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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 19, 1994
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MORRISON KNUDSEN CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
I-8889 82-0393735
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(Commission File Number) (I.R.S. Employer Identification No.)
Morrison Knudsen Plaza, Boise, Idaho 83729
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(Address of Principal Executive Offices) (Zip Code)
(208) 386-5000
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER MATERIAL IMPORTANT EVENTS.
On July 19, 1994, the Company announced a loss for second quarter in a
press release which is attached hereto as Exhibit 1.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MORRISON KNUDSEN CORPORATION
(Registrant)
/s/ Stephen G. Hanks
July 26, 1994 By:
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Stephen G. Hanks
Executive Vice President -
Finance and Administration
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MORRISON KNUDSEN CORPORATION
Morrison Knudsen Plaza/P. O. Box 73 NEWS RELEASE
Boise, Idaho 83729
Telex: 368439/Phone: (208) 386-5387 For Further Information Contact:
Fax: (208) 386-5065 Corporate Communications
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FOR RELEASE:
JULY 19, 1994
MK REPORTS SECOND QUARTER NET LOSS OF $40.5 MILLION
BOISE -- Morrison Knudsen Corporation today reported results for the second
quarter and six months ended June 30, 1994.
For the quarter, the Company reported a net loss of $40.5 million, or $1.24
per share, compared with net income of $8.2 million, or $.27 per share, for the
same period a year ago.
The second quarter loss results from a $59.4 million pre-tax loss reserve
taken by the Company on contracts in its transit car business, a one-time non-
recurring pre-tax charge of $13.8 million attributable to the write-down of the
Company's investment in the Texas TGV Corporation and the writedown of $5.0
million of capitalized development costs at the Company's Vertac hazardous waste
incineration facility. These three items reduced second quarter net income by
$46.9 million, or $1.44 per share.
For the six months ended June 30, 1994, the net loss amounted to $30.8
million, or $.95 per share, versus net income of $16.1 million or $.52 per
share, last year.
MK indicated that the losses attributable to transit car contracts are
largely due to delays in testing and delivery of new transit cars under the
Company's contract with Metro North which resulted in higher labor and overhead
costs and contract penalties.
In addition, the Company has recorded anticipated losses on three other
transit car contracts which
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are in the early phase of production. These losses are the result of higher
than planned start-up costs at the Company's two new manufacturing facilities,
as well as higher labor and overhead costs attributable to schedule delays.
The Company stressed that its transit business is out of its start-up phase
and that the Transit Group, which now is headed by a new highly experienced
management team, has a firm backlog of $980 million. MK's company-wide backlog
stands at $4.4 billion, with healthy business prospects in engineering and
construction, transportation, mining, environmental and industrial markets.
Second quarter results also include a $24.0 million pre-tax gain as a
result of MK Rail's sale of 6 million shares of its common stock at an initial
offering price of $16 per share. This sale reduced MK's ownership of MK Rail to
65%.
As previously disclosed, Texas TGV Corporation, which is 38% owned by the
Company, did not provide an equity financing commitment on December 31, 1993, as
required under the Franchise Agreement between Texas TGV and the Texas High-
Speed Rail Authority. Since Texas TGV's recent efforts to negotiate contract
amendments with the Authority have been unsuccessful, the Company is writing off
its $13.8 million investment in Texas TGV.
The Company is writing-down $5.0 million of capital investment in its
Vertac facility in Arkansas, which is currently completing a contract for
environmental clean-up work at a Superfund site. The pre-tax write-down
represents the amount of capitalized costs which are not expected to be
recovered from existing and anticipated future contracts to incinerate waste at
the facility.
Operating results also were adversely impacted by a $10.3 million pre-tax
write-down of operating equipment, including $6.0 million with respect to the
Company's CF Systems processing plant in Texas and $4.3 million from the
Company's construction equipment pool.
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The Company noted that operating income for the third quarter will be down
considerably from third quarter 1993 results due primarily to delays in the
commencement of two major design-build construction contracts. Operating
earnings are expected to recover during the fourth quarter of 1994.
MK indicated steps are underway to enable the Company to maintain technical
compliance under the Company's credit agreements. The actions being taken by MK
will not result in any change in the Company's current dividend policy.
Morrison Knudsen Corporation (MRN-NYSE) serves the world's construction,
transportation, environmental, industrial and power, markets as an engineer,
contractor and manufacturer, offering complete development, operations and
financial services.
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MORRISON KNUDSEN CORPORATION
CONSOLIDATED SUMMARY OF OPERATIONS
THREE ANDSIX MONTHS ENDED JUNE 30, 1994 AND 1993
(Thousands of dollars except per share data)
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<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30
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1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenue
Engineering and construction $499,070 $554,915 $955,191 $1,025,913
Rail systems 92,374 100,477 177,554 189,674
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Total revenue $591,444 $655,392 $1,132,745 $1,215,587
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Operating income (loss)
Engineering and construction $(8,664) $14,023 $1,760 $29,791
Rail systems (56,996) 3,820 (53,248) 5,928
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Total operating income (loss) (65,660) 17,843 (51,488) 35,719
General and administrative expenses (8,249) (9,669) (16,974) (17,656)
Research and development expenses (996) - (996) -
Interest expense (2,438) (422) (3,794) (611)
Other income (expense), net (3,695) 6,429 (571) 15,308
Equity in net income (loss) of unconsolidated
affiliates 4,774 (824) 4,887 (4,290)
Gains on subsidiaries sales of stock 24,029 - 25,284 -
Losses from dispositions of investments in unconsolidated affiliates, net (13,828) - (8,951) -
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Income (loss) before taxes and minority interests (66,063) 13,357 (52,603) 28,470
Income tax (expense) benefit 26,432 (5,062) 21,048 (12,051)
Minority interests in net (income) loss of subsidiaries (835) (88) 741 (329)
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Net income (loss) $(40,466) $8,207 $(30,814) $16,090
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Earnings (loss) per common share $(1.24) $.27 $(.95) $.52
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Weighted average number of common shares outstanding 32,550,792 30,762,989 32,363,527 30,711,123
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Corporation's new business booked in period
Engineering and construction $305,800 $609,700 $ 678,600 $ 997,100
Rail systems 332,500 127,400 635,200 127,400
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Total new business $638,300 $737,100 $1,313,800 $1,124,500C
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CORPORATION'S BACKLOG June 1994 June 1993
Engineering and construction $2,772,700 $3,464,400
Rail systems 1,640,300 1,095,200
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Total Corporation's backlog $4,413,000 $4,559,600
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Corporation's share of unconsolidated affiliates backlog (a) $463,000 $35,000
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<FN>
(a) Consists of next 5 year portion of long-term coal delivery contracts for
MIBRAG and Westmoreland Resources, Inc. and a mining services contract for MK
Gold Company.
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