TURNER CORP, S-3, 1999-03-04

TURNER CORP
S-3, 1999-03-04
GENERAL BLDG CONTRACTORS - NONRESIDENTIAL BLDGS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 1999.

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

THE TURNER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 375 HUDSON STREET 13-3209884
(STATE OR OTHER JURISDICTION OF NEW YORK, NEW YORK 10014 (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) (212) 229-6000 IDENTIFICATION NO.)
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE
NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
</TABLE>

------------------------

SARA J. GOZO, ESQ.

THE TURNER CORPORATION
375 HUDSON STREET
NEW YORK, NEW YORK 10014
PHONE: (212) 229-6000
FAX: (212) 229-6485
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

COPIES TO:

<TABLE>
<S> <C>
KENNETH R. BLACKMAN, ESQ. STEPHEN P. FARRELL, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON MORGAN, LEWIS & BOCKIUS LLP
ONE NEW YORK PLAZA 101 PARK AVENUE
NEW YORK, NEW YORK 10004-1980 NEW YORK, NEW YORK 10178-0060
PHONE: (212) 859-8000 PHONE: (212) 309-6000
FAX: (212) 859-4000 FAX: (212) 309-6273
</TABLE>

------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(2) UNIT(3) PRICE(3) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1 per share(1).... 4,096,875 $17.28125 $70,799,121.09 $19,683
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes one attached preferred stock purchase right per share of common
stock. Prior to the occurrence of certain events, the preferred stock
purchase rights will not be exercisable and will not be evidenced separately
from the common stock.
(2) Includes an aggregate of 534,375 shares issuable pursuant to an
over-allotment option granted to the Underwriters.
(3) Estimated solely for the purpose of calculating the amount of the
registration fee. Pursuant to Rule 457(c), the registration fee is based
upon the average of the high and low prices of the registrant's common stock
as reported on the New York Stock Exchange Composite Tape on February 26,
1999.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY THE EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION. DATED MARCH 4, 1999

PROSPECTUS
------------------------

3,562,500 SHARES

THE TURNER CORPORATION
COMMON STOCK
------------------------

Two of our stockholders, Karl Steiner Holding AG, which is offering
2,400,000 shares, and The Turner Corporation Employees' Cash Balance Retirement
Plan, which is offering 1,162,500 shares, are selling shares of common stock of
The Turner Corporation. We will not receive any of the proceeds from the sale of
these shares. The underwriters named in this prospectus may purchase up to
534,375 additional shares of common stock from The Turner Corporation under
certain circumstances.

The common stock is listed on the New York Stock Exchange under the symbol
"TUR." The last reported sale price of our common stock on the New York Stock
Exchange on , 1999 was $ per share.

------------------------

INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 6.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------

<TABLE>
<CAPTION>
Per Share Total
--------- -------
<S> <C> <C>
Public Offering Price..................................... $ $
Underwriting Discount.....................................
Proceeds to the Selling Stockholders (before expenses)....
</TABLE>

The underwriters are offering the shares subject to various conditions. The
underwriters expect to deliver the shares of common stock to purchasers on or
about , 1999.
------------------------

PAINEWEBBER INCORPORATED

CIBC OPPENHEIMER

SANDERS MORRIS MUNDY
------------------------

THE DATE OF THIS PROSPECTUS IS , 1999
<PAGE> 3

TURNER CITY

Turner City is a rendering of the construction projects we substantially
completed during the year throughout the world as if they were located in one
city. Turner City 1998 consists of 149 projects totaling approximately 29
million square feet in 246 buildings. These projects are located in 115 cities,
30 states, United Arab Emirates, Saudi Arabia and Brazil.

[AERIAL DEPICTION/RENDERING]

TURNER
<PAGE> 4

COVER THREE
- -----------

[PHOTO 1]

Rock and Roll Hall of Fame Museum
Cleveland, OH

[PHOTO 2]

Ontario Convention Center
Ontario, CA

[PHOTO 3]

Naval Air Systems Command Headquarters
Patuxent River, MD

[PHOTO 4]

Ericsson Stadium
Charlotte, NC

Turner provides innovative, responsive solutions to the diverse needs of our
customers with a broad range of capabilities from strategic conceptual planning
through construction and post-construction services.

<PAGE> 5

COVER FOUR
- ----------

[PHOTO 5]

Arlington Courts and Police Facility
Arlington, VA

[PHOTO 6]

Genzyme Biopharmaceutical Manufacturing Facility
Allston Landing, MA

<PAGE> 6

You should rely only on the information contained in or incorporated in
this prospectus. We have not authorized anyone to provide you with different
information. This prospectus is not making an offer to sell our common stock in
any state where the offer is not permitted. You should not assume that the
information provided by this prospectus is accurate as of any date other than
the date on the front of this prospectus.
------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements.................................. i
Prospectus Summary.......................................... 1
Risk Factors................................................ 6
Use of Proceeds............................................. 9
Price Range of Common Stock and Dividend Policy............. 10
Capitalization.............................................. 11
Selected Consolidated Financial Data........................ 12
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 14
Business.................................................... 21
Management.................................................. 30
Principal and Selling Stockholders.......................... 32
Certain Relationships and Related Transactions.............. 34
Description of Capital Stock................................ 35
Underwriting................................................ 41
Legal Matters............................................... 42
Experts..................................................... 42
Where You Can Find More Information......................... 42
Index to Financial Statements............................... F-1
</TABLE>

In this prospectus, "Turner," "we," "us" and "our" refer to The Turner
Corporation and, unless the usage suggests differently, its subsidiaries.
"Steiner Holding" refers to Karl Steiner Holding AG, and "Selling Stockholders"
refers to Steiner Holding and The Turner Corporation Employees' Cash Balance
Retirement Plan.
------------------------
FORWARD-LOOKING STATEMENTS

This prospectus includes or incorporates forward-looking statements. We
have based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements appear in
various places in this prospectus, including the sections entitled "Prospectus
Summary," "Risk Factors," "Use of Proceeds," "Selected Consolidated Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" "Business" and "Financial Statements." These forward-looking
statements are subject to risks, uncertainties and assumptions including, among
others, those discussed under "Risk Factors" and the following:

- the accuracy of our estimates as to future revenues from and future costs
to be incurred on construction projects;

- our dependence on construction activity in the markets we serve; and

- the impact of competition and economic conditions on our business.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in and incorporated into this prospectus might not occur.

i
<PAGE> 7

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and may not contain all of the information that you
should consider before investing in our common stock. You should read the entire
prospectus carefully, including the "Risk Factors" section and the financial
statements and notes to those statements included in this prospectus or in
Turner's filings with the Securities and Exchange Commission.

THE COMPANY

Turner, established in 1902, is one of the largest construction contractors
in the United States and, based on 1997 revenue, is the second largest
contractor in the general building segment of the market, the principal segment
in which we participate. We are also one of the leading companies in various
sectors of the general building construction market, including the construction
of commercial office buildings, healthcare facilities, pharmaceutical plants and
R&D laboratories, education and science centers, correctional facilities, sports
complexes and distribution/warehouse facilities. Within these market sectors, we
have expertise in the construction of many specialty facilities such as
hospitals, stadiums, correctional facilities, airport terminals, "clean rooms"
and research facilities. Our special projects divisions perform tenant fit-out
and renovation work and build smaller, free-standing structures. We conduct our
United States operations, which generated substantially all of the $4.1 billion
value of construction completed by us in 1998, through 24 full-service regional
business units and 17 satellite offices. During 1998, we worked on more than
1,000 projects for a diversified client base. Projects ranged in size from less
than $1 million to over $150 million. In 1998, we generated earnings from
construction contracts of $98.7 million and net income of $19.6 million.

In our 97-year history, Turner has completed a number of notable projects
including the United Nations Headquarters building, Madison Square Garden and
Lincoln Center in New York. More recently, we built the Rock and Roll Hall of
Fame and Museum in Cleveland, Ohio, Ericsson Stadium (the home of the Carolina
Panthers), Arthur Ashe Stadium (the home of the United States Open Tennis
Tournament) and the Swiss Bank Headquarters in Stamford, Connecticut. During
1998, Turner completed projects including Princeton Stadium in Princeton, New
Jersey, Swiss Re America Headquarters in Armonk, New York and Shirley Maximum
Security Correctional Facility in Shirley, Massachusetts. Over the last year, we
began work on several significant projects including the Bristol-Myers Squibb
Laboratory Renovation project in New Jersey, new stadiums for the Cincinnati
Bengals and Detroit Tigers, and the Merck office complex in West Point,
Pennsylvania. In addition, late in 1998, American Airlines awarded us a
five-year project for terminal facilities at Miami International Airport. In
recent years, we have benefited from repeat business, with approximately 69% of
our 1998 contracts coming from repeat customers.

Our services typically include the pricing, planning and scheduling of a
construction project, the awarding of subcontracts to subcontractors who perform
most of the construction activity, the procurement of materials and the general
management of the construction operation. As a result of engaging subcontractors
to perform nearly all of the construction activities, a substantial portion of
our revenues from construction contracts is paid to subcontractors and is
reflected in our income statement as cost of construction contracts.

Subsequent to changes in our senior management team during August of 1996,
we strengthened our financial and operating controls and implemented new
procedures in an effort to enhance our operating results. Partly as a result of
these changes, our income from construction operations increased from $5.3
million in 1996 to $31.2 million in 1998 and our earnings before interest
expense, income taxes, depreciation and amortization (EBITDA) increased from
$19.4 million in 1996 to
1
<PAGE> 8

$48.6 million in 1998. During this period, we continued to divest our real
estate investments, all of which had been acquired during the 1980's and had
negatively impacted our financial results. Our remaining real estate portfolio
was carried at $40.5 million as of December 31, 1998.

We believe that our competitive strengths include:

- Recognized industry leader

- Established customer relationships combined with a broad client base

- Ability to target stronger geographic regions and industry market sectors

- Financial capacity to compete for large projects

- Strong relationships with subcontractors

- Broad range of construction related services

- Extensive management experience in the construction business

Turner's executive office is located at 375 Hudson Street, New York, New
York 10014, and its telephone number at that location is (212) 229-6000.
2
<PAGE> 9

THE OFFERING

<TABLE>
<S> <C>
Common stock offered by the Selling
Stockholders:

Steiner Holding............................ 2,400,000

The Turner Corporation Employees' Cash
Balance Retirement Plan................. 1,162,500
----------
Total.............................. 3,562,500
----------
----------
Shares outstanding after the
offering(1)(2)............................. 10,279,147
Use of proceeds.............................. Turner will not receive any of the proceeds
from the sale of common stock by the Selling
Stockholders.
New York Stock Exchange Symbol............... TUR
</TABLE>

- -------------------------
(1) As of December 31, 1998, as adjusted for the offering. Excludes an aggregate
of 2,339,444 shares reserved for issuance under Turner's various stock-based
compensation plans and 1,258,097 shares issuable upon conversion of our
Series B ESOP Convertible Preferred Stock (the "Series B Preferred Stock").

(2) If the Underwriters exercise their over-allotment option in full, we would
issue an additional 534,375 shares of common stock, and 10,813,522 shares of
common stock would be outstanding after the offering. See "Underwriting" and
"Description of Capital Stock."

RISK FACTORS

Turn to "Risk Factors" commencing on page 6 for a discussion of certain
factors that you should consider before purchasing our common stock.
3
<PAGE> 10

SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1996 1997 1998
------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Value of construction completed(a)........................ $3,317,774 $3,639,754 $4,129,721
---------- ---------- ----------
Revenue from construction contracts(b).................... $2,838,052 $3,170,744 $3,698,994
Cost of construction contracts(c)......................... 2,765,901 3,084,236 3,600,311
---------- ---------- ----------
Earnings from construction contracts(d)................. 72,151 86,508 98,683
Construction operating expenses(e)........................ 52,962 52,500 53,220
General and administrative expenses....................... 13,885 15,823 14,289
---------- ---------- ----------
Income from construction operations..................... 5,304 18,185 31,174
Losses from real estate operations........................ (383) (839) (764)
Interest expense.......................................... (7,735) (6,406) (933)
Interest and other income, net............................ 1,782 5,046 7,379
---------- ---------- ----------
Income (loss) before income taxes....................... (1,032) 15,986 36,856
Income tax provision...................................... 663 7,194 17,223
---------- ---------- ----------
Income (loss) before extraordinary loss................. (1,695) 8,792 19,633
Extraordinary loss on early extinguishment of debt, net of
tax..................................................... -- (2,899) --
---------- ---------- ----------
Net income (loss)....................................... $ (1,695) $ 5,893 $ 19,633
========== ========== ==========
Basic earnings (loss) per common share(f):
Income (loss) before extraordinary loss................. $ (0.45) $ 0.85 $ 2.21
Net income (loss)....................................... (0.45) 0.49 2.21
Diluted earnings (loss) per common share(f):
Income before extraordinary loss........................ $ (g) $ 0.64 $ 1.50
Net income.............................................. (g) 0.41 1.50
CASH FLOW DATA:
EBITDA(h)................................................. $ 19,388 $ 33,100 $ 48,631
Net cash provided by operating activities................. 33,300 92,801 123,964
Net cash provided by (used in) investing activities....... 16,563 (235) (96,466)
Net cash used in financing activities..................... (15,851) (61,306) (11,860)
Construction capital expenditures......................... 7,371 6,117 4,914
Real estate capital expenditures.......................... 2,143 431 83
CONSTRUCTION CONTRACT DATA(I):
Value of new contracts secured(j)......................... $3,621,297 $3,365,441 $4,301,736
Backlog (at period end):
Estimated value of construction to be completed(k)...... 3,506,950 4,005,145 4,497,595
Estimated earnings from construction contracts(l)....... 91,952 104,697 113,208
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------
1996 1997 1998
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 121,981 $ 153,241 $ 168,879
Marketable securities....................................... -- 18,902 112,766
Total assets................................................ 894,596 972,687 1,129,063
Long-term debt, net of current maturities................... 62,593 16,770 13,481
Stockholders' equity........................................ 60,130 76,136 88,766
</TABLE>

4
<PAGE> 11

- ---------------
(a) Represents the cost of the work put in place during the period and related
earnings pursuant to Turner's general building construction and
construction management contracts. It also includes costs incurred directly
by owners in connection with work under construction management and similar
contract types. It is essentially a measure of construction activity during
the year.

(b) Represents the value of construction completed during the period, exclusive
of costs incurred by owners in connection with work under construction
management and similar contract types. It is a measure of the gross
construction revenue that flows directly through Turner from construction
contracts.

(c) Represents all direct material, labor and subcontracting costs, and those
indirect costs related to contract performance that are identifiable with
or allocable to contracts.

(d) Represents the portion of the total earnings anticipated from construction
contracts which the cost of the work completed bears to the estimated total
cost of the work covered by the contracts in accordance with the percentage
of completion method of accounting.

(e) Represents costs incurred by Turner's construction operating units and
subsidiaries that are not directly attributable to construction contracts,
such as business development, estimating, purchasing, accounting, cost
control, general office support and similar costs attributed to our
construction activities.

(f) After giving effect to preferred stock dividends, net of tax benefits.

(g) Antidilutive.

(h) Represents the sum of income (loss) before extraordinary loss, income tax
provision, interest expense, depreciation and amortization. EBITDA does not
purport to represent cash provided by operating activities as reflected in
Turner's consolidated statements of cash flows, is not a measure of
financial performance under generally accepted accounting principles and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.

(i) Construction contract data for periods prior to 1997 have been restated to
be presented on a basis consistent with 1997 and 1998 data.

(j) Represents the value of new contracts awarded through formal signed
contractual commitments during the period.

(k) Represents the value of construction to be completed in future periods from
contracts secured but not yet started or fully completed.

(l) Represents the anticipated earnings associated with the estimated value of
construction to be completed in future periods from contracts secured but
not yet started or fully completed.
5
<PAGE> 12

RISK FACTORS

You should consider carefully the following factors together with the other
information contained in this prospectus.

OUR ESTIMATES OF THE TIME AND COSTS OF LUMP SUM AND GUARANTEED MAXIMUM PRICE
CONTRACTS MAY EXCEED EXPECTATIONS

Approximately 21% of our value of construction completed, by dollar amount
for the year ended December 31, 1998, was generated by lump sum contracts and
55% was generated by guaranteed maximum price contracts. The terms of these
contracts require us to estimate the time and costs to complete a project. Based
on these estimates, we determine a time and a price for completion of the
project and assume the risk that the time and costs associated with our
performance may be greater than what we anticipated. As a result, our
profitability in lump sum and guaranteed maximum price contracts is dependent on
our ability to predict these factors accurately. The time and costs may be
affected by a variety of factors, some of which are beyond our control. If we do
not accurately predict the time and costs of lump sum and guaranteed maximum
price contracts for particular projects, we could suffer losses on those
projects or have lower than anticipated profits, which could have a material
adverse effect on our business, operating results and financial condition.

COMPETITION

The United States building construction industry is intensely competitive
and highly fragmented with no participant, we believe, having a greater than 5%
market share. We compete with other major contractors as well as with smaller
contractors. Competition in the industry takes a number of forms, including
reputation, fee levels, quality of service and degree of risk assumption. Each
population center generally has a number of smaller, locally-based contractors
capable of undertaking all but the largest and most complicated projects. Also,
contractors who have no local presence in areas where we have an office can
successfully compete for and obtain projects there, notwithstanding a lack of a
local presence.

SKILLED SUBCONTRACTORS AND PERSONNEL MAY NOT BE AVAILABLE

We are dependent on the availability of qualified subcontractors.
Subcontractors in turn and we are dependent on the availability of skilled
workers. From time to time, particularly when the level of activity in the
construction industry is high, both subcontractors and we may face shortages of
skilled workers. We cannot assure you that an adequate supply of subcontractors
or skilled workers will be available to carry out our projects or that the costs
to retain skilled subcontractors and workers will not exceed our estimates.

POOR SUBCONTRACTOR PERFORMANCE OR SUBCONTRACTOR DEFAULTS CAN AFFECT US ADVERSELY

We rely on subcontractors to perform most of the construction activities.
Our subcontractors not only have to be financially sound to complete their jobs,
but they must also possess the skills and sophistication to perform their jobs
efficiently and free of defects. Poor performance or defaults by a major
subcontractor may lead to project delays, unanticipated additional costs and,
possibly, penalties and claims. All of this could have a material adverse effect
on our business, operating results and financial condition and adversely affect
our reputation.

CONSTRUCTION INDUSTRY CYCLICALITY MAY IMPACT OUR BUSINESS ADVERSELY

The construction industry is cyclical and influenced by various economic
factors, including interest rates and general fluctuations of the business
cycle. Although we provide services to a broad

6
<PAGE> 13

range of commercial, industrial and institutional clients, cyclicality in
construction markets as well as instability in general economic conditions could
have a material adverse effect on our business, operating results and financial
condition. In recent years, the level of construction activity in the market
sectors that we serve has been at a relatively high level. We cannot assure you
that this level of activity will be sustained.

OUR OPERATING RESULTS MAY BE VARIABLE

Our revenue and operating results vary from quarter to quarter as a result
of a number of factors including projects commenced and completed during a
quarter, the size and scope of projects, and the amount of work performed in the
quarter. Because a significant portion of our operating expenses are fixed, a
variation in the number of projects, progress on projects, or the timing of the
initiation or completion of projects can cause significant variations in
operating results from quarter to quarter.

WE MAY BE UNABLE TO OBTAIN BID AND PERFORMANCE BONDS

Many projects, particularly those with funding provided by government
agencies and private projects that require FHA type mortgage insurance, require
us to have the financial strength to, among other things, obtain bid and
performance bonds. These bonds are often a condition to our being awarded
contracts for such projects. We cannot be certain that we will be able to obtain
adequate bid and performance bonds in the future. The inability to procure bonds
could have a material adverse effect on our business, operating results and
financial condition.

DISPUTES OFTEN ARISE IN OUR BUSINESS

Given the nature of the construction industry and the contracting process,
disputes often arise among builders, subcontractors and customers. These
disputes have the potential to result in the assertion of claims and litigation.
We incur substantial legal expenses in defense of claims against us and in
pursuit of our claims. The costs of claims and litigation could have a material
adverse effect on our business, operating results and financial condition.

WE MAY BE UNABLE TO REALIZE THE CARRYING VALUES OF REAL ESTATE HOLDINGS

We own certain real estate assets which had a total carrying value as of
December 31, 1998 of approximately $40.5 million. These real estate assets are
being held until they can be sold at prices which we believe reflect their
reasonable values. We cannot assure you that we will be able to sell the
properties, when any sales will occur, or whether the prices received will equal
or exceed their carrying values.

YEAR 2000 ISSUES MAY AFFECT US

We have evaluated the impact of Year 2000 issues on our business and
operations. While we believe, based upon our internal reviews and other factors,
that future internal costs to be incurred relating to the modification of
internal-use software should not have a material adverse effect on our business,
operating results or financial condition, we still may experience significant
cost overruns or delays in connection with the upgrade and modifications of our
existing computer system. Additionally, our failure or the failure of third
parties to address adequately Year 2000 issues could have a material adverse
effect on us. For a more detailed discussion of our efforts to address Year 2000
issues, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Year 2000."

7
<PAGE> 14

DEPENDENCE ON SENIOR MANAGEMENT

A relatively small number of key executive officers manage our business and
formulate our strategies. The loss of these key management persons could have a
material adverse effect on us. E. T. Gravette, Jr., our Chairman of the Board
and Chief Executive Officer, and several members of the Board of Directors are
over 65 years of age. While we expect these individuals to retire over the next
few years, we equally expect that they will remain with Turner until suitable
replacements are identified. We cannot assure you that we will find suitable
replacements.

WE DO NOT PLAN ON PAYING DIVIDENDS

We do not anticipate paying cash dividends on our common stock in the
foreseeable future.

OUR SHARE PRICE MAY BE VOLATILE

Historically, the number of shares of our common stock available for sale
in the public market has been limited. As a result of the offering, the number
of shares available in the public market will increase significantly. We cannot
predict whether having a greater number of shares available for sale in the
public market will have an impact on the market price of our common stock. In
addition, actual or anticipated quarterly fluctuations in operating results,
changes in earnings estimates or recommendations by securities analysts, and
changes in the construction industry or general economic conditions may lead to
stock price volatility and have a significant effect on the market price of our
common stock.

ANTI-TAKEOVER EFFECTS

Our Certificate of Incorporation and By-Laws and Delaware corporate law
contain provisions which could delay or impede the removal of incumbent
directors and could make more difficult a merger, tender offer or proxy contest
involving Turner, even if such a transaction would be beneficial to the
interests of the stockholders. Some of these provisions could also discourage a
third party from attempting to acquire control of Turner or could have the
effect of delaying or preventing a change in control of Turner. For example,
before we can merge, consolidate, or dispose of all or substantially all of our
assets, the holders of at least two-thirds of all outstanding shares entitled to
vote must vote in favor of the proposal. In addition, if a person owning more
than 5% of our voting shares wants to merge, consolidate or carry out other
major transactions with us: (a) a majority of disinterested directors must
approve the transaction; (b) 80% of voting shares must approve the transaction;
or (c) provisions of the Certificate of Incorporation must be satisfied. Also,
we have a staggered board of directors, stockholders are not permitted to act by
written consent, and special meetings of the stockholders may only be called by
the Board of Directors. Further, we could issue shares of preferred stock,
without stockholder approval, upon terms as our Board may specify.

We have in place a stockholder rights plan. The rights issued under the
stockholder rights plan have certain anti-takeover effects. If our Board of
Directors does not approve the terms proposed by the third party attempting to
acquire us, the rights plan can have the effect of substantially diluting equity
ownership for such third party. The rights should not interfere with any merger
or other business combination approved by the Board, since the Board may redeem
the rights.

8
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Selling Stockholders from the sale of 3,562,500
shares of our common stock being sold by them (net of underwriting discounts and
commissions) are estimated (based on the assumed offering price of $ per
share) to be $ million. Turner will not receive any of the proceeds from the
sale of common stock by the Selling Stockholders.

If the underwriters exercise in full their over-allotment option, Turner
would receive (based on the same assumed offering price per share) approximately
$ million (net of underwriting discounts and commissions and estimated
offering expenses). If the underwriters' over-allotment option is exercised, we
intend to use the net proceeds for working capital and other general corporate
purposes. See "Underwriting."

9
<PAGE> 16

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Turner's common stock has been listed and traded on the New York Stock
Exchange (the "NYSE") since December 16, 1998. Before that date, it was listed
on the American Stock Exchange. The following table sets forth high and low
closing prices per share of our common stock. The prices for our common stock
have been restated to reflect a three-for-two stock split payable in the form of
a 50% stock dividend distributed on August 14, 1998.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1997
First Quarter....................................... $ 9.500 $ 6.833
Second Quarter...................................... 11.667 8.000
Third Quarter....................................... 15.333 10.417
Fourth Quarter...................................... 17.750 13.083
1998
First Quarter....................................... $20.000 $16.500
Second Quarter...................................... 20.167 16.333
Third Quarter....................................... 18.078 13.750
Fourth Quarter...................................... 18.625 14.000
1999
First Quarter (through February 26)................. $18.813 $16.750
</TABLE>

A recent closing price appears on the cover page of this prospectus.

We did not pay any cash dividends on our common stock in 1997 or 1998 and
currently intend to retain any future earnings for use in our business.
Accordingly, we do not expect to pay cash dividends on our common stock in the
foreseeable future.

10
<PAGE> 17

CAPITALIZATION

The "Actual" column in the following table sets forth the historical
consolidated capitalization of Turner. The "As Adjusted" column shows the
historical consolidated capitalization of Turner as adjusted to reflect the
conversion of our Series C 8.5% Convertible Preferred Stock (the "Series C
Preferred Stock") and our Series D 8.5% Convertible Preferred Stock (the "Series
D Preferred Stock") held by Steiner Holding, which conversion will occur in
connection with the offering. The adjustments do not give effect to the exercise
of the underwriters' over-allotment option. See "Use of Proceeds" and
"Underwriting." The table should be read in conjunction with our financial
statements, the related notes and the other financial data and statistical
information included in this prospectus.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt........................ $ 5,410 $ 5,410
Long-term debt:
Revenue bonds............................................. 10,600 10,600
Employee Stock Ownership Plan............................. -- --
Capital lease obligations................................. 2,881 2,881
-------- -----------
Total debt........................................ 18,891 18,891
Stockholders' equity:
Preferred Stock, $1 par value (2,000,000 shares
authorized):
Series C 8.5% cumulative convertible (9,000 shares
issued and outstanding; no shares as adjusted)........ 9 --
Series D 8.5% cumulative convertible (6,000 shares
issued and outstanding; no shares as adjusted)........ 6 --
Series B cumulative convertible (850,000 shares issued;
838,731 shares outstanding)........................... 839 839
Common Stock, $1 par value (20,000,000 shares authorized;
8,382,581 shares issued; 10,782,581 as adjusted)....... 8,383 10,783
Paid in capital........................................... 45,392 (a)
Retained earnings......................................... 44,113 44,113
-------- -----------
98,742
Less: Loan to Employee Stock Ownership Plan............... (1,832) (1,832)
Treasury stock, at cost (503,434 common shares).... (8,144) (8,144)
-------- -----------
Total stockholders' equity............................. 88,766
-------- -----------
Total capitalization........................................ $107,657
-------- -----------
-------- -----------
</TABLE>

- -------------------------
(a) Gives effect to payment by Turner of costs of the offering of approximately
$ .

11
<PAGE> 18

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected historical consolidated financial
data as of December 31, 1994, 1995, 1996, 1997 and 1998 and for each of the
years then ended. The selected consolidated financial data as of December 31,
1997 and 1998 and for each of the years ended December 31, 1996, 1997 and 1998
have been derived from the audited financial statements as of those dates and
for those periods (the "1998 Financial Statements") included in this prospectus.
The following data are qualified by reference to, and should be read in
conjunction with, the 1998 Financial Statements and the related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in this prospectus. The Construction Contract Data for the
years ended December 31, 1994, 1995, 1996, 1997 and 1998 have been derived from
Turner's contract records.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Value of construction completed(a).............. $2,670,433 $3,281,495 $3,317,774 $3,639,754 $4,129,721
---------- ---------- ---------- ---------- ----------
Revenue from construction contracts(b).......... $2,174,836 $2,727,001 $2,838,052 $3,170,744 $3,698,994
Cost of construction contracts(c)............... 2,118,361 2,658,462 2,765,901 3,084,236 3,600,311
---------- ---------- ---------- ---------- ----------
Earnings from construction contracts(d)....... 56,475 68,539 72,151 86,508 98,683
Construction operating expenses(e).............. 41,296 45,699 52,962 52,500 53,220
General and administrative expenses............. 9,221 11,555 13,885 15,823 14,289
Restructuring charges (credits)................. (1,145) -- -- -- --
---------- ---------- ---------- ---------- ----------
Income from construction operations........... 7,103 11,285 5,304 18,185 31,174
Income (loss) from real estate operations....... 1,312 (227) (383) (839) (764)
Interest expense................................ (7,923) (9,267) (7,735) (6,406) (933)
Interest and other income (loss), net........... (2) 1,470 1,782 5,046 7,379
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes............. 490 3,261 (1,032) 15,986 36,856
Income tax provision (benefit).................. (3,160) 1,987 663 7,194 17,223
---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary loss....... 3,650 1,274 (1,695) 8,792 19,633
Extraordinary loss on early extinguishment of
debt, net of tax.............................. -- -- -- (2,899) --
---------- ---------- ---------- ---------- ----------
Net income (loss)............................. 3,650 1,274 (1,695) 5,893 19,633
Dividends on preferred stock, net of tax
benefits...................................... (1,828) (1,828) (1,827) (2,037) (1,956)
---------- ---------- ---------- ---------- ----------
Net income (loss) available to common
stockholders................................ $ 1,822 $ (554) $ (3,522) $ 3,856 $ 17,677
========== ========== ========== ========== ==========
PER SHARE DATA:
Basic earnings (loss) per common share:
Income (loss) before extraordinary loss....... $ 0.24 $ (0.07) $ (0.45) $ 0.85 $ 2.21
Net income (loss)............................. 0.24 (0.07) (0.45) 0.49 2.21
Diluted earnings (loss) per common share:
Income (loss) before extraordinary loss....... $ 0.20 $ (f) $ (f) $ 0.64 $ 1.50
Net income (loss)............................. 0.20 (f) (f) 0.41 1.50
CASH FLOW DATA:
EBITDA(g)....................................... $ 17,779 $ 24,054 $ 19,388 $ 33,100 $ 48,631
Net cash provided by operating activities....... 6,943 40,132 33,300 92,801 123,964
Net cash provided by (used in) investing
activities.................................... 18,250 11,598 16,563 (235) (96,466)
Net cash provided by (used in) financing
activities.................................... 4,116 (20,011) (15,851) (61,306) (11,860)
Construction capital expenditures............... 3,569 4,556 7,371 6,117 4,914
Real estate capital expenditures................ 3,423 2,064 2,143 431 83
CONSTRUCTION CONTRACT DATA(H):
Value of new contracts secured(i)............... $2,697,661 $2,641,544 $3,621,297 $3,365,441 $4,301,736
Backlog (at period end):
Estimated value of construction to be
completed(j)................................ 3,391,249 3,088,232 3,506,950 4,005,145 4,497,595
Estimated earnings from construction
contracts(k)................................ 79,077 76,267 91,952 104,697 113,208
</TABLE>

12
<PAGE> 19

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....................... $ 56,250 $ 87,969 $ 121,981 $ 153,241 $ 168,879
Marketable securities........................... 4,251 4,838 -- 18,902 112,766
Total assets.................................... 715,329 823,963 894,596 972,687 1,129,063
Long-term debt, net of current maturities....... 94,891 88,613 62,593 16,770 13,481
Stockholders' equity............................ 59,216 61,296 60,130 76,136 88,766
</TABLE>

- -------------------------
(a) Represents the cost of the work put in place during the period and related
earnings pursuant to Turner's general building construction and construction
management contracts. It also includes costs incurred directly by owners in
connection with work under construction management and similar contract
types. It is essentially a measure of construction activity during the year.

(c) Represents all direct material, labor and subcontracting costs, and those
indirect costs related to contract performance that are identifiable with or
allocable to contracts.

(f) Antidilutive.

(g) Represents the sum of income (loss) before extraordinary loss, income tax
provision (benefit), interest expense, depreciation and amortization. EBITDA
does not purport to represent cash provided by operating activities as
reflected in Turner's consolidated statements of cash flows, is not a
measure of financial performance under generally accepted accounting
principles and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles.

(h) Construction contract data for periods prior to 1997 have been restated to
be presented on a basis consistent with 1997 and 1998 data.

(i) Represents the value of new contracts awarded through formal signed
contractual commitments during the period.

(j) Represents the value of construction to be completed in future periods from
contracts secured but not yet started or fully completed.

(k) Represents the anticipated earnings associated with the estimated value of
construction to be completed in future periods from contracts secured but
not yet started or fully completed.

13
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Turner determines construction earnings under the percentage of completion
method. Under this method, Turner 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. Turner's
construction contracts generally extend over more than one year. During the
course of the work, we make revisions in costs and earnings estimates in the
year in which the facts that require the revision become known. Due to
uncertainties inherent in the estimation process, it is reasonably possible that
we may revise our estimates from time to time.

Value of construction completed includes, in addition to revenue from
construction contracts, construction costs incurred directly by owners on
certain construction management and similar projects. Because of the varying
proportion of general building construction, construction management and
construction consulting contracts, which generally have different anticipated
profit margins, the relationship between the value of work completed and
earnings from construction contracts is not necessarily meaningful in the short
run.

Revenue from construction contracts represents the value of construction
completed during the period, exclusive of costs incurred by owners in connection
with work under construction management and similar contract types. It is a
measure of the gross construction revenue that flows directly through Turner
from construction contracts.

Construction operating expenses are costs incurred by Turner's construction
operating units and subsidiaries that are not directly attributable to
construction contracts, such as business development, estimating, purchasing,
accounting, cost control, general office support and similar costs attributed to
our construction activities. These construction operating expenses are expensed
as incurred.

General and administrative expenses represent corporate overhead expenses.

Value of new contracts secured represents the value of construction to be
completed under contracts awarded through formal signed contractual commitments
during the period.

Backlog represents the value of construction to be completed in future
periods from contracts secured but not yet started or fully completed. The
average duration of a project in backlog, excluding projects to be performed by
our special projects divisions, is approximately 18 months. Estimated earnings
from construction contracts, which represents the anticipated earnings
associated with the estimated value of construction to be completed, cannot and
should not be used as the basis for predicting future net income.

Our cash and cash equivalents and marketable securities balances at any
particular time include substantial monies received from owners on construction
contracts which have not yet been remitted for the purchase of materials,
payment of subcontractors and other construction costs.

14
<PAGE> 21

RESULTS OF OPERATIONS

The following table summarizes the consolidated results of operations and
the related percentages of revenues for the years ended December 31, 1996, 1997
and 1998.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1996 1997 1998
------------------- ------------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenue from construction
contracts................... $2,838,052 100.00% $3,170,744 100.00% $3,698,994 100.00%
Cost of construction
contracts................... 2,765,901 97.46% 3,084,236 97.27% 3,600,311 97.33%
---------- ------ ---------- ------ ---------- ------
Earnings from construction
contracts................ 72,151 2.54% 86,508 2.73% 98,683 2.67%
Construction operating
expenses.................... 52,962 1.87% 52,500 1.66% 53,220 1.44%
General and administrative
expenses.................... 13,885 0.49% 15,823 0.50% 14,289 0.39%
---------- ------ ---------- ------ ---------- ------
Income from construction
operations............... 5,304 0.18% 18,185 0.57% 31,174 0.84%
Losses from real estate
operations.................. (383) (0.01%) (839) (0.03%) (764) (0.02%)
Interest expense.............. (7,735) (0.27%) (6,406) (0.20%) (933) (0.03%)
Interest and other income,
net......................... 1,782 0.06% 5,046 0.16% 7,379 0.20%
---------- ------ ---------- ------ ---------- ------
Income (loss) before income
taxes.................... (1,032) (0.04%) 15,986 0.50% 36,856 0.99%
Income tax provision.......... 663 0.02% 7,194 0.23% 17,223 0.46%
---------- ------ ---------- ------ ---------- ------
Income (loss) before
extraordinary loss....... (1,695) (0.06%) 8,792 0.27% 19,633 0.53%
Extraordinary loss on early
extinguishment of debt, net
of tax...................... -- -- (2,899) (0.09%) -- --
---------- ------ ---------- ------ ---------- ------
Net income (loss)........... $ (1,695) (0.06%) $ 5,893 0.18% $ 19,633 0.53%
---------- ------ ---------- ------ ---------- ------
---------- ------ ---------- ------ ---------- ------
</TABLE>

RESULTS OF OPERATIONS 1998 VERSUS 1997

Revenue from construction contracts was a record $3.7 billion in 1998
versus $3.2 billion in 1997, an increase of 17% due to increased market
penetration in the key market sectors in which we compete, particularly the
commercial office building sector, as well as an enhanced sales and marketing
effort. The value of construction completed was a record $4.1 billion in 1998
versus $3.6 billion in 1997, an increase of 13%.

Earnings from construction contracts were a record $98.7 million in 1998
versus $86.5 million in 1997, an increase of 14%. The increase in earnings is
directly related to the increased revenue from construction contracts in 1998.
As a percentage of revenue, earnings from construction contracts decreased
slightly to 2.67% in 1998 from 2.73% in 1997. However, as a percentage of the
value of construction completed, earnings from construction contracts were 2.39%
in 1998 versus 2.38% in 1997.

15
<PAGE> 22

Construction operating expenses were $53.2 million in 1998 versus $52.5
million in 1997, an increase of 1%. Due to Turner's increased construction
activity in 1998, we were able to allocate a greater percentage of construction
operating costs to cost of construction contracts than in 1997. In addition,
1998 includes a net periodic pension credit of $4.2 million versus a $0.6
million charge in 1997 relating to Turner's qualified defined benefit pension
plan, due to a higher return achieved on plan assets. The 1998 pension credit
was offset by an increase in expenses related to Turner's incentive compensation
plan as a result of improved earnings. As a percentage of construction revenue,
construction operating expenses were 1.44% in 1998 versus 1.66% in 1997.

General and administrative expenses were $14.3 million in 1998 versus $15.8
million in 1997, a decrease of 10%. Expenses for 1997 include a non-recurring
charge of approximately $2.0 million related to stock awards granted to
directors in connection with the termination of the directors' retirement plan.

Income from construction operations, reflecting the factors discussed
above, was $31.2 million in 1998 versus $18.2 million in 1997, an increase of
71%. As a percentage of earnings from construction contracts, income from
construction operations was 32% in 1998 versus 21% in 1997.

Losses from real estate operations were $0.8 million in 1998 and 1997. We
sold one undeveloped land parcel in 1998 for $1.5 million at approximately its
carrying value, and entered into a 90 year ground lease arrangement on another
land parcel. The ground lease tenant is currently constructing a commercial
office building on the site. Our proceeds from real estate sales were
approximately $1.4 million in 1998 and $22.9 million in 1997. Rental and other
income from real estate operations declined by 55% to $1.9 million in 1998 and
the related cost of operations declined by 58% to $1.1 million in 1998, due to
the sales of properties in 1998 and 1997. Losses from real estate operations
included depreciation and amortization expense of $1.5 million for 1998 and $2.3
million for 1997. Because these expenses are non-cash, Turner's real estate
operations generated positive cash flow after payments of interest on real
estate debt for each of these years.

Interest expense was $0.9 million in 1998 versus $6.4 million in 1997, a
decrease of 85% primarily due to lower debt levels as a result of real estate
sales, debt repayments and the conversion of a debenture. In 1997, we paid down
$10.3 million of building mortgages, and in December 1997 we repaid the $39.5
million principal balance of our 11.74% senior notes. Interest expense also
decreased as a result of Steiner Holding's election to convert its $6.0 million
8.5% convertible debenture into 6,000 shares of Series D preferred stock as of
June 30, 1997.

Interest and other income, net was $7.4 million in 1998 versus $5.0 million
in 1997, an increase of 46%. Interest income was $9.3 million in 1998 versus
$5.1 million in 1997, an increase of 82% due to increased income from higher
investment balances of cash and cash equivalents and marketable securities. We
have been able to maintain these higher investment balances due to increased
construction activity, higher levels of profitability and improved cash
management practices. As noted above, these investment balances consist
principally of monies received from owners on construction projects which have
not yet been remitted for the purchase of materials, payment of subcontractors
and other construction costs. Also included in other income in 1998 is a $2.0
million impairment loss on an investment in a construction material supply
company.

Income taxes. The provision for income taxes resulted in an effective rate
of 46.7% in 1998 and 45.0% in 1997. The difference between this rate and the 35%
statutory federal rate is primarily due to state and local taxes. The effective
rate for 1998 also includes the impact of the non-deductibility of certain
operating costs, primarily executive compensation in excess of $1.0 million.

16
<PAGE> 23

Net income was $19.6 million in 1998 versus net income of $5.9 million in
1997. The 1997 results included the impact of a $2.9 million extraordinary loss,
net of tax, due to the early extinguishment of debt. Basic earnings per share
were $2.21 in 1998 versus $0.85 before the extraordinary loss of $0.36, and
$0.49 after the extraordinary loss, in 1997, all after taking into account the
dividends paid to preferred stockholders. Diluted earnings per share were $1.50
in 1998 versus $0.64 before the extraordinary loss of $0.23, and $0.41 after the
extraordinary loss, in 1997.

Value of new contracts secured was $4.30 billion in 1998 versus $3.37
billion in 1997, an increase of 28%. We attribute the improvement to our
increased market penetration in the general building market sectors in which we
compete.

The backlog of value of construction to be completed was $4.50 billion as
of December 31, 1998 versus $4.01 billion as of December 31, 1997, an increase
of 12%. Anticipated earnings associated with backlog from construction contracts
were $113.2 million as of December 31, 1998 versus $104.7 million as of December
31, 1997, an increase of 8%. We attribute these results to increased market
penetration in the key market sectors in which we compete and our enhanced sales
and marketing effort.

Approximately 30% of the earnings backlog and 31% of the value of
construction backlog relates to work to be performed in 2000 and beyond.
Estimated earnings from construction backlog should not be used as a basis for
predicting future operating results.

RESULTS OF OPERATIONS 1997 VERSUS 1996

Revenue from construction contracts was $3.2 billion in 1997 versus $2.8
billion in 1996, an increase of 12% due to the continuation of a strong general
building construction market across the United States. The value of construction
completed was $3.6 billion in 1997 versus $3.3 billion in 1996, an increase of
10%.

Earnings from construction contracts were $86.5 million in 1997 versus
$72.2 million in 1996, an increase of 20%. As a percentage of revenue, earnings
from construction contracts increased to 2.73% in 1997 from 2.54% in 1996, its
highest level since 1993. These results reflected not only the growth in
construction revenues but also an improvement in margins of new contracts
secured over the past several years. As of January 1997, Turner stopped pursuing
new construction contracts in the Caribbean and ceased its Caribbean operations
in March 1998. During 1997, our Caribbean operations incurred losses on
construction contracts of $2.0 million due to continued labor inefficiencies and
corrective work. In 1996, the Caribbean operations had losses from construction
contracts of $4.9 million. Also included in 1996 was the recognition of $5.0
million of losses on a contract in Minneapolis. The losses on the Minneapolis
project were 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. Late in 1998, Turner settled
these issues with the owner at an amount within the losses previously recorded.

Construction operating expenses and general and administrative expenses
were $68.3 million in 1997 versus $66.8 million in 1996, an increase of 2%. As a
percentage of construction revenue, construction operating expenses and general
and administrative expenses were 2.16% in 1997 versus 2.36% in 1996. Expenses
for 1997 include a non-recurring charge of approximately $2.0 million related to
stock awards granted to directors in connection with the termination of the
directors' retirement plan. Included in 1996 were expenses of $2.5 million
related to management changes, and

17
<PAGE> 24

the write-off of $1.3 million of goodwill associated with two subsidiaries
acquired in the mid 1980's that management determined was impaired.

Income from construction operations, reflecting the factors discussed
above, was $18.2 million in 1997 versus $5.3 million in 1996, an increase of
243%. As percentage of earnings from construction contracts, income from
construction operations was 21% in 1997 versus 7% in 1996.

Losses from real estate operations were $0.8 million in 1997 versus $0.4
million in 1996, an increase of 119%. We sold three developed properties, a real
estate joint venture interest, two land parcels and a number of condominium
units in 1997 as we continued to dispose of properties at approximately their
carrying values. In 1996, we sold two developed properties and two land parcels,
all at approximately their carrying values. Our proceeds from real estate sales
were approximately $22.9 million in 1997 and $18.5 million in 1996. Rental and
other income from real estate operations declined by 47% to $4.1 million in 1997
and the related cost of operations declined by 40% to $2.7 million in 1997, due
to the sales of properties in 1997 and 1996. Losses from real estate operations
included depreciation and amortization expense of $2.3 million for 1997 and $3.7
million for 1996. Because these expenses are non-cash, Turner's real estate
operations generated positive cash flow after payments of interest on real
estate debt for each of these years.

Interest expense was $6.4 million in 1997 versus $7.7 million in 1996, a
decrease of 17% primarily due to lower debt levels as a result of real estate
sales, debt repayments and the conversion of a debenture. In 1997, Turner paid
down $10.3 million in building mortgages. Interest expense also decreased as a
result of Steiner Holding's election to convert its $6.0 million 8 1/2%
convertible debenture into 6,000 shares of Series D preferred stock as of June
30, 1997.

Interest and other income, net was $5.0 million in 1997 versus $1.8 million
in 1996, an increase of 183% due to increased interest income attributable to
higher investment balances maintained by Turner.

Income taxes. The provision for income taxes resulted in an effective tax
rate of 45.0% in 1997. The difference between this rate and the 34% statutory
federal rate is primarily attributable to state and local taxes. In 1996, Turner
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.

Net income was $5.9 million in 1997 versus a net loss of $1.7 million in
1996. The 1997 results included the impact of a $2.9 million extraordinary loss,
net of tax, due to the early extinguishment of debt. Basic earnings per share
before the extraordinary loss were $0.85 in 1997 versus a loss of $0.45 per
share in 1996, both after taking into account dividends paid to the preferred
stockholders. Basic earnings per share were $0.49 after the extraordinary loss
of $0.36 in 1997. Diluted earnings per share before the extraordinary loss were
$0.64 in 1997. Diluted earnings per share were $0.41 after the extraordinary
loss of $0.23 in 1997.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1998, Turner had cash, cash equivalents and marketable
securities of $281.6 million, compared with $172.1 million as of December 31,
1997 and $122.0 million at the end of 1996. Management believes Turner's current
cash position, in addition to cash flows from construction activities, its $45.0
million revolving credit facility and amounts available from overnight credit
facilities, will be sufficient to support Turner's short-term and foreseeable
long-term requirements. Debt maturing in 1999 and capital expenditures in 1999
will be paid from funds generated from operations.

18
<PAGE> 25

Cash flows for 1998 resulted in a net increase of funds of $15.6 million.
Cash flows provided by operating activities amounted to $124.0 million due
primarily to an increase in construction activity and the timing of associated
receipts and disbursements. Cash flows used in investing activities amounted to
$96.5 million, principally due to purchases and sales of marketable securities.
Cash used in financing activities amounted to $11.9 million in 1998 and was
primarily attributable to stock repurchases and debt payments.

In November 1997, we announced the adoption of a stock repurchase program
for 5% of our common stock. In August 1998, we announced that we had completed
that program and may repurchase up to an additional 5% of our common stock.
Repurchases may be made from time to time in the open market or in negotiated
transactions as market and economic conditions warrant and may be discontinued
at any time. Turner will fund repurchases through internally generated funds.

Capital expenditures in 1998, excluding real estate related capital
expenditures, were $4.9 million versus $6.1 million in 1997, a decrease of $1.2
million. Significant capital expenditures in 1998 included computer hardware and
software and leasehold improvements. We do not expect our capital expenditures
for 1999 to vary significantly from the level incurred over the last two years.
There was $0.1 million in real estate related capital expenditures in 1998
versus $0.4 million in 1997. We do not anticipate any significant real estate
related capital expenditures for 1999.

Turner has a $45.0 million unsecured revolving credit facility that can be
used for borrowings for general corporate purposes. The facility matures in 2001
and contains two one-year extension options. Turner also maintains $8.5 million
of overnight credit facilities with various banks. Turner had no borrowings
under these facilities during 1997 or 1998.

INFLATION

Inflation and price changes during 1998 did not significantly affect the
major markets in which Turner conducts its business. In view of the moderate
rate of inflation, its impact on our business has not been significant.

YEAR 2000

The Year 2000 issue results from computer programs and circuitry that do
not differentiate between the year 1900 and the year 2000 because they are
written using two- rather than four-digit dates to define the applicable year.
If not corrected, many computer applications and date-sensitive devices could
fail or create erroneous results before, on or after January 1, 2000. The Year
2000 issue affects virtually all companies and organizations, including Turner.

Turner has developed, circulated and is implementing a plan, the goal of
which is to assure that Turner will achieve Year 2000 readiness in time to avoid
significant Year 2000 failures. We are proceeding with our assessment of the
Year 2000 readiness issues for our computer systems, business processes,
facilities and equipment to assure their continued functionality. We are also
continuing our assessment of the readiness of external entities, including
subcontractors, suppliers, vendors, and customers that interface with us. To
that end, Turner has taken the following actions:

- COMPUTER SYSTEMS. Turner periodically upgrades its computer systems as
its needs require. We began to upgrade the software for our internal
computer systems in 1997, and we expect to complete this process,
including the upgrade of our financial, project management and human
resources systems, by the second quarter of 1999. Vendors of our new
internal computer systems certified them to be Year 2000 compliant.
Turner's computer hardware is limited to stand-alone and networked
desk-top systems. Turner has assessed the Year 2000 readiness of its
computer hardware and potential risks to Turner's operations, and in 1999
intends to replace those systems that may pose a risk to Turner's
operations. With regard to

19
<PAGE> 26

computer equipment that is not Year 2000 compliant, but does not pose a
risk to Turner, as, for example, a desk-top computer used for word
processing, Turner intends to replace that equipment as part of routine
upgrading.

- BUSINESS PROCESSES. Turner has and continues to assess the potential
impact of Year 2000 on its business processes. Internally, Turner has
prepared and distributed a memorandum outlining a plan of preparedness to
all of Turner's financial managers in our headquarters and business
units. The plan requires each manager to assess the risks of Year 2000
issues at his or her business unit or department, and it describes
Turner's policies on testing, upgrading, and dealing with third parties
as they relate to Year 2000. Each manager is required to report back to
headquarters on his or her assessment of the unit's readiness. We have
modified our contract terms for any subcontractor hired to install or
construct structures or equipment that may be affected by Year 2000
issues. We also require any vendor selling equipment that may be affected
by Year 2000 issues to sign a contract. In both cases, the contract terms
require the subcontractor or vendor to represent and warrant that the
work performed by the subcontractor or the equipment sold by the vendor
is Year 2000 compliant. The subcontractor or the vendor also must agree
to indemnify Turner and the owner of the building from any claims arising
out of the breach of such representation and warranty. Turner is in the
process of contacting its key suppliers and subcontractors regarding
their Year 2000 readiness.

- FACILITIES AND EQUIPMENT. Turner does not actually own or operate
significant construction machinery, but we have implemented a policy of
inquiring as to the Year 2000 compliance of subcontractors' equipment and
suppliers' products. We have upgraded our phone switch with Year 2000
compliant components in our New York headquarters and are assessing the
equipment of other offices. The cost of our phone switch upgrade was
under $50,000. Although Turner intends to upgrade its e-mail and
networking software and hardware by mid-1999, we will still be vulnerable
to any Year 2000 problems incurred by third-party telecommunications
companies.

The costs incurred for upgrading our computer systems are being funded with
cash flows from operations. The costs incurred principally relate to new systems
being implemented to improve business functionality rather than solely to
address Year 2000 issues. These costs have not been and are not expected to be
material in relation to Turner's overall results of operations or financial
position.

Turner believes that its internal computer systems, facilities, and
equipment will be Year 2000 compliant. However, there is no assurance that all
of the planned upgrades will be completed in time or function as intended. As we
have no contingency plan other than to deal as expeditiously as possible with
situations if and when they arise, we may experience significant disruptions,
the cost of which we are unable to estimate at this time. We also believe that
disruptions in some of our subcontractors' operations will not significantly
affect our projects because we have relationships with other subcontractors with
similar expertise. We cannot assure, however, that an adequate supply of
subcontractors will be available.

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<PAGE> 27

BUSINESS

Turner, established in 1902, is one of the largest construction contractors
in the United States and, based on 1997 revenues, is the second largest
contractor in the general building segment of the market, the principal segment
in which we participate. We are also one of the leading companies in various
sectors of the general building construction market, including the construction
of commercial office buildings, healthcare facilities, pharmaceutical plants and
R&D laboratories, education and science centers, correctional facilities, sports
complexes and distribution/warehouse facilities. Within these market sectors, we
have expertise in the construction of many specialty facilities such as
hospitals, stadiums, correctional facilities, airport terminals, "clean rooms"
and research facilities. We do not currently participate in the single-family
home market or in the heavy construction market such as roads, bridges and power
plants. Our special projects divisions perform tenant fit-out and renovation
work and build smaller, free-standing structures. We conduct our United States
operations, which generated substantially all of the $4.1 billion value of
construction completed by us in 1998, through 24 full-service regional business
units and 17 satellite offices. During 1998, we worked on more than 1,000
projects for a diversified client base. Projects ranged in size from less than
$1 million to over $150 million. In 1998, we generated earnings from
construction contracts of $98.7 million and net income of $19.6 million.

Subsequent to changes in our senior management team during August of 1996,
we strengthened our financial and operating controls and implemented new
procedures in an effort to enhance our operating results. We established a new
contract approval process to improve risk management procedures governing
contract authorizations. This process includes a review by outside legal counsel
of significant contracts and revised procedures and authority levels for
contract approvals by management. In order to provide more direct and timely
supervision over business unit managers, we assigned senior level officers to
take responsibility for geographic areas of the country, and we strengthened
control procedures governing preparation and submission of contract status
reports. We also revised our incentive compensation programs in an effort to
focus management's attention on profitability, operating efficiency and
stockholder value. In addition, we expanded our marketing effort by appointing
senior officers with responsibility for our local and national business
development staff and became more focused on growing both our national accounts
and sectors where we have specialized expertise. Partly as a result of these
changes, our income from construction operations increased from $5.3 million in
1996 to $31.2 million in 1998 and EBITDA increased from $19.4 million in 1996 to
$48.6 million in 1998.

INDUSTRY OVERVIEW

The construction industry is comprised of numerous segments such as
single-family homes, general building and heavy construction. It is also
cyclical and susceptible to fluctuations in the

21
<PAGE> 28

general economy. We believe, however, that sectors within both the construction
industry as a whole and within the general building segment vary in their
business cycles with some sectors expanding when other sectors are contracting.
We are most active in the commercial office building, healthcare, pharmaceutical
plants and R&D laboratories, education and science, correctional facilities,
sports and distribution/warehouse sectors. While we are one of the largest
participants in the general building segment of the construction industry, the
industry is highly fragmented with no participant, we believe, having a greater
than 5% market share.

According to data derived from a report by F.W. Dodge, a recognized source
of construction industry data, we estimate that the available market in the
sectors in the general building segment in which we compete was approximately
$134 billion in 1998 as compared with approximately $89 billion in 1993. This
represents an estimated 8.5% compound annual growth rate from 1993 to 1998.
Market data for 1993 reflects a lower level of activity due to a decline in
commercial construction activity in the early 1990's. Consistent with its
forecast of general economic activity, F.W. Dodge, in its latest quarterly
report issued in 1998, estimates that construction activity in these sectors
will show little change in 1999 and decrease 1.0% in 2000 and 2.85% in 2001.

COMPETITIVE STRENGTHS

Turner's corporate strategy is to continue to grow profitably by delivering
quality service to our customers. In executing our strategy, we will rely on its
competitive strengths.

- RECOGNIZED INDUSTRY LEADER. We believe that Turner is a recognized
general construction industry leader. Our market position is largely
attributable to the following strategic advantages that help us to
successfully compete for new projects:

- Founded in 1902, Turner has an established operating history and a
strong track record of providing quality construction services.

- According to Engineering News-Record ("ENR") magazine and based on
1997 revenues, we were the second largest general building contractor
in the United States.

- Our network of 24 full-service and 17 satellite offices throughout the
United States gives us the strength and resources of a national
company with the knowledge, accessibility and support of a local firm.

- Turner has developed significant expertise in a number of specialty
construction sectors such as hospitals, stadiums, correctional
facilities, airport terminals, "clean rooms" and research facilities.

- According to ENR magazine and based on 1997 revenues, Turner was one
of the top three construction companies in many of the magazine's
market sector categories. The market sectors in which we were among
the top three accounted for approximately 80% of our 1997 revenue. The
following table lists these market sectors and Turner's ranking.

<TABLE>
<CAPTION>
ENR
ENR DEFINED MARKET SECTORS RANKING
- -------------------------- -------
<S> <C>
Commercial offices.......................................... 1
Healthcare.................................................. 1
Pharmaceutical plants and R&D laboratories.................. 2
Education and science....................................... 3
Correctional facilities..................................... 1
Sports...................................................... 3
Distribution/warehouse...................................... 3
</TABLE>

22
<PAGE> 29

- ESTABLISHED CUSTOMER RELATIONSHIPS. We believe that a strong indicator
of our customers' satisfaction is repeat business. Contracts from repeat
customers represented approximately 69% of our 1998 and 65% of our 1997
contracts. We have developed long-term relationships with a broad
customer base including many Fortune 500 companies. Our top repeat
customers ranked by cumulative contracts secured over the last five years
include: U.S. Government (various agencies), General Motors, Disney,
Motorola, Swiss Bank Corporation, Lucent Technologies, Cleveland Clinic
Foundation, Merck and The Port Authority of New York and New Jersey. By
establishing long-term relationships with our customers, we believe that
we gain better access to new projects they initiate.

- ABILITY TO TARGET STRONG GEOGRAPHIC REGIONS AND MARKET SECTORS. The
general building segment of the construction industry consists of a
number of market sectors such as commercial office buildings, healthcare
and educational facilities and sport complexes. Within these market
sectors, demand may increase or decrease regionally and over time. In
addition, the factors that affect demand in the various sectors may be
different. For example, commercial construction is typically subject to
changes in regional vacancy rates and overall levels of business
activity. Demand for healthcare and educational facilities is typically
subject to changing demographics and levels of government spending.
Turner believes it benefits from operating in multiple market sectors and
geographic regions. We target our new business efforts on geographic
regions and market sectors that we believe exhibit growth potential or
where we believe we have expertise. We are currently focusing our
marketing efforts on healthcare facilities, educational facilities,
entertainment facilities (such as stadiums), "clean rooms" and research
facilities.

- FINANCIAL CAPACITY. We believe that we have greater financial resources
and more surety bonding capacity than most of our competitors and that
these strengths permit us to compete for large projects that require
surety bonds and significant amounts of working capital. We also have the
capacity to undertake a significant number and dollar value of
construction projects at the same time.

- STRONG RELATIONSHIPS WITH SUBCONTRACTORS. We believe we enjoy strong
relationships with subcontractors throughout our network of offices. We
also believe that these relationships enable us to judge the quality of
subcontractors, monitor the available labor supply, track local industry
trends, better estimate costs and reduce expenses. We continually seek to
develop relationships with new subcontractors and, in doing so, examine
their financial strength, bonding capacity, past work and ability to meet
schedules. Out of the thousands of subcontracts we awarded in the last
five years, we experienced a very limited number of subcontractor
failures.

- BROAD RANGE OF SERVICES. In an effort to meet the needs of our clients,
we offer a broad range of construction services. Our portfolio of
services includes general construction, construction management,
consulting, program management, design/build (where we provide both the
design and construction for the project), design/build/finance (where we
partner with another party which provides financing for the project),
construction maintenance, preconstruction planning, and feasibility
studies.

- MANAGEMENT EXPERTISE. Members of our management are highly skilled and
experienced individuals. Senior officers of our construction subsidiaries
have an average of over 25 years of experience with Turner. At the
operating level, our business units are also staffed with experienced
personnel. Our business development, engineering, estimating and
purchasing managers comprise approximately 150 individuals, with
approximately 64% having at least 10 years of service with Turner. We
have approximately 300 project managers, with approximately 72% having at
least 10 years of experience with Turner.

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<PAGE> 30

CONSTRUCTION ACTIVITIES

Our construction activities include:

- GENERAL CONTRACTING (87% OF OUR VALUE OF CONSTRUCTION COMPLETED IN
1998). When we act as a general contractor, we normally are responsible
for the entire project and are paid the entire price for the completed
project. Most aspects of the construction, however, are performed by
subcontractors who are paid by us. We plan and schedule the project,
procure materials, marshal the workforce required for the project, award
subcontracts and direct and manage construction operations. When
providing design/build services in general contracting, we design and
complete the entire project. We hire the designer, supervise the design
and act as a general contractor. These projects are generally not
competitively bid, and we believe that our role in the design phase of
the project enables us to more accurately estimate the cost of the
project. In design/build/finance, we additionally enter into an
arrangement with a partner who seeks to arrange financing for the
project.

- CONSTRUCTION MANAGEMENT (12% OF OUR VALUE OF CONSTRUCTION COMPLETED IN
1998). When we provide construction management services, we monitor and
coordinate the progress of the work done by contractors who are typically
employed directly by the owner to build the project. Construction
management contracts generally involve less risk than do projects in
which we are the general contractor. However, the potential profit from
construction management contracts is typically less than the potential
profit we expect to earn as a general contractor.

- CONSULTING (1% OF OUR VALUE OF CONSTRUCTION COMPLETED IN 1998). When
providing consulting services, we act as an advisor to our client. For
example, we may provide advice on budget review, constructability,
scheduling, materials or building codes. In some situations, we act as an
agent of the client by monitoring the progress of another contractor. We
also provide construction maintenance, preconstruction planning, and
feasibility studies as part of our consulting services.

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<PAGE> 31

Following is a list of some of the projects that we completed in 1997 and
1998 and that are active in 1999.

<TABLE>
<CAPTION>
MARKET SECTOR PROJECTS COMPLETED IN 1997 AND 1998 ACTIVE PROJECTS IN 1999
- ---------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
Commercial Offices - Alcoa Corporate Center World - Banc One Corporate Center --
Headquarters, Pittsburgh, PA Phase II, Columbus, OH
- Swiss Bank Headquarters, - Pembroke Real Estate, a Fidelity
Stamford, CT Investments Company, World Trade
Center East, Boston, MA
- Reebok International Limited World
Headquarters, Canton, MA
- Merck Office Complex, West Point, PA
Healthcare - Wayne State University, Hudson Webber - Interfaith Medical Center,
Cancer Research Center, Detroit, MI Brooklyn, NY
- Santa Clara Valley Medical Center, - Cleveland Clinic Foundation
San Jose, CA Biological Resources Building,
Cleveland, OH
Pharmaceutical Plants - Boehringer Ingelheim Roxane Labs, - Schering Plough Drug Safety
and R&D Laboratories Columbus, OH Evaluation Facility, Lafayette, NY
- Fred Hutchinson Cancer Research - Astra Research Center,
Center Phase II, Seattle, WA Waltham, MA
- Searle Life Science Research
Facility, Skokie, IL
Education & Science - PS #56, Staten Island, NY - Middle College High School at Medgar
- Brown University, MacMillan Hall, Evers College,
Providence, RI Brooklyn, NY
- UCLA, Gonda Neuroscience & Genetics - Northeastern University, West Campus
Research Center, Residence Hall,
Los Angeles, CA Boston, MA
- Yale Law School and Library
Renovations, New Haven, CT
Correctional - Shirley Maximum Security Correctional - Clayton County Justice Complex,
Facilities Facility, Shirley, MA Jonesboro, GA
- Waterbury Superior Courthouse, - Mohave County Juvenile Detention
Waterbury, CT Facility, Kingman, AZ
- Sterling Correctional Facility
Phase I & II, Sterling, CO
Sports - Princeton University Stadium, - Tiger Stadium, Detroit, MI
Princeton, NJ - Duke University Athletic Center,
- USTA Arthur Ashe Stadium, Flushing, Durham, NC
NY - Paul Brown Stadium (Cincinnati
Bengals), Cincinnati, OH
</TABLE>

25
<PAGE> 32

<TABLE>
<CAPTION>
MARKET SECTOR PROJECTS COMPLETED IN 1997 AND 1998 ACTIVE PROJECTS IN 1999
- ---------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
Entertainment - Mystic Marinelife Aquarium, - Greater Columbus Convention Center
Mystic, CT Expansion, Columbus, OH
- New Jersey Performing Arts Center, - San Diego Convention Center
Newark, NJ Expansion, San Diego, CA
Retail - The Rouse Co., Beachwood Place - The Rouse Co., Exton Square Mall,
Expansion & Renovation, Beachwood, OH Exton, PA
- Lazarus Department Store, Pittsburgh, - The Mall at Sierra Vista,
PA Sierra Vista, AZ
- FAO Schwarz Toy Store, - Stew Leonard's Dairy Store, Yonkers,
Orlando, FL NY
Government Offices - DEA-Justice Training Facility, - Erie County Courthouse,
Quantico, VA Buffalo, NY
- Association of the US Army - US GSA Federal Building & US
Renovations, Arlington, VA Courthouse, Central Islip, NY
- US Navy, Naval Propulsion Systems
Evaluation, Patuxent River, MD
Distribution/ - Quik-Pak Distribution Center, - American Express Billing & Inserting
Warehouses Indianapolis, IN Operations Center Fit- out, Fort
- Motorola Do Brazil, Motorola-CSG, Lauderdale, FL
Jaguariuna, Brazil - AmeriPlex, The Logan Office/
Warehouse Facility, Indianapolis, IN
- Lucent Technologies Office &
Warehouse, Ontario, Canada
Multi-Unit Residential - 7000 Island Boulevard Condominium, - Raymond Properties Company,
Williams Island, FL 25 Huntington Ave. Condos,
- Harbourage Place Condominium, Fort Boston, MA
Lauderdale, FL - Miranova Condominium,
Columbus, OH
Hotel/Motels - Marriott Courtyard, - General Motors, Renaissance Center
Independence, OH Hotel Core & Shell,
- Embassy Suites, Dallas, TX Detroit, MI
- The Drake Hotel Renovation, Chicago,
IL
</TABLE>

CONTRACTS

We generally enter into one of the following types of contracts with our
clients: guaranteed maximum price, lump sum or cost plus fee. In 1998,
consistent with past experience, the majority of our contracts was the result of
a negotiation process, as opposed to competitive bidding.

- GUARANTEED MAXIMUM PRICE (55% OF OUR VALUE OF CONSTRUCTION COMPLETED IN
1998). With a guaranteed maximum price contract, the owner is required
to pay costs, materials and other charges up to a guaranteed maximum
price. In many cases, the owner and Turner share the costs savings if the
actual costs of construction are less than the guaranteed maximum price.

26
<PAGE> 33

Turner assumes the risk that costs may exceed the guaranteed maximum
price. Guaranteed maximum price contracts allow the construction process
to begin before plans and specifications are finalized. Normally, the
guaranteed maximum price itself is not negotiated until the design is at
least 70% complete. Guaranteed maximum price contracts are typically
entered into when we perform general contracting services.

- LUMP SUM (21% OF OUR VALUE OF CONSTRUCTION COMPLETED IN 1998). Under
lump sum contracts, there is a fixed price for the project. The fixed
price of lump sum contracts eliminates the client's price risk, but there
is no sharing of any cost savings. Turner assumes any costs above the
fixed price, and any cost savings flow directly to us. On projects which
are competitively bid, lump sum arrangements are generally required by
the bidding procedures. Lump sum may also be used in negotiated
situations. In either event, Turner uses a lump sum contract for a
project only if the plans and specifications for the project are complete
so as to allow costs to be fully estimated. Lump sum contracts are
typically entered into when we perform general contracting services.

- COST PLUS FEE (24% OF OUR VALUE OF CONSTRUCTION COMPLETED IN
1998). Under these contracts, the owner is required to pay costs,
materials and other charges plus a fee for our services. Cost plus fee
contracts expose the client to the risk of cost overruns. For us, cost
plus fee contracts normally involve less risk and less profit than lump
sum or guaranteed maximum price contracts. Cost plus fee contracts may be
entered into when we perform general contracting, construction management
or consulting services. Under these contracts, our reimbursable costs and
fee may be fixed in amount or subject to a maximum amount.

Before we enter into any contract, we review each project to assess its
risk, feasibility and profitability. Our review process is designed to provide
key information to different levels of management and record compliance with our
procedures as to who may submit binding proposals or make contractual
commitments on our behalf. When new project opportunities arise, the manager of
business development pursuing the new project must complete a proposal
authorization form. All projects with a dollar volume exceeding $2 million are
reviewed by the Contract Review Committee at our headquarters. The Contract
Review Committee provides guidance on how the contract should be structured and
whether the project should be pursued. After receiving input from the Contract
Review Committee, the manager begins negotiations for the contract. Before the
contract is signed, the manager must submit a contract approval form to the
Contract Review Committee which, in the case of projects involving less than $25
million, reviews it and provides guidance and, in the case of projects involving
$25 million or more, has the responsibility to either approve or reject the
contract. Any contract exceeding $10 million must also be reviewed by outside
construction legal counsel who provides advice on contract terms. Both the
contract approval form and proposal authorization form require an array of
information such as risk analysis, staff requirements, bonding requirements,
type of project, fee level and client background.

BUSINESS UNITS

We have a network of 24 full-service business units and 17 satellite
offices located in or near many major cities in the United States. Each business
unit or office in the network operates as a decentralized profit center, with
each business unit responsible for the creation of an annual profit plan. Each
business unit is typically led by a general manager who has the overall
responsibility and accountability for the management and operation of the
business unit.

A full-service business unit includes staff in each of our
disciplines -- business development, estimating, purchasing, accounting, cost
control and project management. Many of these support services report directly
to the general manager, with the operations manager and project executives
assuming responsibility and accountability for operations and project
management.

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<PAGE> 34

Most of our 24 full-service business units have a special projects
division. Each of these divisions is generally set up as an independent profit
center within the respective business unit. The special projects divisions
perform tenant fit-out and renovation work and build smaller, free-standing
structures, such as restaurants, warehouses and convenience stores. In 1998, the
special projects divisions had approximately 780 active projects across the
United States. The total value of construction completed by the special projects
divisions in 1998 was $664 million.

A satellite office typically engages in business development and project
management, delegating staff functions, such as estimating, purchasing,
accounting and cost-control to a full-service business unit. Each satellite
office also reports to a full-service business unit.

Turner's offices are located in:

<TABLE>
<S> <C>
MIDWEST NORTHEAST
- - Denver, CO - Shelton, CT
- - Arlington Heights, IL - Boston, MA
- - Chicago, IL (2) - Atlantic City, NJ
- - Indianapolis, IN - Somerset, NJ
- - The Lathrop Company, Inc., - Albany, NY
Maumee, OH - Buffalo, NY
- - Detroit, MI - Melville (Long Island), NY
- - Kansas City, MO - New York, NY
- - Cincinnati, OH (2) - Philadelphia, PA
- - Cleveland, OH (2) - Pittsburgh, PA
- - Worthington (Columbus), OH
WEST SOUTHEAST
- - Irvine (Orange County), CA - Universal Construction Company, Inc.,
- - Los Angeles, CA Huntsville, AL
- - San Diego, CA - Washington, DC
- - San Francisco, CA - Maitland (Orlando), FL
- - San Jose, CA - Miami, FL
- - West Sacramento, CA - Atlanta, GA
- - Portland, OR - Raleigh, NC
- - Dallas, TX - Nashville, TN
- - Houston, TX - Richmond, VA
- - Seattle, WA
</TABLE>

In general, contracts are secured either through the business development
department in the business unit -- headed by a senior staff person, usually the
Manager of Business Development -- or through the Corporate Sales and Marketing
Strategies Department at Turner's New York headquarters. The latter department
is headed by a Senior Vice President. The Corporate Sales and Marketing
Strategies Department also develops sales strategies for Turner and each of the
business units and satellite offices and has responsibility for Turner's
national accounts. We maintain relationships with local architects, facility
managers and repeat customers with the goal of participating in a project from
the planning stage.

Turner from time to time evaluates the potential acquisition of other
contractors. In the past, we have made, and in the future may make, selected
acquisitions in local market areas with a view to improving our presence in
particular geographic areas or market sectors.

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<PAGE> 35

EMPLOYEES

As of December 31, 1998, we employed approximately 3,200 staff employees,
of whom about 1,900 were executives, project managers, superintendents,
engineers, purchasing agents, estimators, senior accountants and other
supervisory personnel. In addition, we employ supervisors and skilled building
workers for construction work which has not been subcontracted to contractors.
During 1998, approximately 2,200 supervisors and skilled building workers were
employed at various times.

COMPETITION

The United States building construction industry is intensely competitive
and highly fragmented with no participant, we believe, having a greater than 5%
market share. We compete both with major contractors and with small contractors.
Competition in the industry takes a number of forms, including reputation, fee
levels, quality of service and degree of risk assumption. Each large population
center generally has a number of smaller, locally based building contractors
accustomed to undertaking all but the largest and most complicated projects.
Also, contractors who have no local presence in areas where we have an office
can successfully compete for and obtain projects there, notwithstanding the lack
of a local presence.

REAL ESTATE

During the early 1980's, we acquired and developed a number of real estate
properties. In 1987, we decided to cease our real estate development activities
and to divest the company's real estate investments. Since that time, our real
estate portfolio has been reduced from a carrying value of more than $240.0
million at the end of 1987 to $40.5 million as of December 31, 1998. Among the
properties we currently own, either directly or through joint venture interests,
are an air cargo distribution facility in Columbus, Ohio and undeveloped land in
Virginia, Illinois and Florida. The air cargo distribution facility is under a
lease until 2010 to an investment grade tenant. As of December 31, 1998, the
remaining debt on the air cargo facility was $11.4 million. The terms of this
debt provide for it to be fully amortized prior to the lease expiration in 2010.
Currently, we have no employees exclusively managing our real estate operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 4 of Notes to the 1998 Financial Statements.

LEGAL PROCEEDINGS

We are a defendant in various litigation incident to our business, and in
some instances the amounts sought include substantial claims and counterclaims.
Although we cannot predict the outcome of litigation with certainty, in our
opinion based on the facts known to us at this time, we anticipate that the
resolution of such litigation will not have a material adverse effect on our
business, operating results and financial condition. See "Risk
Factors -- Disputes often arise in our business."

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<PAGE> 36

MANAGEMENT

The following table provides information regarding Turner's directors and
certain of its executive officers as of December 31, 1998. Biographical
information for each of the persons set forth in the table is presented below.

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- -----------------------------------------------------
<S> <C> <C>
E. T. Gravette, Jr. ....... 73 Chairman of the Board, Chief Executive Officer and
Director
Robert E. Fee.............. 62 President, Chief Operating Officer and Director
Harold J. Parmelee......... 61 President - Asset Management and Director
Donald G. Sleeman.......... 44 Senior Vice President, Chief Financial Officer and
Chief Accounting Officer
Sara J. Gozo............... 35 Vice President, Secretary and General Counsel
Heinrich Baumann-Steiner... 56 Director
Walter G. Ehlers........... 65 Director
A. Gary Fieger............. 71 Director
Thomas C. Leppert.......... 44 Director
Leif Lomo.................. 69 Director
Charles H. Moore, Jr....... 69 Director
G. Jeffrey Records, Jr..... 39 Director
Peter K. Steiner........... 52 Director
Gordon A. Walker........... 70 Director
John O. Whitney............ 70 Director
</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 Turner
and has been an employee of The Turner Corporation or its principal construction
subsidiary, Turner Construction Company, in an executive or managerial capacity
for the past five years except for Mr. Gravette and Ms. Gozo.

MR. GRAVETTE has served as a Director of Turner since 1981 and has served
as Chairman of the Board and Chief Executive Officer since August 1996. From
1986 to 1996, Mr. Gravette served as President of Ardath Associates, Inc., a
private investment company.

MR. FEE has served as a Director of Turner since 1997. He has been
President and Chief Operating Officer of Turner since 1998 and has served as
Director, President and Chief Operating Officer of Turner Construction Company
since 1997. From 1994 to 1996, Mr. Fee served as Senior Vice President of Turner
Construction Company and from 1986 to 1994 as Vice President.

MR. PARMELEE has served as a Director of Turner since 1988. He has served
as President - Asset Management of Turner since 1998. Prior to this, he was
President of Turner.

MR. SLEEMAN has served as Senior Vice President and Chief Financial Officer
since August 1996 and Chief Accounting Officer since March 1997. Prior to August
1996, Mr. Sleeman served as Treasurer since 1992.

MS. GOZO has served as a Vice President and Secretary since October 1994
and General Counsel since December 1996. From 1989 to 1993, Ms. Gozo practiced
construction law at Shea & Gould, and until October 1994, at Thelen, Marrin,
Johnson & Bridges, both New York City law firms.

MR. BAUMANN-STEINER has served as a Director of Turner since 1992. Mr.
Baumann-Steiner is Chairman of Steiner Holding, a Switzerland-based construction
company, and Vice Chairman and Managing Director of Karl Steiner Immobilien AG
(an affiliate of Steiner Holding).

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<PAGE> 37

MR. EHLERS has served as a Director of Turner since 1985. Currently, Mr.
Ehlers is a retired executive. Mr. Ehlers is a Director of Neuberger &
Berman - Advisers Management Trust and a Trustee of China Medical Board of New
York, Inc., which provides assistance to medical, public health, and nursing
schools. From 1984 to 1988, Mr. Ehlers served as President, Chief Operating
Officer and Trustee of Teachers Insurance and Annuity Association and College
Retirement Equities Fund.

MR. FIEGER has served as a Director of Turner since 1992. Mr. Fieger is
President of Fieger International and A. Gary Fieger Associates, Inc., real
estate development consulting firms. Previously, Mr. Fieger served as President
and Chief Executive Officer of Hammerson Property Corporation, a real estate
development firm.

MR. LEPPERT has served as a Director of Turner since 1998 and is currently
trustee of the James Campbell Estate. Previously, Mr. Leppert served as Vice
Chairman of Bank of Hawaii and Pacific Century Financial Corp. from 1996 to
1997. Mr. Leppert served as President and Chief Executive Officer of Castle &
Cooke Hawaii, a real estate development company, from 1989 to 1996 and as
President and Director of Hawaii Residential and Commercial Operations of Castle
& Cooke from 1995 to 1996.

MR. LOMO has served as a Director of Turner since 1992. Currently, Mr. Lomo
is a retired executive. From 1994 to 1995, Mr. Lomo served as President of
Marley Pump Company, a manufacturer of water pumps and water pump accessories.
From 1987 to 1994, Mr. Lomo served as Chairman and Chief Executive Officer of
A.B. Chance Company, a manufacturer of wiring devices, lighting fixtures,
industrial motor controls, wire and cable. Currently, Mr. Lomo also serves as a
Director of Young Broadcasting, Inc. and Mercantile Bank of Boone County.

MR. MOORE has served as a Director of Turner since 1990. Currently, Mr.
Moore serves as Director of Athletics for Cornell University and Chairman and
Chief Executive Officer of Xpander Pak, Inc., a packaging manufacturer.
Presently Mr. Moore also serves as a Director of Elcotel, Inc., a manufacturer
of telecommunication apparatus, and the United States Olympic Committee.

MR. RECORDS has served as a Director of Turner since 1997. Mr. Records
serves as Chairman and Chief Executive Officer of MidFirst Bank, a state
chartered savings bank in Oklahoma City, Oklahoma. From 1995 to February 1998,
Mr. Records served as President and Chief Executive Officer of MidFirst Bank.
From 1987 to 1995, Mr. Records served as President and Chief Executive Officer,
Midland Mortgage. Presently, Mr. Records also serves as a Director of Midland
Financial Company (an insurance company), Midland Mortgage Company and
Homeshield Insurance Company (an insurance agency and brokerage company).

MR. STEINER has served as a Director of Turner since 1992. Mr. Steiner
currently serves as Chairman and Managing Director of Karl Steiner Immobilien AG
(an affiliate of Steiner Holding) and Vice Chairman of Steiner Holding.

MR. WALKER has served as a Director of Turner since 1984. Currently, Mr.
Walker is a retired executive. From 1987 to 1997, Mr. Walker served as Chairman
and Chief Executive Officer of Hollinee, Inc. From 1981 to 1986, Mr. Walker
served as President and Chief Executive Officer of U.S. Industries, Inc.

MR. WHITNEY has served as a Director of Turner since 1988. Mr. Whitney is
currently a Professor and Executive Director of The Deming Center for Quality
Management at the Columbia Business School and a Director of Atchison Castings,
a manufacturer of highly engineered metal castings, and Church & Dwight Co.,
Inc., a manufacturer of sodium bicarbonate and ammonium bicarbonate products.

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<PAGE> 38

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 31, 1998 (a) by each person who is
known by us to own beneficially more than 5% of Turner's common stock; (b) by
each director; (c) by the Chief Executive Officer of Turner and each of the four
highest paid executive officers of Turner whose compensation exceeded $100,000
in the fiscal year ended December 31, 1998; (d) by all executive officers and
directors of Turner as a group; and (e) by each Selling Stockholder. The table
also shows information regarding the beneficial ownership of our common stock as
adjusted to give effect to the offering for each Selling Stockholder.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING(1) SHARES TO AFTER OFFERING
---------------------- BE SOLD IN ----------------------
NAME NUMBER PERCENT(9) OFFERING NUMBER PERCENT(9)
- -------------------------------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Steiner Holding................. 2,430,750(2) 23.6% 2,400,000 30,750 --
The Turner Corporation
Employees' Cash Balance
Retirement Plan............... 1,162,500 14.8% 1,162,500 -- --
The Turner Corporation Employee
Stock Ownership Plan.......... 1,258,097(3) 13.8%
Officers
- --------
E. T. Gravette, Jr. ............ 193,855 2.4%
Robert E. Fee................... 34,218 --
Harold J. Parmelee.............. 104,067 1.3%
Donald G. Sleeman............... 5,616 --
Ralph W. Johnson................ 33,637 --
Directors
- ----------
Heinrich Baumann-Steiner........ 17,250(4) --
Walter G. Ehlers................ 56,750 --
A. Gary Fieger.................. 30,850(5) --
Thomas C. Leppert............... 9,750 --
Leif Lomo....................... 21,750 --
Charles H. Moore, Jr. .......... 25,150 --
G. Jeffrey Records, Jr. ........ 132,998 1.7%
Peter K. Steiner................ 17,250(6) --
Gordon A. Walker................ 33,900 --
John O. Whitney................. 32,250(7) --
Directors and officers as a
group......................... 798,480 9.7%
Granite Capital(8).............. 632,550 8.0%
Dimensional Fund Advisors,
Inc.(8)....................... 483,798 6.14%
</TABLE>

- -------------------------
(1) Includes shares issuable on exercise of currently exercisable stock options
as follows: E. T. Gravette, Jr. 84,000; Robert E. Fee, 16,068; Harold J.
Parmelee, 64,563; Donald G. Sleeman, 5,331, Ralph W. Johnson, 12,310; G.
Jeffrey Records, Jr., 9,750; Thomas C. Leppert, 9,750; Walter G. Ehlers,
6,750; all other non-employee Directors: Messrs. Baumann-Steiner, Fieger,
Lomo, Moore, Steiner, Walker and Whitney 17,250 each, and Directors and
officers as a group 356,478. Does not include the interest of any executive
officer or director in the 1,258,097 shares of common stock issuable on
conversion of Series B Preferred Stock or in shares of common

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<PAGE> 39

stock issuable on exercise of options which are not exercisable prior to 60
days after December 31, 1998. Also does not include for Messrs. Gravette,
Baumann-Steiner, Ehlers, Fieger, Lomo, Moore, Steiner, Walker and Whitney
rights to receive 17,175 shares of common stock each, which rights were
granted in lieu of vested retirement benefits under the Directors'
Retirement Plan and which common stock will be distributed to the
participating director 90 days after the later of his 70th birthday or his
ceasing to be a director.

(2) Includes an aggregate of 2,400,000 shares issuable upon conversion of Series
C Preferred Stock, representing all outstanding shares of Series C Preferred
Stock, and upon conversion of Series D Preferred Stock, representing all
outstanding shares of Series D Preferred Stock. In connection with the
offering, all outstanding shares of Series C Preferred Stock and Series D
Preferred Stock will be converted into common stock, and such common stock
will be sold in the offering. Does not include 17,250 shares of common stock
beneficially owned by Peter K. Steiner and 17,250 shares of common stock
beneficially owned by Heinrich Baumann-Steiner.

(3) Represents shares issuable upon conversion of Series B Preferred Stock.

(4) Does not include 17,250 shares of common stock beneficially owned by Peter
K. Steiner or 2,430,750 (prior to the offering) or 30,750 (after the
offering) shares of common stock beneficially owned by Steiner Holding.
Heinrich Baumann-Steiner is the Chairman of Steiner Holding and his wife is
the beneficial owner of 50% of the shares of that company.

(5) Includes 4,500 shares owned by A. Gary Fieger Associates, Inc., of which Mr.
Fieger is the President and sole owner.

(6) Does not include 17,250 shares of common stock beneficially owned by
Heinrich Baumann-Steiner or 2,430,750 (prior to the offering) or 30,750
(after the offering) shares of common stock beneficially owned by Steiner
Holding. Peter K. Steiner is the Vice Chairman of Steiner Holding and the
beneficial owner of 50% of the shares of that company.

(7) Includes 15,000 shares held by the Marcia Whitney Trust of which Mr. Whitney
and his wife are co-trustees.

(8) As of December 31, 1998, as reported to the Securities and Exchange
Commission.

(9) Computed in accordance with Rule 13d-3 under the Securities Exchange Act of
1934. Unless noted, less than 1%.

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<PAGE> 40

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with Steiner Holding's purchase in July 1992 of 9,000 shares
of Series C Preferred Stock and 6,000 shares of Series D Preferred Stock from
Turner for an aggregate purchase price of $15,000,000, Turner and Steiner
Holding entered into an Agreement Regarding Security Holder's Rights,
Obligations and Options, dated as of July 20, 1992 (the "Steiner Agreement").
The Steiner Agreement included, among other things: (a) a standstill provision
which restricted Steiner Holding's ability to accumulate additional equity in
Turner and to take certain other actions relating to seeking control of Turner;
(b) a provision which gave Steiner Holding the option to maintain its percentage
ownership interest in Turner (the "Position Maintenance Option"); (c) a
provision which gave Turner a right of first refusal under certain circumstances
with regard to transfers by Steiner Holding of more than 5% of our outstanding
common stock; (d) a provision which gave Steiner Holding a right of first
refusal under certain circumstances with regard to issuances by Turner of more
than 5% of the outstanding common stock; and (e) provisions giving Steiner
Holding the option in 2002 to either sell certain securities to or purchase
additional securities from Turner.

In August 1998, Turner irrevocably waived the standstill provision referred
to above. As a result, the dividend formula on the Series C Preferred Stock and
Series D Preferred Stock changed so that instead of being entitled to dividends
at the rate of 8 1/2% per year, holders of the Series C Preferred Stock and
Series D Preferred Stock became entitled to receive an amount equal to the
dividends, if any, paid on the number of shares of common stock into which the
Series C Preferred Stock and Series D Preferred Stock could be converted.

In December 1998, Turner paid Steiner Holding approximately $1.57 million
in consideration of Steiner Holding's waiver of its rights to purchase Turner
common stock accrued through December 28, 1998 under the Position Maintenance
Option.

Under the terms of the Steiner Agreement, Turner is required to file with
the Securities and Exchange Commission a registration statement relating to the
offering of common stock under this prospectus and pay all expenses related
thereto (other than underwriting commissions). See "Underwriting." Upon
consummation of the offering, the Steiner Agreement will be terminated.

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<PAGE> 41

DESCRIPTION OF CAPITAL STOCK

The summary of the material terms of our share capital set forth below does
not purport to be complete and is qualified by reference to our Restated
Certificate of Incorporation (the "Certificate of Incorporation") and our
By-Laws, which we have filed with the Securities and Exchange Commission.

AUTHORIZED SHARE CAPITAL

Turner's authorized share capital consists of 20,000,000 shares of common
stock, par value $1 per share, and 2,000,000 shares of preferred stock, par
value $1 per share, issuable in series. The following series of preferred stock
are currently authorized: 850,000 shares of Series B Preferred Stock, 9,000
shares of Series C Preferred Stock, 6,000 shares of Series D Preferred Stock,
9,000 shares of Series E 8.5% Convertible Preferred Stock (the "Series E
Preferred Stock") and 200,000 shares of Series F Participating Preferred Stock
(the "Series F Preferred Stock"). As of December 31, 1998, there were
outstanding 7,879,147 shares of common stock, 838,731 shares of Series B
Preferred Stock convertible into 1,258,097 shares of common stock, 9,000 shares
of Series C Preferred Stock convertible into 1,500,000 shares of common stock,
6,000 shares of Series D Preferred Stock convertible into 900,000 shares of
common stock, no shares of Series E Preferred Stock and no shares of Series F
Preferred Stock.

COMMON STOCK

DIVIDENDS. The holders of our common stock are entitled to receive ratably
such dividends as may be declared from time to time by the Board of Directors
out of funds legally available therefor, subject to the preferential dividend
rights of any outstanding shares of preferred stock.

VOTING. Holders of shares of our common stock are entitled to one vote for
each share held of record on matters to be voted on by the stockholders.

LIQUIDATION. Upon voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of Turner, the holders of our common stock
are entitled to receive, after distribution in full of the preferential amounts
to be distributed to the holders of preferred stock, all the remaining assets of
Turner available for distribution to stockholders ratably in proportion to the
number of shares of common stock held by them, respectively.

The rights, preferences and privileges of holders of our common stock are
subject to, and may be adversely affected by, the rights of the holders of
outstanding shares of preferred stock and any shares of preferred stock that
Turner may issue in the future.

PREFERRED STOCK

The Board of Directors is expressly authorized to issue shares of preferred
stock from time to time in one or more series as the Board of Directors may
determine.

DIVIDENDS. The holders of our preferred stock of any series are entitled
to receive preferential cash dividends as established for the particular series,
before any dividend on common stock (other than dividends payable in common
stock) has been paid or set apart for payment with respect to the same dividend
period. All shares of preferred stock will be of equal rank, preference and
priority as to dividends irrespective of whether the dividend rates are the
same. When the stated dividends are not paid in full, the shares of all series
of preferred stock will share ratably in the payment of dividends including
accumulations, if any, in accordance with the sums which would be payable to
such shares if all dividends are not paid in full. Any two or more series of
preferred stock may differ from each other as to the existence and extent of the
right to cumulative dividends.

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<PAGE> 42

VOTING RIGHTS. Except to the extent otherwise provided by law or in the
resolution of the Board of Directors creating a series of preferred stock, the
shares of our preferred stock will have no voting power with respect to any
matter, including, but not limited to, any actions to (a) increase the
authorized number of shares of preferred stock or of any series thereof, (b)
create shares of stock of any class ranking prior to or on a parity with any
series of preferred stock with respect to any preference or voting power, and
(c) authorize a new series of preferred stock having preferences or voting power
ranking prior to or on a parity with any series of preferred stock.

LIQUIDATION. In the event of any voluntary or involuntary liquidation,
dissolution, distribution of assets or winding up of Turner, the holders of the
shares of each series of our preferred stock then outstanding will be entitled
to receive out of the net assets of Turner the amount per share fixed as the
liquidation preference by the Board of Directors before any distribution or
payment is made to the holders of common stock. If the net assets of Turner
available for distribution to the holders of the shares of all series of
preferred stock are insufficient to pay in full the preferential amount as
declared by the Board of Directors, then such assets will be distributed among
such holders ratably in accordance with the respective amounts which would be
payable if all amounts payable were paid in full. Neither the consolidation or
merger of Turner, nor the sale, lease or conveyance of all or any part of its
assets will be deemed a liquidation, dissolution, distribution of assets or
winding up of Turner.

SERIES B PREFERRED STOCK

DIVIDENDS. The holders of shares of Series B Preferred Stock are entitled
to receive, when declared by the Board of Directors out of funds legally
available therefor, cash dividends in an amount per share per annum equal to
10.14% of the original issuance price per share of Series B Preferred Stock (the
"Issue Price") of $21.29.

So long as any shares of Series B Preferred Stock are outstanding, Turner
may not make any distributions on or make any payment on account of the
purchase, redemption or other retirement of any other class of stock or series
of stock ranking junior to the Series B Preferred Stock as to payment of
dividends (including the common stock) unless full dividends for all past and
then current dividend payment periods of the Series B Preferred Stock have been
declared, paid or set apart for payment on the Series B Preferred Stock.

REDEMPTION. The Series B Preferred Stock is redeemable, in whole or in
part, at the option of Turner. The redemption price per share during the
twelve-month period which started on July 1, 1998 is 104% of the Issue Price and
commencing on July 1, 1999 reduces to an amount equal to the Issue Price plus
accrued and unpaid dividends. Turner, at its option, may make payment of the
redemption price in cash or in a combination of shares of common stock and cash,
any such shares of common stock to be valued for such purposes at their Current
Market Price (as defined).

CONVERSION. Each share of Series B Preferred Stock is convertible, at the
option of the holder, at any time and from time to time into shares of common
stock. The present conversion rate is one and one-half shares of common stock
for each share of Series B Preferred Stock, subject to antidilution adjustments.

VOTING. As a general matter, the holders of Series B Preferred Stock are
entitled to a number of votes equal to the number of shares of common stock into
which the shares of Series B Preferred Stock held could be converted, voting
together as one class with the holders of common stock on all matters submitted
to a vote of the stockholders of Turner. Except as specified above and as
required by law, holders of Series B Preferred Stock have no special voting
rights. However, the affirmative vote of at least two-thirds of the outstanding
shares of Series B Preferred Stock, voting separately as a single series, is
necessary to adopt any alteration, amendment or repeal of any provision of the

36
<PAGE> 43

Certificate of Incorporation or the resolution of the Board of Directors
authorizing the Series B Preferred Stock, if such amendment, alteration or
repeal would adversely alter or change the powers, preferences or special rights
of the shares of Series B Preferred Stock.

LIQUIDATION. Upon any liquidation, dissolution or winding up of Turner,
the holders of Series B Preferred Stock are entitled to receive on a
preferential basis, before any amount is paid on the common stock, liquidating
distributions in an amount per share equal to the Issue Price plus accrued and
unpaid dividends. If upon any liquidation, dissolution or winding up of Turner,
the amounts payable with respect to the Series B Preferred Stock and any other
stock ranking as to any such distribution on a parity with the Series B
Preferred Stock are not paid in full, the holders of the Series B Preferred
Stock and such other stock will share ratably in any distribution of assets in
proportion to the full respective preferential amounts to which they are
entitled.

In the event that Turner consummates any consolidation, merger, business
combination or other similar transaction, pursuant to which the outstanding
shares of common stock are by operation of law exchanged for or changed or
converted into other stock or securities or cash or any other property, or any
combination thereof, outstanding shares of Series B Preferred Stock will,
without any action on the part of Turner or any holder, be automatically
converted into an amount per share equal to the aggregate amount of stock,
securities, cash or other property (payable in like kind) receivable upon such
event by a holder of the number of shares of common stock into which the shares
of Series B Preferred Stock could have been converted immediately prior to such
event unless the holder of Series B Preferred Stock elects to receive a cash
payment equal to the amount payable in respect of shares of Series B Preferred
Stock upon liquidation of Turner pursuant to the liquidation rights described
above.

SERIES C PREFERRED STOCK, SERIES D PREFERRED STOCK AND SERIES E PREFERRED STOCK

In connection with this offering, all shares of Series C Preferred Stock
and Series D Preferred Stock will be converted into shares of common stock, and
none will be outstanding after completion of the offering. See "Principal and
Selling Stockholders" and "Certain Relationships and Related Transactions." The
Series E Preferred Stock is issuable only in exchange for Series C Preferred
Stock and, therefore, will not be issuable after completion of the offering.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF TURNER'S CERTIFICATE OF INCORPORATION,
BY-LAWS,
RIGHTS PLAN AND DELAWARE CORPORATE LAW

CHARTER AND BY-LAW PROVISIONS. Our Certificate of Incorporation and
By-Laws contain provisions which could delay or impede the removal of incumbent
directors and could make more difficult a merger, tender offer or proxy contest
involving Turner, even if such a transaction would be beneficial to the
interests of the stockholders, or could discourage a third party from attempting
to acquire control of Turner or could have the effect of delaying or preventing
a change in control of Turner. Any merger, consolidation or disposition of
substantially all the assets of Turner must be authorized by the affirmative
vote of the holders of at least two-thirds of all outstanding shares entitled to
vote thereon. Unless a majority of disinterested directors approve, a merger,
consolidation or other major corporate transactions involving a person owning
more than five percent of the voting shares of Turner (an "Interested
Stockholder") requires approval of 80% of the eligible voting shares, except
that if requirements as to form of consideration, minimum price and procedure
set forth in the Certificate of Incorporation are met, only the regular voting
requirements, if any, applicable to the eligible voting shares need be
satisfied. To comply with the form of consideration requirement, the Interested
Stockholder must offer either cash or the same type of consideration used by the
Interested Stockholder in acquiring the largest number of shares of voting
shares previously acquired. To satisfy the minimum price requirements, the
aggregate amount of cash and the "Fair Market

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<PAGE> 44

Value" (as defined in the Certificate of Incorporation) of the consideration
other than cash to be received per share by holders of voting shares must be at
least equal to the highest per share price (including brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder
in acquiring any of Turner's voting shares. Furthermore, the minimum price
requirement can be fulfilled only if the Interested Stockholder has neither
received any newly issued shares of capital stock, nor received generally any
disproportionate benefits from Turner or any of its subsidiaries. The "Fair
Market Value" may exceed the market price of common stock at the time of any
proposed merger.

In addition, Turner's Board of Directors is divided into three classes, as
nearly equal in number as is reasonably possible, serving staggered terms. One
class of directors is elected at each annual meeting to serve a term of three
years. Special meetings of the stockholders may only be called at the direction
of the Board of Directors. In order to nominate one or more candidates for
election to the Board of Directors at an annual meeting of stockholders, the
stockholder must notify Turner in writing of such stockholder's nominee at least
120 days before the first anniversary of the date of the preceding annual
meeting of the stockholders.

Further, the Certificate of Incorporation provides that actions by
stockholders may be taken only at a duly constituted meeting of stockholders and
may not be taken by written consent. Finally, we could issue shares of preferred
stock, without stockholder approval, upon such terms as our Board may specify.

RIGHTS PLAN. Turner has in place a stockholder rights plan (the "Rights
Plan"). Under the Rights Plan, each outstanding share of common stock has one
right (a "Right") to purchase shares of Series F Preferred Stock under certain
circumstances. Each share of Series F Preferred Stock is entitled to receive, as
general matter, 100 times the dividends declared on a share of common stock and
is entitled to 100 votes, voting together with the common stock on all matters
submitted to a vote of the stockholders of Turner.

When exercisable, each Right entitles the registered holder to purchase
from Turner one one-hundredth of a share of Series F Preferred Stock at a
purchase price of $80 per one one-hundredth of a share (the "Purchase Price").
The terms of the Rights are set forth in the Rights Agreement, dated as of
September 21, 1998, between Turner and First Chicago Trust Company of New York
as Rights Agent (the "Rights Agreement"). The following summary outlines various
provisions of the Rights Agreement and is qualified by reference to the full
text of the form of the Rights Agreement, which we have filed with the
Securities and Exchange Commission.

Up to and including the Distribution Date (as defined below), the Rights
will be evidenced, with respect to any of our common stock certificates
outstanding as of the close of business of September 21, 1998 (the date the
Rights were initially distributed to stockholders), by that common stock
certificates, and the Rights will be transferred with and only with common
stock. In addition, up to and including the Distribution Date (or earlier
redemption or expiration of the Rights), (a) new common stock certificates
issued after the close of business on September 21, 1998, upon transfer or new
issuance of common stock, will contain a notation incorporating the Rights
Agreement by reference and (b) the surrender for transfer of any certificates
for common stock outstanding on or after September 21, 1998, will also
constitute the transfer of the Rights associated with common stock represented
by that certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of common stock as of the close of business on the
Distribution Date and those separate Right Certificates alone will evidence the
Rights.

Under the Rights Agreement, the term "Distribution Date" generally means
the earlier of the tenth business day after (a) the commencement of a tender or
exchange offer by any person (other

38
<PAGE> 45

than Turner, any subsidiary of Turner or any employee benefit plan or employee
stock plan of Turner or of any subsidiary of Turner) for a number of the
outstanding shares of Turner's stock having in the aggregate 30% or more of the
general voting power of Turner, unless the Board declares that the tenth
business day following such tender or exchange offer shall not be considered a
Distribution Date or (b) the date (the "Stock Acquisition Date") of a public
announcement by Turner or an Acquiring Person that an Acquiring Person has
become such.

In general, under the Rights Agreement, the term "Acquiring Person" means,
subject to certain exceptions, any person who, together with affiliates and
associates, acquires or obtains the right to acquire beneficial ownership of
outstanding shares of Turner stock representing 30% or more of the general
voting power of Turner, but shall not include Turner, any subsidiary of Turner,
any employee benefit plan or stock option plan of Turner or of any subsidiary of
Turner or any person who acquires shares of Turner's stock having in the
aggregate 30% or more of the general voting power of Turner in connection with a
transaction or series of transactions approved in advance by the Board of
Directors.

In the event that (a) on or at any time after a Stock Acquisition Date,
Turner is the surviving corporation in a merger of other business combination
and the common stock remains outstanding and unchanged, (b) an Acquiring Person
engages in one or more self-dealing transactions specified in the Rights
Agreement, (c) a person (other than Turner, any subsidiary of Turner, any
employee benefit plan or employee stock plan of Turner or of any subsidiary of
Turner, or a person who acquires 30% or more of the general voting power of
Turner in connection with a transaction or series of transactions approved prior
to such transaction or transactions by the Board of Directors of Turner) alone,
or together with his, her or its affiliates or associates, becomes the
beneficial owner of a number of the outstanding shares of Turner's stock having
in the aggregate 30% or more of the general voting power of Turner or (d) during
such time as there is an Acquiring Person, any of certain events described in
the Rights Agreement occurs which results in such Acquiring Person's ownership
interest being increased by more than 1%, then, and in each such case, proper
provision shall be made so that each holder of a Right (except as noted below)
will thereafter have the right to receive, upon payment of the Purchase Price,
that number of shares of common stock, or in the discretion of the Board of
Directors of Turner, one one-hundredths of a share of Series F Preferred Stock
as shall equal the result obtained by (1) multiplying the then current Purchase
Price by the then number of one one-hundredths of a share of Series F Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of any one of the events listed above in this paragraph and (2)
dividing that product by 50% of the current market price per one share of common
stock. Notwithstanding the foregoing, the holder of any Rights that are, or
were, beneficially owned by an Acquiring Person or an affiliate or associate
thereof or certain transferees thereof which engaged in, or realized the benefit
of, an event or transaction or transactions described in this paragraph, shall
not be entitled to the benefit of the adjustment described in this paragraph.

In the event that, on or at any time after a Stock Acquisition Date, Turner
is acquired in a merger or other business combination transaction (in which any
shares of Turner's common stock are changed into or exchanged for other
securities or assets) or 50% or more of the assets or earning power of Turner
and its subsidiaries (taken as a whole) are sold, proper provision shall be made
so that each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction would have a market value (determined as provided in the Rights
Agreement) of two times the exercise price of the Right.

The Rights expire on September 21, 2008, unless redeemed earlier by the
Board.

39
<PAGE> 46

At any time up to and including the tenth business day subject to extension
following the Stock Acquisition Date, Turner may redeem the Rights, in whole,
but not in part, at a price of $.01 per Right.

Until a Right is exercised, the holder, as such, will have no rights as a
stockholder of Turner, including without limitation, the right to vote or to
receive dividends.

In general, the Rights Agreement may be amended by the Board (a) prior to
the Distribution Date in any manner and (b) on or after the Distribution Date in
various respects, including (1) to shorten or lengthen certain time periods and
(2) in a manner not adverse to the interests of Rights holders. However,
amendments extending the redemption period must be made while the rights are
still redeemable.

The Rights have anti-takeover effects and will cause substantial dilution
to a person or group that attempts to acquire Turner on terms not approved by
the Board. The Rights should not interfere with any merger or other business
combination approved by the Board, since the Board may redeem the Rights as
provided above.

DELAWARE ANTI-TAKEOVER LAW. Turner is subject to provisions of Section 203
of the Delaware General Corporation Law. In general, under Section 203, a
Delaware corporation may not engage in any business combination with any
interested stockholder (a person that owns, directly or indirectly, 15% or more
of the outstanding voting stock of a corporation or is an affiliate or associate
of a corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the prior three years), for a period
of three years following the date such stockholder became an interested
stockholder, unless (a) prior to such date the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, or (b) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced or (c) on or subsequent to such date, the business combination is
approved by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder. The
restrictions imposed by Section 203 do not apply to a corporation if the
corporation's original certificate of incorporation contains a provision
expressly electing not to be governed by this section or the corporation by
action of its stockholders adopts an amendment to its certificate of
incorporation or by-laws expressly electing not to be governed by Section 203.
Turner has not elected out of Section 203, and thus the restrictions imposed by
Section 203 apply to Turner.

40
<PAGE> 47

UNDERWRITING

The underwriters have agreed to purchase from the Selling Stockholders the
numbers of shares of Turner's common stock indicated below, subject to the terms
and conditions set forth in an underwriting agreement dated ,
1999.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------- ---------
<S> <C>
PaineWebber Incorporated...................................
CIBC Oppenheimer Corp. ....................................
Sanders Morris Mundy Inc. .................................
---------

Total................................................. 3,562,500
=========
</TABLE>

The underwriters are obligated to purchase all shares of our common stock
offered hereby if any shares are purchased. We have granted to the underwriters
an option, exercisable within 30 days after the date of this prospectus
supplement, to purchase up to 534,375 additional shares of our common stock
solely for the purpose of covering over-allotments, if any, at the public
offering price less the underwriting discounts and commissions set forth on the
cover page hereof. If the underwriters exercise this option, each underwriter
will be committed, subject to certain conditions, to purchase an additional
number of shares of our common stock proportionate to that underwriter's initial
commitment.

The shares of our common stock are offered subject to prior sale to the
public at the public offering price set forth on the cover page hereof and to
certain dealers at such price less a concession not exceeding cents per share.
Underwriters and dealers may reallow to certain other dealers a discount not
exceeding cents per share. After the public offering, the public offering
price and concessions and discounts to dealers may be changed by the
underwriters.

The underwriting agreement provides that we and the Selling Stockholders
will indemnify the underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.

In connection with this offering, the underwriters may purchase and sell
shares of our common stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with this offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of our common stock, and syndicate
short positions involve the sale by the underwriters of a greater number of
shares of our common stock than they are required to purchase from us in this
offering. The underwriters also may impose a penalty bid, whereby selling
concessions allowed to syndicate members or other broker-dealers in respect of
the shares of our common stock sold in this offering for their account may be
reclaimed by the syndicate if those shares of common stock are repurchased by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of our common stock,
which may be higher than the price that might otherwise prevail in the open
market, and these activities, if commenced, may be discontinued at any time
without notice. These transactions may be effected on the New York Stock
Exchange or otherwise.

41
<PAGE> 48

The underwriters have in the past and may in the future engage in
transactions with, or perform services for, us in the ordinary course of their
businesses.

We will pay all expenses, estimated to be $ , associated with the
offer and sale of our common stock.

For a -day period commencing on the closing date, we and the Selling
Stockholders have agreed, without the prior written consent of PaineWebber
Incorporated, directly or indirectly, not to sell, contract to sell, offer to
sell, assign, pledge, hypothecate, lend, transfer, make any short sale of, grant
any option, right or warrant for the sale of, or otherwise dispose of, any
common stock or securities convertible into our common stock, subject to various
exceptions.

LEGAL MATTERS

Fried, Frank, Harris, Shriver & Jacobson (a partnership including
professional corporations), New York, New York will issue an opinion on the
validity of the common stock offered by this prospectus. Morgan, Lewis & Bockius
LLP, New York, New York is advising the underwriters in connection with the
offering.

EXPERTS

The consolidated financial statements of Turner as of December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998,
included in the registration statement, of which this prospectus forms a part,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report on such financial statements. Those financial
statements are included elsewhere in this prospectus in reliance upon the
authority of that firm as experts in accounting and auditing in giving said
reports.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). You may
read and copy any document we file at the SEC's public reference rooms in
Washington, D.C., New York, N.Y. and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov. Reports, proxy and information statements and other
information concerning us can also be inspected at the offices of the NYSE, 20
Broad Street, New York, New York 10005.

The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus may update documents previously filed with the
SEC, and later information that we file with the SEC will automatically update
this prospectus. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 prior to the termination of the offering:

- Annual Report on Form 10-K for the year ended December 31, 1998; and

- The description of our common stock and the Rights contained in our
registration statement on Form 8-A, dated December 11, 1998.

42
<PAGE> 49

You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:

Corporate Secretary
The Turner Corporation
375 Hudson Street
New York, NY 10014
212-229-6000

------------------------

Information on our websites shall not be deemed to constitute a part of this
prospectus.

43
<PAGE> 50

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
NO.
-------
<S> <C>
Financial Statements:
Report of Independent Public Accountants.................. F-2
Consolidated Balance Sheets -- as of December 31, 1998 and
1997................................................... F-3
Consolidated Statements of Operations -- for the years
ended December 31, 1998, 1997 and 1996................. F-4
Consolidated Statements of Stockholders' Equity -- for the
years ended December 31, 1998, 1997 and 1996........... F-5
Consolidated Statements of Cash Flows -- for the years
ended December 31, 1998, 1997 and 1996................. F-7
Notes to Consolidated Financial Statements................ F-8
Responsibilities for Financial Reporting.................. F-30
</TABLE>

F-1
<PAGE> 51

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, 1998
and 1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1998. 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, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

New York, New York
February 19, 1999

F-2
<PAGE> 52

THE TURNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------
1998 1997
---------- --------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 168,879 $153,241
Marketable securities (Note 2).............................. 112,766 18,902
Construction receivables: (Note 3)
Due on contracts.......................................... 358,502 334,802
Retainage................................................. 188,148 180,329
Unbilled construction costs and related earnings.......... 159,093 139,969
Real estate (Note 4)........................................ 40,494 44,378
Property and equipment, net (Note 5)........................ 22,298 23,241
Prepaid pension cost (Note 10).............................. 67,066 62,854
Other assets................................................ 11,817 14,971
---------- --------

Total assets........................................... $1,129,063 $972,687
========== ========
LIABILITIES
Construction accounts payable and accrued expenses:
Trade..................................................... $ 540,435 $469,734
Retainage................................................. 216,077 189,480
Billings in excess of construction costs and related
earnings............................................... 128,029 105,021
Notes payable (Note 6)...................................... 18,891 21,719
Deferred income taxes (Note 7).............................. 18,417 17,097
Other liabilities........................................... 118,448 93,500
---------- --------

Total liabilities...................................... 1,040,297 896,551
---------- --------
Commitments and contingencies (Note 13)
STOCKHOLDERS' EQUITY (NOTE 12)
Preferred stock, $1 par value (2,000,000 shares authorized):
Series C 8.5% cumulative convertible (9,000 shares issued
and outstanding; $9,000 liquidation preference)........ 9 9
Series D 8.5% cumulative convertible (6,000 shares issued
and outstanding; $6,000 liquidation preference)........ 6 6
Series B cumulative convertible (850,000 shares issued;
838,731 and 844,966 outstanding)....................... 839 845
Common stock, $1 par value (20,000,000 shares authorized;
8,382,581 and 5,440,738 issued)........................... 8,383 5,441
Paid in capital............................................. 45,392 50,250
Retained earnings........................................... 44,113 26,436
---------- --------
98,742 82,987
Less: Loan to Employee Stock Ownership Plan (Note 11)....... (1,832) (4,349)
Treasury stock, at cost (503,434 and 138,509 common
shares)................................................... (8,144) (2,502)
---------- --------

Total stockholders' equity............................. 88,766 76,136
---------- --------

Total liabilities and stockholders' equity............. $1,129,063 $972,687
========== ========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.

F-3
<PAGE> 53

THE TURNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Value of construction completed (see below).............. $ 4,129,721 $ 3,639,754 $ 3,317,774
----------- ----------- -----------
Revenue from construction contracts...................... $ 3,698,994 $ 3,170,744 $ 2,838,052
Cost of construction contracts........................... 3,600,311 3,084,236 2,765,901
----------- ----------- -----------
Earnings from construction contracts................. 98,683 86,508 72,151
Construction operating expenses.......................... 53,220 52,500 52,962
General and administrative expenses...................... 14,289 15,823 13,885
----------- ----------- -----------
Income from construction operations.................. 31,174 18,185 5,304
Losses from real estate operations (see below)........... (764) (839) (383)
Interest expense (Note 16)............................... (933) (6,406) (7,735)
Interest and other income, net (Note 14)................. 7,379 5,046 1,782
----------- ----------- -----------
Income (loss) before income taxes.................... 36,856 15,986 (1,032)
Income tax provision (Note 7)............................ 17,223 7,194 663
----------- ----------- -----------
Income (loss) before extraordinary loss.............. 19,633 8,792 (1,695)
Extraordinary loss on early extinguishment of debt, net
of tax (Note 6)........................................ -- (2,899) --
----------- ----------- -----------
Net income (loss).................................... $ 19,633 $ 5,893 $ (1,695)
=========== =========== ===========
Basic earnings (loss) per common share:
Income (loss) before extraordinary loss (Note 15)...... $ 2.21 $ 0.85 $ (0.45)
Extraordinary loss..................................... -- (0.36) --
Net income (loss)...................................... 2.21 0.49 (0.45)
Diluted earnings (loss) per common share:
Income before extraordinary loss (Note 15)............. $ 1.50 $ 0.64 (a)
Extraordinary loss..................................... -- (0.23) --
Net income............................................. 1.50 0.41 (a)
Weighted average common shares outstanding............... 8,001,425 7,929,739 7,858,022
Weighted average common and common equivalent shares
outstanding............................................ 12,382,739 12,268,714 (a)
- ----------------------------------------------------------------------------------------------------
VALUE OF CONSTRUCTION COMPLETED CONSISTS OF THE
FOLLOWING:
Revenue from construction contracts...................... $ 3,698,994 $ 3,170,744 $ 2,838,052
Construction costs incurred by owners in connection with
work under construction management and similar
contracts.............................................. 430,727 469,010 479,722
----------- ----------- -----------
Value of construction completed...................... $ 4,129,721 $ 3,639,754 $ 3,317,774
=========== =========== ===========
REAL ESTATE OPERATIONS CONSIST OF THE FOLLOWING:
Real estate sales........................................ $ 1,500 $ 23,567 $ 19,454
Cost of sales............................................ (1,500) (23,567) (19,439)
Rental and other income.................................. 1,872 4,137 7,834
Cost of operations....................................... (1,127) (2,705) (4,498)
Depreciation and amortization expense.................... (1,509) (2,271) (3,734)
----------- ----------- -----------
Losses from real estate operations................... $ (764) $ (839) $ (383)
=========== =========== ===========
</TABLE>

- -------------------------
(a) Antidilutive

The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.

F-4
<PAGE> 54

THE TURNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996
------------------- ------------------- --------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------- --------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
CONVERTIBLE PREFERRED STOCK, SERIES C
Balance as of January 1 and December 31....... 9,000 $ 9 9,000 $ 9 9,000 $ 9
--------- ------- --------- ------- --------- --------
CONVERTIBLE PREFERRED STOCK, SERIES D
Balance as of January 1....................... 6,000 6 -- -- -- --
Preferred stock issued........................ -- -- 6,000 6 -- --
--------- ------- --------- ------- --------- --------
Balance as of December 31..................... 6,000 6 6,000 6 -- --
--------- ------- --------- ------- --------- --------
CONVERTIBLE PREFERRED STOCK, SERIES B
Balance as of January 1....................... 844,966 845 847,925 848 848,560 849
Preferred stock retired....................... (6,235) (6) (2,959) (3) (635) (1)
--------- ------- --------- ------- --------- --------
Balance as of December 31................. 838,731 839 844,966 845 847,925 848
--------- ------- --------- ------- --------- --------
COMMON STOCK
Balance as of January 1....................... 5,440,738 5,441 5,290,861 5,291 5,270,040 5,270
Three-for-two stock split..................... 2,720,127 2,720 -- -- -- --
Common stock issued........................... 221,716 222 149,877 150 20,821 21
--------- ------- --------- ------- --------- --------
Balance as of December 31................. 8,382,581 8,383 5,440,738 5,441 5,290,861 5,291
--------- ------- --------- ------- --------- --------
PAID IN CAPITAL
Balance as of January 1....................... 50,250 38,388 38,305
Three-for-two stock split..................... (2,720) -- --
Excess of proceeds over par value of common
stock issued................................ 1,676 1,328 83
Exercise of stock awards with treasury
stock....................................... (2,299) -- --
Tax benefits from stock options exercised..... 216 309 --
Retirement of Series B preferred stock........ (158) (96) --
Retirement of common stock purchase rights.... (1,573) -- --
Conversion of debenture to Series D preferred
stock....................................... -- 5,994 --
Issuance of stock awards and stock options.... -- 4,327 --
------- ------- --------
Balance as of December 31................. 45,392 50,250 38,388
------- ------- --------
RETAINED EARNINGS
Balance as of January 1....................... 26,436 22,580 26,102
Net income (loss)............................. 19,633 5,893 (1,695)
Dividends on Series C preferred stock......... (542) (765) (765)
Dividends on Series D preferred stock......... (361) (212) --
Dividends on Series B preferred stock......... (1,815) (1,827) (1,832)
Tax benefits on Series B preferred stock
dividends................................... 762 767 770
------- ------- --------
Balance as of December 31................. 44,113 26,436 22,580
------- ------- --------
LOAN TO EMPLOYEE STOCK OWNERSHIP PLAN
Balance as of January 1....................... (4,349) (6,595) (8,673)
Repayment from loan to ESOP................... 2,517 2,246 2,078
------- ------- --------
Balance as of December 31................. (1,832) (4,349) (6,595)
------- ------- --------
TREASURY STOCK
Balance as of January 1....................... 138,509 (2,502) 45,549 (391) 51,090 (508)
Three-for-two stock split..................... 69,255 -- -- -- -- --
Purchases of treasury stock................... 417,200 (6,782) 97,079 (2,170) -- --
Treasury stock issued......................... (121,530) 1,140 (4,119) 59 (5,541) 117
--------- ------- --------- ------- --------- --------
Balance as of December 31................. 503,434 (8,144) 138,509 (2,502) 45,549 (391)
--------- ------- --------- ------- --------- --------
TOTAL STOCKHOLDERS' EQUITY.................... $88,766 $76,136 $ 60,130
======= ======= ========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
F-5
<PAGE> 55

THE TURNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 19,633 $ 5,893 $ (1,695)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization expense................... 10,842 10,708 12,685
Net periodic pension charge (credit).................... (4,212) 617 (1,227)
Provision for deferred income taxes..................... 1,320 3,089 5
Investment impairment................................... 2,000 -- --
Write-off of goodwill................................... -- -- 1,290
Stock-based compensation charge......................... -- 4,379 --
Extraordinary loss on early extinguishment of debt...... -- 4,392 --
Changes in operating assets and liabilities:
Increase in construction receivables................. (50,643) (58,697) (67,087)
Increase in construction accounts payable and accrued
expenses........................................... 120,306 104,515 85,350
Decrease (increase) in other assets.................. (1,454) 2,477 3,833
Increase in other liabilities........................ 26,172 15,428 146
--------- -------- --------
Net cash provided by operating activities............ 123,964 92,801 33,300
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities........................ (109,036) (18,902) (257)
Proceeds from sale of marketable securities............... 15,151 -- 5,025
Distributions from real estate joint ventures............. 54 590 1,215
Purchases of property and equipment....................... (4,914) (6,117) (7,371)
Proceeds from sale of property and equipment.............. 73 502 290
Proceeds from sale of real estate, net.................... 1,416 22,942 18,509
Increase in real estate................................... (83) (431) (2,143)
Repayments on notes receivable............................ 873 1,181 1,295
--------- -------- --------
Net cash provided by (used in) investing
activities......................................... (96,466) (235) 16,563
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued....................................... 1,898 1,485 172
Cash dividends to preferred stockholders.................. (2,718) (2,804) (2,597)
Repayments from loan to ESOP.............................. 2,517 2,246 2,078
Principal payments under capital lease obligations........ (2,052) (2,160) (3,016)
Retirement of common stock purchase rights................ (1,573) -- --
Payments on borrowings.................................... (3,150) (54,002) (18,044)
Proceeds from borrowings.................................. -- -- 5,507
Premium on early extinguishment of debt................... -- (3,901) --
Proceeds from issuance of treasury stock.................. -- -- 49
Purchases of treasury stock............................... (6,782) (2,170) --
--------- -------- --------
Net cash used in financing activities................ (11,860) (61,306) (15,851)
--------- -------- --------
Net increase in cash and cash equivalents............... 15,638 31,260 34,012
Cash and cash equivalents at beginning of year.......... 153,241 121,981 87,969
--------- -------- --------
Cash and cash equivalents at end of year................ $ 168,879 $153,241 $121,981
========= ======== ========
NON-CASH INVESTING ACTIVITIES:
Note receivable from sale of net assets of construction
affiliate............................................... $ 1,200 $ -- $ --
NON-CASH FINANCING ACTIVITIES:
Capital lease obligations incurred by the Company......... 2,374 2,076 2,568
Conversion of debenture to Series D convertible preferred
stock................................................... -- 6,000 --
Treasury stock issued under stock-based compensation
plans................................................... 1,140 -- --
</TABLE>

The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
F-6
<PAGE> 56

THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

The Turner Corporation and Subsidiaries is a construction contractor, which
also has limited real estate operations. Turner is predominantly engaged in
general building construction and construction management throughout the United
States, with limited construction operations abroad. The primary construction
market sectors in which we operate are the commercial office building,
healthcare, pharmaceutical plants and R&D laboratories, education and science,
correctional facilities, sports and distribution/warehouse sectors. Turner also
performs interior construction work and construction consulting services.
Construction contracts include lump sum contracts, cost plus fee contracts and
variations of these types of contracts, including guaranteed maximum price
contracts. Specialty trade contractors are used extensively as subcontractors in
the performance of our construction contracts.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Turner and
our proportionate interest in the accounts of construction affiliates and
construction joint ventures. Turner 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 that we 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 our financial
statements are reasonable and prudent; however, actual results could differ from
those estimates.

CONSTRUCTION OPERATIONS

Turner determines construction earnings under the percentage of completion
method. Under this method, we recognize 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 our
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. Unapproved change orders and
claims, primarily due to owner-caused delays, incomplete specifications or
similar reasons, are included in earnings from construction contracts at their
estimated recoverable amounts based on the related contract costs when
realization is probable and the amount can be reliably estimated. Management
believes that Turner has

F-7
<PAGE> 57
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

contractual or legal bases for pursuing recovery of unapproved change orders and
claims. The settlement of these amounts depends on individual circumstances and
negotiations with the counterparty; accordingly, the timing of the collection
will vary and may extend beyond one year.

Turner continuously reviews estimated earnings from construction contracts
and makes necessary adjustments based on current evaluations of the indicated
outcome. In 1998, 1997 and 1996, we wrote down certain construction receivables
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 contracts. Construction operating
expenses are costs incurred by Turner's construction operating units and
subsidiaries that are not directly attributable to construction contracts, such
as business development, estimating, purchasing, accounting, cost control,
general office support and similar costs attributed to our construction
activities, 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. Turner 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

Turner 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 (Turner as lessee)
to property used in our operations are amortized on a straight-line basis over
the lease terms. Tenant improvements (Turner 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.

F-8
<PAGE> 58
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS

Turner considers all investments purchased with maturities of 90 days or
less to be cash equivalents.

The carrying amount of cash and cash equivalents approximates fair value
due to the short-term maturity of these amounts.

Other liabilities include approximately $73,600 and $57,600 net payable to
banks for checks drawn but not cleared as of December 31, 1998 and 1997,
respectively.

MARKETABLE SECURITIES

Marketable debt and equity securities are classified as available-for-sale
and reported at fair value. The fair value of marketable securities is based on
quoted market prices for such investments. Unrealized gains and losses, if any,
are reported as other comprehensive income. The cost basis of securities is
determined on a specific identification basis in calculating gains and losses.

Interest and dividend income and realized gains and losses on sales of
marketable securities are included in Interest and Other Income on the
Statements of Operations.

LONG-LIVED ASSETS

Long-lived assets to be held and used are 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,
when the carrying amount of an asset exceeds the sum of its expected future cash
flows, on an undiscounted basis, the asset's carrying amount is written down to
fair value. Long-lived assets to be disposed of are reported at the lower of
carrying amount or fair value less cost to sell.

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.

Turner does not provide for U.S. federal income taxes on undistributed
earnings of foreign subsidiaries since it is our intention to permanently
reinvest those earnings outside the United States.

EARNINGS PER COMMON SHARE

In 1997, Turner adopted Statement of Financial Accounting Standards
("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

F-9
<PAGE> 59
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 incremental number of
shares issuable under stock-based compensation plans, 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 adjustments are dilutive.

STOCK-BASED COMPENSATION

Turner 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 1998, Turner adopted 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 includes net income plus other comprehensive income, which includes
unrealized gains and losses on marketable securities that are "available for
sale," changes in additional minimum pension liabilities and changes in foreign
currency translation adjustments. Turner has not presented statements of
comprehensive income, as other comprehensive income was not material.

2. MARKETABLE SECURITIES

Marketable securities as of December 31, 1998 and 1997 consisted of the
following:

<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Corporate obligations.............................. $ 47,610 $18,902
Treasury securities................................ 16,378 --
State & municipal securities....................... 48,778 --
-------- -------
Total.................................... $112,766 $18,902
======== =======
</TABLE>

Realized gains and losses on sales of marketable securities for 1998, 1997
and 1996 were not significant. As of December 31, 1998 and 1997, there were no
unrealized gains or losses reported as the market value of the securities
approximated cost.

As of December 31, 1998, scheduled maturities of investments within one
year were $37,289, one year to five years were $71,758 and greater than five
years were $3,719. As of December 31, 1997, scheduled maturities of investments
within one year were $14,700 and within one to five years were $4,202.

F-10
<PAGE> 60
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. CONSTRUCTION RECEIVABLES AND CONSTRUCTION PAYABLES

Construction receivables include $188,148 of retainage as of December 31,
1998, of which approximately 90% is anticipated to be collected by December 31,
1999.

The carrying amount of construction receivables and construction payables
approximate fair value as these amounts generally are due or payable within our
operating cycle.

4. REAL ESTATE

Turner 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 our
interests in developed properties were $19,221 and $20,767 and in undeveloped
land parcels were $21,273 and $23,611 as of December 31, 1998 and 1997,
respectively. Accumulated depreciation as of December 31, 1998 and 1997 was
$24,902 and $23,393, respectively.

Turner's most significant real estate asset is the air cargo distribution
facility located in Columbus, Ohio, with a carrying amount of $16,027 as of
December 31, 1998, which is under a long term lease until 2010 to an investment
grade tenant. With recent improvements in the real estate markets, we have been
able to sell certain developed and undeveloped properties at approximately their
carrying amounts. The remaining properties will be held until such time that
they can be sold for prices which we believe reflect reasonable values.
Management anticipates a longer holding period may result for our undeveloped
land parcels, as land values have generally been slower to recover than
developed properties. Turner 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.

5. PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1998 and 1997 consisted of the
following:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Buildings and improvements.......................... $15,405 $14,526
Office machines and furniture....................... 29,090 26,921
Equipment........................................... 24,674 22,225
------- -------
Total..................................... 69,169 63,672
Less: accumulated depreciation and amortization..... (46,871) (40,431)
------- -------
Net....................................... $22,298 $23,241
======= =======
</TABLE>

F-11
<PAGE> 61
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. NOTES PAYABLE

Notes payable as of December 31, 1998 and 1997 consisted of the following:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Revenue bonds....................................... $11,400 $12,100
Employee Stock Ownership Plan....................... 2,650 5,100
Capital lease obligations........................... 4,841 4,519
------- -------
Total.......................................... $18,891 $21,719
======= =======
</TABLE>

REVENUE BONDS

Adjustable rate revenue refunding bonds are collateralized by letters of
credit and mature in varying installments through 2010. The bonds bear interest
at a weekly variable rate. The weighted average interest rate for 1998, 1997 and
1996 was 3.48%, 3.72% and 3.53%, respectively. The bonds are supported by a
letter of credit which carries an annual fee of 1.25%.

EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

This loan was used to fund Turner'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 our option. The loan is collateralized by a first
mortgage on a real estate property and letters of credit. The loan allows for
collateral substitution and upon disposition of such property may require
additional collateral to maintain loan-to-value relationships. The weighted
average interest rate for 1998, 1997 and 1996 was 6.15%, 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. As of December 31, 1998, the minimum stockholders' equity required was
$59,877 and increases by the sum of 50% of the consolidated net income and the
aggregate net proceeds received from the issuance of equity securities for each
subsequent fiscal year.

CAPITAL LEASE OBLIGATIONS

Turner leases certain computer equipment and vehicles under agreements
which are classified as capital leases. The weighted average implicit interest
rates for 1998, 1997 and 1996 were 6.83%, 6.69% and 6.69%, respectively. The
leases have original terms of three years and payments under the leases are due
in varying installments through 2001.

REVOLVING CREDIT FACILITY

In September 1998, Turner amended its unsecured revolving credit facility
to provide for borrowings up to $45,000, the proceeds of which can be used for
general corporate purposes. Turner had no borrowings under this facility at any
time during 1998 or 1997. Up to $10 million of the facility may be used for
letters of credit. The facility matures in July 2001, with two options to extend
an additional one year each up to June 2003. The current facility permits us to
choose between various interest rate options. We pay an annual commitment fee on
the unused portion of the facility

F-12
<PAGE> 62
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ranging from 0.25% to 0.5%. The facility contains various financial covenants,
the most restrictive of which is the fixed-charge coverage ratio.

OTHER CREDIT FACILITIES

Turner maintains overnight credit facilities of $8,500 with various banks
at varying rates. Turner did not use any of these facilities during 1998 or
1997. 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%.

SENIOR NOTES

On December 22, 1997, Turner exercised its option to prepay the senior
notes which had a remaining balance of $39,500. The senior notes were scheduled
to mature in 2001 and carried interest at a fixed rate of 11.74%. Under the note
agreement, we were 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 mortgages were retired upon the sale of the underlying
properties in August 1997 and October 1996. The weighted average interest rate
for 1997 and 1996 on the variable rate mortgages was approximately 8.64% and
8.80%, respectively. The fixed rate mortgages, which carried interest of 7% and
7.375%, were retired in December 1997 and September 1997 upon the sale of the
underlying properties.

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 of Series D preferred stock.

Aggregate maturities of notes due are as follows:

<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER
- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$5,410 $2,445 $1,889 $1,347 $1,100 $6,700
</TABLE>

Turner was in compliance with all financial covenants under its credit
facilities as of December 31, 1998.

Interest expense approximates amounts paid for the years ended December 31,
1998, 1997 and 1996.

As of December 31, 1998, the carrying value of the real estate that was
pledged as collateral for notes payable was $22,253.

The fair value of notes payable is estimated based on our year-end,
risk-adjusted incremental borrowing rate for similar liabilities. As of December
31, 1998 and 1997, the carrying amount of notes payable approximated fair value.

F-13
<PAGE> 63
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES

The components of the income tax provision are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................... $13,745 $ 2,889 $ 139
State & local......................... 2,158 1,216 519
------- ------- -------
15,903 4,105 658
------- ------- -------
Deferred:
Federal............................... 1,267 3,089 5
State................................. 53 -- --
------- ------- -------
1,320 3,089 5
------- ------- -------
Total.............................. $17,223 $ 7,194 $ 663
======= ======= =======
</TABLE>

The current federal provisions 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 as of
December 31, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
DEFERRED INCOME TAX
LIABILITY (ASSET)
--------------------
1998 1997
-------- --------
<S> <C> <C> <C>
Employee benefit plans.................. $22,678 $20,614
Depreciation............................ 3,699 3,922
Real estate properties.................. (2,307) (2,592)
Federal net operating loss benefits..... (2,229) (2,165)
Investment impairment................... (820) --
Jobs credit carryforward................ (202) (202)
Deferred compensation plan.............. (763) (646)
Contributions carryover................. (860) (1,445)
Other................................... (779) (389)
------- -------
Total.............................. $18,417 $17,097
======= =======
</TABLE>

As of December 31, 1998, Turner had recorded $7,960 of deferred tax assets
resulting 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

F-14
<PAGE> 64
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

future reversals of existing taxable temporary differences primarily related to
Turner's employee benefit plans.

A comparison of the federal statutory rate with Turner's effective tax rate
is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Statutory federal income tax rate (benefit)................. 35.0% 34.0% (34.0)%
State and local taxes, net of federal benefit............... 6.0 7.6 33.2
Non-deductible executive compensation....................... 2.8 -- --
Goodwill amortization and write-off......................... 0.8 0.6 51.9
Other....................................................... 2.1 2.8 13.1
----- ----- -----
Effective tax rate................................ 46.7% 45.0% 64.2%
===== ===== =====
</TABLE>

Income taxes paid were $16,285, $2,069 and $1,276 for 1998, 1997, and 1996,
respectively.

For federal income tax purposes, Turner has available as of December 31,
1998 a net operating loss carryforward of $6,368 that is available to offset
future taxable income and expires in 2009.

The deferred tax liability related to cumulative undistributed earnings of
foreign subsidiaries that were permanently reinvested was $60 as of December 31,
1998.

8. INCENTIVE COMPENSATION PLANS

Turner sponsors an Incentive Compensation Plan (ICP) which authorizes
payments of awards to executive officers and other designated employees 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 amounts charged to expense in 1998 and 1997 were $9,341 and $4,621,
respectively.

9. STOCK-BASED COMPENSATION PLANS

Turner has a stock incentive plan adopted in 1998, a non-qualified stock
option plan adopted in 1997, and an incentive stock option plan adopted in 1992.
The 1998 plan provides for the granting of employee options, stock appreciation
rights, dividend equivalent rights, restricted stock, performance units and
performance shares to employees, officers and directors of Turner. The 1998 plan
provides for awards to be granted at a price at the discretion of the
compensation committee. The 1992 and 1997 plans provide for the granting of
options to officers, directors and designated employees to purchase shares of
common stock of Turner. The 1992 plan provides for 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 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.

Turner may grant options or awards for up to 750,000 shares of common stock
under the 1998 plan. Turner may grant options for up to 600,000 and 750,000
shares of common stock under the

F-15
<PAGE> 65
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1992 and 1997 plans, respectively. Options and awards granted generally vest up
to three years from the date of grant. Options and awards are exercisable
generally in whole or in part up to ten years from the date of grant. The
vesting period and term of the options and awards may vary and are at the
discretion of the compensation committee.

In 1997, a total of 340,500 stock awards of Turner'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 $10.83
at the date of grant and are subject to certain contractual restrictions. The
award granted to the Chairman was distributed in March 1998. The awards to
directors were granted in lieu of vested retirement benefits and will be
distributed to directors on the ninetieth day following the later of their
seventieth birthday or their ceasing to be a director. In conjunction with these
distributions, Turner may withhold shares to satisfy tax withholding
requirements.

Turner 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. If Turner had
decided to account for stock-based compensation awards using the fair value
based method, 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,
Turner would have recognized additional compensation costs, net of tax, of
$1,644 in 1998, lower compensation costs, net of tax, of $38 in 1997 and
additional compensation costs, net of tax, of $123 in 1996. As a result, basic
earnings per common share would have been $0.21 lower in 1998, $.01 higher in
1997, and $0.01 lower in 1996. Diluted earnings per common share would have been
$0.13 lower in 1998, unchanged in 1997, and $0.01 lower in 1996. 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 1998, 1997 and 1996, respectively: dividend yield
of 0.0%, 0.0% and 2.5%; expected volatility of 32%, 33% and 30%; risk-free
interest rates of 5.66%, 6.52% and 6.06% for stock options granted to officers
and designated employees and 5.43%, 6.13% and 6.50% for options granted to
non-employee directors; and expected lives of five years for all plans.

F-16
<PAGE> 66
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the status of Turner's stock option plans as of December 31,
1998, 1997 and 1996, and changes during the years then ended is presented in the
table below:

<TABLE>
<CAPTION>
1998 1997 1996
--------------------- --------------------- ---------------------
WTD. AVG. WTD. AVG. WTD. AVG.
EXERCISE EXERCISE EXERCISE
AMOUNT PRICE AMOUNT PRICE AMOUNT PRICE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding as of January
1.......................... 1,285,513 $ 8.16 1,065,102 $ 7.75 1,127,397 $ 8.31
Granted at market price...... 543,470 18.41 229,500 10.76 139,875 6.02
Granted below market price... -- -- 329,664 7.39 -- --
Exercised.................... (210,530) 8.17 (216,465) 6.61 (22,350) 5.33
Canceled..................... (12,818) 10.60 (122,288) 10.06 (179,820) 10.21
--------- --------- ---------
Outstanding as of December
31......................... 1,605,635 11.61 1,285,513 8.16 1,065,102 7.75
Exercisable as of December
31......................... 711,939 9.82 764,037 7.73 948,177 7.98
Weighted average fair value
of options granted at
market price............... 7.18 4.28 1.75
Weighted average fair value
of options granted below
market price............... -- 4.60 --
</TABLE>

The following table summarizes information about options outstanding as of
December 31, 1998:

<TABLE>
<CAPTION>
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
- ----------- ------------ ------------ --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
293,051... 5.2 $ 5.16-7.30 $ 5.59 293,051 $ 5.59
541,564... 5.6 7.39-10.17 8.35 236,084 9.59
283,950... 8.5 10.58-15.50 11.69 73,200 14.34
487,070... 9.4 16.50-18.88 18.81 109,604 18.59
--------- -------
1,605,635.. 7.2 5.16-18.88 11.61 711,939 9.82
========= =======
</TABLE>

10. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PENSION PLANS

Turner has a noncontributory defined benefit pension plan which covers
salaried employees who meet minimum age and length of service requirements. In
1991, Turner 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.

F-17
<PAGE> 67
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 1994, Turner 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.

Turner 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. Turner amortizes the full amount of the unrecognized net
actuarial gains and losses 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 1,162,500 shares of
Turner's common stock.

The following table sets forth the funded status of the defined benefit
pension plan and the amounts recognized in the financial statements as of
December 31, 1998 and 1997:

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Change in projected benefit obligation:
Benefit obligation as of January 1...................... $159,490 $133,911
Service cost............................................ 10,325 9,662
Interest cost........................................... 11,590 10,624
Plan amendments......................................... 2,446 --
Actuarial losses........................................ 20,855 14,971
Benefits paid........................................... (11,925) (9,678)
-------- --------
Benefit obligation as of December 31.................... 192,781 159,490
-------- --------
Change in plan assets:
Fair value of plan assets as of January 1............... 257,164 207,886
Actual return on plan assets............................ 41,064 58,956
Benefits paid........................................... (11,925) (9,678)
-------- --------
Fair value of plan assets as of December 31............. 286,303 257,164
-------- --------
Plan assets in excess of projected benefit obligation..... 93,522 97,674
Unrecognized net actuarial gains.......................... (36,877) (43,095)
Unrecognized prior service cost........................... 11,302 10,036
Unrecognized net transition asset......................... (881) (1,761)
-------- --------
Prepaid pension cost.................................... $ 67,066 $ 62,854
======== ========
</TABLE>

F-18
<PAGE> 68
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of the net periodic pension charge (credit) recognized for
1998, 1997 and 1996 were:

<TABLE>
<CAPTION>
1998 1997 1996
------- -------- --------
<S> <C> <C> <C>
Service cost.................................... $10,325 $ 9,662 $ 8,432
Interest cost................................... 11,590 10,624 9,301
Expected return on plan assets.................. (22,637) (19,411) (18,348)
Amortization of net transition asset............ (881) (881) (881)
Amortization of prior service cost.............. 1,180 1,098 777
Net actuarial gains recognized.................. (3,789) (475) (508)
------- -------- --------
Net periodic pension charge (credit)....... $(4,212) $ 617 $ (1,227)
======= ======== ========
</TABLE>

The weighted average assumptions used in measuring the actuarial amounts
for the plan were:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Discount rate.............................................. 6.50% 7.25% 7.50%
Rate of compensation increase -- cash balance plan......... 6.00% 4.75% 4.25%
Expected long-term rate of return on plan assets........... 9.00% 9.59% 9.64%
</TABLE>

Turner also sponsors three non-qualified defined benefit plans relating to
officers and directors. The net periodic benefit cost of the plans was $447 and
$370 for 1998 and 1997, respectively. As Turner funds these plans on a
pay-as-you-go basis, there were no plan assets as of December 31, 1998 and 1997.
The accrued projected benefit obligation for the plans was $2,033 and $1,487 as
of December 31, 1998 and 1997, respectively.

DEFINED CONTRIBUTION PENSION PLAN

Turner 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 $2,161, $1,911, and $1,742 in 1998, 1997 and 1996,
respectively.

POSTRETIREMENT BENEFIT PLAN

Employees retiring from Turner 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 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 years of service at
retirement. The medical plans of Turner are funded on a pay-as-you-go basis.

F-19
<PAGE> 69
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table sets forth the funded status of the postretirement
benefit plan and the amounts recognized in the financial statements as of
December 31, 1998 and 1997:

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C> <C>
Change in accumulated postretirement benefit
obligation:
Benefit obligation as of January 1........... $ 21,332 $ 21,601
Service cost................................. 469 425
Interest cost................................ 1,538 1,490
Plan participants contributions.............. 470 430
Actuarial losses (gains)..................... 1,746 (1,084)
Benefits paid................................ (1,670) (1,530)
-------- --------
Benefit obligation as of December 31......... $ 23,885 $ 21,332
-------- --------

Change in plan assets:
Fair value of plan assets as of January 1.... $ -- $ --
Actual return on plan assets................. -- --
Employer contributions....................... 1,200 1,100
Plan participants' contributions............. 470 430
Benefits paid................................ (1,670) (1,530)
-------- --------
Fair value of plan assets as of December
31........................................ $ -- $ --
-------- --------
Accumulated postretirement benefit obligation
in excess of plan assets..................... $(23,885) $(21,332)
Unrecognized net actuarial gains............... (629) (2,390)
Unrecognized net transition obligation......... 13,865 14,856
-------- --------
Accrued postretirement benefit obligation.... $(10,649) $ (8,866)
======== ========
</TABLE>

The components of the net periodic postretirement benefit cost for 1998,
1997 and 1996 were:

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Service cost................................... $ 469 $ 425 $ 371
Interest cost.................................. 1,538 1,490 1,546
Amortization of net transition obligation...... 991 991 991
Net actuarial gains recognized................. (15) (57) --
-------- -------- --------
Net periodic postretirement benefit cost..... $ 2,983 $ 2,849 $ 2,908
======== ======== ========
</TABLE>

The accumulated postretirement benefit obligation and net periodic
postretirement benefit cost were computed using an assumed weighted average
discount rate of 6.50% in 1998, 7.25% in 1997 and 7.50% in 1996. The health care
cost trend rate was assumed to be 8% in 1998 decreasing by 1%

F-20
<PAGE> 70
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

a year to 6% in 2000 and 5.5% in 2001 and beyond. A one percentage point change
in the assumed health care cost trend rate would have the following effects:

<TABLE>
<CAPTION>
1% INCREASE 1% DECREASE
----------- -----------
<S> <C> <C>
Aggregate effect on annual service cost and interest
cost................................................. $ 94 $ (85)
Effect on accumulated postretirement benefit
obligation........................................... 1,353 (1,248)
</TABLE>

In 1998, Turner adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which revised the disclosures about
its employee benefit plans. The statement did not change the measurement or
recognition of those plans. Turner has restated prior years to conform to the
new disclosure requirements.

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.

11. EMPLOYEE STOCK OWNERSHIP PLAN

Turner has a leveraged Employee Stock Ownership Plan (ESOP) for salaried
employees who meet minimum age and length of service requirements. To fund the
ESOP, Turner 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. As of December 31, 1998, the number of allocated and
unallocated shares were 779,715 and 59,016, respectively.

The Series B stock is callable, in whole or in part, at the option of
Turner, at a price per share expressed as a percentage of the issue price of
$21.29. At our option, the call may be satisfied by common shares, cash or a
combination thereof. The call price was 112% in 1994 and decreases annually to
100% in July 1999. The trustee may, at any time, convert each share of Series B
stock into one and one-half shares 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 February 26, 1999, was $28.49 per preferred share. At
Turner's option, redemption by an employee may be satisfied by common shares,
cash or a combination thereof.

The Series B preferred stockholders are entitled to the same voting rights
as the holders of the number of shares of common stock into which the Series B
stock held is convertible. Dividends on Series B stock are $2.16 per share per
annum.

The loan to the ESOP is on the same terms as Turner's bank loan. The ESOP
will repay the loan (plus interest) with proceeds from the quarterly dividends
paid on the allocated and unallocated
F-21
<PAGE> 71
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Series B stock and contributions from Turner. All contributions to the ESOP in
excess of dividends are treated as compensation expense. The fair value of the
loan receivable from the ESOP is estimated based on estimated future cash flows
discounted at a risk-adjusted rate. As of December 31, 1998 and 1997, the
carrying amount approximated fair value.

Compensation expense and interest income for the years ended December 31,
1998, 1997 and 1996 were:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Compensation expense..................................... $857 $726 $632
Interest income.......................................... 222 352 464
</TABLE>

The interest income earned by Turner on the ESOP loan offsets the interest
expense incurred on the original borrowing, with no impact on the results of
operations.

12. STOCKHOLDERS' EQUITY

On July 24, 1998, the Board of Directors declared a three-for-two stock
split of Turner's common stock, effected in the form of a 50% stock dividend
paid on August 14, 1998 to all stockholders of record on August 3, 1998. All
agreements concerning stock options and other commitments payable in shares of
Turner's common stock provide for the issuance of additional shares due to the
declaration of the stock split. Historical share and per share amounts in the
financial statements have been adjusted to reflect the stock split on a
retroactive basis. However, share amounts presented in the Consolidated Balance
Sheets and Consolidated Statements of Stockholders' Equity reflect the actual
share amounts outstanding for each period presented. In connection with the
stock split, $2,720 was transferred to common stock from the paid in capital
account as the common stock's par value remained at $1.00 per share.

On July 20, 1992, Turner 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. 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 1,500,000 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 900,000 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.
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 Turner'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

F-22
<PAGE> 72
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 Turner
is six quarters or more in arrears in paying dividends.

In connection with the purchase of Turner's securities by Steiner, we
executed an agreement providing us 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 certain
instances with regard to sales by Turner of more than five percent of its stock.
In addition, if we issue additional stock or convertible or exchangeable
securities, Steiner will have the option in certain instances to purchase
similar securities to the extent necessary to maintain its percentage ownership.
This agreement also includes a standstill provision which restricted Steiner's
ability to accumulate additional equity in Turner and to take certain other
actions relating to seeking control of Turner.

In August 1998, Turner irrevocably waived the standstill provision. As a
result, the dividend formula on the Series C and Series D stock changed so that
in lieu of being entitled to dividends at a rate of $85.00 per share per year,
the holders of the Series C and Series D stock became entitled to receive an
amount equal to the dividends, if any, paid on the number of shares of common
stock into which the Series C and Series D stock could be converted.

If Turner issues, in a transaction or related series of transactions,
common stock or convertible or exchangeable securities totaling at least 15% of
our 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.

Turner has a right of first refusal with regard to sales or transfers of
the Turner securities owned by Steiner constituting more than five percent of
our outstanding common stock, on a fully diluted basis. In addition, Turner has
the option to repurchase the securities owned by Steiner, upon a change in
control in the ownership of Steiner.

If the price of Turner's common stock is below $4.67 per share for at least
20 consecutive trading days (or if the agreement is not extended), Steiner may
require Turner either to find a buyer (which may be Turner) for all of Steiner's
holdings (or, in some instances, 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 Turner's common stock. Turner 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.

On December 29, 1998, Turner paid Steiner $1,573 to retire Steiner's
rights, which it waived, to purchase additional shares of common stock to
maintain its percentage ownership through December 28, 1998. The amount paid was
charged against the paid in capital account.

F-23
<PAGE> 73
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. COMMITMENTS AND CONTINGENCIES

Turner (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, 1998, 1997 and 1996 amounted to $9,658, $9,610 and
$9,392, respectively. Future minimum rental payments are as follows:

<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER
- ------ ------ ------ ------ ------ ----------
<S> <C> <C> <C> <C> <C>
$8,743.. $8,354 $6,557 $5,129 $4,321 $8,805
</TABLE>

Turner (as lessor) has operating leases with tenants for the air cargo
distribution facility and the commercial office property which have terms of up
to 15 years, and a ground lease on a land parcel for 90 years. Rental income
under the air cargo distribution facility lease represented 86%, 39% and 21% of
total rental income for 1998, 1997 and 1996, respectively. Future minimum rental
revenue from non-cancelable leases in effect as of December 31, 1998 are as
follows:

<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER
- ------ ------ ------ ------ ------ ----------
<S> <C> <C> <C> <C> <C>
$1,841.. $1,791 $1,791 $1,791 $1,791 $8,140
</TABLE>

Turner has guaranteed $2,750 of a $5,000 letter of credit facility and $275
of a $500 line of credit facility of Turner Steiner International LLC, in which
Turner holds a 50% ownership interest.

Turner is a defendant in various litigation incident to its business and in
certain 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 our financial position or results of operations. As these matters
continue to proceed through the litigation process to ultimate resolution, it is
reasonably possible that our estimation of the effect of such matters could
change within the next year.

14. INTEREST AND OTHER INCOME, NET

The major components of Interest and Other Income, net are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Interest income...................................... $9,299 $5,108 $2,140
Investment impairment................................ (2,000) -- --
Other................................................ 80 (62) (358)
------ ------ ------
Net........................................ $7,379 $5,046 $1,782
====== ====== ======
</TABLE>

F-24
<PAGE> 74
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. EARNINGS PER SHARE

The following table reconciles the components of basic and diluted earnings
per common share for "income (loss) before extraordinary loss" for the years
ended December 31, 1998, 1997 and 1996.

<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- ----------
<S> <C> <C> <C>
Numerator:
Income (loss) before extraordinary loss....... $ 19,633 $ 8,792 $ (1,695)
Preferred stock dividends, net of tax
benefits................................... (1,956) (2,037) (1,827)
----------- ----------- ----------
Income (loss) available to common stockholders
before extraordinary loss -- Basic......... 17,677 6,755 (3,522)
----------- ----------- ----------
Effect of dilutive securities:(a)
Series C preferred stock dividends......... 542 765 --
Series D preferred stock dividends......... 361 212 --
Convertible debenture interest expense, net
of tax................................... -- 140 --
Series B preferred stock dividends, net of
tax benefits............................. 1,053 1,060 --
Series B preferred stock dividend
differential............................. (1,053) (1,060) --
----------- ----------- ----------
903 1,117 --
----------- ----------- ----------
Income (loss) available to common stockholders
before extraordinary loss -- Diluted....... $ 18,580 $ 7,872 $ (3,522)
=========== =========== ==========
Denominator:
Weighted average common shares outstanding --
Basic...................................... 8,001,425 7,929,739 7,858,022
----------- ----------- ----------
Effect of dilutive securities:(a)
Stock-based compensation plans............. 720,157 670,395 --
Series C convertible preferred stock....... 1,500,000 1,500,000 --
Series D convertible preferred stock....... 900,000 900,000 --
Series B convertible preferred stock....... 1,261,157 1,268,580 --
----------- ----------- ----------
4,381,314 4,338,975 --
----------- ----------- ----------
Weighted average common and common equivalent
shares outstanding -- Diluted.............. 12,382,739 12,268,714 7,858,022
=========== =========== ==========
Basic earnings (loss) per common share before
extraordinary loss............................ $ 2.21 $ 0.85 $ (0.45)
Diluted earnings per common share before
extraordinary loss............................ 1.50 0.64 (a)
</TABLE>

- ---------------
(a) The common equivalent shares for the year ended December 31, 1996 were:
124,394 shares for the Stock-based compensation plans, 1,500,000 shares for
the Series C convertible preferred stock, 900,000 shares for the convertible
debenture, and 1,272,361 shares for the Series B

F-25
<PAGE> 75
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

convertible preferred stock. The common equivalent shares for these
securities were not included in the calculation of diluted earnings per
common share because the effect would be antidilutive.

16. OPERATING SEGMENT INFORMATION

Turner's one reportable operating segment is our construction segment;
however, information regarding the real estate segment is also presented. The
construction segment provides general contracting, construction management and
consulting services.

The Consolidated Statements of Operations provides information regarding
segment profit/loss and segment revenues. Certain other financial data for
Turner's segments are presented below:

<TABLE>
<CAPTION>
1998 1997 1996
---------- -------- --------
<S> <C> <C> <C>
Total assets at year end:
Construction.............................. $ 841,016 $790,969 $744,186
Real estate............................... 42,402 46,509 72,606
---------- -------- --------
Segment total............................. 883,418 837,478 816,792
Unallocated amounts:
Cash and cash equivalents.............. 129,927 113,800 75,731
Marketable securities.................. 112,766 18,902 --
Other.................................. 2,952 2,507 2,073
---------- -------- --------
Consolidated total........................ $1,129,063 $972,687 $894,596
========== ======== ========
Depreciation and amortization expense:
Construction.............................. $ 9,333 $ 8,437 $ 8,951
Real estate............................... 1,509 2,271 3,734
---------- -------- --------
Consolidated total........................ $ 10,842 $ 10,708 $ 12,685
========== ======== ========
Interest expense:
Construction.............................. $ 321 $ 321 $ 393
Real estate............................... 612 1,263 2,147
Corporate................................. -- 4,822 5,195
---------- -------- --------
Consolidated total........................ $ 933 $ 6,406 $ 7,735
========== ======== ========
Capital expenditures:
Construction.............................. $ 4,914 $ 6,117 $ 7,371
Real estate............................... 83 431 2,143
---------- -------- --------
Consolidated Total........................ $ 4,997 $ 6,548 $ 9,514
========== ======== ========
</TABLE>

F-26
<PAGE> 76
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The value of construction completed related to Turner's products and
services provided by our construction segment was:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ------------ -----------
<S> <C> <C> <C> <C>
General contracting................ $3,601,070 $3,089,099 $2,744,630
Construction management............ 505,695 517,196 546,851
Consulting......................... 22,956 33,459 26,293
---------- ---------- ----------
Construction segment total....... $4,129,721 $3,639,754 $3,317,774
========== ========== ==========
</TABLE>

Turner's revenue and assets predominantly relate to our United States
operations, with immaterial amounts related to foreign operations.

In 1998, Turner adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which revised the disclosures about our
operating segments. Turner has restated prior years to conform to the new
disclosure requirements.

17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
1998 QUARTER ENDED
Value of construction completed......... $906,438 $1,033,616 $1,105,095 $1,084,572
Revenue from construction contracts..... 814,435 923,419 963,305 997,835
Earnings from construction contracts.... 21,576 22,247 24,920 29,940
Income before income taxes.............. 6,499 7,477 9,722 13,158
Net income.............................. 3,574 4,113 5,347 6,599
Basic earnings per common share (a)..... $ 0.37 $ 0.44 $ 0.60 $ 0.80
Diluted earnings per common share (a)... 0.27 0.31 0.41 0.52
</TABLE>

F-27
<PAGE> 77
THE TURNER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1997 QUARTER ENDED
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(b)
Basic earnings per common share:(a)
Income before extraordinary
loss........................... $ 0.10 $ 0.15 $ 0.21 $ 0.39
Net income........................ 0.10 0.15 0.21 0.03
Diluted earnings per common
share:(a)
Income before extraordinary
loss........................... $ 0.08 $ 0.12 $ 0.16 $ 0.27
Net income........................ 0.08 0.12 0.16 0.04
</TABLE>

- -------------------------
(a) The quarterly per share amounts are computed independently of annual
amounts.

(b) The fourth quarter includes an extraordinary loss on early extinguishment of
debt of $2,899, net of tax.

F-28
<PAGE> 78

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 Turner'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, 1998. Management has made available
to Arthur Andersen LLP all of Turner'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
Turner. Management believes the internal accounting controls in use provide
reasonable assurance that Turner'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, Turner 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.

F-29
<PAGE> 79
NATIONAL OFFICE NETWORK

Turner offers customers a nationwide office network. Through this network, we
offer customers a broad range of construction related services.

<TABLE>

<S> <C> <C> <C>
CALIFORNIA Special Projects Division Special Projects Division VIRGINIA
Los Angeles* Chicago Cincinnati Richmond*

Orange County INDIANA Cleveland WASHINGTON
Irvine Indianapolis Seattle*

Special Projects Division
San Diego MASSACHUSETTS Cleveland WASHINGTON, DC
Boston* Arlington*

San Francisco* MICHIGAN Columbus/Worthington THE LATHROP
Detroit* COMPANY, INC.
Maumee, OH*
San Jose* MISSOURI OREGON
Kansas City Portland TURNERUNIVERSAL
CONSTRUCTION
COMPANY
West Sacramento* NEW JERSEY PENNSYLVANIA Huntsville, AL*
Atlantic City Philadelphia*

COLORADO Somerset* Pittsburgh* INTERNATIONAL
Denver TURNERSTEINER
INTERNATIONAL, LLC
New York, NY
CONNECTICUT NEW York TENNESSEE
Shelton* Albany Nashville*
TURNERSOUTH
AMERICA LTDA.
FLORIDA Buffalo TEXAS Sao Paulo, Brazil
Miami* Dallas*

Orlando/Maitland Long Island/Melville Houston

GEORGIA New York*
Atlanta

ILLINOIS NORTH CAROLINA [LOGO]
Arlington Heights Raleigh

Chicago OHIO
Cincinnati

</TABLE>

* Office includes a special projects division

<PAGE> 80

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

3,562,500 SHARES

THE TURNER CORPORATION

COMMON STOCK

------------------------

PROSPECTUS

------------------------

PAINEWEBBER INCORPORATED
CIBC OPPENHEIMER
SANDERS MORRIS MUNDY

------------------------

, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 81

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*

The following table sets forth the estimated expenses to be borne by
Turner, in connection with the issuance and distribution of the securities being
registered hereby, other than underwriting and commissions.

<TABLE>
<S> <C>
SEC registration fee.................................. $19,683
NASD filing fee....................................... 7,580
Accounting fees and expenses**........................
Legal fees and expenses**.............................
Blue Sky expenses and counsel fees**..................
Printing and engraving expenses**.....................
NYSE listing fee...................................... 3,500
Transfer Agent and Registrar's fees and expenses**....
Miscellaneous expenses**..............................
-------
Total............................................ $
=======
</TABLE>

- -------------------------
* Except for the SEC registration fee, the NASD filing fee and the NYSE listing
fee, all the foregoing expenses have been estimated.

** To be completed by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article EIGHT of the By-Laws of The Turner Corporation provides as follows:

The Corporation shall indemnify Directors or Officers of the
Corporation in the manner and to the fullest extent now or hereafter
permitted by law in connection with any threatened, pending or completed
action, suit or proceeding (including civil, criminal, administrative or
investigative proceedings) arising out of their service to the Corporation
or to another organization at the Corporation's request. Persons who are
not Directors or Officers of the Corporation may be similarly indemnified
in respect of such service to the extent authorized at any time by the
Board of Directors. The provisions of this Section shall be applicable to
actions or proceedings commenced after the adoption hereof, whether arising
from acts or omissions occurring before or after the adoption hereof, and
to persons who have ceased to be Directors, Officers or employees and shall
inure to the benefit of their heirs, executors and administrators.

Section 145 of the General Corporation Law of the State of Delaware
provides as follows:

Under certain circumstances a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was
serving at its request in such capacity in another corporation or business
association, against expenses (including attorney's fees), judgments, fines

II-1
<PAGE> 82

and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.

In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by a director, officer, employee or agent of the
corporation, or a person who is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or business association in connection with the defense or
settlement of an action or suit, if such person has acted in good faith and
in a manner that he or she reasonably believed to be in or not opposed to
the best interests of the corporation, except that no indemnification shall
be made if such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the
defendant is fairly and reasonably entitled to indemnity for such expenses
despite such adjudication of liability.

Turner has entered into agreements to provide indemnification for its
directors in addition to the indemnification provided for in the By-Laws of
Turner. These agreements, among other things, indemnify the directors, to the
fullest extent provided by Delaware law, for certain expenses (including
attorney's fees), losses, claims, liabilities, judgments, fines and settlement
amounts incurred by such indemnitee in any action or proceeding, including any
action by or in the right of Turner, on account of services as a director or
officer of any affiliate of Turner, or as a director or officer of any other
company or enterprise that the indemnitee provides services to at the request of
Turner.

The form of Underwriting Agreement filed as Exhibit 1.1 provides for the
indemnification of Turner, its controlling persons, its directors and certain of
its officers by the Underwriters against certain liabilities, including
liabilities under the Securities Act.

II-2
<PAGE> 83

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. The following is a list of exhibits filed as part of the
Registration Statement.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1. Form of Underwriting Agreement.*
3.1.1 Certificate of Incorporation, as amended to April 5, 1984,
incorporated herein by reference to Exhibit 3 to Turner's
Registration Statement on Form S-14, No. 2-90235.
3.1.2 Amendments dated May 19, 1986, September 12, 1988 and July
10, 1989, incorporated herein by reference to Exhibit 3(a)
to Turner's 1989 Annual Report on Form 10-K.
3.1.3 Certificate of Designations with regard to Series C 8 1/2%
Convertible Preferred Stock, incorporated herein by
reference to Exhibit 2 to Turner's Form 8-K dated July 20,
1992.
3.1.4 Certificate of Designations with regard to Series D 8 1/2%
Convertible Preferred Stock, incorporated herein by
reference to Exhibit 3 to Turner's Form 8-K dated July 20,
1992.
3.1.5 Certificate of Designations with regard to Series E 8 1/2%
Convertible Preferred Stock, incorporated herein by
reference to Exhibit 4 to Turner's Form 8-K dated July 20,
1992.
3.1.6 Certificate of Designations with regard to Series F
Participating Preferred Stock, incorporated by reference to
Exhibit C to Exhibit 1 to Turner's Form 8-A filed September
3, 1998.
3.1.7 Certificate of Elimination with regard to Series A Junior
Participating Preferred Stock, incorporated herein by
reference to Exhibit 3(a)(ix) to Turner's 1998 Annual Report
on Form 10-K.
3.2 By-Laws, as amended to December 9, 1998, incorporated herein
by reference to Exhibit 3(b) to Turner's 1998 Annual Report
on Form 10-K.
4.1. Rights Agreement, dated as of September 21, 1998 between
Turner and First Chicago Trust Company of New York,
incorporated herein by reference to Exhibit 1 to Turner's
Form 8-A, filed on September 3, 1998.
4.2 Agreement regarding Security Holder's Rights, Obligations
and Options, dated July 20, 1992, between Turner and Karl
Steiner Holding AG, incorporated herein by reference to
Exhibit 5 to Turner's Form 8-K dated July 20, 1992.
5.1. Opinion of Fried, Frank, Harris, Shriver & Jacobson, as to
the legality of the securities being offered.*
23.1 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.1).*
23.2. Consent of Arthur Andersen LLP.
24.1. Powers of Attorney (included on the signature pages of the
Registration Statement).
</TABLE>

- -------------------------
* To be filed by amendment.

(b) Financial Statement Schedules.

Not applicable.

II-3
<PAGE> 84

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of registrant in
the successful defense of action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

(2) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(3) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 85

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 4th day of March,
1999.

THE TURNER CORPORATION

By: /s/ E. T. GRAVETTE, JR.

--------------------------------------
Name: E. T. Gravette, Jr.
Title: Chairman of the Board of
Directors
and Chief Executive
Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints Ellis T. Gravette, Jr., Robert E. Fee and Donald G.
Sleeman, and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, as well as any
related registration statement (or amendment thereto) filed pursuant to Rule
462(b) promulgated under the Securities Act of 1933, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.

This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together shall constitute one
instrument.

II-5
<PAGE> 86

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ E. T. GRAVETTE, JR. Chairman of the Board March 4, 1999
- --------------------------------------------------- of Directors, Chief
E. T. Gravette, Jr. Executive Officer and
Director

/s/ D. G. SLEEMAN Senior Vice President March 4, 1999
- --------------------------------------------------- and Chief Financial
D. G. Sleeman Officer (Principal
Financial Officer and
Principal Accounting
Officer)

/s/ H. BAUMANN-STEINER Director March 4, 1999
- ---------------------------------------------------
H. Baumann-Steiner

/s/ W. G. EHLERS Director March 4, 1999
- ---------------------------------------------------
W. G. Ehlers

/s/ R. E. FEE Director, President and March 4, 1999
- --------------------------------------------------- Chief Operating
R. E. Fee Officer

/s/ A. G. FIEGER Director March 4, 1999
- ---------------------------------------------------
A. G. Fieger

/s/ T. C. LEPPERT Director March 4, 1999
- ---------------------------------------------------
T. C. Leppert

/s/ L. LOMO Director March 4, 1999
- ---------------------------------------------------
L. Lomo

/s/ C. H. MOORE, JR. Director March 4, 1999
- ---------------------------------------------------
C. H. Moore, Jr.

/s/ H. J. PARMELEE Director and March 4, 1999
- --------------------------------------------------- President -- Asset
H. J. Parmelee Management

/s/ G. J. RECORDS, JR. Director March 4, 1999
- ---------------------------------------------------
G. J. Records, Jr.

/s/ P. K. STEINER Director March 4, 1999
- ---------------------------------------------------
P. K. Steiner
</TABLE>

II-6
<PAGE> 87

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ G. A. WALKER Director March 4, 1999
- ---------------------------------------------------
G. A. Walker

/s/ J. O. WHITNEY Director March 4, 1999
- ---------------------------------------------------
J. O. Whitney
</TABLE>

II-7
<PAGE> 88

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1. Form of Underwriting Agreement.*
3.1.1 Certificate of Incorporation, as amended to April 5, 1984,
incorporated herein by reference to Exhibit 3 to Turner's
Registration Statement on Form S-14, No. 2-90235.
3.1.2 Amendments dated May 19, 1986, September 12, 1988 and July
10, 1989, incorporated herein by reference to Exhibit 3(a)
to Turner's 1989 Annual Report on Form 10-K.
3.1.3 Certificate of Designations with regard to Series C 8 1/2%
Convertible Preferred Stock, incorporated herein by
reference to Exhibit 2 to Turner's Form 8-K dated July 20,
1992.
3.1.4 Certificate of Designations with regard to Series D 8 1/2%
Convertible Preferred Stock, incorporated herein by
reference to Exhibit 3 to Turner's Form 8-K dated July 20,
1992.
3.1.5 Certificate of Designations with regard to Series E 8 1/2%
Convertible Preferred Stock, incorporated herein by
reference to Exhibit 4 to Turner's Form 8-K dated July 20,
1992.
3.1.6 Certificate of Designation with regard to Series F
Participating Preferred Stock, incorporated by reference to
Exhibit C to Exhibit 1 to Turner's Form 8-A filed September
3, 1998.
3.1.7 Certificate of Elimination with regard to Series A Junior
Participating Preferred Stock, incorporated herein by
reference to Exhibit 3(a)(ix) to Turner's 1998 Annual Report
on Form 10-K.
3.2 By-Laws, as amended to December 9, 1998, incorporated herein
by reference to Exhibit 3(b) to Turner's 1998 Annual Report
on Form 10-K.
4.1. Rights Agreement, dated as of September 21, 1998 between
Turner and First Chicago Trust Company of New York,
incorporated herein by reference to Exhibit 1 to Turner's
Form 8-A, filed on September 3, 1998.
4.2 Agreement regarding Security Holder's Rights, Obligations
and Options, dated July 20, 1992, between Turner and Karl
Steiner Holding AG, incorporated herein by reference to
Exhibit 5 to Turner's Form 8-K dated July 20, 1992.
5.1. Opinion of Fried, Frank, Harris, Shriver & Jacobson as to
the legality of the securities being offered.*
23.1 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.1).*
23.2. Consent of Arthur Andersen LLP.
24.1. Powers of Attorney (included on the signature pages of the
Registration Statement).
</TABLE>

- -------------------------
* To be filed by amendment.

<PAGE> 1
Exhibit 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use in this
registration statement of The Turner Corporation on Form S-3 of our report dated
February 19, 1998 included herein and to all references to our Firm included in
this registration statement.

ARTHUR ANDERSEN LLP

New York, New York
March 3, 1999