UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6314
PERINI CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1717070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
73 MT. WAYTE AVENUE, FRAMINGHAM, MASSACHUSETTS 01701-9160
(Address of principal executive offices)
(Zip code)
(508)-628-2000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Number of shares of common stock of registrant outstanding at August 10,
1994: 4,373,475
PERINI CORPORATION & SUBSIDIARIES
INDEX
Page Number
Part I. - Financial Information:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - 3
June 30, 1994 and December 31, 1993
Consolidated Condensed Statements of 4
Operations - Three Months and Six Months ended
June 30, 1994 and 1993
Consolidated Condensed Statements of Cash 5-6
Flows - Six Months ended June 30, 1994 and
1993
Notes to Consolidated Condensed Financial 7-8
Statements
Item 2. Management's Discussion and Analysis of the 9-12
Consolidated Financial Condition and Results
of Operations
Part II. - Other Information:
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security 12
Holders
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
JUNE 30, 1994 AND DECEMBER 31, 1993
(In Thousands)
ASSETS
JUNE 30, DEC. 31,
1994 1993
Cash $ 12,001 $ 35,871
Accounts and Notes Receivable 121,174 123,009
Unbilled Work 15,583 14,924
Construction Joint Ventures 63,154 61,156
Deferred Income Taxes 7,702 7,702
Other Current Assets 16,753 14,940
-------- --------
Total Current Assets $236,367 $257,602
-------- --------
Land Held for Sale or Development $ 40,958 $ 48,011
Investments in and Advances to Real Estate
Joint Ventures 142,658 138,095
Real Estate Properties Used in Operations 10,141 12,678
Long-Term Portion of Notes Receivable 5,000 -
-------- --------
Total Real Estate Development Investments $198,757 $198,784
-------- --------
Other Assets $ 3,771 $ 3,896
-------- --------
Property and Equipment, less Accumulated
Depreciation of $29,796 - 1994 and $28,986 -
1993 $ 15,828 $ 16,096
-------- --------
$454,723 $476,378
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes Payable - Bank $ 3,000 $ -
Current Maturities of Long-Term Debt 4,335 7,617
Accounts Payable 117,039 136,231
Deferred Contract Revenue 33,157 25,867
Accrued Expenses 55,524 47,827
Accrued Income Taxes 321 3,183
-------- --------
Total Current Liabilities $213,376 $220,725
-------- --------
Deferred Income Taxes and Other Liabilities $ 29,839 $ 38,794
-------- --------
Long-Term Debt, including real estate
development debt of $7,405 - 1994 and $11,382
- 1993 $ 79,437 $ 82,366
-------- --------
Minority Interest $ 3,302 $ 3,350
-------- --------
Stockholders' Equity:
Preferred Stock $ 100 $ 100
Series A Junior Participating Preferred
Stock - -
Common Stock 4,985 4,985
Paid-In Surplus 59,740 59,875
Retained Earnings 80,675 83,594
ESOT Related Obligations (6,982) (6,982)
--------- --------
$138,518 $141,572
Less - Treasury Stock (9,749) (10,429)
-------- --------
Total Stockholders' Equity $128,769 $131,143
-------- --------
$454,723 $476,378
======== ========
The accompanying notes are an integral part of these financial statements.
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Share Data)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1994 1993 1994 1993
REVENUES FROM OPERATIONS:
Construction $227,759 $317,177 $381,950 $561,664
Real Estate 15,346 30,827 35,546 44,383
-------- -------- -------- --------
TOTAL REVENUES FROM
OPERATIONS $243,105 $348,004 $417,496 $606,047
-------- -------- -------- --------
COST AND EXPENSES:
Cost of Operations $235,648 $334,063 $397,263 $581,101
General, Administrative and
Selling Expenses 10,399 10,862 20,209 19,889
-------- -------- -------- --------
$246,047 $344,925 417,472 $600,990
-------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS $ (2,942) $ 3,079 $ 24 $ 5,057
-------- -------- -------- --------
Other Income (Expense), Net
(Note 2) (149) (401) (569) 4,654
Interest Expense (1,367) (1,130) (2,614) (2,318)
-------- -------- -------- --------
Income (Loss) Before Income
Taxes $ (4,458) $ 1,548 $ (3,159) $ 7,393
(Provision) Benefit for
Income Taxes (Note 3) 1,809 (583) 1,302 (5,683)
-------- -------- -------- --------
NET INCOME (LOSS) $ (2,649) $ 965 $ (1,857) $ 1,710
======== ======== ======== ========
EARNINGS (LOSS) PER COMMON
SHARE (Note 4) $ (.73) $ .10 $ (.67) $ .15
======== ======== ======== ========
DIVIDENDS PER COMMON SHARE
(Note 5) $ - $ - $ - $ -
======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (Note 4) 4,360,225 4,269,428 4,347,617 4,218,298
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(In Thousands)
SIX MONTHS
ENDED JUNE 30,
1994 1993
Cash Flows from Operating Activities:
Net Income (Loss) (1,857) $ 1,710
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation and amortization 1,217 1,798
Noncurrent deferred taxes and other
liabilities (8,955) 5,750
Distributions greater (less) than earnings
of joint ventures 2,967 (10,010)
(Gain) on sale of subsidiary (Note 2) - (4,600)
Minority interest, net (48) (182)
Cash provided from (used by) changes in
components of
Working capital other than cash, notes
payable and current maturities of
long-term debt (9,948) (21,715)
Real estate development investments other
than joint ventures 7,722 2,672
Other non-cash items, net (1,281) (544)
-------- --------
NET CASH USED BY OPERATING ACTIVITIES $(10,183) $(25,121)
-------- --------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 288 $ 731
Cash distributions of capital from
unconsolidated joint ventures 3,633 1,715
Acquisition of property and equipment (1,171) (2,855)
Improvements to land held for sale or
development (245) (2,582)
Improvements to real estate properties used
in operations (204) (303)
Capital contributions to unconsolidated
joint ventures (8,199) (14,328)
Advances to real estate joint ventures (4,062) (5,020)
Proceeds from sale of Majestic net of
subsidiary's cash - 4,377
-------- --------
NET CASH USED BY INVESTING ACTIVITIES $ (9,960) $(18,265)
-------- --------
Cash Flows from Financing Activities:
Proceeds of long-term debt $ 2,457 $ 7,236
Repayment of long-term debt (8,667) (4,998)
Cash dividends paid (1,062) (1,063)
Proceeds from notes payable to banks 3,000 -
Purchase of treasury stock 545 2,504
-------- --------
NET CASH FROM FINANCING ACTIVITIES $ (3,727) $ 3,679
-------- --------
Net (Decrease) in cash $(23,870) $(39,707)
Cash at Beginning of Year 35,871 79,563
-------- --------
Cash at End of Period $ 12,001 $ 39,856
======== ========
Supplemental Disclosures of Cash paid during
the period for:
Interest, net of amounts capitalized $ 2,688 $ 2,462
======== ========
Income tax payments $ 4,641 $ 482
======== ========
The accompanying notes are an integral part of these financial statements.
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) Significant Accounting Policies
The significant accounting policies followed by the Company and its
subsidiaries in preparing its consolidated financial statements are set
forth in Note (1) to such financial statements included in Form 10-K/A
for the year ended December 31, 1993. The Company has made no
significant change in these policies during 1994.
(2) Other Income (Expense) Net
Includes a pretax gain of $4.6 million for the first six months 1993
from the sale of Majestic Contractors Limited, the Company's 74%-owned
Canadian pipeline subsidiary. This gain nets to zero after providing an
equivalent amount for federal income taxes at the 34% statutory rate and
an additional 66% rate which represents a combination of an additional
tax provision for the difference between book and tax basis of the
Company's investment in this subsidiary and a valuation reserve based
upon the Company's current estimate of its utilization of the foreign
tax credits related to the sale.
(3) Income Taxes
The higher-than-normal tax rate for the first six months of 1993 is due
to the reasons stated in (2) above.
(4) Per Share Data
Computations of earnings per common share amounts are based on the
weighted average number of the Company's common shares outstanding
during the periods presented. Earnings per common share reflect the
effect of preferred dividends accrued during both the 1994 and 1993
three and six month periods ended June 30, $531,000 and $1,062,000,
respectively. Common stock equivalents related to additional shares of
common stock issuable upon exercise of stock options have not been
included since their effect would be antidilutive. Per share data on a
fully diluted basis is not presented because the effect of conversion of
the Company's depositary convertible exchangeable preferred shares into
common stock is antidilutive.
(5) Cash Dividends
There were no cash dividends on common stock declared or paid during the
periods presented in the condensed financial statements presented
herein.
(6) Opinion
The unaudited condensed financial statements presented herein have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. These statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Form 10-K/A for the year ended December 31,
1993. In the opinion of management, the accompanying unaudited
condensed financial statements include all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the
Company's financial position as of June 30, 1994 and December 31, 1993
and results of operations and cash flows for the three and six month
periods ended June 30, 1994 and 1993. The results of operations for the
three and six month period ended June 30, 1994 may not be indicative of
the results that may be expected for the year ending December 31, 1994
because the Company's results generally consist of a limited number of
large transactions in both construction and real estate. Therefore,
such results can vary depending on the timing of transactions and the
profitability of projects being reported.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
RESULTS OF OPERATIONS
Comparison of the Second Quarter of 1994
with the Second Quarter of 1993
Revenues decreased $104.9 million (or 30.1%), from $348.0 million in
1993 to $243.1 million in 1994. This decrease resulted from decreased
construction revenues of $89.4 million (or 28%), from $317.2 million in 1993
to $227.8 million in 1994, due primarily to a decrease in revenues from
building operations of $95 million (or 40%), from $239 million in 1993 to
$144 million in 1994. This decrease in revenues was due to the timing in the
start-up of certain hotel/casino projects obtained late in 1993 compared to a
few similar projects that were well underway during the second quarter of
1993. This decrease was partially offset by an increase in revenues from the
heavy construction operations of $5 million (or 6%), from $79 million in 1993
to $84 million in 1994, due to an increased heavy construction backlog going
into 1994. In addition to the overall decrease in construction revenues,
revenues from real estate operations decreased $15.5 million (or 50%), from
$30.8 million in 1993 to $15.3 million in 1994 due primarily to the non-
recurring sale in 1993 of a partnership interest in certain commercial rental
properties in San Francisco ($23.2 million). This revenue decrease was
partially offset from the sale of a marginally profitable land sale in 1994
($6 million).
The gross profit in 1994 decreased by $6.5 million, from $13.9 million
in 1993 to $7.4 million in 1994, due primarily to a $4.6 million decrease
from real estate operations, from a profit of $3.4 million in 1993 to a loss
of $1.2 million in 1994. This profit decrease primarily results from the
non-recurring gain in 1993 from the sale of certain commercial rental
properties referred to above. The gross profit from construction operations
decreased $1.9 million (or 18%), from $10.5 million in 1993 to $8.6 million
in 1994. This decrease was primarily caused by the decrease in building
construction revenues referred to above and a loss from international
operations resulting from unstable economic and political conditions in a
certain overseas location where the Company is working. These decreases were
partially offset by the increase in the relatively higher margin heavy
construction revenues referred to above and the non-recurring unfavorable
settlement in 1993 of a contract dispute related to a project completed
several years ago.
Comparison of the Six Months Ended June 30, 1994
with the Six Months Ended June 30, 1993
Revenues decreased $188.6 million (or 31.1%), from $606.1 million in
1993 to $417.5 million in 1994. This decrease resulted from decreased
construction revenues of $179.7 million (or 32%), from $561.7 million in 1993
to $382.0 million in 1994, due primarily to a decrease in revenues from
building operations of $200 million (or 46%), from $438 million in 1993 to
$238 million in 1994. This decrease in revenues was primarily due to the
timing in the start-up of certain hotel/casino projects obtained late in 1993
compared to a few similar projects that were well underway during the first
six months of 1993. This decrease was partially offset by an increase in
revenues from the heavy construction operations of $20 million (or 16%), from
$123 million in 1993 to $143 million in 1994, due to an increased heavy
construction backlog going into 1994. In addition to the overall decrease in
construction revenues, revenues from real estate operations decreased $8.9
million (or 20%), from $44.4 million in 1993 to $35.5 million in 1994 due
primarily to the non-recurring sale in 1993 of a partnership interest in
certain commercial rental properties in San Francisco ($23.2 million). This
revenue decrease was partially offset from the sale of a marginally
profitable land sale in 1994 ($6 million) and the sale of two investment
properties in 1994 ($8.9 million).
The gross profit in 1994 decreased by $4.7 million, from $24.9 million
in 1993 to $20.2 million in 1994, due primarily to a $5.3 million decrease
from real estate operations, from a profit of $4.6 million in 1993 to a loss
of $.7 million in 1994. This profit decrease primarily results from the non-
recurring gain in 1993 from the sale of certain commercial rental properties
referred to above and a decrease in high margin land sales in Florida. The
gross profit from construction operations increased $.6 million (or 3%), from
$20.3 million in 1993 to $20.9 million in 1994 in spite of the negative
profit impact from the reduction in building construction revenues referred
to above. Increased profits from the relatively higher margin heavy
construction revenues referred to above and the non-recurring unfavorable
settlement in 1993 of a contract dispute related to a project completed
several years ago more than offset the impact of reduced building
construction revenues and the loss from international operations resulting
from unstable economic and political conditions in a certain overseas
location where the Company is working.
The $5.2 million decrease in other income (expense), from income of $4.7
million in 1993 to a loss of $.5 million in 1994 was due primarily to the
non-recurring gain ($4.6 million) on the sale by the Company of its 74%-owned
interest in Majestic Contractors Limited ("Majestic"), its Canadian pipeline
subsidiary, in January, 1993.
The $.3 million increase in interest expense (or 13%), from $2.3 million
in 1993 to $2.6 million in 1994 is due to a combination of higher prevailing
interest rates and an increase in the average amount borrowed.
The higher-than-normal tax rate in 1993 was due to tax provided at an
additional 66% rate on the gain on the sale of Majestic, which represented a
combination of an additional tax provision for the difference between book
and tax basis of the Company's investment in this subsidiary and a valuation
reserve related to the gain based upon the Company's estimate of its
utilization of the related foreign tax credits.
_______________________
The Company's backlog of uncompleted construction work at the end of
June 1994 was $1.385 billion, a 50% increase from the $924 million reported
for the same period in 1993 and an all time company record. Backlog
increases were experienced in all of the Company's principal construction
businesses. In addition, the Company presently has a large number of
contracts in the final stages of negotiation. While there can be no
assurances that all the negotiations will result in signed contracts, they
could, if completed, have an even greater impact on backlog.
As previously reported, the Company had under contract, in early 1994,
for scheduled closings two major land sales, one in Florida and the other in
Massachusetts. If both transactions meet their scheduled closing dates, they
will produce over $6 million in revenue and have an important profit impact
on the Company in 1994. The land sale in Florida closed in early July, 1994.
However, until the sale of the remaining project actually occurs, this
revenue and profit cannot be assured since it is not unusual for such
closings to be delayed or cancelled.
FINANCIAL CONDITION
Working capital decreased $13.9 million, from $36.9 million at the end
of 1993 to $23.0 million at June 30, 1994. The current ratio decreased from
1.17:1 to 1.11:1.
During the first six months of 1994 the Company used $10.2 million of
cash from operations, primarily to fund a decrease in payables; $10.0 million
of cash for investing activities, primarily in certain real estate joint
ventures; and $3.7 million of cash for financial activities, primarily to pay
down debt. The source of cash was a $23.9 million reduction in cash on hand.
Long-term debt at June 30, 1994 was $79.4 million, a decrease of $3.0 million
from December 31, 1993. This decrease resulted primarily from the repayment
of certain mortgages related to real estate properties sold during the
period. The long-term debt to equity ratio at June 30, 1994 was .62 to 1,
compared to the .63 to 1 ratio at December 31, 1993.
In addition to internally generated funds, the Company has access to
additional funds under its $18 million of short-term lines of credit, its $70
million long-term Credit Agreement and, effective March 31, 1994, a $15
million collateralized short-term credit facility available for the balance
of 1994. At June 30, 1994, there was $15 million available under the short-
term lines of credit and $15 million available under the new short-term
credit faclity. The full amount available under the credit facilities may be
borrowed during any fiscal quarter. However, financial covenants limiting
the debt to equity ratio contained in the agreements governing these
facilities limit the amount of borrowings which may be outstanding at the end
of any fiscal quarter. Based on these covenants, $2.6 million of additional
borrowing capacity was available at June 30, 1994. Management believes that
cash generated from operations, unused credit lines and various real estate
borrowings should probably be adequate for the next twelve months to meet the
Company's funding requirements. However, the withdrawal of many commercial
lending sources from both the real estate and construction markets and/or
restrictions on new borrowings and extensions on maturing loans by these same
sources cause uncertainties in predicting liquidity.
On August 5, 1994, the Company announced that it had for the present
postponed a pending placement of $25-30 million of a new series of
convertible preferred stock. The Company said it would be interested in
reactivating the financing later in the year or in early 1995 if market
conditions become more favorable.
Part II. - Other Information
Item 1. - Legal Proceedings - None
Item 2. - Changes in Securities
(a) None
(b) None
Item 3. - Defaults Upon Senior Securities - None
Item 4. - Submission of Matters to a Vote of Security Holders
(a) May 19, 1994 - Annual Meeting of Shareholders
(b) Not applicable
(c) To consider and take action on certain changes to the restated Articles
of Organization of The Company, as heretofore amended, to increase the
number of authorized shares of Common Stock, $1.00 Par Value, from
7,500,000 to 15,000,000 shares.
Number of Shares
For 3,207,986
Against 286,717
Withheld 343,964
Abstentions and Broker Non-Votes 492,140
Item 5. - Other Information - None
Item 6. - Exhibits and Reports on Form 8-K
(a) None
(b) None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PERINI CORPORATION
Registrant
Date: August 12, 1994 /s/ John H. Schwarz
----------------------------------
John H. Schwarz, Executive Vice President,
Finance and Administration
Date: August 12, 1994 /s/ Barry R. Blake
----------------------------------
Barry R. Blake, Vice President
and Controller
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