UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
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 Identification No.)
incorporation or organization)
73 Mt. Wayte Avenue, Framingham, Massachusetts 01701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 508-628-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on
------------------- which registered
--------------------------
Common Stock, $1.00 par value The American Stock Exchange
$2.125 Depositary Convertible The American Stock Exchange
Exchangeable Preferred Shares, each
representing 1/10th Share of $21.25
Convertible Exchangeable Preferred
Stock, $1.00 par value
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of voting stock held by nonaffiliates of the
registrant is $29,652,513 as of March 1, 1996.
The number of shares of Common Stock, $1.00 par value per share, outstanding at
March 1, 1996 is 4,723,754.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual proxy statement for the year ended December 31, 1995 are
incorporated by reference into Part III.
<PAGE>
<TABLE>
<CAPTION>
PERINI CORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-K/A
PAGE
----
<S> <C> <C>
PART I
Item 1: Business 2
Item 2: Properties 13
Item 3: Legal Proceedings 13 - 14
Item 4: Submission of Matters to a Vote of Security Holders 14
PART II
Item 5: Market for the Registrant's Common Stock and Related 15
Stockholder Matters
Item 6: Selected Financial Data 15
Item 7: Management's Discussion and Analysis of Financial 16
Condition and Results of Operations
Item 8: Financial Statements and Supplementary Data 19
Item 9: Disagreements on Accounting and Financial Disclosure 19
PART III
Item 10: Directors and Executive Officers of the Registrant 20
Item 11: Executive Compensation 20
Item 12: Security Ownership of Certain Beneficial Owners and 20
Management
Item 13: Certain Relationships and Related Transactions 20
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on 21
Form 8-K
Signatures 22
</TABLE>
- 1 -
<PAGE>
PART I.
ITEM 1. BUSINESS
General
Perini Corporation and its subsidiaries (the "Company" unless the
context indicates otherwise) is engaged in two principal businesses:
construction and real estate development. The Company was incorporated in 1918
as a successor to businesses which had been engaged in providing construction
services since 1894.
The Company provides general contracting, construction management and
design-build services to private clients and public agencies throughout the
United States and selected overseas locations. Historically, the Company's
construction business involved four types of operations: civil and environmental
("heavy"), building, international and pipeline. However, the Company sold its
pipeline construction business in January, 1993.
The Company's real estate development operations are conducted by
Perini Land & Development Company, a wholly-owned subsidiary with extensive
development interests concentrated in historically attractive markets in the
United States - Arizona, California, Florida, Georgia and Massachusetts, but has
not commenced the development of any new real estate projects since 1990.
Because the Company's results consist in part of a limited number of
large transactions in both construction and real estate, results in any given
fiscal quarter can vary depending on the timing of transactions and the
profitability of the projects being reported. As a consequence, quarterly
results may reflect such variations.
In 1988, the Company, in conjunction with two other companies, formed a
new entity called Perland Environmental Technologies, Inc. ("Perland"). Perland
provides consulting, engineering and construction services primarily on a
turn-key basis for hazardous material management and clean-up to both private
clients and public agencies nationwide. The Company's investment in Perland was
increased from 47 1/2% to 100% in recent years as a result of Perland
repurchasing its stock owned by the outside investors. During 1995, Perland's
name was changed to Perini Environmental Services, Inc.
In January 1993, the Company sold its 74%-ownership in Majestic, its
Canadian pipeline construction subsidiary, for $31.7 million which resulted in
an after tax gain of approximately $1.0 million.
Although Majestic was profitable in both 1992 and 1991, it participated
in a sector of the construction business that was not directly related to the
Company's core construction operations. The sale of Majestic served to generate
liquid assets which improved the Company's financial condition without affecting
its core construction business.
Effective July 1, 1993, the Company acquired Gust K. Newberg
Construction Co.'s ("Newberg") interest in certain construction projects and
related equipment. The purchase price for the acquisition was (i) approximately
$3 million in cash for the equipment paid by a third party leasing company
which, in turn, simultaneously entered into an operating lease agreement with
the Company for the use of said equipment, (ii) $1 million in cash paid by the
Company and (iii) 50% of the aggregate net profits earned from each project from
April 1, 1993 through December 31, 1994 and, with regard to one project, through
December 31, 1995. This acquisition has been accounted for as a purchase.
- 2 -
<PAGE>
Information on lines of business and foreign business is included under
the following captions of this Annual Report on Form 10-K for the year ended
December 31, 1995.
<TABLE>
Annual Report
On Form 10-K
Caption Page Number
------- -----------
<S> <C>
Selected Consolidated Financial Information Page 15
Management's Discussion and Analysis Page 16
Footnote 13 to the Consolidated Financial Statements, entitled Business Page 40
Segments and Foreign Operations
</TABLE>
While the "Selected Consolidated Financial Information" presents
certain lines of business information for purposes of consistency of
presentation for the five years ended December 31, 1995, additional information
(business segment and foreign operations) required by Statement of Financial
Accounting Standards No. 14 for the three years ended December 31, 1995 is
included in Note 13 to the Consolidated Financial Statements.
A summary of revenues by product line for the three years ended
December 31, 1995 is as follows:
<TABLE>
Revenues (in thousands)
Year Ended December 31,
------------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Construction:
Building $ 770,427 $ 640,721 $ 762,451
Heavy 286,246 310,163 267,890
---------- ---------- ----------
Total Construction Revenues $1,056,673 $ 950,884 $1,030,341
---------- ---------- ----------
Real Estate:
Sales of Real Estate $ 10,738 $ 33,188 $ 40,053
Building Rentals 16,799 16,388 19,313
Interest Income 12,396 7,031 6,110
All Other 4,462 4,554 4,299
---------- ---------- ----------
Total Real Estate Revenues $ 44,395 $ 61,161 $ 69,775
---------- ---------- ----------
Total Revenues $1,101,068 $1,012,045 $1,100,116
========== ========== ==========
</TABLE>
Construction
The general contracting and construction management services provided
by the Company consist of planning and scheduling the manpower, equipment,
materials and subcontractors required for the timely completion of a project in
accordance with the terms and specifications contained in a construction
contract. The Company was engaged in over 160 construction projects in the
United States and overseas during 1995. The Company has three principal
construction operations: heavy, building, and international, having sold its
Canadian pipeline construction business in January 1993. The Company also has a
subsidiary engaged in hazardous waste remediation.
The heavy operation undertakes large civil construction projects
throughout the United States, with current emphasis on major metropolitan areas
such as Boston, New York City, Chicago and Los Angeles. The heavy operation
performs construction and rehabilitation of highways, subways, tunnels, dams,
bridges, airports, marine projects, piers and waste water treatment facilities.
The Company has been active in heavy operations since 1894, and believes that it
has particular expertise in large and complex projects. The Company believes
that infrastructure
- 3 -
<PAGE>
rehabilitation is and will continue to be a significant market in the 1990's.
The building operation provides its services through regional offices
located in several metropolitan areas: Boston and Philadelphia, serving New
England and the Mid-Atlantic area; Detroit and Chicago, operating in Michigan
and the Midwest region; and Phoenix, Las Vegas, Los Angeles and San Francisco,
serving Arizona, Nevada and California. In 1992, the Company combined its
building operations into a new wholly-owned subsidiary, Perini Building Company,
Inc. This new company combines substantial resources and expertise to better
serve clients within the building construction market, and enhances Perini's
name recognition in this market. The Company undertakes a broad range of
building construction projects including health care, correctional facilities,
sports complexes, hotels, casinos, residential, commercial, civic, cultural and
educational facilities.
The international operation engages in both heavy and building
construction services overseas, funded primarily in U.S. dollars by agencies of
the United States government. In selected situations, it pursues private work
internationally.
Construction Strategy
The Company plans to continue to increase the amount of heavy
construction work it performs because of the relatively higher margin
opportunities available from such work. The Company believes the best
opportunities for growth in the coming years are in the urban infrastructure
market, particularly in Boston, metropolitan New York, Chicago, Los Angeles and
other major cities where it has a significant presence, and in other large,
complex projects. The Company's acquisition during 1993 of Chicago-based Newberg
referred to above is consistent with this strategy. The Company's strategy in
building construction is to maximize profit margins; to take advantage of
certain market niches; and to expand into new markets compatible with its
expertise. Internally, the Company plans to continue both to strengthen its
management through management development and job rotation programs, and to
improve efficiency through strict attention to the control of overhead expenses
and implementation of improved project management systems. Finally, the Company
continues to expand its expertise to assist public owners to develop necessary
facilities through creative public/private ventures.
Backlog
As of December 31, 1995, the Company's construction backlog was $1.53
billion compared to backlogs of $1.54 billion and $1.24 billion as of December
31, 1994 and 1993, respectively.
<TABLE>
Backlog (in thousands) as of December 31,
-----------------------------------------------------------------------------
1995 1994 1993
--------------------- ---------------------- ---------------------
<S> <C> <C> <C>
Northeast $ 749,017 49% $ 803,967 52% $ 552,035 45%
Mid-Atlantic 179,324 12 26,408 2 34,695 3
Southeast 33,223 2 783 - 34,980 3
Midwest 325,055 21 293,168 19 143,961 12
Southwest 94,725 6 174,984 11 314,058 25
West 134,259 9 193,996 13 143,251 11
Other Foreign 18,919 1 45,473 3 15,161 1
---------- ---- ---------- ---- ---------- ----
Total $1,534,522 100% $1,538,779 100% $1,238,141 100%
========== ==== ========== ==== ========== ====
</TABLE>
The Company includes a construction project in its backlog at such time
as a contract is awarded or a firm letter of commitment is obtained. As a
result, the backlog figures are firm, subject only to the cancellation
provisions contained in the various contracts. The Company estimates that
approximately $657 million of its backlog will not be completed in 1996.
The Company's backlog in the Northeast region of the United States
remains strong because of its ability to meet the needs of the growing
infrastructure construction and rehabilitation market in this region,
particularly in the metropolitan Boston and New York City areas. The increase in
the Midwest region primarily reflects an increase in building work in that area.
Other fluctuations in backlog are viewed by management as transitory.
- 4 -
<PAGE>
Types of Contracts
The four general types of contracts in current use in the construction
industry are:
o Fixed price contracts ("FP"), which include unit price contracts,
usually transfer more risk to the contractor but offer the opportunity,
under favorable circumstances, for greater profits. With the Company's
increasing move into heavy and publicly bid building construction in
response to current opportunities, the percentage of fixed price
contracts continue to represent the major portion of the backlog.
o Cost-plus-fixed-fee contracts ("CPFF") which provide greater safety for
the contractor from a financial standpoint but limit profits.
o Guaranteed maximum price contracts ("GMP") which provide for a
cost-plus-fee arrangement up to a maximum agreed price. These contracts
place risks on the contractor but may permit an opportunity for greater
profits than cost-plus-fixed-fee contracts through sharing agreements
with the client on any cost savings.
o Construction management contracts ("CM") under which a contractor
agrees to manage a project for the owner for an agreed-upon fee which
may be fixed or may vary based upon negotiated factors. The contractor
generally provides services to supervise and coordinate the
construction work on a project, but does not directly purchase contract
materials, provide construction labor and equipment or enter into
subcontracts.
Historically, a high percentage of company contracts have been of the
fixed price type. Construction management contracts remain a relatively small
percentage of company contracts. A summary of revenues and backlog by type of
contract for the most recent three years follows:
<TABLE>
Revenues - Year Ended Backlog As Of
December 31, December 31,
- ----------------------------------- -----------------------------------
1995 1994 1993 1995 1994 1993
- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
67% 54% 56% Fixed Price 74% 68% 65%
33 46 44 CPFF, GMP or CM 26 32 35
- ---- ---- ---- ---- ---- ----
100% 100% 100% 100% 100% 100%
==== ==== ==== ==== ==== ====
</TABLE>
Clients
During 1995, the Company was active in the building, heavy and
international construction markets. The Company performed work for over 100
federal, state and local governmental agencies or authorities and private
customers during 1995. No material part of the Company's business is dependent
upon a single or limited number of private customers; the loss of any one of
which would not have a materially adverse effect on the Company. As illustrated
in the following table, the Company continues to serve a significant number of
private owners. During the period 1993-1995, the portion of construction
revenues derived from contracts with various governmental agencies remains
relatively constant at 56% in 1995 and 1994, and 54% in 1993.
<TABLE>
<CAPTION>
Revenues by Client Source
Year Ended December 31,
-----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Private Owners 44% 44% 46%
Federal Governmental Agencies 8 11 12
State, Local and Foreign Governments 48 45 42
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
All Federal government contracts are subject to termination provisions, but as
shown in the table above, the Company does not have a material amount of such
contracts.
- 5 -
<PAGE>
General
The construction business is highly competitive. Competition is based
primarily on price, reputation for quality, reliability and financial strength
of the contractor. While the Company experiences a great deal of competition
from other large general contractors, some of which may be larger with greater
financial resources than the Company, as well as from a number of smaller local
contractors, it believes it has sufficient technical, managerial and financial
resources to be competitive in each of its major market areas.
The Company will endeavor to spread the financial and/or operational
risk, as it has from time to time in the past, by participating in construction
joint ventures, both in a majority and in a minority position, for the purpose
of bidding on projects. These joint ventures are generally based on a standard
joint venture agreement whereby each of the joint venture participants is
usually committed to supply a predetermined percentage of capital, as required,
and to share in the same predetermined percentage of income or loss of the
project. Although joint ventures tend to spread the risk of loss, the Company's
initial obligations to the venture may increase if one of the other participants
is financially unable to bear its portion of cost and expenses. For a possible
example of this situation, see "Legal Proceedings" on page 13. For further
information regarding certain joint ventures, see Note 2 to Notes to
Consolidated Financial Statements.
While the Company's construction business may experience some adverse
consequences if shortages develop or if prices for materials, labor or equipment
increase excessively, provisions in certain types of contracts often shift all
or a major portion of any adverse impact to the customer. On fixed price type
contracts, the Company attempts to insulate itself from the unfavorable effects
of inflation by incorporating escalating wage and price assumptions, where
appropriate, into its construction bids. Gasoline, diesel fuel and other
materials used in the Company's construction activities are generally available
locally from multiple sources and have been in adequate supply during recent
years. Construction work in selected overseas areas primarily employs expatriate
and local labor which can usually be obtained as required. The Company does not
anticipate any significant impact in 1996 from material and/or labor shortages
or price increases.
Economic and demographic trends tend not to have a material impact on
the Company's heavy construction operation. Instead, the Company's heavy
construction markets are dependent on the amount of heavy civil infrastructure
work funded by various governmental agencies which, in turn, may depend on the
condition of the existing infrastructure or the need for new expanded
infrastructure. The building markets in which the Company participates are
dependent on economic and demographic trends, as well as governmental policy
decisions as they impact the specific geographic markets.
The Company has minimal exposure to environmental liability as a result
of the activities of Perini Environmental Services, Inc. ("Perini
Environmental"), a wholly-owned subsidiary of the Company. Perini Environmental
provides hazardous waste engineering and construction services to both private
clients and public agencies nationwide. Perini Environmental is responsible for
compliance with applicable law in connection with its clean up activities and
bears the risk associated with handling such materials.
In addition to strict procedural guidelines for conduct of this work,
the Company and Perini Environmental generally carry insurance or receive
satisfactory indemnification from customers to cover the risks associated with
this business.
The Company also owns real estate nationwide, most of which is
residential, and as an owner, is subject to laws governing environmental
responsibility and liability based on ownership. The Company is not aware of any
environmental liability associated with its ownership of real estate property.
The Company has been subjected to a number of claims from former
employees of subcontractors regarding exposure to asbestos on the Company's
projects. None of the claims have been material. The Company also operates
construction machinery in its business and will, depending on the project or the
ease of access to fuel for such machinery, install fuel tanks for use on-site.
Such tanks run the risk of leaking hazardous fluids into the environment. The
Company, however, is not aware of any emissions associated with such tanks or of
any other environmental liability associated with its construction operations or
any of its corporate activities.
Progress on projects in certain areas may be delayed by weather
conditions depending on
- 6 -
<PAGE>
the type of project, stage of completion and severity of the weather. Such
delays, if they occur, may result in more volatile quarterly operating results.
In the normal course of business, the Company periodically evaluates its
existing construction markets and seeks to identify any growing markets where it
feels it has the expertise and management capability to successfully compete or
withdraw from markets which are no longer economically attractive.
Real Estate
The Company's real estate development operations are conducted by Perini
Land & Development Company ("PL&D"), a wholly-owned subsidiary, which has been
involved in real estate development since the early 1950's. PL&D engages in real
estate development in Arizona, California, Florida, Georgia and Massachusetts.
However, in 1993, PL&D significantly reduced its staff in California and has
suspended any new land acquisition in that area. PL&D's development operations
generally involve identifying attractive parcels, planning and development,
arranging financing, obtaining needed zoning changes and permits, site
preparation, installation of roads and utilities and selling the land.
Originally, PL&D concentrated on land development. In appropriate situations,
PL&D has also constructed buildings on the developed land for rental or sale.
For the past five years PL&D has been affected by the reduced liquidity
in real estate markets brought on by the cutbacks in real estate funding by
commercial banks, insurance companies and other institutional lenders. Many
traditional buyers of PL&D properties are other developers or investors who
depend on third party sources for funding. As a result, some potential PL&D
transactions have been cancelled, altered or postponed because of financing
problems. Over this period, PL&D looked to foreign buyers not affected by U.S.
banking policies or in some cases, provided seller financing to complete
transactions. Based on a weakening in property values which has come with the
industry credit crunch and the national real estate recession, PL&D took a $31
million pre-tax net realizable value writedown against earnings in 1992. The
charge affected those properties which PL&D had decided to sell in the near
term. Currently it is management's belief that its remaining real estate
properties are not carried at amounts in excess of their net realizable values.
PL&D periodically reviews its portfolio to assess the desirability of
accelerating its sales through price concessions or sale at an earlier stage of
development. In circumstances in which asset strategies are changed and
properties brought to market on an accelerated basis, those assets, if
necessary, are adjusted to reflect the lower of cost or market value. To achieve
full value for some of its real estate holdings, in particular its investments
in Rincon Center and the Resort at Squaw Creek, the Company may have to hold
those properties several years and currently intends to do so.
Real Estate Strategy
Since 1990, PL&D has taken a number of steps to minimize the adverse
financial impact of current market conditions. In early 1990, all new real
estate investment was suspended pending market improvement, all but critical
capital expenditures were curtailed on on-going projects and PL&D's workforce
was cut by over 60%. Certain project loans were extended, with such extension
usually requiring paydowns and increased annual amortization of the remaining
loan balance. Going forward, PL&D will operate with a reduced staff and adjust
its activity to meet the demands of the market.
PL&D's real estate development project mix includes planned community,
industrial park, commercial office, multi-unit residential, urban mixed use,
resort and single family home developments. Given the current real estate
environment, PL&D's emphasis is on the sale of completed product and also
developing the projects in its inventory with the highest near term sales
potential. It may also selectively seek new development opportunities in which
it serves as development manager with limited equity exposure, if any.
Real Estate Properties
The following is a description of the Company's major development
projects and properties by geographic area:
Florida
West Palm Beach and Palm Beach County - In 1994, PL&D completed the sale
of all of the
- 7 -
<PAGE>
original 1,428 acres located in West Palm Beach at the development known as "The
Villages of Palm Beach Lakes". PL&D's only continuing interest in the project is
its ownership in the Bear Lakes Country Club which under agreement with the
membership can be turned over to the members when membership reaches 650.
Current membership is 438. The club includes two championship golf courses
designed by Jack Nicklaus.
At Metrocentre, a 51-acre commercial/office park at the intersection of
Interstate 95 and 45th Street in West Palm Beach, one site totaling 2.78 acres
was sold in 1995. That site was sold to a national motel chain. The park
consists of 17 parcels, of which 2 1/4 (7.3 acres) currently remain unsold. The
park provides for 570,500 square feet of mixed commercial uses.
Massachusetts
Perini Land and Development or Paramount Development Associates, Inc.
("Paramount"), a wholly-owned subsidiary of PL&D, owns the following projects:
Raynham Woods Commerce Center, Raynham - In 1987, Paramount acquired a
409-acre site located in Raynham, Massachusetts, on which it had done
preliminary investigatory and zoning work under an earlier purchase option
period. During 1988, Paramount secured construction financing and completed
infrastructure work on a major portion of the site (330 acres) which is being
developed as a mixed use corporate campus style park known as "Raynham Woods
Commerce Center". During 1989, Paramount completed the sale of a 24-acre site to
be used as a headquarters facility for a division of a major U.S. company.
During 1990, construction was completed on this facility. In 1990 construction
was also completed on two new commercial buildings by Paramount. During 1992, a
17-acre site was sold to a developer who was working with a major national
retailer. The site has since been developed into the first retail project in the
park. No new land sales were made in 1993, but in 1994, an 11-acre site was sold
to the same major U.S. company which had acquired land in 1989, and in 1995 a
4-acre site was sold to a major insurance company. Although the two Paramount
commercial buildings owned within the park experienced some tenant turnover in
late 1994 and into 1995, they remain 90% occupied. The park is planned to
eventually contain 2.5 million square feet of office, R&D, light industrial and
mixed commercial space.
Easton Business Center, Easton - In 1989, Paramount acquired a 40-acre
site in Easton, Massachusetts, which had already been partially developed.
Paramount completed the work in 1990 and is currently marketing the site to
commercial/industrial users. No sales were closed in 1995.
Wareham - In early 1990, Paramount acquired an 18.9-acre parcel of land
at the junction of Routes 495 and 58 in Wareham, Massachusetts. The property is
being marketed to both retail and commercial/industrial users. No sales were
closed in 1995.
Georgia
The Villages at Lake Ridge, Clayton County - During 1987, PL&D (49%)
entered into a joint venture with 138 Joint Venture partners to develop a
348-acre planned commercial and residential community in Clayton County to be
called "The Villages at Lake Ridge", six miles south of Atlanta's Hartsfield
International Airport. By year end 1990, the first phase infrastructure and
recreational amenities were in place. In 1991, the joint venture completed the
infrastructure on 48 lots for phased sales of improved lots to single family
home builders and sold nine. During 1992, the joint venture sold an additional
60 lots and also sold a 16-acre parcel for use as an elementary school. During
1993, unusually wet weather in the spring delayed construction on improvements
required to deliver lots as scheduled. As a result, the sale of an additional 58
lots in 1993 were below expectation. Although 1994 started off strong, rising
interest rates created a slowdown in activity later in the year. For the year,
52 lots were sold. In 1995, the pace picked up again and a record 72 lots were
sold. Because most of the homes built within the development are to first time
buyers, demand is highly sensitive to mortgage rates and other costs of
ownership. Financing restrictions generally require the joint venture to allow
developers to take down finished lots only as homes built on previously acquired
lots are sold. As a result, any slowdown in home sales will influence joint
venture sales quickly thereafter. The development plan calls for mixed
residential densities of apartments and moderate priced single-family homes
totaling 1,158 dwelling units in the residential tracts plus 220,000 square feet
of retail and 220,000 square feet of office space in the commercial tracts.
- 8 -
<PAGE>
The Oaks at Buckhead, Atlanta - Sales commenced on this 217-unit
residential condominium project at a site in the Buckhead section of Atlanta
near the Lenox Square Mall in 1992. The project consists of 201 residences in a
30-story tower plus 16 adjacent three-story townhome residences. At year end 207
units were either sold or under contract. Sixty-nine of these units were closed
in 1995, up from 53 for 1994. PL&D (50%) is developing this project in joint
venture with a subsidiary of a major Taiwanese company.
California
Rincon Center, San Francisco - Major construction on this mixed-use
project in downtown San Francisco was completed in 1989. The project,
constructed in two phases, consists of 320 residential rental units,
approximately 423,000 square feet of office space, 63,000 square feet of retail
space, and a 700-space parking garage. Following its completion in 1988, the
first phase of the project was sold and leased back by the developing
partnership. The first phase consists of about 223,000 square feet of office
space and 42,000 square feet of retail space. The Phase I office space continues
to be close to 100% leased with the regional telephone directory company as the
major tenant on leases which run into early 1998. The retail space is currently
90% leased. Phase II of the project, which began operations in late 1989,
consists of approximately 200,000 square feet of office space, 21,000 square
feet of retail space, a 14,000 square foot U.S. postal facility, and 320
apartment units. Currently, close to 100% of the office space, 94% of the retail
space and virtually all of the 320 residential units are leased. The major
tenant in the office space in Phase II is the Ninth Circuit Federal Court of
Appeals which is leasing approximately 176,000 square feet. That lease expires
at the end of 1996. Currently, the space is being shown to potential tenants for
possible 1997 occupancy. PL&D currently holds a 46% interest in and is managing
general partner of the partnership which is developing the project. The land
related to this project is being leased from the U.S. Postal Service under a
ground lease which expires in 2050.
In addition to the project financing and guarantees disclosed in the
first, second and third paragraphs of Note 11 to Notes to Consolidated Financial
Statements, the Company has advanced approximately $78 million to the
partnership through December 31, 1995, of which approximately $5 million was
advanced during 1995, primarily to paydown some of the principal portion of
project debt which was renegotiated during 1993. In 1995, operations before
principal repayment of debt created a positive cash flow on an annual basis.
Two major loans on this property in aggregate totaling over $75 million
were scheduled to mature in 1993. During 1993 both loans were extended for five
additional years. To extend these loans, PL&D provided approximately $6 million
in new funds which were used to reduce the principal balances of the loans. In
1995 and over the next three years, additional amortization will be required,
some of which may not be covered by operating cash flow and, therefore, at least
80% of those funds not covered by operations will be provided by PL&D as
managing general partner. Lease payments and loan amortization obligations at
Rincon Center through 1997 are as follows: $7.5 million in 1996 and $7.3 million
in 1997. Based on Company forecasts, it could be required to contribute as much
as $9.4 million to cover these and possible tenant improvement requirements not
covered by project cash flow through 1997. While the budgeted shortfall includes
an estimate for tenant improvements, they may or may not be required. Although
management believes operating expenses will be covered by operating cash flow at
least through 1997, the interest rates on much of the debt financing covering
Rincon Center are variable based on various rate indices. With the exception of
approximately $20 million of the financing, none of the debt has been hedged or
capped and is subject to market fluctuations. From time to time, the Company
reviews the costs and anticipated benefits from hedging Rincon Center's interest
rate commitments. Based on current costs to further hedge rate increases and
market conditions, the Company has elected not to provide any additional hedges
at this time.
As part of the Rincon One sale and operating lease-back transaction, the
joint venture agreed to obtain an additional financial commitment on behalf of
the lessor to replace at least $33 million of long-term financing by January 1,
1998. If the joint venture has not secured a further extension or new commitment
for financing on the property for at least $33 million, the lessor will have the
right under the lease to require the joint venture to purchase the property for
a stipulated amount of approximately $18.8 million in excess of the then
outstanding debt. Management currently believes it will be able to extend the
financing or refinance the building such that this sale back to the Company will
not occur.
During 1993 PL&D agreed, if necessary, to lend Pacific Gateway
Properties (PGP), the other
- 9 -
<PAGE>
General Partner in the project, funds to meet its 20% share of cash calls. In
return PL&D receives a priority return from the partnership on those funds and
penalty fees in the form of rights to certain distributions due PGP by the
partnership controlling Rincon. During 1993, 1994 and 1995, PL&D advanced $1.7
million, $.3 million and $.9 million, respectively, under this agreement,
primarily to meet the principal payment obligations of the loan extensions
described above.
The Resort at Squaw Creek - During 1990, construction was completed on
the 405-unit first phase of the hotel complex of this major resort-conference
facility. In mid-December of that year, the resort was opened. In 1991, final
work was completed on landscaping the golf course, as well as the remaining
facilities to complete the first phase of the project. The first phase of the
project includes a 405-unit hotel, 36,000 square feet of conference facilities,
a Robert Trent Jones, Jr. golf course, 48 single-family lots, all but three of
which had been sold or put under contract by early 1993, three restaurants, an
ice skating rink, pool complex, fitness center and 11,500 square feet of various
retail support facilities. The second phase of the project is planned to include
an additional 409-unit hotel facility, 36 townhouses, 27,000 square feet of
conference space, 5,000 square feet of retail space and a parking structure. No
activity on the second phase will begin until stabilization is attained on phase
one and market conditions warrant additional investment.
While PL&D has an effective 18% ownership interest in this joint
venture, it has additional financial commitments as described below.
In addition to the project financing and guarantees disclosed in
paragraphs four and five of Note 11 to Notes to Consolidated Financial
Statements, the Company has advanced approximately $76 million to the joint
venture through December 31, 1995, of which approximately $3.3 million was
advanced during 1995, for the cost of operating expenses, debt amortization and
interest payments. Further, it is anticipated the project may require additional
funding by PL&D before it reaches stabilization which may take several years.
During 1992, the majority partner in the joint venture sold its interest to a
group put together by an existing limited partner. As a part of that
transaction, PL&D relinquished its managing general partnership position to the
buying group, but retained a wide range of approval rights. The result of the
transaction was to strengthen the financial support for the project and led to
an extension of the bank financing on the project to mid-1995. The $48 million
of bank financing on the project was extended again in 1995 and currently
matures in May, 1997, with an option by the borrower to extend an additional
year.
As part of Squaw Creek Associates partnership agreement, either partner
may initiate a buy/sell agreement on or after January 1, 1997. Such buy/sell
agreement, which is similar to those often found in real estate development
partnerships, provides for the recipient of the offer to have the option of
selling its share or purchasing its partners share at the proportionate amount
applicable based on the offer price and the specific priority of payout as
called for under the partnership agreement based on a sale and termination of
the partnership. The Company does not anticipate such a circumstance, because
until the end of the year 2001, the partner would lose the certainty of a $2
million annual preferred return currently guaranteed by the Company. However, an
exercise of the buy/sell agreement by its partner could force the Company to
sell its ownership at a price possibly significantly less than its full value
should the Company be unable to buy out its partner and forced to sell at the
price initiated by its partner.
The operating results of this project are weather sensitive. For
example, a large snowfall in late 1994 helped improve results during the 1994-5
ski season. As a result, through October of 1995, the resort showed marked
improvement over the previous year. Snowfall in late 1995, however, did not
match the previous year which adversely affected results in late 1995 and in
early 1996.
Corte Madera, Marin County - After many years of intensive planning,
PL&D obtained approval for a 151 single-family home residential development on
its 85-acre site in Corte Madera and, in 1991, was successful in gaining water
rights for the property. In 1992, PL&D initiated development on the site which
was continued into 1993. This development is one of the last remaining in-fill
areas in southern Marin County. In 1993, when PL&D decided to scale back its
operations in California, it also decided to sell this development in a
transaction which closed in early 1994. The transaction calls for PL&D to get
the majority of its funds from the sale of residential units or upon the sixth
anniversary of the sale whichever takes place first and, although indemnified,
to leave in place certain bonds and other assurances previously given to the
town of Corte Madera guaranteeing performance in compliance with approvals
previously obtained. Sale of the units began in August of 1995 and by year end,
10 units were under contract or closed.
- 10 -
<PAGE>
Arizona
I-10 West, Phoenix - In 1979, I-10 Industrial Park Developers ("I-10"),
an Arizona partnership between Paramount Development Associates, Inc. (80%) and
Mardian Development Company (20%), purchased approximately 160 acres of
industrially zoned land located immediately south of the Interstate 10 Freeway,
between 51st and 59th Avenues in the City of Phoenix. The project experienced
strong demand through 1988. With the downturn in the Arizona real estate
markets, subsequent to 1988, sales slowed. However, in 1995 the remaining 13.3
acres were sold and this project is sold out.
Airport Commerce Center, Tucson - In 1982, the I-10 partnership
purchased 112 acres of industrially zoned property near the Tucson International
Airport. During 1983, the partnership added 54 acres to that project, bringing
its total size to 166 acres. This project has experienced a low level of sales
activity due to an excess supply of industrial property in the marketplace.
However, the partnership built and fully leased a 14,600 square foot
office/warehouse building in 1987 on a building lot in the park, which was sold
during 1991. In 1990, the partnership sold 14 acres to a major airline for
development as a processing center and, in 1992, sold a one acre parcel adjacent
to the existing property. After experiencing no new sales in 1993, approximately
12 acres were sold in 1994 and an additional 24 acres were sold in 1995.
Currently, 87 acres remain to be sold.
Perini Central Limited Partnership, Phoenix - In 1985, PL&D (75%)
entered into a joint venture with the Central United Methodist Church to master
plan and develop approximately 4.4 acres of the church's property in midtown
Phoenix. Located adjacent to the Phoenix Art Museum and near the Heard Museum,
the project is positioned to become the mixed use core of the newly formed
Phoenix Arts District. In 1990, the project was successfully rezoned to permit
development of 580,000 square feet of office, 37,000 square feet of retail and
162 luxury apartments. Plans for the first phase of this project, known as "The
Coronado" have been put on hold pending improved market conditions. In 1993,
PL&D obtained a three-year extension of the construction start date required
under the original zoning and for the present is continuing to hold the project
in abeyance.
Grove at Black Canyon, Phoenix - The project consists of an office park
complex on a 30-acre site located off of Black Canyon Freeway, a major Phoenix
artery, approximately 20 minutes from downtown Phoenix. When complete, the
project will include approximately 650,000 square feet of office, hotel,
restaurant and/or retail space. Development, which began in 1986, is scheduled
to proceed in phases as market conditions dictate. In 1987, a 150,000 square
foot office building was completed within the park and now is 97% leased with
approximately half of the building leased to a major area utility company.
During 1993, PL&D (50%) successfully restructured the financing on the project
by obtaining a seven year extension with some amortization and a lower fixed
interest rate. The annual amortization commitment is not currently covered by
operating cash flow, which caused PL&D to have to provide approximately $1.2
million in 1994 and $.7 million in 1995 to cover the shortfall. In the near term
it appears approximately $700,000 per year of support to cover loan amortization
will continue to be required. No new development within the park was begun in
1994 nor were any land sales consummated. However, the lease covering space
occupied by the major office tenant was extended an additional seven years to
the year 2004 on competitive terms. In 1995, a day care center was completed on
an 8-acre site along the north entrance of the park.
Sabino Springs Country Club, Tucson - During 1990, the Tucson Board of
Supervisors unanimously approved a plan for this 410-acre residential golf
course community close to the foothills on the east side of Tucson. In 1991,
that approval, which had been challenged, was affirmed by the Arizona Supreme
Court. When developed, the project will consist of 496 single-family homes. An
18-hole Robert Trent Jones, Jr. designed championship golf course and clubhouse
were completed within the project in 1995. In 1993, PL&D recorded the master
plat on the project and sold a major portion of the property to an international
real estate company. Although it will require some infrastructure development
before sale, PL&D still retains 33 estate lots for sale in future years.
Capitol Plaza, Phoenix - In 1988, PL&D acquired a 1.75-acre parcel of
land located in the Governmental Mall area of Phoenix. Original plans were to
either develop a 200,000 square foot office building on the site to be available
to government and government related tenants or to sell the site. The project
has currently been placed on hold pending a change in market conditions.
- 11 -
<PAGE>
General
The Company's real estate business is influenced by both economic
conditions and demographic trends. A depressed economy may result in lower real
estate values and longer absorption periods. Higher inflation rates may increase
the values of current properties, but often are accompanied by higher interest
rates which may result in a slowdown in property sales because of higher
carrying costs. Important demographic trends are population and employment
growth. A significant reduction in either of these may result in lower real
estate prices and longer absorption periods.
The well publicized real estate problems experienced by the commercial
bank and savings and loan industries in the early 90's have resulted in sharply
curtailed credit available to acquire and develop real estate; further, the
continuing national weakness in commercial office markets has significantly
slowed the pace at which PL&D has been able to proceed on certain of its
development projects and its ability to sell developed product. In some or all
cases, it has also reduced the sales proceeds realized on such sales and/or
required extended payment terms.
Generally, there has been no material impact on PL&D's real estate
development operations over the past 10 years due to interest rate increases.
However, an extreme and prolonged rise in interest rates could create market
resistance for all real estate operations in general, and is always a potential
market obstacle. PL&D, in some cases, employs hedges or caps to protect itself
against increases in interest rates on any of its variable rate debt and,
therefore, is insulated from extreme interest rate risk on borrowed funds,
although specific projects may be impacted if the decision has been made not to
hedge or to hedge at higher than current rates.
The Company has been replacing relatively low cost debt-free land in
Florida acquired in the late 1950's with land purchased at current market
prices. In 1995 and into the future, as the mix of land sold contains
proportionately less low cost land, the gross margin on real estate revenues
will decrease.
Insurance and Bonding
All of the Company's properties and equipment, both directly owned or
owned through partnerships or joint ventures with others, are covered by
insurance and management believes that such insurance is adequate. However, due
to conditions in the insurance market, the Company's California properties, both
directly owned and owned in partnership with others, are not fully covered by
earthquake insurance.
In conjunction with its construction business, the Company is often
required to provide various types of surety bonds. The Company has dealt with
the same surety for over 75 years and it has never been refused a bond. Although
from time-to-time the surety industry encounters limitations affecting the
bondability of very large projects and the Company occasionally has encountered
limits imposed by its surety, these limits have not had an adverse impact on its
operations.
Employees
The total number of personnel employed by the Company is subject to
seasonal fluctuations, the volume of construction in progress and the relative
amount of work performed by subcontractors. During 1995, the maximum number of
employees employed was approximately 3,000 and the minimum was approximately
2,100.
The Company operates as a union contractor. As such, it is a signatory
to numerous local and regional collective bargaining agreements, both directly
and through trade associations, throughout the country. These agreements cover
all necessary union crafts and are subject to various renewal dates. Estimated
amounts for wage escalation related to the expiration of union contracts are
included in the Company's bids on various projects and, as a result, the
expiration of any union contract in the current fiscal year is not expected to
have any material impact on the Company.
- 12 -
<PAGE>
ITEM 2. PROPERTIES
Properties applicable to the Company's real estate development
activities are described in detail by geographic area in Item 1. Business on
pages 7 through 12. All other properties used in operations are summarized
below:
Owned or Leased Approximate Approximate Square
Principal Offices by Perini Acres Feet of Office Space
- ----------------- --------------- ----------- --------------------
Framingham, MA Owned 9 110,000
Phoenix, AZ Leased - 22,000
Southfield, MI Leased - 13,900
San Francisco, CA Leased - 3,500
Hawthorne, NY Leased - 12,500
West Palm Beach, FL Leased - 5,000
Los Angeles, CA Leased - 2,000
Las Vegas, NV Leased - 3,000
Atlanta, GA Leased - 1,700
Chicago, IL Leased - 14,700
Philadelphia, PA Leased - 2,100
-- -------
9 190,400
== =======
Principal Permanent
Storage Yards
- -------------------
Bow, NH Owned 70
Framingham, MA Owned 6
E. Boston, MA Owned 3
Las Vegas, NV Leased 2
Novi, MI Leased 3
--
84
The Company's properties are generally well maintained, in good
condition, adequate and suitable for the Company's purpose and fully utilized.
ITEM 3. LEGAL PROCEEDINGS
As previously reported, the Company is a party to an action entitled
Mergentime Corporation et. al. v. Washington Metropolitan Transit Authority v.
Insurance Company of North America (Civil Action No. 89-1055) in the U.S.
District Court for the District of Columbia. The action involves WMATA's
termination of the general contractor, a joint venture in which the Company was
a minority partner, on two contracts to construct a portion of the Washington,
D.C. subway system, and certain claims by the joint venture against WMATA for
claimed delays and extra work.
On July 30, 1993, the Court upheld the termination for default, and
found both joint venturers and their surety jointly and severally liable to
WMATA for damages in the amount of $16.5 million, consisting primarily of
WMATA's excess reprocurement costs, but specifically deferred ruling on the
amount of the joint venture's claims against WMATA. Since the other joint
venture partner may be unable to meet its financial obligations under the award,
the Company could be liable for the entire amount.
At the direction of the judge now presiding over the action, during the
third quarter of 1995, the parties submitted briefs on the issue of WMATA's
liability on the joint venture's claims for delays and for extra work. As a
result of that process, the company established a reserve with respect to the
litigation. Management believes the reserve should be adequate to cover the
potential ultimate liability in this matter.
- 13 -
<PAGE>
In the ordinary course of its construction business, the Company is
engaged in other lawsuits. The Company believes that such lawsuits are usually
unavoidable in major construction operations and that their resolution will not
materially affect its results of future operations and financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
- 14 -
<PAGE>
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the American Stock Exchange
under the symbol "PCR". The quarterly market price ranges (high-low) for 1995
and 1994 are summarized below:
1995 1994
-------------- --------------
Market Price Range per Common Share: High Low High Low
- ----------------------------------- ------ ----- ------ -----
Quarter Ended
March 31 11 7/8 - 9 3/8 13 7/8 - 11 1/4
June 30 11 1/2 - 9 1/2 13 3/8 - 10 7/8
September 30 13 3/8 - 10 1/8 11 1/2 - 9 1/8
December 31 12 1/4 - 7 7/8 11 1/8 - 9 1/8
For information on dividend payments, see Selected Financial Data in
Item 6 below and "Dividends" under Management's Discussion and Analysis on Item
7 below.
As of March 1, 1996, there were approximately 1,327 record holders of
the Company's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
OPERATING SUMMARY 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues
Construction operations $1,056,673 $ 950,884 $1,030,341 $1,023,274 $ 919,641
Real estate operations 44,395 61,161 69,775 47,578 72,267
----------- ----------- ----------- ----------- -----------
Total Revenues $1,101,068 $1,012,045 $1,100,116 $1,070,852 $ 991,908
----------- ----------- ----------- ----------- -----------
Gross Profit $ 14,855 $ 51,797 $ 52,786 $ 22,189 $ 60,854
General, Administrative & Selling
Expenses (37,283) (42,985) (44,212) (41,328) (48,530)
----------- ----------- ----------- ----------- -----------
Income (Loss) From Operations $ (22,428) $ 8,812 $ 8,574 $ (19,139) $ 12,324
Other Income (Expense), Net 814 (856) 5,207 436 1,136
Interest Expense (8,582) (7,473) (5,655) (7,651) (9,022)
----------- ----------- ----------- ----------- -----------
Income (Loss) Before Income Taxes $ (30,196) $ 483 $ 8,126 $ (26,354) $ 4,438
(Provision) Credit for Income Taxes 2,611 (180) (4,961) 9,370 (1,260)
----------- ----------- ----------- ----------- -----------
Net Income (Loss) $ (27,585) $ 303 $ 3,165 $ (16,984) $ 3,178
----------- ----------- ----------- ----------- -----------
Per Share of Common Stock:
Earnings (loss) $ (6.38) $ (.42) $ .24 $ (4.69) $ .27
----------- ----------- ----------- ----------- -----------
Cash dividends declared $ - $ - $ - $ - $ -
----------- ----------- ----------- ----------- -----------
Book value $ 17.06 $ 23.79 $ 24.49 $ 23.29 $ 28.96
----------- ----------- ----------- ----------- -----------
Weighted Average Number
of Common Shares Outstanding 4,655 4,380 4,265 4,079 3,918
----------- ----------- ----------- ----------- -----------
FINANCIAL POSITION SUMMARY
Working Capital $ 36,545 $ 29,948 $ 36,877 $ 31,028 $ 30,724
----------- ----------- ----------- ----------- -----------
Current Ratio 1.12:1 1.13:1 1.17:1 1.14:1 1.16:1
Long-term Debt, less current
maturities $ 84,155 $ 76,986 $ 82,366 $ 85,755 $ 96,294
----------- ----------- ----------- ----------- -----------
Stockholders' Equity $ 105,606 $ 132,029 $ 131,143 $ 121,765 $ 138,644
----------- ----------- ----------- ----------- -----------
Ratio of Long-term Debt to Equity .80:1 .58:1 .63:1 .70:1 .69:1
----------- ----------- ----------- ----------- -----------
Total Assets $ 539,251 $ 482,500 $ 476,378 $ 470,696 $ 498,574
----------- ----------- ----------- ----------- -----------
OTHER DATA
Backlog at Year-end $1,534,522 $1,538,779 $1,238,141 $1,169,553 $1,233,958
----------- ----------- ----------- ----------- -----------
</TABLE>
- 15 -
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS -
1995 COMPARED TO 1994
The Company's 1995 operations resulted in a net loss of $27.6 million or
$6.38 per common share on revenues of $1.1 billion compared to net income of $.3
million or a loss of $.42 per common share (after giving effect to the dividend
payments required on its preferred stock) on revenues of $1.0 billion in 1994.
The primary reasons for this decrease in earnings were a pretax charge of $25.6
million in connection with previously disclosed litigation in Washington, D.C.
and downward revisions in estimated probable recoveries on certain outstanding
contract claims, and lower than normal profit margins on certain heavy
construction contracts, including a significant reduction in the profit level on
a tunnel project in the Midwest.
Revenues reached a record level of $1.101 billion in 1995, an increase
of $89 million (or 9%) compared to the 1994 revenues of $1.012 billion. This
increase resulted primarily from an increase in construction revenues of $106
million (or 11%) from $.951 billion in 1994 to $1.057 billion in 1995. This
increase in construction revenues resulted primarily from an increase in
building construction revenues of $122 million (or 19%), from $626 million in
1994 to $748 million in 1995, primarily due to substantially increased volume in
the Midwest region resulting from a substantially higher backlog in that area
entering 1995 combined with several hotel/casino projects acquired during 1995.
This increase was partially offset by a decrease in building construction
revenues in the Eastern and Western regions, as well as in the overall heavy
construction operations, due primarily to the timing in the start-up of several
significant new projects and the completion early in 1995 of several other major
projects. Revenues from real estate operations also decreased by $16.8 million
(or 27%) from $61.2 million in 1994 to $44.4 million in 1995 due to the
non-recurring sale in 1994 of two investment properties ($8.3 million) and fewer
land sales in Massachusetts and California during 1995.
In spite of the 9% increase in revenues, the gross profit in 1995
decreased by $36.9 million, from $51.8 million in 1994 to $14.9 million in 1995,
due primarily to an overall decrease in gross profit from construction
operations of $32.1 million (or 67%), from $48.0 million in 1994 to $15.9
million in 1995. The primary reasons for this decrease were a pretax charge of
$25.6 million in connection with previously disclosed litigation in Washington,
D.C. (as more fully discussed in Note 11 to Notes to Consolidated Financial
Statements) and downward revisions in estimated probable recoveries on certain
outstanding contract claims, and lower than normal profit margins on certain
heavy construction contracts, including a significant reduction in the profit
level on a tunnel project in the Midwest. In addition, the overall gross profit
from real estate operations decreased by $4.8 million, from a profit of $3.8
million in 1994 to a loss of $1.0 million in 1995 due to the sale in 1994 of the
last parcels of high margin land in Florida and in a project in Massachusetts
which was partially offset by improved operating results in 1995 from its two
major on-going operating properties in California.
Total general, administrative and selling expenses decreased by $5.7
million (or 13%) from $43.0 million in 1994 to $37.3 million in 1995. This
decrease primarily reflects reduced bonuses, an increased allocation of various
insurance costs to projects in 1995, and a continuation during 1995 of the
Company's re-engineering efforts commenced in prior years.
The increase in other income (expense), net, of $1.7 million, from a net
expense of $.9 million in 1994 to a net income of $.8 million in 1995, is
primarily due to an increase in interest income and, to a lesser extent, a gain
realized on the sale of certain underutilized operating facilities, including a
quarry, in 1995.
The increase in interest expense of $1.1 million (or 15%), from $7.5
million in 1994 to $8.6 million in 1995, primarily results from a higher average
level of borrowings during 1995.
The Company recognized a tax benefit in 1995 equal to $2.6 million or 9%
of the pretax loss. A portion of the tax benefit related to the 1995 loss was
not recognized because of certain accounting limitations. However, an amount
estimated to be approximately $20 million of future pretax earnings should
benefit from minimal, if any, tax charges.
----------------------------------------------------------
Looking ahead, we must consider the Company's construction backlog and
remaining
- 16 -
<PAGE>
inventory of real estate projects. The overall construction backlog at the end
of 1995 was $1.535 billion which approximates the 1994 record year-end backlog
of $1.539 billion. This backlog has a better balance between building and heavy
work and a higher overall estimated profit margin.
With the sale of the final 21 acres during 1994, the Company's Villages
of Palm Beach Lakes, Florida land inventory was completely sold out. Because of
its low book value, sales of this acreage have provided a major portion of the
Company's real estate profit in recent years. With the sale of this property
complete, the Company's ability to generate profit from real estate sales and
the related gross margin will be reduced as was the case in 1995. Between 1989
and 1995, property prices in general have fallen substantially due to the
reduced liquidity in real estate markets and reduced demand. Recently, the
Company has noted improvement in some property areas. This trend has had some
effect on residential property sales which were closed in 1995. However, this
trend is still neither widespread nor proven to be sustainable.
RESULTS OF OPERATIONS -
1994 COMPARED TO 1993
The Company's 1994 operations resulted in net income of $.3 million on revenues
of $1.0 billion and a loss of 42 cents per common share (after giving effect to
the dividend payments required on its preferred stock) compared to net income of
$3.2 million or 24 cents per common share on revenues of $1.1 billion in 1993.
In spite of the overall decrease in revenues during 1994, income from operations
increased slightly compared to 1993 results. An increase in interest expense in
1994 and the non-recurring $1 million net gain after tax in 1993 from the sale
by the Company of its 74%-ownership interest in Majestic Contractors Limited
("Majestic"), its Canadian pipeline subsidiary, contributed to the overall
decrease in net income.
Revenues amounted to $1.012 billion in 1994 compared to $1.100 billion in 1993,
a decrease of $88 million (or 8%). This decrease resulted primarily from a net
decrease in construction revenues of $79 million (or 8%) from $1.030 billion in
1993 to $.951 billion in 1994 due to a decrease in volume from building
operations of $126 million (or 17%), from $752 million in 1993 to $626 million
in 1994. The decrease in revenue from building operations was primarily due to
the prolonged start-up phases on certain projects. This decrease was partially
offset by an increase in revenues from civil and environmental construction
operations of $47 million (or 17%), from $278 million in 1993 to $325 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 $8.6 million (or 12%), from $69.8 million in 1993 to
$61.2 million in 1994, due primarily to the non-recurring sale ($23.2 million)
in 1993 of a partnership interest in certain commercial rental properties in San
Francisco and a $5.2 million decrease in land sales in Arizona. The decrease in
real estate revenues was partially offset from the sale of two investment
properties in 1994 ($8.3 million) and increased land sales in Massachusetts
($5.4 million) and California ($4.9 million).
In spite of the 8% decrease in total revenues, the gross profit in 1994
decreased only $1.0 million (or 2%), from $52.8 million in 1993 to $51.8 million
in 1994. The gross profit from construction operations decreased $1.1 million
(or 2.3%), from $49.1 million in 1993 to $48.0 million in 1994, due to the
negative profit impact from the reduction in building construction revenues
referred to above and a loss from international operations resulting from
unstable economic and political conditions in a certain overseas location where
the Company is working. These decreases were partially offset by slightly higher
margins on the construction work performed in 1994 (5.0% in 1994 compared with
4.8% in 1993) and a slight overall increase ($.1 million) in the gross profit
from real estate operations, from $3.7 million in 1993 compared to $3.8 million
in 1994.
Total general, administrative and selling expenses decreased by $1.2 million (or
3%) in 1994, from $44.2 million in 1993 to $43.0 million in 1994 due to several
factors, the more significant ones being a $2.1 million expense for severance
incurred in 1993 in connection with re-engineering some of the business units,
which was partially offset by the full year impact of expenses related to the
acquisition referred to in Note 1 to Notes to Consolidated Financial Statements.
The decrease in other income (expense), net of $6.1 million, from income of $5.2
million in 1993 to a net loss of $.9 million in 1994 is primarily due to the
pretax gain in 1993 of $4.6 million on the sale of Majestic and, to a lesser
degree, an increase in other expenses in 1994, primarily bank fees.
The increase in interest expense of $1.8 million (or 32%), from $5.7 million in
1993 to $7.5 million in 1994 primarily results from higher interest rates during
1994 and higher average level of borrowings.
- 17 -
<PAGE>
FINANCIAL CONDITION
CASH AND WORKING CAPITAL
During 1995, the Company provided $24.6 million in cash from operating
activities, primarily due to an overall increase in accounts payable and
advances from joint ventures; $9.0 million from financing activities due to an
increase in borrowings under its revolving credit facility; and $23.9 million
from cash distributions from certain joint ventures. These increases in cash
were used to increase cash on hand by $21.2 million, with the balance used for
various investment activities, primarily to fund construction and real estate
joint ventures. In addition, the Company has future financial commitments to
certain real estate joint ventures as described in Note 11 to Notes to
Consolidated Financial Statements.
During 1994, the Company used $15.6 million in cash for investment activities,
primarily to fund construction and real estate joint ventures; $7.4 million for
financing activities, primarily to pay down company debt; and $5.0 million to
fund operating activities, primarily changes in working capital.
During 1993, the Company used $39.1 million of cash for investment activities,
primarily to fund construction and real estate joint ventures; $3 million for
financing activities, primarily to pay down Company debt; and $1.6 million to
fund operating activities, primarily changes in working capital.
Since 1990, the Company has paid down $44.3 million of real estate debt on
wholly-owned real estate projects (from $50.9 million to $6.6 million),
utilizing proceeds from sales of property and general corporate funds.
Similarly, real estate joint venture debt has been reduced by $158 million over
the same period. As a result, the Company has reached a point at which revenues
from further real estate sales that, in the past, have been largely used to
retire real estate debt will be increasingly available to improve general
corporate liquidity. With the exception of the major properties referred to in
Note 11 to Notes to Consolidated Financial Statements, this trend should
continue over the next several years with debt on projects often being fully
repaid prior to full project sell-out. On the other hand, the softening of the
national real estate market coupled with problems in the commercial banking
industry have significantly reduced credit availability for both new real estate
development projects and the sale of completed product, sources historically
relied upon by the Company and its customers to meet liquidity needs for its
real estate development business. The Company has addressed this problem by
relying on corporate borrowings, extending certain maturing real estate loans
(with such extensions usually requiring pay downs and increased annual
amortization of the remaining loan balance), suspending the acquisition of new
real estate inventory, significantly reducing development expenses on certain
projects, utilizing treasury stock in partial payment of amounts due under
certain of its incentive compensation plans, utilizing cash internally generated
from operations and, during the first quarter of 1992, selling its interest in
Monenco. In addition, in January 1993, the Company sold its majority interest in
Majestic for approximately $31.7 million in cash. Since Majestic had been fully
consolidated, the net result to the Company was to increase working capital by
$8 million and cash by $4 million. In addition, the Company implemented a
company-wide cost reduction program in 1990, and again in 1991 and 1993 to
improve long-term financial results and suspended the dividend on its common
stock during the fourth quarter of 1990. Also, the Company increased the
aggregate amount available under its revolving credit agreement during the
period from $70 million to $114.5 million at December 31, 1995. Effective
February 26, 1996, the Company entered into a Bridge Loan Agreement for an
additional $15 million through July 31, 1996 (see Note 4 to Notes to
Consolidated Financial Statements). Management believes that cash generated from
operations, existing credit lines and additional borrowings should probably be
adequate to meet the Company's funding requirements for at least the next twelve
months. 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 very same sources cause uncertainties in
predicting liquidity. In addition to internally generated funds, the Company has
access to additional funds under its long-term revolving credit facility and
Bridge Loan Agreement. At December 31, 1995, the Company has $24.5 million
available under its revolving credit facility and, effective February 26, 1996,
an additional $15 million became available under the Bridge Loan Agreement. The
financial covenants to which the Company is subject include minimum levels of
working capital, debt/net worth ratio, net worth level and interest coverage,
all as defined in the loan documents. Although the Company was in violation of
certain of the covenants during the latter part of 1995, it obtained waivers of
such violations and, effective February 26, 1996, received modifications to the
Credit Agreement which eliminated any non-compliance.
- 18 -
<PAGE>
The working capital current ratio stood at 1.12:1 at the end of 1995, compared
to 1.13:1 at the end of 1994 and to 1.17:1 at the end of 1993. Of the total
working capital of $36.5 million at the end of 1995, approximately $6 million
may not be converted to cash within the next 12 to 18 months.
LONG-TERM DEBT
Long-term debt was $84.2 million at the end of 1995, which represented an
increase of $7.2 million compared with $77 million at the end of 1994, which was
a decrease of $5.4 million compared with $82.4 million at the end of 1993. The
ratio of long-term debt to equity increased from .58:1 at the end of 1994 to
.80:1 at the end of 1995 due to the increase in long-term debt coupled with the
negative impact on equity as a result of the net loss experienced by the Company
in 1995. The ratio of long-term debt to equity improved from .63:1 at the end of
1993 to .58:1 at the end of 1994 due to the decrease in long-term debt achieved
in 1994.
STOCKHOLDERS' EQUITY
The Company's book value per common share stood at $17.06 at December 31, 1995,
compared to $23.79 per common share and $24.49 per common share at the end of
1994 and 1993, respectively. The major factor impacting stockholders' equity
during the three-year period under review was the net loss recorded in 1995 and,
to a lesser extent, preferred dividends paid or accrued, and treasury stock
issued in partial payment of incentive compensation.
At December 31, 1995, there were 1,346 common stockholders of record based on
the stockholders list maintained by the Company's transfer agent.
DIVIDENDS
During 1993 and 1994, the Company paid the regular quarterly cash dividends of
$5.3125 per share on the Company's convertible exchangeable preferred shares for
an annual total of $21.25 per share (equivalent to quarterly dividends of
$.53125 per depositary share for an annual total of $2.125 per depositary
share). During 1995, the Board of Directors continued to declare and pay the
regular quarterly cash dividend on the Company's preferred stock through
December 15, 1995. In conjunction with the covenants of the new Amended
Revolving Credit Agreement (see Note 4 to Notes to Consolidated Financial
Statements), the Company is required to suspend the payment of quarterly
dividends on its preferred stock until the Bridge Loan commitment is no longer
outstanding, if a default exists under the terms of the Amended Revolving Credit
Agreement, or if the ratio of long-term debt to equity exceeds 50%. Therefore,
the dividend that normally would have been declared during December of 1995 and
payable on March 15, 1996 has not been declared (although it has been fully
accrued due to the "cumulative" feature of the preferred stock). The Board of
Directors intends to resume payment of the cumulative dividend on the Company's
preferred stock as the Company satisfies the terms of the new credit agreement
and the Board deems it prudent to do so. There were no cash dividends declared
during the three-year period ended December 31, 1995 on the Company's
outstanding common stock. It is Management's intent to recommend reinstating
dividends on common stock once it is prudent to do so.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Reports of Independent Public Accountants, Consolidated Financial
Statements, and Supplementary Schedules, are set forth on the pages that follow
in this Report and are hereby incorporated herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
- 19 -
<PAGE>
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information to be set forth in the section
entitled "Election of Directors" in the definitive proxy statement involving
election of directors in connection with the Annual Meeting of Stockholders to
be held on May 16, 1996 (the "Proxy Statement"), which section is incorporated
herein by reference. The Proxy Statement will be filed with the Securities and
Exchange Commission not later than 120 days after December 31, 1995 pursuant to
Regulation 14A of the Securities and Exchange Act of 1934, as amended.
Listed below are the names, offices held, ages and business experience
of all executive officers of the Company.
<TABLE>
Name, Offices Held and Age Year First Elected to Present Office and Business Experience
-------------------------- ------------------------------------------------------------
<S> <C>
David B. Perini, Director, Chairman, He has served as a Director, President, Chief Executive Officer and
President and Chief Executive Acting Chairman since 1972. He became Chairman on March 17,
Officer - 58 1978 and has worked for the Company since 1962 in various
capacities. Prior to being elected President, he served as Vice
President and General Counsel.
Richard J. Rizzo, Executive Vice He has served in this capacity since January, 1994, which entails
President, Building Construction - overall responsibility for the Company's building construction
52 operations. Prior thereto, he served as President of Perini Building
Company (formerly known as Mardian Construction Co.) since 1985,
and in various other operating capacities since 1977.
John H. Schwarz, Executive Vice He has served as Executive Vice President, Finance and
President, Finance and Administration since August, 1994, and as Chief Executive Officer of
Administration of the Company Perini Land and Development Company, which entails overall
and Chief Executive Officer of responsibility for the Company's real estate operations since April,
Perini Land and Development 1992. Prior to that, he served as Vice President, Finance and
Company - 57 Controls of Perini Land and Development Company. Previously, he
served as Treasurer from August, 1984, and Director of Corporate
Planning since May, 1982. He joined the Company in 1979 as Manager of
Corporate Development.
Donald E. Unbekant, Executive Vice He has served in this capacity since January, 1994, which entails
President, Civil and Environmental overall responsibility for the Company's civil and environmental
Construction - 64 construction operations. Prior thereto, he served in the Metropolitan New York
Division of the Company as President since 1992, Vice President and General
Manager since 1990 and Division Manager since 1984.
</TABLE>
The Company's officers are elected on an annual basis at the Board of
Directors Meeting immediately following the Shareholders Meeting in May, to hold
such offices until the Board of Directors Meeting following the next Annual
Meeting of Shareholders and until their respective successors have been duly
appointed or until their tenure has been terminated by the Board of Directors,
or otherwise.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In response to Items 11-13, reference is made to the information to be
set forth in the section entitled "Election of Directors" in the Proxy
Statement, which is incorporated herein by reference.
- 20 -
<PAGE>
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PERINI CORPORATION AND SUBSIDIARIES
(a)1. The following financial statements and supplementary financial
information are filed as part of this report:
<TABLE>
Pages
-----
<S> <C>
Financial Statements of the Registrant
Consolidated Balance Sheets as of December 31, 1995 and 1994 23 - 24
Consolidated Statements of Operations for the three years 25
ended December 31, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity for the 26
three years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the three years ended 27 -28
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements 29-41
Report of Independent Public Accountants 42
(a)2. The following financial statement schedules are filed as part of this report:
Report of Independent Public Accountants on Schedule 43
Schedule II -- Valuation and Qualifying Accounts and Reserves 44
</TABLE>
All other schedules are omitted because of the absence of the conditions
under which they are required or because the required information is
included in the Consolidated Financial Statements or in the Notes
thereto.
Separate condensed financial information of the Company has been omitted
since restricted net assets of subsidiaries included in the consolidated
financial statements and its equity in the undistributed earnings of 50%
or less owned persons accounted for by the equity method do not, in the
aggregate, exceed 25% of consolidated net assets.
(a)3. Exhibits
The exhibits which are filed with this report or which are incorporated
herein by reference are set forth in the Exhibit Index which appears on
pages 45 and 46. The Company will furnish a copy of any exhibit not
included herewith to any holder of the Company's common and preferred
stock upon request.
(b) During the quarter ended December 31, 1995, the Registrant made no
filings on Form 8-K.
- 21 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
PERINI CORPORATION
(Registrant)
Dated: November 21, 1996 s/David B. Perini
-----------------
David B. Perini
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
<TABLE>
Signature Title Date
--------- ----- ----
<S> <C> <C>
(i) Principal Executive Officer
David B. Perini Chairman, President and
Chief Executive Officer
s/David B. Perini November 21, 1996
- -----------------------------------------------
David B. Perini
(ii) Principal Financial Officer
John H. Schwarz Executive Vice President,
Finance & Administration
s/John H. Schwarz November 21, 1996
- -----------------------------------------------
John H. Schwarz
(iii) Principal Accounting Officer
Barry R. Blake Vice President and
Controller
s/Barry R. Blake November 21, 1996
- -----------------------------------------------
Barry R. Blake
(iv) Directors
</TABLE>
David B. Perini )
Joseph R. Perini ) By
Richard J. Boushka )
Marshall M. Criser ) s/David B. Perini
------------------
Thomas E. Dailey ) David B. Perini
Albert A. Dorman )
Arthur J. Fox, Jr. ) Attorney in Fact
John J. McHale ) Dated: November 21, 1996
Jane E. Newman )
Bart W. Perini )
- 22 -
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
December 31, 1995 and 1994
(In thousands except per share data)
Assets
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents of $29,059 and $3,518 (Note 1) $ 29,059 $ 7,841
Accounts and notes receivable, including retainage of $69,884 and $63,344 180,978 151,620
Unbilled work (Note 1) 28,304 20,209
Construction joint ventures (Notes 1 and 2) 61,846 66,346
Real estate inventory, at the lower of cost or market (Note 1) 14,933 11,525
Deferred tax asset (Notes 1 and 5) 13,039 6,066
Other current assets 2,186 3,041
-------- --------
Total current assets $330,345 $266,648
-------- --------
REAL ESTATE DEVELOPMENT INVESTMENTS:
Land held for sale or development (including land development costs) at
the lower of cost or market (Note 1) $ 41,372 $ 43,295
Investments in and advances to real estate joint ventures
(Notes 1, 2 and 11) 148,225 148,843
Real estate properties used in operations, less accumulated depreciation
of $3,444 and $3,698 2,964 6,254
Other 302 80
-------- --------
Total real estate development investments $192,863 $198,472
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Land $ 809 $ 1,134
Buildings and improvements 13,548 13,653
Construction equipment 15,597 15,249
Other equipment 9,911 12,552
-------- --------
$ 39,865 $ 42,588
Less - Accumulated depreciation (Note 1) 27,299 29,082
-------- --------
Total property and equipment, net $ 12,566 $ 13,506
-------- --------
OTHER ASSETS:
Other investments $ 1,839 $ 2,174
Goodwill (Note 1) 1,638 1,700
-------- --------
Total other assets $ 3,477 $ 3,874
-------- --------
$539,251 $482,500
======== ========
<CAPTION>
The accompanying notes are an integral part of these financial statements.
- 23 -
<PAGE>
Liabilities and Stockholders' Equity
1995 1994
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 4) $ 5,697 $ 5,022
Accounts payable, including retainage of $58,749 and $52,224 197,052 148,055
Advances from construction joint ventures (Note 2) 34,830 8,810
Deferred contract revenue (Note 1) 23,443 38,929
Accrued expenses 32,778 35,884
--------- --------
Total current liabilities $293,800 $236,700
--------- --------
DEFERRED INCOME TAXES AND OTHER LIABILITIES (Notes 1, 5 & 6) 52,663 $ 33,488
--------- --------
LONG-TERM DEBT, less current maturities included above (Note 4):
Real estate development $ 3,660 $ 6,502
Other 80,495 70,484
--------- --------
Total long-term debt $ 84,155 $ 76,986
--------- --------
MINORITY INTEREST (Note 1) $ 3,027 $ 3,297
--------- --------
CONTINGENCIES AND COMMITMENTS (Note 11)
STOCKHOLDERS' EQUITY (Notes 1, 7, 8, 9 and 10):
Preferred stock, $1 par value -
Authorized - 1,000,000 shares
Issued and outstanding - 100,000 shares
($25,000 aggregate liquidation preference) $ 100 $ 100
Series A junior participating preferred stock, $1 par value -
Authorized - 200,000
Issued - none - -
Common stock, $1 par value -
Authorized - 15,000,000 shares
Issued - 4,985,160 shares 4,985 4,985
Paid-in surplus 57,659 59,001
Retained earnings 52,062 81,772
ESOT related obligations (4,965) (6,009)
--------- ---------
$109,841 $139,849
Less - Common stock in treasury, at cost - 265,735 shares and 490,674 4,235 7,820
--------- --------
shares
Total stockholders' equity $105,606 $132,029
--------- --------
$539,251 $482,500
======== ========
</TABLE>
- 24 -
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Operations
For the years ended December 31, 1995, 1994 & 1993
(In thousands, except per share data)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUES (Notes 2 and 13) $1,101,068 $1,012,045 $1,100,116
----------- ----------- -----------
COSTS AND EXPENSES (Notes 2 and 10):
Cost of operations $1,086,213 $ 960,248 $1,047,330
General, administrative and selling expenses 37,283 42,985 44,212
----------- ----------- -----------
$1,123,496 $1,003,233 $1,091,542
----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (Note 13) $ (22,428) $ 8,812 $ 8,574
----------- ----------- -----------
Other income (expense), net (Note 6) 814 (856) 5,207
Interest expense (Notes 3 and 4) (8,582) (7,473) (5,655)
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES $ (30,196) $ 483 $ 8,126
(Provision) credit for income taxes (Notes 1 and 5) 2,611 (180) (4,961)
----------- ----------- -----------
NET INCOME (LOSS) $ (27,585) $ 303 $ 3,165
=========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE (Note 1) $ (6.38) $ (.42) $ .24
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 25 -
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 1995, 1994 & 1993
(In thousands, except per share data)
Cumulative ESOT
Preferred Common Paid-In Retained Translation Related Treasury
Stock Stock Surplus Earnings Adjustment Obligation Stock
- -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance-December 31, 1992 $100 $4,985 $60,019 $ 82,554 $(4,696) $(7,888) $(13,309)
- -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
Net income - - - 3,165 - - -
Preferred stock-cash
dividends declared
($21.25 per share*) - - - (2,125) - - -
Treasury stock issued in
partial payment of
incentive compensation - - (143) - - - 2,872
Restricted stock awarded - - (1) - - - 8
Related to Sale of
Majestic - - - - 4,696 - -
Payments related to ESOT
notes - - - - - 906 -
- -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
Balance-December 31, 1993 $100 $4,985 $59,875 $ 83,594 $ - $(6,982) $(10,429)
- -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
Net Income - - - 303 - - -
Preferred stock-cash
dividends declared
($21.25 per share*) - - - (2,125) - - -
Treasury stock issued in
partial payment of
incentive compensation - - (835) - - - 2,444
Restricted stock awarded - - (39) - - - 165
Payments related to ESOT -
notes - - - - - 973
- -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
Balance-December 31, 1994 $100 $4,985 $59,001 $ 81,772 $ - $(6,009) $ (7,820)
- -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
Net Loss - - - (27,585) - - -
Preferred stock-cash
dividends declared or
accrued ($21.25 per
share*) - - - (2,125) - - -
Treasury stock issued in
partial payment of
incentive compensation - - (1,342) - - - 3,585
Payments related to ESOT
notes - - - - - 1,044 -
- -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
Balance-December 31, 1995 $100 $4,985 $57,659 $ 52,062 $ - $(4,965) $ (4,235)
- -------------------------------- ------------- --------- ------------ ------------ ------------- --------------- --------------
</TABLE>
*Equivalent to $2.125 per depositary share (see Note 7).
The accompanying notes are an integral part of these financial statements.
- 26 -
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
For the years ended December 31, 1995, 1994 & 1993
(In thousands)
Cash Flows from Operating Activities: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net income (loss) $(27,585) $ 303 $ 3,165
Adjustments to reconcile net income (loss) to net cash from
operating activities -
Depreciation and amortization 2,769 2,879 3,515
Non-current deferred taxes and other liabilities 19,175 (5,306) 11,239
Distributions greater (less) than earnings of joint ventures
and affiliates 12,880 2,995 (2,821)
Gain on sale of Majestic (Note 6) - - (4,631)
Cash provided from (used by) changes in components of working capital other
than cash, notes payable and current maturities of long-term debt:
(Increase) decrease in accounts receivable (29,358) (28,611) (7,435)
(Increase) decrease in unbilled work (8,095) (5,285) (6,046)
(Increase) decrease in construction joint ventures 2,643 (662) (10,695)
(Increase) decrease in deferred tax asset (6,973) 1,636 (7,702)
(Increase) decrease in other current assets 2,109 233 133
Increase (decrease) in accounts payable 48,997 35,024 3,986
Increase (decrease) in advances from construction joint
ventures 26,020 (14,390) (2,056)
Increase (decrease) in deferred contract revenue (15,486) 13,062 619
Increase (decrease) in accrued expenses (3,106) (15,126) 9,543
Real estate development investments other than joint ventures 2,757 11,451 10,908
Other non-cash items, net (2,174) (3,231) (3,299)
--------- --------- ---------
NET CASH PROVIDED FROM (USED BY) OPERATING ACTIVITIES $ 24,573 $ (5,028) $ (1,577)
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 3,115 $ 989 $ 1,344
Cash distributions of capital from unconsolidated joint
ventures $ 23,858 13,112 4,977
Acquisition of property and equipment (1,960) (2,493) (4,387)
Improvements to land held for sale or development (193) (334) (4,227)
Improvements to real estate properties used
in operations (263) (140) (614)
Capital contributions to unconsolidated joint ventures (29,373) (20,199) (24,579)
Advances to real estate joint ventures, net (7,735) (6,559) (16,031)
Proceeds from sale of Majestic, net of subsidiary's cash - - 4,377
Investments in other activities 190 14 -
--------- --------- ---------
NET CASH USED BY INVESTING ACTIVITIES $(12,361) $(15,610) $(39,140)
--------- --------- ---------
- 27 -
<PAGE>
<CAPTION>
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 1995, 1994 & 1993
(In thousands)
<S> <C> <C> <C>
Cash Flows from Financing Activities:
Proceeds from long-term debt $ 12,033 $ 3,127 $ 8,014
Repayment of long-term debt (3,145) (10,129) (11,600)
Cash dividends paid (2,125) (2,125) (2,125)
Treasury stock issued 2,243 1,735 2,736
--------- --------- ---------
NET CASH PROVIDED FROM (USED BY) FINANCING ACTIVITIES $ 9,006 $ (7,392) $ (2,975)
--------- --------- ---------
Net Increase (Decrease) in Cash $ 21,218 $(28,030) $(43,692)
Cash and Cash Equivalents at Beginning of Year 7,841 35,871 79,563
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 29,059 $ 7,841 $ 35,871
========= ========= =========
Supplemental Disclosures of Cash Paid During the Year For:
Interest $ 8,715 $ 7,308 $ 5,947
========= ========= =========
Income tax payments $ 121 $ 1,176 $ 843
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 28 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995 1994 & 1993
[1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[a] Principles of Consolidation
The consolidated financial statements include the accounts of Perini
Corporation, its subsidiaries and certain majority-owned real estate joint
ventures (the "Company"). All subsidiaries are currently wholly-owned. All
significant intercompany transactions and balances have been eliminated in
consolidation. Non-consolidated joint venture interests are accounted for on the
equity method with the Company's share of revenues and costs in these interests
included in "Revenues" and "Cost of Operations," respectively, in the
accompanying consolidated statements of operations. All significant intercompany
profits between the Company and its joint ventures have been eliminated in
consolidation. Taxes are provided on joint venture results in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes".
Effective July 1, 1993, the Company acquired Gust K. Newberg Construction Co.'s
("Newberg") interest in certain construction projects and related equipment. The
purchase price for the acquisition was (i) approximately $3 million in cash for
the equipment paid by a third party leasing company, which in turn
simultaneously entered into an operating lease agreement with the Company for
the use of said equipment, (ii) $1 million in cash paid by the Company, and
(iii) 50% of the aggregate of net profits earned from each project from April 1,
1993 through December 31, 1994 and, with regard to one project, through December
31, 1995. This acquisition has been accounted for as a purchase. If this
acquisition had been consummated as of January 1, 1993, the 1993 pro forma
results would have been. Revenues of $1,134,264,000 and Net Income of $3,724,000
($.37 per common share).
[b] Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates 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. The most significant
estimates with regard to these financial statements relate to the estimating of
final construction contract profits in accordance with accounting for long term
contracts (see Note 1(c) below), estimating of net realizable value of real
estate development projects (see Note 1(d) below) and estimating potential
liability in conjunction with certain contingencies and commitments, as
discussed in Note 11. Actual results could differ from these estimates.
[c] Method of Accounting for Contracts
Profits from construction contracts and construction joint ventures are
generally recognized by applying percentages of completion for each year to the
total estimated profits for the respective contracts. The percentages of
completion are determined by relating the actual cost of the work performed to
date to the current estimated total cost of the respective contracts. When the
estimate on a contract indicates a loss, the Company's policy is to record the
entire loss. The cumulative effect of revisions in estimates of total cost or
revenue during the course of the work is reflected in the accounting period in
which the facts that caused the revision became known. An amount equal to the
costs attributable to unapproved change orders and claims is included in the
total estimated revenue when realization is probable. Profit from claims is
recorded in the year such claims are resolved.
In accordance with normal practice in the construction industry, the Company
includes in current assets and current liabilities amounts related to
construction contracts realizable and payable over a period in excess of one
year. Unbilled work represents the excess of contract costs and profits
recognized to date on the percentage of completion accounting method over
billings to date on certain contracts. Deferred contract revenue represents the
excess of billings to date over the amount of contract costs and profits
recognized to date on the percentage of completion accounting method on the
remaining contracts.
[d] Methods of Accounting for Real Estate Operations
All real estate sales are recorded in accordance with SFAS No. 66. Gross profit
is not recognized in full unless the collection of the sale price is reasonably
assured and the Company is not obliged to perform significant activities after
the sale. Unless both conditions exist, recognition of all or a part of gross
profit is deferred.
- 29 -
<PAGE>
The gross profit recognized on sales of real estate is determined by relating
the estimated total land, land development and construction costs of each
development area to the estimated total sales value of the property in the
development. Real estate investments are stated at the lower of cost, which
includes applicable interest and real estate taxes during the development and
construction phases, or market. The market or net realizable value of a
development is determined by estimating the sales value of the development in
the ordinary course of business less the estimated costs of completion (to the
stage of completion assumed in determining the selling price), holding and
disposal. Estimated sales values are forecast based on comparable local sales
(where applicable), trends as foreseen by knowledgeable local commercial real
estate brokers or others active in the business and/or project specific
experience such as offers made directly to the Company relating to the property.
If the net realizable value of a development is less than the cost of a
development, a provision is made to reduce the carrying value of the development
to net realizable value. At present, the Company believes its real estate
properties are carried at amounts at or below their net realizable values
considering the expected timing of their disposal.
[e] Depreciable Property and Equipment
Land, buildings and improvements, construction and computer-related equipment
and other equipment are recorded at cost. Depreciation is provided primarily
using accelerated methods for construction and computer-related equipment and
the straight-line method for the remaining depreciable property.
[f] Goodwill
Goodwill represents the excess of the costs of subsidiaries acquired over the
fair value of their net assets as of the dates of acquisition. These amounts are
being amortized on a straight-line basis over 40 years.
[g] Income Taxes
The Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes," (see Note 5).
[h] Earnings (Loss) Per Common Share
Computations of earnings (loss) per common share amounts are based on the
weighted average number of common shares outstanding (4,655,000 shares in 1995,
4,380,000 shares in 1994 and 4,265,000 shares in 1993). During the three-year
period ended December 31, 1995, earnings (loss) per common share reflect the
effect of $2,125,000 of preferred dividends accrued during the year. Common
stock equivalents related to additional shares of common stock issuable upon
exercise of stock options (see Note 9) have not been included since their effect
would be immaterial or antidilutive. Earnings (loss) per common share on a fully
diluted basis are not presented because the effect of conversion of the
Company's depositary convertible exchangeable preferred shares into common stock
is antidilutive.
[i] Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with original
maturities of three months or less.
[j] Reclassifications
Certain prior year amounts have been reclassified to be consistent with the
current year classifications.
[k] Impact of Recently Issued Accounting Standards
During 1995, the Financial Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets to Be Disposed Of", effective January 1, 1996, which requires
the determination of whether an impairment has occurred based on undiscounted
cash flows. If it is determined that an impairment has occurred, the impaired
asset must be written down to fair value. The Company does not expect the
adoption of SFAS No. 121 to have a material impact on its financial statements.
Also during 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-based Compensation" (SFAS 123) was issued. This statement
requires the fair value of stock options and other stock-based compensation
issued to employees to be either included as compensation expense in the income
statement, or the pro-forma effect on net income and earnings per share to be
disclosed in the footnotes to the financial statements commencing in 1996. The
Company has elected to adopt SFAS 123 on a disclosure basis, and, as such, the
effect of its implementation is not expected to have a material impact on its
financial statements.
- 30 -
<PAGE>
[2] JOINT VENTURES
The Company, in the normal conduct of its business, has entered into partnership
arrangements, referred to as "joint ventures," for certain construction and real
estate development projects. Each of the joint venture participants is usually
committed to supply a predetermined percentage of capital, as required, and to
share in a predetermined percentage of the income or loss of the project.
Summary financial information (in thousands) for construction and real estate
joint ventures accounted for on the equity method for the three years ended
December 31, 1995 follows:
CONSTRUCTION JOINT VENTURES
Financial position at December 31, 1995 1994 1993
--------- --------- ---------
Current assets $227,578 $232,025 $241,905
Property and equipment, net 22,491 19,386 17,228
Current liabilities (151,311) (132,326) (151,181)
--------- --------- ---------
Net assets $ 98,758 $119,085 $107,952
========= ========= =========
Operations for the year ended December 31,
1995 1994 1993
--------- --------- ---------
Revenue $348,730 $544,546 $626,327
Cost of operations 329,414 505,347 574,383
--------- --------- ---------
Pretax income $ 19,316 $ 39,199 $ 51,944
========= ========= =========
Company's share of joint ventures
Revenue $182,799 $241,784 $293,547
Cost of operations 177,990 224,039 272,137
--------- --------- ---------
Pretax income $ 4,809 $ 17,745 $ 21,410
========= ========= =========
Equity $ 61,846 $ 66,346 $ 61,156
========= ========= =========
The Company has a centralized cash management arrangement with most construction
joint ventures in which it is the sponsor. Under this arrangement, excess cash
is controlled by the Company; cash is made available to meet the individual
joint venture requirements, as needed; and interest income is credited to the
ventures at competitive market rates. In addition, certain joint ventures
sponsored by other contractors, in which the Company participates, distribute
cash at the end of each quarter to the participants who will then return these
funds at the beginning of the next quarter. Of the total cash advanced at the
end of 1995 ($34.8 million) and 1994 ($8.8 million), approximately $12.1 million
in 1995 and $5.5 million in 1994 was deemed to be temporary.
REAL ESTATE JOINT VENTURES
Financial position at December 31, 1995 1994 1993
--------- --------- ---------
Property held for sale or development $ 18,350 $ 28,885 $ 35,855
Investment properties, net 173,468 177,258 191,606
Other assets 61,700 62,101 61,060
Long-term debt (72,603) (77,968) (103,090)
Other liabilities* (305,755) (277,184) (256,999)
---------- --------- ---------
Net assets (liabilities) $(124,840) $(86,908) $(71,568)
========== ========= =========
Operations for the year ended December 31, 1995 1994 1993
--------- --------- ---------
Revenue $ 49,560 $ 58,326 $ 83,710
---------- --------- ---------
Cost of operations -
Depreciation $ 7,304 $ 7,245 $ 8,660
Other 73,829 71,211 92,963
---------- --------- ---------
$ 81,133 $ 78,456 $101,623
---------- --------- ---------
Pretax income (loss) $ (31,573) $(20,130) $(17,913)
========== ========= =========
Company's share of joint ventures
Revenue $ 23,424 $ 27,059 $ 43,590
---------- --------- ---------
Cost of operations -
Depreciation $ 3,275 $ 3,323 $ 4,033
Other ** 20,888 26,682 40,716
---------- --------- ---------
$ 24,163 $ 30,005 $ 44,749
---------- --------- ---------
Pretax income (loss) $ (739) $ (2,946) $ (1,159)
========== ========= =========
Equity *** $ (49,580) $(33,091) $(27,768)
Advances 197,805 181,934 165,863
---------- --------- ---------
Total Equity and Advances $ 148,225 $148,843 $138,095
========== ========= =========
- 31 -
<PAGE>
* Included in "Other liabilities" are advances from joint venture partners
in the amount of $236.8 million in 1993, $259.3 million in 1994, and
$287.6 million in 1995. Of the total advances from joint venture
partners, $165.9 million in 1993, $181.9 million in 1994, and $198.7
million in 1995 represented advances from the Company.
** Other costs are reduced by the amount of interest income recorded by the
Company on its advances to the respective joint ventures.
*** When the Company's equity in a real estate joint venture is combined
with advances by the Company to that joint venture, each joint venture
has a positive investment balance at December 31, 1995.
[3] NOTES PAYABLE TO BANKS
During 1994, the Company maintained unsecured short-term lines of credit
totaling $18 million. In support of these credit lines, the Company paid fees
approximating 1/4 of 1% of the amount of the lines. These lines were canceled as
of December 12, 1994 upon the effective date of the expanded credit agreement
referred to in Note 4 below. Information relative to the Company's short-term
debt activity under such lines in 1994 follows (in thousands):
1994
----
Borrowings during the year:
Average $10,992
Maximum $18,000
At year-end $ -
Weighted average interest rates:
During the year 7.4%
At year-end -
[4] LONG-TERM DEBT
Long-term debt of the Company at December 31, 1995 and 1994 consists of the
following (in thousands):
<TABLE>
1995 1994
---- ----
<S> <C> <C>
Real Estate Development:
Industrial revenue bonds, at 65% of prime, payable in semi-annual installments $ 1,034 $ 1,310
Mortgages on real estate, at rates ranging from prime plus 1 1/2% to 10.82%,
payable in installments 5,521 6,588
------- -------
Total $ 6,555 $ 7,898
Less - current maturities 2,895 1,396
------- -------
Net real estate development long-term debt $ 3,660 $ 6,502
======= =======
Other:
Revolving credit loans at an average rate of 8.1% in 1995 and 8.6% in 1994 $73,000 $62,000
ESOT Notes at 8.24%, payable in semi-annual installments (Note 7) 4,484 5,396
Industrial revenue bonds at various rates, payable in installments to 2005 4,000 4,000
Other indebtedness 1,813 2,714
------- -------
Total $83,297 $74,110
Less - current maturities 2,802 3,626
------- -------
Net other long-term debt $80,495 $70,484
======= =======
</TABLE>
Payments required under these obligations amount to approximately $5,697 in
1996, $74,877 in 1997, $3,128 in 1998, $2,150 in 1999, $ - in 2000 and $4,000
for the years 2001 and beyond.
Effective December 12, 1994, the Company entered into a new revolving credit
agreement with a group of major banks which provided, among other things, for
the Company to borrow up to an aggregate of $125 million (aggregate limit under
previous agreements was $85 million), with a $25 million maximum of such amount
also being available for letters of credit, of which $17 million was outstanding
at December 31, 1995. The Company may choose from three interest rate
alternatives including a prime-based rate, as well as other interest rate
options based on LIBOR (London inter- bank offered rate) or participating bank
certificate of deposit rates. Borrowings and repayments may be made at any time
through December 6, 1997, at which time all outstanding loans under the
- 32 -
<PAGE>
agreement must be paid or otherwise refinanced. The Company must pay a
commitment fee of 1/2 of 1% annually on the unused portion of the commitment.
The aggregate $125 million commitment is subject to permanent partial reductions
based on certain events, as defined, such as proceeds from real estate sales
over a defined annual minimum, certain claims and future equity offerings and
was reduced accordingly during 1995 by $10.5 million.
The revolving credit agreement, as well as certain other loan agreements,
provides for, among other things, maintaining specified working capital and
tangible net worth levels and, additionally, imposes limitations on indebtedness
and future investment in real estate development projects. As a result of the
loss in the third quarter of 1995, the Company was in violation of certain of
these financial covenants; however, the Company obtained waivers of any such
violations and effective February 26, 1996, received modifications to the Credit
Agreement which eliminated any non-compliance.
Other modifications included, among other things, a requirement to reduce the
amount of this loan commitment by $2 million per month for four months
commencing the later of September 1, 1996 or the date of repayment and
cancellation of the Bridge Loan referred to below; additional collateral which
consists of all available assets not included as collateral in other agreements;
and suspension of payment of the 53 1/8 cent per share quarterly dividend on the
Company's Depositary Convertible Exchangeable Preferred Shares (see Note 7)
until certain financial criteria are met.
Also, effective February 26, 1996, the Company entered into a Bridge Loan
Agreement with its revolver banks to borrow up to an additional $15 million
through July 31, 1996 at an interest rate of prime plus 2%. The Bridge Loan
Agreement provides for, among other things, interim mandatory reductions in the
amount of the commitment equal to the net proceeds from sale of collateral not
included in the Company's 1996 budget and 50% of the net proceeds from any new
equity.
[5] INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109. This
standard determines deferred income taxes based on the estimated future tax
effects of differences between the financial statement and tax bases of assets
and liabilities, given the provisions of enacted tax laws.
The (provision) credit for income taxes is comprised of the following (in
thousands):
Federal State Total
------- ----- -----
1995
Current $ - $ (11) $ (11)
Deferred 2,726 (104) 2,622
-------- -------- --------
$ 2,726 $ (115) $ 2,611
======== ======== ========
1994
Current $ - $ (21) $ (21)
Deferred (108) (51) (159)
-------- -------- --------
$ (108) $ (72) $ (180)
======== ======== ========
1993
Current $(2,824) $ (430) $(3,254)
Deferred (1,808) 101 (1,707)
-------- -------- --------
$(4,632) $ (329) $(4,961)
======== ======== ========
The table below reconciles the difference between the statutory federal income
tax rate and the effective rate provided in the statements of operations.
1995 1994 1993
---- ---- ----
Statutory federal income tax rate (34)% 34 % 34 %
State income taxes, net of federal tax benefit - 4 2
Change in valuation allowance 25 - -
Sale of Canadian subsidiary - - 24
Goodwill and other - (1) 1
----- ----- ------
Effective tax rate (9)% 37 % 61 %
===== ===== ======
- 33 -
<PAGE>
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of December 31, 1995 and 1994 (in
thousands):
<TABLE>
1995 1994
------------------------------------ -------------------------------
Deferred Deferred Tax Deferred Deferred Tax
Tax Assets Liabilities Tax Assets Liabilities
---------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Provision for estimated losses $ 5,646 $ - $ 6,203 $ -
Contract losses 5,642 - 887 -
Joint ventures - construction - 4,929 - 8,088
Joint ventures - real estate - 20,419 - 25,668
Timing of expense recognition 4,253 - 13,867 -
Capitalized carrying charges - 2,187 - 1,776
Net operating loss carryforwards 13,675 - 5,960 -
Alternative minimum tax credit
carryforwards 2,419 - 2,300 -
General business tax credit
carryforwards 3,532 - 3,637 -
Foreign tax credit carryforwards 978 - 978 -
Other, net 576 985 685 861
-------- -------- -------- --------
$36,721 $28,520 $34,517 $36,393
Valuation allowance for deferred
tax assets (9,342) - (1,846) -
-------- -------- -------- --------
Total $27,379 $28,520 $32,671 $36,393
======== ======== ======== ========
</TABLE>
The net of the above is deferred taxes in the amount of $1,141 in 1995 and
$3,722 in 1994 which is classified in the respective Consolidated Balance Sheets
as follows:
1995 1994
---- ----
Long-term deferred tax liabilities
(included in "Deferred Income
Taxes and Other Liabilities") $14,180 $ 9,788
Short-term Deferred Tax Asset 13,039 6,066
------- -------
$ 1,141 $ 3,722
======= =======
A valuation allowance is provided to reduce the deferred tax assets to a level
which, more likely than not, will be realized. The net deferred assets reflect
management's estimate of the amount which will be realized from future taxable
income which can be predicted with reasonable certainty.
At December 31, 1995, the Company has unused tax credits and net operating loss
carryforwards for income tax reporting purposes which expire as follows (in
thousands):
Unused Investment Foreign Net Operating Loss
Tax Credits Tax Credits Carryforwards
----------- ----------- -------------
1996-2000 $ - $ 978 $ -
2001-2004 3,532 - 968
2005-2010 - - 39,251
------ ------ -------
$3,532 $ 978 $40,219
====== ====== =======
Approximately $2.8 million of the net operating loss carryforwards can only be
used against the taxable income of the corporation in which the loss was
recorded for tax and financial reporting purposes.
- 34 -
<PAGE>
[6] DEFERRED INCOME TAXES AND OTHER LIABILITIES AND OTHER INCOME (EXPENSE), NET
Deferred Income Taxes and Other Liabilities
Deferred income taxes and other liabilities at December 31, 1995 and 1994
consist of the following (in thousands):
1995 1994
------- -------
Deferred Income Taxes $14,180 $ 9,788
Insurance related liabilities 20,484 18,000
Employee benefit-related liabilities 5,110 4,700
Other 12,889 1,000
------- -------
$52,663 $33,488
Other Income (Expense), Net
Other income (expense) items for the three years ended December 31, 1995 are as
follows (in thousands):
1995 1994 1993
------- ------- -------
Interest and dividend income $ 1,369 $ 205 $ 624
Minority interest (Note 1) 10 24 167
Gain on sale of Majestic - - 4,631
Bank fees (1,099) (1,100) (584)
Miscellaneous income (expense)
, net 534 15 369
-------- -------- -------
$ 814 $ (856) $5,207
======== ======== =======
[7] CAPITALIZATION
In July 1989, the Company sold 262,774 shares of its $1 par value common stock,
previously held in treasury, to its Employee Stock Ownership Trust ("ESOT") for
$9,000,000. The ESOT borrowed the funds via a placement of 8.24% Senior
Unsecured Notes ("Notes") guaranteed by the Company. The Notes are payable in 20
equal semi-annual installments of principal and interest commencing in January
1990. The Company's annual contribution to the ESOT, plus any dividends
accumulated on the Company's common stock held by the ESOT, will be used to
repay the Notes. Since the Notes are guaranteed by the Company, they are
included in "Long-Term Debt" with an offsetting reduction in "Stockholders'
Equity" in the accompanying Consolidated Balance Sheets. The amount included in
"Long-Term Debt" will be reduced and "Stockholders' Equity" reinstated as the
Notes are paid by the ESOT.
In June 1987, net proceeds of approximately $23,631,000 were received from the
sale of 1,000,000 depositary convertible exchangeable preferred shares (each
depositary share representing ownership of 1/10 of a share of $21.25 convertible
exchangeable preferred stock, $1 par value) at a price of $25 per depositary
share. Annual dividends are $2.125 per depositary share and are cumulative.
Generally, the liquidation preference value is $25 per depositary share plus any
accumulated and unpaid dividends. The preferred stock of the Company, as
evidenced by ownership of depositary shares, is convertible at the option of the
holder, at any time, into common stock of the Company at a conversion price of
$37.75 per share of common stock. The preferred stock is redeemable at the
option of the Company at any time, in whole or in part, at declining premiums
until June 1997 and thereafter at $25 per share plus any unpaid dividends. The
preferred stock is also exchangeable at the option of the Company, in whole but
not in part, on any dividend payment date into 8 1/2% convertible subordinated
debentures due in 2012 at a rate equivalent to $25 principal amount of
debentures for each depositary share.
[8] SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Under the terms of the Company's Shareholder Rights Plan, as amended, the Board
of Directors of the Company declared a distribution on September 23, 1988 of one
preferred stock purchase right (a "Right") for each outstanding share of common
stock. Under certain circumstances, each Right will entitle the holder thereof
to purchase from the Company one one-hundredth of a share (a "Unit") of Series A
Junior Participating Cumulative Preferred Stock, $1 par value (the "Preferred
Stock"), at an exercise price of $100 per Unit, subject to adjustment. The
Rights will not be exercisable or transferable apart from the common stock until
the occurrence of certain events viewed to be an attempt by a person or group to
gain control of the Company (a "triggering
- 35 -
<PAGE>
event"). The Rights will not have any voting rights or be entitled to dividends.
Upon the occurrence of a triggering event, each Right will be entitled to that
number of Units of Preferred Stock of the Company having a market value of two
times the exercise price of the Right. If the Company is acquired in a merger or
50% or more of its assets or earning power is sold, each Right will be entitled
to receive common stock of the acquiring company having a market value of two
times the exercise price of the Right. Rights held by such a person or group
causing a triggering event may be null and void.
The Rights are redeemable at $.02 per Right by the Board of Directors at any
time prior to the occurrence of a triggering event and will expire on September
23, 1998.
[9] STOCK OPTIONS
At December 31, 1995 and 1994, 481,610 shares of the Company's authorized but
unissued common stock were reserved for issuance to employees under its 1982
Stock Option Plan. Options are granted at fair market value on the date of grant
and generally become exercisable in two equal annual installments on the second
and third anniversary of the date of grant and expire eight years from the date
of grant. Options for 240,000 shares common stock granted in 1992 become
exercisable on March 31, 2001 if the Company achieves a certain profit target in
the year 2000; may become exercisable earlier if certain interim profit targets
are achieved; and to the extent not exercised, expire 10 years from the date of
grant. A summary of stock option activity related to the Company's stock option
plan is as follows:
Number of
Number of Option Price Shares
Shares Per Share Exercisable
------ --------- -----------
Outstanding at December 31, 1993 434,425 $11.06-$33.06 143,000
Granted 20,000 $13.00
Canceled (32,900) $11.06-$33.06
Outstanding at December 31, 1994 421,525 $11.06-$33.06 251,525
Granted 10,000 $10.44
Canceled (52,875) $11.06-$33.06
Outstanding at December 31, 1995 378,650 $10.44-$33.06 198,650
When options are exercised, the proceeds are credited to stockholders' equity.
In addition, the income tax savings attributable to nonqualified options
exercised are credited to paid-in surplus.
[10] EMPLOYEE BENEFIT PLANS
The Company and its U.S. subsidiaries have a defined benefit plan which covers
its executive, professional, administrative and clerical employees, subject to
certain specified service requirements. The plan is noncontributory and benefits
are based on an employee's years of service and "final average earnings", as
defined. The plan provides reduced benefits for early retirement and takes into
account offsets for social security benefits. All employees are vested after 5
years of service. Net pension cost for 1995, 1994 and 1993 follows (in
thousands):
1995 1994 1993
------ ------ -------
Service cost - benefits earned
during the period $ 988 $ 1,178 $ 1,000
Interest cost on projected benefit
obligation 2,956 2,936 2,862
Return on plan assets:
Actual (6,971) 1,229 (4,002)
Deferred 4,217 (3,839) 1,309
Other - - 19
-------- -------- --------
Net pension cost $ 1,190 $ 1,504 $ 1,188
======== ======== ========
Actuarial assumptions used:
Discount rate 7 %* 8 3/4%** 7 1/2%
Rate of increase in compensation 4 %* 5 1/2% 5 1/2%
Long-term rate of return on assets 8 % 8 % 8 %
* Rates were changed effective December 31, 1995. The decrease in the
discount rate resulted in an increase in the projected benefit
obligations of $8.1 million, while the decrease in the rate of increase
in compensation resulted in a decrease in the projected benefit
obligations of $1.3 million, resulting in a net increase of $6.8 million
in 1995 in the projected benefit obligations referred to below.
- 36 -
<PAGE>
** Rate was changed effective December 31, 1994 and resulted in a net
decrease of $5.6 million in the projected benefit obligation referred to
below.
The Company's plan has assets in excess of accumulated benefit obligation. Plan
assets generally include equity and fixed income funds. The status of the
Company's employee pension benefit plan is summarized below (in thousands):
December 31,
1995 1994
-------- --------
Assets available for benefits:
Funded plan assets at fair value $37,542 $31,762
Accrued pension expense 4,122 3,610
-------- --------
Total assets $41,664 $35,372
-------- --------
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including
vested benefits of $39,050 and $30,179 $39,760 $30,537
Effect of future salary increases 3,831 4,546
-------- --------
Projected benefit obligations $43,591 $35,083
-------- --------
Assets available more (less) than projected benefits $(1,927) $ 289
======== ========
Consisting of:
Unamortized net liability existing at date of
adopting SFAS No. 87 $ (29) $ (36)
Unrecognized net loss (2,408) (268)
Unrecognized prior service cost 510 593
-------- --------
$(1,927) $ 289
======== ========
The Company also has a contributory Section 401(k) plan and a noncontributory
employee stock ownership plan (ESOP) which cover its executive, professional,
administrative and clerical employees, subject to certain specified service
requirements. Under the terms of the Section 401(k) plan, the provision is based
on a specified percentage of profits, subject to certain limitations.
Contributions to the related employee stock ownership trust (ESOT) are
determined by the Board of Directors and may be paid in cash or shares of
Company common stock.
The Company's policy is generally to fund currently the costs accrued under the
pension plan and the Section 401(k) plan.
The Company also has an unfunded supplemental retirement plan for certain
employees whose benefits under principal salaried retirement plans are reduced
because of compensation limitations under federal tax laws. Pension expense for
this plan was $.2 million in 1995 and 1994 and $.1 million in 1993. At December
31, 1995 the projected benefit obligation was $1.3 million. A corresponding
accumulated benefit obligation of $.8 million has been recognized as a liability
in the consolidated balance sheet and is equal to the amount of the vested
benefits.
In addition, the Company has an incentive compensation plan for key employees
which is generally based on achieving certain levels of profit within their
respective business units.
The aggregate amounts provided under these employee benefit plans were $7.6
million in 1995, $9.2 million in 1994 and $8.5 million in 1993.
The Company also contributes to various multiemployer union retirement plans
under collective bargaining agreements, which provide retirement benefits for
substantially all of its union employees. The aggregate amounts provided in
accordance with the requirements of these plans were $12.6 million in 1995,
$12.4 million in 1994, and $5.2 million in 1993. The Multiemployer Pension Plan
Amendments Act of 1980 defines certain employer obligations under multiemployer
plans. Information regarding union retirement plans is not available from plan
administrators to enable the Company to determine its share of unfunded vested
liabilities.
[11] Contingencies and Commitments
In connection with the Rincon Center real estate development joint venture, the
Company's wholly-owned real estate subsidiary has guaranteed the payment of
interest on both mortgage and bond financing covering a project with loans
totaling $59 million; has issued a secured letter of credit to collateralize
$3.7 million of these borrowings; has guaranteed amortization payments on these
borrowings which the Company estimates to be a maximum of $7.2 million; and has
guaranteed a master lease under a sale operating lease-back transaction. In
calculating the potential obligation
- 37 -
<PAGE>
under the master lease guarantee, the Company has an agreement with its lenders
which employs a 10% discount rate and no increases in future rental rates beyond
current lease terms. Based on these assumptions, management believes its
additional future obligation will not exceed $2.3 million. The Company has also
guaranteed the $3.7 million letter of credit, $5.0 million of the subsidiary's
$7.2 million amortization guaranty and any obligation under the master lease
during the next three years. As part of the sale operating lease-back
transaction, the joint venture, in which the Company's real estate subsidiary is
a 46% general partner, agreed to obtain a financial commitment on behalf of the
lessor to replace at least $43 million of long-term financing by July 1, 1993.
To satisfy this obligation, the partnership successfully extended existing
financing to July 1, 1998. To complete the extension, the partnership had to
advance funds to the lessor sufficient to reduce the financing from $46.5
million to $40.5 million. Subsequent payments through 1995 have further reduced
the loan to $38.2 million. In addition, as part of the obligations of the
extension, the partnership will have to further amortize the debt from its
current level to $33 million through additional lease payments over the next
three years. If by January 1, 1998, the joint venture has not received a further
extension or new commitment for financing on the property for at least $33
million, the lessor will have the right under the lease to require the joint
venture to purchase the property for approximately $18.8 million in excess of
the then outstanding debt.
In 1993, the joint venture also extended $29 million of the $61 million
financing then outstanding through October 1, 1998. This extension required a
$.6 million up front paydown. Subsequent payments through 1995 further reduced
the loan by $2.7 million. The joint venture may be required to amortize up to
$9.1 million more of the principal, however, under certain conditions, that
amortization could be as low as $6.8 million. Total lease payments and loan
amortization obligations at Rincon Center through 1997 are as follows: $7.5
million in 1996 and $7.3 million in 1997. It is expected that some but not all
of these requirements will be generated by the project's operations. The
Company's real estate subsidiary and, to a more limited extent, the Company, is
obligated to fund any of the loan amortization and/or lease payments at Rincon
in the event sufficient funds are not generated by the property or contributed
to it by its partners. Based on current Company forecasts, it is expected the
maximum exposure to service these commitments in each of the years through 1997
is as follows: $5.4 million in 1996 and $4.0 million in 1997. Both years include
an estimate for tenant improvements which may or may not be required.
In a separate agreement related to this same property, the 20% co-general
partner has indicated it does not currently have nor does it expect to have the
financial resources to fund its share of capital calls. Therefore, the Company's
wholly-owned real estate subsidiary agreed to lend this 20% co-general partner
on an as-needed basis, its share of any capital calls which the partner cannot
meet. In return, the Company's subsidiary receives a priority return from the
partnership on those funds it advances for its partner and penalty fees in the
form of rights to certain other distributions due the borrowing partner from the
partnership. The severity of the penalty fees increases in each succeeding year
for the next several years. The subsidiary has advanced approximately $3 million
to date under this agreement.
In connection with a second real estate development joint venture known as the
Resort at Squaw Creek, the Company's wholly-owned real estate subsidiary has
guaranteed the payment of interest on mortgage financing with a total bank loan
value currently estimated at $46 million; has guaranteed $10 million of loan
principal; has posted a letter of credit for $2.0 million as its part of credit
support required to extend the maturity of the loan to May 1997; and has
guaranteed leases which aggregate $1.1 million on a present value basis as
discounted at 10%. Effective May 1, 1995, the loan was renewed for an additional
two years with an option to renew for a third year. Required principal payments
are $250,000 per quarter for the first year and $500,000 per quarter for the
second year.
The subsidiary also has an obligation through the year 2001 to cover
approximately a $2 million per year preferred return to its joint venture
partner at the Resort if the funds are not generated from hotel operations.
Although results have shown improvement since the Resort opened in late 1990, it
is not expected that hotel operations will contribute to the obligation during
1996. Under the terms of the loan extension, payment of the preferred return out
of operating profits requires lender approval.
Included in the loan agreements related to the above joint ventures, among other
things, are provisions that, under certain circumstances, could limit the
subsidiary's ability to dividend funds to the Company. In the opinion of
management, these provisions should not affect the operations of the Company or
the subsidiary.
- 38 -
<PAGE>
On July 30, 1993, the U.S. District Court (D.C.), in a preliminary opinion,
upheld terminations for default on two adjacent contracts for subway
construction between Mergentime-Perini, under two joint ventures, and the
Washington Metropolitan Area Transit Authority ("WMATA") and found the
Mergentime Corporation, Perini Corporation and the Insurance Company of North
America, the surety, jointly and severally liable to WMATA for damages in the
amount of $16.5 million, consisting primarily of excess reprocurement costs to
complete the projects. Many issues were left partially or completely unresolved
by the opinion, including substantial joint venture claims against WMATA. As a
result of developments in the case during the third quarter of 1995, the Company
established a reserve with respect to the litigation. Management believes the
reserve should be adequate to cover the potential ultimate liability in this
matter.
Contingent liabilities also include liability of contractors for performance and
completion of both company and joint venture construction contracts. In
addition, the Company is a defendant in various lawsuits. In the opinion of
management, the resolution of these matters will not have a material effect on
the results of operation or financial condition as reported in the accompanying
financial statements.
- 39 -
<PAGE>
[12] UNAUDITED QUARTERLY FINANCIAL DATA
The following table sets forth unaudited quarterly financial data for the years
ended December 31, 1995 and 1994 (in thousands, except per share amounts):
1995 by Quarter
---------------
1st 2nd 3rd 4th
--- --- --- ---
Revenues $263,089 $306,961 $232,974 $298,044
Net income (loss) $ 872 $ 886 $(30,674)* $ 1,331
Earnings (loss) per
common share $ .08 $ .08 $ (6.61) $ .17
1994 by Quarter
---------------
1st 2nd 3rd 4th
--- --- --- ---
Revenues $174,391 $243,105 $304,776 $289,773
Net income (loss) $ 792 $ (2,649) $ 984 $ 1,176
Earnings (loss) per
common share $ .06 $ (.73) $ .10 $ .15
* Includes a charge, which aggregates $25.6 million, to provide for
reserves related to previously disclosed litigation discussed under
"Item 3. Legal Proceedings" in this Form 10-K/A and downward revisions
in estimated probable recoveries on certain outstanding contract claims.
[13] BUSINESS SEGMENTS AND FOREIGN OPERATIONS
The Company is currently engaged in the construction and real estate development
businesses. The Company provides general contracting, construction management
and design-build services to private clients and public agencies throughout the
United States and selected overseas locations. The Company's construction
business involves three types of operations: civil and environmental ("heavy"),
building and international. The Company's real estate development operations are
concentrated in Arizona, California, Florida, Georgia and Massachusetts;
however, the Company has not commenced the development of any new real estate
projects since 1990. The following tables set forth certain business and
geographic segment information relating to the Company's operations for the
three years ended December 31, 1995 (in thousands):
Business Segments
Revenues
1995 1994 1993
------------ ----------- ----------
Construction $1,056,673 $ 950,884 $1,030,341
Real Estate 44,395 61,161 69,775
------------ ----------- ----------
$1,101,068 $1,012,045 $1,100,116
============ =========== ==========
Income (Loss) From Operations
1995 1994 1993
------------ ----------- -----------
Construction $ (15,322) $ 13,989 $ 15,164
Real Estate (2,921) 732 240
Corporate (4,185) (5,909) (6,830)
------------ ----------- -----------
$ (22,428) $ 8,812 $ 8,574
============ =========== ===========
Assets
1995 1994 1993
------------ ------------ -----------
Construction $ 298,564 $ 262,850 $ 219,604
Real Estate 209,789 209,635 218,715
Corporate* 30,898 10,015 38,059
------------ ------------ -----------
$ 539,251 $ 482,500 $ 476,378
============ ============ ===========
- 40 -
<PAGE>
Capital Expenditures
1995 1994 1993
----------- ----------- ----------
Construction $ 1,960 $ 2,491 $ 4,387
Real Estate 9,555 10,274 23,590
----------- ----------- ----------
$ 11,515 $ 12,765 $ 27,977
=========== =========== ==========
Depreciation
1995 1994 1993
----------- ----------- ----------
Construction $ 2,369 $ 2,551 $ 2,552
Real Estate** 400 328 963
----------- ----------- ----------
$ 2,769 $ 2,879 $ 3,515
=========== =========== ==========
Geographic Segments
Revenues
1995 1994 1993
------------ ----------- ----------
United States $1,084,390 $ 996,832 $1,064,380
Foreign 16,678 15,213 35,736
----------- ----------- ----------
$1,101,068 $1,012,045 $1,100,116
=========== =========== ==========
Income (Loss) From Operations
1995 1994 1993
----------- ----------- -----------
United States $ (15,405) $ 17,275 $ 17,249
Foreign (2,838) (2,554) (1,845)
Corporate (4,185) (5,909) (6,830)
----------- ----------- -----------
$ (22,428) $ 8,812 $ 8,574
=========== =========== ===========
Assets
1995 1994 1993
----------- ----------- ----------
United States $503,114 $ 467,298 $ 433,488
Foreign 5,239 5,187 4,831
Corporate* 30,898 10,015 38,059
----------- ----------- ----------
$539,251 $ 482,500 $ 476,378
=========== =========== ==========
* In all years, corporate assets consist principally of cash, cash
equivalents, marketable securities and other investments available for
general corporate purposes.
** Does not include approximately $3 to $4 million of depreciation that
represents its share from real estate joint ventures. (See Note 2 to
Notes to the Consolidated Financial Statements.)
Contracts with various federal, state, local and foreign governmental agencies
represented approximately 56% of construction revenues in 1995 and 1994, and 54%
in 1993.
- 41 -
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Perini Corporation:
We have audited the accompanying consolidated balance sheets of PERINI
CORPORATION (a Massachusetts corporation) and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Perini Corporation
and subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 26, 1996
- 42 -
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To the Stockholders of Perini Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in this Form 10-K, and
have issued our report thereon dated February 26, 1996. Our audits were made for
the purpose of forming an opinion on the consolidated financial statements taken
as a whole. The supplemental schedule listed in the accompanying index is the
responsibility of the Company's management and is presented for purpose of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 26, 1996
- 43 -
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
PERINI CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF DOLLARS)
Additions
Balance at Charged Charged to Deductions Balance
Beginning to Costs Other from at End
Description of Year & Expenses Accounts Reserves of Year
- ----------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995
- ----------------------------
Reserve for doubtful accounts $ 351 $ - $ - $ - $ 351
======= ======= ==== ====== =======
Reserve for depreciation on $ 3,698 $ 387 $ - $ 641 (1) $ 3,444
real estate properties used ======= ======= ==== ====== =======
in operations
Reserve for real estate $11,471 $ - $ - $ 974 (2) $10,497
======= ======= ==== ====== =======
investments
Year Ended December 31, 1994
- ----------------------------
Reserve for doubtful accounts $ 351 $ - $ - $ - $ 351
======= ======= ==== ====== =======
Reserve for depreciation on $ 3,637 $ 328 $ - $ 267 (2) $ 3,698
real estate properties used ======= ======= ==== ====== =======
in operations
Reserve for real estate $20,838 $ - $ - $9,367 (2) $11,471
======= ======= ==== ====== =======
investments
Year Ended December 31, 1993
- ----------------------------
Reserve for doubtful accounts $ 351 $ - $ - $ - $ 351
======= ======= ==== ====== =======
Reserve for depreciation on
real estate properties used
in operations $ 3,181 $ 920 $ - $ 464 (2) $ 3,637
======= ======= ==== ====== =======
Reserve for real estate
investments $29,968 $ - $ - $9,130 (2) $20,838
======= ======= ==== ====== =======
</TABLE>
(1) Represents reserve reclassed with related asset to "Real estate
inventory".
(2) Represents sales of real estate properties.
- 44 -
<PAGE>
EXHIBIT INDEX
The following designated exhibits are, as indicated below, either filed herewith
or have heretofore been filed with the Securities and Exchange Commission under
the Securities Act of 1933 or the Securities Act of 1934 and are referred to and
incorporated herein by reference to such filings.
Exhibit 3. Articles of Incorporation and By-laws
Incorporated herein by reference:
3.1 Restated Articles of Organization - As amended
through July 7, 1994 - Exhibit 3.1 to 1994 Form
10-K, as filed.
3.2 By-laws - As amended through September 14, 1990
- Exhibit 3.2 to 1991 Form 10-K, as filed.
Exhibit 4. Instruments Defining the Rights of Security Holders,
Including Indentures
Incorporated herein by reference:
4.1 Certificate of Vote of Directors Establishing a
Series of a Class of Stock determining the
relative rights and preferences of the $21.25
Convertible Exchangeable Preferred Stock -
Exhibit 4(a) to Amendment No. 1 to Form S-2
Registration Statement filed June 19, 1987; SEC
Registration No. 33-14434.
4.2 Form of Deposit Agreement, including form of
Depositary Receipt - Exhibit 4(b) to Amendment
No. 1 to Form S-2 Registration Statement filed
June 19, 1987; SEC Registration No. 33-14434.
4.3 Form of Indenture with respect to the 8 1/2%
Convertible Subordinated Debentures Due June 15,
2012, including form of Debenture - Exhibit 4(c)
to Amendment No. 1 to Form S-2 Registration
Statement filed June 19, 1987; SEC Registration
No. 33-14434.
4.4 Shareholder Rights Agreement and Certificate of
Vote of Directors adopting a Shareholders Rights
Plan providing for the issuance of a Series A
Junior Participating Cumulative Preferred Stock
purchase rights as a dividend to all
shareholders of record on October 6, 1988, as
amended and restated as of May 17, 1990 - filed
herewith.
Exhibit 10. Material Contracts
Incorporated herein by reference:
10.1 1982 Stock Option and Long Term Performance
Incentive Plan - Exhibit A to Registrant's Proxy
Statement for Annual Meeting of Stockholders
dated April 15, 1992.
10.2 Perini Corporation Amended and Restated General
Incentive Compensation Plan - Exhibit 10.2 to
1991 Form 10-K, as filed.
10.3 Perini Corporation Amended and Restated
Construction Business Unit Incentive
Compensation Plan - Exhibit 10.3 to 1991 Form
10-K, as filed.
10.4 $125 million Credit Agreement dated as of
December 6, 1994 among Perini Corporation, the
Banks listed herein, Morgan Guaranty Trust
Company of New York, as Agent, and Shawmut Bank,
N.A., Co-Agent Exhibit 10.4 to 1994 Form 10-K,
as filed.
- 45 -
<PAGE>
EXHIBIT INDEX
(Continued)
10.5 Amendment No. 1 as of February 26, 1996 to the
Credit Agreement dated as of December 6, 1994
among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts (f/k/a Shawmut Bank, N.A.), as Co-
Agent - filed herewith.
10.6 Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Bridge Banks
listed herein, Morgan Guaranty Trust Company of
New York, as Agent, and Fleet National Bank of
Massachusetts (f/k/a Shawmut Bank, N.A.) as
Co-Agent - filed herewith.
Exhibit 22. Subsidiaries of Perini Corporation - filed herewith.
Exhibit 23. Consent of Independent Public Accountants - filed herewith.
Exhibit 24. Power of Attorney - filed herewith.
Exhibit 27. Financial Data Schedule - filed herewith.
- 46 -
<PAGE>
EXHIBIT 22
<TABLE>
<CAPTION>
PERINI CORPORATION
SUBSIDIARIES OF THE REGISTRANT
Percentage of
Interest or
Voting
Name Place of Organization Securities Owned
---- --------------------- ----------------
<S> <C> <C>
Perini Corporation Massachusetts
Perini Building Company, Inc. Arizona 100%
Pioneer Construction, Inc. West Virginia 100%
Perini Environmental Services, Inc. Delaware 100%
International Construction Management Delaware 100%
Services, Inc.
Percon Constructors, Inc. Delaware 100%
Perini International Corporation Massachusetts 100%
Bow Leasing Company, Inc. New Hampshire 100%
Perini Land & Development Company Massachusetts 100%
Paramount Development Massachusetts 100%
Associates, Inc.
I-10 Industrial Park Developers Arizona General 80%
Partnership
Perini Resorts, Inc. California 100%
Glenco-Perini - HCV Partners California Limited 45%
Partnership
Squaw Creek Associates California General 40%
Partnership
Perland Realty Associates, Inc. Florida 100%
Rincon Center Associates California Limited 46%
Partnership
Perini Central Limited Partnership Arizona Limited 75%
Partnership
Perini Eagle Limited Partnership Arizona Limited 50%
Partnership
Perini/138 Joint Venture Georgia General 49%
Partnership
Perini/RSEA Partnership Georgia General 50%
Partnership
</TABLE>
- 47 -
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports, dated February 26, 1996, included in Perini Corporation's Annual Report
on this Form 10-K/A for the year ended December 31, 1995, and into the Company's
previously filed Registration Statements Nos. 2-82117, 33-24646, 33-46961,
33-53190, 33-53192, 33-60654, 33- 70206, 33-52967 and 33-58519.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 21, 1996
- 48 -
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
We, the undersigned, Directors of Perini Corporation, hereby severally
constitute David B. Perini, John H. Schwarz and Richard E. Burnham, and each of
them singly, our true and lawful attorneys, with full power to them and to each
of them to sign for us, and in our names in the capacities indicated below, any
Annual Report on Form 10-K pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 to be filed with the Securities and Exchange Commission and
any and all amendments to said Annual Report on Form 10-K, hereby ratifying and
confirming our signatures as they may be signed by our said Attorneys to said
Annual Report on Form 10-K and to any and all amendments thereto and generally
to do all such things in our names and behalf and in our said capacities as will
enable Perini Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission.
WITNESS our hands and common seal on the date set forth below.
s/David B. Perini Director March 13, 1996
David B. Perini Date
s/Joseph R. Perini Director March 13, 1996
Joseph R. Perini Date
s/Richard J. Boushka Director March 13, 1996
Richard J. Boushka Date
s/Marshall M. Criser Director March 13, 1996
Marshall M. Criser Date
s/Thomas E. Dailey Director March 13, 1996
Thomas E. Dailey Date
s/Albert A. Dorman Director March 13, 1996
Albert A. Dorman Date
s/Arthur J. Fox, Jr. Director March 13, 1996
Arthur J. Fox, Jr. Date
- ------------------- Director March 13, 1996
Nancy Hawthorne Date
s/John J. McHale Director March 13, 1996
John J. McHale Date
s/Jane E. Newman Director March 13, 1996
Jane E. Newman Date
s/Bart W. Perini Director March 13, 1996
Bart W. Perini Date
- 49 -
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Balance Sheets as of December 31, 1995 and the Consolidated Statements of
Operations for the twelve months ended December 31, 1995 as qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000077543
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 29,059
<SECURITIES> 0
<RECEIVABLES> 180,978
<ALLOWANCES> 0
<INVENTORY> 14,933
<CURRENT-ASSETS> 330,345 <F1>
<PP&E> 39,865
<DEPRECIATION> (27,299)
<TOTAL-ASSETS> 539,251 <F2>
<CURRENT-LIABILITIES> 293,800
<BONDS> 84,155
100
0
<COMMON> 4,985
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 539,251 <F3>
<SALES> 0
<TOTAL-REVENUES> 1,101,068
<CGS> 0
<TOTAL-COSTS> (1,086,213)
<OTHER-EXPENSES> 814
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8,582)
<INCOME-PRETAX> (30,196)<F4>
<INCOME-TAX> 2,611
<INCOME-CONTINUING> (27,585)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,585)
<EPS-PRIMARY> (6.38)
<EPS-DILUTED> 0
<FN>
<F1> Includes Equity in Construction Joint Ventures of $61,846, Unbilled Work of
$28,304, and Other Short-Term Assets of $15,225, not currently reflected in
this tag list.
<F2> Includes investments in and advances to Real Estate Joint Ventures of
$148,225, Land Held for Sale or Development of $41,372, and Other Long-Term
Assets of $6,743 not currently reflected in this tag list.
<F3> Includes Deferred Income Taxes and Other Liabilities of $52,663, Minority
Interest of $3,027, Paid-In Surplus of $57,659, Retained Earnings of
$52,062, ESOT Related Obligations of $(4,965), and Treasury Stock of
$(4,235).
<F4> Includes General, Administrative and Selling Expenses of $37,283, not
currently reflected on this tag list.
</FN>
</TABLE>
