UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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
At August 12, 1998 5,413,647 shares of common stock of the registrant were
outstanding.
Page 1 of 15
<PAGE>
<TABLE>
<CAPTION>
PERINI CORPORATION & SUBSIDIARIES
INDEX
Page Number
<S> <C>
Part I. - Financial Information:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - 3
June 30, 1998 and December 31, 1997
Consolidated Condensed Statements of Income - 4
Three Months and Six Months ended June 30, 1998 and 1997
Consolidated Condensed Statements of Cash Flows - 5
Six Months ended June 30, 1998 and 1997
Notes to Consolidated Condensed Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of the Consolidated 8 - 10
Financial Condition and Results of Operations
Part II. - Other Information:
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11 - 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12 - 14
Signatures 15
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997
(In Thousands)
ASSETS
JUNE 30, DEC. 31,
1998 1997
---------------- ----------------
<S> <C> <C>
Cash $ 47,846 $ 31,305
Accounts and Notes Receivable 109,830 139,221
Unbilled Work 20,728 36,574
Construction Joint Ventures 70,160 71,056
Real Estate Inventory, at the lower of cost or market 17,257 25,145
Deferred Tax Asset 986 1,067
Other Current Assets 4,912 1,808
---------------- ----------------
Total Current Assets $ 271,719 $ 306,176
---------------- ----------------
Land Held for Sale or Development $ 13,383 $ 7,093
Investments in and Advances to Real Estate Joint Ventures 84,779 86,598
---------------- ----------------
Total Real Estate Development Investments $ 98,162 $ 93,691
---------------- ----------------
Other Assets $ 4,111 $ 4,581
---------------- ----------------
Property and Equipment, less Accumulated Depreciation of $17,866 in 1998 and
$19,406 in 1997 $ 9,672 $ 10,476
---------------- ----------------
$ 383,664 $ 414,924
================ ================
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
================ ================
<S> <C> <C>
Current Maturities of Long-Term Debt $ 3,376 $ 11,873
Accounts Payable 128,123 145,118
Advances from Construction Joint Ventures 24,101 29,801
Deferred Contract Revenue 28,824 17,117
Accrued Expenses 38,456 30,296
---------------- ----------------
Total Current Liabilities $ 222,880 $ 234,205
---------------- ----------------
Deferred Income Taxes and Other Liabilities $ 14,565 $ 24,101
---------------- ----------------
Long-Term Debt, including real estate development debt of $322 in 1998 and $322 in
1997 $ 66,434 $ 84,898
---------------- ----------------
Minority Interest $ 1,064 $ 1,064
---------------- ----------------
Redeemable Convertible Series B Preferred Stock $ 31,605 $ 29,756
---------------- ----------------
Stockholders' Equity:
Preferred Stock $ 100 $ 100
Series A Junior Participating Preferred Stock --- ---
Stock Purchase Warrants 2,233 2,233
Common Stock 5,506 5,267
Paid-In Surplus 52,216 53,012
Retained Earnings (9,961) (15,294)
ESOT Related Obligations (1,501) (2,663)
---------------- ----------------
$ 48,593 $ 42,655
Less - Treasury Stock 1,477 1,755
---------------- ----------------
Total Stockholders' Equity $ 47,116 $ 40,900
---------------- ----------------
$ 383,664 $ 414,924
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(In Thousands, Except Per Share Data)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES FROM OPERATIONS:
Construction $ 273,761 $ 361,651 $ 492,963 $ 679,168
Real Estate 4,450 27,273 14,630 36,975
--------------- --------------- --------------- ---------------
TOTAL REVENUES FROM OPERATIONS $ 278,211 $ 388,924 $ 507,593 $ 716,143
--------------- --------------- --------------- ---------------
COST AND EXPENSES:
Cost of Operations $ 265,853 $ 375,712 $ 482,767 $ 690,799
General, Administrative and Selling Expenses 7,420 8,116 14,364 14,936
--------------- --------------- --------------- ---------------
$ 273,273 $ 383,828 $ 497,131 $ 705,735
--------------- --------------- --------------- ---------------
INCOME FROM OPERATIONS $ 4,938 $ 5,096 $ 10,462 $ 10,408
Other Income (Expense), Net (105) (327) (438) (925)
Interest Expense (1,519) (2,321) (4,301) (5,059)
--------------- --------------- --------------- ---------------
Income Before Income Taxes $ 3,314 $ 2,448 $ 5,723 $ 4,424
Provision for Income Taxes (Note 2) 200 115 390 230
--------------- --------------- --------------- ---------------
NET INCOME $ 3,114 $ 2,333 $ 5,333 $ 4,194
=============== =============== =============== ===============
BASIC AND DILUTED EARNINGS PER SHARE (Note 3) $ 0.31 $ 0.19 $ 0.46 $ 0.34
=============== =============== =============== ===============
DIVIDENDS PER COMMON SHARE (Note 4) $ --- $ --- $ --- $ ---
=============== =============== =============== ===============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 3) 5,294,042 5,033,462 5,235,329 4,975,685
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(In Thousands)
SIX MONTHS
ENDED JUNE 30,
1998 1997
-------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 5,333 $ 4,194
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization 1,127 1,293
Noncurrent deferred taxes and other liabilities 480 (136)
Distributions greater (less) than earnings of joint ventures and affiliates 964 (6,563)
Cash provided from (used by) changes in components of working capital other
than cash and current maturities of long-term debt 26,515 (6,826)
Sale of interest in real estate joint venture --- 17,149
Real estate development investments other than joint ventures 6,534 (377)
Other non-cash items, net (947) (600)
-------------- --------------
NET CASH PROVIDED FROM OPERATING ACTIVITIES $ 40,006 $ 8,134
-------------- --------------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 509 $ 400
Cash distributions of capital from unconsolidated joint ventures 2,153 16,904
Acquisition of property and equipment (428) (840)
Improvements to land held for sale or development (158) (90)
Capital contributions to unconsolidated joint ventures (677) (1,948)
Advances to real estate joint ventures, net (1,766) (4,072)
Investments in other activities 440 885
-------------- --------------
NET CASH PROVIDED FROM INVESTING ACTIVITIES $ 73 $ 11,239
-------------- --------------
Cash Flows from Financing Activities:
Series B preferred stock issued, net $ --- $ 26,558
Proceeds of long-term debt 3,162 ---
Repayment of long-term debt (29,333) (15,564)
Common stock issued 2,482 1,701
Treasury Stock Issued 151 165
-------------- --------------
NET CASH (USED BY) PROVIDED FROM FINANCING ACTIVITIES $ (23,538) $ 12,860
-------------- --------------
Net Increase in Cash $ 16,541 $ 32,233
Cash at Beginning of Period 31,305 9,745
-------------- --------------
Cash at End of Period $ 47,846 $ 41,978
============== ==============
Supplemental Disclosures of Cash paid during the period for:
Interest $ 3,331 $ 5,013
============== ==============
Income tax payments $ 261 $ 253
============== ==============
Supplemental Disclosures of Non-cash Transactions:
Dividends paid in shares of Series B Preferred Stock (Note 4) $ 1,664 $ 1,246
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
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, 1997. The Company has made no significant
change in these policies during 1998.
(2) Provision For Income Taxes
The lower-than-normal tax rate in 1998 and 1997 reflects the realization of
a portion of the tax benefit not recognized in prior years due to certain
accounting limitations.
(3) Per Share Data
Computations of basic and diluted earnings per common share ("EPS") amounts
are based on the weighted average number of the Company's common shares
outstanding during the periods presented. Earnings available for common
shares are calculated as follows (in thousands):
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Income $ 3,114 $ 2,333 $ 5,333 $ 4,194
------------ ------------ ------------ ------------
Less:
Accrued dividends on Senior Preferred Stock (531) (531) (1,062) (1,062)
Dividends declared on Series B Preferred Stock (842) (762) (1,664) (1,246)
Accretion deduction required to reinstate
mandatory redemption value of Series B
Preferred Stock over a period of 8-10 years (92) (95) (187) (184)
------------ ------------ ------------ ------------
$(1,465) $(1,388) $(2,913) $(2,492)
------------ ------------ ------------ ------------
Earnings Available for Common Shares $ 1,649 $ 945 $ 2,420 $ 1,702
============ ============ ============ ============
</TABLE>
Basic EPS equals diluted EPS for the periods presented due to the
immaterial effect of stock options and the antidilutive effect of
conversion of the Company's depositary convertible exchangeable preferred
shares into common stock.
(4) 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 as well as the New Credit Agreement,
effective January 17, 1997, the Company is required to suspend the payment
of quarterly dividends on its $21.25 preferred stock ("Senior Preferred
Stock") until certain financial criteria are met. Therefore, the dividends
on the Senior Preferred Stock have not been declared since 1995 (although
they have been fully accrued due to the "cumulative" feature of the Senior
Preferred Stock). The aggregate amount of dividends in arrears is
approximately $5,843,000 at June 30, 1998 which represents approximately
$58.43 per share of Preferred Stock or approximately $5.84 per Depositary
Share and is included in Long
6
<PAGE>
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(4) Dividends (continued)
Term Other Liabilities in the accompanying Consolidated Balance Sheet.
Under the terms of the Preferred Stock, the holders of the Depositary
Shares were entitled to elect two additional Directors since dividends have
been deferred for more than six quarters and such directors were elected at
the May 14, 1998 Annual Meeting. Quarterly In-kind dividends (based on an
annual rate of 10%) were paid on March 16, 1998 on the Series B Preferred
Stock to the stockholders of record on March 2, 1998. The dividend was paid
in the form of approximately 4,108 additional shares of Series B Preferred
Stock valued at $200.00 per share for a total of $821,501. In-kind
dividends for the second quarter were paid on June 15, 1998 to stockholders
of record on June 1, 1998. The dividend was paid in the form of
approximately 4,210 additional shares of Series B Preferred Stock valued at
$200.00 per share for a total of $842,039.
(5) Basis of Presentation
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, 1997. In the
opinion of management, the accompanying unaudited condensed financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the Company's financial position
as of June 30, 1998 and December 31, 1997 and results of operations and
cash flows for the three month and six month periods ended June 30, 1998
and 1997. The results of operations for the six month period ended June 30,
1998 may not be indicative of the results that may be expected for the year
ending December 31, 1998 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) Impact of Recently Issued Accounting Standards
During the quarter ended March 31, 1998, the Company adopted the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 130 "Reporting
Comprehensive Income". There was no impact to the accompanying consolidated
condensed financial statements due to the adoption of this statement,
therefore no additional disclosure is required.
In June 1998 the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Financial Instruments and Hedging Activities. The
statement establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either an
asset or liability measured at its fair value. The Statement requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that the
company must formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting.
Statement No. 133 is effective for fiscal years beginning after June 15,
1999. A company may also implement the Statement as of the beginning of any
fiscal quarter after issuance. Statement No. 133 cannot be applied
retroactively.
The Company does not hold any significant derivative instruments or engage
in significant hedging activities and therefore the impact of adopting
Statement No. 133 is expected to be immaterial. The Company plans to adopt
Statement No. 133 on January 1, 1999, the start of the next fiscal year.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
Results of Operations
- ---------------------
Comparison of the Second Quarter of 1998 with the Second Quarter of 1997
Revenues decreased $110.7 million (or 28.4%), from $388.9 million in 1997 to
$278.2 million in 1998. This decrease resulted from decreased construction
revenues of $87.9 million (or 24.3%), from $361.6 million in 1997 to $273.7
million in 1998, due primarily to decreases in revenues from both building and
civil construction operations. Revenues from building operations decreased $54.2
million (or 22.3%), from $243.5 million in 1997 to $189.3 million in 1998 due
primarily to a decrease in revenues from correctional facility projects in the
East. Revenues from civil operations decreased $33.7 million (or 28.5%) from
$118.1 million in 1997 to $84.4 million in 1998 due primarily to the timing in
the start up of new infrastructure projects in the Northeast. In addition, the
decision to phase out two construction divisions in the Midwest also contributed
to the decrease in revenues from both the building and civil operations. The
decline in real estate revenues of $22.8 million (or 83.7%) is primarily due to
the non-recurring revenues related to the 1997 sale of the Company's interest in
the Resort at Squaw Creek in California.
In spite of the overall 28% decrease in total revenues described above, total
gross profit of $12.4 million only decreased by $.8 million (or 6%) due
primarily to improved margins on both the building and civil construction work
performed in 1998.
General, administrative and selling expenses decreased $.7 million (or 8.6%)
from $8.1 million in 1997 to $7.4 million in 1998 due primarily to phasing out
of the two construction divisions in the Midwest as well as efficiencies
achieved by combining certain other divisions.
Other income (expense), net decreased by $.2 million from a net expense of $.3
million in 1997 to a net expense of $.1 million in 1998 due to a decrease in
bank financing fees and a decrease in amortization of deferred debt expense.
Interest expense decreased by $.8 million, from $2.3 million in 1997 to $1.5
million in 1998 due primarily to lower averge levels of borrowing in 1998.
The lower than normal tax rate in 1998 and 1997 for all periods presented is due
to the utilization of tax loss carryforwards from prior years. Because of
certain accounting limitations, the Company was not able to recognize a portion
of the tax benefit related to the operating losses experienced in fiscal 1996
and 1995.
Comparison of the Six Months Ended June 30, 1998
and the Six Months Ended June 30, 1997
Revenues decreased $208.5 million (or 29.1%) from $716.1 million in 1997 to
$507.6 million in 1998. This decrease resulted from decreased construction
revenues of $186.2 million (or 27.4%) from $679.2 million in 1997 to $493.0
million in 1998, due primarily to decrease in revenues from building
construction operations of $143.2 million (or 29.3%) from $488.8 million in 1997
to $345.6 million in 1998. Decreased building construction revenues were due
primarily to the timing in the start of new hotel/casino projects in Las Vegas
and, to a lesser degree, a decrease in revenues from correctional facility
projects in the East. Civil construction revenues also decreased by $43.0
million (or 22.6%), from $190.4 million in 1997 to $147.4 million in 1998 due to
the timing in the start up of new infrastructure projects in the Northeast. The
phasing out of two construction divisions in the Midwest contributed to the
decrease in revenues from both the building and civil operations. The decline in
real estate revenues of $22.3 million (or 60.4%) is primarily due to
non-recurring revenues related to the 1997 sale of the Company's interest in the
Resort at Squaw Creek.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Continued)
In spite of the decrease in revenues, the total gross profit only decreased
slightly, from $25.3 million in 1997 to $24.8 million in 1998, primarily due to
improved margin on both the building and civil work performed in 1998.
General administrative and selling expenses decreased slightly from $14.9
million in 1997 to $14.4 million in 1998 due primarily to the phasing out of two
construction divisions in the Midwest which was partially offset by an increase
in selling expenses incurred by the real estate operations in the first quarter
of 1998.
Other income (expense) net decreased by $.5 million from a net expense of $.9
million in 1997 to a net expense of $.4 million in 1998 due primarily to a
decrease in bank financing fees and a decrease in amortization of deferred debt
expense.
Interest expense decreased by $.8 million, from $5.1 million in 1997 to $4.3
million in 1998 due primarily to lower levels of borrowing in 1998.
Financial Condition
- -------------------
Working capital decreased $23.2 million, from $72.0 million at the end of 1997
to $48.8 million at June 30, 1998. The primary reason for the decrease in
working capital was the reclassificiation of certain items between current and
long-term during the first quarter of 1998, because of a change in real estate
strategy and a certain long-term liability becoming current. The current ratio
decreased from 1.31:1 to 1.22:1 during this same period.
During the first six months of 1998, the Company generated $40.0 million from
operating activities, primarily from changes in working capital, which was used
to fund financing activities ($23.5 million), primarily to paydown debt, and to
increase cash by $16.5 million.
Long-term debt at June 30, 1998 was $66.4 million, a decrease of $18.5 million
from December 31, 1997 due to the reduction in borrowing under the Company's
Revolving Credit Facility. The long-term debt to equity ratio at June 30, 1998
was 1.41 to 1, compared to 2.08 to 1 at December 31, 1997.
At June 30, 1998, the Company had $47.8 million available under its line of
credit facilities. Management believes that cash generated from operations and
its existing credit lines should be adequate to meet the Company's funding
requirements for at least the next twelve months.
Outlook
- -------
General - The statements contained in this Outlook that are not purely
historical are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, including statements regarding the Company's expectations,
hopes, beliefs, intentions or strategies regarding the future. All
forward-looking statements included in this Outlook are based on
information available to the Company on the date hereof. It is important to
note that the Company's actual results could differ materially from those
in such forward-looking statements.
Construction - Looking ahead, we must consider the Company's construction
backlog and remaining portfolio of real estate projects. The overall
construction backlog at June 30, 1998 was at $1.490 billion which
represented a slight decrease over the backlog at December 31, 1997. While
approximately 47% of the current backlog relates to building construction
projects which generally represent lower risk, lower margin work,
approximately 53% of the current backlog relates to heavy construction
projects which
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Continued)
generally represent higher risk, but correspondingly higher margin work.
Rincon Center - As previously reported in Note 11 of the December 31, 1997
Consolidated Financial Statements included in the Company's 1997 Form 10-K,
the Company's Real Estate subsidiary, Perini Land and Development Company,
the managing general partner of Rincon Center Associates, has reached a
preliminary agreement with the parties in Rincon Center, a mixed-use
property in San Francisco, subject to various approvals and further
negotiations, with regard to restructuring certain financial obligations
and ownership interests. These negotiations are continuing and include the
possible acquisition of the property known as Rincon I, previously sold in
1988 under a sale leaseback transaction. While further negotiations with
and final approval by the various parties involved are ongoing, the Company
has received the appropriate waivers or assurances to date that (i) the
Lessor on Rincon I will continue to defer enforcement of the purchase
requirement provisions under the Master Lease, and (ii) while the $33
million loan to the Lessor on Rincon I has matured, the lenders have
deferred enforcement of any remedies pending completion of the
restructuring discussions. It continues to be the opinion of management
that the final resolution of these negotiations and restructure of certain
financial obligations will not have a material impact on the results of
operations or financial condition as reported in the financial statements
included in this Form 10-Q.
Year 2000 - Since many computers, related software and certain devices with
embedded microchips record only the last two digits of a year, they may not
be able to recognize that January 1, 2000 (or subsequent dates) comes after
December 31, 1999. This situation could cause erroneous calculations or
system shutdowns, causing problems that could range from merely
inconvenient to significant. As previously reported in the Company's 1997
Form 10-K, the Company began a project to review all of its computer
systems in 1995. One factor, among many, to consider was what impact, if
any, would the Year 2000 have on computer systems. As a result of this
project, the Company implemented new fully integrated online construction
specific financial systems during the first quarter of 1998 which are Year
2000 compliant. The Company recognizes the Year 2000 issue could be an
overall business problem, not just a technical problem, therefore it
recently established a Year 2000 Committee to identify all of the other
potential Year 2000 problems that could impact the Company, including
readiness issues for its computer applications and business processes,
those of its facilities, equipment and joint ventures, along with
relationships with third parties, such as our customers, vendors,
subcontractors and other business partners; develop plans to evaluate the
significance of the potential problem; develop plans to remedy or minimize
the potential problem; assign appropriate resources; and monitor the
implementation of the plans. Since the Company is generally in the
identification phase of this project, except for its recently implemented
new financial systems, the Company is unable to estimate the total cost to
achieve Year 2000 readiness. While the Company currently does not
anticipate any material disruption in its operations as a result of any
failure by the Company to be in compliance, the Company does not currently
have any information concerning the Year 2000 compliance status of its
suppliers and customers. In the event that any of the Company's significant
suppliers or customers does not successfully and timely achieve Year 2000
compliance, the Company's business or operations could be adversely
affected.
10
<PAGE>
PART II. - OTHER INFORMATION
Item 1. - Legal Proceedings - None
Item 2. - Changes in Securities
(a) None
(b) None
(c) None
Item 3. - Defaults Upon Senior Securities
(a) None
(b) In accordance with the provisions of the 1995 Amended Revolving Credit
Agreement and the Credit Agreement which became effective on January
17, 1997, the Company suspended payment of quarterly dividends on its
$21.25 Convertible Exchangeable Preferred Stock ("Senior Preferred
Stock") commencing with the dividend that normally would have been
declared during December, 1995 through the dividend that would normally
have been declared during June, 1998 for a total arrearage of $58.43
per share (or $5.84 per depositary share) which aggregates $5,843,000
to date. While these dividends have not been declared or paid, they
have been fully accrued in accordance with the "cumulative" feature of
the stock.
Item 4. - Submission of Matters to a Vote of Security Holders
(a) May 14, 1998 - Annual Meeting of Shareholders
(b) Not applicable
(c) (1) Nominees for Class II Directors as listed in the proxy
statement, to hold office for a three year term, expiring in
2001 and until their successors are chosen and qualified, were
elected by holders of Common Stock and Series B Preferred
Stock with the following vote:
<TABLE>
Number of Votes
--------------------------------------------------------------------
Class I Director For Against Abstain
- -------------------------------- ------------------ --------------------- -----------------
<S> <C> <C> <C>
Richard J. Boushka 7,879,747 --- 28,876
Roger J. Ludlam 7,878,847 --- 29,776
Jane E. Newman 7,879,622 --- 29,001
Ronald N. Tutor 7,887,960 --- 20,663
</TABLE>
(2) Two nominees for Preferred Directors (the "Preferred
Directors") as listed in a separate information statement,
prepared by the Depositary for the Company's $21.25
Convertible Exchangeable Preferred Stock (the "Preferred
Stock", each $2.125 Depositary Receipt equals 1/10 share of
the Preferred Stock), to hold office until the earlier of (i)
payment in full by the Company of any dividends owed on the
Preferred Stock or (ii) the next annual meeting of
stockholders and their successors are chosen and qualified,
were elected by
11
<PAGE>
the Depositary, based on the two nominees who receive the
greatest number of votes as indicated by the holders of the
Depositary Receipts. A summary of the voting results follows:
<TABLE>
Number of Votes
--------------------------------------------------------------
Nominees for Authority
Preferred Directors For Against Withheld
- ---------------------------------------- ---------------- ------------------ ---------------
<S> <C> <C> <C>
Robert L. Ball 9,205 --- 414,956
Arthur I. Caplan (Elected) 215,100 --- 209,061
John A. Donaho 4,681 --- 419,480
Frederick Doppelt (Elected) 265,386 --- 158,775
Bennett Feinsilber 2,670 --- 421,491
Reid W. Goyert 5,450 --- 418,711
Edward P. Hoffer, M.D. 11,240 --- 412,921
Arthur J. Lempert 19,600 --- 404,561
Linton S. Marshall III 29,756 --- 394,405
Tony Eugene Pittsey 10,552 --- 413,609
Martin Shubik 114,011 --- 310,150
Joseph Silvestro 4,864 --- 419,297
Ben Warman 47,535 --- 376,626
Albert Olaf Wilson, Jr. 62,011 --- 362,150
Leland D. Zulch 38,670 --- 385,491
</TABLE>
(d) Not applicable
Item 5. - Other Information - None
Item 6. - Exhibits and Reports on Form 8-K
(a) 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 January 17, 1997 - Exhibit 3.1 to 1996
Form 10-K filed March 31, 1997.
3.2 By-laws - As amended and restated as of January
17, 1997 - Exhibit 3.2 to Form 8-K filed on
February 14, 1997.
12
<PAGE>
Part II. - Other Information (Continued)
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 dated as of
September 23, 1988, as amended and restated as
of May 17, 1990, as amended and restated as of
January 17, 1997, between Perini Corporation and
State Street Bank and Trust Company, as Rights
Agent - Exhibit 4.4 to Amendment No. 1 to
Registration Statement on Form 8-A/A filed on
January 29, 1997.
4.5 Stock Purchase and Sale Agreement dated as of
July 24, 1996 by and among the Company, PB
Capital and RCBA, as amended - Exhibit 4.5 to
the Company's Quarterly Report on Form 10-Q/A
for the fiscal quarter ended September 30, 1996
filed on December 11, 1996.
4.8 Certificate of Vote of Directors Establishing a
Series of Preferred Stock determining the
relative rights and preferences of the Series B
Cumulative Convertible Preferred Stock, dated
January 16, 1997 - Exhibit 4.8 to Form 8- K
filed on February 14, 1997.
4.9 Stock Assignment and Assumption Agreement dated
as of December 13, 1996 by and among the
Company, PB Capital and ULLICO (filed as Exhibit
4.1 to the Schedule 13D filed by ULLICO on
December 16, 1996 and incorporated herein by
reference).
4.10 Stock Assignment and Assumption Agreement dated
as of January 17, 1997 by and among the Company,
RCBA and The Common Fund - Exhibit 4.10 to Form
8-K filed on February 14, 1997.
4.11 Voting Agreement dated as of January 17, 1997 by
and among PB Capital, David B. Perini, Perini
Memorial Foundation, David B. Perini
Testamentary Trust, Ronald N. Tutor, and
Tutor-Saliba Corporation - Exhibit 4.11 to Form
8-K filed on February 14, 1997.
13
<PAGE>
Part II. - Other Information (Continued)
4.12 Registration Rights Agreement dated as of
January 17, 1997 by and among the Company, PB
Capital and ULLICO - Exhibit 4.12 to Form 8-K
filed on February 14, 1997.
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
1997 Form 10-K, as filed.
10.3 Perini Corporation Amended and Restated
Construction Business Unit Incentive
Compensation Plan - Exhibit 10.3 to 1997 Form
10-K, as filed.
10.4 Management Agreement dated as of January 17,
1997 by and among the Company, Ronald N. Tutor
and Tutor-Saliba Corporation - Exhibit 10.16 to
Form 8-K filed on February 14, 1997.
10.5 Amended and Restated Credit Agreement dated as
of January 17, 1997 among Perini Corporation,
the Banks listed herein and Morgan Guaranty
Trust Company of New York, as Agent, and Fleet
National Bank, as Co- Agent - Exhibit 10.17 to
Form 10-K filed March 31, 1997.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Perini Corporation
Registrant
Date: August 13, 1998 /s/ Robert Band
Robert Band, Executive Vice President,
Chief Financial Officer
Date: August 13, 1998 /s/ Barry R. Blake
Barry R. Blake, Vice President
and Controller
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule containes summary financial information extracted from
Consolidated Balance Sheets as of June 30, 1998 and the Consolidated Statements
of Operations for the three months and six months ended June 30, 1998 as
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 47,846
<SECURITIES> 0
<RECEIVABLES> 109,830
<ALLOWANCES> 0
<INVENTORY> 17,257
<CURRENT-ASSETS> 271,719 <F1>
<PP&E> 27,538
<DEPRECIATION> (17,866)
<TOTAL-ASSETS> 383,664 <F2>
<CURRENT-LIABILITIES> 222,880
<BONDS> 66,434
31,605
100
<COMMON> 5,506
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 383,664 <F3>
<SALES> 0
<TOTAL-REVENUES> 507,593
<CGS> 0
<TOTAL-COSTS> 482,767
<OTHER-EXPENSES> (438)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,301)
<INCOME-PRETAX> 5,723 <F4>
<INCOME-TAX> 390
<INCOME-CONTINUING> 5,333
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,333
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
<FN>
<F1> Includes Equity in Construction Joint Ventures of $70,160, Unbilled Work of
$20,728, and Other Short-Term Assets of $5,898, not currently reflected in
this tag list.
<F2> Includes investments in and advances to Real Estate Joint Ventures of
$84,779, Land Held for Sale or Development of $13,383, and Other Long-Term
Assets of $4,111, not currently reflected in this tag list.
<F3> Includes Deferred Income Taxes and Other Liabilities of $14,565, Minority
Interest of $1,064, Paid-In Surplus of $52,216, Retained Deficit of
$(9,961), ESOT Related Obligations of $(1,501), Treasury Stock of $(1,477),
and Stock Purchase Warrants of $2,233.
<F4> Includes General, Administrative and Selling Expenses of $(14,364), not
currently reflected on this tag list.
</FN>
</TABLE>
