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 September 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 November 9,
1994: 4,408,162
PERINI CORPORATION & SUBSIDIARIES
INDEX
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Page
Number
Part I. - Financial Information:
Item 1. Financial Statements
Consolidated Condensed Balance 3
Sheets - September 30, 1994 and
December 31, 1993
Consolidated Condensed Statements 4
of Operations - Three Months and
Nine Months ended September 30,
1994 and 1993
Consolidated Condensed Statements 5-6
of Cash Flows - Nine Months ended
September 30, 1994 and 1993
Notes to Consolidated Condensed 7
Financial Statements
Item 2. Management's Discussion and 8-10
Analysis of the Consolidated
Financial Condition and Results
of Operations
Part II. - Other Information:
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of 10
Security Holders
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(In Thousands)
ASSETS
SEPT. 30, DEC. 31,
1994 1993
--------- --------
Cash $ 20,027 $ 35,871
Accounts and Notes Receivable 148,267 123,009
Unbilled Work 12,001 14,924
Construction Joint Ventures 68,833 61,156
Deferred Income Taxes 7,702 7,702
Other Current Assets 18,515 14,940
-------- --------
Total Current Assets $275,345 $257,602
-------- --------
Land Held for Sale or Development $ 41,327 $ 48,011
Investments in and Advances to Real Estate
Joint Ventures 141,450 138,095
Real Estate Properties Used in Operations 10,397 12,678
Long-Term Portion of Notes Receivable 6,991 -
-------- --------
Total Real Estate Development
Investments $200,165 $198,784
-------- --------
Other Assets $ 3,719 $ 3,896
-------- --------
Property and Equipment, less Accumulated
Depreciation of $30,252 - 1994 and $28,986
- 1993 $ 15,501 $ 16,096
-------- --------
$494,730 $476,378
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Maturities of Long-Term Debt $ 4,277 $ 7,617
Accounts Payable 152,006 136,231
Deferred Contract Revenue 36,492 25,867
Accrued Expenses 60,060 47,827
Accrued Income Taxes 299 3,183
-------- --------
Total Current Liabilities $253,134 $220,725
-------- --------
Deferred Income Taxes and Other Liabilities $ 29,974 $ 38,794
-------- --------
Long-Term Debt, including real estate
development debt of $7,142 - 1994 and
$11,382 - 1993 $ 78,681 $ 82,366
-------- --------
Minority Interest $ 3,365 $ 3,350
-------- --------
Stockholders' Equity:
Preferred Stock $ 100 $ 100
Series A Junior Participating Preferred
Stock - -
Common Stock 4,985 4,985
Paid-In Surplus 59,533 59,875
Retained Earnings 81,127 83,594
ESOT Related Obligations (6,982) (6,982)
--------- ---------
$138,763 $141,572
Less - Treasury Stock (9,187) (10,429)
--------- ---------
Total Stockholders' Equity $129,576 $131,143
--------- ---------
$494,730 $476,378
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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 NINE MONTHS
ENDED SEPT. 30 ENDED SEPT. 30,
1994 1993 1994 1993
-------- -------- -------- --------
REVENUES FROM OPERATIONS:
Construction $294,610 $267,056 $676,560 $828,720
Real Estate 10,166 7,739 45,712 52,122
-------- -------- -------- --------
TOTAL REVENUES
FROM OPERATIONS $304,776 $274,795 $722,272 $880,842
-------- -------- -------- --------
COST AND EXPENSES:
Cost of Operations $290,903 $261,756 $688,166 $842,857
General, Administrative
and Selling Expenses 10,003 10,839 30,212 30,728
-------- -------- -------- --------
$300,906 $272,595 $718,378 $873,585
-------- -------- -------- --------
INCOME FROM OPERATIONS $ 3,870 $ 2,200 $ 3,894 $ 7,257
-------- -------- -------- --------
Other Income (Expense),
Net (Note 2) (87) 214 (656) 4,868
Interest Expense (2,101) (1,357) (4,715) (3,675)
--------- --------- --------- ---------
Income (Loss) Before Income
Taxes $ 1,682 $ 1,057 $ (1,477) $ 8,450
(Provision) Credit for
Income Taxes (Note 3) (698) (378) 604 (6,061)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 984 $ 679 $ (873) $ 2,389
EARNINGS (LOSS) PER COMMON
SHARE (Note 4) $ .10 $ .04 $ (.57) $ .19
DIVIDENDS PER COMMON SHARE
(Note 5) $ - $ - $ - $ -
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (Note 4) 4,391,119 4,309,196 4,362,432 4,245,567
<PAGE>
The accompanying notes are an integral part of these financial statements.
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(In Thousands)
NINE MONTHS
ENDED SEPT. 30,
1994 1993
--------- ---------
Cash Flows from Operating Activities:
Net Income (Loss) $ (873) $ 2,389
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation and amortization 2,247 2,665
Noncurrent deferred taxes and other
liabilities (8,820) 9,359
Distributions greater (less) than earnings
of joint ventures and affiliates 1,061 1,023
Gain on sale of affiliated companies - (4,600)
(Note 2)
Gain on sale of fixed assets (106) (247)
Minority interest, net 15 (59)
Cash provided from (used by) changes in
components of
Working capital other than cash, notes
payable and current maturities of long-
term debt 7,133 (26,799)
Real estate development investments other
than joint ventures and properties used
in operations 8,396 2,816
Other non-cash items, net (1,783) (2,626)
--------- ---------
NET CASH PROVIDED FROM (USED BY) OPERATING
ACTIVITIES $ 7,270 $(16,079)
--------- ---------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 363 $ 1,021
Cash distributions of capital from
unconsolidated joint ventures 7,923 2,202
Acquisition of property and equipment (1,540) (3,603)
Improvements to land held for sale or
development (287) (3,360)
Improvements to real estate properties used
in operations (99) (431)
Capital contributions to unconsolidated (16,770) (18,651)
joint ventures
Advances to real estate joint ventures (4,988) (14,900)
Proceeds from sale of Majestic net of
subsidiary's cash - 4,377
--------- ---------
<PAGE>
NET CASH USED BY INVESTING ACTIVITIES $(15,398) $(33,345)
--------- ---------
Cash Flows from Financing Activities:
Proceeds of long-term debt $ 2,809 $ 7,519
Repayment of long-term debt (9,831) (8,195)
Cash dividends paid (1,594) (1,594)
Treasury stock issued 900 2,504
Proceeds from notes payable to banks 3,000 -
Repayment of notes payable to banks (3,000) -
--------- ---------
NET CASH PROVIDED FROM (USED BY) FINANCING
ACTIVITIES $ (7,716) $ 234
--------- ---------
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993 (CONTINUED)
(In Thousands)
NINE MONTHS
ENDED SEPT. 30,
1994 1993
--------- ---------
Net (Decrease) in cash $(15,844) $(49,190)
Cash at Beginning of Year 35,871 79,563
--------- ---------
Cash at End of Period $ 20,027 $ 30,373
Supplemental Disclosures of Cash paid during
the period for:
Interest, net of amounts capitalized $ 5,021 $ 4,159
Income tax payments $ 4,662 $ 684
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 nine months of
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 nine 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 nine month periods ended September 30, of $531,000 and
$1,594,000, 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 September 30, 1994 and December 31,
1993 and results of operations and cash flows for the three and nine
month periods ended September 30, 1994 and 1993. The results of
operations for the three and nine month periods ended September 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
<PAGE>
RESULTS OF OPERATIONS
Comparison of the Third Quarter of 1994
with the Third Quarter of 1993
Revenues increased $30 million (or 10.9%), from $274.8 million in 1993
to $304.8 million in 1994. This increase resulted primarily from
increased construction revenues of $27.6 million (or 10.3%), from $267.0
million in 1993 to $294.6 million in 1994, due primarily to an increase in
revenues from civil and environmental operations of $22.1 million (or
29%), from $77.3 million in 1993 to $99.4 million in 1994. This increase
in revenues was due to an increased backlog going into 1994. In addition,
building construction revenues increased $5.5 million (or 3%), from $189.7
million in 1993 to $195.2 million in 1994, due to the timing in the start-
up of certain hotel/casino projects. Real estate revenues also increased
by $2.4 million, from $7.8 million in 1993 to $10.2 million in 1994 due to
an increase in land sales in Florida.
The gross profit in 1994 increased by $.8 million, from $13.1 million
in 1993 to $13.9 million in 1994 because of an increase in gross profit
from real estate of $3.2 million, from a loss of $1.6 million in 1993 to a
profit of $1.6 million in 1994 due to the sale referred to above of highly
profitable land in Florida. This improvement was partially offset by a
decrease in gross profit from construction operations of $2.4 million,
from $14.7 million in 1993 to $12.3 million in 1994 due to the favorable
close out of several civil construction projects in 1993.
The $.7 million increase in interest expense (or 50%), from $1.4
million in 1993 to $2.1 million in 1994 is due to a combination of higher
prevailing interest rates and an increase in the average amount borrowed.
Comparison of the Nine Months September 30, 1994
with the Nine Months Ended September 30, 1993
Revenues decreased $158.5 million (or 18%), from $880.8 million in
1993 to $722.3 million in 1994. This decrease resulted from decreased
construction revenues of $152.1 million (or 18%), from $828.7 million in
1993 to $676.6 million in 1994, due primarily to a decrease in revenues
from building operations of $194 million (or 31%), from $628 million in
1993 to $434 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 under way
during the first six months of 1993. This decrease was partially offset
by an increase in revenues from civil and environmental construction
operations of $42 million (or 21%), from $201 million in 1993 to $243
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 $6.4 million (or 12%), from
$52.1 million in 1993 to $45.7 million in 1994 due primarily to the non-
recurring sale ($23 million) in 1993 of a partnership interest in certain
commercial rental properties in San Francisco. 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 ($8.6
million).
The gross profit in 1994 decreased by $3.9 million, from $38.0 million
in 1993 to $34.1 million in 1994, due primarily to a $2.2 million decrease
from real estate operations, from a profit of $3.1 million in 1993 to a
profit of $.9 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 which was partially offset by improved
operating results in both Massachusetts and Georgia. The gross profit
from construction operations decreased $1.7 million (or 5%), from $34.9
million in 1993 to $33.2 million in 1994 due to the negative profit impact
from the reduction 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. This decrease in construction gross profit was partially offset
by increased profits from the relatively higher margin heavy construction
revenues referred to above.
The $5.5 million decrease in other income (expense), from income of
$4.9 million in 1993 to a loss of $.6 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 $1.0 million increase in interest expense (or 27%), from $3.7
million in 1993 to $4.7 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 current
estimate of its utilization of the related foreign tax credits.
_______________________
The Company's backlog of uncompleted construction work at the end of
September 1994 was $1.273 billion, a 51% increase from the $843 million
reported for the same period in 1993. Backlog increases were experienced
in all of the Company's principal construction businesses. Overall, the
pace of new work acquisition throughout the Company during the first nine
months of 1994 has run ahead of the comparable period in the previous
year. This trend is expected to continue as the volume of pending
contracts not yet reported in backlog remains significant.
FINANCIAL CONDITION
Working capital decreased $14.7 million, from $36.9 million at the
end of 1993 to $22.2 million at September 30, 1994. The current ratio
decreased from 1.17:1 to 1.09:1.
During the first nine months of 1994 the Company used $15.4 million
of cash for investing activities, primarily in certain construction and
real estate joint ventures, and $7.7 million of cash for financial
activities, primarily to pay down debt. The sources of cash were $7.3
million from operating activities, primarily from proceeds related to real
estate sales and an increase in accounts payable, and a $15.8 million
reduction in cash on hand.
Long-term debt at September 30, 1994 was $78.7 million, a decrease of
$3.7 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 September
30, 1994 was .61 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 September 30, 1994, there was $18 million available
under the short-term lines of credit and $15 million available under the
new short-term credit facility. 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, $7.4 million of additional borrowing capacity was available at
September 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.
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 - None
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.
<PAGE>
PERINI CORPORATION
Registrant
Date: November 11, 1994 /s/ John H. Schwarz
-------------------------------
John H. Schwarz,
Executive Vice President,
Finance and Administration
Date: November 11, 1994 /s/ Barry R. Blake
-------------------------------
Barry R. Blake, Vice President and
Controller
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