendment, alteration, rescission or replacement.
Section 8.12 Indemnification of Employees who are not Directors
or Officers and Indemnification of Agents of the Corporation. The
Corporation may, by action of the Board of Directors from time to
time, grant rights to indemnification and advancement of expenses to
employees who are not directors or officers and to agents of the
Corporation with the same scope and effect as the provisions of this
Article VIII with respect to the indemnification of directors and
officers of the Corporation.
Section 8.13 Savings Clause. If this Article VIII or any
portion hereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Corporation shall nevertheless
indemnify each person entitled to indemnification under the first
paragraph of this Article VIII as to all losses actually and
reasonably incurred or suffered by such person and for which
indemnification is available to such person pursuant to this Article
VIII to the full extent permitted by any applicable portion of this
Article VIII that shall not have been invalidated and to the full
extent permitted by applicable law.
Exhibit 10(c)(xv)
RESOLUTIONS OF THE BOARD OF DIRECTORS
OF THE TURNER CORPORATION
WHEREAS, The Turner Corporation (the "Company") sponsors The
Turner Corporation Directors' Retirement Plan (the "Retirement Plan")
to provide Retirement Payments to Non-Employee Directors (as those
terms are defined in the Retirement Plan); and
WHEREAS, Section 7 of the Retirement Plan provides that the
Retirement Plan may be amended or terminated at any time by the Board
of Directors of the Company, provided that amendment or termination
may not deprive any Non-Employee Director of benefits to which he or
she is, or may become, entitled for service prior to such amendment or
termination; and
WHEREAS, the Board of Directors deems it advisable and in
the best interest of the Company and its shareholders to terminate the
Retirement Plan as of August 7, 1997 and (i) to continue to provide
Retirement Payments to Non-Employee Directors who retired prior to
August 7, 1997, and (ii) in lieu of Retirement Payments to those
directors who were Non-Employee Directors on August 7, 1997 but who
had not retired as of that date (the "Eligible Directors"), to
provide, on the date that Retirement Payments would have commenced
under the Retirement Plan as in effect on August 7, 1997, 11,450
shares of common stock of the Company (the "Common Stock");
NOW, THEREFORE, IT IS
RESOLVED, that the Retirement Plan be, and hereby is,
terminated effective as of August 7, 1997; provided, however, that any
Non-Employee Director receiving Retirement Payments as of August 7,
1997 shall continue to receive such Retirement Payments as if the
Retirement Plan had remained in effect; and it is further
RESOLVED, that each Eligible Director is hereby granted the
right to receive, at the time specified below, 11,450 shares of Common
Stock (each such grant in respect of 11,450 shares, a "Share Right"),
such Share Right being in lieu of, and in full satisfaction of, each
Eligible Director's right to Retirement Payments under the Retirement
Plan; and it is further
RESOLVED, that, upon the ninetieth (90th) day (or the first
business day thereafter, if such ninetieth (90th) day is not a
business day) following the later of (i) an Eligible Director's
seventieth birthday or (ii) such Eligible Director ceasing to be a
member of the Board of Directors of the Company for any reason (the
"Payment Date"), the Company shall issue and deliver to such Eligible
Director 11,450 shares of Common Stock in settlement of such Eligible
Director's Share Right; provided, however, that (i) if an Eligible
Director ceases to be a member of the Board of Directors of the
Company by reason of his death, (x) the Payment Date shall be the
ninetieth (90th) day following the date of such Eligible Director's
death and (y) the Company in its sole discretion may make a cash
payment to such Eligible Director's designated beneficiary (or, in the
absence of a designated beneficiary, his estate) in lieu of such Share
Right (the price per share of the Common Stock subject to such cash
payment to be the "Fair Market Value" of the shares (defined, for
purposes of these resolutions, as the mean of the high and low prices
at which the Common Stock is reported to have traded in the principal
market (whether consolidated trading on a stock exchange, an
interdealer quotation system or another market) in which the Common
Stock is traded; or, if there is no trade on a particular date, the
mean of the low asked and high bid prices in that market on that
date)); or (ii) in the event of a "Change in Control" (as such term is
defined in The Turner Corporation 1997 Non-Qualified Stock Option Plan
as in effect on August 7, 1997 (the "1997 Plan")) of the Company, the
Payment Date shall be the ninetieth (90th) day following the Change in
Control; and it is further
RESOLVED, that each Eligible Director (or his designated
beneficiary or estate, as the case may be) may elect, by written
notice to the Board of Directors within ninety (90) days prior to the
Payment Date, to have the Company withhold sufficient shares to allow
the Company to pay any taxes due on behalf of the Eligible Director;
provided, however, that the Board of Directors may, in its sole
discretion, in whole or in part, consent to or not consent to such
election; and provided, further, however, that in the event of a
Change in Control, the per share payment in respect of the Share Right
shall be (i) in the same form and amount of consideration (cash,
securities or other property) per share paid to shareholders in the
transaction or series of transactions constituting the Change in
Control, or (ii) if the Change in Control occurs other than upon the
consummation of a transaction or series of transactions, in cash in
the amount of the Fair Market Value of the shares on the date of the
Change in Control; and it is further
RESOLVED, that if a "Change in Capitalization" (as defined
below) occurs, the Share Right shall be adjusted by the Board in good
faith and in a manner that preserves the economic value of the Share
Right immediately prior to the Change in Capitalization (with "Change
in Capitalization" defined as any increase or reduction in the number
of shares of the Common Stock, or any change (including, in the case
of a spin-off or extraordinary dividend, a change in value) in such
shares or exchange of such shares for a different number or kind of
shares or other securities of the Company or another corporation or
other entity or other property, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off,
split-up, issuance of warrants or rights or debt securities, stock
dividend, stock split or reverse stock split, extraordinary dividend,
combination or exchange of shares, repurchase of shares, change in
corporate structure or similar transaction); and it is further
RESOLVED, that, except to the extent provided herein, (i)
participation in the Retirement Plan shall immediately cease as of
August 7, 1997, and (ii) no director other than Eligible Directors
shall be eligible for a Share Right; and it is further
RESOLVED, that the officers of the Company be, and hereby
are, authorized and directed to take all actions they deem necessary
and appropriate to effectuate the foregoing resolutions, and any such
action shall be conclusive evidence that the same is authorized
hereby.
Exhibit 10(c)(xvi)
RESOLUTIONS OF THE BOARD OF DIRECTORS
OF THE TURNER CORPORATION
WHEREAS, The Turner Corporation (the "Company") sponsors The Turner
Corporation Directors' Retirement Plan (the "Retirement Plan") to provide
Retirement Payments to Non-Employee Directors (as those terms are defined in the
Retirement Plan); and
WHEREAS, Section 7 of the Retirement Plan provides that the Retirement
Plan may be amended or terminated at any time by the Board of Directors of the
Company, provided that amendment or termination may not deprive any Non-Employee
Director of benefits to which he or she is, or may become, entitled for service
prior to such amendment or termination; and
WHEREAS, the Board of Directors deems it advisable and in the best
interest of the Company and its shareholders to terminate the Retirement Plan as
of August 7, 1997 and (i) to continue to provide Retirement Payments to Non-
Employee Directors who retired prior to August 7, 1997, and (ii) in lieu of
Retirement Payments to those directors who were Non-Employee Directors on August
7, 1997 but who had not retired as of that date (the "Eligible Directors"), to
provide, on the date that Retirement Payments would have commenced under the
Retirement Plan as in effect on August 7, 1997, 11,450 shares of common stock of
the Company (the "Common Stock");
NOW, THEREFORE, IT IS
RESOLVED, that the Retirement Plan be, and hereby is, terminated
effective as of August 7, 1997; provided, however, that any Non-Employee
Director receiving Retirement Payments as of August 7, 1997 shall continue to
receive such Retirement Payments as if the Retirement Plan had remained in
effect; and it is further
RESOLVED, that each Eligible Director is hereby granted the right to
receive, at the time specified below, 11,450 shares of Common Stock (each such
grant in respect of 11,450 shares, a "Share Right"), such Share Right being in
lieu of, and in full satisfaction of, each Eligible Director's right to
Retirement Payments under the Retirement Plan; and it is further
RESOLVED, that, upon the ninetieth (90th) day (or the first business
day thereafter, if such ninetieth (90th) day is not a business day) following
the later of (i) an Eligible Director's seventieth birthday or (ii) such
Eligible Director ceasing to be a member of the Board of Directors of the
Company for any reason (the "Payment Date"), the Company shall issue and deliver
to such Eligible Director 11,450 shares of Common Stock in settlement of such
Eligible Director's Share Right; provided, however, that (i) if an Eligible
Director ceases to be a member of the Board of Directors of the Company by
reason of his death, (x) the Payment Date shall be the ninetieth (90th) day
following the date of such Eligible Director's death and (y) the Company in its
sole discretion may make a cash payment to such Eligible Director's designated
beneficiary (or, in the absence of a designated beneficiary, his estate) in lieu
of such Share Right (the price per share of the Common Stock subject to such
cash payment to be the "Fair Market Value" of the shares (defined, for purposes
of these resolutions, as the mean of the high and low prices at which the Common
Stock is reported to have traded in the principal market (whether consolidated
trading on a stock exchange, an interdealer quotation system or another market)
in which the Common Stock is traded; or, if there is no trade on a particular
date, the mean of the low asked and high bid prices in that market on that
date)); or (ii) in the event of a "Change in Control" (as such term is defined
in The Turner Corporation 1997 Non-Qualified Stock Option Plan as in effect on
August 7, 1997 (the "1997 Plan")) of the Company, the Payment Date shall be the
ninetieth (90th) day following the Change in Control; and it is further
RESOLVED, that each Eligible Director (or his designated beneficiary
or estate, as the case may be) may elect, by written notice to the Board of
Directors within ninety (90) days prior to the Payment Date, to have the Company
withhold sufficient shares to allow the Company to pay any taxes due on behalf
of the Eligible Director; provided, however, that the Board of Directors may, in
its sole discretion, in whole or in part, consent to or not consent to such
election; and provided, further, however, that in the event of a Change in
Control, the per share payment in respect of the Share Right shall be (i) in the
same form and amount of consideration (cash, securities or other property) per
share paid to shareholders in the transaction or series of transactions
constituting the Change in Control, or (ii) if the Change in Control occurs
other than upon the consummation of a transaction or series of transactions, in
cash in the amount of the Fair Market Value of the shares on the date of the
Change in Control; and it is further
RESOLVED, that if a "Change in Capitalization" (as defined below)
occurs, the Share Right shall be adjusted by the Board in good faith and in a
manner that preserves the economic value of the Share Right immediately prior to
the Change in Capitalization (with "Change in Capitalization" defined as any
increase or reduction in the number of shares of the Common Stock, or any change
(including, in the case of a spin-off or extraordinary dividend, a change in
value) in such shares or exchange of such shares for a different number or kind
of shares or other securities of the Company or another corporation or other
entity or other property, by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, spin-off, split-up, issuance of warrants
or rights or debt securities, stock dividend, stock split or reverse stock
split, extraordinary dividend, combination or exchange of shares, repurchase of
shares, change in corporate structure or similar transaction); and it is further
RESOLVED, that, except to the extent provided herein, (i)
participation in the Retirement Plan shall immediately cease as of August 7,
1997, and (ii) no director other than Eligible Directors shall be eligible for a
Share Right; and it is further
RESOLVED, that the officers of the Company be, and hereby are,
authorized and directed to take all actions they deem necessary and appropriate
to effectuate the foregoing resolutions, and any such action shall be conclusive
evidence that the same is authorized hereby.
Exhibit 10(c)(xvii)
RESTRICTED STOCK UNIT AGREEMENT
THIS AGREEMENT, made as of the 7th day of August, 1997 (the "Grant
Date"), between The Turner Corporation, a Delaware corporation (the "Company"),
and Ellis T. Gravette, Jr. (the "Grantee").
WHEREAS, the Grantee is currently the Chief Executive of the Company,
and the Board of Directors of the Company (the "Board") has determined that it
is in the best interest of the Company and its stockholders to secure the
continued services of the Grantee; and
WHEREAS, in consideration of the grant of Restricted Stock Units as
provided herein, the Grantee has agreed to continue to serve the Company as its
Chief Executive Officer;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Rights.
The Company hereby grants to the Grantee 112,500 Restricted Stock
Units ("RSUs") (as adjusted pursuant to Section 7) subject to, and in accordance
with, the terms and conditions set forth in this Agreement.
2. Time of Payment.
2.1 Payment in respect of all RSUs shall be deferred until Grantee
ceases to be an employee of the Company for any reason and shall be made within
thirty (30) days following such date.
2.2 In the event of a Change in Control, payment in respect of all
RSUs shall be made within thirty (30) days following the date of the Change in
Control.
3. Form of Payment.
3.1 Except as provided in Sections 3.2, and 3.3, payment in respect
of all RSUs shall be made by delivery of shares of the Company's common stock,
par value $1.00 per share (the "Common Stock"), with each RSU representing the
right to receive one (1) share of Common Stock as existing on the date hereof
(and adjusted pursuant to Section 7).
3.2 In the event that the Grantee dies prior to the payment date in
respect of the RSUs, the Company in its sole discretion may make a cash payment
to the Grantee's designated beneficiary (or, in the absence of a designated
beneficiary, his estate) in lieu of all or any portion of the RSUs, such payment
to be in an amount for each such RSU equal to the Fair Market Value of shares of
Common Stock on the date that delivery of the shares of Common Stock in respect
of such RSUs was scheduled to be made.
3.3 In the event of a Change in Control, payment in respect of each
RSU shall be made (i) in the same form and amount of consideration (cash,
securities or other property) paid to shareholders in the transaction or series
of transactions constituting the Change in Control, or (ii) if the Change in
Control occurs other than upon the consummation of a transaction or series of
transactions, in cash in the amount of the Fair Market Value of the Common Stock
on the date of the Change in Control.
4. Right of First Refusal.
The Company shall have a right of first refusal (as described below)
to repurchase any and all shares of Common Stock issued pursuant to this
Agreement from a "Holder" (as defined below) of such shares of Common Stock. If
in any calendar month a Holder of the Common Stock issued pursuant to this
Agreement wishes to sell or transfer shares of such Common Stock, whether
privately or publicly, such Holder must, prior to any such sale or transfer,
give notice of such proposed sale or transfer to the Company at its principal
executive offices, unless such sale or transfer (when added to any other sales
or transfers of such shares in such calendar month) would result in the sale or
transfer of ten thousand (10,000) or fewer of such shares in such calendar
month. The Holder's written notice to the Company must state (i) the name and
address of the proposed transferee, (ii) the number of such shares to be sold or
transferred, (iii) the price per share and (iv) the terms and conditions for
payment of the price; provided, however, that no disclosure of the name and
address of the proposed purchaser or transferee shall be required with respect
to any proposed sale or transfer that is to be effected through a public sale in
which the name of the purchaser or transferee is unknown. Upon receipt of the
Holder's written notice, the Company, or such other party as the Company may
designate, shall, within five (5) business days following such receipt,
thereupon have the right and option to purchase from the Holder such shares
which are (when added to any other sales or transfers of such shares in such
calendar month) in excess of ten thousand (10,000) shares, on the following
terms: (x) if the proposed sale or transfer is to be effected pursuant to a
bona fide offer received by the Holder, on the terms contained in such offer; or
(y) if otherwise, at a price per share in cash equal to the Fair Market Value of
the Common Stock on the day the Company receives the Holder's written notice of
the proposed sale or transfer. If the Company does not exercise its right and
option within five (5) business days following its receipt of the Holder's
written notice, the Holder may thereafter sell or transfer the shares of Common
Stock in accordance with the terms disclosed to the Company; provided, however,
that if such sale or transfer does not occur within five (5) business days
following the expiration of the Company's right and option, the Holder's right
to sell or transfer such shares shall expire and the Holder must thereafter
comply with this Section 4 as to any sale or transfer of any of such shares.
For purposes of this Section 4, "Holder" shall mean the Grantee or his
designated beneficiary or estate.
5. Transferability.
The RSUs may not be transferred, assigned, pledged or alienated by the
Grantee except under the following circumstances: (i) with the express written
consent of the Board or (ii) by will or pursuant to the laws of descent and
distribution. Any attempted transfer, assignment, pledge or alienation not in
accordance with this paragraph shall be null and void and of no force and
effect.
6. Adjustment.
If a "Change in Capitalization" (as defined in Section 7.1) occurs,
the RSUs shall be adjusted by the Board in good faith and in a manner that
preserves the economic value of the RSUs immediately prior to the Change in
Capitalization.
7. Definitions.
For purposes of this Agreement, the following terms shall have the
following definitions:
7.1 "Change in Capitalization" shall mean any increase or reduction
in the number of shares of the Common Stock, or any change (including, in the
case of a spin-off or extraordinary dividend, a change in value) in such shares
or exchange of such shares for a different number or kind of shares or other
securities of the Company or another corporation or other entity or other
property, by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of warrants or
rights or debt securities, stock dividend, stock split or reverse stock split,
extraordinary dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or similar transaction.
7.2 "Change in Control" shall have the same meaning as in The Turner
Corporation 1997 Non-Qualified Stock Option Plan, as in effect on the date
hereof.
7.3 "Fair Market Value" shall mean the average of the high and low
prices at which the Common Stock is reported to have traded in the principal
market (whether consolidated trading on a stock exchange, an interdealer
quotation system or another market) in which the Common Stock is traded, or if
there is no trade on a particular date, "Fair Market Value" shall mean the
average of the low asked and high bid prices in that market on that date;
provided, however, that if the Common Stock is not traded on any such market at
the relevant time, Fair Market Value shall be as determined (i) by the Board in
good faith or (ii) upon the election of the Grantee, by an investment banking
firm or other appraiser mutually acceptable to the Company and the Grantee.
8. Withholding.
The Company shall have the right to deduct from any amounts payable
hereunder any taxes or other amounts required by law to be withheld and shall
not be required to issue or deliver any shares of Common Stock to the Grantee
until the Grantee has made satisfactory arrangements for the payment of all
applicable withholding requirements.
9. Securities Laws.
The obligation of the Company to issue or deliver shares of Common
Stock under this Agreement shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Company.
10. Notices.
Every notice relating to this Agreement shall be in writing and shall
be given by personal delivery or by registered or certified mail, postage
prepaid, return receipt requested, to:
If to the Company: The Turner Corporation
375 Hudson Street
New York, New York 10014
Attn: Corporate Secretary
If to the Grantee: Ellis T. Gravette
3500 State Highway 97A
P.O. Box 177
Chelan, WA 98816
11. Continued Employment.
Nothing in this Agreement shall be interpreted or construed to confer
upon the Grantee any right with respect to continuance of employment by the
Company, nor shall this Agreement interfere in any way with the right of the
Company to terminate the Grantee's employment at any time.
12. General Creditor Status.
The rights of Grantee under this Agreement shall be solely those of an
unsecured creditor of the Company. Any asset acquired or held by the Company or
funds allocated by the Company in connection with the liabilities assumed by the
Company pursuant to this Agreement shall not be deemed to be security for the
performance of the Company's obligations pursuant hereto, but shall be and
remain general assets of the Company.
13. Severability.
Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining
provisions of this Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.
14. Governing Law.
Except as to matters of federal law, this Agreement and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Delaware without giving effect to conflicts of law
principles.
15. Successors in Interest.
This Agreement shall inure to the benefit of and be binding upon any
successor to the Company. This Agreement shall inure to the benefit of the
Grantee's legal representatives. All obligations imposed upon the Grantee and
all rights granted to the Company under this Agreement shall be binding upon the
Grantee's heirs, executors, administrators and successors.
THE TURNER CORPORATION
Attest:
__________________________ By: _____________________________
Sara J. Gozo
Vice President, Secretary
and General Counsel
Attest: AGREED AND ACCEPTED
__________________________ _____________________________
Ellis T. Gravette, Jr.
<TABLE> <S> <C>
<ARTICLE> 5
<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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 153,241
<SECURITIES> 18,902
<RECEIVABLES> 655,100
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,672
<DEPRECIATION> 40,431
<TOTAL-ASSETS> 972,687
<CURRENT-LIABILITIES> 0
<BONDS> 21,719
<COMMON> 5,441
0
860
<OTHER-SE> 69,835
<TOTAL-LIABILITY-AND-EQUITY> 972,687
<SALES> 0
<TOTAL-REVENUES> 3,198,448
<CGS> 0
<TOTAL-COSTS> 3,112,779
<OTHER-EXPENSES> 68,323
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,406
<INCOME-PRETAX> 15,986
<INCOME-TAX> 7,194
<INCOME-CONTINUING> 8,792
<DISCONTINUED> 0
<EXTRAORDINARY> (2,899)
<CHANGES> 0
<NET-INCOME> 5,893
<EPS-PRIMARY> .73
<EPS-DILUTED> .59
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<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.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 121,981
<SECURITIES> 0
<RECEIVABLES> 596,403
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 62,833
<DEPRECIATION> 39,608
<TOTAL-ASSETS> 894,596
<CURRENT-LIABILITIES> 0
<BONDS> 81,805
<COMMON> 5,291
0
857
<OTHER-SE> 53,982
<TOTAL-LIABILITY-AND-EQUITY> 894,596
<SALES> 0
<TOTAL-REVENUES> 2,865,340
<CGS> 0
<TOTAL-COSTS> 2,793,572
<OTHER-EXPENSES> 66,847
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,735
<INCOME-PRETAX> (1,032)
<INCOME-TAX> 663
<INCOME-CONTINUING> (1,695)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,695)
<EPS-PRIMARY> (.67)
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 21
Subsidiaries Of The Registrant
Percentage
Jurisdiction of
Voting
Incorporation Held
Securities
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, Inc. 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 (UK) Limited England
100
Turner International Limited Bermuda 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.
