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FORM 10-K
Securities and Exchange Commission Commission File No. 1-6314
Washington, DC 20549
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(MarkOne)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of
1934.
For the fiscal year ended December 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to ____________
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Perini Corporation
(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)
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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
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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
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The aggregate market value of voting stock held by nonaffiliates of the
registrant is $28,846,432 as of February 28, 1997.
The number of shares of Common Stock, $1.00 par value per share, outstanding at
February 28, 1997 is 4,898,648 .
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Documents Incorporated by Reference
Portions of the annual proxy statement for the year ended December 31, 1996 are
incorporated by reference into Part III.
PERINI CORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-K
PAGE
----
PART I
Item 1: Business 2
Item 2: Properties 13
Item 3: Legal Proceedings 14
Item 4: Submission of Matters to a Vote of Security Holders 14
PART II
Item 5: Market for the Registrant's Common Stock and Related 14
Stockholder Matters
Item 6: Selected Financial Data 15
Item 7: Management's Discussion and Analysis of Financial 16 - 21
Condition and Results of Operations
Item 8: Financial Statements and Supplementary Data 21
Item 9: Disagreements on Accounting and Financial Disclosure 21
PART III
Item 10: Directors and Executive Officers of the Registrant 22
Item 11: Executive Compensation 23
Item 12: Security Ownership of Certain Beneficial Owners and 23
Management
Item 13: Certain Relationships and Related Transactions 23
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on 24
Form 8-K
Signatures 25
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PART I.
ITEM 1. BUSINESS
General
Perini Corporation and its subsidiaries (the "Company" unless the
context indicates otherwise) provides general contracting, including building
and civil construction, and construction management and design-build services to
private clients and public agencies throughout the United States and selected
overseas locations. The Company is also engaged in real estate development
operations which are conducted by Perini Land & Development Company, a
wholly-owned subsidiary with offices in Arizona, Georgia and Massachusetts. The
Company was incorporated in 1918 as a successor to businesses which had been
engaged in providing construction services since 1894.
Because the Company's results consist in part of a limited number of
large transactions in both construction and real estate, 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, 1996.
Annual Report
On Form 10-K
Caption Page Number
Selected Consolidated Financial Information Page 15
Management's Discussion and Analysis Pages 16 - 21
Footnote 13 to the Consolidated Financial Statements, entitled Business Segments Pages 46 - 47
and Foreign Operations
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, 1996, additional information
(business segment and foreign operations) required by Statement of Financial
Accounting Standards No. 14 for the three years ended December 31, 1996 is
included in Note 13 to the Consolidated Financial Statements.
- 2 -
A summary of revenues by product line for the three years ended
December 31, 1996 is as follows:
Revenues (in thousands)
Year Ended December 31,
-------------------------------------------------
1996 1995 1994
---- ---- ----
Construction:
Building $ 834,888 $ 748,412 $ 626,391
Heavy 389,540 308,261 324,493
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Total Construction Revenues $1,224,428 $ 1,056,673 $ 950,884
----------- ------------ -----------
Real Estate:
Sales of Real Estate $ 7,639 $ 10,738 $ 33,188
Building Rentals 19,446 16,799 16,388
Interest Income 14,406 12,396 7,031
All Other 4,365 4,462 4,554
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Total Real Estate Revenues $ 45,856 $ 44,395 $ 61,161
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Total Revenues $1,270,284 $ 1,101,068 $ 1,012,045
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Construction
The general contracting and construction management 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 was engaged in over 180 construction projects in the
United States and overseas during 1996. The Company has three principal
construction operations: building, civil and international.
The civil operation undertakes large heavy construction projects
throughout the United States, with current emphasis on major metropolitan areas
such as Boston, New York City, Chicago and Los Angeles. The civil operation
performs construction and rehabilitation of highways, subways, tunnels, dams,
bridges, airports, marine projects, piers 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 the 1990's and beyond.
The building operation provides its services through regional offices
located in several metropolitan areas: Boston and Philadelphia, serving New
England and the Mid-Atlantic area; Detroit and Chicago, operating in Michigan
and the Midwest region; and Phoenix, Las Vegas, Los Angeles and San Francisco,
serving Arizona, Nevada and California. In 1992, the Company combined its
building operations into a new wholly-owned subsidiary, Perini Building Company,
Inc. This new 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 health care, correctional facilities,
sports complexes, hotels, casinos, residential, commercial, civic, cultural and
educational facilities.
The international operation engages in both civil and building
construction services overseas, funded primarily in U.S. dollars by agencies of
the United States government. In selected situations, it pursues private work
internationally.
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Construction Strategy
The Company plans to continue to increase the amount of civil
construction work it performs because of the relatively higher margin
opportunities available from such work. The Company believes the best
opportunities for growth in the coming years are in the urban infrastructure
market, particularly in Boston, metropolitan New York, Chicago, Los Angeles and
other major cities where it has a significant presence, and in other large,
complex projects. The Company's strategy in building construction is to maximize
profit margins; to take advantage of certain market niches; and to expand into
new markets compatible with its expertise. Internally, the Company plans to
continue both to strengthen its management through management development and
job rotation programs, and to improve efficiency through strict attention to the
control of overhead expenses and implementation of improved project management
systems. Finally, the Company continues to expand its expertise to assist public
owners to develop necessary facilities through creative public/private ventures.
During 1996, the Company also adopted a plan to enhance the
profitability of its construction operations by emphasizing gross margin and
bottom line improvement ahead of top line revenue growth. This plan calls for
the Company to focus its financial and human resources on construction
operations which are consistently profitable and to de-emphasize marginal
business units. Consistent with that Plan, the Company currently is closing or
downsizing and refocusing four business units. The Company also sold a mine
reclamation subsidiary last year, which was not an integral part of its core
building and civil construction operations.
Backlog
As of December 31, 1996 the Company's construction backlog was $1.52
billion compared to backlogs of $1.53 billion and $1.54 billion as of December
31, 1995 and 1994, respectively.
Backlog (in thousands) as of December 31,
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1996 1995 1994
---- ---- ----
Northeast $ 643,114 42% $ 749,017 49% $ 803,967 52%
Mid-Atlantic 113,289 8 179,324 12 26,408 2
Southeast 56,925 4 33,223 2 783 -
Midwest 97,954 6 325,055 21 293,168 19
Southwest 425,901 28 94,725 6 174,984 11
West 139,079 9 134,259 9 193,996 13
Other Foreign 41,438 3 18,919 1 45,473 3
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Total $ 1,517,700 100% $ 1,534,522 100% $1,538,779 100%
============ ==== ============ ==== ============ ====
The Company includes a construction project in its backlog at such time
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. The Company estimates that
approximately $402 million of its backlog will not be completed in 1997.
The Company's backlog in the Northeast region of the United States
remains strong because of its ability to meet the needs of the growing
infrastructure construction and rehabilitation market in this region,
particularly in the metropolitan Boston and New York City areas. The backlog
increase in the Southwest region is indicative of the increased demand by the
hotel-casino market in Nevada, while the decrease in backlog in the Midwest is
due, in part, to a downsizing of certain business units. Other fluctuations in
backlog are viewed by management as transitory.
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Types of Contracts
The four general types of contracts in current use in the construction
industry are:
o Fixed price contracts ("FP"), which include unit price contracts,
usually transfer more risk to the contractor but offer the opportunity,
under favorable circumstances, for greater profits. With the Company's
increasing move into civil construction and publicly bid building
construction in response to current opportunities, the percentage of
fixed price contracts continue to represent the major portion of the
backlog.
o Cost-plus-fixed-fee contracts ("CPFF") which provide greater safety for
the contractor from a financial standpoint but limit profits.
o Guaranteed maximum price contracts ("GMP") which provide for a
cost-plus-fee arrangement up to a maximum agreed price. These contracts
place risks on the contractor but may permit an opportunity for greater
profits than cost-plus-fixed-fee contracts through sharing agreements
with the client on any cost savings.
o Construction management contracts ("CM") under which a contractor
agrees to manage a project for the owner for an agreed-upon fee which
may be fixed or may vary based upon negotiated factors. The contractor
generally provides services to supervise and coordinate the
construction work on a project, but does not directly purchase contract
materials, provide construction labor and equipment or enter into
subcontracts.
Historically, a high percentage of company contracts have been of the
fixed price type. Construction management contracts remain a relatively small
percentage of company contracts. 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,
- ----------------------------------- -------------------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
59% 67% 54% Fixed Price 62% 74% 68%
41 33 46 CPFF, GMP or CM 38 26 32
---- ---- ---- ---- ---- ----
100% 100% 100% 100% 100% 100%
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Clients
During 1996, the Company was active in the building, heavy and
international construction markets. The Company performed work for over 125
federal, state and local governmental agencies or authorities and private
customers during 1996. No material part of the Company's business is dependent
upon a single or limited number of private customers; the loss of any one of
which would not have a materially adverse effect on the Company. As illustrated
in the following table, the Company continues to serve a significant number of
private owners. During the period 1994-1996, the portion of construction
revenues derived from contracts with various governmental agencies remains
relatively constant at 52% in 1996 and 56% in 1995 and 1994.
Revenues by Client Source
Year Ended December 31,
-----------------------------------
1996 1995 1994
---- ---- ----
Private Owners 48% 44% 44%
Federal Governmental Agencies 5 8 11
State, Local and Foreign Governments 47 48 45
---- ---- ----
100% 100% 100%
==== ==== ====
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All Federal government contracts are subject to termination provisions, but as
shown in the table above, the Company does not have a material amount of such
contracts.
General
The construction business is highly competitive. Competition is based
primarily on price, reputation for 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 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 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. 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 a possible
example of this situation, see "Legal Proceedings" on page 14. For further
information regarding certain joint ventures, see Note 2 to 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. Gasoline, diesel fuel 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 1997 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 heavy 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. Perini Environmental
provides hazardous waste engineering and construction services to both private
clients and public agencies nationwide. Perini Environmental is responsible for
compliance with applicable law in connection with its clean up activities and
bears the risk associated with handling such materials. In addition to strict
procedural guidelines for conduct of this work, the Company and Perini
Environmental generally carry insurance or receive satisfactory indemnification
from customers to cover the risks associated with this business. The Company
also owns real estate nationwide 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.
- 6 -
The Company has been subjected to a number of claims from former
employees of subcontractors regarding exposure to asbestos on the Company's
projects. None of the claims have been material. 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 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.
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 are conducted by Perini
Land & Development Company ("PL&D"), a wholly owned subsidiary, which has been
involved in real estate development since the early 1950's. PL&D has
traditionally engaged in real estate development in Arizona, California,
Florida, Georgia and Massachusetts. In 1993, PL&D significantly reduced its
staff in California and has suspended any new land acquisition in that area. In
1996, PL&D took the same steps in Florida. PL&D's development operations
generally involve identifying attractive parcels, planning and development,
arrange financing, obtaining needed zoning changes and permits, site
preparation, installation of roads and utilities and selling the land.
Originally, PL&D concentrated on land development. In appropriate situations,
PL&D has also constructed buildings on the developed land for rental or sale.
Early in 1997, PL&D changed its strategy on certain of its properties
from maximizing value by holding them through the necessary development and
stabilization periods to a new strategy of generating short-term liquidity
through an accelerated disposition or bulk sale. This change in strategy
substantially reduced the estimated future cash flow from these properties.
Therefore, an impairment loss on those properties has resulted in PL&D's
recording a non-cash charge in an aggregate amount of approximately $80 million
as of December 31, 1996, in accordance with Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of". An estimated allocation of the write down,
by geographic areas, is California ($59 million), Arizona ($18 million), and
Florida ($3 million).
In 1992, based on a weakening in property values and a national real
estate recession, PL&D took a $30 million pre-tax net realizable value write
down against earnings. Following the charges taken in 1992 and 1996, it is
management's belief that none of its real estate properties are currently
carried at amounts in excess of their net realizable values or otherwise require
a write down in accordance with SFAS No. 121. PL&D will continue periodically to
review its portfolio to assess the desirability of accelerating its sales
through price concessions or sale at an earlier stage of development. In
circumstances in which asset strategies are changed, such as in 1997, and
properties brought to market on an accelerated basis, those assets, if
necessary, are adjusted to reflect the lower of carrying amounts or fair value
less cost to sell. Similarly, if the long term outlook for a property in
development or held for future sale is adversely changed, the Company will
adjust its carrying value to reflect such an impairment in value.
To achieve full value for some of its real estate holdings, in
particular its investments in Rincon Center, PL&D may have to hold that property
several years and currently intends to do so.
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Real Estate Strategy
Since 1990, PL&D has taken a number of steps to reduce the size of its
operations. In early 1990, all new real estate investment was suspended pending
market improvement, all but critical capital expenditures were curtailed on
on-going projects, and PL&D's work force was cut by over 60%. Certain project
loans were extended, with such extension usually requiring pay downs and
increased annual amortization of the remaining loan balance. Since that time,
PL&D has operated with a reduced staff and has adjusted its activity to meet the
demands of the market.
PL&D's real estate development project mix includes planned community,
industrial park, commercial office, multi-unit residential, urban mixed use and
single family home developments. PL&D's emphasis is on the sale of completed
product and also developing the projects in its inventory with the highest near
term sales potential. It may also selectively seek new development opportunities
in which it serves as development manager with limited equity exposure, if any.
Real Estate Properties
----------------------
The following is a description of the Company's major development
projects and properties by geographic area:
Florida
West Palm Beach and Palm Beach County - In 1996, PL&D sold its ownership
interest in the Bear Lakes Country Club to the club membership. The sale
represented PL&D's last investment in PL&D's development at the "Villages of
Palm Beach Lakes" which is now completely sold out.
At Metrocentre, a 51-acre commercial/office park at the intersection of
Interstate 95 and 45th Street in West Palm Beach, one site totaling 2 acres was
sold in 1996. The park consists of 17 parcels, of which 5 acres currently remain
unsold. The park provides for 570,500 square feet of mixed commercial uses.
Massachusetts
Perini Land and Development or Paramount Development Associates, Inc.
("Paramount"), a wholly-owned subsidiary of PL&D, owns the following projects:
Raynham Woods Commerce Center, Raynham - In 1987, Paramount acquired a
409-acre site located in Raynham, Massachusetts. During 1988, Paramount
completed infrastructure work on a major portion of the site (330 acres) which
is being developed as a mixed use corporate campus style park known as "Raynham
Woods Commerce Center". From 1989 through 1995, Paramount sold an aggregate of
56 acres to various users, including the division of a major U.S. company for
use as its headquarters, to a developer who was working with a major national
retailer for a retail site, and to a major insurance company. In 1990, Paramount
built two commercial buildings in the park which are currently approximately 90%
occupied. In 1996, 2 additional acres of land were sold to a previous tenant
from one of the Paramount-owned buildings. The park is planned to eventually
contain 2.5 million square feet of office, R&D, light industrial and mixed
commercial space.
Easton Business Center, Easton - In 1989, Paramount acquired a 40-acre
site in Easton, Massachusetts, which already had been partially developed.
Paramount completed the work and is currently marketing the site to
commercial/industrial users. No sales were closed in 1996.
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
being marketed to both retail and commercial/industrial users. No sales were
closed in 1996.
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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 in Clayton County to be
called "The Villages at Lake Ridge" six miles south of Atlanta's Hartsfield
International Airport. Since its acquisition, the joint venture has put in a
substantial portion of the infrastructure, all of the recreational amenities,
and through 1995 had sold 251 single family lots to developers. An additional 42
lots were sold in 1996, along with a 13.6 acre tract designed for 52 lots. Prior
to 1996 the joint venture also sold a 16-acre parcel for use as an elementary
school and developed a 278 unit apartment complex which it later sold to a third
party buyer. Because most of the homes built within the development are to first
time buyers, demand is highly sensitive to mortgage rates and other costs of
ownership. Financing restrictions generally require the joint venture to allow
developers to take down finished lots only as homes built on previously acquired
lots are sold. As a result, any slowdown in home sales will influence joint
venture sales quickly thereafter. The development plan calls for mixed
residential densities of apartments and moderate priced single-family homes
totaling 1,158 dwelling units in the residential tracts, plus 220,000 square
feet of retail and 220,000 square feet of office space in the commercial tracts.
The Oaks at Buckhead, Atlanta - All remaining units in this project were
sold in 1996. Sales commenced on this 217-unit residential condominium project
at a site in the Buckhead section of Atlanta near the Lenox Square Mall in 1992.
The project consists of 201 residences in a 30-story tower plus 16 adjacent
three-story townhome residences. PL&D (50%) developed this project in joint
venture with a subsidiary of a major Taiwanese company.
California
Rincon Center, San Francisco - Major construction on this mixed-use
project in downtown San Francisco was completed in 1989. The project,
constructed in two phases, consists of 320 residential units, approximately
423,000 square feet of office space, 63,000 square feet of retail space, and a
700-space parking garage. Following its completion in 1988, the first phase of
the project was sold and leased back by the developing partnership. The first
phase consists of about 223,000 square feet of office space and 42,000 square
feet of retail space. The Phase I office space continues to be close to 100%
leased with the regional telephone directory company as the major tenant on
leases which, under a lease extension currently being finalized, will run into
2003. The retail space is currently 97% leased. Phase II of the project, which
began operations in late 1989, consists of approximately 200,000 square feet of
office space, 21,000 square feet of retail space, a 14,000 square foot U.S.
postal facility, and 320 apartment units. Currently, close to 98% of the office
space, 77% of the retail space and virtually all of the 320 residential unit are
leased. The major tenant in the office space in Phase II, starting in mid-1997,
will be a major national insurance company who will be moving into 155,000
square feet, replacing most of the space previously occupied by the Ninth
Circuit Court of Appeals which recently moved out. PL&D currently holds a 46%
interest in, and is managing general partner of, the partnership which is
developing the project. The land related to this project is being leased from
the U.S. Postal Service under a ground lease which expires in 2050.
In addition to the project financing and guarantees disclosed in the
first, second and third paragraphs of Note 11 to Notes to Consolidated Financial
Statements, the Company has advanced approximately $83 million to the
partnership through December 31, 1996, of which approximately $5 million was
advanced during 1996, primarily to paydown some of the principal portion of
project debt which was renegotiated during 1993. In 1996, operations before
principal repayment of debt created a positive cash flow on an annual basis.
- 9 -
Two major loans on this property, in aggregate totaling over $75
million, were scheduled to mature in 1993. During 1993, both loans were extended
for five additional years. To extend these loans, PL&D provided approximately $6
million in new funds which were used to reduce the principal balances of the
loans. In 1996, and over the next two years, additional amortization will be
required, some of which may not be covered by operating cash flow and,
therefore, at least 80% of those funds not covered by operations will be
provided by PL&D as managing general partner. Lease payments and loan
amortization obligations at Rincon Center are $7.3 million in 1997. Based on
Company forecasts, it could be required to contribute as much as $8.4 million to
cover these obligations and costs associated with the tenant turnover mentioned
above, which are not covered by project cash flow in 1997. The interest rates on
much of the debt financing covering Rincon Center are variable based on various
rate indices. With the exception of approximately $20 million of the financing,
none of the debt has been hedged or capped and is subject to market
fluctuations. From time to time, the Company reviews the costs and anticipated
benefits from hedging Rincon Center's interest rate commitments. Based on
current costs to further hedge rate increases and market conditions, the Company
has elected not to provide any additional hedges at this time.
As part of the Rincon One sale and operating lease-back transaction, the
joint venture agreed to obtain an additional financial commitment on behalf of
the lessor to replace at least $33 million of long-term financing by January 1,
1998. If the joint venture has not secured a further extension or new commitment
for financing on the property for at least $33 million, the lessor will have the
right under the lease to require the joint venture to purchase the property for
a stipulated amount of approximately $18.8 million in excess of the then
outstanding debt. Management currently believes it will be able to extend the
financing or refinance the building such that this sale back to the Company will
not occur.
During 1993 PL&D agreed, if necessary, to lend Pacific Gateway
Properties (PGP), the other General Partner in the project, funds to meet its
20% share of cash calls. In return PL&D receives a priority return from the
partnership on those funds and penalty fees in the form of rights to certain
distributions due PGP by the partnership controlling Rincon. From 1993-1996,
PL&D advanced $4 million under this agreement, primarily to meet the principal
payment obligations of the loan extensions described above.
The Resort at Squaw Creek - Early in 1997, PL&D signed a letter of
intent to sell its interest in the joint venture through which the Company holds
its ownership interest in the Resort. The agreed upon price is $21 million with
a closing scheduled no later than July 1, 1997 and incentives for the buyer to
close on or before May 1, 1997. During 1996, the Company acquired the interest
of another partner increasing its effective interest in the property to 34%.
Given the proposed transaction, the Company took an approximately $57 million
write down on this project at year end. If the transaction is not consummated,
the Company anticipates either acquiring controlling interest of the property or
selling its total interest through the use of the buy/sell provision of the
joint venture agreement.
As part of the Squaw Creek Associates partnership agreement, either
partner may initiate a buy/sell agreement on or after January 1, 1997. Such
buy/sell agreement is similar to those often found in real estate development
partnerships. It provides for the recipient of the offer to have the option of
selling its share at the proportionate amount applicable based on the offer
price and the specific priority of payout as called for under the partnership
agreement based on a sale and termination of the partnership.
Currently, in addition to the project financing and guarantees disclosed
in paragraphs four and five of Note 11 to Notes to Consolidated Financial
Statements, the Company has advanced approximately $79 million to the joint
venture through December 1996, of which approximately $3 million was advanced
during 1996, for the cost of operating expenses, debt amortization and interest
payments.
If the proposed sale of the Company's interest is consummated, all
contingent liabilities would be
- 10 -
released or provided for through indemnification.
The project which was completed in 1991, includes a 405-unit hotel,
36,000 square feet of conference facilities, a Robert Trent Jones, Jr. golf
course, 48 single-family lots, all but one of which have been sold, three
restaurants, an ice skating rink, pool complex, fitness center, and 11,500
square feet of various retail support facilities. In addition, a second phase is
planned to include an additional 409-unit hotel facility, 36 townhouses, 27,000
square feet of conference space, 5000 square feet of retail space and a parking
structure. No activity on the second phase will begin until stabilization is
attained on phase one and market conditions warrant additional investment.
Corte Madera, Marin County - After many years of intensive planning,
PL&D obtained approval for a 151 single-family home residential development on
its 85-acre site in Corte Madera and, in 1991, was successful in gaining water
rights for the property. In 1992, PL&D initiated development on the site which
was continued into 1993. This development is one of the last remaining in-fill
areas in southern Marin County. In 1993, when PL&D decided to scale back its
operations in California, it also decided to sell this development in a
transaction which closed in early 1994. The transaction calls for PL&D to get
the majority of its funds from the sale of residential units or upon the sixth
anniversary of the sale whichever takes place first, and, although indemnified,
to leave in place certain bonds and other assurances previously given to the
town of Corte Madera guaranteeing performance in compliance with approvals
previously obtained. Sale of the units began in August of 1995 and by year end,
10 units were under contract or closed. During 1996, another 29 closings were
recorded.
Arizona
Airport Commerce Center, Tucson - In 1982, the 1-10 partnership
purchased 112 acres of industrially- zoned property near the Tucson
International Airport. During 1983, the partnership added 54 acres to that
project, bringing its total size to 166 acres. This project has experienced a
low level of sales activity due to an excess supply of industrial property in
the marketplace. However, the partnership built and fully leased a 14,600 square
foot office/warehouse building in 1987 on a building lot in the park, which was
sold during 1991. From 1990 through 1995, the partnership sold 51 acres within
the park. In 1996, another 22 acres were sold. Early in 1997, PL&D agreed to
sell its remaining interest in the project to its partner. The transaction is
expected to close by mid-year.
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 of the church's property in midtown
Phoenix. Located adjacent to the Phoenix Art Museum and near the Heard Museum,
the project is positioned to become the mixed use core of the newly formed
Phoenix Arts District. 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. Plans for the first phase of this project, known as "The
Coronado" have been put on hold. Currently, the joint venture is exploring
possible sale opportunities for all or part of the property.
Grove at Black Canyon, Phoenix - The project consists of an office park
complex on a 30-acre site located off of Black Canyon Freeway, a major Phoenix
artery, approximately 20 minutes from downtown Phoenix. When complete, the
project will include approximately 650,000 square feet of office, hotel,
restaurant and/or retail space. Development, which began in 1986, is scheduled
to proceed in phases as market conditions dictate. In 1987, a 150,000 square
foot office building was completed within the park and now is 97% leased with
approximately half of the building leased to a major area utility company.
During 1993, PL&D (50%) successfully restructured the financing on the project
by obtaining a seven year extension with some amortization and a lower fixed
interest rate. The annual amortization commitment is not currently covered by
operating cash flow. In the near term, it appears approximately $700,000 per
year of support to cover loan amortization will continue to be required. No new
development within the park was begun in 1996, however, the lease covering space
occupied by the major office tenant was
- 11 -
extended an additional seven years to the year 2004 on competitive terms. In
1995, a day care center was completed on an 8-acre site along the north entrance
of the park. In 1996, no new sales were closed but 2.9 acre and 1.5 acre parcels
of land are both under contract for 1997 closings.
Sabino Springs Country Club, 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. In 1991,
that approval, which had been challenged, was affirmed by the Arizona Supreme
Court. When fully developed, the project will consist of 496 single-family
homes. In 1993, PL&D recorded the master plat on the project and sold a major
portion of the property to an international real estate company. An 18-hole
Robert Tent Jones, Jr. designed championship golf course and clubhouse were
completed within the project in 1995. Although it will require some
infrastructure development before sale, PL&D still retains 33 estate lots for
sale in future years.
Capitol Plaza, Phoenix - In 1996, PL&D sold this 1.75-acre parcel of
land located in the Governmental Mall area of Phoenix.
General
The Company's real estate business is influenced by both economic
conditions and demographic trends. A depressed economy may result in lower real
estate values and longer absorption periods. Higher inflation rates may increase
the values of current properties, but often are accompanied by higher interest
rates which may result in a slowdown in property sales because of higher
carrying costs. Important demographic trends are population and employment
growth. A significant reduction in either of these may result in lower real
estate prices and longer absorption periods.
Generally, there has been no material impact on PL&D's real estate
development operations over the past 10 years due to interest rate increases.
However, an extreme and prolonged rise in interest rates could create market
resistance for all real estate operations in general, and is always a potential
market obstacle. Historically, PL&D has, in some cases, employed hedges or caps
to protect itself against increases in interest rates on any of its variable
rate debt and, therefore, was insulated from extreme interest rate risk on
borrowed funds, although specific projects may have been impacted if the
decision had been made not to hedge or to hedge at higher than current rates.
The future use of such hedges or caps is somewhat restricted under the terms of
the New Credit Agreement.
Over the past few years, the Company has sold out its relatively low
cost debt-free land in Florida acquired in the late 1950's, and its sales mix
has begun to contain land purchased at current market prices. In 1996 and future
years, as the mix of land sold contain little or none of the lower cost land,
the gross margin on real estate revenues will decrease substantially.
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 dealt with
the same surety 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 and the Company occasionally has encountered
limits imposed by its surety, these limits have not had an adverse impact on its
operations.
- 12 -
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 1996 the maximum number of
employees employed was approximately 2,700 and the minimum was approximately
2,100.
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 through 12. All other properties used in operations are summarized
below:
Owned or Leased Approximate Approximate Square
Principal Offices by Perini Acres Feet of Office Space
- ----------------- --------- ----- --------------------
Framingham, MA Owned 9 110,000
Phoenix, AZ Leased - 22,000
Southfield, MI Leased - 13,900
Hawthorne, NY Leased - 12,500
Los Angeles, CA Leased - 2,000
Las Vegas, NV Leased - 3,000
Atlanta, GA Leased - 1,700
Chicago, IL Leased - 14,700
Philadelphia, PA Leased - 2,100
---- -----------
9 181,900
==== ===========
Principal Permanent Storage Yards
- ---------------------------------
Bow, NH Owned 70
Framingham, MA Owned 6
Las Vegas, NV Leased 2
Novi, MI Leased 3
----
81
====
The Company's properties are generally well maintained, in good
condition, adequate and suitable for the Company's purpose and fully utilized.
- 13 -
ITEM 3. LEGAL PROCEEDINGS
As previously reported, the Company is a party to an action entitled
Mergentime Corporation et. al. v. Washington Metropolitan Transit Authority 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 judge now 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. As a
result of that process, the company established a reserve with respect to the
litigation. Management believes the reserve should be adequate to cover the
potential ultimate liability in this matter.
In the ordinary course of its construction business, the Company is
engaged in other lawsuits. The Company believes that such lawsuits 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 1996
and 1995 are summarized below:
1996 1995
---- ----
Market Price Range per Common Share: High Low High Low
- ----------------------------------- ---- --- ---- ---
Quarter Ended
March 31 9 - 7 1/2 11 7/8 - 9 3/8
June 30 12 1/8 - 7 3/4 11 1/2 - 9 1/2
September 30 12 1/4 - 8 5/8 13 3/8 - 10 1/8
December 31 9 1/4 - 7 1/2 12 1/4 - 7 7/8
For information on dividend payments, see Selected Financial Data in
Item 6 below and "Dividends" under Management's Discussion and Analysis in Item
7 below.
As of February 28, 1997, there were approximately 1,023 record holders
of the Company's Common Stock.
- 14 -
ITEM 6. SELECTED FINANCIAL DATA
Selected Consolidated Financial Information
(In thousands, except per share data)
OPERATING SUMMARY 1996 1995 1994 1993 1992
------------- ------------ ------------ ------------ ------------
Revenues
Construction Operations $ 1,224,428 $ 1,056,673 $ 950,884 $ 1,030,341 $ 1,023,274
Real Estate Operations 45,856 44,395 61,161 69,775 47,578
------------- ------------ ------------ ------------ ------------
Total Revenues $ 1,270,284 $ 1,101,068 $ 1,012,045 $ 1,100,116 $ 1,070,852
------------- ------------ ------------ ------------ ------------
Costs:
Cost of Operations $ 1,215,806 $ 1,086,213 $ 960,248 $ 1,047,330 $ 1,018,663
Write down of Certain Real Estate
Assets (Note 4) 79,900 - - - 30,000
------------- ------------ ------------ ------------ ------------
$ 1,295,706 $ 1,086,213 $ 960,248 $ 1,047,330 $ 1,048,663
------------- ------------ ------------ ------------ ------------
Gross Profit (Loss) $ (25,422) $ 14,855 $ 51,797 $ 52,786 $ 22,189
General, Administrative & Selling
Expenses 33,988 37,283 42,985 44,212 41,328
------------- ------------ ------------ ------------ ------------
Income (Loss) From Operations $ (59,410) $ (22,428) $ 8,812 $ 8,574 $ (19,139)
Other Income (Expense), Net (492) 814 (856) 5,207 436
Interest Expense (9,871) (8,582) (7,473) (5,655) (7,651)
------------- ------------ ------------ ------------ ------------
Income (Loss) Before Income Taxes $ (69,773) $ (30,196) $ 483 $ 8,126 $ (26,354)
(Provision) Credit for Income Taxes (830) 2,611 (180) (4,961) 9,370
------------- ------------ ------------ ------------ ------------
Net Income (Loss) $ (70,603) $ (27,585) $ 303 $ 3,165 $ (16,984)
------------- ------------ ------------ ------------ ------------
Per Share of Common Stock:
Earnings (loss) $ (15.13) $ (6.38) $ (0.42) $ 0.24 $ (4.69)
------------- ------------ ------------ ------------ ------------
Cash dividends declared $ - $ - $ - $ - $ -
------------- ------------ ------------ ------------ ------------
Book value $ 2.14 $ 17.06 $ 23.79 $ 24.49 $ 23.29
------------- ------------ ------------ ------------ ------------
Weighted Average Number of
Common Shares Outstanding 4,808 4,655 4,380 4,265 4,079
------------- ------------ ------------ ------------ ------------
FINANCIAL POSITION
SUMMARY *
Working Capital $ 56,744 $ 36,545 $ 29,948 $ 36,877 $ 31,028
------------- ------------ ------------ ------------ ------------
Current Ratio 1.19.1 1.12:1 1.13:1 1.17:1 1.14:1
------------- ------------ ------------ ------------ ------------
Long-term Debt, less current
maturities $ 96,893 $ 84,155 $ 76,986 $ 82,366 $ 85,755
------------- ------------ ------------ ------------ ------------
Stockholders' Equity $ 35,558 $ 105,606 $ 132,029 $ 131,143 $ 121,765
------------- ------------ ------------ ------------ ------------
Ratio of Long-term Debt to Equity 2.72.1 .80:1 .58:1 .63:1 .70:1
------------- ------------ ------------ ------------ ------------
Total Assets $ 464,292 $ 539,251 $ 482,500 $ 476,378 $ 470,696
------------- ------------ ------------ ------------ ------------
OTHER DATA
Backlog at Year-end $ 1,517,700 $ 1,534,522 $ 1,538,779 $ 1,238,141 $ 1,169,553
------------- ------------ ------------ ------------ ------------
* See Pro Forma impact on 1996 as if the New Equity transaction had been
closed as of December 31, 1996 (see Note 14 to Notes to Consolidated
Financial Statements).
- 15-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations -
1996 Compared to 1995
In spite of record revenues and earnings from domestic construction operations
during 1996, the Company's total operations resulted in a net loss of $70.6
million (or $15.13 per common share) on revenues of $1.3 billion in 1996
compared to a net loss of $27.6 million in 1995 (or $6.38 per common share) on
revenues of $1.1 billion. The reason for the net loss in 1996 was a change in
the Company's real estate strategy on certain of its properties from maximizing
value by holding them through the necessary development and stabilization
periods to a new strategy of generating short-term liquidity through an
accelerated disposition or bulk sale. The change in strategy substantially
reduced the estimated future cash flows from these properties. Therefore, a
non-cash impairment loss on those properties, in the aggregate amount of $79.9
million, was provided in the fourth quarter of 1996 in accordance with SFAS No.
121 (see Notes (1)(d) and 4 to Notes to Consolidated Financial Statements).
Revenues amounted to $1.270 billion in 1996, a record level for the second
consecutive year, an increase of $169 million (or 15%) compared to the 1995
revenues of $1.101 billion. This increase was almost entirely due to an increase
in construction revenues of $167 million (or 16%), from $1.057 billion in 1995
to $1.224 billion in 1996. This increase in construction revenues was divided
fairly equally between building and heavy (or "civil") construction operations.
Building construction revenues increased $87 million (or 12%), from $748 million
in 1995 to $835 million in 1996 while civil construction revenues increased $80
million (or 26%), from $309 million in 1995 to $389 million in 1996. These
revenue increases reflect the impact of several fast track hotel/casino projects
in the western and midwestern United States, several prison/detention and
medical facilities projects in the northeastern United States, and several
long-term infrastructure rehabilitation projects in the metropolitan New York,
Boston and Los Angeles areas.
In spite of the 15% increase in revenues, the gross profit decreased $40.3
million, from a gross profit of $14.9 million in 1995 to a gross loss of $25.4
million in 1996. The primary reason for the gross loss in 1996 was the $79.9
million real estate write down referred to above which caused the increase in
gross loss from real estate from $1.0 million in 1995 to $80.9 million in 1996.
This increase in gross loss was partially offset by a substantial increase in
gross profit from construction operations of $39.6 million, from $15.9 million
in 1995 to $55.5 million in 1996. Overall gross profit margins on both building
and civil construction operations in 1996 exceeded those experienced in 1995.
The lower than normal gross profit from construction operations recognized in
1995 included a pretax charge, which aggregated $25.6 million, to provide for a
liability related to previously disclosed litigation in Washington, D.C. (see
Note 11 to Notes to Consolidated Financial Statements), and downward revisions
in estimated probable recoveries on certain outstanding contract claims. These
pretax charges in 1995, coupled with the increased construction revenues in 1996
referred to above, including the favorable profit impact in 1996 of several
large infrastructure projects, primarily in the metropolitan New York, Boston
and Los Angeles areas, resulted in the substantial increase in gross profit from
construction operations in 1996.
General, administrative and selling expenses decreased by $3.3 million (or 9%),
from $37.3 million in 1995 to $34.0 million in 1996 due primarily to continued
emphasis on reducing overall overhead expenses in conjunction with the Company's
re-engineering efforts commenced in prior years, the sale in June of 1996 of
Pioneer Construction, a former subsidiary of the Company located in West
Virginia, and the continuation of the gradual down-sizing of the Company's real
estate and environmental remediation construction operations.
Other income (expense), net decreased $1.3 million, from income of $.8 million
in 1995 to a loss of $.5 million in 1996 primarily due to higher bank charges
experienced in 1996 in conjunction with the Company's renegotiation of certain
provisions of its Revolving Credit Agreement and Bridge Loan Agreement and, to a
lesser degree, a reduction in gains from the sale of certain underutilized
operating
- 16-
facilities and less interest income.
Interest expense increased by $1.3 million (or 15%), from $8.6 million in 1995
to $9.9 million in 1996 due to a higher average level of borrowings during 1996.
The Company recognized income tax expense for the year ending December 31, 1996
of $.8 million on a pretax loss of $69.8 million, whereas in 1995, the Company
recognized a tax benefit of $2.6 million on a pretax loss of $30.2 million. The
1996 income tax expense is primarily for state income taxes relating to certain
jurisdictions in which the Company had net taxable income. The Company did not
provide any federal tax benefit in 1996, whereas in 1995, a partial tax benefit
was provided on the Company's pretax loss, due to certain accounting
limitations. As a result, an amount estimated to be approximately $92.0 million
of future pretax earnings should benefit from minimal, if any, federal tax
charges. The net deferred tax assets reflect management's estimate of the amount
that will, more likely than not, be realized (see Note 5 to Notes to
Consolidated Financial Statements).
Results of Operations -
1995 Compared to 1994
The Company's 1995 operations resulted in a net loss of $27.6 million or $6.38
per common share on revenues of $1.1 billion compared to net income of $.3
million or a loss of $.42 per common share (after giving effect to the dividend
payments required on its preferred stock) on revenues of $1.0 billion in 1994.
The primary reasons for this decrease in earnings were a pretax charge of $25.6
million in connection with previously disclosed litigation in Washington, D.C.
and downward revisions in estimated probable recoveries on certain outstanding
contract claims, and lower than normal profit margins on certain civil
construction contracts, including a significant reduction in the profit level on
a tunnel project in the Midwest.
Revenues reached a record level of $1.101 billion in 1995, an increase of $89
million (or 9%) compared to the 1994 revenues of $1.012 billion. This increase
resulted primarily from an increase in construction revenues of $106 million (or
11%) from $.951 billion in 1994 to $1.057 billion in 1995. This increase in
construction revenues resulted primarily from an increase in building
construction revenues of $122 million (or 19%), from $626 million in 1994 to
$748 million in 1995, primarily due to substantially increased volume in the
Midwest region resulting from a substantially higher backlog in that area
entering 1995 combined with several hotel/casino projects acquired during 1995.
This increase was partially offset by a decrease in building construction
revenues in the Eastern and Western regions, as well as in the overall civil
construction operations, due primarily to the timing in the start-up of several
significant new projects and the completion early in 1995 of several other major
projects. Revenues from real estate operations also decreased by $16.8 million
(or 27%) from $61.2 million in 1994 to $44.4 million in 1995 due to the
non-recurring sale in 1994 of two investment properties ($8.3 million) and fewer
land sales in Massachusetts and California during 1995.
In spite of the 9% increase in revenues, the gross profit in 1995 decreased by
$36.9 million, from $51.8 million in 1994 to $14.9 million in 1995, due
primarily to an overall decrease in gross profit from construction operations of
$32.1 million (or 67%), from $48.0 million in 1994 to $15.9 million in 1995. The
primary reasons for this decrease were a pretax charge of $25.6 million in
connection with previously disclosed litigation in Washington, D.C. and downward
revisions in estimated probable recoveries on certain outstanding contract
claims, and lower than normal profit margins on certain civil construction
contracts, including a significant reduction in the profit level on a tunnel
project in the Midwest. In addition, the overall gross profit from real estate
operations decreased by $4.8 million, from a profit of $3.8 million in 1994 to a
loss of $1.0 million in 1995 due to the sale in 1994 of the last parcels of high
margin land in Florida and in a project in Massachusetts which was partially
offset by improved operating results in 1995 from its two major on-going
operating properties in California.
- 17-
Total general, administrative and selling expenses decreased by $5.7 million (or
13%) from $43.0 million in 1994 to $37.3 million in 1995. This decrease
primarily reflects reduced bonuses, an increased allocation of various insurance
costs to projects in 1995, and a continuation during 1995 of the Company's
re-engineering efforts commenced in prior years.
The increase in other income (expense), net, of $1.7 million, from a net expense
of $.9 million in 1994 to a net income of $.8 million in 1995, is primarily due
to an increase in interest income and, to a lesser extent, a gain realized on
the sale of certain underutilized operating facilities, including a quarry, in
1995.
The increase in interest expense of $1.1 million (or 15%), from $7.5 million in
1994 to $8.6 million in 1995, primarily results from a higher average level of
borrowings during 1995.
The Company recognized a tax benefit in 1995 equal to $2.6 million or 9% of the
pretax loss. A portion of the tax benefit related to the 1995 loss was not
recognized because of certain accounting limitations. However, an amount
estimated to be approximately $20 million of future pretax earnings should
benefit from minimal, if any, federal tax charges.
Financial Condition
Cash and Working Capital
During 1996, the Company used $24.3 million in cash for operating activities,
primarily for changes in working capital, and $21.1 million for investment
activities, primarily to fund construction and real estate joint ventures. These
uses of cash were provided by $26.1 million from financing activities, primarily
increases in borrowings under the Company's Revolving Credit and Bridge Loan
facilities, and a $19.3 million reduction in cash on hand. In addition, the
Company has future financial commitments to certain real estate joint ventures
as described in Note 11 to Notes to Consolidated Financial Statements.
During 1995, the Company provided $24.6 million in cash from operating
activities, primarily due to an overall increase in accounts payable and
advances from joint ventures; $9.0 million from financing activities due to an
increase in borrowings under its revolving credit facility; and $23.9 million
from cash distributions from certain joint ventures. These increases in cash
were used to increase cash on hand by $21.2 million, with the balance used for
various investment activities, primarily to fund construction and real estate
joint ventures.
Since 1990, the Company has paid down $42.8 million of real estate debt on
wholly-owned real estate projects (from $50.9 million to $8.1 million),
utilizing proceeds from sales of property and general corporate funds.
Similarly, real estate joint venture debt has been reduced by $163 million over
the same period. As a result, the Company has reached a point at which revenues
from further real estate sales that, in the past, have been largely used to
retire real estate debt will be increasingly available to improve general
corporate liquidity subject to certain restrictions contained in the New Credit
Agreement referred to in Note 14 to Notes to Consolidated Financial Statements.
With the exception of the major properties referred to in Note 11 to Notes to
Consolidated Financial Statements, this trend should continue over the next
several years with debt on projects often being fully repaid prior to full
project sell-out. In addition, the Company made a strategic decision in the
early 1990's to change its mix of construction work by increasing the relative
percentage of potentially higher margin civil construction projects. The working
capital required to support civil construction projects is substantially more
than the normal building construction project because of its equipment intensive
nature, progress billing terms imposed by certain public owners and, in some
instances, time required to process contract change orders. The Company has
addressed these problems by relying on corporate borrowings, extending certain
maturing real estate loans (with such extensions usually requiring pay downs and
increased annual amortization of the remaining loan balance), suspending the
acquisition of new real estate inventory, significantly reducing
- 18 -
development expenses on certain projects, utilizing stock in payment of certain
expenses, utilizing cash internally generated from operations and selling its
interest in certain engineering and construction business units that were not an
integral part of the Company's ongoing building and civil construction
operations. The Company also implemented company-wide cost reduction programs in
1990, and again in 1991 and 1993 to improve long-term financial results and
suspended the dividend on its common stock during the fourth quarter of 1990 and
suspended payment of dividends on its $21.25 Convertible Exchangeable Preferred
Stock in the first quarter of 1996. Also, the Company increased the aggregate
amount available under its revolving credit agreement during the period from $70
million to $114.5 million at December 31, 1995, plus, effective February 26,
1996, another $15 million under a Bridge Loan Agreement. In addition to
internally generated funds, at December 31, 1996, the Company has $18.3 million
available under its revolving credit facility and $15 million available under
its Bridge Loan Agreement. The financial covenants to which the Company is
subject include minimum levels of working capital, debt/net worth ratio, net
worth level, interest coverage and certain restrictions on real estate
investments, all as defined in the loan documents. Although the Company would
have been in violation of certain of the covenants during 1996, it obtained
waivers of such violations. Effective January 17, 1997, the Company's liquidity
and access to future borrowings, as required, during the next few years were
significantly enhanced by the "New Equity" and "New Credit Agreement" referred
to in Note 14 to Notes to Consolidated Financial Statements.
The working capital current ratio stood at 1.19:1 at the end of 1996, compared
to 1.12:1 at the end of 1995 and to 1.13:1 at the end of 1994. Of the total
working capital of $56.7 million at the end of 1996, approximately $8 million
may not be converted to cash within the next 12 to 18 months.
Long-term Debt
Long-term debt was $96.9 million at the end of 1996, an increase of $12.7
million compared with $84.2 million at the end of 1995, which was an increase of
$7.2 million compared with $77.0 million at the end of 1994. The ratio of
long-term debt to equity increased from .58:1 at the end of 1994 to .80:1 at the
end of 1995 and 2.72:1 at the end of 1996 due to increases in long-term debt
coupled with the negative impact on
equity of the net losses experienced by the Company in 1995 and 1996.
Stockholders' Equity
The Company's book value per common share stood at $2.14 at December 31, 1996,
compared to $17.06 per common share and $23.79 per common share at the end of
1995 and 1994, respectively. The major factors impacting stockholders' equity
during the three-year period under review were the net losses recorded in 1995
and 1996 and, to a lesser extent, preferred dividends paid or accrued, and stock
issued in partial payment of certain expenses.
At December 31, 1996, there were 1,276 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, 1996.
During 1994 and 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 1995
Amended Revolving Credit Agreement (see Note 3 to Notes to Consolidated
Financial Statements), the Company was required to suspend the payment of
quarterly dividends on its preferred stock until the Bridge Loan commitment was
no longer
- 19 -
outstanding, if a default exists under the terms of the Amended Revolving Credit
Agreement, or if the ratio of long-term debt to equity exceeded 50%. Therefore,
the dividend that normally would have been declared during December of 1995 and
payable on March 15, 1996, as well as subsequent quarterly dividends in 1996,
have not been declared or paid (although they have been fully accrued due to the
"cumulative" feature of the preferred stock). A New Credit Agreement,
superseding the loan agreements referred to above, was approved January 17, 1997
and provides that the Company may not pay cash dividends or make other
restricted payments, as defined, prior to September 30, 1998 and thereafter may
not pay cash dividends or make other restricted payments unless: (i) the Company
is not in default under the New Credit Agreement; (ii) commitments under the
credit facility have been reduced to less than $90 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, adjusted for non-cash charges incurred
in connection with any disposition or write down of any real estate investment,
provided that unadjusted net worth must be at least $60 million:
(In thousands)
Adjusted for 1996
Real Estate
Unadjusted Write Down
October 1, 1998 to December 30, 1998 $161,977 $82,077
December 31, 1998 to March 31, 1999 $167,303 $87,403
April 1, 1999 to June 30, 1999 $170,129 $90,229
July 1, 1999 to September 30, 1999 $172,955 $93,055
October 1, 1999 to January 1, 2000 $175,781 $95,881
For purposes of the New Credit Agreement, net worth shall include the net
proceeds from the sale of the Series B Preferred Stock to the Investors. In
addition, under the terms of the Series B Preferred Stock, the Company may not
pay any cash dividends on its Common Stock until after September 1, 2001, and
then only to the extent such dividends do not exceed in aggregate more than
twenty-five percent (25%) of the Company's consolidated net income available for
distribution to Common shareholders (after preferred dividends); provided,
however, that the Company shall have elected and paid cash dividends on the
Series B Preferred Stock for the preceding four quarters.
The Board of Directors intends to resume payment of dividends as the Company
satisfies the terms of the New Credit Agreement, the provisions of the Series B
Preferred Stock and the Board deems it prudent to do so.
Outlook
Looking ahead, the overall construction backlog at the end of 1996 was $1.518
billion which approximates the 1995 year-end backlog of $1.535 billion. This
backlog has a good balance between building and civil work and a higher overall
estimated profit margin. Approximately 53% of the current backlog relates to
building construction projects which generally represent lower risk, lower
margin work and approximately 47% of the current backlog relates to heavy
construction projects which generally represent higher risk, but correspondingly
higher margin work. During 1996, the Company also adopted a plan to enhance the
profitability of its construction operations by emphasizing gross margin and
bottom line improvement ahead of top line revenue growth. This plan calls for
the Company to focus its financial and human resources on construction
operations which are consistently profitable and to de-emphasize marginal
business units. Consistent with that Plan, the Company currently is closing or
downsizing and refocusing four business units. The Company believes the outlook
for its building and civil construction businesses continues to be promising.
- 20 -
With the sale of the final 21 acres during 1994, the Company's Villages of Palm
Beach Lakes, Florida land was completely sold out. Because of its low book
value, sales of this acreage have provided a major portion of the Company's real
estate profit in recent years. With the sale of this property complete, the
Company's ability to generate profit from real estate sales and the related
gross margin will be reduced as was the case in 1996. In addition, five
projects, which aggregate approximately 6% of the Company's real estate asset
values, are projected to produce an estimated average 3% gross margin over the
period through ultimate disposition. As such, future gross margins from sales of
real estate will be impacted by the operations and/or disposition of these
properties.
With the closing of the new equity transaction and New Credit Agreement becoming
effective on January 17, 1997 (see Note 14 to Notes to Consolidated Financial
Statements), the Company's near term liquidity position has improved
substantially, enabling payments to vendors to generally be made in accordance
with normal payment terms. In order to generate cash and reduce the Company's
dependence on bank debt to fund the working capital needs of its core
construction operations as well as to lower the Company's substantial interest
expense and strengthen the balance sheet in the longer term, the Company will
continue to sell certain real estate assets as market opportunities present
themselves; to actively pursue the favorable conclusion of various 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;
to downsize or close operations with marginal prospects for success; to continue
to restrict the payment of cash dividends on the Company's $1 par value common
stock and depositary convertible exchangeable preferred stock; and to continue
to seek ways to control overhead expenses. In addition, the Company recently
completed a review of all of its real estate assets which resulted in a change
of strategies related to certain of those assets to a new strategy of generating
short-term liquidity of up to an additional $30 million for the Company.
Management believes that cash generated from operations, existing credit lines,
additional borrowings and projected sale of certain real estate assets referred
to above should be adequate to meet the Company's funding requirements for at
least the next twelve months.
Forward-looking Statements
This Management's Discussion and Analysis of Financial Condition and Results of
Operations, including "Outlook" and other sections of this Annual Report,
contain 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 that are based on current expectations, estimates and
projections about the industries in which the Company operates, management's
beliefs and assumptions made by management. Words such as "expects",
"anticipates", "intends", "plans", "believes", "seeks", "estimates", variations
of such words and similar expressions are intended to identify such forward-
looking statements. These statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions which are difficult to
predict. Therefore, actual outcomes and results may differ materially from those
in such forward-looking statements. The Company undertakes no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
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.
- 21 -
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 15, 1997 (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, 1996 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.
Name, Offices Held and Age Year First Elected to Present Office and Business Experience
David B. Perini, Director, Chairman He has served as a Director, President, Chief Executive Officer and
and Chief Executive Officer - 59 Acting Chairman since 1972. He became Chairman on March 17, 1978
and has worked for the Company since 1962 in various capacities.
Prior to being elected President, he served as Vice President and
General Counsel.
Richard J. Rizzo, Executive Vice He has served in this capacity since January
President, Building Construction - 53 1994, which entails overall responsibility for the Company's
building construction operations. Prior thereto, he served as President
of Perini Building Company (formerly known as Mardian Construction
Co.) since 1985, and in various other operating capacities since 1977.
John H. Schwarz, Executive Vice He has served as Executive Vice President, Finance and
President, Finance and Administration since August 1994. He also served as Chief Executive
Administration of the Company - 58 Officer of Perini Land and Development Company, which entails
overall responsibility for the Company's real estate operations
since April 1992 through 1995. Prior to that, he served as Vice President,
Finance and Controls of Perini Land and Development Company. Previously,
he served as Treasurer from August 1984, and Director of Corporate
Planning since May 1982. He joined the Company in 1979 as Manager of
Corporate Development.
Donald E. Unbekant, Executive Vice He has served in this capacity since January 1994, which entails overall
President, Civil Construction - 65 responsibility for the Company's civil construction operations. Prior
thereto, he served in the Metropolitan New York Division of the
Company as President since 1992, Vice President and General Manager since
1990 and Division Manager since 1984.
The Company's officers are elected on an annual basis at the Board of
Directors Meeting immediately following the Shareholders Meeting in May, to hold
such offices until the Board of Directors Meeting following the next Annual
Meeting of Shareholders and until their respective successors have been duly
appointed or until their tenure has been terminated by the Board of Directors,
or otherwise.
- 22 -
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 section entitled "Election of Directors" in the Proxy
Statement, which is incorporated herein by reference.
- 23 -
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, 1996 and 1995 26 - 27
Consolidated Statements of Operations for the three years ended December 31, 1996, 28
1995 and 1994
Consolidated Statements of Stockholders' Equity for the three years ended December 29
31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the three years ended December 31, 1996, 30 - 31
1995 and 1994
Notes to Consolidated Financial Statements 32 - 48
Report of Independent Public Accountants 49
(a)2. The following financial statement schedules are filed as part of this
report:
Pages
Report of Independent Public Accountants on Schedules 50
Schedule I -- Condensed Financial Information of Registrant 51 - 55
Schedule II -- Valuation and Qualifying Accounts and Reserves 56
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 57 through 60. 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, 1996, the Registrant made no
filings on Form 8-K.
- 24 -
Signatures
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 27, 1997
David B. Perini
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities and 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.
Signature Title Date
--------- ----- ----
(i) Principal Executive Officer
David B. Perini Chairman and Chief
Executive Officer March 27, 1997
/s/David B. Perini
------------------
David B. Perini
(ii) Principal Financial Officer
John H. Schwarz Executive Vice President
Finance & Administration March 27, 1997
/s/John H. Schwarz
------------------
John H. Schwarz
(iii) Principal Accounting Officer
Barry R. Blake Vice President and
Controller March 27, 1997
/s/Barry R. Blake
-----------------
Barry R. Blake
(iv) Directors
David B. Perini )
Richard J. Boushka ) By
Marshall M. Criser )
Thomas E. Dailey ) /s/David B. Perini
------------------
Albert A. Dorman ) David B. Perini
Arthur J. Fox, Jr. )
Nancy Hawthorne ) Attorney in Fact
Michael R. Klein ) Dated: March 27, 1997
Douglas J. McCarron )
John H. McHale )
Jane E. Newman )
Bart W. Perini )
Ronald N. Tutor )
- 25 -
Consolidated Balance Sheets
December 31, 1996 and 1995
(In thousands except per share data)
Assets
- ------
1996 1995
---- ----
CURRENT ASSETS:
Cash, including cash equivalents of $9,071 and $29,059 (Note 1) $ 9,745 $ 29,059
Accounts and notes receivable, including retainage of $63,423 and $69,884 188,120 180,978
Unbilled work (Note 1) 35,600 28,304
Construction joint ventures (Notes 1 and 2) 78,233 61,846
Real estate inventory, at the lower of cost or market (Notes 1 and 4) 37,914 14,933
Deferred tax asset (Notes 1 and 5) 3,513 13,039
Other current assets 1,655 2,186
-------- --------
Total current assets $354,780 $330,345
-------- --------
REAL ESTATE DEVELOPMENT INVESTMENTS (Notes 1 and 4):
Land held for sale or development (including land development costs) at
the lower of cost or market $ 21,520 $ 41,372
Investments in and advances to real estate joint ventures
(Notes 2 and 11) 71,253 148,225
Real estate properties used in operations, less accumulated depreciation
of $3,444 in 1995 - 2,964
Other 49 302
-------- --------
Total real estate development investments $ 92,822 $192,863
-------- --------
PROPERTY AND EQUIPMENT, at cost (Note 1):
Land $ 793 $ 809
Buildings and improvements 13,075 13,548
Construction equipment 10,535 15,597
Other equipment 9,726 9,911
-------- --------
$ 34,129 $ 39,865
Less - Accumulated depreciation 23,013 27,299
-------- --------
Total property and equipment, net $ 11,116 $ 12,566
-------- --------
OTHER ASSETS:
Other investments $ 3,999 $ 1,839
Goodwill (Note 1) 1,575 1,638
-------- --------
Total other assets $ 5,574 $ 3,477
-------- --------
$464,292 $539,251
======== ========
The accompanying notes are an integral part of these financial statements.
- 26-
Liabilities and Stockholders' Equity
- ------------------------------------
1996 1995
---- ----
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 3) $ 16,421 $ 5,697
Accounts payable, including retainage of $57,131 and $58,749 183,407 197,052
Advances from construction joint ventures (Note 2) 47,544 34,830
Deferred contract revenue (Note 1) 23,841 23,443
Accrued expenses 26,823 32,778
--------- --------
Total current liabilities $298,036 $293,800
--------- --------
DEFERRED INCOME TAXES AND OTHER LIABILITIES (Notes 1, 5 & 6) $ 31,297 $ 52,663
--------- --------
LONG-TERM DEBT, less current maturities included above (Note 3):
Real estate development $ 4,287 $ 3,660
Other 92,606 80,495
--------- --------
Total long-term debt $ 96,893 $ 84,155
--------- --------
MINORITY INTEREST (Note 1) $ 2,508 $ 3,027
--------- --------
CONTINGENCIES AND COMMITMENTS (Note 11)
STOCKHOLDERS' EQUITY (Notes 1, 7, 8, 9, 10 and 14):
Preferred stock, $1 par value -
Authorized - 1,000,000 shares
Issued and outstanding - 100,000 shares
($25,000 aggregate liquidation preference) $ 100 $ 100
Series A junior participating preferred stock, $1 par value -
Authorized - 200,000
Issued - none - -
Common stock, $1 par value -
Authorized - 15,000,000 shares
Issued - 5,032,427 shares and 4,985,160 shares 5,032 4,985
Paid-in surplus 57,080 57,659
Retained earnings (deficit) (20,666) 52,062
ESOT related obligations ( 3,856) (4,965)
--------- ---------
$ 37,690 $109,841
Less - Common stock in treasury, at cost - 133,779 shares and 265,735 2,132 4,235
--------- --------
shares
Total stockholders' equity $ 35,558 $105,606
--------- --------
$464,292 $539,251
======== ========
- 27 -
Consolidated Statements of Operations
For the years ended December 31, 1996, 1995 & 1994
(In thousands, except per share data)
1996 1995 1994
---- ---- ----
REVENUES (Notes 2 and 13) $1,270,284 $1,101,068 $1,012,045
----------- ----------- ----------
COSTS AND EXPENSES (Notes 2 and 10):
Cost of operations $1,215,806 $1,086,213 $ 960,248
Write down of certain real estate assets (Note 4) 79,900 - -
General, administrative and selling expenses 33,988 37,283 42,985
----------- ----------- ----------
$1,329,694 $1,123,496 $1,003,233
----------- ----------- ----------
INCOME (LOSS) FROM OPERATIONS (Note 13) $ (59,410) $ (22,428) $ 8,812
----------- ----------- ----------
Other income (expense), net (Note 6) (492) 814 (856)
Interest expense (Note 3) (9,871) (8,582) (7,473)
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES $ (69,773) $ (30,196) $ 483
(Provision) credit for income taxes (Notes 1 and 5) (830) 2,611 (180)
----------- ----------- -----------
NET INCOME (LOSS) $ (70,603) $ (27,585) $ 303
=========== =========== ==========
EARNINGS (LOSS) PER COMMON SHARE (Note 1) $ (15.13) $ (6.38) $ (.42)
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
- 28 -
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 1996, 1995 & 1994
(In thousands, except per share data)
ESOT
Preferred Common Paid-In Retained Related Treasury
Stock Stock Surplus Earnings Obligation Stock Total
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Balance-December 31, 1993 $100 $4,985 $59,875 $ 83,594 $(6,982) $(10,429) $131,143
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Net Income - - - 303 - - 303
Preferred stock-cash
dividends declared
($21.25 per share*) - - - (2,125) - - (2,125)
Treasury stock issued in
partial payment of
incentive compensation - - (835) - - 2,444 1,609
Restricted stock awarded - - (39) - - 165 126
Payments related to ESOT -
notes - - - - 973 973
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Balance-December 31, 1994 $100 $4,985 $59,001 $ 81,772 $(6,009) $ (7,820) $132,029
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Net Loss - - - (27,585) - - (27,585)
Preferred stock-cash
dividends declared or
accrued ($21.25 per
share*) - - - (2,125) - - (2,125)
Treasury stock issued in
partial payment of
incentive compensation - - (1,342) - - 3,585 2,243
Payments related to ESOT
notes - - - - 1,044 - 1,044
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Balance-December 31, 1995 $100 $4,985 $57,659 $ 52,062 $(4,965) $ (4,235) $105,606
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Net Loss - - - (70,603) - - (70,603)
Preferred stock
dividends accrued ($21.25
per share*) - - - (2,125) - - (2,125)
Treasury stock issued in
partial payment of
incentive compensation - - (830) - - 1,867 1,037
Payment of director fees - - (102) - - 236 134
Payment of finance fee
(Note 3) - 47 353 - - - 400
Payments related to ESOT
notes - - - - 1,109 - 1,109
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
Balance-December 31, 1996 $100 $5,032 $57,080 $(20,666) $(3,856) $(2,132) $ 35,558
- -------------------------------- ------------- --------- ------------ ------------ -------------- ------------ ------------
*Equivalent to $2.125 per depositary share (see Note 7).
The accompanying notes are an integral part of these financial statements.
- 29 -
Consolidated Statements of Cash Flows
For the years ended December 31, 1996, 1995 & 1994
(In thousands)
Cash Flows from Operating Activities: 1996 1995 1994
-------- -------- --------
Net income (loss) $(70,603) $(27,585) $ 303
Adjustments to reconcile net income (loss) to net cash from
operating activities -
Depreciation and amortization 2,590 2,769 2,879
Non-current deferred taxes and other liabilities (21,366) 19,175 (5,306)
Distributions greater (less) than earnings of joint ventures
and affiliates (4,586) 12,880 2,995
Write down of certain real estate properties 79,900 - -
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 (7,142) (29,358)