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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1 TO FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended
MAY 31, 1997
Commission File Number 1-12054
MORRISON KNUDSEN CORPORATION
A Delaware Corporation
IRS Employer Identification No. 33-0565601
MORRISON KNUDSEN PLAZA, BOISE, IDAHO 83729
208 / 386-5000
At May 31, 1997, 54,038,927 shares of the registrant's $.01 par value common
stock were outstanding.
The registrant 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
has been subject to such filing requirements for the past 90 days.
/X/ Yes / / No
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This Amendment No. 1 on Form 10-Q/A (this "Amendment") amends Item 1 of the
Quarterly Report on Form 10-Q of Morrison Knudsen Corporation for the quarter
ended May 31, 1997 (the "Form 10-Q") to include parentheses to designate the
decrease in cash and cash equivalents for the six months ended May 31, 1996 in
the Condensed Consolidated Statements of Cash Flows. In accordance with Rule
12b-15 promulgated under the Securities Exchange Act of 1934, as amended, this
Amendment sets forth the complete text of Item 1 of the Form 10-Q, as amended.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Corporation has duly caused this Amendment to be signed on its
behalf by the undersigned thereunto duly authorized.
MORRISON KNUDSEN CORPORATION
/s/ Anthony S. Cleberg
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Executive Vice President and
Chief Financial Officer
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MORRISON KNUDSEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED MAY 31, 1997 AND 1996 (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
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THREE MONTHS ENDED SIX MONTHS ENDED
MAY 31, MAY 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenue $414,225 $82,693 $803,755 $144,699
Cost of revenue (395,019) (76,897) (766,445) (135,441)
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Gross profit 19,206 5,796 37,310 9,258
General and administrative expenses (5,881) (3,830) (11,386) (9,120)
Goodwill amortization (891) (105) (1,796) (210)
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Operating income (loss) 12,434 1,861 24,128 (72)
Investment income 1,435 740 3,485 1,607
Interest expense (218) (192) (475) (382)
Other income (expense), net (60) 73 (127) 116
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Income before income taxes 13,591 2,482 27,011 1,269
Income tax expense (6,172) (868) (12,588) (443)
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Net income $ 7,419 $ 1,614 $ 14,423 $ 826
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Income per share $.14 $.06 $.27 $.03
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Common shares used to compute income per share 53,917 29,482 53,875 29,482
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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MORRISON KNUDSEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AT MAY 31, 1997 (UNAUDITED) AND NOVEMBER 30, 1996
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
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ASSETS 1997 1996
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CURRENT ASSETS
Cash and cash equivalents $ 34,451 $ 48,310
Accounts receivable, including retentions of $37,275 in 1997
and $28,348 in 1996 196,628 222,341
Unbilled receivables 68,312 101,564
Refundable income taxes, net 11,209 10,806
Current portion of note receivable 3,000 3,000
Investments in and advances to construction joint ventures 35,897 24,538
Deferred income taxes 26,703 31,291
Other 12,474 17,399
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Total current assets 388,674 459,249
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INVESTMENTS AND OTHER ASSETS
Securities available for sale, at fair value 33,233 30,494
Investments in mining ventures 61,119 56,210
Assets held for sale 18,751 18,853
Cost in excess of net assets acquired, net of accumulated
amortization of $3,973 in 1997 and $2,177 in 1996 138,632 140,677
Note receivable, net of current portion 3,435 4,935
Deferred income taxes 26,930 31,555
Other 8,636 12,330
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Total investments and other assets 290,736 295,054
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PROPERTY AND EQUIPMENT, AT COST
Construction equipment 177,500 179,483
Land and improvements 7,110 7,110
Buildings and improvements 25,965 25,062
Equipment and fixtures 31,592 30,388
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Total property and equipment 242,167 242,043
LESS ACCUMULATED DEPRECIATION (161,335) (156,709)
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Property and equipment, net 80,832 85,334
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Total assets $760,242 $839,637
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
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CURRENT LIABILITIES
Accounts payable $ 45,196 $ 68,926
Subcontracts payable, including retentions of $20,598 in 1997
and $27,006 in 1996 46,496 75,036
Billings in excess of cost and estimated earnings on uncompleted contracts 44,035 49,626
Advances from customers 5,404 11,280
Estimated costs to complete long-term contracts 87,127 100,832
Accrued salaries, wages and benefits 48,231 49,136
Income taxes payable 2,209 8,255
Other accrued liabilities 25,667 37,513
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Total current liabilities 304,365 400,604
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NON-CURRENT LIABILITIES
Postretirement benefit obligation 53,829 53,433
Accrued workers' compensation 27,123 26,061
Pension and deferred compensation liabilities 19,718 20,563
Environmental remediation obligations 8,815 8,972
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Total non-current liabilities 109,485 109,029
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CONTINGENCIES AND COMMITMENTS (Note 5)
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REDEEMABLE PREFERRED STOCK, issued 1,799,984 shares of Series A 18,000 18,000
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STOCKHOLDERS' EQUITY
Preferred stock, 10,000,000 shares authorized,
1,799,984 redeemable shares of Series A issued and outstanding
Common stock, par value $.01 per share; authorized 100,000,000 shares;
issued 54,100,946 and 53,808,748 541 538
Capital in excess of par value 245,766 242,669
Stock purchase warrants 6,560 6,564
Retained earnings 76,250 61,827
Treasury stock, 62,019 shares, at cost (682) --
Unearned compensation - restricted stock (12) (19)
Cumulative translation adjustments (216) (154)
Net unrealized gain on securities available for sale 185 579
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Total stockholders' equity 328,392 312,004
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Total liabilities and stockholders' equity $760,242 $839,637
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MORRISON KNUDSEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MAY 31, 1997 AND 1996 (UNAUDITED)
(THOUSANDS OF DOLLARS)
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<CAPTION>
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,423 $ 826
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation of property and equipment 12,097 4,288
Amortization of goodwill 1,796 410
Deferred income taxes 8,384 --
Equity in net income of mining ventures, net of dividends received (4,740) --
Decrease in cash from changes in operating assets and liabilities (41,558) (7,544)
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Net cash used in operating activities (9,598) (2,020)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (6,740) (5,046)
Proceeds from disposals of property and equipment 2,308 2,160
Purchases of securities available for sale (5,676) --
Proceeds from sales of securities available for sale 2,511 --
Proceeds from collection of note receivable 1,500 --
Other investing activities (326) (45)
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Net cash used in investing activities (6,423) (2,931)
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CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt -- (219)
Proceeds from stock issued and other 2,162 (2)
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Cash provided (used) in financing activities 2,162 (221)
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Net decrease in cash and cash equivalents (13,859) (5,172)
Cash and cash equivalents at beginning of period 48,310 30,035
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Cash and cash equivalents at end of period $ 34,451 $24,863
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Supplemental disclosure of cash paid for:
Interest $ 475 $362
Income taxes 9,111 15
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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MORRISON KNUDSEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION: On September 11, 1996, the Corporation (then known as
Washington Construction Group, Inc.) acquired the net assets and the
engineering and construction, environmental response service and mining
service operations of Morrison Knudsen Corporation ("Old MK") in a business
combination accounted for as a purchase and changed its name to Morrison
Knudsen Corporation. The acquisition of Old MK was an integral part of the
reorganization of Old MK pursuant to a plan of reorganization filed by Old MK
in the United States Bankruptcy Court for the District of Delaware, which
Plan was confirmed by the Bankruptcy Court on August 26, 1996, and became
effective concurrently with the business combination on September 11, 1996.
The Corporation provides global (i) engineering and construction
management services to industrial companies, electric utilities and public
agencies, (ii) comprehensive environmental and hazardous substance
remediation services to governmental and private-sector clients, (iii)
diverse heavy construction services for the highway, airport, water resource,
railway and commercial building industries, and (iv) mine planning,
engineering and contract mining services.
BASIS OF PRESENTATION: The accompanying condensed consolidated financial
statements include the accounts of the Corporation and all of its
majority-owned subsidiaries. Investments in 20% to 50% owned companies and
all construction joint ventures and mining ventures are accounted for by the
equity method. The Corporation's proportionate share of construction joint
venture and mining venture revenue, cost of revenue and gross profit (loss)
is included in the consolidated statements of operations. Intercompany
accounts and transactions are eliminated.
The accompanying unaudited consolidated financial statements and
financial statement footnotes should be read in conjunction with the audited
consolidated financial statements and financial statement footnotes included
in the Corporation's Annual Report on Form 10-K for the year ended November
30, 1996. The comparative consolidated balance sheet and related disclosures
at November 30, 1996 have been derived from the audited balance sheet and
financial statement footnotes.
The preparation of the Corporation's consolidated financial statements in
conformity with generally accepted accounting principles necessarily requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the balance sheet dates and the reported amounts of revenue and cost
during the reporting periods. Actual results could differ in the near term
from those estimates.
The Corporation has a substantial history of making reasonably dependable
estimates of the extent of progress towards completion, contract revenue and
contract completion costs on its long-term contracts. However, due to
uncertainties inherent in the estimation process, it is at least reasonably
possible that actual contract completion costs may vary from estimates in the
near term.
The accompanying consolidated financial statements reflect all
adjustments, consisting of normal recurring adjustments, that in the opinion
of management are necessary to a fair presentation of the results of
operations and cash flows for the interim periods presented. The results of
operations for the six months ended May 31, 1997 are not necessarily
indicative of the operating results to be expected for the full year.
CLASSIFICATION OF CURRENT ASSETS AND LIABILITIES: The Corporation includes in
current assets and liabilities amounts realizable and payable under contracts
that extend beyond one year. Accounts receivable at May 31, 1997 included
approximately $3,850 of contract retentions that are not expected to be
collected within one year, and $10,891 of short-term marketable securities
jointly held with customers as contract retentions, the market values of
which approximated the carrying amounts.
PREACQUISITION CONTINGENCIES: The Corporation allocated the purchase price of
Old MK to the assets acquired and liabilities assumed, including preacquisition
contingencies, on the basis of estimated fair values at September 11, 1996 or,
as applicable, reasonable estimates of the preacquisition contingencies the
occurrence of which is considered to be probable. The effects of resolving
preacquisition contingencies within one year of the acquisition date are
reflected as an adjustment to the goodwill recorded at the acquisition date. The
effects of resolving preacquisition contingencies after one year from the
acquisition date will be recognized in the determination of net income.
Unresolved
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preacquisition contingencies at May 31, 1997, in connection with the
acquisition of Old MK on September 11, 1996, include long-term contract
obligations, claims for additional revenue, performance guarantees, letters
of credit, environmental liabilities, results of government audits and legal
proceedings.
RECLASSIFICATIONS: Certain reclassifications have been made in prior period
financial statements to conform to the 1997 presentation.
