<PAGE>
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, 1994
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 1994 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.
$420,000,000 approximately, based on the closing price on the New
York Stock Exchange Composite Transactions as of January 31, 1995.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable date.
Common Stock: 14,502,281 shares as of January 31, 1995.
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 1995 Annual Meeting of
Stockholders
2
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FORM 10-K 1994 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; develops and takes ownership interests in and operates
projects in the power, pulp and paper, and other industries; 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 revenues from sales to unaffiliated customers (from
which percentage of revenues information is available), operating
profit and identifiable assets attributable to the registrant's
industry segments for the three years ended December 31, 1994.
Also see "Management's Discussion and Analysis of Financial
Condition and Results of Operations" filed herein in Appendix A.
Engineering, Construction and Consulting Services
Registrant, through its subsidiaries, provides complete
engineering, design, construction and full environmental services
for power, process, 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
3
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Engineering, Construction and Consulting Services
(Cont'd.)
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, including public
utility, transportation, pipeline, land development, petroleum
and manufacturing companies, banking and financial institutions
and government agencies, and appraisals are performed for
industrial companies and utilities.
During 1994, the registrant's engineering, construction and
consulting services segment modified its approach to its market
and strengthened its strategic plan by implementing a new
organizational structure in registrant's largest subsidiary. This
organizational structure establishes four "Global Business Units"
(GBU) responsible for marketing and executing projects within a
sector on a worldwide basis. Each GBU also will be accountable
for achieving goals established for that market sector. These
four GBUs are in the power, process, government and industrial
sectors. The new structure will enable the registrant to
capitalize on its international relationships, experience and
abilities. Where appropriate, lump sum, turnkey contracts will be
employed as a means of providing comprehensive services.
Registrant's engineering, construction and consulting business
segment will continue to focus on its strengths involving
technology, for example, in advanced applications in both refinery
and ethylene process work and in development of expert systems.
In addition, registrant's development activities will continue to
involve projects in which registrant's subsidiaries will hold
equity investments while at the same time providing engineering,
construction and plant operations opportunities for other units in
the organization.
In connection with the GBU organizational structure adopted
in 1994 as discussed above, workforce reductions were made to
improve the engineering, construction and consulting services
segment's competitive position in a highly competitive business
environment while still maintaining the full engineering and
construction and support resources necessary to serve clients.
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.
4
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Cold Storage Services (Cont'd.)
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. In view of increased demand
for services relating to food exports, this subsidiary's strategic
plans include adding three additional blast-freezing cells in
1995.
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, an office building occupied by
subsidiaries of registrant is located at 1430 Enclave Parkway,
Houston, Texas. Building operating services are also performed
at this location.
Projects which may be wholly or jointly owned and operated
are being developed. Most projects include opportunities for
other subsidiaries of registrant to provide engineering,
construction and management services. Projects being developed
are in the power, pulp and paper, and other industries.
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; mineral rights are owned in Texas and New Mexico; 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.
A large corporate office and business center is owned and
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
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Competition (Cont'd.)
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 historically have not
been considered by the registrant 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. Clients frequently
revise the scope of the services for which they have contracted
with subsidiaries of registrant, especially on projects subject to
regulatory approval or which require environmental
permitting/licensing. Scope increases and decreases of
substantial magnitude are commonplace on such projects and
directly affect backlog. Additionally, delays are common and
affect the timing of when backlog would be translated into
revenues. As a result, the aggregate of such figures in relation
to registrant's consolidated revenues could be misleading unless
understood in light of the foregoing contingencies.
The registrant's backlog information is calculated on the
basis of the total value to the registrant's subsidiaries of all
services to be rendered under the available contracts plus the
value of equipment, material, services and subcontracts for which
the contracting subsidiary has overall technical and commercial
responsibility. The following backlog information is provided as
of December 31, 1994 and December 31, 1993.
6
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Backlog (Cont'd.)
The registrant's subsidiaries' backlog as of December 31,
1994 amounted to $1,541.8 million in comparison to $1,509.7
million as of December 31, 1993. New work awards in 1994 were
$1,069.5 million, approximately 40% of which came from contract
awards in the process sector. The reduction in backlog due to
changes in scope was primarily due to the reduction of scope in
the amount of $319 million at a Tennessee Valley Authority ("TVA")
plant during the first quarter of 1994. Although the majority of
our contracts may be reduced or cancelled by the client at any
time, reductions in scope of this magnitude are unusual.
The backlog at December 31, 1994 includes $130 million for
contracts won, but still under final negotiation.
Approximately 40% of the total backlog as of December 31,
1994 is expected to be realized within the next year.
In addition, approximately 40% of the December 31, 1994
backlog amount is from contracts with foreign clients.
BACKLOG
Engineering, Construction and Consulting Services
(in Millions of Dollars)
As of New Changes Revenue As of
12/31/93 Work In Scope Recognized* 12/31/94
$1,509.7 $1,069.5 ($ 296.9) ($ 740.5) $1,541.8
*Revenue Recognized reflects gross revenues.
Backlog figures in the cold storage industry are not
provided since, in the registrant's opinion, such information is
not necessarily meaningful because of the nature of the food
processing, storage and distribution business where repetitive
services of short duration are the norm.
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 has in the past and may in
the future contribute a substantial portion of the registrant's
consolidated revenues in any one year or over a period of several
consecutive years due to the size of major engineering and
construction projects. 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
revenues contributed by particular clients in any given year or
7
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Clients (Cont'd.)
period of consecutive years. Once the subsidiary commences work
on a particular project, it is unlikely that the client would
terminate the involvement of the subsidiary prior to completion of
the project, unless the project itself is cancelled or postponed.
Historically the registrant's subsidiaries have provided ongoing
services to clients following completion of major projects for
them. Nonetheless, the registrant must obtain new engineering and
construction projects, whether from existing clients or new
clients, in order to generate revenues in future years as existing
projects are completed. Consequently, the registrant has not
considered the names of clients to be material to investors'
understanding of the registrant's business taken as a whole. The
registrant has previously reported this information on the basis
of gross earnings (revenues less direct costs). Stated in terms
of total revenues (as described under Backlog, above), which is
consistent with registrant's financial reporting in this report,
Tennessee Valley Authority, which has been and continues to be a
significant client, accounted for 15%, 22% and 18% of consolidated
revenues for 1992, 1993 and 1994, respectively. In addition, in
1994 Indianapolis Power and Light Company contributed 11% of
consolidated revenues.
The cold storage and related activities segment had no
client who accounted for 10% or more of consolidated revenues in
1992, 1993, or 1994.
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. Also see
Note (M) 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.
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
provided by registrant's subsidiaries. This demand for such
services to help clients in their own environmental compliance
efforts is expected to continue.
8
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Employees
The registrant and its subsidiaries had approximately 5,000
regular employees as of December 31, 1994. 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.
9
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 1. Business. (Cont'd.)
Executive and Other Officers of the Registrant.
Name Age Position Held Held Since
Bruce C. Coles 50 President 6/20/90
Chief Executive
Officer 5/12/94
Director 6/20/90
William M. Egan 66 Executive
Vice President 2/19/86
Director 10/1/91
James N. White 60 Executive
Vice President 1/1/92
Kenneth F. Reinschmidt 56 Senior
Vice President 7/1/93
Peter F. Durning 56 Secretary 7/20/94
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
11, 1995.
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. A 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.
10
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 2. Properties. (Cont'd.)
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 which 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. A 50 megawatt electrical co-generation plant in
Binghamton, New York, in which a subsidiary owns a 33 1/3%
interest.
H. A 200 tons per day paper fiber recycling plant currently
under construction in Auburn, Maine, in which a subsidiary
owns a 94.3% interest.
I. A plant for the production of oriented strand board
currently under construction in Miramichi, New Brunswick,
Canada, in which a subsidiary owns a 10.42% interest.
J. Approximately 290 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 240 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.
11
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 3. Legal Proceedings.
(a) As reported in Item 3, Legal Proceedings, in
registrant's Form 10-K for the year ended December 31, 1993,
Stone & Webster Engineering Corporation, a subsidiary of
registrant, ("SWEC") provided design engineering services to
Chesapeake Paper Products Company ("Chesapeake") 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.
SWEC believes there are substantial grounds for
setting aside the jury verdict against SWEC, and has filed
an appeal to the Fourth Circuit Court of Appeals.
(b) As reported in Item 3, Legal Proceedings, in
registrant's Form 10-K for the year ended December 31, 1993,
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.
(c) As reported in Item 3, Legal Proceedings, of the
registrant's Form 10-K for the year ended December 31, 1993,
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
12
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 3. Legal Proceedings. (Cont'd.)
personal injuries and/or wrongful death due to exposure to
asbestos products negligently utilized by the defendants.
Many of these complaints have been dismissed or
withdrawn, and SWEC has settled many of these cases for
amounts which, when taken together, do not have a material
impact on registrant's financial condition or results of
operation. Registrant believes that there has not been, nor
is there a probability that there will be, any accrual of a
material liability of the registrant as a result of the
absbestos claims received to the present.
SWEC believes that it has strong factual and
legal defenses to the remaining claims and intends to defend
vigorously.
(d) Stone & Webster Engineering Corporation provided
engineering services to Vista Chemical Company ("Vista") at
its Westlake, Louisiana chemical plant. In 1991, Vista
filed suit against another company and SWEC, contending that
the engineering work performed by SWEC was performed late
and not in accordance with the standards of professional
practice. Vista is seeking to recover costs incurred to
complete the project in excess of the original estimate,
certain costs that it incurred to operate the plant, and
lost profits from its operations, but it has not specified
in writing the total amount of damages it is seeking. SWEC
has denied the material allegations contained in the
plaintiff's petition. SWEC believes that it has valid
factual and legal defenses to the claims asserted and that
limitation of liability provisions in the engineering
contracts limit the amount of recoverable damages in this
case to the proceeds from insurance with the limits
specified in the contracts, plus compensation received by
SWEC for its work under the contracts. In the latter part
of 1994, SWEC, after consultation with counsel, determined
that it is probable that it has some liability in this
action and that it has a reasonable estimate of liability of
$5,000,000. It is probable that any liability in excess of
$5,000,000 would be covered by insurance. As stated in Note
(M) to the consolidated financial statements filed herewith,
SWEC has expensed $3,800,000 and $1,200,000 in 1994 and
1993, respectively, in connection with this matter.
(e) Also see Note (M) 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.
13
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FORM 10-K 1994 Stone & Webster, Incorporated
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.
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 L. L. P. dated February 14, 1995 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.
14
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FORM 10-K 1994 Stone & Webster, Incorporated
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.
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.
15
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FORM 10-K 1994 Stone & Webster, Incorporated
PART IV
Item 14. Exhibits, Financial Statement Schedule, and
Reports on Form 8-K.
(a) Documents filed as part of the report:
1. Financial Statements and Financial
Statement Schedule
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, 1994
Consolidated Balance Sheet as at December 31,
1994 and 1993
Consolidated Statement of Stockholders' Equity
for the Three Years Ended December 31, 1994
Consolidated Statement of Cash Flows for the
Three Years Ended December 31, 1994
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 Schedule:
Financial Statement Schedule for the Three
Years Ended December 31, 1994:
VIII-Valuation and Qualifying Accounts
16
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FORM 10-K 1994 Stone & Webster, Incorporated
Item 14. Exhibits, Financial Statement Schedule, and
Reports on Form 8-K.
1. Financial Statements and Financial
Statement Schedule (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, 1994,
registrant and its subsidiaries had outstanding long-
term debt (excluding current portion) totaling
approximately $89,642,000 principally
in connection with mortgages relating to real
property for a subsidiary's corporate office
and business center in Tampa, Florida, for
another subsidiary's office building, for the
construction of a paper fiber recycling plant of a
limited partnership in which a subsidiary owns a 94.3%
interest, and in connection with capitalized lease
commitments for the acquisition of certain
computer equipment. None of these agreements are
filed herewith because the amount of indebtedness
authorized under each such agreement 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.
17
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
Item 14. Exhibits, Financial Statement Schedule, 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) Consulting Agreement dated June 15, 1994 between Stone
& Webster, Incorporated and William F. Allen, Jr.
(21) Subsidiaries of the registrant.
(23) Consent of Independent Accountants.
(27) Financial Data Schedule.
(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.
18
<PAGE>
FORM 10-K 1994 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 15, 1995
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 15, 1995 BRUCE C. COLES
Bruce C. Coles
President
Chief Executive Officer
Director
" WILLIAM M. EGAN
William M. Egan
Executive Vice President
Director
(Principal Financial and
Accounting Officer)
" WILLIAM F. ALLEN, JR.
William F. Allen, Jr.
Chairman of the Board
Director
" WILLIAM L. BROWN
William L. Brown
Director
19
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
February 15, 1995 FRANK J. A. CILLUFFO
Frank J. A. Cilluffo
Director
" DONNA R. FITZPATRICK
Donna R. Fitzpatrick
Director
" J. PETER GRACE
J. Peter Grace
Director
" KENT F. HANSEN
Kent F. Hansen
Director
" ELVIN R. HEIBERG III
Elvin R. Heiberg III
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
20
<PAGE>
Form 10-K 1994 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 Operations for the Three Years Ended
December 31, 1994 A-6
Consolidated Balance Sheet as at December 31, 1994 and 1993 A-7
Consolidated Statement of Stockholders' Equity for the Three Years
Ended December 31, 1994 A-9
Consolidated Statement of Cash Flows for the Three Years
Ended December 31, 1994 A-10
Summary of Significant Accounting Policies A-11
Notes to Consolidated Financial Statements A-12
Selected Financial Data and Market and Dividend Information A-19
Report of Management A-20
Business Segment Information A-21
Financial Statement Schedule:
Financial Statement Schedule for the Three Years
Ended December 31, 1994:
VIII - Valuation and Qualifying Accounts A-22
Report of Independent Accountants A-23
</TABLE>
A-1
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(All dollar amounts, except per share amounts, are in thousands.)
RESULTS OF OPERATIONS
1994 Compared With 1993. The Corporation has changed its reporting format and
now reports revenues instead of gross earnings. Engineering, construction and
consulting revenues represent billings for the total value of all services
including plant equipment, materials and subcontractors for which the
engineering subsidiaries are contractually responsible under all of their
contracts. Previously, the Corporation reported gross earnings which represented
engineering, construction and consulting revenues less direct costs.
The Corporation had a consolidated net loss for 1994 of $7,807, or $.52 per
share. These results included, on an after-tax basis, severance costs of $12,596
and profits from sales of investment securities of $21,208. The net loss is
attributable to our engineering, construction and consulting operations
primarily due to a decline in revenues, lower profit margins and intensified
competition. As a result, there was a downsizing and a new organizational
structure implemented in the Corporation's largest engineering subsidiary. The
comparisons between years are presented below.
Revenues from engineering, construction and consulting services decreased by
$266,308 in 1994. This decrease was due to a decline in revenues of $124,704
from domestic operations and $141,604 from foreign operations. Approximately
$93,000 of the domestic decrease was attributable to a decrease in our nuclear
work with the Tennessee Valley Authority (TVA) due to the reduction in scope by
the TVA in its nuclear program. The decrease in foreign operations of $141,604
was due to a reduction in expenditures for plant equipment and materials
purchased for projects in the United Kingdom and Abu Dhabi and a lower level of
work activity in Malaysia and other foreign operations. Other factors affecting
revenues in 1994 were primarily the result of a lower volume of work available
for execution. The backlog as of December 31, 1994 amounted to $1,541,800 in
comparison to $1,509,700 as of December 31, 1993. The 1994 backlog amount
includes approximately 40% from contracts with foreign clients. Although the
total value of the backlog was relatively unchanged, many of the projects were
at reduced levels of activity because they were either at the early stages of
initiation or nearing completion. Relatively fewer projects were at a stage of
peak activity and many of the current projects extend over relatively long
periods with services furnished on demand. New work awards in 1994,
approximately 40% of which came from contract awards in the process sector, were
$1,069,500 and offset the significant reduction in scope of $319,000 experienced
at a TVA plant during the first quarter of 1994. Based upon these factors and
current market conditions we expect similar revenue levels in 1995 to those of
1994.
A-2
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
The Corporation's largest subsidiary, Stone & Webster Engineering Corporation,
took actions throughout the year to reduce staff levels and operating costs.
During 1994, the subsidiary modified its business environment and strengthened
its strategic business plan by implementing a new organizational structure. This
organizational structure establishes four "Global Business Units" (GBU)
responsible for marketing and executing projects within a sector on a worldwide
basis. Each GBU also will be accountable for achieving goals established for
that market sector. These four GBUs are in the power, process, government and
industrial sectors. In connection with the GBU organizational structure adopted
in 1994, workforce reductions were made to improve the engineering, construction
and consulting services competitive position and gross profit in a highly
competitive business environment while still maintaining the full engineering
and construction and support resources necessary to serve clients. In April
1994, the subsidiary reported a first quarter pre-tax charge of $5,500 for
severance costs relating to the termination of 350 positions and it estimated
that it would be required to make further reductions of management and other
staff positions which could amount to additional severance costs of
approximately $10,000 over the remainder of the year. The actual amount for the
last three quarters amounted to $14,000 for 650 additional positions that were
terminated. The subsidiary currently expects that the payroll-related cost
savings to be realized from these staff reductions will be approximately $35,000
in 1995. The subsidiary does not anticipate any significant staff adjustments in
1995 other than those associated with the normal start up and completion of
projects. As a result of the staff reduction actions in 1994, the Corporation
expects that 1995 operations will be profitable.
A number of significant items affected gross profit (loss) in both years and the
amounts included in cost of revenues are itemized in the table below:
<TABLE>
<CAPTION>
-------------------------------------
1994 1993
- -------------------------------------------------------------------------
<S> <C> <C>
Revenues $740,458 $1,006,766
Cost of revenues 747,732 970,237
-------- ----------
Gross profit (loss) as reported (7,274) (1.0)% 36,529 3.6%
Add (deduct):
Pension plan credit (12,391) (13,312)
Incentive Retirement Program -- 8,718
Severance 19,319 7,138
Pension curtailment gain (363) (986)
Provision for lawsuits 4,700 5,200
Changes in job contract estimates 5,310 --
-------- ----------
Adjusted Gross Profit $ 9,301 1.3% $ 43,287 4.3%
- -------------------------------------------------------------------------
</TABLE>
Excluding the significant items noted above, gross profit decreased by $33,986
in 1994 compared with 1993. Gross profit was adversely impacted by declining
activity levels, as previously discussed, and the necessity to retain staff
until job obligations were complete. This caused an increase in overhead costs
and a corresponding increase in cost of revenues which reduced gross profit. A
subsidiary of the Corporation settled two contract-related lawsuits in 1994 for
$900 and has another case where it is probable that the final outcome will
result in a loss to the subsidiary. Based on opinion from counsel, the
subsidiary expensed $3,800 and $1,200 in 1994 and 1993, respectively. It is
probable that any liability in excess of the amounts expensed would be fully
covered by applicable insurance. Losses in excess of existing insurance coverage
are considered unlikely.
Pension plan credits reduced costs and expenses and contributed to operating
income by $13,043 and $13,867 in 1994 and 1993, respectively. Favorable asset
performance in the past ten years is the primary reason that the pension plan is
overfunded. Selling, general and administrative expenses increased by $5,793
primarily due to higher bid and proposal expenses incurred in seeking new work.
Revenues from cold storage and related activities increased by $366 in 1994
primarily due to increased demand for services relating to food exports. As a
result of the increased demand, additional blast-freezing cells will be added in
1995. Gross profit was $7,890 or 45.7% in 1994 compared with $7,195 or 42.5% in
1993, an increase of $695 or 9.7%. The improvement in gross profit was
attributable to higher revenues as well as a decrease in cost of revenues.
Direct labor and maintenance expense decreased due to improved warehouse
management. Selling, general and administrative expenses remained relatively
constant in 1994.
Revenues from our oil and gas interests decreased by $2,270 in 1994 primarily
due to a significant decline in the number of gas marketing sales by our
natural gas gathering and transporting company. The competitive factors in this
business have resulted in our shifting away from this area as larger companies
have captured most of the available gas marketing transactions. Therefore, the
Corporation evaluated the carrying value of the gas gathering and transporting
company and the remaining goodwill of $862 was written off in 1994. Cost of
revenues, before this goodwill writeoff, decreased by $1,706 primarily due to
the decrease in purchases of gas for resale because of the reduction in the
related gas marketing activity. Other oil and gas activities showed a slight
increase in revenues in 1994 but were exceeded by costs of revenues due to
higher operating costs of producing wells and higher exploration costs during
1994 compared with 1993. Selling, general and administrative expenses remained
relatively constant in 1994.
Revenues from dividends and interest increased by $877 in 1994 due to increased
interest income on U. S. Government securities,
A-3
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
partially offset by a decrease in dividend income due to the sale of our
remaining investment securities in 1994. Therefore, there will be no dividend
income in 1995.
The Corporation realized profits from sales of investment securities of $32,102
for 1994. There were no such sales in the prior year.
Revenues from all other activities increased by $359 in 1994. Rental income on
available space in company-owned office buildings in the Northeast, previously
used for engineering operations, accounted for most of this increase. Operations
of our Tampa, Florida, real estate holdings improved in 1994 as compared with
1993 due to higher rental income and lower operating costs. Occupancy in
company-owned and operated properties in Sabal Park continues to be high with a
vacancy rate of less than 3%.
The income tax provision resulted in effective tax rates (benefit) of (11%) and
104% for 1994 and 1993, respectively. The benefit for 1994 was lower than the
U.S. statutory rate and the effective rate for 1993 was higher than the U.S.
statutory rate, primarily due to foreign taxes applicable to certain foreign
projects which are calculated based on gross receipts and which accounted for
12% and 34% increases, respectively, in the effective tax rates recorded. The
decrease in the benefit in 1994 was also due to state income taxes, which
accounted for 8% of the decrease. The increase in 1993 was also due to
settlement with the IRS of prior years' federal income tax returns, amounting to
24%, and an increase in the Corporation's net deferred tax liabilities,
amounting to 13%, due to the change in the federal statutory income tax rate
from 34% to 35%.
In the first quarter of 1993, the Corporation adopted FASB 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.
1993 Compared With 1992. Consolidated revenues were $1,053,095 in 1993 compared
with $987,220 in 1992, an increase of $65,875. Consolidated cost of revenues
increased by $80,560 in 1993 while selling, general and administrative expenses
increased by $884.
Revenues from engineering, construction and consulting services increased by
$63,830 in 1993 largely due to expenditures for plant equipment and material
purchased for projects in the United Kingdom and Abu Dhabi. Excluding these
expenditures, revenues decreased by $4,878 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. Gross profit was $36,529 or 3.6% in 1993 compared
with $53,696 or 5.7% in 1992.
A number of significant items affected gross profit (loss) in both years and the
amounts included in cost of revenues are itemized in the table below:
<TABLE>
<CAPTION>
---------------------------------------
1993 1992
- ----------------------------------------------------------------------
<S> <C> <C>
Revenues $1,006,766 $942,936
Cost of revenues 970,237 889,240
---------- --------
Gross profit as reported 36,529 3.6% 53,696 5.7%
Add (deduct):
Pension plan credit (13,312) (13,063)
Incentive Retirement Program 8,718 --
Severance 7,138 3,077
Pension curtailment gain (986) --
Provision for lawsuits 5,200 --
---------- --------
Adjusted Gross Profit $ 43,287 4.3% $ 43,710 4.6%
- ----------------------------------------------------------------------
</TABLE>
Excluding the items noted above, gross profit decreased by $423 in 1993 compared
with 1992. The decrease in gross profit was attributable to the intense
competition for new work which resulted in lower margins on projects. The
decrease would have been greater except for the favorable impact of several
contract change orders and the attainment of milestones on two substantially
completed projects in Malaysia. In 1993, in a contract-related lawsuit, the jury
returned a verdict against a subsidiary of the Corporation. Although the
subsidiary has filed an appeal to reverse the damage award against it, the
subsidiary recorded a $4,000 charge in connection with this matter.
We had reported that in excess of 200 employees elected to retire under the 1993
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 did not 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 originally expected. Pension plan credits reduced
costs and expenses and contributed to operating income by $13,867 and $13,607 in
1993 and 1992, respectively. Favorable asset performance in the past ten years
is the primary reason that the pension plan is overfunded. Selling, general and
administrative expenses increased $976 primarily due to higher bid and proposal
expenses.
There continued to be a lack of major new projects due to the slower than
expected economic recovery. The intense competition for new work 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, as anticipated, negatively
impacted financial results for 1994.
Revenues from cold storage and related activities increased by $1,216 in 1993
primarily due to increases in storage and handling revenues. Gross profit was
$7,195 or 42.5% in 1993 compared with $6,106 or
A-4
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
38.9% in 1992, an increase of $1,089 or 17.8%. The improvement in gross profit
was attributable to higher revenues and a relatively small increase in cost of
revenues due to improved management of operating and indirect costs. Selling,
general and administrative expenses increased by $86 in 1993.
Revenues 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 revenues of an increase in the average gas
price received by our other oil and gas interests. Cost of revenues of our oil
and gas interests decreased in 1993 by $1,453 primarily due to a decrease in the
purchases of gas for resale and lower depletion costs in our oil and gas
operations as a result of several gas well retirements in 1992. Selling, general
and administrative expenses increased by $141 in 1993 compared with the prior
year.
Revenues from dividends and interest decreased by $649 in 1993 due to reduced
interest income on U.S. Government securities, reflecting lower interest rates.
Revenues from all other activities increased by $6,257 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.
The income tax provision resulted in effective rates of 104% and 60% for 1993
and 1992, respectively. The effective rates for 1993 and 1992 were higher than
the U.S. statutory rate, primarily due to foreign taxes applicable to certain
foreign projects which are calculated based on gross receipts and which
accounted for 34% and 11% increases, respectively, in the effective tax rates
recorded. The increases were also due to settlement with the IRS of prior years'
federal income tax returns, amounting to 24% in 1993 and 6% in 1992. Also
affecting the rate by 13% in 1993 was an increase in the Corporation's net
deferred tax liabilities due to the change in the federal statutory income tax
rate from 34% to 35%.
FINANCIAL CONDITION
Cash and cash equivalents, as shown in the Consolidated Statement of Cash Flows,
decreased by $8,491 during 1994. Net cash provided by operating activities of
$17,574 reflects a decrease in costs and revenues recognized in excess of
billings of $20,071, attributable to the lower level of activity in our
engineering, construction and consulting operations; an increase in billings in
excess of costs and revenues recognized of $20,190, attributable to milestone
billings being achieved on certain of our contracts in advance of costs being
incurred, and an increase in other accrued liabilities of $8,075 primarily due
to unpaid severance, partially offset by losses from operations and a reduction
in accounts payable of $5,143 resulting from the paydown of job liabilities.
Severance payments of $10,992 of the $19,500 accrued by Stone & Webster
Engineering Corporation in 1994 were made during 1994. The balance of severance
costs not yet paid will be funded from cash on hand and temporary investments.
Net cash used by investing activities primarily reflects purchases of property,
plant and equipment primarily related to expenditures for the construction of a
paper fiber recycling plant and the construction of a new office facility which
was completed and opened in early 1994, partially offset by cash provided by
proceeds from sales of investment securities. A subsidiary of the Corporation
also made a $3,565 equity investment in a joint venture, which is constructing
an oriented-strand board mill. Another subsidiary of the Corporation has a
material commitment for capital expenditures relating to a paper fiber recycling
plant. The financing for the paper fiber recycling plant, as well as the source
of funding for the subsidiary's share of the equity investment, is described
below and in Note J to the consolidated financial statements. Net cash provided
by financing activities primarily represents borrowings to finance capital
expenditures previously discussed. Dividends paid amounted to $8,984. The
Corporation believes that the types of businesses in which it is engaged require
that it maintain a strong financial condition. The Corporation has on hand and
access to sufficient sources of funds to meet its anticipated operating,
dividend and capital expenditure needs. Cash on hand and temporary investments
provide adequate operating liquidity. Additional liquidity is provided through
lines of credit and revolving credit facilities which totaled $26,500, all of
which were available at December 31, 1994.
The Corporation and its subsidiaries have obtained financing for their real
estate operations, the construction of a paper fiber recycling plant and a new
office facility which was completed and opened in early 1994. In the first
quarter of 1994, a limited partnership in which a subsidiary of the Corporation
owns a 94.3% interest entered into an agreement with various lending
institutions for a non recourse construction loan of $62,500 for the
partnership's planned paper fiber recycling plant. In December 1994, an
additional loan agreement was entered into for $2,500, resulting in total
construction loans of $65,000. The cost of the plant, which is collateral for
the construction loans, is expected to be $65,000. Upon completion of
construction, which is expected to be December 1995, the construction loans will
be paid by term debt of $48,750 and the partners will make an equity investment
of $16,250, of which the subsidiary of the Corporation's share is $15,324. The
Corporation intends to invest in additional equity participation investments.
A-5
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(All dollar amounts, except per share amounts, are in thousands.)
<TABLE>
<CAPTION>
-------------------------------------------
Years ended December 31,
1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Engineering, construction and consulting services $740,458 $1,006,766 $942,936
Cold storage and related activities 17,280 16,914 15,698
Other (Note A) 60,483 29,415 28,586
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues 818,221 1,053,095 987,220
- ----------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of revenues:
Engineering, construction and consulting services (Note B) 747,732 970,237 889,240
Cold storage and related activities 9,390 9,719 9,592
Other 19,107 20,782 21,346
- ----------------------------------------------------------------------------------------------------------------------------------
Total cost of revenues 776,229 1,000,738 920,178
Selling, general and administrative expenses (Note B) 46,864 41,298 40,414
Interest expense (Note C) 3,900 2,606 3,021
- ----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses (Note P) 826,993 1,044,642 963,613
- ----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) before Income Tax (Benefit) Provision (8,772) 8,453 23,607
Income Tax (Benefit) Provision (Note D) (965) 8,823 14,267
- ----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) before Extraordinary Item and Cumulative Effect of a Change in
Accounting Principle (per share: 1994 - $(.52), 1993 - $(.03) and 1992 - $.62) (7,807) (370) 9,340
Extraordinary Item (per share: 1992 - $.02) (Note D) -- -- 246
Cumulative Effect of a Change in Accounting Principle
on Prior Years (per share: 1993 - $.16 and 1992 - $.21) (Notes D and P) -- 2,322 3,229
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) (per share: 1994 - $(.52), 1993 - $.13 and 1992 - $.85) $ (7,807) $ 1,952 $ 12,815
==================================================================================================================================
</TABLE>
See Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
A-6
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(All dollar amounts, except per share amounts, are in thousands.)
<TABLE>
<CAPTION>
---------------------------
December 31,
ASSETS 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 55,650 $ 64,141
U. S. Government securities, at amortized cost, which approximates market. (Note E) 74,685 54,478
Accounts receivable, principally trade 96,624 106,982
Costs and revenues recognized in excess of billings 42,542 62,613
Deferred income taxes (Note D) 7,825 6,334
Other 657 947
- ----------------------------------------------------------------------------------------------------------------------------------
Total Current Assets 277,983 295,495
Investment Securities, at market value (Note F) -- 40,836
Property, Plant and Equipment, at cost, less accumulated depreciation,
depletion and amortization. (Note G) 233,869 201,936
Land Held for Resale, at cost (Note H) 25,664 23,626
Prepaid Pension Cost (Note P) 101,131 87,540
Other Assets 39,737 34,146
- ----------------------------------------------------------------------------------------------------------------------------------
$ 678,384 $683,579
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
A-7
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
--------------------------
December 31,
Liabilities and Stockholders' Equity 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities:
Bank loans (Note I) $ -- $ 5,677
Accounts payable, principally trade 23,996 29,139
Dividend payable 2,195 2,247
Billings in excess of costs and revenues recognized 48,485 28,295
Current portion of long-term debt (Note J) 4,988 4,492
Accrued taxes 6,070 5,449
Other accrued liabilities (Note K) 55,702 46,831
- ----------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 141,436 122,130
Long-Term Debt (Note J) 89,642 47,739
Deferred Income Taxes (Note D) 48,580 64,859
Other Non-Current Liabilities (Note L) 23,408 23,473
Commitments and Contingencies (Note M)
Stockholders' Equity:
Preferred stock
Authorized, 2,000,000 shares of no par value; none issued. -- --
Common stock, carried at (Note O) 65,171 65,213
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 408,211 424,723
Unrealized gain on investment securities, net (Note F) -- 24,975
Cumulative translation adjustment (3,072) (2,854)
- ----------------------------------------------------------------------------------------------------------------------------------
473,170 514,917
- ----------------------------------------------------------------------------------------------------------------------------------
Less: Common stock in treasury, at cost (Notes N and O) 66,961 54,979
3,122,181 shares (1993 - 2,753,638).
Employee stock ownership and restricted stock plans (Note O) 30,891 34,560
- ----------------------------------------------------------------------------------------------------------------------------------
97,852 89,539
- ----------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 375,318 425,378
- ----------------------------------------------------------------------------------------------------------------------------------
$678,384 $683,579
==================================================================================================================================
</TABLE>
A-8
<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,
1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock (Note O):
Balance at beginning of year $ 65,213 $ 65,297 $ 65,893
Excess of market value over cost of treasury shares
issued/forfeited under Restricted Stock Plan, net (17) (9) (177)
Tax charge for shares issued under Restricted Stock Plan, net (25) (75) (419)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at end of year 65,171 65,213 65,297
- ----------------------------------------------------------------------------------------------------------------------------------
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 424,723 431,490 427,364
Income tax benefit of Employee Stock Ownership Plan dividends 227 268 309
Net Income (Loss) (7,807) 1,952 12,815
Dividends declared (per share: 1994, 1993 and 1992 - $.60) (8,932) (8,987) (8,998)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at end of year 408,211 424,723 431,490
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized Gain on Investment Securities, net (Note F):
Balance at beginning of year 24,975 -- --
Adjustment for the year (24,975) 24,975 --
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at end of year -- 24,975 --
- ----------------------------------------------------------------------------------------------------------------------------------
Cumulative Translation Adjustment:
Balance at beginning of year (2,854) (2,649) (1,174)
Adjustments for the year (218) (205) (1,475)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at end of year (3,072) (2,854) (2,649)
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock in Treasury (Notes N and O):
Balance at beginning of year (54,979) (55,078) (54,016)
Cost of treasury shares:
Issued under Restricted Stock Plan
(shares: 1993 - 22,000) -- 440 --
Forfeited under Restricted Stock Plan
(shares: 1994 - 2,000, 1993 - 7,200 and 1992 - 9,800) (40) (133) (172)
Purchased (shares: 1994 - 366,543, 1993 - 7,363 and 1992 - 35,631) (Note N) (11,942) (208) (890)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at end of year (66,961) (54,979) (55,078)
- ----------------------------------------------------------------------------------------------------------------------------------
Employee Stock Ownership and Restricted Stock Plans (Note O):
Balance at beginning of year (34,560) (38,782) (46,188)
Payments received from Employee Stock Ownership Trust (principal only) 3,091 3,587 3,320
Market value of shares forfeited/issued under Restricted Stock Plan, net 57 (298) 349
Amortization of market value of shares issued under Restricted Stock Plan 521 933 3,737
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at end of year (30,891) (34,560) (38,782)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity $ 375,318 $425,378 $403,138
==================================================================================================================================
</TABLE>
See Summary of Significant Accounting Policies and Notes to Consolidated
Financial Statements.
A-9
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
--------------------------------------------
Years ended December 31,
1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ (7,807) $ 1,952 $ 12,815
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation, depletion and amortization 19,717 20,135 20,124
Deferred income taxes (4,343) 559 8,782
Cumulative effect of a change in accounting principle -- (2,322) (5,390)
Pension plan curtailment gain (357) (1,072) --
Prepaid pension cost (13,234) (13,953) (13,751)
Incentive Retirement Program -- 9,081 --
Profits on investment securities (32,102) -- (4,398)
Amortization of market value of shares issued
under Restricted Stock Plan 521 933 3,737
Amortization of net cost of Employee Stock Ownership Plan 1,560 1,562 1,567
Changes in operating assets and liabilities:
Accounts receivable 12,267 15,984 25,706
Costs and revenues recognized in excess of billings 20,071 4,133 15,823
Other assets (2,026) (2,345) (7,773)
Accounts payable (5,143) (868) (11,224)
Billings in excess of costs and revenues recognized 20,190 7,103 (5,115)
Other accrued liabilities 8,075 (458) 3,529
Other 185 (1,476) 15
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 17,574 38,948 44,447
- ----------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Maturities of U.S. Government securities 103,032 109,289 84,032
Purchases of U.S. Government securities (122,404) (108,301) (97,723)
Proceeds from sale of investment securities 34,515 -- 4,758
Increases in property, plant and equipment (52,344) (31,679) (22,592)
(Purchase) sale of land held for resale (2,038) 731 12
Proceeds from disposals of property, plant and equipment 525 1,599 280
Equity investment in joint venture (3,565) (5,000) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (42,279) (33,361) (31,233)
- ----------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Proceeds from long-term debt 68,988 20,760 1,500
Repayments of long-term debt (3,922) (23,964) (3,551)
Increase in bank loans 1,093 26,330 7,903
Decrease in bank loans (29,437) (4,933) (956)
Payments to Employee Stock Ownership Trust (4,046) (6,395) (6,275)
Payments received from Employee Stock Ownership Trust 4,464 7,217 7,217
Purchase of common stock for treasury (11,942) (208) (890)
Dividends paid (8,984) (8,985) (9,005)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 16,214 9,822 (4,057)
- ----------------------------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents (8,491) 15,409 9,157
Cash and Cash Equivalents at Beginning of Year 64,141 48,732 39,575
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 55,650 $ 64,141 $ 48,732
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 3,910 $ 2,558 $ 2,967
Income taxes $ 5,368 $ 7,742 $ 7,591
- ----------------------------------------------------------------------------------------------------------------------------------
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-10
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(All dollar amounts are in thousands.)
RECLASSIFICATIONS. In 1994, the Corporation changed its presentation of
reporting gross earnings to a format reflecting total revenues, cost of revenues
and selling, general and administrative expenses to be more consistent with
industry practice, primarily in its engineering, construction and consulting
business. In prior years, gross earnings from engineering, construction and
consulting services included (generally on a percentage-of-completion basis)
fees earned on agency contracts and the excess of revenues over direct
construction costs on non-agency contracts. The Corporation now includes in
revenues the total value of all services including plant equipment, materials
and subcontractors for which its engineering subsidiaries are contractually
responsible under all of their contracts. Cost of revenues includes all direct
and indirect contract costs. In prior years, operating and general expenses
included indirect costs of revenues and selling, general and administrative
expenses. To conform to the 1994 presentation, revenues, cost of revenues and
selling, general and administrative expenses have been reclassified for prior
periods. As a result of these reclassifications, both total revenues (previously
reported as gross earnings) and total costs and expenses (previously reported as
total expenses) increased by $773,303 and $704,123 for 1993 and 1992,
respectively. These reclassifications had no effect on net income for either
period.
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. The Corporation recognizes engineering and construction
revenues on a percentage-of-completion method, primarily based on contract costs
incurred compared with total estimated costs. (Contract costs include both
direct and indirect costs.) When the Corporation is contractually responsible
for materials, craft labor, equipment and subcontractor costs, these items are
included in revenues and costs of revenues. Revisions to total estimated
contract cost or losses, if any, are recognized in the period in which they are
determined. Certain contracts contain provisions for performance incentives.
Such incentives are included in revenues when realization is assured. Contract
change orders in excess of agreed contract prices are included in revenues when
approved by the client.
Revenues recognized in excess of amounts billed are classified in current
assets. Accounts receivable includes amounts representing retainages under
long-term contracts which are due within one year and are not significant. The
Corporation anticipates that substantially all of its costs and revenues
recognized in excess of billings will be billed and collected over the next
twelve months and there were no significant amounts included in accounts
receivable or costs and revenues recognized in excess of billings under
contracts for claims subject to uncertainty as to their ultimate realization.
Billings in excess of revenues recognized are classified in current liabilities.
INCOME TAXES. 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
$2,858 at December 31, 1994. This amount represents the accumulated earnings of
consolidated foreign subsidiaries which are being permanently reinvested in
their operations.
INCOME PER SHARE. Per share amounts are based on the average number of shares
outstanding during the year.
A-11
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts, except per share amounts, are in thousands.)
(A) OTHER REVENUES
Other revenues consist of the following:
<TABLE>
<CAPTION>
-----------------------------------
1994 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Oil and gas revenues $ 8,615 $10,885 $11,266
Dividends from investment securities 1,045 1,311 1,388
Interest income, primarily from
U.S. Government securities
and cash in banks 4,078 2,935 3,507
Profits on investment securities 32,102 -- 4,398
Rents 12,074 10,030 5,271
Other 2,569 4,254 2,756
- -----------------------------------------------------------------------------
Total $60,483 $29,415 $28,586
- -----------------------------------------------------------------------------
</TABLE>
(B) SEVERANCE COSTS
Severance costs increased the cost of revenues by $19,319, $7,138 and $3,077 for
the years 1994, 1993 and 1992, respectively, and selling, general and
administrative expenses by $1,022, $338 and $132 for the years 1994, 1993 and
1992, respectively.
In 1994, a subsidiary of the Corporation, Stone & Webster Engineering
Corporation, took a number of actions to further lower operating costs. These
included the elimination of approximately 1,000 positions resulting in a pre-tax
charge of $19,500 for severance costs, which increased the cost of revenues by
$18,525 and selling, general and administrative expenses by $975, and decreased
net income by $11,900, or $.80 per share. All of these positions have been
terminated as of December 31, 1994. Severance payments of $10,992, of the
$19,500 accrued by the subsidiary in 1994, were made in 1994.
(C) INTEREST EXPENSE
Interest expense for 1994 and 1993 excludes $1,392 and $439, respectively, which
was capitalized as part of the construction cost for a paper fiber recycling
plant and a new office facility.
(D) INCOME TAXES
The Corporation incurred a taxable loss of $10,602 in 1994 and was able to
carryback $5,830 of this loss to offset taxable income generated in the years
1991 and 1992. As a result of the carry-back, current taxes receivable of $1,238
is included in Accounts Receivable. A benefit of $1,622 as a result of the
carry-forward of the excess current period federal net operating loss has been
included as a deferred tax asset.
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 1992 were not restated for this
change in accounting.
The income tax (benefit) provision consists of the following:
<TABLE>
<CAPTION>
---------------------------------
1994 1993 1992
- -----------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense (benefit)
United States $ 469 $3,528 $ 3,997
State and local 1,458 1,355 1,079
Foreign 1,451* 3,381* 2,324*
- -----------------------------------------------------------------
Total current 3,378 8,264 7,400
- -----------------------------------------------------------------
Deferred tax expense (benefit)
United States (706) 457 5,022
State and local (3,631) 260 1,577
Foreign (6) (158) 22
- -----------------------------------------------------------------
Total deferred (4,343) 559 6,621
- -----------------------------------------------------------------
Charge equivalent of tax
loss carryforwards -- -- 246
- -----------------------------------------------------------------
Total (benefit) provision $ (965) $8,823 $14,267
- -----------------------------------------------------------------
</TABLE>
* Includes taxes, in lieu of income taxes, of $870 in 1994, $2,292 in 1993 and
$1,744 in 1992 on foreign projects which are calculated based on gross receipts.
In 1992, the Corporation recognized an extraordinary item of $246, 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,
1994 1993
- ------------------------------------------------------------------
<S> <C> <C>
Long-term liabilities:
Depreciation $ 20,719 $ 23,359
Retirement 44,553 39,626
Investment securities -- 13,448
Other 3,039 4,871
- ------------------------------------------------------------------
Total long-term liabilities 68,311 81,304
- ------------------------------------------------------------------
Long-term assets:
Deferred rent (2,050) (1,467)
Employee Stock Ownership Plan interest
payments and contributions (5,801) (6,447)
Incentive Retirement Program (3,690) (3,730)
AMT credit carryforward (4,367) (3,221)
Foreign net operating loss carryforwards (8,494) (6,916)
Federal net operating loss carryforwards (1,622) --
State net operating loss carryforwards (5,590) (3,435)
Other (2,201) (1,580)
- ------------------------------------------------------------------
Total long-term assets (33,815) (26,796)
- ------------------------------------------------------------------
Net operating loss valuation allowance 14,084 10,351
- ------------------------------------------------------------------
Net long-term deferred tax liabilities $ 48,580 $ 64,859
- ------------------------------------------------------------------
</TABLE>
A-12
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
-------------------------
December 31,
1994 1993
- --------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Other $ 1,386 $ 1,268
Current assets:
Vacation pay (4,072) (5,598)
Severance pay (3,417) (240)
State net operating loss carryforwards (200) (200)
Other (1,522) (1,564)
- --------------------------------------------------------------------
Total current assets (9,211) (7,602)
- --------------------------------------------------------------------
Net current deferred tax assets $(7,825) $(6,334)
- --------------------------------------------------------------------
</TABLE>
The Corporation had a valuation allowance of $10,351 at December 31, 1993 for
the deferred tax assets related to net operating loss carryforwards. The net
change in the valuation allowance for 1994 was an increase of $3,733 for a total
valuation allowance of $14,084 at December 31, 1994. This increase was caused by
state tax losses in 1994 and additional losses incurred by one of our foreign
subsidiaries. The valuation allowance at December 31, 1994 comprises $8,494
relating to the carryforwards of several of the Corporation's foreign
subsidiaries and $5,590 relating to state net operating loss carryforwards.
Approximately $124,805 (with a tax benefit of $14,284) of the net operating loss
carryforwards remains at December 31, 1994, of which $25,739 (with a tax benefit
of $8,494) is applicable to foreign subsidiaries and the remaining $99,066 (with
a tax benefit of $5,790) 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, due to the uncertainty of the
realization of these benefits, no benefit has been recognized in the
consolidated financial statements.
The state net operating loss carryforwards of $99,066 are applicable to many
states and will expire as follows: $9,046 in 1995, $1,791 in 1996, $4,090 in
1997, $2,379 in 1998, $20,674 in 1999, $1,267 in 2000, $7,139 in 2001, $1,125 in
2002, $4,034 in 2003 and $47,521 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 $5,590, 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 effect for
1992 were:
<TABLE>
<CAPTION>
-------
1992
- ----------------------------------------------------------------
<S> <C>
Depreciation $ 489
Retirement 5,524
Vacation pay (334)
Accruals currently
deductible for tax purposes 847
Deferred other assets 61
Other 34
- ----------------------------------------------------------------
$6,621
- ----------------------------------------------------------------
</TABLE>
See Note P 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>
--------------------------------
1994 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C> <C>
United States statutory income
tax rate (35.0)% 35.0% 34.0%
Increase (decrease) resulting from:
State and local income taxes,
net of United States tax effect 7.7 5.3 6.3
Dividend received deduction (2.9) (3.8) (1.4)
Writeoff/amortization of goodwill 4.9 1.7 .6
Meals and entertainment 5.5 2.3 .9
Difference in effective tax rate
of foreign operations and
projects, net of United States
tax effect 12.1 33.8 10.9
Adjustment of prior years'
federal income tax accruals,
net of interest effect .7 23.8 5.9
Adjustment of prior years' state
income tax accruals, net of
United States tax effect 2.0 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 (6.0) 2.5 2.1
- -----------------------------------------------------------------------
Effective income tax rate (11.0)% 104.4% 60.4%
- -----------------------------------------------------------------------
</TABLE>
Income from operations before income taxes, extraordinary item and cumulative
effect of a change in accounting principle were:
<TABLE>
<CAPTION>
-----------------------------------
1994 1993 1992
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $(9,548) $3,046 $23,586
Foreign 776 5,407 21
- -----------------------------------------------------------------------
$(8,772) $8,453 $23,607
- -----------------------------------------------------------------------
</TABLE>
The carryback of the taxable loss for 1994 to 1991 and 1992 resulted in a net
increase in the federal alternative minimum tax liability of $1,146, which
produced a credit that can be carried forward indefinitely
A-13
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
to reduce future federal income taxes payable. The total aggregate credit
available for regular federal tax carryforward purposes was $4,367 at December
31, 1994.
In 1993, the Corporation 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 in 1993.
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 in 1993.
(E) U.S. GOVERNMENT SECURITIES
U.S. Government securities are debt securities issued by the U.S. Treasury
comprising entirely U.S. Treasury bills, which the Corporation intends to hold
to maturity. These U.S. Treasury bills have maturity dates of one year or less.
The aggregate fair market value of U.S. Government securities at December 31,
1994 and December 31, 1993 was $74,624 and $54,488, respectively, the amortized
cost basis at December 31, 1994 and December 31, 1993 was $74,685 and $54, 478,
respectively, and the net unrealized holding (loss) gain at December 31, 1994
and December 31, 1993 was $(61) and $10, respectively.
(F) INVESTMENT SECURITIES
In 1993, the Corporation adopted Financial Accounting Standards Board Statement
No. 115 - Accounting for Certain Investments in Debt and Equity Securities.
Accordingly, at December 31, 1993, investment securities, consisting only of
equity securities, were carried at a fair market value of $40,836 and the gross
unrealized holding gain of $38,423, after reduction of deferred income taxes of
$13,448, or $24,975, was credited to Stockholders' Equity at December 31, 1993.
In 1994, all investment securities were sold. Profits from the sale of
investment securities were $32,102 in 1994 and $4,398 in 1992, which after
income taxes resulted in net income of $21,208, or $1.42 per share in 1994 and
$2,802, or $.19 per share in 1992. The cost of securities sold was determined by
average cost.
(G) PROPERTY, PLANT AND EQUIPMENT
Following is a summary of property, plant and equipment at December 31:
<TABLE>
<CAPTION>
------------------------
1994 1993
- -----------------------------------------------------------------
<S> <C> <C>
Office buildings and other real estate $162,021 $134,289
Furniture and equipment 133,006 130,741
Cold storage plant and equipment 50,568 48,185
Oil and gas properties 29,657 29,025
Construction in progress 38,183 24,405
- -----------------------------------------------------------------
413,435 366,645
Less accumulated depreciation,
depletion and amortization 179,566 164,709
- -----------------------------------------------------------------
Property, plant and equipment, net $233,869 $201,936
- -----------------------------------------------------------------
</TABLE>
Property, plant and equipment includes computer equipment under capital leases
of $7,037 at December 31, 1994 and $5,296 at December 31, 1993; related amounts
included in accumulated depreciation, depletion and amortization were $3,742 at
December 31, 1994 and $2,379 at December 31, 1993. Depreciation expense was
$18,133 for 1994, $18,349 for 1993 and $17,718 for 1992. Office buildings and
other real estate includes property of a subsidiary's office and business center
in Tampa, Florida of $29,331 and $29,209 at December 31, 1994 and 1993,
respectively, and related accumulated depreciation of $7,439 and $6,354 at
December 31, 1994 and 1993, respectively.
(H) LAND HELD FOR RESALE
Land held for resale is stated at the lower of cost or estimated net realizable
value and, in determining net realizable value, the Corporation uses independent
appraisals and/or internal estimates which, among other things, include
historical sales data, estimates of future sales prices and related
transactional costs.
(I) 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. There were no
amounts outstanding at December 31, 1994.
(J) LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
----------------------
1994 1993
- -------------------------------------------------------------------
<S> <C> <C>
Mortgage loans:
Due in 1996, interest at 9 1/8% $ 4,180 $ 6,000
Due in 1998, interest at 7.35% (1994),
5.18% (1993) 19,663 20,497
Due in 2009, interest at 6.44% 27,914 22,667
Construction loans 39,989 --
Capitalized lease obligations 2,884 3,067
- -------------------------------------------------------------------
94,630 52,231
Less current portion 4,988 4,492
- -------------------------------------------------------------------
$89,642 $47,739
- -------------------------------------------------------------------
</TABLE>
In March 1994, a limited partnership in which a subsidiary of the Corporation
owns a 94.3% interest, entered into an agreement with various lending
institutions for a non recourse construction loan of $62,500 for the
construction of a paper fiber recycling plant with interest payable monthly on
the average outstanding balance based on LIBOR and commercial paper rates. The
loan is collateralized by the plant. As of December 31, 1994, interest rates on
outstanding borrowings ranged from 6.94% to 9.81%. In December 1994, an
additional
A-14
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
loan agreement was entered into for $2,500. The loans are expected to be paid in
December 1995, from term debt and cash equity contributions. The long-term debt
agreements have been entered into in the form of a senior loan and subordinated
loan. The senior loan will have an eight-year term and be for 50% of the amount
of the construction loan at either a fixed or variable interest rate based upon
current market rates at date of conversion. The subordinated loan will have an
eleven-year term and be for 25% of the amount of the construction loan at a
fixed rate based upon current market rates at date of conversion. The balance of
the construction loans will be paid by cash equity contributions. At December
31, 1994, the outstanding construction loan balance was $39,989.
The Corporation and its subsidiaries have mortgage loans collateralized by
office buildings and other real estate with a net book value of $84,302 at
December 31, 1994. 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. A subsidiary of the Corporation has a 6.44% mortgage loan
obtained from an insurance company to finance the acquisition of land and the
construction of an office building to be occupied by an engineering subsidiary
of the Corporation. The office building was completed and opened in early 1994.
The remaining mortgage loans were obtained for a subsidiary's office and
business center in Tampa, Florida and principal and interest is due monthly. The
interest rate is adjusted annually on August 1st to the current market rate and
is based on U.S. Government securities rates. These loans contain a conversion
option, available on an annual basis, to fixed rate mortgages at the current
market rate. Principal payments required on long-term debt in the years 1995
through 1999 are $4,988, $5,227, $2,240, $19,677 and $1,783, respectively.
(K) OTHER ACCRUED LIABILITIES
Other accrued liabilities consists of the following at December 31:
<TABLE>
<CAPTION>
-----------------------
1994 1993
- ----------------------------------------------------------------
<S> <C> <C>
Salaries and benefits $14,905 $14,316
Insurance premiums 12,670 18,018
Severance 9,047 1,042
Other 19,080 13,455
- ----------------------------------------------------------------
$55,702 $46,831
- ----------------------------------------------------------------
</TABLE>
(L) OTHER NON-CURRENT LIABILITIES
Other non-current liabilities includes the accrued cost of the Employee Stock
Ownership Plan of $14,016 at December 31, 1994 and $16,031 at December 31, 1993.
(M) COMMITMENTS AND CONTINGENCIES
Rental expense was $7,200 in 1994, $12,600 in 1993 and $16,000 in 1992. 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, 1994 are as follows:
<TABLE>
<CAPTION>
---------------------
CAPITAL OPERATING
LEASES LEASES
- ----------------------------------------------------------------
<S> <C> <C>
1995 $1,255 $ 8,200
1996 1,239 9,600
1997 253 8,400
1998 237 7,900
1999 158 7,300
2000 and thereafter -- 46,800
- ----------------------------------------------------------------
Total minimum lease payments 3,142 $88,200
-------
Amount representing interest 258
- -------------------------------------------------
Present value of minimum lease payments $2,884
- -----------------------------------------------------------------
</TABLE>
The current portion of the present value of the minimum lease obligations under
capital leases as of December 31, 1994 amounted to $1,158.
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. In 1994, a subsidiary of the
Corporation settled two contract-related lawsuits for $900, which was expensed
during the year. In addition, with respect to a certain other case, it is
probable that the final outcome of the case will result in a loss to the
subsidiary. Based on opinion from counsel, the subsidiary expensed $3,800 and
$1,200 in 1994 and 1993, respectively. It is probable that any liability in
excess of the amounts expensed would be fully covered by applicable insurance.
Losses in excess of existing insurance coverage are considered unlikely. The
Corporation also has possible liabilities related to environmental pollution.
Management believes, on the basis of its examination and consideration of these
matters and such possible liabilities, including consultation with counsel, that
neither these legal actions, nor such possible liabilities, will result in
payment of amounts, if any, which would have a material adverse effect on the
consolidated financial statements. In addition, the Corporation and a subsidiary
are plaintiffs in one legal action, and a subsidiary is a plaintiff in another
action, to recover damages, attorneys' fees and other monetary relief from their
insurance carriers. No provision has been made in the financial statements for
any potential recoverable amounts.
A-15
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
In 1993, in a contract-related lawsuit, the jury returned a verdict against a
subsidiary of the Corporation. Although the subsidiary has filed an appeal to
reverse the damage award against it, 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 $7,469 at December 31, 1994.
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, 1994. The
Corporation has obtained bank letters of credit amounting to $1,500 at December
31, 1994 in favor of the bank financing the project to assure that certain
financial obligations with respect to the project will be met. Another
subsidiary of the Corporation is a partner in a joint venture to construct an
oriented-strand board mill in New Brunswick, Canada. An equity investment of
$3,565 was made in 1994, which approximates the carrying value at December 31,
1994.
A subsidiary of the Corporation owns a 94.3% interest in a limited partnership,
which is constructing a paper fiber recycling plant in Auburn, Maine. The
Corporation has obtained bank letters of credit in the amount of $15,324 at
December 31, 1994 in favor of the banks financing the project to assure that
certain financial obligations with respect to the project will be met.
Foreign subsidiaries of the Corporation have an overdraft banking facility of
$3,100 and lines of credit totaling $8,400, which are used for general
corporate purposes. The overdraft banking facility incurs interest based on 1%
over the bank's published rate. A commitment fee of 1/8% per annum is paid to
the banks on the unused portion of the lines of credit. At December 31, 1994,
no amounts were outstanding under the lines of credit or the overdraft banking
facility.
At December 31, 1994, subsidiaries of the Corporation have contingent
liabilities arising from guarantees to banks for credit facilities extended to
affiliates for general operating purposes of approximately $17,730.
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.
(N) TREASURY STOCK
In July 1994, the Board of Directors of the Corporation authorized a stock
repurchase program for up to 1 million shares of common stock in open market
transactions at prevailing prices. The Corporation acquired 366,543 shares in
1994, of which 363,324 represent purchases under this program. As of December
31, 1994, the Corporation had 14,609,307 shares outstanding. The amount and
timing of stock repurchases will depend upon market conditions, share price, as
well as other factors. The Corporation reserves the right to discontinue the
repurchase program at any time.
(O) 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 (ESOT), 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. The last sale of shares to the ESOT by the Corporation
occurred in 1985. At December 31, 1994, the balance of the notes receivable from
the Trust was $30,458. 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 $1,560
in 1994, $1,562 in 1993 and $1,567 in 1992.
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, previously held in the Treasury, were granted
subject to the restrictions described in the Plan. There were no such awards
granted in 1994. The market value of the shares awarded is being charged to
income over the vesting period of five years. At December 31, 1994, 1,724,200
shares have been awarded, net of shares forfeited, and the unamortized portion
of the market value was $433.
(P) 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 1994, the Corporation recorded a curtailment gain of $357 resulting from
employee terminations. The curtailment was determined as of July 1, 1994. The
employee terminations caused a significant reduction in defined benefit accruals
for present employees' future services. The net credit of $357 attributable to
the curtailment comprises two components: a curtailment gain of $4,206 resulting
from a reduction in the projected benefit obligation of the curtailed group and
a loss of $3,849 due to accelerated recognition of prior service costs for the
terminated employees.
A-16
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
Pension cost for the domestic plan includes the following components:
<TABLE>
<CAPTION>
------------------------------------
1994 1993 1992
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost -- benefits earned
during the year $ 7,630 $ 8,561 $ 8,334
Interest cost on projected
benefit obligation 28,593 27,332 25,101
Actual return on assets 1,518 (56,275) (29,579)
Net amortization and deferral (50,975) 6,429 (17,607)
- ------------------------------------------------------------------------
Net pension credit $(13,234)* $(13,953)** $(13,751)***
- ------------------------------------------------------------------------
</TABLE>
* Does not include curtailment gain of $357.
** 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).
Fluctuations in the actual return on plan assets reflect fluctuations in the
market prices of equity securities as well as debt securities owned by the
pension plan. These fluctuations account for most of the variation in the net
amortization and deferral component of pension cost. This component also
includes amortization of the transition asset amounting to $10,383.
The net pension credits reduced costs and expenses and contributed to income
(loss) before income tax (benefit) provision by $13,234, $13,953 and $13,751 for
the years 1994, 1993 and 1992, respectively.
A reconciliation of the domestic plan's funded status to the balance sheet
prepaid pension cost is as follows at December 31:
<TABLE>
<CAPTION>
------------------------
1994 1993
- ----------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefits:
Vested benefit obligation $(330,993) $(362,749)
- ----------------------------------------------------------------
Accumulated benefit obligation $(333,719) $(369,109)
- ----------------------------------------------------------------
Projected benefit obligation $(348,706) $(388,922)
Plan assets at fair value 454,757 477,237
- ----------------------------------------------------------------
Excess of assets over projected
benefit obligation 106,051 88,315
Unrecognized prior service cost 16,061 22,809
Unrecognized net loss 19,818 27,598
Unrecognized net transition (asset) (40,799) (51,182)
- ----------------------------------------------------------------
Prepaid pension cost $ 101,131 $ 87,540
- ----------------------------------------------------------------
</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 8 3/4% at December 31, 1994, 8 1/4% at the July 1,
1994 interim measurement date and 7 1/2% at December 31, 1993 and assumed
long-term rate of compensation increases of 5%, 5% and 4 1/2% at December 31,
1994, July 1, 1994 and December 31, 1993, respectively. Pension cost was
determined using an assumed long-term rate of return on plan assets of 9 3/4% at
July 1, 1994 and 9 1/2% at January 1, 1994 and 10% for 1993 and 1992.
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 costs and 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.
Pro forma amounts showing the effects of applying the new method retroactively
are presented below:
<TABLE>
<CAPTION>
------
1992
- --------------------------------------------------------------
<S> <C>
Income before extraordinary item $9,340
Per share .62
Net income 9,586
Per share .64
- --------------------------------------------------------------
</TABLE>
In 1993, a foreign subsidiary of the Corporation recorded a curtailment gain of
$1,072, resulting from employee terminations. The terminations caused a
significant reduction in defined benefit accruals for present employees' future
services. Pension expense (credit) for foreign subsidiaries was $454 in 1994,
$(436) in 1993 and $998 in 1992. Assets and liabilities of foreign pension plans
are not material.
(Q) FOREIGN SUBSIDIARIES
The total revenues and net assets of foreign subsidiaries amounted to $83,228
and $8,959 in 1994, $224,563 and $10,615 in 1993 and $166,797 and $8,146 in
1992. The net income (loss) of foreign subsidiaries was $(844) in 1994, $2,551
in 1993 and $(2,512) in 1992.
(R) BUSINESS SEGMENTS
The Corporation, through its subsidiaries, is principally engaged in providing
professional engineering, design, construction, consulting and full
environmental services for power, process, industrial and governmental projects.
The Corporation's cold storage and related activities business offers
consolidated distribution of frozen products for food processors and others
throughout the Southeast.
A-17
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
Export revenues were less than 10% of consolidated revenues. 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 revenues 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 clients who
accounted for 10% or more of consolidated revenues as follows: two clients in
1994 - 11% and 18%; one client in 1993 and 1992 - 22% and 15%. The cold storage
and related activities business segment had no single client providing 10% or
more of consolidated revenues.
Information regarding business segments is shown on page A-21 and is
incorporated herein.
(S) QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tabulation sets forth unaudited quarterly financial data for the
years 1994 and 1993:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
1994 QUARTER QUARTER QUARTER* QUARTER*
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $192,725 $190,432 $205,394 $229,670
Income (Loss) before Income Taxes (19,454) (4,763) 8,410 7,035
Net Income (Loss) (12,921) (3,989) 5,182 3,921
Net Income (Loss) per share ** (.86) (.27) .35 .26
- -----------------------------------------------------------------------------
</TABLE>
* Includes revenues of $9,762 and $22,340, net income of $6,449 and $14,759 and
net income per share of $.43 and $.99 resulting from the sale of investment
securities for the third and fourth quarters, respectively.
** Includes severance costs of $.25, $.14, $.03 and $.42 per share for the
first, second, third and fourth quarters and a pension curtailment gain of
$.02 per share in the third quarter.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
1993 QUARTER QUARTER QUARTER QUARTER
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $283,834 $285,521 $260,813 $222,927
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 of $.16 per
share 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 and severance costs of $.08 ,$.13 ,$.08 and
$.04 per share for the first, second, third and fourth quarters,
respectively.
A substantial portion of the Corporation's business is derived from long-term
engineering and construction contracts. Revenues are determined on the
percentage-of-completion method. Under this method, revisions to earnings
estimates recorded in any quarterly period may be adjustments to revenues and
cost of revenues recognized in prior periods and may in turn be further adjusted
during subsequent quarters. Accordingly, historical results may vary from
quarter to quarter.
(T) FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Corporation's financial instruments at December
31, 1994 follow:
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.
Long-term debt, excluding capital lease obligations, consists of mortgage loans
related to our real estate operations in Tampa, Florida, which were renewed in
1993, construction loans relating to our paper fiber recycling plant in Auburn,
Maine and mortgage loans relating to office buildings. The fair value of the
construction loans approximates the carrying value at December 31, 1994. The
carrying value of the mortgage loans for a subsidiary's office buildings and our
real estate operations amounted to $51,757 compared with a fair value of $47,342
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 $621 based on the fees paid to obtain the obligations.
(U) RECLASSIFICATIONS
Certain reclassifications have been made in the prior years' consolidated
financial statements to conform with the 1994 presentation.
A-18
<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,
1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Engineering, construction and consulting services $740,458 $1,006,766 $942,936 $923,944 $708,113
Cold storage and related activities 17,280 16,914 15,698 15,348 14,378
Other 60,483 29,415 28,586 28,276 45,316
- ----------------------------------------------------------------------------------------------------------------
Total revenues $818,221 $1,053,095 $987,220 $967,568 $767,807
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) from Continuing Operations $ (7,807) $ (370) $ 9,340 $ 16,417 $ 7,542
Net Income (Loss) (Notes 1, 2, 3 and 4) $ (7,807) $ 1,952 $ 12,815 $ 17,605 $ 8,888
- ----------------------------------------------------------------------------------------------------------------
Average Number of Shares Outstanding 14,907,000 14,978,000 14,999,000 15,055,000 15,124,000
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) from Continuing Operations Per Share $(.52) $(.03) $.62 $1.08 $ .50
Net Income (Loss) Per Share (Notes 1, 2, 3 and 4) $(.52) $ .13 $.85 $1.17 $ .59
- ----------------------------------------------------------------------------------------------------------------
Dividends Declared Per Share $ .60 $ .60 $.60 $.60 $1.05
- ----------------------------------------------------------------------------------------------------------------
Total Assets (Note 5) $678,384 $ 683,579 $623,493 $609,828 $576,708
- ----------------------------------------------------------------------------------------------------------------
Long-Term Debt $ 89,642 $ 47,739 $ 24,768 $ 28,022 $ 11,350
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (1) Reflects gain on sale of investment securities, which increased net
income by $21,208, or $1.42 per share in 1994 and $2,802, or $.19
per share in 1992, as explained in Note F to the Consolidated
Financial Statements, and $2,853, or $.19 per share in 1990.
(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 pension curtailment gains which increased net income by
$218, or $.02 per share in 1994 and by $1,072, or $.07 per share in
1993, severance costs which decreased net income by $12,596, or $.84
per share in 1994, $4,967, or $.33 per share in 1993 and by $1,881,
or $.13 per share in 1992, 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.
(6) Certain reclassifications have been made in the prior years' data to
conform with the 1994 presentation. See Summary of Significant
Accounting Policies.
MARKET AND DIVIDEND INFORMATION
Principal Market - New York Stock Exchange
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
SALES PRICE OF DIVIDENDS PAID
COMMON SHARES PER SHARE
- -----------------------------------------------------------------
1994 1993 1994 1993
- -----------------------------------------------------------------
QUARTER HIGH LOW HIGH LOW
- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First 31 5/8 27 1/4 25 5/8 21 7/8 $.15 $.15
Second 33 7/8 29 5/8 26 1/2 21 1/4 .15 .15
Third 33 3/4 31 7/8 29 1/8 24 5/8 .15 .15
Fourth 34 31 3/4 30 1/4 26 1/4 .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. Also see Note
N to the Consolidated Financial Statements. The approximate number of record
holders of Common Stock as of December 31, 1994 was 6,500. The Common Stock is
also listed for trading on the Boston Stock Exchange.
A-19
<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.
Bruce C. Coles William M. Egan
President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
A-20
<PAGE>
STONE & WEBSTER, INCORPORATED AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(See Note R to Consolidated Financial Statements)
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
BUSINESS SEGMENTS REVENUES (NOTE 1) OPERATING PROFIT (LOSS) (NOTE 4)
1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Engineering, construction and
consulting services (Note 2) $751,755 $1,016,511 $947,714 $(36,306) $ 9,879 $ 23,456
Cold storage and related activities (Note 2) 17,305 16,939 15,714 5,957 5,286 4,206
Other (Note 3) 13,606 16,555 15,776 1,607 2,833 1,100
- -------------------------------------------------------------------------------------------------------------
Total 782,666 1,050,005 979,204 (28,742) 17,998 28,762
General corporate dividends and interest 3,453 3,090 3,618 3,453 3,090 3,618
Profits on investment securities 32,102 -- 4,398 32,102 -- 4,398
General corporate expenses (11,685) (10,029) (10,150)
Interest expense (3,900) (2,606) (3,021)
General corporate assets (Note 6)
- -------------------------------------------------------------------------------------------------------------
Total Revenues, Income (Loss) before Income
Taxes and Total Assets $818,221 $1,053,095 $987,220 $ (8,772) $ 8,453 $ 23,607
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
BUSINESS SEGMENTS IDENTIFIABLE ASSETS (NOTE 5)
1994 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Engineering, construction and
consulting services (Note 2) $492,650 $477,905 $445,873
Cold storage and related activities (Note 2) 35,798 35,015 35,760
Other (Note 3) 68,679 68,981 71,581
- ----------------------------------------------------------------------------
Total 597,127 581,901 553,214
General corporate dividends and interest
Profits on investment securities
General corporate expenses
Interest expense
General corporate assets (Note 6) 81,257 101,678 70,279
- ----------------------------------------------------------------------------
Total Revenues, Income (Loss) before Income
Taxes and Total Assets $678,384 $683,579 $623,493
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
GEOGRAPHIC AREAS REVENUES OPERATING PROFIT (LOSS)
1994 1993 1992 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States (Note 7) $696,625 $ 822,769 $809,640 $(29,741) $12,365 $28,494
Foreign (Note 8) 86,041 227,236 169,564 999 5,633 268
- -----------------------------------------------------------------------------------------------------------
Total $782,666 $1,050,005 $979,204 $(28,742) $17,998 $28,762
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
GEOGRAPHIC AREAS IDENTIFIABLE ASSETS
1994 1993 1992
- --------------------------------------------------------------------------
<S> <C> <C> <C>
United States (Note 7) $553,096 $539,378 $515,086
Foreign (Note 8) 44,031 42,523 38,128
- --------------------------------------------------------------------------
Total $597,127 $581,901 $553,214
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
BUSINESS SEGMENTS DEPRECIATION, DEPLETION
AND AMORTIZATION CAPITAL EXPENDITURES
1994 1993 1992 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Engineering, construction and consulting services $14,904 $15,182 $14,549 $47,637 $29,389 $24,018
Cold storage and related activities 1,951 2,025 1,976 2,439 863 579
Other (Note 3) 2,862 2,928 3,599 2,268 1,427 2,349
- ----------------------------------------------------------------------------------------------------------------------------------
Total $19,717 $20,135 $20,124 $52,344 $31,679 $26,946
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (1) Total segment revenues include revenues from unaffiliated customers
as reported in the consolidated income statement. In computing
segment revenues, general corporate dividends and interest and
profits on investment securities have been excluded.
(2) To reconcile segment revenues information with consolidated amounts,
the following items have been included in the engineering,
construction and consulting services segment: $1,402, $1,060 and
$1,183 of interest income and $9,895, $8,685 and $3,595 of other
revenues for the years 1994, 1993 and 1992, respectively; and, the
following items have been included in the cold storage and related
activities segment: $30, $12 and $11 of interest income for the years
1994, 1993 and 1992, respectively, and $(5), $13 and $5 of other
revenues for the years 1994, 1993 and 1992, respectively.
(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 (loss) comprises total segment revenues, 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. Net pension
credits reduced costs and expenses and contributed to operating
profit or reduced operating loss by $13,234, $13,953 and $13,751 for
the years 1994, 1993 and 1992, respectively.
(5) Identifiable assets are those assets that are used in the operations
of each segment.
(6) General corporate assets, which represent assets of the parent
company, 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 revenues of $50,893, $39,041 and $43,644 for the
years 1994, 1993 and 1992, respectively, primarily to Asia/Pacific
Rim, Middle East and Canada.
(8) Revenues principally to Asia/Pacific Rim, Canada, Europe and Middle
East.
(9) Certain reclassifications have been made in the prior years' data to
conform with the 1994 presentation. See Summary of Significant
Accounting Policies.
A-21
<PAGE>
Stone & Webster, Incorporated and Subsidiaries
Schedule VIII - Valuation and Qualifying Accounts
(All dollar amounts are in thousands.)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at Charged Charged Balance at
Beginning of to Costs to Other End of
Description Period and Expenses Accounts Deductions Period
<S> <C> <C> <C> <C> <C>
Allowance deducted from
asset to which it applies:
Allowance for doubtful
accounts:
Year ended December 31, 1994 $2,957 $647 $289 $170 (A) $3,723
Year ended December 31, 1993 4,529 498 354 2,424 (A) 2,957
Year ended December 31, 1992 2,857 699 1,000 27 (A) 4,529
Note A - Uncollected receivables written off, net of recoveries
</TABLE>
A-22
<PAGE>
Form 10-K 1994 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 schedule of Stone & Webster, Incorporated and Subsidiaries listed
in the index on page A-1 of the Form 10-K. These financial statements and
the financial statement schedule are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements and the financial statement schedule 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 also 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 Subsidiaries as of December 31, 1994 and 1993, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
As discussed in Notes D and F 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 P 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
calculating annual pension cost in 1992.
COOPERS & LYBRAND L.L.P.
New York, New York
February 14, 1995
A-23
<PAGE>
Form 10-k 1994 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 consulting
agreement (filed herewith)
(21) Subsidiaries of the Registrant (filed herewith)
(23) Consent of Independent Accountants (filed herewith)
(27) Financial Data Schedule (filed herewith)
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
Exhibit (3)(ii)
B Y - L A W S
OF
STONE & WEBSTER, INCORPORATED
AS AMENDED EFFECTIVE
FEBRUARY 15, 1995
_________________
ARTICLE I
Name
The name of the corporation (hereinafter referred to as
this Corporation) is Stone & Webster, Incorporated.
ARTICLE II
Stockholders' Meetings
Meetings of the stockholders may be held in such
locations within or without the State of Delaware as shall be designated
by the Board of Directors or set forth in the notice of such meeting.
ARTICLE III
Annual Stockholders' Meeting
The Annual Meeting of the stockholders of this
Corporation shall be held at the time set forth in the notice of such
meeting on the second Thursday in May in each year if not a legal
holiday, and if a legal holiday, then at the time set forth in said
notice 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.
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FORM 10-K 1994 Stone & Webster, Incorporated
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 the Chairman of the Executive Committee or by vote
of the Board of Directors.
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 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 Restated 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
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<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
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 Restated 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.
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 XXIII, 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,
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<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
(c) one-third of the number of Directors shall be
elected to serve until the 1975 Annual Meeting of
the stockholders,
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
Chairman of the Board of Directors
A Chairman of the Board of Directors may be appointed by
the Board of Directors from among its members at the first meeting after
the Annual Meeting of the stockholders or at any other meeting of the
Board of Directors, and a meeting may be held without notice for this
purpose immediately after the Annual Meeting of the stockholders and at
the same place.
The Chairman of the Board of Directors 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.
ARTICLE XI
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 Restated
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.
4
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
ARTICLE XII
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. A Chairman of the Executive Committee (who shall preside at
the meetings of the Executive Committee, may call meetings thereof
whenever he deems it necessary and shall have such other powers and
duties as the Board of Directors shall designate from time to time)
shall be appointed by the Board of Directors at the time it designates
members of the Executive Committee. 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 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
Restated 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 XIII
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, the Chairman of the Executive
Committee, a Vice-President, the Secretary, an Assistant Secretary or
5
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
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 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 XIV
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 Restated
Certificate of Incorporation or by these By-laws.
ARTICLE XV
Officers
The officers of this Corporation shall be a President,
one or more Vice-Presidents, a Secretary and a Treasurer. 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 XVI
Eligibility of Officers
The President may, but need not, be a stockholder but
shall be a Director of this Corporation. 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.
6
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
ARTICLE XVII
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 XVIII
President
The President 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. The President also
shall have such powers and duties as are commonly incident to the office
of president. He shall also have such other powers and duties as 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-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.
ARTICLE XX
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 President 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.
7
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
ARTICLE XXI
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 President 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 be drawn by such person as the Treasurer shall
designate and need not be countersigned.
ARTICLE XXII
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
8
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
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 XXIII
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
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.
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<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
ARTICLE XXIV
Capital Stock
The maximum amount of capital stock shall be as fixed in
the Restated Certificate of Incorporation or in any lawful amendments
thereto from time to time.
ARTICLE XXV
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 President 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
President 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. 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 XXVI
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
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<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
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 XXVII
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 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 XXVIII
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.
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FORM 10-K 1994 Stone & Webster, Incorporated
ARTICLE XXIX
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 XXX
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 XXXI
Voting of Stock Held
Unless otherwise provided in the Restated Certificate of
Incorporation of this Corporation or by resolution of the Board of
Directors, 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 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
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 XXXII
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
12
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
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 By-laws 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.
13
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
Exhibit (10)(b)
STONE & WEBSTER, INCORPORATED
ONE PENN PLAZA
250 WEST 34TH STREET
NEW YORK, NEW YORK
TELEPHONE: 212-290-7500
FAX: 212-290-7507
ADDRESS ALL CORRESPONDENCE TO P.O. BOX 1244, NEW YORK, NEW YORK 10116
June 15, 1994
Mr. William F. Allen, Jr.
Chairman of the Board
Stone & Webster, Incorporated
One Penn Plaza
250 West 34th Street
New York, New York 10119
Dear Mr. Allen:
You have extensive experience in the business of Stone &
Webster, Incorporated ("S&W") and its subsidiaries, including the
experience and knowledge you gained during your service as Chief
Executive Officer of S&W. Effective as of the Board of Director action
taken on May 12, 1994, although you remain as Chairman of the Board of
Directors of S&W, you are no longer an officer of S&W and have elected
to retire under the provisions of the Employee Retirement Plan of Stone
& Webster, Incorporated and Participaing Subsidiaries as of the close of
business on June 30, 1994. However, because of the value to S&W of your
extensive experience and knowledge of the business of S&W and its
affiliates, S&W has determined that it is in S&W's best interest to have
the benefit of your services as a consultant and adviser to S&W and
desires to retain your services in accordance with the terms of this
Agreement.
1. Term of Consultantship. The term of this
Agreement shall be the period commencing July 1, 1994 and ending May 31,
1995, unless sooner terminated in accordance with the provisions hereof.
2. Position and Responsibilities.
(a) You are retained to serve as a consultant and
adviser to S&W and its affiliates. The specific services to be
performed by you hereunder shall be designated, from time to time, by
the Chief Executive Officer or other representative of the Board of
Directors. Subject to the requirement that you shall have received
reasonable advance notice, you shall make yourself available at such
places as S&W shall from time to time designate for at least 110 days
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
during the period which this Agreement is in effect. S&W and you agree
to use best efforts to schedule any such designated days to avoid
interference with your other activities, including vacation travel.
(b) In your capacity, you shall not have the
authority to bind, or be an agent of, S&W or any of its affiliates in
any respect.
(c) By your acceptance of this Agreement, you
undertake to provide such consulting services and to use your best
efforts, ability and fidelity in the performance thereof.
3. Compensation.
(a) During the term of this Agreement, you shall
receive a consulting fee of $25,000 per month for each month during
which you are a consultant hereunder, payable at the end of each such
month.
(b) You shall be reimbursed upon proper
documentation for your reasonable expenses incurred in connection with
the performance of your services to be provided hereunder.
(c) Payments under this Agreement shall be
subject to deduction, if required by law, for any applicable federal,
state or municipal income withholding, social security, State disability
insurance, or similar or other taxes, or any other items which may be
required to be deducted by law or custom.
4. Termination of Consultantship.
(a) Your consultantship hereunder may be
terminated for your failure (including by reason of death or incapacity)
or refusal to perform the duties and responsibilities of your
consultantship.
(b) If at any time you shall voluntarily
terminate your consultantship hereunder, or if at any time your services
shall be terminated pursuant to paragraph (a) of this Section 4, then
this Agreement shall terminate and all further obligations of S&W
hereunder shall cease.
5. Entire Agreement. This Agreement sets forth all
of the terms of the understandings between the parties with reference to
the subject matter set forth herein and may not be waived, changed,
discharged or terminated orally or by any course of dealing between the
parties, but only by an instrument in writing signed by the party
against whom any waiver, change, discharge or termination is sought.
6. Pension and other Payments. Since, under the
terms of this Agreement you shall be an independent contractor,
consultant and not an employee or officer of S&W (or any of its
affiliates), the terms of this Agreement shall not affect your rights to
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
payments under the Employee Retirement Plan of S&W, as such rights have
been modified by agreements between you and S&W. In addition, the
amounts payable hereunder shall be in addition to any amounts that may
be payable to you in your capacity as a Director, including annual
retainer amounts, chairmanship fees and meeting attendance fees.
7. Governing Law. This Agreement shall be construed
in accordance with the laws of the State of New York.
* * * * * * *
This letter has been executed by S&W pursuant to
authority of its Board of Directors and when accepted by you will
constitute an agreement between us and shall be binding upon you and
S&W.
If the foregoing terms and conditions correctly embody
your mutual understanding with S&W, kindly endorse your acceptance and
agreement therewith in the space below provided, whereupon this shall
become a binding agreement between us.
Very truly yours,
STONE & WEBSTER, INCORPORATED
By BRUCE C. COLES
Accepted and Agreed to as of
the date first above set forth.
WILLIAM F. ALLEN, JR.
William F. Allen, Jr.
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
Exhibit (21) Subsidiaries of Registrant
Subsidiaries of Registrant on December 31, 1994 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 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
Stone & Webster Engineering Limited England
Stone & Webster Services Limited England
Stone & Webster Services Sdn. Bhd. Malaysia
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
Stone & Webster Engineering and Field
Services Limited England
Stone & Webster Engineering (Mauritius)
Limited Mauritius
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 Lithuania Corporation 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
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
Queen Palm Corporation Florida
Registry Building Corporation Florida
Registry Square Corporation Florida
Sabal Park Plaza Corporation Florida
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
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>
<PAGE>
FORM 10-K 1994 Stone & Webster, Incorporated
Exhibit (23)
Coopers & Lybrand L. L. P.
a professional services firm
COOPERS
& 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 14, 1995, on our audits of the consolidated financial
statements and financial statement schedule of Stone & Webster,
Incorporated and Subsidiaries as of December 31, 1994 and 1993, and for
each of the three years in the period ended December 31, 1994, which
report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L. L. P.
COOPERS & LYBRAND L. L. P.
New York, New York
February 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS AND
RETAINED EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 55650
<SECURITIES> 0
<RECEIVABLES> 96624
<ALLOWANCES> 3723
<INVENTORY> 0
<CURRENT-ASSETS> 277983
<PP&E> 413435
<DEPRECIATION> 179566
<TOTAL-ASSETS> 678384
<CURRENT-LIABILITIES> 141436
<BONDS> 89642
<COMMON> 65171
0
0
<OTHER-SE> 310147
<TOTAL-LIABILITY-AND-EQUITY> 678384
<SALES> 0
<TOTAL-REVENUES> 818221
<CGS> 0
<TOTAL-COSTS> 776229
<OTHER-EXPENSES> 46217
<LOSS-PROVISION> 647
<INTEREST-EXPENSE> 3900
<INCOME-PRETAX> (8772)
<INCOME-TAX> (965)
<INCOME-CONTINUING> (7807)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7807)
<EPS-PRIMARY> (.52)
<EPS-DILUTED> (.52)
</TABLE>
