WASHINGTON GROUP INTERNATIONAL INC - 10-Q Quarterly Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended

At March 2, 2001, 52,468,687 shares of the registrant's $.01 par value common stock were outstanding.

The registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and has been subject to such filing requirements for the past 90 days. ý Yes o No

WASHINGTON GROUP INTERNATIONAL, INC.
Quarterly Report Form 10-Q for the
Quarter Ended March 2, 2001

WASHINGTON GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 2, 2001 AND MARCH 3, 2000
(In thousands except per share data)
(UNAUDITED)

The accompanying notes are an integral part of the consolidated financial statements.

WASHINGTON GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
AT MARCH 2, 2001 (UNAUDITED) AND DECEMBER 1, 2000
(In thousands except per share data)

The accompanying notes are an integral part of the consolidated financial statements.

WASHINGTON GROUP INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 2, 2001 AND MARCH 3, 2000
(In thousands)
(UNAUDITED)

The accompanying notes are an integral part of the consolidated financial statements.

WASHINGTON GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 2, 2001 AND MARCH 3, 2000
(In thousands)
(UNAUDITED)

The accompanying notes are an integral part of the consolidated financial statements.

WASHINGTON GROUP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars except per share data)

The terms "we," "us" and "our" as used in this quarterly report include Washington Group International, Inc. ("WGI") and its consolidated subsidiaries unless otherwise indicated. The term "Plan of Reorganization" as used in this quarterly report refers to the Second Amended Joint Plan of Reorganization of Washington Group International, Inc., et al., as modified and confirmed by the U.S. Bankruptcy Court for the District of Nevada on December 21, 2001.

We were originally incorporated in Delaware on April 28, 1993 under the name Kasler Holding Company. In April 1996, we changed our name to Washington Construction Group, Inc. On September 11, 1996, we purchased Morrison Knudsen Corporation, which we refer to as "Old MK," and changed our name to Morrison Knudsen Corporation. On September 15, 2000, we changed our name to Washington Group International, Inc.

We are an international provider of a broad range of design, engineering, construction, construction management, facilities and operations management, environmental remediation and mining services to diverse public and private sector clients, including (i) engineering, construction and operations and maintenance services in nuclear and fossil power markets; (ii) diverse engineering and construction and construction management services for the highway and bridge, airport and seaport, dam, tunnel, water resource, railway and commercial building markets; (iii) engineering, design, procurement, construction and construction management services to industrial companies; (iv) contract mining, technical and engineering services for the metals, precious metals, coal, minerals and minerals processes markets; (v) comprehensive nuclear and other environmental and hazardous substance remediation services for governmental and private-sector clients and (vi) weapons and chemical demilitarization programs for governmental and private-sector clients. In providing these services, we enter into three basic types of contracts: fixed-price or lump-sum contracts providing for a fixed price for all work to be performed, fixed-unit-price contracts providing for a fixed price for each unit of work to be performed, and cost-type contracts providing for reimbursement of costs plus a fee. Both anticipated income and economic risk are greater under fixed-price and fixed-unit-price contracts than under cost-type contracts. Engineering, construction management and environmental and hazardous substance remediation contracts are typically awarded pursuant to a cost-type contract.

We participate in construction joint ventures, often as sponsor and manager of projects, that are formed for the sole purpose of bidding, negotiating and completing specific projects. We also participate in two incorporated mining ventures: Westmoreland Resources, Inc., a coal mining company in Montana, and MIBRAG mbH, a company that operates lignite coal mines and power plants in Germany. On March 22, 1999, we and BNFL Nuclear Services, Inc. ("BNFL"), an unrelated entity, acquired the government and environmental services businesses of CBS Corporation (now Viacom, Inc.). We refer to these businesses as the "Westinghouse Businesses." The Westinghouse Businesses currently constitute our Westinghouse Government Services Group ("WGSG"), which is part of our Government operating unit. On July 7, 2000, we purchased from Raytheon Company ("Raytheon") and Raytheon Engineers & Constructors International, Inc. ("RECI") the capital stock of the subsidiaries of RECI, and specified other assets of RECI and we assumed specified liabilities of RECI. The businesses that we purchased provide engineering, design, procurement, construction, operation, maintenance and other services on a worldwide basis. See Note 3, "Acquisition of Raytheon Engineers & Constructors."

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These consolidated financial statements include the accounts of WGI and all of its majority-owned subsidiaries and certain construction joint ventures. Investments in non-consolidated construction joint ventures and mining ventures are accounted for using the equity method. For these non-consolidated construction joint ventures, our proportionate share of revenue, cost of revenue and gross profit (loss) is included in the consolidated statements of operations, and equity in net earnings of our incorporated mining ventures is accounted for on the equity method. All significant intercompany transactions and accounts have been eliminated in consolidation.

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our annual report on Form 10-K for the fiscal year ended December 1, 2000. The comparative balance sheet and related disclosures at December 1, 2000 have been derived from the audited balance sheet and consolidated footnotes referred to above.

In our opinion, the accompanying unaudited interim consolidated financial statements reflect all adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented.

The results of operations for the interim periods presented in these unaudited interim consolidated financial statements are not necessarily indicative of results to be expected for the full year, and future operating results may not be comparable to historical operating results as a result of our acquisition of RE&C, as described below, effective July 7, 2000; our filing for protection under Chapter 11 of the U.S. Bankruptcy Code on May 14, 2001; our subsequent emergence therefrom on January 25, 2002; and the implementation of fresh-start reporting on February 1, 2002. See Note 3, "Acquisition of Raytheon Engineers & Constructors" and Note 4, "Reorganization Case and Fresh-start Reporting."

Effective December 1, 1998, we adopted a 52/53 week fiscal year ending on the Friday closest to November 30.

The preparation of our consolidated financial statements in conformity with generally accepted accounting principles necessarily requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and costs during the reporting periods. Actual results could differ from those estimates. On an ongoing basis, we review our estimates based on information that is currently available. Changes in facts and circumstances may cause us to revise estimates.

Certain reclassifications have been made to prior period consolidated financial statements to conform to the current period presentation.

On July 7, 2000, pursuant to a stock purchase agreement dated April 14, 2000 (the "Stock Purchase Agreement"), we purchased from Raytheon and RECI (collectively with Raytheon, the "Sellers") the capital stock of the subsidiaries of RECI and specified other assets of RECI, and we assumed specified liabilities of RECI. The businesses that we purchased, hereinafter called "RE&C", provide engineering, design, procurement, construction, operation, maintenance and other services on a worldwide basis. We financed the acquisition by obtaining new senior secured financing facilities (the

"RE&C Financing Facilities") and issuing senior unsecured notes due July 1, 2010 (the "Senior Unsecured Notes"). See Note 7, "Credit Facilities—RE&C Financing Facilities" for a more detailed description of the terms of the RE&C Financing Facilities and Senior Unsecured Notes.

The purchase price paid at the closing of the acquisition on July 7, 2000 was $53,000 in cash and the assumption of net liabilities originally estimated at $450,000. We also incurred acquisition costs of $7,705. The cash portion of the purchase price paid at closing was determined based upon a formula contained in the Stock Purchase Agreement and represented the estimated amount of the Adjusted Non-Current Net Assets and Adjusted Net Working Capital (as the terms are defined in the Stock Purchase Agreement) that we acquired, valued as of April 30, 2000. The amounts of Adjusted Non-Current Net Assets and Adjusted Net Working Capital were subject to post-closing finalization, including an audit by independent accountants, and other adjustments to the price paid at closing. In addition, the Stock Purchase Agreement contained a provision requiring us either to pay the Sellers, or to be paid by the Sellers, the net amount of cash the Sellers either advanced to or withdrew from RE&C between April 30, 2000 and July 7, 2000. After closing, we paid the Sellers $84,400 representing the net amount of cash advanced or paid by the Sellers for the use or benefit of RE&C between April 30, 2000 and July 7, 2000.

The Stock Purchase Agreement provided that the Sellers would retain all non-restricted cash and cash equivalents held by RE&C at the close of business on April 30, 2000 (the "Cut-Off Date Cash Balances"). At closing, for purposes of administrative convenience, RE&C kept all cash held by it ($15,790), and we paid the Sellers an additional $30,800 for the cash balances on April 30, 2000. That amount was subject to post-closing verification by us and adjustment in the event it was not equal to the Cut-Off Date Cash Balances held by RE&C. We subsequently verified the amount and no adjustment was required. In total, we paid net cash of $160,130 for the RE&C acquisition.

RECI retained, among other assets, all of its interest in and rights with respect to some of the existing contracts. In addition, the Stock Purchase Agreement provided that the contracts related to four specified construction projects would be transferred to RECI, and RE&C would enter into subcontracts to perform, on a cost-reimbursed basis, all of RECI's obligations under those contracts. Because the customer consents required to transfer the four contracts to RECI could not be obtained as of closing, we agreed to remain the contract party and continued to be directly obligated to the customers and other third parties under the contracts relating to the four projects. Accordingly, we and the Sellers agreed that the Sellers would provide us with full indemnification with respect to any risks associated with those contracts, which arrangement accomplished the original intent of the Stock Purchase Agreement. Under the Stock Purchase Agreement, we agreed that we would complete the four specified projects for the Sellers' account and the Sellers agreed to reimburse our costs and to share equally with us any positive variance between actual costs and estimated costs. The Sellers also agreed to indemnify us against any losses, claims or liabilities under the contracts relating to such projects, except losses, claims or liabilities resulting from our gross negligence or willful misconduct, against which we would indemnify the Sellers.

The Stock Purchase Agreement did not contain a fixed purchase price at closing for the transaction, but rather, as noted above, provided that the purchase price would be adjusted upward or downward post-closing based on the effect on a formula that would be applied to an audited RE&C April 30, 2000 balance sheet to be prepared by the Sellers and audited by the Sellers' independent accountants. After closing, we extended the delivery date for the final audited RE&C balance sheet for April 30, 2000 to January 14, 2001.

As part of the acquisition of RE&C, we undertook a comprehensive review of existing contracts that we acquired for the purpose of making a preliminary allocation of the acquisition price to the net assets acquired. As part of this review, we evaluated, among other matters, RECI's estimates of the costs at completion of the long-term contracts that were underway as of July 7, 2000 ("Acquisition Date

EAC's"). During this process, information came to our attention that raised questions as to whether the Acquisition Date EAC's needed to be adjusted significantly. Our review process involved the analysis of an extensive amount of supporting data, including analysis of numerous, large construction projects in various stages of completion. Based on the information available at the time of the review, the preliminary results of this review indicated that the Acquisition Date EAC's of numerous long-term contracts required substantial adjustment. The adjustments resulted in contract losses or lower than market rate margins. As a result, in our report on Form 10-Q for the quarter ended September 1, 2000, we significantly decreased the carrying value of the net assets acquired and increased the goodwill associated with the transaction. Because many of the contracts we acquired contained either unrecorded losses or lower than market profits, these contracts were adjusted to their estimated fair value at the July 7, 2000 acquisition date in order to allow for a reasonable profit margin for completing the contracts, and a gross margin or normal profit reserve of $233,135 was established and recorded in billings in excess of cost and estimated earnings on uncompleted contracts.

Our review of the RE&C contracts and the purchase price allocation process continued thereafter and, based on the results of that review, we expected that, as a result of the purchase price adjustment process, the purchase price of RE&C would be adjusted downward by a significant amount. Subsequent to the quarter ended September 1, 2000, we completed the review and made additional adjustments to the contracts we had acquired, resulting from a more accurate determination of the actual contract status at the acquisition date.

The normal profit reserve has been reduced as work has been performed on the affected projects. The reduction results in reductions to cost of revenue and corresponding increases in gross profit, but has no effect on cash.

The establishment of the normal profit reserve and decreases in cost of revenue for the periods indicated are as follows:

Normal profit reserve
July 7, 2000 balance	$	233,135
Cost of revenue (decrease)		(24,525	)

September 1, 2000 balance		208,610
Cost of revenue (decrease)		(25,746	)

December 1, 2000 balance		182,864
Cost of revenue (decrease)		(30,498	)

March 2, 2001 balance	$	152,366

An audited RE&C April 30, 2000 balance sheet was not delivered by the Sellers, and therefore, on February 27, 2001, we filed a lawsuit against the Sellers seeking specific performance of the purchase price adjustment provisions of the Stock Purchase Agreement. On March 8, 2001, we amended our complaint to also seek money damages for misstatements and omissions allegedly made by the Sellers. Our lawsuit seeking specific performance was successful, and we and the Sellers thereafter commenced an arbitration proceeding to determine the purchase price adjustment. A significant arbitration claim was ultimately filed against the Sellers, as discussed below.

During the spring of 2000, in connection with the acquisition of RE&C, we received from the Sellers audited RECI financial statements at December 31, 1999 and 1998 and for each of the three years in the period ended December 31, 1999 and unaudited RECI financial statements as of and for the three months ended April 2, 2000 and April 4, 1999. In accordance with federal securities law disclosure requirements, we filed on July 13, 2000 those audited and unaudited financial statements and our related unaudited pro forma condensed combined financial statements as of and for the year ended December 3, 1999 and for the quarter ended March 3, 2000 in a current report on Form 8-K. In our

current report on Form 8-K filed March 8, 2001, we advised that, for the reasons stated in such report, the foregoing audited and unaudited financial statements of RECI, and our related unaudited pro forma condensed combined financial statements, which were derived therefrom, no longer should be relied upon.

On March 2, 2001, we announced that we faced severe near-term liquidity problems as a result of our acquisition of RE&C. On March 9, 2001, because of those liquidity problems, we suspended work on two large construction projects located in Massachusetts that were part of the acquisition. The Sellers had provided the customer with parent performance guarantees on those two contracts and the guarantees remained in effect after closing. Those performance guarantees required the Sellers to complete the work on the contracts in the event RE&C (owned by us as of July 7, 2000) did not complete them. The contracts were fixed-price in nature and our review of cost estimates indicated that there were substantial unrecognized future costs in excess of future contract revenues that were not reflected in RECI's Acquisition Date EAC's.

Upon our suspension of work, the Sellers undertook performance of those contracts pursuant to the outstanding performance guarantees. We, however, were obligated under the Stock Purchase Agreement to indemnify the Sellers for losses they incurred under those guarantees. The Sellers also assumed obligations under other contracts, primarily in the RE&C power generation construction business unit that resulted in significant additional indemnification obligations by us to the Sellers. As a result of costs it incurred to perform under the parent guarantees, the Sellers filed a claim against us in the bankruptcy process for approximately $940,000. As further discussed below, this claim was ultimately settled without payment to the Sellers in connection with the completion of our Plan of Reorganization. See Note 4, "Reorganization Case and Fresh-start Reporting." Until such settlement, we retained all liabilities related to the contracts, including normal profit reserves, on our balance sheet as accrued liabilities included in liabilities subject to compromise.

On May 14, 2001, because of the severe near-term liquidity problems resulting from our acquisition of RE&C, we filed for protection under Chapter 11 of the U.S. Bankruptcy Code. At various times between May 14, 2001 and November 20, 2001, we "rejected" numerous contracts (construction contracts, leases and others), as that term is used in the legal sense in bankruptcy law. Included in these rejections were numerous contracts that we acquired from the Sellers. Effective August 27, 2001, we also rejected the Stock Purchase Agreement.

During the pendency of the bankruptcy, we continued to negotiate with the Sellers a settlement of our outstanding litigation with respect to the RE&C acquisition. As a result of those negotiations, we reached a settlement regarding all issues and disputes between the parties, which settlement was incorporated into our Plan of Reorganization (the "Raytheon Settlement").

Under the Raytheon Settlement, the Sellers agreed that, with respect to their bankruptcy claim, the Sellers would be considered unpaid, unsecured creditors having rights in the unsecured creditor class, but that, upon completion of our reorganization, they would waive any rights to receive any distributions to be given to unsecured creditors with allowed claims. In exchange, we agreed to dismiss all litigation against the Sellers related to the acquisition, and to discontinue the purchase price adjustment and binding arbitration process. We released all claims based on any act occurring prior to our emergence from bankruptcy protection, including all claims against the Sellers, their affiliates and directors, officers, employees, agents and specified professionals. The Sellers released all claims based on any act occurring prior to our emergence from bankruptcy protection, including any claims related to any contracts or projects not assumed by us during the bankruptcy cases, against us and our directors, officers, employees, agents and professionals. No cash was exchanged as a result of the settlement.

In addition, under a services agreement entered into as a part of the Raytheon Settlement, the Sellers will direct the process for resolving pre-petition claims asserted against us in the bankruptcy

case relating to any contract or project that we rejected and that involved some form of support arrangement from the Sellers. We will assist the Sellers in settling or litigating various claims related to those rejected projects. We will also complete work as requested by the Sellers on those rejected projects, and will be reimbursed on a cost-reimbursable basis. The Sellers may, with respect to the rejected projects described above, pursue or settle any of our claims against project owners, contractors or other third parties and will retain any resulting proceeds, except that for specified projects, recoveries in excess of amounts paid by the Sellers will be returned to us.

While this settlement eliminated our ability to continue to seek to collect our arbitration claim, it was necessary because the Sellers' large unsecured claims in the bankruptcy were substantially impeding our reorganization process. Without this settlement, a successful emergence from Chapter 11 would have been delayed or impossible.

We made adjustments to the preliminary purchase price allocation of the RE&C acquisition price to the net assets acquired that was included in the unaudited quarterly information at September 1, 2000, including the following, as a result of completing our review:

Cost of revenue	$	(140,954	)
Impairment of assets		(4,685	)
Other		1,158

Total	$	(144,481	)

We accounted for the acquisition of RE&C as a purchase business combination. The results of our operations, financial position and cash flows include the operations of RE&C from the July 7, 2000 acquisition date. We made an allocation of the aggregate purchase price to the net assets we acquired,

with the remainder recorded as goodwill, on the basis of estimates of fair values after adjustments for the arbitration claim against the Sellers and adjustments charged to operations as follows:

Working capital	$	(958,636	)
Arbitration claim receivable		444,055
Investments and other assets		42,633
Property and equipment		139,868
Pension and post-retirement benefit obligations		(16,427	)
Deferred income taxes		(83,222	)
Other non-current liabilities		(88,351	)
Goodwill		680,210

Total acquisition costs, net of cash acquired of $15,790	$	160,130

As a result of the foregoing events and the substantial negative cash flows of RE&C, we analyzed for impairment the assets acquired in the acquisition of RE&C, including goodwill. Based upon the results of our analysis, we recorded a charge against income during the quarter ended December 1, 2000 for the following impairments of acquired assets:

Goodwill, net of accumulated amortization of $8,727		$	671,483
Indemnification amounts receivable from the Sellers under the Stock Purchase Agreement:
	Billed and unbilled receivables on closed contracts		46,562
	Partial indemnification of loss on government contract		25,115
	Reimbursement for restructuring costs		3,026
	Reimbursement of legal fees		1,305

Impairment of assets		$	747,491

As a result of the acquisition, we incurred significant costs associated with the integration and merger of the two companies. They consisted primarily of incremental costs for legal, accounting, consulting and other fees, including business consulting, promotion and systems integration. For the three months ended March 2, 2001, those costs were $5,920.

On May 14, 2001, because of severe near-term liquidity issues, WGI and several but not all of its direct and indirect domestic subsidiaries (the "Debtors") filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Nevada. The various individual bankruptcy cases were administered jointly.

Under Chapter 11, certain claims against a debtor in existence prior to the filing of a petition for relief under the federal bankruptcy laws ("Pre-petition Claims") are stayed while the debtor continues business operations as a debtor-in-possession. Each of the Debtors in this case continued to operate its business and manage its property as a debtor-in-possession during the pendency of the case. Subsequent to the filing date, additional Pre-petition Claims resulted from the rejection of executory contracts, including leases, and from the resolution of claims for contingencies and other disputed amounts. The Pre-petition Claims are reflected in the balance sheets as of dates between May 14, 2001 and February 1, 2002 as "liabilities subject to compromise." Secured claims, primarily representing liens on the Debtors' assets related to the RE&C Financing Facilities, were also stayed during the pendency of the bankruptcy.

The Debtors received approval from the bankruptcy court under first-day orders to pay and did pay specified pre-petition obligations, including employee wages and benefits, foreign vendors, tax obligations and critical vendor obligations.

Our ability to continue as a going-concern during the pendency of the bankruptcy was dependent upon obtaining sufficient debtor-in-possession financing to enable us to continue operations while in bankruptcy, the confirmation of a plan of reorganization by the bankruptcy court and resolution of disputes between the Sellers and us. For a discussion of these disputes, see Note 3, "Acquisition of Raytheon Engineers & Constructors."

As of May 14, 2001, we obtained a Secured Super-Priority Debtor in Possession Revolving Credit Facility (the "DIP Facility") with a commitment of $195,000 that was available to provide both ongoing funding and to support letters of credit. On June 5, 2002, the DIP Facility lenders approved an increase in the total commitment from $195,000 to $220,000. See Note 7, "Credit Facilities—DIP Facility." The DIP Facility was available and utilized as needed throughout the pendency of the bankruptcy, had no outstanding balance at November 30, 2001 and was replaced by a secured $350,000, 30-month revolving credit facility (the "Senior Secured Revolving Credit Facility") entered into on January 25, 2002. For a detailed discussion on the Senior Secured Revolving Credit Facility, see Note 7, "Credit Facilities—Senior Secured Revolving Credit Facility."

On December 21, 2001, the bankruptcy court entered an order confirming our Plan of Reorganization. Substantially all liabilities of the Debtors as of the date of the bankruptcy filing were subject to settlement under our Plan of Reorganization. The order of the bankruptcy court confirming our Plan of Reorganization is the subject of two appeals filed by three of our former unsecured creditors. Those appeals currently are pending in the U.S. District Court for the District of Nevada. None of the appellants sought to stay the implementation of our Plan of Reorganization as part of its appeal. We believe that the outcomes of these proceedings, individually and collectively, will not have a material adverse effect on our business, financial condition, results of operations or cash flows.

			PAGE
PART I. FINANCIAL INFORMATION
PART I
Item 1.	Consolidated Financial Statements and Notes Thereto
		Statements of Income for the Three Months Ended March 2, 2001 and March 3, 2000	I-1
		Balance Sheets at March 2, 2001 and December 1, 2000	I-2
		Condensed Statements of Cash Flows for the Three Months Ended March 2, 2001 and March 3, 2000	I-3
		Statements of Comprehensive Income for the Three Months Ended March 2, 2001 and March 3, 2000	I-4
		Notes to Financial Statements	I-5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		I-29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		I-44
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		II-1
Item 3.	Defaults Upon Senior Securities		II-1
Item 6.	Exhibits and Reports on Form 8-K		II-1
SIGNATURES

		2001			2000
Operating revenue		$	1,015,239		$	593,902
Equity in net income of mining ventures			1,610			1,543

Total revenue			1,016,849			595,445
Cost of revenue			(973,182	)		(570,243	)

Gross profit			43,667			25,202
General and administrative expenses			(15,605	)		(5,365	)
Goodwill amortization			(5,341	)		(4,176	)
Integration and merger costs			(5,920	)		—

Operating income			16,801			15,661
Investment income			5,052			749
Interest expense			(20,604	)		(2,330	)
Other income (expense), net			(3,498	)		43

Income (loss) before income taxes and minority interests			(2,249	)		14,123
Income tax (expense) benefit			626			(5,479	)
Minority interests in income of consolidated subsidiaries			(776	)		402

Net income (loss)		$	(2,399	)	$	9,046

Income (loss) per share
	Basic	$	(.05	)	$	.17
	Diluted		(.05	)		.17
Common shares used to compute income (loss) per share
	Basic		52,468			52,350
	Diluted		52,468			52,410

	2001			2000
ASSETS
Current assets
Cash and cash equivalents	$	240,534		$	393,433
Securities available for sale, at fair value		32,645			38,345
Accounts receivable, including retentions of $38,773 and $41,934		631,916			575,545
Unbilled receivables		305,604			257,744
Inventories		35,435			20,575
Refundable income taxes		3,337			3,837
Investments in and advances to construction joint ventures		46,492			55,693
Deferred income taxes		198,539			197,147
Other		53,498			38,956

Total current assets		1,548,000			1,581,275

Investments and other assets
Investments in mining ventures		72,301			66,008
Goodwill, net of accumulated amortization of $34,154 and $28,965		259,880			265,068
Deferred income taxes		403,095			404,414
Other		73,034			80,671

Total investments and other assets		808,310			816,161

Property and equipment, at cost
Construction equipment		309,089			306,401
Land and improvements		8,058			8,056
Buildings and improvements		36,263			37,453
Equipment and fixtures		104,592			99,851

Total property and equipment		458,002			451,761
Less accumulated depreciation		(209,275	)		(193,215	)

Property and equipment, net		248,727			258,546

Total assets	$	2,605,037		$	2,655,982

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Current portion of long-term debt	$	4,000		$	4,516
Accounts payable and subcontracts payable, including retentions of $16,306 and $10,125		279,212			373,080
Billings in excess of cost and estimated earnings on uncompleted contracts		1,314,112			1,276,846
Estimated costs to complete long-term contracts		79,552			81,595
Accrued salaries, wages and benefits, including compensated absences of $36,357 and $29,208		130,575			126,031
Income taxes payable		666			1,466
Other accrued liabilities		105,495			106,035

Total current liabilities		1,913,612			1,969,569

Non-current liabilities
Long-term debt		691,929			692,874
Self-insurance reserves		176,314			176,087
Pension and postretirement benefit obligations		176,095			175,856
Environmental remediation obligations		8,017			7,983
Other non-current liabilities		20,938			18,783

Total non-current liabilities		1,073,293			1,071,583

Contingencies and commitments
Minority interests		84,104			79,748

Stockholders' equity (deficit)
Preferred stock, par value $.01, 10,000 shares authorized		—			—
Common stock, par value $.01, authorized 100,000 shares; issued 54,486		545			545
Capital in excess of par value		250,118			250,112
Stock purchase warrants		6,550			6,550
Accumulated deficit		(682,079	)		(679,680	)
Treasury stock, 2,019 shares, at cost		(23,192	)		(23,192	)
Accumulated other comprehensive income (loss)		(17,914	)		(19,253	)

Total stockholders' equity (deficit)		(465,972	)		(464,918	)

Total liabilities and stockholders' equity (deficit)	$	2,605,037		$	2,655,982

		2001			2000
Operating activities
Net income (loss)		$	(2,399	)	$	9,046
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
	Depreciation of property and equipment		17,891			8,300
	Amortization of goodwill		5,341			4,176
	Amortization of prepaid loan fees		1,116			189
	Normal profit		(30,499	)		—
	Deferred income taxes		(1,667	)		3,543
	Minority interest in net income (loss) of consolidated subsidiaries		718			(2,873	)
	Equity in net income of mining ventures less dividends received		(1,610	)		(1,543	)
	Gain on sale of assets, net		(1,413	)		(486	)
	Decrease (increase) in net operating assets		(141,720	)		17,725

Net cash provided (used) in operating activities			(154,242	)		38,077

Investing activities
Property and equipment acquisitions			(11,292	)		(10,150	)
Property and equipment disposals			4,225			1,579
Purchases of securities available for sale			(9,239	)		(6,364	)
Sale and maturities of securities available for sale			15,527			4,722
Other investing activities			—			3,634

Net cash used by investing activities			(779	)		(6,579	)

Financing activities
Net repayments on long-term revolving line of credit			(1,516	)		(15,000	)
Contributions from (distributions to) minority interests			3,638			(18,640	)

Net cash provided (used) by financing activities			2,122			(33,640	)

Decrease in cash and cash equivalents			(152,899	)		(2,142	)
Cash and cash equivalents at beginning of period			393,433			52,475

Cash and cash equivalents at end of period		$	240,534		$	50,333

Supplemental disclosure of cash flow information:
	Interest paid	$	27,326		$	2,014
	Income tax paid, net		2,068			694

			2001			2000
Net income (loss)			$	(2,399	)	$	9,046

Other comprehensive income (loss), net of tax:
	Foreign currency translation adjustments			1,866			(3,587	)
	Unrealized gains (losses) on marketable securities:
		Unrealized net holding gain (loss)		359			(270	)
		Less: Reclassification adjustment for net gains realized in net income		(249	)		—
	Derivatives designated as cash flow hedges:
		Cumulative effect of adoption of accounting principle		(1,161	)		—
		Loss on settled or terminated contracts		524			—

Other comprehensive income (loss), net of tax				1,339			(3,857	)

Comprehensive income (loss)			$	(1,060	)	$	5,189