UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6314
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1717070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
73 MT. WAYTE AVENUE, FRAMINGHAM, MASSACHUSETTS 01701-9160
(Address of principal executive offices)
(Zip code)
(508)-628-2000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ___ No X
Number of shares of common stock of registrant outstanding at April 30, 2003: 22,664,135
Page 1 of 28
PERINI CORPORATION & SUBSIDIARIES
INDEX
Page Number
Part I. - Financial Information:
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets- 3
March 31, 2003 and December 31, 2002
Consolidated Condensed Statements of Income - 4
Three Months ended March 31, 2003 and 2002
Consolidated Condensed Statements of Cash Flows - 5
Three Months ended March 31, 2003 and 2002
Notes to Consolidated Condensed Financial Statements 6 - 15
Item 2. Management's Discussion and Analysis of the Consolidated Financial
Condition and Results of Operations 16 - 19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 20
Part II. - Other Information:
Item 1. Legal Proceedings 21
Item 2. Changes in Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21 - 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22 - 25
Signatures 26
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 27 - 28
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, 2003 AND DECEMBER 31, 2002
(In Thousands)
ASSETS MARCH 31, DEC. 31,
2003 2002
------------- --------------
Cash and Cash Equivalents (Note 4) $ 69,116 $ 47,031
Accounts and Notes Receivable 234,875 218,172
Unbilled Work 103,752 112,563
Land Held for Sale, Net 2,070 2,173
Other Current Assets 4,645 1,992
------------- --------------
Total Current Assets $ 414,458 $ 381,931
------------- --------------
Property and Equipment, less Accumulated Depreciation of $21,201 in 2003 and
$19,858 in 2002 $ 16,837 $ 14,042
------------- --------------
Other Assets $ 24,759 $ 6,416
------------- --------------
$ 456,054 $ 402,389
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Maturities of Long-term Debt (Note 7) $ 2,206 $ 416
Accounts Payable 205,729 162,456
Deferred Contract Revenue 66,226 65,868
Accrued Expenses 31,928 37,283
------------- --------------
Total Current Liabilities $ 306,089 $ 266,023
------------- --------------
Long-term Debt, less current maturities included above (Note 7) $ 13,745 $ 12,123
------------- --------------
Other Long-term Liabilities (Note 10) $ 38,683 $ 37,594
------------- --------------
Contingencies and Commitments (Note 6)
Stockholders' Equity:
Preferred Stock $ 100 $ 100
Series A Junior Participating Preferred Stock - -
Stock Purchase Warrants 2,233 2,233
Common Stock 22,725 22,725
Paid-In Surplus 95,015 95,546
Retained Earnings (Deficit) (1,998) (13,417)
Less - Treasury Stock (965) (965)
------------- --------------
$ 117,110 $ 106,222
Accumulated Other Comprehensive Loss (19,573) (19,573)
------------- --------------
Total Stockholders' Equity $ 97,537 $ 86,649
------------- --------------
$ 456,054 $ 402,389
============= ==============
The accompanying notes are an integral part of these financial statements.
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(In Thousands, Except Share Data)
THREE MONTHS
ENDED MARCH 31,
------------------------------
2003 2002
------------- -------------
Revenues (Note 11) $ 291,260 $ 321,370
Cost of Operations 277,557 308,371
------------- -------------
Gross Profit $ 13,703 $ 12,999
General and Administrative Expenses 8,808 7,066
------------- -------------
INCOME FROM OPERATIONS (Note 11) $ 4,895 $ 5,933
Other Income (Expense), Net (174) (328)
Interest Expense (202) (400)
------------- -------------
Income before Income Taxes $ 4,519 $ 5,205
Credit for Income Taxes (Note 8) 6,900 10
------------- -------------
NET INCOME $ 11,419 $ 5,215
============= =============
Less: Accrued Dividends on $21.25 Preferred Stock (Note 10) (531) (531)
------------- -------------
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS $ 10,888 $ 4,684
============= =============
BASIC EARNINGS PER COMMON SHARE (Note 9) $ 0.48 $ 0.21
============= =============
DILUTED EARNINGS PER COMMON SHARE (Note 9) $ 0.48 $ 0.20
============= =============
DIVIDENDS PER COMMON SHARE (Note 10) $ - $ -
============= =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 9):
BASIC 22,664,135 22,664,135
============= =============
DILUTED 22,678,179 23,562,990
============= =============
The accompanying notes are an integral part of these financial statements.
PERINI CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(In Thousands)
THREE MONTHS
ENDED MARCH 31,
----------------------------
2003 2002
------------ -------------
Cash Flows from Operating Activities:
Net income $ 11,419 $ 5,215
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 832 887
Cash provided from (used by) changes in components of working capital other
than cash, current maturities of long-term debt and deferred tax asset 24,207 (10,821)
Net deferred tax asset (7,000) -
Other long-term liabilities 558 531
Other non-cash items, net 6 (16)
------------ -------------
NET CASH PROVIDED FROM (USED BY) OPERATING ACTIVITIES $ 30,022 $ (4,204)
------------ -------------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment $ 114 $ 25
Acquisition of property and equipment (3,190) (2,083)
Acquisition of James A. Cummings, Inc., net of cash balance acquired (8,613) -
Investment in land held for sale, net (50) (324)
Proceeds from sale of marketable securities 380 -
Investment in other activities 10 (461)
------------ -------------
NET CASH USED BY INVESTING ACTIVITIES $ (11,349) $ (2,843)
------------ -------------
Cash Flows from Financing Activities:
Proceeds from long-term debt $ 3,529 $ 9,816
Reduction of long-term debt (117) (9,889)
------------ -------------
NET CASH PROVIDED FROM (USED BY) FINANCING ACTIVITIES $ 3,412 $ (73)
------------ -------------
Net Increase (Decrease) in Cash $ 22,085 $ (7,120)
Cash at Beginning of Year 47,031 56,542
------------ -------------
Cash at End of Period $ 69,116 $ 49,422
============ =============
Supplemental Disclosure of Cash Paid During the Period For:
Interest $ 221 $ 378
============ =============
Income tax payments $ 501 $ 348
============ =============
The accompanying notes are an integral part of these financial statements.
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) Basis of
Presentation
The
unaudited consolidated condensed financial statements presented herein have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and note disclosures required by accounting principles
generally accepted in the United States of America. These statements should be
read in conjunction with the financial statements and notes thereto included in
the Company’s Form 10-K for the year ended December 31, 2002. In the
opinion of management, the accompanying unaudited condensed financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Company’s financial position as of March
31, 2003 and December 31, 2002 and results of operations and cash flows for the
three month periods ended March 31, 2003 and 2002. The results of operations for
the three month period ended March 31, 2003 may not be indicative of the results
that may be expected for the year ending December 31, 2003 because the
Company’s results are primarily generated from a limited number of
significant active construction contracts. Therefore, such results can vary
depending on the timing of progress achieved and changes in estimated
profitability of projects being reported.
(2) Significant Accounting Policies
The
significant accounting policies followed by the Company and its subsidiaries in
preparing its consolidated financial statements are set forth in Note (1) to
such financial statements included in Form 10-K for the year ended December 31,
2002. The Company has made no significant change in these policies during 2003.
(3)
Stock-Based Compensation
The
Company accounts for stock options granted to employees and directors using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees”, and related
Interpretations. No stock-based employee compensation cost is reflected in net
income since all stock options granted by the Company had an exercise price
equal to or greater than the fair market value of the underlying common stock on
the date of grant. The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value recognition
provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”,
to stock-based employee and director compensation (in thousands). The effect of
applying SFAS No. 123 in this pro forma disclosure may not be indicative of
future charges.
Three Months Ended
March 31,
------------------------------
2003 2002
------------- ------------
Net income, as reported $ 11,419 $ 5,215
Less: Total stock-based employee compensation expense
determined under fair value based method for all awards - (708)
------------- ------------
Net income, pro forma $ 11,419 $ 4,507
============= ============
Basic earnings per common share:
As reported (see Note 9) $ 0.48 $ 0.21
Pro forma $ 0.48 $ 0.18
Diluted earnings per common share:
As reported (see Note 9) $ 0.48 $ 0.20
Pro forma $ 0.48 $ 0.17
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(4) Cash and Cash Equivalents
Cash
equivalents include short-term, highly liquid investments with original
maturities of three months or less.
Cash and cash equivalents as reported in the accompanying Consolidated Condensed Balance Sheets consist of amounts held by the Company that are available for general corporate purposes and the Company’s proportionate share of amounts held by construction joint ventures that are available only for joint venture-related uses. Cash held by construction joint ventures is distributed from time to time to the Company and to the other joint venture participants in accordance with their percentage interest after the joint venture partners determine that a cash distribution is prudent. Cash distributions received by the Company from its construction joint ventures are then available for general corporate purposes. At March 31, 2003 and December 31, 2002, cash and cash equivalents consisted of the following (in thousands):
March 31, Dec. 31,
2003 2002
------------- -----------
Corporate cash and cash equivalents (available
for general corporate purposes) $ 40,268 $ 11,220
Company's share of joint venture cash and
cash equivalents (available only for joint venture
purposes, including future distributions) 28,848 35,811
------------- -----------
$ 69,116 $ 47,031
============= ===========
(5)
Acquisition of James A. Cummings, Inc.
On
January 23, 2003, the Company completed the acquisition of 100% of the
outstanding common stock of James A. Cummings, Inc. (“Cummings”), a
privately held construction company based in Fort Lauderdale, Florida, for $20
million in cash, financed in part through the Company’s credit facility.
Cummings is an established building construction and construction management
company in the South Florida region specializing in the construction of schools,
municipal buildings, and commercial facilities. At January 1, 2003, Cummings had
a firm backlog of approximately $170 million. The acquisition is effective as of
January 1, 2003 and, accordingly, Cummings’ financial results are included
in the Company’s consolidated results of operations and financial position
beginning in the first quarter of 2003.
The transaction was accounted for using the purchase method of accounting as required by FASB Statement No. 141, “Business Combinations”. Goodwill and identifiable intangible assets recorded in the acquisition will be tested periodically for impairment as required by FASB Statement No. 142 “Goodwill and Other Intangible Assets”. The preliminary allocation of acquisition costs, which consists of the $20 million cash consideration referred to above and $565,000 of other direct acquisition costs, is as follows (in thousands):
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(5) Acquisition of James A. Cummings, Inc. (continued)
Current assets $ 34,419
Property and equipment, net 394
Other long-term assets 23
Goodwill 12,990
Other identifiable intangible assets 575
------------
Total assets acquired $ 48,401
Less-Current liabilities (27,836)
------------
Total Consideration and Acquisition Costs $ 20,565
============
Since the acquisition was effective as of January 1, 2003, the Company's actual 2003 first quarter results include Cummings for the total period. Therefore, the following pro forma financial information is only presented for the comparative 2002 first quarter period (in thousands, except per share data):
Three Months Ended
March 31, 2002
------------------------------
Actual Pro forma
------------- --------------
Revenues $ 321,370 $ 345,714
Gross profit $ 12,999 $ 14,594
Net income $ 5,215 $ 5,853
Basic earnings per common share $ 0.21 $ 0.24
Diluted earnings per common share $ 0.20 $ 0.23
The pro forma results have been prepared for comparative purposes only and include certain adjustments such as increased interest expense on acquisition debt and additional amortization expenses related to intangible assets arising from the acquisition. The pro forma results are not necessarily indicative either of the results of operations that actually would have resulted had the acquisition been in effect on January 1, 2002 or of future results.
(6) Contingencies and Commitments
(a) Mergentime - Perini Joint Ventures vs. WMATA Matter
On May 11, 1990, contracts with two joint ventures in which Perini Corporation held a minority
interest ("Joint Ventures") were terminated by the Washington Metropolitan Area Transit Authority
("WMATA") on two adjacent subway construction contracts in the District of Columbia. The contracts
were awarded to the Joint Ventures in 1985 and 1986. However, Perini and Mergentime Corporation
("Mergentime"), the 60% managing partner, entered into an agreement in 1987 under which Perini
withdrew from the Joint Ventures and Mergentime assumed complete control over the performance of
both projects. This agreement did not relieve Perini of its responsibilities to WMATA as a Joint
Venture partner. After Perini withdrew from the Joint Ventures, Mergentime and WMATA were
embroiled in a dispute regarding progress on the projects. Each party blamed the other for delays
that were
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(6) Contingencies and Commitments (continued)
(a) Mergentime - Perini Joint Ventures vs. WMATA Matter (continued)
impacting both cost and progress and the parties were unable to resolve their dispute. Ultimately,
both construction contracts were terminated by WMATA and WMATA retained Perini, acting
independently, to complete both projects.
Subsequently, the Joint Ventures brought an action in the United States District Court for the District of Columbia against WMATA, seeking damages for delays, unpaid extra work and wrongful termination and WMATA brought an action against the Joint Ventures seeking damages for additional costs to complete the projects. After a bench trial before two District Court Judges (the initial Judge died before the matter could be concluded), the District Court found the Joint Ventures liable to WMATA for damages in the amount of approximately $16.5 million and WMATA liable to the Joint Ventures for damages in the amount of approximately $4.3 million.
The Joint Ventures appealed the judgment to the United States Court of Appeals for the District of Columbia ("Court of Appeals"), arguing, among other things, that the second District Court Judge had issued his final decision without fully familiarizing himself with the record of the initial District Court Judge. On February 16, 1999, the Court of Appeals vacated the District Court's final judgment and ordered the successor District Court Judge to review the findings of the initial Judge and hold further hearings in regard to the Joint Venture's affirmative claims. In addition, the Court of Appeals held that statutory interest on any of the claims will not accrue until final judgment is entered sometime in the future. Later in 1999, the case was transferred to a new successor District Court Judge.
On February 28, 2001, the new successor District Court Judge informed the parties that in the absence of a new trial, he could not certify adequate familiarity with the record to complete the remaining proceedings; therefore, he ordered that the Joint Ventures' motion for a new trial be granted.
A new trial before the new successor District Court Judge was completed in January 2002 and a decision is still pending. The ultimate financial impact of the Judge's pending decision is not yet determinable; therefore, no provision for loss, if any, has been recorded in the financial statements.
(b) Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter
During 1995, a joint venture, Tutor-Saliba-Perini ("TSP"), in which Perini Corporation is a 40%
minority partner and Tutor-Saliba Corporation of Sylmar, CA is the 60% managing partner, filed a
complaint in the Superior Court of the State of California for the County of Los Angeles against
the Los Angeles County Metropolitan Transportation Authority ("MTA") seeking to recover costs for
extra work required by the MTA in connection with the construction of the Wilshire/Normandie Subway
Station. TSP is seeking additional compensation from the MTA for claims related to the
construction and in February 1999 the MTA countered with civil claims under the California False
Claims Act against TSP, Tutor-Saliba Corporation, Perini Corporation and other parties. Ronald N.
Tutor, the Chairman and CEO of Perini Corporation since March of 2000, is also the CEO and the sole
stockholder of Tutor-Saliba Corporation.
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(6) Contingencies and Commitments (continued)
(b) Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter (continued)
Claims concerning the construction of the Wilshire/Normandie Subway Station were tried before a
Jury in 2001. During trial, the Judge ruled that TSP had failed to comply with the Court's prior
discovery orders and the Judge penalized TSP for its alleged non-compliance by dismissing TSP's
claim and by ruling, without a Jury finding, that TSP was liable to the MTA for damages on the
MTA's counterclaim. The Judge then instructed the Jury that TSP was liable to the MTA and charged
the Jury with the responsibility of determining the amount of the damages based on the Judge's
ruling. The Jury awarded the MTA approximately $29.6 million in damages.
On March 26, 2002, the Judge amended the award, ordering TSP to pay the MTA an additional $33.4 million in costs and attorney fees, with the aggregate $63.0 million award subject to interest at an annual rate of 10% from the date of the award.
TSP and the other plaintiffs/defendants in counterclaim have appealed the Judge's discovery sanction, the subsequent Jury award and the amended award. The ultimate financial impact of the Judge's ruling and/or the awards is not yet determinable. Therefore, no provision for loss, if any, has been recorded in the financial statements.
(c) City of San Francisco vs. Tutor-Saliba, Perini & Buckley Joint Venture Matter
In November 2002, the San Francisco City Attorney, on behalf of the City and County of San
Francisco and the citizens of California ("Plaintiffs"), filed a civil action with a demand for a
jury trial against Tutor-Saliba Corporation ("TSC"), the Tutor-Saliba, Perini & Buckley, Joint
Venture ("JV"), Perini Corporation ("Perini"), Buckley & Company, Inc. ("Buckley") and their
bonding companies in the United States District Court in San Francisco relating to seven contracts
for work on the expansion of the San Francisco International Airport. The Plaintiffs allege
various overcharges, bidding violations, violations of minority contracting regulations, civil
fraud, and violation of the California and San Francisco False Claims and California Unfair
Competition Acts. In addition, the Plaintiffs allege that TSC has violated the United States
Racketeer Influenced Corrupt Organizations Act. The Plaintiffs have asserted $30 million in
damages and are seeking treble damages, various civil penalties and debarment of the JV and TSC
from doing business with the City of San Francisco. The Plaintiffs have not allocated their claims
for damages and penalties amongst the defendants or the seven contracts at issue, only two of which
involved the JV. TSC is the managing partner of the JV and, in December 1997, Perini sold its
entire 20% interest in the JV to TSC. TSC has agreed to indemnify Perini from any liability
arising out of the joint venture, including legal fees and expenses.
(d) Perini/Kiewit/Cashman Joint Venture - Central Artery/Tunnel Project Matter
Perini/Kiewit/Cashman Joint Venture ("PKC"), a joint venture in which Perini Corporation holds a
56% interest and is the managing partner, is currently pursuing a series of claims for additional
contract time and/or compensation against the Massachusetts Highway Department ("MHD") for work
performed by PKC on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. The
claims relate to the construction of the Northbound Mainline Central Artery Tunnel from Kneeland
Street to Congress Street. During construction, MHD ordered PKC to perform changes to the work and
issued related direct cost changes with an estimated value, excluding time delay and inefficiency
costs, in excess of $100 million.
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(6) Contingencies and Commitments (continued)
(d) Perini/Kiewit/Cashman Joint Venture - Central Artery/Tunnel Project Matter (continued)
In addition, PKC encountered a number of unforeseen conditions during construction that greatly
increased PKC's cost of performance.
Certain of PKC's claims have been presented to a Disputes Review Board ("DRB") which consists of three construction experts chosen by the parties. To date, the DRB has ruled on a binding basis that PKC is entitled to additional compensation for its contract time delay claim in the amount of $17.4 million. A Judge of the Massachusetts Superior Court has issued a decision upholding the DRB's binding award to PKC. Although MHD challenged several of the DRB's decisions relative to the contract time delay award discussed above, PKC received a favorable ruling on March 20, 2002 from the Superior Court of the Commonwealth of Massachusetts that approved PKC's request to have MHD comply with the DRB's decision to award the $17.4 million for the time delay. The MHD has appealed the Superior Court decision to the Appeals Court of the Commonwealth of Massachusetts.
The DRB has also ruled on a binding basis that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKC's underpinning work in the amount of $5.6 million and that PKC is entitled to additional compensation for impacts and inefficiencies caused by MHD to PKC's utility work in the amount of $11.5 million. PKC has filed applications in these actions seeking to confirm the awards and MHD has filed civil actions in Massachusetts Superior Court seeking to vacate these awards.
Under the Dispute Resolution Rules of the contract, either party may periodically terminate the services of some or all of the DRB members provided that members who are removed under this provision will remain on the DRB through the completion of any then pending claims. The MHD has chosen to remove the current DRB members under this provision and those members are in the process of completing hearings on all pending claims. Although the replacement DRB members have been agreed upon, proceedings before the current DRB and the new DRB have been postponed pending resolution of the current negotiations discussed below.
The pending claims yet to be decided by the current/replacement DRB on a binding basis have an anticipated value of $43 million. The remaining claims to be decided by the replacement DRB on a non-binding basis have an anticipated value of $80 million.
On August 14, 2002 the Massachusetts Attorney General's office, pursuant to its authority under the Massachusetts False Claims Act, served a Civil Investigative Demand ("CID") on Perini and the other joint venture partners. The CID sought the production of certain construction claims documentation in connection with the Central Artery/Tunnel Contract No. C11A1. PKC vigorously denies that it submitted any false claims and is cooperating with the Attorney General's Office in the ongoing investigation
In December 2002, PKC and MHD entered into an agreement whereby the parties agreed to attempt to resolve by negotiation and mediation all of the outstanding claims on the project. As part of the agreement, the MHD recommended for approval by the Massachusetts Turnpike Authority a contract modification that provides for provisional payments to PKC totaling $25 million against PKC's outstanding claims. To date, PKC has received $23.75 million of those provisional payments. The parties also agreed to stay the pending litigation
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(6) Contingencies and Commitments (continued)
(d) Perini/Kiewit/Cashman Joint Venture - Central Artery/Tunnel Project Matter (continued)
and DRB proceedings during the negotiations. The ultimate financial impact of resolving all of the
claims on this project is not yet determinable.
(e) Redondo/Perini Joint Venture vs. Siemens Transportation Matter
This is a binding arbitration proceeding arising out of a contract between the Redondo/Perini Joint
Venture ("RPJV"), a joint venture in which Perini Corporation ("Perini") and Redondo Construction
Corp. ("Redondo") each have a 50% interest, and the Siemens Transportation Partnership, S.E.,
Puerto Rico ("STP"). STP, in conjunction with the Siemens Transportation Team, is constructing a
public metropolitan passenger rail transportation project for the Commonwealth of Puerto Rico known
as the Tren Urbano Phase I Project (the "Project"). The Project consists of approximately 17
kilometers of railway track work and the construction of sixteen railway stations in Puerto Rico
which, for contracting purposes, have been divided into nine alignment sections. Pursuant to its
contract with STP, RPJV has agreed to design and construct the majority of the railway station
fixed facilities in Alignment Section 3 along with the railway track throughout the Project.
On March 19, 2002, Redondo filed a petition for reorganization under 11 U.S.C. Chapter 11 in U.S. Bankruptcy Court for the District of Puerto Rico.
On December 23, 2002, RPJV filed an arbitration demand against STP seeking the recovery of additional costs related to design changes and the late completion of the design for Alignment Section 3 in the amount of approximately $38 million. On January 31, 2003, STP filed a counter-demand against RPJV seeking the recovery of damages allegedly related to defects in design and construction and the late completion of RPJV's work in the amount of approximately $17.9 million along with the repayment of approximately $22.6 million for alleged advances previously paid to RPJV.
An arbitration panel has not been chosen and no date for the arbitration hearing has been established. The ultimate financial impact of resolving all of the claims on this Project is not yet determinable.
(f) $21.25 Preferred Shareholders Class Action Lawsuit
On October 15, 2002, Frederick Doppelt, Arthur I. Caplan and Leland D. Zulch filed a lawsuit
individually, and as representatives of a class of holders of the Company's $2.125 Depositary
Convertible Exchangeable Shares (the "Depositary Shares", each of which represents 1/10th of a
share of the Company's $21.25 Convertible Exchangeable Preferred Shares), against certain current
and former directors of Perini (the "Massachusetts Defendants"). This lawsuit is captioned
Doppelt, et al. v. Tutor, et al., United States District Court for the District of Massachusetts,
No. 02CV12010MLW. Mr. Doppelt is a current Director of the Company and Mr. Caplan is a former Director of the Company.
Specifically, the Complaint alleges that the Massachusetts Defendants breached their fiduciary duties owed to the holders of the Depositary Shares and to Perini. The plaintiffs principally allege that the Massachusetts Defendants improperly authorized the exchange of Series B Preferred Stock for common stock while simultaneously refusing to pay accrued dividends due on the Depositary Shares. The plaintiffs seek damages in an amount not less than $14,875,000 plus interest, costs, fees, and other unspecified punitive and exemplary damages.
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(6) Contingencies and Commitments (continued)
(f) $21.25 Preferred Shareholders Class Action Lawsuit (continued)
On January 6, 2003, the Massachusetts Defendants moved to dismiss the lawsuit. Among other things,
the Massachusetts Defendants argued that: (1) they did not owe fiduciary duties to the holders of
the Depositary Shares and (2) the claims of breach of fiduciary duty owed to Perini must be
dismissed because the claim could only be brought as a derivative action. On March 21, 2003, the
plaintiffs filed an opposition to the motion to dismiss. The Court has not yet ruled
on the motion to dismiss.
In 2001, a somewhat similar lawsuit was filed by some of the same plaintiffs in the United States District Court for the Southern District of New York. In 2002, the case was dismissed and upon appeal by the plaintiffs to the United States Court of Appeals for the Second Circuit, the appeal was dismissed.
(g) Other
Contingent liabilities also include liability of contractors for performance and completion of both
Company and joint venture construction contracts. In addition to the legal matters described
above, the Company is involved in various lawsuits, arbitration and alternative dispute resolution
proceedings. In the opinion of management, the resolution of these proceedings will not
have a material effect on the Company's results of operations or financial condition.
(7) Long-term Debt
On January 23, 2002, the Company entered into an agreement with a bank group to refinance its former
credit facility with a new $45 million credit agreement (the "Credit Agreement"). In February 2003, the
terms of the Credit Agreement were amended to increase the revolving credit facility from $45 million to
$50 million; to extend the term of the Credit Agreement from January 2004 to June 2005; to increase the
amount of unborrowed revolving commitment available for letters of credit from $5.0 million to $7.5
million; and to adjust certain financial covenants. Other terms of the Credit Agreement remained the
same, including the provision that amounts due in June 2005, if not extended or repaid, convert to a
three year term loan with equal quarterly principal payments. Because of this provision, borrowings
under the Credit Agreement are classified as "Long-term Debt" in the accompanying Consolidated Condensed
Balance Sheets.
(8) Credit For Income Taxes
The credit for income taxes in 2003 is due primarily to the recognition of a $7.0 million federal tax
benefit in accordance with SFAS No. 109, "Accounting for Income Taxes" based on the expectation that the
Company will be able to utilize a portion of its net operating loss carryforwards in future years. In
addition, the credit for income taxes reflects a lower-than-normal tax rate in both years due primarily
to the realization of a portion of the federal tax benefit not recognized in prior years. Also, the
credit for income taxes in 2002 reflects the reversal of the federal alternative minimum tax provided in
2001 which was no longer required based on the provisions of the Job Creation and Workers Assistance Act
of 2002.
(9) Per Share Data
Basic earnings per common share was computed by dividing net income less dividends accrued on the $21.25
Preferred Stock during the period (see Note 10) by the weighted average number of common shares
outstanding. Diluted earnings per common share was similarly computed after
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(9) Per Share Data (continued)
giving consideration to the dilutive effect of stock options outstanding on the weighted average number
of common shares outstanding.
Options to purchase 3,164,500 shares of Common Stock at prices ranging from $4.50 to $8.66 per share were outstanding at March 31, 2003 but were not included in the computation of diluted EPS because the options' exercise price was greater than the average market price of the Common Stock. Options to purchase 564,000 shares of Common Stock at prices ranging from $8.10 to $16.44 per share were outstanding at March 31, 2002 but were not included in the computation of diluted EPS because the options' exercise price was greater than the average market price of the Common Stock. In addition, the effect of the assumed conversion of the Company's $21.25 Preferred Stock and Stock Purchase Warrants into Common Stock is antidilutive for both periods presented.
(10) Dividends
(a) Common Stock
There were no cash dividends declared or paid on the Company's outstanding Common Stock during the
periods presented in the consolidated condensed financial statements included herein.
(b) $21.25 Preferred Stock
In conjunction with the covenants of the Company's prior Credit Agreements, the Company was
required to suspend the payment of quarterly dividends on its $21.25 Preferred Stock until certain
financial criteria were met. Quarterly dividends on the $21.25 Preferred Stock have not been paid
since 1995 (although they have been fully accrued due to the "cumulative" feature of the $21.25
Preferred Stock). The aggregate amount of dividends in arrears is approximately $15,936,000 at
March 31, 2003, which represents approximately $159.36 per share of $21.25 Preferred Stock or
approximately $15.94 per Depositary Share and is included in "Other Long-term Liabilities" in the
Consolidated Condensed Balance Sheets. Under the terms of the $21.25 Preferred Stock, the holders
of Depositary Shares are entitled to elect two additional Directors when dividends have been deferred for more than six quarters, and
they did so at each of the last five Annual Meetings of Stockholders.
PERINI
CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(11) Business Segments
The following tables set forth certain business segment information relating to the Company's operations
for the three month periods ended March 31, 2003 and 2002 (in thousands):
Three months ended March 31, 2003
Reportable Segments
--------------------------------------------
Consolidated
Building Civil Totals Corporate Totals
------------ ------------ ------------- ------------ ----------------
Revenues $245,559 $ 45,701 $291,260 $ - $ 291,260
Income from Operations $ 5,202 $ 1,642 $ 6,844 $ (1,949)* $ 4,895
Assets $199,626 $199,281 $398,907 $ 57,147 ** $ 456,054
Three months ended March 31, 2002
Reportable Segments
--------------------------------------------
Consolidated
Building Civil Totals Corporate Totals
------------ ------------ ------------- ------------ ----------------
Revenues $244,233 $ 77,137 $321,370 $ - $ 321,370
Income from Operations $ 5,441 $ 1,729 $ 7,170 $ (1,237)* $ 5,933
Assets $192,361 $219,001 $411,362 $ 30,777 ** $ 442,139
* In all periods, consists of corporate general and administrative expenses.
** In all periods, corporate assets consist principally of cash, cash equivalents, marketable securities, net deferred tax asset, land held for sale and other investments available for general corporate purposes.
Comparison of the First Quarter of 2003 with the First Quarter of 2002
On January 23, 2003, the Company completed the acquisition of James A. Cummings, Inc., (“Cummings”) a privately held construction company based in Fort Lauderdale, Florida. The acquisition was effective as of January 1, 2003 and, accordingly, the financial results of Cummings are included in the Company’s consolidated results of operations and financial position at and for the three months ended March 31, 2003. See Note 5 of Notes to Consolidated Condensed Financial Statements for a further discussion and analysis of the acquisition of Cummings and related pro forma financial information.
The overall increase in net income of $6.2 million, from $5.2 million in 2002 to $11.4 million in 2003 was due primarily to the recognition of a $7.0 million federal tax benefit based on the expectation that the Company will be able to utilize a portion of its net operating loss carryforwards in future years.
Overall revenues from construction operations decreased by $30.1 million (or 9.4%), from $321.4 million in 2002 to $291.3 million in 2003. This decrease was due primarily to a decrease in civil construction revenues of $31.4 million (or 40.7%), from $77.1 million in 2002 to $45.7 million in 2003. Building construction revenues of $245.6 million in 2003 were approximately the same as building construction revenues of $244.3 million in 2002. The decrease in revenues from civil construction operations primarily reflects the decrease in the Company’s year-end backlog at December 31, 2002 compared to the year-end backlog at December 31, 2001, as the pace of new contract awards slowed during the past year. Building construction operations also experienced a decrease in revenues due to the slow pace of new work awards during the past year; however, this decrease was offset by an increase in revenues as a result of the Cummings acquisition in January, 2003.
Income from construction operations decreased by $0.4 million (or 5.6%), from $7.2 million in 2002 to $6.8 million in 2003. Building construction operating income decreased by $0.3 million, from $5.5 million in 2002 to $5.2 million in 2003. Building construction operating income was negatively impacted by a $0.9 million increase in building construction-related general and administrative expenses (exclusive of Cummings) primarily in connection with the pursuit of new work opportunities. Largely offsetting this increase in expense was an increase in gross profit in 2003 (exclusive of Cummings) as a result of an increase in the average gross margin on building construction contracts (exclusive of Cummings) from 3.8% in 2002 to 4.2% in 2003 due primarily to an upward profit revision on an overseas project. Despite the decrease in revenues discussed above, civil construction operating income decreased by only $0.1 million, from $1.7 million in 2002 to $1.6 million in 2003 due to an increase in the gross margin. The improvement in gross margin was primarily due to downward profit revisions in 2002 on several infrastructure projects in the metropolitan New York area. Income from operations was also negatively impacted by a $0.6 million increase in corporate general and administrative expenses, from $1.3 million in 2002 to $1.9 million in 2003 due primarily to an increase in outside professional fees relating to the annual audit of the Company’s financial statements and to the tender offer made by the Company in 2003 for up to 90% of its $2.125 Depositary Convertible Exchangeable Shares.
The credit for income taxes in 2003 is due primarily to the recognition of a $7.0 million federal tax benefit in accordance with SFAS No. 109, “Accounting for Income Taxes” based on the expectation that the Company will be able to utilize a portion of its net operating loss carryforwards in future years. In addition, the credit for income taxes reflects a lower-than-normal tax rate in both years due primarily to the realization of a portion of the federal tax benefit not recognized in prior years. Also, the credit for income taxes in 2002 reflects the reversal of the federal alternative minimum tax provided in 2001 which was no longer required based on the provisions of the Job Creation and Worker Assistance Act of 2002.
Financial Condition
In February 2003, the terms of the Company’s existing $45 million revolving credit facility (the “Credit Agreement”) were amended to increase the revolving credit facility from $45 million to $50 million; to extend the term of the Credit Agreement from January 2004 to June 2005; to increase the amount of unborrowed revolving credit commitment available for letters of credit from $5.0 million to $7.5 million; and to adjust certain financial covenants. Other terms of the Credit Agreement remained the same, including the provision that amounts due in June 2005, if not extended or repaid, convert to a three year term loan. The Credit Agreement, as amended, will provide the Company with greater flexibility in providing the working capital needed to support the anticipated growth of the Company’s construction activities and other corporate activities. At March 31, 2003, the Company had $42.2 million available to borrow under the Credit Agreement.
Cash and cash equivalents as reported in the accompanying Consolidated Condensed Statements of Cash Flows consist of amounts held by the Company as well as the Company’s proportionate share of amounts held by construction joint ventures. Cash held by the Company is available for general corporate purposes while cash held by construction joint ventures is available only for joint venture-related uses. Cash held by construction joint ventures is distributed from time to time to the Company and to the other joint venture participants in accordance with their percentage interest after the joint venture partners determine that a cash distribution is prudent. Cash distributions received by the Company from its construction joint ventures are then available for general corporate purposes. At March 31, 2003 and December 31, 2002, cash held by the Company and available for general corporate purposes was $40.3 million and $11.2 million, respectively, and the Company’s proportionate share of cash held by joint ventures and available only for joint venture-related uses was $28.8 million and $35.8 million, respectively.
During the first three months of 2003, the Company generated $30.0 million in cash flow from operating activities and $3.4 million from a net increase in debt to fund $11.3 million used by investing activities, primarily for the acquisition of Cummings, as well as to acquire construction equipment and an office building and equipment storage facility to be used by Company’s civil construction operations. As a result, the Company’s consolidated cash balance increased by $22.1 million, from $47.0 million at December 31, 2002 to $69.1 million at March 31, 2003. In the first quarter of 2003 the Company received its proportionate share of provisional payments against outstanding claims on a Central Artery/Tunnel “Big Dig” joint venture project in Boston, Massachusetts, as a result of an agreement reached in December, 2002 (see Note 6(d) of Notes to Consolidated Condensed Financial Statements). This amount of approximately $13.3 million was a significant contributor to the $30.0 million in cash flow generated from operating activities in the first quarter of 2003.
Working capital decreased slightly, from $115.9 million at the end of 2002 to $108.4 million at March 31, 2003. The current ratio decreased from 1.44:1.00 to 1.35:1.00 during the same period.
Long-term debt at March 31, 2003 was $13.7 million, an increase of $1.6 million from December 31, 2002. The long-term debt to equity ratio was .14:1.00 at both March 31, 2003 and December 31, 2002.
The aggregate amount of dividends in arrears on the Company’s $21.25 Preferred Stock is approximately $15,936,000 at March 31, 2003. As of December 31, 2000, the financial criteria in the Company’s prior Credit Agreement which restricted the payment of dividends were satisfied, thereby making the resumption of dividends possible if the Company believed that its working capital was sufficient to warrant the resumption of payment of the regular dividend or any of the dividends in arrears on the $21.25 Preferred Stock. The Company does not currently have any plans or target date for when this action may
occur. This decision is based on the following circumstances:
The Board of Directors does not believe that it is, or will be, proper or prudent to pay or commit to pay dividends on the $21.25 Preferred Stock for the foreseeable future, and it is not obligated to do so under the terms of the $21.25 Preferred Stock.
Outlook
Forward-looking Statements
The statements contained in this Management’s Discussion and Analysis of the Consolidated Condensed Financial Statements, including “Outlook”, and other sections of this Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation, statements regarding the Company’s or its management’s expectations, hopes, beliefs, intentions or strategies regarding the future. These forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules; the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings; the availability of borrowed funds on terms acceptable to the Company; changes in federal and state appropriations for infrastructure projects; possible changes or developments in worldwide or domestic political, social, economic, business, industry, market and regulatory conditions or circumstances; and actions taken or not taken by third parties including the Company’s customers, suppliers, business partners, and competitors and legislative, regulatory, judicial and other governmental authorities and officials. Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the Company’s exposure to market risk since December 31, 2002.
CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
The Company’s principal executive officer and principal financial officer have evaluated the Company’s disclosure controls and procedures (as such term is defined in paragraph (c) of the Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days of the filing date of this quarterly report on Form 10-Q. In conjunction with their initial evaluation, they formed a Disclosure Controls and Procedures Committee to formalize the Company’s current disclosure controls and procedures and to assist in the periodic evaluations of the Company’s disclosure controls and procedures. Based on their evaluation, they have concluded that the Company’s disclosure controls and procedures are operating effectively.
(b) Changes in internal controls
There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.
Part II. - Other Information
Item 1. - Legal Proceedings
Redondo/Perini Joint Venture vs. Siemens Transportation Matter
This is a binding arbitration proceeding arising out of a contract between the Redondo/Perini
Joint Venture ("RPJV"), a joint venture in which Perini Corporation ("Perini") and Redondo
Construction Corp. ("Redondo") each have a 50% interest, and the Siemens Transportation
Partnership, S.E., Puerto Rico ("STP"). STP, in conjunction with the Siemens Transportation Team,
is constructing a public metropolitan passenger rail transportation project for the Commonwealth of
Puerto Rico known as the Tren Urbano Phase I Project (the "Project"). The Project consists of
approximately 17 kilometers of railway track work and the construction of sixteen railway stations in
Puerto Rico which, for contracting purposes, have been divided into nine alignment sections.
Pursuant to its contract with STP, RPJV has agreed to design and construct the majority of the
railway station fixed facilities in Alignment Section 3 along with the railway track throughout the
Project.
On March 19, 2002, Redondo filed a petition for reorganization under 11 U.S.C. Chapter 11 in U.S.
Bankruptcy Court for the District of Puerto Rico.
On December 23, 2002, RPJV filed an arbitration demand against STP seeking the recovery of
additional costs related to design changes and the late completion of the design for Alignment
Section 3 in the amount of approximately $38 million. On January 31, 2003, STP filed a counter-
demand against RPJV seeking the recovery of damages allegedly related to defects in design and
construction and the late completion of RPJV's work in the amount of approximately $17.9 million
along with the repayment of approximately $22.6 million for alleged advances previously paid to
RPJV.
An arbitration panel has not been chosen and no date for the arbitration hearing has been
established. The ultimate financial impact of resolving all of the claims on this Project is not yet
determinable.
Item 2. - Changes in Securities and Use of Proceeds
(a) None
(b) None
(c) None
(d) Not applicable
Item 3. - Defaults Upon Senior Securities
(a) None
Part II. - Other Information (continued)
(b) In accordance with the covenants of the 1995 Amended Revolving Credit Agreement, the First
Amended and Restated Credit Agreement effective January 17, 1997 and the Second Amended
and Restated Credit Agreement effective March 29, 2000, the Company was required to suspend the
payment of quarterly dividends on its $21.25 Convertible Exchangeable Preferred Stock ("$21.25
Preferred Stock") until certain financial criteria were met, commencing with the dividend that
normally would have been declared during December 1995. Although the financial criteria were
satisfied as of December 31, 2000 and the Company's most recent Credit Agreement, entered into in
January 2002 and amended in February 2003, does not contain similar restrictions, the Board of
Directors does not believe that it is proper or prudent to pay or commit to pay dividends on the
$21.25 Preferred Stock for the foreseeable future based on the Company's other working capital
requirements. See additional comments under "Financial Condition" on pages 17 and 18 herein.
Therefore, as of March 31,2003, the aggregate amount of dividends in arrears is approximately
$15,936,000, which represents approximately $159.36 per share of $21.25 Preferred Stock or
approximately $15.94 per Depositary Share. While these dividends have not been declared or paid,
they have been fully accrued in accordance with then "cumulative" feature of the $21.25 Preferred
Stock.
Item 4. - Submission of Matters to a Vote of Security Holders
(a) None
(b) Not applicable
(c) Not applicable
(d) Not applicable
Item 5. - Other Information - None
Item 6. - Exhibits and Reports on Form 8-K
(a) The following designated exhibits are, as indicated below, either filed herewith or have heretofore
been filed with Securities and Exchange Commission under the Securities Act of 1933 or the
the Securities Act of 1934 and are referred to and incorporated herein by reference to such filings:
Exhibit 3. Articles of Incorporation and By-laws
Incorporated herein by reference:
3.1 Restated Articles of Organization - As amended through March 29, 2000 -
Exhibit 3.1 to Form 8-K filed on April 12, 2000.
3.2 By-laws - As amended and restated as of March 29, 2000 - Exhibit 3.2 to
Form 8-K filed on April 12, 2000.
Exhibit 4. Instruments Defining the Rights of Security Holders, Including Indentures
Incorporated herein by reference:
4.1 Certificate of Vote of Directors Establishing a Series of a Class of Stock
determining the relative rights and preferences of the $21.25 Convertible
Exchangeable Preferred Stock - Exhibit 4(a) to Amendment No. 1 to Form S-
Part II. - Other Information (continued)
2 Registration Statement filed June 19, 1987; SEC Registration No. 33-
14434.
4.2 Form of Deposit Agreement, including form of Depositary Receipt - Exhibit
4(b) to Amendment No. 1 to Form S-2 Registration Statement filed June 19,
1987; SEC Registration No. 33-14434.
4.3 Form of Indenture with respect to the 8 1/2% Convertible Subordinated
Debentures Due June 15, 2012, including form of Debenture - Exhibit 4(c) to
Amendment No. 1 to Form S-2 Registration Statement filed June 19, 1987;
SEC Registration No. 33-14434.
4.4 Shareholder Rights Agreement dated as of September 23, 1988, as
amended and restated as of May 17, 1990, as amended and restated as of
January 17, 1997, between Perini Corporation and State Street Bank and
Trust Company, as Rights Agent - Exhibit 4.4 to Amendment No. 1 to
Registration Statement on Form 8-A/A filed on January 29, 1997, and as
further amended as of March 29, 2000 - Exhibit 4.3 to Form 8-K filed on April
12, 2000.
4.13 Exchange Agreement by and between Perini Corporation and The Union
Labor Life Insurance Company, acting on behalf of its Separate Account P,
dated as of February 7, 2000 - Exhibit 10.1 to Form 8-K filed on April 12, 2000.
4.14 Exchange Agreement by and between Perini Corporation and PB Capital
Partners, L.P., dated as of February 14, 2000 - Exhibit 10.2 to Form 8-K filed
on April 12, 2000.
4.15 Exchange Agreement by and between Perini Corporation and The Common
Fund for Non-Profit Organizations, dated as of February 14, 2000 - Exhibit
10.3 to Form 8-K filed on April 12, 2000.
4.16 Registration Rights Agreement by and among Perini Corporation, Tutor-
Saliba Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union
Fire Insurance Company of Pittsburgh, Pa., BLUM Capital Partners, L.P., PB
Capital Partners, L.P. The Common Fund for Non-Profit Organizations, and
The Union Labor Life Insurance Company, acting on behalf of its Separate
Account P, dated as of March 29, 2000 - Exhibit 4.1 to Form 8-K filed on
April 12, 2000.
4.17 Shareholders' Agreement by and among Perini Corporation, Tutor-Saliba
Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union Fire
Insurance Company of Pittsburgh, Pa., BLUM Capital Partners, L.P., PB
Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and
The Union Labor Life Insurance Company, acting on behalf of its Separate
Account P, dated as of March 29, 2000 - Exhibit 4.2 to Form 8-K filed on
April 12, 2000.
Exhibit 10. Material Contracts
Incorporated herein by reference:
10.2 Perini Corporation Amended and Restated General Incentive Compensation
Plan - Exhibit 10.2 to 1997 Form 10-K filed on March 30, 1998.
Part II. - Other Information (continued)
10.3 Perini Corporation Amended and Restated Construction Business Unit
Incentive Compensation Plan - Exhibit 10.3 to 1997 Form 10-K filed on March
30, 1998.
10.16 Management Agreement dated as of January 17, 1997 by and among the
Company, Ronald N. Tutor and Tutor-Saliba Corporation - Exhibit 10.16 to
Form 10-K filed on March 31, 2003.
10.31 Amendment No. 2 dated as of December 31, 1999 to the Management
Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba
Corporation - Exhibit 10.31 to Form 10-Q filed on May 9, 2000.
10.32 Special Equity Incentive Plan - Exhibit A to Registrant's Proxy Statement for
Annual Meeting of Stockholders dated April 19, 2000.
10.33 Securities Purchase Agreement by and among Perini Corporation and Tutor-
Saliba Corporation, O&G Industries, Inc. and National Union Fire Insurance
Company of Pittsburgh, PA, dated as of February 5, 2000 - Exhibit 10.1 to Form
8-K filed on February 9, 2000.
10.34 Promissory Note dated as of September 6, 2000 by and among Mt. Wayte
Realty, LLC (a wholly-owned subsidiary of Perini Corporation) and The
Manufacturers Life Insurance Company (U.S.A.) - Exhibit 10.34 to Form 10-Q
filed on November 6, 2000.
10.35 Credit Agreement dated January 23, 2002 among Perini Corporation, Fleet
National Bank, as Administrative Agent, Fleet National Bank, as Arranger, and the
Lenders Party Hereto - Exhibit 10.35 to Form 10-K filed on March 21, 2002.
10.36 Amendment No. 4 dated as of December 31, 2001 to the Management Agreement
by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation -
Exhibit 10.36 to Form 10-K filed on March 31, 2003.
10.37 Stock Purchase and Sale Agreement dated December 16, 2002 by and among the
Company, James A. Cummings, Inc., James A. Cummings, William R. Derrer and
Michael F. Lanciault - Exhibit 10.37 to Form 10-K filed on March 31, 2003.
10.38 Employment Agreement dated January 23, 2003 by and among the Company,
James A. Cummings, Inc. and James A. Cummings - Exhibit 10.38 to Form 10-K
filed on March 31, 2003.
10.39 First Amendment and Waiver dated February 14, 2003 to Credit Agreement
among Perini Corporation, Fleet National Bank, as Administrative Agent, and the
Lenders - Exhibit 10.39 to Form 10-K filed on March 31, 2003.
Exhibit 99. Additional Exhibits
99.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - filed
herewith.
99.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - filed
herewith.
Part II. - Other Information (continued)
(b) Reports on Form 8-K
A Form 8-K was filed on January 27, 2003 that reported on the Company's completion of its
acquisition of James A. Cummings, Inc., a privately held construction company based in Fort
Lauderdale, Florida, for $20 million in cash in "Item 5. Other Events" in said Form 8-K.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Perini Corporation
Registrant
Date: May 12, 2003 /s/ Michael E. Ciskey
Michael E. Ciskey, Vice President and Controller
Duly Authorized Officer and Principal Accounting Officer
I, Ronald N. Tutor, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Perini Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: May 12, 2003 /s/ Ronald N. Tutor
Ronald N. Tutor, Chairman and Chief Executive Officer
I, Robert Band, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Perini Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: May 12, 2003 /s/ Robert Band
Robert Band, President, Chief Operating Officer and
Principal Financial Officer