The accompanying notes are an integral part of these financial statements.
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) Basis of Presentation
The unaudited consolidated condensed financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2000. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2001 and December 31, 2000 and results of operations and cash flows for the three month periods ended March 31, 2001 and 2000. The results of operations for the three month period ended March 31, 2001 may not be indicative of the results that may be expected for the year ending December 31, 2001 because the Company’s results are primarily generated from a limited number of significant active construction contracts. Therefore, such results can vary depending on the timing of progress achieved and changes in estimated profitability of projects being reported.
(2) Significant Accounting Policies
The significant accounting policies followed by the Company and its subsidiaries in preparing its consolidated financial statements are set forth in Note (1) to such financial statements included in Form 10-K for the year ended December 31, 2000. The Company has made no significant change in these policies during 2001.
(3) Recapitalization
On March 29, 2000 (the “Closing Date”), the Company completed the sale of 9,411,765 shares of its common stock, par value $1.00 (the “Common Stock”), for an aggregate of $40 million, or $4.25 per share (the “Purchase”), to an investor group led by Tutor-Saliba Corporation (“TSC”), and including O&G Industries, Inc. (“O&G”), and National Union Fire Insurance Company of Pittsburgh, Pa., a wholly owned subsidiary of American International Group, Inc. (“National Union” and together with TSC and O&G, the “New Investors”) pursuant to a Securities Purchase Agreement dated as of February 5, 2000 by and among the Company and the New Investors. Tutor-Saliba Corporation is owned and controlled by Ronald N. Tutor, who serves as Chairman of the Company’s Board of Directors and Chief Executive Officer.
In connection with the Purchase, TSC acquired 2,352,942 shares of Common Stock for a total consideration of $10,000,000, O&G acquired 2,352,941 shares of Common Stock for a total consideration of $10,000,000 and National Union acquired 4,705,882 shares of Common Stock for a total consideration of $20,000,000.
Concurrent with the closing of the Purchase and as a condition thereto, the Company exchanged 100% of its Redeemable Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”) (which had a current accreted face amount of approximately $41.2 million) for an aggregate of 7,490,417 shares of common stock at an exchange price of $5.50 per share (the “Exchange” and together with the Purchase, the “Transaction”) pursuant to certain Exchange Agreements by and
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(3) Recapitalization (continued)
between the Company and each of The Union Labor Life Insurance Company, acting on behalf of its Separate Account P (“ULLICO”), PB Capital Partners, L.P. (“PB Capital”) and The Common Fund for Non-Profit Organizations (“The Common Fund”).
In connection with the Transaction, the Company amended its By-Laws to remove provisions creating an Executive Committee of the Board of Directors and granting certain powers to it and amended its Restated Articles of Organization as of the Closing Date to increase the number of authorized shares of Common Stock from 15,000,000 shares to 40,000,000 shares and to amend the Series B Preferred Stock Certificate of Vote. The Company also entered into a Shareholders’ Agreement and a Registration Rights Agreement, each by and among the Company, the New Investors, Ronald N. Tutor, BLUM Capital Partners, L.P., PB Capital, The Common Fund and ULLICO dated as of the Closing Date. The Shareholders’ Agreement contains provisions that define, among other things, certain put and call rights and rights of first refusal between National Union and TSC, tag-along rights of the New Investors and former holders of Series B Preferred Stock and certain procedures to protect the Company’s use of its net operating losses (“NOLs”) for tax purposes. Since the Common Stock issued in connection with the Transaction was not registered under the Securities Act, the Registration Rights Agreement contains provisions that define the rights of the New Investors and former holders of Series B Preferred Stock to require the Company, under certain circumstances, to register some or all of the shares under the Securities Act. In addition, the Company entered into an Amendment to the Shareholder Rights Agreement dated as of the Closing Date whereby the Transaction would not trigger the dilutive provisions of the Agreement.
A Special Committee of the Company’s Board of Directors approved the Transaction after receiving a fairness opinion from an investment banking firm. A majority of outstanding common shares, including a majority of shares held by disinterested shareholders, were voted in favor of the Transaction at a Special Meeting of Stockholders held on March 29, 2000.
The shares of Common Stock issued in the Purchase represent approximately 42% of the Company’s voting rights and the New Investors have the right to nominate three members to the Company’s Board of Directors. The New Investors designated Ronald N. Tutor, Raymond R. Oneglia and Christopher H. Lee as their nominees and they were appointed Directors of the Company as of March 29, 2000. The former holders of the Series B Preferred Stock now control approximately 33% of the Company’s voting rights and continue to be entitled to nominate two members to the Company’s Board of Directors. The former holders of Series B Preferred Stock designated Michael R. Klein and Robert A. Kennedy as their nominees and they were appointed Directors of the Company as of March 29, 2000.
In connection with the Transaction and as a condition thereto, the Company also entered into an Amended and Restated Credit Agreement with its lenders that extended the credit facility from January 2001 to January 2003 (see Note 4).
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(3) Recapitalization (continued)
The effect of the Transaction on Stockholders’ Equity was to increase Stockholders’ Equity by approximately $76.2 million; $37.3 million from the Purchase (gross proceeds of $40.0 million less related capital expenses of $2.7 million) and $38.9 million from the Exchange (accreted value of $41.2 million less non-accreted capital expenses of $2.3 million).
(4) Long-term Debt
In conjunction with the recapitalization of the Company as described in Note 3, effective March 29, 2000, the Company entered into an Amended and Restated Credit Agreement (the “New Credit Agreement”) with its lenders that extended the credit facility from January 2001 to January 2003. The New Credit Agreement provides for a $35 million term loan (the “Term Loan”) and a $21 million revolving credit facility (the “Revolving Credit Facility”). The New Credit Agreement requires that the Company repay the Term Loan in quarterly installments through 2002 and the Revolving Credit Facility by January 21, 2003. Commitments under the New Credit Agreement have been reduced to $38.3 million as of March 31, 2001 as a result of scheduled Term Loan payments and proceeds from sales of certain real estate. In addition, on September 6, 2000, the Company completed a refinancing of its corporate headquarters building for $7.5 million at an annual interest rate of approximately 9%. In connection with the refinancing, approximately $.8 million was set aside in escrow for immediate and future repairs and improvements to the structure and the grounds. As of March 31, 2001, approximately $.5 million remains in escrow. The loan is payable in equal monthly installments of $67,300 over a ten year period, with a balloon payment of $5.3 million due in 2010.
(5) Provision For Income Taxes
The credit (provision) for income taxes reflects a lower-than-normal tax rate in both 2001 and 2000 due primarily to the realization of a portion of the federal tax benefit not recognized in prior years due to certain accounting limitations. In addition, the credit for income taxes for the three months ended March 31, 2000 reflects the reversal of foreign taxes accrued in prior years that were no longer required.
(6) Per Share Data
Computations of basic and diluted earnings per common share (“EPS”) amounts are based on the weighted average number of the Company’s common shares outstanding during the periods presented. The actual basic and diluted EPS for the three month periods ended March 31, 2001 and 2000 and the pro forma basic and diluted EPS for the three months ended March 31, 2000, assuming the Transaction described in Note 3 closed on January 1, 2000, are calculated as follows (in thousands, except per share amounts):
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(6) Per Share Data (continued)
Three Months Ended March 31,
------------------------------------------------------
2001 2000 2000
Actual Pro Forma Actual
---------------- --------------- ---------------
Net Income $ 6,820 $ 5,173 $ 5,173
---------------- --------------- ---------------
Less:
- - Accrued dividends on $21.25 Senior Preferred Stock $ (531) (531) (531)
- - Dividends declared on Series B Preferred Stock - - (a) (1,161)
- - Accretion deduction required to reinstate mandatory
redemption value of Series B Preferred Stock over a
period of 8-10 years - - (a) (96)
Plus - Reduction in interest expense - 863 (b) -
---------------- --------------- ---------------
$ (531) $ 332 $ (1,788)
---------------- --------------- ---------------
Total Available for Common Stockholders $ 6,289 $ 5,505 $ 3,385
================ =============== ===============
Weighted average shares outstanding 22,584 22,584 (c) 6,240
---------------- --------------- ---------------
Basic and diluted earnings per Common Share $ 0.28 $ 0.24 $ 0.54
================ =============== ===============
(a) For pro forma purposes it is assumed that the Series B Preferred Stock was exchanged for shares of Common Stock as of January 1, 2000. Therefore, the deduction of $1,161 for dividends declared on the Series B Preferred Stock and the deduction of $96 for accretion applicable to the Series B Preferred Stock are not required when calculating the pro forma earnings per share for the three months ended March 31, 2000.
(b) The pro forma adjustment reducing interest expense by $863 is based on the assumption that the net cash proceeds of $37.3 million ($40 million less estimated related expenses of $2.7 million) received from the New Investors was used to reduce debt under the Company's Revolving Credit Facility as of January 1, 2000 based on the average effective borrowing rate of 9.25% experienced during the first three months of 2000.
(c) Adjusted to give effect to (i) the sale of 9,411,765 shares of Common Stock to the New Investors and (ii) the exchange of the Series B Preferred Stock (which had a current accreted face amount of $41,197) for 7,490,417 shares of Common Stock assuming the Transaction closed on January 1, 2000.
Basic EPS equals diluted EPS for the periods presented due to the immaterial effect of stock options and the antidilutive effect of conversion of the Company's depositary convertible exchangeable preferred shares and stock purchase warrants into common stock.
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(7) Dividends
There were no cash dividends on common stock declared or paid during the periods presented in the consolidated condensed financial statements presented herein.
As previously disclosed, in conjunction with the covenants of the Company's current and prior Credit Agreements, the Company was required to suspend the payment of quarterly dividends on its $21.25 Preferred Stock ("Preferred Stock") until certain financial criteria were met. Therefore, the dividends on the Preferred Stock have not been declared since 1995 (although they have been fully accrued due to the "cumulative" feature of the Preferred Stock). The aggregate amount of dividends in arrears is approximately $11,686,000 at March 31, 2001 which represents approximately $116.86 per share of Preferred Stock or approximately $11.69 per Depositary Share and is included in "Other Long-term Liabilities" in the accompanying Consolidated Condensed Balance Sheets. Under the terms of the Preferred Stock, the holders of the Depositary Shares were entitled to elect two additional Directors since dividends had been deferred for more than six quarters and they did so at each of the last three Annual Meetings of Stockholders.
Although it is possible that these bank restrictions may not apply heretofore, the Board of Directors does not believe that it is, or will be, proper or prudent to pay or commit to pay dividends on the Preferred Stock or the Common Stock for the foreseeable future, and it is not obligated to do so under the terms of the Preferred Stock.
Quarterly In-kind dividends (based on an annual rate of 10%) were paid on March 15, 2000 on the Series B Preferred Stock to the stockholders of record on March 1, 2000. The dividends were paid in the form of approximately 5,004 additional shares of Series B Preferred Stock valued at $200.00 per share for a total of $1,000,918. In addition, accrued in-kind dividends were paid on the Series B Preferred Stock for the 14-day period from March 16, 2000 through March 29, 2000, the date on which the holders of the Series B Preferred Stock exchanged 100% of their shares of Series B Preferred Stock for shares of the Company's Common Stock (see Note 3). The dividends were paid in the form of approximately 798 additional shares of Series B Preferred Stock valued at $200.00 per share for a total of $159,621.
(8) Discontinued Operations
Effective June 30, 1999, management adopted a plan to withdraw completely from the real estate development business and to wind down the operations of Perini Land and Development Company ("PL&D"), the Company's real estate development subsidiary. Therefore, both historical and current real estate results have been presented as a discontinued operation in accordance with generally accepted accounting principles.
At March 31, 2001 and December 31, 2000, the net current assets of discontinued real estate development operations consisted primarily of real estate properties for sale. The revenues related to discontinued real estate operations are summarized below (in thousands):
Three Months Ended
March 31,
-----------------------------
2001 2000
Revenues $350 $949
============ ============
PERINI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(9) Business Segments
The following tables set forth certain updated business segment information relating to the Company's operations for the three month periods ended March 31, 2001 and 2000 (in thousands):
Three months ended March 31, 2001
- ------------------------------------
Reportable Segments
--------------------------------------------
Consolidated
Building Civil Totals Corporate Totals
------------ ------------ ------------- ------------ ----------------
Revenues $ 284,021 $ 68,157 $ 352,178 $ - $ 352,178
Income from Operations $ 8,497 $ 385 $ 8,882 $ (1,179) * $ 7,703
Assets $ 167,143 $ 148,491 $ 315,634 $ 46,776 ** $ 362,410
Three months ended March 31, 2000
- ------------------------------------
Reportable Segments
--------------------------------------------
Consolidated
Building Civil Totals Corporate Totals
------------ ------------ ------------- ------------ ----------------
Revenues $ 140,344 $ 57,558 $ 197,902 $ - $ 197,902
Income from Operations $ 5,240 $ 1,824 $ 7,064 $ (1,189) * $ 5,875
Assets $ 95,097 $ 104,901 $ 199,998 $ 60,783 ** $ 260,781
* In all periods,consists of corporate general and administrative expenses.
** In all periods, corporate assets consist principally of cash, cash equivalents, marketable securities and other investments available for general corporate purposes plus the net assets of discontinued operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
Results of Operations
Comparison of the First Quarter of 2001 with the First Quarter of 2000
Overall revenue from construction operations increased by $154.3 million (or 78.0%), from $197.9 million in 2000 to $352.2 million in 2001. This increase resulted from an increase in building construction revenues of $143.7 million (or 102.4%), from $140.3 million in 2000 to $284.0 million in 2001, due primarily to an increase in the volume of work completed at the Mohegan Sun Expansion project in the eastern United States and the start-up of three large hotel/casino projects in the southwestern United States. Civil construction revenues increased by $10.6 million (or 18.4%), from $57.6 million in 2000 to $68.2 million in 2001, due primarily to the start-up of several infrastructure projects in the metropolitan New York area.
Overall pretax income increased by $2.6 million (or 59.2%), from $4.5 million in 2000 to $7.1 million in 2001. This increase primarily reflects the increased revenues discussed above as well as lower construction-related general and administrative expenses and lower interest expense due to the reduction in debt achieved at the end of the first quarter of 2000 as a result of the new equity transaction.
Income from construction operations increased by $1.8 million (or 25.4%), from $7.1 million in 2000 to $8.9 million in 2001. Building construction operating income increased by a net of $3.3 million, from $5.2 million in 2000 to $8.5 million in 2001, due to the increase in revenues discussed above which were partially reduced by a decrease in average gross margin from 6.10% in 2000 to 4.24% in 2001 because 2000 included the favorable close out of certain projects. Despite the increase in civil construction revenues discussed above as well as a decrease in civil construction-related general and administrative expenses, civil construction operating income decreased by $1.5 million, from $1.9 million in 2000 to $0.4 million in 2001, due primarily to downward profit revisions experienced on several joint venture projects sponsored by others.
Interest expense decreased by $1.1 million, from $1.7 million in 2000 to $0.6 million in 2001, due primarily to the reduction in debt achieved at the end of the first quarter of 2000 as a result of the new equity transaction described in Note 3 of Notes to Consolidated Condensed Financial Statements.
The credit (provision) for income taxes reflects a lower than normal tax rate for both 2001 and 2000 due to the realization of a portion of the federal tax benefit not recognized in prior years due to certain accounting limitations. In addition, the credit for income taxes in 2000 reflects the reversal of foreign taxes accrued in prior years that were no longer required.
Financial Condition
As more fully described in Note 3 of Notes to the Consolidated Condensed Financial Statements, effective March 29, 2000, the Company completed a recapitalization which included the sale of 9,411,765 shares of Common Stock for an aggregate of $40 million in cash (before fees and expenses) and the exchange of 100% of its Redeemable Series B Cumulative Convertible Preferred Stock for an aggregate of 7,490,417 shares of Common Stock. The effect of the recapitalization on the Company’s stockholders’ equity was to increase stockholders’ equity by approximately $76.2 million, from a negative net worth of approximately $36.6 million to a positive net worth of approximately $39.6 million upon completion of the transaction. The recapitalization and the concurrent negotiation of an Amended and Restated Credit Agreement (the “New Credit Agreement”) described below served to significantly enhance the Company’s working capital and liquidity required to support its ongoing construction operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Continued)
Working capital increased $3.9 million, from $80.5 million at the end of 2000 to $84.4 million at March 31, 2001. The current ratio increased from 1.27:1.00 to 1.32:1.00 during the same period.
During the first three months of 2001, the Company used $26.0 million in cash to fund $19.4 million used by operating activities, primarily for changes in working capital; $4.5 million for investing activities, primarily to fund construction joint ventures; and to reduce debt by a net amount of $2.1 million.
Long-term debt at March 31, 2001 was $14.7 million, a decrease of $2.6 million from December 31, 2000. The long-term debt to equity ratio at March 31, 2001 was .22:1.00 compared to .28:1.00 at December 31, 2000.
Effective March 29, 2000, the Company entered into a New Credit Agreement with its lenders. The New Credit Agreement provides for a $35 million Term Loan and a $21 Revolving Credit Facility. The New Credit Agreement requires, among other things, that the Company repay the Term Loan quarterly through 2002 and the Revolving Credit Facility by January 21, 2003. Under the terms of the New Credit Agreement, the Company had $21 million available to borrow under the maximum commitment of $38.3 million at March 31, 2001. In addition, on September 6, 2000, the Company completed a refinancing of its corporate headquarters building for $7.5 million at an annual interest rate of approximately 9%. The loan is payable in monthly installments over a ten year period with a balloon payment of $5.3 million due in 2010. Management believes that cash generated from operations and existing credit lines should be adequate to meet the Company’s funding requirements for at least the next twelve months.
Outlook
- Continuing Construction Operations - The overall construction backlog at March 31, 2001 was $1.67 billion, a 7% decrease from the $1.79 billion record year-end backlog at December 31, 2000. With a strong backlog in hand, the Company plans to continue its strategy of improving the profitability of its construction operations by emphasizing gross margin and bottom line improvement. The Company is also continuing the process of developing a strategy to profitably grow the business internally or through acquisition. The Company’s reputation as a world class builder and the strong outlook in the gaming and hospitality building markets and civil infrastructure repair markets support this strategy. These markets remain strong and have not shown any noticeable deterioration due to the softness in the general economic environment.
- Discontinued Real Estate Operations – Significant progress has been made in the Company’s plan to wind down its discontinued real estate operations. Approximately 94% of the non-cash provision for the estimated loss on disposal recorded in 1999 has been realized. Certain of the few remaining real estate properties now being offered for sale are currently under or are pending purchase and sale agreements. It is the opinion of management that the remaining provision for the estimated loss on disposal of the Company’s real estate business segment is adequate.
Forward-looking Statements
The statements contained in this Management’s Discussion and Analysis of the Consolidated Condensed Financial Statements, including “Outlook”, and other sections of this Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding the Company’s
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Continued)
expectations, hopes, beliefs, intentions or strategies regarding the future. Forward-looking statements involve a number of risks, uncertainties or other factors that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules; the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings; changes in federal and state appropriations for infrastructure projects; possible changes or developments in worldwide or domestic social, economic, business, industry, market and regulatory conditions or circumstances; and actions taken or omitted to be taken by third parties including the Company’s customers, suppliers, business partners, and competitors and legislative, regulatory, judicial and other governmental authorities and officials.
QUANTITATIVE AND QUALITATIVE DISLOSURES ABOUT MARKET RISK
There has been no material change in the Company’s exposure to market risk since December 31, 2000.
Part II. - Other Information
Item 1. - Legal Proceedings
On July 30, 1993, the U.S. District Court for the District of Columbia, in a preliminary opinion, upheld
termination 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. In July 1997, the remaining issues were ruled on by a successor judge, who
awarded approximately $4.3 million to the joint venture, thereby reducing the net amount payable to
approximately $12.2 million. The joint venture appealed the decision and filed a motion for a new
trial.
On February 16, 1999, the U.S. Court of Appeals for the District of Columbia vacated the April 1995
and July 1997 Orders and remanded the case back to the successor judge with instructions for the
successor judge to consider certain post-trial motions to the same extent an original judge would
have, and to make findings and conclusions regarding the unresolved issues, giving appropriate
consideration to whether or not witnesses must be recalled. During 1999, a new successor judge
was appointed.
On February 28, 2001, the new successor judge informed the parties that in the absence of a new
trial, he could not certify adequate familiarity with the record to complete the remaining proceedings;
therefore, he ordered that the joint venture's motion for a new trial be granted, with a preliminary
pretrial conference scheduled for April 9, 2001. This decision means that the original July 30, 1993
Decision and Order of the U.S. District Court no longer has any force or effect and that the interim
judgement in favor of WMATA for $16.5 million was set aside.
Item 2. - Changes in Securities and Use of Proceeds
(a) None
(b) None
(c) None
(d) Not applicable
Part II. - Other Information (Continued)
Item 3. - Defaults Upon Senior Securities
(a) None
(b) In accordance with the covenants of the 1995 Amended Revolving Credit Agreement, the First
Amended and Restated Credit Agreement effective January 17, 1997 and the Second Amended
and Restated Credit Agreement effective March 29, 2000, the Company was required to suspend the
payment of quarterly dividends on its $21.25 Convertible Exchangeable Preferred Stock ("Preferred
Stock") until certain financial criteria were met, commencing with the dividend that normally would
have been declared during December 1995 through the dividend that normally would have been
declared during March 2001. As of March 31, 2001, the aggregate amount of dividends in arrears is
approximately $11,686,000, which represents approximately $116.86 per share of Preferred Stock or
approximately $11.69 per Depositary Share. While these dividends have not been declared or paid,
they have been fully accrued in accordance with the "cumulative" feature of the Preferred Stock.
Item 4. - Submission of Matters to a Vote of Security Holders
(a) None
(b) Not applicable
(c) Not applicable
(d) Not applicable
Item 5. - Other Information
On May 3, 2001 the Company was served with a Complaint entitled Frederick Doppelt, Arthur I.
Caplan and Michael Miller v. Perini Corporation, Ronald N. Tutor, Robert Band, Christopher H. Lee,
Marshall M. Criser, Arthur J. Fox, Jr., Michael R. Klein, Richard J. Boushka, Peter Arkley,
Robert A. Kennedy, Jane E. Newman, Douglas J. McCarron, Nancy Hawthorne, Raymond R.
Oneglia, Albert A. Dorman and John J. McHale, Supreme Court of the State of New York, County of
New York, Civil Action No. 602156/01. Each plaintiff is a holder of the Company's Preferred Stock,
and two of the plaintiffs, Messrs. Doppelt and Caplan, are current Directors of the Company and
nominees for Preferred Director. Plaintiffs purport to bring the action individually and on behalf of the
entire class of holders of the Preferred Stock.
Plaintiffs have asserted claims for breach of contract, breach of fiduciary duty, fraud and negligent
misrepresentation. Plaintiffs principally allege that the Company and its Directors improperly
authorized the exchange of Series B Preferred Stock for Common Stock without first paying all
accrued dividends on the Preferred Stock. More specifically, plaintiffs allege that the Company and
its Directors violated the terms of the Preferred Stock when, in March 2000, the Company authorized
the exchange of Series B Preferred Stock for Common Stock. Plaintiffs further allege that the
Company and its Directors issued a false and misleading prospectus in 1987 relating to the issuance
of the Preferred Stock. Plaintiffs seek payment of accrued dividends in the amount of approximately
$11.7 million and unspecified punitive and exemplary damages.
The Company believes that the claims are without merit and intends to vigorously defend the actions
of the Company and its Directors.
Part II. - Other Information (Continued)
Item 6. - Exhibits and Reports on Form 8-K
(a) The following designated exhibits are, as indicated below, either filed herewith or have heretofore
been filed with Securities and Exchange Commission under the Securities Act of 1933 or the
the Securities Act of 1934 and are referred to and incorporated herein by reference to such filings:
Exhibit 3. Articles of Incorporation and By-laws
Incorporated herein by reference:
3.1 Restated Articles of Organization - As amended through March 29, 2000 -
Exhibit 3.1 to Form 8-K filed on April 12, 2000.
3.2 By-laws - As amended and restated as of March 29, 2000 - Exhibit 3.2 to
Form 8-K filed on April 12, 2000.
Exhibit 4. Instruments Defining the Rights of Security Holders, Including Indentures
Incorporated herein by reference:
4.1 Certificate of Vote of Directors Establishing a Series of a Class of Stock
determining the relative rights and preferences of the $21.25 Convertible
Exchangeable Preferred Stock - Exhibit 4(a) to Amendment No. 1 to Form S-
2 Registration Statement filed June 19, 1987; SEC Registration No. 33-
14434.
4.2 Form of Deposit Agreement, including form of Depositary Receipt - Exhibit
4(b) to Amendment No. 1 to Form S-2 Registration Statement filed June 19,
1987; SEC Registration No. 33-14434.
4.3 Form of Indenture with respect to the 8 1/2% Convertible Subordinated
Debentures Due June 15, 2012, including form of Debenture - Exhibit 4(c) to
Amendment No. 1 to Form S-2 Registration Statement filed June 19, 1987;
SEC Registration No. 33-14434.
4.4 Shareholder Rights Agreement dated as of September 23, 1988, as
amended and restated as of May 17, 1990, as amended and restated as of
January 17, 1997, between Perini Corporation and State Street Bank and
Trust Company, as Rights Agent - Exhibit 4.4 to Amendment No. 1 to
Registration Statement on Form 8-A/A filed on January 29, 1997, and as
further amended as of March 29, 2000 - Exhibit 4.3 to Form 8-K filed on April
12, 2000.
4.5 Stock Purchase and Sale Agreement dated as of July 24, 1996 by and
among the Company, PB Capital and RCBA, as amended - Exhibit 4.5 to the
Company's Quarterly Report on Form 10-Q/A for the fiscal quarter ended
September 30, 1996 filed on December 11, 1996 and as amended by the
Termination/Amendment Agreement on March 29, 2000 - Exhibit 4.4 to Form
8-K filed on April 12, 2000.
Part II. - Other Information (Continued)
4.8 Certificate of Vote of Directors Establishing a Series of Preferred Stock
determining the relative rights and preferences of the Series B Cumulative
Convertible Preferred Stock, dated January 16, 1997 - Exhibit 4.8 to Form 8-K
filed on February 14, 1997.
4.13 Exchange Agreement by and between Perini Corporation and The Union
Labor Life Insurance Company, acting on behalf of its Separate Account P,
dated as of February 7, 2000 - Exhibit 10.1 to Form 8-K filed on April 12,
2000.
4.14 Exchange Agreement by and between Perini Corporation and PB Capital
Partners, L.P., dated as of February 14, 2000 - Exhibit 10.2 to Form 8-K filed
on April 12, 2000.
4.15 Exchange Agreement by and between Perini Corporation and The Common
Fund for Non-Profit Organizations, dated as of February 14, 2000 - Exhibit
10.3 to Form 8-K filed on April 12, 2000.
4.16 Registration Rights Agreement by and among Perini Corporation, Tutor-
Saliba Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union
Fire Insurance Company of Pittsburgh, Pa., BLUM Capital Partners, L.P., PB
Capital Partners, L.P. The Common Fund for Non-Profit Organizations, and
The Union Labor Life Insurance Company, acting on behalf of its Separate
Account P, dated as of March 29, 2000 - Exhibit 4.1 to Form 8-K filed on
April 12, 2000.
4.17 Shareholders' Agreement by and among Perini Corporation, Tutor-Saliba
Corporation, Ronald N. Tutor, O&G Industries, Inc. and National Union Fire
Insurance Company of Pittsburgh, Pa., BLUM Capital Partners, L.P., PB
Capital Partners, L.P., The Common Fund for Non-Profit Organizations, and
The Union Labor Life Insurance Company, acting on behalf of its Separate
Account P, dated as of March 29, 2000 - Exhibit 4.2 to Form 8-K filed on
April 12, 2000.
Exhibit 10. Material Contracts
Incorporated herein by reference:
10.1 1982 Stock Option and Long Term Performance Incentive Plan - Exhibit A to
Registrant's Proxy Statement for Annual Meeting of Stockholders dated April
15, 1992.
10.2 Perini Corporation Amended and Restated General Incentive Compensation
Plan - Exhibit 10.2 to 1997 Form 10-K filed on March 30, 1998.
10.3 Perini Corporation Amended and Restated Construction Business Unit
Incentive Compensation Plan - Exhibit 10.3 to 1997 Form 10-K filed on March
30, 1998.
10.16 Management Agreement dated as of January 17, 1997 by and among the
Company, Ronald N. Tutor and Tutor-Saliba Corporation - Exhibit 10.16 to
Form 8-K filed on February 14, 1997.
Part II. - Other Information (Continued)
10.30 Second Amended and Restated Credit Agreement dated as of March 29,
2000 among Perini Corporation, the Banks listed herein and Morgan
Guaranty Trust Company of New York, as Agent and Fleet National Bank, as
Co-Agent - Exhibit 10.4 to Form 8-K filed on April 12, 2000.
10.31 Amendment No. 2 dated as of December 31, 1999 to the Management
Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba
Corporation - Exhibit 10.31 to Form 10-Q filed on May 9, 2000.
10.32 Special Equity Incentive Plan - Exhibit A to Registrant's Proxy Statement for
Annual Meeting of Stockholders dated April 19, 2000.
10.33 Securities Purchase Agreement by and among Perini Corporation and Tutor-
Saliba Corporation, O&G Industries, Inc. and National Union Fire Insurance
Company of Pittsburgh, PA, dated as of February 5, 2000 - Exhibit 10.1 to Form
8-K filed on February 9, 2000.
10.34 Promissory Note dated as of September 6, 2000 by and among Mt. Wayte
Realty, LLC (a wholly-owned subsidiary of Perini Corporation) and The
Manufacturers Life Insurance Company (U.S.A.) - Exhibit 10.34 to Form 10-Q
filed on November 6, 2000.
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Perini Corporation
Registrant
Date: May 11, 2001 /s/ Robert Band
Robert Band, President and Chief Operating Officer
Date: May 11, 2001 /s/ Michael E. Ciskey
Michael E. Ciskey, Vice President and Controller
