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FORM 10 - K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from..........to..........
Commission file number 1-1228
STONE & WEBSTER, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 13-5416910
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 W. 34th Street, New York, N.Y. 10119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code -
(212) 290-7500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
Common Stock - $1 par New York Stock Exchange
Boston Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X . No_____.
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Form 10-K 1993 Stone & Webster, Incorporated
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date
within 60 days prior to the date of filing.
$430,000,000 approximately, based on the closing price on the New
York Stock Exchange Composite Transactions as of January 31, 1994.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable date.
Common Stock: 14,977,850 shares as of January 31, 1994.
The following documents, or portions thereof as indicated in the
following report, are incorporated by reference in the Parts of Form 10-
K indicated:
Part Document
III Proxy Statement in connection with the
registrant's 1994 Annual Meeting of
Stockholders
2
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Form 10-K 1993 Stone & Webster, Incorporated
PART I
Item 1. Business.
Registrant was incorporated as a Delaware corporation in
1929. Registrant, through its subsidiaries, is principally
engaged in providing professional engineering, construction and
consulting services. The Stone & Webster organization also owns
cold storage warehousing facilities in Atlanta and Rockmart,
Georgia; owns and operates the Stone & Webster office buildings in
Boston, Massachusetts, Cherry Hill, New Jersey, and Houston,
Texas; owns natural gas and oil production facilities in Texas,
Louisiana and the Province of Alberta, Canada; explores for
natural gas and oil in the United States and Canada; owns mineral
interests in the United States and Canada; owns and operates
natural gas gathering and transporting systems and compressor
stations in the Southwest; and is developing for rental or sale a
major corporate office and business center in Tampa, Florida.
Services of the nature inherent in these businesses are provided
to clients and customers.
The information relating to the business segments of the
registrant required by this Item is filed herewith under "Business
Segment Information" of the Financial Information section included
in Appendix A to this report. This information indicates the
amounts of gross earnings from sales to unaffiliated customers,
operating profit and identifiable assets attributable to the
registrant's industry segments for the three years ended December
31, 1993.
Engineering, Construction and Consulting Services
Registrant, through its subsidiaries, provides complete
engineering, design, construction and full environmental services
for petrochemical, refining, power, industrial, governmental,
transportation and civil works projects. It also constructs from
plans developed by others, makes engineering reports and business
examinations, undertakes consulting engineering work, and offers
information management and computer systems expertise to clients.
It also offers a full range of services in environmental
engineering and sciences, including complete execution of
environmental projects. It remains active in the nuclear power
business, for utility and governmental clients, and continues to
undertake a significant amount of modification and maintenance
work on existing nuclear power plants. In addition, it offers
advanced computer systems development services and products in the
areas of plant scheduling, information systems, systems
integration, computer-aided design, expert systems, and database
management. It also develops projects in the power and other
industries in which registrant or its subsidiaries may take an
ownership position and for which other subsidiaries may provide
engineering, construction, management and operation and
maintenance services. Comprehensive management consulting and
financial services are also furnished for business and industry,
3
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Form 10-K 1993 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Engineering, Construction and Consulting Services
(Cont'd.)
including public utility, transportation, pipeline, land
development, banking, petroleum and manufacturing companies and
government agencies, and appraisals are performed for industrial
companies and utilities.
Cold Storage Services
Modern public cold storage warehousing, blast-freeze and
other refrigeration and consolidation services are offered in the
Atlanta, Georgia metropolitan area to food processors and others
at three facilities with approximately 21.1 million cubic feet of
freezer and controlled temperature storage space, including a
facility in Rockmart, Georgia which has approximately 3.5 million
cubic feet of freezer and controlled temperature storage space.
Offices and processing areas are leased to customers.
Comprehensive freezer services are offered to customers. The
Rockmart site has sufficient land to allow for future expansion
and to make additional space available to food processors. In
addition, the facility features direct loading of product onto
distribution trucks from railroad cars delivered on two railroad
lines which serve the Rockmart plant.
Other
Building operating services are performed for office
buildings at 245 Summer Street and 51 Sleeper Street, Boston,
Massachusetts, and at 3 Executive Campus, Cherry Hill, New Jersey.
These buildings are occupied by subsidiaries of registrant or held
for rental to others. In addition, a new office building
occupied by subsidiaries of registrant is located at 1430 Enclave
Parkway, Houston, Texas. Building operating services are also
performed at this location.
Natural gas and oil production properties are owned and
operated in Texas; exploration for and development of natural gas
and oil properties are carried out in the United States and
Canada; interest in a natural gas and oil lease offshore Texas is
also owned; and working interests are held in natural gas and oil
properties in Texas and in western Canada. Natural gas gathering
and transporting systems are owned and operated in fee and in
partnership with others, and related services are provided, in
Texas, Louisiana and Oklahoma.
Since the latter part of 1988, contract drilling operations
which had been provided to oil and gas operators in the area
around Victoria, Texas had been suspended due to unfavorable
market conditions. During 1993, this operation was terminated and
the drilling rigs were sold.
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Form 10-K 1993 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Other (Cont'd.)
A large corporate office and business center is being
developed in Tampa, Florida. Commercial, industrial and other
properties are held for sale and for lease.
Competition
The principal business activities of registrant in the
engineering, construction and consulting services segment are
highly competitive, with competition from a large number of well-
established concerns, some privately held and others publicly
held. Inasmuch as registrant is primarily a service organization,
it competes in its areas of interest by providing services of the
highest quality. Registrant believes it occupies a strong
competitive position but is unable to estimate with reasonable
accuracy the number of its competitors and its competitive
position in the engineering, construction and consulting services
industry.
The business activities of registrant in the cold
storage services segment are performed in the Atlanta and
northwestern areas of Georgia. Competition in this market area
comes from a relatively small number of companies offering similar
types of services. Registrant's subsidiary competes in this field
by providing services of the highest quality, emphasizing
responsiveness to the needs of its customers and to the end
receiver of the customers' product. As part of that commitment,
it provides modern data processing and communication equipment for
its customers. Registrant believes it occupies a strong
competitive position in this area.
Backlog
Backlog figures for the registrant's engineering,
construction and consulting services segment are not considered to
be indicative of any trend in these activities nor material for an
understanding of its business. At any given date, the portion of
engineering and construction work to be completed within one year
can only be estimated subject to adjustments, which can in some
instances be substantial, based on a number of factors, and the
aggregate of such figures in relation to registrant's consolidated
earnings would be misleading. Backlog figures in the cold storage
industry are not necessarily meaningful because of the nature of
the food processing, storage and distribution system which
requires continual monitoring to preserve food quality.
5
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Form 10-K 1993 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Clients
Although registrant's subsidiaries in the engineering,
construction and consulting services segment have numerous clients
and registrant historically has not had a continuing dependence on
any single client, one or a few clients may contribute a
substantial portion of the registrant's consolidated gross
earnings in any one year or over a period of several consecutive
years due to the size of major engineering and construction
projects and the progress accomplished on those projects in that
year or period of consecutive years. The registrant's business is
not necessarily dependent upon sustaining, and the registrant does
not necessarily expect to sustain, in future years the level of
gross earnings contributed by a particular client in any given
year or period of consecutive years. Historically the registrant
has provided ongoing services to clients following completion of
major projects for them. Once the registrant or one of its
subsidiaries commences work on a particular project, it is
unlikely that the client would terminate the involvement of the
registrant or its subsidiary prior to completion of the project.
Nonetheless, the registrant must obtain new engineering and
construction projects, whether from existing clients or new
clients, in order to generate gross earnings in future years as
existing projects are completed. Consequently, the registrant
does not consider the names of clients to be material to
investors' understanding of the registrant's business taken as a
whole. The engineering, construction and consulting services
segment had one client who accounted for 17% of consolidated gross
earnings in 1993 and no client who accounted for 10% or more of
consolidated gross earnings in 1992 or 1991.
The cold storage and related activities segment had no
client who accounted for 10% or more of consolidated gross
earnings in 1993, 1992, or 1991.
Environmental Compliance
Compliance by registrant and its subsidiaries with Federal,
State and local provisions regulating the discharge of materials
into the environment, or otherwise relating to the protection of
the environment, has had, and is expected to have, no material
adverse effect upon the capital expenditures, earnings and
competitive position of registrant and its subsidiaries.
The engineering, construction and consulting services
segment has benefitted from the extensive amount of environmental
legislation and regulatory activity now in place because the
effect of such regulations on the businesses of the segment's
clients has increased the demand for environmental services
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Form 10-K 1993 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Environmental Compliance (Cont'd.)
provided by registrant's subsidiaries. This demand for such
services to help clients in their own environmental compliance
efforts is expected to continue.
Employees
The registrant and its subsidiaries had approximately 6,000
regular employees as of December 31, 1993. In addition, there are
at times several thousand craft employees employed on projects by
subsidiaries of registrant. The number of such employees varies
in relation to the number and size of the projects actually
undertaken at any particular time.
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Form 10-K 1993 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Executive and Other Officers of the Registrant.
Name Age Position Held Held Since
William F. Allen, Jr. 74 Chairman of the
Board 1/1/88
Chief Executive
Officer 5/21/86
Director 2/19/86
Bruce C. Coles 49 President 6/20/90
Director 6/20/90
William M. Egan 65 Executive
Vice President 2/19/86
Director 10/1/91
James N. White 59 Executive
Vice President 1/1/92
Kenneth F. Reinschmidt 55 Senior
Vice President 7/1/93
Raymond F. Rugg 50 Vice President 1/1/93
Robert F. Gallagher 59 Treasurer 5/20/70
Vice President 5/15/91
Joel A. Skidmore 64 Secretary 9/16/81
Each of the executive and other officers listed above has
held executive or administrative positions with the registrant or
one or more of its subsidiaries for at least the last five years.
Each officer was elected to hold office until the first meeting
of the Board of Directors after the next Annual Meeting of the
Stockholders and until his successor is duly elected and qualified.
The next Annual Meeting of Stockholders is scheduled to be held May
12, 1994.
The Board of Directors of the registrant has approved a plan to
elect Bruce C. Coles Chief Executive Officer and President after the
next Annual Meeting of Stockholders, and William F. Allen, Jr. will
remain Chairman of the Board.
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Form 10-K 1993 Stone & Webster, Incorporated
Item 2. Properties.
The important physical properties of registrant and its
subsidiaries are as follows:
A. A 14 story office building with approximately 800,000
square feet of office space at 245 Summer Street, Boston,
Massachusetts, which serves as engineering headquarters
for the organization and is approximately 65% occupied by
registrant's subsidiaries with the balance held for
rental to others.
B. An 8 story office building with approximately 140,000
square feet of office space at 51 Sleeper Street, Boston,
Massachusetts which is held for rental to others.
C. A 6 story office building with approximately 450,000
square feet of office space at 3 Executive Campus, Cherry
Hill, New Jersey, which is approximately 50% occupied by
registrant's subsidiaries with the balance held for rental
to others.
D. A 6 story office building with approximately 320,000
square feet of office space at 1430 Enclave Parkway,
Houston, Texas is substantially occupied by subsidiaries
of registrant.
E. Approximately 17.6 million cubic feet of cold storage
plant in two facilities in Atlanta, Georgia, and
approximately 3.5 million cubic feet of cold storage space
in a third facility near Rockmart, Georgia.
F. Twelve facilities consisting of natural gas gathering and
transporting systems and compressor stations in Texas,
Louisiana and Oklahoma, including six systems the
ownership of which is shared with others.
G. Approximately 237 acres in or near a corporate office and
business center being developed by a subsidiary of
registrant in Tampa, Florida, including 10 buildings owned
by subsidiaries of registrant comprising approximately
440,000 square feet of space, a 50% interest in a limited
partnership owning an office building with approximately
130,000 square feet of space, and approximately 190 acres
of developed and vacant land, all of which is held for
sale or rental to others.
Except as specified above, all of the properties listed above
are owned in fee by subsidiaries of the registrant. In addition to
the foregoing, registrant and its subsidiaries occupy office space in
various cities, in premises leased from others for varying periods -
both long and short term - the longest of which extends to 2008.
9
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Form 10-K 1993 Stone & Webster, Incorporated
Item 3. Legal Proceedings.
(a) As set forth in Part II, Item 1 of registrant's
Form 10-Q for the quarter ended September 30, 1993, in 1987
Long Island Lighting Co. ("LILCO") filed an amended
complaint in the action entitled "Long Island Lighting Co.
v. IMO Delaval, Inc. and Stone & Webster Engineering
Corporation" for the purpose of asserting additional claims
against IMO Delaval, Inc. ("Delaval") and for the purpose of
naming Stone & Webster Engineering Corporation ("SWEC"), a
subsidiary of the registrant, as a party defendant. The
claims arose out of the sale by Delaval to LILCO of certain
emergency diesel generators for use at LILCO's Shoreham
Nuclear Power Station ("Shoreham") and alleged that these
generators were defective in a number of ways. SWEC had
rendered engineering services to LILCO in connection with
its purchase of these diesel generators. The claims against
SWEC in this action were dismissed by the trial court based
on SWEC's contractual defenses. At the conclusion of trial
on the underlying action against Delaval, LILCO appealed the
dismissal of SWEC to the Second Circuit Court of Appeals.
On September 22, 1993, the appellate court affirmed the
dismissal of LILCO's claims against SWEC.
On August 5, 1991, LILCO instituted an action
against SWEC in the United States District Court for the
Eastern District of New York for damages arising out of
SWEC's alleged deficient performance in connection with the
design and construction of Shoreham which was claimed to
have increased the costs of building Shoreham. The amount
of damages being sought was not specified in the complaint,
but LILCO estimated its damages to be approximately $725
million.
On December 13, 1993, in light of the decision
of the Second Circuit Court of Appeals referred to above,
the District Court dismissed this complaint against SWEC.
LILCO has announced that an appeal will not be taken. SWEC
believes that this decision should end the litigation
against SWEC with respect to Shoreham.
10
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Form 10-K 1993 Stone & Webster, Incorporated
Item 3. Legal Proceedings. (Cont'd)
(b) Stone & Webster Engineering Corporation has been
named as a defendant, along with numerous other defendants,
in a number of complaints which seek damages arising out of
alleged personal injuries and/or wrongful death due to
exposure to asbestos products negligently utilized by the
defendants.
As stated in Part I, Item 3. of registrant's
Form 10-K for the year ended December 31, 1992, on March 18,
1991, SWEC was impleaded into approximately 750 asbestos-
related cases pending in the United States District Court
for the Eastern District of New York. SWEC has settled
substantially all of these cases, as well as other cases in
New York courts, for amounts which, when taken together, do
not have a material impact on registrant's financial
condition or results of operations. These settlements
substantially reduce the number of New York State cases
involving SWEC.
SWEC believes that it has strong factual and
legal defenses to the remaining claims and intends to defend
vigorously.
(c) Stone & Webster Engineering Corporation provided
design engineering services to Chesapeake Paper Products
Company in Virginia in connection with a plant expansion.
After the completion of SWEC's services on its contract,
Chesapeake made a claim against SWEC in the amount of
approximately $5,000,000, claiming additional expenses due
to design defects associated with the structural electrical
and mechanical design of the boiler and evaporator. In
April of 1993, Chesapeake brought suit against SWEC in the
United States District Court for the Eastern District of
Virginia. SWEC denied Chesapeake's allegations, claiming
that it did not owe Chesapeake anything, and instead, by way
of counterclaim, that Chesapeake owed SWEC $1,479,258 for
the balance due for its services on the project. The case
was tried before a jury and completed on December 8, 1993.
At the close of the plaintiff's case, the Court directed a
verdict on SWEC's counterclaim in favor of SWEC for
approximately $1,580,000. Chesapeake's claim proceeded
through trial and was submitted to the jury. The jury
returned a verdict in favor of Chesapeake and against SWEC
for $4,655,642.
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Form 10-K 1993 Stone & Webster, Incorporated
Item 3. Legal Proceedings. (Cont'd)
SWEC believes there are substantial grounds for
setting aside the jury verdict against SWEC, and for
ordering a new trial. SWEC has moved for a new trial on
Chesapeake's claim and, if denied, intends to appeal to the
Fourth Circuit Court of Appeals.
(d) In November 1990, Stone & Webster Engineering
Corporation commenced an action, now pending in the United
States District Court for the District of Massachusetts,
against Northbrook Insurance Company, several other
insurance companies and certain other parties. The complaint
sought monetary damages, attorneys' fees and costs, and a
declaration that the insurance company defendants must
defend and indemnify SWEC against claims asserted against it
in another lawsuit. Although the underlying lawsuit was
settled in March 1991, SWEC is continuing its suit seeking
damages, attorneys' fees and other monetary relief relating
to its defense of such underlying lawsuit. No provision has
been made in the financial statements of registrant for any
potential recoverable amounts.
(e) Also see Note (K) to the consolidated financial
statements as set forth under "Notes to Consolidated
Financial Statements" of the Financial Information section
filed herewith in Appendix A to this report.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters.
The information required by Item 5 is filed herewith under
"Market and Dividend Information" of the Financial Information
section included in Appendix A to this report.
Item 6. Selected Financial Data.
The information required by Item 6 is filed herewith under
"Selected Financial Data" of the Financial Information section
included in Appendix A to this report.
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Form 10-K 1993 Stone & Webster, Incorporated
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
The information required by Item 7 is filed herewith under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" of the Financial Information section
included in Appendix A to this report.
Item 8. Financial Statements and Supplementary Data.
The information required by Item 8 is filed herewith under
the Consolidated Financial Statements of Stone & Webster,
Incorporated and Subsidiaries together with the report of Coopers
& Lybrand dated February 15, 1994 of the Financial Information
section included in Appendix A to this report.
Item 9. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
In accordance with General Instruction G(3) to Form 10-K,
the information called for in this Item 10 with respect to
Directors is not presented here since such information is included
in the definitive proxy statement which involves the election of
directors which will be filed pursuant to Regulation 14A not later
than 120 days after the close of the fiscal year, and such
information is hereby incorporated by reference from Part I of
such proxy statement.
See also the section captioned "Executive and Other Officers
of the Registrant" under Item 1 of Part I herein.
Item 11. Executive Compensation.
In accordance with General Instruction G(3) to Form 10-K,
the information called for in this Item 11 is not presented here
since such information is included in the definitive proxy
statement which involves the election of directors which will be
filed pursuant to Regulation 14A not later than 120 days after the
close of the fiscal year, and such information is hereby
incorporated by reference from Part I of such proxy statement,
except that the information included therein which is not required
to be "filed" in accordance with Regulation S-K, Item 402(a)(8),
including the Report of the Compensation Committee and the
Performance Graph, is not incorporated by reference as part of
this report on Form 10-K.
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Form 10-K 1993 Stone & Webster, Incorporated
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
In accordance with General Instruction G(3) to Form 10-K,
the information called for in this Item 12 is not presented here
since such information is included in the definitive proxy
statement which involves the election of directors which will be
filed pursuant to Regulation 14A not later than 120 days after the
close of the fiscal year, and such information is hereby
incorporated by reference from Part I of such proxy statement.
Item 13. Certain Relationships and Related Transactions.
In accordance with General Instruction G(3) to Form 10-K,
the information called for in this Item 13 is not presented here
since such information is included in the definitive proxy
statement which involves the election of directors which will be
filed pursuant to Regulation 14A not later than 120 days after the
close of the fiscal year, and such information is hereby
incorporated by reference from Part I of such proxy statement.
14
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Form 10-K 1993 Stone & Webster, Incorporated
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
(a) Documents filed as part of the report:
1. Financial Statements and Financial
Statement Schedules
The following items appear in the Financial Information
section included as Appendix A to this report:
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Financial Statements:
Consolidated Statement of Income for the Three
Years Ended December 31, 1993
Consolidated Balance Sheet as at December 31,
1993 and 1992
Consolidated Statement of Stockholders' Equity
for the Three Years Ended December 31, 1993
Consolidated Statement of Cash Flows for the
Three Years Ended December 31, 1993
Summary of Significant Accounting Policies
Notes to Consolidated Financial Statements
Selected Financial Data
Market and Dividend Information
Report of Management
Business Segment Information
Financial Statement Schedules:
Financial Statement Schedule as at
December 31, 1993:
I - Marketable Securities - Other Security
Investments
Financial Statement Schedules for the Three
Years Ended December 31, 1993:
V - Property, Plant and Equipment
VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and
Equipment
IX - Short-Term Borrowings
X - Supplementary Income Statement Information
15
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Form 10-K 1993 Stone & Webster, Incorporated
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
1. Financial Statements and Financial
Statement Schedules (Cont'd.)
Report of Independent Accountants
2. Exhibits:
(3) Articles of Incorporation and By-laws -
(i) The Restated Certificate of
Incorporation of registrant which
appears in Exhibit (3)(a) to
registrant's Form 10-K for the fiscal
year ended December 31, 1990 is
hereby incorporated by reference.
(ii) The By-laws of registrant, as amended, are filed
herewith as Exhibit (3)(ii).
(4) Instruments defining the rights of security holders,
including indentures - As of December 31, 1993,
registrant and its subsidiaries had outstanding long-
term debt (excluding current portion) totaling
approximately $47,739,000 principally
in connection with mortgages relating to real
property for a subsidiary's corporate office
and business center in Tampa, Florida and for
two other subsidiaries' office buildings, and
in connection with capitalized lease
commitments for the acquisition of certain
computer equipment. These agreements are not
filed herewith because the total amount of
indebtedness authorized thereunder does not
exceed 10% of the total assets of the
registrant and its subsidiaries on a
consolidated basis; the registrant hereby
undertakes to furnish copies of such
agreements to the Commission upon request.
16
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Form 10-K 1993 Stone & Webster, Incorporated
Item 14. Exhibits, Financial Statement Schedules, and
Report on Form 8-K.
2. Exhibits: (Cont'd.)
(10) Material contracts -
(a) The Restricted Stock Plan of Stone & Webster,
Incorporated, approved by the Stockholders of
registrant in 1976, as amended and approved by the
Stockholders of registrant in 1988, and the form of
grant under the Restricted Stock Plan, which appear
in Exhibit (10)(a) to registrant's Form 10-K for the
fiscal year ended December 31, 1988 are hereby
incorporated by reference.
(b) Form of letter agreement between registrant and
certain officers relating to other benefits which
appears in Exhibit (10)(c) to registrant's Form 10-K
for the fiscal year ended December 31, 1986 (File No.
1-1228) filed with the Commission on March 5, 1987 is
hereby incorporated by reference.
(21) Subsidiaries of the registrant.
(23) Consent of Independent Accountants.
(b) Reports on Form 8-K
Registrant did not file any reports on Form
8-K during the last quarter of the period covered by this
report.
17
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Form 10-K 1993 Stone & Webster, Incorporated
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
STONE & WEBSTER, INCORPORATED
By
WILLIAM M. EGAN
William M. Egan
Executive Vice President
Date: February 16, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
February 16, 1994 WILLIAM F. ALLEN, JR.
William F. Allen, Jr.
Chairman of the Board
Chief Executive Officer
Director
" WILLIAM M. EGAN
William M. Egan
Executive Vice President
Director
(Principal Financial and
Accounting Officer)
" BRUCE C. COLES
Bruce C. Coles
President
Director
" WILLIAM L. BROWN
William L. Brown
Director
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Form 10-K 1993 Stone & Webster, Incorporated
February 16, 1994 HOWARD L. CLARK
Howard L. Clark
Director
" DONNA R. FITZPATRICK
Donna R. Fitzpatrick
Director
" J. PETER GRACE
J. Peter Grace
Director
" KENT F. HANSEN
Kent F. Hansen
Director
" JOHN A. HOOPER
John A. Hooper
Director
" J. ANGUS McKEE
J. Angus McKee
Director
" KENNETH G. RYDER
Kenneth G. Ryder
Director
" MEREDITH R. SPANGLER
Meredith R. Spangler
Director
" FRED D. THOMPSON
Fred D. Thompson
Director
19
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Form 10-K 1993 Stone & Webster, Incorporated
APPENDIX A
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
INDEX TO FINANCIAL INFORMATION APPENDIX
<TABLE>
<CAPTION>
Page
<S> <C>
Management's Discussion and Analysis of Financial
Condition and Results of Operations A-2
Financial Statements:
Consolidated Statement of Income for the Three Years Ended
December 31, 1993 A-5
Consolidated Balance Sheet as at December 31, 1993 and 1992 A-6
Consolidated Statement of Stockholders' Equity for the Three Years
Ended December 31, 1993 A-8
Consolidated Statement of Cash Flows for the Three Years
Ended December 31, 1993 A-9
Summary of Significant Accounting Policies A-10
Notes to Consolidated Financial Statements A-11
Selected Financial Data A-17
Market and Dividend Information A-17
Report of Management A-18
Business Segment Information A-19
Financial Statement Schedules:
Financial Statement Schedule as at December 31, 1993
I - Marketable Securities - Other Security Investments A-20
Financial Statement Schedules for the Three Years
Ended December 31, 1993:
V - Property, Plant and Equipment A-21
VI - Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment A-22
IX - Short-Term Borrowings A-24
X - Supplementary Income Statement Information A-25
Report of Independent Accountants A-26
</TABLE>
Schedules other than those listed above have been omitted because the
required information is included in the consolidated financial statements
or notes to consolidated financial statements, or is not applicable or not
required.
A-1
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(All dollar amounts are in thousands.)
RESULTS OF OPERATIONS
1993 Compared With 1992. Consolidated gross earnings were $279,792 for 1993, a
slight increase over 1992, after excluding profits on investment securities of
$4,398 in 1992. Consolidated operating and general expenses increased by $1,047
in 1993, before a $9,081 charge for the Incentive Retirement Program, a $4,000
charge for a judgment against a subsidiary of the Corporation and a foreign
pension curtailment gain of $1,072.
Gross earnings from our domestic engineering, construction and consulting
services decreased by $6,550 in 1993 primarily due to the completion of a
number of assignments coupled with delays in the start-up of replacement work.
Many of our new assignments are executed under multiyear contracts, and there
can be a long time lag between the award date and the authorization by the
client to initiate start-up. Operating and general expenses of our domestic
engineering, construction and consulting services increased by $4,994, before a
$9,081 charge for the Incentive Retirement Program and a $4,000 charge for a
judgment against a subsidiary, primarily due to higher employee carrying costs
for billable staff who could not be assigned to projects and an increase in
severance costs of $2,509 as a result of reduced workload. We previously
reported that in excess of 200 employees elected to retire under the Incentive
Retirement Program which, based on their payroll and related expenses, should
have resulted in an estimated on-going annual savings of $18,000. However, this
annualized savings will not necessarily result in increased net income since
our workload dropped in the second half of 1993 and some staff could not be
placed on billable projects as expected.
Gross earnings of our foreign subsidiaries' engineering, construction and
consulting services increased by $1,988 in 1993 primarily due to the favorable
impact of several contract change orders and the attainment of milestones on
two substantially completed foreign projects partially offset by a decrease in
gross earnings from our United Kingdom subsidiary primarily due to a lack of
new work. Operating and general expenses of our foreign subsidiaries'
engineering, construction and consulting services decreased by $2,976 in 1993
before a pension curtailment gain of $1,072. This decrease which was primarily
due to a reduction in contract staff costs in our United Kingdom subsidiary was
partially offset by higher severance costs of $1,448 associated with staff
reductions.
There continues to be a lack of major new projects due to the slower than
expected economic recovery. The intense competition for new work has resulted
in lower profit margins on the projects awarded. These factors, combined with
delays in the start-up of new work, adversely affected our engineering,
construction and consulting operations in 1993 and will negatively impact
financial results for the first half of 1994. We have placed increased emphasis
on international work while adapting to the changing domestic business
environment. There has been an increase in the amount of new work awarded to
our engineering, construction and consulting operations during 1993, and we
anticipate improved performance later in 1994 and continuing into 1995.
Gross earnings from cold storage and related activities increased by $1,216
primarily due to increases in storage and handling revenue. Operating and
general expenses of our cold storage and related activities increased by $107.
Gross earnings from our oil and gas interests decreased by $381 in 1993
primarily due to a decline in the number of gas marketing sales by our natural
gas gathering and transporting company due to competitive factors. Partially
offsetting this decrease was the favorable effect on gross earnings of an
increase in the average gas price received by our other oil and gas interests.
Operating and general expenses of our oil and gas interests decreased in 1993
by $804 primarily due to a decline in the number of gas marketing sales and a
corresponding decrease in the purchases of gas for resale.
Gross earnings from dividends and interest decreased by $649 in 1993 due to
reduced interest income on U.S. Government securities, reflecting lower
interest rates.
Gross earnings from all other activities increased by $5,469 in 1993 due
principally to higher rental income on company-owned office buildings in the
Northeast, previously used for engineering operations. Our real estate
operations in Tampa, Florida, continued to be affected by the adverse
conditions prevailing in the commercial real estate market in the United
States. Operating results in 1993 showed a slight improvement over 1992.
A-2
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
The effective tax rates for 1993 and 1992 are higher than the United States
statutory income tax rates. Both periods reflect foreign taxes applicable to
certain foreign projects which are calculated based on gross receipts, in lieu
of a tax on income, prior years' federal income tax liabilities resulting from
settlements with the IRS of prior years' tax returns and accruals for prior
years' state and local income taxes. Also contributing to the high effective
tax rate in 1993 was an increase in the Corporation's net deferred tax
liabilities due to the change in the income tax rate from 34% to 35%.
1992 Compared With 1991. Consolidated gross earnings, excluding profits on
investment securities of $4,398, increased by $2,280 in 1992. Gross earnings
from our domestic engineering, construction and consulting services increased
by $9,779 in 1992 primarily due to continued demand for our services in the
power sector involving the maintenance and modification of facilities and the
completion of facilities under construction as well as increases in assignments
in the process and environmental sectors. Despite adverse worldwide economic
conditions and the lack of major new projects from the electric utility
industry, we obtained new assignments due to our successful diversification
into growing areas such as environmental, process, industrial and
transportation and positioned the Corporation to compete for a significant
share of that anticipated new work. Gross earnings from our foreign
engineering, construction and consulting services decreased by $3,761 in 1992
primarily due to losses incurred on certain projects. Gross earnings from cold
storage and related activities increased by $350 in 1992 primarily due to
increases in business volume. Gross earnings from our oil and gas interests
decreased by $697 primarily due to the reduced volume of gas transported by our
natural gas gathering company, offset in part by increased production and
higher prices in our other oil and gas operations. Gross earnings from
dividends and interest decreased by $2,442 in 1992 primarily due to reduced
interest income on U.S. Government securities, reflecting lower interest rates,
and lower dividends received on investment securities. Gross earnings from all
other activities decreased by $949 in 1992 primarily due to reduced rental
income on a company-owned office building in Boston, Massachusetts.
Consolidated operating and general expenses increased by $9,007 in 1992.
Effective January 1, 1992, the Corporation changed the method of calculating
annual pension cost under Financial Accounting Standards Board Statement No. 87
which resulted in a decrease in pension cost of $2,322. This decrease was
offset by higher pension cost associated with amendments to the retirement plan
effective January 1, 1992 to improve generally the relationship between
retirement benefits and current salary of employee members, and to increase
benefit payments to retired members. Operating and general expenses of our
domestic engineering, construction and consulting services increased by $9,105
in 1992 primarily due to retaining staff who were expected to be on job
assignments which were cancelled, delayed or reduced in scope. Operating and
general expenses of our foreign engineering, construction and consulting
services increased by $539 in 1992 primarily due to an increase in business
development costs. Operating and general expenses from our cold storage and
related activities decreased by $247 in 1992. Operating and general expenses
from our oil and gas interests decreased by $1,025 primarily due to reduced
volume of gas purchased by our natural gas gathering and transporting company.
Operating and general expenses from all other activities increased by $635 in
1992. Our real estate operations in Tampa, Florida continued to be affected by
the slow down in the real estate market in the United States. However, there
was an improvement in operating results in 1992 compared with the prior year
primarily due to improved occupancy rates in company-owned buildings at our
Sabal Park properties in the Tampa Bay area and lower operating and general
expenses. Taxes other than income taxes increased by $1,518 in 1992 primarily
due to higher payroll taxes and state unemployment tax rates. Provision for
depreciation, depletion and amortization increased by $1,310 primarily due to
depreciation and amortization applicable to equipment purchases, acquisition of
computer equipment under capital lease and the expansion of cold storage
facilities. Interest expense decreased by $638 primarily due to lower interest
rates on mortgage loans.
A-3
19
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
The provision for income taxes reflected a higher effective tax rate for 1992
compared with 1991 primarily due to higher foreign taxes applicable to certain
foreign projects and an increase in prior years' federal income tax
liabilities. The increase in the prior years' federal income tax liabilities
was primarily due to a settlement of prior years' tax items.
After excluding the profits on investment securities of $2,802, income before
extraordinary item and cumulative effect of a change in accounting principle
decreased by $9,879 in 1992, compared with 1991. This decrease was primarily
due to lower operating results of our domestic engineering, construction and
consulting operations, losses from foreign engineering, construction and
consulting services and a higher effective tax rate.
FINANCIAL CONDITION
Cash and cash equivalents increased by $15,409 during 1993. Net cash provided
by operating activities of $39,679 primarily reflects a decline in accounts
receivable and an increase in advance payments by clients. Net cash used by
investing activities of $34,092 represents principally property, plant and
equipment expenditures primarily related to expenditures for the construction
of a new office building to be occupied by an engineering subsidiary and an
equity investment in a joint venture. Net cash provided by financing activities
principally reflects bank loans to finance the construction of the new office
building partially offset by dividends paid. The Corporation believes that the
types of businesses in which it is engaged require that it maintain a strong
financial condition. Except for our real estate operations and the financing
for the construction of a new office building to be occupied by an engineering
subsidiary, substantially all of our current and anticipated capital
expenditures, dividend and working capital requirements will be met from
internally generated funds. However, from time to time one or more of our
subsidiaries might borrow funds on a short-term basis through lines of credit
and revolving credit facilities for working capital needs. Subsidiaries of the
Corporation have lines of credit, revolving credit facilities and bank
overdraft facilities totaling $28,000, of which $22,323 was available at
December 31, 1993. Mortgage loans scheduled to become due in 1993 and 1994 have
been renewed at lower interest rates and will mature in 1998 and are classified
as long-term debt.
A-4
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(All dollar amounts, except per share amounts, are in thousands.)
<TABLE>
<CAPTION>
-------------------------------------------
Years ended December 31,
1993 1992 1991
=============================================================================================================================
<S> <C> <C> <C>
Gross Earnings:
Engineering, construction and consulting services (Note A) $234,251 $238,813 $232,795
Cold storage and related activities 16,914 15,698 15,348
Oil and gas interests 10,885 11,266 11,963
Dividends and interest (Note B) 4,246 4,895 7,337
Profits on investment securities (Note E) -- 4,398 --
Other 13,496 8,027 8,976
- ------------------------------------------------------------------------------------------------------------------------------
Total 279,792 283,097 276,419
- ------------------------------------------------------------------------------------------------------------------------------
Operating and General Expenses:
Engineering, construction and consulting services 203,987 189,960 180,316
Cold storage and related activities 8,755 8,648 8,895
Oil and gas interests 6,529 7,333 8,358
Includes cost of gas purchased for resale of $2,838 in 1993,
$3,528 in 1992 and $4,318 in 1991.
Other 11,953 12,227 11,592
- ------------------------------------------------------------------------------------------------------------------------------
Total Operating and General Expenses 231,224 218,168 209,161
Taxes, Other than Income Taxes 17,374 18,177 16,659
Provision for Depreciation, Depletion and Amortization (Note F) 20,135 20,124 18,814
Interest Expense (Note C) 2,606 3,021 3,659
- ------------------------------------------------------------------------------------------------------------------------------
Total 271,339 259,490 248,293
- ------------------------------------------------------------------------------------------------------------------------------
Income before Provision for Income Taxes 8,453 23,607 28,126
Provision for Income Taxes (Note D) 8,823 14,267 11,709
- ------------------------------------------------------------------------------------------------------------------------------
Income (Loss) before Extraordinary Item and Cumulative Effect of a Change in
Accounting Principle (per share: 1993 - $(.03), 1992 - $.62 and 1991 - $1.08) (370) 9,340 16,417
Extraordinary Item (per share: 1992 - $.02 and 1991 - $.09) (Note D) -- 246 1,188
Cumulative Effect of a Change in Accounting Principle
on Prior Years (per share: 1993 - $.16 and 1992 - $.21) (Notes D and M) 2,322 3,229 --
- ------------------------------------------------------------------------------------------------------------------------------
Net Income (per share: 1993 - $.13, 1992 - $.85 and 1991 - $1.17) $ 1,952 $ 12,815 $ 17,605
==============================================================================================================================
</TABLE>
See Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
A-5
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(All dollar amounts, except per share amounts, are in thousands.)
<TABLE>
<CAPTION>
------------------------
December 31,
ASSETS 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 64,141 $ 48,732
U. S. Government securities, at cost, which approximates market. 54,478 55,295
Accounts receivable, principally trade 99,127 117,616
Unbilled charges under contracts 66,731 63,257
Deferred income taxes (Note D) 6,334 --
Other 947 1,323
- ------------------------------------------------------------------------------------------------------------------------------
Total Current Assets 291,758 286,223
Investment Securities (Note E) 40,836 2,413
Property, Plant and Equipment (Note F) 201,936 192,281
At cost, less accumulated depreciation, depletion and amortization.
Land Held for Resale, at cost 23,626 24,357
Prepaid Pension Cost 87,540 82,579
Other Assets 34,146 26,801
- ------------------------------------------------------------------------------------------------------------------------------
$679,842 $614,654
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
A-6
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
------------------------
December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities:
Bank loans (Notes G and I) $ 5,677 $ 6,947
Accounts payable, principally trade 29,139 30,007
Dividend payable 2,247 2,245
Advance payments by clients 24,558 12,353
Current portion of long-term debt (Note I) 4,492 8,000
Accrued taxes 5,449 6,558
Other accrued liabilities (Note H) 46,831 49,475
- ------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 118,393 115,585
Long-Term Debt (Note I) 47,739 24,768
Deferred Income Taxes (Note D) 64,859 46,832
Other Non-Current Liabilities (Note J) 23,473 24,331
Commitments and Contingencies (Note K)
Stockholders' Equity:
Preferred stock -- --
Authorized, 2,000,000 shares of no par value; none issued.
Common stock, carried at (Note L) 65,213 65,297
Authorized, 40,000,000 shares of $1 par value; issued, 17,731,488 shares,
including shares held in treasury.
Capital in excess of carrying value of common stock 2,860 2,860
Retained earnings 424,723 431,490
Unrealized gain on investment securities, net (Note E) 24,975 --
Cumulative translation adjustment (2,854) (2,649)
- ------------------------------------------------------------------------------------------------------------------------------
514,917 496,998
- ------------------------------------------------------------------------------------------------------------------------------
Less: Common stock in treasury, at cost (Note L) 54,979 55,078
2,753,638 shares (1992 - 2,761,075).
Employee stock ownership and restricted stock plans (Note L) 34,560 38,782
- ------------------------------------------------------------------------------------------------------------------------------
89,539 93,860
- ------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 425,378 403,138
- ------------------------------------------------------------------------------------------------------------------------------
$679,842 $614,654
==============================================================================================================================
</TABLE>
A-7
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(All dollar amounts, except per share amounts, are in thousands.)
<TABLE>
<CAPTION>
----------------------------------------
Years ended December 31,
1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock (Note L):
Balance at beginning of year $ 65,297 $ 65,893 $ 66,314
Excess of cost over market value of treasury shares
issued/forfeited under Restricted Stock Plan, net (9) (177) (284)
Tax charge on shares issued under Restricted Stock Plan, net (75) (419) (137)
- ------------------------------------------------------------------------------------------------------------------------------
Balance at end of year 65,213 65,297 65,893
- ------------------------------------------------------------------------------------------------------------------------------
Capital in Excess of Carrying Value of Common Stock:
Balance at beginning and end of year 2,860 2,860 2,860
- ------------------------------------------------------------------------------------------------------------------------------
Retained Earnings:
Balance at beginning of year 431,490 427,364 418,440
Income tax benefit of Employee Stock Ownership Plan dividends 268 309 350
Net Income 1,952 12,815 17,605
Dividends declared (per share: 1993, 1992 and 1991 - $.60) (8,987) (8,998) (9,031)
- ------------------------------------------------------------------------------------------------------------------------------
Balance at end of year 424,723 431,490 427,364
- ------------------------------------------------------------------------------------------------------------------------------
Unrealized Gain on Investment Securities, net (Note E):
Balance at end of year 24,975 -- --
- ------------------------------------------------------------------------------------------------------------------------------
Cumulative Translation Adjustment:
Balance at beginning of year (2,649) (1,174) (312)
Adjustments for the year (205) (1,475) (862)
- ------------------------------------------------------------------------------------------------------------------------------
Balance at end of year (2,854) (2,649) (1,174)
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock in Treasury (Note L):
Balance at beginning of year (55,078) (54,016) (52,254)
Cost of treasury shares:
Issued under Restricted Stock Plan
(shares: 1993 - 22,000 and 1991 - 2,000) 440 -- 39
Forfeited under Restricted Stock Plan
(shares: 1993 - 7,200, 1992 - 9,800 and 1991 - 17,200) (133) (172) (305)
Purchased (shares: 1993 - 7,363, 1992 - 35,631 and 1991 - 50,212) (208) (890) (1,496)
- ------------------------------------------------------------------------------------------------------------------------------
Balance at end of year (54,979) (55,078) (54,016)
- ------------------------------------------------------------------------------------------------------------------------------
Employee Stock Ownership and Restricted Stock Plans (Note L):
Balance at beginning of year (38,782) (46,188) (54,666)
Payments received from Employee Stock Ownership Trust (principal only) 3,587 3,320 3,075
Market value of shares forfeited/issued under Restricted Stock Plan, net (298) 349 550
Amortization of market value of shares issued under Restricted Stock Plan 933 3,737 4,853
- ------------------------------------------------------------------------------------------------------------------------------
Balance at end of year (34,560) (38,782) (46,188)
- ------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity $425,378 $403,138 $394,739
==============================================================================================================================
</TABLE>
See Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
A-8
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
----------------------------------------
Years ended December 31,
1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 1,952 $ 12,815 $ 17,605
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 20,135 20,124 18,814
Deferred income taxes 559 8,782 7,879
Cumulative effect of a change in accounting principle (2,322) (5,390) --
Prepaid pension cost (13,953) (13,751) (15,347)
Incentive Retirement Program 9,081 -- --
Profits on investment securities -- (4,398) --
Amortization of market value of shares issued
under Restricted Stock Plan 933 3,737 4,853
Amortization of net cost of Employee Stock Ownership Plan 1,562 1,567 1,602
Changes in operating assets and liabilities:
Accounts receivable 18,489 21,238 20,597
Unbilled charges under contracts (3,474) 21,733 (19,921)
Other assets (2,345) (7,773) (3,801)
Accounts payable (868) (11,224) 6,619
Advance payments by clients 12,205 (6,557) 3,956
Other accrued liabilities (1,530) 3,529 1,338
Other (745) 27 1,060
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 39,679 44,459 45,254
- ------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Maturities of U.S. Government securities 109,289 84,032 85,592
Purchases of U.S. Government securities (108,301) (97,723) (86,095)
Proceeds from sale of investment securities -- 4,758 --
Increases in property, plant and equipment (31,679) (22,592) (23,198)
Proceeds from disposals of property, plant and equipment 1,599 280 497
Equity investment in joint venture (5,000) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (34,092) (31,245) (23,204)
- ------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from long-term debt 20,760 1,500 24,149
Repayments of long-term debt (23,964) (3,551) (23,208)
Increase in bank loans 26,330 7,903 2,145
Decrease in bank loans (4,933) (956) (5,535)
Payments to Employee Stock Ownership Trust (6,395) (6,275) (5,940)
Payments received from Employee Stock Ownership Trust 7,217 7,217 7,217
Purchase of common stock for treasury (208) (890) (1,496)
Dividends paid (8,985) (9,005) (9,041)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 9,822 (4,057) (11,709)
- ------------------------------------------------------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents 15,409 9,157 10,341
Cash and Cash Equivalents at Beginning of Year 48,732 39,575 29,234
- ------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 64,141 $ 48,732 $ 39,575
- ------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 2,558 $ 2,967 $ 3,709
Income taxes $ 7,742 $ 7,591 $ 3,283
- ------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Noncash Investing
and Financing Activities:
Acquisition of equipment under capital lease $ -- $ 4,354 $ --
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
A-9
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(All dollar amounts are in thousands.)
BASIS OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Corporation and all subsidiaries. The accounts of subsidiaries
outside the United States and Canada are included in the consolidated financial
statements on the basis of fiscal years ending on November 30 to facilitate
timely interim and year-end financial reporting. Investments in joint ventures,
where the Corporation owns 50% or less, are accounted for by the equity method.
CONSOLIDATED STATEMENT OF CASH FLOWS. The Corporation considers U.S. Government
securities purchased with a maturity of three months or less to be cash
equivalents.
FOREIGN CURRENCY TRANSLATION. Assets and liabilities of operations outside the
United States are translated into U.S. dollars at current exchange rates, while
income statement items are translated at average monthly exchange rates. Gains
or losses on such translations are accumulated in a separate component of
Stockholders' Equity and are excluded from net income. Transaction gains and
losses, which were not material, resulting from the settlement of receivables
or payables, or the conversion of currency, are included in the determination
of net income.
DEPRECIATION, DEPLETION AND AMORTIZATION. Depreciation generally is provided on
a straight-line basis (accelerated methods for income taxes) over the estimated
useful lives of the assets. Depreciation and depletion of oil and gas producing
properties and natural gas pipeline systems are generally provided on the unit
of production method. Amortization is provided for leased property and
equipment on a straight-line basis over the life of the lease. Generally, the
cost of depreciable property retired or otherwise disposed of is charged to the
accumulated depreciation account and net salvage is credited thereto. The cost
of depletable property retired or otherwise disposed of is charged to the
accumulated depletion account.
LONG-TERM CONTRACTS. Gross earnings from long-term engineering and construction
contracts are determined on the percentage-of-completion method, based upon the
ratio of costs incurred to total estimated costs. Provisions are made currently
for all known or anticipated losses. The effects of changes to total estimated
contract revenues and costs are recognized in the period they are determined.
Certain contracts contain provisions for performance incentives. Such
incentives are included in revenues when realization is assured. Contract costs
attributed to claims in excess of agreed contract prices are included in
revenues when realization is assured. Costs and earnings in excess of billings
are classified in current assets as unbilled charges under contracts and
represent revenue accrued under the percentage-of-completion method which is
not yet billable under the terms of the contract but is recoverable from
customers upon various measures of performance such as costs incurred, time
schedules or completion of certain milestones within the contract. Amounts
received from clients in excess of revenues recognized to date are classified
in current liabilities as advance payments by clients.
Accounts receivable includes amounts representing retainages under long-term
contracts which are due within one year and are not significant. Substantially
all unbilled charges under contracts reflected in the accompanying consolidated
balance sheet are billed on the basis of contract terms and are usually
collected in the subsequent year. There were no significant amounts included in
accounts receivable or unbilled charges under contracts for claims subject to
uncertainty as to their ultimate realization.
INCOME TAXES. Effective January 1, 1993, the Corporation adopted Financial
Accounting Standards Board Statement No. 109 - Accounting for Income Taxes,
which changes the Corporation's method of accounting for income taxes from the
deferred method to an asset and liability approach. Previously the Corporation
deferred the past tax effects of timing differences between financial reporting
and taxable income. The asset and liability approach requires the recognition
of deferred tax liabilities and assets for the expected future tax consequences
of temporary differences between the carrying amounts and the tax bases of
other assets and liabilities. Undistributed earnings of foreign subsidiaries
for which the Corporation has not provided deferred U.S. income taxes, because
a taxable distribution of these earnings is not anticipated, aggregated
approximately $2,976 at December 31, 1993. This amount represents the
accumulated earnings of consolidated foreign subsidiaries which are being
permanently reinvested in their operations.
INVESTMENT SECURITIES. On December 31, 1993, the Corporation adopted Financial
Accounting Standards Board Statement No. 115 - Accounting for Certain
Investments in Debt and Equity Securities, which requires the Corporation's
investment securities to be classified as those "available for sale" and to be
carried at market value on the balance sheet with the unrealized gain or loss
presented as a separate component of Stockholders' Equity net of applicable
deferred taxes.
INCOME PER SHARE. Per share amounts are based on the average number of shares
outstanding during the year.
A-10
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts, except per share amounts, are in thousands.)
(A) GROSS EARNINGS FROM ENGINEERING, CONSTRUCTION
AND CONSULTING SERVICES
Gross earnings from engineering and construction services include, generally on
a percentage-of-completion basis, fees earned on agency contracts and the
excess of revenues ($747,787 in 1993, $763,145 in 1992 and $660,255 in 1991)
over direct construction costs ($555,561 in 1993, $564,322 in 1992 and $469,568
in 1991) on non-agency contracts.
(B) DIVIDENDS AND INTEREST INCOME
Dividends and interest income includes dividends from investment securities of
$1,311, $1,388 and $2,477 for the years 1993, 1992 and 1991, respectively, and
interest income primarily from U.S. Government securities, repurchase
obligations and cash in banks of $2,935, $3,507 and $4,860 for the years 1993,
1992 and 1991, respectively.
(C) INTEREST EXPENSE
Interest expense for 1993 excludes $439, which was capitalized as part of the
construction cost for a new office facility.
(D) INCOME TAXES
On January 1, 1993, the Corporation adopted Financial Accounting Standards
Board Statement No. 109 - Accounting for Income Taxes. As a result of this
accounting change, the cumulative effect from prior periods increased net
income for 1993 by $2,322, or $.16 per share. The results for the prior years
have not been restated for this change in accounting.
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
-----------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense
United States $3,528 $ 3,997 $ 725*
State and local 1,355 1,079 751
Foreign 3,381** 2,324** 1,166**
- -----------------------------------------------------------------------------
Total current 8,264 7,400 2,642
- -----------------------------------------------------------------------------
Deferred tax expense (benefit)
United States 457 5,022 6,228
State and local 260 1,577 1,651
Foreign (158) 22 --
- -----------------------------------------------------------------------------
Total deferred 559 6,621 7,879
- -----------------------------------------------------------------------------
Charge equivalent of tax
loss carryforwards -- 246 1,188
- -----------------------------------------------------------------------------
Total provision $8,823 $14,267 $11,709
- -----------------------------------------------------------------------------
</TABLE>
* Net of reversal of prior years' income tax of $519 in 1991.
** Includes taxes, in lieu of income taxes, of $2,292 in 1993, $1,744 in 1992
and $655 in 1991 on foreign projects which are calculated based on gross
receipts.
In 1992 and 1991 the Corporation recognized an extraordinary item of $246 and
$1,188, respectively, which represents the recognition of a tax benefit from
utilization of foreign subsidiaries' tax loss carryforwards.
Deferred tax liabilities (assets) comprise the following:
<TABLE>
<CAPTION>
-------------
DECEMBER 31,
1993
- -------------------------------------------------------------
<S> <C>
Long-term liabilities:
Depreciation $ 23,359
Retirement 39,626
Investment securities 13,448
Other 4,871
- -------------------------------------------------------------
Total long-term liabilities 81,304
- -------------------------------------------------------------
Long-term assets:
Deferred rent (1,467)
Employee Stock Ownership Plan interest payments
and contributions (6,447)
Incentive Retirement Program (3,730)
AMT credit carryforward (3,221)
Foreign net operating loss carryforwards (6,916)
State net operating loss carryforwards (3,435)
Other (1,580)
- -------------------------------------------------------------
Total long-term assets (26,796)
- -------------------------------------------------------------
Net operating loss valuation allowance 10,351
- -------------------------------------------------------------
Net long-term deferred tax liabilities $ 64,859
- -------------------------------------------------------------
Current liabilities:
Other $ 1,268
Current assets:
Vacation pay (5,598)
State net operating loss carryforwards (200)
Other (1,804)
Total current assets (7,602)
- -------------------------------------------------------------
Net current deferred tax assets $ (6,334)
- -------------------------------------------------------------
</TABLE>
The Corporation established a valuation allowance of $11,173 at January 1, 1993
for the deferred tax assets related to net operating loss carryforwards. The
net change in the valuation allowance for 1993 was a decrease of $822 for a
total valuation allowance of $10,351 at December 31, 1993. This decrease was
caused by the use of net operating loss carryforwards relating to several of
our foreign subsidiaries for which valuation allowances had previously been
provided. The valuation allowance at December 31, 1993 comprises $6,916
relating to the carryforwards of several of the Corporation's foreign
subsidiaries and $3,435 relating to state net operating loss carryforwards.
Approximately $67,386 (with a tax benefit of $10,551) of the net operating loss
carryforwards remains at December 31, 1993, of which $20,958 (with a tax
benefit of $6,916) is applicable to foreign subsidiaries and the remaining
$46,428 (with a tax benefit of $3,635) relates to state net operating loss
carryforwards. Use of the foreign net operating loss carryforwards is limited
to future taxable earnings of the Corporation's applicable foreign
subsidiaries. Although these net operating loss carryforwards never expire, no
benefit has been recognized in the consolidated financial statements.
A-11
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
The state net operating loss carryforwards of $46,428 are applicable to many
states and will expire as follows: $1,364 in 1994, $9,718 in 1995, $1,902 in
1996, $4,840 in 1997, $34 in 1998, $124 in 1999, $707 in 2000, $2,309 in 2001,
$1,617 in 2002 and $23,813 thereafter. The Corporation has determined that it
will be able to realize a tax benefit of $200 relating to these state net
operating loss carryforwards and the remaining net operating loss carryforwards
(with a tax benefit of $3,435, which is fully reserved for) are expected to
expire unused.
Deferred income taxes were provided for timing differences between book and tax
income. The principal sources of these differences and the related effects for
1992 and 1991 were as follows:
<TABLE>
<CAPTION>
---------------------
1992 1991
- -------------------------------------------------------------
<S> <C> <C>
Depreciation $ 489 $ 590
Retirement 5,524 7,040
Vacation pay (334) (2,095)
Accruals currently (not currently)
deductible for tax purposes 847 (73)
Deferred other assets 61 2,659
Other 34 (242)
- -------------------------------------------------------------
$ 6,621 $ 7,879
- -------------------------------------------------------------
</TABLE>
See Note M for deferred taxes relating to the cumulative effect of a change in
accounting principle in 1992.
The following is an analysis of the difference between the United States
statutory income tax rate and the Corporation's effective income tax rate:
<TABLE>
<CAPTION>
---------------------------------------
1993 1992 1991
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States statutory income
tax rate 35.0% 34.0% 34.0%
Increase (decrease) resulting from:
State and local income taxes,
net of United States tax effect 5.3 6.3 5.6
Dividend received deduction (3.8) (1.4) (2.1)
Difference in effective tax rate
of foreign operations and
projects, net of United States
tax effect 33.8 10.9 4.7
Adjustment of prior years'
Federal Income Tax accruals,
net of interest effect 23.8 5.9 (1.8)
Adjustment of prior years' state
income tax accruals, net of
United States tax effect 7.1 1.1 --
Utilization of net operating loss
carryforwards of
foreign operations (15.9) -- --
Deferred taxes -- impact of
increase in federal statutory
rate on prior years 12.6 -- --
Other 6.5 3.6 1.2
- -------------------------------------------------------------------------------------
Effective income tax rate 104.4% 60.4% 41.6%
- -------------------------------------------------------------------------------------
</TABLE>
Income from operations before income taxes, extraordinary item and cumulative
effect of a change in accounting principle were:
<TABLE>
<CAPTION>
----------------------------------------
1993 1992 1991
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $3,046 $23,586 $23,528
Foreign 5,407 21 4,598
- -------------------------------------------------------------------------------------
$8,453 $23,607 $28,126
- -------------------------------------------------------------------------------------
</TABLE>
The Corporation accrued a $780 federal alternative minimum tax liability in
1993 and incurred a federal alternative minimum tax of $693 in 1992 and $113 in
1991, which produced a credit that can be carried forward indefinitely to
reduce future federal income taxes payable. The total aggregate credit
available for regular federal tax carryforward purposes was $3,221 at December
31, 1993.
The Corporation has settled all issues raised in connection with the
examination of the Corporation's income tax returns for the years 1985 and 1987
through 1989. The settlement of these issues resulted in an additional net
charge of $2,015.
The Omnibus Budget Reconciliation Act of 1993 raised the statutory federal
income tax rate on corporations from 34% to 35%. The effect of this 1% increase
in the tax rate on the Corporation's net deferred tax liabilities was a charge
to income of $1,131, or $.08 per share.
(E) INVESTMENT SECURITIES
In 1993, the Corporation adopted Financial Accounting Standards Board Statement
No. 115 - Accounting for Certain Investments in Debt and Equity Securities.
Accordingly, investment securities are being carried at a fair market value of
$40,836 and the unrealized gain of $24,975, net of deferred income taxes of
$13,448, was credited to Stockholders' Equity at December 31, 1993. At December
31, 1992 investment securities were carried at a cost of $2,413 with a market
value of $32,259 (no allowance was made for taxes on unrealized appreciation of
$29,846).
Profits on investment securities represents the sale of investment securities,
which after income taxes resulted in net income of $2,802, or $.19 per share in
1992. The cost of securities sold was determined by average cost.
A-12
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
(F) PROPERTY, PLANT AND EQUIPMENT
Following is a summary of property, plant and equipment at December 31:
<TABLE>
<CAPTION>
--------------------------
1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C>
Office buildings and other real estate $134,289 $132,485
Furniture and equipment 130,741 129,704
Cold storage plant and equipment 48,185 47,442
Oil and gas properties 29,025 29,587
Construction in progress 24,405 2,357
Contract drilling equipment -- 17,031
- --------------------------------------------------------------------------------------
366,645 358,606
Less accumulated depreciation,
depletion and amortization 164,709 166,325
- --------------------------------------------------------------------------------------
Property, plant and equipment, net $201,936 $192,281
- --------------------------------------------------------------------------------------
</TABLE>
Property, plant and equipment includes computer equipment under capital leases
of $5,296 at December 31, 1993 and $5,340 at December 31, 1992; related amounts
included in accumulated depreciation, depletion and amortization were $2,379 at
December 31, 1993 and $1,386 at December 31, 1992. Depreciation expense was
$18,349 for 1993, $17,718 for 1992 and $15,115 for 1991. Office buildings and
other real estate includes property of a subsidiary's office and business
center in Tampa, Florida of $29,209 and $28,906 at December 31, 1993 and 1992,
respectively, and related accumulated depreciation of $6,354 and $5,291 at
December 31, 1993 and 1992, respectively.
In 1993, a subsidiary of the Corporation sold the remaining equipment in its
contract drilling operations.
(G) BANK LOANS
In 1992, a subsidiary of the Corporation entered into a $15,000 revolving
credit agreement with a bank for financing of the subsidiary's activities
performed under a client's contract for engineering services. The agreement was
collateralized by an assignment of the contract to the bank and payments
received from the client are applied to outstanding borrowings which incur
interest based on the London Interbank Offered Rate. At December 31, 1993,
there was $5,677 outstanding under the revolving credit agreement.
(H) OTHER ACCRUED LIABILITIES
Other accrued liabilities consists of the following at December 31:
<TABLE>
<CAPTION>
------------------------
1993 1992
- --------------------------------------------------------------------
<S> <C> <C>
Salaries and benefits $15,358 $18,433
Insurance premiums 18,018 18,501
Other 13,455 12,541
- --------------------------------------------------------------------
$46,831 $49,475
- --------------------------------------------------------------------
</TABLE>
(I) LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
------------------------
1993 1992
- -------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage loans:
Due in 1993, interest at 6 1/2% $ -- $ 5,050
Due in 1994, interest at 6 1/2% -- 9,345
Due in 1994, interest at prime rate plus 1% -- 6,723
Due in 1996, interest at 9 1/8% 6,000 7,661
Due in 1998, interest at 5.18 % 20,497 --
Due in 2009, interest at 6.44% 22,667 --
Capitalized lease obligations 3,067 3,989
- -------------------------------------------------------------------------------------
52,231 32,768
Less current portion 4,492 8,000
- -------------------------------------------------------------------------------------
$47,739 $24,768
- -------------------------------------------------------------------------------------
</TABLE>
In 1992, a subsidiary of the Corporation obtained a construction loan from a
bank to finance the acquisition of land and the construction of an office
building to be occupied by an engineering subsidiary of the Corporation. At
December 31, 1993, the balance outstanding was $22,667. In February 1994, this
construction loan was refinanced with a permanent mortgage obtained from a life
insurance company. The mortgage amount is $29,000 and the loan term is 15
years. Collateral for the mortgage loan consists of the land and building. A
reclassification of the loan balance from bank loans to long-term debt has been
made to the December 31, 1993 balance sheet to give effect to this transaction.
The Corporation and its subsidiaries have mortgage loans collateralized by
office buildings and other real estate with a net book value of $57,795 at
December 31, 1993. The 9 1/8% mortgage loan was incurred in connection with a
subsidiary's purchase of an office building and principal and interest is
payable monthly. The remaining mortgage loans were assumed in connection with a
subsidiary's office and business center in Tampa, Florida and principal and
interest is due monthly. The mortgage loans that were previously due in 1993
and 1994 have been renewed and will mature in 1998. The interest rate is fixed
for one year and is based on U.S. Government securities rates. Principal
payments required on long-term debt in the years 1994 through 1998 are $4,492,
$4,480, $4,787, $1,720 and $19,382, respectively.
(J) OTHER NON-CURRENT LIABILITIES
Other non-current liabilities includes the accrued cost of the Employee Stock
Ownership Plan of $16,031 at December 31, 1993 and $17,605 at December 31,
1992.
A-13
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
(K) COMMITMENTS AND CONTINGENCIES
Rental expense was $12,600 in 1993, $16,000 in 1992 and $15,300 in 1991. The
Corporation and subsidiaries have leases for office space, computer equipment
and other office equipment with varying lease terms. All noncancelable leases
have been categorized as either capital or operating and under most leasing
arrangements the Corporation and subsidiaries pay the property taxes, insurance
and maintenance and expenses related to the leased properties. Future minimum
lease payments, net of sublease income, under long-term leases as of December
31, 1993 are as follows:
<TABLE>
<CAPTION>
--------------------------
CAPITAL OPERATING
LEASES LEASES
- --------------------------------------------------------------------
<S> <C> <C>
1994 $1,363 $ 6,500
1995 1,024 6,900
1996 1,003 8,100
1997 16 6,800
1998 -- 6,300
1999 and thereafter -- 45,900
- --------------------------------------------------------------------
Total minimum lease payments 3,406 $80,500
-------
Amount representing interest 339
- ---------------------------------------------------
Present value of minimum lease payments $3,067
- --------------------------------------------------------------------
</TABLE>
The current portion of the present value of the minimum lease obligations under
capital leases as of December 31, 1993 amounted to $1,166.
The Corporation and certain subsidiaries have been named as defendants, along
with others, in legal actions claiming damages in connection with engineering
and construction projects and other matters. Most such actions involve claims
for personal injury or property damage which occur from time to time in
connection with services performed by subsidiaries relating to project or
construction sites, and for which coverage under appropriate insurance policies
usually applies; other actions arise in the normal course of business including
employment-related claims and contractual disputes for which insurance coverage
or other contractual provisions may or may not apply. Such contractual disputes
normally involve claims relating to the performance of equipment design or
other engineering services or project construction services provided by
subsidiaries of the Corporation, and often such matters may be resolved without
going through a complete and lengthy litigation process. Management believes,
on the basis of its examination and consideration of these matters, including
consultation with counsel, that these legal actions will not result in payment
of amounts, if any, which would have a material adverse effect on the
consolidated financial statements. In addition, a subsidiary of the Corporation
is a plaintiff in a legal action to recover damages, attorneys' fees and other
monetary relief from its insurance carriers. No provision has been made in the
financial statements for any potential recoverable amounts.
In a contract-related lawsuit, the jury returned a verdict against a subsidiary
of the Corporation. Although the subsidiary has filed a post-trial motion to
set the judgment aside and intends to appeal the damage award asserted against
it if this relief is not granted, the subsidiary recorded a $4,000 charge in
connection with this matter.
The Corporation co-signed a note for a mortgage loan collateralized by land and
an office building owned by a 50%-owned joint venture. The loan will mature in
1997 and totaled $7,578 at December 31, 1993.
A subsidiary of the Corporation is a partner in a joint venture in an electric
cogeneration facility, which commenced operations in late 1992. An additional
equity investment of $5,000 was made in 1993 resulting in a total investment of
$6,000 which approximates the carrying value at December 31, 1993. The
Corporation has obtained bank letters of credit amounting to $1,500 at December
31, 1993 in favor of the bank financing the project to assure that certain
financial obligations with respect to the project will be met.
In 1993, a subsidiary of the Corporation renewed an agreement with a bank to
provide a short-term unsecured line of credit totaling $10,000, and in January
1994, that subsidiary renewed an agreement with a second bank to provide a
short-term unsecured line of credit totaling $10,000. Borrowings under these
agreements are to be used for general corporate purposes and incur interest
based on the prime rate, money market rates, 1 1/2% above the London Interbank
Offered Rate or 1% above the Eurodollar's rate. A commitment fee of 3/16% per
annum is paid to the banks on the unused portion of the facility. A foreign
subsidiary of the Corporation has an overdraft banking facility of $3,000,
which is used for general corporate purposes and incurs interest based on 1%
over the bank's published Base Rate. At December 31, 1993, no amounts were
outstanding under the lines of credit or the overdraft banking facility.
At December 31, 1993, subsidiaries of the Corporation have contingent
liabilities arising from guarantees to banks for credit facilities extended to
affiliates for general operating purposes of approximately $17,749.
The Corporation and its subsidiaries place their cash and cash equivalents and
U.S. Government securities with high credit quality financial institutions and,
by policy, limit the amount of credit exposure to any one financial
institution.
(L) EMPLOYEE STOCK OWNERSHIP AND RESTRICTED STOCK PLANS
Under the terms of the Employee Stock Ownership Plan, the Corporation and
participating subsidiaries make contributions to a trust which can acquire from
the Corporation up to 5,000,000 shares of Common Stock of the Corporation, for
the exclusive benefit of participating employees.
The notes receivable from the Employee Stock Ownership Trust, received as
consideration by the Corporation for the 4,000,000 shares of Common Stock sold
to the Trust in prior years, are payable in level payments of principal and
interest over 20 years. At December 31, 1993 the balance of the notes
receivable from the
A-14
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
Trust was $33,549. The unamortized cost of the shares is being funded by annual
contributions necessary to enable the Trust to meet its current obligations,
after taking into account dividends received on the Common Stock held by the
Trust. The net cost of the Plan is being amortized over 20-year periods from
the dates of acquisition of shares. The charge to income was $1,562 in 1993,
$1,567 in 1992 and $1,602 in 1991.
Under the terms of the Restricted Stock Plan, which will terminate June 1, 1998
unless extended, the Corporation may award up to a total of 2,400,000 shares of
the Common Stock of the Corporation to key employees. Restricted Stock Plan
awards of 22,000 shares in 1993 and 2,000 shares in 1991, previously held in
the Treasury, were granted subject to the restrictions described in the Plan.
The market value of the shares awarded is being charged to income over the
vesting period of five years. At December 31, 1993, 1,726,200 shares have been
awarded, net of shares forfeited, and the unamortized portion of the market
value was $1,011.
(M) RETIREMENT PLANS
The Corporation and domestic subsidiaries have a noncontributory defined
benefit plan covering executive, administrative, technical and other employees.
The benefits for this plan are based primarily on years of service and
employees' career pay. The Corporation's policy is to make contributions which
are equal to current year cost plus amortization of prior service cost, except
as limited by full funding restrictions. Plan assets consist principally of
common stocks, bonds and U.S. Government obligations.
In 1993, the Corporation offered an Incentive Retirement Program for employees
of two of its subsidiaries. In excess of two hundred employees elected to
retire under this Program. Total Program costs of $9,081 ($5,460, or $.36 per
share, after tax), including $89 for incentive benefits from a non-qualified
Supplemental Retirement Plan, representing the actuarially determined present
value of Program benefits, were charged to operating and general expenses with
a corresponding offset to prepaid pension cost of $8,992 and $89 to other
accrued liabilities.
Effective January 1, 1992, the Corporation changed its method for determining
the calculated value of the assets of its pension plan for purposes of
calculating annual pension cost under Financial Accounting Standards Board
Statement No. 87. This calculated value is the basis for computing the annual
expected return on plan assets, which is part of the net amortization and
deferral component of pension cost. This calculated value recognizes changes in
fair value of assets over five years.
The effect of this change before the cumulative effect of the change on prior
years results was to increase income before extraordinary item and net income
for the year 1992 by $1,391 (net of taxes of $931), or $.09 per share. The
total cumulative effect on prior years to December 31, 1991 was $3,229 (net of
taxes of $2,161), or $.21 per share, which was a one time increase in income
for the year 1992.
A comparison of pro forma amounts showing the effects of applying the new
method retroactively is presented below:
<TABLE>
<CAPTION>
-----------------------
1992 1991
- --------------------------------------------------------------------
<S> <C> <C>
Income before extraordinary item $9,340 $17,697
Per share .62 1.16
Net income 9,586 18,885
Per share .64 1.25
- --------------------------------------------------------------------
</TABLE>
Pension cost for the domestic plan includes the following components:
<TABLE>
<CAPTION>
-----------------------------------------
1993 1992 1991
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost -- benefits earned
during the year $ 8,561 $ 8,334 $ 7,149
Interest cost on projected
benefit obligation 27,332 25,101 21,191
Actual return on assets (56,275) (29,579) (81,652)
Net amortization and deferral 6,429 (17,607) 37,994
- -------------------------------------------------------------------------------------
Net pension expense (credit) $(13,953)* $(13,751)** $(15,318)
- -------------------------------------------------------------------------------------
</TABLE>
* Does not include Incentive Retirement Program charges of $8,992.
** Does not include the cumulative effect of a change in accounting principle
on prior years of $(5,390).
A reconciliation of the domestic plan's funded status to the balance sheet
prepaid pension cost is as follows at December 31:
<TABLE>
<CAPTION>
-------------------------
1993 1992
- --------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefits:
Vested benefit obligation $(362,749) $(297,974)
- --------------------------------------------------------------------
Accumulated benefit obligation $(369,109) $(300,995)
- --------------------------------------------------------------------
Projected benefit obligation $(388,922) $(322,084)
Plan assets at fair value 477,237 439,889
- --------------------------------------------------------------------
Excess of assets over projected
benefit obligation 88,315 117,805
Unrecognized prior service cost 22,809 25,156
Unrecognized net loss or (gain) 27,598 1,183
Unrecognized net transition (asset) (51,182) (61,565)
- --------------------------------------------------------------------
Prepaid pension cost $ 87,540 $ 82,579
- --------------------------------------------------------------------
</TABLE>
The plan's funded status as of any measurement date is based on prevailing
market conditions as to discount rate and plan assets, and is accordingly
subject to volatility. The projected benefit obligation was determined using
assumed discount rates of 7 1/2% at December 31, 1993, 8% at the June 1, 1993
interim measurement and 8 1/2% at December 31, 1992 and assumed long-term rate
of compensation increases of 4 1/2%, 5% and 6% at December 31, 1993, June 1,
1993 and December 31, 1992, respectively. Pension cost was determined using an
assumed long-term rate of return on plan assets of 10% for 1993, 1992 and 1991.
In 1993, a foreign subsidiary of the Corporation recorded a curtailment gain of
$1,072, resulting from a significant reduction in defined benefit accruals for
present employees' future services. Pension expense (credit) for foreign
subsidiaries was $(436) in 1993, $998 in 1992 and $349 in 1991. Assets and
liabilities of foreign pension plans are not material.
A-15
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
(N) FOREIGN SUBSIDIARIES
The gross earnings and net assets of foreign subsidiaries amounted to $27,595
and $10,615 in 1993, $26,030 and $8,146 in 1992 and $29,627 and $12,355 in
1991. The net income (loss) of foreign subsidiaries was $2,551 in 1993,
$(2,512) in 1992 and $2,845 in 1991.
(O) BUSINESS SEGMENTS
The Corporation, through its subsidiaries, is principally engaged in providing
professional engineering, design, construction, consulting and full
environmental services for petrochemical, refining, power, industrial,
governmental, transportation and civil works projects. The Corporation's cold
storage and related activities business offers consolidated distribution of
frozen products for food processors and others throughout the Southeast.
Export gross earnings were less than 10% of consolidated gross earnings.
Although the Corporation has numerous clients and is not dependent on any
single client, one or a few clients may contribute a substantial portion of the
Corporation's consolidated gross earnings in any one year or over a period of
several consecutive years due to the size of major engineering and construction
projects and the progress accomplished on those projects in that year or period
of years. The engineering, construction and consulting services segment had one
client in 1993 who accounted for 17% of consolidated gross earnings and had no
single client in 1992 or 1991 who accounted for 10% or more of consolidated
gross earnings. The cold storage and related activities business segment had no
single client providing 10% or more of consolidated gross earnings.
Information regarding business segments is shown on page A-19 and is
incorporated herein.
(P) QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tabulation sets forth unaudited quarterly financial data for the
years 1993 and 1992:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
1993 QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Earnings $72,834 $78,221 $65,439 $63,298
Income (Loss) before Income Taxes 4,440 435 4,519 (941)
Net Income (Loss) 2,705 77 1,213 (2,043)
Net Income (Loss) per share * .18 .01 .08 (.14)
====================================================================================================
</TABLE>
* Includes cumulative effect of a change in accounting principle per share of
$.16 for the first quarter; costs associated with the Incentive Retirement
Program of $.36 per share for the second quarter; costs related to an
increase in the statutory federal income tax rate on corporations from 34% to
35% of $.08 per share and a foreign pension curtailment gain of $.07 per
share for the third quarter; a charge for a judgment against a subsidiary of
the Corporation of $.16 per share and a charge for an IRS settlement of $.09
per share for the fourth quarter.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
1992 QUARTER QUARTER* QUARTER* QUARTER*
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Earnings $65,796 $76,028 $68,783 $72,490
Income before Income Taxes 1,671 11,371 3,129 7,436
Net Income 3,356 5,573 581 3,305
Net Income per share ** .22 .37 .04 .22
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Includes gross earnings of $3,734, $290 and $374, net income of $2,364 ,
$191 and $247 and net income per share of $.16 , $.01 and $.02 resulting
from the sale of investment securities for the second , third and fourth
quarters, respectively.
** Includes extraordinary item per share of $.01 and $.01 for the first and
second quarters, and cumulative effect of a change in accounting principle
per share of $.21 for the first quarter.
A substantial portion of the Corporation's business is derived from long-term
engineering and construction contracts. Gross earnings are determined on the
percentage-of-completion method. Under this method, revisions to earnings
estimates recorded in any quarterly period may be adjustments to revenue
recognized in prior periods and may in turn be further adjusted during
subsequent quarters. Accordingly, historical results may vary from quarter to
quarter.
(Q) FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Corporation's financial instruments at
December 31, 1993 follows:
The carrying amounts for cash and cash equivalents and U.S. Government
securities approximate their fair values because of the short maturity of the
instruments. Investment securities are carried at fair value based on quoted
market prices.
Long-term debt, excluding capital lease obligations, consists primarily of
mortgage loans related to our real estate operations in Tampa, Florida, which
were renewed in 1993. The fair value of these mortgage loans approximates the
carrying value at December 31, 1993. The carrying value of the mortgage loan
for a subsidiary's office building amounted to $6,000 compared with a fair
value of $6,217 based on quoted market prices for similar issues or on current
rates available to the Corporation for debt with similar terms and maturities.
In addition, the Corporation and its subsidiaries have entered into other
financial agreements in the normal course of business. These agreements, which
by their nature contain potential risk of loss, include lines of credit,
letters of credit, performance bonds and performance guarantees. The fair
values of the lines of credit, letters of credit, performance bonds and
performance guarantees are estimated at $340, based on the fees paid to obtain
the obligations.
(R) RECLASSIFICATIONS
Certain reclassifications have been made in the prior years' consolidated
financial statements to conform with the 1993 presentation.
A-16
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(All dollar amounts, except per share amounts, are in thousands.)
<TABLE>
<CAPTION>
---------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Earnings:
Engineering, construction and consulting services $234,251 $238,813 $232,795 $205,471 $227,569
Cold storage and related activities 16,914 15,698 15,348 14,378 11,726
Oil and gas interests 10,885 11,266 11,963 14,308 16,645
Dividends and interest 4,246 4,895 7,337 12,731 20,528
Profits on investment securities (Note 1) -- 4,398 -- 4,274 4,155
Other 13,496 8,027 8,976 12,885 8,642
- ------------------------------------------------------------------------------------------------------------------------------
Total $279,792 $283,097 $276,419 $264,047 $289,265
- ------------------------------------------------------------------------------------------------------------------------------
Net Income (Notes 1, 2, 3 and 4) $ 1,952 $ 12,815 $ 17,605 $ 8,888 $ 20,797
- ------------------------------------------------------------------------------------------------------------------------------
Average Number of Shares Outstanding 14,978,000 14,999,000 15,055,000 15,124,000 15,161,000
- ------------------------------------------------------------------------------------------------------------------------------
Net Income Per Share (Notes 1, 2, 3 and 4) $ .13 $ .85 $1.17 $ .59 $1.37
- ------------------------------------------------------------------------------------------------------------------------------
Dividends Declared Per Share $ .60 $ .60 $ .60 $1.05 $1.20
- ------------------------------------------------------------------------------------------------------------------------------
Total Assets (Note 5) $679,842 $614,654 $602,431 $569,095 $565,927
- ------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt $ 47,739 $ 24,768 $ 28,022 $ 11,350 $ 21,626
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (1) Reflects gain on sale of investment securities, which increased net
income by $2,802, or $.19 per share in 1992, as explained in Note E
to the Consolidated Financial Statements, $2,853, or $.19 per share
in 1990 and $2,774, or $.18 per share in 1989.
(2) Includes an extraordinary item from utilization of foreign
subsidiaries' net operating loss carryforwards, which increased net
income by $246, or $.02 per share in 1992, $1,188, or $.09 per
share in 1991 and $1,346, or $.09 per share in 1990.
(3) Includes cumulative effect of a change in accounting principle,
which increased net income by $2,322, or $.16 per share in 1993 and
$3,229, or $.21 per share in 1992.
(4) Includes a foreign pension curtailment gain which increased net
income in 1993 by $1,072, or $.07 per share, and costs which
decreased net income in 1993 as follows: $5,460, or $.36 per share,
associated with the Incentive Retirement Program; $1,131, or $.08
per share, relating to an increase in the statutory federal income
tax rate on corporations from 34% to 35%; $2,340, or $.16 per
share, relating to a judgment against a subsidiary of the
Corporation and $2,015, or $.13 per share, relating to an IRS
settlement in connection with prior years' income tax returns.
(5) Total assets at December 31, 1993 includes an increase of $38,423,
as a result of carrying investment securities at a fair market
value of $40,836, due to the adoption of Financial Accounting
Standards Board Statement No. 115 -- Accounting for Certain
Investments in Debt and Equity Securities.
MARKET AND DIVIDEND INFORMATION
Principal Market - New York Stock Exchange
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SALES PRICE OF DIVIDENDS PAID
COMMON SHARES PER SHARE
- -------------------------------------------------------------
1993 1992 1993 1992
- -------------------------------------------------------------
QUARTER HIGH LOW HIGH LOW
- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First 25 5/8 21 7/8 31 27 3/8 $.15 $.15
Second 26 1/2 21 1/4 28 1/4 23 3/4 .15 .15
Third 29 1/8 24 5/8 28 1/8 25 1/8 .15 .15
Fourth 30 1/4 26 1/4 26 24 .15 .15
- ------------------------------------------------------------
</TABLE>
The Corporation has purchased and may continue to purchase from time to time
additional shares of its Common Stock for general corporate purposes on the New
York Stock Exchange, or otherwise. However, there is no assurance that the
Corporation will continue to purchase shares of its Common Stock. The
approximate number of record holders of Common Stock as of December 31, 1993
was 6,800. The Common Stock is also listed for trading on the Boston Stock
Exchange.
A-17
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
REPORT OF MANAGEMENT
The management of Stone & Webster, Incorporated is responsible for the
preparation of the financial statements and related notes included in this
annual report to stockholders. The financial statements have been prepared in
conformity with generally accepted accounting principles and accordingly
include certain amounts which represent management's best estimates and
judgments.
Management maintains internal systems to assist it in fulfilling its
responsibility for financial reporting, including careful selection of
personnel, segregation of duties and the maintenance of formal accounting and
reporting policies and procedures. While no system can ensure elimination of
all errors and irregularities, the systems have been designed to provide
reasonable assurance that assets are safeguarded, policies and procedures are
followed and transactions are properly executed and reported. These systems are
reviewed and modified in response to changing conditions. Management believes
that the Corporation's system of internal controls is adequate to accomplish
the objectives discussed herein.
The system is supported by an internal auditing function that operates
worldwide and reports its findings to management throughout the year. The
Corporation's independent accountants are engaged to express an opinion on the
year-end financial statements. The independent accountants review and test the
system of internal accounting controls and the data contained in the financial
statements to the extent required by generally accepted auditing standards as
they deem necessary to arrive at an opinion on the fairness of the financial
statements presented herein.
The Audit Committee of the Board of Directors, which is comprised of outside
directors, meets regularly with management, the internal auditors and the
independent accountants to discuss the adequacy of internal controls, the
reported financial results and the results of the auditors' examinations. The
internal auditors and the independent accountants have direct access to the
Audit Committee and meet privately with the Committee.
William F. Allen, Jr. William M. Egan
Chairman of the Board and Executive Vice President and
Chief Executive Officer Chief Financial Officer
Bruce C. Coles
President
A-18
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(See Note O to Consolidated Financial Statements)
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
BUSINESS SEGMENTS GROSS EARNINGS (NOTE 1) OPERATING PROFIT (NOTE 4) IDENTIFIABLE ASSETS (NOTE 5)
1993 1992 1991 1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Engineering, construction and
consulting services (Note 2) $243,996 $243,591 $239,050 $ 9,879 $ 23,456 $31,238 $474,168 $437,034 $435,611
Cold storage and related activities (Note 2) 16,939 15,714 15,369 5,286 4,206 3,932 35,015 35,760 37,216
Other (Note 3) 15,767 15,776 16,413 2,833 1,100 (222) 68,981 71,581 71,514
- ------------------------------------------------------------------------------------------------------------------------------------
Total 276,702 275,081 270,832 17,998 28,762 34,948 578,164 544,375 544,341
General corporate dividends and interest 3,090 3,618 5,587 3,090 3,618 5,587
Profits on investment securities -- 4,398 -- -- 4,398 --
General corporate expenses (10,029) (10,150) (8,750)
Interest expense (2,606) (3,021) (3,659)
General corporate assets (Note 6) 101,678 70,279 58,090
- ------------------------------------------------------------------------------------------------------------------------------------
Total Gross Earnings, Income before Income
Taxes and Total Assets $279,792 $283,097 $276,419 $ 8,453 $ 23,607 $28,126 $679,842 $614,654 $602,431
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GEOGRAPHIC AREAS GROSS EARNINGS OPERATING PROFIT IDENTIFIABLE ASSETS
1993 1992 1991 1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States (Note 7) $246,434 $246,284 $238,197 $12,365 $28,494 $30,244 $535,641 $506,247 $505,903
Foreign (Note 8) 30,268 28,797 32,635 5,633 268 4,704 42,523 38,128 38,438
- ------------------------------------------------------------------------------------------------------------------------------------
Total Gross Earnings, Operating Profit and
Identifiable Assets $276,702 $275,081 $270,832 $17,998 $28,762 $34,948 $578,164 $544,375 $544,341
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
BUSINESS SEGMENTS DEPRECIATION, DEPLETION
AND AMORTIZATION CAPITAL EXPENDITURES
1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Engineering, construction and consulting services $15,182 $14,549 $12,863 $29,389 $24,018 $13,109
Cold storage and related activities 2,025 1,976 1,665 863 579 7,711
Other (Note 3) 2,928 3,599 4,286 1,427 2,349 2,378
- ------------------------------------------------------------------------------------------------------------------------------------
Total $20,135 $20,124 $18,814 $31,679 $26,946 $23,198
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (1) Total segment gross earnings include gross earnings from
unaffiliated customers as reported in the consolidated income
statement. In computing segment gross earnings, general corporate
dividends and interest and profits on investment securities have
been excluded.
(2) To reconcile segment gross earnings information with consolidated
amounts, the following items have been included in the engineering,
construction and consulting services segment: $1,060, $1,183 and
$1,537 of interest income and $8,685, $3,595 and $4,718 of other
gross earnings for the years 1993, 1992 and 1991, respectively; and,
the following items have been included in the cold storage and
related activities segment: $12, $11 and $16 of interest income for
the years 1993, 1992 and 1991, respectively, and $13 of other gross
earnings for the year 1993 and $5 for the years 1992 and 1991.
(3) The Other segment includes oil and gas and real estate businesses
that historically have never been reported as separate segments.
(4) Segment operating profit comprises total segment gross earnings, as
defined in Note 1, less operating expenses and before general
corporate expenses, interest expense and income taxes, including
taxes which are calculated based on gross receipts.
(5) Identifiable assets are those assets that are used in the operations
of each segment.
(6) General corporate assets are principally cash, U.S. Government
securities and investment securities. Corporate assets at
December 31, 1993 includes an increase of $38,423 as a result of
carrying investment securities at fair market value.
(7) Includes export sales of $22,277, $24,171 and $16,018 for the
years 1993, 1992 and 1991, respectively, primarily to Asia/Pacific
Rim, Middle East and Canada.
(8) Gross earnings principally to Asia/Pacific Rim, Canada, Europe and
Middle East.
A-19
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES - OTHER SECURITY INVESTMENTS
as at December 31, 1993
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Amount at Which
Each Portfolio
Number of of Equity Security
Shares or Units- Market Value Issues and Each Other
Principal Amount Cost of of Each Issue at Security Issue Carried
Name of Issuer and Title of Each Issue of Bonds and Notes Each Issue Balance Sheet Date in the Balance Sheet
Investment securities, at cost:
<S> <C> <C> <C> <C>
Tenneco Inc., common stock 700,317 shs. $2,071 $36,854 $36,854
Miscellaneous 342 3,982 3,982
Total $2,413 $40,836 $40,836
</TABLE>
A-20
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
Other Changes
Add (Deduct)
Balance at Cumulative Balance at
Beginning Additions Translation End of
Classification of Period at Cost Retirements Adjustments Other Period
<S> <C> <C> <C> <C> <C> <C>
For the Year 1993
Oil and gas properties $ 29,587 $ 893 $ 1,820 $ - $ 365 (A) $ 29,025
Contract drilling equipment 17,031 - 16,665 - (366)(B) -
Cold storage plant & equipment 47,442 863 129 - 9 (C) 48,185
Office buildings & other real estate 132,485 1,806 1 - (1)(C) 134,289
Construction in progress 2,357 22,048 - - - 24,405
Furniture and equipment 129,704 6,069 4,671 (355) (6)(C) 130,741
$358,606 $31,679 $23,286 $ (355) $ 1 $366,645
For the Year 1992
Oil and gas properties $ 30,825 $ 1,377 $ 2,604 $ - $ (11)(C) $ 29,587
Contract drilling equipment 17,031 - - - - 17,031
Cold storage plant & equipment 46,887 579 19 - (5)(C) 47,442
Office buildings & other real estate 124,567 7,928 10 - - 132,485
Construction in progress - 2,357 - - - 2,357
Furniture and equipment 117,255 14,705 3,115 (1,850) 2,709 (D) 129,704
$336,565 $26,946 $ 5,748 $(1,850) $2,693 $358,606
For the Year 1991
Oil and gas properties $ 31,799 $ 1,470 $ 2,407 $ - $ (37)(C) $ 30,825
Contract drilling equipment 18,973 - 1,942 - - 17,031
Cold storage plant & equipment 39,254 7,711 81 - 3 (C) 46,887
Office buildings & other real estate 123,071 1,842 307 - (39)(C) 124,567
Furniture and equipment 108,470 12,175 5,952 (865) 3,427 (D) 117,255
$321,567 $23,198 $10,689 $ (865) $3,354 $336,565
</TABLE>
Notes:
(A) Represents transfers in of $351 and miscellaneous adjustments of $14.
(B) Represents transfers out of $(351) and miscellaneous adjustments of $(15).
(C) Represents miscellaneous adjustments.
(D) Represents reclassifications from another balance sheet account and
miscellaneous adjustments.
A-21
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
Other Changes
Add (Deduct)
Balance at Cumulative Balance at
Beginning Additions Translation End of
Classification of Period at Cost Retirements Adjustments Other Period
<S> <C> <C> <C> <C> <C> <C>
For the Year 1993
Oil and gas properties $ 20,234 $ 1,485 $ 1,820 $ - $ 801 (A) $ 20,700
Contract drilling equipment 15,828 129 16,665 - 708 (B) -
Cold storage plant & equipment 13,670 2,025 129 - 22 (C) 15,588
Office buildings & other real estate 32,661 3,884 1 - - 36,544
Furniture and equipment 83,932 12,612 4,671 (248) 252 (D) 91,877
$166,325 $20,135 $23,286 $ (248) $1,783 $164,709
For the Year 1992
Oil and gas properties $ 20,580 $ 2,037 $ 2,604 $ - $ 221 (E) $ 20,234
Contract drilling equipment 15,577 251 - - - 15,828
Cold storage plant & equipment 11,713 1,976 19 - - 13,670
Office buildings & other real estate 29,243 3,428 10 - - 32,661
Furniture and equipment 75,960 12,432 3,115 (1,376) 31 (F) 83,932
$153,073 $20,124 $ 5,748 $(1,376) $ 252 $166,325
For the Year 1991
Oil and gas properties $ 20,362 $ 2,476 $ 2,407 $ - $ 149 (G) $ 20,580
Contract drilling equipment 17,050 272 1,942 - 197 (H) 15,577
Cold storage plant & equipment 10,084 1,665 81 - 45 (H) 11,713
Office buildings & other real estate 26,063 3,466 307 - 21 (H) 29,243
Furniture and equipment 71,389 10,935 5,952 (722) 310 (I) 75,960
$144,948 $18,814 $10,689 $ (722) $ 722 $153,073
</TABLE>
Notes:
(A) Represents net salvage of $593, transfers in of $189 and other adjustments
of $19.
(B) Represents net salvage of $912, transfers out of $(189) and other
adjustments of $(15).
(C) Represents net salvage of $13 and other adjustments of $9.
(D) Represents net salvage of $259 and other adjustments of $(7).
(E) Represents net salvage of $75 and other adjustments of $146.
(F) Represents net salvage of $4 and other adjustments of $27.
(G) Represents net salvage of $78 and other adjustments of $71.
(H) Represents net salvage.
(I) Represents net salvage of $285 and other adjustments of $25.
See notes to Schedule VI on page A-23.
A-22
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
NOTES TO SCHEDULE VI-PROPERTY, PLANT AND EQUIPMENT
for the years 1993, 1992 and 1991
Depreciation and amortization are provided principally on a straight-line
basis at the following annual rates:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Oil and gas properties:
Lease and well equipment * * *
Pipeline properties * * *
Depletable oil and gas
properties * * *
Unproved oil and gas
properties 8.0% to 28.3% 8.0% to 28.3% 8.0% to 28.3%
Other depreciable properties 10.0% 10.0% 10.0%
Contract drilling equipment - 3.2% to 20.0% 3.2% to 20.0%
Cold storage plant and
equipment 1.9% to 14.3% 1.9% to 14.3% 1.9% to 14.3%
Office buildings 2.0% to 3.3% 2.0% to 3.3% 2.0% to 3.3%
Furniture and equipment 6.7% to 25.0% 6.7% to 25.0% 6.7% to 25.0%
</TABLE>
Expenditures for maintenance and repairs are charged against income;
expenditures for renewals and betterments, except minor items, are
capitalized.
* Depreciation of lease and well equipment and pipeline properties and
depletion of oil and gas properties are provided by the units of production
method.
A-23
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
for the years 1993, 1992 and 1991
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F
Category of Balance Weighted Maximum Amount Average Amount Weighted Average
Aggregate at End Average Outstanding Outstanding Interest Rate
Short-Term of Interest During the During the During the
Borrowings Period Rate Period Period (C) Period (D)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Bank loans (A) $5,677 3.91% $ 7,509 $ 6,191 3.92%
Construction Loans (B) - - 22,667 12,494 4.83
Year Ended December 31, 1992
Bank loans (A) 3,950 4.16 3,950 871 4.91
Construction loans (B) 2,997 6.00 2,997 250 6.00
Year Ended December 31, 1991
Bank loans (A) - - 1,782 195 13.26
Construction loans (B) - - 3,388 1,974 8.86
</TABLE>
Notes:
(A) Bank loans represent borrowings under revolving lines of credit.
(B) Represents loans for construction of buildings. In February 1994, the
December 31, 1993 construction loan balance was refinanced with a
permanent mortgage. A reclassification of this loan balance to long-term
debt has been made to the December 31, 1993 Consolidated Balance Sheet
to give effect to this transaction.
(C) The average amount outstanding during the period was calculated using
month-end outstanding principal balances during the year.
(D) The weighted average interest rate during the period was computed by
averaging the month-end interest rates on each borrowing, with each
month-end rate being weighted in proportion to the related month-end
outstanding amount.
A-24
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
for the years 1993, 1992 and 1991
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
Item Description Charged to Costs and Expenses
1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $2,860 $2,588 $3,234
Taxes, other than income and payroll taxes
Real estate 5,223 6,146 5,982
Other 1,666 2,042 1,547
</TABLE>
Note - Depreciation and amortization of intangible assets, royalties and
advertising costs have been omitted because each of the items does
not exceed 1 percent of gross earnings in the related Consolidated
Statement of Income.
A-25
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
COOPERS Certified Public Accountants
& LYBRAND
REPORT OF INDEPENDENT ACCOUNTANTS
_______
To the Stockholders and Board of
Directors of Stone & Webster, Incorporated
We have audited the consolidated financial statements and the
financial statement schedules of Stone & Webster, Incorporated
and Subsidiaries listed in the index on page A-1 of the Form 10-
K. These financial statements and financial statement schedules
are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Stone & Webster, Incorporated and Subsid-
iaries as of December 31, 1993 and 1992, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles. In addition, in
our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the
information required to be included therein.
As discussed in Notes D and E to the consolidated financial
statements, the Corporation changed its method of accounting for
income taxes and investment securities in 1993. Additionally, as
discussed in Note M to the consolidated financial statements, the
Corporation changed its method for determining the calculated
value of the assets of its pension plan for purposes of calculat-
ing annual pension cost in 1992.
COOPERS & LYBRAND
New York, New York
February 15, 1994
A-26
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
EXHIBIT INDEX
No. Exhibit
(3) (i) Restated Certificate of Incorporation
(incorporated by reference)
(ii) By-Laws (filed herewith)
(10) (a) Material Contracts - Restricted Stock
Plan and form of grant (incorporated by reference)
(b) Material Contracts - Form of letter agreement
relating to other benefits (incorporated by
reference)
(21) Subsidiaries of the Registrant
(23) Consent of Independent Accountants.
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
Exhibit (3)(ii)
B Y - L A W S
of
STONE & WEBSTER, INCORPORATED
AS AMENDED EFFECTIVE
JANUARY 19, 1994
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
B Y - L A W S
OF
STONE & WEBSTER,
INCORPORATED
ARTICLE I
Name
The name of the corporation (hereinafter referred to as this
Corporation) is Stone & Webster, Incorporated.
ARTICLE II
Stockholders' Meetings
All meetings of the stockholders shall be held at the
principal office of this Corporation in the City of Wilmington,
Delaware.
ARTICLE III
Annual Stockholders' Meeting
The Annual Meeting of the stockholders of this Corporation
shall be held at two o'clock in the afternoon, Wilmington, Delaware
Time, on the second Thursday in May in each year if not a legal holiday,
and if a legal holiday, then at the same time on the next succeeding
Thursday not a legal holiday. In the event that such Annual Meeting is
omitted by oversight or otherwise on the date herein provided for, the
Directors shall cause a meeting in lieu thereof to be held as soon
thereafter as conveniently may be, and any business transacted or
elections held at such meeting shall be as valid as if transacted or
held at the Annual Meeting. Such subsequent meeting shall be called in
the same manner as provided for Special Stockholders' Meetings.
ARTICLE IV
Special Stockholders' Meetings
Special Meetings of the stockholders of this Corporation shall
be held whenever called in the manner required by law for purposes as to
which there are special statutory provisions and for other purposes
whenever called by the Chairman of the Board of Directors or by the
President or by a Vice Chairman or by the Chairman of the Executive
Committee or by vote of the Board of Directors.
2
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
ARTICLE V
Notice of Stockholders' Meetings
Notice of all stockholders' meetings stating the time and
place, and, in the case of Special Meetings, the objects for which such
meetings are called, shall be given by the Chairman of the Board of
Directors or the President or a Vice Chairman or the Chairman of the
Executive Committee or a Vice-President or the Secretary or an Assistant
Secretary, by mail, to each stockholder of record having voting power in
respect of the business to be transacted thereat, at his or her
registered address at least ten (10) days prior to the date of the
meeting, and the person giving such notice shall make affidavit in
relation thereto.
Any meeting at which all stockholders having voting power in
respect of the business to be transacted thereat are present, either in
person, or by proxy, or of which those not present shall at any time
waive or have waived notice in writing, shall be a legal meeting for the
transaction of business, notwithstanding that notice has not been given
as hereinbefore provided.
ARTICLE VI
Waiver of Notices
Whenever any notice whatever is required to be given by these
By-laws, or the Certificate of Incorporation of this Corporation, or any
of the laws of the State of Delaware, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VII
Quorum at Stockholders' Meetings
At any meeting of the stockholders, a majority in interest of
all the capital stock issued and outstanding and entitled to vote,
represented by such stockholders of record in person or by proxy, shall
constitute a quorum, but a less interest may adjourn any meeting from
time to time and the meeting may be held as adjourned without further
notice. When a quorum is present at any meeting, a majority in interest
of the stock entitled to vote represented thereat shall decide any
question brought before such meeting, unless the question is one upon
which by express provision of law or of the Certificate of Incorporation
or of these By-laws a larger or different vote is required, in which
case such express provision shall govern and control the decision of
such question.
3
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
ARTICLE VIII
Proxy and Voting
Stockholders of record entitled to vote may vote at any
meeting either in person or by proxy in writing, which shall be filed
with the Secretary of the meeting before being voted. Such proxies
shall entitle the holders thereof to vote at any adjournment of such
meeting, but shall not be valid after the final adjournment thereof.
Stockholders entitled to vote may also be represented by a general power
of attorney produced at any meeting until it is revoked. No proxy or
power of attorney shall be voted on after three years from its date,
unless said proxy or power of attorney provides for a longer period.
ARTICLE IX
Board of Directors
A Board of Directors shall be elected by ballot at the Annual
Meeting of the stockholders or at any meeting held in place thereof as
hereinbefore provided. No director shall be elected by stockholders
except by the vote of a majority of all votes entitled to be cast in
such election by all of the outstanding shares of all classes of capital
stock of the Corporation. The number of Directors of this Corporation
shall be thirteen (13), but the number may be increased or decreased at
any time by amendment of these By-laws adopted by vote of two-thirds of
all of the Directors of this Corporation at the time in office or by
vote of at least two-thirds of the votes at the time entitled to be cast
generally in the election of directors by all of the outstanding shares
of all classes of capital stock of the Corporation, provided that the
number of Directors shall always be not less than three. Directors need
not be stockholders of this Corporation.
The Directors of the Corporation shall be divided into three
classes with the number of Directors fixed by or in accordance with the
By-laws divided equally so far as possible among the three classes.
Except as otherwise provided in Article XXV, following adoption of this
By-law provision,
(a) one-third of the number of Directors shall be
elected to serve until the 1973 Annual Meeting of
the stockholders,
(b) one-third of the number of Directors shall be
elected to serve until the 1974 Annual Meeting of
the stockholders,
(c) one-third of the number of Directors shall be
elected to serve until the 1975 Annual Meeting of
the stockholders,
4
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Form 10-K 1993 Stone & Webster, Incorporated
and until their successors are duly elected and qualified. At each
annual election after the 1972 election, the successors to the Directors
of each class whose term shall expire in that year shall be elected to
hold office for a term of three years from the date of their election
and until their successors are duly elected and qualified. In case of
any increase in the number of Directors, the additional Directors shall
be distributed among the several classes as nearly equally as possible.
ARTICLE X
Power of Directors
The Board of Directors shall have the entire management of the
business of this Corporation. In the management and control of the
property, business and affairs of this Corporation, the Board of
Directors is hereby vested with all the powers possessed by this
Corporation itself, so far as this delegation of authority is not
inconsistent with the laws of the State of Delaware, with the
Certificate of Incorporation of this Corporation, or with these By-laws.
The Board of Directors shall have authority from time to time to set
apart out of any assets of this Corporation otherwise available for
dividends a reserve or reserves as working capital or for any other
proper purpose or purposes, and to abolish or add to any such reserve or
reserves from time to time as the Board may deem to be in the interests
of this Corporation and the Board shall likewise have power to determine
in its discretion what part of the assets of this Corporation available
for dividends in excess of such reserve or reserves shall be declared in
dividends and paid to the stockholders of this Corporation.
ARTICLE XI
Executive and Other Committees
The Board of Directors may designate by resolution passed by a
majority of the whole Board two or more of its number who shall
constitute an Executive Committee, which Committee shall, when the Board
of Directors is not in session, have and may, subject to any limitation
imposed by the laws of the State of Delaware, exercise any or all of the
powers of the Board of Directors in the management of the business and
affairs of this Corporation, and have power to authorize the seal of
this Corporation to be affixed to all papers which may require it. The
Secretary of this Corporation, or, in his absence, an Assistant
Secretary or any other person designated by the Committee, shall act as
Secretary of the Committee. The Executive Committee, except as
otherwise herein provided, shall fix its own rules of procedure and
shall keep a record of its acts and proceedings and report the same from
time to time to the Board of Directors. Any vacancy in the Executive
Committee shall be filled by the vote of the majority of the whole Board
of Directors. The Board of Directors may appoint one or more of its
members as ex-officio members of the Executive Committee, who shall have
the privilege of attending meetings of the Executive Committee, but who
shall not be entitled to vote upon any matters brought before the
Executive Committee and shall not be counted as a member of the
5
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Form 10-K 1993 Stone & Webster, Incorporated
Executive Committee for the purpose of determining the number necessary
to constitute a quorum, or for the purpose of determining whether a
quorum is present. Notice of meetings to ex-officio members shall not
be deemed to be required under law, the Certificate of Incorporation or
these By-laws.
The Board of Directors likewise may appoint from their number
or from the stockholders other committees from time to time, the number
(not less than two) composing such committees and the powers conferred
upon the same to be determined by a vote of the Board of Directors.
ARTICLE XII
Directors' Meetings
Regular Meetings of the Board of Directors shall be held at
such places within or without the State of Delaware and at such times as
the Board by vote may determine from time to time, and if so determined
no notice thereof need be given. Special Meetings of the Board of
Directors may be held at any time or place either within or without the
State of Delaware, whenever called by the Chairman of the Board of
Directors, the President, a Vice Chairman, the Chairman of the Executive
Committee, a Vice-President, the Secretary, an Assistant Secretary or
three or more Directors, notice thereof being given to each Director by
the Secretary or an Assistant Secretary or officer calling the meeting,
or at any time or place without formal notice, provided all the
Directors are present or waive notice thereof as provided in Article VI
hereof. Notice of Special Meetings, stating the time and place thereof,
shall be given by mailing the same to each Director at his residence or
business address at least two days before the meeting, or by delivering
the same to him personally or telephoning or telegraphing the same to
him at his residence or business address at least one day before the
meeting, unless, in case of exigency, the Chairman of the Board of
Directors or the President or a Vice Chairman or the Chairman of the
Executive Committee or in their absence the Secretary shall prescribe a
shorter notice to be given personally or by telephoning or telegraphing
each Director at his residence or business address. Such Special
Meetings shall be held at such times and places as the notice thereof or
waiver shall specify.
ARTICLE XIII
Quorum at Directors' Meetings
One-third of the number of Directors, but not less than four
members of the Board of Directors, shall constitute a quorum for the
transaction of business, but a less number may adjourn any meeting from
time to time and the meeting may be held as adjourned without further
notice. When a quorum is present at any meeting a majority of the
members present thereat shall decide any question brought before such
meeting, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-laws.
6
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Form 10-K 1993 Stone & Webster, Incorporated
ARTICLE XIV
Officers
The officers of this Corporation shall be a Chairman of the
Board of Directors, a President, a Secretary and a Treasurer. There may
be one or more Vice Chairmen, one or more Vice-Presidents and a Chairman
of the Executive Committee. The officers shall be elected by the Board
of Directors at the first meeting after the Annual Meeting of the
stockholders, and a meeting may be held without notice for this purpose
immediately after the Annual Meeting of the stockholders and at the same
place.
ARTICLE XV
Eligibility of Officers
The Chairman of the Board of Directors, the President and the
Chairman of the Executive Committee may, but need not, be stockholders
but shall be Directors of this Corporation. The Vice Chairmen, the
Vice-Presidents, Secretary, Treasurer and such other officers as may be
elected or appointed may, but need not, be stockholders or Directors of
this Corporation. Any person may hold more than one office provided the
duties thereof can be consistently performed by the same person,
provided, however, that no one person shall, at the same time, hold the
three offices of President or Vice-President and Secretary and
Treasurer.
ARTICLE XVI
Additional Officers and Agents
The Board of Directors, at its discretion, may appoint one or
more Assistant Treasurers, and one or more Assistant Secretaries, and
such other officers or agents as it may deem advisable, and prescribe
the duties thereof.
ARTICLE XVII
Chairman of the Board of Directors
The Chairman of the Board of Directors shall be the chief
executive officer of this Corporation, and, as such, shall have
supervision of its policies, business, and affairs, and such other
powers and duties as are commonly incident to the office of chief
executive officer. He shall preside at the meetings of the Board of
Directors and may call meetings of the Board of Directors and of any
committee thereof whenever he deems it necessary, and he shall call to
order and act as chairman of all meetings of the stockholders of this
Corporation. In addition, he shall have such other powers and duties as
the Board of Directors shall designate from time to time. The Chairman
of the Board of Directors, unless some other person is thereunto
specifically authorized by vote of the Board of Directors, shall have
7
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Form 10-K 1993 Stone & Webster, Incorporated
power to sign all certificates of stock, bonds, deeds and contracts of
this Corporation.
ARTICLE XVIII
President
The President shall have such powers and duties as are
commonly incident to his office. He shall also have such other powers
and duties as the Board of Directors or the Chairman of the Board of
Directors shall designate from time to time. He may call meetings of
the Board of Directors and of any committee thereof whenever he deems it
necessary. The President, unless some other person is thereunto
specifically authorized by vote of the Board of Directors, shall have
power to sign all certificates of stock, bonds, deeds and contracts of
this Corporation.
ARTICLE XIX
Vice Chairman
The Vice Chairman shall have such powers and duties as are
commonly incident to his office. He shall also have such other powers
and duties as the Board of Directors or the Chairman of the Board of
Directors shall designate from time to time. The Vice Chairman, unless
some other person is thereunto specifically authorized by vote of the
Board of Directors, shall have power to sign all certificates of stock,
bonds, deeds and contracts of this Corporation.
ARTICLE XX
Chairman of the Executive Committee
The Chairman of the Executive Committee shall preside at the
meetings of the Executive Committee and may call meetings thereof
whenever he deems it necessary. In addition, he shall have such other
powers and duties as the Board of Directors shall designate from time to
time.
ARTICLE XXI
Vice-Presidents
The Vice-Presidents shall each possess such powers and perform
such duties, in addition to those expressly provided herein, as the
Board of Directors may from time to time determine.
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Form 10-K 1993 Stone & Webster, Incorporated
ARTICLE XXII
Secretary
The Secretary shall keep accurate minutes of all meetings of
the stockholders, the Board of Directors and the Executive Committee,
respectively, shall perform all the duties commonly incident to his
office, and shall perform such other duties and have such other powers
as the Board of Directors shall designate from time to time. The
Secretary shall have power, together with the Chairman of the Board, the
President, a Vice Chairman or a Vice-President, to sign certificates of
stock of this Corporation. In his absence at any meeting an Assistant
Secretary or a Secretary Pro Tempore shall perform his duties thereat.
The Secretary, any Assistant Secretary and any Secretary Pro Tempore
shall be sworn to the faithful discharge of their duties.
ARTICLE XXIII
Treasurer
The Treasurer, subject to the order of the Board of Directors,
shall have the care and custody of the moneys, funds, valuable papers
and documents of this Corporation (other than his own bond which shall
be in the custody of the President) and shall have and exercise, under
the supervision of the Board of Directors, all the powers and duties
commonly incident to his office, and shall, if required by the Board of
Directors, give bond in such form and with such sureties as it may
require. He shall deposit all funds of this Corporation in such bank or
banks, trust company or trust companies or with such firm or firms doing
a banking business, as the Directors shall designate and shall have
power to borrow from time to time at his discretion moneys for the
corporate needs of this Corporation and cause to be issued as evidence
thereof notes of this Corporation. He may endorse for deposit or
collection all checks, notes, et cetera, payable to this Corporation or
to its order, may accept drafts on behalf of this Corporation, and,
together with the Chairman of the Board, the President, a Vice Chairman,
or a Vice-President, may sign certificates of stock. He shall keep
accurate books of account of this Corporation's transactions which shall
be the property of this Corporation, and, together with all its property
in his possession, shall be subject at all times to the inspection and
control of the Board of Directors. The Treasurer shall be subject in
every way to the order of the Board of Directors.
All checks, drafts, notes, bonds, or other obligations for the
payment of money shall be signed by the Treasurer and/or such other
officer or officers, agent or agents, as the Board of Directors shall by
resolution direct. The Board of Directors may, in its discretion, also
provide by resolution for countersignature or registration of checks,
drafts, notes and/or bonds of this Corporation. Checks for the total
amount of any pay roll may be drawn in accordance with the foregoing
provisions and deposited in a special fund. Checks upon this fund may
9
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
be drawn by such person as the Treasurer shall designate and need not be
countersigned.
ARTICLE XXIV
Resignations and Removals
Any Director, officer or agent of this Corporation may resign
at any time by giving written notice to the Board of Directors or to any
elected officer of this Corporation and any member of any committee may
resign by giving written notice either as aforesaid or to the committee
of which he is a member or the chairman thereof. Any such resignation
shall take effect at the time specified therein or, if the time be not
specified, upon receipt thereof; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to
make it effective.
Any Director may be removed from office, but only for cause,
at a meeting called for the purpose and by the affirmative approval of
holders of shares of capital stock of the Corporation entitled to cast
at least a majority of the votes at the time entitled to be cast
generally in the election of directors by all of the outstanding shares
of all classes of capital stock of the Corporation, considered for the
purposes of this paragraph of this Article as one class; provided,
however, that if the Board of Directors, by vote of two-thirds of all
the Directors then in office, shall have recommended removal of a
Director, then stockholders may remove such Director from office by the
foregoing procedure without cause. If any Director shall be removed
pursuant to this paragraph of this Article, then the stockholders of the
Corporation may, at the meeting at which such removal is effected, elect
his successor.
The Board of Directors, by vote of not less than a majority of
all the Directors of the Corporation at the time in office, may remove
from office any officer, agent or member of any committee, elected or
appointed by it.
ARTICLE XXV
Vacancies
If the office of any Director, one or more, becomes vacant by
reason of death, resignation, removal, disqualification or otherwise,
then (except where such vacancy results from removal and is filled by
the stockholders as provided in the Restated Certificate of
Incorporation) the Directors at the time in office may, by vote of a
majority of the Directors then in office, elect a successor or
successors who shall hold office for the unexpired term, and even if
there be less than a quorum of the Directors at the time in office, said
Directors may by a majority vote elect a successor or successors who
10
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
shall hold office for the unexpired term. Vacancies in the Board of
Directors may be filled for an unexpired term by the stockholders having
voting power at a meeting of the stockholders called for that purpose,
by the vote required in Article IX hereof, unless such vacancy shall
have been filled by the Directors in the manner provided in this
Article. Vacancies resulting from an increase in the number of
Directors shall be deemed to be vacancies to be filled in the manner
provided in this Article.
If the office of any officer or agent, one or more, becomes
vacant for any of the aforesaid reasons, the successor or successors
shall be elected or appointed by the Board of Directors.
This Article may not be amended or repealed except by the
affirmative approval of holders of shares of capital stock of the
Corporation entitled to cast at least two-thirds of the votes at the
time entitled to be cast generally in the election of directors by all
of the outstanding shares of all classes of capital stock of the
Corporation, considered for the purposes of this Article as one class,
or by resolution adopted by a vote of two-thirds of all the Directors of
the Corporation at the time in office.
ARTICLE XXVI
Capital Stock
The maximum amount of capital stock shall be as fixed in the
Certificate of Incorporation or in any lawful amendments thereto from
time to time.
ARTICLE XXVII
Certificates of Stock
Every stockholder shall be entitled to a certificate or
certificates of the capital stock of this Corporation in such form as
may be prescribed by the Board of Directors, duly numbered and setting
forth the number and kind of shares. Such certificates shall be signed
by the Chairman of the Board, the President, a Vice Chairman, or a Vice-
President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary. The Board of Directors may also
appoint one or more Transfer Agents and/or Registrars for its stock of
any class or classes and may require stock certificates to be
countersigned by one or more of them. If certificates of capital stock
of this Corporation are manually signed by the Registrar, the signatures
thereon of the Transfer Agent and of the Chairman of the Board of
Directors, the President, a Vice Chairman, or a Vice-President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, of this Corporation, may be facsimiles, engraved or printed.
11
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Form 10-K 1993 Stone & Webster, Incorporated
Any provisions of these By-laws with reference to the signing of stock
certificates shall include in cases above permitted, such facsimile
signatures. In case any officer or officers who shall have signed, or
whose facsimile signature or signatures shall have been used on, any
such certificate or certificates, shall cease to be such officer or
officers of this Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been
delivered by this Corporation, such certificate or certificates may
nevertheless be adopted by the Board of Directors of this Corporation
and be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such
officer or officers of this Corporation.
ARTICLE XXVIII
Transfer of Stock
Shares of stock may be transferred by delivery of the
certificate accompanied either by an assignment in writing on the back
of the certificate or by a written power of attorney to sell, assign and
transfer the same on the books of this Corporation, signed by the person
appearing by the certificate to be the owner of the shares represented
thereby, and shall be transferable on the books of this Corporation upon
surrender thereof so assigned or endorsed. The person registered on the
books of this Corporation as the owner of any shares of stock shall
exclusively be entitled as the owner of such shares to receive dividends
and to vote as such owner, in respect thereof. It shall be the duty of
every stockholder to notify this Corporation of his post office address.
ARTICLE XXIX
Transfer Books
The Board of Directors shall have power to close the stock
transfer books of this Corporation for a period not exceeding sixty (60)
days preceding the date of any meeting of stockholders or the date for
payment of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go
into effect; provided, however, that in lieu of closing the stock
transfer books as aforesaid, the Board of Directors may fix in advance a
date, not exceeding sixty (60) days preceding the date of any meeting of
stockholders or the date for the payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, as a record date for
the determination of the stockholders entitled to notice of, and to vote
at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or
exchange of capital stock, and in such case only such stockholders as
12
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Form 10-K 1993 Stone & Webster, Incorporated
shall be stockholders of record on the date so fixed shall be entitled
to such notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any stock on the books of this
Corporation after any such record date fixed as aforesaid. Except where
the transfer books of the Corporation shall have been closed or a date
shall have been fixed as a record date for the determination of the
Stockholders entitled to vote, as hereinbefore provided, no share of
stock shall be voted on at any election for Directors which shall have
been transferred on the books of the Corporation within twenty (20) days
next preceding such election of Directors.
ARTICLE XXX
Loss of Certificates
In case of the loss, mutilation or destruction of a
certificate of stock, a duplicate certificate may be issued upon such
terms as the Board of Directors shall prescribe.
ARTICLE XXXI
Seal
The seal of this Corporation shall consist of a flatfaced
circular die with the words and figures "Stone & Webster, Incorporated
Corporate Seal 1929 Delaware" cut or engraved thereon.
ARTICLE XXXII
Books and Records
Unless otherwise expressly required by the laws of Delaware,
the books and records of this Corporation may be kept outside of the
State of Delaware at such places as may be designated from time to time
by the Board of Directors.
ARTICLE XXXIII
Voting of Stock Held
Unless otherwise provided in the Certificate of Incorporation
of this Corporation or by resolution of the Board of Directors, the
Chairman of the Board of Directors or the President may from time to
time appoint an attorney or attorneys or agent or agents of this
Corporation, in the name and on behalf of this Corporation to cast the
votes which this Corporation may be entitled to cast as a stockholder or
otherwise in any other corporation or association, any of whose stock or
securities may be held by this Corporation, at meetings of the holders
13
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Form 10-K 1993 Stone & Webster, Incorporated
of the stock or other securities of such other corporations or
associations, or to consent in writing to any action by any such other
corporation or association, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent,
and may execute or cause to be executed on behalf of this Corporation
and under its corporate seal, or otherwise, such written proxies,
consents, waivers or other instruments as he may deem necessary or
proper in the premises; or the Chairman of the Board of Directors or the
President, or his attorney or agent, may attend any meeting of the
holders of stock or other securities of any such other corporation or
association and thereat vote or exercise any or all other powers of this
Corporation as the holder of such stock or other securities of such
other corporation or association.
ARTICLE XXXIV
Amendments
Except as otherwise expressly provided in a By-law adopted by
the stockholders at the time having voting power, all By-laws of this
Corporation shall be subject to amendment or repeal, and new By-laws may
be adopted, either by the affirmative approval of holders of shares of
capital stock of the Corporation entitled to cast at least a majority of
the votes at the time entitled to be cast generally in the election of
directors by all of the outstanding shares of all classes of capital
stock of the Corporation, considered for the purposes of this Article as
one class, given at an Annual Meeting or at any Special Meeting,
provided notice of the proposed amendment or repeal or of the proposed
new Bylaws be included in the notice of such meeting, or by the
affirmative vote of a majority of all of the Directors of the
Corporation at the time in office given at a regular or special meeting
of the Board of Directors, provided notice of the proposed amendment or
repeal or of the proposed new By-laws be included in the notice of such
meeting or waiver thereof or all of the Directors at the time in office
be present at such meeting. Except as aforesaid, By-laws made or
amended by the stockholders or by the Board of Directors shall be
subject to amendment or repeal by the stockholders entitled to vote or
by the Board of Directors.
14
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Form 10-K 1993 Stone & Webster, Incorporated
Exhibit (21) Subsidiaries of Registrant
Subsidiaries of Registrant on December 31, 1993 included:
<TABLE>
<CAPTION>
PLACE OF
NAME OF SUBSIDIARY INCORPORATION
<S> <C>
Stone & Webster Advanced Systems Development
Services, Inc. Delaware
Stone & Webster Advanced Technology
Applications, Inc. Delaware
Stone & Webster Development Corporation Delaware
Stone & Webster Auburn Corporation Delaware
Auburn VPS General Corporation Delaware
Auburn VPS Limited Corporation Delaware
Stone & Webster Binghamton Corporation Delaware
Stone & Webster Engineering Corporation Mass.
DSS Engineers, Inc. Florida
Fast Supply Corporation Delaware
Rockton Associates, Incorporated Delaware
Stone & Webster Civil and Transportation
Services, Inc. Mass.
Stone & Webster Construction Company, Inc. Delaware
Stone & Webster Management Consultants, Inc. New York
Stone & Webster of Argentina Corporation Delaware
Stone & Webster Management Services Limited Bermuda
Stone & Webster Overseas Consultants, Inc. Delaware
Stone & Webster Service Pty. Limited Australia
Stone & Webster Michigan, Inc. Michigan
Stone & Webster Operating Corporation Delaware
Stone & Webster Power Projects Corporation Delaware
Stone & Webster Worldwide Engineering Corporation Delaware
3 Executive Campus Corporation Delaware
245 Summer Street Corporation Mass.
1430 Enclave Parkway Corporation Delaware
Stone & Webster Overseas Group, Inc. Delaware
Associated Engineers & Consultants, Inc. New York
Rockton Technical Services Corporation Delaware
Stone & Webster Abu Dhabi (United Arab Emirates),
Inc. Delaware
Stone & Webster Arabia, Incorporated Delaware
Stone & Webster Asia Corporation Delaware
Stone & Webster Atlantic Corporation Delaware
Stone & Webster Australia Corporation Delaware
Stone & Webster Bharat, Incorporated Delaware
Stone & Webster Dominican Republic, Incorporated Delaware
Stone & Webster Engineering Pty. Limited Australia
Stone & Webster Engineering Services, Incorporated Delaware
Stone & Webster Espana, Incorporated Delaware
Stone & Webster Far East Technical Services Corp. Delaware
Stone & Webster Group Limited England
Stone & Webster Construction Limited England
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
Stone & Webster Engineering Limited England
Stone & Webster Services Limited England
Stone & Webster Services Sdn. Bhd. Malaysia
Stone & Webster Engineering and Field
Services Limited England
Stone & Webster Management Consultants England
Limited
Stone & Webster United Arab Emirates Limited England
Stone & Webster Indonesia Corporation Delaware
Stone & Webster Inter-American Corporation Delaware
Stone & Webster International Corporation Delaware
Stone & Webster International Projects Corporation Delaware
Stone & Webster Italia, Incorporated Delaware
Stone & Webster Korea Corporation Delaware
Stone & Webster Kuwait, Incorporated Delaware
Stone & Webster Malaysia Corporation Delaware
Stone & Webster of Mexico Engineering Corporation Delaware
Stone & Webster Middle East Engineering Services
Corporation Delaware
Stone & Webster Pacific Corporation Delaware
Stone & Webster Pakistan Corporation Delaware
Stone & Webster Power Engineering Corporation Delaware
Stone & Webster Puerto Rico, Incorporated Delaware
Stone & Webster Saudi Arabia, Incorporated Delaware
Stone & Webster Taiwan Corporation Delaware
Stone & Webster Technology Corporation Delaware
Stone & Webster Technology B.V. Netherlands
Stone & Webster Thailand Limited Thailand
Stone & Webster Turkey Corporation Delaware
Stone & Webster Venezuela, Incorporated Delaware
Stone & Webster Canada Limited Canada
Rockton Field Services of Canada Ltd. Canada
Stone & Webster St. Jerome Limited Canada
Stone & Webster Worldwide, Incorporated Delaware
Commercial Cold Storage, Inc. Georgia
Stone & Webster Oil Company, Inc. Texas
SAW Construction Corporation Delaware
SAW Consulting Services, Inc. Delaware
Saw Drilling, Inc. Texas
Venture Resources, Inc. Texas
VenGas Marketing Company Texas
VenGas Pipeline Company Texas
Venture Distribution Company Texas
Venture Pipeline Company Texas
Venture Processing Company Texas
Sabal Corporation Florida
Atrium Building Corporation Florida
Coconut Center Corporation Florida
Coconut Palm Corporation Florida
King Palm Corporation Florida
Park Progressive Development Corporation Florida
Princess Palm Corporation Florida
<PAGE>
Form 10-K 1993 Stone & Webster, Incorporated
Queen Palm Corporation Florida
Registry Building Corporation Florida
Registry Square Corporation Florida
Sabal Park Plaza Corporation Florida
Sabal Realty Management Corporation Florida
Tech Center Corporation Florida
San Salvador Development Company, Inc. Texas
Sleeper Street Realty Corporation Delaware
Spruce Hills Production Company, Inc. Delaware
Summer Street Realty Corporation Mass.
3 Executive Campus Realty, Inc. Delaware
Enclave Parkway Realty, Inc. Delaware
</TABLE>
Form 10-K 1993 Stone & Webster, Incorporated
Exhibit (23)
COOPERS Certified Public Accountants
& LYBRAND
CONSENT OF INDEPENDENT ACCOUNTANTS
____________
We consent to the incorporation by reference in the registration
statement of Stone & Webster, Incorporated and Participating
Subsidiaries on Form S-8 (File No. 33-23594) of our report dated
February 15, 1994, on our audits of the consolidated financial statements
and financial statement schedules of Stone & Webster, Incorporated and
Subsidiaries as of December 31, 1993 and 1992, and for each of the three
years in the period ended December 31, 1993, which report is included in
this Annual Report on Form 10-K.
COOPERS & LYBRAND
New York, New York
February 15, 1994
