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, 1999
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 11, 1999:
5,680,485
Page 1 of 17
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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, 1999 and December 31, 1998
Consolidated Condensed Statements of Income - 4
Three Months ended March 31, 1999 and 1998
Consolidated Condensed Statements of Cash Flows - 5
Three Months ended March 31, 1999 and 1998
Notes to Consolidated Condensed Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of the Consolidated 8 - 11
Financial Condition and Results of Operations
Part II. - Other Information:
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12 - 16
Signatures 17
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2
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<TABLE>
<CAPTION>
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, 1999 AND DECEMBER 31, 1998
(In Thousands)
ASSETS
MARCH 31, DEC. 31,
1999 1998
-------------- -------------
<S> <C> <C>
Cash $ 22,611 $ 46,507
Accounts and Notes Receivable 138,308 113,855
Unbilled Work 20,115 19,585
Construction Joint Ventures 71,695 67,100
Real Estate Inventory, at the lower of cost or market 10,837 10,069
Deferred Tax Assets 1,076 1,076
Other Current Assets 3,752 1,332
-------------- -------------
Total Current Assets $ 268,394 $ 259,524
-------------- -------------
Land Held for Sale or Development $ 13,530 $ 15,541
Investments in and Advances to Real Estate Joint Ventures 89,641 89,499
-------------- -------------
Total Real Estate Development Investments $ 103,171 $ 105,040
-------------- -------------
Other Assets $ 4,194 $ 4,169
-------------- -------------
Property and Equipment, less Accumulated Depreciation of $16,678 in 1999 and
$16,378 in 1998 $ 9,872 $ 9,858
-------------- -------------
$ 385,631 $ 378,591
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Maturities of Long-Term Debt $ 15,153 $ 2,956
Accounts Payable 115,916 127,774
Advances from Construction Joint Ventures 13,344 17,300
Deferred Contract Revenue 17,570 14,350
Accrued Expenses 37,761 39,479
-------------- -------------
Total Current Liabilities $ 199,744 $ 201,859
-------------- -------------
Deferred Income Taxes and Other Liabilities $ 17,124 $ 15,713
-------------- -------------
Long-Term Debt, less current maturities included above $ 80,292 $ 75,857
-------------- -------------
Minority Interest $ 1,064 $ 1,064
-------------- -------------
Redeemable Convertible Series B Preferred Stock $ 34,542 $ 33,540
-------------- -------------
Stockholder's Equity:
Preferred Stock $ 100 $ 100
Series A Junior Participating Preferred Stock --- ---
Stock Purchase Warrants 2,233 2,233
Common Stock 5,506 5,506
Paid-In Surplus 47,357 49,219
Retained Earnings (1,218) (3,642)
ESOT Related Obligations (120) (1,381)
-------------- -------------
$ 53,858 $ 52,035
Less - Treasury Stock 993 1,477
-------------- -------------
Total Stockholders' Equity $ 52,865 $ 50,558
-------------- -------------
$ 385,631 $ 378,591
============== =============
</TABLE>
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 INCOME (UNAUDITED)
(In Thousands, Except Per Share Data)
THREE MONTHS
ENDED MARCH 31,
1999 1998
--------------- ----------------
<S> <C> <C>
REVENUES FROM OPERATIONS (Note 6):
Construction $ 251,819 $ 219,202
Real Estate 4,732 10,180
--------------- ----------------
TOTAL REVENUES FROM OPERATIONS $ 256,551 $ 229,382
--------------- ----------------
COST AND EXPENSES:
Cost of Operations $ 245,551 $ 216,914
General, Administrative and Selling Expenses 6,375 6,944
--------------- ----------------
$ 251,926 $ 223,858
--------------- ----------------
INCOME FROM OPERATIONS (Note 6) $ 4,625 $ 5,524
Other Income (Expense), Net (408) (333)
Interest Expense (1,593) (2,782)
--------------- ----------------
Income before Income Taxes $ 2,624 $ 2,409
Provision for Income Taxes (Note 3) 200 190
--------------- ----------------
NET INCOME $ 2,424 $ 2,219
=============== ================
BASIC AND DILUTED EARNINGS PER COMMON SHARE (Note 4) $ 0.16 $ 0.15
=============== ================
DIVIDENDS PER COMMON SHARE (Note 5) $ --- $ ---
=============== ================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 4) 5,436,419 5,161,394
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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<TABLE>
<CAPTION>
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(In Thousands)
THREE MONTHS
ENDED MARCH 31,
1999 1998
------------- ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 2,424 $ 2,219
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization 764 548
Noncurrent deferred taxes and other liabilities 1,411 398
Distributions greater (less) than earnings of joint ventures and affiliates 1,867 (1,522)
Cash provided from (used by) changes in components of working capital other
than cash and current maturities of long-term debt (42,196) (18,015)
Real estate development investments other than joint ventures 1,115 6,133
Other non-cash items, net --- (891)
------------- ------------
NET CASH USED BY OPERATING ACTIVITIES $ (34,615) $ (11,130)
------------- ------------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 36 $ 221
Cash distributions of capital from unconsolidated joint ventures 450 2,700
Acquisition of property and equipment (429) (227)
Improvements to land held for sale or development (3) (126)
Capital contributions to unconsolidated joint ventures (7,180) (747)
Advances (to) from real estate joint ventures, net 75 (1,500)
Investments in other activities (223) 179
------------- ------------
NET CASH PROVIDED FROM (USED BY) INVESTING ACTIVITIES $ (7,274) $ 500
------------- ------------
Cash Flows from Financing Activities:
Proceeds of long-term debt $ 17,838 $ 3,162
Repayment of long-term debt --- (5,108)
Treasury Stock issued 155 151
------------- ------------
NET CASH PROVIDED FROM (USED BY) FINANCING ACTIVITIES $ 17,993 $ (1,795)
------------- ------------
Net Increase (Decrease) in Cash $ (23,896) $ (12,425)
Cash at Beginning of Year 46,507 31,305
------------- ------------
Cash at End of Period $ 22,611 $ 18,880
============= ============
Supplemental Disclosures of Cash paid during the period for:
Interest $ 1,945 $ 2,288
============= ============
Income tax payments $ 47 $ 167
============= ============
Supplemental Disclosures of Non-cash Transactions:
Dividends paid in shares of Series B Preferred Stock (Note 4) $ 907 $ 822
============= ============
</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) 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, 1998. 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, 1999 and results of
operations and cash flows for the three month periods ended March 31,
1999 and 1998. The results of operations for the three month period
ended March 31, 1999 may not be indicative of the results that may be
expected for the year ending December 31, 1999 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.
(2) 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, 1998. The Company has made no significant
change in these policies during 1999.
(3) Provision For Income Taxes
The lower-than-normal tax rate in 1999 and 1998 reflects the realization
of a portion of the tax benefit not recognized in prior years due to
certain accounting limitations.
(4) Per Share Data
Computations of basic and diluted earnings per common share 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, except per share
amounts):
<TABLE>
1999 1998
--------------- ----------------
<S> <C> <C>
Net Income $ 2,424 $ 2,219
--------------- ----------------
Less:
- Accrued dividends on $21.25 Senior Preferred Stock $ (531) $ (531)
- Dividends declared on Series B Preferred Stock (907) (822)
- Accretion deduction required to reinstate mandatory
redemption value of Series B Preferred Stock over a
period of 8-10 years (95) (91)
--------------- ----------------
$ (1,533) $ (1,444)
=============== ================
Earnings available for Common Stockholders $ 891 $ 775
=============== ================
Weighted average shares outstanding 5,436 5,161
--------------- ----------------
Basic and diluted earnings per Common Share $ 0.16 $ 0.15
=============== ================
</TABLE>
6
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PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(4) Per Share Data (continued)
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 Senior Preferred Stock, Series B Preferred
Stock and Stock Purchase Warrants into common stock.
(5) 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 $7,437,000 at March 31,
1999 which represents approximately $74.37 per share of Preferred Stock
or approximately $7.44 per Depositary Share and is included in "Other
Liabilities" (long-term) in the accompanying Consolidated Condensed
Balance Sheet. Under the terms of the Preferred Stock, the holders of
the Depositary Shares were entitled to elect two additional Directors
since dividends had been deferred for more than six quarters and they
did so at the May 14, 1998 Annual Meeting.
Quarterly In-kind dividends (based on an annual rate of 10%) were paid
on March 15, 1999 on the Series B Preferred Stock to the stockholders of
record on March 1, 1999. The dividend was paid in the form of
approximately 4,534 additional shares of Series B Preferred Stock valued
at $200.00 per share for a total of $906,783.
(6) Business Segments
The following tables set forth certain updated business segment
information relating to the Company's operations for the three months
ended March 31, 1999 and 1998 (in thousands):
<TABLE>
1999: Reportable Segments
----------------------------------------------------
Real Consolidated
Building Civil Estate Totals Corporate Totals
---------- --------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $182,965 $ 68,854 $ 4,732 $256,551 $ - $256,551
Income (Loss) from Ops. $ 4,622 $ 1,971 $ (272) $ 6,321 $ (1,696)* $ 4,625
Assets $140,082 $104,885 $115,293 $360,260 $ 25,371 $385,631
1998: Reportable Segments
----------------------------------------------------
Real Consolidated
Building Civil Estate Totals Corporate Totals
---------- --------- ---------- ---------- ----------- ------------
Revenues $156,160 $ 63,042 $ 10,180 $229,382 $ - $229,382
Income (Loss) from Ops. $ 4,760 $ 2,825 $ (262) $ 7,323 $ (1,799)* $ 5,524
Assets $148,006 $108,971 $114,597 $371,574 $ 21,770 $393,344
</TABLE>
* In all periods, consists of corporate general and administrative
expenses.
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
Results of Operations
- ---------------------
Comparison of the First Quarter of 1999 with the First Quarter of 1998
Revenues increased $27.2 million (or 11.9%), from $229.4 in 1998 to $256.6
million in 1999. This increase resulted from increased construction revenues of
$32.7 million (or 14.9%), from $219.2 million in 1998 to $251.9 million in 1999,
due primarily to an increase in building construction operations of $26.8
million or (17.2%), from $156.2 million in 1998 to $183.0 million in 1999, and
to a lesser degree, an increase in revenues from civil operations of $5.9
million (or 9.4%), from $63.0 million in 1998 to $68.9 million in 1999.
Increased building construction revenues were due primarily to the start-up of
several new fast-track hotel/casino projects by the Company's western building
operations which was partially offset by a decrease in revenues from
correctional facilities projects in the Northeast that have been completed.
Increased civil construction revenues were due primarily to the favorable impact
of several large infrastructure projects in the Northeast. The decline of real
estate revenues of $5.5 million, from $10.2 million in 1998 to $4.7 million in
1999 is due to non-recurring revenues related to the 1998 sale of two buildings
in Massachusetts.
In spite of the increase in total revenues described above, income from
operations of the Company's business segments decreased by $1.0 million, from
$7.3 million in 1998 to $6.3 million in 1999 - see Note 6. The decrease was
primarily due to a $0.8 million decrease in operating income from civil
operations, from $2.8 million in 1998 to $2.0 million in 1999, that resulted
from a lower average margin on the civil construction backlog going into 1999.
Although revenues from building construction operations increased by over 17%
during the quarter, income from operations decreased slightly to $4.6 million in
1999 from $4.8 million in 1998 because of the favorable close out of certain
contracts during the first quarter of 1998. The operating loss from real estate
remained constant at approximately $0.3 million during both periods.
Interest expense decreased by $1.2 million, from $2.8 million in 1998 to $1.6
million in 1999 due primarily to a reduction in the average amount borrowed
under the Company's Revolving Credit Agreement.
The lower than normal tax rate in 1999 and 1998 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.
Financial Condition
- -------------------
Working capital increased $11.0 million, from $57.7 million at the end of 1998
to $68.7 million at March 31, 1999. The current ratio increased from 1.29:1 to
1.34:1 during this same period.
During the first three months of 1999, the Company used $23.9 million in cash
and $18.0 million of additional borrowings under the Company's Revolving Credit
Agreement to fund $34.6 million used by operating activities, primarily for
changes in working capital, and $7.3 million for investing activities, primarily
to fund construction joint ventures.
Long-term debt at March 31, 1999 was $80.3 million, an increase of $4.4 million
from December 31, 1998. The long-term debt to equity ratio at March 31, 1999 of
1.52 to 1 approximated the 1.50 to 1 at December 31, 1998.
Effective March 23, 1999, the Company finalized certain changes to its Revolving
Credit Agreement with its Bank Group, including extending the Revolving Credit
Agreement from January 3, 2000 to January 3, 2001. Other changes to the
Revolving Credit Agreement include, among other things, a scheduled
8
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Continued)
mandatory reduction in the maximum commitment of $20.0 million in 1999 and $15.0
million in 2000, with the balance in 2001, additional permanent mandatory
reductions, as defined, from the net proceeds from real estate sales, an
interest rate increase of 1/2 of 1% in 1999 and an additional 1/4 of 1% increase
in 2000, and a one-time bank fee of $483,000. At March 31, 1999, the Company had
$7.3 million available to borrow under its $96.0 million Revolving Credit
Agreement. Management believes that cash generated from operations, existing
credit lines and additional borrowings should be adequate to meet the Company's
funding requirements for at least the next twelve months.
Outlook
- -------
o 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, whether as a
result of new information, future events or otherwise.
o Operations - Looking ahead, we must consider the Company's construction
backlog and remaining portfolio of real estate projects. The overall
construction backlog at March 31, 1999 was at $1.029 billion, a 16.5%
decrease from the backlog at December 31, 1998, which primarily reflects
the timing in finalizing certain construction contracts currently under
negotiations. Project awards with a combined value in excess of $700
million are currently pending, including the previously announced
construction management services contract for the $650 million Mohegan
Sun Phase II Expansion Project in Uncasville, CT. While approximately
40% of the current backlog relates to building construction projects
which generally represent lower risk, lower margin work, approximately
60% of the current backlog relates to heavy construction projects which
generally represent higher risk, but correspondingly higher margin work.
Since several of the remaining real estate projects have been written
down to net realizable value in the past, future gross profit from real
estate sales will be minimal.
o Rincon Center - As previously reported in Note 11 of the December 31,
1998 Consolidated Financial Statements included in the Company's 1998
Form 10-K, the Company's Real Estate subsidiary, Perini Land and
Development Company ("PL&D"), the managing general partner of Rincon
Center Associates ("RCA"), has reached a nonbinding agreement with the
lenders and lessor in Rincon Center, a mixed-use property in San
Francisco, subject to final documentation and final approval of several
parties, with regard to restructuring certain financial obligations and
ownership interests. While the process of completing further
documentation and obtaining final approval by the various parties
involved is 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 and the $14 million loan on Rincon II has matured,
the lenders have deferred enforcement of any remedies pending completion
of the restructuring agreement. It continues to be the opinion of
management that the final documentation 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.
9
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Continued)
- On September 10, 1998 the Company through Spear Land
LLC ("Spear"), a newly formed affiliated company, entered into
an agreement with the U.S. Postal Service to acquire the land,
including certain ground leases ("the land") under Rincon
Center, subject to the Company obtaining the necessary financing
and approvals. Effective March 30, 1999, Spear assigned the
agreement to an affiliate of the Blackstone Group ("Blackstone")
that purchased the land on that date. Although Spear has no
rights with respect to the management or operations related to
the land, Spear does have a residual interest in the future net
proceeds, if any, from any sale or refinancing after Blackstone
has received a return of its invested capital and a return on
its invested capital resulting in a 12% internal rate of return.
- In connection with the above transactions (the
restructuring of Rincon Center and the purchase of the related
land from the U.S. Postal Service), the Company and PL&D are
involved in litigation with Pacific Gateway Properties (PL&D's
co-general partner in RCA). The Company does not anticipate that
this litigation will materially impact the Rincon restructuring.
o Year 2000 Readiness Disclosures - 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, 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 cost of these new systems,
including the hardware, software and implementation costs, approximated
$1.5 million which was capitalized and is being amortized over ten years
on a straight-line basis.
The Company recognizes the Year 2000 issue could be an overall business
problem, not just a technical problem. Therefore, it established a Year
2000 Committee early in 1998 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, non-information
technology systems such as those of its facilities and equipment, along
with relationships with third parties, such as our customers, vendors,
subcontractors, joint ventures, 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. During the third
quarter of 1998, the Committee, which included both the Company's
Chairman and CEO, designated the Year 2000 Project Manager. The Project
Manager has organized a Year 2000 Team, consisting of specific
individuals assigned from each operating unit and each corporate
department. In addition, the Company developed, published and commenced
implementation of its Year 2000 Readiness Plan which has as its overall
objective "to eliminate or minimize the potential internal and external
impact of the Year 2000 issue on the normal business operations of the
Company, its subsidiaries, and joint ventures in a timely and cost
effective manner". In addition to addressing its own computer
applications, facilities, and construction equipment, the Plan includes
communication with critical third parties as stated above.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Continued)
The Year 2000 Plan includes the following phases: (1) potential problem
identification, (2) resource commitment, (3) inventory, (4) assessment,
(5) prioritization, (6) remediation and (7) testing. While the Company
completed the problem identification, resource commitment and
prioritization phases during 1998, and inventory phase during the first
quarter of 1999, it is currently in various stages of the "assessment",
"testing", and "remediation" phases as of March 31, 1999. As part of the
Plan, the Company is evaluating alternative solutions and developing
contingency plans for handling certain critical areas in the event
remediation is unsuccessful. Completion of the Year 2000 Plan, including
final testing and development of final contingency plans, is currently
on schedule and should be completed by its October 1999 targeted
completion date. The Company currently estimates that costs related to
the Year 2000 Plan, over and above the cost of the new financial systems
referred to above, will approximate $0.3 million which are being
expensed currently.
The Company, as a general contractor, generally provides its
construction services in accordance with detailed contracts and
specifications provided by its clients. Also, the Company recently
installed all new mission critical financial system software on new
hardware, all of which are Year 2000 compliant. In light of the above,
the Company has defined its most reasonable likely worse case scenario
at this stage of implementing its Year 2000 Plan to include last minute
inquiries and requests for assistance in determining Year 2000
compliance by some limited number of clients who have not properly
prepared for this event. In addition, the possible filing of frivolous
lawsuits against the Company, among others, by a party or parties that
claim they were adversely impacted by a Year 2000 issue related to one
of the many projects with which the Company was associated is also a
concern. The Company currently plans to have a Year 2000 Urgent Response
Team defined and available to respond to last minute Year 2000 issues
raised by clients or others in a timely, proactive and cost effective
manner. In addition, the Company currently plans to develop prepackaged
legal defenses in advance assuming various types of complaints.
11
<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 March 1999 for a total arrearage of $74.37 per share (or
$7.44 per depositary share) which aggregates $7,437,000 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 - None
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.
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.
12
<PAGE>
Part II. - Other Information (Continued)
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.
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.
13
<PAGE>
Part II. - Other Information (Continued)
10.2 Perini Corporation Amended and Restated General
Incentive Compensation Plan - Exhibit 10.2 to
1997 Form 10-K filed on March 30, 1998.
10.3 Perini Corporation Amended and Restated
Construction Business Unit Incentive
Compensation Plan - Exhibit 10.3 to 1997 Form
10-K filed on March 30, 1998.
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.
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 - Exhibit 10.5 to 1995 Form 10-K, as
filed.
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 - Exhibit 10.6 to 1995 Form 10-K, as
filed.
10.7 Amendment No. 2 as of July 30, 1996 to the
Credit Agreement dated as of December 6, 1994
and Amendment No. 1 as of July 30, 1996 to the
Bridge Credit Agreement dated February 26, 1996
among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.7 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.8 Amendment No. 2 as of September 30, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.8 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.9 Amendment No. 3 as of October 2, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.9 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.10 Amendment No. 4 as of October 15, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.10 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
14
<PAGE>
Part II. - Other Information (Continued)
10.11 Amendment No. 5 as of October 21, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.11 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.12 Amendment No. 6 as of October 24, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.12 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.13 Amendment No. 7 as of November 1, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 among Perini Corporation, the Banks listed
herein, Morgan Guaranty Trust Company of New
York, as Agent, and Fleet National Bank of
Massachusetts, as Co-Agent - Exhibit 10.13 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.14 Amendment No. 8 as of November 4, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 and Amendment No. 3 as of November 4, 1996
to the Credit Agreement dated 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, as Co-Agent - Exhibit 10.14 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.15 Amendment No. 9 as of November 12, 1996 to the
Bridge Credit Agreement dated as of February 26,
1996 and Amendment No. 4 as of November 12, 1996
to the Credit Agreement dated 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, as Co-Agent - Exhibit 10.15 to
Perini Corporation's Form 10-Q/A for the fiscal
quarter ended September 30, 1996 filed on
December 11, 1996.
10.16 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.
10.17 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
1996 Form 10-K - as filed.
10.18 Amendment No. 1 as of November 10, 1997 to the
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 10.18 to
1998 Form 10-K - as filed.
15
<PAGE>
Part II. - Other Information (Continued)
10.19 Amendment No. 2 as of August 31, 1998 to the
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 10.19 to
1998 Form 10-K - as filed.
10.20 Amendment No. 3 as of September 9, 1998 to the
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 10.20 to
1998 Form 10-K - as filed.
10.21 Amendment No. 4 as of September 30, 1998 to the
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 10.21 to
1998 Form 10-K - as filed.
10.22 Amendment No. 5 as of November 16, 1998 to the
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 10.22 to
1998 Form 10-K - as filed.
10.23 Amendment No. 6 as of December 1, 1998 to the
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 10.23 to
1998 Form 10-K - as filed.
10.24 Amendment No. 7 as of March 23, 1999 to the
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 - filed herewith.
(b) Reports on Form 8-K - None.
16
<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: May 14, 1999 /s/ Robert Band
---------------
Robert Band, Executive Vice President,
Chief Financial Officer
Date: May 14, 1999 /s/ Barry R. Blake
------------------
Barry R. Blake, Vice President and
Controller
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Balance Sheets as of March 31, 1999 and the Consolidated Statements of
Operations for the three months ended March 31, 1999 as qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 22,611
<SECURITIES> 0
<RECEIVABLES> 138,308
<ALLOWANCES> 0
<INVENTORY> 10,837
<CURRENT-ASSETS> 268,394 <F1>
<PP&E> 26,550
<DEPRECIATION> 16,678
<TOTAL-ASSETS> 385,631 <F2>
<CURRENT-LIABILITIES> 199,744
<BONDS> 80,292
100
0
<COMMON> 5,506
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 385,631 <F3>
<SALES> 0
<TOTAL-REVENUES> 256,551
<CGS> 0
<TOTAL-COSTS> (245,551)
<OTHER-EXPENSES> (408)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,593)
<INCOME-PRETAX> 2,624 <F4>
<INCOME-TAX> (200)
<INCOME-CONTINUING> 2,424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,424
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
<FN>
<F1> Includes Equity in Construction Joint Ventures of $71,695, Unbilled Work
of $20,115, and Other Short-Term Assets of $4,828, not currently
reflected in this tag list.
<F2> Includes investments in and advances to Real Estate Joint Ventures of
$89,641, Land Held for Sale or Development of $13,530, and Other
Long-Term Assets of $4,194, not currently reflected in this tag list.
<F3> Includes Deferred Income Taxes and Other Liabilities of $17,124,
Minority Interest of $1,064, Redeemable Series B Preferred Stock
$34,542, Stock Purchase Warrants $2,233, Paid-In Surplus of $47,357,
Retained Deficit of $1,218, ESOT Related Obligations of $(120), and
Treasury Stock of $(993).
<F4> Includes General, Administrative and Selling Expenses of $6,375 not
currently refelected on this tag list.
</FN>
</TABLE>
Exhibit 10.24
AMENDMENT NO. 7 TO CREDIT AGREEMENT
AMENDMENT NO. 7 dated as of March 23, 1999 among PERINI CORPORATION (the
"Borrower"), the BANKS listed on the signature pages hereof (collectively, the
"Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Agent are parties to an Amended
and Restated Credit Agreement dated as of January 17, 1997 (as heretofore
amended, the "Credit Agreement");
WHEREAS, the Borrower has requested an extention of the Termination Date
for the Tranche A Commitments until the first Domestic Business Day of January,
2001, and certain other amendments to the Credit Agreement;
WHEREAS, the amount of each Bank's Tranche B commitment has previously
been reduced to zero, and shall remain at zero hereafter; and
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other similar
reference contained in the Credit Agreement shall from and after the date hereof
refer to the Credit Agreement as amended hereby.
SECTION 2. Amendments to Definitions. Section 1.01 of the Credit
Agreement is amended as follows:
(a) The definition of "Applicable Base Rate Margin" is amended and
restated in its entirety to read as follows:
1
<PAGE>
Exhibit 10.24
"Applicable Base Rate Margin" means 1.75%.
(b) The definition of "Applicable Euro-Dollar Margin" is amended and
restated in its entirety to read as follows:
"Applicable Euro-Dollar Margin" means (i) prior to the
first Domestic Business Day of January, 2000, 2.75% and
(ii) thereafter, 3.00%
(c) The definition of "Asset Sale Letter" is amended and restated in
its entirety to read as follows:
"Asset Sale Letter" means (i) for purposes of any
Disposition of an asset from the Effective Date until
the Amendment No. 7 Effective Date, a letter from the
Borrower to the Banks and the Agent listing certain
potential asset sales, which letter shall be in form and
substance satisfactory to each Bank and which letter
shall have been delivered to the Banks and the Agent not
less than five Domestic Business Days prior to the
Effective Date; or (ii) for purposes of any Disposition
of an asset on or after the Amendment No. 7 Effective
Date, the chart identified as the "Revised 'Asset Sale
Letter'" distributed by the Borrower to the Banks and
the Agent on March 22, 1999.
(d) The definition of "Commitment Reduction Date" is amended by
deleting "and September 1999" and inserting in lieu thereof ",
September 1999, December 1999, March 2000, June 2000, September
2000 and December 2000".
(e) The definition of "Disposition" is amended and restated in its
entirety to read as follows:
"Disposition" means any sale, conveyance, lease,
granting of any Lien, exchange, assignment, Casualty,
Condemnation or other transfer and to "Dispose" means to
sell, convey, lease, exchange, assign, suffer a Casualty
or Condemnation or to otherwise transfer, in each case
(i) whether voluntary or involuntary, (ii) whether
direct or indirect and (iii) including any agreement
providing for a Disposition or granting any right or
option providing for a Disposition.
(f) The definition of "Net Proceeds" is amended by deleting the text
that follows the clause "and including all Awards (as defined in
any Mortgage) received in respect of any Condemnation," and
inserting in its place the following text:
2
<PAGE>
Exhibit 10.24
", less (without duplication) reasonable out-of-pocket
fees, commissions and other transaction expenses paid or
payable by the Borrower or such Subsidiary to
unaffiliated third parties in connection with such
Disposition, all senior mortgage debt owed to
unaffiliated third parties and required to be repaid at
the time of such Disposition and any property taxes paid
or payable (as estimated by a financial officer of the
Borrower in good faith) in respect thereof; provided
that with respect to any Disposition by a Subsidiary
that is not 100%-owned (directly or indirectly) by the
Borrower (a "Joint Venture"), the term "Net Proceeds"
shall be the product of the amount determined as set
forth above in this definition, multiplied by the
greater of (i) the aggregate percentage ownership
interest that the Borrower, directly or indirectly,
holds in such Joint Venture and (ii) the aggregate
percentage of such Net Proceeds that the Borrower and
its 100%-owned (directly or indirectly) Subsidiaries
would be entitled to receive if such Joint Venture were
to immediately distribute all of such Net Proceeds to
the partners, joint venturers or other holders of
interests in such Joint Venture, determined in
accordance with the applicable partnership agreement,
joint venture agreement or other governing document."
(g) The definition of "Perini International" is amended and restated
in its entirety to read as follows:
"Perini International" means Perini Management Services,
Inc., a Massachusetts corporation formerly named Perini
International Corporation.
(h) The definition of "Termination Date" is amended by deleting
"January, 2000" and inserting in lieu thereof "January, 2001".
(i) The definition of "Tranche B Commitment" is amended by adding
the following sentence at the end thereof:
"The aggregate amount of the Tranche B Commitment of
each Bank on and after the Amendment No. 7 Effective
Date shall be zero."
(j) The following new definitions are inserted, in appropriate
alphabetical order:
"Amendment No. 7 Effective Date" means the date when
Amendment No. 7 to Credit Agreement dated as of March
23, 1999 becomes effective in accordance with its terms.
3
<PAGE>
Exhibit 10.24
"Harris Bank LC" means the letter of credit listed on
Schedule 1.01 issued by Harris Trust & Savings Bank to
State Street Bank and Trust Company, as Trustee, as the
same may be amended from time to time.
"Rincon Restructuring" means the restructuring, with the
prior written consent of the Required Banks, of the
payment and other obligations under the Rincon
Agreements of the Borrower, Rincon Center Associates and
any other Subsidiaries of the Borrower party thereto,
substantially as contemplated by the "Rincon I
Deed-In-Lieu Term Sheet" dated October 23, 1998 and the
"Rincon II Term Sheet" dated October 23, 1998 or
pursuant to such other terms and conditions as shall be
acceptable to the parties thereto and the Required
Banks, with the result that any and all defaults and/or
events of default existing under any Rincon Agreement at
any time prior to such restructuring shall have been
waived or cured or otherwise ceased to exist.
SECTION 3. Amendment to Letters of Credit Provisions.
(a) Section 2.16(a) of the Credit Agreement is amended as follows:
(i) Clause (ii) is amended and restated in its entirety to
read as follows:
"(ii) the aggregate amount of the Letter of Credit
Liabilities for all Performance Letters of Credit shall
not exceed $5,000,000".
(ii) The following proviso is inserted at the end of the
third sentence:
", and provided further that no Letter of Credit shall
be issued to replace, in whole or in part, directly or
indirectly, the Harris Bank LC".
(b) Section 2.16(c) of the Credit Agreement is amended by amending
and restating the first sentence thereof in its entirety to read
as follows:
"The Borrower shall pay to the Agent a letter of credit
fee at a per annum rate equal to the Applicable
Euro-Dollar Margin multiplied by the aggregate amount
available for drawings under each Letter or Credit
issued from time to time, any such fee to be payable for
the account of the Banks ratably in proportion to their
respective Tranche A Commitment Percentages."
SECTION 4. Amendment to Scheduled Commitment Reductions. Section 2.10(b)
of the Credit Agreement is amended as follows:
4
<PAGE>
Exhibit 10.24
(a) The mandatory reductions of the Commitments in March, 1999,
June, 1999 and September, 1999 shown therein are deleted and the
following mandatory reductions of the Commitments are inserted
in lieu therof:
"March 1999 $0
June 1999 $2,500,000
September 1999 $5,000,000
December 1999 $12,500,000
March 2000 $0
June 2000 $2,500,000
September 2000 $5,000,000
December 2000 $7,500,000".
(b) The proviso therein is amended and restated in its entirety to
read as follows:
"provided that if the Commitments shall be reduced at any time
after the Amendment No. 7 Effective Date in accordance with
Section 2.09 or 2.10(c) such reductions shall be applied to
decrease the amounts set forth above, first for any such
reductions prior to the December, 1999 Commitment Reduction
Date, to decrease by a maximum of $5,000,000 the aggregate
amount of reduction in Commitments required on the December,
1999 Commitment Reduction Date, second to decrease the amount of
the reduction in Commitments required on the Termination Date,
and thereafter to decrease the required amount of reduction in
Commitment in reverse chronological order."
SECTION 5. Amendment to Mandatory Commitment Reductions From
Dispositions of Real Estate Investments and Other Property. Section 2.10(c) of
the Credit Agreement is amended as follows:
(a) Clause (i) is amended and restated in its entirety to read as
follows:
"(i) immediately upon receipt by the Borrower or any Subsidiary
at any time of any proceeds from any Disposition of any Real
Estate Investment or any other real property of the Borrower or
any Subsidiary (including without limitations any proceeds
received by the Borrower or any Subsidiary as consideration for
the granting of any right or option providing for a Disposition
but excluding operating receipts from Real Estate Investments),
by an amount equal to (x) 100% of the Net Proceeds realized by
the Borrower or any Subsidiary in respect thereof until the
aggregate amount of Net Proceeds realized by the Borrower and
its Subsidiaries in respect of all Dispositions of Real Estate
Investments and other real property after the Amendment No.7
Effective Date equals
5
<PAGE>
Exhibit 10.24
$5,000,000, (y) 50% of the Net Proceeds realized by the Borrower
or any Subsidiary in respect thereof to the extent that the
aggregate amount of Net Proceeds realized by the Borrower and
its Subsidiaries in respect of all Dispositions of Real Estate
Investments and other real property after the Amendment No. 7
Effective Date exceeds $5,000,000 but is less than $6,000,000,
and (z) 33-1/3% of the Net Proceeds realized by the Borrower or
any Subsidiary in respect thereof to the extent that the
aggregate amount of Net Proceeds realized by the Borrower and
its Subsidiaries in respect of all Dispositions of Real Estate
Investments and other real property after the Amendment No. 7
Effective Date is at least $6,000,000."
(b) Clause (ii) is amended by inserting at the beginning of the
parenthetical contained therin, immediately before the word
"excluding", the following phrase:
"including without limitation any proceeds received by the
Borrower or any Subsidiary as consideration for the granting of
any right or option providing for a Disposition but".
SECTION 6. Amendment to Permit Certain Derivatives Obligations. Section
5.02(b) of the Credit Agreement is amended and restated in its entirety to read
as follows:
"The Borrower will not, and will not permit any of its
Subsidiaries to, become a party to any Derivatives Obligation
other than interest rate swap, interest rate cap, interest rate
collar or other interest rate hedging transactions and/or any
foreign currency exchange or other currency hedging
transactions, but only if (x) each such transaction is with a
Bank or an Affiliate of a Bank, (y) each such transaction is
entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any of its Subsidiaries
is exposed in the conduct of its business or the management of
its liabilities, and (z) the aggregate notional amount of
obligations for which the interest rate or currency exposure is
hedged by all such transactions does not at any time exceed
$2,500,000."
SECTION 7. Amendment to Debt Covenant. Section 5.08(a)(vii) of the
Credit Agreement is amended by amending and restating subclause (x) in the
proviso thereof in its entirety to read as follows:
"(x) Modified Parent Company Debt shall not at any time exceed
$120,000,00".
SECTION 8. Amendment to Minimum Consolidated Adjusted Tangible Net Worth
Covenant. Section 5.09 of the Credit Agreement is amended by adding the
following at the end thereof:
6
<PAGE>
Exhibit 10.24
"March 31, 2000 $128,000,000
June 30, 2000 $132,000,000
September 30, 2000 $136,000,000
December 31, 2000 $140,000,000".
SECTION 9. Amendment to Minimum Operating Cash Flow Covenant. Section
5.10 is amended and restated in its entirety to read as follows:
"SECTION 5.10. Minimum Operating Cash Flow. The Borrower shall
not permit Operating Cash Flow to be less than $15,000,000 for
any of: (i) the period of four consecutive fiscal quarters
ending March 31, 1999, (ii) the period of five consecutive
fiscal quarters ending June 30, 1999 and (iii) the period of
four consecutive fiscal quarters endings September 30, 1999. The
Borrower shall not permit Operating Cash Flow to be less than
$20,000,000 for any period of four consecutive fiscal quarters,
beginning with the four consecutive fiscal quarters ending
December 31, 1999."
SECTION 10. Amendment to Asset Sale Covenant. Section 5.12(b) of the
Credit Agreement is amended as follows:
(a) The introductory phrase "The Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise
dispose of any of its or their assets, other than:" is changed
to "The Borrower will not, and will not permit any of its
Subsidiaries to, Dispose of any of its or their assets, other
than:"; and
(b) Clause (iii) is amended by amending and restating subclause (A)
therein in its entirety to read as follows:
"(A) a Disposition of any asset if the aggregate amount of the
fair market value of all Dispositions for which consent is not
provided during any fiscal year is less than $500,000 and the
Borrower delivers to each of the Banks prompt written notice of
each such Disposition or".
SECTION 11. Amendment to Restricted Payments Covenant. Section 5.14(c)
of the Credit Agreement is amended by deleting "$90,000,000" in clause (ii) and
inserting in lieu thereof "$75,000,000".
SECTION 12. Amendment to Real Estate Investments Convenant. Section 5.15
of the Credit Agreement is amended by deleting the maximum amount of Real Estate
Investments permitted during the fiscal year ended December 31, 1999 shown
therein and inserting the following maximum amounts of Real Estate Investments
in lieu thereof:
7
<PAGE>
Exhibit 10.24
"December 31, 1999 $6,000,000
December 31, 2000 $3,900,000".
SECTION 13. Amendment to Events of Default. Section 6.01 of the Credit
Agreement is amended by (i) deleting the word "or" at the end of subsection (m)
thereof, (ii) adding the word "or" at the end of subsection (n) thereof and
(iii) inserting the following new subsection (o):
"(o) the Rincon Restructuring shall not have become effective on
or before April 30, 1999, or the Borrower shall fail to perform
any of its obligations under Section 15 of the Amendment No. 7
to Credit Agreement within ten days after written notice thereof
has been given to the Borrower by the Agent at the request of
the Required Banks;".
SECTION 14. Amendment Fee. In consideration for this Amendment, the
Borrower agrees to pay the Agent, for the account of each Bank in proportion to
its aggregate Commitments, a fee equal to 0.50% of such Bank's aggregate
Commitments, of which one-half shall be payable no later than the Amendment No.
7 Effective Date and one-half shall be payable on the last Domestic Business Day
of May, 2000; provided that the Borrower shall not be required to pay the
portion of such fee payable on the last Domestic Business Day of May 2000 if
prior to such date all principal, interest, fees and other amounts outstanding
or payable under the Credit Agreement and all other Financing Documents shall
have been paid and all Letters of Credit and Commitments shall have expired or
been terminated. It shall be an Event of Default pursuant to Section 6.01(a) of
the Credit Agreement if the Borrower shall fail to pay any such amount when due.
SECTION 15. Restructuring of the Rincon Agreements.
(a) The Borrower agrees to pay the Agent, for the account of each
Bank in proportion to its aggregate Commitments, a fee equal to
$150,000 on the date when the Rincon Restructuring shall become
effective. This fee shall be payable whether or not the fee
required by Section 15(b) shall have become payable or been
paid.
(b) The Borrower agrees to pay the Agent, for the account of each
Bank in proportion to its aggregate Commitments, a fee equal to
$50,000 if the Rincon Restructuring does not become effective on
or before April 30, 1999.
(c) The Borrower shall hold a meeting for representatives of the
Banks during each month from April 1999 until the completion of
the Rincon Restructuring, at a time and place to be determined
by the Agent (after consultation with the Banks) on ten Domestic
Business Days' notice to the Borrower and the Banks, for the
purpose of discussing the status of the Rincon Restructuring
with such of the Borrower's officers,
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Exhibit 10.24
employees and advisors as the Borrower shall designate or as the
Agent shall designate at the reasonable request of any Bank.
SECTION 16. Consent to Amendment of Management Agreement. Each Bank
consents to an amendment of the Management Agreement to (a) extend the specified
date for termination of the Management Agreement until December 31, 999 and (b)
increase the number of shares issuable upon exercise of the options granted
thereunder from 150,000 shares of common stock to 225,000 shares.
SECTION 17. Consents to Amendments of Financing Documents. Each Bank
(a) consents to the amendments to the Collateral Documents and
Subsidiary Guarantee Agreement set forth in the Global Amendment
to Collateral Documents and Subsidiary Guarantee dated as of
March 23, 1999, substantially in the form of Exhibit A hereto
(the "Global Amendment");
(b) consents to the amendments to the Mortgages, in each case
substantially in the form of Exhibit B hereto (collectively, the
"New Mortgage Amendments");
(c) agrees that the Agent is authorized to execute and deliver the
Global Amendment and New Mortgage Amendments upon its receipt of
duly executed counterparts hereof signed by each Bank (or, in
the case of any Bank as to which an executed counterpart shall
not have been received, the Agent shall have received
telgraphic, telex or other written confirmation from such party
of execution of a counterpart hereof by such party).
SECTION 18. Representations and Warranties Correct; No Default.
(a) The Borrower and each Subsidiary Guarantor represents and
warrants that on and as of the date hereof, after giving effect
to this Amendment, (a) the representations and warranties of
each Obligor contained in each Financing Document, as amended,
to which it is a party are true and (b) no Default under the
Credit Agreement exists, other than a Default that arises by
reason of the defaults and/or "Events of Default" described in
the July 2, 1998 or October 2, 1998 letter from Citicorp Real
Estate, Inc. to Rincon Center Associates.
(b) Except as set forth in Schedule 18(b), the Borrower and each
Subsidiary Guarantor represents and warrants that on and as of
the date hereof, all of the information set forth in the
Perfection Certificates (as defined in the Borrower Security
Agreement or Subsidiary Security Agreement, as the case may be)
of the Borrower and each Subsidiary Guarantor is correct and
complete.
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Exhibit 10.24
SECTION 19. Effect of Amendments. Except as expressly set forth herein,
the amendments contained herein shall not constitute an amendment or waiver of
any term or condition of the Credit Agreement or of any other Financing
Document, and all such terms and conditions shall remain in full force and
effect and are hereby ratified and confirmed in all respects.
SECTION 20. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 21. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 22. Consent by Subsidiary Guarantors. By signing this Amendment
below, each Subsidiary Guarantor affirms its obligations under the Subsidiary
Guarantee Agreement and acknowledges that this Amendment shall not alter,
release, discharge or otherwise affect any of such obligations, all of which
shall remain in full force and effect and are hereby ratified and confirmed in
all respects.
SECTION 23. Effectiveness. This Amendment shall become effective as of
the date hereof when the Agent shall have received:
(a) dully executed counterparts hereof signed by the Borrower, each
Bank, the Agent and each Subsidiary Guarantor (or, in the case
of any party as to which an executed counterpart shall not have
been received, the Agent shall have received telegraphic, telex
or other written confirmation from such party of execution of a
counterpart hereof by such party);
(b) duly executed counterparts of the Global Amendment and New
Mortgage Amendments, in each cash signed by the parties thereto;
(c) for the account of each Bank in proportion to its aggregate
Commitments, the one-half of the restructuring fee payable under
Section 14;
(d) evidence satisfactory to the Agent that arrangements
satisfactory to it have been made for recording of the New
Mortgage Amendments;
(e) an endorsement to each title insurance policy delivered to the
Agent pursuant to the Credit Agreement insuring that the
coverage under such policy is unaffected by this Amendment and
the New Mortgage Amendments; and
(f) opinion or opinions of counsel for the Borrower, in form and
substance satisfactory to the Administrative Agent, covering
such matters relating
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Exhibit 10.24
to this Amendment and the transaction contemplated hereby as the
Administrative Agent or the Required Banks may reasonably
request.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the date first above
written.
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