UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6314
Perini Corporation
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1717070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
73 MT. WAYTE AVENUE, FRAMINGHAM, MASSACHUSETTS 01701-9160
(Address of principal executive offices)
(Zip code)
(508)-628-2000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares of common stock of registrant outstanding at
May 9, 1996: 4,728,015
Page 1 of 10
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PERINI CORPORATION & SUBSIDIARIES
INDEX
Page Number
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Part I. - Financial Information:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - 3
March 31, 1996 and December 31, 1995
Consolidated Condensed Statements of Income - 4
Three Months ended March 31, 1996 and 1995
Consolidated Condensed Statements of Cash Flows - 5
Three Months ended March 31, 1996 and 1995
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of the Consolidated 7 - 8
Financial Condition and Results of Operations
Part II. - Other Information:
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
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2
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PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, 1996 AND DECEMBER 31, 1995
(In Thousands)
<CAPTION>
ASSETS
------
MARCH 31, DEC. 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Cash $ 5,121 $ 29,059
Accounts and Notes Receivable 163,891 180,978
Unbilled Work 37,612 28,304
Construction Joint Ventures 67,739 61,846
Real Estate Inventory, at the lower of cost or market 13,860 14,933
Deferred Tax Asset 15,146 13,039
Other Current Assets 5,450 2,186
---------------- ----------------
Total Current Assets $ 308,819 $ 330,345
---------------- ----------------
Land Held for Sale or Development $ 41,286 $ 41,372
Investments in and Advances to Real Estate Joint Ventures 149,923 148,225
Real Estate Properties Used in Operations 2,931 2,964
Other 223 302
---------------- ----------------
Total Real Estate Development Investments $ 194,363 $ 192,863
---------------- ----------------
Other Assets $ 3,584 $ 3,477
---------------- ----------------
Property and Equipment, less Accumulated Depreciation of $26,506 in 1996
and $27,299 in 1995 $ 11,996 $ 12,566
---------------- ----------------
$ 518,762 $ 539,251
================ ================
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current Maturities of Long-Term Debt $ 8,091 $ 5,697
Accounts Payable 174,698 197,052
Advances from Construction Joint Ventures 23,635 34,830
Deferred Contract Revenue 22,908 23,443
Accrued Expenses 27,198 32,778
---------------- ----------------
Total Current Liabilities $ 256,530 $ 293,800
---------------- ----------------
Deferred Income Taxes and Other Liabilities $ 57,082 $ 52,663
---------------- ----------------
Long-Term Debt, including real estate development debt of $3,661 in 1996
and $3,660 in 1995 $ 94,631 $ 84,155
---------------- ----------------
Minority Interest $ 2,932 $ 3,027
---------------- ----------------
Stockholders' Equity:
Preferred Stock $ 100 $ 100
Series A Junior Participating Preferred Stock --- ---
Common Stock 4,985 4,985
Paid-In Surplus 57,626 57,659
Retained Earnings 53,018 52,062
ESOT Related Obligations (3,976) (4,965)
---------------- ----------------
$ 111,753 $ 109,841
Less - Treasury Stock 4,166 4,235
---------------- ----------------
Total Stockholders' Equity $ 107,587 $ 105,606
---------------- ----------------
$ 518,762 $ 539,251
================ ================
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The accompanying notes are an integral part of these financial statements.
3
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<CAPTION>
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Share Data)
THREE MONTHS
ENDED MARCH 31,
---------------
1996 1995
--------------- ---------------
<S> <C> <C>
REVENUES FROM OPERATIONS:
Construction $ 258,515 $ 253,326
Real Estate 11,514 9,763
--------------- ---------------
TOTAL REVENUES FROM OPERATIONS $ 270,029 $ 263,089
--------------- ---------------
COST AND EXPENSES:
Cost of Operations $ 258,250 $ 250,916
General, Administrative and Selling Expenses 8,134 9,145
--------------- ---------------
$ 266,384 $ 260,061
--------------- ---------------
INCOME FROM OPERATIONS $ 3,645 $ 3,028
Other Income (Expense), Net (336) 348
Interest Expense (1,707) (2,119)
--------------- ---------------
Income Before Income Taxes $ 1,602 $ 1,257
Provision for Income Taxes (Note 2) 115 385
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NET INCOME $ 1,487 $ 872
=============== ===============
EARNINGS PER COMMON SHARE (Note 3) $ 0.20 $ 0.08
=============== ===============
DIVIDENDS PER COMMON SHARE (Note 4) $ --- $ ---
=============== ===============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 3) 4,722,672 4,510,329
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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<CAPTION>
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(In Thousands)
THREE MONTHS
ENDED MARCH 31,
---------------
1996 1995
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<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 1,487 $ 872
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization 666 686
Noncurrent deferred taxes and other liabilities 4,419 (4,959)
Distributions greater (less) than earnings of joint ventures and affiliates 44 (3,612)
Cash provided from (used by) changes in components of working capital other
than cash, notes payable and current maturities of long-term debt (38,971) 27,874
Real estate development investments other than joint ventures 79 365
Other non-cash items, net 15 79
-------------- --------------
NET CASH (USED BY) PROVIDED FROM OPERATING ACTIVITIES $ (32,261) $ 21,305
-------------- --------------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 737 $ 1,925
Cash distributions of capital from unconsolidated joint ventures 1,820 1,010
Acquisition of property and equipment (391) (216)
Improvements to land held for sale or development (13) (27)
Improvements to real estate properties used in operations (110) (32)
Capital contributions to unconsolidated joint ventures (6,763) (3,946)
Advances to real estate joint ventures, net (729) (2,275)
Investments in other activities (123) 102
-------------- --------------
NET CASH USED BY INVESTING ACTIVITIES $ (5,572) $ (3,459)
-------------- --------------
Cash Flows from Financing Activities:
Proceeds of long-term debt $ 14,211 $ 3,409
Repayment of long-term debt (352) (2,264)
Cash dividends paid --- (531)
Treasury stock issued 36 203
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NET CASH PROVIDED FROM FINANCING ACTIVITIES $ 13,895 $ 817
-------------- --------------
Net Increase (Decrease) in Cash $ (23,938) $ 18,663
Cash at Beginning of Year 29,059 7,841
-------------- --------------
Cash at End of Period $ 5,121 $ 26,504
============== ==============
Supplemental Disclosures of Cash paid during the period for:
Interest $ 1,599 $ 2,179
============== ==============
Income tax payments (refunds) $ (57) $ 1,175
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) Significant Accounting Policies
The significant accounting policies followed by the Company and its
subsidiaries in preparing its consolidated financial statements are set
forth in Note (1) to such financial statements included in Form 10-K for
the year ended December 31, 1995. The Company has made no significant
change in these policies during 1996.
(2) Provision For Income Taxes
The lower-than-normal tax rate in 1996 reflects the realization of a
portion of the tax benefit not recognized in 1995 due to certain
accounting limitations. The lower-than-normal tax rate in 1995 is due to
a tax benefit realized.
(3) Per Share Data
Computations of earnings per common share amounts are based on the
weighted average number of the Company's common shares outstanding
during the periods presented. Earnings per common share reflect the
effect of preferred dividends accrued during both the 1996 and 1995
three month periods ended March 31, of $531,000. Common stock
equivalents related to additional shares of common stock issuable upon
exercise of stock options have not been included since their effect
would be antidilutive. Per share data on a fully diluted basis is not
presented because the effect of conversion of the Company's depositary
convertible exchangeable preferred shares into common stock is also
antidilutive.
(4) Cash Dividends
There were no cash dividends on common stock declared or paid during the
periods presented in the consolidated condensed financial statements
presented herein. As previously disclosed, in conjunction with the
covenants of the Company's Amended Revolving Credit Agreement, 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 dividends on preferred stock that normally
would have been declared during December of 1995 and March of 1996, and
payable on March 15 and June 15, 1996, respectively, have not been
declared (although they have been fully accrued due to the "cumulative"
feature of the preferred stock).
(5) Opinion
The unaudited consolidated condensed financial statements presented
herein have been prepared in accordance with the instructions to Form
10-Q and do not include all of the information and note disclosures
required by generally accepted accounting principles. These statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-K for the year ended December
31, 1995. In the opinion of management, the accompanying unaudited
condensed financial statements include all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the
Company's financial position as of March 31, 1996 and December 31, 1995
and results of operations and cash flows for the three month periods
ended March 31, 1996 and 1995. The results of operations for the three
month period ended March 31, 1996 may not be indicative of the results
that may be expected for the year ending December 31, 1996 because the
Company's results generally consist of a limited number of large
transactions in both construction and real estate. Therefore, such
results can vary depending on the timing of transactions and the
profitability of projects being reported.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
RESULTS OF OPERATIONS
- ---------------------
Revenues increased $6.9 million (or 2.6%), from $263.1 million in 1995 to $270
million in 1996. This increase resulted from increased construction revenues of
$5.2 million (or 2.0%), from $253.3 million in 1995 to $258.5 million in 1996,
due primarily to an increase in revenues from heavy construction operations of
$17.3 million (or 27%), from $63 million in 1995 to $80.3 million in 1996, which
was partially offset by a decrease in revenues from building construction
operations of $12.1 million (or 6%), from $190.3 million in 1995 to $178.2
million in 1996. These revenue fluctuations reflect the timing in the start-up
of new construction projects, in particular certain fast track hotel/casino
projects in various parts of the United States as well as certain long-term
infrastructure rehabilitation projects. Revenues from real estate operations
increased $1.7 million, from $9.8 million in 1995 to $11.5 million in 1996 due
primarily to an increase in condominium sales in Georgia.
In spite of the modest increase in revenues, the total gross profit decreased
slightly, from $12.2 million in 1995 to $11.8 million in 1996, primarily due to
an overall decrease in gross profit from construction operations of $.6 million
(or 5%), from $12.3 million in 1995 to $11.7 million in 1996. This decrease is
due to lower overall profit margins experienced in 1996 in several building and
heavy construction operating units as a result of the completion in 1995 of
several successful construction projects, including a major hotel/casino project
in Nevada, plus a lower than anticipated margin in 1996 on a casino project in
Iowa. This gross profit decrease was partially offset by a $.2 million increase
in gross profit from real estate operations due primarily to the increase in
condominium sales referred to above.
General, administrative and selling expenses decreased by $1.0 million (or 11%),
from $9.1 million in 1995 to $8.1 million in 1996 primarily due to certain
insurance allocations to projects as well as continued emphasis on reducing
overall Company overhead expenses in conjunction with the Company's
re-engineering efforts commenced in prior years and the continuation of the
gradual down-sizing of the Company's real estate operations.
Other income decreased $.7 million, from income of $.4 million in 1995 to a loss
of $.3 million in 1996 primarily due to a $.4 million non-recurring gain on the
sale of certain underutilized operating facilities, including a quarry, in 1995.
Interest expense decreased by $.4 million (or 19%), from $2.1 million in 1995 to
$1.7 million in 1996 due to a lower average level of borrowings during 1996 as
well as lower effective interest rates.
The lower than normal tax rate in 1996 is due to the utilization of tax loss
carry forwards from 1995. Because of certain accounting limitations, the Company
was not able to recognize a portion of the tax benefit related to the operating
loss experienced in fiscal 1995. Therefore, approximately $20 million of future
pretax earnings, including the earnings achieved in the first quarter of 1996,
should benefit from minimal tax charges. The lower than normal tax rate in 1995
is due to a tax benefit realized that related to the sale of certain
underutilized operating facilities referred to above.
FINANCIAL CONDITION
- -------------------
Working capital increased $15.8 million, from $36.5 million at the end of 1995
to $52.3 million at March 31, 1996, the highest level in recent years. The
current ratio increased from 1.12:1 to 1.20:1 during this same period.
During the first three months of 1996 the Company used $30.3 million of cash for
operating activities, primarily to fund cash requirements on construction
projects. In addition, the Company used $5.6 million of cash for investing
activities, primarily for working capital contributions to construction joint
ventures. The sources of these funds were $14.0 million from financing
activities, primarily from net borrowings, and $23.9 million from cash on hand.
7
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Long-term debt at March 31, 1996 was $94.6 million, an increase of $10.4 million
from December 31, 1995. The long-term debt to equity ratio at March 31, 1996 was
.88 to 1, compared to .80 to 1 at December 31, 1995.
In addition to internally generated funds, the Company has access to additional
funds under its $114.5 million long-term Credit Agreement. Effective February
26, 1996, the Company entered into a Bridge Loan Agreement for an additional $15
million through July 31, 1996. At March 31, 1996 there was $13.4 million
available under the Company's long-term credit facility and $15 million
available under the Bridge Loan Agreement. 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 same sources cause
uncertainties in predicting liquidity.
8
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Part II. - Other Information
- ----------------------------
Item 1. - Legal Proceedings - None
Item 2. - Changes in Securities
(a) None
(b) None
Item 3. - Defaults Upon Senior Securities - None
Item 4. - Submission of Matters to a Vote of Security Holders - None
Item 5. - Other Information - None
Item 6. - Exhibits and Reports on Form 8-K
(a) None
(b) None
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Perini Corporation
------------------
Registrant
Date: May 14, 1996 /s/ John H. Schwarz
-------------------
John H. Schwarz, Executive Vice President,
Finance and Administration
Date: May 14, 1996 /s/ Barry R. Blake
------------------
Barry R. Blake, Vice President and Controller
10
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Balance Sheets as of March 31, 1996 and the Consolidated Statements of
Operations for the three months ended March 31, 1996 as qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,121
<SECURITIES> 0
<RECEIVABLES> 163,891
<ALLOWANCES> 0
<INVENTORY> 13,860
<CURRENT-ASSETS> 308,819 <F1>
<PP&E> 38,502
<DEPRECIATION> (26,506)
<TOTAL-ASSETS> 518,762 <F2>
<CURRENT-LIABILITIES> 256,530
<BONDS> 94,631
100
0
<COMMON> 4,985
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 518,762 <F3>
<SALES> 0
<TOTAL-REVENUES> 270,029
<CGS> 0
<TOTAL-COSTS> (258,250)
<OTHER-EXPENSES> (336)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,707)
<INCOME-PRETAX> 1,602 <F4>
<INCOME-TAX> (115)
<INCOME-CONTINUING> 1,487
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,487
<EPS-PRIMARY> .20
<EPS-DILUTED> 0
<FN>
<F1> Includes Equity in Construction Joint Ventures of $67,739, Unbilled Work of
$37,612, and Other Short-Term Assets of $20,596, not currently reflected in
this tag list.
<F2> Includes investments in and advances to Real Estate Joint Ventures of
$149,923, Land Held for Sale or Development of $41,286, and Other Long-Term
Assets of $6,738 not currently reflected in this tag list.
<F3> Includes Deferred Income Taxes and Other Liabilites of $57,082, Minority
Interest of $2,932, Paid-In Surplus of $57,626, Retained Earnings of
$53,018, ESOT Related Obligations of $(3,976), and Treasury Stock of
$(4,166).
<F4> Includes General, Administrative and Selling Expenses of $8,134, not
currently reflected on this tag list.
</FN>
</TABLE>
