Securities and Exchange Commission
Commission File No. 1-6314
Washington, DC 20549
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934.
For the fiscal year ended December 31, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to ____________
(Exact name of registrant as specified in its charter)
Massachusetts
04-1717070
(State of Incorporation)
(IRS Employer Identification No.)
73 Mt. Wayte Avenue, Framingham, Massachusetts
01701
(Address of principal executive offices)
(Zip Code)
(508) 628-2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of each exchange on which registered
Common Stock, $1.00 par value
The American Stock Exchange
$2.125 Depositary Convertible Exchangeable
The American Stock Exchange
Preferred Shares, each representing 1/10th
Share of $21.25 Convertible Exchangeable
Preferred Stock, $1.00 par value
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 ___
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
The aggregate market value of voting Common Stock held by nonaffiliates of the registrant is $74,984,458 as of February 26, 2001. The Company does not have any non-voting Common Stock.
The number of shares of Common Stock, $1.00 par value per share, outstanding at February 26, 2001 is 22,584,469.
Documents Incorporated by Reference
Portions of the annual
proxy statement for the year ended December 31, 2000 are incorporated by
reference into Part III.
PERINI CORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-K
PAGE
PART I
Item 1: Business 2 - 8
Item 2: Properties 8
Item 3: Legal Proceedings 9
Item 4: Submission of Matters to a Vote of Security Holders 9
PART II
Item 5: Market for the Registrant's Common Stock and Related Stockholder Matters 10
Item 6: Selected Financial Data 11
Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations 12 - 17
Item 7A: Quantitative and Qualitative Disclosure About Market Risk 17
Item 8: Financial Statements and Supplementary Data 18
Item 9: Disagreements on Accounting and Financial Disclosure 18
PART III
Item 10: Directors and Executive Officers of the Registrant 19 - 20
Item 11: Executive Compensation 20
Item 12: Security Ownership of Certain Beneficial Owners and Management 20
Item 13: Certain Relationships and Related Transactions 20
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K 21
Signatures 22
PART I.
ITEM 1. BUSINESS
General
Perini Corporation and its subsidiaries (the "Company" unless the context indicates otherwise) is engaged in the construction business. The Company was incorporated in 1918 as a successor to businesses which had been engaged in providing construction services since 1894. The Company currently provides general contracting, construction management and design-build services to private clients and public agencies throughout the United States and selected overseas locations. The Company's construction business involves two basic segments: building and civil.
The Company was previously engaged in the real estate development business which was conducted by Perini Land & Development Company, a wholly-owned subsidiary. As discussed in Note 2 of Notes to Consolidated Financial Statements, effective June 30, 1999 the Company adopted a plan to withdraw completely from the real estate development business and to wind down the operations of the Company's real estate development subsidiary.
Because the Company's results consist, in part, of a limited number of large transactions, results in any given fiscal quarter can vary depending on the timing of transactions and the profitability of the projects being reported. As a consequence, quarterly results may reflect such variations.
Information on lines of business and foreign business is included under the following captions of this Annual Report on Form 10-K for the year ended December 31, 2000.
Annual Report
on Form 10-K
Caption Page Number
Selected Consolidated Financial Information Page 11
Management's Discussion and Analysis Pages 12 - 17
Note 13 of Notes to the Consolidated Financial Statements, entitled "Business Segments" Pages 46 - 48
While the "Selected Consolidated Financial Information" presents certain lines of business information for purposes of consistency of presentation for the five years ended December 31, 2000, additional information (business segment) required by Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information", for the three years ended December 31, 2000 is included in Note 13 of Notes to Consolidated Financial Statements.
A summary of revenues by business segment for each of the three years in the period ending December 31, 2000 is as follows (in thousands):
Revenues For Year Ended December 31,
---------------------------------------------
2000 1999 1998
Construction:
Building $ 826,191 $ 696,407 $ 679,296
Civil 279,469 323,077 332,026
------------- ------------- -------------
Total Construction Revenues $1,105,660 $ 1,019,484 $ 1,011,322
============= ============= =============
The general building and civil contracting services provided by the Company consist of planning and scheduling the manpower, equipment, materials and subcontractors required for the timely completion of a project in accordance with the terms and specifications contained in a construction contract. The Company provides these services using the traditional general contracting method as well as under construction management or design-build contracting arrangements. The Company was engaged in approximately 100 construction projects in the United States and overseas during 2000.
The building operation provides its services through regional offices located in several metropolitan areas: Boston, serving New England and the Mid-Atlantic area; Phoenix and Las Vegas, serving Arizona, Nevada and California; and Detroit, serving the Midwest area. The Company's building contracting services are provided by Perini Building Company, Inc., a wholly-owned subsidiary. This company combines substantial resources and expertise to better serve clients within the building construction market and enhances Perini's name recognition in this market. The Company undertakes a broad range of building construction projects including hotels, casinos, health care facilities, correctional facilities, sports complexes, multi-unit residential, commercial, civic, cultural and educational facilities.
The civil operation undertakes large public civil projects in the East, with current emphasis on major metropolitan areas such as New York City and Boston and selectively, in other geographic locations. The Company's civil contracting services are provided by "Perini Civil", which is part of Perini Corporation, and include construction and rehabilitation of highways, bridges, subways, tunnels, dams, airports, marine projects and waste water treatment facilities. The Company has been active in civil operations since 1894 and believes that it has particular expertise in large and complex projects. The Company believes that infrastructure rehabilitation is, and will continue to be, a significant market in 2001 and beyond.
Perini Management Services, Inc. (formerly Perini International Corporation), a wholly-owned subsidiary, provides a broad range of both civil and building construction services to U.S. government agencies in the U.S. and selected overseas locations, funded primarily in U.S. dollars. In addition, a joint venture managed by Perini Management Services, Inc. provides maintenance/modification and support services at five nuclear power generating plant sites in the Midwest under a multi-year contract with a private client. In selected situations, it pursues other work internationally.
Construction Strategy
Overall, the Company continues to focus on improving the profitability of its construction operations by emphasizing gross margin and bottom line improvement. The Company's current strategy is to concentrate on the civil construction market in the East and specialized niche building construction markets throughout the United States, with the goal in both markets to continue to improve profit margins. In addition, the Company is currently in the process of developing a strategy to profitably grow the business internally or through acquisition. The Company believes the best opportunities for growth in the coming years for its civil construction business are in the urban infrastructure market, particularly in metropolitan New York and Boston, and in other large, complex projects. The Company's strategy in building construction is to take advantage of certain market niches, and to expand into new markets compatible with its expertise. Internally, the Company plans to continue to improve efficiency through strict attention to the control of overhead expenses. Finally, the Company continues to expand its expertise to assist public owners to develop necessary facilities through creative alternative project delivery methods, including public/private ventures, design-build and design-build-operate-maintain ("DBOM") arrangements.
Backlog
The Company includes a construction project in its backlog at such times as a contract is awarded or a firm letter of commitment is obtained. As a result, the backlog figures are firm, subject only to the cancellation provisions contained in the various contracts.
As of December 31, 2000, the Company has a record year end construction backlog of $1.79 billion compared to the previous record year end backlog of $1.66 billion as of December 31, 1999 and to $1.23 billion as of December 31, 1998. The backlog is summarized below by geographic area and also by business segment:
Backlog (in thousands) as of December 31,
--------------------------------------------------------------------------
2000 1999 1998
----------------------- ----------------------- ----------------------
Northeast $ 1,219,166 68% $1,089,234 66% $ 682,774 55%
Mid-Atlantic 53,334 3 45,084 3 45,417 4
Southeast 115,165 6 210,395 12 35,801 3
Midwest 110,867 6 144,895 9 92,928 8
Southwest 206,796 12 44,994 3 294,931 24
West 885 - 1,264 - 26,843 2
Foreign 82,518 5 122,211 7 53,562 4
------------- ------- ------------- ------- ------------- -------
Total $ 1,788,731 100% $1,658,077 100% $1,232,256 100%
============= ======= ============= ======= ============= =======
Backlog in the Northeast region of the United States increased substantially during 1999 due to the addition of a $650 million construction contract for the Mohegan Sun Phase II Expansion project ("Mohegan Sun Project") and otherwise remains strong because of the Company's ability to meet the needs of the growing infrastructure construction and rehabilitation market in this region, particularly in the metropolitan New York and Boston areas. The fluctuation in backlog in the Southwest region is due to the timing of the signing and start-up of new contracts and the redeployment of some of its resources from that region to the Southeast and Northeast regions, rather than a longer term trend. Other fluctuations in backlog are viewed by management as transitory.
Backlog (in thousands) as of December 31,
-----------------------------------------------------------------------------
2000 1999 1998
----------------------- ----------------------- ------------------------
Building $ 1,051,364 59% $ 1,114,366 67% $ 581,776 47%
Civil 737,367 41 543,711 33 650,480 53
------------- ------ ------------- ------- -------------- -------
Total $ 1,788,731 100% $ 1,658,077 100% $ 1,232,256 100%
============= ====== ============= ======= ============== =======
The historical relationship between Building and Civil is somewhat distorted in 1999 due to the impact of the Mohegan Sun Project. If that project was excluded from the backlog at the end of 1999, the remaining backlog would be divided equally between the Company's Building and Civil construction segments.
The Company estimates that approximately $660 million of its backlog will not be completed in 2001.
Types of Contracts
The four general types of contracts in current use in the construction industry are:
Historically, a high percentage of Company contracts have been of the fixed price and GMP type. A summary of revenues and backlog by type of contract for the most recent three years follows:
Revenues - Year Ended
December 31, Backlog as of December 31,
- -------------------------------- ------------------------------
2000 1999 1998 2000 1999 1998
- ---------- --------- --------- -------- -------- --------
32% 46% 50% Fixed Price 46% 38% 68%
68 54 50 CPAF, GMP or CM 54 62 32
- ---------- --------- --------- -------- -------- --------
100% 100% 100% 100% 100% 100%
========== ========= ========= ======== ======== ========
Clients
During 2000, the Company was active in the building, civil and to a lesser extent, the international construction markets, and performed work for over 45 federal, state and local governmental agencies or authorities and private customers. Due to the Company's trend toward fewer, but larger contracts, a material part of the Company's business has been dependent on a single or limited number of private customers and/or public agencies in recent years (see Note 13 of Notes to Consolidated Financial Statements), the loss of any one of which could have a materially adverse effect on the Company. During the period 1998-2000, the portion of construction revenues derived from contracts with various governmental agencies was 32% in 2000, 40% in 1999 and 43% in 1998.
Revenues by Client Source
Year Ended December 31,
-------------------------------
2000 1999 1998
-------- ------- --------
Private Owners 68% 60% 57%
Federal Governmental Agencies 4 3 2
State, Local and Foreign Governments 28 37 41
-------- ------- --------
100% 100% 100%
======== ======= ========
General
The construction business is highly competitive. Competition is based primarily on price, reputation for on time completion, quality, reliability and financial strength of the contractor. While the Company experiences a great deal of competition from other large general contractors, some of which may be larger with greater financial resources than the Company, as well as from a number of smaller local contractors, it believes it has sufficient technical, managerial and financial resources combined with a positive reputation for performance to be competitive in each of its major market areas.
The Company will endeavor to spread the financial and/or operational risk, as it has from time to time in the past, by participating in construction joint ventures, both in a majority and in a minority position, for the purpose of bidding and if awarded, performing on projects. These joint ventures are generally based on a standard joint venture agreement whereby each of the joint venture participants is usually committed to supply a predetermined percentage of capital, as required, and to share in the same predetermined percentage of income or loss of the project on a joint and several basis. Although joint ventures tend to spread the risk of loss, the Company's initial obligations to the venture may increase if one of the other participants is financially unable to bear its portion of cost and expenses. For further information regarding certain joint ventures, see Note 3 of Notes to Consolidated Financial Statements.
While the Company's construction business may experience some adverse consequences if shortages develop or if prices for materials, labor or equipment increase excessively, provisions in certain types of contracts often shift all or a major portion of any adverse impact to the customer. On fixed price type contracts, the Company attempts to insulate itself from the unfavorable effects of inflation by incorporating escalating wage and price assumptions, where appropriate, into its construction bids. Construction and other materials used in the Company's construction activities are generally available locally from multiple sources and have been in adequate supply during recent years. Construction work in selected overseas areas primarily employs expatriate and local labor which can usually be obtained as required. The Company does not anticipate any significant impact in 2001 from material and/or labor shortages or price increases.
Economic and demographic trends tend not to have a material impact on the Company's civil construction operation. Instead, the Company's civil construction markets are dependent on the amount of civil infrastructure work funded by various governmental agencies which, in turn, may depend on the condition of the existing infrastructure or the need for new expanded infrastructure. The building markets in which the Company participates are dependent on economic and demographic trends, as well as governmental policy decisions as they impact the specific geographic markets.
The Company has minimal exposure to environmental liability as a result of the activities of Perini Environmental Services, Inc. ("Perini Environmental"), a wholly-owned subsidiary of the Company that was phased out during 1997. Perini Environmental provided hazardous waste engineering and construction services to both private clients and public agencies nationwide. Perini Environmental was responsible for compliance with applicable laws in connection with its clean up activities and bore the risk associated with handling such materials. In addition to strict procedural guidelines for conduct of this work, the Company and Perini Environmental generally carried insurance or received satisfactory indemnification from customers to cover the risks associated with this business. The Company also owns real estate in three states and as an owner, is subject to laws governing environmental responsibility and liability based on ownership. The Company is not aware of any environmental liability associated with its ownership of real estate property.The Company has been named in a number of claims from former employees of subcontractors regarding exposure to asbestos on certain Company projects. None of the claims have resulted in or are expected to result in a material settlement. The Company also operates construction machinery in its business and will, depending on the project or the ease of access to fuel for such machinery, install fuel tanks for use on site. Such tanks run the risk of leaking hazardous fluids into the environment. The Company, however, is not aware of any emissions associated with such tanks or of any other significant environmental liability associated with its construction operations or any of its corporate activities.
Progress on projects in certain areas may be delayed by weather conditions depending on the type of project, stage of completion and severity of the weather. Such delays, if they occur, may result in more volatile quarterly operating
results due to less progress than anticipated being achieved on projects.
In the normal course of business, the Company periodically evaluates its existing construction markets and seeks to identify any growing markets where it feels it has the expertise and management capability to successfully compete or withdraw from markets which are no longer economically attractive.
Real Estate
The Company’s real estate development operations were conducted by Perini Land & Development Company (“PL&D”), a wholly-owned subsidiary. Effective June 30, 1999, management adopted a plan to withdraw completely from the real estate development business and wind down the operations of PL&D. Significant progress has been made in implementing the plan with approximately 93% of the non-cash provision for the estimated loss on disposal of this business segment being realized as of December 31, 2000. Properties sold or closed out in accordance with the plan include Rincon Center (California), The Villages at Lake Ridge (Georgia), Metrocentre (Florida), The Grove at Black Canyon (Arizona) and the Easton Business Center (Massachusetts). In addition, portions of the remaining real estate properties have been sold. Several of the remaining parcels are currently under or are pending purchase and sale agreements.
Real Estate Properties
Perini Land & Development Company or Paramount Development Associates, Inc. ("Paramount"), a wholly-owned subsidiary of PL&D, owned the following properties during 2000:
Massachusetts
Raynham Woods Commerce Center, Raynham - During the late 1980's, Paramount acquired a 409-acre site (equivalent to 304 net saleable acres) located in Raynham, Massachusetts and completed infrastructure work on a major portion of the site (330 gross acres) which was being developed as a mixed-use corporate park known as "Raynham Woods Commerce Center". From 1989 through 1999, Paramount sold an aggregate of 129 acres to various users. Paramount sold 18 acres during 2000 which leaves approximately 262 acres, of which 163 acres are buildable, with the remainder located in wetlands areas.
Wareham - In early 1990, Paramount acquired an 18.9-acre parcel of land at the junction of Routes 495 and 58 in Wareham, Massachusetts. The property is under contract for sale in 2001.
Georgia
The Villages at Lake Ridge, Clayton County - During 1987, PL&D (49%) entered into a joint venture with 138 Joint Venture Partners to develop a 348-acre planned commercial and residential community. The last 50 acres were sold in 2000.
Arizona
Perini Central Limited Partnership, Phoenix - In 1985, PL&D (75%) entered into a joint venture with the Central United Methodist Church to master plan and develop approximately 4.4 acres in midtown Phoenix. In 1990, the project was successfully rezoned to permit development of 580,000 square feet of office, 37,000 square feet of retail and 162 luxury apartments. At December 31, 2000, the property was under contract to be sold in 2001.
Grove at Black Canyon, Phoenix - The project consists of an office park complex on a 30-acre site located adjacent to the Black Canyon Freeway, a major Phoenix artery. In 1987, a 150,000-square foot office building was completed within the park, which was sold in 1999. The final 6 acres of this property were sold in 2000.
Sabino Springs Estates, Tucson - During 1990, the Tucson Board of Supervisors unanimously approved a plan for this 410-acre residential golf course community close to the foothills on the east side of Tucson, which approval was
later affirmed by the Arizona Supreme Court. In 1993, PL&D sold a major portion of the property to an international real estate company, who completed a championship golf course and clubhouse within the project in 1995. During 2000, PL&D substantially completed infrastructure development on the remaining property. The remaining 33 estate lots retained by PL&D will be marketed for sale beginning in 2001.
Insurance and Bonding
All of the Company's properties and equipment, both directly owned or owned through partnerships or joint ventures with others, are covered by insurance, and management believes that such insurance is adequate.
In conjunction with its construction business, the Company is often required to provide various types of surety bonds. The Company has a co-surety arrangement with three sureties, one of which it has dealt with for over 75 years, and it has never been refused a bond. Although from time-to-time the surety industry encounters limitations affecting the bondability of very large projects, these limits have not had an adverse impact on the Company's operations.
Employees
The total number of personnel employed by the Company is subject to seasonal fluctuations, the volume of construction in progress and the relative amount of work performed by subcontractors. During 2000, the maximum number of employees was approximately 3,800 and the minimum was approximately 1,600.
The Company operates as a union contractor. As such, it is a signatory to numerous local and regional collective bargaining agreements, both directly and through trade associations, throughout the country. These agreements cover all necessary union crafts and are subject to various renewal dates. Estimated amounts for wage escalation related to the expiration of union contracts are included in the Company's bids on various projects and, as a result, the expiration of any union contract in the current fiscal year is not expected to have any material impact on the Company.
ITEM 2. PROPERTIES
Properties applicable to the Company's real estate development activities are described in detail by geographic area in Item 1. Business on pages 7 and 8. All other properties used in operations are summarized below:
Owned or Approximate Approximate Square
Leased by Perini Acres Feet of Office Space
------------------ -------------- ---------------------
Principal Offices
- ---------------------------------------
Framingham, MA Owned 9 100,000
Phoenix, AZ Leased - 22,700
Hawthorne, NY Leased - 12,500
Las Vegas, NV Leased - 2,900
Chicago, IL Leased - 1,600
Detroit, MI Leased - 2,800
-------------- ---------------------
9 142,500
============== =====================
Principal Permanent Storage Yards
- ---------------------------------------
Bow, NH Owned 70
Framingham, MA Owned 6
Las Vegas, NV Leased 2
--------------
78
==============
The Company's properties are well maintained, in good condition, adequate and suitable for the Company's purpose and fully utilized.
ITEM 3. LEGAL PROCEEDINGS
As previously reported, the Company is a party to an action entitled Mergentime Corporation et. al. v. Washington Metropolitan Area Transit Authority ("WMATA") v. Insurance Company of North America (Civil Action No. 89-1055) in the U.S. District Court for the District of Columbia. The action involves WMATA's termination of the general contractor, a joint venture in which the Company was a minority partner, on two contracts to construct a portion of the Washington, D.C. subway system, and certain claims by the joint venture against WMATA for claimed delays and extra work. On July 30, 1993, the Court upheld the termination for default, and found both joint venturers and their surety jointly and severally liable to WMATA for damages in the amount of $16.5 million, consisting primarily of WMATA's excess reprocurement costs, but specifically deferred ruling on the amount of the joint venture's claims against WMATA. Since the other joint venture partner may be unable to meet its financial obligations under the award, the Company could be liable for the entire amount. At the direction of the successor judge presiding over the action, during the third quarter of 1995, the parties submitted briefs on the issue of WMATA's liability on the joint venture's claims for delays and for extra work. In July 1997, the remaining issues were ruled on by the successor judge, who awarded approximately $4.3 million to the joint venture, thereby reducing the net amount payable to approximately $12.2 million. The joint venture appealed the decision and filed a motion for a new trial.
On February 16, 1999, the U.S. Court of Appeals for the District of Columbia vacated the April 1995 and July 1997 Orders and remanded the case back to the successor judge with instructions for the successor judge to consider certain post-trial motions to the same extent an original judge would have, and to make findings and conclusions regarding the unresolved issues, giving appropriate consideration to whether or not witnesses must be recalled. During 1999, a new successor judge was appointed.
On February 28, 2001 the new successor judge informed the parties that in the absence of a new trial, he could not certify adequate familiarity with the record to complete the remaining proceedings; therefore, he ordered that the joint venture's motion for a new trial be granted, with a preliminary pretrial conference scheduled for April 9, 2001. This decision means that the original July 30, 1993 Decision and Order of the U.S. District Court no longer has any force or effect and that the interim judgement in favor of WMATA for $16.5 million was set aside.
In the ordinary course of its construction business, the Company is engaged in other lawsuits, and arbitration and alternative dispute resolution ("ADR") proceedings. The Company believes that such other lawsuits and proceedings are usually unavoidable in major construction operations and that their resolution will not materially affect its results of future operations and financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the American Stock Exchange under the symbol "PCR". The quarterly market price ranges (high-low) for 2000 and 1999 are summarized below:
2000 1999
----------------------- -------------------------
High Low High Low
---------- --------- ----------- ----------
Market Price Range per Common Share:
Quarter Ended
March 31 5 7/8 - 3 3/4 7 1/2 - 4 3/8
June 30 4 1/2 - 2 3/4 5 7/8 - 4 1/2
September 30 4 15/16 - 3 1/2 6 3/16 - 2 5/8
December 31 4 1/4 - 3 4 3/4 - 3 1/4
For information on dividend payments, see "Dividends" under Management's Discussion and Analysis in Item 7 below.
At February 26, 2001, there were 1,164 common stockholders of record based on the stockholders list maintained by the Company's transfer agent.
ITEM 6. SELECTED FINANCIAL DATA
Selected Consolidated Financial Information
(In thousands, except per share data)
2000 1999 1998 1997 1996
---------------- --------------- ---------------- ---------------- ----------------
OPERATING SUMMARY
CONTINUING OPERATIONS:
Revenues:
Building $ 826,191 $ 696,407 $ 679,296 $ 888,809 $ 834,888
Civil 279,469 323,077 332,026 387,224 389,540
---------------- --------------- ---------------- ---------------- ----------------
Total $ 1,105,660 $ 1,019,484 $ 1,011,322 $ 1,276,033 $ 1,224,428
Cost of Operations 1,053,328 969,015 957,651 1,225,814 1,168,997
---------------- --------------- ---------------- ---------------- ----------------
Gross Profit $ 52,332 $ 50,469 $ 53,671 $ 50,219 $ 55,431
G&A Expense 24,977 26,635 27,397 29,715 32,385
---------------- --------------- ---------------- ---------------- ----------------
Income From Operations $ 27,355 $ 23,834 $ 26,274 $ 20,504 $ 23,046
Other (Income) Expense, Net (949) (72) 652 1,695 665
Interest Expense 3,966 7,128 8,473 9,910 9,397
---------------- --------------- ---------------- ---------------- ----------------
Income From Continuing
Operations Before Income Taxes $ 24,338 $ 16,778 $ 17,149 $ 8,899 $ 12,984
Credit (Provision) for Income Taxes 43 (421) (1,100) (950) (830)
---------------- --------------- ---------------- ---------------- ----------------
Income From Continuing Operations $ 24,381 $ 16,357 $ 16,049 $ 7,949 $ 12,154
---------------- --------------- ---------------- ---------------- ----------------
DISCONTINUED OPERATIONS:
Loss From Operations $ - $ (694) $ (4,397) $ (2,577) $ (82,757)
Estimated Loss on Disposal of
Real Estate Business Segment - (99,311) - - -
---------------- --------------- ---------------- ---------------- ----------------
Loss From Discontinued Operations $ - $ (100,005) $ (4,397) $ (2,577) $ (82,757)
---------------- --------------- ---------------- ---------------- ----------------
Net Income (Loss) $ 24,381 $ (83,648) $ 11,652 $ 5,372 $ (70,603)
================ =============== ================ ================ ================
Per Share of Common Stock:
Basic and Diluted Earnings (Loss):
Income From Continuing Operations $ 1.13 $ 1.80 $ 1.91 $ 0.52 $ 2.08
Loss From Discontinued Operations - (0.12) (0.83) (0.51) (17.21)
Estimated Loss on Disposal - (17.72) - - -
---------------- --------------- ---------------- ---------------- ----------------
Total $ 1.13 $ (16.04) $ 1.08 $ 0.01 $ (15.13)
================ =============== ================ ================ ================
Book Value $ 1.57 $ (11.31) $ 4.17 $ 2.44 $ 2.14
---------------- --------------- ---------------- ---------------- ----------------
Weighted Average Common Shares Outstanding 18,521 5,606 5,318 5,059 4,808
---------------- --------------- ---------------- ---------------- ----------------
FINANCIAL POSITION SUMMARY
Working Capital $ 80,477 $ 48,430 $ 57,665 $ 76,752 $ 56,744
---------------- --------------- ---------------- ---------------- ----------------
Current Ratio 1.27:1 1.23:1 1.29:1 1.34:1 1.19:1
---------------- --------------- ---------------- ---------------- ----------------
Long-term Debt, less current maturities $ 17,218 $ 41,091 $ 75,857 $ 84,576 $ 92,606
---------------- --------------- ---------------- ---------------- ----------------
Stockholders' Equity (Deficit) $ 60,622 $ (36,618) $ 50,558 $ 40,900 $ 35,558
---------------- --------------- ---------------- ---------------- ----------------
Ratio of Long-term Debt to Equity .28:1 n.a. 1.50:1 2.07:1 2.60:1
---------------- --------------- ---------------- ---------------- ----------------
Total Assets $ 393,452 $ 275,488 $ 375,466 $ 407,288 $ 451,619
---------------- --------------- ---------------- ---------------- ----------------
OTHER DATA
Backlog at Year End $ 1,788,731 $ 1,658,077 $ 1,232,256 $ 1,309,454 $ 1,517,700
---------------- --------------- ---------------- ---------------- ----------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations -
2000 Compared to 1999
Continuing Operations
Income from continuing construction operations for the year ended 2000 increased 49% to a record $24.4 million (or $1.13 per Common Share), compared to $16.4 million (or $1.80 per Common Share) in 1999. Despite the significant increase in income from continuing operations in 2000, earnings per Common Share decreased due to the significant increase in the number of common shares outstanding as a result of the recapitalization of the Company achieved in March 2000. (See Note 7 of Notes to Consolidated Financial Statements.) Overall, the 2000 results from continuing operations reflect a continued strong profit contribution from the building construction segment as well as the positive impact of lower finance-related charges due to the recapitalization referred to above, and lower overhead expenses.
Revenues from continuing construction operations increased $86.2 million (or 8.5%) from $1,019.5 million in 1999 to $1,105.7 million in 2000. This increase was due primarily to an increase in building construction revenues of $129.8 million (or 18.6%) from $696.4 million in 1999 to $826.2 million in 2000, which more than offset a decrease in revenues from civil construction operations of $43.6 million (or 13.5%) from $323.1 million in 1999 to $279.5 million in 2000. The increase in revenues from building construction operations was due primarily to an increase in the volume of work completed at the Mohegan Sun Casino Expansion project in Connecticut. The decrease in revenues from civil construction operations was due primarily to the timing in the start up of new work.
Income from construction operations increased by $1.4 million (or 4.5%), from $31.3 million in 1999 to $32.7 million in 2000 due to a significant increase in income from building construction operations that more than offset a decrease in income from civil construction operations. Building construction operating income increased by $10.4 million, from $16.7 million in 1999 to $27.1 million in 2000, due to the increase in revenues referred to above and an increase in average gross margin from 4.2% in 1999 to 4.8% in 2000 due primarily to the favorable close out of certain projects. Civil construction operating income decreased by $9.0 million, from $14.6 million in 1999 to $5.6 million in 2000, due primarily to downward revisions of estimated profit on certain infrastructure projects and, to a lesser extent, the decrease in revenues referred to above. In addition, a $2.2 million decrease in corporate general and administrative expenses from $7.5 million in 1999 to $5.3 million in 2000 contributed to the overall increase in total operating income of $3.6 million, from $23.8 million in 1999 to $27.4 million in 2000. The decrease in corporate general and administrative expenses was primarily the result of a reduction in outside legal expenses.
Other income (expense) improved by $0.8 million, from a net income of $0.1 million in 1999 to a net income of $0.9 million in 2000. This improvement was due primarily to a decrease in amortization of deferred debt expense and bank financing fees relating to the Company’s revolving credit agreement, partly offset by a non-recurring gain on sale of investment recorded in 1999.
Interest expense decreased by $3.1 million from $7.1 million in 1999 to $4.0 million in 2000, due primarily to the reduction in debt achieved at the end of the first quarter of 2000 as a result of the closing of the new equity transaction described in Note 7 of Notes to Consolidated Financial Statements.
The lower than normal tax rate for the three year period ended December 31, 2000 is due to the utilization of tax loss carryforwards from prior years. Because of certain accounting limitations, the Company was not able to recognize a portion of the tax benefit related to the operating losses experienced in fiscal 1996 and 1995. As a result of these losses and the loss recognized in 1999, an amount estimated to be approximately $122 million of future pretax earnings could benefit from minimal, if any, federal tax provisions. The net deferred tax assets reflect management’s estimate of the amount that will, more likely than not, be realized (see Note 5 of Notes to Consolidated Financial Statements). In
addition, the credit for income taxes applicable to Income from Continuing Operations in 2000 reflects the reversal of foreign taxes accrued in prior years that are no longer required.
Discontinued Operations
Effective June 30, 1999, management adopted a plan to withdraw completely from the real estate development business and wind down the operations of Perini Land and Development Company (“PL&D”), the Company’s real estate development subsidiary. Therefore, the operating results of PL&D have been presented as a discontinued operation in accordance with accounting principles generally accepted in the United States. Significant progress has been made in implementing the plan with approximately 93% of the non-cash provision for the estimated loss on disposal of this business segment being realized as of December 31, 2000. Properties sold or closed out in accordance with the plan include Rincon Center (California), The Villages at Lake Ridge (Georgia), Metrocentre (Florida), The Grove at Black Canyon (Arizona) and the Easton Business Center (Massachusetts). In addition, portions of the remaining real estate properties have been sold. All of these properties were sold at prices approximating those originally anticipated in calculating the estimated loss on disposal of the real estate development business segment at June 30, 1999. The actual net loss from the sale or disposition of these properties approximated the net loss originally estimated as of June 30, 1999. Several of the remaining parcels are currently under or are pending purchase and sale agreements.
Results of Operations -
1999 Compared to 1998
Continuing Operations
The Company’s continuing construction operations produced income of $16.4 million (or $1.80 per Common Share) in 1999 compared to income of $16.0 million (or $1.91 per Common Share) in 1998. Overall, the 1999 results from continuing operations include strong profit contributions from both the building and civil construction segments as well as lower interest expense.
Revenues from continuing construction operations increased $8.2 million (or 0.8%) from $1,011.3 million in 1998 to $1,019.5 million in 1999. This increase was due primarily to an increase in building construction revenues of $17.1 million (or 2.5%) from $679.3 million in 1998 to $696.4 million in 1999, which more than offset a decrease in revenues from civil construction operations of $8.9 million (or 2.7%) from $332.0 million in 1998 to $323.1 million in 1999. The increase in revenues from building construction operations was due primarily to the start up of several new projects in the East. The slight decrease in revenues from civil construction operations was due primarily to the completion of several major mass transit and infrastructure projects in late 1998 and early 1999.
Income from construction operations decreased by $2.4 million (or 7.1%), from $33.7 million in 1998 to $31.3 million in 1999. Building construction operating income decreased by $1.5 million (or 8.2%), from $18.2 million in 1998 to $16.7 million in 1999 due primarily to additional losses attributable to the phasing out of a building construction division in the Midwest that more than offset additional income related to the increase in revenues referred to above. Civil construction operating income decreased $.9 million (or 5.8%), from $15.5 million in 1998 to $14.6 million in 1999 due to additional close out costs related to certain completed contracts as well as the profit impact of the decrease in revenues referred to above. In addition, corporate general and administrative expenses increased slightly from $7.4 million in 1998 to $7.5 million in 1999 which contributed to a $2.5 million overall decrease in operating income, from $26.3 million in 1998 to $23.8 million in 1999.
Other income (expense), net improved by $0.7 million from a net expense of $0.6 million in 1998 to a net income of $0.1 million in 1999. This improvement was due to a $1.5 million increase in gain on sale of investments which was partly offset by a $0.8 million increase in bank fees relating to the Company’s revolving credit facility.
Interest expense decreased by $1.4 million from $8.5 million in 1998 to $7.1 million in 1999, due primarily to
lower average levels of borrowing during 1999.
Discontinued Operations
Based on the plan adopted on June 30, 1999 to discontinue the Company’s real estate development business, the 1999 results included a $99.3 million non-cash provision which represented the estimated loss on disposal of this business segment. This non-cash charge reflected the impact of the disposition of the Rincon Center property located in San Francisco and the reduction in projected future cash flow from the disposition of PL&D’s remaining real estate development operations resulting from the change in strategy of holding the properties through the necessary development and stabilization periods to a new strategy of generating short-term liquidity through an accelerated disposition or bulk sale. The estimated loss on disposal of the real estate business segment also included a provision for shut down costs related to PL&D during the wind down period. No Federal tax benefit was attributable to the estimated loss on disposal of the real estate business segment due to certain accounting limitations. During the fourth quarter of 1999, the Company and PL&D, the managing general partner of Rincon Center Associates (“RCA”), entered into a full and final non-cash settlement regarding its interests in the Rincon Center property. As part of the settlement and in exchange for the transfer of its ownership interest in the RCA property, the Company has exchanged mutual releases with the other RCA general partner, the RCA-related lenders and all other entities formally associated with the RCA property from any claims, lawsuits or other liabilities they may have with respect to each other in connection with the RCA property. This completed a major step in the Company’s plan to discontinue its real estate development operations. In addition, during the last half of 1999, PL&D concluded the sale of two other properties at prices approximating those originally anticipated in calculating the estimated loss on disposal of the real estate business segment at June 30, 1999. The actual loss from the sale of these two properties and loss on disposition of the RCA property approximated the losses originally estimated as of June 30, 1999.
Financial Condition
Cash and Working Capital
During 2000, cash generated from operating activities in the amount of $42.6 million, resulting primarily from higher profit distributions and temporary borrowings from certain construction joint ventures, continued to reflect improvement over recent prior years. The funds generated were used for investing activities ($33.0 million), primarily for funding the working capital needs of certain other construction joint ventures, and for financing activities ($8.3 million), primarily to continue to pay down debt and to increase cash on hand by $1.3 million. Financing activities in 2000 include net proceeds of $37.3 million received from the issuance of Common Stock in connection with the recapitalization of the Company as discussed in Note 7 of Notes to Consolidated Financial Statements, as well as net proceeds of $7.1 million received from a refinancing of the Company’s corporate headquarters building. These funds were primarily used to pay down debt and to enhance working capital.
During 1999, cash generated from operating activities in the amount of $27.8 million, due primarily to changes in various elements of working capital, was approximately equal to the amount of cash generated from operating activities in 1998 and continued to reflect improvement over recent prior years. The funds generated were used for investing activities ($13.5 million), primarily for funding the working capital needs of certain construction joint ventures, and for financing activities ($2.6 million), primarily to pay down borrowings and to increase cash on hand by $11.7 million.
During 1998, the Company generated $27.8 million in cash from operating activities, due primarily to changes in various elements of working capital. The funds generated were used for investing activities ($2.2 million), primarily for funding the working capital needs of the Company’s discontinued real estate operations, and for financing activities ($10.4 million), primarily to pay down borrowings and to increase cash on hand by $15.2 million.
Effective March 29, 2000, the Company’s liquidity and access to future borrowings, as required, were
significantly enhanced by the sale of 9,411,765 shares of Common Stock for an aggregate of $40 million (before fees and expenses)(see Note 7 of Notes to Consolidated Financial Statements) and the concurrent renegotiation of an Amended and Restated Credit Agreement (the “New Credit Agreement”) referred to in Note 4 of Notes to Consolidated Financial Statements. In addition to internally generated funds, at December 31, 2000, the Company has $21.0 million available under the New Credit Agreement. Also, on September 6, 2000, the Company completed a refinancing of its corporate headquarters building for $7.5 million (before fees and expenses) (see Note 4 of Notes to Consolidated Financial Statements). The financial covenants to which the Company is subject include minimum levels of working capital, net operating profit, tangible net worth and operating cash flow and certain limitations on cash dividends, all as defined in the loan documents. Also, during the last three years, the Company has made substantial progress on its strategy for liquidating its real estate assets, resolving several major construction claims and minimizing overhead expenses.
The working capital current ratio was 1.27:1 at the end of 2000 compared to 1.23:1 at the end of 1999 and 1.29:1 at the end of 1998.
Long-term Debt
Long-term debt was $17.2 million at the end of 2000, down from $41.1 million in 1999, $75.9 million in 1998 and $84.6 million in 1997. In addition to the $67.4 million reduction in long-term debt during the three year period ended December 31, 2000, the Company paid down all of its $5.3 million of real estate debt on wholly-owned real estate projects, utilizing proceeds from sales of property and general corporate funds. Similarly, real estate joint venture debt of $61.7 million has been reduced to zero during the same three year period.
Stockholders' Equity (Deficit)
As more fully described in Note 7 of Notes to Consolidated Financial Statements, effective March 29, 2000, the Company completed a recapitalization which included the sale of 9,411,765 shares of Common Stock for an aggregate of $40 million in cash (before fees and expenses) and the exchange of 100% of its Redeemable Series B Cumulative Convertible Preferred Stock for an aggregate of 7,490,417 shares of Common Stock. The effect of the recapitalization on the Company’s stockholders’ equity was to increase stockholders’ equity by approximately $76.2 million, from a negative net worth of approximately $36.6 million at December 31, 1999 to a positive net worth of approximately $39.6 million upon completion of the recapitalization.
The negative net worth of approximately $36.6 million at December 31, 1999 was the result of the net loss recorded in 1999 due to the $100 million loss from discontinued real estate operations. The Company’s book value per Common Share stood at $1.57 at December 31, 2000, compared to a negative $(11.31) per Common Share at December 31, 1999 and $4.17 per Common Share at December 31, 1998. The major factors impacting stockholders’ equity during the three year period under review were the recapitalization completed in 2000, the net income recorded in 2000 and 1998, the net loss recorded in 1999 and, to a lesser extent, preferred dividends paid in-kind or accrued and stock issued in partial payment of certain expenses.
At December 31, 2000, there were 1,157 common stockholders of record based on the stockholders list maintained by the Company's transfer agent.
Dividends
There were no cash dividends declared or paid on the Company's outstanding Common Stock during the three years ended December 31, 2000.
During 1995, the Company declared and paid the regular quarterly cash dividends of $5.3125 per share on the Company’s Convertible Exchangeable Preferred Shares for an annual total of $21.25 per share (equivalent to quarterly dividends of $.53125 per Depositary Share for an annual total of $2.125 per Depositary Share). In conjunction with the
covenants of the Company’s current and prior Credit Agreements (see Note 4 of Notes to Consolidated Financial Statements), the Company was required to suspend the payment of quarterly dividends on its $21.25 Preferred Stock until certain financial criteria were met. The dividend that normally would have been declared during December of 1995 and payable on March 15, 1996, as well as subsequent quarterly dividends through 2000, have not been declared or paid (although they have been fully accrued due to the “cumulative” feature of the Preferred Stock).
The New Credit Agreement provides that the Company may not pay cash dividends or make other restricted payments, as defined, unless: (i) the Company is not in default under the New Credit Agreement; (ii) commitments under the New Credit Agreement have been reduced to less than $41 million; (iii) restricted payments in any quarter, when added to restricted payments made in the prior three quarters, do not exceed fifty percent (50%) of net income from continuing operations for the prior four quarters; and (iv) net worth (after taking into consideration the amount of the proposed cash dividend or restricted payment) is at least equal to the amount shown below:
Minimum Consolidated
As of: Adjusted Tangible Net Worth
(In millions)
December 31, 2000 $46.6
March 31, 2001 48.2
June 30, 2001 51.1
September 30, 2001 55.3
December 31, 2001 60.0
March 31, 2002 61.6
June 30, 2002 64.7
September 30, 2002 71.1
December 31, 2002 75.1
The aggregate amount of dividends in arrears is approximately $11,155,000 at December 31, 2000, which represents approximately $111.55 per share of Preferred Stock or approximately $11.16 per Depositary Share and is included in “Other Long-term Liabilities” in the Consolidated Balance Sheet. Under the terms of the Preferred Stock, the holders of the Depositary Shares are entitled to elect two additional Directors when dividends have been deferred for more than six quarters, and they did so at each of the last three Annual Meetings of Stockholders.
Although it is possible that these bank restrictions may not apply heretofore, the Board of Directors does not believe that it is, or will be, proper or prudent to pay or commit to pay dividends on the Preferred Stock or the Common Stock for the foreseeable future, and it is not obligated to do so under the terms of the Preferred Stock.
Outlook
new common equity received as part of the recapitalization (before fees and expenses) plus the $7.5 million received from the refinancing of the corporate headquarters building in 2000 (before fees and expenses), served to substantially improve the Company’s near term liquidity position. The recapitalization has enabled the Company to reduce its dependence on bank debt to fund the working capital needs of its core construction operations, resulting in a significant reduction in interest expense. In addition to discontinuing its real estate development business and liquidating the remaining portion of its real estate portfolio, the Company will continue to actively pursue the favorable conclusion of various unapproved change orders and construction claims; to focus new construction work acquisition efforts on various niche markets and geographic areas where the Company has a proven history of success; and to continue to seek ways to control overhead expenses.
Management believes that cash generated from operations, existing credit lines, projected sale of certain real estate assets referred to above and timely resolution and payment of various unapproved change orders and construction claims referred to above should be adequate to meet the Company’s funding requirements for at least the next twelve months.
Forward-looking Statements
The statements contained in this Management’s Discussion and Analysis of the Consolidated Financial Statements, including “Outlook”, and other sections of this Annual Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding the Company’s expectations, hopes, beliefs, intentions or strategies regarding the future. Forward-looking statements involve a number of risks, uncertainties or other factors that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules; the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings; changes in federal and state appropriations for infrastructure projects; possible changes or developments in worldwide or domestic, social, economic, business, industry, market and regulatory conditions or circumstances; and actions taken or omitted to be taken by third parties including the Company’s customers, suppliers, business partners, and competitors and legislative, regulatory, judicial and other governmental authorities and officials.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s revolving credit debt (see Note 4 of Notes to Consolidated Financial Statements) and short-term investment portfolio. As of December 31, 2000, the Company had $19.8 million borrowed under its revolving credit agreement and $34.3 million of short-term investments classified as cash equivalents.
The Company borrows under its bank revolving credit facility for general corporate purposes, including working capital requirements and capital expenditures. Borrowings under the bank credit facility bear interest at the applicable LIBOR or base rate, as defined, and therefore, the Company is subject to fluctuations in interest rates. If the average effective 2000 borrowing rate of 9.4% changed by 10% (or 0.94%) during the next twelve months, the impact, based on the Company’s ending 2000 revolving debt balance, would be an increase or decrease in net income and cash flow of
approximately $186,000.
The Company’s short-term investment portfolio consists primarily of highly liquid instruments with maturities of less than one month.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Reports of Independent Public Accountants, Consolidated Financial Statements, and Supplementary Schedules are set forth on the pages that follow in this Report and are hereby incorporated herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information to be set forth in the section entitled "Election of Directors" in the definitive proxy statement involving election of directors in connection with the Annual Meeting of Stockholders to be held on May 17, 2001 (the "Proxy Statement"), which section is incorporated herein by reference. The Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2000 pursuant to Regulation 14A of the Securities and Exchange Act of 1934, as amended.
Listed below are the names, offices held, ages and business experience of all executive officers of the Company.
Names, Office Held and Age Year First Elected to Present Office and Business Experience
Ronald N. Tutor, Director, Chairman and Since March 29, 2000 he serves as a Director, Chairman and Chief
Chief Executive Officer - 60 Executive Officer. Prior to that, he served as a Director and Chairman
since July 1, 1999; a Director and Vice Chairman since January 1, 1998;
and as a Director and Acting Chief Operating Officer since January 17,
1997. He is the Chairman, President and Chief Executive Officer of
Tutor-Saliba Corporation, a California based construction contractor, since
prior to 1995 and has actively managed that company since 1966.
Robert Band, Director, President and Since March 29, 2000 he serves as a Director, President and Chief
Chief Operating Officer - 53 Operating Officer. Prior to that, he served as a Director, President and
Chief Executive Officer since May 12, 1999. He has served as Chief
Financial Officer since December 1997. Prior to that, he served as
President of Perini Management Services, Inc. (formerly Perini
International Corporation) since January 1996 and as Senior Vice
President, Chief Operating Officer of Perini International Corporation
since April 1995. Previously, he served as Vice President Construction
from July 1993 and in various operating and financial capacities since
1973, including Treasurer from May 1988 to January 1990.
Zohrab B. Marashlian,President, He was elected to his current position in December 1997, which entails
Perini Civil Construction – 56 overall responsibility for the Company’s civil construction operations.
Prior to that, he served as President of the Company’s Metropolitan New
York Division since April 1995 and as Senior Vice President, Operations
of the Company’s Metropolitan New York Division since January 1994.
Previously, he served in various project management capacities with the
Company since 1985, including Project Manager and Vice President –
Area Manager. Prior to that, he served in various capacities for the
Company on projects in New York and overseas since 1971.
Craig W. Shaw, President, Perini He was elected to his current position in October 1999, which entails
Building Company – 46 overall responsibility for the Company’s building construction operations.
Prior to that he served as President, Perini Building Company, Western
U.S. Division since April 1995 and Senior Vice President, Construction
for Perini Building Company’s Western U.S. Division since January 1994
and as Vice President, Construction for Perini Building Company’s
Western U.S. Division since 1986. Previously, he served in various
project management capacities with the Company since 1978, including
Project Manager from 1979 to 1986.
The Company's officers are elected on an annual basis at the Board of Directors' Meeting immediately following the Stockholders' Meeting in May, to hold such offices until the Board of Directors' Meeting following the next Annual Meeting of Stockholders' and until their respective successors have been duly appointed or until their tenure has been terminated by the Board of Directors, or otherwise.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In response to Items 11-13, reference is made to the information to be set forth in the sections entitled "Election of Directors" and "Certain Transactions" in the Proxy Statement, which are incorporated herein by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PERINI CORPORATION AND SUBSIDIARIES
(a)1. The following financial statements and supplementary financial information are filed as part of this
report:
Pages
Financial Statements of the Registrant
Consolidated Balance Sheets as of December 31, 2000 and 1999 23 - 24
Consolidated Statements of Operations for each of the three years ended December 31, 2000, 25
1999 and 1998
Consolidated Statements of Stockholders' Equity (Deficit) for each of the three years ended 26
December 31, 2000, 1999, and 1998
Consolidated Statements of Cash Flows for each of the three years ended December 31, 2000, 27 - 28
1999 and 1998
Notes to Consolidated Financial Statements 29 - 49
Report of Independent Public Accountants 50
(a)2. The following financial statement schedules are filed as part of this report:
Pages
Report of Independent Public Accountants on Schedule 51
Schedule II - Valuation and Qualifying Accounts and Reserves 52
All other schedules are omitted because of the absence of the conditions under which they are required or
because the required information is included in the Consolidated Financial Statements or in the Notes
thereto.
(a)3. Exhibits
The exhibits which are filed with this report or which are incorporated herein by reference are set forth
in
the Exhibit Index which appears on pages 53 through 55. The Company will furnish a copy of any exhibit
not included herewith to any holder of the Company's Common and Preferred Stock upon request.
(b) During the quarter ended December 31, 2000, the Registrant made no filings on Form 8-K.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Perini Corporation
(Registrant)
Dated: March 21, 2001 /s/Robert Band
Robert Band
President and Chief Operating Officer
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 Company and in the capacities and on the dates indicated.
Signatures Title Date
(i) Principal Executive Officer
Robert Band President and Chief Operating Officer March 21, 2001
/s/Robert Band
- -----------------------------------------------
Robert Band
(ii) Principal Financial Officer
Robert Band President and Chief Operating Officer March 21, 2001
/s/Robert Band
- -----------------------------------------------
Robert Band
(iii) Principal Accounting Officer
Michael E. Ciskey Vice President and Controller March 21, 2001
/s/Michael E. Ciskey
- -----------------------------------------------
Michael E. Ciskey
(iv) Directors
Ronald N. Tutor )
Peter Arkley )
Robert Band )
Richard J. Boushka )
Arthur I. Caplan )/s/ Robert Band
Frederick Doppelt )Robert Band
Nancy Hawthorne )
Robert A. Kennedy )
Michael R. Klein )Attorney in Fact
Christopher H. Lee )Dated: March 21, 2001
Raymond R. Oneglia )
Consolidated Balance Sheets
December 31, 2000 and 1999
(In thousands, except share data)
Assets
2000 1999
------------ ------------
CURRENT ASSETS:
Cash, including cash equivalents of $34,275 and $54,759 (Note 1) $ 59,515 $ 58,193
Accounts and notes receivable, including retainage of $39,322 and $20,458 189,365 93,785
Unbilled work (Note 1) 18,323 14,283
Construction joint ventures (Notes 1 and 3) 101,339 82,493
Net current assets of discontinued operations (Note 2) 10,614 12,695
Other current assets 796 647
------------ ------------
Total current assets $ 379,952 $ 262,096
------------ ------------
PROPERTY AND EQUIPMENT, at cost (Note 1):
Land $ 489 $ 536
Buildings and improvements 11,757 11,551
Construction equipment 8,548 8,185
Other equipment 7,167 6,983
------------ ------------
$ 27,961 $ 27,255
Less - Accumulated depreciation 18,071 17,438
------------ ------------
Total property and equipment, net $ 9,890 $ 9,817
------------ ------------
OTHER ASSETS (Note 6) $ 3,610 $ 3,575
------------ ------------
$ 393,452 $ 275,488
============ ============
The accompanying notes are an integral part of these consolidated financial statements.
Liabilities and Stockholders' Equity (Deficit)
2000 1999
------------ ------------
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 4) $ 10,398 $ 32,158
Accounts payable, including retainage of $32,156 and $24,501 183,359 83,578
Advances from construction joint ventures (Note 3) 25,570 14,104
Deferred contract revenue (Note 1) 33,573 45,088
Accrued expenses 46,575 38,738
------------ ------------
Total current liabilities $ 299,475 $ 213,666
------------ ------------
LONG-TERM DEBT, less current maturities included above (Note 4) $ 17,218 $ 41,091
------------ ------------
OTHER LONG-TERM LIABILITIES (Notes 6 and 8) $ 16,137 $ 19,664
------------ ------------
CONTINGENCIES AND COMMITMENTS (Note 11)
REDEEMABLE SERIES B CUMULATIVE CONVERTIBLE PREFERRED
STOCK (Note 8):
Authorized - 0 shares and 500,000 shares
Issued and outstanding - 0 shares and 200,184 shares
(aggregate liquidation preferences of $0 and $40,037) $ - $ 37,685
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT) (Notes 1, 4, 7, 8, 9 and 10):
Preferred Stock, $1 par value -
Authorized - 1,000,000 shares and 500,000 shares
Designated, issued and outstanding - 99,990 shares of $21.25 Convertible
Exchangeable Preferred Stock ($24,998 aggregate liquidation preference) $ 100 $ 100
Series A junior participating Preferred Stock, $1 par value -
Designated - 200,000
Issued - none - -
Stock Purchase Warrants 2,233 2,233
Common Stock, $1 par value -
Authorized - 40,000,000 shares and 15,000,000 shares
Issued - 22,644,998 shares and 5,742,816 shares 22,645 5,743
Paid-in surplus 99,518 43,561
Retained earnings (deficit) (62,909) (87,290)
------------ ------------
$ 61,587 $ (35,653)
Less - Common Stock in treasury, at cost - 60,529 shares 965 965
------------ ------------
Total stockholders' equity (deficit) $ 60,622 $ (36,618)
------------ ------------
$ 393,452 $ 275,488
============ ============
Consolidated Statements of Operations
For the Years Ended December 31, 2000, 1999 and 1998
(In thousands, except per share data)
2000 1999 1998
------------- ------------- --------------
CONTINUING OPERATIONS:
Revenues (Notes 3 and 13) $ 1,105,660 $ 1,019,484 $ 1,011,322
Cost of Operations (Notes 3 and 10) 1,053,328 969,015 957,651
------------- ------------- --------------
Gross Profit $ 52,332 $ 50,469 $ 53,671
General and Administrative Expenses 24,977 26,635 27,397
------------- ------------- --------------
INCOME FROM OPERATIONS (Note 13) $ 27,355 $ 23,834 $ 26,274
Other (Income) Expense, Net (Note 6) (949) (72) 652
Interest Expense (Note 4) 3,966 7,128 8,473
------------- ------------- --------------
Income from Continuing Operations before Income Taxes $ 24,338 $ 16,778 $ 17,149
Credit (Provision) for Income Taxes (Notes 1 and 5) 43 (421) (1,100)
------------- ------------- --------------
INCOME FROM CONTINUING OPERATIONS $ 24,381 $ 16,357 $ 16,049
DISCONTINUED OPERATIONS (Notes 2 and 5):
Loss from Operations $ - $ (694) $ (4,397)
Estimated Loss on Disposal of Real Estate Business Segment - (99,311) -
------------- ------------- --------------
LOSS FROM DISCONTINUED OPERATIONS $ - $ (100,005) $ (4,397)
------------- ------------- --------------
NET INCOME (LOSS) $ 24,381 $ (83,648) $ 11,652
============= ============= ==============
NET INCOME (LOSS) AVAILABLE FOR COMMON STOCKHOLDERS (Note 1) $ 20,999 $ (89,917) $ 5,743
============= ============= ==============
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE (Note 1):
Income from Continuing Operations $ 1.13 $ 1.80 $ 1.91
Loss from Discontinued Operations - (0.12) (0.83)
Estimated Loss on Disposal - (17.72) -
------------- ------------- --------------
Total $ 1.13 $ (16.04) $ 1.08
============= ============= ==============
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Stockholders' Equity (Deficit)
For the Years Ended December 31, 2000, 1999 and 1998
(In thousands, except per share data)
Stock Retained ESOT
Preferred Purchase Common Paid-In Earnings Related Treasury
Stock Warrants Stock Surplus (Deficit) Obligations Stock Total
- -------------------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1997 $ 100 $ 2,233 $ 5,267 $53,012 $(15,294) $ (2,663) $ (1,755) $40,900
- -------------------------------------------------------------------------------------------------------------------------------------
Net Income - - - - 11,652 - - 11,652
Preferred Stock dividends accrued
($21.25 per share*) - - - (2,125) - - - (2,125)
Series B Preferred Stock dividends
in kind issued (Note 8) - - - (3,411) - - - (3,411)
Accretion related to Series B
Preferred Stock (Note 8) - - - (373) - - - (373)
Common Stock issued in partial
payment of incentive compensation - - 239 2,243 - - - 2,482
Payment of director fees - - - (127) - - 278 151
Payments related to ESOT notes - - - - - 1,282 - 1,282
-------------------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1998 $ 100 $ 2,233 $ 5,506 $49,219 $ (3,642) $ (1,381) $ (1,477) $50,558
- -------------------------------------------------------------------------------------------------------------------------------------
Net Loss - - - - (83,648) - - (83,648)
Preferred Stock dividends accrued
($21.25 per share*) - - - (2,125) - - - (2,125)
Series B Preferred Stock dividends
in kind issued (Note 8) - - - (3,765) - - - (3,765)
Accretion related to Series B
Preferred Stock (Note 8) - - - (379) - - - (379)
Common Stock issued in partial
payment of incentive compensation - - 237 960 - - - 1,197
Payment of director fees - - - (349) - - 512 163
Payments related to ESOT notes - - - - - 1,381 - 1,381
-------------------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1999 $ 100 $ 2,233 $ 5,743 $43,561 $(87,290) $ - $ (965) $(36,618)
- -------------------------------------------------------------------------------------------------------------------------------------
Net Income - - - - 24,381 - - 24,381
Preferred Stock dividends accrued
($21.25 per share*) - - - (2,125) - - - (2,125)
Series B Preferred Stock dividends
in kind issued (Note 8) - - - (1,161) - - - (1,161)
Accretion related to Series B
Preferred Stock (Note 8) - - - (96) - - - (96)
Net proceeds received from
issuance of Common Stock (Note 7) - - 9,412 27,887 - - - 37,299
Exchange of Series B Preferred
Stock for Common Stock (Note 7) - - 7,490 31,452 - - - 38,942
-------------------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 2000 $ 100 $ 2,233 $ 22,645 $99,518 $(62,909) $ - $ (965) $60,622
- -------------------------------------------------------------------------------------------------------------------------------------
*Equivalent to $2.125 per Depositary Share (see Note 8).
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2000, 1999 and 1998
(In thousands)
2000 1999 1998
----------- ----------- -----------
Cash Flows from Operating Activities:
Net income (loss) $ 24,381 $(83,648) $11,652
Adjustments to reconcile net income (loss) to net cash from operating activities -
Loss from discontinued operations - 100,005 4,397
Depreciation 1,617 1,585 1,463
Amortization of deferred debt expense, Stock Purchase Warrants and other 574 1,757 1,596
(Gain) loss on sale of investment - (1,406) 118
Distributions greater (less) than earnings of joint ventures and affiliates 14,320 (1,571) 1,367
Cash provided from (used by) changes in components of working capital other than
cash, notes payable, and current maturities of long-term debt:
(Increase) decrease in accounts receivable (95,580) 19,267 25,345
(Increase) decrease in unbilled work (4,040) 5,302 16,989
(Increase) decrease in construction joint ventures (60) (307) (1,509)
(Increase) decrease in deferred tax asset - 1,076 (9)
(Increase) decrease in other current assets (149) 1,822 354
Increase (decrease) in accounts payable 99,781 (43,771) (17,585)
Increase (decrease) in advances from construction joint ventures 11,466 (3,196) (12,501)
Increase (decrease) in deferred contract revenue (11,515) 30,738 (2,767)
Increase (decrease) in accrued expenses 7,837 (1,244) 12,190
Other long-term liabilities (5,652) 1,033 (13,169)
Other non-cash items, net (332) 363 (153)
----------- ----------- -----------
NET CASH PROVIDED FROM OPERATING ACTIVITIES $ 42,648 $ 27,805 $ 27,778
----------- ----------- -----------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 435 $ 585 $ 608
Cash distributions of capital from unconsolidated joint ventures 962 1,475 5,625
Acquisition of property and equipment (1,793) (1,599) (1,418)
Capital contributions to unconsolidated joint ventures (34,068) (14,990) (1,527)
Proceeds from (investment in) discontinued operations 2,081 (615) (5,288)
Proceeds from sale of investment - 4,000 200
Investment in other activities (609) (2,328) (390)
----------- ----------- -----------
NET CASH USED BY INVESTING ACTIVITIES $(32,992) $(13,472) $ (2,190)
----------- ----------- -----------
Consolidated Statements of Cash Flows (Continued)
For the Years Ended December 31, 2000, 1999, and 1998
(In thousands)
2000 1999 1998
------------- ------------- -----------
Cash Flows from Financing Activities:
Proceeds from long-term debt $ 7,757 $ 656 $ 113
Reduction of long-term debt (53,390) (4,663) (13,132)
Proceeds from issuance of common stock, net 37,299 1,197 2,482
Treasury stock issued - 163 151
------------- ------------- -----------
NET CASH USED BY FINANCING ACTIVITIES $ (8,334) $ (2,647) $ (10,386)
------------- ------------- -----------
Net Increase in Cash $ 1,322 $ 11,686 $ 15,202
Cash and Cash Equivalents at Beginning of Year 58,193 46,507 31,305
------------- ------------- -----------
Cash and Cash Equivalents at End of Year $ 59,515 $ 58,193 $ 46,507
============= ============= ===========
Supplemental Disclosures of Cash Paid During the Year For:
Interest $ 4,242 $ 7,369 $ 8,137
============= ============= ===========
Income tax payments $ 1,320 $ 101 $ 160
============= ============= ===========
Supplemental Disclosure of Noncash Transactions:
Dividends paid in shares of Series B Preferred Stock (Note 8) $ 1,161 $ 3,765 $ 3,411
============= ============= ===========
Conversion of Series B Preferred Stock into Common Stock
at $5.50 per share (Note 7) $ 38,942 $ - $ -
============= ============= ===========
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2000, 1999 and 1998
[1] Summary of Significant Accounting Policies
[a] Principles of Consolidation
The consolidated financial
statements include the accounts of Perini Corporation, its subsidiaries and a
majority-owned real estate joint venture (the “Company”). All
subsidiaries are currently wholly-owned. All significant intercompany
transactions and balances have been eliminated in consolidation.
Non-consolidated construction joint venture interests are accounted for on the
equity method in the accompanying consolidated balance sheets with the
Company’s share of revenues and costs in these interests included in
“Revenues” and “Cost of Operations,” respectively, in the
accompanying consolidated statements of operations. All significant intercompany
profits between the Company and its joint ventures have been eliminated in
consolidation. Taxes are provided on joint venture results in accordance with
Statement of Financial Accounting Standards (“SFAS”) No. 109,
“Accounting for Income Taxes”.
[b] Use of Estimates
The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The
most significant estimates with regard to these financial statements relate to
the estimating of final construction contract profits in accordance with
accounting for long-term contracts (see Note 1(c) below), estimating future cash
flows from real estate dispositions (see Note 1(d) and Note 2 below) and
estimating potential liabilities in conjunction with certain contingencies and
commitments (see Note 11 below). Actual results could differ from these
estimates.
[c] Method of Accounting for Contracts
Profits from construction
contracts and construction joint ventures are generally recognized by applying
percentages of completion for each year to the total estimated profits for the
respective contracts. The percentages of completion are determined by relating
the actual cost of the work performed to date to the current estimated total
cost of the respective contracts. When the estimate on a contract indicates a
loss, the Company’s policy is to record the entire loss. The cumulative
effect of revisions in estimates of total cost or revenue during the course of
the work is reflected in the accounting period in which the facts that caused
the revision become known. An amount equal to the costs attributable to
unapproved change orders and claims is included in the total estimated revenue
when realization is probable. Profit from unapproved change orders and claims is
recorded in the year such amounts are resolved.
In accordance with normal practice in the construction industry, the Company includes in current assets and current liabilities amounts related to construction contracts realizable and payable over a period in excess of one year. Unbilled work represents the excess of contract costs and profits recognized to date on the percentage of completion accounting method over billings to date on certain contracts. Deferred contract revenue represents the excess of billings to date over the amount of contract costs and profits recognized to date on the percentage of completion accounting method on the remaining contracts.
[d] Method of Accounting for Discontinued Real Estate Operations
Effective June 30, 1999,
the Company adopted a plan to withdraw completely from its real estate
development business segment, which is presented as a discontinued operation in
accordance with Accounting Principles Board (“APB”) Opinion No. 30,
“Reporting the Results of Operations” (see Note 2). Accordingly, the
historical amounts presented for 1998 have been restated to conform to the
requirements of APB No. 30.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2000, 1999 and 1998 (continued)
[1] Summary of Significant Accounting Policies (continued)
[e] Depreciable Property and Equipment
Land, buildings and
improvements, construction and computer-related equipment and other equipment
are recorded at cost. Depreciation is provided primarily using accelerated
methods for construction and computer-related equipment and the straight-line
method for the remaining depreciable property.
[f] Goodwill
Goodwill represents the
excess of the costs of subsidiaries acquired over the fair value of their net
assets as of the dates of acquisition. These amounts are being amortized on a
straight-line basis over 40 years.
[g] Income Taxes
The Company accounts for
income taxes in accordance with SFAS No. 109, “Accounting for Income
Taxes,” (see Note 5). Deferred income tax assets and liabilities are
recognized for the effects of temporary differences between the financial
statement carrying amounts and the income tax basis of assets and liabilities
using enacted tax rates. In addition, future tax benefits, such as net operating
loss carryforwards, are recognized currently to the extent such benefits are
more likely than not to be realized as an economic benefit in the form of a
reduction of income taxes in future years.
[h] Earnings (Loss) Per Common Share
Earnings (loss) per common
share amounts we