UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
____ TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to
_____________________
Commission file number 1-6314
PERINI CORPORATION
(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
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 508-628-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
Common Stock, $1.00 par value The American Stock Exchange
$2.125 Depositary Convertible Exchangeable
Preferred Shares, each representing 1/10th
Share of $21.25 Convertible Exchangeable
Preferred Stock, $1.00 par value The American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ___
The aggregate market value of voting stock held by nonaffiliates of the
registrant is $33,787,391 as of March 3, 1995.
The number of shares of Common Stock, $1.00 par value per share,
outstanding at March 3, 1995 is 4,515,610.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual proxy statement for the year ended December 31,
1994 are incorporated by reference into Part III.
PERINI CORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-K
PAGE
PART I
Item 1: Business 2
Item 2: Properties 17
Item 3: Legal Proceedings 18
Item 4: Submission of Matters to Vote of 18
Security Holders
PART II
Item 5: Market for the Registrant's Common 19
Stock and Related Stockholder Matters
Item 6: Selected Financial Data 19
Item 7: Management's Discussion and Analysis 20
of Financial Condition and Results of
Operations
Item 8: Financial Statements and Supplementary 24
Data
Item 9: Disagreements on Accounting and 24
Financial Disclosure
PART III
Item 10: Directors and Executive Officers of 25
the Registrant
Item 11: Executive Compensation 26
Item 12: Security Ownership of Certain 26
Beneficial Owners and Management
Item 13: Certain Relationships and Related 26
Transactions
PART IV
Item 14: Exhibits, Financial Statement 27
Schedules and Reports on Form 8-K
Signatures 28
PART I.
ITEM 1. BUSINESS
General
Perini Corporation and its subsidiaries (the "Company" unless the
context indicates otherwise) is engaged in two principal businesses:
construction and real estate development. The Company, incorporated in
1918 as a successor to businesses which had been engaged since 1894 in
providing construction services, celebrated its 100th anniversary in 1994.
The Company provides general contracting, construction management and
design-build services to private clients and public agencies throughout
the United States and selected overseas locations. Historically, the
Company's construction business involved four types of operations: civil
and environmental ("heavy"), building, international and pipeline.
However, the Company sold its pipeline construction business in January,
1993 (see Note 1 to the Consolidated Financial Statements).
The Company's real estate development operations are conducted by
Perini Land & Development Company, a wholly-owned subsidiary with
extensive development interests concentrated in historically attractive
markets in the United States - Arizona, California, Florida, Georgia and
Massachusetts, but has not commenced the development of any new real
estate projects since 1990.
Because the Company's results consist in part of a limited number of
large transactions in both construction and real estate, results in any
given quarter can vary depending on the timing of transactions and the
profitability of the projects being reported. As a consequence, quarterly
results may reflect such variations.
In 1988, the Company, in conjunction with two other companies, formed
a new entity called Perland Environmental Technologies, Inc. ("Perland").
Perland provides consulting, engineering and construction services
primarily on a turn-key basis for hazardous material management and clean-
up to both private clients and public agencies nationwide. The outlook
for this business on a long-term basis appears to be attractive because of
the environmental protection laws enacted by Congress. During the fourth
quarter of 1991 and early in 1992, Perland repurchased its stock owned by
the other outside investors, resulting in an increase in the Company's
ownership from its original investment of 47 1/2% to slightly more than
90%. During the fourth quarter of 1994, the Company acquired the
remaining outside interest in Perland.
In March 1992, Majestic sold its 41%-interest in Monenco, a company
primarily involved in providing engineering services in Canada and
throughout the world, resulting in a pretax gain to the Company of
approximately $2 million.
In January 1993, the Company sold its 74%-ownership in Majestic, its
Canadian pipeline construction subsidiary, for $31.7 million which
resulted in an after tax gain of approximately $1.0 million.
Although these companies were profitable in both 1992 and 1991, they
participated in sectors of the construction business that were not
directly related to the Company's core construction operations. The sale
of these companies served to generate liquid assets which improved the
Company's financial condition without affecting its core construction
business.
Effective July 1, 1993, the Company acquired Gust K. Newberg
Construction Co.'s ("Newberg") interest in certain construction projects
and related equipment. The purchase price for the acquisition was (i)
approximately $3 million in cash for the equipment paid by a third party
leasing company, which in turn simultaneously entered into an operating
lease agreement with the Company for the use of said equipment, (ii) the
greater of $1 million or 25% of the aggregate pretax earnings during the
period from April 1, 1993 through December 31, 1994, net of payments
accruing to Newberg as described in (iii) below, and (iii) 50% of the
aggregate of net profits earned from each project from April 1, 1993
through December 31, 1994 and, with regard to one project, through
December 31, 1995. This acquisition has been accounted for as a purchase.
Information on lines of business and foreign business is included
under the following captions of this Annual Report on Form 10K for the
year ended December 31, 1994.
Annual Report
On Form 10K
Caption Page Number
Selected Consolidated Financial Page 19
Information
Management's Discussion and Analysis Page 20
Footnote 13 to the Consolidated Financial Page 47
Statements, entitled Business Segments
and Foreign Operations
While the "Selected Consolidated Financial Information" presents
certain lines of business information for purposes of consistency of
presentation for the five years ended December 31, 1994, additional
information (business segment and foreign operations) required by
Statement of Financial Accounting Standards No. 14 for the three years
ended December 31, 1994 is included in Note 13 to the Consolidated
Financial Statements.
A summary of revenues by product line for the three years ended
December 31, 1994 is as follows:
Revenues (in thousands)
Year Ended December 31,
1994 1993 1992
Construction:
Building $ 621,567 $ 736,116 $ 620,628
Heavy 329,317 294,225 288,158
Pipeline - - 100,929
Engineering Services - - 13,559
---------- ---------- ----------
Total Construction Revenues $ 950,884 $1,030,341 $1,023,274
---------- ---------- ----------
Revenues (in thousands)
Year Ended December 31,
1994 1993 1992
Real Estate:
Sales of Real Estate $ 33,188 $ 40,053 $ 12,636
Building Rentals 16,388 19,313 24,208
Interest Income 7,031 6,110 6,452
All Other 4,554 4,299 4,282
---------- ---------- ----------
Total Real Estate Revenues $ 61,161 $ 69,775 $ 47,578
---------- ---------- ----------
Total Revenues $1,012,045 $1,100,116 $1,070,852
========== ========== ==========
Construction
The general contracting and construction management services provided
by the Company consist of planning and scheduling the manpower, equipment,
materials and subcontractors required for the timely completion of a
project in accordance with the terms and specifications contained in a
construction contract. The Company was engaged in over 165 construction
projects in the United States and overseas during 1994. The Company has
three principal construction operations: heavy, building, and
international, having sold its Canadian pipeline construction business in
January 1993, and its interest in an engineering services business in
March 1992. The Company also has a subsidiary engaged in hazardous waste
remediation.
The heavy operation undertakes large civil construction projects
throughout the United States, with current emphasis on major metropolitan
areas, such as Boston, New York City, Chicago and Los Angeles. The heavy
operation performs construction and rehabilitation of highways, subways,
tunnels, dams, bridges, airports, marine projects, piers and waste water
treatment facilities. The Company has been active in heavy operations
since 1894, and believes that it has particular expertise in large and
complex projects. The Company believes that infrastructure rehabilitation
is and will continue to be a significant market in the 1990's.
The building operation provides its services through regional offices
located in several metropolitan areas: Boston and Philadelphia, serving
New England and the Mid-Atlantic area; Detroit and Chicago, operating in
Michigan and the Midwest region; and Phoenix, Las Vegas, Los Angeles and
San Francisco, serving Arizona, Nevada and California. In 1992, the
Company combined its building operations into a new wholly-owned
subsidiary, Perini Building Company, Inc. This new company combines
substantial resources and expertise to better serve clients within the
building construction market, and enhances Perini's name recognition in
this market. The Company undertakes a broad range of building
construction projects including health care, correctional facilities,
sports complexes, hotels, casinos, residential, commercial, civic,
cultural and educational facilities.
The international operation engages in both heavy and building
construction services overseas, funded primarily in U.S. dollars by
agencies of the United States government. In selected situations, it
pursues private work internationally.
Construction Strategy
The Company plans to continue to increase the amount of heavy
construction work it performs because of the relatively higher margin
available on such work. The Company believes the best opportunities for
growth in the coming years are in the urban infrastructure market,
particularly in Boston, metropolitan New York, Chicago, Los Angeles and
other major cities where it has a significant presence, and in other
large, complex projects. The Company's acquisition during 1993 of
Chicago-based Newberg referred to above is consistent with this strategy.
The Company's strategy in building construction is to maximize profit
margins; to take advantage of certain market niches; and to expand into
new markets compatible with its expertise. Internally, the Company plans
to continue both to strengthen its management through management
development and job rotation programs, and to improve efficiency through
strict attention to the control of overhead expenses and implementation of
improved project management systems. Finally, a department was formed in
1992 to improve the Company's focus on strategic planning, construction
project development and project finance, and marketing.
Backlog
As of December 31, 1994, the Company's construction backlog was $1.54
billion compared to backlogs of $1.24 billion and $1.17 billion as of
December 31, 1993 and 1992, respectively.
Backlog (in thousands) as of December 31,
1994 1993 1992
Northeast $ 803,967 52% $ 552,035 45% $ 451,746 39%
Mid-Atlantic 26,408 2 34,695 3 34,840 3
Southeast 783 - 34,980 3 53,971 5
Midwest 293,168 19 143,961 12 211,649 18
Southwest 174,984 11 314,058 25 256,973 22
West 192,996 13 143,251 11 123,384 10
Canada - - - - 711 -
Other Foreign 45,473 3 15,161 1 36,279 3
---------- ---- ---------- ---- ---------- ----
Total $1,538,779 100% $1,238,141 100% $1,169,553 100%
========== ==== ========== ==== ========== ====
The Company includes a construction project in its backlog at such
time as a contract is awarded or a firm letter of commitment is obtained.
As a result, the backlog figures are firm, subject only to the
cancellation provisions contained in the various contracts. The Company
estimates that approximately $718.7 million of its backlog will not be
completed in 1995.
The Company's backlog in the Northeast region of the United States
remains strong and continues to increase because of its ability to meet
the needs of the growing infrastructure construction and rehabilitation
market in this region, particularly in the metropolitan Boston and New
York City areas. The increase in the Midwest region primarily reflects an
increase in building work in that area. Other fluctuations in backlog are
viewed by management as transitory.
Types of Contracts
The four general types of contracts in current use in the
construction industry are:
- Fixed price contracts ("FP"), which include unit price contracts,
usually transfer more risk to the contractor but offer the
opportunity, under favorable circumstances, for greater profits.
With the Company's increasing move into heavy and publicly bid
building construction in response to current opportunities, the
percentage of fixed price contracts continue to represent the
major portion of the backlog.
- Cost-plus-fixed-fee contracts ("CPFF") which provide greater
safety for the contractor from a financial standpoint but limit
profits.
- Guaranteed maximum price contracts ("GMP") which provide for a
cost-plus-fee arrangement up to a maximum agreed price. These
contracts place risks on the contractor but may permit an
opportunity for greater profits than cost-plus-fixed-fee contracts
through sharing agreements with the client on any cost savings.
- Construction management contracts ("CM") under which a contractor
agrees to manage a project for the owner for an agreed-upon fee
which may be fixed or may vary based upon negotiated factors. The
contractor generally provides services to supervise and coordinate
the construction work on a project, but does not directly purchase
contract materials, provide construction labor and equipment or
enter into subcontracts.
Historically, a high percentage of company contracts have been of the
fixed price type. Construction management contracts remain a relatively
small percentage of company contracts. A summary of revenues and backlog
by type of contract for the most recent three years follows:
Revenues
Year Ended Backlog As Of
December 31, December 31,
1994 1993 1992 1994 1993 1992
54% 56% 68% Fixed Price 68% 65% 64%
46% 44 32 CPFF, GMP or CM 32% 35 36
---- ---- ---- ---- ---- ----
100% 100% 100% 100% 100% 100%
==== ==== ==== ==== ==== ====
Clients
During 1994, the Company was active in the building, heavy and
international construction markets. The Company performed work for over
100 federal, state and local governmental agencies or authorities and
private customers during 1994. No material part of the Company's business
is dependent upon a single or limited number of private customers; the
loss of any one of which would not have a materially adverse effect on the
Company. As illustrated in the following table, the Company continues to
serve a significant number of private owners. During the period 1992-
1994, the portion of construction revenues derived from contracts with
various governmental agencies remained relatively constant at, 57% in
1992, 54% in 1993, and 56% in 1994.
Revenues by Client Source
Year Ended
December 31,
1994 1993 1992
Private Owners 44% 46% 43%
Federal Governmental Agencies 11 12 6
State, Local and Foreign 45 42 51
Governments ---- ---- ----
100% 100% 100%
==== ==== ====
All Federal government contracts are subject to termination provisions,
but as shown in the table above, the Company does not have a material
amount of such contracts.
General
The construction business is highly competitive. Competition is based
primarily on price, reputation for quality, reliability and financial
strength of the contractor. While the Company experiences a great deal of
competition from other large general contractors, some of which may be
larger with greater financial resources than the Company, as well as from
a number of smaller local contractors, it believes it has sufficient
technical, managerial and financial resources to be competitive in each of
its major market areas.
The Company will endeavor to spread the financial and/or operational
risk, as it has from time to time in the past, by participating in
construction joint ventures, both in a majority and in a minority
position, for the purpose of bidding on projects. These joint ventures
are generally based on a standard joint venture agreement whereby each of
the joint venture participants is usually committed to supply a
predetermined percentage of capital, as required, and to share in the same
predetermined percentage of income or loss of the project. Although joint
ventures tend to spread the risk of loss, the Company's initial
obligations to the venture may increase if one of the other participants
is financially unable to bear its portion of cost and expenses. For a
possible example of this situation, see "Legal Proceedings" on page 18.
For further information regarding certain joint ventures, see Note 2 of
the Notes to Consolidated Financial Statements.
While the Company's construction business may experience some adverse
consequences if shortages develop or if prices for materials, labor or
equipment increase excessively, provisions in certain types of contracts
often shift all or a major portion of any adverse impact to the customer.
On fixed price type contracts, the Company attempts to insulate itself
from the unfavorable effects of inflation by incorporating escalating wage
and price assumptions, where appropriate, into its construction bids.
Gasoline, diesel fuel and other materials used in the Company's
construction activities are generally available locally from multiple
sources and have been in adequate supply during recent years.
Construction work in selected overseas areas primarily employs expatriate
and local labor which can usually be obtained as required. The Company
does not anticipate any significant impact in 1995 from material and/or
labor shortages or price increases.
Economic and demographic trends tend not to have a material impact on
the Company's heavy construction operation. Instead, the Company's heavy
construction markets are dependent on the amount of heavy civil
infrastructure work funded by various governmental agencies which, in
turn, may depend on the condition of the existing infrastructure or the
need for new expanded infrastructure. The building markets in which the
Company participants are dependent on economic and demographic trends, as
well as governmental policy decisions as they impact the specific
geographic markets.
The Company has minimal exposure to environmental liability as a
result of the activities of Perland Environmental Technologies, Inc.
("Perland"), a 100%-owned subsidiary of the Company. Perland provides
hazardous waste engineering and construction services to both private
clients and public agencies nationwide. Perland is responsible for
compliance with applicable law in connection with its clean up activities
and bears the risk associated with handling such materials.
In addition to strict procedural guidelines for conduct of this work,
the Company and Perland generally carry insurance or receive satisfactory
indemnification from customers to cover the risks associated with this
business.
The Company also owns real estate nationwide, most of which is
residential, and as an owner, is subject to laws governing environmental
responsibility and liability based on ownership. The Company is not aware
of any environmental liability associated with its ownership of real
estate property.
The Company has been subjected to a number of claims from former
employees of subcontractors regarding exposure to asbestos on the
Company's projects. None of the claims have been material. The Company
also operates construction machinery in its business and will, depending
on the project or the ease of access to fuel for such machinery, install
fuel tanks for use on-site. Such tanks run the risk of leaking hazardous
fluids into the environment. The Company, however, is not aware of any
emissions associated with such tanks or of any other environmental
liability associated with its construction operations or any of its
corporate activities.
Progress on projects in certain areas may be delayed by weather
conditions depending on the type of project, stage of completion and
severity of the weather. Such delays, if they occur, may result in more
volatile quarterly operating results.
In the normal course of business, the Company periodically evaluates
its existing construction markets and seeks to identify any growing
markets where it feels it has the expertise and management capability to
successfully compete or withdraw from markets which are no longer
economically attractive.
Real Estate
The Company's real estate development operations are conducted by
Perini Land & Development Company ("PL&D"), a wholly-owned subsidiary,
which has been involved in real estate development since the early 1950's.
PL&D engages in real estate development in Arizona, California, Florida,
Georgia and Massachusetts. However, in 1993, PL&D significantly reduced
its staff in California and has suspended any new land acquisition in that
area. PL&D's development operations generally involve identifying
attractive parcels, planning and development, arranging financing,
obtaining needed zoning changes and permits, site preparation,
installation of roads and utilities and selling the land. Originally,
PL&D concentrated on land development. In appropriate situations, PL&D
has also constructed buildings on the developed land for rental or sale.
For the past four to five years PL&D has been severely affected by the
reduced liquidity in real estate markets brought on by the cutbacks in
real estate funding by commercial banks, insurance companies and other
institutional lenders. Many traditional buyers of PL&D properties are
other developers or investors who depend on third party sources for
funding. As a result, some potential PL&D transactions have been
cancelled, altered or postponed because of financing problems. Over this
period, PL&D looked to foreign buyers not affected by U.S. banking
policies or in some cases, provided seller financing to complete
transactions. PL&D also experienced slowdowns in negotiations in the sale
of PL&D developed income properties or residential units because of
economic uncertainties and the reluctance of some buyers to commit to
acquisitions in the current environment. Based on a weakening in property
values which has come with the industry credit crunch and the national
real estate recession, PL&D took a $31 million pre-tax net realizable
value writedown against earnings in 1992. The charge affected those
properties which PL&D had decided to sell in the near term. Currently it
is management's belief that its remaining real estate properties are not
carried at amounts in excess of their net realizable values. To achieve
full value for some of its real estate holdings, in particular its
investments in Rincon Center and the Resort at Squaw Creek, the Company
may have to hold those properties several years and currently intends to
do so.
Real Estate Strategy
Since 1990, PL&D has taken a number of steps to minimize the adverse
financial impact of current market conditions. In early 1990, all new
real estate investment was suspended pending market improvement, all but
critical capital expenditures were curtailed on on-going projects and
PL&D's workforce was cut by over 60%. Certain project loans were
extended, with such extension usually requiring paydowns and increased
annual amortization of the remaining loan balance. Going forward, PL&D
will operate with a reduced staff and adjust its activity to meet the
demands of the market.
PL&D's real estate development project mix includes planned community,
industrial park, commercial office, multi-unit residential, urban mixed
use, resort and single family home developments. Given the current real
estate environment, PL&D's emphasis is on the sale of completed product
and also developing the projects in its inventory with the highest near
term
sales potential. It may also selectively seek new development
opportunities in which it serves as development manager with limited
equity exposure, if any.
Real Estate Properties
The following is a description of the Company's major development
projects and properties by geographic area:
Florida
West Palm Beach and Palm Beach County - At year end, PL&D had
completed the sale of all of the original 1,428 acres located in West Palm
Beach at the development known as "The Villages of Palm Beach Lakes".
During 1994, the final 21 acres were sold. "The Villages" is a planned
community development that, when completed, will provide approximately
6,750 residential dwelling units and related commercial developments,
clustered around two championship golf courses designed by Jack Nicklaus.
From 1982 to 1989, Burg & DiVosta, one of Florida's largest
privately-owned building firms, built and sold 2,264 townhouse units in
"The Villages". Burg & DiVosta also delivered 575 zero-lot-line three
bedroom, two bath, single-family homes within several subdivisions of "The
Villages" and 480 mid-rise condominium units.
In 1991, the final 57 of 83 lots at Bear Lakes Estates, an upscale
single family neighborhood within "The Villages", were sold to a
residential developer who is currently building out the development.
In 1993, PL&D sold tracts totaling approximately 52 acres and in 1994,
the final 21 acres were sold. Recent sales within the development have
been almost totally made to residential multi-unit rental developers.
PL&D's only continuing interest in the project will be its ownership in
the Bear Lakes Country Club which under agreement with the membership can
be turned over to the members when membership reaches 650. Current
membership is 437.
At Metrocentre, a 51-acre commercial/office park at the intersection
of Interstate 95 and 45th Street in West Palm Beach, two sites totalling 8
acres were sold in 1994 and all remaining financing on the project was
repaid. One site is being developed by a national restaurant chain, the
other was acquired by an existing property owner within the park for
expansion. At year-end, a third site is in negotiation with a possible
closing sometime in 1995. The park consists of 17 parcels, of which 3
remain unsold at year-end. The park provides for 570,500 square feet of
mixed commercial uses.
Massachusetts
Perini Land and Development or Paramount Development Associates, Inc.
("Paramount"), a wholly-owned subsidiary of PL&D, owns the following
projects:
Raynham Woods Commerce Center, Raynham - In 1987, Paramount acquired a
409 acre site located in Raynham, Massachusetts, on which it had done
preliminary investigatory and zoning work under an earlier purchase option
period. During 1988, Paramount secured construction financing and
completed infrastructure work on a major portion of the site (330 acres)
which is being developed as a mixed-use corporate campus style park known
as "Raynham Woods Commerce Center". During 1989, Paramount completed the
sale of a 24-acre site to be used as a headquarters facility for a
division of a major U.S. company. During 1990, construction was completed
on this facility. In 1990 construction was also completed on two new
commercial buildings by Paramount. During 1992, a 17-acre site was sold
to a developer who was working with a major national retailer. The site
has since been developed into the first retail project in the park. No
new land sales were made in 1993, but in 1994, an 11 acre site was sold
to the same major U.S. company which had acquired land in 1989. Although
the two Paramount commercial buildings owned within the park experienced
some tenant turnover in 1994, they remained 90% occupied at year-end. The
park is planned to eventually contain 2.5 million square feet of office,
R&D, light industrial and mixed commercial space.
Robin Hill, Marlborough - The Robin Hill project is located at the
intersection of Routes 495 and 290 in Marlborough, Massachusetts. The
major portion of this property was sold in 1985-1987. Paramount exercised
its option to purchase an additional 53 acres of contiguous property in
1989. In 1993, this site was identified as the potential location for a
new retail center and was sold by Paramount in 1994.
Easton Business Center, Easton - In 1989, Paramount acquired a
40-acre site in Easton, Massachusetts, which had already been partially
developed. Paramount completed the work in 1990 and is currently
marketing the site to commercial/industrial users. No sales were closed
in 1994.
Wareham - In early 1990, Paramount acquired an 18.9 acre parcel of
land at the junction of Routes 495 and 58 in Wareham, Massachusetts. The
property is being marketed to both retail and commercial/industrial users.
No sales were closed in 1994.
Easton Industrial Park, Easton - In 1992, PL&D acquired four
single-story industrial/office buildings located in the Easton Industrial
Park with an aggregate square footage of 110,000. The buildings,
originally developed by Paramount, were acquired from Pacific Gateway
Properties (formerly Perini Investment Properties) in 1992 as part of an
overall settlement agreement. Late in 1993, these buildings were put
under a contract of sale and were sold in early 1994.
Georgia
The Villages at Lake Ridge, Clayton County - During 1987, PL&D (49%)
entered into a joint venture with 138 Joint Venture partners to develop a
348-acre planned commercial and residential community in Clayton County to
be called "The Villages at Lake Ridge", six miles south of Atlanta's
Hartsfield International Airport. By year end 1990, the first phase
infrastructure and recreational amenities were in place. In 1991, the
joint venture completed the infrastructure on 48 lots for phased sales of
improved lots to single family home builders and sold nine. During 1992,
the joint venture sold an additional 60 lots and also sold a 16-acre
parcel for use as an elementary school. During 1993, unusually wet
weather in the spring delayed construction on improvements required to
deliver lots as scheduled. As a result, the sale of an additional 58 lots
in 1993 were below expectation. Although 1994 started off strong, rising
interest rates created a slowdown in activity later in the year. For the
year, 52 lots were sold. Because most of the homes built within the
development are to first time buyers, demand is highly sensitive to
mortgage rates and other costs of ownership. Financing restrictions
generally require the joint venture to allow developers to take down
finished lots only as homes built on previously acquired lots are sold.
As a result, any slowdown in home sales will influence joint venture sales
quickly thereafter. The development plan calls for mixed residential
densities of apartments and moderate priced single-family homes totalling
1,158 dwelling units in the residential tracts plus 220,000 square feet of
retail and 220,000 square feet of office space in the commercial tracts.
Garden Lakes - During 1994 PL&D (49.5%), in joint venture, sold this
278-unit apartment complex on an 18.5 acre tract within the Villages of
Lake Ridge.
The Oaks at Buckhead, Atlanta - Sales commenced on this 217-unit
residential condominium project at a site in the Buckhead section of
Atlanta near the Lenox Square Mall in 1992. The project consists of 201
residences in a 30-story tower plus 16 adjacent three-story townhome
residences. At year end 123 units were either sold or under contract.
Fifty-three of these units were sold in 1994, up from 35 the previous
year. PL&D (50%) is developing this project in joint venture with a
subsidiary of a major Taiwanese company.
California
Rincon Center, San Francisco - Major construction on this mixed-use
project in downtown San Francisco was completed in 1989. The project,
constructed in two phases, consists of 320 residential rental units,
approximately 423,000 square feet of office space, 63,000 square feet of
retail space, and a 700-space parking garage. Following its completion in
1988, the first phase of the project was sold and leased back by the
developing partnership. The first phase consists of about 223,000 square
feet of office space and 42,000 square feet of retail space. The Phase I
office space continues to be close to 100% leased with the regional
telephone directory company as the major tenant on leases which run into
early 1998. The retail space was 90% leased at year end. Phase II of the
project, which began operations in late 1989, consists of approximately
200,000 square feet of office space, 21,000 square feet of retail space, a
14,000 square foot U.S. postal facility, and 320 apartment units. At year
end, close to 100% of the office space, 94% of the retail space and all
but 9 of the 320 residential units were leased. The major tenant in the
office space in Phase II is the Ninth Circuit Federal Court of Appeals
which is leasing approximately 176,000 square feet. That lease expires at
the end of 1996 with the tenant holding an option for two additional
years. Currently efforts are underway to determine whether those options
will be exercised. PL&D currently holds a 46% interest in and is managing
general partner of the partnership which is developing the project. The
land related to this project is being leased from the U.S. Postal Service
under a ground lease which expires in 2050.
In addition to the project financing and guarantees disclosed in the
first, second and third paragraphs of Footnote 11 to Notes to the
Consolidated Financial Statements, the Company has advanced approximately
$72.4 million to the partnership through December 31, 1994, of which
approximately $1.4 million was advanced during 1994, primarily to paydown
some of the principal portion of project debt which was renegotiated
during 1993. In 1994, operations before principal repayment of debt
created a positive cash flow on an annual basis for the first time.
Two major loans on this property in aggregate totaling over $75
million were scheduled to mature in 1993. During 1993 both loans were
extended for five additional years. To extend these loans, PL&D provided
approximately $6 million in new funds which were used to reduce the
principal balances of the loans. In 1994 and over the next four years,
additional amortization will be required, some of which may not be covered
by operating cash flow and, therefore, at least 80% of those funds not
covered by operations will be provided by PL&D as managing general
partner. Lease payments and loan amortization obligations at Rincon
Center through 1997 are as follows: $6.9 million in 1995; $7.5 million in
1996; $7.3 million in 1997. Based on Company forecasts, it could be
required to contribute as much as $10.4 million to cover these
requirements not covered by project cash flow through 1997. Although
management believes operating expenses will be covered by operating cash
flow at least through 1997, the Company's share of project depreciation,
which could be as much as $2 million annually, will not be covered through
operating profit and, therefore, will continue to reduce the Company's
reported earnings by that amount. In addition, interest rates on much of
the debt financing covering Rincon Center are variable based on various
rate indices. With the exception of approximately $20 million of the
financing, none of the debt has been hedged or capped and is subject to
market fluctuations. From time to time the, Company reviews the costs and
anticipated benefits from hedging Rincon Center's interest rate
commitments. Based on current costs to further hedge rate increases, the
Company has elected not to provide any additional hedges at this time.
As part of the Rincon One sale and operating lease-back transaction,
the joint venture agreed to obtain an additional financial commitment on
behalf of the lessor to replace at least $33 million of long-term
financing by January 1, 1998. If the joint venture has not secured a
further extension or new commitment for financing on the property for at
least $33 million, the lessor will have the right under the lease to
require the joint venture to purchase the property for a stipulated amount
of approximately $18.8 million in excess of the then outstanding debt.
Management believes it will be able to extend the financing or refinance
the building such that this sale back to the Company will not occur.
During 1993 PL&D agreed, if necessary, to lend Pacific Gateway
Properties (PGP), the other General Partner in the project, funds to meet
its 20% share of cash calls. In return PL&D receives a priority return
from the partnership on those funds and penalty fees in the form of rights
to certain distributions due PGP by the partnership controlling Rincon.
During 1993 and 1994, PL&D advanced $1.7 million and $.3 million,
respectively, under this agreement, primarily to meet the principal
payment obligations of the loan extensions described above.
During 1994, a major commercial tenant with a lease running through
1996 indicated it may be vacating all or a portion of its 180,000 square
feet of office space on or before the end of its lease. Although the
exact status of the current tenant's intentions are still unknown, the
space is being shown to potential tenants for possible 1997 occupancy.
The Resort at Squaw Creek - During 1990, construction was completed on
the 405-unit first phase of the hotel complex of this major
resort-conference facility. In mid-December of that year, the resort was
opened. In 1991, final work was completed on landscaping the golf course,
as well as the remaining facilities to complete the first phase of the
project. The first phase of the project includes a 405-unit hotel, 36,000
square feet of conference facilities, a Robert Trent Jones, Jr. golf
course, 48 single-family lots, all but three of which had been sold or put
under contract by early 1993, three restaurants, an ice skating rink, pool
complex, fitness center and 11,500 square feet of various retail support
facilities. The second phase of the project is planned to include an
additional 409-unit hotel facility, 36 townhouses, 27,000 square feet of
conference space, 5,000 square feet of retail space and a parking
structure. No activity on the second phase will begin until stabilization
is attained on phase one and market conditions warrant additional
investment.
While PL&D has an effective 18% ownership interest in this joint
venture, it has additional financial commitments as described below.
In addition to the project financing and guarantees disclosed in
paragraphs four and five of Note 11 to Notes to the Consolidated Financial
Statements, the Company has advanced approximately $72.6 million to the
joint venture through December 31, 1994, of which approximately $3.2
million was advanced during 1994, for the cost of operating expenses and
interest payments. Further, it is anticipated the project may require
additional funding by PL&D before it reaches stabilization which may take
several years. During 1992, the majority partner in the joint venture sold
its interest to a group put together by an existing limited partner. As a
part of that transaction, PL&D relinquished its managing general
partnership position to the buying group, but retained a wide range of
approval rights. The result of the transaction was to strengthen the
financial support for the project and led to an extension of the bank
financing on the project to mid-1995. The $48 million of bank financing
on the project currently matures in May, 1995. Preliminary conversations
have taken place with the project's lead bank and management anticipates
extension or replacement of the loan. However, as with any real estate
financing, there is no assurance that an extension or replacement
financing will be available. In the event that were to happen, the
property would be subject to foreclosure and possible sale at a value
below the Company's present investment basis.
As part of Squaw Creek Associates partnership agreement, either
partner may initiate a buy/sell agreement on or after January 1, 1997.
Such buy/sell agreement, which is similar to those often found in real
estate development partnerships, provides for the recipient of the offer
to have the option of selling its share or purchasing its partners share
at the proportionate amount applicable based on the offer price and the
specific priority of payout as called for under the partnership agreement
based on a sale and termination of the partnership. The Company does not
anticipate such a circumstance, because until the end of the year 2001,
the partner would lose the certainty of a $2 million annual preferred
return currently guaranteed by the Company. However, an exercise of the
buy/sell agreement by its partner could force the Company to sell its
ownership at a price possibly significantly less than its full value
should the Company be unable to buy out its partner and were forced to
sell at the price initiated by its partner.
The operating results of this project are weather sensitive. For
example, a large snowfall in late 1994 helped improve results in the
fourth quarter of 1994 and, for the full year the resort showed marked
improvement over the previous year with funds available for debt service
doubling as compared to 1993.
Corte Madera, Marin County - After many years of intensive planning,
PL&D obtained approval for a 151 single-family home residential
development on its 85-acre site in Corte Madera and, in 1991, was
successful in gaining water rights for the property. In 1992, PL&D
initiated development on the site which was continued into 1993. This
development is one of the last remaining in-fill areas in southern Marin
County. In 1993, when PL&D decided to scale back its operations in
California, it also decided to sell this development in a transaction
which closed in early 1994. The transaction calls for PL&D to get the
majority of its funds from the sale of residential units or upon the sixth
anniversary of the sale whichever takes place first and, although
indemnified, to leave in place certain bonds and other assurances
previously given to the town of Corte Madera guaranteeing performance in
compliance with approvals previously obtained. By
year-end 1994, most of the infrastructure related to the development had
been
completed by the purchaser using equity funds. PL&D has agreed to
subordinate its debt to a commercial lender who will be financing the
building of housing units.
Arizona
I-10 West, Phoenix - In 1979, I-10 Industrial Park Developers
("I-10"), an Arizona partnership between Paramount Development
Associates, Inc. (80%) and Mardian Development Company (20%), purchased
approximately 160 acres of industrially zoned land located immediately
south of the Interstate 10 Freeway, between 51st and 59th Avenues in the
City of Phoenix. The project experienced strong demand through 1988.
With the recent downturn in the Arizona real estate markets, sales have
slowed. No sales were made in 1994, leaving approximately 13 acres
unsold.
Airport Commerce Center, Tucson - In 1982, the I-10 partnership
purchased 112 acres of industrially zoned property near the Tucson
International Airport. During 1983, the partnership added 54 acres to
that project, bringing its total size to 166 acres. This project has
experienced a low level of sales activity due to an excess supply of
industrial property in the marketplace. However, the partnership built
and fully leased a 14,600 square foot office/warehouse building in 1987 on
a building lot in the park, which was sold during 1991. In 1990, the
partnership sold 14 acres to a major airline for development as a
processing center and, in 1992, sold a one acre parcel adjacent to the
existing property. After experiencing no new sales in 1993, approximately
12 acres were sold in 1994 and currently an additional 9 acres are under
agreement for sale in 1995. At year end, approximately 111 acres remain
to be sold.
Perini Central Limited Partnership, Phoenix - In 1985, PL&D (75%)
entered into a joint venture with the Central United Methodist Church to
master plan and develop approximately 4.4 acres of the church's property
in midtown Phoenix. Located adjacent to the Phoenix Art Museum and near
the Heard Museum, the project is positioned to become the mixed use core
of the newly formed Phoenix Arts District. In 1990, the project was
successfully rezoned to permit development of 580,000 square feet of
office, 37,000 square feet of retail and 162 luxury apartments. Plans for
the first phase of this project, known as "The Coronado" have been put on
hold pending improved market conditions. In 1993, PL&D obtained a
three-year extension of the construction start date required under the
original zoning and for the present is continuing to hold the project in
abeyance.
Grove at Black Canyon, Phoenix - The project consists of an office
park complex on a 30-acre site located off of Black Canyon Freeway, a
major Phoenix artery, approximately 20 minutes from downtown Phoenix.
When complete, the project will include approximately 650,000 square feet
of office, hotel, restaurant and/or retail space. Development, which
began in 1986, is scheduled to proceed in phases as market conditions
dictate. In 1987, a 150,000 square foot office building was completed
within the park and now is 97% leased with approximately half of the
building leased to a major area utility company. During 1993, PL&D (50%)
successfully restructured the financing on the project by obtaining a
seven-year extension with some amortization and a lower fixed interest
rate. The annual amortization commitment is not currently covered by
operating cash flow, which has caused PL&D to have to provide
approximately $1.2 million in 1994 to cover the shortfall. In the near
term it appears approximately $800,000 per year of support to cover loan
amortization will continue to be required. No new development within the
park was begun in 1994 nor were any land sales consummated. However, the
lease covering space occupied by the major office tenant was extended an
additional seven years to the year 2004 on competitive terms.
Sabino Springs Country Club, Tucson - During 1990, the Tucson Board of
Supervisors unanimously approved a plan for this 410-acre residential golf
course community close to the foothills on the east side of Tucson. In
1991, that approval which had been challenged, was affirmed by the Arizona
Supreme Court. When developed, the project will consist of 496
single-family homes and an 18-hole Robert Trent Jones, Jr. designed
championship golf course and club. In 1993, PL&D recorded the master plat
on the project and sold a major portion of the property to an
international real estate company. Although it will require some
infrastructure development before sale, PL&D still retains 33 estate lots
for sale in future years.
Capitol Plaza, Phoenix - In 1988, PL&D acquired a 1 3/4-acre parcel of
land located in the Governmental Mall area of Phoenix. Original plans
were to either develop a 200,000 square foot office building on the site
to be available to government and government related tenants or to sell
the site. The project has currently been placed on hold pending a change
in market conditions.
General
The Company's real estate business is influenced by both economic
conditions and demographic trends. A depressed economy may result in
lower real estate values and longer absorption periods. Higher inflation
rates may increase the values of current properties, but often are
accompanied by higher interest rates which may result in a slowdown in
property sales because of higher carrying costs. Important demographic
trends are population and employment growth. A significant reduction in
either of these may result in lower real estate prices and longer
absorption periods.
The well publicized problems in the commercial bank and savings and
loan industries over the past several years have resulted in sharply
curtailed credit available to acquire and develop real estate; further,
the current national real estate recession has significantly slowed the
pace at which PL&D has been able to proceed on certain of its development
projects and its ability to sell developed product. In some or all cases,
it has also reduced the sales proceeds realized on such sales and/or
required extended payment terms.
Generally, there has been no material impact on PL&D's real estate
development operations over the past 10 years due to interest rate
increases. However, an extreme and prolonged rise in interest rates could
create market resistance for all real estate operations in general, and is
always a potential market obstacle. PL&D, in some cases, employs hedges
or caps to protect itself against increases in interest rates on any of
its variable rate debt and, therefore, is insulated from extreme interest
rate risk on borrowed funds, although specific projects may be impacted if
the decision has been made not to hedge or to hedge at higher than current
rates.
The Company has been replacing relatively low cost debt-free land in
Florida acquired in the late 1950's with land purchased at current market
prices. In the future, as the mix of land sold contains proportionately
less low cost land, the gross margin on real estate revenues will
decrease.
Insurance and Bonding
All of the Company's properties and equipment, both directly owned or
owned through partnerships or joint ventures with others, are covered by
insurance, and management believes that such insurance is adequate.
However, due to conditions in the insurance market, the Company's
California properties, both directly owned and owned in partnership with
others, are not fully covered by earthquake insurance.
In conjunction with its construction business, the Company is often
required to provide various types of surety bonds. The Company has dealt
with the same surety for over 75 years and it has never been refused a
bond. Although from time-to-time the surety industry encounters
limitations affecting the bondability of very large projects, the Company
has not encountered any limit on its bonding ability that has adversely
impacted its operations.
Employees
The total number of personnel employed by the Company is subject to
seasonal fluctuations, the volume of construction in progress and the
relative amount of work performed by subcontractors. During 1994, the
maximum number of employees employed was approximately 2,900 and the
minimum was approximately 2,100.
The Company operates as a union contractor. As such, it is a
signatory to numerous local and regional collective bargaining agreements,
both directly and through trade associations, throughout the country.
These agreements cover all necessary union crafts and are subject to
various renewal dates. Estimated amounts for wage escalation related to
the expiration of union contracts are included in the Company's bids on
various projects and, as a result, the expiration of any union contract in
the current fiscal year is not expected to have any material impact on the
Company.
ITEM 2. PROPERTIES
Properties applicable to the Company's real estate development
activities are described in detail by geographic area in Item 1. Business
on pages 8 through 15. All other properties used in operations are
summarized below:
Owned or Approximate Approximate
Principal Offices Leased by Acres Square Feet
Perini of Office
Space
Framingham, MA Owned 9 110,000
Phoenix, AZ Owned 1 22,000
Southfield, MI Leased - 13,900
San Francisco, CA Leased - 3,500
Hawthorne, NY Leased - 12,500
West Palm Beach, FL Leased - 5,000
Los Angeles, CA Leased - 2,000
Las Vegas, NV Leased - 3,000
Atlanta, GA Leased - 1,700
Chicago, IL Leased - 14,700
Philadelphia, PA Leased - 2,100
-- -------
10 190,400
== =======
Principal Permanent Storage Yards
Bow, NH 70
Owned
Framingham, MA 6
Owned
E. Boston, MA 6
Owned
Las Vegas, NV 2
Leased
Novi, MI 3
Leased --
87
==
The Company's properties are generally well maintained, in good condition,
adequate and suitable for the Company purpose and fully utilized.
ITEM 3. LEGAL PROCEEDINGS
On July 30, 1993, the U.S. District Court (D.C.) upheld the Contracting
Officer's terminations for default, both dated May 11, 1990, on two
adjacent contracts for subway construction between Mergentime-Perini (two
joint ventures) and the Washington Metropolitan Area Transit Authority
("WMATA") and found the Mergentime Corporation, Perini Corporation and the
Insurance Company of North America, the surety, jointly and severally
liable to WMATA for damages in the amount of $16.5 million, consisting
primarily of excess reprocurement costs. The court deferred ruling on the
net value of the joint ventures' major claims against WMATA. Any such
amounts awarded to the joint ventures could serve to offset the above
damages award. Originally Mergentime Corporation was the sponsor and
manager of both joint ventures with a 60% interest in each. Perini held
the remaining 40%. The contracts were awarded in 1985 and 1986 but
subsequently in 1987, Perini and Mergentime entered into an agreement
whereby Perini withdrew from the joint ventures, but remained obligated to
WMATA under the contracts. At that point, Mergentime assumed full control
over the performance of both projects. After the termination of the joint
ventures' contracts in May of 1990, Perini Corporation, acting
independently, was awarded a separate contract by WMATA to finish these
projects, both of which were successfully completed on schedule.
Mergentime may be unable to meet its financial obligations under the
award. In such event the Company, as a joint venture partner, could be
liable for the entire amount. Currently, both parties have filed post-
trial motions with the District Court attacking the decision and award.
The successor judge is treating the judgement as one that is not a final
judgment and thus not one from which an appeal lies pending rulings on the
motions. It is anticipated that the Court's review of the case and the
motions will require substantial time and effort. The Court has indicated
that it intends to give the case the consideration it deserves. No date
has been set for the continuation of the case.
The ultimate financial impact, if any, of this judgment is not yet
determinable, and therefore, no impact is reflected in the 1993 or 1994
financial statements.
In the ordinary course of its construction business, the Company is
engaged in other lawsuits. The Company believes that such lawsuits are
usually unavoidable in major construction operations and that their
resolution will not materially affect its results of future operations and
financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is traded on the American Stock Exchange
under the symbol "PCR". The quarterly market price ranges (high-
low) for 1994 and 1993 are summarized below:
1994 1993
Market Price Range per High Low High Low
Common Share:
Quarter Ended
March 31 13 7/8 - 11 1/4 18 5/8 - 14 1/8
June 30 13 3/8 - 10 7/8 14 7/8 - 13
September 30 11 1/2 - 9 1/8 13 1/2 - 9 7/8
December 31 11 1/8 - 9 1/8 12 3/4 - 10 1/8
For information on dividend payments, see Selected Financial Data
in Item 6 below and "Dividends" under Management's Discussion and
Analysis on Item 7 below.
As of March 3, 1995, there was approximately 1,430 record holders
of the Company's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
RINCON CENTER ASSOCIATES
Balance Sheet
As of March 31,SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
OPERATING SUMMARY 1994 ASSETS
3/31/94 12/31/93
CASH $ 366,825 $ 120,129
ACCOUNTS RECEIVABLE 402,363 44,399
DEFERRED RENT RECEIVABLE 7,430,165 7,882,208
NOTES RECEIVABLE 15,751,844 15,828,196
REAL ESTATE PROPERTIES USED IN OPERATIONS, Net 116,802,510 118,021,303
LEASEHOLD IMPROVEMENTS, Net 2,235,690 1,854,719
OTHER ASSETS 2,195,626 2,855,012
------------ ------------
Total Assets $145,185,023 $146,605,966
============ ============
LIABILITIES
CONSTRUCTION NOTES PAYABLE $ 62,182,500 $ 62,370,000
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 3,036,584 3,415,936
DEFERRED GROUND RENT, Net 7,197,194 7,306,810
DEFERRED LEASE EXPENSE, Net 1,609,927 3,101,814
DEFERRED INCOME 1,540,311 1,540,311
ACCRUED INTEREST DUE GENERAL PARTNERS 35,326,625 33,900,724
DUE TO PERINI LAND AND DEVELOPMENT COMPANY 69,759,693 68,499,293
DUE TO PACIFIC GATEWAY PROPERTIES, INC. 17,428,051 16,988,451
------------ ------------
Total Liabilities $198,080,885 $197,123,339
PARTNERS' DEFICIT (52,895,862) (50,517,373)
------------- -------------
Liabilities and Partners' Deficit $145,185,023 $146,605,966
============= =============
RINCON CENTER ASSOCIATES
Income Statement
For Period 1/1/93 thru 3/31/94
Current Year-To-Date Year-To-Date
Period 3/31/94 3/31/931993 1992 1991 1990
REVENUE:
Rental Income
Revenues
Construction operations $ 1,448,804950,884 $1,030,341 $1,023,274 $ 4,328,191919,641 $ 4,284,069
Parking Income 112,890 316,517 341,329
Interest Income 140,897 404,456 259,104983,689
Real estate operations 61,161 69,775 47,578 72,267 31,331
---------- ---------- ---------- ---------- ----------
Total Revenues $1,012,045 $1,100,116 $1,070,852 $ 991,908 $1,015,020
---------- ---------- ---------- ---------- ----------
Gross Profit $ 51,797 $ 52,786 $ 22,189 60,854 $ 43,388
General, Administrative & Selling
Expenses (42,985) (44,212) (41,328) (48,530) (46,841)
----------- ----------- ----------- Total Revenue----------- -----------
Income (Loss) From Operations $ 1,702,5918,812 $ 5,049,1648,574 $ 4,884.502
OPERATIONS EXPENSE:
Operating(19,139) $ 12,324 $ (3,453)
Other Income (Expense), Net (856) 5,207 436 1,136 3,431
Interest Expense $ 794,219 $ 2,181,212 $ 2,058,734
Ground Rent Expense 233,306 754,664 850,152(7,473) (5,655) (7,651) (9,022) (6,238)
----------- ----------- ----------- Total Operating Expense----------- -----------
Income (Loss) Before Income Taxes $ 1,027,525483 $ 2,935,8768,126 $ 2,908,886(26,354) $ 4,438 $ (6,260)
(Provision) Credit for Income Taxes (180) (4,961) 9,370 (1,260) 3,685
----------- ----------- ----------- NET OPERATING INCOME----------- -----------
Net Income (Loss) $ 675,066303 $ 2,113,2883,165 $ 1,975,616
DEBT SERVICE:
Sale Lease Back Basic Rent 442,468 1,327,405 873,358
Interest Expense 217,945 581,225 630,971
LC Fees 44,601 133,802 215,818(16,984) $ 3,178 $ (2,575)
----------- ----------- ----------- Total Debt Service $ 705,014 $ 2,042,432 $ 1,720,327
INCOME OR (LOSS) B/F PARTNER EXPENSES & DEPRECIATION (29,948) 70,856 255,289
PARTNER EXPENSES:
General Partner Loan Interest Expense $ 595,982 $ 1,709,665 1,524,815
General Partner LC Fees 43,400 (285,257) 215,753
Other 94 96 1,800
----------- -----------
---------
Total Partner ExpensesPer Share of Common Stock:
Earnings (loss) $ 639,476(.42) $ 1,424,504 1,742,368
DEPRECIATION:
Amortization.24 $ 26,394(4.69) $ 69,421.27 $ 49,265
Depreciation 324,916 955,421 946,259(1.20)
----------- ----------- ----------- Total Amortization/Depreciation----------- -----------
Cash dividends declared $ 351,310- $ 1,024,842- $ 995,524- $ - $ .60
----------- ----------- ----------- NET INCOME OR (LOSS) $(1,020,734) $(2,378,490) $(2,482,603)
============ ============ ============----------- -----------
Book value $ 23.79 $ 24.49 $ 23.29 $ 28.96 $ 28.48
----------- ----------- ----------- ----------- -----------
Weighted Average Number
of Common Shares Outstanding 4,380 4,265 4,079 3,918 3,916
----------- ----------- ----------- ----------- -----------
FINANCIAL POSITION SUMMARY
Working Capital $ 29,948 $ 36,877 $ 31,028 $ 30,724 $ 33,756
----------- ----------- ----------- ----------- -----------
Current Ratio 1.13:1 1.17:1 1.14:1 1.16:1 1.16:1
----------- ----------- ----------- ----------- -----------
Long-term Debt, less current
maturities $ 76,986 $ 82,366 $ 85,755 $ 96,294 $ 100,912
----------- ----------- ----------- ----------- -----------
Stockholders' Equity $ 132,029 $ 131,143 $ 121,765 $ 138,644 $ 136,682
----------- ----------- ----------- ----------- -----------
Ratio of Long-term Debt to Equity $ .58:1 .63:1 .70:1 .69:1 .74:1
----------- ----------- ----------- ---------- -----------
Total Assets $ 482,500 $ 476,378 $ 470,696 $ 498,574 $ 509,707
----------- ----------- ----------- ---------- -----------
OTHER DATA
Backlog at Year-end $1,538,779 $1,238,141 $1,169,553 $1,233,958 $1,091,077
----------- ----------- ----------- ---------- -----------
RINCON CENTER ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIPMANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS -
1994 COMPARED TO 1993
The Company's 1994 operations resulted in net income of $.3 million on
revenues of $1.0 billion and a loss of 42 cents per common share (after
giving effect to the dividend payments required on its preferred stock)
compared to net income of $3.2 million or 24 cents per common share on
revenues of $1.1 billion in 1993. In spite of the overall decrease in
revenues during 1994, income from operations increased slightly compared
to 1993 results. An increase in interest expense in 1994 and the non-
recurring $1 million net gain after tax in 1993 from the sale by the
Company of its 74%-ownership interest in Majestic Contractors Limited
("Majestic"), its Canadian pipeline subsidiary, contributed to the overall
decrease in net income.
Revenues were down from the record level established last year and
amounted to $1.012 billion in 1994 compared to $1.100 billion in 1993, a
decrease of $88 million (or 8%). This decrease resulted primarily from a
net decrease in construction revenues of $79 million (or 8%) from $1.030
billion in 1993 to $.951 billion in 1994 due to a decrease in volume from
building operations of $126 million (or 17%), from $752 million in 1993 to
$626 million in 1994. The decrease in revenue from building operations
was primarily due to the prolonged start-up phases on certain projects.
This decrease was partially offset by an increase in revenues from civil
and environmental construction operations of $47 million (or 17%), from
$278 million in 1993 to $325 million in 1994, due to an increased heavy
construction backlog going into 1994. In addition to the overall decrease
in construction revenues, revenues from real estate operations decreased
$8.6 million (or 12%), from $69.8 million in 1993 to $61.2 million in
1994, due primarily to the non-recurring sale ($23.2 million) in 1993 of a
partnership interest in certain commercial rental properties in San
Francisco and a $5.2 million decrease in land sales in Arizona. The
decrease in real estate revenues was partially offset from the sale of two
investment properties in 1994 ($8.3 million) and increased land sales in
Massachusetts ($5.4 million) and California ($4.9 million).
In spite of the 8% decrease in total revenues, the gross profit in 1994
decreased only $1.0 million (or 2%), from $52.8 million in 1993 to $51.8
million in 1994. The gross profit from construction operations decreased
$1.1 million (or 2.3%), from $49.1 million in 1993 to $48.0 million in
1994, due to the negative profit impact from the reduction in building
construction revenues referred to above and a loss from international
operations resulting from unstable economic and political conditions in a
certain overseas location where the Company is working. These decreases
were partially offset by slightly higher margins on the construction work
performed in 1994 (5.0% in 1994 compared with 4.8% in 1993) and a slight
overall increase ($.1 million) in the gross profit from real estate
operations, from $3.7 million in 1993 compared to $3.8 million in 1994.
Total general, administrative and selling expenses decreased by $1.2
million (or 3%) in 1994, from $44.2 million in 1993 to $43.0 million in
1994 due to several factors, the more significant ones being a $2.1
million expense for severance incurred in 1993 in connection with re-
engineering some of the business units, which was partially offset by the
full year impact of expenses related to the acquisition referred to in
Note 1 to Notes to the Consolidated Financial Statements.
The decrease in other income (expense), net of $6.1 million, from income
of $5.2 million in 1993 to a net loss of $.9 million in 1994 is primarily
due to the pretax gain in 1993 of $4.6 million on the sale of Majestic
and, to a lesser degree, an increase in other expenses in 1994, primarily
bank fees.
The increase in interest expense of $1.8 million (or 32%), from $5.7
million in 1993 to $7.5 million in 1994 primarily results from higher
interest rates during 1994 and higher average level of borrowings.
Looking ahead, we must consider the Company's construction backlog and
remaining inventory of real estate projects. The overall construction
backlog reached a record $1.539 billion at the end of 1994, an increase of
$301 million (or 24%), from the $1.238 billion at the end of 1993. This
backlog is well balanced over the various business units included in both
the building and civil and environmental operating groups. Approximately
70% of this increase in backlog can be attributable to an increase in the
backlog of heavy construction contracts. This increase could indicate a
relative increase in higher margin heavy construction revenues in the
future.
With the sale of the final 21 acres during 1994, the Company's Villages of
Palm Beach Lakes, Florida land inventory is completely sold out. Because
of its low book value, sales of this acreage have provided a major portion
of the Company's real estate profit in recent years. With this property
fully sold, the Company's ability to generate profit from real estate
sales and the related gross margin will be reduced. Between 1989 and
1994, property prices in general have fallen substantially due to the
reduced liquidity in real estate markets and reduced demand. Recently,
the Company has noted improvement in some property areas. This trend has
had some effect on residential property sales which were closed in 1994.
However, this trend is still not widespread nor proven to be sustainable.
The Company's profitability will also be affected by the continuation of
approximately $3 million of annual depreciation recognized through its
share of ownership in joint venture properties which to date has not been
fully covered by operating profit.
RESULTS OF OPERATION -
1993 COMPARED TO 1992
The improved operating results in 1993 resulted in net income of $3.2
million (or $.24 per common share) compared to a net loss in 1992 of $17
million (or $4.69 per common share). The primary reason for this
improvement was the nominal profit generated by real estate operations in
1993 compared to a $47 million operating loss in 1992 which included a
$31.4 million pretax net realizable value writedown on certain real estate
assets management decided to liquidate in the near term. However, profits
from construction operations decreased due primarily to the mix of work
performed in 1993, relatively more of the lower margin building work and
relatively less of the higher margin heavy and pipeline construction work,
the latter being due to the sale by the Company of its 74%-ownership
interest in Majestic in January 1993.
Revenues reached a new record for the second consecutive year and amounted
to $1.100 billion in 1993 compared to $1.071 billion in 1992, an increase
of $29 million (or 3%). This increase resulted primarily from a net
increase in construction revenues of $7 million from $1.023 billion in
1992 to $1.030 billion in 1993 due primarily to an increase in volume from
building operations of $113 million (or 19%), from $604 million in 1992 to
$717 million in 1993 due to an increased backlog going into 1993 and
certain fast-track hotel/casino projects included in the backlog, and to a
lesser degree, a small increase in heavy construction revenues. These
increases more than offset the $101 million decrease in revenues from
pipeline construction due to the sale referred to above and a $14 million
decrease from engineering services due to the sale of Monenco Group Ltd.
("Monenco") in the first quarter of 1992. In addition, revenues from real
estate operations increased by $22.2 million, from $47.6 million in 1992
to $69.8 million in 1993 due primarily to the sale of a partnership
interest in certain commercial rental properties in San Francisco ($23.2
million) and, to a lesser degree, a $7 million increase in land sales in
Florida.
Gross profit in 1993 increased by $30.6 million, from $22.2 million in
1992 to $52.8 million in 1993 due primarily to a $47.2 million increase
from real estate operations, from a $43.5 million loss in 1992 to a $3.7
million profit in 1993. This improvement from real estate operations is
due primarily to the non-recurring $31.4 million pretax net realizable
value writedown in 1992 referred to previously, the profitable sale of
certain commercial rental properties in San Francisco, profitable land
sales in Florida and a $1.3 million improvement in results from a major
ongoing operating property, the Resort at Squaw Creek. This increase in
gross profit was offset by a decrease in gross profit from construction
operations of $16.6 million, from $65.7 million in 1992 to $49.1 million
in 1993 due primarily to the sale of Majestic and Monenco referred to
above, a combined $18 million decrease.
Total general, administrative and selling expenses increased by $2.9
million (or 7%) in 1993, from $41.3 million in 1992 to $44.2 million in
1993 due to several factors, including $2.2 million related to the
acquisition referred to in Note 1 to Notes to the Consolidated Financial
Statements, a $2.1 million expense for severance incurred in connection
with reengineering some of the business units, and additional personnel
for the Company's ongoing heavy construction operations. These increases
were partially offset by the $5.1 million decrease resulting from the sale
of Majestic referred to above.
The increase in other income of $4.8 million, from $.4 million in 1992 to
$5.2 million in 1993 is due to the gain of $4.6 million on the sale of
Majestic and a decrease in the deduction for minority interest, both of
which were partially offset by the nonrecurring gain of $2 million from
the sale of Monenco in 1992.
The decrease in interest expense of $2 million (or 26%), from $7.7 million
in 1992 to $5.7 million in 1993, primarily results from lower interest
rates during 1993 and lower average borrowings due to the continued pay
down of real estate and other debt, and, to a lesser degree, less
interest expense related to Majestic due to the sale.
The higher-than-normal tax rate in 1993 is due to additional tax provided
on the gain on the sale of Majestic for the difference between the book
and tax bases of the Company's investment in this subsidiary.
FINANCIAL CONDITION
CASH AND WORKING CAPITAL
During 1994, the Company used $15.6 million in cash for investment
activities, primarily to fund construction and real estate joint ventures;
$7.4 million for financing activities, primarily to pay down company debt;
and $5.0 million to fund operating activities, primarily changes in
working capital. In the future, the Company has additional financial
commitments to certain real estate joint ventures as described in Note 11
to Notes to the Consolidated Financial Statements.
During 1993, the Company used $39.1 million of cash for investment
activities, primarily to fund construction and real estate joint ventures;
$3 million for financing activities, primarily to pay down Company debt;
and $1.6 million to fund operating activities, primarily changes in
working capital.
During 1992, the Company provided $55.4 million of cash from operations
and $14.2 million of cash from the sale of its investment in Monenco. Of
this amount, $29.9 million was used for investing activities, primarily in
two real estate joint ventures and, to a lesser degree, real estate
properties used in operations; $7.1 million was used for financing
activities, primarily to pay down Company debt; and the remaining amount
($31.7 million, net) increased cash on hand.
Since 1990, the Company has paid down $43.0 million of real estate debt on
wholly-owned real estate projects (from $50.9 million to $7.9 million),
utilizing proceeds from sales of property and general corporate funds.
Similarly, real estate joint venture debt has been reduced by $151 million
over the same period. As a result, the Company has reached a point at
which revenues from further real estate sales that, in the past, have been
largely used to retire real estate debt will be increasingly available to
improve general corporate liquidity. With the exception of the major
properties referred to in Note 11 to Notes to the Consolidated Financial
Statements, this trend should continue over the next several years with
debt on projects often being fully repaid prior to full project sell-out.
On the other hand, the softening of the national real estate market
coupled with problems in the commercial banking industry have
significantly reduced credit availability for both new real estate
development projects and the sale of completed product, sources
historically relied upon by the Company and its customers to meet
liquidity needs for its real estate development business. The Company has
addressed this problem by relying on corporate borrowings, extending
certain maturing real estate loans (with such extensions usually requiring
pay downs and increased annual amortization of the remaining loan
balance), suspending the acquisition of new real estate inventory,
significantly reducing development expenses on certain projects, utilizing
treasury stock in partial payment of amounts due under certain of its
incentive compensation plans, utilizing cash internally generated from
operations and, during the first quarter of 1992, selling its interest in
Monenco. In addition, in January 1993, the Company sold its majority
interest in Majestic for approximately $31.7 million in cash. Since
Majestic had been fully consolidated, the net result to the Company was to
increase working capital by $8 million and cash by $4 million. In
addition, the Company implemented a company-wide cost reduction program in
1990, and again in 1991 and 1993 to improve long-term financial results
and suspended the dividend on its common stock during the fourth quarter
of 1990. Also, the Company increased the aggregate amount available under
its revolving credit agreement from $70 million to $125 million during
1994. Management believes that cash generated from operations, existing
credit lines and additional borrowings should probably be adequate to meet
the Company's funding requirements for at least the next twelve months.
However, the withdrawal of many commercial lending sources from both the
real estate and construction markets and/or restrictions on new borrowings
and extensions on maturing loans by these very same sources cause
uncertainties in predicting liquidity. In addition to internally
generated funds, the Company has access to additional funds under its $5
million short-term line of credit and its $125 million long-term revolving
credit facility. At December 31, 1994, the Company has $5 million
available under its short-term lines of credit and $63 million available
under its revolving credit facility.
The full amount available under the credit facilities may be borrowed
during any fiscal quarter. However, financial covenants limiting the debt
to equity ratio contained in the agreements governing these facilities
limit the amount of borrowings which may be outstanding at the end of any
fiscal quarter. Based on these covenants, $11 million of additional
borrowing capacity was available at December 31, 1994. The financial
covenants to which the Company is subject include minimum levels of
working capital, debt/net worth ratio, net worth level and interest
coverage, all as defined in the loan documents. The Company is in
compliance with all of its covenants as of the most recent balance sheet
date.
The working capital current ratio stood at 1.13:1 at the end of 1994,
compared to 1.17:1 at the end of 1993 and to 1.14:1 at the end of 1992.
Of the total working capital of $29.9 million at the end of 1994, $10
million may not be converted to cash within the next 12-18 months.
LONG-TERM DEBT
Long-term debt was $77 million at the end of 1994 which represented a
decrease of $5.4 million compared with $82.4 million at the end of 1993,
which was a decrease of $3.4 million from the $85.8 million at the end of
1992. The ratio of long-term debt to equity improved to .58:1 at the end
of 1994 compared to .63:1 at the end of 1993 and .70:1 at the end of 1992.
STOCKHOLDERS' EQUITY
The Company's book value per common share stood at $23.79 at December 31,
1994, compared to $24.49 per common share and $23.29 per common share at
the end of 1993 and 1992, respectively. The major factors impacting
stockholders' equity during the three-year period under review were
results of operations, preferred dividends and treasury stock issued in
partial payment of incentive compensation.
At December 31, 1994, there were 1,449 common stockholders of record based
on the stockholders list maintained by the Company's transfer agent.
DIVIDENDS
There were no cash dividends declared during the three year period ended
December 31, 1994 on the Company's outstanding common stock. It is
management's intent to recommend reinstating dividends on common stock
once it is prudent to do so. In 1987, the Company issued 1,000,000
depositary convertible exchangeable preferred shares, each depositary
share representing ownership of 1/10 of a share of $21.25 convertible
exchangeable preferred stock. During the three-year period ended December
31, 1994, the Board of Directors declared regular quarterly cash dividends
of $5.3125 per share for the annual total of $21.25 per share (equivalent
to quarterly dividends of $.53125 per depositary share for an annual total
of $2.125 per depositary share). Dividends on preferred shares are
cumulative and are payable quarterly before any dividends may be declared
or paid on the common stock of the Company (see Note 7 to Notes to the
Consolidated Financial Statements).
ITEM 8. FINANCIAL STATEMENTS ASAND SUPPLEMENTARY DATA
The Reports of Independent Public Accountants, Consolidated
Financial Statements, and Supplementary Schedules, are set forth
on the pages that follow in this Report and are hereby
incorporated herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF DECEMBERTHE REGISTRANT
Reference is made to the information to be set forth in the section
entitled "Election of Directors" in the definitive proxy statement
involving election of directors in connection with the Annual
Meeting of Stockholders to be held on May 18, 1995 (the "Proxy
Statement"), which section is incorporated herein by reference.
The Proxy Statement will be filed with the Securities and Exchange
Commission not later than 120 days after December 31, 1994 pursuant
to Regulation 14A of the Securities and Exchange Act of 1934, as
amended.
Listed below are the names, offices held, ages and business
experience of all executive officers of the Company.
Year First Elected to Present
Name, Offices Held and Age Office and Business Experience
David B. Perini, Director, He has served as a Director,
Chairman, President and Chief President, Chief Executive Officer
Executive Officer - 57 and Acting Chairman since 1972. He
became Chairman on March 17, 1978 and
has worked for the Company since 1962
in various capacities. Prior to
being elected President, he served as
Vice President and General Counsel.
Richard J. Rizzo, He has served in this capacity since
Executive Vice President, January, 1994, which entails overall
Building Construction - 51 responsibility for the Company's
building construction operations.
Prior thereto, he served as President
of Perini Building Company (formerly
known as Mardian Construction Co.)
since 1985, and in various other
operating capacities since 1977.
John H. Schwarz, Executive He has served as Executive Vice
Vice President, Finance and President, Finance and Administration
Administration of the Company since August, 1994, and as Chief
and Chief Executive Officer Executive Officer of Perini Land and
of Perini Land and Development Company, which entails
Development Company - 56 overall responsibility for the
Company's real estate operations
since April, 1992. Prior to that, he
served as Vice President, Finance and
Controls of Perini Land and
Development Company. Previously, he
served as Treasurer from August,
1984, and Director of Corporate
Planning since May, 1982. He joined
the Company in 1979 as Manager of
Corporate Development.
Donald E. Unbekant, Executive He has served in this capacity since
Vice President, Civil and January, 1994, which entails overall
Environmental Construction - responsibility for the Company's
63 civil and environmental construction
operations. Prior thereto, he served
in the Metropolitan New York Division
of the Company as President since
1992, Vice President and General
Manager since 1990 and Division
Manager since 1984.
The Company's officers are elected on an annual basis at the Board of
Directors Meeting immediately following the Shareholders Meeting in May,
to hold such offices until the Board of Directors Meeting following the
next Annual Meeting of Shareholders and until their respective successors
have been duly appointed or until their tenure has been terminated by the
Board of Directors, or otherwise.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In response to Items 11-13, reference is made to the information to
be set forth in the section entitled "Election of Directors" in the
Proxy Statement, which is incorporated herein by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PERINI CORPORATION AND SUBSIDIARIES
(a)1. The following financial statements and supplementary financial
information are filed as part of this report:
Pages
Financial Statements of the Registrant
Consolidated Balance Sheets as of December 31, 1994 and 29 - 30
1993
Consolidated Statements of Operations for the three years 31
ended December 31, 1994, 1993 and 1992
Consolidated Statements of Stockholders' Equity for the 32
three years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the three years 33 - 34
ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements 35 - 48
Report of Independent Public Accountants 49
(a)2. The following financial statement schedules are filed as part of
this report:
Pages
Report of Independent Public Accountants on Schedules 50
Schedule II -- Valuation and Qualifying Accounts and 51
Reserves
All other schedules are omitted because of the absence of the
conditions under which they are required or because the required
information is included in the Consolidated Financial Statements or
in the Notes thereto.
Separate condensed financial information of the Company has been
omitted since restricted net assets of subsidiaries included in the
consolidated financial statements and its equity in the
undistributed earnings of 50% or less owned persons accounted for
by the equity method do not, in the aggregate, exceed 25% of
consolidated net assets.
(a)3. Exhibits
The exhibits which are filed with this report or which are
incorporated herein by reference are set forth in the Exhibit Index
which appears on pages 52 and 53. The Company will furnish a copy
of any exhibit not included herewith to any holder of the Company's
common and preferred stock upon request.
(b) During the quarter ended December 31, 1994, the Registrant made no
filings on Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized.
PERINI CORPORATION
(Registrant)
Dated: March 22, 1995
David B. Perini
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Company and in the capacities and on the dates indicated.
Signature Title Date
(i) Principal Executive Officer
David B. Perini
Chairman, President and
Chief Executive Officer
--------------------- March 22, 1995
David B. Perini
(ii) Principal Financial Officer
John H. Schwarz Executive Vice
President,
Finance &
Administration
---------------------- March 22, 1995
John H. Schwarz
(iii) Principal Accounting
Officer
Barry R. Blake Vice President and
Controller
------------------------- March 22, 1995
Barry R. Blake
(iv) Directors
David B. Perini )
Joseph R. Perini ) By
Richard J. Boushka )
Marshall M. Criser ) ---------------------
Thomas E. Dailey ) David B. Perini
Albert A. Dorman )
Arthur J. Fox, Jr. ) Attorney in Fact
Nancy Hawthorne ) Dated: March 22, 1995
John J. McHale )
Jane E. Newman )
Bart W. Perini )
Consolidated Balance Sheets
December 31, 1994 and 1993
(In thousands except per share data)
Assets
1994 1993
CURRENT ASSETS:
Cash, including cash equivalents of $3,518 and $ 7,841 $ 35,871
$20,354 (Note 1)
Accounts and notes receivable, including retainage 151,620 123,009
of $63,344 and $45,084
Unbilled work (Note 1) 20,209 14,924
Construction joint ventures (Notes 1 and 2) 66,346 61,156
Real estate inventory, at the lower of cost or 11,525 11,666
market (Note 1)
Deferred tax asset (Notes 1 and 5) 6,066 7,702
Other current assets 3,041 3,274
-------- --------
Total current assets $266,648 $257,602
-------- --------
REAL ESTATE DEVELOPMENT INVESTMENTS:
Land held for sale or development (including land
development costs) at the lower of cost or market $ 43,295 $ 48,011
(Note 1)
Investments in and advances to real estate joint
ventures (Notes 1, 2 and 11) 148,843 138,095
Real estate properties used in operations, less
accumulated depreciation of $3,698 and $3,638 6,254 12,678
Other 80 -
-------- --------
Total real estate development investments $198,472 $198,784
-------- --------
PROPERTY AND EQUIPMENT, at cost:
Land $ 1,134 $ 1,451
Buildings and improvements 12,505 15,566
Construction equipment 16,397 16,440
Other equipment 12,552 11,625
-------- --------
$ 42,588 $ 45,082
Less - Accumulated depreciation (Note 1) 29,082 28,986
-------- --------
Total property and equipment, net $ 13,506 $ 16,096
-------- --------
OTHER ASSETS:
Other investments $ 2,174 2,188
Goodwill (Note 1) 1,700 1,708
-------- --------
Total other assets $ 3,874 $ 3,896
-------- --------
$482,500 $476,378
======== ========
The accompanying notes are an integral part of these financial statements.
Liabilities and Stockholders' Equity
1994 1993
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 4) $ 5,022 $ 7,617
Accounts payable, including retainage of $52,224 140,454 136,231
and $45,508
Deferred contract revenue (Note 1) 38,929 25,867
Accrued expenses 52,295 47,827
Accrued income taxes (Notes 1 and 5) - 3,183
--------- --------
Total current liabilities $236,700 $220,725
--------- --------
DEFERRED INCOME TAXES AND OTHER LIABILITIES $ 33,488 $ 38,794
(Notes 1 and 5) -------- ---------
LONG-TERM DEBT, less current maturities included
above (Note 4):
Real estate development $ 6,502 $ 11,382
Other 70,484 70,984
--------- ---------
Total long-term debt $ 76,986 $ 82,366
--------- ---------
MINORITY INTEREST (Note 1) $ 3,297 $ 3,350
--------- ---------
CONTINGENCIES AND COMMITMENTS (Note 11)
STOCKHOLDERS' EQUITY (Notes 1, 7, 8, 9 and 10):
Preferred stock, $1 par value -
Authorized - 1,000,000 shares
Issued and outstanding - 100,000 shares
($25,000 aggregate liquidation preference) $ 100 $ 100
Series A junior participating preferred stock,
$1 par value -
Authorized - 200,000 - -
Issued - none
Common stock, $1 par value -
Authorized - 15,000,000 and 7,500,000 shares
Issued - 4,985,160 shares 4,985 4,985
Paid-in surplus 59,001 59,875
Retained earnings 81,772 83,594
ESOT related obligations (6,009) (6,982)
--------- ---------
$139,849 $141,572
Less - Common stock in treasury, at cost - 7,820 10,429
490,674 shares and 654,353 shares --------- ---------
Total stockholders' equity $132,029 $131,143
-------- ---------
$482,500 $476,378
======== ========
Consolidated Statements of Operations
For the years ended December 31, 1994, 1993 & 1992
(In thousands, except per share data)
1994 1993 1992
REVENUES (Notes 2 and 13) $1,012,045 $1,100,116 $1,070,852
----------- ----------- -----------
COSTS AND EXPENSES (Notes 2 and
10):
Cost of operations $ 960,248 $1,047,330 $1,048,663
General, administrative and 42,985 44,212 41,328
selling expenses ----------- ----------- -----------
$1,003,233 $1,091,542 $1,089,991
----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS $ 8,812 $ 8,574 $ (19,139)
(Note 13) ----------- ----------- -----------
Other income (expense), net (856) 5,207 436
(Note 6)
Interest expense, net of (7,473) (5,655) (7,651)
capitalized amounts ----------- ----------- -----------
(Notes 1, 3 and 4)
INCOME (LOSS) BEFORE INCOME TAXES $ 483 $ 8,126 $ (26,354)
(Provision) credit for income (180) (4,961) 9,370
taxes (Notes 1 and 5) ----------- ----------- -----------
NET INCOME (LOSS) $ 303 $ 3,165 $ (16,984)
========== ========== ===========
EARNINGS (LOSS) PER COMMON SHARE $ (.42) $ .24 $ (4.69)
(Note 1) =========== ========== ===========
The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 1994, 1993 & 1992
(In thousands, except per share data)
Cumulative ESOT
Preferred Common Paid-In Retained Translation Related Treasury
Stock Stock Surplus Earnings Adjustment Obligation Stock
Balance-December 31, 1991 $100 $4,985 $60,627 $101,663 $(3,035) $(8,736) $(16,960)
Net Income (loss) - - - (16,984) - - -
Preferred stock-cash
dividends declared ($21.25
per share*) - - - (2,125) - - -
Treasury stock issued in
partial payment of incentive
compensation - - (606) - - - 3,642
Restricted stock awarded - - (2) - - - 9
Translation adjustment - - - - (1,661) - -
Payments related to ESOT
notes - - - - - 848 -
Balance-December 31, 1992 $100 $4,985 $60,019 $ 82,554 $(4,696) $(7,888) $(13,309)
Net income - - - 3,165 - - -
Preferred stock-cash
dividends declared ($21.25
per share*) - - - (2,125) - - -
Treasury stock issued in
partial payment of incentive
compensation - - (143) - - - 2,872
Restricted stock awarded - - (1) - - - 8
Related to Sale of Majestic
- - - - 4,696 - -
Payments related to ESOT
notes - - - - - 906 -
Balance-December 31, 1993 $100 $4,985 $59,875 $ 83,594 $ - $(6,982) $(10,429)
Net Income - - - 303 - - -
Preferred stock-cash
dividends declared
($21.25 per share*) - - - (2,125) - - -
Treasury stock issued in
partial payment of
incentive compensation - - (835) - - - 2,444
Restricted stock awarded - - (39) - - - 165
Payments related to ESOT
notes - - - - - 973 -
Balance-December 31, 1994 $100 $4,985 $59,001 $ 81,772 $ - $(6,009) $ (7,820)
*Equivalent to $2.125 per depositary share (see Note 7).
The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Cash Flows
For the years ended December 31, 1994, 1993 & 1992
(In thousands)
1994 1993 1992
Cash Flows from Operating Activities:
Net income (loss) $ 303 $ 3,165 $(16,984)
Adjustments to reconcile net income
(loss) to net cash from operating
activities -
Depreciation and amortization 2,879 3,515 6,297
Non-current deferred taxes and other (5,306) 11,239 (13,236)
liabilities
Distributions greater (less) than
earnings of joint ventures 2,995 (2,821) 9,412
and affiliates
Writedown of certain real estate - - 31,368
properties
Gain on sale of Monenco (Note 6) - - (1,976)
Gain on sale of Majestic - (4,631) -
(Notes 1 and 6)
Gain on sale of fixed assets (105) (299) (570)
Minority interest, net (53) (78) 2,001
Cash provided from (used by) changes
in components of working capital
other than cash, notes payable and (14,119) (19,653) 35,819
current maturities
of long-term debt
Real estate development investments 11,451 10,908 6,253
other than joint ventures
Other non-cash items, net (3,073) (2,922) (2,972)
--------- --------- ---------
NET CASH FROM OPERATING ACTIVITIES $ (5,028) $ (1,577) $ 55,412
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from sale of property and $ 989 $ 1,344 $ 1,890
equipment
Cash distributions of capital from
unconsolidated joint ventures 13,112 4,977 3,413
Acquisition of property and equipment (2,493) (4,387) (4,044)
Improvements to land held for sale or (334) (4,227) (4,341)
development
Improvements to and acquisitions of
real estate properties used in (140) (614) (6,310)
operations
Capital contributions to (20,199) (24,579) (8,425)
unconsolidated joint ventures
Advances to real estate joint (6,559) (16,031) (12,091)
ventures, net
Proceeds from sale of Monenco shares - - 14,180
Proceeds from sale of Majestic, net - 4,377 -
of subsidiary's cash
Investments in other activities 14 - (3)
--------- --------- ---------
NET CASH USED BY INVESTING ACTIVITIES $(15,610) $(39,140) $(15,731)
--------- --------- ---------
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 1994, 1993 & 1992
(In thousands)
Cash Flows from Financing Activities:
Proceeds from long-term debt $ 3,127 $ 8,014 $ 9,571
Repayment of long-term debt (10,129) (11,600) (17,590)
Cash dividends paid (2,125) (2,125) (2,125)
Treasury stock issued 1,735 2,736 3,043
--------- --------- ---------
NET CASH USED BY FINANCING ACTIVITIES $ (7,392) $ (2,975) $ (7,101)
--------- --------- ---------
Effect of Exchange Rate Changes on Cash $ - $ - $ (831)
--------- --------- ---------
Net Increase (Decrease) in Cash $(28,030) $(43,692) $ 31,749
Cash and Cash Equivalents at Beginning 35,871 79,563 47,814
of Year --------- --------- ---------
Cash and Cash Equivalents at End of $ 7,841 $ 35,871 79,563
Year ========= ========= =========
Supplemental Disclosures of Cash Paid
During the Year For:
Interest, net of amounts capitalized $ 7,308 $ 5,947 $ 10,995
========= ========= =========
Income tax payments (refunds) $ 1,176 $ 843 $ (2,603)
========= ========= ========
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1993, 1992 & 1991
[1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[a] Principles of Consolidation
The consolidated financial statements include the accounts of Perini
Corporation, its subsidiaries and certain majority-owned real estate joint
ventures (the "Company"). All subsidiaries are wholly-owned except
Majestic Contractors Limited ("Majestic"), which was approximately 74%-
owned and Perland Environmental Technologies, Inc. ("Perland"), which was
approximately 90%-owned until October 1994 when it became 100%-owned. All
significant intercompany transactions and balances have been eliminated in
consolidation. Non-consolidated joint venture interests are accounted for
on the equity method with the Company's share of revenues and costs in
these interests included in "Revenues" and "Cost of Operations,"
respectively, in the accompanying consolidated statements of operations.
All significant intercompany profits between the Company and its joint
ventures have been eliminated in consolidation. Taxes are provided on
joint venture results in accordance with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes".
In January 1993, the Company sold its 74%-ownership in Majestic, its
Canadian pipeline construction subsidiary, for $31.7, million, which
resulted in an after tax gain of approximately $1.0 million.
Effective July 1, 1993, the Company acquired Gust K. Newberg Construction
Co.'s ("Newberg") interest in certain construction projects and related
equipment. The purchase price for the acquisition was (i) approximately
$3 million in cash for the equipment paid by a third party leasing
company, which in turn simultaneously entered into an operating lease
agreement with the Company for the use of said equipment, (ii) the greater
of $1 million or 25% of the aggregate pretax earnings during the period
from April 1, 1993 through December 31, 1994, net of payments accruing to
Newberg as described in (iii) below, and (iii) 50% of the aggregate of net
profits earned from each project from April 1, 1993 through December 31,
1994 and, with regard to one project, through December 31, 1995. This
acquisition has been accounted for as a purchase. If this acquisition had
been consummated as of January 1, 1992, the 1992 and 1993 pro forma
results would have been, respectively, Revenues of $1,164,444,000 and
$1,134,264,000 and Net Income (Loss) of $(14,935,000) ($(4.18) per common
share) and $3,724,000 ($.37 per common share).
[b] Translation of Foreign Currencies
The accounts of the former Canadian subsidiary were translated in
accordance with Statement of Financial Accounting Standards (SFAS) No. 52,
under which translation adjustments are accumulated directly as a separate
component of stockholders' equity. Gains and losses on foreign currency
transactions are included in results of operations during the period in
which they arise.
[c] Method of Accounting for Contracts
Profits from construction contracts and construction joint ventures are
generally recognized by applying percentages of completion for each year
to the total estimated profits for the respective contracts. The
percentages of completion are determined by relating the actual cost of
the work performed to date to the current estimated total cost of the
respective contracts. When the estimate on a contract indicates a loss,
the Company's policy is to record the entire loss. The cumulative effect
of revisions in estimates of total cost or revenue during the course of
the work is reflected in the accounting period in which the facts that
caused the revision became known. An amount equal to the costs
attributable to unapproved change orders and claims is included in the
total estimated revenue when realization is probable. Profit from claims
is recorded in the year such claims are resolved.
In accordance with normal practice in the construction industry, the
Company includes in current assets and current liabilities amounts related
to construction contracts realizable and payable over a period in excess
of one year. Unbilled work represents the excess of contract costs and
profits recognized to date on the percentage of completion accounting
method over billings to date on certain contracts. Deferred contract
revenue represents the excess of billings to date over the amount of
contract costs and profits recognized to date on the percentage of
completion accounting method on the remaining contracts.
[d] Methods of Accounting for Real Estate Operations
All real estate sales are recorded in accordance with SFAS No. 66. Gross
profit is not recognized in full unless the collection of the sale price
is reasonably assured and the Company is not obliged to perform
significant activities after the sale. Unless both conditions exist,
recognition of all or a part of gross profit is deferred.
The gross profit recognized on sales of real estate is determined by
relating the estimated total land, land development and construction costs
of each development area to the estimated total sales value of the
property in the development. Real estate investments are stated at the
lower of cost, which includes applicable interest and real estate taxes
during the development and construction phases, or market. The market or
net realizable value of a development is determined by estimating the
sales value of the development in the ordinary course of business less the
estimated costs of completion (to the stage of completion assumed in
determining the selling price), holding and disposal. Estimated sales
values are forecast based on comparable local sales (where applicable),
trends as foreseen by knowledgeable local commercial real estate brokers
or others active in the business and/or project specific experience such
as offers made directly to the Company relating to the property. If the
net realizable value of a development is less than the cost of a
development, a provision is made to reduce the carrying value of the
development to net realizable value. A provision (or writedown to net
realizable value) amounted to $31.4 million in 1992. At present, the
Company believes its remaining real estate properties are carried at
amounts at or below their net realizable values considering the expected
timing of their disposal.Interest expense incurred by the Company and
capitalized during the development or construction phase amounted to zero
in 1994 and $.2 million per year in 1993 and 1992.
[e] Depreciable Property and Equipment
Land, buildings and improvements, construction and computer-related
equipment and other equipment are recorded at cost. Depreciation is
provided primarily using accelerated methods for construction and
computer-related equipment and the straight-line method for the remaining
depreciable property.
[f] Goodwill
Goodwill represents the excess of the costs of subsidiaries acquired over
the fair value of their net assets as of the dates of acquisition. These
amounts are being amortized on a straight-line basis over 40 years.
[g] Income Taxes
The Company follows Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," (see Note 5).
It is the policy of the Company to accrue appropriate U.S. and foreign
income taxes on earnings of foreign subsidiaries which are intended to be
remitted to the Company.
[h] Earnings (Loss) Per Common Share
Computations of earnings (loss) per common share amounts are based on the
weighted average number of common shares outstanding during the respective
periods. During the three-year period ended December 31, 1994, earnings
(loss) per common share reflect the effect of preferred dividends accrued
during the year. Common stock equivalents related to additional shares of
common stock issuable upon exercise of stock options (see Note 9) have not
been included since their effect would be immaterial or antidilutive.
Earnings (loss) per common share on a fully diluted basis are not
presented because the effect of conversion of the Company's depositary
convertible exchangeable preferred shares into common stock is
antidilutive.
[i] Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
original maturities of three months or less.
[j] Reclassifications
Certain prior year amounts have been reclassified to be consistent with
the current year classifications.
[2] JOINT VENTURES
The Company, in the normal conduct of its business, has entered into
certain partnership arrangements, referred to as "joint ventures," for
construction and real estate development projects. Each of the joint
venture participants is usually committed to supply a predetermined
percentage of capital, as required, and to share in a predetermined
percentage of the income or loss of the project. Summary financial
information (in thousands) for construction and real estate joint ventures
accounted for on the equity method for the three years ended December 31,
1994 follows:
CONSTRUCTION JOINT VENTURES
Financial position at December 31, 1994 1993 1992
Current assets $232,025 $241,905 $216,568
Property and equipment, net 19,386 17,228 18,203
Current liabilities (132,326) (151,181) (155,026)
--------- --------- ---------
Net assets $119,085 $107,952 $ 79,745
========= ========= =========
Operations for the year ended
December 31, 1994 1993 1992
Revenue $544,546 $626,327 $487,758
Cost of operations 505,347 574,383 445,494
--------- -------- --------
Pretax income $ 39,199 $ 51,944 $ 42,264
========= =========
=========
Company's share of joint ventures
Revenue $241,784 $293,547 $254,265
Cost of operations 224,039 272,137 231,564
--------- -------- --------
Pretax income $ 17,745 $ 21,410 $ 22,701
========= ========= =========
Equity $ 66,346 $ 61,156 $ 29,654
========= ========= =========
REAL ESTATE JOINT VENTURES
Financial position at December 31, 1994 1993 1992
Property held for sale or $ 28,885 $ 35,855 $ 17,902
development
Investment properties, net 177,258 191,606 243,477
Other assets 62,101 61,060 59,688
Long-term debt (77,968) (103,090) (151,538)
Other liabilities* (277,184) (256,999) (229,865)
--------- --------- ---------
Net assets (liabilities) $(86,908) $(71,568) $(60,336)
========= ========= =========
Operations for the year ended 1994 1993 1992
December 31,
Revenue $ 58,326 $ 83,710 $ 64,776
--------- --------- --------
Cost of operations -
Depreciation $ 7,245 $ 8,660 $ 9,469
Other 71,211 92,963 86,354
--------- --------- ---------
$ 78,456 $101,623 $ 95,823
--------- --------- ---------
Pretax income (loss) $(20,130) $(17,913) $(31,047)
========= ========= =========
Company's share of joint ventures
Revenue $ 27,059 $ 43,590 $ 27,118
--------- --------- ---------
Cost of operations -
Depreciation $ 3,323 $ 4,033 $ 4,581
Other 26,682 40,716 36,105
--------- --------- ---------
$ 30,005 $ 44,749 $ 40,686
--------- --------- ---------
Pretax income (loss) $ (2,946) $ (1,159) $(13,568)
========= ========= =========
Equity ** $(33,091) $(27,768) $(23,542)
========= ========= =========
* Included in "Other liabilities" are advances from joint venture
partners in the amount of $207.4 million in 1992, $236.8 million in
1993, and $259.3 million in 1994. Of the total advances from joint
venture partners, $150.6 million in 1992, $165.9 million in 1993, and
$181.9 million in 1994 represented advances from the Company.
** When the Company's equity in a real estate joint venture is combined
with advances by the Company to that joint venture, each joint venture
has a positive investment balance at December 31, 1994.
[3] NOTES PAYABLE TO BANKS
During 1994 and 1993, the Company maintained unsecured short-term lines of
credit totaling $18 million. In support of these credit lines, the
Company paid fees approximating 1/4 of 1% of the amount of the lines. All
but $5 million of such lines were canceled as of December 12, 1994 upon
the effective date of the expanded credit agreement referred to in Note 4
below. Information relative to the Company's short-term debt activity
under such lines in 1994 and 1993 follows (in thousands):
1994 1993
Borrowings during the year:
Average $10,992 $ 8,451
Maximum $18,000 $18,000
At year-end $ - $ -
Weighted average interest rates:
During the year 7.4% 6.2%
At year-end - -
[4] LONG-TERM DEBT
Long-term debt of the Company at December 31, 1994 and 1993 consists of
the following (in thousands):
1994 1993
Real Estate Development:
Industrial revenue bonds, at 65% of prime, $ 1,310 $ 1,683
payable in semi-annual installments
Mortgages on real estate, at rates ranging from
prime plus 1 1/2% to 10.82%, payable in 6,588 16,027
installments ------- -------
Total $ 7,898 $17,710
Less - current maturities 1,396 6,328
------- -------
Net real estate development long-term debt $ 6,502 $11,382
======= =======
Other:
Revolving credit loans at an average rate of $62,000 $60,000
8.6% in 1994 and 5.8% in 1993
ESOT Notes at 8.24%, payable in semi-annual 5,396 6,238
installments (Note 7)
Industrial revenue bonds at various rates, 4,000 4,000
payable in installments to 2005
Total $74,110 $72,273
Less - current maturities 3,626 1,289
------- -------
Net other long-term debt $70,484 $70,984
======= =======
Payments required under these obligations amount to approximately $5,022
in 1995, $1,945 in 1996, $63,999 in 1997, $4,841 in 1998, $2,201 in 1999
and $4,000 for the years 2000 and beyond.
Effective December 12, 1994, the Company entered into a new revolving
credit agreement with a group of major banks which provides for, among
other things, the Company to borrow up to an aggregate of $125 million
(aggregate limit under previous agreements was $85 million), with a $25
million maximum of such amount also being available for letters of credit.
The Company may choose from three interest rate alternatives including a
prime-based rate, as well as other interest rate options based on LIBOR
(London inter-bank offered rate) or participating bank certificate of
deposit rates. Borrowings and repayments may be made at any time through
December 6, 1997, at which time all outstanding loans under the agreement
must be paid or otherwise refinanced. The Company must pay a commitment
fee of 1/2 of 1% annually on the unused portion of the commitment.
The aggregate $125 million commitment is subject to permanent partial
reductions based on certain events, as defined, such as proceeds from real
estate sales over a defined annual minimum, certain claims and future
equity offerings.
The revolving credit agreement, as well as certain other loan agreements,
provides for, among other things, maintaining specified working capital
and tangible net worth levels and, additionally, imposes limitations on
indebtedness and future investment in real estate development projects.
[5] INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109.
This standard determines deferred income taxes based on the estimated
future tax effects of differences between the financial statement and tax
bases of assets and liabilities, given the provisions of enacted tax laws.
The (provision) credit for income taxes is comprised of the following (in
thousands):
Federal Foreign State Total
1994
Current $ - $ - $ (21) $ (21)
Deferred (108) - (51) (159)
-------- -------- -------- --------
$ (108) $ - $ (72) $ (180)
======== ======== ======== ========
1993
Current $(2,824) $ - $ (430) $(3,254)
Deferred (1,808) - 101 (1,707)
-------- -------- -------- --------
$(4,632) $ - $ (329) $(4,961)
======== ======== ======== ========
1992
Current $ - $(5,486) $ (325) $(5,811)
Deferred 13,236 814 1,131 15,181
------- -------- ------- --------
$13,236 $(4,672) $ 806 $ 9,370
======= ======== ======= ========
The domestic and foreign components of income (loss) before income
taxes are as follows (in thousands):
U.S. Foreign Total
1994 $ 483 $ - $ 483
1993 $ 8,126 $ - $ 8,126
1992 $(42,238) $15,884 $(26,354)
The table below reconciles the difference between the statutory
federal income tax rate and the effective rate provided in the
statements of operations.
1994 1993 1992
Statutory federal income 34% 34% (34)%
tax rate
State income taxes, net of 4 2 (1)
federal tax benefit
Sale of Canadian - 24 -
subsidiary
Goodwill and other (1) 1 (1)
---- ----- ----
37% 61% (36)%
==== ===== =====
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of December 31, 1994 and 1993 (in
thousands):
1994 1993
Deferred Deferred Deferred
Deferred Tax Tax Tax
Tax Assets Liabilities Assets Liabilities
Provision for estimated $ 6,203 $ - $ 9,684 $ -
losses
Contract losses 887 - 2,841 -
Joint ventures - - 8,088 - 6,996
construction
Joint ventures - real - 25,668 - 18,078
estate
Timing of expense 13,867 - 5,012 -
recognition
Capitalized carrying - 1,776 - 2,301
charges
Net operating loss 5,960 - 916 -
carryforwards
Alternative minimum tax 2,300 - 3,567 -
credit carryforwards
General business tax 3,637 - 4,038 -
credit carryforwards
Foreign tax credit 978 - 1,352 -
carryforwards
Other, net 685 - 422 -
-------- -------- -------- --------
$34,517 $35,532 $27,832 $27,375
Valuation allowance for (1,846) - (2,251) -
deferred tax assets -------- -------- -------- --------
Total $32,671 $35,532 $25,581 $27,375
======== ======== ======== =========
The net of the above is deferred taxes in the amount of $2,861 in 1994 and
$1,794 in 1993 which is classified in the respecitve Consolidated Balance
Sheets as follows:
1994 1993
Long-term deferred tax liabilities (included in $8,927 $9,496
"Deferred Income Taxes and
Other Liabilities")
Short-term Deferred Tax Asset 6,066 7,702
------ ------
$2,861 $1,794
====== ======
The valuation allowance for deferred tax assets is principally
attributable to the net operating loss carryforwards of Perland
Environmental Technologies, Inc. and foreign tax credit carryforwards
resulting from the 1993 sale of the Company's Canadian subsidiary. Any
portion of the valuation allowance attributable to these deferred tax
assets for which benefits are subsequently recognized will be applied to
reduce income tax expense.
At December 31, 1994, the Company has unused tax credits and net operating
loss carryforwards for income tax reporting purposes which expire as
follows (in thousands):
Unused Investment Foreign Net Operating Loss
Tax Credits Tax Credits Carryforwards
1995-1998 $ 20 $ 978 $ -
1999-2004 3,617 - 823
2005-2009 - - 16,705
------ ------- -------
$3,637 $ 978 $17,528
====== ======= =======
Approximately $2.7 million of the net operating loss carryforwards can
only be used against the taxable income of the corporation in which the
loss was recorded for tax and financial reporting purposes.
[6] OTHER INCOME (EXPENSE), NET
Other income (expense) items for the three years ended December 31, 1994
are as follows (in thousands):
1994 1993 1992
Interest and dividend income $ 205 $ 624 $ 1,783
Minority interest (Note 1) 24 167 (3,039)
Gain on sale of Majestic (Note 1) - 4,631 -
Gain on sale of investment in Monenco - - 1,976
Bank fees (1,100) (584) (571)
Miscellaneous income (expense), net 15 369 287
-------- ------- --------
$ (856) $5,207 $ 436
======== ====== ========
[7] CAPITALIZATION
In July 1989, the Company sold 262,774 shares of its $1 par value common
stock, previously held in treasury, to its Employee Stock Ownership Trust
("ESOT") for $9,000,000. The ESOT borrowed the funds via a placement of
8.24% Senior Unsecured Notes ("Notes") guaranteed by the Company. The
Notes are payable in 20 equal semi-annual installments of principal and
interest commencing in January 1990. The Company's annual contribution to
the ESOT, plus any dividends accumulated on the Company's common stock
held by the ESOT, will be used to repay the Notes. Since the Notes are
guaranteed by the Company, they are included in "Long-Term Debt" with an
offsetting reduction in "Stockholders' Equity" in the accompanying
Consolidated Balance Sheets. The amount included in "Long-Term Debt" will
be reduced and "Stockholders' Equity" reinstated as the Notes are paid by
the ESOT.
In June 1987, net proceeds of approximately $23,631,000 were received from
the sale of 1,000,000 depositary convertible exchangeable preferred shares
(each depositary share representing ownership of 1/10 of a share of $21.25
convertible exchangeable preferred stock, $1 par value) at a price of $25
per depositary share. Annual dividends are $2.125 per depositary share
and are cumulative. Generally, the liquidation preference value is $25
per depositary share plus any accumulated and unpaid dividends. The
preferred stock of the Company, as evidenced by ownership of depositary
shares, is convertible at the option of the holder, at any time, into
common stock of the Company at a conversion price of $37.75 per share of
common stock. The preferred stock is redeemable at the option of the
Company at any time after June 15, 1990, in whole or in part, at declining
premiums until June 1997 and thereafter at $25 per share plus any unpaid
dividends. The preferred stock is also exchangeable at the option of the
Company, in whole but not in part, on any dividend payment date into 8
1/2% convertible subordinated debentures due in 2012 at a rate equivalent
to $25 principal amount of debentures for each depositary share.
[8] SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Under the terms of the Company's Shareholder Rights Plan, as amended, the
Board of Directors of the Company declared a distribution on September 23,
1988 of one preferred stock purchase right (a "Right") for each
outstanding share of common stock. Under certain circumstances, each
Right will entitle the holder thereof to purchase from the Company one
one-hundredth of a share (a "Unit") of Series A Junior Participating
Cumulative Preferred Stock, $1 par value (the "Preferred Stock"), at an
exercise price of $100 per Unit, subject to adjustment. The Rights will
not be exercisable or transferable apart from the common stock until the
occurrence of certain events viewed to be an attempt by a person or group
to gain control of the Company (a "triggering event"). The Rights will
not have any voting rights or be entitled to dividends.
Upon the occurrence of a triggering event, each Right will be entitled to
that number of Units of Preferred Stock of the Company having a market
value of two times the exercise price of the Right. If the Company is
acquired in a merger or 50% or more of its assets or earning power is
sold, each Right will be entitled to receive common stock of the acquiring
company having a market value of two times the exercise price of the
Right. Rights held by such a person or group causing a triggering event
may be null and void.
The Rights are redeemable at $.02 per Right by the Board of Directors at
any time prior to the occurrence of a triggering event and will expire on
September 23, 1998.
[9] STOCK OPTIONS
At December 31, 1994 and 1993, 481,610 shares of the Company's authorized
but unissued common stock were reserved for issuance to employees under
its 1982 Stock Option Plan. Options are granted at fair market value on
the date of grant and generally become exercisable in two equal annual
installments on the second and third anniversary of the date of grant and
expire eight years from the date of grant. The options for the 240,000
shares common stock granted in 1992 become exercisable on March 31, 2001
if the Company achieves a certain profit target in the year 2000; may
become exercisable earlier if certain interim profit targets are achieved;
and to the extent not exercised, expire 10 years from the date of grant.
A summary of stock option activity related to the Company's stock option
plan is as follows:
Number of
Number of Option Price Shares
Shares Per Share Exercisable
Outstanding at 438,825 $11.06-$33.06 91,075
December 31, 1992
Granted - -
Canceled (4,400) $11.06-$33.06
Outstanding at 434,425 $11.06-$33.06 143,000
December 31, 1993
Granted 20,000 $13.00
Canceled (32,900) $11.06-$33.06
Outstanding at 421,525 $11.06-$33.06 251,525
December 31, 1994
When options are exercised, the proceeds are credited to stockholders'
equity. In addition, the income tax savings attributable to nonqualified
options exercised is credited to paid-in surplus.
[10] EMPLOYEE BENEFIT PLANS
The Company and its U.S. subsidiaries have a defined benefit plan which
covers its executive, professional, administrative and clerical employees,
subject to certain specified service requirements. The plan is
noncontributory and benefits are based on an employee's years of service
and "final average earnings", as defined. The plan provides reduced
benefits for early retirement and takes into account offsets for social
security benefits. All employees are vested after 5 years of service.
Net pension cost for 1994, 1993 and 1992 follows (in thousands):
1994 1993 1992
Service cost - benefits earned during $1,178 $1,000 $ 896
the period
Interest cost on projected benefit 2,936 2,862 2,314
obligation
Return on plan assets:
Actual 1,229 (4,002) (1,220)
Deferred (3,839) 1,309 (1,043)
Other - 19 19
------- ------- -------
Net pension cost $1,504 $1,188 $ 966
======= ======= =======
Actuarial assumptions used:
Discount rate 8 3/4%* 7 1/2%* 8 1/2%
Rate of increase in compensation 5 1/2% 5 1/2%* 6 1/2%
Long-term rate of return on assets 8% 8%* 9%
*Rate was changed effective December 31, 1994 and resulted in a net
decrease of $5.6 million in the projected benefit obligation referred to
below.
**Rates were changed effective December 31, 1993 and resulted in a net
increase of $3.1 million in the projected benefit obligation referred to
below.
The Company's plan has assets in excess of accumulated benefit obligation.
Plan assets generally include equity and fixed income funds. The status
of the Company's employee pension benefit plan is summarized below (in
thousands):
December 31,
1994 1993
Assets available for benefits:
Funded plan assets at fair value $31,762 $32,795
Accrued pension expense 3,610 3,780
-------- --------
Total assets $35,372 $36,575
-------- --------
Actuarial present value of benefit
obligations:
Accumulated benefit obligations, $30,537 $32,463
including vested benefits of $30,179
and $31,837
Effect of future salary increases 4,546 6,468
-------- --------
Projected benefit obligations $35,083 $38,931
-------- --------
Assets available more (less) than $ 289 $(2,356)
projected benefits ======= ========
Consisting of:
Unamortized net liability existing at $ (36) $ (41)
date of adopting SFAS No. 87
Unrecognized net loss (268) (2,260)
Unrecognized prior service cost 593 (55)
-------- --------
$ 289 $(2,356)
======== ========
The Company's policy is generally to fund currently the costs accrued
under the pension plan and the Section 401(k) plan described below.
The Company also has noncontributory Section 401(k) and employee stock
ownership plans (ESOP) which cover its executive, professional,
administrative and clerical employees, subject to certain specified
service requirements. Under the terms of the Section 401(k) plan, the
provision is based on a specified percentage of profits, subject to
certain limitations. Contributions to the related employee stock
ownership trust (ESOT) are determined by the Board of Directors and may be
paid in cash or shares of Company common stock.
The Company also has an unfunded supplemental retirement plan for certain
employees whose benefits under principal salaried retirement plans are
reduced because of compensation limitations under federal tax laws.
Pension expense for this plan was $.2 million in 1994 and $.1 million per
year in 1993 and 1992. At December 31, 1994, the projected benefit
obligation was $1.0 million. A corresponding accumulated benefit
obligation of $.6 million has been recognized as a liability in the
consolidated balance sheet and is equal to the amount of the vested
benefits.
In addition, the Company has an incentive compensation plan for key
employees which is generally based on achieving certain levels of profit
within their respective business units.
The aggregate amounts provided under these employee benefit plans were
$9.2 million in 1994, $8.5 million in 1993, and $10.8 million in 1992.
The Company also contributes to various multiemployer union retirement
plans under collective bargaining agreements, which provide retirement
benefits for substantially all of its union employees. The aggregate
amounts provided in accordance with the requirements of these plans were
$12.4 million in 1994, $5.2 million in 1993, and $11.2 million in 1992.
The Multiemployer Pension Plan Amendments Act of 1980 defines certain
employer obligations under multiemployer plans. Information regarding
union retirement plans is not available from plan administrators to enable
the Company to determine its share of unfunded vested liabilities.
[11] Contingencies and Commitments
In connection with the Rincon Center real estate development joint
venture, the Company's wholly-owned real estate subsidiary has guaranteed
the payment of interest on both mortgage and bond financing covering a
project with loans totaling $61 million; has issued a secured letter of
credit to collateralize $3.7 million of these borrowings; has guaranteed
amortization payments up to $9.1 million on these borrowings; and has
guaranteed a master lease under a sale operating lease-back transaction.
In calculating the potential obligation under the master lease guarantee,
the Company has an agreement with its lenders which employs a 10% discount
rate and no increases in future rental rates beyond current lease terms.
Based on these assumptions, management believes its additional future
obligation will not exceed $3.0 million. The Company has also guaranteed
$5.0 million of the subsidiary's $9.1 million amortization guaranty and
any obligation under the master lease during the next four years. As part
of the sale operating lease-back transaction, the joint venture, in which
the Company's real estate subsidiary is a 46% general partner, agreed to
obtain a financial commitment on behalf of the lessor to replace at least
$43 million of long-term financing by July 1, 1993. To satisfy this
obligation, the partnership successfully extended existing financing to
July 1, 1998. To complete the extension, the partnership had to advance
funds to the lessor sufficient to reduce the financing from $46.5 million
to $40.5 million. Subsequent payments through 1994 have further reduced
the loan to $39.3 million. In addition, as part of the obligations of the
extension, the partnership will have to further amortize the debt from its
current level to $33 million through additional lease payments over the
next four years. If by January 1, 1998, the joint venture has not
received a further extension or new commitment for financing on the
property for at least $33 million, the lessor will have the right under
the lease to require the joint venture to purchase the property for
approximately $18.8 million in excess of the then outstanding debt.
In 1993, the joint venture also extended $29 million of the $61 million
financing then outstanding through October 1, 1998. This extension
required a $.6 million up front paydown. Subsequent payments through 1994
further reduced the loan by $1.0 million. The joint venture is required
to amortize up to $11.3 million more of the principal. Under certain
conditions, that amortization could be as low as $8.5 million. Total
lease payments and loan amortization obligations at Rincon Center through
1997 are as follows: $6.9 million in 1995, $7.5 million in 1996, and $7.3
million in 1997. It is expected that some but not all of these
requirements will be generated by the project's operations. The Company's
real estate subsidiary and, to a more limited extent, the Company, is
obligated to fund any of the loan amortization and/or lease payments at
Rincon in the event sufficient funds are not generated by the property or
contributed to by its partners. Based on current Company forecasts, it is
expected the maximum exposure to service these commitments in each of the
years through 1997 is as follows: $2.0 million in 1995, $2.4 million in
1996, and as much as $6.0 million in 1997 based on possible tenanting
expenses during that year.
In a separate agreement related to this same property, the 20% co-general
partner has indicated it does not currently have nor does it expect to
have the financial resources to fund its share of capital calls.
Therefore, the Company's wholly-owned real estate subsidiary agreed to
lend this 20% co-general partner on an as-needed basis, its share of any
capital calls which the partner cannot meet. In return, the Company's
subsidiary receives a priority return from the partnership on those funds
it advances for its partner and penalty fees in the form of rights to
certain other distributions due the borrowing partner from the
partnership. The severity of the penalty fees increases in each
succeeding year for the next several years. The subsidiary advanced $.3
million in 1994 and $1.7 million in 1993 under this agreement.
In connection with a second real estate development joint venture known as
the Resort at Squaw Creek, the Company's wholly-owned real estate
subsidiary has guaranteed the payment of interest on mortgage financing
with a total bank loan value currently estimated at $48 million; has
guaranteed $10 million of loan principal; has posted a letter of credit
for $1.0 million as its part of credit support required to extend the
maturity of the $48 million loan to May 1995, which letter of credit is
guaranteed by both the Company and its subsidiary; and has guaranteed
leases which aggregate $1.5 million on a present value basis as discounted
at 10%. The $48 million of bank financing on the project matures on May
1, 1995. Preliminary discussions have taken place with the Resort's lead
bank and management anticipates extension or replacement of the loan.
However, as with any real estate financing, there is no assurance that any
extension or replacement financing will be available. In the event that
were to happen, the property would be subject to foreclosure and possibly
sale at a value below the Company's present investment basis. It is also
possible an extension or new financing could require the joint venture to
make additional amortization payments either on extension or over the life
of such an extension, which could create additional financial requirements
for the Company's wholly-owned real estate subsidiary.
The subsidiary also has an obligation through the year 2001 to cover
approximately a $2 million per year preferred return at the Resort if the
funds are not generated from hotel operations. Although results have
shown improvement since the Resort opened in late 1990, it is not expected
that hotel operations will contribute to the obligation during 1995.
Although the results of the hotel's operations can be somewhat weather
dependent, management believes that operations should contribute
increasing amounts toward the coverage of the preferred return over the
next two to three years and will, at some point during that period, fully
cover it.
Included in the loan agreements related to the above joint ventures, among
other things, are provisions that, under certain circumstances, could
limit the subsidiary's ability to transfer funds to the Company. In the
opinion of management, these provisions should not affect the operations
of the Company or the subsidiary.
On July 30, 1993, the U.S. District Court (D.C.), in a preliminary
opinion, upheld terminations for default on two adjacent contracts for
subway construction between Mergentime-Perini, under two joint ventures,
and the Washington Metropolitan Area Transit Authority ("WMATA") and found
the Mergentime Corporation, Perini Corporation and the Insurance Company
of North America, the surety, jointly and severally liable to WMATA for
damages in the amount of $16.5 million, consisting primarily of excess
reprocurement costs to complete the projects. Many issues were left
partially or completely unresolved by the opinion, including substantial
joint venture claims against WMATA. Any such amounts awarded to the joint
ventures could serve to offset the above damages awarded. The ultimate
financial impact, if any, of this judgement is not yet determinable, and
therefore, no impact is reflected in either the 1993 or 1994 financial
statements.
Contingent liabilities also include liability of contractors for
performance and completion of both company and joint venture construction
contracts. In addition, the Company is a defendant in various lawsuits
(some of which are for significant amounts). In the opinion of
management, the resolution of these matters will not have a material
effect on the accompanying financial statements.
[12] UNAUDITED QUARTERLY FINANCIAL DATA
The following table sets forth unaudited quarterly financial data for the
years ended December 31, 1994 and 1993 (in thousands, except per share
amounts):
1994 by Quarter
1st 2nd 3rd 4th
Revenues $174,391 $243,105 $304,776 $289,773
Net income (loss) $ 792 $ (2,649) $ 984 $ 1,176
Earnings (loss) per $ .06 $ (.73) $ .10 $ .15
common share
1993 by Quarter
1st 2nd 3rd 4th
Revenues $258,043 $348,004 $274,795 $219,274
Net income $ 745 $ 965 $ 679 $ 776
Earnings per common share $ .05 $ .10 $ .04 $ .05
[13] BUSINESS SEGMENTS AND 1991
TOGETHER WITH AUDITORS' REPORTFOREIGN OPERATIONS
The Company is currently engaged in the construction and real estate
development businesses. The following tables set forth certain business
and geographic segment information relating to the Company's operations
for the three years ended December 31, 1994 (in thousands):
Business Segments
Revenues
1994 1993 1992
Construction $ 950,884 $1,030,341 $1,023,274
Real Estate 61,161 69,775 47,578
----------- ----------- -----------
$1,012,045 $1,100,116 $1,070,852
=========== ========== ==========
Income (Loss) From Operations
1994 1993 1992
Construction $ 13,989 $ 15,164 $ 34,387
Real Estate 732 240 (47,206)
Corporate (5,909) (6,830) (6,320)
----------- ----------- -----------
$ 8,812 $ 8,574 $ (19,139)
=========== =========== ===========
Assets
1994 1993 1992
Construction $ 262,850 $ 219,604 $ 214,089
Real Estate 209,635 218,715 204,713
Corporate* 10,015 38,059 51,894
------------ ---------- -----------
$ 482,500 $ 476,378 $ 470,696
============ =========== ===========
Capital Expenditures
1994 1993 1992
Construction $ 2,491 $ 4,387 $ 4,042
Real Estate 10,274 23,590 29,131
----------- ----------- -----------
$ 12,765 $ 27,977 $ 33,173
========== =========== ===========
Depreciation
1994 1993 1992
Construction $ 2,551 $ 2,552 $ 5,489
Real Estate** 328 963 808
----------- ----------- -----------
$ 2,879 $ 3,515 $ 6,297
=========== =========== ===========
Geographic Segments
Revenues
1994 1993 1992
United States $ 996,832 $1,064,380 $ 909,358
Canada - - 107,709
Other Foreign 15,213 35,736 53,785
----------- ----------- -----------
$1,012,045 $1,100,116 $1,070,852
=========== =========== ===========
Income (Loss) From Operations
1994 1993 1992
United States $ 17,275 $ 17,249 $ (28,994)
Canada - - 12,812
Other Foreign (2,554) (1,845) 3,363
Corporate (5,909) (6,830) (6,320)
----------- ----------- -----------
$ 8,812 $ 8,574 $ (19,139)
=========== =========== ===========
Assets
1994 1993 1992
United States $ 467,298 $ 433,488 $ 365,997
Canada - - 46,089
Other Foreign 5,187 4,831 6,716
Corporate* 10,015 38,059 51,894
----------- ----------- -----------
$ 482,500 $ 476,378 $ 470,696
=========== =========== ===========
*In all years, corporate assets consist principally of cash, cash
equivalents, marketable securities and other investments available for
general corporate purposes.
**Does not include approximately $3 to 4 million of depreciation that
represents its share from real estate joint ventures. (See Note 2 to
Notes to the Consolidated Financial Statements.)
Contracts with various federal, state, local and foreign governmental
agencies represented approximately 56% of construction revenues in 1994,
54% in 1993 and 57% in 1992.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the PartnersStockholders of Rincon Center Associates,
A California Limited Partnership:Perini Corporation:
We have audited the accompanying consolidated balance sheets of Rincon Center Associates,
A California Limited PartnershipPERINI
CORPORATION (a Massachusetts corporation) and subsidiaries as of December
31, 19931994 and 1992,1993, and the related consolidated statements of operations,
changes in partners' deficitstockholders' equity and cash flows for each of the three years in the
period ended December 31, 1993.1994. These financial statements are the
responsibility of the Partnership'sCompany's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Rincon Center Associates, A
California Limited PartnershipPerini
Corporation and subsidiaries as of December 31, 19931994 and 1992,1993, and the
results of itstheir operations and itstheir cash flows for each of the three
years in the period ended December 31, 1993,1994, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 11, 1994
RINCON CENTER ASSOCIATES
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS - DECEMBER 31, 1993 AND 1992
1993 1992
ASSETS
CASH $ 120,000 $ 272,000
ACCOUNTS RECEIVABLE, net of reserves
of $239,000 and $95,000 at
December 31, 1993 and 1992,
respectively 44,000 2,074,000
DEFERRED RENT RECEIVABLE 7,883,000 7,626,000
NOTES RECEIVABLE 15,828,000 10,140,000
REAL ESTATE USED IN OPERATIONS, net 118,021,000 121,505,000
LEASEHOLD IMPROVEMENTS, net 1,855,000 1,894,000
OTHER ASSETS, net 2,855,000 2,368,000
------------ ------------
Total assets $146,606,000 $145,879,000
============ ============
LIABILITIES AND PARTNERS' DEFICIT
CONSTRUCTION NOTES PAYABLE $ 62,370,000 $ 64,224,000
ACCOUNTS PAYABLE AND ACCURED
LIABILITIES 3,416,000 3,607,000
ACCRUED GROUND RENT LIABILITY, net 7,307,000 7,636,000
ACCRUED LEASE LIABILITY, net 3,102,000 3,030,000
DEFERRED INCOME 1,540,000 1,540,000
ACCRUED INTEREST DUE GENERAL
PARTNERS 33,901,000 27,432,000
DUE TO PERINI LAND AND DEVELOPMENT
COMPANY 68,399,000 61,592,000
DUE TO PACIFIC GATEWAY PROPERTIES,
INC. 17,089,000 15,390,000
------------ ------------
Total liabilities $197,124,000 $184,451,000
COMMITMENTS (NOTE 3)
PARTNERS' DEFICIT (50,518,000) (38,572,000)
------------- ------------
Total liabilities and
partners'deficit $146,606,000 $145,879,000
============ ============
The accompanying notes are an integral part of these financial
statements.
RINCON CENTER ASSOCIATES
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
1993 1992 1991
REVENUE:
Rental income $ 17,083,000 $ 17,583,000 $ 16,814,000
Parking and other
income 1,260,000 1,150,000 1,195,000
------------ ------------ ------------
Total revenue 18,343,000 18,733,000 18,009,000
------------ ------------ ------------
EXPENSES:
Operating 5,132,000 5,448,000 4,824,000
Administrative and
other 1,556,000 1,313,000 1,437,000
Property taxes and
insurance 2,438,000 3,200,000 1,835,000
Leases 4,515,000 3,775,000 4,755,000
Ground rent 3,391,000 3,407,000 3,437,000
Interest and letter
of credit fees 10,582,000 10,862,000 12,802,000
Depreciation and
amortization 4,040,000 4,726,000 3,487,000
------------ ------------ ------------
Total expenses 31,654,000 32,731,000 32,577,000
INTEREST INCOME 1,365,000 1,062,000 1,023,000
------------- ------------- -------------
Net loss $(11,946,000) $(12,936,000) $(13,545,000)
============= ============= =============
The accompanying notes are an integral part of these financial
statements.
RINCON CENTER ASSOCIATES
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
General Limited
Partners Partners Total
BALANCE,
DECEMBER 31, 1990 $ (5,923,000) $ (6,168,000) $(12,091,000)
Net loss (6,786,000) (6,759,000) (13,545,000)
------------- ------------- -------------
BALANCE,
DECEMBER 31, 1991 (12,709,000) (12,927,000) (25,636,000)
Net loss (6,481,000) (6,455,000) (12,936,000)
------------- ------------- -------------
BALANCE,
DECEMBER 31, 1992 (19,190,000) (19,382,000) (38,572,000)
Net loss (5,985,000) (5,961,000) (11,946,000)
------------- ------------- -------------
BALANCE,
DECEMBER 31, 1993 $(25,175,000) $(25,343,000) $(50,518,000)
------------- ------------- -------------
PARTNERS' PERCENTAGE
INTEREST 50.10 49.90 100.00
====== ===== ======
The accompanying notes are an integral part of these financial
statements.
RINCON CENTER ASSOCIATES
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
1993 1992 1991
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $(11,946,000) $(12,936,000) $(13,545,000)
Adjustments to reconcile net loss to net
cash used in operating activities -
Depreciation and amortization 4,040,000 4,726,000 3,487,000
(Increase) decrease in accounts receivable 2,030,000 (1,620,000) (102,000)
(Increase) decrease in deferred rent
receivable (257,000) (479,000) (2,170,000)
(Increase) decrease in other assets (214,000) (598,000) (467,000)
Increase (decrease) in accounts payable and
accrued liabilities (191,000) 61,000 (1,072,000)
(Decrease) in accrued ground rent
liabilities (329,000) (329,000) (329,000)
Increase (decrease) in accrued lease
liability 72,000 (500,000) (946,000)
Increase in accrued interest due general
partners 6,469,000 5,271,000 7,918,000
------------- ------------- -------------
Net cash used in operating activities (326,000) (6,404,000) (7,226,000)
CASH FLOW FROM INVESTING ACTIVITIES:
Expenditure on real estate used in
operations (642,000) (369,000) (5,133,000)
Additions to leasehold improvements (118,000) - (18,000)
Additions to fixed assets (30,000) (73,000) (10,000)
Increase in notes receivable (6,000,000) (32,000) (138,000)
Payments on notes receivable 312,000 440,000 277,000
------------- ------------- -------------
Net cash used in investing activities (6,478,000) (34,000) (5,022,000)
------------- ------------- -------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from construction notes payable - 858,000 2,787,000
Payments on notes payable (1,854,000) - -
Proceeds from advances from general 8,506,000 5,634,000 8,505,000
partners ------------- ------------- -------------
Net cash provided by financing
activities 6,652,000 6,492,000 11,292,000
------------- ------------- -------------
INCREASE (DECREASE) IN CASH (152,000) 54,000 (956,000)
CASH AT BEGINNING OF YEAR 272,000 218,000 1,174,000
------------- ------------ -------------
CASH AT END OF YEAR $ 120,000 $ 272,000 $ 218,000
============ ============ ============
The accompanying notes are an integral part of these financial statements.
RINCON CENTER ASSOCIATES
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
1. PARTNERSHIP ORGANIZATION:
Rincon Center Associates, A California Limited Partnership (the Partnership)
was formed on September 18, 1984, to lease and develop land and buildings
located in the Rincon Point-South Beach Redevelopment Project Area in the
City and County of San Francisco, California. The Rincon Center Project (the
Project) comprises commercial and retail space, 320 rental housing units and
associated off-street parking. The Project was developed in two distinct
segments: Rincon One and Rincon Two.
Profits and losses are shared by the partners in accordance with their
percentage interest as provided in the partnership agreement and as shown in
the statements of changes in partners' deficit. Cash profits, as determined
by the managing general partner, are distributed to the partners in the same
percentage interest.
Perini Land and Development Company (PL&D) is the managing general partner of
the
Partnership and has the responsibility for general management, administration
and control of the Partnership's property, business
addition, PL&D provides project and general accounting services to the
Partnership (Note 7). Pacific Gateway Properties, Inc. (PGP), formerly
Perini Investment Properties, Inc., is the other general partner.
2. SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements have been prepared using the accrual
basis of accounting.
Real Estate Used in Operations
Real estate used in operations includes all costs capitalized during the
development of the project. These costs include interest and financing
costs, ground rent expense during construction, property taxes, tenant
improvements and other capitalizable overhead costs.
Depreciation and Amortization
The Partnership uses the straight-line method of depreciation. The
significant asset groups and their estimated useful lives are:
Structural components of buildings 60 years
Nonstructural components of buildings 25 years
All other depreciable assets 5-30 years
Leasehold improvements are amortized using the straight-line method over the
lesser of their useful lives or the lease terms.
Income Taxes
In accordance with federal and state income tax regulations, no income taxes
are levied on the Partnership; rather, such taxes are levied on the
individual partners. Consequently, no provision or liability for federal or
state income taxes is reflected in the accompanying financial statements.
Rental Income
Certain lease agreements provide for periods of free rent or stepped
increases in rent over the lease term. In such cases, revenue is recognized
at a constant rate over the term of the lease. Amounts recognized as income
but not yet due under the terms of the leases are shown in the accompanying
balance sheets as deferred rent receivable.
Statements of Cash Flows
Cash paid for interest was $2,414,000, $3,199,000 and $4,015,000 in 1993,1992
and 1991, respectively.
Accrued Lease Liability
The Partnership is leasing Rincon One from Chrysler McNally (Chrysler) over a
25-year lease term (Note 3). In connection with this lease, the Partnership
was granted a free rent concession for one year. The intent of Chrysler's
free rent provision was to match a similar provision granted by the
Partnership to an anchor sublease tenant of Rincon One, whose lease is for 10, years. The Partnership expensed rent in the first year of the lease and is
amortizing the accrued lease liability related to Rincon One over 10 years to
match the expense with the revenue recorded on the sublease.
Three amendments to the master lease agreement were made in 1993 in
connection with the extending of Chrysler's existing financing on the
property (Note 3). The rent schedule was revised which resulted in an
increase to the accrued lease liability during 1993 in order to normalize the
rent expense over the remaining lease term.
Other Assets
Other assets include prepaid expenses, deferred lease commissions and fixed
assets. Deferred lease commissions are amortized over the life of the lease.
Fixed assets are amortized over the life of the asset, which is generally
five years.
Reclassification of Prior Year Amounts
Certain prior year amounts have been reclassified to conform with the current
year presentation.
3. OPERATING LEASE, RINCON ONE:
On June 24, 1988, the Partnership sold Rincon One to Chrysler and
subsequently leased the property back under a master lease with a basic term
of 25 years and four 5-year renewal options at the Partnership's discretion.
The transaction was accounted for as a sale and operating leaseback and the
gain on the sale of $1,540,000 has been deferred.
In connection with the sale and operating leaseback of Rincon One, Chrysler
assumed and agreed to perform the Partnership's financing obligations. The
Partnership, in accordance with the master lease and several amendments in
1993, obtained a financial commitment on behalf of Chrysler to replace at
least $43,000,000 of long-term financing by July 1, 1993. To satisfy this
obligation, the Partnership successfully extended existing financing to July
1, 1998. To complete the extension, the Partnership had to advance funds
sufficient to reduce the financing from $46,500,000 to $40,500,000. The
Partnership received a 10% secured note in the principal amount of $6,000,000
from Chrysler upon the Partnership's advance of funds to reduce the
financing. If by January 1, 1998, the Partnership has not received a further
extension or new commitment for financing on the property for at least
$33,000,000, Chrysler will have the right
under the lease to require the Partnership to purchase the property for a
stipulated amount significantly in excess of the debt. The Partnership
intends to obtain financing meeting the conditions of the lease prior to
January 1, 1998.
The master lease was amended several times in 1993 in connection with the
extending of Chrysler's existing financing on the property through July 1,
1998.
Payments under the master lease agreement may be adjusted to reflect
adjustments in the rate of interest payable by Chrysler on the Rincon One
debt. Future minimum lease payments based on scheduled payments under the
master lease agreement are as follows:
1994 $ 6,565,000
1995 6,570,000
1996 6,550,000
1997 5,952,000
1998 5,634,000
Thereafter 85,120,000
4. NOTES RECEIVABLE:
At December 31, 1993 and 1992, the Partnership had the following notes
receivable:
1993 1992
Due from Chrysler secured by second deed
on trust on Rincon One, bearing interest
at 10 percent, with monthly principal
and interest payments of $150,285 in
1993 and $92,383 in 1992; unpaid balance
due July 2013 $15,469,000 $ 9,739,000
Notes from tenants secured by tenant
improvements, bearing interest at 8
percent to 11 percent, with maturities
from 1994 to 2001, due in monthly
installments 359,000 401,000
----------- -----------
$15,828,000 $10,140,000
=========== ===========
In 1993, the Partnership received a 10% secured note in the principal amount
of $6,000,000 from Chrysler upon the Partnership's advance of funds (Note 3).
5. GROUND LEASE:
The Partnership entered into a 65-year ground lease with the United States
Postal Service for the Project property on April 19, 1985. On June 24, 1988,
this lease was bifurcated into two leases (Rincon One and Rincon Two). The
terms of the original lease did not change; the dollar amounts were simply
split between the two properties. Under the terms of the leases, the
Partnership must make monthly lease payments (Basic Rent) of $101,750 and
$173,250 for Rincon One and Rincon Two, respectively. In April, 1994 and
every six years thereafter, the monthly base payments can be increased based
on the increase in the Consumer Price Index subject to a minimum of 5 percent
per year and a maximum of 8 percent per year. In addition, the Basic Rent
can be increased based on reappraisal of the underlying property on the
occurrence of certain events if those events occur prior to the regular
reappraisal dates of April 19, 2019, and each twelfth year thereafter for the
remainder of the lease term.
The lease agreement calls for the payment of certain percentage rents based
on revenues received from the subleasing of the Rincon One building.
Percentage rents paid in 1993, 1992 and 1991 were $259,000, $267,000 and
$271,000, respectively.
This lease has been accounted for as an operating lease, with minimum future
lease payments of:
1994 $ 4,120,000
1995 4,410,000
1996 4,410,000
1997 4,410,000
1998 4,290,000
Thereafter 894,853,000
During 1993, 1992 and 1991, Basic Rent was not capitalized because the entire
project was placed in service. At December 31, 1990, ground rent of
$10,407,312 was capitalized. Under the provisions of the original lease, no
lease payments were to be made from the inception of the lease (April 19,
1985) until April 18, 1987, and one-half of the regular monthly payment was
due for the period from April 19, 1987 to April 18, 1988. However, as
allowed by the lease agreement, the Partnership deferred the payment of Basic
Rent until the initial occupancy date, February 8, 1988. At December 31,
1993 and 1992, the deferred Basic Rent
and interest for the period April 19, 1987 to April 18, 1988, amount to
$552,000 and $685,000, respectively, and are being paid in 120 monthly
installments together with interest at a rate based on the average discount
rates of 90-day U.S. Treasury bills, which was approximately 3.88 percent for
the year ended December 31, 1993. The rate will be adjusted every 90 days as
long as a balance is due on the deferred rent. The remaining deferred ground
rent related to the
free rent period amounted to $6,754,000 and $6,951,000 at December 31, 1993
and 1992, respectively, and is being amortized over the lease term.
6. CONSTRUCTION NOTES PAYABLE:
Residential
The residential portion of the Project is being financed with a $36,000,000
loan from the Redevelopment Agency of the City and County of San Francisco
(the Agency), of which $34,100,000 and $34,600,000 was outstanding at
December 31, 1993 and 1992, respectively. The Agency raised these funds
through the issuance of Variable Rate Demand Multifamily Housing Revenue
Bonds (Rincon Center Project) 1985 Issue B (the Bonds).
The interest rate on the Bonds is variable at the rate required to produce a
market value for the Bonds equal to their par value. At December 31, 1993,
1992 and 1991, the effective interest rate on the bonds was 3.00 percent,
3.13 percent and 4.20 percent, respectively. Interest payments are to be
made on the first business day of each March, June, September and December.
The Partnership has the option to convert the Bonds to a fixed interest rate
at any of the above interest payment dates. The fixed rate will be the rate
required to produce a market value for the Bonds equal to their par value.
After conversion to a fixed rate, interest payments must be made on each June
1 and December 1.
The Partnership must repay the residential loan as the Bonds become due. The
Bonds shall be redeemed in at least the minimum amounts set forth below:
1994 $ 600,000
1995 600,000
1996 600,000
1997 700,000
1998 900,000
Thereafter 30,700,000
The Bonds are due December 1, 2006. The Bonds are secured by an irrevocable
letter of credit issued by Citibank in the name of the Partnership in the
amount of approximately $36,200,000. In the event that drawings are made on
the letter of credit, the Partnership has agreed to reimburse Citibank for
such drawings pursuant to the terms of a Reimbursement Agreement. The
Partnership obligations under the Reimbursement Agreement are secured by a
deed of trust on the Project and the equity letters of credit and guarantees
described below.
Commercial
The development and construction of the commercial portion of the Project was
financed pursuant to a Construction Loan Agreement between the Partnership
and Citibank of which $28,270,000 and $28,849,000 was outstanding at December
1993 and 1992, respectively. The loan, as is the irrevocable letter of
credit supporting the residential bond, is secured by a deed of trust on the
Project and equity letters of credit currently in the aggregate amount of
$9,000,000, issued to Citibank by Bank of America, N.T. & S.A. on behalf of
the general partners. PL&D has also provided a $3.5 million corporate
guarantee to support the project financing. PGP and Perini Corporation, the
parent company of PL&D, have agreed to reimburse Bank of America for any
drawings under these letters of credit. An annual fee equal to prime plus 1
percent of the aggregate amount is due to PGP and PL&D for the use of these
letters of credit. The loan is also secured by the guarantees described in
Note 7. As of December 31, 1993 and 1992, $751,000 and $0, respectively, of
accrued letter of credit fees were included in accrued interest due general
partners in the accompanying balance sheets. The total fee in 1993, 1992 and
1991 was $751,000, $909,000 and $1,180,000, respectively.
In 1993, the Partnership extended the loan to October 1, 1998, that required
a $600,000 up front paydown and an additional fee of $105,000. The loan
requires the Partnership to amortize $13,000,000 over the next five years.
Amounts are payable as follows: $1,475,000 in 1994; $2,192,000 in 1995;
$2,708,000 in 1996; $3,150,000 in 1997 and the remainder in 1998. The
Partnership obtained a swap agreement with interest rates stepping up from
3.61% to 5.96% over the loan term. At December 31, 1993 the rate on the loan
was 3.61%.
At December 31, 1992, the Partnership has purchased an option to acquire an
interest rate hedge for principal amounts totaling $46,500,000 at 11.5% until
December 1993. The total fee paid of $51,000 is included in interest and
letter of credit fees in 1992.
Additionally, the Partnership obtained short-term financing to fund tenant
improvements. The amount outstanding at December 31, 1993 and 1992, was $0
and $775,000, respectively. The loan was paid on March 31, 1993 by the
Partnership.
7. TRANSACTIONS WITH GENERAL PARTNERS:
PL&D has guaranteed the payment of both interest on the financing of the
Project and operating deficit, if any. It has also guaranteed the master
lease under the sale and operating lease-back transaction (Note 3).
In accordance with the construction loan agreement (Note 6), the general
partners have advanced monies to the Partnership to fund project costs. At
December 31, 1993 and 1992, the general partners had advanced $85,488,000 and
$76,982,000, respectively. The advances accrue interest at a rate of prime
plus 2 percent. The related accrued interest liability of $33,901,000 and
$27,432,000 as of December 31, 1993 and 1992, respectively, is reflected in
the accompanying balance sheets. For the years ended December 31, 1993, 1992
and 1991, interest expense on partner advances was $6,469,000, $6,141,000 and
$7,048,000, respectively.
Effective January 1, 1988, PL&D retained Pacific Gateway Properties
Management Corporation (PGPMC), a wholly owned subsidiary of PGP, to provide
management and leasing services for the Project. As compensation for
managing the facilities, the Partnership paid PGPMC a base management fee of
$222,000 annually until leasing the residential portion of the Project was
completed. At such time, the compensation increased to $319,200 per year or,
if greater, the sum of 3 percent of the first $13,000,000 of the annual gross
receipts plus 2 percent of receipts
in excess of the $13,000,000. The fees incurred for the years ended December
31, 1993, 1992 and 1991 were $497,000, $485,000 and $514,000, respectively,
and were included in administrative and other expenses in the accompanying
statements of operations. At December 31, 1993 and 1992, $27,000 and
$96,000, respectively, related to this fee had not been paid and is included
in accounts payable and accrued liabilities. Additionally, the Partnership
reimburses PGPMC for certain payroll costs.
RINCON CENTER ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1992, 1991 AND 1990
TOGETHER WITH AUDITORS' REPORT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To the PartnersStockholders of Rincon Center Associates,
A California Limited Partnership:Perini Corporation:
We have audited, the accompanying balance sheets of Rincon Center Associates,
A California Limited Partnership as of December 31, 1992 and 1991, and the
related statements of operations, changes in partners' deficit and cash flows
for the three years ended December 31, 1992, 1991 and 1990. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rincon Center Associates, A
California Limited Partnership as of December 31, 1992 and 1991, and the
results of its operations and its cash flows for the three years ended
December 31, 1992, 1991 and 1990, in conformity with generally accepted
accounting principles.
San Francisco, California,
February 2, 1993
RINCON CENTER ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS--DECEMBER 31, 1992 AND 1991
1992 1991
ASSETS
CASH $ 272,450 $ 217,525
ACCOUNTS RECEIVABLE, net of
reserves of $94,969 and $60,213
at December 31, 1992 and 1991,
respectively 2,073,326 452,754
DEFERRED RENT RECEIVABLE 7,626,401 7,147,821
NOTES RECEIVABLE 10,140,144 10,486,680
REAL ESTATE USED IN OPERATIONS,
net 121,505,397 124,827,339
LEASEHOLD IMPROVEMENTS, net 1,894,035 2,151,027
OTHER ASSETS, net 2,367,087 2,536,882
------------ ------------
Total assets $145,878,840 $147,820,028
============ ============
LIABILITIES AND PARTNERS' DEFICIT
CONSTRUCTION NOTES PAYABLE $ 64,223,609 $ 63,366,870
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 3,606,324 3,545,690
ACCRUED GROUND RENT LIABILITY,
net 7,635,657 7,964,505
ACCRUED LEASE LIABILITY, net 3,029,494 3,529,855
DEFERRED INCOME 1,540,311 1,540,311
ACCRUED INTEREST DUE GENERAL
PARTNERS 27,432,444 22,161,596
DUE TO PERINI LAND AND
DEVELOPMENT COMPANY 61,592,314 57,132,226
DUE TO PACIFIC GATEWAY
PROPERTIES, INC. 15,390,273 14,215,189
------------ ------------
Total liabilities 184,450,426 173,456,242
PARTNERS' DEFICIT (38,571,586) (25,636,214)
------------ ------------
Liabilities and partners'
deficit $145,878,840 $147,820,028
============ ============
The accompanying notes are an integral part of these statements.
RINCON CENTER ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
1992 1991 1990
REVENUE:
Rental income $ 17,583,217 $ 16,814,229 $10,657,413
Parking and other
income 1,149,377 1,194,601 1,170,619
------------ ------------ -----------
Total revenue 18,732,594 18,008,830 11,828,032
------------ ------------ -----------
EXPENSES:
Operating 5,146,334 4,315,732 3,395,729
Administrative and
other 1,614,502 1,944,545 1,334,475
Property taxes and
insurance 3,200,377 1,835,409 949,078
Leases 3,774,793 4,755,463 4,957,081
Ground rent 3,406,939 3,436,746 2,255,221
Interest and letter of
credit fees 10,861,967 12,802,374 7,210,713
Depreciation and
amortization 4,726,039 3,487,034 1,800,615
------------ ------------ ------------
Total expenses 32,730,951 32,577,303 21,902,912
------------ ------------ ------------
OTHER INCOME- Interest
income 1,062,985 1,023,517 1,062,782
------------ ------------ ------------
Net loss $(12,935,372) $(13,544,956) $(9,012,098)
============ ============ ============
The accompanying notes are an integral part of these statements.
RINCON CENTER ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
General Limited
Partners Partners Total
BALANCE, DECEMBER 31, 1989 $ (1,408,133) $ (1,671,027) $ (3,079,160)
Net loss (4,515,061) (4,497,037) (9,012,098)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1990 (5,923,194) (6,168,064) (12,091,258)
Net loss (6,786,023) (6,758,933) (13,544,956)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1991 (12,709,217) (12,926,997) (25,636,214)
Net loss (6,480,621) (6,454,751) (12,935,372)
------------ ------------ ------------
BALANCE, DECEMBER 31, 1992 $(19,189,838) $(19,381,748) $(38,571,586)
============ ============ ============
PARTNERS' PERCENTAGE
INTEREST 50.10% 49.90% 100.00%
===== ===== ======
The accompanying notes are an integral part of these statements.
RINCON CENTER ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
1992 1991 1990
CASH FLOW FROM OPERATING
ACTIVITIES:
Net loss $(12,935,372) $(13,544,956) $(9,012,098)
Adjustments to
reconcile net loss
to net cash used in
operating
activities-
Depreciation and
amortization 4,726,039 3,487,034 1,800,615
Increase in accounts
receivable (1,620,572) (102,469) (210,746)
Increase in deferred
rent receivable (478,580) (2,169,965) (190,527)
Increase in other
assets (597,550) (465,927) (638,700)
Decrease in other
receivable - - 1,006,810
Increase (decrease) in
accounts payable and
accrued liabilities 60,634 (1,071,547) (4,685,396)
Decrease in accrued
ground rent
liability (328,848) (328,848) (328,847)
Decrease in accrued
lease liability (500,361) (945,808) (1,716,176)
Recognition of
deferred income - (1,374) (67,996)
Increase in accrued
interest due general
partners 5,270,848 7,918,261 6,701,884
------------ ------------ ------------
Net cash used in
operating
activities (6,403,762) (7,225,599) (7,341,177)
------------ ------------ ------------
CASH FLOW FROM INVESTING
ACTIVITIES:
Expenditure on real
estate used in
operations (367,631) (5,133,601) (10,334,901)
Additions to leasehold
improvements - (17,782) (2,447,205)
Additions to fixed
assets (73,392) (10,676) (111,060)
Issuance of notes
receivable (32,206) (138,669) (346,830)
Payments on notes
receivable 440,005 277,301 221,562
------------ ------------ ------------
Net cash used in
investing
activities (33,224) (5,023,427) (13,018,434)
------------ ------------ ------------
CASH FLOW FROM FINANCING
ACTIVITIES:
Proceeds from
construction
notes payable 856,739 2,787,284 2,942,807
Proceeds from advances
from general
partners 5,635,172 8,504,998 18,012,417
------------ ------------ ------------
Net cash provided by
financing
activities 6,491,911 11,292,282 20,955,224
------------ ------------ ------------
INCREASE (DECREASE) IN
CASH 54,925 (956,744) 595,613
CASH AT BEGINNING OF
YEAR 217,525 1,174,269 578,656
------------ ------------ ------------
CASH AT END OF YEAR $ 272,450 $ 217,525 $ 1,174,269
============ ============ ============
The accompanying notes are an integral part of these statements.
RINCON CENTER ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1992
1. PARTNERSHIP ORGANIZATION:
Rincon Center Associates, A California Limited Partnership (the Partnership)
was formed on September 18, 1984, to lease and develop land and buildings
located in the Rincon Point-South Beach Redevelopment Project Area in the
City and County of San Francisco, California. The Rincon Center Project (the
Project) comprises commercial and retail space, 320 rental housing units and
associated off-street parking. The Project was developed in two distinct
segments: Rincon One and Rincon Two.
Profits and losses are shared by the partners in accordance with their
percentage interests as provided in the partnership agreement and as shown in
the statement of changes in partners' deficit. Cash profits, as determined
by the managing general partner, shall be distributed to the partners in the
same percentage interest.
Perini Land and Development Company (PL&D) is the managing general partner of
the Partnership and has the responsibility for general management,
administration and control of the Partnership's property, business and
affairs. In addition, PL&D provides project and general accounting services
to the Partnership (Note 7). Pacific Gateway Properties, Inc. (PGP),
formerly Perini Investment Properties, Inc. is the other general partner.
2. SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements have been prepared using the accrual
basis of accounting.
Real Estate Used in Operations
Real estate used in operations includes all costs capitalized during the
development of the project. These costs include interest and financing
costs, ground rent expense during construction, property taxes, tenant
improvements and other capitalizable overhead costs. In 1990, $5,935,541 of
interest was capitalized.
Depreciation and Amortization
The Partnership uses the straight-line method of depreciation. The
significant asset groups and their estimated useful lives are:
Structural components of buildings 60 years
Nonstructural components of 25 years
buildings
All other depreciable assets 5-30
years
Leasehold improvements are amortized on the straight-line method over the
lesser of their useful lives or the lease terms.
Income Taxes
In accordance with federal and state income tax regulations, no income taxes
are levied on the Partnership; rather, such taxes are levied on the
individual partners. Consequently, no provision or liability for federal or
state income taxes is reflected in the accompanying financial statements.
Rental Income
Certain lease agreements provide for free rent or stepped increases in rent
over the lease term. In such cases, revenue is recognized at a constant rate
over the term of the lease. Amounts recognized as income but not yet due
under the terms of the leases are shown on the balance sheets as deferred
rent receivable.
Statements of Cash Flows
Cash paid for interest was $3,198,881 and $4,015,315 in 1992 and 1991,
respectively. Cash paid for interest, net of capitalized interest and
interest income paid on funds held in escrow and invested, was $3,190,246 in
1990.
Accrued Lease Liability
The Partnership is leasing Rincon One from Chrysler McNally (Chrysler) over a
25-year lease term (Note 3). In connection with this lease, the Partnership
was granted a free rent concession for one year. The intent of Chrysler's
free rent provision was to match a similar provision granted by the
Partnership to an anchor sublease tenant of Rincon One, whose lease is for 10
years. The Partnership expensed rent in the first year of the lease and is
amortizing the accrued lease liability related to Rincon One over 10 years to
match the expense with the revenue recorded on the sublease.
Other Assets
Other assets include prepaid expenses, deferred lease commissions and fixed
assets. Deferred lease commissions are amortized over the life of the lease.
Fixed assets are amortized over the life of the asset, which is generally
five years.
Reclassification of Prior Year Amounts
Certain prior year amounts have been reclassified to conform with the current
year presentation.
3. OPERATING LEASE, RINCON ONE:
On June 24, 1988, the Partnership sold Rincon One to Chrysler and
subsequently leased the property back under a master lease with a basic term
of 25 years and four 5-year renewal options at the Partnership's discretion.
The transaction was accounted for as a sale and operating leaseback and the
gain on the sale of $1,540,311 has been deferred.
Payments under the master lease agreement may be adjusted to reflect
adjustments in the rate of interest payable by Chrysler on the Rincon One
debt. Future minimum lease payments based on scheduled payments under the
master lease agreement are as follows:
1993 $ 6,639,000
1994 5,929,000
1995 5,929,000
1996 5,891,000
1997 5,906,000
Thereafter 106,405,000
The lease also permits the lessor to put the property back to the Partnership
at stipulated prices beginning January 1, 1993, if long-term financing
meeting certain conditions is not obtained. Financing has been arranged with
the current lender which meets the conditions of the lease through April 1,
1998, subsequent to year-end.
4. NOTES RECEIVABLE:
At December 31, 1992 and 1991, the Partnership had the following notes
receivable:
1992 1991
Due from Chrysler secured by second
deed of trust on Rincon One,
bearing interest at 10 percent,
with monthly principal and interest
payments of $92,383 in 1992, 1991
and 1990; unpaid balance due July
2013 $ 9,739,079 $ 9,875,504
Notes from tenants secured by
tenant improvements, bearing
interest at 10 percent to
12 percent, with maturities from
1994 to 1998, due in monthly
installments 629,179 611,176
----------- -----------
$10,368,258 $10,486,680
=========== ===========
5. GROUND LEASE:
The Partnership entered into a 65-year ground lease with the United States
Postal Service for the Project property on April 19, 1985. On June 24, 1988,
this lease was bifurcated into two leases (Rincon One and Rincon Two). The
terms of the original lease did not change; the dollar amounts were simply
split between the two properties. Under the terms of the leases, the
Partnership must make monthly lease payments (Basic Rent) of $101,750 and
$173,250 for Rincon One and Rincon Two, respectively. In February 1995 and
every six years thereafter, the monthly base payments can be increased based
on the increase in the Consumer Price Index subject to a minimum of 5 percent
per year and a maximum of 8 percent per year. In addition, the Basic Rent
can be increased based on reappraisal of the underlying property on the
occurrence of certain events if those events occur prior to the regular
reappraisal dates of April 19, 2020, and each twelfth year thereafter for the
remainder of the lease term.
The lease agreement calls for the payment of certain percentage rents based
on revenues received from the subleasing of the Rincon One building.
Percentage rents paid in 1992, 1991 and 1990 were $267,474, $271,388 and
$221,454, respectively, and are included in ground rent expense.
This lease has been accounted for as an operating lease, with minimum future
lease payments of:
1993 $ 3,436,260
1994 3,436,260
1995 3,436,260
1996 3,436,260
1997 3,436,260
Thereafter 175,036,260
During 1990, Basic Rent relating only to those portions of Rincon Two under
construction was capitalized. During 1992 and 1991, Basic Rent was not
capitalized because the entire project was placed in service. At
December 31, 1990, ground rent of $10,407,312 was capitalized.
Under the provisions of the original lease, no lease payments were to be made
from the inception of the lease (April 19, 1985) until April 18, 1987, and
one-half of the regular monthly payment was due for the period from April 19,
1987, to April 18, 1988. However, as allowed by the lease agreement, the
Partnership deferred the payment of Basic Rent until the initial occupancy
date, February 8, 1988. At December 31, 1992 and 1991, the deferred Basic
Rent and interest for the period April 19, 1987, to April 18, 1988, amount to
$684,881 and $817,439, respectively, and are being paid in 120 monthly
installments together with interest at a rate based on the average discount
rates of 90-day U.S. Treasury bills, which was approximately 4.125 percent
for the year ended December 31, 1992. The rate will be adjusted every 90
days as long as a balance is due on the deferred rent. The remaining
deferred ground rent related to the free rent period amounted to $6,950,776
and $7,047,066 at December 31, 1992 and 1991, respectively, and is being
amortized over the lease term.
6. CONSTRUCTION NOTES PAYABLE:
Residential
The residential portion of the Project is being financed with a $36,000,000
loan from the Redevelopment Agency of the City and County of San Francisco
(the Agency), of which $34,600,000 and $35,100,000 was outstanding at
December 31, 1992 and 1991, respectively. The Agency raised these funds
through the issuance of Variable Rate Demand Multifamily Housing Revenue
Bonds (Rincon Center Project) 1985 Issue B (the Bonds).
The interest rate on the Bonds is variable at the rate required to produce a
market value for the Bonds equal to their par value. At December 31, 1992,
1991 and 1990, the effective interest rate on the Bonds was 3.13 percent,
4.2 percent and 5.5 percent, respectively. Interest payments are to be made
on the first business day of each March, June, September and December.
The Partnership has the option to convert the Bonds to a fixed interest rate
at any of the above interest payment dates. The fixed rate will be the rate
required to produce a market value for the Bonds equal to their par value.
After conversion to a fixed rate, interest payments must be made on each
June 1 and December 1.
The Partnership must repay the residential loan as the Bonds become due. The
Bonds shall be redeemed in at least the minimum amounts set forth below:
1993 $ 500,000
1994 600,000
1995 600,000
1996 600,000
1997 700,000
Thereafter 31,600,000
The Bonds are due December 1, 2006. The Bonds are secured by an irrevocable
letter of credit issued by Citibank in the name of the Partnership in the
amount of approximately $36,200,000. In the event that drawings are made on
the letter of credit, the Partnership has agreed to reimburse Citibank for
such drawings pursuant to the terms of a Reimbursement Agreement. The
Partnership obligations under the Reimbursement Agreement are secured by a
deed of trust on the Project and the equity letters of credit and guarantees
described below.
Commercial
The development and construction of the commercial portion of the Project is
being financed pursuant to a Construction Loan Agreement between the
Partnership and Citibank of which $28,849,475 and $27,990,000 was outstanding
at December 31, 1992 and 1991, respectively. The loan, as is the irrevocable
letter of credit supporting the residential bond, is secured by a deed of
trust on the Project and equity letters of credit currently in the aggregate
amount of $9,000,000, issued to Citibank by Bank of America, N.T. & S.A. on
behalf of the general partners. PL&D has also provided a $3.5 million
corporate guarantee to support the project financing. PGP and Perini
Corporation, the parent company of PL&D, have agreed to reimburse Bank of
America for any drawings under these letters of credit. An annual fee equal
to prime plus 1 percent of the aggregate amount is due to PGP and PL&D for
the use of these letters of credit. The loan is also secured by the
guarantees described in Note 7. As of December 31, 1992 and 1991, $0 and
$870,033, respectively, of accrued letter of credit fees were included in
accrued interest due general partners in the accompanying balance sheet. The
total fee in 1992, 1991 and 1990 was $908,733, $1,180,394 and $1,376,199,
respectively.
The loan matured on May 31, 1988, but was extended until May 31, 1993, for an
additional fee of .5 percent of the maximum loan amount. The lender has
indicated a willingness to renegotiate the loan at its maturity. Interest on
the loan is generally at Citibank's base rate plus 1 percent, payable
monthly. The Partnership has the option to convert the loan to a fixed rate
of interest for a set period of time based upon the London Interbank Offered
Rate (LIBOR) plus 1.5 percent at the time of the conversion. The interest
rate shall be increased by .125 percent each year after the first two years
of the extension period.
At December 31, 1992, the Partnership had purchased an option to acquire an
interest rate hedge for principal amounts totaling $46,500,000 at
11.5 percent until December 1993. The total fee paid of $51,000 is included
in interest and letter of credit fees.
Additionally, the Partnership obtained short-term financing to fund tenant
improvements. The amount outstanding at December 31, 1992, was $774,134.
This amount was due at December 31, 1992, but the bank agreed to extend the
date to March 31, 1992, while the Partnership collected from the respective
tenant.
7. RELATED PARTY TRANSACTIONS:
PL&D has guaranteed the payment of both interest on the financing of the
Project and operating deficits, if any. It has also guaranteed the master
lease under the sale and operating lease-back transaction (Note 3).
In accordance with the construction loan agreement (Note 6), the general
partners have advanced monies to the Partnership to fund project costs. At
December 31, 1992 and 1991, the general partners had advanced $76,982,587 and
$71,347,415, respectively. The advances and accrued interest accrue interest
at a rate of prime plus 2 percent. The related accrued interest liability of
$27,432,445 and $21,291,563 as of December 31, 1992 and 1991, respectively is
reflected in the accompanying balance sheet. For the years ended
December 31, 1992, 1991 and 1990, interest expensed on partner advances was
$6,140,883, $7,048,277 and $3,658,993, respectively.
Effective January 1, 1988, PL&D retained Pacific Gateway Properties
Management Corporation (PGPMC), a wholly owned subsidiary of PGP, to provide
management and leasing services for the Project. As compensation for
managing the facilities, the Partnership paid PGPMC a base management fee of
$222,000 annually until leasing the residential portion of the Project was
completed. At such time, the compensation increased to $319,200 per year or,
if greater, the sum of 3 percent of the first $13,000,000 of the annual gross
receipts plus 2 percent of receipts in excess of the $13,000,000. The fees
incurred for the years ended December 31, 1992, 1991 and 1990, were $485,306,
$513,950 and $346,241, respectively, and were included in administrative and
other expense in the accompanying statement of operations. At December 31,
1992 and 1991, $96,294 and $100,353, respectively, related to this fee had
not been paid and is included in accounts payable and accrued liabilities.
Additionally, the partnership reimburses PGPMC for certain payroll costs.
SQUAW CREEK ASSOCIATES
BALANCE SHEET
MARCH 31, 1994
ALL DEPARTMENTS CONSOLIDATED
ASSETS
CURRENT ASSETS:
CASH $ 327,581.84
ACCOUNTS RECEIVABLE 2,371,634.21
INVENTORIES 1,078,549.79
PREPAID ASSETS 886,886.38
LAND HELD FOR SALE 314,457.01
--------------
TOTAL CURRENT ASSETS 4,979,109.23
PROPERTIES AND EQUIPMENT - COST:
LAND 2,001,823.54
LAND IMPROVEMENTS 39,701,908.32
BUILDINGS AND IMPROVEMENTS 63,591,248.32
FURN., FIXT. & EQUIP. - COST 23,314,880.13
PROPERTIES UNDER CONSTRUCTION 421,160.40
--------------
TOTAL PROP. AND EQUIP. - COST 129,033.020.71
ACCUMULATED DEPRECIATION:
ACC. DEP. - LAND IMPROVEMENTS (4,440,773.62)
ACC. DEP. BUILDINGS & IMPROV. (3,764,788.21)
ACC. DEP. - F, F, & E. (7,081,718.68)
--------------
TOTAL ACCUMULATED DEPRECIATION (15,287.280.51)
OTHER ASSETS - NET:
OTHER ASSETS - GROSS 6,780,624.90
ACC. AMORT. - OTHER ASSETS (4,587,036.54)
--------------
TOTAL OTHER ASSETS - NET 2,193,588.36
---------------
TOTAL ASSETS $120,916,437.79
===============
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUALS $ 4,727,353.48
OTHER LIABILITIES - CURRENT 451,223.25
INTEREST PAYABLE - CURRENT 226,593.36
---------------
TOTAL CURRENT LIABILITIES 5,405,170.09
NON-CURRENT LIABILITIES:
N/P - BANK OF AMERICA LOAN 48,013,422.86
N/P - GPH JUNIOR LOAN 14,931,327.00
I/P - GPH JUNIOR LOAN 4,921,622.52
---------------
TOTAL NON-CURRENT LIABILITIES 67,866,372.38
---------------
TOTAL LIABILITIES 73,271,542.47
PARTNERS CAPITAL
CAPITAL ACCOUNTS:
GLENCO - PERINI - HCV 63,090,864.86
PACIFIC SQUAW CREEK, INC. 33,270,026.85
---------------
CAPITAL ACCOUNTS 96,360,891.71
RETAINED EARNINGS - PRIOR YEAR (47,613,634.12)
CURRENT YEAR P&L (1,102,362.27)
----------------
RETAINED EARNINGS (48,715,996.39)
----------------
PARTNERS CAPITAL 47,644,895.32
---------------
TOTAL LIABILITIES AND CAPITAL $120,916,437.79
===============
SQUAW CREEK ASSOCIATES
INCOME STATEMENT
ALL DEPARTMENTS CONSOLIDATED
THREE MONTHS ENDED MARCH 31, 1994
--THIS YEAR-- --LAST YEAR-- --VARIANCE--
AMOUNT AMOUNT AMOUNT
REVENUES:
RESORT OPERATIONS $8,909,303.00 $9,032,880.00 $(123,577.00)
HOMESITE SALES 0.00 175.000.00 (175,000.00)
OTHER REVENUE 445.60 848.03 (402.43)
------------- ------------- -------------
TOTAL REVENUES 8,909,748.60 9,208,728.03 (298,979.43)
------------- ------------- -------------
COSTS AND EXPENSES
RESORT OPERATIONS:
DIR. COSTS AND EXP'S - 5,326,096.34 5,563,532.80 237,436.66
HOTEL
SELLING, GENERAL & ADMIN. 1,673,116.50 1,791,269.00 118,152.50
FIXED HOTEL EXPENSES 385,470.38 21,526.00 (363,944.38)
------------- ------------- -------------
TOTAL RESORT 7,384,683.02 7,376,327.80 (8,355.22)
OPERATIONS
COST OF HOMESITES SOLD:
COST OF HOMESITES SOLD 1,095.00 107,899.52 106,804.52
------------- ------------- ------------
COST OF HOMESITES SOLD 1,095.00 107,899.52 106,804.52
OTHER GENERAL AND ADMIN.:
OTHER GENERAL AND ADMIN. 135,394.01 111,168.33 (24,225.68)
------------- ------------- -------------
OTHER GENERAL AND 135,394.01 111,168.33 (24,225.68)
ADMIN. ------------- ------------- -------------
NET OPERATING INCOME 1,388,576.57 1,613,332.38 (224,755.81)
DEPRECIATION AND
AMORTIZATION:
DEPRECIATION EXPENSE 1,065,663.33 1,065,663.30 (0.03)
AMORTIZATION EXPENSE 470,417.34 451,023.33 (19,394.01)
------------- -------------- -------------
TOTAL DEPRECIATION AND 1,536,080.67 1,516,686.63 (19,394.04)
AMORT.
INTEREST EXPENSE:
INTEREST EXPENSE - B OF A 728,353.20 721,180.80 (7,172.40)
LOAN
INTEREST EXPENSE - GPW 226,504.97 224,275.00 (2,229.97)
LOAN ------------- ------------- -------------
TOTAL INTEREST EXPENSE 954,858.17 945,455.80 (9,402.37)
------------- ------------- -------------
TOTAL COSTS AND 10,012,110.87 10,057,538.08 45,427.21
EXPENSES ------------- ------------- -------------
TOTAL INCOME/(LOSS) (1,102,362.27) (848,810.05) (253,552.22)
============== ============== =============
Squaw Creek Associates
(a California general partnership)
Financial Statements
and Additional Information
December 31, 1993 and 1992
Squaw Creek Associates
(a California general partnership)
Index to Financial Statements
December 31, 1993 and 1992
Page
Financial Statements with Standard Report
Report of Independent Accountants 1
Financial Statements 2-6
Notes to Financial Statements 7-13
Additional Information
Report of Independent Accountants on Additional Information14
Details of Cumulative Preferred Returns 15
Comparison of Resort Operations Revenues and Expenses to Annual
Operating Plan 16-19
Schedule of Cash Flows Used in Operating Activities - Excluding
Homesite Operations 20
Schedule of Changes in Partners' Capital 21
Report of Independent Accountants
February 22, 1994
To the General Partners
of Squaw Creek Associates
In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in partners' capital and of cash flows present fairly,
in all material respects, the financial position of Squaw Creek Associates (a
California general partnership) at December 31, 1993 and 1992, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with generally accepted auditing
standards, which require that we planthe consolidated financial statements included in this Form 10-
K, and performhave issued our report thereon dated February 10, 1995. Our audits
were made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The supplemental schedules listed
in the accompanying index are the responsibility of the Company's
management and are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing
procedures applied in the audits to obtain reasonable assurance about whetherof the basic financial statements and, in
our opinion, fairly state, in all material respects, the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supportingdata
required to be set forth therein in relation to the amounts and disclosures in thebasic financial
statements assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits providetaken as a reasonable basis for the opinion expressed above.
The Partnership has in the past relied upon, and will continuewhole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 10, 1995
SCHEDULE II
PERINI CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
Additions
Balance at Charged Charged to rely upon,
cash provided by partner contributionsDeductions Balance
Beginning to service operating cash shortfalls.
Squaw Creek Associates
(a California general partnership)
Balance SheetCosts Other from at End
Description of Year & Expenses Accounts Reserves of Year
Year Ended December
31, 1993 1992
Assets
Current assets:
Cash1994
Reserve for $ 454,395351 $ 441,170
Accounts receivable - trade 838,554 1,038,319
Accounts receivable$ - other 660,821 375,649
Inventories 1,159,113 1,153,658
Prepaid expenses 652,009 486,347
Land held$ - $ 351
doubtful accounts ======= ======= ==== ====== =======
Reserve for sale 314,457 399,775
------------ ------------
Total current assets 4,079,349 3,894,918
Property and equipment, net 114,117,662 117,699,950
Deferred expenses, net 2,552,040 3,985,846
Deposit$ 3,637 $ 328 $ - $ 267 (2) $ 3,698
depreciation on ======= ======= ==== ====== =======
real estate
properties used
in operations
Reserve for land purchase 375,000real $20,838 $ - ------------ ------------
Total assets $121,124,051 $125,580,714
Liabilities and partners' capital
Current liabilities:
Trade and other accounts payable $ 3,399,876 $ 4,078,590
Construction payables 65,974 101,547
Due to affiliates 10,818 101,813
Customer advance deposits 730,187 850,827
Current portion of obligations under
capital leases 470,970 348,452
------------ ------------
Total current liabilities 4,677,825 5,481,229
Notes payable 48,013,423 48,013,423
Partner loan 14,931,327 14,931,327
Accrued interest on partner loan 4,695,118 3,783,235
Obligations under capital leases, less current
portion 589,848 951,806
------------ ------------
Total liabilities 72,907,541 73,161,020
Commitments (Note 8)
Partners' capital 48,216,510 52,419,694
------------ ------------
Total liabities and partners' capital $121,124,051 $125,580,714
============ ============
See accompanying notes to financial statements.
Squaw Creek Associates
(a California general partnership)
Statement of Operations
For the- $9,367 (2) $11,471
estate ======= ======== ===== ====== =======
investments
Year Ended December
31, 1993
Reserve for $ 351 $ - $ - $ - $ 351
doubtful accounts ======= ======= ===== ======= =======
Reserve for
depreciation on
real estate $ 3,181 $ 920 $ - $ 464 (2) $ 3,637
properties used ======= ======= ==== ====== =======
in operations
Reserve for real
estate $29,968 $ - $ - $9,130 (2) $20,838
investments ======= ======= ===== ====== =======
Year Ended December
31, 1992
Revenue
ResortReserve for $ 742 $ - $ - $ 391 (1) $ 351
doubtful accounts ======= ======= ==== ====== =======
Reserve for
depreciation on
real estate $ 2,428 $ 974 $ - $ 221 (2) $ 3,181
properties used ======= ======= ==== ====== =======
in operations
$29,038,722Reserve for real
estate $ 22,126,0144,732 $31,368 $ - $6,132 (2) $29,968
investments ======= ======= ==== ====== ======
(1) Represents write-off of uncollectible accounts and reversal of
reserves no longer required.
(2) Represents sales of real estate properties.
EXHIBIT INDEX
The following designated exhibits are, as indicated below, either
filed herewith or have heretofore been filed with the Securities and
Exchange Commission under the Securities Act of 1933 or 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
3.1 Restated Articles of Organization - As amended through July 7,
1994
Filed herewith
Incorporated herein by reference:
3.2 3.2By-laws - As amended through September 14, 1990 - Exhibit 3.2 to
1991 Form 10K, as filed.
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-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 and Certificate of Vote of Directors
adopting a Shareholders Rights Plan providing for the issuance of
a Series A Junior Participating Cumulative Preferred Stock
purchase rights as a dividend to all shareholders of record on
October 6, 1988, incorporated by reference from Current Report on
Form 8-K filed on May 25, 1990.
Exhibit 10. Material Contracts
Incorporated herein by reference:
10.1 1982 Stock Option and Long Term Performance Incentive Plan -
Registrant's Proxy Statement for Annual Meeting of
Stockholders dated April 27, 1987.
10.2 Perini Corporation Amended and Restated General Incentive
Compensation Plan - Exhibit 10.2 to 1991 Form 10K, as filed.
10.3 Perini Corporation Amended and Restated Construction Business
Unit Incentive Compensation Plan - Exhibit 10.3 to 1991 Form
10K, as filed.
EXHIBIT INDEX
(Continued)
10.4 $125 million Credit Agreement dated as of December 6, 1994
among Perini Corporation, the Banks listed herein, Morgan
Guaranty Trust Company of New York, as Agent, and Shawmut
Bank, N.A., Co-Agent.
Filed herewith
Exhibit 22. Subsidiaries of Perini Corporation
Filed herewith
Exhibit 23. Consent of Independent Public Accountants
Filed herewith
Exhibit 24. Power of Attorney
Filed herewith
Exhibit 27. Financial Data Schedule
Filed Herewith
EXHIBIT 3.1
PERINI CORPORATION
RESTATED ARTICLES OF ORGANIZATION
(As Amended Through July 7, 1994)
1. The name by which the corporation shall be known is:
PERINI CORPORATION
2. The purpose for which the corporation is formed are as follows:
To carry on a general contracting and construction business; to carry
on a general mining business; to carry on a general business with respect
to oil, gas and other natural resources; to carry on a general real estate
development and operations business; to carry on a general business of
promoting, conducting or producing any one or more lawful athletic or
amusement activities and exhibitions; to carry on a general business of
manufacturing or otherwise producing, acquiring, preparing for market,
buying and selling, dealing in and with and disposing of any and all kinds
of construction, sporting and amusement equipment, materials and supplies
and any and all products and by-products thereof, any and all ingredients,
supplies and items in any stage of production, used or useful in
combination with, in substitution for or otherwise in connection with or
of which any one or more such products, by-products, ingredients, supplies
or items form, or are suitable to form, a component part and all related
machinery, appliances, apparatus and tools; to acquire, hold, use and
dispose of property of whatever kind and wherever situated, and rights and
interests therein, including going enterprises and the acquisition of
interests in and obligations of other concerns (wherever and however
organized) or of individuals, and while the owner thereof to exercise all
the rights, powers and privileges of ownership in the same manner and to
the same extent that an individual might; to discover, invent or acquire
rights and interests in inventions, designs, patents, patent rights and
licenses, trademarks, trade names, copyrights and trade secrets in any
field, whether or not cognate to any other activity of the corporation and
to hold, use, sell, license the use of or otherwise utilize, deal in or
dispose of the same; to lend money, credit or security to, to guarantee or
assume obligations of and to aid in any other manner other concerns
(whatever and however organized) or individuals, any obligation of which
or any interest in which is held by this corporation or in the affairs or
prosperity of which this corporation has a lawful interest, and to do all
acts and things designed to protect, improve or enhance the value of any
such obligation or interest; to join with others in any enterprise
conducive to the success of the corporation, in such manner and on such
terms and conditions as may be agreed upon; and in general, whether as
principal or as agent or contractor for others and in any manner, to do
every act and thing and to carry on any and all businesses and activities
in any way connected with any of the foregoing which may lawfully be done
or carried on by business corporations wherever such one or more
businesses or activities may be so done and to exercise all the powers
conferred by the laws of The Commonwealth of Massachusetts upon business
corporations, provided, however, that the corporation is not organized for
any purpose which prevents the provisions of Chapter 156 B of the General
Laws of said Commonwealth and acts in amendment thereof and in addition
thereto, from being applicable to it.
3. The total number of shares and the par value, if any, of each class of
stock which the corporation is authorized to issue is as follows:
Without Par Value With Par Value
Number of Number of
Class of Stock Shares Shares Par Value
Common None 15,000,000 $ 1.00
Preferred None 1,000,000 1.00
Series of Preferred Stock
$ 21.25 Convertible
Exchangeable
Preferred Stock None 100,000 1.00
$ Series A Junior
Participating
Cummulative None 200,000 1.00
Preferred Stock
Two classes of stock are authorized, Common Stock having a par value
of $1.00 per share and Preferred Stock having a par value of $1.00 per
share. Stock of any class or series authorized pursuant hereto may be
issued from time to time by authority of the Board of Directors for such
consideration as from time to time may be fixed by vote of the Board of
Directors.
I. The Preferred Stock may consist of one or more series. The Board
of Directors may, from time to time, establish and designate the different
series and the variations in the relative rights and preferences as
between the different series as provided in Section II hereof, but in all
other respects all shares of the Preferred Stock shall be identical. In
the event that at any time the Board of Directors shall have established
and designated one or more series of Preferred Stock consisting of a
number of shares less than all of the authorized number of shares of
Preferred Stock, the remaining authorized shares of Preferred Stock shall
be deemed to be shares of an undesignated series of Preferred Stock until
designated by the Board of Directors as being a part of a series
previously established or a new series than being established by the Board
of Directors.
II. Subject to the provisions of this Description of Classes of Stock,
the Board of Directors is authorized to establish one or more series of
Preferred Stock and, to the extent now or hereafter permitted by the laws
of the Commonwealth of Massachusetts to fix and determine the preferences,
voting powers, qualifications and special or relative rights or privileges
of each series including, but not limited to:
(a) the number of shares to constitute such series and the
distinctive designation thereof;
(b) the dividend rate on the shares of such series and the
preferences, if any, and the special and relative rights of such
shares of such series as to dividend;
(c) whether or not the shares of such series shall be
redeemable, and, if redeemable, the price, terms and manner of
redemption;
(d) the preference, if any, and the special and relative rights of
the shares of such series upon liquidation of the corporation;
(e) whether or not the shares of such series shall be subject
to the operation of a sinking or purchase fund and, if so, the
terms and provisions of such fund;
(f) whether or not the shares of such series shall be
convertible into shares of any other class or of any other series
of the same or any other class of stock of the corporation and, if
so, the conversion price or ratio and other conversion rights;
(g) the conditions under which the shares of such series
shall have separate voting rights or no voting rights; and
(h) such other designations, preferences and relative,
participating, optional or other special rights and
qualifications, limitations or restrictions of such series to the
full extent now and hereafter permitted by the laws of the
Commonwealth of Massachusetts.
Notwithstanding the fixing of the number of shares constituting a
particular series, the Board of Directors may at any time authorize the
issuance of additional shares of the same series.
III. Holders of Preferred Stock shall be entitled to receive, when
and as declared by the Board of Directors, but only out of funds legally
available for the payment of dividends, cash dividends at the rates fixed
by the Board of Directors for the respective series, payable on such dates
in each year as the Board of Directors shall fix for the respective series
as provided in Section II (hereinafter referred to as "dividend dates").
Until all accrued dividends on each series of Preferred Stock shall have
been paid through the last preceding dividend date of each such series, no
dividend or distribution shall be made to holders of Common Stock other
than a dividend payable in Common Stock of the corporation. Dividends on
shares on any cumulative series of Preferred Stock shall accumulate form
and after the day on which such shares are issued, but arrearages in the
payment thereof shall not bear interest. Nothing herein contained shall
be deemed to limit the right of the corporation to purchase or otherwise
acquire at any time any shares of its capital stock.
For purposes of this Description of Class of Stock, the amount of
dividends "accrued" on any shares on any cumulative series of Preferred
Stock as at any dividend date shall be deemed to be the amount of any
unpaid dividends accumulated thereon to and including such dividend date,
whether or not earned or declared. The amount of dividends "accrued" on
any noncumulative series of Preferred Stock shall mean only those
dividends declared by the Board of Directors, unless otherwise specified
for such series by the Board of Directors pursuant to Section II.
IV. Upon the voluntary or involuntary liquidation of the corporation,
before any payment or distribution of the assets of the corporation shall
be made to or set apart for any other class of stock, the holders of
Preferred Stock shall be entitled to payment of the amount of the
preference payable upon such liquidation of the corporation shall be
insufficient to pay in full to the holders of the Preferred Stock the
preferential amount aforesaid, then such assets, or the proceeds thereof,
shall be distributed among the holders of each series of Preferred Stock
ratably in accordance with the sums which would be payable on such
distribution if all sums payable were discharged in full. The voluntary
sale, conveyance, exchange or transfer of all or substantially all of the
property and assets of the corporation, the merger or consolidation of the
corporation into or with any other corporation, or the merger of any other
corporation into it, shall not be deemed to be a liquidating of the
corporation for the purpose of this Section IV.
V. Any shares of Preferred Stock which shall at any time have been
redeemed or which shall at any time have been surrendered for conversion
or exchange or for cancellation, pursuant to any sinking or purchase fund
provisions with respect to any series of Preferred Stock, shall be retired
and shall thereafter have the status of authorized and unissued shares of
Preferred Stock undesignated as to series.
VI. The Common Stock shall have exclusive voting power except as
required by law and except to the extent the Board of Directors shall, at
the time any series of Preferred Stock is established, determine that the
shares of such series shall vote (i) together as a single class with
shares of Common Stock and/or with shares of Preferred Stock (or one or
more other series thereof) on all or certain matters presented to the
stockholders and/or upon the occurrence of any specified event or
condition, and/or (ii) exclusively on certain matters or, upon the
occurrence of any specified event or condition, on all or certain matters.
The Board of Directors, in establishing a series of Preferred Stock and
fixing the voting rights thereof, may determine that the voting power of
each share of such series may be greater or less than the voting power of
each share of the Common Stock or of other series of Preferred Stock
notwithstanding that the shares of such series of preferred Stock may vote
as a single class with the shares of other series of Preferred Stock
and/or with the shares of Common Stock.
4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications, special or relative rights or privileges as to each class
thereof and any series now established:
See Article 3 above.
5. The restrictions, if any, imposed by the articles of organization
upon the transfer of shares of stock of any class are as follows:
None.
6. Other lawful provisions for the conduct and regulation of the
business and affairs of the corporation, of its voluntary dissolution, or
for limiting, defining, or regulating the powers of the corporation, or of
its directors or stockholders, or of any class of stockholders are as
follows:
6.1. The directors may make, amend or repeal the bylaws
in whole or in part, except with respect to any provision thereof
which by law or the by-laws requires action by the stockholders.
6.2. Meetings of the stockholders may be held anywhere in
the United States.
6.3. Except as specifically authorized by statute, no
stockholder shall have any right to examine any property or any
books, accounts or other writings of the corporation if there is
reasonable ground for belief that such examination will for any
reason be adverse to the interest of the corporation, and a vote
of the board of directors refusing permission to make such
examination and setting forth that in the opinion of the board of
directors such examination would be adverse to the interests of
the corporation shall be prima facie evidence that such
examination would be adverse to the interests of the corporation.
Every such examination shall be subject to such reasonable
regulations as the board of directors may establish in regard
thereto.
6.4. The board of directors may specify the manner in
which the accounts of the corporation shall be kept and may
determine what constitutes net earnings, profits and surplus, what
amounts, if any, shall be reserved for any corporation purpose,
and what amounts, if any, shall be declared as dividends. Unless
the board of directors otherwise specifies, the excess of the
consideration for any share of its capital stock with par value
issued by it over such par value shall be paid in surplus. All
surplus shall be available for any corporate purpose, including
the payment of dividends.
6.5 The corporation may purchase or otherwise acquire, hold,
sell or otherwise dispose of shares of its own capital stock, and
such purchase or holding shall not be deemed a reduction of its
capital stock. The corporation may reduce its capital stock in
any manner authorized by law. Such reduction may be effected by
the cancellation and retirement of any shares to its capital stock
held by it. Upon any reduction of capital or capital stock, no
stockholder shall have any right to demand any distribution from
the corporation, except as and to the extent that the stockholders
shall so have provided at the time of authorizing such reduction.
6.6. Each director and officer of the corporation shall,
in the performance of his duties, be fully protected in relying in
good faith upon the books of account of the corporation, reports
made to the corporation by any of its officers of employees or by
counsel, accountants, appraisers or other experts or consultants
selected with reasonable care by the directors, or upon other
records of the corporation.
6.7. The directors shall have the power to fix from time
to time their compensation.
6.8. The corporation may enter into contracts and
otherwise transact business as vendor, purchaser or otherwise with
its directors, officers and stockholders and with corporations,
joint stock companies, trusts, firms and associations in which
they are or may be or become interested as directors, officers,
shareholders, members, trustees, beneficiaries or otherwise as
freely as though such adverse interest did not exist even though
the vote, action or presence of such director, officer or
stockholder may be necessary to obligate the corporation upon such
contract or transactions; and no such contract or transaction
shall be avoided and no such director, officer or stockholder
shall be held liable to account to the corporation of to any
creditor or stockholder of the corporation for any profit or
benefit realized by him through any such contract or transaction
by reasons of such adverse interest nor by reason of any fiduciary
relationship of such director, officer or stockholder to the
corporation arising out of such office or stock ownership;
provided (in the case of directors and officers but not in the
case of any stockholder who is not a director or not in the case
of any stockholder who is not a director or officer of the
corporation) the nature of the interest of such director of
officer, though not necessarily the details or extend thereof, be
known by or disclosed to the directors. Ownership or beneficial
interest in a minority of the stock or securities of another
corporation, joint stock company, trust, firm or association shall
not be deemed to constitute an interest adverse to this
corporation in such other corporation, joint stock company, trust,
firm or association and need not be disclosed. A general notice
that a director or officer of the corporation is interested in any
corporation, joint stock company, trust, firm or association shall
be a sufficient disclosure as to such director or officer with
respect to all contracts and transactions with that corporation,
joint stock company, trust, firm of association. In any event the
authorizing or ratifying vote of a majority of the capital stock
of the corporation outstanding and entitled to vote passed at a
meeting duly called and held for the purpose shall validate any
such contract or transaction as against all stockholders of the
corporation, whether of record or not at the time of such vote,
and as against all creditors and other claimants, under the
corporation, and no contract or transaction shall be avoided by
reason of any provision of this paragraph which would be valid but
for these provisions.
6.9. The terms and conditions upon which a sale or
exchange of all the property and assets, including the good will
of the corporation, or any part thereof, is voted may include the
payment thereof in whole or in part on shares, notes, bonds or
other certificated of interest or indebtedness of any voluntary
association, trust, joint stock company or corporation.
Such vote or a subsequent vote may in the event of or in
contemplation of proceedings for the dissolution of the
corporation also provide, subject to the rights of creditors and
preferred stockholders, for the distribution pro rate among the
stockholders of the corporation, of the proceed of any such sale
or exchange, whether such proceeds be in cash or in securities as
aforesaid (at values to be determined by the board of directors).
6.10. No director of this corporation shall be personally
liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director notwithstanding any
provision of law imposing such liability; provided, however, that
this Article shall not eliminate or limit any liability of a
director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct of a
knowing violation of law, (iii) under Sections 61 or 62 of the
Massachusetts Business Corporation Law, or (iv) with respect to
any transaction from which the director derived an improper
personal benefit.
No amendment or repeal of this Article shall adversely affect
the rights and protection afforded to a director of this
corporation under this Article for acts or omissions occurring
while this Article is in effect.
EXHIBIT 10.4
[CONFORMED COPY]
$125,000,000
CREDIT AGREEMENT
dated as of
December 6, 1994
among
Perini Corporation
The Banks Listed Herein
Morgan Guaranty Trust Company of New York,
as Agent
Shawmut Bank, N.A., Co-Agent
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations. . . . . . . 17
SECTION 1.03. Types of Borrowings. . . . . . . . . . . . . . . 17
ARTICLE II
THE CREDITS
SECTION 2.01. The Loans. . . . . . . . . . . . . . . . . . . . 17
SECTION 2.02. Method of Borrowing. . . . . . . . . . . . . . . 18
SECTION 2.03. Notes. . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.04. Maturity of Loans. . . . . . . . . . . . . . . . 20
SECTION 2.05. Interest Rates. . . . . . . . . . . . . . . . . 21
SECTION 2.06. Commitment Fees. . . . . . . . . . . . . . . . . 24
SECTION 2.07. Participation Fee. . . . . . . . . . . . . . . . 24
SECTION 2.08. Agency Fee. . . . . . . . . . . . . . . . . . . . 25
SECTION 2.09. Optional Termination or Reduction of
Commitments. . . . . . . . . . . . . . . . . . . . 25
SECTION 2.10. Mandatory Termination or Reduction of
Commitments. . . . . . . . . . . . . . . . . . . . 25
SECTION 2.11. Optional Prepayments. . . . . . . . . . . . . . . 27
SECTION 2.12. General Provisions as to Payments. . . . . . . . 27
SECTION 2.13. Funding Losses. . . . . . . . . . . . . . . . . . 27
SECTION 2.14. Computation of Interest and Fees. . . . . . . . . 28
SECTION 2.15. Maximum Interest Rate. . . . . . . . . . . . . . 28
SECTION 2.16. Letters of Credit. . . . . . . . . . . . . . . . 29
SECTION 2.17. Termination of the Security Interest. . . . . . . 34
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. . . . . . . . . . . . . . . . . . 35
SECTION 3.02. Credit Events. . . . . . . . . . . . . . . . . . 37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power. . . . . . . . . . 38
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. . . . . . . . . . . . . . . . . . . 38
SECTION 4.03. Binding Effect; Liens of Collateral
Documents. . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.04. Financial Information. . . . . . . . . . . . . . 39
SECTION 4.05. Litigation. . . . . . . . . . . . . . . . . . . . 39
SECTION 4.06. Compliance with ERISA. . . . . . . . . . . . . . 40
SECTION 4.07. Environmental Matters. . . . . . . . . . . . . . 40
SECTION 4.08. Taxes. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.09. Subsidiaries. . . . . . . . . . . . . . . . . . . 42
SECTION 4.10. Not an Investment Company. . . . . . . . . . . . 42
SECTION 4.11. No Burdensome Restrictions. . . . . . . . . . . . 42
SECTION 4.12. Full Disclosure. . . . . . . . . . . . . . . . . 42
SECTION 4.13. Ownership of Property; Liens. . . . . . . . . . . 43
ARTICLE V
COVENANTS
SECTION 5.01. Information. . . . . . . . . . . . . . . . . . . 43
SECTION 5.02. Payment of Obligations. . . . . . . . . . . . . . 46
SECTION 5.03. Maintenance of Property; Insurance. . . . . . . . 46
SECTION 5.04. Conduct of Business and Maintenance of Existence. 47
SECTION 5.05. Compliance with Laws. . . . . . . . . . . . . . . 47
SECTION 5.06. Inspection of Property, Books and Records. . . . 47
SECTION 5.07. Current Ratio. . . . . . . . . . . . . . . . . . 47
SECTION 5.08. Debt. . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.09. Minimum Consolidated Tangible Net Worth. . . . . 48
SECTION 5.10. Interest Coverage. . . . . . . . . . . . . . . . 48
SECTION 5.11. Negative Pledge. . . . . . . . . . . . . . . . . 48
SECTION 5.12. Consolidations, Mergers and Sales of homesites 177,967 3,718,690
----------- ------------
29,216,689 25,844,704
----------- ------------
Expenses
Resort operations 20,919,792 19,741,176
Resort selling, generalAssets. . . 49
SECTION 5.13. Use of Proceeds. . . . . . . . . . . . . . . . . 50
SECTION 5.14. Restricted Payments. . . . . . . . . . . . . . . 50
SECTION 5.15. Real Estate Investments. . . . . . . . . . . . . 51
SECTION 5.16. Other Investments. . . . . . . . . . . . . . . . 51
SECTION 5.17. Further Assurances. . . . . . . . . . . . . . . . 51
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. . . . . . . . . . . . . . . . 52
SECTION 6.02. Cash Cover. . . . . . . . . . . . . . . . . . . . 55
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. . . . . . . . . . 56
SECTION 7.02. Agent and Affiliates. . . . . . . . . . . . . . . 56
SECTION 7.03. Action by Agent. . . . . . . . . . . . . . . . . 56
SECTION 7.04. Consultation with Experts. . . . . . . . . . . . 56
SECTION 7.05. Liability of Agent. . . . . . . . . . . . . . . . 56
SECTION 7.06. Indemnification. . . . . . . . . . . . . . . . . 57
SECTION 7.07. Credit Decision. . . . . . . . . . . . . . . . . 57
SECTION 7.08. Successor Agent. . . . . . . . . . . . . . . . . 57
SECTION 7.09. Collateral Documents. . . . . . . . . . . . . . . 58
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. . . . . . . . . . . . . . . . 58
SECTION 8.02. Illegality. . . . . . . . . . . . . . . . . . . . 59
SECTION 8.03. Increased Cost and Reduced Return. . . . . . . . 59
SECTION 8.04. Base Rate Loans Substituted for Affected Fixed
Rate Loans. . . . . . . . . . . . . . . . . . . . . 61
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.02. No Waivers. . . . . . . . . . . . . . . . . . . . 62
SECTION 9.03. Expenses; Documentary Taxes; Indemnification. 63
SECTION 9.04. Sharing of Setoffs. . . . . . . . . . . . . . . . 64
SECTION 9.05. Amendments and Waivers. . . . . . . . . . . . . . 64
SECTION 9.06. Successors and Assigns. . . . . . . . . . . . . . 65
SECTION 9.07. Collateral. . . . . . . . . . . . . . . . . . . . 66
SECTION 9.08. Governing Law; Submission to Jurisdiction. . . . 66
SECTION 9.09. Counterparts; Integration. . . . . . . . . . . . 67
SECTION 9.10. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . 67
CREDIT AGREEMENT
AGREEMENT dated as of December 6, 1994 among PERINI CORPORATION,
the BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein,
have the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section 2.05(b).
"Adjusted London Interbank Offered Rate" has the meaning set forth
in Section 2.05(c).
"Administrative Questionnaire" means, with respect to each Bank,
the administrative 6,224,580 6,826,032
Partnership selling, generalquestionnaire in the form submitted to such Bank by the
Agent and administrative 473,006 546,929
Costsubmitted to the Agent (with a copy to the Borrower) duly
completed by such Bank.
"Agent" means Morgan Guaranty Trust Company of homesites sold,New York in its
capacity as agent for the Banks under the Financing Documents, and its
successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Domestic Loans, its Domestic Lending Office and (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.05(b).
"Assignee" has the meaning set forth in Section 9.06(c).
"Available LC Amount" means at any time an amount equal to the
lesser of (x) $25,000,000 or (y) the excess, if any, of (i) the aggregate
amount of the Tranche A Commitments over (ii) the aggregate outstanding
principal amount of the Tranche A Loans.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1%
plus the Federal Funds Rate for such day.
"Base Rate Loan" means a Tranche A Loan to be made by a Bank as a
Base Rate Loan pursuant to the Applicable Notice of Borrowing or Article
VIII.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by
any member of the ERISA Group.
"Borrower" means Perini Corporation, a Massachusetts corporation,
and its successors.
"Borrower's 1993 Form 10-K" means the Borrower's amended annual
report on Form 10-KA for 1993, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
"Borrower Pledge Agreement" means the Borrower Pledge Agreement in
substantially the form of Exhibit E between the Borrower and the Agent as
executed and delivered pursuant to Section 3.01(c) and as the same may be
amended from time to time as permitted herein and in accordance with the
terms thereof.
"Borrower Security Agreement" means the Borrower Security
Agreement in substantially the form of Exhibit D between the Borrower and
the Agent, as executed and delivered pursuant to Section 3.01(c) and as
the same may be amended from time to time as permitted herein and in
accordance with the terms thereof.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.05(b).
"CD Loan" means a Tranche A Loan to be made by a Bank as a CD
Loan pursuant to the applicable Notice of Borrowing.
"CD Margin" has the meaning set forth in Section 2.05(b).
"CD Reference Banks" means Shawmut Bank, N.A., Fleet Bank of
Massachusetts, N.A. and Morgan Guaranty Trust Company of New York.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, and
any rules or regulations promulgated thereunder.
"Class" refers to a determination whether a Loan is a Tranche A
Loan or a Tranche B Loan (or whether a Borrowing is to be comprised of, or
a Commitment relates to the making of, Tranche A Loans or Tranche B
Loans).
"Collateral" means all property, real and personal, tangible and
intangible, with respect to which Liens are created or are purported to be
created pursuant to the Collateral Documents.
"Collateral Documents" means the Borrower Security Agreement, the
Borrower Pledge Agreement, the Subsidiary Security Agreement, the Deeds of
Trust and all other supplemental or additional security agreements, pledge
agreements, mortgages or similar instruments delivered pursuant hereto or
thereto.
"Commitment" means a Tranche A Commitment or a Tranche B
Commitment and "Commitments" means all or any combination of the
foregoing, as the context may require.
"Consolidated Capital Base" means, at any date, the Consolidated
Tangible Net Worth of the Borrower at such date plus 75% of the principal
amount of any Special Subordinated Debt outstanding at such date.
"Consolidated Current Assets" means at any date the consolidated
current assets of the Borrower and its Consolidated Subsidiaries excluding
costs related to Claims, all determined as of such date. For purposes of
this definition, "Claims" mean the amount (to the extent reflected in
determining such consolidated current assets) of disputed or unapproved
change orders in regards to scope and/or price that, in Perini project
management's opinion (and approved by Perini senior management), will not
be resolved in the normal course of business (i.e. through the change
order process and without resort to litigation or arbitration) and which
have not been previously reflected in the consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of September 30, 1994.
"Consolidated Current Liabilities" means at any date the
consolidated current liabilities of the Borrower and its Consolidated
Subsidiaries, determined as of such date.
"Consolidated Earnings Before Interest and Taxes" means for any
period Consolidated Net Income for such period (x) less (i) the Borrower's
equity share of income (or plus the Borrower's equity share of loss) of
unconsolidated joint ventures for such period and (ii) capitalized real
estate taxes for such period, to the extent not permitted to be
capitalized in accordance with generally accepted accounting principles as
in effect on the date hereof, and (y) plus (i) cash distributions of
earnings from unconsolidated joint ventures for such period and (ii) the
aggregate amount deducted in determining such Consolidated Net Income in
respect of Consolidated Interest Charges and income taxes.
"Consolidated Interest Charges" means for any period the aggregate
interest expense of the Borrower and its Consolidated Subsidiaries for
such period including, sellingwithout limitation, (i) the portion of any
obligation under capital leases allocable to interest expense in
accordance with generally accepted accounting principles, (ii) the portion
of any debt discount that shall be amortized in such period and (iii) any
interest accrued during such period which is capitalized in accordance
with generally accepted accounting principles, and without any reduction
on account of interest income.
"Consolidated Net Income" means for any period the consolidated
net income (or loss) of the Borrower and its Consolidated Subsidiaries for
such period.
"Consolidated Subsidiary" of any Person means at any date any
Subsidiary of such Person or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial
statements if such statements were prepared as of such date.
"Consolidated Tangible Net Worth" of any Person means at any date
the consolidated stockholders' equity of such Person and its Consolidated
Subsidiaries less their consolidated Intangible Assets, all determined as
of such date. For purposes of this definition "Intangible Assets" means
the amount (to the extent reflected in determining such consolidated
stockholders' equity) of (i) all write-ups (other than write-ups resulting
from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to September 30, 1994 in the book value of any asset
owned by the Borrower or a Consolidated Subsidiary and (ii) all
unamortized debt discount and expense, capitalized real estate taxes (to
the extent not permitted to be capitalized in accordance with generally
accepted accounting principles as in effect on the date hereof), goodwill,
patents, trademarks, service marks, trade names, copyrights, organization
or developmental (other than real estate developmental) expenses and other
intangible items.
"Construction Claim" means a construction claim listed in Schedule
IV.
"Credit Event" means the making of a Loan or the issuance of a
Letter of Credit or the extension of an Evergreen Letter of Credit.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such
Person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all Debt secured by a Lien on any
asset of such Person, whether or not such Debt is otherwise an obligation
of such Person, and (vi) all Debt of others Guaranteed by such Person;
provided that advances to the Borrower or a Subsidiary by a joint venture
out of the Borrower's or such Subsidiary's share of the undistributed
earnings of such joint venture shall not constitute Debt.
"Deeds of Trust" means the Deed of Trust, Assignment of Leases and
Rents, Security Agreement and Financing Statement dated as of December 6,
1994 for each of the Mortgaged Facilities, each substantially in the form
of Exhibits H-1 and H-2 hereto.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City or Massachusetts
are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending
Office) or such other office as such Bank may hereafter designate as its
Domestic Lending Office by notice to the Borrower and the Agent; provided
that any Bank may so designate separate Domestic Lending Offices for its
Tranche A Base Rate Loans and Tranche B Loans, on the one hand, and its CD
Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or
both of such offices, as the context may require.
"Domestic Loans" means CD Loans, Tranche A Base Rate Loans or
Tranche B Loans.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.05(b).
"Effective Date" means the date this Agreement becomes effective
in accordance with Section 3.01.
"Environmental Laws" means any and all federal state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and other
governmental restrictions relating to the environment, the effect of the
environment on human health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or
the clean-up or other remediation thereof.
"Environmental Liabilities" means any and all liabilities of or
relating to the Borrower or any of its Subsidiaries (including any
liabilities derived from an entity which is, in whole or in part, a
predecessor of the Borrower or any of its Subsidiaries), whether vested or
unvested, contingent or fixed, actual or potential, known or unknown,
which arise under or relate to matters covered by Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with
the Borrower or any Subsidiary, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including
dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to
each Bank, its office, branch or affiliate located at
its address set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Euro-Dollar Lending Office) or
such other office, branch or affiliate of such Bank as it may hereafter
designate as its Euro-Dollar Lending Office by notice to the Borrower and
the Agent.
"Euro-Dollar Loan" means a Tranche A Loan to be made by a Bank
as a Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section
2.05(c).
"Euro-Dollar Reference Banks" means the principal London offices
of Bank of America National Trust and Savings Association and Morgan
Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Evergreen Letter of Credit" has the meaning set forth in Section
2.16(b).
"Exempt Group" means (i) any employee benefit plan of the Borrower
or any Subsidiary, (ii) any entity or Person holding shares of common
stock of Borrower organized, appointed or established by the Borrower or
any Subsidiary for or pursuant to the terms of any such plan or (iii) The
Perini Memorial Foundation, Inc., The Joseph Perini Memorial Foundation,
or any of the various trusts established under the wills of Lewis R.
Perini, Senior, Joseph R. Perini, Senior or Charles B. Perini, Senior.
"Existing Credit Agreements" means the Primary Credit Agreement
and the Credit Agreement dated as of March 9, 1994 among the Borrower, the
banks listed therein and Morgan Guaranty Trust Company of New York, as
agent for such banks, as amended to the Effective Date.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Domestic Business Day next succeeding such day, provided that (i) if such
day is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day,
and (ii) if no such rate is so published on such next succeeding Domestic
Business Day, the Federal Funds Rate for such day shall be the average
rate quoted to Morgan Guaranty Trust Company of New York on such day on
such transactions as determined by the Agent.
"Financial Letter of Credit" means any Letter of Credit which
constitutes a financial standby letter of credit within the meaning of
Appendix A to Regulation H of the Board of Governors of the Federal
Reserve System or other applicable capital adequacy guidelines promulgated
by bank regulatory authorities (including without limitation workmen's
compensation letters of credit).
"Financing Documents" means this Agreement, the Subsidiary
Guarantee Agreement, the Notes and the Collateral Documents.
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or both.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of
any other Person and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring
in any other manner the holder of such Debt of the payment thereof or to
protect such holder against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include endorsements for
collection or deposit or bid and performance bonds and guarantees in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending
one, two, three or six months thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Borrowing, the period commencing on the date
of such Borrowing and ending 30, 60 or 90 days thereafter, as the Borrower
may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date; and
(3) with respect to each Tranche A Base Rate Borrowing or Tranche B
Borrowing, the period commencing on the date of such Borrowing and ending
30 days thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on
a day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Investment" means any investment in any Person, whether by means
of share purchase, capital contribution, loan, Guarantee, time deposit or
otherwise.
"LC Bank" means BayBank Boston, N.A. or such other Bank as the
Borrower may designate from time to time (with the consent of such other
Bank).
"LC Exposure" means, at any time and for any Bank, an amount
equal to such Bank's Percentage of the aggregate amount of Letter of
Credit Liabilities in respect of all Letters of Credit at such time.
"Letter of Credit" has the meaning set forth in Section 2.16(a).
"Letter of Credit Liabilities" means, at any time and in respect
of any Letter of Credit, the sum, without duplication, of (i) the amount
available for drawing under such Letter of Credit plus (ii) the aggregate
unpaid amount of all Reimbursement Obligations in respect of previous
drawings made under such Letter of Credit.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other
type of preferential arrangement that has the practical effect of creating
a security interest, in respect of such asset. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest
of a vendor or lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan and "Loans"
means Domestic Loans or Euro-Dollar Loans or both.
"Loan Commitment" means for any Bank at any time an amount equal
to the excess, if any, of such Bank's Commitment at such time over such
Bank's LC Exposure at such time.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $10,000,000.
"Material Subsidiary" means at any time a Subsidiary which as of
such time meets the definition of a "significant subsidiary" contained as
of the date hereof in Regulation S-X of the Securities and Exchange
Commission.
"Modified Parent Company Debt" means at any date the Debt of the
Borrower (other than Debt payable to any Wholly-Owned Consolidated
Subsidiary) determined on an unconsolidated basis as of such date, less
75% of the principal amount of any Special Subordinated Debt outstanding
on such date.
"Mortgaged Facilities" means the properties described on Schedule
III.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member
of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be
a member of the ERISA Group during such five year period.
"Notes" means promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Notice Time" has the meaning set forth in Section 2.16(b).
"Obligor" means each of the Borrower and the Subsidiary
Guarantors, and "Obligors" means all of the foregoing.
"Paramount Development Associates" means Paramount Development
Associates, a Massachusetts corporation.
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Percentage" means, with respect to each Bank, the percentage that
such Bank's Tranche A Commitment constitutes of the aggregate amount of
the Tranche A Commitments.
"Performance Letter of Credit" means a Letter of Credit which
constitutes a performance standby letter of credit within the meaning of
Appendix A to Regulation H of the Board of Governors of the Federal
Reserve system or other applicable capital adequacy guidelines promulgated
by bank regulatory authorities.
"Perini Building Company" means Perini Building Company, Inc., an
Arizona corporation.
"Perini International" means Perini International Corporation, a
Massachusetts corporation.
"Perini Land and Development" means Perini Land and Development
Company, a Delaware corporation.
"Permitted Encumbrances" means, with respect to any real property
owned or leased by the Borrower or any of its Subsidiaries:
(a) Liens for taxes, assessments or other governmental charges
not yet due or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Borrower or such Subsidiary, as the
case may be, in accordance with generally accepted accounting
principles;
(b) carriers', warehousemen's, mechanics', materialmens',
repairmens' or other like Liens arising by operation of law in the
ordinary course of business so long as (A) the underlying obligations
are not overdue for a period of more than 60 days or (B) such Liens
are being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of
the Borrower or such Subsidiary, as the case may be, in accordance
with generally accepted accounting principles; and
(c) other Liens or title defects (including matters which an
accurate survey might disclose) which (x) do not secure Debt; (y) do
not materially detract from the value of such real property or
materially impair the use thereof by the Borrower or such Subsidiary
in the operation of its business; and (z) are set forth in the title
reports referred to in Section 3.01(h) hereof.
"Permitted Liens" means the Liens permitted to exist under Section
5.11.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the ERISA Group
or (ii) has at any time within the preceding five years been maintained,
or contributed to, by any Person which was at such time a member of the
ERISA Group for employees of any Person which was at such time a member of
the ERISA Group.
"Pledged Instrument" has the meaning set forth in Section 1 of the
Borrower Pledge Agreement.
"Primary Credit Agreement" means the Credit Agreement dated as of
May 10, 1993 among the Borrower, the banks listed therein and Morgan
Guaranty Trust Company of New York, as agent for such banks, as amended to
the Effective Date.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to
time as its Prime Rate.
"Real Estate Investment" means (i) the acquisition, construction
or improvement of any real property, other than real property used by the
Borrower or a Consolidated Subsidiary in the conduct of its construction
business or (ii) any Investment in any Person (including Perini Land and
Development or another Consolidated Subsidiary, but without duplication of
any Real Estate Investment made by such Person with the proceeds of such
Investment) engaged in real estate investment or development or whose
principal assets consist of real property; provided that the Debt
contemplated by Section 5.08(b)(ii) shall not constitute Real Estate
Investments.
"R. E. Dailey & Co." means R. E. Dailey & Co., a Michigan
corporation.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means
any one of such Reference Banks.
"Refunding Borrowing" means a Borrowing which, after application
of the proceeds thereof, results in no net increase in the outstanding
principal amount of Loans made by any Bank.
"Regulated Activity" means any generation, treatment, storage,
recycling, transportation or Release of any Hazardous Substance.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursement Obligations" means at any date the obligations of
the Borrower then outstanding under Section 2.16 to reimburse any Bank for
the amount paid by such Bank in respect of a drawing under a Letter of
Credit.
"Release" means any discharge, emission or release, including a
Release as defined in CERCLA at 42 U.S.C. Section 9601(22). The term
"Released" has a corresponding meaning.
"Required Banks" means at any time Banks having at least 60% of
the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 60% of the aggregate
unpaid principal amount of the Loans.
"Restricted Payment" means (i) any dividend or other distribution
on any shares of the Borrower's capital stock (except dividends payable
solely in shares of its capital stock) or (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (a) any shares of
the Borrower's capital stock or (b) any option, warrant or other right to
acquire shares of the Borrower's capital stock; provided that none of the
following shall constitute Restricted Payments: (i) the declaration and
payment of dividends on preferred stock of the Borrower in an aggregate
amount with respect to any four consecutive fiscal quarters not exceeding
$5,125,000, (ii) the exchange of Special Subordinated Debt for the
Borrower's $21.25 Convertible Exchangeable Preferred Shares, (iii) the
redemption, for an aggregate redemption price not exceeding $200,000, of
the "Rights" issued pursuant to the Shareholder Rights Agreement dated as
of September 23, 1988, as amended, between the Borrower and State Street
Bank & Trust Company, as Rights Agent or (iv) cash payments in the
ordinary course of business in full or partial settlement of employee
stock options or similar incentive compensation arrangements.
"Special Subordinated Debt" means the 8 1/2% Convertible
Subordinated Debentures due 2012 of the Borrower issuable in exchange for
the Borrower's $21.25 Convertible Exchangeable Preferred Shares in
accordance with the terms of the Certificate of Vote of Directors
Establishing a Series of a Class of Stock fixing the relative rights and
preferences of such Shares as originally filed with the Secretary of the
Commonwealth of Massachusetts.
"Subsidiary" of any Person means any corporation or other entity
of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned
by such Person.
"Subsidiary Guarantor" means each of Perini Building Company,
Perini International, Perini Land and Development, R. E. Dailey & Co.,
Paramount Development Associates and each other Subsidiary of the Borrower
which becomes a party to the Subsidiary Guarantee Agreement pursuant to
Section 3.01 thereof, and their respective successors.
"Subsidiary Guarantee Agreement" means the Subsidiary Guarantee
Agreement in substantially the form of Exhibit F among the Borrower, the
Subsidiary Guarantors party thereto and the Agent, as executed and
delivered pursuant to Section 3.01(b) and as the same may be amended from
time to time as permitted herein and in accordance with the terms thereof.
"Subsidiary Security Agreement" means the Subsidiary Security
Agreement in substantially the form of Exhibit G among the Borrower, the
Subsidiary Guarantors party thereto and the Agent, as executed and
delivered pursuant to Section 3.01(c) and as the same may be amended from
time to time as permitted herein and in accordance with the terms thereof.
"Temporary Cash Investment" means investment of cash balances in
United States Government securities or other short-term money market
investments.
"Termination Date" means December 6, 1997 (or if such date is not
a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day).
"Tranche A Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the signature pages
hereof as its Tranche A Commitment, as such amount may be reduced from
time to time pursuant to Section 2.09 and Section 2.10.
"Tranche A Loan" means a Loan made by a Bank pursuant to Section
2.01(a).
"Tranche B Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the signature pages
hereof as its Tranche B Commitment, as such amount may be reduced from
time to time pursuant to Section 2.09 and Section 2.10.
"Tranche B Loan" means a Loan made by a Bank pursuant to Section
2.01(b).
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit
liabilities under such Plan, determined on a plan termination basis using
the assumptions prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds (ii) the fair market value of all Plan assets allocable to
such liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a
potential liability of a member of the ERISA Group to the PBGC or any
other Person under Title IV of ERISA.
"Usage" means, at any date, the sum of the aggregate outstanding
principal amount of the Loans at such date plus the aggregate amount of
Letter of Credit Liabilities at such date with respect to all Letters of
Credit.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary of the Borrower all of the shares of capital stock or other
ownership interests of which (except directors' qualifying shares) are at
the time directly or indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be
prepared in accordance with generally accepted accounting principles as in
effect from time to time, applied on a basis consistent (except for
changes concurred in by the Borrower's independent public accountants)
with the most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement by reference to
the Class of Loans comprising such Borrowing (e.g., a "Tranche A
Borrowing" is a Borrowing comprised of Tranche A Loans) or by reference to
the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar
Borrowing" is a Borrowing comprised of Euro-Dollar Loans).
ARTICLE II
THE CREDITS
SECTION 2.01. The Loans.
(a) Tranche A Loans. From time to time prior to the Termination
Date, each Bank severally agrees, on the terms and conditions set forth in
this Agreement, to lend to the Borrower from time to time amounts not to
exceed in the aggregate at any one time outstanding the amount of its
Tranche A Loan Commitment. Each Borrowing under this Section shall be in
an aggregate principal amount of $1,000,000 or any larger multiple of
$500,000 (except that any such Borrowing may be in the aggregate amount of
the unused Tranche A Commitments) and shall be made from the several Banks
ratably in proportion to their respective Tranche A Commitments. Within
the foregoing limits, the Borrower may borrow under this Section, repay,
or to the extent permitted by Section 2.10 or Section 2.11, prepay Tranche
A Loans and reborrow at any time prior to the Termination Date under this
Section.
(b) Tranche B Loans. From time to time prior to the Termination
Date each Bank severally agrees, on the terms and conditions set forth in
this Agreement, to lend to the Borrower from time to time amounts not to
exceed in the aggregate at any one time outstanding the amount of its
Tranche B Commitment. Each Borrowing under this Section shall be in an
aggregate principal amount of $1,000,000 or any larger multiple of
$500,000 (except that any such Borrowing may be in the aggregate amount of
the unused Tranche B Commitments) and shall be made from the several Banks
ratably in proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this Section, repay, or to
the extent permitted by Section 2.10 or Section 2.11, prepay Tranche B
Loans and reborrow at any time prior to the Termination Date under this
Section.
SECTION 2.02. Method of Borrowing. (a) The Borrower shall
give the Agent notice (a "Notice of Borrowing") not later than 11:30 A.M.
(New York City time) on the date of each Base Rate Borrowing or Tranche B
Borrowing, at least two Domestic Business Days before each CD Borrowing
and at least three Euro-Dollar Business Days before each Euro-Dollar
Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) the Class of such Borrowing,
(iv) in the case of a Tranche A Borrowing, whether the Loans
comprising such Borrowing are to be CD Loans, Base Rate Loans or
Euro-Dollar Loans, and
(v) in the case of a Fixed Rate Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's
ratable share of such Borrowing and such Notice of Borrowing shall not
thereafter be revocable by the Borrower.
(c) Not later than 1:30 P.M. (New York City time) on the date
of each Borrowing, each Bank shall (except as provided in subsection (d)
of this Section) make available its ratable share of such Borrowing, in
Federal or other funds immediately available in New York City, to the
Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article III has not
been satisfied, the Agent will make the funds so received from the Banks
available to the Borrower at the Agent's aforesaid address.
(d) If any Bank makes a new Loan hereunder on a day on which
the Borrower is to repay all or any part of an outstanding Loan from such
Bank, such Bank shall apply the proceeds of its new Loan to make such
repayment and only an amount equal to the difference (if any) between the
amount being borrowed and the amount being repaid shall be made available
by such Bank to the Agent as provided in subsection (c) of this Section,
or remitted by the Borrower to the Agent as provided in Section 2.12, as
the case may be.
(e) Unless the Agent shall have received notice from a Bank
prior to the date of any Borrowing (or, in a case of a Tranche A Base Rate
Borrowing or a Tranche B Borrowing, prior to noon (New York City time) on
the date of such Borrowing) that such Bank will not make available to the
Agent such Bank's share of such Borrowing, the Agent may assume that such
Bank has made such share available to the Agent on the date of such
Borrowing in accordance with subsections (c) and (d) of this Section 2.02
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that
such Bank shall not have so made such share available to the Agent, such
Bank and the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each
day from the date such amount is made available to the Borrower until the
date such amount is repaid to the Agent, at (i) in the case of the
Borrower, a rate per annum equal to the higher of the Federal Funds Rate
and the interest rate applicable thereto pursuant to Section 2.05 and (ii)
in the case of such Bank, the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of
this Agreement.
SECTION 2.03. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the
account of its Applicable Lending Office.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular Class or type be evidenced by a
separate Note in an amount equal to the aggregate unpaid principal amount
of such Loans. Each such Note shall be in substantially the form of
Exhibit A hereto with appropriate modifications to reflect the fact that
it evidences solely Loans of the relevant class or type. Each reference
in this Agreement to the "Note" of such Bank shall be deemed to refer to
and include any or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(c),
the Agent shall forward such Note to such Bank. Each Bank shall record
the date, amount, type and maturity of each Loan made by it and the date
and amount of each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with any transfer
or enforcement of its Note, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding; provided that the failure of any Bank
to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Notes. Each Bank is
hereby irrevocably authorized by the Borrower so to endorse its Note and
to attach to and make a part of its Note a continuation of any such
schedule as and when required.
SECTION 2.04. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such
Borrowing.
SECTION 2.05. Interest Rates. (a) Each Tranche A Base Rate
Loan shall bear interest on the outstanding principal amount thereof, for
each day from the date such Loan is made until it becomes due, at a rate
per annum equal to the sum of 1% plus the Base Rate for such day. Such
interest shall be payable for each Interest Period on the last day
thereof. Any overdue principal of or interest on any Tranche A Base Rate
Loan shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 2% plus the rate otherwise applicable
to Tranche A Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a
rate per annum equal to the sum of the CD Margin plus the applicable
Adjusted CD Rate; provided that if any CD Loan or any portion thereof
shall, as a result of clause (2)(b) of the definition of Interest Period,
have an Interest Period of less than 30 days, such portion shall bear
interest during such Interest Period at the rate applicable to Base Rate
Loans during such period. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is
longer than 90 days, at intervals of 90 days after the first day thereof.
Any overdue principal of or interest on any CD Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to
the sum of 2% plus the higher of (i) the sum of the CD Margin plus the
Adjusted CD Rate applicable to such Loan and (ii) the rate applicable to
Base Rate Loans for such day.
"CD Margin" means 2.375%.
The "Adjusted CD Rate" applicable to any Interest Period means a
rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate
of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per
annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two or more New
York certificate of deposit dealers of recognized standing for the
purchase at face value from each CD Reference Bank of its certificates of
deposit in an amount comparable to the principal amount of the CD Loan of
such CD Reference Bank to which such Interest Period applies and having a
maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) for a member
bank of the Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of new non-personal time
deposits in dollars in New York City having a maturity comparable to the
related Interest Period and in an amount of $100,000 or more. The
Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate
in effect on such date which is payable by a member of the Bank Insurance
Fund classified as adequately capitalized and within supervisory subgroup
"A" (or a comparable successor assessment risk classification) within the
meaning of 12 C.F.R. X 327.3(e) (or any successor provision) to the
Federal Deposit Insurance Corporation (or any successor) for such
Corporation's (or such successor's) insuring time deposits at offices of
such institution in the United States. The Adjusted CD Rate shall be
adjusted automatically on and as of the effective date of any change in
the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin
plus the applicable Adjusted London Interbank Offered Rate. Such interest
shall be payable for each Interest Period on the last day thereof and, if
such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
"Euro-Dollar Margin" means 2.25%.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained
(rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing
(i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which deposits in dollars
are offered to each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Euro-Dollar Loan of
such Euro-Dollar Reference Bank to which such Interest Period is to apply
and for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member
bank of the Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency liabilities"
(or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to United States
residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day from and
including the date payment thereof was due to but excluding the date of
actual payment, at a rate per annum equal to the sum of 2% plus the higher
of (i) the sum of the Euro-Dollar Margin plus the Adjusted London
Interbank Offered Rate applicable to such Loan and (ii) the Euro-Dollar
Margin plus the quotient obtained (rounded upward, if necessary, to the
next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per
annum at which one day (or, if such amount due remains unpaid more than
three Euro-Dollar Business Days, then for such other period of time not
longer than three months as the Agent may elect) deposits in dollars in an
amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank
in the London interbank market for the applicable period determined as
provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or,
if the circumstances described in clause (a) or (b) of Section 8.01 shall
exist, at a rate per annum equal to the sum of 2% plus the rate applicable
to Base Rate Loans for such day).
(e) Each Tranche B Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the sum of 2% plus the
Base Rate for such day. Such interest shall be payable for each Interest
Period on the last day thereof. Any overdue principal of or interest on
any Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 2% plus the rate otherwise
applicable to Tranche B Loans for such day.
(f) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower
and the Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest
error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated hereby. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the
relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
SECTION 2.06. Commitment Fees. The Borrower shall pay to the
Agent for the account of each Bank a commitment fee at the rate of 1/2 of
1% per annum on the daily average unused portion of such Bank's
Commitments. Such commitment fees shall accrue from and including the
Effective Date to but excluding the Termination Date. Such commitment
fees shall be payable on the last day of each fiscal quarter of the
Borrower prior to the Termination Date and on the Termination Date.
SECTION 2.07. Participation Fee. The Borrower shall pay to the
Agent for the account of each Bank on the Effective Date (i) in the case
of a Bank with Commitments aggregating $25,000,000 or more, a
participation fee in an amount equal to .30% of such Bank's Commitments
and (ii) in the case of a Bank with Commitments aggregating less than
$25,000,000, a participation fee in an amount equal to .175% of such
Bank's Commitments.
SECTION 2.08. Agency Fee. The Borrower shall pay to the Agent as
compensation for its services hereunder and under the Collateral Documents
agency fees payable in the amounts and at the times heretofore agreed
between the Borrower and the Agent. The Borrower shall also pay to the
Agent for its own account on the Effective Date an arrangement fee in the
amount previously agreed between the Borrower and the Agent.
SECTION 2.09. Optional Termination or Reduction of Commitments.
The Borrower may, upon at least three Domestic Business Days' notice to
the Agent, terminate at any time, or proportionately permanently reduce
from time to time by an aggregate amount of $5,000,000 or any larger
multiple of $1,000,000, the unused portions of the Commitments. If the
Commitments are terminated in their entirety, all accrued commitment fees
shall be payable on the effective date of such termination.
SECTION 2.10. Mandatory Termination or Reduction of Commitments.
(a) The Commitments shall terminate on the Termination Date, and any
Loans then outstanding (together with accrued interest thereon) shall be
due and payable on such date.
(b) The Commitments of all Banks shall be permanently,
automatically and ratably reduced:
(i) immediately upon receipt by the Borrower or any Subsidiary of
the proceeds from the collection, sale or other disposition of any
real property (other than real property used by the Borrower or a
Consolidated Subsidiary in its construction business) owned by the
Borrower or a Subsidiary by an amount equal to 50% of such proceeds
net of all out-of-pocket costs, all applicable mortgage debt, fees,
commissions and other expenses 111,696 2,215,547
Legalreasonably incurred in respect of such
collection, sale or disposition and any taxes paid or payable (as
estimated by a financial officer of the Borrower in good faith) in
respect thereof provided that no such reduction shall be required
unless and until, and then only to the extent that, the aggregate
amount of such net proceeds received by the Borrower and its
Subsidiaries during (x) the period from the date hereof through
December 31, 1994 or (y) any fiscal year thereafter exceeds
$5,000,000;
(ii) immediately upon receipt by the Borrower or a Subsidiary of
proceeds from the settlement - 1,723,158
----------- ------------
27,729,074 31,052,842
----------- ------------
Income (loss) before depreciation,
amortizationof any Construction Claim by an amount
equal to 50% of such proceeds net of all out-of-pocket expenses
reasonably incurred in respect of such collection and any taxes paid
or payable (as estimated by a financial officer of the Borrower in
good faith) in respect thereof; provided that in the event that the
Construction Claim filed by Tutor-Saliba-Perini JV against the
California State Department of Highways for cost overruns associated
with the Redwood Bypass in Humboldt and Del Norte Counties, California
is settled at a time when the aggregate amount of the Commitments
exceeds $110,000,000, 100% of the proceeds of the Borrower's or any
Subsidiary's share of such settlement net of all out-of-pocket
expenses reasonably incurred in respect of such collection and any
taxes paid or payable (as estimated by a financial officer of the
Borrower in good faith) in respect thereof shall be applied to the
extent required to permanently, automatically and ratably reduce the
aggregate amount of the Commitments to $110,000,000, and 50% of the
balance (if any) of such net proceeds shall be so applied; and
(iii) by $15,000,000 upon the completion of an issuance by the
Borrower of convertible preferred stock or other equity issue provided
that in the event that the proceeds of such issuance net of all out-
of-pocket expenses reasonably incurred in respect of such issuance and
any taxes paid or payable (as estimated by a financial officer of the
Borrower in good faith) in respect thereof exceeds $30,000,000, the
aggregate amount of the Commitments shall be reduced by an amount not
less than the sum of $15,000,000 plus 50% of the excess over
$30,000,000 of such proceeds.
(c) On each day on which any Commitment is reduced pursuant to
this Section, the Borrower shall repay such principal amount (together
with accrued interest thereon) of each Bank's outstanding Loans of each
Class, if any, as may be necessary so that after such repayment, the
aggregate unpaid principal amount of such Bank's Loans of each Class,
together with (in the case of the Tranche A Loans) such Bank's Percentage
of the aggregate amount of Letter of Credit Liabilities, does not exceed
the amount of such Bank's Commitment of such Class after giving effect to
such reduction; provided that if this subsection (c) would otherwise
require prepayment of any Fixed Rate Loan prior to the last day of the
applicable Interest Period, such prepayment shall be deferred to such last
day unless the Required Banks otherwise direct by notice to the Borrower.
In the event that the aggregate amount of the Tranche A Commitments is
reduced to an amount less than the aggregate amount of Letter of Credit
Liabilities at such time in respect of all Letters of Credit, the Borrower
hereby agrees that it shall forthwith, without any demand or taking of any
other action by the Required Banks or the Agent, pay to the Agent an
amount in immediately available funds equal to the difference to be held
as security for the Letter of Credit Liabilities for the benefit of all
Banks.
(d) Any reduction of the Commitments described in clauses (a) and
(b) above shall be applied first to reduce the Tranche B Commitments pro
rata and if the Tranche B Commitments are reduced to zero, then to reduce
the Tranche A Commitments pro rata.
SECTION 2.11. Optional Prepayments. (a) The Borrower may, upon
notice to the Agent not later than 11:30 A.M. (New York City time) on any
Domestic Business Day, prepay on such Domestic Business Day any Base Rate
Borrowing or any Tranche B Borrowing in whole at any time, or from time to
time in part in amounts aggregating $1,000,000 or any larger multiple of
$500,000, by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several
Banks included in such Borrowing.
(b) Except as provided in Sections 2.10(c) and 8.02, the Borrower
may not prepay all or any portion of the principal amount of any Fixed
Rate Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share of such prepayment and such notice shall
not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the
Loans and of fees hereunder, not later than 1:30 P.M. (New York City time)
on the date when due, in Federal or other funds immediately available in
New York City, to the Agent at its address referred to in Section 9.01.
The Agent will promptly distribute to each Bank its ratable share of each
such payment received by the Agent for the account of the Banks. Whenever
any payment of principal of, or interest on, the Domestic Loans or of fees
shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of, or interest on, the Euro-
Dollar Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for payment thereof shall
be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that
the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be distributed
to each Bank on such due date an amount equal to the amount then due such
Bank. If and to the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date
such Bank repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan (pursuant to
Section 2.10(c), Article VI or VIII or otherwise) on any day other than
the last day of the Interest Period applicable thereto, or the last day of
an applicable period fixed pursuant to Section 2.05(d), or if the Borrower
fails to borrow any Fixed Rate Loans after notice has been given to any
Bank in accordance with Section 2.02(b), the Borrower shall reimburse each
Bank on demand for any resulting loss or expense 1,487,615 (5,208,138)
Depreciationincurred by it (or by any
existing or prospective Participant in the related Loan), including
(without limitation) any loss incurred in obtaining, liquidating or
employing deposits from third parties, but excluding loss of margin for
the period after any such payment or failure to borrow, provided that such
Bank shall have delivered to the Borrower a certificate as to the amount
of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.14. Computation of Interest and amortization 6,326,004 6,248,185Fees. Interest based
on the Prime Rate shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest
and commitment fees shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed (including the first day
but excluding the last day).
SECTION 2.15. Maximum Interest Rate. (a) Nothing contained in
this Agreement or the Notes shall require the Borrower to pay interest at
a rate exceeding the maximum rate permitted by applicable law. Neither
this Section nor Section 9.08 is intended to limit the rate of interest
payable for the account of any Bank to the maximum rate permitted by the
laws of the State of New York if a higher rate is permitted with respect
to such Bank by supervening provisions of U.S. federal law.
(b) If the amount of interest payable for the account of any Bank
on any interest payment date in respect of the immediately preceding
interest computation period, computed pursuant to Section 2.05, would
exceed the maximum amount permitted by applicable law to be charged by
such Bank, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible
amount.
(c) If the amount of interest payable for the account of any Bank
in respect of any interest computation period is reduced pursuant to
clause (b) of this Section and the amount of interest payable for its
account in respect of any subsequent interest computation period, computed
pursuant to Section 2.05, would be less than the maximum amount permitted
by applicable law to be charged by such Bank, then the amount of interest
payable for its account in respect of such subsequent interest computation
period shall be automatically increased to such maximum permissible
amount; provided that at no time shall the aggregate amount by which
interest paid for the account of any Bank has been increased pursuant to
this clause (c) exceed the aggregate amount by which interest paid for its
account has theretofore been reduced pursuant to clause (b) of this
Section.
SECTION 2.16. Letters of Credit. (a) Subject to the terms and
conditions hereof, the LC Bank agrees to issue letters of credit hereunder
from time to time before the Termination Date upon the request of the
Borrower (such letters of credit issued, the "Letters of Credit");
provided that, immediately after each such Letter of Credit is issued, the
aggregate amount of the Letter of Credit Liabilities for all Letters of
Credit shall not exceed the Available LC Amount. Upon the date of
issuance by the LC Bank of a Letter of Credit in accordance with this
Section 2.16, the LC Bank shall be deemed, without further action by any
party hereto, to have sold to each Bank, and each Bank shall be deemed,
without further action by any party hereto, to have purchased from the LC
Bank, a participation in such Letter of Credit and the related Letter of
Credit Liabilities in proportion to its Percentage.
(b) The Borrower shall give the LC Bank at least three Domestic
Business Days' prior notice (effective upon receipt) specifying the date
each Letter of Credit is to be issued, and describing the proposed terms
of such Letter of Credit and the nature of the transactions proposed to be
supported thereby. Upon receipt of such notice the LC Bank shall promptly
notify the Agent, and the Agent shall promptly notify each Bank of the
contents thereof and of the amount of such Bank's participation in such
proposed Letter of Credit. The issuance by the LC Bank of any Letter of
Credit shall, in addition to the conditions precedent set forth in Article
III (the satisfaction of which the LC Bank shall have no duty to
ascertain), be subject to the conditions precedent that such Letter of
Credit shall be satisfactory to the LC Bank and that the Borrower shall
have executed and delivered such other instruments and agreements relating
to such Letter of Credit as the LC Bank shall have reasonably requested.
Each Letter of Credit shall have an expiry date of not later than one year
after its date of issue; provided that no Letter of Credit shall have a
term extending beyond the Termination Date; and provided further that any
such Letter of Credit may include an evergreen or renewal option, pursuant
to which the expiry date of such Letter of Credit will be automatically
extended unless notice of non-renewal is given by the LC Bank (provided
that such Letter of Credit has an absolute expiry date not later than the
Termination Date and provided further that the LC Bank shall deliver
notice of non-renewal at the time such notice is required to be given (for
any such Letter of Credit, the "Notice Time") unless requested not to by
the Borrower, which request will be treated in the same manner as a
request for issuance of a new Letter of Credit on the same terms (any such
Letter of Credit, an "Evergreen Letter of Credit").
(c) The Borrower shall pay to the Agent a letter of credit fee
at a rate equal to (i) 1.00% per annum on the aggregate amount available
for drawings under each Performance Letter of Credit issued from time to
time and (ii) 2.25% per annum on the aggregate amount available for
drawings under each Financial Letter of Credit issued from time to time,
any such fee to be payable for the account of the Banks ratably in
proportion to their Percentages. Such fee shall be payable in arrears on
the last day of each fiscal quarter of the Borrower for so long as such
Letter of Credit is outstanding and on the date of termination thereof.
The Borrower shall pay to the LC Bank additional fees and expenses in the
amounts and at the times as agreed between the Borrower and the LC Bank.
(d) Upon receipt from the beneficiary of any Letter of Credit
of any demand for payment or other drawing under such Letter of Credit,
the LC Bank shall notify the Agent and the Agent shall promptly notify the
Borrower and each other Bank as to the amount to be paid as a result of
such demand or drawing and the respective payment date. The
responsibility of the LC Bank to the Borrower and each Bank shall be only
to determine that the documents (including each demand for payment or
other drawing) delivered under each Letter of Credit issued by it in
connection with such presentment shall be in conformity in all material
respects with such Letter of Credit. The LC Bank shall endeavor to
exercise the same care in the issuance and administration of the Letters
of Credit as it does with respect to letters of credit in which no
participations are granted, it being understood that in the absence of any
gross negligence or willful misconduct by the LC Bank, each Bank severally
agrees that it shall be unconditionally and irrevocably liable without
regard to the occurrence of any Event of Default or any condition
precedent whatsoever, pro rata to the extent of such Bank's Percentage, to
reimburse the LC Bank on demand for the amount of each payment made by the
LC Bank under each Letter of Credit issued by the LC Bank to the extent
such amount is not reimbursed by the Borrower pursuant to clause (e) below
together with interest on such amount for each day from the date of the LC
Bank's demand for such payment (or, if such demand is made after 11:00
A.M. (New York City time) on such date, from the next succeeding Domestic
Business Day) to the date of payment by such Bank of such amount at a rate
of interest per annum equal to the Federal Funds Rate for such day.
(e) The Borrower shall be irrevocably and unconditionally
obligated forthwith to reimburse the LC Bank for any amounts paid by the
LC Bank upon any drawing under any Letter of Credit, without presentment,
demand, protest or other formalities of any kind; provided that neither
the Borrower nor any Bank shall hereby be precluded from asserting any
claim for direct (but not consequential) damages suffered by the Borrower
or such Bank to the extent, but only to the extent, caused by (i) the
willful misconduct or gross negligence of the LC Bank in determining
whether a request presented under any Letter of Credit complied with the
terms of such Letter of Credit or (ii) such Bank's failure to pay under
any Letter of Credit after the presentation to it of a request strictly
complying with the terms and conditions of the Letter of Credit. All such
amounts paid by the LC Bank and remaining unpaid by the Borrower shall
bear interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 2% plus the rate applicable to Base Rate Loans
for such day. The LC Bank will pay to each Bank ratably in accordance
with its Percentage all amounts received from the Borrower for application
in payment, in whole or in part, of the Reimbursement Obligation in
respect of any Letter of Credit, but only to the extent such Bank has made
payment to the LC Bank in respect of such Letter of Credit pursuant to
Section 2.16(d).
(f) If after the date hereof, the adoption of any applicable law,
rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any
Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency shall
impose, modify or deem applicable any tax, reserve, special deposit or
similar requirement against or with respect to or measured by reference to
Letters of Credit issued or to be issued hereunder or participations
therein, and the result shall be to increase the cost to any Bank of
issuing or maintaining any Letter of Credit or any participation therein,
or reduce any amount receivable by any Bank hereunder in respect of any
Letter of Credit (which increase in cost, or reduction in amount
receivable, shall be the result of such Bank's reasonable allocation of
the aggregate of such increases or reductions resulting from such event),
then, upon demand by such Bank (which demand shall not be unreasonably
delayed, provided that a demand within six months of the accrual of such
increased cost or reduction in amount receivable will not be deemed to be
unreasonably delayed), the Borrower agrees to pay to such Bank, from time
to time as specified by such Bank, such additional amounts as shall be
sufficient to compensate such Bank for such increased costs or reductions
in amount incurred by such Bank. A certificate of such Bank submitted by
such Bank to the Borrower shall be conclusive as to the amount thereof in
the absence of manifest error.
(g) The Borrower's obligations under this Section 2.16 shall be
absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the LC Bank, any Bank or any
beneficiary of a Letter of Credit. The Borrower further agrees with the
LC Bank and the Banks that the LC Bank and the Banks shall not be
responsible for, and the Borrower's Reimbursement Obligation in respect of
any Letter of Credit shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even
if such documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or among the
Borrower, any of its Subsidiaries, the beneficiary of any Letter of Credit
or any financing institution or other party to whom any Letter of Credit
may be transferred or any claims or defenses whatsoever of the Borrower or
any of its Subsidiaries against the beneficiary of any Letter of Credit or
any such transferee. The LC Bank shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter
of Credit issued, extended or renewed by it. The Borrower agrees that any
action taken or omitted by the LC Bank or any Bank under or in connection
with each Letter of Credit and the related drafts and documents, if done
in good faith and without gross negligence, shall be binding upon the
Borrower and shall not put the LC Bank or any Bank under any liability to
the Borrower.
(h) To the extent not inconsistent with clause (g) above, the LC
Bank shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel,
independent accountants and other experts selected by the LC Bank. The LC
Bank shall be fully justified in failing or refusing to take any action
under this Agreement unless it shall first have received such advice or
concurrence of the Required Banks as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by the Banks
against any and all liability and expense 3,844,144 4,501,357
------------ ------------
Netwhich may be incurred by it by
reason of taking or continuing to take any such action. Notwithstanding
any other provision of this Section 2.16, the LC Bank shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of the Required Banks, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon the Banks and all future holders of participations in any
Letters of Credit.
(i) The Borrower hereby indemnifies and holds harmless each Bank
and the Agent from and against any and all claims and damages, losses,
liabilities, costs or expenses which such Bank or the Agent may incur (or
which may be claimed against such Bank or the Agent by any Person
whatsoever) by reason of or in connection with the execution and delivery
or transfer of or payment or failure to pay under any Letter of Credit,
including, without limitation, any claims, damages, losses, liabilities,
costs or expenses which the LC Bank may incur by reason of or in
connection with the failure of any other Bank to fulfill or comply with
its obligations to the LC Bank hereunder (but nothing herein contained
shall affect any rights the Borrower may have against such defaulting
Bank); provided that the Borrower shall not be required to indemnify any
Bank or the Agent for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of the LC Bank in determining whether a
request presented under any Letter of Credit complied with the terms of
such Letter of Credit or (ii) the LC Bank's failure to pay under any
Letter of Credit after the presentation to it of a request strictly
complying with the terms and conditions of the Letter of Credit. Nothing
in this Section 2.16(i) is intended to limit the obligations of the
Borrower under any other provision of this Agreement.
(j) Each Bank shall, ratably in accordance with its Percentage,
indemnify the LC Bank, its affiliates and their respective directors,
officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss $(8,682,533) $(15,957,680)
See accompanying notesor liability (except such as
result from such indemnitees' gross negligence or willful misconduct or
the LC Bank's failure to pay under any Letter of Credit after the
presentation to it of a request strictly complying with the terms and
conditions of the Letter of Credit) that such indemnitees may suffer or
incur in connection with this Section 2.16 or any action taken or omitted
by such indemnitees hereunder.
(k) In its capacity as a Bank the LC Bank shall have the same
rights and obligations as any other Bank.
SECTION 2.17. Termination of the Security Interest. Upon the
completion of an issuance by the Borrower of convertible preferred stock
or other equity instrument for proceeds (net of all out-of-pocket expenses
reasonably incurred in respect of such issuance and any taxes paid or
payable (as estimated by a financial statements.
Squaw Creek Associates
(a California general partnership
Statementofficer of Changesthe Borrower in Partners' Capitalgood
faith) in respect thereof) in excess of $25,000,000, so long as no Default
is then continuing, the Borrower shall be entitled to the release of all
Collateral from the Liens of the Collateral Documents in accordance with
the provisions thereof, and the Collateral Documents shall thereupon cease
to be Financing Documents.
Balance atARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become
effective on the date that each of the following conditions shall have
been satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts of this Agreement signed
by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received, receipt by
the Agent in form satisfactory to it of telegraphic, facsimile, telex
or other written confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by the Agent of counterparts of the Subsidiary
Guarantee Agreement, duly executed by each of the Obligors listed on
the signature pages thereof;
(c) receipt by the Agent of counterparts of the Borrower Security
Agreement, the Borrower Pledge Agreement, the Subsidiary Security
Agreement, the Deeds of Trust and all other documents and certificates
to be delivered pursuant thereto on the Effective Date (including
appropriately completed and duly executed Uniform Commercial Code
financing statements required thereby) duly executed by each of the
Obligors listed on the signature pages thereof;
(d) receipt by the Agent of evidence satisfactory to the Agent
that arrangements satisfactory to it shall have been made for
recording the Deeds of Trust and filing the Uniform Commercial Code
financing statements referred to in paragraph (c) above on or promptly
after the Effective Date;
(e) receipt by the Agent of all Pledged Instruments;
(f) receipt by the Agent of copies of file search reports from
the Uniform Commercial Code filing officer in each jurisdiction (i) in
which any Mortgaged Facility is located or (ii) in which the chief
executive office of the Borrower and each Subsidiary Guarantor is
located, setting forth the results of Uniform Commercial Code file
searches conducted in the name of the Borrower and each Subsidiary
Guarantor, as the case may be;
(g) receipt by the Agent of evidence satisfactory to the Agent of
the insurance coverage required by Section 5.03;
(h) with respect to each of the Mortgaged Facilities, receipt by
the Agent of title reports with respect thereto issued by a title
insurance company reasonably acceptable to the Agent and dated no more
than 45 days prior to the Effective Date showing no Liens except
Permitted Encumbrances with respect thereto;
(i) receipt by the Agent of duly executed Notes for the account
of each Bank dated on or before the Effective Date complying with the
provisions of Section 2.03;
(j) receipt by the Agent of (i) an opinion of the General Counsel
of the Borrower and (ii) an opinion of Jacobs Persinger & Parker, New
York counsel for the Borrower, substantially in the forms of Exhibits
B-1 and B-2, respectively, and covering such additional matters
relating to the transactions contemplated hereby as the Required Banks
may reasonably request;
(k) receipt by the Agent of (i) an opinion of Davis Polk &
Wardwell, special New York counsel for the Agent, and (ii) an opinion
of Meyer Hendricks Victor Osborn & Maledon, special Arizona counsel
for the Agent, substantially in the forms of Exhibits C-1 and C-2,
respectively, hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required Banks may
reasonably request;
(l) receipt by the Agent of evidence satisfactory to the Agent
that the commitments under the Existing Credit Agreements
have been terminated and that the principal and interest
on all loans and accrued fees outstanding thereunder have been
paid in full; and
(m) receipt by the Agent of all documents it may reasonably
request relating to the existence of the Obligors, the corporate
authority for and the validity of the Financing Documents and any
other matters relevant hereto, all in form and substance satisfactory
to the Agent;
provided that this Agreement shall not become effective or be binding on
any party hereto unless all of the foregoing conditions are satisfied not
later than December 31, 1991 $ 61,568,115
Contributions 14,657,060
Distributions (4,416,474)
Reclassification (Note 1) (3,431,327)
Net loss (15,957,680)
-------------
Balance at December 31, 1992 52,419,694
Contributions 6,630,348
Distributions (2,150,999)
Net loss (8,682,533)
-------------
Balance at1994. The Agent shall promptly notify the
Borrower and the Banks of the Effective Date, and such notice shall be
conclusive and binding on all parties hereto. The Borrower and each of
the Banks which is a party to the Existing Credit Agreements, comprising
the "Required Banks" as defined in the Existing Credit Agreements, hereby
agree that (i) the commitments of the banks under the Existing Credit
Agreements shall terminate simultaneously with the effectiveness of this
Agreement without the notice required under Sections 2.09 of the Existing
Credit Agreements and (ii) the Borrower may prepay any Borrowing as
defined in the Existing Credit Agreements on the Effective Date hereof
without prior notice. The Borrower covenants that all accrued and unpaid
fees and any other amounts due and payable under the Existing Credit
Agreements shall have been paid on or prior to the Effective Date. Upon
the effectiveness of this Agreement, any letter of credit outstanding
under the Primary Credit Agreement shall be deemed to be a Letter of
Credit outstanding hereunder.
SECTION 3.02. Credit Events. The obligation of any Bank to make
a Loan on the occasion of any Borrowing and of the LC Bank to issue a
Letter of Credit (or to permit the extension of an Evergreen Letter of
Credit) on the occasion of a request therefor by the Borrower is subject
to the satisfaction of the following conditions:
(a) receipt (i) by the Agent of a Notice of Borrowing as required
by Section 2.02, in the case of a Borrowing or (ii) by the LC Bank of
notice as required by Section 2.16 , in the case of a Letter of
Credit;
(b) the fact that, after giving effect to such Credit Event, the
Usage shall not exceed the aggregate amount of the Commitments and, in
the case of a Tranche B Borrowing, the fact that the Tranche A
Commitments shall be fully utilized;
(c) the fact that, immediately after such Credit Event, no
Default shall have occurred and be continuing;
(d) the fact that the representations and warranties of each
Obligor contained in each Financing Document to which it is a party
(except, in the case of a Refunding Borrowing, the representation and
warranty set forth in Section 4.04(c) hereof as to any material
adverse change which has theretofore been disclosed in writing by the
Borrower to the Banks) shall be true on and as of the date of such
Borrowing.
Each Borrowing shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing as to the facts specified in
clauses (b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under
the laws of Massachusetts, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by each Obligor of
the Financing Documents to which it is a party are within its corporate
powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental
body, agency or official and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the certificate
of incorporation or by-laws of such Obligor or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such Obligor or
any of its Subsidiaries or result in the creation or imposition of any
Lien, except Liens created by the Collateral Documents, on any asset of
such Obligor or any of its Subsidiaries.
SECTION 4.03. Binding Effect; Liens of Collateral Documents.
This Agreement constitutes a valid and binding agreement of the Borrower
and the Notes, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of the Borrower
in each case enforceable in accordance with their respective terms. Each
other Financing Document, when executed and delivered in accordance with
this Agreement, will constitute a valid and binding agreement of each
Obligor party thereto enforceable against each such Obligor in accordance
with its terms. Subject to Section 2.17, the Collateral Documents create
valid security interests in, and first mortgage Liens on, the Collateral
purported to be covered thereby, which security interests and mortgage
Liens are and will remain perfected security interests and duly recorded
mortgage Liens, prior to all other Liens except Liens permitted by the
Collateral Documents.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1993 $ 48,216,510
============
See accompanying notesand the related
consolidated statements of income, stockholders' equity and cash flows for
the fiscal year then ended, reported on by Arthur Andersen & Co. and set
forth in the Borrower's 1993 Form 10-K, a copy of which has been delivered
to each of the Banks, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial statements.
Squaw Creek Associates
(a California general partnership)
Statementposition of Cash Flows
For the
Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of September 30, 1994 and the related
unaudited consolidated statements of income, stockholders' equity and cash
flows for the nine months then ended, set forth in the Borrower's
quarterly report for the fiscal quarter ended September 30, 1994 as filed
with the Securities and Exchange Commission on Form 10-Q, a copy of which
has been delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in subsection (a) of
this Section, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results
of operations and cash flows for such nine month period (subject to normal
year-end adjustments).
(c) Since September 30, 1994 there has been no material adverse
change in the business, financial position, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries, considered as
a whole.
SECTION 4.05. Litigation. Except as disclosed in the Borrower's
1993 Form 10-K and the Form 10-Q referred to in Section 4.04(b) above,
there is no action, suit or proceeding pending against, or to the
knowledge of the Borrower threatened against or affecting, the Borrower or
any of its Subsidiaries before any court or arbitrator or any governmental
body, agency or official in which there is a reasonable possibility of an
adverse decision which could materially adversely affect the business,
consolidated financial position or consolidated results of operations of
the Borrower and its Consolidated Subsidiaries or which in any manner
draws into question the validity of any Financing Document.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each
Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Internal Revenue Code in respect
of any Plan, (ii) failed to make any contribution or payment to any Plan
or Multiemployer Plan or in respect of any Benefit Arrangement, or made
any amendment to any Plan or Benefit Arrangement, which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Internal Revenue Code or (iii) incurred any
liability to the PBGC or any other Person under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. (a) In the ordinary course
of its business, the Borrower conducts periodic reviews of the effect of
Environmental Laws on the business, operations and properties of the
Borrower and its Subsidiaries and compliance therewith. The Borrower and
its Subsidiaries also attempt, whenever possible, to negotiate specific
provisions in contracts for construction services that allocate to the
contracting governmental agency or private owner, the entire risk and
responsibility for Hazardous Substances encountered during the course of
construction. On the basis of such reviews and contract provisions and
procedures, the Borrower has reasonably concluded that the costs and
associated liabilities of compliance with Environmental Laws are unlikely
to have a material adverse effect on the business, financial condition,
results of operations or prospects of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
(b) Without limiting the foregoing, as of the Effective Date:
(i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint
has been filed, no penalty has been assessed and no investigation or
review is pending or, to the knowledge of the Obligors, threatened by
any governmental or other entity with respect to any (A) alleged
violation by the Borrower or any of its Subsidiaries of any
Environmental Law involving any Mortgaged Facility, (B) alleged
failure by the Borrower or any of its Subsidiaries to have any
environmental permit, certificate, license, approval, registration or
authorization required in connection with the conduct of its business
at any Mortgaged Facility, (C) Regulated Activity conducted at any
Mortgaged Facility or (D) Release of Hazardous Substances at or in
connection with any Mortgaged Facility;
(ii) other than generation of Hazardous Substances in
compliance with all applicable Environmental Laws, no Regulated
Activity has occurred at or on any Mortgaged Facility;
(iii) no polychlorinated biphenyls, radioactive material, urea
formaldehyde, lead, asbestos, asbestos-containing material or
underground storage tank (active or abandoned) is or has been present
at any Mortgaged Facility;
(iv) no Hazardous Substance has been Released (and no written
notification of such Release has been filed) or is present (whether or
not in a reportable or threshold planning quantity) at, on or under
any Mortgaged Facility;
(v) no Mortgaged Facility is listed or, to the knowledge of the
Obligors, proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or
on any similar federal, state or foreign list of sites requiring
investigation or clean-up; and
(vi) there are no Liens under Environmental Laws on any
Mortgaged Facility, no government actions have been taken or are in
process which could subject any Mortgaged Property to such Liens and
neither the Borrower nor any of its Subsidiaries would be required to
place any notice or restriction relating to Hazardous Substances in
any deed to any Mortgaged Facility.
(c) No environmental investigation, study, audit, test, review or
other analysis has been conducted of which the Obligors have knowledge in
relation to any Mortgaged Facility which has not been delivered to the
Banks.
SECTION 4.08. Taxes. United States Federal income tax returns of
the Borrower and its Subsidiaries have been examined and closed through
the fiscal year ended December 31, 1986. The Borrower and its
Subsidiaries have filed all United States Federal income tax returns and
all other material tax returns which are required to be filed by them and
have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and has
all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business
as now conducted.
SECTION 4.10. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
SECTION 4.11. No Burdensome Restrictions. No contract, lease,
agreement or other instrument to which the Borrower or any of its
Subsidiaries is a party or by which any of its property is bound or
affected, no charge, corporate restriction, judgment, decree or order and
no provision of applicable law or governmental regulation has or is
reasonably expected to materially and adversely affect the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of the Borrower to perform
its obligations under this Agreement.
SECTION 4.12. Full Disclosure. All information heretofore
furnished by the Borrower to the Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated hereby is,
and all such information hereafter furnished by the Borrower to the Agent
or any Bank will be, true and accurate in all material respects (or in the
case of projections and similar information based on reasonable estimates)
on the date as of which such information is stated or certified. The
Borrower has disclosed to the Banks in writing any and all facts which
materially and adversely affect or may reasonably be expected to
materially and adversely affect (to the extent the Borrower can now
reasonably foresee), the business, operations or financial condition of
the Borrower and its Consolidated Subsidiaries, taken as a whole, or the
ability of the Borrower to perform its obligations under this Agreement.
SECTION 4.13. Ownership of Property; Liens. The Borrower and its
Subsidiaries have good and marketable title to and are in lawful
possession of, or have valid leasehold interests in, or have the right to
use pursuant to valid and enforceable agreements or arrangements, all of
their respective properties and other assets (real or personal, tangible,
intangible or mixed), except where the failure to have or possess the same
with respect to such properties or other assets could not, in the
aggregate, have a material adverse effect on the business, financial
condition, results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole. None of such properties
or other assets is subject to any Lien except Permitted Liens.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid or any
Letter of Credit remains outstanding or any Reimbursement Obligation with
respect thereto remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of
the Banks:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, consolidated and
consolidating balance sheets of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by Arthur Andersen & Co. or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated condensed balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such quarter and the
related consolidated condensed statements of income and cash flows for
such quarter and for the portion of the Borrower's fiscal year ended
at the end of such quarter, setting forth in each case in comparative
form the figures for the corresponding quarter and the corresponding
portion of the Borrower's previous fiscal year, all certified (subject
to normal year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the chief
financial officer or the chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.07 to 5.10, inclusive, 5.12, 5.14 and 5.15
on the date of such financial statements and (ii) stating whether
there exists on the date of such certificate any Default and, if any
Default then exists, setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
whether anything has come to their attention to cause them to believe
that there existed on the date of such statements any Default and (ii)
confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (c) above;
(e) simultaneously with the delivery of each set of financial
statements set forth above, a schedule, dated as of the date of such
financial statements, listing each construction contract which
provides for aggregate total payments in excess of $2,500,000 and with
respect to which the Borrower or a Consolidated Subsidiary of the
Borrower is a party or participates through a joint venture, and
setting forth as of the date of such schedule for each such contract
the Borrower's original estimate of revenue and profit, the Borrower's
current estimate of revenue and profit, cumulative realized and
estimated remaining revenue and profit, and the percentage of
completion and anticipated completion date of each such contract,
certified as to consistency, accuracy and reasonableness of estimates
by the chief financial officer or the chief accounting officer of the
Borrower;
(f) forthwith upon the occurrence of any Default, a certificate
of the chief financial officer or the chief accounting officer of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(g) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(h) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or
monthly reports which the Borrower shall have filed with the
Securities and Exchange Commission;
(i) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums
under Section 407 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent
to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of the chief financial officer
or the chief accounting officer of the Borrower setting forth details
as to such occurrence and action, if any, which the Borrower or
applicable member of the ERISA Group is required or proposes to take;
(j) prompt notice of the receipt of any complaint, order,
citation, notice or other written communication from any Person with
respect to (i) the existence or alleged existence of a violation of
any applicable Environmental Law at or on, or of any Environmental
Liability arising with respect to, any Mortgaged Facility, (ii) any
Release on any Mortgaged Facility or any part thereof in a quantity
that is reportable under any applicable Environmental Law, and (iii)
any pending or threatened proceeding for the termination, suspension
or non-renewal of any permit required under any applicable
Environmental Law with respect to any Mortgaged Facility; and
(k) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as
the Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or
before maturity, all their respective material obligations and
liabilities, including, without limitation, tax liabilities, except where
the same may be contested in good faith by appropriate proceedings, and
will maintain, and will cause each Subsidiary to maintain, in accordance
with generally accepted accounting principles, appropriate reserves for
the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance. The Borrower
will keep, and will cause each Subsidiary to keep, all property useful and
necessary in its business in good working order and condition, ordinary
wear and tear excepted; will maintain, and will cause each Subsidiary to
maintain (either in the name of the Borrower or in such Subsidiary's own
name) with financially sound and reputable insurance companies, insurance
on all their property in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
of established repute engaged in the same or a similar business; and will
furnish to the Banks, upon written request from the Agent, full
information as to the insurance carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence.
The Borrower will continue, and will cause each Subsidiary Guarantor to
continue, to engage in business of the same general type as now conducted
by the Borrower and its Subsidiaries, and will preserve, renew and keep in
full force and effect, and will cause each Subsidiary Guarantor to
preserve, renew and keep in full force and effect their respective
corporate existence and their respective rights, privileges and franchises
necessary or desirable in the normal conduct of business.
SECTION 5.05. Compliance with Laws. The Borrower will comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith by
appropriate proceedings.
SECTION 5.06. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Subsidiary to keep, proper books
of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of
all dealings and transactions in relation to its business and activities;
and will permit, and will cause each Subsidiary to permit, representatives
of any Bank at such Bank's expense (subject to Section 9.03(a)(ii)) to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
SECTION 5.07. Current Ratio. Consolidated Current Assets will at
no time be less than 100% of Consolidated Current Liabilities.
SECTION 5.08. Debt. (a) At the end of each fiscal quarter ending
prior to September 30, 1996, Modified Parent Company Debt shall not exceed
75% of Consolidated Capital Base and at the end of each fiscal quarter
ending on or after September 30, 1996, Modified Parent Company Debt shall
not exceed 70% of Consolidated Capital Base.
(b) The Borrower will not permit any Subsidiary to incur or
suffer to exist any Debt other than (i) Debt of Perini Land and
Development outstanding at September 30, 1994, as described in Schedule I,
(ii) additional Debt of Perini Land and Development in an aggregate amount
not exceeding $5,000,000, (iii) Debt of Perini International Corporation
in an aggregate amount not exceeding $5,000,000, (iv) Debt of any
Subsidiary Guarantor under the Subsidiary Guarantee Agreement and (v) any
refinancing, extension, renewal or refunding of the Debt referred to in
clauses (i) through (iv) above, provided that such Debt is not increased.
SECTION 5.09. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth of the Borrower will at no time be less
than the Minimum Compliance Level, determined as set forth below. The
"Minimum Compliance Level" is an amount equal to the Base Compliance
Amount subject to increase (but in no case subject to decrease) from time
to time as follows: (i) at the end of each fiscal year commencing after
December 31, 1993 1992for which Consolidated Net Income is a positive number,
the Minimum Compliance Level shall be increased effective at the last day
of such fiscal year by an amount equal to 50% of such Consolidated Net
Income; and (ii) on the date of each issuance by the Borrower subsequent
to December 31, 1993 of any capital stock or other equity interest, the
Minimum Compliance Level shall be increased by an amount equal to 75% of
the amount of the net proceeds received by the Borrower on account of such
issuance. For purposes of this Section, "Base Compliance Amount" means
(i) for any date prior to September 30, 1996, $110,000,000 or (ii) for any
date on or after September 30, 1996, $135,000,000.
SECTION 5.10. Interest Coverage. For each of (i) the fiscal
quarter ending on December 31, 1994, (ii) the two consecutive fiscal
quarters ending on March 31, 1995, (iii) the three consecutive fiscal
quarters ending on June 30, 1995 or (iv) each period of four consecutive
fiscal quarters ending on or after September 30, 1995 but on or before
June 30, 1996, Consolidated Earnings Before Interest and Taxes shall not
be less than 175% of Consolidated Interest Charges for each such period.
Consolidated Earnings Before Interest and Taxes for each period of four
consecutive fiscal quarters ending on or after September 30, 1996 shall
not be less than 200% of Consolidated Interest Charges for such four
fiscal quarters.
SECTION 5.11. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary of the Borrower will create, assume or suffer to
exist any Lien on any asset (including, without limitation, capital stock
of Subsidiaries) now owned or hereafter acquired by it, except:
(a) Liens existing on September 30, 1994 securing Debt
outstanding on September 30, 1994 as described in Schedule II;
(b) any Lien existing on any asset of any corporation at the time
such corporation becomes a Consolidated Subsidiary of the Borrower and
not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such
asset, provided that such Lien attaches to such asset concurrently
with or within 90 days after the acquisition thereof and such Lien
secures only such Debt;
(d) any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Borrower
or a Consolidated Subsidiary of the Borrower and not created in
contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Consolidated Subsidiary of the Borrower
and not created in contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not
increased and is not secured by any additional assets;
(g) Liens incidental to conduct of its business or the ownership
of its assets which (i) do not secure Debt and (ii) do not in the
aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(h) Permitted Encumbrances; and
(i) Liens created by the Collateral Documents.
SECTION 5.12. Consolidations, Mergers and Sales of Assets. (a)
The Borrower will not (i) consolidate or merge with or into any other
Person or sell, lease or otherwise transfer all or any substantial part of
its assets to any other Person or (ii) permit any Material Subsidiary
(other than a Subsidiary Guarantor) to consolidate or merge with or into,
or transfer all or any substantial part of its assets to, any Person other
than the Borrower or a Wholly-Owned Consolidated Subsidiary; provided that
the Borrower or a Material Subsidiary other than Perini Land and
Development may sell or otherwise transfer assets if Aggregate Asset Sale
Proceeds after such sale less Aggregate Reinvested Proceeds does not at
any time exceed $15,000,000. "Aggregate Asset Sale Proceeds" means the
sum of the proceeds of each sale in a single transaction or series of
related transactions by the Borrower or any Subsidiary, on or after the
Effective Date, of fixed assets yielding proceeds in excess of 5% of the
Consolidated Tangible Net Worth of the Borrower. "Aggregate Reinvested
Proceeds" means the amount of Aggregate Asset Sale Proceeds used to
purchase fixed assets for use in the same general business presently
conducted by the Borrower or the Subsidiary that realized such proceeds,
as the case may be, provided such proceeds are so used within 18 months of
receipt thereof. The Borrower will not permit any Subsidiary Guarantor to
consolidate or merge with or into, or transfer all or any substantial part
of its assets to, any Person; provided that the foregoing shall not
prohibit any Subsidiary Guarantor from selling, leasing or otherwise
transferring assets in the ordinary course of its business.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, sell, lease or otherwise dispose of any item of
Collateral unless (i) the Required Banks shall have given their prior
written consent thereto and (ii) the consideration therefor is (x) at
least equal to the fair market value of such asset (as determined in good
faith by a financial officer of the Borrower or, if such value exceeds
$15,000,000, by the board of directors of the Borrower or a duly
constituted committee thereof) and (y) in the case of any agreement
entered into on or after the Effective Date for the sale, lease or other
disposition of such Collateral, shall consist of cash payable at closing.
SECTION 5.13. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrower for general corporate
purposes. None of such proceeds will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any "margin stock" within the meaning of Regulation U.
SECTION 5.14. Restricted Payments. The aggregate amount of all
dividends which constitute Restricted Payments declared and other
Restricted Payments made during any period of four consecutive fiscal
quarters will not exceed an amount equal to 50% of the excess, if any, of
(x) Consolidated Net Income for such period over (y) the aggregate amount
of preferred stock dividends not constituting Restricted Payments paid
during such period. The Borrower will not declare any dividend payable
more than 120 days after the date of declaration thereof.
SECTION 5.15. Real Estate Investments. The Borrower will not,
and will not permit any Consolidated Subsidiary to, make any Real Estate
Investment if, after giving effect thereto, the cumulative amount of Net
Real Estate Investments made (i) at any time during the period beginning
January 1, 1994 and ending December 31, 1994 shall exceed $8,000,000 or
(ii) during any fiscal year thereafter shall exceed $4,000,000 plus 25% of
the amount, if any, by which the Net Real Estate Investments made during
the preceding period were less than the applicable limitation specified
above for such period. For purposes of this Section, the cumulative
amount of "Net Real Estate Investments" made during any period, as
measured at any date during such period, is the aggregate amount of Real
Estate Investments made by the Borrower and its Consolidated Subsidiaries
from and including the first day of such period to and including such
date, less the sum of all cash or cash equivalent payments received by the
Borrower or one of its Consolidated Subsidiaries, as the case may be, in
respect of Real Estate Investments from and including the first day of
such period to and including such date.
SECTION 5.16. Other Investments. Neither the Borrower nor any
Consolidated Subsidiary will make or acquire any Investment in any Person
other than:
(a) Real Estate Investments permitted by Section 5.15;
(b) Investments in Subsidiaries or joint ventures principally
engaged in the construction business;
(c) Temporary Cash flowsInvestments; and
(d) any Investment not otherwise permitted by the foregoing
clauses of this Section if, immediately after such Investment is made
or acquired, the aggregate net book value of all Investments permitted
by this clause (d) does not exceed 5% of Consolidated Tangible Net
Worth;
provided that no Real Estate Investment may be made pursuant to clause
(b), (c) or (d) above.
SECTION 5.17. Further Assurances. (a) The Borrower will, and
will cause each of its Subsidiaries to, at its sole cost and expense, do,
execute, acknowledge and deliver all such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment, transfers and
assurances as the Agent shall from operating activities
Nettime to time request, which may be
necessary or desirable in the reasonable judgment of the Agent from time
to time to assure, perfect, convey, assign, transfer and confirm unto the
Agent the property and rights conveyed or assigned pursuant to the
Collateral Documents, or which the Borrower or such Subsidiaries may be or
may hereafter become bound to convey or assign to the Agent or which may
facilitate the performance of the terms of the Collateral Documents or the
filing, registering or recording of the Collateral Documents.
(b) All costs and expenses in connection with the security
interests and Liens created by the Collateral Documents, including
reasonable legal fees and other reasonable costs and expenses in
connection with the granting, perfecting and maintenance of such security
interests and Liens, the preparation, execution, delivery, recordation or
filing of documents and any other acts in connection with the grant of
such security interests and Liens as the Agent may reasonably request,
shall be paid by the Borrower promptly when due.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan, any Reimbursement Obligation, any fees or any other amount
payable hereunder;
(b) the Borrower shall fail to pay when due or within five
Business Days thereof any interest on any Loan;
(c) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.17, inclusive or in Section 3.01 of
the Subsidiary Guarantee Agreement;
(d) any Obligor shall fail to observe or perform any covenant or
agreement contained in any Financing Document (other than those
covered by clauses (a), (b) and (c) above) for 10 days after written
notice thereof has been given to such Obligor by the Agent at the
request of any Bank;
(e) any representation, warranty, certification or statement made
by any Obligor in any Financing Document or in any certificate,
financial statement or other document delivered pursuant thereto shall
prove to have been incorrect in any material respect when made (or
deemed made);
(f) the Borrower shall fail to make any payment in respect of any
Debt (other than the Notes or Reimbursement Obligations) when due or
within any applicable grace period;
(g) any Subsidiary shall fail to make any payment in respect of
any Debt the aggregate principal amount of which is $250,000 or more
when due or within any applicable grace period;
(h) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower or any
Subsidiary or enables (or, with the giving of notice or lapse of time
or both, would enable) the holder of such Debt or any Person acting on
such holder's behalf to accelerate the maturity thereof;
(i) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts
as they become due, or shall take any corporate action to authorize
any of the foregoing;
(j) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Borrower or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect;
(k) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay to the PBGC or any other Person under Title
IV of ERISA; or notice of intent to terminate a Material Plan shall be
filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA)
in respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material
Plan must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a
current payment obligation in excess of $5,000,000;
(l) a judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against the Borrower or any Subsidiary
and such judgment or order shall continue unsatisfied, unstayed and
unbonded for a period of 10 days;
(m) any of the following: (i) any person or group or persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) (other than the Exempt Group) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under said Act) of 25% or more
of the outstanding shares of common stock of the Borrower; (ii) fewer
than two of the following people shall be members of the Board of
Directors of the Borrower: David Perini, Joseph Perini and Bart
Perini; or (iii) the Borrower shall cease to own 100% of the capital
stock of any Subsidiary Guarantor; or
(n) subject to Section 2.17, any Financing Document shall cease to
be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any Obligor,
or the Agent on behalf of the Banks shall at any time fail to have a
valid and perfected Lien on all of the Collateral purported to be
subject to such Lien, subject to no prior or equal Lien except Liens
permitted by the Collateral Documents, or any Obligor shall so assert
in writing;
then, and in every such event, the Agent shall (i) if requested by Banks
having more than 50% in aggregate amount of the Commitments, by notice to
the Borrower terminate the Commitments and they shall thereupon terminate,
and (ii) if requested by Banks holding Notes evidencing more than 50% in
aggregate principal amount of the Loans, by notice to the Borrower declare
the Notes (together with accrued interest thereon) to be, and the Notes
shall thereupon become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby
waived by the Obligors; provided that in the case of any of the Events of
Default specified in clause (i) or (j) above with respect to any Obligor,
without any notice to the Borrower or any other act by the Agent or the
Banks, the Commitments shall thereupon terminate and the Notes (together
with accrued interest thereon) shall become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Obligors.
SECTION 6.02. Cash Cover. The Borrower hereby agrees, in
addition to the provisions of Section 6.01 hereof, that upon the
occurrence and during the continuance of any Event of Default, it shall,
if requested by the Agent upon instructions from Banks having more than
50% in aggregate amount of the Commitments, pay (and, in the case of any
of the Events of Default specified in clause (i) or (j) above with respect
to any Obligor, forthwith, without any demand or the taking of any other
action by the Agent or any Bank, it shall pay) to the Agent an amount in
immediately available funds equal to the then aggregate Letter of Credit
Liabilities for all Letters of Credit to be held as security therefor for
the benefit of all Banks.
SECTION 6.03. Notice of Default. The Agent shall give notice
to the Borrower under Section 6.01(d) promptly upon being requested to do
so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under the Financing Documents as
are delegated to the Agent by the terms thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under the
Financing Documents as any other Bank and may exercise or refrain from
exercising the same as though it were not the Agent, and Morgan Guaranty
Trust Company of New York and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the
Borrower or any Subsidiary or affiliate of the Borrower as if it were not
the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
under the Financing Documents are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Agent shall not be
required to take any action with respect to any Default, except as
expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for an Obligor), independent public
accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its affiliates nor any of their
respective directors, officers, agents or employees shall be responsible
for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with the
Financing Documents or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of the Borrower; (iii)
the satisfaction of any condition specified in Article III, except receipt
of items required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of any Financing Document or any other
instrument or writing furnished in connection herewith. The Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex
or similar writing) believed by it to be genuine or to be signed by the
proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent
not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss $(8,682,533) $(15,957,680)
Adjustmentsor
liability (except such as result from such indemnitees' gross negligence
or willful misconduct) that such indemnitees may suffer or incur in
connection with this Agreement or any action taken or omitted by such
indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to reconcileenter into this Agreement.
Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action under this
Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time
by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by
the Required Banks, and shall have accepted such appointment, within 30
days after the retiring Agent gives notice of resignation, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $150,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Agent.
SECTION 7.09. Collateral Documents. (a) As to any matters not
expressly provided for in the Collateral Documents (including the timing
and methods of realization upon the Collateral), the Agent shall act or
refrain from acting in accordance with written instructions from the
Required Banks or, in the absence of such instructions, in accordance with
its discretion; provided that the Agent shall not be obligated to take any
action if the Agent believes that such action is or may be contrary to any
applicable law or might cause the Agent to incur any loss or liability for
which it has not been indemnified to its satisfaction.
(b) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity,
perfection, priority or enforceability of the security interests in any of
the Collateral, whether impaired by operation of law or by reason of any
action or omission to act on its part under the Collateral Documents. The
Agent shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms of the Collateral Documents by any Obligor.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any
Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted CD Rate or the Adjusted
London Interbank Offered Rate, as the case may be, as determined by
the Agent will not adequately and fairly reflect the cost to such
Banks of funding their CD Loans or Euro-Dollar Loans, as the case may
be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the
obligations of the Banks to make CD Loans or Euro-Dollar Loans, as the
case may be, shall be suspended. Unless the Borrower notifies the Agent
at least two Domestic Business Days before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that
it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar
Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency
shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans shall be suspended. Before giving any notice to the
Agent pursuant to this Section, such Bank shall designate a different
Euro-Dollar Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall determine that
it may not lawfully continue to maintain and fund any of its outstanding
Euro-Dollar Loans to maturity and shall so specify in such notice, the
Borrower shall immediately prepay in full the then outstanding principal
amount of each such Euro-Dollar Loan, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Dollar Loan, the
Borrower shall borrow a Base Rate Loan in an equal principal amount from
such Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks),
and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If after
the date hereof, the adoption of any applicable law, rule or regulation,
or any change in any applicable law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or
its Applicable Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject any Bank (or its Applicable Lending Office)
to any tax, duty or other charge with respect to its Fixed Rate Loans,
its Note or its obligation to make Fixed Rate Loans, or shall change
the basis of taxation of payments to any Bank (or its Applicable
Lending Office) of the principal of or interest on its Fixed Rate
Loans or any other amounts due under this Agreement in respect of its
Fixed Rate Loans or its obligation to make Fixed Rate Loans (except
for changes in the rate of tax on the overall net lossincome of such Bank
or its Applicable Lending Office imposed by the jurisdiction in which
such Bank's principal executive office or Applicable Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but excluding (A)
with respect to net
cash usedany CD Loan any such requirement included in operating activities:
Depreciationan
applicable Domestic Reserve Percentage and amortization 6,326,004 6,248,185
Non-cash(B) with respect to any
Euro-Dollar Loan any such requirement included in an applicable
Euro-Dollar Reserve Percentage), special deposit, insurance assessment
(excluding, with respect to any CD Loan, any such requirement
reflected in an applicable Assessment Rate) or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall
impose on any Bank (or its Applicable Lending Office) or on the United
States market for certificates of deposit or the London interbank
market any other condition affecting its Fixed Rate Loans, its Note or
its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Fixed
Rate Loan, or to reduce the amount of any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or under
its Note with respect thereto, by an amount deemed by such Bank to be
material, then, within 15 days after demand by such Bank (with a copy to
the Agent), the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or
any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations hereunder to a level
below that which such Bank (or its Parent) could have achieved but for
such adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Agent), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section and
will designate a different Applicable Lending Office if such designation
will avoid the need for, or reduce the amount of, such compensation and
will not, in the judgment of such Bank, be otherwise disadvantageous to
such Bank. A certificate of any Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 8.04. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03(a) and the Borrower shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank through the
Agent, have elected that the provisions of this Section shall apply to
such Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans which would otherwise be made by such Bank as CD
Loans or Euro-Dollar Loans, as the case may be, shall be made instead
as Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the other
Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case
may be, has been repaid, all payments of principal which would
otherwise be applied to repay such Fixed Rate Loans shall be applied
to repay its Base Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, facsimile transmission or similar writing) and shall be given
to such party: (x) in the case of the Borrower or the Agent, at its
address or telex or facsimile number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address or telex or facsimile
number set forth in its Administrative Questionnaire or (z) in the case of
any party, such other address or telex or facsimile number as such party
may hereafter specify for the purpose by notice to the Agent and the
Borrower. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate answerback is
received, (ii) if given by facsimile transmission, when such facsimile is
transmitted to the facsimile number specified in this Section and receipt
of such facsimile is confirmed, either orally or in writing, by the party
receiving such transmission, (iii) if given by certified mail, 72 hours
after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other
means, when delivered at the address specified in this Section; provided
that notices to the Agent under Article II or Article VIII shall not be
effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
therein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes; Indemnification. (a)
The Borrower shall pay (i) all out-of-pocket expenses of the Agent,
including fees and disbursements of special counsel for the Agent, in
connection with the preparation of the Financing Documents, any waiver or
consent under any Financing Document, or any amendment of any Financing
Document or any Default or alleged Default and (ii) if an Event of Default
occurs, all out-of-pocket expenses incurred by the Agent and each Bank,
including fees and disbursements of counsel (including allocated costs of
homesites sold 85,318 1,796,487
Note receivable, homesites sold (87,500) -
Changesinternal counsel and disbursements of internal counsel), in operating assetsconnection
with such Event of Default and liabilities:
Accounts receivable and prepaid
expenses (251,069) (529,593)
Inventories (5,455) 410,349
Accounts payablecollection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom. The Borrower shall
indemnify each Bank against any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution and delivery of any Financing Document.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents
and employees of the foregoing (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all liabilities, (834,927) 1,367,535
Duelosses,
damages, costs and expenses of any kind, including, without limitation,
the reasonable fees and disbursements of counsel (including allocated
costs of internal counsel and disbursements of internal counsel), which
may be incurred by any Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether or not such Indemnitee
shall be designated a party thereto) brought or threatened relating to affiliates (90,995) (324,138)
Accruedor
arising out of any Financing Document or any actual or proposed use of
proceeds of Loans hereunder; provided that no Indemnitee shall have the
right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
(c) The Borrower agrees to indemnify each Indemnitee and hold each
Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind (including without limitation
reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and reasonable fees and
disbursements of counsel including allocated costs of internal counsel and
disbursements of internal counsel) of any Indemnitee arising out of, in
respect of or in connection with any and all Environmental Liabilities.
Without limiting the generality of the foregoing, the Borrower hereby
waives all rights for contribution or any other rights of recovery with
respect to liabilities, losses, damages, costs or expenses arising under
or related to Environmental Laws that it might have by statute or
otherwise against any Indemnitee.
SECTION 9.04. Sharing of Setoffs. Each Bank agrees that if it
shall, by exercising any right of setoff or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount due with respect
to any Loan or Reimbursement Obligation owed to it which is greater than
the proportion received by any other Bank in respect of the aggregate
amount due with respect to any Loan or Reimbursement Obligation owed to
such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Loans and Reimbursement
Obligations owed to the other Banks, and such other adjustments shall be
made, as may be required so that all such payments with respect to the
Loans and Reimbursement Obligations owed to the Banks shall be shared by
the Banks pro rata; provided that nothing in this Section shall impair the
right of any Bank to exercise any right of setoff or counterclaim it may
have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness hereunder. The
Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Loan or
Reimbursement Obligation, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of setoff or counterclaim and
other rights with respect to such participation as fully as if such holder
of a participation were a direct creditor of the Borrower in the amount of
such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Banks (and, if the rights or duties of the Agent are affected
thereby, by it); provided that no such amendment or waiver shall, unless
signed by all the Banks, (i) increase or decrease the Commitment of any
Bank (except for a ratable decrease in the Commitments of all Banks) or
subject any Bank to any additional obligation, (ii) reduce the principal
of or rate of interest on partner loan 911,883 1,036,956
------------ -------------
Net cash usedany Loan or any fees hereunder, (iii) postpone
the date fixed for any payment of principal of or interest on any Loan,
any Reimbursement Obligation or any fees hereunder or for termination of
any Commitment, (iv) amend or waive any of the provisions of Article VIII,
(v) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this
Section or any other provision of the Financing Documents or (vi) release
any Subsidiary Guarantor from the Subsidiary Guarantee Agreement.
SECTION 9.06. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that
the Borrower may not assign or otherwise transfer any of its rights under
this Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in operating activities (2,629,274) (5,951,899)
------------ -------------
Cash flows from investing activities
Additionsits
Commitment or any or all of its Loans. In the event of any such grant by
a Bank of a participating interest to propertya Participant, whether or not upon
notice to the Borrower and equipment (1,132,867) (1,848,602)
Depositthe Agent, such Bank shall remain responsible
for land purchase (375,000) -
Deferred expenses - (662,149)
------------ -------------
Net cash usedthe performance of its obligations hereunder, and the Borrower and the
Agent shall continue to deal solely and directly with such Bank in
investing activities (1,507,867) (2,510,751)
------------ -------------
Cash flows from financing activities
Partner contributions 6,630,348 14,657,060
Partner distributions (2,063,499) (4,416,474)
Repayment of note payableconnection with such Bank's rights and obligations under capital leases (416,483) (1,996,238)
------------ -------------
Net cashthis Agreement.
Any agreement pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided by financing activities 4,150,366 8,244,348
----------- ------------
Net increase (decrease)that
such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in
cash 13,225 (218,302)
Cash at beginningclause (i), (ii) or (iii) of year 441,170 659,472
----------- -------------
Cash at endSection 9.05 without the consent of year $ 454,395 $ 441,170
=========== ============
Supplemental disclosure of cash flow
information
Cash paid during the
year for interest $ 3,141,989 $ 3,698,599
=========== ============
Supplemental disclosure of noncash investing and financing activities
PursuantParticipant. The Borrower agrees that each Participant shall, to the
second amendmentextent provided in its participation agreement, be entitled to the
benefits of Article VIII with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or
(d) below shall be given effect for purposes of this Agreement only to the
extent of a participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of
its rights and obligations under this Agreement and the Notes and such
Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit I
hereto executed by such Assignee and such transferor Bank, with (and
subject to) the subscribed consent of the Borrower (which shall not be
unreasonably withheld) and the Agent; provided that if an Assignee is an
affiliate of such transferor Bank, no such consent shall be required.
Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price
agreed between such transferor Bank and such Assignee, such Assignee shall
be a Bank party to this Agreement and shall have all the rights and
obligations of a Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by
any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if required, a new
Note is issued to the Assignee. In connection with any such assignment,
the transferor Bank shall pay to the Agent an administrative fee for
processing such assignment in the amount of $2,500.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No
such assignment shall release the transferor Bank from its obligations
hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03
than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Applicable Lending Office
under certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
SECTION 9.07. Collateral. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying
upon any "margin stock" (as defined in Regulation U) as collateral in the
extension or maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be construed in accordance with and governed
by the law of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in
New York City for purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. The
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum.
SECTION 9.09. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject
matter hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day
and year first above written.
PERINI CORPORATION
By /s/ John H. Schwarz
----------------------------
Title: Exec. Vice President,
Finance & Admin.
By /s/ Susan C. Mellace
----------------------------
Title: Vice President &
Treasurer
73 Mount Wayte Avenue
Framingham, MA 01701
Facsimile number: (508) 628-2960
Commitments
Tranche A: MORGAN GUARANTY TRUST COMPANY
$22,704,000.00 OF NEW YORK
Tranche B:
$3,096,000.00
By /s/ Robert Bottamedi
----------------------------
Title: Vice President
Tranche A: SHAWMUT BANK, N.A.
$22,704,000.00
Tranche B:
$3,096,000.00
By /s/ Robert J. Lord
----------------------------
Title: Director
Tranche A: BANK OF AMERICA NATIONAL TRUST AND $16,016,000.00
SAVINGS ASSOCIATION
Tranche B:
$2,184,000.00
By /s/ Richard J. Cerf
---------------------------------
Title: Vice President
Tranche A: FLEET BANK OF MASSACHUSETTS, N.A.
$16,016,000.00
Tranche B:
$2,184,000.00
By /s/ Jeffery Bauer
-------------------------------
Title: Vice President
Tranche A: BAYBANK BOSTON, N.A., as Bank and $10,560,00.00
as LC Bank
Tranche B:
$1,440,00.00
By /s/ Timothy M. Laurion
---------------------------------
Title: Vice President
Tranche A: COMERICA BANK
$8,800,000.00
Tranche B:
$1,200,000.00
By /s/ Jon A. Bird
--------------------------------
Title: Vice President
Tranche A: HARRIS TRUST & SAVINGS BANK
$8,800,000.00
Tranche B:
$1,200,000.00
By /s/ David L. Sauerman
------------------------------
Title: Vice President
Tranche A: STATE STREET BANK AND TRUST COMPANY
$4,400,000.00
Tranche B:
$600,000.00
By /s/ Linda A. Moulton
------------------------------
Title: Vice President
_________________
Total Commitments
$125,000,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Robert Bottamedi
---------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260
Attn: Robert Bottamedi
Telex number: 177615 MGT UT
Facsimile number: (212) 648-5023
EXHIBIT 22
PERINI CORPORATION
114
SUBSIDIARIES OF THE REGISTRANT
Percentage of
Interest or
Place Voting
Name of Organization Securities Owned
Perini Corporation Massachusetts
Perini Building Company, Inc. Arizona 100%
Pioneer Construction, Inc. West Virginia 100%
Perland Environmental Delaware 100%
Technologies, Inc.
International Construction Delaware 100%
Management Services, Inc.
Percon Constructors, Inc. Delaware 100%
Perini International Massachusetts 100%
Corporation
Bow Leasing Company, Inc. New Hampshire 100%
Perini Land & Development Massachusetts 100%
Company
Paramount Development Massachusetts 100%
Associates, Inc.
I-10 Industrial Park Arizona General 80%
Developers Partnership
agreement, duringPerini Resorts, Inc. California 100%
Glenco-Perini - HCV California 45%
Partners Limited
Partnership
Squaw Creek Associates California 40%
General
Partnership
Perland Realty Associates, Florida 100%
Inc.
Rincon Center Associates California 46%
Limited
Partnership
Perini Central Limited Arizona Limited 75%
Partnership Partnership
Perini Eagle Limited Arizona Limited 50%
Partnership Partnership
Perini/138 Joint Venture Georgia General 49%
Partnership
115
Perini/RSEA Partnership Georgia General 50%
Partnership
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the year ended December 31, 1992, $3,431,327 was reclassified from partners'
capital to partner loan (Notes 1 and 5).
During the years ended December 31, 1993 and 1992, the Partnership executed
lease arrangements which qualify for treatment as capital leases.
Accordingly, the Partnership has recorded an asset under capital lease and
related capital lease obligationuse of
$177,043 and $311,060, respectively,our reports, dated February 10, 1995, included in Perini Corporation's
Annual Report on this Form 10-K for the year ended December 31, 19931994, and
1992.
Duringinto the year ended December 31, 1993,Company's previously filed Registration Statements Nos. 2-82117,
33-24646, 33-46961, 33-53190, 33-53192, 33-60654, 33-70206 and 33-52967.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 22, 1995
EXHIBIT 24
POWER OF ATTORNEY
We, the Partnership distributed a note
receivable worth $87,500undersigned, Directors of Perini Corporation, hereby
severally constitute David B. Perini, John H. Schwarz and Richard E.
Burnham, and each of them singly, our true and lawful attorneys, with full
power to onethem and to each of its partners.
1. Organization
Nature of Business
Squaw Creek Associates, a California general partnership (the Partnership),
was formed underthem to sign for us, and in our names in the
provisions of a partnership agreement dated June 3, 1988
(the Agreement)capacities indicated below, any Annual Report on Form 10-K pursuant to
own, develop and manage The Resort at Squaw Creek, a 405
room resort facility located in Olympic Valley, California (the Resort). The
Resort was substantially complete on December 19, 1990 and commenced
operations on that date. In addition, the Partnership has developed for sale
48 single family homesites on land surrounding the Resort. At December 31,
1993, 3 homesites remain unsold.
Ownership
During the year ended December 31, 1992, oneSection 13 or 15(d) of the general partnership
interests was sold,Securities Exchange Act of 1934 to be filed
with the Securities and the Agreement was amended. SubsequentExchange Commission and any and all amendments to
said Annual Report on Form 10-K, hereby ratifying and confirming our
signatures as they may be signed by our said Attorneys to said Annual
Report on Form 10-K and to any and all amendments thereto and generally to
do all such things in our names and behalf and in connectionour said capacities as
will enable Perini Corporation to comply with this transaction, the Partnership successfully extended the
maturity date of its note payable (Note 4). Currently, the Partnership is
owned by Glenco-Perini-HCV (GPH), a California limited partnership (40%), and
Pacific Squaw Creek, Inc. (PSC), a California corporation (60%). PSC serves
as the managing partner and receives a management fee for services rendered
to the Partnership based upon the results of operations, as defined in the
amended Agreement.
In conjunction with the change in ownership mentioned above, and under the provisions of the
Securities Exchange Act of 1934, as amended, Agreement, certain modifications were made to the
partners' capital accounts and the partner loan. As a result, the partner
loan was increased by $3,431,327, the GPH capital account was decreased by
the same amount and certain components of equity used to determine preferred
returns were adjusted.
2. Accounting Policies
Development costs
Land acquisition costs and certain other development costs were incurred by
affiliatesall requirements of the
partners prior to the formation of the Partnership. These
costs were assumed by GPH ($3,254,063)Securities and contributed to the Partnership as
the initial capital contribution. The Partnership used the cost basis of the
previous owners to record the landExchange Commission.
WITNESS our hands and other development costs contributed.
The Agreement assigned a value of $13,500,000 to the GPH contributions
($4,000,000 in cash and $9,500,000 attributable to the land) for the purpose
of calculating certain preferred returns, as defined.
Land development costs contributed to the Partnership and the cost incurred
in connection with development of the Resort (including amenities) were
capitalized and allocated to the related project components. Real estate
taxes, insurance, general and administrative, marketing and interest expense
were capitalized during the development period. No interest costs were
capitalized during 1993 and 1992.
Depreciation
Depreciation is computed using the straight-line method over the estimated
useful lives of the respective property (25 to 60 years) and equipment (5 to
12 years). For assets under capital lease, amortization is provided over the
lesser of the estimated useful life of the asset or the lease term.
Contributions
The Agreement provides that funds required to support operation of the Resort
in excess of funds available from operations must be provided by PSC and GPH
in the form of additional capital contributions (Shortfall Contributions).
The first $2,500,000 of Shortfall Contributions was the responsibility of
GPH; all additional Shortfall Contributions require a 60% capital
contribution by PSC and a 40% capital contribution by GPH. In addition, as
defined in the Agreement, GPH is required to contribute cash necessary for
the Partnership to make certain preferred return distributions to PSC.
Allocation of profits and losses
The Agreement provides that net profits of the Partnership are allocated to
the partners in accordance with their respective percentage interests, after
special allocations are made for depreciation and certain preferred returns,
as defined. Net losses of the Partnership are allocated so as to entirely
offset previous allocations of net profits and then as follows: $13,500,000
to GPH, to the extent of GPH's additional capital contributions (excluding
Shortfall Contributions), then to GPH and PSC to the extent of their
Shortfall Contributions and, thereafter, in accordance with the partners'
respective interests.
Distribution of cash flow
Cash flow from operations and capital transactions are distributed to the
partners in accordance with the Agreement. The Agreement provides that each
of the partners are entitled to various preferred returns based upon
specifically defined capital amounts. At December 31, 1993, PSC and GPH had
cumulative preferred returns totaling $13,415,843 and $28,001,419,
respectively.
Inventories
Inventories consist of food and beverage, apparel and other consumer products
for retail sale at the Resort, and provisions (food and beverage and other
incidentals) for use in Resort operations. Inventories are accounted forcommon seal on
a first-in, first-out basis and are stated at the lower of cost or market.
Inventories also include hotel supplies such as china, glassware, silver and
other reusable items which are valued at original cost of the par stock
purchased less a provision for normal use, damage and loss. All subsequent
purchases of these items are expensed in the period purchased.
Deferred expenses
Costs incurred which relate to activities having future benefit to the
Partnership are deferred. Deferred expenses principally include costs
incurred in connection with bringing the Resort to full operational capacity.
Such amounts are being amortized over a period of 60 months beginning at the date Resort operations commenced. Also included are deferred financing fees,
which are amortized overset forth below.
s/David B. Perini Director March 22, 1995
---------------------- Date
David B. Perini
s/Joseph R. Perini Director March 22, 1995
---------------------- Date
Joseph R. Perini
s/Richard J. Boushka Director March 22, 1995
---------------------- Date
Richard J. Boushka
116
s/Marshall M. Criser Director March 22, 1995
---------------------- Date
Marshall M. Criser
s/Thomas E. Dailey Director March 22, 1995
---------------------- Date
Thomas E. Dailey
s/Albert A. Dorman Director March 22, 1995
---------------------- Date
Albert A. Dorman
s/Arthur J. Fox, Jr. Director March 22, 1995
---------------------- Date
Arthur J. Fox, Jr.
s/Nancy Hawthorne Director March 22, 1995
---------------------- Date
Nancy Hawthorne
s/John J. McHale Director March 22, 1995
---------------------- Date
John J. McHale
s/Jane E. Newman Director March 22, 1995
---------------------- Date
Jane E. Newman
s/Bart W. Perini Director March 22, 1995
---------------------- Date
Bart W. Perini
EXHIBIT 27
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted
from the life of the related loan agreement.
At December 31, 1993 and 1992, accumulated amortization totals $4,228,585 and
$2,794,779, respectively.
Land held for sale
The Partnership has developed residential homesites on land adjacent to the
Resort. Revenue from parcels sold is recognized at the time title passes to
the buyer and full funding is received. Costs of parcels sold are based on
an allocation of the cost of developing the parcels, determined using the
ratio of each parcel's sales proceeds to the total expected sales proceeds
for all parcels. The cost of developing the parcels includes certain
marketing, selling, general and administrative and interest costs that were
incurred during the development period. The Agreement provides that net
proceeds from homesite sales be used to reduce the outstanding note payable
balance and for remaining development costs.
Deposit for land purchase
The Partnership has cash that is held in escrow for the purchase of land
located adjacent to the Resort (Note 8).
Income taxes
Consideration of income taxes is not necessary in the financial statements of
the Partnership because, as a partnership, it is not subject to income tax
and the tax effect of its activities accrues to the partners.
3. Property and Equipment
Property and equipment consist of the following:
1993 1992
Land $ 1,574,202 $ 1,574,202
Land improvements 39,763,047 39,658,830
Buildings and improvement 63,376,837 62,935,293
Furniture, fixtures and equipment 21,211,236 20,765,426
Furniture, fixtures and equipment
under capital lease 1,985,982 1,808,939
Construction in progress 507,546 381,075
------------ ------------
128,418,850 127,123,765
(14,301,188) (9,423,815)
------------- -------------
$114,117,662 $117,699,950
============ ============
Certain of the above assets are pledged as security for the construction loan
and the partner loan (Notes 4 and 5).
Accumulated amortization on assets under capital lease totaled $1,060,923 and
$639,286 at December 31, 1993 and 1992, respectively, and is included above.
Related amortization expense for the years ended December 31, 1993 and 1992
totaled $421,637 and $332,985, respectively.
4. Note Payable
The Partnership has outstanding a note payable relating to construction of
the Resort and development of the homesites. Depending upon the form of the
borrowing, interest is payable monthly at the applicable rate plus a margin
of 1.25% for borrowings based on prime rate; a margin of 2.5% for borrowings
based on the Eurodollar rate; or a margin of 2.625% for borrowings based upon
the CD rate. The interest rate at December 31, 1993 and 1992 was 6%. During
1992, the note agreement was modified and extended through May 1, 1995.
The note payable is secured by the Resort and remaining homesites, and by the
assignment of certain agreements related principally to operation of the
Resort. The terms of the loan agreement prohibit capital distributions from
net operating cash flows of the Partnership until it is retired. Perini Land
and Development Corporation (Perini), an affiliate of GPH, has provided a
guarantee for $10,000,000 in outstanding principal and payment of unpaid
interest on this loan. In addition, the partners have provided the lender
with letters of credit totaling $4,000,000 at December 31, 1993 as guarantee
of the related debt service obligation.
5. Partner Loan
The Partnership has outstanding $14,931,327 in the form of a loan from GPH at
December 31, 1993 and 1992. Under the terms of the Agreement, during the
construction period the Partnership had the ability to borrow funds from GPH
as necessary to pay for obligations arising from construction. The loan
bears interest at the same rate of interest as due under the note payable
discussed at Note 4. The loan and any accrued interest payable, except in
certain circumstances described in the Agreement, will be repaid from
positive cash flows from operations and has priority over other Partnership
distributions of positive cash flows. The loan is secured by a second deed
of trust on the Resort. Management has classified this loan and the related
accrued interest as non-current liabilities since repayment of these amounts
will not occur in 1994.
Interest expense under the partner loan totaled $911,883 and $1,036,956 in
1993 and 1992, respectively.
6. Related Party Transactions
The Partnership paid approximately $53,256 and $439,000 to Perini and its
affiliates during 1993 and 1992, respectively, for administrative services
provided.
During 1993, the Partnership incurred costs totalling $306,525 in connection
with management services provided by PSC under the terms of the Agreement and
the related amendment. In 1992, the Partnership incurred costs totaling
$130,000 and $99,962 in connection with management services provided by GPH
and PSC, respectively.
During 1992, the Partnership entered into certain subleases for equipment
with Perini and its parent corporation, Perini Corporation. Under the
sublease arrangements, the Partnership pays approximately $102,000 annually
relating to leases which expire in 1996.
7. Resort Management Agreement
The Resort is managed by Benchmark Management Company (BMC) under an
agreement that provides for fees based upon the Resort's operating results.
A total of $651,648 and $648,700 was paid to BMC for management services in
1993 and 1992, respectively. During 1992 the agreement with BMC was amended
to allow for certain reductions in the management fee based on specified
performance factors. As a result, the Partnership is owed approximately
$555,200 and $325,000 by BMC for fee reductions at December 31, 1993 and
1992, respectively.
8. Commitments
The Partnership has entered into various lease agreements for land, buildings
and equipment. The lease terms are primarily for one or two year periods
except as follows:
- - - At December 31, 1993 the Partnership had two separate ground lease
agreements for approximately 24 acres of land in Olympic Valley,
California. The primary use of the land is for the Resort's golf course.
These agreements include escalation clauses that will increase the
scheduled rents due beginning in 1992 based on increases in the Consumer
Price Index. Subsequent to December 31, 1993, the Partnership completed
the purchase, for $350,000, of the land subject to one of these ground
leases (Note 2). Accordingly, this lease is not included in the schedule
of future minimum lease payments below.
- - - An operating lease through May 1996 for storage facilities.
- - - Various capital and operating leases for equipment.
Rent expense for land, building and equipment was approximately $311,000
and $497,000 for 1993 and 1992, respectively. The future minimum lease
payments for all leases existing at December 31, 1993 are as follows:
Capital Operating
Leases Leases
1994 $ 601,128 $ 217,644
1995 585,478 215,311
1996 59,524 183,342
1997 2,576 158,696
1998 - 126,546
Thereafter - 3,818,327
----------- ----------
1,248,706 $4,719,866
==========
Less amounts representing interest (187,888)
-----------
Present value of obligations 1,060,818
Less current portion of obligations under
capital leases (470,970)
-----------
$ 589,848
===========
9. Legal Settlement
The Partnership, together with its partners and several affiliated entities,
was a defendant in a lawsuit seeking damages for alleged malicious
prosecution in connection with a lawsuit the Partnership brought against the
Institute for Conservation Education, the Sierra Club and several individuals
alleging breach of contract, among other things, relating to agreements
between the parties. During 1992 and prior to the scheduled court date, the
Partnership agreed to a settlement of this matter. The aggregate settlement
amount was $2,250,000; legal and related costs incurred by the Partnership
relating to this matter totaled $1,075,890. Of the total costs, $1,325,890
was covered by the insurance carriers of the Partnership and its legal
counsel. The remaining amounts are the direct responsibility of the
Partnership, and have been properly recorded in the accompanying financial
statements. As of December 31, 1993, all amounts have been paid.
Audited Financial Statements
and Other Financial Information
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Years ended December 31, 1991 and 1990
with Report of Independent Auditors
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Audited Financial Statements
and Other Financial Information
Years ended December 31, 1991 and 1990
CONTENTS
Report of Independent Auditors 1
Audited Financial StatementsConsolidated Balance Sheets 2
Statements of Revenue and Expenses 4
Statements of Changes in Partners' Capital 5
Statement of Cash Flows 6
Notes to Financial Statements 7
Other Financial Information
Report of Independent Auditors on Other Financial
Information 16
Details of Cumulative Preferred Return 17
Comparison of Resort Operations Revenue and Expenses to
Annual Operating Plan 18
Schedules of Cash Flows used by Operating Activities
Excluding Homesite Operations, Accrued Interest Payable -
Affiliate and Initial Purchase of Provisions Inventories 22
Schedule of Changes in Partners' Capital 23
Report of Independent Auditors
The General Partners
Squaw Creek Associates
We have audited the accompanying balance sheets of Squaw Creek Associates (a
California general partnership) (dba The Resort at Squaw Creek) as of December 31, 1991 and 19901994 and the
related statementsConsolidated Statements of revenue and
expenses, changes in partners' capital and cash flowsOperations for the years then
ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conduct our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Squaw Creek Associates at
December 31, 1991 and 1990, and the results of its operations and cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that Squaw
Creek Associates will continue as a going concern. As discussed in Note 1 to
the financial statements, the Partnership has sustained operating cash flow
deficits and operating losses and has been unable to reach agreement with its
lender regarding terms of an extension of its note payable that was due on
August 1, 1991. These conditions raise substantial doubt about the
Partnership's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1 to the financial
statements. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty. In addition, recovery of
the Partnership's investment in the Resort is dependent upon the Resort's
ability to generate profits from operations and/or from disposition of the
property, the achievement of which cannot be determined at this time.
As discussed in Note 4 to the financial statements, in December 1990 the
Partnership became a defendant in a lawsuit alleging malicious prosecution,
among other claims, in connection with a lawsuit brought by the Partnership
against a third party. The Partnership denies all liability and is
vigorously defending against these claims. The ultimate outcome of this
litigation cannot be determined. Accordingly, no provision for any liability
that may result has been made in the financial statements.
February 22, 1992
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Balance Sheets
December 31
1991 1990
Assets
Current assets:
Cash $ 659,472 $ 1,244,128
Accounts receivable:
Trade 754,559 433,237
Other 202,971 177,688
------------ ------------
957,530 610,925
Inventories:
Inventories - retail 676,214 397,170
Inventories - provisions 383,543 268,023
Hotel supplies 504,250 759,000
------------ ------------
1,564,007 1,424,193
Prepaid expenses 413,192 215,205
Land held for sale 2,196,262 3,528,103
------------ ------------
Total current assets 5,790,463 7,022,554
Property and equipment, at cost:
Land 925,397 925,397
Land improvements 29,696,458 24,188,117
Buildings and improvements 66,014,868 64,541,702
Furniture, fixtures and equipment 28,877,507 27,416,383
------------ ------------
125,514,230 117,071,599
Accumulated depreciation 4,690,428 80,640
------------ ------------
120,823,802 116,990,959
Deferred expenses (net of accumulated
amortization of $1,518,154 and $0 at
December 31, 1991 and 1990, respectively) 4,649,505 80,640
------------ ------------
Total assets $131,263,770 $130,205,714
============ ============
December 31
1991 1990
Liabilities and Partners' Capital
Current Liabilities:
Accounts payable:
Construction $ 204,762 $ 10,274,938
Trade or other 3,561,882 2,220,323
Retainage payable 100,332 1,836,654
Due to affiliates 425,951 396,305
------------ ------------
4,292,927 14,728,220
Current portion of obligations under
capital leases 457,619 256,000
Note payable 49,715,159 43,766,924
------------ ------------
Total current liabilities 54,465,705 58,751,144
Obligations under capital leases, net
of current portion 983,671 1,193,497
Accrued interest payable - affiliate 2,746,279 1,653,072
Loan payable - affiliate 11,500,000 11,500,000
------------ ------------
Total liabilities 69,695,655 73,097,713
Partners' capital 61,568,115 57,108,001
------------ ------------
Total liabilities and partners' $131,263,770 $130,205,714
capital ============ ============
See accompanying notes.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Statements of Revenue and Expenses
Yeartwelve months ended December
31, 1991 1990
Revenue:
Resort operations $ 13,055,986 $ 787,800
Sales of homesites 2,742,833 2,305,000
------------ ----------
15,798,819 3,092,800
Costs1994 and expenses:
Resort operations:
Direct costs and expenses 13,042,821 916,052
Selling, general and administrative
expenses 10,288,443 646,168
Fixed expenses 817,661 62,814
Cost of homesites sold, including selling 2,246,386 1,369,708
and other expenses
Depreciation and amortization 6,180,161 10,320
Interest expense 6,264,624 200,628
------------ ----------
38,840,096 3,205,690
------------ ----------
Net loss $(23,041,277) $ (112,890)
============= ===========
See accompanying notes.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Statements of Changesis qualified in Partners' Capital
Partners' capital atits entirety by reference to such financial
statements.
Multiplier 1,000
Period Type 12 Months
Fiscal Year End December 31, 1989 $34,054,063
Additional capital contributions 23,166,828
Net loss (112,890)
------------
Partners' capital at1994
Period End December 31, 1990 57,108,001
Additional capital contributions 27,501,3911994
Cash 7,841
Securities 0
Receivables 151,620
Allowances 0
Inventory 11,525
Current Assets 266,648 (F1)
PP&E 42,588
Depreciation (29,082)
Total Assets 482,500 (F2)
Current Liabilities 236,700
Bonds 76,986
Common 4,985
Preferred Mandatory 100
Preferred 0
117
Other SE 0
Total Liability and 482,500 (F3)
Equity
Sales 0
Total Revenues 1,012,045
CGS 0
Total Costs (960,248)
Other Expenses (856)
Loss Provision 0
Interest Expense (7,473)
Income Pretax 483 (F4)
Income Tax (180)
Income Continuing 303
Discontinued 0
Extraordinary 0
Changes 0
Net loss (23,041,277)
------------
Partners' capital at December 31, 1991 $61,568,115
===========
See accompanying notes.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
StatementsIncome 303
EPS Primary (.42)
EPS Diluted 0
(F1) Includes Equity in Construction Joint Ventures of Cash Flows
Year ended December 31,
1991 1990
Operating activities
Net loss $(23,041,277) $ (112,890)
Adjustments$66,346,
Unbilled Work of $20,209, and Other Short-Term Assets of $9,107,
not currently reflected in this tag list.
(F2) Includes investments in and advances to reconcile net loss to net
cash (used in) provided by operating
activities:
Depreciation and amortization expense 6,180,161 10,320
CostReal Estate Joint Ventures
of homesites sold related to land and
development costs 1,455,933 1,020,701
Increase in accrued interest payable to
affiliate 1,093,207 1,173,252
Changes in operating assets and
liabilities:
Accounts receivable and prepaid expenses (544,592) (826,130)
Inventories - retail (279,044) (397,170)
Inventories - provisions (115,520) (268,023)
Hotel supplies 254,750 (759,000)
Accounts payable - trade and other 1,341,559 2,220,323
Due to affiliates - current 29,646 79,272
------------ ------------
Net cash (used in) provided by operating
activities (13,625,177) 2,140,655
Investing activities
Additions to property, equipment and
deferred expenses (8,307,348) (72,496,868)
(Decrease) increase in construction accounts
and retainage payable (11,806,498) 2,706,647
------------- -----------
Net cash used in investing activities (20,113,846) (69,790,221)
Financing activities
Proceeds from loan payable - affiliate - 2,504,357
Proceeds from partners' capital
contributions 27,501,391 23,166,828
Proceeds from note payable 7,068,806 44,053,145
Repayment of note payable and obligations
under capital leases (1,415,830) (873,161)
------------- ------------
Net cash provided by financing activities 33,154,367 68,851,169
------------- -----------
Net (decrease) increase in cash (584,656) 1,201,603
Cash at beginning of year 1,244,128 42,525
------------- -----------
Cash at end of year $ 659,472 $ 1,244,128
============ ===========
Supplemental cash flow disclosures:
Cash paid for interest $ 4,862,870 $ 159,000
============ ===========
See accompanying notes.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements
December 31, 1991 and 1990
1. Accounting Policies
Nature of Business
Squaw Creek Associates (the Partnership) is a California general partnership
formed through the Partnership Agreement (Agreement) dated June 3, 1988 to
own, develop and manage a resort located in Placer County, California (the
Resort). The Resort was substantially complete on December 19, 1990 and
commenced operations on that date. Homesite sales activities commenced in
1990, with the first title closing occurring in September 1990. Revenue and
expenses for the year ended December 31, 1990 are presented for the period
subsequent to August 1990 for homesite sales and for the period subsequent to
December 18, 1990 for Resort operations. The Partnership is owned by Glenco-
Perini-HCV Partners (GPH), a California limited partnership, and Squaw Creek
Investors Corporation (SCIC). GPH, a partnership owned by Glenco-Squaw
Associates, Perini Resorts, Inc., and HCV Pacific Investors III, serves as a
managing partner through its general partner, Perini Resorts, Inc., a wholly
owned subsidiary of Perini Land & Development Company (Perini) which is a
wholly owned subsidiary of Perini Corporation. GPH receives a management fee
for services rendered to the Partnership based upon the results of operations
as defined in the Agreement.
The Partnership experienced operating cash flow deficits and operating losses
in 1991. Additionally, the Partnership has been unable to reach agreement
with its lender regarding terms of an extension of its note payable that was
due on August 1, 1991. The Partnership has been unable to obtain other
permanent financing and could be required to repay the outstanding loan if
called by the lender. The Partnership has implemented plans to improve
operating performance and has had ongoing discussions with its lender
regarding its capital situation. The Partnership's financial condition and
its inability to extend or to secure permanent financing raise substantial
doubt regarding the Partnership's ability to continue as a going concern.
These financial statements do not include any adjustments that might result
from the outcome of this uncertainty. In addition, recovery of the
Partnership's investment in the Resort is dependent upon its ability to
generate profits from operations and/or from disposition of the property, the
achievement of which cannot be determined at this time.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements (continued)
1. Accounting Policies (continued)
Development Costs
Land acquisition costs and certain other development costs were incurred by
Glenco-Squaw Associates and Perini prior to the formation of the Partnership.
These costs were assumed by GPH ($3,254,063) and contributed to the
Partnership as the initial capital contribution. The Partnership used the
cost basis of the previous owners to record the land and other development
costs contributed. The Agreement assigned to contribution value to the GPH
contributions of $13,500,000 (consisting of $4,000,000 in cash equity and
$9,500,000 in land equity) for the purpose of calculating certain preferred
returns (see Note 2 for further discussion). SCIC's initial contribution was
$8,312,981. Land development costs contributed to the Partnership and the
cost incurred by the Partnership for developing the Resort (including
amenities) are allocated to the related Project components. Real estate
taxes, insurance, general and administrative, marketing and interest expense
were capitalized during the development period. Interest cost capitalized
amounted to $3,025,994 in 1990. No interest costs were capitalized in 1991.
Contributions
The Agreement provides that funds needed to operate the Resort in excess of
funds available from the Resort's operations (cash shortfall) must be
provided by SCIC and GPH in the form of additional capital contributions.
The first $2,500,000 of cash shortfall was the responsibility of GPH with all
additional cash shortfall contributions requiring a 60% capital contribution
by SCIC and a 40% capital contribution by GPH.
Starting in November 1991, SCIC has not made its required contributions under
the cash shortfall provisions of the Agreement. Consequently, GPH has made
the necessary contributions to fund all operating cash shortfalls, including
amounts not funded by SCIC, under the default contribution provisions of the
Agreement. The Agreement provides that in the event of default, the
defaulting partner loses certain partnership rights, authorities and other
distribution priorities. SCIC disputes that its actions and failure to fund
its share of the cash shortfalls has resulted in its default.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements (continued)
1. Accounting Policies (continued)
Distribution of Cash Flows and Profits and Losses
Operating cash flow, as defined by the Agreement, principally consists of net
cash generated from operations of the Resort less interest and principal paid
by the Partnership for indebtedness (excluding indebtedness and interest due
to affiliate). Distributable cash flow, as defined by the Agreement,
principally consists of operating cash flow and proceeds from capital
transactions; however, if the operating cash flow after December 31, 1991 is
insufficient to permit the payment of SCIC's 9% preferred return, GPH is to
contribute the deficiency to the Partnership, thereby increasing
distributable cash flow.
The Agreement generally provides that distributable cash flows are shared by
the partners in accordance with their respective percentage interests after
repayment of: default contributions; the outstanding interest and principal
of GPH's (affiliate) loans to the Partnership; the unpaid SCIC 9% preferred
returns (see Note 2 for further discussion); and, the partners' additional
capital contributions resulting from operating cash shortfalls and after
repayment of certain other preferred returns and related contributions to
capital by the partners (see Note 2 for further discussion).
The Agreement generally provides that the net profits of the Partnership are
allocated to the partners in accordance with their respective percentage
interests after allocations are made for certain preferred returns (see Note
2 for further discussion). Net losses of the Partnership are generally
allocated so as to entirely offset previous allocations of allocated net
profits and then as follows: $13,500,000 to GPH, to the extent of GPH's
additional capital contributions (excluding operating shortfall contribution
amounts), to the extent of GPH's and SCIC's operating shortfall contribution
amounts, and thereafter, in accordance with the partners' respective
interests.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements (continued)
1. Accounting Policies (continued)
Capital Transactions
Capital transactions, as defined by the Agreement, principally consist of
dispositions of any of the Partnership assets other than through the ordinary
course of business of the Resort and the net proceeds from refinancing or
financing the indebtedness of the Partnership. The Agreement generally
provides that the proceeds from capital transactions are distributed as other
cash proceeds except that the distributions for the partners' unpaid
preferred returns and related capital contribution amounts are performed in a
different priority.
Inventories
Inventories consist of food and beverage, apparel and other consumer products
for retail sale or rental to the Resort's patrons and provisions (food and
beverage and other incidentals) for use in the Resort's operations. Retail,
rental and provisions inventories are stated at the lower of cost (first-in,
first-out method) or market.
Hotel supplies consist of china, glassware, silver and other reusable items
and are valued at the original cost of the par stock purchased less a
provision for normal use, damage and loss. All subsequent purchases of hotel
supplies are expensed in the period purchased.
Deferred Expenses
Costs which are incurred and which relate to activities having future benefit
to the Partnership are deferred. Deferred expenses principally include costs
associated with bringing the Resort to full operational capacity. Deferred
expenses are being amortized over 60 months beginning in January 1991, the
first full month subsequent to the date that Resort operations commenced.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements (continued)
1. Accounting Policies (continued)$148,843, Land Held for Sale The Partnership has developed residential homesitesor Development of $43,295, and
Other Long-Term Assets of $10,208 not currently reflected in conjunction with the
development of the Resort. Revenue from the parcels sold is recognized at
the time title passes to the buyer and full funding is received. The costs
for parcels sold are based on the allocation of the costs of developing the
parcels as determined using the ratio of each parcel's sales proceeds to the
total expected sales proceeds for all parcels. The cost of developing the
parcels includes certain marketing, selling, general and administrative and
interest costs that were incurred during the development period. The
Agreement calls for the net proceeds from the homesite sales to be used to
reduce the outstanding note payable balance and the development costs.
Depreciation and amortization are computed using the straight-line method
over the estimated useful lives of the respective property (25 to 60 years)
and equipment (5 to 12 years). For leased equipment, amortization is
provided using the lesser of the estimated useful life or the lease term.
The Partnership uses the mid-month convention whereby property and equipment
placed in service on or before the fifteenth day of the month will be
depreciated for the full month with no depreciation provided for property and
equipment placed in service after the fifteenth day of the month.this
tag list.
(F3) Includes Deferred Income Taxes The Partnership isand Other Liabilities of $33,488,
Minority Interest of $3,297, Paid-In Surplus of $59,001, Retained
Earnings of $81,772, ESOT Related Obligations of $(6,009), and
Treasury Stock of $(7,820).
(F4) Includes General, Administrative and Selling Expenses of
$(42,985), not subject to taxescurrently reflected on its income. Federal and state
income tax regulations provide that the items of income, gain, loss,
deduction, credit and tax preference of the Partnership are reportable by the
partners in their income tax returns. Accordingly, no provision for incomethis tag list.
118
taxes has been made in these financial statements.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements (continued)
2. Cumulative Preferred Return
Under the terms of the Agreement, SCIC and GPH will receive cumulative
preferred returns. SCIC's return is based upon 9% and 3% (noncompounded)
returns on its adjusted contribution amount and a 12% return on its adjusted
shortfall contribution amount, as defined in the Agreement. The total
cumulative preferred return of SCIC amounted to approximately $7,950,000 for
the period July 25, 1988 through December 31, 1991. GPH's return is based
upon 12% and 9% (noncompounded) of its adjusted cash equity and adjusted
phase I and phase II land equity amounts, respectively, 12% of the first
$2,500,000 of its adjusted shortfall contribution amount and 24% of its
adjusted default contribution amount as defined in the Agreement. The total
cumulative preferred return of GPH amounted to approximately $12,104,000 for
the period July 25, 1988 through December 31, 1991. Because there has been
no net positive cash flows from operations, these amounts are unpaid at
December 31, 1991.
3. Note Payable and Loan Payable - Affiliate
The Partnership has a note payable relating to a construction loan agreement
(loan agreement) that permits the Partnership to borrow funds as necessary to
pay for project costs up to a maximum of $53,000,000. Depending upon the
form of the borrowing, interest is payable monthly at the applicable rate
plus: a margin of 1.25% for borrowings based on prime rate; a margin of 2.5%
for borrowings based on the Eurodollar rate; or a margin of 2.625% for
borrowings based upon the CD rate. The interest rate at December 31, 1991
was 7.75% (10.72% at December 31, 1990).
The loan is secured by the Project and the assignment of certain agreements
related to, among other things, the operation of the Project. Perini has
guaranteed $10,000,000 of any outstanding principal balance, payment of
unpaid interest and the lien free completion of the project.
The loan was originally payable on August 1, 1991. The loan agreement
permits the Partnership to extend the agreement through August 1, 1996.
However, the Partnership has been unable to reach agreement with the lender
as to the terms of extension. The Partnership is currently negotiating an
extension to the loan agreement, and management believes it has performed its
obligations under the loan agreement as if the loan had been extended.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements (continued)
3. Notes Payable and Loan Payable - Affiliate (continued)
The Partnership has an $11,500,000 loan payable to GPH, an affiliate, at
December 31, 1991 and 1990. The Partnership, under the Agreement, has the
ability to borrow funds from GPH as necessary (to the extent other funds are
not available, as discussed in Note 1) to pay for obligations arising from
construction. The loan bears interest at the same rate of interest as due
under the note payable. The loan and any accrued interest payable, except in
certain circumstances as described in the Agreement, will be repaid from
positive cash flows from operations and has priority over the Partnership
distributions of positive cash flows. Management has classified the note
payable to affiliate (and related interest) as a long-term liability, as
repayment of these amounts will not occur in 1992.
4. Commitments and Contingencies
The partnership has entered into various lease agreements for land, buildings
and equipment. The lease terms are primarily for one or two year periods
except as follows:
- - - The Partnership has two separate ground lease agreements for approximately
24 acres of land in Olympic Valley, California. The primary use of the
land is for construction of the Resort's golf course. Under these
agreements, the Partnership also leases ski lift equipment, two buildings
and also receives certain rights to conduct snow skiing activities. These
agreements contain rent escalation clauses that will increase the
scheduled rents due beginning in 1992 based on increases in the consumer
price index. An option under one of the lease agreements permits the
Partnership to acquire a ten acre parcel for $2,900,000 before May 31,
1992, with a scheduled purchase price increase thereafter.
- - - An operating lease through May 1996 for storage facilities.
- - - Various capital and operating leases for equipment. Equipment accounted
for as capital leases is recorded at the present value of future minimum
rental payments and is included in the net book value of equipment at
December 31, 1991 and 1990 in the amount of approximately $1,783,000 and
$1,496,000, respectively. During 1991 and 1990, the Company acquired
approximately $287,000 and $1,263,000, respectively, in equipment through
lease financing.
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements (continued)
4. Commitments and Contingencies (continued
Rent expense for land, building and equipment was approximately $305,000 and
$7,000 for 1991 and 1990, respectively. The future minimum lease payments
for all leases are as follows:
Capital Operating
Leases Leases
1992 $ 504,824 $ 226,802
1993 474,283 206,833
1994 468,845 181,357
1995 442,132 177,773
1996 5,397 171,874
Thereafter - 3,295,145
----------- ----------
1,895,481 $4,259,784
==========
Amounts representing interest (454,191)
-----------
Present value of obligations under capital 1,441,290
leases
Less current portion of obligations under
capital leases (457,619)
-----------
$ 983,671
===========
The Partnership has recorded various other commitments under agreements with
both third and related parties including the following:
- - - An agreement to pay various amounts to a management company for services
received based upon the results of Resort operations (approximately
$376,000 in 1991 and $23,000 in 1990).
- - - An agreement to pay various amounts to GPH for services received based
upon the results of Resort operations and the gross sales of homesites
(approximately $227,000 in 1991 and $79,000 in 1990).
Squaw Creek Associates
(a California general partnership)
(dba The Resort at Squaw Creek)
Notes to Financial Statements (continued)
4. Commitments and Contingencies (continued
The Partnership is involved in litigation and various other legal matters
which are being defended and handled in the ordinary course of business.
Specifically, in December 1990, the Partnership, along with a number of
related entities, including the partners of the Partnership, was named as a
defendant in a lawsuit seeking damages for alleged malicious prosecution in
connection with a lawsuit it brought against the Sierra Club alleging breach
of contract, among other things, relating to certain agreements between the
parties. The Partnership denies all liability and is vigorously defending
against these claims.
5. Related Party Transactions
The Partnership incurred approximately $1,111,000 and $1,774,000 in 1991 and
1990, respectively, for administrative, occupancy and management fees related
to services provided by Perini.
Perini has guaranteed to the Partnership, and to SCIC, the obligations of
Perini Resorts, Inc., as the General Partner of GPH, including contributions
of cash, under the shortfall contributions provision of the Agreement, and
provision of certain services.