approximates fair value. As a result, the Company has no cumulative gross realized or unrealized holding gains or losses from these securities and all income is recorded as interest income.
Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123(R), “Share-Based Payment” using the modified prospective application method and, accordingly, prior period amounts have not been restated. In November 2005, the Financial Accounting Standards Board issued its Staff Position No. 123(R)-3, “Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards” (“FSP 123(R)-3”). The Company elected to adopt the alternative transition method provided in FSP 123(R)-3 for calculating the tax effects of stock-based compensation pursuant to SFAS No. 123(R). The alternative transition method includes a simplified method to establish the beginning balance of the additional paid-in capital pool (“APIC Pool”) related to the tax effects of employee stock-based compensation, and to determine the subsequent impact on the APIC Pool and the Consolidated Statements of Cash Flows of the tax effects of employee stock-based compensation awards that are outstanding upon adoption of SFAS No. 123(R). (See Note 9.)
The Company typically utilizes third party insurance coverage subject to varying deductible or self insurance levels with aggregate caps on losses retained. The Company assumes the risk for the amount of the self-insured deductible portion of the losses and liabilities primarily associated with workers' compensation and general liability coverage. In addition, on certain projects, the Company assumes the risk for the amount of the self-insured deductible portion of losses that arise from any subcontractor defaults. Losses are accrued based upon the Company's estimates of the aggregate liability for claims incurred using historical experience and certain actuarial assumptions followed in the insurance industry. The estimate of insurance liability within the self-insured deductible limits includes an estimate of incurred but not reported claims based on data compiled from historical experience.
The carrying amount of cash and cash equivalents approximates fair value due to the short-term nature of these items. The carrying value of receivables, payables and other amounts arising out of normal contract activities, including retentions, which may be settled beyond one year, is estimated to approximate fair value. See Note 4 for disclosure of the fair value of long-term debt.
In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Bulletin No. 51.” SFAS No. 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for the Company beginning January 1, 2009 and the Company will apply the provisions of SFAS No. 160 prospectively as of that date.
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” SFAS No. 141(R) establishes principles and requirements for how an acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS No. 141(R) also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is effective for the Company beginning January 1,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[1] Summary of Significant Accounting Policies (continued)
(o) New Accounting Pronouncements (continued)
2009 and the Company will apply the provisions of SFAS No. 141(R) prospectively as of that date.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – including an amendment of SFAS No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for the Company beginning January 1, 2008 for financial assets and beginning January 1, 2009 for non-financial assets, and the Company will apply the provisions of SFAS No. 159 prospectively as of that date. The Company is in the process of evaluating the impact, if any, the adoption of SFAS No. 159 may have on its consolidated financial statements when it becomes effective in 2008.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which clarifies the definition of fair value, describes methods used to appropriately measure fair value, and expands fair value disclosure requirements. SFAS No. 157 applies under other accounting pronouncements that currently require or permit fair value measurements. SFAS No. 157 is effective for the Company beginning January 1, 2008 for financial assets and beginning in January 1, 2009 for non-financial assets, and the Company will apply the provisions of SFAS No. 157 prospectively as of those dates. The Company is in the process of determining the impact, if any, the adoption of SFAS No. 157 may have on its consolidated financial statements and related disclosures when it become effective in 2008.
[2] Contingencies and Commitments
(a) Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter
During 1995, a joint venture, Tutor-Saliba-Perini, or the Joint Venture, in which Perini Corporation, or Perini, is the 40% minority partner and Tutor-Saliba Corporation, or Tutor-Saliba, of Sylmar, California is the 60% managing partner, filed a complaint in the Superior Court of the State of California for the County of Los Angeles against the Los Angeles County Metropolitan Transportation Authority, or LAMTA, seeking to recover costs for extra work required by LAMTA in connection with the construction of certain tunnel and station projects. In 1999, LAMTA countered with civil claims under the California False Claims Act (“CFCA”) against the Joint Venture, Tutor-Saliba and Perini jointly and severally (together, TSP). Ronald N. Tutor, the Chairman and Chief Executive Officer of Perini since 2000, is also the chief executive officer and the primary beneficial owner of Tutor-Saliba.
Claims concerning the construction of LAMTA projects were tried in 2001. During the trial, based on the Joint Venture's alleged failure to comply with the court's discovery orders, the judge issued terminating sanctions that resulted in a substantial judgment against TSP.
TSP appealed and, in January, 2005, the State of California Court of Appeal reversed the trial court's entire judgment and found that the trial court judge had abused his discretion and had violated TSP's due process rights, and had imposed impermissibly overbroad terminating sanctions. The Court of Appeal also directed the trial court to dismiss LAMTA's claims that TSP had violated the Unfair Competition Law ("UCL") because LAMTA lacked standing to bring such a claim, and remanded the Joint Venture's claims against LAMTA for extra work required by LAMTA and LAMTA's counterclaim under the CFCA against TSP to the trial court for further proceedings, including a new trial. LAMTA petitioned the Court of Appeal for rehearing and the California Supreme Court for review. Both petitions were denied and the case was remanded and reassigned for a new trial.
In 2006, upon remand, the trial court allowed LAMTA to amend its cross-complaint to add the District Attorney as a party in order to have a plaintiff with standing to assert a UCL claim, and allowed a UCL claim to be added. The court also ordered that individual issues of the case be tried separately.
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[2] Contingencies and Commitments (continued)
(a) Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter (continued)
In December, 2006, in the trial of the first issue, which arose out of a 1994 change order involving a Disadvantaged Business Enterprise subcontractor pass-through claim, the jury found that the Joint Venture had submitted two false claims for payment and had breached its contract with LAMTA and awarded LAMTA $111,651 in direct damages. The court has awarded penalties of $10,000 for each of the two claims and will treble the damages awarded by the Jury. A final judgment with respect to these claims will not be entered until the entire case has been resolved and is subject to appeal. In addition, the court will determine whether there were any violations of the UCL, but has deferred its decision on those claims until the case is completed. Each such violation may bear a penalty of up to $2,500.
In February 2007, the court granted a Joint Venture motion and precluded LAMTA in future proceedings from presenting its claims that the Joint Venture breached its contract and violated the CFCA by allegedly “frontloading” the so-called “B Series” contracts. The court ordered further briefing on LAMTA’s UCL claim on this issue.
On December 26, 2007, the Court dismissed both TSP’s and LAMTA’s affirmative work restriction claims. LAMTA has filed a motion asking the Court, in effect, to reconsider its decision to dismiss LAMTA’s claim and to allow the matter to proceed to trial. TSP will oppose the motion.
A schedule for addressing the remaining claims has not yet been established. The court has indicated that it would like the parties to resolve the entire case through mediation. To date, efforts by the parties to settle the case have not been successful.
The ultimate financial impact of the lawsuit is not yet determinable. Therefore, no provision for loss, if any, has been recorded in the financial statements.
(b) Perini/Kiewit/Cashman Joint Venture-Central Artery/Tunnel Project Matter
Perini/Kiewit/Cashman Joint Venture, or PKC, a joint venture in which Perini holds a 56% interest and is the managing partner, is currently pursuing a series of claims for additional contract time and/or compensation against the Massachusetts Highway Department, or MHD, for work performed by PKC on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. During construction, MHD ordered PKC to perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs, in excess of $100 million. In addition, PKC encountered a number of unforeseen conditions during construction that greatly increased PKC's cost of performance. MHD has asserted counterclaims for liquidated damages.
Certain of PKC's claims have been presented to a Disputes Review Board, or DRB, which consists of three construction experts chosen by the parties. To date, the DRB has issued five binding awards on PKC’s claims. It has ruled that PKC is entitled to additional compensation for the first portion of its contract time delay claim in the amount of $17.4 million. The Massachusetts Superior Court approved PKC's request to confirm the DRB's $17.4 million award. The Massachusetts Appeals Court affirmed that decision.
The DRB has also ruled on a binding basis that PKC is entitled to four additional compensation awards, less credits, totaling $39.8 million for impacts and inefficiencies caused by MHD to certain of PKC’s work. The first two such awards, totaling $17.1 million, have been confirmed by the Superior Court and were not appealed. MHD has filed actions in the Superior Court seeking to vacate the other two awards, and PKC has answered, seeking to confirm them. These actions have not yet been heard. PKC has taken the position that it is entitled to interest on each of the
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[2] Contingencies and Commitments (continued)
(b) Perini/Kiewit/Cashman Joint Venture-Central Artery/Tunnel Project Matter (continued)
five binding DRB awards as provided in the awards. It appears that MHD will object to payment of any interest.
It is PKC’s position that the remaining claims to be decided by the DRB on a binding basis have an anticipated value of approximately $104 million (exclusive of interest). MHD disputes that the remaining claims before the DRB may be decided on a binding basis. Hearings before the DRB are scheduled to occur throughout 2008 and into early 2009.
To date, the DRB has issued two interim decisions. The first, issued on December 4, 2007, held that Perini’s claim for delay damages (the “Time II” claim) is not barred or limited by the 10% markups for overhead and profit on change orders. The second decision, issued on January 11, 2008, held that the date of the project’s substantial completion, for purposes of calculating any liquidated damages, is August 23, 2003.
Management has made an estimate of the total anticipated cost recovery on this project and it is included in revenue recorded to date. To the extent new facts become known or the final cost recovery included in the claim settlement varies from this estimate, the impact of the change will be reflected in the financial statements at that time.
(c) Investigation by U.S. Attorney for Eastern District of New York
In 2001, the Company received a grand jury subpoena for documents in connection with an investigation by the U.S. Attorney’s Office for the Eastern District of New York. The investigation concerns contracting with disadvantaged, minority, and women-owned businesses in the New York City area construction industry. The Company has cooperated with the U. S. Attorney’s Office in the investigation and produced documents pursuant to the subpoena in 2001 and 2002. In August 2006 and May 2007, the Company received two additional grand jury subpoenas for documents in connection with the same investigation. The Company subsequently produced documents pursuant to those subpoenas, and continues to cooperate in the investigation. It is the Company’s understanding that lawyers for two former Perini Civil Division employees also are in separate discussions with the U.S. Attorney’s Office related to the investigation. On January 8, 2007, the Company was informed by the U.S. Attorney's Office that the Company meets the definition of “subject” in the United States Attorney's Manual. That definition is "a person whose conduct is within the scope of the grand jury's investigation.” At the same time, the U.S. Attorney's Office also wrote to the Company that "Perini has been cooperatively engaged in discussions with this office and that we are considering a civil settlement with regard to Perini.” The Company has been in active discussions with the U.S Attorney’s Office concerning a resolution of this matter. The Company recorded a charge in 2007 with respect to this matter which materially affected the operating results of the civil segment. Since this matter has not been settled, the potential for a further charge (or credit) exists; however, management believes that the amount of such further charge or credit, if any, will not be material to the operating results of the Company or to the civil segment.
(d) Long Island Expressway/Cross Island Parkway Matter
The Company reconstructed the Long Island Expressway/Cross Island Parkway Interchange for the New York State Department of Transportation (the “NYSDOT”). The $130 million project (the “Project”) included the complete reconstruction and/or new construction of fourteen bridges and numerous retaining and barrier walls; reconfiguration of the existing interchange with the addition of three flyover bridges; widening and resurfacing of three miles of highway; and a substantial amount of related work. The Company substantially completed the Project in January 2004, and its work on the Project was accepted by the NYSDOT as finally complete in February 2006.
Because of numerous design errors, undisclosed utility conflicts, lack of coordination with local agencies and other interferences for which the Company believes that the NYSDOT is responsible, the Company suffered impacts involving every structure. As a result, the Company incurred significant additional costs in completing its work and
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[2] Contingencies and Commitments (continued)
(d) Long Island Expressway/Cross Island Parkway Matter (continued)
suffered a significantly extended Project schedule.
The initial Project schedule contemplated substantial completion in 28 months from the Project commencement in September, 2000. Ultimately, the time for substantial completion was extended by 460 days. While the Project was under construction, the NYSDOT made $8.5 million of payments to the Company for its extended overhead costs.
The Company sought approximately $33 million of additional relief from the NYSDOT for the delay and extra work it experienced. The NYSDOT, however, declined to grant the Company any further relief. Moreover, it is the Company’s understanding that the NYSDOT will seek an adjustment of an unspecified amount of the $8.5 million it previously paid to the Company for its extended overhead costs.
Since the NYSDOT has accepted the Company’s work as complete, it must take certain steps to close out the Project contract. To date, the NYSDOT has not completed that process.
After the closeout of the Project contract by the NYSDOT, which is expected soon, the Company will file a formal claim with the NYSDOT for the delay and extra work it experienced, as a condition precedent to filing an action in the New York Court of Claims.
Management has made an estimate of the total anticipated cost recovery on the Project and it is included in revenue recorded to date. To the extent new facts become known or the final cost recovery included in the claim settlement varies from this estimate, the impact of the change will be reflected in the financial statements at that time.
(e) The Cosmopolitan Resort and Casino Matter
The Company is engaged in the construction of The Cosmopolitan Resort and Casino, a mixed-use casino/hotel development project in Las Vegas, Nevada, (the “Project”) for Cosmo Senior Borrower LLC, (“Cosmo”). On January 16, 2008, Deutsche Bank AG delivered a notice of loan default to Cosmo, et al. At this time, construction work continues on the Project and all current amounts due the Company have been paid pursuant to the terms of the construction contract. The Company has an interim commitment from Deutsche Bank under which Deutsche Bank will continue to pay the Company for performing construction work on the Project on a monthly basis while the issues of the loan default are being resolved. The Project is scheduled for completion in December 2009. As of December 31, 2007, approximately $1.4 billion of work remained to be performed by the Company under the construction contract.
The ultimate financial impact of this matter, if any, is not yet determinable. Therefore, no provision for loss or contract profit reduction, if any, has been recorded in the financial statements.
[3] Acquisitions
(a) | Rudolph and Sletten, Inc. |
In October 2005, the Company completed the acquisition of 100% of the outstanding capital stock of Rudolph and Sletten, Inc. (“Rudolph and Sletten”), a privately held construction and construction management company, for approximately $55.5 million in cash, including $0.2 million of other direct acquisition costs. Based in Redwood City, California, and covering the major California construction markets of Los Angeles, Silicon Valley, San Francisco and Sacramento, Rudolph and Sletten is an established building contractor and construction management company specializing in corporate campuses, healthcare, biotech, pharmaceutical and high-tech projects. The acquisition is intended to expand the Company’s building construction market presence on the west coast of the United States. In addition, the Company expects to realize significant synergy from the acquisition by deploying
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[3] Acquisitions (continued)
(a) | Rudolph and Sletten, Inc. (continued) |
Rudolph and Sletten’s resources in regional gaming and hospitality markets in California and other locations. The acquisition was effective as of October 3, 2005 and, accordingly, Rudolph and Sletten’s financial results are included in the Company’s consolidated results of operations and financial position beginning October 3, 2005.
The transaction was accounted for using the purchase method of accounting as required by SFAS No. 141, “Business Combinations”, including the allocation of the purchase price to the tangible and intangible assets of Rudolph & Sletten which has been finalized. The following table summarizes the fair value of the assets acquired and liabilities assumed as of October 3, 2005 (in thousands):
Current assets | $ 214,823 |
Property and equipment, net | 17,625 |
Other long-term assets | 1,758 |
Goodwill | 13,590 |
Intangible assets | 7,410 |
Total assets acquired | $ 255,206 |
Current liabilities | (194,388) |
Other long-term liabilities | (2,803) |
Long-term deferred tax liabilities | (2,555) |
Total Acquisition Costs | $ 55,460 |
The $13.6 million of “Goodwill” referred to above has been allocated to the building construction segment and is not deductible for tax purposes. Goodwill and intangible assets with an indefinite life recorded in the acquisition were tested in 2005, 2006 and 2007 and will be tested periodically in the future for impairment as required by SFAS No. 142, “Goodwill and Other Intangible Assets.”
The following table identifies the intangible assets acquired and their respective amortization period. The amounts assigned to intangible assets represent the Company’s estimate of the fair value of the intangible assets acquired as of October 3, 2005 and were based on an independent appraisal.
| | | Amortization |
| Amount | | Period |
| (in thousands) | | |
| | | |
Construction contract backlog | $ 1,840 | | 3 years |
Customer relationships | 2,300 | | 10 years |
Non-compete agreements | 2,400 | | 5 years |
Rudolph and Sletten trademark | 850 | | n.a. |
Construction permits and licenses | 20 | | 1 year |
Total intangible assets acquired | $ 7,410 | | |
(b) Unaudited Pro Forma Results of Operations
The acquisition of Rudolph and Sletten was effective as of October 3, 2005 and, accordingly, the Company’s 2005 results include Rudolph and Sletten for only the fourth quarter of 2005. The following pro forma financial information presents the results of the Company, assuming Rudolph and Sletten was acquired on January 1, 2005 (in thousands):
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[3] Acquisitions (continued)
(b) Unaudited Pro Forma Results of Operations (continued)
| Year Ended | |
| Dec. 31, 2005 | |
| Pro forma (unaudited) | |
| | |
Revenues | $ 2,197,324 | |
Gross Profit | $ 96,369 | |
Net Income | $ 6,574 | |
| | |
Basic earnings per common share | $ 0.31 | |
Diluted earnings per common share | $ 0.30 | |
The pro forma results have been prepared for comparative purposes only and include certain adjustments such as (i) increased interest expense on acquisition debt; (ii) adjustments to depreciation expense resulting from the adjustment of fixed asset bases to fair value at acquisition; (iii) additional amortization expense related to intangible assets arising from the acquisition; and (iv) to reflect a statutory income tax rate on the pretax income of Rudolph and Sletten as well as on the applicable pro forma income adjustments made. In addition, the pro forma results include adjustments to reflect (i) the elimination of a non-recurring gain on sale of certain real estate properties by Rudolph and Sletten in 2005 that were specifically excluded from the acquisition, and (ii) the elimination of compensation and payroll burden expense of certain Rudolph and Sletten executives who resigned in accordance with the terms of the stock purchase agreement. The pro forma results are not necessarily indicative either of the results of the operations that actually would have resulted had the acquisition been in effect on January 1, 2005, or of future results.
[4] Financial Commitments
Long-term Debt
Long-term debt of the Company at December 31, 2007 and 2006 consisted of the following (in thousands):
| 2007 | | 2006 |
| | | |
Borrowings under term loan at an average rate of 7.2% in 2006 | $ - | | $ 22,500 |
Mortgage on corporate headquarters building, at a rate of 8.96% | | | |
payable in equal monthly installments over a ten year period, with a balloon | | | |
payment of approximately $5.3 million in 2010 | 6,123 | | 6,370 |
Mortgage on office building at a rate of 5.68% payable in equal monthly installments | | | |
over a five year period, with a balloon payment of $1.4 million in 2008 | 1,456 | | 1,513 |
Mortgage on office building at a rate of 7.16% payable in equal monthly installments | | | |
over a five year period, with a balloon payment of $1.5 million in 2011 | 1,711 | | 1,754 |
Other mortgages | 1,407 | | 1,806 |
Other indebtedness, primarily equipment financing at rates ranging from 0% to 7.0% | 10,035 | | 14,799 |
Total | $ 20,732 | | $ 48,742 |
Less – current maturities | 7,374 | | 14,607 |
Net long-term debt | $ 13,358 | | $ 34,135 |
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[4] Financial Commitments (continued)
Payments required under these obligations amount to approximately $7,374 in 2008, $3,671 in 2009, $7,843 in 2010 and $1,844 in 2011.
On February 22, 2007, the Company entered into an Amended and Restated Credit Agreement with Bank of America, N.A., as administrative agent, and three participant lenders (the “Amended Agreement”). The Amended Agreement amends and restates in its entirety the Company’s previously existing credit agreement dated as of October 14, 2005, as amended through April 13, 2006 (the “Prior Agreement”).
The Amended Agreement provides for a secured revolving credit facility (the “Revolving Facility”) of up to $125 million, which can be expanded to $175 million in the future with the consent of the lenders. This represents an increased borrowing capacity from the Prior Agreement, which provided for a revolving credit facility of $50 million, plus a term loan in the original amount of $30 million, of which $22.5 million was outstanding at December 31, 2006. The term loan was paid in full on February 22, 2007 in conjunction with the closing of the Amended Agreement. The Company has not borrowed under its available revolving credit facilities during 2007 and 2006 but has utilized them for letters of credit. Accordingly, at December 31, 2007, the Company has $113.5 million available to borrow under the Revolving Facility.
The Company can choose from interest rate alternatives including a prime-based rate, as well as Eurodollar rate-based options. While the Amended Agreement also provides for an increase in the aggregate amount of letters of credit that may be issued under the agreement from $15 million to $50 million, any outstanding letters of credit reduce availability under the Revolving Facility on a dollar-for-dollar basis. The termination date of the Revolving Facility was extended from June 30, 2008 to February 22, 2012.
The Amended Agreement requires, among other things, maintaining minimum net worth and fixed charge coverage and asset coverage ratios as well as a maximum leverage ratio. The Amended Agreement also includes operational covenants customary for facilities of this type, including limitations on incurring additional indebtedness and liens, as well as restrictions on types of investments and the purchase and sale of assets outside of the normal course of business. The Company’s obligations under the Amended Agreement are guaranteed by substantially all of the Company’s current and future subsidiaries, and secured by substantially all of the Company’s and its subsidiaries’ assets.
The fair value of the balance outstanding under the Amended Agreement equals the carrying value of zero. For fixed rate debt, fair value is determined based on discounted cash flows for the debt at the Company’s current incremental borrowing rate for similar types of debt. The estimated fair value of fixed rate debt at December 31, 2007 and 2006 is $21.2 million and $26.5 million, respectively, compared to the carrying amount of $20.7 million and $26.2 million, respectively.
Leases
The Company leases certain construction equipment, vehicles and office space under non-cancelable operating leases. Future minimum rent payments under non-cancelable operating leases as of December 31, 2007 are as follows (in thousands):
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[4] Financial Commitments (continued)
| Amount |
| |
2008 | $ 6,425 |
2009 | 4,564 |
2010 | 2,846 |
2011 | 1,371 |
2012 | 989 |
Thereafter | 2,314 |
Subtotal | $ 18,509 |
| |
Less - Sublease rental agreements | (251) |
| |
Total | $ 18,258 |
Rental expense under operating leases of construction equipment, vehicles and office space was $7,492 in 2007, $7,191 in 2006, and $10,531 in 2005.
[5] Income Taxes
The provision for income taxes is comprised of the following (in thousands):
| Federal | | State | | Total |
| | | | | |
2007 | | | | | |
Current | $ 61,198 | | $ 6,751 | | $ 67,949 |
Deferred | (9,593) | | (1,075) | | (10,668) |
| $ 51,605 | | $ 5,676 | | $ 57,281 |
2006 | | | | | |
Current | $ 11,564 | | $ 1,316 | | $ 12,880 |
Deferred | 13,931 | | 1,342 | | 15,273 |
| $ 25,495 | | $ 2,658 | | $ 28,153 |
2005 | | | | | |
Current | $ 1,417 | | $ 3,594 | | $ 5,011 |
Deferred | 781 | | (2,920) | | (2,139) |
| $ 2,198 | | $ 674 | | $ 2,872 |
The table below reconciles the difference between the statutory federal income tax rate and the effective rate provided for income before income taxes in the Consolidated Statements of Income.
67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[5] Income Taxes (continued)
| 2007 | | 2006 | | 2005 |
| | | | | |
Statutory federal income tax rate | 35.0% | | 35.0% | | 35.0% |
State income taxes, net of federal tax benefit | 2.6 | | 2.9 | | (0.2) |
Secondary offering costs | - | | - | | 2.9 |
Officer's compensation | - | | 3.2 | | 4.8 |
Other | (0.5) | | (0.7) | | (1.0) |
Effective tax rate | 37.1% | | 40.4% | | 41.5% |
The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of December 31, 2007 and 2006 (in thousands):
| 2007 | | 2006 |
Deferred Tax Assets | | | |
Construction contract accounting | $ 2,126 | | $ 1,432 |
Timing of expense recognition | 20,665 | | 10,358 |
Other, net | - | | 71 |
Deferred tax assets | $ 22,791 | | $ 11,861 |
| | | |
Deferred Tax Liabilities | | | |
Joint ventures - construction | $ (5,723) | | $ (5,136) |
Fixed assets, due primarily to purchase accounting | (8,332) | | (8,226) |
Intangible assets, due primarily to purchase accounting | (2,636) | | (2,647) |
Other | (236) | | (656) |
Deferred tax liabilities | $ (16,927) | | $ (16,665) |
| | | |
Net deferred tax asset (liability) | $ 5,864 | | $ (4,804) |
The net deferred tax asset (liability) as of December 31, 2007 and 2006 is classified in the Consolidated Balance Sheets based on when the future benefit (expense) is expected to be realized as follows (in thousands):
| 2007 | | 2006 |
| | | |
Short-term deferred tax asset (liability) | $ 7,988 | | $ (852) |
Long-term deferred tax liability | (2,124) | | (3,952) |
| $ 5,864 | | $ (4,804) |
No valuation allowance for deferred tax assets was recorded at December 31, 2007 and 2006 since the Company believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years.
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[5] Income Taxes (continued)
As of December 31, 2007, the Company identified and reviewed potential uncertainties related to taxes upon the adoption of FIN 48 and determined that the exposure to those uncertainties did not have a material impact on the Company’s results of operations or financial condition.
[6] Other Assets, Other Long-term Liabilities and Other Income, Net
Other Assets, Other Long-term Liabilities and Other Income, Net consist of the following (in thousands) for the periods presented:
Other Assets | | | | | |
| 2007 | | 2006 | | |
Land held for sale (Note 13) | $ 407 | | $ 974 | | |
Deferred expenses | 1,348 | | 749 | | |
Other investments | 432 | | 529 | | |
Intangible assets (Note 3) | 4,141 | | 5,408 | | |
| $ 6,328 | | $ 7,660 | | |
| | | | | |
Other Long-term Liabilities | | | | | |
| 2007 | | 2006 | | |
Employee benefit related liabilities | $ 2,189 | | $ 2,186 | | |
Minimum pension liability adjustment (Note 7) | 5,892 | | 13,298 | | |
Subcontractor insurance program (Note 1) | 26,966 | | 12,737 | | |
Deferred and other tax liabilities | 3,244 | | 3,952 | | |
Deferred lease incentive | 1,571 | | 1,524 | | |
| $ 39,862 | | $ 33,697 | | |
| | | | | |
Other Income, Net | | | | | |
| 2007 | | 2006 | | 2005 |
Interest income | $ 13,811 | | $ 4,323 | | $ 1,040 |
Gain (loss) from land sales, net (Note 13) | 566 | | (394) | | 1,566 |
Gain on sale of property used in operations | 1,585 | | - | | - |
Bank fees | (683) | | (712) | | (597) |
Stock registration expense | - | | (222) | | (576) |
Miscellaneous income (expense), net | 82 | | (414) | | (462) |
| $ 15,361 | | $ 2,581 | | $ 971 |
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[7] Employee Benefit Plans
The Company has a defined benefit pension plan that 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. Effective June 1, 2004, all benefit accruals under the Company’s pension plan were frozen; however, the current vested benefits will be preserved. The Company also has an unfunded supplemental retirement plan for certain employees whose benefits under the defined benefit pension plan were reduced because of compensation limitations under federal tax laws. In accordance with SFAS No. 132R, “Employers’ Disclosures About Pensions and Other Post-Retirement Benefits”, pension disclosure as presented below includes aggregated amounts for both of the Company’s plans, except where otherwise indicated.
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an Amendment of FASB Statements No. 87, 88, 106 and 132(R)”, which requires an employer to recognize the over funded or under funded status of defined benefit and other post-retirement plans as an asset or liability in its balance sheet and to recognize changes in that funded status in the year in which the changes occur through an adjustment to accumulated other comprehensive income (loss) in stockholders’ equity. Since the Company had recognized the under funded status of its defined benefit pension plan in its financial statements in previous years and since the Company’s defined benefit pension plan was frozen in 2004 such that the projected benefit obligation equals the accumulated benefit obligation, the adoption of the provisions of SFAS No. 158 did not have a significant impact on the consolidated financial statements.
In addition, SFAS No. 158 requires an employer to measure the funded status of a plan as of the date of its fiscal year-end, with limited exceptions. The Company historically has used the date of its fiscal year-end as its measurement date.
Net pension cost for 2007, 2006 and 2005 follows (in thousands):
| 2007 | | 2006 | | 2005 |
| | | | | |
Interest cost on projected benefit obligation | $ 4,490 | | $ 4,382 | | $ 4,185 |
Expected return on plan assets | (4,536) | | (4,247) | | (4,132) |
Recognized actuarial loss | 2,261 | | 2,453 | | 1,660 |
Net pension cost | $ 2,215 | | $ 2,588 | | $ 1,713 |
| | | | | |
Actuarial assumptions used to determine net pension cost: | | | | | |
Discount rate | 5.86% | | 5.62% | | 5.75% |
Long-term rate of return on assets | 7.50% | | 7.50% | | 7.50% |
Rate of increase in compensation | n.a. | | n.a. | | n.a. |
The expected long-term rate of return on assets assumption will remain at 7.50% for 2008. The expected long-term rate of return on assets assumption was developed considering historical and future expectations for returns for each asset class.
The target asset allocation for the Company’s pension plan by asset category for 2008 and the actual asset allocation at December 31, 2007 and 2006 by asset category are as follows:
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[7] Employee Benefit Plans (continued)
| | Percentage of Plan Assets at December 31, |
| | Target | | | | |
| | Allocation | | | | |
Asset Category | | 2008 | | 2007 | | 2006 |
| | | | | | |
Equity securities: | | | | | | |
Domestic | | 60.0% | | 60.9% | | 61.4% |
International | | 15.0 | | 18.4 | | 17.9 |
Fixed income securities | | 25.0 | | 20.7 | | 20.1 |
Other | | 0.0 | | 0.0 | | 0.6 |
Total | | 100.0% | | 100.0% | | 100.0% |
The target asset allocation was established to attempt to maximize returns with consideration of the long-term nature of the obligations and to reducing the level of overall market volatility through the allocation to fixed income investments. During the year, the asset allocation is reviewed for adherence to the target asset allocation and the portfolio of investments is rebalanced periodically.
International investments consist primarily of large capitalization equities. During 2007, the domestic equity portfolio was transferred to funds of hedge funds, with the goal of generating returns in excess of traditional equity funds. Investments are broadly diversified by strategy and manager. As of December 31, 2007, plan assets included approximately $40.1 million of investments in funds of hedge funds which have non-readily determinable fair values. Estimates of fair value of these funds are determined using the best information available. The fixed income allocation comprises a high yield mutual fund which invests primarily corporate bonds with an average rating of B.
The Company expects to contribute $2.0 million to its defined benefit pension plan in 2008.
Future benefit payments under the plans are estimated as follows (in thousands):
| Amount |
2008 | $ 4,740 |
2009 | 4,865 |
2010 | 5,009 |
2011 | 5,160 |
2012 | 5,276 |
2013 – 2017 | 28,503 |
The following tables provide a reconciliation of the changes in the fair value of assets in the plan and plan benefit obligations during the two year period ended December 31, 2007, and a statement of the funded status as of December 31, 2007 and 2006 (in thousands):
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[7] Employee Benefit Plans (continued)
| 2007 | | 2006 |
Change in Fair Value of Plan Assets | | | |
Balance at beginning of year | $ 62,659 | | $ 53,526 |
Actual return on plan assets | 4,505 | | 7,022 |
Company contribution | 3,397 | | 6,157 |
Benefit payments | (4,218) | | (4,046) |
Balance at end of year | $ 66,343 | | $ 62,659 |
| | | |
Change in Projected and Accumulated Benefit Obligations | | | |
Balance at beginning of year | $ 78,311 | | $ 78,638 |
Interest cost | 4,490 | | 4,382 |
Actuarial gain | (3,945) | | (663) |
Benefit payments | (4,218) | | (4,046) |
Balance at end of year | $ 74,638 | | $ 78,311 |
| | | |
| 2007 | | 2006 |
Funded Status | | | |
Funded status at December 31, | $ (8,295) | | $ (15,652) |
| | | |
Amounts recognized in Consolidated Balance Sheets consist of: | | | |
Current liabilities | $ (210) | | $ (168) |
Long-term liabilities | (8,085) | | (15,484) |
| | | |
Net amount recognized in Consolidated Balance Sheets | $ (8,295) | | $ (15,652) |
| | | |
Amounts not yet reflected in net periodic benefit cost and | | | |
included in accumulated other comprehensive loss: | | | |
Accumulated loss | $ (17,517) | | $ (23,692) |
Accumulated other comprehensive loss | (17,517) | | (23,692) |
Cumulative Company contributions in excess of net periodic benefit cost | 9,222 | | 8,040 |
Net amount recognized in Consolidated Balance Sheets | $ (8,295) | | $ (15,652) |
The estimated amount of the net accumulated loss that will be amortized from accumulated other comprehensive loss into net period benefit cost in 2008 is $1.6 million. There was no change in accumulated other comprehensive loss as a result of the application of SFAS No. 158 in 2006.
| 2007 | | 2006 |
Actuarial assumptions used to determine benefit obligation: | | | |
Discount rate | 6.41% | | 5.86% |
Rate of increase in compensation | n.a. | | n.a. |
Measurement date | December 31 | | December 31 |
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[7] Employee Benefit Plans (continued)
Other comprehensive loss attributable to the net gain arising during the period plus the amortization of the loss during the period pursuant to SFAS No. 158 amounted to decreases of $6.2 million in 2007 and $5.9 million in 2006. Other comprehensive loss attributable to a change in the additional minimum pension liability recognized pursuant to SFAS No. 87, “Employers’ Accounting for Pensions” amounted to increases of $0.6 million in 2005 and $29.0 million in prior years. The cumulative net amount of $17.5 million represents the excess of the projected benefit obligations of the Company’s pension plans over the fair value of the plans’ assets as of December 31, 2007, compared to a $9.2 million pension asset previously recognized. The net amount of $8.3 million is reflected as a liability as of December 31, 2007 (see above) with the offset being a reduction in stockholders’ equity. Adjustments to the amount of this pension liability will be recorded in future years, as required, based upon periodic re-evaluation of the funded status of the Company’s pension plans.
The Company’s plans have benefit obligations in excess of the fair value of the plans’ assets. The following table provides information relating to each of the plans’ benefit obligations compared to the fair value of its assets as of December 31, 2007 and 2006 (in thousands):
| 2007 | | 2006 |
| | | Benefit | | | | | | Benefit | | |
| Pension | | Equalization | | | | Pension | | Equalization | | |
| Plan | | Plan | | Total | | Plan | | Plan | | Total |
| | | | | | | | | | | |
Projected benefit obligation | $ 71,764 | | $ 2,874 | | $ 74,638 | | $ 75,370 | | $ 2,941 | | $ 78,311 |
Accumulated benefit obligation | $ 71,764 | | $ 2,874 | | $ 74,638 | | $ 75,370 | | $ 2,941 | | $ 78,311 |
Fair value of plan assets | $ 66,343 | | $ - | | $ 66,343 | | $ 62,659 | | $ - | | $ 62,659 |
| | | | | | | | | | | |
Projected benefit obligation | | | | | | | | | | | |
greater than Fair value of | | | | | | | | | | | |
plan assets | $ 5,421 | | $ 2,874 | | $ 8,295 | | $ 12,711 | | $ 2,941 | | $ 15,652 |
| | | | | | | | | | | |
Accumulated benefit obligation | | | | | | | | | | | |
greater than Fair value of | | | | | | | | | | | |
plan assets | $ 5,421 | | $ 2,874 | | $ 8,295 | | $ 12,711 | | $ 2,941 | | $ 15,652 |
The Company has a contributory Section 401(k) plan which covers its executive, professional, administrative and clerical employees, subject to certain specified service requirements. The 401(k) expense provision approximated $3.7 million in 2007, $2.9 million in 2006 and $1.8 million in 2005. The Company’s contribution is based on a non-discretionary match of employees’ contributions, as defined.
The Company has an incentive compensation plan for key employees which is generally based on the Company’s achievement of a certain level of profit.
The Company also contributes to various multi-employer 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 approximately $25.9 million in 2007, $15.3 million in 2006 and $7.4 million in 2005. The Multi-employer Pension Plan Amendments Act of 1980 defines certain employer obligations under multi-employer plans. Information regarding union retirement plans is not available from plan administrators to enable the Company to determine its share of any unfunded vested liabilities.
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[7] Employee Benefit Plans (continued)
Under the Employee Retirement Income Security Act, a contributor to a multi-employer plan is liable, upon termination or withdrawal from a plan, for its proportionate share of a plan’s unfunded vested liability. The Company currently has no intention of withdrawing from any of the multi-employer pension plans in which it participates.
[8] Capital Stock and Stock Purchase Warrants
(a) $21.25 Convertible Exchangeable Preferred Stock (“$21.25 Preferred Stock”)
In June 1987, the Company received net proceeds of approximately $23.6 million from the sale of 1,000,000 $2.125 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) (“Depositary Shares”) at a price of $25 per Depositary Share. Annual dividends were $2.125 per Depositary Share and were cumulative. Generally, the liquidation preference value was $25 per Depositary Share plus any accumulated and unpaid dividends. In conjunction with the covenants of certain of the Company’s prior credit agreements, the Company was required to suspend the payment of quarterly dividends on its Depositary Shares until certain financial criteria were met. Dividends on the Depositary Shares had not been declared since 1995 (although they were fully accrued due to the “cumulative” feature of the Depositary Shares).
In June 2003, the Company completed a tender offer whereby the Company purchased and immediately retired 440,627 Depositary Shares at a purchase price of $25 per share, net to the seller in cash without interest.
In October 2002, certain holders of the Depositary Shares filed a lawsuit against certain directors of the Company alleging that the defendants, among other things, breached their fiduciary duties owed to the holders of the Depositary Shares. On November 30, 2004, the Company announced that the parties had reached an agreement for settlement of the lawsuit and, in September 2005, the Court gave final approval of the settlement as fair, just, reasonable and adequate.
Under the terms of the settlement, effective November 2, 2005, the Company purchased all of the 374,185 participating Depositary Shares that were submitted for $19.00 in cash and one share of the Company’s common stock for each Depositary Share for an aggregate of approximately $7.1 million in cash and 374,185 shares of common stock. The completion of the settlement offer resulted in the Company purchasing and immediately retiring 374,185 Depositary Shares, a reduction of approximately $1.4 million in stockholders’ equity, and a reversal of approximately $2.3 million of previously accrued and unpaid dividends relating to the purchased shares that was restored to additional paid-in capital. In addition, the $2.3 million of previously accrued and unpaid dividends was added to net income to determine net income available for common stockholders for the purpose of computing earnings per common share for the year ended December 31, 2005.
On May 17, 2006, the Company redeemed all remaining outstanding Depositary Shares in accordance with the terms of the $21.25 Preferred Stock at a price of $25.00 per Depositary Share plus accrued and unpaid dividends to that date, for an aggregate amount of approximately $8.8 million.
(b) Stock Purchase Warrants
In connection with an amended credit agreement effective January 17, 1997, certain banks received stock purchase warrants to purchase up to 420,000 shares of the Company’s Common Stock at a purchase price of $8.30 per share, subject to certain anti-dilution adjustments in the event of certain distributions and other corporate events, at any time during the ten year period ending January 17, 2007. Prior to 2006, 333,312 warrants were exercised. The remaining balance of 86,688 warrants outstanding as of December 31, 2006 was exercised on January 12, 2007.
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[9] Stock-Based Compensation
In May 2004, the Company’s stockholders approved the adoption of the 2004 Stock Option and Incentive Plan which provided that up to 1,000,000 shares of the Company’s Common Stock will be available for the granting of stock-based compensation awards to key executives, employees and directors of the Company. In May 2006, the Company’s stockholders approved an amendment to the Plan that increased the number of shares of the Company’s common stock available for issuance thereunder from 1,000,000 shares to 3,000,000 shares. The Plan allows these stock-based compensation awards to be granted in a variety of forms, including stock options, stock appreciation rights, restricted stock awards, unrestricted stock awards, deferred stock awards and dividend equivalent rights. During 2004, restricted stock awards were granted to two executive officers of the Company. Upon the achievement of specified performance goals and/or service requirements during the period from 2004 to 2006, these restricted stock awards vested resulting in the issuance of 150,000 shares of the Company’s common stock in both 2005 and 2006. The grant date fair value of the restricted stock awards granted in 2004 was $4.7 million which was amortized and included as a component of “General and Administrative Expenses” in the Consolidated Statements of Income over the vesting period, including $0.6 million in 2006 and $3.3 million in 2005.
The Compensation Committee of the Company’s Board of Directors has approved the grant of 1,345,000 restricted stock units to certain of its executive officers and employees under the 2004 Stock Option and Incentive Plan. As of December 31, 2007, 315,000 restricted stock units vested and accordingly 315,000 shares of common stock were issued. Of the remaining 1,030,000 restricted stock units outstanding at December 31, 2007, 665,000 generally vest in three equal installments on January 1, 2008, 2009 and 2010, and 365,000 generally vest on January 1, 2010. Of the restricted stock units outstanding at December 31, 2007, 630,000 are subject only to the satisfaction of service requirements and the remaining 400,000 are subject to the satisfaction of both service requirements and achievement of certain pre-established pretax income performance criteria. Upon vesting, each restricted stock unit will be exchanged for one share of the Company’s common stock. The grant date fair value of the restricted stock units is $43.4 million based on the closing price of the Company’s common stock on the dates of grant. For the years ended December 31, 2007 and 2006, the Company recognized compensation expense of $14.4 million and $16.5 million, respectively, related to these restricted stock units and these amounts are included as a component of “General and Administrative Expenses” in the Consolidated Statements of Income. At December 31, 2007, there was $12.4 million of unrecognized compensation cost related to the non-vested restricted stock units outstanding which, absent significant forfeitures in the future, will be recognized over a weighted average period of 1.75 years.
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[9] Stock-Based Compensation (continued)
A summary of stock-based compensation awards related to the Company’s 2004 Stock Option and Incentive Plan is as follows:
| | | Weighted Average | | Shares |
| Number | | Grant Date | | Available |
| of Shares | | Fair Value | | to Grant |
Outstanding at December 31, 2004 | 300,000 | | $15.62 | | 700,000 |
Issued | (150,000) | | $15.62 | | - |
Reacquired | - | | | | 23,813 |
Outstanding at December 31, 2005 | 150,000 | | $15.62 | | 723,813 |
Approved Plan Amendment | - | | | | 2,000,000 |
Granted | 1,295,000 | | $31.44 | | (1,295,000) |
Issued | (300,000) | | $23.58 | | - |
Reacquired | - | | | | 23,813 |
Outstanding at December 31, 2006 | 1,145,000 | | $31.43 | | 1,452,626 |
Granted | 50,000 | | $53.22 | | (50,000) |
Issued | (165,000) | | $31.55 | | - |
Reacquired | - | | | | 5,000 |
Outstanding at December 31, 2007 | 1,030,000 | | $32.47 | | 1,407,626 |
The aggregate intrinsic value of the restricted stock units outstanding at December 31, 2007 is approximately $42.7 million.
In May 2000, the Company’s stockholders approved the adoption of the Special Equity Incentive Plan which provided that up to 3,000,000 shares of the Company’s Common Stock would be available for the granting of nonqualified stock options to key executives, employees and directors of the Company. Options are granted at not less than the fair market value on the date of grant, as defined. Options generally expire 10 years from the date of grant. Options outstanding under the Special Equity Incentive Plan are generally exercisable in three equal annual installments, on the date of grant and on the first and second anniversary of the date of grant. As of December 31, 2007, 2006 and 2005, all of the options outstanding were exercisable. A summary of stock option activity related to the Company’s Special Equity Incentive Plan is as follows:
| | | | | | | |
| | | Option Price Per Share | | Shares |
| Number | | | | Weighted | | Available |
| of Shares | | Range | | Average | | to Grant |
Outstanding at December 31, 2005 | 454,000 | | $3.13 - $4.50 | | $4.42 | | 195,634 |
Exercised | (214,000) | | $4.50 | | $4.50 | | - |
Outstanding at December 31, 2006 | 240,000 | | $3.13 - $4.50 | | $4.36 | | 195,634 |
Exercised | (203,500) | | $3.13 - $4.50 | | $4.43 | | - |
Outstanding at December 31, 2007 | 36,500 | | $3.13 - $4.50 | | $3.97 | | 195,634 |
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[9] Stock-Based Compensation (continued)
Options outstanding at December 31, 2007 and related weighted average price and life information follows:
| | | | | | | | Weighted | | |
| | | | | | | | Average | | Aggregate |
Remaining | | Grant | | Options | | Options | | Exercise | | Intrinsic |
Life (Years) | | Date | | Outstanding | | Exercisable | | Price | | Value |
| | | | | | | | | | |
2.5 | | 05/25/00 | | 14,000 | | 14,000 | | $3.13 | | $ 536,130 |
2.75 | | 09/12/00 | | 22,500 | | 22,500 | | $4.50 | | 830,700 |
Totals | | | | 36,500 | | 36,500 | | $3.97 | | $ 1,366,830 |
[10] Unaudited Quarterly Financial Data
The following table sets forth unaudited quarterly financial data for the years ended December 31, 2007 and 2006
(in thousands, except per share amounts):
| 2007 by Quarter |
| 1st | | 2nd | | 3rd | | 4th |
Revenues | $ 987,356 | | $ 1,151,620 | | $ 1,242,666 | | $ 1,246,716 |
Gross profit | $ 57,897 | | $ 64,902 | | $ 63,895 | | $ 62,200 |
Net income | $ 22,653 | | $ 27,578 | | $ 24,011 | | $ 22,872 |
| | | | | | | |
Basic earnings per common share | $ 0.85 | | $ 1.03 | | $ 0.89 | | $ 0.85 |
| | | | | | | |
Diluted earnings per common share | $ 0.84 | | $ 1.01 | | $ 0.87 | | $ 0.83 |
| | | | | | | |
| 2006 by Quarter |
| 1st | | 2nd | | 3rd | | 4th |
Revenues | $ 612,763 | | $ 712,462 | | $ 773,282 | | $ 944,332 |
Gross profit | $ 32,322 | | $ 37,016 | | $ 43,131 | | $ 56,926 |
Net income | $ 8,090 | | $ 4,561 | | $ 9,583 | | $ 19,302 |
| | | | | | | |
Basic earnings per common share | $ 0.31 | | $ 0.16 | | $ 0.36 | | $ 0.73 |
| | | | | | | |
Diluted earnings per common share | $ 0.30 | | $ 0.16 | | $ 0.36 | | $ 0.72 |
[11] Business Segments
Business segment information presented below was determined in accordance with SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information”.
The Company provides diversified general contracting, construction management and design-build services to private clients and public agencies throughout the world. The Company’s construction business is conducted through three reportable segments: building, civil and management services. The building segment is comprised of Perini Building Company, James A. Cummings, Inc., and Rudolph and Sletten, Inc., and focuses on large, complex projects in the hospitality and gaming, sports and entertainment, educational, transportation, corrections, healthcare,
77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[11] Business Segments (continued)
biotech, pharmaceutical and high-tech markets. The civil segment is comprised of Perini Civil Construction and Cherry Hill Construction, Inc., and focuses on public works construction primarily in the northeastern and mid-Atlantic United States including the repair, replacement and reconstruction of the public infrastructure such as highways, bridges, mass transit systems and wastewater treatment facilities. The management services segment provides diversified construction, design-build and maintenance services to the U.S. military and government agencies as well as surety companies and multi-national corporations in the United States and overseas.
During the years 2005 through 2007, the Company’s chief operating decision making group consisted of the Chairman and Chief Executive Officer, the President and Chief Operating Officer who is also the President of Perini Management Services, and the Chairman and Chief Executive Officer of Perini Building Company. During 2005 and 2006, the Company’s chief operating decision making group also included the President of Perini Civil Construction; however, this individual retired from the Company in March 2007. This group decides how to allocate resources and assess performance of the business segments. Generally, the Company evaluates performance of its operating segments on the basis of income from operations and cash flow. The accounting policies applied by each of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note 1). The following tables set forth certain business and geographic segment information relating to the Company’s operations for each of the three years in the period ended December 31, 2007 (in thousands):
2007 | Reportable Segments | | | | |
| | | | | Management | | | | | | Consolidated |
| Building | | Civil | | Services | | Totals | | Corporate | | Total |
| | | | | | | | | | | |
Revenues | $ 4,248,814 | | $ 234,778 | | $ 144,766 | | $ 4,628,358 | | $ - | | $ 4,628,358 |
Income (Loss) from Construction Operations | $ 127,426 | | $ (12,991) | | $ 49,402 | | $ 163,837 | | $ (22,856) | (a) | $ 140,981 |
Assets | $ 995,303 | | $ 181,798 | | $ 23,697 | | $ 1,200,798 | | $ 453,317 | (b) | $ 1,654,115 |
Capital Expenditures | $ 19,111 | | $ 4,504 | | $ 270 | | $ 23,885 | | $ - | | $ 23,885 |
| | | | | | | | | | | |
2006 | Reportable Segments | | | | |
| | | | | Management | | | | | | Consolidated |
| Building | | Civil | | Services | | Totals | | Corporate | | Total |
| | | | | | | | | | | |
Revenues | $ 2,515,051 | | $ 281,137 | | $ 246,651 | | $ 3,042,839 | | $ - | | $ 3,042,839 |
Income from Construction Operations | $ 59,296 | | $ 1,772 | | $ 34,280 | | $ 95,348 | | $ (24,469) | (a) | $ 70,879 |
Assets | $ 717,467 | | $ 253,896 | | $ 27,430 | | $ 998,793 | | $ 197,199 | (b) | $ 1,195,992 |
Capital Expenditures | $ 17,850 | | $ 3,453 | | $ 223 | | $ 21,526 | | $ - | | $ 21,526 |
| | | | | | | | | | | |
2005 | Reportable Segments | | | | |
| | | | | Management | | | | | | Consolidated |
| Building | | Civil | | Services | | Totals | | Corporate | | Total |
| | | | | | | | | | | |
Revenues | $ 1,181,103 | | $ 275,584 | | $ 276,790 | | $ 1,733,477 | | $ - | | $ 1,733,477 |
Income (Loss) from Construction Operations | $ 29,277 | | $ (26,890) | | $ 19,133 | | $ 21,520 | | $ (13,567) | (a) | $ 7,953 |
Assets | $ 463,885 | | $ 288,174 | | $ 39,357 | | $ 791,416 | | $ 123,840 | (b) | $ 915,256 |
Capital Expenditures | $ 6,702 | | $ 5,500 | | $ 145 | | $ 12,347 | | $ - | | $ 12,347 |
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[11] Business Segments (continued)
(a) | Consists of corporate general and administrative expenses. |
(b) | Consists principally of cash and cash equivalents, net deferred tax asset, land held for sale and other investments available for general corporate purposes. |
Revenues from the Project CityCenter project and other projects in Las Vegas, Nevada for MGM MIRAGE in the building segment totaled approximately $1,495 million (or 32% of total revenues) in 2007, and approximately $452 million (or 15% of total revenues) in 2006. Revenues from various healthcare-related projects in California for Kaiser Foundation Health Plan, Inc. in the building segment totaled approximately $310 million (or 10% of total revenues) in 2006. Revenues from the Red Rock Casino Resort Spa project in Las Vegas, Nevada for Station Casinos, Inc. in the building segment totaled approximately $355 million (or 20% of total revenues) in 2005. Revenues from various agencies of the United States federal government in the management services segment totaled approximately $201 million (or 12% of total revenues) in 2005.
Information concerning principal geographic areas is as follows (in thousands):
| Revenues |
| 2007 | | 2006 | | 2005 |
| | | | | |
United States | $ 4,494,976 | | $ 2,887,755 | | $ 1,543,289 |
Foreign and U.S. Territories | 133,382 | | 155,084 | | 190,188 |
| | | | | |
Total | $ 4,628,358 | | $ 3,042,839 | | $ 1,733,477 |
| | | | | |
| Income from Construction Operations |
| | | | | |
| 2007 | | 2006 | | 2005 |
| | | | | |
United States | $ 114,986 | | $ 66,022 | | $ 2,970 |
Foreign and U.S. Territories | 48,851 | | 29,326 | | 18,550 |
Corporate | (22,856) | | (24,469) | | (13,567) |
| | | | | |
Total | $ 140,981 | | $ 70,879 | | $ 7,953 |
Income (loss) from construction operations has been allocated geographically based on the location of the job site. Long-lived assets outside the United States are immaterial and therefore not presented.
[12] Related Party Transactions
As a condition to an investor group’s acquisition of shares of the Company’s Series B Preferred Stock for an aggregate of $30 million, which was approved by the stockholders in January 1997, the Company entered into an agreement with Tutor-Saliba Corporation (“Tutor-Saliba”), a California corporation engaged in the construction industry, and Ronald N. Tutor, Chief Executive Officer and primary beneficial owner of Tutor-Saliba, to provide certain management services, as defined. Tutor-Saliba participates in joint ventures with the Company, the Company’s share of which contributed $70.6 million (or 1.5%) $41.4 million (or 1.4%) and $39.2 million (or 2.3%) to the Company’s consolidated revenues in 2007, 2006 and 2005, respectively. In addition, in January 2008, Tutor-
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[12] Related Party Transactions (continued)
Saliba acquired a plumbing contractor which has subcontracts with the Company totaling approximately $63.7 million. The management agreement has generally been renewed annually by the Compensation Committee of the Company’s Board of Directors, which consists entirely of independent directors, under the same basic terms and conditions as the initial agreement except that the amount of the annual fee payable thereunder to Tutor-Saliba was increased effective March 15, 2006, from $800,000 to $900,000, and effective March 14, 2007, from $900,000 to $1,000,000. Effective December 1, 2001, Mr. Tutor was included as a participant in the Company’s incentive compensation plan. Since January 17, 1997, Mr. Tutor has been a member of the Company’s Board of Directors and an officer of Perini. Effective July 1, 1999, Mr. Tutor was elected Chairman of the Board of Directors and effective March 29, 2000 was elected Chairman and Chief Executive Officer. Compensation for his management services consists of (i) payments of $800,000 to Tutor-Saliba for the year ended December 31, 2005, $879,000 for the year ended December 31, 2006, and $979,000 for the year ended December 31, 2007; (ii) stock options and restricted stock awards granted to Mr. Tutor; and (iii) incentive compensation payable to Tutor-Saliba of $800,000 in 2005, $1,679,000 in 2006, and $977,000 in 2007. Stock options for 1,225,000 shares of common stock were granted to Mr. Tutor between January, 1997 and March, 2000. All of the stock options were granted at or above the fair market value price per share on the respective dates of grant. All of the stock options were exercised in 2004.
On April 5, 2006, Mr. Tutor was granted 450,000 restricted stock units under the Perini Corporation 2004 Stock Option and Incentive Plan, subject to vesting, as described in Note 9. Upon the satisfaction of the service and/or performance-based vesting requirements, the Company issued to Mr. Tutor 150,000 shares of common stock on June 30, 2006 and issued 150,000 additional shares of common stock to Mr. Tutor on June 30, 2007. The remaining 150,000 restricted stock units are scheduled to vest on June 30, 2008, subject to the satisfaction of certain service and performance-based vesting requirements. The grant date fair value of the restricted stock awards is $14.2 million which is being recorded as expense over the vesting period. Accordingly, expense related to these restricted stock awards of $9.1 million and $4.0 million was recorded in 2007 and 2006, respectively.
The Company issued to Mr. Tutor 75,000 shares of common stock on June 30, 2005 and 75,000 additional shares of common stock to Mr. Tutor on June 30, 2006 based on the completion of certain service requirements. The grant date fair value of these restricted stock awards was $2.5 million which was recorded as expense over the vesting period. Expense related to these restricted stock awards of $0.4 million and $2.0 million was recorded in 2006 and 2005, respectively.
The investors that provided $40 million of new equity in the Company on March 29, 2000 consist of Tutor-Saliba (see above), O&G Industries, Inc. (“O&G”), a participant in certain construction joint ventures with the Company, and National Union Fire Insurance Company of Pittsburgh, Pa., a wholly owned subsidiary of American International Group, Inc. (“AIG”), one of the Company’s sureties and a provider of insurance and insurance related services to the Company. These investors participated in a secondary public stock offering which was completed in December 2005. In addition, in 2005 Tutor-Saliba exercised its call right under an existing shareholders’ agreement to purchase 2,352,941 shares owned by AIG at a predetermined rate, as defined. The cumulative holdings of each of the investors as of December 31, 2007, 2006 and 2005 were as follows:
80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2007, 2006 and 2005 (continued)
[12] Related Party Transactions (continued)
| | Number of Common Shares |
| | Tutor-Saliba | | O&G | | AIG |
| | | | | | |
Balance at December 31, 2004 | | 3,112,288 | | 2,502,941 | | 2,659,846 |
Sold in secondary offering | | (1,500,000) | | (700,000) | | (306,905) |
Exercise of call option per Shareholders' Agreement | | 2,352,941 | | - | | (2,352,941) |
Balance at December 31, 2005 | | 3,965,229 | | 1,802,941 | | - |
Sold or donated | | (930,000) | | (150,000) | | - |
Balance at December 31, 2006 | | 3,035,229 | | 1,652,941 | | - |
Sold | | (3,035,229) | | (1,052,941) | | - |
Balance at December 31, 2007 | | - | | 600,000 | | - |
| | | | | | |
Percentage of total common shares outstanding | | 0.00% | | 2.22% | | 0.00% |
O&G participates in joint ventures with the Company, the Company’s share of which contributed $3.1 million (or less than 1%), $37.9 million (or 1.2%) and $38.4 million (or 2.2%) to the Company’s consolidated revenues in 2007, 2006 and 2005, respectively.
[13] Land Held for Sale
As of December 31, 2007, land held for sale consists of approximately 20 fully developed acres in Raynham, Massachusetts. Management’s plan is to continue to market the remaining land for sale in this development as a bulk sale or as individual parcels over an estimated 24 to 36 month “sell off” period.
During the year ended December 31, 2007, 10 acres were sold resulting in a net gain of $0.6 million. During the year ended December 31, 2006, 2 acres were sold resulting in a net loss of $0.4 million and during the year ended December 31, 2005, 28 acres were sold resulting in a net gain of $1.6 million. (See Note 6.)
81
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Perini Corporation
Framingham, Massachusetts
We have audited the accompanying consolidated balance sheets of Perini Corporation and subsidiaries (the “Company”) as of December 31, 2007 and 2006, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2008 expressed an unqualified opinion on the Company's internal control over financial reporting.
/s/Deloitte & Touche LLP
Boston, Massachusetts
February 28, 2008
82
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 (incorporated by reference to Exhibit 4 to Form S-2 (File No. 33-28401) filed on April 28, 1989). |
| | |
| 3.2 | Articles of Amendment to the Restated Articles of Organization of the Perini Corporation (incorporated by reference to Exhibit 3.2 to Form S-1 (File No. 333-111338) filed on December 19, 2003). |
| | |
| 3.3 | Articles of Amendment to the Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on April 12, 2000). |
| | |
| 3.4 | Amended and Restated By-laws of Perini Corporation (incorporated by reference to Exhibit 3.2 of Form 8-K (File No. 001-06314) filed on February 14, 1997). |
| | |
| 3.5 | Amendment No. 1 to the Amended and Restated By-laws of Perini Corporation (incorporated by reference to Exhibit 3.2 to Form 8-K filed on April 12, 2000). |
| | |
Exhibit 4. | Instruments Defining the Rights of Security Holders, Including Indentures |
| | |
| 4.1 | 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 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on April 12, 2000). |
| | |
| 4.2 | Letter Agreement by and among Perini Corporation, BLUM Capital Partners, L.P., PB Capital Partners, L.P. and The Common Fund for Non-Profit Organizations, dated as of December 1, 2003 (incorporated by reference to Exhibit 4.14 to Form S-1 (File No. 333-111338) filed on December 19, 2003). |
| | |
83
Exhibit Index
(Continued)
Exhibit 10. | Material Contracts |
| | |
| 10.1* | Perini Corporation Amended and Restated (2004) General Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Amendment No. 2 to Form S-1 (File No. 333-111338) filed on March 8, 2004). |
| | |
| 10.2* | Perini Corporation Amended and Restated (2004) Construction Business Unit Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to Amendment No. 2 to Form S-1 (File No. 333-111338) filed on March 8, 2004). |
| | |
| 10.3* | Management Agreement dated as of January 17, 1997 by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.16 to Perini Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
| | |
| 10.4* | Amendment No. 1 dated as of December 23, 1998 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.4 to Form S-1 (File No. 333-111338) filed on December 19, 2003). |
| | |
| 10.5* | 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 (incorporated by reference to Exhibit 10.31 to Perini Corporation’s. Quarterly Report on Form 10-Q for the period ended March 31, 2000 filed on May 9, 2000). |
| | |
| 10.6* | Amendment No. 3 dated as of December 31, 2000 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation. (incorporated by reference to Exhibit 10.6 to Form S-1 (File No. 333-111338) filed on December 19, 2003). |
| | |
| 10.7* | Amendment No. 4 dated as of December 31, 2001 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.36 to Perini Corporation’s. Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 31, 2003). |
| | |
| 10.8* | Amendment No. 5 dated as of December 31, 2002 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.8 to Form S-1 (File No. 333-111338) filed on December 19, 2003). |
| | |
| 10.9* | Special Equity Incentive Plan (incorporated by reference to Exhibit A to Perini Corporation’s Proxy Statement for the Annual Meeting of Stockholders dated April 19, 2000). |
| | |
84
Exhibit Index
(Continued)
| 10.10* | Perini Corporation 2004 Stock Option and Incentive Plan (incorporated by reference to Exhibit D to Perini Corporation’s Proxy Statement for the Annual Meeting of Stockholders dated April 20, 2004). |
| | |
| 10.11 | 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.) (incorporated by reference to Exhibit 10.34 to Perini Corporation’s Quarterly Report on Form 10-Q for the period ended September 30, 2000 filed on November 6, 2000). |
| | |
| 10.12* | Amendment No. 6 dated as of January 1, 2004 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.18 to Amendment No. 1 to Form S-1 (File No. 333-111338) filed on February 10, 2004). |
| | |
| 10.13* | Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.19 to Amendment No. 1 to Form S-1 (File No. 333-111338) filed on February 10, 2004). |
| | |
| 10.14* | Amendment No. 7 dated as of September 15, 2004 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.2 to Perini Corporation’s Quarterly Report on Form 10-Q for the period ended September 30, 2004 filed on November 5, 2004). |
| | |
| 10.15* | Amendment No. 8 dated as of December 15, 2004 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 16, 2004). |
| | |
| 10.16* | Form of Restricted Stock Unit Award Agreement under the Perini Corporation 2004 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.24 to Perini Corporation’s Annual Report on Form 10-K for the year ended December 31, 2004 filed on March 4, 2005). |
| | |
| 10.17 | Amended and Restated Credit Agreement dated October 14, 2005 among Perini Corporation, Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as Arranger, and the Lenders Party thereto (incorporated by reference to Exhibit 10.2 to Perini Corporation’s Quarterly Report on Form 10-Q for the period ended September 30, 2005 filed on November 4, 2005). |
| | |
| 10.18 | Letter Agreement by and among Perini Corporation, BLUM Capital Partners, L.P., PB Capital Partners, L.P., National Union Fire Insurance Company of Pittsburgh, Pa., The Union Labor Life Insurance Company, O&G Industries, Inc. and Tutor-Saliba Corporation, dated as of December 14, 2005 (incorporated by reference to Exhibit 10.28 to Post-Effective Amendment No. 4 to Form S-1 (File No. 333-117344) filed on December 14, 2005). |
85
Exhibit Index
(Continued)
| 10.19 | First Amendment and Waiver dated as of February 23, 2006 to Amended and Restated Credit Agreement among Perini Corporation, Bank of America, N.A., as Administrative Agent, and the lenders (incorporated by reference to Exhibit 10.29 to Perini Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005 filed on March 10, 2006). |
| | |
| 10.20* | Amendment No. 9 dated as of March 15, 2006 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on May 5, 2006). |
| | |
| 10.21 | Amended and Restated Credit Agreement, dated February 22, 2007 among Perini Corporation, the subsidiaries of Perini identified therein, Bank of America, N.A. and the other lenders that are parties thereto (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 27, 2007). |
| | |
| 10.22* | Amendment No. 10 dated as of March 14, 2007 to the Management Agreement by and among the Company, Ronald N. Tutor and Tutor-Saliba Corporation (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on May 9, 2007). |
| | |
| 10.23* | Restricted Stock Unit Award Agreement under the Perini Corporation 2004 Stock Option and Incentive Plan dated as of September 26, 2007 between the Company and Kenneth R. Burk (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on November 9, 2007). |
| | |
Exhibit 21 | Subsidiaries of Perini Corporation - filed herewith. |
| | |
Exhibit 23 | Consent of Independent Registered Public Accounting Firm - filed herewith |
| | |
Exhibit 24 | Power of Attorney - filed herewith. |
| | |
Exhibit 31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herewith |
| |
Exhibit 31.2 | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herewith. |
| |
Exhibit 32.1 | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – filed herewith. |
| |
Exhibit 32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – filed herewith. |
| |
* Management contract or compensatory arrangements required to be filed as an exhibit pursuant to Item 15(a)(3) of Form 10-K.
86
